MONTGOMERY COUNTY HIGHER EDUCATION and HEALTH AUTHORITY Tax-Exempt Revenue Bonds (Pennsylvania LTC, Inc

This Preliminary Official Statement and the information contained herein are subject to change, completion or amendment without notice. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these Series 2017 Bonds in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction. 2017 BONDS, AND SUCH BONDS SHALL NOT BE DEEMED OBLIGATIONS OF on theSeries2017Bondswillbemadetosuchregisteredowner,anddisbursementofpaymentsresponsibilityDTCitsparticipants.See“ principal andinteresttoitsparticipantsforsubsequentdisbursementthebeneficialownersofSeries2017 Bonds.AslongasCede&Co.istheregisteredowner asnomineeofDTC,payments owners oftheSeries2017Bondswillbeevidencedbybook-entryonly.PrincipalandinterestonpaidBondTrusteetoDTC,whichinturn will remitsuch depository fortheSeries2017Bonds.PurchasersofBondswillnotreceivecertificatesrepresentingtheirinterestinpurchased.Ownership by thebeneficial prior tomaturityatthepricesandundercircumstancesdescribedherein.See“THESERIES2017BONDS.” redemption, commencingJune1,2018.TheSeries2017Bondsaresubjecttoaccelerationofmaturityandoptional,extraordinarymandatoryinwholeorpart, * Preliminary, subjecttochange. Dated: ______,2017 service reservefundforthe Series 2017Bondsandcapitalizedinterest on the Series2017Bonds;and(v)paymentofcertaincostsissuingBonds(collectively, the “Project”). and furnishingofanew2-story,46-bedreplacementwingattheLinwoodFacility;(iii)miscellaneouscapitalexpendituresEdgehillFacility(iv)funding ofadebt Rest NursingHome),a102-bednursingfacilitylocatedinScranton,Pennsylvania(the“LinwoodFacility”);(ii)thedemolitionofonewingLinwoodFacilityandconstruction, equipping Nursing andRehabilitationCenter,a60-bednursingfacilitylocatedinGlenside,Pennsylvania(the“EdgehillFacility”)LinwoodCenter(formerlyknown asMountain (Tax-Exempt), issuedintheoriginalparamountof$7,265,000,proceedswhichwereappliedtofinanceorrefinanceacquisitionandcapitalexpenditureswithrespect toEdgehill current refundingoftheoutstandingHorshamIndustrialandCommercialDevelopmentAuthorityHealthCareFacilitiesRefundingRevenueBonds(PennsylvaniaLTC,Inc.Project)Series2007 November 1,2017(the“LoanAgreement”),betweentheIssuerandObligor.TheObligorwilluseproceedsofSeriesBonds,togetherwithcertainothermoneys,tofinance(i) 2017 Note,whichisbeingissuedconcurrentlywiththeSeriesBonds.TheIssuerwillloanproceedsofBondstoObligorpursuantaLoanAgreement,datedas a Pennsylvanianon-profitcorporation(the“Obligor”)andU.S.BankNationalAssociation,asMasterTrusteesetsforthcertaincovenantsobligationsoftheObligorwithrespecttoSeries Dated: DateofDelivery income taxandcorporatenettax,theSeries2017BondsareexemptfrompersonalpropertytaxesinPennsylvania.See“TAXMATTERS”herein. MATTERS” herein.BondCounselisalsooftheopinionthat,underlawsCommonwealthPennsylvania,interestonSeries2017BondsexemptfromPennsylvaniapersonal minimum tax; however, interest paid to corporate holders of the Series 2017 Bonds may be indirectly subject to alternative minimum tax under circumstances described under “TAX compliance withtherequirementsoffederaltaxlaws.InterestonSeries2017Bondsisnotapreferenceitemforpurposeseitherindividualorcorporatealternative BOOK ENTRYONLY NEW ISSUE sole currentmemberis as ofNovember1,2017(the “Supplemental Indenture”;the Master TrustIndenture and theSupplementalIndenture,collectively,“MasterIndenture”),betweenObligatedGroup,whose described herein.ThatcertainMasterTrustIndenturedatedasofNovember1,2017(the“MasterIndenture”),supplementedbySupplementalNumber1 recourse (i) to the collateral pledged pursuanttothe Master Indenture(as defined herein), (ii)totheMortgages (asdefined herein),and (iii)from moneyspledged undertheBondIndenture as of theSeries2017Bondsoranyinvestmentincometherefrom,willbepayablesolelyoutcertainpaymentsunderLoanAgreementandNote(eachasdefinedherein),by as bond trustee (the “Bond Trustee”). The Series 2017 Bonds will be limited obligations of the Issuerand,exceptto extent thatpayment thereof may be madefromthe proceeds of the sale the CommonwealthofPennsylvania(the“Issuer”),underaBondTrustIndenture,datedasNovember1,2017“BondIndenture”),betweenIssuerandU.S.BankNationalAssociation, be availablefordeliverytotheBondTrustee on behalfofDTCundertheFASTsystemregistration,againstpaymenttherefor, oraboutNovember____,2017. Robert W.Scott,PC,Media,Pennsylvania;and fortheUnderwriterbyitscounsel,EckertSeamansCherin&Mellott,LLC,Philadelphia, Pennsylvania.ItisexpectedthattheSeries2017Bondswill B. Breidenbach,Jr.,Esquire,Pottstown,Pennsylvania; fortheObligorbyitscounsel,TheLawOfficeofTimothyE.Dixon,PA,Ellicott City,MarylandanditsPennsylvaniacounsel,LawOfficeof “Underwriter”) subjecttotheapprovingopinion ofBallardSpahrLLP,Philadelphia,Pennsylvania,BondCounsel.Certainlegalmatters willbepasseduponfortheIssuerbyitscounsel,Douglas making aninformedinvestmentdecision. 2017 Bonds. Thiscover page isforquick reference and does not summarize the issue. Investors must read the entire Official Statement to obtaininformation essentialto FOR THESERIES2017BONDS”and“RISKFACTORS”hereinforadiscussionofcertainriskfactorsthatshouldbeconsideredinconnectionwithaninvestment intheSeries business, theregulatoryenvironment,andprovisionsofprincipaldocuments.AprospectiveBondholderisadvisedtoread“SECURITYANDSOURCESOF PAYMENT in AppendixFhereto. TAXING POWER. IF ANY, OR THE INTEREST ON THE SERIES 2017 BONDS. THE ISSUER HAS NO THEREOF IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF OR PREMIUM, THE COUNTY, THE COMMONWEALTH OR ANY OTHER POLITICAL SUBDIVISION THEREOF. NEITHER THE FULL FAITH AND CREDIT NOR THE TAXING POWER OF THE COUNTY, THE COMMONWEALTH OR ANY OTHER POLITICAL SUBDIVISION PAY THE PRINCIPAL OF OR PREMIUM, IF ANY, OR INTEREST ON THE SERIES OTHER POLITICAL SUBDIVISION THEREOF IS OR SHALL BE OBLIGATED TO THE COMMONWEALTH OF PENNSYLVANIA (THE “COMMONWEALTH”) NOR ANY POWER OF THE COUNTY OF MONTGOMERY, PENNSYLVANIA (THE “COUNTY”), THE GENERAL CREDIT OF THE ISSUER NOR THE GENERAL CREDIT OR TAXING PERSONAL, PLEDGED BY THE OBLIGOR AS SECURITY THEREFOR. NEITHER THE LOAN AGREEMENT AND SECURED BY THE COLLATERAL, REAL AND AND OTHER FUNDS PROVIDED PURSUANT TO THE BOND INDENTURE AND OBLIGATIONS OF THE ISSUER, PAYABLE SOLELY FROM THE REPAYMENTS The Series2017BondswhenissuedwillberegisteredonlyinthenameofCede&Co.,asnomineeDepositoryTrustCompany,NewYork,York(“DTC”).DTCact securities The Series2017Bondsarestatedtomatureassetforthontheinsidecover.InterestispayableJune1andDecemberin The sourcesofpaymentof,andsecurityfor,theSeries2017BondsaremorefullydescribedinthisOfficialStatement. The Series2017Bonds(as defined herein)areissued byMontgomery CountyHigherEducation andHealthAuthority,a bodycorporate andpoliticorganizedexistingunderthelawsof The Series2017Bondsarebeingoffered,subject topriorsaleandwithdrawalofsuchofferwithoutnotice,when,asifissuedbythe IssuerandacceptedbyHerbertJ.Sims&Co.,Inc.(the In the opinion of Ballard Spahr LLP, Bond Counsel, interest on the Series 2017 Bonds is excludable from gross income for purposes of federal income tax, assuming continuing The Series 2017 Bonds are not rated. An investment in the Series 2017 Bonds involves a certain degree of risk related to, among other things, the nature of the Obligor’s THE SERIES 2017 BONDS AND THE INTEREST THEREON ARE LIMITED

PRELIMINARY OFFICIAL STATEMENT DATED AS OF OCTOBER 6, 2017 HIGHER EDUCATION AND HEALTH AUTHORITY (Pennsylvania LTC,Inc.Project) MONTGOMERY COUNTY Tax-Exempt RevenueBonds PENNSYLVANIA LTC,INC. $12,555,000* Series of2017 Due: December1,asshownontheinsidecover each yearuntilmaturityorprior B oo k-E ntry O nly NOT RATED S ystem ” $12,555,000* MONTGOMERY COUNTY HIGHER EDUCATION AND HEALTH AUTHORITY Tax-Exempt Revenue Bonds (Pennsylvania LTC, Inc. Project) Series of 2017

Dated: Date of Delivery Due: As shown below

MATURITIES, AMOUNTS, INTEREST RATES, YIELDS, PRICES and CUSIPs1

$830,000* _____% Term Bonds due December 1, 2022* Yield _____%, Price ______, CUSIP ______

$1,270,000* _____% Term Bonds due December 1, 2027* Yield _____%, Price ______, CUSIP ______

$1,625,000* _____% Term Bonds due December 1, 2032* Yield _____%, Price ______, CUSIP ______

$2,145,000* _____% Term Bonds due December 1, 2037* Yield _____%, Price ______, CUSIP ______

$6,685,000* _____% Term Bonds due December 1, 2047* Yield _____%, Price ______, CUSIP ______

* Preliminary, subject to change. 1 CUSIP is a registered trademark of the American Bankers Association. CUSIP Global Services (CGS) is managed on behalf of the American Bankers Association by S&P Global Market Intelligence. 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 Issuer, the Obligor or the Underwriter makes any representation with respect to such numbers or undertake 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 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. 1J1QQR %` 1J$:JRV.:G1C1 : 1QJVJ V` 0V`:CC%1CR1J$V` ]VH 10VQ` Q` .:H1J$%1CR1J$:H:RV

1J1QQR %GI1 1QJVJRV`1J$ !:`H.5 1J1QQR %` 1J$:JRV.:G1C1 : 1QJVJ V` V` ]VH 10V``QICQ`1R:0VJ%V

1J1QQR %GI1 1QJVJRV`1J$ :`H.5 No dealer, salesman or other person has been authorized to give any information or to make any representations other than those contained in this Official Statement, and if given or made, such information or representations must not be relied upon as having been authorized by the Obligor, the Issuer or the Underwriter. This Official Statement does not constitute an offer to sell or a solicitation of an offer to buy any of the securities offered hereby in any state to any person to whom it is unlawful to make such offer in such state. Except where otherwise indicated, this Official Statement speaks as of its date. The information and expressions of opinion herein are subject to change without notice and neither the delivery of this Official Statement nor any sale hereunder will under any circumstances create any implication that there has been no change in the affairs of the Obligor 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 part of, its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information. The information contained in this Official Statement has been furnished by the Obligor, the Issuer, DTC and other sources that are believed to be reliable, but such information is not guaranteed as to accuracy or completeness by, and is not to be construed as a representation of, the Underwriter.

No registration statement relating to the Series 2017 Bonds has been filed with the Securities and Exchange Commission (“SEC”) or any state securities agency. The Series 2017 Bonds are not and will not be registered under the Securities Act of 1933, as amended, or under any state securities laws, and the Bond Indenture has not been and will not be qualified under the Trust Indenture Act of 1939 because of available exemptions therefrom. In making an investment decision, investors must rely on their own examination of the Obligor and the terms of the offering, including the merits and risks involved. The Series 2017 Bonds have not been approved or disapproved by the SEC or any state securities agency, nor has the SEC or any state securities agency passed upon the accuracy or adequacy of this Official Statement. Any representation to the contrary is a criminal offense.

In connection with this offering, the Underwriter may effect transactions that 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 without notice.

THE ISSUER HAS NOT REVIEWED OR APPROVED, AND DOES NOT REPRESENT OR WARRANT IN ANY WAY, THE ACCURACY OR COMPLETENESS OF ANY OF THE INFORMATION SET FORTH IN THIS OFFICIAL STATEMENT, INCLUDING THE APPENDICES HERETO, OTHER THAN THE STATEMENTS SET FORTH UNDER THE CAPTIONS “THE ISSUER,” AND “LITIGATION” (INSOFAR AS SUCH INFORMATION RELATES TO THE ISSUER).

CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS IN THIS OFFICIAL STATEMENT

Certain statements included or incorporated by reference in this Official Statement, including Appendix A and Appendix C, constitute “forward looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended. These statements are based upon a number of assumptions and estimates which are subject to significant uncertainties, many of which are beyond the control of the Obligor. The words “may,” “would,” “could,” “will,” “expect,” “anticipate,” “believe,” “intend,” “plan,” “estimate” and similar expressions are meant to identify these forward-looking statements.

The achievement of certain results or other expectations contained in such forward looking statements involves known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements described to be materially different from any future results, performance or achievements expressed or implied by such forward looking statements. The Obligor does not plan to issue any updates or revisions to those forward looking statements if or when its expectations, or events, conditions or circumstances on which such statements are based, do or do not occur.

TABLE OF CONTENTS

Page

SHORT STATEMENT ...... i The Issuer ...... i The Plan of Finance ...... ii Description of the Series 2017 Bonds ...... ii The Obligor and the Facilities ...... iii Security and Sources of Payment for the Series 2017 Bonds ...... iii Funds and Accounts ...... v Events of Default, Rights and Remedies under the Master Indenture ...... x Financial Statements ...... xi Financial Feasibility Study ...... xi Financial Reporting and Disclosure ...... xii Risk Factors ...... xiii The Principal Documents ...... xiii INTRODUCTION ...... 1 Purpose of this Official Statement ...... 1 Purpose of the Series 2017 Bonds ...... 1 Security and Sources of Payment for the Series 2017 Bonds ...... 2 THE ISSUER ...... 4 FINANCIAL FEASIBILITY STUDY ...... 5 THE OBLIGOR, THE PARENT AND THE FACILITIES ...... 5 PLAN OF FINANCE ...... 6 General ...... 6 Subordinated Debt ...... 6 ESTIMATED SOURCES AND USES OF FUNDS ...... 8 ANNUAL DEBT SERVICE REQUIREMENTS ...... 9 THE SERIES 2017 BONDS ...... 10 General; Book-Entry Only System ...... 10 Payment of Principal and Interest ...... 10 Transfers and Exchanges; Persons Treated as Owners ...... 11 Mandatory Sinking Fund Redemption ...... 12 Optional Redemption ...... 12 Mandatory Redemption upon Determination of Taxability ...... 13 Extraordinary Optional Redemption ...... 13 Optional Excess Proceeds Redemption...... 14 Partial Redemption; Selection of Bonds to be Redeemed ...... 14 Notice of Redemption ...... 14 SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2017 BONDS ...... 15 General ...... 15 Limited Obligations ...... 15 Debt Service Reserve Fund for the Series 2017 Bonds ...... 15

The Loan Agreement ...... 16 The Master Indenture ...... 16 The Mortgages ...... 18 Repair and Replacement Fund ...... 18 Events of Default under the Master Indenture; Exercise of Rights and Remedies Thereafter ...... 19 Certain Amendments to Bond Indenture and Master Indenture After an Event of Default ...... 22 Certain Covenants of the Obligor and any Future Members of the Obligated Group ...... 22 Revenue Fund ...... 27 RISK FACTORS ...... 29 General Risk Factors ...... 29 Limited Obligations ...... 30 The Mortgages ...... 31 Limits on Use of Condemnation and Casualty Proceeds arising from the Mortgaged Property ...... 32 Additional Indebtedness ...... 32 Management Fees and Subordination ...... 33 State Regulation; Rights of Residents ...... 33 Changing Capabilities of Home Health Care Technology; Impact on Demand for Facility ...... 34 Uncertainty of Occupancy and Resident Fee Collection ...... 34 Reimbursement from Third Parties ...... 35 Changes in Demand for Facilities ...... 35 Impact of Market Turmoil ...... 35 Feasibility Study ...... 36 Competition ...... 36 Labor Union Activity ...... 36 Additions to the Obligated Group ...... 37 Liquidation of Security May Not be Sufficient in the Event of a Default ...... 37 Availability of Remedies ...... 37 Bankruptcy ...... 37 Certain Matters Relating to Enforceability of the Master Indenture ...... 38 Limitations on Security Interest in Gross Revenues and Other Personal Property Collateral ...... 39 Environmental Matters ...... 40 Amendments to Documents ...... 40 Uncertainty of Investment Income ...... 42 Federal Tax Matters ...... 42 Market for the Series 2017 Bonds; Absence of Rating ...... 43 Health Care Risk Factors ...... 43 Other Possible Risk Factors ...... 49 FINANCIAL REPORTING AND CONTINUING DISCLOSURE ...... 50 Financial Reporting ...... 50 Continuing Disclosure ...... 52 FEASIBILITY CONSULTANT ...... 53 LITIGATION ...... 53 Issuer ...... 53 Obligor ...... 53

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LEGAL MATTERS ...... 53 TAX MATTERS ...... 54 General ...... 54 Changes in Federal and State Tax Law ...... 5 4 FINANCIAL STATEMENTS ...... 55 RATING ...... 55 UNDERWRITING ...... 55 MISCELLANEOUS ...... 55 CERTIFICATION ...... 56

Appendix A — CERTAIN INFORMATION ABOUT THE OBLIGOR AND THE COMMUNITY Appendix B — AUDITED FINANCIAL STATEMENTS Appendix C — FINANCIAL FEASIBILITY STUDY Appendix D — COPIES OF PROPOSED FORMS OF PRINCIPAL FINANCING DOCUMENTS Appendix E — PROPOSED FORM OF BOND COUNSEL OPINION Appendix F — BOOK-ENTRY ONLY SYSTEM Appendix G — FORM OF CONTINUING DISCLOSURE CERTIFICATE

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SHORT 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. The offering of the Series 2017 Bonds to potential investors is made only by means of this entire Official Statement. No person is authorized to detach this Short 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 Short Statement, see Appendix D - COPIES OF PROPOSED FORMS OF PRINCIPAL FINANCING DOCUMENTS hereto.

The Issuer

The Issuer is a body corporate and politic organized and existing under the Municipality Authorities Act, 53 Pa.C.S.A. §5601 et seq., as amended (the “Act”) of the Commonwealth of Pennsylvania (the “Commonwealth”) and created by a resolution adopted by the Board of County Commissioners of the County of Montgomery, Pennsylvania (the “County”). The Issuer was incorporated on October 1, 1968. The Issuer is governed by a board of six members.

The Series 2017 Bonds are being issued by the Issuer pursuant to the Act. The Issuer originally was formed for the purpose of acquiring, holding, constructing, equipping, furnishing, improving, maintaining, owning, leasing, either in the capacity of lessor or lessee, and operating hospital facilities or parts thereof in the County. On July 2, 1984, the Secretary of the Commonwealth issued a Certificate of Amendment to the Issuer under which the name of the Issuer was changed to “Montgomery County Higher Education and Health Authority” and the purposes of the Issuer were amended to enable the Issuer to participate in additional projects authorized by the Act. On October 24, 1985, the Secretary of the Commonwealth issued a Certificate of Amendment to the Issuer under which the purposes of the Issuer were amended to enable the Issuer to participate in such buildings, projects, facilities and parts thereof in such locations as the Board of County Commissioners of the County may direct, and as authorized by the Act, and to grant to the Issuer all of the powers granted by the Act. The Series 2017 Bonds are limited obligations of the Issuer as described under “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2017 BONDS - Limited Obligations.”

The Plan of Finance

The proceeds of the Series 2017 Bonds will be loaned to Pennsylvania LTC, Inc., a Pennsylvania non-profit corporation (the “Obligor” or the “Obligated Group Representative”), pursuant to a Loan Agreement, dated as of November 1, 2017 (the “Loan Agreement”), between the Issuer and the Obligor. The Obligor owns and operates the following senior nursing facilities: (i) Edgehill Nursing and Rehabilitation Center, a 60-bed nursing facility located in Glenside, Pennsylvania (the “Edgehill Facility”); and (ii) Linwood Nursing and Rehabilitation Center (formerly known as Mountain Rest Nursing Home), a 102-bed nursing facility located in Scranton, Pennsylvania (the “Linwood Facility”, and together with the Edgehill Facility, the “Facilities”). The Obligor will use the proceeds of the Series 2017 Bonds, together with certain other moneys, including an equity contribution from the Obligor, to finance: (i) the current refunding of the outstanding Horsham Industrial and Commercial Development Authority Health Care Facilities Refunding Revenue Bonds (Pennsylvania LTC, Inc. Project) Series 2007 (Tax-Exempt), issued in the original par amount of $7,265,000, the proceeds of which were applied to finance or refinance the acquisition of and capital expenditures with respect to the Edgehill Facility and the Linwood Facility; (ii) the demolition of one wing of the Linwood Facility and the construction, equipping and furnishing of a new 2-story, 46-bed replacement wing at the Linwood Facility; (iii) miscellaneous capital expenditures at the Facilities; (iv) the funding of a debt service reserve fund for the Series 2017 Bonds and capitalized interest on the Series 2017 Bonds; and (v) the payment of certain costs of issuing the Series 2017 Bonds (the “Project”). See “PLAN OF FINANCE” and “ESTIMATED SOURCES AND USES OF FUNDS” herein.

Description of the Series 2017 Bonds

Redemption. The Series 2017 Bonds are subject to optional, extraordinary and mandatory redemption prior to their stated maturity. See “THE SERIES 2017 BONDS” herein.

Denominations. The Series 2017 Bonds are issuable in the denominations of $25,000 and any integral multiple of $5,000 in excess thereof. See “THE SERIES 2017 BONDS” herein.

Registration, Transfers and Exchanges. The Series 2017 Bonds are issuable only as fully registered bonds in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York (“DTC”) and will be available to ultimate purchasers (“Beneficial Owners”) under the book- entry only system maintained by DTC, only through brokers and dealers who are, or act through, DTC Participants. Beneficial Owners will not be entitled to receive physical delivery of the Series 2017 Bonds. Transfers of ownership interests in the Series 2017 Bonds are to be accomplished by entries made on the books of DTC Participants acting on behalf of Beneficial Owners. See “BOOK-ENTRY ONLY SYSTEM” in Appendix F hereto.

Payments. Interest on the Series 2017 Bonds is payable on June 1 and December 1 of each year (each such date, an “Interest Payment Date”), commencing June 1, 2018. Payment of the principal of and interest on the Series 2017 Bonds will be made by the Bond Trustee directly to Cede & Co., as nominee of DTC, and will subsequently be disbursed to DTC Participants and thereafter by the DTC Participants to Beneficial Owners of the Series 2017 Bonds. See “BOOK-ENTRY ONLY SYSTEM” in Appendix F hereto.

Tax Exemption. In the opinion of Ballard Spahr LLP, Bond Counsel, interest on the Series 2017 Bonds is excludable from gross income for purposes of federal income tax, assuming continuing compliance with the requirements of the federal tax laws. Interest on the Series 2017 Bonds is not a preference item for purposes of either individual or corporate federal alternative minimum tax; however, interest paid to corporate holders of the Series 2017 Bonds may be indirectly subject to alternative

minimum tax under circumstances described under “TAX MATTERS” herein. Bond Counsel is also of the opinion that, under the laws of the Commonwealth of Pennsylvania, interest on the Series 2017 Bonds is exempt from Pennsylvania personal income tax and corporate net income tax, and the Series 2017 Bonds are exempt from personal property taxes in Pennsylvania. See “TAX MATTERS” herein.

The Obligor and the Facilities

Pennsylvania LTC, Inc. is a nonprofit corporation organized and existing under the laws of the Commonwealth and is an organization described under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the “Code”) by virtue of the exemption granted to Guardian (hereinafter defined). Incorporated on March 6, 1990, the Obligor currently owns: (i) the Linwood Facility; and (ii) the Edgehill Facility, each of which were existing facilities acquired by the Obligor in 1994. The Obligor is a single purpose entity with its activities limited to the ownership and operation of the Facilities.

The Obligor is an operating affiliate of The Guardian Foundation, Inc. (“Guardian”), a nonprofit corporation organized and existing under the laws of the Commonwealth and an organization described under Section 501(c)(3) of the Code. Guardian was organized for public charitable purposes to provide services to its affiliates, which are separately incorporated, to establish, acquire, own, and maintain nursing homes, hospitals, and related healthcare facilities, including retirement housing for seniors, and to operate such facilities through third-party management contracts. Guardian is currently the sole corporate member of 14 nonprofit affiliates, which operate 39 senior living and healthcare facilities across five (5) states, including PA-LTC, with over 1,750 resident units and program participants. Each affiliate facility is independently operated, and each affiliate retains its excess cash flow, which it reinvests as necessary to improve its facility and resident quality of care. Guardian is not obligated to provide financial support to its affiliates for any of their properties or activities and is not obligated with respect to the Series 2017 Bonds, and the revenues and assets of Guardian are not pledged or granted as security for the Series 2017 Bonds.

The Facilities are currently operated and managed by Genesis Eldercare Network Services, LLC (“Genesis Eldercare”), an affiliate of Genesis Healthcare Corporation (“Genesis”), which assumed management of the Facilities on July 10, 2008. Genesis, a skilled nursing and rehabilitation therapy provider, is headquartered in Kennett Square, Pennsylvania, and employs more than 80,000 individuals. Genesis currently manages more than 450 skilled nursing centers and assisted senior living communities. Genesis is not obligated with respect to the Series 2017 Bonds.

See “CERTAIN INFORMATION ABOUT THE OBLIGOR AND ITS FACILITIES” in Appendix A hereto.

Security and Sources of Payment for the Series 2017 Bonds

Limited Obligations of the Issuer. THE SERIES 2017 BONDS AND THE INTEREST THEREON ARE LIMITED OBLIGATIONS OF THE ISSUER, PAYABLE SOLELY FROM THE REPAYMENTS AND OTHER FUNDS PROVIDED PURSUANT TO THE BOND INDENTURE AND THE LOAN AGREEMENT AND SECURED BY THE COLLATERAL, REAL AND PERSONAL, PLEDGED BY THE OBLIGOR AS SECURITY THEREFOR. NEITHER THE GENERAL CREDIT OF THE ISSUER NOR THE GENERAL CREDIT OR TAXING POWER OF THE COUNTY, THE COMMONWEALTH NOR ANY OTHER POLITICAL SUBDIVISION THEREOF IS OR SHALL BE OBLIGATED TO PAY THE PRINCIPAL OF OR PREMIUM, IF ANY, OR INTEREST ON THE SERIES 2017 BONDS, AND SUCH BONDS SHALL NOT BE DEEMED OBLIGATIONS OF THE COUNTY, THE COMMONWEALTH OR ANY OTHER POLITICAL SUBDIVISION THEREOF. NEITHER THE FULL FAITH AND CREDIT NOR

iii

THE TAXING POWER OF THE COUNTY, THE COMMONWEALTH OR ANY OTHER POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF OR PREMIUM, IF ANY, OR THE INTEREST ON THE SERIES 2017 BONDS. THE ISSUER HAS NO TAXING POWER.

Bond Indenture. The Series 2017 Bonds will be issued under and will be equally and ratably secured under the Bond Indenture, pursuant to which the Issuer will assign and pledge to the Bond Trustee all of its right, title and interest in and to the Loan Agreement and the security granted thereunder and under the other Bond Documents including, but not limited to: (i) the hereinafter described Series 2017 Note relating to the Series 2017 Bonds (excluding the Unassigned Rights, as defined in the Loan Agreement); (ii) certain rights of the Issuer under the Loan Agreement (excluding the Unassigned Rights); (iii) such other property as may from time to time be pledged to the Bond Trustee as additional security for such Bonds or which may come into possession of the Bond Trustee pursuant to the terms of the Loan Agreement or the Series 2017 Note; and (iv) the funds and accounts created under the Bonds Indenture (except the Rebate Fund), including the money and investments in them.

Loan Agreement. Pursuant to the Loan Agreement, the Issuer will lend the proceeds of the Series 2017 Bonds (the “Loan”) to the Obligor, and the Obligor will agree to make loan payments sufficient, among other things, to pay in full when due all principal of, premium, if any, and interest on the Series 2017 Bonds and the administrative fees of the Bond Trustee, and to make payments as required to restore any deficiencies in the debt service reserve fund. See “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2017 BONDS - The Loan Agreement” herein and Appendix D - COPIES OF PROPOSED FORMS OF PRINCIPAL FINANCING DOCUMENTS hereto.

Master Indenture and the Series 2017 Note. The obligations of the Obligor to repay the Loan are unconditional general obligations of the Obligor and will be evidenced by a promissory note in the principal amount equal to the principal amount of the Series 2017 Bonds (the “Series 2017 Note”) issued under the Master Trust Indenture (the “Master Trust Indenture”), as supplemented by Supplemental Master Trust Indenture Number 1 (the “Supplemental Indenture”), each dated as of November 1, 2017 (the Master Trust Indenture and the Supplemental Indenture, collectively, the “Master Indenture”), and each between the Obligor and U.S. Bank National Association, as master trustee (the “Master Trustee”). The Issuer will assign its interest in the Series 2017 Note (excluding the Unassigned Rights) to the Bond Trustee. The Series 2017 Note will constitute a Master Obligation under the Master Indenture and will be secured equally and ratably with all other Master Obligations issued or to be issued under the Master Indenture (other than any Master Obligations issued as Subordinated Indebtedness). See “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2017 BONDS - The Master Indenture” herein and Appendix D - COPIES OF PROPOSED FORMS OF PRINCIPAL FINANCING DOCUMENTS hereto.

The Series 2017 Note will constitute an unconditional promise by each Obligated Group Member (as defined in the Master Indenture) to pay amounts sufficient to pay principal of (whether at maturity, by acceleration or call for redemption) and premium, if any, and interest on the Series 2017 Bonds. To secure the Master Obligations, the Obligor (i) will deliver the Mortgages (as defined below) and (ii) will grant a security interest: (a) in all their right, title and interest in and to any fund or account created under the Master Indenture, subject to the provisions thereof, including all moneys and investments therein and investment income thereon; and (b) in all the Gross Revenues of the Obligated Group, with certain limited exceptions. As of the date of this Official Statement, the Obligor is the only Obligated Group Member. The Obligor and each Obligated Group Member admitted in the future will be jointly and severally liable for the payment for all Master Obligations entitled to the benefits of the Master Indenture and will be subject to the financial and operating covenants thereunder. The Obligor does not currently anticipate the addition of any other Member to the Obligated Group.

Mortgages. To secure its obligations under the Series 2017 Note and with respect to other obligations as contemplated in the Master Indenture, the Obligor will deliver to the Master Trustee, (i) an Open-End Mortgage and Security Agreement dated as of the date of issuance of the Series 2017 Bonds, pursuant to which the Obligor will grant to the Master Trustee and its successors and assigns a lien on Obligor’s interest in the real property located in Glenside, Pennsylvania, as more particularly described therein and (ii) an Open-End Mortgage and Security Agreement dated as of the date of issuance of the Series 2017 Bonds, pursuant to which the Obligor will grant to the Master Trustee and its successors and assigns a lien on the Obligor’s interest in the real property located in Scranton, Pennsylvania (collectively, the “Mortgages”).

Pledge of Gross Revenues. In order to secure the payment of the principal of, premium, if any, and interest on the Series 2017 Note and the other Master Obligations issued under the Master Indenture, the Obligated Group Members will pledge, assign, confirm and grant a security interest unto the Master Trustee in the Gross Revenues of the Obligated Group Members as well as all moneys and securities from time to time held by the Master Trustee under the terms of the Master Indenture. See “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2017 BONDS - Revenue Fund” herein.

Funds and Accounts

Project Fund. A Project Fund will be established pursuant to the Bond Indenture for the payment of certain costs of the Project. See Appendix D - COPIES OF PROPOSED FORMS OF PRINCIPAL FINANCING DOCUMENTS hereto

Capitalized Interest Account in Project Fund. On the Issue Date of the Series 2017 Bonds, a portion of the equity contribution provided by the Obligor in the amount of $500,000∗ will be deposited in the Capitalized Interest Account of the Project Fund for the payment of interest on the Series 2017 Bonds through approximately November 15, 2018*. See Appendix D - COPIES OF PROPOSED FORMS OF PRINCIPAL FINANCING DOCUMENTS hereto.

Equity Account in Project Fund. On the Issue Date of the Series 2017 Bonds, a portion of the equity contribution provided by the Obligor will be deposited in the Equity Account of the Project Fund for the payment of costs of the Project. Amounts deposited into the Equity Account shall be used after all other amounts in the Project Fund have disbursed. See Appendix D - COPIES OF PROPOSED FORMS OF PRINCIPAL FINANCING DOCUMENTS hereto.

Debt Service Reserve Fund. As additional security for the Series 2017 Bonds, a debt service reserve fund (the “Reserve Fund”) will be established pursuant to the Bond Indenture and will be funded from a portion of the equity contribution provided by the Obligor and/or a portion of the Subordinated Guardian Loan (as defined in the Master Indenture). See “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2017 BONDS – Debt Service Reserve Fund for the Series 2017 Bonds” herein and Appendix D - COPIES OF PROPOSED FORMS OF PRINCIPAL FINANCING DOCUMENTS hereto.

Repair and Replacement Fund. A Repair and Replacement Fund will be established under the Master Indenture (the “Repair and Replacement Fund”) and will be funded from a portion of the equity contribution provided by the Obligor and/or a portion of the Subordinated Guardian Loan All moneys held in the Repair and Replacement Fund shall be trust funds under the terms of the Master Indenture for the benefit of all of the Master Obligations Outstanding under the Master Indenture (except as otherwise provided) and shall not be subject to lien or attachment of any creditor of any Member of the Obligated Group. Such moneys are held in trust and applied in accordance with the provisions of the Master

∗ Preliminary, subject to change.

Indenture and may be used to pay the cost of Capital Additions which are necessary, but are either unanticipated, extraordinary, or of a nonrecurring nature and shall be used to pay debt service on any Indebtedness of any Obligated Group Member prior to any amounts on deposit in any debt service reserve fund relating to such Indebtedness being used for such purpose.

Debt Service Coverage Ratio Covenant. Pursuant to the Master Indenture, each Obligated Group Member has covenanted to operate all of its Facilities (as defined in the Master Indenture) on a revenue producing basis and to charge such fees and rates for its Facilities and services and to exercise such skill and diligence, including obtaining payment for services provided, as to provide income from its Property together with other available funds sufficient to pay promptly all payments of principal and interest on its Indebtedness, all expenses of operation, maintenance and repair of its Property and all other payments required to be made by it under the Master Indenture to the extent permitted by law. Each Member has agreed that it will, from time to time as often as necessary and to the extent permitted by law, revise its rates, fees and charges in such manner as may be necessary or proper to comply with the provisions of the Master Indenture.

The Members have covenanted and agreed that the Obligated Group Representative will calculate the Historical Debt Service Coverage Ratio of the Obligated Group (i) for each Fiscal Year commencing with the Fiscal Year ending June 30, 2020, based on audited financial statements, and (ii) for each twelve (12) month period ending December 31, commencing with the twelve (12) month period ending December 31, 2020, based on audited financial statements for the four consecutive fiscal quarters ending with such December 31. In addition, the Accountant preparing the annual audited financial report of the Obligated Group is required to calculate the Historical Debt Service Coverage Ratio of the Obligated Group as of June 30 as part of the financial report. The Obligated Group Representative will deliver a copy of such calculation to the Persons to whom and within the time frame such report is required to be delivered under Section 4.15 thereof.

If the Historical Debt Service Coverage Ratio as of any June 30 or December 31 is less than 1.20 (but not less than 1.00), the Obligated Group Representative is required to, within 30 days after delivery of the Officer’s Certificate disclosing such deficiency, deliver an Officer’s Certificate approved by a resolution of the Governing Body of the Obligated Group Representative to the Master Trustee setting forth in reasonable detail the reasons for such deficiency and adopting a specific plan setting forth steps to be taken designed to increase such Historical Debt Service Coverage Ratio to at least 1.20.

If (i) the Obligated Group has not corrected the deficiency by the first June 30 or December 31 immediately subsequent to delivery of the Officer’s Certificate required in the preceding paragraph, or (ii) for any June 30 or December 31, the Historical Debt Service Coverage Ratio is less than 1.00, the Obligated Group Representative is required to, within 30 days after receipt of the Officer’s Certificate disclosing such deficiency, select a Consultant to make recommendations with respect to the rates, fees and charges of the Obligated Group and the Obligated Group’s methods of operation and other factors affecting its financial condition in order to increase such Historical Debt Service Coverage Ratio to at least 1.20. A copy of the Consultant’s report and recommendations, if any, is required to be filed with each Member and each Required Information Recipient within 60 days after the date such Consultant is actually engaged. Each Obligated Group Member is required to use the recommendations of the Consultant applicable to it to the extent feasible (as determined in the reasonable judgment of the Governing Body of such Member) and permitted by law.

The foregoing provisions notwithstanding, if the Historical Debt Service Coverage Ratio of the Obligated Group as of June 30 or December 31 does not meet the level required above, the Obligated Group is not obligated to select a Consultant to make such recommendations if a Consultant’s report was prepared less than two fiscal quarters prior to the current fiscal quarter (unless a majority in principal

amount of the Outstanding Master Obligations request a new Consultant’s report, which request may not be made more frequently than once every two fiscal quarters).

If the Obligated Group fails to achieve a Historical Debt Service Coverage Ratio of 1.20, but achieves a Historical Debt Service Coverage Ratio of at least 1.00 at the end of any Fiscal Year, such failure will not constitute a default or an Event of Default under the Master Indenture if the Obligated Group has taken all action necessary to comply with the procedures set forth above for preparing a report and adopting a plan and used the recommendations contained in such report to the extent feasible (as determined in the reasonable judgment of the Governing Body of the Obligated Group Representative) and permitted by law.

If the Obligated Group fails to achieve a Debt Service Coverage Ratio of at least 1.00 for any Fiscal Year, such failure shall constitute an Event of Default under the Master Indenture.

Notwithstanding any other provisions of the Master Trust Indenture, in the event that any Obligated Group Member incurs any Additional Indebtedness for any Capital Addition, the Debt Service Requirements on such Additional Indebtedness and the Revenues and Expenses relating to the Capital Addition financed with the proceeds of such Additional Indebtedness shall be excluded from the calculation of the Historical Debt Service Coverage Ratio of the Obligated Group until the first full Fiscal Year following the later of (i) the estimated completion of the Capital Addition being paid for with the proceeds of such Additional Indebtedness provided that such completion occurs no later than six months following the completion date for such Capital Addition set forth in the Consultant’s report described in paragraph (A) below, or (ii) if the Capital Addition being paid for with the proceeds of such Additional Indebtedness includes independent living, assisted living or skilled nursing facilities, the first full Fiscal Year in which Stable Occupancy is achieved, which Stable Occupancy shall be projected in the report of the Consultant referred to in paragraph (A) below to occur no later than during the fifth full Fiscal Year following the incurrence of such Additional Indebtedness, or (iii) the end of the fifth full Fiscal Year after the incurrence of such Additional Indebtedness, if the following conditions are met:

(A) there is delivered to the Master Trustee a report or opinion of a Consultant to the effect that the Projected Debt Service Coverage Ratio for the first full Fiscal Year following the later of (1) the estimated completion of the Capital Addition being paid for with the proceeds of such Additional Indebtedness, or (2) if the Capital Addition being paid for with the proceeds of such Additional Indebtedness includes independent living, assisted living or skilled nursing facilities, the first full Fiscal Year following the year in which Stable Occupancy is achieved, which Stable Occupancy shall be projected to occur no later than during the fifth full Fiscal Year following the incurrence of such Additional Indebtedness, will be not less than 1.20 after giving effect to the incurrence of such Additional Indebtedness and the application of the proceeds thereof; provided further, however, that in the event that a Consultant shall deliver a report to the Master Trustee to the effect that state or federal laws or regulations or administrative interpretations of such laws or regulations then in existence do not permit or by their application make it impracticable for Members to produce the required ratio, then such ratio shall be reduced to the highest practicable ratio then permitted by such laws or regulations but in no event less than 1.00; provided further, however, that in the event a Consultant’s report is not required to incur such Additional Indebtedness, the Obligated Group may deliver an Officer’s Certificate to the Master Trustee in lieu of the Consultant’s report described in this paragraph (A); and

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Historical Debt Service Coverage Ratio of the Obligated Group at the end of each Fiscal Year and demonstrating that such Historical Debt Service Coverage Ratio is not less than 1.00, such Historical Debt Service Coverage Ratio to be computed without taking into account (1) the Additional Indebtedness to be incurred if (x) the interest on such Additional Indebtedness during such period is funded from proceeds thereof or other funds of the Member then on hand and available therefor, and (y) no principal of such Additional Indebtedness is payable during such period, and (2) the Revenues to be derived from the Capital Addition to be financed from the proceeds of such Additional Indebtedness.

See “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2017 BONDS - Certain Covenants of the Obligor and any Future Members of the Obligated Group – Debt Service Coverage Ratio Covenant.”

Liquidity Covenant. The Master Indenture requires that the Obligated Group calculate the Days Cash on Hand of the Obligated Group as of June 30 and December 31 of each fiscal year (each such date being a “Testing Date”), commencing December 31, 2017. The Obligated Group is required to deliver an Officer’s Certificate setting forth such calculation as of each Testing Date to the Master Trustee not less than 45 days after such Testing Date. In addition, the Accountant preparing the annual audited financial report of the Obligated Group is required to calculate Days Cash on Hand as of June 30 as part of the financial report. Each Obligated Group Member is required to conduct its business so that on each Testing Date the Obligated Group shall have no less than the number of Days Cash on Hand (the “Liquidity Requirement”) shown below for the Testing Dates shown below.

Testing Date Number of Days Cash on Hand December 31, 2017 and June 30, 2018 30 December 31, 2018 and June 30, 2019 30 December 31, 2019 and June 30, 2020 35 December 31, 2020 and June 30, 2021 35 December 31, 2021 and each Testing Date thereafter 40

If the Days Cash on Hand as of any Testing Date is less than the Liquidity Requirement, the Obligated Group Representative shall, within 30 days of delivery of the Officer’s Certificate disclosing such deficiency, deliver an Officer’s Certificate approved by a resolution of the Governing Body of the Obligated Group Representative to the Master Trustee, setting forth in detail the reasons for such deficiency and adopting a specific plan setting forth steps designed to improve the Obligated Group’s Days’ Cash on Hand to meet or exceed the Liquidity Requirement for future Testing Dates.

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

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The Obligated Group shall not be required to cause the Consultant’s report referred to in this paragraph to be prepared if a Consultant’s report referred to above was prepared for the Testing Date prior to the current Testing Date and the Obligated Group provides to the Master Trustee and each Related Bond Trustee an Opinion of Counsel to the effect that the applicable laws and regulations underlying the last Consultant’s report have not changed in any material way.

Notwithstanding any other provision of the Master Indenture, failure of the Obligated Group to achieve the required Liquidity Requirement for any Testing Date will not constitute a default or an Event of Default under the Master Indenture if the Obligated Group has taken all action necessary to comply with the procedures set forth above for adopting a plan and used the recommendations contained in such plan or Consultant’s report to the extent feasible (as determined in the reasonable judgment of the Governing Body of such Member) and permitted by law.

See “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2017 BONDS - Certain Covenants of the Obligor and any Future Members of the Obligated Group – Liquidity Covenant.”

Occupancy Requirements. The Obligated Group covenants in the Supplemental Indenture that, commencing with the fiscal quarter ending December 31, 2017 and ending with the first full fiscal quarter following Stable Occupancy with respect to the Linwood Facility (each such quarter, an “Occupancy Test Date”), the Obligor is required to use its best efforts to cause the Edgehill Facility to maintain an Average Occupancy for each such quarter of at least 90.3% and commencing with the fiscal quarter ending December 31, 2017 and ending with the first full fiscal quarter following Stable Occupancy with respect to the Linwood Facility, the Obligor is required to use its best efforts to cause the Linwood Facility to maintain an Average Occupancy (as defined below), so as to be in compliance with the following (each, an “Occupancy Requirement”; collectively, the “Occupancy Requirements”):

Occupancy Test Date Available Beds Occupancy Requirement 12/31/2017 58 92.2% 3/31/2018 58 92.2% 6/30/2018 58 92.2% 9/30/2018 58 92.2% 12/31/2018 102 62.0% 3/31/2019 102 75.1% 6/30/2019 102 85.3% 9/30/2019 102 89.2% 12/31/2019 and 102 89.2% thereafter until Stable Occupancy

If the occupancy of the Linwood Facility or the Edgehill Facility as of any Occupancy Test Date is less than the Occupancy Requirement, the Obligor shall, within 30 days of delivery of the Officer’s Certificate disclosing such deficiency, deliver (a) an occupancy report prepared by management that includes the following information: (i) the percentage occupancy of the Linwood Facility or the Edgehill Facility, as applicable and (ii) the number of vacancies and occupancies for the applicable Facility during the immediately preceding fiscal quarter and on an aggregate basis; (b) a forecast, prepared by management of the Obligor, of the number of units that are part of the applicable Facility expected to be occupied in the fiscal quarter immediately succeeding the fiscal quarter with respect to which the report is being prepared; and (c) a description of the admissions development plan of the Obligor

Occupancy Test Date, the Obligated Group Representative shall, within 30 days after delivery of the Officer’s Certificate disclosing such deficiency, engage a Consultant, at the Obligated Group’s expense, setting forth in detail the reasons for such deficiency and preparing a report, to be delivered within 60 days of the engagement of the Consultant, recommending steps designed to improve the occupancy of the applicable Facility to meet or exceed the Occupancy Requirement; provided, however, that no such report shall be required if a report has been delivered with respect to either of the two immediately preceding testing dates for the Occupancy Requirement. Each Obligated Group Member shall follow the recommendations of the Consultant applicable to it to the extent feasible (as determined in the reasonable judgment of the Governing Body of the Obligated Group Representative) and permitted by law.

Notwithstanding any other provision of this Master Trust Indenture, failure of the Obligor to achieve the required Occupancy Requirement for any Occupancy Test Date shall not constitute a default or an Event of Default under the Master Trust Indenture if the Obligor (i) takes all action necessary to comply with the procedures in Section 4.27 of the Master Trust Indenture for retaining a Consultant and (ii) follows the recommendation of the Consultant in accordance with this Section 4.01 of the Supplemental Indenture.

See “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2017 BONDS - Certain Covenants of the Obligor and any Future Members of the Obligated Group – Occupancy Requirements.”

Incurrence of Indebtedness. Pursuant to the Master Indenture, the Obligated Group agrees to restrictions on the incurrence of additional indebtedness, as more fully described under the captions “SECURITY FOR THE SERIES 2017 BONDS – Incurrence of Additional Indebtedness” herein and Appendix D - COPIES OF PROPOSED FORMS OF PRINCIPAL FINANCING DOCUMENTS hereto. To the extent that the conditions provided in the Master Indenture are met, such indebtedness may be secured on a parity basis with the Series 2017 Note.

Events of Default, Rights and Remedies under the Master Indenture

The Master Indenture sets forth the circumstances under which an Event of Default (as defined therein) may be declared with respect to a Master Obligation, which include, but are not limited to: (i) the failure to pay, when due, principal of (or premium, if any) or interest on any Master Obligation beyond any applicable grace period; (ii) the failure to duly observe or perform covenants or agreements set forth in the Master Indenture beyond any applicable notice, grace or cure period; (iii) certain involuntary insolvency events of an Obligated Group Member that last beyond any applicable cure period; (iv) certain voluntary insolvency events; (v) the failure to pay or make provision for payment with respect to any other recourse indebtedness of an Obligated Group Member (other than Subordinated Indebtedness owed to an Affiliate of the Obligated Group Member) having a principal balance of not less than $250,000 and the continuance of such failure beyond the applicable grace period, if any; (vi) the Master Trustee has received written notice that an event of default, as therein defined, under any instrument under which Master Obligations may be incurred or secured, including, without limitation, Related Bond Indentures, Related Loan Agreements, Credit Facilities, the Mortgages or other documents delivered in connection with the issuance of Related Bonds, has occurred and is continuing beyond the applicable period of grace, if any; or (vii) the Historical Debt Service Coverage Ratio for any Fiscal Year is less than 1.00. See Appendix D - COPIES OF PROPOSED FORMS OF PRINCIPAL FINANCING DOCUMENTS hereto.

The Master Trust Indenture generally provides that, during the continuance of an Event of Default, the Master Trustee may, and at the direction of the Holders of not less than twenty-five (25%) in aggregate principal amount of the Master Obligations then Outstanding, shall declare the principal of all the Master Obligations to be due and payable immediately, and upon such declaration such principal shall

become immediately due and payable. See “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2017 BONDS – Events of Default under the Master Indenture; Exercise of Rights and Remedies Thereafter” herein.

Financial Statements

Audited financial statements of the Obligor for the fiscal years ended June 30, 2017, 2016, 2015 and 2014 are included in “AUDITED FINANCIAL STATEMENTS” in Appendix B hereto. Summaries of the unaudited financial information for the Obligor for the two months ended August 31, 2016 and August 31, 2017 are included in Appendix A. Mayer Hoffman McCann P.C., the independent auditor, has performed certain procedures on the unaudited financial statements of the Obligor included in Appendix A and has consented to the inclusion of the audited financial statements of the Obligor in Appendix B. See “FINANCIAL STATEMENTS” herein.

Financial Feasibility Study

Payment of the Series 2017 Bonds is primarily dependent on revenues to be generated by the existing Facilities, as improved by the Project. A description of certain risks affecting the generation of such revenues is set forth in the section herein “RISK FACTORS.” Baker Tilly Virchow Krause, LLP, independent certified public accountants, has prepared a financial feasibility study dated October 6, 2017 (the “Feasibility Study”), for the existing Facilities, including an examination of the financial forecast of the Obligor’s management. See the section herein “FINANCIAL FEASIBILITY STUDY.” The Feasibility Study is included in its entirety as Appendix C hereto, and includes the financial forecast of the Obligor’s management for the five years ending June 30, 2022. The table on the following page shows the forecasted Historical Debt Service Coverage Ratio for the five years ending June 30, 2022 and the forecasted Days’ Cash on Hand as of the end of such period. The information on the table below has been extracted from the Financial Feasibility Study included in Appendix C hereto. As stated in the Feasibility Study, there will be differences between the forecasted data and actual results because events and circumstances frequently do not occur as expected, and those differences may be material. The achievement of any financial forecast is dependent upon future events, many of which are beyond the Obligor’s control and the occurrence of which cannot be assured. See the section herein “RISK FACTORS.” The Feasibility Study should be read in its entirety, including all management’s notes and assumptions set forth therein.

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Pennsylvania LTC, Inc. Forecasted Schedule of Debt Service Coverage Ratio and Days Cash on Hand As of and For Each of the Years Ending June 30, 2018 - 2022 (In thousands of dollars)

2018 2019 2020 2021 2022

Debt Service Coverage Ratio (1) Revenues available for debt service: Revenues less than expenses $ (191) $ (285) $ (209) Depreciation 810 787 785 Interest 756 748 739 Revenues available for debt service $ 1,375 $ 1,250 $ 1,315 Maximum annual debt service, 2017 Bonds $ 912 $ 912 $ 912 Debt service coverage ratio 1.51 1.37 1.44 Days Cash on Hand (2) Total expenses $ 12,785 $ 14,261 $ 16,147 $ 16,386 $ 16,667 Less: Depreciation 571 699 810 787 785 Amortization of debt issuance costs 17 22 22 22 22 Loss on refunding 226 - - - - Provision for doubtful collections 97 121 162 164 169 Total cash operating expenses 11,874 13,419 15,153 15,413 15,691 365/366 days 365 365 366 365 365 Daily cash operating expenses $ 33 $ 37 $ 41 $ 42 $ 43 Unrestricted cash and investments $ 1,997 $ 1,300 $ 1,474 $ 1,673 $ 1,918 Days cash on hand 61 35 36 40 45

Notes: (1) The debt service coverage ratio is calculated by dividing revenues available for debt service by maximum annual debt service for the Series 2017 Bonds (2) Days cash on hand is calculated by dividing unrestricted cash and investments by daily cash operating expenses.

The foregoing table should be considered in conjunction with the entire Financial Feasibility Study, included herein as Appendix C, to understand the Obligor’s financial requirements and the assumptions upon which the Financial Feasibility Study is based. The realization of any financial forecast depends on future events the occurrence of which cannot be assured. Therefore, the actual results realized may vary from the Financial Feasibility Study. Such variation could be material. See Appendix C hereto.

Financial Reporting and Disclosure

Financial Reporting. The Master Indenture requires that the Obligated Group Representative provide to each Required Information Recipient certain financial information on a quarterly and annual

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basis. For a description of the financial information required to be provided, see “FINANCIAL REPORTING AND CONTINUING DISCLOSURE – Financial Reporting” herein.

Continuing Disclosure. Given the sources of repayment for the Series 2017 Bonds and the Issuer’s limited obligation in respect thereof, the Issuer has determined that its financial and operating data are not material to a decision to purchase, hold or sell the Series 2017 Bonds. Consequently, the Issuer will not provide any such information. The Obligor, however, has agreed to make certain financial information and operating data available to holders of the Series 2017 Bonds as described under “FINANCIAL REPORTING AND CONTINUING DISCLOSURE—Financial Reporting”. The Obligor is solely responsible for providing such disclosure, and the Issuer shall have no responsibility or liability to the holders of the Series 2017 Bonds or any other person for the making, monitoring or content of such disclosures. See “FINANCIAL REPORTING AND CONTINUING DISCLOSURE - Continuing Disclosure” herein and Appendix G for further information.

Risk Factors

The Series 2017 Bonds are not rated. An investment in the Series 2017 Bonds involves a certain degree of risk including those risks set forth under the heading “RISK FACTORS” herein. A prospective bondholder is advised to read “Security and Sources of Payment for the Series 2017 Bonds” and “RISK FACTORS” for a discussion of certain risk factors which 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, careful evaluation should be made of certain factors that may adversely affect the ability of the Obligor or any future obligor to generate sufficient revenues to pay expenses of operation, including the principal of, premium, if any, and interest on the Series 2017 Bonds.

The Principal Documents

The descriptions and summaries of various documents set forth in this Official Statement do not purport to be comprehensive or definitive, and reference is made to each document for complete details of all terms and conditions. All statements herein are qualified in their entirety by the terms of each such document. Copies of the drafts of the Bond Indenture, the Loan Agreement, the Master Trust Indenture and the Supplemental Indenture are attached hereto in Appendix D, and the Continuing Disclosure Certificate is attached hereto as Appendix G. Following delivery of the Series 2017 Bonds, copies of the executed originals thereof may be examined at the designated corporate trust office of the Bond Trustee.

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OFFICIAL STATEMENT RELATING TO THE

$12,555,000∗ MONTGOMERY COUNTY HIGHER EDUCATION AND HEALTH AUTHORITY Tax-Exempt Revenue Bonds (Pennsylvania LTC, Inc. Project) Series of 2017

INTRODUCTION

Purpose of this Official Statement

This Official Statement, including the cover page, Short Statement and Appendices hereto, is provided to furnish information with respect to the issuance, sale and delivery by Montgomery County Higher Education and Health Authority (the “Issuer”) of its $12,555,000* Tax-Exempt Revenue Bonds (Pennsylvania LTC, Inc. Project) Series of 2017 (the “Series 2017 Bonds”).

The Series 2017 Bonds are being issued pursuant to the provisions of Municipality Authorities Act, 53 Pa.C.S.A. §5601 et seq., as amended (the “Act”), in conformity with the provisions, restrictions and limitations thereof and pursuant to a Bond Trust Indenture, dated as of November 1, 2017 (the “Bond Indenture”), between the Issuer and U.S. Bank National Association, as bond trustee (the “Bond Trustee”).

Certain capitalized terms used herein are defined in Appendix D - COPIES OF PROPOSED FORMS OF PRINCIPAL FINANCING DOCUMENTS hereto. The descriptions and summaries of various documents hereinafter set forth do not purport to be comprehensive or definitive, and reference is made to each document for the complete details of its terms and conditions. All statements herein are qualified in their entirety by reference to each document.

Purpose of the Series 2017 Bonds

The proceeds of the Series 2017 Bonds will be loaned to Pennsylvania LTC, Inc., a Pennsylvania nonprofit corporation (the “Obligor” or the “Obligated Group Representative”), pursuant to a Loan Agreement, dated as of November 1, 2017 (the “Loan Agreement”), between the Issuer and the Obligor. The Obligor currently owns: (i) Edgehill Nursing and Rehabilitation Center, a 60-bed nursing facility located in Glenside, Pennsylvania (the “Edgehill Facility”); and (ii) Linwood Nursing and Rehabilitation Center (formerly known as Mountain Rest Nursing Home), a 102-bed nursing facility located in Scranton, Pennsylvania (the “Linwood Facility”, and together with the Edgehill Facility, the “Facilities”), each of which were existing facilities acquired by the Obligor in 1994.

The proceeds of the Series 2017 Bonds will be used, together with other available moneys described herein, including an equity contribution from the Obligor, to finance (i) the current refunding of the outstanding Horsham Industrial and Commercial Development Authority Health Care Facilities Refunding Revenue Bonds (Pennsylvania LTC, Inc. Project) Series 2007 (Tax-Exempt), issued in the original par amount of $7,265,000 (the “2007 Bonds”), the proceeds of which were applied to finance or refinance the acquisition of and capital expenditures with respect to the Edgehill Facility and the Linwood

∗ Preliminary, subject to change.

Facility; (ii) the demolition of one wing of the Linwood Facility and the construction, equipping and furnishing of a new 2-story, 46-bed replacement wing at the Linwood Facility (the “Linwood Capital Project”); (iii) miscellaneous capital expenditures at the Edgehill and the Linwood Facilities; (iv) the funding of a debt service reserve fund for the Series 2017 Bonds and capitalized interest on the Series 2017 Bonds; and (v) the payment of certain costs of issuing the Series 2017 Bonds (collectively, the “Project”). See “PLAN OF FINANCE” and “ESTIMATED SOURCES AND USES OF FUNDS” herein.

Risk Factors. An investment in the Series 2017 Bonds involves a significant degree of risk. Certain risks are inherent in the successful operation of facilities such as the Edgehill Facility and the Linwood Facility on a basis such that sufficient cash will be available to pay interest on and to retire indebtedness. See “RISK FACTORS” below for a discussion of certain of these risks. A prospective bondholder is advised to read the entire Official Statement, including the appendices hereto, before making an investment decision to purchase Bonds. Special reference is made to “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2017 BONDS” and “RISK FACTORS” herein for a discussion of certain risk factors which should be considered in connection with an investment in the Series 2017 Bonds.

Security and Sources of Payment for the Series 2017 Bonds

Bond Indenture. The Series 2017 Bonds will be issued under and will be equally and ratably secured under the Bond Indenture, pursuant to which the Issuer will assign and pledge to the Bond Trustee all of its right, title and interest in and to the Loan Agreement and the security granted thereunder and under the other Bond Documents including: (i) the hereinafter described Series 2017 Note relating to the Series 2017 Bonds (excluding the Unassigned Rights, as defined in the Loan Agreement); (ii) certain rights of the Issuer under the Loan Agreement (excluding the Unassigned Rights); (iii) such other property as may from time to time be pledged to the Bond Trustee as additional security for such Bonds or which may come into possession of the Bond Trustee pursuant to the terms of the Loan Agreement or the Series 2017 Note; and (iv) the funds and accounts created under the Bonds Indenture (except the Rebate Fund), including the money and investments in them.

Loan Agreement. Pursuant to the Loan Agreement, the Obligor will agree to make loan payments sufficient, among other things, to pay in full when due all principal of, premium, if any, and interest on the Series 2017 Bonds and the administrative fees of the Bond Trustee, and to make payments as required to restore any deficiencies in the Reserve Fund (as defined herein). See “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2017 BONDS - The Loan Agreement” herein and Appendix D - COPIES OF PROPOSED FORMS OF PRINCIPAL FINANCING DOCUMENTS hereto.

Mortgages. To secure its obligations under the Series 2017 Note and with respect to other obligations as contemplated in the Master Indenture, the Obligor will deliver to the Master Trustee, (i) an Open-End Mortgage and Security Agreement dated as of the date of issuance of the Series 2017 Bonds, pursuant to which the Obligor will grant to the Master Trustee and its successors and assigns a lien on the Obligor’s interest in the real property located in Glenside, Pennsylvania, as more particularly described therein and (ii) an Open-End Mortgage and Security Agreement dated as of the date of issuance of the Series 2017 Bonds, pursuant to which the Obligor will grant to the Master Trustee and its successors and assigns a lien on the Obligor’s interest in the real property located in Scranton, Pennsylvania (collectively, the “Mortgages”).

Pledge of Gross Revenues. In order to secure the payment of the principal of, premium, if any, and interest on the Series 2017 Note and any other Master Obligations issued under the Master Indenture, the Obligated Group Members will pledge, assign, confirm and grant a security interest unto the Master Trustee in the Gross Revenues of the Obligated Group Members as well as all moneys and securities from time to time held by the Master Trustee under the terms of the Master Indenture. See “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2017 BONDS - Revenue Fund” herein.

∗ Preliminary, subject to change.

THE ISSUER

The Issuer is a body corporate and politic organized under the Act by a resolution adopted by the Board of County Commissioners of the County of Montgomery, Pennsylvania (the “County”). On October 1, 1968, the Secretary of the Commonwealth of Pennsylvania (the “Commonwealth”) issued a Certificate of Incorporation to the Issuer under the name “Montgomery County Hospital Authority.” The Issuer originally was formed for the purpose of acquiring, holding, constructing, equipping, furnishing, improving, maintaining, owning, leasing, either in the capacity of lessor or lessee, and operating hospital facilities or parts thereof in the County. On July 2, 1984, the Secretary of the Commonwealth issued a Certificate of Amendment to the Issuer under which the name of the Issuer was changed to “Montgomery County Higher Education and Health Authority” and the purposes of the Issuer were amended to enable the Issuer to participate in additional projects authorized by the Act. On October 24, 1985, the Secretary of the Commonwealth issued a Certificate of Amendment to the Issuer under which the purposes of the Issuer were amended to enable the Issuer to participate in such buildings, projects, facilities and parts thereof in such locations as the Board of County Commissioners of the County may direct, and as authorized by the Act, and to grant to the Issuer all of the powers granted by the Act.

Members of the Issuer

The governing body of the Issuer is a board consisting of six members appointed by the Board of County Commissioners of the County. Members of the Issuer are appointed for staggered five-year terms and may be reappointed to an unlimited number of successive terms. All board members serve to December 31 of the year indicated and thereafter until replaced or reappointed. Current members of the Issuer, their offices, principal occupations and terms of office are as follows:

Term Members Office Occupation Expires

James A. Konnick Chairman CFO, Unlimited Restoration, Inc. 2017

Jeffrey Bevington Vice Chairman Retired 2016*

Robert L. Williams, Jr. Assistant Secretary COO, Robert Williams Funeral Home, Inc. 2016*

James H. Shacklett, III Assistant Secretary CEO, National Label Company 2015*

J. Mark Lankford Assistant Secretary Heritage Coach Company 2015*

Harriet Weiss Assistant Secretary CEO, CRW Graphics 2017 ______*Serves until a successor is appointed.

The address of the Issuer is 1800 East High Street, Suite 250, Pottstown, PA 19464.

Financings of the Issuer

The Issuer has participated in the past and intends to participate from time to time in the future in additional financing transactions for other health care and higher education facilities and projects, and for other projects permitted under the Act, and in connection therewith may issue bonds or notes which will be limited obligations of the Issuer, to be solely payable from and secured by revenues derived from such

projects. The Issuer may also from time to time enter into refinancing transactions for obligations previously issued.

THE SERIES 2017 BONDS AND THE INTEREST THEREON ARE LIMITED OBLIGATIONS OF THE ISSUER, PAYABLE SOLELY FROM THE REPAYMENTS AND OTHER FUNDS PROVIDED PURSUANT TO THE BOND INDENTURE AND THE LOAN AGREEMENT AND SECURED BY THE COLLATERAL, REAL AND PERSONAL, PLEDGED BY THE OBLIGOR AS SECURITY THEREFOR. NEITHER THE GENERAL CREDIT OF THE ISSUER NOR THE GENERAL CREDIT OR TAXING POWER OF THE COUNTY, THE COMMONWEALTH NOR ANY OTHER POLITICAL SUBDIVISION THEREOF IS OR SHALL BE OBLIGATED TO PAY THE PRINCIPAL OF OR PREMIUM, IF ANY, OR INTEREST ON THE SERIES 2017 BONDS, AND SUCH BONDS SHALL NOT BE DEEMED OBLIGATIONS OF THE COUNTY, THE COMMONWEALTH OR ANY OTHER POLITICAL SUBDIVISION THEREOF. NEITHER THE FULL FAITH AND CREDIT NOR THE TAXING POWER OF THE COUNTY, THE COMMONWEALTH OR ANY OTHER POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF OR PREMIUM, IF ANY, OR THE INTEREST ON THE SERIES 2017 BONDS. THE ISSUER HAS NO TAXING POWER. The Issuer has not independently verified, reviewed or approved, and does not make any representations with respect to, the accuracy or completeness of any of the information set forth in this Official Statement, other than in this section and the sections entitled “SHORT STATEMENT – The Issuer” and “LITIGATION – Issuer.” The Issuer makes no representation, direct or indirect, that the Project will be able to generate revenues to pay debt service on the Series 2017 Bonds and operating expenses of the Facilities.

FINANCIAL FEASIBILITY STUDY

Attached as Appendix C is a financial feasibility study relating to the Obligor, including an examination from Baker Tilly Virchow Krause, LLP, independent certified public accountants (the “Feasibility Consultant”), on the financial forecast of the Obligor’s management contained in such study, dated October 6, 2017 (collectively, the “Feasibility Study”). The Feasibility Study was undertaken by the Feasibility Consultant at the request of the Obligor, and the Issuer assumes no responsibility therefor.

Management’s financial forecast contained in the Feasibility Study is based on assumptions made by management of the Obligor. As stated in such financial forecast, there will usually be differences between forecasted and actual results, because events and circumstances frequently do not occur as expected, and those differences may be material. In addition, the financial forecast is only for the five years ending June 30, 2022, and consequently, does not cover the whole period during which the Series 2017 Bonds may be outstanding. The Feasibility Study included herein as Appendix C should be read in its entirety, including all management’s notes and assumptions set forth therein.

THE OBLIGOR, THE PARENT AND THE FACILITIES

The Obligor is a nonprofit corporation organized and existing under the laws of the Commonwealth and is an organization described under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the “Code”) by virtue of the exemption granted to Guardian (hereinafter defined). Incorporated on March 6, 1990, the Obligor currently owns: (i) the Linwood Facility; and (ii) the Edgehill

Facility. The Obligor is a single purpose entity with its activities limited to the ownership and operation of the Facilities.

The Obligor is an operating affiliate of The Guardian Foundation, Inc. (“Guardian” or the “Parent”), a nonprofit corporation organized and existing under the laws of the Commonwealth and an organization described under Section 501(c)(3) of the Code. Guardian was organized for public charitable purposes to provide services to its affiliates, which are separately incorporated, to establish, acquire, own, and maintain nursing homes, hospitals, and related healthcare facilities, including retirement housing for seniors, and to operate such facilities through third-party management contracts. Guardian is currently the sole corporate member of 14 nonprofit affiliates, which operate 39 senior living and healthcare facilities across five (5) states, including PA-LTC, with over 1,750 resident units and program participants. Each affiliate facility is independently operated, and each affiliate retains its excess cash flow, which it reinvests as necessary to improve its facility and resident quality of care. Guardian is not obligated to provide financial support to its affiliates for any of their properties or activities and is not obligated with respect to the Series 2017 Bonds, and the revenues and assets of Guardian are not pledged or granted as security for the Series 2017 Bonds.

The Linwood Facility and the Edgehill Facility (along with a third nursing facility that is no longer owned by the Obligor) were each existing facilities acquired by the Obligor in 1994. The Facilities are currently operated and managed by Genesis Eldercare Network Services, LLC, an affiliate of Genesis Healthcare Corporation (“Genesis”), which assumed management of the Facilities on July 10, 2008. Genesis, a skilled nursing and rehabilitation therapy provider, is headquartered in Kennett Square, Pennsylvania, and employs approximately 80,000 individuals. Genesis currently manages more than 450 skilled nursing centers and assisted senior living communities. Genesis is not obligated with respect to the Series 2017 Bonds.

For more information regarding the Obligor, the Parent, Genesis and the Facilities, see Appendix A hereto.

PLAN OF FINANCE

General

The proceeds of the Series 2017 Bonds will be used, together with other available moneys described herein, to finance the Project.

Upon issuance of the Series 2017 Bonds, a portion of the proceeds thereof, together with other available amounts, will be deposited with BOKF, National Association (formerly known as the Bank of Oklahoma, National Association), as trustee with respect to the 2007 Bonds, in an amount sufficient to refund the 2007 Bonds at a redemption price equal to 102% of the principal amount plus accrued interest, on the date of issuance of the Series 2017 Bonds.

Subordinated Debt

On the date of issuance of the Series 2017 Bonds, the Obligor intends to borrow $1,000,000∗ (the “Subordinated Loan”) from Guardian pursuant to the terms of the Subordinate Revolving Line of Credit Loan and Security Agreement (the “Subordinated Loan Agreement”) and the Subordinate Revolving

∗ Preliminary, subject to change.

Secured Promissory Note (the “Subordinated Note”) each between the Obligor and Guardian for purposes of funding a portion of the costs of the Project.

The Subordinated Loan will be in the form of a line of credit that will be fully drawn on the date of issuance of the Series 2017 Bonds and will be repaid and be available to be redrawn from time to time thereafter. The Subordinated Loan will bear interest at a fixed rate of 2.5%, with principal and interest payable no more frequently than annually pursuant to the terms of the Master Trust Indenture, subject to the terms below. As security for the Subordinated Loan, the Obligor has granted and assigned to Guardian, a subordinate security interest in, and lien on, all of the Obligor’s right, title and interest to its accounts and receivables and other collateral described therein. The Subordinated Loan Agreement and the Subordinated Note (including all interest, principal, principal pre-payments, late payment fees, expenses of Guardian and any other amount due thereunder) are subject and subordinated in right of payment to the Series 2017 Bonds and any other indebtedness incurred by the Obligor under the Master Trust Indenture, other than Subordinated Indebtedness (as defined in the Master Trust Indenture) incurred by the Obligor under the Master Trust Indenture.

Pursuant to the terms of the Subordinated Loan Agreement and the Subordinated Note payments will only be made on the Subordinated Loan to the extent that, after giving effect to such payment the Obligor is in compliance with the following: (i) the Debt Service Coverage Ratio is at least equal to 1.20; (ii) the Days Cash on Hand is at least equal to the Liquidity Requirement; (iii) there exists no Event of Default under the Series 2017 Bonds, the Master Indenture, the Bond Indenture, the Loan Agreement or the Mortgage or an event or omission, which, with the passage of time or the giving of notice, would constitute an Event of Default under the Series 2017 Bonds, the Master Indenture, the Bond Indenture, the Loan Agreement or the Mortgage; and (iv) pursuant to the Master Indenture, (A) the construction of the Linwood 2017 Project has been completed and (B) the Obligor is in compliance with the Occupancy Requirements set forth in the Supplemental Indenture. If any payment or payments cannot be timely made, such payments will remain an obligation of the Obligor and shall be deferred until such time as they are capable of being paid in compliance with the Subordinated Loan Agreement and the Subordinated Note.

An event of default shall occur under the Subordinated Loan if: (i) the Obligor has the ability to, but fails to, pay any amount due and owing under the Subordinated Loan Agreement or the Subordinated Note, including, but not limited to, any payment and/or interest on the Subordinated Loan, as and when the same shall become due and payable; (ii) any representation, warranty, certification or statement made by Obligor in connection with the Subordinated Loan shall prove to have been false or misleading in any respect when made or omitted to state a material fact necessary to make such representation, warranty, certification or statement not misleading in light of the circumstances under which it was furnished; (iii) certain bankruptcy proceedings shall be initiated or commenced with respect to Obligor; or (iv) any Event of Default shall occur under any of the Series 2017 Bonds, the Master Indenture, the Bond Indenture, the Loan Agreement or the Mortgage. Any event of default with respect to the Subordinated Loan shall not be an Event of Default with respect to the Series 2017 Bonds, and the Subordinated Loan may not be accelerated without the consent of the Holder of each Master Obligation Outstanding.

Guardian is not obligated to provide financial support to its affiliates for any of their properties or activities and is not obligated with respect to the Series 2017 Bonds, and the revenues and assets of Guardian are not pledged or granted as security for the Series 2017 Bonds.

ESTIMATED SOURCES AND USES OF FUNDS∗

The estimated sources and uses of funds in connection with the issuance of the Series 2017 Bonds are as follows:

SOURCES OF FUNDS

Series 2017 Bonds $12,555,000.00 Original Issue Premium/Discount ______2007 Bonds Funds 1,321,670.26 Equity Contribution (1) 4,047,943.00 Guardian Subordinated Loan Proceeds 1,000,000.00 Total $18,924,613.26

USES OF FUNDS

Project Fund(2) $10,432,399.00 Redemption of 2007 Bonds 6,334,500.00 Debt Service Reserve Fund(3) 911,640.02 Deposit to Capitalized Interest Account of 500,000.00 Project Fund(4) Repair and Replacement Fund 100,000.00 Costs of Issuance(5) 646,074.24 Total $18,924,613.26

______(1) Of this amount, $447,943.00 reflects construction costs paid by the Obligor prior to the date hereof. (2) Of this amount, $______has been spent prior to the closing of the Series 2017 Bonds. (3) The amount initially deposited to the Debt Service Reserve Fund will be funded from a portion of the equity contribution provided by the Obligor and a portion of the Subordinated Guardian Loan and represents the maximum annual debt service (principal and interest) on the Series 2017 Bonds for each bond year ending December 1, as calculated as of the Issue Date. (4) Amounts on deposit in the Capitalized Interest Account of the Project Fund will be funded from a portion of the equity contribution provided by Obligor and such deposit and earnings thereon are estimated to cover interest costs on the Series 2017 Bonds incurred during the period from the Issue Date through approximately November 15, 2018. (5) The Obligor estimates that bond issuance costs will approximate this amount and will include legal fees, accounting fees, Underwriter’s discount, feasibility study costs and expenses, printer fees and other costs associated with the issuance of the Series 2017 Bonds.

∗ Preliminary, subject to change.

ANNUAL DEBT SERVICE REQUIREMENTS

The following table sets forth the amounts required for the payment of principal of the Series 2017 Bonds at maturity or by mandatory sinking fund redemption and for the payment of interest on the Series 2017 Bonds for each Bond Year ending December 1.

Bond Year Ending December 1 Principal Interest 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 Total

THE SERIES 2017 BONDS

Specific information about the Series 2017 Bonds is contained below. Information about security for the Series 2017 Bonds is contained in “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2017 BONDS.”

General; Book-Entry Only System

The Bond Indenture provides that no recourse under or upon any obligation, covenant or agreement contained in the Bond Indenture, or in the Series 2017 Bonds, or for any claim based thereon, or under any judgment obtained against the Issuer or the Bond Trustee, or by the enforcement of any assessment or penalty or otherwise or by any legal or equitable proceeding by virtue of any constitution, rule of law or equity or statute or otherwise or under any other circumstances, under or independent of the Bond Indenture, will be had against any incorporator, member, director, officer or employee, as such, past, present or future of the Issuer or the Bond Trustee, or any incorporator, member, director, officer or employee of any successor corporation, as such, either directly or through the Issuer or the Bond Trustee, or any successor corporation, or otherwise, for the payment for or to the Issuer or any receiver thereof, or for or to the Bond Trustee as trustee for the Bondholders or otherwise, of any sum that may be due and unpaid by the Issuer upon the Series 2017 Bonds. Any and all personal liability of every nature, whether at common law or in equity, or by statute or by constitution or otherwise, of any such incorporator, member, director, officer or employee, as such, to respond by reason of any act or omission on his part or otherwise, for the payment for or to the Issuer or any receiver thereof, or for or to the Bond Trustee as trustee for the Bondholders or otherwise, of any sum that may remain due and unpaid upon the Series 2017 Bonds, is hereby expressly waived and released as a condition of and in consideration for the execution of the Bond Indenture and the issuance of the Series 2017 Bonds.

So long as DTC acts as securities depository for the Series 2017 Bonds, as described in Appendix F hereto, all references herein to “Owner,” “owner,” “Holder” or “holder” of any Series 2017 Bonds or to “Bondowner,” “Bondholder,” “bondowner” or “bondholder” are deemed to refer to Cede & Co., as nominee for DTC, and not to Participants, Indirect Participants or Beneficial Owners (as defined in Appendix F hereto).

So long as the Series 2017 Bonds are registered in the name of Cede & Co., as nominee of DTC, principal of, premium, if any, and interest on the Series 2017 Bonds will be paid as described in Appendix F hereto. The following information is subject in its entirety to the provisions described in Appendix F hereto.

The Series 2017 Bonds will be issued only in fully registered form without coupons in the denominations of $25,000 and any integral multiple of $5,000 in excess thereof. The Series 2017 Bonds will be dated their date of issuance and will accrue interest from the date of delivery, except as otherwise provided in the Bond Indenture. The Series 2017 Bonds will bear interest (based on a 360-day year of twelve 30-day months) at the rates set forth on the inside cover hereof, payable semiannually on June 1 and December 1 each year, commencing June 1, 2018 (each, an “Interest Payment Date”), and mature on the dates set forth on the inside cover page hereof.

Payment of Principal and Interest

Payment of principal of and interest on the Series 2017 Bonds will be made as described in Appendix F. In the event the book-entry system shall be discontinued for the Series 2017 Bonds, the following provisions shall pertain. Interest on each Series 2017 Bond shall be payable on each Interest Payment Date by check or draft mailed by first class mail on the date on which due to the person in whose

name such Bond is registered on the registration books of the Issuer maintained by the Bond Trustee at the close of business on the Regular Record Date (which is the fifteenth (15th) day of the month (whether or not a Business Day) next preceding each Interest Payment Date), except that any interest not so timely paid or duly provided for shall cease to be payable to the person who is the registered owner of such Bond as of the Regular Record Date, and shall be payable to the person who is the registered owner of such Bond at the close of business on a Special Record Date for the payment of such defaulted interest. Such Special Record Date shall be fixed by the Bond Trustee whenever moneys become available for the payment of such defaulted interest, and notice of the Special Record Date shall be given by first class mail by the Bond Trustee or by or on behalf of the Issuer to the registered owner thereof not less than 15 days prior thereto. Such interest shall be mailed to the registered owner at his or her address as shown on the bond register maintained by the Bond Trustee on such Special Record Date. In the event that any owner of the Series 2017 Bonds in an aggregate principal amount of at least $1,000,000 shall provide the Bond Trustee on or prior to any Regular Record Date with written wire transfer instructions, the interest on subsequent Interest Payment Dates shall be paid in accordance with such instructions until the Bond Trustee receives written notice to the contrary.

The principal of and interest and redemption premium (if any) on the Series 2017 Bonds shall be payable in any coin or currency of the United States of America which at the time of payment is legal tender for payment of public and private debts. The principal of and redemption premium (if any) on the Series 2017 Bonds are payable only upon presentation and surrender thereof at the designated corporate trust office of the Bond Trustee.

Transfers and Exchanges; Persons Treated as Owners

The Series 2017 Bonds are exchangeable for an equal aggregate principal amount of fully registered Bonds of the same principal amount, interest rate, maturity and series of other authorized denominations at the designated corporate trust office of the Bond Trustee but only in the manner and subject to the limitations and on payment of the charges provided in the Bond Indenture.

The Series 2017 Bonds are fully transferable by the registered owner in person or by his or her duly authorized attorney-in-fact or legal representative on the registration books kept at the principal office of the Bond Trustee upon surrender of the Series 2017 Bond together with a duly executed written instrument of transfer in form and with guarantee of signature satisfactory to the Bond Trustee. Upon such transfer a new fully registered Series 2017 Bond of authorized denomination or denominations for the same aggregate principal amount, interest rate, maturity and series will be issued to the transferee in exchange therefor, all upon payment of the charges and subject to the terms and conditions set forth in the Bond Indenture.

The Bond Trustee will not be required to transfer any Series 2017 Bond (a) during the period beginning fifteen (15) days before the mailing of notice of redemption calling the Series 2017 Bonds or any portion of the Series 2017 Bonds for redemption and ending on the redemption date or (b) selected for redemption.

The Issuer and the Bond Trustee may deem and treat the person in whose name the Series 2017 Bond is registered as the absolute owner thereof for the purpose of making payment (except to the extent otherwise provided in the Bond Indenture with respect to Regular and Special Record Dates for the payment of interest) and for all other purposes, and neither the Issuer nor the Bond Trustee will be affected by any notice to the contrary.

Mandatory Sinking Fund Redemption

As and for the retirement of the Series 2017 Bonds, the Basic Payments specified in the Loan Agreement which are to be deposited in the Bond Fund will include an amount sufficient to redeem in part, by lot (after credit as provided below), the following principal amounts (which include the principal amount which will be outstanding on the date of maturity) of such Series 2017 Bonds at 100% of the principal amount thereof plus accrued interest to the redemption date on the following redemption dates:

SERIES 2017 BONDS MATURING DECEMBER 1, 20__

December 1 Principal of the Year Amount $ *

* At maturity

SERIES 2017 BONDS MATURING DECEMBER 1, 20___

December 1 Principal of the Year Amount $ *

* At maturity

The Issuer will be entitled to receive a credit in respect of its mandatory redemption obligation for Series 2017 Bonds delivered, purchased, or redeemed, if the Obligor at its option purchases in the open market and delivers to the Bond Trustee for cancellation, Series 2017 Bonds of the same series or redeems Series 2017 Bonds of the same maturity (other than through mandatory redemption) and such Series 2017 Bonds have not theretofore been applied as a credit against any mandatory redemption obligation. Each such Series 2017 Bond so purchased or redeemed will be credited by the Bond Trustee at 100% of the principal amount thereof to the obligation of the Issuer on such mandatory redemption date, and any excess will be credited to future mandatory redemption obligations in inverse order of maturity, unless the Authorized Obligor Representative directs the Bond Trustee otherwise, and the principal amount of such Series 2017 Bonds to be redeemed by operation of mandatory redemption and the Basic Payments specified in the Loan Agreement for mandatory redemption will be accordingly reduced.

Optional Redemption

The Series 2017 Bonds maturing on and after December 1, 20__ are subject to optional redemption prior to maturity by the Issuer at the written direction of the Obligor, in whole or in part on December 1, 20__ or on any date thereafter at the redemption prices set forth in the table below, together with accrued and unpaid interest to the redemption date.

Redemption Price (% of principal amount of the Series Redemption Dates 2017 Bonds to be redeemed)

Mandatory Redemption upon Determination of Taxability

The Series 2017 Bonds are subject to mandatory redemption in whole at a redemption price equal to: (i) 105% of the principal amount redeemed plus accrued interest to, but not including, the date of redemption to the extent that such Determination of Taxability resulted from the action or inaction of the Obligor or (ii) 100% of the principal amount redeemed plus accrued interest to, but not including, the date of redemption to the extent that such Determination of Taxability did not result from the action or inaction of the Obligor, on any Business Day within forty-five days after the occurrence of a Determination of Taxability; provided, however, if, in the opinion of Bond Counsel, a mandatory redemption on account of a Determination of Taxability of less than all of the Series 2017 Bonds would result in the interest on the Bonds Outstanding following such mandatory redemption not being includable in the gross income of the holders of such Outstanding Bonds, then the Series 2017 Bonds are subject to mandatory redemption upon the occurrence of a Determination of Taxability in the amount specified in such Opinion, provided that such redemption must be in an Authorized Denomination.

“Determination of Taxability” means: (i) the issuance of a statutory notice of deficiency by the Internal Revenue Service (the “IRS”) which in effect holds that an Event of Taxability has occurred; (ii) the issuance of a proposed written adverse determination by the IRS to the Obligor or the Issuer, which in effect holds that an Event of Taxability has occurred; provided that no Determination of Taxability will be deemed to occur if the Obligor or the Issuer has initiated an administrative appeal of such determination or has begun negotiating a closing agreement with the IRS, until the earliest of (A) abandonment of the appeals process by the Obligor, (B) the date on which such appeals process has been concluded adversely to the Obligor or the Issuer and no further appeal is permitted or (C) twelve (12) months after the receipt by the Obligor or the Issuer of the proposed adverse determination, unless otherwise approved by the Owners of at least a majority in aggregate principal amount of the Series 2017 Bonds then Outstanding; (iii) the deposit by the Obligor with the Bond Trustee of a certificate to the effect that an Event of Taxability has occurred or will occur and setting forth the date of taxability (i.e. the date on which the interest on the Series 2017 Bonds is declared taxable for federal income tax purposes); the Obligor will be obligated to deliver promptly to the Bond Trustee such a certificate upon the occurrence of an Event of Taxability; (iv) the rendering of a final and nonappealable decision, judgment, decree or other order by any court of competent jurisdiction to the effect that an Event of Taxability has occurred; or (v) the delivery to the Bond Trustee of an unqualified opinion of Bond Counsel to the effect that an Event of Taxability has occurred or a written statement by Bond Counsel delivered to the Bond Trustee that Bond Counsel is unable to render an opinion to the effect that interest on the Series 2017 Bonds is excluded from gross income for purposes of federal income taxation.

Extraordinary Optional Redemption

Series 2017 Bonds may be called for redemption, in whole or in part, at any time, in the event (i) the Facilities or any portion thereof is damaged or destroyed or taken in a condemnation proceeding as provided in Sections 4.12 and 4.13 of the Master Trust Indenture and the Obligor is under no obligation to repair or rebuild the Facilities under the Master Trust Indenture or (ii) the Obligor shall exercise its option to cause the Series 2017 Bonds to be redeemed as provided in Section 4.04 of the Loan Agreement. If called for redemption at any time pursuant to this paragraph, the Series 2017 Bonds shall be subject to

redemption by the Issuer on any date, in whole or in part, at a redemption price equal to 100% of the principal amount thereof being redeemed, plus accrued interest to the redemption date.

Optional Excess Proceeds Redemption

The Series 2017 Bonds are callable for redemption, at the option of the Obligor on behalf of the Issuer, at the written direction of the Authorized Obligor Representative addressed to the Trustee, from amounts remaining in the Project Fund upon completion of the Project and achievement of Stable Occupancy, in an amount not to exceed Five Hundred Thousand Dollars ($500,000), at a redemption price equal to 100% of the principal amount thereof being redeemed, plus accrued interest to the redemption date.

Partial Redemption; Selection of Bonds to be Redeemed

If less than all of the Series 2017 Bonds are called for redemption in any of the circumstances set forth above, other than mandatory redemption, the Series 2017 Bonds or portions thereof to be redeemed shall be as directed in writing by the Authorized Obligor Representative and, if less than all of the Series 2017 Bonds of a maturity are to be redeemed, and in the case of mandatory redemption pursuant to Section 4.01(c) thereof, the particular Series 2017 Bonds or portions thereof to be redeemed within a maturity will be selected by DTC or any successor depository in accordance with its procedures or, if the book-entry system is discontinued, by lot in such manner as the Trustee shall determine. If the Trustee receives no such direction from the Obligor, Series 2017 Bonds shall be redeemed in inverse order of maturity and if less than all of the Series 2017 Bonds of a maturity are to be redeemed, the particular Series 2017 Bonds or portions thereof within a maturity to be redeemed shall be selected by DTC or any successor depository in accordance with its procedures or, if the book-entry system is discontinued, by lot in such manner as the Trustee shall determine.

Upon surrender of any Series 2017 Bond for redemption in part, the Issuer will execute and the Bond Trustee will authenticate and deliver to the Owner thereof a new Series 2017 Bond or Bonds of the same series, interest rate and maturity and of authorized denominations in an aggregate principal amount equal to the unredeemed portion of the Series 2017 Bond so surrendered. If a Series 2017 Bond is of a denomination larger than $25,000, a portion of such Series 2017 Bond may be redeemed, but Series 2017 Bonds will be redeemed only in an amount that causes the unredeemed portion to be in an Authorized Denomination.

Notice of Redemption

Notice of the call for redemption, identifying the Series 2017 Bonds or portions thereof to be redeemed and the redemption price (including the premium, if any), shall be given by the Trustee by mailing a copy of the redemption notice by first class mail at least (i) ten days prior to the date fixed for a mandatory redemption pursuant a Determination of Taxability, and (ii) thirty days but not more than sixty days prior to the date fixed for redemption in all other instances to the Owner of each Series 2017 Bond to be redeemed in whole or in part at the address shown on the registration books. Such notice shall contain such matters specified in the Series 2017 Bonds for the redemption thereof and shall state that such redemption is conditional upon the receipt of monies by the Trustee for such purpose on or prior to the redemption date. Any notice mailed as provided in this Section shall be conclusively presumed to have been duly given, whether or not the Owner receives the notice. The Trustee shall deliver a copy of any such redemption notice to the Obligor and to the MSRB (as hereinafter defined) through EMMA (as hereinafter defined), or any similar system that is acceptable to or as may be prescribed by the MSRB (or, if such system is no longer in existence, to such other information service of national recognition that disseminates redemption information as is specified in writing by the Obligor to the Trustee).

SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2017 BONDS

General

The Series 2017 Bonds will be issued under and will be equally and ratably secured under the Bond Indenture, pursuant to which the Issuer will assign and pledge to the Bond Trustee all of its right, title and interest in and to the Loan Agreement and the security granted thereunder and under the other Bond Documents including: (i) the hereinafter described Series 2017 Note relating to the Series 2017 Bonds (excluding the Unassigned Rights, as defined in the Loan Agreement); (ii) certain rights of the Issuer under the Loan Agreement (excluding the Unassigned Rights); (iii) such other property as may from time to time be pledged to the Bond Trustee as additional security for such Bonds or which may come into possession of the Bond Trustee pursuant to the terms of the Loan Agreement or the Series 2017 Note; and (iv) the funds and accounts created under the Bonds Indenture (except the Rebate Fund), including the money and investments in them.

The proceeds of the Series 2017 Bonds will be loaned to the Obligor, and the obligation of the Obligor to repay that loan will be evidenced by the Series 2017 Note of the Obligor issued pursuant to, and entitled to the benefit and security of, the Master Indenture.

Limited Obligations

Debt Service Reserve Fund for the Series 2017 Bonds

The Bond Indenture creates and establishes with the Bond Trustee the Debt Service Reserve Fund. Moneys on deposit in the Debt Service Reserve Fund will be used to provide a reserve for the payment of the principal of and interest on the Series 2017 Bonds. See Appendix D - COPIES OF PROPOSED FORMS OF PRINCIPAL FINANCING DOCUMENTS hereto.

Payments into the Debt Service Reserve Fund. Pursuant to the Bond Indenture, the Debt Service Reserve Fund is required to be funded on the Issue Date in the amount of $911,640.02∗, which is an

∗ Preliminary, subject to change.

amount equal to the least of (a) 10% of the original face amount of the Series 2017 Bonds (provided, however, that if the Series 2017 Bonds have original issue discount or premium that exceeds two percent (2%) of the stated redemption price at maturity plus any original issue premium attributable exclusively to underwriters’ compensation, the issue price shall be used in lieu of the stated principal amount for purposes of the ten percent (10%) limitation), (b) 125% of the average annual debt service on the Series 2017 Bonds, or (c) the Maximum Annual Debt Service Requirement on the Series 2017 Bonds. In addition, there will be deposited into the Debt Service Reserve Fund all moneys required to be transferred thereto pursuant to the Bond Indenture, and all other moneys received by the Bond Trustee when accompanied by written directions that such moneys are to be paid into the Debt Service Reserve Fund. There will also be retained in the Debt Service Reserve Fund all interest and other income received on investments of Debt Service Reserve Fund moneys in the Debt Service Reserve Fund to the extent provided in the Bond Indenture.

Use of Moneys in the Debt Service Reserve Fund. Except as provided in the Bond Indenture, moneys in the Debt Service Reserve Fund will be used solely for the payment of the principal of and interest on the Series 2017 Bonds in the event moneys in the Bond Fund are insufficient to make such payments when due, whether on an interest payment date, redemption date, maturity date, acceleration date or otherwise.

Remaining Funds. On the final maturity date or redemption date of the Series 2017 Bonds, any moneys in the Debt Service Reserve Fund may be used to pay the principal of, premium, if any, and interest on the Series 2017 Bonds.

The Loan Agreement

Under the Loan Agreement, the Obligor is required to duly and punctually pay the principal of, premium, if any, and interest on the Series 2017 Bonds, and to make payments to the Bond Trustee to maintain the Debt Service Reserve Fund at the required amount and to make certain other payments. The Issuer will assign its interest in the Series 2017 Note to the Bond Trustee. See Appendix D - COPIES OF PROPOSED FORMS OF PRINCIPAL FINANCING DOCUMENTS hereto.

The Master Indenture

The Master Indenture is intended to provide assurance for the repayment of Master Obligations entitled to its benefits by imposing financial and operating covenants which restrict the Obligor and any other future Obligated Group Members and by the appointment of the Master Trustee to enforce such covenants for the benefit of the holders of such Master Obligations. As of the date of this Official Statement, the Series 2017 Note is the only Master Obligation that is expected to be entitled to the benefits of the Master Indenture. The holders of all Master Obligations entitled to the benefit of the Master Indenture will be on a parity with respect to the benefits of the Master Indenture, except for any Master Obligations constituting Subordinated Indebtedness. Pursuant to the Master Indenture, the Obligor and any future Obligated Group Members have pledged and granted to the Master Trustee a security interest: (a) in all their right, title and interest in and to any fund or account created under the Master Indenture, subject to the provisions thereof, including all moneys and investments therein and investment income thereon; and (b) in all the Gross Revenues of the Obligated Group, with certain limited exceptions. See Appendix D - COPIES OF PROPOSED FORMS OF PRINCIPAL FINANCING DOCUMENTS.

“Gross Revenues” means all receipts, revenues, rentals, income, insurance proceeds (including, without limitation, all Medicaid, Medicare and other third party payments if any), condemnation awards,

Federal Subsidy Payments and other moneys received by or on behalf of any Obligated Group Member, including, without limitation, revenues derived from

(a) the ownership, operation or leasing of any portion of the Facilities (including, without limitation, fees payable by or on behalf of residents of the Facilities) and all rights to receive the same (other than the right to receive Medicaid and Medicare payments if any), whether in the form of accounts, general intangibles or other rights, and the proceeds of such accounts, general intangibles and other rights, whether now existing or hereafter coming into existence or whether now owned or held or hereafter acquired,

(b) proceeds received from (i) accounts, (ii) securities and other investments, (iii) inventory and other tangible and intangible property and (iv) accounts receivable, general intangibles, contract rights, chattel paper, instruments and other rights and assets now existing or hereafter coming into existence or whether now owned or held or hereafter acquired; and

(c) gifts, grants, bequests, donations and contributions heretofore or hereafter made that are legally available to meet any of the obligations of the Obligated Group Member incurred in the financing, operation, maintenance or repair of any portion of the Facilities;

provided, however, that there shall be excluded from Gross Revenues:

(i) all such items, whether now owned or hereafter acquired by the Obligated Group Members, which by their terms or by reason of applicable law cannot be granted, assigned or pledged hereunder or which would become void or voidable if granted, assigned or pledged hereunder by the Obligated Group Members, or which cannot be granted, assigned or pledged hereunder without the consent of other parties whose consent is not secured, or without subjecting the Master Trustee to a liability not otherwise contemplated by the provisions hereof, or which otherwise may not be, or are not, hereby lawfully and effectively granted, assigned and pledged by the Obligated Group Members,

(ii) any amounts received by an Obligated Group Member as a billing agent for another entity, except for fees received for serving as billing agent,

(iii) gifts, grants, bequests, donations and contributions to an Obligated Group Member heretofore or hereafter made, and the income and gains derived therefrom, which are specifically restricted by the donor or grantor to a particular purpose which is inconsistent with their use as payments required under the Master Trust Indenture,

(iv) any moneys received by any Obligated Group Member from commercial tenants in order to pay for customized improvements to those areas of the Facilities to be occupied or leased to such tenants, and

(v) all deposits and/or advance payments made in connection with any leases of the Facilities and received prior to receipt of such certificate and licenses.

The security interest in the Gross Revenues and the proceeds thereof is subject to Permitted Encumbrances that exist prior to or that may be created subsequent to the time such security interest attaches and is subject to the right of the Obligated Group Members to transfer such Gross Revenues subject to certain circumstances. See Appendix D - COPIES OF PROPOSED FORMS OF PRINCIPAL FINANCING DOCUMENTS.

The Series 2017 Note will constitute a joint and several obligation of each Obligated Group Member, and the Series 2017 Note will be secured on a parity basis with any other Master Obligations hereafter issued under the Master Indenture (except for any Master Obligations constituting Subordinated Indebtedness) by a lien on the trust estate pledged thereunder, which includes the Gross Revenues of the Obligated Group.

As of the date of this Official Statement, the Obligor is the only Obligated Group Member. The Obligor and each Obligated Group Member that may be admitted in the future will be jointly and severally liable for the payment for all obligations entitled to the benefits of the Master Indenture and will be subject to the financial and operating covenants thereunder. See Appendix D - COPIES OF PROPOSED FORMS OF PRINCIPAL FINANCING DOCUMENTS for a description of the limitations on admission and release of Obligated Group Members.

The Mortgages

The obligations of the Obligor to repay the Loan are unconditional general obligations of the Obligor and will be evidenced by the Series 2017 Note. To secure its obligations under the Series 2017 Note and all other Master Obligations that constitute parity indebtedness under the Master Indenture, the Obligor will deliver to the Master Trustee the Mortgages.

All of the real property and personal property pledged as security to the Master Trustee pursuant to the Mortgages, as described under this caption and the immediately preceding caption, is collectively referred to as the “Mortgaged Property” in the Master Indenture.

Repair and Replacement Fund

A Repair and Replacement Fund will be established under the Master Indenture (the “Repair and Replacement Fund”) into which the Obligor shall deposit or cause to be deposited on the date of issuance of the Series 2017 Bonds, an amount equal to the Repair and Replacement Fund Requirement. Moneys in the Repair and Replacement Fund and any investments held as part of such Fund shall be held in trust and, except as otherwise provided in the Master Indenture, shall be applied by the Master Trustee at the written direction of an Authorized Obligor Representative, solely to the payment of the cost of Capital Additions which are necessary, but are either unanticipated, extraordinary, or of a nonrecurring nature.

If at any time the amount in the Repair and Replacement Fund drops below the Repair and Replacement Fund Requirement, the Obligated Group shall pay to the Master Trustee for deposit into the Repair and Replacement Fund, on the twenty-fifth day of each month, the amount of $2,500, until such time as the amount on deposit in the Repair and Replacement Fund is equal to the Repair and Replacement Fund Requirement; provided, that (i) the Obligated Group shall be obligated to resume making the required monthly payments to the Trustee until the deficiency is made up; and (ii) the Obligated Group may receive a credit against its obligations to deposit funds each month if there is delivered to the Trustee an Officer’s Certificate of the Obligated Group Representative to the effect that: (A) the credited amount has been spent for non-budgeted capital expenditures eligible to be paid, but not paid, from the Repair and Replacement Fund, (B) the credited amount was not previously used as a credit against amounts to be deposited in the Repair and Replacement Fund, (C) the expenditure was made in an emergency situation where patient or third party health or welfare, facility licensure or security was at stake, and (D) there was insufficient time to complete the normal requisition progress.

(i) If moneys in the Repair and Replacement Fund are to be used for Capital Additions, the Master Trustee shall make payment only upon receipt of an Officer’s Certificate of the Obligated Group Representative describing the Capital Addition and stating that (A) such Capital Addition is of an

unanticipated, extraordinary nature required to be made and (B) the total amount to be withdrawn from the Repair and Replacement Fund, together with other amounts available for the purpose (which amounts shall be identified), will be sufficient to pay the costs of the Capital Addition (which shall be itemized); (ii) If the Capital Addition involves construction, repairs or renovation estimated to cost in excess of $250,000, the Officer’s Certificate referred to in clause (i) shall state that the plans and specifications have been approved by all governmental bodies required to approve them (specifying such bodies) or that such approval is reasonably expected as needed, that the contracts entered into or to be entered into by the Obligated Group (which shall be specified) or its agents cover substantially all phases of the construction, repairs or renovation not being done by employees of the Obligated Group, and that the contractors have furnished customary labor and performance bonds and the Obligated Group shall attach copies of all invoices covering or relating to such construction, repairs or renovation, which invoices shall equal, in the aggregate, the total amount requested; and (iii) if the Capital Addition involves the acquisition of furnishings, equipment, machinery, or apparatus to be used in the Mortgaged Property, as to such acquisition the Master Trustee shall make payment only upon receipt of an Officer's Certificate of the Obligated Group Representative stating that the Capital Addition is reasonable and practicable, and the cost of such furnishings, equipment, machinery or apparatus is reasonable.

Moneys in the Repair and Replacement Fund shall be used to pay debt service on any Indebtedness of any Obligated Group Member prior to any amounts on deposit in any debt service reserve fund relating to such Indebtedness being used for such purpose.

The Repair and Replacement Requirement means $100,000; provided, however that such amount shall be increased by 10% effective on the fifth anniversary of the date of issuance of the Series 2017 Bonds and on each successive fifth anniversary thereafter.

Events of Default under the Master Indenture; Exercise of Rights and Remedies Thereafter

Events of Default under the Master Indenture

The Master Indenture contains certain Events of Default (as defined therein), which include, but are not limited to: (i) the failure to pay, when due, principal of (or premium, if any) or interest on any Master Obligation beyond any applicable grace period; (ii) the failure to duly observe or perform covenants or agreements set forth in the Master Indenture beyond any applicable notice, grace or cure period; (iii) certain involuntary insolvency events of an Obligated Group Member that last beyond any applicable cure period; (iv) certain voluntary insolvency events; (v) the failure to pay or make provision for payment with respect to any other recourse indebtedness of an Obligated Group Member (other than Subordinated Indebtedness owed to an Affiliate of the Obligated Group Member) having a principal balance of not less than $250,000 and the continuance of such failure beyond the applicable grace period, if any; (vi) the Master Trustee has received written notice that an event of default, as therein defined, under any instrument under which Master Obligations may be incurred or secured, including, without limitation, Related Bond Indentures, Related Loan Agreements, Credit Facilities, the Mortgages or other documents delivered in connection with the issuance of Related Bonds, has occurred and is continuing beyond the applicable period of grace, if any; or (vii) the Historical Debt Service Coverage Ratio for any Fiscal Year for which such Historical Debt Service Coverage Ratio is required to be tested is less than 1.00. See Appendix D - COPIES OF PROPOSED FORMS OF PRINCIPAL FINANCING DOCUMENTS hereto.

Acceleration of Maturity; Rescission and Annulment Thereof

If an Event of Default occurs under the Master Indenture and is continuing, then and in every such case the Master Trustee may, and at the direction of the Holders of not less than twenty-five percent

(25%) in aggregate principal amount of the Master Obligations then Outstanding, shall declare the principal of all the Master Obligations to be due and payable immediately, by a notice in writing to the Obligated Group Representative, and upon any such declaration such principal shall become immediately due and payable.

At any time after such a declaration of acceleration has been made and before a judgment or decree for payment of the money due has been obtained by the Master Trustee as otherwise provided in the Master Indenture, the Master Trustee, by written notice to the Obligated Group Representative, is required to rescind and annul such declaration and its consequences if:

(a) one or more Obligated Group Members have paid or deposited with the Master Trustee a sum sufficient to pay:

(i) all overdue installments of interest on all Master Obligations;

(ii) the principal of (and premium, if any, on) any Master Obligations which have become due otherwise than by such declaration of acceleration and interest thereon at the rate borne by the Master Obligations; and

(iii) all sums paid or advanced by the Master Trustee under the Master Indenture and the reasonable compensation, expenses, disbursements and advances of the Master Trustee, its agents and counsel; and

(b) all Events of Default, other than the nonpayment of the principal of Master Obligations which have become due solely by such acceleration, have been cured or waived as provided in the Master Indenture.

No such rescission shall affect any subsequent default or impair any right consequent thereon.

See Appendix D - COPIES OF PROPOSED FORMS OF PRINCIPAL FINANCING DOCUMENTS hereto.

Application of Moneys

Any money or property collected by the Master Trustee pursuant to Article VII of the Master Trust Indenture (Remedies of the Master Trustee and Holders of Master Obligations in Event of Default), any money or property distributable in respect of an Obligated Group Member’s obligations under the Master Indenture after any Event of Default, and any proceeds of any sale (after deducting the costs and expenses of such sale, including reasonable compensation to the Master Trustee, its agents and counsel, and any taxes, assessments or liens prior to the lien of the Master Indenture, except any thereof subject to which such sale shall have been made), whether made under any power of sale granted in the Master Indenture or pursuant to judicial proceedings, together with, in the case of any entry or sale as otherwise provided in the Master Indenture, any other sums then held by the Master Trustee as part of the Trust Estate, shall be deposited in the Revenue Fund created by the Master Indenture, shall be applied in the order specified under the heading “Revenue Fund” below, at the date or dates fixed by the Master Trustee and, in case of the distribution of such money on account of principal (or premium, if any), upon presentation of the Master Obligations and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid. See Appendix D - COPIES OF PROPOSED FORMS OF PRINCIPAL FINANCING DOCUMENTS hereto.

Limitation on Suits and Actions Brought by Holders of Master Obligations

The Master Indenture provides that no Holder of any Master Obligation shall have any right to institute any proceeding, judicial or otherwise, with respect to the Master Indenture, or for the appointment of a receiver or trustee, or for any other remedy under the Master Indenture, unless:

(a) Such Holder has previously given written notice to the Master Trustee of a continuing Event of Default;

(b) The Holders of not less than 25% in principal amount of the Outstanding Master Obligations shall have made written request to the Master Trustee to institute proceedings in respect of such Event of Default in its own name as Master Trustee hereunder;

(c) Such Holder or Holders have offered to the Master Trustee security or indemnity satisfactory to it against the costs, expenses and liabilities to be incurred in compliance with such request;

(d) The Master Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and

(e) No direction inconsistent with such written request has been given to the Master Trustee during such 60 day period by the Holders of a majority in principal amount of the Outstanding Master Obligations (except Master Obligations constituting Subordinated Indebtedness); it being understood and intended that no one or more Holders of Master Obligations shall have any right in any manner whatever by virtue of, or by availing of, any provision of the Master Indenture to affect, disturb or prejudice the rights of any other Holders of Master Obligations, to obtain or to seek to obtain priority or preference over any other Holders or to enforce any right under the Master Indenture, except in the manner provided in the Master Indenture and for the equal and ratable benefit of all the Holders of Master Obligations. See Appendix D - COPIES OF PROPOSED FORMS OF PRINCIPAL FINANCING DOCUMENTS hereto.

Control by Holders of Master Obligations

The Holders of a majority in principal amount of the Outstanding Master Obligations (except Master Obligations constituting Subordinated Indebtedness) shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Master Trustee or exercising any trust or power conferred on the Master Trustee, provided that:

(a) Such direction shall not be in conflict with any rule of law or with the Master Indenture or be unduly prejudicial to the rights of Holders of Master Obligations not joining in the giving of such direction (it being understood that the Master Trustee does not have an affirmative duty to ascertain whether or not any such direction is unduly prejudicial to such Holders of Master Obligations);

(b) The Master Trustee may take any other action deemed proper by the Master Trustee which is not inconsistent with such direction; and

(c) The Master Trustee shall not be required to act on any direction given to it pursuant to the Master Indenture until indemnity as required by it pursuant to the terms of the Master Indenture is provided to it by such Holders.

See Appendix D - COPIES OF PROPOSED FORMS OF PRINCIPAL FINANCING DOCUMENTS hereto.

Certain Amendments to Bond Indenture and Master Indenture After an Event of Default

If an Event of Default under the Bond Indenture occurs, there may be an amendment made to the Bond Indenture that (a) affects the payment provisions of the Series 2017 Bonds, including an extension of the maturity of, or a reduction of the principal amount of, or a reduction of the rate of, or extension of the time of payment of interest on, or a reduction of a premium payable upon any redemption of, any Bond; (b) creates a lien or security interest (other than any Permitted Encumbrances) prior to or on a parity with the lien and security interest of the Bond Indenture; (c) reduces the amount, or extends the time of any payment, required by the mandatory redemption provisions of the Bond Indenture; (d) reduces the aggregate principal amount of the Series 2017 Bonds required for consent to any supplemental bond indenture; (e) provides for a privilege or priority of any Bond or Bonds over any other Bond; or (f) releases or changes the requirements for the release of the Bond Indenture. The Bond Indenture 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 clauses (a) through (f) above may be made with the consent of the owners of 80% in aggregate principal amount of all Outstanding Bonds; provided, however, any such amendment shall not result in a preference or priority of any Bonds over any other Bonds and no such amendment described in clauses (a) through (f) shall result in a disproportionate change, reduction or modification with respect to any Bonds. Additionally, no such amendment shall become effective unless the Bond Trustee shall have obtained an opinion of Bond Counsel to the effect that any such amendment will not adversely affect the exclusion from gross income for federal income tax purposes of the interest on the Series 2017 Bonds.

If an Event of Default under the Master Indenture occurs, there may be an amendment made to the Master Indenture that (a) changes the stated maturity of the principal of, or any installment of interest on, any Master Obligations or any date for mandatory redemption thereof, or reduces the principal amount thereof or the interest thereon or any premium payable upon the redemption thereof, or changes any place of payment where, or the coin or currency in which, any Master Obligations or the interest thereon is payable, or impairs the right to institute suit for the enforcement of any such payment on or after the stated maturity thereof (or, in the case of redemption, on or after the redemption date); (b) reduces the percentage in principal amount of the Outstanding Master Obligations the Consent of whose Holders is required for any such Supplement, or the Consent of whose Holders is required for any waiver (of compliance with certain provisions of the Master Indenture or certain defaults thereunder and their consequences) provided for in the Master Indenture; or (c) modifies any of the provisions of Section 9.02 of the Master Indenture (relating to Supplements with consent of Holders), except to increase any such percentage or to provide that certain other provisions of the Master Indenture cannot be modified or waived without the Consent of the Holder of each Master Obligation affected thereby. The Master Indenture 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 clauses (a), (b) and (c) above may be made with respect to an Outstanding Master Obligation with the consent of the Holders of at least 80% in aggregate principal amount of all Outstanding Related Bonds related to such Master Obligation; provided, however, any such amendment shall not result in a preference or priority of any Master Obligation or Related Bonds over any other Master Obligation or Related Bonds (other than Subordinated Indebtedness and subordinated Related Bonds) and no such amendment described in clauses (a), (b), or (c) shall result in a disproportionate change, reduction or modification with respect to any Related Bonds. See “RISK FACTORS - Amendments to Documents.”

Certain Covenants of the Obligor and any Future Members of the Obligated Group

In addition to the covenants described below, the Master Indenture contains additional covenants relating to, among others, the maintenance of the Obligor’s property, corporate existence, the maintenance of certain levels of insurance coverage, the incurrence of additional debt, the sale or lease of

certain property, and permitted liens. For a full description of these and other covenants, see Appendix D - COPIES OF PROPOSED FORMS OF PRINCIPAL FINANCING DOCUMENTS hereto.

If the Obligated Group fails to achieve a Debt Service Coverage Ratio of at least 1.00 for any Fiscal Year, such failure shall constitute an Event of Default under the Master Indenture.

Notwithstanding any other provisions of the Master Indenture, in the event that any Obligated Group Member incurs any Additional Indebtedness for any Capital Addition, the Debt Service Requirements on such Additional Indebtedness and the Revenues and Expenses relating to the Capital Addition financed with the proceeds of such Additional Indebtedness shall be excluded from the calculation of the Historical Debt Service Coverage Ratio of the Obligated Group until the first full Fiscal Year following the later of (i) the estimated completion of the Capital Addition being paid for with the proceeds of such Additional Indebtedness provided that such completion occurs no later than six months following the completion date for such Capital Addition set forth in the Consultant’s report described in paragraph (A) below, or (ii) if the Capital Addition being paid for with the proceeds of such Additional Indebtedness includes independent living, assisted living or skilled nursing facilities, the first full Fiscal Year in which Stable Occupancy is achieved, which Stable Occupancy shall be projected in the report of the Consultant referred to in paragraph (A) below to occur no later than during the fifth full Fiscal Year following the incurrence of such Additional Indebtedness, or (iii) the end of the fifth full Fiscal Year after the incurrence of such Additional Indebtedness, if the following conditions are met:

(B) there is delivered to the Master Trustee an Officer’s Certificate on the date on which financial statements are required to be delivered to the Master Trustee pursuant to Section 4.15 of the Master Trust Indenture until the first Fiscal Year in which the exclusion from the calculation of the Historical Debt Service Coverage Ratio no longer applies, calculating the Historical Debt Service Coverage Ratio of the Obligated Group at the end of each Fiscal Year and demonstrating that such Historical Debt Service Coverage Ratio is not less than 1.00, such Historical Debt Service Coverage Ratio to be computed without taking into account (1) the

Additional Indebtedness to be incurred if (x) the interest on such Additional Indebtedness during such period is funded from proceeds thereof or other funds of the Member then on hand and available therefor, and (y) no principal of such Additional Indebtedness is payable during such period, and (2) the Revenues to be derived from the Capital Addition to be financed from the proceeds of such Additional Indebtedness.

See “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2017 BONDS - Certain Covenants of the Obligor and any Future Members of the Obligated Group – Debt Service Coverage Ratio Covenant.”

Trustee an Opinion of Counsel to the effect that the applicable laws and regulations underlying the last Consultant’s report have not changed in any material way.

See “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2017 BONDS - Certain Covenants of the Obligor and any Future Members of the Obligated Group – Liquidity Covenant.”

If, after delivery of the Officer’s Certificate required by the immediately preceding paragraph, the occupancy for the applicable Facility has not increased to the Occupancy Requirement for the following Occupancy Test Date, the Obligated Group Representative shall, within 30 days after delivery of the Officer’s Certificate disclosing such deficiency, engage a Consultant, at the Obligated Group’s expense, setting forth in detail the reasons for such deficiency and preparing a report, to be delivered within 60

days of the engagement of the Consultant, recommending steps designed to improve the occupancy of the applicable Facility to meet or exceed the Occupancy Requirement; provided, however, that no such report shall be required if a report has been delivered with respect to either of the two immediately preceding testing dates for the Occupancy Requirement. Each Obligated Group Member shall follow the recommendations of the Consultant applicable to it to the extent feasible (as determined in the reasonable judgment of the Governing Body of the Obligated Group Representative) and permitted by law.

See “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2017 BONDS - Certain Covenants of the Obligor and any Future Members of the Obligated Group – Occupancy Requirements.”

Incurrence of Indebtedness. Pursuant to the Master Indenture, the Obligated Group agrees to restrictions on the incurrence of additional indebtedness, as more fully described in Appendix D - COPIES OF PROPOSED FORMS OF PRINCIPAL FINANCING DOCUMENTS hereto. To the extent that the conditions provided in the Master Indenture are met, such indebtedness may be secured on a parity basis with the Series 2017 Note.

Insurance. Each Member shall maintain, or cause to be maintained at its sole cost and expense, insurance with respect to its Property, the operation thereof and its business against such casualties, contingencies and risks and in amounts not less than is customary in the case of corporations engaged in the same or similar activities and similarly situated and as is adequate to protect its Property and operations. All insurance (except in the case of certain self-insurance and workers’ compensation coverage) shall be maintained with an insurer rated “A-” or higher by A.M. Best & Company or by S&P. See Appendix D - COPIES OF PROPOSED FORMS OF PRINCIPAL FINANCING DOCUMENTS hereto.

Revenue Fund

If an Event of Default under the Master Indenture occurs due to failure to pay any debt service on any Master Obligations when due and continues for a period of five days following the expiration of any cure period with respect thereto, the Master Trustee may, and if directed by the Holders of at least 25% in aggregate principal amount of the Master Obligations shall establish a Revenue Fund and each Obligated Group Member shall deposit with the Master Trustee for deposit into the Revenue Fund all Gross Revenues of such Obligated Group Member (except to the extent otherwise provided by or inconsistent with any instrument creating any Permitted Encumbrance) during each succeeding month, beginning on the first day thereof and on each day thereafter, until no payment default under the Master Indenture then exists.

On the fifth Business Day preceding the end of each month in which any Obligated Group Member has made payments to the Master Trustee for deposit into the Revenue Fund, the Master Trustee shall withdraw and pay or deposit from the amounts on deposit in the Revenue Fund the following amounts in the order indicated:

(i) If the principal of all the Master Obligations has not been declared to be due and payable immediately:

FIRST, to the payment of all amounts due or reasonably expected to become due the Master Trustee under the Master Indenture;

SECOND, to an operating account designated by the Obligated Group Representative (which shall be subject to the lien of the Master Indenture), the amount necessary to pay the Expenses due or expected to become due in the month following the month in which such transfer is made, all as set forth in the then-current Annual Budget;

THIRD, to the payment of the amounts then due and unpaid upon the Master Obligations, other than Master Obligations constituting Subordinated Indebtedness, for principal (and premium, if any) and interest, in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Master Obligations for principal (and premium, if any) and interest, respectively;

FOURTH, to restore any deficiency in the Reserve Fund;

FIFTH, to the payment of the amounts then due and unpaid upon the Master Obligations constituting Subordinated Indebtedness for principal (and premium, if any) and interest, in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Master Obligations for principal (and premium, if any) and interest, respectively; and

SIXTH, any balance shall be kept in the Revenue Fund for application as set forth in this subsection (i) until the Event of Default has been waived or cured, and when the Event of Default has been waived or cured, to the Obligated Group Representative.

(ii) If the principal of all the Master Obligations has been declared to be due and payable immediately:

FIRST: to the payment of all amounts due or reasonably expected to become due the Master Trustee under the Master Indenture;

SECOND: (a) unless, in its sole discretion, the Master Trustee determines payment under subparagraph (b) below is in the best interest of the Holders of the Outstanding Master Obligations or is directed by the Holders of not less than 25% in aggregate principal amount of Master Obligations then Outstanding to proceed under subparagraph (b) below, to pay the Expenses due or expected to become due in the month following the month in which such transfer is made, all as set forth in the then-current Annual Budget; and (b) as an alternative to subparagraph (a) above, if, in its sole discretion, the Master Trustee determines payment under this subparagraph (b) is in the best interest of the Holders of the Outstanding Master Obligations or is directed by the Holders of not less than 25% in aggregate principal amount of Master Obligations then Outstanding to proceed under this subparagraph (b), to pay the amounts required by paragraph Third below;

THIRD: to the payment of the amounts then due and unpaid upon the Master Obligations, other than Master Obligations constituting Subordinated Indebtedness, for principal (and premium, if any) and interest, in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Master Obligations for principal (and premium, if any) and interest, respectively; FOURTH: to the payment of the amounts then due and unpaid upon the Master Obligations constituting Subordinated Indebtedness for principal (and premium, if any) and interest, in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority

of any kind, according to the amounts due and payable on such Master Obligations for principal (and premium, if any) and interest, respectively; and

FIFTH: to the Obligated Group Representative.

RISK FACTORS

General Risk Factors

When the Series 2017 Bonds are issued, the Obligor will be the only Member of the Obligated Group and the facilities owned will consist only of the Facilities; therefore, the discussion of risk factors under this caption generally uses the term “Obligor” rather than “Obligated Group” or “Member of the Obligated Group” and the term “Facilities” only consists of the Linwood Facility and the Edgehill Facility. If there are additional Members of the Obligated Group or additional facilities in the future, though, the information described herein should be understood to apply to all such Members of the Obligated Group and all facilities. Although, the Obligor does not currently anticipate the addition of any other Member to the Obligated Group.

The Series 2017 Bonds are special and limited obligations of the Issuer, payable solely from and secured exclusively by the funds pledged thereto, including the payments to be made by the Obligor under the Loan Agreement and the Series 2017 Note.

An investment in the Series 2017 Bonds involves various risks as described in this Official Statement. The relatively high interest rate borne by the Series 2017 Bonds (as compared to prevailing interest rates on tax-exempt bonds such as those that constitute general obligation bonds of fiscally sound municipalities or states) is compensation to the investor for assuming the element of risk. Each prospective investor should carefully examine this Official Statement and his or her own financial condition in order to make a judgment as to whether the Series 2017 Bonds are an appropriate investment. A prospective bondholder is advised to read the entire Official Statement, including the Appendices hereto, and special reference is made to the section “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2017 BONDS” and this section for a discussion of certain risk factors which should be considered in connection with an investment in the Series 2017 Bonds.

As described herein under the caption “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2017 BONDS,” except to the extent that the principal of, premium, if any, and interest on the Series 2017 Bonds may be payable from the proceeds thereof or investment income thereon or, under certain circumstances, proceeds of insurance, sale or condemnation awards or net amounts by recourse to the Facilities, such principal, premium and interest will be payable solely from amounts paid by the Obligor under the Loan Agreement or the Series 2017 Note.

No representation or assurance is given or can be made that revenues will be realized by the Obligor sufficient to ensure the payment of the principal and interest on the Series 2017 Bonds in the amounts and at the times required to pay debt service on the Series 2017 Bonds when due. The ability of the Obligor to generate sufficient revenues may be impacted by a number of factors. Some, but not necessarily all of these risk factors are discussed in this section below; these risk factors should be considered by investors considering any purchase of the Series 2017 Bonds. Neither the Underwriter nor the Issuer has made any independent investigation of the extent to which any such factors may have an adverse effect on the revenues of the Obligor.

Limited Obligations

The Series 2017 Bonds are special limited obligations of the Issuer and have three sources of payment, as follows:

(1) Loan payments received by the Bond Trustee from the Obligor pursuant to the terms of the Loan Agreement and the Series 2017 Note. The Issuer has no obligation to pay the Series 2017 Bonds except from loan payments derived from the Obligor pursuant to the Loan Agreement and the Series 2017 Note. The Series 2017 Bonds and the interest thereon are limited obligations of the Issuer as described above under “Limited Obligations.” Under the Loan Agreement and the Series 2017 Note, which the Issuer will assign to the Bond Trustee (excluding the Unassigned Rights), the Obligor will be required to make loan payments directly to the Bond Trustee in amounts sufficient to enable the Bond Trustee to pay the principal of, premium, if any, and interest on the Series 2017 Bonds. Such loan payments are, however, anticipated to be derived solely from operation of the Facilities and investment earnings. Profitable operation of the Facilities depends in large part on achieving and maintaining certain occupancy levels throughout the term of the Series 2017 Bonds. However, no assurance can be made that the revenues derived from the operation of the Facilities will be realized by the Obligor in the amounts necessary, after payment of operating expenses of the Facilities, to pay maturing principal of, premium, if any, and interest on the Series 2017 Bonds.

(2) Revenues received from operation of the Facilities by a receiver upon a default under the Master Indenture. Attempts to have a receiver appointed to take charge of properties pledged to secure loans are frequently met with defensive measures such as the initiation of protracted litigation and/or the initiation of bankruptcy proceedings, and such defensive measures can prevent the appointment of a receiver or greatly increase the expense and time involved in having a receiver appointed. If a receiver is appointed, there is no assurance that the receiver would be able to generate cash flow from the Facilities sufficient to pay debt service on the Series 2017 Bonds, in addition to paying the fees and expenses related to the Facilities and of the receiver.

(3) Proceeds realized from the sale or lease of the Facilities to a third party by the Master Trustee. Attempts to sell or foreclose on commercial property or otherwise realize upon security for obligations may be met with defensive measures such as protracted litigation and/or bankruptcy proceedings, and such defensive measures can greatly increase the expense and time involved in

achieving such foreclosure or other realization. In addition, the Master Trustee could experience difficulty in selling or leasing the Facilities upon foreclosure or sale due to the special-purpose nature of a facility whose use is designed for operation of a skilled nursing facility, and the proceeds of such sale may not be sufficient to fully pay the owners of the Series 2017 Bonds.

The best prospects for uninterrupted payment of principal and interest on the Series 2017 Bonds in accordance with their terms is the source described in (1) above, which is wholly dependent upon the success of the Obligor in operating the Facilities in a profitable manner. Even if the Facilities are operating profitably, other factors could affect the Obligor’s ability to make loan payments under the Loan Agreement.

The Mortgages

The Obligor will execute the Mortgages on the Mortgaged Property to secure its obligations pursuant to the Series 2017 Note and the Master Indenture. Similar mortgages may be executed and delivered under certain circumstances involving Additional Indebtedness or admission of any new Obligated Group Members. In the event that there is a default under the Master Indenture, the Master Trustee has the right to foreclose on and sell the Mortgaged Property under certain circumstances.

All amounts collected upon sale of the Mortgaged Property pursuant to the Mortgages will be used to pay certain costs and expenses incurred by, or otherwise related to, the sale of the Mortgaged Property, the performance of the Master Trustee under the Mortgages, and then to pay amounts owing under the Master Indenture in accordance with the provisions of the Master Indenture.

In the event that foreclosure and sale under any Mortgages is actually exercised, then, in addition to the customary costs and expenses of operating and maintaining the Facilities, the party or parties succeeding to the interest of the Obligor in the Mortgaged Property (including the Master Trustee, if such party was to acquire the interest of the Obligor in the Mortgaged Property) could be required to bear certain associated costs and expenses, which could include: the cost of complying with federal, state or other laws, ordinances and regulations related to the removal or remediation of certain hazardous or toxic substances; the cost of complying with laws, ordinances and regulations related to health and safety, and the continued use and occupancy of the Facilities, such as the Americans with Disabilities Act; and costs associated with the potential reconstruction or repair of the Mortgaged Property in the event of any casualty or condemnation.

In case of any foreclosure and sale under the Mortgages, by virtue of judicial proceedings or otherwise, the Property may be sold as an entirety or in parcels, by one sale or by several sales, as may be deemed by the Individual Trustees to be appropriate and without regard to any right of the Obligor or any other person to the marshalling of assets. The transfer of ownership of licensed and certified skilled nursing facilities is subject to the approval of the Pennsylvania Department of Health as to licensure and the federal Centers for Medicare and Medicaid Services and the Pennsylvania Department of Health as to Medicare and Medicaid certification. The Facilities must continue to comply with all applicable regulatory standards during such transfer, including providing care to the residents of the Properties in accordance with standards established by applicable law.

The Facilities are purpose built for use as skilled nursing facilities and generally would not be suitable for industrial or commercial use. Additionally, the Facilities each require a license from the State and Medicare and Medicaid program certifications to operate. Consequently, the market for the Facilities could be limited to buyers or lessees which would be interested in continuing to operate the Facilities and skilled nursing facilities. Upon any default, the Master Trustee may not realize the amount of the outstanding Series 2017 Bonds from the sale or lease of the Facilities in the event of foreclosure.

Any valuation of the Facilities is based on future projections of income, expenses, capitalization rates, and the availability of a partial or total property tax exemption. Additionally, the value of the Facilities will at all times be dependent upon many factors beyond the control of the Obligor, such as changes in general and local economic conditions, changes in the supply of or demand for competing properties in the same locality, and changes in real estate and zoning laws or other regulatory restrictions. A material change in any of these factors could materially change the value of the Facilities. Any weakened market condition may also depress the value of the Facilities. Any reduction in the market value of the Facilities could adversely affect the security available to the owners of the Series 2017 Bonds. There is no assurance that the amount available upon foreclosure or sale of the Facilities after the payment of costs will be sufficient to pay the amounts owing by the Obligor on the Series 2017 Bonds.

In the event of sale, a prospective purchaser of the Mortgaged Property may assign less value to the Mortgaged Property than the value of the Mortgaged Property while owned by the Obligor since such purchaser may not enjoy the favorable financing rates associated with the Series 2017 Bonds and other benefits. To the extent that buyers whose income is not tax-exempt may be willing to pay less for the Mortgaged Property than nonprofit buyers, then the resale of the Mortgaged Property after foreclosure and sale may require more time to solicit nonprofit buyers interested in assuming the financing now applicable to the Mortgaged Property. In addition, there can be no assurance that the Mortgaged Property could be sold at one hundred percent (100%) of its fair market value in the event of foreclosure and sale. Although the Master Trustee will have available the remedy of public sale under the Mortgages in the event of a default (after giving effect to any applicable grace periods, and subject to any legal rights which may operate to delay or stay such sale, such as may be applicable in the event of the Obligor’s bankruptcy), there are substantial risks that the exercise of such a remedy will not result in recovery of sufficient funds to satisfy all the Obligor’s obligations.

Limits on Use of Condemnation and Casualty Proceeds arising from the Mortgaged Property

Under the terms of the Mortgage, if, the Mortgaged Property is damaged by fire or other casualty, the Obligor shall comply with the provisions of Section 4.12 of the Master Indenture. In the event of any condemnation or taking of any part of the Mortgaged Property by eminent domain, alteration of the grade of any street, or other injury to or decrease in the value of the Mortgaged Property by any public or quasi- public authority or corporation, the Obligor shall comply with the provisions of Section 4.13 of the Master Indenture. See Appendix D - COPIES OF PROPOSED FORMS OF PRINCIPAL FINANCING DOCUMENTS hereto.

Additional Indebtedness

The Master Indenture permits the Obligor to incur Additional Indebtedness which may be equally and ratably secured with the Series 2017 Note. Any additional parity indebtedness would be entitled to share ratably with the holders of the Series 2017 Note in any moneys realized from the exercise of remedies in the event of a default under the Master Indenture. The issuance of additional parity indebtedness could reduce the Historical Debt Service Coverage Ratio and could impair the ability of the Obligor to maintain its compliance with certain covenants described in Appendix D - COPIES OF PROPOSED FORMS OF PRINCIPAL FINANCING DOCUMENTS hereto. Despite compliance with the conditions upon which Additional Indebtedness may be incurred at the time such debt is created, the ability of the Obligor to make the necessary payments to repay the Series 2017 Note may be materially adversely affected because of the incurrence of Additional Indebtedness.

Management Fees and Subordination

Genesis Eldercare Management Agreement. The Obligor engaged Genesis Eldercare to exclusively supervise and direct the management and operation of its facilities pursuant to a Management Agreement, dated as of June 19, 2013, as amended as of the date of issuance of the Series 2017 Bonds (the “Management Agreement”). While Genesis Eldercare is responsible for the day to day operation of the Facilities, the Obligor retains ultimate control and ownership of the Facilities. Under the Management Agreement, Genesis Eldercare receives a fixed monthly fee, together with an incentive management fee, which collectively shall not exceed four and one-half percent (4½%) of revenues of the Obligor. Notwithstanding anything to the contrary herein or in any other documents, all Incentive Fees (as defined therein) due to Genesis Eldercare are unconditionally and irrevocably subordinated in right of payment to all other payments required under the Series 2017 Bonds, the Series 2017 Note, the Master Indenture, the Bond Indenture and the Loan Agreement (the “Bond Documents”). Upon any Default or Event of Default (as therein defined) occurring under the Bond Documents or Genesis Eldercare’s breach of the terms of the Management Agreement which has not been cured within thirty (30) days of written notice from Owner or Trustee (Subordination Events), any accrued Incentive Fees shall only be payable as allowed by the terms of the Management Agreement. Any portion of the accrued Incentive Fees subordinated and not paid due to the foregoing shall be carried over and be payable (without interest) in the month immediately succeeding the cure or removal of all Subordination Events provided there are then sufficient funds available to pay such deferred Incentive Fees. Any portion of the Incentive Fees not paid due to the application of this paragraph at the time of termination of the Management Agreement by the Obligor resulting from a default by Genesis Eldercare under the Agreement (including bankruptcy of Genesis Eldercare) shall be forgiven and not collectable against any party. If the amount of accrued Incentive Management Fee (as defined therein) exceeds one hundred thousand dollars ($100,000) for the period beginning with the effective date of the Management Agreement, the Management Agreement may be terminated by the Obligor unless Genesis Eldercare forgives all accrued Incentive Fees in excess of such limit.

Guardian Foundation Corporate Administration Agreement. The Obligor engaged Guardian to exclusively provide certain organization, financial and strategic support services for the Obligor and the Facilities pursuant to a Corporate Administration Agreement, dated as of July 1, 2017, as amended as of the date of issuance of the Series 2017 Bonds (the “Corporate Administration Agreement”). Pursuant to the Corporate Administration Agreement, the Obligor has agreed to pay Guardian a corporate administration charge in the amount of $10,323 per month (subject to increase based on the Consumer Price Index). Under the Corporate Administration Agreement, Guardian and the Obligor have agreed that so long as any of the Series 2017 Bonds are outstanding, any Participation (as defined therein) otherwise payable to Guardian under the Corporate Administration Agreement shall not be paid if an Event of Default is occurring. Guardian has agreed that its right to payment of the Participation shall be subject and subordinate to the rights of the holder of the Series 2017 Bonds in accordance with the terms of the Bond Documents.

As management and administration fees are subordinated, if the current Management Agreement or Corporate Administration Agreement is terminated for any reason, there is no assurance that the Obligor could find a suitable replacements to perform such functions for the Obligor and the Facilities at the same cost.

State Regulation; Rights of Residents

At the time of closing on the Series 2017 Bonds, the Edgehill Facility is licensed for 60 long term care nursing beds, and the Linwood Facility is licensed for 102 beds of which 90 beds are in service. As

part of the Linwood Capital Project, the Linwood Facility will construct a new wing and replace 46 of its beds after which all 102 licensed beds will be restored to service.

The enactment of additional legislation restricting or regulating the operation of senior housing nursing facilities creating additional residents’ rights or requiring certain financial reserves could adversely affect the financial condition of the Obligor.

In addition, the ability of the Master Trustee or the Bond Trustee to foreclose its lien on the Mortgaged Property or enforce other rights and remedies under the Bond Documents may be adversely affected by litigation on behalf of residents. Although residents have no special lien or claim against any property of the Obligor, there can be no certainty that residents could not successfully claim or otherwise restrict the use of the Obligor’s property in bankruptcy proceedings or other disputes.

Changing Capabilities of Home Health Care Technology; Impact on Demand for Facility

New and changing methods of care delivery, such as web-based home monitoring, telemedicine, mobile health, and smartphone technology will likely change the way in which providers of health services to the elderly deliver home health, hospice and other community-based services. These developments will further the ability of the home health and hospice industry to care for patients in their homes. Proliferation and availability of technological changes are expected to increase the ability of the elderly to remain in their homes longer into their lives than has historically been feasible, which could result in significantly reduced demand for facilities such as the Facilities. The Obligor may encounter increased competition in the future that could negatively impact patient referrals to it, limit its ability to maintain or increase its market position and adversely affect the Obligor's profitability.

Uncertainty of Occupancy and Resident Fee Collection

As noted elsewhere, except to the extent that the Series 2017 Bonds will be payable from the proceeds of insurance, sale or condemnation awards, the Series 2017 Bonds will be payable solely from payments or prepayments to be made by the Obligor under the Loan Agreement and the Series 2017 Note. The ability of the Obligor to make payments under the Loan Agreement and the Series 2017 Note is dependent upon the generation by the Obligor of revenues in the amounts necessary for the Obligor to pay the principal, premium, if any, and interest on the Series 2017 Bonds, as well as other operating and capital expenses.

The financial feasibility of the Facilities and payment, when due, of the Series 2017 Bonds is dependent on the continuing ability of the Obligor to maintain high levels of occupancy of the Facilities and keep the Facilities substantially occupied by residents who are approved for nursing home benefits under the Medicare or Medicaid programs or who can pay the full amount of the fees charged. This depends to some extent on factors outside the Obligor’s control, such government regulation general economic conditions. If the Facilities fails to maintain a high level of occupancy, there may be insufficient funds to pay debt service on the Series 2017 Bonds and any other outstanding Bonds and obligations. In addition, the economic feasibility of the Facilities depends on the Obligor’s ability to remarket units becoming available when residents die, withdraw, or transfer to a healthcare facility or any other facility.

It is assumed that regular increases in revenue will be necessary to offset increasing operating costs due primarily to inflation. There can be no assurance that such revenue increases can or will be made or that increases in expenses will not be greater than assumed. The Obligor’s principal revenue sources are payments from the federal Medicare program and the state Medicaid program. Generally, the Medicare and Medicaid programs pay for care rendered at the Facilities based upon rates set by such

programs, which may decrease from time to time. The Obligor would not be entitled to Medicare or Medicaid rate increases based upon increases in the Obligor’s costs.

Collection of payments from the Medicare and Medicaid requires the Obligor to provide accurate, timely billing in accordance with the procedures established by the Medicare and Medicaid programs. Billing errors, failure to submit required documentation and other non-compliance with the billing procedures can result in delayed cash collections or, in some cases, permanent total or partial denial of payment for the bill in question.

The rates for the Facilities are described in Appendix A hereto. If actual operating experience is substantially different from that anticipated, the revenues of the Obligor could be less than needed. No representation or assurance can be made that revenues will be realized by the Obligor in amounts sufficient to make the required payments with respect to debt service on the Series 2017 Bonds.

Reimbursement from Third Parties

The majority of the revenues of the Obligor are derived from third-party payors that reimburse or pay providers for the services rendered to patients covered by such third parties for such services. The most significant third-party payors are the federal Medicare Program and the state Medicaid Program. The Obligor also receives payment from commercial insurance, if any, carried by the applicable resident. Medicaid and private payments including insurers are subject to the Commonwealth’s rate equalization. Medicare makes payments to the Obligor at rates other than the direct charges of the Obligors, which rates may be determined other than on the basis of the actual costs incurred in providing services. Accordingly, payments made under such programs may not be adequate to cover the Obligor’s actual costs. In addition, the financial performance of the Obligor could be adversely affected by the insolvency of, or other delay in receipt of payments from, third-party payors which provide reimbursement for services to residents of the Facilities.

Changes in Demand for Facilities

Over the past several decades, federal and state health policy has included various ways of avoiding or delaying nursing home admission. Advances in medical and scientific technology along with such health policies have resulted in the creation of programs to provide care to seniors in non-nursing home settings, such as home based care, adult medical day care center based care, Medicaid funded assisted living facility based care and other nursing home diversion programs. The result has been a decrease in nursing home use rates (admissions per thousand), but an increase in the medical acuity of those admitted to nursing homes for long term care. Such higher acuity nursing home residents require greater resources to care for than the average nursing home residents of the past. Increases in nursing home Medicare and Medicaid rates have generally not kept pace with the increased cost of care. This trend may continue, creating further pressure on nursing home rates.

Impact of Market Turmoil

Recent economic turmoil has had and will continue to have negative repercussions upon the United States and global economies. To date, this turmoil has particularly impacted the financial sector, prompting a number of banks and other financial institutions to seek additional capital, to merge and, in some cases, to cease operations. These events collectively have led to a scarcity of credit, lack of confidence in the financial sector, volatility in the financial markets, fluctuations in interest rates, reduced economic activity, increased business failures and increased consumer and business bankruptcies.

Recent market conditions have adversely affected investment earnings and values and could adversely affect the value of the Obligor’s investments and those of prospective residents, as well as future investment earnings. Further, sales of residential real estate have been negatively impacted. As a result, prospective residents of the Facilities may encounter difficulty in liquidating investments and selling homes in order to raise necessary cash to pay their entrance fees and the monthly service fees.

As investor confidence has waned, investments previously recognized as stable, such as tax- exempt money market funds (which are one of the largest purchasers of tax-exempt bonds), have at times experienced significant withdrawals. This could affect the market and demand for the Series 2017 Bonds.

Feasibility Study

Management’s financial forecast included in the Feasibility Study was prepared by and is based upon assumptions made by management of the Obligor. As stated in the Feasibility Study, there will usually be differences between forecasted and actual results, because events and circumstances frequently do not occur as expected, and those differences may be material. The achievement of any financial forecast is dependent upon future events, many of which are beyond the Obligor’s control and the occurrence of which cannot be assured. In addition, such financial forecast is only for the five years ending June 30, 2022, and consequently does not cover the entire period during which the Series 2017 Bonds may be outstanding. The Feasibility Study should be read in its entirety, including all management’s notes and assumptions set forth therein.

Because there is no assurance that actual events will correspond with the assumptions made, there cannot be any representation or guarantee that the financial forecast 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 changes in employee relations, increased taxes or governmental controls, changes in applicable governmental regulation, changes in demographic trends, increased competition which may affect occupancy levels, changes in the retirement living and health care industries, changes in general economic conditions, changes in management of the Obligor and increased inflation, all of which could result in changes in, or failure to execute, management’s plans as reflected in the financial forecast contained in the Feasibility Study in Appendix C hereto and result in increased costs and/or lower than anticipated revenues.

Competition

The Facilities is located in an area where other skilled nursing homes and other competitive facilities exist, and may in the future be developed. The Obligor will also face competition from other forms of senior care health delivery services, such as adult medical day care centers, in-home care and programs for all-inclusive care for the elderly (PACE). These factors combine to make the senior care industry volatile and subject to material change that cannot be currently predicted. See “COMPETITION AND SERVICE AREA” in Appendix A and APPENDIX C – Financial Feasibility Study for information regarding the Facilities’ existing competitors.

Labor Union Activity

Employees of the Obligor are not presently subject to any collective bargaining agreements. There can be no assurance, however, that such employees will not seek to establish collective bargaining agreements with the Obligor, and if so established, such collective bargaining agreements could result in significantly increased labor costs to the Obligor and have an adverse effect on the financial condition of the Obligor.

Additions to the Obligated Group

As of the date of this Official Statement, the Obligor is the only Member of the Obligated Group. Upon satisfaction of certain conditions in the Master Indenture, other entities can become members of the Obligated Group. See Appendix D - COPIES OF PROPOSED FORMS OF PRINCIPAL FINANCING DOCUMENTS. Management of the Obligor currently has no plans to add additional members to the Obligated Group. However, if and when new members are added, the Obligated Group’s financial situation and operations will likely be altered from that of the Obligor alone.

Liquidation of Security May Not be Sufficient in the Event of a Default

The Bond Trustee and the Issuer must look solely to the Mortgaged Property, including Gross Revenues and the other Personal Property Collateral, and any funds held under the Bond Indenture and the Master Indenture to pay and satisfy the Series 2017 Bonds in accordance with their terms. The Bondholders are dependent upon the success of the Facilities and the value of the assets of the Obligor for the payment of the principal of, redemption price, if any and interest on, the Series 2017 Bonds. The Obligor has not made any representations to Bondholders regarding the current market value of the Facilities. In the event of a default, the value of the Mortgaged Property may be less than the amount of the outstanding Series 2017 Bonds, since the Facilities exists for the narrow use of providing housing for the senior Facilities.

Availability of Remedies

The remedies available to the Bond Trustee, the Master Trustee and the owners of the Series 2017 Bonds upon an event of default under the Bond Indenture and the Master Indenture are in many respects dependent upon judicial actions that are often subject to discretion and delay. Under existing constitutional and statutory law and judicial decisions, including, specifically, the United States Bankruptcy Code, the remedies provided in the Bond Indenture and the Master Indenture may not be readily available or may be limited. The various legal opinions to be delivered concurrently with the delivery of the Series 2017 Bonds will be qualified as to the enforceability of the various legal instruments by limitations imposed by general principals of equity and by bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors’ generally and laws relating to fraudulent conveyances.

Bankruptcy

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

In a bankruptcy proceeding, the petitioner could file a plan for the adjustment of its debts which modifies the rights of creditors generally, or any class of creditors, secured or unsecured. The plan, when confirmed by the court, binds all creditors who had notice or knowledge of the plan and discharges all claims against the debtor provided for in the plan. No plan may be confirmed unless, among other conditions, the plan is in the best interests of creditors, is feasible and has been accepted by each class of

claims impaired thereunder. Each class of claims has accepted the plan if at least two-thirds in dollar amount and more than one-half in number of the allowed claims of the class that are voted with respect to the plan are cast in its favor. Even if the plan is not so accepted, it may be confirmed if the court finds that the plan is fair and equitable with respect to each class of non-accepting creditors impaired thereunder and does not discriminate unfairly in favor of junior creditors. Certain judicial decisions have cast doubt upon the right of a trustee, in the event of a health care facility’s bankruptcy, to collect and retain for the benefit of bondholders portions of revenues consisting of Medicare and other governmental receivables.

In the event of bankruptcy of the Obligor, there is no assurance that certain covenants, including tax covenants, contained in the Bond Indenture, the Loan Agreement, the Master Indenture and certain other documents would survive. Accordingly, the Obligor, as debtor in possession, or a bankruptcy trustee could take action that would adversely affect the exclusion of interest on the Series 2017 Bonds from gross income of the Bondholders for federal income tax purposes.

Certain Matters Relating to Enforceability of the Master Indenture

The obligations of the Obligor and any future Member of the Obligated Group under the Series 2017 Note will be limited to the same extent as the obligations of debtors typically are affected by bankruptcy, insolvency and the application of general principles of creditors’ rights and as additionally described below.

The accounts of the Obligor and any future Member of the Obligated Group will be combined for financial reporting purposes and will be used in determining whether various covenants and tests contained in the Master Indenture (including tests relating to the incurrence of Additional Indebtedness) are met, notwithstanding the uncertainties as to the enforceability of certain obligations of the Obligated Group contained in the Master Indenture which bear on the availability of the assets and revenues of the Obligated Group to pay debt service on Master Obligations, including the Series 2017 Note pledged under the Bond Indenture as security for the Series 2017 Bonds. The obligations described herein of the Obligated Group to make payments of debt service on Master Obligations issued under the Master Indenture (including transfers in connection with voluntary dissolution or liquidation) may not be enforceable to the extent (1) enforceability may be limited by applicable bankruptcy, moratorium, reorganization or similar laws affecting the enforcement of creditors’ rights and by general equitable principles and (2) such payments (i) are requested with respect to payments on any Master Obligations issued by a member other than the member from which such payment is requested, issued for a purpose which is not consistent with the charitable purposes of the Member of the Obligated Group from which such payment is requested or issued for the benefit of a Member of the Obligated Group which is not a Tax-Exempt Organization; (ii) are requested to be made from any moneys or assets which are donor-restricted or which are subject to a direct or express trust which does not permit the use of such moneys or assets for such a payment; (iii) would result in the cessation or discontinuation of any material portion of the health care or related services previously provided by the Member of the Obligated Group from which such payment is requested; or (iv) are requested to be made pursuant to any loan violating applicable usury laws. The extent to which the assets of any future Member of the Obligated Group may fall within the categories (ii) and (iii) above with respect to the Master Obligations cannot now be determined. The amount of such assets which could fall within such categories could be substantial.

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

clear precedent in the law as to whether such payments from a Member of the Obligated Group in order to pay debt service on the Series 2017 Note may be voided by a trustee in bankruptcy in the event of bankruptcy of a Member of the Obligated Group, or by third-party creditors in an action brought pursuant to Pennsylvania fraudulent conveyance statutes. Under the United States Bankruptcy Code, a trustee in bankruptcy and, under Pennsylvania fraudulent conveyance statutes and common law, a creditor of a related guarantor, may avoid any obligation incurred by a related guarantor if, among other bases therefor, (1) the guarantor has not received fair consideration or reasonably equivalent value in exchange for the guaranty and (2) the guaranty renders the guarantor insolvent, as defined in the United States Bankruptcy Code or Pennsylvania fraudulent conveyance statutes, or the guarantor is undercapitalized.

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

Limitations on Security Interest in Gross Revenues and Other Personal Property Collateral

The security interest in the Personal Property Collateral and the proceeds thereof will be perfected to the extent, and only to the extent, that such security interest may be perfected by filing financing statements under the Uniform Commercial Code of the Commonwealth of Pennsylvania (the “UCC”). Continuation statements with respect to such filings must be filed periodically as required by law to continue the perfection of such security interest. To the extent that the security interest in certain Personal Property Collateral cannot be perfected by filing a financing statement, the security interest in such Personal Property Collateral may not be enforceable against third parties unless such Personal Property Collateral is transferred to the Master Trustee (which is required only upon the occurrence of an Event of Default under the Master Indenture). In such event, the Master Trustee may not be able to compel certain third-party payors to make payment directly to the Master Trustee. Under state and federal law, the Medicare and Medicaid programs are permitted to pay Medicare and Medicaid claims only to the licensed provider which generated the claim. Neither the Medicare program nor the Medicaid program may be compelled to make payment directly to the Master Trustee. The enforcement of the security interest in Personal Property Collateral may further be limited by the following: (a) statutory liens, (b) rights arising in favor of the United States of America or any agency thereof, (c) current or future prohibitions against assignment contained in any federal or State statutes or regulations, (d) constructive trusts, equitable liens or other rights impressed or conferred by any state or federal court in the exercise of its equitable jurisdiction and (e) federal bankruptcy laws, Commonwealth of Pennsylvania receivership or fraudulent conveyance laws or similar laws affecting creditors’ rights that may affect the enforceability of the Master Indenture or the security interest in the Personal Property Collateral.

Pursuant to the Master Indenture, each Member of the Obligated Group that pledges its Gross Revenues under the Master Indenture covenants and agrees that, if an Event of Default involving a failure to pay any installment of interest or principal on a Master Obligation should occur and be continuing, it will deposit the proceeds of its Gross Revenues as set forth in the Master Indenture. Such deposits will continue until such default is cured.

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

Environmental Matters

Skilled nursing facilities such as those operated by the Obligor are subject to a wide variety of federal, state and local environmental and occupational health and safety laws and regulations which address, among other things, health care operations, facilities and properties owned or operated by health care providers. Among the types of regulatory requirements faced by health care providers and nursing facilities are (a) air and water quality control requirements, (b) waste management requirements, including medical waste disposal, (c) specific regulatory requirements applicable to asbestos, polychlorinated biphenyls and radioactive substances, (d) requirements for providing notice to employees and members of the public about hazardous materials handled by or located at the facilities, (e) requirements for training employees in the proper handling and management of hazardous materials and wastes, and (f) other requirements.

In its role as the owner and operator of properties or facilities, the Obligor may be subject to liability for failure to investigate and remedy any hazardous substances that may have migrated off of its property. Typical health care and nursing facility operations include, but are not limited to, in various combinations, the handling, use, storage, transportation, disposal and discharge of hazardous, infectious, toxic, radioactive, flammable and other hazardous materials, wastes, pollutants or contaminants. As such, health care and nursing facility operations are particularly susceptible to the practical, financial and legal risks associated with compliance with such laws and regulations. Such risks may (a) result in damage to individuals, property or the environment, (b) interrupt operations and increase their cost, (c) result in legal liability, damages, injunctions or fines and (d) result in investigations, administrative proceedings, penalties or other governmental agency actions. There is no assurance that the Obligor will not encounter such risks in the future, and such risks may result in material adverse consequences to the operations or financial condition of the Obligor.

See Appendix A “CURRENT 2017 CAPITAL PROJECT STATUS-Environmental Studies” hereto.

Amendments to Documents

Certain amendments to the Master Indenture, the Bond Indenture, the Loan Agreement and the Mortgages may be made without notice to or the consent of the holders of the Series 2017 Bonds. Such amendments could affect the security for the Series 2017 Bonds.

The Bond Indenture further provides that nothing therein shall permit, or be construed as permitting, any of the following:

(a) an extension of the stated maturity or reduction in the principal amount of, or a reduction in the rate or an extension of the time of payment of interest on, or a reduction of any premium payable on the redemption of, any Series 2017 Bonds, without the consent of every Owner of such Series 2017 Bonds;

(b) the creation of any lien or security interest (other than any Permitted Encumbrances) prior to or on a parity with the lien and security interest of the Bond Indenture without the consent of the Owners of all the Series 2017 Bonds at the time Outstanding which would be affected by the action to be taken;

(c) a reduction in the amount, or an extension of the time of any payment, required by the mandatory redemption provisions of the Bond Indenture, without the consent of the

Owners of all the Series 2017 Bonds at the time Outstanding which would be affected by the action to be taken;

(d) a reduction in the aforesaid aggregate principal amount of the Series 2017 Bonds the Owners of which are required to consent to any such amendment or supplemental indenture, without the consent of the Owners of all Series 2017 Bonds at the time Outstanding which would be affected by the action to be taken;

(e) a privilege or priority of any Series 2017 Bond or Bonds over any other Series 2017 Bond or Bonds; or

(f) the release of or requirements for the release of the Bond Indenture, without the consent of the Owners of all Series 2017 Bonds at the time Outstanding which would be affected by the action to be taken.

The Bond Indenture 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 clauses (a) through (f) above may be made with the consent of the owners of 80% in aggregate principal amount of all Outstanding Series 2017 Bonds; provided, however, any such amendment shall not result in a preference or priority of any Series 2017 Bonds over any other Series 2017 Bonds and no such amendment described in clauses (a) through (f) shall result in a disproportionate change, reduction or modification with respect to any Series 2017 Bonds. Additionally, no such amendment shall become effective unless the Bond Trustee shall have obtained an opinion of Bond Counsel to the effect that any such amendment will not adversely affect the exclusion from gross income for federal income tax purposes of the interest on the Series 2017 Bonds. The Master Indenture has similar provisions that permit the holders of at least 80% in aggregate principal amount of all Outstanding Related Bonds related to a Master Obligation to consent to similar changes to the Master Obligations outstanding. See “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2017 BONDS—Certain Amendments to Bond Indenture and Master Indenture After an Event of Default” above.

This provision is intended to make it easier for the Obligor to restructure its indebtedness, including the Series 2017 Bonds, if an Event of Default has occurred, without having to file for bankruptcy under the federal Bankruptcy Code. If the holders of at least 80% in aggregate principal amount of the Series 2017 Bonds consent to an amendment described in clauses (a) through (f) after an Event of Default, such as an amendment reducing the interest rate on the Series 2017 Bonds or extending their maturity date, then the holders of all Bonds would be bound by such amendment, including those who did not consent. In the absence of a provision such as this in the Bond Indenture, such a change in payment terms on the Series 2017 Bonds could only be made under a plan of reorganization approved by a Bankruptcy Court. The consent of the holders of 100% of the Series 2017 Bonds would be extremely difficult to obtain, and a bankruptcy filing would necessarily involve delay and expense which could affect the ability of the Obligor to accomplish a successful reorganization. The 80% consent requirement would only be in effect if an Event of Default occurred and was continuing.

Prospective purchasers of the Series 2017 Bonds are advised that this change means there is a risk that, if an Event of Default occurs, there may be an amendment made to the Bond Indenture which affects the payment provisions of the Series 2017 Bonds such purchaser holds, the priority of payment of such Bonds or other matters described in clauses (a) through (f) above. This amendment may be made without the consent of such purchasers, if the holders of at least 80% in aggregate principal amount of the Series 2017 Bonds consent to such amendment and the other conditions to such amendment described above are met.

See Appendix D - COPIES OF PROPOSED FORMS OF PRINCIPAL FINANCING DOCUMENTS hereto.

Uncertainty of Investment Income

A portion of the Obligor’s revenues available to pay debt service and to cover the Obligor’s operating losses during the period prior to Stable Occupancy of the Linwood Facility is expected to come from investment income and net realized gains on the investment of available funds. The amount of such interest earnings and gains will fluctuate with changes in prevailing interest rates and financial market conditions and may, at the time needed, be insufficient to cover debt service or operating losses.

Federal Tax Matters

Possible Changes in Obligor’s Tax Status. The possible modification or repeal of certain existing federal income or state tax laws or other loss by the Obligor of the present advantages of certain provisions of the federal income or state tax laws could materially and adversely affect the status of the Obligor and thereby the revenues of the Obligor. The Obligor has obtained a determination letter from the Internal Revenue Service to the effect that the Obligor is exempt from federal income taxation under Section 501(a) of the Code by virtue of being an organization described in Section 501(c)(3) of the Code. As an exempt organization, the Obligor is subject to a number of requirements affecting its operation. The failure of the Obligor to remain qualified as an exempt organization would affect the funds available to the Obligor for payments to be made under the Loan Agreement. Failure of the Obligor or the Issuer to comply with certain requirements of the Code, or adoption of amendments to the Code to restrict the use of tax-exempt bonds for facilities such as those being financed with Bond proceeds, could cause interest on the Series 2017 Bonds to be included in the gross income of holders of the Series 2017 Bonds or former holders of the Series 2017 Bonds for federal income tax purposes.

It is not possible to predict the scope or effect of future legislative or regulatory actions with respect to taxation of charitable organizations. There can be, however, no assurance that future changes in the laws and regulations of the federal, state or local governments will not materially and adversely affect the operations and revenues of the Obligor by requiring it to pay income taxes.

Possible Changes in Laws Regarding Tax-Exempt Bonds. Additionally, as the pressure to reduce the federal deficit and balance the federal budget increases, limiting or even eliminating the general exclusion of state and local bond interest has been discussed as one way to raise additional revenue for the federal government. For example, President Obama had proposed to limit the benefit of the exemption to the 28% bracket. Any such limitation or elimination, if retroactive, would result in some or all of the interest on the Series 2017 Bonds being included in gross income of owners of the Series 2017 Bonds for federal income tax purposes and could adversely affect the market value of the Series 2017 Bonds. Any such limitation or elimination could also increase the future borrowing costs of the Obligor.

Intermediate Sanctions. Section 4958 of the Code provides the Internal Revenue Service with an “intermediate” tax enforcement tool to combat violations by tax-exempt organizations and certain insiders of the private inurement prohibition of the Code. Previous to the “intermediate sanctions law,” the Internal Revenue Service could punish such violations only through revocation of an entity’s tax-exempt status. Intermediate sanctions may be imposed where there is an “excess benefit transaction,” defined to include a disqualified person (i.e., a director, officer or other related party) (1) engaging in a non-fair market value transaction with the tax-exempt organization; (2) receiving excessive compensation from the tax-exempt organization; or (3) receiving payment in an arrangement that violates the private inurement proscription. A disqualified person who benefits from an excess benefit transaction will be subject to a

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

Bond Audit. Internal Revenue Service officials have stated that more resources will be allocated to audits of tax-exempt bonds in the charitable organization sector. The Series 2017 Bonds may be subject to audit, from time to time, by the Internal Revenue Service. The Obligor believes that the Series 2017 Bonds properly comply with applicable tax laws and regulations. In addition, Bond Counsel will render an opinion with respect to the tax-exempt status of the Series 2017 Bonds, as described under the heading “TAX MATTERS.” No ruling with respect to the tax-exempt status of the Series 2017 Bonds has been or will be sought from the Internal Revenue Service, however, and opinions of counsel are not binding on the Internal Revenue Service or the courts, and are not guarantees. There can be no assurance, therefore, that an audit of the Series 2017 Bonds will not adversely affect the Series 2017 Bonds.

Other Legislation. In recent years the Internal Revenue Service and members of Congress have expressed concern about the need for more restrictive rules governing the tax-exempt status of 501(c)(3) organizations generally and of retirement communities in particular. Although the Obligor has covenanted in the Loan Agreement to take all appropriate measures to maintain its tax-exempt status, compliance with current and future regulations and rulings of the Internal Revenue Service could adversely affect the ability of the Obligor to charge and collect revenues at the level required by the Loan Agreement, finance or refinance indebtedness on a tax-exempt basis or otherwise generate revenues necessary to provide for payment of the Series 2017 Bonds.

Market for the Series 2017 Bonds; Absence of Rating

The Series 2017 Bonds have not received any credit rating by any recognized rating agency. The absence of any such rating could adversely affect the ability of holders to sell the Series 2017 Bonds or the price at which the Series 2017 Bonds can be sold. Although the Underwriter intends to maintain a secondary market for the Series 2017 Bonds, it is under no obligation to do so.

Health Care Risk Factors

Generally. The Obligor’s Facilities are subject to extensive governmental regulation through state licensing requirements, and complex laws and regulations imposed at the federal and state level for facilities to remain licensed and certified to receive payments under the Medicaid and Medicare programs. The Pennsylvania Department of Health (“DOH”) renews nursing home licenses annually and makes periodic inspections to determine compliance with licensure and certification requirements. Continuing licensure to provide nursing care is essential to the operation of the Facilities. Further, revenues of the Obligor are significantly dependent on payments under the Medicaid and Medicare programs, such that a loss of licensure for participation in the Medicaid or Medicare program or an elimination of or a material reduction in the availability of Medicaid or Medicare payments would materially adversely affect the operations and financial condition of the Obligor.

Changes in Law-Recent Legislation. Licensing and certification requirements for facilities such as those of the Obligor are subject to change, and there can be no assurance that the Facilities will be able to maintain all necessary licenses or certifications or that they will not incur substantial costs in doing so. Both federal and state regulation relating to health care and the payment thereof have been subject to change in the past, and future change can be expected, the effect of which may materially

adversely affect the operations and financial condition of the Obligor. In attempts to limit federal and state expenditures, there have been, and the Obligor expects that there will continue to be, a number of proposals to limit Medicaid payments, including those for care provided by basic care facilities or nursing homes. Although cutbacks may affect the basic care/nursing beds at the Facilities, at this time the effect of such future reductions cannot been determined.

Health Care Reform. The Patient Protection and Affordable Care Act of 2010 and the Health Care and Education Affordability Reconciliation Act of 2010 (collectively referred to as the “Affordable Care Act”) has significantly changed the United States health care delivery system, addressing almost all aspects of healthcare facility and provider operations, including the delivery of health care services, the financing of health care costs, healthcare provider reimbursement and the legal obligations of healthcare providers, insurers, employers and consumers. Key changes include cost containment measures, including new payment models which may result in lower health care provider reimbursement and utilization changes; quality improvement and clinical integration initiatives; fraud and abuse enforcement enhancements; health insurance market reforms; and Medicaid expansion. Additionally, the Affordable Care Act includes a number of initiatives that impact skilled nursing facility reimbursement. Each of these Affordable Care Act initiatives have required health care providers to assess, and potentially alter, their business strategy and practices. While the Affordable Care Act may result in many providers receiving reduced payments for care, millions of previously uninsured Americans have obtained health insurance coverage as a result of the Affordable Care Act. There is no assurance that federal payments made as a result of reimbursement reform measures will be sufficient to cover the Obligor’s skilled nursing facility costs. While management of the Obligor is currently operating within the framework of the Affordable Care Act, management cannot predict with any reasonable degree of certainty or reliability any ultimate effects of the law and its accompanying regulations on the Obligor’s operations or financial condition.

Due to the controversial nature of health care reform generally, the future of the Affordable Care Act is uncertain. Since its enactment, the law has continually faced legal and political challenges, including repeal efforts. Recently introduced legislation (referred to as the American Health Care Act) is aimed at repealing and replacing the law. As President Trump and many members of the Republican controlled Congress have criticized the Affordable Care Act, there is a substantial likelihood that all or a portion of the Affordable Care Act will be amended, repealed or replaced by either the American Health Care Act or other legislation. Management of the Obligor cannot predict the impact a full or partial repeal of the Affordable Care Act, or any replacement legislation, would have on the Obligor’s operations or financial condition. However, any legal, legislative or executive action that reduces the number of individuals with health insurance coverage, reduces government program (e.g. Medicare or Medicaid) reimbursement rates, or otherwise significantly disrupts the health care or health insurance industries could have a material adverse effect on the Obligor’s business or financial condition.

Malpractice Claims and Losses. The Obligor will covenant in the Master Indenture to maintain professional liability insurance with commercial insurance carriers unless the Obligor provide a certificate of an insurance consultant complying with the terms of the Master Indenture. The operations of the Obligor may be affected by increases in the incidence of malpractice lawsuits against elder care facilities and care providers in general and by increases in the dollar amount of client damage recoveries. These may result 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 malpractice coverage will continue to be available to the Obligor or the premiums at which such coverage can be obtained.

Restrictions on Referrals. The federal Anti-Self Referral Legislation (“Stark Law”) is the federal law prohibiting certain enumerated patient referrals. Specifically, the Stark Law prohibits a physician, or an immediate family member of such physician, that maintains a financial relationship with an entity, from referring patients to that entity. The Stark Law also prohibits an entity receiving a prohibited referral from billing the Medicare or Medicaid programs for any services rendered to the patient. The Stark Law contains certain exceptions which protect parties from liability under the Stark Law if the parties comply with the requirements of the exceptions. The sanctions under the Stark Law include denial and refund of payments, civil monetary penalties and exclusion from the Medicare and Medicaid programs.

Management of the Obligor believes that they are presently in material compliance with the Stark Law. However, in light of the narrowness of the statutory exception, lack of regulatory guidance and the scarcity of case law interpreting the Stark Law, there can be no assurances that the Obligor will not be found to have violated the Stark Law, and if so, whether any sanction imposed would have a material adverse effect on the operations of the Obligor, the financial condition of the Obligor, or the status of the Obligor as a 501(c)(3) Organization.

Health Data Privacy and Security. In 1996, Congress enacted the Health Insurance Portability and Accountability Act (“HIPAA”). HIPAA includes a number of “administrative simplification” provisions designed to streamline the electronic transmission of health claims as well as to protect the privacy and security of patient health information.

Although Congress did establish some requirements in HIPAA itself, it delegated authority to the Secretary of the United States Department of Health and Human Services (the “Secretary”) to develop and implement specific regulatory standards as well as to enforce those standards. The Secretary has promulgated regulations for the three major components of HIPAA’s administrative simplification provisions, which are discussed in greater detail below.

One major focus of HIPAA is in the area of electronic data interchange. Specifically, the regulations require all health care providers, health care clearinghouses and health plans who submit electronic transactions to do so in a nationally standardized format. The purpose is to allow for uniformity in claims and other electronic data communications between payors and providers. The regulations only apply to providers who submit claims electronically. As part of the requirements, the Secretary has published implementation standards for providers to use when transmitting electronic data. It is possible that compliance costs related to the transactions regulations could require the Obligor to make a substantial capital outlay. Moreover, any failure by the Obligor, its billing agents, and/or third party payors to comply with the transaction code set standards could result in substantial and possibly prolonged interruptions in the Obligor’s cash flow.

Federal privacy regulations issued pursuant to HIPAA require health care providers (among other “covered entities” regulated by HIPAA) to protect the confidentiality of patient health information in any form, including electronically stored or transmitted information. Penalties for violation of the regulations range from civil fines to (in extreme circumstances involving intentional violations for financial gain) up to ten years imprisonment. In addition to requiring patient authorization for many uses and disclosures of health information, the HIPAA privacy regulations contain many administrative requirements designed to ensure that covered entities exercise prudent privacy practices. For example, HIPAA requires that covered entities maintain detailed records of all disclosures of a patient’s data, and make these records available to the patient upon his/her request; give patients the right to access, inspect, and request amendments to their health records; develop and adhere to strict privacy policies and furnish privacy notices to patients; provide privacy training for all employees; implement physical, technical, and administrative safeguards to prevent intentional

or accidental misuse of health information; and designate a “privacy officer” to oversee implementation of these requirements.

The HIPAA regulations also address the security of provider information. The requirements are directed to ensure that electronic health information pertaining to patients remains secure. The regulations require organizations to evaluate existing security and confidentiality policies, as well as technical practices and procedures, including access controls, audit trails, physical security and disaster recovery, protection of remote access points, protection of external electronic communications, and software and system assessment.

Anti-Kickback Law. The Federal Medicare/Medicaid Anti-Fraud and Abuse Amendments to the Social Security Act (the “Anti-Kickback Law”) make it a criminal felony offense (subject to certain exceptions) to knowingly or willfully offer, pay, solicit or receive remuneration in order to induce business for which reimbursement may be provided under the Medicare or Medicaid programs. The arrangements prohibited under the Anti-Kickback Law can involve hospitals, physicians and other health care providers such as nursing homes. Prohibited arrangements may include joint ventures between providers, space and equipment rentals, purchases of physician practices, physician recruiting programs and management and personal services contacts. In addition to criminal penalties, violations of the Anti-Kickback Law can lead to civil monetary penalties and exclusion from the Medicare and Medicaid programs for not less than five years. Exclusion from either of these programs would have a material adverse impact on the operations and financial condition of the Obligor.

Presently, the Obligor considers itself to be in material compliance with the Anti-Kickback Law. However, in light of the lack of regulatory guidance and the scarcity of case law interpreting the Anti-Kickback Law, there can be no assurances the Obligor will not be found to have violated the Anti-Kickback Law, and if so, whether any sanction imposed would have a material adverse effect on the operations or the financial condition of the Obligor.

Labor Issues. In recent years, many health care facilities have suffered from an increasing scarcity of skilled nursing and health care personnel and aides to staff their facilities. The trend in the scarcity of qualified personnel has forced owners of such facilities, to pay increased salaries to such personnel as competition for such employees intensified. If a facility cannot maintain adequate staffing levels, the facility’s license may be at risk. A shortage of qualified professional personnel, including registered nurses, could significantly increase payroll costs of the Obligor, which cannot control the prevailing wage rates in its service area. Any increase in such rates will directly affect its costs of operations and could adversely affect the amount of revenues to pay the Obligor’s debt service.

Billing and Reimbursement Practices. Health care providers, including nursing homes and assisted living facilities, also are subject to criminal, civil and exclusionary penalties for violating billing and reimbursement standards under state and federal law. In recent years, state and federal enforcement authorities have investigated and prosecuted providers for submitting false claims to Medicare or Medicaid for services not rendered or for misrepresenting the level or necessity of services actually rendered in order to obtain a higher level of reimbursement.

Enforcement Activity. Enforcement activity against health care providers is increasing, and enforcement authorities are adopting more aggressive approaches. In the current regulatory climate, it is anticipated that many hospitals, physician groups and other health care providers will be subject to investigation, audit or inquiry regarding billing practices or false claims. The Department of Health and Human Services Office of Inspector General (“OIG”) and the Department of Justice (“DOJ”)

have conducted several joint investigation and prosecution projects in the last two (2) years involving a significant number of hospitals and certain other health care providers nationwide in an effort to recover alleged overpayments. In some instances, the OIG and DOJ have recovered double or treble damages, plus penalties and interest, and have imposed strict compliance measures to ensure correct billing practices in the future.

As with other health care providers, the Obligor may be the subject of Medicare intermediary or carrier, OIG, U.S. Attorney General, Department of Justice, state attorney general investigations, audits or inquiries in the future. Because of the complexity of these laws, the instances in which an alleged violation may arise to trigger such investigations, audits or inquiries is increasing and could result in enforcement action against the Obligor.

Regardless of the merits of a particular case or cases, the Obligor could incur significant legal and settlement costs. Prolonged and publicized investigations could be damaging to the reputation, business and credit of the Obligor, and certain of their affiliates, regardless of the outcome, and could have material adverse consequences on the financial condition of the Obligor.

Medicare Program. The Obligor is certified to receive payments under Medicare. For Fiscal Years 2017 and 2016, approximately 16.6% and 19.4% of the combined revenues of the Obligor were derived from Medicare payments.

The successful operation of skilled nursing facilities such as those operated by the Obligor in the current competitive marketplace has become increasingly dependent on revenues derived from Medicare. Average lengths of stay in many facilities are becoming shorter as facilities are being used more significantly by residents who are recovering from hospitalizations and whose rates are typically covered by Medicare reimbursement. These payment rates are frequently higher than comparable rates paid by the Medicaid program, but they include payment for therapy and other ancillary services, which are separately billed for Medicaid recipients. At the same time, the ongoing trend in Medicare payment rates is expected to continue to be focused on the creation of savings to the federal government through an emphasis on cost cutting and the imposition of greater responsibility on providers to control costs and take on the risk of providing quality care to residents under stricter budget constraints. Future limitations on Medicare payment rates and other restrictions can be expected to have an adverse impact on skilled nursing facilities and such impact may be material.

Medicare rates are established under a method called the Prospective Payment System (“PPS”). The PPS rates include costs of furnishing skilled nursing services, including routine, ancillary, and capital-related costs. Routine costs are regular costs for which a separate charge is not made; ancillary costs are for specialized services attributable to individual patients such as therapy services; and capital costs include costs of land, buildings, and equipment. There are services outside the PPS rate that are separately allowed when furnished to a skilled nursing facility resident by an outside supplier.

The Obligor is subject to highly technical regulations by a number of federal, state and local government agencies and private agencies, including those that administer the Medicare program. Changes in the structure of the Medicare system, as well as potential limitations on payments from governmental and other third party payors, could potentially have an adverse effect on the results of operations of the Obligor. Actions by governmental agencies concerning the licensure and certification of the facilities of the Obligor or the initiation of audits and investigations concerning billing practices could also potentially have an adverse effect on the results of operations of the Obligor.

There is an expanding and increasingly complex body of law, regulation and policy (both federal and state) relating to the Medicare program, which is not directly related to payments under such program. This includes reporting and other technical rules as well as broadly stated prohibitions regarding improper inducements for referrals, referrals by physicians for designated health services to entities with which the physicians have a prohibited financial relationship, and payment of kickbacks in connection with the purchase of goods and services (see “Enforcement Activity” above). Violations of prohibitions against false claims, improper inducements and payments, prohibited physician referrals, and illegal kickbacks may result in civil and/or criminal sanctions and penalties. Civil penalties range from monetary fines that may be levied on a per-violation basis to temporary or permanent exclusion from the Medicare program. A determination that the Obligor is in violation of these laws could have a material adverse effect on finances of the Obligor.

Other future legislation, regulation or actions by the federal government are expected to continue the trend toward more restrictive limitations on reimbursement for long term care services. At present, no determination can be made concerning whether, or in what form, such legislation could be introduced and enacted into law. Similarly, the impact of future cost control programs and future regulations upon the Obligor’s financial performance cannot be determined at this time.

Medicaid. The operations of the Obligor are subject to extensive government regulation and a portion of the revenues of the Obligor will be dependent on reimbursement under the Pennsylvania Medical Assistance “Medicaid” program.

The Pennsylvania Medicaid program is a joint federal-state reimbursement program administered by the Pennsylvania Department of Human Services (“DHS”). Medicaid provides certain health care benefits to beneficiaries who are categorically needy (based on financial condition) or meet certain other eligibility requirements for skill nursing and intermediate care services.

On January 1, 1996, DHS implemented 55 PA. Code Chapter 1187, the Nursing Facilities Services Case-Mix Reimbursement System. Case mix rates for all Medical Assistance (MA) nursing facilities’ were determined in accordance with the conditions and limitations specified in 55 PA. Code Chapter 1187 and the Commonwealth’s Title XIX State Plan.

Under the Affordable Care Act, states have the option to expand Medicaid eligibility to individuals with incomes up to 133% of the federal poverty level. In 2014, Pennsylvania obtained a waiver from the federal government to expand Medicaid eligibility based on a private-market Medicaid program which began on January 1, 2015. Governor Tom Wolf immediately acted to transition the state’s Medicaid population from the private-market program (known as Healthy PA) to an expansion of the traditional Medicaid program, known as HealthChoices. HealthChoices became available for new enrollees as of April of 2015, and all individuals enrolled in the earlier program were transitioned to the HealthChoices program by September 1, 2015.

The percentage of combined revenues derived from Medicaid payments for the Fiscal Years ended June 30, 2017 and 2016 for the Obligor are, respectively, 73.5% and 71.5%. Each state currently funds a substantial portion of Medicaid payments and exercise considerable discretion in determining payments allowed to care providers. Regulations promulgated by Centers for Medicare & Medicaid Services (“CMS”) provide that states are not required to pay for long-term care services on a cost-related basis, but may do so according to payment rate systems established by the state and identified in a state Medicaid plan. See APPENDIX A-1 to this Official Statement.

Medicaid payments are made to skilled nursing facilities on behalf of eligible individuals based upon a case-mix payment system that is set prospectively on an annual basis. The case-mix payment

system is based on (i) the skilled nursing facility’s net operating costs, which include resident care costs, other costs related to resident care, and administrative costs, and (ii) the nursing facility’s capital costs, which include the facility’s fixed property costs, moveable property costs, and real estate tax costs as determined by real estate costs in the facility’s most recent audited cost report.

The operating cost component of facility reimbursement is determined based upon the classification of each facility into one (1) of twelve (12) peer groups with similar geographical locations and certified bed complements, and the average operating costs of facilities within such peer group. In determining the resident care costs, a component of the operating costs, the applicable case-mix index for a facility is determined based upon a quarterly snapshot of all of the residents in a facility, and the arithmetic mean of their respective resource utilization group classifications, which reflects each resident’s individual characteristics and clinical needs.

The capital cost component of facility reimbursement is based upon the facility-specific fair rental values for certain fixed and movable property, and facility-specific real estate tax costs. DHS has placed substantial limitations on reimbursement for capital costs, and has eliminated payments for capital costs to most facilities not operational prior to August 31, 1982.

There can be no assurance that payments under the Medicaid program will be adequate to cover the costs of providing nursing care to Medicaid patients. Budgetary and financial constraints in the Commonwealth, as well as severe limitations on the method of acquiring increased federal financial participation through the use of provider taxes and donations have called into question the ability of DHS to make adequate and timely payments to providers. In addition, proposals to reduce or substantially alter federal funding for Medicaid programs to effect federal budget reductions may result in decreased payment levels to providers which may not be adequate to cover the Obligor’s cost of care to Medicaid patients. Further, the Commonwealth has increasingly supported funding for home-based and community services case instead of institutional care. There can be no assurance that this policy will not negatively impact funding for institutionalized Medicaid recipients.

Other Possible Risk Factors

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

1. Reinstatement or establishment of mandatory governmental wage, rent or price controls;

2. 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;

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

4. Adoption of other federal, state or local legislation or regulations having an adverse effect on the future operating or financial performance of the Obligor;

5. The cost and availability of energy;

6. Increased unemployment or other adverse economic conditions in the service areas of the Obligor which would increase the proportion of residents who are unable to pay fully for the cost of their care;

7. Any increase in the quantity of indigent care provided which is mandated by law or required due to increased needs of the Facilities in order to maintain the charitable status of the Obligor;

8. Inflation or other adverse economic conditions;

9. Changes in tax, pension, social security or other laws and regulations affecting the provisions of healthcare and other services to the elderly;

10. The occurrence of natural disasters, including, but not limited to, hurricanes, volcanic eruptions and typhoons, floods or earthquakes, or failures of storm water retention devices during such naturally occurring events, which may damage the Facilities, interrupt utility service to the Facilities, or otherwise impair the operation and generation of revenues from the Facilities; or

11. Cost and availability of any insurance, such as malpractice, fire, automobile and general comprehensive liability insurance that organizations, such as the Obligor, generally carry.

FINANCIAL REPORTING AND CONTINUING DISCLOSURE

Financial Reporting

The Master Indenture requires that the Obligated Group Representative provide to each Required Information Recipient the following:

(A) Following the end of each fiscal quarter:

(i) quarterly unaudited financial statements of the Obligated Group as soon as practicable after they are available but in no event more than 45 days after the completion of such fiscal quarter, including a combined or combining statement of revenues and expenses and statement of cash flows of the Obligated Group during such period, a combined or combining balance sheet as of the end of each such fiscal quarter, and a calculation of compliance with the Marketing Requirements and Occupancy Requirements, and a calculation of Days’ Cash on Hand and Debt Service Coverage Ratio for such fiscal quarter if required to be calculated by this Master Trust Indenture, all prepared in reasonable detail and certified, subject to year-end adjustment, by an officer of the Obligated Group. Such financial statements and calculations shall be accompanied by a comparison to the Annual Budget provided pursuant to subsection (D) below; and

(ii) occupancy levels of the Facilities as of the end of such quarter including the number of beds that were occupied and vacated during that quarter and on an aggregate basis;

(B) Within 120 days of the end of each Fiscal Year, an annual audited financial report of the Obligated Group prepared by an Accountant, including a balance sheet as of the end of such Fiscal Year and statements of cash flows and changes in net assets (deficit) for such Fiscal Year (together with any required supplemental information), showing in each case in

comparative form the financial figures for the preceding Fiscal Year, together with a separate written statement of the Accountant preparing such report containing calculations of the Obligated Group’s Historical Debt Service Coverage Ratio for said Fiscal Year and the Days’ Cash on Hand of the Obligated Group at the end of such Fiscal Year if required to be calculated by this Master Trust Indenture, and a statement that such Accountant has no knowledge of any default under this Master Trust Indenture insofar as it is related to accounting matters or to the Obligated Group’s financial covenants, or if such Accountant shall have obtained knowledge of any such default or defaults, they shall disclose in such statement the default or defaults and the nature thereof (but such Accountant shall not be liable directly or indirectly to anyone for failure to obtain knowledge of any default);

(C) On or before the date of delivery of the financial reports referred to in subsection (B) above, an Officer’s Certificate of the Obligated Group (i) stating that the Obligated Group is in compliance with all of the terms, provisions and conditions of this Master Trust Indenture or, if not, specifying all such defaults and the nature thereof, (ii) calculating and certifying the Occupancy Requirements, Days’ Cash on Hand and Debt Service Coverage Ratio, if required to be calculated for such Fiscal Year by this Master Trust Indenture, as of the end of such Fiscal Year, as appropriate, and (iii) stating that any reports or information required to be posted to EMMA in accordance with the provisions of the Continuing Disclosure Certificate has been posted as required;

(D) The Annual Budget for the Obligated Group’s operations for each Fiscal Year, prepared and delivered prior to the start of each such Fiscal Year, and amendments thereof within 30 days after board approval;

(E) Such additional information as the Master Trustee or any Related Bond Trustee may reasonably request concerning any Member in order to enable the Master Trustee or such Related Bond Trustee to determine whether the covenants, terms and provisions of this Master Trust Indenture have been complied with by the Members and for that purpose all pertinent books, documents and vouchers relating to the business, affairs and Property (other than patient, donor and personnel records) of the Members shall, to the extent permitted by law, at all times during regular business hours be open to the inspection of such accountant or other agent (who may make copies of all or any part thereof) as shall from time to time be designated by the Master Trustee or such Related Bond Trustee. Without limiting the foregoing, each Member will permit, upon reasonable notice, the Master Trustee or any such Related Bond Trustee (or such personas as they may designate) to visit and inspect, at the expense of such visiting Person, its Property and to discuss the affairs, finances and accounts of the Obligated Group with its officers and Accountant, all at such reasonable times and locations and as often as the Master Trustee or such Related Bond Trustee may reasonably desire; and

(F) The Obligated Group Representative may designate a different Fiscal Year for the Members of the Obligated Group by delivering a notice to the Master Trustee designating the first and last day of such new Fiscal Year and whether or not there will be any interim fiscal period (the “Interim Period”) of a duration greater than or less than 12 months preceding such new Fiscal Year. The Members covenant that they will furnish to the Master Trustee and each Related Bond Trustee, as soon as practicable after they are available, but in no event more than 150 days after the last day of such Interim Period, a financial report for such Interim Period certified by an Accountant selected by the Obligated Group Representative covering the operations of the Obligated Group for such Interim Period and containing a combined balance sheet as of the end of such Interim Period and combined statements of operations, changes in net assets (deficit) and cash flows for such Interim Period, showing in each case in comparative form

the financial figures for the comparable period in the preceding Fiscal Year, together with a separate written statement of the Accountant preparing such report containing calculations of the Obligated Group’s Historical Debt Service Coverage Ratio for the Interim Period and Days Cash on Hand as of the last day of such Interim Period and a statement that such Accountant has no knowledge of any default under this Master Trust Indenture insofar as it relates to accounting matters or to the Obligated Group’s financial covenants, or if such Accountant shall have obtained knowledge of any such default or defaults, it shall disclose in such statement the default or defaults and the nature thereof (but such Accountant shall not be liable directly or indirectly to anyone for failure to obtain knowledge of any default).

Continuing Disclosure

In accordance with the Securities and Exchange Commission Rule 15c2-12 (the “Rule”) and so long as the Series 2017 Bonds are outstanding, the Obligor will agree pursuant to a Continuing Disclosure Certificate to be dated and delivered on the date of delivery of the Series 2017 Bonds, to cause certain financial and operating information to be provided to the Municipal Securities Rulemaking Board (“MSRB”). See Appendix G for the form of the Continuing Disclosure Certificate.

As required by the Rule, the Continuing Disclosure Certificate provides that the information to be filed with the MSRB described in the preceding paragraph is to be filed in an electronic format as prescribed by the MSRB, accompanied by identifying information as prescribed by the MSRB. The MSRB will make all continuing disclosure filings available to the public free of charge through its Electronic Municipal Market Access system (“EMMA”), which can be accessed online at www.emma.msrb.org. In general, all continuing disclosure documents and related information are to be submitted to EMMA, accompanied by certain identification information, in portable document format (PDF) files configured to permit documents to be saved, viewed, printed and retransmitted by electronic means and must be word-searchable.

The Continuing Disclosure Certificate provides holders of the Series 2017 Bonds with certain enforcement rights in the event of a failure by the Obligor to comply with the terms thereof; however, a default under the Continuing Disclosure Certificate does not constitute a default under the Bond Indenture, the Loan Agreement, the Mortgages, the Series 2017 Note or the Master Indenture. The Continuing Disclosure Certificate may be amended or terminated under certain circumstances in accordance with the Rule as more fully described therein. Holders of the Series 2017 Bonds are advised that the Continuing Disclosure Certificate should be read in its entirety for more complete information regarding its contents.

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

While the Obligor does not currently have any continuing disclosure obligations with respect to the 2007 Bonds, in order to assist investors, the Obligor on August 29, 2017 and August 31, 2017 voluntarily posted the information for its last five (5) fiscal years on EMMA that would have been required under the Continuing Disclosure Certificate had one been executed in connection with the 2007 Bonds.

FEASIBILITY CONSULTANT

The Obligor’s financial forecast, included as part of the Feasibility Study included as Appendix C hereto, has been examined by Baker Tilly Virchow Krause, LLP, independent certified public accountants, as stated in the report appearing in Appendix C and is included in reliance on the report. As stated in the financial forecast, there will usually be differences between the forecast data and actual results because events and circumstances frequently do not occur as expected, and those differences may be material. The Feasibility Study should be read in its entirety.

LITIGATION

Issuer

There is not now pending or, to the Issuer’s knowledge, threatened any litigation restraining or enjoining the issuance or delivery of the Series 2017 Bonds or the execution and delivery by the Issuer of the Bond Indenture or the Loan Agreement or questioning or affecting the validity of the Series 2017 Bonds or the security therefor or the proceedings of the Issuer under which they are to be issued.

Obligor

There is no litigation pending or, to the Obligor’s knowledge, threatened against the Obligor, wherein an unfavorable decision would (i) adversely affect the ability of the Obligor to make the Improvements or to operate its facilities or to carry out its obligations under the Master Indenture, the Loan Agreement or the Mortgages, or (ii) have a material adverse impact on the financial position or results of operations of the Obligor.

LEGAL MATTERS

Certain legal matters incident to the authorization and issuance of the Series 2017 Bonds by the Issuer are subject to the approving opinion of Ballard Spahr LLP, Philadelphia, Pennsylvania, Bond Counsel. The proposed form of such opinion is included herein as Appendix E. The Bond Counsel opinion will be limited to matters relating to the authorization and validity of the Series 2017 Bonds and to the tax-exempt status of interest on the Series 2017 Bonds as described in “TAX MATTERS” and will make no statement as to the financial resources of the Obligor or its ability to provide for payment of the Series 2017 Bonds.

Certain legal matters will be passed upon for the Issuer by its counsel, Douglas B. Breidenbach, Jr., Esquire, Pottstown, Pennsylvania; for the Obligor by its counsel, The Law Office of Timothy E. Dixon, PA, Ellicott City, Maryland and it Pennsylvania counsel, Law Offices of Robert W. Scott, PC, Media, Pennsylvania; and for the Underwriter by its counsel, Eckert Seamans Cherin & Mellott, LLC, Philadelphia, Pennsylvania.

The various legal opinions to be delivered concurrently with the delivery of the Series 2017 Bonds express the professional judgment of the attorneys rendering the opinions as to the legal issues explicitly addressed therein. In rendering a legal opinion, the attorney does not become an insurer or guarantor of the expression of professional judgment, of the transaction opined upon, or of the future performance of the parties to the transaction, nor does the rendering of an opinion guarantee the outcome of any legal dispute that may arise out of the transaction.

TAX MATTERS

General

In the opinion of Ballard Spahr LLP, Bond Counsel, interest on the Series 2017 Bonds is excludable from gross income for purposes of federal income tax under existing laws as enacted and construed on the date of initial delivery of the Series 2017 Bonds, assuming the accuracy of the certifications of the Authority and the Borrower and continuing compliance by the Authority and the Borrower with the requirements of the Internal Revenue Code of 1986 (the "Code"). Interest on the Series 2017 Bonds is not an item of tax preference for purposes of either individual or corporate federal alternative minimum tax; however, interest on Series 2017 Bonds held by a corporation (other than an S Corporation, regulated investment company, or real estate investment trust) may be indirectly subject to federal alternative minimum tax because of its inclusion in the adjusted current earnings of a corporate holder. Bond Counsel expresses no opinion regarding other federal tax consequences relating to ownership or disposition of, or the accrual or receipt of interest on, the Series 2017 Bonds.

Certain Series 2017 Bonds may be offered at a discount ("original issue discount") equal generally to the difference between their public offering price and their principal amount. For federal income tax purposes, original issue discount on a Series 2017 Bond accrues periodically over the term of the Series 2017 Bond as interest with the same tax exemption and alternative minimum tax status as regular interest. The accrual of original issue discount increases the holder's tax basis in the Series 2017 Bond for determining taxable gain or loss from sale or from redemption prior to maturity. Holders should consult their tax advisers for an explanation of the accrual rules.

Certain of the Series 2017 Bonds may be offered at a premium ("original issue premium") over their principal amount. For federal income tax purposes, original issue premium is amortizable periodically over the term of a Series 2017 Bond through reductions in the holder's tax basis for the Series 2017 Bond for determining taxable gain or loss from sale or from redemption prior to maturity. Amortization of premium does not create a deductible expense or loss. Holders should consult their tax advisors for an explanation of the amortization rules.

Bond Counsel is also of the opinion that, under the laws of the Commonwealth of Pennsylvania as enacted and construed on the date of initial delivery of the Series 2017 Bonds, interest on the Series 2017 Bonds is exempt from Pennsylvania personal income tax and corporate net income tax, and the Series 2017 Bonds are exempt from personal property taxes in Pennsylvania.

Changes in Federal and State Tax Law

From time to time, there are Presidential proposals, proposals of various federal committees, and legislative proposals in the Congress and in the states that, if enacted, could alter or amend the federal and state tax matters referred to herein or adversely affect the marketability or market value of the Series 2017 Bonds or otherwise prevent holders of the Series 2017 Bonds from realizing the full benefit of the tax exemption of interest on the Series 2017 Bonds. Further, such proposals may impact the marketability or market value of the Series 2017 Bonds simply by being proposed. It cannot be predicted whether or in what form any such proposal might be enacted or whether if enacted it would apply to Series 2017 Bonds issued prior to enactment. In addition, regulatory actions are from time to time announced or proposed and litigation is threatened or commenced which, if implemented or concluded in a particular manner, could adversely affect the market value, marketability or tax status of the Series 2017 Bonds. It cannot be predicted whether any such regulatory action will be implemented, how any particular litigation or judicial action will be resolved, or whether the Series 2017 Bonds would be impacted thereby.

Purchasers of the Series 2017 Bonds should consult their tax advisors regarding any pending or proposed legislation, regulatory initiatives or litigation. The opinions expressed by Bond Counsel are based upon existing legislation and regulations as interpreted by relevant judicial and regulatory authorities as of the date of issuance and delivery of the Series 2017 Bonds, and Bond Counsel has expressed no opinion as of any date subsequent thereto or with respect to any proposed or pending legislation, regulatory initiatives or litigation.

FINANCIAL STATEMENTS

The financial statements of the Obligor as of and for the years ended June 30, 2014, 2015, 2016 and 2017, included in Appendix B, have been audited by Mayer Hoffman McCann P.C. (the “Auditor”), independent auditors, as stated in their report appearing in Appendix B to this Official Statement. Such statements include reports for the fiscal years ended June 30, 2014, 2015, 2016 and 2017. A summary of the unaudited financial information of the Obligor for the two months ended August 31, 2016 and August 31, 2017 is included in Appendix A. The Auditor has performed certain procedures on the unaudited financial statements of the Obligor included in Appendix A and has consented to the inclusion of the audited financial statements of the Obligor in Appendix B.

RATING

The Series 2017 Bonds are not rated by any rating service.

UNDERWRITING

The Series 2017 Bonds are being purchased by Herbert J. Sims & Co., Inc., as Underwriter for a purchase price of $______(representing the $______aggregate principal amount of the Series 2017 Bonds, plus/less original issue premium/discount of $______, and less the Underwriter’s discount of $______), pursuant to a Bond Purchase Agreement, entered into among the Issuer, the Underwriter and the Obligor (the “Bond Purchase Agreement”). The Underwriter reserves the right to join with dealers and other underwriters in offering the Series 2017 Bonds to the public. The obligations of the Underwriter to accept delivery of the Series 2017 Bonds are subject to various conditions contained in the Bond Purchase Agreement. The Bond Purchase Agreement provides that the Underwriter will purchase all of the Series 2017 Bonds if any Series 2017 Bonds are purchased.

MISCELLANEOUS

The references herein to the Act, the Bond Indenture, the Loan Agreement, the Master Indenture, the Supplemental Indenture and other materials are only brief outlines of certain provisions thereof and do not purport to summarize or describe all the provisions thereof. Reference is hereby made to such instruments, documents and other materials, copies of which are either attached hereto in APPENDIX D or, if not so attached, will be furnished by the Bond Trustee upon request for further information.

Any statements in this Official Statement involving matters of opinion, whether or not expressly so stated, are intended as such and not as representations of fact.

The attached Appendices A through G are integral parts of this Official Statement and should be read in their entirety together with all of the foregoing statements.

The information assembled in this Official Statement has been supplied by the Obligor and other sources believed to be reliable. The information contained in this Official Statement should not be construed as representing all of the conditions affecting the Issuer, the Obligor or the Series 2017 Bonds.

The Obligor has agreed to indemnify the Issuer and the Underwriter against certain liabilities relating to the Official Statement.

CERTIFICATION

The Issuer has consented to the use of this Official Statement, however, except for the information set forth under the headings “SHORT STATEMENT – The Issuer,” “THE ISSUER” and “LITIGATION – Issuer,” the Issuer has not participated in the preparation of this Official Statement and has made no independent investigation with respect to the information contained in this Official Statement, and accordingly, the Issuer assumes no responsibility for the sufficiency, the accuracy or completeness of any of the material contained in this Official Statement. The Issuer is not responsible for providing any purchaser of the Series 2017 Bonds with any information relating to the Series 2017 Bonds or any of the parties in this transaction referred to in this Official Statement or for the accuracy or completeness of any such information furnished to any purchaser.

The execution, delivery and use of this Official Statement has been duly authorized by the Authority and the Obligor.

MONTGOMERY COUNTY HIGHER EDUCATION AND HEALTH AUTHORITY

By: Title: APPROVED:

PENNSYLVANIA LTC, INC.

By: Title:

APPENDIX A CERTAIN INFORMATION ABOUT THE OBLIGOR AND THE COMMUNITY

APPENDIX A

CERTAIN INFORMATION ABOUT PENNSYLVANIA LTC, INC. AND ITS FACILITIES

Table of Contents

Page

CERTAIN INFORMATION ABOUT THE OBLIGOR AND ITS FACILITIES ...... A-1 CORPORATE GOVERNANCE AND MANAGEMENT OF THE OBLIGOR ...... A-1 THE MANAGER ...... A-8 THE LINWOOD FACILITY ...... A-9 THE EDGEHILL FACILITY ...... A-14 COMPETITION AND SERVICE AREA ...... A-19 FINANCIAL INFORMATION ...... A-21 INVESTMENT OF CASH RESERVES ...... A-25 INSURANCE ...... A-25 LITIGATION ...... A-25 THE 2017 CAPITAL PROJECT ...... A-25 DESIGN AND CONSTRUCTION OF THE 2017 CAPITAL PROJECT ...... A-27 CURRENT 2017 CAPITAL PROJECT STATUS ...... A-30 FEASIBILITY STUDY ...... A-31

APPENDIX A

CERTAIN INFORMATION ABOUT THE OBLIGOR AND ITS FACILITIES

General. Pennsylvania LTC, Inc. (the “Obligor”, “PA-LTC” or the “Corporation”) is a nonprofit corporation organized and existing under the laws of the Commonwealth of Pennsylvania (the “Commonwealth”) and is an organization described under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the “Code”) by virtue of an exemption determination letter and a group exemption letter granted to Guardian (hereinafter defined). Incorporated on March 6, 1990, the Obligor currently owns: (i) a 102 licensed bed (90-bed in service) nursing facility located in the City of Scranton, Lackawanna County, Pennsylvania known as Linwood Nursing and Rehabilitation Center (“Linwood” or the “Linwood Facility”); and (ii) a 60-bed nursing facility located in Glenside, Montgomery County, Pennsylvania known as Edgehill Nursing and Rehabilitation Center (“Edgehill” or the “Edgehill Facility”, and together with Linwood, the “Facilities”). The Obligor is a single purpose entity with its activities limited to the ownership and operation of the Facilities.

PA-LTC is an operating affiliate of The Guardian Foundation, Inc. (“Guardian” or the “Parent”), a nonprofit corporation organized and existing under the laws of the Commonwealth and an organization described under Section 501(c)(3) of the Code. Guardian was organized for public charitable purposes to provide services to its affiliates, which are separately incorporated, to establish, acquire, own, and maintain nursing homes, hospitals, and related healthcare facilities, including retirement housing for seniors, and to operate such facilities through third-party management contracts. Guardian is currently the sole corporate member of 14 nonprofit affiliates, which operate 39 senior living and healthcare facilities across five (5) states, including PA-LTC, with over 1,750 resident units and program participants. Each affiliate facility is independently operated, and each Affiliate (hereinafter defined) retains its excess cash flow, which it reinvests as necessary to improve its facility and resident quality of care. Guardian is not obligated to provide financial support to its Affiliates for any of their properties or activities and is not obligated with respect to the Series 2017 Bonds, and the revenues and assets of Guardian are not pledged or granted as security for the Series 2017 Bonds. See “CORPORATE GOVERNANCE AND MANAGEMENT OF THE OBLIGOR – “Guardian” and “Affiliates” herein.

Linwood and Edgehill (along with a third nursing facility that is no longer owned by the Obligor) were each existing facilities acquired by the Obligor in 1994. See “THE LINWOOD FACILITY” and “THE EDGEHILL FACILITY” herein for a detailed description of each Facility. The Facilities are currently managed by Genesis Eldercare Network Services, LLC (“Genesis Eldercare”), an affiliate of Genesis Healthcare (“Genesis”), under a Management Agreement (hereinafter defined), which assumed management of the Facilities on July 10, 2008. Genesis, a skilled nursing and rehabilitation therapy provider, is headquartered in Kennett Square, Pennsylvania, and employs approximately 80,000 individuals. Genesis Eldercare currently manages more than 450 skilled nursing centers and assisted senior living communities. An affiliate, Genesis Eldercare Rehab Services, provides therapy to approximately 1,700 locations across the country. Genesis Eldercare is not obligated with respect to the Series 2017 Bonds. See “THE MANAGER” herein.

CORPORATE GOVERNANCE AND MANAGEMENT OF THE OBLIGOR

Board of Directors, Officers and Corporate Structure.

Board of Directors. The Board of Directors (“Board”) of the Obligor currently consists of three members appointed by the Board of Directors of Guardian. William F. Rowe, III, serves as Vice President, Treasurer and Secretary, but is not a director of Guardian or the Obligor. The Board is required to have a minimum of three members who are appointed to terms of three years. Members may be reappointed for unlimited successive terms. The directors and officers of the Obligor serve without compensation. Set forth

A-1 below is a list of the Board of Directors and Officers as of June 30, 2017 and an organizational chart for the Obligor:

Name Title Occupation Latest Appointment

Gregory K. Grove President & Director President of Guardian 2016

Timothy A. Duggan Director Business Owner 2016

Arthur C. Delozier Director Retired 2016

William F. Rowe, III Vice President, Vice President of Accounting 2016 Treasurer & Secretary and Corporate Controller of Guardian

Guardian. Guardian was organized for public charitable purposes to provide services to its affiliates, which are separately incorporated, to establish, acquire, own, and maintain nursing homes, hospitals, and related healthcare facilities, including retirement housing for seniors, and to operate such facilities through third-party management contracts. Guardian is currently the sole corporate member of 14 nonprofit affiliates, which operate 39 senior living and healthcare facilities across five (5) states, including PA-LTC, with over 1,750 resident units and program participants. Information regarding the Parent is provided solely for informational purposes. The Parent is not obligated with respect to the Series 2017 Bonds and the revenues and assets of the Parent are not pledged or granted as security for the Series 2017 Bonds.

The Obligor has a Corporate Administration Services Agreement, dated July 1, 2017, with Guardian whereby the Obligor will pay Guardian a monthly fee in exchange for corporate administrative services. The fee is adjusted every January 1 by the change in the Consumer Price Index (CPI) and the agreement is scheduled to expire on December 31, 2022.

Guardian shall also be entitled to a participation fee equal to one dollar per resident day, to be adjusted every January 1 by the change in the CPI. The participation fee will be subordinated to the payment of the debt service on the Series 2017 Bonds. For additional information regarding the Corporate Administration Agreement, see “RISK FACTORS – Management Fees and Subordination” in the Official Statement.

Affiliates. Information regarding the Affiliates is provided solely for informational purposes. None of the Affiliates (other than PA-LTC) are obligated with respect to the Series 2017 Bonds and the revenues and assets of the Affiliates (other than PA-LTC) are not pledged or granted as security for the Series 2017 Bonds.

A-2

The Guardian Foundation, Inc.

Affiliated Entities in IRS Exempt Group

Central Florida Communities, AICC, Inc. Florida Care Properties, Inc. Guardian Center, Inc. Inc.

Guardian Hospice of Lighthouse of Revere, Naamans Creek Care, Nassau Care Centers, Health Systems, Inc. MA, Inc. Inc. Inc. Inc.

Rolling Meadows Care, Somerset Meadows, Pennsylvania LTC, Inc. RBRC, Inc. Somerset Care, Inc. Inc. Inc.

The Internal Revenue Service issued the following letters to Guardian: (i) a letter dated January 30, 1990 determining that Guardian is an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986 (the “Code”), (ii) a group exemption letter dated August, 23, 1990 recognizing the subordinate entities named in the ruling request and those subsequently included within its exempt group as organizations described in Section 501(c)(3) of the Code, and (iii) a letter dated August 31, 1995 that Guardian is classified as a public charity under Section 509(a) of the Code. At present there are nearly a dozen active affiliated entities which own and operate facilities as non-profit corporations created under the non-profit laws of the Commonwealths of Kentucky, Pennsylvania, and Massachusetts and the States of Florida and Mississippi (collectively, the “Affiliates”).

The purpose of the Affiliates is to permit independent financing and operation of various projects through separate corporate entities, in order to segregate the operations, assets and liabilities of each Affiliate from Guardian and the other Affiliates. Additional subordinate entities may be created in the future as the need arises.

Operating Affiliates.

AICC, Inc. AICC, Inc. closed its initial acquisition on January 29, 1993, with the purchase of a 70-bed Intermediate Care Facility for Individuals with Mental Retardation (ICF/MR) located on Amelia Island, Florida (the “Amelia Island Facility”), which provided residential care to adult developmentally disabled residents. Financing was obtained through the issuance of $6,210,000 Nassau County, Florida ICF/MR Revenue Bonds, Series 1993. This financing was retired in November 2007.

In 2009, Nassau Care Centers, Inc., an Affiliate of Guardian, constructed three sets of cluster homes for the developmentally disabled. Thereafter, AICC, Inc. transferred all of its residents to the newly constructed cluster homes and closed the Amelia Island Facility

AICC has paid off all of the debt on its approximate 4.75 acre site of the Amelia Island Facility and is presently redeveloping the site.

SOMERSET CARE, Inc. Somerset Care, Inc., closed a financing for the construction of a 180-bed nursing facility in Somerset County, Pennsylvania, on July 20, 1994. The facility, Meadow View Nursing Home, was completed and opened on August 1, 1995. It replaced an older and smaller county owned and operated nursing home. The financing consisted of $11,220,000 Somerset County Hospital Authority Health Care Facility First Mortgage Revenue Bonds (GF/Somerset Care, Inc. Project) Series 1994. The facility was developed for the

A-3 company by Complete Healthcare Resources - Eastern, Inc., which manages the facility. Meadow View presently operates 150 skilled nursing beds and 11 independent living units.

In July 2012, Somerset Care refinanced its Series 1994 Bonds issued at 8.5% with a HUD insured thirty- year, first mortgage at 2.8%, substantially reducing its debt service and better assuring its long term viability.

An approximate 8.9 acre parcel not used in the operation of Meadow View Nursing Home was transferred to Somerset Meadows, Inc., a corporation affiliated with Guardian, without debt, to facilitate future development – See reference to Somerset Meadows, Inc. below.

ROLLING MEADOWS CARE, Inc. On January 26, 1995, the acquisition of a 121-bed nursing home facility from Greene County, Pennsylvania, by Rolling Meadows Care, Inc. was completed. Complete Healthcare Resources - Eastern, Inc., manages the facility for the company. The acquisition was financed with the issuance of $6,800,000 Greene County Industrial Development Authority, Series 1995 Bonds.

In June 2011, Rolling Meadows Care refinanced the Series 1995 Bonds issued at 9.0% with a HUD insured thirty-year, first mortgage at 3.4%, substantially reducing its debt service and better assuring its long term viability. Renovations of the interior were completed in early 2015.

LIGHTHOUSE OF REVERE, Inc. On April 21, 1995, Lighthouse of Revere, Inc. acquired the AtlantiCare Nursing Home, a 123-bed skilled nursing home located in Revere, Massachusetts. The acquisition and renovation were financed through the issuance of $7,845,000 aggregate principal amount of Massachusetts Industrial Development Agency First Mortgage Revenue Bonds (GF/Revere, Inc. Issue) Series 1995.

This facility was renamed Lighthouse Nursing Care Center and has achieved the distinction of being a top ranked nursing home facility in Massachusetts based on an annual survey conducted by the Massachusetts Department of Public Health. Lighthouse achieved nine consecutive years with a perfect score of 132 on the Massachusetts Department of Public Health surveys, and in 2011, was ranked 34th in the state in the “Boston Globe 100 Best Places To Work” poll.

In 2007, Lighthouse of Revere worked with its sole bondholder to refinance the bonds at a lower interest rate. In June 2012, Lighthouse of Revere refinanced its Series 1995 Bond issue with its $8,000,000 Series 2012 Bond issue, which included $3,160,000 to fund the cost of expanding and renovating the nursing facility. The project included the construction of a new space to expand the facility’s therapy space. The entire project cost approximately $7,000,000, including approximately $3,840,000 funded from equity. Construction began in September 2013 and was completed in March 2015. The Lighthouse is being managed for the company by Genesis Eldercare.

NAAMANS CREEK CARE, Inc. On May 2, 1995, Naamans Creek Care, Inc. acquired an approximate 1.85 acre parcel of land in Bethel Township, Pennsylvania, and began the construction of a new 90-bed nursing facility thereon. The acquisition and construction were financed with the proceeds of the $7,170,000 Delaware County Authority Health Care Facility First Mortgage Revenue Bonds (GF/Longwood Care, Inc. Project) Series 1995A and Series 1995B. The facility opened on March 1, 1996, and is being managed for the company by Genesis Eldercare.

In 2007, the Series 1995 bonds were refunded with the proceeds of $4,650,000 of Delaware County IDA First Mortgage Refunding Revenue Bonds. Naamans Creek continues to enjoy the benefits of this lower debt service and its distinction as a facility of choice in the area. It completed a substantial renovation in early 2010 and added a parking lot in 2014. On August 10, 2017, the Naamans Creek refinanced its Series 2007 Bonds issued at 7.0% with a HUD 232/223(f) thirty-year, first mortgage, at an interest rate of 3.43%, substantially reducing its debt service and better assuring its long term viability.

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RBRC, Inc. On March 6, 1998, RBRC, Inc. acquired the Lake Clough Health and Retirement Center located in Kuttawa, Kentucky. Prior to its acquisition, the facility had experienced operating and financial problems which the previous owner was unable to overcome. The facility was renamed River’s Bend Retirement Center and is being managed by Eidetik, Inc., a Kentucky-based long term care management company. The acquisition was financed with conventional debt and later refinanced in 1999 with the proceeds of the $2,900,000 City of Kuttawa, Kentucky, First Mortgage Revenue Bonds (GF/Kentucky, Inc. Project). It provides 40 skilled nursing beds, 8 personal care beds, 18 assisted living apartments, and child care services for up to 30 children.

GUARDIAN CENTER, Inc. On October 29, 1998, Guardian Center, Inc. acquired the Lutheran Home of Brockton, a 123-bed nursing and rehabilitation facility located in Brockton, Massachusetts. The acquisition and renovation of the facility were financed with the proceeds of the $5,780,000 Massachusetts Development Finance Agency Mortgage Revenue Bonds (GF/Pilgrim, Inc. Project), Series 1998. The facility, renamed as “The Guardian Center,” is being managed for the company by Genesis Eldercare.

CENTRAL FLORIDA COMMUNITIES, Inc. On February 28, 2001, Central Florida Communities, Inc. acquired three intermediate care facilities for the developmentally disabled (ICF/DD) and 11 group homes for the developmentally disabled located in the State of Florida. The acquisitions were financed with the proceeds of the $16,985,000 Orange County Health Facilities Authority (Florida) First Mortgage Healthcare Facilities Revenue Bonds (GF/Orlando, Inc. Project), Series 2001. The company has developed or acquired eight additional group home facilities. The facilities are managed for the company by DSI Management, LLC.

In June 2013, Central Florida Communities refinanced the Series 2001 Bonds issued at 9.0% with a HUD insured thirty-year, first mortgage at 3.2%, substantially reducing its debt service and better assuring its long term viability.

FLORIDA CARE PROPERTIES, Inc. On October 10, 2007, Florida Care Properties, Inc. acquired five (5) facilities providing day program services to approximately six hundred (600) developmentally clients in Mississippi and Florida together with the business operations. Financing totaling $29,000,000 was provided through a combination of tax-exempt bonds issued through the Mississippi Business Finance Corporation and a loan from NPPF Intermediate Funding I, LLC. The company has constructed a new day program facility in North Fort Myers, Florida, of approximately 7,000 square feet, and facilities of over 9,300 square feet in Starkville and Brookhaven, Mississippi.

Florida Care Properties has financed from operating cash flow, the construction and replacement of three day program facilities for the developmentally disabled. Its new $1,560,000 facility in North Fort Myers, Florida, opened in late 2009, and in December 2012, a new $1,780,000 facility in Starkville, Mississippi, opened. The company constructed a third new facility in Brookhaven, Mississippi, which was financed from cash on hand and completed in late 2015. In August 2017, the loan from NPPF Intermediate Funding I, LLC, was paid off.

NASSAU CARE CENTERS, Inc. On January 3, 2008, Nassau Care Centers, Inc. began construction of nine (9) eight-bed cluster homes for the developmentally disabled to replace an aging ICF/MR facility on Amelia Island, Florida, owned by AICC, Inc. Financing was provided through the issuance of $11,150,000 Nassau County First Mortgage Revenue Bonds. Construction was completed in mid-2009 and clients were relocated to the new facilities from the Amelia Island Facility. A new $2,750,000 day program facility was completed in December 2014. The facility is being managed by Eidetik, Inc.

SOMERSET MEADOWS, Inc. In July 2012, Somerset Meadows, Inc. acquired an 8.9 acre parcel adjacent to the Meadow View Nursing Home owned by Somerset Care, Inc., an affiliate. Somerset Meadows hopes to develop the property for senior housing, assisted living, or independent living units.

Conflict of Interest Policy. To date, the Obligor has not conducted business transactions with any organizations or corporations with which one or more Directors may be affiliated. The Obligor has a written

A-5 conflict of interest policy which requires that any possible conflict of interest be disclosed and made a matter of record. In addition to disclosure, the policy requires that any Director having a possible conflict not participate in the decision-making process or use his or her personal influence to affect the outcome of a matter. The policy is reviewed annually; each Board member is asked to declare any potential conflicts of interest on an annual basis as well. There are no other conflicts of interest that would have an impact on the financing of the Project.

Executive Management of the Obligor.

Below is a list of the directors and officers of the Obligor:

Gregory K. Grove, Director & President

Mr. Grove serves as a director and president of Guardian and the Obligor and is a full time, compensated employee of Guardian, but serves in an uncompensated capacity with the Obligor. Mr. Grove has served as an active member of the boards of directors of several other non-profits organizations, including the Board of Directors and as Treasurer of the Georgia Senior Living Association, until retiring from that organization in early 2017.

Mr. Grove was a co-founder of Grove Capital Corporation, Inc., formed in late 1983 to provide investment banking and underwriting services to the health care industry. Prior to relocating to Atlanta, Georgia, in 1983, Mr. Grove was a First Vice President with the firm of Shearson American Express in New York City, and from 1978 to 1982, he was employed with the investment banking firm of Oppenheimer & Company, Inc., in its New York headquarters in the Financial Services Department. For a number of years, Mr. Grove was registered with the National Association of Securities Dealers, Inc. as a Municipal Securities Principal, General Securities Principal, Registered Representative, and Financial and Operations Principal. Mr. Grove is no longer active in the investment banking field.

Mr. Grove received his Masters of Business Administration from Tulane University and his Bachelors of Arts degree in science from the University of North Carolina.

Arthur C. DeLozier, Director

Mr. DeLozier currently serves as a director of Guardian and the Obligor. Mr. DeLozier receives a board stipend for his service to Guardian, but serves in an uncompensated capacity with the Obligor. Mr. DeLozier was employed by Guardian in Atlanta from 1996 through 2010, serving as Vice President and Chief Financial Officer. Prior to joining Guardian, Mr. DeLozier was the Vice President of Accounting for First American Health Care, a national provider of home health services and management services to hospital-based home health care entities.

From 1980 through 1985, Mr. DeLozier was a partner in the firm of Stapleton and DeLozier, PC, a St. Petersburg, Florida CPA firm that specialized in the provision of audit and reimbursement services to nursing homes, home health agencies, and rehabilitative agencies. Prior to that, Mr. DeLozier was employed by Aetna Life and Casualty in Clearwater, Florida, as a Medicare auditor and reimbursement consultant.

Mr. DeLozier has lectured on industry accounting practices and reimbursement topics before national association seminars, and has provided expert witness services in litigation matters involving healthcare industry practices.

Mr. DeLozier graduated with honors in 1975 from the University of South Florida with a baccalaureate degree in accounting. From 1969 through 1972, he served in the United States Air Force. In retirement, Mr. DeLozier is a writer of novels.

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Timothy A. Duggan, Director

Mr. Duggan currently serves as a director of Guardian and the Obligor. Mr. Duggan began his career with a real estate management company in Atlanta, Georgia, working with various banks to turnaround distressed properties, such as office parks, hotels and shopping centers.

In 1984, he founded Media Masters, a software manufacturing company providing services in package design, printing, CD/DVD manufacturing and customer order fulfillment. The company served clients based on the east coast, including IBM, Coca-Cola and Bank of America. The firm was successfully sold to a Boston based company.

From 2001 until present, Mr. Duggan, along with his wife, owns and operates Com-Source, a sales and marketing services firm. They also represent the interests, in the United States, of two Chinese based manufacturers, for contract manufacturing services.

William F. Rowe, III; Vice President, Treasurer & Secretary

Mr. Rowe joined Guardian in Atlanta in 2005. He is a full time employee of Guardian, serving as Vice President of Accounting and is the Corporate Controller. Prior to joining Guardian, Mr. Rowe was the Director of Finance for Oak Summit Nursing and Rehabilitation, a skilled nursing facility affiliated with Baptist Medical Center/Wake Forest University, providing acute, ventilator and intermediate care services. Mr. Rowe was responsible for all financial, accounting and reimbursement aspects of the facility.

From 2000 through 2003, Mr. Rowe was a manager with Crisp, Hughes, Evans, LLP in Atlanta, Georgia, where he specialized in reimbursement consulting services to nursing homes and hospice throughout Georgia and South Carolina.

Mr. Rowe was previously employed by Beverly Enterprises in Fort Smith, Arkansas, as Director of Reimbursement. Mr. Rowe was instrumental in developing an in-house automated cost report filing system for both Medicare and several Medicaid state programs.

Mr. Rowe graduated in 1977 from Catawba College with a baccalaureate degree in accounting and business administration. Mr. Rowe graduated with honors with a Master’s in Business Administration from Old Dominion University in 1989. He became credentialed as a Certified Public Accountant in 1991.

Employees.

As of June 30, 2017, the Obligor employed 155 individuals, of whom 117 are full-time employees and 38 are part-time employees. The Linwood Facility had 77 full-time equivalent employees and 19 part-time employees, and the Edgehill Facility had 40 full-time equivalent employees and 19 part-time employees.

The Obligor provides its full-time employees with health, dental and vision, and basic life insurance. In addition, the Obligor provides a retirement benefit plan for eligible employees. The Obligor contributes .25% of the first 6% of eligible salary with a 1.5% maximum as its contribution. All retirement plan contributions of the Obligor are fully funded on an annual basis.

The Obligor has no collective bargaining agreements. No known union activity or attempts to organize are being conducted at the present time. The Obligor considers its relationship with its employees to be good and there has never been a work stoppage by employees.

The Obligor has not experienced problems with filling vacancies nor does it anticipate any significant vacancies in key positions.

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Vendors and Service Providers.

The Obligor is generally within payment terms with its various vendors and service providers. The Obligor believes that it enjoys favorable relations with it vendors and service providers.

In addition to managing the Facilities, Genesis Eldercare provides certain long term care related services for the Obligor. The Obligor also utilizes Hospice of the Sacred Heart, Arcadia Hospice, VNA Hospice, Allied Hospice, Caring Hospice Services, Abington Memorial Hospital Home Care Department and Life Choice for hospice care. In addition, the Obligor has engaged Omnicare to provide pharmacy services. Genesis Eldercare selects and supervises the various vendors and service providers used by the Facilities. Genesis Eldercare periodically reviews the various vendor and service provider relationships to assure that the pricing and quality are favorable to the Obligor. Most of the vendor and service provider contracts grant to the Obligor, the right to terminate the applicable contract upon thirty (30) to sixty (60) days’ notice, without cause or penalty. The vendors and service providers listed in this paragraph are subject to change from time to time in the ordinary course of business of the Facilities.

THE MANAGER

General

The Facilities are managed by Genesis Eldercare, a subsidiary of Genesis Healthcare, Inc., a New York Stock Exchange listed company (“Genesis”). Genesis is a skilled nursing care provider, headquartered in Kennett Square, Pennsylvania, which is located southwest of Philadelphia and approximately 15 miles northwest of Wilmington, Delaware. In addition, Genesis provides rehabilitation therapy and other long term care related services through subsidiaries. Genesis and its subsidiaries employ approximately 80,000 individuals and currently operate and manage more than 450 skilled nursing centers and assisted senior living communities in 30 states. In addition, subsidiaries of Genesis provide therapy to approximately 1,700 locations in 45 states and the District of Columbia.

Genesis provides short-term and long-term healthcare services, as well as a variety of care related housing and professional clinical services. Genesis, through its rehabilitation therapy subsidiary, offers short-term rehabilitation therapy, which utilizes occupational, physical and speech therapy, specialized cardiac or pulmonary management, transitional care, respiratory therapy, dialysis, neurorehabilitation and driving rehabilitation. Further, long-term care at Genesis includes 24-hour skilled nursing services for elderly residents and individuals with a chronic condition or a prolonged illness, as well as memory support and hospice care.

Genesis owns or manages six (6) skilled nursing facilities within the PMA (hereinafter defined) of the Edgehill Facility. Genesis Eldercare manages the operations of four other subordinates of Guardian.

Management Agreement

The Obligor engaged Genesis Eldercare to exclusively supervise and direct the management and operation of its facilities pursuant to a management agreement, dated as of June 19, 2013 (the “Management Agreement”). While Genesis Eldercare is responsible for the day to day operation of the Facilities, the Obligor retains ultimate control and ownership of the Facilities. Under the Management Agreement, Genesis Eldercare receives a fixed monthly fee, together with an incentive management fee, which collectively shall not exceed four and one-half percent (4½%) of revenues of PA-LTC. The incentive management fee is only earned upon certain milestones being met and is subordinated to the payment of the debt service on the Series 2017 Bonds. Staff members of the Facilities are employees of the Obligor, with the exception of the Administrator and Director of Nursing who are employees of Genesis Eldercare. Salaries and benefits of the Administrator and Director of Nursing at the Facilities are also reimbursed by the Obligor.

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Pursuant to the Management Agreement, Genesis Eldercare is obligated to undertake the management services, as defined therein. Management services include, inter alia, providing and maintaining operating manuals and procedures; managing the facilities in a manner consistent with applicable licensing, accreditation, professional standards and financial covenants; overseeing the hiring and discharge, compensation, promotion, training and supervision of full-time and part-time employees; marketing, purchasing, contracting, billing and collecting facility revenues; performing physical repairs and maintenance to the properties; maintaining required license and permit renewals and updates; and keeping books and records and preparing financial reports and operating and capital budgets. See “RISK FACTORS – Management Fees and Subordination” in the Official Statement.

THE LINWOOD FACILITY

General

The Linwood Nursing and Rehabilitation Center is located in the City of Scranton, Lackawanna County, Pennsylvania (the “City”) in a scenic mountainside setting adjacent to Lake Scranton and a few miles from the historical downtown area of the City. Linwood is located off of Interstate 81 adjacent to Nay Aug Park (the City’s largest park) and is less than two (2) miles from the University of Scranton. The Wilkes-Barre/Scranton International Airport is approximately eight (8) miles away from the facility.

The Linwood Facility was constructed and expanded in phases beginning in 1915. While the Linwood Facility has existed for over 100 years, the building has undergone a number of expansions, renovations and renewals. At the Linwood Facility, the Obligor provides long-term care and short-term rehabilitation for its residents with an emphasis on quality of care. Linwood has 77 full-time and 19 part-time employees, including an on-site medical director and nurse practitioner, as well as visiting attending physicians and registered nurses, and offers patients a variety of services. The Linwood Facility provides private and semi-private rooms, a variety of dining options, an activity room, wellness programs, computers with internet access, housekeeping, complimentary laundry facilities, mail, newspaper and pharmaceutical delivery services.

The Linwood Facility consists of a one floor 34,600 square foot building located on 6.5 acres. Prior to the commencement of the 2017 Capital Project, Linwood had 102 licensed beds, 90 of which were in service. Linwood’s census was reduced to 58 residents as of July 31, 2017 in preparation for the 2017 Capital Project. As part of the renovation and expansion plan, the Obligor will restore the licensed beds which are currently out of service to in service status, bringing the total number of beds in service at the Linwood Facility to 102. See “THE 2017 CAPITAL PROJECT” herein for a more detailed description regarding the proposed renovations and expansion plan for the Linwood facility.

Expansion History

Linwood was originally constructed in 1915 as the Municipal Hospital for Contagious Disease. In 1958, the hospital closed and began operating as a skilling nursing facility.

The existing facility consists of two (2) wings containing a total of 102 patient beds, as well as a recently constructed wing encompassing and replacing a kitchen. The original facility has undergone a number of renovations and additions since 1915. In 1985, a major 58-bed addition was completed which included business and administrative offices, dining room, maintenance and service areas.

In 2009 and 2010, Linwood underwent extensive renovations of the resident rooms and common areas in the east wing. The corridor flooring and wall coverings were replaced and all commons areas received new furniture and window treatments. Resident rooms were renovated; wall coverings, window treatments, and furniture were replaced; and new flooring was installed. A serving area was added to the main dining room to

A-9 provide a point of service dining and eliminate tray service from the dining room. The capital budget for these renovations was over $400,000.

In 2015, Linwood replaced its aging 1,170 square foot kitchen with a spacious and modern 2,855 square foot kitchen, including new appliances and equipment. The capital budget was just over $1,000,000.

Occupancy and Turnover

As of July 31, 2017, Linwood had reduced its census to 58 residents in preparation for demolishing and replacing the older wing. In deciding to construct a new and larger building, the Obligor retained a commitment to its current residents and was determined to not displace anyone currently in residence by relocating residents in the remaining wing and transferring some to other nursing facilities nearby managed or operated by Genesis Eldercare until the renovations are complete.

The age and configuration of the older wing of the Linwood Facility presents marketing challenges and accounts for the vast majority of open beds. Transitions among several levels in the older wing restrict use by residents in wheelchairs and those with walking difficulties, limiting occupancy to those with greater mobility. Newly admitted residents often prefer the newer wing. This results in uneven admission pattern and lost referrals and fewer admissions. The application of modern life safety code and environmental standards to the functionally obsolete older wing results in Linwood restricting its beds in service to 90 beds of the licensed 102 beds. After the demolition of the functionally obsolete older wing and construction of a new replacement wing, the Obligor will be able to restore all 102 licensed beds to service.

The following table indicates the average annual occupancy of Linwood for the past five fiscal years ended June 30, 2017:

2 Months Year Ended June 30 Average Annual Occupancy Ended* August 2014 2015 2016 2017 31, 2017 Average Occupancy 82 79 78 77 59 % Occupancy 91% 88% 87% 85% 102%**

______Source: Corporation. * In order to prepare for the construction of the 2017 Capital Project, Linwood was operating with a reduced number of licensed beds (90 of its 102 licensed beds) through July of 2017. Linwood began operating with 58 beds starting in August of 2017. ** Percent of occupancy is greater than 100% due to the attrition rate in July. The Linwood Facility lowered the number of available beds to 58 on July 1st, but the attrition of the residents occurred gradually.

Utilization Statistics – Payor Mix

Revenue for beds is generated from Medicaid, Medicare, private payments and commercial insurance payments. For a description of the rate setting methodologies used by the Medicare and Medicaid programs, see “RATE SETTING METHODOLOGY” herein.

Services rendered to Medicare program beneficiaries are paid at prospectively determined rates. Linwood also accepts several commercial insurance plans. Most commercial insurance plans reimburse the Obligor directly and some may reimburse the beneficiary.

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For additional information, see “RISK FACTORS – Health Care Risk Factors” in the Official Statement.

The following table summarizes the historical payor mix of the beds for the last five (5) fiscal years. The percentages are based upon patient days, by payor class, and not upon the revenue received from the operation of the Linwood Facility by payor class.

Payor Mix 6/30/2014 6/30/2015 6/30/2016 6/30/2017 8/31/2017 Private Pay 9.02% 5.78% 5.36% 8.70% 5.70% Medicaid 75.12 78.83 79.41 79.37 91.8 Medicare 9.75 13.21 13.88 9.93 2.80 Insurance 6.10 2.18 1.35 2.00 0.00 Total 100 100 100 100 100 ______Source: Corporation Financial Statements.

Services and Amenities

Linwood features long and short term care, including hospice care. There is a 24-hour emergency alert and response system, along with on-site nurse practitioner, registered nurse staff, on-site medical director and wound certified physician. Linwood also provides attending physician care and a comprehensive complement of other services and care, which include the following areas:

Audiology Care Physiatry Services Colostomy Care Physical Therapy Dementia Care Podiatry Care Dental Care Psychiatric Services Dietary and Nutrition Management Rehabilitation Therapy Discharge Planning Respite Care Electrical Stimulation for Wound Respiratory Therapy Care and Pain Management Speech Therapy Heparin Care Tracheostomy Care and Weaning IV Therapy Total Parenteral Nutrition Medication Management Vision Care Occupational Therapy Wound Vac Orthopedic Rehabilitation Wound Care Pain Management X-Ray Services Palliative Care

In addition to medical services, Linwood offers private and semi-private rooms and provides its residents with recreational, cultural, educational and religious activities. The facility also has the following amenities available to residents:

Air Conditioned Facility and Rooms In-Room Dining Activity Room Mail and Newspaper Delivery Dining Room On-Site Laundry Facility Gardens and Courtyard Pharmaceutical Delivery Housekeeping Phone Computer and Wireless Services Individual Climate Control Wellness Programs

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Rates and Charges

Approximately 90% of the Linwood Facility’s patient days by payor class are for caring for Medicare and Medicaid beneficiaries. Generally, the rates paid by the Medicare and Medicaid programs are set by such programs prospectively, based upon the acuity of each resident individually. The acuity level of each individual resident is determined initially by an evaluation performed by the nursing staff of the Linwood Facility and re- evaluated periodically by the nursing staff. The Medicare and Medicaid programs use different classification systems to weigh the acuity of individual residents, as specified by applicable law. Rates for residents who are beneficiaries of commercial insurance are set in accordance with the applicable commercial insurance policy, as adjusted by the commercial insurance carrier under its customary claims processing procedures. Private (self) pay resident rates are set by facility management.

To the extent permitted by applicable law in the case of Medicare and Medicaid beneficiaries, residents are charged an additional fee for personal care services. Personal care items such as dietary supplements, bandages and similar products are available as needed and billed to the resident at the Obligor’s cost. The Obligor also offers a variety of additional services such as telephone and internet, and notary services. These are billed directly to the residents according to a fee schedule established each year.

Pennsylvania is in the process of implementing its mandatory managed care program, “Community HealthChoices or “CHC”, in order to coordinate health care coverage and improve access to medical care. The services that participants are eligible for will not change under the new program.

Currently, the Pennsylvania Department of Human Services (the “Department”) coordinates care for most participants in two different fee-for-service systems. Under CHC, managed care organizations (MCOs) will coordinate both physical health and long-term services and supports in one system. Under the new program, each CHC participant will be able to choose their own MCO. CHC MCOs include AmeriHealth Caritas, Pennsylvania Health & Wellness and UPMC Community Healthchoices.

While CHC eliminates the need for fee-for service (“FFS”) payment system methodology, FFS will remain in effect during and after implementation. This rate methodology may be referred to the “case-mix rates”. Facilities will continue to submit cost reports and case-mix index reports.

The Department will continue to set quarterly per diem rates for each nonpublic nursing facility (“NF”) and annual per diem rates for each county NF. This is primarily due to the fact that the FFS (or case-mix rates) rate will be utilized to set the “floor” for each nursing facility prior the implementation of CHC.

The rate floor is developed from the FFS or case-mix rate methodology. Facilities such as Edgehill, which is located in the Southeast Region (Montgomery County) of the Commonwealth, will fully implement CHC beginning July 1, 2018. The Southeast Region will utilize an average calculation of the facility’s prior four (4) quarters FFS rates. The following rate periods are based on the July 1, 2018 implementation date:

Rate Period Beginning Case Mix Picture Date July 1, 2017 February 1, 2017 October 1, 2017 May 1, 2017 January 1, 2018 August 1, 2017 April 1, 2018 November 1, 2017

The rate floor will be developed similarly for the Lehigh/Capital, Northwest & Northeast Region. Facilities such as Linwood, which is located in the Lehigh/Capital, Northwest & Northeast region (Lackawanna County) of the Commonwealth, will fully implement CHC on January 1, 2019. This region will utilize the average calculation of the facility’s prior four (4) quarters FFS rates. The following rate periods are based on the January 1, 2019 implementation date:

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Rate Period Beginning Case Mix Picture Date January 1, 2018 August 1, 2017 April 1, 2018 November 1, 2017 July 1, 2018 February 1, 2018 October 1, 2018 May 1, 2018

All eligible individuals will be notified at least ninety (90) days prior to the implementation dates and be requested to choose a Medicaid MCO servicing that particular region.

The FFS rates, established from the cost report submissions and the case-mix index reports, continue to be a critical part of the FFS rate development. The continued submission and accurate preparation of this information will be vital through implementation, based on the floor rate setting requirements. The rate floors (the average four (4) quarter FFS rates in effect prior to implementation) will be in effect for 36 months. This is a downside risk, because such rates are not anticipated to be adjusted for the next three (3) years. In addition, an MCO and the NF may agree to higher or lower rates under an alternative payment methodology agreement.

Currently, there are supplemental payments for exceptional durable medical equipment (DME) and the Department’s “access to care” payments. These access to care payments include assessment-related allowable costs for nonpublic NFs and quarterly supplemental payments for nonpublic NFs. Such supplemental payments, which are included in the capitation rate, other than the floor, are available at this time.

Each facility that participates in CHC and meets the participation requirements is considered an “Any Willing Provider” (“AWP”). Each MCO must contract for at least 18 months with any AWP facility initially, from the implementation date.

In comparison to neighboring states, the AWP, rate floors, and mandatory participation in CHC for all eligible residents or patients appears to be restrictive. Some states that have implemented similar programs permit residents or patients that were covered under the FFS rate to remain there until discharge; and then, upon readmission, if necessary, allows conversion to the CHC-MCO methodology. In Pennsylvania, CHC-MCO participation is mandatory from the beginning of the implementation period.

During the implementation period, there may be adjustments to case-mix indexes and FFS rates and a lack of required AWP regulations and participation after the initial 18 months. In addition, MCOs may place downward pressure on facilitates to participate in rate negotiations for rates other than the floor rates. Further, all regulations regarding the continuity of care will remain the same as prior reimbursement programs.

Accordingly, since CHC is a mandatory program for all dual eligible residents and patients, the historical medical assistance utilization history may remain stagnant minus any participatory changes. The potential issues facing the Facilities include AWP contract time limitations, the ability to provide needed or required services, and participation in rate negotiations for a new capital rate after the initial 36 month floor rate timeframe ends.

Licensure, Certifications and Memberships

The Obligor is licensed to operate the Linwood Facility as a long-term care nursing facility by the Pennsylvania Department of Health (“DOH”). The license is subject to annual renewal. The Obligor is certified for participation in the Medicare program at the Linwood Facility by the U.S. Centers for Medicare and Medicaid Services and is certified for participation in the Pennsylvania Medicaid program by the Pennsylvania Department of Public Welfare. Licensure and certification for participation in the Medicare and Medicaid programs are subject to continuous compliance with the conditions for participation prescribed in federal and state regulations. Compliance is determined based upon annual surveys and complaint surveys conducted by DOH, as the survey

A-13 agency for both the Medicare and Medicaid programs. The Linwood Facility’s most recent survey inspection was its annual survey reported on July 7, 2017. At that time, the Linwood Facility was found to be in substantial compliance with conditions for participation in the Medicare and Medicaid programs.

Linwood is a member of the American Health Care Association, the Pennsylvania Health Care Association, and NEPA Long Term Care Association. Linwood plans to maintain these memberships into the foreseeable future.

Star Rating

The Star Rating system was developed by the US Centers for Medicare and Medicaid Services (“CMS”) as a part of the CMS Nursing Home Quality Reporting initiative. The Linwood Facility’s overall Star Rating is currently four stars (4) out of five (5) (above average). The overall rating is based on the combined ratings of health inspection, staffing, and quality measures. The Linwood Facility’s rating for the underlying components are (i) health inspection (3 stars out of 5 – average), (ii) staffing (3 stars out of 5 – average) (iii) RN staffing (5 stars out of 5 – much above average) and (iv) quality measures (5 stars out of 5 – much above average).

The overall star ratings of Linwood have varied over the last five years. The overall ratings ranged, in the third and fourth quarter of 2013, from two (2) stars to three (3) stars out of five (5) stars, in 2014, from three (3) stars to five (5) stars out of five (5) stars, in 2015, from two (2) stars to five (5) stars out of five (5) stars, in 2015, from two (2) stars to three (3) stars out of five (5) stars, in 2016, from two (2) stars to three (3) stars out of five (5) stars, and through the third quarter in 2017, from (2) stars to four (4) stars out of five (5) stars.

The overall rating is based on the combined ratings of health inspection, staffing, and quality measures. Medicare Star ratings are limited in scope to the data sources they are derived from. A provider’s star rating on an individual measure or domain may not be reflective of that provider’s overall star rating. Star ratings are not intended to constitute government approval, endorsement or authorization of products or services offered by nursing homes.

THE EDGEHILL FACILITY

General

The Edgehill Nursing and Rehabilitation Center was constructed in 1981. At the Edgehill Facility, the Obligor provides long-term care and short-term rehabilitation for its residents. Edgehill has 40 full-time and 19 part-time employees, including an on-site medical director, as well as attending physicians and registered nurses, and provides a variety of patient services. The center offers private and semi-private rooms, a beauty salon and barber services, an activity room, housekeeping, and on-site laundry facilities, as well as common and lounge areas for residents to gather with family and friends.

Edgehill is located in Glenside, Abington Township, Montgomery County, Pennsylvania in a suburban residential setting less than fifteen (15) miles from downtown Philadelphia, Pennsylvania and near many major roadways. Edgehill is located one (1) mile from Arcadia University and is approximately twenty (20) miles away from the Philadelphia International Airport.

The Edgehill Facility consists of a 39,700 square foot building with two floors located on .91 acres. The Edgehill Facility currently has 60 beds. In recent years, Edgehill has undertaken several improvement and renovation projects.

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Expansion and Improvements History

The Edgehill Facility was renovated in 2012. All resident rooms received new wall coverings, flooring, furniture, and window treatments. The corridors received new flooring and wall coverings. Common areas received new wall coverings, flooring, furniture, and window treatments. The capital budget was $350,000.

The standby emergency generator was replaced in 2017 with a new 350 kilowatt generator which can maintain 100% of the facility in a power outage. This enables Edgehill to admit residents with life sustaining equipment and to be a facility of refuge in the community. The capital budget of $231,000 was funded from operating capital.

In 2017, the central bathroom was renovated to make bathing more private and feel less like an institutional environment. The renovation cost of $38,500 was funded from operating capital.

Edgehill is currently constructing an expansion of its activities room. Upon completion, the patio will incorporate a 470 square foot sunroom usable by the residents during all seasons. This expansion is being undertaken at the request of the residents. The capital budget is $174,000.

Occupancy and Turnover

As of August 31, 2017, Edgehill had a census of 58 residents. The Obligor has a history of strong occupancy as the data on the following page indicates. The following table indicates the average annual occupancy of Edgehill for the past five fiscal years ended June 30, 2017:

2 Months Year Ended June 30 Average Annual Occupancy Ended August 2014 2015 2016 2017 31, 2017 Average Occupancy 58 58 59 58 58 % Occupancy 97% 97% 99% 97% 97% ______Source: Corporation.

Utilization Statistics – Payor Mix

Services rendered to Medicare program beneficiaries are paid at prospectively determined rates. Edgehill also accepts several commercial insurance plans. Most commercial insurance plans reimburse the Obligor directly and some may reimburse the beneficiary.

For additional information, see “RISK FACTORS – Health Care Risk Factors” in the Official Statement.

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Payor Mix 6/30/2013 6/30/2014 6/30/2015 6/30/2016 6/30/2017 8/31/2017 Private Pay 5.44% 12.26% 7.65% 6.80% 2.99% 7.70% Medicaid 90.30 83.49 87.70 90.53 93.21 88.0 Medicare 3.08 3.09 3.88 2.47 3.03 1.80 Insurance 1.19 1.17 0.76 0.19 0.77 2.50 Total 100 100 100 100 100 100 ______Source: Corporation Financial Statements.

Services and Amenities

Edgehill features long and short term care, including hospice care. The Edgehill Facility has a registered nurse staff and on-site medical director. Edgehill also provides attending physician care and a comprehensive complement of other services and care, which include the following areas:

Audiology Care Pain Management Certified Registered Nurse Practitioner Physical Therapy Colostomy Care Podiatry Care Dementia Care Psychiatric Services Dental Care Rehabilitation Therapy Dietary and Nutrition Management Respite Care Discharge Planning Speech Therapy IV Therapy Total Parenteral Nutrition Medication Management Vision Care Occupational Therapy Wound Care Orthopedic Rehabilitation

Air Conditioned Facility and Rooms Mail and Newspaper Delivery Activity and Lounge Areas On-Site Laundry Facility Beauty Salon and Barber Services Pharmaceutical Delivery Dining Room Phone, Cable Television Housekeeping Computer and Wireless Services Individual Climate Control

Rates and Charges

Approximately 96% of the Edgehill Facility’s patient days by payor class are for caring for Medicare and Medicaid beneficiaries. Generally, the rates paid by the Medicare and Medicaid programs are set by such programs prospectively, based upon the acuity of each resident individually. The acuity level of each individual resident is determined initially by an evaluation performed by the nursing staff of the Edgehill Facility and re- evaluated periodically by the nursing staff. The Medicare and Medicaid programs use different classification systems to weigh the acuity of individual residents, as specified by applicable law. Rates for residents who are beneficiaries of commercial insurance are set in accordance with the applicable commercial insurance policy, as adjusted by the commercial insurance carrier under its customary claims processing procedures. Private (self) pay resident rates are set by facility management.

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Rate Period Beginning Case Mix Picture Date July 1, 2017 February 1, 2017 October 1, 2017 May 1, 2017 January 1, 2018 August 1, 2017 April 1, 2018 November 1, 2017

Rate Period Beginning Case Mix Picture Date January 1, 2018 August 1, 2017 April 1, 2018 November 1, 2017 July 1, 2018 February 1, 2018 October 1, 2018 May 1, 2018

All eligible individuals will be notified at least ninety (90) days prior to the implementation dates and be requested to choose a Medicaid MCO servicing that particular region.

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Licensure and Memberships

The Obligor is licensed to operate the Edgehill Facility as a long-term care nursing facility by the Pennsylvania Department of Health (“DOH”). The license is subject to annual renewal. The Obligor is certified for participation in the Medicare program at the Edgehill Facility by the U.S. Centers for Medicare and Medicaid Services and is certified for participation in the Pennsylvania Medicaid program by the Pennsylvania Department of Public Welfare. Licensure and certification for participation in the Medicare and Medicaid programs are subject to continuous compliance with the conditions for participation prescribed in federal and state regulations. Compliance is determined based upon annual surveys and complaint surveys conducted by DOH, as the survey agency for both the Medicare and Medicaid programs. The Edgehill Facility’s most recent survey inspection was its annual survey reported on March 24, 2017. At that time, the Edgehill Facility was found to be in substantial compliance with conditions for participation in the Medicare and Medicaid programs.

Edgehill is a member of the American Health Care Association and the Pennsylvania Health Care Association. Edgehill plans to maintain these memberships into the foreseeable future.

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Star Rating

The Star Rating system was developed by the U.S. Centers for Medicare and Medicaid Services (“CMS”) as a part of the CMS Nursing Home Quality Reporting initiative. The Edgehill Facility’s overall Star Rating is currently three stars (3) out of five (5) (average). The overall rating is based on the combined ratings of health inspection, staffing, and quality measures. The Edgehill Facility’s rating for the underlying components are (i) health inspection (2 stars out of 5 – below average), (ii) staffing (3 stars out of 5 – average) and (iii) quality measures (5 stars out of 5 – much above average).

The overall star ratings of Edgehill have varied over the last five years. The overall rating in the third and fourth quarter of 2013, in 2014 and in 2015, was five (5) stars out of five (5) stars. In addition, the overall ratings ranged, in 2016, from two (2) stars to five (5) stars out of five (5) stars, and through the third quarter in 2017, from (2) stars to stars (3) stars out of five (5) stars.

COMPETITION AND SERVICE AREA

Primary Market Area – Linwood

The primary market area for providers of senior nursing services is typically defined as the geographic area from which the majority of residents resided prior to assuming occupancy at Linwood. Based on the zip code of origin of the residents, discussions with existing senior nursing providers in the area and expertise with similar facilities, the Obligor has defined its primary market area to be within Lackawanna County spanning from 10.6 miles north to south and 11.2 miles west to east around Linwood.

The primary market area (the “PMA”) for providers of senior nursing services is typically defined as the geographic area from where the majority of residents resided prior to occupancy. The PMA for Linwood is based on the home addresses, prior to occupancy, of the 66 nursing residents at Linwood as of June, 2017.

See “Appendix C – Financial Feasibility Study” for more information regarding the PMA for Linwood.

Competition – Linwood

There are a total of 1,629 licensed beds in existence in thirteen (13) existing nursing facilities (including Linwood and the 102 licensed beds at Linwood) located in Linwood’s PMA.

See “Appendix C – Financial Feasibility Study” for more information regarding existing licensed nursing facilities located in Linwood’s PMA.

Primary Market Area – Edgehill

The primary market area for providers of senior nursing services is typically defined as the geographic area from which the majority of residents resided prior to assuming occupancy at Edgehill. Based on the zip code of origin of the residents, discussions with existing senior nursing providers in the area and expertise with similar facilities, the Obligor has defined its primary market area to be within Montgomery County spanning 10.9 miles north to south and 12.3 miles west to east around Edgehill.

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The PMA for Edgehill is based on the home addresses, prior to occupancy, of the 59 nursing residents at Edgehill as of June 2017.

See “Appendix C – Financial Feasibility Study” for more information regarding the PMA for Edgehill.

Competition – Edgehill

There are a total of 2,383 licensed beds in nineteen (19) existing nursing facilities (including Edgehill and the 60 licensed beds at Edgehill) located in Edgehill’s PMA.

See “Appendix C – Financial Feasibility Study” for more information regarding existing licensed nursing facilities located in Edgehill’s PMA.

Marketing & Referrals

The Facilities generate residents through a variety of means and sources including the community-at-large via word-of-mouth as well as referrals from local hospitals and medical facilities and providers. Each of the Facilities has a marketing plan and process to create and maintain awareness in the local community and among healthcare providers leading to referrals of residents who require skilled nursing and related services.

The Linwood Nursing and Rehabilitation Center marketing efforts include:

• Utilization of a Website to market offered services: www.genesishcc.com/linwood; • Printed marketing materials and brochures; • Word of mouth referrals; • A Genesis National Care Line and a team of Genesis Healthcare Admissions Directors allows Genesis Eldercare Centers to field referrals and facilitate admissions on a 24-hour, seven day a week basis; • Clinical Admissions Directors are stationed in most Pennsylvania and New Jersey Acute Care Hospitals. Their job is to facilitate patients from acute care to skilled nursing facilities for rehabilitation, short stay care, or long term care. A Genesis liaison supports Linwood’s three largest hospital referral sources: Regional Hospital, Moses Taylor Hospital, and Geisinger Community Medical Center. The representative works closely with hospital personnel to find appropriate placement and to match patients to the Linwood Center, and also provide support to the Admissions process; • Linwood utilizes Allscripts and Curaspan, which are referral management systems. The systems support marketing efforts to increase exposure to referral senders, update the Linwood Facility profile (capabilities), and inform discharge planners and patients about facility and care options; • Linwood seeks referrals from families of current and past residents and volunteers, as well as from local churches, organizations, and neighbors. Linwood is involved in the Lackawanna County health fair and various local community and senior events, which increase exposure and build relationships; and • The Linwood Social Worker and Clinical Director of Admissions establish relationships with neighboring assisted living facilities, hospice agencies, senior centers, county health offices, doctor’s offices, and healthcare services agencies. Continued relationship building provides opportunities to match customer needs and potential clientele with Linwood’s services and benefits.

Linwood does not contract with a third party marketing consultant. However, Linwood is supported in marketing efforts by Genesis Eldercare, the facility’s third party management company.

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The Edgehill Facility’s marketing efforts include:

• A Genesis National Care Line and a team of Genesis HealthCare Clinical Admissions Directors allows Genesis Eldercare centers to fields referrals and facilitate admissions on a 24-hour, seven day a week basis. • Clinical Admission Directors are stationed in most Pennsylvania and New Jersey Acute Care Hospitals. Their job is to facilitate patients from acute care to skilled nursing facilities for rehabilitation, short stay care, or long term care. Two Genesis Eldercare liaisons support the Edgehill Facility’s biggest hospital referral source – Abington Jefferson Hospital. They work closely with hospital personnel in finding appropriate placement, matching patients to our center, and are a support system to our Admissions process. • Utilization of Allscripts, which is a referral management system used by hospitals, supports marketing to increase exposure to referral senders, update facility profiles (capabilities), to inform discharge planners and patients about the centers and their options.

In addition, the Edgehill Facility seeks referrals from families of current and past residents and center volunteers, and from local churches, organizations, schools, colleges and neighbors. The Facility is involved in community and local events, and invites neighbors to job fairs and senior events to increase exposure and build relationships. Social services has developed relationships with neighboring assisted living facilities and hospice companies, who visit and tour with prospective families seeking long term care placement.

FINANCIAL INFORMATION

The following financial information for the Obligor for each of the four fiscal years ended June 30, 2014, 2015, 2016 and 2017 and the unaudited financial information of the Obligor for the two months ended August 31, 2017 and August 31, 2016, has been derived by management from the audited financial statements and other records of the Corporation. The following information should be read in conjunction with the financial statements and related notes that are included in Appendix B to this Official Statement.

[Remainder of the page left blank intentionally.]

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RESULTS OF AUDITED FINANCIAL STATEMENTS FOR FISCAL YEARS ENDED JUNE 30, 2017, 2016, 2015 AND 2014 AND TWO MONTHS ENDED AUGUST 31, 2017†* AND 2016*

Two Months Ended Two Months Ended Year Ended June 30 August 31, 2016 August 31, 2017 (Dollars in Thousands) (Dollars in Thousands) (Dollars in Thousands) 2014 2015 2016 2017 Actual Budget Actual Budget Unrestricted Revenues Resident Service Revenue $ 13,178 $ 13,072 12,832$ $ 12,182 $ 2,026 $ 2,217 1,711$ 1,706$ Investment Income 38 43 40 116 47 1 26 1 Net Unrealized Gains (Losses) on Investments 34 (34) (38) 5 5 - - - -

Total unrestricted revenues $ 13,250 $ 13,081 $ 12,834 $ 12,353 $ 2,073 $ 2,218 $ 1,737 $ 1,707

Expenses Resident Care Services $ 6,483 6,510$ 6,543$ 6,298$ $ 1,100 $ 1,156 948$ 938$ Dietary Services 1,064 1,036 1,055 1,036 179 189 172 187 Activities and Social Services 440 476 462 464 75 73 57 71 Housekeeping and Laundry Services 634 645 608 624 103 114 99 105 Plant Operations and Maintenance 687 708 731 748 124 127 106 129 General and Administrative 1,745 1,720 1,722 1,698 266 285 255 251 Bad Debts 149 246 17 115 (17) 24 18 12 Interest Expense 409 401 393 384 63 63 61 130 Depreciation 417 392 417 717 7 9 7 0 8 1 8 1

Total Expenses $ 12,028 $ 12,134 $ 11,948 $ 12,084 $ 1,972 $ 2,101 $ 1,797 $ 1,904

Increase (Decrease) in Unrestricted Net Assets $ 1,222 $ 947$ 886 $ 269 $ 101 $ 117 $ ( 60)$ (197)

Source: Corporation Financial Statements and Corporation records. † In order to prepare for the construction of the 2017 Capital Project, Linwood was operating with a reduced number of licensed beds (90 of its 102 licensed beds) through July of 2017. Linwood began operating with 58 beds starting in August 2017. * Unaudited.

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Key Financial Ratios

Debt Service Coverage.

The following table sets forth long-term debt service coverage ratios for the Obligor for the four fiscal years ended June 30, 2014, 2015, 2016 and 2017. The long-term debt service ratios set forth below have been calculated by the auditors for fiscal years 2014, 2015, and 2016 and by Genesis Eldercare for fiscal year 2017. The financial information used in such calculations for the fiscal years ended June 30, 2014, 2015, 2016 and 2017 are derived from the audited financial statements of Obligor.

The long-term debt service coverage ratio set forth above is calculated by dividing cash available for debt service by annual long-term debt service. Set forth the below are the historic ratios for the fiscal years ending June 30th, inclusive.

Year Ended June 30 2014 2015 2016 2017

Increase (Decrease) in Net Assets 1,223,138$ 946,973$ 885,630$ $ 268,566

Add: Depreciation 417,237 392,042 416,971 716,835 Interest Expense 399,113 391,462 383,598 375,000 Amortization of Bond Issue Costs 9,513 9,338 9,125 8,911 Bad Debts 148,612 245,471 17,456 115,427

Cash Available for Debt Service 2,197,613$ 1,985,286$ 1,712,780$ 1,484,739$

Annual Long Term Debt Service $ 529,113 $ 531,462 $ 523,598 $ 525,000

Ratio 4.15 3.74 3.27 2.83

Covenant 1.20 1.20 1.20 1.20

Days’ Cash on Hand.

The following table sets forth days’ cash on hand and days’ cash on hand requirement for the Obligor for the four fiscal years ended June 30, 2014, 2015, 2016 and 2017. The financial information used in such calculations for the fiscal years ended June 30, 2014, 2015, 2016 and 2017 are derived from the audited financial statements of Obligor.

Days’ cash on hand as set forth above is computed by dividing cash-on-hand, including unrestricted cash and proceeds, by expenses per day, which is calculated by dividing total operating expenses, less depreciation and amortization of bond issuance costs, by the number of days in each quarter. The days’ cash on hand computation is reflected in relation to the days’ cash on hand requirement of 30 days. Set forth the below are the historic ratios for the fiscal years ending June 30th, inclusive.

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Year Ended June 30 2014 2015 2016 2017

Total Operating Expenses for the Quarter Ended June 30 3,458,159$ 3,470,957$ 3,265,497$ 3,145,106$

Less: Depreciation 104,866 97,120 95,645 364,882 Amortization of Bond Issue Costs 2,374 2,328 2,131 2,394 Bad Debts 63,110 39,332 16,543 30,471

Cash Available for Debt Service $ 3,287,809 3,332,177$ $ 3,151,178 2,747,359$

Divided by: Number of Days in Period 91 9 1 9 1 9 1

Expenses Per Day $ 36,130 $ 36,617 $ 34,628 $ 30,191

Cash-on-Hand Unrestricted Cash $ 2,868,921 3,994,006$ 2,398,215$ 2,020,331$ Proceeds Account 430,553 430,557 430,587 430,650 $ 3,299,474 4,424,563$ $ 2,828,802 2,450,981$

Days' Cash-on-Hand 91 121 8 2 8 1

Days' Cash-on-Hand Requirement 30 3 0 3 0 3 0

Management’s Discussion and Analysis of Recent Financial Performance

During the fiscal year 2014, excess revenue over expenses increased by 14% over 2013, a portion of which was attributable to an increase in the market value of the Obligor’s investment portfolio. During the fiscal year 2015, excess revenue over expenses decreased by 18%. The decline resulted primarily from a decrease of five residents in the average daily census of private pay and insurance residents, and rising costs of plant operations and maintenance, highlighting the difficulty of marketing and maintaining the older wing of the Linwood Facility and the increasing need to replace it.

The preference of prospective admissions for newer, attractive rooms and facilities resulted in a further decrease of two residents in the average daily census of private pay and insurance residents during fiscal year 2016. Notwithstanding these challenges, the Obligor achieved an excess of revenues over expenses in 2016, which was 7.6% above the base fiscal year of 2013. The 2017 fiscal year exhibited a continuing declining trend in quality mix and census. While operating expenses were well managed, the lower average daily census in private pay and Medicare therapy revenue could not be completely offset. Increased costs of operations and maintenance, higher bad debt expense, and higher depreciation expense contributed to a decline in excess of revenues over expenses.

The need to replace the aging resident wing at the Linwood Facility is well recognized. However, the Obligor has, until now, been unwilling to refinance and fund the new construction because of the prepayment provisions on its current debt. With the current debt now currently callable, the Obligor is now able to refinance its current debt and fund the long awaited replacement, providing new and expanded resident and therapy facilities at its Linwood Facility.

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The Obligor and Genesis Eldercare have been working to improve the Annual Medicaid Survey performance of both Facilities, with emphasis on enhancing survey performance at Linwood. Linwood’s most recent annual survey was completed on July 7, 2017 and resulted in four level “D” deficiencies, which is an improvement and 50% reduction from the prior annual survey.

INVESTMENT OF CASH RESERVES

Under a contract between Guardian and the Obligor, Guardian manages investment of cash reserves for the Obligor. Guardian has established a standing Investment Committee which performs the cash investment tasks. The Investment Committee has no set investment policies or guidelines. The Investment Committee is composed of persons knowledgeable in capital markets. The Investment Committee uses its best business judgment to respond to market condition with the goals of preserving principal and realizing grow in the investments.

The investment profile of Capital Appreciation – Moderate Risk, is the investment objective which has historically been followed by the Obligor. The primary investment objective of the account is long- term capital appreciation with a secondary objective of generation of current income. The account seeks to assume a level of risk that is deemed appropriate in relation to the Obligor’s investable assets and investment objective.

INSURANCE

The Obligor maintains commercial property coverage on the Obligor’s current premises for a total amount of $16,307,000, plus personal property coverage, which policy amount includes an automatic inflation guard. During the construction of the 2017 Capital Project, the Obligor will maintain a policy of builder’s risk insurance to protect the improvements against loss. The Obligor also maintains general and professional liability insurance with limits of $1,000,000 per claim and $6,000,000 in the aggregate. The insurance also includes coverage for employee benefit programs. In addition, the Obligor maintains excess liability insurance for claims- made during the policy period with limits of $5,000,000 for each occurrence and in the aggregate, and a self- insured retention of $10,000. PA-LTC maintains workers compensation and employers’ liability coverage, as required in the Commonwealth, in the amount of $500,000 for each accident. Automobile coverage is maintained by the Obligor with a combined single limit of $1,000,000. Finally, PA-LTC maintains commercial crime coverage in the amount of $100,000 for employee theft, $100,000 for forgery or alteration, and $250,000 for computer fraud and funds transfer fraud.

LITIGATION

At any given time the Obligor may have a number of lawsuits pending that arise in the ordinary course of business. There is currently no litigation of any nature to which the Obligor is a party, or to the Obligor’s knowledge, threatened against it, which, if determined adversely to the Obligor, would have a material adverse effect on the financial condition of the Obligor or the Obligor’s ability to make payments required on the Series 2017 Bonds or on the completion of the 2017 Capital Project and the operation of the Facilities.

THE 2017 CAPITAL PROJECT

General

The construction project (the “2017 Capital Project”) consists of the total demolition of a portion of the Linwood Facility and its replacement and renovation. Due to current facility limitations, Linwood can currently operate with a maximum 90 beds of the licensed 102 beds. After the renovation is completed, the total bed capacity will increase to the original 102 licensed beds.

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More specifically, the 2017 Capital Project will also consist of the construction of an approximate 32,136 square foot replacement facility incorporating:

• 11 skilled nursing semi-private patient rooms (adding 22 new beds); • 2 skilled nursing private patient rooms (adding 2 new beds); • 8 new transitional rehabilitation private patient rooms (adding 8 new beds); • 7 new transitional rehabilitation semi-private patient rooms (adding 14 new beds); and • New commons areas, amenities, and support areas, including: o Therapy gym; o Resident lounge; o Beauty parlor; o Activity space; o Dining area; o Nurses station and medication room; o Support offices; o Resident shower room; o Resident storage area; and o Mechanical and utility rooms.

The addition contains a skilled nursing unit comprised of 24 beds supported by residential amenities and therapy space, as well as an independent 22-bed transitional rehabilitation unit with its own amenities and therapy area. The design of the addition has a “homelike” aesthetic on both its interior and exterior, with many of the resident rooms and common spaces having views across the valley or of an interior courtyard.

The new Linwood Facility will provide the same services as the current facility and will remain licensed for 102 skilled nursing beds. The 2017 Capital Project will replace 46 of those licensed beds.

Need for Renovation

The age and configuration of the dated “west wing” portion of the Linwood Facility presents marketing challenges for Linwood, which accounts for the majority of its open beds. This wing of the facility is subject to several code deficiencies, including a number of resident rooms that do not meet the minimum square footage requirements or connect to directly-accessible bathrooms. In addition, insufficient corridor widths, including distance between fire doors in excess of 200 feet, a lack of a second means of egress from partial basements in this wing and groundwater issues are problems that need to be addressed. This area of the facility is limited to residents with greater mobility since transitions between the one-story, multi-level floors restrict access to residents in wheelchairs and individuals with walking difficulties. Prospective residents prefer the updated and newer section of the facility, which is less likely to have open units, resulting in lost referrals and fewer admissions. It was determined that renovations and modifications required to bring this wing into compliance with the delivery of contemporary skilled nursing would not be feasible given the constraints of the building footprint and the varying floor levels. Therefore, Linwood has contracted with BDA Architects, LLC, an established architectural firm with experience in the long-term care industry, to analyze the facility's existing code compliance issues and to design a replacement of this section of the facility.

Construction Advisors to the Obligor

Raymond E. Mead of Genesis Healthcare and Dorothy Herkalo, formerly of Genesis Healthcare will be involved in the development and construction of the 2017 Capital Project:

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Raymond E. Mead, Director of Construction

Mr. Mead serves as the director of construction for Genesis Healthcare. Mr. Mead is responsible for multiple construction, development and real estate projects. His duties include the negotiation and purchase of land for new and existing facilities, the performance of all building inspections and due diligence on all acquisitions, interviewing and hiring architectural, engineering, construction management firms and general contractors to construct and renovate facilities, and for proposing and presenting new capital projects.

In 2007 and 2008, Mr. Mead served as a project manager for FW Madigan Company Inc. Prior to joining Genesis Healthcare, he was President and General Contractor of Mead Construction Inc. from 1983 to 2003, constructing a variety of commercial, industrial, retail and multi-family housing projects.

Mr. Mead will coordinate bid documents and contracts, as well as provide contract administration for the 2017 Capital Project. In addition, Mr. Mead will oversee all design, approvals, budgeting, and permitting.

Dorothy Herkalo, Property Manager

Ms. Herkalo has served as the property manager for Genesis Healthcare for more than 37 years. As property manager, Ms. Herkalo managed 18 properties, as well as housekeeping, laundry and maintenance services. Ms. Herkalo was responsible for assisting in hiring and training management staff, conducting annual reviews, and completing pre-inspection tours to prepare facilities for state inspections. She was also involved in maintaining budget compliance in connection with capital projects.

Prior to her current position as construction representative for the Obligor, Ms. Herkalo served as project manager for Genesis Healthcare, managing multiple construction and renovation projects in New Jersey and Pennsylvania. Her duties as project manager included overseeing capital projects from commencement to completion, ordering materials, selecting vendors, and ensuring budget compliance. In addition, Ms. Herkalo handled all construction and facility related issues.

DESIGN AND CONSTRUCTION OF THE 2017 CAPITAL PROJECT

The Architect and the Architect Services Agreement

BDA Architects (“BDA” or the “Architect”) of Clarks Summit and Bethlehem, Pennsylvania has been selected as the architect for the 2017 Capital Project. Founded in 1948, they have been involved in design for the senior care industry since 1990 and they currently dedicate over 85% of the firm’s work to the healthcare sector. In addition to architectural services, BDA also provides master planning and interior design services for a wide range of product types.

A representative list of BDA’s senior housing clients include the following:

• Allied Services Main Campus (Scranton, PA)

• Allied Services John Heinz Institute (Wilkes-Barre, PA)

• Birch Hills Elder Care (Carbondale, PA)

• Carbondale Nursing Rehab Center (Carbondale, PA)

• Catholic Social Services (Scranton, PA)

• Community Health Systems CHSPSC, LLC (Franklin, TN)

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• Community Health Systems Berwick Retirement Village (Berwick, PA)

• Community Health Systems Regional Hospital of Scranton (Scranton, PA)

• Complete Healthcare Resources (Dresher, PA)

• Elan Gardens (Clark Summit, PA)

• Genesis Healthcare Corporation (Kennett Square, PA)

• Geisinger Health System Geisinger Community Medical Center (Scranton, PA)

• Guthrie Health System (Sayre, PA)

• Jewish Home of Easter PA (Scranton, PA)

• Mallard Meadows (Waymart, PA)

• New Seasons Assisted Living Communities (Blue Bell, PA)

• Oakwood Terrace (Pittston, PA)

• St. Mary’s Villa (Elmhurst Township, PA)

• Wayne Memorial Hospital (Honesdale, PA)

• Willowbrook Sr. Living (Clarks Summit, PA)

BDA has entered into a contract with the Obligor dated June 23, 2016 (the “A&E Agreement”) which provides for BDA to serve as the architect of record for the 2017 Capital Project, and lead the design of the 2017 Capital Project from the schematic design phase through to the end of the construction administration phase. The A&E Agreement includes architectural services throughout the phases of: schematic design, design development, pre-guaranteed maximum price estimate, construction documents, final guaranteed maximum price and review of bids, and construction administration. Although BDA, itself, will not be providing engineering services or consultancy, the A&E Agreement does provide that BDA will be responsible for retaining, supervising and coordinating the structural, mechanical, electrical, fire protection and other consultancies, which will be hired by BDA and whose services are included in BDA’s Base Fee. Although BDA has also not agreed to provide post- construction services as part of its Base Fee and Basic Services, the parties have agreed that any involvement by BDA in all warranty work and/or project defect remediation will be provided as Additional Work and charged to the Obligor at BDA’s Additional Services charging rate. Lastly, BDA will not provide onsite, day-to-day architectural site representation, but will provide an expected number of site visits monthly by it and its engineering consultancies to ensure harmony of BDA’s program and services with that of the construction manager.

In exchange for these services, BDA will be compensated on a lump sum basis in the amount of six percent (6%) of the cost of construction. A schedule of additional services outside of BDA’s services that are included in the lump sum payment are included in a hourly fee schedule within the A&E Agreement, which is based on BDA’s normal hourly fees.

The A&E Agreement includes provisions concerning the use of BDA’s Drawings and Specifications in the event the A&E Agreement is terminated, whether for convenience or for cause.

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Both BDA and the Obligor will be permitted to terminate the A&E Agreement, for cause or for convenience, upon seven business days’ prior notice. In the event termination is not the fault of BDA, BDA shall be compensated for services performed prior to termination together with any reimbursable expenses and termination expenses directly attributable to the termination by the Obligor of which BDA has not been compensated otherwise.

The General Contractor The Obligor has selected Sordoni Construction Services, Inc. (“Sordoni”, the “General Contractor” or “Construction Manager”) as the general contractor for the 2017 Capital Project. Founded in 1910 and headquartered in Forty Fort, Pennsylvania, Sordoni is a regional contractor with experience in a variety of sectors, including senior living, higher education, retail, and hospitality.

Under the Construction Contract, Sordoni is obligated to provide professional management, expertise, and controls, which are necessary to complete the Project on time and within budget.

Sordoni has been engaged to (i) provide construction administration, management services and supervision; (ii) furnish, at all times, an adequate supply of workers and materials’, and (iii) perform the work in a good and wormanlike manner. A representative list of the General Contractor’s construction projects include the following:

• United Methodist Homes (Binghamton, NY)

• Geisinger Woodbine Campus Expansion (Danville, PA) • Endless Mountains Health Systems (Montrose, PA)

• Geisinger Mount Pleasant Clinic (Danville, PA)

• Elan Gardens (Clarks Summit, PA) • Wayne Woodlands Manor (Waymart, PA)

• Mountain View Care Center (Scranton, PA)

The Construction Contract General Description. The Obligor has executed a Construction Contract with the General Contractor dated October 4, 2017 (the “Construction Contract”) for the construction of the 2017 Capital Project at a guaranteed maximum price of $8,813,106.

The following table is a summary of the components of the Construction Contract:

Construction $ 7,961,574 Procurement 24,000 Mercantile Tax 53,347 General Liability Insurance 52,216 Building Permit 72,927 Inspection Costs 59,959 Performance & Labor/Material Payment Bond 60,483 Fee 128,600 Contingency 400,000

Total $ 8,813,106

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The Construction Contract includes a Construction Manager’s Fee of 1.5% of Cost of the Work. The General Contractor will be paid as the Work progresses based on the actual cost of the Work completed, less retainage of ten percent (10%).

The General Contractor performed pre-construction services, which included assistance in developing the building concept, recruiting subcontractors for the purpose of developing preliminary cost estimates and assisting the Obligor in identifying options so that the project would be cost effective. The Obligor paid the General Contractor $57,410 for such services.

The guaranteed maximum price includes a contractor controlled contingency in the amount of $400,000.00. In addition to this project contingency shown in the Project Budget in the amount of $400,000.00, the owner holds a contingency included in the Project Budget Total in the amount of $50,000.00 funded from owner equity.

If, following the completion of construction, the actual costs of the work, plus the Construction Manager’s fee, under the Construction Contract are less than the guaranteed maximum price, the savings will inure solely to the Obligor.

The Construction Contract requires the General Contractor to provide payment and performance bonds. The payment bond and performance bond shall each be in an amount equal to the guaranteed maximum price. If the guaranteed maximum price is increased by change order(s), then the amount of the payment bond and the performance bond shall automatically increase to conform to the adjusted guaranteed maximum price.

The Construction Contract requires the Obligor to procure the builder’s risk insurance policy. The General Contractor, the Obligor and the Master Trustee will be named as insured parties. The General Contractor will be the sole loss payee under the policy.

The Construction Contract requires the General Contractor to substantially complete construction of the 2017 Capital Project within 370 days from the date on which the Obligor issues a Notice to Proceed (the “Guaranteed Completion Date”). The Guaranteed Completion Date is subject to extension by change order. In some cases, the General Contractor is entitled as a matter of right to a change order extending the Guaranteed Completion Date. In the event the General Contractor does not substantially complete construction by the Guaranteed Completion Date, the General Contractor will be liable for liquidated damages for each day of delay past the Guaranteed Completion Date, as such date may be extended. Liquidated damages are as follows: (i) for the period beginning on the first day after the Guaranteed Completion Date and ending on the thirtieth day after the Guaranteed Completion Date, $1,400.00 per day; and (ii) for the period beginning on the thirty-first day after the Guaranteed Completion Date, $1,600.00 per day.

CURRENT 2017 CAPITAL PROJECT STATUS

Permit and Approval Status for 2017 Capital Project

Various approvals and permits are necessary in order for the Obligor to begin construction on the 2017 Capital Project.

The current status of all necessary permits/approvals is as follows:

(1) Pennsylvania Department of Health project plan approval: received.

(2) Stormwater Management Plan Consistency Letter from the City of Scranton evidencing compliance with the City’s Stormwater Management Ordinance and the Lackawanna River Act 167 Plan: received.

A-30

(3) Erosion and Sediment Pollution Control Plan for the project is determined to satisfy the minimum Erosion Control Regulations of the Department of Environmental Protection by the Lackawanna County Conservation District: received.

(4) Pennsylvania Department of Health Division of Safety Inspection “Face-to Face” Plan Review on June 14, 2017 and Approval letter dated June 21, 2017.

(5) City of Scranton International Building Code review and approval of the construction documents was completed on July 7, 2017 and the third party plan reviewer returned the approved construction documents to the City of Scranton.

(6) All building permits have been approved and will be issued as soon as the Obligor pays the permit fees.

(7) The Obligor expects to commence pre-construction activities prior to the closing for the Series 2017 Bonds, which will include asbestos abatement and site work.

Environmental Studies

A Phase I Environmental Site Assessment Report (the “Linwood Phase I Study”) was completed in July 2017 by D. Force EMS, LLC of the Linwood Facility in connection with the 2017 Capital Project. The Linwood Phase I Study revealed no recognized environmental conditions other than one (1) 500-1000 gallon underground storage tank located on the east side of the Linwood Facility property and used to store fuel oil. It was recommended that, and the Obligor intends to, perform an integrity test on the tank. There were no de minimis conditions identified in the Linwood Phase I Study.

In addition, a Phase I Environmental Site Assessment Report (the “Edgehill Phase I Study”) was completed in August 2017 by D. Force EMS, LLC for the Edgehill Facility. The Edgehill Phase I Study revealed no recognized environmental conditions other than one (1) 500-1000 gallon belly tank located on the west side of the Edgehill Facility property and used to store fuel oil in connection with an emergency generator. It was recommended that, and the Obligor intends to, perform required operations and maintenance procedures on the tank on a regular basis. There were no de minimis conditions identified in the Edgehill Phase I Study.

FEASIBILITY STUDY

Baker Tilly Virchow Krause, LLP was engaged to perform a Financial Feasibility Study of the 2017 Capital Project. See “Appendix C - Financial Feasibility Study”.

A-31

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APPENDIX B AUDITED FINANCIAL STATEMENTS

[THIS PAGE INTENTIONALLY LEFT BLANK] PENNSYLVANIA LTC, INC.

FINANCIAL STATEMENTS

YEARS ENDED JUNE 30, 2015 AND 2014 PENNSYLVANIA LTC, INC.

YEARS ENDED JUNE 30, 2015 AND 2014

CONTENTS

Page

Independent Auditors' Report 1

Financial Statements

Balance Sheets 2

Statements of Operations and Changes in Net Assets 3

Statements of Cash Flows 4

Notes to Financial Statements 5 - 14 Mayer Hoffman MccannMcCann P.C. An Independent CPA Firm 401 Plymouth Road, Suite 200 Plymouth MeetingMeeting,, Pennsylvania 19462 ® Main: 610.862.2200 Fax: 610.862.2500 • www.mhmcpa.com

INDEPENDENT AUDITORS' REPORT

To the Board of Directors of Pennsylvania LTC, Te, Inc.

We have audited the accompanying financial statements of Pennsylvania LTCLTC,, Inc. which comprise the balance sheets as of June 30,201530, 2015 and 2014, and the related statements of operations and changes in net assets and cash flows for the years then ended, and the related notes to financial statementsstatements.. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors'Auditors'Responsibility Responsibility Our responsibility is to express an opinionopInion on · these financial statements based on our audits. We conducted our audits in accordance with audauditingiting standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.error. In making those risk assessments, the auditors consider internal control relevant to the entityentity's's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by managementmanagement,, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Pennsylvania LTC, Inc. as of June 30,30,2015 2015 and 2014, and the results of its operations and changes in net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

. f1fYl(j

KRESTONKRESTON Member of Kreston IntInternational-ernational - a globagloball network of independent accounting firms Page2Page 2 PENNSYLVANIA LTC, INC. BALANCE SHEETS JUNE 30, 2015 AND 2014

ASSETS 2015 2014 Current Assets Cash $ 3,994,006 $ 2,868,921 Resident Accounts Receivable, Net 1,700,056 1,788,137 Estimated Third Party Payor Settlements 60,548 54,760 Investments, at Fair Value 1,077,528 1,070,570 Current Portion of Assets Whose Use is Limited 557,717 557,340 Prepaid Expenses and Other Current Assets 103,910 206,206

Total Current Assets 7,493,765 6,545,934

Noncurrent Assets Assets Whose Use is Limited, Less Current Portion 728,834 728,832 Property and Equipment, Net 3,251,455 3,280,728 Bond Issuance Costs, Net 124,328 133,666

Total Noncurrent Assets 4,4,104,617 104,617 4,143,226

Total Assets $ 11,598,382 $ 10,689,160

LIABILITIES AND NET ASSETS

Current Liabilities Current Portion of Long Term Debt $ 140,000 $ 130,000 Accounts Payable 408,110 464,763464,763 Accrued Payroll, Benefits, and Payroll Taxes 400,400,135 135 278,636 Accrued Interest 32,200 32,988 Accrued Expenses and Other Current Liabilities 389,283 361,092

Total Current Liabilities 1,369,728 1,267,479

Long Term Liabilities Long Term Debt, Less Current Portion 6,300,0006,300,000 6,440,000

Total Liabilities 7,669,728 7,707,479

Net Assets Unrestricted 3,928,654 2,981,681

Total Liabilities and Net Assets $ 11,598,382 $ 10,689,160

The accompanying notes are an integral part of the financial statements Page 3 PENNSYLVANIA LLTC, TC, INC. STATEMENTS OF OPERATIONS AND CHANGES IN NET ASSETS YEARS ENDED JUNE 30, 2015 AND 2014

2015 2014

Operating Revenue Resident Service Revenue $ 13,071,800 $ 13,178,436

Operating Expenses Resident Care Services 6,510,6,510,188 188 6,482,897 Dietary Services 1,035,689 1,064,504 Activities and Social Services 476,063 439,973 Housekeeping and Laundry Services 644,693 633,771 Plant Operations and Maintenance 708,184 687,201 General and Administrative 1,720,441 1,744,915 Bad Debts 245,471 148,612 Interest Expense 400,800 408,626 Depreciation 392,042 417,237

Total Operating Expenses 12,12,133,571 133,571 12,02712,027,736,736

Operating Income 938,229 1,150,700

Other Revenues Investment Income 42,798 38,272

Excess of Revenues Over Expenses 981981,027 ,027 1J188,9721,188,972

Net Unrealized Gains (Losses) on Investments (34,054) 3434,166,166

Increase in Net Assets 946,973 1,223,1381,223, 138

Net Assets - Beginning of Year 2,981,681 1,7581,758,543,543

Net Assets - End of Year $ 3,928,654 $ 2,2,981,681981,681

The accompanying notes are an integral part of the financial statements Page4Page 4 PENNSYLVANIA LTC, INC. STATEMENTS OF CASH FLOWS YEARS ENDED JUNE 30,201530, 2015 AND 2014

2015 2014 Cash Flows From 01:1eratingOl2erating and Nono1:1eratingNonol2erating Activities Increase in Net Assets $ 946,973 $ 1,223,138 Adjustments to Reconcile Increase in Net Assets to Net Cash Provided By Operating and Nonoperating Activities Amortization of Bond Issuance Costs 9,338 9,513 Depreciation 392,042 417,237 Change in Allowance for Doubtful Accounts 113,780 20,295 Net Unrealized Losses (Gains) on Investments 34,054 (34,(34,166) 166) Net Realized Gains from Sale of Investments (1,802) (Increase) Decrease in Assets Resident Accounts Receivable (25,699) 3636,360,360 Estimated ThThirdird Party Payor Settlements (5,788) (53,443) Prepaid Expenses and Other Current Assets 102102,296,296 4646,386,386 Increase (Decrease) in Liabilities Accounts Payable (56,653) 76,328 Accrued Payroll, Benefits, and Payroll Taxes 121,499 (87(87,238),238) Accrued Interest (788) (788) Accrued Expenses and Other Current Liabilities 28,28,191 191 (44{44,472},472) Total Adjustments 710,470 386,012 Net Cash Provided By Operating and Nonoperating ActivActivitiesities 1,657,443 1,609,150 Cash Flows From Investing Activities Purchase of Investments (55,612) (1(1,036,404),036,404) Proceeds from the Sale of Investments 16,402 Acquisition of Property and Equipment (362,769) (124(124,601,601) ) Change in Assets Whose Use is Limited (379){379} (15{15,120},120)

Net Cash Used In Investing Activities (402,358){402,358~ (1{1,176,125~, 176, 125) Cash Flows From Financing Activities Principal Repayments of Long Term Debt (130,000){130,OOO~ (125,000){125,OOO~ Increase in Cash 1,1,125,085 125,085 308,025 Cash - Beginning of Year 2,2,868,921868,921 2,2,560,896560,896 Cash - End of Year $ 3,3,994,006994,006 $ 2,868,921

Supplemental Disclosure of Cash Flow Information: Cash Paid During the Year for: Interest $ 392,250 $ 399399,901,901

The accompanying notes are an integral part of the financial statements Page 5 PENNSYLVANIA LTCLTC,, INC. NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 AND 2014

NOTE 1: NATURE OF ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Pennsylvania LLTC,TC, Inc. (the "Corporation") is a Pennsylvania not-for-profnot-for-profitit corporation incorporated without stock on March 6, 1990, which owns and operates Linwood Nursing Home, a 102-bed nursing facility located in Lackawanna County, Pennsylvania, and Edgehill Nursing and Rehabilitation Center,Center, a 60-bed nursing facility located in Montgomery CountyCounty,, Pennsylvania (the "Facilities")"Facilities").. The Corporation is an affiliate of the Guardian Foundation, Inc. ("Guardian"),("Guardian"), a Pennsylvania nonprofit corporation,corporation, and receives its exempt status by virtue of being included within GuardianGuardian's's group exemption which is granted by the Internal Revenue Service and which recognizes such organizations as exempt from federal income tax under Section 501 (c)(3) of the Internal Revenue Code.

The financial statements of the Corporation have been prepared on the accrual basis of accountingaccounting.. The Corporation's significant accountaccountinging policies are descrdescribedibed belowbelow::

A) Assets Whose Use is Limited

Assets whose use is limited primarily include assets held by the Bank of Oklahoma N.A. (("Bond"Bond Trustee") (Note 2) under the Open-End Mortgage, Security Agreement, and Trust Agreement in (Note 5). Amounts requrequiredired to meet current liabilities of the Corporation have been classified as current assets iinn the balance sheets as of June 30, 2015 and 2014.

B) Property and Equipment

Property and equipment are stated at cost. Depreciation is provided over the estimated useful lives of the related assets on the straightstraight-line-line method.method.

Maintenance and repairs are charged to operations when incurred.incurred. Betterments and renewals are capitalized. When property and equipment are sold or otherwise disposed of, the asset accounts and the related accumulated depreciation accounts are relievedrelieved,, and any gain or loss is included in operations.

The estimated useful lives of property and equipment for purposes of computing depreciation are:

Land Improvements 3 - 20 Years Buildings and Improvements 5 - 30 Years Furniture, FixturesFixtures,, and Equipment 3 - 10 Years

C) Bond Issuance Costs

UnderwriterUnderwriter's's discountdiscount,, professional fees, printer expenses,expenses, and other costs incurred on behalf of the Corporation in connection with the issuance of Health Care Facilities Revenue Bonds, Series 2007 (the ""20072007 BondsBonds")") (Note 5)5),, are being amortized over the life of the 2007 Bonds using the effective interest method. Accumulated amortization as of June 3030,, 2015 and 20142014,, was $79$79,477,477 and $70,$70,139, 139, respectively. Amortization expense for the years ended June 30, 20201515 and 2014, was $9,338 and $9$9,513,,513, respectively, and is included in interest expenseexpense.. Page 6 PENNSYLVANIA LTC, INC. NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 AND 2014

NOTE 1: NATURE OF ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

C) Bond Issuance Costs (continued)

Estimated aggregate amortization expense for each of the next five years is as follows:

Years Ending June 30,30.

2016 $ 9,124 2017 $ 8,912 2018 $ 8,686 2019 $ 8,447 2020 $ 8,194

D) Resident Service Revenue

Approximately 90% of the Corporation's resident service revenues are from participation in the Medicaid and Medicare programsprograms..

Resident service revenue is reported at the estimated net realizable amounts from residents, third party payors, and others for services rendered.

Revenue under third party payor agreements is subject to audit, regulatory change, and retroactive adjustment. Provisions for estimated third party payor settlements are provided in the period the related services are rendered. Differences between the estimated amounts accrued and interim and final settlements are reported in operations in the year of settlement.

The Pennsylvania Department of Public Welfare currently pays for services under the Medicaid Case-Mix Reimbursement System for nursing facilities.facilities. The payments are based on a prospectiveprospective,, case-mix payment system for net operating costs and a fair rental value system for capital costscosts..

The Corporation is paid under a Prospective Payment System for Medicare Part A services that establishes an all-inclusive per diem payment rate, based on resident acuity, which covers routine, ancillary,anCillary, and capital-related costscosts..

As described above, the Medicaid and Medicare rates are based on clinical, diagnostic, and other factors. The determination of these rates is partially based on the Corporation's clinical assessments of its residents, done at predetermined times during the resident's stay.stay. The documented assessments are subject to review and adjustment by the Medicaid and Medicare programs.

E) Allowance for Doubtful Accounts

The Corporation provides an allowance for doubtful accounts equal to the estimated losses that will be incurred in the collection of all receivables.receivables. The estimated losses are based on a review of the current status of the existing resident accounts receivable. Page 7 PENNSYLVANIA LTC, INCINC.. NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 AND 2014

NOTE 1: NATURE OF ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

F) Income Taxes

The Corporation is recognized as exempt from federal income taxes under Section 501(c)(3)501 (c)(3) of the Internal Revenue Code of 1986, as amended, and state income taxes under the Not-for-Profit Corporation Laws of the Commonwealth of Pennsylvania. Accordingly, no provision for income taxes for the Corporation has been provided.

The Corporation has identified its tax status, as a tax-exempt entity, as a tax position.position. The Corporation has determined that such tax position does not result in an uncertainty requiring recognition.

The Corporation believes it is no longer subject to income tax examinations for years prior to June 30, 2012.

G) Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results may differ from the estimates.

H) Excess of Revenues Over Expenses

The statements of operations and changes in net assets include excess of revenues over expenses. Changes in unrestricted net assets which are excluded from excess of revenues over expenses, if any, but are not limited to, unrealized gains and losses on investments other than trading securities, permanent transfers of assets to and from affiliates for other than goods and services, and contributions of long-lived assets.

I) Fair Value Measurements

The Corporation measures its financial instruments at fair value.value. Fair value is defined as the price that would be received to sell an asset or the price that would be paid to dispose of a liability in an orderly transaction between market participants at the measurement date. The framework established for measuring fair value includes a hierarchy used to classify the inputsinputs used in measuring fair value. The hierarchy established prioritizes the inputs used in determining valuations into three levels. The level in the fair value hierarchy within which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement.

The levels of the fair value hierarchy are as follows:

Level 1 - Observable inputs such as quoted prices in active markets for identical assets.

Level 2 - Directly or indirectly observable inputs for quoted and other than quoted prices for identical or similar assets and liabilities in active or nonactive marketsmarkets..

Level 3 - Unobservable inputsinputs not corroborated by market data, therefore requiring the entity to use the best information available in the circumstances, including the Corporation's own data. Page 8 PENNSYLVANIA LTC, INC. NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 AND 2014

NOTE 1: NATURE OF ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

I) Fair Value Measurements (continued)

Both investments and assets whose use is limited were measured using Level 1 inputs.

Fair value of financial instruments for which the Corporation did not elect the fair value option includes cash, resident accounts receivablereceivable,, netnet,, estimated third party payor settlements, other current assets, accounts payablepayable,, accrued payroll, benefits, and payroll taxes, accrued interest, and accrued expenses and other current liabilitiesliabilities.. The fair value of such instruments, except for long term debtdebt,, was determined to approximate carrying value given the short term nature of these instruments. The fair value of long term debt has been estimated by discounting future cash flows using current market rates for similar debt. The carrying value of the long term debt exceeds its estimated fair value by approximately $300,000$300,000 to $500,000$500,000 as of June 30, 2015. Considerable judgment is required in interpreting market data as well as the risk of nonperformance to develop estimates of fair valuevalue.. The use of different assumptions and/or estimation methodologies may have a material effect on the estimated fafairir value. Net rearealizablelizable values could be matermateriallyially different from the estimates at June 30, 2015. In additionaddition,, the estimates are only indicative of the value of the individual financial instruments and should not be considered an indication of the fair value of the Corporation.

J) Subsequent events

The CorporationCorporation has evaluated subsequent events through October 11, , 2015, which is the date the financial statements were available to be issued.

NOTE 2: INVESTMENTS

Assets Whose Use is Limited

Assets whose use is limited represent funds held by the Bond Trustee in accordance wwithith the Open-End Mortgage,Mortgage, Security AgreementAgreement,, and Trust Agreement described in (Note 5) as of June 3030,, as follows: 2015 2014 Debt Service Reserve Fund $ 528,003 $ 528,003528,003 Debt Service Fund Interest 126126,797,797 126126,424,424 Proceeds Account 430,557 430430,553,553 Replacement Reserve Fund 200200,831,831 200,829 Tax and Insurance Fund 363 363 1,286,551 1,1,286,172286,172 Less: Current Portion 557557,717,717 557557,340,340 $ 728728,834,834 $ 728728,832,832

Assets whose use is limitedlimited,, which are presentedpresented at cost which approximates fair value, as of June 3030,, 2015 and 2014,2014, consist of:of: 2201501 5 20120144 Money Market Accounts $ 1,2861,286,551,551 $ 1,1,286,172286,172 Page9Page 9 PENNSYLVANIA LTC, INC. NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 AND 2014

NOTE 2: INVESTMENTS (CONTINUED)

Investments

The Corporation invested surplus cash durduringing the years ended 2015 and 20142014.. These investments, stated at fair value, consist of the following as of June 30, 2015 and 2014:

2015 Cost Fair Value Mutual Funds Fixed Income $ 542,659 $ 534,457 Global Equity 473,684 478,935 Exchange Traded Funds 58,975 6262,038,038 Cash and Cash Equivalents 2,0982,098 2,2,098098

$ 1,077,416 $ 1,0771,077,528,528

2014 Cost Fair Value Mutual Funds Fixed Income $ 512512,817,817 $ 519,015 Global Equity 459,534 481,384 Exchange Traded Funds 6161,599,599 66,96866,968 Equity Securities 1,1,300300 2,0482,048 Cash and Cash Equivalents 1,1,154154 1,1,155155

$ 1,036,404 $ 1,070,5701,070,570

Investment income and other changes in net assets are comprised of the following for the years ended June 30, 2015 and 2014:2014:

2015 2014 Investment Income Interest and Dividend Income $ 4242,798,798 $ 38,27238,272

Other Changes in Net Assets Net Unrealized Gains (Losses) on Investments $ {34~34,054),054) $ 3434,166,166 Page 10 PENNSYLVANIA LTC, INC. NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 AND 2014

NOTE 3: RESIDENT ACCOUNTS RECEIVABLE

Resident accounts receivable consisted of the following as of June 30:

2015 2014

Private $ 145,836 $ 281,156 Medicaid 11,320,847 ,320,847 1J199,6821,199,682 Medicare 397,688 286,864 Other Third Party Payors 215,701 286,671 2,080,072 2,054,373 Less: Allowance for Doubtful Accounts 380,016 266,236

$ 1,700,056 $ 1,788,137

NOTE 4: PROPERTY AND EQUIPMENT

The following is a summary of property and equipment as of June 30, at cost, less accumulated depreciation:

2015 2014 Cost Land and Land Improvements $ 485,179 $ 471,213 Buildings and Improvements 7,2107,210,282,282 7,158,256 Furniture, Fixtures, and Equipment 2,317,843 2,246,375 Total Cost 10,013,304 9,8759,875,844,844 Accumulated Depreciation 6,987,6,987,158 158 6,595,116 Subtotal 3,026,146 3,280,728 Construction in Process 225,309

Net Property and Equipment $ 3,251,455 $ 3,280,728

Property and equipment are pledged as collateral as described in Note 5.

Depreciation expense charged to operations for the years ended June 30, 2015 and 2014, was $392,042 and $417,237, respectivelyrespectively..

NOTE 5: LONG TERM DEBT

The Horsham Industrial and Commercial Development Authority (the "Authority") issued on September 15, 19941994,, Health Care Facilities Revenue BondsBonds,, Series 1994 (the ""19941994 Bonds") in the principal amount of $10$10,385,000,385,000 with interest between 5% and 8.8.375%.375%.

The proceeds of the 1994 Bonds along with certain otherother funds made available to the Corporation were used to acquire and make certain renovations to the Facilities, fund certain working capital costs of the Facilities along with the Debt Service Reserve Fund for the 1994 Bonds,Bonds, and pay certain costs of issuance of the 1994 Bonds. Page 11 PENNSYLVANIA LTC, INC. NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 AND 2014

NOTE 55:: LONG TERM DEBT (CONTINUED)

On June 30, 2007, the 1994 Bonds were refinanced as part of the sale of the Rolling Hills Manor facilfacility.ity. The Authority issued on July 11,, 20072007,, the 2007 Bonds in the principal amount of $7$7,265,000,265,000 with interest at 6%.6%. Through an Open-End Mortgage, Security Agreement, and Trust Agreement dated July 1, 2007 ("Open-End Mortgage, Security Agreement,Agreement, and Trust Agreement"), iinterestnterest is payable quarterly on March 1, June 1,1, September 1, and December 11.. Principal redemption commenced on June 1, 20082008,, and continues through December 1, 2037.

Under the terms of the Open-End MortgageMortgage,, Security AgreementAgreement,, and Trust Agreement between the Authority and the Corporation, the Corporation agreed to maintain assets whose use is limited (Note 2) and to make periodic payments in amounts sufficient to permit the Authority to meet the debt service requirements of the 2007 Bonds. Title to the FacilFacilitiesities wwillill pass from the Authority to the Corporation when the Open-End Mortgage, Security Agreement and Trust Agreement are satisfied in full. The Corporation has included the cost of the Facilities and equipment and the related long term debt in the financial statements.

Under the terms of the Open-End MortgageMortgage,, Security AgreementAgreement,, and Trust Agreement, the Corporation is subject to various restrictive covenants which began with the twetwelvelve month period ended JuJunene 30,30, 2008.2008. The most significant covenants are the mamaintenanceintenance of an annual Debt Service Coverage Ratio of at least 1.20 to 1 on long term indebtedness, as defined in the Open-End Mortgage, Security Agreement, and Trust Agreement,Agreement, and at each annual evaluation datedate,, the Corporation is required to maintain 30 DaysDays'' Cash on Hand, and no more than 10% Trade Payables outstanding in excess of 90 Days.

As of June 30,30,2015 2015, the Corporation was in compliance with its covenant requirements.

Mortgage note payable in installments of principal and interest sufficient to meet the debt service requirements of the 2007 BondsBonds.. Secured by a first mortgage lien on the Facilities and a security interest on the land, property, and gross receipts of the Corporation.Corporation . $ 6,4406,440,000,000 $ 66,570,000,570,000

LLess:ess: CurrentCurrent Portion 140,000140,000 130,000

$ 6,300,000 $ 6,440,0006,440,000 Page 12 PENNSYLVANIA LLTC,TC, INC. NOTES TO FINANCIAL STATEMENTS JUNE 30,201530, 2015 AND 2014

NOTE 5: LONG TERM DEBT (CONTINUED)

The following are the annual maturities of the long term debt for each of the next five years and in the aggregate:

Years Ending June 30,

2016 $ 140,000 2017 150,000 2018 160,000 2019 165,000 2020 180,000 Thereafter 5,645,000

$ 6,440,000

NOTE 6: COMMITMENTS AND RELATED-PARTY ACTIVITIES

Construction Agreement

On December 5, 2014, management signed an agreement with Charles W. Grimm Construction for renovations and upgrades to the skilled nursing facility. The project is expected to be completed in 2015. The total expected cost of the project is approximately $509,000, with approximately $181,000$181 ,000 of costs incurred as of June 30, 2015.

Management Fees

The Corporation entered into a management services agreement with Genesis Eldercare Network Services, Inc. ("Genesis") for a period of five years ending June 30, 2018. The management agreement included a base monthly payment ranging from $29,500 per month to $31,500 per month through June 3030,, 2018, plus an incentive fee equal to 2% of net operating revenues, as defined in the management services agreement, with total management fees not to exceed 4.4.5%5% of net operating revenues. Portions of the incentive fee were only earned upon certain milestones being met.

Management fees incurred for the years ended June 30, 2015 and 2014, were $577,647 and $594,$594,173, 173, respectively, and are included in general and administrative expenses. Management fees payable as of June 30, 2015 and 2014, were $228$228,790, 790 and $240,$240,173, 173, respectively, and are included in accrued expenses and other current liabilities.

Corporate Administration and Participation Fees

The Corporation has a Corporate Administration Agreement with Guardian whereby in exchange for corporate administrative services, the Corporation will pay Guardian a monthly fee. The fee will be adjusted every January 1st1st by the change in the Consumer Price Index and the agreement will expire on June 30, 2015.

Guardian shall also be entitled to a participation fee equal to $1 per resident day, to be adjusted every January 1st1st by the change in the Consumer Price Index. Accrual and payment of the participation fee is subordinated under the terms and conditions of the Subordination Agreement (Note 10). Page 13 PENNSYLVANIALTC,PENNSYLVANIA LTC, INCINC.. NOTES TO FINANCIAL STATEMENTS JUNE 30,201530, 2015 AND 2014

NOTE 6: COMMITMENTS AND RELATED-PARTY AC1:1VITIESAC~IVITIES (CONTINUED)

Corporate Administration and Participation Fees (continued)

Corporate administration and participation fees for the years ended June 30, 2015 and 2014, were $167,060 and $166,207, respectively, and are included in general and administrative expenses. As of June 30, 2015 and 2014, $59,588 and $59,923, respectively, was due to Guardian for corporate administration and participation fees and is included in accounts payablepayable..

Unemployment Compensation

Effective January 1, 20122012,, the Corporation entered into a group plan with Health Systems, Inc.Inc. ("Health Systems"), an affiliate related through common control, for the purpose of paying unemployment claims on a claims-made self-insurance basis, instead of making payments to a state administered fund. Quarterly, the Corporation remits to Health Systems a premium based upon its claims history plus an administration fee. These premiums and administration fees are then submitted to a third party administrator who handles actual claim adjudication and payment. Premiums and administration fees remitted by the Corporation to Health Systems for the years ended June 30, 2015 and 2014, were $87,917 and $43,000, respectively.

NOTE 7: EMPLOYEE BENEFIT PLAN

Effective August 1, 2013, Guardian formed a qualified 401 (k) defined contribution plan for nonhighly compensated employees of its affiliated organizations. Eligible employees, as defined by the plan documents, are automatically enrolled and may defer a portion of their salaries. The Corporation has elected to contribute a minimum employer matching contribution of 25% of employee contributions up to 6% of compensation, as defined. The Corporation may also make additional voluntary contributions, at its discretion, to the plan. Total contributions made to the plan by the Corporation are $24,947 and $4,784 for the years ended June 30,30,2015 2015 and 2014, respectively.

NOTE 8: CREDIT RISK AND OPERATING RISK

The Facilities grant credit without collateral to their residents, most of who are insured under third party payor agreements. The mix of receivables from residents and third party payors, as of June 30,30,2015 2015 and 2014, is summarized in Note 3.

The Corporation's credit risk associated with cash and the investments of assets whose use is limited relates to funds held by a brokerage firm and Bond Trustee which are held in money market accounts, and cash held in local banks which exceed the federal deposit limit and are not insured or guaranteed by the United States Government. Management believes that the risk related with these funds is minimal.

The CorporatCorporationion receives revenue from Medicare, Medicaid, private insurers, self-pay residents, and other third party payors.payors. The source and amounts of the CorporationCorporation's's revenues are determined by a number of factors, including licensed bed capacity, occupancy, the mix and acuacuityity levels of residents, and the rates of reimbursement among payors. Changes in case mix of residents as well as payor mix among Medicare, MedicaidMedicaid,, and private pay, can significantly affect the Corporation's profitability. Page 14 PENNSYLVANIA LTC,LTC, INCINC.. NOTES TO FINANCIAL STATEMENTS JUNE 30,201530, 2015 AND 2014

NOTE 8: CREDIT RISK AND OPERATING RISK (CONTINUED)

NOTE 9: MEDICAL PROFESSIONAL LIABILITY INSURANCE

In accordance with Pennsylvania Insurance Law, the primary coverage provided by a recognized insurance company (i.e., rated A in A.M. Best) is in the amount of $500,000 per occurrence and $1,500,000 per annual aggregate. The Pennsylvania Mcare Program provides excess limits above the primary insurance carrier's limit just mentioned up to total limits of $1,000,000$1 ,000,000 per occurrence and $3,000,000$3,000,000 annual aggregate.

NOTE 10: SUBORDINATION AGREEMENT

Pursuant to a Subordination Agreement, dated as of July 1, 2007, Genesis and Guardian have subordinated their right to certain payments described below to the payment of debt service on the 2007 Bonds.Bonds.

No subordinated payables will be paid unless: (i) there is no event of default under the Open-End Mortgage, Security Agreement, and Trust AgreementAgreement,, and there is sufficient monies in the Debt Service Reserve Fund; (ii) payment does not violate the Days' Cash on Hand requirement and the aged Trade Payables test; and (iii) the annual interim Debt Service Coverage Ratio Requirement tests are met. There were no subordinated payables as of June 30, 2015 and 2014.

NOTE 11: LITIGATION

In the ordinary course of business, the Corporation is involved in litigation. Management is of the opinion that any liability or loss in excess of insurance coverage resulting from such litigation will not have a material adverse effect on the financial statements.

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APPENDIX C FINANCIAL FEASIBILITY STUDY

[THIS PAGE INTENTIONALLY LEFT BLANK] Pennsylvania LTC, Inc.

Financial Feasibility Study for the Five Years Ending June 30, 2022 and Independent Accountants’ Report Pennsylvania LTC, Inc. Table of Contents

Page

Independent Accountants’ Report 1

Forecasted Schedule of Debt Service Coverage Ratio and Days Cash on Hand 4

Financial Statements

Forecasted Balance Sheets 5

Forecasted Statements of Operations and Changes in Net Assets 6

Forecasted Statements of Cash Flows 7

Summary of Significant Forecast Assumptions and Accounting Policies

Basis of Presentation 8

Background of the Obligor 8

Description of the Project 9

Timing of the Project 9

Unit Complement 10

Project Financing 10

Description of Nursing Services 12

Characteristics of the Market Area 12

Revenues 32

Expenses 37

Summary of Significant Accounting Policies 38

Assets Whose Use is Limited 40

Property and Equipment 42

Long-Term Debt and Interest Expense 43

Commitments and Related Party Activities 45

Contingencies 46

Subordination of Management and Participation Fees 48

Sensitivity Analyses 48

Independent Accountants’ Report

Board of Directors Pennsylvania LTC, Inc.

We have prepared a financial feasibility study of the plans of Pennsylvania LTC, Inc. (the Obligor) to finance a nursing facility replacement project at Linwood Nursing and Rehabilitation Center (Linwood) (the Project) and refund existing long-term debt of the Obligor, namely the Horsham Industrial and Commercial Development Authority’s Healthcare Facilities Refunding Revenue Bonds (Pennsylvania LTC, Inc. Project) Series 2007 (Tax-Exempt) (Series 2007 Bonds). The Obligor operates Linwood, a 102-bed nursing facility located in the City of Scranton, Lackawanna County, Pennsylvania, and Edgehill Nursing and Rehabilitation Center, a 60-bed nursing facility located in Glenside, Montgomery County, Pennsylvania. The Project is assumed to consist of the demolition of the older 44-bed west wing of Linwood and its replacement. The Project will also include new common areas and amenities, including a therapy gym, resident lounge, beauty parlor, activity space, dining area, nurses’ station and medication room, support offices, resident shower room, resident storage area, and mechanical and utility rooms.

Management of the Obligor (Management) anticipates construction of the Project will be completed by October 2018. The estimated total cost of the Project, including costs associated with the proposed issuance of bonds that are assumed to be the primary source of financing for the Project, is disclosed in Table 2 in the Summary of Significant Forecast Assumptions and Accounting Policies.

The study was undertaken to evaluate the ability of the Obligor to generate sufficient funds to meet its operating expenses, working capital needs, and other financial requirements, including the debt service requirements associated with the proposed $12,555,000 Montgomery County Higher Education and Health Authority (the Authority) Tax-Exempt Revenue Bonds (Pennsylvania LTC, Inc. Project), Series of 2017 (Series 2017 Bonds). The Series 2017 Bonds are assumed to be outstanding throughout the forecast period, less scheduled principal repayments.

The proposed Series 2017 Bonds are assumed to be unrated, tax-exempt fixed rate bonds. The terms of the proposed Series 2017 Bonds are assumed to be:

$830,000 term bonds due in varying annual installments beginning December 2017 through December 2022, issued at an annual average interest rate of 4.00 percent; $1,270,000 term bonds due in varying annual installments beginning December 2023 through December 2027, issued at an average annual interest rate of 5.00 percent; $1,625,000 term bonds due in varying annual installments beginning December 2028 through December 2032, issued at an average annual interest rate of 5.575 percent; $2,145,000 term bonds due in varying annual installments beginning December 2033 through December 2037, issued at an average annual interest rate of 5.825 percent; and $6,685,000 term bonds due in varying annual installments beginning December 2038 through December 2047, issued at an average annual interest rate of 6.00 percent.

The proceeds from the sale of the Series 2017 Bonds, together with other available funds described below, will be used to:

Refund the Series 2007 Bonds; Pay for design, construction, and other costs associated with the Project; Fund a debt service reserve fund for the Series 2017 Bonds; Fund a replacement reserve fund; Fund interest on the Series 2017 Bonds through August 2018; and Pay for certain costs associated with the issuance of the Series 2017 Bonds.

The proceeds from a loan of $1,000,000 from Guardian Foundation, Inc., and an equity contribution from the Obligor, of approximately $4,048,000, including prepaid construction costs, will also be utilized for the Project.

The responsibility for payment of debt service on the Series 2017 Bonds is solely that of the Obligor.

Our procedures included analysis of the following: The Obligor’s history, objectives, timing, and financing; The future demand for the Obligor’s nursing care services, including consideration of: o Economic and demographic characteristics of the Obligor’s primary market areas; o Locations, capacities, and competitive information pertaining to other existing nursing facilities in the primary market areas; and o Historical utilization levels. Construction and equipment costs, debt service requirements, and estimated financing costs; Staffing patterns and other operating considerations; Revenue, expense, and occupancy relationships; and Applicable legislation and regulations currently in effect.

We also participated in gathering other information, assisted Management in identifying and formulating its assumptions, and assembled the accompanying financial forecast based upon those assumptions.

The accompanying financial forecast for each of the five years ending June 30, 2022 is based on assumptions that were provided by, or reviewed with and approved by, Management. The financial forecast includes:

Forecasted Balance Sheets; Forecasted Statements of Operations and Changes in Net Assets; and Forecasted Statements of Cash Flows.

We have examined the accompanying financial forecast of the Obligor based on the guidelines for the presentation of a forecast established by the American Institute of Certified Public Accountants (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 performing procedures to obtain evidence about the forecast. The nature, timing, and extent of the procedures selected depend on our judgment, 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 forecasted schedule of debt service coverage ratio and days cash on hand on page 4 is presented for purposes of additional analysis and is not a required part of the financial forecast. Such information has been subjected to procedures applied in the examination of the financial forecast, and in our opinion, is fairly stated in all material respects in relation to the financial forecast taken as a whole.

Legislation and regulations at all levels of government have affected and may continue to affect the revenues and expenses of the Obligor. The financial forecast is based on legislation and regulations currently in effect. If future legislation or regulations affecting the Obligor are subsequently enacted, such legislation or regulations could have a material effect on future operations.

The interest rates, principal payments, Project costs, 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 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.

Our conclusions are presented below:

In our opinion, the accompanying financial forecast is presented, in all material respects, in accordance with guidelines for presentation of a financial forecast established by the AICPA. In our opinion, the underlying assumptions are suitably supported and provide a reasonable basis for Management’s forecast. However, there will usually be differences between the forecasted and actual results because events and circumstances frequently do not occur as expected, and those differences may be material. The accompanying financial forecast indicates sufficient funds could be generated to meet the Obligor’s operating expenses, working capital needs, and other financial requirements, including the debt service requirements associated with the proposed Series 2017 Bonds during the forecast period. However, the achievement of any financial forecast is dependent upon future events, the occurrence of which cannot be assured.

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

Philadelphia, Pennsylvania October 6, 2017

3 Pennsylvania LTC, Inc. Forecasted Schedule of Debt Service Coverage Ratio and Days Cash on Hand As of and For Each of the Years Ending June 30, 2018 - 2022 (In thousands of dollars)

2018 2019 2020 2021 2022

Debt Service Coverage Ratio (1) Revenues available for debt service: Revenues less than expenses $ (191) (285)$ $ (209) Depreciation 810 787 785 Interest 756 748 739

Revenues available for debt service $ 1,375 1,250$ 1,315$

Maximum annual debt service, 2017 Bonds $ 912 912$ $ 912

Debt service coverage ratio 1.51 1.37 1.44

Days Cash on Hand (2) Total expenses $ 12,785 14,261$ 16,147$ 16,386$ 16,667$ Less: Depreciation 571 699 810 787 785 Amortization of debt issuance costs 17 22 22 22 22 Loss on refunding 226 - - - - Provision for doubtful collections 97 121 162 164 169

Total cash operating expenses 11,874 13,419 15,153 15,413 15,691

365/366 days 365 365 366 365 365

Daily cash operating expenses $ 33 37$ $ 41 $ 42 $ 43

Unrestricted cash and investments $ 1,997 1,300$ 1,474$ 1,673$ 1,918$

Days cash on hand 61 35 36 40 45

Notes: (1) The debt service coverage ratio is calculated by dividing revenues available for debt service by maximum annual debt service for the Series 2017 Bonds. (2) Days cash on hand is calculated by dividing unrestricted cash and investments by daily cash operating expenses.

See independent accountants' report and summary of significant forecast assumptions and accounting policies 4 Pennsylvania LTC, Inc. Forecasted Balance Sheets June 30, 2018 - 2022 (In thousands of dollars)

2018 2019 2020 2021 2022

Assets

Current Assets Cash and cash equivalents $ 1,997 1,300$ 1,474$ $ 1,673 $ 1,918 Current portion of assets whose use is limited 59 173 178 181 186 Accounts receivable, residents, net 1,064 1,237 1,536 1,556 1,595 Prepaid expenses and other current assets 214 242 280 285 291

Total current assets 3,334 2,952 3,468 3,695 3,990

Assets Whose Use is Limited 5,063 1,012 1,012 1,012 1,012

Property and Equipment, Net 9,809 13,352 12,667 12,005 11,345

Total assets $ 18,206 $ 17,316 $ 17,147 16,712$ 16,347$

Liabilities and Net Assets

Current Liabilities Current maturities of long-term debt $ - $ 195 $ 205 210$ $ 220 Accounts payable 429 485 559 570 581 Accounts payroll and related expenses 434 482 530 542 553 Accrued interest 62 62 61 60 59 Other accrued expenses 429 485 559 570 581

Total current liabilities 1,354 1,709 1,914 1,952 1,994

Long-Term Debt 12,924 12,751 12,568 12,380 12,182

Total liabilities 14,278 14,460 14,482 14,332 14,176

Net Assets Unrestricted 3,928 2,856 2,665 2,380 2,171

Total liabilities and net assets $ 18,206 $ 17,316 $ 17,147 16,712$ 16,347$

See independent accountants' report and summary of significant forecast assumptions and accounting policies 5 Pennsylvania LTC, Inc. Forecasted Statements of Operations and Changes in Net Assets For Each of the Years Ending June 30, 2018 - 2022 (In thousands of dollars)

2018 2019 2020 2021 2022

Unrestricted Revenues Net resident service revenues $ 9,714 $ 11,289 14,055$ $ 14,200 $ 14,557 Pennsylvania nursing home assessment 1,870 1,870 1,870 1,870 1,870 Other revenues 15 16 17 17 17

Total unrestricted revenues 11,599 13,175 15,942 16,087 16,444

Expenses Resident care 5,636 6,615 7,802 7,978 8,160 General and administrative 1,637 1,824 2,065 2,093 2,135 Pennsylvania nursing home assessment 1,456 1,456 1,456 1,456 1,456 Dietary 1,029 1,081 1,164 1,185 1,206 Plant operations and maintenance 721 811 884 907 931 Depreciation 571 699 810 787 785 Housekeeping and laundry 619 693 734 747 760 Interest 276 619 756 748 739 Activities and social services 452 463 476 485 495 Loss on refunding 226 - - - - Demolition costs 162 - - - -

Total expenses 12,785 14,261 16,147 16,386 16,667

Operating loss (1,186) (1,086) (205) (299) (223)

Other Revenues, Investment income 31 14 14 14 14

Revenues less than expenses (1,155) (1,072) (191) (285) (209)

Net Assets, Beginning 5,083 3,928 2,856 2,665 2,380

Net Assets, Ending $ 3,928 2,856$ 2,665$ 2,380$ 2,171$

See independent accountants' report and summary of significant forecast assumptions and accounting policies 6 Pennsylvania LTC, Inc. Forecasted Statements of Cash Flows For Each of the Years Ending June 30, 2018 - 2022 (In thousands of dollars)

2018 2019 2020 2021 2022

Cash Flows from Operating Activities Change in net assets $ (1,155) $ (1,072) $ (191) $ (285) $ (209) Adjustments to reconcile change in net assets to net cash provided by (used in) operating activities: Depreciation 571 699 810 787 785 Amortization of debt issuance costs 17 22 22 22 22 Loss on refunding 226 - - - - Changes in assets and liabilities: Accounts receivable, residents 450 (173) (299) (20) (39) Prepaid expenses and other current assets 13 (28) (38) (5) (6) Accounts payable 14 56 74 11 11 Accrued expenses 52 104 121 22 21

Net cash provided by (used in) operating activities 188 (392) 499 532 585

Cash Flows from Investing Activities Net change in assets whose use is limited and investments (633) 3,937 (5) (3) (5) Purchase of property and equipment (6,215) (4,242) (125) (125) (125)

Net cash used in investing activities (6,848) (305) (130) (128) (130)

Cash Flows from Financing Activities Proceeds from long-term debt 7,282 - - - - Repayment of long-term debt - - (195) (205) (210) Payment of debt issuance costs (645) - - - -

Net cash provided by (used in) financing activities 6,637 - (195) (205) (210)

Net (decrease) increase in cash and cash equivalents (23) (697) 174 199 245

Cash and Cash Equivalents, beginning of year 2,020 1,997 1,300 1,474 1,673

Cash and Cash Equivalents, end of year $ 1,997 $ 1,300 1,474$ $ 1,673 $ 1,918

Supplemental Disclosure of Cash Flow Information Interest paid, net of capitalized interest $ 265 $ 560 735$ $ 727 $ 718

Noncash Investing and Financing Activity Proceeds from long-term debt used to refund long-term debt $ 6,150 $ - -$ -$ -$

Proceeds from long-term debt used to pay redemption premium on refunded long-term debt $ 123 $ - -$ -$ -$

See independent accountants' report and summary of significant forecast assumptions and accounting policies 7 Pennsylvania LTC, Inc. Summary of Significant Forecast Assumptions and Accounting Policies

Basis of Presentation

The accompanying financial forecast presents, to the best of the knowledge and belief of management of Pennsylvania LTC, Inc. (Management), the expected financial position, results of operations, changes in net assets, and cash flows of Pennsylvania LTC, Inc. (the Obligor) as of and for each of the five years ending June 30, 2022. Accordingly, the forecast reflects Management’s judgment as of October 6, 2017, the date of this forecast, of the expected conditions and Management’s expected course of action during the forecast period. The assumptions disclosed herein are those Management believes are significant to the financial forecast. There will usually be differences between the forecasted and actual results because events and circumstances frequently do not occur as expected, and those differences may be material.

Background of the Obligor

The Obligor is a not-for-profit corporation organized and existing under the laws of the Commonwealth of Pennsylvania. Incorporated on March 6, 1990, the Obligor currently owns and operates a 102-bed nursing facility located in the City of Scranton, Lackawanna County, Pennsylvania known as Linwood Nursing and Rehabilitation Center (Linwood) and a 60-bed nursing facility located in Glenside, Montgomery County, Pennsylvania known as Edgehill Nursing and Rehabilitation Center (Edgehill). Due to current facility limitations, Linwood has been operating with a maximum of 90 of the 102 licensed nursing beds.

The Obligor is an operating affiliate of the Guardian Foundation, Inc. (Guardian), a nonprofit corporation organized for public charitable purposes to provide services to its affiliates, which are separately incorporated, to establish, acquire, own, and maintain nursing homes, hospitals, and related healthcare facilities, including retirement housing for seniors, and to operate such facilities through third-party management contracts. Guardian is currently the sole corporate member of 14 nonprofit affiliates, which operate 39 senior living and healthcare facilities across five states, with over 1,750 resident units and program participants.

Linwood and Edgehill (collectively, the Facilities) are each existing facilities acquired by the Obligor in 1994. The Facilities are currently operated and managed by Genesis Eldercare Services Network, LLC (Genesis Eldercare), an affiliate of Genesis Healthcare (Genesis), under a management agreement. Genesis Eldercare assumed management of the Facilities on July 10, 2008. Genesis, a nursing and rehabilitation therapy provider, is headquartered in Kennett Square, Pennsylvania and employs approximately 80,000 individuals. Genesis currently manages more than 450 nursing centers and assisted senior living communities. An affiliate, Genesis Eldercare Rehab Services (Genesis Rehab), provides therapy services to approximately 1,700 locations across the country.

The Obligor is led by a 3-member Board of Directors (the Board) appointed by the Board of Directors of Guardian. The Board is required to have a minimum of 3 members who are appointed to 3-year terms. Members may be re-appointed for unlimited successive terms.

8 Pennsylvania LTC, Inc. Summary of Significant Forecast Assumptions and Accounting Policies

Description of the Project

Management has planned the demolition of the older 44-bed west wing of Linwood and the construction of an approximate 32,000 square foot replacement facility (the Project), which will incorporate the following:

11 nursing semi-private resident rooms; 2 nursing private resident rooms; 8 new transitional rehabilitation private resident rooms; 7 new transitional rehabilitation semi-private resident rooms; and New commons areas, amenities, and support areas, including: o Therapy gym; o Resident lounge; o Beauty parlor; o Activity space; o Dining area; o Nurses’ station and medication room; o Support offices; o Resident shower room; o Resident storage area; and o Mechanical and utility rooms.

The design of the new addition has a “homelike” aesthetic on both its interior and exterior, with many of the resident rooms and common spaces having views across the valley or of an interior courtyard. Upon completion of the Project, Linwood will operate 46 beds in the new addition and 56 beds in the existing facility.

Timing of the Project

Construction for the Project is expected to last 12 months. Management has forecasted that construction will commence in November 2017 and be completed in October 2018. The new building is forecasted to be available for occupancy on November 1, 2018. Stabilized occupancy (94%) in Linwood is forecasted to be achieved in August 2019 (10 months).

9 Pennsylvania LTC, Inc. Summary of Significant Forecast Assumptions and Accounting Policies

Unit Complement

The table below illustrates the Obligor’s unit complement.

Table 1 Unit Complement

Prior to Project After Project Changes Project

Linwood nursing beds(1)(2) 90 12 102 Edgehill nursing beds 60 - 60

Total 150 12 162

Source: Management.

Notes: (1) Linwood is currently operating 90 nursing beds but is licensed for 102 nursing beds. Linwood will be expanding the number of available operating nursing beds to 102 in connection with the Project. (2) Linwood will be reducing its operating bed count to 58 beds during construction. Upon completion of the Project, Linwood will operate 46 beds in the new addition and 56 beds in the existing facility.

Project Financing

Management intends to use the proceeds from the issuance of the proposed $12,555,000 Montgomery County Higher Education and Health Authority (the Authority) Tax-Exempt Revenue Bonds (Pennsylvania LTC, Inc. Project), Series of 2017 (Series 2017 Bonds), together with other available funds, to refund existing long-term debt of the Obligor, namely the Horsham Industrial and Commercial Development Authority’s Healthcare Facilities Refunding Revenue Bonds (Pennsylvania LTC, Inc. Project) Series 2007 (Tax-Exempt) (Series 2007 Bonds) and to finance the construction and equipping of the Project. The Series 2017 Bonds are assumed to be issued on or around November 1, 2017.

10 Pennsylvania LTC, Inc. Summary of Significant Forecast Assumptions and Accounting Policies

A summary of the estimated sources and uses of funds to finance the Project, as provided by Management and Herbert J. Sims & Co., Inc. (the Underwriter), is presented in the following table.

Table 2 Estimated Project Sources and Uses of Funds (in thousands of dollars)

Sources of Funds Series 2017 Bonds(1) $ 12,555 Loan from Guardian(2) 1,000 Series 2007 Bonds trustee held funds(3) 1,322 Prepaid construction costs(4) 448 Equity contribution(5) 3,600

Total sources of funds $ 18,925

Uses of Funds Project costs: Construction(6) $ 8,813 Architect, engineering, and other(7) 1,033 Additional Project contingency(8) 50 Furniture and equipment(7) 239 Demolition costs(7) 162 Asbestos abatement costs(7) 136 Funded interest(9) 500 Debt service reserve fund(10) 912 Replacement reserve fund(11) 100 Financing costs(12) 645 Refund Series 2007 Bonds, payment of accrued interest, and redemption premium(13) 6,335

Total uses of funds $ 18,925

Source: Management and Underwriter.

Notes: (1) The Series 2017 Bonds are assumed to yield an average annual interest rate of 5.87 percent. (2) Guardian is assumed to loan the Obligor $1,000,000 (Guardian Loan). The Guardian Loan is subordinate to the Series 2017 Bonds and has an assumed annual interest rate of 2.5 percent. (3) The Obligor will use $1,322,000 of Series 2007 Bonds trustee held funds as a source of funding for the refunding of the Series 2007 Bonds. (4) The Obligor is assumed to have incurred and paid $648,000 of construction costs prior to the date of financing (November 1, 2017), $448,000 of which will not be reimbursed to the Obligor and are another source of funds. (5) The Obligor will use $3,600,000 of its cash and investments as a source of funding for the Project. (6) Construction costs are based on a construction contract with a guaranteed maximum price (GMP) of $8,813,106, as provided by Sordoni Construction Services, Inc. and include a Project contingency of $400,000 (approximately 4.5 percent of the GMP). (7) Architect, engineering, and other costs, furniture and equipment, demolition costs, and asbestos abatement costs represent estimates by Management based on discussions with the architect, engineer, construction manager, and construction contractors and are not include in the GMP. (8) Management has included an additional Project contingency for additional unexpected costs. (9) Funded interest represents interest costs incurred during the period November 2017 through August 2018 on the Series 2017 Bonds. (10) The debt service reserve fund represents the maximum annual debt service (principal and interest) on the Series 2017 Bonds for each bond year ending December 1. (11) A replacement and reserve fund of $100,000 is assumed to be established with proceeds from the Guardian Loan and the Obligor’s equity contribution. (12) Financing costs include underwriting fees, legal fees, financial feasibility study fees, and other fees related to issuance of the Series 2017 Bonds. (13) A portion of the Series 2017 Bonds will be used to refund the Series 2007 Bonds. 11 Pennsylvania LTC, Inc. Summary of Significant Forecast Assumptions and Accounting Policies

Description of Nursing Services

Nursing services are offered on a fee-for-service basis. Nursing services include three meals per day, assistance with activities of daily living (ADLs), which include bathing, dressing, grooming, toileting, transferring, and eating, and nursing care. Such services are provided pursuant to an admissions agreement.

Characteristics of the Market Area

Assumptions for the future utilization of the Facilities are based on an analysis of the following factors which may affect the demand for the Facilities’ services: Site description and general area analysis; Defined primary market area for the Facilities; Demographic and economic characteristics of the defined primary market area; and Description and utilization of existing comparable nursing beds within the defined primary market area.

Each of the above factors is described in the following sections.

Edgehill

Site Description

The Edgehill Facility is located in Glenside, a non-incorporated census-designated place (CDP), in Montgomery County, Pennsylvania. Quiet, tree-lined streets surround the campus, with major roads and commuter lines easily accessible within several blocks of the property. The campus is bordered by Elm Avenue to the north and west, Mt. Carmel Avenue to the southwest, and Edge Hill Road to the east. Glenside is located in portions of Abington, Cheltenham, and Springfield Townships which border Philadelphia County. Edgehill is located less than 15 miles north of Center City Philadelphia.

General Area Analysis

The following section describes the characteristics of Glenside and Montgomery County, Pennsylvania.

Highways

Pennsylvania Route 309 runs north and south to the west of Glenside. To the north, Interstate 276 runs east and west. On the east side of Glenside, Pennsylvania Route 611 runs north and south. Route 309 and Route 611 merge at Melrose Park, directly south of Glenside. The roadway system conveniently positions Edgehill to all areas and suburbs of Philadelphia, Pennsylvania, including access to Interstates 76, 276, and 476. Interstate 76 is the mainline of the Pennsylvania Turnpike, and traverses west to east from Akron, Ohio to Bellmawr, New Jersey. Interstate 276 is the northern portion of the Pennsylvania Turnpike, and extends west to east from the Interstate 76 split to central Philadelphia and to the Pennsylvania-New Jersey state line. Interstate 476 runs north and south from West Ridley Park, Pennsylvania to Clarks Summit, Pennsylvania.

12 Pennsylvania LTC, Inc. Summary of Significant Forecast Assumptions and Accounting Policies

Transportation

Edgehill does not have direct access to a public transportation line; however, the Southeastern Pennsylvania Transportation Authority (SEPTA) operates a station at 49 West Glenside Avenue. The station is served by three regional rail lines: Airport Line; Lansdale/Doylestown Line; and Warminster Line. The Airport Line runs from Philadelphia International Airport to Glenside. The Lansdale/Doylestown Line runs from Doylestown to 30th Street Station in Philadelphia. The Warminster Line runs from Warminster to University City.

The Glenside SEPTA station is also served by bus routes 22 and 77. Route 22 runs from Warminster and Willow Grove to Olney Transportation Center. Route 77 runs from Roosevelt-St. Vincent to Chestnut Hill.

Within Cheltenham Township, residents age 65 and older are eligible for free transportation on Mondays through Fridays from 9am to 3:30pm. Suburban Transit Network, Inc. (TransNet) provides curb-to-curb transportation to any destination within the Cheltenham Township boundaries, plus The Pavilion shopping center in Abington and the Jenkintown-Wyncote Train Station.

Montgomery County seniors age 65 or older are eligible for the Shared Ride Program, a service funded by the Pennsylvania Lottery. The program provides door-to-door transportation at a reduced fare with a call ahead time of one day.

Edgehill is located approximately 9 miles from the Amtrak station in North Philadelphia and 19 miles from the Amtrak station in Ardmore.

Airport

Edgehill is located approximately 21 miles northwest of the Philadelphia International Airport, which offers both domestic and international flights on 14 airlines.

Surrounding Community

Edgehill is located between Abington Township and Cheltenham Township, approximately one mile northwest of downtown Glenside. Edgehill sits on a 0.94 acre lot. Residential homes are located to the left and behind Edgehill. Carmel Presbyterian Church is to the right of Edgehill. Residential homes and the church parking lot are located across the street from Edgehill. The City of Philadelphia, located approximately 45 minutes south of Edgehill, offers an abundance of downtown dining, shopping, theatre, museums, and other cultural activities.

13 Pennsylvania LTC, Inc. Summary of Significant Forecast Assumptions and Accounting Policies

Glenside received a Livability Score of 82 (out of 100) from areavibes.com. The score is higher than scores for both Pennsylvania (70) and the United States (66). Glenside receives A+ ratings for both crime ratings and available amenities. Amenities include access to:

Shopping Food and Drink Schools and Libraries Parks and Fitness Entertainment Public Transit

Glenside is home of The Keswick Theatre and Arcadia University. The Keswick Theatre first opened in 1928, and is “nationally recognized as the most comfortable, acoustically perfect listening room in the entire Philadelphia market.” Arcadia University is a private institution with a total enrollment of 3,850 students.

Five hospitals are located within a 5-mile radius of Edgehill: Abington Memorial Hospital, Chestnut Hill Hospital, Holy Redeemer, Jeanes Hospital, and Fox Chase Cancer Center.

Abington Memorial Hospital, part of the Jefferson Health System, is within a few minutes’ drive from Edgehill. Abington – Jefferson Health operates six outpatient campuses, five within a 7-mile radius of Edgehill, making it very convenient for local residents, including residents of Edgehill, to access both primary care physicians and other specialists.

Primary Market Area

A Primary Market Area (PMA) is generally defined as the geographic area from which the largest concentration of residents originated prior to occupancy. The PMA for Edgehill is based on the home addresses, prior to occupancy, of 59 nursing residents (as of June 2017).

Management defined the PMA to be a multi-point polygon within Montgomery County. The polygon traverses 10.9 miles north to south and 12.3 miles west to east around Edgehill. Management has assumed that the defined PMA for Edgehill will remain consistent throughout the forecast period.

The resident origin analysis is profiled in the following table.

Table 3 Resident Origin Analysis Area of Origin Number Percent of Total PMA 33 55.9% Other areas in Pennsylvania 23 39.0% Out of State 3 5.1% Total 59 100% Source: Management, June 2017.

14 Pennsylvania LTC, Inc. Summary of Significant Forecast Assumptions and Accounting Policies

The following map depicts the location of Edgehill, the defined PMA, and the locations of licensed nursing facilities located within the PMA.

15 Pennsylvania LTC, Inc. Summary of Significant Forecast Assumptions and Accounting Policies

Economic Profile of the Surrounding Area

Because certain statistical information is accumulated by various governmental offices and agencies, economic data is presented, as available, by county, city, or metropolitan region. For the purposes of this section of the study, economic data is presented for Montgomery County, which is the location of the PMA.

Unemployment Rates

The unemployment rates for Montgomery County, the Commonwealth of Pennsylvania, and the United States are shown in the following table as recorded by the Bureau of Labor Statistics.

Table 4 Unemployment Trends

2014 2015 2016 2017(1) Montgomery County 4.6% 4.2% 4.2% 4.0% Pennsylvania 5.8% 5.3% 5.4% 5.0% United States 6.2% 5.3% 4.9% 4.5% Source: U.S. Department of Labor, Bureau of Labor Statistics, June 2017.

Note: (1) Data through May 31, 2017.

Major Employers

The following are the top ten employers within Montgomery County as of the fourth quarter of 2016 (most recent data available), and as recorded by the Pennsylvania Department of Labor & Industry.

Table 5 Top Ten Employers within Montgomery County Employer Industry Merck Sharp & Dohme Corporation Finance Abington Memorial Hospital Healthcare Main Line Hospitals Inc. Healthcare State Government Government Giant Food Stores, LLC Food Service United Parcel Service Inc. Services SmithKline Beecham Corporation Retail Trade Montgomery County Government SEI Investments Company Finance Federal Government Government Source: Pennsylvania Department of Labor & Industry, Center for Workforce Information & Analysis, June 2017.

16 Pennsylvania LTC, Inc. Summary of Significant Forecast Assumptions and Accounting Policies

Major Industry Classifications

The following table summarizes the 2016 (most recent data available) average annual major industry classifications for employment for Montgomery County, Pennsylvania as provided by the Pennsylvania Department of Labor & Industry.

Table 6 Major Industry Classifications of Employment for Montgomery County Industry Percentage of Employees Health Care and Social Assistance 15.5% Retail Trade 11.8% Professional and Technical Services 11.3% Manufacturing 8.7% Administrative and Waste Services 7.4% Finance and Insurance 7.0% Accommodation and Food Services 6.6% Educational Services 6.3% Construction 4.5% Wholesale Trade 4.5% Other Services (Except Public Administration) 3.3% Management of Companies and Enterprises 3.0% Transportation and Warehousing 2.3% Public Administration 2.2% Information 2.1% Real Estate and Rental and Leasing 1.5% Arts, Entertainment, and Recreation 1.4% Utilities 0.6% Agriculture, Forestry, Fishing and Hunting 0.0% Mining, Quarrying, and Oil & Gas 0.0% Total 100.0% Source: Pennsylvania Department of Labor & Industry, Center for Workforce Information & Analysis, June 2017.

Demographic Characteristics of the PMA

The age distribution of the population in a geographic area is a key factor in the determination of the need for nursing services. Population data regarding numbers of elderly within Edgehill’s PMA are presented in the following tables.

The 2017 and 2022 data below are estimates and projections (most recently available) as provided by ESRI, a nationally recognized provider of census data and related forecasts. ESRI bases its estimated 2017 and projected 2022 data on a combination of 2010 census data and the American Community Survey.

As shown in the following tables, there are 203,748 persons projected within the PMA in 2022. Of the total population in 2022, 21,168 people, or approximately 10.4 percent, will be 75 years of age and older, while 7,322 people, or approximately 3.6 percent, will be 85 years of age or older.

17 Pennsylvania LTC, Inc. Summary of Significant Forecast Assumptions and Accounting Policies

The total population is projected to increase 0.4 percent, the 75 and older population is projected to increase 2.1 percent, and the 85 and older population is projected to increase 0.2 percent in the PMA compounded annually from 2017 through 2022.

The following table presents population data by age group and the average annual compounded percentage change projected between 2017 and 2022 in the PMA.

Table 7 Demographic Trends – Population Change Average Annual Compounded 2017 (Estimated) 2022 (Projected) Percentage Change Population Population 2017-2022 PMA Total Population 199,568 203,748 0.4% Age 75 to 84 Population 11,871 13,846 3.1% Age 85 plus Population 7,251 7,322 0.2% Total 75 plus 19,122 21,168 2.1% Source: ESRI, July 2017.

The following table presents the percentage of total population by age group for the senior population in the PMA, the Commonwealth of Pennsylvania, and the United States.

Table 8 Demographic Trends – Percentage of Total Population 2017 (Estimated) Population PMA PA US Age Group 75 plus 9.6% 8.0% 6.4% 85 plus 3.6% 2.7% 2.0% 2022 (Projected) Population PMA PA US Age Group 75 plus 10.4% 8.9% 7.3% 85 plus 3.6% 2.7% 2.0% Source: ESRI, July 2017.

Description and Utilization of Nursing Home Services

The Pennsylvania Department of Health is responsible for the licensure and regulation of nursing facilities in Pennsylvania. Licensure regulations are defined under Title 28, Chapters 201, 203, 205, 207, 209, and 211 of the Pennsylvania Code. The Department of Health defines nursing facilities as providing 24-hour nursing services, including room and board to five or more unrelated persons. Pennsylvania does not have an active Certificate of Need (CON) requirement for nursing facilities.

18 Pennsylvania LTC, Inc. Summary of Significant Forecast Assumptions and Accounting Policies

Existing Comparable Nursing Facilities

The table below includes a list of licensed beds and occupancy for existing nursing facilities located in the PMA. Management identified the nursing facilities that are most comparable to and competitive with Edgehill. These facilities are in bold print below and are considered to be nursing facilities with market rate fees and similar services and amenities as Edgehill.

Table 9 Existing Nursing Facilities Located in the PMA Facility Name Licensed Capacity Occupancy(4) Edgehill(1) 60 97%(5) Brookside Healthcare and Rehabilitation 120 90% Center(2)(3) Chestnut Hill Lodge Health and Rehabilitation Center 181 82% Dresher Hill Health and Rehab Center 118 92% Elkins Crest Health and Rehabilitation Center(2)(3) 150 86% Fairview Care Center of Papermill Road(2)(3) 129 92% Garden Spring Center(2) 173 98% Harston Hall(2) 120 94% Hillcrest Center(2)(3) 180 97% Hopkins Center(2)(3) 106 95% HRH Transitional Care Unit 21 80% Luther Woods Nursing and Rehabilitation Center 140 81% Manorcare Health Services – Huntingdon Valley 125 93% Phoebe Wyncote 58 84% Powerback Rehabilitation(2) 109 81% Rydal Park of Philadelphia Presbyterian Homes, Inc. 114 81% Saint Joseph Villa 106 96% St. Joseph’s Manor 296 88% Wyndmoor Hills Health Care & Rehab Center 77 64% Total Beds/Average Occupancy 2,383 88% Source: Management for Edgehill; Pennsylvania Department of Health, June 2017, for all other facilities.

Notes: (1) Edgehill is managed by Genesis Eldercare. (2) Facility is owned by Genesis. (3) Management identified as a comparable nursing facility to Edgehill. (4) Occupancy is calculated on licensed bed capacity. The reporting period is July 1, 2015 – June 30, 2016, except for Edgehill. (5) Occupancy is based on an average of 58 residents for fiscal year 2017.

19 Pennsylvania LTC, Inc. Summary of Significant Forecast Assumptions and Accounting Policies

There are 19 licensed nursing home facilities within the PMA, including Edgehill. The following table profiles the facilities considered most comparable with Edgehill, as well as those facilities owned by Genesis. The comparable nursing facilities are in bold print below.

Table 10 Comparable Nursing Facilities and Genesis Owned Facilities in the PMA Unit Mix Daily Fees Total Overall Driving Licensed Medicare Miles from Nursing Semi- Percent Semi- Star Edgehill Beds Private Private Occupied Private Private Rating Edgehill(1) -- 60 1 59 97% $415 $388 3 Brookside Healthcare and 3.5 120 11 109 91% $285 $275 4 Rehabilitation Center Elkins Crest Health and 5.2 150 10 140 89% $385 $368 1 Rehabilitation Center Fairview Care Center of 3.4 129 5 124 91% $422 $388 1 Papermill Road(2) Garden Spring Center(2) 4.7 173 10 163 95% $473 $417 5 Harston Hall(2) 2.8 120 4 116 94% $459 $395 2 Hillcrest Center(2) 2.0 180 3 177 96% $428 $408 3 Hopkins Center(2) 2.5 106 2 104 91% $414 $401 3 Powerback Rehabilitation(2) 5.9 109 15 94 80% $528 $474 4 Total 1,147 Source: Management for Genesis managed and owned facilities (information as of September 2017); Pennsylvania Department of Human Services, June 2017 (licensed beds), Medicare.gov, September 2017 (star rating), and surveys conducted in July 2017 (occupancy, unit mix, and fees) for Brookside Healthcare and Rehabilitation Center and Elkins Crest Health and Rehabilitation Center.

Notes: (1) Edgehill is managed by Genesis Eldercare. (2) Facility is owned by Genesis.

20 Pennsylvania LTC, Inc. Summary of Significant Forecast Assumptions and Accounting Policies

The following table profiles the payor mix for the comparable nursing homes and Genesis managed and owned facilities in the PMA, as reported by the Pennsylvania Department of Human Services.

Table 11 Payor Mix for Nursing Facilities in the PMA(1) Medical Private- Insurance/ Medicare Assistance Pay Other Edgehill(2) 2% 91% 7% 0% Brookside Healthcare and Rehabilitation Center 10% 81% 6% 3% Elkins Crest Health and Rehabilitation Center 10% 89% 1% 0% Fairview Care Center of Papermill Road(3) 2% 86% 0% 12% Garden Spring Center(3) 9% 79% 2% 10% Harston Hall(3) 12% 82% 3% 3% Hillcrest Center(3) 6% 91% 2% 1% Hopkins Center(3) 8% 86% 1% 5% Powerback Rehabilitation(3) 37% 16% 4% 43% Source: Pennsylvania Department of Human Services, June 2017.

Notes: (1) Reporting period of July 1, 2015 - June 30, 2016. (2) Edgehill is managed by Genesis Eldercare. (3) Facility is owned by Genesis.

Planned Nursing Homes

According to interviews with representatives of local planning and zoning departments and existing nursing home providers within the PMA, there are no known nursing homes planned within the PMA.

21 Pennsylvania LTC, Inc. Summary of Significant Forecast Assumptions and Accounting Policies

Linwood

Site Description

Linwood is located in Scranton, Pennsylvania, just minutes from scenic Lake Scranton and the historical downtown area. Scranton is located within Lackawanna County in the northeastern portion of the state. Linwood is bordered by Lynwood Avenue to the west, Moosic Street to the north, and Oak Lane to the east. Moosic Mountain is located to the southeast of the property.

General Area Analysis

The following section describes the characteristics of Scranton and Lackawanna County, Pennsylvania.

Highways

Pennsylvania Interstate 81 is located within one-quarter mile of Linwood. The Interstate runs north and south from Dandridge, Tennessee to the Thousand Islands Bridge into Canada. On the east side, Interstate 84 runs east and west from Scranton to Hartford, Connecticut. Interstate 380 begins in Scranton with Interstate 84; the two roadways are shared for approximately four miles. Interstate 380 runs north to south, and serves as a connector between Scranton and Interstate 80. The roadway system conveniently positions Linwood with convenient access to Scranton and highway access to areas within northeast Pennsylvania and neighboring states.

Transportation

Linwood does not have direct access to a public transportation line; however, the County of Lackawanna Transit System (COLTS) runs 29 bus routes throughout the county. COLTS operates from 6am to 6pm Monday through Friday and from 8am to 6pm on Saturday. Route 21 East Mountain/Oakmont serves as the bus stop on East Mountain Road, within one-quarter mile of Linwood. Residents age 65 and older are eligible to ride COLTS buses for free when they obtain a state Transit ID card at COLTS headquarters, located at 800 North South Road in Scranton.

All of the bus routes operated by COLTS stop at the Lackawanna Transit Center located at 30 Lackawanna Avenue in Scranton, two miles from Linwood. The Transit Center was completed in 2015. In addition to being the COLTS bus hub, it is the location of Martz Transportation, offering services outside of Lackawanna County.

Airport

Linwood is located approximately 8 miles northeast of the Wilkes-Barre/Scranton International Airport, which offers both domestic and international flights on four airlines.

Surrounding Community

Linwood sits on a 2.5 acre lot. The area surrounding Linwood is described as suburban, residential. The area to the south and east of Linwood is rural, and includes Lake Scranton and Moosic Mountain. The City of Scranton, located just minutes from Linwood, offers an abundance of downtown dining, shopping, theatre, museums, and other cultural activities.

22 Pennsylvania LTC, Inc. Summary of Significant Forecast Assumptions and Accounting Policies

Scranton received a Livability Score of 73 (out of 100) from areavibes.com. The score is higher than scores for both Pennsylvania (70) and the United States (66). Scranton receives an A+ rating for available amenities. Amenities include access to:

Shopping Food and Drink Schools and Libraries Parks and Fitness Entertainment Public Transit

Scranton is home to a number of cultural attractions, including professional sports teams and sites celebrating the city’s history in the iron and coal industry. The Steamtown National Historic Site in downtown Scranton occupies 62 acres and seeks to preserve the history of railroads in the Northeast. Scranton is also home to five colleges and universities.

Three hospitals are located within a 2-mile radius of Linwood: Geisinger Community Medical Center, Moses Taylor Hospital, and Regional Hospital of Scranton.

Geisinger Community Medical Center is located within one mile of Linwood. The Medical Center is Lackawanna County’s most complete healthcare system, offering award-winning specialty areas and modern facilities. Moses Taylor Hospital and the Regional Hospital of Scranton are part of Commonwealth Health. Commonwealth Health is the largest network of hospitals in Northeastern Pennsylvania. Both Moses Taylor Hospital and the Regional Hospital of Scranton have affiliated facilities offering outpatient services, home health and hospice, and emergency medical services.

Primary Market Area

The PMA for Linwood is based on the home addresses, prior to occupancy, of 66 nursing residents (as of June 2017).

Management defined the PMA to be a multi-point polygon within Lackawanna County. The polygon traverses 10.6 miles north to south and 11.2 miles west to east around Linwood. Management has assumed that the defined PMA for Linwood will remain consistent for the forecast period.

The resident origin analysis is profiled in the following table.

Table 12 Resident Origin Analysis Area of Origin Number Percent of Total PMA 49 74.2% Other areas in Pennsylvania 17 25.8% Out of State 0 0.0% Total 66 100% Source: Management, June 2017.

23 Pennsylvania LTC, Inc. Summary of Significant Forecast Assumptions and Accounting Policies

The following map shows the location of Linwood, the defined PMA, and the locations of licensed nursing facilities located within the PMA.

24 Pennsylvania LTC, Inc. Summary of Significant Forecast Assumptions and Accounting Policies

Economic Profile of the Surrounding Area

Because certain statistical information is accumulated by various governmental offices and agencies, economic data is presented, as available, by county, city, or metropolitan region. For the purposes of this section of the study, economic data is presented for Lackawanna County, which is the location of the PMA.

Unemployment Rates

The unemployment rates for Lackawanna County, the Commonwealth of Pennsylvania, and the United States are shown in the following table as recorded by the Bureau of Labor Statistics.

Table 13 Unemployment Trends

2014 2015 2016 2017(1) Lackawanna County 6.6% 5.8% 5.7% 5.4% Pennsylvania 5.8% 5.3% 5.4% 5.0% United States 6.2% 5.3% 4.9% 4.5% Source: U.S. Department of Labor, Bureau of Labor Statistics, June 2017.

Note: (1) Data through May 31, 2017.

Major Employers

The following are the top ten employers within Lackawanna County as of the fourth quarter of 2016 (most recent data available), and as recorded by the Pennsylvania Department of Labor & Industry.

Table 14 Top Ten Employers within Lackawanna County Employer Industry Allied Services Foundation Healthcare State Government Government Geisinger Community Medical Center Healthcare Scranton School District Education The University of Scranton Education Lackawanna County Government TMG Health, Inc. Healthcare Federal Government Government Wal-Mart Associates, Inc. Retail Trade Scranton Quincy Hospital Co, LLC Healthcare Source: Pennsylvania Department of Labor & Industry, Center for Workforce Information & Analysis, June 2017.

25 Pennsylvania LTC, Inc. Summary of Significant Forecast Assumptions and Accounting Policies

Major Industry Classifications

The following table summarizes the 2016 (most recent data available) average annual major industry classifications for employment for Lackawanna County, Pennsylvania as provided by the Pennsylvania Department of Labor & Industry.

Table 15 Major Industry Classifications of Employment for Lackawanna County Industry Percentage of Employees Health Care and Social Assistance 20.2% Retail Trade 12.3% Manufacturing 9.7% Educational Services 8.8% Accommodation and Food Services 8.3% Administrative and Waste Services 6.6% Transportation and Warehousing 5.9% Finance and Insurance 4.9% Professional and Technical Services 4.2% Wholesale Trade 3.7% Construction 3.4% Public Administration 3.4% Other Services (Except Public Administration) 3.3% Management of Companies and Enterprises 1.4% Information 1.3% Arts, Entertainment, and Recreation 1.3% Real Estate and Rental and Leasing 0.8% Utilities 0.4% Agriculture, Forestry, Fishing and Hunting 0.1% Mining, Quarrying, and Oil & Gas 0.0% Total 100.0% Source: Pennsylvania Department of Labor & Industry, Center for Workforce Information & Analysis, June 2017.

Demographic Characteristics in the PMA

Population data regarding numbers of elderly within Linwood’s PMA are presented in the following tables.

As shown in the following tables, there are 117,030 persons projected within the PMA in 2022. Of the total population in 2022, 11,815 people, or approximately 10.1 percent, will be 75 years of age and older, while 3,860 people, or approximately 3.3 percent, will be 85 years of age or older.

26 Pennsylvania LTC, Inc. Summary of Significant Forecast Assumptions and Accounting Policies

The total population is projected to increase 0.1 percent, the 75 and older population is projected to increase 1.4 percent, and the 85 and older population is projected to decrease 1.2 percent in the PMA compounded annually from 2017 through 2022.

The following table presents population data by age group and the average annual compounded percentage change projected between 2017 and 2022 in the PMA.

Table 16 Demographic Trends – Population Change Average Annual Compounded 2017 (Estimated) 2022 (Projected) Percentage Change Population Population 2017-2022 PMA Total Population 116,420 117,030 0.1% Age 75 to 84 Population 6,941 7,955 2.8% Age 85 plus Population 4,091 3,860 -1.2% Total 75 plus 11,032 11,815 1.4% Source: ESRI, July 2017.

The following table presents the percentage of total population by age group for the senior population in the PMA, the Commonwealth of Pennsylvania, and the United States.

Table 17 Demographic Trends – Percentage of Total Population 2017 (Estimated) Population PMA PA US Age Group 75 plus 9.5% 8.0% 6.4% 85 plus 3.5% 2.7% 2.0% 2022 (Projected) Population PMA PA US Age Group 75 plus 10.1% 8.9% 7.3% 85 plus 3.3% 2.7% 2.0% Source: ESRI, July 2017.

27 Pennsylvania LTC, Inc. Summary of Significant Forecast Assumptions and Accounting Policies

Existing Comparable Nursing Facilities

The following table includes a list of licensed beds and occupancy for existing nursing facilities located in the PMA. Management identified the nursing facilities that are most comparable to and competitive with Linwood. These facilities are in bold print below and are considered to be nursing facilities with market rate fees and similar services and amenities as Linwood. There are no other nursing facilities beyond Linwood in the PMA that are either owned or managed by Genesis Eldercare.

Table 18 Existing Nursing Facilities Located in the PMA Facility Name Licensed Capacity Occupancy (3) Linwood(1) 102 85%(4) Allied Services Nursing Center (2) 371 92% Allied Services Transitional Care 22 54% Dunmore Health Care Center 92 87% Gino J. Merli Veterans’ Center 196 88% Green Ridge Care Center 95 98% Holy Family Residence 54 99% Jewish Home of Eastern PA (2) 173 91% The Meadows at Scranton for Nursing 139 84% and Rehabilitation (2) Mountain View Care Center (2) 180 94% Riverside Rehabilitation & Nursing Center 161 85% Scranton Health Care Center 44 78% Total Beds/Average Occupancy 1,629 86% Source: Management for Linwood; Pennsylvania Department of Health, June 2017, for all other facilities.

Notes: (1) Linwood is managed by Genesis Eldercare. (2) Management identified as a comparable nursing facility to Linwood. (3) Occupancy is calculated on licensed bed capacity. The reporting period is July 1, 2015 – June 30, 2016, except for Linwood. (4) Occupancy is based on fiscal year 2017; 77 average residents in 90 operating beds. Due to current facility limitations, Linwood has been operating with a maximum of 90 of the 102 licensed beds.

28 Pennsylvania LTC, Inc. Summary of Significant Forecast Assumptions and Accounting Policies

There are 12 licensed nursing home facilities within the PMA, including Linwood. The following table profiles the facilities considered most comparable with Linwood.

Table 19 Comparable Nursing Facilities in the PMA Unit Mix Daily Fees Total Overall Driving Miles Licensed Medicare from Nursing Semi- Percent Semi- Star Linwood Beds Private Private Occupied Private Private Rating Linwood(1) -- 102 8(2) 94(2) 85%(3) $312(4) $295(4) 4 Allied Services Nursing 5.4 371 20 351 94% $255 $255 4 Center Jewish Home of Eastern PA 1.6 173 19 154 94% $315 $300 3 The Meadows at Scranton for $305 2.5 139 N/A 139 74% -- 1 Nursing and Rehabilitation(5) /$290 Mountain View Care Center 4.2 180 10 170 97% $305 $295 2 Total 965 Source: Management for Linwood; Pennsylvania Department of Human Services, June 2017 (licensed beds), Medicare.gov, September 2017 (star rating), and surveys conducted in July 2017 (occupancy, unit mix, and fees) for all other facilities. Notes: (1) Linwood is managed by Genesis Eldercare. (2) Unit mix is based on 102 licensed beds. (3) Percent occupied is based on a fiscal year 2017; 77 average residents in 90 operating beds. Due to current facility limitations, Linwood has been operating with a maximum of 90 of the 102 licensed beds. (4) Daily fees are fiscal 2018 fees. (5) The Meadows at Scranton for Nursing and Rehabilitation was formerly known as the Golden Living Center- Scranton. It was purchased by Priority Healthcare Group in February 2017.

In addition to operating the 371-bed nursing facility above, Allied Services Foundation also operates two transitional care nursing facilities within the Scranton area; Allied Services Transitional Care is located within the PMA at the Regional Hospital of Scranton and is licensed for 22 units and Allied Services Transitional Rehabilitation Unit is located outside of the PMA at the Allied Rehab Hospital and is licensed for 55 units. The Allied Services Transitional Rehabilitation Unit opened in July 2014 after extensive renovations to patient rooms, nursing stations, and visiting areas.

29 Pennsylvania LTC, Inc. Summary of Significant Forecast Assumptions and Accounting Policies

The following table profiles the payor mix for the comparable nursing homes, as reported by the Pennsylvania Department of Human Services.

Table 20 Payor Mix for Nursing Facilities in the PMA(1) Medical Insurance/ Medicare Assistance Private-Pay Other Linwood 14% 79% 5% 2% Allied Services Nursing Center 16% 73% 8% 3% Jewish Home of Eastern PA 6% 72% 22% 0% The Meadows at Scranton for Nursing and 12% 84% 2% 2% Rehabilitation Mountain View Care Center 13% 59% 19% 9% Source: Pennsylvania Department of Human Services, June 2017.

Note: (1) Reporting period of July 1, 2015 - June 30, 2016.

Planned Nursing Homes

According to interviews with representatives of local planning and zoning departments and existing nursing home providers within the PMA, there are no known nursing homes planned within the PMA.

Hospital Discharge and CMS Data

Medicare discharges for the top three referring hospitals to Linwood are trended below.

Table 21 Discharge Status of Medicare Patients from Hospitals in the PMA Geisinger Community Regional Hospital of Moses Taylor Hospital Medical Center Scranton 2016 2015 2014 2016 2015 2014 2016 2015 2014 Home with self- 1,981 2,045 1,975 753 810 708 1,710 1,756 1,802 care Home with 1,099 913 868 574 438 500 1,037 1,003 888 covered care Nursing home with 1,252 1,286 1,160 594 604 577 1,045 1,088 1,023 covered care Short-term general 166 151 131 55 48 64 52 52 36 hospital Inpatient rehab 88 78 108 186 322 368 368 389 431 facility Source: CMS Inpatient Standard Analytic File (IPSAF), 2014-2016.

30 Pennsylvania LTC, Inc. Summary of Significant Forecast Assumptions and Accounting Policies

Marketing and Promotion

Management at Linwood is actively involved in the Scranton community. Further, Genesis Eldercare has a longstanding reputation of operating local nursing facilities. Management also considers the reputation of Genesis Rehab to be an asset for Linwood as Linwood will be seeking to increase Medicare volume after the Project is completed. Additionally, the Vitality program offered through Genesis Rehab is considered to be attractive to local seniors, allowing their therapist to follow them to home with continued therapy.

Management indicated that Genesis Eldercare and the Nursing Home Administrator at Linwood have extensive experience filling and operating nursing homes in the Scranton marketplace. Existing relationships with hospital discharge planners and physician practices/orthopedic surgery groups are considered to be deep and well developed.

Management is planning a marketing campaign that will be deployed approximately 8-12 weeks prior to completion of the Project. Management at Linwood, assisted by the corporate marketing department at Genesis, has developed a comprehensive marketing and public relations strategy to promote the Project. Key components of the plan include:

Media blitz, including radio, billboard, and potentially television advertising; Public relations campaign to include articles on resident activities and Project development status; On-site visits with physician groups, discharge planners, and other referral sources to provide updates on construction progress; and Multiple open houses for professionals, referral sources, and general public after Project completion.

Management believes its marketing and promotion plan for Linwood will allow Linwood to achieve the forecasted occupancy levels and payor mix.

31 Pennsylvania LTC, Inc. Summary of Significant Forecast Assumptions and Accounting Policies

Summary of Market Analysis

The future utilization of nursing services provided at the Facilities depends on various factors, including:

Certain economic and demographic factors within the PMA which could affect utilization and staffing; Management’s ability to effectively market the existing nursing beds at Edgehill and Linwood; Management’s ability to increase overall market share and achieve the forecasted occupancy levels at Linwood; Management’s ability to increase Medicare market share by attracting short-term rehab residents and achieve the forecasted Medicare occupancy levels at Linwood; and Maintaining and strengthening relationships with local referral sources, reporting high quality of care outcomes, and responding to the changing demands of the acute care marketplace.

Revenues

Net Resident Service Revenues

Forecasted Utilization

The following tables summarize the utilization of services for Linwood and Edgehill:

Table 22 Utilization of Nursing Beds - Linwood Average Average Total Average Available Beds Occupied Beds % Occupancy

Historical: 2015 90 79 88% 2016 90 78 87% 2017 90 77 85% Forecasted: 2018(1) 61 57 94% 2019(2) 87 70 81% 2020 - 2022 102 96 94%

Source: Management.

Notes: (1) Linwood operated 90 beds through July 2017. Management forecasted that Linwood will operate 58 beds from August 2017 through October 2018. In May 2017, Management began an intentional attrition period in anticipation of the reduction in operating beds. (2) The Project is assumed to be placed in service on November 1, 2018, at which time 102 beds are forecasted to be operated at Linwood. Management forecasted that the nursing beds in the new addition at Linwood will be filled between November 2018 and August 2019, at which point the facility will achieve stabilized occupancy of 94 percent.

32 Pennsylvania LTC, Inc. Summary of Significant Forecast Assumptions and Accounting Policies

Table 23 Utilization of Nursing Beds - Edgehill Average Average Total Average Available Beds Occupied Beds % Occupancy Historical: 2015 60 58 97% 2016 60 59 99% 2017 60 58 97% Forecasted, 2018-2022 60 58 97%

Source: Management.

Forecasted Daily Fees

Revenues are primarily generated from daily fees received from residents and third-party payors for nursing services. Daily fees for nursing care for Linwood and Edgehill are based on the following pricing schedules provided by Management.

Table 24 Nursing Daily Fees - Linwood (in 2018 Dollars) # of Beds(1) Daily Fees

Nursing Private 4 $312 Semi-Private 54 295

Total beds / Weighted average fee 58 $296

Medicare $503

Medical Assistance(2)(3) $189

Commercial $400

Source: Management.

Notes: (1) The number of beds includes only the existing portion of the building that will not be demolished and replaced. (2) The Medical Assistance rate approximates the average of Linwood’s July 1 and October 1, 2017 proposed Medical Assistance rates. (3) The Medical Assistance rate does not include disproportionate share (DSH) or Medical Assistance Day One Incentive (MDOI) amounts. However, in 2020 through 2022, Management forecasted that Linwood would be eligible to receive the MDOI; this amount was forecasted to approximate $2 per day.

33 Pennsylvania LTC, Inc. Summary of Significant Forecast Assumptions and Accounting Policies

Table 25 Nursing Daily Fees - Edgehill (in 2018 Dollars) # of Beds Daily Fees

Nursing Private 1 $415 Semi-Private 59 388

Total beds / Weighted average fee 60 $388

Medicare $500

Medical Assistance(1) $197

Commercial $500

Source: Management.

Note: (1) The Medical Assistance rate approximates the average of Edgehill’s July 1 and October 1, 2017 proposed Medical Assistance rates, plus a DSH amount of approximately $4 per day and a MDOI amount of approximately $2 per day.

DSH and MDOI

As indicated above, certain of the forecasted Medical Assistance rates for Linwood and Edgehill include DSH and MDOI.

Nursing facilities in Pennsylvania are currently eligible for a DSH incentive payment if the following criteria are met during the cost reporting period:

1. The nursing facility shall have an annual overall occupancy rate of at least 90% of the total available bed days. 2. The nursing facility shall have a Medical Assistance occupancy rate of at least 80%. The Medical Assistance occupancy rate is calculated by dividing paid Medical Assistance days by total actual days of care.

The DSH incentive payment is calculated by multiplying Medical Assistance paid days during a facility’s cost reporting period times a per diem incentive. The per diem incentives are currently based on the following FY 2015-2016 incentive payment schedule issued by the Commonwealth of Pennsylvania, Department of Human Services (DHS):

Medical Overall Assistance Per Diem Occupancy Occupancy (y) Incentive

Group A 90% y >= 90% $4.25 Group B 90% 88% <= y < 90% $2.87 Group C 90% 86% <= y < 88% $1.71 Group D 90% 84% <= y < 86% $1.04 Group E 90% 82% <= y < 84% $0.53 Group F 90% 80% <= y < 82% $0.39

34 Pennsylvania LTC, Inc. Summary of Significant Forecast Assumptions and Accounting Policies

Management forecasted the DSH reimbursement for Edgehill based on the schedule above.

Nursing facilities in Pennsylvania are currently eligible for an MDOI payment if the facility is a nonpublic nursing facility, has an overall occupancy percentage of at least 85%, and has a Medical Assistance occupancy percentage of at least 65%. The MDOI per diem is calculated on a quarterly basis and varies by quarter based on the total funds available for MDOI (as dictated by DHS) divided by the sum of the total Medical Assistance days for all qualifying facilities. Management forecasted the MDOI reimbursement for Linwood and Edgehill based on historical MDOI payment per diems.

Medicare Part B revenues

Medicare Part B revenues are included in net resident service revenues in the forecasted statements of operations and changes in net assets and were forecasted based on historical operating experience and anticipated changes related to the Project.

United HealthCare Insurance Company Contract - Edgehill

In August 2016, Edgehill entered in a contract with United HealthCare Insurance Company (UHC) whereby Edgehill agreed to accept a capitated monthly payment of $546 for Edgehill residents that are UHC beneficiaries and, in turn, also agreed to accept responsibility for all Medicare Part A and Part B services that were needed by these same beneficiaries.

Management assumes that there will be 30 Edgehill residents that are UHC beneficiaries each year during the forecast period. The capitated monthly payment was forecasted to remain unchanged during the forecast period. Management also assumes that there will be a reduction of Medicare related revenues for the Edgehill residents that are UHC beneficiaries of $50,000 each year during the forecast period.

In connection with the UHC contract, Edgehill also entered in a contract with Genesis Rehab whereby Genesis Rehab agreed to provide all necessary Medicare Part A and Part B therapy services to the Edgehill residents that are UHC beneficiaries and, in turn, Edgehill agreed to pay Genesis Rehab a capitated monthly payment of $160 for these same residents.

In summary, net resident service revenues includes $147,000 related to the UHC contract each year during the forecast period, while resident care expenses includes $58,000 related to the Genesis Rehab contract each year during the forecast period.

35 Pennsylvania LTC, Inc. Summary of Significant Forecast Assumptions and Accounting Policies

Inflationary Trends

Management assumes that the daily private pay fees for nursing services will increase 3.0 percent each year during the forecast period. Management assumes that Medicare daily rates for nursing services will increase 1.0 percent each year during the forecast period. Management assumes that the Medical Assistance daily rates for nursing services will be remain unchanged for 2019 through 2021, except for the additional MDOI per diem payment forecasted to be received by Linwood of approximately $2 per day, as indicated in Table 24 above. Management assumes that the Medical Assistance daily rates will increase 2.0 percent in 2022. Management has not forecasted any changes in the Commercial daily rates for nursing services during the forecast period.

Payor Mix

The historical and forecasted payor mix for nursing beds at Linwood and Edgehill is presented in the following tables.

Table 26 Nursing Payor Mix – Linwood Medical Private Pay Medicare Assistance Commercial

Historical: 2015 6% 13% 79% 2% 2016 5% 14% 79% 2% 2017 8% 10% 80% 2% Forecasted: 2018 7% 5% 86% 2% 2019 7% 10% 81% 2% 2020 7% 13% 78% 2% 2021 7% 14% 77% 2% 2022 7% 15% 76% 2%

Source: Management.

Table 27 Nursing Payor Mix – Edgehill Medical Private Pay Medicare / UHC Assistance Commercial

Historical: 2015 7% 4% 88% 1% 2016 7% 2% 91% 0% 2017 3% 3% 93% 1% Forecasted, 2018-2022 4% 3% 92% 1%

Source: Management.

Pennsylvania Nursing Home Assessment Revenue

Pennsylvania nursing home assessment revenue was forecasted based on fiscal year 2017 activity and was assumed to remain unchanged during the forecast period.

36 Pennsylvania LTC, Inc. Summary of Significant Forecast Assumptions and Accounting Policies

Investment Income

Investment income was forecasted to be comprised of interest and dividend income and approximates a 1.5 percent return on the balance of the Obligor’s investments, which were assumed to be utilized on November 1, 2017 as the Obligor’s equity contribution to the Project, and the balance in the Debt Service Reserve Fund. No investment income is forecasted to be earned on cash and cash equivalents and other assets whose use is limited.

Expenses

Operating expenses have been forecasted based upon Management’s anticipated costs at the forecasted occupancy levels, historical operating experience, and anticipated costs of the Project.

Management assumes that the Project will require the addition of approximately 22 full-time- equivalent (FTE) employees between 2018 and reaching stabilization in 2020. Salaries and wages, which were forecasted based on historical operating experience and the additional Project FTEs, were assumed to increase at a rate of 2.0 percent per year during the forecast period. Payroll taxes and employee benefit costs, which were forecasted based on historical operating experience and future expectations, were assumed to equal 24 percent of salaries and wages each year during the forecast period.

Insurance was assumed to increase 5.0 percent each year during the forecast period. All other operating expenses were generally assumed to increase 1.5 percent each year during the forecast period.

The following is a schedule of forecasted FTEs, by department, and the average salary per FTE for 2018 and 2022:

Table 28 Forecasted Staffing Levels (FTEs) FTEs Incremental FTEs 2018 FTEs 2022

Resident care 77.7 21.1 98.8 General and administrative 6.8 - 6.8 Dietary 20.0 - 20.0 Plant operations and maintenance 3.0 - 3.0 Housekeeping and laundry 8.9 0.5 9.4 Activities and social services 9.9 - 9.9

126.3 21.6 147.9

Average salary per FTE $40,445 $44,029

Source: Management

Resident Care

Resident care consists of expenses for employee compensation and benefit costs, medical supplies, pharmacy, therapy, purchased services (Director of Nursing), and other related costs in connection with the provision of nursing care services. These expenses were forecasted by Management based on historical operating experience with consideration given to incremental costs associated with the Project. 37 Pennsylvania LTC, Inc. Summary of Significant Forecast Assumptions and Accounting Policies

General and Administrative

General and administrative services consist of expenses for employee compensation and benefit costs, management fees, purchased services (primarily, Nursing Home Administrator), advertising and marketing costs, professional fees, provision for doubtful collections, and other miscellaneous expenses. These expenses were forecasted by Management based on historical operating experience with consideration given to incremental costs associated with the Project.

Pennsylvania Nursing Home Assessment

Pennsylvania nursing home assessment expense was forecasted based on fiscal year 2017 activity and was assumed to remain unchanged during the forecast period.

Dietary

Dietary consists of expenses for employee compensation and benefit costs, food costs, and other related costs in connection with the provision of food service to residents. These expenses were forecasted by Management based on historical operating experience with consideration given to incremental costs associated with the Project.

Plant Operations and Maintenance

Plant operations and maintenance consists of expenses for employee compensation and benefit costs, utilities, purchased services, insurance, and other related costs. These expenses were forecasted by Management based on historical operating experience with consideration given to incremental costs associated with the Project.

Housekeeping and Laundry

Housekeeping and laundry consists of expenses for employee compensation and benefit costs, supplies, and other miscellaneous costs. These expenses were forecasted by Management based on historical operating experience with consideration given to incremental costs associated with the Project.

Activities and Social Services

Activities and social services consist of expenses for employee compensation and benefit costs and other related costs in connection with the provision of activities, wellness programs, and social services to residents. These expenses were forecasted by Management based on historical operating experience with consideration given to incremental costs associated with the Project.

Summary of Significant Accounting Policies

Cash and Cash Equivalents

For purposes of the forecasted statements of cash flows, cash and cash equivalents include investments in highly liquid debt instruments purchased with an original maturity of three months or less.

38 Pennsylvania LTC, Inc. Summary of Significant Forecast Assumptions and Accounting Policies

Accounts Receivable, Residents

Accounts receivable are reported at net realizable value. Accounts are written-off when they are determined to be uncollectible based upon management’s assessment of individual accounts. Management has forecasted the provision for doubtful collections based on historical operating experience. The provision for doubtful collections was forecasted to equal 1.50 percent of Linwood’s net resident service revenues and 0.50 percent of Edgehill’s net resident service revenues each year during the forecast period; the total provision for doubtful collections was forecasted to be $97,000 in 2018, $121,000 in 2019, $162,000 in 2020, $164,000 in 2021, and $169,000 in 2022.

Assets Whose Use is Limited

Assets whose use is limited are assumed to include funds held by the bond trustee under a trust indenture for the Series 2017 Bonds.

Property and Equipment

Property and equipment acquisitions are recorded at cost. Depreciation is computed using the straight-line method based on the estimated useful lives of the related assets.

Interest is capitalized for assets that require a period of time to be constructed or to prepare them for their intended use.

Impairment of Property and Equipment

Property and equipment will be evaluated for impairment whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. If expected cash flows are less than the carrying value, an impairment loss will be recognized equal to an amount by which the carrying value exceeds the fair value of the assets. Management assumes that no impairment losses will be incurred during the forecast period.

Debt Issuance Costs

Debt issuance costs include costs incurred in connection with the Series 2017 Bonds. Debt issuance costs are presented in the forecasted balance sheets as a direct reduction of the Obligor’s debt. The debt issuance costs are amortized over the term of the related debt using the straight-line method, which approximates the effective interest method. Amortization expense is forecasted to be $17,000 in 2018 and $22,000 in 2019 through 2022.

Net Resident Service Revenues

Net resident service revenues are reported at the estimated net realizable amounts from residents and third-party payors for services rendered.

Income Taxes

The Obligor has been recognized by the Internal Revenue Service as a not-for-profit corporation described in Section 501(c)(3) of the Internal Revenue Code (the Code) and is exempt from federal income taxes on its exempt income under Section 501(a) of the Code under a group exemption with Guardian.

39 Pennsylvania LTC, Inc. Summary of Significant Forecast Assumptions and Accounting Policies

Revenues Less Than Expenses

The forecasted statements of operations include the determination of revenues less than expenses. Changes in unrestricted net assets which are excluded from operating loss, consistent with industry practice, include contributions of long-lived assets (including assets acquired using contributions which by donor restriction were to be used for the purposes of acquiring such assets).

New Accounting Standards

In 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers, which provides comprehensive guidance on recognizing revenue from contracts and the related costs. The guidance will not become effective until 2019. At the time this forecast was prepared, there was uncertainty as to how, if at all, the guidance would affect the manner in which the Obligor recognizes revenue. Accordingly, the forecast continues the entity's current accounting principles related to revenue recognition throughout the forecast period.

In 2016, the FASB issued ASU No. 2016-14, Not-for-Profit Entities (Topic 958): Presentation of Financial Statements of Not-for-Profit Entities. The new guidance is intended to improve and simplify the current net asset classification requirements and information presented in financial statements and notes that is useful in assessing a not-for-profit’s liquidity, financial performance, and cash flows. The guidance will not become effective until 2019. Management does not believe the impact of the changes as a result of the adoption of ASU 2016-14 is significant to the forecasted financial statements. Accordingly, the forecast continues the entity's current accounting principles related to presentation of financial statements of not-for-profit entities throughout the forecast period.

Assets Whose Use Is Limited

Assets whose use is limited assumed to be held by a bond trustee under a trust indenture for the Series 2017 Bonds are listed below.

Project Fund

At closing, a portion of the proceeds from the Series 2017 Bonds, the Guardian Loan, and the Obligor’s equity contribution are forecasted to be deposited into the Project Fund to pay costs incurred in connection with the construction and equipping the Project.

Funded Interest Fund

At closing, a portion of the proceeds from the Obligor’s equity contribution are forecasted to be deposited into the Funded Interest Fund to pay interest costs incurred on the Series 2017 Bonds during the period November 2017 through August 2018.

Debt Service Reserve Fund

At closing, a portion of the proceeds from the Guardian Loan are forecasted to be deposited into the Debt Service Reserve Fund. The deposit into the Debt Service Reserve Fund is assumed to be $912,000, which represents the maximum annual debt service (principal and interest) on the Series 2017 Bonds for each bond year ending December 1. The Debt Service Reserve Fund secures the Series 2017 Bonds. Earnings on the Debt Service Reserve Fund are assumed to be used to pay debt service.

40 Pennsylvania LTC, Inc. Summary of Significant Forecast Assumptions and Accounting Policies

Debt Service Fund

The Obligor is required to make monthly deposits into the respective bond principal and interest funds at an amount approximately equal to one-sixth of the next semi-annual interest payment and one-twelfth of the next annual principal payment for the Series 2017 Bonds. The funding of the interest payments on the Series 2017 Bonds will commence after funds from the Funded Interest Fund are expended.

Replacement Reserve Fund

At closing, a portion of the proceeds from the Guardian Loan and the Obligor’s equity contribution are forecasted to be deposited into the Replacement Reserve Fund. The deposit into the Replacement Reserve Fund is assumed to be $100,000. As defined in the Master Trust Indenture, the Replacement Reserve Fund may be used to pay costs incurred with the maintenance and repair of Linwood and Edgehill. Withdrawals from the Replacement Reserve Fund must be approved by the Master Trustee.

Composition of Assets Whose Use Is Limited

Assets whose use is limited is forecasted as follows:

Table 29 Assets Whose Use is Limited (in thousands of dollars) 2018 2019 2020 2021 2022

Project fund $ 3,975 $ - $ - $ - $ - Funded interest fund 84 - - - - Debt service reserve fund 912 912 912 912 912 Debt service fund 51 173 178 181 186 Replacement reserve fund 100 100 100 100 100

Total 5,122 1,185 1,190 1,193 1,198

Less amounts available to meet current liabilities (59) (173) (178) (181) (186)

Noncurrent portion of assets whose use is limited $ 5,063 $ 1,012 $ 1,012 $ 1,012 $ 1,012

Source: Management.

41 Pennsylvania LTC, Inc. Summary of Significant Forecast Assumptions and Accounting Policies

Property and Equipment

Management assumes the useful lives of depreciable assets generally range from 5 to 30 years. For purposes of the forecast, Management assumed weighted average useful lives of approximately 27 years and 7 years for Project related assets and other capital expenditures, respectively. Property and equipment, capital expenditures, and depreciation expense are forecasted as follows:

Table 30 Property and Equipment, Capital Expenditures, and Depreciation Expense (in thousands of dollars) 2018 2019 2020 2021 2022

Property and equipment: Land and land improvements $ 560 $ 560 $ 560 $ 560 $ 560 Buildings and improvements 7,525 17,982 18,045 18,107 18,170 Furniture, fixtures, and equipment 2,742 3,041 3,103 3,166 3,228 Construction in progress 6,514 - - - -

Subtotal 17,341 21,583 21,708 21,833 21,958

Accumulated depreciation (7,532) (8,231) (9,041) (9,828) (10,613)

Property and equipment, net $ 9,809 $ 13,352 $ 12,667 $ 12,005 $ 11,345

Capital additions: Project related assets $ 6,115 $ 4,117 $ - $ - $ - Other capital additions 100 125 125 125 125

Total $ 6,215 $ 4,242 $ 125 $ 125 $ 125

Depreciation expense $ 571 $ 699 $ 810 $ 787 $ 785

Source: Management.

Management assumes that interest expense capitalized into property and equipment approximates $356,000 in 2018 and $141,000 in 2019.

Project related assets are assumed to be transferred out of construction in progress and placed in service in November 2018.

42 Pennsylvania LTC, Inc. Summary of Significant Forecast Assumptions and Accounting Policies

Long-Term Debt and Interest Expense

Series 2017 Bonds (Unrated Tax-Exempt)

Management assumes that on or around November 1, 2017, the Authority will issue, on behalf of the Obligor, $12,555,000 of Tax-Exempt Revenue Bonds (Pennsylvania LTC, Inc. Project), Series of 2017. The proceeds from the Series 2017 Bonds and other sources of funds will be used to refund the Series 2007 Bonds, finance the construction and equipping of the Project, fund interest on the Series 2017 Bonds through August 2018, fund the Debt Service Reserve Fund and Replacement Reserve Fund, and pay certain costs in connection with the issuance of the Series 2017 Bonds.

The proposed Series 2017 Bonds are assumed to be unrated, tax-exempt fixed rate bonds. The terms of the proposed Series 2017 Bonds are assumed to be:

Interest on the Series 2017 Bonds is assumed to be payable semiannually on June 1 and December 1 of each year. Principal on the Series 2017 Bonds is assumed to be paid annually on December 1.

Loan from Guardian Foundation, Inc.

Management assumes that on or around November 1, 2017, Guardian Foundation, Inc. will advance $1,000,000 to the Obligor (Guardian Loan). The Guardian Loan bears interest at 2.50 percent per annum and is assumed to be subordinate to the Series 2017 Bonds. Repayment of the Guardian Loan is contingent upon the Obligor’s ability to comply with the debt service coverage ratio, liquidity, and occupancy covenants for the Series 2017 Bonds. No principal payments were assumed during the forecast period.

43 Pennsylvania LTC, Inc. Summary of Significant Forecast Assumptions and Accounting Policies

Long-Term Debt Summary

The following is a summary of long-term debt as of June 30:

Table 31 Summary of Long-Term Debt (in thousands of dollars) 2018 2019 2020 2021 2022

Series 2017 Bonds $ 12,555 $ 12,555 $ 12,360 $ 12,155 $ 11,945 Guardian Loan 1,000 1,000 1,000 1,000 1,000

Total long-term debt 13,555 13,555 13,360 13,155 12,945

Less: Current maturities of long-term debt $ - $ 195 $ 205 $ 210 $ 220 Debt issuance costs, nets 631 609 587 565 543

Long-term debt $ 12,924 $ 12,751 $ 12,568 $ 12,380 $ 12,182

Source: Management.

Annual Principal and Interest Payments

The following table presents forecasted annual principal and interest payments on the Obligor’s long-term debt.

Table 32 Forecasted Annual Debt Service (in thousands of dollars) Principal Interest Series 2017 Guardian Series 2017 Guardian Total Debt Bonds Loan Bonds Loan Service

Year Ending June 30, 2018(1)(2) $ - $ - $ 416 $ 14 $ 430 2019(3) - - 713 25 738 2020 195 - 710 25 930 2021 205 - 702 25 932 2022 210 - 693 25 928 Thereafter(4) 11,945 1,000 11,330 - 24,275

Total $ 12,555 $ 1,000 $ 14,564 $ 114 $ 28,233

Source: Management.

Notes: (1) Principal amounts exclude long-term debt of $6,150,000 refunded with proceeds from the Series 2017 Bonds. (2) Interest amounts include capitalized interest of $319,000 and exclude interest payments of $154,000 on the Series 2007 Bonds. (3) Interest amounts include capitalized interest of $178,000. (4) Due to the uncertainty related to the timing of the payment of the Guardian Loan, no interest payments were included in the thereafter row above.

44 Pennsylvania LTC, Inc. Summary of Significant Forecast Assumptions and Accounting Policies

Commitments and Related Party Activities

Management Fees

The Obligor entered into a management services agreement with Genesis Eldercare for a period of five years ending June 30, 2018. The management services agreement includes a base monthly management fee (currently $31,500), plus an incentive fee equal to 2 percent of net operating revenues, as defined in the management services agreement. Total management fees cannot exceed 4.5 percent of net resident service revenues. The incentive fee is only earned upon certain milestones being met and is assumed to be subordinate to payment of the debt service on the Series 2017 Bonds. Management assumed that the management services agreement will be renewed through the forecast period under the current terms and conditions.

Management fees are forecasted to be equal to 4.5 percent of net resident service revenues, and are included in general and administrative expenses in the forecasted statements of operations and changes in net assets.

The following table summarizes the forecasted management fees for Genesis Eldercare during the forecast period:

Table 33 Management Fees for Genesis Eldercare (in thousands of dollars) 2018 2019 2020 2021 2022

Base management fees $ 378 $ 378 $ 378 $ 378 $ 378 Incentive management fees 59 130 254 261 277

Total $ 437 $ 508 $ 632 $ 639 $ 655

Source: Management.

In addition, the Facilities’ Directors of Nursing and Nursing Home Administrators are employees of Genesis Eldercare. The amounts forecasted to be charged by Genesis Eldercare for the Directors of Nursing are $216,000 in 2018, $220,000 in 2019, $223,000 in 2020, $226,000 in 2021, and $230,000 in 2022 and are included in resident care expenses in the forecasted statements of operations and changes in net assets. The amounts forecasted to be charged by Genesis Eldercare for the Nursing Home Administrators are $288,000 in 2018, $292,000 in 2019, $297,000 in 2020, $301,000 in 2021, and $306,000 in 2022 and are included in general and administrative expenses in the forecasted statements of operations and changes in net assets.

Corporate Administration and Participation Fees

The Obligor has a Corporate Administration Services Agreement with Guardian whereby the Obligor will pay Guardian a monthly fee in exchange for corporate administrative services. The fee is adjusted every January 1 by the change in the Consumer Price Index (CPI) and the agreement is scheduled to expire on December 31, 2022.

Guardian shall also be entitled to a participation fee equal to one dollar per resident day, to be adjusted every January 1 by the change in the CPI. The participation fee is assumed to be subordinate to payment of the debt service on the Series 2017 Bonds.

45 Pennsylvania LTC, Inc. Summary of Significant Forecast Assumptions and Accounting Policies

The following table summarizes the forecasted corporate administration and participation fees, which are included in general and administrative expenses in the forecasted statements of operations and changes in net assets, during the forecast period:

Table 34 Fees for Guardian (in thousands of dollars) 2018 2019 2020 2021 2022

Administration fees $ 98 $ 109 $ 130 $ 132 $ 134 Participation fees 52 59 72 73 74

Total $ 150 $ 168 $ 202 $ 205 $ 208

Source: Management.

Contingencies

Senior Living Services Industry

The senior living services industry is subject to numerous laws, regulations, and administrative directives of federal, state, and local governments and agencies. Compliance with these laws, regulations, and administrative directives is subject to future government review and interpretation as well as regulatory actions unknown or unasserted at this time. Government activity continues to increase with respect to investigations and allegations concerning possible violations by healthcare providers of fraud and abuse statutes and regulations, which could result in the imposition of significant fines and penalties as well as significant repayments for resident services previously billed. Management is not aware of any material incidents of noncompliance; however, the possible future effects of this matter on Obligor, if any, are not presently determinable.

Regulatory Considerations

With the enactment of Patient Protection and Affordable Care Act (H.R. 3590) and Health Care and Education Affordability Reconciliation Act of 2010 (H.R. 4872) (collectively referred to herein as HC Reform) there are a number of potential future changes to the current care delivery and reimbursement systems which may have a significant impact on the utilization of long-term care services.

In addition to the numerous potential impacts of HC Reform, budgetary pressures at both the State and Federal levels have the potential to limit funding for Medical Assistance and Medicare reimbursement for nursing services. While there is anecdotal information available on the potential impacts to the industry in general as a result of HC Reform, and the potential impacts resulting from government budgetary pressures, very little specific information is available as of the date of this report to estimate the specific impact on an individual provider or entity. Therefore, Management has relied upon historical operating experience, as well as information currently available, to forecast future demand for nursing services and future reimbursement rates for services rendered to Medical Assistance and Medicare program beneficiaries.

46 Pennsylvania LTC, Inc. Summary of Significant Forecast Assumptions and Accounting Policies

Medical Assistance Program

The Department of Human Services (DHS) in the Commonwealth of Pennsylvania is in the process of implementing its mandatory Medical Assistance managed care program, Community HealthChoices (CHC). The primary goals of CHC are to better coordinate health care coverage and improve access to medical care. The services for which Medical Assistance program beneficiaries are eligible will not change under CHC.

Under CHC, each Medical Assistance program beneficiary will be able to choose from three managed care organizations (MCOs), AmeriHealth Caritas, Pennsylvania Health & Wellness, and UPMC Community HealthChoices.

The current Medical Assistance reimbursement system in Pennsylvania is a fee-for-service (FFS) system. CHC eliminates the FFS payment methodology.

CHC is scheduled to be effective for Linwood on January 1, 2019, and for Edgehill on July 1, 2018. DHS has provided information to nursing facilities indicating the initial rate paid by the MCOs will be subject to a “floor” equal to the average of each facility’s prior four quarters Medical Assistance rates. In addition, MCOs and nursing facilities may agree to higher or lower negotiated rates under an alternative payment methodology agreement.

Linwood’s “floor” will be based on the FFS Medical Assistance rates paid to Linwood during the period January 1, 2018 through December 31, 2018, while Edgehill’s “floor” will be based on the FFS Medical Assistance rates paid to Edgehill during the period July 1, 2017 through June 30, 2018. The rate “floors” are expected to be in effect for 36 months. As such, the Medical Assistance rates assumed by Management generally remained unchanged during Linwood’s and Edgehill’s 36 month “floor” periods.

Each nursing facility that participates in CHC and meets the participation requirements is considered an “Any Willing Provider” (AWP). Each MCO must contract for at least 18 months with all AWP facilities.

As disclosed in Tables 24 and 25, Management assumed that the DSH and MDOI payments will continue to be paid to eligible nursing facilities, including Linwood and Edgehill, under CHC.

There is uncertainty related to the implementation of CHC in the following primary areas:

The ability of Linwood and Edgehill to maintain contracts with the MCOs after the 18-month AWP period. The rates to be paid to Linwood and Edgehill after the 36-month “floor” period. The continued payment of the DSH and MDOI payments to eligible nursing facilities.

47 Pennsylvania LTC, Inc. Summary of Significant Forecast Assumptions and Accounting Policies

Subordination of Management and Participation Fees

Under the terms of the management services agreement with Genesis Eldercare and the Corporate Administration Services Agreement with Guardian, Genesis Eldercare and Guardian have subordinated their right to certain payments to the payment of debt service on the Series 2017 Bonds (Subordinated Payables). Genesis Eldercare is subordinating its right to the payment of the incentive management fee, while Guardian is subordinating its right to the payment of the participation fee.

Generally, Subordinated Payables can only be paid each year if: (i) there is no event of default, as defined, under the agreements related to the Series 2017 Bonds, (ii) there are sufficient funds in the Debt Service Reserve Fund; (iii) the Obligor is in compliance with the liquidity covenant, after payment of the Subordinated Payables, (iv) the Obligor is in compliance with the debt service coverage ratio requirement; and (v) the Obligor is in compliance with the occupancy covenant.

Sensitivity Analyses

Management provided the following sensitivity analyses related to certain assumptions that are believed to be sensitive:

Sensitivity Analysis I reflects certain financial information for 2021 and 2022 if Linwood, upon completion of the Project, only fills to and remains at 90 percent occupancy throughout the forecast period. For purposes of this sensitivity analysis, Management assumed the same fill period (November 2018 through August 2019), and also assumed similar move-ins by month, until 90 percent occupancy was achieved.

Sensitivity Analysis II reflects changes in the payor mix of Linwood in forecast years 2019 through 2022 such that the Obligor’s debt service coverage ratio would approximate 1.00 in 2021 and 2022.

Sensitivity Analysis III reflects certain financial information for 2021 and 2022 if Linwood’s private pay census was eliminated and shifted to Medical Assistance in forecast years 2019 through 2022.

For purposes of all three sensitivity analyses, Management assumes that substantially all expenses remained unchanged.

Certain financial information for each sensitivity analysis is as follows:

Table 35 Sensitivity Analysis I For the Years Ending June 30 Change in Linwood Forecast Occupancy % 2021 2022 2021 2022

Average occupied beds – Linwood 96 96 92 92 Revenues less than expenses $ (285) $ (209) $ (569) $ (499) Debt service coverage ratio 1.37 1.44 1.06 1.12 Days cash on hand 40 45 24 23

Source: Management.

48 Pennsylvania LTC, Inc. Summary of Significant Forecast Assumptions and Accounting Policies

Table 36 Sensitivity Analysis II For the Years Ending June 30 Estimated Break-Even Forecast Payor Mix 2021 2022 2021 2022

Nursing Payor Mix - Linwood: Private Pay 7% 7% 2% 2% Medicare 14% 15% 12% 12% Medical Assistance 77% 76% 84% 84% Commercial 2% 2% 2% 2% Revenues less than expenses $ (285) $ (209) $ (621) $ (612) Debt service coverage ratio 1.37 1.44 1.00 1.00 Days cash on hand 40 45 23 19

Source: Management.

Table 37 Sensitivity Analysis III For the Years Ending June 30 Forecast Eliminate Private Pay Days 2021 2022 2021 2022

Nursing Payor Mix - Linwood: Private Pay 7% 7% 0% 0% Medicare 14% 15% 14% 15% Medical Assistance 77% 76% 84% 83% Commercial 2% 2% 2% 2% Revenues less than expenses $ (285) $ (209) $ (592) $ (528) Debt service coverage ratio 1.37 1.44 1.03 1.09 Days cash on hand 40 45 22 20

Source: Management.

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APPENDIX D COPIES OF PROPOSED FORMS OF PRINCIPAL FINANCING DOCUMENTS

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Table of Contents Page

ARTICLE I DEFINITIONS; CONTENT OF CERTIFICATES AND OPINIONS ...... 5 BOND TRUST INDENTURE SECTION 1.01. Definitions...... 5 SECTION 1.02. Content of Certificates and Opinions ...... 15 SECTION 1.03. Interpretation ...... 16 ARTICLE II THE BONDS ...... 17 SECTION 2.01. Authorization of Bonds ...... 17 SECTION 2.02. Terms of Bonds; Interest on the Bonds...... 17 Dated as of November 1, 2017 SECTION 2.03. Execution of Bonds ...... 19 SECTION 2.04. Authentication ...... 19 SECTION 2.05. Form of Bonds ...... 19 SECTION 2.06. Transfer of Bonds ...... 19 SECTION 2.07. Exchange of Bonds ...... 20 Between SECTION 2.08. Bond Registrar ...... 20 SECTION 2.09. Temporary Bonds ...... 20 SECTION 2.10. Bond Mutilated, Lost, Destroyed or Stolen ...... 20 SECTION 2.11. Cancellation and Destruction of Surrendered Bonds ...... 21 SECTION 2.12. Acts of Bondholders; Evidence of Ownership ...... 21 SECTION 2.13. CUSIP Number ...... 21 MONTGOMERY COUNTY HIGHER EDUCATION AND HEALTH AUTHORITY SECTION 2.14. Book-Entry-Only System for the Bonds ...... 21

D-1 ARTICLE III ISSUANCE OF BONDS; APPLICATION OF PROCEEDS ...... 24

SECTION 3.01. Issuance of the Bonds ...... 24 SECTION 3.02. Validity of Bonds ...... 24

SECTION 3.03. Disposition of Proceeds of the Bonds and Other Amounts ...... 24 and ARTICLE IV REDEMPTION OF BONDS BEFORE MATURITY...... 25 SECTION 4.01. Extraordinary and Mandatory Redemption ...... 25 SECTION 4.02. Optional Redemption ...... 26 SECTION 4.03. Notice of Redemption ...... 27 SECTION 4.04. Effect of Redemption ...... 27 SECTION 4.05. Cancellation ...... 27 U.S. BANK NATIONAL ASSOCIATION, SECTION 4.06. Partial Redemption of Bonds ...... 28 as Trustee SECTION 4.07. Payment upon Redemption ...... 28 SECTION 4.08. Purchase of Bonds...... 28 ARTICLE V REVENUES AND FUNDS ...... 30 SECTION 5.01. Creation of the Bond Fund ...... 30 SECTION 5.02. Payments into the Bond Fund ...... 30 SECTION 5.03. Use of Moneys in the Bond Fund ...... 30 $______Tax-Exempt Revenue Bonds SECTION 5.04. Costs of Issuance Fund ...... 30 (Pennsylvania LTC, Inc. Project) SECTION 5.05. Project Fund ...... 31 Series of 2017 SECTION 5.06. Payments into the Project Fund; Disbursements ...... 31 SECTION 5.07. Use of Money in the Project Fund Upon Default ...... 31 SECTION 5.08. Use of Money in the Project Fund Upon Completion of the Project 31 SECTION 5.09. Nonpresentment of Bonds...... 32 SECTION 5.10. Moneys to be Held in Trust ...... 32

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SECTION 5.11. Repayment to the Obligor from the Bond Fund, the Rebate SECTION 9.04. Trustee Authorized to Join in Supplements; Reliance on Fund or the Project Fund...... 32 Opinion of Counsel ...... 53 SECTION 5.12. Rebate Fund ...... 32 ARTICLE X AMENDMENT OF LOAN AGREEMENT ...... 55 SECTION 5.13. Debt Service Reserve Fund ...... 34 SECTION 10.01. Amendments to Loan Agreement Not Requiring Consent of SECTION 5.14. Investment of Moneys in Funds ...... 34 Bondholders. 55 SECTION 5.15. Allocation of Income from Investments ...... 35 SECTION 10.02. Amendments to Loan Agreement Requiring Consent of SECTION 5.16. Trustee’s Own Bond or Investment Department ...... 36 Bondholders. 55 SECTION 5.17. Investment Records ...... 36 SECTION 10.03. Trustee Authorized to Join in Amendments; Reliance on ARTICLE VI PARTICULAR COVENANTS ...... 37 Counsel. 56 SECTION 6.01. Punctual Payment...... 37 ARTICLE XI DEFEASANCE; DISCHARGE OF LIENS ...... 57 SECTION 6.02. Extension of Payment of Bonds ...... 37 SECTION 11.01. Discharge of Liens ...... 57 SECTION 6.03. Against Encumbrances ...... 37 SECTION 11.02. Defeasance of Bonds ...... 57 SECTION 6.04. Power to Issue Bonds and Make Pledge and Assignment ...... 37 SECTION 11.03. Deposit of Money or Securities with Trustee ...... 58 SECTION 6.05. Accounting Records and Financial Statements ...... 37 ARTICLE XII MISCELLANEOUS ...... 60 SECTION 6.06. Tax Covenants ...... 38 SECTION 12.01. Consents of Bondholders ...... 60 ARTICLE VII DEFAULT PROVISIONS AND REMEDIES OF TRUSTEE AND SECTION 12.02. Liability of Authority Limited to Revenues ...... 61 BONDHOLDERS ...... 39 SECTION 12.03. Limitation of Liability of Directors, Etc. of Authority ...... 61 SECTION 7.01. Defaults; Events of Default ...... 39 SECTION 12.04. Covenant Not to Sue ...... 62 SECTION 7.02. Acceleration ...... 39 SECTION 12.05. Successor is Deemed Included in All References to SECTION 7.03. Remedies Upon Event of Default ...... 40 Predecessor 62 SECTION 7.04. Rights of Bondholders to Require Trustee to Pursue SECTION 12.06. Limitation of Rights to Parties, Obligor and Bondholders ...... 62 Remedies 41 SECTION 12.07. Waiver of Notice ...... 62

D-2 SECTION 7.05. Rights of Bondholders to Direct Proceedings ...... 41 SECTION 12.08. Severability of Invalid Provisions ...... 62 SECTION 7.06. Application of Moneys ...... 42 SECTION 12.09. Notices ...... 62 SECTION 7.07. Remedies Vested in the Trustee ...... 43 SECTION 12.10. Evidence of Rights of Bondholders ...... 63 SECTION 7.08. Limitations on Rights and Remedies of Bondholders ...... 44 SECTION 12.11. Disqualified Bonds...... 64 SECTION 7.09. Termination of Proceedings ...... 44 SECTION 12.12. Money Held for Particular Bonds ...... 64 SECTION 7.10. Waivers of Events of Default ...... 45 SECTION 12.13. Funds ...... 64 SECTION 7.11. Notice of Defaults; Opportunity of the Authority and the SECTION 12.14. Payments Due on Days other than Business Days...... 64 Obligor to Cure Defaults ...... 45 SECTION 12.15. Execution in Several Counterparts ...... 64 ARTICLE VIII THE TRUSTEE ...... 47 SECTION 12.16. Notices to Rating Agency ...... 65 SECTION 8.01. Duties, Immunities and Liabilities of Trustee ...... 47 SECTION 12.17. Governing Law ...... 65 SECTION 8.02. Merger or Consolidation ...... 48 SECTION 8.03. Liability of Trustee ...... 48 SECTION 8.04. Right of Trustee to Rely on Documents ...... 49 SECTION 8.05. Preservation and Inspection of Documents...... 50 EXHIBIT A Form of Bond SECTION 8.06. Compensation ...... 50 EXHIBIT B Requisition Form SECTION 8.07. Construction of Ambiguous Provisions ...... 50 EXHIBIT C Form of Completion Certificate SECTION 8.08. Notice to Bondholders if Payment Default Occurs ...... 50 ARTICLE IX AMENDMENTS TO INDENTURE AND SUPPLEMENTAL INDENTURES ...... 51 SECTION 9.01. Amendments to Indenture and Supplemental Indentures Not Requiring Consent of Bondholders ...... 51 SECTION 9.02. Amendments to Indenture and Supplemental Indentures Requiring Consent of Bondholders ...... 52 SECTION 9.03. Consent of Obligor ...... 53

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THIS BOND TRUST INDENTURE (this “Bond Indenture”), made and entered into this WHEREAS, to evidence the obligation of the Obligor to make payments under the Loan 1st day of August, 2017 by and between the MONTGOMERY COUNTY HIGHER Agreement sufficient to pay the principal of, premium, if any, and interest on the Bonds, the EDUCATION AND HEALTH AUTHORITY (the “Authority”), a public instrumentality of the Obligor will execute and deliver to the Authority a promissory note dated the date of issuance of Commonwealth and a body corporate and politic organized and existing under the Pennsylvania the Bonds in the principal amount of $______(the “Series 2017 Master Obligation”), which Municipality Authorities Act, 53 PA.C.S.A. §5601 et seq., as amended (the “Act”), and U.S. Series 2017 Master Obligation will be issued pursuant to a Master Trust Indenture dated as of BANK NATIONAL ASSOCIATION, a national banking association, with a corporate trust November 1, 2017, as supplemented by a Supplemental Master Trust Indenture Number 1 dated office located in Philadelphia, Pennsylvania, as trustee (the “Trustee”); as of November 1, 2017 (collectively, the “Master Trust Indenture”), between the Obligor and U.S. Bank National Association, as master trustee (the “Master Trustee”); and W I T N E S S E T H: WHEREAS, to secure its obligations to pay principal of, premium, if any, and interest on Certain of the terms and words used in these Recitals, and in the following Granting the Bonds, the Authority has agreed (i) to assign and pledge to the Trustee, and grant a first Clauses, are defined in Section 1.01 of this Bond Indenture, and if not so defined, in the Loan priority security interest to the Trustee in, all of its right, title, and interest in the Loan Agreement Agreement or the Master Trust Indenture. (except for the Unassigned Rights), and (ii) to assign and endorse the Series 2017 Master Obligation, and all revenues, payments, receipts, and moneys to be received and held thereunder WHEREAS, the Authority is authorized under the Act to finance health centers, as (excluding the Unassigned Rights), to the order of the Trustee; and defined in the Act; and WHEREAS, to secure its obligations under the Series 2017 Master Obligation, the WHEREAS, Pennsylvania LTC, Inc., a Pennsylvania non-stock, nonprofit corporation Obligor (i) will grant to the Master Trustee a security interest in the Gross Revenues (as defined (the “Obligor”), has requested that the Authority provide funds to finance a project (the in the Master Trust Indenture) pursuant to the Master Trust Indenture, and (ii) will grant to the “Project”) consisting of (i) the current refunding of the outstanding Horsham Industrial and Master Trustee a mortgage lien on and a security interest in the real property and personal Commercial Development Authority Health Care Facilities Refunding Revenue Bonds property described in the Mortgage and Security Agreements, each dated as of November 1, (Pennsylvania LTC, Inc. Project) Series 2007 (the “2007 Bonds”), the proceeds of which were 2017 (collectively, the “Mortgage”) from the Obligor, as mortgagor, to the Master Trustee, as applied to finance or refinance the acquisition of and capital expenditures with respect to D-3 mortgagee, all subject to Permitted Encumbrances, as defined in the Master Trust Indenture; and Edgehill Nursing and Rehabilitation Center, a 60-bed nursing facility located in Glenside, Pennsylvania (the “Edgehill Facility”) and Linwood Nursing and Rehabilitation Center (formerly WHEREAS, all things necessary to make the Bonds, when executed by the Authority and known as Mountain Rest Nursing Home), a 102-bed nursing facility located in Scranton, when authenticated by the Trustee and issued as in this Bond Indenture provided, the valid, Pennsylvania (the “Linwood Facility,” and together with the Edgehill Facility, the “Facilities”); binding and legal obligations of the Authority according to the import thereof, to constitute this (ii) the demolition of one wing of the Linwood Facility and the construction, equipping and Bond Indenture a valid lien on the interests in property hereby conveyed, a valid grant of a furnishing of a new 2-story, 46-bed replacement wing at the Linwood Facility (the security interest in the interests in property hereby made, and a valid assignment and pledge of “Improvements”); (iii) miscellaneous capital expenditures at the Edgehill and Linwood the revenues and receipts hereby made to secure the payment of the principal of, premium, if Facilities; (iv) the funding of a debt service reserve fund for the Bonds and capitalized interest on any, and interest on the Bonds, and to constitute this Bond Indenture a valid and binding the Bonds (defined below); and (v) the payment of certain costs of issuing the Bonds; and agreement for the uses and purposes herein set forth in accordance with its terms have been done and performed, and the creation, execution and delivery of this Bond Indenture and the creation, WHEREAS, the Authority has determined that it shall undertake the financing of the execution and issuance of the Bonds, subject to the terms hereof, have in all respects been duly Project pursuant to the provisions and requirements of the Act; and authorized;

WHEREAS, the Authority, by resolution adopted on June 26, 2017 (the “Resolution”), GRANTING CLAUSES AND AGREEMENTS has authorized the issuance of its Tax-Exempt Revenue Bonds (Pennsylvania LTC, Inc. Project), Series of 2017 (the “Bonds”) in the principal amount of $______for the purpose of NOW, THEREFORE, in consideration of the premises and the acceptance by the Trustee providing funds for financing a portion of the costs of the Project; and of the trusts hereby created and of the purchase and acceptance of the Bonds issued and sold by the Authority under this Bond Indenture by those who shall own the same from time to time, and WHEREAS, the Authority and the Obligor are entering into a Loan Agreement, dated as of the sum of one dollar, lawful money of the United States of America, duly paid to the of the date hereof (the “Loan Agreement”), pursuant to which the Authority will provide (i) for Authority by the Trustee at or before the execution and delivery of this Bond Indenture, and for the use of the proceeds of the Bonds by the Obligor to finance the Project and (ii) the Obligor other good and valuable consideration, the receipt and sufficiency of which are hereby agrees to pay to the Authority such payments at such times and in such amounts as will be acknowledged, and for the purpose of fixing and declaring the terms and conditions upon which required to pay the principal of, premium, if any, and interest on the Bonds to be issued, as and the Bonds are to be executed, authenticated, issued, delivered and accepted by all persons who when the same become due; and shall from time to time be or become owners thereof, and in order to secure the payment of the

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principal of and premium (if any) and interest on, and purchase price of, the Bonds according to IN TRUST NEVERTHELESS, under and subject to the terms and conditions hereinafter their tenor and effect and the performance and observance by the Authority of all the covenants set forth, (a) for the equal benefit, protection and security of the Owners of any and all of the expressed or implied herein and in the Bonds and the payment and performance of all other of Bonds, all of which regardless of the time or times of their issuance or maturity shall be of equal the Authority's obligations, the Authority does hereby grant, bargain, sell, convey, pledge and rank, without preference, priority or distinction, except as otherwise provided in or pursuant to assign, without recourse, unto the Trustee and unto its successors in the trust forever, and grants this Bond Indenture, (b) for securing the observance and performance of the Authority's to the Trustee and to its successors in the trust, a security interest in all of the following: obligations and of all others of the conditions, promises, stipulations, agreements and terms and provisions of this Bond Indenture and the uses and purposes herein expressed and declared, and GRANTING CLAUSE FIRST (c) for the benefit of the Trustee to secure payment of the principal of the Bonds and premiums (if any) and interest due or to become due thereon; All right, title and interest of the Authority in and to the Loan Agreement and the security granted thereunder and under the Bond Documents, including, but not limited to (i) the PROVIDED, HOWEVER, that if the Authority, its successors or assigns, well and truly obligation of the Obligor under Section 4.01 of the Loan Agreement to make payments at such pays, or causes to be paid, the principal of the Bonds issued hereunder and the premium (if any) times and in such amounts as are necessary to pay the principal of, interest and redemption and interest due or to become due thereon, at the times and in the manner mentioned in the premium, if any, on the Bonds, (ii) the present and continuing right to make claim for, collect, Bonds and as provided herein, according to the true intent and meaning thereof, and shall cause receive and receipt for any of the sums, amounts, income, revenues, issues and profits and any the payments to be made into the Bond Fund as required under Article V hereof, or shall provide, other sums of money payable or receivable under the Loan Agreement and the other Bond as permitted hereby, for payment thereof, in accordance with Article XI hereof, and shall well Documents (except for the Unassigned Rights), (iii) the present and continuing right to bring and truly keep, perform and observe all of the covenants and conditions pursuant to the terms of actions and proceedings thereunder or for the enforcement thereof, and (iv) the present and this Bond Indenture and all other of the Authority's obligations to be kept, performed and continuing right to do any and all things which the Authority is or may become entitled to do observed by it, and shall pay or cause to be paid to the Trustee all sums of money due or to under the Loan Agreement and the other Bond Documents; become due in accordance with the terms and provisions hereof, then upon such final payments or deposits as provided in Article XI hereof, and upon the termination of the Loan Agreement, GRANTING CLAUSE SECOND the right, title and interest of the Trustee in and to the Trust Estate shall cease, terminate and be

D-4 void, and the Trustee shall thereupon assign, transfer, and turn over the Trust Estate to the All right, title and interest of the Authority in and to all moneys and securities from time Obligor; and the Trustee shall execute and deliver to the Authority and the Obligor, as to time held by the Trustee in the funds and accounts created under the terms of this Bond appropriate, such instruments in writing as shall be requisite to evidence such transfer of the Indenture (except the Rebate Fund); Trust Estate. Upon the Trustee's assignment, transfer and turning over to the Obligor, as appropriate, of the Trust Estate pursuant to the provisions of Section XI hereof, the Trustee shall PROVIDED THAT THE BONDS AND THE AUTHORITY'S COVENANTS UNDER have no further duties, responsibilities or obligations under and pursuant to this Bond Indenture. THIS BOND INDENTURE ARE SPECIAL, LIMITED OBLIGATIONS OF THE AUTHORITY, PAYABLE SOLELY FROM THE REVENUES AND AMOUNTS AND IT IS EXPRESSLY DECLARED that all Bonds issued and secured hereunder are DESCRIBED HEREIN AND IN THE LOAN AGREEMENT; THAT NEITHER THE to be issued, authenticated and delivered and all of the Trust Estate hereby pledged is to be dealt GENERAL CREDIT OF THE AUTHORITY NOR THE GENERAL CREDIT OR THE with and disposed of under, upon and subject to the terms, conditions, stipulations, covenants, TAXING POWER OF THE COUNTY OF MONTGOMERY, PENNSYLVANIA, THE agreements, trusts, uses and purposes hereinafter expressed, and the Authority has agreed and COMMONWEALTH OF PENNSYLVANIA OR ANY POLITICAL SUBDIVISION covenanted and intending to be legally bound does hereby agree and covenant with the Trustee THEREOF IS PLEDGED FOR THE PAYMENT OF THE BONDS OR THE PERFORMANCE and with the respective Owners from time to time of the Bonds, or any part thereof as follows: OF THE AUTHORITY'S COVENANTS UNDER THIS BOND INDENTURE, AND NEITHER THE BONDS NOR THIS BOND INDENTURE SHALL BE OR BE DEEMED AN [End of Granting Clauses] OBLIGATION OF THE COUNTY OF MONTGOMERY, PENNSYLVANIA, THE COMMONWEALTH OF PENNSYLVANIA OR ANY POLITICAL SUBDIVISION THEREOF; IT BEING FURTHER UNDERSTOOD THAT THE AUTHORITY HAS NO TAXING POWER;

TO HAVE AND TO HOLD all and singular the Trust Estate with all privileges and appurtenances hereby conveyed and assigned, or agreed or intended so to be to the Trustee and its successors in trust forever.

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ARTICLE I for federal income tax purposes of interest on, the obligations of states and their political subdivisions, as may be selected by the Obligor and which is reasonably acceptable to the DEFINITIONS; CONTENT OF CERTIFICATES AND OPINIONS Authority.

SECTION 1.01. Definitions. Unless the context otherwise requires, the terms “Bond Documents” means any or all of the Loan Agreement, this Bond Indenture, the defined in this Section shall, for all purposes of the recitals hereto, this Bond Indenture and of Series 2017 Master Obligation and all documents, certificates and instruments executed in any indenture supplemental hereto and of any certificate, opinion or other document herein connection with the foregoing. mentioned, have the meanings herein specified, to be equally applicable to both the singular and plural forms of any of the terms herein defined. Unless otherwise defined in this Bond “Bond Fund” means the Bond Fund, as defined in Article V hereof. Indenture, all terms used herein shall have the meanings assigned to such terms in the Master Trust Indenture. “Bond Indenture” means this Bond Indenture, as originally executed or as it may from time to time be supplemented, modified or amended by any Supplemental Bond Indenture. “Act” shall have the meaning set forth in the Recitals. “Bond Registrar” means any bank, national banking association or trust company “Additional Payments” means any payments required to be made by the Obligor pursuant designated as registrar for the Bonds, and its successor appointed under the Bond Indenture. to Section 4.01(c) of the Loan Agreement which are not required to be applied to the payment of scheduled debt service on the Bonds. “Bonds” shall have the meaning set forth in the Recitals.

“Authority” shall have the meaning set forth in the Recitals. “Bond Year” means, while the Bonds remain Outstanding, the annual period provided for the computation of rebate under Section 148(f) of the Code. For the purposes hereof, the Bond “Authority Board” shall mean at any given time the governing body of the Authority. Year shall mean the one-year period (or shorter period from the original issue date of the Bonds) that ends at the close of business on each ______. “Authority Officer” means the Chairman, Vice Chairman, Secretary or Assistant D-5 Secretary and, when used with reference to an act or document, also means any other person “Book Entry Form,” or “book entry system” means, with respect to the Bonds, a form or authorized by resolution of the Authority to perform such act or sign such document. system, as applicable, under which (a) the interests of Beneficial Owners may be transferred only through a book entry and (b) physical Bond certificates in fully registered form are registered “Authorized Denominations” means the denominations of $25,000 and any integral only in the name of a Securities Depository or its nominee as holder, with the physical Bond multiple of $5,000 in excess thereof. certificates “immobilized” in the custody of the Securities Depository or its nominee. The book entry system maintained by and the responsibility of the Securities Depository (and not “Authorized Obligor Representative” means, with respect to the Obligor, the President, maintained by or the responsibility of the Authority or the Trustee) is the record that identifies, any Vice President, the Secretary, the Treasurer or any other person designated as an Authorized and records the transfer of the interests of, the owners of book entry interests in such Bonds. Obligor Representative of the Obligor by a certificate of the Obligor signed by the President, a Vice President, the Secretary or the Treasurer and filed with the Trustee. “Bondholder,” “Holder,” or “Owner” whenever used herein with respect to a Bond, means the person in whose name such Bond is registered on the registration books maintained by “Bankruptcy Code” means the Federal Bankruptcy Code, 11 U.S.C. §101 et seq., as the Trustee. amended and supplemented from time to time. “Business Day” shall mean any day other than (i) a Saturday or Sunday; (ii) a legal “Basic Payments” means the payments to be made by the Obligor pursuant to Section holiday on which banking institutions in the State of New York or the Commonwealth of 4.01(a) of the Loan Agreement with respect to debt service on the Bonds. Pennsylvania are authorized or required by law to close; or (iii) a day on which the New York Stock Exchange is closed. “Beneficial Owner” means any Person who acquires beneficial ownership interest in a Bond held by the Securities Depository. In determining the Beneficial Owner of any Bond, the “Cede & Co.” means Cede & Co., as nominee of The Depository Trust Company, New Trustee may rely upon representations made and information given to the Trustee by the York, New York. Securities Depository or its Participants with respect to any Bond held by the Securities Depository in which a beneficial ownership is claimed. “Certificate,” “Statement,” “Request,” “Requisition” and “Order” means (a) with respect to the Authority, a written certificate, statement, request, requisition or order signed in the name “Bond Counsel” means an independent attorney or firm of attorneys of nationally of the Authority by its Chairman, Vice Chairman, or such other person as may be designated and recognized experience in matters pertaining to the validity of, and exclusion from gross income authorized to sign for the Authority, or (b) with respect to the Obligor, a written certificate,

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statement, request, requisition or order signed by an Authorized Obligor Representative. Any “Debt Service Reserve Fund” means the Debt Service Reserve Fund, as defined in Article such instrument and supporting opinions or representations, if any, may, but need not, be V hereof. combined in a single instrument with any other instrument, opinion or representation, and the two or more so combined shall be read and construed as a single instrument. If and to the extent “Debt Service Reserve Requirement” means, as of the Issue Date, $______, which is required by Section 1.02 hereof, each such instrument shall include the statements provided for equal to the least of (a) 10% of the original face amount of the Bonds (provided, however, that if in such Section 1.02. the Bonds have original issue discount or premium that exceeds two percent (2%) of the stated redemption price at maturity plus any original issue premium attributable exclusively to “Certified Resolution of the Authority” means a copy of a resolution of the Authority underwriters’ compensation, the issue price shall be used in lieu of the stated principal amount Board certified by the Secretary or an Assistant Secretary of the Authority, or other officer for purposes of the ten percent (10%) limitation), (b) 125% of the average annual debt service on serving in a similar capacity, under its corporate seal, to have been duly adopted by the Authority the Bonds, and (c) the Maximum Annual Debt Service Requirement on the Bonds. Board and to be in full force and effect on the date of such certification. “Defaulted Interest” means any interest on any Bond which is due and payable, but which “Certified Resolution of the Obligor” means a copy of the resolution of such Obligor duly is not punctually paid or duly provided for on any Interest Payment Date. adopted and in full force and effect as of the date of the execution and delivery of the Bonds. “Defeasance Obligations” means: “Code” means the Internal Revenue Code of 1986, as amended, and all regulations promulgated thereunder, to the extent applicable to the Bonds. 1. Government Obligations; and

“Commonwealth” means the Commonwealth of Pennsylvania. 2. Obligations issued or guaranteed by the following instrumentalities or agencies of the United States of America: “Completion Date” means the date of completion of the Project, as that date shall be certified as provided in Section 3.04 of the Loan Agreement. (a) Federal Home Loan Bank System;

D-6 “Cost” or “Costs” means any cost in respect of the Project permitted under the Act and (b) Export-Import Bank of the United States; the Code. (c) Federal Financing Bank; “Costs of Issuance Fund” means the fund established by that name pursuant to Section 5.04. (d) Government National Mortgage Association;

“Counsel” means an attorney-at-law or law firm (who may be counsel for the Obligor or (e) Farmers Home Administration; for the Authority) not unsatisfactory to the Trustee. (f) Federal Home Loan Mortgage Company; “County” means the County of Montgomery, Pennsylvania. (g) Federal Housing Administration; “Debt Service Requirements” with reference to a specified period means, with respect to the Bonds: (h) Federal National Mortgage Association;

(a) amounts required to be paid into any mandatory sinking fund account (i) Any other agency or instrumentality of the United States of during the period; and America created by an Act of Congress which is substantially similar to the foregoing in its legal relationship to the United States of America; and (b) amounts needed to pay the principal of such indebtedness maturing during the period and not to be redeemed prior to maturity from amounts on deposit in any sinking fund 3. Obligations described in Section 103(a) of the Code, provision for the or redemption, retirement or similar fund or account; and payment of the principal of (and premium, if any) and interest on which shall have been made by the irrevocable deposit at least 123 days preceding the date of deposit into the escrow or the fund (c) interest payable on the subject indebtedness during the period, excluding established for the subject defeasance with a bank or trust company acting as a trustee or escrow capitalized interest and amounts on deposit with the Trustee which are available under the Bond agent for holders of such obligations of money, or obligations described in clause (1) above, the Indenture to pay interest with respect to such indebtedness. maturing principal of and interest on which, when due and payable, without reinvestment, together with any cash held uninvested, will provide money sufficient to pay when due the

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principal of (and premium, if any) and interest on such obligations, and which money, or “Event of Taxability” means any conditions or circumstances that cause the interest on obligations described in clause (1) above, are not available to satisfy any other claim, including any of the Bonds to become includable in the gross income of the Owners thereof for purposes of any claim of the Trustee or escrow agent or any claim of any Person claiming through the federal income tax. Trustee or escrow agent or any claim of any Person to whom the Person on whose behalf such irrevocable deposit was made, the Trustee or the escrow agent may be obligated, whether arising “Extraordinary Services of the Trustee” and “Extraordinary Expenses of the Trustee” out of the insolvency of the Person on whose behalf such irrevocable deposit was made, the mean all reasonably necessary services rendered and all reasonably necessary expenses incurred trustee or escrow agent or otherwise. by the Trustee under the Bond Indenture, including but not limited to those rendered or incurred after a Default or an Event of Default, including the reasonable compensation and the expenses “Designated Corporate Trust Office” means the corporate trust office of the Trustee and disbursements of its agents and counsel, other than Ordinary Services of the Trustee and the designated as such, which at the date of the execution of this Bond Indenture is located at 50 Ordinary Expenses of the Trustee. South 16th Street, Suite 2000, Mail Station: EX-PA-WBSP, Philadelphia, Pennsylvania 19102. “Favorable Opinion of Bond Counsel” means, with respect to any action the taking of “Determination of Taxability” means: (i) the issuance of a statutory notice of deficiency which requires such an opinion, an opinion of Bond Counsel to the effect that such action will by the Internal Revenue Service (the “IRS”) which in effect holds that an Event of Taxability has not adversely affect the exclusion of interest on the Bonds from gross income for purposes of occurred; (ii) the issuance of a proposed written adverse determination by the IRS to the Obligor federal income taxation (subject to the inclusion of any exceptions and qualifications contained or the Authority, which in effect holds that an Event of Taxability has occurred; provided that no in the opinion delivered upon the original issuance of the Bonds). Determination of Taxability will be deemed to occur if the Obligor or the Authority has initiated an administrative appeal of such determination or has begun negotiating a closing agreement “Fiscal Year” means the period of twelve consecutive months beginning July 1 of each with the IRS, until the earliest of (A) abandonment of the appeals process by the Obligor, (B) the year, or such other period of twelve consecutive months established by the Obligor as its new date on which such appeals process has been concluded adversely to the Obligor or the Authority Fiscal Year. and no further appeal is permitted or (C) twelve months after the receipt by the Obligor or the Authority of the proposed adverse determination, unless otherwise approved by the Owners of at “Fitch” means Fitch Inc., a corporation organized and existing under the laws of the State of Delaware, its successors and assigns, or, if such corporation shall be dissolved or liquidated or D-7 least a majority in aggregate principal amount of the Bonds then Outstanding; (iii) the deposit by the Obligor with the Trustee of a Certificate to the effect that an Event of Taxability has occurred shall no longer perform the functions of a securities rating agency, any other nationally or will occur and setting forth the date of taxability (i.e. the date on which the interest on the recognized securities rating agency designated by the Authority, with the written approval of the Bonds is declared taxable for federal income tax purposes); the Obligor will be obligated to Obligor. deliver promptly to the Trustee such a Certificate upon the occurrence of an Event of Taxability; (iv) the rendering of a final and nonappealable decision, judgment, decree or other order by any “Generally Accepted Accounting Principles” means those accounting principles court of competent jurisdiction to the effect that an Event of Taxability has occurred; or (v) the applicable in the preparation of financial statements of business institutions or industrial delivery to the Trustee of an unqualified opinion of Bond Counsel to the effect that an Event of development authorities, as appropriate, as promulgated by the Financial Accounting Standards Taxability has occurred or a written statement by Bond Counsel delivered to the Trustee that Board or such other body recognized as authoritative by the American Institute of Certified Bond Counsel is unable to render an opinion to the effect that interest on the Bonds is excluded Public Accountants or any successor body. from gross income for purposes of federal income taxation. “Government Obligations” means direct obligations of (including obligations issued or “DTC” means The Depository Trust Company (“DTC”), New York, New York. held in book entry form), or obligations the principal of and interest on which are unconditionally guaranteed as to full and timely payment by the United States of America. “Electronic Notice” means notice transmitted electronically (“E-mail”) or in writing by facsimile transmission or telephone (promptly confirmed in writing by facsimile transmission). “Improvements” shall have the meaning set forth in the Recitals.

“Equity Account” means the account established by that name within the Project Fund “Independent Counsel” means an attorney or firm of attorneys duly admitted to practice pursuant to Section 5.05 hereof. law before the highest court of any state of the United States and not in the full-time employment of the Authority or the Obligor. “Event of Default” means any of the events specified in Section 7.01 of this Bond Indenture. “Interest Payment Date” means June 1 and December 1 of each year, commencing June 1, 2018.

“Issue Date” means the date of original issuance and delivery of the Bonds.

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“Loan Agreement” shall have the meaning set forth in the Recitals. “Outstanding,” when used as of any particular time with reference to the Bonds, means all Bonds of such series theretofore, or thereupon being, authenticated and delivered by the “Mandatory Sinking Fund Payment Date” shall have the meaning set forth in Section Trustee under this Bond Indenture, except (1) Bonds theretofore cancelled by the Trustee or 4.01(c). surrendered to the Trustee for cancellation; (2) Bonds with respect to which all liability of the Authority shall have been discharged in accordance with Section 10.02, including Bonds (or “Majority Bondowners” means, at the time of determination, the Owners of a majority in portions of Bonds) referred to in Section 12.11; and (3) Bonds for the transfer or exchange of or aggregate principal amount of Bonds then Outstanding (determined in accordance with the in lieu of or in substitution for which other Bonds of such series shall have been authenticated provisions of Section 12.01 of the Bond Indenture). and delivered by the Trustee pursuant to this Bond Indenture.

“Master Trustee” shall have the meaning set forth in the Recitals. “Participant” means any broker, dealer, bank or other financial institution or other Person for which, from time to time, the Securities Depository effectuates book-entry transfers and “Master Trust Indenture” shall have the meaning set forth in the Recitals. pledges of securities pursuant to the book-entry system.

“Moody’s” means Moody's Investors Service, a corporation organized and existing under “Payments” means the payments to be made by the Obligor pursuant to Section 4.01 of the laws of the State of Delaware, its successors and their assigns, or, if such corporation shall be the Loan Agreement, including Basic Payments, Reserve Payments and Additional Payments. dissolved or liquidated or shall no longer perform the functions of a securities rating agency, any other nationally recognized securities rating agency designated by the Authority, with the written “Permitted Investments” means dollar denominated investments, to the extent permitted approval of the Obligor. by law, in any of the following:

“Mortgage” shall have the meaning set forth in the Recitals. (a) Government Obligations;

“Net Proceeds” means, when used with respect to any insurance (other than the proceeds (b) debt obligations which are (i) issued by any state or political of business interruption insurance) or condemnation award or sale consummated under threat of subdivision thereof or any agency or instrumentality of such state or political subdivision and (ii) D-8 condemnation, the gross proceeds from the insurance or condemnation award or sale with respect at the time of purchase rated by any Rating Agency in one of the three highest categories to which that term is used less all expenses (including attorneys’ fees, adjuster’s fees and any assigned by such Rating Agency (without regard to any refinement or gradation of rating expenses of the Obligated Group or the Master Trustee) incurred in the collection of such gross category by numerical modifier or otherwise); proceeds. (c) any bond, debenture, note, participation certificate or other similar “Obligor” shall have the meaning set forth in the Recitals. 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 or the “Obligor’s Documents” means the Loan Agreement, the Master Trust Indenture, the Federal Farm Credit Bank or (ii) backed by the full faith and credit of the United States of Series 2017 Master Obligation, the Mortgage and all documents, certificates and instruments America; executed and delivered by the Obligor in connection with the foregoing. (d) denominated deposit accounts, certificates of deposit and banker’s “Officers' Certificate” means with respect to the Authority, a certificate, duly executed by acceptances with domestic commercial banks, including the Trustee or its affiliates, which have the chairman or Vice Chairman, Secretary or Assistant Secretary, Treasurer or Assistant a rating on their short term certificates of deposit on the date of purchase of “A 1” by S&P, “F Treasurer of the Authority; or with respect to the Obligor, a certificate duly executed by an 1+” by Fitch or “P 1” by Moody’s, without regard to gradation and which mature not more than Authorized Obligor Representative. 360 days after the date of purchase;

“Opinion of Counsel” means a written opinion of counsel (who may be counsel for the (e) commercial paper which is rated at the time of purchase within the Authority) approved by the Authority. classification “A 1” by S&P, “F 1+” by Fitch or “P 1” by Moody’s, without regard to gradation and which matures not more than 270 days after the date of purchase; “Ordinary Services of the Trustee” and “Ordinary Expenses of the Trustee” mean those services rendered and those reasonable expenses incurred by the Trustee in the performance of (f) bonds, notes, debentures or other evidences of indebtedness issued its duties under the Bond Indenture, including the reasonable compensation and the expenses and or guaranteed by a corporation which are, at the time of purchase, rated by any Rating Agency in disbursements of its agents and counsel. any of the three highest rating categories (without regard to any refinement or gradation of rating category by numerical modifier or otherwise);

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(g) investment agreements with banks that at the time such agreement “Project” shall have the meaning set forth in the Recitals. is executed are rated by any Rating Agency in one of the three highest rating categories assigned by such Rating Agency (without regard to any refinement or gradation of rating category by “Project Fund” means the fund established by that name pursuant to Section 5.05 hereof. numerical modifier or otherwise) or investment agreements with non-bank financial institutions which (i) all of the unsecured, direct long-term debt of either the non-bank financial institution or “Rating Agency” means Moody's, if the Bonds are rated by Moody's, S&P, if the Bonds the related guarantor of such non-bank financial institution is rated by any Rating Agency at the are rated by S&P, and Fitch if the Bonds are rated by Fitch. time such agreement is executed in one of the three highest rating categories (without regard to any refinement or gradation of rating category by numerical modifier or otherwise) for “Rating Category” means one of the general rating categories of Moody's, S&P or Fitch, obligations of that nature or (ii) if such non-bank financial institutions have no outstanding long- without regard to any refinement or gradation of such rating category by a numerical modifier or term debt that is rated, all of the short term debt of either the non-bank financial institution or the otherwise. related guarantor of such non-bank financial institution is rated by any Rating Agency in one of “Rebate Fund” means the fund by that name established pursuant to the provisions of the three highest rating categories (without regard to any refinement or gradation of the rating Section 5.12 hereof. category by numerical modifier or otherwise) assigned to short term indebtedness by such Rating Agency; provided that if at any time after purchase the provider of the investment agreement “Regular Record Date” means that date which is the fifteenth day of the month next drops below one of the three highest rating categories assigned by all Rating Agencies then preceding any Interest Payment Date. rating such non-bank financial institution, the investment agreement must, within 30 days, either (x) be assigned to a provider rated in one of the three highest rating categories or (y) be secured “Replacement Bonds” means Bonds issued to the Owners of Bonds in accordance with by the provider with, if provided for in the investment agreement, collateral in the form of Section 2.14 hereof. securities held by the custodian under an agreement satisfactory to the Trustee, the fair market value of which, in relation to the amount of the investment agreement, including principal and “Reserve Payments” means the Payments payable by the Obligor to the Trustee, interest, is equal to at least 102%; investment agreements with banks or non-bank financial described under the subheading “Reserve Payments” in Section 4.01(b) of the Loan Agreement. institutions shall not be permitted if no rating is available with respect to debt of the investment

D-9 agreement provider or the related guarantor of such provider; “Responsible Officer” when used with respect to the Trustee means any officer of the Trustee having direct responsibility for administration of this Bond Indenture, and any other (h) repurchase agreements with respect to and secured by Government officer of the Trustee to whom such matter is referred because of such person’s knowledge of Obligations or by obligations described in clauses (b) and (c) above, which agreements may be and familiarity with the particular subject. entered into with a bank (including, without limitation, the Trustee or the Master Trustee), a trust company, a financial services firm or a broker dealer which is a member of the Securities “Revenues” means all amounts received by the Authority or the Trustee for the account Investors Protection Corporation, provided that (i) the Trustee or a custodial agent of the Trustee of the Authority pursuant or with respect to the Loan Agreement or received by the Master has possession of the collateral and the collateral is free and clear of third-party claims, (ii) a Trustee with respect to the Master Trust Indenture, including without limiting the generality of master repurchase agreement or specific written repurchase agreement governs the transaction, the foregoing, payments under the Loan Agreement (including both timely and delinquent (iii) the collateral securities are valued no less frequently than monthly, (iv) the fair market value payments and late charges), and whether paid from any source, prepayments, insurance proceeds of the collateral securities in relation to the amount of the repurchase obligation, including under the Master Trust Indenture, condemnation proceeds under the Master Trust Indenture, and principal and interest, is equal to at least 103%, and (v) such obligations must be held in the all interest, profits or other income derived from the investment of amounts in any fund or custody of the Trustee Trustee’s agent; and account established pursuant to this Bond Indenture.

(i) shares of a money market mutual fund or other collective “S&P” means S&P Global Ratings, a division of Standard & Poor's Financial Services investment fund registered under the federal Investment Company Act of 1940 whose shares are LLC, its successors and their assigns, or, if such corporation shall be dissolved or liquidated or registered under the Securities Act of 1933, as amended, having assets of at least $100,000,000 shall no longer perform the functions of a securities rating agency designated by the Authority, and having a rating AAAm or AAAm-G by a Rating Agency, including money market mutual with the approval of the Obligor. funds from which the Trustee or its affiliates derive a fee for investment advisory or other services to the fund. “Securities Depository” means any securities depository that is a clearing agency under federal law operating and maintaining, with its participants or otherwise, a book entry system to “Person” means an individual, corporation, firm, association, partnership, trust, or other record ownership of book entry interests in bonds, and to effect transfers of book entry interests legal entity or group of entities, including a governmental entity or any agency or political in bonds in book entry form, and includes and means initially DTC. subdivision thereof.

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“Special Record Date” means the date fixed by the Trustee for the payment of any Any such certificate or opinion made or given by an officer of the Authority or the Defaulted Interest pursuant to Section 2.02 or 2.14 hereof or for the determination of Bond Obligor may be based, insofar as it relates to legal or accounting matters, upon a certificate or ownership (including Beneficial Owners) for any purpose under this Bond Indenture. opinion of or representation by counsel or an accountant, unless such officer knows, or in the exercise of reasonable care should have known, that the certificate, opinion or representation “Supplemental Bond Trust Indenture” means any bond indenture hereafter duly with respect to the matters upon which such certificate or statement may be based, as aforesaid, authorized and entered into between the Authority and the Trustee, supplementing, modifying or is erroneous. Any such certificate or opinion made or given by counsel or an accountant may be amending this Bond Indenture, but only if and to the extent that such Supplemental Bond Trust based, insofar as it relates to factual matters (with respect to which information is in the Indenture is specifically authorized hereunder. possession of the Authority or the Obligor as the case may be) upon a certificate or opinion of or representation by an officer of the Authority or the Obligor, unless such counsel or accountant “Tax Certificate” means the Tax Certificate delivered on the Issue Date by the Obligor knows, or in the exercise of reasonable care should have known, that the certificate or opinion or and the Authority. representation with respect to the matters upon which such person's certificate or opinion or representation may be based, as aforesaid, is erroneous. The same officer of the Authority or the “Tax-Exempt Bonds” means Bonds that as originally issued were the subject of an Obligor, or the same counsel or accountant, as the case may be, need not certify to all of the opinion of Bond Counsel to the effect that the interest thereon is excluded from the gross income matters required to be certified under any provision of this Bond Indenture, but different officers, of the holders thereof for federal income tax purposes under Section 103(a) of the Code and not counsel or accountants may certify to different matters, respectively. an item of tax preference for purposes of the alternative minimum tax imposed on individuals and corporations under the Code. SECTION 1.03. Interpretation. (a) Unless the context otherwise indicates, words expressed in the singular shall include the plural and vice versa and the use of the neuter, “Tax-Exempt Organization” means an entity that is exempt from federal income tax masculine, or feminine gender is for convenience only and shall be deemed to mean and include under Section 501(a) of the Code as an organization described in Section 501(c)(3) of the Code. the neuter, masculine or feminine gender, as appropriate.

“Trust Estate” means all property rights and interests transferred, assigned, or otherwise (b) Headings of articles and sections herein and the table of contents hereof D-10 pledged to the Trustee pursuant to the Granting Clauses hereof. are solely for convenience of reference, do not constitute a part hereof and shall not affect the meaning, construction or effect hereof. “Trustee” means U.S. Bank National Association, and its successors and any corporation resulting from or surviving any consolidation or merger to which it or its successors may be a (c) All references herein to “Articles,” “Sections” and other subdivisions are party and any successor trustee at the time serving as successor trustee hereunder. to the corresponding Articles, Sections or subdivisions of this Bond Indenture; the words “herein,” “hereof,” “hereby,” “hereunder” and other words of similar import refer to this Bond “Unassigned Rights” means the rights of the Authority to indemnification and the Indenture as a whole and not to any particular Article, Section or subdivision hereof. payment of its costs, fees and expenses as set forth in the Bond Documents. [End of Article I] “Underwriter” means Herbert J. Sims & Co., Inc., together with its successors and/or assigns.

SECTION 1.02. Content of Certificates and Opinions. The Trustee may, but shall not be obligated to, require that every certificate or opinion (except Opinions of Counsel) provided for in this Bond Indenture with respect to compliance with any provision hereof shall include (1) a statement to the effect that the Person making or giving such certificate or opinion has read such provision and the definitions herein relating thereto; (2) a brief statement as to the nature and scope of the examination or investigation upon which the certificate or opinion is based; (3) a statement to the effect that in the opinion of such person, he has made or caused to be made such examination or investigation as is necessary to enable him to express an informed opinion with respect to the subject matter referred to in the instrument to which his signature is affixed; (4) a statement of the assumptions upon which such certificate or opinion is based, and that such assumptions are reasonable; and (5) a statement as to whether, in the opinion of such person, such provision has been complied with.

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ARTICLE II

THE BONDS

SECTION 2.01. Authorization of Bonds. (a) The Bonds shall be issued hereunder in order to obtain moneys to finance the Project for the benefit of the Obligor. The Bonds shall be comprised of one series of bonds designated as “Montgomery County Higher Education and Health Authority Tax-Exempt Revenue Bonds (Pennsylvania LTC, Inc. Project), Series of The Bonds will bear interest on overdue principal at the aforesaid rates. 2017”. (d) Interest on the Bonds shall be computed on the basis of a 360-day year of (b) The aggregate principal amount of Bonds which may be issued and twelve 30-day months. The principal of and premium, if any, on the Bonds shall be payable in Outstanding under this Bond Indenture shall not exceed ______Dollars lawful money of the United States of America at the Designated Corporate Trust Office of the ($______). This Bond Indenture constitutes a continuing agreement by the Authority for the Trustee, or of its successor in trust. benefit of the Holders from time to time of the Bonds to secure the full payment of the principal of, prepayment premium, if any, and interest on all such Bonds, subject to the covenants, Principal of and premium, if any, on each Bond are payable by check or draft in lawful provisions and conditions herein contained. money of the United States of America (except when Bonds are in a Book-Entry-Only System as set forth in Section 2,14 hereof) by presentation and surrender of such Bond at the Designated SECTION 2.02. Terms of Bonds; Interest on the Bonds. (a) The Bonds shall be Corporate Trust Office of the Trustee, or at the duly designated office of any duly appointed issued in fully registered form and (i) such Bonds shall be Outstanding in Authorized alternate or successor paying agent. Payment of interest on each Bond will be made to the Denominations and (ii) such Bonds may not be issued, exchanged or transferred except in Owners and will be paid in lawful money of the United States of America by check or draft Authorized Denominations. The Bonds shall be dated the Issue Date and shall mature, subject to mailed to the Owner, at his address as it appears on the registration books of the Authority prior redemption, as provided herein. maintained by the Trustee, as bond registrar, at the close of business on the Regular Record Date, D-11 irrespective of any transfer or exchange of a Bond subsequent to a Regular Record Date and (b) Each of the Bonds shall bear interest, payable on each Interest Payment prior to such Interest Payment Date, unless the Authority will be in default in the payment of Date of each year, commencing on June 1, 2018, in each case from the Interest Payment Date interest due on such Interest Payment Date. next preceding the date of authentication thereof to which interest has been paid or duly provided for, unless the date of authentication thereof is an Interest Payment Date to which interest has At the option of the Owner of not less than $1,000,000 in aggregate principal amount been paid or duly provided for, in which case from the date of authentication thereof, or unless outstanding of Bonds at the time the request is made, interest will be paid by wire transfer in no interest has been paid or duly provided for on the Bonds, in which case from the Issue Date, immediately available funds to a bank within the continental United States in accordance with until payment of the principal thereof has been made or duly provided for. Notwithstanding the written wire transfer instructions filed with the Trustee prior to the close of business on the foregoing, any Bond authenticated after any Regular Record Date and before the following Business Day preceding the Regular Record Date. Interest will continue to be paid in Interest Payment Date shall bear interest from such Interest Payment Date; provided, however, accordance with such instructions, until revoked in writing, except for the final payment of that if the Authority shall default in the payment of interest from the next preceding Interest interest upon maturity or redemption prior to maturity, which will be paid only upon presentation Payment Date to which interest has been paid or duly provided for, or, if no interest has been of the Bond to the Trustee, provided however that while in Book-Entry Form, payment of the paid or duly provided for on the Bonds, from the Issue Date. principal of and interest on Bonds will be made by the Trustee directly to Cede & Co., as nominee of DTC, or as otherwise required by the Securities Depository, and will subsequently be (c) The Bonds will bear interest at the rates per annum set forth below, will disbursed by DTC to DTC Participants (as herein defined) and thereafter by DTC Participants to mature on December 1 in the years and in the amounts as follows, unless earlier called for Beneficial Owners of the Bonds. redemption. Defaulted Interest will cease to be payable to the Owner on the relevant Regular Record Year Amount Interest Rate Date solely by virtue of such Owner having been such Owner, and such Defaulted Interest will be paid by the Trustee to the Owner in whose name the Bond is registered at the close of business on a Special Record Date as described below. The Trustee will make payment of any Defaulted Interest on the Bonds to the Persons in whose names such Bonds are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest, which will be fixed in the following manner. When the Trustee holds an amount of money equal to the proposed payment of Defaulted Interest, the Trustee will fix a Special Record Date for the

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payment of such Defaulted Interest which will be not more than fifteen nor less than ten days Whenever any Bond or Bonds shall be surrendered for transfer, the Authority shall prior to the date of the proposed payment. The Trustee will promptly notify the Authority of execute and the Trustee shall authenticate and deliver a new Bond or Bonds for a like aggregate such Special Record Date and, in the name and at the expense of the Authority, such expense to principal amount, interest rate and maturity date. The Trustee shall require the Bondholder be paid solely from amounts held under this Bond Indenture, will cause notice of the date and requesting such transfer to pay any tax or other governmental charge required to be paid with amount of the proposed payment of such Defaulted Interest and the Special Record Date therefor respect to such transfer, and may in addition require the payment of a reasonable sum to cover to be mailed, first class postage prepaid, not less than fifteen days preceding such Special Record expenses incurred by the Authority or the Trustee in connection with such transfer. No transfer Date, to each Owner at his address as it appears in the registration books maintained by the of any Bond shall be valid unless made in accordance with such requirements and similarly Trustee at the close of business on the fifth day preceding the date of mailing. Notice of the noted by endorsement of the Trustee on such Bond or unless, at the expense of the Registered proposed payment of such Defaulted Interest and the Special Record Date therefor having been Owner of the Bond, the Authority shall execute, and the Trustee shall authenticate and deliver, a mailed as aforesaid, such Defaulted Interest will be paid to the Persons in whose names the new Bond or Bonds registered in the name of the transferee. Bonds are registered on such Special Record Date. The Trustee shall not be required to transfer any Bond (a) during the period beginning SECTION 2.03. Execution of Bonds. The Bonds shall be executed in the name and fifteen days before the mailing of notice of redemption calling the Bond or any portion of the on behalf of the Authority with the manual or facsimile signature of its Chairman or Vice Bond for redemption and ending on the redemption date or (b) selected for redemption. Chairman and attested by the manual or facsimile signature of its Secretary or Assistant Secretary, and the seal of the Authority will be impressed or imprinted on the Bonds by facsimile SECTION 2.07. Exchange of Bonds. Bonds may be exchanged at the Designated or otherwise. The Bonds shall then be delivered to the Trustee for authentication by it. In case Corporate Trust Office of the Trustee for a like aggregate principal amount of Bonds of other any of the officers who shall have signed or attested any of the Bonds shall cease to be such Authorized Denominations in accordance with the requirements of Section 2.02 hereof. The officer or officers of the Authority before the Bonds so signed or attested shall have been Trustee shall require the Bondholder requesting such exchange to pay any tax or other authenticated or delivered by the Trustee or issued by the Authority, such Bonds may governmental charge required to be paid with respect to such exchange, and may in addition nevertheless be authenticated, delivered and issued and, upon such authentication, delivery and require the payment of a reasonable sum to cover expenses incurred by the Authority or the issue, shall be as binding upon the Authority as though those who signed and attested the same Trustee in connection with such exchange. D-12 had continued to be such officers of the Authority. SECTION 2.08. Bond Registrar. The Trustee is hereby appointed the Bond SECTION 2.04. Authentication. No Bond shall be valid or obligatory for any Registrar of the Authority. The Trustee will keep or cause to be kept sufficient books for the purpose or entitled to any security or benefit under this Bond Indenture unless and until a registration and transfer of the Bonds, which shall at all times be open to inspection during certificate of authentication on such Bond, substantially in the form set forth in Exhibit A regular business hours by the Authority and the Obligor; and, upon presentation for such attached hereto, shall have been duly executed by the Trustee and such executed certificate of purpose, the Trustee shall, under such reasonable regulations as it may prescribe, register or authentication upon any such Bond shall be conclusive evidence that such Bond has been transfer or cause to be registered or transferred, on its books, Bonds as hereinbefore provided. authenticated and delivered under this Bond Indenture. The certificate of authentication on any Bond shall be deemed to have been executed by the Trustee if signed by an authorized signatory SECTION 2.09. Temporary Bonds. The Bonds may be issued in temporary form of the Trustee but it shall not be necessary that the same signatory execute the certificate of exchangeable for definitive Bonds when ready for delivery. Any temporary Bond may be authentication on all of the Bonds. printed, lithographed or typewritten, shall be of such denomination as may be determined by the Authority, shall be in fully registered form without coupons and may contain such reference to SECTION 2.05. Form of Bonds. The Bonds and the certificate of authentication to any of the provisions of this Bond Indenture as may be appropriate. Every temporary Bond shall be endorsed thereon are to be substantially in the form set forth in Exhibit A, attached hereto, be executed by the Authority and be authenticated by the Trustee upon the same conditions and with appropriate variations, omissions and insertions as permitted or required by this Bond in substantially the same manner as the definitive Bonds. If the Authority issues temporary Indenture and applicable law. Bonds it will execute and deliver definitive Bonds as promptly thereafter as practicable, and thereupon the temporary Bonds may be surrendered for cancellation, in exchange therefor at the SECTION 2.06. Transfer of Bonds. Subject to the provisions of Section 2.14 Designated Corporate Trust Office of the Trustee and the Trustee shall authenticate and deliver hereof, any Bond may be transferred in accordance with its terms upon the books required to be in exchange for such temporary Bonds an equal aggregate principal amount of definitive Bonds kept pursuant to the provisions of Section 2.08 hereof. Such transfer shall be made by the person of authorized denominations. Until so exchanged, the temporary Bonds shall be entitled to the in whose name it is registered, in person or by his duly authorized attorney, upon surrender of same benefits under this Bond Indenture as definitive Bonds authenticated and delivered such registered Bond for cancellation, accompanied by delivery of a written instrument of hereunder. transfer, duly executed in a form approved by the Trustee. SECTION 2.10. Bond Mutilated, Lost, Destroyed or Stolen. If any Bond shall become mutilated, the Authority, at the expense of the Holder of said Bond, shall execute and the

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Trustee shall thereupon authenticate and deliver, a new Bond of like tenor and number in shall be registered in the name of the Securities Depository or its nominee provided that if the exchange and substitution for the Bond so mutilated, but only upon surrender to the Trustee of Securities Depository shall request that the Bond be registered in the name of a different the Bond so mutilated. Every mutilated Bond so surrendered to the Trustee shall be cancelled by nominee, the Bond Registrar shall exchange all or any portion of the Bond for an equal aggregate it and delivered to, or upon the order of, the Authority. If any Bond shall be lost, destroyed or principal amount of Bonds registered in the name of such nominee or nominees of the Securities stolen, evidence of such loss, destruction or theft may be submitted to the Authority and the Depository. No Person other than the Securities Depository or its nominee shall be entitled to Trustee and, if such evidence be satisfactory to both and indemnity satisfactory to them both receive from the Authority or the Trustee either a Bond or any other evidence of ownership of shall be given, the Authority, at the expense of the Holder, shall execute, and the Trustee shall the Bonds, or any right to receive any payment in respect thereof unless the Securities thereupon authenticate and deliver, a new Bond of like tenor and number in lieu of and in Depository or its nominee shall transfer record ownership of all or any portion of the Bonds, in substitution for the Bond so lost, destroyed or stolen (or if any such Bond shall have matured or connection with discontinuing the Book-Entry System as provided in this Section 2.14. shall be about to mature, instead of issuing a substitute Bond, the Trustee may pay the same without surrender thereof). The Authority may require payment by the Holder of a sum not (b) So long as the Book-Entry System is in effect, the Trustee and the Bond exceeding the actual cost of preparing each new Bond issued under this Section and of the Registrar shall comply with the terms of any agreement with the Securities Depositary, and expenses which may be incurred by the Authority and the Trustee in connection therewith. Any notwithstanding anything in this Indenture to the contrary, such agreement shall govern with Bond issued under the provisions of this Section in lieu of any Bond alleged to be lost, destroyed respect to notices, consents, voting, payment, and delivery of Bonds. or stolen shall constitute an original additional contractual obligation on the part of the Authority whether or not the Bond so alleged to be lost, destroyed or stolen be at any time enforceable by (c) The Book-Entry System may be terminated upon the happening of any of anyone, and shall be entitled to the benefits of this Bond Indenture with all other Bonds secured the following: by this Bond Indenture. (i) The Securities Depository or the Authority, based upon SECTION 2.11. Cancellation and Destruction of Surrendered Bonds. All Bonds advice from the Securities Depository, advises the Trustee and the Bond Registrar in surrendered for payment or redemption and all Bonds purchased with moneys available for that writing that the Securities Depository is no longer willing or able to properly discharge its purpose in any funds established under this Bond Indenture, shall, at the time of such payment or responsibilities under any agreement(s) with the Authority and the Trustee, and the D-13 redemption, be cancelled and destroyed by the Trustee. The Trustee shall deliver to the Obligor is unable to locate a qualified successor Securities Depository satisfactory to the Authority certificates of destruction with respect to all Bonds destroyed in accordance with this Trustee, the Authority and the Obligor; Section. (ii) The Authority, or the Authority at the request of the SECTION 2.12. Acts of Bondholders; Evidence of Ownership. Any action to be Obligor may elect to terminate the Book-Entry System by written notice to the Securities taken by Bondholders may be evidenced by one or more concurrent written instruments of Depository, the Obligor and the Trustee; or similar tenor signed or executed by such Bondholders in person or by agents appointed in writing. The fact and date of the execution by any person of any such instrument may be proved (iii) After the occurrence of an Event of Default, the Beneficial by acknowledgment before a notary public or other officer empowered to take Owners of a majority in aggregate Outstanding principal amount of the Bonds, through acknowledgements or by an affidavit of a witness to such execution. Any action by the Holder the Participants and the Securities Depository, may elect to discontinue the Book-Entry of any Bond shall bind all future Holders of the same Bond in respect of anything done or System and so advise the Trustee, the Authority, the Obligor and the Securities suffered by the Authority or the Trustee in pursuance thereof. Depository in writing.

SECTION 2.13. CUSIP Number. The Authority, for the convenience of the Upon the occurrence of any event hereinabove described, the Trustee shall notify registered Owners of the Bonds, may cause CUSIP (Committee on Uniform Security the Securities Depository of the occurrence of such event and of the availability of definitive or Identification Procedures) numbers to be printed on such Bonds. No representation shall be temporary certificated Bonds to Beneficial Owners, in an aggregate Outstanding principal made as to the correctness or accuracy of such numbers, either as printed on such Bonds or as amount representing the ownership interest of each such Beneficial Owner, making such contained in any notice of redemption, and the Authority shall have no liability of any sort with adjustments and allowances as it may find necessary or appropriate as to accrued interest and respect thereto. No reliance with respect to any redemption notices with respect to any Bond previous payments of principal or redemption price. Definitive certificated Bonds shall be issued may be placed on the identification number printed thereon. only upon surrender to the Trustee of the Bond held by the Securities Depository, accompanied by registration instructions for the definitive certificated Bonds. Neither the Authority, the SECTION 2.14. Book-Entry-Only System for the Bonds. Trustee nor the Bond Registrar shall be liable for any delay in delivery of such instructions and may conclusively rely on, and shall be protected in relying on, such instructions. Upon issuance (a) The Bonds shall initially be issued in the form of one typewritten fully of definitive certificated Bonds, all references herein to obligations imposed upon or to be registered Bond for the aggregate principal amount of the Bonds of each maturity, which Bond performed by the Securities Depository shall be deemed to be imposed upon and performed by

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the Trustee and the Bond Registrar, to the extent applicable with respect to such definitive ARTICLE III certificated Bonds. ISSUANCE OF BONDS; APPLICATION OF PROCEEDS (d) Except for payment of principal at maturity, any provision of this Indenture permitting or requiring the delivery of Bonds shall, while the Book-Entry System is in SECTION 3.01. Issuance of the Bonds. On the Issue Date, the Authority will effect, be satisfied by the notation on the books of the Securities Depository or a Participant of execute and the Trustee shall authenticate and, upon request of the Authority, deliver the Bonds the transfer of the Beneficial Owner’s interest in such Bond. in the aggregate principal amount of $______.

(e) Neither the Authority, the Trustee, the Bond Registrar, or the Obligor will SECTION 3.02. Validity of Bonds. The validity of the authorization and issuance have any responsibility or obligation to Participants, to indirect Participants or to any Beneficial of the Bonds is not dependent on and shall not be affected in any way by any proceedings taken Owner with respect to (i) the accuracy of any records maintained by the Securities Depository, by the Authority or the Trustee with respect to or in connection with the Loan Agreement. any Participant, or any indirect Participant; (ii) the payment by the Securities Depository, any Participant or indirect Participant of any amount with respect to the principal of, or premium, if SECTION 3.03. Disposition of Proceeds of the Bonds and Other Amounts. any, or interest on the Bonds; (iii) any notice which is permitted or required to be given by Beneficial Owners under this Indenture; (iv) the selection by the Securities Depository or any (a) The Authority shall deposit or cause to be deposited with the Trustee direct or indirect Participant of any Person to receive payment in the event of a partial immediately upon receipt thereof the net proceeds derived from the sale of the Bonds for transfer redemption of the Bonds, or (v) any consent given or other action taken by the Securities or deposit as follows: Depository as Bondholder. (i) Transfer to ______the amount of $______, as (f) Payments by the Participants or indirect Participants to Beneficial Owners payment in full of the Series 2007 Bonds. will be governed by standing instructions and customary practices, as is now the case with municipal securities held for the accounts of customers in bearer form or registered in “street (ii) Deposit into the Costs of Issuance Fund the amount of $______.

D-14 name,” and will be the responsibility of such Participant or indirect Participant and not of the Securities Depository, the Trustee or the Authority, subject to any statutory and regulatory (iii) Deposit into the Project Fund the amount of $______. requirements as may be in effect from time to time. (b) The Obligor shall deposit or cause to be deposited with the Trustee from [End of Article II] proceeds of the Subordinated Guardian Loan (as defined in the Master Trustee Indenture) an amount equal to $______for transfer or deposit as follows:

(i) Deposit into Debt Service Reserve Fund the amount of $______.

(c) The Obligor shall deposit or cause to be deposited with the Trustee from its own funds an amount equal to $______for transfer or deposit as follows:

(i) Deposit into Costs of Issuance Fund the amount of $______.

(ii) Deposit into the Capitalized Interest Account of the Project Fund the amount of $______.

(iii) Deposit into the Equity Account of the Project Fund the amount of $______.

[End of Article III]

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Bonds Maturing December 1, 20__ ARTICLE IV December 1 of the Year Principal Amount REDEMPTION OF BONDS BEFORE MATURITY

SECTION 4.01. Extraordinary, Excess Proceeds and Mandatory Redemption.

(a) Extraordinary Optional Redemption. The Bonds are callable for redemption in the event (i) the Facilities or any portion thereof is damaged or destroyed or taken * At maturity in a condemnation proceeding as provided in Sections 4.12 and 4.13 of the Master Trust Indenture and the Obligor is under no obligation to repair or rebuild the Facilities under the Bonds Maturing December 1, 20__ Master Trust Indenture or (ii) the Obligor shall exercise its option to cause the Bonds to be redeemed as provided in Section 4.04 of the Loan Agreement. If called for redemption at any December 1 of the Year Principal Amount time pursuant to this Section 4.01(a), the Bonds shall be subject to redemption by the Authority on any date, in whole or in part, at a redemption price equal to 100% of the principal amount thereof being redeemed, plus accrued interest to the redemption date.

(b) Optional Excess Proceeds Redemption. The Bonds are callable for redemption, at the option of the Obligor on behalf of the Issuer, at the written direction of the * At maturity Authorized Obligor Representative addressed to the Trustee, from amounts remaining in the Project Fund upon completion of the Project and achievement of Stable Occupancy (as defined Bonds Maturing December 1, 20__ in the Master Trust Indenture), in an amount not to exceed $500,000, at a redemption price equal D-15 to 100% of the principal amount thereof being redeemed, plus accrued interest to the redemption December 1 of the Year Principal Amount date.

(c) Mandatory Redemption upon Determination of Taxability. The Bonds are subject to mandatory redemption in whole at a redemption price equal to : (i) 105% of the

principal amount redeemed plus accrued interest to, but not including, the date of redemption to the extent that such Determination of Taxability resulted from the action or inaction of the * At maturity Obligor or (ii) 100% of the principal amount redeemed plus accrued interest to, but not including, the date of redemption to the extent that such Determination of Taxability did not result from the action or inaction of the Obligor, on any Business Day within forty-five days The Authority will be entitled to receive a credit in respect of its mandatory redemption after the occurrence of a Determination of Taxability; provided, however, if, in the opinion of obligation under this Section 4.01(c) for Bonds delivered, purchased or redeemed, as hereinafter Bond Counsel, a mandatory redemption on account of a Determination of Taxability of less than provided, if the Obligor at its option purchases in the open market and delivers to the Trustee for all of the Bonds would result in the interest on the Bonds Outstanding following such mandatory cancellation Bonds of the same series or redeems Bonds of the same maturity (other than through redemption not being includable in the gross income of the holders of such Outstanding Bonds, mandatory redemption under this Section 4.01(c)) and such Bonds have not theretofore been then the Bonds are subject to mandatory redemption upon the occurrence of a Determination of applied as a credit against any mandatory redemption obligation. Each such Bond so purchased Taxability in the amount specified in such Opinion, provided that such redemption must be in an or redeemed will be credited by the Trustee at 100% of the principal amount thereof to the Authorized Denomination. obligation of the Authority on such mandatory redemption date, and any excess will be credited to future mandatory redemption obligations in inverse order of maturity, unless the Authorized (d) Mandatory Sinking Fund Redemption. As and for the retirement of the Obligor Representative directs the Trustee otherwise, and the principal amount of such Bonds to Bonds, the Basic Payments specified in Section 4.01(a) of the Loan Agreement which are to be be redeemed by operation of mandatory redemption and the Basic Payments specified in Section deposited in the Bond Fund will include an amount sufficient to redeem in part, by lot (after 4.01 of the Loan Agreement for mandatory redemption will be accordingly reduced. credit as provided below), the following principal amounts (which include the principal amount which will be outstanding on the date of maturity) of such Bonds at one hundred percent (100%) SECTION 4.02. Optional Redemption. The Series 2017 Bonds maturing on and of the principal amount thereof plus accrued interest to the redemption date on the following after December 1, 20__ are subject to optional redemption prior to maturity by the Issuer at the redemption dates (each, a “Mandatory Sinking Fund Payment Date”): written direction of the Obligor in whole or in part on December 1, 20__ or on any date

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thereafter at the redemption prices set forth in the table below, together with accrued and unpaid SECTION 4.06. Partial Redemption of Bonds. (a) If less than all the Bonds are to interest to the redemption date. be redeemed except in accordance with Section 4.01(c) hereof, the particular maturities of Bonds or portions thereof to be redeemed shall be as directed in writing by the Authorized Obligor Redemption Price Representative and, if less than all of the Bonds of a maturity are to be redeemed, and in the case Redemption Dates (% of principal amount to be redeemed) of mandatory redemption pursuant to Section 4.01(c) thereof, the particular Bonds or portions thereof to be redeemed within a maturity will be selected by DTC or any successor depository in accordance with its procedures or, if the book-entry system is discontinued, by lot in such manner as the Trustee shall determine. If the Trustee receives no such direction from the Obligor, Bonds shall be redeemed in inverse order of maturity and if less than all of the Bonds of a maturity are to be redeemed, the particular Bonds or portions thereof within a maturity to be redeemed shall be selected by DTC or any successor depository in accordance with its

procedures or, if the book-entry system is discontinued, by lot in such manner as the Trustee SECTION 4.03. Notice of Redemption. Notice of the call for redemption, shall determine. identifying the Bonds or portions thereof to be redeemed and the redemption price (including the (b) Upon surrender of any Bond for redemption in part only, the Authority premium, if any), shall be given by the Trustee by mailing a copy of the redemption notice by shall execute and the Trustee shall authenticate and deliver to the Owner thereof a new Bond or first class mail at least (i) ten days prior to the date fixed for a mandatory redemption pursuant to Bonds of authorized denominations, in an aggregate principal amount equal to the unredeemed Section 4.01(b) hereof, and (ii) thirty days but not more than sixty days prior to the date fixed for portion of the Bond surrendered. redemption in all other instances to the Owner of each Bond to be redeemed in whole or in part at the address shown on the registration books. Such notice shall contain such matters specified (c) In case a Bond is of a denomination larger than $25,000, a portion of such in the Bonds for the redemption thereof and shall state that such redemption is conditional upon Bond may be redeemed, but Bonds shall be redeemed only if the remaining unredeemed portion the receipt of monies by the Trustee for such purpose on or prior to the redemption date. Any of such Bond is in an Authorized Denomination.

D-16 notice mailed as provided in this Section shall be conclusively presumed to have been duly given, whether or not the Owner receives the notice. The Trustee shall deliver a copy of any SECTION 4.07. Payment upon Redemption. On or prior to each redemption date, such redemption notice to the Obligor and to the Municipal Securities Rulemaking Board the Trustee will make provision for the payment of the Bonds to be redeemed on such date by (“MSRB”) through its the Electronic Municipal Market Access system (“EMMA”) as provided setting aside and holding in trust an amount of available funds from the Bond Fund sufficient to at http://www.emma.msrb.org, or any similar system that is acceptable to or as may be pay (a) the principal of and interest on such Bonds, and (b) the premium, if any, on such Bonds. prescribed by the MSRB (or, if such system is no longer in existence, to such other information Upon presentation and surrender of any such Bond at the Designated Corporate Trust Office of service of national recognition that disseminates redemption information as is specified in the Trustee on or after the date fixed for redemption, if the Book-Entry System is no longer being writing by the Obligor to the Trustee). maintained with the Depository, the Trustee will pay the principal of, premium, if any, and interest on such Bond from the moneys set aside for such purpose. SECTION 4.04. Effect of Redemption. Upon the giving of notice at the required times on or prior to the date fixed for redemption, as provided in this Article, the Bonds or SECTION 4.08. Purchase of Bonds. At the written direction of the Authorized portion thereof designated for redemption will become and be due and payable on the date fixed Obligor Representative, the Trustee will apply moneys in the Bond Fund held for redemption or for redemption at the redemption price provided for herein, provided immediately available payment of Bonds, in excess of any amount set aside for payment of Bonds theretofore matured funds for their redemption are on deposit at the place of payment at that time, and, unless the or called for redemption and unpaid interest in all cases where such Bonds have not been Authority defaults in the payment of the principal thereof, premium, if any, and interest thereon, presented for payment, to the purchase of Outstanding Bonds subject to redemption or payment such Bonds or portion thereof will cease to bear interest from and after the date fixed for from such moneys owned or purchased by the Obligor and presented to the Trustee for payment redemption, whether or not such Bonds are presented and surrendered for payment on such date. as herein provided, and upon such purchase such Bonds will be canceled and the amount of such If any Bond or portion thereof called for redemption is not so paid upon presentation and redemption or principal payment will thereupon be reduced by the principal amount of such surrender thereof for redemption, such Bond or portion thereof will continue to bear interest at Bonds so purchased and canceled, provided that no credit will be given for such Bonds so the rate set forth therein until paid or until due provision is made for the payment of the same. purchased within the forty-five days next preceding the redemption or payment date. Subject to the above limitations, the Trustee will, if directed by the Authorized Obligor Representative in SECTION 4.05. Cancellation. Bonds which have been redeemed shall not be writing, purchase Bonds on the open market for cancellation at such times, for such prices (not to reissued but shall be cancelled and destroyed by the Trustee in accordance with Section 2.11 exceed the redemption price to redeem such Bonds pursuant to Section 4.02 hereof), in such hereof. amounts and in such manner as so directed by the Authorized Obligor Representative and as may

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be possible with the amount of money available in the Bond Fund. The expenses of such ARTICLE V purchase will be deemed an Ordinary Expense of the Trustee. REVENUES AND FUNDS [End of Article IV] SECTION 5.01. Creation of the Bond Fund. There is hereby created and established with the Trustee a trust fund to be designated “Bond Fund.” Upon receipt of moneys pursuant to Section 5.02 hereof, the Trustee shall deposit such moneys into the Bond Fund, which amounts shall be used to pay when due the principal of, premium, if any, and interest on the Bonds.

SECTION 5.02. Payments into the Bond Fund. There shall be deposited into the Bond Fund from time to time the following:

(a) any amount deposited in accordance with the provisions of Section 5.04 hereof;

(b) all payments specified in Sections 3.03 and 4.01 of the Loan Agreement (other than amounts paid for the Trustee's or the Authority’s own account);

(c) all moneys transferred from the Capitalized Interest Account of the Project Fund pursuant to Section 5.06 hereof, from the Project Fund pursuant to Section 5.07 or 5.08 hereof from the Debt Service Reserve Fund pursuant to Section 5.13 hereof; and D-17 (d) all other moneys received by the Trustee under and pursuant to any of the provisions of the Loan Agreement which are required to be or which are accompanied by directions that such moneys are to be paid into the Bond Fund.

SECTION 5.03. Use of Moneys in the Bond Fund. Moneys in the Bond Fund shall be used solely for the payment of the principal of, premium, if any, and interest on the Bonds, for the redemption of the Bonds prior to maturity and for payment of Bonds upon acceleration as contemplated by Section 7.02 hereof.

SECTION 5.04. Costs of Issuance Fund. There is hereby created and established with the Trustee a trust fund to be designated “Costs of Issuance Fund” which shall be expended for purposes of paying the costs of issuance and of the Bonds. Moneys in the Costs of Issuance Fund will be disbursed to pay costs of issuance other expenses in respect of the Bonds upon receipt of a closing statement delivered by the Authority at the time of issuance of the Bonds or a requisition for payment substantially in the form attached hereto as Exhibit B executed by the Authorized Obligor Representative, and the Trustee is hereby authorized and directed to issue its checks or initiate wire transfers for each disbursement upon receipt of such a direction or requisition. If any funds remain in the Costs of Issuance Fund after the earlier of (i) receipt of a Certificate of the Authorized Obligor Representative stating that all costs of issuance in respect of the Bonds have been paid or (ii) six months from the Issue Date, the Trustee will transfer such remaining funds to the Bond Fund.

The Trustee will keep and maintain adequate records pertaining to the Costs of Issuance Fund and all disbursements therefrom, and after all amounts are disbursed from the Costs of

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Issuance Fund, if requested by an Authority Officer or the Authorized Obligor Representative, SECTION 5.09. Nonpresentment of Bonds. In the event any Bond shall not be the Trustee will file an accounting thereof with the Authority and the Obligor. presented for payment when the principal thereof becomes due, either at maturity, or at the date fixed for redemption thereof, or otherwise, all liability of the Authority to the owner thereof for SECTION 5.05. Project Fund. There is hereby created and established with the the payment of such Bond shall forthwith cease, determine and be completely discharged, and Trustee a trust fund to be designated “Project Fund,” which shall be expended in accordance with thereupon it shall be the duty of the Trustee to hold such funds uninvested, without liability for the provisions hereof and of the Loan Agreement, particularly Section 3.03 of the Loan interest thereon, for the benefit of the owner of such Bond who shall thereafter be restricted Agreement. There is hereby created and established with the Trustee (i) an account in the exclusively to such funds for any claim of whatever nature on his part under this Bond Indenture Project Fund, which shall be designated as the Capitalized Interest Account and (ii) an account in with respect to such Bond. the Project Fund, which shall be designated as the Equity Account. The Project Fund shall consist of funds deposited therein, from time to time, pursuant to the provisions hereof, for Any moneys so deposited with and held by the Trustee not so applied to the payment of purposes of paying Costs of the Project. Bonds within two years after the date on which the same shall have become due shall be repaid by the Trustee to the Obligor upon written direction of an Authorized Obligor Representative, SECTION 5.06. Payments into the Project Fund; Disbursements. The Project Fund and thereafter owners of Bonds shall be entitled to look only to the Obligor for payment, and shall initially consist of those moneys deposited therein pursuant to Section 3.03 hereof. then to the extent of the amount so repaid, and all liability of the Trustee with respect to such Proceeds of the Bonds deposited in the Project Fund shall be applied to pay Costs of the Project. money shall thereupon cease, and the Obligor shall not be liable for any interest thereon and The Trustee is hereby authorized and directed to make disbursements from the Project Fund shall not be regarded as a trustee of such money. upon the receipt of a requisition in the form of Exhibit B hereto signed by the Obligor. Disbursements for Costs of the Project shall be made first from the Project Fund and then from SECTION 5.10. Moneys to be Held in Trust. All moneys required to be deposited the Equity Account. The final disbursement requisition shall include a Certificate of Completion with or paid to the Trustee for the account of any fund or account referred to in any provision of in the form attached hereto as Exhibit C. In the event there are insufficient moneys in the Bond this Bond Indenture or the Loan Agreement shall be held by the Trustee in trust, and (except for Fund to pay interest on the Bonds when due, the Trustee shall transfer moneys, if any, in the the moneys from time to time required to be deposited and maintained in the Rebate Fund) shall, Capitalized Interest Account of the Project Fund to the Bond Fund to pay such interest when due. while held by the Trustee, constitute part of the Trust Estate and be subject to the lien and D-18 The Trustee shall keep and maintain adequate records pertaining to the Project Fund (including security interest created hereby. the Equity Account) and all disbursements therefrom, including records of all requisitions made pursuant to the Loan Agreement, and the Trustee shall, upon request of the Obligor, furnish SECTION 5.11. Repayment to the Obligor from the Bond Fund, the Rebate Fund or statements in the form customarily prepared by the Trustee. The Trustee shall hold all moneys the Project Fund. Any amounts remaining in the Bond Fund, the Project Fund, the Rebate Fund and investments from time to time on deposit in the Project Fund for the benefit of the Owners. or any other fund or account created hereunder after payment in full of the principal of, premium, if any, and interest on the Bonds, the fees, charges and expenses of the Trustee and all other SECTION 5.07. Use of Money in the Project Fund Upon Default. If the principal amounts required to be paid hereunder, including payment to the United States of America of the of the Bonds shall have become due and payable pursuant to Article VII hereof, any balance final installment of the rebate amount, if any, pursuant to Section 5.12 hereof, shall be paid as remaining in the Project Fund shall, without further authorization, be transferred into the Bond soon as possible to the Obligor. Fund. SECTION 5.12. Rebate Fund. (a) The Trustee shall establish and maintain a fund SECTION 5.08. Use of Money in the Project Fund Upon Completion of the Project. separate from any other fund established and maintained hereunder designated as the Rebate The completion of the Project and payment or provision for payment of all Costs of the Project Fund. Notwithstanding anything contained herein or in any of the other Bond Documents, the shall be evidenced by the filing with the Trustee of the Certificate contained as Exhibit C hereto Rebate Fund shall be held for the benefit of the United States of America and not for the benefit and required by Section 3.04 of the Loan Agreement. As soon as practicable and in any event of the Holders of the Bonds, which Holders shall have no rights in or to such fund. not more than sixty days from the date of receipt by the Trustee of such certificate, (i) any balance remaining in the Project Fund representing proceeds of the Bonds (except amounts the (b) Subject to subsection (c) of this Section 5.12, as of the last day of each Obligor shall have directed the Trustee to retain or set aside for any Cost of the Project not then fifth Bond Year (the “Rebate Computation Date”), the Obligor, on behalf of the Authority, shall due and payable or which are being contested) shall without further authorization be transferred calculate or cause to be calculated the amount required to be paid to the United States of into the Bond Fund and used to pay interest on the Bonds unless the Obligor has directed the America (the “Rebatable Arbitrage”) pursuant to Section 148 of the Code. On or before the Trustee in writing to apply such funds to a redemption of Bonds in accordance with Section sixtieth day after such date, the Trustee at the direction of, and upon the receipt of funds from, 4.01(b) hereof, and (ii) any balance remaining in the Equity Account (except amounts the the Obligor shall deposit in the Rebate Fund the amount, if any, needed to increase the amount in Obligor shall have directed the Trustee to retain or set aside for any Cost of the Project not then such Fund to an amount equal to ninety percent of the Rebatable Arbitrage for the period from due and payable or which are being contested) shall be returned to the Obligor or applied as the date of issuance of the Bonds to the Rebate Computation Date at issue, or shall transfer from otherwise directed by the Obligor.

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the Rebate Fund to the Bond Fund the amount, if any, needed to reduce the amount in the Rebate SECTION 5.13. Debt Service Reserve Fund. There is hereby created a special fund Fund to ninety percent of the amount of the Rebatable Arbitrage for such period. to be known as the Debt Service Reserve Fund which shall be held in trust by the Trustee until applied as hereinafter directed. The Debt Service Reserve Fund shall be funded at closing in an Subject to subsection (c) of this Section 5.12, as of the last day on which the last Bond amount equal to the Debt Service Reserve Requirement. The Trustee will deposit in the Debt remaining Outstanding is retired (the “Final Computation Date”), the Obligor, on behalf of the Service Reserve Fund any moneys paid to the Trustee under the Loan Agreement or this Bond Authority, shall calculate, or cause to be calculated, the amount required to be paid to the United Indenture for credit or transfer to the Debt Service Reserve Fund. If the Obligor has exercised its States of America pursuant to Section 148 of the Code on or before the sixtieth day after such option or is obligated to prepay the Loan in whole, all of the moneys then in the Debt Service date, the Trustee, at the direction of, and upon the receipt of funds from, the Obligor, shall Reserve Fund will be deposited in the Bond Fund. deposit in the Rebate Fund the amount, if any, needed to increase the amount in such Fund to an amount equal to the Rebatable Arbitrage for the period from the date of issuance of the Bonds to The Authority hereby authorizes and directs the Trustee to withdraw funds from the Debt the Final Computation Date, or shall transfer from the Rebate Fund to the Bond Fund the Service Reserve Fund to pay, first, all installments of interest then due on the Bonds, and then all amount, if any, needed to reduce the amount in the Rebate Fund to the amount of the Rebatable principal of and premium, if any, then due on the Bonds if there should be insufficient funds for Arbitrage for such period. such purposes in the Bond Fund and in the Capitalized Interest Account of the Project Fund on the date such interest, principal, and premium is due. The Trustee will give written notice to the After making any transfer required for a Rebate Computation Date and the Final Authority and the Underwriter of any withdrawal from the Debt Service Reserve Fund. Computation Date, the Authority shall immediately pay or cause to be paid to the United States of America the amount in the Rebate Fund. The amounts in the Rebate Fund shall not be subject When the amount of principal of, premium, if any, and interest on the Outstanding Bonds to the claim of any party, including any Bondholder, and shall not be paid to any party other than is equal to or less than the sum of the balance of the Bond Fund and the balance of the Debt the United States. Service Reserve Fund, and if all amounts owed under the Loan Agreement and this Bond Indenture have been paid, moneys held in the Debt Service Reserve Fund will be deposited by All amounts in the Rebate Fund shall be used and withdrawn by the Authority or the the Trustee in the Bond Fund and credited against payments of Payments required under Section Trustee solely for the purposes set forth in this Section. In the event the amount in the Rebate 4.01 of the Loan Agreement.

D-19 Fund is for any reason insufficient to pay to the United States of America the amounts due as calculated in this Section, the Obligor or the Trustee at the direction of, and upon the receipt of SECTION 5.14. Investment of Moneys in Funds. Subject to Article XI hereof, any funds from, the Obligor, shall deposit in the Rebate Fund the amount for such deficiency. moneys held as part of any fund or account under this Bond Indenture, reserves in connection with contested liens or other special trust funds created under this Bond Indenture or other (c) Notwithstanding the provisions of this Section 5.12, the Obligor, on behalf accounts or funds held by the Trustee, to the extent permitted by law, will be invested and of the Authority, hereby agrees to calculate the amount to be deposited in the Rebate Fund and reinvested by the Trustee in Permitted Investments in accordance with the written direction of the amount to be rebated to the United States of America pursuant to Section 148(f) of the Code. the Authorized Obligor Representative. Any such investments will be held by or under the Such calculation shall give regard to all regulations applicable to such Section 148(f) including control of the Trustee and will be deemed at all times a part of the respective fund or account, any temporary regulations heretofore or hereafter released. and the interest accruing thereon and any profit realized from such investments will be credited as set forth in Section 5.15 of this Bond Indenture, and any loss resulting from such investments (d) The Trustee shall not be liable for any damages, costs or liabilities will be charged to such fund or account. The Trustee is directed to sell and reduce to cash a resulting from the performance of the Trustee's duties and obligations under this Section 5.12, sufficient amount of such investments whenever the cash balance in any fund or account is except that the Trustee shall be liable for its gross negligence or willful misconduct. The Obligor insufficient for the uses prescribed for moneys held in such fund or account. The Trustee may shall indemnify and hold harmless the Trustee from and against any liabilities which the Trustee transfer investments from any fund or account to any other fund or account in lieu of cash when may incur in the exercise and performance of its duties and obligations under Section 5.12 required or permitted by the provisions of this Bond Indenture. The Trustee will value the hereof, excepting only those damages, costs, expenses or liabilities caused by the Trustee's gross investments held in the Debt Service Reserve Fund as of the close of business on May 31 and negligence or willful misconduct. In making any deposit or transfer to or payment from the November 30 in each year. In computing the assets of any fund or account, investments and Rebate Fund, the Trustee shall be entitled to rely solely on the written instructions of the Obligor accrued interest thereon will be deemed a part thereof. Such investments will be valued at their and shall have no duty to examine such written instruments to determine the accuracy of the fair market value. The Trustee will not be liable for any depreciation in the value of any Obligor's calculation of the amounts to be paid to the United States. In the event that the Obligor obligations in which moneys of funds or accounts will be invested, as aforesaid, or for any loss or the Authority shall not comply with their respective obligations under Section 5.12 of this arising from any such investment. Such investments will be made only as follows: Bond Indenture, the Trustee shall have no obligation to cause compliance on their respective behalf. (i) moneys in the Cost of Issuance Fund, the Project Fund and any other accounts or funds other than the Bond Fund or the Debt Service Reserve Fund only in obligations maturing or redeemable at the option of the holder in

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such amounts and on such dates as may be necessary to provide moneys to meet is determined to be in excess of the Debt Service Reserve Requirement, then the amount of such the payments from each such respective fund, excess will be deposited in the Bond Fund;

(ii) moneys in the Bond Fund only in obligations maturing or (d) interest and profits from the investment of moneys in the Project Fund will redeemable at the option of the holder not later than the next succeeding principal be retained in the Project Fund; payment date, mandatory redemption date or Interest Payment Date of the Bonds, and (e) interest and profits from the investment of moneys in the Rebate Fund will be retained in the Rebate Fund; and (iii) moneys in the Debt Service Reserve Fund only in (a) obligations that can be promptly converted to cash and (b) in the case of marketable (f) interest and profits from the investment of moneys in any other funds will, securities, obligations maturing or redeemable at the option of the holder not later at the written direction of the Authorized Obligor Representative, be retained in the respective than twenty-four (24) months from the date of purchase. funds or deposited in the Bond Fund.

The Authority (to the extent it exercises control or direction) covenants that none of the SECTION 5.16. Trustee’s Own Bond or Investment Department. moneys held under this Bond Indenture will knowingly be used in any manner which will cause any Bonds to become arbitrage bonds within the meaning of Section 148 of the Code and any The Trustee may make any and all investments permitted under Section 5.14 hereof regulations proposed or promulgated in connection therewith or to become federally guaranteed through its own bond or investment department. within the meaning of Section 149(b) of the Code and any regulations proposed or promulgated in connection therewith. The Authority’s reliance upon the written investment instructions of the SECTION 5.17. Investment Records. Authorized Obligor Representative will fully protect the Authority in fulfilling its obligations set The Trustee will keep or cause to be kept proper and detailed books of record and forth above. account containing complete and correct entries of all transactions relating to the receipt, investment, disbursement, allocation and application of the moneys held under this Bond D-20 Ratings of investments shall be determined at the time of purchase of such investments and without regard to ratings subcategories. The Trustee and the Authority shall have no Indenture. The Trustee will make copies of such records available to the Authority or the responsibility to monitor the ratings of investments after the initial purchase of such investments. Obligor, upon reasonable written request. The Trustee agrees to retain investment records In the absence of written investment instructions from the Obligated Group Representative, the relating to the moneys held under this Bond Indenture until six years after the Bonds are no Trustee shall not be responsible or liable for keeping the moneys held by it hereunder fully longer Outstanding. invested. The Authority and the Obligor hereby agree that confirmations of investments are not The Authority and the Obligor acknowledge that to the extent regulations of the required to be issued by the Trustee for each month in which a monthly statement is rendered. Comptroller of the Currency or other applicable regulatory entity grant them the right or option No statement need be rendered for any fund or account if no activity occurred in such fund or to receive individual confirmation of security transactions at no additional cost, as they occur, the account during such month. Authority and the Obligor specifically waive the option to receive such confirmation to the SECTION 5.15. Allocation of Income from Investments. extent permitted by law. The Master Trustee will furnish periodic cash transaction statements that include detail for all investment transactions made by the Trustee hereunder. All interest accruing from investments of moneys in the Bond Fund, the Cost of Issuance Fund, the Debt Service Reserve Fund, the Project Fund, the Rebate Fund and other funds and [End of Article V] any profit realized therefrom will be allocated as follows:

(a) interest and profits from the investments of moneys in the Bond Fund will be retained in the Bond Fund;

(b) interest and profits from the investments of moneys in the Cost of Issuance Fund will be deposited in the Bond Fund;

(c) interest and profits from the investment of moneys in the Debt Service Reserve Fund will be retained in the Debt Service Reserve Fund, provided that upon determination of the value thereof in accordance with Section 5.14 hereof, if the balance thereof

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ARTICLE VI representative duly authorized in writing, at reasonable hours and under reasonable circumstances. PARTICULAR COVENANTS (b) The Trustee shall within thirty days after the end of each month furnish to SECTION 6.01. Punctual Payment. The Authority shall punctually pay or cause to the Obligor a monthly statement (which need not be audited) covering receipts, disbursements, be paid the principal of, premium, if any, and interest to become due in respect of all the Bonds, allocation and application of Revenues and any other moneys (including proceeds of Bonds) in in strict conformity with the terms of the Bonds and of this Bond Indenture, according to the true any of the funds and accounts established pursuant to this Bond Indenture for such month. intent and meaning thereof, but only out of revenues and other assets pledged for such payment as provided in this Bond Indenture. SECTION 6.06. Tax Covenants. The Obligor has covenanted in the Loan Agreement not to take any action, or fail to take any action, if any such action or failure to take SECTION 6.02. Extension of Payment of Bonds. The Authority shall not directly action would adversely affect the exclusion from gross income of the interest on the Bonds under or indirectly extend or assent to the extension of the maturity of any of the Bonds or the time of Section 103 and Sections 141 through 150, inclusive, of the Code. The Authority and the payment of any claims for interest by the purchase or funding of such Bonds or claims for Obligor will not directly or indirectly use or permit the use of any proceeds of the Bonds or any interest or by any other arrangement and in case the maturity of any of the Bonds or the time of other funds of the Authority or the Obligor, or take or omit to take any action that would cause payment of any such claims for interest shall be extended, such Bonds or claims for interest shall the Bonds to be “arbitrage bonds” within the meaning of Section 148(a) of the Code. To that not be entitled, in case of any default hereunder, to the benefits of this Bond Indenture, except end, the Authority and the Obligor will comply with all requirements of Section 148 of the Code payment in full of the principal of all of the Bonds then Outstanding and of all claims for interest to the extent applicable to the Bonds. In the event that any time the Authority or the Obligor are thereon which shall not have been so extended. Nothing in this Section shall be deemed to limit of the opinion that for purposes of this Section 6.06 it is necessary to restrict or limit the yield on the right of the Authority to issue Bonds for the purpose of refunding any Outstanding Bonds, the investment of any moneys held by the Trustee under this Bond Indenture, the Loan and such issuance shall not be deemed to constitute an extension of the maturity of Bonds. Agreement or otherwise, the Authority or the Obligor shall so instruct the Trustee in writing, and the Trustee shall take such action as shall be set forth in such instructions. The representations, SECTION 6.03. Against Encumbrances. The Authority shall not create, or permit warranties, and covenants of the Authority and the Obligor contained in the Loan Agreement and D-21 the creation of, any pledge, lien, charge or other encumbrance upon the revenues and other assets the Tax Certificate are fully incorporated herein by reference and are made a part of this Bond pledged or assigned under this Bond Indenture while any of the Bonds are Outstanding, except Indenture as if fully set forth herein. the pledge and assignment created by this Bond Indenture and will assist the Trustee in contesting any such pledge, lien, charge or other encumbrance which may be created. The Without limiting the generality of the foregoing, the Authority and the Obligor agree that Authority expressly reserves the right to enter into one or more other indentures for any of its there shall be paid from time to time all amounts required to be rebated to the United States corporate purposes, including other programs under the Act, and reserves the right to issue other pursuant to Section 148(f) of the Code and any temporary, proposed or final Treasury obligations for such purposes. Regulations as may be applicable to the Bonds from time to time. This covenant shall survive payment in full or defeasance of the Bonds. SECTION 6.04. Power to Issue Bonds and Make Pledge and Assignment. The Authority represents and covenants that it is duly authorized pursuant to law to issue the Bonds Notwithstanding any provision of this Section and Section 5.12 hereof, if the Obligor and to enter into this Bond Indenture and to pledge and assign the Revenues and other assets shall provide to the Authority and the Trustee an opinion of Bond Counsel to the effect that any pledged and assigned, respectively, under this Bond Indenture in the manner and to the extent action required under this Section or Section 5.12 hereof is no longer required, or that some provided in this Bond Indenture. The Bonds and the provisions of this Bond Indenture are and further action is required to maintain the exclusion from gross income of interest on the Bonds, will be the legal, valid and binding limited obligations of the Authority in accordance with their the Authority, the Trustee and the Obligor may rely conclusively on such opinion. terms, and the Authority shall at all times, to the extent permitted by law, defend, preserve and protect said pledge and assignment of Revenues and other assets and all the rights of the [End of Article VI] Bondholders under this Bond Indenture against all claims and demands of all Persons whomsoever.

SECTION 6.05. Accounting Records and Financial Statements. (a) The Trustee shall at all times keep, or cause to be kept, proper books of record and account as shall be consistent with prudent industry practice, in which complete and accurate entries shall be made of all transactions relating to the proceeds of Bonds, the Revenues, the Loan Agreement and all funds established pursuant to this Bond Indenture. Such books of record and account shall be available for inspection by the Authority, the Obligor and any Bondholder, or his agent or

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ARTICLE VII rescission and annulment will extend to or affect any subsequent default or Event of Default or impair or exhaust any right, power or remedy consequent thereon. In the case of any such DEFAULT PROVISIONS AND REMEDIES OF TRUSTEE AND BONDHOLDERS annulment, the Authority, the Trustee and the Bondholders will be restored to their former positions and rights under the Bond Documents. SECTION 7.01. Defaults; Events of Default. SECTION 7.03. Remedies Upon Event of Default. If any of the following events occur, unless waived or cured under the provisions of Sections 7.10 and 7.11 hereof, it is hereby defined as and declared to be and to constitute a If an Event of Default occurs and is continuing, the Trustee has the power to proceed default and an “Event of Default”: with any available right or remedy granted by the Bond Documents or the Constitution and laws of the Commonwealth or other applicable law, as it may deem best, including any suit, action, (a) default in the due and punctual payment of any interest on any Bond, mandamus or special proceeding in equity or at law or in bankruptcy or otherwise for the collection of all amounts due and unpaid under the Bond Documents, for specific performance of (b) default in the due and punctual payment of the principal of any Bond (or any covenant or agreement contained herein or therein or for the enforcement of any proper legal premium thereon, if any), whether at the stated maturity thereof, upon proceedings for or equitable remedy as the Trustee deems most effective to protect the rights aforesaid, insofar as redemption thereof or upon the maturity thereof by declaration, such may be authorized by law. The Trustee may enforce each and every right granted to the Authority under the Bond Documents (excluding the Unassigned Rights). Upon the occurrence (c) the occurrence of an “Event of Default” under the Loan Agreement or the of an Event of Default, the Trustee, in its own name and as trustee of an express trust, or in the Master Trust Indenture, or name of the Authority without the necessity of joining the Authority, will be entitled to institute any action or proceedings at law or in equity and may prosecute any such action or proceedings (d) subject to Section 7.11 hereof, any material breach by the Authority of any to judgment or final decree and may enforce any such judgment or final decree against any representation or warranty made in this Bond Indenture or default in the performance or obligor thereon and collect in the manner provided by law, but limited as provided in the Bond observance of any other of the covenants, agreements or conditions on the part of the Authority Documents, out of the property of any obligor thereon wherever situated the moneys adjudged or D-22 in this Bond Indenture. decreed to be payable for the benefit of the Bondholders, or on behalf of the Authority. The rights herein specified are to be cumulative to all other available rights, remedies or powers and SECTION 7.02. Acceleration. will not exclude any such rights, remedies or powers, which rights, remedies and powers will be If an Event of Default occurs and is continuing, the Trustee may, and at the direction of subject to the limits provided in the Bond Documents. the Owners of not less than twenty-five percent in aggregate principal amount of Bonds then In case there are pending proceedings for the bankruptcy or for the reorganization of the Outstanding shall, by notice in writing delivered to the Authority and the Obligor, declare the Obligor under federal bankruptcy law or any other applicable law, or in the case a receiver or principal of all Bonds then Outstanding and the interest accrued thereon immediately due and trustee has been appointed for the property of the Obligor, or in the case of any other judicial payable, and such principal and interest will thereupon become and be immediately due and proceedings relative to the Obligor or relative to the creditors or property of the Obligor, the payable. Upon any declaration of acceleration hereunder, all installments of Basic Payments Trustee (irrespective of whether the principal of the Bonds will then be due and payable as payable under Section 4.01 of the Loan Agreement shall become immediately due and payable in therein expressed or by declaration or otherwise and irrespective of whether the Trustee has accordance with Section 9.02 of the Loan Agreement. made any demand pursuant to the power vested in it by this Bond Indenture) will be entitled and The provisions of Section 7.01 hereof and this Section 7.02, however, are subject to the empowered, by intervention in such proceedings or otherwise, to file and prove a claim or claims condition that if, after the principal of all Bonds then Outstanding has been so declared to be due for the whole amount owing and unpaid and to file such other papers or documents as may be and payable, all arrears of interest upon such Bonds and the principal and redemption premium, necessary or advisable in order to have the claims of the Trustee (including any claim for if any, on all Bonds then Outstanding which has become due and payable otherwise than by reasonable compensation to the Trustee, its agents, attorneys and counsel and for reimbursement acceleration, and all other sums payable under this Bond Indenture, has been paid by or on behalf of all expenses and liabilities incurred and all advances made by the Trustee except as a result of of the Authority, together with the reasonable expenses of the Trustee, the Authority and the its gross negligence or willful misconduct) and of the Bondholders allowed in any such judicial Owners of such Bonds, including attorneys’ fees actually paid or incurred, and the Loan proceedings relative to the Obligor under the Loan Agreement, or relative to the creditors or Agreement is in full force and effect, then and in every such case, (but if Owners of not less than property of the Obligor and to collect and receive any moneys or other property payable or twenty-five percent in aggregate principal amount of the Bonds then Outstanding have already deliverable on any such claims and to distribute all amounts received with respect to the claims directed an acceleration as specified in the first paragraph of this Section, then also upon the of the Bondholders and of the Trustee on their behalf. Any receiver, assignee or trustee in written approval of not less than twenty-five percent in aggregate principal amount of the Bonds bankruptcy or reorganization is hereby authorized by each of the Bondholders to make payments then Outstanding), the Trustee may annul such declaration of acceleration and its consequences, to the Trustee and if the Trustee consents to the making of payments directly to the Bondholders, which waiver and annulment will be binding upon all Bondholders; but no such waiver, to pay to the Trustee such amount sufficient to cover reasonable compensation to the Trustee, its

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agents, attorneys and counsel and all other expenses and liabilities incurred and all advances connection with any other proceedings hereunder; provided, that such direction will not be made by the Trustee except as a result of its gross negligence or willful misconduct. To the otherwise than in accordance with the provisions of law and of this Bond Indenture and will not extent that the payment of any such compensation, expenses, disbursements and advances of the be unduly prejudicial to the rights of Owners not joining in the giving of such direction (it being Trustee, its agent and counsel, and any other amounts due the Trustee under the Bond understood that the Trustee does not have an affirmative duty to ascertain whether or not any Documents out of the estate in any such proceeding, shall be unpaid for any reason, payment of such directions are unduly prejudicial to such Owners) and provided further that the Trustee may the same shall be secured by a lien on, and shall be paid out of, any and all distributions, take any other action deemed proper by the Trustee which is not inconsistent with such direction. dividends, money, securities and other properties that the Bondholders may be entitled to receive in such proceeding whether in liquidation or under any plan of reorganization or arrangement or SECTION 7.06. Application of Moneys. otherwise. The Trustee may, on behalf of the Owners, vote for the election of a trustee in any bankruptcy relative to the Obligor or similar official and be a member of a creditors’ or other Upon an Event of Default, unless moneys held by the Trustee are sufficient to pay all of similar committee. the principal of, premium, if any, and interest on the Bonds and all expenses described in paragraph “FIRST” below, all moneys or properties received and held by the Trustee pursuant to SECTION 7.04. Rights of Bondholders to Require Trustee to Pursue Remedies. this Bond Indenture (except for the Rebate Fund) and all moneys or properties received by the Trustee pursuant to any right given or action taken under the provisions of this Article will be If an Event of Default occurs and is continuing, and if requested so to do by the Owners applied as follows: of at least twenty-five percent in aggregate principal amount of Bonds then Outstanding and if indemnified as provided in Section 8.03(d) hereof, the Trustee will be obligated to exercise such (a) Unless the principal of all the Bonds shall have become or shall have been one or more of the rights and powers conferred by Sections 7.02 and 7.03 as the Trustee, being declared due and payable, all such moneys shall be applied: advised by counsel, deems most expedient in the interests of all Bondholders. FIRST - To the payment of (i) all amounts owing to the Trustee, including the No lien, right or remedy by the terms of this Bond Indenture conferred upon or reserved Ordinary Expenses and Extraordinary Expenses of the Trustee and (ii) any or otherwise available to the Trustee or Bondholders is intended to be or is construed to be amounts due to the Authority under Section 4.01(c) of the Loan Agreement;

D-23 exclusive of any other available lien, right or remedy, but each and every such lien, right or remedy is cumulative and is in addition to any other lien, right or remedy given to the Trustee or SECOND - If directed by the Bondholders pursuant to Section 7.05 hereof, to the the Bondholders hereunder or now or hereafter existing at law or in equity or by statute. payment of operating expenses of the Facilities and for reasonable renewals, repairs and replacements of the Facilities necessary to prevent impairment of the No delay or omission to exercise any right, power or remedy accruing upon any default Trust Estate and to the payment of the costs and compensation of any advances or Event of Default will impair any such right, power or remedy or be construed to be a waiver made by the Authority and the reasonable attorneys’ fees and expenses of the of any such default or Event of Default or an acquiescence therein, but every such right, power Authority; or remedy may be exercised from time to time and as often as may be deemed expedient. THIRD - To the payment to the Owners entitled thereto of all installments of No waiver of any default or Event of Default hereunder, whether by the Trustee or by the interest then due on the Bonds, in the order of the maturity of the installments of Bondholders, will extend to or will affect any subsequent default or Event of Default or impair such interest and, if the amount available is not sufficient to pay in full any any rights or remedies consequent thereon. The giving, taking or enforcement of any other or particular installment, then to the payment ratably, according to the amounts due additional security, collateral or guarantee for the payment of Bonds will not operate to on such installment, to the Owners entitled thereto, without any discrimination or prejudice, waive or affect the Trust Estate or any rights, powers or remedies under this Bond privilege; Indenture, nor will the Trustee be required to first look to, enforce or exhaust such other additional security, collateral or guarantees. FOURTH - To the payment to the Owners entitled thereto of the unpaid principal of and premium, if any, on any of the Bonds which have become due (other than SECTION 7.05. Rights of Bondholders to Direct Proceedings. Bonds matured or called for redemption for the payment of which moneys are held pursuant to the provisions of this Bond Indenture), in the order of their due At any time when an Event of Default shall have occurred and be continuing, the Owners dates, with interest at the same rate as the interest on such Bonds from the of at least a majority in aggregate principal amount of Bonds then Outstanding have the right, by respective dates upon which they became due and, if the amount available is not an instrument or instruments in writing executed and delivered to the Trustee, and provided the sufficient to pay in full principal of, premium, if any, and overdue interest on the Trustee is indemnified pursuant to Section 8.03(d) hereof, to direct the time, method and place of Bonds due on any particular date, then to the payment ratably, according to the conducting all proceedings to be taken in connection with the enforcement of the terms and amount of principal, premium, if any, and overdue interest due on such date, to conditions of this Bond Indenture or in connection with the appointment of a receiver or in the Owners entitled thereto, without any discrimination or privilege;

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FIFTH - To be held for the payment to the Bondholders entitled thereto as the necessity of joining as plaintiffs or defendants any Owners of Bonds, and any recovery of same becomes due of the principal of, premium, if any, and interest on the Bonds judgment will be for the equal and ratable benefit of the Owners of Outstanding Bonds. which may thereafter become due either at maturity or upon call for redemption prior to maturity and, if the amount available is not sufficient to pay in full Bonds SECTION 7.08. Limitations on Rights and Remedies of Bondholders. due on any particular date, together with interest and premium, if any, then due and owing thereon, payment will be made ratably, according to the amount of No Bondholder has any right to institute any suit, action or proceeding in equity or at law principal, premium, if any, and interest due on such date, to the Bondholders for the enforcement of this Bond Indenture or for the execution of any trust hereof or for the entitled thereto, without any discrimination or privilege; and appointment of a receiver or any other remedy hereunder or under the Bond Documents, unless: (i) an Event of Default has occurred of which the Trustee has been notified as provided in SIXTH - After payment in full of the Bonds and all other amounts due under the Section 7.11, or of which by such subsection it is deemed to have notice, (ii) a default has Bond Documents, to the Obligor. become an Event of Default, (iii) Owners of at least twenty-five percent (25%) in aggregate principal amount of Bonds then Outstanding have made written request to the Trustee and (b) If the principal of all the Bonds shall have become due or shall have been provided the indemnity required by Section 8.03(d) of this Bond Indenture and the Trustee has declared due and payable, all such moneys shall be applied first to the items described in been offered reasonable opportunity either to proceed to exercise the powers hereinbefore paragraph FIRST of the preceding subsection (a), and then to the payment to the Owners entitled granted or to institute such suit, action or proceeding in its own name, (iv) the Trustee thereafter thereto of the principal and interest then due and unpaid on the Bonds, without preference or fails or refuses to exercise the powers hereinbefore granted or to institute such suit, action or priority of principal over interest or of interest over principal, or of any installment of interest proceeding in its, his or their own name or names, for a period of 60 days after receipt of the over any other installment of interest, or of any Bond over any other Bond, ratably, according to request and the offer of security or indemnity, and (v) during such 60-day period a majority in the amounts due respectively for principal and interest to the persons entitled thereto, without principal amount of the then outstanding Bonds do not give the Trustee a direction inconsistent any discrimination or preference except as to any difference in the respective rates of interest with the request. Such notification, request and offer of opportunity and indemnity are hereby specified in the Bonds. declared in every case at the option of the Trustee to be conditions precedent to the execution of the powers and trusts of this Bond Indenture and to any action or cause of action for the D-24 (c) If the principal of all the Bonds shall have been declared due and payable enforcement of this Bond Indenture or for the appointment of a receiver or for any other remedy and if such declaration shall thereafter have been rescinded and annulled under the provisions of hereunder or under the Bond Documents; it being understood and intended that no one or more this Article VII, then, subject to the provisions of subsection (b) of this Section in the event that Owners of Bonds has any right in any manner whatsoever to affect, disturb or prejudice the lien the principal of all the Bonds shall later become due or be declared due and payable, the moneys of this Bond Indenture by its, his or their action or to enforce any right hereunder except in the shall be applied in accordance with the provisions of subsection (a) of this Section. manner herein provided, and that all proceedings at law or in equity will be instituted, had and maintained in the manner herein provided and for the equal and ratable benefit of the Owners of Whenever moneys are to be applied pursuant to the provisions of this Section, such all Bonds then Outstanding. Nothing contained in this Bond Indenture will, however, affect or moneys shall be applied at such times and from time to time as the Trustee shall determine, impair the right of any Bondholder to enforce the payment of the principal of, premium, if any, having due regard to the amount of such moneys available for application and the likelihood of and interest on any Bond at and after the maturity thereof or the obligation of the Authority to additional moneys becoming available for such application in the future. Whenever the Trustee pay the principal of, premium, if any, and interest on each of the Bonds issued hereunder to the shall apply such moneys, it shall fix the date (which shall be an interest payment date unless it respective Owners thereof at the time and place, from the source and in the manner in such shall deem another date more suitable) on which such application is to be made, and on such date Bonds expressed. interest on the amounts of principal to be paid on such date shall cease to accrue. The Trustee shall give such notice as it may deem appropriate of the deposit with it of any such moneys and SECTION 7.09. Termination of Proceedings. 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 Trustee for appropriate endorsement or for In case the Trustee has proceeded to enforce any right under this Bond Indenture by the cancellation if fully paid. appointment of a receiver, by entry or otherwise, and such proceedings have been discontinued or abandoned for any reason or have been determined adversely to the Trustee, then and in every SECTION 7.07. Remedies Vested in the Trustee. such case the Authority, the Trustee and Bondholders will be restored to their former positions and rights hereunder, and all rights, remedies and powers of the Trustee will continue unimpaired All rights of action (including the right to file proofs of claim) under this Bond Indenture as if no such proceedings had been taken. or under any of the Bonds may be enforced by the Trustee without the possession of any of the Bonds or the production thereof in any trial or other proceedings relating thereto, and any such suit or proceeding instituted by the Trustee will be brought in its name as Trustee without the

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SECTION 7.10. Waivers of Events of Default. Any notice of an Event of Default hereunder must prominently include the following information; provided, however, failure to include all such information will not affect the Holders of not less than a majority in aggregate principal amount of the then outstanding effectiveness of such notice: Bonds, by notice to the Trustee, the Authority and the Obligor, may on behalf of the Holders of all of the Bonds waive any default or Event of Default hereunder and rescind its consequences (i) The complete title of the Bonds, and will rescind any declaration of maturity of principal of and interest on the Bonds; provided, however, that there will not be waived any Event of Default in the payment when due of (i) the (ii) The complete name of the Authority and the Obligor, principal of any Outstanding Bonds at the date of maturity specified therein or upon proceedings for redemption pursuant to any mandatory sinking fund payments required or (ii) interest or (iii) The entire nine-digit CUSIP number for each affected maturity of premium on any such Bonds, unless prior to such waiver or rescission the consent of the Owners the Bonds, of 100% in aggregate principal amount of Bonds then Outstanding to such waiver has been obtained and all arrears of interest and all arrears of payments of principal or premium, if any, (iv) the record date, if any, for the notice, and when due, with interest on such overdue amounts (to the extent permitted by law) at the rate (v) a title or reference line that provides a summary of the subject of borne by the Bonds, and all expenses of the Trustee in connection with such default, have been the notice, including a statement that the notice relates to defaulted municipal paid or provided for. In the case of any such waiver or rescission, or in case any proceeding securities. taken by the Trustee on account of any such default has been discontinued or abandoned or determined adversely to the Trustee, then and in every such case the Authority, the Trustee and [End of Article VII] the Bondholders will be restored to their former positions and rights hereunder respectively, but no such waiver or rescission will extend to any subsequent or other default or impair any right consequent thereon. All waivers under this Bond Indenture must be in writing.

SECTION 7.11. Notice of Defaults; Opportunity of the Authority and the Obligor D-25 to Cure Defaults.

Anything herein to the contrary notwithstanding, no default under Section 7.01(d) hereof will constitute an Event of Default until actual written notice of such default by registered or certified mail is given by the Trustee or by Owners of not less than twenty-five percent in aggregate principal amount of Bonds then Outstanding to the Obligor and the Authority, and also to the Trustee if given by Owners, and the Obligor and the Authority have had thirty days after receipt of such notice to correct such default or cause such default to be corrected and have not corrected such default or caused such default to be corrected within the applicable period; provided, however, if such default cannot with due diligence be cured within the applicable period but can be wholly cured within a period of time not materially detrimental to the rights of the Bondholders, it will not constitute an Event of Default if corrective action is instituted by the Obligor or the Authority, as the case may be, within the applicable period and diligently pursued until the default is corrected in accordance with and subject to any directions or limitations of time established in writing by the Trustee or the Bondholders which are delivered to the Obligor and the Authority, and the Trustee if given by Bondholders.

With regard to any default concerning which notice is given to the Obligor under the provisions of this Section 7.11, the Authority hereby grants the Obligor full authority for the account of the Authority to perform any covenant or obligation alleged in such notice to constitute a default, in the name and stead of the Authority with full power to do any and all things and acts to the same extent that the Authority could do and perform any such things and acts and with power of substitution.

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ARTICLE VIII shall execute and deliver any and all instruments as may be reasonably required for more fully and certainly vesting in and confirming to such successor Trustee all such moneys, estates, THE TRUSTEE properties, rights, powers, trusts, duties and obligations. Upon acceptance of appointment by a successor Trustee as provided in this subsection, the Authority shall mail a notice of the SECTION 8.01. Duties, Immunities and Liabilities of Trustee. (a) The Trustee succession of such Trustee to the trusts hereunder to the Rating Agency, if any, and to the shall, prior to an Event of Default, and after the curing of all Events of Default which may have Bondholders at the addresses shown on the registration books maintained by the Trustee. If the occurred, perform such duties and only such duties as are specifically set forth in this Bond Authority fails to mail such notice within fifteen days after acceptance of appointment by the Indenture. The Trustee shall, during the existence of any Event of Default (which has not been successor Trustee, the successor Trustee shall cause such notice to be mailed at the expense of cured), exercise such of the rights and powers vested in it by this Bond Indenture, and use the the Authority. same degree of care and skill in their exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. (e) Any Trustee appointed under the provisions of this Section in succession to the Trustee shall be a trust company or bank having the powers of a trust company having a (b) The Authority shall remove the Trustee with thirty days prior written corporate trust office in the Commonwealth having a combined capital and surplus of at least one notice if at any time requested to do so by an instrument or concurrent instruments in writing Hundred Million Dollars ($100,000,000), subject to supervision or examination by federal or signed by the Holders of not less than a majority in aggregate principal amount of the Bonds then state authorities and shall have received written evidence from the Rating Agency then rating the outstanding (or their attorneys duly authorized in writing), or if at any time the Trustee shall Bonds, if any, that the use of such Trustee would not result in a reduction or withdrawal of the cease to be eligible in accordance with Subsection (e) of this Section or shall become incapable rating on the Bonds. If such bank or trust company publishes a report of condition at least of acting, or shall be adjudged a bankrupt or insolvent, or a receiver of the Trustee or its property annually, pursuant to law or to the requirements of any supervising or examining authority above shall be appointed, or any public officer shall take control or charge of the Trustee or of its referred to, then for the purpose of this subsection the combined capital and surplus of such bank property or affairs for the purpose of rehabilitation, conservation or liquidation, in each case by or trust company shall be deemed to be its combined capital and surplus as set forth in its most giving written notice of such removal to the Trustee, and thereupon shall appoint, at the direction recent report of condition so published. In case at any time the Trustee shall cease to be eligible of the Obligor, a successor Trustee by an instrument in writing. in accordance with the provisions of this subsection (e), the Trustee shall resign immediately in D-26 the manner and with the effect specified in this Section. (c) The Trustee may at any time resign by giving thirty days prior written notice of such resignation to the Authority and by giving the Bondholders notice of such (f) The Trustee is not required to take notice or be deemed to have notice of resignation by mail at the addresses shown on the registration books maintained by the Trustee. any default or Event of Default hereunder except (i) failure by the Authority to cause to be made Upon receiving such notice of resignation, the Authority shall promptly appoint, with the consent any of the payments to the Trustee required to be made by Article V hereof, and (ii) failure by of the Obligor, a successor Trustee by an instrument in writing. the Obligor to make any of the payments to the Trustee required to be made by Section 4.01 of the Loan Agreement, unless a Responsible Officer actually receives a notice in writing of such (d) Any removal or resignation of the Trustee and appointment of a successor default or Event of Default by the Authority, the Obligor or Owners of at least twenty-five Trustee shall become effective upon acceptance of appointment by the successor Trustee. If no percent (25%) in aggregate principal amount of all Bonds then Outstanding. All notices or other successor Trustee shall have been appointed and have accepted appointment within thirty days of instruments required by this Bond Indenture to be delivered to the Trustee must, in order to be giving notice of removal or notice of resignation as aforesaid, the resigning Trustee or any effective, be delivered at the notice address provided by the Trustee pursuant to Section 12.09 Bondholder (on behalf of himself and all other Bondholders) may petition any court of below, and in the absence of such notice so received, the Trustee may conclusively assume there competent jurisdiction for the appointment of a successor Trustee. Any successor Trustee is no default or Event of Default except as aforesaid. appointed under this Bond Indenture shall signify its acceptance of such appointment by executing and delivering to the Authority and to its predecessor Trustee a written acceptance SECTION 8.02. Merger or Consolidation. Any company into which the Trustee thereof, and thereupon such successor Trustee, without any further act, deed or conveyance, shall may be merged or converted or with which it may be consolidated or any company resulting become vested with all the moneys, estates, properties, rights, powers, trusts, duties and from any merger, conversion or consolidation to which it shall be a party or any company to obligations of such predecessor Trustee, with like effect as if originally named Trustee herein; which the Trustee may sell or transfer all or substantially all of its corporate trust business, but, nevertheless at the request of the Authority or the request of the successor Trustee, such provided such company shall be eligible under subsection (e) of Section 8.01, shall be the predecessor Trustee shall execute and deliver any and all instruments of conveyance or further successor to such Trustee without the execution or filing of any paper or any further act, assurance and do such other things as may reasonably be required for more fully and certainly anything herein to the contrary notwithstanding. vesting in and confirming to such successor Trustee all the right, title and interest of such predecessor Trustee in and to any property held by it under this Bond Indenture and shall pay SECTION 8.03. Liability of Trustee. (a) The recitals of facts herein and in the over, transfer, assign and deliver to the successor Trustee any moneys or other property subject Bonds shall not be taken as statements of the Trustee, and the Trustee shall assume no to the trusts and conditions herein set forth. Upon request of the successor Trustee, the Authority responsibility for the correctness of the same, or make any representations as to the validity or

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sufficiency of this Bond Indenture or of the Bonds or shall incur any responsibility in respect or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein thereof, other than in connection with the duties or obligations herein or in the Bonds assigned to specifically prescribed) may be deemed to be conclusively proved and established by a or imposed upon it. The Trustee shall, however, be responsible for its representations contained Certificate of the Authority, and such Certificate shall be full warrant to the Trustee for any in its certificate of authentication on the Bonds. The Trustee shall not be liable in connection action taken or suffered in good faith under the provisions of this Bond Indenture in reliance with the performance of its duties hereunder, except for its own gross negligence or willful upon such Certificate, but in its discretion the Trustee may, in lieu thereof, accept other evidence misconduct. The Trustee may become the owner of Bonds with the same rights it would have if of such matter or may require such additional evidence as it may deem reasonable. it were not Trustee and, to the extent permitted by law, may act as depositary for and permit any of their officers or directors to act as a member of, or in any other capacity with respect to, any SECTION 8.05. Preservation and Inspection of Documents. committee formed to protect the rights of Bondholders, whether or not such committee shall represent the Holders of a majority in principal amount of the Bonds then Outstanding. (a) All documents received by the Trustee under the provisions of this Bond Indenture shall be retained in its possession and shall be subject during normal business hours of (b) The Trustee shall not be liable for any error of judgment made in good the Trustee to the inspection of the Authority and any Bondholder, and their agents and faith by a responsible officer, unless it shall be proved that the Trustee was grossly negligent in representatives duly authorized in writing, at reasonable hours and under reasonable conditions. ascertaining the pertinent facts. (b) The Trustee covenants and agrees that it shall maintain a current list of the (c) The Trustee shall not be liable with respect to any action taken or omitted names and addresses of all the Bondholders. to be taken by it in good faith in accordance with the direction of the Holders of not less than a majority in aggregate principal amount of the Bonds at the time Outstanding relating to the time, SECTION 8.06. Compensation. The Trustee shall be paid from time to time method and place of conducting any proceeding for any remedy available to the Trustee, or reasonable compensation for all services rendered under this Bond Indenture, and also all exercising any trust or power conferred upon the Trustee under this Bond Indenture. reasonable expenses, charges, legal and consulting fees and other disbursements and those of its attorneys, agents and employees, incurred in and about the performance of its powers and duties (d) The Trustee shall be under no obligation to exercise any of the rights or under this Bond Indenture.

D-27 powers vested in it by this Bond Indenture (other than declaring the principal of the Bonds to be immediately due and payable when required hereunder or making payments on the Bonds when SECTION 8.07. Construction of Ambiguous Provisions. The Trustee may construe due) at the request, order or direction of any of the Bondholders pursuant to the provisions of this any provision hereof insofar as such may appear to be ambiguous or inconsistent with any other Bond Indenture unless such Bondholders shall have offered to the Trustee indemnification to its provision hereof; and any construction of any such provision by the Trustee in good faith shall be satisfaction for indemnity against the costs, expenses and liabilities which may be incurred binding upon the Owners of the Bonds. therein or thereby. SECTION 8.08. Notice to Bondholders Event of Default Occurs. If an Event of (e) The Trustee shall not be liable for any action taken by it in good faith and Default occurs, the Trustee will give such notice to the Obligor and the Authority as is specified believed by it to be authorized or within the discretion or rights or powers conferred upon it by in Section 7.11 hereof will give written notice thereof by first-class mail, within fifteen days this Bond Indenture. (unless such default is cured or waived), to the Owners of all Bonds then Outstanding shown by the registration books maintained by the Trustee pursuant to Section 2.08 hereof; provided, SECTION 8.04. Right of Trustee to Rely on Documents. The Trustee may however, that except in the case of a default in the payment of the principal of (or premium, if conclusively rely, and shall be protected in acting upon any notice, resolution, request, consent, any) or interest on any Bonds, the Trustee shall be protected in withholding such notice if and so order, certificate, report, opinion, bond or other paper or document believed by it to be genuine long as the board of directors, the executive committee or a trust committee of directors or and to have been signed or presented by the proper party or parties. The Trustee may consult Responsible Officers of the Trustee in good faith determines that the withholding of such notice with counsel, who may be counsel of or to the Authority, with regard to legal questions, and the is in the interest of the Bondholders. opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good faith and in accordance therewith. [End of Article VIII]

The Trustee shall not be bound to recognize any person as the Holder of a Bond unless and until such Bond is submitted for inspection, if required, and his title thereto is satisfactorily established, if disputed.

Whenever in the administration of the trusts imposed upon it by this Bond Indenture the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking

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ARTICLE IX (viii) to comply with any provisions of the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, or any rules or AMENDMENTS TO INDENTURE AND SUPPLEMENTAL INDENTURES regulations promulgated thereunder,

SECTION 9.01. Amendments to Indenture and Supplemental Indentures Not (ix) to reflect a change in applicable law provided that the Trustee Requiring Consent of Bondholders. receives an Opinion of Counsel that such amendment or supplemental indenture does not prejudice the rights of Bondholders, or (a) Without the consent of or notice to any of the Bondholders, but with the consent of the Authorized Obligor Representative if required by Section 9.03 hereof, the (x) in connection with any other change herein which does not Authority and the Trustee may enter into an amendment or supplement to this Bond Indenture prejudice or materially adversely affect the Bondholders or impair the Trust for any one or more of the following purposes: Estate.

(i) to cure any ambiguity or formal defect or omission in, or to correct (b) Prior to entering into an amendment or supplemental indenture pursuant to or supplement any defective provision of, this Bond Indenture, subsection (a) above, there shall be delivered to the Authority and the Trustee a Favorable Opinion of Bond Counsel. (ii) to add to the covenants and agreements of, and limitations and restrictions upon, the Authority in this Bond Indenture other covenants, SECTION 9.02. Amendments to Indenture and Supplemental Indentures Requiring agreements, limitations and restrictions to be observed by the Authority for the Consent of Bondholders. protection of the Bondholders, Except for amendments and indentures supplemental hereto covered by Section 9.01 (iii) to evidence the appointment of a separate trustee or a co-trustee or hereof and subject to the terms and provisions contained in this Section and not otherwise, the the succession of a new trustee or the appointment of a new or additional paying Majority Bondowners have the right, from time to time, to consent to and approve the execution

D-28 agent or bond registrar, by the Authority and the Trustee of an amendment or amendments to this Bond Indenture or such indenture or indentures supplemental hereto as are deemed necessary and desirable by the (iv) to grant to or confer upon the Trustee for the benefit of Authority for the purpose of modifying, altering, amending, adding to or rescinding, in any Bondholders any additional rights, remedies, powers, benefits, security, liabilities, particular, any of the terms or provisions contained in this Bond Indenture or in any duties or authority that may lawfully be granted to or conferred or imposed upon supplemental indenture; provided, however, that nothing contained in this Section will permit, or the Bondholders or the Trustee or either of them, be construed as permitting, (a) an extension of the stated maturity or reduction in the principal amount of, or a reduction in the rate or an extension of the time of payment of interest on, or a (v) to subject to the lien and security interest of this Bond Indenture reduction of any premium payable on the redemption of, any Bonds, without the consent of additional revenues, properties or collateral, every Owner of such Bonds, or (b) the creation of any lien or security interest (other than any Permitted Encumbrances) prior to or on a parity with the lien and security interest of this Bond (vi) to modify, amend or supplement this Bond Indenture or any Indenture without the consent of the Owners of all the Bonds at the time Outstanding which indenture supplemental hereto in such manner as to permit the qualification would be affected by the action to be taken, or (c) a reduction in the amount, or an extension of hereof and thereof under the Trust Indenture Act of 1939, as amended, or any the time of any payment, required by the mandatory redemption provisions of Section 4.01(c) of similar federal statute hereafter in effect or to permit the qualification of Bonds this Bond Indenture, without the consent of the Owners of all the Bonds at the time Outstanding for sale under the securities laws of any state, and, if they so determine, to add to which would be affected by the action to be taken, or (d) a reduction in the aforesaid aggregate this Bond Indenture or any indenture supplemental hereto such other terms, principal amount of Bonds the Owners of which are required to consent to any such amendment conditions and provisions as may be permitted by the Trust Indenture Act of or supplemental indenture, without the consent of the Owners of all Bonds at the time 1939, as amended, or any similar federal statute, Outstanding which would be affected by the action to be taken, or (e) except as otherwise permitted by Article X, a privilege or priority of any Bond or Bonds over any other Bond or (vii) to modify, amend or supplement this Bond Indenture in such Bonds, or (f) the release of or requirements for the release of this Bond Indenture, without the manner to assure the continued exclusion from gross income of the Owners consent of the Owners of all Bonds at the time Outstanding which would be affected by the thereof for federal income tax purposes of interest on any Bonds which is action to be taken. excludable from the gross income of the Owners thereof for federal income tax purposes, Notwithstanding the foregoing, during any period of time in which an Event of Default has occurred and is continuing, an amendment of the type described in clauses (a) through (f)

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above may be made with respect to an Outstanding Bond with the consent of the holders of at The Trustee and the Authority are authorized to join in the execution and delivery of any least eighty percent in aggregate principal amount of all Outstanding Bonds with respect to supplemental indenture permitted by this Article IX and, in so doing, each shall be entitled to which such amendment is made; provided, however, any such amendment shall not result in a receive, and shall be fully protected by, an Opinion of Counsel that such supplemental indenture preference or priority of Bonds over any other Bonds and no such amendment described in complies with the Bond Indenture and has been duly authorized by the Authority and that all clauses (a) through (f) shall result in a disproportionate change, reduction or modification with things necessary to make it a valid and binding supplemental indenture have been done. The respect to any Bonds. Trustee shall not be required to enter into any supplemental indenture permitted by this Article IX if, in the sole judgment of the Trustee, such action might adversely affect its rights, remedies, Prior to entering into an amendment or supplemental indenture pursuant to this Section privileges, protections or indemnities or might increase its liability in any respect. In any 9.02, there must be delivered to the Authority and the Trustee a Favorable Opinion of Bond instance in which the Trustee may be required to determine that a modification or amendment Counsel. If at any time the Trustee is requested to enter into any such amendment or will not materially adversely affect the interest of the Bondholders, prior to consenting to such supplemental indenture for any of the purposes allowed by this Section, the Trustee, upon being modification or amendment, the Trustee will be entitled to require that there be delivered to it an indemnified to its satisfaction with respect to the expenses of the Trustee and its agents, attorneys Opinion of Counsel on any point of law related to the determination that there is no materially and other professionals, will cause notice of the proposed execution of such amendment or adverse effect and may rely conclusively upon any such Opinion of Counsel as to any such supplemental indenture to be given in substantially the manner provided in Section 4.03 hereof determination. with respect to redemption of Bonds. Such notice shall be prepared by the Authority or the Obligor and include a draft of such amendment or supplemental indenture, and must briefly set [End of Article IX forth the nature of the proposed amendment or supplemental indenture and state that copies thereof are available from the Trustee upon request. The costs of such copies will be Ordinary Expenses. If the Majority Bondowners at the time of the execution of any such amendment or supplemental indenture have consented to and approved the execution thereof as herein provided, no Owner of any Bond has any right to object to any of the terms and provisions contained therein or to the operation thereof or in any manner to question the propriety of the D-29 execution thereof or to enjoin or restrain the Trustee or the Authority from executing the same or from taking any action pursuant to the provisions thereof. Upon the execution of any such amendment or supplemental indenture as in this Section permitted and provided, this Bond Indenture will be and be deemed to be modified and amended in accordance therewith. The Trustee may rely upon an opinion of counsel as conclusive evidence that execution and delivery of an amendment or supplemental indenture has been effected in compliance with the provisions of this Article IX.

SECTION 9.03. Consent of Obligor.

Anything herein to the contrary notwithstanding, if the Obligor is not in default under the Loan Agreement at such time, an amendment or supplemental indenture under this Article IX which affects any rights or obligations of the Obligor or which changes the priority or use of moneys under this Bond Indenture will not become effective unless and until the Authorized Obligor Representative has consented to the execution and delivery of such amendment or supplemental indenture. In this regard, the Authority will cause notice of the proposed execution and delivery of any such amendment or supplemental indenture, together with a copy of such amendment or supplemental indenture, to be mailed by certified or registered mail or personally delivered to the Authorized Obligor Representative at least fifteen days prior to the proposed date of execution and delivery of any such amendment or supplemental indenture. Nothing in this Bond Indenture shall be construed to require the Trustee to solicit the consent of the Obligor.

SECTION 9.04. Trustee Authorized to Join in Supplements; Reliance on Opinion of Counsel.

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ARTICLE X the execution thereof as herein provided, no Owner of any Bond has any right to object to any of the terms and provisions contained therein or to the operation thereof or in any manner to AMENDMENT OF LOAN AGREEMENT question the propriety of the execution thereof or to enjoin or restrain the Trustee from consenting to the execution thereof or to enjoin or restrain the Authority or the Obligor from SECTION 10.01. Amendments to Loan Agreement Not Requiring Consent of executing the same or from taking any action pursuant to the provisions thereof. Upon the Bondholders. execution of any such amendment, change or modification as in this Section 10.02 permitted and provided, the Loan Agreement will be and be deemed to be modified, changed and amended in Without the consent of or notice to Bondholders, the Authority and the Trustee will accordance therewith. consent to any amendment, change or modification of the Loan Agreement as may be required by the provisions of the Loan Agreement and this Bond Indenture, (i) for the purpose of curing SECTION 10.03. Trustee Authorized to Join in Amendments; Reliance on Counsel. any ambiguity or formal defect or omission therein or to correct or supplement any defective provision thereof, (ii) so as to add additional rights acquired in accordance with the provisions of The Trustee and the Authority are authorized to join with the Obligor in the execution the Loan Agreement, (iii) to substitute a new Obligor under the Loan Agreement as provided and delivery of any amendment, change or modification permitted by this Article X and, in so therein, (iv) to comply with any provisions of the Securities Act of 1933, as amended, or the doing, each shall be fully protected by an Opinion of Counsel that such amendment, change or Securities Exchange Act of 1934, as amended, or any rules or regulations promulgated modification complies with the Bond Documents and has been duly authorized by the Authority thereunder, or (v) in connection with any other change therein which does not prejudice the and the Obligor and that all things necessary to make it a valid and binding agreement have been Trustee or materially adversely affect Owners of Bonds. Prior to entering into any amendment, done. The Trustee shall not be required to enter into or consent to any amendment, change or change or modification of the Loan Agreement, there must be delivered to the Authority and the modification to the Loan Agreement permitted by this Article X if, in the sole judgment of the Trustee a Favorable Opinion of Bond Counsel. The Trustee shall be fully protected and shall Trustee, such action might adversely affect its rights, remedies, privileges, protections or incur no liability in relying on such opinion. indemnities or might increase its liability in any respect.

SECTION 10.02. Amendments to Loan Agreement Requiring Consent of [End of Article X] D-30 Bondholders.

Except for the amendments, changes or modifications as provided in Section 10.01 hereof, neither the Authority nor the Trustee will consent to any other amendment, change or modification of the Loan Agreement without giving notice to and obtaining the written approval or consent of the Majority Bondowners given and procured as in this Section 10.02 provided; provided, however, that nothing in this Section or Section 10.01 hereof will permit or be construed as permitting (a) an extension of the time for payment of any amounts payable under the Loan Agreement or a reduction in the amount of any payment or in the total amount due under the Loan Agreement, without the consent of every Owner of Bonds affected thereby or (b) a reduction in the aforesaid aggregate principal amount of Bonds the Owners of which are required to consent to any such amendment, change or modification of the Loan Agreement, without the consent of the Owners of all Bonds at the time Outstanding which would be affected by the action to be taken. Prior to entering into any amendment, change or modification of the Loan Agreement, there must be delivered to the Authority and the Trustee a Favorable Opinion of Bond Counsel. If at any time the Authority or the Obligor requests any such proposed amendment, change or modification of the Loan Agreement, the Trustee, upon being satisfactorily indemnified with respect to expenses, will cause notice of such proposed amendment, change or modification to be given in the same manner as provided by Section 9.02 hereof with respect to supplemental indentures. Such notice shall be prepared by the Authority or the Obligor and include a draft of such amendment or supplemental indenture, must briefly set forth the nature of such proposed amendment, change or modification and state that copies of the instrument embodying the same are on file at the Designated Corporate Trust Office of the Trustee for inspection by all Bondholders. If the Majority Bondowners at the time of the execution of such proposed amendment, change or modification have consented to and approved

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ARTICLE XI the payment of the principal of, premium, if any, and interest on such Bonds, (iv) unless there has been irrevocably deposited with the Trustee moneys in an amount which will be sufficient, DEFEASANCE; DISCHARGE OF LIENS along with any other moneys held by the Trustee and available therefor, to pay the principal or redemption price of and interest due and to become due on such Bonds without taking into SECTION 11.01. Discharge of Liens. If the Authority pays or causes to be paid, or account any investment earnings, there has been submitted to the Authority and the Trustee a there is otherwise paid or provisions for payment made, to or for the Holders of all Outstanding certificate or report of an independent certified public accountant or a nationally recognized firm Bonds the principal, premium, if any, and interest due or to become due thereon and pays or with experience preparing verification reports to the effect that the deposit required by (i) above causes to be paid all fees and expenses of the Trustee and each paying agent due or to become will provide funds sufficient to pay when due the principal or redemption price, if applicable, due under this Bond Indenture, then this Bond Indenture and these presents and the estate, lien, and interest due and to become due on such Bonds on and prior to the redemption date or interests and rights hereby created and granted will cease, determine, terminate and become null maturity date thereof, as the case may be, and (v) there has been submitted to the Authority and and void (except as to any surviving rights of registration, transfer or exchange of Bonds herein the Trustee an opinion of Bond Counsel to the effect that the defeasance of the Bonds in provided for, the rights, powers, trusts duties and immunities of the Trustee, and the Trustee’s accordance with this Article will not cause interest on any of the Bonds to become includable in obligations under Section 5.17 hereof). Upon such cessation, termination, discharge and gross income for federal income tax purposes. Neither Defeasance Obligations nor moneys satisfaction, (i) the Trustee will execute and deliver to the Authority and the Obligor all such deposited with the Trustee pursuant to this Article nor principal nor interest payments on any instruments as may be appropriate or reasonably requested by the Authority or the Obligor to such securities will be withdrawn or used for any purpose other than, and will be held in trust for, evidence such cessation, termination, discharge and satisfaction, and (ii) the Trustee will pay the payment of the principal or redemption price, if applicable, and interest on such Bonds; over or deliver to the Obligor or on its order all moneys and securities held by it pursuant to this provided that any cash received from such principal or interest payments on such Defeasance Bond Indenture which are not required for (x) the payment of the principal of, premium, if any, Obligations deposited with the Trustee, if not then needed for such purpose, will, to the extent and interest on Bonds not theretofore surrendered for payment or redemption, (y) the payment of practicable, at the written direction of the Authorized Obligor Representative, be reinvested in all other amounts due or to become due under this Bond Indenture or the Loan Agreement and Defeasance Obligations maturing at times and in amounts sufficient to pay when due the (z) the payment of any amounts the Trustee has been directed to pay to the United States under principal or redemption price, if applicable, and interest to become due on such Bonds on and the Tax Certificate or this Bond Indenture. prior to such redemption date or maturity date thereof, as the case may be. D-31 SECTION 11.02. Defeasance of Bonds. Any Outstanding Bond will, prior to the The items required by (i) through (v) of the preceding paragraph may be submitted with maturity or redemption date thereof, be deemed to have been paid and defeased within the respect to any particular Bonds identified by the Authorized Obligor Representative, on behalf of meaning and with the effect expressed in the first paragraph of this Article with respect to the Authority (whether upon or prior to the maturity or the redemption date of such Bonds), in payment of such Bond hereunder (i) if there has been irrevocably deposited with the Trustee, in which case such Bonds will no longer be deemed to be Outstanding and will be deemed to be trust, either moneys in an amount which will be sufficient, along with any other moneys held by paid within the meaning of this Article, and the Owners of such Bonds will be secured only by the Trustee and available therefor, or Defeasance Obligations not redeemable by the issuer such deposit and not by any other part of the Trust Estate. The Authorized Obligor thereof, the principal of and interest on which when due, without reinvestment, will provide Representative, on behalf of the Authority, shall cause any such Bonds to bear a separate CUSIP moneys which, together with the moneys, if any, deposited with the Trustee at the same time and number. to be held uninvested, will be sufficient to pay when due the principal or redemption price, if applicable, and interest due and to become due on such Bonds on and prior to the redemption SECTION 11.03. Deposit of Money or Securities with Trustee. Anything in Article date or maturity date thereof, as the case may be, and if all Bonds Outstanding are to be deemed X hereof to the contrary notwithstanding, if such moneys or Defeasance Obligations have been to have been paid and defeased, an amount equal to the Trustee’s and paying agents’ necessary deposited or set aside with the Trustee pursuant to this Article for the payment of Bonds and and proper fees, compensation and expenses under this Bond Indenture accrued and to accrue interest and premium thereon, if any, and such Bonds will not have in fact been actually paid in until such redemption date or date of maturity, (ii) if such Bonds are to be redeemed, the full, no amendment to the provisions of this Article will be made without the consent of the Authorized Obligor Representative, on behalf of the Authority, gives the Trustee in form Owner of each Bond affected thereby. satisfactory to it irrevocable written instructions to give notice of redemption of such Bonds as provided in Section 4.03 of this Bond Indenture, (iii) if such Bonds are to be redeemed and are The escrow agreement for any defeasance of the Bonds must provide that: not by their terms subject to redemption within the following sixty days, the Authorized Obligor Representative, on behalf of the Authority, or the Authority gives the Trustee in form satisfactory (a) Any substitution of securities (if such substitution is permitted by the to it irrevocable written instructions to give, as soon as practicable in the same manner as a terms of the escrow agreement) will require a verification by an independent certified public notice of redemption of such Bonds as provided in Section 4.03 of this Bond Indenture, a notice accountant; and to the Owners of such Bonds stating that the deposit required by (i) above has been made with (b) The Authority and the Obligor will not exercise any optional redemption the Trustee, stating that such Bonds are deemed to have been paid in accordance with this of Bonds secured by the escrow agreement or any other redemption other than mandatory Article, and stating such maturity or redemption dates upon which moneys are to be available for

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sinking fund redemptions unless the right to make any such redemption has been expressly ARTICLE XII reserved in the escrow agreement and such reservation has been disclosed in detail in the official statement (or other disclosure documents) for the refunding bonds. MISCELLANEOUS

[End of Article XI] SECTION 12.01. Consents of Bondholders.

While any Bonds are held in Book-Entry Form, as provided by Section 2.14 hereof, for purposes of this Section 12.01 the term “Bondholders” shall mean the Beneficial Owners of the Bonds so held.

Any consent, request, direction, approval, waiver, objection or other instrument required by this Bond Indenture 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 consent, request, direction, approval, waiver, objection or other instrument or of the writing appointing any such agent and of the ownership of Bonds, if made in the following manner, will be sufficient for any of the purposes of this Bond Indenture and will be conclusive in favor of the Trustee and the Authority with regard to any action taken under such request or other instrument, namely:

(a) the fact and date of the execution by any person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by the certificate of any notary public or other officer of any jurisdiction authorized by the laws thereof to take

D-32 acknowledgments of deeds, certifying that the person signing such instrument or writing acknowledged to him the execution thereof; where such execution is by an officer of a corporation or association or a member of a partnership on behalf of such corporation, association or partnership, such affidavit or certificate will also constitute sufficient proof of his authority;

(b) the fact of ownership of Bonds and the amount or amounts, numbers, other identification of such Bonds and the date of ownership will be proved by the registration books of the Authority maintained by the Trustee pursuant to Section 2.08 hereof;

(c) any request, consent or vote of the Owner of any Bond will bind every future Owner of the same Bond and the Owner of every Bond issued in exchange therefor or in lieu thereof in respect of anything done or suffered to be done by the Trustee or the Authority in pursuance of such request, consent or vote; and

(d) in determining whether Owners of the requisite aggregate principal amount of Bonds have concurred in any demand, request, direction, consent or waiver under this Bond Indenture, unless all of the Bonds are owned by the Authority or the Obligor, Bonds which are owned by the Authority, by the Obligor or by any other obligor under the Loan Agreement or on the Bonds, or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Authority, the Obligor or any other obligor under the Loan Agreement or on the Bonds, will be disregarded and deemed not to be outstanding but only Bonds which the Trustee knows to be so owned will be disregarded; Bonds so owned which have been pledged in good faith may be regarded as outstanding for the purposes of this Section 12.01 if the pledgee will establish to the satisfaction of the tabulating entity Trustee the pledgee’s right

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to vote such Bonds and that the pledgee is not a Person directly or indirectly controlling or SECTION 12.04. Covenant Not to Sue. The forms of Bonds provide that the controlled by or under direct or indirect common control with the Authority, the Obligor or any Owners of the Bonds agree not to sue the Authority or any of its board members, officers, agents other obligor under the Loan Agreement or on the Bonds; in case of a dispute as to such right, or employees, past, present or future except as provided herein and in the Loan Agreement as a any decision by the Trustee taken upon the advice of counsel will be full protection to the condition of, and in consideration for, the issuance of the Bonds; accordingly, the Trustee shall Trustee and the Authority. not be permitted to sue the Authority on behalf of the Owners of the Bonds.

SECTION 12.02. Liability of Authority Limited to Revenues. Notwithstanding SECTION 12.05. Successor is Deemed Included in All References to Predecessor. anything to the contrary contained in this Bond Indenture or in the Bonds, the Authority shall not Whenever in this Bond Indenture either the Authority or the Trustee is named or referred to, such be required to advance any moneys derived from any source other than the Revenues and other reference shall be deemed to include the successors or assigns thereof, and all the covenants and assets pledged under this Bond Indenture for any of the purposes in this Bond Indenture agreements in this Bond Indenture contained by or on behalf of the Authority or the Trustee shall mentioned, whether for the payment of the principal of or interest on the Bonds or for any other bind and inure to the benefit of the respective successors and assigns thereof whether so purpose of this Bond Indenture. Notwithstanding any provisions of this Bond Indenture to the expressed or not. contrary, no recourse under or upon any obligation, covenant or agreement contained herein or in any Bond shall be had against the Authority, it being expressly agreed and understood that the SECTION 12.06. Limitation of Rights to Parties, Obligor and Bondholders. Nothing obligations of the Authority hereunder, and under the Bonds and elsewhere, are solely corporate in this Bond Indenture or in the Bonds, express or implied, is intended or shall be construed to obligations of the Authority and shall be enforceable only out of the Authority's interest in this give to any person other than the Authority, the Trustee, the Obligor and the Holders of the Bond Indenture and the Loan Agreement (except for the Authority's rights to payment of certain Bonds, any legal or equitable right, remedy or claim under or in respect of this Bond Indenture or costs, fees and expenses as set forth in this Bond Indenture, the Loan Agreement and elsewhere) any covenant, condition or provision therein or herein contained; and all such covenants, and there shall be no other recourse against the Authority or any property now or hereafter conditions and provisions are and shall be held to be for the sole and exclusive benefit of the owned by it and after entry of judgment against the Authority by virtue of the power herein Authority, the Trustee, the Obligor and the Holders of the Bonds. contained, the Authority shall mark the judgment index to the effect that the judgment is limited as aforesaid. SECTION 12.07. Waiver of Notice. Whenever in this Bond Indenture the giving of D-33 notice by mail or otherwise is required, the giving of such notice may be waived in writing by SECTION 12.03. Limitation of Liability of Directors, Etc. of Authority. No the person entitled to receive such notice and in any case the giving or receipt of such notice covenant, agreement, provision or obligation contained herein shall be deemed to be a covenant, shall not be a condition precedent to the validity of any action taken in reliance upon such agreement or obligation of any present or future director, commissioner, officer, employee, waiver. member or agent of the Authority in his individual capacity, and neither the members of the Authority nor any officer thereof shall be liable personally on this Bond Indenture or any of the SECTION 12.08. Severability of Invalid Provisions. If any one or more of the Bonds or be subject to any personal liability or accountability by reason of the issuance thereof provisions contained in this Bond Indenture or in the Bonds shall for any reason be held to be or this Bond Indenture. No director, commissioner, officer, employee, member or agent of the invalid, illegal or unenforceable in any respect, then such provision or provisions shall be Authority shall incur any personal liability with respect to any other action taken by him deemed several from the remaining provisions contained in this Bond Indenture and such pursuant to this Bond Indenture or the Act. Notwithstanding anything herein to the contrary, no invalidity, illegality or unenforceability shall not affect any other provision of this Bond provision, covenant or agreement contained in this Bond Indenture or in the Bonds or any Indenture, and this Bond Indenture shall be construed as if such invalid or illegal or obligations herein or therein imposed upon the Authority or the breach thereof, shall constitute or unenforceable provision had never been contained herein. give rise to or impose upon the Authority a pecuniary liability or a charge upon its general credit. In making the agreements, provisions and covenants set forth in this Bond Indenture, the SECTION 12.09. Notices. All notices to Bondholders, including DTC, shall be Authority has not obligated itself except with respect to its rights and interest in the Loan given by certified or registered mail, commercial overnight delivery service, telex, telegram, Agreement, as hereinabove provided. The liability of the Authority, including its officers, telecopier, Electronic Notice or other telecommunication device unless otherwise provided members and employees under any and all of the documentation executed in connection with the herein and confirmed in writing as soon as practicable. Any notice to or demand upon the issuance of the Bonds shall not constitute its general obligation and recourse against the Trustee may be served or presented, and such demand may be made, at the Designated Corporate Authority on the documentation executed in connection with the issuance of the Bonds shall be Trust Office of the Trustee, or at such other address as may have been filed in writing by the had only against the property specifically pledged as security therefor and any rents, issues and Trustee, the Authority or the Obligor, shall be deemed to have been sufficiently given or served profits thereof. It is expressly understood that the Authority shall not otherwise be obligated and for all purposes by being delivered or sent by telex or by being deposited, postage prepaid, in a that none of its members, officers or employees shall be in any way obligated for any costs, post office letter box, addressed as the case may be, expenses, fees or other obligations or liabilities incurred or imposed in connection with the To the Trustee: issuance of the Bonds, whether incurred prior to or after closing, and that recourse against the

Authority and its members, officers of employees, shall be limited as set forth herein.

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U.S. Bank National Association execution thereof, or by an affidavit of a witness of such execution duly sworn to before such Global Corporate Trust Services notary public or other officer. 50 South 16th Street, Suite 2000 Mail Station: EX-PA-WBSP The ownership of Bonds shall be proved by the bond registration books held by the Philadelphia, PA 19102 Trustee.

To the Authority: Any request, consent or other instrument or writing of the Holder of any Bond shall bind every future Holder of the same Bond and the Holder of every Bond issued in exchange therefor Montgomery County Higher Education and Health Authority or in lieu thereof, in respect of anything done or suffered to be done by the Trustee or the 1800 East High Street, Suite 250 Authority in accordance therewith or in reliance thereon. Pottstown, PA 19464 Attention: Chairman SECTION 12.11. Disqualified Bonds. In determining whether the Holders of the Telecopier No: (610) 970-5016 requisite aggregate principal amount of Bonds have concurred in any demand, request, direction, consent or waiver under this Bond Indenture, Bonds which are owned or held by or for the (or such other address as may have been filed in writing by the Authority with the Trustee), account of the Authority or the Obligor, or by any other obligor on the Bonds, or by any person directly or indirectly controlling or controlled by, or under direct or indirect common control To the Obligor: with, the Authority, the Obligor, or any other obligor on the Bonds, shall be disregarded and deemed not to be Outstanding for the purposes of this Section if the Holder shall establish to the Pennsylvania LTC, Inc. satisfaction of the Trustee the Holder’s right to vote such Bonds and that the Holder is not a 15 Piedmont Centre, Suite 930 person directly or indirectly controlling or controlled by, or under direct or indirect common Atlanta, GA 30305 control with, the Authority, the Obligor or any other obligor on the Bonds. In case of a dispute Attention: President as to such right, any decision by the Trustee taken upon the advice of counsel shall be full D-34 protection to the Trustee. (or such other address as may have been filed in writing by the Obligor with the Trustee), SECTION 12.12. Money Held for Particular Bonds. The money held by the Trustee To the Underwriter: for the payment of the interest, principal or premium due on any date with respect to particular Bonds (or portions of Bonds in the case of registered Bonds redeemed in part only) shall, on and Herbert J. Sims & Co., Inc. after such date and pending such payment, be set aside on its books and held uninvested in trust 2150 Post Road, Suite 301 by it for the Holders of the Bonds entitled thereto. Fairfield, Connecticut 06824 Attention: Executive Offices SECTION 12.13. Funds. Any fund required by this Bond Indenture to be established and maintained by the Trustee may be established and maintained in the accounting records of (or such other address as may have been filed in writing by the Underwriter with the Trustee), the Trustee, either as a fund or an account, and may, for the purposes of such records, any audits thereof and any reports or statements with respect thereto, be treated either as a fund or as an SECTION 12.10. Evidence of Rights of Bondholders. Any request, consent or other account; but all such records with respect to all such funds shall at all times be maintained in instrument required or permitted by this Bond Indenture to be signed and executed by accordance with current industry standards, to the extent practicable, and with due regard for the Bondholders may be in any number of concurrent instruments of substantially similar tenor and requirements of Section 6.05 hereof and for the protection of the security of the Bonds and the shall be signed or executed by such Bondholders in person or by an agent or agents duly rights of every Holder thereof. appointed in writing. Proof of the execution of any such request, consent or other instrument or of a writing appointing any such agent, or of the holding by any person of Bonds transferable by SECTION 12.14. Payments Due on Days other than Business Days. If a payment delivery, shall be sufficient for any purpose of this Bond Indenture and shall be conclusive in day is not a Business Day at the Designated Corporate Trust Office of the Trustee, then payment favor of the Trustee and of the Authority if made in the manner provided in this Section. may be made at that place on the next Business Day and no interest shall accrue for the intervening period. The fact and date of the execution by any person of any such request, consent or other instrument or writing may be proved by the certificate of any notary public or other officer of SECTION 12.15. Execution in Several Counterparts. This Bond Indenture may be any jurisdiction, authorized by the laws thereof to take acknowledgments of deeds, certifying executed in any number of counterparts and each of such counterparts shall for all purposes be that the person signing such request, consent or other instrument acknowledged to him the

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deemed to be an original; and all such counterparts, shall together constitute but one and the IN WITNESS WHEREOF, the Montgomery County Higher Education and Health same instrument. Authority has caused this Bond Indenture to be signed in its name by its (Vice) Chairman and its seal to be hereunto affixed and attested by its Secretary or Assistant Secretary, and U.S. Bank SECTION 12.16. Notices to Rating Agency. Written notice shall be provided by the National Association, has caused this Bond Indenture to be signed in its corporate name by its Trustee to each Rating Agency, if any, of (i) by the successor Trustee of the appointment of any Authorized Officer, all as of the day and year first above written successor Trustee, (ii) any supplemental indenture or any amendment to the Loan Agreement, and (iii) the payment of all Outstanding Bonds. Attest: MONTGOMERY COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY SECTION 12.17. Governing Law. This Bond Indenture and all matter arising hereunder shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania, without regard to any conflict of laws provision thereof. ______By:______(Vice) Chairman [End of Article XII] Assistant Secretary

(SEAL)

U.S. BANK NATIONAL ASSOCIATION

D-35 By:______Authorized Officer

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EXHIBIT A Indenture dated as of November 1, 2017, between the Authority and the Trustee (which indenture, as from time to time amended and supplemented, is hereinafter referred to as the “Bond Indenture”). Payment of interest on this Bond shall be made on each Interest Payment FORM OF BOND Date to the registered Owner hereof as of the applicable Regular Record Date and shall be paid by check mailed by the Trustee to such registered Owner at his address as it appears on the Unless this certificate is presented by an authorized representative of The Depository Trust registration books of the Authority or at such other address as is furnished to the Trustee in Company, a New York corporation (“DTC”) to the Montgomery County Higher Education and writing by such registered Owner, or in such other manner as may be permitted by the Bond Health Authority (the “Authority”) or its agent for registration of transfer, exchange or payment, Indenture. As used herein, the term “Business Day” means a day other than (i) a Saturday or and any certificate issued is registered in the name of Cede & Co. or in such other name as is Sunday; (ii) a legal holiday on which banking institutions in the State of New York or the requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to Commonwealth of Pennsylvania are authorized or required by law to close; or (iii) a day on such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, which the New York Stock Exchange is closed. PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner (the “Registered Owner”) hereof, This Bond and the Bonds of the Series of which it is a part is comprised of a duly Cede & Co., has an interest herein. authorized issue of bonds of the Authority designated as “Tax-Exempt Revenue Bonds (Pennsylvania LTC Inc. Project), Series of 2017” (the “Bonds”) issued in the original aggregate MONTGOMERY COUNTY HIGHER EDUCATION AND HEALTH AUTHORITY principal amount of $______under and by virtue of the Pennsylvania Municipality TAX-EXEMPT REVENUE BOND Authorities Act, 53 PA.C.S.A. §5601 et seq., as amended (the “Act”), and by virtue of a (PENNSYLVANIA LTC, INC. PROJECT) resolution duly adopted by the Authority on June 26, 2017 (the “Resolution”), and equally and SERIES OF 2017 ratably secured under the Bond Indenture, for the purpose of financing a portion of the costs of the project (the “Project”) consisting of (i) the current refunding of the outstanding Horsham No. R-1 Industrial and Commercial Development Authority Health Care Facilities Refunding Revenue Interest Rate Maturity Date Dated Date CUSIP Bonds (Pennsylvania LTC, Inc. Project) Series 2007, the proceeds of which were applied to D-36 finance or refinance the acquisition of and capital expenditures with respect to Edgehill Nursing December 1, 20__ and Rehabilitation Center, a 60-bed nursing facility located in Glenside, Pennsylvania (the “Edgehill Facility”) and Linwood Nursing and Rehabilitation Center (formerly known as Mountain Rest Nursing Home), a 102-bed nursing facility located in Scranton, Pennsylvania (the “Linwood Facility,” and together with the Edgehill Facility, the “Facilities”); (ii) the demolition KNOW ALL PERSONS BY THESE PRESENTS that the Montgomery County Higher of one wing of the Linwood Facility and the construction, equipping and furnishing of a new 2- Education and Health Authority (the “Authority”), for value received, promises to pay to CEDE story, 46-bed replacement wing at the Linwood Facility (the “Improvements”); (iii) and Co. registered assigns, upon surrender hereof, the principal sum of miscellaneous capital expenditures at the Facilities; (iv) the funding of a debt service reserve dollars ($ ), and in like manner to pay (calculated on the basis of a 360-day year or fund for the Bonds and capitalized interest on the Bonds; and (v) the payment of certain costs of twelve 30 day months) on said sum at the rate of ______% per annum on June 1 and issuing the Bonds. December 1 of each year, commencing June 1, 2018 (each, an “Interest Payment Date”), from the Interest Payment Date next preceding the date of authentication hereof to which interest has Pursuant to a Loan Agreement dated as of November 1, 2017 (the “Loan Agreement”) by been paid or duly provided for, unless the date of authentication hereof is an Interest Payment and between the Authority and Pennsylvania LTC Inc. (the “Obligor”), payments sufficient for Date to which interest has been paid or duly provided for, in which case from the date of the prompt payment when due of the principal of, premium, if any, and interest on the Bonds are authentication hereof. to be paid to the Trustee for the account of the Authority and deposited in the Bond Fund established by the Bond Indenture and have been duly pledged for that purpose, all to the extent Notwithstanding the foregoing, if this Bond is authenticated after any date which is the and in the manner provided in the Bond Indenture. fifteenth day of the month next preceding any Interest Payment Date (a “Record Date”) and before the following Interest Payment Date, this Bond shall bear interest from such Interest To provide for its loan repayment obligations, the Obligor has issued its Series 2017 Note Payment Date; provided, however, that if the Authority shall default in the payment of interest (the “Series 2017 Master Obligation”) pursuant to a Master Trust Indenture dated as of due on such Interest Payment Date, then this Bond shall bear interest from the next preceding November 1, 2017, as supplemented (the “Master Trust Indenture”), between the Obligor and Interest Payment Date to which interest has been paid or duly provided for. The principal of this U.S. Bank National Association, as master trustee (the “Master Trustee”). Pursuant to the Bond is payable in lawful money of the United States of America at the principal corporate trust Master Trust Indenture, the Obligated Group has pledged and granted a security interest in the office of U.S. Bank National Association, as trustee (together with its successors in trust, the Gross Revenues (as defined in the Master Trust Indenture) and certain real and personal property “Trustee”) or at the duly designated office of any successor Trustee under the Bond Trust to the Master Trustee to secure the Series 2017 Master Obligation. Additional obligations on a

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parity basis with the Series 2017 Master Obligation may be issued pursuant to the Master Trust purposes, and neither the Authority nor the Trustee shall be bound by any notice or knowledge to Indenture subject to the conditions and terms contained therein, and the payments on such the contrary. additional obligations will also be secured by a pledge of the Gross Revenues and certain real and personal property. The Bonds shall be issuable as fully registered Bonds without coupons in the denomination of $25,000 or any integral multiple of $5,000 in excess thereof. The Bonds are all issued under and are equally and ratably secured by and entitled to the protection of the Bond Indenture, pursuant to which all payments due from the Obligor to the Extraordinary Optional Redemption Authority under the Loan Agreement (other than certain indemnification payments and the payment of certain expenses of the Authority) are assigned to the Trustee to secure the payment The Bonds are callable for redemption in the event (i) the Facilities or any portion thereof of the principal of and premium, if any, and interest on the Bonds and certain costs, fees and is damaged or destroyed or taken in a condemnation proceeding as provided in Sections 4.12 and expenses of the Trustee. 4.13 of the Master Trust Indenture and the Obligor is under no obligation to repair or rebuild the Facilities under the Master Trust Indenture or (ii) the Obligor shall exercise its option to cause Reference is hereby made to the Master Trust Indenture, the Bond Indenture and the the Bonds to be redeemed as provided in Section 4.04 of the Loan Agreement. If called for Loan Agreement for a description of the property pledged and assigned, the provisions, among redemption at any time pursuant to this Section 4.01(a), the Bonds shall be subject to redemption others, with respect to the nature and extent of the security, the rights, duties and obligations of by the Authority on any date, in whole or in part, at a redemption price equal to 100% of the the Authority, the Trustee and the Owners of the Bonds and the terms upon which the Bonds are principal amount thereof being redeemed, plus accrued interest to the redemption date. issued and secured; and the Owner of this Bond, by acceptance hereof, hereby consents to the terms and provisions of all of the foregoing as a material portion of the consideration for the Optional Excess Proceeds Redemption. issuance of this Bond. The Bonds are callable for redemption, at the option of the Obligor on behalf of the THIS BOND IS A LIMITED OBLIGATION OF THE ISSUER AND IS PAYABLE Issuer, at the written direction of the Authorized Obligor Representative addressed to the SOLELY FROM THE SOURCES REFERRED TO HEREIN. NEITHER THE GENERAL Trustee, from amounts remaining in the Project Fund upon completion of the Project and

D-37 CREDIT OF THE ISSUER NOR THE CREDIT OR THE TAXING POWER OF THE achievement of Stable Occupancy (as defined in the Master Trust Indenture), in an amount not to COUNTY OF MONTGOMERY OR OF THE COMMONWEALTH OF PENNSYLVANIA OR exceed $500,000, at a redemption price equal to 100% of the principal amount thereof being OF ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED FOR THE PAYMENT OF redeemed, plus accrued interest to the redemption date. THIS BOND, NOR SHALL THIS BOND BE OR BE DEEMED A GENERAL OBLIGATION OF THE ISSUER OR AN OBLIGATION OF THE COUNTY OF MONTGOMERY OR THE Mandatory Redemption Upon Determination of Taxability COMMONWEALTH OF PENNSYLVANIA OR OF ANY POLITICAL SUBDIVISION The Bonds are subject to mandatory redemption in whole at a redemption price equal to: THEREOF. THE ISSUER HAS NO TAXING POWER. (i) 105% of the principal amount redeemed plus accrued interest to, but not including, the date of This Bond shall be issued pursuant to a book entry system administered by The redemption to the extent that such Determination of Taxability resulted from the action or Depository Trust Company (together with any successor thereto, “Securities Depository”). The inaction of the Obligor or (ii) 100% of the principal amount redeemed plus accrued interest to, book entry system will evidence beneficial ownership of the Bonds with transfers of ownership but not including, the date of redemption to the extent that such Determination of Taxability did effected on the register held by the Securities Depository pursuant to rules and procedures not result from the action or inaction of the Obligor, on any Business Day within forty-five (45) established by the Securities Depository. So long as the book entry system is in effect, transfer days after the occurrence of a Determination of Taxability; provided, however, if, in the opinion of principal, interest and premium payments, and provisions of notices or other communications, of Bond Counsel, a mandatory redemption on account of a Determination of Taxability of less to beneficial owners of the Bonds will be the responsibility of the Securities Depository as set than all of the Bonds would result in the interest on the Bonds Outstanding following such forth in the Bond Indenture. mandatory redemption not being includable in the gross income of the holders of such Outstanding Bonds, then the Bonds are subject to mandatory redemption upon the occurrence of If the book-entry system is discontinued, this Bond will be transferable by the registered a Determination of Taxability in the amount specified in such Opinion, provided that such owner hereof in person or by his attorney duly authorized in writing, at the principal corporate redemption must be in an Authorized Denomination. trust office of the Trustee, but only in the manner, subject to the limitations and upon payment of the charges provided in the Bond Indenture, and upon surrender and cancellation of this Bond. “Determination of Taxability” means: (i) the issuance of a statutory notice of deficiency Upon such transfer a new registered Bond or Bonds of authorized denomination or by the Internal Revenue Service (the “IRS”) which in effect holds that an Event of Taxability has denominations for the same aggregate principal amount will be issued to the transferee in occurred; (ii) the issuance of a proposed written adverse determination by the IRS to the Obligor exchange therefor. The Authority and the Trustee may deem and treat the registered Owner or the Authority, which in effect holds that an Event of Taxability has occurred; provided that no hereof as the absolute Owner hereof (whether nor not this Bond shall be overdue) for all Determination of Taxability will be deemed to occur if the Obligor or the Authority has initiated an administrative appeal of such determination or has begun negotiating a closing agreement

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with the IRS, until the earliest of (A) abandonment of the appeals process by the Obligor, (B) the date on which such appeals process has been concluded adversely to the Obligor or the Authority * At maturity and no further appeal is permitted or (C) twelve (12) months after the receipt by the Obligor or the Authority of the proposed adverse determination, unless otherwise approved by the Owners Bonds Maturing December 1, 20__ of at least a majority in aggregate principal amount of the Bonds then Outstanding; (iii) the December 1 of the Year Principal Amount deposit by the Obligor with the Trustee of a certificate to the effect that an Event of Taxability has occurred or will occur and setting forth the date of taxability (i.e. the date on which the

interest on the Bonds is declared taxable for federal income tax purposes); the Obligor will be obligated to deliver promptly to the Trustee such a certificate upon the occurrence of an Event of Taxability; (iv) the rendering of a final and nonappealable decision, judgment, decree or other order by any court of competent jurisdiction to the effect that an Event of Taxability has occurred; or (v) the delivery to the Trustee of an unqualified opinion of Bond Counsel to the * At maturity effect that an Event of Taxability has occurred or a written statement by Bond Counsel delivered to the Trustee that Bond Counsel is unable to render an opinion to the effect that interest on the Bonds is excluded from gross income for purposes of federal income taxation. The Authority will be entitled to receive a credit in respect of its mandatory redemption obligation under this Section 4.01(c) for Bonds delivered, purchased or redeemed, as hereinafter “Event of Taxability” means any conditions or circumstances that cause the interest on provided, if the Obligor at its option purchases in the open market and delivers to the Trustee for any of the Bonds to become includable in the gross income of the Owners thereof for purposes of cancellation Bonds of the same series or redeems Bonds of the same maturity (other than through federal income tax. mandatory redemption under this Section 4.01(c)) and such Bonds have not theretofore been applied as a credit against any mandatory redemption obligation. Each such Bond so purchased Mandatory Sinking Fund Redemption or redeemed will be credited by the Trustee at 100% of the principal amount thereof to the obligation of the Authority on such mandatory redemption date, and any excess will be credited D-38 (a) As and for the retirement of the Bonds, the Basic Payments specified in to future mandatory redemption obligations in inverse order of maturity, unless the Authorized Section 4.01(a) of the Loan Agreement which are to be deposited in the Bond Fund will include Obligor Representative directs the Trustee otherwise, and the principal amount of such Bonds to an amount sufficient to redeem in part, by lot (after credit as provided below), the following be redeemed by operation of mandatory redemption and the Basic Payments specified in Section principal amounts (which include the principal amount which will be outstanding on the date of 4.01 of the Loan Agreement for mandatory redemption will be accordingly reduced. maturity) of such Bonds at one hundred percent (100%) of the principal amount thereof plus accrued interest to the redemption date on the following redemption dates (each, a “Mandatory Optional Redemption Sinking Fund Payment Date”) The Series 2017 Bonds maturing on and after December 1, 20__ are subject to optional Bonds Maturing December 1, 20__ redemption prior to maturity by the Issuer at the written direction of the Obligor in whole or in part on December 1, 20__ or on any date thereafter at the redemption prices set forth in the table December 1 of the Year Principal Amount below, together with accrued and unpaid interest to the redemption date.

Redemption Dates Redemption Price (% of principal amount to be redeemed)

* At maturity

Bonds Maturing December 1, 20__

December 1 of the Year Principal Amount

Except for mandatory redemption pursuant to Section 4.01(c) of the Bond Indenture, if less than all of the Bonds are called for redemption in any of the circumstances set forth above, the particular Bonds or portions thereof to be redeemed will be directed in writing by the Authorized Obligor Representative and, if less than all of the Bonds of a maturity are to be

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redeemed, and in the case of mandatory redemption pursuant to Section 4.01(c) thereof, the In lieu of redeeming the Bonds, the Trustee shall, at the direction of the Obligor, use such particular Bonds or portions thereof to be redeemed within a maturity will be selected by DTC or funds otherwise available under the Bond Indenture for redemption of Bonds to purchase Bonds any successor depository in accordance with its procedures or, if the book-entry system is as described in the Indenture. discontinued, by lot in such manner as the Trustee shall determine. If the Trustee receives no such direction from the Obligor, Bonds shall be redeemed in inverse order of maturity and if less The Bonds are issued pursuant to and in full compliance with the Constitution and laws than all of the Bonds of a maturity are to be redeemed, the particular Bonds or portions thereof of the Commonwealth of Pennsylvania, particularly the Act, and by appropriate action duly within a maturity to be redeemed shall be selected by DTC or any successor depository in taken by the Authority authorizing the execution and delivery of the Loan Agreement and the accordance with its procedures or, if the book-entry system is discontinued, by lot in such Bond Indenture. The Bonds have been issued under the provisions of the Act. manner as the Trustee shall determine. Notwithstanding anything to the contrary contained herein or in the Bond Indenture, the If a Bond is of a denomination larger than $25,000, a portion of such Bond may be Loan Agreement or in any other instrument or document executed by or on behalf of the redeemed, but Bonds will be redeemed only in an amount that causes the unredeemed portion to Authority in connection herewith, no stipulation, covenant, agreement or obligation contained be in an Authorized Denomination. Upon surrender of any Bond for redemption in part, the herein or therein shall be deemed or construed to be a stipulation, covenant, agreement or Authority will execute and the Trustee will authenticate and deliver to the Owner thereof a new obligation of any present or future member commissioner, director, trustee, officer, employee or Bond or Bonds of the same series, interest rate and maturity and of authorized denominations in agent of the Authority, or of any successor to the Authority, in any such person's individual an aggregate principal amount equal to the unredeemed portion of the Bond so surrendered. capacity, and no such person, in his individual capacity, shall be liable personally for any breach or nonobservance of or for any failure to perform, fulfill or comply with any such stipulations, So long as the Bonds are registered in the name of DTC or its nominee, the Trustee shall covenants, agreements or the principal of or premium, if any, or interest on any of the Bonds or cause notice of any redemption of such series of Bonds hereunder to be made in accordance with for any claim based thereon or on any such stipulation, covenant, agreement or obligation, the Letter of Representations. If at any time the book-entry only system shall be discontinued, against any such person, in his individual capacity, either directly or through the Authority or notice of the call for redemption, identifying the Bonds or portions thereof to be redeemed and any successor to the Authority, under any rule of law or equity, statute or constitution or by the the redemption price (including the premium, if any), shall be given by the Trustee by mailing a (enforcement of any assessment or penalty or otherwise, and all such liability of any such person, D-39 copy of the redemption notice by first class mail at least (i) ten (10) days prior to the date fixed in his individual capacity, is hereby expressly waived and released. for a mandatory redemption pursuant to Section 4.01(b) of the Bond Indenture, and (ii) thirty (30) days but not more than sixty (60) days prior to the date fixed for redemption in all other The Owner of this Bond shall have no right to enforce the provisions of the Bond instances to the Owner of each Bond to be redeemed in whole or in part at the address shown on Indenture or to institute action to enforce the covenants therein, or to take any action with respect the registration books. Such notice shall contain such matters specified in the Bonds for the to any default under the Bond Indenture, or to institute, appear in or defend any suit or other redemption thereof and shall state that such redemption is conditional upon the receipt of monies proceedings with respect thereto, unless certain circumstances described in the Bond Indenture by the Trustee for such purpose on or prior to the redemption date. Any notice mailed as shall have occurred. In certain events, on the conditions in the manner and with the effect set provided in this paragraph shall be conclusively presumed to have been duly given, whether or forth in the Bond Indenture, the principal of all the Bonds issued under the Bond Indenture and not the Owner receives the notice. The Trustee shall deliver a copy of any such redemption then outstanding may become or may be declared due and payable before the stated maturity notice to the Obligor. thereof, together with interest accrued thereon.

Upon the giving of notice at the required times on or prior to the date fixed for The Owner of this Bond has no right to enforce the provisions of the Bond Indenture or redemption, the Bonds or portion thereof designated for redemption will become and be due and to institute action to enforce the covenants therein, or to take any action with respect to any event payable on the date fixed for redemption at the redemption price provided for such Bond, of default under the Bond Indenture, or to institute, appear in or defend any suit, action or other provided immediately available funds for their redemption are on deposit at the place of payment proceedings with respect thereto except as provided in the Bond Indenture. In certain events, on at that time, and, unless the Authority defaults in the payment of the principal thereof, premium, the conditions, in the manner and with the effect set forth in the Bond Indenture, the principal of if any, and interest thereon, such Bonds or portion thereof will cease to bear interest from and all of the bonds issued under the Bond Indenture and then outstanding may become or may be after the date fixed for redemption, whether or not such Bonds are presented and surrendered for declared due and payable before the stated maturity thereof, together with interest accrued payment on such date. If any Bond or portion thereof called for redemption is not so paid upon thereon. Modifications or alterations of the Bond Indenture, or of any supplements thereto, may presentation and surrender thereof for redemption, such Bond or portion thereof will continue to be made only to the extent and in the circumstances permitted by the Bond Indenture. bear interest at the rate set forth therein until paid or until due provision is made for the payment of the same. It is hereby certified, recited and declared that all acts, conditions and things required to exist, happen and be performed precedent to and in connection with the execution and delivery of the Bond Indenture and the issuance of this Bond do exist, have happened and have been performed in due time, form and manner as required by law; and that the issuance of this Bond

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and the issue of which it forms a part, together with all other obligations of the Authority, does IN WITNESS WHEREOF, the Montgomery County Higher Education and Health not exceed or violate any constitutional or statutory limitation. Authority has caused this Bond to be signed in its name and on its behalf by the manual or facsimile signature of its Chairman and its corporate seal to be affixed, imprinted or reproduced To the extent permitted by, and as provided in, the Bond Indenture, modifications or hereon and attested by the manual or facsimile signature of its Secretary or Assistant Secretary amendments of the Bond Indenture, or of any indenture supplemental thereto, and of the rights all as of the Date of Issuance. and obligations of the Authority and of the owners of the Bonds may be made with the consent of the Authority and the Bond Trustee and, in certain instances, of not less than a majority in aggregate principal amount of the Bonds then Outstanding; provided, however, that no such ATTEST: MONTGOMERY COUNTY INDUSTRIAL modification or amendment shall be made which will affect the terms of payment of the principal DEVELOPMENT AUTHORITY of, premium, if any, or interest on any of the Bonds, which are unconditional. Any such consent by the owner of this Bond shall be conclusive and binding upon such owner and upon all future owners of this Bond and of any Bond issued upon the transfer or exchange of this Bond whether or not notation of such consent is made upon this Bond. ______By:______This Bond shall not be valid or become obligatory for any purpose or be entitled to any Assistant Secretary (Vice) Chairman security or benefit under the Bond Indenture until the certificate of authentication hereon shall have been signed by the Trustee, as authenticating agent. (SEAL) D-40

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(Form of Certificate of Authentication) (Form of Transfer) CERTIFICATE OF AUTHENTICATION FOR VALUE RECEIVED, ______the undersigned, hereby sells, assigns This Bond is one of the Bonds of the issue described in the within-mentioned Bond Trust and transfers unto ______(Tax Identification or Social Security Indenture. No.______) the within Bond and all rights thereunder, and hereby irrevocably constitutes and appoints ______attorney to transfer the within Bond on the books U.S. Bank National Association, kept for registration thereof, with full power of substitution in the premises. as Trustee Dated: ______By:______Authorized Signature NOTICE: Signature must be guaranteed by an approved eligible guarantor institution, an institution which is a participant in a Securities Transfer Association recognized signature guarantee program. Date of Authentication: ______NOTICE: The Signature to this assignment must correspond with the name as it appears upon the face of the within Bond in every particular, without alteration or enlargement or any change whatever.

D-41

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EXHIBIT B Executed the ___ day of ______, 20__.

FORM OF PROJECT FUND REQUISITION PENNSYLVANIA LTC, INC. REQUISITION FOR PAYMENT FROM PROJECT FUND - NO. ______

By: (Vice) President T O: TO: U.S. Bank National Association, Trustee under the Bond Trust Indenture (the “Bond Indenture”) between Montgomery County Higher Education and Health Authority and Pennsylvania LTC, Inc., dated as of November 1, 2017. This requisition is made pursuant to Section 5.06 of the Bond Indenture on account of Costs of the Project. Terms used in this requisition shall have the meanings specified for them in the Bond Indenture. The Trustee is hereby authorized and directed to make payment from the Project Fund as specified in Schedule A attached hereto.

The undersigned Authorized Obligor Representative hereby certifies to you in connection with the amount for which payment is requested by this requisition, as follows:

1. The obligations set forth on this requisition are properly allocable to the Project Fund and do not constitute Costs of Issuance.

D-42 2. The undersigned has reviewed the provisions of the Bond Indenture and the Loan Agreement and the payment of this requisition will not result in any proceeds of the Bonds being expended in violation of the provisions of the Bond Indenture or the Loan Agreement.

3. As to any obligation stated on the requisition incurred in or for payment of the purchase price of any item of machinery or equipment the Obligor has, or upon disbursement pursuant to such requisition will have, title to such property free and clear of any lien or encumbrance other than Permitted Encumbrances (as defined in the Master Trust Indenture).

4. The obligation was properly incurred and is a proper charge against the Project Fund; the amount requisitioned is due and unpaid; and the work, material or other purchased item to which the payment relates has been accomplished, delivered or installed in a manner satisfactory to the Obligor.

5. If this requisition relates in whole or in part to payments under construction contracts, it shall be accompanied by an AIA form Application and Certification for Payment) (AIA form G702/703).

6. No event has occurred and is continuing which constitutes an Event of Default under the Bond Indenture or the Loan Agreement.

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EXHIBIT C

COMPLETION CERTIFICATE

To: U.S. Bank National Association, as trustee (the “Trustee”) under that certain Trust Indenture, dated as of November 1, 2017 (the “Bond Indenture”), between the Trustee and the Montgomery County Higher Education and Health Authority, pursuant to which the $______Tax-Exempt Revenue Bonds (Pennsylvania LTC, Inc. Project) Series of 2017 (the “Bonds”) were issued.

The undersigned, being the Obligor under the Bond Indenture hereby certifies as follows:

1. All construction of the Project has been completed and all costs of labor, services, materials and supplies used in connection with such construction have been paid, except for amounts representing holdbacks, or not yet payable, or being contested as specified in the ;list of such amounts attached hereto (the “Reserved Amounts”).

2. All equipment for the Project has been acquired and installed and all costs and expenses incurred in connection therewith have been paid, except Reserved Amounts.

3. All other facilities necessary in connection with the Project have been acquired, D-43 constructed, improved and equipped, all costs and expenses incurred in connection therewith [THIS PAGE INTENTIONALLY LEFT BLANK] have been paid and all other payments required to be made in connection with the Project have been made, except Reserved Amounts.

4. All capitalized terms shall have the meaning set forth in the Bond Indenture or the Construction and Disbursement Agreement.

Executed the ___ day of ______, 20__.

PENNSYLVANIA LTC, INC.

By: (Vice) President

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TABLE OF CONTENTS Page

ARTICLE I DEFINITIONS ...... 2 Section 1.01 Definitions...... 2 Section 1.02 Content of Certificates and Opinions ...... 2 Section 1.03 Interpretation ...... 3

ARTICLE II REPRESENTATIONS AND UNDERTAKINGS ...... 3 Section 2.01 Representations by the Authority...... 3 Section 2.02 Representations by the Obligor ...... 5

ARTICLE III THE LOAN; USE OF PROCEEDS ...... 9 LOAN AGREEMENT Section 3.01 Loan of Funds to the Obligor ...... 9 Section 3.02 Acquisition, Construction, Furnishing and Equipping of the dated as of November 1, 2017 Improvements; Refunding and Refinancing ...... 9 Section 3.03 Project Fund ...... 9 by and between Section 3.04 Establishment of Completion Date ...... 10 Section 3.05 Security for Payments Under this Agreement; Recording and MONTGOMERY COUNTY HIGHER EDUCATION AND HEALTH AUTHORITY Filing ...... 10 Section 3.06 Covenants for Benefit of Bondholders ...... 11 D-44 and Section 3.07 Obligor Required to Pay Costs of the Project if Project Fund Insufficient ...... 11 PENNSYLVANIA LTC, INC. Section 3.08 Investment of Funds and Accounts ...... 11 Relating to Montgomery County Higher Education and Health Authority Section 3.09 Special Investment Covenants ...... 12

$______Tax-Exempt Revenue Bonds ARTICLE IV PAYMENT PROVISIONS...... 12 (Pennsylvania LTC, Inc. Project) Section 4.01 Payments ...... 12 Series of 2017 Section 4.02 Place of Payments ...... 14 Section 4.03 Reserved ...... 14 Section 4.04 Acceleration of Payment to Redeem Bonds ...... 14 Section 4.05 No Defense or Set-Off ...... 15 Section 4.06 Termination Upon Payment or Defeasance of Bonds ...... 15 Section 4.07 Assignment of Authority’s Rights ...... 15 Section 4.08 Assignment by Obligor ...... 15 Section 4.09 Indemnity Against Claims ...... 15 Section 4.10 Authority is Conduit Issuer; Obligor is Real Party in Interest; Covenant Not to Sue ...... 17

ARTICLE V OBLIGOR OBLIGATIONS; ASSIGNMENT TO TRUSTEE ...... 17 Section 5.01 General Obligation of the Obligor ...... 17 Section 5.02 Assignment to Trustee ...... 17 Section 5.03 Maintenance and Operation of the Facilities ...... 18 Section 5.04 Maintenance of Existence; Transfer of Assets ...... 18 Section 5.05 Compliance with Laws ...... 19

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Section 5.06 Notice of Bankruptcy Case Commencement ...... 19 Section 11.14 Multiple Counterparts ...... 27 Section 11.15 Consent ...... 27 ARTICLE VI THE FACILITIES ...... 19 Section 6.01 Prohibited Uses ...... 19

ARTICLE VII INSURANCE; DESTRUCTION, DAMAGE, EMINENT DOMAIN ...... 19 Section 7.01 Taxes, Other Governmental Charges and Utility Charges ...... 19 Section 7.02 Insurance Required ...... 20 Section 7.03 Advances by the Authority or the Trustee ...... 20 Section 7.04 Damage and Destruction ...... 20 Section 7.05 Condemnation ...... 20 Section 7.06 Condemnation of Property Not Included in Facilities ...... 20

ARTICLE VIII ADDITIONAL COVENANTS OF THE OBLIGOR ...... 20 Section 8.01 Compliance with Laws ...... 20 Section 8.02 Access to Premises and Records ...... 21 Section 8.03 Additional Information ...... 21 Section 8.04 Cooperation with Trustee ...... 21 Section 8.05 Rebate Fund ...... 21

ARTICLE IX EVENTS OF DEFAULT AND REMEDIES ...... 22 D-45 Section 9.01 Events of Default ...... 22 Section 9.02 Acceleration ...... 22 Section 9.03 Payment of Loan Payments on Default; Suit Therefor ...... 23 Section 9.04 Other Remedies ...... 23 Section 9.05 Cumulative Rights ...... 24 Section 9.06 Determination of Taxability Not a Default ...... 24

ARTICLE X OPTIONS TO TERMINATE AGREEMENT ...... 25 Section 10.01 Option to Terminate Upon Defeasance ...... 25

ARTICLE XI MISCELLANEOUS ...... 25 Section 11.01 Approval of Bond Indenture ...... 25 Section 11.02 Taxes and Insurance; Rights of Authority to Pay ...... 25 Section 11.03 Illegal Provisions Disregarded ...... 25 Section 11.04 Limitation of Liability of the Authority ...... 26 Section 11.05 No Recourse as to the Authority ...... 26 Section 11.06 Reference to Statute or Regulation ...... 26 Section 11.07 Notices ...... 26 Section 11.08 Applicable Law ...... 27 Section 11.09 Amendments ...... 27 Section 11.10 Term of Agreement ...... 27 Section 11.11 Amounts Remaining in Bond Fund ...... 27 Section 11.12 Survival of Covenants, Conditions and Representations ...... 27 Section 11.13 Headings ...... 27

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THIS LOAN AGREEMENT, dated as of November 1, 2017 (the “Agreement”), is by WHEREAS, to evidence the obligation of the Obligor to make payments under this and between MONTGOMERY COUNTY HIGHER EDUCATION AND HEALTH Agreement sufficient to pay the principal of, premium, if any, and interest on the Bonds, the AUTHORITY (the “Authority”), a public instrumentality of the Commonwealth and a body Obligor will execute and deliver to the Authority a promissory note dated the date of issuance of corporate and politic organized and existing under the Pennsylvania Municipality Authorities the Bonds in the principal amount of $______(the “Series 2017 Master Obligation”), which Act, 53 PA.C.S.A. §5601 et seq., as amended (the “Act”), and PENNSYLVANIA LTC, INC., a Series 2017 Master Obligation will be issued pursuant to a Master Trust Indenture dated as of Pennsylvania non-profit, nonstock corporation (the “Obligor”). November 1, 2017, as supplemented by a Supplemental Master Trust Indenture Number 1 dated as of November 1, 2017 (collectively, the “Master Trust Indenture”), between the Obligor and WITNESSETH: U.S. Bank National Association, as master trustee (the “Master Trustee”); and

WHEREAS, the Authority is authorized under the Act to finance health centers, as WHEREAS, to secure its obligations to pay principal of, premium, if any, and interest on defined in the Act; and the Bonds, the Authority has agreed (i) to assign and pledge to the Trustee, and grant a first priority security interest to the Trustee in, all of its right, title, and interest in this Agreement WHEREAS, the Obligor has requested that the Authority provide funds to finance a (except for the Unassigned Rights), and (ii) to assign and endorse the Series 2017 Master project (the “Project”) consisting of (i) the current refunding of the outstanding Horsham Obligation, and all revenues, payments, receipts, and moneys to be received and held thereunder, Industrial and Commercial Development Authority Health Care Facilities Refunding Revenue to the order of the Trustee; and Bonds (Pennsylvania LTC, Inc. Project) Series 2007 (the “2007 Bonds”), the proceeds of which were applied to finance or refinance the acquisition of and capital expenditures with respect to WHEREAS, to secure its obligations under the Series 2017 Master Obligation, the Edgehill Nursing and Rehabilitation Center, a 60-bed nursing facility located in Glenside, Obligor (i) will grant to the Master Trustee a security interest in the Gross Revenues (as defined Pennsylvania (the “Edgehill Facility”) and Linwood Nursing and Rehabilitation Center (formerly in the Master Trust Indenture) pursuant to the Master Trust Indenture, and (ii) will grant to the known as Mountain Rest Nursing Home), a 102-bed nursing facility located in Scranton, Master Trustee a mortgage lien on and a security interest in the real property and personal Pennsylvania (the “Linwood Facility”); (ii) the demolition of one wing of the Linwood Facility property described in the Mortgage and Security Agreements, each dated as of November 1, and the construction, equipping and furnishing of a new 2-story, 46-bed replacement wing at the 2017 (collectively, the “Mortgage”) from the Obligor, as mortgagor, to the Master Trustee, as D-46 Linwood Facility (the “Improvements”); (iii) miscellaneous capital expenditures at the Edgehill mortgagee, all subject to Permitted Encumbrances, as defined in the Master Trust Indenture; and Linwood Facilities; (iv) the funding of a debt service reserve fund for the Bonds (defined below) and capitalized interest on the Bonds; and (v) the payment of certain costs of issuing the NOW, THEREFORE, in consideration of the above premises and of the mutual Bonds; and covenants hereinafter contained, and for other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: WHEREAS, the Authority, by resolution adopted on June 26, 2017 (the “Resolution”), has authorized the issuance of its Tax-Exempt Revenue Bonds (Pennsylvania LTC, Inc. Project), ARTICLE I Series of 2017 (the “Bonds”) in the aggregate principal amount of $______for the purpose of providing funds for financing the Project; and DEFINITIONS

WHEREAS, the Bonds are to be issued under and secured by a Bond Trust Indenture, of Section 1.01 Definitions. Terms used as defined terms in the recitals shall have the even date herewith (the “Bond Indenture”), between the Authority and U.S. Bank National same meanings throughout this Agreement, and, in addition thereto, capitalized terms used and Association, a national banking association, as trustee (the “Trustee”); and not defined herein shall have the meanings assigned to such terms in the Bond Indenture and, to the extent not defined in the Bond Indenture, in the Master Trust Indenture. WHEREAS, this Agreement provides that the Authority will loan the proceeds of the Bonds to the Obligor to finance the Project and the Obligor has agreed, among other things, to Section 1.02 Content of Certificates and Opinions. Unless waived in whole or in part repay the loan in installments equal to payments of debt service on the Bonds when due; and by the Trustee, every certificate or opinion provided for in this Agreement with respect to compliance with any provision hereof shall include (1) a statement to the effect that the Person WHEREAS, the Authority hereby finds and determines that the financing of the Project making or giving such certificate or opinion has read such provision and the definitions herein will comply with the purposes and provisions of the Act; and relating thereto; (2) a brief statement as to the nature and scope of the examination or investigation upon which the certificate or opinion is based; (3) a statement to the effect that in WHEREAS, the execution and delivery of this Agreement and the Bond Indenture, and the opinion of such Person, he has made or caused to be made such examination or investigation the issuance of the Bonds under the Act, have been in all respects duly and validly authorized by as is necessary to enable him to express an informed opinion with respect to the subject matter the Resolution of the Authority, duly adopted and approved; and referred to in the instrument to which his signature is affixed; (4) a statement of the assumptions upon which such certificate or opinion is based, and that such assumptions are reasonable; and

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(5) a statement as to whether, in the opinion of such Person, such provision has been complied (b) Pending Litigation. There are no actions, suits, proceedings, inquiries or with. investigations pending or, to the knowledge of the Authority, threatened against or affecting the Authority in any court or by or before any governmental authority or arbitration board or Any such certificate or opinion made or given by an officer of the Authority or the tribunal, which involve the possibility of materially and adversely affecting the transactions Obligor may be based, insofar as it relates to legal or accounting matters, upon a certificate or contemplated by this Agreement or which, in any way, would adversely affect the validity or opinion of or representation by counsel or an accountant, unless such officer knows, or in the enforceability of the Bonds, the Bond Documents or any agreement or instrument to which the exercise of reasonable care should have known, that the certificate, opinion or representation Authority is a party and which is used or contemplated for use in the consummation of the with respect to the matters upon which such certificate or statement may be based, as aforesaid, transactions contemplated hereby or thereby, nor is the Authority aware of any facts or is erroneous. Any such certificate or opinion made or given by counsel or an accountant may be circumstances presently existing which would form the basis for any such actions, suits or based, insofar as it relates to factual matters (with respect to which information is in the proceedings. possession of the Authority or the Obligor, as the case may be) upon a certificate or opinion of or representation by an officer of the Authority or the Obligor, unless such counsel or accountant (c) Issue, Sale and Other Transactions Are Legal and Authorized. The issue knows, or in the exercise of reasonable care should have known, that the certificate or opinion or and sale of the Bonds and the execution and delivery by the Authority of the Bond Documents to representation with respect to the matter upon which such certificate or opinion or representation which it is a party and the compliance by the Authority with all of the provisions of each thereof may be based, as aforesaid, is erroneous. The same officer of the Authority or the Obligor, or the and of the Bonds (i) are within the purposes, powers and authority of the Authority, (ii) have same counsel or accountant, as the case may be, need not certify to all of the matters required to been done in full compliance with the provisions of the Act and have been approved by the be certified under any provision of this Agreement, but different officers, counsel or accountants Authority Board and will not conflict with or constitute on the part of the Authority a violation of may certify to different matters, respectively. or a breach of or a default under the provisions of the Authority’s articles of incorporaton or bylaws or any indenture, mortgage, deed of trust, pledge, note, lease, loan or installment sale Section 1.03 Interpretation. agreement, contract, or other agreement or instrument to which the Authority is a party or by which the Authority or its properties are otherwise subject or bound, or any license, judgment, (a) Unless the context otherwise indicates, words expressed in the singular decree, law, statute, order, writ, injunction, demand, rule or regulation of any court or D-47 shall include the plural and vice versa and the use of the neuter, masculine or feminine gender is governmental agency or body having jurisdiction over the Authority or any of its activities or for convenience only and shall be deemed to mean and include the neuter, masculine or feminine properties, and (iii) have been duly authorized by all necessary corporate action on the part of the gender, as appropriate. Authority.

(b) Headings of articles and sections herein and the table of contents hereof (d) Governmental Approvals. The Project has been approved by the County are solely for convenience of reference, do not constitute a part hereof and shall not affect the Commissioners of Montgomery County, Pennsylvania and the County Commissioners of meaning, construction or effect hereof. Lackawanna County, Pennsylvania after a public hearing held upon reasonable notice.

(c) All references herein to “Articles, “Sections” and other subdivisions are to (e) No Defaults. To the knowledge of the Authority, no event has occurred the corresponding Articles, Sections or subdivisions of this Agreement; the words “herein,” and no condition exists which would constitute an Event of Default by the Authority or which, “hereof,” “hereby,” “hereunder” and other words of similar import refer to this Agreement as a with the lapse of time or with the giving of notice or both, would become an Event of Default by whole and not to any particular Article, Section or subdivision hereof. the Authority. To the knowledge of the Authority, after making due inquiry with respect thereto, the Authority is not in default or violation in any material respect under the Act or under any ARTICLE II charter, bylaw or other agreement or instrument to which it is a party or by which it may be bound which would adversely affect the issuance of the Bonds or the consummation of the REPRESENTATIONS AND UNDERTAKINGS transactions contemplated hereby or by the Bond Indenture.

Section 2.01 Representations by the Authority. The Authority makes the following (f) No Prior Pledge. The Authority has not and will not pledge the income representations and findings as the basis for the undertakings on its part herein contained: and revenues derived from this Agreement other than pursuant to and as set forth in the Bond Indenture. (a) Organization and Authority. The Authority is a public body, corporate and politic created pursuant to the Act. Under the Act, the Authority has the power to enter into (g) Disclosure. The representations of the Authority contained in this the Bond Indenture and this Agreement and to carry out its obligations thereunder and to issue Agreement and any certificate, document, written statement or other instrument furnished to the the Bonds to finance the Project. Trustee or the Underwriter by or on behalf of the Authority in connection with the transactions contemplated hereby do not contain any untrue statement of a material fact relating to the

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Authority and do not omit to state a material fact relating to the Authority necessary in order to or constitute on the part of the Obligor a violation of or a breach of or a default under, or result in make the statements contained herein and therein relating to the Authority not misleading. the creation or imposition of any lien, charge, restriction or encumbrance (other than Permitted Encumbrances) upon any property of the Obligor under the provisions of, any charter instrument, (h) Authorized Project. The Authority has determined, based on information bylaw, operating agreement, indenture, mortgage, deed of trust, pledge, note, lease, loan or provided by the Obligor, that the Facilities constitute a “health center” within the meaning of the installment sale agreement, contract or other agreement or instrument to which the Obligor is a Act. party or by which the Obligor or its properties are otherwise subject or bound, or any license, law, statute, rule, regulation, judgment, order, writ, injunction, decree or demand of any court or (i) Tax Compliance. The Authority hereby covenants and agrees to comply governmental agency or body having jurisdiction over the Obligor or any of its activities or (to the extent it exercises control or direction) with all requirements of the Code, compliance properties, and (iii) have been duly authorized by all necessary and appropriate corporate action with which on its part subsequent to the issuance of the Bonds is necessary for the Bonds to be, on the part of the Obligor. The Obligor’s Documents are the valid, legal, binding and and to remain, Tax-Exempt Bonds and to not take any actions that would adversely affect the enforceable obligations of the Obligor. The officers of the Obligor executing the Obligor’s status of the Bonds as Tax-Exempt Bonds. The representations, warranties and covenants of the Documents are duly and properly in office and are fully authorized and empowered to execute Authority set forth in the Tax Certificate are hereby incorporated herein and made a part hereof the same for and on behalf of the Obligor. by this reference thereto as if fully set forth herein. (d) Governmental Consents. Neither the Obligor nor any of its business or Section 2.02 Representations by the Obligor. The Obligor makes the following properties, nor any relationship between the Obligor and any other Person, nor any circumstance representations and warranties as the basis for the undertakings on its part herein contained: in connection with the execution, delivery and performance by the Obligor of its obligations under the Obligor’s Documents, or offer, issue, sale or delivery by the Authority of the Series (a) Organization and Power. The Obligor is a non-profit, nonstock 2017 Bonds, is such as to require the consent, approval, permission, order, license or corporation duly organized, validly existing and in good standing under the laws of the authorization of, or the filing, registration or qualification with, any governmental authority on Commonwealth of Pennsylvania and has all requisite power and authority and all necessary the part of the Obligor in connection with the execution, delivery and performance of the licenses and permits to own and operate its properties and to carry on its business as it is now Obligor’s Documents, the consummation of any transaction therein contemplated, or offer, issue, D-48 being conducted and as it is presently proposed to be conducted. sale or delivery of the Series 2017 Bonds, except as have been obtained or made and as are in full force and effect and except as are not presently obtainable, other than the recording of the (b) Pending Litigation and Taxes. There are no actions, suits, proceedings, Mortgage and the filing of financing statements or instruments effective as financing statements inquiries or investigations pending or, to the knowledge of the Obligor, threatened against or perfecting the security interests created by the Bond Indenture, the Master Trust Indenture and affecting the Obligor in any court or by or before any governmental authority or arbitration board the Mortgage to be recorded and filed in connection therewith. To the knowledge of the Obligor, or tribunal, which involve the likelihood of materially and adversely affecting the properties, after making due inquiry with respect thereto, the Obligor will be able to obtain all such business, prospects, profits, operations or condition (financial or otherwise) of the Obligor, or the additional consents, approvals, permissions, orders, licenses or authorizations of governmental ability of the Obligor to perform its obligations under the Obligor’s Documents, or the authorities as may be required on or prior to the date the Obligor is legally required to obtain the transactions contemplated by this Agreement or which, in any way, would adversely affect the same. validity or enforceability of the Obligor’s Documents or the Bond Documents or any agreement or instrument to which the Obligor is a party and which is used or contemplated for use in the (e) No Defaults. To the Obligor’s knowledge, no event has occurred and no consummation of the transactions contemplated hereby or thereby, nor is the Obligor aware of condition exists that would constitute an Event of Default or which, with the lapse of time or any facts or circumstances presently existing which would form the basis for any such actions, with the giving of notice or both, would become an Event of Default. To the knowledge of the suits or proceedings. The Obligor is not in default with respect to any judgment, order, writ, Obligor, the Obligor is not in default or violation in any material respect, and no condition exists injunction, decree, demand, rule or regulation of any court, governmental authority or arbitration that, with the lapse of time or with the giving of notice or both, would become such a default or board or tribunal. All tax returns (federal, state and local) required to be filed by or on behalf of violation, under any charter instrument, bylaw, operating agreement or other agreement or the Obligor have been duly filed, and all taxes, assessments and other governmental charges instrument to which it is a party or by which it may be bound. For purposes of this subsection shown thereon to be due, including interest and penalties, except such, if any, as are being (e), a default or violation will be deemed “material” if it would adversely affect the ability of the actively contested by the Obligor in good faith, have been paid or adequate reserves have been Obligor to perform its obligations hereunder. made for the payment thereof. (f) Compliance with Law. To the knowledge of the Obligor, after making (c) Agreements Are Authorized. The execution and delivery by the Obligor due inquiry with respect thereto, the Obligor is not in violation of any laws, ordinances or of the Obligor’s Documents, the consummation of the transactions herein and therein governmental rules or regulations to which it is subject and has not failed to obtain any licenses, contemplated and the fulfillment of or the compliance with all of the provisions hereof and permits, franchises or other governmental authorizations (which are presently obtainable) thereof (i) are within the power, legal right and authority of the Obligor, (ii) do not conflict with necessary to the ownership of its properties or to the conduct of its business, which violation or

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failure to obtain might materially and adversely affect the properties, business, prospects, profits not omit to state a material fact necessary to make the statements contained herein or therein not or conditions (financial or otherwise) of the Obligor, including, without limitation, all licenses, misleading. There is no fact that the Obligor has not disclosed to the Authority or the permits and approvals. Underwriter in writing that materially and adversely affects or in the future may (so far as the Obligor can now reasonably foresee) materially and adversely affect the ownership or operation (g) Restrictions on the Obligor. The Obligor is not a party to or bound by any of the Facilities or the properties, business, operations, prospects, profits or condition (financial contract, instrument or agreement, or subject to any other restriction, that materially and or otherwise) of the Obligor or the ability of the Obligor to perform its obligations under the adversely affects its business, properties, assets, operations or condition (financial or otherwise). Obligor’s Documents or any of the documents or transactions contemplated hereby or thereby or The Obligor is not a party to any contract or agreement that restricts the right or ability of the any other transactions contemplated by the Bond Documents which has not been set forth in the Obligor to incur indebtedness for borrowed money. official statement relating to the Bonds or in the other certificates, documents and instruments furnished to the Underwriter by or on behalf of the Obligor prior to the date of delivery of such (h) No Prior Pledge. The Obligor has not created and will not create any liens official statement in connection with the transactions contemplated hereby. on any of its real or personal property, including Obligated Group cash, investments and Gross Revenues and the Mortgaged Property, other than the Permitted Encumbrances. (k) Compliance. The Facilities comply with all presently applicable building and zoning, health, environmental and safety ordinances and laws and all other applicable laws, (i) Tax-Exempt Organization. As of the date of this Agreement, (i) the rules and regulations of any and all governmental and quasi-governmental authorities having Obligor is a Tax-Exempt Organization by reason of its inclusion in the group exemption granted jurisdiction over any portion of the Facilities. to the Obligor’s affiliate, Guardian Foundation, Inc. (“Guardian”), (ii) Guardian received a determination letter dated January 30, 1990, from the Internal Revenue Service to the effect that (l) Condemnation. No condemnation or eminent domain proceeding has been it is a Tax-Exempt Organization (“Guardian’s 501(c)(3) Determination Letter”), (iii) Guardian commenced and is currently pending or, to the knowledge of the Obligor, threatened against the received a group exemption letter dated August 23, 1990, from the Internal Revenue Service (as Facilities. modified by a letter dated August 31, 1995, from the Internal Revenue Service recognizing Guardian as a public charity under Section 509(a)(3) of the Code) recognizing each of (m) Tax Compliance. The Obligor hereby covenants and agrees to comply

D-49 Guardian’s subordinates, including the Obligor, as a Tax-Exempt Organization (together, with all requirements of the Code compliance with which subsequent to the issuance of the “Guardian’s Group Exemption Letters”), (iv) Guardian has complied with all requirements to Bonds is necessary for the Bonds to be, and to remain, Tax-Exempt Bonds and to not take any notify the Internal Revenue Service that the Obligor is included in Guardian’s Group Exemption actions that would adversely affect the status of the Bonds as Tax-Exempt Bonds. The Obligor Letters, (v) Guardian is in full compliance with all terms, conditions and limitations, if any, hereby further covenants and agrees that it will not take any action, or fail to take any action, if contained in Guardian’s 501(c)(3) Determination Letter and is a Tax-Exempt Organization, (vi) any such action or failure to take such action would adversely affect the exclusion from gross Guardian and the Obligor are in full compliance with all terms, conditions and limitations, if any, income of interest on the Bonds under Section 103(a) of the Code or cause the interest on the contained in Guardian’s Group Exemption Letters, (vii) the status of each of Guardian and the Bonds, or any portion thereof, to become an item of tax preference for purposes of the alternative Obligor as a Tax-Exempt Organization has not been adversely modified, limited or revoked, minimum tax imposed on individuals and corporations under the Code. (viii) the facts and circumstances that formed the basis for the status of Guardian, as represented to the Internal Revenue Service in Guardian’s application for Guardian’s 501(c)(3) (n) Obligor’s Tax Certificate. The representations, warranties and covenants Determination Letter, either substantially still exist for Guardian or differ only in a manner of the Obligor set forth in the Tax Certificate are hereby incorporated herein and made a part consistent with the requirements of Section 501(c)(3) of the Code, (ix) the facts and hereof by this reference thereto as if fully set forth herein. circumstances that formed the basis for the status of Guardian, as represented to the Internal Revenue Service in Guardian’s application for Guardian’s Group Exemption Letters, either (o) Tax Filings. The Obligor has filed or caused to be filed all federal, state substantially still exist for Guardian or differ only in a manner consistent with the requirements and local tax returns which are required to be filed, and has paid or caused to be paid all taxes as for the Internal Revenue Service’s determination that Guardian qualifies as a central organization shown on said returns or on any assessment it has received, to the extent that such taxes have entitled such status under Guardian’s Group Exemption Letters, and (x) the facts and become due, except such taxes are as being contested by the Obligor in appropriate proceedings. circumstances that formed the basis for the inclusion of the Obligor in Guardian’s Group Exemption Letters either substantially still exist for the Obligor or differ only in a manner consistent with the requirements of Section 501(c)(3) of the Code.

(j) Disclosure. The representations of the Obligor contained in this Agreement and any certificate, document, written statement or other instrument furnished by or on behalf of the Obligor to the Authority, the Trustee or the Underwriter in connection with the transactions contemplated hereby do not contain any untrue statement of a material fact and do

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ARTICLE III Each payment from the Project Fund will be made by the Trustee in lawful money of the United States by check or interbank transfer of funds, as directed by the Obligor, to the payee THE LOAN; USE OF PROCEEDS shown on the Requisition, upon receipt by the Trustee of a Requisition as provide for in Section 5.06 and contained as Exhibit B of the Bond Indenture. The Obligor hereby covenants and agrees Section 3.01 Loan of Funds to the Obligor. to indemnify and save harmless the Authority and the Trustee and their respective officers, directors, members, agents and employees from any liability incurred in connection with any (a) The Authority hereby agrees that simultaneously with the execution and application for payment. delivery of this Agreement, it will issue, sell and deliver to the Underwriter the Bonds in the aggregate principal amount of $______and will thereupon (i) cause the deposit of the Section 3.04 Establishment of Completion Date. The Completion Date shall be proceeds of the sale of the Bonds to be made in accordance with the provisions of the Bond evidenced to the Authority and the Trustee by a certificate signed by an Authorized Obligor Indenture and (ii) loan to the Obligor, upon the terms and conditions specified herein and in the Representative, in the form attached to the Bond Indenture, stating in effect that (i) if applicable, Bond Indenture, the proceeds of the sale of the Bonds (the “Loan”), and the Obligor agrees to construction of the Project has been completed and all costs of labor, services, materials and receive such Loan from the Authority, for the purposes provided herein and in the Bond supplies used in connection with such construction have been paid (except for any amounts being Indenture. reserved or contested as provided for in Section 5.08 of the Bond Indenture); (ii) if applicable, all equipment for the Project has been acquired and installed and all costs and expenses incurred in (b) The Obligor’s obligation to make Payments, which is more fully described connection therewith have been paid (except reserved amounts as aforesaid); and (iii) all other in Section 4.01 hereof, will be evidenced by the Series 2017 Master Obligation, which the facilities necessary in connection with the Project have been acquired, constructed, improved and Obligor hereby agrees to execute and deliver to the Authority and which the Authority hereby equipped, all costs and expenses incurred in connection therewith have been paid and all other agrees to endorse to the order of the Trustee with respect to the Bonds. payments required to be made in connection with the Project have been made (except reserved amounts as aforesaid). Notwithstanding the foregoing, such certificate shall state that it is given Section 3.02 Acquisition, Construction, Furnishing and Equipping of the without prejudice to any rights against third parties which exist at the date of such certificate or Improvements; Refunding and Refinancing. which may subsequently come into being. Forthwith upon completion of the Project, the Obligor D-50 agrees to cause such certificate to be furnished to the Authority and the Trustee. Upon receipt of (a) Promptly following the issuance and sale of the Bonds, the Obligor shall such certificate, the Trustee shall give notice to the Obligor of the amount of funds remaining acquire, construct, furnish and equip the Improvements. The Authority hereby authorizes the unspent in the Project Fund. Any remaining moneys on deposit in the Project Fund shall (except Obligor to use the proceeds of the Bonds deposited in the Project Fund to acquire, construct, for reserved amounts as aforesaid) be forthwith applied to the payment of the Costs of the furnish and equip the Improvements. Project, or if not so applied, shall (except reserved amounts as aforesaid) be promptly transferred by the Trustee into the Bond Fund and used by the Trustee in accordance with the terms of (b) The Obligor will not permit any mechanics’ or materialmen’s or other Section 5.08 of the Bond Indenture. liens to be perfected or remain against the Improvements for labor or materials furnished in connection with the construction of the Improvements, provided that it will not constitute an Section 3.05 Security for Payments Under this Agreement; Recording and Filing. Event of Default hereunder upon such lien being filed, if the Authorized Obligor Representative Contemporaneously with the issuance of the Bonds, as security for the payment of the Bonds, the notifies promptly the Trustee of any such liens, and the Obligor in good faith contests promptly Authority will execute and deliver the Bond Indenture, under the terms of which all of the right, such liens in accordance with Section 4.05 of the Master Trust Indenture; and in such event the title, interest and remedies of the Authority in this Agreement (except the Unassigned Rights), Obligor may permit the items so contested to remain undischarged and unsatisfied during the together with all revenues and amounts to be received and all property to be held by the period of such contest and any appeal therefrom. The Obligor agrees to complete the acquisition, Authority thereunder, will be assigned and will be the subject of a grant of a security interest to construction, furnishing and installation of the Improvements as promptly as practicable and with the Trustee and will be pledged as security for, among other things, the payment of the Bonds. all reasonable dispatch after the date of issuance of the Bonds. Contemporaneously therewith, the Authority will endorse and assign the Series 2017 Master Obligation (excluding the Unassigned Rights) to the Trustee. The Obligor hereby consents to Section 3.03 Project Fund. In the Bond Indenture the Authority has authorized and such assignment and grant of a security interest and hereby agrees that its obligations to make all directed the Trustee to use the moneys in the Project Fund to pay Costs of the Project. Pursuant payments under this Agreement will be absolute and will not be subject to any defense, except to the direction of an Authorized Obligor Representative, all proceeds of the Bonds remaining in payment, or to any right of setoff, counterclaim or recoupment arising out of any breach by the the Project Fund on the Completion Date, less amounts owing under any construction contracts Authority of any obligation to the Obligor, whether hereunder or otherwise, or arising out of any and amounts retained or set aside pursuant to Section 5.08 of the Bond Indenture to meet costs indebtedness or liability at any time owing to the Obligor by the Authority. The Obligor further not then due and payable or which are being contested, will be transferred to the Bond Fund and agrees that all Basic Payments required to be made under this Agreement will be paid directly to used to pay interest on the Bonds. the Trustee for the account of the Authority. The Trustee will have all rights and remedies herein accorded to the Authority (except for Unassigned Rights), and any reference herein to the

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Authority will be deemed, with the necessary changes in detail, to include the Trustee, and the thereon and any profit realized therefrom will be credited as provided in the Bond Indenture, and Trustee and the Bondholders are deemed to be and are third party beneficiaries of the any losses resulting from such investments will be charged to such fund or account. representations, covenants and agreements of the Obligor herein contained. Section 3.09 Special Investment Covenants. The Obligor covenants that it will not As security for the Series 2017 Master Obligation, the Obligor shall, prior to or directly or indirectly use or permit the use of any proceeds (as defined in the Code) of the Bonds, contemporaneously with the execution and delivery of this Agreement, execute and deliver the or take or omit to take any action, or direct the Trustee to invest any funds in such manner as will Mortgage. The Obligor shall cause the Mortgage to be recorded in all offices as may at the time cause the Bonds to be “arbitrage bonds” within the meaning of Section 148 of the Code or to be be provided by law as the proper place for recordation thereof. The Obligor further agrees that it “federally guaranteed,” as such term is used and defined in Section 149(b) of the Code. If at any will cause to be filed all necessary continuation statements within the time prescribed by the time the Authority or the Obligor is of the opinion that for purposes of this Section 3.09 it is State Uniform Commercial Code - Secured Transactions, and the appropriate parties shall necessary to dispose of any investment or to restrict or limit the yield on any investment held maintain possession of appropriate collateral in order to continue the security interests identified under the Bond Documents or otherwise, the Authority or the Obligor, as the case may be, will in this Section 3.05. so instruct the Trustee in writing. The Authority has no obligation or responsibility to monitor investments as described in this Section 3.09. Section 3.06 Covenants for Benefit of Bondholders. This Agreement is executed in part to induce the purchase by others of the Bonds. Accordingly, all covenants and agreements ARTICLE IV on the part of the Obligor and the Authority, as set forth in the Agreement, are hereby declared to be for the benefit of the Owners from time to time of the Bonds. PAYMENT PROVISIONS

Section 3.07 Obligor Required to Pay Costs of the Project if Project Fund Insufficient. Section 4.01 Payments. Until the principal of, premium, if any, and interest on the If the moneys in the Project Fund available for payment of the Costs of the Projects are not Bonds have been fully paid or provision for the payment thereof has been made in accordance sufficient to pay the costs thereof in full, the Obligor agrees to complete the acquisition, with the Bond Indenture, the Obligor will pay to the Trustee for the account of the Authority construction, furnishing and equipping of the Project and to pay all that portion of Costs of the (except as otherwise provided in Section 4.01(c) below), the following amounts:

D-51 Project as may be in excess of the moneys available therefor in the Project Fund. The Authority does not make any warranty, either express or implied, that the moneys which will be paid into (a) Basic Payments: the Project 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 of the Project. The (i) on or before ______20, 2017 and on or before the twentieth day Obligor agrees that if, after exhaustion of the moneys in the Project Fund, the Obligor pays any of each month thereafter, a sum equal to one-sixth of the amount payable on June 1, 2018 portion of such Costs of the Project pursuant to the provisions of this Section, it will not be and on each following Interest Payment Date as interest on the Bonds, as provided in the entitled to any reimbursement therefor from the Authority or from the Trustee or from the Bond Indenture, provided that the payments under this clause (i) shall be required only to Owners of any of the Bonds, nor will it be entitled to any diminution of the Payments payable the extent the proceeds of the Bonds deposited into the Capitalized Interest Account of under Section 4.01 hereof. The obligation of the Obligor to complete the acquisition, the Project Fund are not sufficient to cover such payments, and construction, furnishing and equipping of the Project will survive any termination of this Agreement. (ii) on or before _____ 20, 20__ and on or before the twentieth day of each month thereafter, a sum equal to (A) one-twelfth of the amount required to retire Section 3.08 Investment of Funds and Accounts. Subject to Article V of the Bond Bonds under the mandatory redemption requirements of Section 4.01(c) of the Bond Indenture and Section 3.09 hereof, any moneys held as a part of the funds and accounts held Indenture on the following December 1 or (B) one-twelfth of the principal due on the under the Bond Indenture will be invested or reinvested by the Trustee at the written direction of following December 1 which is a maturity date of the Bonds, as provided in the Bond an Authorized Obligor Representative in such Permitted Investments as may be designated by Indenture, as the case may be, and the Obligor. If the Authorized Obligor Representative fails to give such written instructions to the Trustee, the Trustee will hold such funds on deposit without investment and shall have no (iii) for deposit in the Bond Fund in immediately available funds on the liability for interest or other compensation thereon. The Trustee will not be liable for any Business Day prior to any date on which the Bonds are to be redeemed pursuant to the depreciation in the value of any obligations in which moneys of funds or accounts held under the redemption provisions of the Bond Indenture (other than mandatory sinking fund Bond Indenture are invested, as aforesaid, or for any loss arising from any investment. The redemption pursuant to Section 4.01(c) of the Bond Indenture), an amount in immediately Trustee may make any and all such investments through its own bond or investment department. available funds equal to the principal amount of, premium, if any, and interest on the Bonds to be redeemed (taking into account amounts then on deposit in the Bond Fund to The investments so purchased will be held by the Trustee and will be deemed at all times be used for the payment of such Bonds to be redeemed). a part of funds or accounts described in the preceding paragraph, and the interest accruing

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Each payment of Basic Payments under (i) of this Section due on the twentieth day of or expenses, (ii) any expenses incurred by the Authority hereunder, including the amount each May and November until the Bonds are fully paid or payment is provided therefor in sufficient to reimburse the Authority for any expenses incurred by the Authority hereunder and accordance with the Bond Indenture will in all events be sufficient, after giving credit for funds paid by the Authority, and (iii) all reasonable fees and expenses of Bond Counsel or counsel to held in the Bond Fund available for such purpose, to pay the total amount of interest payable on the Authority in connection with rendering advice after the issuance of the Bonds. the Bonds on the following Interest Payment Date. Each payment of Basic Payments under (ii) of this Section due on the twentieth day of each November until the Bonds are fully paid or Such Additional Payments in (i) through (iii) will be billed to the Obligor by the payment is provided therefor in accordance with the Bond Indenture will in all events be Authority, counsel to the Authority, the Trustee or Bond Counsel from time to time. Amounts so sufficient, after giving credit for funds held in the Bond Fund available for such purpose, to pay billed will be paid by the Obligor within thirty (30) days after receipt of the bill by the Obligor. the total amount of principal payable on the Bonds on the next December 1. Any Basic Payments payment will be reduced or need not be made to the extent that there are moneys on Should the Obligor fail to make any of the payments required in this Section, the item or deposit in the Bond Fund in excess of scheduled payments of Basic Payments (excluding any installment so in default will continue as an obligation of the Obligor until the amounts in default amounts required for the payment of Bonds theretofore matured or called for redemption and have been fully paid and will bear interest at the highest rate of interest on the Bonds. past due interest in all cases where Bonds have not been presented for payment). Further, if the amount held by the Trustee in the Bond Fund should be sufficient to pay the principal of and (d) Nature of Obligations Hereunder. All Basic Payments and other sums due interest on the Bonds then remaining unpaid, the Obligor will not be obligated to make any and payable to the Authority or the Trustee under this Agreement shall be absolutely net to the further payments of Basic Payments under the provisions of this Section. There will also be a Authority or the Trustee, as applicable, free of any taxes, costs, liabilities or other deductions credit against remaining Basic Payments for Bonds purchased, redeemed or canceled, as whatsoever with respect to the Facilities and the maintenance, repair, or use thereof or any provided in Article II of the Bond Indenture. portion thereof, so that this Agreement shall yield all amounts due hereunder net to the Authority or the Trustee throughout the term hereof. (b) Reserve Payments: The Debt Service Reserve Fund will be funded in an amount equal to the Debt Service Reserve Requirement for the purpose of paying principal of, (e) Deposits to Rebate Fund. The Obligor hereby covenants to make all premium, if any, and interest on the Bonds as the same become due if there should be required payments into the Rebate Fund as provided for in the Bond Indenture. D-52 insufficient funds for such purpose in the Bond Fund. If any funds from the Debt Service Section 4.02 Place of Payments. The Basic Payments provided for in Section 4.01(a) Reserve Fund will be withdrawn or if there is a diminution in value of the investments held in the hereof will be paid in lawful money of the United States of America directly to the Trustee for Debt Service Reserve Fund or any net losses result from the investment of amounts held in the the account of the Authority and will be deposited in the Bond Fund. The payments of Reserve Debt Service Reserve Fund such that the amount on deposit in the Debt Service Reserve Fund is Payments provided for in Section 4.01(b) hereof will be paid directly to the Trustee for the less than the Debt Service Reserve Requirement, beginning on the twentieth day of the month account of the Authority and will be deposited in the Debt Service Reserve Fund. Additional following notice of such withdrawal, diminution in value or losses, and on the twentieth day of Payments to be made to the Trustee under Section 4.01(c)(i) hereof will be paid directly to the each month thereafter, in addition to any other Payments which may be due, the Obligor will Trustee for its own use or for disbursement to the paying agents, as the case may be. The make twelve equal consecutive monthly Payments as Reserve Payments to the Trustee for payment of any reimbursable expenses incurred by the Authority pursuant to Section 4.01(c)(ii) deposit into the Debt Service Reserve Fund, each equal to one-twelfth of the amount of such hereof will be paid directly to the Authority for its own use. The payment of the fees and withdrawals, diminution in value or losses, subject to a credit for earnings retained in, or deposits reimbursable expenses incurred by Bond Counsel and counsel to the Authority pursuant to other than required by this paragraph (b) made to, the Debt Service Reserve Fund during such Section 4.01(c)(iii) hereof will be paid directly to Bond Counsel and counsel to the Authority, as period. applicable, for its own use. (c) Additional Payments: The Obligor agrees to pay, directly to the Person Section 4.03 Reserved. entitled to payment therefor, (i) (A) as the Trustee and the Obligor shall agree in writing from time to time, an amount equal to the annual fee of the Trustee for Ordinary Services of the Section 4.04 Acceleration of Payment to Redeem Bonds. Whenever the Bonds are Trustee rendered and Ordinary Expenses of the Trustee incurred under the Bond Indenture, as subject to optional redemption or extraordinary redemption pursuant to the Bond Indenture and and when the same become due, (B) reasonable fees and charges of the Trustee, as bond registrar the provisions hereof, the Authority will, upon request of the Obligor, direct the Trustee to call and paying agent, and of any other paying agents on the Bonds for acting as paying agents as the same for redemption as provided in the Bond Indenture. Whenever any Bond is subject to provided in the Bond Indenture, as and when the same become due, and (C) the reasonable fees mandatory redemption pursuant to the Bond Indenture, the Obligor will cooperate with the and charges of the Trustee for the necessary Extraordinary Services of the Trustee rendered by it Authority and the Trustee in effecting such redemption. In the event of any mandatory, optional and Extraordinary Expenses of the Trustee incurred by it under the Bond Indenture, as and when or extraordinary redemption of the Bonds, the Obligor will pay or cause to be paid to the Trustee the same become due; provided, that the Obligor may, without creating a default hereunder, an amount equal to the applicable redemption price as a prepayment of that portion of the Basic contest in good faith the necessity for any such Extraordinary Services of the Bond Trustee and Payments corresponding to the Bonds to be redeemed together with interest accrued to the date the Extraordinary Expenses of the Bond Trustee and the reasonableness of any such fees, charges

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of redemption and will also pay all fees and expenses of the Authority and the Trustee arising acquisition, installation and equipping of the Facilities; and the Authority shall not be liable for with respect to such redemption or otherwise due and owing hereunder or under the Bond any loss, damage or injury to the person or property of the Obligor or its agents, servants or Indenture at such times and in such amounts as are required to effect the mandatory, optional or employees or any other person who or which may be upon the Facilities or damaged or injured extraordinary redemption of the Bonds under the terms of the Bond Indenture. as a result of any condition existing or activity occurring upon the Facilities or any other matter connected directly or indirectly therewith due to any act or negligence of any person, excepting Section 4.05 No Defense or Set-Off. The obligations of the Obligor to make all only willful misconduct of the Authority, its officers, agents, members or employees. payments due hereunder shall be absolute and unconditional without any defense or set-off for any reason, including, without limitation, any acts or circumstances that may constitute failure of (b) The Obligor hereby covenants and agrees that it will indemnify the consideration, destruction of or damage to the Facilities, invalidity or unenforceability of the Trustee against any and all claims arising out of the Trustee’s exercise and performance of Bonds, commercial frustration of purpose or failure of the Authority to perform and observe any powers and duties granted unto it by the Bond Indenture and hereunder, and not resulting from agreement, whether express or implied, or any duty, liability or obligation arising out of or the Trustee’s willful misconduct or gross negligence. connected with this Agreement, it being the intention of the parties that the payments required of the Obligor hereunder will be paid in full when due without any delay or diminution whatsoever. (c) The Obligor will indemnify, hold harmless and defend the Authority and the Trustee, and the respective officers, members, directors, officials and employees of each of Section 4.06 Termination Upon Payment or Defeasance of Bonds. When (a) interest them, against all losses, costs, damages, expenses, suits, judgments, actions and liabilities of on, and principal or the redemption price of all Bonds issued under the Bond Indenture, together whatever nature including, specifically, any liability under any state or federal securities laws with all other amounts due and payable by the Obligor hereunder or under the Bond Indenture, (including but not limited to reasonable attorneys’ fees, litigation and court costs, amounts paid shall have been paid, or (b) all Bonds shall be deemed to have been paid and defeased in in settlement and amounts paid to discharge judgments) directly or indirectly resulting from or accordance with the provisions of Article XI of the Bond Indenture, no further Basic Payments arising out of or related to: (i) the installation, operation, use, maintenance or ownership of the shall be payable hereunder, this Agreement shall thereupon be terminated, and the Authority Facilities (including compliance with laws, ordinances and rules and regulations of public (i) shall cause the Trustee to pay over to the Obligor any additional moneys then remaining in authorities relating thereto); or (ii) any statements or representations with respect to the Obligor, any Funds under the Bond Indenture (other than moneys in the Rebate Fund), and (ii) shall pay the Facilities, this Agreement, the Bonds, the Bond Indenture, or any other documents or D-53 over to the Obligor any additional moneys which may be paid to the Authority by the Trustee; instruments delivered at or in connection with the closing held on the Issue Date (including any provided, however, that the provisions of Section 4.09 shall not be terminated. statements or representations made in connection with the offer or sale thereof) made or given to the Authority, the Trustee or any underwriters or purchasers of any of the Bonds, by the Obligor Section 4.07 Assignment of Authority’s Rights. As security for the payment of the or any of its officers, partners, agents or employees, including, but not limited to, statements or Bonds, the Authority will assign to the Trustee all the Authority’s rights under the Agreement representations of facts, financial information or corporate or partnership affairs. The Obligor and the Series 2017 Master Obligation (other than the Unassigned Rights). The Obligor consents also will pay and discharge and indemnify and hold harmless the Authority and the Trustee from to such assignment and agrees to make the Basic Payments and the Additional Payments under (x) any lien or charge upon payments by the Obligor to the Authority and the Trustee under this Section 4.01 hereof directly to the Trustee without defense or set-off by reason of any dispute Agreement and (y) any taxes (including, without limitation, any ad valorem taxes and sales between the Obligor and the Trustee. taxes, assessments, impositions and other charges in respect of any portion of the Facilities). If any such claim is asserted, or any such lien or charge upon payments, or any such taxes, Section 4.08 Assignment by Obligor. This Agreement may be assigned in whole or in assessments, impositions or other charges are sought to be imposed, the Authority or the Trustee part by the Obligor in accordance with the provisions of Section 5.04(b) without the necessity of will give prompt notice to the Obligor, and the Obligor will have the sole right and duty to obtaining the consent of the owners of the Bonds; provided, however, that no assignment assume, and will assume, the defense thereof, with full power to litigate, compromise or settle pursuant to this Section shall be made otherwise than in accordance with the Act and the Code as the same in its sole discretion. from time to time amended and in accordance with the Master Trust Indenture. The Obligor shall, within thirty (30) days after execution thereof, furnish or cause to be furnished to the (d) If the indemnification provided heretofore is for any reason determined to Authority and the Trustee a true and complete copy of each such assignment together with any be unavailable to the Authority or the Trustee with respect to any such loss, claim, demand or instrument of assumption. liability, including expenses in connection therewith, the Authority and the Trustee as appropriate, shall be entitled as a matter of right to contribution by the Obligor. The amount of Section 4.09 Indemnity Against Claims. such contribution shall be in such proportion as is appropriate to reflect relative culpability of the parties. (a) The Obligor agrees that at all times it will protect and hold the Authority, its officers, members, employees and agents harmless and indemnified from and against all (e) The provisions of this Section 4.09 shall survive the termination and claims for losses, damages or injuries to others, including death, personal injury and property discharge of this Agreement and the Bond Indenture. damage or loss, arising during the term hereof or during any other period arising out of the

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Section 4.10 Authority is Conduit Issuer; Obligor is Real Party in Interest; Covenant Section 5.03 Maintenance and Operation of the Facilities. Not to Sue. (a) During the term of this Agreement, the Obligor will at its own cost and (a) The Obligor hereby expressly acknowledges that the Authority is a expense keep and maintain, or cause to be kept and maintained, in good repair and condition conduit issuer and that all of the right, title and interest of the Authority in and to this Agreement, (excepting reasonable wear and tear) the Facilities and all additions and improvements thereto, but not the obligations of the Authority, are to be assigned to the Trustee (except for the and pay, or cause to be paid, any costs and expenses arising out of its use of the Facilities. Unassigned Rights), naming the Trustee its true and lawful attorney for and in its name to enforce the terms and conditions of this Agreement. Notwithstanding any other provision (b) The Obligor agrees to timely pay for any improvements to the Facilities contained herein, the Obligor hereby expressly agrees, acknowledges and covenants that it shall lawfully done or lawfully ordered to be done by any municipal, state or federal authority and to duly and punctually perform or cause to be performed each and every duty and obligation of the comply in all material respects at its own cost and expense with all lawful and enforceable Authority under and pursuant to the Bond Indenture unless performable only by the Authority. notices received (whether by the Authority or the Obligor) from public authorities from and after the date hereof that affect the Facilities and the use and operation thereof, other than those (b) The Obligor covenants and agrees that it shall neither sue the Authority, or improvements, orders and notices, the amount, validity or application of which is at the time any of its board members, officers, agents or employees, past, present or future, for any claim, being contested, in whole or in part, in good faith by appropriate proceedings promptly initiated loss, demand, action or nonaction based upon this financing nor ever raise as a defense in any and diligently conducted. proceedings whatsoever that the Authority is the true party in interest. Notwithstanding the provisions of the foregoing sentence, the Obligor shall be entitled to (i) bring an action of (c) The Obligor covenants and agrees that the Facilities shall be used only for specific performance against the Authority to compel any action required to be taken by the such purposes as are lawful under the Act. Authority hereunder or an action to enjoin the Authority from performing any action prohibited by this instrument, but no such action shall in any way impose pecuniary liability against the (d) The Obligor shall make no changes to the Facilities or to the operation Authority or any of its board members, officers, agents or employees, and (ii) join the Authority thereof which would affect the qualification of the Facilities under the Act or impair the in any litigation if such joinder is necessary to pursue any of the Obligor’s rights, provided that exclusion from gross income for federal income tax purposes of the interest on the Bonds. D-54 prior to such joinder, the Obligor shall post such security as the Authority may reasonably require to further protect the Authority from loss. Section 5.04 Maintenance of Existence; Transfer of Assets.

ARTICLE V (a) Except as otherwise permitted in connection with any assignment, transfer or other disposition of the Project permitted by paragraph (b) or (c) below, the Obligor agrees OBLIGOR OBLIGATIONS; ASSIGNMENT TO TRUSTEE that it will maintain its existence as a Pennsylvania non-profit, nonstock corporation, will not dissolve or otherwise dispose of all or substantially all of its assets and will not consolidate with Section 5.01 General Obligation of the Obligor. This Agreement constitutes a general or merge into another entity. obligation of the Obligor and the full faith and credit of the Obligor is pledged to the payment of (b) The Obligor shall not sell, assign, transfer or otherwise dispose of all amounts due hereunder. substantially all of the Project or substantially all of its assets, except as may be required by a Section 5.02 Assignment to Trustee. The Authority, immediately following execution condemnation by a proper authority or except as permitted by the Master Trust Indenture. and delivery hereof, shall assign this Agreement and amounts payable hereunder (except for the Notwithstanding the preceding sentence, the Project or this Agreement may be transferred Unassigned Rights) to the Trustee pursuant to the Bond Indenture, IN TRUST, to be held and without violating this Section, provided (i) the net worth of the transferee following the transfer applied pursuant to the provisions of the Bond Indenture. The Obligor: (1) consents to such is substantially equal to or greater than the net worth of the Obligor immediately preceding the assignment and accepts notice thereof with the same legal effect as though such acceptances transfer as certified to by the independent auditors of the Obligor; (ii) any litigation or were embodied in separate instruments, separately executed after execution of such assignments; investigations known to the Obligor in which the transferee or, where applicable, its officers and (2) agrees to pay directly to the Trustee, all payments payable hereunder for application to directors are involved at the time of such transfer (other than litigation involving the Obligor), amounts then due and payable or to become due and payable under the Bond Indenture, such and any court, administrative or other orders to which the transferee is or, where applicable, its payments to be paid by the Obligor to the Trustee without any defense, set-off or counterclaim officers and directors are, subject, relate to matters arising in the ordinary course of business; arising out of any default on the part of the Authority under this Agreement or any transaction (iii) the transferee assumes in writing the obligations of the Obligor under this Agreement, the between the Obligor and the Authority or the Obligor and the Trustee; and (3) agrees that the Tax Certificate and the Bonds; (iv) after the transfer, the Project shall continue to be operated as Trustee may exercise any and all rights and pursue any and all remedies granted the Authority an authorized project under the Act; and (vi) such transfer is made in accordance with the terms hereunder. of the Master Trust Indenture. In the event Bonds are then Outstanding under the Bond Indenture, the Obligor shall, prior to the taking of any of the foregoing proposed actions, deliver

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to the Authority and the Trustee an opinion of Bond Counsel to the effect that the proposed Section 7.02 Insurance Required. Throughout the term of this Agreement, the Obligor action will not cause the interest on the Bonds to become includable in the gross income of the will keep the Facilities or cause the same to be kept continuously insured in accordance with the Owners of the Bonds for federal or state income tax purposes. requirements of Section 4.10 of the Master Trust Indenture. All liability policies relating to the Facilities shall name the Authority and the Trustee as additional insureds, as their interests may (c) The Obligor shall not sell or otherwise dispose of any possessory interest appear. in whole or in part of the Project without complying with the provisions of paragraph (b), except in the ordinary course of business. Section 7.03 Advances by the Authority or the Trustee. If the Obligor fails to maintain the insurance coverages required by this Agreement or fails to pay the taxes and other charges Section 5.05 Compliance with Laws. With respect to the Facilities and any additions, required to be paid by this Agreement or fails to keep the Buildings and Equipment in good alterations or improvements thereto, the Obligor will at all times comply with all applicable repair and good operating condition, the Authority or the Trustee may (but will be under no requirements of federal, state and local laws and with all applicable lawful requirements of any obligation to), after notifying the Obligor of its intention to do so and the Obligor’s continuing agency, board, or commission created under laws of the Commonwealth or of any other duly failure to comply with such obligations, take out the required policies of insurance and pay the constituted public authority, and will use, and permit the use of the Facilities only for such premiums on the same or pay the taxes or other charges or make the required repairs, renewals purposes as are lawful under the Act; provided, however, that the Obligor shall be deemed in and replacements, and all amounts so advanced therefor by the Authority or the Trustee will compliance with this Section 5.05 so long as it is contesting in good faith any such requirement become an additional obligation of the Obligor to the one making the advancement, which by appropriate legal proceedings. amounts, together with interest thereon from the date of payment at the rate charged prime corporate borrowers per annum on demand loans by the commercial lending department of the Section 5.06 Notice of Bankruptcy Case Commencement. The Obligor covenants and Trustee, the Obligor agrees to pay on demand and payment of which will be secured by the Trust agrees that it shall immediately notify the Authority and the Trustee of the commencement of Estate and by the Mortgage. Any remedy herein vested in the Authority or the Trustee for the any case by or against it under the Bankruptcy Code. collection of Payments will also be available to the Authority and the Trustee for the collection of all such amounts so advanced. ARTICLE VI

D-55 Section 7.04 Damage and Destruction. If the Facilities are destroyed or damaged (in THE FACILITIES whole or in part) by fire or other casualty, the use of the Net Proceeds of insurance shall be governed by Section 4.12 of the Master Trust Indenture. Section 6.01 Prohibited Uses. The Obligor covenants and agrees that it will not use or permit the use by any Person of any of the funds provided by the Authority hereunder or any Section 7.05 Condemnation. If title to, or temporary use of, all or substantially all, or other of its funds, directly or indirectly, or direct the Trustee to invest any funds held by it under any material portion, of the Facilities has been taken under the exercise of the power of eminent the Bond Indenture or this Agreement, in such manner as would, or enter into, any arrangement, domain by any governmental body or by any Person acting under governmental authority, the formal or informal, that would, or take or omit to take any other action that would, cause any disposition of the Net Proceeds received by the Obligor shall be governed by Section 4.13 of the Bond to be an “arbitrage bond” within the meaning of Section 148(a) of the Code. The Obligor Master Trust Indenture. acknowledges having read Sections 5.12 and 6.06 of the Bond Indenture and agrees to perform all duties imposed upon it by such Sections and by the Tax Certificate. Insofar as said Sections Section 7.06 Condemnation of Property Not Included in Facilities. The Obligor is and the Tax Certificate impose duties and responsibilities on the Obligor, they are specifically entitled to Net Proceeds of any condemnation award or portion thereof made for damages to or incorporated herein by reference. for taking of its property not included in the Facilities and not subject to the liens of the Mortgage. ARTICLE VII ARTICLE VIII INSURANCE; DESTRUCTION, DAMAGE, EMINENT DOMAIN ADDITIONAL COVENANTS OF THE OBLIGOR Section 7.01 Taxes, Other Governmental Charges and Utility Charges. The Obligor will pay, as the same become due, (i) all taxes, assessments and other governmental charges The Obligor makes the following additional representations and covenants: lawfully levied or assessed or imposed upon it or upon its income, profits or the Facilities, and (ii) all lawful claims for labor, materials and supplies which, if unpaid, might by law become a Section 8.01 Compliance with Laws. The Obligor covenants that all actions heretofore lien upon the Facilities in accordance with Section 4.05 of the Master Trust Indenture. and hereafter taken by the Obligor or by the Authority upon the recommendation or request of any officer of the Obligor to acquire and carry out the Project have been and will be in full compliance with all pertinent laws, ordinances, rules, regulations and orders applicable to the

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Obligor. In connection with the operation, maintenance, repair and replacement of the Facilities, pursuant to Section 148(f) of the Code in any manner not inconsistent with its arbitrage the Obligor covenants that it shall comply with all applicable ordinances, laws, rules, regulations covenants set forth in the Tax Certificate and in this Agreement. Such calculation shall give and orders of the government of the United States of America, the Commonwealth, the County regard to all regulations applicable to such Section 148(f) including any temporary regulations of Montgomery, and any other applicable government unit having jurisdiction over it, and any heretofore or hereafter released. requirement of any board of fire underwriters having jurisdiction or of any insurance company writing insurance on the Facilities; provided, however, that nothing herein shall prevent or ARTICLE IX prohibit the Obligor from contesting in good faith and by appropriate proceedings the legality or reasonableness of any such standards, or the imposition of any such standards upon it with EVENTS OF DEFAULT AND REMEDIES respect to the Facilities so long as the operation of the Facilities or the receipt of income therefrom would not be adversely affected by reason thereof. The Obligor further covenants and Section 9.01 Events of Default. Each of the following events shall constitute an “Event represents that the Facilities are in compliance with all applicable laws and ordinances. The of Default” under this Agreement: Obligor covenants that it shall not take any action or request the Authority to execute any release which would cause the Facilities to be in violation of such laws or ordinances or such that a (a) if the Obligor fails to make any payment required by Sections 4.01(a) conveyance of the Facilities or of any portion of the Facilities would create a violation of such hereof; or laws and ordinances. The Obligor acknowledges that any review by the Authority or Counsel to the Authority of any action heretofore or hereafter taken by the Obligor has been or will be (b) if the Obligor fails to make any other payment required hereby and such solely for the protection of the Authority. Such reviews shall not prevent the Authority from failure continues for sixty days after the Authority or the Trustee gives notice to the Obligor that enforcing any of the covenants made by the Obligor. such payment is due and unpaid; or

Section 8.02 Access to Premises and Records. The Authority, the Trustee, the (c) if the Obligor fails to perform any of its other covenants or conditions or Underwriter and their duly authorized representatives, agents, experts, engineers, accountants fails to perform any of its obligations hereunder and such failure continues for sixty days after and representatives reserve the right, upon reasonable prior notice and subject to the rights of written notice specifying such failure and requesting that it be remedied is given by the D-56 those occupying the Facilities, to enter the Facilities at all reasonable times during the term of Authority, the Trustee or the Holders of at least 25% in aggregate principal amount of Bonds this Agreement for the purpose of (i) examining and inspecting the same, including any then Outstanding (with copies to each person not providing notice), unless the Holders of at least reconstruction thereof, including all books, papers and records, (ii) performing such work in and 25% in aggregate principal amount of Bonds then Outstanding agree in writing to an extension about the Facilities made necessary by reason of an Event of Default, and (iii) upon an Event of of such time prior to its expiration; provided, however, that if such performance requires work to Default, exhibiting the Facilities to prospective purchasers, lessees or mortgagees. The Trustee, be done, actions to be taken, or conditions to be remedied, which by their nature cannot the Authority and the Underwriter will also have the right at all reasonable times to examine the reasonably be done, taken or remedied, as the case may be, within such sixty day period, no books and records of the Obligor insofar as such books and records relate to the repair and Event of Default shall be deemed to have occurred or to exist if, and so long as, the Obligor shall maintenance of the Facilities or insofar as necessary to ascertain compliance with this commence such performance within such sixty day period and shall diligently and continuously Agreement. Notwithstanding the foregoing, the Authority shall have no obligation to undertake proceed to completion within one hundred eighty days; or the activities contemplated by this Section 8.02. (d) if there occurs an Event of Default as defined in the Master Trust Section 8.03 Additional Information. The Obligor agrees, whenever requested by the Indenture. Authority, to provide and certify or cause to be provided and certified such information Section 9.02 Acceleration. Subject to the provisions of this Agreement, upon the concerning the Facilities, to enable the Authority to make any reports or supply any information occurrence of any Event of Default by the Authority under the Bond Indenture caused or required by the Bond Indenture, law, governmental regulation or otherwise. resulting directly or indirectly by the occurrence of an Event of Default by the Obligor Section 8.04 Cooperation with Trustee. The Obligor covenants and agrees that it will hereunder, the Trustee may, pursuant to Section 7.02 of the Bond Indenture, declare the principal not interfere with the exercise of the power and authority granted to the Trustee in the Bond of the then Outstanding Bonds and all accrued interest immediately due and payable. Upon such Indenture. The Obligor further agrees to aid in furnishing to the Authority or the Trustee any declaration by the Trustee, the Authority shall have the right to terminate this Agreement and, documents, financial reports, certificates or opinions that may be required under the Bond upon such termination, there shall become immediately due and payable hereunder as then Indenture or requested by the Trustee and to comply with the provisions thereof to the extent current damages of the Authority under this Agreement, an amount equal (i) to all amounts then applicable to the Obligor. due and payable by the Authority to the Trustee under such Section 7.02 and (ii) all other amounts due and owing as Basic Payments hereunder. Until such amount is paid by the Obligor, Section 8.05 Rebate Fund. The Obligor hereby agrees to calculate the amount to be at the time or times and in the manner required to permit the Authority to meet its obligations deposited in the Rebate Fund and the amount to be rebated to the United States of America under the Bond Indenture, the Authority shall continue to have all of the rights, powers and

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remedies herein (notwithstanding the termination hereof), and, for such time as may be necessary (a) by mandamus, or other suit, action or proceeding at law or in equity, to enable the Authority to satisfy in full its obligations under the Bond Indenture, the term of this enforce all rights of the Authority, and require the Obligor to carry out any agreements with or Agreement shall, at the election of the Authority, be extended at the will of the Authority, and for the benefit of the Bondholders and to perform its duties under the Act or this Agreement; or the Obligor’s obligations hereunder shall continue in full force and effect. (b) by action or suit in equity require the Obligor to account as if it were the Section 9.03 Payment of Loan Payments on Default; Suit Therefor. trustee of an express trust for the Authority; or

(a) The Obligor covenants that, if default shall be made in the payment of any (c) by action or suit in equity enjoin any acts or things which may be unlawful sum payable by the Obligor under this Agreement as and when the same shall become due and or in violation of the rights of the Authority; or payable, whether at maturity or by acceleration or otherwise, then, upon demand of the Authority or its assignee, the Obligor will pay to the Authority or its assignee the whole amount of the (d) upon the filing of a suit or other commencement of judicial proceedings to Basic Payments that then shall have become due and payable hereunder and to the extent such enforce the rights of the Trustee and the Bondholders, have appointed a receiver or receivers of Basic Payments represent payments due on the Bonds, such payments shall be applied to the the Trust Estate, with such powers as the court making such appointment shall confer. payment of the Bonds in accordance with the terms of the Bond Indenture; and, in addition thereto, such further amount as shall be sufficient to pay the costs and expenses of collection, In order to entitle the Authority or the Trustee to exercise any remedy reserved to including reasonable compensation based upon actual time expended by the Authority and its it in this Article, it shall not be necessary to give any notice, other than such notice as may be assignee and their respective agents, attorneys and counsel, and any expenses or liabilities herein expressly required. Such rights and remedies as are given the Authority hereunder shall incurred by the Authority or its assignee (other than through the Authority’s or its assignee’s also extend to the Trustee. For so long as any Bonds remain Outstanding under the Bond own gross negligence or bad faith). In case the Obligor shall fail forthwith to pay such amounts Indenture, and except with respect to the Obligor’s obligations in respect of the Authority’s upon such demand, the Authority or its assignee shall be entitled and empowered to institute any rights to notices, payments of fees and expenses and indemnification rights and the Obligor’s actions or proceedings at law or in equity for the collection of the sums so due and unpaid, and obligations to comply with the Act, the Trustee, as the assignee of the Authority, shall have the may prosecute any such action or proceeding to judgment or final decree, and may enforce any sole right to exercise rights and remedies against the Obligor upon the occurrence of any Event D-57 such judgment or final decree against the Obligor and collect in the manner provided by law out of Default under this Loan Agreement, and the exercise by the Trustee of such rights and of the property of the Obligor the money adjudged or decreed to be payable. remedies shall be subject to all applicable provisions of the Bond Indenture, this Loan Agreement and the Act. To the extent necessary or appropriate and requested by the Trustee, the (b) In case there shall be pending proceedings in bankruptcy or for the Authority shall cooperate with the Trustee in connection with the exercise by the Trustee of such reorganization of the Obligor under the United States Bankruptcy Code or any other applicable rights and remedies against the Obligor. law, or in case a receiver or trustee shall have been appointed for the benefit of the creditors or the property of the Obligor, or in the case of any other similar judicial proceedings relative to the Section 9.05 Cumulative Rights. No remedy conferred upon or reserved to the Obligor, the Authority or its assignee shall be entitled and empowered, by intervention in such Authority or its assignee by this Agreement is intended to be exclusive of any other available proceedings or otherwise, to file and prove a claim or claims for the whole amount of the Basic remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition Payments, including interest owing and unpaid in respect thereof, and, in case of any judicial to every other remedy given under this Agreement or now or hereafter existing at law or in proceedings, to file such proofs of claim and other papers or documents as may be necessary or equity or by statute. No waiver by the Authority or its assignee of any breach by the Obligor of advisable in order to have the claims of the Authority or its assignee allowed, and to collect and any of its obligations, agreements or covenants hereunder shall be a waiver of any subsequent receive any moneys or other property payable or deliverable on any such claims, and to distribute breach, and no delay or omission to exercise any right or power shall impair any such right or the same after the deduction of its charges and expenses; and any receiver, assignee or trustee in power or shall be construed to be a waiver thereof, but any such right and power may be bankruptcy or reorganization is hereby authorized to make such payments to the Authority or its exercised from time to time and as often as may be deemed expedient. assignee, and to pay to the Authority or its assignee any amount due it for compensation based upon actual time expended and expenses, including counsel fees incurred by it up to the date of Section 9.06 Determination of Taxability Not a Default. Notwithstanding anything to such distribution. the contrary contained in this Agreement, in the event of a breach or inaccuracy of any applicable statutory or regulatory requirement or of a covenant or representation of the Obligor Section 9.04 Other Remedies. Whenever the Obligor is in default hereunder the relating to the exclusion from gross income of interest on the Bonds for purposes of federal Authority or the Trustee, as its assignee, shall be entitled to any one or more of the following income taxation, such breach or inaccuracy shall not be considered an Event of Default remedies: hereunder so long as the Obligor performs all of its obligations arising out of the breach or inaccuracy including, without limitation, the payment of all amounts due under Sections 4.01 and 4.04 hereof if such breach or inaccuracy results in a Determination of Taxability with respect to the Bonds; provided, however, that if the Determination of Taxability results in a mandatory

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redemption of the Bonds under the Bond Indenture, then, in such an event, the mandatory invalid or unenforceable; each term and provision hereof shall be valid and enforceable to the redemption of the Bonds shall result in an Event of Default hereunder. fullest extent permitted by law, and shall be liberally construed in favor of the Authority or its assignee in order to effect the intent of this instrument. ARTICLE X Section 11.04 Limitation of Liability of the Authority. In the event of any default by the OPTIONS TO TERMINATE AGREEMENT Authority hereunder, and notwithstanding any provision or obligation to the contrary hereinbefore or hereinafter set forth, the liability of the Authority shall be limited to its interest in Section 10.01 Option to Terminate Upon Defeasance. The Obligor shall have, and is the Facilities, the improvements thereon, the rents, issues and profits therefrom, and the lien of hereby granted, the option to terminate its obligations under this Agreement prior to full payment any judgment shall be restricted thereto. The Authority does not assume general liability nor of the Bonds by providing for the payment of all of the Outstanding Bonds in accordance with specific liability for the repayment of any mortgage or other loan, or for the costs, fees, penalties, Article XI of the Bond Indenture and for the payment of all other amounts due and owing taxes, interest, commissions, charges, insurance or other payments therein recited or therein set hereunder. forth, or incurred in any way in connection therewith.

ARTICLE XI Section 11.05 No Recourse as to the Authority. Except as set forth hereinabove as to the Authority, no recourse under or upon any obligation, covenant or agreement contained herein or MISCELLANEOUS in any Bonds shall be had against the Authority or any past, present or future member, officer, employee or agent of the Authority under this Agreement or under any rule of law, statute or Section 11.01 Approval of Bond Indenture. The Obligor acknowledges that it has constitutional provision, or by enforcement of any assessment or by any legal or equitable received an executed copy of the Bond Indenture and that it is familiar with its provisions, and proceeding or otherwise, it expressly being agreed and understood that the obligations of the agrees that it will take all such actions as are required or contemplated of it under the Bond Authority hereunder, and under the Bonds and elsewhere, are limited obligations of the Indenture to preserve and protect the rights of the Trustee thereunder and that it will not take any Authority to the extent set forth therein, and that no personal liability whatsoever shall attach to action which would cause a default thereunder. or shall be incurred by such members, officers, employees or agents of the Authority or of any D-58 successor of the Authority, or any of them, because of such indebtedness or by reason of any Section 11.02 Taxes and Insurance; Rights of Authority to Pay. If the Obligor, at any obligation, covenant or agreement contained herein, in the Bonds or implied therefrom. All such time, fails to pay any taxes or other impositions payable by it in accordance with Section 4.03 recourse or liability is hereby expressly waived and released as a condition of and in hereof, or to take out, pay for, maintain or deliver any of the insurance policies provided for in consideration for execution and delivery of this Agreement by the Authority. In the event of Article VII, or shall fail, within the time provided for in Article IX after the notice therein entry of judgment against the Authority by virtue of the power herein contained, the Authority or specified of any Event of Default, as therein defined, has been given thereunder, to make any the judgment holder shall mark the judgment index to the effect that the judgment is limited as other payment or perform any other act on its part to be made or performed, then the Authority aforesaid. may, but shall not be obligated so to do, and without further notice to or demand upon the Obligor and without waiving or releasing the Obligor from any of its obligations under the Section 11.06 Reference to Statute or Regulation. A reference herein to a statute or to a Agreement, (a) pay any taxes or other impositions payable by the Obligor in accordance with regulation issued by a governmental agency includes the statute or regulation in force as of the Section 4.03 hereof, (b) take out, pay for and maintain any of the insurance policies provided for date hereof, together with all amendments and supplements thereto and any statute or regulation in Article VII hereof, or (c) make any other payment or perform any other act on the Obligor’s substituted for such statute or regulation, unless the specific language or the context of the part to be made or performed as provided in the Agreement. All sums so paid by the Authority reference herein clearly includes only the statute or regulation in force as of the date hereof. and all necessary incidental costs and expenses in connection with the performance of any such act by the Authority shall, together with interest thereon at the legal rate, be payable to the A reference herein to a governmental agency, department, board, commission or other Authority, on demand, or, at the option of the Authority, may be added to any installment of the public body or to a public officer includes an entity or officer which or who succeeds to Basic Payments then due or thereafter becoming due under the Agreement, and the Obligor substantially the same functions as those performed by such public body or officer as of the date covenants to pay any such sums. hereof, unless the specific language or the context of the reference herein clearly includes only such public body or public officer as of the date hereof. Section 11.03 Illegal Provisions Disregarded. If any term or provision hereof or the application thereof for any reason or circumstance shall to any extent be held to be invalid or Section 11.07 Notices. All notices required or authorized to be given by the Obligor, the unenforceable, this instrument shall be invalid or unenforceable only to the extent of such Authority or the Trustee pursuant to this Agreement shall be in writing and shall be sent in the invalidity or unenforceability and such invalidity or unenforceability shall not invalidate the manner and to the addresses specified in Section 12.09 of the Bond Indenture. balance of such provision or the remaining terms or provisions of this instrument or the application of such terms or provisions to persons other than those as to which it has been held

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Section 11.08 Applicable Law. This Agreement shall be deemed to be a contract made IN WITNESS WHEREOF, the Montgomery County Higher Education and Health in the Commonwealth of Pennsylvania and governed by the laws of the Commonwealth of Authority has caused this Loan Agreement to be executed in its name and on its behalf by its Pennsylvania. (Vice) Chairman and its official seal to be affixed hereunto and attested by its Secretary or Assistant Secretary, and Pennsylvania LTC, Inc. has caused this Loan Agreement to be executed Section 11.09 Amendments. This Agreement may not be amended except as set forth in in its name and on its behalf by its President or Vice President and its official seal to be affixed Article X of the Bond Indenture. hereunto and attested by its Secretary or Assistant Secretary as of the day and year first above written. Section 11.10 Term of Agreement. This Agreement and the respective obligations of the parties hereto shall be in full force and effect from the date hereof until all principal of, premium, ATTEST: MONTGOMERY COUNTY HIGHER if any, and interest on the Bonds shall have been paid or provision for such payment shall have EDUCATION AND HEALTH AUTHORITY been made pursuant to the terms and provisions of the Bond Indenture.

Section 11.11 Amounts Remaining in Bond Fund. It is agreed by the parties hereto that any amounts remaining in the Bond Fund established under the Bond Indenture upon expiration By:______By: or sooner termination of this Agreement after payment in full of the Bonds (or provision for Assistant Secretary (Vice) Chairman payment thereof having been made in accordance with the provisions of the Bond Indenture) and of the fees, charges and expenses of the Trustee and the Authority in accordance with the Bond Indenture, shall be paid to the Obligor by the Trustee as overpayments hereunder. ATTEST: PENNSYLVANIA LTC, INC.

Section 11.12 Survival of Covenants, Conditions and Representations. All covenants, conditions and representations of the Obligor contained herein that, by nature, impliedly or expressly involve performance in any particular manner after the termination of this Agreement ______By: D-59 or that cannot be ascertained to have been performed until after termination of this Agreement, (Assistant) Secretary (Vice) President shall survive said termination. Without intending to limit the generality of the foregoing, the Obligor’s covenant to indemnify the Authority and the Trustee, as set forth in Section 4.10 hereof, shall survive any termination of this Agreement.

Section 11.13 Headings. The captions or headings in this Agreement are for convenience of reference only and shall not control or affect the meaning or construction of any provision hereof.

Section 11.14 Multiple Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be regarded for all purposes as an original and such counterparts shall constitute but one and the same instrument.

Section 11.15 Consent. Whenever the consent of the Authority is given pursuant to the terms of this Agreement, such consent shall create no liability or responsibility upon the Authority, and whenever required, shall not be unreasonably withheld.

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TABLE OF CONTENTS

Page

RECITALS ...... 1 GRANTING CLAUSES ...... 1

ARTICLE I DEFINITION OF TERMS, CONSTRUCTION AND CERTAIN GENERAL PROVISIONS ...... 3 Section 1.01. Definition of Terms...... 3 MASTER TRUST INDENTURE Section 1.02. Compliance Certificates and Reports ...... 25 Section 1.03. Form of Documents Delivered to Master Trustee ...... 26 by and between Section 1.04. Acts of Holders of Master Obligations ...... 27 Section 1.05. Notices, etc. to Master Trustee and Obligated Group Members ...... 27 PENNSYLVANIA LTC, INC., Section 1.06. Notices to Holders of Master Obligations; Waiver ...... 28 as the Initial Obligated Group Member Section 1.07. Notices to Rating Agencies ...... 28 Section 1.08. Effect of Headings and Table of Contents ...... 28

Section 1.09. Successors and Assigns ...... 28 and Section 1.10. Severability Clause ...... 29 Section 1.11. U.S.A. PATRIOT Act ...... 29

D-60 ARTICLE II THE MASTER OBLIGATIONS ...... 30

U.S. BANK NATIONAL ASSOCIATION, Section 2.01. Series and Amount of Master Obligations ...... 30 as Master Trustee Section 2.02. Appointment of Obligated Group Representative ...... 30 Section 2.03. Execution and Authentication of Master Obligations ...... 31 Section 2.04. Supplement Creating Master Obligations ...... 31 Section 2.05. Conditions to Issuance of Master Obligations Hereunder ...... 32 Dated as of November 1, 2017 Section 2.06. List of Holders of Master Obligations ...... 33 Section 2.07. Optional and Mandatory Redemption ...... 33 Section 2.08. Mutilated, Destroyed, Lost and Stolen Master Obligations ...... 33 Section 2.09. Cancellation ...... 34

ARTICLE III FUNDS AND ACCOUNTS ...... 35

Section 3.01. Revenue Fund ...... 35 Section 3.02. [Reserved] ...... 37 Section 3.03. Repair and Replacement Fund ...... 37 Section 3.04. Investment of Funds ...... 38 Section 3.05. Allocation and Transfers of Investment Income ...... 39 Section 3.06. Master Trustee Relieved From Responsibility ...... 39 Section 3.07. Subordinated Indebtedness ...... 39 ARTICLE IV COVENANTS OF THE OBLIGATED GROUP MEMBERS ...... 41 Section 4.01. Title to Facilities and Mortgaged Property ...... 41 Section 4.02. Further Assurances...... 41 Section 4.03. Recording and Filing...... 41 Section 4.04. Payment of Principal, Premium and Interest ...... 42

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Section 4.05. Payment of Taxes and Other Claims ...... 43 Section 7.13. Delay or Omission Not Waiver ...... 76 Section 4.06. Maintenance of Properties ...... 43 Section 7.14. Control by Holders of Master Obligations...... 77 Section 4.07. Corporate Existence; Status of Obligated Group Members; Tax Exemption ...... 44 Section 7.15. Waiver of Past Defaults and Future Covenant Requirements ...... 77 Section 4.08. Preservation of Qualifications...... 45 Section 7.16. Undertaking for Costs ...... 77 Section 4.09. Additions to Facilities ...... 45 Section 7.17. Waiver of Stay or Extension Laws ...... 78 Section 4.10. Insurance ...... 45 ARTICLE VIII CONCERNING THE MASTER TRUSTEE ...... 79 Section 4.11. Debt Service Coverage Ratio Covenant ...... 46 Section 4.12. Damage or Destruction ...... 49 Section 8.01. Duties and Liabilities of Master Trustee ...... 79 Section 4.13. Condemnation ...... 49 Section 8.02. Notice of Defaults ...... 80 Section 4.14. Other Provisions with Respect to Net Proceeds ...... 50 Section 8.03. Certain Rights of Master Trustee ...... 80 Section 4.15. Financial and Other Information ...... 50 Section 8.04. Not Responsible for Recitals or Issuance of Master Obligations ...... 83 Section 4.16. Permitted Additional Indebtedness ...... 52 Section 8.05. Master Trustee or Registrar May Own Master Obligations ...... 84 Section 4.17. Security for Permitted Additional Indebtedness ...... 56 Section 8.06. Money to Be Held in Trust ...... 84 Section 4.18. Calculation of Debt Service and Debt Service Coverage ...... 56 Section 8.07. Compensation and Expenses of Master Trustee ...... 84 Section 4.19. Permitted Transfers or Dispositions of Property ...... 59 Section 8.08. Corporate Master Trustee Required; Eligibility ...... 85 Section 4.20. Liens on Property ...... 59 Section 8.09. Resignation and Removal; Appointment of Successor ...... 85 Section 4.21. [Reserved] ...... 59 Section 8.10. Acceptance of Appointment by Successor ...... 87 Section 4.22. Liquidity Covenant ...... 59 Section 8.11. Merger or Consolidation ...... 87 Section 4.23. [Reserved] ...... 61 Section 8.12. Master Trustee as Related Bond Trustee ...... 87 Section 4.24. [Reserved] ...... 61 Section 8.13. Co-Master Trustee ...... 87 Section 4.25. Management ...... 61 ARTICLE IX SUPPLEMENTS AND AMENDMENTS ...... 89 Section 4.26. Licenses and Qualifications; Third Party Payments ...... 61 D-61 Section 4.27. Approval of Consultants ...... 61 Section 9.01. Supplements Without Consent of Holders of Master Obligations ...... 89 Section 9.02. Supplements With Consent of Holders of Master Obligations ...... 90 ARTICLE V MERGER, CONSOLIDATION, CONVEYANCE AND TRANSFER ...... 63 Section 9.03. Execution of Supplements ...... 91 Section 5.01. Merger, Consolidation, Sale or Conveyance ...... 63 Section 9.04. Effect of Supplement ...... 91 Section 9.05. Master Obligations May Bear Notation of Changes ...... 91 ARTICLE VI MEMBERSHIP IN THE OBLIGATED GROUP ...... 65 ARTICLE X SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED Section 6.01. Merger or Consolidation; Additions to the Obligated Group ...... 65 MONEYS ...... 92 Section 6.02. Obligated Group Members ...... 66 Section 6.03. Withdrawal of Obligated Group Members ...... 66 Section 10.01. Satisfaction and Discharge of Indenture ...... 92 Section 6.04. Successor Obligated Group Representative ...... 67 Section 10.02. Master Obligations Deemed Paid ...... 92 Section 10.03. Application of Trust Money...... 93 ARTICLE VII EVENTS OF DEFAULT; REMEDIES ...... 69 Section 10.04. Payment of Related Bonds ...... 93 Section 7.01. Events of Default ...... 69 ARTICLE XI MISCELLANEOUS PROVISIONS ...... 94 Section 7.02. Acceleration of Maturity; Rescission and Annulment ...... 70 Section 7.03. Remedies ...... 71 Section 11.01. No Personal Liability ...... 94 Section 7.04. [Reserved] ...... 73 Section 11.02. Pennsylvania Contract ...... 94 Section 7.05. Collection of Indebtedness and Suits for Enforcement by Master Trustee ...... 73 Section 11.03. Legal Holidays ...... 94 Section 7.06. Master Trustee May File Proofs of Claim ...... 74 Section 11.04. Benefits of Provisions of Master Trust Indenture and Master Obligations ...... 94 Section 7.07. Master Trustee May Enforce Claims Without Possession of Master Obligations 74 Section 11.05. Execution in Counterparts ...... 95 Section 7.08. Application of Money Collected ...... 75 Section 11.06. UCC Financing Statements ...... 95 Section 7.09. Limitation on Suits ...... 75 Section 11.07. Providers of Credit Facilities Deemed Holders ...... 95 Section 7.10. Unconditional Right of Holders of Master Obligations to Receive Principal, EXHIBIT A EXISTING LIENS Premium and Interest ...... 76 Section 7.11. Restoration of Rights and Remedies ...... 76 Section 7.12. Rights and Remedies Cumulative ...... 76

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THIS MASTER TRUST INDENTURE, dated as of November 1, 2017 (this “Master ALL THINGS NECESSARY to make this Master Trust Indenture a valid agreement Trust Indenture”), between PENNSYLVANIA LTC, INC., a Pennsylvania non-profit, nonstock and contract for the security of the Master Obligations in accordance with the terms of such corporation, as the obligor and the initial Obligated Group Member (the “Obligor”), and U.S. Master Obligations and this Master Trust Indenture have been done; BANK NATIONAL ASSOCIATION, a national banking association, as master trustee (the “Master Trustee”), IT IS HEREBY COVENANTED AND DECLARED that the Trust Estate is to be held and applied by the Master Trustee, subject to the further covenants, conditions and trusts W I T N E S S E T H: hereinafter set forth, and the Obligated Group Members do hereby covenant and agree to and with the Master Trustee, for the equal and proportionate benefit of all Holders of the Master WHEREAS, the Obligor is authorized and deems it necessary and desirable to enter into Obligations, except as herein otherwise expressly provided; and this Master Trust Indenture for the purpose of providing for the issuance from time to time by the Obligor or other Persons electing to become Obligated Group Members (as defined herein) of THIS MASTER TRUST INDENTURE FURTHER WITNESSETH and it is Master Obligations (as defined herein) to finance or refinance the acquisition or betterment of expressly declared that all Master Obligations issued and secured hereunder are to be issued, skilled nursing facilities or other senior living or healthcare facilities or for other lawful and authenticated and delivered and all said rights hereby pledged and assigned are to be dealt with proper purposes; and and disposed of under, upon and subject to the terms, conditions, stipulations, covenants, agreements, trusts, uses and purposes as hereinafter expressed and the Obligated Group Members WHEREAS, all acts and things necessary to constitute this Master Trust Indenture a have agreed and covenanted, and do hereby agree and covenant, with the Master Trustee for the valid indenture and agreement according to its terms have been done and performed, the Obligor equal and proportionate benefit of the respective holders from time to time of the Master has duly authorized the execution and delivery of this Master Trust Indenture, and the Obligor, in Obligations as follows: the exercise of the legal right and power invested in it, executes this Master Trust Indenture and proposes to make, execute, issue and deliver Master Obligations hereunder; and

WHEREAS, the Master Trustee agrees to accept and administer this Master Trust

D-62 Indenture upon the terms set forth herein;

GRANTING CLAUSES

NOW, THEREFORE, in order to declare the terms and conditions upon which Master Obligations are to be issued and delivered hereunder, in consideration of the premises and intending to be legally bound hereby, the Obligor hereby covenants and agrees with the Master Trustee, and each other Obligated Group Member upon becoming such shall covenant and agree with the Master Trustee, for the equal and proportionate benefit of the respective Holders from time to time of all Master Obligations issued hereunder, to perform and observe all covenants and agreements of the Obligated Group and each Obligated Group Member hereunder; and

To secure the performance and observance of all such covenants and agreements, the Obligor does hereby (and each Obligated Group Member upon becoming such shall) sell, assign, transfer, set over, pledge and grant to the Master Trustee a security interest in (a) all of their (or its) right, title and interest in and to any fund or account created hereunder, subject to the provisions of this Master Trust Indenture permitting the application thereof for the purposes and on the terms and conditions set forth herein, including all moneys and investments therein and investment income thereon, and (b) all of its respective right, title and interest in and to the Gross Revenues (collectively, the “Trust Estate”), to have and to hold in trust for the equal and ratable benefit and security of all Holders of Master Obligations issued hereunder, without preference, priority or distinction (except as otherwise specifically provided herein) of any one Master Obligation over any other Master Obligation.

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ARTICLE I “Affiliate” of any specified Person means any other Person directly or indirectly DEFINITION OF TERMS, CONSTRUCTION AND CERTAIN GENERAL controlling or controlled by or under direct or indirect common control with such specified PROVISIONS Person. For purposes of this definition, “control” when used with respect to any specified Person means the power to direct the policies of such Person, directly or indirectly, whether through the Section 1.01. Definition of Terms power to appoint and remove its directors, the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the For all purposes of this Master Trust Indenture, except as otherwise expressly provided or foregoing. unless the context otherwise requires: “Annual Budget” means the annual budget of the Obligated Group required to be (a) “This Master Trust Indenture” means this instrument as originally executed and as provided by the Obligated Group Representative pursuant to Section 4.15 hereof. it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof and shall include the terms of the “Authorized Obligor Representative” shall mean, with respect to the Obligated Group Master Obligations. Representative and each Obligated Group Member, the President, a Vice President, the Secretary, the Treasurer or any other person or persons designated by an Officer’s Certificate of (b) All references in this instrument designated “Articles,” “Sections” and other the Obligated Group Representative or the Obligated Group Member and delivered to the Master subdivisions are to the designated Articles, Sections and other subdivisions of this instrument as Trustee. originally executed. The words “herein,” “hereof” and “hereunder” and other words of similar import refer to this Master Trust Indenture as a whole and not to any particular Article, Section “Balloon Indebtedness” means Funded Indebtedness 25% or more of the original or other subdivision. principal of which matures during any consecutive 12 month period, if such maturing principal amount is not required to be amortized below such percentage by mandatory redemption or (c) The terms defined in this Article have the meanings assigned to them in this prepayment prior to such 12 month period. Balloon Indebtedness does not include Indebtedness Article and include the plural as well as the singular number. which otherwise would be classified hereunder as Put Indebtedness. (d) All accounting terms not otherwise defined herein have the meanings assigned to D-63 “Board Resolution” of any specified Person means a copy of a resolution certified by the them in accordance with GAAP applied in accordance with Section 1.02 of this Master Trust Person responsible for maintaining the records of the Governing Body of such Person to have Indenture. been duly adopted by the Governing Body of such Person and to be in full force and effect on the date of such certification and delivered to the Master Trustee. “Accountant” means a certified public accountant, or a firm of certified public accountants, who or which is “independent” as that term is defined in Rule 101 and related “Bond Counsel” means an independent attorney or firm of attorneys of nationally interpretations of the Code of Professional Ethics of the American Institute of Certified Public recognized experience in matters pertaining to the validity of, and exclusion from gross income Accountants, of recognized standing, who or which does not devote his or its full time to any for federal income tax purposes of interest on, the obligations of states and their political Member or its Affiliates (but who or which may be regularly retained by a Member or its subdivisions, as may be selected by the Obligated Group Representative and which is reasonably Affiliates). acceptable to each issuer of the Related Bonds.

“Act” when used with respect to any Holder of Master Obligations has the meaning “Book Value” when used with respect to Property of a Member means the value of such specified in Section 1.04 and not the meaning assigned such term in any documents delivered in Property, net of accumulated depreciation and amortization, as reflected in the most recent connection with the issuance of Master Obligations or Related Bonds, unless specifically audited financial statements of such Member prepared in accordance with GAAP, and when used provided for in such documents. with respect to Property of all Members means the aggregate of the values of such Property, net of accumulated depreciation and amortization, as reflected in the most recent audited combined “Additional Indebtedness” means Indebtedness incurred by any Member subsequent to financial statements of the Obligated Group prepared in accordance with GAAP, provided that the issuance of the Series 2017 Master Obligation. such aggregate shall be calculated in such a manner that no portion of the value of any Property of any Member is included more than once. “Additional Master Obligation” means any evidence of Indebtedness or evidence of any repayment obligation under any Hedge Agreement issued after the issuance of the Series “Business Day” means any day other than (i) a Saturday or Sunday; (ii) a legal holiday 2017 Master Obligation, which is authorized to be issued by a Member pursuant to this Master on which banking institutions in the State of New York or the Commonwealth of Pennsylvania Trust Indenture and which has been authenticated by the Master Trustee pursuant to Section 2.03 are authorized or required by law to close; or (iii) a day on which the New York Stock Exchange hereof. is closed.

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“Capital Addition” means any addition, improvements, extensions, alterations, Addition thereto of substantially the same type and scope contemplated at the time such prior relocations, enlargements, expansions, modifications or replacement of or to the Facilities and Funded Indebtedness was originally incurred, to provide for Funded Interest during the period of the cost of which is properly capitalized under GAAP applied in accordance with Section 1.02 construction, to provide any reserve fund relating to such Completion Funded Indebtedness and hereof. to pay the costs and expenses of issuing such Completion Funded Indebtedness.

“Capitalized Lease” means any lease of real or personal property which, in accordance “Consent” or “Request” of any specified Person mean, respectively, a written consent or with GAAP, is required to be capitalized on the balance sheet of the lessee. request signed in the name of such Person by the Chairman of the Governing Body, the Chief Executive Officer, the President, a Vice President, the Treasurer, an Assistant Treasurer or the “Capitalized Rentals” means, as of the date of determination, the amount at which the Chief Financial Officer of such Person or any other person or persons designated by an Officer’s aggregate Net Rentals due and to become due under a Capitalized Lease under which a Person is Certificate and delivered to the Master Trustee. a lessee would be reflected as a liability on a balance sheet of such Person. “Consultant” means a professional consulting, accounting, investment banking or “Cash and Investments” means the sum of (a) unrestricted cash, cash equivalents, commercial banking firm or individual selected by the Obligated Group Representative having marketable securities of the Members of the Obligated Group, including without limitation the skill and experience necessary to render the particular report required and having a favorable board-designated assets, and any amounts on deposit in the Repair and Replacement Fund. For reputation for such skill and experience, which firm or individual does not control any Obligated the purposes of calculation of the Liquidity Requirement, an Unrestricted Contribution from an Group Member or any Affiliate thereof and is not controlled by or under common control with Affiliate shall be treated as being made during the period of such calculation so long as the any Obligated Group Member or an Affiliate thereof. Unrestricted Contribution is made prior to the date the applicable certificate is required to be delivered with respect to such calculation. “Construction Index” means the most recent issue of the “Dodge Construction Index for U.S. and Canadian Cities” with reference to the city in which the subject property is located (or, “Code” means the Internal Revenue Code of 1986, as amended from time to time, if such Index is not available for such city, with reference to the city located closest including, when appropriate, the statutory predecessor thereof, or any applicable corresponding geographically to the city in which the subject property is located), or, if such Index is no longer provisions of any future laws of the United States of America relating to federal income taxation, published or used by the federal government in measuring costs under Medicare or Medicaid

D-64 and except as otherwise provided herein or required by the context hereof, includes programs, such other index which is certified to be comparable and appropriate by the Obligated interpretations thereof contained or set forth in the applicable regulations of the Department of Group Representative in an Officer’s Certificate delivered to the Master Trustee. the Treasury (including applicable final or temporary regulations and also including regulations issued pursuant to the statutory predecessor of the Code), the applicable rulings of the Internal “Continuing Disclosure Certificate” means the Continuing Disclosure Certificate Revenue Service (including published Revenue Rulings and private letter rulings) and applicable delivered by the Obligor in connection with the issuance of the Series 2017 Bonds and any court decisions. similar continuing disclosure certificate or undertaking delivered by an Obligated Group Member in connection with the issuance of Related Bonds. “Commitment Indebtedness” means the obligation of any Member to repay amounts disbursed pursuant to a commitment from a financial institution to refinance or purchase when “Contributions” means the aggregate amount of all contributions, grants, gifts, bequests due, when tendered or when required to be purchased (a) other Indebtedness of such Member or and devises actually received in cash or marketable securities by any Person in the applicable (b) Indebtedness of a Person who is not a Member, which Indebtedness is guaranteed by a fiscal year of such Person and any such contributions, grants, gifts, bequests and devises Guaranty of such Member or secured by or payable from amounts paid on Indebtedness of such originally received in a form other than cash or marketable securities by any Person which are Member, in either case which Indebtedness or Guaranty of such Member was incurred in converted in such fiscal year to cash or marketable securities and deposited into the accounts of accordance with the provisions of Section 4.16 hereof, and the obligation of any Member to pay the Obligated Group. interest payable on amounts disbursed for such purposes, plus any fees, costs or expenses payable to such financial institution for, under or in connection with such commitment, in the “Corporate Trust Office” of the Master Trustee shall be the office of the Master Trustee event of disbursement pursuant to such commitment or in connection with enforcement thereof, at which this Master Trust Indenture shall be principally administered, which at the date hereof is including, without limitation, any penalties payable in the event of such enforcement. U.S. Bank National Association, 50 South 16th Street, Suite 2000, Mail Station: EY-PA-WBSP, Philadelphia, PA 19102, Attention: Global Corporate Trust Services, or such other address as to “Completion Funded Indebtedness” means any Funded Indebtedness for borrowed which the Master Trustee may give notice to the Obligated Group. money: (a) incurred for the purpose of financing the completion of the acquisition, construction, remodeling, renovation or equipping of Facilities or a Capital Addition thereto or marketing or “Credit Facility” means any Liquidity Facility, letter of credit, bond insurance policy, other pre-opening expenses of such Facilities with respect to which Funded Indebtedness has standby purchase agreement, guaranty, line of credit, surety bond or similar credit or liquidity been incurred in accordance with the provisions hereof; and (b) with a principal amount not in facility securing any Indebtedness of any Obligated Group Member. excess of the amount which is required to provide completed and equipped Facilities or a Capital

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“Current Value” means (a) with respect to Property, Plant and Equipment: (i) the group of Persons with respect to which such requirements are calculated; provided that: (a) the aggregate fair market value of such Property, Plant and Equipment as reflected in the most recent amount of such payments for a future period shall be calculated in accordance with the written report of an appraiser selected by the Obligated Group Representative and, in the case of assumptions contained in Sections 4.16 and 4.17 hereof; (b) interest shall be excluded from the real property, who is a member of the American Institute of Real Estate Appraisers (MAI), determination of the Debt Service Requirements to the extent that Funded Interest is available to delivered to the Master Trustee (which report shall be dated not more than three years prior to pay such interest; (c) principal of Indebtedness shall be excluded from the determination of Debt the date as of which Current Value is to be calculated) increased or decreased by a percentage Service Requirements to the extent that amounts are on deposit in an irrevocable escrow and equal to the aggregate percentage increase or decrease in the Construction Index from the date of such amounts (including, where appropriate, the earnings or other increment to accrue thereon) such report to the date as of which Current Value is to be calculated, minus the fair market value are required to be applied to pay such principal and such amounts so required to be applied are (as reflected in the most recent appraiser’s report) of any Property, Plant and Equipment included sufficient to pay such principal; (d) principal of Indebtedness due in its final year shall be in such report but disposed of since the last such report increased or decreased by a percentage excluded from the determination of Debt Service Requirements to the extent moneys were equal to the aggregate percentage increase or decrease in the Construction Index from the date of initially deposited and are on deposit as of the date of calculation in a debt service reserve fund such report to the date as of which Current Value is to be calculated; plus (ii) the Book Value of which required that moneys on deposit in the debt service reserve fund be used to pay a principal any Property, Plant and Equipment acquired since the last such report increased or decreased by payment in the final year of such Indebtedness and, except for the payment to be received from a percentage equal to the aggregate percentage increase or decrease in the Construction Index such debt service reserve fund, the Indebtedness would have had approximately level debt from the date of such acquisition to the date as of which Current Value is to be calculated; minus service; (e) any annual fees payable in respect of a Credit Facility (other than annual fees to be (iii) the Book Value of any such Property, Plant and Equipment acquired since the last such paid from proceeds of a bond issue escrowed for such purpose) shall be included in the report but disposed of; and (b) with respect to any other Property, the fair market value of such determination of Debt Service Requirements; and (f) principal of and interest on Qualified Property. Intermediate Term Indebtedness shall be excluded.

“Days Cash on Hand” means, as of the date of calculation, the amount determined by “Default” means any event that is, or with the passage of time or the giving of notice or dividing (a) the amount of Cash and Investments on such date by (b) the quotient obtained by both would be, an Event of Default. dividing (i) Expenses (including interest on Indebtedness but excluding provisions for bad debt amortization, depreciation or any other non-cash expenses) for the six-month period ending as of “Defeasance Obligations” means (i) with respect to any Obligation that secures a series D-65 each June 30 and December 31 as shown on the unaudited financial statements delivered of Related Bonds, the obligations permitted to be used to defease such series of Related Bonds pursuant to Section 4.15(A) or 4.15(B) hereof, as applicable, by (ii) the number of days in such under the Related Bond Indenture, and (ii) with respect to any Obligation for which there are no six-month period; provided, however, that for the calculation required to be made by an Related Bonds, (A) noncallable Government Obligations, (B) evidences of ownership of a Accountant for each June 30 pursuant to Section 4.15 hereof, the audited financial statements for proportionate interest in specified noncallable Government Obligations, which Government the fiscal year ended on such June 30 shall be used for such calculation. Obligations are held by a bank or trust company organized and existing under the laws of the United States of America or any state thereof in the capacity of custodian, (C) Defeased “Debt Service Coverage Ratio” means, means, for any twelve month period, the ratio Municipal Obligations and (D) evidences of ownership of a proportionate interest in specified determined by dividing Income Available for Debt Service for that period by the Maximum Defeased Municipal Obligations, which Defeased Municipal Obligations are held by a bank or Annual Debt Service Requirement; provided, however, that in making such calculation, (a) the trust company organized and existing under the laws of the United States of America or any state principal amount of any Indebtedness included in such calculation shall be excluded to the extent thereof in the capacity of custodian. such principal amount is paid from the proceeds of other Indebtedness incurred in accordance with this Master Trust Indenture, (b) to the extent a Hedge Agreement has been entered into in “Defeased Municipal Obligations” means obligations of state or local government connection with any particular Indebtedness, the actual debt service paid after the effect of municipal bond issuers which are rated in the highest rating category by S&P and Moody’s and payments made to or received from the provider of the Hedge Agreement shall be used in this provision for the payment of the principal of and interest on which shall have been made by calculation, (c) any Subordinated Indebtedness shall be excluded except when making such deposit with a trustee or escrow agent of (i) noncallable Government Obligations, (ii) evidences calculation for the purpose of determining whether payments on Subordinated Indebtedness can of ownership of a proportionate interest in specified noncallable Government Obligations, (iii) be made pursuant to this Master Trust Indenture and (d) such calculation shall be based on cash or (iv) any combination of such noncallable Government Obligations, evidences of unaudited financial statements (and adjusted retroactively for any material changes reflected in ownership and cash, which Government Obligations or evidences of ownership, together with audited financial statements for the fourth quarter of a Fiscal Year) for the four consecutive any cash, are held by a bank or trust company organized and existing under the laws of the quarters ending for the period of time tested, as applicable. United States of America or any state thereof in the capacity of custodian, the maturing principal of and interest on such Government Obligations or evidences of ownership, when due and “Debt Service Requirements” means, with respect to the period of time for which payable, being sufficient, together with any cash, to provide money to pay the principal of, calculated, the aggregate of the payments required to be made during such period in respect of premium, if any, and interest on such obligations of such state or local government municipal principal (whether at maturity, as a result of mandatory sinking fund redemption, mandatory bond issuers. prepayment or otherwise) and interest on outstanding Funded Indebtedness of each Person or a

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“Edgehill Facility” means the 60-bed nursing facility known as Edgehill Nursing and “Fiscal Year” means the 12 month period beginning on July 1 of any calendar year and Rehabilitation Center, located in Glenside, Pennsylvania. ending on June 30 of the following calendar year or such other consecutive 12 month period selected by the Obligated Group Representative as the fiscal year for the Members. “EMMA” means the Electronic Municipal Market Access System, or any successor depository or system, designated or maintained by the Municipal Securities Rulemaking Board “Fitch” means Fitch Inc., a corporation organized and existing under the laws of the State and its successors. of Delaware, its successors and assigns, and if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, “Fitch” shall be deemed to “Event of Default” has the meaning set forth in Section 7.01 hereof. refer to any other nationally recognized securities rating agency designated by the Obligated Group, with written notice to the Master Trustee. “Expenses” means, for any period, the aggregate of all expenses calculated under GAAP including, without limitation, any accrual for taxes, assessments and insurance and any refunds “Funded Indebtedness” means, with respect to any Person, (a) all Indebtedness of such owed to residents, incurred by the Obligated Group during such period, but excluding (a) interest Person for money borrowed or credit extended, incurred or assumed which is not Short Term; (b) on Funded Indebtedness, (b) depreciation and amortization, (c) extraordinary expenses, losses on all Short Term Indebtedness incurred by the Person which is of the type described in Section the sale of assets other than in the ordinary course of business and losses on the extinguishment 4.16(d) hereof; (c) the Person’s Guaranties of Indebtedness which are not Short Term (but of debt or termination of pension plans, (d) any expenses resulting from a forgiveness of or the including Guaranties of Short Term Indebtedness described in Section 4.16(d) hereof); and (d) establishment of reserves against indebtedness of an Affiliate which does not constitute an Capitalized Rentals under Capitalized Leases entered into by the Person; provided, however, that extraordinary expense, (e) losses resulting from any reappraisal, revaluation or write down of Indebtedness that could be described by more than one of the foregoing categories shall not in assets other than bad debts, (f) non-cash expenses or losses, (g) any expenses paid with proceeds any case be considered more than once for the purpose of any calculation made pursuant to this of Related Bonds, (h) any development, marketing, operating, overhead or management fees that Master Trust Indenture. have been deferred from the year in which they were originally due, (i) expenses attributable to transactions among any Members of the Obligated Group, and (j) termination payments relating “Funded Interest” means amounts irrevocably deposited in an escrow or other trust to interest rate swaps or other derivative financial products that are paid with the proceeds of any account (other than a debt service reserve fund held under a Related Bond Indenture) to pay Indebtedness issued for a capital project or financing. interest on Funded Indebtedness or Related Bonds and interest earned on such amounts to the

D-66 extent such interest earned is required to be applied to pay interest on Funded Indebtedness or “Facilities” means collectively, the Edgehill Facility and the Linwood Facility and any Related Bonds. additional facilities owned by any Obligated Group Member and located on the Mortgaged Property, all necessary and useful furnishings, equipment and machinery and such interests in “GAAP” means those principles of accounting set forth in pronouncements of the land as may be necessary or suitable for the foregoing, including roads and rights of access, Financial Accounting Standards Board and its predecessors or pronouncements of the American utilities and other necessary site preparation facilities. Institute of Certified Public Accountants or those principles of accounting which have other substantial authoritative support and are applicable in the circumstances as of the date of “Feasibility Report” means a report prepared and signed by a Consultant, who is an application, as such principles are from time to time supplemented or amended. Accountant, setting forth for a forecast period not exceeding five Fiscal Years from the later of the date of the issuance of the Indebtedness in question or the completion of the Capital “Governing Body” means, with respect to a Member, the board of directors, the board Additions financed with such Indebtedness: (a) forecasted financial statements prepared on the of trustees or similar group in which the right to exercise the powers of corporate directors or same basis as the Obligated Group’s audited financial statement; and (b) a full explanation of the trustees is vested. assumptions and rationale used in preparing such forecasts, including that such forecasts have taken into account the projected utilization of the Facilities, the rates and charges to patients and “Government Obligations” means direct obligations of the United States of America or residents and such other data and information as may be necessary to support the forecasted obligations the full and timely payment of the principal of and interest on which is financial statements; such report shall be accompanied by an opinion of such Consultant that the unconditionally guaranteed by the United States of America. underlying assumptions provide a reasonable basis for such forecast. “Gross Revenues” means all receipts, revenues, rentals, income, insurance proceeds “Federal Subsidy Payments” means the direct payments made by the United States (including, without limitation, all Medicaid, Medicare and other third party payments), Department of Treasury or other federal governmental agency or entity authorized to make such condemnation awards, Federal Subsidy Payments and other moneys received by or on behalf of payments to the issuer or conduit borrower for any Related Bonds which constitute Subsidy any Obligated Group Member, including, without limitation, revenues derived from (a) the Bonds. ownership, operation or leasing of any portion of the Facilities (including, without limitation, fees payable by or on behalf of residents of the Facilities) and all rights to receive the same (other than the right to receive Medicaid and Medicare payments), whether in the form of accounts, general intangibles or other rights, and the proceeds of such accounts, general

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intangibles and other rights, whether now existing or hereafter coming into existence or whether Indenture, to convert any element of any such bonds from one form to another, to maximize or now owned or held or hereafter acquired, (b) proceeds received from (i) accounts, (ii) securities increase investment return, to minimize investment return risk or to protect against any type of and other investments, (iii) inventory and other tangible and intangible property and (iv) financial risk or uncertainty. accounts receivable, general intangibles, contract rights, chattel paper, instruments and other rights and assets now existing or hereafter coming into existence or whether now owned or held “Hedge Receipts” means amounts payable by any provider of a Hedge Agreement or hereafter acquired and (c) gifts, grants, bequests, donations and contributions heretofore or pursuant to such Hedge Agreement, other than termination payments, fees, expenses and hereafter made that are legally available to meet any of the obligations of the Obligated Group indemnity payments. Member incurred in the financing, operation, maintenance or repair of any portion of the Facilities; provided, however, that there shall be excluded from Gross Revenues (i) all such “Historical Debt Service Coverage Ratio” means, for any twelve month period, the items, whether now owned or hereafter acquired by the Obligated Group Members, which by ratio determined by dividing Income Available for Debt Service for that period by the Maximum their terms or by reason of applicable law cannot be granted, assigned or pledged hereunder or Annual Debt Service Requirement; provided, however, that in making such calculation, (a) the which would become void or voidable if granted, assigned or pledged hereunder by the principal amount of any Indebtedness included in such calculation shall be excluded to the extent Obligated Group Members, or which cannot be granted, assigned or pledged hereunder without such principal amount is paid from the proceeds of other Indebtedness incurred in accordance the consent of other parties whose consent is not secured, or without subjecting the Master with the provisions of this Master Trust Indenture, (b) to the extent a Hedge Agreement has been Trustee to a liability not otherwise contemplated by the provisions hereof, or which otherwise entered into in connection with any particular Indebtedness, the actual debt service paid after the may not be, or are not, hereby lawfully and effectively granted, assigned and pledged by the effect of payments made to or received from the provider of the Hedge Agreement shall be used Obligated Group Members, (ii) any amounts received by an Obligated Group Member as a in the calculation, (c) any Subordinated Indebtedness shall be excluded except when making billing agent for another entity, except for fees received for serving as billing agent, (iii) gifts, such calculation for the purpose of determining whether payments on Subordinated Indebtedness grants, bequests, donations and contributions to an Obligated Group Member heretofore or can be made pursuant to Section 3.05 hereof and (d) such calculation shall be based on unaudited hereafter made, and the income and gains derived therefrom, which are specifically restricted by financial statements (and adjusted retroactively for any material changes reflected in audited the donor or grantor to a particular purpose which is inconsistent with their use as payments financial statements for the fourth quarter of a Fiscal Year) for the four consecutive quarters required under this Master Trust Indenture, (iv) any moneys received by any Obligated Group ending for the period of time tested. Member from commercial tenants in order to pay for customized improvements to those areas of D-67 the Facilities to be occupied or leased to such residents or tenants, and (v) all deposits and/or “Historical Pro Forma Debt Service Coverage Ratio” means, for twelve month period, advance payments made in connection with any leases of the Facilities and received prior to the ratio determined by dividing Income Available for Debt Service for that period by the receipt of such certificate and licenses. Maximum Annual Debt Service Requirement for the Funded Indebtedness then outstanding (other than any Funded Indebtedness being refunded with the Funded Indebtedness then “Guaranty” means all obligations of a Person guaranteeing, or in effect guaranteeing, proposed to be issued) and the Funded Indebtedness then proposed to be issued. any Indebtedness, dividend or other obligation of any Primary Obligor in any manner, whether directly or indirectly, including, but not limited to, obligations incurred through an agreement, “Holder” means the registered owner of any Master Obligation. contingent or otherwise, by such Person (a) to purchase such Indebtedness or obligation or any “Holder Consent” means the written consent of the Holders of a majority in aggregate Property constituting security therefor, (b) to advance or supply funds (i) for the purchase or principal amount of the total amount of Master Obligations then Outstanding. payment of such Indebtedness or obligation, or (ii) to maintain working capital or other balance sheet condition, (c) to purchase securities or other Property or services primarily for the purpose “Income Available for Debt Service” means, for any period, the excess of Revenues of assuring the owner of such Indebtedness or obligation of the ability of the Primary Obligor to over Expenses for the Obligated Group. make payment of the Indebtedness or obligation, or (d) otherwise to assure the owner of such Indebtedness or obligation against loss in respect thereof. “Indebtedness” means, for any Person, (a) all Guaranties by such Person, (b) all liabilities (exclusive of reserves such as those established for deferred taxes or litigation) “Hedge Agreement” means, without limitation, (a) any contract known as or referred to recorded or required to be recorded as debt on the audited financial statements of such Person in or which performs the function of an interest rate swap agreement, currency swap agreement, accordance with GAAP, and (c) all obligations for the payment of money incurred or assumed by forward payment conversion agreement or futures contract; (b) any contract providing for such Person (i) due and payable in all events, or (ii) if incurred or assumed primarily to assure payments based on levels of, or changes or differences in, interest rates, currency exchange rates, the repayment of money borrowed or credit extended, due and payable upon the occurrence of a or stock or other indices; (c) any contract to exchange cash flows or payments or series of condition precedent or upon the performance of work, possession of Property as lessee, payments; (d) any type of contract called, or designed to perform the function of, interest rate rendering of services by others or otherwise; provided that Indebtedness shall not include floors, collars, caps, options, puts or calls to hedge or minimize any type of financial risk, Indebtedness of one Member to another Member, any Guaranty by any Member of Indebtedness including, without limitation, payment, currency, rate or other financial risk; and (e) any other of any other Member, the joint and several liability of any Member on Indebtedness issued by type of contract or arrangement that the Obligated Group Members determine is to be used, or is intended to be used, to manage or reduce the cost of any bonds issued under a Related Bond

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another Member or Hedge Agreements or service fees payable to any manager of the Facilities “Long-Term Indebtedness” means Indebtedness having a maturity of greater than one or to The Guardian Foundation, Inc. year.

“Independent Counsel” means an attorney duly admitted to practice law in any state “Master Obligation” means any promissory note, guaranty, lease, contractual agreement and, without limitation, may include independent legal counsel for any Member. to pay money or other obligation of any Obligated Group Member which is authenticated and delivered pursuant to this Master Trust Indenture and which is entitled to the benefits of this “Initial Mortgage” means, collectively, the Open-End Mortgage and Security Master Trust Indenture. Agreements dated as of November __, 2017, from the Obligor to the Master Trustee. “Master Trust Indenture” means this Master Trust Indenture dated as of November 1, “Initial Purchaser” means Herbert J. Sims & Co., Inc., the initial purchaser of the Series 2017, between the Obligor and the Master Trustee, as supplemented by the Initial Supplemental 2017 Bonds. Indenture and any supplements or amendments thereto and modifications thereof.

“Initial Supplemental Indenture” means Supplemental Master Trust Indenture Number “Master Trustee” means U.S. Bank National Association, a national banking 1 of even date herewith, between the Obligated Group Representative and the Master Trustee, association, until a successor replaces it in accordance with the applicable provisions of Article related to the issuance of the Series 2017 Master Obligation. VIII hereof and thereafter means the successor serving hereunder.

“Insurance Consultant” means a person or firm who in the case of an individual is not “Maturity” means, when used with respect to any Indebtedness, the date on which the an employee or officer of any Member and which, in the case of a firm, does not control any principal of such Indebtedness or any installment thereof becomes due and payable as therein Obligated Group Member or any Affiliate thereof and is not controlled by or under common provided, whether at the Stated Maturity thereof or by declaration of acceleration, call for control with any Obligated Group Member or an Affiliate thereof, appointed by the Obligated redemption or otherwise. Group Representative, qualified to survey risks and to recommend insurance coverage for senior living facilities or health care facilities and services of the type involved and having a favorable “Maximum Annual Debt Service Requirement” means the highest annual Debt reputation for skill and experience in such surveys and such recommendations, and which may Service Requirements for the current or any succeeding Fiscal Year of any Master Obligations

D-68 include a broker or agent with whom any Member transacts business. constituting Parity Obligations, provided, that the amount due in the 12-month period preceding maturity shall be excluded from the calculation. “Lien” means any mortgage, pledge or lease of, security interest in or lien, charge or encumbrance on any Property of the Person involved in favor of, or which secures any obligation “Moody’s” means Moody’s Investors Service, a corporation organized and existing to, any Person other than any Member. under the laws of the State of Delaware, its successors and assigns, and, if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, “Linwood Facility” means the 102-bed nursing facility known as Linwood Nursing and “Moody’s” shall be deemed to refer to any other nationally recognized securities rating agency Rehabilitation Center (formerly known as Mountain Rest Nursing Home), located in Scranton, designated by the Obligated Group with written notice to the Master Trustee. Pennsylvania. “Mortgage” means, collectively, the Initial Mortgage and any similar mortgages to “Linwood 2017 Project” means the demolition of one wing of the Linwood Facility and secure debt executed and delivered in connection with any Additional Indebtedness or admission the construction, equipping and furnishing of a replacement wing financed, in part, with proceeds of any Obligated Group Member. of the Series 2017 Bonds. “Mortgaged Property” means the real property and personal property of the Obligated “Liquidity Facility” means a written commitment to provide money to purchase or retire Group Members which is subject to the lien and security interest of the Mortgage. any Indebtedness if (a) on the date of delivery of such Liquidity Facility the unsecured Funded Indebtedness or claims-paying ability of the provider of such Liquidity Facility or its parent “Needs Assessment Analysis” means an analysis conducted by an independent holding company or other controlling entity is rated at least “A” by a least one of the Rating Consultant with respect to the capital needs for repairs and replacements to the Facilities. Agencies, and (b) as of any particular date of determination no amount realized under such Liquidity Facility for the payment of the principal or the purchase or redemption price of such “Net Book Value” means, when used in connection with Property, Plant and Equipment Indebtedness (exclusive of amounts realized for the payment of accrued interest on such or other Property of any Person, the value of such Property, Plant and Equipment or other Indebtedness) shall be required to be repaid by the obligor on such Funded Indebtedness for a Property, net of accumulated depreciation, as it is carried on the books of such Person in period of at least one year. conformity with generally accepted accounting principles consistently applied, and when used in connection with Property, Plant and Equipment or other Property of the Obligated Group, means “Liquidity Requirement” has the meaning given such term in Section 4.22 hereof. the aggregate of the values so determined with respect to such Property, Plant and Equipment or

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other Property of the Obligated Group determined in such a manner that no portion of such value Chief Operating Officer, the President, any Vice President, the Treasurer, the Secretary, the of Property, Plant and Equipment or other Property is included more than once. Director of Finance or any other Authorized Obligor Representative of any Obligated Group Member or, in the case of a certificate delivered by any other entity, by the President, any Vice “Net Proceeds” means, when used with respect to any insurance (other than the proceeds President, the Chief Operating Officer, the Chief Financial Officer, the Director of Finance or of business interruption insurance) or condemnation award or sale consummated under threat of any other officer or agent authorized to sign by resolution of the Governing Body of such entity condemnation, the gross proceeds from the insurance or condemnation award or sale with respect or, in the case of a certificate delivered by any other Person, the chief executive or chief financial to which that term is used less all expenses (including attorneys’ fees, adjuster’s fees and any officer of such other Person. expenses of the Obligated Group or the Master Trustee) incurred in the collection of such gross proceeds. “Opinion of Bond Counsel” shall mean an opinion in writing signed by Bond Counsel.

“Net Rentals” means all fixed rents (including as such all payments which the lessee is “Opinion of Counsel” means a written opinion of Independent Counsel who may (except obligated to make to the lessor on termination of the lease or surrender of the leased Property as otherwise expressly provided herein) be counsel to any Obligated Group Member. other than upon termination of the lease for a default thereunder) payable under a lease or sublease of real or personal Property excluding any amounts required to be paid by the lessee “Outstanding” means, when used with respect to Master Obligations, as of the date of (whether or not designated as rents or additional rents) on account of maintenance, repairs, determination, all Master Obligations theretofore authenticated and delivered under this Master insurance, taxes and similar charges. Net Rentals for any future period under any so called Trust Indenture, except: “percentage lease” shall be computed on the basis of the amount reasonably estimated to be payable thereunder for such period, but in any event not less than the amount paid or payable (a) Master Obligations theretofore cancelled and delivered to the Master Trustee or thereunder during the immediately preceding period of the same duration as such future period; delivered to the Master Trustee for cancellation; provided that the amount estimated to be payable under any such percentage lease shall in all cases recognize any change in the applicable percentage called for by the terms of such lease. (b) Master Obligations for whose payment or redemption money (or Defeasance Obligations to the extent permitted by Section 10.02 of this Master Trust Indenture) shall have “Obligated Group” means, collectively, all of the Obligated Group Members. theretofore been deposited with the Master Trustee or any Paying Agent for such Master

D-69 Obligations in trust for the Holders of such Master Obligations pursuant to this Master Trust “Obligated Group Member” or “Member” means the Obligor and any other Person Indenture; provided, that, if such Master Obligations are to be redeemed, notice of such who has satisfied the requirements set forth in this Master Trust Indenture for becoming an redemption has been duly given or waived pursuant to this Master Trust Indenture or irrevocable Obligated Group Member and its successors until any such Person or a successor or transferee provision for the giving of such notice satisfactory to the Master Trustee has been made pursuant Person satisfies the requirements set forth in this Master Trust Indenture for ceasing to be an to this Master Trust Indenture; and Obligated Group Member. (c) Master Obligations upon transfer of or in exchange for or in lieu of which other “Obligated Group Representative” means the Obligor or any successor Obligated Master Obligations have been authenticated and delivered pursuant to this Master Trust Group Representative appointed pursuant to Section 6.04 hereof. Indenture;

“Obligated Group Representative Request” means a written order or request of the provided, however, that in determining whether the Holders of the requisite principal amount of Obligated Group or any Member, signed by an Authorized Obligor Representative, and delivered Outstanding Master Obligations have given any request, demand, authorization, direction, notice, to the Master Trustee. consent or waiver hereunder, Master Obligations owned by any Obligated Group Member or any Affiliate of any Obligated Group Member shall be disregarded and deemed not to be “Obligation Register” means the register of ownership of the Master Obligations to be Outstanding, except that, in determining whether the Master Trustee shall be protected in relying maintained pursuant to this Master Trust Indenture. upon any such request, demand, authorization, direction, notice, consent or waiver, only Master Obligations that a Responsible Officer of the Master Trustee actually knows to be so owned shall “Obligor” means Pennsylvania LTC, Inc., a Pennsylvania non-profit, non-stock be so disregarded. Master Obligations so owned that have been pledged in good faith may be corporation, and any and all successors thereto in accordance with this Master Trust Indenture. regarded as Outstanding if the pledgee establishes to the satisfaction of the Master Trustee the pledgee’s right so to act with respect to such Master Obligations and that the pledgee is not an “Occupancy Requirements” shall have the meaning set forth in the Initial Supplemental Obligated Group Member or an Affiliate of any Obligated Group Member. Indenture, with respect to the Linwood 2017 Project, or in any other Supplement with respect to a Capital Addition to the Facilities. “Parity Obligation” means any Master Obligation secured, on a parity basis, by a Mortgage and by the Trust Estate. “Officer’s Certificate” means a certificate signed, in the case of a certificate delivered by an Obligated Group Member, by the Chief Executive Officer, the Chief Financial Officer, the

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“Paying Agent” means any Person authorized by the Obligated Group Representative to extended, renewed or replaced by another lien, nor may it be modified to apply to any property pay the principal of (and premium, if any) or interest on any Master Obligations on behalf of the of a Member of the Obligated Group not subject to such lien on the date of execution unless such Obligated Group. lien as so extended, renewed, modified or replaced otherwise qualifies as a Permitted Encumbrance hereunder; and provided further that no Additional Indebtedness may be incurred “Permitted Encumbrances” means this Master Trust Indenture, the Mortgage, any that is secured by such lien unless such Additional Indebtedness meets the requirements of Related Loan Agreement, any Related Bond Indenture and, as of any particular date: Section 4.16.

(a) Any lien or encumbrance, other than a mortgage on real property, created or (h) Any liens which secure payment of short-term indebtedness incurred in incurred in the ordinary course of business which does not secure, directly or indirectly, the accordance with this Master Trust Indenture. repayment of borrowed money or the payment of installment sales contracts of capital leases individually or in the aggregate, and which does not materially impair the value or the utility of (i) Liens to which Property of an entity is subject at the time (the “Effective Date”) the property subject to such lien or encumbrance. either (A) such entity is merged or consolidated with a Member of the Obligated Group, or (B) all or substantially all of its assets are sold or otherwise conveyed to a Member of the Obligated (b) Liens arising by reason of good faith deposits with a Member of the Obligated Group, provided that: (i) no lien so described may be extended or renewed, nor may it be Group in connection with tenders, leases of real estate, bid or contracts (other than contracts for modified, to apply to any Property not subject to such lien on the Effective Date; (ii) no the payment of money), deposits by a Member of the Obligated Group to secure public or Additional Indebtedness may be thereafter incurred that is secured by such lien; (iii) no lien so statutory obligations, or to secure, or in lieu of, surety, stay or appeal bonds, and deposits as described was created in order to avoid the limitations contained herein on the impositions of security for the payment of taxes and assessments or other similar charges. liens on the Property of a Members of the Obligated Group; and (iv) such indebtedness does not become part of the indebtedness of a Member of the Obligated Group. (c) Statutory rights of the United States of America or the Commonwealth of Pennsylvania to recover against a Member of the Obligated Group by reason of any Federal or (j) Any lease and leaseback, lien, security interest or similar arrangement entered State loan, grant or subsidy (including Medicare, Medicaid and Vereran’s Administration) made into by the Obligated Group with an authority, to the extent that such arrangement is required by available to the Obligated Group. law in connection with the issuance by such authority of bonded indebtedness to be secured by a

D-70 Master Obligation under this Master Trust Indenture. (d) Any lien arising by reason of deposits to enable a Member of the Obligated Group to maintain self-insurance or to participate in any funds established to cover any insurance risks (k) Any lien with respect to property acquired after the closing date of the Series or in connection with worker’s compensation insurance, pension or profit-sharing plans, or other 2017 Bond transaction, which lien either secures the purchase price of such property or is a lien social security, or to share in the privileges or benefits required for companies participating in to which such property is subject at the time of its acquisition, provided that the Indebtedness such arrangements. secured by such lien is permitted to be incurred by the Obligated Group pursuant to Section 4.16 hereof. (e) Any judgment lien against a Member of the Obligated Group so long as such judgment is being contested and execution is stayed and so long as such judgment lien will not (l) Any lien on property received by the Obligated Group through gifts, grants, or materially interfere with or impair the operations conducted on all property. bequests, or on the income therefrom, provided that, (i) such liens consist solely of restrictions on the use thereof or the income therefrom, or (ii) such liens secure indebtedness which is not (f) (i) Rights reserved to or vested in any municipality or public authority by the assumed by any Member of the Obligated Group and such liens attach solely to the property terms of any right, power, franchise, grant, license, permit or provision of law, affecting any (including the income therefrom) that is the subject of such gift, grant, bequest or devise. property; (ii) 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, (m) Liens on moneys deposited by residents, patients or others with a Member of the suppliers or vendors for work or services performed or materials furnished in connection with Obligated Group as security for, or as prepayment for, the cost of residency or patient care; or such property, which are not due and payable or which are being contested and execution thereon any rights of residents of life care or similar facilities to endowment or similar funds deposited is stayed or which have been due for less than ninety days; (iii) easements, rights-of-way, by or on behalf of such residents. servitudes, restrictions and other minor defects, encumbrances and irregularities in the title of any property that do not materially impair the use of such Property in any manner; (iv) temporary (n) Operating leases or ground leases whereunder a Member of the Obligated Group easements necessary to facilitate the construction of the Linwood 2017 Project; and (v) rights of is the lessor; or any license or other use agreement made with respect to a property where way and utility easements to accommodate any relocation of utility service as a result of the revenues generated inure to the benefit of a Member of the Obligated Group. Linwood 2017 Project. (o) Any lien on money (or the investment made with such money) held in any (g) Any lien on the property of a Member of the Obligated Group that is existing on depreciation reserve, debt service reserve, construction, debt service or similar fund and granted the date of execution of this Master Trust Indenture, provided that no lien so described may be by a Member of the Obligated Group to secure payment of indebtedness (including any

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Commitment Indebtedness, whether or not then drawn upon); and any lien on money (or the three highest rating categories (without regard to any refinement or gradation of rating category investment made with such money) held in any escrow or similar fund to defease indebtedness. by numerical modifier or otherwise);

(p) Any lien on property (other than real estate) in the nature of a purchase money (g) investment agreements with banks that at the time such agreement is executed are security interest resulting from installment sale agreements or borrowings, financing leases, or rated by any Rating Agency in one of the three highest rating categories assigned by such Rating similar agreements relating to the acquisition of property; or liens of a lessor or a vendor on the Agency (without regard to any refinement or gradation of rating category by numerical modifier property being leased or sold under a lease, installment sale or similar agreement. or otherwise) or investment agreements with non-bank financial institutions provided (i) all of the unsecured, direct long-term debt of either the non-bank financial institution or the related (q) Such minor defects and irregularities of title as normally exist with respect to guarantor of such non-bank financial institution is rated by any Rating Agency at the time such property similar in character to the property involved, and which do not materially adversely agreement is executed in one of the three highest rating categories (without regard to any affect the value of or materially impair the property affected thereby. Any liens, encumbrances refinement or gradation of rating category by numerical modifier or otherwise) for obligations of and title defects shown on the title insurance policy shown on the title insurance policy which that nature or (ii) if such non-bank financial institutions have no outstanding long-term debt that insures the lien of the Initial Mortgage shall be deemed to be included in this paragraph. is rated, all of the short term debt of either the non-bank financial institution or the related guarantor of such non-bank financial institution is rated by any Rating Agency in one of the three (r) Any lien securing Parity Obligations on a parity basis. highest rating categories (without regard to any refinement or gradation of the rating category by numerical modifier or otherwise) assigned to short term indebtedness by such Rating Agency; (s) Any lien on Gross Revenues securing Subordinated Indebtedness (including the provided that if at any time after purchase the provider of the investment agreement drops below Subordinated Guardian Loan), provided such lien is subordinate to the lien on Gross Revenues one of the three highest rating categories assigned by all Rating Agencies then rating such non- securing Parity Obligations. bank financial institution, the investment agreement must, within 30 days, either (x) be assigned to a provider rated in one of the three highest rating categories or (y) be secured by the provider “Permitted Investments” means dollar denominated investments, to the extent permitted with, if provided for in the investment agreement, collateral in the form of securities held by a by law, in any of the following: custodian under an agreement satisfactory to the Master Trustee, the fair market value of which, (a) Government Obligations; in relation to the amount of the investment agreement, including principal and interest, is equal D-71 to at least 102%; investment agreements with banks or non-bank financial institutions shall not (b) debt obligations which are (i) issued by any state or political subdivision thereof be permitted if no rating is available with respect to debt of the investment agreement provider or or any agency or instrumentality of such state or political subdivision and (ii) at the time of the related guarantor of such provider; purchase rated by any Rating Agency in one of the three highest categories assigned by such Rating Agency (without regard to any refinement or gradation of rating category by numerical (h) repurchase agreements with respect to and secured by Government Obligations or modifier or otherwise); by obligations described in clauses (b) and (c) above, which agreements may be entered into with a bank (including, without limitation, the Related Bond Trustee or the Master Trustee), a trust (c) any bond, debenture, note, participation certificate or other similar obligation company, a financial services firm or a broker dealer which is a member of the Securities which is either (i) issued or guaranteed by the Federal National Mortgage Association, the Investors Protection Corporation, provided that (i) the Master Trustee or a custodial agent of the Federal Home Loan Bank System, the Federal Home Loan Mortgage Corporation or the Federal Master Trustee has possession of the collateral and the collateral is free and clear of third-party Farm Credit Bank or (ii) backed by the full faith and credit of the United States of America; claims, (ii) a master repurchase agreement or specific written repurchase agreement governs the transaction, (iii) the collateral securities are valued no less frequently than monthly, (iv) the fair (d) denominated deposit accounts, certificates of deposit and banker’s acceptances market value of the collateral securities in relation to the amount of the repurchase obligation, with domestic commercial banks, including the Master Trustee or its affiliates, which have a including principal and interest, is equal to at least 103%, and (v) such obligations must be held rating on their short term certificates of deposit on the date of purchase of “A 1” by S&P, “F 1+” in the custody of the Related Bond Trustee or the Master Trustee’s agent; and by Fitch or “P 1” by Moody’s, without regard to gradation and which mature not more than 360 days after the date of purchase; (i) shares of a money market mutual fund or other collective investment fund registered under the federal Investment Company Act of 1940 whose shares are registered under (e) commercial paper which is rated at the time of purchase within the classification the Securities Act of 1933, as amended, having assets of at least $100,000,000 and having a “A 1” by S&P, “F 1+” by Fitch or “P 1” by Moody’s, without regard to gradation and which rating AAAm or AAAm-G by a Rating Agency, including money market mutual funds from matures not more than 270 days after the date of purchase; which the Master Trustee or its affiliates derive a fee for investment advisory or other services to the fund. (f) bonds, notes, debentures or other evidences of indebtedness issued or guaranteed by a corporation which are, at the time of purchase, rated by any Rating Agency in any of the The Master Trustee shall be entitled to assume that any investment which at the time of purchase is a Permitted Investment remains a Permitted Investment thereafter (even if any rating

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is downgraded), absent receipt by a Responsible Officer of the Master Trustee of written notice “Property” means any and all rights, titles and interests in and to any and all property, or actual information to the contrary. To the extent such investment is no longer a Permitted whether real or personal, tangible (including cash) or intangible, wherever situated and whether Investment, the Obligated Group Representative shall promptly provide a direction for now owned or hereafter acquired by a Person. replacement to the Master Trustee pursuant to an Obligated Group Representative Request with respect to any such investment pursuant to Section 3.02 herein. “Property, Plant and Equipment” means all Property of each Member which is classified as property, plant and equipment under GAAP. To the extent collateralization is required for Permitted Investments, except as provided in subsection (h) above, any deposits held by the Master Trustee which are continuously secured “Put Indebtedness” means Indebtedness which is (a) payable or required to be by any collateral that satisfies the provisions of 12CFR part 9, Section 9.10(b)(2) shall constitute purchased or redeemed by or on behalf of the underlying obligor, at the option of the owner compliance with the provisions of this section. thereof, prior to its stated maturity date or (b) payable or required to be purchased or redeemed from the owner by or on behalf of the underlying obligor (other than at the option of the owner) “Person” means any individual, corporation, partnership, limited liability company, firm, prior to its stated maturity date, other than pursuant to any mandatory sinking fund or other joint venture, association, joint stock company, trust, unincorporated organization or government similar fund or other than by reason of acceleration upon the occurrence of an event of default. or any agency or political subdivision thereof or any other entity. “Qualified Intermediate Term Indebtedness” shall mean any Indebtedness that “Place of Payment” for a series of Master Obligations means an office location or matures not more than seven years from the date of its issuance or incurrence and is issued or address designated as such pursuant to this Master Trust Indenture or a Supplement. incurred to finance Facilities for the Obligated Group.

“Primary Obligor” means the Person who is primarily obligated on an obligation which “Rating Agency” means, as applicable, Moody’s, S&P or Fitch. is guaranteed by another Person. “Related Bond Indenture” means any indenture, bond resolution or other comparable “Projected Debt Service Coverage Ratio” means, for any future twelve month period, instrument pursuant to which a series of Related Bonds is issued including, without limitation, the ratio determined by dividing projected Income Available for Debt Service for that period by the Series 2017 Bond Indenture.

D-72 the Maximum Annual Debt Service Requirement for the Funded Indebtedness expected to be outstanding during such period. “Related Bond Trustee” means the bond trustee and its successor in the trust created under any Related Bond Indenture, including, without limitation, the Series 2017 Bond Trustee. “Projected Rate” means the projected yield at par of an obligation as set forth in the report of a Consultant. Such report shall state that in determining the Projected Rate such “Related Bonds” means the Series 2017 Bonds and any other revenue bonds or other Consultant reviewed the yield evaluations at par of not less than three obligations (or such lesser obligations issued by any state, territory or possession of the United States or any municipal number as the Consultant shall deem appropriate, but in no event less than one) selected by such corporation or political subdivision formed under the laws thereof or any constituted authority or Consultant the interest on which is entitled to the exemption from federal income tax afforded by agency or instrumentality of any of the foregoing empowered to issue obligations on behalf Section 103(a) of the Code or any successor thereto (or, if it is not expected that it will be thereof (“governmental issuer”), pursuant to a single Related Bond Indenture, the proceeds of reasonably possible to issue such tax-exempt obligations, or if the interest on the Indebtedness which are loaned or otherwise made available to any Obligated Group Member in consideration for which the Projected Rate is being calculated is not entitled to such exemption, then of the execution, authentication and delivery of a Master Obligation to or for the order of such obligations the interest on which is subject to federal income taxation), which obligations such governmental issuer. Consultant states in its report are reasonable comparators to utilize in developing such Projected Rate and which obligations (a) were outstanding on a date selected by the Consultant, which date “Related Bonds Debt Service Reserve Fund” means a debt service reserve fund so selected occurred during the 90 day period preceding the date of the calculation utilizing the established pursuant to a Related Bond Indenture to secure payment on any Related Bonds. Projected Rate in question, (b) to the extent practicable, are obligations of Persons engaged in operations similar to those of the Obligated Group and having a credit rating similar to that of the “Related Loan Agreement” means the Series 2017 Loan Agreement and any other loan Obligated Group, (c) are not entitled to the benefits of any credit enhancement (including, agreement, lease agreement, financing agreement, credit agreement or other comparable without limitation, any letter or line of credit or insurance policy) if the obligation for which the instrument entered into in connection with a series of Related Bonds. Projected Rate is being determined is not benefited by any credit enhancement and (d) to the "Repair and Replacement Fund Requirement" means $100,000; provided, however extent practicable, have a remaining term and amortization schedule substantially the same as the that such amount shall be increased by 10% effective on the fifth anniversary of the date of obligation with respect to which such Projected Rate is being developed. issuance of the Series 2017 Bonds and on each successive fifth anniversary.

“Required Information Recipient” means the Master Trustee, each Related Bond Trustee, each provider of a Credit Facility so long as such Credit Facility is in effect, the Initial

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Purchaser, the Municipal Securities Rulemaking Board, which currently accepts continuing “Short Term” means, when used in connection with Indebtedness, having an original disclosure submissions through EMMA, or any successor entity authorized and approved by the maturity less than or equal to one year and not renewable at the option of the debtor for a term Securities and Exchange Commission from time to time to act as a recognized municipal greater than one year beyond the date of original issuance. securities repository. “Stable Occupancy” means, (i) with respect to the Linwood 2017 Project, an average “Responsible Officer” means, when used with respect to the Master Trustee, the officer annual occupancy of the Linwood Facility of 89.2% and (ii) with respect to any Capital Addition of the Master Trustee at its Corporate Trust Office having direct responsibility for administration financed with proceeds of Additional Indebtedness, an average annual occupancy of 85%. of this Master Trust Indenture and also means, with respect to a particular corporate trust matter, any other officer of the Master Trustee to whom such matter is referred because of such person’s “S&P” means S&P Global Ratings, a division of Standard & Poor's Financial Services knowledge of and familiarity with the particular subject. LLC, its successors and assigns, and, if such entity shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, “S&P” shall be deemed to refer to any “Revenue Fund” means the Revenue Fund created by Section 3.01 hereof. other nationally recognized securities rating agency designated by the Obligated Group Representative with written notice to the Master Trustee. “Revenues” means, for any period, gross revenues less sale discounts and sale returns and allowances as determined in accordance with GAAP, but excluding (i) any unrealized gain “State” means the Commonwealth of Pennsylvania. or loss resulting from changes in the valuation of investment securities or unrealized changes in the value of derivative investments or Hedge Agreements, (ii) any gains on the sale or other “Stated Maturity” means, when used with respect to any Indebtedness or any disposition of fixed or capital assets not in the ordinary course, (iii) earnings resulting from any installment of interest thereon, any date specified in the instrument evidencing such Indebtedness reappraisal, revaluation or write up of fixed or capital assets, (iv) insurance proceeds (other than or such installment of interest as a fixed date on which the principal of such Indebtedness or any business interruption) and (v) revenues attributable to transactions among any Members of the installment thereof or the fixed date on which such installment of interest is due and payable. Obligated Group. “Subordinated Guardian Loan” means the line of credit in the amount of $1,000,000 “Series 2017 Bond Indenture” means the Bond Trust Indenture, dated as of November extended by The Guardian Foundation, Inc. (“Guardian”) to the Obligor pursuant to the

D-73 1, 2017, between the Series 2017 Related Bond Issuer and the Series 2017 Bond Trustee, relating Revolving Line of Credit Loan and Security Agreement dated ______, 2017 between to the Series 2017 Bonds. Guardian and the Obligor and the Revolving Secured Promissory Note dated ______, 2017 by the Obligor, payable to Guardian. The Subordinated Guardian Loan includes any credit “Series 2017 Bond Trustee” means U.S. Bank National Association, as bond trustee facility which replaces the credit facility described above. under the Series 2017 Bond Indenture. “Subordinated Indebtedness” means the Subordinated Guardian Loan and any other “Series 2017 Bonds” means the $______Montgomery County Higher Education and promissory note, guaranty, lease, contractual agreement to repay borrowed money or other Health Authority Revenue Bonds (Pennsylvania LTC, Inc. Project) Series of 2017 issued obligation the terms of the documents providing for the issuance of which expressly provide that pursuant to the Series 2017 Bond Indenture. all payments on such indebtedness shall be subordinated to the timely payment of all Master Obligations, except Master Obligations that are or evidence other Subordinated Indebtedness, “Series 2017 Bonds Closing Date” means October __, 2017 whether currently Outstanding or subsequently issued, which contain the provisions described in Section 3.07 hereof and which are unsecured or secured solely by a lien on Gross Revenues “Series 2017 Loan Agreement” means the Loan Agreement, dated as of November 1, subordinate to the lien on Gross Revenues securing Parity Obligations, and except any service 2017, between the Series 2017 Related Bond Issuer and the Obligor, relating to the Series 2017 fees payable to any manager of the Facilities or to The Guardian Foundation, Inc. Bonds. “Subsidy Bonds” means any Related Bonds for which the issuer or conduit borrower is “Series 2017 Master Obligation” means the initial Master Obligation in the principal entitled to receive Federal Subsidy Payments directly from the United States Department of amount of ______issued by the Obligated Group Representative pursuant to the terms Treasury or other federal governmental agency or entity authorized to make such payments hereof and the Initial Supplemental Indenture to secure repayment of the Series 2017 Bonds. under the Code.

“Series 2017 Project” means the Project identified under the Series 2017 Bond “Supplement” means an indenture supplemental to, and authorized and executed Indenture. pursuant to the terms of, this Master Trust Indenture.

“Series 2017 Related Bond Issuer” means the Montgomery County Higher Education “Tax-Exempt Bonds” means any bonds that as originally issued were the subject of an and Health Authority, a public body corporate and politic and a municipal authority duly opinion of bond counsel to the effect that the interest thereon is excluded from the gross income organized and existing under the Constitution and laws of the Commonwealth of Pennsylvania. of the owners thereof for federal income tax purposes under Section 103(a) of the Code and not

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an item of tax preference for purposes of the alternative minimum tax imposed on individuals shall be established by an Officer’s Certificate of the Obligated Group Representative stating the and corporations under the Code. amount of such item and that such amounts have been derived from either the most recent financial statements of the Obligated Group delivered to the Master Trustee pursuant to Section “Tax-Exempt Organization” means a Person organized under the laws of the United 4.15 hereof or, for any period other than a prior Fiscal Year, from the internally prepared States of America or any state thereof that is exempt from federal income taxes under Section financial statements of the Obligated Group for such period; 501(a) of the Code as an organization described in Section 501(c)(3) of the Code or corresponding provisions of federal income tax laws from time to time in effect. (c) the anticipated date of completion of any construction project of any Person shall be established by an Officer’s Certificate of the Obligated Group Representative; and “Testing Date” shall have the meaning ascribed to it in Section 4.22 hereof. (d) securities shall include any amounts invested in marketable securities, whether “Threshold Amount” means an amount equal to 5% of the Net Book Value of the classified as short term or long term assets. Property Plant and Equipment of the Obligated Group, as shown on the most recent audited financial statements of the Obligated Group. All calculations required to be made hereunder with respect to the Obligated Group shall be made after elimination of intercompany items on a combined basis. The character or amount “Title Policy” means title insurance in the form of an ALTA mortgagee’s title policy of any asset, liability or item of income or expense required to be determined or any issued by a title insurance company in favor of the Master Trustee in the face amount at least consolidation, combination or other accounting computation required to be made for the equal to the principal amount of the Outstanding Master Obligations (other than Master purposes hereof shall be determined or made in accordance with GAAP in effect on the date Obligations evidencing Subordinated Indebtedness). hereof or, at the option of the Obligated Group Representative, at the time in effect (provided that GAAP is applied consistently with the requirements existing either on the date hereof or at “Trust Estate” has the meaning given such term in the Granting Clauses hereof. the time in effect), except that assets, liabilities, items of income and expenses of Affiliates which are not included in the Obligated Group shall not be taken into account, and except where “Underwriter” means Herbert J. Sims & Co., Inc. with respect to the Series 2017 Bonds such principles are inconsistent with the requirements of this Master Trust Indenture; provided, and any other underwriter for any other series of bonds issued for the benefit of the Obligated however, that there shall not be included in any calculation any item otherwise required to be Group. D-74 included in such calculation with respect to any Person which has withdrawn or is withdrawing from the Obligated Group. “Unrestricted Contributions” means Contributions which are not restricted in any way that would prevent their application to the payment of debt service on Indebtedness of the Person Section 1.03. Form of Documents Delivered to Master Trustee receiving such Contributions. Upon any request or application by the Obligated Group to the Master Trustee to take any Section 1.02. Compliance Certificates and Reports action under this Master Trust Indenture, the Obligated Group shall furnish to the Master Trustee (a) an Officer’s Certificate stating that, in the opinion of the signer, all conditions precedent and Whenever the amount or date of any of the following is a condition to the taking of any covenants, if any, provided for in this Master Trust Indenture relating to the proposed action action permitted hereby: have been satisfied; and (b) an Opinion of Counsel stating that, in the opinion of such counsel (a) Estimated Revenues, Expenses, Cash and Investments and Income Available for (who may rely upon an Officer’s Certificate as to matters of fact), all such conditions precedent Debt Service of any Person for any future Fiscal Year shall be established by a certificate or and covenants have been satisfied. report of a Consultant stating the amount of such estimated item based upon assumptions In any case where several matters are required to be certified by, or covered by an provided by such Person and stating that such assumptions are, in the opinion of the Consultant, opinion of, any specified Person, it is not necessary that all such matters be certified by, or reasonable; covered by the opinion of, only one such Person or that they be so certified or covered by only (b) any of: one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give (i) Revenues, Expenses, Cash and Investments and Income Available for an opinion as to such matters in one or several documents. Debt Service of any Person for any prior Fiscal Year or period, Any certificate or opinion of any officer of a Person may be based, insofar as it relates to (ii) Maximum Annual Debt Service Requirement of any Person, and legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or (iii) principal of and interest on any Indebtedness representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any such certificate or Opinion of Counsel or Opinion of Bond Counsel may be

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based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations (b) the Obligated Group Members by the Master Trustee or by any Holder of Master by, an officer or officers of a specified Person stating that the information with respect to such Obligations shall be sufficient for every purpose hereunder if in writing and mailed, first class factual matters is in the possession of such Person, unless such counsel knows, or in the exercise postage prepaid, US Certified Mail, Return Receipt Requested], to the Obligated Group of reasonable care should know, that the certificate or opinion or representations with respect to Representative addressed to it at Pennsylvania LTC, Inc., 15 Piedmont Centre, Suite 930, such matters are erroneous. Atlanta, GA 30305, Attention: President, or at any other address previously furnished in writing to the Master Trustee by the Obligated Group Representative; or Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Master Trust (c) any Obligated Group Member by the Master Trustee or by any Holder of Master Indenture, they may, but need not, be consolidated and form one instrument. Obligations shall be sufficient for every purpose hereunder if in writing and mailed, registered or certified first class postage prepaid, return receipt requested, to the Obligated Group Member Section 1.04. Acts of Holders of Master Obligations addressed to it at the address specified in the Supplement executed by such Obligated Group Member or at any other address previously furnished in writing to the Master Trustee by such (a) Any request, demand, authorization, direction, notice, consent, waiver or other Obligated Group Member. action provided by this Master Trust Indenture to be given or taken by Holders of Master Obligations may be embodied in and evidenced by one or more instruments of substantially Section 1.06. Notices to Holders of Master Obligations; Waiver similar tenor signed by such Holders of Master Obligations in person or by an agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall Where this Master Trust Indenture provides for notice to Holders of Master Obligations become effective when such instrument or instruments are delivered to the Master Trustee and, of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) where it is hereby expressly required, to the Obligated Group Representative. Such instrument if in writing and mailed, first class postage prepaid, to each Holder of such Master Obligations, or instruments (and the action embodied therein and evidenced thereby) are herein sometimes at his address as it appears on the Obligation Register, not later than the latest date, and not referred to as the “Act” of the Holders of Master Obligations signing such instrument or earlier than the earliest date, prescribed for the transmission of such notice. Where this Master instruments. Proof of execution of any such instrument or of a writing appointing any such Trust Indenture provides for notice in any manner, such notice may be waived in writing by the agent, or of the holding by any Person of unregistered Master Obligations, shall be sufficient for Person entitled to receive such notice, either before or after the event, and such waiver shall be

D-75 any purpose of this Master Trust Indenture and conclusive in favor of the Master Trustee and the the equivalent of such notice. Waivers of notice by Holders of Master Obligations shall be filed Obligated Group Members, if made in the manner provided in this Section. The Obligated with the Master Trustee, but such filing shall not be a condition precedent to the validity of any Group may establish a record date for purposes of determining the identity of Holders entitled to action taken in reliance upon such waiver. vote or consent to any action by vote or consent authorized or permitted under this Master Trust Indenture. Section 1.07. Notices to Rating Agencies

(b) The ownership of Master Obligations shall be proved by the Obligation Register. If any Related Bonds are then rated by a Rating Agency, the Obligated Group Representative shall give prompt notice to such Rating Agency of any of the following events: (c) Any request, demand, authorization, direction, notice, consent, waiver or other action by the Holder of any Master Obligation shall bind every future Holder of the same Master (a) any Event of Default hereunder; Obligation and the Holder of every Master Obligation issued upon the transfer thereof or in exchange therefor or in lieu thereof, in respect of anything done or suffered to be done by the (b) any addition to or withdrawal from the Obligated Group; and Master Trustee or the Obligated Group Members in reliance thereon, whether or not notation of such action is made upon such Master Obligation. (c) any other information required to be provided by a Rating Agency in connection with providing a rating on Related Bonds. Section 1.05. Notices, etc. to Master Trustee and Obligated Group Members Section 1.08. Effect of Headings and Table of Contents Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders of Master Obligations or other document provided or permitted by this Master Trust Indenture to The Article and Section headings herein and the Table of Contents are for convenience be made upon, given or furnished to or filed with: only and shall not affect the construction hereof.

(a) the Master Trustee by any Holder of Master Obligations or by any specified Section 1.09. Successors and Assigns Person shall be sufficient for every purpose hereunder if actually received by the Master Trustee All covenants and agreements in this Master Trust Indenture by the Obligated Group at the Corporate Trust Office, or at any other address previously furnished in writing to the Members shall bind their respective successors and assigns, whether so expressed or not. Obligated Group Members and the Holders of Master Obligations by the Master Trustee;

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Section 1.10. Severability Clause ARTICLE II THE MASTER OBLIGATIONS In case any provision in this Master Trust Indenture or in the Master Obligations shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining Section 2.01. Series and Amount of Master Obligations provisions shall not in any way be affected or impaired thereby. (a) Master Obligations shall be issued under this Master Trust Indenture in series Section 1.11. U.S.A. PATRIOT Act created by Supplements permitted hereunder. Each series shall be designated to differentiate the Master Obligations of such series from the Master Obligations of any other series. All Master The Obligated Group acknowledges that in accordance with Section 326 of the Obligation issued hereunder shall be secured on a parity basis (except Master Obligations U.S.A. PATRIOT Act, the Master Trustee, like all financial institutions and in order to help fight constituting Subordinated Indebtedness); provided, however, that the provision of a Hedge the funding of terrorism and money laundering, is required to obtain, verify and record Agreement or Credit Facility or the establishment of a separate debt service reserve fund or information that identifies each person or legal entity that establishes a relationship or opens an account for the sole benefit of the Holders of certain Master Obligations shall be permitted. The account with the Master Trustee. The parties to this Master Trust Indenture agree that they will number of series of Master Obligations that may be created under this Master Trust Indenture is provide the Master Trustee with such information as it may request in order for the Master not limited. The aggregate principal amount of Master Obligations of each series that may be Trustee to satisfy the requirements of the U.S.A. PATRIOT Act. created under this Master Trust Indenture is not limited except as restricted by the applicable Supplement and the provisions of Article IV of this Master Trust Indenture. [End of Article I] (b) Any Obligated Group Member proposing to incur Indebtedness other than the Series 2017 Master Obligation, whether evidenced by Master Obligations issued pursuant to a Supplement or by evidences of Indebtedness issued pursuant to documents other than this Master Trust Indenture, shall give written notice of its intention to incur such Indebtedness, including in such notice the amount of Indebtedness to be incurred, to the Obligated Group Representative and the other Obligated Group Members. The Obligated Group Representative shall provide the

D-76 Master Trustee with a copy of any such notice it receives prior to the date such Indebtedness is to be incurred. Any such Obligated Group Member, other than the Obligated Group Representative, proposing to incur such Indebtedness other than the Series 2017 Master Obligation, shall obtain the written consent of the Obligated Group Representative, which consent shall be evidenced by an Officer’s Certificate of the Obligated Group Representative filed with the Master Trustee or an endorsement to such Indebtedness signed by the Obligated Group Representative, stating compliance of such Indebtedness with this Master Trust Indenture. The Series 2017 Master Obligation is issued simultaneously with the execution and delivery hereof.

Section 2.02. Appointment of Obligated Group Representative

Each Obligated Group Member, by becoming an Obligated Group Member, irrevocably appoints the Obligated Group Representative as its agent and true and lawful attorney in fact and grants to the Obligated Group Representative (a) full and exclusive power to execute Supplements authorizing the issuance of Master Obligations or series of Master Obligations, (b) full and exclusive power to execute Master Obligations for and on behalf of the Obligated Group and each Obligated Group Member, (c) full and exclusive power to execute Supplements on behalf of the Obligated Group and each Obligated Group Member pursuant to Sections 9.01 and 9.02 hereof, and (d) full power to prepare, or authorize the preparation of, any and all documents, certificates or disclosure materials reasonably and ordinarily prepared in connection with the issuance of Master Obligations hereunder or Related Bonds associated therewith and to execute and deliver such items to the appropriate parties in connection therewith.

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Section 2.03. Execution and Authentication of Master Obligations Trustee as assignee of the issuer of the Related Bonds. Unless a Master Obligation has been registered under the Securities Act of 1933, as amended (or similar legislation subsequently All Master Obligations shall be executed for and on behalf of the Obligated Group and enacted), each such Master Obligation shall be endorsed with a legend which shall read the Obligated Group Members by an Authorized Obligor Representative of the Obligated Group substantially as follows: “This [describe Master Obligation] has not been registered under the Representative. The signature of any such Authorized Obligor Representative may be manual or Securities Act of 1933 or any state securities law (or any such similar subsequent legislation);” may be mechanically or photographically reproduced on the Master Obligation. If any provided, however, such legend shall not be required if the Master Trustee is provided with an Authorized Obligor Representative whose signature appears on any Master Obligation ceases to Opinion of Counsel to the effect that such legend is not required. be such Authorized Obligor Representative before delivery thereof, such signature shall remain valid and sufficient for all purposes as if such Authorized Obligor Representative had remained A Supplement and the Master Obligations issued thereunder may contain, as applicable, in office until such delivery. Each Master Obligation shall be manually authenticated by an provisions relating to a Credit Facility, as well as any and all compatible provisions necessary in authorized officer of the Master Trustee, without which authentication no Master Obligation order to make the Master Obligations meet the requirements of an issuer of such Credit Facility. shall be entitled to the benefits hereof, and shall be dated the date of its authentication. Similarly, a Supplement may provide for Master Obligations to be issued in fixed or variable rate forms, as the case may be, with such tender and redemption provisions as may be deemed The Master Trustee’s authentication certificate shall be substantially in the following necessary for the issuance thereof and provide for the execution of required documents necessary form: for such purposes, and may specifically subordinate payment, remedies and any other provisions of the Master Obligations issued thereunder to the provisions of any other Master Obligations. MASTER TRUSTEE’S AUTHENTICATION CERTIFICATE Section 2.05. Conditions to Issuance of Master Obligations Hereunder This [Master Obligation] is one of the Master Obligations referred to in the aforementioned Master Trust Indenture. With respect to Master Obligations created hereunder, simultaneously with or prior to the execution, authentication and delivery of Master Obligations pursuant to this Master Trust Date of Authentication: U.S. BANK NATIONAL ASSOCIATION, as Indenture: Master Trustee

D-77 (a) The Obligated Group Representative (on behalf of the Obligated Group Members) shall deliver to the Master Trustee (i) an Obligated Group Representative Request for the authentication of any such Master Obligations and (ii) an Officer’s Certificate of the Obligated By: Group Representative stating that all covenants, requirements and conditions to the issuance and authentication of such Master Obligations set forth in the related Supplement and in this Master Authorized Signatory Trust Indenture (including, without limitation, the provisions of Section 4.16 and 9.01 hereof; provided that such provisions shall not be applicable to the Series 2017 Master Obligation) shall have been complied with and satisfied, and the Obligated Group Representative (on behalf of the Section 2.04. Supplement Creating Master Obligations Obligated Group Members) and the Master Trustee shall have entered into a Supplement as provided in Section 2.04 hereof; The Obligated Group Representative (on behalf of the Obligated Group Members) and the Master Trustee may from time to time enter into a Supplement in order to create Master (b) The Obligated Group Representative shall have delivered to the Master Trustee an Obligations hereunder. Each Supplement authorizing the issuance of Master Obligations shall Opinion of Counsel to the effect that (i) registration of such Master Obligations under the specify and determine the date of the Master Obligations, the form of the Master Obligations, the Securities Act of 1933, as amended, and qualification of this Master Trust Indenture or the principal amount thereof, the purposes for which such Master Obligations are being issued, the Supplement under the Trust Indenture Act of 1939, as amended, is not required or, if such form, title, designation and manner of numbering or denominations, if applicable, of such Master registration or qualification is required, that all applicable registration and qualification Obligations, the date or dates of maturity of such Master Obligations, the rate or rates of interest provisions of said acts have been complied with; (ii) this Master Trust Indenture, as amended and (or method of determining the rate or rates of interest) and premium, if any, borne by such supplemented by such Supplement, and the Master Obligations are valid, binding and Master Obligations, the arrangement for place and medium of payment and any other provisions enforceable obligations of each of the Obligated Group Members in accordance with their terms, deemed advisable or necessary, and any of the foregoing terms may be incorporated into such except as enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance and Supplement by reference. Each Master Obligation shall be issuable, shall be transferable and other laws affecting creditors’ rights generally, usual equity principles and other customary exchangeable and shall be subject to redemption as specified in this Master Trust Indenture and exclusions; (iii) all covenants, requirements and conditions to the execution and delivery of the in the Supplement. Any Master Obligation to be held by a Related Bond Trustee in connection Supplement and issuance and authentication of such Master Obligations set forth in the with the issuance of Related Bonds shall be in the principal amount equal to the aggregate Supplement and in this Master Trust Indenture have been complied with and satisfied; and (iv) principal amount of such Related Bonds and shall be registered in the name of the Related Bond

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all action has been taken in order to cause the Lien of the Master Trustee in the Trust Estate to be execute and upon its request the Master Trustee shall authenticate and deliver in exchange for or perfected or recorded in accordance with this Master Trust Indenture and applicable law; in lieu of any such mutilated, destroyed, lost or stolen Master Obligation a new Master Obligation of like tenor, series, interest rate and principal amount, bearing a number not (c) If Master Obligations are issued with respect to tax-exempt Related Bonds, the contemporaneously outstanding. Obligated Group Representative shall have delivered to the Master Trustee an Opinion of Bond Counsel to the effect that issuance of such Master Obligations will not adversely affect the In case any such mutilated, destroyed, lost or stolen Master Obligation has become or is exclusion from gross income of interest on such Related Bonds; about to become due and payable, the Obligated Group Representative in its discretion may, instead of issuing a new Master Obligation, pay such Master Obligation. (d) The Obligated Group Representative shall have delivered to the Master Trustee copies of Pennsylvania Uniform Commercial Code financing statements to be filed pursuant to Upon the issuance of any new Master Obligation under this Section, the Obligated Group Section 4.03, and such other documents as the Master Trustee may reasonably request; Representative and the Master Trustee may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (e) Additional Obligations may be secured on a parity first lien basis with the (including the fees and expenses of the Master Trustee) connected therewith. outstanding Master Obligations by the issuance of a Master Obligation to the holder of such Additional Indebtedness if (i) one of the tests described in Section 4.16 (a) or (b) are met; (ii) the Every new Master Obligation issued pursuant to this Section in lieu of any destroyed, lost test in Section 4.16 (b) is met, but only if the indebtedness which originally financed the capital or stolen Master Obligation shall constitute an original additional contractual obligation of the improvement was financed with a Master Obligation or bonds, notes or other obligations secured maker thereof, whether or not the destroyed, lost or stolen Master Obligation shall be at any time by a Master Obligation; or (iii) if the test in Section 4.16 (c) is met and the original indebtedness enforceable by anyone, and shall be entitled to all the benefits and security of this Master Trust was financed with a Master Obligation or bonds, notes or other obligations secured by a Master Indenture equally and proportionately with any and all other Master Obligations duly issued Obligation; and hereunder.

(f) Indebtedness to provide working capital may be financed with a Master The provisions of this Section are exclusive and shall preclude (to the extent lawful) all Obligation. other rights and remedies with respect to the replacement or payment of mutilated, destroyed,

D-78 lost or stolen Master Obligations. Section 2.06. List of Holders of Master Obligations Section 2.09. Cancellation The Master Trustee shall keep on file at its office the Obligation Register which shall consist of a list of the names and addresses of the Holders of all Master Obligations. At All Master Obligations surrendered for payment, redemption, transfer or exchange shall, reasonable times and under reasonable regulations established by the Master Trustee, the if delivered to any Person other than the Master Trustee, be delivered to the Master Trustee and, Obligation Register may be inspected and copied by any Obligated Group Member, the Holder if not already canceled or required to be otherwise delivered by the terms of the Supplement of any Master Obligation or the Authorized Obligor Representative; provided that the ownership authorizing the series of Master Obligations of which such Master Obligation is a part, shall be by such Holder and the authority of any such designated representative shall be evidenced to the promptly canceled by it. The Obligated Group Representative may at any time deliver to the satisfaction of the Master Trustee. Master Trustee for cancellation any Master Obligations previously authenticated and delivered hereunder, which the Obligated Group Representative may have acquired in any manner Section 2.07. Optional and Mandatory Redemption whatsoever, and all Master Obligations so delivered shall be promptly canceled by the Master Trustee. No Master Obligations shall be authenticated in lieu of or in exchange for any Master Master Obligations of each series may be subject to optional and mandatory redemption Obligations canceled as provided in this Section, except as expressly permitted by this Master in whole or in part and may be redeemed prior to maturity, as provided in the Supplement Trust Indenture. All canceled Master Obligations held by the Master Trustee shall be treated by creating such series, but not otherwise. the Master Trustee in accordance with its current document retention policies.

Section 2.08. Mutilated, Destroyed, Lost and Stolen Master Obligations [End of Article II]

If (a) any mutilated Master Obligation is surrendered to the Master Trustee, or the Master Trustee receives evidence to its satisfaction of the destruction, loss or theft of any Master Obligation, and (b) there is delivered to the Master Trustee and the Obligated Group Representative such security or indemnity as may be required by the Master Trustee and the Obligated Group Representative to save it and the Obligated Group harmless, then, in the absence of notice to the Obligated Group Representative or the Master Trustee that such Master Obligation has been acquired by a bona fide purchaser, the Obligated Group Representative shall

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ARTICLE III Sixth: any balance shall be kept in the Revenue Fund for application as set forth FUNDS AND ACCOUNTS in this subsection (i) until the Event of Default has been waived or cured, and when the Event of Default has been waived or cured, to the Obligated Group Representative. Section 3.01. Revenue Fund (ii) If the principal of all the Master Obligations has been declared to be due (a) If an Event of Default under Section 7.01(a) of this Master Trust Indenture shall and payable immediately: occur and continue for a period of five (5) Business Days following the expiration of any cure period with respect thereto, the Master Trustee may, and if directed by the Holders of at least First: the payment of all amounts due or reasonably anticipated to become due the 25% in aggregate principal amount of the Master Obligations shall, establish a fund called the Master Trustee under this Master Trust Indenture; “The Pennsylvania LTC Inc. Revenue Fund” (the “Revenue Fund”) and each Obligated Group Member shall deposit with the Master Trustee all Gross Revenues of such Obligated Group Second: (a) unless, in its sole discretion, the Master Trustee determines payment Member (except to the extent otherwise provided by or inconsistent with any instrument creating under subparagraph (b) below is in the best interest of the Holders of the Outstanding any Permitted Encumbrances) during each succeeding month, beginning on the first day thereof Master Obligations or is directed by the Holders of not less than 25% in aggregate and on each day thereafter, until no default under Section 7.01(a) of this Master Trust Indenture principal amount of Master Obligations then Outstanding to proceed under subparagraph or in the payment of any other Master Obligations then exists. (b) below, to pay the Expenses due or expected to become due in the month following the month in which such transfer is made, all as set forth in the then-current Annual Budget; (b) On the fifth Business Day preceding the end of each month in which any and (b) as an alternative to subparagraph (a) above, if, in its sole discretion, the Master Obligated Group Member has made payments to the Master Trustee for deposit into the Revenue Trustee determines payment under this subparagraph (b) is in the best interest of the Fund, the Master Trustee shall withdraw and pay or deposit from the amounts on deposit in the Holders of the Outstanding Master Obligations or is directed by the Holders of not less Revenue Fund the following amounts in the order indicated: than 25% in aggregate principal amount of Master Obligations then Outstanding to proceed under this subparagraph (b), to pay the amounts required by paragraph Third (i) If the principal of all the Master Obligations has not been declared to be below; due and payable immediately:

D-79 Third: to the payment of the amounts then due and unpaid upon the Master First: to the payment of all amounts due or reasonably anticipated to become due Obligations, other than Master Obligations constituting Subordinated Indebtedness, for the Master Trustee under this Master Trust Indenture; principal (and premium, if any) and interest, in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, Second: to an operating account designated by the Obligated Group according to the amounts due and payable on such Master Obligations for principal (and Representative (which shall be subject to the lien of this Master Trust Indenture), the premium, if any) and interest, respectively; amount necessary to pay the Expenses due or expected to become due in the month following the month in which such transfer is made, all as set forth in the then-current Fourth: to the payment of the amounts then due and unpaid upon the Master Annual Budget; Obligations constituting Subordinated Indebtedness for principal (and premium, if any) and interest, in respect of which or for the benefit of which such money has been Third: to the payment of the amounts then due and unpaid upon the Master collected, ratably, without preference or priority of any kind, according to the amounts Obligations, other than Master Obligations constituting Subordinated Indebtedness, for due and payable on such Master Obligations for principal (and premium, if any) and principal (and premium, if any) and interest, in respect of which or for the benefit of interest, respectively; and which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Master Obligations for principal (and Fifth: To the Obligated Group Representative. premium, if any) and interest, respectively; (c) The money deposited to the Revenue Fund, together with all investments thereof Fourth: to restore any deficiency in a Related Bonds Debt Service Reserve Fund; and investment income therefrom, shall be held in trust and applied solely as provided in this Section and in Section 7.08 hereof. Pending disbursements of the amounts on deposit in the Fifth: to the payment of the amounts then due and unpaid upon the Master Revenue Fund, the Master Trustee shall promptly invest and reinvest such amounts in Obligations constituting Subordinated Indebtedness for principal (and premium, if any) accordance with Section 3.04 hereof. All such investments shall have a maturity not greater than and interest, in respect of which or for the benefit of which such money has been 91 days from the date of purchase. collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Master Obligations for principal (and premium, if any) and (d) Except as described in Section 3.01(a) above, each Obligated Group Member interest, respectively; and shall be entitled to full possession and use of its Gross Revenues.

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Section 3.02. [Reserved] make payment only upon receipt of an Officer's Certificate of the Obligated Group Representative stating that the Capital Addition is reasonable and practicable, and the cost of Section 3.03. Repair and Replacement Fund such furnishings, equipment, machinery or apparatus is reasonable.

(a) The Master Trustee shall establish a fund called “The Pennsylvania LTC Inc. (d) Moneys in the Repair and Replacement Fund shall be used to pay debt service on Repair and Replacement Fund”, herein referred to as the “Repair and Replacement Fund,” into any Indebtedness of any Obligated Group Member prior to any amounts on deposit in any debt which the Obligor shall deposit or cause to be deposited on the date of issuance of the Series service reserve fund relating to such Indebtedness being used for such purpose. 2017 Bonds, an amount equal to the Repair and Replacement Fund Requirement. Moneys in the Repair and Replacement Fund and any investments held as part of such Fund shall be held in Section 3.04. Investment of Funds trust and, except as otherwise provided in this Master Trust Indenture, shall be applied by the Master Trustee at the written direction of an Authorized Obligor Representative, solely to the Any moneys held by the Master Trustee hereunder, including any fund or account payment of the cost of Capital Additions which are necessary, but are either unanticipated, established pursuant to any Supplement, shall be invested or reinvested by the Master Trustee in extraordinary, or of a nonrecurring nature. Permitted Investments upon the receipt of an Obligated Group Representative Request (upon which the Master Trustee is entitled to rely). Any such investments shall be held by or under the (b) If at any time the amount in the Repair and Replacement Fund drops below the control of the Master Trustee and shall mature, or be redeemable at the option of the Master Repair and Replacement Fund Requirement, the Obligated Group shall pay to the Master Trustee Trustee, at such times as it is anticipated by the Obligated Group Representative that moneys for deposit into the Repair and Replacement Fund, on the twenty-fifth day of each month, the from the particular fund will be required for the purposes of this Master Trust Indenture. For the amount of $2,500, until such time as the amount on deposit in the Repair and Replacement Fund purpose of any investment or reinvestment under this Section, investments shall be deemed to is equal to the Repair and Replacement Fund Requirement; provided, that (i) the Obligated mature at the earliest date on which the obligor under such investment is, on demand, obligated Group shall be obligated to resume making the required monthly payments to the Master Trustee to pay a fixed sum in discharge of the whole of such obligation. Any Permitted Investments may until the deficiency is made up; and (ii) the Obligated Group may receive a credit against its be purchased from or sold to the Master Trustee or any of its affiliates. The Master Trustee shall obligations to deposit funds each month if there is delivered to the Master Trustee an Officer’s have no responsibility to monitor the ratings of investments after the initial purchase of such Certificate of the Obligated Group Representative to the effect that: (A) the credited amount has investments. The Master Trustee may make any and all such investments through its own

D-80 been spent for non-budgeted capital expenditures eligible to be paid, but not paid, from the investment department or that of its affiliates or subsidiaries and may charge its ordinary and Repair and Replacement Fund, (B) the credited amount was not previously used as a credit customary fees for such trades. In the absence of written investment instructions from the against amounts to be deposited in the Repair and Replacement Fund, (C) the expenditure was Obligated Group Representative, the Master Trustee shall hold funds on deposit without made in an emergency situation where patient or third party health or welfare, facility licensure investment and without liability for interest or other compensation thereon, and shall not be or security was at stake, and (D) there was insufficient time to complete the normal requisition responsible or liable for keeping the moneys held by it hereunder fully invested. Confirmations progress. of investments are not required to be issued by the Master Trustee for each month in which a monthly statement is rendered. (c) (i) If moneys in the Repair and Replacement Fund are to be used for Capital Additions, the Master Trustee shall make payment only upon receipt of an Officer’s Certificate The Master Trustee shall keep or cause to be kept proper and detailed books of record of the Obligated Group Representative describing the Capital Addition and stating that (A) such and account containing complete and correct entries of all transactions relating to the receipt, Capital Addition is of an unanticipated, extraordinary nature required to be made and (B) the investment, disbursement, allocation and application of the moneys held under this Master Trust total amount to be withdrawn from the Repair and Replacement Fund, together with other Indenture. The Master Trustee shall make copies of such records available to the Obligated amounts available for the purpose (which amounts shall be identified), will be sufficient to pay Group Representative upon its reasonable written request. the costs of the Capital Addition (which shall be itemized); (ii) If the Capital Addition involves construction, repairs or renovation estimated to cost in excess of $250,000, the Officer’s The Obligated Group Representative acknowledges that to the extent regulations of the Certificate referred to in clause (i) shall state that the plans and specifications have been Comptroller of the Currency or other applicable regulatory entity grant the Obligated Group the approved by all governmental bodies required to approve them (specifying such bodies) or that right or option to receive individual confirmation of security transactions at no additional cost, as such approval is reasonably expected as needed, that the contracts entered into or to be entered they occur, the Obligated Group Representative specifically waives the option to receive such into by the Obligated Group (which shall be specified) or its agents cover substantially all phases confirmation to the extent permitted by law. The Master Trustee will furnish the Obligated of the construction, repairs or renovation not being done by employees of the Obligated Group, Group Representative with periodic cash transaction statements that include detail for all and that the contractors have furnished customary labor and performance bonds and the investment transactions made by the Master Trustee hereunder. Obligated Group shall attach copies of all invoices covering or relating to such construction, repairs or renovation, which invoices shall equal, in the aggregate, the total amount requested; and (iii) if the Capital Addition involves the acquisition of furnishings, equipment, machinery, or apparatus to be used in the Mortgaged Property, as to such acquisition the Master Trustee shall

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Section 3.05. Allocation and Transfers of Investment Income (b) All payments on Subordinated Indebtedness in a fiscal period shall be subordinated to all payments due on any Master Obligations Outstanding in such period, except Any investments in any fund or account shall be held by or under the control of the for Master Obligations evidencing other Subordinated Indebtedness. Master Trustee and shall be deemed at all times a part of the fund or account from which the investment was made. Any loss resulting from such investments shall be charged to such fund or (c) Payments of principal and interest on Subordinated Indebtedness which are not account. Any interest or other gain from any fund or account from any investment or permitted to be paid pursuant to the foregoing requirements shall be deferred without accrual of reinvestment pursuant to Section 3.04 hereof on deposit in such fund or account (other than the additional interest. Subordinated Indebtedness may not be accelerated without the prior written Revenue Fund) on the last business day of each calendar quarter shall be transferred to the consent of the Holder of each Master Obligation Outstanding that does not constitute Obligated Group Representative upon its written request. Subordinated Indebtedness.

Section 3.06. Master Trustee Relieved From Responsibility [End of Article III]

The Master Trustee may conclusively rely, and shall be fully protected in conclusively relying, upon any Obligated Group Representative Request relating to investments in any fund, shall not be liable for any losses or prepayment penalties as a result of complying with any such Obligated Group Representative Request and shall not be required to ascertain any facts with respect to such Request.

Section 3.07. Subordinated Indebtedness

(a) An Obligated Group Member will not make payments on Subordinated Indebtedness unless the following conditions are satisfied:

(i) if the proposed payment had occurred as of the last day of the most recent D-81 fiscal quarter for which financial statements have been delivered under Section 4.15 hereof or otherwise posted to EMMA, the Obligated Group would have had sufficient Days Cash on Hand to satisfy the Liquidity Requirement, after giving effect to such payment, as of such date; and

(ii) (A) with respect to the Subordinated Guardian Loan, payments may be made no more frequently than annually and if the proposed payment had occurred during the most recent Fiscal Year for which financial statements have been delivered under Section 4.15 hereof or otherwise posted to EMMA, the Historical Debt Service Coverage Ratio calculated as of the end of such Fiscal Year would have been not less than 1.20, and (B) with respect to other Subordinated Indebtedness, if the proposed payment had occurred during the most recent fiscal quarter for which financial statements have been delivered under Section 4.15 hereof or otherwise posted to EMMA, the Historical Debt Service Coverage Ratio calculated as of the end of such fiscal quarter would have been not less than 1.20; and

(iii) there is no deficiency in the bond fund or the debt service reserve fund with respect to any Outstanding Master Obligations or Related Bonds, and there is no event existing that constitutes, or with the giving of notice or the passing of time or both would constitute, an Event of Default under this Master Trust Indenture; and

(iv) in the case of the Subordinated Guardian Loan, the following additional requirements shall have been met: (A) construction of the Linwood 2017 Project shall have been completed, and (B) the Obligor is in compliance with the Occupancy Requirements set forth in the Initial Supplemental Indenture.

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ARTICLE IV Master Trust Indenture. The Master Trustee shall file continuation statements with respect to COVENANTS OF THE OBLIGATED GROUP MEMBERS each U.C.C. financing statement relating to the Trust Estate filed by the Obligated Group Representative at the time of the issuance of a Master Obligation; provided that a copy of the Section 4.01. Title to Facilities and Mortgaged Property filed initial financing statement is timely delivered to the Master Trustee. In addition, unless the Master Trustee shall have been notified in writing by the Obligated Group Representative that Each of the Obligated Group Members warrants that it has good and indefeasible fee title any such initial filing or description of collateral was or has become defective, the Master to the Facilities and the Mortgaged Property free and clear of any liens, charges, encumbrances, Trustee shall be fully protected in (a) relying on such initial filing and descriptions in filing any security interests and adverse claims whatsoever except Permitted Encumbrances. Each of the financing or continuation statements or modifications thereto pursuant to this section and (b) Obligated Group Members represents that it has the right to provide a Lien on the Mortgaged filing any continuation statements in the same filing offices as the initial filings were made. The Property and to enter into the Mortgage and will warrant and defend to the Master Trustee the Obligated Group Members shall be responsible for the customary fees charged by the Master title and the lien of the Mortgage as a valid and enforceable Lien thereon and a security interest Trustee for the preparation and filing of continuation statements and for the reasonable costs therein, subject to Permitted Encumbrances. The Mortgage constitutes a valid and subsisting lien incurred by the Master Trustee in the preparation and filing of all continuation statements on and security interests in the Mortgaged Property, all in accordance with the terms thereof, hereunder, including attorneys' fees and expenses. These fees shall be considered "extraordinary subject to Permitted Encumbrances. services" fees.

Section 4.02. Further Assurances The Obligated Group Members hereby irrevocably constitute and appoint the Master Trustee and any officer or agent of the Master Trustee, with full power of substitution, as its true The Obligated Group Members, upon the request of the Master Trustee or any Related and lawful attorneys in fact with full irrevocable power and authority in the place and stead of Bond Trustee, will execute, acknowledge, deliver and record or file such further instruments and the Obligated Group Members or in the Obligated Group Members’ own name to execute in the do such further acts as may be necessary, desirable or proper to carry out more effectively the Obligated Group Members’ name any documents and otherwise to carry out the purposes of this purpose of this Master Trust Indenture and to subject the Trust Estate to the liens and security Section 4.03, to the extent that the Obligated Group Members’ authorization above is not interests hereof. sufficient. To the extent permitted by law, the Obligated Group Members hereby ratify all acts said attorneys in fact have lawfully done in the past or shall lawfully do or cause to be done in

D-82 Section 4.03. Recording and Filing the future by virtue hereof. This power of attorney is coupled with an interest and shall be The Obligated Group Members shall cause the Mortgage and all other instruments irrevocable. Information concerning the security interest herein granted may be obtained from necessary to create or preserve the liens and security interests granted hereunder and under the the Obligated Group Members at the addresses of the Obligated Group Members as set forth in Mortgage and all amendments and supplements thereto and substitutions therefor to be recorded, Section 1.05 of this Master Trust Indenture. filed, re-recorded and refiled in such manner and in such places as are necessary to protect the Section 4.04. Payment of Principal, Premium and Interest lien on and security interests in the Mortgaged Property and the Trust Estate and will pay all such recording, filing, re-recording and refiling taxes, fees and other charges. Subject to Section The Obligated Group will duly and punctually pay the principal of (and premium, if any) 11.06 hereof, the Obligated Group Members hereby authorize the Master Trustee at any time and and interest on the Master Obligations in accordance with the terms of the Master Obligations from time to time to file any financing statements, amendments thereto and continuation and this Master Trust Indenture. statements with or without the signature of the Obligated Group Members as authorized by applicable law, as applicable to all or part of the Property of the Obligated Group Members, for Each Obligated Group Member hereby jointly, severally and unconditionally agrees to the purpose of securing the lien on and security interest in the Mortgaged Property and the Trust the full and timely payment of the principal of, premium, if any, and interest on all Outstanding Estate created pursuant to this Master Trust Indenture and the Mortgage. Master Obligations which such Person has not created or otherwise made (and on which such Person is not otherwise primarily liable) in accordance with the terms thereof, whether at Stated The Obligated Group Members shall be responsible for, and Master Trustee shall not be Maturity, declaration of acceleration, call for redemption or otherwise. Such agreement shall not responsible for and makes no representation as to, the legality, effectiveness or sufficiency of any be affected, modified or impaired upon the happening from time to time of any event, other than security document or for the creation, perfection, priority or protection of any lien securing the the payment of such Master Obligations (or provision therefor), including, without limitation, Master Obligations. The Master Trustee shall not be responsible for filing any financing or any of the following, whether or not with notice to, or the consent of, each Obligated Group continuation statement except such continuation statements as are set forth below or recording Member: any documents or instruments in any public office at any time or otherwise for perfecting or maintaining the perfection of any lien or security interest in the Trust Estate it being understood (a) the waiver, compromise, settlement, release or termination by any Person of the that the Obligated Group Members shall be obligated to make such filings on behalf of the obligations evidenced by such Master Obligations or any covenant or security in support thereof; Master Trustee. The Master Trustee shall not be responsible for filing or for the sufficiency or accuracy of any financing statements initially filed to perfect security interests granted under this

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(b) unless otherwise required, the failure to give notice to such Obligated Group (and in the opinion of the Governing Body of such Person if the property involved is any Member of the occurrence of an event of default under the terms and provisions of this Master substantial part of the properties of such Person taken in the aggregate), desirable in the conduct Trust Indenture or any agreement under which such Master Obligations are created, assumed, of its business and not disadvantageous in any material respect to the Holders of the Master guaranteed or secured; Obligations.

(c) any failure, omission or delay on the part of the Master Trustee or the Holder of Section 4.07. Corporate Existence; Status of Obligated Group Members; Tax Exemption such Master Obligations to enforce, assert or exercise any right, power or remedy conferred on the Master Trustee or such Holder in this Master Trust Indenture or any other agreement under (a) Subject to Section 5.01 hereof, each Obligated Group Member will do or cause to which such Master Obligations are created, assumed, guaranteed or secured; be done all things necessary to preserve and keep in full force and effect its corporate existence, rights (charter and statutory) and franchises; provided, however, that no Person shall be required (d) the voluntary or involuntary liquidation, dissolution, sale or other disposition of to preserve any right or franchise if the Governing Body of such Person shall determine that the all or substantially all the assets, marshaling of assets and liabilities, receivership, insolvency, preservation thereof is no longer desirable in the conduct of its business and that the loss thereof bankruptcy, assignment for the benefit of creditors, reorganization or arrangement under is not disadvantageous in any material respect to the Holders of the Master Obligations. bankruptcy or similar laws, composition with creditors or readjustment of debts or other similar proceedings affecting such Obligated Group Member or any other obligor on Master (b) The Obligor’s exact legal name is correctly set forth at the beginning of this Obligations; Master Trust Indenture, and the Obligor is an organization of the type specified in the first paragraph of this Master Trust Indenture. The Obligor is formed or incorporated in or organized (e) the invalidity, irregularity, illegality, unenforceability or lack of value of, or any under the laws of the Commonwealth of Pennsylvania. The exact legal name and type of defect in, any of the Master Obligations so guaranteed or any collateral security therefor; or organization of any other Obligated Group Member will be correctly set forth at the beginning of the Supplement pursuant to which such Person becomes a Member. No Obligated Group (f) to the extent permitted by law, any event or action that would, in the absence of Member will cause or permit any change to be made in its name or identity unless such this Section, result in the release or discharge by operation of law of such Obligated Group Obligated Group Member shall have first notified the Master Trustee in writing of such change Member from the performance or observance of any obligation, covenant or agreement at least 30 days prior to the effective date of such change and shall have first delivered an

D-83 contained in this Master Trust Indenture. Officer’s Certificate stating that it has taken all action required by applicable law for the purpose of perfecting or protecting the lien and security interest of the Master Trustee created in the Trust Section 4.05. Payment of Taxes and Other Claims Estate hereby or by the Mortgage. The place where the Obligated Group Members keep their books and records, including recorded data of any kind or nature, regardless of the medium or Each Obligated Group Member will pay or discharge or cause to be paid or discharged recording, including software, writings, plans, specifications and schematics, has been for the before the same shall become delinquent (a) all taxes, assessments and other governmental preceding two months and will continue to be the address of the Obligated Group Members set charges lawfully levied or assessed or imposed upon it or upon its income, profits or property forth in Section 1.05 hereof (unless the Obligated Group Members notify the Master Trustee in and (b) all lawful claims for labor, materials and supplies which, if unpaid, might by law become writing at least 30 days prior to the date of such change). a lien upon its property; provided, however, that no such Person shall be required to pay and discharge or cause to be paid and discharged any such tax, assessment, governmental charge or (c) Each of the Obligated Group Members which is a Tax-Exempt Organization claim to the extent that the amount, applicability or validity thereof shall currently be contested covenants and agrees to take all action necessary to preserve its status as a Tax-Exempt in good faith by appropriate proceedings, such Person shall have established and shall maintain Organization. adequate reserves on its books for the payment of the same and such property is not jeopardized as a result of nonpayment. (d) Each of the Obligated Group Members covenants and agrees that it will not take any action, or fail to take any action, if any such action or failure to take such action would Section 4.06. Maintenance of Properties adversely affect the exclusion from gross income of the interest on the Tax-Exempt Bonds under Section 103(a) of the Code or cause the interest on the Tax-Exempt Bonds, or any portion Each Obligated Group Member will cause all its properties used or useful in the conduct thereof, to become an item of tax preference for purposes of the alternative minimum tax of its business to be maintained and kept in good condition, repair and working order and imposed on individuals and corporations under the Code. supplied with all necessary equipment, ordinary wear and tear, casualty, condemnation and acts of God excepted. Each Obligated Group Member will cause to be made all necessary repairs, (e) Any Member of the Obligated Group may establish separate divisions and may renewals, replacements, betterments and improvements thereof, all as in the judgment of the cause such divisions to be separately incorporated or otherwise organized or reorganized, but all Obligated Group Representative may be necessary so that the business carried on in connection such divisions, whether separately incorporated or not, shall remain bound by this Master Trust therewith may be properly and advantageously conducted at all times; provided, however, that Indenture and all Master Obligation, and shall be jointly and severally liable with the other nothing in this Section shall prevent any such Person from discontinuing the operation and Members of the Obligated Group with respect thereto. Prior to effecting any such maintenance of any of its properties if such discontinuance is, in the judgment of such Person

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reorganization, such Member shall deliver to the Master Trustee (i) an opinion of counsel to the insurance described below or worker’s compensation coverage, all insurance provided shall be effect that after such reorganization all separately incorporated divisions will be jointly and maintained with an insurer rated “A-” or higher by A.M. Best & Company or by S&P. The severally liable with the other Members of the Obligated Group under this Master Trust Master Trustee shall be named as loss payee or an additional insured under all such policies (to Indenture and all Master Obligations issued thereunder, and (ii) an opinion of bond counsel that the extent such option is commercially available). The Obligated Group Representative shall such reorganization will not affect the validity of any bonds, notes or other obligations secured annually review the insurance each Member maintains as to whether such insurance is customary by this Master Trust Indenture, or, with respect to any tax-exempt bonds, notes or other and adequate and deliver an Officer’s Certificate to the Master Trustee on or before each July 1 obligations, the exclusion from gross income under Section 103 of the Internal Revenue Code of beginning July 1, 2018, stating that such Member is in compliance with the requirements set 1986, as amended, of interest paid on such bonds, notes or other obligations. Such reorganizing forth herein. In addition, the Obligated Group Representative shall, at least once every two Fiscal Member shall preserve all of its rights and licenses to the extent necessary or desirable in the Years with respect to commercial insurance and at least once every Fiscal Year with respect to operation of its business affairs, provided that such Member shall not be obligated to retain or self-insurance, cause a certificate of an Insurance Consultant or Insurance Consultants to be preserve any rights or licenses no longer used or, in the judgment of its governing body, no delivered to the Master Trustee within 120 days of the end of the applicable Fiscal Year which longer useful in the conduct of its business. indicates that the insurance then being maintained by the Members meets the standards described above. The Obligated Group Representative shall cause copies of its review, or the certificates Section 4.08. Preservation of Qualifications of the Insurance Consultant or Insurance Consultants, as the case may be, to be delivered promptly to the Master Trustee. The Obligated Group or any Member may, upon resolution Each Obligated Group Member will not allow any permit, right, license, franchise or adopted in good faith by its Governing Body, which resolution shall be delivered to the Master privilege so long as it is necessary for the ownership or operation of the Facilities as nursing and Trustee, and upon the recommendation of an Insurance Consultant, adopt alternative risk rehabilitation facilities to lapse or be forfeited; provided, however, that an Obligated Group management programs which shall be in compliance with applicable governmental rules and member may modify, amend or forfeit any permit, right, licensing, franchise or privilege, in regulations, including, without limitation, the right: to self-insure in whole or in part; to organize, whole or in part, as long as such modification, amendment or forfeiture does not affect the either solely or in connection with others, captive insurance companies; to participate in operation of the Facilities as nursing and rehabilitation facilities. If an Obligated Group Member programs of captive insurance companies organized by others; to establish self-insurance trust becomes a provider of services under and a participant in the Medicare or Medicaid programs or funds; to participate in mutual or other cooperative insurance or other risk management programs any successor programs thereto or any program by a federal, state or local government providing with others; to participate in or enter in agreements with local, state or federal governments in D-84 for payment or reimbursement for services rendered for health care, such Obligated Group order to achieve such insurance; to take advantage of state or federal statutes or laws now or Member shall use its commercially reasonable efforts to remain fully qualified as a provider of hereafter in existence limiting medical and malpractice liability; or to participate in other services and a participant in such program; provided, however, that no Obligated Group Member alternative risk management programs as shall be recommended by said Insurance Consultant. shall be required to maintain any such qualification if (a) the Governing Board of such Person shall determine that the maintenance of such qualification is not in the best economic interest of Naming of the Master Trustee as a loss payee or an insured or additional insured under such Person and (b) at least 30 days prior to the discontinuance of such qualification, such any insurance policy, or the furnishing to the Master Trustee of information relating thereto, shall Person shall notify the Initial Purchaser of such proposed discontinuance and shall provide the not impose upon the Master Trustee any responsibility or duty to approve the form of such Initial Purchaser with a written explanation of the basis for such determination. policy, the level of coverage, the qualifications of the company issuing same or any other matters relating thereto. Section 4.09. Additions to Facilities Section 4.11. Debt Service Coverage Ratio Covenant Any additions, improvements and extensions to the Facilities and repairs, renewals and replacements thereof, including, without limitation, any capital improvements, shall upon their (a) Each Member covenants and agrees to operate all of its Facilities on a revenue acquisition become part of the Facilities. producing basis and to charge such fees and rates for its Facilities and services and to exercise such skill and diligence, including obtaining payment for services provided, as to provide income Section 4.10. Insurance 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 Each Member shall maintain, or cause to be maintained, at its sole cost and expense, Property and all other payments required to be made by it hereunder to the extent permitted by insurance with respect to its Property, the operation thereof and its business against such law. Each Member further covenants and agrees that it will, from time to time as often as casualties, contingencies and risks (including but not limited to public liability and employee necessary and to the extent permitted by law, revise its rates, fees and charges in such manner as dishonesty) and in amounts not less than is customary in the case of corporations engaged in the may be necessary or proper to comply with the provisions of this Section. same or similar activities and similarly situated and as is adequate to protect its Property and operations; provided that insurance against loss or damage to the Facilities shall be for an The Members covenant and agree that the Obligated Group Representative will calculate amount at least equal to the least of (i) the full insurable value of the Facilities and (ii) the the Historical Debt Service Coverage Ratio of the Obligated Group (i) for each Fiscal Year, aggregate principal amount of all Outstanding Master Obligations. Except in the case of self- commencing with the Fiscal Year ending June 30, 2020, based on audited financial statements,

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and (ii) for each 12 month period ending December 31, commencing with the 12-month period contained in such report to the extent feasible (as determined in the reasonable judgment of the ending December 31, 2020, based on unaudited financial statements for the four consecutive Governing Body of the Obligated Group Representative) and permitted by law. fiscal quarters ending with such December 31. In addition, the Accountant preparing the annual audited financial report of the Obligated Group is required to calculate the Historical Debt (f) Notwithstanding any other provisions of this Master Trust Indenture, in the event Service Coverage Ratio of the Obligated Group as of June 30 as part of the financial report. The that any Obligated Group Member incurs any Additional Indebtedness for any Capital Addition, Obligated Group Representative will deliver a copy of such calculation to the Persons to whom the Debt Service Requirements on such Additional Indebtedness and the Revenues and Expenses and within the time frame such report is required to be delivered under Section 4.15 hereof. relating to the Capital Addition financed with the proceeds of such Additional Indebtedness shall be excluded from the calculation of the Historical Debt Service Coverage Ratio of the Obligated (b) If the Historical Debt Service Coverage Ratio as of any June 30 or December 31 Group for the purposes of complying with this Section 4.11 until the first full Fiscal Year is less than 1.20 (but not less than 1.00), the Obligated Group Representative shall, within 30 following the later of (i) the estimated completion of the Capital Addition being paid for with the days after delivery of the Officer’s Certificate disclosing such deficiency, deliver an Officer’s proceeds of such Additional Indebtedness provided that such completion occurs no later than six Certificate approved by a resolution of the Governing Body of the Obligated Group months following the completion date for such Capital Addition set forth in the Consultant’s Representative to the Master Trustee setting forth in reasonable detail the reasons for such report described in paragraph (A) below, or (ii) if the Capital Addition being paid for with the deficiency and adopting a specific plan setting forth steps to be taken designed to increase such proceeds of such Additional Indebtedness includes independent living, assisted living or skilled Historical Debt Service Coverage Ratio to at least 1.20. nursing facilities, the first full Fiscal Year in which Stable Occupancy is achieved, which Stable Occupancy shall be projected in the report of the Consultant referred to in paragraph (A) below (c) If (i) the Obligated Group has not corrected the deficiency by the first June 30 or to occur no later than during the fifth full Fiscal Year following the incurrence of such December 31 immediately subsequent to delivery of the Officer’s Certificate required in the Additional Indebtedness, or (iii) the end of the fifth full Fiscal Year after the incurrence of such preceding paragraph, or (ii) for any June 30 or December 31, the Historical Debt Service Additional Indebtedness, if the following conditions are met: Coverage Ratio is less than 1.00, the Obligated Group Representative shall, within 30 days after delivery of the Officer’s Certificate disclosing such deficiency, select a Consultant to make (A) there is delivered to the Master Trustee a report or opinion of a Consultant to the recommendations with respect to the rates, fees and charges of the Obligated Group and the effect that the Projected Debt Service Coverage Ratio for the first full Fiscal Year following the Obligated Group’s methods of operation and other factors affecting its financial condition in later of (1) the estimated completion of the Capital Addition being paid for with the proceeds of

D-85 order to increase such Historical Debt Service Coverage Ratio to at least 1.20. A copy of the such Additional Indebtedness, or (2) if the Capital Addition being paid for with the proceeds of Consultant’s report and recommendations, if any, shall be filed with each Member and each such Additional Indebtedness includes independent living, assisted living or skilled nursing Required Information Recipient within 60 days after the date such Consultant is actually facilities, the first full Fiscal Year following the year in which Stable Occupancy is achieved, engaged. Each Obligated Group Member shall use the recommendations of the Consultant which Stable Occupancy shall be projected to occur no later than during the fifth full Fiscal Year applicable to it to the extent feasible (as determined in the reasonable judgment of the Governing following the incurrence of such Additional Indebtedness, will be not less than 1.20 after giving Body of such Member) and permitted by law. This Section shall not be construed to prohibit any effect to the incurrence of such Additional Indebtedness and the application of the proceeds Member from serving indigent residents to the extent required for such Member to continue its thereof; provided further, however, that in the event that a Consultant shall deliver a report to the qualification as a Tax-Exempt Organization or from serving any other class or classes of Master Trustee to the effect that state or federal laws or regulations or administrative residents without charge or at reduced rates so long as such service does not prevent the interpretations of such laws or regulations then in existence do not permit or by their application Obligated Group from satisfying the other requirements of this Section. make it impracticable for Members to produce the required ratio, then such ratio shall be reduced to the highest practicable ratio then permitted by such laws or regulations but in no event less (d) The foregoing provisions notwithstanding, if the Historical Debt Service than 1.00; provided further, however, that in the event a Consultant’s report is not required to Coverage Ratio of the Obligated Group as of any June 30 or December 31 date does not meet the incur such Additional Indebtedness, the Obligated Group may deliver an Officer’s Certificate to levels required above, the Obligated Group shall not be obligated to select a Consultant to make the Master Trustee in lieu of the Consultant’s report described in this paragraph (A); and such recommendations pursuant to Section 4.11(c) of this Master Trust Indenture if a Consultant’s report was prepared less than two fiscal quarters prior to the current fiscal quarter (B) there is delivered to the Master Trustee an Officer’s Certificate on the date on (unless a majority in principal amount of the Outstanding Master Obligations request a new which financial statements are required to be delivered to the Master Trustee pursuant to Section Consultant’s report, which request may not be made more frequently than once every two fiscal 4.15 hereof until the first Fiscal Year in which the exclusion from the calculation of the quarters). Historical Debt Service Coverage Ratio no longer applies, calculating the Historical Debt Service Coverage Ratio of the Obligated Group at the end of each Fiscal Year and demonstrating (e) If the Obligated Group fails to achieve a Historical Debt Service Coverage Ratio that such Historical Debt Service Coverage Ratio is not less than 1.00, such Historical Debt of 1.20, but achieves a Historical Debt Service Coverage Ratio of at least 1.00 at the end of any Service Coverage Ratio to be computed without taking into account (1) the Additional Fiscal Year, such failure shall not constitute a default or an Event of Default under this Master Indebtedness to be incurred if (x) the interest on such Additional Indebtedness during such Trust Indenture if the Obligated Group takes all action necessary to comply with the procedures period is funded from proceeds thereof or other funds of the Member then on hand and available set forth above for preparing a report and adopting a plan and uses the recommendations therefor, and (y) no principal of such Additional Indebtedness is payable during such period, and

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(2) the Revenues to be derived from the Capital Addition to be financed from the proceeds of In the event such Net Proceeds exceed the Threshold Amount, the Obligated Group must such Additional Indebtedness. deliver to the Master Trustee (i) an Officer’s Certificate stating that the repair or replacement can be completed based on funds available from the Net Proceeds or otherwise, and (ii) a forecast Section 4.12. Damage or Destruction that no monetary default will occur prior to completion of such repair or replacement.

Each Member agrees to notify the Master Trustee in writing promptly in the case of the If within 180 days after notification of the damage or destruction the Obligated Group destruction of its Facilities or any material portion thereof as a result of fire or other casualty or fails to deliver the required Officer’s Certificate and forecast to the Master Trustee, the Net any damage to such Facilities or material portion thereof as a result of fire or other casualty. The Proceeds will be applied, at the direction of the Obligated Group, first, on a pro rata basis among Net Proceeds shall be applied to the reconstruction, repair or replacement of the damaged Parity Obligations to the prepayment of such Parity Obligations; to the redemption of Bonds Facilities. In the event such Net Proceeds exceed the Threshold Amount, the Obligated Group constituting Parity Obligations; or to the open-market purchase of Bonds constituting Parity must deliver to the Master Trustee (i) an Officer’s Certificate stating that the repair or Obligations, notes or other obligations secured by Master Obligations constituting Parity replacement can be completed based on funds available from the Net Proceeds or otherwise, and Obligations; or any combination thereof; second, on a pro rata basis among all other Master (ii) a forecast that no monetary default will occur prior to completion of such repair or Obligations not constituting Parity Obligations; and third, as directed by the Obligated Group. replacement. Section 4.14. Other Provisions with Respect to Net Proceeds If within 180 days after notification of the damage or destruction the Obligated Group fails to deliver the required Officer’s Certificate and forecast to the Master Trustee, the Net Subject to Section 3.04 hereof, amounts received by the Master Trustee in respect of any Proceeds will be applied, at the direction of the Obligated Group, first, on a pro rata basis among Net Proceeds shall, at the Request of the Obligated Group Representative, be deposited with the Parity Obligations to the prepayment of such Parity Obligations; to the redemption of Bonds Master Trustee in a special trust account and be invested or reinvested by the Master Trustee as constituting Parity Obligations; or to the open-market purchase of Bonds constituting Parity directed in writing by the Obligated Group Representative in Permitted Investments subject to Obligations, notes or other obligations secured by Master Obligations constituting Parity any Member’s right to receive the same pursuant to Sections 4.12 and 4.13 hereof. If any Obligations; or any combination thereof; second, on a pro rata basis among all other Master Member elects to proceed under either Section 4.12 hereof or 4.13 hereof, any amounts in Obligations not constituting Parity Obligations; and third, as directed by the Obligated Group. respect of such Net Proceeds not so paid to such Member shall be used to prepay Master

D-86 Obligations on a pro rata basis among all Master Obligations Outstanding pursuant to an If the Master Trustee receives a report that the Obligated Group facilities can continue to Obligated Group Representative Request. No certifications or use restrictions shall apply to Net operate with less than full repair or replacement of damage caused by casualty and demonstrating Proceeds below the Threshold Amount. that the Obligated Group will continue to satisfy the required Debt Service Coverage Ratio, the Liquidity Requirement and other Master Trust Indenture covenants (including maintenance of Section 4.15. Financial and Other Information the Debt Service Reserve Fund under any Related Bond Indenture), then Net Proceeds may be used to redeem Bonds and other obligations secured by Master Obligations to the extent not used The Members covenant that they will keep or cause to be kept proper books of records to make partial repairs or replacements. and accounts in which full, true and correct entries will be made of all dealings or transactions of or in relation to the business and affairs of the Obligated Group in accordance with GAAP Section 4.13. Condemnation consistently applied except as may be disclosed in the notes to the audited financial statements referred to in subparagraph (C) below. To the extent that GAAP would require the combination The Master Trustee shall cooperate fully with the Members in the handling and conduct of certain financial information of entities which are not Members of the Obligated Group with of any prospective or pending condemnation proceedings with respect to their Facilities or any financial information of one or more Members, combined financial statements prepared in part thereof. Each Member hereby irrevocably assigns to the Master Trustee, as its interests may accordance with GAAP which include information with respect to entities which are not appear, all right, title and interest of such Member in and to any Net Proceeds of any award, Members of the Obligated Group may be delivered in satisfaction of the requirements of this compensation or damages payable in connection with any such condemnation or taking or Section 4.15 so long as: (i) supplemental information in sufficient detail to separately identify the payment received in a sale transaction consummated under threat of condemnation (any such information with respect to the Members of the Obligated Group is delivered to the Required award, compensation, damages or payment being hereinafter referred to as an “award”). Such Information Recipients with the audited financial statements; (ii) such supplemental information Net Proceeds shall be initially paid to the Master Trustee for disbursement or use as hereinafter has been subjected to the auditing procedures applied in the audit of the combined financial provided. If such Net Proceeds do not exceed the Threshold Amount, such Net Proceeds may be statements delivered to the Required Information Recipients and, in the opinion of the paid to the Member in question. The Members covenant that they will expend or contract to Accountant, is fairly stated in all material respects in relation to the combined financial expend an amount not less than the amount of any such Net Proceeds within 24 months of the statements taken as a whole; and (iii) such supplemental information is used for the purposes receipt thereof to reconstruct, repair or replace the taken property. hereof or for any agreement, document or certificate executed and delivered in connection with or pursuant to this Master Trust Indenture. Prior to the first day of each Fiscal Year, the Obligated Group Representative will prepare the Annual Budget for such Fiscal Year. If the

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Obligated Group Representative fails to prepare the Annual Budget for any Fiscal Year, the (D) The Annual Budget for the Obligated Group’s operations for each Fiscal Year, Annual Budget for the preceding Fiscal Year will continue until the Annual Budget is prepared prepared and delivered prior to the start of each such Fiscal Year, and amendments thereof for the remainder of the applicable Fiscal Year. within 30 days after board approval;

The Obligated Group shall provide the following reports to the Master Trustee, the Bond (E) Such additional information as the Master Trustee or any Related Bond Trustee Trustee, the Underwriter, and EMMA: may reasonably request concerning any Member in order to enable the Master Trustee or such Related Bond Trustee to determine whether the covenants, terms and provisions of this Master (A) Following the end of each fiscal quarter: Trust Indenture have been complied with by the Members and for that purpose all pertinent books, documents and vouchers relating to the business, affairs and Property (other than patient, (i) quarterly unaudited financial statements of the Obligated Group as soon as donor and personnel records) of the Members shall, to the extent permitted by law, at all times practicable after they are available but in no event more than 45 days after the completion of during regular business hours be open to the inspection of such accountant or other agent (who such fiscal quarter, including a combined or combining statement of revenues and expenses and may make copies of all or any part thereof) as shall from time to time be designated by the statement of cash flows of the Obligated Group during such period, a combined or combining Master Trustee or such Related Bond Trustee. Without limiting the foregoing, each Member will balance sheet as of the end of each such fiscal quarter, and a calculation of compliance with the permit, upon reasonable notice, the Master Trustee or any such Related Bond Trustee (or such Occupancy Requirements, and a calculation of Days’ Cash on Hand and Debt Service Coverage personas as they may designate) to visit and inspect, at the expense of such visiting Person, its Ratio for such fiscal quarter if required to be calculated by this Master Trust Indenture, all Property and to discuss the affairs, finances and accounts of the Obligated Group with its officers prepared in reasonable detail and certified, subject to year-end adjustment, by an officer of the and Accountant, all at such reasonable times and locations and as often as the Master Trustee or Obligated Group. Such financial statements and calculations shall be accompanied by a such Related Bond Trustee may reasonably desire; and comparison to the Annual Budget provided pursuant to subsection (D) below; and (F) The Obligated Group Representative may designate a different Fiscal Year for the (ii) Occupancy levels of the Facilities as of the end of such quarter including Members of the Obligated Group by delivering a notice to the Master Trustee designating the the number of beds that were occupied and vacated during that quarter and on an aggregate basis; first and last day of such new Fiscal Year and whether or not there will be any interim fiscal period (the “Interim Period”) of a duration greater than or less than 12 months preceding such

D-87 (B) Within 120 days of the end of each Fiscal Year, an annual audited financial report new Fiscal Year. The Members covenant that they will furnish to the Master Trustee and each of the Obligated Group prepared by an Accountant, including a balance sheet as of the end of Related Bond Trustee, as soon as practicable after they are available, but in no event more than such Fiscal Year and statements of cash flows and changes in net assets (deficit) for such Fiscal 150 days after the last day of such Interim Period, a financial report for such Interim Period Year (together with any required supplemental information), showing in each case in certified by an Accountant selected by the Obligated Group Representative covering the comparative form the financial figures for the preceding Fiscal Year, together with a separate operations of the Obligated Group for such Interim Period and containing a combined balance written statement of the Accountant preparing such report containing calculations of the sheet as of the end of such Interim Period and combined statements of operations, changes in net Obligated Group’s Historical Debt Service Coverage Ratio for said Fiscal Year and the Days’ assets (deficit) and cash flows for such Interim Period, showing in each case in comparative form Cash on Hand of the Obligated Group at the end of such Fiscal Year if required to be calculated the financial figures for the comparable period in the preceding Fiscal Year, together with a by this Master Trust Indenture, and a statement that such Accountant has no knowledge of any separate written statement of the Accountant preparing such report containing calculations of the default under this Master Trust Indenture insofar as it is related to accounting matters or to the Obligated Group’s Historical Debt Service Coverage Ratio for the Interim Period and Days Cash Obligated Group’s financial covenants, or if such Accountant shall have obtained knowledge of on Hand as of the last day of such Interim Period and a statement that such Accountant has no any such default or defaults, they shall disclose in such statement the default or defaults and the knowledge of any default under this Master Trust Indenture insofar as it relates to accounting nature thereof (but such Accountant shall not be liable directly or indirectly to anyone for failure matters or to the Obligated Group’s financial covenants, or if such Accountant shall have to obtain knowledge of any default); obtained knowledge of any such default or defaults, it shall disclose in such statement the default or defaults and the nature thereof (but such Accountant shall not be liable directly or indirectly to (C) On or before the date of delivery of the financial reports referred to in subsection anyone for failure to obtain knowledge of any default). (B) above, an Officer’s Certificate of the Obligated Group (i) stating that the Obligated Group is in compliance with all of the terms, provisions and conditions of this Master Trust Indenture or, Section 4.16. Permitted Additional Indebtedness if not, specifying all such defaults and the nature thereof, (ii) calculating and certifying the Occupancy Requirements, Days’ Cash on Hand, and Debt Service Coverage Ratio, if required to So long as any Master Obligations are outstanding, the Obligated Group will not incur be calculated for such Fiscal Year by this Master Trust Indenture, as of the end of such Fiscal any Additional Indebtedness (whether or not incurred through the issuance of Additional Master Year, as appropriate, and (iii) stating that any reports or information required to be posted to Obligations) other than: EMMA in accordance with the provisions of a Continuing Disclosure Certificate has been posted as required; (a) Long-Term Indebtedness. If no Event of Default shall have occurred and then be continuing, an Obligated Group Member may incur or assume additional Long-Term

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Indebtedness for such lawful purposes of such Obligated Group Member as shall be specified in and the Obligated Group is forecasted to be in compliance with the Liquidity reasonable detail in a certified resolution of such Obligated Group Member; provided that, on or Requirement. before the date on which any Long-Term Indebtedness, whether secured or unsecured, is to be incurred or assumed, the Obligated Group Representative shall deliver to the Master Trustee: (iv) Limit Based on Revenues. Commencing one year after the certificate of occupancy has been issued with respect to the Linwood 2017 Project, in lieu of the (i) Historical Pro Forma Test. Excepts as provided in paragraphs (ii) through requirements of paragraphs (i) through (iii) above, an Officer’s Certificate showing that (vi) below, an Officer’s Certificate stating that the Historical Pro Forma Debt Service the proposed Long-Term Indebtedness, together with all Long-Term Indebtedness Coverage Ratio of the Obligated Group for the immediately preceding Fiscal Year incurred pursuant to this paragraph (iv) which is then outstanding and which is not (taking into account the Long-Term Indebtedness to be incurred) was not less than 1.20 covered by an Officer’s Certificate or Feasibility Report delivered pursuant to paragraphs and the Obligated Group was in compliance with the Days’ Cash on Hand covenant. (i) through (iii) above, does not exceed 10% of Revenues of the Obligated Group for the immediately preceding Fiscal Year. (ii) Historical Test and Forecast. In lieu of the requirements of Paragraph (i) above, (v) Completion Indebtedness. In the case of Long-Term Indebtedness incurred or assumed to finance the completion of the Linwood 2017 Project or a Capital (A) An Officer’s Certificate stating that the Historical Debt Service Addition, in lieu of the requirements of paragraphs (i) through (iv) above, so long as the Coverage Ratio of the Obligated Group for the immediately preceding Fiscal Year scope of the Linwood 2017 Project or such Capital Addition is not being changed, either (without taking into account the Long-Term Indebtedness to be incurred) was not less (A) an Officer’s Certificate showing that the principal amount of the proposed Long- than 1.20 and the Obligated Group was in compliance with the Liquidity Requirement, Term Indebtedness does not exceed 10% of the principal amount of the Long-Term and Indebtedness originally incurred to finance the Linwood 2017 Project or such Capital Addition or (B) a Feasibility Report stating that the forecasted Debt Service Coverage (B) A Feasibility Report stating that (a) the estimated Projected Debt Ratio of the Obligated Group for each of the two Fiscal Years immediately following the Service Coverage Ratio of the Obligated Group (taking into account the Long-Term completion of the Linwood 2017 Project or such Capital Addition will not be less than Indebtedness to be incurred) is expected to be not less than 1.25 for (i) the first complete what such Debt Service Coverage Ratio would have been without the incurrence of such

D-88 Fiscal Year following the Fiscal Year during which the Capital Addition financed with Indebtedness. such Long-Term Indebtedness is expected to be placed into service, or (ii) if the Long- Term Indebtedness will finance a Capital Addition that includes additional independent (vi) Refunding Indebtedness. In lieu of the requirements of paragraphs (i) living units, personal care units or health care beds, the earlier of (1) the first complete through (v) above, in the case of Long-Term Indebtedness incurred to refinance Fiscal Year for which the additional units achieve average occupancy of 85% or (2) the outstanding Long-Term Indebtedness an Officer’s Certificate showing that the Maximum first complete Fiscal Year that begins at least 18 months after the date such additional Annual Debt Service Requirement on the proposed Long-Term Indebtedness does not units are expected to be placed in service and (b) the Obligated Group is forecasted to be exceed 110% of the Maximum Annual Debt Service Requirement on the Long-Term in compliance with the Liquidity Requirement; provided that such report shall include Indebtedness to be refinanced. forecasted balance sheets and statements of operations, changes in net assets (deficit) and cash flows for such Fiscal Year and a statement of the relevant assumptions upon which (b) Subordinated Indebtedness. Subordinated Indebtedness may be incurred without such forecasted statements are based, which financial statements must indicate that limit. Payment of interest or principal on such indebtedness shall be deferred unless (i) the Debt sufficient revenues and cash flows could be generated to pay the operating expenses of Service Coverage Ratio for the preceding fiscal quarter was at least 1.20, (ii) there is no the Obligated Group’s proposed and existing Facilities and the debt service on the deficiency in the Bond Fund or the Debt Service Reserve Fund under any Bond Indenture at the Obligated Group’s other existing Indebtedness during such Fiscal Year. time of such payment, and (iii) Days Cash on Hand would be at least equal to the Liquidity Requirement after giving effect to such payment. Payments of principal and interest on (iii) Forecast. In lieu of the requirements of paragraphs (i) and (ii) above, a Subordinated Indebtedness which is not permitted to be paid pursuant to the foregoing Feasibility Report stating that the Projected Debt Service Coverage Ratio of the requirements shall be deferred without accrual of additional interest expense. Subordinated Obligated Group (taking into account the Long-Term Indebtedness to be incurred) is indebtedness may not be accelerated without the consent of the Master Trustee. 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 (c) Short-Term Indebtedness. The Obligated Group may, from time to time, incur, expected to be placed into service, or (ii) if the Long-Term Indebtedness will finance a assume or allow to remain Outstanding at any time Short-Term Indebtedness in any amount up Capital Addition that includes additional independent living units, personal care units or to ten percent (10%) of Revenues of the Obligated Group for the preceding Fiscal Year. Any health care beds, the earlier of (1) the first complete Fiscal Year for which the additional such Short-Term Indebtedness must, for a period of at least 15 consecutive days during each units achieve average occupancy of 85% or (2) the first complete Fiscal Year that begins Fiscal Year, be less than 5% of the Revenues for the preceding Fiscal Year. Short-Term at least 18 months after the date such additional units are expected to be placed in service

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Indebtedness in excess of such 5% limit shall be permitted to remain Outstanding only if Indebtedness; provided, however, that this requirement shall not apply to Indebtedness incurred permitted to exist under this Master Trust Indenture as Long-Term Indebtedness. pursuant to subsection (d) or (e) of this Section 4.16.

(d) Self-Insurance Programs. Liabilities for contributions to self-insurance or shared (l) Each Member agrees that, prior to incurring Additional Indebtedness for money or pooled risk insurance programs required or permitted to be maintained under this Master Trust borrowed from or credit extended by entities other than issuers of Related Bonds, sellers of real Indenture, including any letters of credit or other Indebtedness incurred with respect to such or personal property for purchase money debt, lessors of such property or banks or other liabilities. institutional lenders, it will provide the Master Trustee with an Opinion of Counsel to the effect that, to such Independent Counsel’s knowledge, such Member has complied in all material (e) Indebtedness Secured by Accounts Receivable. Indebtedness secured by accounts respects with all applicable state and federal laws regarding the sale of securities in connection receivable may be incurred up to, but not in excess of, an aggregate of 20% of net accounts with the incurrence of such Additional Indebtedness (including the issuance of any securities or receivable of the Obligated Group as reported in the audited financial statements for the other evidences of indebtedness in connection therewith) and such Independent Counsel has no preceding Fiscal Year. To the extent accounts receivable are sold or pledged in accordance with reason to believe that a right of rescission under such laws exists on the part of the entities to the preceding sentence, such receivables shall be released from the Gross Revenue pledge but which such Additional Indebtedness is to be incurred. only if the resulting obligations satisfy the applicable test described elsewhere in this Section 4.16. (m) The provisions of this Master Trust Indenture notwithstanding, the Members of the Obligated Group may not incur any Additional Indebtedness through the issuance of or (f) Credit Facility Debt. Obligations may be incurred in connection with a Credit evidenced by Additional Master Obligations the proceeds of which will be used for the Facility issued with respect to Indebtedness incurred in accordance with any other provision set acquisition of real Property or the construction of any additional Facilities unless the right, title forth in this Section 4.16 provided that any Indebtedness in favor of the Credit Facility provided and interest in any assets to be financed or refinanced with the proceeds of such Additional shall not exceed 110% of the related Indebtedness. Indebtedness and the real estate upon which such assets will be located have been mortgaged and assigned to the Master Trustee pursuant to the Initial Mortgage or pursuant to a Mortgage in (g) Indebtedness Among Members of the Obligated Group. Indebtedness among substantially the form of the Initial Mortgage and such assets and real estate are not subject to Members of the Obligated Group is permitted without limit. any other Lien except for Permitted Encumbrances. D-89 (h) Notwithstanding the foregoing, the Obligated Group may not incur or assume any Section 4.17. Security for Permitted Additional Indebtedness Additional Indebtedness under this Section 4.16 if such Additional Indebtedness is for the purpose of financing Facilities or a Capital Addition, without providing an Officer’s Certificate (a) Additional Indebtedness incurred as permitted by Sections 4.16(a) and (c) above with a certification that the amount of Additional Indebtedness to be incurred will be sufficient to may be secured on a parity first lien basis with the outstanding Parity Obligations by the issuance complete the Facilities or Capital Addition to be financed. of a Master Obligation to the holder of such indebtedness.

(i) It is agreed and understood by the parties hereto and by the Holders of Master (b) Additional Indebtedness may also be secured by (i) a lien on property not Obligations by their acceptance thereof that various types of Indebtedness may be incurred under constituting one of the Obligated Group facilities subject to the Initial Mortgage, (ii) a purchase any of the above referenced subsections with respect to which the tests set forth in such money security interest (first lien) on new or replacement equipment and fixtures, or (iii) subsection are met and need not be incurred under only a subsection specifically referring to Permitted Encumbrances. such type of Indebtedness. (c) Short-Term Indebtedness and Long-Term Indebtedness to provide working capital (j) Each Member covenants that Indebtedness of the type permitted to be incurred may be financed with a Master Obligation. under subsection (e) above will not be allowed to become overdue for a period in excess of that which is in the ordinary course of business, based on applicable industry standards and taking (d) Subordinated Indebtedness may be secured by a subordinate lien on the Gross into consideration the size and type of the facility, without being contested in good faith and by Revenues. appropriate proceedings. Section 4.18. Calculation of Debt Service and Debt Service Coverage (k) Each Member covenants that on or prior to the incurrence of Indebtedness by such Member for money borrowed or credit extended, or the equivalent thereof, after the date of (a) The various calculations of the amount of Indebtedness of a Person, the issuance of the Series 2017 Master Obligation, it will deliver to the Master Trustee an Officer’s amortization schedule of such Indebtedness and the debt service payable with respect to such Certificate which identifies the Indebtedness incurred, identifies the subsection of this Section Indebtedness required under certain provisions of this Master Trust Indenture shall be made in a 4.16 pursuant to which such Indebtedness was incurred, demonstrates compliance with the manner consistent with this Section 4.18. In the case of Balloon Indebtedness or Put provisions of such subsection and attaches a copy of the instrument evidencing such Indebtedness incurred in connection with Section 4.16 unless such Indebtedness is reclassified pursuant to this Section 4.18 as having been issued pursuant to another subsection of Section

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4.16, the amortization of such Indebtedness and the debt service payable with respect to such Section 4.18, if issued, shall be deemed to be payable in accordance with the terms of such Indebtedness is being issued simultaneously with such calculation. With respect to Put indebtedness. Indebtedness, if the option of the holder to require that such Indebtedness be paid, purchased or redeemed prior to its stated maturity date (other than at the option of such holder and other than (f) For the purpose of determining whether any particular guaranty may be incurred, pursuant to any mandatory sinking fund or any similar fund), has expired or lapsed as of the date it shall be assumed that 100% of the Indebtedness guaranteed is funded indebtedness of the of such calculation, such Put Indebtedness shall be deemed payable in accordance with its terms. 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 (b) In determining the amount of debt service payable on Indebtedness in the course be the actual amount paid on such guaranty by the guarantor. For any other purpose, a guarantor of the various calculations required under this Master Trust Indenture, if the terms of the shall be considered liable only for 20% of the annual debt service requirement on the Indebtedness being considered are such that interest thereon for any future period of time is Indebtedness guaranteed; provided, however, if the guarantor has been required by reason of its expressed to be calculated at a varying rate per annum, a formula rate or a fixed rate per annum guaranty to make a payment in respect of such Indebtedness within the immediately preceding based on a varying index, then for the purpose of making such determination of debt service, 24 months, the guarantor shall be considered liable for 100% of the annual debt service interest on such Indebtedness for such period (the “Determination Period”) shall be computed by requirement on the Indebtedness guaranteed. assuming that the rate of interest applicable to the Determination Period is equal to the average of the rate of interest (calculated in the manner in which the rate of interest for the Determination (g) For purposes of the various calculations required under this Master Trust Period) is expressed to be calculated) which was in effect on the last date of each of the 12 full Indenture for capitalized leases, the capitalized rentals under a capitalized lease at the time of calendar months immediately preceding the month in which such calculation is made; provided such calculation shall be deemed to be principal payable thereon. that if the index or other basis for calculating such interest was not in existence for at least 12 full calendar months next preceding the date of calculation, the rate of interest for such period shall (h) In the case of Indebtedness related to any Subsidy Bonds, debt service payable be deemed to be the average rate of interest that was in effect on the last day of each full calendar shall be computed net of Federal Subsidy Payments scheduled to be received by the issuer of month next preceding the date of calculation; and if the average rate of interest borne by such such Subsidy Bonds or the Obligated Group Member in connection with such Subsidy Bonds Indebtedness for such shorter period cannot be calculated, the rate of interest for such period during the applicable time period. shall be deemed to be the Projected Rate.

D-90 (i) Each Member may elect to have Indebtedness issued pursuant to one provision of (c) Master Obligations issued to secure Indebtedness permitted to be incurred under Section 4.16 reclassified as having been incurred under another provision of Section 4.16 by Section 4.16 shall not be treated separately as Additional Indebtedness from the Indebtedness demonstrating compliance with such other provision on the assumption that such Indebtedness is secured thereby in a manner which would require such indebtedness to be included more than being reissued on the date of delivery of the materials required to be delivered under such other one time in the calculations performed under this Master Trust Indenture. provision including the certification of any applicable Projected Rate. From and after such demonstration, such Indebtedness shall be deemed to have been incurred under the provision (d) Except as set forth below, no debt service shall be deemed payable with respect to with respect to which such compliance has been demonstrated until any subsequent Commitment Indebtedness until such time as funding occurs under the commitment which gave reclassification of such Indebtedness. rise to such Commitment Indebtedness. From and after such funding, the amount of such debt service shall be calculated in accordance with the actual interest rate and amortizations schedule (j) Anything herein to the contrary notwithstanding, any portion of any Indebtedness applicable thereto. No Additional Indebtedness shall be deemed to arise when any funding of any Member for which a Hedge Agreement has been obtained by such Member shall be occurs under any such commitment or any such commitment is renewed upon terms which deemed to bear interest for the period of time that such Hedge Agreement is in effect at a net rate provide for substantially the same terms of repayment of amounts disbursed pursuant to such which takes into account the interest payments made by such Member on such Indebtedness and commitment as obtained prior to such renewal. In addition, no Additional Indebtedness shall be the payments made or received by such Member on such Hedge Agreement; provided that the deemed to arise when Indebtedness which bears interest at a variable rate of interest is converted long term credit rating of the provider of such Hedge Agreement (or any guarantor thereof) is in to Indebtedness which bears interest at a fixed rate of interest or the method of computing the one of the three highest rating categories of any Rating Agency (without regard to any variable rate on such Indebtedness is changed or the terms upon which Indebtedness, if Put refinements of gradation of rating category by numerical modifier or otherwise) or is at least as Indebtedness, may be or is required to be tendered for purchase are changed, if such conversion high as that of the Obligated Group. In addition, so long as any Indebtedness is deemed to bear or change is in accordance with the provisions applicable to such variable rate Indebtedness or interest at a rate taking into account a Hedge Agreement, any payments made by a Member on Put Indebtedness in effect immediately prior to such conversion or change. such Hedge Agreement shall be excluded from Expenses, and any payments received by a Member on such Hedge Agreement shall be excluded from Revenues, in each case, for all (e) Balloon Indebtedness incurred as provided under subsection (a)(i), (ii) and (iii) of purposes of this Master Trust Indenture. Section 4.16, unless reclassified pursuant to this Section 4.18, shall be deemed to be payable in accordance with the assumptions set forth in this Section 4.18. Put Indebtedness incurred as provided under subsection (a)(i), (ii) and (iii) of Section 4.16, unless reclassified pursuant to this

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Section 4.19. Permitted Transfers or Dispositions of Property Testing Date Number of Days Cash on Hand December 31, 2017 and June 30, 2018 30 Each Member agrees that it will not sell, lease, donate, transfer or otherwise dispose December 31, 2018 and June 30, 2019 30 (including, without limitation, any involuntary disposition) of Property (either real or personal December 31, 2019 and June 30, 2020 35 property, including Cash and Investments) except for the following: December 31, 2020 and June 30, 2021 35 December 31, 2021 and each Testing 40 (a) Transfers among Members of the Obligated Group without limitation. Date thereafter

(b) Dispositions of Property which has been replaced or determined to be obsolete, inadequate, or not useful in the ordinary course of business, may be transferred without receiving cash or other property substantially equivalent in value. If the Days Cash on Hand as of any Testing Date is less than the Liquidity Requirement, (c) Transfers aggregating in any Fiscal Year to not more than 5% of net property, the Obligated Group Representative shall, within 30 days of delivery of the Officer’s Certificate plant and equipment, as reported in the prior Fiscal Year’s audit, may be transferred without disclosing such deficiency, deliver an Officer’s Certificate approved by a resolution of the receiving cash or other property substantially equivalent in value. Governing Body of the Obligated Group Representative to the Master Trustee, setting forth in detail the reasons for such deficiency and adopting a specific plan setting forth steps designed to (d) Cash and investments may not be transferred outside the Obligated Group, except improve the Obligated Group’s Days’ Cash on Hand to meet or exceed the Liquidity that current assets (i.e. cash and cash equivalents, investment securities, accounts receivable, Requirement for future Testing Dates. accrued interest or other investment income, funds permitted to be designed by the Governing Body of the Obligated Group for any specific purpose, and any other tangible or intangible assets If the Obligated Group has not raised the level of Days Cash on Hand to the Liquidity of the Obligated Group ordinarily considered to be current assets under generally accepted Requirement by the next Testing Date immediately subsequent to the delivery of the Officer’s accounting principles) may be transferred and used in payment for property or services of Certificate required pursuant to the immediately preceding paragraph, the Obligated Group substantially equivalent value, for Obligated Group capital expenditures, or as an investment of Representative shall, within 30 days after delivery of the Officer’s Certificate disclosing such

D-91 Obligated Group funds. deficiency, select a Consultant to make recommendations with respect to the rates, fees and charges of the Obligated Group and the Obligated Group’s methods of operation and other Section 4.20. Liens on Property factors affecting its financial condition in order to increase Days Cash on Hand to the Liquidity Requirement for future Testing Dates. A copy of the Consultant’s report and recommendations, (a) The Obligated Group shall not create any liens on any of its real or personal if any, shall be filed with each Member and each Required Information Recipient within 60 days property, including Obligated Group cash, investments and Gross Revenues, other than the after the date such Consultant is actually engaged. Each Obligated Group Member shall use the Permitted Encumbrances. The Obligated Group shall promptly discharge any liens on any of its recommendations of the Consultant applicable to it to the extent feasible (as determined in the real or personal property that are not Permitted Encumbrances. reasonable judgment of the Governing Body of such Member) and permitted by law. The Section 4.21. [Reserved] Obligated Group shall not be required to cause the Consultant’s report referred to in this paragraph to be prepared if a Consultant’s report referred to above was prepared for the Testing Section 4.22. Liquidity Covenant Date prior to the current Testing Date and the Obligated Group provides to the Master Trustee and each Related Bond Trustee an Opinion of Counsel to the effect that the applicable laws and The Obligated Group covenants that it will calculate the Days Cash on Hand of the regulations underlying the last Consultant’s report have not changed in any material way. Obligated Group as of June 30 and December 31 of each Fiscal Year (each such date being a “Testing Date”), commencing with December 31, 2017. The Obligated Group shall deliver an Notwithstanding any other provision of this Master Trust Indenture, failure of the Officer’s Certificate setting forth such calculation as of each Testing Date to the Master Trustee Obligated Group to achieve the required Liquidity Requirement for any Testing Date shall not not less than 45 days after such Testing Date pursuant to Section 4.15(A) hereof. In addition, the constitute a default or an Event of Default under this Master Trust Indenture if the Obligated Accountant preparing the annual audited financial report of the Obligated Group is required to Group (i) takes all action necessary to comply with the procedures in this Master Trust Indenture calculate Days Cash on Hand as of June 30 as part of the financial report. for retaining a Consultant and (ii) follows the recommendation of the Consultant in accordance with this Section 4.22. Each Obligated Group Member is required to conduct its business so that on each Testing Date the Obligated Group shall have no less than the number of Days Cash on Hand (the “Liquidity Requirement”) shown below for the Testing Dates shown below.

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Section 4.23. [Reserved] Facility that is secured by a separate Master Obligation, shall be treated as the holder of an Obligation in a principal amount equal to the aggregate principal amount of the outstanding Section 4.24. [Reserved] Related Bonds owned by such beneficial owner) submit to the Related Bond Trustee or the Master Trustee, within 15 days following the Notice Date, subject, however, to the provisions of Section 4.25. Management subparagraph (c) below, written objection to the engagement of such Consultant. Such objection, if submitted by the beneficial owner of Related Bonds, shall identify the Related Bonds owned The Obligated Group Members covenant to provide for management of the Facilities by such beneficial owner by series, maturity and aggregate principal amount (and the Related through competent and qualified persons having experience in the management of facilities Bond Trustee and the Master Trustee may rely in good faith upon the truthfulness of such similar to the Facilities. Any contract with a manager shall provide that such contract may be person’s statement of ownership of Related Bonds for purposes of this Section). If the beneficial terminated by the Obligor at any time. While any Master Obligations with respect to tax-exempt owner submits its written objection to the Related Bond Trustee, the Related Bond Trustee shall Related Bonds are Outstanding, the Obligated Group Members shall not enter into any promptly communicate to the Master Trustee the series, maturity and aggregate principal amount management contract or contract for services at the Facilities unless the contract complies with of Related Bonds owned by the objecting beneficial owner. Internal Revenue Service Rev. Proc. 97-13, as modified by Rev. Proc. 2001-39 and Notice 2014- 67, with respect to contracts entered into prior to August 18, 2017, or Rev. Proc. 2017-13 for (b) Holders of Master Obligations (including beneficial owners of Related Bonds contracts entered into, materially modified or renewed on or after August 18, 2017, or other who are deemed to be the Holder of a Master Obligation as aforesaid) shall be deemed to consent guidance as may be issued by the Internal Revenue Service. to the engagement of the named Consultant unless they have submitted written objection to the Master Trustee or the Related Bond Trustee in accordance with the notice and in a timely Section 4.26. Licenses and Qualifications; Third Party Payments manner. No later than two (2) Business Days after the end of the 15-day period for submission of written objections, the Master Trustee shall notify the Obligated Group Representative of the Each Obligated Group Member will do all things necessary to obtain, maintain and number of any written objections received. If 33.4% or more in aggregate principal amount of renew, from time to time, as necessary, all permits, licenses, accreditation and other the Holders of the Master Obligations Outstanding (including beneficial owners of Related governmental approvals necessary for the operation of the Facilities. Bonds who are deemed to be the Holder of a Master Obligation as aforesaid) have objected to Section 4.27. Approval of Consultants the engagement of the named Consultant, the Obligated Group Representative shall propose that D-92 another Consultant be engaged and shall again follow the above procedures to obtain the consent If at any time the Obligated Group Representative is required by the provisions of Section or deemed consent of Holders of Outstanding Master Obligations as soon as practicable; 4.11 (Debt Service Coverage Ratio Covenant) or Section 4.22 (Liquidity Covenant) of this otherwise, the Obligated Group Representative shall engage the Consultant within three (3) Master Indenture to engage a Consultant, such Consultant shall be engaged only in the following Business Days. manner: (c) The 15-day period for submission of written objections specified above may be (a) The Obligated Group Representative shall provide written notice to the Master extended by the Master Trustee for such reasonable time as is necessary to permit each Related Trustee that the Obligated Group Representative proposes to engage a Consultant, and the Bond Trustee to give the beneficial owners of Related Bonds 15 days from the date on which the Master Trustee shall, as soon as practicable but in no case longer than five (5) Business Days Related Bond Trustee issues to them notice of the proposed engagement of the Consultant to after receipt of such notice, send a copy of such notice to the Holders of all Master Obligations submit written objection to the proposed Consultant to the Related Bond Trustee or the Master Outstanding under this Master Indenture (the date on which the Master Trustee sends such notice Trustee. to the Holders is hereinafter referred to as the “Notice Date”) and, if any such Holder is the Related Bond Trustee with respect to Related Bonds, shall request that such Related Bond (d) By acceptance of a Master Obligation securing Related Bonds, a Related Bond Trustee forward such notice to the owners of outstanding Related Bonds. Such notice prepared Trustee shall be deemed to agree to comply with the provisions of this Section and to cooperate by the Obligated Group Representative shall (i) include the name of the Consultant and a brief with the Master Trustee to identify the Related Bonds that are outstanding by series, maturity and description of the Consultant, (ii) state the reason why the Obligated Group Representative aggregate principal amount of each maturity. proposes to engage the Consultant, including a description of the covenant(s) of this Master [End of Article IV] Indenture that require a Consultant to be engaged, (iii) state that the engagement of the Consultant is required by this Master Indenture, and (iv) state that the Holders of Master Obligations (or, in the case of Related Bonds secured by an Obligation but not by a Credit Facility that is also secured by a separate Master Obligation, the beneficial owners of the Related Bonds, as provided in Section 11.07 of this Master Indenture) will be deemed to have consented to the engagement of the Consultant named in such notice unless the Holders of not less than 33.4% in aggregate principal amount of all Outstanding Master Obligations (and for this purpose, each beneficial owner of Related Bonds, other than Related Bonds secured by a Credit

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ARTICLE V change in such Member’s corporate status. Any successor corporation to such Member MERGER, CONSOLIDATION, CONVEYANCE AND TRANSFER thereupon may cause to be signed and may issue in its own name Master Obligations hereunder and the predecessor corporation shall be released, without recourse, representation or warranty, Section 5.01. Merger, Consolidation, Sale or Conveyance from its obligations hereunder and under any Outstanding Master Obligations, if such predecessor corporation shall have conveyed all Property owned by it (or all such Property shall (a) Pennsylvania LTC, Inc. shall remain a Member of the Obligated Group for as be deemed conveyed by operation of law) to such successor corporation. All Master Obligations long as any Series 2017 Bonds remain outstanding. so issued by such successor corporation hereunder shall in all respects have the same legal rank and benefit under this Master Trust Indenture as Master Obligations theretofore or thereafter (b) No Member of the Obligated Group may sell substantially all of its assets, or issued in accordance with the terms of this Master Trust Indenture as though all of such Master merge or consolidate with another corporation (other than with another Member of the Obligated Obligations had been issued hereunder by such prior Member without any such consolidation, Group), and no new Member shall be added to the Obligated Group, unless: merger, sale or conveyance having occurred.

(i) The transferee or surviving corporation in the case of a merger, (d) In case of any such consolidation, merger, sale or conveyance, such changes in consolidation or transfer, or the new Member of the Obligated Group, is phraseology and form (but not in substance) may be made in Master Obligations thereafter to be an organization described under 501(c)(3) of the Internal Revenue Code of issued as may be appropriate. 1986, as amended, or the Master Trustee shall have received an opinion of counsel that the addition of such non-501(c)(3) Member will not adversely (e) The Obligated Group Representative shall deliver to the Master Trustee, and the affect the tax-exempt status of any Related Bonds, or the exemption from Master Trustee may conclusively rely upon, an Officer’s Certificate and an Opinion of Counsel Federal securities laws of any of the Master Obligations; as conclusive evidence that any such consolidation, merger, sale or conveyance, and any such assumption, complies with the provisions of this Master Trust Indenture summarized under this (ii) The transferee or surviving corporation in the case of a merger, Section 5.01 and that it is proper for the Master Trustee under the provisions of this Master Trust consolidation or transfer, or new Member of the Obligated Group, shall Indenture to join in the execution of any Supplement required to be executed and delivered by have delivered to the Master Trustee (A) either (1) an Officer’s Certificate the Master Trustee.

D-93 demonstrating and concluding that if such merger, consolidation, sale or conveyance had taken place on the first day of the last Fiscal Year for [End of Article V] which audited financial statements are available, the Historical Pro Forma Debt Service Coverage Ratio for such Fiscal Year would have been at least 80% of the actual Historical Debt Service Coverage Ratio for such Fiscal Year and at least 1.20, and Days’ Cash on Hand would have been not less than 80% of the actual Days’ Cash on Hand and at least 45 days; or (2) a Consultant’s Report showing that for the next two Fiscal Years the Projected Debt Service Coverage Ratio is forecasted to be at least 80% of the actual Historical Debt Service Coverage Ratio for the preceding Fiscal Year and at least 1.20, and Days’ Cash on Hand is forecasted to be not less than 80% of the actual Days’ Cash on Hand for the preceding Fiscal Year and at least 45 days at the end of each Fiscal Year during the forecast period; and (B) evidence from any Rating Agency then maintaining a rating on any series of Related Bonds to the effect that the admission of such Person to the Obligated Group will not result in a below investment- grade rating on such series of Related Bonds, provided, however, that a majority of bondholders may consent to waive such requirement.

(c) In case of any such consolidation, merger, sale or conveyance and upon any such assumption by the successor corporation, such successor corporation shall succeed to and be substituted for its predecessor, with the same effect as if it had been named herein as such Member, pursuant to a Supplement. Each successor, assignee, surviving, resulting or transferee corporation of a Member must agree to become, and satisfy the conditions described in Section 6.01 to becoming, an Obligated Group Member prior to any such succession, assignment or other

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all amounts due or to become due on all Related Bonds have not been paid to the holders thereof ARTICLE VI and provision for such payment has not been made in such manner as to have resulted in the MEMBERSHIP IN THE OBLIGATED GROUP defeasance of all Related Bond Indentures, an Opinion of Bond Counsel to the effect that under then existing law the consummation of such transaction would not, in and of itself, adversely Section 6.01. Merger or Consolidation; Additions to the Obligated Group affect the validity of any Related Bonds or any exemption from federal or state income taxation of interest payable on such Related Bonds otherwise entitled to such exemption; provided that in Any other Person may become an Obligated Group Member if: making the calculation called for by subsection (d)(i) above, (x) there shall be excluded from Revenues any Revenues generated by Property of such Person transferred or otherwise disposed (a) Such Person is a business entity; of by such Person since the beginning of the Fiscal Year during which such Person’s entry into the Obligated Group occurs, and (y) there shall be excluded from Expenses any Expenses related (b) Such Person shall execute and deliver to the Master Trustee a Supplement in a to Property of such Person transferred or otherwise disposed of by such Person since the form acceptable to the Master Trustee which shall be executed by the Master Trustee and the beginning of the Fiscal Year during which such Person’s entry into the Obligated Group occurs; Obligated Group Representative, containing the agreement of such Person (i) to become an and (vi) EXHIBIT A to this Master Trust Indenture shall be amended to add a description of any Obligated Group Member and thereby to become subject to compliance with all provisions of Liens on such real property as of the date such Person becomes a Member, and the Person this Master Trust Indenture and (ii) unconditionally and irrevocably (subject to the right of such becoming a Member shall execute and deliver to the Master Trustee a Mortgage encumbering Person to cease its status as an Obligated Group Member pursuant to the terms and conditions of such real property, subject to such Liens. Section 6.03 hereof) to jointly and severally make payments upon each Master Obligation and any amounts due the Master Trustee hereunder; Each successor, assignee, surviving, resulting or transferee corporation of a Member must agree to become, and satisfy the above described conditions to becoming, an Obligated Group (c) The Obligated Group Representative and each Member shall have approved the Member prior to any such succession, assignment or other change in such Member’s corporate admission of such Person to the Obligated Group; and status. (d) The Obligated Group Representative shall deliver to the Master Trustee an Section 6.02. Obligated Group Members Officer’s Certificate and an Opinion of Counsel as conclusive evidence that any such admission D-94 and Supplement comply with the provisions of this Master Trust Indenture, together with either Upon any Person’s becoming an Obligated Group Member as provided in Section 6.01: (i) an Officer’s Certificate demonstrating and concluding that if such addition to the Obligated Group had taken place on the first day of the last Fiscal Year for which audited financial (a) The Master Trustee may pursue any remedies consequent upon an Event of statements are available, the Historical Pro Forma Debt Service Coverage Ratio for such Fiscal Default against any Obligated Group Member, or all of them, without notice to, demand upon or Year would have been at least 80% of the actual Historical Debt Service Coverage Ratio for such joinder of (and without in any way releasing) any of the others, or against any one or more or all Fiscal Year and at least 1.20, and Days Cash on Hand would have been not less than 80% of the of them at the same time or at different times; actual Days Cash on Hand and at least 45 days; or (ii) a Consultant’s report showing that for the next two Fiscal Years the Projected Debt Service Coverage Ratio is forecasted to be at least 80% (b) Any right of contribution or right acquired by subrogation by any Obligated of the actual Historical Debt Service Coverage Ratio for the preceding Fiscal Year and at least Group Member against any other Obligated Group Member arising out of the payment of 1.20, and Days Cash on Hand is forecasted to be at least 80% of the actual Days Cash on Hand Indebtedness shall be subordinated to the rights of the Master Trustee and the Holders of Master for the preceding Fiscal Year and at least 45 days at the end of each Fiscal Year during the Obligations; and forecast period; and (iii) an Opinion of Counsel in form and substance acceptable to the Master Trustee to the effect that (x) the Supplement described in Section 6.01(b) above has been duly (c) Each Obligated Group Member shall designate the Obligated Group authorized, executed and delivered and constitutes a legal, valid and binding agreement of such Representative as its attorney in fact with full power of substitution to perform, satisfy and Person, enforceable in accordance with its terms, subject to customary exceptions for discharge every obligation, covenant, duty or liability to be performed on the part of the bankruptcy, insolvency and other laws generally affecting enforcement of creditors’ rights and Obligated Group Member hereunder. application of general principles of equity, and all action has been taken in order to cause the Lien of the Master Trustee in the Trust Estate to be perfected or recorded in accordance with this Section 6.03. Withdrawal of Obligated Group Members Master Trust Indenture and applicable law, and (y) the addition of such Person to the Obligated Group will not adversely affect the status as a Tax-Exempt Organization of any Member which The Obligor may not withdraw from the Obligated Group for as long as any Series 2017 otherwise has such status; (iv) evidence from each Rating Agency then maintaining a rating on Bonds remain outstanding. Any other Obligated Group Member may withdraw from the any series of Related Bonds to the effect that the admission of such Person to the Obligated Obligated Group and be discharged of all indebtedness under this Master Trust Indenture, if the Group will not result in a below investment-grade rating on such series of Related Bonds; Obligated Group Representative shall deliver to the Master Trustee an Officer’s Certificate and provided, however, that a majority of bondholders may consent to waive such requirement; (v) if an Opinion of Counsel as conclusive evidence that any such withdrawal and related release comply with the provisions of this Master Trust Indenture, together with:

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(a) either (i) an Officer’s Certificate demonstrating and concluding that if such or resign as Obligated Group Representative until another entity has been appointed as Obligated withdrawal had taken place on the first day of the last Fiscal Year for which audited financial Group Representative and such successor Obligated Group Representative has accepted its duties statements are available, the Historical Pro Forma Debt Service Coverage Ratio for such Fiscal in writing. Each Obligated Group Member by becoming an Obligated Group Member Year would have been at least 80% of the actual Historical Debt Service Coverage Ratio for such acknowledges that the Obligated Group Representative has certain powers and duties under this Fiscal Year and at least 1.20, and Days Cash on Hand would have been at least 80% of the actual Master Trust Indenture and authorizes the Obligated Group Representative to exercise such Days Cash on Hand at the end of such Fiscal Year and at least 45 days; or (ii) a Consultant’s powers and carry out such duties. Report showing that for the next two Fiscal Years, the Projected Debt Service Coverage Ratio is forecasted to be at least 80% of the actual Historical Debt Service Coverage Ratio for the [End of Article VI] preceding Fiscal Year and at least 1.20, and Days Cash on Hand is forecasted to be at least 80% of the actual Days Cash on Hand for the preceding Fiscal Year and at least 45 days at the end of each Fiscal Year during the forecast period; provided however, that a Member may withdraw from the Obligated Group without delivering the documents referred to in subsection (i) or (ii) above, if the Obligated Group Representative shall deliver to the Master Trustee an Officer’s Certificate demonstrating and concluding that either (A) the Debt Service Coverage Ratio for such Obligated Group Member (calculated by eliminating all financial transactions with other Members of the Obligated Group) would have been less than 1.00, or (B) if the proposed withdrawal had been made on the first day of the last Fiscal Year for which audited financial statements are available, (1) the Historical Pro Forma Debt Service Coverage Ratio for the Obligated Group, after giving effect to any indebtedness which is proposed to be retired, repaid or otherwise discharged following such withdrawal, would have been at least equal to the actual Historical Debt Service Coverage Ratio for such Fiscal Year, and (2) the Obligated Group’s Days Cash on Hand, after giving effect to the proposed withdrawal, would have been equal to or greater than the actual Days Cash on Hand at the end of such Fiscal Year; and (iii) evidence from D-95 each Rating Agency then maintaining a rating on any series of Related Bonds to the effect that the admission of such Person to the Obligated Group will not result in a below investment-grade rating on such series of Related Bonds; provided, however, that a majority of bondholders may consent to waive such requirement;

(b) Prior to cessation of such status, there is delivered to the Master Trustee an Opinion of Counsel to the effect that the cessation by such Member of its status as a Member is permitted under this Master Trust Indenture and will not, in and of itself, adversely affect the status as a Tax-Exempt Organization of any Member which otherwise has such status;

(c) Any Liens in favor of the withdrawing Member on the Property of a remaining Member is released and satisfied unless such Lien constitutes a Permitted Encumbrance after the withdrawing Member is no longer a Member; and

(d) Prior to cessation of such status, the Obligated Group Representative and each Member consents in writing to the withdrawal by such Member.

Section 6.04. Successor Obligated Group Representative

Pennsylvania LTC, Inc. shall serve as the Obligated Group Representative until such time as Pennsylvania LTC, Inc. either (a) withdraws from the Obligated Group in accordance with this Article VI hereof or (b) delivers to the Master Trustee its resignation as the Obligated Group Representative. Pennsylvania LTC, Inc. covenants to fulfill all of the duties of the Obligated Group Representative under this Master Trust Indenture. Pennsylvania LTC, Inc. agrees that it shall not withdraw from the Obligated Group unless permitted to do so pursuant to Section 6.03

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action shall be taken by the Governing Body of any Obligated Group Member in furtherance of ARTICLE VII any of the aforesaid purposes; or EVENTS OF DEFAULT; REMEDIES (e) Any Obligated Group Member shall fail to pay or make provision for payment of Section 7.01. Events of Default any recourse Indebtedness (other than Subordinated Indebtedness) having a principal balance of not less than $250,000 and the continuance of such failure beyond the applicable grace period, if Event of Default, as used herein, shall mean any of the following events, whatever the any; or reason for such Event of Default and whether it shall be voluntary or involuntary or come about or be effected by operation of law or pursuant to or in compliance with any judgment, decree or (f) The Master Trustee has received written notice that an event of default, as therein order of any court or any order, rule or regulation of any administrative or governmental body: defined, under any instrument under which Master Obligations may be incurred or secured, including, without limitation, Related Bond Indentures, Related Loan Agreements, Credit (a) Default in the payment of the principal of (or premium, if any) or interest on any Facilities, the Mortgage or other documents delivered in connection with the issuance of Related Master Obligation when it becomes due and payable and the continuance of such default beyond Bonds, has occurred and is continuing beyond the applicable period of grace, if any; or the period of grace, if any, provided in the instrument creating such Master Obligation; or (g) The Historical Debt Service Coverage Ratio for any Fiscal Year for which such (b) Any Obligated Group Member shall fail duly to observe or perform any other Historical Debt Service Coverage Ratio is required to be tested is less than 1.00. covenant or agreement (other than a covenant whose performance or observance is elsewhere in this Section 7.01) on the part of such Person contained in this Master Trust Indenture for a period Section 7.02. Acceleration of Maturity; Rescission and Annulment of 45 days after the date on which written notice of such failure, requiring the same to be remedied, shall have been given to the Obligated Group Representative by the Master Trustee or (a) If an Event of Default occurs and is continuing, then and in every such case the to the Obligated Group Representative and the Master Trustee by the Holders of at least 25% in Master Trustee may, and at the direction of the Holders of not less than twenty-five percent aggregate principal amount of Master Obligations then Outstanding; provided that if any such (25%) in aggregate principal amount of Master Obligations then Outstanding, shall, declare the default can be cured by such Obligated Group Member but cannot be cured within the 45 day principal of all the Master Obligations to be due and payable immediately, by a notice in writing

D-96 curative period described above, it shall not constitute an Event of Default if corrective action is to the Obligated Group Representative, and upon any such declaration such principal shall instituted by such Obligated Group Member within such 45 day period and diligently pursued become immediately due and payable. until the default is corrected; and provided further that in no event shall any failure to observe or perform any covenant or agreement under Sections 1.07, 4.08(b) or 4.15 hereof constitute a (b) At any time after such a declaration of acceleration has been made and before a Default or an Event of Default; or judgment or decree for payment of the money due has been obtained by the Master Trustee as hereinafter in this Article provided, the Master Trustee, by written notice to the Obligated Group (c) A decree or order by a court having jurisdiction in the premises shall have been Representative, shall rescind and annul such declaration and its consequences if: entered adjudging any Obligated Group Member a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization or arrangement of any Obligated Group Member (i) one or more Obligated Group Members have paid or deposited with the under the federal Bankruptcy Code or any other similar applicable federal or state law, and such Master Trustee a sum sufficient to pay: (A) all overdue installments of decree or order shall have continued undischarged and unstayed for a period of 90 days; or a interest on all Master Obligations; (B) the principal of (and premium, if decree or order of a court having jurisdiction in the premises for the appointment of a receiver or any, on) any Master Obligations which have become due otherwise than trustee or assignee in bankruptcy or insolvency of any Obligated Group Member or of its by such declaration of acceleration and interest thereon at the rate borne property, or for the winding up or liquidation of its affairs, shall have been entered, and such by the Master Obligations; and (C) all sums paid or advanced by the decree or order shall have remained in force undischarged and unstayed for a period of 90 days; Master Trustee hereunder and the reasonable compensation, expenses, or disbursements and advances of the Master Trustee, its agents and counsel; and (d) Any Obligated Group Member shall institute proceedings to be adjudicated a voluntary bankrupt, shall consent to the institution of a bankruptcy proceeding against it, shall (ii) all Events of Default, other than the nonpayment of principal of Master file a petition or answer or consent seeking reorganization or arrangement under the federal Obligations which have become due solely by such acceleration, have Bankruptcy Code or any other similar applicable federal or state law, shall consent to the filing been cured or waived as provided in Section 7.15 hereof. of any such petition, shall consent to the appointment of a receiver or trustee or assignee in bankruptcy or insolvency of it or of its Trust Estate, shall make an assignment for the benefit of No such rescission shall affect any subsequent default or impair any right consequent creditors, or shall admit in writing its inability to pay its debts generally as they become due, or thereon.

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Section 7.03. Remedies direction of the Holders of a majority in aggregate principal amount of the Master Obligations outstanding, take such other action to protect and enforce its rights hereunder and the lien and In case an Event of Default shall occur and be continuing, the Master Trustee, in its security interests created by the Mortgage as it deems advisable, including, without limitation: discretion, may exercise any or all of the following remedies: (1) The foreclosure of the Mortgage with respect to all or any portion (a) The Master Trustee, in its own name and as trustee of an express trust, shall be of the Mortgaged Property, subject, at the option of the Master Trustee or as provided by entitled and empowered to institute any actions or proceedings at law or in equity for the law, to the rights of any lessees of the Obligated Group Members or other Persons collection of all sums due under this Master Trust Indenture and unpaid, and may prosecute any occupying the Mortgaged Property or any portion thereof, and in any such foreclosure such action or proceedings to judgment or final decree, and may enforce any such judgment or proceeding, no Obligated Group Member shall assert as a defense that the Master Trustee final decree against each Obligated Group Member, and collect in the manner provided by law failed to foreclose any such rights adversely affecting the value of the Mortgaged out of the property of the Obligated Group wherever situated the moneys adjudged or decreed to Property; be payable; (2) The sale of the Mortgaged Property in a foreclosure proceeding, in (b) The Master Trustee shall have all rights and remedies of a secured party under the one or several parcels, at the option of the Master Trustee and without obligation to have Uniform Commercial Code with respect to the Gross Revenues, including without limiting the the Mortgaged Property marshalled; and generality of the foregoing, to the extent permitted by law and subject to any intercreditor agreement into which the Master Trustee shall have entered: (i) to enter the Facilities and take (3) The sale or other disposition of any personal property or fixtures possession of the financial books and records of the Obligated Group relating to the Gross included in the Mortgaged Property or any portion thereof, either as a whole or in parcels, Revenues and all checks or other orders for payment of money and cash in the possession of the at public or private proceedings separate from the sale of the real property, in accordance Obligated Group representing Gross Revenues or proceeds thereof; (ii) to notify account debtors with applicable state laws, and may, with respect to such personal property or fixtures, obligated on any Gross Revenues to make payment directly to the order of the Master Trustee; exercise any other rights of a secured party under such applicable law; and in such case (iii) to collect, compromise, settle, compound or extend Gross Revenues which are in the form of the Master Trustee shall have no obligation to marshall. accounts receivable or contract rights from the Obligated Group’s account debtors by suit or

D-97 other means and give a full acquittance therefor and receipt therefor in the name of the Obligated Any such sale or other disposition of the Mortgaged Property shall forever bar the Members whether or not the full amount of any such account receivable or contract right owing Obligated Group Members and all Persons claiming under them from all right and interest in the shall be paid to the Master Trustee; (iv) to require the Obligated Group Members to deposit all property so disposed of whether at law or in equity. cash, money and checks or other orders for the payment of money which represents Gross Revenues within two (2) business days after receipt of written notice of such requirement, and Notwithstanding any term of this Master Trust Indenture, including this subsection (d) thereafter as received, into the Revenue Fund; (v) to forbid the Obligated Group Members to and the Mortgage to the contrary, and notwithstanding an agreement of indemnity, the Master extend, compromise, compound or settle any accounts receivable or contract rights which Trustee shall have no responsibility, obligation or duty to undertake foreclosure proceedings represent Gross Revenues, or release, wholly or partly, any person liable for the payment thereof upon or to enter upon, or otherwise take possession or control of, the Mortgaged Property, or (except upon receipt of the full amount due) or allow any credit or discount thereon; and (vi) to take any other action which could constitute taking possession or control of the Mortgaged endorse as attorney-in-fact in the name of the Obligated Group Members any checks or other Property, until the Master Trustee shall be satisfied, in its sole discretion and determination, that orders for the payment of money representing Gross Revenues or the proceeds thereof; and for neither it nor the trusts created hereby shall incur, by reason of such action, any personal liability the purpose of this subsection (b) and subsection (a) above, notice in accordance with Section under any federal or state law for hazardous wastes, hazardous materials or other environmental 1.05 hereof, mailed to an Obligated Group Member at least ten (10) days before an event shall liabilities. If the Master Trustee believes it prudent or appropriate prior to taking any foreclosure constitute reasonable notification of such Obligated Group Member of such event under the proceedings or other action with respect to possession or control of the Mortgaged Property, the Uniform Commercial Code; Master Trustee may contract for, at the expense of the Obligated Group or the trust created hereby, an environmental inspection of the Mortgaged Property. In addition, before being (c) If an Obligated Group Member commits a breach or threatens to commit a breach required to undertake any action under the Indenture or Mortgage relating to the foreclosure of any of the provisions of this Master Trust Indenture, the Master Trustee shall have the right, upon or possession or control of the Mortgaged Property, the Master Trustee may require that a without posting bond or other security to seek injunctive relief or specific performance, it being satisfactory indemnity, an indemnity bond, or environmental impairment insurance be furnished acknowledged and agreed that any such breach, or threatened breach, will cause irreparable to it for the payment or reimbursement of all expenses to which the Master Trustee may be injury to the Master Trustee and the Holders of Master Obligations and that money damages will exposed and to protect it against all liability resulting from any claims, judgments, damages, not provide an adequate remedy. losses, penalties, fines, liabilities, including strict liability, which may result from such foreclosure, possession, control or other action. (d) Mortgage Remedies. If an Event of Default has occurred and is continuing, subject to the provisions of Section 7.02(b) hereof, the Master Trustee may and shall, at the

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(e) Receivership. Upon application to a court of competent jurisdiction, the Master Section 7.06. Master Trustee May File Proofs of Claim Trustee shall be entitled, without regard to the adequacy of the security for the Obligations secured hereby and by the Mortgage, or the solvency of any Obligated Group Member, to the In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, appointment of a receiver to take possession of and to operate all or any portion of the reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Mortgaged Property and to collect rents, profits, revenues, income and other moneys received Obligated Group Members or any other obligor upon the Master Obligations or the property of from such operation. Upon demand, each Obligated Group Member shall pay to the Master the Obligated Group Members or of such other obligor or their creditors, the Master Trustee Trustee all expenses, including receiver’s and attorneys’ fees, costs and agents compensation, (irrespective of whether the principal of the Master Obligations shall then be due and payable as incurred pursuant to the provisions of this subsection (e). therein expressed or by declaration or otherwise and irrespective of whether the Master Trustee shall have made any demand on the Obligated Group Members for the payment of overdue Section 7.04. [Reserved] principal, premium, or interest) shall be entitled and empowered, by intervention in such proceeding or otherwise, Section 7.05. Collection of Indebtedness and Suits for Enforcement by Master Trustee (a) To file and prove a claim for the whole amount of principal (and premium, if any) The Obligated Group Members covenant (subject to any notice and grace periods and interest owing and unpaid in respect of the Master Obligations and to file such other papers contained herein) that if: or documents as may be necessary or advisable in order to have the claims of the Master Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of (a) Default is made in the payment of any installment of interest on any Master the Master Trustee, its agents and counsel which shall be deemed an administrative claim) and of Obligation when such interest becomes due and payable, or the Holders of Master Obligations allowed in such judicial proceeding, and

(b) Default is made in the payment of any installment of the principal of (or premium, (b) To collect and receive any moneys or other property payable or deliverable on if any, on) any Master Obligation or at the Maturity thereof, any such claims and to distribute the same; and any receiver, assignee, trustee, liquidator, sequestrator, custodian or other similar official in any such judicial proceeding is hereby (c) Each Obligated Group Member will, upon demand of the Master Trustee, pay to authorized by each Holder of Master Obligations to make such payments to the Master Trustee it, for the benefit of the Holders of such Master Obligations, the whole amount then due and D-98 and, in the event that the Master Trustee shall consent to the making of such payments directly to payable on such Master Obligations for principal (and premium, if any) and interest, with interest the Holders of Master Obligations, to pay to the Master Trustee any amount due to it for the at the rate borne by the Master Obligations upon the overdue principal (and premium, if any), reasonable compensation, expenses, disbursements and advances of the Master Trustee, its and, in addition thereto, such further amount as shall be sufficient to cover the costs and agents and counsel and any other amounts due the Master Trustee under this Master Trust expenses of collection, including the reasonable compensation, expenses, disbursements and Indenture which shall be deemed an administrative claim. To the extent that the payment of any advances of the Master Trustee, its agents and counsel. such compensation, expenses, disbursements and advances of the Master Trustee, its agents and counsel, and any other amounts due the Master Trustee under Section 8.07 hereof out of the If the Obligated Group Members fail to pay any of the foregoing amounts forthwith upon estate in any such proceeding, shall be unpaid for any reason, payment of the same shall be demand, the Master Trustee, in its own name and as trustee of an express trust, may institute a secured by a Lien on, and shall be paid out of, any and all distributions, dividends, money, judicial proceeding for the collection of the sums so due and unpaid, may prosecute such securities and other properties that the Holders may be entitled to receive in such proceeding, proceeding to judgment or final decree and may enforce the same against the Obligated Group whether in liquidation or under any plan of reorganization or arrangement or otherwise. Members or any other obligor upon the Master Obligations and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Obligated Group The Master Trustee may, on behalf of the Holders, vote for the election of a trustee in Members or any other obligor upon the Master Obligations, wherever situated. bankruptcy or similar official and be a member of a creditors’ committee or other similar committee. Nothing herein contained shall be deemed to authorize the Master Trustee to If an Event of Default occurs and is continuing, the Master Trustee may in its discretion authorize or consent to or accept or adopt on behalf of any Holder of Master Obligations any proceed to protect and enforce its rights and the rights of the Holders of Master Obligations by plan of reorganization, arrangement, adjustment or composition affecting the Master Obligations such appropriate judicial proceedings as the Master Trustee shall deem most effectual to protect or the rights of any Holder thereof or to authorize the Master Trustee to vote in respect of the and enforce any such rights, whether for the specific enforcement of any covenant or agreement claim of any Holder of Master Obligations in any such proceeding. in this Master Trust Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy. Section 7.07. Master Trustee May Enforce Claims Without Possession of Master Obligations If an Event of Default occurs and is continuing, the Master Trustee, as the beneficiary under the Mortgage, may in its discretion proceed to enforce its rights and seek any remedies All rights of action and claims under this Master Trust Indenture or the Master available to it under the Mortgage. Obligations may be prosecuted and enforced by the Master Trustee without the possession of any

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of the Master Obligations or the production thereof in any proceeding relating thereto, and any (d) The Master Trustee for 60 days after its receipt of such notice, request and offer such proceeding instituted by the Master Trustee shall be brought in its own name as trustee of of indemnity has failed to institute any such proceeding; and an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Master Trustee, its (e) No direction inconsistent with such written request has been given to the Master agents and counsel, be for the ratable benefit of the Holders of the Master Obligations in respect Trustee during such 60 day period by the Holders of a majority in principal amount of the of which such judgment has been recovered. Outstanding Master Obligations (except Master Obligations constituting Subordinated Indebtedness); it being understood and intended that no one or more Holders of Master Section 7.08. Application of Money Collected Obligations shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Master Trust Indenture to affect, disturb or prejudice the rights of any other Any money or property collected by the Master Trustee pursuant to this Article VII, any Holders of Master Obligations, to obtain or to seek to obtain priority or preference over any other money or property distributable in respect of an Obligated Group Member’s obligations under Holders or to enforce any right under this Master Trust Indenture, except in the manner herein this Master Trust Indenture after any Event of Default, and any proceeds of any sale (after provided and for the equal and ratable benefit of all the Holders of Master Obligations. deducting the costs and expenses of such sale, including reasonable compensation to the Master Trustee, its agents and counsel, and any taxes, assessments or liens prior to the lien of this Master Section 7.10. Unconditional Right of Holders of Master Obligations to Receive Principal, Trust Indenture, except any thereof subject to which such sale shall have been made), whether Premium and Interest made under any power of sale herein granted or pursuant to judicial proceedings, together with, in the case of any entry or sale as otherwise provided herein, any other sums then held by the Subject to Section 9.02 hereof, the Holder of any Master Obligation shall have the right Master Trustee as part of the Trust Estate, shall be deposited in the Revenue Fund created by this which is absolute and unconditional to receive payment of the principal of (and premium, if any) Master Trust Indenture, shall be applied in the order specified in Section 3.01 hereof, at the date and interest on such Master Obligation on the respective Stated Maturities expressed in such or dates fixed by the Master Trustee and, in case of the distribution of such money on account of Master Obligation (or, in the case of redemption, on the redemption date) and to institute suit for principal (or premium, if any), upon presentation of the Master Obligations and the notation the enforcement of any such payment, and such rights shall not be impaired without the consent thereon of the payment if only partially paid and upon surrender thereof if fully paid. The of such Holder. Master Trustee may fix a record date and payment date for any payment or distribution to

D-99 Holders pursuant to this Section 7.08. Section 7.11. Restoration of Rights and Remedies

In the event the Master Trustee incurs expenses or renders services in any proceedings If the Master Trustee or any Holder of Master Obligations has instituted any proceeding which result from the occurrence or continuance of an Event of Default under Section 7.01(c) or to enforce any right or remedy under this Master Trust Indenture and such proceeding has been 7.01(d), or from the occurrence of any event which, by virtue of the passage of time, would discontinued or abandoned for any reason, or has been determined adversely to the Master become such Event of Default, the expenses so incurred and compensation for services so Trustee or to such Holder of Master Obligations, then and in every such case the Obligated rendered are intended to constitute expenses of administration under the United States Group Members, the Master Trustee and the Holders of Master Obligations shall, subject to any Bankruptcy Code or equivalent law. court determination in such proceeding, be restored severally and respectively to their former positions hereunder, and thereafter all rights and remedies of the Master Trustee and the Holders Section 7.09. Limitation on Suits of Master Obligations shall continue as though no such proceeding had been instituted.

No Holder of any Master Obligation shall have any right to institute any proceeding, Section 7.12. Rights and Remedies Cumulative judicial or otherwise, with respect to this Master Trust Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless: No right or remedy herein conferred upon or reserved to the Master Trustee or to the Holders of Master Obligations is intended to be exclusive of any other right or remedy, and (a) Such Holder has previously given written notice to the Master Trustee of a every right and remedy shall, to the extent permitted by law, be cumulative and in addition to continuing Event of Default; every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall (b) The Holders of not less than 25% in principal amount of the Outstanding Master not prevent the concurrent assertion or employment of any other appropriate right or remedy. Obligations shall have made written request to the Master Trustee to institute proceedings in respect of such Event of Default in its own name as Master Trustee hereunder; Section 7.13. Delay or Omission Not Waiver

(c) Such Holder or Holders have offered to the Master Trustee security or indemnity No delay or omission of the Master Trustee or of any Holder of any Master Obligation to satisfactory to it against the costs, expenses and liabilities to be incurred in compliance with such exercise any right or remedy accruing upon any Event of Default shall impair any such right or request; remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article VII or by law to the Master Trustee or to the Holders of

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Master Obligations may be exercised from time to time, and as often as may be deemed such suit, and that such court may in its discretion assess reasonable costs, including reasonable expedient, by the Master Trustee or by the Holders of Master Obligations, as the case may be. attorneys’ fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section Section 7.14. Control by Holders of Master Obligations shall not apply to any suit instituted by the Master Trustee, to any suit instituted by any Holder of Master Obligations, or group of Holders of Master Obligations, holding in the aggregate more The Holders of a majority in principal amount of the Outstanding Master Obligations than 10% in principal amount of the Outstanding Master Obligations, or to any suit instituted by (except Master Obligations constituting Subordinated Indebtedness) shall have the right to direct any Holder of Master Obligations for the enforcement of the payment of the principal of (or the time, method and place of conducting any proceeding for any remedy available to the Master premium, if any) or interest on any Master Obligation on or after the respective Stated Maturities Trustee or exercising any trust or power conferred on the Master Trustee, provided that: expressed in such Master Obligation (or, in the case of redemption, on or after the redemption date). (a) Such direction shall not be in conflict with any rule of law or with this Master Trust Indenture or be unduly prejudicial to the rights of Holders of Master Obligations not Section 7.17. Waiver of Stay or Extension Laws joining in the giving of such direction (it being understood that the Master Trustee does not have an affirmative duty to ascertain whether or not any such direction is unduly prejudicial to such Each Obligated Group Member covenants (to the extent that it may lawfully do so) that it Holders of Master Obligations), will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in (b) The Master Trustee may take any other action deemed proper by the Master force, which may affect the covenants or the performance of this Master Trust Indenture; and Trustee which is not inconsistent with such direction; and each Obligated Group Member (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law and covenants that it will not hinder, delay or impede (c) The Master Trustee shall not be required to act on any direction given to it the execution of any power herein granted to the Master Trustee, but will suffer and permit the pursuant to this Section until indemnity as set forth in Section 8.03(e) hereof is provided to it by execution of every such power as though no such law had been enacted. Notwithstanding the such Holders. foregoing, nothing contained in this Section 7.17 shall be deemed to be a waiver of any applicable statute of limitations or repose. D-100 Section 7.15. Waiver of Past Defaults and Future Covenant Requirements [End of Article VII] The Holders of not less than a majority in principal amount of the Outstanding Master Obligations (except Master Obligations constituting Subordinated Indebtedness) may on behalf of the Holders of all the Master Obligations waive any past default or Event of Default hereunder and its consequences (or future covenant requirements), except a default or covenant requirement with respect to:

(a) The payment of the principal of (or premium, if any) or interest on any Master Obligation, or

(b) A covenant or provision hereof which under Article IX cannot be modified or amended without the consent of the Holder of each Outstanding Master Obligation affected.

Upon any such waiver, such default shall be deemed to have never occurred, and any Event of Default arising therefrom shall be deemed to have been cured ab initio, for every purpose of this Master Trust Indenture; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon.

Section 7.16. Undertaking for Costs

All parties to this Master Trust Indenture agree, and each Holder of any Master Obligation by his acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Master Trust Indenture, or in any suit against the Master Trustee for any action taken or omitted by it as Master Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of

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ARTICLE VIII Master Trust Indenture, but need not confirm or investigate the accuracy CONCERNING THE MASTER TRUSTEE of any mathematical calculations or other facts stated therein.

Section 8.01. Duties and Liabilities of Master Trustee (d) Whether or not therein expressly so provided, every provision of this Master Trust Indenture relating to the conduct or affecting the liability of or affording protection to the Master (a) Except during the continuance of an Event of Default, the Master Trustee Trustee shall be subject to the provisions of this Section. undertakes to perform such duties and only such duties as are specifically set forth in this Master Trust Indenture and no implied covenants or obligations shall be read into this Master Trust Section 8.02. Notice of Defaults Indenture against the Master Trustee. The Master Trustee shall have no duty to review any financial statements provided by the Obligated Group hereunder, nor shall the Master Trustee be Within 60 days after the occurrence of any default or Event of Default hereunder of considered to have notice of the content of such statements or a default based on such content. which the Master Trustee is deemed to have knowledge as provided in Section 8.03(h) hereof, The Master Trustee shall have no duty to verify the accuracy of such financial statements. the Master Trustee shall transmit by mail to all Holders of Master Obligations notice of such default unless such default shall have been cured or waived; provided, however, that except in (b) In case any Event of Default has occurred and is continuing, the Master Trustee the case of a default in the payment of the principal of (or premium, if any) or interest on any shall exercise such of the rights and powers vested in it by this Master Trust Indenture and use Master Obligations or in the payment of any sinking or purchase fund installment, the Master the same degree of care and skill in their exercise as a reasonably prudent man would exercise or Trustee shall be protected in withholding such notice if and so long as the board of directors, the use under the circumstances in the conduct of his own affairs. executive committee or a trust committee of directors or Responsible Officers of the Master Trustee in good faith determines that the withholding of such notice is in the interest of the (c) No provision of this Master Trust Indenture shall be construed to relieve the Holders of Master Obligations. Master Trustee from liability for its own grossly negligent action, its own grossly negligent failure to act or its own willful misconduct, except that: Section 8.03. Certain Rights of Master Trustee

(i) this subsection shall not be construed to limit the effect of subsection (a) Except as otherwise provided in Section 8.01 hereof:

D-101 of this Section; (a) The Master Trustee may conclusively rely and shall be fully protected in acting or (ii) the Master Trustee shall not be liable for any error of judgment made in refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, good faith by a Responsible Officer, unless it shall be proved that the notice, request, direction, consent, order, approval, bond, debenture, coupon or other paper or Master Trustee was grossly negligent in ascertaining the pertinent facts; document (whether in its original or facsimile form) believed by it to be genuine and to have been signed or presented by the proper party or parties and shall not be required to verify the (iii) the Master Trustee shall not be liable with respect to any action taken or accuracy of any information or calculations required to be included therein or attached thereto; omitted to be taken by it in good faith in accordance with the direction of the holders of not less than a majority in aggregate principal amount of (b) Any request or direction of any Person mentioned herein shall be sufficiently Master Obligations then Outstanding or the provider of a Credit Facility evidenced by a Request of such Person or any Obligated Group Representative Request; and any relating to the time, method and place of conducting any proceeding for resolution of the Governing Body of any Person may be evidenced to the Master Trustee by a any remedy available to the Master Trustee or exercising any trust or Board Resolution of such Person; power conferred upon the Master Trustee under this Master Trust Indenture; (c) Whenever in the administration of this Master Trust Indenture the Master Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or (iv) no provision of this Master Trust Indenture shall require the Master omitting any action hereunder, the Master Trustee (unless other evidence be herein specifically Trustee to expend or risk its funds or otherwise incur any financial liability prescribed) may, in the absence of bad faith on its part, conclusively rely upon an Officer’s in the performance of any of its duties hereunder or in the exercise of any Certificate or an Opinion of Counsel, which shall conform to the provisions of Section 1.03; the of its rights or powers without regard to whether it shall have grounds for Master Trustee shall not be liable for any action it takes or omits to take in good faith in reliance believing that the repayment of such funds or indemnity satisfactory to it on such certificate or opinion; against such risk or liability is not assured to it; and (d) The Master Trustee may consult with counsel concerning all matters of trusts (v) in the absence of bad faith on its part, the Master Trustee may hereof and duties hereunder and may in all cases pay such reasonable compensation to any conclusively rely as to the truth of the statements and the correctness of attorney, agent, receiver or employee retained or employed by it in connection herewith, and the the opinions expressed therein, and upon any certificates or opinions written advice of such counsel or any Opinion of Counsel or Opinion of Bond Counsel shall be furnished to the Master Trustee and conforming to the requirements of this

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full and complete authorization and protection in respect of any action taken, suffered or omitted Trustee’s officers, directors, agents and employees. Such immunities and protections, together by it hereunder in good faith and in reliance thereon; with the Master Trustee’s right to compensation, shall survive the Master Trustee’s resignation or removal and final payment of the Master Obligations; (e) The Master Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Master Trust Indenture at the request or direction of any of the (m) Except for information provided by the Master Trustee concerning the Master Holders of Master Obligations pursuant to the provisions of this Master Trust Indenture, unless Trustee, the Master Trustee shall have no responsibility for any information in any offering such Holders shall have provided or arranged to provide to the Master Trustee security or memorandum or other disclosure material distributed with respect to the Master Obligations, and indemnity satisfactory to it against the costs, expenses and liabilities which might be incurred by the Master Trustee shall have no responsibility for compliance with any state or federal securities it in connection with such request or direction; laws in connection with the Master Obligations;

(f) The Master Trustee shall not be bound to make any investigation into the facts or (n) Notwithstanding anything contained herein or in the Mortgage to the contrary, matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, upon the occurrence and continuance of an Event of Default, before taking any foreclosure request, direction, consent, order, approval, bond, debenture, coupon or other paper or document, action or any action which may subject the Master Trustee to liability under any environmental but the Master Trustee, in its discretion, may make such further inquiry or investigation into such law, statute, regulation or similar requirement relating to the environment, the Master Trustee facts or matters as it may see fit, and, if the Master Trustee shall determine to make such further may require that a satisfactory indemnity bond, indemnity or environmental impairment inquiry or investigation, it shall be entitled to examine the books, records and premises of the insurance be furnished for the payment or reimbursement of all expenses to which it may be put Obligated Group Members and each other obligor on the Master Obligations, personally or by and to protect it against all liability resulting from any claims, judgments, damages, losses, agent or attorney; penalties, fines, liabilities (including strict liability) and expenses which may result from such foreclosure or other action and the Master Trustee shall not be required to take such foreclosure (g) The Master Trustee may execute any of the trusts or powers hereunder or perform or similar action if it reasonably determines that the approval of a governmental regulator that any duties hereunder either directly or by or through agents or attorneys (including, without cannot be obtained is necessary for such foreclosure or similar action. In addition to the limitation, engaging one or more consultants or agents necessary or desirable to operate the foregoing, the Master Trustee may also engage one or more consultants or agents necessary or Facilities upon the occurrence of an Event of Default) and the Master Trustee shall not be desirable to manage the Facilities upon the occurrence of an Event of Default; D-102 responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care hereunder; (o) The Master Trustee shall not be responsible or liable for any failure or delay in the performance of its obligations under this Master Trust Indenture arising out of or caused, (h) The Master Trustee shall not be required to take notice or be deemed to have directly or indirectly, by circumstances beyond its reasonable control, including, without knowledge of any default or Event of Default hereunder, except an Event of Default under limitation, acts of God, earthquakes, fire, flood, hurricanes or other storms, wars, terrorism, Section 7.01(a), unless a Responsible Officer has actually received notice of such default in similar military disturbances, sabotage, epidemic, pandemic, riots, interruptions, loss or writing from any Obligated Group Member or the Holder of any Master Obligation referencing malfunctions of utilities, computer (hardware or software) or communications services, the Master Obligations and describing such default or Event of Default; accidents, labor disputes or acts of civil or military authority or governmental action, it being understood that the Master Trustee shall use commercially reasonable efforts which are (i) The permissive right of the Master Trustee to do things enumerated in this Master consistent with accepted practices in the banking industry to resume performance as soon as Trust Indenture shall not be construed as a duty. It shall not be the duty of the Master Trustee, reasonably practicable under the circumstances; except as herein provided, to see that any duties or obligations herein imposed upon any Obligated Group Member or any other Person are performed, and the Master Trustee shall not be (p) In no event shall the Master Trustee be responsible or liable for any special, liable or responsible for the failure of any Obligated Group Member or any other Person to indirect, punitive or consequential loss or damage of any kind whatsoever (including, but not perform any act required of it or them by this Master Trust Indenture; limited to, loss of profit), irrespective of whether the Master Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action; (j) The Master Trustee is not required to give any bond or surety with respect to the performance of its duties or the exercise of its powers under this Master Trust Indenture; (q) The rights, privileges, protections, immunities and benefits given to the Master Trustee, including, without limitation, its right to be compensated, reimbursed and indemnified, (k) In the event the Master Trustee receives inconsistent or conflicting requests and are extended to, and shall be enforceable by, the Master Trustee in each of its capacities indemnity from two or more groups of holders of Master Obligations, each representing less than hereunder, and to each agent, custodian and other Person employed to act hereunder; a majority in aggregate principal amount of the Master Obligations Outstanding, the Master Trustee, in its sole discretion, may determine what action, if any, shall be taken; (r) The Master Trustee shall not be liable for any action it takes or omits to take in good faith that it believes to be authorized or within the rights or powers conferred upon it by (l) The Master Trustee’s immunities and protections from liability in connection with this Master Trust Indenture; and the performance of its duties under this Master Trust Indenture shall extend to the Master

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(s) The Master Trustee may request that the Obligated Group Representative deliver other document it may receive or which may be alleged to have been delivered to or served upon an Officer’s Certificate setting forth the names of individuals and/or titles of officers authorized it by third parties as a consequence of the filing or recordation of any portion of the Trust Estate; at such time to furnish the Master Trustee with Officer’s Certificates, Requests, directions, provided, however, that the Master Trustee shall use commercially reasonable efforts to deliver notices and any other matters or directions pursuant to this Master Trust Indenture. to the Obligated Group Representative a copy of any such complaint, claim, demand, notice or other document which is delivered to the Corporate Trust Office and contains sufficient Section 8.04. Not Responsible for Recitals or Issuance of Master Obligations information to enable the Master Trustee to identify such complaint, claim, demand, notice or other document as pertaining to this Master Trust Indenture. The recitals contained herein and in the Master Obligations (other than the certificate of authentication on such Master Obligations) shall be taken as the statements of the Obligated Section 8.05. Master Trustee or Registrar May Own Master Obligations Group Members, and the Master Trustee assumes no responsibility for their correctness. The Master Trustee makes no representations as to the validity or sufficiency of this Master Trust The Master Trustee, any Paying Agent, any registrar or any other agent of the Obligated Indenture or of the Master Obligations or of the Trust Estate. The Master Trustee shall not be Group Members, in its individual or any other capacity, may become the owner or pledgee of accountable for the use or application by the Obligated Group Members of any of the Master Master Obligations and may otherwise deal with the Obligated Group Members with the same Obligations or of the proceeds of such Master Obligations or any money paid to the Obligated rights it would have if it were not Master Trustee, Paying Agent, Master Obligation registrar or Group Members or upon any Obligated Group Member’s direction under any provision of this such other agent. Master Trust Indenture. The Master Trustee is not a party to, and is not responsible for, and makes no representation with respect to matters set forth in, any preliminary official statement, Section 8.06. Money to Be Held in Trust official statement or similar document prepared and distributed in connection with the transactions contemplated in this Master Trust Indenture. Notwithstanding the effective date of All money received by the Master Trustee shall, until used or applied as herein provided, this Master Trust Indenture or anything to the contrary in this Master Trust Indenture, the Master be held in trust for the purposes for which they were received, but need not be segregated from Trustee shall have no liability or responsibility for any act or event relating to this Master Trust other funds except to the extent required by law. The Master Trustee shall be under no liability Indenture which occurs prior to the date the Master Trustee formally executes this Master Trust for interest on any money received by it hereunder other than such interest as it expressly agrees Indenture and commences acting as Master Trustee hereunder. The Master Trustee shall have no in writing to pay. D-103 responsibility or liability of any kind as a result of any adverse consequence to any Holder of Master Obligations that constitute Subordinated Indebtedness as result of the terms of such Section 8.07. Compensation and Expenses of Master Trustee Subordinated Indebtedness. The Master Trustee shall not be responsible for and makes no The Obligated Group Members agree: representation as to the tax exempt status of any Master Obligation or Related Bond. (a) To pay to the Master Trustee from time to time reasonable compensation for all The Master Trustee shall not be responsible for and makes no representation as to the services rendered by it hereunder in accordance with a written schedule provided by the Master Obligated Group’s or any Member’s right, title, or ownership in any of the Trust Estate and shall Trustee to the Obligated Group Representative, which shall not be limited by any law on have no obligation for any defects therein or to inquire or investigate the same in any manner. compensation of a trustee of an express trust; The Master Trustee shall not be responsible for and makes no representation as to the existence or sufficiency of the Trust Estate, the creation, perfection, priority, sufficiency or protection of (b) To reimburse the Master Trustee upon its request for all reasonable expenses, any Liens securing the Master Obligations and this Master Trust Indenture, or for any failure to disbursements and advances incurred or made by the Master Trustee in accordance with any demand, collect, foreclose or realize upon or otherwise enforce any Lien or Master Trust provision of this Master Trust Indenture (including the reasonable compensation and the Indenture document. The Master Trustee shall not be responsible for and makes no expenses and disbursements of its agents and counsel) except any such expense, disbursement or representation as to the compliance by the Obligated Group Members with any covenant or advance as may arise from its grossly negligence or willful misconduct; statutory or regulatory requirement related to the Trust Estate or this Master Trust Indenture. The Master Trustee makes no representation as to, and shall not be responsible for, the recording or (c) Each Obligated Group Member shall, jointly and severally, indemnify the Master re-recording filing, or filing or re-filing any financing or continuation statements or recording Trustee and its officers, directors, employees and agents for, and hold it harmless against, any any documents or instruments in any public office at any time or times or otherwise perfecting or loss, liability, damage, claim or expense incurred by it without gross negligence or willful maintaining the perfection of any Lien or security interest in the Trust Estate except as expressly misconduct on its part, arising out of and in connection with the acceptance or administration of provided in Section 11.06. The Master Trustee shall not be liable or responsible for the failure of this trust and the performance of its duties hereunder or the exercise of its rights and powers the Obligated Group Members to maintain insurance on the Facilities as provided in this Master hereunder or under the Master Obligations, including the costs and expenses (including Trust Indenture, nor shall it be responsible for any loss due to the insufficiency of such insurance reasonable attorney’s fees, costs and expenses) of defending itself against any claim or liability or by reason of the failure of any insurer to pay the full amount of any loss against which it may and of enforcing this Master Trust Indenture and the Master Obligations (whether asserted by have insured any Obligated Group Member, the Master Trustee or any other Person. The Master any Holder of Master Obligations, any Obligated Group Member or otherwise), and such Trustee shall have no duty hereunder with respect to any complaint, claim, demand, notice or indemnification shall survive the termination of this Master Trust Indenture, the payment in full

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of all Master Obligations issued hereunder or the sooner resignation or removal of the Master this Master Trust Indenture, then by act of the Obligated Group Representative delivered to the Trustee; Master Trustee, and (ii) by act of the Holders of a majority in principal amount of the Outstanding Master Obligations (except Master Obligations constituting Subordinated (d) In the case of any claim indemnified by the Obligated Group Members hereunder Indebtedness) delivered to the Master Trustee and to the Obligated Group Representative. that is covered by a policy of insurance maintained by or on behalf of the Obligated Group Members, the Master Trustee agrees to cooperate, at the Obligated Group Members’ expense, (d) If at any time: with the insurers in the exercise of their rights to investigate, defend or compromise such claim as may be required to retain the benefits of such insurance with respect to such claim; (i) the Master Trustee shall cease to be eligible under Section 8.08 hereof and shall fail to resign after written request therefor by the Obligated Group (e) To secure the Obligated Group Members’ payment obligations in this Section Representative or by any such Holder of Master Obligations, or 8.07, the Master Trustee shall have a Lien prior to the Master Obligations on all money or property held or collected by the Master Trustee, except that held in trust to pay principal and (ii) the Master Trustee shall become incapable of acting or shall be adjudged a interest on particular Master Obligations; such Lien shall survive the satisfaction and discharge bankrupt or insolvent or a receiver of the Master Trustee or of its property of this Master Trust Indenture and resignation or removal of the Master Trustee; and shall be appointed or any public officer shall take charge or control of the Master Trustee or of its property or affairs for the purpose of (f) “Master Trustee” for the purposes of this Section 8.07 shall include any rehabilitation, conservation or liquidation, predecessor Master Trustee and the Master Trustee in each of its capacities hereunder and each agent, custodian and other person employed to act hereunder; provided, however, that the then, in any such case, (A) the Obligated Group Representative by written request may remove negligence or willful misconduct of any Master Trustee hereunder shall not affect the rights of the Master Trustee or (B) subject to Section 7.16 hereof, any Holder of Master Obligations who any other Master Trustee hereunder. has been a bona fide Holder of a Master Obligation for at least 6 months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the Section 8.08. Corporate Master Trustee Required; Eligibility removal of the Master Trustee and the appointment of a successor Master Trustee.

D-104 There shall at all times be a Master Trustee hereunder which shall be a banking (e) If the Master Trustee shall resign, be removed or become incapable of acting, or if corporation, bank or trust company organized and doing business under the laws of the United a vacancy shall occur in the office of Master Trustee for any cause, the Obligated Group States of America or of any state, authorized under such laws to exercise corporate trust powers, Representative, by an Obligated Group Representative Request, shall promptly appoint a having a combined capital and surplus of at least $50,000,000, subject to supervision or successor Master Trustee. If, within one year after such resignation, removal or incapability, or examination by federal or state banking authority. If such corporation publishes reports of the occurrence of such vacancy, a successor Master Trustee shall be appointed by act of the condition at least annually, pursuant to law or to the requirements of the aforesaid supervising or Holders of a majority in principal amount of the Outstanding Master Obligations (except Master examining authority, then for the purposes of this Section, the combined capital and surplus of Obligations constituting Subordinated Indebtedness) delivered to the Obligated Group such corporation shall be deemed to be its combined capital and surplus as set forth in its most Representative and the retiring Master Trustee, the successor Master Trustee so appointed shall, recent report of condition so published. If at any time the Master Trustee shall cease to be forthwith upon its acceptance of such appointment, become the successor Master Trustee and eligible in accordance with the provisions of this Section, it shall resign promptly in the manner supersede the successor Master Trustee appointed by the Obligated Group Representative. If no and with the effect hereinafter specified in this Article VIII. successor Master Trustee shall have been so appointed by the Obligated Group Representative or the Holders of Master Obligations and accepted appointment in the manner hereinafter provided, Section 8.09. Resignation and Removal; Appointment of Successor any Holder of Master Obligations who has been a bona fide Holder of a Master Obligation for at least 6 months may, on behalf of himself and all others similarly situated, petition any court of (a) No resignation or removal of the Master Trustee and no appointment of a competent jurisdiction for the appointment of a successor Master Trustee. successor Master Trustee pursuant to this Article VIII shall become effective until the acceptance of appointment by the successor Master Trustee under Section 8.10 hereof. (f) The Obligated Group Representative shall give notice of each resignation and each removal of the Master Trustee and each appointment of a successor Master Trustee by (b) The Master Trustee may resign at any time by giving written notice thereof to the mailing written notice of such event by first class mail, postage prepaid, to the registered Holders Obligated Group Representative. If an instrument of acceptance by a successor Master Trustee of Master Obligations at their addresses as shown in the Obligation Register. Each notice shall shall not have been delivered to the Master Trustee within 30 days after the giving of such notice include the name and address of the designated corporate trust office of the successor Master of resignation, the resigning Master Trustee may petition any court of competent jurisdiction for Trustee. the appointment of a successor Master Trustee.

(c) The Master Trustee may be removed upon thirty (30) days written notice to the current Master Trustee (i) if no default or Event of Default has occurred and is continuing under

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Section 8.10. Acceptance of Appointment by Successor Trustee appoint an additional individual or institution as a separate Master Trustee or Co-Master Trustee. The following provisions of this Section are adapted to these ends. Every successor Master Trustee appointed hereunder shall execute, acknowledge and deliver to the Obligated Group Representative and to the retiring Master Trustee an instrument Upon the incapacity or lack of authority of the Master Trustee, by reason of any present accepting such appointment, and thereupon the resignation or removal of the retiring Master or future law of any jurisdiction, to exercise any of the rights, powers and trusts herein granted to Trustee shall become effective and such successor Master Trustee, without any further act, deed the Master Trustee or to hold a security interest in the Trust Estate or to take any other action or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring which may be necessary or desirable in connection therewith, each and every remedy, power, Master Trustee; but, on the reasonable written request of the Obligated Group Representative or right, claim, demand, cause of action, immunity, estate, title, interest and lien expressed or the successor Master Trustee, such retiring Master Trustee shall, upon payment of its charges and intended to be exercised by or vested in or conveyed to the Master Trustee with respect thereto the amounts due to it hereunder, execute and deliver an instrument transferring to such successor shall be exercisable by and vest in a separate Master Trustee or Co-Master Trustee appointed by Master Trustee all the rights, powers and trusts of the retiring Master Trustee and shall duly the Master Trustee but only to the extent necessary to enable the separate Master Trustee or Co- assign, transfer and deliver to the successor Master Trustee all property and money held by such Master Trustee to exercise such rights, powers and trusts, and every agreement and obligation retiring Master Trustee hereunder. Upon request of any such successor Master Trustee, the necessary to the exercise thereof by such separate Master Trustee or Co-Master Trustee shall run Obligated Group Representative shall execute any and all instruments for more fully and to and be enforceable by either of them. Should any deed, conveyance or instrument in writing certainly vesting in and confirming to such successor Master Trustee all such rights, powers and from any Obligated Group Member be required by the separate Master Trustee or Co-Master trusts. Trustee so appointed by the Master Trustee in order to more fully and certainly vest in and confirm to such separate Master Trustee or Co-Master Trustee such properties, rights, powers, No successor Master Trustee shall accept its appointment unless at the time of such trusts, duties and obligations, any and all such deeds, conveyances and instruments shall, on acceptance such successor Master Trustee shall be qualified and eligible under this Article VIII. request, be executed, acknowledged and delivered by such Obligated Group Member, at the The indemnity provided for in Section 8.07(c) hereof herein shall continue to be binding upon expense of the Obligated Group. In case any separate Master Trustee or Co-Master Trustee, or a the Members of the Obligated Group for the benefit of the retiring or removed Master Trustee. successor to either, shall die, become incapable of acting, resign or be removed, all the estates, properties, rights, powers, trusts, duties and obligations of such separate Master Trustee or Co- Section 8.11. Merger or Consolidation Master Trustee, so far as permitted by law, shall vest in and be exercised by the Master Trustee D-105 until the appointment of a new Master Trustee or successor to such separate Master Trustee or Any entity into which the Master Trustee may be merged or with which it may be Co-Master Trustee. consolidated, any entity resulting from any merger or consolidation to which the Master Trustee shall be a party or any entity succeeding to all or substantially all of the corporate trust business [End of Article VIII] of the Master Trustee shall be the successor Master Trustee hereunder, provided such entity shall be otherwise qualified and eligible under this Article VIII, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Master Obligations shall have been authenticated, but not delivered, by the Master Trustee then in office, any successor by merger or consolidation to such authenticating Master Trustee may adopt such authentication and deliver the Master Obligations so authenticated with the same effect as if such successor Master Trustee had itself authenticated such Master Obligations.

Section 8.12. Master Trustee as Related Bond Trustee

The Master Trustee may serve as Related Bond Trustee under any Related Bond Indenture so long as the Master Trustee is the Related Bond Trustee for all outstanding Related Bonds.

Section 8.13. Co-Master Trustee

It is the purpose hereof that there shall be no violation of any law of any jurisdiction (including particularly the laws of the State) denying or restricting the right of banking corporations or associations to transact business as trustee in such jurisdiction. It is recognized that in case of litigation hereunder and in particular in case of the enforcement of this Master Trust Indenture upon the occurrence of an Event of Default, it may be necessary that the Master

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(h) To specify and determine matters necessary or desirable for the incorporation of any future rules and regulations with respect to Subsidy Bonds; and ARTICLE IX SUPPLEMENTS AND AMENDMENTS (i) To make any amendment to any provision of this Master Trust Indenture or to any Supplement which is only applicable to Master Obligations issued thereafter or which will not Section 9.01. Supplements Without Consent of Holders of Master Obligations apply so long as any Master Obligation then Outstanding remains Outstanding.

Without the Consent of the Holders of any Master Obligations, each Obligated Group Section 9.02. Supplements With Consent of Holders of Master Obligations Member, when authorized by a Board Resolution, and the Master Trustee at any time may enter into one or more Supplements for any of the following purposes: With the Consent of the Holders of not less than a majority in principal amount of the Outstanding Master Obligations (except Master Obligations constituting Subordinated (a) To evidence the succession of another Person to an Obligated Group Member, or Indebtedness), by Act of said Holders delivered to the Obligated Group Representative and the successive successions, and the assumption by the successor Person of the covenants, agreements Master Trustee, each Obligated Group Member, when authorized by a Board Resolution, and the and obligations of an Obligated Group Member as permitted by this Master Trust Indenture or to Master Trustee may enter into Supplements for the purpose of adding any provisions to or evidence additions to, or withdrawals from, membership in the Obligated Group in accordance changing in any manner or eliminating any of the provisions of this Master Trust Indenture or of with the provisions of Article VI hereof; modifying in any manner the rights of the Holders of the Master Obligations under this Master Trust Indenture; provided, however, that no such Supplement shall, without the Consent of the (b) To add to the covenants of the Obligated Group Members for the benefit of the Holder of each Outstanding Master Obligation affected thereby: Holders of Master Obligations, to surrender any right or power herein conferred upon the Obligated Group Members or to add to the Events of Default enumerated in Section 7.01 hereof; (a) Change the Stated Maturity of the principal of, or any installment of interest on, any Master Obligations or any date for mandatory redemption thereof, or reduce the principal (c) To cure any ambiguity or to correct or supplement any provision herein that may amount thereof or the interest thereon or any premium payable upon the redemption thereof, or be inconsistent with any other provision herein or to make any other change hereto, provided change any Place of Payment where, or the coin or currency in which, any Master Obligations or D-106 such action shall not materially adversely affect the interests of the Holders of Master the interest thereon is payable, or impair the right to institute suit for the enforcement of any such Obligations; payment on or after the Stated Maturity thereof (or, in the case of redemption, on or after the redemption date), or (d) To modify or supplement this Master Trust Indenture in such manner as may be necessary or appropriate to qualify this Master Trust Indenture under the Trust Indenture Act of (b) Reduce the percentage in principal amount of the Outstanding Master Obligations 1939, as then amended, or under any similar federal or state statute or regulation, including the Consent of whose Holders is required for any such Supplement or the Consent of whose provisions whereby the Master Trustee accepts such powers, duties, conditions and restrictions Holders is required for any waiver (of compliance with certain provisions of this Master Trust hereunder and the Obligated Group Members undertake such covenants, conditions or Indenture or certain defaults hereunder and their consequences) provided for in this Master Trust restrictions additional to those contained in this Master Trust Indenture as would be necessary or Indenture, or appropriate so to qualify this Master Trust Indenture; provided, however, that nothing herein contained shall be deemed to authorize inclusion in this Master Trust Indenture or in any (c) Modify any of the provisions of this Section, except to increase any such Supplements provisions referred to in Section 316(a)(2) of the said Trust Indenture Act or any percentage or to provide that certain other provisions of this Master Trust Indenture cannot be corresponding provision provided for in any similar statute hereafter in effect; modified or waived without the Consent of the Holder of each Master Obligation affected thereby. (e) To create and provide for the issuance of Master Obligations as permitted hereunder; Notwithstanding the foregoing, during any period of time in which an Event of Default has occurred and is continuing, an amendment of the type described in subsections (a), (b) and (f) To increase or maintain any credit rating assigned to any series of Related Bonds (c) above may be made with respect to an Outstanding Master Obligation with the consent of the by a Rating Agency so long as no Master Obligation issued hereunder shall be secured on a basis holders of at least eighty percent (80%) in aggregate principal amount of all Outstanding Related senior to other Master Obligations (except Master Obligations constituting Subordinated Bonds related to such Master Obligation; provided, however, any such amendment shall not Indebtedness); result in a preference or priority of any Master Obligation or Related Bonds over any other Master Obligation or Related Bonds (other than Subordinated Indebtedness and subordinated (g) To change Section 4.15 to permit the financial statements required therein to more Related Bonds) and no such amendment described in subsections (a), (b) or (c) shall result in a accurately reflect the financial position and operations of the Obligated Group; disproportionate change, reduction or modification with respect to any Related Bonds.

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It shall not be necessary for any Act of Holders of Master Obligations under this Section to approve the particular form of any proposed Supplement, but it shall be sufficient if such Act shall approve the substance thereof. ARTICLE X SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS Section 9.03. Execution of Supplements Section 10.01. Satisfaction and Discharge of Indenture In executing, or accepting the additional trusts created by, any Supplement permitted by this Article or the modifications thereby of the trusts created by this Master Trust Indenture, the If at any time the Obligated Group Members shall have paid or caused to be paid the Master Trustee shall be entitled to receive, and shall be fully protected in conclusively relying principal of (and premium, if any) and interest on all the Master Obligations Outstanding upon, an Officer’s Certificate and an Opinion of Counsel stating that the execution of such hereunder, as and when the same shall have become due and payable (in the case of Master Supplement is authorized or permitted by this Master Trust Indenture and that all conditions Obligations related to any Subsidy Bonds, without regard to expected Federal Subsidy precedent thereto have been complied with. In connection with the execution and delivery of a Payments), and if the Obligated Group Members shall also pay or provide for the payment of all Supplement pursuant to Section 9.01(c), the Master Trustee, in its discretion, may determine other sums payable hereunder by each Obligated Group Member, then this Master Trust whether or not in accordance with such Section the Holders of the Master Obligations would be Indenture shall cease to be of further effect (except as to (a) rights of registration of transfer and affected by such Supplement, and any such determination shall be binding and conclusive on the exchange, (b) substitution of mutilated, defaced or apparently destroyed, lost or stolen Master Members of the Obligated Group and the Holders of the Master Obligations. The Master Trustee Obligations, (c) rights of Holders to receive payments of principal thereof (and premium, if any) may receive and be entitled to conclusively rely upon an Opinion of Counsel as conclusive and interest thereon, (d) the rights, remaining obligations, if any, and immunities of the Master evidence as to whether the Holders of the Master Obligations would be so affected by any such Trustee hereunder, and (e) the rights of the Holders as beneficiaries hereof with respect to the Supplement. The Master Trustee may, but shall not (except to the extent required in the case of a property so deposited with the Master Trustee payable to all or any of them) and the Master Supplement entered into under Section 9.01(d)) be obligated to, enter into any such Supplement Trustee, on the Obligated Group Representative’s Request accompanied by an Officer’s which affects the Master Trustee’s own rights, duties or immunities under this Master Trust Certificate and an Opinion of Counsel (both to the effect that all conditions precedent in this Indenture or otherwise. Master Trust Indenture relating to the satisfaction and discharge of this Master Trust Indenture have been satisfied) and at the cost and expense of the Obligated Group Representative, shall D-107 Section 9.04. Effect of Supplement execute proper instruments acknowledging satisfaction of and discharging this Master Trust Indenture. Upon the execution of any Supplement under this Article, this Master Trust Indenture shall, with respect to each series of Master Obligations to which such Supplement applies, be Notwithstanding the satisfaction and discharge of this Master Trust Indenture, the modified in accordance therewith, and such Supplement shall form a part of this Master Trust obligations of the Obligated Group Members to the Master Trustee under Section 8.07 and, if Indenture for all purposes, and every Holder of Master Obligations thereafter or (except to the funds shall have been deposited with the Master Trustee pursuant to Section 10.02, the extent provided pursuant to Section 9.01(h)) theretofore authenticated and delivered hereunder obligations of the Master Trustee under Section 10.03 shall survive. shall be bound thereby. Section 10.02. Master Obligations Deemed Paid Section 9.05. Master Obligations May Bear Notation of Changes Master Obligations of any series shall be deemed to have been paid if (a) (i) in case such Master Obligations authenticated and delivered after the execution of any Supplement Master Obligations are to be redeemed on any date prior to their Stated Maturity, the Obligated pursuant to this Article may bear a notation in form approved by the Master Trustee as to any Group Representative by Obligated Group Representative Request shall have given to the Master matter provided for in such Supplement. If the Obligated Group Representative or the Master Trustee in form satisfactory to it irrevocable written instructions to give notice of redemption of Trustee shall so determine, new Master Obligations so modified as to conform, in the opinion of such Master Obligations on said redemption date, (ii) there shall have been deposited with the the Master Trustee and the Obligated Group Representative, to any such Supplement may be Master Trustee either money sufficient, or Defeasance Obligations the principal of and the prepared and executed by the applicable Obligated Group Member and authenticated and interest on which will provide money sufficient without reinvestment (as established by an delivered by the Master Trustee in exchange for Master Obligations then Outstanding. Officer’s Certificate delivered to the Master Trustee accompanied by a report of an independent certified public accountant or a nationally recognized firm with experience preparing verification [End of Article IX] reports setting forth the calculations upon which such Officer’s Certificate is based), to pay when due the principal of (and premium, if any) and interest due and to become due on said Master Obligations (in the case of Master Obligations related to any Subsidy Bonds, without regard to expected Federal Subsidy Payments) on and prior to the redemption date or Stated Maturity thereof, as the case may be, and (iii) in the event said Master Obligations are not by their terms subject to redemption within the next 45 days, the Obligated Group Representative shall have

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given the Master Trustee in form satisfactory to it irrevocable written instructions to give a notice to the Holders of such Master Obligations that the deposit required by clause (ii) above ARTICLE XI has been made with the Master Trustee and that said Master Obligations are deemed to have MISCELLANEOUS PROVISIONS been paid in accordance with this Section and stating such maturity or redemption date upon which money is to be available for the payment of the principal of (and premium, if any) and Section 11.01. No Personal Liability interest on said Master Obligations (in the case of Master Obligations related to any Subsidy Bonds, without regard to expected Federal Subsidy Payments), or (b) such Master Obligations No recourse under this Master Trust Indenture or any Master Obligations shall be had are delivered to the Master Trustee by the Holder thereof together with instructions from the against any officer, director, agent or employee, as such, past, present or future, of any Obligated Obligated Group Representative directing the Master Trustee to retire and cancel such Master Group Member, any Affiliate, the Master Trustee or of any successor corporation; it being Obligations. expressly understood that this Master Trust Indenture and the obligations incurred hereunder are solely obligations of the entities named herein as Obligated Group Members, that no personal Section 10.03. Application of Trust Money liability whatever shall attach to such persons or any of them under this Master Trust Indenture or any Master Obligations, and that any and all such personal liability of every name and nature, The Defeasance Obligations and money deposited with the Master Trustee pursuant to either at common law or in equity or by constitution or statute, of, and any and all such rights Section 10.02 hereof and principal or interest payments on any such Defeasance Obligations and claims against, every such person because of the creation of the indebtedness hereby shall be held in trust, shall not be sold or reinvested and shall be applied by it in accordance with authorized or under or by reason of the obligations, covenants or agreements contained in this the provisions of the Master Obligations and this Master Trust Indenture to the payment, either Master Trust Indenture or in any Master Obligations are hereby expressly waived and released as directly or through any Paying Agent (including the Obligated Group Representative acting as a condition of, and as a consideration for, the execution of this Master Trust Indenture and the Paying Agent) as the Master Trustee may determine, to the Persons entitled thereto, of the issue of such Master Obligations. principal (and premium, if any) and interest for whose payment such money or Defeasance Obligations were deposited. Section 11.02. Pennsylvania Contract

Section 10.04. Payment of Related Bonds This Master Trust Indenture and the Master Obligations shall be deemed to be contracts D-108 made under the laws of the Commonwealth of Pennsylvania and for all purposes shall be Notwithstanding any other provision of this Article X, no Master Obligation will be construed in accordance with the laws of said state applicable to contracts made and to be considered paid or deemed to have been paid unless the Related Bonds, if any, have been paid or performed in said state without regard to conflict of law principles. deemed paid pursuant to the Related Bond Indenture. Section 11.03. Legal Holidays [End of Article X] If the date for making any payment or the last date for performance of any act or the exercising of any right, as provided in this Master Trust Indenture, shall be a legal holiday, a day on which banking institutions in Pennsylvania are authorized by law to remain closed or a day on which the payment system of the U.S. Federal Reserve System is not operational, such payment may be made or act performed or right exercised on the next succeeding day not a legal holiday, a day on which such banking institutions are authorized by law to remain closed or a day on which the payment system of the U.S. Federal Reserve System is not operational, with the same force and effect as if done on the nominal date provided in this Master Trust Indenture.

Section 11.04. Benefits of Provisions of Master Trust Indenture and Master Obligations

Nothing in this Master Trust Indenture or in the Master Obligations, expressed or implied, shall give or be construed to give any Person, other than the parties hereto, the provider of any Credit Facility and the Holders of such Master Obligations, any legal or equitable right, remedy or claim under or in respect of this Master Trust Indenture or under any covenant, condition and provision herein contained, all its covenants, conditions and provisions being for the sole benefit of the parties hereto and of the Holders of such Master Obligations.

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Section 11.05. Execution in Counterparts

This Master Trust Indenture may be executed in any number of counterparts, each of [SIGNATURE PAGE TO MASTER TRUST INDENTURE] which shall be an original, but such counterparts shall together constitute but one and the same instrument. The exchange of copies of this Master Trust Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Master Trust Indenture as to the parties hereto and may be used in lieu of the original Master Trust IN WITNESS WHEREOF, the parties hereto have caused this Master Trust Indenture Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile or PDF shall to be duly executed by persons thereunto duly authorized, as of the day and year first above be deemed to be their original signatures for all purposes. written.

Section 11.06. UCC Financing Statements PENNSYLVANIA LTC, INC., as the initial Obligated Group Member The Members of the Obligated Group hereby expressly grant to the Master Trustee the full right and authority to file any Pennsylvania Uniform Commercial Code financing statement, continuation statement or amendment that may be required by law or is necessary to maintain By: any security interest granted by the Obligated Group to the Master Trustee pursuant to this [Title] Master Trust Indenture and shall timely provide a recorded copy of each filed original financing [SEAL] statement filed pursuant to Section 4.03 to the Master Trustee. Notwithstanding anything to the contrary contained herein, the Master Trustee shall not be responsible for any initial filings of Attest: any financing statements or the information contained therein (including the exhibits thereto), the perfection of any such security interests or the accuracy or sufficiency of any description of collateral in such filings, and unless the Master Trustee shall have been notified by the Obligated Group that any such initial filing or description of collateral was or has become defective, the Authorized Officer D-109 Master Trustee shall be fully protected in conclusively relying on such initial filing and descriptions in filing any financing or continuation statement(s) pursuant to this Section. The Master Trustee agrees that it will cause to be filed all necessary continuation statements within the time prescribed by the Pennsylvania Uniform Commercial Code - Secured Transactions in order to continue the Pennsylvania Uniform Commercial Code financing statements in connection with the security interests created by this Master Trust Indenture and the Mortgage that were initially filed by the Members of the Obligated Group; provided, however, no such agreement shall apply or extend to any amendment or new original filing required pursuant to Section 4.07 and any event described therein. The Obligated Group shall be responsible for and shall pay any reasonable expenses, including legal fees incurred under this section.

Section 11.07. Providers of Credit Facilities Deemed Holders

For all purposes hereof including, without limitation, Articles VII and IX of this Master Trust Indenture, so long as a provider of a Credit Facility securing any Master Obligations or Indebtedness represented by such Master Obligations (including, without limitation, Related Bonds) is not in default with respect to its obligations under such Credit Facility, such provider shall be deemed to be the Holder of such Master Obligations and entitled to provide all consents and control all remedies with respect thereto to the exclusion of the Holders thereof so long as its Credit Facility is in effect.

[End of Article XI]

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[SIGNATURE PAGE TO MASTER TRUST INDENTURE] EXHIBIT A

EXISTING LIENS

U.S. BANK NATIONAL ASSOCIATION, as Master Trustee

By: Authorized Officer

D-110

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TABLE OF CONTENTS Page

(This Table of Contents is not a part of this Supplemental Indenture Number 1 and is only for convenience of reference)

PENNSYLVANIA LTC, INC. as an Obligated Group Member and as the Obligated Group Representative RECITALS ...... 1

And ARTICLE I DEFINITION OF TERMS ...... 2

Section 1.01 Definitions...... 2

ARTICLE II SERIES 2017 NOTE ...... 2 U.S. BANK NATIONAL ASSOCIATION, as Master Trustee Section 2.01 Series 2017 Note ...... 2 Section 2.02 Issuance of Series 2017 Note ...... 2

ARTICLE III PREPAYMENT ...... 2 ______Section 3.01 Prepayment of Series 2017 Note ...... 2 SUPPLEMENTAL INDENTURE NUMBER 1 Section 3.02 Additional Prepayment of Series 2017 Note ...... 2 D-111 Section 3.03 Credit on Series 2017 Note ...... 3 ______Section 3.04 Place of Payment for the Series 2017 Note ...... 3

Dated as of November 1, 2017 EXHIBIT A Form of Series 2017 Note ...... A-1

Relating to:

$______Montgomery County Higher Education and Health Authority Tax-Exempt Revenue Bonds (Pennsylvania LTC, Inc. Project), Series of 2017

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SUPPLEMENTAL INDENTURE NUMBER 1 and the purchase and acceptance of the Master Obligation created hereby by the Holder thereof, the Obligated Group Representative, on behalf of the Obliged Group Members, covenants and THIS SUPPLEMENTAL INDENTURE NUMBER 1, dated as of November 1, 2017, agrees with the Master Trustee as follows: between PENNSYLVANIA LTC, INC. (the “Obligor”), as an Obligated Group Member and as the Obligated Group Representative (the “Obligated Group Representative”) and U.S. BANK ARTICLE I NATIONAL ASSOCIATION, a national banking association (the “Master Trustee”), DEFINITION OF TERMS

W I T N E S S E T H : Section 1.01 Definitions. The terms used and not otherwise defined in this Supplemental Indenture shall have the meanings assigned to them in the Master Trust Indenture. WHEREAS, the Obligor and the Master Trustee have entered into a Master Trust Indenture dated as of November 1, 2017 (the “Master Trust Indenture”); and

WHEREAS, Montgomery County Higher Education and Health Authority (the “Issuer”) ARTICLE II has contemporaneously herewith issued its Tax-Exempt Revenue Bonds (Pennsylvania LTC, Inc. SERIES 2017 NOTE Project), Series of 2017 in the aggregate principal amount of $______(the “Series 2017 Bonds”) under a Bond Trust Indenture dated as of November 1, 2017 (the “Bond Indenture”) Section 2.01 Series 2017 Note. There is hereby created as a Master Obligation under between the Issuer and U.S. Bank National Association, as trustee (the “Bond Trustee”), to the Master Trust Indenture a promissory note to be known and entitled Pennsylvania LTC, Inc. finance a project described in the Bond Indenture for the benefit of the Obligor; and Series 2017 Note (the “Series 2017 Note”). The Series 2017 Note, in the principal amount of $______, may be executed, authenticated and delivered in accordance with Article II of the WHEREAS, pursuant to the Loan Agreement dated as of November 1, 2017 (the “Loan Master Trust Indenture. Agreement”) between the Issuer and the Obligor, the Obligor has agreed to issue the Master Obligation (the “Master Obligation”) created by this Supplemental Indenture Number 1 (the Section 2.02 Issuance of Series 2017 Note. The Series 2017 Note created hereby shall

D-112 “Supplemental Indenture”) to evidence the obligation of the Obligor to make the payments be in the form of a fully registered Master Obligation without coupons, shall be dated the date of required under the Loan Agreement; and its issuance, shall bear interest on the principal balance thereof in the amount set forth in such Series 2017 Note, payable as described in such Series 2017 Note, and shall be substantially in the WHEREAS, the Obligor is authorized by law and by the Master Trust Indenture, and form attached hereto as Exhibit A. deems it necessary and desirable, to issue and deliver the Master Obligation pursuant to the Master Trust Indenture; and

WHEREAS, pursuant to the terms of the Master Trust Indenture, each of the Obligated ARTICLE III Group Members will be jointly and severally liable for payment of the Master Obligation; and PREPAYMENT

WHEREAS, all acts and things necessary to make the Master Obligation authorized by Section 3.01 Prepayment of Series 2017 Note. The Series 2017 Note and its principal this Supplemental Indenture, when executed by the Obligor and authenticated and delivered by installments shall be subject to prepayment, in whole or in part at any time, at the option of the the Master Trustee as provided in the Master Trust Indenture and this Supplemental Indenture, Obligated Group Representative upon payment of a sum, in cash and/or Government the valid, binding and legal obligation of the Obligor, and to constitute these presents, together Obligations, sufficient, together with any other cash and/or obligations held by the Bond Trustee with the Master Trust Indenture, a valid indenture and agreement according to its terms and the and available for such purpose, to cause an equal aggregate principal amount of outstanding terms of the Master Trust Indenture, have been done and performed and the execution of this Series 2017 Bonds to be deemed to have been paid within the meaning of Section 11.02 of the Supplemental Indenture and the issue hereunder and under the Master Trust Indenture of the Bond Indenture. Any prepayment of the principal of the Series 2017 Note shall be credited Master Obligation created by this Supplemental Indenture have in all respects been duly against the scheduled principal payment corresponding to the maturity or sinking fund authorized, and the Obligor, in the exercise of the legal right and power vested in it, executes this redemption date for the Series 2017 Bonds redeemed with the proceeds of such prepayment. Supplemental Indenture and proposes to make, execute, issue and deliver the Master Obligation created hereby; Section 3.02 Additional Prepayment of Series 2017 Note. The Series 2017 Note shall also be subject to prepayment, in whole or in part at any time, at the option of the Obligated NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH: Group Representative as elected by the Obligated Group Representative pursuant to Sections 4.12 and 4.13 of the Master Trust Indenture or in connection with any prepayment in whole or in That in order to declare the terms and conditions upon which the Master Obligation part of the Series 2017 Bonds pursuant to the provision of the Series 2017 Bonds and the Bond authorized hereby are authenticated, issued and delivered, and in consideration of the premises Indenture.

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Section 3.03 Credit on Series 2017 Note. If the Obligor (i) shall have elected to apply the Series 2017 Bonds that have been redeemed or otherwise acquired by the Obligated Group Members or the Issuer and delivered to the Bond Trustee for cancellation by the Bond Trustee, in (c) If the occupancy of the Linwood Facility or the Edgehill Facility as of any payment of all or a part of a sinking fund requirement under the Bond Indenture in accordance Occupancy Test Date is less than the Occupancy Requirement, the Obligor shall, within with the provisions of Section 4.01(c) of the Bond Indenture, and (ii) the Issuer shall have 30 days of delivery of the Officer’s Certificate disclosing such deficiency, deliver (a) an received a credit against such sinking fund requirement in the amount of 100% of the principal occupancy report prepared by management that includes the following information: (i) amount of the Series 2017 Bond or Series 2017 Bonds thus applied, then upon receipt of notice the percentage occupancy of the Linwood Facility or the Edgehill Facility, as applicable of such credit by Master Trustee, the Obligor and the other Obligated Group Members shall and (ii) the number of vacancies and occupancies for the applicable Facility during the receive a credit, equal to the credit received by the Issuer, in respect of the payment of principal immediately preceding fiscal quarter and on an aggregate basis; (b) a forecast, prepared due on the Series 2017 Note on the same date as the sinking fund payment date under the Bond by management of the Obligor, of the number of units that are part of the applicable Indenture for the sinking fund requirement in payment of which the Series 2017 Bond or Series Facility expected to be occupied in the fiscal quarter immediately succeeding the fiscal 2017 Bonds have been applied, and the principal amount of the Series 2017 Note created hereby quarter with respect to which the report is being prepared; and (c) a description of the due on such date will be reduced accordingly. admissions development plan of the Obligor.

Section 3.04 Place of Payment for the Series 2017 Note. The place of payment for (d) If, after delivery of the Officer’s Certificate required by the immediately the Series 2017 Note shall be the designated corporate trust office of the Bond Trustee. preceding paragraph, the occupancy for the applicable Facility has not increased to the Occupancy Requirement for the following Occupancy Test Date, the Obligated Group Representative shall, within 30 days after delivery of the Officer’s Certificate disclosing ARTICLE IV such deficiency, engage a Consultant, at the Obligated Group’s expense, setting forth in COVENANTS OF OBLIGATED REPRESENTATIVE detail the reasons for such deficiency and preparing a report, to be delivered within 60 days of the engagement of the Consultant, recommending steps designed to improve the Section 4.01 Occupancy Requirement. occupancy of the applicable Facility to meet or exceed the Occupancy Requirement; D-113 provided, however, that no such report shall be required if a report has been delivered (a) Commencing with the fiscal quarter ending December 31, 2017 and with respect to either of the two immediately preceding testing dates for the Occupancy ending with the first full fiscal quarter following Stable Occupancy with respect to the Requirement. Each Obligated Group Member shall follow the recommendations of the Linwood Facility (each such quarter, an “Occupancy Test Date”), the Obligor is required Consultant applicable to it to the extent feasible (as determined in the reasonable to use its best efforts to cause the Edgehill Facility to maintain an Average Occupancy for judgment of the Governing Body of the Obligated Group Representative) and permitted each such quarter of at least 90.3%. by law.

(b) Commencing with the fiscal quarter ending December 31, 2017 and (e) Notwithstanding any other provision of this Master Trust Indenture, ending with the first full fiscal quarter following Stable Occupancy with respect to the failure of the Obligor to achieve the required Occupancy Requirement for any Occupancy Linwood Facility, the Obligor is required to use its best efforts to cause the Linwood Test Date shall not constitute a default or an Event of Default under the Master Trust Facility to maintain an Average Occupancy (as defined below), so as to be in compliance Indenture if the Obligor (i) takes all action necessary to comply with the procedures in with the following (each, an “Occupancy Requirement”; collectively, the “Occupancy Section 4.27 of the Master Trust Indenture for retaining a Consultant and (ii) follows the Requirements”): recommendation of the Consultant in accordance with this Section 4.01.

Occupancy Test Date Available Beds Occupancy Requirement (f) For purposes of this Section 4.01, “Average Occupancy” means, for the 12/31/2017 58 92.2% last month in each calendar quarter, the average daily census of the applicable Facility for 3/31/2018 58 92.2% such month, divided by the number of licensed and in-service beds in the applicable 6/30/2018 58 92.2% 9/30/2018 58 92.2% Facility for such month. 12/31/2018 102 62.0% 3/31/2019 102 75.1% Section 4.02 Owner’s Representative; Construction Progress Reports. The Obligor 6/30/2019 102 85.3% shall retain Raymond E. Mead, Director of Construction for Genesis Healthcare, to serve as 9/30/2019 102 89.2% Owner’s Representative in connection with construction of the Linwood 2017 Project. The 12/31/2019 and 102 89.2% Obligor shall provide construction progress reports with respect to the Linwood 2017 Project in thereafter until Stable accordance with the provisions of the Continuing Disclosure Certificate delivered by the Obligor Occupancy in connection with the issuance of the Series 2017 Bonds.

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IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture EXHIBIT A to be duly executed by persons thereunto duly authorized, as of the day and year first written above. THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAW

$______PENNSYLVANIA LTC, INC., as an Obligated Group Member and as Obligated Group PENNSYLVANIA LTC, INC. Representative SERIES 2017 NOTE

PENNSYLVANIA LTC, INC., as an obligated group member and the obligated group By: representative (the “Obligated Group Representative”), for value received, hereby promises to President pay to MONTGOMERY COUNTY HIGHER EDUCATION AND HEALTH AUTHORITY (the “Issuer”), or registered assigns, at the designated corporate trust office of U.S. Bank National Association, as Trustee (the “Bond Trustee”), the principal sum set forth above and to pay interest on the unpaid principal balance hereof, in each case as provided in Section 4.01 of the Loan Agreement dated as of November 1, 2017 (the “Loan Agreement”) between the Issuer U.S. BANK NATIONAL ASSOCIATION, as and the Obligated Group Representative, and on such other dates as may be required by the Loan Master Trustee Agreement, until the principal amount hereof is paid or made available for payment. This Note is due and payable on [December 1, 20__], subject to prepayment as provided herein.

By: Principal of, premium, if any, and interest on this Note are payable in any coin or

D-114 Authorized Signatory currency of the United States of America which, at the respective times of payment, is legal tender for the payment of public and private debts.

The principal hereof, premium, if any, and interest hereon shall be payable in immediately available funds by depositing the same with the Bond Trustee, at or prior to the opening of business on the date the same shall become due and payable, and by giving notice of payment to the Master Trustee, as herein defined, as provided in the Bond Indenture, as herein defined.

This Note is dated the date of its delivery and is issued in the principal amount of $______, and is designated as the “Pennsylvania LTC, Inc. Series 2017 Note” (the “Note” or the “Series 2017 Note”, and together with all other Master Obligations issued under the Master Trust Indenture hereinafter defined, the “Master Obligations”) issued under and pursuant to Supplemental Indenture Number 1 dated as of November 1, 2017 (the “Supplemental Indenture”), supplementing and amending the Master Trust Indenture dated as of November 1, 2017 (the “Master Trust Indenture”), between the Obligor and U.S. Bank National Association, as Master Trustee (the “Master Trustee”), and delivered pursuant to the Loan Agreement. The Master Trust Indenture, as supplemented and amended by the Supplemental Indenture, is herein called the “Master Trust Indenture”.

Pursuant to the terms of the Master Trust Indenture, each of the Obligated Group Members described therein will be jointly and severally liable for the payment of this Note and all other Master Obligations.

This Note is issued for the purpose of securing the payment of the principal of, premium, if any, and interest on Montgomery County Higher Education and Health Authority

DMEAST #30843321 v4 [Signature Page of Supplemental Indenture Number 1] DMEAST #30843321 v4 A-1

Tax-Exempt Revenue Bonds (Pennsylvania LTC, Inc. Project), Series of 2017 (the “Series 2017 amount of the Series 2017 Bond or Series 2017 Bonds thus applied, then the Bond Trustee shall Bonds”). The Series 2017 Bonds were issued under the laws of the Commonwealth of promptly notify the Master Trustee, whereupon the Obligor and the other Obligated Group Pennsylvania, including particularly the Pennsylvania Municipality Authorities Act, 53 Pa. Members shall receive a credit, equal to the credit received by the Issuer, in respect of the C.S.A. §5601 et seq., as amended (the “Act”), and a Bond Trust Indenture dated as of November payment of principal due on this Note on the same date as the sinking fund payment date under 1, 2017 (the “Bond Indenture”), between the Issuer and the Bond Trustee, to finance a project the Bond Indenture for the sinking fund requirement in payment of which the Series 2017 Bond described in the Bond Indenture for the benefit of the Obligor. or Series 2017 Bonds have been applied, and the principal amount of this Note due on such date will be reduced accordingly. Copies of the Master Trust Indenture are on file at the corporate trust office in Philadelphia, Pennsylvania of the Master Trustee and reference is hereby made to the Master Upon the occurrence of certain “Events of Default”, as defined in the Master Trust Trust Indenture for the provisions, among others, with respect to the nature and extent of the Indenture, the principal of all Outstanding Master Obligations may be declared due and payable, rights of the Holder of this Note, the terms and conditions on which, and the purposes for which, and thereupon shall become due and payable as provided in the Master Trust Indenture. this Note is issued and the rights, duties and obligations of the Obligor and the Master Trustee under the Master Trust Indenture, to all of which the Holder hereof, by acceptance of this Note, The Holder of this Note shall have no right to enforce the provisions of the Master Trust assents. Indenture, or to institute any action to enforce the covenants therein, or to take any action with respect to any default under the Master Trust Indenture, or to institute, appear in or defend any Any amounts in the Bond Fund (as defined in the Bond Indenture) at the close of suit or other proceeding with respect thereto, except as provided in the Master Trust Indenture. business of the Bond Trustee on the day immediately preceding any payment date on this Note in excess of the aggregate amount then required to be contained in such Fund shall be credited This Note shall be registered on the register to be maintained by the Master Trustee and against the payments due by the Obligor and the other Obligated Group Members on such next this Note shall be transferable only upon said register at said office by the registered owner or by succeeding principal or interest payment date on this Note. his duly authorized attorney. Such transfer shall be without charge to the Holder hereof, but any taxes or other governmental charges required to be paid with respect to the same shall be paid by To the extent permitted by and as provided in the Master Trust Indenture, modifications the Holder requesting such transfer as a condition precedent to the exercise of such privilege. D-115 or changes of the Master Trust Indenture, or of any indenture supplemental thereto, and of the Upon any such transfer, the Obligor shall execute and the Master Trustee shall authenticate and rights and obligations of the Obligated Group Members (as defined in the Master Trust deliver in exchange for this Note a new registered Note without coupons, registered in the name Indenture) and of the Holders of the Master Obligations in any particular may be made with the of the transferee. consent of the Master Trustee and the Obligated Group Members and, in certain circumstances, with the consent of the Holders of not less than a majority in aggregate principal amount of the The Obligor and the other Obligated Group Members, the Master Trustee and any paying Master Obligations then Outstanding under the Master Trust Indenture. Any such consent by the agent may deem and treat the person in whose name this Note is registered as the absolute owner Holder of this Note shall be conclusive and binding upon such Holder and all future Holders and hereof for all purposes; and neither the Obligor and the other Obligated Group Members, any owners hereof irrespective of whether or not any notation of such consent is made upon this paying agent, the Master Trustee nor any Master Obligation registrar shall be affected by any Note. notice to the contrary. All payments made to the registered owner hereof shall be valid and, to the extent of the sum or sums so paid, effectual to satisfy and discharge the liability for moneys In the manner and with the effect provided in the Master Trust Indenture, this Note and payable on this Note. its principal installments will be subject to prepayment prior to maturity, in whole at any time, or in part from time to time at the option of the Obligor, without penalty, upon payment of a sum, in No covenant or agreement contained in this Note or the Master Trust Indenture shall be cash and/or Government Obligations, sufficient, together with any other cash and/or obligations deemed to be a covenant or agreement of any officer, agent or employee of any of the Obligated held by the Bond Trustee and available for such purpose, to cause an equal aggregate principal Group Members in his individual capacity, and neither the Board of Directors of any of the amount of outstanding Series 2017 Bonds to be deemed to have been paid within the meaning of Obligated Group Members nor any officer executing this Note shall be liable personally on this Section 11.02 of the Bond Indenture or in connection with any prepayment in whole or in part of Note or be subject to any personal liability or accountability by reason of the issuance of this the Series 2017 Bonds pursuant to the provision of the Series 2017 Bonds and the Bond Note. Indenture. This Note shall not be entitled to any benefit under the Master Trust Indenture, or be If (i) the Obligor shall have elected to apply a Series 2017 Bond or Series 2017 Bonds valid or become obligatory for any purpose, until this Note shall have been authenticated by that have been redeemed or otherwise acquired by the Obligated Group Members or the Issuer execution by the Master Trustee, or its successor as Master Trustee, of the Certificate of and delivered to the Bond Trustee for cancellation by the Bond Trustee, in payment of all or a Authentication inscribed hereon. part of a sinking fund requirement under the Bond Indenture, and (ii) the Issuer shall have received a credit against such sinking fund requirement in the amount of 100% of the principal

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IN WITNESS WHEREOF, the Obligor has caused this Note to be executed in its name [Form of Endorsement By Obligated Group Representative] and on its behalf by the manual or facsimile signature of its (Vice) President. The undersigned Obligated Group Representative (as defined in the within mentioned PENNSYLVANIA LTC, INC. Master Trust Indenture) hereby certifies that, pursuant to the provisions of the Master Trust Indenture, the Obligor on this Series 2017 Note and all other Obligated Group Members referred By: to and defined in the Master Trust Indenture are jointly and severally obligated hereon. The (Vice) President Obligated Group Members as of the date of execution and delivery of this Series 2017 Note, Attest: including the Obligor hereon, are identified on Schedule I attached hereto.

Any Person (as defined in the Master Trust Indenture) who shall satisfy the conditions set forth in the Master Trust Indenture and become an Obligated Group Member subsequent to the Secretary date of execution and delivery of this Series 2017 Note shall thereupon and thereafter likewise be jointly and severally obligated on this Series 2017 Note, whether or not the name of such Person shall appear on or be added to Schedule I.

If any Person (including the Obligor hereon) who is on the date of execution and delivery of this Series 2017 Note, or who shall thereafter become, an Obligated Group Member and thus jointly and severally obligated hereon, shall satisfy the conditions set forth in the Master Trust Indenture for withdrawal from the Obligated Group and shall withdraw from the Obligated Group pursuant to written release executed by the Master Trustee, such Person shall thereupon and thereafter be released from any further liability or obligation on this Series 2017 Note and under the Master Trust Indenture, whether or not the name of such Person shall appear on or be D-116 deleted from Schedule I.

Promptly after any such withdrawal and release, the Master Trustee shall give written notice thereof by mail to each Related Bond Trustee (as defined in the Master Trust Indenture) and to all other Holders of Master Obligations at their last addresses as they shall appear upon the register maintained as provided in the Master Trust Indenture. Such notice may set forth, in addition to other matters deemed by the Master Trustee to be properly included therein, a statement that Outstanding Master Obligations must be presented to the Master Trustee for notation of such withdrawal and release thereon or surrendered to the Master Trustee in exchange for one or more substitute Master Obligations delivered pursuant to the provisions of the Master Trust Indenture.

PENNSYLVANIA LTC, INC., as Obligated Group Representative

By: (Vice) President

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[Form of Master Trustee’s Certificate of Authentication] (Form of Assignment to Bond Trustee)

This Series 2017 Note is one of the Master Obligations referred to in the aforementioned Pay to the order of U.S. Bank National Association, as Bond Trustee for the owners of Master Trust Indenture. the Series 2017 Bonds hereinabove mentioned, without warranty and without recourse against the undersigned except warranty of good title, warranty that the Issuer has not assigned this Note Date of Authentication: ______to a Person or entity other than the Bond Trustee, and that the original principal amount thereof remains unpaid hereunder.

MONTGOMERY COUNTY HIGHER U.S. BANK NATIONAL ASSOCIATION, not in EDUCATION AND HEALTH AUTHORITY its individual capacity, but solely as Master Trustee

By: Attest: Chairman By: Authorized Signatory

Secretary

D-117 [Form of Schedule I]

Members of the Obligated Group

Name Address for Notices

Pennsylvania LTC, Inc. 15 Piedmont Center, Suite 930 Atlanta, Georgia 30305 Attention: President

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APPENDIX E PROPOSED FORM OF BOND COUNSEL OPINION

[THIS PAGE INTENTIONALLY LEFT BLANK]

November __, 2017

Montgomery County Higher Education and U.S. Bank National Association, as Trustee Health Authority 50 South 16th Street, Suite 2000 1800 East High Street, Street 250 Philadelphia, PA 19102 Pottstown, PA 19464 Attention: Global Corporate Trust Services

Herbert J. Sims & Co., Inc. Pennsylvania LTC, Inc. 1515 Market Street, Suite 1200 15 Piedmont Center, Suite 930 Philadelphia, PA 19102 Atlanta, GA 30305

Re: $______Montgomery County Higher Education and Health Authority Tax-Exempt Revenue Bonds (Pennsylvania LTC, Inc. Project), Series of 2017

Ladies and Gentlemen:

We have acted as Bond Counsel to the Montgomery County Higher Education and Health Authority (the “Issuer”) in connection with the issuance of $______aggregate principal amount of its Tax-Exempt Revenue Bonds (Pennsylvania LTC, Inc. Project), Series of 2017 (the “Bonds”). The Bonds are issued under and pursuant to the provisions of the Pennsylvania Municipality Authorities Act, 53 PA.C.S.A. §5601 et seq., as amended (the “Act”) and a Bond Trust Indenture (the “Indenture”) dated as of November 1, 2017 between the Issuer and U.S. Bank National Association, as trustee (the “Trustee”).

The Issuer is issuing the Bonds at the request of Pennsylvania LTC, Inc. (the “Borrower”) to provide funds which will be used, together with other available funds, to finance the costs of a project (the “Project”) consisting of: (i) the current refunding of the outstanding Horsham Industrial and Commercial Development Authority Health Care Facilities Refunding Revenue Bonds (Pennsylvania LTC, Inc. Project), Series 2007, the proceeds of which were applied to finance or refinance the acquisition of and/or capital expenditures with respect to certain facilities owned and operated by the Borrower (the “Facilities”); (ii) the demolition of one wing of one of the Facilities and the construction, equipping and furnishing of a replacement wing; (iii) miscellaneous capital expenditures at the Facilities; (iv) the funding of a debt service reserve fund for the Bonds and capitalized interest on a portion of the Bonds; and (v) the payment of certain costs of issuing the Bonds.

The Issuer and the Borrower have entered into a Loan Agreement dated as of November 1, 2017 (the “Loan Agreement”) which provides for the loan of the proceeds of the Bonds

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to the Borrower and the repayment of such loan by the Borrower in amounts sufficient to pay, when due, the principal or redemption price of and interest on the Bonds. To evidence its loan repayment obligations, the Borrower has issued its Series 2017 Note (the “Series 2017 Note”) under a Master Trust Indenture dated as of November 1, 2017, as supplemented (the “Master Trust Indenture”), between the Borrower and U.S. Bank National Association, as master trustee (the “Master Trustee”). The Issuer has assigned its rights under the Series 2017 Note and certain of its rights under the Loan Agreement, including the right to receive loan payments thereunder, to the Trustee as security for the Bonds.

The Borrower has represented that it is an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the “Code”), is not a “private foundation” within the meaning of Section 509(a) of the Code, and is exempt from federal income tax under Section 501(a) of the Code. The Borrower has covenanted that it will maintain its status as a 501(c)(3) organization under the Code and will take whatever actions are necessary to continue to be organized and operated in a manner which will preserve and maintain its status as an organization which is described in Section 501(c)(3) of the Code and exempt from federal income taxes under Section 501(a) of the Code (except as to unrelated business income).

The Code sets forth certain requirements which must be met subsequent to the issuance and delivery of the Bonds for interest thereon to remain excludable from the gross income of the owners of the Bonds for federal income tax purposes. The Issuer and the Borrower have covenanted to comply with such requirements. Noncompliance with such requirements may cause the interest on the Bonds to be includible in the gross income of the owners of the Bonds for federal income tax purposes, retroactive to the date of issue of the Bonds or as of some later date. Under the Loan Agreement, the Borrower has covenanted that it will not take any action, or fail to take any action, if any such action or failure to take action would adversely affect the exclusion from gross income of the interest on the Bonds under Section 103(a) of the Code. For the purposes of the opinions set forth below, we have assumed that the Issuer and the Borrower will comply with the covenants set forth in the Loan Agreement relating to the tax-exempt status of the Bonds.

An officer of the Issuer responsible for issuing the Bonds and an authorized officer of the Borrower have each executed a certificate stating the reasonable expectations of the Issuer and the Borrower on the date of issue of the Bonds as to future events that are material for the purposes of Section 148 of the Code pertaining to arbitrage bonds. Also, the Issuer has caused or will cause to be filed with the Internal Revenue Service a report of the issuance of the Bonds as required by Section 149(e) of the Code as a condition of the exclusion from gross income of the interest on the Bonds.

In our capacity as Bond Counsel we have examined such documents, records of the Issuer and other instruments as we deemed necessary to enable us to express the opinions set forth below, including original counterparts or certified copies of the Indenture, the Loan Agreement and the other documents listed in the Closing Index in respect of the Bonds filed with the Trustee. We

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also have examined an executed Bond and assume that all other Bonds have been similarly executed and have been authenticated by the Trustee.

Based on the foregoing, it is our opinion that:

1. The Issuer is a body corporate and politic validly existing under the laws of the Commonwealth of Pennsylvania, with full power and authority under the Act to undertake the financing of the Project, to execute, deliver and perform its obligations under the Loan Agreement and the Indenture, and to issue and sell the Bonds.

2. The Loan Agreement and the Indenture have been duly authorized, executed and delivered by the Issuer and, assuming due authorization, execution and delivery by the other parties thereto, constitute legal, valid and binding obligations of the Issuer enforceable in accordance with their respective terms, except as the rights created thereunder and the enforcement thereof may be limited by bankruptcy, insolvency or other laws or equitable principles affecting the enforcement of creditors’ rights generally.

3. The issuance and sale of the Bonds have been duly authorized by the Issuer and, on the assumption as to execution and authentication stated above, such Bonds have been duly executed and delivered by the Issuer and authenticated by the Trustee, and are legal, valid and binding limited obligations of the Issuer entitled to the benefit and security of the Indenture, except as the rights created thereunder and enforcement thereof may be limited by bankruptcy, insolvency or other laws or equitable principles affecting the enforcement of creditors’ rights generally.

4. Under the laws of the Commonwealth of Pennsylvania as presently enacted and construed, the Bonds are exempt from personal property taxes in Pennsylvania, and interest on the Bonds is exempt from Pennsylvania personal income tax and Pennsylvania corporate net income tax.

5. Assuming the accuracy of the certifications of the Issuer and the Borrower and their continuing compliance with the requirements of the Code, interest on the Bonds [(including original issue discount on certain of the Bonds)] is excludable from gross income for purposes of federal income taxation under existing laws as enacted and construed on the date hereof. Interest on the Bonds is not an item of specific tax preference for purposes of either individual or corporate federal alternative minimum tax; however, interest on Bonds held by a corporation (other than an S corporation, regulated investment company or real estate investment trust) may be indirectly subject to corporate federal alternative minimum tax because of its inclusion in the adjusted current earnings of the corporate holder. We express no opinion regarding other federal tax consequences relating to ownership or disposition of, or the accrual or receipt of interest on, the Bonds.

[Certain Bonds were offered at a premium (“original issue premium”) over their principal amount. For federal income tax purposes, original issue premium is amortizable

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periodically over the term of a Bond through reductions in the holder’s tax basis for the Bond for determining taxable gain or loss from sale or from redemption prior to maturity. Amortization of premium does not create a deductible expense or loss.]

We have not been engaged to express and do not express any opinion herein with respect to the adequacy of the security for the Bonds or the sources of payment for the Bonds or with respect to the accuracy or completeness of any offering document or other information pertaining to the offering for sale of the Bonds or as to any other matter not set forth herein.

We call your attention to the fact that the Bonds are limited obligations of the Issuer payable only out of payments to be made by the Borrower pursuant to the Loan Agreement and certain other moneys available therefor, and that the Bonds do not pledge the credit or taxing power of the County of Montgomery, the Commonwealth of Pennsylvania or any political subdivision thereof. The Issuer has no taxing power.

Very truly yours,

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APPENDIX F BOOK-ENTRY ONLY SYSTEM

This section describes how ownership of the Series 2017 Bonds is to be transferred and how the principal of, premium, if any, and interest on the Series 2017 Bonds are to be paid to and credited by DTC while the Series 2017 Bonds are registered in its nominee name. The information in this section concerning DTC and the Book-Entry Only System has been provided by DTC for use in disclosure documents such as this Official Statement. The Issuer believes the source of such information to be reliable, but takes no responsibility for the accuracy or completeness thereof. As of the Issue Date, references to the “Bonds” in this Appendix F shall be deemed to refer to the Series 2017 Bonds.

The Issuer cannot and does not give any assurance that (1) DTC will distribute payments of debt service on the Series 2017 Bonds, or redemption or other notices, to DTC Participants, (2) DTC Participants or others will distribute debt service payments paid to DTC or its nominee (as the registered owner of the Series 2017 Bonds), or redemption or other notices, to the Beneficial Owners, or that they will do so on a timely basis, or (3) DTC will serve and act in the manner described in this Official Statement. The current rules applicable to DTC are on file with the Securities and Exchange Commission, and the current procedures of DTC to be followed in dealing with DTC Participants are on file with DTC.

DTC will act as securities depository for the Series 2017 Bonds. The Series 2017 Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Bond will be issued for each maturity of the Series 2017 Bonds, each in the aggregate principal amount of such maturity, and will be deposited with DTC.

General

DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations.

DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation, and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non- U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC is rated AA+ by Standard & Poor’s. 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 and www.dtc.org.

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Purchases of 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 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 Bonds, except in the event that use of the book-entry system for the Series 2017 Bonds is discontinued.

To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Series 2017 Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.

Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of the 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 Bond Indenture. For example, Beneficial Owners of 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 Paying Agent/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 the Series 2017 Bonds unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts the Series 2017 Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).

Principal and interest payments and redemption proceeds 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 Issuer or the Paying Agent/Registrar, on 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 securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC nor its nominee, the Paying Agent/Registrar, or the Issuer, subject to any

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statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Issuer or the Paying Agent/Registrar, 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 Issuer or the Paying Agent/Registrar. Under such circumstances, in the event that a successor depository is not obtained, Bond certificates are required to be printed and delivered.

Use of Certain Terms in Other Sections of this Official Statement

In reading this Official Statement it should be understood that while the Series 2017 Bonds are in the Book-Entry Only System, references in other sections of this Official Statement to registered owners should be read to include the person for which the Participant acquires an interest in the Series 2017 Bonds, but (i) all rights of ownership must be exercised through DTC and the Book-Entry Only System, and (ii) except as described above, notices that are to be given to registered owners under the Bond Indenture will be given only to DTC.

Information concerning DTC and the Book-Entry Only System has been obtained from DTC and is not guaranteed as to accuracy or completeness by, and is not to be construed as a representation by the Issuer or the Underwriter.

Effect of Termination of Book-Entry Only System

In the event that the Book-Entry Only System is discontinued by DTC or the use of the Book- Entry Only System is discontinued by the Issuer, the following provisions will be applicable to the Series 2017 Bonds. The Series 2017 Bonds may be exchanged for an equal aggregate principal amount of the Series 2017 Bonds in authorized denominations and of the same maturity upon surrender thereof at the principal office for payment of the Bond Trustee. The transfer of any Bond may be registered on the books maintained by the Bond Trustee for such purpose only upon the surrender of such Bond to the Bond Trustee with a duly executed assignment in form satisfactory to the Bond Trustee. For every exchange or transfer of registration of Bonds, the Bond Trustee and the Issuer may make a charge sufficient to reimburse them for any tax or other governmental charge required to be paid with respect to such exchange or registration of transfer. The Issuer shall pay the fee, if any, charged by the Bond Trustee for the transfer or exchange. The Bond Trustee will not be required to transfer or exchange any Bond after its selection for redemption. The Issuer and the Bond Trustee may treat the person in whose name a Bond is registered as the absolute owner thereof for all purposes, whether such Bond is overdue or not, including for the purpose of receiving payment of, or on account of, the principal of, premium, if any, and interest on, such Bond.

Limitations

For so long as the Series 2017 Bonds are registered in the name of DTC or its nominee, Cede & Co., the Issuer and the Bond Trustee will recognize only DTC or its nominee, Cede & Co., as the registered owner of the Series 2017 Bonds for all purposes, including payments, notices and voting.

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Under the Bond Indenture, payments made by the Bond Trustee to DTC or its nominee will satisfy the Issuer’s respective obligations under the Bond Indenture and the Obligor’s respective obligations under the Loan Agreement to the extent of the payments so made.

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

Prior to any discontinuation of the book-entry only system described above, the Issuer and the Bond Trustee may treat DTC as, and deem DTC to be, the absolute owner of the Series 2017 Bonds for all purposes whatsoever, including, without limitation, (i) the payment of principal of, premium, if any, and interest on the Series 2017 Bonds, (ii) giving notices of redemption and other matters with respect to the Series 2017 Bonds, (iii) registering transfers with respect to the Series 2017 Bonds, and (iv) the selection of Bonds for redemption. The Issuer and the Bond Trustee cannot give any assurances that DTC or the Participants will distribute payments of the principal or redemption price of and interest on the Series 2017 Bonds, paid to DTC or its nominee, as the registered owner of the Series 2017 Bonds, or any redemption or other notices, to the Beneficial Owners or that they will do so on a timely basis or that DTC will serve and act in the manner described in this Official Statement.

So long as Cede & Co. is the registered owner of the Series 2017 Bonds, as nominee of DTC, references in this Official Statement to the Holders of the Series 2017 Bonds shall mean Cede & Co. and shall not mean the Beneficial Owners, and Cede & Co. will be treated as the only Bondholder of the Series 2017 Bonds for all purposes under the Bond Indenture.

The Issuer may enter into amendments to the agreement with DTC or successor agreements with a successor securities depository relating to the book-entry system to be maintained with respect to the Series 2017 Bonds without the consent of Beneficial Owners or Bondholders.

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APPENDIX G FORM OF CONTINUING DISCLOSURE CERTIFICATE

[THIS PAGE INTENTIONALLY LEFT BLANK] CONTINUING DISCLOSURE CERTIFICATE

CONTINUING DISCLOSURE CERTIFICATE (this “Disclosure Certificate”) is executed and delivered as of the ___ day of November, 2017, by PENNSYLVANIA LTC, INC. (the “Obligor”).

RECITALS

WHEREAS, Montgomery County Higher Education and Health Authority (the “Issuer”) will issue its Revenue Bonds (Pennsylvania LTC, Inc. Project) Series of 2017 in the original aggregate principal amount of $______(the “Bonds”) pursuant to a Bond Trust Indenture, dated as of November 1, 2017 (the “Bond Indenture”), between the Issuer and U.S. Bank National Association, as bond trustee (the “Bond Trustee”), and will loan the proceeds thereof to the Obligor pursuant to the terms and provisions of a Loan Agreement, dated as of November 1, 2017 (the “Loan Agreement”), between the Issuer and the Obligor for the purposes described in the Bond Indenture and Loan Agreement; and

WHEREAS, concurrently with the sale and delivery by the Issuer of the Bonds, the Obligor will issue, execute and deliver a 2017 Master Obligation to the Issuer, dated the date of delivery of the Bonds in the original principal amount of the Bonds, pursuant to a Master Trust Indenture, dated as of November 1, 2017 (the “Master Trust Indenture”), as supplemented by Supplemental Master Trust Indenture Number 1, dated as of November 1, 2017 (the “Supplemental Indenture”, as further supplemented or amended from time to time in accordance with its terms, collectively, the “Master Indenture”), each between the Obligor, as the sole member of an Obligated Group (the “Obligated Group”), and U.S. Bank National Association, as master trustee (the “Master Trustee”); and

WHEREAS, the Bonds have been offered and sold pursuant to a Preliminary Official Statement dated October ___, 2017, and a final Official Statement dated October ____, 2017 (collectively, the “Offering Document”); and the Issuer has entered into a Bond Purchase Agreement, dated October ____, 2017 (the “Bond Purchase Agreement”), with respect to the sale of the Bonds, with the Obligor and the Participating Underwriter, as hereinafter defined; and

WHEREAS, the Obligor has been asked to provide for the disclosure of certain information concerning the Bonds and other matters on an on-going basis as set forth herein for the benefit of Holders (as hereinafter defined) to enable the Participating Underwriter (hereinafter defined) to comply with the provisions of Securities and Exchange Commission Rule 15c2-12, as amended from time to time (the “Rule”).

NOW, THEREFORE, the Obligor hereby agrees as follows:

Section 1. Definitions; Scope of this Disclosure Certificate.

(A) All terms capitalized but not otherwise defined herein shall have the meanings assigned to those terms in the Bond Indenture, the Master Indenture and the Loan Agreement, respectively, as those agreements are amended and supplemented from time to time, unless the context or use clearly indicates otherwise. The following capitalized terms shall have the following meanings:

“Annual Financial Information” shall mean (i) a copy of the annual audited financial report of the Obligated Group prepared by an Accountant, including a balance sheet as of the end of such Fiscal Year and a statements of cash flows and changes in net assets (deficit) for such Fiscal Year (together with any required supplemental information), showing in each case in comparative form the financial figures for the preceding Fiscal Year, together with a separate

{M1655844.5} G-1 written statement of the Accountant preparing such report containing calculations of the Obligated Group’s Historical Debt Service Coverage Ratio for said Fiscal Year and the Days’ Cash on Hand of the Obligated Group at the end of such Fiscal Year if required to be calculated by the Master Indenture, and a statement that such Accountant has no knowledge of any default under the Master Indenture insofar as it is related to accounting matters or to the Obligated Group’s financial covenants, or if such Accountant shall have obtained knowledge of any such default or defaults, they shall disclose in such statement the default or defaults and the nature thereof (but such Accountant shall not be liable directly or indirectly to anyone for failure to obtain knowledge of any default); (ii) a brief narrative of the financial and operating results for such fiscal year; and (iii) in the event the star rating assigned by Medicare to the nursing beds at the Edgehill Facility or the Linwood Facility is no longer available on the Medicare website or on another publicly available website, notice of the then-current star rating assigned by Medicare. All such financial information shall be prepared using the applicable method of accounting for each entity in place at the time of the issuance of the Bonds, provided, however, that the Obligor may change its accounting principles used for preparation of such financial information so long as the Obligor includes as information provided to the public a statement to the effect that different accounting principles are being used, stating the reason for such change and a reasonable explanation of how to compare the financial information provided by the differing financial accounting principles.

“Beneficial Owner” shall mean any person which 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).

“Business Day” shall mean any day other than a Saturday, Sunday or a day on which the Obligor is authorized or required by law or executive order to remain closed.

“Commonwealth” shall mean the Commonwealth of Pennsylvania.

“EMMA” means the Electronic Municipal Market Access system maintained by the MSRB at http://emma.msrb.org/.

“Event” shall mean 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 material notices or determinations with respect to the tax status of the Bonds, or other material events affecting the tax-exempt status of the Bonds;

{M1655844.5} G-2 (vii) Modifications to rights of the Beneficial Owners of the Bonds, if material;

(viii) Bond calls, if material, and tender offers (except for mandatory scheduled redemptions not otherwise contingent upon the occurrence of an event);

(ix) Defeasances;

(x) Release, substitution or sale of property securing repayment of the Bonds, if material;

(xi) Rating changes;

(xii) Bankruptcy, insolvency, receivership or similar event of any Member of the Obligated Group (Note: For the purposes of this event, the event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for any Member of the Obligated Group in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of any Member of the Obligated Group, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of any Member of the Obligated Group);

(xiii) The consummation of a merger, consolidation, or acquisition involving any Member of the Obligated Group or the sale of all or substantially all of the assets of any Member of the Obligated Group, 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 bond trustee or the change of name of a bond trustee, if material.

The SEC requires the listing of (i) through (xiv) above, although certain of such events may not be applicable to the Bonds.

“Holders” shall mean any holder of the Bonds and any Beneficial Owner thereof.

“MSRB” shall mean the Municipal Securities Rulemaking Board.

“Operating Data” shall mean (i) an update of the information in Appendix A to the Offering Document included in the tables under the following headings: “THE LINWOOD FACILITY - Occupancy and Turnover,” “THE LINWOOD FACILITY – Utilization Statistics – Payor Mix,” “THE EDGEHILL FACILITY - Occupancy and Turnover” and “THE EDGEHILL FACILITY – Utilization Statistics – Payor Mix”; (ii) a statement and certification as to Section 4.01 (Occupancy Requirement) of the Supplemental Indenture and compliance therewith; (iii) a narrative explanation regarding the presentation of financial and operating data concerning the Obligor and the financial and operating condition of the Obligated Group (which may be the same as included with the Annual Financial Information), (iv) the annual budget of any Member

{M1655844.5} G-3 of the Obligated Group, (v) a calculation of the Days Cash on Hand ratio on a quarterly basis, (vi) details regarding any additional indebtedness incurred by the Obligor, including the terms of the borrowing and ongoing compliance with the documents executed in connection with such borrowing, and (vii) status reports on any future related construction project, if any, including the same information as required under Section 2(A)(3) hereunder.

“Participating Underwriter” shall mean the original underwriter of the Bonds required to comply with the Rule in connection with the offering of the Bonds.

“Quarterly Financial Information”: shall mean (i) occupancy statistics for the Facilities for the related fiscal quarter, (ii) quarterly financial statements including income statement, balance sheet and cash flow statements, compared to budget, and information with respect to the payor mix for such fiscal quarter, and (iii) computations of the Debt Service Coverage Ratio (calculated based on the twelve month period ending on the last day of such fiscal quarter then ended) and the number of Days’ Cash on Hand as of the end of such fiscal quarter.

“SEC” shall mean the Securities and Exchange Commission.

(B) This Disclosure Certificate applies to the Bonds.

Section 2. Disclosure of Information.

(A) Information Required to be Provided to the Public. Except to the extent this Disclosure Certificate is modified or otherwise altered in accordance with Section 3 hereof, the Obligor shall make or cause to be made public the information set forth in subsections (1), (2) and (3) below:

(1) Annual Financial Information and Operating Data. The Obligor covenants that it will disseminate or cause to disseminate the Annual Financial Information and Operating Data to EMMA at least annually not later than 120 days after the end of each Fiscal Year, beginning with the Fiscal Year ended June 30, 2018. If the Annual Financial Information is not available within 120 days after the end of the relevant Fiscal Year, the Obligor shall disseminate unaudited annual financial statements for such Fiscal Year to be replaced subsequently by the audited financial statements within 15 days after such audited financial statements become available.

(2) Quarterly Financial Information. The Obligor covenants that it will disseminate or cause to disseminate the Quarterly Financial Information to EMMA not later than 45 days after the end of each quarter of each Fiscal Year, commencing with the quarter ending December 31, 2017.

(3) Construction Update. The Obligor covenants that it will disseminate or cause to be disseminated to EMMA not later than the 1st Business Day of each month until substantial completion of the Linwood 2017 Project an information update from the Authorized Obligor Representative regarding the status of construction thereof, including the following: (i) the dollar amount and percentage of completion of the Linwood 2017 Project with a comparison to the construction timeline and budget on the date hereof, including an explanation of any material deviations therefrom; (iii) quantification and description of any funds drawn from any contingency established for the Linwood 2017 Project; and (iv) certification as to the remaining amounts available in the Project Fund and that such amounts will be sufficient to pay the costs of completing the Linwood 2017 Project.

{M1655844.5} G-4 (4) Event Notices. The Obligor covenants that it will disseminate or cause to be disseminated to EMMA notice of the occurrence of an Event, in a timely manner, not in excess of ten Business Days after the occurrence of the Event.

(5) Failure to Provide Annual Financial Information or Operating Data. The Obligor covenants that it will disseminate or cause to be disseminated to EMMA notice of the failure of the Obligor to provide the Annual Financial Information, Quarterly Financial Information or Operating Data by the date required herein.

(B) Other Information. The Obligor has the option to disseminate to EMMA such other information as the Obligor shall determine to make public. If the Obligor chooses to include any information, in addition to that which is specifically required by this Disclosure Certificate, the Obligor shall have no obligation under this Disclosure Certificate to update such information or include it in any future filing.

(C) Means of Making Information Public. Information shall be deemed to have been disseminated under this Disclosure Certificate if it is transmitted to EMMA in an electronic format as prescribed by the MSRB, accompanied by identifying information as prescribed by the MSRB (a description of such format and information as presently prescribed by the MSRB is included in Exhibit A hereto), or in such other manner as may be approved by the SEC or the MSRB from time to time. To the extent the Obligor is obligated to file information pursuant to this Disclosure Certificate, such information may be set forth in the document or set of documents transmitted as provided in this paragraph, or may be included by specific reference to documents available on the MSRB’s Internet Website or filed with the SEC.

Section 3. Amendment or Waiver; Successor or Assigns of the Obligor.

Notwithstanding any other provision of this Disclosure Certificate, the Obligor may amend this Disclosure Certificate and any provision of this Certificate may be waived, if such amendment or waiver is supported by an opinion of Bond Counsel or counsel expert in federal securities laws acceptable to the Obligor to the effect that such amendment or waiver would not, in and of itself, cause the undertakings herein to violate the Rule if such amendment or waiver had been effective on the date hereof but taking into account any subsequent change in or official interpretation of the Rule as well as any change in circumstance. Any Annual Financial Information, Quarterly Financial Information or Operating Data containing the amended operating data or financial information is required to explain, in narrative form, the reasons for the amendments and the impact of the change in the type of operating data or financial information being provided.

In the event that the Obligor shall merge, consolidate or transfer all or substantially all of its assets to another entity, and such other entity assumes liability with respect to the Bonds, this Disclosure Certificate may be amended at the option of the Obligor to provide that the information required to be filed herein may be provided on a consolidated basis by the surviving entity without the necessity of requiring a separate audit or similar report for the Obligor.

Section 4. Miscellaneous.

(A) Representations. The Obligor represents and warrants that it has: (i) duly authorized the execution and delivery of this Disclosure Certificate by the officer whose signature appears on the execution pages hereto; (ii) that it has all requisite power and authority to execute, deliver and perform this Disclosure Certificate under its organizational documents and any corporate resolutions now in effect; (iii) that the execution and delivery of this Disclosure Certificate, and performance of the terms hereof, does not and will not violate any law, regulation, ruling, decision, order, indenture, decree,

{M1655844.5} G-5 agreement or instrument by which such party is bound; and (iv) it is not aware of any litigation or proceeding pending, or, to the best of its knowledge, threatened, contesting or questioning its existence, or its power and authority to enter into this Disclosure Certificate, or its due authorization, execution and delivery of this Disclosure Certificate.

(B) Governing Law. This Disclosure Certificate shall be governed by and interpreted in accordance with the laws of the Commonwealth; provided that, to the extent that the SEC, the MSRB or any other federal or state agency or regulatory body with jurisdiction over the Bonds shall have promulgated any rule or regulation governing the subject matter hereof, this Disclosure Certificate shall be interpreted and construed in a manner consistent therewith.

(C) Severability. If any provision hereof shall be held invalid or unenforceable by a court of competent jurisdiction, the remaining provisions hereof shall survive and continue in full force and effect.

(D) Termination. This Disclosure Certificate may be terminated upon thirty days’ written notice of termination delivered to the Master Trustee; provided the termination of this Disclosure Certificate is not effective until: (i) the Obligor or its respective successors or assigns, execute a new continuing disclosure instrument and agree to continue to provide, in substantially the manner provided herein, the information required to be communicated pursuant to this Disclosure Certificate (subject to Section 3 above); (ii) Bond Counsel or counsel experienced in federal securities law provides an opinion that the new continuing disclosure instrument is in compliance with all Commonwealth and Federal Securities laws and (iii) notice of the termination of this Disclosure Certificate is provided to the MSRB. This Disclosure Certificate shall automatically terminate when all of the Bonds are or are deemed to be no longer outstanding by reason of redemption or legal defeasance or at maturity.

(E) Defaults: Remedies. The Obligor shall be in default of its obligations hereunder if it fails to carry out or perform its obligations hereunder. If an event of default occurs and continues beyond a period of 30 days following notice of such failure given in writing to the Obligor by a beneficiary hereof as identified in Section 4(F), the Participating Underwriter or any Holder or Beneficial Owner of the Bonds may seek to enforce the obligations of the Obligor under this Disclosure Certificate; provided, however, the sole remedy available in any proceeding to enforce this Disclosure Certificate shall be an action in mandamus, for specific performance or similar remedy to compel performance and no damages shall be sought from the Obligor. The occurrence of any event of default as provided in this Disclosure Certificate shall not constitute an event of default under the Bond Indenture, the Master Indenture or the Loan Agreement.

(F) Beneficiaries. This Disclosure Certificate is entered into by the Obligor and shall inure solely to the benefit of the Issuer, the Master Trustee, the Bond Trustee, the Participating Underwriter and the Holders, and shall create no rights in any other person or entity.

(G) Dissemination Agent. The Obligor may, from time to time, appoint or engage a dissemination agent to assist it in carrying out its obligations under this Disclosure Certificate, and the Obligor may, from time to time, discharge any such dissemination agent, with or without appointing a successor dissemination agent.

{M1655844.5} G-6 IN WITNESS WHEREOF, the Obligor has caused its duly authorized officer to execute this Disclosure Certificate, as of the day and year first above written.

PENNSYLVANIA LTC, INC.

By: ______Name: ______Title: ______

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EXHIBIT A

MSRB Procedures for Submission of Continuing Disclosure Documents and Related Information

Securities and Exchange Commission Release No. 34-59061 (the “Release”) approves an MSRB rule change establishing a continuing disclosure service of the MSRB’s Electronic Municipal Market Access system (“EMMA”). The rule change establishes, as a component of EMMA, the continuing disclosure service for the receipt of, and for making available to the public, continuing disclosure documents and related information to be submitted by issuers, obligated persons and their agents pursuant to continuing disclosure undertakings entered into consistent with Rule 15c2-12 (“Rule 15c2-12”) under the Securities Exchange Act of 1934. The following discussion summarizes procedures for filing continuing disclosure documents and related information with the MSRB as described in the Release.

All continuing disclosure documents and related information is to be submitted to the MSRB, free of charge, through an Internet-based electronic submitter interface or electronic computer-to-computer data connection, at the election of the submitter. The submitter is to provide, at the time of submission, information necessary to accurately identify: (i) the category of information being provided; (ii) the period covered by any annual financial information, financial statements or other financial information or operating data; (iii) the issues or specific securities to which such document is related or otherwise material (including CUSIP number, issuer name, state, issue description/securities name, dated date, maturity date, and/or coupon rate); (iv) the name of any obligated person other than the Issuer; (v) the name and date of the document; and (vi) contact information for the submitter.

Submissions to the MSRB are to be made as portable document format (PDF) files configured to permit documents to be saved, viewed, printed and retransmitted by electronic means. If the submitted file is a reproduction of the original document, the submitted file must maintain the graphical and textual integrity of the original document. In addition, such PDF files must be word-searchable (that is, allowing the user to search for specific terms used within the document through a search or find function), provided that diagrams, images and other non-textual elements will not be required to be word-searchable.

All submissions to the MSRB’s continuing disclosure service are to be made through password protected accounts on EMMA by (i) issuers, which may submit any documents with respect to their municipal securities; (ii) obligated persons, which may submit any documents with respect to any municipal securities for which they are obligated; and (iii) agents, designated by issuers and obligated persons to submit documents and information on their behalf. Such designated agents are required to register to obtain password-protected accounts on EMMA in order to make submissions on behalf of the designating issuers or obligating persons. Any party identified in a continuing disclosure undertaking as a dissemination agent or other party responsible for disseminating continuing disclosure documents on behalf of an issuer or obligated person will be permitted to act as a designated agent for such issuer or obligated person, without a designation being made by the Issuer or obligated person as described above, if such party certifies through the EMMA on-line account management utility that it is authorized to disseminate continuing disclosure documents on behalf of the Issuer or obligated person under the continuing disclosure undertaking. The Issuer or obligated person, through the EMMA on-line account management utility, is able to revoke the Issuer of such party to act as a designated agent.

The MSRB's Internet-based electronic submitter interface (EMMA Dataport) is currently at www.emma.msrb.org.

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MONTGOMERY COUNTY HIGHER EDUCATION AND HEALTH AUTHORITY • Tax-Exempt Revenue Bonds (Pennsylvania LTC, Inc. Project) Series of 2017