ANCILLARY BUSINESS. Means a lawful business conducted by Borrower or an Affiliated Entity in which goods or services are sold or provided to residents of a Property or Properties, subject to the limitations set forth below. Goods and services sold or provided by Ancillary Businesses must be sold or provided at competitive prices to residents, and must not now or in the future be included within the package of items or basic services, other than pharmacy services, which the landlord under residency agreements for
... the Property is obligated to provide to residents of the applicable Property or Properties. To qualify as an Ancillary Business, said business shall not: (i) either directly or indirectly divert the services of personnel of the Property or Properties from other responsibilities and duties at the Property; (ii) materially and adversely affect the collateral for the Loan; (iii) divert income from the Property or Properties to such Ancillary Business; or (iv) in any manner burden the operation or decrease the profitability of the Property or Properties to an extent greater than if said goods or services were provided to the residents by an outside vendor other than Borrower or any Affiliated Entity. For example, pharmaceutical goods are not currently provided by Borrower or Affiliated Entities to the residents of the Properties. In the event that Borrower or an Affiliated Entity opens a pharmacy: (1) which does not utilize any income-generating space at the Properties, (2) which does not divert the services of any personnel from their existing duties at the Properties, (3) which does not materially and adversely affect the collateral for the Loan (e.g., increased liability exposure), (4) the expenses of which are paid out of the revenue generated by the Ancillary Business or other revenue of an Affiliated Entity unrelated to the Property, (5) which does not reduce potential revenues as compared to other assisted living or independent living facilities reasonably deemed comparable in the marketplace by GECC, and (6) which is being conducted in accordance with applicable law, such pharmacy would be an Ancillary Business. On the other hand, for example, in the event that Borrower or any of the Affiliated Entities begins offering elder care services to non-residents who would be cared for at the Property or Properties (thereby occupying the general meeting rooms, enjoying programs and services available to residents, possibly utilizing vacant rooms for short periods of time), such elder care services would be utilizing income-producing space at the Property or Properties and would therefore not be an Ancillary Business. As a further example, elder care services to residents of the type described in the preceding sentence would not constitute an Ancillary Business. Nothing contained in the foregoing shall in any manner affect Borrower's covenants and obligations pursuant to the Second Amended Note and the other Loan Documents.
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