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Exhibit 10.25.1

AMENDED AND RESTATED MASTER LEASE AGREEMENT
 
AMONG
 
HEALTH CARE REIT, INC.,
 
HCRI LOUISIANA PROPERTIES, L.P.
 
AND
 
SENIOR LIVING PROPERTIES, LLC
 
March 1, 2007

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TABLE OF CONTENTS

SECTION
PAGE
ARTICLE 1: LEASED PROPERTY, TERM AND DEFINITIONS
1
1.1
Leased Property
1
1.2
Indivisible Lease
1
1.3
Term
2
1.4
Definitions
2
1.5
Landlord as Agent
12
ARTICLE 2: RENT
13
2.1
Base Rent
13
2.2
Base Rent Adjustments
13
2.3
2.2.1 Annual Increase of Base Rent
13
 
2.2.2 Additional Landlord Payments
13
 
Additional Rent
13
2.4
Place of Payment of Rent
14
2.5
Net Lease
14
2.6
No Termination, Abatement, Etc.
14
ARTICLE 3:IMPOSITIONS AND UTILITIES
14
3.1
Payment of Impositions
14
3.2
Definition of Impositions
15
3.3
Escrow of Impositions
16
3.4
Utilities
16
3.5
Discontinuance of utilities
16
3.6
Business Expenses
17
3.7
Permitted Contests
17
ARTICLE 4: INSURANCE
17
4.1
Property Insurance
17
4.2
Liability Insurance
18
4.3
Builder’s Risk Insurance
19
4.4
Insurance Requirements
19
4.5
Replacement Value
20
4.6
Blanket Policy
20
4.7
No Separate Insurance
20
4.8
Waiver of Subrogation
20
4.9
Mortgages.
21
4.10
Escrows
21
ARTICLE 5: INDEMNITY,
21
5.1
Tenant’s Indemnification,
21
 
5.1.1 Notice of Claim
21
 
5.1.2 Survival of Covenants
22

ii

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SECTION
PAGE
             
5.1.3 Reimbursement of Expenses
22
5.2
Environmental Indemnity; Audits
22
5.3
Limitation of Landlord’s Liability
22
ARTICLE 6: USE AND ACCEPTANCE OF PREMISES
23
6.1
Use of Leased Property
23
6.2
Acceptance of Leased Property
23
6.3
Conditions of Use and Occupancy
23
ARTICLE 7: MAINTENANCE AND MECHANICS’ LIENS
24
7.1
Maintenance
24
7.2
Required Alterations
24
7.3
Mechanic’s Liens
24
7.4
Replacements of Fixtures and Landlord’s Personal Property
25
ARTICLE 8:DEFAULTS AND REMEDIES
25
8.1
Events of Default
25
8.2
Remedies
27
8.3
Right of Setoff
30
8.4
Performance of Tenant’s Covenants
30
8.5
Late Payment Charge
30
8.6
Default Rent
31
8.7
Attorneys’ Fees
31
8.8
Escrows and Application of Payments
31
8.9
Remedies Cumulative
31
8.10
Waivers
31
ARTICLE 9:DAMAGE AND DESTRUCTION
32
9.1
Notice of Casualty
32
9.2
Substantial Destruction
32
9.3
Partial Destruction
33
9.4
Restoration
33
9.5
Insufficient Proceeds
34
9.6
Not Trust Funds
34
9.7
Landlord’s Inspection
34
9.8
Landlord’s Costs
35
9.9
No Rent Abatement
35
ARTICLE 10.3: : CONDEMNATION
35
10.1
Total Taking
35
10.2
Partial Taking
35
10.3
Condemnation Proceeds Not Trust Funds
36
ARTICLE 11 : TENANT’S PROPERTY
36
11.1
Tenant’s Property
36
11.2
Requirements for Tenant’s Property
36

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ARTICLE 12: RENEWAL OPTIONS
37
12.1
Renewal Options
37
12.2
Effect of Renewal
37
ARTICLE 13: OPTION TO PURCHASE
38
13.1
Option to Purchase
38
13.2
Option Price
39
13.3
Fair Market Value
39
13.4
Closing
40
13.5
Failure to Close Option
41
13.6
Failure to Exercise Option to Purchase and Renewal Option
41
13.7
Early Option to Purchase Dayton Facility
41
ARTICLE 14:NEGATIVE COVENANTS
41
14.1
No Debt
42
14.2
No Liens
42
14.3
No Guaranties
42
14.4
No Transfer
42
14.5
No Dissolution
42
14.6
No Change in Management or Operation
42
14.7
No Investments
42
14.8
Contracts
42
14.9
Subordination of Payments to Affiliates
42
14.10
Change of Location or Name
42
ARTICLE 15:AFFIRMATIVE COVENANTS
43
15.1
Perform Obligations
43
15.2
Proceedings to Enjoin or Prevent Construction
43
15.3
Documents and Information
43
 
15.3.1 Furnish Documents
43
 
15.3.2 Furnish Information
43
 
15.3.3 Further Assurances and Information
44
 
15.3.4 Material Communications
44
 
15.3.5 Requirements for Financial Statements
44
15.4
Compliance With Laws
44
15.5
Broker’s Commission
44
15.6
Existence and Change in Ownership
45
15.7
Financial Covenants
45
 
15.7.1    Definitions
45
 
15.7.2    Coverage Ratio
46
 
15.7.3    Net Worth
46
 
15.7.4    Accounts Payable Days Sales Outstanding
46
15.8
Facility Licensure and Certification
46
15.9
Transfer of License and Facility Operations
46
 
15.9.1    Licensure
46
 
15.9.2    Facility Operations
46
15.10
Bed Operating Rights
47

iv

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SECTION
PAGE
           
15.11
Power of Attorney
47
ARTICLE 16: ALTERATIONS, CAPITAL IMPROVEMENTS, AND SIGNS
47
16.1
Prohibition on Alterations and Improvements
47
16.2
Approval of Alterations
47
16.3
Permitted Alterations
48
16.4
Requirements for Permitted Alterations
48
16.5
Ownership and Removal of Permitted Alterations
49
16.6
Minimum Qualified Capital Expenditures
49
16.7
Signs
49
ARTICLE 17: RESERVED
49
ARTICLE 18:ASSIGNMENT AND SALE OF LEASED PROPERTY
49
18.1
Prohibition on Assignment and Subletting
49
18.2
Requests for Landlord’s Consent to Assignment, Sublease or Management Agreement
50
18.3
Agreements with Residents
51
18.4
Sale of Leased Property
51
18.5
Assignment by Landlord
51
ARTICLE 19: HOLDOVER AND SURRENDER
51
19.1
Holding Over
51
19.2
Surrender
52
ARTICLE 20: LETTER OF CREDIT
52
20.1
Terms of Letter of Credit
52
20.2
Replacement Letter of Credit
52
20.3
Draws.
53
20.4
Partial Draws
53
20.5
Substitute Letter of Credit
53
20.6
Retention of Letter of Credit
53
ARTICLE 21: : QUIET ENJOYMENT, SUBORDINATION, ATTORNMENT AND ESTOPPEL
CERTIFICATES
54
21.1
Quiet Enjoyment
54
21.2
Subordination
54
21.3
Attornment.....
54
21.4
Estoppel Certificates
55
ARTICLE 22: : CONTINGENT PAYMENTS
55
22.1
Contingent Payments
55
22.2
Contingent Payments for Capital Expenditures
55
 
22.2.1    Conditions
55
 
22.2.2    No Commitment
55
22.3
Contingent Payments for Project Improvements
56
 
22.3.1    Conditions
56

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22.3.2    No Commitment
56
ARTICLE 23: SECURITY INTEREST
56
23.1
Collateral
56
23.2
Additional Documents
57
23.3
Notice of Sale
57
23.4
Recharacterization
57
23.5
Confession of Judgment
57
23.6
Additional Remedies Upon Default.,
57
23.7
Waiver
58
23.8
Appointment of Receiver or Keeper
58
ARTICLE 24: MISCELLANEOUS
58
24.1
Notices
58
24.2
Advertisement of Leased Property
58
24.3
Entire Agreement
59
24.4
Severability
59
24.5
Captions and Headings
59
24.6
Governing Law
59
24.7
Memorandum of Lease
59
24.8
Waiver
59
24.9
Binding Effect
59
24.10
No Offer
59
24.11
Modification
60
24.12
Landlord’s Modification
60
24.13
No Merger
60
24.14
Laches
60
24.15
Limitation on Tenant’s Recourse
60
24.16
Construction of Lease
60
24.17
Counterparts
61
24.18
Landlord’s Consent
61
24.19
Custody of Escrow Funds
61
24.20
Landlord’s Status as a REIT
61
24.21
Exhibits
61
24.22
Waiver of Jury Trial
61
24.23
Consent to Jurisdiction
61
24.24
Attorney’s Fees and Expenses
62
24.25
Survival
62
24.26
Time
62
24.27
Subtenant
62

 
vi

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SECTION
PAGE

   
SCHEDULE 1:
INITIAL RENT SCHEDULE
EXHIBIT A:
LEGAL DESCRIPTIONS
EXHIBIT B:
PERMITTED EXCEPTIONS
EXHIBIT C:
FACILITY INFORMATION
EXHIBIT D:
WIRE TRANSFER INSTRUCTIONS
EXHIBIT E:
DOCUMENTS TO BE DELIVERED
EXHIBIT F:
FINANCIAL CERTIFICATION
EXHIBIT G:
ANNUAL CAPITAL EXPENDITURE CERTIFICATE
EXHIBIT H:
CONTINGENT PAYMENT REQUEST
EXHIBIT I:
COMMITMENT

 
vii

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AMENDED AND RESTATED MASTER LEASE AGREEMENT
 
 
This Amended and Restated Master Lease Agreement ("Lease") is made effective as
of March 1, 2007 (the "Effective Date") among HEALTH CARE REIT, INC., a
corporation organized under the laws of the State of Delaware ("HCN" and a
"Landlord" as further defined in §1.4 below), having its principal office
located at One SeaGate, Suite 1500, P. 0. Box 1475, Toledo, Ohio 43603-1475,
HCRI LOUISIANA PROPERTIES, L.P., a limited partnership organized under the laws
of the State of Delaware ("HCN-LA" and a "Landlord" as further defined in §1.4
below), having its principal office located at One SeaGate, Suite 1500, P. 0.
Box 1475, Toledo, Ohio 43603-1475, and SENIOR LIVING PROPERTIES, LLC, a limited
liability company organized under the laws of the State of Delaware ("Tenant"),
having its chief executive office located at 3000 Executive Parkway, Suite 530,
San Ramon, California 94583.
 
RECITALS
 
A.            HCN-LA entered into a Lease Agreement dated as of July 29, 1998,
as amended ("Original Lease") with Summerville at Kenner, L.L.C., a Delaware
limited liability company ("Kenner") for a property located in Kenner,
Louisiana, as more particularly described therein ("Kenner Property"). As of the
Effective Date, Kenner shall assign its interest in the Original Lease to Tenant
pursuant to an Assignment of Lease of even date herewith, and Kenner shall enter
into a new sublease with Tenant for the Kenner Property.
 
B.            In addition, Tenant has agreed to assume the operation of
facilities located in Westerville, Ohio and Dayton, Ohio that are owned by HCN
and were previously leased to another tenant (collectively called "Additional
Properties").
 
C.            Landlord and Tenant desire to amend and restate the Original Lease
to modify certain terms and conditions, to include the Additional Properties,
and to add HCN as a Landlord. This Lease amends, restates, and replaces the
Original Lease in its_entirety.
 
D.            Landlord desires to lease the Leased Property to Tenant and Tenant
desires to lease the Leased Property from Landlord upon the terms set forth in
this Lease.
 
NOW, THEREFORE, Landlord and Tenant agree as follows:
 
ARTICLE 1: LEASED PROPERTY, TERM AND DEFINITIONS
 
1.1 Leased Property. Landlord hereby leases to Tenant and Tenant hereby leases
from Landlord the Leased Property, subject, however, to the Permitted Exceptions
and subject to the terms and conditions of this Lease.
 
1.2 Indivisible Lease. This Lease constitutes one indivisible lease of the
entire Leased Property. The Leased Property 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 Leased Property 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 Leased
Property as one unit and any Event of Default under this Lease is an Event of
Default as to the entire Leased Property. 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
Leased Property 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 nonseverable 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 Leased Property covered hereby.
The parties agree that the existence of more than one Landlord under this Lease
does not affect the indivisible, nonseverable nature of this Lease. The parties
may amend this Lease from time to time to include one or more additional
Facility Properties as part of the Leased Property and such future addition to
the Leased Property shall not in any way change the indivisible and nonseverable
nature of this Lease and all of the foregoing provisions shall continue to apply
in full force.

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 1.3 Term. The initial term ("Initial Term") of this Lease commences on the
Effective Date and expires at 12:00 Midnight Eastern Time on February 28, 2018
(the "Expiration Date"); provided, however, that [i] Tenant has one or more
options to renew the Lease pursuant to Article 12, and [ii] that any addition to
the Leased Property pursuant to amendment of this Lease shall extend the Initial
Term so that the Initial Term shall expire on the day before the eleventh
anniversary of the Amendment Commencement Date as set forth in such amendment.
In addition, if Landlord or any Landlord Affiliate enters into a lease
transaction with Tenant or any Affiliate, the Initial Term shall automatically
be extended to be coterminous with the most recently closed lease transaction.
 
 1.4 Definitions. Except as otherwise expressly provided, [i] the terms defined
in this section have the meanings assigned to them in this section and include
the plural as well as the singular; [ii] all accounting terms not otherwise
defined herein have the meanings assigned to them in accordance with generally
accepted accounting principles as of the time applicable; and [iii] the words
"herein", "hereof' and "hereunder" and similar words refer to this Lease as a
whole and not to any particular section.
 
"Accounts Payable Days Sales Outstanding" has the meaning set forth in § 15.7.1.
 
"Acquisition Payment" means any payment by Landlord to acquire Leased Property.
 
"Actual Rate of Return" means, as of any Rent Adjustment Date, the Initial Rate
of Return plus the sum of the annual Increaser Rates before that Rent Adjustment
Date.
 
"ADA" means the federal statute entitled Americans with Disabilities Act, 42
U.S.C. §12101, et seq.
 
"Additional Properties" has the meaning set forth in Recital A. "Additional
Rent" has the meaning set forth in §2.3.
"Adjusted Accounts Payable" has the meaning set forth in §15.7.1.

2

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"Affiliate" means any person, corporation, partnership, limited liability
company, trust, or other legal entity that, directly or indirectly, controls, or
is controlled by, or is under common control with Tenant or Guarantor. "Control"
(and the correlative meanings of the terms "controlled by" and "under common
control with") means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such entity.
"Affiliate" includes, without limitation, each Guarantor.
 
"Affiliate Facility" means each facility that is leased under an Affiliate
Lease, whether now or hereafter existing.
 
"Affiliate Lease" means each lease now or hereafter made between Landlord or any
Landlord Affiliate and Tenant or any Affiliate (except this Lease), as amended,
modified, extended or renewed from time to time.
 
"Affiliate Tenant" means each tenant under an Affiliate Lease.
 
"Amendment Commencement Date" means the Amendment Effective Date if such date is
the first day of a month, and if it is not, the first day of the first month
following the Amendment Effective Date.
 
"Amendment Effective Date" means the Amendment Effective Date set forth in the
introductory paragraph of an amendment to this Lease.
 
"Annual Budget" means such entity's projection of its financial statement for
the next fiscal year (or the 12-month rolling forward period, if applicable),
which shall include the balance sheet, statement of income, statement of cash
flows, statement of shareholders' equity and statement of capital expenditures
for the applicable period.
 
"Annual Facility Budget" means Tenant's projection of the Facility Financial
Statement for the next fiscal year (or the 12-month rolling forward period, if
applicable).
 
"Annual Financial Statements" means [1] for Tenant and Subtenant, an unaudited
balance sheet and statement of income for the most recent fiscal year on an
individual facility and consolidated basis; [ii] for each Facility, an unaudited
Facility Financial Statement for the most recent fiscal year; and [iii] for
Company, an audited balance sheet and statement of income for the most recent
fiscal year.
 
"Annual Rate Shortfall" means the difference between [i] the Target Rate of
Return and [ii] the Actual Rate of Return.
 
"Annual Rent Increase" means, as of any Rent Adjustment Date, the product of [i]
the Investment Amount as of the Rent Adjustment Date times [ii] the applicable
Increaser Rate; provided, however, that for any Lease Year in which the
Increaser Rate is .27%, the Annual Rent Increase means the foregoing amount plus
the product of [a] the Investment Amount as of the Rent Adjustment Date times
[ii] the applicable Rate Shortfall up to the amount of the CPI Rate Change as of
the Rent Adjustment Date. In no event will the Annual Rent Increase be negative.
 
"Average Quarterly Accounts Payable" has the meaning set forth in § 15.7.1.

3

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"Bankruptcy Code" means the United States Bankruptcy Code set forth in 11 U.S.C.
§101, et seq., as amended from time to time.
 
"Base Rent" has the meaning set forth in §2.1, as increased from time to time
pursuant to §2.2.
 
"Business Day" means any day other than a Saturday, Sunday, or national
holiday.
 
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended from time to time.
 
"Closing" means the closing of the lease of the Leased Property to Tenant.
"Collateral" has the meaning set forth in §23.1.
"Commencement Date" means the Effective Date if such date is the first day of a
month, and if it is not, the first day of the first month following the
Effective Date.
 
"Commitment" means the Summerville Term Sheet dated February 15, 2007, a copy of
which is attached as Exhibit I.
 
"Company" means Summerville Senior Living, Inc., a corporation organized under
the laws of the State of Delaware.
 
"Contingent Payment" means any payment by Landlord (excluding Acquisition
Payments) made pursuant to a Contingent Payment Request from Tenant and the
applicable terms of Article 22.
 
"Contingent Payment Request" means Tenant's written request for a Contingent
Payment on the form attached as Exhibit H.
 
"CPI" means the Consumer Price Index for Urban Wage Earners and Clerical
Workers, U.S. Cities Average, All Items (1982-84 = 100) published by the Bureau
of Labor Statistics of the U.S. Department of Labor; provided that if
compilation of the CPI in its present form and calculated on its present basis
is discontinued or transferred to any other governmental department or bureau,
then the index most nearly the same as the CPI published by the Bureau of Labor
Statistics shall be used. If there is no such similar index, a substitute index
which is then generally recognized as being similar to the CPI shall be used,
such substitute index to be reasonably selected by Landlord.
 
"CPI Change" shall be determined by dividing [i] the most recently available CPI
as of the applicable Rent Adjustment Date minus the CPI used to calculate the
Increaser Rate for the preceding Rent Adjustment Date by [ii] the CPI used for
the preceding Rent Adjustment Date. For the second Lease Year, the Commencement
Date shall serve as the preceding Rent Adjustment Date.

4

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"CPI Rate Change" means an amount equal to the CPI Change divided by 10 and
stated as a percentage. For example, if the CPI Change is .02, the CPI Rate
Change is .20% (.02 divided by 10 = .002 = .20%).
 
"Daily Non-Payroll Operating Expenses" has the meaning set forth in §15.7.1.
"Default Rent" has the meaning set forth in §8.6.
"Disbursing Agreement" means any Disbursing Agreement between Landlord and
Tenant setting forth the terms and conditions pursuant to which Landlord shall
make Contingent Payments to Tenant for certain Project Improvements and any
amendments thereto or substitutions and replacements therefor.
 
"Early Option" has the meaning set forth in § 13.7. "Effective Date" means the
date of this Lease.
"Environmental Laws" means all federal, state, and local laws, ordinances and
policies the purpose of which is to protect human health and the environment, as
amended from time to time, including, but not limited to, [i] CERCLA; [ii] the
Resource Conservation and Recovery Act; [iii] the Hazardous Materials
Transportation Act; [iv] the Clean Air Act; [v] Clean Water Act; [vi] the Toxic
Substances Control Act; [vii] the Occupational Safety and Health Act; [viii] the
Safe Drinking Water Act; and [ix] analogous state laws and regulations.
 
"Event of Default" has the meaning set forth in §8.1. "Expiration Date" has the
meaning set forth in § 1.3.
"Facility" means each facility located on a portion of the Land, including the
Facility Property associated with such Facility. References in this Lease to
"the Facility" shall mean each Facility individually unless expressly stated
otherwise.
 
"Facility Financial Statement" means a financial statement for each Facility
which shall include the balance sheet, statement of income, statement of cash
flows, statement of shareholders' equity, occupancy census data (including payor
mix), statement of capital expenditures and a comparison of the actual financial
data versus the Annual Facility Budget for the applicable period.
 
"Facility Name" means the name under which a Facility has done business during
the Term. The Facility Name in use by each Facility on the Effective Date is set
forth on the attached Exhibit C.
 
"Facility Property" means the portion of the Land on which a Facility is
located, the legal description of which is set forth beneath the applicable
Facility Name on Exhibit A, the Improvements on such portion of the Land, the
Related Rights with respect to such portion of the Land, and Landlord's Personal
Property with respect to such Facility.
 
"Facility State" means the State in which a respective Facility is located.

5

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"Facility States" means, collectively, the States in which the Leased Property
is located.
 
"Facility Uses" means the uses relating to the operation of a Facility as a
facility of the type and operating the number of beds and units set forth on
Exhibit C with respect to such Facility.
 
"Fair Market Value" has the meaning set forth in §13.3.
 
"Fixtures" means all permanently affixed equipment, machinery, fixtures and
other items of real and/or personal property (excluding Landlord's Personal
Property), including all components thereof, now and hereafter located in, on or
used in connection with, and permanently affixed to or incorporated into the
Improvements, including, without limitation, all furnaces, boilers, heaters,
electrical equipment, heating, plumbing, lighting, ventilating, refrigerating,
incineration, air and water pollution control, waste disposal, air-cooling and
air-conditioning systems and apparatus, sprinkler systems and fire and theft
protection equipment, built-in oxygen and vacuum systems, towers and other
devices for the transmission of radio, television and other signals, all of
which, to the greatest extent permitted by law, are hereby deemed by the parties
hereto to constitute real estate, together with all replacements, modifications,
alterations and additions thereto.
 
"Government Authorizations" means all permits, licenses, approvals, consents,
and authorizations required to comply with all Legal Requirements, including,
but not limited to, [i] zoning permits, variances, exceptions, special use
permits, conditional use permits, and consents; [ii] the permits, licenses,
provider agreements and approvals required for licensure and operation of each
Facility in accordance with its respective Facility Uses and certified as a
provider under the federal Medicare and state Medicaid programs to the extent
applicable;
[iii]  environmental, ecological, coastal, wetlands, air, and water permits,
licenses, and consents;
[iv]  curb cut, subdivision, land use, and planning permits, licenses, approvals
and consents;
[v]   building, sign, fire, health, and safety permits, licenses, approvals, and
consents; and
[vi]  architectural reviews, approvals, and consents required under restrictive
covenants.
 
"Guarantor" means Company and Subtenant, individually and collectively.
 
"Guaranty" means each Unconditional and Continuing Lease Guaranty entered into
by a Guarantor to guarantee payment and performance of the Obligor Group
Obligations and any amendments thereto or substitutions or replacements
therefor.
 
"Hazardous Materials" means any substance [i] the presence of which poses a
hazard to the health or safety of persons on or about the Land, including, but
not limited to, asbestos containing materials; [ii] which requires removal or
remediation under any Environmental Law, including, without limitation, any
substance which is toxic, explosive, flammable, radioactive, or otherwise
hazardous; or [iii] which is regulated under or classified under any
Environmental Law as hazardous or toxic, including, but not limited to, any
substance within the meaning of "hazardous substance", "hazardous material",
"hazardous waste", "toxic substance", "regulated substance", "solid waste" or
"pollutant" as defined in any Environmental Law.

6

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"HCN" means Health Care REIT, Inc., a corporation organized under the laws of
the State of Delaware.
 
"HCN-LA" means HCRI Louisiana Properties, L.P., a limited partnership organized
under the laws of the State of Delaware.
 
"HIPDB" means the Healthcare Integrity and Protection Data Bank maintained by
the Department of Health and Human Services.
 
"Impositions" has the meaning set forth in §3.2.
 
"Improvements" means all buildings, structures, Fixtures and other improvements
of every kind on any portion of the Land, including, but not limited to, alleys,
sidewalks, utility pipes, conduits and lines (on-site and off-site), parking
areas and roadways appurtenant to such buildings and structures, now or
hereafter situated upon any portion of the Land.
 
"Increaser Rate" means, as of the applicable Rent Adjustment Date, the lesser of
the CPI Rate Change and .27%.
 
"Initial Rate of Return" means 10.17%.
 
"Initial Term" has the meaning set forth in § 1.3.
 
"Investment Amount" is an aggregate concept and means the sum of all Landlord
Payments outstanding at the applicable time. On the Effective Date, the
Investment Amount is $27,019,834.76.
 
"Issuer" means a financial institution satisfactory to Landlord issuing the
Letter of Credit and such Issuer's successors and assigns. Any "Issuer" shall
have a Lace Financial Service Rating of "C+" or higher at all times throughout
the Term.
 
"Kenner" has the meaning set forth in Recital A.
 
"Kenner Property" has the meaning set forth in Recital A.
 
"Land" means the real property described in Exhibit A attached hereto.
 
"Landlord" means HCN and HCN-LA, individually and collectively.
"Landlord Affiliate" means any person, corporation, partnership, limited
liability company, trust, or other legal entity that, directly or indirectly,
controls, or is controlled by, or is under common control with Landlord.
"Control" (and the correlative meanings of the terms "controlled by" and "under
common control with") means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of such entity.

"Landlord Payment" means any Acquisition Payment or Contingent Payment.
 
"Landlord's Personal Property" means all Personal Property owned by Landlord on
the Effective Date and located at the Facility, including, without limitation,
all personal property listed on any bills of sale delivered to Landlord in
connection with the Facility, together with any and all replacements thereof,
and all Personal Property that pursuant to the terms of this Lease becomes the
property of Landlord during the Term.

7

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"LC Proceeds" has the meaning set forth in §20.3.
 
"Lease" means this Amended and Restated Master Lease Agreement, as amended from
time to time.
 
"Lease Documents" means this Lease and all documents executed by Landlord and
Tenant relating to this Lease or the Facility.
 
"Lease Payments" means the sum of the Base Rent payments (as increased from time
to time) for the applicable period.
 
"Lease Year" means each consecutive period of 365 or 366 days throughout the
Term. The first Lease Year commences on the Commencement Date and expires on the
day before the first anniversary of the Commencement Date.
 
"Leased Property" means all of the Land, Improvements, Related Rights and
Landlord's Personal Property.
 
"Legal Requirements" means all laws, regulations, rules, orders, writs,
injunctions, decrees, certificates, requirements, agreements, conditions of
participation and standards of any federal, state, county, municipal or other
governmental entity, administrative agency, insurance underwriting board,
architectural control board, private third-party payor, accreditation
organization, or any restrictive covenants applicable to the development,
construction, condition and operation of the Facility by Tenant, including, but
not limited to, [i] zoning, building, fire, health, safety, sign, and
subdivision regulations and codes; [ii] certificate of need laws (if
applicable); [iii] licensure to operate as each Facility in accordance with its
respective Facility Uses; [iv] Medicare and Medicaid certification—requirements
(if applicable); [v] the ADA; [vi] any Environmental Laws; and [vii]
requirements, conditions and standards for participation in third-party payor
insurance programs.
 
"Letter of Credit" means an irrevocable and transferable Letter of Credit in an
amount required by the Commitment, issued by Issuer in favor of Landlord as
security for the Lease and in form acceptable to Landlord, and any amendments
thereto or replacements or substitutions therefor. Since no Letter of Credit is
required under the Commitment, all references and provisions relating to "Letter
of Credit" shall have no force or effect, including without limitation, the
provisions of Article 20.
 
"Loan" means the term loan extended to Tenant by HCN on this date in the Loan
Amount.
 
"Loan Amount" means $12,864,874.24.
 
"Louisiana Leased Property" means any Leased Property situated within the State
of Louisiana.

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"Manager" means Summerville Management, LLC, a limited liability company
organized under the laws of the State of Delaware.
 
"Material Obligation" means [i] any indebtedness secured by a security interest
in the accounts receivable of Tenant, Subtenant or Guarantor or any Personal
Property; [ii] any indebtedness or lease of Tenant, Subtenant or Guarantor or of
any other party that has been guaranteed by Tenant, Subtenant or Guarantor that
has an outstanding principal balance or obligation in an amount not less than
$500,000.00; [iii] any obligation to or agreement with the Issuer relating to
the Letter of Credit, if any; and [iv] any sublease of the Leased Property.
 
"Net Operating Income" means the pre-tax net income of Tenant or Subtenant plus
[i] the amount of the provision for depreciation and amortization; plus [ii] the
amount of the provision for interest and lease payments, if any; plus [iii] the
amount of the provision for Rent payments; plus [iv] the amount of the provision
for management fees.
 
"Net Worth" has the meaning set forth in § 15.7.1.
 
"Non-Payroll Operating Expenses" has the meaning set forth in §15.7.1.
 
"Obligor Group Obligations" means all payment and performance obligations of
Tenant, Subtenant and Guarantor to Landlord or any Landlord Affiliate,
including, but not limited to, all obligations under this Lease, any loans
extended to Tenant, Subtenant or Guarantor by Landlord or any Landlord Affiliate
and all documents executed by Tenant, Subtenant or Guarantor in connection with
this Lease, any loan or any other obligation.
 
"Option Price" has the meaning set forth in § 13.2.
 
"Option to Purchase" has the meaning set forth in § 13.1.
 
"Organization State" means the State in which an entity is organized.
 
"Organizational Documents" means [i] for a corporation, its Articles of
Incorporation certified by the Secretary of State of the Organization State, as
amended to date, and its Bylaws certified by such entity, as amended to date;
[ii] for a partnership, its Partnership Agreement certified by such entity, as
amended to date, and the Partnership Certificate, certified by the appropriate
authority, as amended to date; and [iii] for a limited liability company, its
Articles of Organization certified by the Secretary of State of the Organization
State, as amended to date, and its Operating Agreement certified by such entity,
as amended to date.
 
"Original Lease" has the meaning set forth in Recital A.
 
"Payment Amount" means the amount of any Landlord Payment. The first Landlord
Payment is the Acquisition Payment made on the Effective Date.
 
"Payment Date" means the date on which Landlord makes a Landlord Payment.
 
"Periodic Financial Statements" means [i] for Tenant and Subtenant, an unaudited
balance sheet and statement of income for the most recent quarter; [ii] for the
Facility, an unaudited Facility Financial Statement for the most recent month;
and [iii] for each Guarantor, an unaudited balance sheet and statement of income
of Guarantor for the most recent quarter.

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"Permitted Exceptions" means all easements, liens, encumbrances, restrictions,
agreements set forth on Exhibit B attached hereto and such other matters
approved in writing by Landlord and Tenant in the future, and any sublease of
any portion of the Leased Property made in complete accordance with Article 18.
 
"Permitted Liens" means [i] liens granted to Landlord; [ii] liens customarily
incurred by Tenant or Subtenant in the ordinary course of business for items not
delinquent, including mechanic's liens and deposits and charges under workers'
compensation laws; [iii] liens for taxes and assessments not yet due and
payable; [iv] any lien, charge, or encumbrance which is being contested in good
faith pursuant to this Lease; [v] the Permitted Exceptions; and [vi] purchase
money financing and capitalized equipment leases for the acquisition of personal
property provided, however, that Landlord obtains a nondisturbance agreement
from the purchase money lender or equipment lessor in form and substance as may
be satisfactory to Landlord if the original cost of the equipment exceeds
$50,000.00.
 
"Personal Property" means all machinery, equipment, furniture, furnishings,
movable walls or partitions, computers (and all associated software), trade
fixtures and other personal property (but excluding consumable inventory and
supplies owned by Tenant) used in connection with the Leased Property, together
with all replacements and alterations thereof and additions thereto, except
items, if any, included within the definition of Fixtures or Improvements.
 
"Portfolio Cash Flow" has the meaning set forth in §15.7.1. "Portfolio Coverage
Ratio" has the meaning set forth in § 15.7.1.
"Pro Forma Statement" means a financial forecast for the Facility for the next
five-year period prepared in accordance with the standards for forecasts
established by the American Institute of Certified Public Accountants.
 
"Project Improvements" means any addition to or major renovation of a Facility
for which Contingent Payments are made by Landlord pursuant to §22.3.
 
"Purchase Notice" has the meaning set forth in § 13.1.
 
"Qualified Capital Expenditures" means the expenditures capitalized on the books
of Tenant or Subtenant for any of the following: replacement of furniture,
fixtures and equipment, including refrigerators, ranges, major appliances,
bathroom fixtures, doors (exterior and interior), central air conditioning and
heating systems (including cooling towers, water chilling units, furnaces,
boilers and fuel storage tanks) and major replacement of siding; major roof
replacements, including major replacements of gutters, downspouts, eaves and
soffits; major repairs and replacements of plumbing and sanitary systems;
overhaul of elevator systems; major repaving, resurfacing and sealcoating of
sidewalks, parking lots and driveways; repainting of entire building exterior;
but excluding major alterations, renovations, additions and normal maintenance
and repairs.

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"Rate Shortfall" means, as of the applicable Rent Adjustment Date, a percentage
amount equal to the aggregate of the Annual Rate Shortfalls, but excluding any
Annual Rate Shortfall (or portion thereof) that was taken into account for the
calculation of an Annual Rent Increase for a prior Lease Year.
 
"Receivables" means [i] all of Tenant's or Subtenant's rights to receive payment
for providing resident care and services as set forth in any accounts, contract
rights, and instruments, and [ii] those documents, chattel paper, inventory
proceeds, provider agreements, participation agreements, ledger sheets, files,
records, computer programs, tapes, and agreements relating to Tenant's or
Subtenant's rights to receive payment for providing resident care services.
 
"Related Rights" means all easements, rights (including bed operating rights)
and appurtenances relating to the Land and the Improvements.
 
"Renewal Date" means the first day of each Renewal Term. "Renewal Option" has
the meaning set forth in § 12.1. "Renewal Term" has the meaning set forth in
§12.1.
"Rent" means Base Rent, Additional Rent and Default Rent.
 
"Rent Adjustment Date" means November 1, 2007 and November 1 of each year
thereafter.
 
"Rent Schedule" means the schedule issued by Landlord to Tenant showing the Base
Rent to be paid by Tenant pursuant to the terms of this Lease, as such schedule
is amended from time to time by Landlord. The initial Rent Schedule is attached
to this Lease as Schedule 1 or will be attached within 5 Business Days following
Closing if the Rent Schedule cannot be determined until the day of Closing.
 
"Replacement Operator" has the meaning set forth in §15.9.1.
 
"Secured Party" has the meaning set forth in §23.1.
"Subtenant" means the entity identified on Exhibit C that subleases the Facility
from Tenant and is the licensed operator (or is operating through an interim
management agreement with the licensed operator) of its respective Facility as
shown on Exhibit C, individually and collectively. References in this Lease to
"Subtenant" shall mean each Subtenant individually and shall relate to such
Subtenant's respective Facility unless expressly stated otherwise.
 
"Substitute Facility" has the meaning set forth in § 13.7.
 
"Target Rate of Return" means, as of the relevant Rent Adjustment Date or
measurement date, the Initial Rate of Return plus .27% for each Lease Year after
the first Lease Year.

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"Tenant" has the meaning set forth in the introductory paragraph of this Lease.
 
"Tenant's Property" has the meaning set forth in § 11.1.
"Term" means the Initial Term and each Renewal Term.
 
"Third-Party Sale" has the meaning set forth in §13.7.
 
1.4.1 Louisiana Leased Property Definitions. When used in connection with the
Louisiana Leased Property, the following defined terms shall have the following
additional meanings:
 
"Article 9 of the Uniform Commercial Code" shall also be understood to include,
without exclusion, Chapter 9 of the Louisiana Commercial Laws, La. R.S.
10:9-101, et seq.
 
"Condemnation" includes "expropriation", as that term is used in the Louisiana
Civil Code.
 
"Easement" includes "servitude", as that term is used in the Louisiana Civil
Code.
 
"Land" whether used in isolation or incorporated into any other defined terms,
shall also be understood to mean and refer to "immovable property", as that term
is used in the Louisiana Civil Code.
 
"Landlord" whether used in isolation or incorporated into any other defined
terms, shall also be understood to mean and refer to "lessor", as that term is
used in the Louisiana Civil Code.
 
"Liens" shall also be understood to mean and refer to "privileges" created under
the Louisiana Civil Code.
 
"Personal Property" whether used in isolation or incorporated into any other
defined terms, shall also be understood to mean and refer to "movable property",
as that term is used in the Louisiana Civil Code.
 
"Tenant" whether used in isolation or incorporated into any other defined terms,
shall also be understood to mean and refer to "lessee", as that term is used in
the Louisiana Civil Code.
 
1.5 Landlord as Agent. With respect to its respective Facility, each Landlord
appoints HCN 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
the other Lease Documents. All notices, consents, waivers and all other
documents and instruments executed by HCN pursuant to the Lease Documents from
time to time and all other actions of HCN as Landlord under the Lease Documents
shall be binding upon such Landlord. All Rent payable under this Lease shall be
paid to HCN.

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ARTICLE 2: RENT
 
2.1 Base Rent. Tenant shall pay Landlord base rent ("Base Rent") in advance in
consecutive monthly installments payable on the first day of each month during
the Term commencing on the Commencement Date. If the Effective Date is not the
first day of a month, Tenant shall pay Landlord Base Rent on the Effective Date
for the partial month, i.e., for the period commencing on the Effective Date and
ending on the day before the Commencement Date. The Base Rent payable for the
first Lease Year is as shown on the Rent Schedule, subject to adjustment
pursuant to §2.2.2 if applicable. For the second and each subsequent Lease Year
of the Initial Term, the Base Rent shall be paid in accordance with the most
recent revised Rent Schedule provided by Landlord pursuant to §2.2, as
applicable. The Base Rent for each Renewal Term will be determined in accordance
with § 12.2.
 
2.2 Base Rent Adjustments.
 
2.2.1 Annual Increase of Base Rent. Commencing on the first Rent Adjustment Date
and on each Rent Adjustment Date thereafter, the annual Base Rent shall increase
by the Annual Rent Increase. If the CPI Change is zero or negative as of any
Rent Adjustment Date, the Annual Rent Increase for such Lease Year is
$28,101.24. Notwithstanding the foregoing, the aggregate Base Rent paid by
Tenant for any particular Lease Year and all preceding Lease Years will not
exceed the Base Rent that Tenant would have paid if the Landlord had received
Base Rent based on the Target Rate of Return during the Lease Year in question
and all preceding Lease Years. As of each Rent Adjustment Date, Landlord shall
calculate the Annual Rent Increase and shall deliver the revised Rent Schedule
to Tenant no later than 30 days after the Rent Adjustment Date. Until the
revised Rent Schedule is delivered to Tenant, Tenant shall pay the monthly Base
Rent with the Annual Rent Increase (paid in equal monthly installments)
calculated based upon an Increaser Rate of .27%. After the revised Rent Schedule
is delivered to Tenant, if the actual monthly Base Rent is more or less than the
monthly Base Rent paid pursuant to the preceding sentence, the difference shall
be added to or deducted from (as applicable) the monthly Base Rent payment made
for the following month. Thereafter, Tenant-shall make monthly Base Rent
payments in accordance with the revised Rent Schedule.
 
2.2.2 Additional Landlord Payments. If Landlord makes a Landlord Payment other
than the initial Acquisition Payment, the Base Rent will be increased effective
on the Payment Date based upon the applicable rate of return to Landlord as set
forth in the Commitment. Until Tenant receives a revised Rent Schedule from
Landlord, Tenant shall for each month [i] continue to make installments of Base
Rent according to the Rent Schedule in effect on the day before the Payment
Date; and [ii] within 10 days following Landlord's issuance of an invoice, pay
the difference between the installment of Base Rent that Tenant paid to Landlord
for such month and the installment of Base Rent actually due to Landlord for
such month as a result of the Landlord Payment. On the first day of the month
following receipt of the revised Rent Schedule, Tenant shall pay the monthly
installment of Base Rent specified in the revised Rent Schedule.
 
2.3 Additional Rent. In addition to Base Rent, Tenant shall pay all other
amounts, liabilities, obligations and Impositions which Tenant assumes or agrees
to pay under this Lease including any fine, penalty, interest, charge and cost
which may be added for nonpayment or late payment of such items (collectively
the "Additional Rent").

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2.4 Place of Payment of Rent. Tenant shall make all payments of Rent to Landlord
by electronic wire transfer in accordance with the wiring instructions set forth
in Exhibit H attached hereto, subject to change in accordance with other written
instructions provided by Landlord to Tenant from time to time.
 
2.5 Net Lease. This Lease shall be deemed and construed to be an "absolute net
lease", and Tenant shall pay all Rent and other charges and expenses in
connection with the Leased Property throughout the Term, without abatement,
deduction, recoupment or setoff. Landlord shall have all legal, equitable and
contractual rights, powers and remedies provided either in this Lease or by
statute or otherwise in the case of nonpayment of the Rent.
 
2.6 No Termination, Abatement, Etc. Except as otherwise specifically provided in
this Lease, Tenant shall remain bound by this Lease in accordance with its
terms. Tenant shall not, without the consent of Landlord, modify, surrender or
terminate the Lease, nor seek nor be entitled to any abatement, deduction,
deferment or reduction of Rent, or setoff or recoupment against the Rent. Except
as expressly provided in this Lease, the obligations of Landlord and Tenant
shall not be affected by reason of [i] any damage to, or destruction of, the
Leased Property or any part thereof from whatever cause or any Taking (as
hereinafter defined) of the Leased Property or any part thereof; [ii] the lawful
or unlawful prohibition of, or restriction upon, Tenant's use of the Leased
Property, or any part thereof, the interference with such use by any person,
corporation, partnership or other entity, or by reason of eviction by paramount
title; [iii] any claim which Tenant has or might have against Landlord or by
reason of any default or breach of any warranty by Landlord under this Lease or
any other agreement between Landlord and Tenant, or to which Landlord and Tenant
are parties; [iv] any bankruptcy, insolvency, reorganization, composition,
readjustment, liquidation, dissolution, winding up or other proceeding affecting
Landlord or any assignee or transferee of Landlord; or [v] any other cause,
whether similar or dissimilar to any of the foregoing, other than a discharge of
Tenant from any such obligations as a matter of law. Except as otherwise
specifically provided in this Lease, Tenant hereby specifically waives all
rights, arising from any occurrence whatsoever, which may now or hereafter be
conferred upon it by law [a] to modify, surrender or terminate this Lease or
quit or surrender the Leased Property or any portion thereof; or [b] entitling
Tenant to any abatement, reduction, suspension or deferment of the Rent or other
sums payable by Tenant hereunder. The obligations of Landlord and Tenant
hereunder shall be separate and independent covenants and agreements and the
Rent and all other sums payable by Tenant hereunder shall continue to be payable
in all events unless the obligations to pay the same shall be terminated
pursuant to the express provisions of this Lease or by termination of this Lease
other than by reason of an Event of Default.
 
ARTICLE 3: IMPOSITIONS AND UTILITIES
 
 3.1 Payment of Impositions. Tenant shall pay, as Additional Rent, all
Impositions that may be levied or become a lien on the Leased Property or any
part thereof at any time (whether prior to or during the Term), without regard
to prior ownership of said Leased Property, before any fine, penalty, interest,
or cost is incurred; provided, however, Tenant may contest any Imposition in
accordance with §3.7. Tenant shall deliver to Landlord [i] not more than five
days after the due date of each Imposition, copies of the invoice for such
Imposition and the check delivered for payment thereof; and [ii] not more than
30 days after the due date of each Imposition, a copy of the official receipt
evidencing such payment or other proof of payment satisfactory to Landlord.
Tenant's obligation to pay such Impositions shall be deemed absolutely fixed
upon the date such Impositions become a lien upon the Leased Property or any
part thereof. Tenant, at its expense, shall prepare and file all tax returns and
reports in respect of any Imposition as may be required by governmental
authorities. Tenant shall be entitled to any refund due from any taxing
authority if no Event of Default shall have occurred hereunder and be continuing
and if Tenant shall have paid to Escrow Agent all Impositions due and payable to
such taxing authority as of the date of the refund. Landlord shall be entitled
to any refund from any taxing authority if an Event of Default has occurred and
is continuing. Any refunds retained by Landlord due to an Event of Default shall
be applied as provided in §8.8. Landlord and Tenant shall, upon request of the
other, provide such data as is maintained by the party to whom the request is
made with respect to the Leased Property as may be necessary to prepare any
required returns and reports. In the event governmental authorities classify any
property covered by this Lease as personal property, Tenant shall file all
personal property tax returns in such jurisdictions where it may legally so
file. Landlord, to the extent it possesses the same, and Tenant, to the extent
it possesses the same, will provide the other party, upon request, with cost and
depreciation records necessary for filing returns for any property so classified
as personal property. Where Landlord is legally required to file personal
property tax returns, Tenant will be provided with copies of assessment notices
indicating a value in excess of the reported value in sufficient time for Tenant
to file a protest. Tenant may, upon notice to Landlord, at Tenant's option and
at Tenant's sole cost and expense, protest, appeal, or institute such other
proceedings as Tenant may deem appropriate to effect a reduction of real estate
or personal property assessments and Landlord, at Tenant's expense as aforesaid,
shall fully cooperate with Tenant in such protest, appeal, or other action.
Tenant shall reimburse Landlord for all personal property taxes paid by Landlord
within 30 days after receipt of billings accompanied by copies of a bill
therefor and payments thereof which identify the personal property with respect
to which such payments are made. Impositions imposed in respect to the
tax-fiscal period during which the Term terminates shall be adjusted and
prorated between Landlord and Tenant, whether or not such Imposition is imposed
before or after such termination, and Tenant's obligation to pay its prorated
share thereof shall survive such termination.

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3.2 Definition of Impositions. "Impositions" means, collectively, [i] taxes
(including, without limitation, all capital stock and franchise taxes of
Landlord imposed by the Facility State or any governmental entity in the
Facility State due to this lease transaction or Landlord's ownership of the
Leased Property and the income arising therefrom, or due to Landlord being
considered as doing business in the Facility State because of Landlord's
ownership of the Leased Property or lease thereof to Tenant), all real estate
and personal property ad valorem, sales and use, business or occupation, single
business, gross receipts, commercial activity, transaction privilege, rent or
similar taxes; [ii] assessments (including, without limitation, all assessments
for public improvements or benefits, whether or not commenced or completed prior
to the date hereof and whether or not to be completed within the Term); [iii]
ground rents, water, sewer or other rents and charges, excises, tax levies, and
fees (including, without limitation, license, permit, inspection, authorization
and similar fees); [iv] all taxes imposed on Tenant's operations of the Leased
Property, including, without limitation, employee withholding taxes, income
taxes and intangible taxes; [v] all taxes imposed by the Facility State or any
governmental entity in the Facility State with respect to the conveyance of the
Leased Property by Landlord to Tenant or Tenant's designee, including, without
limitation, conveyance taxes, capital gains taxes, and commercial activity
taxes; and [vi] all other governmental charges, in each case whether general or
special, ordinary or extraordinary, or foreseen or unforeseen, of every
character in respect of the Leased Property or any part thereof and/or the Rent
(including all interest and penalties thereon due to any failure in payment by
Tenant), which at any time prior to, during or in respect of the Term hereof may
be assessed or imposed on or in respect of or be a lien upon [a] Landlord or
Landlord's interest in the Leased Property or any part thereof; [b] the Leased
Property or any part thereof or any rent therefrom or any estate, right, title
or interest therein; or [c] any occupancy, operation, use or possession of, or
sales from, or activity conducted on, or in connection with the Leased Property
or the leasing or use of the Leased Property or any part thereof. Tenant shall
not, however, be required to pay any tax based on net income imposed on Landlord
by any governmental entity other than the capital stock and franchise taxes
described in clause [i] above.

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3.3 Escrow of Impositions. Tenant shall deposit with Landlord on the first day
of each month a sum equal to 1/12th of the Impositions assessed against the
Leased Property for the preceding tax year for real estate taxes, which sums
shall be used by Landlord toward payment of such real estate taxes. In addition,
if an Event of Default occurs and while it remains uncured, Tenant shall, at
Landlord's election, deposit with Landlord on the first day of each month a sum
equal to 1/12th of the Impositions assessed against the Leased Property for the
preceding tax year other than for real estate taxes, which sums shall be used by
Landlord toward payment of such Impositions. Tenant, on demand, shall pay to
Landlord any additional funds necessary to pay and discharge the obligations of
Tenant pursuant to the provisions of this section. The receipt by Landlord of
the payment of such Impositions by and from Tenant shall only be as an
accommodation to Tenant, the mortgagees, and the taxing authorities, and shall
not be construed as rent or income to Landlord, Landlord serving, if at all,
only as a conduit for delivery purposes.
 
3.4 Utilities. Tenant shall pay, as Additional Rent, all taxes, assessments,
charges, deposits, and bills for utilities, including, without limitation,
charges for water, gas, oil, sanitary and storm sewer, electricity, telephone
service, and trash collection, which may be charged against the occupant of the
Improvements during the Term. If an Event of Default occurs and while it remains
uncured, Tenant shall, at Landlord's election, deposit with Landlord on the
first day of each month a sum equal to 1/12th of the amount of the annual
utility expenses for the preceding Lease Year, which sums shall be used by
Landlord to pay such utilities. Tenant shall, on demand, pay to Landlord any
additional amount needed to pay such utilities. Landlord's receipt of such
payments shall only be an accommodation to Tenant and the utility companies and
shall not constitute rent or income to Landlord. Tenant shall at all times
maintain that amount of heat necessary to ensure against the freezing of water
lines. Tenant hereby agrees to indemnify and hold Landlord harmless from and
against any liability or damages to the utility systems and the Leased Property
that may result from Tenant's failure to maintain sufficient heat in the
Improvements.
 
3.5  Discontinuance of Utilities. Landlord will not be liable for damages to
person or property or for injury to, or interruption of, business for any
discontinuance of utilities nor will such discontinuance in any way be construed
as an eviction of Tenant or cause an abatement of rent or operate to release
Tenant from any of Tenant's obligations under this Lease.

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3.6 Business Expenses. Tenant acknowledges that it is solely responsible for all
expenses and costs incurred in connection with the operation of the Facility on
the Leased Property, including, without limitation, employee benefits, employee
vacation and sick pay, consulting fees, and expenses for inventory and supplies.
 
 3.7 Permitted Contests. Tenant, on its own or on Landlord's behalf (or in
Landlord's name), but at Tenant's expense, may contest, by appropriate legal
proceedings conducted in good faith and with due diligence, the amount or
validity or application, in whole or in part, of any Imposition or any Legal
Requirement or insurance requirement or any lien, attachment, levy, encumbrance,
charge or claim provided that [i] in the case of an unpaid Imposition, lien,
attachment, levy, encumbrance, charge or claim, the commencement and
continuation of such proceedings shall suspend the collection thereof from
Landlord and from the Leased Property; [ii] neither the Leased Property nor any
Rent therefrom nor any part thereof or interest therein would be in any
immediate danger of being sold, forfeited, attached or lost; [iii] in the case
of a Legal Requirement, Landlord would not be in any immediate danger of civil
or criminal liability for failure to comply therewith pending the outcome of
such proceedings; [iv] in the event that any such contest shall involve a sum of
money or potential loss in excess of $75,000.00, Tenant shall deliver to
Landlord and its counsel an opinion of Tenant's counsel to the effect set forth
in clauses [i], [ii] and [iii], to the extent applicable; [v] in the case of a
Legal Requirement and/or an Imposition, lien, encumbrance or charge, Tenant
shall give such reasonable security as may be demanded by Landlord to insure
ultimate payment of the same and to prevent any sale or forfeiture of the
affected Leased Property or the Rent by reason of such nonpayment or
noncompliance; provided, however, the provisions of this section shall not be
construed to permit Tenant to contest the payment of Rent (except as to contests
concerning the method of computation or the basis of levy of any Imposition or
the basis for the assertion of any other claim) or any other sums payable by
Tenant to Landlord hereunder; [vi] in the case of an insurance requirement, the
coverage required by Article 4 shall be maintained; and [vii] if such contest be
finally resolved against Landlord or Tenant, Tenant shall, as Additional Rent
due hereunder, promptly pay the amount required to be paid, together with all
interest and penalties accrued thereon, or comply with the applicable Legal
Requirement or insurance requirement. Landlord, at Tenant's expense, shall
execute and deliver to Tenant such authorizations and other documents as may be
reasonably required in any such contest, and, if reasonably requested by Tenant
or if Landlord so desires, Landlord shall join as a party therein. Tenant hereby
agrees to indemnify and save Landlord harmless from and against any liability,
cost or expense of any kind that may be imposed upon Landlord in connection with
any such contest and any loss resulting therefrom.
 
ARTICLE 4: INSURANCE
 
 4.1 Property Insurance. At Tenant's expense, Tenant shall maintain in full
force and effect a property insurance policy or policies insuring the Leased
Property against the following:

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(a)            Loss or damage commonly covered by a "Special Form" policy
insuring against physical loss or damage to the Improvements and Personal
Property, including, but not limited to, risk of loss from fire, windstorm and
other hazards, collapse, transit coverage, vandalism, malicious mischief, theft,
earthquake (if the Leased Property is in a higher risk earthquake zone as
determined by Landlord) and sinkholes (if usually recommended in the area of the
Leased Property). The policy shall be in the amount of the full replacement
value (as defined in §4.5) of the Improvements and Personal Property and shall
contain a deductible amount acceptable to Landlord. Landlord shall be named as
an additional insured. The policy shall include a stipulated value endorsement
or agreed amount endorsement and endorsements for ordinance or law including
demolition costs and increased cost of construction.
 
(b)            If applicable, loss or damage by explosion of steam boilers,
pressure vessels, or similar apparatus, now or hereafter installed on the Leased
Property, in commercially reasonable amounts acceptable to Landlord.
 
(c)            Consequential loss of rents and income coverage insuring against
all "Special Form" risk of physical loss or damage with limits and deductible
amounts acceptable to Landlord covering risk of loss during the first nine
months of reconstruction, and containing an endorsement for extended period of
indemnity of at least six months, and shall be written with a stipulated amount
of coverage if available at a reasonable premium.
 
(d)            If the Leased Property is located, in whole or in part, in a
federally designated 100-year flood plain area, flood insurance for the
Improvements in an amount equal to the lesser of [i] the full replacement value
of the Improvements; or [ii] the maximum amount of insurance available for the
Improvements under all federal and private flood insurance programs.
 
(e)            Loss or damage caused by the breakage of plate glass in
commercially reasonable amounts acceptable to Landlord.
 
(f)            Loss or damage commonly covered by blanket crime insurance,
including employee dishonesty, loss of money orders or paper currency,
depositor's forgery, and loss of property of patients accepted by Tenant for
safekeeping, in commercially reasonable amounts acceptable to Landlord.
 
4.2 Liability Insurance. At Tenant's expense, Tenant shall maintain liability
insurance against the following:
 
(a)           Claims for personal injury or property damage commonly covered by
comprehensive general liability insurance with endorsements for incidental
malpractice, contractual, personal injury, voluntary medical payments, products
and completed operations, broad form property damage, and extended bodily
injury, with commercially reasonable amounts for bodily injury, property damage,
and voluntary medical payments acceptable to Landlord, but with a combined
single limit of not less than $3,000,000.00 per occurrence.
 
(b)           Claims for personal injury and property damage commonly covered by
comprehensive automobile liability insurance, covering all owned and non-owned
automobiles, with commercially reasonable amounts for bodily injury, property
damage, and for automobile medical payments acceptable to Landlord, but with a
combined single limit of not less than $3,000,000.00 per occurrence.

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(c)           Claims for personal injury commonly covered by medical malpractice
and professional liability insurance in commercially reasonable amounts
acceptable to Landlord.
 
(d)           Claims commonly covered by workers' compensation insurance for all
persons employed by Tenant on the Leased Property. Such workers' compensation
insurance shall be in accordance with the requirements of all applicable local,
state, and federal law.
 

4.3 Builder's Risk Insurance. In connection with any construction, Tenant shall
maintain in full force and effect a builder's completed value risk policy
("Builder's Risk Policy") of insurance in a nonreporting form insuring against
all "Special Form" risk of physical loss or damage to the Improvements,
including, but not limited to, risk of loss from fire, windstorm and other
hazards, collapse, transit coverage, vandalism, malicious mischief, theft,
earthquake (if Leased Property is in a higher risk earthquake zone as determined
by Landlord) and sinkholes (if usually recommended in the area of the Leased
Property). The Builder's Risk Policy shall include endorsements providing
coverage for building materials and supplies and temporary premises. The
Builder's Risk Policy shall be in the amount of the full replacement value of
the Improvements and shall contain a deductible amount acceptable to Landlord.
Landlord shall be named as an additional insured. The Builder's Risk Policy
shall include an endorsement permitting initial occupancy.
 
4.4 Insurance Requirements. The following provisions shall apply to all
insurance coverages required hereunder:
 
(a)           The form and substance of all policies shall be subject to the
approval of Landlord, which approval will not be unreasonably withheld.
 
(b)           The carriers of all policies shall have a Best's Rating of "A" or
better and a Best's Financial Category of X or higher and shall be authorized to
do insurance business in the Facility State.
 
(c)           Tenant shall be the "named insured" and Landlord shall be an
"additional insured" on each policy.
 
(d)           Tenant shall deliver to Landlord certificates or policies showing
the required coverages and endorsements. The policies of insurance shall provide
that the policy may not be canceled or not renewed, and no material change or
reduction in coverage may be made, without at least 30 days' prior written
notice to Landlord.
 
(e)       The policies shall contain a severability of interest and/or
cross-liability endorsement, provide that the acts or omissions of Tenant or
Landlord will not invalidate the coverage of the other party, and provide that
Landlord shall not be responsible for payment of premiums.

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(1)            All loss adjustment shall require the written consent of Landlord
and Tenant, as their interests may appear.
 
(g)    At least 30 days prior to the expiration of each insurance policy, Tenant
shall deliver to Landlord a certificate showing renewal of such policy and
payment of the annual premium therefor and a current Certificate of Compliance
(in the form delivered at the time of Closing) completed and signed by Tenant's
insurance agent.
 
4.5 Replacement Value. The term "full replacement value" means the actual
replacement cost thereof from time to time, including increased cost of
construction endorsement, with no reductions or deductions. Tenant shall, in
connection with each annual policy renewal, deliver to Landlord a
redetermination of the full replacement value by the insurer or an endorsement
indicating that the Leased Property is insured for its full replacement value.
If Tenant makes any Permitted Alterations (as hereinafter defined) to the Leased
Property, Landlord may have such full replacement value redetermined at any time
after such Permitted Alterations are made, regardless of when the full
replacement value was last determined.
 
4.6 Blanket Policy. Notwithstanding anything to the contrary contained in this
Article 4, Tenant may carry the insurance required by this Article under a
blanket policy of insurance, provided that the coverage afforded Tenant will not
be reduced or diminished or otherwise be different from that which would exist
under a separate policy meeting all of the requirements of this Lease.
 
4.7 No Separate Insurance. Tenant shall not take out separate insurance
concurrent in form or contributing in the event of loss with that required in
this Article, or increase the amounts of any then existing insurance, by
securing an additional policy or additional policies, unless all parties having
an insurable interest in the subject matter of the insurance, including Landlord
and any mortgagees, are included therein as additional insureds or loss payees,
the loss is payable under said insurance in the same manner as losses are
payable under this Lease, and such additional insurance is not prohibited by the
existing policies of insurance. Tenant shall immediately notify Landlord of the
taking out of such separate insurance or the increasing of any of the amounts of
the existing insurance by securing an additional policy or additional policies.
 
4.8 Waiver of Subrogation. Each party hereto hereby waives any and every claim
which arises or may arise in its favor and against the other party hereto during
the Term for any and all loss of, or damage to, any of its property located
within or upon, or constituting a part of the Leased Property, which loss or
damage is covered by valid and collectible insurance policies, to the extent
that such loss or damage is recoverable under such policies. Said mutual waiver
shall be in addition to, and not in limitation or derogation of, any other
waiver or release contained in this Lease with respect to any loss or damage to
property of the parties hereto. Inasmuch as the said waivers will preclude the
assignment of any aforesaid claim by way of subrogation (or otherwise) to an
insurance company (or any other person), each party hereto agrees immediately to
give each insurance company which has issued to it policies of insurance,
written notice of the terms of said mutual waivers, and to have such insurance
policies properly endorsed, if necessary, to prevent the invalidation of said
insurance coverage by reason of said waivers, so long as such endorsement is
available at a reasonable cost.

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4.9 Mortgages. The following provisions shall apply if Landlord now or hereafter
places a mortgage on the Leased Property or any part thereof: [i] Tenant shall
obtain a standard form of lender's loss payable clause insuring the interest of
the mortgagee; [ii] Tenant shall deliver evidence of insurance to such
mortgagee; [iii] loss adjustment shall require the consent of the mortgagee; and
[iv] Tenant shall provide such other information and documents as may be
required by the mortgagee.
 
4.10 Escrows. After an Event of Default occurs hereunder, Tenant shall make such
periodic payments of insurance premiums in accordance with Landlord's
requirements after receipt of notice thereof from Landlord.
 
ARTICLE 5: INDEMNITY
 
5.1 Tenant's Indemnification. Tenant hereby indemnifies and agrees to hold
harmless Landlord, any successors or assigns of Landlord, and Landlord's and
such successor's and assign's directors, officers, employees and agents from and
against any and all demands, claims, causes of action, fines, penalties, damages
(including consequential damages), losses, liabilities (including strict
liability), judgments, and expenses (including, without limitation, reasonable
attorneys' fees, court costs, and the costs set forth in §8.7) incurred in
connection with or arising from: [i] the use or occupancy of the Leased Property
by Tenant or any persons claiming under Tenant; [ii] any activity, work, or
thing done, or permitted or suffered by Tenant in or about the Leased Property;
[iii] any acts, omissions, or negligence of Tenant or any person claiming under
Tenant, or the contractors, agents, employees, invitees, or visitors of Tenant
or any such person; [iv] any breach, violation, or nonperformance by Tenant or
any person claiming under Tenant or the employees, agents, contractors,
invitees, or visitors of Tenant or of any such person, of any term, covenant, or
provision of this Lease or any law, ordinance, or governmental requirement of
any kind, including, without limitation, any failure to comply with any
applicable requirements under the ADA; [v] any injury or damage to the person,
property or business of Tenant, its employees, agents, contractors, invitees,
visitors, or any other person entering upon the Leased Property; [vi] any
construction, alterations, changes or demolition of the Facility performed by or
contracted for by Tenant or its employees, agents or contractors; and [vii] any
obligations, costs or expenses arising under any matters shown on Exhibit B or
any other Permitted Encumbrances consented to in writing by Landlord and Tenant
but excluding obligations, costs or expenses arising from [a] Landlord's gross
negligence or willful misconduct, or [b] matters covered by Landlord's title
insurance policy. If any action or proceeding is brought against Landlord, its
employees, or agents by reason of any such claim, Tenant, upon notice from
Landlord, will defend the claim at Tenant's expense with counsel reasonably
satisfactory to Landlord. All amounts payable to Landlord under this section
shall be payable on written demand and any such amounts which are not paid
within 10 days after demand therefor by Landlord shall bear interest at
Landlord's rate of return as provided in the Commitment. In case any action,
suit or proceeding is brought against Tenant by reason of any such occurrence,
Tenant shall use its commercially reasonable efforts to defend such action, suit
or proceeding.
 
5.1.1 Notice of Claim. Landlord shall notify Tenant in writing of any claim or
action brought against Landlord in which indemnity may be sought against Tenant
pursuant to this section. Such notice shall be given in sufficient time to allow
Tenant to defend or participate in such claim or action, but the failure to
give-such notice in sufficient time shall not constitute a defense hereunder nor
in any way impair the obligations of Tenant under this section unless the
failure to give such notice precludes Tenant's defense of any such action.

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5.1.2 Survival of Covenants. The covenants of Tenant contained in this section
shall remain in full force and effect after the termination of this Lease until
the expiration of the period stated in the applicable statute of limitations
during which a claim or cause of action may be brought and payment in full or
the satisfaction of such claim or cause of action and of all expenses and
charges incurred by Landlord relating to the enforcement of the provisions
herein specified.
 
5.1.3 Reimbursement of Expenses. Unless prohibited by law, Tenant hereby agrees
to pay to Landlord all of the reasonable fees, charges and reasonable
out-of-pocket expenses related to the Facility and required hereby, or incurred
by Landlord in enforcing the provisions of this Lease.
 
5.2 Environmental Indemnity; Audits. Tenant hereby indemnifies and agrees to
hold harmless Landlord, any successors to Landlord's interest in this Lease, and
Landlord's and such successors' directors, officers, employees and agents from
and against any losses, claims, damages (including consequential damages),
penalties, fines, liabilities (including strict liability), costs (including
cleanup and recovery costs), and expenses (including expenses of litigation and
reasonable consultants' and attorneys' fees) incurred by Landlord or any other
indemnitee or assessed against any portion of the Leased Property by virtue of
any claim or lien by any governmental or quasi-governmental unit, body, or
agency, or any third party, for cleanup costs or other costs pursuant to any
Environmental Law. Tenant's indemnity shall survive the termination of this
Lease. Provided, however, Tenant shall have no indemnity obligation with respect
to [i] Hazardous Materials first introduced to the Leased Property subsequent to
the date that Tenant's occupancy of the Leased Property shall have fully
terminated; or [ii] Hazardous Materials introduced to the Leased Property by
Landlord, its agent, employees, successors or assigns. If at any time during the
Term of this Lease any governmental authority notifies Landlord or Tenant of a
violation of any Environmental Law or Landlord reasonably believes that a
Facility may violate any Environmental Law, Landlord may require one or more
environmental audits of such portion of the Leased Property, in such form, scope
and substance as specified by Landlord, at Tenant's expense. Tenant shall,
within 30 days after receipt of an invoice from Landlord, reimburse Landlord for
all reasonable out of pocket costs and expenses incurred in reviewing any
environmental audit, including, without limitation, reasonable attorneys' fees
and costs.
 
5.3 Limitation of Landlord's Liability. Except for Landlord's gross negligence
or willful misconduct, Landlord, its agents, and employees, will not be liable
for any loss, injury, death, or damage (including consequential damages) to
persons, property, or Tenant's business occasioned by theft, act of God, public
enemy, injunction, riot, strike, insurrection, war, court order, requisition,
order of governmental body or authority, fire, explosion, falling objects,
steam, water, rain or snow, leak or flow of water (including water from the
elevator system), rain or snow from the Leased Property or into the Leased
Property or from the roof, street, subsurface or from any other place, or by
dampness or from the breakage, leakage, obstruction, or other defects of the
pipes, sprinklers, wires, appliances, plumbing, air conditioning, or lighting
fixtures of the Leased Property, or from construction, repair, or alteration of
the Leased Property or from any acts or omissions of any other occupant or
visitor of the Leased Property, or from any other cause beyond Landlord's
control.

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ARTICLE 6: USE AND ACCEPTANCE OF PREMISES
 
 6.1 Use of Leased Property. Tenant shall use and occupy the Leased Property
exclusively for the Facility Uses specified for each Facility and for all lawful
and licensed ancillary uses, and for no other purpose without the prior written
consent of Landlord. Tenant shall obtain and maintain all approvals, licenses,
and consents needed to use and operate the Leased Property as herein permitted.
Tenant shall deliver to Landlord complete copies of surveys, examinations,
certification and licensure inspections, compliance certificates, and other
similar reports issued to Tenant by any governmental agency within 10 days after
Tenant's receipt of each item.
 
 6.2 Acceptance of Leased Property. Tenant acknowledges that [i] Tenant and its
agents have had an opportunity to inspect the Leased Property; [ii] Tenant has
found the Leased Property fit for Tenant's use; [iii] Landlord will deliver the
Leased Property to Tenant in "as-is" condition; [iv] Landlord is not obligated
to make any improvements or repairs to the Leased Property; and [v] the roof,
walls, foundation, heating, ventilating, air conditioning, telephone, sewer,
electrical, mechanical, elevator, utility, plumbing, and other portions of the
Leased Property are in good working order. Tenant waives any claim or action
against Landlord with respect to the condition of the Leased Property. LANDLORD
MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, IN RESPECT OF THE
LEASED PROPERTY OR ANY PART THEREOF, EITHER AS TO ITS FITNESS FOR USE, DESIGN OR
CONDITION FOR ANY PARTICULAR USE OR PURPOSE OR OTHERWISE, OR AS TO QUALITY OF
THE MATERIAL OR WORKMANSHIP THEREIN, LATENT OR PATENT, IT BEING AGREED THAT ALL
SUCH RISKS ARE TO BE BORNE BY TENANT.
 
 6.3 Conditions of Use and Occupancy. Tenant agrees that during the Term it
shall use and keep the Leased Property in a careful, safe and proper manner; not
commit or suffer waste thereon; not use or occupy the Leased Property for any
unlawful purposes; not use or occupy the Leased Property or permit the same to
be used or occupied, for any purpose or business deemed extra-hazardous on
account of fire or otherwise; keep the Leased Property in such repair and
condition as may be required by the Board of Health, or other city, state or
federal authorities, free of all cost to Landlord; not permit any acts to be
done which will cause the cancellation, invalidation, or suspension of any
insurance policy; and permit Landlord and its agents to enter upon the Leased
Property at all reasonable times to examine the condition thereof. Landlord
shall have the right to have an annual inspection of the Leased Property
performed and Tenant shall pay an inspection fee of $1,500.00 per Facility plus
Landlord's reasonable out-of-pocket expenses within 30 days after receipt of
Landlord's invoice.
 
 6.4 Tenant Solely Responsible. Tenant specifically acknowledges that it is
solely responsible for the operation and maintenance of the Louisiana Leased
Property, and that Landlord, its agents and employees, have no responsibility
therefore.

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 6.5 Opportunity to Inspect. TENANT ACKNOWLEDGES THAT IT HAS HAD THE OPPORTUNITY
TO INSPECT THE PREMISES OF ALL LOUISIANA LEASED PROPERTY AND, IN ACCORDANCE WITH
THE PROVISIONS OF LA. C.C. ARTICLE 2699, HEREBY SPECIFICALLY WAIVES ANY AND ALL
WARRANTIES PROVIDED BY THE PROVISIONS OF THE LOUISIANA CIVIL CODE TO THE FULLEST
EXTENT PERMITTED BY LAW.
 
ARTICLE 7: MAINTENANCE AND MECHANICS' LIENS
 
 7.1 Maintenance. Tenant shall maintain, repair, and replace the Leased
Property, including, without limitation, all structural and nonstructural
repairs and replacements to the roof, foundations, exterior walls, HVAC systems,
equipment, parking areas, sidewalks, water, sewer and gas connections, pipes and
mains. Tenant shall pay, as Additional Rent, the full cost of maintenance,
repairs, and replacements. Tenant shall maintain all drives, sidewalks, parking
areas, and lawns on or about the Leased Property in a clean and orderly
condition, free of accumulations of dirt, rubbish, snow and ice. Tenant shall at
all times maintain, operate and otherwise manage the Leased Property on a basis
and in a manner consistent with the standards of the highest quality competing
facilities in the market areas served by the Leased Property. All repairs shall,
to the extent reasonably achievable, be at least equivalent in quality to the
original work or the property to be repaired shall be replaced. Tenant will not
take or omit to take any action the taking or omission of which might materially
impair the value or the usefulness of the Leased Property or any parts thereof
for the Facility Uses. Tenant shall permit Landlord to inspect the Leased
Property at all reasonable times, and if Landlord gives Tenant notice of
maintenance problem areas, Tenant shall deliver to Landlord a plan of correction
within 20 Business Days after receipt of the notice. Tenant shall diligently
pursue correction of all problem areas within 75 days after receipt of the
notice and, upon expiration of the 75-day period, shall deliver evidence of
completion to Landlord or an interim report evidencing Tenant's diligent
progress towards completion and, at the end of the next 75-day period, evidence
of satisfactory completion. Upon completion, Landlord shall have the right to
re-inspect the Facility and Tenant shall pay a re-inspection fee of $750.00 per
Facility plus Landlord's reasonable out-of-pocket expenses within 30 days after
receipt of Landlord's invoice. At each inspection of the Leased Property by
Landlord, made upon at least 2 Business Days notice to Tenant, the Facility
employee in charge of maintenance shall be available to tour the Facility with
Landlord and answer questions.
 
 7.2 Required Alterations. Tenant shall, at Tenant's sole cost and expense, make
any additions, changes, improvements or alterations to the Leased Property,
including structural alterations, which may be required by any governmental
authorities, including those required to maintain licensure or certification
under the Medicare and Medicaid programs (if so certified), whether such changes
are required by Tenant's use, changes in the law, ordinances, or governmental
regulations, defects existing as of the date of this Lease, or any other cause
whatsoever. All such additions, changes, improvements or alterations shall be
deemed to be Permitted Alterations and shall comply with all laws requiring such
alterations and with the provisions of § 16.4.
 
7.3 Mechanic's Liens. Tenant shall have no authority to permit or create a lien
against Landlord's interest in the Leased Property, and Tenant shall post
notices or file such documents as may be required to protect Landlord's interest
in the Leased Property against liens. Tenant hereby agrees to defend, indemnify,
and hold Landlord harmless from and against any mechanic's liens against the
Leased Property by reason of work, labor, services or materials supplied or
claimed to have been supplied on or to the Leased Property. Tenant shall remove,
bond-off, or otherwise obtain the release of any mechanic's lien filed against
the Leased Property within 10 days after notice of the filing thereof. Tenant
shall pay all expenses in connection therewith, including, without limitation,
damages, interest, court costs and reasonable attorneys' fees.

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 7.4 Replacements of Fixtures and Landlord's Personal Property. Tenant shall not
remove Fixtures and Landlord's Personal Property from the Leased Property except
to replace the Fixtures and Landlord's Personal Property by other similar items
of equal quality and value. Items being replaced by Tenant may be removed and
shall become the property of Tenant and items replacing the same shall be and
remain the property of Landlord. Tenant shall execute, upon written request from
Landlord, any and all documents necessary to evidence Landlord's ownership of
Landlord's Personal Property and replacements therefor. Tenant may finance
replacements for the Fixtures and Landlord's Personal Property by equipment
lease or by a security agreement and financing statement if [i] Landlord has
consented to the terms and conditions of the equipment lease or security
agreement; and [ii] the equipment lessor or lender has entered into a
nondisturbance agreement with Landlord upon terms and conditions reasonably
acceptable to Landlord, including, without limitation, the following: [a]
Landlord shall have the right (but not the obligation) to assume such security
agreement or equipment lease upon the occurrence of an Event of Default under
this Lease; [b] the equipment lessor or lender shall notify Landlord of any
default by Tenant under the equipment lease or security agreement and give
Landlord a reasonable opportunity to cure such default; and [c] Landlord shall
have the right to assign its rights under the equipment lease, security
agreement, or
nondisturbance agreement. Tenant shall, within 30 days after receipt of an
invoice from Landlord, reimburse Landlord for all costs and expenses incurred in
reviewing and approving the equipment lease, security agreement, and
nondisturbance agreement, including, without limitation, reasonable attorneys'
fees and costs.
 
ARTICLE 8: DEFAULTS AND REMEDIES
 
 8.1 Events of Default. The occurrence of any one or more of the following shall
be an event of default ("Event of Default") hereunder without any advance notice
to Tenant unless specified herein:
 
(a)           Tenant fails to pay in full any installment of Base Rent, any
Additional Rent or any other monetary obligation payable by Tenant under this
Lease (including the Option Price), when such payment is due, provided, however,
Tenant shall not be in default hereunder if Tenant makes such payment within 10
days after written notice from Landlord that such payment is due.
 
(b)           Landlord gives Tenant three or more notices of non-payment of Rent
(after expiration of the 10-day grace period) in any Lease Year.

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(c)            Tenant, Subtenant or Guarantor (where applicable) fails to comply
with any covenant set forth in Article 14, § 15.6, § 15.7, §15.8- or Article 20
(if applicable) of this Lease.
 
(d)            Tenant fails to observe and perform any other covenant, condition
or agreement under this Lease to be performed by Tenant and [i] such failure
continues for a period of 30 days after written notice thereof is given to
Tenant by Landlord; or [ii] if, by reason of the nature of such default it
cannot be remedied within 30 days, Tenant fails to proceed with diligence
reasonably satisfactory to Landlord after receipt of the notice to cure the
default or, in any event, fails to cure such default within 90 days after
receipt of the notice. The foregoing notice and cure provisions do not apply to
any Event of Default otherwise specifically described in any other subsection of
§8.1.
 
(e)            Tenant or Subtenant abandons or vacates any Facility Property or
any material part thereof, ceases to operate any Facility, ceases to do business
or ceases to exist for any reason for any three or more days.
 
(f)            [i] The filing by Tenant, Subtenant or Guarantor of a petition
under the Bankruptcy Code or the commencement of a bankruptcy or similar
proceeding by Tenant, Subtenant or Guarantor; [ii] the failure by Tenant,
Subtenant or Guarantor within 60 days to dismiss an involuntary bankruptcy
petition or other commencement of a bankruptcy, reorganization or similar
proceeding against such party, or to lift or stay any execution, garnishment or
attachment of such consequence as will impair its ability to carry on its
operation at the Leased Property; [iii] the entry of an order for relief under
the Bankruptcy Code in respect of Tenant, Subtenant or Guarantor; [iv] any
assignment by Tenant, Subtenant or Guarantor for the benefit of its creditors;
[v] the entry by Tenant, Subtenant or Guarantor into an agreement of composition
with its creditors; [vi] the approval by a court of competent jurisdiction of a
petition applicable to Tenant, Subtenant or Guarantor in any proceeding for its
reorganization instituted under the provisions of any state or federal
bankruptcy, insolvency, or similar laws; [vii] appointment by final order,
judgment, or decree of a court of competent jurisdiction of a receiver of a
whole or any substantial part of the properties of Tenant, Subtenant or
Guarantor (provided such receiver shall not have been removed or discharged
within 60 days of the date of his qualification).
 
(g)           [i] Any receiver, administrator, custodian or other person takes
possession or control of any of the Leased Property and continues in possession
for 60 days; [ii] any writ against any of the Leased Property is not released
within 60 days; [iii] any judgment is rendered or proceedings are instituted
against the Leased Property, Tenant or Subtenant which affect the Leased
Property or any part thereof, which is not dismissed for 60 days (except as
otherwise provided in this section); [iv] all or a substantial part of the
assets of Tenant, Subtenant or Guarantor are attached, seized, subjected to a
writ or distress warrant, or are levied upon, or come into the possession of any
receiver, trustee, custodian, or assignee for the benefit of creditors; [v]
Tenant, Subtenant or Guarantor is enjoined, restrained, or in any way prevented
by court order, or any proceeding is filed or commenced seeking to enjoin,
restrain or in any way prevent Tenant, Subtenant or Guarantor from conducting
all or a substantial part of its business or affairs; or [vi] except as
otherwise permitted hereunder, a final notice of lien, levy or assessment is
filed of record with respect to all or any part of the Leased Property or any
property of Tenant or Subtenant located at the Leased Property and is not
dismissed, discharged, or bonded-off within 30 days.

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(h)            Any representation or warranty made by Tenant, Subtenant or
Guarantor in this Lease or any other document executed in connection with this
Lease, any guaranty of or other security for this Lease, or any report,
certificate, application, financial statement or other instrument furnished by
Tenant, Subtenant or Guarantor pursuant hereto or thereto shall prove to be
false, misleading or incorrect in any material respect as of the date made.
 
(i)            Tenant, any Subtenant, any Guarantor, or any Affiliate defaults
on any indebtedness or obligation to Landlord or any Landlord Affiliate, any
Obligor Group Obligation or any agreement with Landlord or any Landlord
Affiliate, including, without limitation, any lease with Landlord or any
Landlord Affiliate, or the occurrence of a default under any Material
Obligation, and any applicable grace or cure period with respect to default
under such indebtedness or obligation expires without such default having been
cured. This provision applies to all such indebtedness, obligations and
agreements as they may be amended, modified, extended, or renewed from time to
time.
 
(j)            Any guarantor of this Lease dies, dissolves, terminates, is
adjudicated incompetent, files a petition in bankruptcy, or is adjudicated
insolvent under the Bankruptcy Code or any other insolvency law, or fails to
comply with any covenant or requirement of such guarantor set forth in this
Lease or in the guaranty of such guarantor.
 
(k)            The license for the Facility or any other Government
Authorization is canceled, suspended, reduced to provisional or temporary, or
otherwise invalidated and not reinstated within 60 days thereafter, or license
revocation or decertification proceedings are commenced against Tenant or
Subtenant and not dismissed within 60 days, or any reduction occurs in the
number of licensed beds or units at the Facility and such original number of
beds is not reinstated within 60 days, or an admissions ban is issued for the
Facility and not dismissed within 60 days.
 
8.2 Remedies. Upon the occurrence of an Event of Default under this Lease or any
Lease Document, at Landlord's option, Landlord may exercise any one or more of
the following remedies:
 
(a)            Landlord may re-enter and take possession of the Leased Property
without terminating this Lease, and lease the Leased Property for the account of
Tenant, holding Tenant liable for all costs of Landlord in reletting the Leased
Property and for the difference in the amount received by such reletting and the
amounts payable by Tenant under the Lease.
 
(b)            Landlord may terminate this Lease by written notice to Tenant,
exclude Tenant from possession of the Leased Property and use efforts to lease
the Leased Property to others, holding Tenant liable for the difference in the
amounts received from such reletting and the amounts payable by Tenant under
this Lease.
 
(c)            Landlord may re-enter the Leased Property and have, repossess and
enjoy the Leased Property as if this Lease had not been made, and in such event,
Tenant and its successors and assigns shall remain liable for any contingent or
unliquidated obligations or sums owing at the time of such repossession.

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(d)            Landlord may have access to and inspect, examine and make copies
of the books and records and any and all accounts, data and income tax and other
returns of Tenant insofar as they pertain to the Leased Property.
 
(e)            Landlord may accelerate all of the unpaid Rent hereunder based on
the then current Rent Schedule and Tenant shall be liable for the present value
of the aggregate Rent for the unexpired term of this Lease assuming the Target
Rate of Return, discounted at an annual rate equal to the then-current U.S.
Treasury Note rate for the closest comparable term, and subject to Landlord's
obligations under law, if any, concerning Tenant's continued possession of the
Leased Property.
 
(f)            [Intentionally Deleted.]
 
(g)            Landlord may take whatever action at law or in equity as may
appear necessary or desirable to collect the Rent and other amounts payable
under this Lease then due and thereafter to become due, or to enforce
performance and observance of any obligations, agreements or covenants of Tenant
under this Lease.
 
(h)            With respect to the Collateral or any portion thereof and Secured
Party's security interest therein, Secured Party may exercise all of its rights
as secured party under Article 9 of the Uniform Commercial Code. Secured Party
may sell the Collateral by public or private sale upon five days' notice to
Tenant or Subtenant. Tenant and Subtenant agree that a commercially reasonable
manner of disposition of the Collateral shall include, without limitation and at
the option of Secured Party, a sale of the Collateral, in whole or in part,
concurrently with the sale of the Leased Property.
 
(i)            Secured Party may obtain control over and collect the Receivables
and apply the proceeds of the collections to satisfaction of the Obligor Group
Obligations unless prohibited by law. Tenant and Subtenant appoint HCN or its
designee as attorney for Tenant and Subtenant, respectively, with powers [i] to
receive, to endorse, to sign and/or to deliver, in Tenant's or Subtenant's name
or Secured Party's name, any and all checks, drafts, and other instruments for
the payment of money relating to the Receivables, and to waive demand,
presentment, notice of dishonor, protest, and any other notice with respect to
any such instrument; [ii] to sign Tenant's or Subtenant's name on any invoice or
bill of lading relating to any Receivable, drafts against account debtors,
assignments and verifications of Receivables, and notices to account debtors;
[iii] to send verifications of Receivables to any account debtor; and [iv] to do
all other acts and things necessary to carry out this Lease. Secured Party shall
not be liable for any omissions, commissions, errors of judgment, or mistakes in
fact or law made in the exercise of any such powers. At Secured Party's option,
Tenant and Subtenant shall [i] provide Secured Party a full accounting of all
amounts received on account of Receivables with such frequency and in such form
as Secured Party may require, either with or without applying all collections on
Receivables in payment of the Obligor Group Obligations or [ii] deliver to
Secured Party on the day of receipt all such collections in the form received
and duly endorsed by Tenant or Subtenant, as applicable. At Secured Party's
request, Tenant and Subtenant shall institute any action or enter into any
settlement determined by Secured Party to be necessary to obtain recovery or
redress from any account debtor in default of Receivables. Secured Party may
give notice of its security interest in the Receivables to any or all account
debtors with instructions to make all payments on Receivables directly to
Secured Party, thereby terminating Tenant's and Subtenant's authority to collect
Receivables. After terminating Tenant's and Subtenant's authority to enforce or
collect Receivables, Secured Party shall have the right to take possession of
any or all Receivables and records thereof and is hereby authorized to do so,
and only Secured Party shall have the right to collect and enforce the
Receivables. Prior to the occurrence of an Event of Default, at Tenant's and
Subtenant's cost and expense, but on behalf of Secured Party and for Secured
Party's account, Tenant and Subtenant shall collect or otherwise enforce all
amounts unpaid on Receivables and hold all such collections in trust for Secured
Party, but Tenant and Subtenant may commingle such collections with Tenant's and
Subtenant's own funds, until Tenant's and Subtenant's authority to do so has
been terminated, which may be done only after an Event of Default.
Notwithstanding any other provision hereof, Secured Party does not assume any of
Tenant's or Subtenant's obligations under any Receivable, and Secured Party
shall not be responsible in any way for the performance of any of the terms and
conditions thereof by Tenant or Subtenant.

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Without waiving any prior or subsequent Event of Default, Landlord may waive any
Event of Default or, with or without waiving any Event of Default, remedy any
default.
 
(k)    Landlord may terminate its obligation, if any, to disburse any Landlord
Payments.
 
(1)            Landlord may enter and take possession of the Land or any portion
thereof and any one or more Facilities without terminating this Lease and
complete construction and renovation of the Improvements (or any part thereof)
and perform the obligations of Tenant under the Lease Documents. Without
limiting the generality of the foregoing and for the purposes aforesaid, Tenant
hereby appoints HCN its lawful attorney-in-fact with full power to do any of the
following: [i] complete construction, renovation and equipping of the
Improvements in the name of Tenant; [ii] use unadvanced funds remaining under
the Investment Amount, or funds that may be reserved, escrowed, or set aside for
any purposes hereunder at any time, or to advance funds in excess of the
Investment Amount, to complete .the Improvements; [iii] make changes in the
plans and specifications that shall be necessary or desirable to complete the
Improvements in substantially the manner contemplated by the plans and
specifications; [iv] retain or employ new general contractors, subcontractors,
architects, engineers, and inspectors as shall be required for said purposes;
[v] pay, settle, or compromise all existing bills and claims, which may be liens
or security interests, or to avoid such bills and claims becoming liens against
the Facility or security interest against fixtures or equipment, or as may be
necessary or desirable for the completion of the construction and equipping of
the Improvements or for the clearance of title; [vi] execute all applications
and certificates, in the name of Tenant, that may be required in connection with
any construction; [vii] do any and every act that Tenant might do in its own
behalf, to prosecute and defend all actions or proceedings in connection with
the Improvements; and [viii] to execute, deliver and file all applications and
other documents and take any and all actions necessary to transfer the
operations of the Facility to Secured Party or Secured Party's designee. This
power of attorney is a power coupled with an interest and cannot be revoked.

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(m)           Landlord may apply, with or without notice to Tenant, for the
appointment of a receiver ("Receiver") for Tenant or Tenant's business or for
the Leased Property. Unless prohibited by law, such appointment may be made
either before or after termination of Tenant's possession of the Leased
Property, without regard to the solvency or insolvency of Tenant at the time of
application for such Receiver and without regard to the then value of the Leased
Property, and Secured Party may be appointed as Receiver. During the continuance
of an Event of Default, Landlord shall be entitled to appointment of a receiver
as a matter of right and without the need to make any showing other than the
continuance of an Event of Default. The Receiver shall have the power to collect
the rents, income, profits and Receivables of the Leased Property during the
pendency of the receivership and all other powers which may be necessary or are
usual in such cases for the protection, possession, control, management and
operation of the Leased Property during the whole of said proceeding. All sums
of money received by the Receiver from such rents and income, after deducting
therefrom the reasonable actual out of pocket charges and expenses paid or
incurred in connection with the collection and disbursement thereof, shall be
applied to the payment of the Rent or any other monetary obligation of Tenant
under this Lease, including, without limitation, any losses or damages incurred
by Landlord under this Lease. Tenant, if requested to do so, will consent to the
appointment of any such Receiver as aforesaid.
 
(n)            Landlord may terminate any management agreement with respect to
any of the Leased Property and shall have the right to retain one or more
managers for the Leased Property at a commercially reasonable costs at the
expense of Tenant, such manager(s) to serve for such term and at such
compensation as Landlord reasonably determines is necessary under the
circumstances.
 
 8.3 Right of Setoff. Landlord may, and is hereby authorized by Tenant to, at
any time and from time to time without advance notice to Tenant (any such—notice
being expressly waived by Tenant), setoff or recoup and apply any and all sums
held by Landlord, any indebtedness of Landlord to Tenant, and any claims by
Tenant against Landlord, against any obligations of Tenant hereunder and against
any claims by Landlord against Tenant, whether or not such obligations or claims
of Tenant are matured and whether or not Landlord has exercised any other
remedies hereunder. The rights of Landlord under this section are in addition to
any other rights and remedies Landlord may have against Tenant.
 
 8.4 Performance of Tenant's Covenants. Landlord may perform any obligation of
Tenant which Tenant has failed to perform within 10 days after Landlord has sent
a written notice to Tenant informing it of its specific failure. Tenant shall
reimburse Landlord on demand, as Additional Rent, for any expenditures thus
incurred by Landlord and shall pay interest thereon at Landlord's rate of return
as provided in the Commitment.
 
 8.5 Late Payment Charge. Tenant acknowledges that any default in the payment of
any installment of Rent payable hereunder will result in loss and additional
expense to Landlord in servicing any indebtedness of Landlord secured by the
Leased Property, handling such delinquent payments, and meeting its other
financial obligations, and because such loss and additional expense is extremely
difficult and impractical to ascertain, Tenant agrees that in the event any Rent
payable to Landlord hereunder is not paid within 10 days after the due date,
Tenant shall pay a late charge of 5% of the amount of the overdue payment as a
reasonable estimate of such loss and expenses, unless applicable law requires a
lesser charge, in which event the maximum rate permitted by such law may be
Charged by Landlord. The 10-day grace period set forth in this section shall not
extend the time for payment of Rent or the period for curing any default or
constitute a waiver of such default.

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 8.6 Default Rent. At Landlord's option at any time after the occurrence of an
Event of Default and while such Event of Default remains uncured, the Base Rent
payable under this Lease shall be increased to reflect Landlord's rate of return
of the greater of [i] 18.5% per annum or [ii] 2.5% per annum above Landlord's
rate of return then in effect ("Default Rent"); provided, however, that if a
court of competent jurisdiction determines that any other amounts payable under
this Lease are deemed to be interest, the Default Rent shall be adjusted to
ensure that the aggregate interest payable under this Lease does not accrue at a
rate in excess of the maximum legal rate.
 
 8.7 Attorneys' Fees. Tenant shall pay all reasonable costs and expenses
incurred by Landlord in enforcing or preserving Landlord's rights under this
Lease, whether or not an Event of Default has actually occurred or has been
declared and thereafter cured, including, without limitation, [i] the reasonable
fees, expenses, and costs of any litigation, appellate, receivership,
administrative, bankruptcy, insolvency or other similar proceeding; [ii]
reasonable attorney, paralegal, consulting and witness fees and disbursements,
whether in-house counsel or outside counsel; and [iii] the reasonable expenses,
including, without limitation, lodging, meals, and transportation, of Landlord
and its employees, agents, attorneys, and witnesses in preparing for litigation,
administrative, bankruptcy, insolvency or other similar proceedings and
attendance at hearings, depositions, and trials in connection therewith. All
such reasonable costs, expenses, charges and fees payable by Tenant shall be
deemed to be Additional Rent under this Lease.
 
 8.8 Escrows and Application of Payments. As security for the performance of the
Obligor Group Obligations, Tenant hereby assigns to Landlord all its right,
title, and interest in and to all monies escrowed with Landlord under this Lease
and all deposits with utility companies, taxing authorities and insurance
companies; provided, however, that Landlord shall not exercise its rights
hereunder until an Event of Default has occurred. Any payments received by
Landlord under any provisions of this Lease during the existence or continuance
of an Event of Default shall be applied to the Obligor Group Obligations in the
order which Landlord may determine.
 
 8.9 Remedies Cumulative. The remedies of Landlord herein are cumulative to and
not in lieu of any other remedies available to Landlord at law or in equity. The
use of any one remedy shall not be taken to exclude or waive the right to use
any other remedy.
 
 8.10 Waivers. Tenant waives [i] any objections, defenses, claims or rights with
respect to summary proceedings initiated by Landlord, [ii] any right of
redemption whether pursuant to statute, at law or in equity, [iii] except as
specifically provided hereunder, all presentments, demands for performance,
notices of nonperformance, protest, notices of protest, notices of dishonor,
notices to quit and any other notice or demand of any kind, and [iv] except as
specifically provided hereunder, all notices of the existence, creation or
incurring of any obligation or advance under this Lease before or after this
date.

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ARTICLE 9: DAMAGE AND DESTRUCTION
 
9.1 Notice of Casualty. If the Leased Property shall be destroyed, in whole or
in part, or damaged by fire, flood, windstorm or other casualty in excess of
$50,000.00 (a "Casualty"), Tenant shall give written notice thereof to Landlord
within one Business Day after the occurrence of the Casualty. Within 15 days
after the occurrence of the Casualty or as soon thereafter as such information
is reasonably available to Tenant, Tenant shall provide the following
information to Landlord: [i] the date of the Casualty; [ii] the nature of the
Casualty; [iii] a description of the damage or destruction caused by the
Casualty, including the type of Leased Property damaged and the area of the
Improvements damaged; [iv] a preliminary estimate of the cost to repair,
rebuild, restore or replace the Leased Property; [v] a preliminary estimate of
the schedule to complete the repair, rebuilding, restoration or replacement of
the Leased Property; [vi] a description of the anticipated property insurance
claim, including the name of the insurer, the insurance coverage limits, the
deductible amount, the expected settlement amount, and the expected settlement
date; and [vii] a description of the business interruption claim, including the
name of the insurer, the insurance coverage limits, the deductible amount, the
expected settlement amount, and the expected settlement date. Within five days
after request from Landlord, Tenant will provide Landlord with copies of all
correspondence to the insurer and any other information reasonably requested by
Landlord.
 
9.2 Substantial Destruction.
 
9.2.1 If any Facility's Improvements are substantially destroyed at any time
other than during the final 18 months of the Initial Term or any Renewal Term,
Tenant shall promptly rebuild and restore such Improvements in accordance with
§9.4 and Landlord shall make the insurance proceeds available to Tenant for such
restoration. The term "substantially destroyed" means any casualty resulting in
the loss of use of 50% or more of the licensed beds at any one Facility.
 
9.2.2 If any Facility's Improvements are substantially destroyed during the
final 18 months of the Initial Term or any Renewal Term, Landlord may elect to
terminate this Lease with respect to the entire Leased Property or terminate
this Lease and all Affiliate Leases, at Landlord's option, and retain the
insurance proceeds unless Tenant exercises its option to renew as set forth in
§9.2.3 or exercises its option to purchase as set forth in §9.2.4. If Landlord
elects to terminate, Landlord shall give notice ("Termination Notice") of its
election to terminate this Lease (or this Lease and all Affiliate Leases, if
elected by Landlord) within 30 days after receipt of Tenant's notice of the
damage. If Tenant does not exercise its option to renew under §9.2.3 or its
option to purchase under §9.2.4 within 15 days after delivery of the Termination
Notice, this Lease (or this Lease and all Affiliate Leases, if elected by
Landlord) shall terminate on the 15th day after delivery of the Termination
Notice. If this Lease (or this Lease and all Affiliate Leases, if elected by
Landlord) is so terminated, Tenant shall be liable to Landlord for all Rent and
all other obligations accrued under this Lease through the effective date of
termination and each Affiliate shall be liable to Landlord for all Rent and all
other obligations accrued under its respective Affiliate Lease through the
effective date of termination.

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9.2.3 If any Facility's Improvements are substantially destroyed during the
final 18 months of the Initial Term or the Renewal Term and Landlord gives the
Termination Notice, Tenant shall have the option to renew this Lease with
respect to the entire Leased Property (but not any part thereof). Tenant shall
give Landlord irrevocable notice of Tenant's election to renew, and each
Affiliate Tenant shall give irrevocable notice of renewal, within 15 days after
delivery of the Termination Notice. If Tenant and each Affiliate Tenant elect to
renew, the Renewal Term will be in effect for the balance of the then current
Term plus a 10-year period. The Renewal Term will commence on the third day
following Landlord's receipt of Tenant's and each Affiliate Tenant's notice of
renewal. All other terms of this Lease for the Renewal Term shall be in
accordance with Article 12. The Improvements will be restored by Tenant in
accordance with the provisions of this Article 9 regarding partial destruction.
 
9.2.4 If any Facility's Improvements are substantially destroyed during the
final 18 months of the Initial Term or any Renewal Term and Landlord gives the
Termination Notice, Tenant shall have the option to purchase the entire Leased
Property (but not any part thereof). Tenant shall give Landlord notice of
Tenant's election to purchase, and if required by Landlord, each Affiliate
Tenant shall give notice of its election to purchase its respective Affiliate
Facility, within 15 days after delivery of the Termination Notice. If Tenant and
each Affiliate Tenant elect to purchase their respective Leased Property, the
Option Price will be determined in accordance with § 13.2 and the Fair Market
Value will be determined in accordance with § 13.3 except as otherwise provided
in this section. For purposes of determining the Fair Market Value, the Leased
Property will be valued as if it had been restored to be equal in value to the
Leased Property existing immediately prior to the occurrence of the damage. All
other terms of the option to purchase shall be in accordance with Article 13.
Landlord shall hold the insurance proceeds until the closing of the purchase of
the Leased Property and at closing shall deliver the proceeds to Tenant.
 
9.3 Partial Destruction. If any Facility's Improvements are not substantially
destroyed, then Tenant shall comply with the provisions of §9.4 and Landlord
shall make the insurance proceeds available to Tenant for such restoration.
 
9.4 Restoration. Tenant shall promptly repair, rebuild, or restore the damaged
Leased Property, at Tenant's expense, so as to make the Leased Property at least
equal in value to the Leased Property existing immediately prior to such
occurrence and as nearly similar to it in character as is practicable and
reasonable. Before beginning such repairs or rebuilding, or letting any
contracts in connection with such repairs or rebuilding, Tenant will submit for
Landlord's approval, which approval Landlord will not unreasonably withhold or
delay, plans and specifications meeting the requirements of § 16.2 for such
repairs or rebuilding. Promptly after receiving Landlord's approval of the plans
and specifications and receiving the proceeds of insurance, Tenant will begin
such repairs or rebuilding and will prosecute the repairs and rebuilding to
completion with diligence, subject, however, to strikes, lockouts, acts of God,
embargoes, governmental restrictions, and other causes beyond Tenant's
reasonable control. Landlord will make available to Tenant the net proceeds of
any fire or other casualty insurance paid to Landlord for such repair or
rebuilding as the same progresses, after deduction of any costs of collection,
including reasonable out of pocket attorneys' fees. Payments will be made
against properly certified vouchers of a competent architect in charge of the
work and approved by Landlord. Payments for deposits for the repairing or
rebuilding or delivery of materials to the Facility will be made upon Landlord's
receipt of evidence satisfactory to Landlord that such payments are required in
advance. Prior to commencing the repairing or rebuilding, Tenant shall deliver
to Landlord for Landlord's approval a schedule setting forth the estimated
monthly draws for such work. Landlord will contribute to such payments out of
the insurance proceeds an amount equal to the proportion that the total net
amount received by Landlord from insurers bears to the total estimated cost of
the rebuilding or repairing, multiplied by the payment by Tenant on account of
such work. Landlord may, however, withhold 10% from each payment until the work
is completed and proof has been furnished to Landlord that no lien or liability
has attached or will attach to the Leased Property or to Landlord in connection
with such repairing or rebuilding. Upon the completion of rebuilding and the
furnishing of such proof, the balance of the net proceeds of such insurance
payable to Tenant on account of such repairing or rebuilding will be paid to
Tenant. Tenant will obtain and deliver to Landlord a temporary or final
certificate of occupancy before the damaged Leased Property is reoccupied for
any purpose. Tenant shall complete such repairs or rebuilding free and clear of
mechanic's or other liens, and in accordance with the building codes and all
applicable laws, ordinances, regulations, or orders of any state, municipal, or
other public authority affecting the repairs or rebuilding, and also in
accordance with all requirements of the insurance rating organization, or
similar body. Any remaining proceeds of insurance after such restoration will be
Tenant's property.

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 9.5 Insufficient Proceeds. If the proceeds of any insurance settlement are not
sufficient to pay the costs of Tenant's repair, rebuilding or restoration under
§9.4 in full, Tenant shall deposit with Landlord at Landlord's option, and
within 10 days of Landlord's request, an amount sufficient in Landlord's
reasonable judgment to complete such repair, rebuilding or restoration. Tenant
shall not, by reason of the deposit or payment, be entitled to any reimbursement
from Landlord or diminution in or postponement of the payment of the Rent.
 
 9.6 Not Trust Funds. Notwithstanding anything herein or at law or equity to the
contrary, none of the insurance proceeds paid to Landlord as herein provided
shall be deemed trust funds, and Landlord shall be entitled to dispose of such
proceeds as provided in this Article 9. Tenant expressly assumes all risk of
loss, including a decrease in the use, enjoyment or value, of the Leased
Property from any casualty whatsoever, whether or not insurable or insured
against.
 
 9.7 Landlord's Inspection. During the progress of such repairs or rebuilding,
Landlord and its architects and engineers may, from time to time, inspect the
Leased Property and will be furnished, if required by them, with copies of all
plans, shop drawings, and specifications relating to such repairs or rebuilding.
Tenant will keep all plans, shop drawings, and specifications at the building,
and Landlord and its architects and engineers may examine them at all reasonable
times. If, during such repairs or rebuilding, Landlord and its architects and
engineers determine that the repairs or rebuilding are not being done in
accordance with the approved plans and specifications, Landlord will give prompt
notice in writing to Tenant, specifying in detail the particular deficiency,
omission, or other respect in which Landlord claims such repairs or rebuilding
do not accord with the approved plans and specifications. Upon the receipt of
any such notice, Tenant will cause corrections to be made to any deficiencies,
omissions, or such other respect. Tenant's obligations to supply insurance,
according to Article 4, will be applicable to any repairs or rebuilding under
this section.

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9.8 Landlord's Costs. Tenant shall, within 30 days after receipt of an invoice
from Landlord, pay the reasonable costs, expenses, and fees of any architect or
engineer employed by Landlord to review any plans and specifications and to
supervise and approve any construction, or for any services rendered by such
architect or engineer to Landlord as contemplated by any of the provisions of
this Lease, or for any services performed by Landlord's attorneys in connection
therewith.
 
9.9  No Rent Abatement. Rent will not abate pending the repairs or rebuilding of
the Leased Property.
 
ARTICLE 10: CONDEMNATION
 
10.1 Total Taking. If, by exercise of the right of eminent domain or by
conveyance made in response to the threat of the exercise of such right
("Taking"), any entire Facility Property is taken, or so much of any Facility
Property is taken that the Facility Property cannot be used by Tenant for the
purposes for which it was used immediately before the Taking, then this Lease
will end with respect to such Facility Property only on the earlier of the
vesting of title to the Facility Property in the condemning authority or the
taking of possession of the Facility Property by the condemning authority. Upon
such termination, the Investment Amount shall be reduced by the actual net award
for such Taking received by Landlord and Rent hereunder shall be reduced
accordingly unless there is only one Facility Property subject to this Lease at
the time of the Taking in which case the Lease will terminate. The termination
of this Lease as to one Facility Property due to a taking is the result of
circumstances beyond the control of Landlord and Tenant and the parties affirm
that, except for such specific isolated situation, this Lease is intended to be
a single indivisible lease. All damages awarded for such Taking under the power
of eminent domain shall be the property of Landlord, whether such damages shall
be awarded as compensation for diminution in value of the leasehold or the fee
of the Facility Property.
 
10.2 Partial Taking. If, after a Taking, so much of the Facility Property
remains that the Facility Property can be used for substantially the same
purposes for which it was used immediately before the Taking, then [i] this
Lease will end as to the part taken on the earlier of the vesting of title to
such Leased Property in the condemning authority or the taking of possession of
such Leased Property by the condemning authority and the Rent will be adjusted
accordingly; [ii] at its cost, Tenant shall restore so much of the Facility
Property as remains to a sound architectural unit substantially suitable for the
purposes for which it was used immediately before the Taking, using good
workmanship and new, first-class materials; [iii] upon completion of the
restoration, Landlord will pay Tenant the lesser of the net award made to
Landlord on the account of the Taking (after deducting from the total award,
attorneys', appraisers', and other fees and costs incurred in connection with
the obtaining of the award and amounts paid to the holders of mortgages secured
by the Facility Property), or Tenant's actual out-of-pocket costs of restoring
the Facility Property; and [iv] Landlord shall be entitled to the balance of the
net award. The restoration shall be completed in accordance with §§9.4, 9.5,
9.7, 9.8 and 9.9 with such provisions deemed to apply to condemnation instead of
casualty.

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10.3 Condemnation Proceeds Not Trust Funds. Notwithstanding anything in this
Lease or at law or equity to the contrary, none of the condemnation award paid
to Landlord shall be deemed trust funds, and Landlord shall be entitled to
dispose of such proceeds as provided in this Article 10. Tenant expressly
assumes all risk of loss, including a decrease in the use, enjoyment, or value,
of the Leased Property from any Condemnation.
 
ARTICLE 11: TENANT'S PROPERTY
 
11.1 Tenant's Property. Tenant shall install, place, and use on the Leased
Property such fixtures, furniture, equipment, inventory and other personal
property in addition to Landlord's Personal Property as may be required or as
Tenant may, from time to time, deem necessary or useful to operate the Leased
Property for its permitted purposes. All fixtures, furniture, equipment,
inventory, and other personal property installed, placed, or used on the Leased
Property which is owned by Tenant or leased by Tenant from third parties is
hereinafter referred to as "Tenant's Property".
 
11.2 Requirements for Tenant's Property. Tenant shall comply with all of the
following requirements in connection with Tenant's Property:
 
(a)            Tenant shall, at Tenant's sole cost and expense, maintain,
repair, and replace Tenant's Property.
 
(b)            Tenant shall, at Tenant's sole cost and expense, keep Tenant's
Property insured against loss or damage by fire, vandalism and malicious
mischief, sprinkler leakage, earthquake, and other physical loss perils commonly
covered by fire and extended coverage, boiler and machinery, and difference in
conditions insurance in an amount not less than 90% of the then full replacement
cost thereof. Tenant shall use the proceeds from any such policy for the repair
and replacement of Tenant's Property. The insurance shall meet the requirements
of §4.3.
 
(c)            Tenant shall pay all taxes applicable to Tenant's Property.
 
(d)            If Tenant's Property is damaged or destroyed by fire or any other
cause, Tenant shall promptly repair or replace Tenant's Property unless Landlord
elects to terminate this Lease pursuant to §9.2.2.
 
(e)            Unless an Event of Default or any event which, with the giving of
notice or lapse of time, or both, would constitute an Event of Default has
occurred, Tenant may remove Tenant's Property from the Leased Property from time
to time provided that [i] the items removed are not required to operate the
Leased Property for the Facility Uses (unless such items are being replaced by
Tenant); and [ii] Tenant repairs any damage to the Leased Property resulting
from the removal of Tenant's Property.
 
(f)            Tenant shall not, without the prior written consent of Landlord
or as otherwise provided in this Lease, remove any Tenant's Property or Leased
Property provided, however, Tenant may transfer to any Affiliate Facility items
of Tenant's Property or Leased Property that are not necessary for the Operation
of the Facility in compliance with this Lease. Tenant shall, at Landlord's
option, remove Tenant's Property upon the termination or expiration of this
Lease and shall repair any damage to the Leased Property resulting from the
removal of Tenant's Property. If Tenant fails to remove Tenant's Property within
30 days after request by Landlord, then Tenant shall be deemed to have abandoned
Tenant's Property, Tenant's Property shall become the property of Landlord, and
Landlord may remove, store and dispose of Tenant's Property. In such event,
Tenant shall have no claim or right against Landlord for such property or the
value thereof regardless of the disposition thereof by Landlord. Tenant shall
pay Landlord, upon demand, all expenses incurred by Landlord in removing,
storing, and disposing of Tenant's Property and repairing any damage caused by
such removal. Tenant's obligations hereunder shall survive the termination or
expiration of this Lease.

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(g)    Tenant shall perform its obligations under any equipment lease or
security agreement for Tenant's Property. For equipment loans or leases for
equipment having an original cost in excess of $50,000.00, Tenant shall cause
such equipment lessor or lender to enter into a nondisturbance agreement with
Landlord upon terms and conditions acceptable to Landlord, including, without
limitation, the following: [i] Landlord shall have the right (but not the
obligation) to assume such equipment lease or security agreement upon the
occurrence of an Event of Default by Tenant hereunder; [ii] such equipment
lessor or lender shall notify Landlord of any default by Tenant under the
equipment lease or security agreement and give Landlord a reasonable opportunity
to cure such default; and [iii] Landlord shall have the right to assign its
interest in the equipment lease or security agreement and nondisturbance
agreement. Tenant shall, within 30 days after receipt of an invoice from
Landlord, reimburse Landlord for all costs and expenses incurred in reviewing
and approving the equipment lease, security agreement and nondisturbance
agreement, including, without limitation, reasonable attorneys' fees and costs.
 
ARTICLE 12: RENEWAL OPTIONS
 
12.1 Renewal Options. Tenant has the option to renew ("Renewal Option") this
Lease for one 10-year renewal term ("Renewal Term"). Tenant can exercise the
Renewal Option only upon satisfaction of the following conditions:
 
(a)           There shall be no uncured Event of Default, or any event which
with the passage of time or giving of notice would constitute an Event of
Default, at the time Tenant exercises its Renewal Option nor on the date the
Renewal Term is to commence.
 
(b)           Tenant shall give Landlord irrevocable written notice of renewal
no later than the date which is [i] 90 days prior to the expiration date of the
then current Term; or [ii] 15 days after Landlord's delivery of the Termination
Notice as set forth in §9.2.3.
 
(c)           Each Affiliate Tenant shall concurrently give irrevocable notice
of
 
(d)           renewal for each Affiliate Lease (if applicable).
 
(e)           Tenant shall pay all amounts, costs, expenses, charges, Rent and
other items then due and payable by Tenant to Landlord, including, but not
limited to, enforcement costs as set forth in §8.7.
 
12.2 Effect of Renewal. The following terms and conditions will be applicable if
Tenant renews the Lease:

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(a)           Effective Date. Except as otherwise provided in §9.2.3, the
effective date of any Renewal Term will be the first day after the expiration
date of the then current Term. The first day of each Renewal Term is also
referred to as the Renewal Date.
 
(b)           Investment Amount. Effective as of the Renewal Date, a single
Investment Amount will be computed by summing all Landlord Payments made to
date.
 
(c)           Rent Adjustment. Effective as of the Renewal Date, Landlord shall
calculate Base Rent for the Renewal Term based upon the applicable rate of
return to Landlord as set forth in the Commitment and shall issue a new Rent
Schedule reflecting the Base Rent adjustment. Until Tenant receives a revised
Rent Schedule from Landlord, Tenant shall for each month [i] continue to make
installments of Base Rent according to the Rent Schedule in effect on the day
before the Renewal Date; and [ii] within 10 days following Landlord's issuance
of an invoice, pay the difference between the installment of Base Rent paid to
Landlord for such month and the installment of Base. Rent actually due for such
month as a result of the renewal of the Lease.
 
(d)           Other Terms and Conditions. Except for the modifications set forth
in this § 12.2, all other terms and conditions of the Lease will remain the same
for the Renewal Term.
 
ARTICLE 13: OPTION TO PURCHASE
 
13.1 Option to Purchase. Landlord hereby grants to Tenant an option to purchase
("Option to Purchase") all of the Leased Property (but not any part thereof
except as specifically permitted herein) in accordance with the terms and
conditions of this Article 13. Tenant may exercise its Option to Purchase only
by giving an irrevocable notice of Tenant's election to purchase the Leased
Property ("Purchase Notice") in accordance with the following:
 
(a)           During the Initial Term or any Renewal Term, Tenant and each
Affiliate Tenant (if any) must give a Purchase Notice no earlier than the date
which is 180 days, and no later than the date which is 90 days, prior to the
expiration date of the then current Term of this Lease and each Affiliate Lease
(if any).
 
(b)           If any Facility's Improvements are substantially destroyed during
the final 18 months of the Initial Term or any Renewal Term, Tenant (and each
Affiliate Tenant if required by Landlord) must give a Purchase Notice within 15
days after Landlord gives the Termination Notice pursuant to §9.2.4.
 
(c)    If any Facility Property is taken during the final 18 months of the
Initial Term or any Renewal Term by exercise of the right of eminent domain or
by conveyance made in response to the threat of the exercise of such right,
Tenant must give a Purchase Notice within 30 days after delivery of the notice
of Landlord's intent to terminate pursuant to §10.1.1.
 
Tenant shall have no right to exercise the Option to Purchase other than in
accordance with the terms of this Article 13.

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13.2 Option Price. The option price ("Option Price") will be an amount equal to
the sum of [a] the Investment Amount plus [b] 50% of the amount by which the
Fair Market Value at the time of the option exercise exceeds the sum of the
Investment Amount and the Loan Amount. In addition to the Option Price, Tenant
shall pay all reasonable closing costs and expenses in connection with the
transfer of the Leased Property to Tenant, including, but not limited to, the
following: [a] real property conveyance or transfer fees or deed stamps;
[b] reasonable title search fees, title insurance commitment fees, and title
insurance premiums; [c] reasonable survey fees; [d] reasonable environmental
assessment fees; [e] recording fees; [f] reasonable attorneys' fees of
Landlord's counsel; and [g] reasonable fees of any escrow agent. Tenant shall
also pay all reasonable amounts, costs, expenses, charges, Rent and other items
payable by Tenant to Landlord, including, but not limited to, enforcement costs
as set forth in §8.7.
 
13.3 Fair Market Value. The fair market value (the "Fair Market Value") of the
Leased Property shall be determined as follows.
 
13.3.1 The parties shall attempt to determine the Fair Market Value by mutual
agreement within 15 days after giving the Purchase Notice. However, if the
parties do not agree on the Fair Market Value within such 15-day period, the
following provisions shall apply.
 
13.3.2 Landlord and Tenant shall each give the other party notice of the name of
an acceptable appraiser 15 days after giving of the Purchase Notice. The two
appraisers will then select a third appraiser within an additional five days.
Each appraiser must demonstrate to the reasonable satisfaction of both Landlord
and Tenant that it has significant experience in appraising properties similar
to the Leased Property. Within five days after designation, each appraiser shall
submit a resume to Landlord and Tenant setting forth such appraiser's
qualifications, including education and experience with similar properties. A
notice of objections to the qualifications of any appraiser shall be given
within 10 days after receipt of such resume. If a party fails to timely object
to the qualifications of an appraiser, then the appraiser shall be conclusively
deemed satisfactory. If a party gives a timely notice of objection to the
qualifications of an appraiser, then the disqualified appraiser shall be
replaced by an appraiser selected by the qualified appraisers or, if all
appraisers are disqualified, then by an appraiser selected by a commercial
arbitrator acceptable to Landlord and Tenant.
 
13.3.3 The Fair Market Value shall be determined by the appraisers within 60
days thereafter as follows. Each of the appraisers shall be instructed to
prepare an appraisal of the Leased Property in accordance with the following
instructions:
 
The Leased Property is to be valued upon the three conventional approaches to
estimate value known as the Income, Sales Comparison and Cost Approaches. Once
the approaches are completed, the appraiser correlates the individual approaches
into a final value conclusion.

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The three approaches to estimate value are summarized as follows:
 
Income Approach: This valuation approach recognizes that the value of the
operating tangible and intangible assets can be represented by the expected
economic viability of the business giving returns on and of the assets.
 
Sales Comparison Approach: This valuation approach is based upon the principle
of substitution. When a facility is replaceable in the market, the market
approach assumes that value tends to be set at the price of acquiring an equally
desirable substitute facility. Since healthcare market conditions change and
frequently are subject to regulatory and financing environments, adjustments
need to be considered. These adjustments also consider the operating differences
such as services and demographics.
 
Cost Approach: This valuation approach estimates the value of the tangible
assets only. Value is represented by the market value of the land plus the
depreciated reproduction cost of all improvements and equipment.
 
In general, the Income and Sales Comparison Approaches are considered the best
representation of value because they cover both tangibles and intangible assets,
consider the operating characteristics of the business and have the most
significant influence on attracting potential investors.
 
The appraised values submitted by the three appraisers shall be ranked from
highest value to middle value to lowest value, the appraised value (highest or
lowest) which is furthest from the middle appraised value shall be discarded,
and the remaining two appraised values shall be averaged to arrive at the Fair
Market Value.
 
13.3.4 In the event of any condemnation, similar taking or threat thereof with
respect to any part of the Leased Property or any insured or partially insured
casualty loss to any part of the Leased Property after Tenant has exercised an
Option to Purchase, but before settlement, the Fair Market Value of the Leased
Property shall be redetermined as provided in this §13.3 to give effect to such
condemnation, taking or loss and shall take into account all available
condemnation awards and insurance proceeds.
 
13.3.5 Tenant shall pay, or reimburse Landlord for, all costs and expenses in
connection with the appraisals.
 
13.4 Closing. The purchase of the Leased Property by Tenant shall close on a
date agreed to by Landlord and Tenant which shall be not less than 60 days after
Landlord's receipt of the Purchase Notice and not more than 60 days after the
Fair Market Value of the Leased Property has been determined. At the closing,
Tenant shall pay the Option Price and all amounts payable under § 13.2 in
immediately available funds and Landlord shall convey title to the Leased
Property to Tenant by a transferable and recordable limited warranty deed and
limited warranty bill of sale.

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13.5 Failure to Close Option. If Tenant for any reason fails to purchase the
Leased Property after Tenant has given the Purchase Notice, then Tenant shall
pay Landlord all costs and expenses actually incurred by Landlord as a result of
the failure to close, including costs of unwinding swap transactions or other
interest rate protection devices and preparing for the closing. Tenant shall
continue to be obligated as lessee hereunder for the remainder of the Term.
 
13.6 Failure to Exercise Option to Purchase and Renewal Option. If Tenant for
any reason does not exercise its Option to Purchase or Renewal Option in
accordance with the terms and conditions of this Lease before the expiration of
the then current Term, Tenant shall be deemed to have forfeited all of Tenant's
rights to exercise the Option to Purchase and Renewal Option.
 
13.7 Early Option to Purchase Dayton Facility. Notwithstanding any provision to
the contrary contained in this Article 13, Tenant may exercise the Option to
Purchase the Dayton Facility prior to the end of the Lease Term ("Early Option")
subject to the same terms and conditions of this Article 13 except that [i] the
required Purchase Notice may be given at any time during the first 21 months of
the Lease Term; [ii] at the time that the Purchase Notice is given or in no
event later than 18 months after the Lease Term begins, Tenant shall deliver to
Landlord a signed letter of intent from an unaffiliated third party to purchase
the Dayton Facility from Tenant ("Third-Party Sale"); [iii] prior to the closing
of the Early Option, Tenant shall add to this Lease a facility or facilities
(collectively called "Substitute Facility") with an acquisition price greater
than $10,100,000.00 at the then current rate of return to Landlord; [iv] the
Option Price shall be the Investment Amount allocated to the Dayton Facility (as
set forth in Landlord's books and records) plus 50% of the positive difference
between the Fair Market Value for the Dayton Facility and the sum of the
Investment Amount allocated to the Dayton Facility and 29.8% of the Loan Amount;
[v] at the time the Purchase Notice for the Early Option is given, no Event of
Default has occurred and is continuing; [vi] the purchase of the Dayton Property
shall close on a date agreed to by Landlord and Tenant which shall be not later
than 90 days after Landlord's receipt of the Purchase Notice; and [vii] Tenant
shall make a prepayment of the Loan as set forth in § 13.8. The addition of the
Substitute Facility will be conditioned upon [a] satisfaction of Landlord's
ordinary and customary due diligence and underwriting, and [b] Tenant's payment
all of Landlord's closing costs for the acquisition of the Substitute Facility
and amendment of this Lease.
 
13.8 Partial Prepayment of Loan. Tenant's right to close on the purchase of the
Early Option is expressly conditioned upon Tenant making a partial prepayment of
the Loan equal to Tenant's proceeds from the Third-Party Sale after payment of
reasonable closing costs approved by HCN.
 
ARTICLE 14: NEGATIVE COVENANTS
 
Until the Obligor Group Obligations shall have been performed in full, Tenant,
Subtenant and Guarantor covenant and agree that Tenant and Subtenant (and
Guarantor where applicable) shall not do any of the following without the prior
written consent of Landlord:

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14.1 No Debt. Tenant and Subtenant shall not create, incur, assume, or permit to
exist any indebtedness other than [i] trade debt incurred in the ordinary course
of business; and [ii] indebtedness that is secured by any Permitted Lien.
 
14.2 No Liens. Tenant and Subtenant shall not create, incur, or permit to exist
any lien, charge, encumbrance, easement or restriction upon the Leased Property
or any lien upon or pledge of any interest in Tenant or Subtenant, except for
Permitted Liens.
 
14.3 No Guaranties. Tenant and Subtenant shall not create, incur, assume, or
permit to exist any guarantee of any loan or other indebtedness except for the
endorsement of negotiable instruments for collection in the ordinary course of
business.
 
14.4 No Transfer. Tenant and Subtenant shall not sell, lease, sublease,
mortgage, convey, assign or otherwise transfer any legal or equitable interest
in the Leased Property or any part thereof, except for transfers made in
connection with any Permitted Lien.
 
14.5 No Dissolution. Tenant, Subtenant, Manager (if applicable) or Guarantor
shall not dissolve, liquidate, merge, consolidate or terminate its existence or
sell, assign, lease, or otherwise transfer (whether in one transaction or in a
series of transactions) all or substantially all of its assets (whether now
owned or hereafter acquired).
 
14.6 No Change in Management or Operation. No material change shall occur in the
management or licensed operation of the Facility. Manager (as defined herein)
shall remain the Manager of the Facility. Each Subtenant shall remain the
licensed operator of the Facility as specified on Exhibit C.
 
14.7 No Investments. Tenant and Subtenant shall not purchase or otherwise
acquire, hold, or invest in securities (whether capital stock or instruments
evidencing indebtedness) of or make loans or advances to any person, including,
without limitation, any Guarantor, any Affiliate, or any shareholder, member or
partner of Tenant, Guarantor or any Affiliate, except for cash balances
temporarily invested in short-term or money market securities.
 
14.8 Contracts. Tenant and Subtenant shall not execute or modify any material
contracts or agreements with respect to the Facility except for contracts and
modifications approved by Landlord. Contracts made in the ordinary course of
business and in an amount less than $75,000.00 shall not be considered
"material" for purposes of this paragraph.
 
14.9 Subordination of Payments to Affiliates. After the occurrence of an Event
of Default and until such Event of Default is cured, Tenant, Subtenant and
Guarantor shall not make any payments or distributions (including, without
limitation, salary, bonuses, fees, principal, interest, dividends, liquidating
distributions, management fees, cash flow distributions or lease payments) to
Guarantor, Manager (if applicable), any Affiliate, or any shareholder, member or
partner of Tenant, Guarantor, Manager (if applicable) or any Affiliate.
 
14.10 Change of Location or Name. Tenant and Subtenant shall not change any of
the following: [i] the location of the principal place of business or chief
executive office of Tenant or Subtenant, or any office where any of Tenant's or
Subtenant's books and records are maintained; [ii] the name under which Tenant
or Subtenant conducts any of its business or operations; or [iii] reorganize or
otherwise change its respective Organization State.

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ARTICLE 15: AFFIRMATIVE COVENANTS
 
15.1 Perform Obligations. Tenant and Subtenant shall each perform all of its
obligations under this Lease, the Government Authorizations, the Permitted
Exceptions, and all Legal Requirements. If applicable, Tenant and each Subtenant
shall take all necessary action to obtain all Government Authorizations required
for the operation of the Facility as soon as possible after the Effective Date.
 
15.2 Proceedings to Enjoin or Prevent Construction. If any proceedings are filed
seeking to enjoin or otherwise prevent or declare invalid or unlawful Tenant's
construction, occupancy, maintenance, or operation of the Facility or any
portion thereof, Tenant will cause such proceedings to be vigorously contested
in good faith, and in the event of an adverse ruling or decision, prosecute all
allowable appeals therefrom, and will, without limiting the generality of the
foregoing, resist the entry or seek the stay of any temporary or permanent
injunction that may be entered, and use its best efforts to bring about a
favorable and speedy disposition of all such proceedings and any other
proceedings.
 
15.3 Documents and Information,
 
15.3.1 Furnish Documents. Tenant and each Subtenant shall periodically during
the term of the Lease deliver to Landlord the Annual Financial Statements,
Periodic Financial Statements, Annual Facility Budget, Annual Budget and all
other documents, reports, schedules and copies described on Exhibit E within the
specified time periods. With each delivery of Annual Financial Statements and
Periodic Financial Statements (other than the monthly Facility Financial
Statement) to Landlord, Tenant and each Subtenant shall also deliver to Landlord
a certificate signed by the Chief Financial Officer, Vice President of
Accounting, general partner or managing member (as applicable) of Tenant and
each Subtenant, and Quarterly Facility Accounts Receivable and Accounts Payable
Aging Reports all in the form of Exhibit F (or in the case of the Receivable and
Payable Reports, a similar format). After the occurrence of an Event of Default
and receipt of Landlord's written request, Tenant shall deliver to Landlord an
updated Annual Facility Budget and Annual Budget (based on a 12-month rolling
forward period) within 10 Business Days after receipt of Landlord's request.
 
15.3.2 Furnish Information. Tenant and each Subtenant shall [i] promptly supply
Landlord with such information concerning its financial condition, affairs and
property, as Landlord may reasonably request from time to time hereafter; [ii]
promptly notify Landlord in writing of any condition or event that constitutes a
breach or event of default of any term, condition, warranty, representation, or
provisions of this Lease or any other agreement, and of any material adverse
change in its financial condition; [iii] maintain a standard and modem system of
accounting; [iv] permit Landlord or any of its agent or representatives to have
access to and to examine all of its books and records regarding the financial
condition of the Facility at any time or times hereafter during business hours
and after reasonable oral or written notice; and [v] permit Landlord to copy and
make abstracts from any and all of said books and records.

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15.3.3 Further Assurances and Information. Tenant shall, on request of Landlord
from time to time, execute, deliver, and furnish documents as may be necessary
to fully consummate the transactions contemplated under this Lease. Within 15
days after a request from Landlord, Tenant and each Subtenant shall provide to
Landlord such additional information regarding Tenant, Tenant's financial
condition, Subtenant, each Subtenant's financial condition or the Facility as
Landlord, or any existing or proposed creditor of Landlord, or any auditor or
underwriter of Landlord, may require from time to time, including, without
limitation, a current Tenant's Certificate and Facility Financial Report in the
form of Exhibit F. Upon Landlord's request, but not more than once every three
years, Tenant shall provide to Landlord, at Tenant's expense, an appraisal
prepared by an MAI appraiser setting forth the current fair market value of the
Leased Property.
 
15.3.4 Material Communications. Tenant and each Subtenant shall transmit to
Landlord, within 5 Business Days after receipt thereof, any material
communication affecting a Facility, this Lease, the Legal Requirements or the
Government Authorizations, and Tenant and each Subtenant will promptly respond
to Landlord's inquiry with respect to such information. Tenant and each
Subtenant shall notify Landlord in writing within 5 Business Days after Tenant
or any Subtenant has knowledge of any potential, threatened or existing
litigation or proceeding against, or investigation of, Tenant, Subtenant,
Guarantor, or the Facility that may affect the right to operate the Facility or
Landlord's title to the Facility or Tenant's interest therein.
 
15.3.5 Requirements for Financial Statements. Tenant shall meet the following
requirements in connection with the preparation of the financial statements: [i]
all audited financial statements shall be prepared in accordance with generally
accepted accounting principles consistently applied; [ii] all unaudited
financial statements shall be prepared in a manner substantially consistent with
prior audited and unaudited financial statements submitted to Landlord; [iii]
all financial statements shall fairly present the financial condition and
performance for the relevant period in all material respects; [iv] the financial
statements shall include all notes to the financial statements and a complete
schedule of contingent liabilities and transactions with Affiliates; and [v] the
audited financial statements shall contain an unqualified opinion.
 
15.4 Compliance With Laws. Tenant and each Subtenant shall comply with all Legal
Requirements and keep all Government Authorizations in full force and effect.
Tenant and each Subtenant shall pay when due all taxes and governmental charges
of every kind and nature that are assessed or imposed upon Tenant and each
Subtenant, respectively, at any time during the term of the Lease, including,
without limitation, all income, franchise, capital stock, property, sales and
use, business, intangible, employee withholding, and all taxes and charges
relating to Tenant's and each Subtenant's respective business and operations.
Tenant and each Subtenant shall be solely responsible for compliance with all
Legal Requirements, including the ADA, and Landlord shall have no responsibility
for such compliance.
 
15.5 Broker's Commission. Tenant shall indemnify Landlord from claims of brokers
arising by the execution hereof or the consummation of the transactions
contemplated hereby and from expenses incurred by Landlord in connection with
any such claims (including attorneys' fees).

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15.6 Existence and Change in Ownership. Tenant, Subtenant, Manager (if
applicable) and each Guarantor shall maintain its existence throughout the term
of this Lease. Any change in the equity ownership of Tenant, Subtenant, Manager
(if applicable) or any Guarantor, directly or indirectly, that results in a
change in Control (as defined within the definition of "Affiliate" in § 1.4
hereof) of such entity, shall require Landlord's prior written consent.
 
15.7 Financial Covenants. The defined terms used in this section are defined in
§ 15.7.1. The method of calculating Net Worth and valuing assets shall be
consistent with the Financial Statements. The following financial covenants
shall be met throughout the term of this Lease:
 
15.7.1 Definitions.
 
(a)           "Accounts Payable Days Sales Outstanding" is equal to the amount
of the Average Quarterly Accounts Payable divided by the amount of the Daily
Non-Payroll Expenses.
 
(b)           "Adjusted Accounts Payable" means the amount of the accounts
payable per Company's Financial Statements excluding any amounts for capital
improvements.
 
(c)           "Average Quarterly Accounts Payable" is equal to [i] the sum of
the Adjusted Accounts Payable for the current fiscal quarter plus the amount of
the Adjusted Accounts Payable for the previous fiscal quarter; divided by [ii]
two.
 
(d)           "Daily Non-Payroll Expenses" is the amount equal to Non-Payroll
Operating Expenses for the fiscal quarter divided by the number of days within
the fiscal quarter.
 
(e)           "Net Worth" means an amount equal to the total consolidated fair
market value of the tangible assets of the person (excluding good will and other
intangible assets) minus the total consolidated liabilities of-such person.
 
(f)            "Non-Payroll Operating Expenses" means the aggregate net income
of Company plus [i] the amount of all payroll expenses, benefits, and payroll
taxes; plus [ii] all non-operating expenses including, but not limited to, all
capital improvements, rents, interest, straight-line rent adjustments,
depreciation, amortization, development expenses, restructuring expenses,
litigation settlements, gain or loss on disposal of assets, and income taxes.
 
(g)   "Portfolio Cash Flow" means the aggregate net income arising from all
Facilities under this Lease as reflected on the Facility Financial Statement of
each Facility plus [i] the amount of the provision for depreciation and
amortization; plus [ii] the amount of the provision for management fees; plus
[iii] the amount of the provision for income taxes; plus [iv] the amount of the
provision for Base Rent payments and interest and equipment lease payments, if
any, relating to the Facilities; minus [v] an imputed management fee equal to 5%
of gross revenues of the Facilities (net of contractual allowances); and minus
[vi] an imputed replacement reserve of $400.00 per licensed unit at all the
Facilities per year.

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(h)   "Portfolio Coverage Ratio" is the ratio. of [i] Portfolio Cash Flow for
each applicable period; to [ii] the Base Rent payments under this Lease for the
applicable period.
 
15.7.2 Coverage Ratio. Tenant shall maintain for each fiscal quarter a Portfolio
Coverage Ratio of not less than 1.25 to 1.00.
 
15.7.3 Net Worth. Commencing on the Effective Date, Company shall maintain for
each fiscal quarter cash and cash equivalents of at least $3,000,000.00.
Commencing March 1, 2010, Company shall also maintain for each fiscal quarter a
Net Worth of at least $3,000,000.00.
 
15.7.4 Accounts Payable Days Sales Outstanding. Company shall maintain for each
fiscal quarter an Accounts Payable Days Sales Outstanding less than 50 days.
 
15.8 Facility Licensure and Certification. Tenant and each Subtenant, as
applicable, shall deliver the documents listed under item no. 16 of Exhibit E
within 5 Business Days after receipt thereof. Tenant and Subtenant acknowledge
that each has reviewed Exhibit E and agrees to the foregoing obligation. If
Tenant or Subtenant receives a Facility survey or inspection report with
material deficiencies, notice of failure to comply with a plan of correction or
an HIPDB adverse action report, Tenant and the respective Subtenant shall cure
all deficiencies and implement all corrective actions by the date required by
the regulatory authority.
 
15.9 Transfer of License and Facility Operations. If this Lease is terminated
due to expiration of the Term, due to an Event of Default or for any reason
other than Tenant's purchase of the Leased Property, or if Tenant or Subtenant
vacates the Leased Property (or any part thereof) without termination of this
Lease, the following provisions shall be immediately effective:
 
15.9.1 Licensure. Tenant and each Subtenant shall execute, deliver and file all
documents and statements reasonably requested by Landlord to effect the transfer
of the Facility license and Government Authorizations to a replacement operator
designated by Landlord ("Replacement Operator"), subject to any required
approval of governmental regulatory authorities, and Tenant and each Subtenant
shall provide to Landlord all information and records required by Landlord in
connection with the transfer of the license and Government Authorizations.
 
15.9.2 Facility Operations. In order to facilitate a responsible and efficient
transfer of the operations of the Facility, Tenant and Subtenant shall, if and
to the extent requested by Landlord and subject to all applicable law, [i]
deliver to Landlord the most recent updated reports, notices, schedules and
documents listed under item nos. 15, 16 17, 18 and 19 of Exhibit E; [ii]
continue and maintain the operation of the Facility in the ordinary course of
business, including retention of all residents at the Facility to the fullest
extent practicable and consistent with applicable laws and regulations, until
transfer of the Facility operations to the Replacement Operator is completed;
[iii] enter into such management agreements, operations transfer agreements and
other types of agreements that may be reasonably requested by Landlord or the
Replacement Operator; and [iv] provide reasonable access for Landlord and its
agents to show the Facility to potential replacement operators. Tenant and
Subtenant consent to the distribution by Landlord to potential replacement
operators of Facility financial statements, licensure reports, financial and
property due diligence materials and other documents, materials and information
relating to the Facility to the extent such documents are not deemed
confidential or subject to attorney-client privilege. The provisions of this
section do not create or establish any rights in Tenant, Subtenant or any third
party and Landlord reserves all rights and remedies relating to termination of
this Lease.

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15.10 Bed Operating Rights. Tenant and Subtenant acknowledge and agree that the
rights to operate the beds located at the Facility as long term care beds under
the law of the applicable Facility State [i] affect the value of the Leased
Property, and [ii] the grant of this Lease is conditioned upon the existence of
such rights. Tenant and Subtenant shall not relocate any licensed bed at any
Facility that Tenant and Subtenant are currently operating pursuant to this
Lease to any other location and shall not transfer any bed operating rights to
any other party without the prior written consent of Landlord.
 
15.11 Power of Attorney. Effective upon [i] the occurrence and during the
continuance of an Event of Default, or [ii] termination of this Lease for any
reason other than Tenant's purchase of the Leased Property, Tenant and Subtenant
hereby irrevocably and unconditionally appoint Landlord, or Landlord's
authorized officer, agent, employee or designee, as Tenant's and Subtenant's
true and lawful attorney-in-fact, to act for Tenant and Subtenant in Tenant's
and Subtenant's respective name, place, and stead, to execute, deliver and file
all applications and any and all other necessary documents and statements to
effect the issuance, transfer, reinstatement, renewal and/or extension of the
Facility license and all Governmental Authorizations issued to Tenant and
Subtenant or applied for by Tenant and Subtenant in connection with Tenant's and
Subtenant's operation of the Facility, to permit any designee of Landlord or any
other transferee to operate the Facility under the Governmental Authorizations,
and to do any and all other acts incidental to any of the foregoing. Tenant and
Subtenant irrevocably and unconditionally grant to Landlord as their respective
attorney-in-fact full power and authority to do and perform every act necessary
and proper to be done in the exercise of any of the foregoing powers as fully as
Tenant and Subtenant might or could do if personally present or acting, with
full power of substitution, hereby ratifying and confirming all that said
attorney shall lawfully do or cause to be done by virtue hereof. This power of
attorney is coupled with an interest and is irrevocable prior to Tenant's
purchase of the Leased Property.
 
ARTICLE 16: ALTERATIONS, CAPITAL IMPROVEMENTS, AND SIGNS
 
16.1 Prohibition on Alterations and Improvements. Except for Permitted
Alterations (as hereinafter defined), Tenant shall not make any structural or
nonstructural changes, alterations, additions and/or improvements (hereinafter
collectively referred to as "Alterations") to the Leased Property.
 
16.2 Approval of Alterations. If Tenant desires to perform any Permitted
Alterations, Tenant shall deliver to Landlord plans, specifications, drawings,
and such other information as may be reasonably requested by Landlord
(collectively the "Plans and Specifications") showing in reasonable detail the
scope and nature of the Alterations that Tenant desires to perform. It is the
intent of the parties hereto that the level of detail shall be comparable to
that which is referred to in the architectural profession as "design development
drawings" as opposed to working or biddable drawings. Landlord agrees not to
unreasonably delay its review of the Plans and Specifications. Within 30 days
after receipt of an invoice, Tenant shall reimburse Landlord for all costs and
expenses incurred by Landlord in reviewing and, if required, approving or
disapproving the Plans and Specifications, inspecting the Leased Property, and
otherwise monitoring compliance with the terms of this Article 16. Tenant shall
comply with the requirements of §16.4 in making any Permitted Alterations.

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16.3 Permitted Alterations. Permitted Alterations means any one of the
following:  [i] Alterations approved by Landlord; [ii] Alterations required
under §7.2;
[iii]           Alterations having a total cost of less than $100,000.00;
provided, however, that any change in the number or configuration of units in a
Facility shall require Landlord's prior approval; or
[iv]           repairs, rebuilding and restoration required or undertaken
pursuant to §9.4.
 
16.4 Requirements for Permitted Alterations. Tenant shall comply with all of the
following requirements in connection with any Permitted Alterations:
 
(a)            The Permitted Alterations shall be made in accordance with the
 
(b)            approved Plans and Specifications.
 
(c)            The Permitted Alterations and the installation thereof shall
comply
 
(d)            with all applicable legal requirements and insurance
requirements.
 
(e)            The Permitted Alterations shall be done in a good and workmanlike
manner, shall not impair the value or the structural integrity of the Leased
Property, and shall be free and clear of all mechanic's liens.
 
(f)            For any Permitted Alterations having a total cost of $100,000.00
or more, Tenant shall deliver to Landlord a payment and performance bond, with a
surety acceptable to Landlord, in an amount equal to the estimated cost of the
Permitted Alterations, guaranteeing the completion of the work free and clear of
liens and in accordance with the approved Plans and Specifications, and naming
Landlord and any mortgagee of Landlord as joint obligees on such bond.
 
(e)            Tenant shall, at Tenant's expense, obtain a builder's completed
value risk policy of insurance insuring against all risks of physical loss,
including collapse and transit coverage, in a nonreporting form, covering the
total value of the work performed, and equipment, supplies, and materials, and
insuring initial occupancy. Landlord and any mortgagee of Landlord shall be
additional insureds of such policy. Landlord shall have the right to approve the
form and substance of such policy.
 
(f)             Tenant shall pay the premiums required to increase the amount of
the insurance coverages required by Article 4 to reflect the increased value of
the Improvements resulting from installation of the Permitted Alterations, and
shall deliver to Landlord a certificate evidencing the increase in coverage.
 
 (g)   Tenant shall, not later than 60 days after completion of the Permitted
Alterations, deliver to Landlord a revised "as-built" survey of the respective
Facility if the Permitted Alterations altered the Land or "footprint" of the
Improvements and an "as-built" set of Plans and Specifications for the Permitted
Alterations in form and substance satisfactory to Landlord.

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(h)    Tenant shall, not later than 30 days after Landlord sends an invoice,
reimburse Landlord for any reasonable costs and expenses, including attorneys'
fees and architects' and engineers' fees, incurred in connection with reviewing
and approving the Permitted Alterations and ensuring Tenant's compliance with
the requirements of this section. The daily fee for Landlord's consulting
engineer is $750.00.
 
16.5 Ownership and Removal of Permitted Alterations. The Permitted Alterations
shall become a part of the Leased Property, owned by Landlord, and leased to
Tenant subject to the terms and conditions of this Lease. Tenant shall not be
required or permitted to remove any Permitted Alterations.
 
16.6 Minimum Qualified Capital Expenditures. During each calendar year of the
Term, Tenant shall expend or escrow at least $400.00 per unit for Qualified
Capital Expenditures to improve the Facilities (provided that as to any Facility
with respect to which a certificate of occupancy was not issued prior to the end
of the first calendar year, the minimum qualified capital expenditures required
by this section shall be waived until the calendar year immediately following
the year in which such certificate of occupancy is issued). Thereafter
throughout the Term, Tenant shall expend or escrow such minimum amount each
calendar year, increased annually in proportion to increases in the CPI. Within
60 days after the end of each fiscal year, Tenant shall deliver to Landlord a
certificate in the form of Exhibit G listing the Qualified Capital Expenditures
made in the prior year. If the entire minimum amount was not expended in such
year, the certificate will include certification that the balance of the current
minimum amount has been deposited in a reserve account to be used solely for
Qualified Capital Expenditures for the Facilities. At least annually, at the
request of Landlord, Landlord and Tenant shall review capital expenditures
budgets and agree on modifications, if any, required by changed circumstances
and the changed conditions of the Leased Property.
 
16.7 Signs. Tenant may, at its own expense, erect and maintain identification
signs at the Leased Property, provided such signs comply with all laws,
ordinances, and regulations. Upon the termination or expiration of this Lease,
Tenant shall, within 30 days after notice from Landlord, remove the signs and
restore the Leased Property to its original condition.
 
ARTICLE 17: RESERVED
 
ARTICLE 18: ASSIGNMENT AND SALE OF LEASED PROPERTY
 
18.1 Prohibition on Assignment and Subletting. Tenant acknowledges that Landlord
has entered into this Lease in reliance on the personal services and business
expertise of Tenant. Except as provided in § 18.1.1, Tenant may not assign,
sublet, mortgage, hypothecate, pledge, grant a right of first refusal or
transfer any interest in this Lease, or in the Leased Property, in whole or in
part, without the prior written consent of Landlord, which Landlord may withhold
in its sole and absolute discretion. The following transactions will be deemed
an assignment or sublease requiring Landlord's prior written consent: [i] an
assignment by operation of law; [ii] an imposition (whether or not consensual)
of a lien, mortgage, or encumbrance upon Tenant's interest in the Lease; [iii]
an arrangement (including, but not limited to, management agreements,
concessions, licenses, and easements) which allows the use or occupancy of all
or part of the Leased Property by anyone other than Tenant; and [iv] a change of
ownership of Tenant. Landlord's consent to any assignment, right of first
refusal or sublease will not release Tenant (or any guarantor) from its payment
and performance obligations under this Lease, but rather Tenant, any guarantor,
and Tenant's assignee or sublessee will be jointly and severally liable for such
payment and performance. Except as provided in §18.1.1, an assignment, right of
first refusal or sublease without the prior written consent of Landlord will be
void at Landlord's option. Landlord's consent to one assignment, right of first
refusal or sublease will not waive the requirement of its consent to any
subsequent assignment or sublease. Notwithstanding the foregoing, Tenant may
enter into a Sublease with each Subtenant for each Facility provided that each
Sublease complies with § 18.2.

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18.1.1 Notwithstanding § 18.1 or other terms of this Lease or the Lease
Documents to the contrary, [i] Tenant may [a] sublease a portion of the Facility
not exceeding 5% of the square footage of any building for resident services
such as a beauty salon; and [ii] Landlord shall not unreasonably withhold,
condition or delay its consent to an assignment or sublease to an Affiliate
provided that such assignee or sublessee assumes Tenant's obligations under this
Lease and the requirements of this Article are satisfied. Any subleases entered
into pursuant to clause [i] above may not extend beyond the Term of this Lease
without the prior written consent of Landlord, which consent shall not be
unreasonably withheld, conditioned or delayed.
 
18.2 Requests for Landlord's Consent to Assignment, Sublease or Management
Agreement. If Tenant is required to obtain Landlord's consent to a specific
assignment, sublease, or management agreement, Tenant shall give Landlord [i]
the name and address of the proposed assignee, subtenant or manager; [ii] a copy
of the proposed assignment, sublease or management agreement; [iii] reasonably
satisfactory information about the nature, business and business history of the
proposed assignee, subtenant, or manager and its proposed use of the Leased
Property; and [iv] banking, financial, and other credit inforthation, and
references about the proposed assignee, subtenant or manager sufficient to
enable Landlord to determine the financial responsibility and character of the
proposed assignee, subtenant or manager. Any assignment, sublease or management
agreement shall contain provisions to the effect that [a] such assignment,
sublease or management agreement is subject and subordinate to all of the terms
and provisions of this Lease and to the rights of Landlord and that the
assignee, subtenant or manager shall comply with all applicable provisions of
this Lease; [b] such assignment, sublease or management agreement may not be
modified without the prior written consent of Landlord not to be unreasonably
withheld or delayed; [c] if this Lease shall terminate before the expiration of
such assignment, sublease or management agreement, the assignee, subtenant or
manager thereunder will, solely at Landlord's option and only upon the express
written notice of attomment from Landlord, attom to Landlord and waive any right
the assignee, subtenant or manager may have to terminate the assignment,
sublease or management agreement or surrender possession thereunder as a result
of the termination of this Lease; and [d] if the assignee, subtenant or manager
receives a written notice from Landlord stating that Tenant is in default under
this Lease, the assignee, subtenant or manager shall thereafter pay all rentals
or payments under the assignment, sublease or management agreement directly to
Landlord until such default has been cured. Any attempt or offer by an assignee,
subtenant or manager to attorn to Landlord shall not be binding or effective
without the express written consent of Landlord. Tenant hereby collaterally
assigns to Landlord, as security for the performance of its obligations
hereunder, all of Tenant's right, title, and interest in and to any assignment,
sublease or management agreement noW or hereafter existing for all or part of
the Leased Property. Tenant shall, at the request of Landlord, execute such
other instruments or documents as Landlord may request to evidence this
collateral assignment. If Landlord, in its sole and absolute discretion,
consents to such assignment, sublease, or management agreement, such consent
shall not be effective until [i] a fully executed copy of the instrument of
assignment, sublease or management agreement has been delivered to Landlord;
[ii] in the case of an assignment, Landlord has received a written instrument in
which the assignee has assumed and agreed to perform all of Tenant's obligations
under the Lease; and [iii] Tenant has paid to Landlord a fee in the amount of
$2,500.00 (applies only to consent requests after the Closing); and [iv]
Landlord has received reimbursement from Tenant or the assignee for all
attorneys' fees and expenses and all other reasonable out-of-pocket expenses
incurred in connection with determining whether to give its consent, giving its
consent and all matters relating to the assignment (applies only to consent
requests after the Closing).

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18.3 Agreements with Residents. Notwithstanding §18.1, Tenant and Subtenant may
enter into an occupancy agreement with residents of the Leased Property without
the prior written consent of Landlord provided that [i] the agreement does not
provide for lifecare services; [ii] the agreement does not contain any type of
rate lock provision or rate guaranty for more than one calendar year; [iii] the
agreement does not provide for any rent reduction or waiver other than for an
introductory period not to exceed six months; [iv] Tenant and Subtenant may not
collect rent for more than one month in advance; and [v] all residents of the
Leased Property are accurately shown in accounting records for the Facility.
Without the prior written consent of Landlord, Tenant and Subtenant shall not
change the form of resident occupancy agreement that was submitted to Landlord
prior to the Effective Date.
 
18.4 Sale of Leased Property. If Landlord or any subsequent owner of the Leased
Property sells the Leased Property, its liability for the performance of its
agreements in this Lease will end on the date of the sale of the Leased
Property, and Tenant will look solely to the purchaser for the performance of
those agreements. For purposes of this section, any holder of a mortgage or
security agreement which affects the Leased Property at any time, and any
landlord under any lease to which this Lease is subordinate at any time, will be
a subsequent owner of the Leased Property when it succeeds to the interest of
Landlord or any subsequent owner of the Leased Property.
 
18.5 Assignment by Landlord. Landlord may transfer, assign, mortgage,
collaterally assign, or otherwise dispose of Landlord's interest in this Lease
or the Leased Property. Landlord shall not assign the Loan separate from the
Lease except for an assignment to a Landlord Affiliate.
 
ARTICLE 19: HOLDOVER AND SURRENDER
 
19.1 Holding Over. If Tenant, with or without the express or implied consent of
Landlord, continues to hold and occupy the Leased Property (or any part thereof)
after the expiration of the Term or earlier termination of this Lease (other
than pursuant to Tenant's purchase of the Leased Property), such holding over
beyond the Term and the acceptance or collection of Rent in the amount specified
below by Landlord shall operate and be construed as creating a tenancy from
month to month and not for any other term whatsoever. Said month-to-month
tenancy may be terminated by Landlord by giving Tenant five days' written
notice, and at any time thereafter Landlord may re-enter and take possession of
the Leased Property. If Tenant continues after the expiration of the Term or
earlier termination of this Lease to hold and occupy the Leased Property whether
as a month-to-month tenant or a tenant at sufferance or otherwise, Tenant shall
pay [i] Default Rent for each month, plus [ii] all Additional Rent accruing
during the month, plus [iii] any and all other sums payable by Tenant pursuant
to this Lease. During any continued tenancy after the expiration of the Term or
earlier termination of this Lease, Tenant shall be obligated to perform and
observe all of the terms, covenants and conditions of this Lease, but shall have
no rights hereunder other than the right, to the extent given by applicable law,
to continue its occupancy and use of the Leased Property until the tenancy is
terminated. Nothing contained herein shall constitute the consent, express or
implied, of Landlord to the holding over of Tenant after the expiration or
earlier termination of this Lease.

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19.2 Surrender. Except for [i] Permitted Alterations; [ii] normal and reasonable
wear and tear (subject to the obligation of Tenant to maintain the Leased
Property in good order and repair during the Term); and [iii] damage and
destruction not required to be repaired by Tenant, Tenant shall surrender and
deliver up the Leased Property at the expiration or termination of the Term in
as good order and condition as of the Commencement Date.
 
ARTICLE 20: LETTER OF CREDIT
 
20.1 Terms of Letter of Credit. If required under the Commitment, Tenant shall
provide Landlord with the Letter of Credit at the Closing. Tenant shall maintain
the Letter of Credit in favor of Landlord until the Obligor Group Obligations
are performed in full. The Letter of Credit shall permit partial and full draws
and shall permit drawing upon presentation of a draft drawn on the Issuer and a
certificate signed by Landlord stating that an Event of Default has occurred
under this Lease. The Letter of Credit shall be for an initial term of one year
and shall be automatically renewed annually for successive terms of at least one
year unless Landlord receives notice from the Issuer, by certified mail, at
least 60 days prior to the expiry date then in effect that the Letter of Credit
will not be extended for an additional one-year period.
 
20.2 Replacement Letter of Credit. Tenant shall provide a replacement Letter of
Credit which satisfies the requirements of §20.1 from an Issuer acceptable to
Landlord within 30 days after the occurrence of any of the following: [i]
Landlord's receipt of notice from the Issuer that the Letter of Credit will not
be extended for an additional one-year period; [ii] Landlord gives notice to
Tenant that the Lace Financial Service Rating (or rating of a comparable rating
service) of the Issuer is less than a "C+" (or the comparable rating of such
other rating service); [iii] Landlord gives notice to Tenant of the admission by
Issuer in writing of its inability to pay its debts generally as they become
due, or Issuer's filing of a petition in bankruptcy or petitions to take
advantage of any insolvency act, making an assignment for the benefit of its
creditors, consenting to the appointment of a receiver of itself or of the whole
or any substantial part of its property, or filing a petition or answer seeking
reorganization or arrangement under the federal bankruptcy laws or any other
applicable law, regulation, or statute of the United States of America or any
state thereof or [iv] Issuer is at any time determined not to be at least
"adequately capitalized", as that term is defined and used in the "Prompt
Corrective Action" statute, 12 U.S.C. §1831, and implementing regulations.
Tenant's failure to comply with the requirements of this section shall be an
immediate Event of Default without any notice (other than as provided for in
this section), cure or grace period. Upon such Event of Default, Landlord shall
be entitled to draw Upon the Letter of Credit and Landlord may, solely at its
option and without any obligation to do so, require Tenant to obtain a
replacement Letter of Credit satisfactory to Landlord with the Letter of Credit
proceeds made available to Tenant solely to secure Tenant's reimbursement
obligation for the replacement Letter of Credit.

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20.3 Draws. Landlord may draw under the Letter of Credit upon the occurrence of
an Event of Default hereunder. Any such draw shall not cure an Event of Default.
The proceeds from the Letter of Credit ("LC Proceeds") shall be the sole
property of Landlord and may be used, retained and invested by Landlord without
restriction or limitation. Landlord shall have no obligation to account for its
use of the LC Proceeds and Tenant shall have no interest in or claim against the
LC Proceeds. Landlord shall have the right and option, but not the obligation,
to apply all or any portion of the LC Proceeds to pay all or any portion of [i]
the Obligor Group Obligations; plus [ii] all reasonable expenses and costs
incurred by Landlord in enforcing or preserving Landlord's rights under this
Lease or any security for the Obligor Group Obligations, including, without
limitation, [a] the fees, expenses, and costs of any litigation, appellate,
receivership, administrative, bankruptcy, insolvency, or other similar
proceeding; [b] attorney, paralegal, consulting and witness fees and
disbursements; and [c] the expenses, including, without limitation, lodging,
meals and transportation of Landlord and its employees, agents, attorneys, and
witnesses in preparing for litigation, administrative, bankruptcy, insolvency,
or similar proceedings and attendance at hearings, depositions, and trials in
connection therewith.
 
20.4 Partial Draws. Upon the occurrence of a monetary Event of Default under the
Obligor Group Obligations, Landlord may, at its option, make a partial draw on
the Letter of Credit in an amount not to exceed the amount of the Obligor Group
Obligations then past due. If Landlord then applies the proceeds from such
partial draw on the Letter of Credit to payment of all or any portion of the
Obligor Group Obligations then past due, Tenant shall, within 10 days after
notice from Landlord of such partial draw and payment, cause the amount of the
Letter of Credit to be reinstated to the amount in effect prior to such partial
draw. Tenant's failure to comply with the requirements of this section shall be
an immediate Event of Default under the Lease Documents without any notice
(other than as provided for in this section), cure or grace period. Landlord's
rights under this §20.4 are in addition to, and not in limitation of, Landlord's
rights under §20.3.
 
20.5 Substitute Letter of Credit. Tenant may, from time to time, deliver to
Landlord a substitute Letter of Credit meeting the requirements of this Lease
and issued by an Issuer acceptable to Landlord. Upon Landlord's approval of the
substitute Letter of Credit, Landlord shall release the previous Letter of
Credit to Tenant.
 
20.6 Retention of Letter of Credit. Upon termination of this Lease due to
expiration of the Term, pursuant to an Event of Default or for any reason other
than Tenant's purchase of the Leased Property, Landlord shall be entitled to
hold the Letter of Credit until the Obligor Group Obligations are performed in
full or are released by Landlord.

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ARTICLE 21: QUIET ENJOYMENT, SUBORDINATION, ATTORNMENT AND
ESTOPPEL CERTIFICATES
 
21.1 Quiet Enjoyment. So long as Tenant performs all of its obligations under
this Lease, Tenant's possession of the Leased Property will not be disturbed by
Landlord or any party claiming by, through or under Landlord.
 
21.2 Subordination. Subject to the terms and conditions of this section, this
Lease and Tenant's rights under this Lease are subordinate to any ground lease
or underlying lease, first mortgage, first deed of trust, or other first lien
against the Leased Property, together with any renewal, consolidation,
extension, modification or replacement thereof, which now or at any subsequent
time affects the Leased Property or any interest of Landlord in the Leased
Property, except to the extent that any such instrument expressly provides that
this Lease is superior. The foregoing subordination provision is expressly
conditioned upon any lessor or mortgagee being obligated and bound to recognize
Tenant as the tenant under this Lease, and such lessor or mortgagee shall have
no right to disturb Tenant's possession, use and occupancy of the Leased
Property or Tenant's enjoyment of its rights under this Lease unless and until
an Event of Default occurs hereunder. Any foreclosure action or proceeding by
any mortgagee with respect to the Leased Property shall not affect Tenant's
rights under this Lease and shall not terminate this Lease unless and until an
Event of Default occurs hereunder. The foregoing provisions will be
self-operative, and no further instrument will be required in order to effect
them. However, Tenant shall execute, acknowledge and deliver to Landlord, at any
time and from time to time upon demand by Landlord, such documents as may be
requested by Landlord or any mortgagee or any holder of any mortgage or other
instrument described in this section, to confirm or effect any such
subordination, provided that any such document shall include a nondisturbance
provision as set forth in this section satisfactory to Tenant. Any mortgagee of
the Leased Property shall be deemed to be bound by the nondisturbance provision
set forth in this section. If Tenant fails or refuses to execute, acknowledge,
and deliver any such document within 20 days after written demand, Tenant shall
be deemed to have affirmed that this Lease and Tenant's rights hereunder are
subordinate to any ground lease or underlying lease, first mortgage, first deed
of trust, or other first lien or privilege against the Leased Property. Landlord
may execute acknowledge and deliver any such document on behalf of Tenant as
Tenant's attorney-in-fact.
 
21.3 Attomment. If any holder of any mortgage, indenture, deed of trust, or
other similar instrument described in §21.2 succeeds to Landlord's interest in
the Leased Property, Tenant will pay to such holder all Rent subsequently
payable under this Lease. Tenant shall, upon request of anyone succeeding to the
interest of Landlord, automatically become the tenant of, and attorn to, such
successor in interest without changing this Lease. The successor in interest
will not be bound by [i] any payment of Rent for more than one month in advance;
[ii] any amendment or modification of this Lease thereafter made without its
consent as provided in this Lease; [iii] any claim against Landlord arising
prior to the date on which the successor succeeded to Landlord's interest; or
[iv] any claim or offset of Rent against Landlord. Upon request by Landlord or
such successor in interest and without cost to Landlord or such successor in
interest, Tenant will execute, acknowledge and deliver an instrument or
instruments confirming the attornment. If Tenant fails or refuses to execute,
acknowledge, and deliver any such instrument within 20 days after written
demand, Tenant shall be deemed to have attomed to any successor to the Interest
of Landlord.

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21.4 Estoppel Certificates. At the request of Landlord or any mortgagee or
purchaser of the Leased Property, Tenant shall execute, acknowledge, and deliver
an estoppel certificate, in recordable form, in favor of Landlord or any
mortgagee or purchaser of the Leased Property certifying the following: [i] that
the Lease is unmodified and in full force and effect, or if there have been
modifications that the same is in full force and effect as modified and stating
the modifications; [ii] the date to which Rent and other charges have been paid;
[iii] whether Tenant or Landlord is in default or whether there is any fact or
condition which, with notice or lapse of time, or both, would constitute a
default, and specifying any existing default, if any; [iv] that Tenant has
accepted and occupies the Leased Property; [v] that Tenant has no defenses,
setoffs, deductions, credits, or counterclaims against Landlord, if that be the
case, or specifying such that exist; and [vi] such other information as may
reasonably be requested by Landlord or any mortgagee or purchaser. Any purchaser
or mortgagee may rely on this estoppel certificate. If Tenant fails to deliver
the estoppel certificates to Landlord within 10 days after the request of
Landlord, then Tenant shall be deemed to have certified that [a] the Lease is in
full force and effect and has not been modified, or that the Lease has been
modified as set forth in the certificate delivered to Tenant; [b] Tenant has not
prepaid any Rent or other charges except for the current month; [c] Tenant has
accepted and occupies the Leased Property; [d] neither Tenant nor Landlord is in
default nor is there any fact or condition which, with notice or lapse of time,
or both, would constitute a default; and [e] Tenant has no defenses, setoffs,
deductions, credits, or counterclaims against Landlord.
 
ARTICLE 22: CONTINGENT PAYMENTS
 
22.1 Contingent Payments. Landlord shall make Contingent Payments to the extent
set forth in this section. Tenant shall request each Contingent Payment by
submitting a Contingent Payment Request to Landlord or in the case of Contingent
Payments for Project Improvements, a Disbursement Voucher pursuant to the
Disbursirig Agreement. Landlord shall make the Contingent Payment provided that
[i] no Event of Default has occurred and is continuing, and [ii] Landlord has
determined that all requirements for the Contingent Payment have been satisfied.
Contingent Payments will be made not less than eight Business Days and not more
than twelve Business Days following Tenant's delivery of the Contingent Payment
Request.
 
22.2 Contingent Payments for Capital Expenditures.
 
22.2.1 Conditions. In addition to any other requirements set forth in this
section, Landlord's obligation to make Contingent Payments for capital
expenditures is subject to Landlord's reasonable approval of the scope of work
and budget, construction and disbursement schedules (if applicable), and
contractor and construction agreements (if applicable). Tenant shall also
provide a collateral assignment of any construction contract to Landlord and the
contractor shall consent to the assignment.
 
22.2.2 No Commitment. Landlord has no current commitment to make Contingent
Payments for capital expenditures pursuant to §22.2.

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22.3 Contingent Payments for Project Improvements.
 
22.3.1 Conditions. In addition to any other requirements set forth in this
section, Landlord's obligation to make Contingent Payments for Project
Improvements is subject to the conditions set forth in the Disbursing Agreement
related to the Project Improvements.
 
22.3.2 No Commitment. Landlord has no current commitment to make Contingent
Payments for Project Improvements pursuant to §22.3.

 
ARTICLE 23: SECURITY INTEREST

23.1 Collateral. Tenant and each Subtenant hereby grant to each Landlord and HCN
(if not a Landlord) (individually and collectively called "Secured Party") a
security interest in all of Tenant's and Subtenant's right, title, and interest
in and to the following described property, whether now owned or hereafter
acquired by Tenant or any Subtenant (the "Collateral"), to secure the payment
and performance of the Obligor Group Obligations:
 
(a)           All machinery, furniture, equipment, trade fixtures, appliances,
inventory and all other goods (as "equipment", "inventory" and "goods" are
defined for purposes of Article 9 ("Article 9") of the Uniform Commercial Code
as adopted in Ohio) and any leasehold interest of Tenant or any Subtenant in any
of the foregoing, including, without limitation, those items which are to become
fixtures or which are building supplies and materials to be incorporated into
any improvement or fixture.
 
(b)           All accounts, contract rights, general intangibles, instruments,
documents, and chattel paper [as "accounts", "contract rights", "general
intangibles", "instruments", "documents" and "chattel paper" are defined for
purposes of Article 9] now or hereafter arising.
 
(c)           All franchises, permits, licenses, operating rights,
certifications, approvals, consents, authorizations and other general
intangibles, including, without limitation, certificates of need, state health
care facility licenses, and Medicare and Medicaid provider agreements, to the
extent permitted by law.
 
(d)           Unless expressly prohibited by the terms thereof, all contracts,
agreements, contract rights and materials relating to the design, construction,
operation or management of any improvements, including, but not limited to,
management agreements, plans, specifications, drawings, blueprints, models,
mock-ups, brochures, flyers, advertising and promotional materials and mailing
lists.
 
(e)    All subleases, occupancy agreements, license agreements and concession
agreements, written or unwritten, of any nature, now or hereafter entered into,
and all right, title and interest thereunder, including, without limitation, the
right, if any, to cash or securities deposited thereunder whether or not the
same was deposited to secure performance by the subtenants, occupants, licensees
and concessionaires of their obligations thereunder, including the right to
receive and collect the rents, revenues, and other charges thereunder.

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(f)            All ledger sheets, files, records, computer programs, tapes,
other electronic data processing materials, and other documentation relating to
the preceding listed property.
 
(g)            The products and proceeds of the preceding listed property,
including, without limitation, cash and non-cash proceeds, proceeds of proceeds,
and insurance proceeds.
 
23.2 Additional Documents. At the request of Landlord, Tenant and each Subtenant
shall execute additional security agreements, financing statements, and such
other documents as may be requested by Landlord to maintain and perfect such
security interest. Tenant and each Subtenant authorize Landlord to file
financing statements describing the Collateral to perfect and maintain the
security interest granted hereunder without the signature or any further
authorization of Tenant or any Subtenant.
 
23.3 Notice of Sale. With respect to any sale or other disposition of any of the
Collateral after the occurrence of an Event of Default, Landlord, Tenant and
each Subtenant agree that the giving of five days' notice by Landlord, sent by
overnight delivery, postage prepaid, to Tenant's or Subtenant's notice address
designating the time and place of any public sale or the time after which any
private sale or other intended disposition of such Collateral is to be made,
shall be deemed to be reasonable notice thereof and Tenant and each Subtenant
waive any other notice with respect thereto.
 
23.4 Recharacterization. Landlord and Tenant intend this Lease to be a true
lease. However, if despite the parties' intent, it is determined or adjudged by
a court for any reason that this Lease is not a true lease or if this Lease is
recharacterized as a financing arrangement, then this Lease shall be considered
a secured financing agreement and Landlord's title to the Leased Property shall
constitute a perfected first priority lien in Landlord's favor on the Leased
Property to secure the payment and performance of all the Obligor Group
Obligations.
 
23.5 Confession of Judgment. Tenant hereby confesses judgment upon the Obligor
Group Obligations solely for purposes of executory process concerning any
Louisiana Leased Property, specifically consenting that executory process be
issued thereon to enforce the same.
 
23.6 Additional Remedies Upon Default. Upon the occurrence of any Event of
Default hereunder, in addition to any other rights and remedies available to
Secured Party:
 
(a)            Secured Party may cause the Collateral to be seized and sold
under executory or other legal process issued by any competent court, either
with or without appraisement (the benefits of all laws relative to appraisement
being hereby expressly waived), as an entirety or in lots or parcels as Secured
Party may determine, to the highest bidder for cash, or on such terms as the
plaintiff in such proceedings may direct; and
 
(b)            Secured Party shall have and may exercise all of the rights,
remedies, and powers of a secured party under the Uniform Commercial Code,
including, without limitation, the right and power to sell, at one or more
public or private sales, or otherwise dispose of or utilize the Collateral or
any part thereof in any manner authorized or permitted under the Uniform
Codunercial Code, or to apply the proceeds thereof toward payment of any
reasonable costs and expenses and attorneys' fees and legal expenses thereby
incurred by Secured Party, as secured party, toward payment of the Obligor Group
Obligations, in such order or manner as Secured Party shall elect.

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23.7 Waiver. To the extent permitted, Tenant hereby expressly waives:
 
(a)            The benefit of appraisement, as provided in Article 2332, 2336,
2723, and 2724, Louisiana Code of Civil Procedure, and all other laws conferring
the same;
 
(b)            The demand and three days' delay afforded by Articles 2639 and
2721, Louisiana Code of Civil Procedure;
 
(c)            The three days' delay provided by Articles 2639 and 2721,
Louisiana Code of Civil Procedure;
 
(d)            The three days' delay provided by Articles 2331 and 2722,
Louisiana Code of Civil Procedure;
 
(e)    The benefit of the other provisions of Article 2331, 2722, and 2723,
Louisiana Code of Civil Procedure, and any other notices or conditions
prescribed by law as a prerequisite to the institution of a suit or sale of the
Collateral. Tenant expressly agrees to the immediate seizure of the Collateral.
 
23.8 Appointment of Receiver or Keeper. Secured Party may cause a receiver or
keeper to the appointed to take possession of the Collateral to manage,
administer, operate, and conserve the value thereof and collect the rents,
issues, revenues, proceeds, and profits thereof. Secured Party may designate any
firm, person, or corporation to be the receiver or keeper of the Collateral as
provided by La. R.S. 9:5132 and similar statutes.

 
ARTICLE 24: MISCELLANEOUS

 
24.1 Notices. Landlord, Tenant and Subtenant hereby agree that all notices,
demands, requests, and consents (hereinafter "notices") required to be given
pursuant to the terms of this Lease shall be in writing, shall be addressed to
the addresses set forth in the introductory paragraph of this Lease, and shall
be served by [i] personal delivery; [ii] certified mail, return receipt
requested, postage prepaid; or [iii] nationally recognized overnight courier.
Notices to any Subtenant should be sent do Tenant at Tenant's address set forth
in the introductory paragraph. All notices shall be deemed to be given upon the
earlier of actual receipt or three days after mailing, or one Business Day after
deposit with the overnight courier. Any notices meeting the requirements of this
section shall be effective, regardless of whether or not actually received.
Landlord or Tenant may change its notice address at any time by giving the other
party notice of such change.
 
24.2 Advertisement of Leased Property. In the event the parties hereto have not
executed a renewal Lease within 120 days prior to the expiration of this Lease,
or Tenant has not exercised its Option to Purchase, then Landlord or its agent
shall have the right to enter the Leased Property at all reasonable times for
the purpose of exhibiting the Leased Property to others and to place upon the
Leased Property for and during the period commencing 120 days prior to the
expiration of this Lease, "for sale" or "for rent" notices or signs.

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24.3 Entire Agreement. This Lease contains the entire agreement between Landlord
and Tenant with respect to the subject matter hereof. No representations,
warranties, and agreements have been made by Landlord except as set forth in
this Lease. No oral agreements or understandings between Landlord and Tenant
shall survive execution of this Lease.
 
24.4 Severability. If any term or provision of this Lease is held or deemed by
Landlord to be invalid or unenforceable, such holding shall not affect the
remainder of this Lease and the same shall remain in full force and effect,
unless such holding substantially deprives Tenant of the use of the Leased
Property or Landlord of the rents herein reserved, in which event this Lease
shall forthwith terminate as if by expiration of the Term.
 
24.5 Captions and Headings. The captions and headings are inserted only as a
matter of convenience and for reference and in no way define, limit or describe
the scope of this Lease or the intent of any provision hereof.
 
24.6 Governing Law. This Lease shall be governed by and construed in accordance
with the laws of the State of Ohio, except as to matters under which the laws of
a State in which a respective Facility is located, or under applicable
procedural conflicts of laws rules, require the application of laws of such
other State, in which case the laws or conflicts of laws rules, as the case may
be, of such State shall govern to the extent required.
 
24.7 Memorandum of Lease. Tenant shall not record this Lease. Tenant shall,
however, record a memorandum of lease approved by Landlord upon Landlord's
request.
 
24.8 Waiver. No waiver by Landlord of any condition or covenant herein
contained, or of any breach of any such condition or covenant, shall be held or
taken to be a waiver of any subsequent breach of such covenant or condition, or
to permit or excuse its continuance or any future breach thereof or of any
condition or covenant, nor shall the acceptance of Rent by Landlord at any time
when Tenant or Subtenant is in default in the performance or observance of any
condition or covenant herein be construed as a waiver of such default, or of
Landlord's right to terminate this Lease or exercise any other remedy granted
herein on account of such existing default.
 
24.9 Binding Effect. This Lease will be binding upon and inure to the benefit of
the heirs, successors, personal representatives, and permitted assigns of
Landlord, Tenant and Subtenant.
 
24.10 No Offer. Landlord's submission of this Lease to Tenant is not an offer to
lease the Leased Property, or an agreement by Landlord to reserve the Leased
Property for Tenant. Landlord will not be bound to Tenant until Tenant has duly
executed and delivered duplicate original leases to Landlord, and Landlord has
duly executed and delivered one of these duplicate original leases to Tenant.

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24.11 Modification. This Lease may only be modified by a writing signed by both
Landlord and Tenant. All references to this Lease, whether in this Lease or in
any other document or instrument, shall be deemed to incorporate all amendments,
modifications and renewals of this Lease, made after the date hereof. If Tenant
requests Landlord's consent to any change in ownership, merger or consolidation
of Tenant, Subtenant or Guarantor, any assumption of the Lease, or any
modification of the Lease, Tenant shall provide Landlord all relevant
information and documents sufficient to enable Landlord to evaluate the request.
In connection with any such request, Tenant shall pay to Landlord a fee in the
amount of $2,500.00 and shall pay all of Landlord's reasonable attorney's fees
and expenses and other reasonable out-of-pocket expenses incurred in connection
with Landlord's evaluation of Tenant's request, the preparation of any documents
and amendments, the subsequent amendment of any documents between Landlord and
its collateral pool lenders (if applicable), and all related matters.
 
24.12 Landlord's Modification. Tenant acknowledges that Landlord may mortgage
the Leased Property or use the Leased Property as collateral for collateralized
mortgage obligations or Real Estate Mortgage Investment Companies (REMICS). If
any mortgage lender of Landlord desires any modification of this Lease, Tenant
agrees to consider such modification in good faith and to execute an amendment
of this Lease if Tenant finds such modification acceptable and Landlord will pay
Tenant's reasonable attorney's fees for reviewing such amendment.
 
24.13 No Merger. The surrender of this Lease by Tenant or the cancellation of
this Lease by agreement of Tenant and Landlord or the termination of this Lease
on account of Tenant's default will not work a merger, and will, at Landlord's
option, terminate any subleases or operate as an assignment to Landlord of any
subleases. Landlord's option under this paragraph will be exercised by notice to
Tenant and all known subtenants of the Leased Property.
 
24.14 Laches. No delay or omission by either party hereto to exercise any right
or power accruing upon any noncompliance or default by the other party with
respect to any of the terms hereof shall impair any such right or power or be
construed to be a waiver thereof.
 
24.15 Limitation on Tenant's Recourse. Tenant's sole recourse against Landlord,
and any successor to the interest of Landlord in the Leased Property, is to the
interest of Landlord, and any such successor, in the Leased Property. Tenant
will not have any right to satisfy any judgment which it may have against
Landlord, or any such successor, from any other assets of Landlord, or any such
successor. In this section, the terms "Landlord" and "successor" include the
shareholders, venturers, and partners of "Landlord" and "successor" and the
officers, directors, and employees of the same. The provisions of this section
are not intended to limit Tenant's right to seek injunctive relief or specific
performance.
 
24.16 Construction of Lease. This Lease has been prepared by Landlord and its
professional advisors and reviewed by Tenant and its professional advisors.
Landlord, Tenant, and their advisors believe that this Le.nw is the product of
all their efforts, that it expresses their agreement, and agree that it shall
not be interpreted in favor of either Landlord or Tenant or against either
Landlord or Tenant merely because of their efforts in preparing it.

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24.17 Counterparts. This Lease may be executed in multiple counterparts, each of
which shall be deemed an original hereof.
 
24.18 Landlord's Consent. Whenever Landlord's consent is required under this
Lease, such consent shall be in writing and shall not be unreasonably withheld
or delayed.
 
24.19 Custody of Escrow Funds. Any funds paid to Landlord in escrow hereunder
may be held by Landlord or, at Landlord's election, by a financial institution,
the deposits or accounts of which are insured or guaranteed by a federal or
state agency. The funds shall not be deemed to be held in trust, may be
commingled with the general funds of Landlord or such other institution, and
shall not bear interest.
 
24.20 Landlord's Status as a REIT. Tenant acknowledges that Landlord (or a
Landlord Affiliate) has elected and may hereafter elect to be taxed as a real
estate investment trust ("REIT") under the Internal Revenue Code.
 
24.21 Exhibits. All of the exhibits referenced in this Lease are attached hereto
and incorporated herein.
 
24.22 Waiver of Jury Trial. LANDLORD, TENANT AND SUBTENANT WAIVE TRIAL BY JURY
IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY OF THEM AGAINST THE
OTHER ON ALL MATTERS ARISING OUT OF THIS LEASE OR THE USE AND OCCUPANCY OF THE
LEASED PROPERTY (EXCEPT CLAIMS FOR PERSONAL INJURY OR PROPERTY DAMAGE). IF
LANDLORD COMMENCES ANY SUMMARY PROCEEDING FOR NONPAYMENT OF RENT, TENANT AND
SUBTENANT WILL NOT INTERPOSE, AND WAIVES THE RIGHT TO INTERPOSE, ANY
COUNTERCLAIM IN ANY SUCH PROCEEDING.
 
24.23 Consent to Jurisdiction. TENANT AND SUBTENANT HEREBY IRREVOCABLY SUBMIT
AND CONSENT TO THE NONEXCLUSIVE JURISDICTION AND VENUE OF ANY STATE OR FEDERAL
COURT HAVING JURISDICTION OVER LUCAS COUNTY, OHIO OR ANY COUNTY IN WHICH A
FACILITY IS LOCATED FOR ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY MATTER
ARISING FROM OR RELATED TO [I] THE COMMITMENT; [11] THIS LEASE; OR [III] ANY
DOCUMENT EXECUTED BY TENANT OR SUBTENANT IN CONNECTION WITH THIS LEASE. TENANT
AND SUBTENANT HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT TENANT AND
SUBTENANT MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE
MAINTENANCE OF ANY SUCH ACTION OR PROCEEDING. TENANT AND SUBTENANT AGREE THAT A
FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE
ENFORCED IN ANY OTHER JURISDICTION BY SUIT ON THE JUDGMENT OR IN ANY OTHER
MANNER PROVIDED BY LAW.
 
TENANT AND SUBTENANT AGREE NOT TO INSTITUTE ANY LEGAL ACTION OR PROCEEDING
AGAINST LANDLORD OR ANY DIRECTOR, OFFICER, EMPLOYEE, AGENT OR PROPERTY OF
LANDLORD, CONCERNING ANY MATTER ARISING OUT OF OR RELATING TO THE COMMITMENT,
THIS LEASE OR ANY RELATED DOCUMENT IN ANY COURT OTHER THAN A STATE OR FEDERAL
COURT HAVING JURISDICTION OVER LUCAS COUNTY, OHIO.

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TENANT AND SUBTENANT HEREBY CONSENT TO SERVICE OF PROCESS BY LANDLORD IN ANY
MANNER AND IN ANY JURISDICTION PERMITTED BY LAW. NOTHING HEREIN SHALL AFFECT OR
IMPAIR LANDLORD'S RIGHT TO SERVE LEGAL PROCESS IN ANY MANNER PERMITTED BY LAW,
OR LANDLORD'S RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST TENANT, SUBTENANT
OR THE PROPERTY OF TENANT OR SUBTENANT IN THE COURTS OF ANY OTHER JURISDICTION.
 
24.24 Attorney's Fees and Expenses. Tenant shall pay to Landlord all reasonable
costs and expenses incurred by Landlord in administering this Lease and the
security for this Lease, enforcing or preserving Landlord's rights under this
Lease and the security for this Lease, and in all matters of collection, whether
or not an Event of Default has actually occurred or has been declared and
thereafter cured, including, but not limited to, [a] reasonable attorney's and
paralegal's fees and disbursements; [b] the reasonable fees and expenses of any
litigation, administrative, bankruptcy, insolvency, receivership and any other
similar proceeding; [c] court costs; [d] the reasonable expenses of Landlord,
its employees, agents, attorneys and witnesses in preparing for litigation,
administrative, bankruptcy, insolvency and other proceedings and for lodging,
travel, and attendance at meetings, hearings, depositions, and trials; and [e]
reasonable consulting and witness fees and expenses incurred by Landlord in
connection with any litigation or other proceeding; provided, however,
Landlord's internal bookkeeping and routine lease servicing costs are not
payable by Tenant.
 
24.25 Survival. The following provisions shall survive termination of the Lease:
Article 8 (Defaults and Remedies); Article 9 (Damage and Destruction); Article
10 (Condemnation); § 15.9 (Transfer of License and Facility Operations); § 15.10
(Bed Operating Rights); Article 19 (Holdover and Surrender); §20.6 (Retention of
Letter of Credit); Article 23 (Security Interest) and §24.25 (Survival).
 
24.26 Time. Time is of the essence in the performance of this Lease.
 
24.27 Subtenant. Each Subtenant has joined in the execution of this Lease to
acknowledge that Subtenant is subject to and bound by the terms of the Lease
applicable to Subtenant, including, without limitation, the grant of a security
interest under Article 23.
 
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
 
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IN WITNESS WHEREOF, the parties hereto have executed this Lease or caused the
same to be executed by their respective duly authorized officers as of the date
first set forth above.

Signed and acknowledged in the presence of: 
 
 HEALTH CARE REIT, INC.
             
Signature
/s / Rita J. Rogge
 
By:
/s/ Erin C. Ibele
Print Name 
Rita J. Rogge
   
Title:
Erin C. Ibele
         
Senior Vice President-
Signature
/s / Kathleena Sullivan
     
Administration and Corporate Secretary
                           
Print Name
Kathleena Sullivan
                             
HCRI LOUISIANA PROPERTIES, L.P.
             
Signature
/s/ Rita J. Rogge
 
By:
HCRI Southern Investments I, Inc.
       
General Partner
Print Name
Rita J. Rogge
                       
Signature  
/s/ Kathleena Sullivan  
 By:
/s/ Erin C. Ibele
             
Print Name
Kathleena Sullivan
   
 Title:
Erin C. Ibele
       
 Senior Vice President-
       
 Administration and Corporate Secretary
                   
SENIOR LIVING PROPERTIES, LLC.
Signature
/s/ Carol Phillips
 
By:
/s/ Granger Cobb
             
Print Name
Carol Phillips
   
 Granger Cobb
                   
Title:
President
Signature
/s / Melanie Werdel
 
Tax I.D.No.: 20-5896699
             
Print Name
Melanie Werdel
                             
SUMMERVILLE  AT KENNER, L.L.C.
Signature
/s/ Carol Phillips
 
By:
/s/ Granger Cobb
             
Print Name
Carol Phillips
   
Granger Cobb
                   
Title:
President
Signature
/s/ Melanie Werdel
 
Tax I.D.No.: 52-2091291
             
Print Name
 Melanie Werdel
         

 
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SUMMERVILLE AT DAYTON LLC
           
Signature.
/s/ Carol Phillips
 
By:
/s/ Granger Cobb
Print Name 
Carol Phillips
   
Granger Cobb
       
Title:
President
Signature
/s/ Melanie Werdel
       
Print
NameMelanie Werdel
 
Tax I. D. No.: 20-8434151
                 
SUMMERVILLE ATOUTLOOK
 
  MANOR LLC  
Signature
/s/ Carol Phillips
       
Print Name
Carol Phillips
 
By:
/s/ Granger Cobb 
 
Granger Cobb
       
Signature
/s/ Melanie Werdel
   
Title:
President
Print Name
Melanie Werdel
   
Tax I. D. No.:  20-8434209

 

STATE OF OHIO                                 )
)SS:
COUNTY OF LUCAS        )

 
The foregoing instrument was acknowledged before me this  5  day of March, 2007
by Erin C. Ibele, the Senior Vice President-Administration and Corporate
Secretary of Health Care REIT, Inc., a Delaware corporation, on behalf of the
corporation
 

   
/s/ RITA J. ROGGE
     
Notary Public
 
My Commission Expires:
[SEAL]
               
RITA J. ROGGE
     
Notary Public, State of Ohio
     
My Commission Expires 08-26-2010
 

 
 
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