Exhibit 10.1

MASTER LEASE
BETWEEN
GAHC4 HOLLAND MI ALF, LLC,
GAHC4 WYOMING MI ALF, LLC,
GAHC4 RIVERSIDE GRAND RAPIDS MI ALF, LLC,
GAHC4 LANSING MI ALF, LLC, and
GAHC4 HOWELL MI ALF, LLC
Collectively, as Landlord
AND
VISTA MICHIGAN OPERATIONS LLC,
as Tenant

Dated: as of December 28, 2018

    

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TABLE OF CONTENTS
 
 
 
ARTICLE A CERTAIN LEASE PROVISIONS
1
ARTICLE B CERTAIN DEFINITIONS
3
ARTICLE C MASTER LEASE; LANDLORD’S AGENT
3
ARTICLE D OPERATING SUBLEASES
3
ARTICLE 1 PERMISES AND TERM; SERIES OF LEASES
4
ARTICLE 2 BASE RENT; SUPPLEMENTARY RENT
4
ARTICLE 3 IMPOSITIONS
6
ARTICLE 4 USE AND OPERATION OF PREMISES
10
ARTICLE 5 CONDITION OF PREMISES; ALTERATIONS AND REPAIRS
11
ARTICLE 6 INSURANCE
16
ARTICLE 7 DAMAGE OR DESTRUCTION
21
ARTICLE 8 CONDEMNATION
24
ARTICLE 9 ASSIGNMENT AND SUBLETTING
26
ARTICLE 10 SUBORDINATION
32
ARTICLE 11 OBLIGATIONS OF TENANT
37
ARTICLE 12 DEFAULT BY TENANT; REMEDIES
42
ARTICLE 13 NO WAIVER
52
ARTICLE 14 ESTOPPEL CERTIFICATE; CONSENT
53
ARTICLE 15 QUIET ENJOYMENT
53
ARTICLE 16 SURRENDER
54
ARTICLE 17 ACCESS
57
ARTICLE 18 ENVIRONMENTAL MATTERS
57
ARTICLE 19 FINANCIAL AND REGULATORY REPORTING COVENANTS
62
ARTICLE 20 LICENSED FACILITY OPERATION; ACCESS TO BOOKS AND
RECORDS; MANAGEMENT
66
ARTICLE 21 MISCELLANEOUS PROVISIONS
74
ARTICLE 22 RIGHT OF FIRST OFFER
80
ARTICLE 23 RESERVED
80
ARTICLE 24 RENEWAL
80
ARTICLE 25 LETTER OF CREDIT
82
ARTICLE 26 CAPITAL EXPENDITURE REQUIREMENT
84

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SCHEDULE 1
 
LIST OF PROPERTIES
SCHEDULE A
 
PREMISES
SCHEDULE B
 
INITIAL BASE RENT
SCHEDULE C
 
FORM OF LETTER OF CREDIT
SCHEDULE D
 
DEFINITIONS
SCHEDULE E
 
RESERVED
SCHEDULE F
 
FORM OF GUARANTY
SCHEDULE G
 
ENVIRONMENTAL REPORTS
SCHEDULE 19.3-A
 
FORM OF REPRESENTATION LETTER
SCHEDULE 19.3-B
 
FORM OF AUDIT LETTER
SCHEDULE 21.24
 
DEPICTION OF PARENT GUARANTOR ORGANIZATION

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MASTER LEASE

THIS MASTER LEASE (the “Lease”) is made as of the 28th day of December, 2018,
(the “Effective Date”) between GAHC4 LANSING MI ALF, LLC (“Edgewood Landlord”),
GAHC4 HOLLAND MI AFL, LLC (“Holland Meadows Landlord”), GAHC4 HOWELL MI ALF, LLC
(“Howell Landlord”), GAHC4 RIVERSIDE GRAND RAPIDS MI ALF, LLC (“Riverside
Gardens Landlord”), and GAHC4 WYOMING MI ALF, LLC (“Wyoming Landlord”) (each a
Delaware limited liability company, individually and collectively, “Landlord”),
and VISTA MICHIGAN OPERATIONS LLC, a Michigan limited liability company
(“Tenant”).

RECITALS

A.    Each Landlord is the owner of the land described on Schedule A-1 through
Schedule A‑5 (collectively, the “Land”) together with the Other Property Rights
associated therewith and the Improvements constructed thereon. For drafting
convenience, Schedule 1 establishes for each property included among the
Premises a name for that property, which name is intended to refer collectively
to the Land, Other Property Rights and Improvements constituting that property.

B.     Tenant desires to lease each property comprising the Premises and the
Leased Personal Property from the applicable Landlord that is the owner thereof
(collectively, the “Property”), and each such Landlord agrees to so lease the
same to Tenant upon the terms and conditions set forth in this Lease.

C.    Simultaneously with the execution of this Lease, Tenant is executing an
Operating Sublease with respect to each property comprising the Premises
pursuant to which Tenant is subleasing the applicable portion of the Premises to
the Operating Subtenant listed on Schedule 1.

NOW, THEREFORE, for good and valuable consideration, the receipt, sufficiency
and fairness of which are hereby acknowledged, Landlord and Tenant, for
themselves, and their administrators, legal representatives, successors and
permitted assigns, hereby covenant as follows:

ARTICLE A
CERTAIN LEASE PROVISIONS

1.    Address for the Premises:
As set forth on Schedule A-1 through Schedule A-5.
2.    (a) “Term”:
Fifteen (15) Lease Years, beginning on the Commencement Date (as defined below
and ending on the Expiration Date (as defined below).
(b) “Commencement Date”:
The Effective Date of this Lease
(c) “Expiration Date”:
The last day of the fifteenth (15th) Lease Year, as such date may be extended
for an Extended Term pursuant to Article 24 hereof, unless sooner terminated
pursuant to this Lease.
3.    “Base Rent” for the Premises:
Subject to Article 26, for the first Lease Year (as defined below), Base Rent
per annum shall be
 
 

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$3,836,000.00 and shall be paid in advance in equal consecutive monthly
installments in the amount of $319,666.67 on the first day of each month
(“Initial Base Rent”). On the first day of the second Lease Year and on the
first day of each Lease Year thereafter, the Base Rent payable under this Lease
shall increase as provided in Section 2.1(c) of this Lease.
4.    Use of Premises:
The operation of the Facilities as assisted living facilities and, to the extent
set forth on Schedule 1, memory care facilities, and for other lawful uses
ancillary and incident thereto.
5.    “Extended Term”:
Two (2) options to extend the Term for additional ten (10) year periods at the
rental as determined pursuant to the provisions of Article 24.
Address for Notice:
 
 
For Landlord:

c/o Griffin American Healthcare REIT IV, Inc.
18191 Von Karman Avenue, Suite 300
Irvine, CA 92612
Attention: President and COO

 
For Tenant:
c/o Vista Springs
Success Center
2610 Horizon Drive, SE, Suite 110
Grand Rapids, MI 49546
Attention: Lou Andriotti, CEO

Address for Rent Payment:
c/o American Healthcare Investors, LLC
4650 E Cotton Center Blvd., Suite 140
Phoenix, AZ 85040
Attention: Accounting

Or, at the direction of Landlord, by wire transfer of electronic funds pursuant
to the written instruction provided by Landlord.

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ARTICLE B
CERTAIN DEFINITIONS

This Lease utilizes capitalized terms that have specific meaning. Many of these
terms and their definition (or references to the Section containing their
definition) are set forth on Schedule D attached to this Lease.

ARTICLE C
MASTER LEASE; LANDLORD’S AGENT

This Lease constitutes one indivisible lease of the entire Property. The
Premises constitutes one economic unit and the Base Rent and all other
provisions have been negotiated and agreed to, based on a lease of all of the
Premises as a single, composite, inseparable transaction. This Lease would not
have been made on these terms if it was not a single indivisible lease. Except
as expressly provided herein for specific, isolated purposes (and then only to
the extent expressly otherwise stated), all provisions of this Lease shall apply
equally and uniformly to all the Premises as one unit and any Event of Default
under this Lease is an Event of Default as to the entire Premises. The parties
intend that the provisions of this Lease shall at all times be construed,
interpreted and applied so as to carry out their mutual objective to create a
single indivisible lease of all the Premises and, in particular but without
limitation, that for purposes of any assumption, rejection or assignment of this
Lease under the Bankruptcy Code, this is one indivisible and non-severable lease
and executory contract dealing with one legal and economic unit which must be
assumed, rejected or assigned as a whole with respect to all (and only all) the
Premises covered hereby. The parties agree that the existence of more than one
Landlord under this Lease does not affect the indivisible, non-severable nature
of this Lease. The parties may amend this Lease from time to time to include one
or more additional properties as part of the Premises and such future addition
to the Premises shall not in any way change the indivisible and non-severable
nature of this Lease and all of the foregoing provisions shall continue to apply
in full force.

Each Landlord hereby appoints GAHC4 Michigan ALF Portfolio, LLC (the “Landlord’s
Representative”) as the agent and lawful attorney-in-fact of such Landlord to
act for such Landlord for all purposes and actions of Landlord under this Lease
and Tenant shall be entitled to conclusively rely on any action taken or notice
given by Landlord’s Representative as being by or from Landlord in respect of
this Lease. All notices, consents, waivers and all other documents and
instruments executed by Landlord’s Representative pursuant to the Lease from
time to time and all other actions of Landlord’s Representative on behalf of
Landlord under the Lease shall be binding upon every entity comprising Landlord.
All notices or communications from Tenant to the Landlord’s Representative shall
be conclusively deemed to have been communicated or delivered, and binding upon,
every entity comprising Landlord in accordance with the terms of this Lease.
Landlord may designate a different party to serve as Landlord’s Representative,
provided that no such designation shall be effective as to Tenant unless and
until Landlord delivers written notice thereof to Tenant.

ARTICLE D
OPERATING SUBLEASES

Simultaneously with the execution of this Lease, Tenant shall execute each of
the Operating Subleases, and shall cause the Operating Subtenants to execute and
deliver the Operating Subleases.

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ARTICLE 1
PREMISES AND TERM; PERMITTED EXCEPTIONS

Section 1.1    Premises. During the Term, Landlord, in consideration of the
Rents herein reserved and of the terms, provisions, covenants and agreements on
the part of Tenant to be kept, observed and performed, does hereby lease and
demise the Premises unto Tenant, and Tenant does hereby hire and take the
Premises from Landlord, subject to the Permitted Exceptions.

Section 1.2    Term. Tenant shall lease the Premises for the Term, unless sooner
terminated as hereinafter provided or pursuant to Applicable Law.

Section 1.3    Permitted Exceptions. Title to the Premises shall be subject to
each and every matter affecting title to the Premises, including, without
limitation, all of the following which are in effect as of the Commencement Date
or thereafter and recorded against or affecting the Premises: all easements,
rights of way, covenants, conditions and restrictions, liens, encumbrances,
encroachments, licenses, notices of pendency, charges, zoning laws, ordinances,
regulations, building codes, Requirements and other Applicable Laws, and other
exceptions to Landlord’s title, of record or otherwise known to Tenant or
knowable by reasonable inquiry and investigation, including, without limitation,
those exceptions listed as “Permitted Exceptions” on Schedule A-1 through
Schedule A-5, and Tenant agrees that its use and occupancy of the Premises, and
each Sublease, shall be subject to the terms and conditions of said Permitted
Exceptions, and accordingly Tenant shall comply with (and not violate any of )
the terms, conditions, obligations and restrictions set forth in the Permitted
Exceptions.

ARTICLE 2
BASE RENT; SUPPLEMENTARY RENT

Section 2.1        (a)    Base Rent. Tenant shall pay to Landlord as Base Rent
for the Premises during the Term the amount initially stated in Article A(3),
subject to increase and adjustment as stated in this Lease (“Base Rent”). Base
Rent shall be payable in equal monthly installments in advance on the first
(1st) day of each and every month during the Term, without previous demand,
notice or presentment therefor and without abatement, offset or deduction of any
kind whatsoever. Although the initial Base Rent is stated on Schedule B on a per
Facility basis, Tenant’s obligation is with respect to the aggregate Base Rent
for all Facilities. Notwithstanding the foregoing, Tenant shall pay the partial
month’s installment of Base Rent (with respect to the remaining days of the
month in which the Commencement Date occurs) upon the Commencement Date of this
Lease. If Tenant fails to pay any installment of Base Rent on or before the date
when due hereunder, Tenant shall owe Landlord, in addition to the installment of
Base Rent, interest on such installment at the Default Rate.

(b)    Lease Year. As used herein the term “Lease Year” means a period of twelve
(12) calendar months commencing on the Commencement Date and ending on the day
immediately preceding the first (1st) anniversary of the Commencement Date (if
the Commencement Date occurs on the first (1st) day of a month) or the last day
of the month during which the first (1st) anniversary of the Commencement Date
occurs (if the Commencement Date occurs on a day other than the first (1st) day
of a month), and each successive twelve (12) month period thereafter during the
Term until the Expiration Date.

(c)    Base Rent Escalation. On the first day of the second Lease Year and on
the first day of each Lease Year thereafter during the Term, Base Rent payable
under this Lease shall increase by the annual increase in CPI, calculated by
comparing CPI for the third (3rd) month preceding the first month of the Lease
Year as compared to the third (3rd) month preceding the first month of the

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prior Lease Year; provided, however, that such increase from one Lease Year to
the next shall be no less than two percent (2%) (i.e., 2% being the minimum
increase) and no more than three percent (3%) (i.e., 3% being the maximum
increase). As used in this Lease, the term “Annual Rent Escalator” shall mean
the actual percentage increase in Base Rent effective as of the first day of the
applicable Lease Year, subject to the percentage floor and ceiling set forth
herein.

Section 2.2    Supplementary Rent. Tenant shall also pay and discharge as
supplementary rent (the “Supplementary Rent”) all other amounts, liabilities and
obligations of whatsoever nature relating to the Premises, including, without
limitation, all Impositions, those amounts, liabilities and obligations arising
under this Lease, any Applicable Laws or Requirements, easements, restrictions,
or other similar agreements affecting the Premises or any adjoining property
thereto, and all interest and penalties that may accrue thereon in the event of
Tenant’s failure to pay such amounts when due, and all damages, costs and
expenses which Landlord may incur by reason of any Default of Tenant or failure
on Tenant’s part to comply with the terms of this Lease, all of which Tenant
hereby agrees to pay within ten (10) days after written demand therefor or as is
otherwise provided herein. Upon any failure by Tenant to pay any of the
Supplementary Rent, such unpaid Supplementary Rent shall accrue interest in
accordance with the terms of Section 12.13 and Landlord shall have all legal,
equitable and contractual rights, powers and remedies provided either in this
Lease or by statute, at law, in equity or otherwise in the case of nonpayment of
the Base Rent. The term Supplementary Rent shall be deemed rent for all purposes
hereunder other than with respect to Tenant’s internal accounting procedures.
Tenant may satisfy its obligations under this Section by causing the Operating
Subtenants to pay all such amounts directly to Landlord.

Section 2.3    Rent Defined. All Base Rent and Supplementary Rent payable
hereunder (collectively, “Rent”) shall be made payable to Landlord and sent to
Landlord’s address set forth in Article A or to such other person or persons or
at such other place as may be designated by written notice from Landlord to
Tenant, from time to time, at least thirty (30) days in advance, and shall be
made in United States currency which shall be legal tender for all debts, public
and private. Landlord may opt to receive all Rent payable hereunder when due by
wire transfer of immediately available funds to an account designated from time
to time by Landlord; such option shall become effective five (5) Business Days
after Landlord’s written request. Notwithstanding the foregoing, Impositions
shall be payable to the parties to whom they are due, except as otherwise
provided herein. The terms and conditions of this Section are subject to the
terms and conditions of Section 2.5 until Mortgagee otherwise notifies Tenant in
writing.

Section 2.4    Absolute Net Lease. This Lease shall be deemed and construed to
be a bond lease, absolutely net to Landlord, and Tenant shall pay to Landlord,
absolutely net throughout the Term, the Rent, free of any charges, assessments,
impositions or deductions of any kind and without abatement, deduction or
set-off whatsoever. Under no circumstances or conditions, whether now existing
or hereafter arising, or whether beyond the present contemplation of the
parties, shall Landlord be expected or required to make any payment of any kind
whatsoever or be under any other express or implied obligation or liability
hereunder, except as herein otherwise expressly set forth in Section 3.5 or
otherwise in this Lease and Tenant hereby waives all Applicable Laws and
Requirements to the contrary. Tenant shall pay (or shall cause the Operating
Subtenants to pay) all costs, expenses and charges of every kind and nature
relating to the Premises from and after the Commencement Date, including,
without limitation, all taxes, costs of improvements, maintenance, repairs,
alterations, additions, replacements, condominium association assessments and
other condominium association charges, and insurance and other Impositions, and
all escrows, reserves and/or deposits relating thereto, except debt service
(principal, interest and any required mortgage insurance premium (“MIP”)) on any
Mortgage or any other indebtedness of Landlord or any rent or other charges
under any Superior Lease, which may arise or become due or payable prior to,
during or after (but attributable to a period falling within) the Term. Unless
otherwise expressly provided in this Lease, Tenant’s obligation to pay Rent
hereunder shall not

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terminate prior to the actual date contemplated by Landlord and Tenant and
specifically set forth in Article A, Section 2(c) for the expiration of the
Term, notwithstanding the exercise by Landlord of any or all of its rights under
Article 12 hereof or otherwise and the obligations of Tenant hereunder shall not
be affected by reason of: any damage to or destruction of the Premises or any
part thereof, any Taking of the Premises or any part thereof or interest therein
by condemnation or otherwise, any prohibition, interruption, limitation,
restriction or prevention of Tenant’s or any Subtenant’s use, occupancy or
enjoyment of the Premises or any part thereof, or any interference with such
use, occupancy or enjoyment by any person or for any reason, any matter
affecting title to the Premises, any eviction by paramount title or otherwise,
any default by Landlord hereunder, the impossibility, impracticability or
illegality of performance by Landlord, Tenant or both, any action of any
Governmental Authority, Tenant’s acquisition of ownership of all or part of the
Premises (unless this Lease shall be terminated by a writing signed by all
Persons, including any Mortgagee, having an interest in the Premises), any
breach of warranty or misrepresentation, or any other cause whether similar or
dissimilar to the foregoing and whether or not Tenant shall have notice or
knowledge thereof and whether or not such cause shall now be foreseeable. The
parties intend that the obligations of Tenant under this Lease shall be separate
and independent covenants and agreements and shall continue unaffected unless
such obligations have been modified or terminated pursuant to an express
provision of this Lease, as may be amended from time to time.

Section 2.5    Payment of Rent Upon Assignment of Lease. Tenant acknowledges
that all of the interest of Landlord in and to this Lease may be assigned to a
present or future Mortgagee pursuant to a Mortgage and other loan documents in
connection therewith, and that under the terms thereof, all Rent under this
Lease may be required to be paid directly to Mortgagee or its designee in
accordance with the provisions contained therein. Tenant hereby agrees, after
notice, to so pay all such Rent directly to Mortgagee or its designee as and
when same are due and payable under this Lease by wire transfer pursuant to the
wire transfer instructions set forth in such notice. Landlord acknowledges that
any such disbursement of the appropriate amounts to Mortgagee shall satisfy
Tenant’s Rent payment obligations under this Lease.

Section 2.6    Federal Income Tax Treatment. Tenant and Landlord agree and
acknowledge that the parties intend the Lease to be classified as a “true lease”
for Federal income tax and all other purposes and that this Lease does not
represent a financing agreement. Each party shall reflect the transaction
represented hereby in all applicable books, records and reports (including
income tax filings) in a manner consistent with “true lease” treatment rather
than “financing” treatment.

Section 2.7    Rents from Real Property. If the aggregate fair market value of
the personal property (for purposes of Section 856(d)(1)(c) of the Code) leased
to Tenant under this Lease equals an amount which, as determined in the sole
discretion of Landlord, (a) would cause any Rent otherwise payable to Landlord
under this Lease to be treated as other than “rents from real property” for
purposes of Section 856(c)(2) and (c)(3) of the Code, and/or (b) would subject
Landlord to a material risk of failing to satisfy the requirements of Section
856(c)(4) of the Code, Tenant and Landlord agree to use their respective best
efforts to effect the assignment of such personal property to an Affiliate of
Landlord or a third party designated by Landlord and the subsequent lease by
Tenant of such personal property from such Affiliate or third party; provided,
however, the aggregate rent payable by Tenant under this Lease and such lease of
personal property shall not exceed the rent which Tenant would have paid under
this Lease absent the assignment of such personal property to an Affiliate of
Landlord or a third party.

ARTICLE 3
IMPOSITIONS

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Section 3.1    “Impositions” Defined. Subject to the terms of Section 3.5, from
and after the Commencement Date and throughout the Term, Tenant shall pay and
discharge (or shall cause each Operating Subtenant to pay and discharge) not
later than thirty (30) days before any fine, penalty, interest or cost may be
added thereto for the non-payment thereof, all taxes, assessments, water rents,
storm and sewer rents and charges, duties, impositions, license and permit fees,
regulatory application fees, assessments payable to any owner’s association or
similar entity, governmental levies and charges, charges for public utilities of
any kind, including, without limitation, all bed tax and assessments or similar
provider taxes or fees, together with any interest or penalties imposed upon the
late payment thereof (except for interest and penalties resulting from
Landlord’s negligent or willful failure to timely perform its obligations under
Section 3.5), which, pursuant to past, present or future Applicable Law, during,
prior to or after (but attributable to a period falling prior to or within) the
Term, shall have been or shall be levied, charged, assessed, imposed upon or
grow or become due and payable out of or for or have become a lien on the
Premises or any part thereof, any Buildings or personal property (including,
without limitation, the Tenant’s Personal Property) in or on the Premises, the
Rents and income payable by Tenant or on account of any use of the Premises and
such franchises as may be appurtenant to the use and occupation of the Premises
as well as any sales, use, excise, commercial rent, tangible personal property
and similar taxes imposed by any Governmental Authority or improvement district
in connection with the use or operation by Tenant of the Premises, any Facility,
and the Tenant’s Personal Property, and any interest and penalties assessed in
connection therewith as a result of late payment or non-payment of any of the
foregoing or late filing or non-filing of any tax returns or reports due in
connection therewith (each of the foregoing being an “Imposition” and
collectively “Impositions”); provided, however, during the continuance of an
Event of Default, Tenant’s obligation to pay directly to the applicable
Governmental Authority all regularly assessed ad valorem real estate taxes and
assessments (“Real Estate Taxes”) shall be suspended at Landlord’s election, and
in such event Tenant shall comply with the terms and provisions of Section 3.5
hereof (in which case Landlord or Mortgagee shall make such payments). Except as
provided in Section 3.5, Tenant, upon request from Landlord, shall submit to
Landlord the proper and sufficient receipts or other evidence of payment and
discharge of the same; provided, however, Tenant shall not be required to
furnish such receipts or other evidence for payment with respect to Real Estate
Taxes or with respect to Impositions that are being contested in accordance with
this Section 3.2. The certificate, advice, or bill of non-payment of any
Imposition from the appropriate official designated by Applicable Law to make or
issue the same or to receive payment of any Imposition shall be prima facie
evidence that such Imposition is due and unpaid at the time of the making or
issuance of such certificate, advice, or bill of non-payment. If any Impositions
are not paid when due under this Lease, Landlord shall have the right, but shall
not be obligated, to pay the same following written notice to Tenant of such
payment, provided Tenant is not contesting the same pursuant to a right to do so
herein. If Landlord shall make such payment, Landlord shall thereupon be
entitled to repayment by Tenant on demand as Supplementary Rent hereunder.

Section 3.2    Tax Protest. Tenant shall have the right to protest and contest
any Impositions imposed against the Premises or any part thereof. If Tenant so
elects to contest, Tenant shall, prior to the prosecution or defense of any such
claim, notify Landlord in writing of its decision to pursue such contest and, to
the extent procedurally required, or if necessary or advisable to prevent
jeopardizing any license, permit or certification, including, without
limitation, any Health Care License or Medicare and Medicaid certifications
under Titles XVIII and XIX of the Social Security Act of 1935, as amended,
because of nonpayment thereof, Tenant shall pay the amount in question prior to
initiating the contest. Tenant’s right to contest is conditioned upon the
following: (i) such contest is done at Tenant’s sole cost and expense, (ii)
nonpayment will not subject the Premises or any part thereof to sale or other
liability by reason of such nonpayment, (iii) such contest shall not subject
Landlord or any Mortgagee to the risk of any criminal or civil liability, and
(iv) Tenant shall provide such security as may reasonably be required by
Landlord or any Mortgagee or under the terms of any Mortgage or any loan
documents in connection therewith to ensure payment of such contested
Impositions. Upon request, Tenant shall keep Landlord

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advised as to the status of such contest. Subject to the provisions of clauses
(i) through (iv) above, Landlord agrees to execute and deliver to Tenant any and
all documents reasonably acceptable to Landlord and otherwise required for such
purpose (including, to the extent procedurally required, pursuing such contest
in the name of Landlord), and to cooperate with Tenant in every reasonable
respect in such contest, but without any cost or expense to Landlord. If
Landlord should actually receive proceeds of any such contest to the extent
Tenant had paid in advance the amount in question, and to the extent that the
same relate to the period of the Term, then Landlord shall remit the same to
Tenant. If Landlord owns the fee interest in the Premises, then at the request
of Landlord, Tenant shall (or at Tenant’s own initiative subject to the
provisions of clauses (i) through (iv) above, Tenant may elect to) take
commercially reasonable steps to file and enforce tax certiorari proceedings to
reduce tax affecting the Premises, all at Tenant’s own expense; provided,
however, that if Tenant shall decline to take such steps after a request by
Landlord, Landlord may take such steps at Landlord’s own expense and, in the
event Landlord is successful in reducing the tax affecting the Premises, Tenant
shall reimburse Landlord for such expenses to the extent of the amount of the
reduction in taxes for the first year in which the lower amount of taxes are
paid, within 30 days of Landlord’s demand therefor.

Section 3.3    Installment Payments. To the extent permitted by Applicable Law,
Tenant shall have the right to apply for the conversion of any Impositions to
make the same payable in annual installments over a period of years. Tenant
shall pay all such deferred installments prior to the expiration or sooner
termination of the Term, notwithstanding that such installments shall not then
be due and payable; provided, however, that any Impositions (other than one
converted by Tenant so as to be payable in annual installments as aforesaid)
relating to a fiscal period of the taxing authority, a part of which is included
in a period of time after the Expiration Date, shall (whether or not such
Impositions shall be assessed, levied, confirmed, imposed or become payable,
during the Term) be prorated between Landlord and Tenant as of the Expiration
Date, so that Landlord shall pay at its own expense (and not from the Imposition
Reserve Fund) that portion of such Impositions which relate to that part of such
fiscal period included in the period of time after the Expiration Date, and
Tenant shall pay the remainder thereof (which amount Landlord shall be entitled
to withdraw from the Imposition Reserve Fund to the extent funds are available
thereof); provided, however, that personal property taxes paid by Tenant on any
Tenant’s Personal Property transferred to Landlord on or after the Expiration
Date shall be pro-rated on a calendar year basis.

Section 3.4    Excluded Taxes. Tenant shall not be obligated to pay (and
Landlord or Mortgagee shall not pay from the Imposition Reserve Fund) any
franchise, excise, corporate, estate, inheritance, succession or capital levy or
tax of Landlord or any income, profits or revenue tax upon the income of
Landlord.

Section 3.5    Tax Escrow. Notwithstanding any provision of this Lease to the
contrary, upon request by Landlord, Tenant shall: (i) pay to Landlord (and/or
cause the Operating Subtenants to pay to Landlord) or, if directed by Landlord,
Mortgagee on the Commencement Date and on the first day of each month thereafter
until thirty (30) days prior to the date when the next installment of all Real
Estate Taxes is due to the authority or other Person to whom the same is paid,
an amount equal to said next installment of Real Estate Taxes divided by the
number of months over which such payments are to be made; and (ii) thereafter
during the Term pay (and/or cause the Operating Subtenants to pay) to Landlord
or Mortgagee an amount each month estimated by Landlord or Mortgagee to be
adequate to create a fund (“Imposition Reserve Fund”) which, as each succeeding
installment of Real Estate Taxes becomes due, will be sufficient, thirty (30)
days prior to such due date, to pay such installment in full based on the then
outstanding tax bills, as increased by the amount of any reasonably foreseen
increases as estimated by Landlord to be adequate, or as otherwise required by
any Mortgagee. All such payments shall be deemed to be Supplementary Rent and
Rent hereunder. Landlord or Mortgagee shall use reasonable efforts to cause the
monthly payments to be equal in amount, but neither of them shall be liable in
the event that

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such required payments are unequal. If at any time the amount of Real Estate
Taxes is increased or Landlord or Mortgagee believes that it will be, said
monthly payments shall be increased within five (5) Business Days after written
demand by Landlord or Mortgagee so that, thirty (30) days prior to the due date
for each installment of Real Estate Taxes, there will be payments on hand with
Landlord or Mortgagee sufficient to pay such installments in full. Landlord or
Mortgagee shall apply the full amount of the Imposition Reserve Fund as
necessary to payments of Real Estate Taxes required to be made by Tenant
pursuant to this Article. In making any payment relating to the Imposition
Reserve Fund, Landlord or Mortgagee may do so according to any bill, statement
or estimate procured from the applicable Governmental Authority or provided by
Tenant without inquiry into the accuracy of such bill, statement or estimate or
into the validity of any Real Estate Taxes. Landlord or Mortgagee shall not be
required to pay any such amounts in an interest bearing account. For the purpose
of determining whether Landlord or Mortgagee has on hand sufficient moneys to
pay any particular Real Estate Taxes at least thirty (30) days prior to the due
date therefor, payments for each category of Real Estate Taxes shall be treated
separately, it being the intention that Landlord shall not be obligated to use
moneys paid for the payment of an item not yet due and payable to the payment of
an item that is due and payable. Notwithstanding the foregoing, it is understood
and agreed that (a) to the extent permitted by Applicable Law, payments provided
for hereunder may be held by Landlord or its Affiliate or Mortgagee in a single
bank account and commingled with other funds of Landlord or Mortgagee, and (b)
Landlord or Mortgagee, may, if Tenant fails to make or cause Operating
Subtenants to make any payments required hereunder, after written notice to
Tenant designating the intended use for such payment, use payments made for any
one item for the payment of the same or any other item of Rent. If this Lease
shall be terminated by reason of any Event of Default, all payments then held by
Landlord shall be applied by Landlord on account of any and all sums due under
this Lease; if there is a resulting deficiency, Tenant shall pay the same, and
if there is a surplus, Tenant shall be entitled to a refund of the surplus once
all taxes attributable to any period prior to termination have been paid. Tenant
acknowledges and agrees that no deficiency or lack of funds in the Imposition
Reserve Fund, including without limitation a deficiency or lack of funds
resulting from the failure of an Operating Subtenant to make a payment that
Tenant has directed the Operating Subtenant to make, shall relieve Tenant of its
obligation to pay all Real Estate Taxes as required under this Lease.

(a)    Security Interest. Although it is the intent of Landlord and Tenant that
Tenant’s payments to Landlord for the Imposition Reserve Fund are Supplementary
Rent and Rent under this Lease, if a court determines that, by operation of
Applicable Law, such sums are not Supplementary Rent or Rent but instead are the
property of Tenant, then to further protect Landlord’s interest in said amounts,
Tenant hereby grants to Landlord a first-priority security interest in the
Imposition Reserve Fund and any and all monies now or hereinafter paid therein
as additional security for payment of Rent. Until expended or applied in
accordance with the terms of this Lease, the Imposition Reserve Fund shall serve
as additional security for Tenant’s obligations hereunder. During the
continuance of an Event of Default, Landlord may, in addition to all other
remedies under this Lease, apply any or all of the Imposition Reserve Fund for
the payment of Rent or other sums owing to Landlord under this Lease in its sole
discretion. The Imposition Reserve Fund shall not constitute trust funds.

(b)    General. Tenant shall not pledge, assign or grant a security interest in
the Imposition Reserve Fund, or permit any lien or encumbrance to attach thereto
or any levy to be made thereon by a party claiming through Tenant, except those
naming Landlord as the secured party. Should Landlord elect to hold the
Imposition Reserve Fund in an interest bearing account, all interest earned
shall be added to the Imposition Reserve Fund and Tenant shall pay all taxes due
in connection therewith.

Section 3.6    Transfer of Payments on Sale of Property. If Landlord ceases to
have any interest in the Premises, Landlord shall transfer to the Person who
owns or acquires such interest in the Premises from Landlord and is the
transferee of this Lease, the payments made pursuant to Section 3.5

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hereof relating to the Premises covered by this Lease, subject, however, to the
provisions thereof. Upon such transfer of the Premises and the payments, and
assumption of this Lease (including, without limitation, the obligations of
Landlord under this Article 3) by the transferee in writing (which writing shall
be promptly provided to Tenant upon request), the transferor and its Affiliates
shall be deemed to be released from all liability with respect thereto and
Tenant agrees to look to the transferee solely with respect thereto, and the
provisions hereof shall apply to each such successive transfer of the said
payments.

Section 3.7    Survival. The provisions of this Article 3 shall survive the
expiration or earlier termination of this Lease.

ARTICLE 4
USE AND OPERATION OF PREMISES

Section 4.1    Use. The Premises may be used and occupied only for the purposes
set forth in Article A, Section 4. Tenant will continuously operate the Premises
for the Permitted Use. If the Health Care Licenses permit operations of a
Facility for a use other than the Permitted Use, Tenant shall not be permitted
(nor shall Tenant permit the Operating Subtenants) to modify the use of the
Facilities to such other use without the prior written consent of Landlord,
which consent shall not be unreasonably withheld, conditioned or delayed, and it
shall be reasonable for Landlord to condition its consent on Tenant executing
and delivering an amendment to this Lease addressing the regulatory and other
issues associated with such different use, as reasonably determined by Landlord.
Tenant shall not create or suffer or permit to exist any public or private
nuisance, hazardous or illegal condition or waste on or with respect to the
Premises. For purposes of this Article 4, “waste” as used herein, includes, but
is not limited to, loss or threat of loss of any of the following which a
Facility currently possesses or in which it participates as of the Effective
Date of this Lease, or any renewals, replacements or substitutions thereof, and
which is necessary or advisable for, and/or otherwise material to, the operation
of a Facility: (i) any certification for participation in the Medicaid Program,
the Medicare Program and/or any other program of any Governmental Authority,
(ii) any Health Care License, (iii) any certificate of need rights, (iv) any
governmental certification or license, or (v) any voluntary or involuntary
suspension, termination, or revocation of any Health Care License of Tenant or
an Operating Subtenant or (v) an Operating Subtenant’s or the Facility’s full
participation in a Third Party Payor program. This Article 4 shall survive the
expiration or earlier termination of this Lease.

Section 4.2    Non-Competition and Non-Solicitation.

(a)    Tenant acknowledges that a fair return to Landlord on its investment in
the Premises is dependent, in part, on the concentration of the Premises during
the Term of the business of Tenant, the Operating Subtenants, Guarantor and
their respective Affiliates in the geographical area of the Premises. Tenant
further acknowledges that the diversion of residents and/or patient care
activities from the Premises to other facilities owned or operated by Tenant,
the Operating Subtenants, Guarantor or their respective Affiliates during the
Term at or near the end of the Term may have a material adverse impact on the
value and utility of the Premises.

(b)    Therefore, Tenant agrees that during the Term, and for a period of one
(1) year following the termination or expiration thereof, neither Tenant, the
Operating Subtenants, Guarantor nor any of their respective Affiliates shall
operate, own, participate in or otherwise receive revenues from any other
facility or institution providing services similar to those provided on or in
connection with the Facilities and the permitted use thereof as contemplated
under this Lease, within a five (5) mile radius of each Facility.

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(c)    Except as required for medically appropriate reasons, or for other
reasons which, in Tenant’s reasonable judgment are in the best interests of the
Facility, prior to and for a period of one (1) year following Lease termination
or expiration, neither Tenant, the Operating Subtenants, Guarantor nor any of
their respective Affiliates will recommend or solicit the removal or transfer of
any resident or patient from the Facilities to any other nursing or health care
facility, or to any senior housing or retirement housing facility, located
within a five (5) mile radius of each Facility.

(d)    During the Term, and for a period of one (1) year following the
termination or expiration thereof, neither Tenant, the Subtenants, Guarantor nor
any of their respective Affiliates will directly or indirectly solicit, raid,
entice, or induce any person who, during the sixty (60) day preceding the
Effective Date or during the Term of this Lease, was an employee of said parties
or of Landlord’s predecessor in title to become employed by any of Tenant, the
Subtenants, Guarantor or any of their respective Affiliates.

(e)    Each of the Operating Subleases shall contain the terms and conditions of
this Section 4.2.

ARTICLE 5
CONDITION OF PREMISES; ALTERATIONS AND REPAIRS

Section 5.1    Condition of Premises. Landlord has not made and does not make
any representations or warranties whatsoever with respect to the Premises or
otherwise with respect to this Lease, express or implied, including any warranty
regarding the merchantability or warranty regarding the suitability of the
Premises for their intended commercial purposes. Tenant assumes all risks
resulting from any defects (patent or latent) in the Premises or from any
failure of the same to comply with any Requirement, Applicable Law or the uses
or purposes for which the same may be occupied and assumes all responsibility
for repair of any defect (patent or latent) in the Premises. WITHOUT LIMITING
THE GENERALITY OF THE FOREGOING OR ANY OTHER PROVISION OF THIS LEASE, TENANT
AGREES THAT IT IS TAKING AND ACCEPTING POSSESSION OF THE PREMISES ON THE
COMMENCEMENT DATE AND THEREAFTER ON AN “AS IS”, “WHERE IS”, AND “WITH ALL
FAULTS” BASIS.

Section 5.2    Tenant Repairs. At Tenant’s sole cost and expense, whether or not
Tenant is in occupancy of all of the Buildings, Tenant shall maintain and keep
all of the Buildings on the Premises and the adjoining sidewalks, curbs and
common areas and any alterations or improvements thereto, if any, clean and in
good condition and repair, normal wear and tear excepted, free of accumulations
of dirt, rubbish, snow and ice, and Tenant shall make all repairs and
replacements, structural and non-structural, ordinary and extraordinary,
foreseen and unforeseen, and shall perform all maintenance, necessary to (a)
maintain the Premises and any sidewalks, curbs and common areas in good
condition and repair, and (b) cause the Premises to comply with all Requirements
and Applicable Laws. When used in this Section 5.2, the term “repairs” shall
include all necessary additions, alterations, improvements, replacements,
renewals and substitutions. Subject to the terms of Section 26.2, Tenant shall
be entitled to reimbursement for any such repairs that are of a capital nature
(as reasonably determined by Tenant, subject to approval by Landlord in its
reasonable discretion) as CapEx Work from the existing CapEx Reserve Funds. All
repairs made by or at the direction of Tenant shall be equal or greater in
quality and class to the original work and shall be made in compliance with all
Requirements and Applicable Laws. Landlord shall not be required to furnish any
services or facilities or to maintain or make any repairs or alterations to the
Premises, and Tenant hereby assumes the full and sole responsibility for the
condition, operation, repair, replacement, maintenance and management of the
Premises and all costs and expenses incidental thereto, including adequate
security for each of the Buildings, whether or not Tenant is then occupying each
of the Buildings. Tenant shall have the roofs inspected annually at Tenant’s
expense and deliver copies of any

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inspection and maintenance reports to Landlord upon receipt. Tenant shall, at
its sole cost and expense, repair, replace and maintain the roof in good
condition and repair. Notwithstanding the foregoing standard of maintaining the
Premises in good condition and repair, if the Requirements or any Applicable Law
mandate a higher standard to be implemented, or if any higher standard if
required by a Mortgagee, then Tenant shall, at Tenant’s expense, be obligated to
cause the Premises to comply with such higher standard. In performing the
obligations set forth in this Section, Tenant shall be permitted to cause the
Operating Subtenant that occupies the portion of the Premises covered by the
applicable Operating Sublease to perform the obligations of Tenant on behalf of
Tenant.

Section 5.3    Landlord Non-Responsibility. Landlord shall not be responsible
for the cost of any alterations or replacements of or maintenance or repairs to,
or Restoration of the Premises of any nature whatsoever, structural or
non-structural, ordinary or extraordinary, foreseen or unforeseen, whether or
not now in the contemplation of the parties. To the extent not prohibited by
Applicable Law, Tenant hereby waives and releases all rights now or hereinafter
conferred by any Applicable Laws, Requirements or otherwise which would have the
effect of limiting or modifying any of the provisions of this Article 5.

Section 5.4    Tenant Alterations. Tenant and each Operating Subtenant shall
have the right at any time and from time to time during the Term to make, at its
sole cost and expense, changes, alterations, additions or improvements
(collectively, “Alterations”) in or to the Premises, subject, however, in each
case to all of the following:

(a)    No Alteration shall be undertaken except after prior written notice to
Landlord and Landlord’s approval thereof (which approval shall be in Landlord’s
sole and absolute discretion except as otherwise provided in this Section 5.4),
provided that no such notice or approval shall be required with respect to (i)
any non-structural Alteration involving an estimated cost of less than or equal
to the Threshold Amount (as reasonably estimated by a licensed third party
architect or contractor reasonably selected by Tenant and reasonably approved by
Landlord), (ii) any Alteration made by Tenant or any Operating Subtenant on an
emergency basis (e.g., to protect health or welfare of persons or imminent loss
or damage to the Premises or any part thereof) in which case Tenant shall notify
Landlord in writing of such emergency Alteration as soon as practicable, or
(iii) Alterations required by the Requirements or Applicable Law. As used
herein, the term “nonstructural Alteration” means an alteration that does not
modify or harm the roof, foundation, load-bearing walls or the systems (e.g.
electric, water, HVAC, etc.) serving the Facility, or otherwise jeopardize any
Permits and/or warranties relating thereto.

(b)    Other than an Alteration to comply with Applicable Laws, no material
structural Alteration, and no other Alteration involving an estimated cost of
more than the Threshold Amount (as reasonably estimated by a licensed third
party architect or contractor reasonably selected by Tenant and reasonably
approved by Landlord), shall be made without the prior written consent of
Landlord in Landlord’s sole and absolute discretion, except with respect to
non-structural Alterations, for which consent shall not be unreasonably
withheld, conditioned or delayed.

(c)    Any Alteration shall, when completed, be of such a character as not to be
expected to reduce the value of the Premises below its value immediately before
such Alteration as determined by Landlord in its reasonable discretion.

(d)    Notwithstanding the provisions of Section 5.4(a)(i) and (ii) and Section
5.4(b), if, under the provisions of any Mortgage which has been delivered or
otherwise made available to Tenant for review and compliance or any Mortgage
Loan Documents, any Alteration requiring Landlord’s consent hereunder also
requires the consent of the Mortgagee, the written consent of such Mortgagee
must be obtained before the commencement of any such Work.

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(e)    Notwithstanding the provisions of Section 5.4(a) and Section 5.4(b), no
Alteration shall be made by Tenant or any Operating Subtenant without Landlord’s
reasonable consent if the same would reduce the number of licensed beds,
including the number of any higher-acuity beds, or the square footage of the
Building being altered, or weaken, temporarily or permanently, the structure of
the Building being altered or any part thereof, or enable Tenant or Operating
Subtenant to conduct activity inconsistent with the limitations upon its use as
stated in Article 4. Notwithstanding the foregoing or any other language herein
to the contrary, no Alteration shall be made by or on behalf of Tenant or any
Operating Subtenant without Landlord’s consent, in its sole discretion, if the
same would reduce the number of licensed beds, including the number of any
higher-acuity beds, in the Facility below the Licensed Bed Capacity by more than
five percent (5%). Landlord shall not be required to give any consent to
Alterations to the extent it would violate the provisions of any Mortgage Loan
Documents, and any consent by Landlord shall not be deemed a waiver of Tenant’s
and Operating Subtenant’s obligation to comply with the Mortgage Loan Documents.

(f)    The reasonable cost and expense of Landlord’s and Mortgagee’s review of
any plans and specifications for Alterations required to be furnished to
Landlord and Mortgagee pursuant to Section 5.5 hereof, including third party
costs and expenses, shall be paid by Tenant to Landlord within ten (10) days
after written demand as Supplementary Rent.

(g)    The provisions and conditions of Section 5.5 shall apply to any work
performed by Tenant under this Section 5.4.

(h)    For purposes of Sections 5.4 and 5.5, the “Threshold Amount” means, for
each applicable project in a Building, an amount equal to $50,000.00 per
Facility per Lease Year; provided, that the Threshold Amount for nonstructural
Alterations (as defined in Section 5.4(a) above) shall be equal to $100,000.00
per Facility per Lease Year. The Threshold Amount shall apply on a per project
basis and shall not be cumulative.

(i)    For purposes of Sections 5.4 and 5.5, notice of whether Landlord’s
consent has been given or withheld shall be delivered to Tenant within ten (10)
Business Days following receipt of Tenant’s written request (as such time period
shall be extended for a reasonable period in the event Landlord determines, in
its reasonable discretion, that it is prudent to engage a third party to review
the plans and specifications, if any, pertaining to such contemplated
Alteration). Tenant’s written request must include a packet of all applicable
documentation, including without limitation, as applicable, site plans,
contractor and vendor proposals, as-built surveys and drawings.

Section 5.5    Tenant Work. Tenant agrees that all Alterations, repairs,
Restoration and other work which Tenant shall be required or permitted to do
under the provisions of this Lease (each hereinafter called the “Work”) shall be
at Tenant’s sole cost and expense, and (i) performed in a good, workmanlike
manner, and in accordance with this Lease and all Requirements and Applicable
Laws, as well as any plans and specifications therefor which shall have been
approved by Landlord (if such approval is required hereunder), (ii) commenced
and completed promptly and (iii) done in all cases upon, in compliance with and
subject to the terms of any Non-Disturbance Agreement and, to the extent not
inconsistent with any term thereof, all of the following terms and conditions:

(a)    If the Work shall (i) involve any material structural Work, or (ii) cost
more than the Threshold Amount (as reasonably estimated in writing by a licensed
third party architect or contractor reasonably selected by Tenant), then the
Work shall not be commenced until detailed plans and specifications (including
layout, architectural, mechanics and structural drawings), prepared by a
licensed architect reasonably selected by Tenant and approved by Landlord,
together with a proposed construction budget shall have been submitted to and
approved by Landlord, which approval shall not be unreasonably

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withheld, conditioned or delayed; provided, however, that for Work which exceeds
the Threshold Amount but otherwise is of a nature which customarily would not
require the services or plans of an architect, as determined by Landlord in its
reasonable discretion, there shall be no requirement for plans prepared by a
licensed architect.

(b)    No material structural Work or Work costing more than the Threshold
Amount shall be undertaken except under the supervision of a licensed third
party architect or other appropriate design professional reasonably satisfactory
to Landlord.

(c)    All Work shall be commenced only after all required permits,
authorizations and approvals shall have been obtained by Tenant (or the
applicable Operating Subtenant) from the applicable Governmental Authorities and
other Persons, at its own cost and expense, and complete copies thereof,
certified by Tenant as true copies, delivered to Landlord. Landlord will, on
Tenant’s written request, execute any documents necessary to be signed by
Landlord to obtain any such permits, authorizations and approvals, provided that
no such documents shall cause Landlord to incur any liability other than
monetary liability associated with fees or costs charged in connection with such
permits, authorizations and approvals, and Tenant shall pay and discharge any
such expense or liability of Landlord in connection therewith.

(d)    If the Work will cost more than the Threshold Amount (as reasonably
estimated in writing by a licensed third party architect or contractor
reasonably selected by Tenant), it shall not be commenced until Tenant shall
have obtained and delivered to Landlord, either (i) a performance bond and a
labor and materials payment bond (issued by a corporate surety licensed to do
business in the State in which the Premises are located and satisfactory to
Landlord in its reasonable discretion), each in an amount equal to the estimated
cost of such Work and in form otherwise satisfactory to Landlord in its
reasonable discretion, or (ii) such other security or evidence of ability to pay
the estimated cost of such Work as shall be satisfactory to Landlord in its
reasonable discretion.

(e)    The cost of all Work shall be paid promptly, in cash, so that the
Premises and Tenant’s leasehold estate therein shall at all times be free from
(i) liens for labor or materials supplied or claimed to have been supplied to
the Premises or Tenant, and (ii) chattel mortgages, conditional sales contracts,
title retention agreements, security interests and agreements, and financing
agreements and statements. Tenant shall, upon Landlord’s request, provide
Landlord evidence of such payment satisfactory to Landlord in Landlord’s
reasonable discretion, which evidence may include partial and final lien
releases and waivers from any and all appropriate parties. Nothing herein shall
be construed to preclude Tenant from bonding-over, in accordance with the
Michigan Construction Lien Act, any construction lien disputed by Tenant in good
faith, provided such bond fully covers the amount of the construction lien and
would not be considered an exception to Landlord’s American Land Title
Association title policy.

(f)    At all times when any Work is in progress, Tenant shall maintain or cause
to be maintained with such companies and for such periods as Landlord may
require (i) workers’ compensation insurance covering all persons employed in
connection with the Work, in an amount at least equal to the minimum amount of
such insurance required by Applicable Law (with a waiver of subrogation
satisfactory to Landlord in its sole and absolute discretion); and (ii) for the
mutual protection of Landlord, Tenant and any Mortgagee, (1) builder’s risk
insurance, completed value form, covering all physical loss, in an amount
satisfactory to Landlord in its sole and absolute discretion, and (2) commercial
general liability insurance against all hazards, with limits for bodily injury
or death to any one person, for bodily injury or death to any number of persons
in respect of any one accident or occurrence, and for property damage in respect
of one accident or occurrence in such amounts as Landlord in its reasonable
discretion may require. Such commercial general liability insurance may be
satisfied by the insurance required

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under Section 6.1(a), but may be effected by an endorsement, if obtainable, upon
the insurance policy referred to in said Section. The provisions and conditions
of Article 6 hereof shall apply to any insurance which Tenant shall be required
to maintain or cause to be maintained under this subsection. All contractors,
subcontractors, vendors, materialmen and others performing any Work on the
Premises or providing any supplies or materials in connection with Work on the
Premises must be licensed and qualified to perform such services and/or provide
such supplies and shall be required to maintain insurance of each of the types
set forth above in such amounts as Landlord in its sole and absolute discretion
requires, naming Landlord, and all Mortgagees as additional named insureds or
loss payees and Tenant shall obtain and supply to Landlord evidence of such
required insurance.

(g)    Upon completion of any Work, Tenant, at Tenant’s expense, shall obtain
certificates of final approval of such Work required by any Governmental
Authority and shall furnish Landlord with copies thereof, together with (i)
“as-built” plans and specifications for such Work (if the cost of such Work
exceeds the Threshold Amount), and (ii) final lien waivers and releases from any
and all appropriate parties.

(h)    The conditions of Section 5.4 shall have been complied with, to the
extent applicable to the Work.

Section 5.6    Landlord Inspection Right. Following the delivery of prior
reasonable notice, any Work shall be subject to inspection at reasonable times
during normal business hours and without disruption to the business of Tenant,
by Landlord, its architect and Mortgagee, or their duly authorized
representatives, and if Landlord’s architect or Mortgagee upon any such
inspection shall be of the opinion that the Work is not being performed
substantially in accordance with the provisions of this Article 5 or with the
plans and specifications, or that any of the materials or workmanship are not of
good quality or are unsound or improper, Tenant shall correct any such failure
and shall immediately replace any unsound or improper materials or workmanship,
and Tenant shall, within five (5) Business Days after demand therefor, reimburse
Landlord for its reasonable expenses actually incurred in connection with such
inspection.

Section 5.7    Fixtures and Tenant’s Personal Property. All fixtures, structures
and other improvements (other than Tenant’s Personal Property) shall become the
property of Landlord and shall remain upon and be surrendered with the Premises.
All Tenant’s Personal Property required to be removed by Tenant at the end of
the Term remaining in the Premises thereafter shall be deemed abandoned and may,
at the election of Landlord, either be retained as Landlord’s property or may be
removed from the Premises by Landlord at Tenant’s expense. Tenant shall be
responsible for, and shall reimburse Landlord within ten (10) days after written
demand therefor, any damage to the Premises caused in whole or in part by the
removal or demolition of Tenant’s Personal Property (unless Landlord purchases
the owned Tenant’s Personal Property or takes an assignment of the leased
Tenant’s Personal Property pursuant to Section 16.5 below, in which event,
Tenant shall not be obligated to remove same), structures or other improvements
which Tenant is required to remove pursuant to this Section 5.7 or which Tenant
is entitled to and elects under the provisions of this Lease to remove. The
provisions of this Section 5.7 shall survive the expiration or earlier
termination of the Term.

Section 5.8    Compliance with Health Care Requirements. Notwithstanding any
other provision of this Lease, Tenant shall be exclusively responsible at its
own expense for determination and assurance that, and shall cause, the condition
of the Premises and the Facilities and all repairs, Alterations, Restoration and
Work are in material compliance with all Requirements of Health Care Licenses
and Governmental Authorities and for obtaining any approvals or consents of
Governmental Authorities in connection with any repairs, Alterations,
Restoration or Work.

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ARTICLE 6
INSURANCE

Section 6.1    Policies to Maintain. Throughout the Term, Tenant shall, at its
own cost and expense, provide and keep in force (or, where specifically
indicated in the subparagraphs of this Section 6.1, cause the Operating
Subtenants to provide and keep in force) for the benefit of Landlord, Tenant,
each Operating Subtenant and any Mortgagee for each Facility:

(a)    commercial general liability insurance and professional liability
insurance (including owner’s protective liability coverage on operations of
Tenant, the Operating Subtenant, and/or their respective independent contractors
engaged in construction, personal injury, and blanket contractual liability
insurance), with a limit for each occurrence not less than $3,000,000 and to
have general aggregate limits of not less than $5,000,000 for each policy year,
protecting and indemnifying Landlord, Tenant, each Operating Subtenant and any
Mortgagee against all claims for damages to person or property or for loss of
life or of property occurring upon, in, or about the Premises, written on a
claims made or occurrence basis. Such coverage shall contain endorsements: (i)
deleting any liquor liability exclusion (if alcohol is sold on the Premises);
(ii) including cross-liability; and (iii) waiving the insurer’s rights of
subrogation against Landlord for events of which Landlord is not, but Tenant
and/or Operating Subtenant is, covered; provided however, that with regard to
the requirements of waiver of subrogation against Landlord, Tenant shall utilize
its best efforts to obtain such waiver in any insurance policy procured by
Tenant or the Operating Subtenant, and if it cannot do so, Landlord shall have
the right to procure, at Tenant’s expense, an insurance policy containing such
waiver if it can do so at the same or better price and on substantially the same
terms and conditions;

(b)    property insurance on the Premises and all installations, additions and
improvements which may now or hereafter be erected thereon against “ALL RISK” of
loss or damage in an amount sufficient to prevent Landlord, Tenant, each
Operating Subtenant and any Mortgagee from becoming co-insurers and in any
event, including loss or damage from earthquakes and windstorm, in an amount not
less than one hundred percent (100%) of the actual replacement value thereof
(i.e., including the cost of debris removal) as agreed by Landlord and Tenant
from time to time (or as otherwise required by Mortgagee) and subject to all
applicable policy sub-limits. Such coverage shall contain an agreed amount
endorsement reasonably acceptable to Landlord. Landlord agrees that Tenant, in
satisfaction of this paragraph, may maintain such property coverage pursuant to
a blanket policy that covers the Premises as well as properties other than the
Premises (i) with a sublimit of $10,000,000 for all-risk loss or damage with
respect to all properties, including the Premises, covered by such blanket
policy, and (ii) a sublimit of $10,000,000 for loss or damage from earthquakes
and windstorm with respect to all properties, including the Premises, covered by
such blanket policy;

(c)    business interruption insurance covering risk of loss due to the
occurrence of any of the hazards covered by the insurance to be maintained by
Tenant described in Section 6.1(b) with coverage in a face amount of not less
than the aggregate amount, for a period of twelve (12) months following the
insured-against peril, of 100% of all Rent (which includes all Impositions and
other amounts specified in the definition of Rent) to be paid by Tenant under
this Lease; such coverage shall contain an agreed amount endorsement acceptable
to Landlord;

(d)    workers’ compensation insurance (including employers’ liability
insurance), with a waiver of subrogation satisfactory to Landlord in its
reasonable discretion, covering all persons employed at the Premises to the
extent required by the Applicable Laws and Requirements of the state in which
the Premises are located, including, without limitation, during the course of
work to the Premises;

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provided, however, that with regard to the requirements of waiver of subrogation
against Landlord, Tenant shall utilize its best efforts to obtain such waiver in
any insurance policy procured by Tenant;

(e)    mechanical breakdown insurance, if applicable, in an amount not less than
one hundred percent (100%) of the actual replacement value thereof and of any
improvements in which any such boiler is located (including the cost of debris
removal but excluding foundations and excavations) as determined by Landlord in
its reasonable discretion from time to time;

(f)    if sprinkler systems are located in the Buildings, sprinkler leakage
insurance in amounts approved by Landlord in its reasonable discretion;

(g)    equipment coverage and elevator liability coverage, if applicable, in
amounts approved by Landlord in its reasonable discretion;

(h)    flood insurance (if the Premises are located in whole or in part within a
special flood hazard area as designated by any department or agency of the
United States Government having jurisdiction);

(i)    any additional insurance as required by any Health Care Regulatory
Agency;

(j)    motor vehicle liability coverage for all owned and non-owned vehicles,
including rented and leased vehicles containing minimum limits per occurrence,
including umbrella coverage, of One Million and No/100 Dollars ($1,000,000) (if
applicable); and

(k)    if during the Term, Tenant, an Operating Subtenant or the Facilities are
covered by general liability, professional liability, patient healthcare
professional malpractice or other liability insurance on a “claims made” basis,
Tenant shall procure and maintain, at Tenant’s sole cost and expense, “tail”
insurance coverage, with such coverage limits and such deductible amounts as
shall be reasonably acceptable to Landlord for general liability, professional
liability, patient healthcare professional malpractice or other liability claims
reported after the termination of this Lease or expiration of the claims made
policy, but concerning services provided during the Term of this Lease. Tenant
shall provide Landlord with a certificate evidencing that such insurance
coverage is in effect for a period of no less than two (2) years subsequent to
the termination of this Lease no later than ninety (90) days prior to the
termination of this Lease.

Tenant shall be permitted to cause the Operating Subtenants to provide and keep
in force the insurance required by this Section 6.1 with respect to the portion
of the Premises subleased by said respective Operating Subtenant, provided that
such policies (i) identify Tenant as an additional named insured, (ii) satisfy
all of the requirements of this Article 6, including without limitation the
requirements of Section 6.2 and Section 6.3, as reasonably determined by
Landlord, (iii) do not preclude the payment and application of the proceeds of
such policy in the manner required by Article 7 of this Lease, and (iv) afford
Landlord and its Mortgagee coverage that is no less than the coverage that
Landlord would have if either Tenant was the Operator of the Facilities and
directly provided such policies or if the Operating Subtenant was the tenant
named in this Lease, as reasonably determined by Landlord.

Section 6.2    Policies to Name Landlord, Mortgagees. Whenever under the terms
of this Lease Tenant is required to maintain insurance for the benefit of
Landlord, (i) Landlord, and any Mortgagee shall be an additional insured (or
loss payee, as applicable) in all such liability insurance policies, and (ii)
either Landlord or Mortgagee, as specified in Section 6.3, shall be named as
loss payee in all such casualty insurance policies. In the event that the
Premises shall be subject to a Mortgage, the commercial general liability
insurance shall name the Mortgagee (together with any trustee or servicer
therefor) as an

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additional insured and all other insurance provided hereunder shall name the
Mortgagee as an additional insured or, as provided in Section 6.3, loss payee
under a standard “non-contributory mortgagee” endorsement or its equivalent. All
policies of insurance shall provide that such coverage shall be primary and that
any insurance maintained separately by Landlord, or the Mortgagee shall be
excess insurance only. The original certificates (on Acord Form 27 or its
equivalent in the case of casualty and on insurance company letterhead in the
case of liability) and certified true copies of the original policies (or
binders thereof if the policies have not yet been prepared) shall be delivered
to Landlord and any Mortgagee.

Section 6.3    Adjustment. The loss under all insurance policies insuring
against property damage to the Buildings shall be payable to Mortgagee or, if
there is none, to Landlord, subject to Section 7.2. All property insurance
policies required by this Lease shall provide that all adjustments for claims
with the insurers in excess of Fifty Thousand Dollars ($50,000.00) (exclusive of
any deductible) shall be made with Landlord, Tenant and any Mortgagee. Subject
to the terms of any Mortgage, any adjustments for claims with the insurers
involving sums of Fifty Thousand Dollars ($50,000.00) (exclusive of any
deductible) or less shall be made with Landlord and Tenant.

Section 6.4    Insurance Company Requirements. All of the above-mentioned
insurance policies and/or certificates shall be obtained by Tenant and delivered
to Landlord on or prior to the date hereof, and thereafter as provided for
herein, and shall be written by insurance companies: (i) rated “A:VIII” or
better in “Best’s Insurance Guide” (or any substitute guide acceptable to
Landlord) and at least “A” by Standard & Poor’s Ratings Group; (ii) authorized
to do business in the state where the Premises are located; and (iii) of
recognized responsibility and which are reasonably satisfactory to Landlord and
any Mortgagee. Any deductible amounts under any property insurance policy for
earthquake, flood and wind damage hereunder shall not exceed $150,000 per
occurrence and any deductible amounts hereunder for any general liability policy
under Section 6.1(a) and any policy under Section 6.1(b) liability insurance
policy hereunder shall not exceed $10,000 per occurrence.

Section 6.5    Evidence of Insurance, Renewal. At least thirty (30) days prior
to the expiration of any policy or policies of such insurance, Tenant shall
renew such insurance, and deliver to Landlord and any Mortgagee, within the said
period of time certificates of insurance evidencing the coverage described in
this Article 6 and as promptly as practicable thereafter, the original
certificates of insurance, endorsed in accordance with Section 6.2 hereof and to
deliver original certificates of insurance thirty (30) days prior to the
expiration of any policy of insurance and, upon Landlord’s request, certified
true copies of the original policies within sixty (60) days after the expiration
of any policy of insurance. All coverage described in this Article 6 shall be
endorsed to provide Landlord, and Mortgagee with thirty (30) days’ notice of
cancellation or change in terms. If Tenant shall fail to procure the insurance
required under this Article 6 in a timely fashion or to deliver such policies or
certificates to Landlord, Landlord may, at its option and in addition to
Landlord’s other remedies for a Default by Tenant, upon written notice to
Tenant, procure the same for the account of Tenant, and the cost thereof shall
be immediately paid to Landlord as Supplementary Rent.

Section 6.6    No Violation of Policies. Tenant shall not violate, nor shall
Tenant permit an Operating Subtenant to violate, in any material respect, any of
the conditions of any of the said policies of insurance.

Section 6.7    Prohibited Insurance. Tenant shall not carry, nor shall Tenant
permit an Operating Subtenant to carry, separate or additional insurance
affecting the coverage described in this Article 6 concurrent in form and
contributing in the event of any loss or damage to the Premises with any
insurance required to be obtained by Tenant under this Lease, unless such
separate or additional insurance

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shall comply with and conform to all of the provisions and conditions of this
Article 6. Tenant shall promptly give notice to Landlord of such separate or
additional insurance.

Section 6.8    Blanket/Umbrella Insurance. The insurance required by this Lease,
at the option of Tenant, may be effected by blanket and/or umbrella policies
issued to Tenant and the Operating Subtenants covering the Premises, provided
that the policies otherwise comply with the provisions of this Lease and
allocate to the different properties comprising Premises the specified coverage,
without possibility of reduction or coinsurance by reason of, or damage to, any
other premises named therein, and if the insurance required by this Lease shall
be effected by any such blanket or umbrella policies, Tenant shall furnish to
Landlord or Mortgagee certified copies or duplicate originals of such policies
in place of the originals, with schedules thereto attached showing the amount of
insurance afforded by such policies applicable to each of the properties
comprising the Premises.

Section 6.9    Landlord’s Right to Place Policy. In the event that Tenant fails
to maintain the insurance required to be maintained by Tenant under this Lease
following at least two (2) Business Days written notice thereof from Landlord,
Landlord may thereafter, in its sole discretion, designate that with respect to
property, fire and related building insurance coverages as described in Sections
6.1(b), 6.1(e), 6.1(f) and 6.1(g) of this Lease, or in the absence of such
failure, upon the agreement of Landlord and Tenant, Landlord or Landlord’s
Affiliates may obtain some or all of such insurance coverages otherwise required
to be obtained by Tenant under this Lease at the expense of Tenant, and in such
event, Tenant shall pay to Landlord, as Supplementary Rent, the premiums and all
other costs of such insurance, on a timely basis when and as required to be paid
by Landlord, including payment in advance of the date such costs become due and
payable, whether by payment of a single installment or in equal monthly
installments. Such insurance which is obtained by Landlord or Landlord’s
Affiliates shall be at costs and on terms no less favorable than prevailing
market terms for similar insurance available to Tenant, and shall offer customer
service which is at least at the level otherwise available to Tenant on the date
of this Lease. Landlord may cause such insurance which it obtains to be provided
by or through an insurance carrier or insurance agency which is an Affiliate of
Landlord.

Section 6.10    Complying with Mortgagee. Tenant shall comply (and shall cause
the Operating Subtenants to comply) with the insurance requirements of any
Mortgagee under the Mortgage or any other loan document in connection therewith
if they (a) require any insurance coverage not otherwise required under this
Lease or (b) provide for more stringent coverages, terms, conditions or
provisions with respect to insurance coverage required under this Lease.
Additionally, Tenant shall obtain and maintain such other insurance or such
greater policy amounts for the insurance specified above as Landlord may
reasonably require from time to time. If required by Mortgagee, Tenant shall
provide copies of policies certified by Tenant’s insurer.

Section 6.11    Premium Escrow. Notwithstanding any provision in this Lease to
the contrary, upon request by Landlord, Tenant shall: (i) pay (and/or cause the
Operating Subtenants to pay) to Landlord or, if directed by Landlord, Mortgagee
on the first (1st) day of each month until thirty (30) days prior to the date
when the next installment of the premiums for the policies of insurance that
Tenant is required by the terms of this Lease to maintain (the “Insurance
Premiums”) is due an amount equal to said next installment of Insurance Premiums
divided by the number of months over which such payments are to be made; and
(ii) thereafter during the Term pay (and/or cause the Operating Subtenants to
pay) pay Landlord or Mortgagee an amount each month estimated by Landlord or
Mortgagee, based on the prior year’s bills and known or reasonably anticipated
premium increases, to be adequate to create a fund (“Insurance Premium Reserve
Fund”) which, as each succeeding installment of Insurance Premiums becomes due,
will be sufficient, thirty (30) days prior to such due date, to pay such
installment in full. Landlord or Mortgagee shall use reasonable efforts to cause
the monthly payments to be equal in amount, but neither of them shall be liable
in the event that such required payments are unequal. All such

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payments shall be deemed to be Supplementary Rent and Rent hereunder. If at any
time the amount of any Insurance Premium is increased, said monthly payments
shall be increased within five (5) Business Days after written demand by
Landlord or Mortgagee so that, thirty (30) days prior to the due date for each
installment of Insurance Premiums, there will be payments on hand with Landlord
or Mortgagee sufficient to pay such installments in full. Landlord or Mortgagee
shall apply the full amount of the Insurance Premium Reserve Fund (as defined
herein) to payments of Insurance Premiums required to be made by Tenant pursuant
to this Article 6, and shall provide evidence of such payments as requested by
Tenant. In making any payment relating to the Insurance Premium Reserve Fund,
Landlord or Mortgagee may do so according to any bill, statement or estimate
procured from the applicable insurance company or provided by Tenant without
inquiry into the accuracy of such bill, statement or estimate or into the
validity of any Insurance Premium. Landlord or Mortgagee shall not be required
to deposit any such amounts in an interest bearing account. For the purpose of
determining whether Landlord or Mortgagee has on hand sufficient moneys to pay
any particular Insurance Premium at least thirty (30) days prior to the due date
therefor, payments for each category of insurance shall be treated separately,
it being the intention that Landlord shall not be obligated to use moneys paid
for the payment of an item not yet due and payable to the payment of an item
that is due and payable. Notwithstanding the foregoing, it is understood and
agreed that (a) to the extent permitted by Applicable Law, payments provided for
hereunder may be held by Landlord or its Affiliate or Mortgagee in a single bank
account and commingled with other funds of Landlord or Mortgagee, and (b)
Landlord or Mortgagee, may, if Tenant fails to make or cause Operating
Subtenants to make any payments required hereunder, use payments made for any
one item for the payment of the same or any other item of Rent, after written
notice to Tenant designating the intended use for such payment. If this Lease
shall be terminated by reason of any Event of Default, all payments then held by
Landlord shall be applied by Landlord on account of any and all sums due under
this Lease; if there is a resulting deficiency, Tenant shall pay the same, and
if there is a surplus, Tenant shall be entitled to a refund of the surplus.
Tenant acknowledges and agrees that no deficiency or lack of funds in the
Insurance Premium Reserve Fund, including without limitation a deficiency or
lack of funds resulting from the failure of an Operating Subtenant to make a
payment that Tenant has directed the Operating Subtenant to make, shall relieve
Tenant of its obligation to pay all Insurance Premiums as required under this
Lease.

(a)    Security Interest. Although it is the intent of Landlord and Tenant that
Tenant’s payments to Landlord for the Insurance Premium Reserve Fund are
Supplementary Rent and Rent under this Lease, if a court determines that, by
operation of Applicable Law, such sums are not Supplemental Rent or Rent but
instead are the property of Tenant, then to further protect Landlord’s interest
in said amounts, Tenant hereby grants to Landlord a first-priority security
interest in the Insurance Premium Reserve Fund and any and all monies now or
hereinafter deposited therein as additional security for payment of Rent. Until
expended or applied in accordance with the terms of this Lease, the Insurance
Premium Reserve Fund shall serve as additional security for Tenant’s obligations
hereunder. During the continuance of an Event of Default, Landlord may, in
addition to all other remedies under this Lease, apply any or all of the
Insurance Premium Reserve Fund for the payment of Rent or other sums owing to
Landlord under this Lease in its sole discretion. The Insurance Premium Reserve
Fund shall not constitute trust funds.

(b)    General. Tenant shall not pledge, assign or grant a security interest in
the Insurance Premium Reserve Fund, or permit any lien or encumbrance to attach
thereto or any levy to be made thereon by a party claiming through Tenant,
except those naming Landlord as the secured party. Should Landlord elect to hold
the Insurance Premium Reserve Fund in an interest bearing account, all interest
earned shall be added to the Insurance Premium Reserve Fund and Tenant shall pay
all taxes due in connection therewith.

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Section 6.12    Waiver of Subrogation. Neither Landlord nor Tenant shall be
liable to the other or to any insurance company (by way of subrogation or
otherwise) insuring the other party for any loss or damage to any building,
structure or other tangible property, or any resulting loss of income, or losses
under worker’s compensation laws and benefits, even though such loss or damage
might have been occasioned by the negligence of such party, its agents or
employees if, and to the extent, that any such loss or damage is covered by
insurance benefiting the party suffering such loss or damage or was required to
be covered by insurance pursuant to this Section. The provisions of this Section
shall prevail over any conflicting provision in the Lease, it being the
intention of Landlord and Tenant that wherever applicable the waiver of
subrogation contained in this Section shall take precedence over any other
provision providing for the liability of one party to the other.

ARTICLE 7
DAMAGE OR DESTRUCTION

Section 7.1    Restoration. If the Premises or any Building or any part thereof
shall be damaged or destroyed by fire or other casualty (including any casualty
for which insurance was not obtained or obtainable) of any kind or nature,
ordinary or extraordinary, foreseen or unforeseen, (a) Landlord shall pay over
to Tenant, upon the terms set forth in Section 7.2 and Section 7.3, any moneys
which may be recovered by Landlord from property insurance procured by Tenant as
required by this Lease, (or by an Operating Subtenant as permitted by this
Lease), (b) this Lease shall be unaffected thereby and shall continue in full
force and effect, and (c) Tenant shall, at Tenant’s sole cost and expense,
expeditiously and in a good and workmanlike manner, cause such damage or
destruction to be remedied or repaired (the “Restoration”) by restoring the
Premises to substantially the same condition and configuration immediately prior
to such damage or destruction. All Restoration work shall be performed in
accordance with the provisions of this Lease, including, without limitation, the
provisions of Section 5.4 and 5.5 hereof. Tenant hereby waives the provisions of
any Applicable Law to the contrary and agrees that the provisions of this
Article 7 shall govern and control in lieu thereof. If Tenant shall fail or
neglect to restore the Premises with reasonable diligence, or having so
commenced such Restoration, shall fail to complete the same with reasonable
diligence, or if prior to the completion of any such Restoration by Tenant, this
Lease shall expire or be terminated for any reason, Landlord shall have the
right, but not the obligation, to complete such Restoration at Tenant’s cost and
expense and the cost thereof shall be payable within five (5) days after written
demand as Supplementary Rent, together with interest thereon from the date of
demand until paid at the Default Rate. In addition, if Landlord so completes the
Restoration as provided hereunder, Landlord shall be entitled to a reasonable
supervisory fee from Tenant to compensate Landlord for administering the
Restoration. The obligations of Tenant under this Section 7.1 shall survive the
expiration or earlier termination of this Lease.

Section 7.2    Disbursing of Proceeds. Subject to the provisions of this Article
7, Landlord, the insurance carrier, or any Mortgagee may elect in their
discretion to perform the Restoration (being under no obligation to do so). If
none of such parties so elect, Landlord shall pay over to Tenant from time to
time, upon the following terms, any moneys which may be received by Landlord
from property insurance provided by Tenant or the Operating Subtenant but, in no
event, to any extent or in any sum exceeding the amount actually collected by
Landlord upon the loss; provided, however, that Landlord, before paying such
moneys over to Tenant, shall be entitled to reimburse or pay itself therefrom to
the extent, if any, of (i) the expenses paid or incurred by Landlord in the
collection of such moneys, and (ii) during the continuance of an Event of
Default, any other amounts then outstanding and owing to Landlord under this
Lease. Landlord shall pay to Tenant, as herein provided, the aforesaid insurance
proceeds which may be received by Landlord for the purpose of Restoration to be
made by Tenant to restore the Premises to a value which shall not be less than
the value of the Premises prior to such fire or other casualty. Prior to making
any Restoration, Tenant shall furnish Landlord with an estimate of the cost of
such Restoration, prepared by a licensed third party architect or contractor
selected by Tenant and reasonably approved by

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Landlord. Such insurance moneys shall be paid to Tenant (or, at Landlord’s
option, directly to the party to whom such payment is due) on a timely basis in
accordance with the payment provisions contained in the contract between Tenant
and the contractor, as approved by Landlord in its reasonable discretion and
subject to and in accordance with the terms of this Lease (the “Restoration
Contract”). If any vendor’s, mechanic’s, laborer’s, or materialman’s lien is
filed against the Premises or any part thereof, or if any public improvement
lien is created or permitted to be created by Tenant and is filed against
Landlord, or any assets of, or funds appropriated to, Landlord, Tenant shall not
be entitled to receive any further installment until such lien is satisfied or
otherwise discharged, unless such lien is contested by Tenant in good faith and
Tenant has obtained and delivered a bond in accordance with the Michigan
Construction Lien Act and issued by a surety, in an amount and in form otherwise
satisfactory to Landlord in its reasonable discretion. Subject to the terms of
the Restoration Contract, the amount of any installment to be paid to Tenant
shall be such proportion of the total insurance moneys received by Landlord as
the cost of labor and materials theretofore incorporated by Tenant in the
Restoration bears to the total estimated cost of the Restoration by Tenant, less
(a) all payments theretofore made to Tenant out of said insurance proceeds, and
(b) ten percent (10%) of the amount so determined (the “Retainage”).
Notwithstanding the foregoing, but subject to the terms of the Restoration
Contract, Landlord shall not withhold the Retainage from any installment
provided (i) such installment constitutes the final payment due a contractor or
materialman, or (ii) the contractor is bonded and Tenant furnishes to Landlord
payment and performance bonds and labor and material bonds of Tenant’s (or the
Operating Subtenant’s) contractor complying with the Requirements, Applicable
Laws and otherwise satisfactory to Landlord in its reasonable discretion, naming
Landlord as co-obligee, in which event Landlord shall withhold from such
installment the same percentage withheld by Tenant or the Operating Subtenant
pursuant to the Restoration Contract. Upon completion of and payment for the
Restoration, including reimbursement of the Retainage or other amount, as
applicable, the balance of any and all insurance proceeds held by Landlord shall
be paid to Tenant so long as no Default (notice of which has been sent by
Landlord to Tenant) or Event of Default is continuing hereunder. In the event
that the insurance proceeds are insufficient for the purpose of paying for the
Restoration, Tenant shall nevertheless be required to make the Restoration and
pay any additional sums required for the Restoration in accordance with the
provisions of Section 7.4 hereof. Notwithstanding the foregoing, if Landlord
makes the Restoration at Tenant’s expense, as provided in Section 7.1 hereof,
then Landlord shall use any amounts held by Landlord to pay for the cost of such
Restoration.

Section 7.3    Payment Conditions. Subject to the terms of the Restoration
Contract, the following shall be conditions precedent to each payment made to
Tenant (or to any other party) as provided in Section 7.2 above:

(a)    Tenant shall provide to Landlord the certificate of the aforesaid
architect or contractor stating (i) that the sum then requested to be withdrawn
either has been paid by Tenant and/or is justly due to contractors,
subcontractors, materialmen, engineers, architects or other persons (whose names
and addresses shall be stated) who have rendered or furnished certain services
or materials for the work and giving a brief description of such services and
materials and the principal subdivisions or categories thereof and the several
amounts so paid or due to each of such persons in respect thereof, and stating
in reasonable detail the progress of the work up to the date of said
certificate, (ii) that no part of such expenditures (A) has been or is being
made the basis, in any previous or then pending request, for the withdrawal of
insurance money or (B) has been made out of the proceeds of insurance received
by Tenant or the Operating Subtenant, (iii) that the sum then requested does not
exceed the value of the services and materials described in the certificate, and
(iv) that the balance of any insurance proceeds held by Landlord, together with
such other sums, if any, which Tenant or the Operating Subtenant has made or
will (for which evidence of Tenant’s intention and ability shall be to
Landlord’s satisfaction in its sole and absolute discretion) make available for
the Restoration in accordance with Section 7.4 hereof and to Landlord’s
satisfaction (in its sole and absolute discretion) will be sufficient upon
completion of the

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Restoration to pay for the same in full, and stating in reasonable detail an
estimate of the cost of such completion;

(b)    there shall be furnished to Landlord an official search, or a certificate
of a title insurance company satisfactory to Landlord in its sole and absolute
discretion, or other evidence satisfactory to Landlord in its sole and absolute
discretion, showing that there has not been filed any vendor’s, mechanic’s,
laborer’s or materialmen’s statutory or other similar lien affecting the
Premises or any part thereof, or any public improvement lien created or
permitted to be created by Tenant or any Operating Subtenant affecting Landlord,
or the assets of, or funds appropriated to, Landlord, which has not been
discharged of record, except such as will be discharged upon payment of the
amount then requested to be withdrawn, or unless any such lien is contested by
Tenant in good faith and Tenant has obtained and delivered a bond issued by a
surety, in accordance with the Michigan Construction Lien Act provided such bond
fully covers the amount of the construction lien and would not be considered an
exception to Landlord’s American Land Title Association title policy;

(c)    at the time of making such payment, no Default or Event of Default shall
have occurred and be continuing;

(d)    Tenant shall have deposited the items required to be deposited under
Section 7.4; and

(e)    Unless any such lien is contested by Tenant in good faith and Tenant has
obtained and delivered a bond in the full amount of the lien issued by a surety
in accordance with the Michigan Construction Lien Act and in form satisfactory
to Landlord, if the amount due to any such Person to be paid from such payment
exceeds $25,000 and the failure to pay for the applicable underlying work or
material could result in a Lien, such payment request shall be accompanied by
conditional lien waivers or other evidence of payment from such Person
reasonably satisfactory to Landlord.

Section 7.4    Payment of Excess Costs. If the estimated cost of any Restoration
determined as provided in Section 7.2 hereof exceeds the net insurance proceeds
then, prior to the commencement of any Restoration, Tenant hereby covenants to
deposit with Landlord, a bond, cash or other security satisfactory to Landlord
(in its sole and absolute discretion) in the amount of ten percent (10%) of such
excess, to be held and applied by Landlord in accordance with the provisions of
Section 7.2 hereof, as security for the completion of the work, free of public
improvement, vendors’, mechanics’, laborers’ or materialmen’s statutory or other
similar liens.

Section 7.5    No Termination of Lease. As material consideration to Landlord
for its agreement to enter into this Lease, the parties agree that this Lease
shall not terminate or be forfeited or be affected in any manner, and there
shall be no reduction or abatement of the Rent payable hereunder, by reason of
damage to or total, substantial or partial destruction of the Premises or any
part thereof or by reason of the untenantability of the same or any part
thereof, for or due to any damage or destruction of the Premises from any cause
whatsoever, and, notwithstanding any Applicable Law, present or future, Tenant
waives any and all rights to quit or surrender the Premises or any part thereof
on account of any damage or destruction of the Premises. Tenant expressly agrees
that its obligations hereunder, including the payment of Rent payable by Tenant
hereunder, shall continue as though the Premises had not been damaged or
destroyed and without abatement, suspension, diminution or reduction of any
kind.

Section 7.6    Applicability of Mortgage. All provisions contained in the
Mortgage or any other document in connection therewith which concern or pertain
to the Restoration of the Premises, the application of insurance proceeds and
any and all matters concerning a casualty shall take precedence over and be in
lieu of any contrary provision provided for in this Lease.

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ARTICLE 8
CONDEMNATION

Section 8.1    Generally. Tenant, immediately upon obtaining knowledge of the
institution of any proceeding for a Taking, shall notify Landlord and Mortgagee
thereof and Landlord and Mortgagee shall be entitled to participate in any
Taking proceeding. Subject to the provisions of this Article 8. Tenant hereby
irrevocably assigns to Mortgagee or to Landlord, in that order, any award or
payment to which Tenant is or may be entitled by reason of any Taking, whether
the same shall be paid or payable for Tenant’s leasehold interest hereunder or
otherwise.

Section 8.2    Limited Termination Right. (a) If the whole of the Premises shall
be permanently taken by condemnation or other eminent domain proceedings
pursuant to any Applicable Law, general or special, or by conveyance made in
response to the threat of the exercise of such a right (a “Taking”), or if a
substantial and material portion of the Premises is taken such that neither
Tenant nor the applicable Operating Subtenant is able to operate all of the
Facilities in substantially the same manner as it was operated prior to the
Taking, then on the earlier of the date of the vesting of title to the Premises
or the date of taking of possession of the Premises (the “Ending Date”): (i)
this Lease shall terminate, (ii) all Rent required to be paid by Tenant under
this Lease shall be pro-rated up to such date, (iii) Landlord shall be entitled
to any and all awards in connection with such condemnation on account of
Landlord’s fee simple interest in the Land and the Buildings, with such proceeds
going first to pay any outstanding amounts owed to Mortgagee, and (iv) Tenant
shall be entitled to receive any and all awards on account of Tenant’s Personal
Property, moving expenses and interruption of or damage to Tenant’s or the
affected Operating Subtenant’s business, with such proceeds going first to pay
any outstanding amounts owed to Mortgagee. Upon such termination, this Lease
shall be of no further force and effect, except that any obligation or liability
of either party, actual or contingent, under this Lease which has accrued on or
prior to the Ending Date shall survive and any prepayment of Rent shall be
prorated between the parties. In the event of a partial Taking that results in
the reduction of the number of licensed beds at a Facility, the terms and
conditions of this Lease that are determined based upon the number of licensed
beds shall be adjusted downward to account for the number of licensed beds at
the Facilities that are the subject of the Taking, and such reduction shall be
the basis for a proportionate reduction in Base Rent, but shall not be the basis
for an Event of Default.

(b)    If there shall be a Taking of the entire Premises for a particular
Facility or of a substantial and material portion of the Premises for a
particular Facility such that neither Tenant nor the affected Operating
Subtenant is able to operate such Facility in substantially the same manner as
it was operated prior to the Taking, then on the Ending Date for such particular
Facility; (i) the Premises for such Facility shall no longer be leased by
Landlord to Tenant under this Lease and shall be removed and thereafter not be a
part of the Premises, (ii) Landlord shall be entitled to any and all awards in
connection with such condemnation on account of Landlord’s fee simple interest
in the Land and the Buildings associated with such Facility, with such proceeds
going first to pay any outstanding amounts owed to Mortgagee, and (iii) as
between Landlord and Tenant, Tenant shall be entitled to receive any and all
awards on account of Tenant’s Personal Property used in connection with such
Facility, moving expenses and interruption of or damage to Tenant’s or the
affected Operating Subtenant’s business associated with such Facility, with such
proceeds going first to pay any outstanding amounts owed to Mortgagee. Upon such
removal of the Premises for such Facility from this Lease, (1) this Lease shall
be of no further force and affect with respect to such Premises, except that any
obligation or liability of either party, actual or contingent, under this Lease
with respect to such Premises which has accrued on or prior to such Ending Date,
for such particular Facility shall survive, (2) any prepayment of Rent on
account of such condemned Facility shall be prorated between the parties, and
(3) effective as of the Ending Date, the Base Rent payable hereunder shall be
reduced by the Base Rent payable hereunder immediately prior to the Ending

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Date multiplied by a fraction (x) the numerator of which is the Facility EBITDAR
for such Facility for the twelve (12) full calendar months immediately prior to
the month in which the Ending Date occurs and (y) the denominator of which is
the Facility EBITDAR for the twelve (12) full calendar months immediately prior
to the month in which the Ending Date occurs.

Section 8.3    Partial Taking. In the event of a permanent partial Taking of one
or more of the Building(s), in which the portion of the Premises taken is such
that Tenant or the affected Operating Subtenant may continue to operate the
Facilities in substantially the same manner as it was operated prior to the
Taking in Tenant’s reasonable discretion, this Lease shall be unaffected by such
Taking, and Tenant shall, continue to pay the Base Rent and Supplementary Rent
pursuant to Article 2 and the following shall apply:

(i)    Landlord shall be entitled to receive the entire award in any proceeding
with respect to such Taking without deduction therefrom for any estate vested in
Tenant by this Lease and Tenant shall receive no part of such award;

(ii)    Notwithstanding the foregoing, in the event this Section 8.3 is
applicable, Landlord shall pay over to Tenant from time to time any moneys which
may be received by Landlord on account of the exercise of the power of eminent
domain with respect to the Premises, which (x) are necessary for Tenant to
repair and restore such Building(s) such that the remaining portion of the
Facilities may continue to be operated and (y) represent an award for the loss
of Tenant’s Personal Property, moving expenses and interruption of or damage to
Tenant’s or the affected Operating Subtenant’s business; provided, however, that
Landlord, before paying such moneys over to Tenant, shall be entitled to
reimburse or pay itself therefrom to the extent, if any, of (i) the reasonable
expenses paid or incurred by Landlord in the collection of such moneys, and (ii)
any other amounts then outstanding and owing to Landlord under this Lease. Such
moneys shall be paid over to Tenant on the terms and subject to the conditions
set forth in Article 7 as if, for this purpose, such moneys were insurance
proceeds resulting from casualty to the Premises. Tenant agrees to undertake
such Restoration on such terms and subject to such conditions to the extent of
the availability of such proceeds and such additional funds as are necessary to
complete the Restoration at Tenant’s own cost and expense.

Section 8.4    Taking Unimproved Land. If only unimproved land shall be the
subject of a Taking and Sections 8.2 and 8.3 do not apply, this Lease shall be
unaffected by such Taking, and Tenant shall continue to pay the Base Rent and
Supplementary Rent pursuant to Article 2 and Landlord shall be entitled to
receive the entire award in any proceeding with respect to such Taking without
deduction therefrom for any estate vested in Tenant by this Lease and Tenant
shall receive no part of such award.

Section 8.5    Temporary Taking. If the use or occupancy of all or any part of
the Premises shall be the subject of a temporary Taking during the Term of this
Lease, Tenant shall be entitled, except as hereinafter set forth, to receive
that portion of the award for such temporary Taking which represents
compensation for the use and occupancy of the Premises and, if so awarded, for
the temporary Taking of Tenant’s Personal Property and for moving expenses, and
that portion which represents reimbursement for the cost of Restoration of the
Premises. This Lease shall be and remain unaffected by such temporary Taking and
Tenant shall be responsible for all obligations hereunder not affected by such
temporary Taking and shall continue to pay in full when due the Base Rent and
Supplementary Rent and all other sums required to be paid by Tenant pursuant to
the provisions of this Lease. If the period of temporary use or occupancy shall
extend beyond the Expiration Date, that part of the award which represents
compensation for the use or occupancy of the Premises (or a part thereof) shall
be divided between Landlord and Tenant so that Tenant shall receive so much
thereof as represents the period to and including the Expiration Date and
Landlord shall receive so much as represents the period subsequent to

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the Expiration Date and Landlord shall be entitled to receive that portion which
represents reimbursement for the cost of Restoration of the Premises. All moneys
received by Tenant as, or as part of, an award for temporary use and occupancy
for a period beyond the date to which the sums to be paid by Tenant hereunder
have been paid by Tenant shall be received, held and applied by Tenant as a
trust fund for payment of all sums payable by Tenant hereunder.

Section 8.6    Cooperation. Each party agrees to execute and deliver to each
other and to applicable Governmental Authorities all documents and instruments
that may be required to effectuate the provisions of this Article 8.

ARTICLE 9
ASSIGNMENT AND SUBLETTING

Section 9.1    General Restriction. Except as expressly permitted by this Lease,
Tenant shall not directly or indirectly (i) sell, assign, mortgage, convey,
alienate, sublease or otherwise transfer, directly or indirectly, by operation
of law or otherwise, this Lease, all or any portion of Tenant’s estate or
interest in this Lease or the Premises, (ii) permit any assignment of this Lease
or any estate or interest therein by operation of law, (iii) grant any Sublease
(other than the Operating Subleases), license, concession, or other right of
occupancy of all or any portion of the Premises, other than in the ordinary
course of business to the operators of ancillary services offered to residents
of the Facilities, such as beauticians and physical therapists, (iv) permit the
use of the Premises or any part thereof by any parties other than Tenant or the
Operating Subtenants, (v) mortgage, encumber, pledge, grant a security interest
in, collaterally assign or conditionally transfer this Lease or any Subleases or
any of the rents, issues and profits from a sublease operator or any other
commercial sublessee or Tenant’s estate or interest in the Premises, (vi) sell,
convey or transfer, directly or indirectly, by operation of law or otherwise,
any capital stock, membership interests, partnership interests, trust units, or
any other equity interest in Tenant, Guarantor, or in any direct or indirect
constituent owner of Tenant or Guarantor, (vii) consummate, or permit any direct
or indirect constituent owner of Tenant to consummate, any transaction resulting
in, or otherwise in any way implement or permit any direct or indirect
constituent owner of Tenant to implement, a change of control (as defined
below), (viii) permit Guarantor or any direct or indirect constituent owner of
Guarantor to consummate, any transaction resulting in, or otherwise in any way
implement or permit any direct or indirect constituent owner of Guarantor to
implement, a change of control (as the terms “control” and “change of control”
are defined below), or (ix) permit any Operating Subtenant to directly or
indirectly do any of the foregoing (each of the foregoing, a “Transfer”),
without Landlord’s prior written consent, which consent may be granted or
withheld in Landlord’s sole and absolute discretion. For purposes of this
Article 9, the terms: (i) “control” or “controls” means (a) ownership directly
or indirectly of more than fifty percent (50%) of all capital stock, membership
interests, partnership interests, trust units, or any other equity interest in
in an entity, or (b) possession, direct or indirect, of the power to direct or
to cause the direction of, the management and policies of any person or entity,
whether through the ownership of voting securities, or partnership, membership
or other equity interests, by contract or otherwise; and (ii) “change of
control” means (a) a change of the direct or indirect power to direct or to
cause the direction of the management and policies of a person or entity,
whether through the ownership of voting securities, or partnership, membership
or other equity interests, by contract or otherwise, (b) the pledge,
hypothecation, encumbrance or transfer of any interest in an entity, or (c) the
merger or consolidation of an entity by, with or into another entity. Any
attempted Transfer in violation of the terms and covenants of this Section 9.1
shall be void. If Landlord consents in writing to a Transfer, then (1) Tenant
shall nevertheless at all times remain fully responsible and liable for payment
of the Rent and for compliance with all of Tenant’s other duties, obligations
and covenants under this Lease, (2) the transferee shall be required to execute
and deliver an assumption of all obligations of Tenant hereunder that are
applicable to such Transfer, pursuant to an instrument satisfactory to Landlord,
and (3) the Transfer shall be conditioned upon obtaining and securing (A) all

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necessary Health Care Licenses and other approvals and consents of Governmental
Authorities at no expense to the Landlord and (B) the consent of any Mortgagee,
which consent may be withheld in Mortgagee’s sole discretion. Notwithstanding
any contrary or ambiguous provision of this Lease, occupancy of individual rooms
or beds by bona fide residents of a Facility and operations of concessionaires
within a Facility that do not have any tenancy or other possessory rights and
are on contracts that may be terminated without penalty on thirty (30) or less
days’ notice (e.g., third party providers of goods or services to residents of a
Facility utilizing space within the Facility for such purpose), in the ordinary
course of business shall be permitted and shall not be considered a “Sublease”
for purposes of this Article 9. Notwithstanding any provision of this Lease to
the contrary, there shall be no assignment of this Lease with respect to less
than the entire Premises. Landlord hereby consents to the existing subleases set
forth in the attached Schedule 9.1.

Notwithstanding the foregoing or any other language to the contrary in this
Agreement, no Transfer shall be permitted without the prior consent of Landlord
in its sole and absolute discretion, to the extent it results in any Parent
Guarantor having less of a direct or indirect ownership interest in any of
Tenant, Operating Subtenant and/or Guarantor than such Parent Guarantor
possesses as of the Effective Date, and/or (b) Parent Guarantor ceasing to have
an active role in the day-to-day management of Tenant, Operating Subtenant
and/or Guarantor (the foregoing restriction not to apply to the death or legal
incapacity of Lou Andriotti).

The parties hereby acknowledge that the structure created by the Lease and the
Operating Subleases is not intended to limit the rights granted to or expressly
or implicitly reserved by Landlord under this Lease. Accordingly,
notwithstanding any provision of this Lease to the contrary, where an Operating
Sublease obligates an Operating Subtenant to obtain the prior consent of
approval of Tenant as the sublandlord under the Operating Sublease, Tenant shall
not give such consent or approval to the Operating Subtenant without first
obtaining the prior written consent or approval of Landlord as required under
this Lease.

Section 9.2    Request for Consent. If Tenant requests Landlord’s or any
Mortgagee’s consent to a Transfer, Landlord and such Mortgagee shall be given
not less than thirty (30) days’ advance written notice of the proposed Transfer,
which notice shall be delivered to Landlord and such Mortgagee together with (i)
an updated organizational chart and a true and complete copy of the proposed
instrument(s) of the Transfer, and (ii) such other information and documents as
Landlord or such Mortgagee may request in its reasonable discretion. Tenant
shall pay, on demand, Landlord’s and such Mortgagee’s reasonable costs and
expenses in connection with their consideration of whether to grant any such
consent to a Transfer. No Transfer may be proposed or consummated during the
continuance of a Default or an Event of Default.

Section 9.3    Nature of Consent. Any consent by Landlord under this Article 9
shall apply only to the specific transaction thereby authorized and shall not
relieve Tenant from the requirement of obtaining the prior written consent of
Landlord to any further Transfer of this Lease. No Transfer of all or a portion
of this Lease shall release or relieve the original named Tenant (or any
previously approved transferee) from any obligations of Tenant hereunder, and
the original named Tenant (or any previously approved transferee) shall remain
liable for the performance of all obligations of Tenant hereunder.

Section 9.4    Subtenant Compliance. If Landlord consents in writing to a
Transfer involving a Sublease, license or occupancy agreement with respect to
the Premises or any part thereof, Tenant shall cause each permitted subtenant,
licensee and occupant (each a “Subtenant” and collectively, the “Subtenants”) to
comply with its obligations under its respective Sublease, license or occupancy
agreement, and Tenant shall diligently enforce all of its rights thereunder in
accordance with the terms of such Sublease, license or occupancy agreement and
this Lease.

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Section 9.5    Subtenant Breach. The fact that a violation or breach of any of
the terms, provisions or conditions of this Lease results from or is caused by
an act or omission by any of the Subtenants shall not relieve Tenant of Tenant’s
obligation to cure the same. Tenant shall take all necessary steps to prevent
any such violation or breach.

Section 9.6    Certain Landlord Rights Following Event of Default. If this Lease
is assigned, or if the Premises or any part thereof is subleased, licensed or
occupied by anybody other than Tenant, Landlord may, after an Event of Default
by Tenant, and in addition to any other remedies herein provided or provided by
Applicable Law, collect all rent becoming due to Tenant directly from the
Subtenants, and apply the net amount collected to the Rent herein reserved and
all other sums due to Landlord by Tenant hereunder, but no such assignment,
sublease, license, occupancy or collection shall be deemed a waiver of this
covenant, or the acceptance of the Subtenant as tenant, or a release of Tenant
from the further performance by Tenant of the terms, covenants, and conditions
on the part of Tenant to be observed or performed hereunder. Tenant hereby
authorizes and directs any such Subtenant to make such payments of rent directly
to Landlord, or into any cash management system required by any Mortgagee upon
receipt of notice from Landlord, and each Sublease will contain this provision.
In the event that amounts payable under such assignment, sublease, license or
occupancy agreement exceed the sums due to Landlord by Tenant hereunder,
Landlord shall be entitled to receive all of such excess proceeds and Tenant
hereby agrees to immediately pay over to Landlord all such excess upon Tenant’s
receipt of same. No direct collection by Landlord from any such Subtenant shall
be construed to constitute a novation or a release of Tenant from the further
performance of its obligations hereunder. After any assignment, subletting,
license or occupancy, Tenant’s liability hereunder shall continue
notwithstanding any subsequent modification or amendment hereof or the release
of any subsequent tenant hereunder from any liability, to all of which Tenant
hereby consents in advance. The consent by Landlord to any Transfer shall not in
any way be construed to relieve Tenant from obtaining the express written
consent of Landlord to any further Transfer.

Section 9.7    Collateral Assignment. To secure the prompt and full payment by
Tenant of the Rent and the faithful performance by Tenant of all the other terms
and conditions herein contained on its part to be kept and performed, Tenant
hereby collaterally assigns, transfers and sets over unto Landlord, subject to
the conditions hereinafter set forth, all of Tenant’s right, title and interest
in and to all permitted subleases, assignments, licenses and occupancy
agreements, including the Operating Subleases (each a “Sublease” and
collectively, the “Subleases”) and hereby confers upon Landlord, its agents and
representatives, a right of entry (after prior written notice) in, and
sufficient possession of, the Premises to permit and ensure the collection by
Landlord of the rentals and other sums payable under the Subleases, and further
agrees that the exercise of said right of entry and qualified possession by
Landlord shall not constitute an eviction of Tenant from the Premises or any
portion thereof and that should said right of entry and possession be denied
Landlord, its agent or representative, Landlord, in the exercise of said right,
may use all requisite force (subject to Applicable Law) to gain and enjoy the
same without responsibility or liability to Tenant, its servants, employees,
guests or invitees, or any Person whomsoever; provided, however, that such
assignment shall become operative and effective only if (a) a Default shall
occur and be continuing or (b) this Lease and the Term shall be cancelled or
terminated pursuant to the terms, covenants and conditions hereof or (c) there
occurs repossession under a dispossess warrant or other re-entry or repossession
by Landlord under the provisions hereof or (d) a receiver for the Premises is
appointed, and then only as to such of the subleases that Landlord may elect to
take over and assume. At any time and from time to time within ten (10) days
after Landlord’s written demand, Tenant promptly shall deliver to Landlord a
schedule of all Subleases, setting forth the names of all Subtenants, with a
true, correct and complete copy of each of the Subleases. Upon reasonable
request of Landlord, Tenant shall permit Landlord and its agents and
representatives to inspect all Subleases affecting the Premises. Tenant
covenants that each Sublease shall provide that the Subtenant thereunder shall
be

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required from time to time, upon request of Landlord or Tenant, to execute,
acknowledge and deliver, to and for the benefit of Landlord, an estoppel
certificate confirming with respect to such Sublease the information set forth
in Section 14.1 hereof. Neither the foregoing nor any other provisions relating
to the Subleases and/or Operating Subtenants shall be deemed to supersede or
otherwise limit Landlords’ right to consent to the same pursuant to the terms
hereof.

Section 9.8    Required Sublease Terms. Tenant covenants and agrees that all
Subleases hereafter entered into affecting the Premises shall provide that (a)
they are subject to this Lease and that the principals of the Subtenant
acknowledge that they have read this Lease and accept the terms hereof, (b) the
term thereof shall not end less than one (1) day prior to the Expiration Date
hereof, unless Landlord shall consent otherwise, which consent may be withheld
in Landlord’s sole and absolute discretion, (c) the Subtenants will not do,
authorize or execute any act, deed or thing whatsoever or fail to take any such
action which will or may cause Tenant to be in violation of any of its
obligations under this Lease, (d) the Subtenants will not pay rent or other sums
under the Subleases with Tenant for more than one (1) month in advance, (e) the
Subtenants shall give to Landlord at the address and otherwise in the manner
specified in Section 21.8 hereof a copy of any notice of default by Tenant as
the landlord under the Subleases at the same time as, and whenever, any such
notice of default shall be given by the Subtenants to Tenant, (f) the Subtenants
shall grant to the landlords under the Subleases a security interest in all of
their right, title and interest in the Health Care Licenses and the Provider
Agreements, such grant to be pursuant to a provision that is substantially
similar to Section 12.15 hereof, and (g) in the event of the termination or
expiration of this Lease prior to the Expiration Date hereof, any such
Subtenant, at Landlord’s election, shall be obligated to attorn to and recognize
Landlord as the lessor under such Sublease, in which event such Sublease shall
continue in full force and effect as a direct lease between Landlord and the
Subtenant upon all the terms and conditions of such Sublease, except as
hereinafter provided. Any attornment required by Landlord of such Subtenant
shall be affective and self-operative as of the date of any such termination or
expiration of this Lease without the execution of any further instrument;
provided, however, that such Subtenant shall agree, upon the request of
Landlord, to execute and deliver any such instruments in recordable form and
otherwise in form and substance satisfactory to Landlord in its sole and
absolute discretion to evidence such attornment. With respect to any attornment
required by Landlord of any Subtenant hereunder, (i) at the option of Landlord,
Landlord shall recognize all rights and obligations of Tenant as the lessor
under such sublease and the Subtenant thereunder shall be obligated to Landlord
to perform all of the obligations of the Subtenant under such Sublease and (ii)
Landlord shall have no liability, prior to its becoming lessor under such
Sublease, to such Subtenant nor shall the performance by such Subtenant of its
obligations under the Sublease, whether prior to or after any such attornment,
be subject to any defense, counterclaim or setoff by reason of any default by
Tenant in the performance of any obligation to be performed by Tenant as lessor
under such Sublease, nor shall Landlord be bound by any prepayment of more than
one (i) month’s rent unless such prepayment shall have been expressly approved
in writing by Landlord. The provisions of this Section shall survive the
expiration or earlier termination of the Term.

Section 9.9    Bankruptcy. If Tenant assumes this Lease and proposes to assign
the same pursuant to the provisions of Title 11 of the United States Code or any
statute of similar purpose or nature (the “Bankruptcy Code”) to any person or
entity who shall have made a bona fide offer to accept an assignment of this
Lease on terms acceptable to Tenant, then notice of such proposed assignment
shall be given to Landlord by Tenant no later than fifteen (15) days after
receipt of such offer by Tenant, but in any event no later than ten (10) days
prior to the date that Tenant shall file any application or motion with a court
of competent jurisdiction for authority and approval to enter into such
assumption and assignment. Such notice shall set forth (a) the name and address
of the assignee, (b) all of the terms and conditions of such offer, and (c) the
proposal for providing adequate assurance of future performance by such person
under the Lease, including, without limitation, the assurance referred to in
Section 365 of the Bankruptcy Code. Any person or entity to which this Lease is
assigned pursuant to the provisions of the Bankruptcy

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Code shall be deemed without further act or deed to have assumed all of the
obligations arising under this Lease from and after the date of such assignment.
Any such assignee shall execute and deliver to Landlord upon demand an
instrument confirming such assumption.

Section 9.10    Adequate Assurance. The term “adequate assurance of future
performance” as used in this Lease means (in addition to the assurances called
for in Bankruptcy Code Section 365(1)) that any proposed assignee shall, among
other things, (a) deposit with Landlord on the assumption of this Lease an
amount equal to the greater of (i) two (2) times the then monthly Base Rent and
Supplementary Rent or (ii) such other amount deemed by the Bankruptcy Court to
be reasonably necessary for the adequate protection of Landlord under the
circumstances, as security for the faithful performance and observance by such
assignee of the terms and obligations of this Lease, (b) furnish Landlord with
financial statements of such assignee for the prior three (3) fiscal years, as
finally determined after an audit and certified as correct by a certified public
accountant, which financial statements shall show a net worth at least equal to
the amount of the deposit referenced in (a) above, (c) if determined by the
Bankruptcy Court to be appropriate under the circumstances, grant to Landlord a
security interest in such property of the proposed assignee as Landlord shall
deem necessary to secure such assignee future performance under this Lease, and
(d) provide such other information or take such action as Landlord, in its
reasonable judgment, shall determine is necessary to provide adequate assurance
of the performance by such assignee of its obligations under the Lease.

Section 9.11    Lease Rejection. If, at any time after Tenant may have assigned
Tenant’s interest in this Lease in a proceeding of the type described in Section
12.1(h) or (i) of this Lease shall be disaffirmed or rejected in any proceeding
of the types described in Section 12.1(h) or (i) hereof, or in any similar
proceeding, or in the event of termination of this Lease by reason of any such
proceeding or by reason of lapse of time following notice of termination given
pursuant to Article 12 based upon any of the events of default set forth in said
Section 12.l(h) or (i), Tenant, upon request of Landlord given within thirty
(30) days next following any such disaffirmance rejection or termination (and
actual notice thereof to Landlord in the event of a disaffirmance or rejection
or in the event of termination other than by act of Landlord), shall (a) pay to
Landlord all Base Rent and Supplementary Rent due and owing by the assignee to
Landlord under this Lease to and including the date of such disaffirmance,
rejection or termination, and (b) as “tenant”, enter into a new lease with
Landlord for a term commencing on the effective date of such disaffirmance,
rejection or termination and ending on the expiration date of the Term, unless
sooner terminated as in such lease provided, at the same Base Rent and
Supplementary Rent upon the then executory terms, covenants and conditions as
are contained in this Lease, except that (i) Tenant’s rights under the new lease
shall be subject to the possessory rights, if any, of the assignee under this
Lease and the possessory rights of any person claiming through or under such
assignee or by virtue of any Applicable Law, (ii) such new lease shall require
all defaults existing under this Lease to be cured by Tenant with due diligence,
and (iii) such new lease shall require Tenant to pay all Base Rent and
Supplementary Rent reserved in this Lease which, had this Lease not been so
disaffirmed, rejected or terminated, would have accrued under the provisions of
this Lease after the date of such disaffirmance, rejection or termination with
respect to any period prior thereto. If Tenant shall default in its obligation
to enter into said new lease for a period of ten (10) days next following
Landlord’s request therefor, then in addition to all other rights and remedies
by reason of such default, either at law or in equity, Landlord shall have the
same rights and remedies against Tenant as if Tenant had entered into such new
lease and such new lease had thereafter been terminated as of the commencement
date thereof by reason of Tenant’s default thereunder.

Section 9.12    Healthcare Issues.

(a)    Upon Landlord’s written demand following the expiration of the term of
this Lease or upon the termination of this Lease after an Event of Default,
Tenant shall assign (or, if held in

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the name of the Operating Subtenant, shall cause the Operating Subtenant to
assign) to Landlord (i) all assignable Health Care Licenses, certificates or
permits, and (ii) the names associated with the Facilities as then known to the
general public (but excluding any names that are Tenant’s Personal Property),
along with the responsibilities and obligations for the management and operation
of the Premises. To the extent that assignment of the Health Care Licenses,
certificates or permits is not permitted by Applicable Law and approved by all
applicable Governmental Authorities, then Tenant shall (and as necessary, shall
cause the Operating Subtenant to) continue to manage and operate the Facility
pursuant to an agreement mutually acceptable to Landlord, Tenant, and the
Operating Subtenant during such period of time that such replacement tenant and
licensed operator of such Facility applies for the issuance of same to said
parties. Tenant agrees to use its best efforts to cooperate (and to cause the
Operating Subtenants to cooperate) with Landlord and any new tenant and licensed
operator to accomplish the transfer of management and operation without
interrupting the operation of the Premises and the parties shall enter into an
Operations Transfer Agreement reasonably acceptable to the parties. For purposes
of all regulatory filings, this provision shall be deemed explicit authorization
and consent by Tenant to the transfer of all operations of the Facility to the
successor operator identified by Landlord. If Tenant fails to provide such
cooperation or to make or refuses to recognize the assignment of any Health Care
Licenses, permits, certificates (to the extent permitted by Applicable Law) or
trade names referred to herein, this provision of this Lease shall constitute an
act of assignment to the replacement licensed operator and/or lessee identified
by Landlord to the extent such assignment is permitted by Applicable Law.

(b)    The present number of licensed beds in the Premises shall not be reduced,
taken out of service or removed from any Third Party Payor program or otherwise
transferred by Tenant or the Operating Subtenants to others or to other
locations or among the Premises for the respective Facilities unless approved in
advance by Landlord in writing, which approval may be withheld in Landlord’s
sole and absolute discretion.

(c)    Tenant shall not and shall not allow a Subtenant or any Person to abandon
or surrender any licenses, permits, certificates or authorizations required for
or which relate to the operation of the Premises for the Permitted Use, as
applicable and as indicated on Schedule 1, without prior notice to, and receipt
of written approval from, Landlord. Tenant shall not and shall not allow any
Person to act or fail to act in any manner which will cause any licenses,
permits or certificates to be revoked or not renewed by any Governmental
Authority having jurisdiction thereof.

(d)    Tenant shall not file bankruptcy, become insolvent, permit itself to
become subject to any action seeking the appointment of a trustee, receiver,
liquidator, custodian or similar official of Tenant or a substantial part of its
assets, permit itself to become subject to any action of involuntary
receivership, fail to pay its debts as they become due, or take any corporate
action to authorize any of the foregoing without the prior written consent of
Landlord.

Section 9.13    Survival. The provisions of Sections 9.7, 9.8, 9.9, 9.12 and
9.13 hereof shall survive the expiration or earlier termination of this Lease.

Section 9.14    Special Purpose Entity. Notwithstanding any of the foregoing,
any assignee of Tenant’s interest in this Lease must at all times be a
Special-Purpose Entity.

Section 9.15    Sublease Rent Limitation. Anything contained in this Lease to
the contrary notwithstanding, without the prior specific written consent of the
Landlord, which consent Landlord may withhold in its sole discretion, Tenant
shall not enter into (or permit any Manager to enter into on its behalf) any
sublease with respect to the Premises or any part or portion thereof on any
basis such that the rental to be paid by Tenant would be based (or considered to
be based), in whole or in part, on either (a) the income or profits derived by
the business activities of the sublessee or any other person, or (b) any

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other formula such that any portion of the rent payable hereunder would or could
fail to qualify as “rents from real property” within the meaning of Section
856(d) of the Code, or any similar or successor provisions thereto. Any such
sublease automatically shall be void.

Section 9.16    Sublease Tenant, Limitation. Anything contained in this Lease to
the contrary notwithstanding, without the prior specific written consent of the
Landlord, which consent Landlord may withhold in its sole discretion, Tenant
shall not sublease (or permit any Manager to sublease on its behalf), the
Premises or any part or portion thereof to any person or entity in which
Landlord or any Affiliate of Landlord owns, directly or indirectly, a ten
percent (10%) or greater interest, within the meaning of Section 856(d)(2)(B) of
the Code, or any similar or successor provisions thereto. Any such sublease
automatically shall be void. Tenant shall take reasonable precautions in
connection with each sublease to ensure that such sublease will not result in a
violation of this Section.

Section 9.17    Assignee Rent Limitation. Anything contained in this Lease to
the contrary notwithstanding, without the prior specific written consent of the
Landlord, Tenant shall not assign this Lease such that the rental to be paid by
the assignee thereunder would be based (or considered to be based), in whole or
in part, on either (a) the income or profits derived by the business activities
of the assignee or any other person, or (b) any other formula such that any
portion of the rent payable hereunder would or could fail to qualify as “rents
from real property” within the meaning of Section 856(d) of the Code, or any
similar or successor provisions thereto. Any such assignment automatically shall
be void.

Section 9.18    Assignee Tenant Limitation. Anything contained in this Lease to
the contrary notwithstanding, without the prior specific written consent of the
Landlord, Tenant shall not assign the Lease to any person or entity in which
Landlord or any Affiliate of Landlord owns, directly or indirectly, a ten
percent (10%) or greater interest, within the meaning of Section 856(d)(2)(B) of
the Code, or any similar or successor provisions thereto. Tenant shall take
reasonable precautions in connection with each assignment to ensure that such
assignment will not result in a violation of this Section. Any such assignment
automatically shall be void.

Section 9.19    Operating Subleases. Tenant hereby represents, warrants and
covenants that (a) it shall timely perform each and every covenant of landlord
under all of the Operating Subleases and that it will enforce the obligations of
the Operating Subtenants thereunder; (b) Tenant will not declare an Event of
Default under the Operating Sublease or exercise any remedy against an Operating
Subtenant pursuant to the Operating Sublease without the prior written consent
of Landlord, which consent Landlord may not unreasonably withhold, condition or
delay, and any such exercise without Landlord’s consent shall be void at
Landlord’s election; (c) Tenant will not consent to the termination of an
Operating Sublease without the prior written consent of Landlord, which consent
Landlord may withhold in its sole discretion, and any such termination without
Landlord’s consent shall be void at Landlord’s election; (d) Tenant shall not
agree to an amendment to or modification of an Operating Sublease without the
prior written consent of Landlord, which consent Landlord may withhold in its
sole discretion, and any such termination without Landlord’s consent shall be
void at Landlord’s election; and (e) Tenant shall deliver to Landlord any notice
of default that that Tenant delivers to an Operating Subtenant at the same time
that the notice is delivered to the Operating Subtenant, and shall deliver to
Landlord a copy of any notice of default that Tenant receives from an Operating
Subtenant within three (3) Business Days after receipt of same.

ARTICLE 10
SUBORDINATION

Section 10.1    Subordination Generally. This Lease shall be subject and
subordinate to all Mortgages and each Superior Lease hereinafter in effect and
to all renewals, modifications,

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consolidations, replacements, restatements, increases and extensions of any such
Mortgages and/or Superior Lease; provided, however, that, subject to the
provision of Section 10.3 of this Lease, the Mortgagee of such Mortgage and/or
the Superior Landlord of such Superior Lease shall execute and deliver to Tenant
an agreement (on such Mortgagee’s or Superior Landlord’s standard form
reasonably acceptable to Tenant) to the effect that, if (x) there shall be a
foreclosure of its Mortgage, such Mortgagee will not make Tenant a party
defendant to such foreclosure, unless necessary under Applicable Law for the
Mortgagee to foreclose, or if there shall be a foreclosure of such Mortgage,
such Mortgagee shall not evict Tenant, or disturb Tenant’s leasehold estate or
rights hereunder, or (y) such Superior Landlord shall exercise any of its rights
and remedies under such Superior Lease or at law or in equity to terminate such
Superior Lease or evict the tenant thereunder, such Superior Landlord shall not
evict Tenant, or disturb Tenant’s leasehold estate or rights hereunder, provided
that, in all events, no Event of Default then exists (any such agreement, or any
agreement of similar import, from a Mortgagee or any Superior Landlord being
hereinafter called a “Non-Disturbance Agreement”), and Tenant shall attorn to
the Mortgagee or any Superior Landlord, or any successor-in-interest to
Landlord, the Mortgagee or any Superior Landlord including without limitation,
any such party which takes title by foreclosure, power of sale, deed in lieu of
foreclosure, pursuant to a proceeding in bankruptcy or alternative procedure, or
any right or remedy under a Superior Lease or at law or in equity. The transfer
of the title to the Premises, any part thereof or any underlying lease to any
Mortgagee or any Superior Landlord, or any successor in interest to Landlord,
Mortgagee or any Superior Landlord by foreclosure, power of sale, deed in lieu
of foreclosure, pursuant to a proceeding in bankruptcy or any alternative
procedure, or any right or remedy under a Superior Lease or at law or in equity
shall not be considered a default or breach by Landlord of this Lease. This
Section 10.1 shall be self-operative and no further instrument of subordination
shall be required to make the interest of any Mortgagee or Superior Landlord, as
the case may be, superior to the interest of Tenant hereunder. Notwithstanding
the previous sentence, however, Tenant shall, together with the Mortgagee or any
Superior Landlord, as the case may be, execute and deliver promptly any
certificate or agreement that Landlord and any Mortgagee or Superior Landlord,
as the case may be, may reasonably request in confirmation of such
subordination, and in the event Tenant fails to deliver such certificate or
agreement within ten (10) Business Days of Tenant’s receipt thereof, Tenant
grants to Landlord and each Superior Landlord an irrevocable power of attorney
coupled with an interest for the purpose of executing and delivering any such
certificate or agreement for or on behalf of Tenant. Any Non-Disturbance
Agreement may be made on the condition that neither the Mortgagee nor any
Superior Landlord or anyone claiming by, through or under such Mortgagee or
Superior Landlord shall be:

(a)    liable for any act or omission of any prior Landlord (including, without
limitation, the then defaulting Landlord);

(b)    subject to any defense or offsets which Tenant may have against any prior
Landlord (including, without limitation, the then defaulting Landlord) which
arise prior to the date such Mortgagee (or someone acquiring at a foreclosure
sale related to the Mortgagee’s Mortgage) or Superior Landlord acquires title to
the Premises or any part thereof or interest therein;

(c)    bound by any payment of Rent which Tenant might have paid for more than
the current month to any prior Landlord (including, without limitation, the then
defaulting Landlord);

(d)    bound by any obligation to make any payment to Tenant which was required
to be made prior to the time such Landlord succeeded to any prior Landlord’s
interest;

(e)    bound by any obligation to perform any work or to make improvements to
the Premises;

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(f)    bound by any modification, amendment or supplement to this Lease made
without the prior written consent of the Mortgagee and/or each Superior
Landlord; or

(g)    bound by any security deposit for Tenant’s obligations under this Lease
unless such deposit is actually received by Mortgagee and/or a Superior
Landlord.

If required by any Mortgagee or Superior Landlord, Tenant promptly shall join in
any Non-Disturbance Agreement to indicate its concurrence with the provisions
thereof and its agreement, in the event of (x) a foreclosure of any Mortgage, or
(y) such Superior Landlord’s exercise any of its rights and remedies under such
Superior Lease or at law or in equity to terminate such Superior Lease or evict
the tenant thereunder, to attorn to such Mortgagee or Superior Landlord, as the
case may be, as Tenant’s landlord hereunder. Tenant shall promptly so accept,
execute and deliver any Non-Disturbance Agreement proposed by any Mortgagee or
Superior Landlord which conforms with the provisions of this Section 10.1. Any
Non-Disturbance Agreement may also contain other terms and conditions as may
otherwise be required by any Mortgagee or Superior Landlord which do not
increase Tenant’s monetary obligations or materially and adversely affect the
rights or obligations of Tenant under this Lease.

Section 10.2    Notice; Mortgagee Performance.

(a)    Tenant hereby agrees to give to any Mortgagee and Superior Landlord that
has provided Tenant with notice of its interest copies of all notices given by
Tenant of default by Landlord under this Lease at the same time and in the same
manner as, and whenever, Tenant shall give any such notice of default to
Landlord. Such Mortgagee and Superior Landlord shall have the right to remedy
any default under this Lease, or to cause any default of Landlord under this
Lease to be remedied, and for such purpose Tenant hereby grants such Mortgagee
and Superior Landlord such period of time as may be reasonable to enable such
Mortgagee or Superior Landlord to remedy, or cause to be remedied, any such
default in addition to the period given to Landlord for remedying, or causing to
be remedied, any such default which is a default; provided, however, in no event
shall such period of time exceed ninety (90) days beyond any set period of time
for Landlord’s cure of such default. Tenant shall accept performance by such
Mortgagee or the Superior Landlord of any term, covenant, condition or agreement
to be performed by Landlord under the Lease with the same force and effect as
though performed by Landlord. No default under the Lease shall exist or shall be
deemed to exist (i) as long as such Mortgagee or Superior Landlord, in good
faith, shall have commenced to cure such default and shall be prosecuting the
same to completion with reasonable diligence in accordance with this Section
10.2, subject to Force Majeure, or (ii) if possession of the Premises is
required in order to cure such default, or if such default is not susceptible of
being cured by such Mortgagee or Superior Landlord, as long as such Mortgagee or
Superior Landlord, in good faith, shall have notified Tenant that such Mortgagee
or Superior Landlord intends to institute proceedings under the Mortgage or the
Superior Lease, as applicable, and, thereafter, as long as such proceedings
shall have been instituted and shall prosecute the same with reasonable
diligence and, after having obtained possession, prosecutes the cure to
completion with reasonable diligence. This Lease shall not be assigned (subject
to the provisions of Article 9) by Tenant or modified, amended or terminated
without such Mortgagee’s and each Superior Landlord’s prior written consent in
each instance, which consent shall not be unreasonably withheld, conditioned or
delayed. In the event of the termination of this Lease by reason of any default
thereunder or for any other reason whatsoever except the expiration thereof,
upon such Mortgagee’s or Superior Landlord’s written request, given within
thirty (30) days after any such termination, Tenant, within fifteen (15) days
after receipt of such request, shall execute and deliver to such Mortgagee or
Superior Landlord or its designee or nominee a new lease of the Premises for the
remainder of the Term of the Lease upon all of the terms, covenants and
conditions of this Lease. Neither such Mortgagee nor Superior Landlord or its
designee or nominee shall become liable under this Lease unless and until such
Mortgagee, Superior Landlord or its designee or

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nominee becomes, and then only for so long as such Mortgagee, Superior Landlord
or its designee or nominee remains, the fee owner of the Premises or the owner
of the leasehold interest of Landlord under this Lease. Such Mortgagee and
Superior Landlord shall have the right, without Tenant’s consent, to, as the
case may be, foreclose the Mortgage or to accept a deed in lieu of foreclosure
of such Mortgage, or exercise its rights and remedies under such Superior Lease
or at law or in equity to terminate such Superior Lease or evict the tenant
thereunder.

(b)    In the event of any act or omission of Landlord which would give Tenant
the right, immediately or after lapse of a period of time, to cancel or
terminate this Lease, or to claim a partial or total eviction, Tenant shall not
exercise such right (i) until it has given written notice of such act or
omission to each Mortgagee and Superior Landlord that has provided Tenant with
notice of its interest, and (ii) unless such act or omission shall be one which
is not capable of being remedied by Landlord or such Mortgagee or Superior
Landlord within a reasonable period of time, until a reasonable period for
remedying such act or omission shall have elapsed following the giving of such
notice and following the time when such Mortgagee or Superior Landlord shall
have become entitled under the Mortgage or any other loan documents in
connection therewith or Superior Lease, as the case may be, to remedy the same
(which reasonable period shall in no event be less than the period to which
Landlord would be entitled under this Lease or otherwise, after similar notice,
to effect such remedy); provided, however, in no event shall such period of time
exceed ninety (90) days beyond any set period of time for Landlord’s cure of
such act or omission.

Section 10.3    Inability to Obtain Non-Disturbance Agreement. After a written
request by Tenant, Landlord shall use its commercially reasonable efforts to
obtain from the Mortgagee of the Mortgage and each Superior Landlord under a
Superior Lease (but only as to such Mortgagee or Superior Landlord whose
interest in the Premises (or any of the Facilities comprising the Premises)
arose after the Effective Date of this Lease) the Non-Disturbance Agreement
referred to in Section 10.1 above, but Landlord does not assure that such
Non-Disturbance Agreement can be obtained. Notwithstanding the inability to
obtain such Non-Disturbance Agreement, this Lease and all of the Operating
Subleases shall continue in full force and affect, provided, however, that in
such event, subject to the Mortgagee’s and each Superior Landlord’s written
consent, Landlord and Landlord’s Affiliates shall permit Tenant and Tenant’s
Affiliates to cure any defaults by Landlord and Landlord’s Affiliates under such
Mortgages by the payment of debt service thereunder and under such Superior
Lease by the payment of rent thereunder. Landlord and Landlord’s Affiliates, and
Tenant and Tenant’s Affiliates, shall implement a lock box arrangement whereby
Base Rent and Impositions payable monthly under this Lease shall be paid into
the lock box as required by the Mortgagee.

Section 10.4    Limitation of Tenant Termination Right. If (x) a Superior Lease
or Mortgage exists, and (y) Landlord gives Tenant notice thereof to Tenant, then
Tenant shall not seek to terminate this Lease by reason of Landlord’s default
hereunder until Tenant has given written notice of such default to the Superior
Landlords and the Mortgagees in either case at the addresses that have been
furnished to Tenant. If any such Superior Landlord or Mortgagee notifies Tenant,
within ten (10) Business Days after the date that such Superior Landlord or
Mortgagee receives such notice from Tenant, that such Superior Landlord or
Mortgagee intends to remedy such act or omission of Landlord, then Tenant shall
not have the right to so terminate this Lease unless such Superior Landlord or
Mortgagee fails to remedy such act or omission of Landlord within the period of
time set forth in Section 10.2 (it being understood that such Superior Landlord
or Mortgagee shall not have any liability to Tenant for the failure of such
Superior Landlord or Mortgagee to so remedy such act or omission of Landlord
during such period).

Section 10.5    Cooperation With Respect to Financing. 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

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therein (including this Lease), to secure any borrowing or other financing or
refinancing. Tenant shall cooperate with Landlord in connection with Landlord’s
efforts to obtain any such financing, including, without limitation, borrowing
or financing insured by the U.S. Department of Housing and Urban Development
Federal Housing Administration (“HUD”) under the provisions of Section 232 of
the National Housing Act, and the regulations promulgated thereunder, or any
other similar program (a “HUD Financing”), and financing with Fannie Mae or
Freddie Mac (“FM Financing”). If required by Landlord, Mortgagee, HUD and/or
Fannie Mae or Freddie Mac, Tenant shall (i) execute an amendment to this Lease
modifying its terms (other than a change in Base Rent or the Base Rent Rate,
which shall not be amended in such an amendment) to include those terms and
provisions required by such mortgagee, including without limitation those
required by HUD, Fannie Mae or Freddie Mac in connection with a HUD Financing, a
FM Financing or other financing, (ii) execute such other documentation required
by the Mortgagee, HUD, Fannie Mae or Freddie Mac in connection with the
financing, including without limitation control account agreements, deposit
account instructions service agreements, required regulatory agreements,
cross-default agreements and subordination, non-disturbance and attornment
agreements; (iii) cause its lender to execute such other documentation required
by the Mortgagee, HUD, Fannie Mae or Freddie Mac in connection with the
financing, including without limitation inter-creditor agreements and collateral
lien subordination agreements, (iv) execute a modification to the operating
agreement or partnership agreement of Tenant to comply with the then-applicable
HUD, Fannie Mae or Freddie Mac requirements for a special purpose entity, (v)
obtain and maintain policies of insurance required of Tenant, (vi) provide for
the escrow of ad valorem real estate taxes, insurance premiums and reserves,
including reserves or escrows for the repair and/or replacement of the Leased
Premises, critical or non-repair escrows, and any other required deposits and/or
hold-backs, and (vii) comply with HUD, Fannie Mae or Freddie Mac requirements
relating to Accounts Receivable financing and other financing secured by the
Landlord Lien Collateral. Similarly, if required by Landlord or its mortgagee,
Tenant shall cause all of the Operating Subtenants to (i) execute an amendment
to their respective Operating Sublease modifying its terms to include those
terms and provisions required by such mortgagee, including without limitation
those required by HUD in connection with a HUD Financing, or by Fannie Mae or
Freddie Mac in connection with a FM Financing or other financing, (ii) execute
such other documentation required by the Mortgagee, HUD, Fannie Mae or Freddie
Mac in connection with the financing, including without limitation control
account agreements, deposit account instructions service agreements, required
regulatory agreements, cross-default agreements and subordination,
non-disturbance and attornment agreements; (iii) cause the Operating Subtenant’s
lender to execute such other documentation required by the Mortgagee, HUD,
Fannie Mae or Freddie Mac in connection with the financing, including without
limitation inter-creditor agreements and collateral lien subordination
agreements; (iv) execute a modification to the operating agreement or
partnership agreement of the Operating Subtenant to comply with the
then-applicable HUD, Fannie Mae or Freddie Mac requirements for a special
purpose entity, (v) obtain and maintain policies of insurance required of
Operating Subtenant, (vi) provide for the escrow of ad valorem real estate
taxes, insurance premiums and reserves, and (vii) comply with HUD, Fannie Mae or
Freddie Mac requirements relating to Accounts Receivable financing and other
financing secured by the Landlord Lien Collateral. If the financing relates to
less than all of the Facilities constituting the Premises, then the
documentation that Tenant will execute (and that Tenant will cause the Operating
Subtenants to execute) may include an amendment to this Lease and the applicable
Operating Subleases removing said Facilities from the Premises covered by this
Lease and establishing a separate master lease agreement and sublease agreements
for said properties, in form and substance identical to this Lease and the
Operating Subleases, with proportionate modification to the economic terms
hereof and thereof. Reserves paid or required to be paid by Tenant hereunder
shall be used to satisfy the reserve requirements of HUD, Fannie Mae or Freddie
Mac or any Mortgagee, and any reserve requirements of HUD, Fannie Mae or Freddie
Mac or any Mortgagee in excess of reserves that Tenant is required to pay
pursuant to this Lease shall be funded by Tenant (and shall remain the property
of Landlord). Except as otherwise provided in this Section, if any of the HUD,
Fannie Mae, Freddie Mac or Mortgagee, or other mortgagee requirements set forth
in this paragraph or otherwise in this Lease call for the completion of certain
so-

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called “critical” repairs or improvements to the Premises in connection with the
funding of the applicable loan, then Tenant shall construct (or cause the
applicable Operating Subtenant to construct) the same and the cost thereof shall
be paid for from the CapEx Reserve Funds, as determined by Landlord. Tenant will
name Landlord’s Lender(s) as an additional insured promptly upon the request of
Landlord. If Landlord or any successor owner of the Premises conveys the Leased
Properties other than as security debt, including without limitation, a Facility
Mortgage, Landlord or such successor owner, as the case may be, except as
otherwise provided in this Lease, shall be released from all future liabilities
and obligations of Landlord under this 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; provided, however, that
such successor Landlord executes an assignment of lease or other such document,
reasonably agreeable to Tenant, assuming all of Landlord’s executory liabilities
and obligations under this Lease. Tenant shall perform the requirements of this
Section at Tenant’s sole cost and expense.

ARTICLE 11
OBLIGATIONS OF TENANT

Section 11.1    Compliance with Requirements. Whether or not Tenant is in
occupancy of all of the Buildings, Tenant shall promptly comply (and shall cause
each Operating Subtenant to comply) with all Applicable Laws with respect to the
Premises (or any part thereof) and/or the use and occupation thereof, whether
any of the same relate to or require (i) structural changes to or in and about
the Premises, or (ii) changes or requirements incident to or as the result of
any use or occupation thereof or otherwise (collectively, the “Requirements”),
and subject to Article 7, Tenant shall so perform and comply (and shall cause
each Operating Subtenant to perform and comply), whether or not such Applicable
Laws or Requirements shall now exist or shall hereafter be enacted or
promulgated and whether or not the same may be said to be within the present
contemplation of the parties hereto. The foregoing shall include, without
limitation, present and future compliance with the provisions of the Americans
with Disabilities Act. In addition, Tenant will comply (and will cause each
Operating Subtenant to comply) with the applicable provisions of ERISA and of
the regulations and published interpretations thereunder and shall furnish to
Landlord promptly after any officer of Tenant either knows, or has a reasonable
basis to know, notice that any violation or other reportable event (including
the events set forth in Section 4043(b) of ERISA) has occurred.

Section 11.2    Notices to Landlord. Tenant agrees to give Landlord notice of
any notice, assessment, claim, demand, communication, violation, summons,
complaint, investigation, sanction, termination, suspension, or revocation
served upon or received by Tenant (as set forth below) or for which Tenant is
otherwise aware and made, issued or adopted by any of the governmental
departments or agencies or authorities hereinbefore mentioned affecting (i) the
Premises, (ii) the use thereof or (iii) the financial condition of Tenant or an
Operating Subtenant, a copy of which is served upon or received by Tenant, or a
copy of which is posted on, or fastened or attached to the Premises, or
otherwise brought to the attention of Tenant in writing, by mailing within five
(5) Business Days after such service, receipt, posting, fastening or attaching
or after the same otherwise comes to the attention of Tenant in writing, a copy
of each and every one thereof to Landlord. At the same time, Tenant will inform
Landlord as to the Work or corrective measure which Tenant proposes to do or
take or that the Operating Subtenant proposes to do or undertake) in order to
comply therewith. Notwithstanding the foregoing, however, if such Work or
corrective measure would require any Alterations which would, in Landlord’s
opinion, reduce the value of the Premises or change the general character,
design or use of any of the Buildings or other improvements thereon, and if
Tenant does not desire to contest the same, Tenant shall, if Landlord so
requests, defer compliance therewith in order that Landlord may, if Landlord
wishes, contest or seek modification of or other relief with respect to such
Requirements, so long as Tenant is not put in violation of any Applicable Law,
but nothing herein shall relieve Tenant of the duty and obligation, at Tenant’s

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expense, to comply with such Requirements, or such Requirements as modified,
whenever Landlord shall so direct.

Section 11.3    Indemnity. Tenant shall defend, protect, indemnify and save
harmless Landlord, Mortgagee, each Superior Landlord, each of their respective
Affiliates, any shareholders, partners, members or managers thereof, any
shareholders, partners, members or managers of any such shareholders, partners,
members or managers, and any partners, members, managers, officers,
stock-holders, trustees, directors or employees of any of the foregoing and any
successors and/or assigns of any of the foregoing (each an “Indemnified Party”
and collectively, “Indemnified Parties”), from and against and shall reimburse
such parties for (a) any and all liabilities, obligations, losses, penalties,
costs, charges, sanctions, judgments, claims, causes of actions, suits, damages
and expenses (collectively, “Claims”) (1) arising from the use, occupancy and
operations of, in or about the Premises under this Lease during the Term of this
Lease, (2) arising from the ownership, operation, maintenance, management, use,
subleasing, regulation, development, expansion or construction of the Facilities
and/or provision of health services from or at the Facilities during the Term of
this Lease including, without limitation, (i) any of the foregoing relating to
that certain Master Deed, Conditions and Restrictions for Town Commons dated as
of August 14, 2001, as the same has been amended from time to time (the “Master
Deed”) and the Bylaws of the condominium association attached to the Master Deed
(the “Bylaws” and, together with the Master Deed, the “Condominium Documents”),
or (ii) the Riverside Gardens TIF (as defined in Section 26.9 below), (3)
arising from working capital or other operating liabilities relating to the
Facilities covered by this Lease on the date hereof, including without
limitation, Claims of Governmental Authorities and Third Party Payors, accounts
payable Claims, Recoupment Claims and similar retroactive adjustments, Claims by
or through patients, residents, customers of such Facilities or services,
employee obligations Claims, payroll and payroll overhead Claims, benefit
program Claims, and other Claims relating to the liabilities of the Facilities,
or (4) arise from a breach of this Lease by Tenant or (5) which may be imposed
upon or incurred or paid by or asserted against the Indemnified Parties by
reason of or in connection with (i) any accident, injury, death or damage to any
person or property occurring in, on or about the Premises or any portion thereof
or any adjacent street, alley, sidewalk, curb, or passageway; (ii) any changes,
alterations, repairs and anything done in, on or about the Premises or any part
thereof in connection with such changes, alterations and repairs; (iii) the use,
non-use, occupation, condition, operation, maintenance or management of the
Premises or any part thereof, or any adjacent street, alley, sidewalk, curb, or
passageway; (iv) any negligent act on the part of Tenant or any of its agents,
contractors, servants, employees, space tenants, licensees, assignees or
Subtenants; (v) the performance of any labor or services or the furnishing of
any materials or other property in respect of the Premises or any part thereof;
(vi) any violation by Tenant (or by any agent, contractor, or licensee then upon
or using the Premises) of any provision of this Lease (beyond the expiration of
all applicable notice and cure periods), including, but not limited to, Article
VII hereof, or any breach of any Applicable Law by Tenant or its agents,
concessionaires, contractors, servants, vendors, materialmen or suppliers; or
(vii) the condition of the Premises, or of any buildings or other structures now
or hereafter situated thereon, or the fixtures or personal property thereon or
therein, to the extent such events described in the foregoing clauses (i)
through (vii) occur prior to or during the Term; and (b) all costs, expenses and
liabilities incurred, including actual and reasonable attorney’s fees and
disbursements through and including appellate proceedings, in or in connection
with any of such Claims; provided, however, that Tenant shall have no such
obligation to defend, protect, indemnify and save harmless the Indemnified
Parties to the extent that such Claims arise out of the gross negligence or
willful misconduct of an Indemnified Party or the Indemnified Parties. If any
action or proceeding shall be brought against any of the Indemnified Parties by
reason of any such Claims, Tenant, upon notice from any of the Indemnified
Parties, shall resist and defend such action or proceeding, at its sole cost and
expense by counsel to be selected by Tenant but otherwise satisfactory to such
Indemnified Party in its reasonable discretion. Tenant or its counsel shall keep
each Indemnified Party fully apprised at all times of the status of such
defense. If Tenant shall fail to defend such action or proceeding, such an
Indemnified Party may retain its

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own attorneys to defend or assist in defending any such claim, action or
proceeding, and Tenant shall pay the reasonable fees and actual disbursements of
such attorneys. The terms and provisions of this Section 11.3 shall not in any
way be affected by the absence of insurance covering such occurrence or claim or
by the failure or refusal of any insurance company to perform any obligation on
its part. The provisions of this Section 11.3 shall survive the expiration or
earlier termination of this Lease. Tenant shall not enter into any settlement of
a Claim which would impose a monetary liability on Landlord, without the written
consent of Landlord. Any insurance proceeds actually received by an Indemnified
Party shall be credited against the indemnification otherwise to be provided
herein. An Indemnified Party shall give prompt written notice to Tenant of any
Claim for which it seeks indemnification hereunder, but delay in providing such
notice shall not relieve Tenant of its indemnification obligations, except to
the extent such delay materially prejudiced Tenant’s ability to defend such
Claim. Nothing contained herein shall be construed to create a benefit for a
third party.

Section 11.4    Mechanics’ Liens. If at any time prior to or during the Term (or
within the statutory period thereafter if attributable to Tenant), any
mechanic’s or other lien or order for payment of money, which shall have been
either created by, caused (directly or indirectly) by, or suffered against
Tenant or any Subtenant, shall be filed against the Premises or any part
thereof, Tenant, at its sole cost and expense, shall cause the same to be
discharged by payment, bonding or otherwise, within thirty (30) days after
Tenant receives notice of the filing thereof unless such lien or order is
contested by Tenant in good faith and Tenant provides sufficient security or
evidence of financial ability, in each case to the satisfaction of Landlord (in
its sole and absolute discretion), to pay the amount of such lien or order.
Tenant shall, upon notice and request in writing by Landlord, defend for
Landlord, at Tenant’s sole cost and expense, any action or proceeding which may
be brought on or for the enforcement of any such lien or order for payment of
money, and will pay any damages and satisfy and discharge any judgment entered
in such action or proceeding and save harmless Landlord from any liability,
claim or damage resulting therefrom. In default of Tenant’s procuring the
discharge or bonding over of any such lien as aforesaid Landlord may, without
notice, and without prejudice to its other remedies hereunder, procure the
discharge thereof by bonding or payment or otherwise, and all cost and expense
which Landlord shall incur shall be paid by Tenant to Landlord as Supplementary
Rent forthwith.

Section 11.5    Non-Liability of Landlord; Liens. Landlord shall not under any
circumstances be liable to pay for any work, labor or services rendered or
materials furnished to or for the account of Tenant or any Subtenant upon or in
connection with the Premises, and no mechanic’s or other lien for such work,
labor or services or material furnished shall, under any circumstances, attach
to or affect the reversionary interest of Landlord in and to the Premises or any
alterations, repairs, or improvements to be erected or made thereon. Nothing
contained in this Lease shall be deemed or construed in any way as constituting
the request or consent of Landlord, either express or implied, to any
contractor, subcontractor, laborer or materialman for the performance of any
labor or the furnishing of any materials for any specific improvement,
alteration to or repair of the Premises or any part thereof, nor as giving
Tenant or any Subtenant any right, power or authority to contract for or permit
the rendering of any services or the furnishing of any materials on behalf of
Landlord that would give rise to the filing of any lien against the Premises.

Section 11.6    Non-Liability of Landlord. Except for matters to the extent
arising out of the gross negligence or willful misconduct of Landlord, neither
Landlord nor its agents shall be liable for any loss of or damage to the
property of Tenant or others by reason of casualty, theft or otherwise, or due
to any interruption or failure of any services or use or the operation or
management of the Premises, or due to any building on the Premises being
defective or improperly constructed, or being or becoming out of repair, or for
any injury or damage to persons or property resulting from any cause of
whatsoever nature.

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Section 11.7    No Services Furnished. Landlord shall not be required to furnish
to Tenant any facilities or services of any kind whatsoever, including, but not
limited to, water, steam, heat, gas, oil, hot water, and/or electricity, all of
which Tenant represents and warrants that Tenant has obtained from the public
utility supplying the same, at Tenant’s sole cost and expense. Upon Tenant’s
written request, however, Landlord agrees to cooperate with Tenant (at no cost
to Landlord) with respect to such services.

Section 11.8    Special-Purpose Entity. Tenant, from its formation has been, and
at all times hereafter shall be a Special-Purpose Entity.

Section 11.9    Leased Personal Property.

(a)    No Representation or Warranty. Tenant acknowledges that: Landlord is not
the manufacturer of Leased Personal Property nor the manufacturer’s or
supplier’s agent; Tenant is satisfied that the Leased Personal Property is
suitable and fit for its purposes; and TENANT ACKNOWLEDGES THAT LANDLORD HAS NOT
MADE AND DOES NOT MAKE ANY WARRANTY OR REPRESENTATION WHATSOEVER, EITHER EXPRESS
OR IMPLIED, AS TO THE FITNESS, CONDITION, MERCHANTABILITY, DESIGN OR OPERATION
OF LEASED PERSONAL PROPERTY, ITS FITNESS FOR ANY PARTICULAR PURPOSE, THE QUALITY
OR CAPACITY OF THE MATERIALS IN LEASED PERSONAL PROPERTY OR WORKMANSHIP IN
LEASED PERSONAL PROPERTY, LANDLORD’S TITLE TO LEASED PERSONAL PROPERTY, NOR ANY
OTHER REPRESENTATION OR WARRANTY WHATSOEVER; Landlord shall not be liable to
Tenant for any loss, damage or expense of any kind or nature caused, directly or
indirectly, by Leased Personal Property or the use or maintenance thereof or the
failure or operation thereof, or the repair, service or adjustment thereof, or
by any delay or failure to provide any such maintenance, repairs, service or
adjustment, or by any interruption of service or loss of use thereof or for any
loss of business however caused. Landlord shall not be liable for any
consequential damages as that term is used in the Uniform Commercial Code. No
defect or unfitness of Leased Personal Property shall relieve Tenant of the
obligation to pay any installment of Rent or any other obligation under this
Lease.

(b)    Title. Title to the Leased Personal Property shall at all times be vested
in Landlord. Tenant authorizes Landlord, at Tenant’s expense, to cause a
statement or other instrument in respect of this Lease showing the interest of
Landlord in the Leased Personal Property, including Uniform Commercial Code
Financing Statements, to be filed or recorded, and appoints Landlord as Tenant’s
attorney-in-fact with the right and power to sign Tenant’s name thereto. Tenant
agrees to execute or procure for Landlord such estoppel certificates, landlord’s
or mortgagee’s waivers or other documents as Landlord may request to confirm or
perfect Landlord’s right in the Leased Personal Property or to otherwise
effectuate the intents of this Lease. Tenant agrees to pay or reimburse Landlord
for any filing, recording or stamp fees or taxes arising from the filing or
recording of any such instrument or statement. Tenant shall, at its expense,
protect and defend Landlord’s title against all persons claiming against or
through Tenant, keep the Leased Personal Property free from legal process or
encumbrance, give Landlord immediate notice thereof and shall indemnify Landlord
from any loss caused thereby. So long as Tenant is not in Default hereunder,
Tenant shall quietly use and enjoy the Leased Personal Property, subject to the
terms hereof.

(c)    Maintenance, Repair, Etc. Tenant shall: maintain the Leased Personal
Property in good operating condition, repair and appearance, and protect it from
deterioration other than normal wear and tear; use the Leased Personal Property
in the regular course of its business, within its normal operating capacity,
without abuse; comply with all laws, ordinances, regulations, requirements and
rules with respect to the use, maintenance and operation of the Leased Personal
Property; use the Leased Personal Property solely for the operation of the
Facilities; not make any modification, alteration or addition to the Leased
Personal Property without the written consent of Landlord, other than repairs
and

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replacements in the ordinary course of Tenant’s business, not affix the Leased
Personal Property (which shall remain personal property at all times regardless
of how attached or installed) to realty so as to change its nature to real
property or a fixture; and keep the Leased Personal Property at the Premises,
and not remove Leased Personal Property (except in the ordinary course of
Tenant’s or the Operating Subtenant’s business, but then only if returned to the
Premises or replaced with an item of equal or greater value and functionality)
without the written consent of Landlord. Tenant, at its sole expense, shall
enter into and maintain in force, for the Term of this Lease, any maintenance
contracts required by the manufacturer of the Leased Personal Property, and
shall provide to Landlord a copy of such contract and all supplements thereto
promptly upon receipt of Landlord’s written request.

(d)    Net Obligation. Tenant therefore covenants and agrees to pay and
discharge on a timely basis, as additional rental hereunder, all costs,
expenses, and obligations of every kind and nature whatsoever relating to the
Leased Personal Property which may arise or become due during the Term (or which
arose or became due prior to the Term and were not paid as of the Effective
Date), including, without limitation, all Taxes and all interest or penalties
related thereto. Tenant will furnish to Landlord, promptly upon receipt of
Landlord’s written request, proof of payment of such amounts. If any such
assessment may legally be paid in installments, Tenant may pay such assessment
in installments; in such event, Tenant shall be liable only for installments
which become due and payable with respect to any tax period occurring in whole
or in part during the Term hereof (or which became due prior to the Term).

(e)    Indemnity. Except for matters to the extent arising out of the gross
negligence or willful misconduct of Landlord, Tenant shall indemnify and hold
Landlord harmless from and against all claims, losses, liabilities (including
negligence, tort and strict liability), damages, judgments, suits and all legal
proceedings, and any and all costs and expenses in connection therewith
(including reasonable attorneys’ fees) arising out of or in any manner connected
with the possession, use, storage, operation, maintenance, repair, and
disposition of the Leased Personal Property, including, without limitation, (a)
claims for injury to or death of persons and for damage to property, and (b)
claims relating to latent or other defects in the Leased Personal Property
whether or not discoverable by Landlord.

(f)    Risk of Loss. All risks of loss, theft, damage or destruction of the
Leased Personal Property from any cause shall be borne by Tenant. The occurrence
of such loss or damage shall not relieve Tenant of any obligations hereunder. In
the event of loss or damage, Tenant, at Tenant’s option, shall: (a) place the
damaged Leased Personal Property in good repair, condition and working order, or
(b) replace lost or damaged Leased Personal Property with new equipment of the
same type and model, or functionally equivalent new equipment. All replacements
of the Leased Personal Property shall constitute Tenant’s Personal Property and
be subject to the rights, security interests and liens granted to Landlord in
this Lease.

(g)    No Assignment. Tenant shall not assign, transfer, convey or grant a
security interest in the Leased Personal Property or any interest therein
without the prior written consent of Landlord, which consent Landlord may
withhold in its sole discretion, except that Tenant may sublease the Leased
Personal Property for a Facility to an Operating Subtenant of that Facility.

(h)    Insurance. Tenant shall, at Tenant’s sole cost and expense, keep the
Leased Personal Property insured against all risks of loss or damage from every
cause whatsoever for not less than the full replacement cost thereof. Tenant
shall also obtain and maintain in effect throughout the term, public liability
insurance, covering both personal injury and property damage arising out of or
in connection with the use or operation of the Leased Personal Property. All
insurance shall be in such form and for such amounts, and issued by such
companies, as shall be acceptable to Landlord and shall name Landlord and
Landlord’s assignee or secured party as loss payees with respect to the casualty
coverage and as additional insured with respect to public liability coverage and
shall provide for the notice

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requirements described in Section 6.5 hereof. Tenant shall, upon Landlord’s
written request, deliver to Landlord satisfactory evidence of the required
insurance coverage.

(i)    Collateral. In order to secure the prompt payment of the Rent and all of
the other amounts from time to time outstanding hereunder, and the performance
and observance by Tenant of all of the provisions hereof, Tenant hereby
collaterally assigns, grants, and conveys to Landlord, a security interest in
and lien on all of Tenant’s right, title and interest in and to all of the
following (whether now existing or hereafter created, the “Collateral”): (1) (if
contrary to the parties’ intentions a court determines that this Lease is not a
true “lease” under any applicable Uniform Commercial Code) the Leased Personal
Property (including all fixtures or other property comprising the Leased
Personal Property), together with all related software (embedded therein or
otherwise), all additions, attachments, accessories and accessions thereto
whether or not furnished by the supplier; (2) all subleases of the Leased
Personal Property and all payments due thereunder, any chattel paper, accounts,
security deposits, and general intangibles generated by such sublease, and any
and all substitutions, replacements or exchanges for any such item of the Leased
Personal Property, in each such case in which Tenant shall from time to time
acquire an interest; and (3) any and all insurance and/or other proceeds of the
property described in clauses (1) and (2) of this Section 11.9(i) in and against
which a security interest is granted hereunder. The collateral assignment,
security interest and lien granted herein shall survive the termination,
cancellation or expiration of the Lease until such time as Tenant’s obligations
hereunder are fully and indefeasibly discharged. Tenant agrees that: (a) with
respect to the Leased Personal Property, in addition to all of the other rights
and remedies available to Landlord hereunder upon the occurrence of an Event of
Default, Landlord shall have all of the rights and remedies of a secured party
under any applicable Uniform Commercial Code and all other applicable law; and
(b) any obligation to pay Rent or any other payment, to the extent constituting
the payment of interest, shall be at an interest rate that is equal to the
lesser of the maximum lawful rate permitted by applicable law or the effective
interest rate used by Landlord in calculating such amounts pursuant to this
Lease.

(j)    For purposes of this Article 11.9, the term “Leased Personal Property”
shall include “Tenant’s Personal Property,” except that title to Tenant’s
Personal Property shall remain vested in Tenant except as otherwise provided
herein.
Section 11.10    Tenant shall comply (and shall cause each Subtenant to comply)
in all material respects with all Mortgage Loan Documents.

ARTICLE 12
DEFAULT BY TENANT; REMEDIES

Section 12.1    Events of Default Defined. Each of the following shall be deemed
an event of default (an “Event of Default”) and a breach of this Lease by
Tenant:

(a)    The failure of Tenant to pay when due, any portion of any installment of
Base Rent, Supplementary Rent or any other monetary charge due from Tenant under
this Lease where such failure continues for a period of three (3) Business Days
after Tenant’s receipt of Landlord’s written notice of such failure, except that
Landlord shall not be required to deliver such notice more than twice in any
twelve (12) month period.

(b)    The failure of Tenant to comply with or observe any of the other
provisions, agreements, conditions, covenants or terms contained in Sections
4.1, 6.1, 9.19, 10.1, 12.15, 14.1, 14.2, 16.1, 16.4, 25.4 of this Lease, and
such failure continues for five (5) Business Days after written notice thereof
to Tenant.

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(c)    The failure of Tenant to comply with or observe any of the other
provisions, agreements, conditions, covenants or terms contained in this Lease
not addressed in the preceding two paragraphs of this Section, and such failure
continues for thirty (30) days after written notice thereof to Tenant (or if
such default is of such a nature that it cannot be completely remedied within
said thirty (30) day period, then if Tenant does not agree in writing within
such thirty (30) day period to cure the same, commence and thereafter diligently
prosecute the cure and complete the cure within ninety (90) days after such
original written notice of default by Landlord to Tenant).

(d)    If Tenant shall Transfer all or any of its interest in the Premises or
this Lease without strict compliance with Article 9 of this Lease; or if Tenant
shall permit an Operating Subtenant to Transfer all or any of its interest in
the Premises or the Operating Sublease without strict compliance with Article 9
of this Lease.

(e)    The (i) initiation of any proceeding whereupon the estate or interest of
Tenant in the Premises, or any portion thereof, or in this Lease is levied upon
or attached, or (ii) taking of Tenant’s leasehold estate by execution or other
process of law other than as provided in Article 8, which proceeding or taking,
as the case may be, is not vacated, discharged, dismissed or otherwise reversed
within ninety (90) days thereafter.

(f)    An Event of Default under and as defined in any of the Subleases,
including the Operating Subleases.

(g)    Tenant shall desert, vacate or fail, or fail to cause a Subtenant, to
physically occupy any portion of the Premises for more than fifteen (15)
consecutive days, excluding a permitted closure permitted under this Lease and
destruction of the Premises or the Premises for a particular Facility prior to
completion of the Restoration, and condemnation of the Premises or the Premises
for a particular Facility, to the extent that Tenant must wholly or partially
vacate the Premises to effect a Restoration.

(h)    If (i) Tenant, Operating Subtenant or Guarantor shall commence any case,
proceeding or other action (A) under any existing or future Applicable Law
relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking
to have an order for relief entered with respect to Tenant, Operating Subtenant
or Guarantor, or seeking to adjudicate Tenant, Operating Subtenant or Guarantor
a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment,
liquidation, dissolution, composition or other relief with respect to such
Person or its debts, or (B) seeking appointment of a receiver, trustee,
custodian or other similar official for Tenant, Operating Subtenant or Guarantor
or for all or any substantial part of its property; or (ii) Tenant, Operating
Subtenant or Guarantor shall become insolvent or make a general assignment for
the benefit of Tenant’s creditors or shall make a transfer in fraud of
creditors; or (iii) there shall be commenced against Tenant, Operating Subtenant
or Guarantor any case, proceeding or other action of a nature referred to in
clause (i) above (including involuntary bankruptcy) or seeking issuance of a
warrant of attachment, execution, distraint or similar process against all or
any substantial part of its property, which case, proceeding or other action (A)
results in the entry of an order for relief or (B) remains undismissed,
undischarged or unbonded for a period of ninety (90) days; or (iv) Tenant,
Operating Subtenant or Guarantor shall take any action consenting to or
approving of any of the acts set forth in clause (i) or (ii) above; or (v)
Tenant, Operating Subtenant or Guarantor shall generally not, or shall be unable
to, pay its debts as they become due or shall admit in writing its inability to
pay its debts.

(i)    Each of Tenant, Operating Subtenant and Guarantor (that is an entity) is
a corporation (or partnership or limited liability company) and shall cease to
exist as a corporation (or partnership or limited liability company) in good
standing in the state of its incorporation (or formation) (unless it
simultaneously becomes incorporated (or formed) and in good standing in another
state) or if

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any of Tenant, Operating Subtenant or Guarantor is a partnership or limited
liability company or other entity and it shall be dissolved or otherwise
liquidated, then, in the event of any of the foregoing, if the Person does not
completely remedy such default within the thirty (30) day period following its
receipt of written notice of such default.

(j)    Tenant or any Operating Subtenant fails or refuses to execute any
certificate or agreement that Landlord or Mortgagee may reasonably request
confirming the subordination required pursuant to Article 10 or estoppel
certificate required pursuant to Article 14 within ten (10) days after Tenant’s
receipt thereof.

(k)    Any revocation, termination, suspension, decertification or other loss of
any Health Care License or Provider Agreement by any Operating Subtenant
relating to any of the Facilities or health care services provided at or from
any of the Facilities or the taking of any action by a Governmental Authority
requiring the suspension, closure or inability to operate any of the Facilities
as a long-term care facility; provided, that in the case of a suspension or
other action which is temporary and not irrevocable and which does not require
the closure of all or any portion of a Facility, Tenant shall have failed to
fully cure the applicable violations and restore use of the Facility to the
Permitted Use within the earlier to occur of (A) the time for cure set by the
Governmental Authority, or (B) one hundred twenty (120) days, provided that
Landlord shall, in its reasonable discretion, permit such longer period of time
(not to exceed the time for cure set by the Governmental Authority) to the
extent (1) Tenant continues to promptly, continuously and with diligence pursue
the cure, (2) Tenant keeps Landlord reasonably apprised of its progress, and (3)
no other Event of Default is continuing under this Lease; and provided further,
that Landlord shall not be obligated to grant Tenant any additional period of
time to cure to the extent the absence of a cure during such additional period
of time would have a Material Adverse Effect on the financial condition of a
particular Facility and/or Tenant’s and the applicable Operating Subtenant’s
ability to perform its obligations under this Lease and the applicable Operating
Sublease.

(l)    Any suspension, debarment or disqualification of Tenant, any of the
Operating Subtenants or their respective Affiliates from being a health care
provider, government contractor, holder of any Health Care License or recipient
of reimbursement from any Third Party Payor.

(m)    If Tenant gives its consent or approval to an Operating Subtenant
required by the Operating Sublease without first obtaining the prior written
consent or approval of Landlord if such consent of Landlord is required under
the terms of this Lease.

(n)    If at any time during the Term or any extension or renewal thereof the
Rent Coverage Ratio is 1.10:1.00 or less on a Test Date, then the occurrence of
such event automatically shall constitute an Event of Default upon written
notice to Tenant, without a further opportunity for Tenant to cure such Event of
Default.

(o)    A default or an event of default under any of the Mortgage Loan Documents
resulting from Tenant or any Subtenant’s failure to comply with and/or observe
the terms of this Lease and/or the Mortgage Loan Documents; provided, however,
that the foregoing shall not apply to a default or an event of default under any
of the Mortgage Loan Documents arising solely as a result of Landlord’s failure
to timely pay debt service (principal and interest) and MIP under the Mortgage
Loan Documents if Tenant has satisfied its obligations under this Lease to pay
Rent.

(p)    A default or an event of default under any of the Guaranties, the Other
Leases, or any other agreement between (i) any of Landlord and/or its
Affiliates, and (ii) any of Tenant and/or its Affiliates (collectively,
“Ancillary Agreements”).

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(q)    A default under the Working Capital Loan or any document executed in
connection therewith by any party other than Working Capital Lender.

Section 12.2    Remedies. Upon the occurrence of an Event of Default, Landlord
may, at any time thereafter, without limiting Landlord in the exercise of any
right or remedy at law or in equity that Landlord may have by reason of such
Event of Default, at its option pursue any one or more of the following remedies
without any further notice or demand whatsoever:

(a)    Terminate this Lease and all of the Subleases by issuing written notice
of termination to Tenant, in which event Tenant shall immediately surrender the
Premises to Landlord, but if Tenant shall fail to do so, Landlord may without
notice and without prejudice to any other remedy Landlord may have, peaceably
enter upon and take possession of the Premises and expel or remove Tenant and
its effects without being liable to prosecution or any claim for damages
therefor, and upon any such termination, Tenant agrees that in addition to its
liability for the payment of arrearages of Base Rent, Supplementary Rent and
other sums due and owing by Tenant to Landlord under this Lease upon such
termination, Tenant shall be liable to Landlord for damages. Tenant shall pay to
Landlord as damages on the same days as Base Rent and other payments which are
expressed to be due under the provisions of this Lease, the total amount of such
Base Rent and other payments plus a reimbursement for all unamortized tenant
allowances and concessions, less such part, if any, of such payments that
Landlord shall have been able to collect from a new tenant upon reletting;
provided, however, that Landlord shall have no obligation to this Tenant to
relet the Premises so as to mitigate the amount for which Tenant is liable.

Landlord shall have the right at any time to demand final settlement. Upon
demand for a final settlement, Landlord shall have the right to receive, and
Tenant hereby agrees to pay, as damages for Tenant’s breach, the total rental
provided for in this Lease for the remainder of the Term. In addition to the
other remedies reserved to Landlord herein, and to the extent not prohibited by
law, if Landlord elects to terminate this Lease following an Event of Default,
Landlord shall be entitled to recover from Tenant the aggregate of: (i) the
amount of unpaid Rent earned as of the date of the termination hereof; (ii) the
worth at the time of award of the amount by which the unpaid Rent which would
have been earned after the date of termination hereof until the time of award
exceeds the amount of such Rental loss that Tenant proves could have been
reasonably avoided; (iii) 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 award exceeds the
amount of such Rental loss that Tenant proves could have been reasonably
avoided; (iv) any other amount necessary to compensate Landlord for the
detriment proximately caused by Tenant’s failure to perform its obligations
under this Lease or which, in the ordinary course of things, would be likely to
result therefrom; and (v) any other amount which Landlord may hereafter be
permitted to recover from Tenant to compensate Landlord for the detriment caused
by Tenant’s default. For the purposes hereof, “Rent" shall be deemed to be and
to mean all sums of every nature required to be paid by Tenant pursuant to the
terms of this Lease, the “time of award” means the date upon which the judgment
in any action brought by Landlord against Tenant by reason of such Event of
Default is entered or such earlier date as the court may determine; the “worth
at the time of award” of the amounts referred to in subclauses (i) and (ii) of
this paragraph shall be computed by allowing interest on such amounts at the
Default Rate; and the “worth at the time of award” of the amount referred to in
subclause (iii) of this paragraph shall be computed by discounting such amount
at the discount rate of the Federal Reserve Bank of New York at the time of
award plus one percent (1%) per annum.

(b)    Enter upon and take possession of the Premises without terminating this
Lease and expel or remove Tenant and any Subtenant and their effects therefrom
without being liable to prosecution or any claim for damages therefor, and
Landlord may relet the Premises for the account of Tenant. Tenant shall pay to
Landlord all arrearages of Base Rent, Supplementary Rent and other sums due

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and owing by Tenant to Landlord, and Tenant shall also pay to Landlord during
each month of the unexpired Term the installments of Base Rent and other sums
due hereunder, less such part, if any, that Landlord shall have, been able to
collect from a new tenant upon reletting; provided, however, that Landlord shall
have no obligation to Tenant to relet the Premises so as to mitigate the amount
for which Tenant is liable. In the event Landlord exercises the rights and
remedies afforded to it under this Section 12.2(b) and then subsequently elects
to terminate this Lease, Tenant shall be liable to Landlord for damages as set
forth in Section 12.2(a) above and Landlord shall have the right at any time to
demand final settlement as provided therein.

(c)    Cause the transfer of Health Care Licenses relating to the Facilities and
the operation and management of the Facilities and leasing of the Premises to
any replacement operator, manager or tenant of the applicable Facility
identified by Landlord, to the extent permitted by Applicable Law, and seek the
approval of Governmental Authorities in connection therewith, in which event
Tenant shall cooperate with Landlord (and shall cause Operating Subtenant to
cooperate with Landlord) to transfer all books and records relating to the
Facilities and transition services to the replacement operator tenant in
accordance with the provisions of Section 16.1 so as to provide continuation of
patient or resident care and minimize disruption. Tenant shall cooperate (and
shall cause Operating Subtenant to cooperate) with Landlord to complete the
relevant application or transfer process as expeditiously as possible. All fees
and other expenses shall be the obligation of Tenant.

(d)    Enforce, by all legal suits and other means, its rights hereunder,
including the collection of Rent and other sums payable by Tenant hereunder,
without re-entering or resuming possession of the Premises and without
terminating this Lease.

(e)    Landlord may do whatever Tenant is obligated to do by the provisions of
this Lease, may peaceably enter the Premises in order to accomplish this purpose
and may make any expenditure or incur any obligation for the payment of money in
connection therewith, including, without limitation, reasonable attorneys’ fees
and expenses. Tenant agrees to reimburse Landlord immediately upon demand for
any expenses which Landlord may incur in its actions pursuant to this Section
12.2(e), with interest thereon at the Default Rate from the date of demand until
paid and such amount shall be deemed to be Supplementary Rent hereunder. Tenant
further agrees that Landlord shall not be liable for damages resulting to Tenant
from such action.

(f)    To the extent permitted by Applicable Law and in compliance with the
requirements of Health Care Licenses and Governmental Authorities, and in
coordination with a transition to a replacement facility operator or manager,
Landlord may peaceably enter upon the Premises and change, alter, or modify the
door locks on all entry doors of the Premises, and permanently or temporarily
exclude Tenant, and its agents, employees, representatives and invitees, from
the Premises. In the event that Landlord either permanently excludes Tenant from
the Premises or terminates this Lease on account of Tenant’s Default, Landlord
shall not be obligated thereafter to provide Tenant with a key to the Premises
at any time, regardless of any amounts subsequently paid by Tenant. If Landlord
elects to exclude Tenant from the Premises temporarily without permanently
repossessing the Premises or terminating this Lease, then Landlord shall not be
obligated to provide Tenant with a key to renter the Premises until such time as
all delinquent rent and other amounts due under this Lease have been paid in
full and all other defaults, if any, have been cured and Tenant shall have given
Landlord evidence reasonably satisfactory to Landlord that Tenant has the
ability to comply with its remaining obligations under this Lease; and if
Landlord temporarily excludes Tenant from the Premises, Landlord shall have the
right thereafter to permanently exclude Tenant from the Premises or terminate
this Lease at any time before Tenant pays all delinquent rent, cures all other
defaults and furnishes such evidence to Landlord. A key to the Premises will be
furnished to Tenant only during Landlord’s normal business hours. Landlord’s
exclusion of Tenant from the Premises shall not constitute a permanent exclusion
of Tenant from the

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Premises or a termination of this Lease unless Landlord so notifies Tenant in
writing. Landlord shall not be obligated to place a written notice on the
Premises on the front door thereof explaining Landlord’s action or stating the
name, address or telephone number of any individual or company from which a new
key may be obtained. In the event Landlord permanently or temporarily excludes
Tenant from the Premises or terminates this Lease, and Tenant owns property that
has been left in the Premises but which is not subject to any statutory or
contractual lien or security interest held by Landlord as security for Tenant’s
obligations, Tenant shall have the right to promptly so notify Landlord in
writing, specifying the items of property not covered by any such lien or
security interest and which Tenant desires to retrieve from the Premises.
Landlord shall have the right to either (i) escort Tenant to the Premises to
allow Tenant to retrieve Tenant’s property not covered by any such lien or
security interest, or (ii) remove such property itself and make it available to
Tenant at a time and place designated by Landlord. In the event Landlord elects
to remove such property itself as provided in the immediately preceding clause
(ii), Landlord shall not be obligated to remove such property or deliver it to
Tenant unless Tenant shall pay to Landlord, in advance, an amount of cash equal
to the amount that Landlord estimates Landlord will be required to expend in
order to remove such property and to repair any damage caused by such removal
and to make such property available to Tenant, including all moving or storage
charges theretofore or thereafter incurred by Landlord with respect to such
property. If Tenant pays such estimated amount to Landlord and the actual amount
incurred by Landlord differs from the estimated amount, Tenant shall pay any
additional amounts to Landlord on demand or Landlord shall refund any excess
amounts paid by Tenant to Tenant on demand.

Pursuit of any of the foregoing remedies shall not preclude pursuit of any of
the other remedies herein provided or any other remedies provided by law or
equity. Exercise of such remedies shall be in compliance with the requirements
of Health Care Licenses and Governmental Authorities, and in coordination with a
transition to a replacement facility operator or manager. Any entry by Landlord
upon the Premises may be by use of a master or duplicate key or electronic pass
card or any locksmith’s entry procedure or other means. Any reletting by
Landlord shall be without notice to Tenant, and if Landlord has not terminated
this Lease, the reletting may be in the name of Tenant or Landlord, as Landlord
shall elect. Any reletting shall be for such term or terms (which may be greater
or less than the period which, in the absence of a termination of this Lease,
would otherwise constitute the balance of the Term) and on such terms and
conditions (which may include free rent, rental concessions or tenant
inducements of any nature) as Landlord in its sole and absolute discretion may
determine, and Landlord may collect and receive any rents payable by reason of
such reletting. In the event of any reletting, Tenant shall pay to Landlord on
demand the cost of renovating, repairing and altering the Premises for a new
tenant or tenants, and the cost of advertisements, brokerage fees, reasonable
attorney’s fees and other costs and expenses incurred by Landlord in connection
with such reletting. In the event any rentals actually collected by Landlord
upon any such reletting for any calendar month are in excess of the amount of
rental payable by Tenant under this Lease for the same calendar month, the
amount of such excess shall belong solely to Landlord and Tenant shall have no
right with respect thereto. In the event it is necessary for Landlord to
institute suit against Tenant in order to collect the rental due hereunder or
any deficiency between the rental provided for by this Lease for a calendar
month and the rental actually collected by Landlord for such calendar month,
Landlord shall have the right to allow such deficiency to accumulate and to
bring an action upon several or all of such rental deficiencies at one time. No
suit shall prejudice in any way the right of Landlord to bring a similar action
for any subsequent rental deficiency or deficiencies.

Section 12.3    Additional Rights. Subject to the terms of Section 12.2 above
and Applicable Law, upon the exercise by Landlord of any of the remedies
contained in this Lease, at law or in equity:

(a)    Tenant shall pay to Landlord all Rent payable under this Lease by Tenant
to Landlord to the date upon which this Lease or Tenant’s right to possess the
Premises shall have been

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terminated or to the date of re-entry upon the Premises by Landlord, as the case
may be. Additionally, Tenant shall pay to Landlord all costs incurred by
Landlord (including court costs and reasonable attorneys’ fees and expenses) in
(i) obtaining possession of the Premises, (ii) removing and storing Tenant’s or
any other occupant’s property, (iii) repairing any damage to the Premises, and
(iv) performing any of Tenant’s unperformed obligations.

(b)    No re-entry or taking possession of the Premises by Landlord shall be
construed as an election on its part to terminate this Lease, unless written
notice of such intention be given to Tenant by Landlord. Notwithstanding any
such reletting or re-entry to take possession, Landlord may at any time
thereafter elect to terminate this Lease for a previous then continuing uncured
Default. No act or thing done by Landlord or its agents during the term hereby
granted shall be deemed an acceptance of a surrender of the Premises, and no
agreement to accept a surrender of the Premises shall be valid unless the same
be made in writing by Landlord.

Section 12.4    Continuing Tenant Liability. Absent termination of this Lease
and subject to Applicable Law, no taking of possession of and/or reletting the
Premises, or any part thereof, shall relieve Tenant of its liabilities and
obligations hereunder, all of which shall survive such repossession or
reletting.

Section 12.5    Waiver. To the extent not prohibited by Applicable Law, Tenant
hereby waives and releases all rights now or hereafter conferred by statute or
otherwise which would have the effect of limiting or modifying any of the
provisions of this Article 12. Tenant shall execute, acknowledge and deliver any
instruments which Landlord may request, whether before or after the occurrence
of an Event of Default evidencing such waiver or release.

Section 12.6    Rent and Costs as a Lien. The Rent payable by Tenant hereunder
and each and every installment thereof, and all costs, actual and reasonable
attorneys’ fees and disbursements and other expenses which may be incurred by
Landlord in enforcing the provisions of this Lease on account of any delinquency
of Tenant in carrying out the provisions of this Lease shall be and they hereby
are declared to constitute a valid lien upon the interest of Tenant in this
Lease and in the Premises.

Section 12.7    No Delay in Recovery. Suit or suits for the recovery of damages,
or for a sum equal to any installment or installments of Rent due and payable
hereunder or any deficiencies or other sums due and payable by Tenant to
Landlord pursuant to this Article 12, may be brought by Landlord from time to
time at Landlord’s election, and nothing herein contained shall be deemed to
require Landlord to await the date whereon this Lease or the Term would have
expired by limitation had there been no Event of Default by Tenant and
termination of this Lease.

Section 12.8    Damages. Nothing contained in this Article 12 shall limit or
prejudice the right of Landlord to prove and obtain as damages in any
bankruptcy, insolvency, receivership, reorganization or dissolution proceeding
an amount equal to the maximum allowed by Applicable Law governing such
proceeding and in effect at the time when such damages are to be proved, whether
or not such amount shall be greater than, equal to or less than the amount of
the damages referred to in any of the preceding Sections of this Article 12.

Section 12.9    Tenant Waiver of Notice and Redemption. Except as otherwise
expressly provided herein or as prohibited by Applicable Law, Tenant hereby
expressly waives the service of any notice of intention to re-enter provided for
in any statute, or of the institution of legal proceedings to that end, and
Tenant, for and on behalf of itself and all persons claiming through or under
Tenant, also waives any and all right of redemption provided by any Applicable
Law or statute now in force or hereafter enacted or otherwise, or re-entry or
repossession or to restore the operation of this Lease in case Tenant

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shall be dispossessed by a judgment or by warrant of any court or judge or in
case of re-entry or repossession by Landlord or in case of any expiration or
termination of this Lease.

Section 12.10    Strict Performance Not a Condition. No failure by Landlord to
insist upon the strict performance of any covenant, agreement, term or condition
of this Lease or to exercise any right or remedy consequent upon a breach
thereof, or receipt or acceptance of Rent with knowledge of or during the
continuance of any such breach, shall constitute a waiver or relinquishment of
any such breach or of such covenant, agreement, term or condition. No covenant,
agreement, term or condition of this Lease to be performed or complied with by
Tenant, and no breach thereof, shall be waived, altered or modified except by a
written instrument executed by Landlord. No waiver of any breach shall affect or
alter this Lease, but each and every covenant, agreement, term and condition of
this Lease shall continue in full force and effect with respect to any other
then existing or subsequent breach thereof.

Section 12.11    Specific Performance. In the event of any breach by Tenant of
any of the covenants, agreements, terms or conditions contained in this Lease,
Landlord shall be entitled to a decree compelling performance of any of the
provisions hereof and the restraint by injunction of the violation, or attempted
or threatened violation, of any of the terms, covenants and conditions of this
Lease, and shall have the right to invoke any rights and remedies allowed at law
or in equity or by statute or otherwise as though re-entry, summary proceedings,
and other remedies were not provided for in this Lease. The rights granted to
Landlord in this Lease shall be cumulative of every other right or remedy which
Landlord may otherwise have at law, in equity or otherwise, and the exercise of
one or more rights or remedies shall not prejudice or impair the concurrent or
subsequent exercise of other rights or remedies.

Section 12.12    Enforcement Costs. Tenant shall pay to Landlord all reasonable
costs and expenses, including, without limitation, reasonable attorneys’ fees
and disbursements, incurred by Landlord in any action or proceeding to which
Landlord may be made a party by reason of any act or omission of Tenant. Tenant
also shall pay to Landlord all reasonable costs and expenses, including, without
limitation, reasonable attorneys’ fees and actual disbursements, incurred by
Landlord in enforcing any of the covenants and provisions of this Lease and
incurred in any action brought by Landlord against Tenant on account of the
provisions hereof, and all such costs, expenses and reasonable attorneys’ fees
and disbursements may be included in and form a part of any judgment entered in
any proceeding brought by Landlord against Tenant on or under this Lease. All of
the sums paid or obligations incurred by Landlord as aforesaid, with interest
and costs, shall be paid by Tenant to Landlord on demand. Notwithstanding any
contrary or ambiguous provision in this Lease, if either Landlord or Tenant
commences or engages in any legal action or proceeding against the other party
(including, without limitation, litigation or arbitration) arising out of or in
connection with the Lease, the Premises, a Facility or the Facilities
(including, without limitation (a) the enforcement or interpretation of either
party’s rights or obligations under this Lease (whether in contract, tort, or
both) or (b) the declaration of any rights or obligations under this Lease), the
prevailing party shall be entitled to recover from the losing party reasonable
attorneys’ fees, together with any costs and expenses, incurred in any such
action or proceeding, including any reasonable attorneys’ fees, costs, and
expenses incurred on collection and on appeal.

Section 12.13    Interest on Late Payment. If Tenant fails to pay any
installment of Base Rent or Supplementary Rent within five (5) days of the date
such payment is due hereunder, Tenant shall pay to Landlord, in addition to such
payment of Base Rent or Supplementary Rent, as the case may be, interest on the
amount unpaid at the Default Rate, computed from the date such payment was due
to and including the date of payment. If Tenant fails to pay any installment of
Base Rent or Supplementary Rent within fifteen (15) days of when such payment is
due, Tenant shall pay to Landlord, in addition to such payment of Base Rent or
Supplementary Rent, as the case may be, interest on the amount unpaid at the
greater of the Default Rate or ten percent (10%), computed from the date such
payment was due to and including

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the date of payment. If Tenant fails to pay any installment of Base Rent or
Supplementary Rent within thirty (30) days of when such payment is due, Tenant
shall pay to Landlord, in addition to such payment of Base Rent or Supplementary
Rent, as the case may be, interest on the amount unpaid at the greater of the
Default Rate or fifteen percent (15%), computed from the date such payment was
due to and including the date of payment.

Section 12.14    Attorneys’ Fees. To the extent that any provision of this Lease
entitles Landlord to recover its fees, costs, expenses or attorneys’ fees from
Tenant, such fees, costs, expenses or attorneys’ fees shall include Landlord’s
allocable costs of in-house counsel, and in-house fees and expenses only to the
extent that Landlord’s right to recover such fees, costs, expenses or attorneys’
fees arises out of an Event of Default by Tenant.

Section 12.15    Landlord’s Lien.

(a)    Subject to this Section 12.15, as security for the payment and
performance of all of Tenant’s obligations and Landlord’s rights under this
Lease, Tenant hereby assigns, grants, delivers, sets over and transfers to
Landlord and grants to Landlord, and Tenant shall cause the Operating
Subtenants, to the extent permitted by Applicable Law, to assign, grant,
deliver, set over and transfer to the applicable Landlord and grant to such
Landlord, its successors and assigns pursuant to those certain Security
Agreements dated of even date herewith (collectively, the “Security
Agreements”), a continuing security interest in all of its right, title and
interest, whether now owned or hereafter acquired, now existing or hereafter
arising, wherever located, in and to (i) the Tenant’s Personal Property, (ii)
all Permits, including without limitation the Health Care Licenses and the
Provider Agreements and (iii) Accounts Receivables (collectively with the
Tenant’s Personal Property and the Permits, the “Landlord Lien Collateral”) in
each case to the extent owned by Tenant or Operating Subtenants, as applicable.
The aforementioned grants of a security interest in the Landlord Lien Collateral
shall, in each instance, create a first priority lien. Tenant shall sign and
deliver, and shall cause the Operating Subtenants to sign and deliver, as
applicable, to Landlord or the applicable Landlord, as the case may be, or if
Tenant’s or the Operating Subtenants’ signatures are not required, Tenant hereby
authorizes Landlord to file (and shall cause each Operating Subtenant to
authorize the applicable Landlord to file) in all necessary governmental
offices, one or more financing statements or other appropriate filings to
perfect the security interest granted by Tenant to Landlord hereunder or by the
Operating Subtenants to the applicable Landlord under the Security Agreements.
Tenant shall promptly notify Landlord in writing if Tenant obtains any interest
in any Collateral consisting of Deposit Accounts (other than payroll, employee
benefits, security deposits, withholding, escrow, trust accounts, tax
withholding accounts and other similar fiduciary accounts) or intellectual
property, and, upon Landlord’s request, shall promptly execute such documents
and take such actions as Landlord deems appropriate to effect Landlord’s valid
and enforceable security interest upon such Collateral, including obtaining any
appropriate possession, access or control agreement. If any Collateral is in the
possession of a third party, Tenant shall use commercially reasonably efforts to
obtain an acknowledgment that such third party holds the Landlord Lien
Collateral for the benefit of Landlord. Landlord shall have all rights and
remedies available to a secured party under the Uniform Commercial Code, as
amended from time to time. Tenant acknowledges that Landlord may collaterally
assign its security interest in the Landlord Lien Collateral to Mortgagee and/or
to a Superior Landlord to secure Landlord’s obligations to Mortgagee or such
Superior Landlord. Upon Landlord’s request, or at the request of Mortgagee,
Tenant shall confirm in writing the grant of such security interests to
Mortgagee and/or Superior Landlord. These provisions of this Lease shall be
deemed to be a security agreement for purposes of the Uniform Commercial Code.
To the extent permitted by Applicable Law, in connection with the expiration or
earlier termination of this Lease, Tenant shall cooperate with Landlord, and
Tenant shall cause the Operating Subtenants to cooperate with the applicable
Landlord, in causing the Health Care Licenses and the Provider Agreements to be
reissued in the name of Landlord or the applicable Landlord, as the case may be,
or its designee as of such date or as soon thereafter as is

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practicable, and such Landlord shall be entitled to apply in its own name, its
designee’s name or the Operating Subtenant’s name for the transfer of the Health
Care Licenses and the Provider Agreements to Landlord or the applicable
Landlord, as the case may be, or its designee, and Tenant’s obligation to
cooperate and to cause the Operating Subtenants to cooperate shall survive the
expiration or earlier termination of this Lease. Any grant of security interest
in, or pledge or collateral assignment of, the Landlord Lien Collateral by
Tenant to any financial institution making a loan to Tenant shall be expressly
subject to the terms of this Lease, including, without limitation, the foregoing
rights of Landlord and security interest therein. Tenant shall provide, and
shall cause the Operating Subtenant to provide, to Landlord copies of the
documents evidencing the Working Capital Loan within five (5) Business Days
following receipt of Landlord’s written request.

(b)    Tenant shall not grant a security interest in, or pledge or collateral
assignment of, the Landlord Lien Collateral (nor permit an Operating Subtenant
to do so) without first complying with the terms and conditions of this Section
12.15. Tenant shall promptly notify Landlord in writing if Tenant has any
Commercial Tort Claims, and, upon Landlord’s request, shall promptly execute
such documents and take such actions as Landlord reasonably deems appropriate to
confer upon Landlord a valid and enforceable lien upon and security interest in
such claim.

(c)    Notwithstanding any provision in this Lease to the contrary, Tenant and
each Operating Subtenant is expressly permitted, from time to time, directly or
indirectly, to grant to a Working Capital Lender a security interest or create
or otherwise cause to exist a lien, encumbrance or pledge, in, to or upon any
and all of Tenant’s right, title and interest in, to and under the Landlord Lien
Collateral, subject to the terms of this Section 12.15, and provided that before
granting same to the Working Capital Lender, the Working Capital Lender executes
an inter-creditor agreement with Landlord, in form and substance acceptable to
Landlord in its reasonable discretion (an “Inter-Creditor Agreement”),
simultaneously with the occurrence of the foregoing. Any Inter-Creditor
Agreement will include a provision that, following an event of default under
such Working Capital Loan or this Lease (beyond any applicable notice and cure
periods), the Working Capital Lender will release its lien against the Landlord
Lien Collateral on terms and conditions stated in the Inter-Creditor Agreement,
which terms and conditions shall be acceptable to Landlord in its sole
discretion. The Inter-Creditor Agreement shall provide for the release of any
Working Capital Lender’s lien against the Health Care Licenses and the Provider
Agreements upon receipt of the sum of $1.00, without the payment of any
termination fee or other prepayment charges.

Nothing contained in this Section 12.15 shall be deemed to permit Tenant to
grant a security interest or create or otherwise cause to exist a lien,
encumbrance or pledge in any of Tenant’s right, title and interest in, to or
under any Rents paid or payable to Tenant under any Sublease of all or any
portion of the Premises, it being understood and agreed that in no event shall
Tenant be permitted to so encumber such Rents. Tenant shall pay all of
Landlord’s costs and expenses (including reasonable attorneys’ fees and
expenses) incurred in connection with the negotiation and execution of an
Inter-Creditor Agreement. With respect to a Working Capital Loan in effect as of
the Effective Date, simultaneously with the execution of this Lease, Landlord,
Tenant, any Superior Landlord or Mortgagee (if designated by Landlord) and the
Working Capital Lender shall execute an Inter-Creditor Agreement with respect to
security interest granted in the Landlord Lien Collateral. The occurrence of a
default by Tenant or an Operating Subtenant under a Working Capital Loan shall,
upon the expiration of the notice and cure periods expressly stated in the
Working Capital Loan, be an automatic Event of Default hereunder.

Section 12.16    Notwithstanding any contrary or ambiguous provision of this
Lease, Landlord acknowledges and agrees that Landlord shall use commercially
reasonable efforts to mitigate its damages after the occurrence of any Event of
Default; provided, that the foregoing shall not be a condition precedent to an
action by Landlord against any Guarantor pursuant to the Guaranties. Landlord's
duty

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to mitigate shall be limited to leasing the Premises to another tenant (a
“Replacement Tenant”), which duty is subject to the following:

(a)    Landlord shall have no obligation to enter into a definitive lease with a
Replacement Tenant until Landlord obtains either (A) the final and unappealable
legal right to relet the Premises free of any claim of Tenant or (B) the written
assurance from Tenant, in form and substance acceptable to Landlord in its
reasonable discretion, by which Tenant waives all claims against Landlord solely
in connection with such mitigation efforts (for the avoidance of doubt, such
waiver is limited to claims arising from the pursuit of such mitigation
efforts);

(b)    Landlord shall not be obligated to lease the Premises to a Replacement
Tenant except to the extent the material terms are substantially consistent with
(or better than) the terms and conditions of this Lease, as reasonably
determined by Landlord;

(c)    Landlord shall not be obligated to lease the Premises to a Replacement
Tenant whose use would, in Landlord’s reasonable opinion, (a) violate any
restriction, covenant or requirement contained in this Lease or document of
another tenant or occupant of the Building; (b) violate the Health Care
Requirements or Health Care Licenses; or (c) be incompatible with the operation
of the Building;

(d)    Landlord shall not be obligated to lease the Premises to any proposed
Replacement Tenant that does not have, in Landlord’s reasonable discretion,
sufficient financial resources or operating experience to operate the Premises
for the use required by this Lease;

(e)    Landlord shall not be required to expend any amount of money to alter,
remodel or otherwise make the Premises suitable for use by a proposed
Replacement Tenant.

ARTICLE 13
NO WAIVER

Section 13.1    Generally. No receipt of moneys by Landlord from Tenant after
the termination or cancellation of this Lease or termination of Tenant’s right
to possess the Premises (or after the giving of any notice of the termination of
this Lease or Tenant’s right to possess the Premises) shall reinstate, continue
or extend the Term, or affect any notice theretofore given to Tenant, or affect
or otherwise operate as a waiver of the right of Landlord to enforce the payment
of Base Rent or Supplementary Rent then due, or thereafter falling due, or
operate as a waiver of the right of Landlord to recover possession of the
Premises by proper suit, action, proceeding or remedy; it being agreed that,
after the service of notice to terminate or cancel this Lease or Tenant’s right
to possess the Premises, or the commencement of suit, action or summary
proceedings, or any other remedy, or after a final order or judgment for the
possession of the Premises, Landlord may demand, receive and collect any moneys
due, or thereafter falling due, without, in any manner whatsoever, affecting
such notice, proceeding, suit, action, order or judgment; and any and all such
moneys collected shall be deemed to be payments on account of the use and
occupation of the Premises or, at the election of Landlord, on account of
Tenant’s liability hereunder. The acceptance of any check or payment bearing or
accompanied by any endorsement, legend or statements shall not, of itself,
constitute any change in or termination of this Lease.

Section 13.2    Continuing Landlord Rights. The failure of Landlord to enforce
any agreement, condition, covenant or term, by reason of its breach by Tenant
shall not be deemed to void, waive or affect the right of Landlord to enforce
the same agreement, condition, covenant or term on the occasion of a subsequent
default or breach. No surrender of the Premises by Tenant or an Operating
Subtenant (prior to any termination of this Lease) shall be valid unless
consented to in writing by Landlord.

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ARTICLE 14
ESTOPPEL CERTIFICATE; CONSENT

Section 14.1    Tenant Certificate. Tenant agrees that it shall, at any time and
from time to time upon not less than ten (10) Business Days’ prior notice by
Landlord, execute, acknowledge and deliver to Landlord a statement in writing
certifying that this Lease is unmodified and in full force and effect (or if
there have been any modifications, that the Lease is in full force and effect as
modified and stating the modifications), the Base Rent and Supplementary Rent
payable and the dates to which the Base Rent and Supplementary Rent have been
paid, that the address for notices to be sent to Tenant is as set forth in this
Lease, stating whether or not to Tenant’s Knowledge Landlord is in default in
keeping, observing or performing any term, covenant, agreement, provision,
condition or limitation contained in this Lease and, if in default, specifying
each such default, the Commencement Date and Expiration Date for the current
Term, that Tenant is in possession of the Premises, and any other matters
reasonably requested by Landlord, any Mortgagee, or any Superior Landlord; it
being intended that any such statement delivered pursuant to this Article 14 may
be relied upon by Landlord or any Superior Landlord or any prospective purchaser
of the Premises or any Mortgagee thereof or any assignee of any Mortgage upon
the Premises. Tenant shall also cause any Subtenant to deliver a statement as to
the foregoing matters with respect to, the applicable Sublease, and the same
parties shall be entitled to rely on such estoppel certificate.

Section 14.2    Lender Certificate. Landlord may secure financing of its
interest in the Premises by, among other things, assigning Landlord’s interest
in this Lease and the sums payable hereunder to Mortgagee. Tenant agrees, upon
not less than ten (10) Business Days’ prior notice by Landlord, to execute,
acknowledge and deliver to Landlord such certificates and other documents as may
be reasonably requested by Mortgagee.

Section 14.3    Landlord Certificate. Landlord agrees that it shall, at any time
and from time to time upon not less than ten (10) Business Days’ prior notice by
Tenant, execute, acknowledge and deliver to Tenant a statement in writing
certifying that this Lease is unmodified and in full force and effect (or if
there have been any modifications, that the Lease is in full force and effect as
modified and stating the modifications), the Base Rent and Supplementary Rent
payable and the dates to which the Base Rent and Supplementary Rent have been
paid, that the address for notices to be sent to Landlord is as set forth in
this Lease, stating whether or not to the knowledge of Landlord an Event of
Default has occurred and is continuing under this Lease and, if so, specifying
each such default, the Commencement Date and Expiration Date for the current
Term, that Tenant is in possession of the Premises, and any other matters
requested by Tenant; it being intended that any such statement delivered
pursuant to this Article 14 may be relied upon by Tenant or any prospective
purchaser of Tenant’s business.

ARTICLE 15
QUIET ENJOYMENT

Section 15.1    Tenant, upon payment of the Rents herein reserved and upon the
due performance and observance of all the covenants, conditions and agreements
herein contained on Tenant’s part to be performed and observed, including
without limitation, the maintenance by Tenant and the Operating Subtenants of
all necessary Health Care Licenses for the Facilities in good standing and the
compliance by Tenant with all Requirements of Governmental Authorities, shall
and may at all times during the Term peaceably and quietly have, hold and enjoy
the Premises without any manner of suit, trouble or hindrance of and from any
person claiming by, through or under Landlord, subject, nevertheless, to the
terms and provisions of this Lease.

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ARTICLE 16
SURRENDER

Section 16.1    Generally. (a)Tenant shall, on the last day of the Term, or upon
the sooner termination of the Term, quit and surrender to Landlord the Premises
vacant, free of all Tenant’s Personal Property (subject to Landlord’s right to
purchase the owned Tenant’s Personal Property or take an assignment of the
leased Tenant’s Personal Property pursuant to Section 16.5 hereof), and in the
same level of condition and repair as on the Commencement Date, reasonable wear
and tear, and damage from condemnation and from Tenant’s election not to restore
after casualty excepted, and Tenant shall remove or demolish all of the
fixtures, structures and other improvements which Landlord shall have elected to
cause Tenant to remove pursuant to and in accordance with Section 5.7 hereof;
provided, however, that at the termination of the Lease, Tenant shall allow the
successor tenant to use Tenant’s Personal Property for a reasonable period of
time until such successor tenant is able to acquire replacements for such
Tenant’s Personal Property, as long as the successor tenant shall pay Tenant the
reasonable rental value for such use, as determined by Tenant in its reasonable
discretion and subject to the terms of Section 16.5 below. Upon the expiration
or earlier termination of this Lease, Landlord may, to the extent permitted by
Applicable Law and approved by all applicable Health Care Regulatory Agencies,
cause the transfer of Health Care Licenses relating to the Facilities and the
operation and management of the Facilities and leasing of the Premises to any
replacement operator, manager or tenant of the Facilities designated by
Landlord. In connection with such transfer, Tenant shall cooperate with Landlord
(including, if required by Landlord, the execution and delivery of a transfer
agreement and the parties shall enter into an Operations Transfer Agreement
reasonably acceptable to Landlord and provide for, at Landlord’s expense: (i)
the transfer to the successor tenant of (A) all federal, state or municipal
licenses, certifications, certificates, approvals, permits, variances, waivers,
provider agreements and other authorizations certificates that are related to
the operation of the Facilities to the extent same are transferable under
Applicable Law and the transfer is approved by all applicable Health Care
Regulatory Agencies and (B) all names associated with the Facilities as then
known to the general public (but excluding any names that are Tenant’s Personal
Property), (ii) indemnification obligations of Landlord and any successor tenant
and subtenant of Tenant, each Operating Subtenant and their respective
affiliates from and against any and all claims, losses, damages, costs,
expenses, liabilities, fines, penalties, charges, administrative and judicial
proceedings and orders, judgments, remedial action requirements, enforcement
actions of any kind (including, without limitation, reasonable attorneys’ fees
and costs that are actually incurred) directly or indirectly arising out of or
attributable to, the use by successor tenant or subtenant of any of Operating
Subtenant Health Care Licenses; (iii) the preparation and filing of all notices
reasonably required by Applicable Law in connection with such termination and
transfer of operations, (iv) the delivery to the successor tenant of all patient
charts and resident records along with appropriate patient and resident
consents, if necessary, subject to applicable regulations, (v) the delivery to
the successor tenant of such inventories and supplies at commercially reasonable
operating levels, and (vi) the delivery of copies of all of Tenant’s books and
records relating to the Facilities and their operations that are necessary to
transition the Facilities to the successor tenant, to Landlord or the successor
tenant, within a reasonable time so as to provide continuation of patient or
resident care and minimize disruption. Tenant’s obligation to observe and
perform this covenant shall survive the expiration or earlier termination of the
Term. In the event that Tenant fails to surrender the Premises as aforesaid, in
addition to the rights of Landlord under Section 16.3, Landlord shall have the
right to exercise the applicable remedies upon the occurrence of an Event of
Default. Tenant shall have the right, as long as no Event of Default has
occurred and is continuing under this Lease, upon the expiration of the Term
(but subject to (a) the temporary use by the successor tenant referred to above
and (b) Landlord’s right to purchase the owned Tenant’s Personal Property or
takes any assignment of the leased Tenant’s Personal Property, in each case,
pursuant to Section 16.5 hereof), to remove from the Premises all of Tenant’s
Personal Property, whether or not the same be attached to the real estate,
provided that Tenant shall at its own cost and expense reasonably restore and
repair any damage to the Premises caused by the removal of Tenant’s

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Personal Property. Such removal shall be done upon reasonable advance notice, at
a mutually convenient time approved by Landlord and without disruption of the
successor tenant’s business operations.

Section 16.2    Rent Apportionment. Upon the expiration of the Term, all Base
Rent and Supplementary Rent and other items payable by Tenant under this Lease
shall be apportioned to the date of termination.

Section 16.3    Holding Over. Tenant acknowledges that possession of the
Premises must be surrendered to Landlord at the expiration or sooner termination
of the term of this Lease. The parties recognize and agree that the damage to
Landlord resulting from any failure by Tenant to timely surrender possession of
the Premises as aforesaid will be extremely substantial, will exceed the amount
of the Base Rent and Supplementary Rent theretofore payable hereunder, and will
be impossible to accurately measure. Tenant therefore agrees that, subject to
Section 16.4, if possession of the Premises is not surrendered to Landlord upon
the expiration or sooner termination of the term of this Lease, then, in
addition to any other rights or remedies available to Landlord under this Lease,
Tenant shall pay to Landlord, as liquidated damages for each month and for each
portion of any month during which Tenant holds over in the Premises after the
expiration or sooner termination of the term of this Lease, a sum equal to the
higher of the then fair market rental value of the Premises as reasonably
determined by Landlord, taking into account the effect of all material factors
reasonably relevant to such determination, or two (2) times the aggregate of the
Base Rent and Supplementary Rent which was payable under this Lease with respect
to the last month of the term hereof. Nothing herein contained shall be deemed
to permit Tenant to retain possession of the Premises after the expiration or
sooner termination of the term of this Lease; and in the event of any
unauthorized holding over, Tenant shall indemnify each of the Indemnified
Parties against all claims for damages by any other lessee or prospective lessee
to whom Landlord may have leased all or any part of the Premises effective
before or after the expiration or termination of the Term of this Lease. If
Tenant holds over in possession after the expiration or termination of the term
of the Lease, such holding over shall not be deemed to extend the term or renew
this Lease, but the tenancy thereafter shall continue as a tenancy from month to
month upon the terms and conditions of this Lease at the Base Rent and
Supplementary Rent as herein increased. Tenant hereby waives the benefit of any
Applicable Law which would contravene or limit the provisions set forth in this
Section 16.3. This provision shall survive the expiration or earlier termination
of this Lease.

Section 16.4    Duty to Continue Operations. Notwithstanding anything to the
contrary contained in this Lease, but subject to all of Landlord’s rights and
remedies upon an Event of Default, if pursuant to Applicable Law, Tenant is
required to continue to operate the Facilities after the Expiration Date, Tenant
shall do so pursuant to Applicable Law, and Tenant shall continue to pay
Landlord Base Rent and Supplementary Rent at the rates then in effect under this
Lease. Landlord further agrees that if Tenant is required to continue the
operation of any Facility pursuant to this Section 16.4, then at Tenant’s
option, Tenant may continue to operate the balance of the Facilities until such
time as Tenant is permitted to cease operations of all of the Facilities. The
period of time pursuant to which Tenant continues to operate any Facility or
Facilities pursuant to this Section 16.4 shall be referred to as the “Extended
Operation Period”.

Section 16.5    Landlord Acquisition of Tenant’s Personal Property. At the
expiration or earlier termination of the Lease, Landlord shall have the right to
acquire all of Tenant’s Personal Property free and clear of all liens and
encumbrances. The acquisition of the Tenant’s Personal Property shall be for a
total consideration of (a) $100 if acquired following an Event of Default or (b)
with payment of said property’s book value if acquired upon the expiration or
earlier termination of the Term (where such early termination is not the result
of a Tenant default). For purposes of determining the fair market value of the
owned Tenant’s Personal Property (“Personal Property Value”), the following
procedure shall apply:

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(a)    If Landlord has timely delivered the aforementioned notice, Tenant shall
within fifteen (15) days deliver to Landlord a written notice of Tenant’s
determination of the Personal Property Value (the “Value Notice”).

(b)    Within fifteen (15) days after Landlord’s receipt of the Value Notice,
Landlord shall give Tenant a notice (“Landlord’s Value Response Notice”)
electing either (i) to accept the Personal Property Value set forth in the Value
Notice, in which case the Personal Property Value shall be as set forth in the
Value Notice, or (ii) not to accept Tenant’s determination of the Personal
Property Value set forth in the Value Notice in which case Landlord’s Value
Response Notice shall include Landlord’s determination of the Personal Property
Value, whereupon Landlord and Tenant shall endeavor to agree upon the Personal
Property Value on or before the date that is thirty (30) days after Tenant’s
receipt of Landlord’s Value Response Notice. If Landlord and Tenant are unable
to agree upon the Personal Property Value within such 30-day period, then the
Personal Property Value shall be determined in accordance with Section 16.5(c)
below. If Landlord fails to deliver Landlord’s Value Response Notice within the
15-day period following its receipt of Tenant’s Value Notice, Landlord shall be
conclusively deemed to have rejected Tenant’s determination of the Personal
Property Value.

(c)    If Landlord and Tenant shall fail to agree upon the Personal Property
Value within thirty (30) days of the date of Tenant’s receipt of Landlord’s
Value Response Notice, then, within ten (10) Business Days thereafter, Landlord
and Tenant each shall give notice to the other setting forth the name and
address of an independent appraiser or consultant having at least ten (10)
years’ experience in the business of appraising or determining the value of
personal property comparable to Tenant’s Personal Property in the general
location of the Premises. If either party shall fail to give notice of such
designation within such ten (10) Business Day period, then the appraiser chosen
shall make the determination alone. If two appraisers have been designated, such
two appraisers may consult with each other and shall, not later than the
sixtieth (60th) day after Tenant’s receipt of Landlord’s Value Response Notice
choose either Landlord’s or Tenant’s determination of the Personal Property
Value by simultaneously giving written notice thereof to each of Landlord and
Tenant, in which case the determination so chosen shall be final and binding
upon Landlord and Tenant and their respective Affiliates. If such two appraisers
shall fail to concur within such thirty (30) day period, then such two
appraisers shall, within the next ten (10) days, designate a third appraiser
meeting the above requirements. The third appraiser shall within thirty (30)
days after its designation, choose either Landlord’s or Tenant’s determination
(and no other) by simultaneously delivering to Landlord and Tenant signed and
acknowledged original counterparts of his or her determination within seven (7)
days thereof, which determination shall be final and binding upon Landlord and
Tenant and their respective Affiliates. The determination of the appraisers
pursuant to this Section 16.5(c) shall be deemed to be binding arbitration which
may be confirmed by court order at the request of either Landlord or Tenant. The
parties shall execute and deliver any instruments of conveyance required to
transfer Tenant’s Personal Property pursuant to such appraisers’ determination;
however, if the appraisal determination is not complete as of the effective
expiration date of the Lease, at Landlord’s request Tenant shall execute and
deliver any such instruments of conveyance on and effective as of said
expiration date, and Landlord’s obligation to pay the consideration as
determined by said appraisal process shall survive said lease expiration and
conveyance.

(d)    The fees, costs and expenses of each party’s appraiser shall be paid by
such party. The fees, costs and expenses of the third appraiser shall be shared
equally by Landlord and Tenant. If a decision is rendered by a single appraiser
due to the other party’s failure to designate an appraiser, then the fees, costs
and expenses of the appraiser so rendering the decision shall be shared equally
by Landlord and Tenant.

(e)    Landlord and/or its designee (including any successor operator of the
Facilities) shall have the unconditional right to utilize the Tenant’s Personal
Property, subject to the terms herein,

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after the expiration of the Term and following Tenant’s return of possession of
the Premises to Landlord during the period of time that the Personal Property
Value is being determined.

ARTICLE 17
ACCESS

Section 17.1    Inspection. Landlord shall at all times during the Term, have
the right and privilege to enter the Premises for the purpose of inspecting the
same, to ensure compliance by Tenant with all the provisions set forth in this
Lease, or for the purpose of showing the same to prospective purchasers or
Mortgagees thereof. Landlord shall also have the right and privilege at all
times during the Term to post notices of non-responsibility for work performed
by or on behalf of Tenant or a Subtenant and, during the last one (1) year of
the Term, Landlord shall have the right and privilege, to enter the Premises at
reasonable times during business hours for the purpose of exhibiting the same to
prospective new tenants. Notwithstanding the foregoing, Landlord will not access
patient or medical information which is protected from such access by Federal or
State privacy laws, including the Health Insurance Portability and
Accountability Act (“HIPAA”) and the Health Information Technology for Economic
and Clinical Health Act (“HITECH Act”) and the regulations promulgated
thereunder, as amended, and Landlord will respect patient’s rights to privacy of
their own rooms and possessions.

Section 17.2    Repairs. Landlord shall at all times during the Term have the
right to enter the Premises or any part thereof for the purpose of making such
repairs or Alterations therein as Landlord deems reasonably necessary or
advisable following the failure of Tenant to make any such repairs or
Alterations required by this Lease beyond any applicable notice and cure period
which required repairs or Alterations must be supported by an engineering report
from an engineer reasonably acceptable to Landlord and Tenant, and reasonably
agreed to by both Landlord and Tenant, but such right of access shall not be
construed as obligating Landlord to make any repairs to or replacements to the
Premises or as obligating Landlord to make any inspection or examination of the
Buildings. Tenant shall pay to Landlord, on demand, as Supplementary Rent
hereunder, all amounts expended by Landlord pursuant to this Section 17.2 which
amounts shall bear interest at the Default Rate until paid, if Tenant shall have
failed to make said repairs within fifteen (15) days of the receipt of said
report. In the event of an emergency, Landlord shall have the right to enter the
Premises or any part thereof.

ARTICLE 18
ENVIRONMENTAL MATTERS

Section 18.1    Generally. Tenant will not use, generate, manufacture, produce,
store, release, discharge or dispose of in, on, under, from or about the
Premises or transport to or from the Premises any Hazardous Substance and will
not allow or suffer any other person or entity to do so (except for non-material
quantities of Hazardous Substances that are customarily used in the ordinary
operation of a Facility for the Permitted Use and for which Tenant has obtained
any necessary permits or Governmental approvals, collectively, “Immaterial
Use”).

Section 18.2    Compliance With Environmental Laws. Tenant shall keep and
maintain the Premises in compliance with, and shall not cause, permit or suffer
the Premises to be in violation of any Environmental Law. Tenant shall, at its
sole cost and expense, cause any Repairs or Alterations to the Premises to be
conducted and performed by qualified contractors and in compliance with all
Environmental Laws.

Section 18.3    Notices. Tenant shall give prompt written notice to Landlord of
Tenant’s Knowledge of:

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(i)    any use, generation, manufacture, production, storage, release, discharge
or disposal of any Hazardous Substance in, on, under, from or about the Premises
or the migration thereof to or from other property (other than Immaterial Use);

(ii)    the commencement, institution or threat of any proceeding, inquiry or
action by or written notice from any local, state or federal governmental
authority with respect to the use or presence of any Hazardous Substance in, on,
under, from or about the Premises or the migration thereof from or to other
property;

(iii)    all claims or demands made or threatened by any third party against
Tenant, an Operating Subtenant or the Premises relating to any damage,
contribution, cost recovery, compensation, loss or injury resulting from any
Hazardous Substance, in each case, during the Term;

(iv)    any circumstances, occurrence or condition on, in, under, to or from the
Premises that reasonably could (A) cause the Premises or any part thereof to be
subject to any restrictions on the ownership, occupancy, transferability or use
under any Environmental Law, (B) give rise to a proceeding, inquiry, notice of
violation, penalty or fine by any local, state or federal governmental authority
against Landlord, Tenant or an Operating Subtenant, or (C) give rise to a claim
or demand by any third party against Landlord or Tenant or an Operating
Subtenant for damages, contribution, cost recovery, compensation, loss or
injury; and

(v)    any claims for the incurrence of expense by any governmental authority or
others in connection with the assessment, containment, remediation or removal of
any Hazardous Substance located on, under, from or about the Premises.

Landlord shall give prompt written notice to Tenant of knowledge of any of the
facts, events or circumstances set forth in (i) and (v) above, including all
claims under Environmental Laws commenced or threatened against Landlord with
respect to the Premises during the Term.

Section 18.4    Landlord Rights. Landlord shall have the right, but not the
obligation, to join and participate in, as a party if it so elects, any legal or
administrative proceedings or actions initiated with respect to the Premises in
connection with any Environmental Law. In the event that Tenant refuses or fails
to defend any such legal proceedings or actions concerning matters for which
Tenant has primary responsibility under this Article 18, Landlord shall have the
right, but not the obligation, to defend proceedings or actions using counsel
chosen by Landlord, and Tenant shall reimburse Landlord for its actual and
reasonable attorney’s fees incurred in connection with such defense.

Section 18.5    Remedial Action. Without Landlord’s prior written consent, which
consent shall not be unreasonably withheld, conditioned or delayed, Tenant shall
not take any remedial action in response to the presence of any Hazardous
Substance in, on, under, from or about the Premises, nor enter into any
settlement, consent or compromise which might, in Landlord’s judgment, impair
the value of Landlord’s interest in the Premises under this Lease; provided,
however, that Landlord’s prior consent shall not be necessary if the presence of
Hazardous Substance in, on, under, from or about the Premises either poses an
immediate threat to the health, safety or welfare of any individual or is of
such a nature that an immediate remedial response is necessary and it is not
reasonably practical or possible to obtain Landlord’s consent before taking such
action. In such event Tenant shall notify Landlord as soon as practicable of any
action so taken. Landlord agrees not to withhold its consent, where such consent
is required hereunder, if a particular remedial action is ordered by a court or
any agency of competent jurisdiction.

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Section 18.6    Indemnity. (a)    Tenant shall protect, indemnify and hold
harmless each of the Indemnified Parties from and against any and all claim,
loss, damage, cost, expense, liability, fines, penalties, charges,
administrative and judicial proceedings and orders, judgments, remedial action
requirements, enforcement actions of any kind (including, without limitation,
reasonable attorneys’ fees and costs) directly or indirectly arising out of or
attributable to, in whole or in part, any of the following: (i) the breach of
any of the covenants, representations and warranties of this Article 18 by
Tenant, or (ii) the use, generation, manufacture, production, storage, release,
threatened release, discharge or disposal of a Hazardous Substance in, on,
under, from or about the Premises prior to or during the Term, or (iii) any
violation or liability under any Environmental Law arising from any other
activity carried on or undertaken on the Premises prior to or during the Term by
Tenant or any employees, agents, contractors or subcontractors of Tenant or any
third persons occupying or present on the Premises prior to or during the Term,
including, without limitation: (i) all consequential damages; (ii) the costs of
any required or necessary response, repair, cleanup or detoxification of the
Premises and the preparation and implementation of any closure, remedial or
other required plans including, without limitation: (A) the costs of response,
removal or remedial action incurred by any Governmental Authority, or response
costs incurred by any other Person, or damages from injury to, destruction of,
or loss of natural resources, including the costs of assessing such injury,
destruction or loss, incurred pursuant to any Environmental Law; (B) the
clean-up costs, fines, damages or penalties incurred pursuant to the provisions
of Applicable Law; and (C) the cost and expenses of abatement, correction or
clean-up, fines, damages, response costs or penalties which arise from the
provisions of any other Applicable Law; and (iii) liability for damages,
including damages assessed for the maintenance of the public or private
nuisance, response costs or for the carrying on of an abnormally dangerous
activity. The obligations arising under this Section 18.6 shall apply regardless
of when the violation, liability, loss, harm, damage or injury is discovered.

As used in this Lease, the term “Petroleum” means any petroleum, petroleum
product, petroleum by-product, and any constituent derivative or by-product
thereof, including methyl tertiary butyl ether (MTBE).

This indemnity is intended to be operable under 42 U.S.C. Section 9607(e)(1),
and any successor section thereof and shall survive expiration or earlier
termination of this Lease and any transfer of all or a portion of the Premises
by Tenant.

(b)    The foregoing indemnity shall in no manner be construed to limit or
adversely affect Landlord’s rights under this Article 18 including, without
limitation, Landlord’s rights to approve any Remedial Work or the contractors
and consulting engineers retained in connection therewith.

Section 18.7    Other Requirements. (a) In the event that any reporting,
assessment, investigation, site monitoring, containment, cleanup, removal,
restoration or other remedial work of any kind or nature (the “Remedial Work”)
is required by any Applicable Law, or by any Governmental Authority or
reasonably by other Person because of, or in connection with, any Hazardous
Substance threatened to be released, released, discharged, or disposed of prior
to or during the Term, Tenant shall within thirty (30) days after written demand
for performance thereof by Landlord (or such shorter period of time as may be
required under any Applicable Law or agreement), commence to perform, or cause
to be commenced, and thereafter diligently prosecute to completion within such
period of time as may be required under any Applicable Law or agreement (or as
otherwise required by Landlord), all such Remedial Work at Tenant’s sole expense
in accordance with the requirements of any applicable Governmental Authority or
Environmental Law. All such Remedial Work shall be completed in accordance with
Applicable Law and performed by qualified contractors, and for an amount in
excess of $50,000 shall be performed by one or more qualified contractors,
approved in advance in writing by Landlord, which approval may be withheld by
Landlord’s reasonable discretion, and under the supervision of a consulting
engineer approved in advance in writing by Landlord. The scope of work and

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schedule for any Remedial Work shall be subject to Landlord’s prior approval,
which approval shall not be unreasonably withheld. All reports, data,
correspondence or any other submittals to a Governmental Authority in connection
with any Remedial Work shall be provided in draft form to Landlord prior to
submittal to the Governmental Authority, and shall be subject to Landlord’s
approval, which approval shall not be unreasonably withheld. All costs and
expenses of such Remedial Work shall be paid by Tenant, including, without
limitation, the charges of such contractor(s) and/or the consulting engineer,
and Landlord’s reasonable attorneys’ fees and actual costs incurred in
connection with monitoring or review of such Remedial Work. In the event Tenant
shall fail to timely commence, or cause to be commenced, or fail to complete
such Remedial Work within the time required above, Landlord may, but shall not
be required to, cause such Remedial Work to be performed and all reasonable
costs and expenses thereof, or incurred in connection therewith shall become
part of the indebtedness secured hereby. The obligations under this Section 18.7
shall survive expiration or earlier termination of this Lease, and any transfer
of all or any portion of the Premises by Tenant or Landlord.

(b)    O&M Plan. Tenant shall maintain and comply with an Operation and
Maintenance Plan reasonably satisfactory to Landlord for any Facility containing
asbestos containing materials.

Section 18.8    Other Landlord Rights. In the event that Landlord or any
Mortgagee believes that there may be a violation or threatened violation of any
Environmental Law or a violation or threatened violation of any covenant under
this Article 18, Landlord is authorized, but not obligated, by itself, its
agents, employees or workmen to enter at any reasonable time following notice,
so long as such entry does not unduly interfere with Tenant’s normal conduct of
business, upon any part of the Premises for the purposes of inspecting the same
for Hazardous Substances and Tenant’s compliance with this Article 18, and such
inspections may include, without limitation, soil borings; provided, however, if
Landlord reasonably believes that the violation or threatened violation either
poses an immediate threat to the health, safety or welfare of any individual or
is of such a nature that an immediate response may be necessary, Landlord may
enter the Premises at any time and Tenant’s prior consent shall not be
necessary. In such event, Landlord shall notify Tenant as soon as practicable of
any action so taken. If such inspection reveals any violation of Environmental
Law or violation by Tenant of any covenant under this Article 18 or the
existence of any Hazardous Substance released, discharged, or disposed of prior
to or during the Term (other than an immaterial technical violation or
liability), Tenant agrees to pay to Landlord, within ten (10) days after
Landlord’s written demand, all actual and reasonable expenses, costs or other
amounts incurred by Landlord in performing any inspection for the purposes set
forth in this Section 18.8.

Section 18.9    Costs. All costs and expenses incurred by Landlord under this
Article 18 shall be immediately due and payable as Supplementary Rent within ten
(10) days after written demand and shall bear interest at the Default Rate from
the date of notice of such payment by Landlord and the expiration of any grace
period provided herein until repaid.

Section 18.10    Environmental Law Defined. “Environmental Law” and
“Environmental Laws” means respectively any one or more Applicable Laws
pertaining to health, industrial hygiene, hazardous waste or the environmental
conditions in, on, under, from or about the Premises or any part thereof,
including, without limitation, the laws listed in the definition of Hazardous
Substances below, and the rules and regulations promulgated thereunder; in each
case as the same may have been and hereafter may be supplemented, modified,
amended, restated or replaced from time to time.

Section 18.11    Hazardous Substance Defined. “Hazardous Substance” and
“Hazardous Substances” means, respectively, any one or more element, compound,
chemical mixture, contaminant, pollutant, material, waste or other substance (a)
which poses a threat to the public health, safety or welfare

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or to the environment if released, or (b) which is defined, determined or
identified as a “hazardous substance”, “hazardous waste” or “hazardous
material”, or is otherwise regulated under any Applicable Law, including,
without limitation, the following: (i) the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (codified in scattered sections of 26
U.S.C., 33 U.S.C., 42 U.S.C. and 42 U.S.C. § 9601 et seq.); (ii) the Resource
Conservation and Recovery Act of 1976 (42 U.S.C. § 6901 et. seq.); (iii) the
Hazardous Materials Transportation Act (49 U.S.C. § 1801 et. seq.); (vi) the
Toxic Substances Control Act (15 U.S.C. § 2601 , et seq.); (v) the Clean Air Act
(33 U.S.C. § 1251 et seq..); (vi) the Clean Air Act (42 U.S.C. § 7401, et seq..)
; (vii) the Safe Drinking Water Act (21 U.S.C. § 349; 42 (U.S.C. § 201 and §
300f et. seq.); (viii) the National Environmental Policy Act of 1969 (42 U.S.C.
§ 3421); (ix) the Superfund Amendment and Reauthorization Act of 1986 (codified
in scattered sections of 10 U.S.C., 29 U.S.C., 33 U.S.C. and 42 U.S.C.); and (x)
Title III of the Superfund Amendment and Reauthorization Act (40 U.S.C. § 1101
et seq.).

Section 18.12    Cooperation. Landlord and Tenant shall cooperate in the
initiation of claims and the enforcement of remedies against third parties which
may be responsible for environmental conditions at the Premises.

Section 18.13    Medical Waste and Drug Compliance. Tenant shall be responsible
for safe and secure storage, transport and off-site disposal of medical waste
materials, including without limitation, biological or infectious waste and
radioactive materials, shall ensure the compliance with all Applicable Laws
pertaining to such storage, transport and disposal, and shall cause the
promulgation and compliance by the Facilities and all personnel with protocols
for storage and disposal of such waste and compliance with Requirements relating
thereto. Tenant shall be responsible for the safe and secure storage,
dispensation and disposal of pharmaceuticals, drugs and controlled substances at
the Facilities and shall cause the promulgation and compliance by the Facilities
and all personnel with protocols for storage, dispensation and disposal of such
pharmaceuticals, drugs and controlled substances and compliance with
Requirements relating thereto.

Section 18.14    Survival. All representations, warranties, covenants and
indemnities of Tenant in this Article 18 shall continue to be binding upon
Tenant, and its successors and assigns, after the expiration or earlier
termination of this Lease.

Section 18.15    Existing Conditions. Tenant acknowledges and agrees that (i) it
has reviewed and is aware of all environmental conditions at, in, on, under,
from or potentially affecting the Premises (the “Environmental Conditions”),
referenced in the documents and reports listed on Schedule G attached hereto
(the “Environmental Reports”), (ii) it takes possession of the premises with
full knowledge of the Environmental Conditions, and (iii) the “As Is” condition
referenced in Section 20.16 shall include the Environmental Conditions. Tenant
acknowledges and agrees that it hereby waives any claim or remedies against
Landlord arising out of or in connection with any of the Environmental
Conditions, arising in law or equity, whether by statute, regulation, common law
or by agreement other than as specifically provided by this Lease, including but
without limitation, for contribution, cost recovery, interference with quiet
enjoyment of the Premises, reduction or abatement of Rent, or other damages. The
provisions contained in this Section 18.15 shall survive expiration or earlier
termination of this Lease, and any transfer of all or a portion of the premises
by Tenant or Landlord. Notwithstanding any of the information, conclusions or
determinations contained in the Environmental Reports, Tenant hereby
acknowledges that in the event Landlord or any Mortgagee determines that
additional assessment, investigation, sampling, monitoring, remedial or other
response actions may be necessary to address Environmental Conditions at the
Premises or any portion thereof, Landlord shall have the right to conduct such
actions following prior notice to Tenant, and Tenant shall provide access to the
Premises as needed to conduct and complete such work.     

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ARTICLE 19
FINANCIAL AND REGULATORY REPORTING COVENANTS

Section 19.1    Reporting, Requirements. Tenant will furnish to Landlord:

(a)    Annual Audited Financial Statements. As soon as available, and in any
event within ninety (90) days after the end of each applicable fiscal year,
beginning with the fiscal year ending December 31 of the calendar year in which
this Lease is executed, (i) copies of the annual consolidated audited reports
for Tenant, each Operating Subtenant and Guarantor containing balance sheets and
statements of income, retained earnings, and cash flow as at the end of such
fiscal year and for the fiscal year then ended, setting forth in comparative
form the figures for the preceding fiscal year, all in reasonable detail and
audited and certified on an unqualified basis by Tenant’s current accounting
firm, or any other independent accounting firm which is reasonably acceptable to
Landlord, to the effect that such report has been prepared in accordance with
GAAP; (ii) individual operating statements for each Facility at the Premises;
and (iii) all federal, state and local tax returns. As soon as available, and in
any event at least sixty (60) days prior to each fiscal year during the Term,
beginning with the fiscal year in which this Lease is executed, Tenant will
furnish to Landlord a copy of Projections for Tenant’s, each Operating
Subtenant’s and Parent Guarantor’s fiscal year immediately following the fiscal
year which is the subject of the financial statements delivered pursuant to
clause (i) preceding. The foregoing shall be complete in all respects and shall
include all footnotes, if any. All annual financials shall be certified by the
chief executive officer, chief financial officer or chief accounting officer of
Tenant and Operating Subtenant, respectively, or Parent Guarantor, as being true
and complete in all material respects, prepared in accordance with GAAP and
fairly presenting the financial condition and results of operations of Tenant,
Operating Subtenant and Parent Guarantor, respectively, at the date and for the
periods indicated therein.

(b)    Unaudited Quarterly Financial Statements. As soon as available, and in
any event within thirty (30) days after the end of each fiscal quarter (i)
copies of unaudited financial reports for Tenant, Operating Subtenants, and
Guarantor as of the end of such period and for the portion of the fiscal year
then ended containing balance sheets and statements of income, retained
earnings, and cash flow, setting forth in comparative form the figures for the
corresponding period of the preceding fiscal year, in reasonable detail
certified by the chief executive officer, chief financial officer or chief
accounting officer of Tenant, Operating Subtenants, and Guarantor (as
applicable) to have been prepared in accordance with GAAP and to fairly present
the financial condition and results of operations of Tenant, Operating
Subtenants, and Guarantor at the date and for the periods indicated therein,
subject to year-end audit adjustments, (ii) individual operating statements for
each Facility at the Premises, also subject to year-end adjustments, and (iii) a
report of monthly Rent Coverage Ratio for each month in the quarter just ended.
The foregoing shall be complete in all respects and shall include all footnotes,
if any.

(c)    Unaudited Monthly Financial Statement. As soon as available, and in any
event within thirty (30) days after the end of each month of the Term (i) copies
of unaudited financial reports for Tenant and each Operating Subtenant as of the
end of such period and for the portion of the fiscal year then ended containing
balance sheets and statements of income, retained earnings, and cash flow,
setting forth in comparative form the figures for the corresponding period of
the preceding fiscal year, in reasonable detail certified by the chief executive
officer, chief financial officer or chief accounting officer of Tenant and each
Operating Subtenant, respectively to have been prepared in accordance with GAAP
and to fairly present the financial condition and results of operations of
Tenant and each Operating Subtenant at the date and for the periods indicated
therein, subject to year-end audit adjustments and (ii) individual operating
statements for each Facility at the Premises, also subject to year-end
adjustments. The foregoing shall be complete in all respects, shall be created
using software (e.g. Microsoft Excel) reasonably acceptable to Landlord and
shall include all footnotes, if any.

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(d)    CapEx and Operating Budgets. Copies of the annual capital and operating
budgets of each Facility, to be delivered as soon as available, and in any event
on or before at least sixty (60) days prior to each fiscal year during the Term.

(e)    Notice of Litigation. Promptly after receipt by Tenant of notice of the
commencement thereof, notice of all actions, suits, and proceedings before any
Governmental Authority or arbitrator materially adversely affecting Tenant’s
ability to perform its obligations under this Lease and of any Operating
Subtenant’s ability to perform its obligations under an Operating Sublease.

(f)    Notice of Regulatory Actions. Promptly after receipt by Tenant or any
Operating Subtenant of the notice of commencement thereof, and in any event
within five (5) days, notice of (i) any audit, investigation, inquiry, claim
(excluding immaterial adjustments, complaints, and corrective activity in the
ordinary course of business, but including without limitation, Recoupment
Claims), proceeding, settlement, judgment, consent order or agreement,
certificate of compliance agreement or corporate integrity agreement by or
imposed by any Health Care Regulatory Agency affecting any Facility, (ii) any
actual or threatened suspension, debarment or disqualification of Tenant, any
Operating Subtenant or any of their respective Affiliates from being a health
care provider, government contractor, holder of any Health Care License or
recipient of reimbursement from any Third Party Payor, (iii) any actual or
threatened suspension, termination, or revocation of any Health Care License of
Tenant, any Operating Subtenant or any of their respective Affiliates, (iv) any
actual or threatened reimbursement, penalty or fine to any Third Party Payor,
(v) any self, voluntary or involuntary disclosure of any material overpayment to
a Third Party Payor by Tenant, any Operating Subtenant or any of their
respective Affiliates, and/or (vi) any other actual or alleged violation of
Stark Law, the Antikickback Statute or any other Health Care Laws relating to a
Facility, Tenant, any Operating Subtenant, Guarantor and/or their Affiliates.
Notwithstanding anything to the contrary in this Lease, Tenant’s failure to
deliver the documentation and/or information required by this subsection within
the prescribed time periods shall constitute an automatic Event of Default
hereunder.

(g)    Notice of Settlement Negotiations. Tenant shall provide Landlord with
reasonable notice of any and all settlement discussions and/or negotiations
materially adversely affecting Tenant or any Operating Subtenant (excluding
immaterial adjustments, complaints, and corrective activity in the ordinary
course of business) between representatives of Tenant, any Operating Subtenant,
and any Governmental Authority, including without limitation negotiations with
respect to any Claim (including without limitation, Recoupment Claims),
settlement agreement, consent order or agreement, certificate of compliance
agreement or corporate integrity agreement between Tenant and its Affiliates and
any Governmental Authority (“Settlement Discussions”). In connection with
Settlement Discussions, (i) Tenant shall timely provide Landlord with copies of
any and all documents that Tenant or any Operating Subtenant intends to submit,
or that Tenant or any Operating Subtenant receives, in connection with any
Settlement Discussions, and (ii) Tenant shall advise Landlord as to the status
of the Settlement Discussions.

(h)    Tenant shall provide Landlord and the Mortgagee with all documents,
instruments, permits, notices, statements and information reasonably required
under the Mortgage and the other loan documents in connection therewith to be
provided with respect to the Premises and the operation of the Facilities.

(i)    No receipts of any such notice under Subsection (d), (e) and (f) shall
impose any obligation on Landlord to take any action or to enforce its rights
hereunder or otherwise remedy the circumstances leading to such notice.

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(j)    Tenant will keep and maintain or will cause to be kept and maintained on
a fiscal year basis, in accordance with GAAP, proper and accurate books, records
and accounts reflecting all of the financial affairs of Tenant, each Operating
Subtenant and all items of income and expense in connection with the operation
on an individual basis of the Premises. Landlord or Landlord’s designee shall
have the right from time to time (but not more than once in any calendar quarter
unless Tenant shall be in Default under this Lease), at all times during normal
business hours upon reasonable advance notice to examine such books, records and
accounts at the office of Tenant or any other Person maintaining such books,
records and accounts and to make such copies or extracts thereof as Landlord
shall desire.

(k)    Tenant will furnish Landlord within thirty (30) days after the end of
each calendar month a true, complete and correct Occupancy Report for the
Facilities.

(l)    Tenant shall furnish Landlord, within five (5) days of the receipt by
Tenant or any Operating Subtenant, all notices (regardless of form) or charges
issued relating to non-compliance from any Health Care Regulatory Agency and/or
any Third Party Payor that Tenant’s or any Operating Subtenant’s license,
Medicare or Medicaid certification, as applicable, or accreditation or ranking
by any Health Care Regulatory Agency or Third Party Payor is being, or could be,
downgraded, revoked, suspended or limited, that action is pending, being
considered or being, or could be, taken to downgrade, revoke, suspend or limit
Tenant’s or any Operating Subtenant’s license, certification or accreditation or
to fine, sanction, penalize or impose remedies upon Tenant or any Operating
Subtenant, or that action is pending, being considered, or being, or could be,
taken, to discontinue, suspend, deny, decrease or recoup any payments or
reimbursements due, made or coming due to Tenant or any Operating Subtenant or
related to the operation of any Facility.

(m)    Tenant shall file (and shall cause each Operating Subtenant to file) all
required Third Party Payor cost reports on or prior to the date such reports are
due and shall furnish Landlord, within thirty (30) days of the date of filing, a
complete and accurate copy of the annual Medicare or Medicaid cost report and
other annual Third Party Payor cost reports for Tenant and the Operating
Subtenant, and promptly furnish Landlord any amendments filed with respect to
such reports and all notices, responses, audit reports or inquiries with aspect
to such reports.

(n)    Tenant shall furnish Landlord, within thirty (30) days of the receipt by
Tenant or an Operating Subtenant, all annual reimbursement rate sheets from all
Third Party Payors, and promptly after receipt thereof by Tenant or an Operating
Subtenant, any new, revised or amended reimbursement rate sheets and other
annual reimbursement rate sheets from all Third Party Payors for Tenant which
may be issued subsequent to the annual reimbursement rate sheets.

(o)     With respect to any deficiency cited, Tenant shall furnish Landlord,
within ten (10) Business Days of receipt but at least five (5) days prior to the
earliest date on which Tenant or any Operating Subtenant is required to take any
action with respect thereto or would suffer any adverse consequence, a copy of
any Third Party Payor or other licensing or accreditation or ranking agency or
entity survey, report, warning letter, or notice, and any statement of
deficiencies, and within the time period required by the particular agency for
furnishing a plan of correction also furnish or cause to be furnished to
Landlord a copy of the plan of correction generated from such survey, report,
warning letter, or notice for Tenant or any Operating Subtenant and by
subsequent correspondence related thereto, and correct or cause to be corrected
any deficiency, the curing of which is a condition of continued licensure or of
full participation in any Third Party Payor program by the date required for
cure by such agency or entity (plus extensions granted by such agency or
entity).

(p)    Any reports, statements or other information required to be delivered
under this Lease shall be delivered (i) in paper form, (ii) in electronic format
as directed by Landlord, and (iii) if

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requested by Landlord and within the capabilities of Tenant’s data systems
without change or modification thereto, in electronic form. Tenant agrees that
Mortgagee may disclose information regarding the Facilities as provided to
Mortgagee pursuant to this Section in connection with the securitization of the
Mortgage Loan to such parties requesting such information in connection with
such securitization.

(q)    Tenant shall cause all residency agreements of the Facilities to
substantially comply with any applicable Health Care Requirements.

(r)     If Tenant fails to deliver to Landlord any report, statement or
information required under this Section within five (5) days of the date due
hereunder, Tenant shall pay to Landlord a late fee of $5,000 per Property for
each such late delivery, plus an additional late fee equal to $250 per day per
report, statement or information per Property for each day that such failure
continues beyond the initial ten days.

Section 19.2    Compliance with Anti-Terrorism Laws. Tenant represents and
warrants to Landlord that it is not, and, after making a commercially reasonable
inquiry, that no person who directly owns a controlling interest in or otherwise
directly controls Tenant, any Operating Subtenant or Guarantor is, (i) listed on
the Specially Designated Nationals and Blocked persons List (the “SDN List”)
maintained by the Office of Foreign Assets Control (“OFAC”), Department of the
Treasury, and/or on any other similar list (“Other Lists” and, collectively with
the SDN List, the “Lists”) maintained by the OFAC pursuant to any authorizing
statute, Executive Order or regulation (collectively, “OFAC Laws and
Regulations”); or (ii) a person (a “Designated Person”) designated under
Sections 1(a), 1(b), 1(c) or 1(d) of Executive Order No. 13224, 66 Fed. Reg.
49079 (published September 25, 2001) or similarly designated under any related
enabling legislation or any other similar Executive Orders (collectively, the
“Executive Orders”). The OFAC Laws and Regulations and the Executive Orders are
collectively referred to in this Agreement as the “Anti-Terrorism Laws”. This
Section shall not apply to any person to the extent that such person’s interest
in the Tenant is through a U.S. Publicly-Traded Entity. As used in this Lease,
“U.S. Publicly-Traded Entity” means a person (other than an individual) whose
securities are listed on a national securities exchange, or quoted on an
automated quotation system, in the United States, or a wholly-owned subsidiary
of such a person.

Section 19.3    REIT Audit. Tenant acknowledges that Landlord may be, or may be
affiliated with, a publicly registered company (“Registered Company”). Tenant
acknowledges that it has been advised that if the Landlord is or becomes, or is
or becomes affiliated with a Registered Company, that the Landlord or said
affiliate may be required to make certain filings with the Securities and
Exchange Commission (the “SEC Filings”) that relate to the three (3) fiscal
years prior to the fiscal year in which this Lease is dated (the “Audited
Years”) through the first anniversary of the date of this Lease (the “stub
period”) for the Premises (calculated on a per Property basis). To assist
Landlord and its affiliate in preparing the SEC Filings, Tenant covenants and
agrees that it shall cause Guarantor and each Operating Subtenant to provide
Landlord with the following: (i) copies of bank statements for the Audited Years
and stub period; (ii) intentionally deleted; (iii) operating statements for the
Audited Years and stub period; (iv) copies of the general ledger for the Audited
Years and stub period; (v) cash receipts schedule for each month in the Audited
Years and stub period; (vi) copies of invoices for expenses and capital
improvements in the Audited Years and stub period; (vii) accounts payable ledger
and accrued expense reconciliations; (viii) check register for the Audited Years
and stub period; (ix) intentionally deleted; (x) copies of all insurance
documentation for the Audited Years and stub period; (xi) copies of Accounts
Receivable aging as of the end of the Audited Years and stub period along with
an explanation for all accounts over 30 days past due as of the end of the
Audited Years and stub period; (xii) a signed representation letter in the form
attached hereto as Schedule “19.3-A”, and (xiii) to the extent necessary, the
information set forth in the letter set forth in the form attached hereto as
Schedule “19.3-B”. The

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foregoing shall be subject to compliance with all Applicable Laws and will be
performed at Tenant’s cost to the extent prepared in the ordinary course of
business, and otherwise at Landlord’s cost, reimbursable to Tenant upon demand;
provided, that such reimbursement be commercially reasonable and supported by
documentary evidence satisfactory to Landlord in its sole discretion.

Section 19.4    Publication.

(a)    Landlord shall be permitted to rely upon the accuracy and completeness of
the items furnished pursuant to this Article and to disclose and publish the
same as required by Applicable Laws. Without limiting the generality of the
foregoing, Tenant acknowledges that Landlord is a subsidiary of a Real Estate
Investment Trust and that, as such, it is subject to certain filing and
reporting requirements in accordance with federal laws and regulations,
including but not limited to, regulations promulgated by the Securities and
Exchange Commission. Accordingly, and notwithstanding any provision of this
Lease or the provisions of any other existing agreement between the parties
hereto to the contrary, Landlord may publicly file, disclose, report or publish
any and all information related to this Lease (including the information
provided to Landlord pursuant to this Article) that may be reasonably
interpreted as being required by federal or state law or regulation.

(b)    Except as provided below, and except for disclosures of information
permitted by Section 19.4(a), Landlord shall use commercially reasonable efforts
to keep confidential the information provided to Landlord pursuant to this
Article. Notwithstanding the foregoing, Landlord may disclose such information
(i) to its existing or potential lenders or purchasers of the Premises, (ii) to
Landlord’s and to said lenders’ and purchasers’ affiliates, directors, officers,
employees, and third party advisors (including, without limitation, financial
advisors, legal counsel and accountants), and (iii) as may be required by court
order.

ARTICLE 20
LICENSED FACILITY OPERATION; ACCESS TO BOOKS
AND RECORDS; MANAGEMENT

Section 20.1    Compliance. The parties agree that if this Lease is determined
to be governed by §1861(v)(1)(i) of the Social Security Act (§952 of the Omnibus
Reconciliation Act of 1980) and the regulations promulgated in implementation
thereof at 42 C.F.R. Part 420, the parties each agree to make available to the
Comptroller General of the United States, the Department of Health and Human
Services (“HHS”) and their duly authorized representatives, the books, documents
and records of either of the parties and such other information as may be
required by the Comptroller General or Secretary of HHS to verify the nature and
extent of the costs of services provided by either of the parties. If either of
the parties carry out the duties of this Lease through a subcontract worth
$10,000 or more over a twelve (12) month period with a related organization, the
subcontract will also contain an access clause to permit access by the
Secretary, Comptroller General and their representatives to the related
organization’s books and records.

Section 20.2    Reserved.

Section 20.3    Facility Operations. Tenant shall operate or cause the Operating
Subtenant to operate the Facilities consistent with its current operation.
Landlord is merely the lessor of the real property which is the subject of this
Lease and shall have no liability in connection with the operation of the
Facilities or the provision of health care services from or at the Facilities.
Tenant shall cause the Operating Subtenant, as the operator, licensee and
provider of the Facilities and all health care services provided from or at the
Facilities, independent and separate from Landlord, to (i) secure and maintain
in full force and effect all Health Care Licenses relating to such Facilities
and services; (ii) comply with all

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Requirements including without limitation all Requirements of Governmental
Authorities and under Health Care Licenses, (iii) maintain quality control of
such Facilities and services, (iv) maintain all computer systems, software,
record keeping, data bases and privacy requirements relating to the Facilities,
all of which shall be provided at Tenant’s own expense, and (v) operate the
Facilities and the services provided thereon in compliance with all Applicable
Laws, including all Healthcare Laws.

Section 20.4    Inspections and Audits. For purposes of satisfying the
requirements of any Mortgage, or any refinancing, sale or appraisal process,
Landlord shall have the right (but not the obligation) to conduct such
inspections, audits, visitations and quality control reviews, of the Facilities
and services provided by Tenant or the Operating Subtenants from or at the
Facilities as Landlord may desire, and for such purposes Tenant shall provide to
Landlord and its representatives access to Tenant’s books and records (and shall
cause Operating Subtenant to provide to Landlord and its representatives access
to their books and records) relating to such Facilities and services during
normal business hours upon reasonable, written notice. No such inspection,
audit, visitation or quality control review conducted by Landlord or its
representatives or any report resulting therefrom shall modify or reduce in any
way Tenant’s or any Operating Subtenant’s obligations under this Lease or as the
parent of the exclusive operator, licensee and provider of the Facilities and
health care services from or at the Facilities, as applicable.

Section 20.5    Relationship of Parties. Landlord and Tenant shall be
independent contractors and nothing in this Lease shall be construed as creating
a partnership, joint venture, employment, agency, license or franchise
relationship. Tenant shall not have any authority to create any obligation
binding upon Landlord.

Section 20.6    Employees. All employees, contractors, consultants,
professionals and providers relating to the Facilities and health care services
provided from or at the Facilities shall be deemed to be employees or
contractors of Tenant or the Operating Subtenants and not of Landlord.

Section 20.7    License Requirements. Tenant shall cause the Operating
Subtenants to provide, at its own expense all deposits, bonds, insurance,
letters of credit, working capital, cash collateral, reserves, patient trust
fund accounts and other financial requirements of Health Care Licenses to
operate and provide health care services at the Facilities.

Section 20.8    Recoupment Claims. Tenant shall assume, or shall cause the
Operating Subtenants to assume, and shall have the exclusive responsibility for
all Claims, if any, of overpayment or recoupment made by Third Party Payors,
including without limitation, Medicaid, relating to the provision of health care
services from or at the Facility, including both (i) those attributable to
periods on or prior to the date of this Lease and (ii) those attributable to
periods during the Term of this Lease (collectively, “Recoupment Claims”).
Tenant or the Operating Subtenants shall continue to have such exclusive,
responsibility for Recoupment Claims, if any, regardless of whether Tenant or
the Operating Subtenants assume and utilize the Medicaid provider numbers of the
Facilities in existence prior to the date of this Lease or obtain new Medicaid
provider numbers for the Facilities.

Section 20.9    Operations. Tenant shall cause operations at the Facilities to
be conducted at all times, at a minimum, in a manner consistent with or better
than Governmental Authority requirements, and, in connection therewith, Tenant
shall or shall cause the Operating Subtenants to:

(a)    maintain the standard of care for the residents or patients of the
Facilities at all times at a level necessary to ensure a level of quality of
care for the residents or patients of the Facility in material compliance with
Health Care Law;

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(b)     maintain a standard of care in the storage, use, transportation and
disposal of all medical equipment, medical supplies, medical products or gases,
and medical waste, of any kind and in any form, that is in material compliance
with all Applicable Laws;

(c)     operate the Facilities in a prudent manner in material compliance with
Applicable Laws and cause all Health Care Licenses, reimbursement or care
contracts, and any other agreements necessary for the certification, licensure,
accreditation or operation of the Facilities as may be necessary without
reduction in the number of licensed beds or beds, including the number of higher
acuity beds, authorized for use in each of the Third Party Payor reimbursement
programs, if any;

(d)     not take or permit action that would have a Material Adverse Effect on
Tenant or an Operating Subtenant;

(e)     not take any action to rescind, withdraw, revoke, amend, modify,
supplement or otherwise alter the nature, tenor, or scope of the Health Care
Licenses;

(f)     not take any action that will, to the extent applicable, adversely
affect the Health Care Licenses; and

(g)     maintain all deposits, including deposits relating to residents or
residency agreements. If such deposits are in cash, Tenant shall deposit and
hold such deposits in accordance with Applicable Law. Tenant shall cause any
bond or other instrument which Tenant or any Operating Subtenant is permitted to
hold in lieu of cash deposits under any Applicable Law or Governmental Authority
requirements to be maintained in full force and effect and to comply, in all
material respects, with any Applicable Law or Governmental Authority
requirements. Tenant shall, upon written request, provide Landlord with evidence
reasonably satisfactory to Landlord of Tenant’s material compliance with the
forgoing.

Section 20.10    No Transfer of Health Care Licenses/Payor Agreements. Tenant
shall not (nor permit the Operating Subtenant to) assign, transfer, or pledge as
collateral security any of its interest in any Health Care Licenses or, to the
extent applicable, Third Party Payor payment or reimbursement contracts
(including rights to payment thereunder) pertaining to them or the Facilities,
or assign, transfer, or remove or permit any other Person to assign, transfer,
or remove any records pertaining to the Facilities, including, without
limitation, resident records, medical and clinical records (except for removal
of such resident records as directed by the residents owning such records or in
accordance with Federal or State privacy laws, including HIPAA and the HITECH
Act and the regulations promulgated thereunder, as amended, to the extent
applicable), without Landlord’s prior written consent, which consent may be
granted or refused in Landlord’s sole discretion; except that (i) the foregoing
shall not apply to an assignment or pledge as collateral to the Working Capital
Lender as a part of the Landlord Lien Collateral, subject to the terms of the
Inter-Creditor Agreement and (ii) Tenant may, to the extent permitted by
Applicable Law, store such records in a manner consistent with Tenant’s standard
policies and procedures. Tenant shall hold such Health Care Licenses (and shall
cause the Operating Subtenants to hold such Health Care Licenses) free from
restrictions or known conflicts that would materially impair the use or
operation of the Facilities as intended, and are not provisional, probationary
or restrictive in any way.

Section 20.11    Other Transactions. Tenant shall not enter into any
transaction, or permit any Operating Subtenant to enter into any transaction,
other than in the ordinary course of its business and on fair and reasonable
terms in material compliance with Applicable Laws and Governmental Authority
requirements and, no less favorable to Tenant (or as applicable, the Operating
Subtenant) than those it would obtain in a comparable arms-length transaction
with a person or entity not an Affiliate.

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Section 20.12    Hill-Burton. Tenant shall not participate in (nor permit the
Operating Subtenant to participate in) any federal, state or local program
whereby any Governmental Authority or other Person may have the right to recover
funds with respect to the Facilities by reason of the advance of federal, state
or local funds, including, without limitation, those authorized under the
Hill-Burton Act (42 U.S.C. 291, et seq.).

Section 20.13    Compliance Evidence. Tenant shall deliver to Landlord evidence
of material compliance with any applicable post-transfer license requirements of
Governmental Authorities.

Section 20.14    Licensed Beds. Tenant shall ensure that the number of licensed
beds, including the number of any higher acuity beds, for residents of any the
Facilities is not decreased without the prior written consent of Landlord. With
respect to reductions in licensed beds due to an Alteration or Restoration,
Landlord’s consent shall not be unreasonably withheld, conditioned or delayed;
provided, however, that notwithstanding the foregoing, Landlord may grant or
withhold its consent in its sole discretion if the number of licensed beds for
patients and residents, including the number of any higher-acuity beds, of any
Facility is to be decreased by more than five percent (5%) of the Licensed Bed
Capacity.

Section 20.15    Tenant Representations and Warranties. Tenant hereby
represents, warrants and certifies to Landlord and Landlord’s designee, as of
the date hereof, as follows:

(a)    Tenant is the tenant under this Lease.

(b)    Tenant has accepted and is occupying or causing the occupancy of the
entire Premises. All improvements to the Premises required by this Lease to be
made by Landlord have been completed by Landlord in accordance with this Lease.

(c)    To Tenant’s Knowledge, there are no defenses to or offsets against the
enforcement of this Lease or any provision thereof against Tenant any Tenant
hereby waives any defenses to or offsets against.

(d)    This Lease is in full force and effect without Default thereunder by
Tenant or, to the best knowledge of Tenant, Landlord.

(e)    To Tenant’s Knowledge, on the date of this Lease, there are no actions,
whether voluntary or otherwise, pending against Tenant under the Bankruptcy
Code.

(f)     All Health Care Licenses, required, necessary or desirable for the legal
use, occupancy and operation of each of the Facilities have been obtained and
are in full force and effect, including, without limitation, to the extent
applicable, approved provider status in any Third Party Payor payment or
reimbursement program license, or approval issued by the applicable Governmental
Authority, as applicable for the requisite number of beds at such Facilities. To
the extent applicable, within thirty (30) days following the Effective Date of
this Lease, Tenant shall cause all of the Operating Subtenants to obtain, and
once obtained, to maintain in full force and effect approved provider status in
the Medicaid Program; and further within said time period shall provide to
Landlord commercially reasonable evidence of having satisfied said requirement.
Tenant will cause the Operating Subtenants to own and/or possess, and to hold
free from restrictions or conflicts with the rights of others all such Health
Care Licenses, and to operate the Facilities in a manner such that such Health
Care Licenses shall remain in force and effect.

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(g)     The Health Care Licenses, may not be and have not been transferred to
any location other than the respective Facility, have not been pledged as
collateral security, and are held free from restrictions or known conflicts that
would materially impair the use or operation of any Facility as intended, and
are not provisional, probationary or restricted in any way.

(h)     None of Tenant, any Operating Subtenant or any of their Affiliates has
taken or will take any action to rescind, withdraw, revoke, amend, modify,
supplement or otherwise alter the nature, tenor, or scope of the Health Care
License.

(i)     Neither this Lease nor Tenant’s performance hereunder will adversely
affect the Health Care Licenses.

(j)     Each Facility is duly licensed as required under Applicable Laws of the
State in which the Facility is located. The licensed bed capacity of each
Facility is as set forth on Schedule 1 in the column named “Licensed Beds” (the
“Licensed Bed Capacity”). Neither Tenant nor any Facility has applied to reduce
the number of licensed beds, or other licensed healthcare services, as more
particularly described on Schedule 1, of such Facility, to move or transfer the
right to any and all of the licensed beds, or other licensed healthcare
services, of such Facility to any other location, or to amend or otherwise
change such Facility’s authorized bed capacity and/or the number of beds, or
other licensed healthcare services, approved by the applicable Governmental
Authority in the State where such Facility is located, and there are no
proceedings or actions pending or, to Tenant’s Knowledge, contemplated to reduce
the number of licensed beds, or other licensed healthcare services, of such
Facility.

(k)     Tenant, each Operating Subtenant, their Affiliates, and the operation of
each Facility are in material compliance with all Applicable Laws, Health Care
Licenses and requirements of Health Care Regulatory Agencies and other
Governmental Authorities having jurisdiction over the operation of such
Facility, including, (i) staffing requirements, (ii) health and fire safety
codes and standards, including quality and safety standards, (iii) accepted
professional standards and principles that apply to professionals providing
services in such Facility, (iv) federal, state or local laws, rules, regulations
or published interpretations or policies relating to the prevention of fraud and
abuse, (v) insurance, reimbursement and cost reporting requirements, (vi)
government payment program requirements and disclosure of ownership and related
information requirements, (vii) requirements of the applicable state department
of health or equivalent and all other federal, state, or focal governmental
authorities, including without limitation those relating to such Facility’s
physical structure and environment, licensing, quality and adequacy of medical
care, distribution or pharmaceuticals, rate setting, equipment, personnel,
operating policies, additions to facilities and services and fee splitting, and
any other applicable laws, regulations or agreements for reimbursement for the
type of care or services provided with respect to such Facility. Tenant will and
will cause the operation of each Facility to be in material compliance with the
foregoing throughout the Term of this Lease.

(l)     To the extent applicable, each Operating Subtenant is in compliance with
the requirements for participation in the Medicare and Medicaid Programs and any
applicable licensing regulations with respect to each Facility that currently
participates in such programs, including the Medicare and Medicaid Patient and
Program Protection Act of 1987, and has a current provider agreement under Title
XVIII and/or XIX of the Social Security Act, which is in full force and effect.
The Facilities did not have any deficiencies or survey violations of a “Level A”
(or equivalent) or worse (with respect to assisted living facilities), or any
analogous licensure deficiency on any survey within the last year, nor has the
Operating Subtenant or the prior operator of the Facilities been cited with any
substandard quality of care deficiencies (as that term is defined in Part 488 of
42 C.F.R) for the past two years. Neither the Facilities nor any other health
care facility owned or operated by Tenant, the Operating Subtenants, Guarantor
or, except has been disclosed in writing to Landlord, their respective
Affiliates has

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been the subject of a “Level A” or “double G” or “immediate jeopardy” (or an
analogous state licensure deficiency) determination for the last three years.

(m)     To Tenant’s Knowledge, no Facility has received a statement of charges
or deficiencies and no penalty enforcement actions have been undertaken against
any Facility, Tenant, Operating Subtenant or any other operator, manager,
officer, director, employee or contractor, by any governmental agency during the
last three calendar years except as posted on the State of Michigan website
(http://w1.lara.state.mi.us/AdultFosterCare), and there have been no violations
over the last three calendar years that resulted in the Facilities’ operator or
any of the Facilities’ suspension, probation, revocation, and/or decertification
for participation in any other Third Party Payor program, to the extent
applicable, except as previously disclosed in writing to Landlord prior to the
Commencement Date and prior to the Effective Date, and/or any self-disclosure or
reporting, whether voluntary or involuntary, to any Governmental Authority
and/or, to the extent applicable, any other Third Party Payor.

(n)     To Tenant’s Knowledge, none of Tenant, any Operating Subtenant, their
Affiliates, or any Facility, is a target of, participant in, or subject to any
action, proceeding, suit, audit, investigation or sanction by any Governmental
Authority or any administrative or investigative body or entity or any other
third party or any resident (including, without limitation, whistleblower suits,
or suits brought pursuant to federal or state False Claims Acts, and
Medicaid/Medicare/State fraud/abuse laws or any other Health Care Laws) which
may result, directly or indirectly, or with the passage of time, in the
imposition of a fine, penalty, alternative, interim or final sanction, or any
other civil or criminal remedy, or which could reasonably be expected to have a
Material Adverse Effect on Tenant, an Operating Subtenant, their Affiliates, or
the operation of any Facility, including such Facility’s ability to accept or
retain residents, or which could result in the appointment of a receiver or
manager, or in the modification, limitation, annulment, revocation, transfer,
surrender, suspension or other impairment of a Health Care License, otherwise
reduce the Rent Coverage Ratio below 1.15 to 1.00 for two (2) consecutive Test
Dates, nor, to Tenant’s Knowledge, has Tenant any such action, proceeding, suit,
inquiry, audit, investigation or sanction been threatened in writing.

(o)      To Tenant’s Knowledge, there are no violations of the Condominium
Documents with respect to the operation of a Facility on the Land subject to the
Condominium Documents and the occupancy of the Facility by Tenant, Subtenants,
and to Tenant’s Knowledge all residents and/or patients thereof is in compliance
therewith.

(p)     There are no agreements with residents of any Facility, or with any
other persons or organizations, which deviate in any material adverse respect
from, or which conflict with, any Applicable Laws. Tenant or each Operating
Subtenant has in place policies and procedures to maintain all resident records
at each Facility, including patient and/or resident account records, in
accordance with Applicable Laws and professional standards.

(q)     Other than any applicable the Medicaid waiver programs, neither Tenant
nor the Operating Subtenants are a participant in any federal, state or local
program whereby any federal, state or local government or quasi-governmental
body, or any intermediary, agency, board or other authority or entity that may
have the right to recover funds with respect to any Facility by reason of the
advance of federal, state or local funds, including, without limitation, those
authorized under the Hill-Burton Act (42 U.S.C. 291, et seq.). Tenant has
received no notice, and to Tenant’s Knowledge Tenant is not in violation of
applicable antitrust laws.

(r)     To Tenant’s Knowledge, all Third Party Payor insurance cost reports and
financial reports, if any, submitted by or on behalf of Tenant, each Operating
Subtenant, any Facility are and will continue to be materially accurate and
complete and have not been and will not be misleading in

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any material respects. There are no current, pending or outstanding, Third Party
Payor programs reimbursement audits or appeals pending at any of the Facilities,
there are no cost report years that are subject to audits, no cost reports
remain “open” or unsettled, and there are no current or pending Third Party
Payor programs recoupment efforts at any Facility.

(s)     Except as otherwise permitted in the Mortgage or any other loan document
in connection therewith or any receivable financing arrangement of Tenant, (i)
Tenant’s Third Party Payor Accounts Receivable, if any, are free and clear of
Liens, (ii) Tenant has not pledged any of its receivables as collateral security
for a loan or other indebtedness and (iii) Tenant has no material indebtedness
other than the obligation to guaranty the repayment of the Working Capital Loan
and unsecured amounts owed to trade vendors of any Facility in the normal course
of business which are no more than thirty (30) days past due.

(t)     Neither Tenant nor any Operating Subtenant is a party to any collective
bargaining agreement or other labor contract applicable to persons employed by
it at any Facility and to Tenant’s Knowledge there are no threatened or pending
labor disputes at any Facility.

(u)     Tenant has instituted or caused each Operating Subtenant to institute,
and each Facility is operated in material compliance with a compliance plan
which follows applicable guidelines established by Health Care Regulatory
Agencies to the extent applicable.

(v)    Tenant and each Operating Subtenant is in material compliance with the
Healthcare Insurance Portability and Accountability Act of 1996, and the
regulations promulgated thereunder to the extent applicable.

(w)     Each Facility and the use and operation thereof complies in all material
respects with all Applicable Laws including, without limitation, local, state,
and federal building codes, fire codes, health care, and other similar
regulatory requirements and no waivers of such physical plant standards exist at
any of the Facilities which would have a Material Adverse Effect on Tenant or an
Operating Subtenant.

(x)    Any existing agreement relating to the management or operation of each
Facility is in full force and effect, to Tenant’s Knowledge is not in default by
any party and is in compliance with all applicable Health Care Laws. If it is
subsequently determined by the appropriate Health Care Regulatory Agency that
one or more of said management agreements is not in compliance with any
applicable Health Care Laws, Tenant shall cause the Operating Subtenants to
modify the non-complying management agreements to cause same to comply with all
Health Care Laws.

(y)    Neither Tenant, any Operating Subtenant nor any Facility has or will,
other than in the normal course of business, change the terms of its normal
billing payment or reimbursement policies and related procedures, including the
amount and timing of finance charges, fees and write-offs.

(z)     Tenant will cause to be delivered to Landlord, with a copy to any other
individual or entity as Landlord may reasonably direct and subject to
appropriate redaction of resident personal information for confidentiality
purposes, a true, correct and complete Occupancy Report for the Facilities.

Section 20.16    Leasing “As-Is”. The parties acknowledge that Tenant has
conducted all of its own due diligence, examination and inspection regarding the
Facilities and the business of providing health care services from and at the
Facilities and is entirely familiar with all business, financial, liability,
physical premises, operational and regulatory aspects, and every other matter or
thing affecting or related to the health care business operated at the
Facilities, and that Tenant is leasing the same in its “As Is”

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condition. Landlord has not made and does not make any representations or
warranties whatsoever with respect to the health care business conducted at and
from the Facilities or otherwise with respect to this Lease, express or implied,
and Tenant is not relying on Landlord or its Affiliates in connection with any
decision to enter into this Lease. Tenant assumes all risks resulting from any
defects (patent or latent) in the Premises or from any failure of the same to
comply with any Requirement or Applicable Law with respect to the Premises or
the uses or purposes for which the same may be occupied.

Section 20.17    Management Agreements.

(a)     Throughout the Term, Tenant shall not enter into, nor permit an
Operating Subtenant to enter into, any Management Agreement without the prior
written approval of Landlord, in each instance, which approval may not be
unreasonably withheld, conditioned or delayed. Tenant shall not (and shall not
permit any Subtenant or Affiliate to), without the prior written consent of
Landlord, which consent Landlord may not unreasonably withhold, condition or
delay, agree to: (i) any change in the Manager under any Management Agreement;
(ii) any material change in any Management Agreement; (iii) the termination of
any Management Agreement; or (iv) the assignment of any Management Agreement by
any Manager. Each Management Agreement shall provide that Landlord shall receive
notice of any defaults thereunder and, at Landlord’s option, an opportunity to
cure any such defaults. If Landlord shall cure any of Tenant’s defaults under
any Management Agreement, the cost of any such cure shall be payable upon demand
to Landlord by Tenant as Supplementary Rent. Any manager shall be reputable and
have experience in managing facilities similar in size, scope, use and value as
the Facilities or any one of them for which they are assigned management
responsibilities.

(b)     In the event the Management Agreement is terminated or expires, Tenant
immediately shall engage (or cause Operating Subtenant) to engage the services
of a third party for the management of all or any part of the Facility meeting
the following criteria, to be demonstrated by Tenant to the reasonable
satisfaction of Landlord: (a) the proposed manager shall have sufficient
operating experience and history; (b) the proposed manager shall, in Landlord’s
reasonable judgment be, a reputable person or entity of good character and have
a general business reputation for providing quality healthcare services
reasonably compatible with the services provided by Tenant and/or Operating
Subtenant; (c) the proposed manager shall collaterally assign and subordinates
its Management Agreement with Tenant to this Lease by executing a collateral
assignment and subordination agreement in favor of Landlord. As used herein, a
manager shall be deemed to have “sufficient operating experience and history”
if, immediately prior to entering into the Management Agreement, such Person
(together with its Affiliates and/or officers, directors, and managers) (i)
operated or managed at least five (50 facilities engaged in the same business as
the Facility, and (ii) has been in the business of operating or managing
assisted living facilities with memory care for at least five (5) years.

(c)    All management fees, payments in connection with any extension of credit
and fees for services provided in connection with the operation of the Facility,
and all other payments and fees, payable by Tenant to any Manager, including a
Manager that is an Affiliate of Tenant, shall be subordinated to the obligations
of Tenant under this Lease. Tenant shall deliver to Landlord any reasonable
instrument requested by Landlord to implement the intent of the foregoing
provision.

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ARTICLE 21
MISCELLANEOUS PROVISIONS

Section 21.1    Waiver of Jury Trial. IT IS MUTUALLY AGREED BY AND BETWEEN
LANDLORD AND TENANT THAT THE RESPECTIVE PARTIES SHALL AND THEY HEREBY DO WAIVE
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF THE
PARTIES HERETO AGAINST THE OTHER ON ANY MATTERS WHATSOEVER ARISING OUT OF OR IN
ANY WAY CONNECTED WITH THIS LEASE, TENANT’S USE OR OCCUPANCY OF THE PREMISES,
AND/OR ANY CLAIM OF INJURY OR DAMAGE EXCLUDING ANY CLAIM FOR PERSONAL INJURY OR
PROPERTY DAMAGE.

Section 21.2    Signs. With the prior written consent of Landlord, which will
not be unreasonably withheld, conditioned or delayed, Tenant may place one or
more signs on the Premises to indicate the nature of the business of Tenant and
such parties. Any sign shall be lawful under applicable sign codes and
subdivision covenants. Landlord hereby approves the signage currently placed on
the Premises.

Section 21.3    Certain Definitions. (a)     The term “Landlord” as used herein
means only the owner or the mortgagee in possession for the time being of the
Premises, so that in the event of any sale, transfer or conveyance of the
Premises Landlord shall be and hereby is entirely freed and relieved of all
agreements, covenants and obligations of Landlord thereafter accruing hereunder
and it shall be deemed and construed without further agreement between the
parties or their successors in interest or between the parties and the
purchaser, transferee or grantee at any such sale, transfer conveyance that such
purchaser, transferee or grantee has assumed and agreed to carry out any and all
agreements, covenants and obligations of Landlord hereunder.

(b)     The term “Tenant” as used herein means the tenant named herein, and from
and after any valid and approved Transfer in whole of said Tenant’s interest
under this Lease pursuant to the provisions of Article 9, means only the
assignee or transferee thereof; but the foregoing shall not release the assignor
or transferor from liability under this Lease.

(c)    The words “enter”, “re-enter”, “entry” and “re-entry” as used in this
Lease shall not be restricted to their technical legal meaning.

(d)     The use herein of the neuter pronoun in any reference to Landlord or
Tenant shall be deemed to include any individual Landlord or Tenant, and the use
herein of the words “successor and assigns” or “successors or assigns” of
Landlord or Tenant shall be deemed to include the heirs, executors,
administrators, representatives and assigns of any individual Landlord or
Tenant.

Section 21.4    Headings. The headings herein are inserted only as a matter of
convenience and for reference and in no way define, limit or describe the scope
or intent of this Lease nor in any way affect this Lease.

Section 21.5    Sprinklers. Notwithstanding any language to the contrary herein
or in the Sale Agreement, or other agreements between the parties hereto, Tenant
shall, at no expense to Landlord, cause each of the Facilities not currently
fully-sprinklered, to become fully-sprinklered, in compliance with and meeting
all requirements of all Applicable Laws and Health Care Requirements, no later
than one hundred eighty (180) calendar days following the Commencement Date.

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Section 21.6    Integration; Amendment. (a)     This Lease contains the entire
agreement between the parties regarding the subject matter set forth herein and
may not be extended, renewed, restated, terminated or otherwise modified in any
manner except by an instrument in writing executed by the party against whom
enforcement of any such modification is sought and with the consent of any
Mortgagee. All prior understandings and agreements between the parties and all
prior working drafts of this Lease are merged in this Lease, which alone
expresses the agreement of the parties. The parties agree that no inferences
shall be drawn from matters deleted from any working drafts of this Lease.

(b)    Tenant agrees that Tenant will not, without the prior written consent of
Landlord, (i) amend, restate, supplement or modify this Lease, (ii) terminate,
cancel or surrender the term of this Lease, or enter into any agreement with
Landlord to do so, except as expressly permitted by the provisions of this Lease
or (iii) pay any installment of Base Rent more than one (1) month in advance of
the due date thereof or otherwise than in the manner provided for in this Lease.

Section 21.7    Successors and Assigns. The agreements, terms, covenants and
conditions herein shall bind and inure to the benefit of Landlord and Tenant and
their respective heirs, personal representatives and, except as is otherwise
provided herein, their permitted successors and permitted assigns.

Section 21.8    Notices. Notice whenever provided for herein shall be in writing
and shall be given either by personal delivery, overnight express mail or by
certified or registered mail, return receipt requested, to Landlord at the
address hereinabove set forth, and to Tenant at the address hereinabove set
forth, or to such other Persons or at such other addresses as may be designated
from time to time by written notice from either party to the other. Notices
shall be deemed given (i) when delivered personally if delivered on a Business
Day (or if the same is not a Business Day, then the next Business Day after
delivery), (ii) three (3) Business Days after being deposited in the United
States mail, registered or certified mail, postage prepaid, return receipt
requested or (iii) if delivery is made by Federal Express or a similar,
nationally recognized overnight courier service for 9:00 am. delivery, then on
the date of delivery (or if the same is not a Business Day, then the next
Business Day after delivery), if properly sent and addressed in accordance with
the terms of this Section 21.8.

Section 21.9    Construction of Lease. (a)     If any provision of this Lease
shall be invalid or unenforceable, the remainder of the provisions of this Lease
shall not be affected thereby and each and every provision of this Lease shall
be enforceable to the fullest extent permitted by Applicable Law.

(b)     The parties hereto intend that this Lease shall constitute a single,
integrated and indivisible contract under Applicable Law, and therefore, that in
any bankruptcy or insolvency proceeding commenced by or against Tenant, this
Lease shall not be subject to assumption, assignment or rejection in parts, or
with respect to particular Facilities, Buildings or parcels of land, but rather
shall be subject to assumption, assignment or rejection, if at all, only in its
entirety as a single contract.

Section 21.10    Brokers. Except as to brokers associated with the Sale
Agreement, for which Seller under the Sale Agreement is solely responsible,
Landlord and Tenant each represent and warrant to the other party that such
party has not dealt with any real estate broker in connection with this Lease
and Landlord and Tenant agree to indemnify the other party and save the other
party harmless from any and all claims for brokerage commissions by any other
person, firm, corporation or other entity claiming through such party to have
brought about this Lease transaction. The provisions of this Section 21.10 shall
survive the expiration or earlier termination of this Lease.

Section 21.11    Control of Facilities. Tenant is and shall be in exclusive
control and possession of the Premises, and Tenant shall operate (or shall cause
the Operating Subtenant to operate) the Facilities

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on the Premises at Tenant’s sole and absolute discretion without control,
interference or direction from Landlord or agents of Landlord (except as
expressly set forth to the contrary in this Lease), and Landlord shall not, in
any event whatsoever, be liable for any injury or damage to any property or to
any person happening in, on or about the Premises, nor for any injury or damage
to any property of Tenant, or of any other person or persons contained therein
unless the same is caused by Landlord’s gross negligence or willful misconduct.
The provisions hereof, including without limitation Article 17, permitting
Landlord to enter and inspect the Premises are made for the purpose of enabling
Landlord to be informed as to whether Tenant is complying with the agreements,
terms, covenants and conditions hereof, and if Landlord so desires, to do such
acts as Tenant shall fail to do. Tenant agrees to look solely to each Landlord’s
interest in its respective Premises for recovery of any judgment from such
Landlord and in no event shall Tenant look to any other Landlord, nor shall any
Landlord (or its partners, shareholders, members, managers, officers, directors
or Affiliates) ever be personally liable for any such judgment. Tenant
acknowledges and agrees that (a) the obligations of each Landlord under this
Lease shall not be joint and several, (b) the obligations of each Landlord shall
be limited to obligations pertaining to the Facility located on the Land owned
by such Landlord (such Facility being referred to herein as the “Owned Land”),
and (c) no Landlord shall have any obligation or liability whatsoever to Tenant
with respect to matters relating to Facilities other than its Owned Land.

Section 21.12    Confidentiality. (a)     Tenant agrees, and agrees to cause
each of their Affiliates, (i) not to transmit or disclose provisions of this
Lease to any Person (other than to Tenant’s advisors and officers on a
need-to-know basis or as otherwise may be required by law) without Landlord’s
prior written consent, (ii) to inform all Persons to whom provisions of this
Lease are disclosed of the confidential nature of the Lease and to direct them
not to disclose the same to any other Person and to direct each of them to
adhere to the provisions of this Section. Tenant shall not, and shall not permit
any of their Affiliates to, use Landlord’s name (or the name of any of
Landlord’s Affiliates) in connection with any of its business operations,
including without limitation, advertising, marketing or press releases or such
other similar purposes, without Landlord’s prior written consent. Nothing
contained in this Lease is intended to permit or authorize Tenant or any of
their Affiliates to contract on behalf of Landlord. Tenant hereby agrees that
Landlord or any Affiliate of Landlord may (A) disclose a general description of
transactions arising under this Lease for advertising, marketing or other
similar purposes, (B) use Tenant’s, the Operating Subtenant’s or Guarantor’s
names, logos or other indicia germane to such parties in connection with such
advertising, marketing or other similar purposes and (C) disclose any and all
information concerning the Lease, as well as any information regarding Tenant,
the Operating Subtenant, the Guarantor and their respective its operations,
received by Landlord in connection with the Lease to its lenders or funding or
financing sources or otherwise required by law.

(b)     Notwithstanding anything to the contrary contained in Section 21.12(a),
Tenant may transmit or disclose this Lease or the provisions of this Lease to:
(i) any of its Affiliates or any of its or their officers, employees, directors,
shareholders, partners, members, principals, agents, lenders, investment
bankers, consultant, attorneys, accountants and other professional advisors that
agrees to comply with the provisions of this Section 21.12 or substantially
equivalent provisions; (ii) any Governmental Authority having jurisdiction over
it upon the request or demand of such Governmental Authority; (iii) any Person
in response to any order of any court or other Governmental Authority or as may
otherwise be required pursuant to any Applicable Law; (iv) in connection with
any litigation or similar proceeding; (v) any Person if this Lease or the
provisions of this Lease has been publicly disclosed other than in breach of
this Section 21.12.

Section 21.13    Construction. The parties took equal part in drafting this
Lease and no rule of construction that would cause any of the terms hereof to be
construed against the drafter shall be applicable to the interpretation of this
Lease.

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Section 21.14    Time is of Essence. Time is strictly of the essence with
respect to each and every term and provision of this Lease.

Section 21.15    Force Majeure. Except for the provisions of Article 7, the time
within which either party hereto shall be required to perform any act under this
Lease, other than the payment of money, shall be extended by a period of time
equal to the number of days during which performance of such act is delayed by
strikes, lockouts, acts of God, governmental restrictions, failure or inability
to secure materials or labor by reason of priority or similar regulation or
order of any governmental or regulatory body, enemy action, civil disturbance or
any other cause beyond the reasonable control of either party hereto.

Section 21.16    Rent Lien Waiver. Tenant hereby waives its statutory lien
against rent under Applicable Law.

Section 21.17    True Lease. Landlord and Tenant each waive any claim or defense
based upon the characterization of this Lease as anything other than a true
lease and irrevocably waive any claim or defense which asserts that the Lease is
anything other than a true lease. Landlord and Tenant covenant and agree that
they will not assert that this Lease is anything but a true lease. Landlord and
Tenant each stipulate and agree not to challenge the validity, enforceability or
characterization of the lease of the Premises as a true lease and further
stipulate and agree that nothing contained in this Lease creates or is intended
to create a joint venture, partnership (either de jure or de facto), equitable
mortgage, trust, financing device or arrangement, security interest or the like.
Landlord or Tenant each shall support the intent of the parties that the lease
of the Premises pursuant to this Lease is a true lease and does not create a
joint venture, partnership (either de jure or de facto), equitable mortgage,
trust, financing device or arrangement, security interest or the like, if, and
to the extent that, any challenge occurs.

Section 21.18    Rent Obligations Unconditional. Tenant acknowledges and agrees
that Tenant’s obligations to pay rent hereunder, and the rights of Landlord in
and to such Rent, shall be absolute, unconditional and irrevocable. Except as
expressly provided for in Section 8.2, Tenant shall not have any right to
terminate this Lease or to be released, relieved, or discharged from any
obligations or liabilities hereunder (including, without limitation, the payment
of Rent) or entitled to any abatement, suspension, determent, reduction, setoff,
counterclaim or defense for any reason whatsoever, including, without
limitation, any of the following reasons:

(a)    Any defect in, damage to, or destruction of, the Premises or any portion
thereof, except as provided in Article 7 and otherwise expressly provided for in
this Lease,

(b)     Any condemnation, confiscation, requisition, or other taking or sale of
the possession, use, occupancy, or title to the Premises or any portion thereof,
except as provided in Article 8 and otherwise expressly provided for in this
Lease;

(c)    Any limitation, restriction, deprivation, or prevention of, or any
interference with, the use, occupancy, or possession of the Premises or any
portion thereof, except as provided in Article 7, Article 8 and otherwise
expressly provided for in this Lease;

(d)     Any set-off, abatement, counterclaim, suspension, recoupment, reduction,
rescission, defense or other right or claim that Tenant may have against
Landlord, any vendor or manufacturer of or contractor or subcontractor for the
Premises or any part of any thereof, or any other person for any reason
whatsoever;

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(e)    The inadequacy, incorrectness, or failure of the description of the
Premises or any portion thereof;

(f)    Any bankruptcy, insolvency, reorganization, composition, readjustment,
liquidation, dissolution, or other proceeding affecting Landlord, any assignee
of Landlord, or Tenant or Operating Subtenant, or any action with respect to
this Lease which may be taken by any receiver, trustee, or liquidator (or other
similar official), or by any court;

(g)    Force Majeure;

(h)     Any title defect, lien or matter affecting title to the Premises or
eviction by paramount title or otherwise; or

(i)    Any default by Landlord under this Lease or the impossibility or
illegality of performance by Landlord, Tenant or both.

Tenant hereby waives, to the fullest extent permitted by Applicable Law, any and
all rights that it may now have or that at any time hereafter may be conferred
upon it, by Applicable Law or otherwise, to modify, terminate, cancel, quit or
surrender this Lease or to effect or claim any diminution or reduction of Rent
payable by Tenant hereunder, except in accordance with the express terms hereof.
Tenant agrees that, if for any reason whatsoever this Lease shall be terminated
in whole or in part by operation of law or otherwise (except as expressly
permitted under Section 8.2), then Tenant shall pay, to the maximum extent
permitted by Applicable Law, to Landlord or any other person entitled thereto,
an amount equal to each installment of Rent at the time such payment would have
become due and payable in accordance with the terms hereof had this Lease not
been terminated in whole or in part. Each payment of Rent made by Tenant
hereunder shall be final and Tenant shall not seek or have any right to recover
all or any part of such payment from Landlord or any Person for any reason
whatsoever. It is the intention of the parties hereto that the obligations of
Tenant hereunder shall be separate and independent covenants and agreements,
that the Rent or other sums payable by Tenant hereunder shall continue to be
payable in all events and that the obligations of Tenant hereunder shall
continue unaffected, unless the requirement to pay or perform the same shall
have been abated, reduced or terminated pursuant to Section 8.2.

Section 21.19    Officer’s Certificate. On the execution of this Lease, Tenant
has delivered an Officer’s Certificate as to the corporate/LLC execution,
delivery and authorization of this Lease, good standing of Tenant and incumbency
of persons signing the Lease.

Section 21.20    Governing Law/Consent to Jurisdiction/Venue. Irrespective of
the place of execution and/or delivery of this Lease or the location of the
Premises, this Lease shall be governed by and shall be construed in accordance
with, the Applicable Laws of the State or States in which the Premises are
located applicable to agreements entered into without regarding to conflicts of
law principles. Landlord and Tenant hereby consent and submit to the exclusive
jurisdiction of the state and Federal courts located in the state in which the
Premises are located with respect to any claim or litigation arising hereunder
or any alleged breach of the covenants or provisions contained herein, and
acknowledge that proper venue in any matter so claimed or litigated shall be in
the state and Federal courts located in which the Premises are located;
provided, however, that (1) Landlord shall be permitted, in addition, if
required by Applicable Law in the jurisdiction where the Premises are located,
to bring any action against Tenant and/or to enforce this Lease in the
jurisdiction where the Premises are located and (2) Tenant shall be permitted,
in addition, if required by Applicable Law in the jurisdiction where the
Premises are located to bring any action against Landlord and/or to enforce this
Lease in the jurisdiction where the Premises are located.

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Section 21.21    Non-Liability for Withholding Consent. Tenant hereby waives any
claim against Landlord, any Superior Landlord and any Mortgagee for Landlord’s,
such Superior Landlord’s or such Mortgagee’s withholding, conditioning or
delaying any consent or approval requested by Tenant. Neither Landlord, any
Superior Landlord nor any Mortgagee shall have any liability to Tenant for its
refusal or failure to give any consent or approval. Tenant’s sole remedy for
Landlord’s, such Superior Landlord’s or such Mortgagee’s withholding,
conditioning or delaying consent or approval shall be to seek injunctive relief
in accordance with the terms and conditions of this Lease.

Section 21.22    Power of Attorney. Tenant grants to Landlord an irrevocable
power of attorney coupled with an interest for the purpose of (a) exercising any
and all rights and remedies available to Tenant under any Sublease, at law or in
equity with respect to any such Sublease, any Subtenant or the Premises or
Facilities thereunder, (b) executing any agreement, document or instrument as
required of Tenant under this Lease, and (c) performing any of Tenant’s other
obligations under this Lease. To the extent not prohibited by Applicable Law,
Tenant hereby ratifies all acts Landlord has lawfully done in the past or shall
lawfully do or cause to be done in the future by virtue of such power of
attorney.

Section 21.23    Counterparts. This Lease may be executed in two or more
counterparts (including by means of electronic signatures transmitted by email,
facsimile or otherwise), each of which shall constitute an original, and all of
which taken together shall constitute one instrument.

Section 21.24    Guaranty.

(a)    As consideration, in part, for Landlord’s willingness to execute this
Lease, Landlord has required Tenant to cause Parent Guarantor to deliver to
Landlord the guaranty of this Lease in the form attached hereto as Schedule F.
Tenant hereby represents, warrants and covenants to Landlord that, as of the
date of this Lease and at all time during the Term, (a) Manager is and during
the Term will be a wholly-owned subsidiary of Vista Springs, LLC, (b) Manager is
and will be the only company providing management, advisory or other services
relating to the operation of the Facilities and the delivery of health care
services at (i) the Facilities and (ii) at all other health care facilities of
every type now or in the future owned, operated and/or managed by Tenant, the
Operating Subtenants, Guarantor and their respective Affiliates, (c) each and
every health care facility of every type now or in the future owned, operated
and/or managed by Tenant, the Operating Subtenants, Guarantor and their
respective Affiliates shall be owned, operated and/or managed only by an entity
the sole direct or indirect owner of which shall be Parent Guarantor, and (d)
the diagram attached as Schedule 21.24 visually represents the organizational
structure of Parent Guarantor and all of its Affiliates as of the Effective
Date. Tenant further represents and warrants to Landlord that, as of the date of
this Lease, the sole voting member of Parent Guarantor is Louis J. Andriotti.
Tenant hereby covenants that there shall not be a change of control (as said
term is defined in Section 9.1) of Vista Springs, LLC without the prior written
consent of Landlord, which consent shall be governed by the consent provisions
set forth in Section 9.1 of this Lease. If a new management company is formed to
provide such services in connection with the Facilities and/or in connection
with any other health care facilities of every type now or hereinafter owned,
operated and/or managed by Tenant, the Operating Subtenants, Guarantor and their
respective Affiliates, then such management company shall become a co-guarantor
under the Parent Guaranty pursuant to a written agreement in form and substance
acceptable to Landlord in its reasonable discretion, and the failure to do so
within five (5) Business Days after written notice to Tenant shall constitute an
automatic Event of Default hereunder. Within ten (10) Business Days after
receipt of notice from Landlord, Tenant shall deliver a written statement
certified by an officer of Tenant confirming the name and responsibilities of
each and every Person providing management, advisory or other services with
respect to the Facilities and all other health care facilities then owned and/or
operated by Tenant, the Operating Subtenants, Guarantor and their respective
Affiliates.

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Section 21.25    Memorandum of Lease. At Tenant’s request and expense, the
parties shall execute and record in the counties in which the Premises are
located a memorandum of lease in the form and substance of the attached Schedule
21.25.

ARTICLE 22
RIGHT OF FIRST OFFER

Section 22.1    If at any time during the Term, Tenant, Operating Subtenant,
Guarantor or their Affiliates (each, for purposes of this Article, an “Owner”)
desire to obtain a bona fide offer from, or make a bona fide offer to, any third
party for the financing of any development, construction, and/or expansion of
any skilled nursing facility, assistant living facility, residential care
facility, independent living facility, or other healthcare related assets, or
any interest therein, including, without limitation, any expansion of the
Facilities (the “Offer Property”), such Owner shall promptly deliver to Landlord
a written request for proposal for such financing, which written request shall
set forth the proposed transaction insufficient detail to respond to the request
for proposal (the “First Offer Notice”). Landlord may, within thirty (30) days
after receipt of the First Offer Notice, elect to finance the development,
construction, and/or expansion of such Offer Property on the same terms and
conditions as those set forth in the First Offer Notice, by delivering written
notice to Owner. Except as otherwise expressly set forth in this Section 22.1,
if Landlord fails to notify Owner in writing of its election to exercise its
right of first offer as to any such Offer Property within the aforesaid thirty
(30) day period, Landlord shall be deemed to have waived such right of first
offer with respect to such Offer Property. Except as otherwise expressly set
forth in this Section 22.1, the failure of Landlord to exercise this right of
first offer with respect to an Offer Property shall not result in termination of
Landlord’ right of first offer with respect to any future Offer Property which
shall be a continuing right during the Term binding upon such Owner and all
future Owners with respect to all subsequent proposed Offer Property. In the
event Landlord elects to exercise its right of first offer with respect to an
Offer Property, the parties shall, upon request by Landlord, endeavor to
negotiate and agree upon a development agreement outlining the terms and
conditions upon which such financing shall be made. In the event the parties do
not, in good faith and after reasonable attempts at negotiation, agree upon the
form of development agreement within sixty (60) days thereafter, Landlord or
Tenant shall have the right to cancel the exercise of the right of first offer.

Section 22.2    Upon the written mutual agreement of Landlord and Tenant, upon
the consummation of any of the foregoing this Lease may be amended to add the
Offer Property to the Premises, and to increase Rent based on the addition of
such Offer Property to the Premises.

ARTICLE 23
RESERVED

ARTICLE 24
RENEWAL

Section 24.1    Option. Provided no Event of Default has occurred which remains
uncured either as of the date of Tenant's notice as set forth below or as of the
first day of the applicable Extended Term (as hereinafter defined), Tenant shall
have the right to extend the term of this Lease for two (2) successive periods
of ten (10) years each (“Extended Term(s)”) with respect to all (but not less
than all) of the then current Premises, upon all of the terms and conditions of
this Section.

Section 24.2    Notice. Tenant must provide Landlord notice of its exercise of
the option for the applicable Extended Term not less than twelve (12) full
months prior, but not more than eighteen (18) months prior, to the expiration
date of the Term or the first or second Extended Term, as the case may be.

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Time is of the essence with respect to the foregoing. Tenant may not exercise
the option for the second Extended Term unless it exercised the option for, and
occupied for the Premises for, the first Extended Term. Tenant may not exercise
an option for an Extended Term unless the term of each and every Operating
Sublease is simultaneously extended for the corresponding Extended Term, and the
simultaneous extension of each and every Operating Sublease for an Extended Term
shall be a condition to the commencement of an Extended Term hereunder.    

Section 24.3    Market Rental Rate. The Base Rent for the first Lease Year of
each of the first and second Extended Terms shall be the greater of (i) the
prevailing Market Rental Rate as of the first day of the applicable Extended
Term and (ii) the Base Rent for the last Lease Year of the then-current Term or
Extended Term (as escalated each Lease Year during the initial Term or prior
Extended Term as required by Section 2.1 and as further escalated for the first
Lease Year of the then-current Extended Term by the Annual Rent Escalator. The
Base Rent for each subsequent Lease Year of each of the first and second
Extended Term shall also increase on an annual basis by the Annual Rent
Escalator as provided in Section 2.1(c). As used herein, the term “Market Rental
Rate” shall be defined as the then fair market rental value of the Premises
determined in accordance with the provisions set forth below. The Market Rental
Rate of the Premises means the base rental rate that would be agreed upon by
Landlord and a comparable tenant at a comparable building, each of whom is
willing, but neither of whom is compelled, to enter into a lease transaction.
The fair market rental value shall be projected into the commencement date of
the applicable term and shall take into account all existing improvements and
special uses or rights afforded to Tenant, and also shall take into account the
following factors, amongst others: (i) rental for comparable premises in
comparable existing buildings (taking into consideration but not limited to
annual escalations, quality, age, and location of applicable buildings); (ii)
the length of the pertinent rental term; (iii) the creditworthiness of Tenant
and the Operating Subtenants, (iv) the fair market rental value of the Leased
Personal Property at the commencement of the first and second of the Extended
Term in question and (v) the security Tenant provides during the Extended Term
for the performance of its obligations hereunder. The fair market rental value
of the Premises shall be determined in accordance with the Uniform Standards of
Professional Appraisal Practice (including the Competency Provision) adopted by
the Appraisal Institute using the Comparative Rental Analysis approach (and not
the Cost Approach, Sales Comparison Approach or Income Capitalization Approach).
All appraisal reports shall be written by the designated MAI appraiser and not
by an associate.

Section 24.4    Arbitration. If Tenant exercises its option for an Extended Term
as provided above, Landlord and Tenant shall meet promptly and shall negotiate,
in good faith, to reach agreement on the Market Rental Rate within fifteen (15)
days following the Notice Date. If Landlord and Tenant are unable to reach
agreement within such 15-day period, the Market Rental Rate shall be determined
as follows:

(a)    Appointment of Arbitrators. Within thirty (30) days after the end of said
15-day period, Landlord and Tenant shall mutually agree upon a licensed, MAI
appraiser involved with the ownership, leasing or management of real estate and
who has at least ten (10) years’ experience, immediately prior to the date in
question, evaluating Market Rental Rates for similar properties in comparable
markets (the “Expert”). The Expert and the firm with whom he or she is employed
shall have no current or, during the prior five (5) years, prior business
relationship with a party or any of their affiliates. If the parties are unable
to timely agree on the Expert, then Market Rental Rate shall be determined by a
panel of three (3) Experts, each of whom shall meet the qualifications set forth
above, and who shall be selected in accordance with the following procedure.
Within ten (10) Business Days following the earlier of (i) a party's election to
appoint a panel of Experts or (ii) the expiration of said 15-day period, each
party shall deliver to the other written notice specifying the name and address
of the person to act as the Expert on the party's behalf. Within ten (10)
Business Days after the parties have appointed their respective Experts, the two
Experts shall appoint a third Expert, who shall have the same

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qualifications as those required of the first two Experts. If the two Experts
are unable to timely agree upon such appointment, then either party, on behalf
of both, may require appointment of such a qualified person by the then
president of the commercial real estate board of the American Arbitration
Association or other board for the county in which the Building is located. Each
party shall pay the fees and expenses of its respective Expert and both shall
equally share the fees and expenses of the third Expert. Attorney's fees and
expenses of counsel for the respective parties shall be paid by the respective
party engaging such counsel. Market Rental Rate shall be fixed in accordance
with the following procedures. Within ten (10) Business Days following the
appointment of the third Expert, each of the two Experts selected by the parties
shall state, in writing, his or her determination of the Market Rental Rate
supported by the reasons therefore. The third Expert shall have the right to
consult experts and competent authorities for factual information or evidence
pertaining to a determination of Market Rental Rate. The third Expert shall
conduct investigations as he or she deems appropriate and shall, within thirty
(30) days after being appointed, select which of the two proposed determinations
most closely approximates his or her determination of Market Rental Rate. The
third Expert shall have no right to propose a middle ground or modification of
either of the two proposed determinations. The determination he or she chooses
as that most closely approximating his or her determination of the Market Rental
Rate shall constitute the decision of the third Expert. The third Expert shall
render the decision in writing with counterpart copies to each party. The third
Expert shall have no power to add to or modify the provisions of this Lease.
Promptly following receipt of the decision, the parties shall enter into an
amendment to this Lease evidencing the extension of the Term for the applicable
terms.

(b)    Final Determination. The determination of the Market Rental Rate as
provided above shall be final, binding and conclusive on both Landlord and
Tenant, shall be considered a final award pursuant to the rules of the American
Arbitration Association and any applicable state or federal law and judgment may
be had on the award in any court of competent jurisdiction.

(c)    Other Terms. All of the terms and conditions of the Lease shall remain
the same and shall remain in full force and effect throughout the Extended
Term(s), except that (i) Base Rent shall be at the new rate determined as
provided above, and (ii) Tenant shall not be entitled to receive and Landlord
shall have no obligation to pay any improvement or other allowance that is
provided for in this Lease for the initial Term.

ARTICLE 25
LETTER OF CREDIT

Section 25.1    Deposit. In lieu of a cash security deposit, Tenant has
delivered to Landlord a letter of credit as security for the prompt, full and
faithful performance by Tenant of each and every provision of the Lease and of
all obligations of Tenant hereunder, and each of the obligations of Affiliates
of Tenant under any and all of the Ancillary Agreements, in the LC Amount (as
defined below). The letter of credit shall be in the form described below and
shall be delivered on the Commencement Date with the initial amount equal to the
LC Amount (defined below). References in this Lease to the “security deposit”
shall refer to the Letter of Credit as defined in Section 25.2.

Section 25.2    Letter of Credit Defined. The term “Letter of Credit” as used
herein means an irrevocable, unconditional standby letter of credit
substantially in the form attached hereto as the Schedule C and made a part
hereof, with either an initial expiration date no earlier than ninety (90) days
after the Expiration Date or an automatic renewal provision as described below,
issued by a national banking association reasonably acceptable to Landlord,
which Letter of Credit shall be payable to Landlord upon demand following the
occurrence and during the continuance of an Event of Default hereunder, at a
bank having offices for banking purposes in a location acceptable to Landlord in
its

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reasonable discretion pursuant to presentation of an unconditional sight draft
with a statement by Landlord that Landlord is entitled to draw thereunder
pursuant to the terms of this Lease.

Section 25.3    LC Amount Defined. The term “LC Amount” as used herein means:

(a)    As of the Effective Date and at all times thereafter, the LC Amount shall
be an amount equal to the product obtained by multiplying the then-applicable
monthly Base Rent by six (6), subject to further adjustment as provided in this
Section;

(b)    if at any time during the Term following the first (1st) anniversary of
the Commencement Date (but not earlier than December 31, 2019) the Rent Coverage
Ratio for all of the Facilities is less than 1.15:1.00 on two consecutive Test
Dates (computed in the aggregate on a trailing twelve (12) month basis), then
the LC Amount automatically shall be adjusted upward or downward (as applicable)
from the then-current LC Amount to an amount equal to the product obtained by
multiplying the then-applicable monthly Base Rent by nine (9), subject to
further adjustment as provided in this Section; and

(c)    if at any time during the Term following the first (1st) anniversary of
the Commencement Date (but not earlier than December 31, 2019) the Rent Coverage
Ratio for all of the Facilities is 1.15:1.00 or more, but less than 1.25:1.00 on
two consecutive Test Dates (computed in the aggregate on a trailing twelve (12)
month basis), then the LC Amount automatically shall be adjusted upward or
downward (as applicable) from the then-current LC Amount to an amount equal to
the product obtained by multiplying the then-applicable monthly Base Rent by six
(6), subject to further adjustment as provided in this Section; and

(d)    if at any time during the Term following the first (1st) anniversary of
the Commencement Date (but not earlier than December 31, 2019) the Rent Coverage
Ratio for all of the Facilities is 1.25:1.00 or more on two consecutive Test
Dates (computed in the aggregate on a trailing twelve (12) month basis), then
the LC Amount automatically shall be adjusted upward or downward (as applicable)
from the then-current LC Amount to an amount equal to the product obtained by
multiplying the then-applicable monthly Base Rent by three (3), subject to
further adjustment as provided in this Section.

For purposes of this Section 25.3, and notwithstanding any contrary or ambiguous
provision of this Lease, the first test to adjust the LC Amount will commence
the quarter ending December 31, 2019, and the initial test period will be the
trailing 12-month period beginning January 1, 2019 through December 31, 2019.

If there is no change to the Rent Coverage Ratio based upon the above, however
Base Rent increases as provided in this Lease, the LC Amount automatically shall
adjust to reflect the new Base Rent amount. With respect to any change in the LC
Amount, Tenant shall delivery to Landlord an amendment to or replacement of the
Letter of Credit reflecting such change within ten (10) Business Days after the
date on which said change becomes effective. Tenant shall be responsible for
paying and shall pay all fees and charges imposed by the Letter of Credit
issuing bank in connection therewith. Upon the delivery of a replacement Letter
of Credit, Landlord shall return a prior Letter of Credit to Tenant.

Section 25.4    Renewal. Unless the stated expiration date of the Letter of
Credit is at least ninety (90) days after the Expiration Date, the Letter of
Credit shall be automatically renewed unless the issuing bank delivers to
Landlord a notice of non-renewal no later than thirty (30) days prior to the
expiration of the Letter of Credit. In the event that the issuing bank has not
timely renewed the Letter of Credit or issued a notice of non-renewal, the
Letter of Credit shall provide that Landlord shall be entitled

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to draw the full amount of the Letter of Credit by sight draft and hold the same
as a cash security deposit, subject to the same terms and conditions of this
Article 26.

Section 25.5    Landlord Rights. If an Event of Default by Tenant then exists
under the Lease or any default (beyond applicable notice and cure periods)
exists under any of the Ancillary Agreements, Landlord may use, apply or retain
the whole or any part of the Letter of Credit which is necessary for the payment
of: (i) any Rent or other sums of money which Tenant has not paid when due after
any applicable notice and cure period stated in this Lease; (ii) any sum
expended by Landlord on behalf of Tenant in accordance with the provisions of
the Lease; or (iii) any sum which Landlord may expend or be required to expend
by reason of any Event of Default under the Lease by Tenant, including, without
limitation, any damage or deficiency in or from the reletting of the Premises as
provided in the Lease. The use, application or retention of the Letter of
Credit, or any portion thereof, by Landlord shall not prevent Landlord from
exercising any other right or remedy provided by the Lease or by law (it being
intended that Landlord shall not first be required to proceed against the Letter
of Credit) and shall not operate as a limitation on any recovery to which
Landlord may otherwise be entitled. Any portion of the cash proceeds of the
Letter of Credit not so used or applied by Landlord in satisfaction of the
obligations of Tenant as to which such Event of Default shall have occurred
shall be deposited by Landlord and retained in a non-interest-bearing account
and may be co-mingled with other funds of Landlord. If any portion of the Letter
of Credit is used, applied or retained by Landlord for the purposes set forth
above, Tenant agrees, within ten (10) days after the receipt of written demand
therefor from Landlord, to either deposit cash security with Landlord the amount
so applied or retained or reinstate the aggregate amount of the Letter of
Credit, as the case may be, in an amount sufficient to restore the then-current
required LC Amount.

Section 25.6    Renewal Option. Notwithstanding anything to the contrary
contained herein, Landlord reserves the right to require a Letter of Credit or
other security deposit after a review of Tenant’s financial statements and upon
Tenant’s exercise of a Renewal Option. In the absence of evidence satisfactory
to Landlord of any permitted assignment of the right to receive the Letter of
Credit, Landlord may return the same to the original Tenant, regardless of one
or more assignments of Tenant’s interest in the Lease or the Letter of Credit.
In such event, upon the return of the Letter of Credit to the original Tenant,
Landlord shall be completely relieved of liability under this Article or
otherwise with respect to the Letter of Credit.

Section 25.7    Landlord Transfer Rights. acknowledges that Landlord has the
right to transfer its interest in the Premises and in the Lease as to the extent
set forth herein and Tenant agrees that if such a transfer occurs, Landlord
shall have the right to transfer or assign the Letter of Credit to the
transferee. Upon such transfer or assignment and delivery of the Letter of
Credit to the transferee and such transferee’s written assumption of
responsibility for the return of the Letter of Credit to Tenant, Landlord shall
thereby be released by Tenant from all liability or obligation for the return of
such Letter of Credit and Tenant shall look solely to such transferee for the
return of the Letter of Credit.

ARTICLE 26
CAPITAL EXPENDITURE REQUIREMENT

Section 26.1    Reserve Deposit Requirement. Upon request by Landlord, Tenant
shall pay to Landlord for each Facility on the first day of each month, as
Supplemental Rent under this Lease, an amount equal to the Required CapEx Amount
per annum; provided, that for the first (1st) Lease year, such per annual amount
shall be established on a pro-rated basis of 1/12th of the required CapEx Amount
per month. Tenant shall pay to Landlord or, at Landlord’s election, the
Mortgagee, with each installment of Base Rent, one-twelfth (1/12) of the CapEx
Amount The amounts so deposited in such account,

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together with the Two Million Six Hundred Twenty-Five Thousand and No/100
Dollars ($2,625,000.00) deposited with Landlord as of the Commencement Date (the
“Initial CapEx Deposit”), shall be the “CapEx Reserve Funds.” Provided no
Default or Event of Default exists and is continuing and Tenant has complied
with the requirements of Section 26.2 below, CapEx Reserve Funds may also be
used for project management or other fees payable to Tenant, Guarantor or any
Affiliate thereof in connection with such Person's supervision and oversight of
the Required PCR Repairs (as hereinafter defined) (such project management fees,
as set forth on page 1 of Schedule 26.6), not to exceed five percent (5.0%) of
the amount of the Required PCR Repairs for which Tenant seeks reimbursement, or
advance disbursement, from the Initial CapEx Deposit and such payments out of
CapEx Reserve Funds shall not exceed One Hundred Fifty Thousand and No/100
Dollars ($150,000.00) in the aggregate.

Section 26.2    Disbursements of CapEx Reserve Funds: Landlord shall make
disbursements of the CapEx Reserve Funds as requested by Tenant, and approved by
Landlord in its reasonable discretion (to the extent Landlord’s approval is
required hereunder), for Tenant to use in making the Required PCR Repairs and
all other capital repairs and capital improvements to the Facilities as
necessary, as determined by Tenant in its reasonable discretion, subject to the
provisions of Section 5.2, Section 5.4 and Section 5.5 above (“CapEx Work”).
Disbursements shall be made no more frequently than once in any thirty (30) days
period, and in an amount no less than twenty-five thousand dollars ($25,000)
upon satisfaction of each of the following criteria: (a) Tenant shall submit a
written request for payment to Landlord at least ten (10) days prior to the date
on which Tenant requests such payment be made and specifying the repair and
improvement costs to be paid; (b) Landlord shall have receive a certificate from
an officer of Tenant stating that previous CapEx Work has been paid for in full
with respect to CapEx Work that has been completed; (c) Landlord shall have
received such other evidence as Landlord shall reasonably request demonstrating
that the CapEx Work to be funded by the requested disbursement from the CapEx
Account has been completed and paid for, or, at Tenant’s reasonable request,
will be paid for immediately upon such disbursement to Tenant, in which case
Tenant shall submit a copy of the applicable invoice, purchase order or similar
binding agreement, and provide evidence of payment or completion of the CapEx
Work within thirty (30) days after receipt of the applicable CapEx Reserve
Funds; and (d) if required by Landlord and applicable to the nature of the CapEx
Work, lien waivers and releases from all parties furnishing materials and/or
services in connection with the requested payments. Landlord may require an
inspection of the Premises at Landlord’s expense prior to making any
disbursement of the CapEx Reserve Funds in order to verify completion of
replacements and repairs of items for which disbursement is sought.

Section 26.3    Conditions for Disbursement. Landlord shall have no obligation
to advance funds for payment of CapEx Reserve Work if (i) an Event of Default
exists, or (ii) insufficient CapEx Reserve Funds to pay the requested amount.

Section 26.4    End of Term. At the expiration or earlier termination of the
Term, any CapEx Reserve Funds not previously disbursed to Tenant shall be the
property of Landlord, subject to the provisions of this Section 26.4. If this
Lease shall be terminated by reason of any Event of Default, Landlord may, in
its sole discretion, apply all CapEx Reserve Funds held by Landlord on account
of any and all sums due under this Lease. Notwithstanding the foregoing,
provided: (i) no Default or Event of Default exists, (ii) Tenant has satisfied
its obligations with respect to the Required CapEx Amount for the last Lease
Year, and (iii) Tenant has delivered to Landlord a PCR (as defined below) dated
within three (3) months of the Lease termination date at Tenant’s sole cost and
expense, then (x) any excess CapEx Reserve Funds then held by Landlord and
actually paid by Tenant (including, without limitation, any CapEx Reserve Funds
that were deposited by Tenant with respect to the last Lease Year) and remaining
in the account, minus (y) the estimated cost (as identified on the PCR or
otherwise agreed to by Tenant and Landlord) of all immediate repairs and
replacements identified on the PCR that do not constitute reasonable wear and
tear, minus (z) a pro rata amount to be held by Landlord for the estimated

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cost (as identified on the PCR or otherwise agreed to by Tenant and Landlord) of
repairs and replacements identified through and including year five (5) on the
PCR based upon their respective anticipated useful life, shall become the
property of Tenant upon the expiration or earlier termination of this Lease and
Landlord shall release any such excess funds to Tenant within forty-five (45)
days following the expiration or earlier termination of the Lease. “PCR” means a
third‑party facility condition report (which report shall be consistent, in form
and substance, with generally accepted industry standards) from a vendor
selected by Landlord and reasonably acceptable to Tenant for purposes of
determining whether additional CapEx Work is necessary.

Section 26.5    Terms of Holding. It is understood and agreed that (a) to the
extent permitted by Applicable Law, CapEx Reserve Funds may be held by Landlord
or its Affiliate or Mortgagee in a single bank account and commingled with other
funds of Landlord or its Affiliate or Mortgagee, and (b) Landlord or Mortgagee,
may, if Tenant fails to make any deposit required hereunder, use deposits made
for any one item for the payment of the same or, during the continuance of any
Event of Default, any other item of Rent. Tenant acknowledges and agrees that no
deficiency or lack of CapEx Reserve Funds, including without limitation a
deficiency or lack of funds resulting from the failure of an Operating Subtenant
to make a deposit that Tenant has directed the Operating Subtenant to make,
shall relieve Tenant of its obligation to pay all deposits of CapEx Reserve
Funds and/or to satisfy the Required CapEx Amount as required under this Lease.

Section 26.6    Minimum Expenditure Requirement; Required PCR Repairs. During
each Lease Year of the Term, Tenant shall spend on CapEx Work for each Facility
an amount that is no less than the Required CapEx Amount. Tenant’s compliance
with this requirement shall be computed with respect to each Facility on an
individual basis and shall not be based upon expenditures for two or more
Facilities on an aggregated basis. Furthermore, Tenant’s compliance with this
requirement shall be computed on a rolling three (3) year (within the Term)
look-back basis, meaning that for any date on which Landlord elects to evaluate
Tenant’s compliance with this provision, Landlord shall determine the amount of
Tenant’s expenditures for CapEx Work made during the three (3) year period
during the Term preceding said measurement date. In addition to the foregoing,
Tenant shall complete, or cause Operating Subtenant to complete, at Tenant’s
sole cost and expense (provided Tenant may seek reimbursement, or advance
disbursement on a line item by line item basis, in accordance with the terms
hereof, from the Initial CapEx Deposit to pay for the Required PCR Repairs),
each of the items set forth on Schedule 26.6 (the “Required PCR Repairs”), to
Landlord’s reasonable satisfaction, within the time period for such Required PCR
Repair set forth on Schedule 26.6. Tenant shall keep Landlord reasonably
apprised of its progress on the Required PCR Repairs, and shall deliver evidence
to Landlord of its satisfaction of the terms herein no less than monthly. In the
event Tenant fails to complete any or all of the Required PCR Repairs to
Landlord’s reasonable satisfaction within the time period set forth on Schedule
26.6 such failure shall constitute an automatic Event of Default hereunder, and
Landlord, in addition to its other rights and remedies hereunder, shall have
right, but not the obligation, to complete, using CapEx Reserve Funds and
charging Tenant as Additional Rent for any deficiency, the Required PCR Repair
at Tenant’s expense, and Tenant shall cooperate to transfer and assign, at no
expense to Landlord, the rights to any and all contracts necessary therefor to
Landlord. In such event Landlord shall be permitted to charge as Additional
Rent, and deduct from the CapEx Reserve Funds, a project management fee in the
amount of 2.5%.

Section 26.7    Security Interest; General.

(a)    Security Interest. Tenant hereby grants to Landlord a first-priority
security interest in the CapEx Reserve Funds and any and all monies now or
hereinafter deposited therein as additional security for payment of Rent. Until
expended or applied in accordance with the terms of this Lease, the CapEx
Reserve Funds shall serve as additional security for Tenant’s obligations
hereunder.

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During the continuance of an Event of Default, Landlord may, in addition to all
other remedies under this Lease, apply any of the CapEx Reserve Funds for the
payment of Rent or other sums owing to Landlord under this Lease in its sole
discretion. The CapEx Reserve Funds shall not constitute trust funds.

(b)    General. Tenant shall not pledge, assign or grant a security interest in
the CapEx Reserve Funds, or permit any lien or encumbrance to attach thereto or
any levy to be made thereon by a party claiming through Tenant, except those
naming Landlord as the secured party. Should Landlord elect to hold the CapEx
Reserve Funds in an interest-bearing account, all interest earned shall be added
to the CapEx Reserve Funds and Tenant shall pay all taxes due in connection
therewith.

Section 26.8    Licensing for the Facilities. With respect to the licensing of
the Facilities and notwithstanding any requirements in Section 4.1 of the Master
Lease, on the Effective Date, Tenant will operate the Holland Meadows, Wyoming
and Riverside Gardens Facilities as licensed Facilities as set forth on the
attached Schedule 1, pursuant to a management agreement with the applicable
current licensee for each Facility. Immediately following the Effective Date,
Tenant shall submit all required documents to commence the change of ownership
process with the applicable Health Care Regulatory Agency, and to apply for the
Howell HFA License (hereinafter defined) and Edgewood HFA License (hereinafter
defined). With respect to the Howell Facility, Tenant shall complete all
repairs, improvements and modifications necessary (the “Howell Licensure
Repairs”) to receive an unconditional license as a Home for the Aged for 50 beds
(the “Howell HFA License”) as administered by the Department of Licensing and
Regulatory Affairs (“LARA”), including without limitation, each of the items set
forth on Schedule 26.8, at Tenant’s sole cost and expense. Tenant shall
complete, to Landlord’s satisfaction, all the Howell Licensure Repairs within
the earlier to occur of (i) the date set forth on Schedule 26.8 or (ii) six (6)
months after the Effective Date. Tenant shall keep Landlord reasonably apprised
of its progress on the Howell Licensure Repairs and application with LARA, and
shall deliver evidence to Landlord of its satisfaction of the terms herein no
less than monthly. Tenant will diligently strive to satisfy the requirements of
LARA to permit the Howell Facility to be licensed as a Home for the Aged in
order to receive the Howell HFA License not later than 12 months after the
Effective Date; provided Landlord may grant an extension of the deadline as
necessary in additional three (3) month increments (not to exceed twelve (12)
months total) to receive the Howell HFA License, which extensions will not be
unreasonably withheld, so long as Tenant demonstrates best effort diligence in
satisfying requirements for licensing and further, that the delay is not
attributable to any inaction or neglect on behalf of the Tenant. Tenant
acknowledges and agrees that, in the event Tenant has not received and delivered
to Landlord the Howell HFA License within two (2) years following the Effective
Date (the “Howell HFA License Outside Date”), the LC Amount shall automatically
be increased by Seven Hundred Fifty Thousand and No/100 Dollars ($750,000.00)
(the “Howell LC Amount”) as of such date, and Tenant's failure to deliver to
Landlord an amendment to or replacement of the Letter of Credit reflecting such
increase on or before the Howell HFA License Outside Date shall constitute an
automatic Event of Default hereunder. Notwithstanding any language to the
contrary in Section 25.2, the portion of the LC Amount constituting the Howell
LC Amount shall remain constant and shall not decrease even if the LC Amount is
otherwise reduced pursuant to Section 25.3; provided, that, so long as no
Default or Event of Default exists or is continuing, the Howell LC Amount shall
reduce to $0.00 upon receipt by Tenant and delivery to Landlord of the Howell
HFA License. In the event Tenant has not received and delivered to Landlord the
Howell HFA License by the expiration of the Term, or earlier termination of the
Lease, Landlord shall be permitted to draw upon and retain the full Howell LC
Amount. With respect to the Edgewood Facility, Tenant shall complete all
reasonable repairs, improvements and modifications necessary (the “Edgewood
Licensure Repairs”) to receive an unconditional license as a Home for the Aged
for 104 beds (the “Edgewood HFA License”) as administered by LARA, which shall
include, without limitation, each of the items set forth on Schedule 26.8, at
Tenant’s sole cost and expense (provided Tenant may seek reimbursement, or
advance disbursement on a line item by line item basis, in accordance with the
terms hereof, from the CapEx

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Reserve Funds, to the extent available). Tenant shall complete, to Landlord’s
satisfaction, all the Edgewood Licensure Repairs within the earlier to occur of
(i) the date set forth on Schedule 26.8 or (ii) nine (9) months after the
Effective Date. Tenant shall keep Landlord reasonably apprised of its progress
on the Edgewood Licensure Repairs and application with LARA, and shall deliver
evidence to Landlord of its satisfaction of the terms herein no less than
monthly. In the event LARA requires additional repairs to the Edgewood Facility,
which are not listed on Schedule 26.8 and that Tenant determines, in its
reasonable and prudent judgment, are not commercially reasonable and financially
advisable and provided Tenant has otherwise complied with each of the terms of
this Section 26.8 and completed, to Landlord’s satisfaction, each of the
Required PCR Repairs, within the time period required on Schedule 26.6 and no
Event of Default otherwise exists and is continuing under this Lease, Tenant may
request that Landlord waive Tenant’s obligation to obtain the Edgewood HFA
License, which consent will not be unreasonably withheld, until such time as the
required repairs become commercially reasonable.

Section 26.9    Riverside Gardens TIF. Reference is hereby made to (i) that
certain Development and Reimbursement Agreement between the City of Grand Rapids
Brownfield Redevelopment Authority, a Michigan public body corporate (the
“Authority”), and Vista Springs Riverside Properties, LLC, a Michigan limited
liability company, and (ii) that certain Obsolete Property Rehabilitation
Exemption Certificate issued on August 25, 2015 to Vista Springs Riverside
Properties, LLC, a Michigan limited liability company, from the Michigan State
Tax Commission (together, the “Riverside Gardens TIF Agreements”) pursuant to
which the Land described on Schedule A-3 (the “Riverside Gardens Land”) benefits
from certain tax reimbursements, abatement, and/or other incentives
(collectively, the “Tax Credits”). Tenant hereby acknowledges and agrees that
the Tax Credits under the Riverside Gardens TIF Agreements shall be the property
of Landlord; provided, that so long as no Event of Default under this Lease has
occurred and Tenant complies with all terms of, and pays all amounts owed under,
the Riverside Gardens TIF Agreements as and when due at its sole cost and
expense and no default otherwise exists under the Riverside Gardens TIF
Agreements, Tenant shall receive a credit against any Impositions due and
payable to Landlord as Additional Rent to the extent of the amount of any
reimbursement check from the Authority actually received and deposited by
Landlord in connection with the Riverside Gardens TIF Agreements. Tenant shall,
within thirty (30) days following the Effective Date of this Lease, or, to the
extent Tenant is using diligent efforts, such additional period of time as may
be necessary not to exceed ninety (90) days, at Tenant’s sole cost and expense,
effectuate or cause to be effectuated the transfer of the Riverside Gardens TIF
Agreements to Landlord or its designee; provided Landlord shall not be required
to assume any liability in connection therewith. Tenant further agrees that it
shall cooperate with Landlord and any necessary governmental or
quasi-governmental authorities with respect to any future transfer of the
Riverside Gardens TIF Agreements, and the securing of the benefit of the Tax
Credit to any successor landlord or any designee of Landlord. As of the
Effective Date of this Lease, Tenant represents and warrants to Tenant’s
Knowledge that there are no violations with respect to the obligations of Vista
Springs Riverside Properties, LLC under the Riverside Gardens TIF Agreements.

[SIGNATURES FOLLOW]

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IN WITNESS WHEREOF, the undersigned has executed this instrument the day and
year first written above.

 
“LANDLORD”

GAHC4 LANSING MI ALF, LLC,
GAHC4 HOLLAND MI AFL, LLC, 
GAHC4 HOWELL MI ALF, LLC, 
GAHC4 RIVERSIDE GRAND RAPIDS MI ALF, LLC and 
GAHC4 WYOMING MI ALF, LLC

 
Each of the above Landlords being a Delaware limited liability
company

 
For each of the above Landlords,

 
By:
GAHC4 Michigan ALF Portfolio, LLC, a Delaware
limited liability company, the sole member and manager
of each of the entities shown above
 
 
 
 
 
 
By:
/s/ Danny Prosky
 
 
Name:
Danny Prosky
 
 
Title:
Authorized Signatory

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IN WITNESS WHEREOF, the undersigned has executed this instrument the day and
year first written above.

 
“TENANT”

VISTA MICHIGAN OPERATIONS LLC,
a Michigan limited liability company
 
 
 
 
By:
/s/ Louis J. Anriotti
 
Name:
Louis J. Anriotti
 
Title:
President and Chief Executive Officer

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