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<br />Property would be sufficient to pay the outstanding principal and interest due under the terms of theSeries
<br />2020 Bonds. Accordingly, in the event of foreclosure and sale of the Project, Bondholders may not
<br />receive all principal and interest due under the terms of the Series 2020 Bonds.
<br />The Manager; Possible Future Conflict of Interest
<br />The Borrower has contracted with the Manager under the terms of the Management Agreement to
<br />receive certain administrative and oversight services necessary for the operation of the Project. The
<br />Manager is an affiliate of the Limited Guarantor. The term of the Management Agreement is for [______]
<br />years, but the Manager may be terminated upon 30 days’ notice. If the Management Agreement is not
<br />renewed, it is unknown whether the Borrower could retain a third party to perform the foregoing services
<br />upon the same terms as the Manager. Therefore, if the Manager should, for any reason, including concern
<br />for its own financial condition, terminate its services under the Management Agreement, the Borrower
<br />can be expected to have increased costs to replace such services. See “APPENDIX A - THE
<br />BORROWER, LANGSTON SHORES, AND THE LIMITED GUARANTOR” in this Official Statement.
<br />Conflicts in the allocation of time and resources may arise with respect to the Manager as
<br />between the Project and the other communities managed by the Manager or its affiliates, to the detriment
<br />of operations of the Project. Neither the Indenture nor the Loan Agreement directly restricts the business
<br />activities of Manager or any of its affiliates. Accordingly, the Manager or its affiliates may become
<br />engaged in other business activities and only devote such of their time and attention to the operation of
<br />the Project as they, in their discretion, determine necessary in the circumstances. The Manager, together
<br />with any of its affiliates, may develop, own, buy, sell, finance, refinance, construct or manage any senior
<br />residential community, other health care community or other business opportunity of any kind or nature,
<br />whether or not within the vicinity of the Project, whether or not such community or opportunity shall be
<br />in competition with the Project, and whether or not such community or opportunity is owned by affiliates
<br />of the Limited Guarantor, or an unrelated third party.
<br />Maintenance of Tax-Exempt Status
<br />The exclusion of interest on the Series 2020 Bonds from gross income for federal income tax
<br />purposes depends on, among other things, the continued status of the Borrower as a nonprofit charitable
<br />organization described in Section 501(c)(3) of the Code. The Borrower has received recognition from the
<br />Internal Revenue Service (the “IRS”) of its status as a 501(c)(3) organization. However, such status might
<br />be revoked, and perhaps retroactively, for material noncompliance with factual representations made in
<br />the application for such recognition. Moreover, the ongoing tax-exempt status of interest on the Series
<br />2020 Bonds is conditioned, under relevant provisions of the Code, on compliance by the Borrower with
<br />various requirements set forth, inter alia, in Section 145 of the Code, requiring, among other things, that
<br />the Project be owned throughout the term of the Series 2020 Bonds by a governmental unit or an
<br />organization described in Section 501(c)(3) of the Code and that not more than five percent (5%) of the
<br />proceeds of the Series 2020 Bonds (inclusive of proceeds applied to defray issuance costs) be applied to
<br />any “private business use,” any use giving rise to “unrelated business income,” or other uses inconsistent
<br />with the charitable purposes of the Borrower as a 501(c)(3) organization, all as further provided in
<br />applicable statutes, regulations, rulings and decisions. Additional provisions of Section 145 and related
<br />Sections (including Sections 147 and 148) of the Code also require, inter alia, that the weighted average
<br />maturity of the Series 2020 Bonds not exceed 120% of the useful economic life of the Project, and that
<br />certain “arbitrage profits” generated from the investment of proceeds of the Series 2020 Bonds or other
<br />moneys must be periodically rebated to the United States Treasury. Failure to comply with any of such
<br />tax requirements could result in the loss of the tax-exempt status of interest on the Series 2020 Bonds to
<br />the owners thereof, and such interest could become taxable to such owners retroactive to the date of
<br />issuance of the Series 2020 Bonds. For a description of the consequences of a Determination of
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