Exhibit 10.1

AMENDED AND RESTATED MASTER LEASE

between

MRT of Las Vegas NV - ACH, LLC, MRT of Las Vegas NV - LTACH, LLC, MRT of Fort
Worth TX - SNF, LLC and MRT of Spartanburg SC - SNF, LLC,
as their interests may appear, “Landlord”

and

Nashville Leasehold Interests, LLC,
“Tenant”

For the lease of:

Mountain’s Edge Hospital

8656 West Patrick Lane

Las Vegas, Nevada 89148

 

Horizon Specialty Hospital of Henderson

8550 South Eastern Avenue

Henderson, Nevada 89123

 

Mira Vista Court

7021 Bryant Irvin Road

Fort Worth, Texas 76132

 

and

 

Magnolia Place at Spartanburg

8020 White Avenue

Spartanburg, South Carolina 29303

 

Dated as of April 27, 2017

 

 

 

 

 

 

 

 

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AMENDED AND RESTATED MASTER LEASE

THIS AMENDED AND RESTATED MASTER LEASE is dated as of April 27, 2017 (the
“Restatement Date”) and is by and among MRT of Las Vegas NV - ACH, LLC, a
Delaware limited liability (“MRT Las Vegas-ACH”), MRT of Las Vegas NV - LTACH,
LLC, a Delaware limited liability company (“MRT Las Vegas-LTACH”), MRT of Fort
Worth TX - SNF, LLC, a Delaware limited liability company (“MRT Fort
Worth-SNF”), MRT of Spartanburg SC - SNF, LLC, a Delaware limited liability
company (“MRT Spartanburg-SNF”; and, together with MRT Las Vegas-ACH, MRT Las
Vegas-LTACH, and MRT Fort Worth-SNF, as their interests may appear, “Landlord”),
Nashville Leasehold Interests, LLC, a Delaware limited liability company
(“Tenant”), Vegas Hospital Care, LLC, a Delaware limited liability company
(“Mountain’s Edge Operator”), THI of Nevada II at Desert Lane, LLC, a Delaware
limited liability company (“Horizon Henderson Operator”), Bryant Irvin
Consulting, LLC, a Delaware limited liability company (“Mira Vista Operator”),
and THI of South Carolina at Magnolia Place at Spartanburg, LLC, a Delaware
limited liability company (“Spartanburg Operator”; and together with Mountain’s
Edge Operator, Horizon Henderson Operator and Mira Vista Operator are
collectively referred to herein as the “Operators”).  Landlord, Tenant and the
Operators are collectively referred to herein as the “Parties”.

RECITALS

A.

MRT Las Vegas-ACH owns (a) that certain tract of land located at 8656 West
Patrick Lane, Las Vegas, Nevada, 89148 in Clark County, Nevada, and more
specifically described on Exhibit A-1 attached hereto (the “Mountain’s Edge
Land”), (b) all buildings, structures and other improvements of every kind
located thereon (the “Mountain’s Edge Improvements”), which Mountain’s Edge
Improvements include that certain two-story building containing approximately
72,140 square feet of space operated as a 130-bed, licensed acute care hospital
on the Land (the “Mountain’s Edge Facility”), (c) the Mountain’s Edge Equipment
(as defined in Section 1.3) and (d) the Mountain’s Edge Fixtures (as defined in
Section 1.4) (the Mountain’s Edge Land, the Mountain’s Edge Improvements, the
Mountain’s Edge Equipment and the Mountain’s Edge Fixtures are collectively
referred to herein as the “Mountain’s Edge Property”).

B.

MRT Las Vegas-LTACH owns (a) that certain tract of land located at 8550 South
Eastern Avenue, Henderson, Nevada 89123 in Clark County, Nevada, and more
specifically described on Exhibit A-2 attached hereto (the “Horizon Henderson
Land”), (b) all buildings, structures and other improvements of every kind
located thereon (the “Horizon Henderson Improvements”), which Horizon Henderson
Improvements include that certain one-story building containing approximately
37,209 square feet of space operated as a 39-bed, licensed long term acute care
hospital (the “Horizon Henderson Facility”), (c) the Horizon Henderson Equipment
(as defined in Section 1.3), and (d) the Horizon Henderson Fixtures (as defined
in Section 1.4) (the Horizon Henderson Land, the Horizon Henderson Improvements,
the Horizon Henderson Equipment and the Horizon Henderson Fixtures are
collectively referred to herein as the “Horizon Henderson Property”).

C.

MRT Fort Worth-SNF owns (a) that certain tract of land located at 7021 Bryant
Irvin Road, Fort Worth, Texas 76132 in Tarrant County, Texas, and more
specifically described on Exhibit A-3 attached hereto (the “Mira Vista Land”),
(b) all buildings, structures and other improvements of every kind located
thereon (the “Mira Vista Improvements”), which Mira Vista Improvements include
that certain one-story building containing approximately 51,534 square feet of
space operated as a 142-bed, licensed skilled nursing facility (the “Mira Vista
Facility”), (c) the Mira Vista Equipment (as defined in Section 1.3), and (d)
the Mira Vista Fixtures (as defined in Section 1.4) (the Mira Vista Land, the
Mira Vista Improvements, the Mira Vista Equipment and the Mira Vista Fixtures
are collectively referred to herein as the “Mira Vista Property”).

D.

MRT Spartanburg-SNF owns (a) that certain tract of land located at 8020 White
Avenue, Spartanburg, South Carolina 29303 in Spartanburg County, South Carolina,
and more specifically described on Exhibit A-4 attached hereto (the “Spartanburg
Land”), (b) all buildings, structures and other improvements of every kind
located thereon (the “Spartanburg Improvements”), which Spartanburg Improvements
include that certain one-story building containing approximately 50,397 square
feet of space operated as a 120-bed, licensed skilled nursing facility (the
“Spartanburg Facility”), (c) the Spartanburg Equipment (as defined in Section
1.3), and (d) the Spartanburg Fixtures (as defined in Section 1.4) (the
Spartanburg Land, the Spartanburg Improvements,

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the Spartanburg Equipment and the Spartanburg Fixtures are collectively referred
to herein as the “Spartanburg Property”).  The Mountain’s Edge Facility, the
Horizon Henderson Facility, the Mira Vista Facility and the Spartanburg Facility
are collectively referred to herein as the “Facilities” and each such facility
is sometimes referred to herein, singularly, as a “Facility”.  The Mountain’s
Edge Property, the Horizon Henderson Property, the Mira Vista Property and the
Spartanburg Property are collectively referred to herein as the “Properties” and
each such property is sometimes referred to herein, singularly, as a “Property”.

E.

MRT Las Vegas-ACH, as landlord, and Mountain’s Edge Operator, as tenant, are
parties to that certain Facility Lease Agreement, dated July 18, 2014, as
amended by that certain First Amendment to Facility Lease Agreement, dated
November 24, 2014, as further amended by that certain Second Amendment to
Facility Lease Agreement, dated January 23, 2015, as further amended by that
certain Third Amendment to Facility Lease Agreement, dated March 30, 2015, and
as further amended by that certain Fourth Amendment to Facility Lease Agreement,
dated June 30, 2015 (collectively, the “Original Mountain’s Edge Lease”),
covering the Mountain’s Edge Property.

F.

MRT Las Vegas-LTACH, as landlord, and Horizon Henderson Operator, as tenant, are
parties to that certain Facility Lease Agreement, dated July 18, 2014 (the
“Original Horizon Henderson Lease”), covering the Horizon Henderson Property.

G.

MRT Fort Worth-SNF, as landlord, and Mira Vista Operator, as tenant, are parties
to that certain Facility Lease Agreement, dated February 20, 2015 (the “Original
Mira Vista Lease”), covering the Mira Vista Property.

H.

MRT Spartanburg-SNF, as landlord, and Spartanburg Operator, as tenant, are
parties to that certain Facility Lease Agreement, dated July 18, 2014 (the
“Original Spartanburg Lease”), covering the Spartanburg Property.  The Original
Mountain’s Edge Lease, the Original Horizon Henderson Lease, the Original Mira
Vista Lease and the Original Spartanburg Lease are collectively referred to
herein as the “Original Leases”.

I.

The obligations of Mountain’s Edge Operator under the Original Mountain’s Edge
Lease are guaranteed by THI of Baltimore, Inc., a Delaware corporation
(“Guarantor”), pursuant to that certain Guaranty, dated as of July 18, 2014 (as
the same may have been amended, modified or reaffirmed from time to time, the
“Original Mountain’s Edge Guaranty”).  The obligations of Horizon Henderson
Operator under the Original Horizon Henderson Lease are guaranteed by Guarantor,
pursuant to that certain Guaranty, dated as of July 18, 2014 (as the same may
have been amended, modified or reaffirmed from time to time, the “Original
Horizon Henderson Guaranty”).  The obligations of Mira Vista Operator under the
Original Mira Vista Lease are guaranteed by Guarantor, pursuant to that certain
Guaranty, dated as of February 20, 2015 (as the same may have been amended,
modified or reaffirmed from time to time, the “Original Mira Vista Guaranty”).
The obligations of Spartanburg Operator under the Original Spartanburg Lease are
guaranteed by Guarantor, pursuant to that certain Guaranty, dated as of July 18,
2014 (as the same may have been amended, modified or reaffirmed from time to
time, the “Original Spartanburg Guaranty”; and together with the Original
Mountain’s Edge Guaranty, the Original Horizon Henderson Guaranty and the
Original Mira Vista Guaranty are collectively referred to herein as the
“Original Guaranties”). Concurrently herewith, Guarantor is executing and
delivering a Master Lease Guaranty in substantially the form attached hereto as
Exhibit B guarantying the obligations of Tenant under this Master Lease (as the
same may be amended, modified or reaffirmed from time to time, the “Master Lease
Guaranty”).

J.

The Parties are entering into this Master Lease on and as of the Restatement
Date, to be effective with respect to the Property of each Facility as of the
Commencement Date (as defined in Section 2), to amend, consolidate, supersede
and restate each of the Original Leases pursuant to this Master Lease and to
provide for the continued lease by Landlord to Tenant (in replacement of the
Operators) from and after the Restatement Date of the Property of each of the
Facilities in a single, integrated and indivisible master lease and economic
unit, upon the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the mutual covenants, conditions and
agreements set forth herein, the Parties enter into this Master Lease on the
terms, conditions and provisions hereinafter set forth.

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Lease of the Premises

.  Landlord hereby leases to Tenant, and Tenant hereby leases from Landlord,
subject to the terms and conditions herein set forth, all of Landlord’s right,
title and interest in and to all of the following (collectively, the
“Premises”):

1.1.Land.  The Mountain’s Edge Land, the Horizon Henderson Land, the Mira Vista
Land and the Spartanburg Land (collectively, the “Land”);

1.2.Improvements.  The Mountain’s Edge Improvements (of which the Mountain’s
Edge Facility is a part), the Horizon Henderson Improvements (of which the
Horizon Henderson Facility is a part), the Mira Vista Improvements (of which the
Mira Vista Facility is a part) and the Spartanburg Improvements (of which the
Spartanburg Facility is a part) (collectively, the “Improvements”);

1.3.Equipment. With respect to each Facility, all un-affixed equipment or other
personal property of any nature whatsoever, including, but not limited to, data
processing equipment, motor vehicles, accessories, medical equipment and
supplies, office equipment and supplies, furniture, and other items owned by
Landlord in connection with each Facility and all component and ancillary parts
used in connection with any such items and all replacements, substitutions,
accretion and additions to any such items (collectively, the “Equipment”).  The
Equipment relating to the Mountain’s Edge Facility is more particularly
described on Schedule 1.3(a) (the “Mountain’s Edge Equipment”).  The Equipment
relating to the Horizon Henderson Facility is more particularly described on
Schedule 1.3(b) (the “Horizon Henderson  Equipment”).  The Equipment relating to
the Mira Vista Facility is more particularly described on Schedule 1.3(c) (the
“Mira Vista Equipment”).  The Equipment relating to the Spartanburg Facility is
more particularly described on Schedule 1.3(d) (the “Spartanburg Equipment”);

1.4.Fixtures.  With respect to each Facility, all affixed items of equipment
(including non-movable medical equipment), machinery, fixtures and other items
of property, including all components thereof, now and hereafter located in, on
or used and incorporated into the Land or the Improvements, including, without
limitation, any and all furnaces, boilers, heaters, electrical equipment,
heating, plumbing, lighting, ventilating, refrigerating, incineration, air and
water pollution control, waste disposal, air-cooling and air conditioning
systems, equipment and apparatus, sprinkler systems and fire and theft
protection equipment, built-in oxygen and vacuum systems, wiring, tubing,
central clock systems, doctor register systems, elevators, dumb waiters,
intercom systems, nurse call systems, affixed cabinetry and counters, pneumatic
tube systems, vacuum cleaning systems, conveyor systems, paging systems, mill
work, x-ray protection, pass-through boxes, exhaust systems, laboratory plumbing
and piping, medical gas systems, nurse station counters, emergency generators
and similar items incorporated into and made a part of the Land or the
Improvements, all of which to the greatest extent permitted by law are hereby
deemed by the Parties to constitute real estate, together with all replacements,
modifications, alterations and additions thereto (collectively, the
“Fixtures”).  The Fixtures  relating to (a) the Mountain’s Edge Facility are
collectively referred to herein as the “Mountain’s Edge Fixtures”, (b) the
Horizon Henderson Facility are collectively referred to herein as the “Horizon
Henderson Fixtures”, (c) the Mira Vista Facility are collectively referred to
herein as the “Mira Vista Fixtures, and (d) the Spartanburg Facility are
collectively referred to herein as the “Spartanburg Fixtures”); and

1.5.Appurtenant Rights.  All easements, licenses, rights-of-way and
appurtenances relating to the Land and the Improvements (the “Appurtenant
Rights”).

2.Primary Term and Renewal Terms.

2.1.Primary Term.  This Master Lease shall be effective as of March 20, 2017
(the “Commencement Date”) and shall continue in effect for an initial term (the
“Primary Term”) that (a) with respect to the Mountain’s Edge Property, ends at
11:59 p.m. (Las Vegas, NV time) on March 31, 2032, (b) with respect to the
Horizon Henderson Property, ends at 11:59 p.m. (Henderson, NV time) on March 31,
2032, (c) with respect to the Mira Vista Property, ends at 11:59 p.m. (Fort
Worth, TX time) on March 31, 2029, and (d) with respect to the Spartanburg
Property, ends at 11:59 p.m. (Spartanburg, SC time) on March 31, 2029.  Tenant
acknowledges it has accepted possession of the Premises on or before the
Commencement Date.  Tenant covenants and agrees with Landlord that Tenant shall
continuously operate each Facility for the Permitted Use (as defined in Section
6.3 herein) applicable to each such Facility throughout the Term.  For purposes
of this Master Lease, the term “Lease

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Year” shall mean the twelve (12) consecutive month period commencing on the
Commencement Date, and each twelve (12) consecutive month period thereafter
during the Term.

2.2.Renewal Terms.  Unless (a) this Master Lease has been terminated in
accordance with its terms, or (b) an Event of Default (as defined in Section
12.1) has occurred and is continuing at the time any extension option may be
exercised or at any time after such exercise and prior to the commencement of a
Renewal Term (as defined below) or (c) there exists, at the time any extension
option may be exercised or at any time after such exercise and prior to the
commencement of a Renewal Term, an event or circumstance which, with the giving
of notice, the passage of time or both, may become an Event of Default, the Term
(as defined in Section 2.2.1) may be extended by Tenant for two (2) separate
renewal terms (each, a “Renewal Term”) of five (5) years each, upon the
satisfaction of all of the following terms and conditions:

2.2.1.Not more than thirty (30) days before or after the date which is nine (9)
months prior to the end of the then current Primary Term or Renewal Term, as
applicable, with respect to the Mira Vista Property and the Spartanburg
Property, Tenant shall give Landlord written notice that Tenant desires to
exercise its right to extend the then current Term with respect to both the Mira
Vista Property and the Spartanburg Property for one (1) Renewal Term; provided,
however, if Tenant gives such exercise notice at a time when the extension
option is not exercisable due to the occurrence of an event or circumstance as
described in Section 2.2(c), then (i) the time period for the giving of such
notice automatically shall be deemed extended by the then remaining cure period,
if any, applicable to such event or occurrence, and (ii) if such event or
circumstance is thereafter timely cured, such notice automatically shall be
deemed to have been given on the date as of which such cure has been
effected.  For avoidance of doubt, with respect to the Mira Vista Property and
the Spartanburg Property, Landlord and Tenant acknowledge and agree that any
option for a Renewal Term may only be exercised with respect to both the Mira
Vista Property and the Spartanburg Property and may not be exercised for the
Mira Vista Property or the Spartanburg Property singularly.  The Primary Term
and any applicable Renewal Term(s) are referred to collectively herein as the
“Term”.

2.2.2.Not more than thirty (30) days before or after the date which is nine (9)
months prior to the end of the then current Primary Term or Renewal Term, as
applicable, with respect to the Horizon Henderson Property and the Mountain’s
Edge Property, Tenant shall give Landlord written notice that Tenant desires to
exercise its right to extend the then current Term with respect to both the
Horizon Henderson Property and the Mountain’s Edge Property for one (1) Renewal
Term; provided, however, if Tenant gives such exercise notice at a time when the
extension option is not exercisable due to the occurrence of an event or
circumstance as described in Section 2.2(c), then (i) the time period for the
giving of such notice automatically shall be deemed extended by the then
remaining cure period, if any, applicable to such event or occurrence, and (ii)
if such event or circumstance is thereafter timely cured, such notice
automatically shall be deemed to have been given on the date as of which such
cure has been effected.  For avoidance of doubt, with respect to the Horizon
Henderson Property and the Mountain’s Edge Property, Landlord and Tenant
acknowledge and agree that any option for a Renewal Term may only be exercised
with respect to both the Horizon Henderson Property and the Mountain’s Edge
Property and may not be exercised for the Horizon Henderson Property or the
Mountain’s Edge Property singularly.  

2.2.3.All other provisions of this Master Lease shall remain in full force and
effect and shall continuously apply throughout the Renewal Term(s).

Rent

.  

3.1.Rent.  Subject to adjustment as set forth in Section 3.2 and Section 3.4
below, annual minimum rent (“Fixed Annual Rent”) payable hereunder shall be in
an amount equal to Eight Million Four Hundred Fifty Two Thousand Six Hundred
Fifty and No/100 Dollars ($8,452,650.00), payable in advance in equal monthly
installments of Seven Hundred Four Thousand Three Hundred Eighty-Seven and
50/100 Dollars ($704,387.50) (“Fixed Monthly Rent”) on the twentieth (20th) day
of each calendar month of the Term commencing on the Commencement Date;
provided, however, that if such day is not a Business Day (as defined
hereinafter), the applicable Fixed Monthly Rent shall be payable on the
immediately preceding Business Day.  For illustration purposes, an allocation of
the Fixed Annual Rent by each Facility is set forth in Schedule 3.1 attached

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hereto and incorporated herein.  The term “Business Day” shall mean any day on
which banking institutions in Nashville, Tennessee are open for the conduct of
normal banking business.

3.2.Escalation of Fixed Annual Rent.  On the first (1st), second (2nd) and third
(3rd) anniversary of the Commencement Date, Fixed Annual Rent will increase to
lesser of (a) the amount equal to the CPI Factor (as defined herein) multiplied
times the Fixed Annual Rent in effect for the immediately preceding Lease Year,
and (b) the amount equal to one hundred one and one-half percent (101.5%) of the
Fixed Annual Rent in effect for the immediately preceding Lease Year; provided,
however, that the Fixed Annual Rent shall never be less than the Fixed Annual
Rent in effect for the immediately preceding Lease Year.  The “CPI Factor” is
the percentage equal to a fraction, the numerator of which is the Index (as
defined herein) most recently published prior to the first day of the new Lease
Year (the “Numerator Index”) and the denominator of which is the then current
Index on the date that is twelve (12) months prior to the date on which the
Numerator Index was published.  The term “Index” shall mean the Consumer Price
Index for All Urban Consumers (CPI-U) for the U.S. City Average for All Items
(1982-84=100), published by the Bureau of Labor Statistics of the United States
Department of Labor.  Thereafter, on the fourth (4th) anniversary of the
Commencement Date and on each subsequent anniversary of the Commencement Date
occurring during the Primary Term and any Renewal Term, the Fixed Annual Rent
will increase to one hundred two percent (102%) of the Fixed Annual Rent in
effect for the immediately preceding Lease Year.

3.3.Proration for Partial Periods. The Fixed Monthly Rent for any partial month
during the Term shall be prorated based on actual days elapsed.

3.4.Rental Adjustment Related to Mountain’s Edge Capital Addition
Project.  Pursuant to Section 25.1 herein, Landlord has agreed to fund to Tenant
an aggregate amount of up to Eleven Million and No/100 Dollars ($11,000,000.00)
for the Mountain’s Edge Capital Addition Project (as defined in Section 25.1
herein) in accordance with the Mountain’s Edge Work Letter (as defined in
Section 25.1 herein).  Notwithstanding anything to the contrary in this Master
Lease, effective as of the 20th day of the calendar month following the date of
Landlord’s first advance of any portion of Landlord’s Maximum Cost (as defined
in the Work Letter) and on the 20th day of each calendar month thereafter during
the Term, in addition to the Fixed Monthly Rent due on such 20th calendar day,
Tenant shall pay to Landlord an additional monthly payment (the “Mountain’s Edge
Supplemental Rent Payment”) in an amount equal to one-twelfth (1/12th) of the
product of (A) the total Landlord’s Maximum Cost actually advanced by Landlord,
together with imputed interest at nine and one-quarter percent (9.25%) per annum
for the period of time from such advance to the date on which the Mountain’s
Edge Supplement Rent Payment includes such advance, times (B) nine and
one-quarter percent (9.25%) (the “Mountain’s Edge Capital Addition
Rate”).  Following the Completion Date (as defined in the Work Letter) of the
Mountain’s Edge Capital Addition Project, at the request of either Landlord or
Tenant, the Parties shall execute a written amendment to this Master Lease
memorializing the final adjustment to the Fixed Annual Rent (as set forth in
Section 3.1 herein) and the allocation of such rent to the Mountain’s Edge
Property (as set forth in Schedule 3.1).  Notwithstanding the foregoing, the
failure of either Landlord or Tenant to request and/or the failure of either
Party to execute and deliver any such written amendment to this Master Lease
shall not (a) affect Landlord’s determination of the amount of each month’s
Mountain’s Edge Supplemental Rent Payment, or (b) affect Tenant’s obligation to
pay the Mountain’s Edge Supplemental Rent Payment on the 20th day of each
calendar month after the first advance is made by Landlord under the Work
Letter.  Until such time as the Mountain’s Edge Supplemental Rental Payment is
memorialized in a written amendment to the Master Lease as contemplated by the
preceding sentence, on each anniversary of the Commencement Date, the Mountain’s
Edge Capital Addition Rate shall increase by a percentage equal to the
percentage increase in the Fixed Annual Rent occurring on each anniversary of
the Commencement Date pursuant to Section 3.2.

3.5.Restatement Date Rent Payment.  As consideration for Landlord agreeing to
enter into this Master Lease, on the Restatement Date, Tenant shall pay to
Landlord the following sums:  (a) all rents due and payable, prior to the
Commencement Date, by the Operators to Landlord under the Original Leases
(including any outstanding deferred rental payments under the Mountain’s Edge
Lease), (b) all Monthly Fixed Rent payments (prorated for any partial months)
due and payable, after the Commencement Date and through the Restatement Date,
by Tenant to Landlord under this Master Lease, (c) all Replacement Reserve
Payments (as defined in Section 6.7 herein) (prorated for any partial months)
due and payable, after the Commencement Date and through the Restatement Date,
by Tenant to Landlord under this Master Lease, and (d) an amount equal to all
reasonable and

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documented attorneys’ fees and legal costs incurred by Landlord in connection
with the preparation and negotiation of this Master Lease and the transaction
contemplated by this Master Lease.

3.6.Absolute Net Lease.  All Fixed Annual Rent and any other rent payments or
other payments or obligations owed to Landlord under this Master Lease shall be
absolutely net to Landlord, and, during the entire Term, Landlord shall have no
cost obligation, responsibility or liability whatsoever for repairing,
operating, maintaining or owning the Premises.  Accordingly, Tenant shall pay
Fixed Annual Rent to Landlord during the Term free of any deduction, diminution
or payment obligation on the part of Landlord for all Taxes (as defined in
Section 4.1), assessments, utility charges, operating expenses, insurance
premiums and any other charge or expense, levy, fine, fee or cost in connection
with the Premises and the ownership, operation and maintenance, repair and
replacement thereof, including but not limited to all expenses and charges,
whether for upkeep, maintenance, operation, repair, refurnishing, refurbishing,
restoration, replacement, insurance premiums, Taxes, utilities, occupational
licenses and other permits and other operating or other charges of a like
nature, whether known or unknown, ordinary or extraordinary, foreseen or
unforeseen, anticipated or unanticipated, and in effect now or enacted hereafter
(the foregoing collectively, “Impositions”). Except as otherwise expressly
provided in this Master Lease, all Impositions shall be the sole responsibility
of Tenant and shall be paid by Tenant thirty (30) days before any fine, penalty,
interest or cost may be added thereto for the non-payment thereof (or sooner if
elsewhere herein required). This provision is not in derogation of the specific
provisions of this Master Lease, but in expansion thereof and as an indication
of the general intentions of the Parties hereto.  Tenant shall continue to pay
Fixed Annual Rent and to perform its obligations under this Master Lease even if
Tenant claims that Landlord has breached any obligation under this Master Lease
or that Tenant has been damaged by any act or omission of Landlord. Therefore,
Tenant shall at all times remain obligated to fully and faithfully pay and
perform all its obligations under this Master Lease, without any right of
set-off, counterclaim, abatement, deduction, or any other reduction. Tenant’s
sole right to recover damages against Landlord by reason of a breach or alleged
breach of Landlord’s obligations under this Master Lease shall be to pursue,
prove and subsequently be awarded by a court of competent jurisdiction a
judgment for such damages in a separate action against Landlord.

Taxes, Assessments and Other Charges

.  

4.1.Tenant’s Obligations.  Tenant agrees to pay and discharge (including the
filing of all required returns) directly to the appropriate assessing authority
any and all taxes (including, but not limited to, real estate and personal
property taxes, business and occupational license taxes, ad valorem sales, use,
single business, gross receipts, transaction privilege, franchise taxes,
business privilege, rent or other excise taxes) and other assessments levied or
assessed against the Premises, Tenant’s interest therein or against Landlord
with respect to this Master Lease and/or the Premises (but excluding any state
or federal income tax based upon the net income of Landlord) (individually a
“Tax” and collectively, “Taxes”), when same shall become due and, in any event,
prior to delinquency or imposition of any fine, penalty, interest or other
cost.  To the extent that in lieu of the whole or any part of any Taxes levied
on the Premises, there is levied on Landlord a capital tax directly on the rents
received therefrom or a franchise tax (such as the so-called “margin tax” in
Texas), assessment, or a charge based, in whole or in part, upon such rents,
then all such taxes, assessments, or charges, or the part thereof so based,
shall be deemed to be included within the term “Taxes” to be governed by this
Section 4.  The term “Taxes” shall not include any taxes based solely upon the
income of Landlord.  All Taxes due and payable for the tax year in which the
Term expires, shall be prorated equitably between Landlord and Tenant.

4.2.Right to Protest.  Landlord and/or Tenant shall have the right, but not the
obligation, to protest the amount or payment of any Taxes by appropriate legal
proceedings diligently conducted in good faith.  Landlord shall, if necessary
for Tenant to pursue such protest, join in such protest brought by Tenant,
provided that Landlord shall not incur any expense because of any such
protest.  Tenant shall in advance of such protest provide such good and
sufficient undertaking, if any, as may be required by law to accomplish a stay
of any foreclosure, and Tenant shall diligently and continuously prosecute any
such protest. In the absence of such undertaking, Tenant shall pay any Tax,
assessment or other charge before the imposition of any penalty or interest and,
in any event, shall remain responsible for the payment of any such penalty or
interest.  If Landlord receives notice that the taxing authority is about to
foreclose on the Premises, Landlord shall be entitled to make a written demand
on Tenant to immediately pay such Taxes and if such Taxes are not so paid,
Landlord may draw upon any security deposit (or other undertaking by Tenant as
described above) by Tenant, if any, and use such funds to pay Taxes then
owing.  

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Any funds advanced by Landlord to pay such Taxes shall constitute an obligation
of Tenant to Landlord and shall promptly be reimbursed by Tenant to Landlord
upon demand.

4.3.Tax Impounds and Tax Escrow.  Upon an Event of Default (as defined), or if
Tenant shall have failed, on any occasion, to pay any Taxes prior to delinquency
(absent an active protest of such Taxes which complies with the requirements of
Section 4.2), Landlord shall have the right, at its option, to require Tenant to
(i) immediately deposit with Landlord an amount equal to all Taxes currently
due, and (ii) make monthly deposits with Landlord in such amount as will be
sufficient to permit Landlord to pay all Taxes in full from such deposits when
next becoming due, and (iii) thereafter to deposit with Landlord one-twelfth
(1/12) of the current annual Taxes on the twentieth (20th) day of each month in
advance, together with such additional amounts as may be required to make
payments of Taxes due during said month.  All such deposited amounts will be
held by Landlord without interest and will be applied by Landlord against the
payment of Taxes as they become due.   Landlord shall deposit all impounded
funds in accounts insured by any federal or state agency and shall not commingle
such funds with other funds and accounts of Landlord.  Interest or other gains
from such funds, if any, shall be the sole property of Landlord.  Upon an Event
of Default, in addition to any other remedies, Landlord may apply all impounded
funds against any sums due from Tenant to Landlord.  Landlord shall give to
Tenant an annual accounting showing all credits and debits to and from such
impounded funds received from Tenant.  Additionally, Tenant shall be required to
maintain with Landlord, or at Landlord’s direction with any Facility Mortgagee
(as defined in Section 18.2.2) of Landlord, such reserve accounts for Taxes as
may be reasonably required under any Facility Mortgage (as defined in Section
18.2.1) and/or by any Facility Mortgagee.

4.4.Tax Bills and Receipts.  Within ten (10) days after receipt by Landlord or
Tenant, as applicable, of a real estate Tax bill relating to the Premises or any
part thereof, such party shall deliver to the other party a copy of such Tax
bill. Tenant will pay all Taxes related to the Premises before the imposition of
any penalty or interest on such Tax payment and, in any event, shall remain
responsible for the payment of any such penalty or interest.  Tenant shall
promptly forward to Landlord proof of payment of all Taxes, but not later than
January 31 of the year following the year to which such Taxes relate.

4.5.Other Charges.  Tenant shall contract in its own name for all utilities and
services used at the Premises. Tenant agrees to pay and discharge, punctually as
and when the same shall become due and payable without penalty, all electricity,
gas, garbage collection, cable television, telephone, water, sewer, and other
utilities costs and all other charges, obligations or deposits assessed against
the Premises during the Term. If Tenant defaults in the payment of any such
utility charges, Landlord may, at its option, pay them for Tenant’s account, in
which event Tenant shall promptly reimburse Landlord upon demand. Landlord shall
have no liability to Tenant for disruption of utilities to the Premises.
Landlord under no circumstances shall be liable to Tenant in damages or
otherwise for loss or interruption for utility or other services for Tenant’s
business at the Premises.

Insurance

.  

5.1.General Insurance Requirements.  Without limiting the liabilities or
indemnification obligations of Tenant, all insurance provided for in this Master
Lease shall be maintained under valid and enforceable policies issued by an
authorized surplus carrier in the state in which each Property is located,
having a general policyholders rating of not less than “A” in the then most
current A.M. Best’s Insurance Report, unless otherwise approved by Landlord and
any Facility Mortgagee.  Any and all policies of insurance required under this
Master Lease shall name Landlord as an additional insured. In addition, Landlord
(and such other parties as Landlord may designate such as any Facility
Mortgagee) shall be shown as the loss payee under the casualty insurance policy
maintained by Tenant pursuant to Section 5.2.  All policies of insurance
required herein may be in the form of “blanket” or “umbrella” type policies
which shall name Landlord and Tenant as their interests may appear and allocate
to the Premises the full amount of insurance required hereunder; provided,
however, that such “blanket” or “umbrella” type policies (including, without
limitation, the deductible amounts thereunder) are acceptable to and have been
approved by Landlord.  Original policies or satisfactory certificates from the
insurers evidencing the existence of all policies of insurance required by this
Master Lease and showing the interest of Landlord shall be provided to Landlord
prior to the Restatement Date and shall provide that, during the Term, the
subject policy may not be canceled, except upon not less than ten (10) days
prior written notice to Landlord in the case of cancellation for nonpayment of
premium, and not less than thirty (30) days prior written notice to Landlord in
the case of cancellation for any other reason. If Landlord is provided with a
certificate, upon Landlord’s request,

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Tenant shall provide Landlord with a complete copy of the insurance policy
evidenced by such certificate within thirty (30) days of the Restatement Date.
Originals of the renewal policies or certificates therefor from the insurers
evidencing the existence thereof shall be provided to Landlord not less than ten
(10) days prior to the expiration dates of the policies. If Landlord is provided
with a certificate for a renewal policy, upon Landlord’s request, Tenant shall
deliver a copy of the complete renewal policy to Landlord within thirty (30)
days of the expiration of the replaced policy. Any claims under any policies of
insurance described in this Master Lease shall be adjudicated by and at the
expense of Tenant or of its insurance carrier. All insurance policies or
certificates shall include provisions for not less than thirty (30) days prior
written notice to Landlord of any change in conditions or terms thereof.

5.2.Fire and Extended Coverage.  Commencing with the Restatement Date and
continuing throughout the Term, Tenant shall keep each Property and Tenant’s
Personal Property (inclusive of the Mountain’s Edge Equipment more particularly
described on Schedule 1.3(a)) in or on each such Property insured under an all
risk property insurance policy covering loss or damage by fire, vandalism and
malicious mischief, extended coverage perils and all physical loss perils,
including, but not limited to, sprinkler leakage, in an amount not less than
100% of the then Full Insurable Value (as defined hereinafter) and without a
coinsurance requirement, and earthquake, windstorm and flood to the extent that
any Facility is located in a high hazard zone for any of those perils.  Such
policy shall provide endorsements for law and ordinance changes, demolition and
increased cost of construction.  Notwithstanding any other provision in this
Master Lease to the contrary, such insurance shall be payable to Landlord and
shall contain a loss payable clause to the holder of any Facility Mortgage to
which this Master Lease shall be subject and subordinate. In addition, the
casualty insurance required under this Section 5.2 will include an agreed amount
endorsement such that the insurance carrier has accepted the amount of coverage
and has agreed that there will be no co-insurance penalty.  The term “Full
Insurable Value” shall mean the actual replacement value of the applicable
Property (including all improvements, fixtures, major movable equipment and
furnishings at the applicable time located in the Improvements or in or on the
Property) and every portion thereof, including, if required, any endorsement to
include, as part of the coverage, the cost of compliance with changes in zoning
and building codes and other laws and regulations, demolition and debris removal
and increased cost of construction.  Such Full Insurable Value may be determined
annually by a qualified appraiser on behalf of Landlord, at Landlord’s sole cost
and expense.  

5.3.Commercial General Liability. With respect to each Property, Tenant shall
maintain a commercial general liability insurance coverage (including broad form
coverage) against claims for bodily injury, death or property damage occurring
on, in or about such Property and the adjoining sidewalks and passageways, and
such insurance shall afford protection to Landlord and Tenant in the initial
amounts of not less than One Million and No/100 Dollars ($1,000,000.00) per each
occurrence and not less than Three Million and No/100 Dollars ($3,000,000) in
the aggregate, with respect to each Facility.  

5.4.Professional Liability Insurance.  With respect to each Property, Tenant
shall maintain a professional liability insurance against liability imposed upon
Tenant or Landlord for damages on account of professional services rendered or
which should have been rendered by Tenant or any Person (as defined hereinafter)
for whose acts Tenant is legally liable on account of injury, sickness or
disease, including death at any time resulting therefrom, and including damages
allowed for loss of service, in a minimum amount of One Million and No/100
Dollars ($1,000,000.00) per each occurrence and Three Million and No/100 Dollars
($3,000,000) in the aggregate, with respect to each Facility.  Such insurance
shall be supplemented by a cash collateral arrangement pursuant to which, as of
the commencement of each policy year, there shall exist a cash collateral
deposit in the amount of Two Million Two Hundred Thousand and No/100 Dollars
($2,200,000.00), which amount shall be available for payment of covered claims
in excess of the policy amount during the ensuing policy year.  Coverage
maintained by Tenant shall be on an “occurrence” basis unless Landlord otherwise
consents in writing.  For purposes of this Master Lease, the term “Person” shall
mean any individual, partnership, association, corporation, limited liability
company or other entity.

5.5.Automobile Liability Insurance.  With respect to each Property, Tenant shall
maintain an automobile liability insurance of not less than One Million and
No/100 Dollars ($1,000,000.00) per occurrence covering all owned, non-owned and
hired vehicles.  

5.6.Worker’s Compensation.  With respect to each Property, Tenant shall at all
times maintain adequate workers’ compensation insurance coverage for all persons
employed by Tenant on the Property of

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each such Facility as well as employer’s liability coverage with a limit of not
less than One Million and No/100 Dollar ($1,000,000.00) per claim. Such worker’s
compensation insurance shall be in accordance with all requirements of
applicable laws.

5.7.Business Interruption Insurance. With respect to each Property, Tenant
shall, at all times, keep in effect a business interruption insurance with a
loss payable endorsement in favor of Landlord in an amount at least sufficient
to cover each of the following for the period of the next succeeding twelve (12)
months following the occurrence of the business interruption:  (a) the aggregate
of the cost of all Taxes and assessments due for such twelve (12) month period
with respect to such Property; (b) the cost of all insurance premiums for
insurance required to be carried by Tenant for such twelve (12) month period
with respect to such Property; (c) the aggregate of the amount of the Fixed
Monthly Rent (taking into account any adjustments thereto described in Section
3.2 above) for such twelve (12) month period with respect to such Property; and
(d) the aggregate amount of the monthly estimated additional rent or other
amounts to be paid under this Master Lease with respect to such Property, such
as utilities and other operating expenses, whether payable to third parties or
to Landlord, for such twelve (12) month period.  All proceeds of any business
interruption insurance shall be applied, first, to the payment of any and all
Fixed Monthly Rent payments for such twelve (12) month period; second, to the
payment of any Taxes and insurance deposits (to the extent then required
hereunder) required for such twelve (12) month period; and, thereafter, after
all necessary repairing, rebuilding, restoring or replacing has been completed
as required by the pertinent provisions of this Master Lease and any Facility
Mortgage, any remaining balance of such proceeds shall be paid over to Tenant.

5.8.Deductible Amounts. Except with respect to worker’s compensation insurance,
the policies of insurance which Tenant is required to provide under this Master
Lease will not have deductibles or self-insured retentions in excess of Four
Hundred Thousand and No/100 Dollars ($400,000.00).

5.9.Coverage Adjustments.  From time to time, Landlord or any Facility Mortgagee
may reasonably require Tenant to change the amount or type of insurance, or to
add or substitute additional reasonable coverages, required to be maintained by
Tenant hereunder, in each case, as may reasonably be necessary to reflect the
amounts and kinds of coverages customarily maintained by quality operators of
similar facilities in the geographic regions in which a Facility is located.

5.10.Proceeds Deposited with Landlord.  In the event Tenant receives or is
entitled to receive payment of any casualty insurance proceeds in excess of One
Hundred Fifty Thousand and No/100 Dollars ($150,000.00), Tenant shall pay (or
cause to be paid) such insurance proceeds to Landlord and Landlord shall hold
and disburse such proceeds for the repairing, rebuilding, restoring or replacing
of the Premises or any portion thereof subject to the pertinent provisions of
this Master Lease and any mortgage held by a Facility Mortgagee.  No such sums
shall be disbursed by Landlord toward such repairing, rebuilding, restoring or
replacing, unless Landlord is reasonably satisfied that the amount of money
necessary to complete such repairing, rebuilding, restoring or replacing in
excess of insurance proceeds received by Landlord has been paid by Tenant for
such repairing, rebuilding, restoring or replacing, and that the amount of such
insurance proceeds held by Landlord is sufficient to complete such work. In the
event the insurance proceeds received by Landlord is not sufficient to cover the
cost of such repairs or replacements, Tenant shall deposit with Landlord the
amount of funds necessary to cover such deficiency and to ensure that Landlord
is holding funds sufficient to complete such repairing, rebuilding, restoring or
replacing in accordance with the provisions of any mortgage held by a Facility
Mortgagee and any plans and specifications relating to such repair or
replacement work, free from any liens or encumbrances of any kind
whatsoever.  The funds held by Landlord shall be disbursed only upon presentment
of architect’s or general contractor’s certificates, waivers of liens,
contractor’s sworn statements, and other evidence of cost and payments as may be
reasonably required by Landlord or any Facility Mortgagee.

5.11.Waiver of Subrogation.  Landlord and Tenant intend that their respective
property loss risks shall be borne fully (other than deductible amounts as
provided herein) by insurance carriers to the extent provided in this Section 5,
and Landlord and Tenant hereby agree to look solely to, and seek recovery only
from, their respective insurance carriers in the event of a property loss to the
extent that such coverage is required under this Section 5.  Landlord and Tenant
each hereby waive all rights and claims against each other for such losses,
provided such waiver of subrogation shall not affect the right of the insureds
to recover under their respective insurance policies.   Landlord and Tenant
agree that their respective insurance policies are now, or shall be, endorsed

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such that the waiver of subrogation shall not affect the right of the insured to
recover thereunder, so long as no material additional premium is charged
therefor.

5.12.Additional Obligations.  It is expressly understood and agreed that (i) if
any insurance required hereunder, shall expire, be withdrawn, become void by
breach of any condition thereof by Tenant, or become void or in jeopardy by
reason of the failure or impairment of the capital of any insurer, Tenant shall
immediately obtain new or additional insurance reasonably satisfactory to
Landlord and any Facility Mortgagee and in accordance with this Section 5; (ii)
the minimum limits of insurance coverage set forth in this Section 5 shall not
limit the liability of Tenant for its acts or omissions as provided in this
Master Lease; (iii) Tenant shall procure policies for all insurance for periods
of not less than one year and shall provide to Landlord and any Facility
Mortgagee certificates of insurance or, upon Landlord’s request, duplicate
originals of insurance policies evidencing that insurance satisfying the
requirements of this Master Lease is in effect at all times; (iv) Tenant shall
pay as they become due all premiums for the insurance required by this Section
5; (v) in the event any insurance policy required to be maintained by Tenant
hereunder contains any breach of warranty provisions, Tenant shall not cause any
violations of the policy warranties, declarations or conditions in such policy;
and (vi) in the event that Tenant fails to comply with any of the requirements
set forth in this Section 5, within three (3) days of the giving of written
notice by Landlord to Tenant, (A) Landlord shall be entitled to procure such
insurance; and (B) any sums expended by Landlord in procuring such insurance
shall be a monetary obligation and shall be repaid by Tenant, together with
interest thereon at the Agreed Rate (as defined in Section 12.5), from the time
of payment by Landlord until fully paid by Tenant (which sums shall be due and
payable to Landlord upon written demand).

5.13.Insurance Impounds and Insurance Escrow.  Upon the occurrence of an Event
of Default, in addition to any other remedies, Landlord shall have the right, at
its option, to require Tenant to (i) immediately deposit with Landlord an amount
equal to all premiums currently due with respect to the insurance policies
required to be maintained by Tenant under this Master Lease, and (ii) make
monthly deposits with Landlord in such amount as will be sufficient to permit
Landlord to pay all such premiums in full from such deposits when next becoming
due, and (iii) thereafter to deposit with Landlord one-twelfth (1/12) of the
current annual premiums with respect to such insurance policies on the twentieth
(20th) day of each month in advance, together with such additional amounts as
may be required to make payments of such premiums due during said month.  In
such event, Tenant shall advise Landlord of all insurance bills which are due
and shall cooperate fully with Landlord in assuring that the same are paid.  All
such deposited amounts will be held by Landlord without interest and applied by
Landlord against the payment of the required insurance premiums as they become
due.  Landlord shall deposit all impounded funds in accounts insured by any
federal or state agency and shall not commingle such funds with other funds and
accounts of Landlord.  Interest or other gains from such funds, if any, shall be
the sole property of Landlord.  Upon an Event of Default, in addition to any
other remedies, Landlord may apply all impounded funds against any sums due from
Tenant to Landlord.  Landlord shall give to Tenant an annual accounting showing
all credits and debits to and from such impounded funds received from
Tenant.  Additionally, Tenant shall be required to fund and maintain all
insurance escrow accounts as may be required by any Facility Mortgagee.

Maintenance, Regulatory Compliance, Permitted Use and Miscellaneous Operational
Covenants

.

6.1.Tenant’s Maintenance Obligations.  

6.1.1.Tenant, at Tenant’s sole cost and expense, will keep and maintain the
Premises in good appearance, repair and condition and maintain proper
housekeeping. Tenant shall promptly make or cause to be made all repairs and
replacements, interior and exterior, structural and nonstructural (including,
without limitation, the heating, plumbing, electrical, mechanical and drainage
systems and all structural components, including building walls, roofs, floors,
foundations, windows and doors and related systems and equipment), ordinary and
extraordinary, foreseen and unforeseen, necessary to (a) keep the Premises in
good and lawful order and condition and in compliance with all requirements for
the operation of each Facility for the Permitted Use applicable to each such
Facility, (b) maintain all licenses, permits and governmental approvals
necessary to operate each such Facility for its Permitted Use, and (c) secure
and maintain for each Facility certification for participation in Medicare and
Medicaid (or any successor programs). Any repairs and/or replacements shall be
Landlord’s property (excluding any replacements of Tenant’s Personal Property
(exclusive of the Mountain’s Edge Equipment more particularly described on
Schedule 1.3(a))) upon installation without any compensation therefor and may
not

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subsequently be removed by Tenant from the Premises, unless required as a
subsequent repair or replacement in compliance with this Master Lease. All
Tenant’s work in repairing or replacing any part or component of the Premises
shall be done utilizing repair or replacement parts of comparable specification
and quality as the item so repaired or replaced, shall be done in a good and
workmanlike manner and shall be performed and installed free and clear of all
liens and encumbrances. Tenant shall promptly replace any glass which may be
broken or damaged with glass of comparable kind and quality.  Tenant shall
surrender the Premises at expiration of this Master Lease in substantially the
same condition as when received, ordinary wear and tear excepted. Tenant will
notify Landlord when it becomes aware that any material repairs or replacements
(in excess of $10,000.00 in any one instance) need to be made and Landlord shall
have the right to monitor, inspect and/or approve of same.

The foregoing maintenance and repair obligations of Tenant shall apply to the
entire Premises, including without limitation, the obligation to operate,
manage, equip, light and maintain the Land and any areas outside any Facility in
good order and repair, including, without limitation, restriping of parking
areas; repairing and replacing paving and the substrata thereof for parking,
driveway, sidewalk and curb facilities; keeping such areas properly drained,
reasonably free of ice, snow, trash, rubbish, waste, and obstructions, and in a
neat, clean, orderly and sanitary condition; keeping such areas suitably lit;
promptly removing abandoned cars and other debris; maintaining signs, markers,
and other means and methods of pedestrian and vehicular traffic control; keeping
all bushes adequately mulched, grass cut and plants trimmed and pruned; subject
to any applicable water restrictions, keeping all landscaping adequately
irrigated; maintenance and repair of the landscaping and the irrigation systems;
maintenance and repair of all lighting systems in the parking and walkway areas;
maintenance and repair of the storm drainage and sanitary sewer systems; garbage
disposal; and maintenance and repair of utility systems serving such
areas.  Landlord shall have no requirement to maintain any portion of
Premises.  Landlord hereby partially assigns, to the extent assignable and
without representation or warranty, any manufacturer, supplier, installer,
contractor, and subcontractor warranties that are issued in connection with the
construction and/or equipping of the Facilities (the “Project Warranties”) to
Tenant such that either Landlord or Tenant will have the right to enforce all
Project Warranties without the joinder of the other.  

6.1.2.As part of Tenant’s obligations under this Section 6.1, Tenant shall be
responsible to maintain the Equipment (which is owned by Landlord and leased to
Tenant under this Master Lease) and any equipment or personal property
comprising Tenant’s Personal Property, in good condition, ordinary wear and tear
excepted. Subject to the foregoing, Tenant shall repair and replace the
Equipment as well as Tenant’s Personal Property consistent with prudent industry
practice for facilities similar in type, size and character to each Facility
that is subject to this Master Lease.  Should Tenant replace any of the
Equipment, such replacement items shall be deemed the sole property of Landlord
and be deemed a part of the Equipment (owned by Landlord and leased to Tenant
under this Master Lease).  

6.1.3.In the event that any repairs or replacements require that a building
permit or other governmental authorization be obtained, the provisions of
Section 6.5 herein shall apply to such repair or replacement work.  Tenant shall
not overload the electrical wiring or install any additional electrical wiring
or plumbing, unless it has first obtained Landlord’s written consent thereto,
and, if such consent is given, installation shall be at Tenant’s sole cost and
expense. Tenant will repair promptly, at its own expense, any damage to the
Premises caused by bringing into the Premises any items of equipment or personal
property for Tenant’s use, or by the installation, use or removal of such
equipment or personal property, regardless of the cause of such damage.  Tenant
waives any right to require Landlord to maintain, repair or rebuild all or any
part of the Premises for any reason whatsoever.

6.1.4.In the event of an Event of Default by Tenant relating to a breach of
Tenant’s obligations under this Section 6.1, in addition to Landlord’s remedies
under Section 12.2, Landlord may, but shall not be obligated to enter the
Premises and cause such maintenance, repair or replacement to be done, as
Landlord deems necessary, and Tenant shall, within ten (10) days after receipt
of an invoice and reasonable back-up documents, pay to Landlord all costs
related thereto plus a reasonable charge for overhead, not to exceed fifteen
percent (15%) of the cost of such maintenance, repairs and/or replacement.

6.1.5.Landlord shall not be liable to Tenant or any other Person, including
employees and invitees, for death or injury to the person or for loss or damage
to property caused by theft, vandalism, water, rain, snow, frost, fire, storm or
accident, or by breakage, stoppage, or leakage of water, gas, heating or sewer
pipes

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or plumbing, upon, about or adjacent to the Premises or by any other cause,
except to the extent caused by the gross negligence or willful misconduct of
Landlord, its employees or its contractors.

6.1.6.Tenant’s obligations of maintenance and repair under this Section 6.1
shall in no way be limited by the amount of the Replacement Reserve (as defined
in Section 6.7) set forth in Section 6.7 hereof or any other impounds or
reserves whether pursuant to Section 4.3 or Section 5.13 or otherwise.

6.2.Regulatory Compliance.  

6.2.1.Tenant shall comply, and shall have the obligation to ensure that any
other operators or users of the Premises and that the Premises comply, in all
material respects with (a) all federal, state and local licensing and other laws
and regulations applicable to the operation of each Facility for the Permitted
Use applicable to each such Facility, and (b) all certification requirements of
Medicare and Medicaid (or any successor program), if applicable, to each such
Facility.  Further, Tenant shall ensure that each Property is continuously
operated as a Facility for the Permitted Use applicable to such Facility,
without any cessation, suspension, revocation, decertification or other
limitation (subject to Tenant’s ability to correct any such revocation,
decertification or other limitation as provided in Section 6.2.8 herein).

6.2.2.Without limiting the generality of the foregoing provisions, Tenant will
maintain in good standing all existing and/or necessary provider agreements,
related provider number or other contract or document providing for
reimbursements or other remuneration to each Facility from the Medicare or
Medicaid programs, regardless how such programs and/or contracts may be
designated, described or named by applicable federal or state authorities (each
a “Medicare or Medicaid Contract”) for the operation of each Facility for its
Permitted Use with no less than the number of licensed beds required for each
Facility pursuant to Section 6.3 herein.  Upon request, Tenant will provide
copies of all material licenses, permits, approvals, registrations, contracts,
consents, franchises, qualifications, accreditations and other authorizations
then maintained by Tenant or any Affiliate (as defined hereinafter) of Tenant or
under Tenant’s Control (as defined hereinafter) for the ownership, operation and
payment for services related to the applicable Facility.  Tenant will comply in
all material respects with the terms, conditions and requirements of such
licenses, permits, approvals, registrations, contracts, consents, franchises,
qualifications, accreditations or other authorizations.  Tenant shall maintain
all material licenses, permits, approvals, registrations, contracts, consents,
franchises, qualifications, accreditations, certifications and other
authorizations necessary to conduct its business as an operator of the
Facilities for the Permitted Use applicable to each Facility.  For purposes of
this Master Lease, (a) the term “Affiliate” shall mean, with respect to any
Person, any other Person which directly or indirectly Controls (as defined
hereinafter), is Controlled by or is under common Control with the such Person,
and (b) the term “Control” or “Controls” shall mean, as applied to any Person,
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of that Person, whether through
ownership, voting control, by contract or otherwise.

6.2.3.Tenant will timely file all Medicare and Medicaid cost reports and other
material reports required to be filed related to each Facility in connection
with such medical reimbursement programs, and all such required reports and
administrative forms and filings will be true, correct and complete in all
material respects.

6.2.4.With respect to each Facility, Tenant and any Affiliate of Tenant has and
will comply in all material respects with all applicable provisions of the
Social Security Act and regulations promulgated thereunder, laws and regulations
relating to institutional and professional licensure, pharmacology or dispensing
medicines or controlled substances, laboratory services, unprofessional conduct,
fee splitting, kickbacks and other prohibited remuneration in exchange for
referrals, billing and submission of false or fraudulent claims, medical privacy
and confidentiality, 42 U.S.C. Section 1320a-7b or 42 U.S.C. Section 1395nn, the
Medicare Regulations and the Medicaid Regulations.  

6.2.5.Tenant represents and warrants to Landlord that the Mountain’s Edge
Facility is accredited as an acute care hospital by the Joint Commission on
Accreditation of Hospitals (the “Joint Commission”).  During the Term, Tenant
shall cause the Mountain’s Edge Facility to maintain its accreditation as

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an acute care hospital by the Joint Commission or another accrediting agency
recognized by Medicare, without qualification, limitation or exception.

6.2.6.Upon Landlord's written request, from time to time during the Term, Tenant
shall certify in writing to Landlord and to any other parties as Landlord may
designate that Tenant's representations, warranties and obligations under this
Section 6 remain true and correct and have not been breached.  Tenant shall
immediately notify Landlord in writing if any of such representations,
warranties or covenants are no longer true or have been breached or if Tenant
has a reasonable basis to believe that they may no longer be true or have been
breached.  In connection with such an event, Tenant shall comply with all legal
requirements and directives of any government or any agency, bureau, board,
directorate, commission, court, department, official, political subdivision,
tribunal, special district, or other instrumentality of any government, whether
federal, state or local, domestic or foreign, and any self-regulatory
organization (each, a “Governmental Authority”) and, at Landlord's request,
provide to Landlord copies of all notices, reports and other communications
exchanged with, or received from, any Governmental Authority relating to such an
event.  Tenant shall also reimburse Landlord for all costs incurred by Landlord
in evaluating the effect of such an event on the Premises and this Master Lease,
in obtaining any necessary license from any Governmental Authority as may be
necessary for Landlord to enforce its rights under this Master Lease, and in
complying with all legal requirements applicable to Landlord as the result of
the existence of such an event and for any penalties or fines imposed upon
Landlord as a result thereof.

6.2.7.All application, inspection and other fees, costs and charges associated
with the issuance and/or change of any licensure or certification for use and/or
operation of each Facility for its Permitted Use and to secure any Medicare or
Medicaid Contract, shall be borne solely by Tenant. Subject to the provisions of
Section 6.5, Tenant shall, at its sole cost, make any additions or alterations
to the Premises necessitated by, or imposed in connection with, a change of
ownership, inspection or survey for the transfer of operation of the Premises
from Tenant or Tenant’s assignee or subtenant to Landlord or Landlord’s designee
at the expiration or termination of the Term.

6.2.8.Tenant further agrees to correct any deficiency or violation within the
timeframe required by any licensure, certification or other governing agency,
pertaining to the use or operation of the Premises, Tenant’s right to continue
participation in Medicare and Medicaid (or any successor program) for existing
patients, or the right to admit new Medicare and Medicaid (or any successor
program) patients. In this regard, Tenant will provide Landlord with a copy of
all notices and correspondence received by Tenant from any state or federal
agency regarding any material deficiency or violation within ten (10) days of
receipt by Tenant. Likewise, Tenant will provide Landlord with a copy of any
corrective plan of action, response or correspondence from Tenant to any such
agency regarding any such deficiency notice simultaneously with sending the same
to the said agency and in any event, within the time required for response by
such agency.

6.2.9.With respect to the Mountain’s Edge Facility and the Horizon Henderson
Facility, Tenant further agrees that it will be required at all times during the
Term to satisfy all requirements of the State of Nevada, Department of Health
and Human Services, Health Division, Bureau of Health Care Quality & Compliance
(“NDHHS”) and any successor agency, division or bureau regarding the sufficiency
of funds available to cover working capital deficits. Tenant will provide any
NDHHS-required supporting data to NDHHS, any such successor or additional
agencies and to Landlord and any Facility Mortgagee to verify and confirm
compliance with this requirement.  

6.2.10.With respect to the Mira Vista Facility, Tenant further agrees that it
will be required at all times during the Term to satisfy all requirements of the
Texas Department of Aging and Disability Services (“TDADS”) (or any other state
agency having licensure authority with respect to the operation and use of the
Mira Vista Facility as a skilled nursing facility) and any successor agency,
division or bureau, regarding the sufficiency of funds available to cover
working capital deficits. Tenant will provide any TDADS-required supporting data
to TDADS, any such successor or additional agencies and to Landlord and any
Facility Mortgagee to verify and confirm compliance with this requirement.  

6.2.11.With respect to the Spartanburg Facility, Tenant further agrees that it
will be required at all times during the Term to satisfy all requirements of the
State of South Carolina, Department of

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Health and Environmental Control, Bureau of Health Licensure (“SCHHS”) (or any
other state agency having licensure authority with respect to the operation and
use of the Spartanburg Facility as a skilled nursing facility), and any
successor agency, division or bureau, regarding the sufficiency of funds
available to cover working capital deficits. Tenant will provide any
SCHHS-required supporting data to SCHHS, any such successor or additional
agencies and to Landlord and any Facility Mortgagee to verify and confirm
compliance with this requirement.  

6.3.Permitted Use. Tenant shall continuously use and occupy each Property and
each Facility during the Term only for the permitted use applicable to such
Facility as described in Schedule 6.3 attached hereto and incorporated herein
(the “Permitted Use”) with each such Facility having no less than the minimum
number of licensed beds described in Schedule 6.3; and Tenant shall not use any
of the Properties or the Facilities for any other purpose without the prior
written consent of Landlord.  Without Landlord’s prior written consent, Tenant
shall not apply for or consent to the suspension or permanent reduction of the
number of state licensed beds or the number of Medicaid or Medicare certified
beds at any Facility.  Tenant shall not modify, de-license or otherwise change
the licensed capacity for any Facility without the prior written approval of
Landlord. Tenant shall have no right to alter the Improvements associated with
any Facility which would make it impractical or unfeasible to operate less than
the minimum number of licensed beds required for such Facility as described in
Schedule 6.3.

6.4.No Liens; Permitted Contests.  Tenant shall not cause or permit any liens,
levies or attachments to be placed or assessed against Landlord’s fee or other
interest in the Premises or against Tenant’s leasehold interest for any reason.
The foregoing shall not prohibit Tenant from granting liens in favor of Tenant’s
Senior Lender (as defined hereinafter) on Tenant’s Personal Property.  The term
“Tenant’s Senior Lender” shall mean Pacific Western Bank (successor-in-interest
to CapitalSource Bank), or such other entity that is not an Affiliate of Tenant
or Guarantor as shall during the Term become the senior secured lender to
Tenant.  Tenant, however, shall be permitted in good faith and at its expense to
contest the existence, amount or validity of any lien upon Landlord’s fee or
other interest in the Premises or Tenant’s leasehold interest by appropriate
proceedings sufficient to prevent the collection or execution of the lien or
claim so contested, as well as the sale, forfeiture or loss of any of the
Premises or any rent to satisfy the same. Tenant shall provide Landlord with
security satisfactory to Landlord, in Landlord’s reasonable judgment, to assure
the foregoing.  Each contest permitted by this Section 6.4 shall be promptly and
diligently prosecuted to a final conclusion by Tenant and shall be subject to
similar requirements concerning Tenant’s contesting of Taxes.

Tenant shall indemnify the Landlord Indemnified Parties (as defined in Section
7.9) against any loss or expenses incurred as a result of the assertion of any
such lien (excluding any liens in favor of any creditor of Landlord), and Tenant
covenants and agrees to remove or bond-over any asserted lien by any means
permitted by law within ten (10) Business Days of the assertion of such lien or
claim of lien. In the event Tenant fails to remove or bond-over such lien within
such ten (10) Business Day period then, in addition to its other remedies under
this Master Lease, Landlord shall have the right to discharge the lien or
bond-over the lien by any means permitted by law and, in any such event, Tenant
shall pay all costs so incurred by Landlord immediately upon written demand to
Tenant.  Tenant shall have no right to subject Landlord’s interest in the
Premises to any lien to secure any contracts signed by Tenant, and Tenant shall
so advise all persons furnishing labor, material or services (including, without
limitation, design or engineering services) to the Premises.

6.5.Alterations by Tenant.  Subject to the provisions of this Section 6.5
(relating to equipment and personal property), Tenant shall have the right to
make non-structural alterations, improvements and modifications to any Facility,
from time to time, as it may determine is desirable for the continuing and
proper use and maintenance of the Premises under this Master Lease without the
consent of Landlord; provided, however, that (a) any alterations, improvements,
or modifications to a Facility shall not affect any structural component of the
Improvements or affect the exterior architecture of any of the Improvements; (b)
the cost of such alterations, improvements and/or modifications with respect to
a single Facility is not in excess of Three Hundred Thousand and No/100 Dollars
($300,000.00) in any rolling twelve (12) month period with respect to such
Facility; (iii) all work in excess of Fifty Thousand and No/100 Dollars
($50,000.00) in any one case must be performed by licensed bondable contractors;
(iv) all such alterations, improvements and modifications must be compliant with
the Americans with Disabilities Act and any similar statutes of the state in
which such Facility is located; (v) any of the Equipment (owned by Landlord and
leased to Tenant subject to this Master Lease) that is replaced shall be
replaced with items that are the functional equivalent and of equal or better
quality and such replacement items shall be deemed, upon installation and/or
use, to become the property of Landlord and deemed a part of the Equipment; and
(vi) any

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equipment, appliances or other items comprising a part of Tenant’s Personal
Property (as defined) that are replaced shall be replaced with items that are
the functional equivalent and of equal or better quality and such replacement
items shall be deemed, upon installation and/or use, to be the property of
Tenant and deemed a part of Tenant’s Personal Property (subject, however, to the
provisions of Section 8.2 requiring all of the Mountain’s Edge Equipment more
particularly described on Schedule 1.3(a) to remain with and on the Mountain’s
Edge Property upon the expiration or earlier termination of this Master
Lease).  Otherwise, all alterations, improvements and modifications to the
Premises and all replacement of equipment, appliances or other items of Personal
Property (other than Tenant’s Personal Property) shall require the prior written
consent of Landlord. Notwithstanding the foregoing, other than alterations,
improvements or modifications which were made to comply with applicable codes,
laws or ordinances and with respect to which Tenant provided Landlord with prior
written notice and alterations, improvements or modifications with respect to
which Landlord granted its prior written consent, at the expiration or earlier
termination of this Master Lease Tenant will be obligated to remove all material
alterations, improvements and alterations if and to the extent that Landlord
directs and to restore the Premises to their original condition, at Tenant’s
sole cost and expense. The cost of all such alterations, improvements,
replacements, modifications or other purchases, whether undertaken as a
requirement of any on-going licensing, Medicare or Medicaid (or any successor
program) or other regulatory requirement or otherwise shall be borne solely and
exclusively by Tenant and shall immediately become a part of the Premises and
the property of Landlord subject to the terms and conditions of this Master
Lease. All work done in connection therewith shall be done in a good and
workmanlike manner and in compliance with all existing codes and regulations
pertaining to the Premises and shall comply with the requirements of any
Facility Mortgagee and insurance policies required under this Master Lease. In
the event any items of the Premises have become inadequate, obsolete or worn out
or require replacement (by direction of any regulatory body or otherwise),
Tenant shall remove such items and exchange or replace the same at Tenant’s sole
cost with items that are the functional equivalent and that are of equal or
better quality and the same shall become part of the Premises and property of
Landlord (except to the extent that the replacement is of one or more items of
Tenant’s Personal Property, in which case, such replacement item(s) or
article(s) will remain Tenant’s Personal Property) and subject to (a) the terms
of this Master Lease and (b) the provisions of Section 8.2 requiring all of the
Mountain’s Edge Equipment more particularly described on Schedule 1.3(a) to
remain with and on the Mountain’s Edge Property upon the expiration or earlier
termination of this Master Lease.

6.6.Compliance With Union Agreements.  Tenant hereby represents to Landlord that
prior to the Commencement Date, there do not exist any collective bargaining or
other agreements with labor unions or other employee groups or associations
affecting the operation of any of the Facilities.  If, during the Term, Tenant
enters into any such agreements, Tenant shall promptly supply Landlord with true
and correct copies of the same and thereafter shall at all times during the Term
comply in all material respects with the terms of such agreements.

6.7.Replacement Reserve.  With respect to each Facility, Tenant shall establish
and maintain in effect throughout the Term a reserve (the “Replacement Reserve”)
funded by Tenant and held by Landlord for each Facility for payment of costs and
expenses associated with Upgrade Expenditures (as defined hereinafter) to be
performed at such Facility. Simultaneously with monthly payments of Fixed
Monthly Rent, Tenant shall deliver to Landlord, in addition to all other amounts
due hereunder, an amount equal to one-twelfth (1/12th) of the then applicable
Replacement Reserve Payment (as hereinafter defined) for each Facility to be
deposited into the Replacement Reserve for such Facility.  Beginning on the
Commencement Date, the “Replacement Reserve Payment” shall mean (a) with respect
each of the Facilities (other than the Mountain’s Edge Facility), an amount
equal to Three Hundred Fifty and No/100 Dollars ($350.00) for each licensed bed
in such Facility, and (b) with respect to the Mountain’s Edge Facility, an
amount equal to Four Hundred and No/100 Dollars ($400.00) for each licensed bed
in the Mountain’s Edge Facility (the annual amount per each licensed bed for the
applicable Facility is referred to hereinafter as the “Base Bed Reserve
Rate”).  During the Term, on each anniversary of the Commencement Date, the Base
Bed Reserve Rate shall be increased to an amount equal to the CPI Factor (as
defined in Section 3.2 herein) multiplied times the Base Bed Reserve Rate in
effect for the immediately preceding Lease Year; provided, however, the Base Bed
Reserve Rate shall never be less than the Base Bed Reserve Rate in the
immediately preceding Lease Year.  So long as no Event of Default has occurred
and is continuing, and no event or circumstance exists which, with the giving of
notice, the passage of time or both, would become an Event of Default, Landlord
shall disburse to Tenant from the Replacement Reserve for a Facility (but in no
event to exceed amounts on deposit in the Replacement Reserve for such
Facility), within ten (10) Business Days after Tenant’s written request (and
provision to Landlord of any supporting documentation reasonably required by
Landlord), the costs and expenses incurred installing or constructing any
Upgrade Expenditures, provided such written notice

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includes a detailed description of the Upgrade Expenditures installed or
constructed together with an invoice for the work done. With each draw request,
Tenant will deliver to Landlord (i) a certification by Tenant that the work for
which the draw to be funded has been completed in accordance with applicable
legal requirements, and (ii) such additional supporting evidence as may be
requested by Landlord in its reasonable judgment, including such items as
invoices, receipts or other evidence verifying the cost of such work, together
with affidavits and/or lien waivers from those providing work, materials or
supplies for such portion of the work (provided it shall not be a requirement
that Tenant shall have made any payment on such invoice, unless necessary to
procure the required lien waiver). Tenant will additionally furnish to Landlord
evidence that all necessary or required approvals or consents from Governmental
Authorities have been obtained. In making any disbursement from the Replacement
Reserve for a Facility, Landlord shall be entitled to rely on Tenant’s written
request and supporting documentation without any inquiry into the accuracy,
validity or contestability of any such amount or the nature or necessity of the
materials provided or the work performed. Landlord may, at any time and from
time to time, but shall have no obligation to make or cause to be made
inspections of the Facilities.  In the event that any inspection report from any
such inspection reasonably recommends that Upgrade Expenditures are required or
anticipated which are the obligation of Tenant in accordance the terms of this
Master Lease, Landlord shall provide Tenant with a written description of such
Upgrade Expenditures and Tenant shall deposit the cost of same into the
Replacement Reserve for such Facility and then complete those Upgrade
Expenditures to the reasonable satisfaction of Landlord as expeditiously as is
reasonably practicable under the circumstances after the receipt of such
description from Landlord.  It is specifically hereby stipulated and agreed that
notwithstanding the preceding provisions of this Section 6.7, the management,
uses and disbursement procedures and requirements of the Replacement Reserve for
a Facility may be taken over by a Facility Mortgagee, and Tenant agrees to
negotiate in good faith any changes to this Section 6.7 as may be reasonably
requested by a Facility Mortgagee in such event and to pay the reasonable costs
of the Facility Mortgagee in processing draw requests. “Upgrade Expenditures”
means expenditures in commercially reasonable amounts to Persons not affiliated
with Tenant for (i) upgrades or improvements to any Facility that have the
effect of maintaining or improving its competitive position in its respective
marketplace, including new or replacement wallpaper, tiles, window coverings,
lighting fixtures, painting, upgraded landscaping, carpeting, architectural
adornments, common area amenities and the like, including, without limitation,
capital improvements or repairs (including repairs or replacements of the roof,
structural elements of the walls, parking area or the electrical, plumbing, HVAC
or other mechanical or structural systems), and (ii) other improvements to any
Facility as reasonably approved by Landlord.  

6.8.Signs and Antennas.  Except for the signs, antennas and other data, voice or
image transmission equipment identified on Schedule 6.8 attached hereto, Tenant
shall have no right to place upon the Premises any signs, antennas or other
data, voice or image transmission equipment, without Landlord’s prior written
consent which shall not be unreasonably withheld, conditioned or delayed.  The
installation of any signs, antennas or other data, voice or image transmission
equipment consented to by Landlord shall be completed at Tenant’s sole cost and
expense and must comply with all applicable governmental requirements.  Tenant,
at its sole cost, shall be responsible for obtaining all permits required for
such approved signs, antennas or other data, voice or image transmission
equipment.  Tenant shall maintain such signs, antennas or other data, voice or
image transmission equipment, in a good state of repair and shall repair any
damage to the Premises arising from the erection, maintenance or removal of such
signs, antennas or equipment at the expiration or termination of this Master
Lease. Upon the expiration or termination of this Master Lease, all signs,
antennas or other data, voice or image transmission equipment (but not
stand-alone sign structures unless requested by Landlord) shall be removed in
accordance with Section 8.2.  Tenant shall pay all Taxes, fees or similar
charges relating to any signs, antennas or other data transmission equipment
that is installed on the Premises.  Any and all revenue, other than healthcare
services revenues, derived from payments by third parties in consideration for
locating any such installations on the Premises shall be for the account of
Landlord, and Tenant shall promptly report and remit same to Landlord.

Environmental Matters

.  

7.1.Representations and Warranties.  Tenant represents and warrants to Landlord,
which representations and warranties shall survive the execution, delivery and
termination of this Master Lease, that (a) neither the Premises nor Tenant is
subject to any pending or, to Tenant’s actual knowledge, threatened,
investigation or inquiry by any Governmental Authority, or, to Tenant’s actual
knowledge, subject to any remedial obligations, concerning Environmental
Activities (as defined hereinafter) or Hazardous Materials Laws (as defined
hereinafter) that would reasonably be expected to have a Material Adverse Effect
(as defined hereinafter), (b) Tenant

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has not received any written or oral notice or other communication from any
Person (including but not limited to a Governmental Authority) relating to (i)
Hazardous Materials Laws; (ii) possible liability of any Person pursuant to any
Hazardous Materials Laws; (iii) other environmental conditions; or (iv) any
actual or potential administrative or judicial proceedings in connection with
any of the foregoing that, in any such case, would reasonably be expected to
have a Material Adverse Effect.  For purposes of this Master Lease, the
following defined terms shall have the meanings provided for herein:

7.1.1.“Environmental Activities” shall mean, with respect to each Property, the
use, generation, transportation, handling, discharge, production, treatment,
storage, release or disposal of any Hazardous Materials (as defined herein) from
the Property or located on or present on or under the Property at any time on or
after the original commencement date of the Original Lease with respect to such
Property and prior to the expiration or earlier termination of the Term with
respect to such Property.

7.1.2.“Environmental Condition” shall mean, with respect to each Property, any
material noncompliance on or about the Property with any Hazardous Materials Law
occurring at any time on or after the original commencement date of the Original
Lease with respect to such Property and prior to the expiration or earlier
termination of the Term with respect to such Property.

7.1.3.“Environmental Notice” shall mean any notice or report from a Governmental
Authority, whether oral or written, of any the following: (a) any suit,
proceeding, investigation, order, consent order, injunction, writ, award, or
action related to or affecting the Handling (as defined hereinafter) of any
Hazardous Materials on or about the Premises or relating to Tenant’s Operations;
(b) any Spill (as hereinafter defined) or Environmental Condition on or about
the Premises or relating to Tenant’s Operations; (c) any dispute relating to
Tenant’s or any other party’s Handling (as defined hereinafter) of any Hazardous
Materials, Spill or Environmental Condition on or about the Premises or relating
to Tenant’s Operations; (d) any claims by or against any insurer related to or
arising out of any Hazardous Materials, Spill or Environmental Condition on or
about the Premises or relating to Tenant’s Operations; (e) any recommendations
or requirements of any Governmental Authority, or insurer relating to any
Handling of Hazardous Materials, Spill, or Environmental Condition on or about
the Premises; (f) any lien imposed or threatened to be imposed on the Premises
under any Hazardous Materials Law; (g) any non-compliance with any Hazardous
Materials Laws related in any way to the Property;

7.1.4.“Handling” shall mean use, treatment, storage, manufacture, processing,
distribution, transport, placement, handling, discharge, generation, production
or disposal.

7.1.5.“Hazardous Materials” shall mean (a) any petroleum products and/or
by-products (including any fraction thereof), flammable substances, explosives,
radioactive materials, hazardous or toxic wastes, substances or materials, known
carcinogens or any other materials, contaminants or pollutants which pose a
hazard to the Premises or to persons on or about the Premises or cause the
Premises to be in violation of any Hazardous Materials Laws; (b) asbestos in any
form which is determined by Landlord to be friable or otherwise in violation of
law; (c) urea formaldehyde in foam insulation or any other form; (d)
transformers or other equipment which contain dielectric fluid containing levels
of polychlorinated biphenyls; (e) medical wastes and biohazards; (f) radon gas;
(g) the contents of USTs (as defined in Section 7.4) or similar above-ground
storage facilities which may be toxic to the public or to wildlife or vegetation
on or near the Premises; and (h) any other chemical, material or substance,
exposure to which is prohibited, limited or regulated by any Governmental
Authority or may or could pose a hazard to the health and safety of the
occupants of the Premises or the owners and/or occupants of property adjacent to
or surrounding the Premises, including, without limitation, any materials or
substances that are listed in the United States Department of Transportation
Hazardous Materials Table (49 CFR 172.101) as amended from time to time.

7.1.6.“Hazardous Materials Claims” shall mean any and all investigations,
inquiries, enforcement, clean-up, removal or other governmental or regulatory
actions or orders threatened, instituted or completed pursuant to any Hazardous
Materials Laws, together with all claims made or threatened by any third party
against the Premises, Landlord or Tenant relating to damage, contribution, cost
recovery compensation, loss or injury resulting from any Hazardous Materials.

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7.1.7.“Hazardous Materials Laws” shall mean any local, state or federal laws,
ordinances, regulations, rules, orders, guidelines or policies relating to the
environment, health and safety, Environmental Activities, Hazardous Materials,
air and water quality, waste disposal and other environmental matters.

7.1.8.“Material Adverse Change” or relatedly “Material Adverse Effect” shall
mean any change(s) which (i) has or would reasonably be expected to have a
material adverse effect on the financial condition of the business, operations,
properties, assets, or liabilities of any single Facility, Tenant or Guarantor,
either individually or taken as a whole, or (ii) constitutes a material adverse
change in or material adverse effect on the legality, validity or enforceability
of this Master Lease or the Master Lease Guaranty, or (iii) constitutes a
material adverse change in or material adverse effect upon the existence,
perfection or priority of any security interest or lien securing this Master
Lease or the value of any collateral securing this Master Lease, or
(iv) constitutes a material violation of any material law, regulation or rule of
any Governmental Authority that is not cured within thirty (30) days, unless
such violation is being contested or appealed by appropriate proceedings, or
(v) has materially impaired or would reasonably be expected to materially impair
the ability of Guarantor to perform the obligations set forth in the Master
Lease Guaranty, or (vi) has materially impaired or would reasonably be expected
to materially impair the ability of Tenant to perform its obligations or to
consummate the transactions under this Master Lease.

7.1.9.“Spill” shall mean any spill, contamination, discharge, leakage, release
or escape of any Hazardous Materials in or affecting the Premises, whether
sudden or gradual, accidental or anticipated, that has occurred during Tenant’s
Operations.

7.2.Compliance with Hazardous Materials Laws.  As a material inducement to
Landlord to lease the Premises to Tenant, Tenant covenants and warrants that
Tenant and Tenant’s Operations (as defined hereinafter) will, at all times,
comply in all material respects with all Hazardous Materials Laws.   For
purposes of this Master Lease, the term “Tenant’s Operations” shall mean the use
or occupancy of the Premises by Tenant, and any subtenant, licensee, manager,
concessionaire of Tenant, at any time during the Term.

7.3.Right of Entry/Compliance Inspections.  Upon reasonable prior notice to
Tenant (which shall mean not more than five (5) business days prior notice),
Landlord and any other Person designated by Landlord, including but not limited
to any receiver, any representative of a Governmental Authority or any
environmental consultant, shall have the right, but not the obligation, to enter
upon the Premises at all reasonable times (including, without limitation, in
connection with the exercise of any remedies set forth in this Master Lease) to
inspect and monitor the Premises and Tenant’s Operations on the Premises and to
assess any and all aspects of the environmental condition of any Premises and
its use, including but not limited to, conducting any environmental assessment
or audit (the scope of which shall be determined in Landlord’s sole and absolute
discretion) and taking samples of soil, groundwater or other water, air, or
building materials, and conducting other invasive testing.  Tenant shall
cooperate with and provide access to Landlord, and any other Person designated
by Landlord.  Any such assessment or investigation shall be at Landlord’s sole
cost and expense, and shall not unreasonably interfere with Tenant’s Operations.

7.4.Inspections.  At its sole cost and expense, Tenant shall have the Premises
inspected as may be required by any Hazardous Materials Laws for seepage,
spillage and other environmental concerns.  Tenant shall maintain and monitor
underground storage tanks (“USTs”), if any, as may be required in accordance
with all Hazardous Materials Laws.  Tenant shall provide Landlord with written,
certified results of all such inspections performed on the Premises.  All costs
and expenses associated with any such required inspection, preparation and
certification of results, as well as those associated with any corrective action
with respect to any Environmental Condition, shall be paid by Tenant.  All
inspections and tests performed on the Premises shall be in compliance with all
Hazardous Materials Laws.

7.5.UST Compliance.  Tenant shall comply with all applicable federal, state and
local regulations and requirements regarding USTs, if any, including, without
limitation, any of such regulations or requirements which impose (a) technical
standards, including, without limitation, performance, leak prevention, leak
detection, notification reporting and recordkeeping; (b) corrective action with
respect to confirmed and suspected releases occurring on or after the
commencement date of the Original Lease applicable to the Property in question;

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and (c) financial responsibility for the payment of costs of corrective action
and compensation to third parties for injury and damage resulting from any such
releases.  Tenant shall immediately notify Landlord, in writing, of the
following, promptly upon acquiring actual knowledge thereof: (i) the presence
in, on or under the Premises, or the release from any USTs, if any, in, on or
under the Premises, of any Hazardous Materials in material violation of any
Hazardous Materials Laws occurring on or after the commencement date of the
Original Lease applicable to the Property in question or of which Tenant has
actual knowledge, and (ii) any and all enforcement, clean up, remedial, removal
or other governmental or regulatory actions threatened, instituted or completed
pursuant to any of the Hazardous Materials Laws affecting the Premises.  In the
event of any such release of any Hazardous Materials from any USTs on or after
the commencement date of the Original Lease applicable to the Property in
question in, on or under the Premises, Tenant shall immediately remedy such
situation in accordance with all Hazardous Materials Laws.  Should Tenant fail
to remedy or cause the remedy of such situation in accordance with all Hazardous
Materials Laws, Landlord shall be permitted to take such actions as required in
order to remedy such situation and all reasonable costs incurred in connection
therewith, together with interest at the Agreed Rate, will be paid by Tenant to
Landlord immediately upon written demand.  

7.6.Compliance Certificate.  Tenant shall, upon Landlord’s written request,
deliver to Landlord a certificate stating that Tenant is and has been in
compliance with all of the environmental representations, warranties and
covenants in this Master Lease.

7.7.Notice to Landlord.  Immediately upon receipt of any Environmental Notice
from any Person, Tenant shall deliver to Landlord a true, correct and complete
copy of any written Environmental Notice or a true, correct, and complete report
of any non-written Notice.

7.8.Remediation.  In the event of any Spill or Environmental Condition in, on or
under the Premises, Tenant shall immediately take all of the following actions,
at its sole cost and expense, and without limitation to any other provision of
this Master Lease:

7.8.1.notify Landlord, as provided in Section 7.7 herein;

7.8.2.effectuate any remediation required by any Governmental Authority with
respect to such Spill or Environmental Condition;

7.8.3.promptly commence and diligently pursue all steps reasonably necessary to
clean up any such Spill and any contamination related to the Spill or to
remediate or abate such Environmental Condition;

7.8.4.promptly provide Landlord with copies of all reports, data, proposals,
test results or analyses, assessment or remediation plans relating to such
incidents; and

7.8.5.fully cooperate with Landlord with respect to any such incident, including
permitting Landlord to monitor and inspect all activities pursuant to this
Section 7.8.

Should Tenant fail to undertake such remediation in accordance with this Section
7.8, Landlord, after written notice to Tenant, shall be permitted to complete
such remediation, and all costs incurred by Landlord in connection therewith,
together with interest at the Agreed Rate, shall be deemed to be a monetary
obligation hereunder and paid by Tenant to Landlord immediately upon written
demand.

7.9.Tenant’s Indemnification of Landlord for Environmental Matters.  Tenant
hereby agrees that it will indemnify, defend, save and hold harmless the
Landlord Indemnified Parties (as defined hereinafter) against and from, and will
reimburse the Landlord Indemnified Parties with respect to, any and all damages,
claims, liabilities, loss, costs and expenses (including, without limitation,
reasonable attorneys’ fees and expenses, whether in court, out of court, in
bankruptcy or administrative proceedings or on appeal), penalties, or fines,
incurred by or asserted against the Landlord Indemnified Parties by reason or
arising out of: (a) the breach of any representation or undertaking of Tenant
under this Section 7; (b) the Spill or handling of any Hazardous Materials by
Tenant or any subtenant, licensee, concessionaire, manager, or other party
occupying or using the

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Premises during the Term; (c) any loss, cost, expense, claim, or liability
arising out of any investigation, monitoring, clean-up, containment, removal,
storage, or restoration work required by any Hazardous Materials Laws as a
result of any Environmental Condition; (d) any claims of third parties for loss,
injury, expense, or damage of any kind or nature arising out of any
Environmental Condition or Spill affecting the Premises; and (e) any actual loss
of use or actual diminution in value of the Premises as a direct result of any
of the foregoing.  For purposes of this Master Lease, the term “Landlord
Indemnified Party” or “Landlord Indemnified Parties” means Landlord, and its
members, managers, officers, directors, shareholders, partners, employees,
agents, servants, representatives, contractors, subcontractors, Affiliates,
subsidiaries, participants, and each of their respective successors and assigns,
including, but not limited to, any successors by merger, consolidation or
acquisition of all or a substantial portion of the assets and business of
Landlord.  “Landlord Indemnified Parties” shall also include any Facility
Mortgagee and its members, managers, officers, directors, shareholders,
partners, employees, agents, servants, representatives, contractors,
subcontractors, Affiliates, subsidiaries, participants and each of their
respective successors and assigns, including, but not limited to, any successors
by merger, consolidation, or acquisition of all or a substantial portion of the
assets and business of the Facility Mortgagee.

7.10.Survival of Covenants, Representations and Warranties and
Indemnities.  Notwithstanding anything in this Master Lease to the contrary, the
covenants, representations, warranties, indemnities and undertakings of Tenant
set forth in this Section 7 shall survive the expiration or termination of this
Master Lease, regardless of the method of expiration or termination of this
Master Lease.

7.11.Installation.  Tenant shall not during the Term install, any fueling
facilities, gas/propane tanks, underground or above ground storage tanks,
vaults, sumps, hydraulic lifts or any kind or nature, in each case, without the
prior written consent of Landlord which consent shall not unreasonably be
withheld or delayed.

7.12.Medical Waste.  Notwithstanding anything to the contrary in this Master
Lease, Landlord acknowledges and agrees that Tenant’s use of the Premises may
produce medical waste, and so long as Tenant complies or causes compliance in
all material respects with all applicable Hazardous Materials Laws related to
the use, handling, storage and disposal of such medical waste, that Landlord
will not interfere with Tenant’s use of the medical products that produce such
medical waste. Tenant shall handle and dispose of all such medical waste in
accordance with all applicable laws and legal requirements and shall fully and
completely indemnify, hold harmless and defend the Landlord Indemnified Parties
from and against any and all liability, costs, claims or expenses arising from
or related to the handling of medical waste on or about the Premises during
Tenant’s Operations.

7.13.Certain Permitted Environmental Activities.  Notwithstanding the definition
of Hazardous Materials or anything else contained in this Master Lease, nothing
in this Master Lease is intended to preclude (a) Hazardous Materials existing on
or being brought on the Premises in amounts which, individually or in the
aggregate, do not constitute a violation of applicable Hazardous Materials Law;
(b) the existence on the Premises of standard cleaning fluids, equipment and
materials in quantities customarily used and in compliance with Hazardous
Materials Laws in connection with business machines and other equipment of the
type used by Tenant in connection with Tenant’s Operations; (c) oil and gasoline
products in quantities customarily used in compliance with Hazardous Materials
Laws in connection with general office usage or that may be incorporated into or
otherwise added to motor vehicles used by Tenant in connection with Tenant’s
Operations; and (d) fluids, materials, chemicals and substances in quantities
customarily used in compliance with Hazardous Materials Laws in the operation of
food service facilities.

Tenant’s Personal Property; Landlord’s Security Interest to Secure Lease
Obligations

.  

8.1.Tenant’s Personal Property.  Except for items of the Equipment (which are
owned by Landlord and leased to Tenant under this Master Lease), Tenant at its
sole cost and expense shall purchase all items of furniture, equipment, wares,
consumables, inventory, supplies, vehicles and other items of personal property
as is required or used for the operation of the Facilities for the Permitted Use
applicable to each such Facility in accordance with all applicable laws and the
requirements of this Master Lease (all of the foregoing are collectively
referred to herein as “Tenant’s Personal Property”).  Tenant, at its sole cost,
shall be responsible for the installation of Tenant’s Personal Property in the
Premises.  Tenant shall continuously provide and maintain during the Term all
items of furniture, equipment and personal property as shall be necessary to
operate the Premises in

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material compliance with all applicable laws and the requirements of this Master
Lease.  Should Tenant replace any of the Equipment pursuant to Section 6.1.2
herein, such replacement items shall be deemed the sole property of Landlord and
be deemed a part of the Equipment (owned by Landlord and leased to Tenant under
this Master Lease).  Should Tenant replace any of Tenant’s Personal Property,
such replacement items shall be deemed the sole property of Tenant and be deemed
a part of Tenant’s Personal Property (subject, however, to the provisions of
Section 8.2 requiring all of the Mountain’s Edge Equipment more particularly
described on Schedule 1.3(a) to remain with and on the Mountain’s Edge Property
upon the expiration or earlier termination of this Master Lease).  

8.2.Removal of the Equipment and Tenant’s Personal Property. Subject to the
provisions of Section 8.2 relating to Mountain’s Edge Equipment more
particularly described on Schedule 1.3(a) and subject to Section 8.5 herein,
Tenant shall have the right in connection with the surrender of the Premises to
remove from the Premises all of Tenant’s Personal Property.  Any such removal
shall be done in a workmanlike manner leaving the Premises in good and
presentable condition and appearance, including repair of any damage caused by
such removal.  Notwithstanding anything to the contrary in this Master Lease,
pursuant to Section 8.2 herein, upon the expiration or earlier termination of
this Master Lease, Tenant shall not be permitted to remove any of the Mountain’s
Edge Equipment more particularly described on Schedule 1.3(a) from the Premises
and such Mountain’s Edge Equipment more particularly described on Schedule
1.3(a) shall remain in the Mountain’s Edge Property and shall become the sole
property of Landlord.

8.3.Title to Personal Property Not Removed.  Title to any of Tenant’s Personal
Property which is not removed by Tenant upon the expiration of the Term shall,
at Landlord’s election, vest in Landlord; provided, however, that (a) Landlord
may remove and dispose, at Tenant’s expense, all of Tenant’s Personal Property
which is not so removed by Tenant without obligation or accounting to Tenant,
and (b) as provided in Section 8.2 all of the Mountain’s Edge Equipment more
particularly described on Schedule 1.3(a) shall remain with and on the
Mountain’s Edge Property and shall become the sole property of Landlord upon the
expiration or earlier termination of this Master Lease.

8.4.Landlord’s Option to Purchase Tenant’s Personal Property.  Effective upon
not less than thirty (30) days prior written notice, or such shorter notice as
shall be appropriate if this Master Lease is terminated prior to the expiration
of the Term, Landlord shall have the option to purchase all and/or any of
Tenant’s Personal Property (as selected by Landlord in its sole discretion)
utilized in connection with the Premises, if any, at the expiration or earlier
termination of the Term, for an amount equal to the fair market value thereof
(if Landlord and Tenant cannot agree on fair market value, Landlord shall be
entitled to rescind its notice to purchase with respect to Tenant’s Personal
Property for which Landlord and Tenant do not agree as to price), and with
appropriate price adjustments for all equipment leases, conditional sales
contracts, UCC-1 financing statements and other encumbrances which encumber
Tenant’s Personal Property.  Notwithstanding anything to the contrary in this
Master Lease, pursuant to Section 8.2 herein, Landlord shall not be required to
purchase from Tenant any of the Mountain’s Edge Equipment more particularly
described on Schedule 1.3(a) given that such Mountain’s Edge Equipment must
remain in the Mountain’s Edge Property and shall, upon the expiration or earlier
termination of this Master Lease, automatically become the sole property of
Landlord.  Promptly after notice from Landlord of its intent to purchase all or
any part of Tenant’s Personal Property, Tenant shall provide for Landlord’s
review and evaluation a list identifying Tenant’s Personal Property and the
proposed fair market value thereof and identifying the appropriate price
adjustments for all equipment leases, conditional sales contracts, UCC-1
financing statements and other encumbrances which encumber Tenant’s Personal
Property.  This Section 8.4 shall not apply to any copyrighted or other
protected materials owned by Tenant. In addition to copyrighted materials, the
concept of “protected” materials means: patient lists, patient records, and
other information that has been developed or prepared specifically for Tenant or
that would be considered to be a “trade secret” or “confidential information”
under applicable law.

Landlord’s Security Interest and Lien on Tenant’s Personal Property

.  

8.5.1.Landlord shall have and Tenant hereby grants to Landlord a security
interest and lien on every right and interest of Tenant in and to this Master
Lease, and on Tenant’s Personal Property purchased and owned by Tenant under
Sections 8.1 and 8.2 herein, on the Assigned Collateral (as defined
hereinafter), on Tenant’s Intangible Property (as defined hereinafter) including
certificates of need, licenses, contract rights, provider agreements, Accounts
(as defined herein), certifications, books, records and other property of any
kind belonging to Tenant and used in connection with this Master Lease or
located at or on any of the Properties

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(collectively, the “Personal Property Collateral”).  Tenant hereby assigns and
transfers to Landlord all right, title and interest, whether now owned or
hereafter acquired, now existing or hereafter arising, wherever located, in and
to the security interests granted to Tenant by each Operator pursuant to the
respective subleases of each Operator (the “Assigned Collateral”).  Each
Operator hereby acknowledges such assignment.  For purposes of this Master
Lease, the term “Accounts” means collectively (a) any right to payment of a
monetary obligation, whether or not earned by performance, (b) without
duplication, and “account” (as defined in the Uniform Commercial Code as in
effect in the State of Delaware (the “UCC Code”), as the same may be amended
from time to time), any accounts receivable (whether in the form of payments for
services rendered or goods sold, rents, license fees or otherwise), any
“health-care-insurance receivables” (as defined in the UCC Code), any “payment
intangible” (as defined in the UCC Code), and all other rights to payment and/or
reimbursement of every kind and description, whether or not earned by
performance, (c) all accounts, rights, remedies, guarantees, supporting
obligations, letter of credit rights and security interest in respect to the
foregoing, all rights of enforcement and collection, (d) all information and
data compiled or derived by Tenant or to which Tenant is entitled in respect of
or related to the foregoing, and (e) all proceeds of the foregoing.  For
purposes of this Master Lease, the term “Intangible Property” shall mean all
accounts (including, without limitation, to the extent assignable, accounts to
be paid by Medicaid or Medicare (or successor or similar programs, however named
or designated), proceeds of accounts, rents, profits, income or revenue derived
from the use of rooms or other space within the Premises or the providing of
services in or from the Premises; documents, chattel paper, instruments,
contract rights, deposit accounts, general intangibles, chooses in action, now
owned or hereafter acquired by Tenant (including any right to any refund of any
taxes or other charges heretofore or hereafter paid to any Governmental
Authority) arising from or in connection with Tenant’s operation or use of the
Premises; all licenses and permits now owned or hereinafter acquired by Tenant,
necessary or desirable for Tenant’s use of the Premises under this Master Lease,
including, without limitation, if applicable, any Medicaid or Medicare Contract
and any certificate of need or other similar certificate and any license, permit
or approval required for the ownership and/or operation of any Facility for its
Permitted Use and the right to use any trade or other name now or hereafter
associated with the operation of the Premises by Tenant.  Landlord’s security
interest in Tenant’s assets is subject to the terms of the Amended and Restated
Intercreditor and Subordination Agreement, dated of even date herewith, between
Pacific Western Bank (formerly known as CapitalSource) and Landlord, as the same
may be amended, restated and modified by the parties thereto (the “PacWest
Intercreditor Agreement”).  In the event that Pacific Western Bank ceases to be
Tenant’s senior secured lender, Landlord agrees that it shall subordinate its
security interest hereunder to any subsequent lender that provides working
capital financing to Tenant in connection with Tenant’s Operations pursuant to
an intercreditor and subordination agreement in form and substance reasonably
satisfactory to it.

8.5.2.Such security interest and lien granted pursuant to Section 8.5.1 is
granted for the purpose of securing the payments of rent payable to Landlord
under Section 3 herein and all other monetary and payment obligations under this
Master Lease whether to Landlord or third parties, all charges, penalties, and
damages herein covenanted to be paid by Tenant, and for the purpose of securing
the performance of all of Tenant’s obligations under this Master Lease. Such
lien shall be in addition to all rights to Landlord given and provided by law.
This Master Lease shall constitute a security agreement under the UCC pursuant
to which Tenant, as debtor, grants to Landlord, as secured party, a security
interest in the assets of Tenant as described above, and Tenant shall execute
such other instruments and financing statements as Landlord may request to
evidence or perfect said security interest.  Tenant covenants to give Landlord
at least fifteen (15) days’ prior written notice of any changes in Tenant’s
name, jurisdiction of organization and/or organizational structure which may
necessitate the execution and filing of additional financing statements;
provided, however, the foregoing shall not be construed as Landlord’s consent to
such changes.

8.5.3.Additionally, Tenant, as sublandlord, shall cause each Operator to which a
Facility is subleased, to grant to Tenant a security interest and lien on every
right and interest of such Operator in to its sublease of such Facility, and in
such Operator’s personal property and intangible property to secure the
obligations of such Operator under its sublease.  Tenant shall assign to
Landlord such security interest granted by each Operator to secure Tenant’s
obligations under this Master Lease.

Tenant, Operators and Guarantor Representations and Warranties

.  Tenant, the Operators and Guarantor, jointly and severally, hereby represent
and warrant to Landlord as follows:

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9.1.Organization, Authority and Status.  Tenant, the Operators and Guarantor
each has been duly organized or formed, is validly existing and in good standing
under the laws of its state of formation and is qualified as a foreign
corporation or limited liability company, as applicable, to do business in any
jurisdiction where such qualification is required.  All necessary corporate or
company action has been taken to authorize the execution, delivery and
performance by Tenant, the Operators and Guarantor, as applicable, of this
Master Lease and the Master Lease Guaranty respectively, and of the other
documents, instruments and agreements provided for herein, to which each is a
party.  Tenant is not, and if Tenant is a “disregarded entity,” the owner or
owners of such disregarded entity is/are not, a “nonresident alien,” “foreign
corporation,” “foreign partnership,” “foreign trust,” “foreign estate,” or any
other “person” that is not a “United States Person” as those terms are defined
in the Internal Revenue Code (“Code”) and the regulations promulgated
thereunder.  The Operators are not, and if any of the Operators is a
“disregarded entity,” the owner or owners of such disregarded entity is/are not,
a “nonresident alien,” “foreign corporation,” “foreign partnership,” “foreign
trust,” “foreign estate,” or any other “person” that is not a “United States
Person” as those terms are defined in the Code and the regulations promulgated
thereunder. Guarantor is not, and if Guarantor is a “disregarded entity,” the
owner or owners of such disregarded entity is/are not a “nonresident alien,”
“foreign corporation,” “foreign partnership,” “foreign trust,” “foreign estate”
or other “person” that is not a United States Person and as those terms are
defined in the Code and the regulations promulgated thereunder.  The Person who
has executed this Master Lease on behalf of Tenant and/or the Operators and the
Person who has executed this Master Lease and the Master Lease Guaranty on
behalf of Guarantor in each case is duly authorized to do so.

9.2.Enforceability.  This Master Lease is the legal, valid and binding
obligation of Tenant, the Operators and Guarantor, and is enforceable against
Tenant, the Operators and Guarantor in accordance with its terms.  The Master
Lease Guaranty is the legal, valid and binding obligation of Guarantor, and is
enforceable against Guarantor in accordance with its terms.  

9.3.Solvency.  Neither Tenant, the Operators nor Guarantor has (i) made a
general assignment for the benefit of creditors, (ii) filed any voluntary
petition in bankruptcy or suffered the filing of an involuntary petition by any
creditors, (iii) suffered the appointment of a receiver to take possession of
all or substantially all of its assets, (iv) suffered the attachment or other
judicial seizure of all or substantially all of its assets, (v) admitted in
writing its inability to pay its debts as they come due, or (vi) made an offer
of settlement, extension or composition to its creditors generally.

9.4.Compliance with Anti-Terrorism Laws.  To the knowledge of Tenant, the
Operators and Guarantor, respectively:  (i) neither Tenant, the Operators nor
Guarantor is in violation of any Anti-Terrorism Laws (as defined hereinafter) ;
(ii) neither Tenant, the Operators nor Guarantor is, as of Restatement Date:
(A) conducting any business or engaging in any transaction or dealing with any
Prohibited Person (as defined hereinafter), including the making or receiving of
any contribution of funds, goods or services to or for the benefit of any
Prohibited Person; (B) dealing in, or otherwise engaging in any transaction
relating to, any property or interests in property blocked pursuant to Executive
Order No. 13224 (as defined hereinafter); or (C) engaging in or conspiring to
engage in any transaction that evades or avoids, or has the purpose of evading
or avoiding, or attempts to violate any of the prohibitions set forth in, any
Anti-Terrorism Law; (iii) neither Tenant, the Operators nor Guarantor, nor any
of their representatives, officers, Affiliates, directors, shareholders or
members, as applicable, is a Prohibited Person; and (iv) neither Tenant, the
Operators nor Guarantor nor any holder of any direct or indirect equitable,
legal or beneficial interest in Tenant, the Operators or Guarantor is the
subject of any law blocking or prohibiting transactions with such Person,
including the USA Patriot Act (as defined hereinafter).  Without limiting the
foregoing, neither Tenant, the Operators nor Guarantor engages in any dealings
or transactions, and is not otherwise associated, with any such persons or
entities or any forbidden entity, including the governments of Cuba, Iran, North
Korea, Myanmar and Syria.  For purposes of this Master Lease, (a) the term
“Anti-Terrorism Law” means any law relating to terrorism, anti-terrorism,
money-laundering or anti-money laundering activities, including without
limitation the United States Bank Secrecy Act, the United States Money
Laundering Control Act of 1986, Executive Order No. 13224, and Title 3 of the
USA Patriot Act, and any regulations promulgated under any of them, (b) the term
“Executive Order No. 13224” means Executive Order No. 13224 on Terrorist
Financing effective September 24, 2001, and relating to “Blocking Property and
Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support
Terrorism”, as may be amended from time to time, (c) the term “Prohibited
Person” means (i) a Person that is listed in the Annex to Executive Order No.
13224, or a Person owned or controlled by an entity that is listed in the Annex
to Executive Order No. 13224; (ii) a Person with whom Landlord

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is prohibited from dealing or otherwise engaging in any transaction by any
Anti-Terrorism Law; or (iii) a Person that is named as a “specially designated
national and blocked person” on the most current list published by the U.S.
Treasury Department Office of Foreign Assets Control at its official website,
http://www.treas.gov/ofac/t11sdn.pdf or at any replacement website or other
official publication of such list, and (d) the term “USA Patriot Act” is defined
as the “Uniting and Strengthening America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism Act of 2001” (Public Law 107-56),
as may be amended from time to time.

9.5.Property Condition.  Tenant has physically inspected the Premises as of the
Restatement Date and has found the same satisfactory in all respects for all of
Tenant’s purposes.

9.6.Litigation.  Except as disclosed on Schedule 9.6, there are no suits,
actions, proceedings or investigations pending, or, to the knowledge of Tenant,
the Operators or Guarantor, threatened against or involving Tenant, the
Operators or Guarantor, as applicable, before any arbitrator or Governmental
Authority which might reasonably result in any Material Adverse Effect.

9.7.Absence of Breaches or Defaults.  Neither Tenant, the Operators nor
Guarantor is in default under any document, instrument or agreement to which
Tenant, the Operators or Guarantor is a party or by which Tenant, the Premises
or any property of Tenant, the Operators or Guarantor is subject or bound, and
which has had, or would reasonably be expected to result in, a Material Adverse
Effect.  The authorization, execution, delivery and performance of this Master
Lease by Tenant and the Operators and of the Master Lease Guaranty by Guarantor
will not result in any breach of or default under any document, instrument or
agreement to which Tenant, the Operators or Guarantor, respectively, is a party
or by which Tenant, the Operators or Guarantor or any property of Tenant, the
Operators or Guarantor is subject or bound.

Landlord Representations and Warranties

.  Landlord hereby represents and warrants to Tenant as follows:

10.1.Organization, Authority and Status.  Landlord has been duly organized or
formed, is validly existing and in good standing under the laws of its state of
formation and is qualified as a foreign corporation or limited liability
company, as applicable, to do business in any jurisdiction where such
qualification is required.  All necessary corporate or company action has been
taken to authorize the execution, delivery and performance by Landlord of this
Master Lease, and of the other documents, instruments and agreements provided
for herein, to which Landlord is a party.  Landlord is not, and if Landlord is a
“disregarded entity,” the owner or owners of such disregarded entity is/are not,
a “nonresident alien,” “foreign corporation,” “foreign partnership,” “foreign
trust,” “foreign estate,” or any other “person” that is not a “United States
Person” as those terms are defined in the Code and the regulations promulgated
thereunder.  The Person who has executed this Master Lease on behalf of Landlord
is duly authorized to do so.

10.2.Enforceability.  This Master Lease is a legal, valid and binding obligation
of Landlord, enforceable against Landlord in accordance with its terms.

10.3.Solvency.  Landlord has not (i) made a general assignment for the benefit
of creditors, (ii) filed any voluntary petition in bankruptcy or suffered the
filing of an involuntary petition by any creditors, (iii) suffered the
appointment of a receiver to take possession of all or substantially all of its
assets, (iv) suffered the attachment or other judicial seizure of all or
substantially all of its assets, (v) admitted in writing its inability to pay
its debts as they come due, or (vi) made an offer of settlement, extension or
composition to its creditors generally.

10.4.Compliance with Anti-Terrorism Laws.  To the knowledge of Landlord:  (i)
Landlord is not in violation of any Anti-Terrorism Law; (ii) Landlord is not, as
of the Restatement Date: (A) conducting any business or engaging in any
transaction or dealing with any Prohibited Person, including the making or
receiving of any contribution of funds, goods or services to or for the benefit
of any Prohibited Person; (B) dealing in, or otherwise engaging in any
transaction relating to, any property or interests in property blocked pursuant
to Executive Order No. 13224; or (C) engaging in or conspiring to engage in any
transaction that evades or avoids, or has the purpose of evading or avoiding, or
attempts to violate any of the prohibitions set forth in, any Anti-Terrorism
Law; (iii) neither Landlord nor any of its officers, Affiliates, directors,
shareholders or members, as applicable, is a Prohibited Person; and (iv) neither
Landlord nor any holder of any direct or indirect equitable, legal or beneficial

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interest in Landlord is the subject of any law blocking or prohibiting
transactions with such person, including the USA Patriot Act.  Without limiting
the foregoing, Landlord does not engage in any dealings or transactions, and is
not otherwise associated, with any such persons or entities or any forbidden
entity, including the governments of Cuba, Iran, North Korea, Myanmar and Syria.

Financial, Regulatory Reports and Management

.  

11.1.Reports. Tenant, the Operators and Guarantor agree to provide Landlord the
following reports:

11.1.1.Annual unaudited financial statements of the Operators and Guarantor,
respectively, within one hundred twenty (120) days after the end of the
respective fiscal year of the Operators and Guarantor, as applicable, which
statements shall (i) be certified as true and correct by an officer of the
Operators and Guarantor, respectively, (ii) shall include a balance sheet and a
statement of earnings for the year ended, and (iii) shall be prepared in
accordance with generally accepted accounting principles consistently applied in
the United States and accounting practices which are recognized as such by the
American Institute of Certified Public Accountants (“GAAP”) from period to
period, except for such deviations from GAAP as are described on Schedule 11.1.1
attached hereto.  In the event that Guarantor shall subsequent to the
Restatement Date obtain for its use and/or provide audited financial statements
to any third party or third parties (such as another lessor or lender to
Guarantor or its Affiliates), then Guarantor shall also provide such annual
audited financial statements to Landlord in lieu of the unaudited financial
statements described above.

11.1.2.Annual audited financial statements of Hunt Valley Holdings LLC, a
Delaware limited liability company (“Hunt Valley”) within one hundred twenty
(120) days after the end of the respective fiscal year of Hunt Valley, which
statements shall (a) include a balance sheet and a statement of earnings for the
year ended, and (ii) be prepared in accordance with GAAP from period to period,
except for such deviations from GAAP as are described on Schedule 11.1.1
attached hereto.  

11.1.3.Quarterly unaudited financial statements of Tenant and the Operators
prepared in accordance with GAAP (except for such deviations from GAAP as are
described on Schedule 11.1.1 hereto), within thirty (30) days after the end of
each calendar quarter which statements shall include a balance sheet, statement
of earnings and census for the year through the quarter then ended setting forth
in comparative form and details the figures for the corresponding period of the
previous fiscal year and shall be certified by the chief financial officer or
other comparable officer of Tenant or the Operators, as the case may be, to be
true and correct.

11.1.4.Internal monthly facility operating detail reports for each Facility with
census, rate, and financial statements including a current balance sheet, in
each case, upon Landlord’s request.

11.1.5.Upon Landlord’s request but not more than one time per calendar quarter,
an aged accounts receivable report of each Facility in sufficient detail to show
amounts due from each class of patient-mix and monthly census information of
each Facility in sufficient detail to show patient-mix on a daily average basis
for such month, in the account age classification of 30 days, 60 days, 90 days,
120 days and over 120 days, within ten (10) days of such request.

11.1.6.All Medicare and Medicaid cost reports and any amendments thereto filed
or received with respect to each Facility and all responses, audit reports, rate
letter, correspondence or inquiries with respect to such cost reports, within
ten (10) days of filing or receipt of such reports, in each case, upon
Landlord’s request.

11.1.7.Copies of all licensure and certification survey reports and statements
of deficiencies (with plans of correction attached thereto) for each Facility
within ten (10) days of receiving such reports, in each case, upon Landlord’s
request.

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11.1.8.Any and all notices (regardless of form) from any and all licensing
and/or certifying agencies of any deficiencies, or that action is pending or
being considered to fine Tenant or the Operators or to revoke, or suspend a
Facility’s license or certification within ten (10) days of receipt of such
reports.

11.1.9.Upon Landlord’s request, evidence of payment by Tenant or the Operators,
as the case may be, of any applicable provider bed taxes or similar taxes,
within ten (10) days of such request.

Landlord reserves the right to require such other financial information of
Tenant, the Operators or Guarantor at such other times as it shall deem
necessary. All financial statements provided by Tenant, the Operators or
Guarantor must be in such form and detail as Landlord and any Facility Mortgagee
shall, from time to time, reasonably request, and Tenant (on behalf of itself
and the Operators) agrees to promptly provide same as well as any other
information reasonably requested by Landlord or any Facility Mortgagee, provided
that Tenant shall not be required to prepare any information that it does not
usually prepare for any Facility. Landlord may include financial and other
information concerning Tenant or the Operators and the operations of the
Facilities in an offering memorandum, prospectus or other public securities
offering disclosures made by Landlord, as well as provide the same to existing
and potential Facility Mortgagees and, upon the written consent of Tenant (not
to be unreasonably withheld, delayed or conditioned), to buyers, brokers,
consultants and other parties deemed appropriate by Landlord.

Financial Ratio Compliance

.  

11.2.1.Tenant covenants and agrees that, on each Test Date (as defined
hereinafter) occurring during the first and second Lease Years, the Portfolio
Rent Coverage Ratio (as defined hereinafter) for the Test Period (as defined
hereinafter) then ended shall be no less than 1.20 to 1.00.  Tenant covenants
and agrees that, on each Test Date occurring after the second Lease Year and
during the remainder of the Term, the Portfolio Rent Coverage Ratio for the Test
Period then ended shall be no less than 1.25 to 1.00. For purposes of this
Master Lease, (a) the term “Consolidated EBITDAR” shall mean, for any period, an
amount equal to (i) the consolidated net income of Tenant for such period
determined in accordance with GAAP, plus (ii) the sum of the following, to the
extent deducted in the calculation of such net income:  (A) interest expense;
(B) depreciation; (C) income taxes; (D) franchise taxes; (E) amortization; (F)
all other non-cash, non-recurring charges and expenses, excluding accruals for
cash expenses made in the ordinary course of business; (G) loss from any sales
of assets, other than sales in the ordinary course of business; (H) non-cash
rent expenses; and (I) rent under any real estate leases; minus (iii) gains from
any sales of assets, other than sales in the ordinary course of business; minus
(iv) if not already deducted from the calculation of net income, a management
fee equal to five percent (5%) of net revenues of each Facility; (b) the term
“Portfolio Rent Coverage Ratio” shall mean, for any period, the ratio of
Consolidated EBITDAR for such period to Consolidated Rent (as defined
hereinafter) for such period; (c) the term “Consolidated Rent” means, for any
period, the aggregate Fixed Annual Rent for such period under this Master Lease;
(d) the term “Test Date” shall mean the last day of each calendar quarter during
the Term, with the first such date to occur on March 31, 2017 with respect to
all Facilities (other than the Mountain’s Edge Facility) and on June 30, 2017
with respect to the Mountain’s Edge Facility; and (e) the term “Test Period”
shall mean (i) as of the first Test Date occurring during the Term, the three
(3) month period then ending as of the Test Date, (ii) as of the second Test
Date occurring during the Term, the six (6) month period then ending as of the
Test Date, (iii) as of the third Test Date occurring during the Term, the nine
(9) month period then ending as of the Test Date, and (iv) as of each Test Date
occurring after the third Test Date during the Term, the twelve (12) month
period then ending as of the applicable Test Date.

11.2.2. Tenant covenants and agrees that, on each Test Date, the Portfolio Fixed
Charge Coverage Ratio (as defined hereinafter) for the Test Period then ended
shall be no less than 1.10 to 1.0.  For purposes of this Master Lease, (a) the
term “Portfolio Fixed Charge Coverage Ratio” means, for any period, the ratio of
Consolidated EBITDAR to the Portfolio Fixed Charges (as defined hereinafter);
and (b) the term “Portfolio Fixed Charges” means, for any period, the aggregate
amount, on a consolidated basis, of Tenant’s (A) scheduled principal payments
for such period in respect of indebtedness, excluding balloon  payments and
principal payments from time to time on any accounts receivable/payable working
capital line of credit provided by a commercial lender, (B) scheduled payments
(including but not limited to principal and interest payments) for such period
related to equipment financing and/or capital leasing (to the extent not
included in clause (A) above), (C) non-financed capital expenditures during such
period, excluding construction in progress expenditures, (D)

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required payments during such period of interest on indebtedness, and (E)
scheduled payments of rent for such period on any real estate leases and
equipment operating leases.

11.2.3.Tenant covenants and agrees that, on each Test Date occurring within the
first and second Lease Years, the Facility Rent Coverage Ratio (as defined
hereinafter) for each Facility for the Test Period then ended shall be no less
than 1.10 to 1.0.  Tenant covenants and agrees that, on each Test Date occurring
after the second Lease Year and during the remainder of the Term, the Facility
Rent Coverage Ratio for each Facility for the Test Period then ended shall be no
less than 1.20 to 1.0. For purposes of this Master Lease, (a) the term “Facility
EBITDAR” shall mean, for any period, an amount equal to (i) the consolidated net
income of each of the Operators with respect to the Facility subleased to such
Operator for such period determined in accordance with GAAP, plus (ii) the sum
of the following, to the extent deducted in the calculation of such net
income:  (A) interest expense; (B) depreciation; (C) income taxes; (D) franchise
taxes; (E) amortization; (F) all other non-cash, non-recurring charges and
expenses, excluding accruals for cash expenses made in the ordinary course of
business; (G) loss from any sales of assets, other than sales in the ordinary
course of business; (H) non-cash rent expenses; and (I) rent under any real
estate leases; minus (iii) gains from any sales of assets, other than sales in
the ordinary course of business; minus (iv) if not already deducted from the
calculation of net income, a management fee equal to five percent (5%) of net
revenues of the applicable Facility; (b) the term “Facility Rent Coverage Ratio”
shall mean, for any period, the ratio of Facility EBITDAR for such period to
Facility Rent (as defined hereinafter) for such period; and (c) the term
“Facility Rent” means, for any period, the aggregate fixed annual rent payable
by an Operator pursuant to its sublease of the applicable Facility for such
period.  Notwithstanding anything to the contrary in this Master Lease, (a)
Tenant’s failure to comply with the Facility Rent Coverage Ratio with respect to
any single Facility as of a particular Test Date shall not be deemed an Event of
Default (as defined in Article 12 herein) unless and until the non-compliant
Facility shall have failed to comply with the Facility Rent Coverage Ratio for
three (3) consecutive Test Dates, and (b) upon the occurrence of an Event of
Default with respect to any single Facility under the preceding clause (a), such
Event of Default shall be deemed an event of default only as to the
non-compliant Facility and Landlord shall only be permitted to pursue such
remedies as may be available to Landlord under Section 12.2 as to the Property
of the non-compliant Facility and not to any other Property that is subject to
this Master Lease but has not suffered an Event of Default under the preceding
clause (a).

11.3.Management.  Tenant covenants and agrees that, throughout the Term, (a)
certain administrative functions of Tenant shall be supported by Fundamental
Administrative Services, LLC, a Delaware limited liability company (“FAS”), and
(b) the president and chief executive officer of FAS, and the president of
Guarantor, shall be a person or persons approved by Landlord in its sole
discretion.  As of the Restatement Date, Tenant represents to Landlord, and
Landlord hereby acknowledges and approves, that Mark Fulchino is the president
and chief executive officer of FAS and the president of Guarantor.  If, at any
time during the Term, Mark Fulchino ceases to be the chief executive officer of
FAS or president of Guarantor, Tenant shall give Landlord prompt written notice
of such event and Tenant shall thereafter, within sixty (60) days of Mark
Fulchino’s resignation or removal in either of such positions, appoint in his
place a new senior officer or officers approved by Landlord.

Events of Default and Landlord’s Remedies

.  

12.1.Events of Default. The occurrence of any of the following shall constitute
an event of default on the part of Tenant hereunder (“Event of Default”):

12.1.1.Any representation or warranty of Tenant, the Operators or Guarantor in
this Master Lease or in the Master Lease Guaranty was false in any material
respect when made and Tenant, the Operators or Guarantor, as applicable, fails
to correct such inaccuracy within thirty (30) days after written notice from
Landlord, provided that if more than thirty (30) days is required for its
correction, Tenant, the Operators or Guarantor, as applicable, shall not be in
default if cure is commenced and diligently prosecuted to completion within
ninety (90) additional days, unless Landlord, upon good cause shown by Tenant,
agrees to a longer cure period;

12.1.2.The failure to pay within three (3) days following the date due any Fixed
Monthly Rent, Fixed Annual Rent or any part thereof or any other sum or sums of
money due or payable to

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Landlord or a third party pursuant to this Master Lease including but not
limited to, Taxes or assessments, utilities, premiums for insurance or other
charges or payments required of Tenant under this Master Lease;

12.1.3.Any unauthorized assignment, subletting or transfer of Tenant’s interest
under this Master Lease as a result of non-compliance with the provisions of
Section 21 (Assignment and Subletting) below;

12.1.4.An assignment by Tenant, the Operators or Guarantor of all or
substantially all of its property for the benefit of creditors (or a transfer in
fraud of the creditors of Tenant, the Operators or Guarantor, as applicable);

12.1.5.The appointment of a receiver, trustee, or liquidator for Tenant, any of
the Operators, Guarantor, or any of the property of Tenant, the Operators or
Guarantor, if within three (3) Business Days of such appointment Tenant or
Guarantor does not inform Landlord in writing that Tenant or Guarantor, as
applicable, intends to cause such appointment to be discharged or Tenant or
Guarantor does not thereafter diligently prosecute such discharge to completion
within sixty (60) days after the date of such appointment;

12.1.6.The breach by Tenant of the obligation to provide replacement policies of
insurance as required in Section 5, above;

12.1.7.The filing by Tenant, the Operators or Guarantor of a voluntary petition
under any federal bankruptcy law or under the law of any state to be adjudicated
as bankrupt or for any arrangement or other debtor’s relief, or in the
alternative, if any such petition is involuntarily filed against Tenant, the
Operators or Guarantor by any other party and Tenant or Guarantor does not
within three (3) Business Days of any such filing inform Landlord in writing of
the intent by Tenant or Guarantor, as applicable, to cause such petition to be
dismissed, and Tenant or Guarantor does not thereafter diligently prosecute such
dismissal, or if such filing is not dismissed within ninety (90) days after
filing thereof;

12.1.8.The failure to perform or comply in any material respect with any other
term or provision of this Master Lease not requiring the payment of money
(except as provided in Section 12.1.6), including, without limitation, the
failure to comply in any material respect with the provisions hereof pertaining
to the use, operation and maintenance of the Premises; provided, however, if the
default described in this Section 12.1.8 is curable same shall be deemed cured,
if: (a) within three (3) Business Days of Tenant’s receipt of a notice of
default from Landlord, Tenant gives Landlord notice of its intent to cure such
default; and (b) Tenant cures such default within thirty (30) days after such
notice from Landlord, unless such default cannot with the exercise of diligent
efforts be cured within a period of thirty (30) days because of the nature of
the default or delays beyond the control of Tenant, and cure after such thirty
(30) day period will not have a material and adverse effect upon the Premises,
in which case such default shall not constitute an Event of Default if Tenant
uses its best efforts to cure such default by promptly commencing and diligently
pursuing such cure to the completion thereof, provided, further however, no cure
period for such default shall continue for more than one hundred twenty (120)
days from Tenant’s receipt of a notice of default from Landlord;

12.1.9.An admission by Tenant, the Operators or Guarantor of its inability to
pay its debts or the voluntary liquidation or dissolution of Tenant or
Guarantor;

12.1.10.  The occurrence of a Material Adverse Change as to Tenant, the
Operators or Guarantor;

12.1.11.  Any license, permit, approval, certificate of need, certificate of
reimbursement or other authorization necessary to operate a Facility for its
Permitted Use is cancelled, suspended, reduced to provisional or temporary
status, or revoked, or its right to so operate a Facility or to accept patients
is suspended, and Tenant fails to remedy any condition causing such revocation
or suspension within any cure period allowed therefor by the applicable agency
or authority or, if no such cure period is allowed or specified by the
applicable agency or authority, Tenant fails to remedy the condition within
ninety (90) days following Tenant’s receipt of notice of such condition and, in
any event, prior to the final, non-appealable revocation or suspension of

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any such license, permit, approval, certificate of need, certificate of
reimbursement, other authorization or right to operate a Facility or to accept
patients at such Facility in question; provided that a denial of payment for new
admissions shall not be an Event of Default so long as (i) Tenant is diligently
pursuing the cure of the applicable violations and the restoration of payment
for new admissions, (ii) Tenant provides Landlord with reasonable assurances
that the applicable violations are capable of being cured within sixty (60)
days, and that applicable Facility will not be subject to a license suspension
or decertification for failure to cure the applicable violations within a
shorter time period, and (iii) the cure of the applicable violations and the
restoration of payment for new admissions is accomplished within such sixty (60)
day period;

12.1.12.  A Citation (as defined hereinafter) is issued and Tenant fails to cure
the condition that is the subject of the Citation within the period of time
required for such cure by the issuer of the Citation, but in any event prior to
the final, non-appealable revocation or suspension of any license, permit,
approval, certificate of need, certificate of reimbursement or other
authorization necessary to operate any Facility as a provider of the health care
services necessary for such Facility’s Permitted Use or to receive Medicare or
Medicaid payments with respect to patients or residents of the Facility in
question, or prior to the appointment of a temporary manager, as the case may be
(except as provided above with respect to a denial of payment for new patient
admissions).  For purposes of this Master Lease, the term “Citation” shall mean
any deficiency or violation set forth in writing with respect to any Facility
comprising a part of the Premises or the use or operation thereof by any
Governmental Authority having regulatory oversight over the Premises or the use
or operation thereof, Tenant or any manager, subtenant or occupant.

12.1.13.  Tenant fails to give Landlord notice within five (5) days of receipt
by Tenant that any event set forth in Section 12.1.11 or Section 12.1.12, above,
has occurred;

12.1.14.  Any material breach or default by Guarantor of any of its covenants
under this Master Lease or the Master Lease Guaranty;

12.1.15.  The abandonment of a Facility, the Premises or any material portion
thereof by Tenant;

12.1.16.  Tenant, the Operators or Guarantor shall be in default beyond any
applicable cure period (including any extensions thereof) of any obligation, in
the case of Tenant or the Operators in excess of One Million and No/100 Dollars
($1,000,000.00) and, in the case of Guarantor, in excess of Fifteen Million and
No/100 Dollars ($15,000,000.00); and

12.1.17.  Except as set forth in Sections 12.1.1, 12.1.2, 12.1.5, 12.1.7, 12.1.8
and 12.1.11, there shall be no cure period for Events of Default listed in this
Section 12.1 or for breach by Tenant of (a) the obligation to provide
replacement policies of insurance as required in Section 5 above, or (b) the
provisions of Section 21 below with respect to assignments and other related
matters.  All notice and cure periods provided herein shall run concurrently
with any notice or cure periods provided by applicable laws.

12.2.Remedies. Upon the occurrence of an Event of Default, Landlord may exercise
all rights and remedies under this Master Lease and the laws of the state in
which any Facility is located available to a Landlord of real and personal
property in the event of a default by its tenant. Without limiting the
foregoing, Landlord shall have the right to do any of the following:

12.2.1.Terminate this Master Lease and all rights of Tenant hereunder, provided
that a Qualified Successor (as defined in Section 23 hereof) has been
designated, by giving Tenant ten (10) days written notice of such election to
terminate, in which event Tenant shall immediately surrender the Premises to the
Qualified Successor, and if Tenant fails to surrender the Premises, Landlord
may, without prejudice to any other remedy which Landlord may have, expel or
remove Tenant and any other Person who may be occupying the Premises, or any
part thereof. In such event Landlord may seek such damages and remedies as are
available at law or in equity for Tenant’s breach of this Master Lease,
including the recovery from Tenant of the following:

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12.2.1.1.the worth at the time of award of any unpaid rent which has been earned
at the time of such termination; plus

12.2.1.2.the worth at the time of award of any amount by which the unpaid rent
which would have been earned after termination until the time of award exceeds
the amount of such rental loss that Tenant proves could have been reasonably
avoided; plus

12.2.1.3. the worth at the time of award of the amount by which the unpaid rent
for the balance of the Term after the time of the award exceeds the amount of
such rental loss that Tenant proves could be reasonably avoided; plus

12.2.1.4. any other amount necessary to compensate Landlord for all the
detriment proximately caused by Tenant’s failure to perform its obligations
under this Master Lease or which in the ordinary course of things would be
likely to result therefrom; and

12.2.1.5. at Landlord’s election, such other amounts in addition to or in lieu
of the foregoing as may be permitted from time to time by applicable law.

All “rent” including Fixed Annual Rent, Fixed Monthly Rent and additional rent
shall be computed on the basis on the monthly amount thereof payable on the date
of Tenant’s default, as the same are to be adjusted thereafter as contemplated
by this Master Lease. As used in Sections 12.2.1.1 and 12.2.1.2 above, the
“worth at the time of award” is computed by allowing interest in the per annum
amount equal to the Agreed Rate. As used in subparagraph (iii) above, the “worth
at the time of award” is computed by discounting such amount at the Prime Rate
(as defined in Section 12.5).

12.2.2.Enter upon and take possession of the Premises and expel or remove Tenant
and any other Person who may be occupying the Premises or any part thereof as
well as any and all property, with or without terminating this Master Lease, and
any property may be removed and stored in a public warehouse or elsewhere at the
cost of and for the account of Tenant; and Landlord may from time to time,
without terminating this Master Lease, either recover all rent as it becomes due
or relet the Premises or any part thereof; and Tenant shall cooperate with
Landlord in connection with any proposed transfer to any Qualified Successor to
transfer operations; and Tenant covenants and agrees to pay Landlord, on demand,
any cost or expense incurred by Landlord in connection with reletting the
Premises or any deficiency in Fixed Annual Rent, Fixed Monthly Rent or
additional rent that may arise by reason of such reletting, including, without
limitation, brokerage fees, advertising expenses, preparation expenses,
alterations and repairs to the Premises, legal expenses, and the cost of
performing such of Tenant’s obligations as Landlord determines to be necessary
and reasonable.

In the event that Landlord shall elect to so relet, rentals received by Landlord
from such reletting shall be applied: first, to the payment of any indebtedness
other than rent due hereunder from Tenant to Landlord; second, to the payment of
any cost of such reletting; third, to the payment of the cost of any alterations
and repairs to the Premises; fourth, to the payment of rent due and unpaid
hereunder; and the remainder, if any, shall be held by Landlord and applied in
payment of future rent as the same may become due and payable hereunder. Should
that portion of such rentals received from such reletting during any month,
which is applied to the payment of rent hereunder, be less than the rent payable
during that month by Tenant hereunder, then Tenant shall pay such deficiency to
Landlord. Such deficiency shall be calculated and paid in full immediately upon
demand. Tenant shall also pay to Landlord, as soon as ascertained, any costs and
expenses incurred by Landlord in such reletting or in making such alterations
and repairs not covered by the rentals received from such reletting.
Notwithstanding any election by Landlord to re-take possession of the Premises
pursuant to this provision, Landlord may, at any time thereafter, upon written
notice to Tenant, terminate this Master Lease in all respects and exercise other
remedies available at law or in equity or herein relating to such termination as
a result of a Tenant default.

12.2.3.Enter upon the Premises and take such actions as may be required of
Tenant to cure the complained of default; and Tenant covenants and agrees to
reimburse Landlord on demand for any expenses, direct or indirect, which
Landlord may incur in thus effecting compliance with Tenant’s obligations under
this Master Lease.

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12.2.4.Pursue change of ownership applications and proceedings with regulatory
authorities regulating the licenses and any Medicare or Medicaid Contracts for
the applicable Facility and its Permitted Use.

12.2.5.Before or after repossession of the Premises pursuant to Section 12.2.2,
and whether or not this Master Lease has been terminated, Landlord shall have
the right (but shall be under no obligation) to relet any portion of the
Premises to such tenant or tenants, for such term or terms (which may be greater
or less than the remaining balance of the Term), for such rent, or such
conditions (which may include concessions or free rent) and for such uses, as
Landlord, in its absolute discretion, may determine, and Landlord may collect
and receive any rents payable by reason of such reletting. Landlord shall not be
responsible or liable for any failure to relet any of the Premises or for any
failure to collect any rent due upon any such reletting. Tenant agrees to pay
Landlord, immediately upon demand, all expenses incurred by Landlord in
obtaining possession and in reletting any of the Premises, including fees,
commissions, tenant improvements, alterations, repairs, and costs of attorneys,
architects, agents and brokers.

12.2.6.Landlord may pursue all of its legal and equitable remedies, including
specific performance.

12.2.7.No re-entry or taking possession of the Premises by Landlord pursuant to
Section 12.2.2 or otherwise shall be construed as an election to terminate this
Master Lease unless a written notice of such intention be given to Tenant or
unless the termination thereof be decreed by a court of competent jurisdiction.
Notwithstanding any reletting without termination by Landlord because of any
default of Tenant, Landlord may at any time after such reletting elect to
terminate this Master Lease for any such default.

12.3.Secured Party Remedies.  

12.3.1.Upon the occurrence and during the continuance of Event of Default by
Tenant hereunder, Landlord, in addition to all other rights, options, and
remedies granted to Landlord under this Master Lease or at law or in equity, may
exercise, either directly or through one or more assignees or designees, all
rights and remedies granted to it hereunder and under the UCC in effect in the
applicable jurisdiction(s) and under any other applicable law.

12.3.2.At any sale or disposition of Personal Property Collateral, Landlord may
(to the extent permitted by applicable law) purchase all or any part of the
Personal Property Collateral, free from any right of redemption by Tenant, which
right is hereby waived and released.  Tenant covenants and agrees not to
interfere with or impose any obstacle to Landlord’s exercise of its rights and
remedies with respect to the Personal Property Collateral.  Landlord shall have
no obligation to clean-up or otherwise prepare the Personal Property Collateral
for sale.  

12.3.3.Without restricting the generality of the foregoing and for the purposes
aforesaid, Tenant hereby appoints and constitutes Landlord its lawful
attorney-in-fact with full power of substitution in the Personal Property
Collateral, upon the occurrence and during the continuance of an Event of
Default, to (i) pay, settle or compromise all existing bills and claims, which
may be liens or security interests, or to avoid such bills and claims becoming
liens against the Personal Property Collateral, (iii) execute all applications
and certificates in the name of such Tenant and to prosecute and defend all
actions or proceedings in connection with the Personal Property Collateral, and
(iv) do any and every act which such Tenant might do in its own behalf; it being
understood and agreed that this power of attorney in this Section 12.3.3 shall
be a power coupled with an interest and cannot be revoked.

12.3.4.Landlord is hereby granted a non-exclusive, royalty-free license or other
right to use, without charge, Tenant’s labels, mask works, rights of use of any
name, any other intellectual property and advertising matter, and any similar
property as it pertains to the Personal Property Collateral, in completing
production of, advertising for sale, and selling any Personal Property
Collateral and, in connection with Landlord’s exercise of its rights under this
Section. Tenant’s rights under all licenses (whether as licensor or licensee)
and all franchise agreements inure to Landlord’s benefit.

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12.4.Receivership.  Tenant acknowledges that one of the rights and remedies
available to Landlord under applicable law is to apply to a court of competent
jurisdiction for the appointment of a receiver to take possession of the
Premises, to collect the rents, issues, profits and income of the Premises and
to manage the operation of the Premises. Tenant further acknowledges that the
revocation, suspension or material limitation of the certification of a Facility
for provider status under Medicare or Medicaid (or successor programs) and/or
the revocation, suspension or material limitation of a license relating to the
operation of a Facility for its Permitted Use under the laws of the state in
which such Facility is located will materially and irreparably impair the value
of Landlord’s interest in such Facility.  Therefore, in any of such events, and
in addition to any other right or remedy of Landlord under this Master Lease,
Landlord may petition any appropriate court for the appointment of a receiver to
take possession of the Premises, to manage the operation of the Premises, to
collect and disburse all rents, issues, profits and income generated thereby and
to preserve or replace, to the extent possible, any such license and provider
certification for the Facility or to otherwise substitute the licensee or
provider thereof. The receiver shall be entitled to a reasonable fee for its
services as a receiver. All such fees and other expenses of the receivership
estate shall be added to the monthly rent due to Landlord under this Master
Lease.

12.5.Late Charges. Tenant acknowledges that the late payment of any Fixed Annual
Rent, Fixed Monthly Rent or other amounts due under this Master Lease will cause
Landlord to lose the use of such money and incur costs and expenses not
contemplated under this Master Lease, including, without limitation,
administrative and collection costs and processing and accounting expenses, the
exact amount of which is extremely difficult to ascertain. Therefore, (a) if any
installment of Fixed Monthly Rent or other amounts due under this Master Lease
is not paid within three (3) days following the due date for such payment, then
Tenant shall thereafter pay to Landlord on demand a late charge equal to ten
percent (10%) of the amount of all installments of Fixed Monthly Rent and other
amounts due under this Master Lease and not paid within three (3) days following
the due date; and (b) if any installment of Fixed Monthly Rent or other amounts
due under this Master Lease is not paid within ten (10) days following the due
date for such payment, such unpaid amount shall accrue interest from the due
date for such payment at the Prime Rate plus five percent (5%) per annum (the
“Agreed Rate”) (or the maximum rate permitted by law if less than the Agreed
Rate).  As used herein, “Prime Rate” shall mean the prime rate of interest
reported in the Wall Street Journal or if the Wall Street Journal ceases to be
in existence or for any reason no longer publishes such prime rate, then the
Prime Rate shall be the rate announced by a national bank selected by Landlord.
Landlord and Tenant agree that this late charge and the accrual of interest at
the Agreed Rate represent a reasonable estimate of such costs and expenses and
is fair compensation to Landlord for the loss suffered from any such nonpayment
and/or delinquent payment by Tenant.

12.6.Remedies Cumulative; No Waiver. No right or remedy herein conferred upon or
reserved to Landlord is intended to be exclusive of any other right or remedy,
and each and every right and remedy shall be cumulative and in addition to any
other right or remedy given hereunder or now or hereafter existing at law or in
equity. No failure of Landlord to insist at any time upon the strict performance
of any provision of this Master Lease or to exercise any option, right, power or
remedy contained in this Master Lease shall be construed as a waiver,
modification or relinquishment thereof as to any similar or different breach
(future or otherwise) by Tenant. A receipt by Landlord of any rent or other sum
due hereunder (including any late charge) with knowledge of the breach of any
provision contained in this Master Lease shall not be deemed a waiver of such
breach, and no waiver by Landlord of any provision of this Master Lease shall be
deemed to have been made unless expressed in a writing signed by Landlord.

12.7.Performance of Tenant’s Obligations by Landlord.  If Tenant, at any time,
shall fail to make any payment or perform any act on its part required to be
made or performed under this Master Lease, then Landlord may, without waiving or
releasing Tenant from any obligations or default of Tenant hereunder, make any
such payment or perform any such act for the account and at the expense of
Tenant, and may enter upon the Premises for the purpose of taking all such
action thereon as may be reasonably necessary therefor. No such entry shall be
deemed an eviction of Tenant. All sums so paid by Landlord and all necessary and
incidental costs and expenses (including, without limitation, reasonable
attorneys’ fees and expenses) incurred in connection with the performance of any
such act by Landlord, together with interest at the Agreed Rate (or the maximum
rate permitted by law if less than the Agreed Rate) from the date of the making
of such payment or the incurring of such costs and expenses by Landlord, shall
be payable by Tenant to Landlord on demand.

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12.8.Default by Landlord.  

12.8.1.If Landlord defaults in the observance or performance of any covenant,
condition or obligation in this Master Lease on its part to be observed or
performed, Landlord shall have thirty (30) days after receiving written notice
from Tenant stating the default complained of and referring to the Section in
this Master Lease relied on by Tenant, to correct any such default, or if such
default is not reasonably capable of being corrected within such thirty (30)
days to commence to correct the same during such thirty (30) days, and
thereafter proceed to correct the same with diligence.

12.8.2.If Landlord fails to correct any such default or to diligently pursue the
correction as provided for herein, then Tenant may sue Landlord for its actual
damages directly resulting from such default by Landlord, including, without
limitation, such additional sums as the court may adjudge reasonable as
attorneys’ fees in any successful suit or action instituted by Tenant to enforce
the provisions of this Master Lease, but excluding consequential, punitive or
special damages. Tenant may further obtain injunctive relief if and only if
necessary to maintain operation of a Facility or comply with applicable
governmental requirements.

12.8.3.The liability of Landlord (and its successors and assigns) to Tenant (or
any Person claiming by, through or under Tenant) for any default by Landlord
under the terms of this Master Lease or any matter relating to or arising out of
the occupancy or use of the Premises or otherwise shall be recoverable only from
the interest of Landlord in the Premises, and Landlord (and its members,
managers, officers, employees, successors and assigns) shall not be personally
liable for any deficiency. Landlord may transfer any portion of the Premises and
any of its rights under this Master Lease and Landlord, and any such transferee,
shall only be liable under this Master Lease during the period of its, or their,
ownership. If Landlord assigns its rights under this Master Lease, then Landlord
shall thereby be released from any further obligations hereunder arising after
the date of transfer, provided that the assignee assumes in writing Landlord’s
obligations hereunder arising from and after the transfer date.

12.9.Delays. Whenever this Master Lease requires any act (other than the payment
of a liquidated sum of money, such as rental payments, taxes, utilities, etc.)
by Landlord or Tenant within a certain period of time or by a certain time, the
time for the performance of such act shall be extended by the period of any
delay caused by war, strikes, lockouts, labor troubles, civil commotion, storms,
electrical blackouts or other power failure, unpreventable material shortages,
casualties, riots, acts of God or other conditions or events beyond the control
of the obligated party, and, with respect to construction matters, delays
considered excusable under the obligated party’s construction contract
(collectively “Force Majeure”). Written notice of such delay and the cause and
circumstances thereof shall be given to the other party promptly after the
commencement of such delay and such delay becoming known by the obligated party.

Damage by Fire or Other Casualty

.  

13.1.Restoration; Termination.  

13.1.1.If at any time during the Term, the Property of any Facility or any part
thereof shall be damaged or destroyed by fire or other casualty (including any
casualty for which insurance coverage was not obtained or obtainable) of any
kind or nature, and whether or not the insurance proceeds, if any, shall be
sufficient for the purpose, Tenant shall proceed with reasonable diligence to
repair and restore such Facility as nearly as possible to the value, condition
and character thereof immediately prior to such damage or destruction, except
that, in the event of a complete or substantial destruction of the Improvements
pertaining to a Facility (the same being deemed to mean such destruction that
the affected Facility cannot be economically and feasibly used by Tenant without
construction of a new building or new buildings), then, and in such event,
Tenant may elect to terminate this Master Lease only as to the Property of the
affected Facility (but not as to the other Properties leased to Tenant pursuant
to this Master Lease) by giving written notice of such election to Landlord, the
effective date of such termination to be the date certain specified in said
notice, but in no event later than thirty-five (35) days following such
destruction, provided and upon condition, that concurrently with the giving of
such notice, Tenant irrevocably and absolutely assigns to Landlord, by
instrument satisfactory to Landlord, all insurance monies payable under
insurance policies covering such casualty. Notwithstanding such assignment, if
the net amount of such insurance monies actually collected by Landlord (after
costs, fees and expenses incurred in connection with

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the adjustment of the loss and collection thereof), shall be insufficient to pay
for the construction of such new building or buildings on the affected Property,
and to repair, alter and restore all damage related to such casualty, Tenant
shall on demand pay to Landlord the amount of such insufficiency, and said
obligation of Tenant shall survive the termination of this Master Lease as to
the affected Facility.

13.1.2.Anything herein contained to the contrary notwithstanding, in the event
of a complete or substantial destruction to the Improvements pertaining to a
Facility as provided for in Section 13.1.1 herein and Tenant does not elect,
pursuant to Section 13.1.1, to terminate this Master Lease as to the affected
Property only, Tenant shall construct such new building or new buildings on the
affected Property as shall constitute an economically sound structure or
structures substantially in accordance with final plans approved in writing by
Landlord and as shall have an aggregate value at least equal to the value of the
building or buildings destroyed. Such repairs, alterations, restoration,
replacement or rebuilding, including such changes and alterations as
aforementioned, and including temporary repairs for the protection of other
property pending the completion thereof, are hereinafter in this Section 13
referred to as the “Restoration Work”.  Prior to the Restoration Work, Tenant
shall submit the plans and specifications therefor to Landlord for the
Landlord’s approval, which approval shall not be unreasonably withheld. In no
event shall Landlord be called upon to do any Restoration Work or to pay any of
the costs or expenses thereof.

13.1.3.Except as provided in Section 13.1.1 herein, no destruction of or damage
to the Improvements pertaining to a Facility or any part thereof, however
caused, shall permit Tenant to terminate this Master Lease as to any Property or
Facility or shall relieve Tenant from its liability to pay the full Fixed
Monthly Rent and additional rent and other monetary obligations and charges
payable under this Master Lease or from any of its other obligations under this
Master Lease, and Tenant waives any rights now or hereafter conferred upon it by
statute or otherwise to quit or surrender this Master Lease or the Properties or
any part thereof, or to any suspension, diminution, abatement or reduction of
rent on account of any such destruction or damage.

13.2.Insurance Proceeds. Except in the case of Tenant’s termination of this
Master Lease as to the Property of a Facility affected by an event of casualty
pursuant to Section 13.1.1 herein, and subject to the applicable requirements of
the Facility Mortgage and Facility Mortgagee, all insurance money paid on
account of any damage or destruction (other than any rental insurance), less the
actual costs, fees and expenses, if any, incurred in connection with the
adjustment of the loss and collection thereof (“net insurance proceeds”), shall
be deposited in a joint account of Landlord and Tenant in a bank or trust
company designated by Landlord (or if required by the Facility Mortgage, in an
account solely of Landlord or solely of Facility Mortgagee as designated by
Facility Mortgagee), and shall be made available for the payment of the cost of
the Restoration Work and shall be paid out from time to time as such Restoration
Work progresses upon the written request of Tenant (“Restoration Work Draw
Requests”), provided that each such request by Tenant is accompanied by the
following:

13.2.1.A certificate signed by Tenant (except as otherwise provided in clause
(c) below of this Section 13.2.1), dated not more than fifteen (15) days prior
to such request, setting forth the following:

(a)That the sum then requested either has been paid by Tenant, or is justly due
to contractors, subcontractors, subcontractor’s materialmen, engineers,
architects or other Persons who have rendered services or furnished materials
for the Restoration Work therein specified, and giving a brief description of
such services and materials and the several amounts so paid or due to each of
said Persons in respect thereof, and stating that no part of such expenditures
has been or is being made the basis, in any previous or then pending request,
for the withdrawal of insurance money, and that the sum then requested does not
exceed the value of the services and materials described in the certificate.

(b)That except for the amount, if any, stated pursuant to the foregoing
subclause (a) in such certificate to be due for services or materials, there is
no outstanding indebtedness known to the Persons signing such certificate, after
due inquiry, which is then due for labor, wages, materials, supplies or services
in connection with such Restoration Work and which, if unpaid, might become the
basis of a vendor’s,

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mechanic’s, laborer’s or materialmen’s statutory or similar lien upon such
restoration or upon the affected Property or any part thereof or upon Tenant’s
leasehold interest therein.

(c)That the cost, as estimated by the Persons signing such certificate, of the
Restoration Work required to be done subsequent to the date of such certificate
in order to complete the same, does not exceed the insurance money plus any
amount paid by Tenant to Landlord or deposited by Tenant to defray such cost and
remaining in said account after payment of the sum requested in such
certificate.

13.2.2.Evidence, reasonably satisfactory to Landlord and the Facility Mortgagee,
to the effect that there has not been filed with respect to the affected
Property or any part thereof or upon Tenant’s leasehold interest therein any
vendor’s, mechanic’s, laborer’s, materialman’s or other lien which has not been
discharged of record, except such as will be discharged by payment of the amount
then requested, together with lien waivers from all contractors, subcontractors,
suppliers, materials suppliers and others who are in a position to file liens
against the affected Property or any part thereof or upon Tenant’s leasehold
interest therein due to non-payment of amounts owed to them waiving all of such
lien rights for all work done through the date that the pending Restoration Work
Draw Request relates to.

13.2.3.Copies of invoices and other supporting materials and information for the
pending Restoration Work Draw Request and any prior Restoration Work Draw
Requests with respect to which all of such materials were not furnished.

13.2.4.Such other information and materials as may be requested by Landlord or
the applicable Facility Mortgagee.

13.2.5.In the event that any such restoration involves expenditures in excess of
$50,000.00, the certificate required by Section 13.2.1 shall be a certificate
signed by the architect or engineer in charge of the restoration, who shall be
selected by Tenant and approved in writing by Landlord and the Facility
Mortgagee, such approval not to be unreasonably withheld.

13.2.6.Anything herein contained to the contrary notwithstanding, it shall be
the duty of Tenant at the time of creating the bank account herein referred to
and, from time to time thereafter, until the Restoration Work shall have been
completed and paid for, to provide Landlord and the Facility Mortgagee such
additional and adequate evidence of the fact that, at all times the undisbursed
portion of the funds in said account is sufficient to pay for the restoration in
its entirety and is sufficient to procure receipted bills and full and final
waivers of lien when the restoration shall have been completed and done.

13.2.7.If the insurance money at any time on deposit in said account shall be
insufficient to pay the entire cost of such restoration, Tenant shall promptly
pay into said account the amount of the deficiency.

Condemnation

.  

14.1.Definitions. For the purpose of this Section 14, the following terms shall
have the meanings ascribed to them in this Section 14.1:

14.1.1.“Award” means all compensation, sums and any other value awarded, paid or
received on a total or partial condemnation;

14.1.2.“Condemnation” or “Taking” means (x) the exercise of any governmental
power, whether by legal proceedings or otherwise, by a Condemnor or (y) a
voluntary sale or transfer by Landlord with Tenant’s consent (provided no Event
of Default has occurred and is continuing at such time) to any Condemnor, either
under threat of condemnation or while legal proceedings for condemnation are
pending; and

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14.1.3.“Condemnor” means any public or quasi-public authority, or private
corporation or individual, having the power of Condemnation.

14.2.Parties’ Rights and Obligations. If during the Term with respect to any
Facility there is any Taking of all or any part of the Property of such Facility
or of any interest in this Master Lease by Condemnation, the rights and
obligations of the Parties shall be determined by this Section 14.

14.3.Compensation.  Except as provided in Section 14.4 for a temporary Taking,
all compensation awarded for any Taking shall belong to and be the property of
Landlord; provided, however, that Tenant shall be entitled to pursue a separate
Award for its moving expenses and the Taking of any of Tenant’s Personal
Property (but not its leasehold interest in the affected Property) which does
not, under the terms of this Master Lease, become the property of Landlord at
the termination hereof, so long as any such Award is separate and distinct from
any claim of Landlord and does not reduce the amount of the Award that would
otherwise be paid to Landlord. Except as aforesaid, Tenant hereby waives all
claims against Landlord and all claims against the governmental authority
responsible for the Taking, and Tenant hereby assigns to Landlord all claims
against the governmental authority responsible for the Taking including, without
limitation, all claims for leasehold damages and diminution in the value of
Tenant’s leasehold interest. Tenant hereby waives all rights to request the
governmental authority responsible for the Taking make a separate allocation to
Tenant or to pursue an independent action for damages against any governmental
authority for said Taking if the effect of such request or action would be to
reduce the amount of the Award that would otherwise be paid to Landlord.

14.4.Effect on this Master Lease of Permanent Taking.  

14.4.1.In the event that there is a Taking of the whole of the Property relating
to a Facility permanently by any method, then this Master Lease shall terminate
only as to the Property affected by such total Taking as of the date that the
affected Property must be vacated. Such date of vesting shall operate as though
it were the date originally intended by the Parties for expiration of this
Master Lease as to the affected Property (but not to the other Properties that
are subject to this Master Lease), and Landlord shall refund to Tenant any
overpayment of Fixed Annual Rent and all other obligations hereunder accrued
(prorated as appropriate) with respect to the affected Property to the date of
such vesting.

14.4.2.In the event that there is a permanent Taking of a substantial and
material portion (as hereinafter defined) of the Property relating to a
Facility, then Tenant shall have the option to terminate this Master Lease only
as to the Facility affected by such substantial and material Taking (but not to
the other Properties that are subject to this Master Lease), by giving the
Landlord at least sixty (60) days written notice. If Tenant does not elect to
terminate this Master Lease as to the Facility affected by such substantial and
material Taking or if less than a substantial and material portion of the
Property pertaining to the affected Facility is subject to a permanent Taking,
then this Master Lease shall terminate only as to the portion of the affected
Property that is subject to the Taking, and the Fixed Annual Rent with respect
to the affected Facility shall be reduced for the remainder of the Term by a
just, fair and equitable portion of the Fixed Annual Rent with respect to the
affected Facility payable according to the size, nature and extent of the
portion of the affected Property that is subject to the Taking. Any adjustments
or reductions in Fixed Annual Rent with respect to the affected Facility as
contemplated by this Section 14.4.2 shall take into account the practical and
economic effect of the Taking in question on the operation of the affected
Property. In the event that a substantial and material portion of a Property is
temporarily subject to a Taking in excess of one hundred twenty (120)
consecutive days, then such Taking shall be deemed a permanent Taking for
purposes of this Master Lease. In the event the Parties cannot agree on the
appropriate adjustments or reductions in Fixed Annual Rent with respect to the
affected Facility, either Party may seek a determination by arbitration pursuant
to Section 24, provided either Party notifies the other of its decision to seek
such a determination and commences same within 90 days following the Taking, and
in all events pending an agreement of the Parties or such determination if same
is pursued, the proportionate abatement of Fixed Annual Rent with respect to the
affected Facility shall be equal to the percentage reduction in the number of
beds able to be operated at the affected Facility.  By way of example, if the
number of beds operated originally at the affected Facility was 130, and after
the Taking the maximum number of beds that can be operated at such Facility is
100, resulting in a loss of 30 beds, the Fixed Annual Rent with respect to the
affected Facility shall be reduced by the percentage reduction in beds,
calculated as follows: ((130-100)/130)) * 100 = 23.08%). It shall be presumed
that a Taking is “substantial and material” if (i) a governmental authority
requires termination of the operation of the

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affected Facility, in whole or in part, because of such Taking, or (ii) the
portion of the Improvements at the affected Facility that is not subject to the
Taking is inadequate to continue to operate (a) with respect to the Mountain’s
Edge Facility at least 65 beds, (b) with respect to the Horizon Henderson
Facility at least 20 beds, (c) with respect to the Mira Vista Facility at least
16 beds, and (d) with respect to the Spartanburg Facility at least 65 beds.

14.5.Effect on this Master Lease of Temporary Taking. In the event that there is
a Taking of all or part of the Property of a Facility for a temporary use, the
Fixed Annual Rent shall not be adjusted or abated and instead, Tenant shall be
entitled to the full condemnation Award (net of any Landlord costs incurred in
assisting with the recovery of same).

14.6.Restoration. If any portion of the Improvements pertaining to a Facility
shall be damaged or partially destroyed by any such Taking and this Master Lease
shall not be terminated by reason thereof, the net proceeds of any Award
recovered by reason of any Taking or Condemnation of the affected Property in
excess of the cost of collecting the Award and in excess of any portion thereof
attributable to the then current market value of the Property taken or condemned
(such excess being hereinafter called the “net condemnation proceeds”) shall be
held in trust by Landlord or any Facility Mortgagee and released for the purpose
of paying the fair and reasonable cost of restoring the Improvements damaged by
reason of the Taking or Condemnation. Such net condemnation proceeds shall be
released, from time to time, as the work progresses to Tenant or to Tenant’s
contractors in the same manner and according to the provisions of Section 13
regarding restoration after a casualty. Tenant shall proceed with reasonable
diligence to cause any necessary demolition and to repair, replace or rebuild,
any remaining part of the Improvements, or of any replacement thereof so taken,
so as to constitute such remaining part thereof complete and useable in the
condition and repair required by this Master Lease and, Tenant shall be required
to expend the amount, if any, needed for such restoration in excess of the
amount of such amount paid to it for such purposes. The portion of the Award
that is made available to Tenant for restoration under this Section 14.6 will be
administered in the same manner and according to the provisions of Section 13
regarding restoration after a casualty. If such net condemnation proceeds are
more than adequate to pay the cost of such restoration, the amount by which such
net condemnation proceeds exceed the cost of restoration will be retained by
Landlord or applied to repayment of any Facility Mortgage secured by the
Property. In the event that the Parties are unable to agree upon the portion of
the Award attributable to the then current market value of the Property taken or
condemned, either Party may submit the issue for arbitration pursuant to Section
24.

14.7.No Abatement of Rent.  Except as provided in Section 14.4.1 or Section
14.4.2 herein as pertains to a possible termination of this Master Lease as to
an affected Facility only, or Section 14.4.2 herein as pertains to possible
partial rent abatement, no Taking of the Property of any Facility or any part
thereof shall permit Tenant to terminate this Master Lease or shall relieve
Tenant from its liability to pay the full Fixed Annual Rent and additional rent
and other charges payable under this Master Lease or from any of its other
obligations under this Master Lease, and Tenant waives any rights now or
hereafter conferred upon it by statute or otherwise to quit or surrender this
Master Lease or the Premises or any part thereof, or to any suspension,
diminution, abatement or reduction of rent on account of any such destruction or
damage.

Provisions on Termination of Term

.  

15.1.Change of Ownership and Transfer of Licenses.  Upon the expiration or
earlier termination of the Term, Tenant shall cooperate with Landlord or
Landlord’s nominee in connection with the processing by Landlord or Landlord’s
nominee of any applications for all licenses, operating permits and other
governmental authorizations and all contracts, including contracts with
governmental or quasi-governmental entities which may be necessary for the
operation of each Facility for its Permitted Use set forth in Section 6.3
hereof; provided, however, the costs and expenses of any such transfer or the
processing of any such application shall be paid by Landlord or Landlord’s
nominee.

15.2.Termination Date; Assignment.  The date on which (i) this Master Lease
either expires or is terminated by either Landlord or Tenant, whether pursuant
to a right granted to it hereunder or otherwise, (ii) the date on which Tenant’s
right to possession of the Premises is terminated pursuant to a right granted to
it hereunder or otherwise, or (iii) the date on which Tenant otherwise abandons
the Premises shall be referred to as the “Termination Date” in this Section.

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On the Termination Date, subject to the Qualified Successor provisions of
Section 23, this Master Lease shall be deemed and construed as an absolute
assignment for purposes of vesting in Landlord (or Landlord’s designee, it being
acknowledged and agreed that for purposes of this Section 15.2, the term
Landlord shall be deemed to mean Landlord’s designee, if applicable) all of
Tenant’s right, title and interest in and to the following intangible property
which is now or hereafter used in connection with the operation of the Premises
(the “Assignable Intangibles”) and an assumption by Landlord or its designee of
Tenant’s obligations under the Assignable Intangibles from and after the
Termination Date; provided that, for a period of two (2) years after the
Termination Date, Tenant shall indemnify, defend and hold harmless the Landlord
Indemnified Parties from and against any claims, losses, costs or damages,
including reasonable attorneys’ fees incurred or arising by reason of Tenant’s
obligations under the Assignable Intangibles prior to the Termination Date:

15.2.1.service contracts and equipment leases for the benefit of the Premises to
which Tenant is a party, and which can be terminated without penalty by Tenant
within thirty (30) or fewer days’ notice or which Landlord requests be assigned
to Landlord pursuant to this Section 15.2.1;

15.2.2.any provider agreements with Medicare, Medicaid or any other third-party
payor programs (excluding the right to any reimbursement for periods prior to
the Termination Date, as defined above) entered in connection with the Premises
to the extent assignable by Tenant;

15.2.3.all existing agreements with patients of the Facility and any guarantors
thereof, to the extent assignable by Tenant (excluding the right to any payments
for periods prior to the Termination Date) and any and all patient trust fund
accounts; and

15.2.4.at Landlord’s option, the business of Tenant as conducted at the Premises
as a going concern, including but not limited to the name of the business
conducted thereon and all telephone numbers presently in use therein.

15.3.Apportionments.  Landlord or its designee shall be responsible for and
shall pay all accrued expenses with respect to the Premises accruing on or after
12:01 a.m. on the day of the Termination Date and shall be entitled to receive
and retain all revenues from the Premises accruing on or after the Termination
Date. Within fifteen (15) Business Days after the Termination Date, the
following adjustments and prorations shall be determined as of the Termination
Date:

15.3.1.Taxes and Assessments, if any.  If the information as to the actual
amount of any of the foregoing Taxes and assessments are not available for the
tax year in which the Termination Date occurs, the proration of such Taxes shall
be estimated based upon reasonable information available to Landlord and Tenant,
including information disclosed by the local tax office or other public
information, and an adjustment shall be made when actual figures are published
or otherwise become available.

15.3.2.Tenant will terminate the employment of all employees on the Termination
Date and shall be and remain liable for any and all wages and earned but unpaid
paid-time-off (“PTO”) for employees of the Premises with respect to the period
prior to and including the Termination Date.

15.3.3.Landlord shall receive a credit equal to any advance payments by patients
of the Facility to the extent attributable to periods on and after the
Termination Date.

15.3.4.The present insurance coverage on the Premises shall be terminated as of
the Termination Date and there shall be no proration of insurance premiums;
provided, however, that if Landlord has not obtained replacement coverage, then
for any period that Tenant remains in management control of the Facility as
Landlord’s manager pursuant to Section 15.5, Tenant shall continue its insurance
coverage in accordance with the insurance requirements of this Master Lease for
up to thirty (30) days after the Termination Date, with the cost of such
coverage to be reimbursed by Landlord as an operating expense of the Facility.

15.3.5.All other income from, and expenses of, the Premises (other than mortgage
interest and principal), including but not limited to public utility charges and
deposits, maintenance charges and

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service charges shall be prorated between Tenant and Landlord as of the
Termination Date. Tenant shall, if possible, obtain final utility meter readings
as of the Termination Date. To the extent that information for any such
proration is not available, Tenant and Landlord shall effect such proration
within ninety (90) days after the Termination Date.

15.3.6.Tenant shall be and remain responsible for any employee severance pay and
earned but unpaid PTO and other benefits which may be payable as the result of
any termination of an employee’s employment on or prior to the Termination Date.

15.4.Transfer of Possession. All necessary arrangements shall be made to provide
possession of the Premises (other than Tenant’s Personal Property, unless
purchased by Landlord pursuant to Section 8.4 hereof) to Landlord on the
Termination Date, at which time of possession Tenant shall deliver to Landlord
all medical records, patient records and other personal information concerning
all patients of the Facility as of the Termination Date and other relevant
records used or developed in connection with the business conducted at the
Premises. Such transfer and delivery shall be in accordance with all applicable
laws, rules and regulations concerning the transfer of medical records and other
types of patient records.

15.5.Management.  For the period commencing on the Termination Date and ending
on the date Landlord, or its designee, obtains any and all appropriate state or
other governmental licenses and certifications required to operate any Facility,
Tenant hereby agrees that Landlord, or Landlord’s designee (which shall include
Tenant in Landlord’s discretion), shall have the right, but not the obligation
(unless Landlord elects to require Tenant as its designee to do so), to manage
and operate the Facilities, on a triple net basis, and Landlord shall be
entitled to all revenues of the Premises during such period, and to use any and
all licenses, certifications and provider agreements issued to Tenant by any
federal, state or other Governmental Authority for such operation of the
Premises, if permitted by any such Governmental Authority and applicable laws.
If Landlord or its designee exercises the right described above in this Section
15.5, the provisions of this Section 15.5 shall, upon Landlord’s election, be
self-operative and shall constitute a management agreement between Tenant, on
the one hand, and Landlord or its designee, on the other hand, on the terms set
forth above in this Section 15.5 provided, however, that upon the request of
Landlord or its designee, Tenant shall enter into a separate management
agreement on the terms set forth in this Section 15.5 and on such other terms
and provisions as may be specified by Landlord or its designee.

15.6.Patient Trust Funds.  Tenant shall provide Landlord or its designee with an
accounting within fifteen (15) days after the Termination Date of all funds
belonging to patients or residents at any Facility which are held by Tenant in a
custodial capacity. Such accounting shall set forth the names of the patients
for whom such funds are held, the amounts held on behalf of each such patient
and Tenant’s warranty that the accounting is true, correct and complete.
Additionally, Tenant, in accordance with all applicable rules and regulations,
shall make all necessary arrangements to transfer such funds to a bank account
designated by Landlord or its designee, and Landlord or its designee shall in
writing acknowledge receipt of and expressly assume all Tenant’s financial and
custodial obligations with respect thereto. Notwithstanding the foregoing,
Tenant will indemnify, defend and hold the Landlord Indemnified Parties harmless
from and against all liabilities, claims and demands, including reasonable
attorney’s fees, in the event the amount of funds, if any, transferred to
Landlord’s or the designee’s bank account as provided above, did not represent
the full amount of the funds then or thereafter shown to have been delivered to
Tenant as custodian that remain undisbursed for the benefit of the patient for
whom such funds were deposited, or with respect to any matters relating to
patient funds which accrued during the Term.

15.7.Cash and Accounts.  All cash, checks and cash equivalent at the Premises
and deposits in bank accounts (other than patient trust accounts) relating to
the Premises on the Termination Date shall remain Tenant’s property after the
Termination Date.  All accounts receivable, loans receivable and other
receivables of Tenant, whether derived from operation of the Premises or
otherwise, shall remain the property of Tenant after the Termination Date.
Tenant shall retain full responsibility for the collection thereof.  Landlord or
its designee shall assume responsibility for the billing and collection of
payments on account of services rendered by it on and after the Termination
Date.  In order to facilitate Tenant’s collection efforts, Tenant agrees to
deliver to Landlord, within a reasonable time after the Termination Date, a
schedule identifying all of those private pay balances owing for the month prior
to the Termination Date, and Landlord or its designee agrees to apply any
payments received which are specifically designated as being applicable to
services rendered prior to the Termination Date to reduce the pre-Termination
Date balances of said patients by promptly remitting said payments to Tenant.
All other payments

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received shall be retained by Landlord as being applicable to services rendered
after the Termination Date. Landlord or its designee shall cooperate with Tenant
in Tenant’s collection of its pre-termination accounts receivable.  Landlord or
its designee shall have no liability for uncollectible receivables and shall not
be obligated to bear any expense as a result of such activities on behalf of
Tenant.  Landlord shall remit to Tenant or its assignee those portions of any
payments received by Landlord within five (5) Business Days of receipt which are
specifically designated as repayment or reimbursement arising out of cost
reports filed for the cost reporting periods ending on or prior to the
Termination Date.

15.8.Collections.  With respect to patients or residents of any Facility on the
Termination Date, Landlord and Tenant agree as follows:

15.8.1.If, following the Termination Date, Landlord or its designee receives
payment from any state or federal agency or third-party provider which
represents reimbursement with respect to services provided at the Premises prior
to the Termination Date, Landlord agrees that it shall remit such payments to
Tenant within five (5) Business Days of receipt. Payments by Landlord to Tenant
shall be accompanied by a copy of the appropriate remittance.

15.8.2.If, following the Termination Date, Tenant receives payment from any
state or federal agency or third-party provider which represents reimbursement
with respect to services provided at the Facility on or after the Termination
Date, Tenant agrees that, it shall remit such payments to Landlord within five
(5) Business Days of receipt. Payments by Tenant to Landlord shall be
accompanied by a copy of the appropriate remittance.

15.8.3.After the Termination Date, Landlord and Tenant shall each have the right
to review supporting books, records and documentation that are in the possession
of the other party relating to Medicaid or Medicare payments.

15.9.In addition to the obligations required to be performed hereunder by Tenant
and Landlord on and after the Termination Date, Tenant and Landlord agree to
perform such other acts, and to execute, acknowledge, and/or deliver subsequent
to the Termination Date such other instruments, documents and materials, as the
other may reasonably request in order to effectuate the consummation of the
transaction contemplated herein, including but not limited to any documents or
filings which may be required to be delivered by Tenant to Landlord or be filed
in order for the transaction contemplated hereunder to be in compliance with all
local, state and federal laws, legal requirements, statutes, rules and
regulations.

15.10.Tenant for itself, its successors and assigns hereby indemnifies and
agrees that for a period of two (2) years after the Termination Date, to defend
and hold Landlord Indemnified Parties harmless from and against any and all
claims, demands, obligations, losses, liabilities, damages, recoveries and
deficiencies (including interest, penalties and reasonable attorney’s fees,
costs and expenses) which any of them may suffer as a result of the breach by
Tenant in the performance of any of its commitments, covenants or obligations
under this Section 15, or with respect to any suits, arbitration proceedings,
administrative actions or investigations which relate to the use by Tenant of
the Premises during the Term or for any liability which may arise from operation
of a Facility for its Permitted Use during the Term, including without
limitation, any amounts due or to be reimbursed to any Governmental Authority
based upon any audit or review of Tenant or of a Facility or the operation
thereof and pertaining to the period prior to the Termination Date or any
amounts recaptured under Titles XVIII or XIX based upon applicable
Medicaid/Medicare recapture regulations. The rights of Landlord under this
Section 15.10 are without prejudice to any other remedies permissible hereunder
which Landlord may have against Tenant pursuant to the terms of this Master
Lease. The foregoing indemnity shall survive the expiration or termination of
this Master Lease, whether due to lapse of time or otherwise.

Landlord for itself, its successors and assigns hereby indemnifies and agrees to
defend and hold Tenant and its successors and assigns harmless from any and all
claims, demands, obligations, losses, liabilities, damages, recoveries and
deficiencies (including interest, penalties and reasonable attorney’s fees,
costs and expenses) which any of them may suffer as a result of the breach by
Landlord in the performance of any of its commitments, covenants or obligations
under this Section 15, or with respect to any suits, arbitration proceedings,
administrative actions or investigations which relate to the use of the Premises
after the Term or for any liability which may arise

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from operation of any Facility for its Permitted Use after the Term.  The rights
of Tenant under this Section are without prejudice to any other remedies not
inconsistent herewith which Tenant may have against Landlord pursuant to the
terms of this Master Lease or otherwise.

Notices and Demands

. All notices and demands, certificates, requests, consents, approvals, and
other similar instruments under this Master Lease shall be in writing and shall
be sent by personal delivery or by (a) hand delivery, (b) United States
certified or registered mail, return receipt requested, postage prepaid, or (c)
Federal Express or similar generally recognized overnight carrier regularly
providing proof of delivery, addressed as follows:

If to Tenant:

 

c/o Fundamental Administrative Services, LLC

920 Ridgebrook Road

Sparks, MD 21152

Attn: General Counsel

 

With a copy to:

 

Arent Fox LLP

1675 Broadway

New York, NY 10019

Attn: Michael S. Blass, Esq.

 

If to Landlord:

 

c/o MedEquities Realty Trust, Inc.

3100 West End Avenue, Suite 1000

Nashville, TN 37203

Attn:  William C. Harlan, President

Telephone:  (615) 627-4714

Email:  wharlan@medequities.com

 

With a copy to:

 

Waller Lansden Dortch & Davis, LLP

511 Union Street, Suite 2700

Nashville, Tennessee 37219

Attn:  Jeffrey A. Calk, Esq.

Telephone:  (615) 850-8129

Facsimile:  (615) 244-6804

Email:  jeff.calk@wallerlaw.com

 

Such addresses may be changed by notice to the other party given in the same
manner as provided above. Any notice so given by mail shall be deemed to have
been given as of the date of delivery (whether accepted or refused) established
by U.S. Post Office return receipt or the overnight carrier’s proof of delivery,
as the case may be, whether accepted or refused. Any such notice not so given
shall be deemed given upon receipt of the same by the party to whom the same is
to be given. If Tenant is not an individual, notice may be made to any officer,
general partner or principal thereof.

Right of Entry; Examination of Records

.  Landlord and its representative may enter the Premises at any reasonable time
after reasonable notice (not to exceed five (5) calendar days) to Tenant for the
purpose of inspecting the Premises for any reason, including, without
limitation, Tenant’s default under this Master Lease, or to exhibit the Premises
for sale, lease or mortgage financing, or posting notices of default, or
non-responsibility under any mechanic’s or materialman’s lien law or to
otherwise inspect the Premises for compliance with the terms of this Master
Lease. Any such entry shall not unreasonably interfere with residents, patients,
patient

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care, or any other of Tenant’s Operations. During normal business hours, Tenant
will permit Landlord and Landlord’s representatives, inspectors and consultants
to examine all contracts, books and records relating to Tenant’s Operations at
the Premises, whether kept at the Premises or at some other location, including,
without limitation, Tenant’s financial records.  Except during the continuation
of any Event of Default, any such inspections pursuant to this Section 17 shall
be at Landlord’s cost and expense.

Financing Provisions

.  

18.1.Conveyance by Landlord. Without the consent of Tenant, Landlord will have
the right, from time to time, directly or indirectly, to create or grant a
Facility Mortgage or any other type of lien or encumbrance on the Premises, or
any portion thereof or interest therein (including this Master Lease), to secure
any borrowing or other financing or refinancing. If Landlord or any successor
owner of the Premises conveys the Premises or any portion thereof pursuant to
foreclosure or deed in lieu of foreclosure under a Facility Mortgage, Landlord
or such successor owner, as the case may be, shall be released from all future
liabilities and obligations of Landlord under this Master Lease arising or
accruing from and after the date of such conveyance or other transfer, and all
such future liabilities and obligations shall be binding upon the new owner.

18.2.Definitions of Facility Mortgage and Facility Mortgage.  For purposes of
this Master Lease, the following terms are defined as follows:

18.2.1. “Facility Mortgage” shall mean individually and, as applicable,
collectively, any mortgage, deed of trust or other security agreement, that,
with the express prior written consent of Landlord, or as a result of actions
taken by Landlord in connection with any financing or refinancing of the
Premises, is a lien upon any or all of the Premises.  The term “Facility
Mortgage” includes any such mortgage, deed of trust or other security agreement
existing as of the Commencement Date, and also includes any such mortgage, deed
of trust or other security agreement, or series of mortgages, deeds of trust or
security agreements, that may be executed and entered into at any time and, from
time to time, following the Commencement Date.  Landlord will provide a copy of
any effective Facility Mortgage to Tenant. Tenant shall not be deemed to have
knowledge of a Facility Mortgage until a copy thereof has been provided to
Tenant.

18.2.2.“Facility Mortgagee” shall mean the secured party pursuant to a Facility
Mortgage, its successors and assigns, any servicer acting on behalf of a
Facility Mortgagee with respect to a Facility Mortgage and, if any Facility
Mortgage is deposited with a trust, then the trustee acting on behalf of the
certificate holders of such trust.

18.3.Subordination of Lease and of Certain Payments.  This Master Lease is
subject and subordinate to any Facility Mortgage, to all advances made or
hereafter to be made thereunder and to all renewals, modifications,
consolidations, replacements and extensions thereof and substitutions therefor.
This clause shall be self-operative and no further instrument of subordination
need be required by any Facility Mortgagee; provided, however, that upon request
by Landlord, Tenant shall execute and acknowledge a subordination agreement as
required by any such Facility Mortgagee subordinating this Master Lease to such
Facility Mortgage. As to any Facility Mortgage to which this Master Lease is
subordinate, Landlord shall use reasonable efforts to obtain a “non-disturbance
agreement” reasonably acceptable to such Facility Mortgagee providing that, if
such Facility Mortgagee acquires the Premises by way of foreclosure or deed in
lieu of foreclosure, such Facility Mortgagee will not disturb Tenant’s
possession under this Master Lease and will recognize Tenant’s rights hereunder
if and for so long as no Event of Default has occurred under this Master Lease
and is continuing. Tenant agrees that it shall not have any right to
unreasonably withhold or delay its consent to any amendment of this Master Lease
required by a Facility Mortgagee, and Tenant shall be deemed to have withheld or
delayed its consent if Tenant has received the non-disturbance agreement
provided for above and the requested amendment does not materially alter the
economic terms of this Master Lease or materially diminish the rights of Tenant
under this Master Lease.

Tenant also acknowledges and agrees that all rights and payments due under any
management, consulting or similar agreement or agreements relative to the
operation of a Facility by or on behalf of Tenant are to be and are hereby made
subordinate to Tenant’s full payment and performance of all obligations under
this Master Lease to Landlord.  As a result, if an Event of Default occurs and
during the continuance of an Event of Default or if an event or circumstance
occurs, which with notice or the passage of time or both would become and Event
of Default, then

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any and all payments otherwise due and owing to the manager or other party to
such agreement(s) by Tenant shall cease and remain suspended until the Event of
Default is cured or, if applicable, such other event or circumstance which might
become an Event of Default no longer exists.  Upon resumption of payments, any
applicable arrearage may be repaid in accordance with a payment schedule as
agreed between Tenant and such manager with Landlord’s approval which shall not
be unreasonably withheld.

18.4.Attornment.  If a Facility Mortgagee enforces the remedies provided for by
law or by a Facility Mortgage, Tenant shall, at the option of the party
succeeding (either directly or by subsequent transfer) to the interest of
Landlord as a result of such enforcement or as a result of a deed or delivery of
possession of the Premises or any portion thereof in lieu of such enforcement,
attorn to such successor and recognize such successor as Landlord under this
Master Lease; provided, however, that such successor in interest shall not (a)
be bound by any payment of Fixed Monthly Rent for more than one (1) month in
advance; (b) be bound by any modification of this Master Lease made without the
written consent of the Facility Mortgagee or successor in interest as
applicable; (c) be liable for any act or omission of Landlord; or (d) be subject
to any offset or defense arising prior to the date such successor in interest
acquired title to the Premises and Tenant agrees that any non-disturbance
agreement referenced in Section 18.3, above, may include such provisions or
other commercially reasonable provisions to protect or for the benefit of such
successor in interest. Upon request, Tenant shall execute and deliver an
instrument or instruments confirming the attornment provided for herein.

18.5.Tenant’s Certificate.  Tenant shall, upon not less than five (5) days prior
written notice from Landlord, execute, acknowledge and deliver to Landlord
and/or any other party designated by Landlord a certificate (a “Tenant Estoppel
Certificate”) containing then-current facts and such other representations and
warranties as are customarily provided by Tenant or as may be reasonably
requested by Landlord or any party designated by Landlord such as any Facility
Mortgagee, purchaser or other third party that might be engaged in a transaction
with Landlord, including, without limitation, certifications to the effect that
this Master Lease is unmodified and in full force and effect (or, if there have
been any modifications, that this Master Lease is in full force and effect as
modified, and setting forth such modifications), the dates to which Fixed
Monthly Rent and additional charges hereunder have been paid, certifying that no
default by either Landlord or Tenant exists hereunder or specifying each such
default and as to other matters as Landlord may reasonably request. It is
intended that any Tenant Estoppel Certificate delivered pursuant hereto may be
relied upon by Landlord, any prospective tenant or purchaser of the Premises,
any mortgagee or prospective mortgagee and any other party who reasonably may
rely on such statement. Tenant’s failure to deliver Tenant Estoppel Certificate
within such time shall constitute an Event of Default. In addition, if Tenant
fails to deliver Tenant Estoppel Certificate within the five (5) day period
referred to above, Tenant hereby authorizes Landlord to execute and deliver a
certificate to the effect (if true) that Tenant represents and warrants that (a)
this Master Lease is in full force and effect without modification, and (b)
Landlord is not in breach or default of any of its obligations under this Master
Lease. and (c) such other matters described in this Section 18.5 or otherwise
reasonably required by the recipient of such certification.

18.6.Notice and Cure.  If a Facility Mortgagee acquires title to the Premises or
any portion thereof by way of foreclosure or deed in lieu of foreclosure, then
commencing on the date the Facility Mortgagee acquires title, the Facility
Mortgagee shall have thirty (30) days within which to cure any default by
Landlord under this Master Lease existing on such date, which is curable by the
payment of a stipulated sum of money as a remedy and not as consequential
damages; any other default not reasonably curable by payment of such sum shall
be deemed waived. If the defaults by Landlord are cured during such period (or
deemed cured in accordance with the foregoing provisions), then this Master
Lease shall remain in full force and effect, and Tenant shall have no right to
terminate this Master Lease so long as the Facility Mortgagee performs all of
Landlord’s subsequent obligations under this Master Lease. The foregoing rights
to cure a Landlord default shall be exercisable in the sole discretion of the
Facility Mortgagee, and, the Facility Mortgagee shall have no obligation to cure
any default by Landlord.

Quiet Enjoyment

.  So long as there is no Event of Default by Tenant, Landlord covenants and
agrees that Tenant shall peaceably and quietly have, hold and enjoy the Premises
for the Term, free of any claim or other action not caused or created by Tenant
(excepting, however, intrusion of Tenant’s quiet enjoyment occasioned by
condemnation or destruction of the property as referred to in Section 13 and
Section 14 hereof).

Applicable Law

.  This Master Lease shall be governed by and construed in accordance with the
internal laws of the State of Delaware without regard to the conflict of laws
rules of such state.

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Assignment and Subletting

.  Tenant shall not, without the prior written consent of Landlord, which may be
withheld at Landlord’s sole discretion, voluntarily or involuntarily assign,
mortgage, encumber or hypothecate this Master Lease or any interest herein or
sublet, license the Premises or any part thereof. For the purposes of this
Master Lease, the following also shall be considered an assignment of this
Master Lease by Tenant: (a) entering into a management or similar agreement
relating to the operation and/or control of all or any part of the Premises, but
excluding any ancillary service agreements reasonably necessary for the
operations of a Facility for its Permitted Use, and (b) any change (voluntary or
involuntary, by operation of law or otherwise) in the Person or Persons which
Control the management and affairs of Tenant or Guarantor as of the Restatement
Date (provided, however, Landlord agrees that its consent to a change in the
Person or Persons which Control Guarantor as of the Restatement Date shall not
be unreasonably withheld).  Any of the foregoing acts without such consent shall
be void but shall, at the option of Landlord, in its sole discretion, constitute
an Event of Default giving rise to Landlord’s right, among other things, to
terminate this Master Lease. Without limiting the foregoing, this Master Lease
shall not, nor shall any interest of Tenant herein, be assigned or encumbered by
operation of law without the prior written consent of Landlord which may be
withheld at Landlord’s sole discretion. Notwithstanding the foregoing, Tenant
may, without Landlord’s consent, assign this Master Lease or sublet the Premises
or any portion thereof to, or enter into a management agreement with respect to
any or all of Tenant’s Operations with, an Affiliate of Tenant. In the event
Landlord shall provide consent to any sublease or assignment or other prohibited
transaction described in this Section 21, Landlord may condition its approval
upon the proposed party and Tenant agreeing that the proposed party fully
assumes the obligations of Tenant under this Master Lease, Tenant remains fully
liable under this Master Lease, the use of the Premises remains unchanged or
upon such other event or condition reasonably determined by Landlord as
appropriate to protect its interests, and no such assignment or sublease shall
be valid and no such proposed party shall take possession of the Premises,
unless and until an executed counterpart of such assignment or sublease has been
delivered to Landlord. Anything contained in this Master Lease to the contrary
notwithstanding, Tenant shall not sublet the Premises on any basis such that the
rental to be paid by the sublessee thereunder would be based, in whole or in
part, on either the income or profits derived by the business activities of the
sublessee, or any other formula, such that any portion of the sublease rental
received by Landlord would fail to qualify as “rents from real property” within
the meaning of Section 856(d) of the U.S. Internal Revenue Code, or any similar
or successor provision thereto.  Subject to Landlord’s review and approval of
the form and substance of each sublease to be executed between Tenant, as
sublandlord, and each of the Operators, Landlord gives its consent to Tenant
subleasing (a) the Mountain’s Edge Property to the Mountain’s Edge Operator, (b)
the Horizon Henderson Property to the Horizon Henderson Operator, (c) the Mira
Vista Property to the Mira Vista Operator, and (d) the Spartanburg Property to
the Spartanburg Operator; provided, however, each such sublease shall include
the following provisions: (i) the rent to be charged to each Operator under its
respective sublease shall be equal to the Fixed Annual Rent allocated to such
Facility as set forth in Schedule 3.1 attached hereto and incorporated herein,
(ii) the term of each sublease shall be coterminous with the Term, and (iii)
upon the early termination of this Master Lease, at Landlord’s election, such
sublease shall become a direct lease between such Operator, as tenant, and
Landlord, as landlord.  For the purpose of this Master Lease, the transfer,
assignment, sale, hypothecation or other disposition of any stock of Tenant or
the Operators, other than to Tenant’s Senior Lender, which results in a change
in the Person which ultimately exerts effective Control over the management of
the affairs of Tenant as of the Restatement Date, shall be deemed to be a
prohibited assignment of this Master Lease.  Notwithstanding anything to the
contrary contained in this Section 21, in no event shall an initial public
offering of Tenant be deemed to be an assignment of this Master Lease; provided,
however, that after such initial public offering of Tenant any transfer,
assignment, sale, hypothecation or other disposition of the voting stock of
Tenant which results in twenty-five percent (25%) or more of the voting stock of
Tenant being held by any Person or related group of Persons who did not have
such ownership after the initial public offering shall be deemed to be a
prohibited assignment of this Master Lease.

Indemnification

.  

22.1.Indemnification of Landlord. To the fullest extent permitted by law, Tenant
agrees to protect, indemnify, defend and save harmless the Landlord Indemnified
Parties from and against any and all foreseeable or unforeseeable liability,
expense loss, costs, deficiency, fine, penalty, or damage (including, without
limitation, punitive or consequential damages) of any kind or nature, including
reasonable attorneys’ fees, from any suits, claims or demands, on account of any
matter or thing, action or failure to act arising out of or in connection with
Tenant’s Operations (including, without limitation, the breach by Tenant of any
of its obligations hereunder), Tenant’s acts or omissions with regard to the
Premises, or the operations of Tenant on the Premises, including, without
limitation, all claims relating to malpractice liability, other tort liability,
contract liability, Environmental

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Activities by Tenant or any of Tenant’s subtenants, agents, employees or
invitees on the Premises, all Hazardous Materials Claims resulting from any
violation by Tenant or any of Tenant’s subtenants, agents, employees or invitees
of a Hazardous Materials Law with respect to the Premises. Upon receiving
knowledge of any suit, claim or demand asserted by a third party that Landlord
believes is covered by this indemnity, Landlord shall give Tenant notice of the
matter. Tenant shall defend Landlord against such matter at Tenant’s sole cost
and expense (including, without limitation, Landlord’s reasonable attorneys’
fees and costs) with legal counsel satisfactory to Landlord. Landlord may elect
to defend any such matter with its own counsel at Tenant’s expense.

22.1.1.Indemnification of Tenant.  To the fullest extent permitted by law,
Landlord agrees to protect, indemnify, defend and save harmless Tenant, its
directors, officers, shareholders, agents and employees from and against any and
all foreseeable or unforeseeable liability, expense loss, costs, deficiency,
fine, penalty, or damage (including, without limitation, punitive or
consequential damages) of any kind or nature, including reasonable attorneys’
fees, from any suits, claims or demands, on account of any matter or thing,
action or failure to act arising out of or in connection with the breach by
Landlord of any of its obligations hereunder.

Holding Over

.  If Tenant remains in possession of the Premises after the expiration of the
Term, such possession shall be as a tenant at will under the law of the state in
which the affected Facility is located.  During such occupancy, rent shall be
payable at the rate equal to 150% times the Fixed Annual Rent in effect during
the last year of the Term, and the provisions of this Master Lease shall be
applicable and continue in full force and effect. However, Landlord’s acceptance
of any rent payments and the terms of this Section 23 shall not constitute
renewal of this Master Lease or give Tenant any right to continue to occupy the
Premises on a month-to-month basis or otherwise. Notwithstanding the foregoing
or anything contained elsewhere in this Master Lease, if, upon the expiration or
any termination of this Master Lease, Tenant is unable to surrender the Premises
because Landlord fails to provide a Qualified Successor for a Facility at the
end of the Term to take over the operation and management of such Facility,
Tenant shall have the right, but shall not be obligated to, remain in possession
of the Premises and continue to operate and manage the same if Tenant would be
legally prohibited from abandoning the Premises or in Tenant’s judgment, based
on reasonable commercial standards in the particular healthcare provider
industry applicable to such Facility’s Permitted Use, abandoning the Premises
without a Qualified Successor in place to continue the operations of the
Facility would jeopardize its or its Affiliates’ reputation as a provider of the
healthcare services provided by a Facility’s Permitted Use or could otherwise
subject it or its Affiliates to liability for negligence or mistreatment of
patients or residents at such Facility.  In the event Tenant remains in
possession of the Premises pursuant to the immediately preceding sentence,
Tenant shall, during such occupancy, pay to Landlord rent at the same rate
payable by Tenant in the last year of the Term, and Tenant shall surrender
possession of the Premises within ten (10) Business Days after Landlord provides
a Qualified Successor for the applicable Facility or Facilities.  The term
“Qualified Successor” means a qualified and duly licensed operator of the
Facility for its Permitted Use or one as to which the applicable Governmental
Authority responsible for licensing such Facility for its Permitted Use has
indicated its willingness to issue a license upon transfer of possession of the
applicable Facility.

Arbitration/Waiver of Jury Trial

.  If any controversy should arise between Landlord and Tenant in the
performance, interpretation or application of this Master Lease, involving any
matter, either party may serve upon the other a written notice stating that such
party desires to have the controversy reviewed by an arbitrator, in which case
both Landlord and Tenant shall be required to submit such dispute to arbitration
and the decision of the arbitrator in accordance with this Section 24 shall be
final and conclusive and binding on Landlord and Tenant. If Landlord and Tenant
cannot agree within fifteen (15) days from the service of such notice upon the
selection of such arbitrator, an arbitrator shall be selected or designated by
the American Arbitration Association upon written request of either party
hereto. Arbitration of such controversy, disagreement, or dispute shall be
conducted in accordance with the Commercial Arbitration Rules then in force of
the American Arbitration Association and the decision and award of the
arbitrator so selected shall be binding upon Landlord and Tenant.

If the issue to be arbitrated is Landlord’s or Tenant’s alleged breach of this
Master Lease and as a result thereof, Landlord or Tenant has the right to
terminate this Master Lease, Tenant shall continue to lease the Premises pending
the outcome of such arbitration, provided, Landlord or Tenant may elect to
proceed without arbitration under its other remedies in this Master Lease.

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LANDLORD AND TENANT HEREBY WAIVE ANY RIGHTS TO TRIAL BY JURY IN ANY ACTION,
PROCEEDINGS OR COUNTERCLAIM BROUGHT BY EITHER LANDLORD OR TENANT AGAINST THE
OTHER IN CONNECTION WITH ANY MATTER WHATSOEVER ARISING OUT OF OR IN ANY WAY
CONNECTED WITH THIS MASTER LEASE, INCLUDING, WITHOUT LIMITATION, THE
RELATIONSHIP OF LANDLORD AND TENANT, TENANT’S USE AND OCCUPANCY OF THE PREMISES,
OR ANY CLAIM OF INJURY OR DAMAGE RELATING TO THE FOREGOING OR THE ENFORCEMENT OF
ANY REMEDY HEREUNDER.

This Section does not limit the right of any party to: (i) initiate judicial or
non-judicial action to evict Tenant or secure or recover possession of the
Facility; (ii) exercise any judicial or other rights as a landlord against any
real or personal property, or (iii) act in a court of law to obtain an interim
remedy, such as, but not limited to, injunctive relief, writ of possession or
appointment of a receiver, or additional or supplementary remedies.

25.Funding of Capital Additions to Mountain’s Edge Property.  

25.1.In consideration of the execution of this Master Lease by Tenant and the
Operators, Landlord agrees to make available to Tenant an aggregate amount of up
to Eleven Million and No/100 Dollars ($11,000,000.00) for use by Tenant for the
construction and equipping of surgical suites at the Mountain’s Edge Property
(the “Mountain’s Edge Capital Addition Project”) subject to and in accordance
with the terms and provisions of the work letter agreement attached hereto as
Exhibit C and incorporated herein (the “Mountain’s Edge Work Letter”).

25.2.Landlord and Tenant acknowledge that KeyBank National Association
(“KeyBank”) continues to be the administrative agent for certain lenders
(“Lenders”) which have provided a revolving credit facility and certain other
financial accommodations (collectively, the “KeyBank Loan”) to MedEquities
Realty Operating Partnership, LP, the sole member of Landlord (“Member”), and
that Agent and the Lenders continue to have, or may in the future, receive as a
part of the security for the KeyBank Loan a collateral assignment of all of the
Member’s equity interests in Landlord (the “Equity Pledge”).  Notwithstanding
anything to the contrary contained in this Master Lease and any other documents
entered into in connection with this Maser Lease, Landlord and Tenant hereby
agree that, in the event of any transfer of the Premises or any portion thereof
(whether by foreclosure of the Equity Pledge, deed in lieu thereof or otherwise)
to Agent, a Lender, any Person to whom the KeyBank Loan or the Equity Pledge has
been assigned, in whole or in part, or any designee or nominee thereof (each, a
“Lender Party”) or any subsequent transferee of a Lender Party, no Lender Party,
nor any subsequent transferee of such Lender Party, shall be (i) obligated to
fund, advance or disburse, or to cause to be funded, advanced or disbursed, any
then remaining portion of Landlord’s Maximum Cost (as defined in the Work
Letter) under this Master Lease, and (ii) bound by any obligation which may
appear in this Master Lease to pay any sum of money to Tenant, and the failure
to make any such advances or disbursements shall not be a default under this
Master Lease.

26.Separation of Master Lease.  

26.1.1.Landlord shall have the right, in connection with any Separation Event
(as defined hereinafter) during the applicable Term, by written notice to
Tenant, to require Tenant to execute an amendment to this Master Lease whereby
the Property of one or more Facilities affected by such Separation Event
(individually, a “Separated Property” or collectively, the “Separated
Properties”) is separated and removed from this Master Lease, and to
simultaneously execute a substitute lease with respect to such Separated
Property(ies), in which case, Landlord and Tenant shall execute a new lease (the
“New Lease”) for such Separated Property(ies), effective as of the date
specified in Section 26.1.3 below (the “New Lease Effective Date”), in the same
form and substance as this Master Lease, but with such changes thereto as
necessary to reflect the separation of the Separated Property(ies) from the
balance of the Premises, including specifically the following:

26.1.1.1.The total Fixed Monthly Rent payable under such New Lease shall be the
total applicable Fixed Monthly Rent for such Separated Property(ies) as set
forth in Schedule 3.1 (subject to adjustments pursuant to Section 3.2 and
Section 3.4 herein);

26.1.1.2.All Fixed Annual Rent escalations under the New Lease shall be at the
times and in the amounts set forth in this Master Lease for such increases; and

46

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26.1.1.3.The Term of the New Lease shall be the same as the Term applicable to
the Separated Property(ies) pursuant to this Master Lease.

26.1.2.Landlord and Tenant shall also execute an amendment to this Master Lease
effective as of the New Lease Effective Date reflecting the separation of the
Separated Property(ies) from the balance of the Premises and making such
modifications to this Master Lease as are necessitated thereby.

26.1.3.In the case of any New Lease that is entered into in accordance with this
Section 26, such New Lease shall be effective on the date the New Lease is fully
executed and delivered by the parties thereto; provided, however, that Tenant’s
failure to execute and deliver any New Lease within ten (10) days after the date
that a draft New Lease consistent with the requirements of this Section 26 is
provided to Tenant shall constitute an Event of Default hereunder.

26.1.4.Concurrently with the execution of any New Lease entered into in
accordance with this Section 26, Guarantor shall execute a written guaranty of
such New Lease in the same form and substance as the Master Lease Guaranty.

26.1.5.Tenant and Landlord shall take such actions and execute and deliver such
documents, including without limitation the New Lease and an amendment to this
Master Lease, as are reasonably necessary and appropriate to effectuate the
provisions and intent of this Section 26.

26.1.6.Each party shall bear its own costs and expenses in connection with any
New Lease entered into in accordance with this Section 26.

26.1.7.For purposes of this Section 26, the term “Separation Event”  shall mean:
(i) the sale, conveyance or other transfer by Landlord of all or any portion of
its interest in the Property of one (1) or more Facilities; or (ii) the sale,
conveyance or other transfer of all or any portion of the stock, partnership,
membership or other equity interests in Landlord or any Person comprising
Landlord.

27.No Termination or Abatement of Master Lease.  Tenant, to the fullest extent
permitted by law, shall remain bound by this Master Lease in accordance with its
terms in all events, unless Landlord shall elect to terminate this Master Lease
(other than due to an Event of Default) in accordance with the terms hereof.
Tenant shall not take any action without the prior written consent of Landlord
to modify, surrender or terminate this Master Lease. The obligations of Landlord
and Tenant hereunder shall be separate and independent covenants and agreements,
and rent and all other sums shall continue to be payable by Tenant hereunder in
any event unless the obligation of Tenant to pay the same terminates pursuant to
the express provisions of this Master Lease in Section 13 and Section 14 (other
than by reason of an Event of Default). Without limiting the generality of the
immediately preceding sentence, Tenant shall not seek or be entitled to any
abatement, deduction, deferment or reduction of rent, or set-off against rent,
nor shall the respective obligations of Landlord and Tenant be otherwise
affected by reason of: (a) any damage to, or destruction of, all or any portion
of the Property of any Facility from whatever cause or any Taking of all or any
portion of the Property of any Facility; (b) the lawful or unlawful prohibition
of or restriction upon, Tenant’s use of the Property of any Facility or the
interference with such use or with Tenant’s quiet enjoyment of the Property of
any Facility by any Person or entity (other than due to the intentional
affirmative and wrongful act of Landlord); (c) the eviction of Tenant from the
Property of any Facility, whether by paramount title or otherwise; (d) any claim
which Tenant has or may have against Landlord by reason of any default or breach
of any warranty by Landlord under this Master Lease or any other agreement
between Landlord and Tenant; (e) any bankruptcy, insolvency, reorganization,
composition, readjustment, liquidation, dissolution, winding up or other
proceeding affecting Landlord or any assignee or transferee of Landlord; or (1)
any other cause, whether similar or dissimilar to any of the foregoing.

Attorney’s Fees

.  All costs and expenses, including, without limitation, reasonable attorneys’
fees, legal costs and expenses (“Legal Costs”) incurred by the prevailing party
in enforcing any of the terms, covenants or conditions of this Master Lease
shall be paid by the non-prevailing party, which Legal Costs shall include,
without limitation, all such reasonable attorneys’ fees, legal costs and
expenses incurred with respect to appeals, arbitrations, and bankruptcy
proceedings or whether or not any action or proceeding is brought with respect
to the matter for which said fees and expenses were incurred.

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Severability

.  In the event any part or provision of this Master Lease shall be determined
to be invalid or unenforceable, the remaining portion of this Master Lease shall
nevertheless continue in full force and effect.

Counterparts

.  This Master Lease may be executed in any number of counterparts, each of
which shall be deemed an original, but all of which shall constitute one and the
same agreement.

Binding Effect

.  Subject to the provisions of Section 21 above, this Master Lease shall be
binding upon and inure to the benefit of Landlord and Tenant and their
respective heirs, personal representatives, successors in interest and assigns.

32.Restatement of Original Leases. This Master Lease amends, consolidates,
supersedes and restates in their entirety each of the Original Leases, and, to
the extent applicable, shall constitute an assignment by each “tenant” under the
Original Leases to the Person constituting Tenant hereunder, jointly and
severally. Notwithstanding the foregoing amendment, consolidation and
restatement of the Original Leases,  the applicable “tenant” under each Original
Lease shall remain responsible for and shall indemnify and hold Landlord
Indemnified Parties harmless from and against any and all claims, liabilities,
damages, actions and causes of action, costs and expenses, including attorneys’
fees, for which such Person is responsible pursuant to such Original Lease and
which accrue or have accrued on or before the Restatement Date.  Landlord and
Tenant hereby acknowledge and agree that, except as otherwise expressly provided
herein to the contrary and for the limited purposes so provided, this Master
Lease is and the Parties intend the same for all purposes to be treated as a
single, integrated and indivisible agreement and economic unit.  Landlord and
Tenant hereby acknowledge and agree that this Master Lease shall be treated as a
true lease and as an operating lease for all purposes and not as a synthetic
lease, financing lease or loan, and that Landlord shall be entitled to all the
benefits of ownership of the Property of each Facility, including depreciation
for all federal, state and local tax purposes.

Memorandum of Lease

.  Landlord and Tenant shall, promptly upon the request of either, enter into a
short form memorandum of this Master Lease, in form suitable for recording under
the laws of the state in which the applicable Property is located in which
reference to this Master Lease shall be made. The party requesting such
recordation shall pay all costs and expenses of preparing and recording such
memorandum of this Master Lease.

Incorporation of Recitals and Attachments; Integration

.  The recitals and exhibits, schedules, addenda and other attachments to this
Master Lease are hereby incorporated into this Master Lease and made a part
hereof. This Master Lease with the exhibits attached hereto, together with the
Master Lease Guaranty executed by Guarantor, constitutes the entire agreement of
the Parties hereto and contains all terms, covenants, conditions, warranties and
agreements of the Parties relating in any manner to the rental, use and
occupancy of the Premises; all prior agreements between the Parties, whether
written or oral, relating to same are merged herein, and except as may be
specifically set forth herein, shall be of no force and effect. This Master
Lease cannot be changed, modified or discharged orally, but only by an agreement
in writing, signed by the party against whom enforcement of the change,
modification or discharge is sought.

Titles and Headings

.  The titles and headings of sections of this Master Lease are intended for
convenience only and shall not in any way affect the meaning or construction of
any provision of this Master Lease.

Usury Savings Clause

.  Nothing contained in this Master Lease shall be deemed or construed to
constitute an extension of credit by Landlord to Tenant. Notwithstanding the
foregoing, in the event any payment made to Landlord hereunder is deemed to
violate any applicable laws regarding usury, the portion of any payment deemed
to be usurious shall be held by Landlord to pay the future obligations of Tenant
as such obligations arise and, in the event Tenant discharges and performs all
obligations hereunder, such funds will be reimbursed to Tenant upon the
expiration of the Term. No interest shall be paid on any such funds held by
Landlord.

Joint and Several

.  If more than one Person is Tenant hereunder, the liability and obligations of
such persons or entities under this Master Lease shall be joint and several.

48

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Survival of Representations, Warranties and Covenants

.  All of the obligations, representations, warranties and covenants of Tenant
under this Master Lease shall survive the expiration or earlier termination of
the Term, including, without limitation, Tenant’s obligations to pay rent and
other sums under this Master Lease following the occurrence of an Event of
Default and the termination of this Master Lease pursuant to Section 12.2.1
above.

Interpretation

.  Both Landlord and Tenant have been represented by counsel and this Master
Lease has been freely and fairly negotiated. Consequently, all provisions of
this Master Lease shall be interpreted according to their fair meaning and shall
not be strictly construed against any party.

Brokerage Fees/Commissions

.  Landlord and Tenant each represent to the other that it has had no dealings
with any real estate broker or agent in connection with the negotiation of this
Master Lease. Each party agrees to indemnify and hold harmless the other against
any claims for brokerage or other commissions arising by reason of a breach of
this representation and warranty.

Additional Rent

.  Whenever under the terms of this Master Lease any sum of money is required to
be paid by Tenant in addition to the Fixed Annual Rent or Fixed Monthly Rent, as
applicable, herein reserved, whether or not such sum is herein designated as
additional rent or provision is made for the collection of said sum as
additional rent, said sum shall nevertheless be deemed additional rent and shall
be collectible as such with the first installment of rent thereafter falling due
hereunder.

[SIGNATURE PAGE FOLLOWS]

 

 

49

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Executed as of the date indicated above.

“LANDLORD”

 

MRT of Las Vegas NV – ACH, LLC,

a Delaware limited liability company

 

 

By:_/s/ William C. Harlan_________________

Name:William C. Harlan

Title:President

 

MRT of Las Vegas NV – LTACH, LLC,

a Delaware limited liability company

 

 

By:_/s/ William C. Harlan_________________

Name:William C. Harlan

Title:President

 

MRT of Fort Worth TX - SNF, LLC,

a Delaware limited liability company

 

 

By:_/s/ William C. Harlan_________________

Name:William C. Harlan

Title:President

 

MRT of Spartanburg SC - SNF, LLC,

a Delaware limited liability company

 

 

By:_/s/ William C. Harlan_________________

Name:William C. Harlan

Title:President

 

[Signature Page to Amended and Restated Master Lease]

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“TENANT”

 

Nashville Leasehold Interests, LLC,

a Delaware limited liability company

 

 

By: /s/ Jaime Andujo_____________________________

Name:Jaime Andujo

Title:President

 

“OPERATORS”

 

Vegas Hospital Care, LLC,

a Delaware limited liability company

 

 

By: /s/ Melissa War______________________________

Name:Melissa War

Title:President

 

THI of Nevada II at Desert Lane, LLC,

a Delaware limited liability company

 

 

By: /s/ Darrin Cook______________________________

Name:Darrin Cook

Title:President

 

Bryant Irvin Consulting, LLC,

a Delaware limited liability company

 

 

By: /s/ Mark Baldridge____________________________

Name:Mark Baldridge

Title:President

 

THI of South Carolina at Magnolia Place at Spartanburg, LLC,

a Delaware limited liability company

 

 

By: /s/ Patricia Harris_____________________________

Name:Patricia Harris

Title:President

 

 

[Signature Page to Amended and Restated Master Lease]

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JOINDER

 

The undersigned Guarantor hereby joins in the execution and delivery of this
Master Lease to acknowledge and agree to the provisions of this Master Lease
which are applicable to Guarantor.  Such provisions shall be binding on
Guarantor with the same force and effect as if Guarantor were a direct party to
this Master Lease.

“GUARANTOR”

 

THI of Baltimore, Inc.,

a Delaware corporation

 

 

By:/s/ Kenneth Tabler___________________________

Name:Kenneth Tabler

Title:Vice President

 

 

 

Joinder ‒ 1

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EXHIBIT A-1 TO MASTER LEASE

[LEGAL DESCRIPTION FOR MOUNTAIN’S EDGE LAND]

THE WEST HALF (W ½) OF THE SOUTHEAST QUARTER (SE ¼) OF THE SOUTHEAST QUARTER (SE
¼) OF THE NORTHEAST QUARTER (NE ¼) OF SCETION 32, TOWNSHIP 21 SOUTH, RANGE 60
EAST, M.D.B. & M.

EXCEPTING THEREFROM THOSE PORTIONS OF SAID LAND AS CONVEYED TO THE COUNTY OF
CLARK BY DEED RECORDED AUGUST 27, 2013 IN BOOK 2013827 AS DOCUMENT NO. 00966 OF
OFFICIAL RECORDS.

 

 

 

A-1 ‒ 1

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EXHIBIT A-2 TO MASTER LEASE

[LEGAL DESCRIPTION FOR HORIZON HENDERSON LAND]

PARCEL 1:

 

That portion of the Northwest Quarter (NW 1/4) of the Southwest Quarter (SW 1/4)
of Section 13, Township 22 South, Range 61 East, M.D.B.&M., described as
follows:

 

Parcel Two (2) as shown by map thereof in File 79 of Parcel Maps, Page 45, in
the Office of the County Recorder of Clark County, Nevada

 

Excepting Therefrom all of Scottsdale Valley Condominiums Unit 1 as shown by map
thereof on file in Book 67 of Plats, Page 19

Further Excepting Therefrom all of Scottsdale Valley Condominiums Unit 2 as
shown by map thereof on file in Book 67 of Plats, Page 20

Further Excepting Therefrom all of Scottsdale Valley Condominiums Unit 3 as
shown by map thereof on file in Book 67 of Plats, Page 21

Further Excepting Therefrom all of Scottsdale Valley Condominiums Unit 4 as
shown by map thereof on file in Book 69 of Plats, Page 92

Further Excepting Therefrom all of Scottsdale Valley Condominiums Unit 5 as
shown by map thereof on file in Book 73 of Plats, Page 9

Further Excepting Therefrom all of Scottsdale Valley Condominiums Unit 6 as
shown by map thereof on file in Book 74 of Plats, Page 27

Further Excepting Therefrom all of Scottsdale Valley Condominiums Unit 7 as
shown by map thereof on file in Book 74 of Plats, Page 28

Further Excepting Therefrom all of Scottsdale Valley Condominiums Unit 8 as
shown by map thereof on file in Book 76 of Plats, Page 24

 

PARCEL 2:

 

An Easement for pedestrian and vehicular ingress and egress as set forth in that
certain Grant of Easement recorded August 20, 2010 in Book 20100820 as
Instrument No. 03143, Official Records.

 

 

 

A-2 ‒ 1

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EXHIBIT A-3 TO MASTER LEASE

[LEGAL DESCRIPTION FOR MIRA VISTA LAND]

Lot 1R1, Block 1, Rall Ranch Addition, an addition to the City of Fort Worth,
Tarrant County, Texas, according to the Plat recorded under Clerk’s File No.
D212265343 of the Plat records, Tarrant County, Texas.

 

 

A-3 ‒ 1

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EXHIBIT A-4 TO MASTER LEASE

[LEGAL DESCRIPTION FOR SPARTANBURG LAND]

Fee Parcel:

 

All that certain piece, parcel or tract of land, together with any buildings and
improvements located thereon, situate, lying and being in Spartanburg County,
South Carolina as shown as Tract 1 on that certain Survey for Magnolia Place at
Spartanburg, Spartanburg Healthcare Realty, LLC, prepared by Lavender, Smith &
Associates, Inc. (David R. Lavender, PLS No. 7258) dated April 28, 2014 recorded
June 2, 2014 in Plat Book 168 at Page 666 in the Spartanburg County, South
Carolina Register of Deeds Office and being more particularly described as
follows on said survey:

 

Beginning at a mag spike found on the southeastern right-of-way of White Ave.
said point having South Carolina State Plane Coordinates North 1,146,456.80,
East 1,711,078.36 (Datum NAD83 2011 Epoch 2010.0000); thence with said
right-of-way two (2) courses as follows: N 44°21'23" E 250.30' to a1/2" rod with
bolt head found; thence N 42°32'32" E 82.02' to a mag nail found; thence S
51°06'51" E 11.30' to a # 4 rebar found; thence S 20°34'23" E 8.98' to a # 4
rebar set; thence S 51°10'19" E 369.06' to a # 4 rebar set; thence N 38°28'19" E
211.44' to a # 4 rebar set; thence S 51°32'52" E 132.59' to a # 4 rebar found;
thence S 37°36'23" W 228.29' to a mag spike found; thence S 37°36'59" W 16.28'
to a mag nail found; thence S 52°23'01" E 25.00' to a # 4 rebar found; thence S
37°36'59" W 212.46' to a # 4 rebar found; thence N 52°23'01" W 25.00' to a # 4
rebar found; thence S 37°36'59" W 80.04' to a # 5 rebar found; thence N
50°56'21" W 160.21' to a # 3 rebar found; thence N 51°31'27" W 100.11' to a # 4
rebar found; thence N 51°32'36" W 99.97' to a 1 1/2" pipe found; thence N
51°29'59" W 99.92' to a # 3 rebar found; thence N 51°30'08" W 99.99' to a mag
spike found; which is the point of beginning, said tract having an area of 4.813
acres (209,678 Square Feet), more or less.

 

Easement Parcel:

 

TOGETHER WITH those certain easements inuring to the benefit of the Fee Simple
Parcel as established in the following instruments recorded in the Spartanburg
County, South Carolina Register of Deeds Office: (a) Easement Agreement by and
between HT Taylor's Nursing Homes, LLC, Magnolia Group, Inc. and H. Thomas
Taylor dated effective as of July 24, 2007, and recorded August 13, 2007 in Deed
Book 89-G at Page 944 as amended and restated by (b) Amended and Restated
Easement Agreement by and between Magnolia Group, Inc. and Spartanburg
Healthcare Realty, LLC dated effective as of May 28, 2014, and recorded June 2,
2014 in Deed Book 106-E at Page 453.

 

 

 

A-4 ‒ 1

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EXHIBIT B TO MASTER LEASE

[FORM OF GUARANTY AGREEMENT]

MASTER LEASE GUARANTY

THIS MASTER LEASE GUARANTY (this “Guaranty”) is made by THI of Baltimore, Inc.,
a Delaware corporation (“Guarantor”), as of the _____ day of __________, 2017
but intended to be effective as of March 20, 2017, in favor of MRT of Las Vegas
NV - ACH, LLC, a Delaware limited liability (“MRT Las Vegas-ACH”), MRT of Las
Vegas NV - LTACH, LLC, a Delaware limited liability company (“MRT Las
Vegas-LTACH”), MRT of Fort Worth TX - SNF, LLC, a Delaware limited liability
company (“MRT Fort Worth-SNF”) and MRT of Spartanburg SC - SNF, LLC, a Delaware
limited liability company (“MRT Spartanburg-SNF”; and, together with MRT Las
Vegas-ACH, MRT Las Vegas-LTACH, and MRT Fort Worth-SNF, as their interests may
appear, “Landlord”).

WHEREAS, Landlord and Nashville Leasehold Interests, LLC, a Delaware limited
liability company (“Tenant”), are entering into that certain Amended and
Restated Master Lease, dated as of ______________, 2017, pertaining to the
leasing of the following facilities located at (a) 8656 West Patrick Lane, Las
Vegas, Nevada, 89148, (b) 8550 South Eastern Avenue, Henderson, Nevada 89123,
(c) 7021 Bryant Irvin Road, Fort Worth, Texas 76132, and (d) 8020 White Avenue,
Spartanburg, South Carolina 29303 (the “Master Lease”); and

WHEREAS, Landlord requires, as a condition to its execution of the Master Lease,
that Guarantor guaranty to Landlord the performance of Tenant’s obligations
under the Master Lease; and

WHEREAS, Guarantor and Tenant are affiliates and, as such, Guarantor is desirous
that Landlord enter into the Master Lease; and

WHEREAS, unless otherwise specifically noted, all capitalized terms used in this
Guaranty shall have the same meaning as are ascribed to such terms in the Master
Lease.

NOW, THEREFORE, in consideration of the execution of the Master Lease by
Landlord and other good and valuable consideration and intending to be legally
bound hereby, Guarantor hereby unconditionally guaranties to Landlord, its
successors and assigns as follows:

1.

Guarantor hereby absolutely, irrevocably, and unconditionally guarantees the
full and punctual payment by Tenant of all rent and other amounts and charges
required to be paid by Tenant pursuant to the Master Lease, and the full and
punctual performance by Tenant of all other obligations on the part of Tenant to
be performed under the Master Lease, including, but not limited to, the
regulatory compliance matters set forth in Section 6 of the Master Lease, the
environmental obligations set forth in Section 7 of the Master Lease and the
obligations of Tenant to complete the Mountain’s Edge Capital Addition Project
(hereinafter collectively referred to as the “Guaranteed Obligations”).

2.

Landlord shall have the right, from time to time, and at any time, in its sole
discretion, without notice to or consent from the undersigned, and without
affecting, impairing or discharging in whole or in part, the Guaranteed
Obligations or the obligations of the undersigned hereunder, to (a) modify,
change, extend, alter, amend, or supplement in any respect whatsoever, the
Master Lease, or any agreement or transaction between Landlord and Tenant, or
any portion or provision thereof, (b) grant extensions of time and other
indulgences of any kind to Tenant, and (c) compromise, release, substitute,
exercise, enforce or fail to refuse to exercise or enforce any claims, rights,
or remedies of any kind which Landlord may have at any time against Tenant.

3.

Guarantor covenants and agrees that, as of each Test Date (as defined
hereinafter), its Fixed Charge Coverage Ratio (as defined hereinafter) for the
twelve (12) month period then ended shall be not less than 1.1 to 1.00.  For the
purposes hereof;

(i) “Fixed Charge Coverage Ratio” means, for any period, the ratio of EBITDAR
(as defined hereinafter) to Fixed Charges (as defined hereinafter) for such
period;

B ‒ 1

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(ii) “Fixed Charges” means, for any period, the aggregate amount, on a
consolidated basis, of Guarantor’s (A) scheduled principal payments for such
period in respect of indebtedness, excluding balloon  payments and principal
payments from time to time on any accounts receivable/payable working capital
line of credit provided by a commercial lender, (B) scheduled payments
(including but not limited to principal and interest payments) for such period
related to equipment financing and/or capital leasing (to the extent not
included in clause (A) above), (C) non-financed capital expenditures during such
period, excluding construction in progress expenditures, (D) required payments
during such period of interest on indebtedness, and (E) scheduled payments of
rent for such period on any real estate leases and equipment operating leases;

(iii) “EBITDAR” shall mean, for any period, an amount equal to (i) the
consolidated net income of Guarantor for such period determined in accordance
with GAAP, plus (ii) the sum of the following, to the extent deducted in the
calculation of such net income:  (A) interest expense; (B) depreciation; (C)
income taxes; (D) franchise taxes; (E) amortization; (F) all other non-cash,
non-recurring charges and expenses, excluding accruals for cash expenses made in
the ordinary course of business; (G) loss from any sales of assets, other than
sales in the ordinary course of business; (H) non-cash rent expenses; and
(I) rent under any real estate leases; minus (iii) gains from any sales of
assets, other than sales in the ordinary course of business; minus (iv) if not
already deducted from the calculation of net income, a management fee equal to
five percent (5%) of net revenues; and

(iv)  “Test Date” shall mean the last day of each calendar quarter during the
Term, with the first such date to occur on March 31, 2017.

4.

Guarantor hereby waives, to the fullest extent permitted by applicable laws, for
the benefit of the Landlord:  (a) any right to require the Landlord, as a
condition of payment or performance by such Guarantor, to (i) proceed against
any Tenant, any other guarantor (including any other guarantor) of the
Guaranteed Obligations or any other Person, (ii) proceed against or exhaust any
security held from any Tenant, any such other guarantor or any other Person,
(iii) proceed against or have resort to any balance of any deposit account or
credit on the books of the Landlord in favor of any Tenant or any other Person,
or (iv) pursue any other remedy in the power of the Landlord whatsoever; (b) any
defense arising by reason of the incapacity, lack of authority or any disability
or other defense (other than payment in full in cash of the Guaranteed
Obligations) of any Tenant or any other guarantor including any defense based on
or arising out of the lack of validity or the unenforceability of the Guaranteed
Obligations or any agreement or instrument relating thereto or by reason of the
cessation of the liability of any Tenant or any other guarantor from any cause
other than payment in full of the Guaranteed Obligations; (c) any defense based
upon any statute or rule of law which provides that the obligation of a surety
must be neither larger in amount nor in other respects more burdensome than that
of the principal or any law, rule, regulation, or order of any jurisdiction
affecting any term of the Guaranteed Obligations; (d) any defense based upon the
Landlord’s errors or omissions in the administration of the Guaranteed
Obligations, except behavior which amounts to bad faith; (e) (i) any principles
or provisions of law, statutory or otherwise, which are or might be in conflict
with the terms hereof and any legal or equitable discharge of such Guarantor’s
obligations hereunder, (ii) the benefit of any statute of limitations affecting
such Guarantor’s liability hereunder or the enforcement hereof, (iii) any rights
to set-offs, recoupments and counterclaims, and (iv) promptness, diligence and
any requirement that the Landlord protect, secure, perfect or insure any
security interest or lien or any property subject thereto; (f) notices (other
than notices expressly required hereunder or under the Master Lease), demands,
presentments, protests, notices of protest, notices of dishonor and notices of
any action or inaction, including acceptance hereof, notices of default under
the Master Lease or any agreement or instrument related thereto, notices of any
renewal, extension or modification of the Guaranteed Obligations or any
agreement related thereto, notices of any extension of credit to any Tenant and
notices of any of the matters referred to in this Section 4 and any right to
consent to any thereof; and (g) any defenses or benefits that may be derived
from or afforded by law which limit the liability of or exonerate guarantors or
sureties, or which may conflict with the terms hereof (other than payment in
full of the Guaranteed Obligations).

5.

Landlord may assign this Guaranty in whole or in part to Landlord’s successor in
interest under the Master Lease, and no assignment of this Guaranty shall
operate to extinguish or diminish the liability of the undersigned hereunder.

6.

The liability of Guarantor under this Guaranty shall be primary under any right
of action which shall accrue to Landlord under the Master Lease, and Landlord
may, at its option, proceed against Guarantor without

B ‒ 2

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having to commence any action against Tenant or obtain any judgment against
Tenant. This is a guaranty of payment and not of collection.

7.

The obligations of Guarantor hereunder shall not be affected, impaired or
discharged, in whole or in part, by reason of: (a) the entry of an order for
relief pursuant to the United States Bankruptcy Code by or against Tenant; or
(b) the proposal of or the consummation of a plan of reorganization concerning
Tenant.

8.

Guarantor agrees that any judgment rendered against Tenant for monies or
performance due Landlord shall in every and all respects bind and be conclusive
against Guarantor to the same extent as if Guarantor had appeared in any such
proceedings and judgment therein had been rendered against Guarantor.

9.

Guarantor subordinates to Tenant’s obligations to Landlord all indebtedness of
Tenant to Guarantor, whether now existing or hereafter contracted, whether
direct or indirect, contingent or determined. With respect to any such
indebtedness of Tenant to Guarantor, Guarantor agrees to make no claim therefor
until any and all obligations of Tenant to Landlord shall have been discharged
in full and Guarantor covenants and agrees not to assign all or any part of such
indebtedness while this Guaranty remains in effect. Upon written notice from
Landlord of an Event of Default (as defined in the Master Lease) under the
Master Lease, Guarantor shall not accept payment of any indebtedness, whether
existing or hereafter contracted, by Tenant to Guarantor, unless and until
written notice from Landlord that the Event of Default has been cured, waived,
or otherwise suspended by Landlord; provided, however, during all other times,
Tenant may pay, and Guarantor may accept payment of, any indebtedness, whether
existing or hereafter contracted, owing by Tenant to Guarantor.

10.

The waiver of any right by Landlord or its failure to exercise promptly any
right shall not be construed as a waiver of any other right including the right
to exercise the same at any time thereafter. No waiver or modification of any of
the terms or conditions of this Guaranty shall be binding against Landlord,
unless such waiver or modification is in writing signed by Landlord. No delay on
Landlord’s part in exercising any right, power or privilege under this Guaranty
or any other document executed in connection herewith shall operate as a waiver
of any such privilege, power or right.

11.

If any term, covenant or condition of this Guaranty, or any application thereof,
should be held by a court of competent jurisdiction to be invalid, void or
unenforceable, all terms, covenants and conditions of this Guaranty, and all
applications thereof not held invalid, void or unenforceable shall continue in
full force and effect and shall in no way be affected, impaired or invalidated
thereby.

12.

The obligations of Guarantor hereunder shall continue and remain in full force
and effect in the event that all or any portion of any payment or performance
hereunder is subsequently avoided or recovered directly or indirectly from
Landlord as a preference, fraudulent transfer or otherwise under the federal
Bankruptcy Code or other similar laws or such payment(s) is otherwise set aside,
and this Guaranty shall be deemed automatically restored and reinstated in such
event until Landlord has been fully paid and indefeasibly recovered the full
benefit of the full payment and performance due under the Master Lease and this
Guaranty.

13.

All rights and remedies of Landlord are cumulative and not alternative. This
Guaranty is, and shall be deemed to be, a contract entered into under and
pursuant to the laws of the State of Delaware and shall be in all respects
governed, construed, applied and enforced in accordance with the laws of said
State. In any action brought by Landlord to enforce any of its rights under or
arising from this Guaranty, Landlord shall be entitled to receive its costs and
legal expenses including reasonable attorneys’ fees, whether such action is
prosecuted to judgment or not.

14.

Contemporaneously with the execution of this Guaranty, in consideration of
Landlord agreeing to enter into the Master Lease, Guarantor covenants to
Landlord that Guarantor shall execute and deliver to Landlord a written pledge
agreement, on mutually acceptable terms, whereby Grantor shall pledge, assign
and grant to Landlord, as security for the Guaranteed Obligations a security
interest in all of the stock, shares, membership interests, partnership
interests and other equity ownership interests in Tenant now or hereafter held
by Guarantor.

SIGNATURE PAGE FOLLOWS

B ‒ 3

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IN WITNESS WHEREOF, the undersigned has caused this Guaranty to be executed as
of the date first written above.

THI OF BALTIMORE, INC., a Delaware corporation

 

 

 

By:____________________________________

Name:Kenneth Tabler

Title:Vice President

 

 

 

 

B ‒ 4

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EXHIBIT C TO MASTER LEASE

[MOUNTAIN’S EDGE WORK LETTER]

In connection with that certain Amended and Restated Master Lease (the “Master
Lease”), of even date herewith, by and among MRT of Las Vegas NV - ACH, LLC, a
Delaware limited liability (“MRT Las Vegas-ACH”), MRT of Las Vegas NV - LTACH,
LLC, a Delaware limited liability company (“MRT Las Vegas-LTACH”), MRT of Fort
Worth TX - SNF, LLC, a Delaware limited liability company (“MRT Fort
Worth-SNF”), MRT of Spartanburg SC - SNF, LLC, a Delaware limited liability
company (“MRT Spartanburg-SNF”; and, together with MRT Las Vegas-ACH, MRT Las
Vegas-LTACH, and MRT Fort Worth-SNF, as their interests may appear, “Landlord”),
Nashville Leasehold Interests, LLC, a Delaware limited liability company
(“Tenant”), Vegas Hospital Care, LLC, a Delaware limited liability company
(“Mountain’s Edge Operator”), THI of Nevada II at Desert Lane, LLC, a Delaware
limited liability company (“Horizon Henderson Operator”), Bryant Irvin
Consulting, LLC, a Delaware limited liability company (“Mira Vista Operator”),
and THI of South Carolina at Magnolia Place at Spartanburg, LLC, a Delaware
limited liability company (“Spartanburg Operator”; and together with Mountain’s
Edge Operator, Horizon Henderson Operator and Mira Vista Operator are
collectively referred to herein as the “Operators”), to which this Mountain’s
Edge Work Letter (this “Work Letter”) is attached, Landlord and Tenant hereby
agree to the terms and conditions set forth in this Work Letter relating to the
construction, performance, and payment of the Capital Addition Project (as
defined hereinafter). Capitalized terms used but not defined in this Work Letter
shall have the meanings ascribed to them in the Master Lease.

1.

Definitions.  The definitions set forth in this Section 1 shall apply with
respect to this Work Letter, the Capital Addition Project and the Master
Lease.  For all purposes of this Work Letter, except as otherwise expressly
provided or unless the context otherwise requires, (i) the terms defined in this
Section 1 have the meanings assigned to them in this Section 1 and shall include
the plural as well as the singular, (ii) all references in this Work Letter to
designated “Sections” and other subdivisions are to the designated Sections and
other subdivisions of this Work Letter; (iii) the word “including” shall have
the same meaning as the phrase “including, without limitation,” and other
similar phrases; and (iv) the words “herein,” “hereof’ and “hereunder” and other
similar words refer to this Work Letter as a whole and not to any particular
Section or other subdivision.

“Capital Addition Plans”:  (i) The final plans and specifications for the
construction/performance of the Capital Addition Project as prepared by the
Architect (as defined hereinafter) and approved by Landlord, which approval
shall not be unreasonably withheld or delayed, and (ii) all amendments,
modifications and supplements thereto which do not require the approval of
Landlord or which have been approved by Landlord subsequent to the approval of
the plans and specifications described in clause (i).

“Capital Addition Project”:  An approximately 11,750 square foot
addition/expansion to the Mountain’s Edge Facility for five (5) surgical suites
all as more particularly depicted on and to be constructed/performed in
accordance with the Capital Addition Plans, including (A) the fixtures referred
to in and/or shown thereon, (B) to the extent not shown on the Capital Addition
Plans, additions to the parking facilities so as to provide sufficient parking
spaces to comply with all legal requirements and as otherwise necessary for the
operation of the Mountain’s Edge Facility (including the Capital Addition
Project) for its Permitted Use, (iii) the Offsite Improvements (as defined
hereinafter) and (iv) any and all site preparation, landscaping and drainage
works and all other improvements necessary to comply with all legal requirements
and/or for the operation of the Mountain’s Edge Facility (including the Capital
Addition Project) for its Permitted Use.

“Capital Addition Project Budget”:  The budget attached hereto as Schedule 1,
together with (i) a detailed estimate report to be prepared by Tenant (or the
Mountain’s Edge Operator to which the Mountain’s Edge Property is subleased from
Tenant) or its General Contractor (as defined hereinafter) and delivered to and
approved by Landlord (which approval shall not be unreasonably withheld or
delayed) promptly following the execution and delivery of the Master Lease and
this Work Letter, which report shall also provide a detailed cost breakdown of
all hard construction costs for the Capital Addition Project and (ii) any other
detailed budget information as Landlord may reasonably request and approve from
Tenant (or the Mountain’s Edge Operator), including a further breakdown of such
hard construction costs to a level of detail that will allow Landlord to
determine the actual cost and percentage of completion of construction as of the
date of any Request for Advance (as defined hereinafter).

 

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“Capital Addition Project Costs”:  All the costs and expenses incurred in
connection with (i) in reviewing all documents and instruments required under
this Work Letter, and (ii) the construction/performance of the Capital Addition
Project, as contemplated by the Capital Addition Project Budget, including the
costs of constructing/performing work depicted by the Capital Addition Plans and
otherwise in accordance with applicable provisions of this Work Letter,
Landlord’s costs and expenses relating to the services of Landlord’s
Construction Consultant (as defined in Section 2.3 of this Work Letter), costs
for bonds, costs and fees for surveys, costs for title work and premiums for
title insurance (including, if available, an endorsement to Landlord’s existing
owner’s title insurance policy increasing the liability thereof by the total
amount of the Capital Addition Project Costs), environmental fees and expenses,
architect fees, engineering costs, Landlord’s appraisal, legal and accounting
fees and costs, reasonable travel expenses, the cost of purchase and
installation of any fixtures or other property included as part of the Capital
Addition Project and all governmental licenses and fees. Without limiting the
foregoing, Capital Addition Project Costs shall include all amounts funded or
advanced by Landlord (including the costs and expenses contemplated by Section
2.8(g) of this Work Letter) pursuant to this Work Letter on account of the
Capital Addition Project.

“Architect”:   An architect and/or engineer selected by Tenant (or the
Mountain’s Edge Operator) in connection with the design and construction of the
Capital Addition Project and approved by Landlord, which approval shall not be
unreasonably withheld or delayed so long as such architect is licensed in the
State of Nevada and has experience with the type and scope of the project for
which he/she is being retained.

“Completion Date”:  The date on which the construction/performance of the
Capital Addition Project have been substantially completed such that Landlord
has received the following: (i) a certificate of substantial completion from the
Architect substantially in the form of American Institute of Architects (“AIA”)
form G704-2000, (ii) a certificate of occupancy or its equivalent issued in
accordance with all legal requirements and by the appropriate Governmental
Authority having jurisdiction over the Mountain’s Edge Property which permits
the occupancy and use of the improvements constructed as part of the Capital
Addition Project, and (iii) all other licenses, authorizations and permits, if
any, required by any Governmental Authority for the use and operation of the
Capital Addition Project as part of the Mountain’s Edge Facility for its
Permitted Use.  For purposes of this Work Letter, “substantially completed”
shall mean that the improvements being constructed/performed as part of the
Capital Addition Project and all other work which Tenant (or the Mountain’s Edge
Operator) is obligated to perform under this Work Letter with respect to the
Capital Addition Project have been (a) completed in accordance with the Capital
Addition Plans and the applicable provisions of this Work Letter and the Master
Lease, notwithstanding the fact that Punch-List Items (as defined hereinafter)
remain to be performed, and (b) approved and licensed by all applicable
regulatory authorities.

“Construction Contracts”:  The contracts between Tenant (or the Mountain’s Edge
Operator) and the General Contractor, Tenant (or the Mountain’s Edge Operator)
and the Architect and/or Tenant (or the Mountain’s Edge Operator) or any other
contractor (including subcontractors) relating to rendering of services or
furnishing of materials in connection with the construction/performance of the
Capital Addition Project, contracts between the General Contractor and any
subcontractor and contracts between any of the foregoing and any other Person
relating to rendering of services or furnishing of materials in connection with
construction/performance of the Capital Addition Project.

“General Contractor”:  The general contractor selected by Tenant (or the
Mountain’s Edge Operator) and approved by Landlord in connection with the
constriction/performance of the Capital Addition Project, including the Capital
Addition Project, which approval of such general contractor shall not be
unreasonably withheld or delayed so long as such general contractor has all
required State of Nevada and local licenses and permits, is bondable and has
sufficient experience with the size, type and scope of the Capital Addition
Project.

“Landlord’s Maximum Cost”:  The sum of Eleven Million and No/100 Dollars
($11,000,000.00).

“Major Subcontractors”:  Subcontractors, materialmen and other vendors with
Construction Contracts in excess of Fifty Thousand and No/100 Dollars
($50,000.00).

 

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“Offsite Improvements”: (i) Any streets, roads, walks, curbs and the like
(whether or not ultimately dedicated for public use and/or maintenance)
necessary to provide access to public roads, streets and highways, (ii) any
improvements and other works necessary or desirable for the provision of
utilities to the Capital Addition Project and/or the existing Mountain’s Edge
Facility and (iii) any other improvements on property other than the Mountain’s
Edge Land that are (A) required by legal requirements, (B) necessary for the
construction/performance of the Capital Addition Project in accordance with the
Capital Addition Plans and the applicable provisions of the Master Lease or this
Work Letter, and/or (C) necessary for operation of the Mountain’s Edge Facility
(including the Capital Addition Project) for its Permitted Use.

“Outside Completion Date”: December 31, 2018.

“Punch List Items”:  Minor details of construction, mechanical adjustments or
decorations which remain to be completed with respect to the Capital Addition
Project following the Completion Date and which do not (i) prevent the issuance
of a certificate of occupancy (or the local equivalent thereat) for the Capita]
Addition Project and/or (ii) materially interfere with the use of the Mountain’s
Edge Facility (including the Capital Addition Project) for its Permitted Use.

“Remaining Funds”:  The unadvanced portion of Landlord’s Maximum Cost, if any.

“Request for Advance”:  Certificates of Tenant (and the Mountain’s Edge
Operator) and, to the extent applicable, the Architect, in each case on the
appropriate AIA form, including form G702 together with attached AIA form G703
(or equivalent, which AIA form G703 or equivalent shall be modified to include
columns for the original estimate of scheduled values for each line item,
changes to the scheduled values for each line item and a revised scheduled value
for each line item after any such change) and/or such other form(s) as Landlord
may hereafter reasonably request which shall: (i) set forth the Persons to whom
money is owed and the amount owed each; (ii) certify among other things that
such amounts represent payments due for services actually rendered or materials
actually acquired or furnished in connection with the construction/performance
of the Capital Addition Project; (iii) state that the sum requested is Capital
Addition Project Cost within the Capital Addition Project Budget for such item
and that, in the opinion of the Architect (if any) and Tenant (and the
Mountain’s Edge Operator), the Remaining Funds are sufficient to complete the
Capital Addition Project pursuant to the Capital Addition Plans and to pay for
all labor, material and other expenses in connection therewith; (iv) be
accompanied by copies of billing statements of the General Contractor, in form
reasonably satisfactory to Landlord; (v) refer to an attached schedule, to be
verified by the Architect (if any) or other reliable Person reasonably
acceptable to Landlord prior to the advance being requested, identifying in a
manner reasonably satisfactory to Landlord all materials not yet affixed or
incorporated into the Capital Addition Project but which have been covered by
certificates submitted to date, including the current certificate; (vi) contain
a statement, to be verified by the Architect (if any) or other reliable Person
reasonably acceptable to Landlord prior to the advance being requested. that all
such materials not yet affixed or incorporated into the Capital Addition Project
have been stored at the Mountain’s Edge Property or at one or more other bonded
locations approved by Landlord identified therein (specifying the materials
located at each location) under adequate safeguards to minimize the possibility
of loss, damage or commingling with other materials or projects, and that
builder’s risk insurance coverage for such materials stored off the Mountain’s
Edge Property is not less than the full insurable value of such materials then
being stored off the Mountain’s Edge Property; and (vii) be accompanied by
appropriate waivers of lien rights (to the extent not previously received and
approved by Landlord) with respect to work and materials for which funds have
already been advanced pursuant to this Work Letter, or which were performed or
were supplied prior to the Restatement Date, executed by the General Contractor
(if any) and all contractors, subcontractors, mechanics and materialmen no more
than one month in arrears and who have furnished labor or material to date and
whose charges are or will be greater than Twenty Five Thousand and No/100
Dollars ($25,000.00) and, unless Tenant (or the Mountain’s Edge Operator) has
provided a statutory payment bond in accordance with applicable legal
requirements, by all other contractors, subcontractors, mechanics and
materialmen.  Notwithstanding anything set forth herein to the contrary, the
Request for Advance for the first advance of funds by Landlord hereunder and for
each advance that is for an item on the Capital Addition Project Budget that is
not a hard cost shall mean such certificate with respect thereto as Landlord may
reasonably request. To the extent that any payment, funding or accrual of
Capital Addition Project Costs by Landlord hereunder is attributable or
allocable to one or more of the categories comprising the Capital Addition
Project, Landlord shall allocate such Capital Addition Project Costs among such
categories as Landlord shall reasonably determine.

 

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“Tenant’s Affidavit”:  A sworn affidavit of Tenant (and the Mountain’s Edge
Operator), in form and substance satisfactory to Landlord, stating that to the
best of the knowledge of Tenant and the Mountain’s Edge Operator), all labor and
material bills of every kind and character incurred by Tenant (or the Mountain’s
Edge Operator) to the date of such affidavit in connection with the Capital
Addition Project have been paid in accordance with the payment provisions of the
applicable Construction Contracts except for the unpaid bills to be paid from
the proceeds of the current Request for Advance, and that the builder’s risk
insurance described in Section 2.4(d)(i) of this Work Letter contains sufficient
coverage for the construction/performance of the Capital Addition Project,
including the value of materials stored off the Mountain’s Edge Property.

2.

Capital Addition Project.  Without limiting any other obligation or liability of
Tenant (or the Mountain’s Edge Operator) under the Master Lease, the following
shall apply with respect to the Capital Addition Project and the
construction/performance and funding thereof:

2.1Obligations of Tenant (and the Mountain’s Edge Operator).

(a)Construction/Performance of Capital Addition Project. Tenant (or the
Mountain’s Edge Operator) shall be responsible to arrange, supervise, coordinate
and carry out all services necessary for the construction, performance and
completion of the Capital Addition Project in accordance with the Capital
Addition Plans and the applicable provisions of this Work Letter, and Tenant
(and the Mountain’s Edge Operator) undertake and accept such responsibility with
the understanding that all Capital Addition Project Costs up to Landlord’s
Maximum Cost will be funded by Landlord to Tenant or its designee pursuant to,
but subject to the applicable terms of, this Section 2. Tenant shall cause the
Capital Addition Project to be completed substantially in accordance with the
Capital Addition Plans and the terms of the Construction Contracts for an amount
not to exceed the Landlord’s Maximum Cost and the Completion Date to occur by
the Outside Completion Date. If and to the extent total Capital Addition Project
Costs exceed the Landlord’s Maximum Cost, Tenant shall pay and shall not be
reimbursed for such excess. If total Capital Addition Project Costs do not
exceed Landlord’s Maximum Cost, Tenant shall not be entitled to any portion of
the difference between Landlord’s Maximum Cost and total Capital Addition
Project Costs.

(b)Duties and Responsibilities. Without limiting Tenant’s obligations under the
Master Lease, the duties and responsibilities of Tenant (and the Mountain’s Edge
Operator) with respect to the Capital Addition Project shall specifically
include the following:

(i)Subject to the other provisions of this Work Letter, to negotiate and enter
into Construction Contracts and other agreements necessary for
construction/performance of the Capital Addition Project in accordance with the
Capital Addition Plans, which such contracts, by their terms, may be assigned by
Tenant (and the Mountain’s Edge Operator) to Landlord;

(ii)To establish operating procedures and a system of records and accounts
suitable for record keeping during construction/performance satisfactory to
Landlord;

(iii)To administer and monitor the performance under all Construction Contracts
and other agreements relating to the construction/performance of the Capital
Addition Project and the monthly reporting of the status of estimated costs of
completing the same in relation to the Capital Addition Project Budget and other
applicable budgets;

(iv)To manage and coordinate contractors, engineers, architects and other
consultants and monitor their compliance with their respective contracts or
agreements;

(v)To monitor and review and, when in the judgment of Tenant (or the Mountain’s
Edge Operator) it is in the best interest of Landlord, propose changes in the
Capital Addition Plans or in any budget relating to the construction/performance
of the Capital Addition Project;

(vi)To review and make a recommendation to Landlord with respect to payment of
all applications for payment under the Construction Contracts and other
agreements relating to the

 

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construction/performance of the Capital Addition Project and make payments of
any and all bills, invoices or other matters calling for payment by Tenant (or
the Mountain’s Edge Operator) or Landlord or for the Landlord’s account in
connection with the construction/performance of the Capital Addition Project,
all in accordance with the provisions of this Section 2;

(vii)To coordinate with the Architect and any inspecting engineer employed by
Landlord in the performance of periodic inspections of the Mountain’s Edge
Property in order to confirm that the materials furnished and work performed are
in accordance with the Capital Addition Plans and that the work on the Capital
Addition Project is progressing on schedule;

(viii)To stop the work and cause the correction of any defect in the materials
or workmanship furnished by any contractor or of any failure by any contractor
to perform its obligations under its Construction Contract and to promptly
inform Landlord of any instances of faulty materials and/or workmanship;

(ix)To make available to Landlord, upon request, the identities of and copies of
contracts with all subcontractors and any other Person supplying labor or
materials for the construction/performance of the Capital Addition Project; and

(x)To obtain all approvals necessary to construct/perform the Capital Addition
Project and to operate the Mountain’s Edge Facility for its Permitted Use.

(c)Performance of Duties. Tenant agrees that, subject to the performance by
Landlord of its obligations under this Section 2, Tenant (and the Mountain’s
Edge Operator) shall act with prudence and diligence in performing its duties
and responsibilities under this Work Letter, with respect to the Capital
Addition Project and in good faith in the best interests of Landlord and the
Mountain’s Edge Facility.

2.2Completion Guarantee.

(a)Construction and Cost Guarantee. Tenant and THI of Baltimore, Inc., a
Delaware corporation (“Guarantor”), jointly and severally, unconditionally
guarantee to Landlord (i) the construction/performance of the Capital Addition
Project in accordance with the Capital Addition Plans and all covenants and
obligations of Tenant under the Master Lease and this Work Letter, by the
Outside Completion Date (subject only to Force Majeure and the performance by
Landlord of its obligations under this Section 2) and (ii) the payment without
demand, and without right to reimbursement therefor, of all development,
construction and related costs of the Capital Addition Project incurred for any
reason whatsoever in excess of the Landlord’s Maximum Cost.

(b)Failure to Construct. Without limiting any other right or remedy of Landlord
under the Master Lease, if for any reason or under any contingency any
contractor shall default under a Construction Contract, fail to commence, or
abandon construction of, the  Capital Addition Project, or fail to complete the
Capital Addition Project within the maximum construction time in accordance with
the terms of the Construction Contracts, then in any such event, without the
need of any demand by Landlord, Tenant (or the Mountain’s Edge Operator) shall
assume all responsibility for and control over the construction, performance and
completion of the Capital Addition Project and shall cause the Capital Addition
Project to be fully completed in accordance with this Work Letter on or before
the Outside Completion Date, other than Punch List Items. Without limiting any
other right or remedy of Landlord under the Master Lease, if Tenant (or the
Mountain’s Edge Operator) fails to complete the Capital Addition Project in
accordance with the Capital Addition Plans prior to the Outside Completion Date
other than the Punch List Items, Landlord, at Landlord’s option, shall have the
right to complete the Capital Addition Project in accordance with the Capital
Addition Plans and expend such sums as Landlord reasonably deems proper in order
so to complete the Capital Addition Project. The amount of any and all
expenditures made by Landlord pursuant to this paragraph (b) which, when
combined with all Capital Addition Project Costs previously funded by Landlord,
are in excess of Landlord’s Maximum Cost, shall be immediately due and payable
by Tenant to Landlord as additional rent, together with interest thereon from
the date of such expenditure to the date paid by Tenant at the Agreed Rate. Said
interest shall accrue on a daily basis. Upon any assumption by Landlord of the
obligation to complete the Capital Addition Project as provided herein, Tenant
(and the Mountain’s Edge Operator) shall forthwith surrender and deliver to
Landlord, or Landlord’s designee, any funds which have been received from
Landlord but have not been disbursed by Tenant (or the Mountain’s Edge
Operator), and all records, plans,

 

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specifications, permits and other governmental approvals, purchase agreements,
contracts, receipts for deposits, unpaid bills and all other records, papers and
documents in the possession of Tenant (or the Mountain’s Edge Operator) relating
to the Capital Addition Project.

(c)Completion of Punch List Items. All Punch List Items, other than those
reasonably requiring more than thirty (30) days to complete due to long
scheduling or ordering time or other reasonable factors, shall be completed
within thirty (30) days after the Completion Date, but in no event later than
the Outside Completion Date. Any Punch List Items reasonably requiring more than
thirty (30) days to complete shall be diligently pursued and completed as
promptly as practicable, but in no event later than sixty (60) days after the
Outside Completion Date.

2.3Landlord’s Construction Consultant. Landlord and Tenant acknowledge that
Landlord is funding the Capital Addition Project Costs and will engage the
services of a third-party construction manager to be selected who will be
supervising the construction of the Capital Addition Project for Landlord’s own
account (“Landlord’s Construction Consultant”).  Accordingly, Landlord and
Tenant agree that for purposes of determining the Capital Addition Project
Costs, the cost of the Capital Addition Project shall be deemed to include the
reasonable fees and expenses paid by Landlord to Landlord’s Construction
Consultant.  

2.4Other Covenants of Tenant.

(a)Construction/Performance of the Capital Addition Project. Construction/
performance of the Capital Addition Project will be prosecuted by Tenant (and
the Mountain’s Edge Operator) in accordance with the Capital Addition Plans in a
good and workmanlike manner and in accordance with sound building and
engineering practices and all applicable legal requirements and all restrictive
covenants affecting the Mountain’s Edge Property. All materials, fixtures or
articles used in the construction/performance of the Capital Addition Project,
or to be used in the operation thereof shall be substantially in accordance with
the Capital Addition Plans as approved by Landlord. Tenant (and the Mountain’s
Edge Operator) shall ensure that no asbestos or asbestos-containing materials or
other Hazardous Materials will be contained in the completed Capital Addition
Project. Subject only to Force Majeure and the performance by Landlord of its
obligations under this Section 2, Tenant (or the Mountain’s Edge Operator) will
complete the construction/performance of the Capital Addition Project
substantially in accordance with the Capital Addition Plans on or before the
Outside Completion Date, free and clear of liens or claims for liens for
material supplied and for labor or services performed in connection with the
construction of the Capital Addition Project (except for permitted contests
pursuant to Section 6.4 of the Master Lease).

(b)Legal Requirements. Tenant (and the Mountain’s Edge Operator) will cause all
legal requirements and all restrictive covenants affecting the Mountain’s Edge
Property to be complied with promptly, and Landlord will be furnished, on
demand, evidence of such compliance.

(c)Change Orders, Defects.

(i)Tenant (or the Mountain’s Edge Operator) may, without obtaining the prior
written approval of Landlord, change the Capital Addition Plans, permit the
Capital Addition Plans to be changed or permit construction/performance of the
Capital Addition Project other than in accordance with the Capital Addition
Plans; provided, however, that if (1) any such change would (w) change the basic
structure or character of the Mountain’s Edge Facility; (x) change the
appearance of the Mountain’s Edge Facility (y) change or reduce the quality of
the basic building systems, including the mechanical, electrical, sprinkler,
plumbing, life-safety, heating, air conditioning and ventilation systems within
the Mountain’s Edge Facility or (z) result in an item of the Capital Addition
Project not being performed, (2) any single change in the Capital Addition Plans
involves an amount in excess of Fifty Thousand and No/100 Dollars ($50,000.00),
(3) any number of changes in the Capital Addition Plans involves in the
aggregate an amount not in excess of One Hundred Thousand and No/100 Dollars
($100,000.00), or (4) any such change in the Capital Addition Plans results in
the Capital Addition Project Costs exceeding the Landlord’s Maximum Cost, then
in any such event Tenant (and the Mountain’s Edge Operator) must obtain the
prior written approval of Landlord prior to implementing such change, which
approval may be given or withheld in the sole and absolute discretion of
Landlord.

 

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(ii)Tenant (or the Mountain’s Edge Operator) will at its sole cost and expense
and not as part of the Capital Addition Project Costs correct or cause to be
corrected any defect in the Capital Addition Project or any departure from the
Capital Addition Plans not approved by Landlord or permitted herein without such
approval or any encroachment by any part of the Capital Addition Project on or
over any building lines, easements, property lines or other restricted areas
which any survey or inspection reflects.

(d)Construction Insurance. To the extent not already maintained or covered by
Tenant pursuant to Section 5 of the Master Lease, Tenant (or the Mountain’s Edge
Operator) will at all times maintain or cause to be maintained the following
insurance during the construction/performance of the Capital Addition Project
(including through the date of completion of the Punch List Items):

(i)Builder’s risk insurance covering the construction/performance of the Capital
Addition Project, in a face amount of not less than the full insurable value of
the Capital Addition Project and materials supplied in connection therewith,
with appropriate provisions made to include coverage of materials stored off the
Mountain’s Edge Property in an amount not less than the full insurable value of
such materials stored off the Mountain’s Edge Property from time to time.

(ii)Errors and omissions insurance by any Architect in an amount at least equal
to One Million Dollars ($1,000,000) which can be applied to the
construction/performance of the Capital Addition Project, covering the entire
period of design and construction/performance of the Capital Addition Project,
including completion of the Punch-List Items.

All such insurance maintained or caused to be maintained by Tenant (or the
Mountain’s Edge Operator) pursuant to clauses (i) and (ii) of this clause (d)
shall name Landlord as an additional insured. All insurance maintained or caused
to be maintained by Tenant pursuant to clause (i) of this clause (d) shall name
Tenant (or the Mountain’s Edge Operator), Landlord and any General Contractor or
other contractor, jointly, as loss payee. In addition, all such insurance to be
maintained or caused to be maintained by Tenant (or the Mountain’s Edge
Operator) shall otherwise, to the extent applicable, comply with the provisions
of and shall be in addition to the insurance specified in Section 5 of the
Master Lease.

(e)Performance and Payment Bond. Tenant (or the Mountain’s Edge Operator) shall
procure or cause to be procured a performance and payment bond for the total
amount of the hard construction costs (including labor and materials) set forth
in the Capital Addition Project Budget. Such performance and payment bonds shall
name Landlord as an additional obligee and be in form and substance and from an
institution satisfactory to Landlord in its sole discretion.

(f)Indemnification. Without in any way limiting any other indemnification
obligation of Tenant under the Master Lease and notwithstanding the existence
and without regard to the policy limits of any insurance required to be
maintained pursuant to the Master Lease or clause (d) above and notwithstanding
the existence and without regard to the amount of bond required pursuant to
clause (e) above, Tenant shall protect, defend, indemnify and hold harmless the
Landlord Indemnified Parties from and against, and reimburse the Landlord
Indemnified Parties for, any and all actions, causes of action, obligations,
damages, penalties, suits, debts, losses, costs, expenses, liabilities, claims
or demands whatsoever, at law or in equity (including reasonable attorneys’ fees
and expenses) imposed on, incurred by or asserted against any of the Landlord
Indemnified Parties in connection with or with respect to the
construction/performance of the Capital Addition Project and any loss in value
of or title to the Mountain’s Edge Property or the Mountain’s Edge Facility
resulting therefrom, arising from:

(i)any breach of any of the provisions of this Work Letter by Tenant (or the
Mountain’s Edge Operator);

(ii)any misstatements or inaccuracies made by or on behalf of Tenant (or the
Mountain’s Edge Operator) contained within or other matters arising out of any
applications for building, foundation, grading or other permits and/or
authorizations necessary for the construction/performance of the Capital
Addition Project, including those required for the use and operation of the
Mountain’s Edge Facility for its

 

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Permitted Use, whether filed or submitted to the applicable Governmental
Authority in the name of Landlord or Tenant (or the Mountain’s Edge Operator);
or

(iii)any act or omission of Tenant (or the Mountain’s Edge Operator) in
connection with the construction/performance of the Capital Addition Project.

(g)Liens on Materials. Tenant (and the Mountain’s Edge Operator) shall not at
any time during the performance of the work, make or cause to be made, or permit
any General Contractor or any other contractor to make, any contract for
materials or equipment of any kind or nature whatsoever to be incorporated in or
to become a part of the Mountain’s Edge Property, title to which is not good or
which is subject to any lien or title retention arrangement other than inchoate
mechanic’s liens. Tenant (and the Mountain’s Edge Operator) will deliver to
Landlord. on demand, true copies of any contracts, bills of sale, statements,
receipted vouchers, or agreements, under which Tenant (or the Mountain’s Edge
Operator) claims title to any materials, fixtures, or articles used in the
construction/performance of the Capital Addition Project.

(h)Storage of Materials. Tenant (and the Mountain’s Edge Operator) will cause
all materials acquired or furnished in connection with the
construction/performance of the Capital Addition Project, but not affixed or
incorporated into the Mountain’s Edge Property, to be stored at the Mountain’s
Edge Property or at bonded locations approved by Landlord, in each case under
adequate safeguards to minimize the possibility of loss, theft, damage or
commingling with other materials or projects. Tenant (and the Mountain’s Edge
Operator) will employ suitable means to protect from theft or vandalism the
Mountain’s Edge Property and all tools and building materials stored on the
Mountain’s Edge Property.

(i)Inspections.  Without limiting any of Landlord’s rights or remedies under the
Master Lease, at any time during regular business hours, Landlord and/or its
representatives will be permitted to enter upon the Mountain’s Edge Property and
any other location where materials for the Capital Addition Project are being
stored to inspect the same and all materials to be used in the
construction/performance thereof; and to examine all detailed plans and shop
drawings which are or may be kept at the construction site, provided that in so
doing, Landlord shall not unreasonably interfere with the
construction/performance of the Capital Addition Project. Upon request, Landlord
will be furnished with reasonable information regarding the
construction/performance of the Capital Addition Project from Tenant (and the
Mountain’s Edge Operator), any Architect, any General Contractor and any other
contractors or subcontractors.

(j)Notices. Without limiting any other obligation of Tenant under the Master
Lease, Tenant (and the Mountain’s Edge Operator) will furnish Landlord with a
copy of any (A) notice or claim made by any Governmental Authority pertaining to
the Mountain’s Edge Property, (B) any notice of any termination, late payment or
other material aspect of any Construction Contract involving more than Twenty
Five Thousand and No/100 Dollars ($25,000.00), together with a copy of each such
Construction Contract and (C) any fire, casualty, notice of any condemnation or
other event materially affecting the Mountain’s Edge Property.

(k)Use of Funds, Deficiency.

(i)Tenant (and the Mountain’s Edge Operator) shall expend all the proceeds of
each advance hereunder for Capital Addition Project Costs in amounts and for the
purposes provided in the Capital Addition Project Budget and for no other
purpose whatsoever.

(ii)Tenant (and the Mountain’s Edge Operator) will promptly advise Landlord if
and when (1) Capital Addition Project Costs shall exceed or appear likely to
exceed the Landlord’s Maximum Cost or (2) Capital Addition Project Costs with
respect to any particular item in the Capital Addition Project Budget shall
exceed or appear likely to exceed the amount specified for any such item in the
Capital Addition Project Budget, and shall give Landlord sufficiently detailed
information with respect thereto.

(iii)if, in the reasonable good faith judgment of Landlord, it appears at any
time or from time to time that the Remaining Funds will be insufficient to
complete the construction/performance of the Capital Addition Project
substantially in accordance with the Capital Addition Plans on or before the
Outside

 

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Completion Date, and to pay for all Capital Addition Project Costs incurred in
connection with such construction/performance, or if any other expenses are
required for such completion which were not scheduled in the Capital Addition
Project Budget, Landlord may request that Tenant (and the Mountain’s Edge
Operator) demonstrate that the Remaining Funds are sufficient for such
completion and payment. If Tenant (or the Mountain’s Edge Operator) does not so
demonstrate to Landlord’s reasonable satisfaction within five (5) Business Days
of receipt of Landlord’s request to do so, then Tenant (and the Mountain’s Edge
Operator) shall make arrangements for additional monies to be made available as
shall, in the reasonable good faith judgment of Landlord, when added to the
Remaining Funds, be sufficient so as to complete and/or pay for the
construction/performance of the Capital Addition Project. Such additional monies
of Tenant (or the Mountain’s Edge Operator) shall be applied for payment of
costs prior to Landlord advancing any additional funds under this Work Letter.

(l)Construction Contract with General Contractor. Notwithstanding anything to
the contrary in this Work Letter, the Construction Contract with the General
Contractor shall specifically include, in substance, the following:

(i)Landlord and Tenant (and the Mountain’s Edge Operator) shall be entitled to
review (a) each subcontract to establish the true value of each line item in the
Construction Contract with the General Contractor and (b) each monthly draw
request from each subcontractor.

(ii)No portion of the retainage withheld in accordance with the Construction
Contract with the General Contractor will be released to the General Contractor
until the last to occur of (a) Landlord has received a certificate of
substantial completion from the Architect substantially in the form of American
Institute of Architects (“AIA”) form G704-2000, (b) life safety approval shall
have been issued so that the Project may be legally occupied and used for its
intended purpose, (c) all Punch List Items that may reasonably be completed
within thirty (30) days have been completed by General Contractor and General
Contractor is diligently pursuing completion of Punch List Items, if any, that
reasonably require more than thirty (30) days to complete due to long scheduling
or ordering time or other reasonable factors, and  (d) the date the Landlord
and/or Tenant receives (1) all lien releases required hereunder, (2) an
“As-Built” set of plans and specifications, and (3) such other documents as
Landlord and/or Tenant may reasonably request.  With respect to any Punch List
Item(s) requiring more than thirty (30) days to complete, the Landlord and/or
Tenant may withhold retainage in the amount of the cost to complete any such
Punch List Item(s) until the General Contractor has completed such Punch List
Item(s).

(m)Documents at Completion. Without limiting any provisions of this Work Letter,
from time to time as requested by Landlord and as soon as practicable following
the Completion Date, Tenant shall supply or cause to be supplied to Landlord
such reasonable documents and information pertaining to the Capital Addition
Project and the construction, performance and/or completion of the same as
Landlord shall request, including those documents and information described on
Schedule 2 attached hereto.

(n)Assignment of Construction Contracts. At the request of Landlord, Tenant (and
the Mountain’s Edge Operator) shall assign to Landlord each Construction
Contract to which Tenant (or the Mountain’s Edge Operator) is a party utilizing
an assignment instrument in form and substance acceptable to Landlord and shall
cause each other party to such Construction Contract to consent to such
assignment, if required by the terms thereof.

2.5Additional Events of Default. In addition to and without limiting the “Events
of Default” set forth in the Master Lease, any one or more of the following
shall also constitute an “Event of Default” under the Master Lease:

(a)Tenant (or the Mountain’s Edge Operator) fails to perform in all material
respects any of the obligations to be performed by Tenant (or the Mountain’s
Edge Operator) under this Work Letter with respect to the Capital Addition
Project, and such failure is not cured within sixty (60) days after notice
thereof from Landlord or, if such failure cannot reasonably be cured within such
sixty (60) day period, such longer period as reasonably may be required to
remedy such default as long as Tenant (or the Mountain’s Edge Operator) has
commenced such cure within such sixty (60) day period, thereafter diligently
prosecutes such cure and completes such cure not later than ninety (90) days
after notice from Landlord but in any event prior to the Outside Completion
Date; or

 

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(b)Tenant (or the Mountain’s Edge Operator) fails to satisfy in all material
respects any condition to an advance under this Work Letter for a period in
excess of sixty (60) days, or, if such failure cannot reasonably be cured within
such sixty (60) day period, such longer period as reasonably may be required to
remedy such failure as long as Tenant (or the Mountain’s Edge Operator) has
commenced such cure within such sixty (60) day period, thereafter diligently
prosecutes such cure and completes such cure within ninety (90) days but in any
event prior to the Outside Completion Date; or

(c)Tenant (or the Mountain’s Edge Operator) uses any monies advanced by Landlord
under this Work Letter for any purpose other than as allowed or contemplated
under this Work Letter; or

(d)Except as a result of a casualty or Force Majeure, work on the Capital
Addition Projects ceases for thirty (30) consecutive days for any reason; or

(e)Except for Force Majeure, the Completion Date does not occur by the Outside
Completion Date, free and clear of mechanics’, materialmen’s and other liens
(except for permitted contests pursuant to Section 6.4 of the Master Lease); or

(f)Except for change orders allowed pursuant to the provisions of this Work
Letter, Tenant (or the Mountain’s Edge Operator) modifies, amends or terminates
any Construction Contract without Landlord’s written consent; or

(g)Any mechanics’, materialmen’s or other lien is filed or asserted against the
Mountain’s Edge Property, or any part thereof, or any suit or other proceeding
is instituted to enforce or foreclose such a lien (except for permitted contests
pursuant to Section 6.4 of the Master Lease).

2.6Advances of Funds by Landlord.

(a)Funding. Subject to the satisfaction by Tenant of the conditions set forth in
Section 2.7 of this Work Letter and the other provisions of this Work Letter,
Landlord will advance to Tenant funds up to the Landlord’s Maximum Cost (less
all costs, fees, allowances and charges of Landlord which are included within
Capital Addition Project Costs and deemed reimbursed to Landlord as part of
Capital Addition Project Costs) for the purpose of paying or reimbursing Tenant
(or the Mountain’s Edge Operator) for the payment of the Capital Addition
Project Costs.

(b)Limitation of Funding Obligation. Landlord shall not be obligated to advance
to Tenant any sums (i) in excess of the Landlord’s Maximum Cost or for which a
Request for Advance is received more than sixty (60) days after the Outside
Completion Date, or (ii) when any of the conditions set forth in Section 2.7 of
this Work Letter have not been met or fulfilled.

(c)Advances of Funds by Landlord. Draw requests will be reviewed once each month
(i.e., not more frequently than once every 30 days) and will be based on the
prorata share completion to date of each construction line item listed in the
Capital Addition Project Budget. All advances of funds under this Work Letter
shall be made by Landlord in accordance with a Request for Advance. Each Request
for Advance shall be honored within ten (10) Business Days of receipt of the
same delivered in accordance with the notice provisions of the Master Lease
together with the information required therein, subject, however, to the
limitations herein. In no event shall Landlord be required to make any advance
for a particular line item which, when aggregated with prior advances, is in
excess of the Capital Addition Project Budget for such line item except to the
extent amounts from contingency line items are unused and/or to the extent
savings, in Landlord’s reasonable good faith discretion, in other budget line
items remain unused. Landlord shall issue checks payable to, or otherwise
advance funds to, Tenant, the payees designated in a Request for Advance or
jointly to Tenant and such payees, as Landlord shall reasonably determine.
Advances of funds to such payees or jointly to Tenant and any such payee shall
constitute an advance hereunder as though advanced directly to Tenant.

(d)Holdbacks. Any advances for costs and expenses of labor and materials
connected with the construction/performance of the Capital Addition Project
shall be limited to Ninety-Five Percent

 

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(95%) of such costs and expenses and shall be made in accordance with the
payment schedule of the Construction Contract with any General Contractor or
other contractor.  The final advance of proceeds representing the Five Percent
(5%) retainage for any particular item will not be made until the last to occur
of (i) Landlord has received a certificate of substantial completion from the
Architect substantially in the form of American Institute of Architects (“AIA”)
form G704-2000, (ii) life safety approval shall have been issued so that the
Project may legally be occupied and used for its intended purpose, (iii) all
Punch List Items that may reasonably be completed within thirty (30) days have
been completed by General Contractor and General Contractor is diligently
pursuing completion of Punch List Items, if any, that reasonably require more
than thirty (30) days to complete due to long scheduling or ordering time or
other reasonable factors, and  (iv) the date the Landlord and/or Tenant
receives, as applicable, (1) all final lien releases required hereunder, (2) an
“As-Built” set of plans and specifications (if reasonably requested by Landlord
based upon the nature of the Capital Addition Project), (3) an ALTA “As-Built”
survey (if reasonably requested by Landlord based upon the nature of the Capital
Addition Project), and (4) such other documents as Landlord may reasonably
request.  With respect to any Punch List Item(s) requiring more than thirty (30)
days to complete, the Landlord and/or Tenant may withhold retainage in the
amount of the cost to complete any such Punch List Item(s) until the General
Contractor has completed such Punch List Item(s).

2.7Conditions to Landlord Obligations to Advance Funds. Landlord shall not be
obligated to make any advance of funds under this Work Letter, including the
first advance, unless and until the following conditions shall have been
satisfied (with proof thereof in form and sufficiency as may be reasonably
requested by Landlord):

(a)Approvals/Entitlements. To the extent not theretofore received and approved
by Landlord and to the extent of a material change not permitted herein without
approval, Landlord shall have received and approved (i) the Capital Addition
Plans; (ii) the Capital Addition Project Budget(s); (iii) all Construction
Contracts with any General Contractor, any Architect and any other contractor or
material supplier that may be requested by Landlord; and (iv) all authorizations
and permits required by any Governmental Authority for the
construction/performance of the Capital Addition Project, including building and
grading permits, a foundation letter (if applicable to the Capital Addition
Project) and such other authorizations and permits as are required for the use
and operation of the Mountain’s Edge Facility for its Permitted Use, which are
presently procurable.

(b)Utilities and Access. To the extent applicable to the Capital Addition
Project as reasonably determined by Landlord, Landlord shall have received
evidence satisfactory to Landlord that (i) all existing public utilities,
including telephone, water, sewage, electricity and gas are adequate for the
Mountain’s Edge Facility; and (ii) all existing means of ingress and egress,
parking, access to public streets and drainage facilities are adequate for the
Mountain’s Edge Facility.

(c)Soils and Other Tests. To the extent applicable to the Capital Addition
Project as reasonably determined by Landlord, Landlord shall have received and
approved test borings, engineering reports and such other site analysis as
Landlord may require, all of which must indicate that the soil is adequate for
the proposed construction/performance of the Capital Addition Project in
accordance with the Capital Addition Plans.

(d)Insurance. Landlord shall have received certificates with respect to the
insurance required to be carried by Tenant (or the Mountain’s Edge Operator) or
other Persons pursuant to Section 2.4 above, together with evidence satisfactory
to Landlord that the premiums therefor have been paid in full.

(e)Payment and Performance Bond(s). Landlord shall have received the payment and
performance bond(s) fulfilling the requirements set forth in Section 2.4 above
and shall have made arrangements, to the extent applicable and prescribed by
legal requirements, for the recordation and/or filing of the same for
recordation in the land records for the county in which the Mountain’s Edge Land
is located, along with a copy of the approved Construction Contract with the
General Contractor.

(f)No Default. No Event of Default shall have occurred under the Master Lease
(including this Work Letter) and no event or condition shall exist which, with
notice and/or lapse of time, or both, would constitute such an Event of Default
under the Master Lease (including this Work Letter).

 

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(g)Condemnation; Casualty. No material condemnation shall be pending or
threatened and no material casualty shall have occurred, in either case with
respect to the Mountain’s Edge Property or any portion thereof.

(h)Other Documents and Assurances. Landlord shall have received such other
documents and assurances as Landlord shall have reasonably requested, including
any endorsements to Landlord existing policy of title insurance updating the
same without any additional exception except as may be approved by Landlord and
increasing the policy limit thereof to an amount equal to the Capital Addition
Project Costs funded or accrued by Landlord.

(i)Request for Advance. Landlord shall have received and approved (A) a Request
for Advance accompanied by all necessary documents and certificates as set forth
in the definition thereof; (B) a Tenant’s Affidavit; and (C) to the extent
applicable, a certificate from the Architect, or if no Architect, from an
officer of Tenant (and the Mountain’s Edge Operator) or any other reliable
Person acceptable to Landlord, to the effect that in such Person’s opinion (1)
the construction/performance of the Capital Addition Project theretofore
performed is in accordance with the Capital Addition Plans and (2) the amount
requested is appropriate in light of the percentage of construction completed
and amount of stored material.

(j)Architect, Contractor Letters. Landlord shall have received from each of the
Architect, General Contractor, and Major Subcontractors a letter, in form and
substance satisfactory to Landlord, which, among other things, (i) states that,
in the event of a default by Tenant (or the Mountain’s Edge Operator) under the
contract with the undersigned, the undersigned agrees to perform for Landlord at
Landlord’s request under the terms of the applicable Construction Contract, and
(ii) to the best knowledge of the undersigned certifies to Landlord that the
Capital Addition Plans comply with all legal requirements, and that the work
performed by the undersigned has been completed in accordance with the Capital
Addition Plans.

(k)Proceedings. Landlord shall have reviewed and approved all corporate
proceedings to be taken by Tenant (and the Mountain’s Edge Operator) and
Guarantor in connection with the transactions contemplated under the Master
Lease and this Work Letter.

2.8Miscellaneous Provisions Applicable to Capital Addition Project.

(a)Ownership of Capital Addition Project. At all times the Capital Addition
Project shall be owned entirely by Landlord subject to the leasehold interest of
Tenant under the Master Lease with respect to the Capital Addition Project. Upon
the request of Landlord, Tenant (and the Mountain’s Edge Operator) shall execute
and/or cause any Affiliate of Tenant to execute such documents as Landlord may
reasonably request evidencing and confirming Landlord’s ownership of such
Capital Addition Project.

(b)Advance Not a Waiver. No advance of funds under this Work Letter shall
constitute a waiver of any of the conditions to Landlord’s obligation to make
further advances nor, if Tenant is unable to satisfy any such condition, shall
any such advance have the effect of precluding Landlord from thereafter
declaring such inability to be an Event of Default under the Master Lease.

(c)Conditions for Benefit of Landlord. All conditions to the obligations of
Landlord hereunder are imposed solely for the benefit of Landlord and no other
Person shall have standing to require satisfaction of such conditions.

(d)Compliance Responsibility. Notwithstanding the review and approval by
Landlord of the Capital Addition Plans or any other matter, Landlord shall have
no responsibility for compliance by the Mountain’s Edge Property, the Capital
Addition Project or the construction/performance of the Capital Addition Project
with legal requirements, sound architectural or engineering practices or other
matters.

(e)Notices. Any notices with respect to Request for Advances and/or change
orders (only) shall be sent to Landlord in accordance with the provisions for
notices in the Master Lease.

 

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(f)Offset. Upon the happening of any Event of Default, Landlord may offset any
amounts owed to Landlord or any Affiliate of Landlord from Tenant or any
Affiliate of Tenant against any monies due from Landlord to Tenant hereunder.

(g)Attorneys’ Fees and Costs. Subject to the Landlord’s funding obligations
under this Work Letter, Tenant shall pay to Landlord all of Landlord’s
attorneys’ fees and other costs and expenses incurred in connection with
(A) amendments or other modifications to any of the Construction Contracts or
the Capital Addition Plans; and (B) any other matter related to the
construction/performance of the Capital Addition Project.  Alternatively,
Landlord may treat such attorneys’ fees and other costs and expenses as part of
the Capital Addition Project Costs as contemplated by Section 2.6(a) of this
Work Letter and such sums will be deemed to have been advanced by Landlord as
part of Landlord’s Maximum Cost.

(h)Incorporation. This Work Letter is incorporated into and shall form a part of
the Master Lease.

IN WITNESS WHEREOF, Landlord and Tenant have caused this Work Letter as of
_______________, 2017.

 

“LANDLORD”

 

MRT of Las Vegas NV – ACH, LLC,

a Delaware limited liability company

 

By:/s/ William C. Harlan________________________

Name:William C. Harlan

Title:President

 

MRT of Las Vegas NV – LTACH, LLC,

a Delaware limited liability company

 

By:/s/ William C. Harlan________________________

Name:William C. Harlan

Title:President

 

MRT of Fort Worth TX - SNF, LLC,

a Delaware limited liability company

 

By:/s/ William C. Harlan________________________

Name:William C. Harlan

Title:President

 

MRT of Spartanburg SC - SNF, LLC,

a Delaware limited liability company

 

By:/s/ William C. Harlan________________________

Name:William C. Harlan

Title:President

 

 

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“TENANT”

 

Nashville Leasehold Interests, LLC,

a Delaware limited liability company

 

By: /s/ Jaime Andujo_____________________________

Name:Jaime Andujo

Title:President

 

JOINDER

 

The undersigned Guarantor hereby joins in the execution and delivery of this
Work Letter to acknowledge and agree to the provisions of this Work Letter which
are applicable to Guarantor.  Such provisions shall be binding on Guarantor with
the same force and effect as if Guarantor were a direct party to this Work
Letter.

“GUARANTOR”

 

THI of Baltimore, Inc.,

a Delaware corporation

 

By:/s/ Kenneth Tabler____________________________

Name:Kenneth Tabler

Title:Vice President