FIS 0504 [04/11) Living Care Disclosure Act Escrow Agreement THIS AGREEMENT, made this _______ day of _____________________ between ______________________________________________ (hereinafter Facility), a corporation, partnership, limited liability company, or other legal entity organized under the laws of the State of Michigan, and ______________ __________________________________ (hereinafter Escrow Agent), a banking corporation organized under the laws of the State of Michigan, as Escrow Agent for purchasers of life interests or long-term leases, and such purchasers as become signatures to this Escrow Agreement. Office of Financial & Insurance Regulation WITNESS THAT: WHEREAS, an application, pursuant to the Michigan Living Care Disclosure Act, 1976 P.A. 440, as amended (the "Act"), has been filed with the Michigan Department of Licensing & Regulatory Affairs, Office of Financial and Insurance Regulation, seeking effective registration or exemption under the aforementioned law or rules thereunder; and WHEREAS, as a condition of registration or exemption the Administrator of the Michigan Office of Financial and Insurance Regulation will require pursuant to the authority granted in Section 16 of the Act the escrow of an amount deemed necessary, by the Office of Financial and Insurance Regulation, for the facility to fulfill its obligations and to protect prospective and present members; and WHEREAS, for the purposes of this Agreement, Administrator means the Commissioner of the Office of Financial and Insurance Regulation, Michigan Department of Licensing & Regulatory Affairs or designee. NOW, THEREFORE, in consideration of the promises and agreements set forth herein, the parties hereto agree as follows: 1. PROCEEDS TO BE PLACED IN ESCROW: All proceeds received from the sale of life interests or long-term leases and other funds paid by purchasers which are subject to this Escrow Agreement on or after the date hereof shall be paid to the Escrow Agent promptly, but in any event, within two (2) business days from the date of sale or receipt and deposited by Escrow Agent in an escrow account. During the term of this Escrow Agreement, the Facility shall cause all checks received by it in payment for such life interests or long-term leases to be payable to the Escrow Agent. All funds held by the Escrow Agent pursuant to this Escrow Agreement shall be held solely for the benefit of the purchasers, until such time as the Administrator, by Order, authorizes release to the Facility as provided in Section 3 hereof. 2. IDENTITY OF PURCHASERS: The Facility shall furnish to the Escrow Agent with each deposit of funds in escrow a list of the persons who have paid the money, showing the name, address, social security number, date and price of deposit agreement and amount of money paid. All proceeds so deposited, together with all income earned thereon (less fees of the Escrow Agent) shall remain the property of the purchaser and shall not be subject to any liens or charges by the Escrow Agent, or judgments or creditors' claims against the Facility until released to the Facility as hereinafter provided. Income earned on all escrowed funds shall be the property of the purchaser during the American LegalNet, Inc. www.FormsWorkFlow.com FIS 0504 [04/11) Living Care Disclosure Act Escrow Agreement period prior to occupancy of the unit. At occupancy, the income earned on all escrowed funds during the period prior to occupancy shall be credited to the account of the purchaser and shall be an offset against the remainder of the Entrance Fees that are owed to the Facility. After occupancy, the income earned on a purchaser's escrowed funds shall be the property of the Facility. The Escrow Agent shall annually notify the Facility of the amount of income earned on the escrowed funds, and shall issue a single Internal Revenue Service Form 1099 to the Facility, as agent for the purchasers, for all income earned on the escrowed funds for the calendar year. The Facility shall thereafter assume full responsibility for notifying each purchaser and the Internal Revenue Service of the amount thereof that is taxable to each such purchaser and for issuing an Internal Revenue Service Form 1099 to each purchaser. 3. DISBURSEMENT OF FUNDS Office of Financial & Insurance Regulation a) Upon receipt by the Escrow Agent of a request from any purchaser for the release of the purchaser's funds, plus all income earned thereon, the Escrow Agent shall notify the Facility which shall promptly assist the Escrow Agent in verifying the validity of the request and determining the amount of income to which the purchaser is entitled. Upon receipt of written confirmation from the Facility as to the validity of the request, and the amount of income to be paid, the Escrow Agent shall promptly release the escrowed funds and income so verified to the purchaser. The Facility shall indemnify and hold harmless the Escrow Agent from any claims arising from verification of the validity of the request and from the allocation of income to be paid in connection with any such request. b) Upon receipt by the Escrow Agent of written authorization from the Administrator, then said Escrow Agent, shall pay over to the Facility all escrowed funds, as so authorized, including income earned thereon. If the conditions of the escrow (see attached pages for specific conditions of escrow, if any) have not been satisfied, upon written authorization of the Administrator, the Escrow Agent shall within a reasonable time, but not more than thirty (30) days after authorization, refund to each purchaser at the address appearing on the life interest or long-term lease Purchase Receipt or list of purchasers, or at such other address as shall be furnished the Escrow Agent by the purchasers in writing, all sums paid by such purchaser pursuant to the life interest or long-term lease agreement plus any income accrued thereon, and shall then notify the Administrator in writing of such refund. c) From and after the date that each purchaser begins occupancy of a unit, and notwithstanding anything in this escrow agreement to the contrary, one and one-half percent (1 ½%) per month of the total entrance fees in escrow for that purchaser from and after the occupancy date shall be considered earned by the Facility and this amount shall be disbursed on a monthly basis to the Facility, upon demand by the Facility which demand shall include the calculation of the amount of the mon