EXHIBIT 10.4

AGREEMENT TO LEASE

between

NHI-REIT OF NORTHEAST, LLC, Landlord

and

NHC/OP, L.P,

and

NATIONAL HEALTHCARE CORPORATION,  Co- Tenants

Dated: August 30, 2013 to be effective as of 12:01 a.m., September 1, 2013

  

Table of Contents

ARTICLE I. PREMISES AND TERM

1

1.1.

Premises.

1

1.2.

Term

2

1.3.

Holding Over

2

1.4.

Surrender.

2

1.5.

Collective Lease.

2

ARTICLE II. RENT

3

2.1.

Base Rent.

3

2.2.

Additional Rent.

3

2.3.

Place(s) of Payment of Rent; Direct Payment of Additional Rent.

3

2.4.

Net Lease.

3

2.5.

No Termination, Abatement, Etc.

3

2.6.

Percentage Rent.

4

2.7.

Late Charge.

5

2.8.

Rent Credit.

5

ARTICLE III. IMPOSITIONS AND UTILITIES

6

3.1.

Payment of Impositions.

6

3.2.

Definition of Impositions.

7

3.3.

Escrow of Impositions.

7

3.4.

Utilities.

8

3.5.

Discontinuance of Utilities.

8

ARTICLE IV. INSURANCE

8

4.1.

Property Insurance.

8

4.2.

Liability Insurance.

9

4.3.

Insurance Requirements.

10

4.4.

Replacement Cost.

10

4.5.

Blanket Policy.

10

4.6.

No Separate Insurance.

11

4.7.

Waiver of Subrogation.

11

4.8.

Mortgages.

11

4.9.

Escrows.

11

4.10.

Cooperation with Mortgage Financing.

11

4.11.

Captive Insurance Company.

12

ARTICLE V. INDEMNITY; HAZARDOUS SUBSTANCES

12

5.1.

Tenant’s Indemnification.

12

5.2.

Hazardous Substances or Materials.

13

5.3.

Limitation of Landlord’s Liability.

13

ARTICLE VI. USE AND ACCEPTANCE OF PREMISES

14

i

6.1.

Use of Leased Property.

14

6.2.

Acceptance of Leased Property.

14

6.3.

Conditions of Use and Occupancy.

14

6.4.

Financial Statements.

15

ARTICLE VII. REPAIRS, COMPLIANCE WITH LAWS, AND MECHANICS’ LIENS

15

7.1.

Maintenance.

15

7.2.

Compliance With Laws.

15

7.3.

Required Alterations.

15

7.4.

Mechanic’s Liens.

16

7.5.

Replacements of Fixtures.

16

ARTICLE VIII. ALTERATIONS AND SIGNS

16

8.1.

Prohibition on Alterations and Improvements.

16

8.2.

Requirements for Permitted Alterations.

17

8.3.

Ownership and Removal of Permitted Alterations.

17

8.4.

Signs.

18

ARTICLE IX. CAPITAL EXPENDITURES

18

9.1.

Minimum Capital Expenditures.

18

9.2.

Capital Expenditure Compliance Certificate.

18

ARTICLE X. DEFAULTS AND REMEDIES

18

10.1.

Events of Default.

18

10.2.

Remedies.

20

10.3.

Right of Set-Off.

22

10.4.

Performance of Tenant’s Covenants.

22

10.5.

[Intentionally Deleted]

22

10.6.

Litigation; Attorneys’ Fees.

22

10.7.

Remedies Cumulative.

23

10.8.

Escrows and Application of Payments.

23

10.9.

Power of Attorney.

23

ARTICLE XI. DAMAGE AND DESTRUCTION

23

11.1.

General.

23

11.2.

Landlord’s Inspection.

24

11.3.

Landlord’s Costs.

24

11.4.

Substantial Damage During Lease Term.

24

ARTICLE XII. CONDEMNATION

25

12.1.

Total Taking.

25

12.2.

Partial Taking.

25

ARTICLE XIII. TENANT’S PROPERTY

25

13.1.

Tenant’s Property.

25

13.2.

Requirements for Tenant’s Property.

26

ARTICLE XIV. ASSIGNMENT AND SUBLETTING; ATTORNMENT

27

ii

14.1.

Subletting and Assignment; Attornment.

27

14.2.

Attornment.

27

14.3.

Sublease Limitation.

28

ARTICLE XV. RIGHT OF FIRST REFUSAL

28

15.1.

Rights of First Refusal.

28

ARTICLE XVI. ARBITRATION

29

16.1.

Arbitration.

29

16.2.

Appointment of Arbitrators.

29

16.3.

Third Arbitrator.

29

16.4.

Arbitration Procedure.

29

16.5.

Expenses.

29

ARTICLE XVII. QUIET ENJOYMENT, SUBORDINATION, ATTORNMENT, BOND  FINANCING AND
ESTOPPEL CERTIFICATES  30

17.1.

Quiet Enjoyment.

30

17.2.

Subordination.

30

17.3.

Attornment; Non-Disturbance.

30

17.4.

Estoppel Certificates.

31

ARTICLE XVIII. EXPIRATION OR TERMINATION OF THE LEASE

31

18.1.

Inventory/Personal Property.

31

18.2.

Tenant’s Proprietary Property.

31

18.3.

Records.

31

18.4.

Bill of Sale.

32

18.5.

Licenses.

32

18.6.

Assignment of Contracts and Leases.

32

18.7.

Cooperation.

32

18.8.

Operations Transfer Agreement.

32

ARTICLE XIX. PURCHASE OPTION

32

19.1.

Purchase Option.

32

19.2.

Closing.

33

ARTICLE XX. INTENTIONALLY DELETED

35

ARTICLE XXI. MISCELLANEOUS

35

21.1.

Notices.

35

21.2.

Advertisement of Leased Property.

35

21.3.

Entire Agreement.

35

21.4.

Severability.

36

21.5.

Captions and Headings.

36

21.6.

Governing Law.

36

21.7.

Recording of Lease.

36

21.8.

Waiver.

36

21.9.

Binding Effect.

36

iii

21.10.

Authority.

36

21.11.

Transfer of Permits, Etc.

36

21.12.

Modification.

37

21.13.

Incorporation by Reference.

37

21.14.

No Merger.

37

21.15.

Laches.

37

21.16.

Waiver of Jury Trial.

37

21.17.

Permitted Contests.

37

21.18.

Construction of Lease.

38

21.19.

Counterparts.

38

21.20.

Relationship of Landlord and Tenant.

38

21.21.

Custody of Escrow Funds.

38

21.22.

Landlord’s Status as a REIT.

38

21.23.

Sale of Real Estate Assets.

39

21.24.

Rights of First Refusal

39

iv

MASTER AGREEMENT TO LEASE

THIS AGREEMENT dated as of the 30th day of August, 2013, to be effective as of
12:01 a.m. on the 1st day of September, 2013 by and between NHI-REIT OF
NORTHEAST, LLC, a Delaware limited liability company (“Landlord”), and NHC/OP,
L.P., a Delaware limited partnership, and NATIONAL HEALTHCARE CORPORATION, a
Delaware corporation ( collectively, the “Tenant”).

RECITALS

WHEREAS, National Health Investors, Inc., an affiliate of Landlord, pursuant to
that certain Settlement Agreement by and among Landlord, Tenant, the Office of
the Tennessee Attorney General and Report, and James A. Skinner, individually
and as President of Cumberland & Ohio Co. of Texas, has agreed to purchase
certain properties listed on Schedule A attached hereto which will be owned by
Landlord; and

WHEREAS, said properties are currently managed by Tenant or its affiliates
pursuant to management agreements with the prior owner; and

WHEREAS,  upon receiving title to said properties, Landlord has agreed to lease
to Tenant and Tenant has agreed to lease from Landlord said properties; and

NOW, THEREFORE, in consideration of the premises and of their respective
agreements and undertakings herein, Landlord and Tenant agree as follows:

  

ARTICLE I.  PREMISES AND TERM

1.1.

Premises.

  The property that is the subject of this Lease and that shall be considered as
leased by the Landlord to the Tenant thereunder shall consist of:

(a)

The land described in the Lease (“Land”) and on Schedule A hereto;

(b)

All buildings, structures, and other improvements, including without limitation
sidewalks, alleys, utility pipes, conduits, and lines, parking areas, and
roadways, now or hereafter situated upon the Land (“Improvements”);

(c)

All easements, rights and other appurtenances relating to the Land and
Improvements (“Appurtenances”);

(d)

All permanently affixed equipment, machinery, fixtures, and other items of real
property, including all components thereof, located in, 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 (but not
movable refrigerators), incineration, air and water pollution control, waste
disposal air-cooling and air-conditioning systems and apparatus, sprinkler
systems and fire and

theft protection equipment, and built-in oxygen and vacuum systems, 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, but specifically excluding items within the
category of “Tenant’s Property” defined in Section 13.1 hereof (collectively,
the “Fixtures”).

The Land, Improvements, Appurtenances and Fixtures are hereinafter collectively
referred to as the “Leased Property”.

1.2.

Term

.  To have and to hold, the term (the “Term”) of this Lease shall commence on
12:01 a.m. on September 1, 2013 (the “Commencement Date”). The term “Lease Year”
means each twelve (12) month period during the Term commencing on January 1 and
ending on December 31, except the first Lease Year shall be the period from the
Commencement Date through the following December 31, and the last Lease Year
shall end on the date of termination of the Lease if a day other than December
31.  The Term shall expire on the fifteenth anniversary of the Commencement
Date.    

1.3.

Holding Over

.  Should Tenant, without the express consent of Landlord, continue to hold and
occupy the Leased Property after the expiration of the Term, such holding over
beyond the Term and the acceptance or collection of Rent by the Landlord shall
operate and be construed as creating a tenancy from month-to-month and not for
any other term whatsoever.  During any such holdover period Tenant shall pay to
Landlord for each month Tenant remains in the Leased Property one hundred fifty
(150%) percent of the Base Rent in effect on the expiration date.  Said
month-to-month tenancy may be terminated by Landlord by giving Tenant ten (10)
days written notice, and at any time thereafter Landlord may re-enter and take
possession of the Leased Property.

1.4.

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) casualty, taking or other 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
broom clean, and in as good order and condition as of the Commencement Date.

1.5.

Collective Lease.

  This Lease constitutes one indivisible master lease of the Leased Property to
the Tenant, and not separate leases governed by similar terms.  The Leased
Property constitutes one economic unit, and the Base Rent and all other
provisions have been negotiated and agreed to based on a demise of all of the
Leased Property as a single, composite, inseparable transaction and would have
been substantially different had separate leases or a divisible lease been
intended.  Except as expressly provided herein for specific, isolated purposes
(and then only to the extent expressly otherwise stated), all provisions of this
Lease apply equally and uniformly to all the Leased Property as one unit.  An
Event of Default with respect to any of the Leased Property is an Event of
Default as to all of the 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 an 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 11
U.S.C. 365, this instrument, shall be one indivisible and non-severable lease

2

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.

ARTICLE II.
RENT

2.1.

Base Rent.

  Tenant shall pay Landlord base rent in the amount of Three Million Four
Hundred and Fifty Thousand Dollars ($3,450,000) (the “Base Rent”) for the Term
in consecutive monthly installments of Two Hundred Eighty-Seven Thousand Five
Hundred Dollars ($287,500) payable in advance on the Commencement Date and
thereafter on the first day of each month during the Term.  Rent shall be
prorated for the first monthly installment if the Commencement Date does not
fall on the first day of a month.  Notwithstanding the foregoing, Tenant shall
be entitled to the Rent Credit provided in Section 2.9.

2.2.

Additional Rent.

  In addition to Base Rent and Percentage Rent (as hereinafter defined in
Section 2.6), Tenant shall pay all other amounts, liabilities, obligations and
Impositions (as hereinafter defined) which Tenant assumes or agrees to pay under
this Agreement and any fine, penalty, interest, charge and cost which may be
added for nonpayment or late payment of such items (collectively the “Additional
Rent”).  

2.3.

Place(s) of Payment of Rent; Direct Payment of Additional Rent.

  The Base Rent, Additional Rent, and Percentage Rent are hereinafter referred
to as “Rent”.  Landlord shall have all legal, equitable and contractual rights,
powers and remedies provided either in this Agreement, or by statute or
otherwise in the case of nonpayment of the Rent.  Tenant shall make all payments
of Base Rent and of Percentage Rent at Landlord’s principal place of business or
as Landlord may otherwise from time to time direct in writing, and all payments
of Additional Rent directly to the person or persons to whom such amount is
owing at the time and times when such payments are due, and shall give to
Landlord such evidence of such direct payments as Landlord shall reasonably
request.

2.4.

Net Lease.

  This Lease shall be deemed and construed to be an “absolute net lease” or
“triple 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 or set-off.

2.5.

No Termination, Abatement, Etc.

  Except as otherwise specifically provided in this Agreement, Tenant shall
remain bound by this Agreement in accordance with its terms.  Except as
otherwise specifically provided in this Agreement, Tenant shall not, without the
prior written consent of Landlord modify, surrender or terminate the Agreement,
nor seek nor be entitled to any abatement, deduction, deferment or reduction of
Rent, or set-off against the Rent.  Except as specifically provided in this
Agreement, the obligations of Landlord and Tenant shall not be affected by
reason of (i) 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; (ii) 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 Agreement or any other agreement between

3

Landlord and Tenant, or to which Landlord and Tenant are parties; (iii) any
bankruptcy, insolvency, reorganization, composition, readjustment, liquidation,
dissolution, winding up or other proceeding affecting Landlord or any assignee
or transferee of Landlord; or (iv) 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 Agreement, and to the maximum extent permitted by law, Tenant hereby
specifically waives all rights, including but not limited to any rights under
any statute relating to rights of tenants in any state in which any Leased
Property is located, 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 Agreement or by termination of this
Agreement other than by reason of an Event of Default.  The Rent hereunder shall
not, under any circumstances, abate or be reduced.

2.6.

Percentage Rent.

  In addition to the Base Rent, with respect to each twelve-month period
beginning January 1, 2015, Tenant shall pay Landlord percentage rent
(“Percentage Rent”) in accordance with this Section 2.6 equal to four percent
(4%) of the amount by which the Gross Revenues (as defined in Section 2.6(a)) of
each Leased Property in the applicable twelve-month period exceeds the Gross
Revenues of each Leased Property during the twelve-month period from January 1,
2014 to December 31, 2014 (the “Base Year”).

(a)

“Gross Revenues” means all revenues received or receivable by the Tenant from or
by reason of Tenant’s operation of the Leased Property, or any other use by
Tenant of the Leased Property, as calculated in accordance with generally
accepted accounting principles, and as adjusted as set forth in this Section.
 Gross Revenues shall not include non-operating revenues such as interest income
or income from the sale of assets other than in the ordinary course of business.
 Gross Revenue shall also not include any prior period adjustments or revenue
related to any prior operator of the facilities (the “Facilities”) located on
the Leased Property.  Gross Revenues shall be adjusted by the following items:
 (i) contractual allowances (difference between customary charges and amounts
receivable based on contract) relating to any period during the Term of the
Lease; (ii) all proper patient billing credits and adjustments (including
adjustments for bad debts) according to generally accepted accounting principles
relating to health care accounting; and (iii) federal, state or local excise
taxes and any tax based upon or measured by said revenues which is added to or
made a part of the amount billed to the patient or other recipient of such
services or goods, whether included in the billing or stated separately.  To the
extent that all or a portion of a Leased Property is subleased by Tenant, Gross
Revenues shall be calculated for purposes of the Lease by including the rent
received or receivable by the Tenant if the space rental does not replace an
operating bed and is for not more than 10% of the square footage of the Leased
Property.  Otherwise, Gross Revenues shall be calculated by including the Gross
Revenues of such sublessees with respect to the subleased property, i.e., the
Gross Revenues generated from the operations conducted on such subleased portion
of the Leased Property shall be included directly in the Gross Revenues for the
purpose

4

of determining percentage rent payable under this Lease and the rent received or
receivable by Tenant under such subleases shall be excluded from Gross Revenues
for such purpose.  

(b)

On or before March 31, 2015, with respect to the twelve-month period ended
December 31, 2014 and on or before each following March 31 thereafter with
respect to each prior twelve-month period, Tenant shall deliver to Landlord a
notarized, sworn statement (the “Tenant’s Certification”) setting forth the
Gross Revenues for the prior twelve-month period.  Annually, a certificate from
a nationally reputable accounting firm satisfactory to Landlord shall be
delivered to Landlord which certificate shall state that, in the course of the
regular audit of Tenant’s financial statements, such firm has reviewed Tenant’s
calculations of the amount of Gross Revenues for each of the Leased Property as
set forth in Tenant’s Certification and that nothing has come to its attention
to make such firm believe the Tenant’s Certification is incorrect in any
material respect (and/or stating, if applicable, any proposed audit adjustments
with respect to Gross Revenue which Tenant elected not to record and set forth
in Tenant’s Certification).  In addition to the Tenant’s Certification and upon
the request of Landlord, Tenant shall deliver the following:  (i) any reports
sent to any reimbursement agency, including, but not limited to, Medicaid and
Medicare Cost Reports; (ii) copies of interim or final cost settlements with
Medicare authorities concerning Medicare receivables with a debit or credit
balance; (iii) patient census data by type of patient on a quarterly basis
within thirty (30) days after the end of each calendar quarter beginning July 1,
2013 as to the calendar quarter ending June 30, 2013; (iv) copies of changes in
rates for Medicare, Medicaid, private payor or any other provider paying for
patients in the Leased Property; and (v) Tenant’s calculation supporting any
estimated contractual allowances in the Financial Statements.

(c)

In each twelve-month period commencing January 1, 2015, Tenant shall for such
twelve-month period make anticipated payments of Percentage Rent monthly at the
time of paying installments of Base Rent, which payments shall be equal to
one-twelfth (1/12th) of the Percentage Rent determined for the preceding Lease
Year, subject to final determination and adjustment in payment by March 31 of
such year.  There shall be a final determination and adjustment in payment by 90
days after the final Lease Year or final partial Lease Year.

(d)

Landlord or its duly authorized representatives may, upon reasonable notice and
on any business day and during reasonable office hours, inspect Tenant’s records
of Gross Revenues, either at the Leased Property or elsewhere as reasonably
designated by Tenant, provided such inspection is made within twelve months
after a Tenant’s Certification is furnished to Landlord by Tenant.  Any claim by
Landlord for a revision of any Tenant’s Certification must be made in writing to
Tenant within twelve (12) months after the date such Tenant’s Certification is
furnished to Landlord; otherwise it shall be deemed waived by Landlord.  If
Landlord inspects Tenant’s records and such inspection shows an error(s) in the
Tenant’s Certification which results in an understatement of Gross Revenues of
five percent (5%) or more for any Leased Property, then in addition to paying
the additional Percentage Rent on demand, Tenant shall pay Landlord, on demand,
the reasonable cost of such inspection as Additional Rent.

2.7.

Late Charge.

2.8.

  Any payment not made by Tenant for more than ten (10) days after the due date
shall be subject to a late charge payable by tenant as Rent of three percent
(3%) of the amount of such overdue payment. Rent Credit.

  Notwithstanding any of the foregoing in this

5

Article, Tenant shall have an Eight Hundred Thousand Dollars ($800,000.00)
credit against the Rent.  No payment of Rent shall be owing hereunder until such
credit shall be exhausted.  The Landlord will maintain a register of all Rent
charged against such credit.  Except for manifest error, such register shall be
conclusive as to all amounts remaining under such credit.

2.8

Security Interest.  In order to secure payment of the Rent and all other amounts
due hereunder, Subtenant grants to Landlord a security interest in all now owned
or hereafter acquired furniture and equipment located at the Leased Property.
 Upon the occurrence of an Event of Default hereunder, Landlord shall have the
right to exercise any remedies available under the Uniform Commercial Code in
the state where the Leased Property is located.

ARTICLE III.
IMPOSITIONS AND UTILITIES

3.1.

Payment of Impositions.

  Subject to the adjustments set forth herein, Tenant shall pay, as Additional
Rent, all Impositions (as hereinafter defined) 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.  Tenant shall, upon
request from Landlord, promptly furnish to Landlord copies of official receipts
or other satisfactory proof evidencing such payments.  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 (as
hereinafter defined) shall have occurred hereunder and be continuing.  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 Section 10.8.  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 promptly reimburse Landlord for all personal property taxes paid
by Landlord upon 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 commences and terminates shall be adjusted and prorated
between Landlord and Tenant on a per diem basis, with Tenant being obligated to
pay its pro rata share from and including the Commencement Date to and including

6

the expiration or termination date of the Term, whether or not such Imposition
is imposed before or after such commencement or termination, and Tenant’s
obligation to pay its prorated share thereof shall survive such termination.
 Tenant shall also pay to Landlord a sum equal to the amount which Landlord may
be caused to pay of any privilege tax, sales tax, gross receipts tax, rent tax,
occupancy tax or like tax (excluding any tax based on net income), hereinafter
levied, assessed, or imposed by any federal, state, county or municipal
governmental authority, or any subdivision thereof, upon or measured by or rent
or other consideration required to be paid by Tenant under this Lease.

3.2.

Definition of Impositions.

  “Impositions” means, collectively, (i) taxes (including without limitation,
all real estate and personal property ad valorem (whether assessed as part of
the real estate or separately assessed as unsecured personal property, sales and
use, business or occupation, single business, gross receipts, transaction
privilege, rent or similar taxes, but not including income or franchise or
excise taxes payable with respect to Landlord’s receipt of Rent); (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 with 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) to the extent they may become a lien on the Leased Property
all taxes imposed on Tenant’s operations of the Leased Property including
without limitation, employee withholding taxes, income taxes and intangible
taxes; and (v) 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 (i) any tax based on net income (whether
denominated as a franchise or capital stock or other tax) imposed on Landlord;
or (ii) except as provided in Section 13.2, any tax imposed with respect to the
sale, exchange or other disposition by Landlord of any Leased Property or the
proceeds thereof; provided, however, that if any tax, assessment, tax levy or
charge which Tenant is obligated to pay pursuant to the first sentence of this
definition and which is in effect at any time during the Term hereof is totally
or partially repealed, and a tax, assessment, tax levy or charge set forth in
clause (i) or (ii) immediately above is levied, assessed or imposed expressly in
lieu thereof Tenant shall then pay such tax, levy, or charge set forth in said
clause (i) or (ii).

3.3.

Escrow of Impositions.

  If Landlord’s lender requires Landlord to escrow real property taxes or other
Impositions on a periodic basis during the Term, Tenant, on notice from Landlord
indicating this requirement, shall pay a sum of money toward its liability under
this Article to lender on a periodic basis in accordance with the lender’s
requirements.  Landlord shall escrow the payments received from Tenant in
accordance with the requirements of its lender, and shall furnish Tenant with a
copy of the lender’s requirements for escrow.  Further, if an Event of Default
occurs hereunder which is not cured within any applicable grace period, Tenant
shall thereafter, at Landlord’s election, deposit with Landlord on the first day
of each

7

month during the remaining Term hereof and any extended Term, a sum equal to
one-twelfth (1/12th) of the Impositions assessed against the Leased Property for
the preceding tax year, which sums shall be used by Landlord toward payment of
such Impositions.  If, at the end of any applicable tax year, any such funds
held by Landlord are insufficient to make full payment of taxes or other
Impositions for which such funds are held, 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.  If, however, at the end of
any applicable tax year, such funds held by Landlord are in excess of the total
payment required to satisfy taxes or other Impositions for which such funds are
held, Landlord shall apply such excess amounts to Tenant’s tax and Imposition
escrow fund for the next tax year.  If any such excess of funds occurs at the
end of the final Lease Year, and subject to Section 10.8 below, Landlord shall
promptly refund such excess amounts to Tenant.  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 hereunder and is not cured within any
applicable grace period, Tenant shall thereafter, at Landlord’s election,
deposit with Landlord on the first day of each month during the remaining Term,
a sum equal to one-twelfth (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.  If, at any time during the Lease Year, such funds held by Landlord
are insufficient to cover monthly, annual, or other periodic charges for
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.  If, at any time during the Lease Year, such funds held
by Landlord are in excess of the total monthly, annual or other periodic payment
necessary to satisfy utility costs, such excess amounts shall be applied to
Tenant’s escrow fund for the next payment of such utilities.  If any such excess
exists following the expiration or earlier termination of the Lease and after
all utility bills and accounts have been settled, Landlord shall, subject to
Section 10.8 below, promptly refund such amounts to Tenant.  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.

8

ARTICLE IV.
INSURANCE

4.1.

Property Insurance.

  Tenant shall, at Tenant’s expense, keep the Improvements, Fixtures, and other
components of the Leased Property insured against the following risks:

(a)

Loss or damage by fire, vandalism and malicious mischief, sprinkler leakage and
all other physical loss perils commonly covered by “All Risk” insurance in an
amount not less than one hundred percent (100%) of the then full replacement
cost thereof (as hereinafter defined).  Such policy shall include an agreed
amount endorsement if available at a reasonable cost.  Such policy shall also
include endorsements for contingent liability for operation of building laws,
demolition costs, and increased cost of construction.

(b)

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)

Loss of rent under a rental value insurance policy covering risk of loss during
the first nine (9) months of reconstruction necessitated by the occurrence of
any hazards described in Sections 4.1(a) or 4.1(b) above, in an amount
sufficient to prevent Landlord or Tenant from becoming a co-insurer, containing
endorsements for extended period of indemnity and premium adjustment, and
written with an agreed amount clause, if the insurance provided for in this
clause (c) is available at a reasonable cost.

(d)

If the Land is located in whole or in part within a designated flood plain area,
loss or damage caused by flood in commercially reasonable amounts acceptable to
Landlord.

(e)

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 the Landlord.

4.2.

Liability Insurance.

  Tenant shall, at Tenant’s expense, maintain liability insurance against the
following:

(a)

Claims for personal injury or property damage commonly covered by comprehensive
general liability insurance, including but not limited to medical
malpractice/professional liability insurance, and containing customary
endorsements for nursing home operations, blanket contractual, personal injury,
owner’s protective liability, real property fire damage legal liability,
voluntary medical payments, products and completed operations, broad form
property damage, and extended bodily injury, with commercially reasonable
amounts for bodily injury, property damage, malpractice/professional liability
and voluntary medical payments acceptable to Landlord, but with a combined
single limit of not less than One Million Dollars ($1,000,000.00) per
occurrence, Three Million Dollars ($3,000,000.00) per location. If malpractice
insurance coverage is unavailable generally or is unreasonably expensive,
Landlord and Tenant will consult in good faith regarding an alternative.

9

(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 One Million Dollars ($1,000,000.00) per occurrence, Three
Million Dollars ($3,000,000.00) aggregate.

(c)

Claims commonly covered by worker’s compensation insurance for all persons
employed by Tenant on the Leased Property.  Such worker’s compensation insurance
shall be in accordance with the requirements of all applicable local, state, and
federal law.

4.3.

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 XII or larger (unless provided by a Captive) and
shall be authorized to do insurance business in the state in which the Leased
Property is located.

(c)

Tenant shall be the “named insured” and Landlord shall be an “additional named
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 cancelled or not renewed, and no material change or reduction
in coverage may be made, without at least thirty (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 will not invalidate
the Landlord’s coverage, and provide that Landlord shall not be responsible for
payment of premiums.

(f)

All loss adjustment shall require the written consent of Landlord and Tenant, as
their interests may appear.

(g)

At least thirty (30) days prior to the expiration of each policy, Tenant shall
deliver to Landlord a certificate showing renewal of such policy and payment of
the annual premium therefor.

4.4.

Replacement Cost.

  The term “full replacement cost” means the actual replacement cost thereof
from time to time including increased cost of construction, with no reductions
or deductions.  Tenant shall, not later than thirty (30) days after the
anniversary of each Lease Year of the Term, increase the amount of the
replacement cost endorsement for the Improvements.  If Tenant makes any
Permitted Alterations (as hereinafter defined) to the Leased Property, Landlord
may have such full replacement cost redetermined at any time after such
Permitted Alterations are made, regardless of when the full replacement cost was
last determined.

10

4.5.

Blanket Policy.

  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 Agreement.

4.6.

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 named insureds or loss payees, the loss is
payable under said insurance in the same manner as losses are payable under this
Agreement, 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.  The
term “mortgages” as used in this Agreement includes Deeds of Trust and the term
“mortgagees” includes trustees and beneficiaries under a Deed of Trust.

4.7.

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 or any extension
or renewal thereof, 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.

4.8.

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 mortgage 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
obtain such other coverages and provide such other information and documents as
may be reasonably required by the mortgagee.

4.9.

Escrows.

  If Landlord’s lender requires the Landlord to escrow insurance premiums on a
periodic basis, or if an Event of Default occurs hereunder, Tenant, after notice
from Landlord, shall make such periodic payments in accordance with the lender’s
or Landlord’s requirements.

4.10.

Cooperation with Mortgage Financing.

  In addition to that which is provided in this Lease, in the event Landlord
determines to obtain mortgage financing in favor of the Landlord for any of the
Leased Property, Tenant shall cooperate (but only to the extent such

11

cooperation would not change the accounting treatment of the lease as an
operating lease) with Landlord, at the expense of Landlord, in Landlord’s
efforts to finance any of the Leased Property with such mortgage loan financing,
which may be from or sponsored by the United States Department of Housing and
Urban Development (a “HUD Loan”) or any other government agency or mortgage
lender and comply with any requirements of such lender. Any mortgage loan
financing on Leased Property, whether a HUD Loan or a loan made by any other
government agency or other mortgage lender is hereinafter referred to
collectively as a “Landlord Financing”.  In this regard Tenant will (i) execute
and comply with the requirements of any regulatory agreements required in
connection with a HUD Loan or any other similar agreement if not a HUD Loan;
 (ii) execute and comply with a security agreement, assignment of lease, and a
deposit account control agreement granting any required liens to such financing
entity on personal property (including accounts receivable, licenses, permits,
contract rights, furniture, fixtures, equipment, and deposit accounts) located
at any of the Leased Properties or arising from the operations at any of the
Leased Properties (iii)  execute and comply with tenant estoppel agreements and
subordination and attornment agreements as customary and required in connection
with any such Landlord Financing; (iv) execute any further amendment to this
Lease or Tenant’s organizational documents as may be  required by any  Landlord
Financing; and (v) do any and all other things as may reasonably be required in
connection with the Landlord Financing.  If any of Tenant’s personal property
(including, but not limited to, accounts receivable) is foreclosed upon in
connection with a Landlord Financing and the foreclosure is due to a default
caused by Landlord (and not due to a cross default to a Tenant default or a
pass-through of a Tenant default, e.g. a failure by Tenant to pay rent to
Landlord which causes Landlord to fail to pay the note payment) then Landlord
shall reimburse Tenant for any losses of Tenant which exceed the threshold
amount of Fifteen Million Dollars ($15,000,000).

4.11.

4.11 Captive Insurance Company.

  Landlord consents to Tenant insuring the coverage required by this Article
through pure captives ( collectively, the “Captive”) owned by the principals of
Tenant or National HealthCare Corporation, which may not meet the Best’s rating
requirement set forth in Section 4.3, provided that (a) the Captive will be
licensed in the states where the Land is located to the extent required by law,
(b) the organization, capitalization, and reserves of the Captive is and shall
at all times remain reasonably acceptable to Landlord, and (c) the insurance
coverages otherwise comply with this Lease.   Tenant will cause the Captive to,
within forty-five (45) days after the end of each calendar quarter, deliver
reports detailing the “total loss pick” with a breakdown between claims incurred
and reported and claims incurred but not yet reported, and further detailing and
indicating the amount to be reserved at the then current “total loss pick” with
a reasonably detailed explanation of how such reserved amount was calculated and
determined.  Tenant shall include therein a certification that the Tenant is
recording general and professional liability costs, on a monthly basis, in a
manner consistent with the most recent actuarial valuations.   Within three (3)
Business Days following Tenant’s receipt thereof, if and to the extent relating
to the Leased Property, true, correct and complete copies of all professional
negligence, malpractice and/or general liability actuarial studies, reports
and/or analyses prepared from time to time for Tenant.   Notwithstanding the
foregoing, Tenant and Landlord agree that if Landlord seeks Landlord Financing
on any or all of the Leased Properties wherein the lender requires that any
insurance will be obtained from a third-party insurer meeting lender
specifications that Tenant will obtain such coverage.  Provided however, a
condition to such Landlord Financing is that Tenant be able to obtain a waiver
from any lender requirement that Tenant must obtain similar coverage for any
other Leased Properties

12

which are not part of such Landlord Financing.  Provided further, Tenant shall
use reasonable best efforts to obtain such waiver, including, but not limited
to, pursuing any available appeals process.  

ARTICLE V.
INDEMNITY; HAZARDOUS SUBSTANCES

5.1.

Tenant’s Indemnification.

  Subject to Section 4.7, Tenant hereby agrees to indemnify and hold harmless
Landlord, its agents, and employees 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, attorneys’ fees, court costs, and the
costs set forth in Section 10.6) incurred in connection with or arising from:
(i) the use or occupancy of each 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 Agreement or any
law, ordinance, or governmental requirement of any kind; and (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 under the express or implied invitation of Tenant.  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.

5.2.

Hazardous Substances or Materials.

  Tenant shall not, either with or without negligence, injure, overload, deface,
damage or otherwise harm any Leased Property or any part or component thereof;
commit any nuisance; permit the emission of any hazardous agents or substances;
allow the release or other escape of any biologically or chemically active or
other hazardous substances or materials so as to impregnate, impair or in any
manner affect, even temporarily, any element or part of any Leased Property, or
allow the storage or use of such substances or materials in any manner not
sanctioned by law or by the highest standards prevailing in the industry for the
storage and use of such substances or materials; nor shall Tenant bring onto any
Leased Property any such materials or substances; permit the occurrence of
objectionable noise or odors; or make, allow or suffer any waste whatsoever to
any Leased Property.  Landlord may inspect the Leased Property from time to
time, and Tenant will cooperate with such inspections.  Without limitation,
“hazardous substances” for the purposes of this Section 5.2 shall include such
substances described in the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, 42 U.S.C. 9601 et seq. and the
regulations adopted thereunder, and hazardous materials shall include such
materials as are described in the Resource Conservation and Recovery Act, as
amended, 42 U.S.C. 6901 et seq.; and hazardous substances or hazardous materials
shall also include any substance or material described in any applicable statute
of any state in which any of the Leased Property is located, and in any
regulations adopted under any of these acts.  Upon request by Landlord, Tenant
shall submit to Landlord quarterly reports regarding Tenant’s use, storage, and
disposal of any of the foregoing materials, said reports to include information
regarding continued hazardous materials

13

inspections, personal interviews, and federal, state and local agency listings.
 In addition, Tenant shall execute affidavits, representations and the like from
time to time at Landlord’s request concerning Tenant’s best knowledge and belief
regarding the presence or absence of hazardous materials on the Leased Property.
 In all events, Tenant shall indemnify Landlord and all mortgagees of any Leased
Property from any release of hazardous materials on the Leased Property
occurring while Tenant is in possession, all costs and expenses and claims
arising from the release of, or discovery of the existence of, or need to clean
up or remove, or arising from any prior release or removal of any hazardous
substances or materials on or from any Leased Property, whether such release,
discovery or removal occurs during the Term or occurred prior to the
commencement of the Term.  (At the request of Landlord, Tenant will from time to
time confirm such indemnity to mortgagees directly with such mortgagees.)

5.3.

Limitation of Landlord’s Liability.

  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 any 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 the presence or release of any hazardous substance or material
on or from the Leased Property or from any other cause beyond Landlord’s
control.

ARTICLE VI.
USE AND ACCEPTANCE OF PREMISES

6.1.

Use of Leased Property.

  Tenant shall use and occupy each Leased Property exclusively as a nursing
home, healthcare facility or other purpose for which the Leased Property is
being used at the Commencement Date of the Term, and for no other purpose
without the prior written consent of the Landlord, which consent will not be
unreasonably withheld.  Tenant shall obtain and maintain all permits, licenses
or accreditations (collectively the “Licenses”), approvals, and consents needed
to use and operate each Leased Property for such purposes.  Tenant shall
promptly 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.

6.2.

Acceptance of Leased Property.

  Except as otherwise specifically provided in this Agreement or in any
individual Lease, 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) delivery of the Leased Property to Tenant
is 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,
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,

14

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, 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 local
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 after notice to
Tenant to examine the condition thereof.

6.4.

Financial Statements.

  Within one hundred twenty (120) days after the end of each fiscal year, Tenant
shall deliver to Landlord audited consolidated financial statements of Tenant
and the Captive, certified by a nationally recognized accounting firm.  The
financial statements shall include a complete schedule of contingent liabilities
and transactions with Affiliates.  Within forty-five (45) days after the end of
each calendar quarter, Tenant shall deliver to Landlord unaudited profit and
loss statements.  

ARTICLE VII.
REPAIRS, COMPLIANCE WITH LAWS, AND MECHANICS’ LIENS

7.1.

Maintenance.

  Tenant shall maintain, repair, and replace each Leased Property, including
without limitation, all structural and nonstructural repairs and replacements to
the roof, foundations, exterior walls, building systems, HVAC systems, 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 permit Landlord to
inspect the Leased Property at all reasonable times, and shall implement all
reasonable suggestions of the Landlord as to the maintenance and replacement of
the Leased Property.

7.2.

Compliance With Laws.

  Tenant shall comply with all laws, ordinances, orders, rules, regulations, and
other governmental requirements relating to the use, condition, or occupancy of
each Leased Property, including without limitation, (i) licensure requirements
for operation as a nursing home or medical facility, (ii) certification
requirements needed to obtain reimbursement under the Medicare and state
Medicaid programs unless Tenant, after notice to Landlord, determines to
discontinue participation in such programs; (iii) requirements of the board of
fire insurance underwriters or insurance service office or any other similar
body having jurisdiction over the Leased Property, and (iv) all zoning and
building codes and Environmental Laws.  At Landlord’s request, from time to
time, Tenant shall deliver to Landlord copies of certificates or permits
evidencing compliance with such laws, including without limitation,

15

copies of the nursing home or health care facility license, provider agreements,
certificates of occupancy and building permits.  Tenant hereby agrees to defend,
indemnify and hold Landlord harmless from and against any loss, liability
(including strict liability), claim, damage (including consequential damages),
cost and expense (including attorneys’ fees) resulting from any failure by
Tenant to comply with any laws, ordinances, rules, regulations, and other
governmental requirements.

7.3.

Required Alterations.

  Tenant shall, at Tenant’s sole cost and expense, make any additions, changes,
improvements or alterations to each Leased Property, including structural
alterations, which may be required by any governmental authorities, including
those required to continue certification under the Medicare and Medicaid
programs (unless Tenant has elected not to participate in such programs),
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 whatever.  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 Section 8.2.

7.4.

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 immediately
remove, bond-off, or otherwise obtain the release of any mechanic’s lien filed
against the Leased Property.  Tenant shall pay all expenses in connection
therewith, including without limitation, damages, interest, court costs and
reasonable attorneys’ fees.

7.5.

Replacements of Fixtures.

  Tenant shall not remove Fixtures from any Leased Property except to replace
the Fixtures by other similar items of equal quality and value.  Items being
replaced by Tenant 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 the Fixtures and replacements therefor.  Tenant
may finance replacements for the Fixtures by equipment lease or by a security
agreement and financing statement; provided, however, that for any item of
Fixtures or Personal Property having a cost greater than or equal to Ten
Thousand Dollars ($10,000.00), Tenant may not finance replacements by security
agreement or equipment lease unless (i) Landlord has consented to the terms and
conditions of the equipment lease or security agreement; (ii) the equipment
lessor or lender has entered into a nondisturbance agreement with Landlord upon
terms and conditions 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 by Tenant 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; and (iii) Tenant shall,
within thirty (30) days after receipt of an invoice from Landlord, reimburse
Landlord for all costs and expenses incurred in reviewing and approving the
equipment lease,

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security agreement, and nondisturbance agreement, including without limitation,
reasonable attorneys’ fees and costs.

ARTICLE VIII.
ALTERATIONS AND SIGNS

8.1.

Prohibition on Alterations and Improvements.

  Except for (i) alterations required by Section 7.3; (ii) replacements of
Fixtures provided for in Section 7.5; and (iii) alterations at any Leased
Property having an aggregate cost of less than One Hundred Fifty Thousand
Dollars ($150,000.00) in any Lease Year, Tenant shall not make any structural or
nonstructural changes, alterations, additions and/or improvements (hereinafter
collectively referred to as “Alterations”) to the Leased Property without the
prior written consent of Landlord which consent will not be unreasonably
withheld.  If Tenant desires to perform any 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 the Alterations that Tenant desires to perform.  Landlord agrees not to
unreasonably delay its review of the Plans and Specifications.  Tenant shall
comply with the requirements of Section 8.2 in making any Alterations approved
by Landlord (the “Permitted Alterations”).

8.2.

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 approved Plans
and Specifications.

(b)

The Permitted Alterations and the installation thereof shall comply with all
applicable legal requirements and insurance requirements.

(c)

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.

(d)

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
named insureds of such policy.  Landlord shall have the right to approve the
form and substance of such policy, which approval shall not be unreasonably
withheld or delayed.

(f)

Tenant shall pay the premiums required to increase the amount of the insurance
coverages required by Article IV to reflect the increased value of the
Improvements

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resulting from installation of the Permitted Alterations, and shall deliver to
Landlord a certificate evidencing the increase in coverage.

(g)

If the alterations are structural or additions, Tenant shall, not later than
sixty (60) days after completion of the Permitted Alterations, deliver to
Landlord a certificate of substantial completion, certified by Tenant’s
architect or engineer, in the form of AIA-G704, or in any other form reasonably
satisfactory to Landlord.

(h)

Tenant shall not later than thirty (30) days after completion of the Permitted
Alterations, reimburse Landlord for any costs and expenses, including attorneys’
fees and architects’ and engineers’ fees, reasonably incurred in connection with
reviewing and approving the Permitted Alterations and ensuring Tenant’s
compliance with the requirements of this Section.

8.3.

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
Agreement and the Lease.  Tenant shall not be required or permitted to remove
any Permitted Alterations.

8.4.

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 occurrence of an Event of Default or the termination or
expiration of this Lease, Tenant shall, within thirty (30) days after notice
from Landlord, remove the signs and restore the Leased Property to its original
condition.

ARTICLE IX.
CAPITAL EXPENDITURES

9.1.

Minimum Capital Expenditures.

  Each year, Tenant agrees that Tenant will incur expenditures (“Capital
Expenditures”) at each Leased Property in the amount of Five Hundred Dollars
($500) per licensed bed (the “Targeted Expenditure Amount”) on an aggregate
basis, which expenditures are either (a) accounted for as capitalized
expenditures under generally accepted accounting principles and in accordance
with Tenant’s capitalization policy or (b) made for capital equipment at the
Leased Property.  With respect to the final calendar year during which this
Lease expires or is terminated, Tenant shall pay to Landlord any shortage in
required Capital Expenditures based upon the Targeted Expenditure Amount;
provided, however, the Targeted Expenditure Amount shall be prorated on a daily
basis for any period of less than a full calendar year.  The Targeted
Expenditure Amount shall also be prorated on a daily basis for the first year
this Section applies.  Notwithstanding any provision contained herein to the
contrary, Tenant may incur amounts in any calendar year in excess of the
Targeted Expenditure Amount and the excess shall be credited in reduction of the
Targeted Expenditure Amount measured on a rolling three (3) year basis;
compliance shall be measured on a rolling three (3) year basis.

9.2.

Capital Expenditure Compliance Certificate.

  Within ninety-five (95) days after the end of each Calendar Year, Tenant shall
furnish to Landlord a certificate of compliance certified by an officer of
Tenant stating with respect to the Leased Property (i) the amount of Capital
Expenditures made at the Leased Property during the prior year, and after the
third

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anniversary of this Lease, (ii) whether the Targeted Expenditure Amount has been
met for the prior three years. Tenant shall provide to Landlord copies of
invoices, cancelled checks or other reasonable supporting documentation for the
Capital Expenditures and reflected in each such annual certificate of
compliance.

ARTICLE X.
DEFAULTS AND REMEDIES

10.1.

Events of Default.

  The occurrence of any one or more of the following shall be an event of
default (“Event of Default”) hereunder:

(a)

Tenant fails to pay in full any installment of Rent, or any other monetary
obligation payable by Tenant to Landlord under this Lease, within ten (10)
business days after notice of nonpayment from Landlord.

(b)

Landlord gives three (3) or more notices of nonpayment of Rent to Tenant in any
Lease Year; provided, however, that such shall not be an Event of Default if
Landlord fails to exercise its remedies under Section 10.2 within sixty (60)
days after the last of such notices.  Notice of the same default with respect to
more than one Lease or Leased Property shall constitute only one notice for
purposes of this Section 10.1(b).

(c)

Tenant fails to observe and perform any other covenant, condition or agreement
under this Agreement (except those described in Section 10.1(a) and 10.1(b) of
this Agreement) and (i) such failure continues for a period of thirty (30) days
after written notice thereof is given to Tenant by Landlord; or (ii) if, by
reason of the nature of such default, the same cannot be remedied within said
thirty (30) days, Tenant fails to proceed with reasonable diligence
(satisfactory to Landlord) after receipt of the notice to cure the same.

(d)

Tenant ceases operations at any Leased Property for a period in excess of
one-hundred eighty (180) days during the Term except pursuant to damage
described in Section 11.5 or condemnation pursuant to Article XII (other than
Section 12.2) of this Agreement.

(e)

(i) The filing by Tenant of a petition under 11 U.S.C. or the commencement of a
bankruptcy or similar proceeding by Tenant; (ii) the failure by Tenant within
ninety (90) days to dismiss an involuntary bankruptcy petition or other
commencement of a bankruptcy, reorganization or similar proceeding against
Tenant, 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 11 U.S.C. in respect of
Tenant; (iv) any assignment by Tenant for the benefit of its creditors; (v) the
entry by Tenant into an agreement of composition with its creditors; (vi) the
approval by a court of competent jurisdiction of a petition applicable to Tenant
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
(provided such receiver shall not have been removed or discharged within sixty
(60) days of the date of his qualification).

(f)

 (i) any administrator, custodian, trustee or other legally authorized person
takes possession or control of any Leased Property or part thereof and continues
in possession

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for ninety (90) days; (ii) any writ against any of the Leased Property is not
released or bonded off within ninety (90) days; (iii) any judgment is rendered
or proceedings are instituted against any Leased Property or Tenant which affect
any Leased Property or any part thereof (other than a condemnation proceeding)
which is not dismissed for ninety (90) days (except as otherwise provided in
this Section); (iv) all or a substantial part of the assets of Tenant 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 and is not dismissed within sixty (60) days; (v) Tenant
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 from conducting all or a substantial part of its business or
affairs and is not dismissed within sixty (60) days; or (vi) except as permitted
by Section 18.18, a notice of lien, levy or assessment is filed of record with
respect to all or any part of the property of Tenant and is not dismissed or
bonded off within sixty (60) days.

(g)

The occurrence of an Event of Default under that certain Master Agreement of
Lease dated October 17, 1991, between Landlord and National Healthcorp, L.P., as
amended and assigned from time to time.

10.2.

Remedies.

  Landlord may exercise any one or more of the following remedies upon the
occurrence of an Event of Default:

(a)

Landlord may terminate the applicable Lease, exclude Tenant from possession of
the Leased Property and use reasonable efforts to lease the Leased Property to
others.  If this Agreement is terminated pursuant to the provisions of this
subparagraph (a), Tenant will remain liable to Landlord for damages in an amount
equal to the Rent and other sums which would have been owing by Tenant under the
Lease for the balance of the Term if the Lease had not been terminated, less the
net proceeds, if any, of any re-letting of the Leased Property by Landlord
subsequent to such termination, after deducting all Landlord’s expenses in
connection with such reletting, including without limitation, the expenses set
forth in Section 10.2(b)(2) below.  Landlord will be entitled to collect such
damages from Tenant monthly on the days on which the Rent and other amounts
would have been payable under the Lease if the Lease had not been terminated and
Landlord will be entitled to receive such damages from Tenant on each such day.
 Alternatively, at the option of Landlord, if the Lease is terminated, Landlord
will be entitled to recover from Tenant (A) the worth at the time of award of
the unpaid Rent which had been earned at the time of termination; (B) the worth
at the time of award of the amount by which the unpaid Rent which would have
been earned after termination until the time of the award exceeds the amount of
such Rent loss that Tenant proves could reasonably have been avoided; (C) the
worth at the time of award of the amount by which the unpaid Rent for the
balance of the Term of the Lease after the time of award exceeds the amount of
such Rent loss that Tenant proves could reasonably be avoided; and (D) any other
amount necessary to compensate Landlord for all the detriment proximately caused
by Tenant’s failure to perform its obligations under the Lease or which in the
ordinary course of things would be likely to result from such failure.  The
“worth at the time of award” of the amount referred to in clauses (A) and (B) is
computed at “present value” using New York Prime Rate.  For purposes of this
Agreement, “New York Prime Rate” shall mean that rate of interest identified as
prime or national prime by the Wall Street Journal, or if not published or
found, then the rate of interest charged by the American bank with the greatest
number of assets on ninety (90) day unsecured

20

notes to its preferred customers.  The worth at the time of award of the amount
referred to in clause (C) is computed by discounting such amount at the discount
rate of the Federal Reserve Bank of New York at the time of award.  For the
purpose of determining unpaid Rent under clause (C), the Rent reserved in the
Lease will be deemed to be the sum of the following: (i) the Base Rent computed
pursuant to Section 2.1; (ii) the Additional Rent pursuant to Section 2.2(b)
based upon the amount of such Additional Rent for the month preceding the date
of termination; and (iii) the Percentage Rent pursuant to Section 2.6 based upon
the amount of the annualized Gross Revenues for the then Lease Year increased by
three percent (3%) per annum, to the date on which the Lease would have expired
if Landlord had not terminated the Lease, but not to exceed the product of one
(1%) percent of the initial Base Rent multiplied by the number of years since
2014.

(b)

(1)  Without demand or notice, Landlord may re-enter and take possession of the
Leased Property or any part of the Leased Property; and repossess the Leased
Property as of the Landlord’s former estate; and expel the Tenant and those
claiming through or under Tenant from the Leased Property; and, remove the
effects of both or either, without being deemed guilty of any manner of trespass
and without prejudice to any remedies for arrears of Rent or preceding breach of
covenants or conditions.  If Landlord elects to re-enter, as provided in this
paragraph (b) or if Landlord takes possession of the Leased Property pursuant to
legal proceedings or pursuant to any notice provided by law, Landlord may, from
time to time, without terminating this Lease, re-let the Leased Property or any
part of the Leased Property, either alone or in conjunction with other portions
of the Improvements of which the Leased Property are a part, in Landlord’s name
but for the account of Tenant, for such term or terms (which may be greater or
less than the period which would otherwise have constituted the balance of the
Term of this Lease) and on such terms and conditions (which may include
concessions of free rent, and the alteration and repair of the Leased Property)
as Landlord, in its uncontrolled discretion, may determine.  Landlord may
collect and receive the Rents for the Leased Property.  Landlord will not be
responsible or liable for any failure to re-let the Leased Property, or any part
of the Leased Property, or for any failure to collect any Rent due upon such
re-letting.  No such re-entry or taking Possession of the Leased Property by
Landlord will be construed as an election on Landlord’s part to terminate this
Lease unless a written notice of such intention is given to Tenant.  No notice
from Landlord under this Lease or under a forcible entry and detainer statute or
similar law will constitute an election by Landlord to terminate this Lease
unless such notice specifically says so.  Landlord reserves the right following
any such re-entry or re-letting, or both, to exercise its right to terminate
this Lease by giving Tenant such written notice, and, in that event the Lease
will terminate as specified in such notice.

(2)  If Landlord elects to take possession of the Leased Property according to
this subparagraph (b) without terminating the Lease, Tenant will pay Landlord
(i) the Rent and other sums which would be payable under the Lease if such
repossession had not occurred, less (ii) the net proceeds, if any, of any
re-letting of the Leased Property after deducting all of Landlord’s expenses
incurred in connection with such re-letting, including without limitation, all
repossession costs, brokerage commissions, legal expenses, attorneys’ fees,
expenses of employees, alteration, remodeling, repair costs, and expenses of
preparation for such re-letting.  If, in connection with any reletting, the new
Lease term extends beyond the currently existing Term or the Leased Property
covered by such re-letting include areas which are not part of the Leased
Property, a fair apportionment of the Rent received from such re-letting and the
expenses

21

incurred in connection with such re-letting will be made in determining the net
proceeds received from such re-letting.  In addition, in determining the net
proceeds from such re-letting, any rent concessions will be apportioned over the
term of the new Lease.  Tenant will pay such amounts to Landlord monthly on the
days on which the Rent and all other amounts owing under this Agreement or the
Lease would have been payable if possession had not been retaken, and Landlord
will be entitled to receive the rent and other amounts from Tenant on each such
day.

(c)

Landlord may re-enter the Leased Property and have, repossess and enjoy the
Leased Property as if the 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.

(d)

Upon the occurrence of any Event of Default under Section 10.1(a) involving a
nonpayment, Tenant shall immediately sell, transfer and convey to Landlord or
Landlord’s designee, and Landlord or Landlord’s designee, in its discretion,
shall purchase the remaining usable consumable supplies, including food, drugs,
medicine, materials and other supplies (the “Inventory”) and the usable
equipment, machinery, furnishings, furniture, trade fixtures, appliances and
other items of personal property (“FF&E”) necessary, appropriate or required for
the operation and occupancy of each facility (a “Facility”) located on the
Leased Property for an amount equal to the fair market value of such property as
mutually agreed on between Landlord and Tenant. If Landlord and Tenant cannot
mutually agree on the fair market value of such property then the fair market
value shall be determined by the Landlord and Tenant each appointing an
appraiser.  If the two appraisers cannot agree on the fair market value, then
they shall appoint a third appraiser whose decision shall be final as to the
fair market value.  Provided however, seven days worth of Inventory (as
determined in the reasonable discretion of Tenant) shall be conveyed to Landlord
at no cost.

(e)

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.

(f)

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 the 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.

10.3.

Right of Set-Off.

  Landlord may, and is hereby authorized by Tenant, at any time and from time to
time, after advance notice to Tenant, to set-off 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 under this Agreement and
against any claims by Landlord against Tenant, 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.

10.4.

Performance of Tenant’s Covenants.

  Landlord may perform any obligation of Tenant which Tenant has failed to
perform within two (2) days after Landlord has sent a written notice to Tenant
informing it of its specific failure.  Tenant shall reimburse Landlord on
demand,

22

as Additional Rent, for any expenditures thus incurred by Landlord and shall pay
interest thereon at the overdue Rate (as hereinafter defined).

10.5.

[Intentionally Deleted]  

10.6.

Litigation; Attorneys’ Fees.

  Within ten (10) days after Tenant has knowledge of any litigation or other
proceeding that may be instituted against Tenant, against the Leased Property to
secure or recover possession thereof, or that may affect the title to or the
interest of Landlord in the Leased Property, Tenant shall give written notice
thereof to Landlord.  Tenant shall pay all reasonable costs and expenses
incurred by Landlord in enforcing or preserving Landlord’s rights under this
Agreement and each Lease, whether or not an Event of Default has actually
occurred or has been declared and thereafter cured, including without
limitation, (i) the fees, expenses, and costs of any litigation, receivership,
administrative, bankruptcy, insolvency or other similar proceeding; (ii)
reasonable attorney, paralegal, consulting and witness fees and disbursements;
and (iii) 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 other
similar proceedings and attendance at hearings, depositions, and trials in
connection therewith.  All such costs, charges and fees as incurred shall be
deemed to be Additional Rent under this Lease.

10.7.

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.

10.8.

Escrows and Application of Payments.

  As security for the performance of its obligations hereunder Tenant hereby
assigns to Landlord all its right, title, and interest in and to all monies
escrowed with Landlord under this Agreement 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
Agreement during the existence, or continuance of an Event of Default shall be
applied to Tenant’s obligations in the order which Landlord may determine.

10.9.

Power of Attorney.

  Tenant hereby irrevocably and unconditionally appoints Landlord, or Landlord’s
authorized officer, agent, employee or designee, as Tenant’s true and lawful
attorney-in-fact, to act, after an Event of Default, for Tenant in Tenant’s
name, place, and stead, and for Tenant’s and Landlord’s use and benefit, to
execute, deliver and file all applications and any and all other necessary
documents or things, to effect a transfer, reinstatement, renewal and/or
extension of any and all Licenses and other governmental authorizations issued
to Tenant in connection with Tenant’s operation of the Leased Property, and to
do any and all other acts incidental to any of the foregoing.  Tenant
irrevocably and unconditionally grants to Landlord as its 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 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 the full performance of the Tenant’s obligations under
this Agreement and each Lease.

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ARTICLE XI.
DAMAGE AND DESTRUCTION

11.1.

General.

  Tenant shall notify Landlord if any of the Leased Property is damaged or
destroyed by reason of fire or any other cause.  Tenant shall promptly repair,
rebuild, or restore the 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, complete and detailed plans and specifications for such
repairs or rebuilding.  Promptly after receiving Landlord’s approval of the
plans and specifications, 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 attorneys’ fees.  Payments
will be made against properly certified vouchers of a competent architect in
charge of the work and approved by Landlord.  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 ten
percent (10%) from each payment until the work of repairing or rebuilding 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 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.

11.2.

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

24

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 IV, will be applicable to any repairs or
rebuilding under this Section.

11.3.

Landlord’s Costs.

  Tenant shall, within thirty (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; provided, however, that Landlord will consult with Tenant and notify
Tenant of the estimated amount of such expenses.  

11.4.

Substantial Damage During Lease Term.

  Provided Tenant has fully complied with Section 4.1 hereof (including actually
maintaining in effect rental value insurance provided for in clause (c)
thereof), if, at any time during the Term of the Lease, the Leased Property is
so damaged by fire or otherwise that more than fifty (50%) percent of the
licensed nursing home beds at the Leased Property are rendered unusable, Tenant
may, within thirty (30) days after such damage, give notice of its election to
terminate the Lease subject to the particular Leased Property and, subject to
the further provisions of this Section, such Lease will cease on the tenth
(l0th) day after the delivery of such notice.  If the Lease is so terminated,
Tenant will have no obligation to repair, rebuild or replace the Leased
Property, and the entire insurance proceeds will belong to Landlord.  If the
Lease is not so terminated, Tenant shall rebuild the Leased Property in
accordance with Section 11.1.

ARTICLE XII.
CONDEMNATION

12.1.

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”), an entire
Leased Property that is the subject of this Agreement is taken, or so much of
the Leased Property is taken that the Leased Property cannot be used by Tenant
for the purposes for which it was used immediately before the Taking, then the
Lease will terminate on the earlier of the vesting of title to the Leased
Property in the condemning authority or the taking of possession of the Leased
Property by the condemning authority.  All damages awarded for such Taking under
the power of eminent domain shall be the property of the Landlord, except for
damages awarded as compensation for diminution in value of the leasehold in
contrast to diminution in the value of the fee of the Leased Property.  Tenant
shall also be entitled to any specific award made for loss of business or the
relocation thereof.

12.2.

Partial Taking.

  If, after a Taking, so much of any Leased Property that is the subject of this
Agreement remains that the Leased Property can be used for substantially the
same purposes for which it was used immediately before the Taking, then (i) the
Lease will end as to the part taken on the earlier of the vesting of title to
the Leased Property in the condemning authority or the taking of possession of
the Leased Property by the condemning authority; (ii) Base Rent for so much of
the Leased Property as remains will be reduced on a pro rata basis by an amount
equal to the difference between the number of available nursing beds remaining
after the Taking and the number of available nursing beds before the Taking;
(iii) at its cost, Tenant

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shall restore so much of the Leased 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; (iv)
upon completion of the restoration, or upon Tenant’s request at intervals during
the restoration process, in accordance with the procedure set forth in Section
11.1, 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 Leased
Property), or Tenant’s actual out-of-pocket costs of restoring the Leased
Property; and (v) Landlord shall be entitled to the balance of the net award.

ARTICLE XIII.
TENANT’S PROPERTY

13.1.

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 the
Fixtures as may be required or as Tenant may, from time to time, deem necessary
or useful to operate the Leased Property as a nursing home or medical care
facility.  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 (other than Landlord) is
hereinafter referred to as “Tenant’s Property”.

13.2.

Requirements for Tenant’s Property.

  Tenant shall comply with all of the following requirements in connection with
Tenant’s Property:

(a)

Tenant shall notify Landlord within one hundred twenty (120) days after each
anniversary of this Agreement of any additions, substitutions, or replacements
of any item of Tenant’s Property which individually has a cost of more than
$10,000.00 and shall furnish Landlord with such other information as Landlord
may reasonably request from time to time.

(b)

Tenant’s Property shall be installed in a good and workmanlike manner, in
compliance with all governmental laws, ordinances, rules, and regulations and
all insurance requirements, and be installed free and clear of any mechanic’s
liens.

(c)

Tenant shall, at Tenant’s sole cost and expense, maintain, repair, and replace
Tenant’s Property and the Fixtures to the extent required to operate the
Property as a nursing home or medical care facility.

(d)

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, 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 ninety percent (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
Section 4.3.

(e)

Tenant shall pay all taxes applicable to Tenant’s Property.

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(f)

If Tenant’s Property is damaged or destroyed by fire or any other cause, Tenant
shall promptly repair or replace Tenant’s Property unless Tenant is entitled to
and elects to terminate the Lease pursuant to Section 11.4.

(g)

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 and
remains uncured beyond any applicable grace period, 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 as a licensed nursing
home facility (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.

(h)

Tenant shall remove Tenant’s Property upon termination or expiration of the
Lease (except as otherwise limited by Article X hereunder) 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 ninety (90) days after the
termination or expiration of the Lease, then Tenant shall be deemed to have
abandoned Tenant’s Property, Tenant’s Property shall become the property of the
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 the Lease.

(i)

Tenant shall perform its obligations under any equipment lease or security
agreement for Tenant’s Property.

ARTICLE XIV.
ASSIGNMENT AND SUBLETTING; ATTORNMENT

14.1.

Subletting and Assignment; Attornment.

  Subject to the provisions of Section 14.3 below and any other express
conditions or limitations set forth herein, Tenant may, without the consent of
Landlord, (i) assign this Agreement or sublet all or any part of any Leased
Property to any Affiliate of Tenant, or (ii) sublet all or any part of any
Leased Property (a) in the normal course of the conduct of Tenant’s business on
the Leased Property (such as but not limited to leasing of space for major
moveable equipment or functional departments such as pathology, pharmacy and
radiology), or (b) as to less than an aggregate of 20% of the rentable square
footage of the buildings on any Leased Property, to concessionaires or other
third party users or operators of portions of the Leased Property which are
reasonably related to the health-care industry or which provide direct services
for patients or employees of the Leased Property.  Landlord shall not
unreasonably withhold its consent to any other or further subletting or
assignment, provided that (a) in the case of a subletting, the sublessee shall
comply with the provisions of Section 14.2(b) in the case of an assignment, the
assignee shall assume in writing and agree to keep and perform all of the terms
of this Lease on the part of Tenant to be kept and performed and shall be, and
become, jointly and severally liable with Tenant for the performance thereof,
(c) an original counterpart of each such sublease and assignment and assumption,
duly executed by Tenant and such sublessee or assignee, as the case may be, in
form and substance

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satisfactory to the Landlord, shall be delivered promptly to Landlord, and (d)
in case of either an assignment or subletting, Tenant shall remain primarily
liable, as principal rather than as surety, for the prompt payment of the Rent
and for the performance and observance of all of the covenants and conditions to
be performed by Tenant hereunder.

14.2.

Attornment.

  Tenant shall insert in each sublease permitted under Section 14.1 provisions
to the effect that (a) such sublease is subject and subordinate to all of the
terms and provisions of this Agreement and to the rights of Landlord hereunder,
(b) in the event this Agreement shall terminate before the expiration of such
sublease, the sublessee thereunder will, at Landlord’s option, attorn to
Landlord and waive any right the sublessee may have to terminate the sublease or
to surrender possession thereunder, as a result of the termination of this
Agreement, and (c) in the event the sublessee receives a written notice from
Landlord or Landlord’s assignees, if any, stating that Tenant is in Default
under this Agreement, the sublessee shall thereafter be obligated to pay all
rentals accruing under said sublease directly to the party giving such notice,
or as such party may direct.  All rentals received from the sublessee by
Landlord or Landlord’s assignees, if any, as the case may be, shall be credited
against the amounts owing by Tenant under this Agreement.

14.3.

Sublease Limitation.

  Anything contained in this Agreement to the contrary notwithstanding, Tenant
shall not sublet the Leased Property on any basis such that the rental to be
paid by the sublessee thereunder would be based, in whole or in part, on either
(i) the income or profits derived by the business activities of the sublessee,
or (ii) any other manner such that any portion of the sublease rental received
by Landlord would fail to qualify as “rents from real property” within the
meaning of Section 856(d) of the Internal Revenue Code of 1986 as amended (the
“Code”), or any similar or successor provisions thereto.

ARTICLE XV.
RIGHT OF FIRST REFUSAL

15.1.

Rights of First Refusal.

(a)

Subject to the terms and conditions set forth in this Section 15.1, Tenant shall
have a right of first refusal to purchase any Leased Property (the “Purchase
Refusal Right”). If during the Term or for a period of six (6) months following
termination of the Lease, Landlord receives a bona fide third party offer to
purchase any Leased Property, Landlord shall, prior to accepting such third
party offer, send written notice thereof to Tenant (“Landlord’s Notice”) along
with a copy of such offer, and further setting forth in detail all of the terms
and conditions of such third party offer, including the price, time for closing,
and any contingencies. Tenant shall have fifteen (15) days after receipt of
Landlord’s Notice to exercise Tenant’s Purchase Refusal Right, by giving
Landlord written notice thereof. Failure of Tenant to exercise the Purchase
Refusal Right within such time period set forth above shall be deemed to
extinguish the Purchase Refusal Right. Thereafter, Landlord may sell such Leased
Property to such third party on the same terms and conditions as set forth in
the Landlord’s Notice and, to the extent that this Lease has not terminated,
subject to all terms and conditions of this Lease, including but not limited to
the Purchase Option. Tenant’s Purchase Refusal Right shall revive in the event
that Landlord fails to close such third party offer. In the event that Tenant
elects to exercise the Purchase Refusal Right and to purchase the Leased
Property thereby, (i) Tenant shall purchase

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such Leased Property on the same terms and conditions and subject to all time
periods and other limitations as provided in Landlord’s Notice, and (ii)
concurrently with such purchase, the Lease of such Leased Property shall
terminate (but Tenant shall remain liable to pay any unpaid Rent with respect to
such Leased Property and all indemnifications and other provisions that survive
the expiration of any Lease or of this Agreement shall continue in effect), and
this Agreement shall be appropriately amended to reflect the termination of such
Lease.  

(b)

Subject to the terms and conditions set forth in this Section 15.1, Tenant shall
have a right of first refusal to lease any Leased Property (the “Lease Refusal
Right”). If during the Term or within six (6) months thereafter Landlord
receives a bona fide third party offer to lease any Leased Property after
expiration of the Lease to Tenant, Landlord shall, prior to accepting such third
party offer, send written notice thereof to Tenant (“Landlord’s Notice”) along
with a copy of such offer, and further setting forth in detail all of the terms
and conditions of such third party offer, including the rent. Tenant shall
thereafter have thirty (30) days after the date of Landlord’s Notice to exercise
Tenant’s Lease Refusal Right, by giving Landlord written notice thereof. Failure
of Tenant to exercise the Lease Refusal Right within such time period set forth
above shall be deemed to extinguish the Lease Refusal Right. Thereafter,
Landlord may lease such Leased Property to such third party on the same terms
and conditions as set forth in the Landlord’s Notice.  Tenant’s Lease Refusal
Right shall revive in the event that Landlord fails to close such third party
offer. In the event that Tenant elects to exercise the Lease Refusal Right and
to lease the Leased Property thereby, Tenant shall lease such Leased Property on
the same terms and conditions and subject to all time periods and other
limitations as provided in Landlord’s Notice.

ARTICLE XVI.
ARBITRATION

16.1.

Arbitration.

  Except with respect to the payment of Base Rent hereunder, in case any
controversy shall arise between the parties hereto as to any of the requirements
of this Lease or the performance thereof, which the parties shall be unable to
settle by agreement or as otherwise provided herein, such controversy shall be
determined by arbitration to be initiated and conducted as provisions of this
Article XVI.

16.2.

Appointment of Arbitrators.

  The party or parties requesting arbitration shall serve upon the other a
demand therefor, in writing, specifying the matter to be submitted to
arbitration, and nominating some competent disinterested person to act as an
arbitrator; within twenty (20) days after receipt of such written demand and
notification, the other party shall, in writing, nominate a competent
disinterested person and the two (2) arbitrators so designated shall, within ten
(10) days thereafter, select a third arbitrator and give immediate written
notice of such selection to the parties and shall fix in said notice a time and
place for the first meeting of the arbitrators, which meeting shall be held as
soon as conveniently possible after the selection of all arbitrators at which
time and place the parties to the controversy may appear and be heard.

16.3.

Third Arbitrator.

  In case the notified party or parties shall fail to make a selection upon
notice, as aforesaid, or in case the first two (2) arbitrators selected shall
fail to agree upon a third arbitrator within ten (10) days after their
selection, then such arbitrator or arbitrators, may, upon application made by
either of the parties to the controversy, after twenty (20) days’ written

29

notice thereof to the other party or parties, be appointed by the Senior Judge
of the United States District Court having jurisdiction of controversies
litigated in Nashville Tennessee.

16.4.

Arbitration Procedure.

  Said arbitrators shall give each of the parties not less than ten (10) days’
written notice of the time and place of each meeting at which the parties or any
of them may appear and be heard and after hearing the parties in regard to the
matter in dispute and taking such other testimony and making such other
examinations and investigations as justice shall require and as the arbitrators
may deem necessary, they shall decide the question submitted to them; and the
decision of said arbitrators in writing signed by a majority of them shall be
final and binding upon the parties to such controversy.  In rendering such
decision and award, the arbitrators shall not add to, subtract from or otherwise
modify the provisions of this Agreement or of any applicable Lease.

16.5.

Expenses.

  The expenses of such arbitration shall be divided between Landlord and Tenant
unless otherwise specified in award.  Each party in interest shall pay the fees
and expenses of its own counsel.

ARTICLE XVII.
QUIET ENJOYMENT, SUBORDINATION, ATTORNMENT, BOND
FINANCING AND ESTOPPEL CERTIFICATES

17.1.

Quiet Enjoyment.

  So long as Tenant performs all of its obligations under this Agreement and
each Lease, Tenant’s possession of the Leased Property will not be disturbed by
or through Landlord.

17.2.

Subordination.

  This Agreement and Tenant’s rights under this Agreement 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 Agreement is superior.  This provision will be
self-operative, and no further instrument or subordination will be required in
order to effect it.  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.  If Tenant fails or refuses to execute, acknowledge, and
deliver any such document within twenty (20) days after written demand, Landlord
may execute, acknowledge and deliver any such document on behalf of Tenant as
Tenant’s attorney-in-fact.  Tenant hereby constitutes and irrevocably appoints
Landlord, its successors and assigns, as Tenant’s attorney-in-fact to execute,
acknowledge, and deliver on behalf of Tenant any documents described in this
Section.  This power of attorney is coupled with an interest and is irrevocable.

17.3.

Attornment; Non-Disturbance.

  If any holder of any mortgage, indenture, deed of trust, or other similar
instrument described in Section 17.2 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

30

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 (1) month in advance; (ii) any amendment or modification
of this Lease made without its written consent; (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 the 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 twenty (20) days
after written demand, then Landlord or such successor in interest will be
entitled to execute, acknowledge, and deliver any document on behalf of Tenant
as Tenant’s attorney-in-fact.  Tenant hereby constitutes and irrevocably
appoints Landlord, its successors and assigns, as Tenant’s attorney-in-fact to
execute, acknowledge, and deliver on behalf of Tenant any such document.  This
power of attorney is coupled with an interest and is irrevocable.

Landlord shall use reasonable efforts to obtain a non-disturbance agreement from
any such party referred to above which provides that in the event such party
succeeds to Landlord’s interest under the Lease and provided that no Event of
Default by Tenant exists, such party will not disturb Tenant’s possession, use
or occupancy of the Leased Property.

17.4.

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) that 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, if that be the case, or specifying any existing default; (iv) that
Tenant has accepted and occupies the Leased Property; (v) that Tenant has no
defenses, set-offs, deductions, credits, or counterclaims against Landlord, if
that be the case, or specifying such that exist; (vi) that the Landlord has no
outstanding construction or repair obligations; and (vii) 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 ten (10) days after the
request of the 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; (e) Landlord has no
outstanding construction or repair obligation, and (f) Tenant has no defenses,
set-offs, deductions, credits, or counterclaims against Landlord.  Tenant hereby
irrevocably appoints Landlord as Tenant’s attorney-in-fact to execute,
acknowledge and deliver on Tenant’s behalf any estoppel certificate which Tenant
does not object to within twenty (20) days after Landlord sends the certificate
to Tenant.  This power of attorney is coupled with an interest and is
irrevocable.

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ARTICLE XVIII.
EXPIRATION OR TERMINATION OF THE LEASE

At the expiration or termination of this Lease and assuming Tenant does not
exercise the Purchase Option defined in Section 19.1 below, the following
provisions shall apply:

18.1.

Inventory/Personal Property.

  Tenant shall sell, transfer and convey to Landlord or Landlord’s designee, and
Landlord or Landlord’s designee, shall purchase, the Inventory and FF&E on the
same terms as provided in Section 10.2(d).  

18.2.

Tenant’s Proprietary Property.

  At the end of the Term of the Lease, Landlord shall not succeed to the
ownership of either the accounts receivable of Tenant or any proprietary
property of Tenant, including but not limited to, printed materials (such as
operating manuals, policies, procedures, and training manuals), computer
software (unless used for administration of patient records or operations)
developed by Tenant.

18.3.

Records.

  Subject to applicable laws governing confidentiality of patient records,
Tenant shall transfer and convey to Landlord or Landlord’s designee  the files
and records, including, but not limited to, correspondence with patients,
tenants, or suppliers, books of account, employment records, patient files,
records pertaining to supplies, advertising records, files, the paperless record
system and all items recorded therein, and literature and other written
materials of Tenant relating to each Facility Property (collectively the
“Records”).

18.4.

Bill of Sale.

  Tenant shall execute a Bill of Sale in favor of Landlord in the form of
Exhibit A with respect to the assets being conveyed to Landlord or Landlord’s
designee pursuant to this Article.

18.5.

Licenses.

  To the extent not then prohibited by law, unless otherwise directed by
Landlord, upon the expiration or termination of the Term, Tenant shall use
reasonable good faith efforts to (i) transfer to Landlord or Landlord’s nominee
(or to cooperate with Landlord or Landlord’s nominee) in connection with the
processing by Landlord or Landlord’s nominee of any applications for all
 Licenses  then in effect which relate to the operation of the Leased Property
or any Facility and/or cooperate with Landlord or its nominee in their efforts
to secure Licenses for which Landlord or its nominee wishes to apply and which
may be required by Landlord or Landlord’s nominee relating to the ownership and
operation of the Leased Property or any Facility located thereon and (ii) file
all final cost reports, if any, relating to Tenant’s operation of the Property
or any Facility.  

18.6.

Assignment of Contracts and Leases.

  Upon the expiration or earlier termination of the Term, Tenant shall execute
in favor of the Landlord as to the Leased Property, an Assignment of Contracts
and Leases in form reasonably acceptable to Landlord.

18.7.

Cooperation.

  In addition, Tenant shall cooperate with Landlord in order to ensure a smooth
transfer without interruption of the operation of the Facilities to Landlord or
Landlord’s nominee.  Such cooperation shall include, without limitation, turning
over (i) all Records and other information which are in the possession of Tenant
or any Affiliate of Tenant with respect to the residents of the Facilities
(subject to applicable laws governing confidentiality of patient

32

records), Tenant agreeing, however, that Tenant’s cooperation shall include
cooperation in facilitating requests to the residents of the Facilities to
consent to the transfer of such  records), and (ii) a cash amount equal to all
prepaid income, rents, and revenues of any kind with respect to the  Leased
Property, including, but not limited to, security deposits, rents and other sums
paid by patients covering any period from and after the date of such expiration
or termination, but reduced to the extent and amount any such prepaid items must
be, and are, refunded to the payor(s) by Tenant.

18.8.

Operations Transfer Agreement.

    Upon the expiration or earlier termination of the Term, at the request of
Landlord or its nominee, Tenant shall enter into an Operations Transfer
Agreement (an “O.T.A.”) with the successor operator of the Leased Property in
form and substance as requested by Landlord as customary in the skilled nursing
industry.  

ARTICLE XIX.
PURCHASE OPTION

19.1.

Purchase Option.

  Landlord hereby grants to Tenant the right and option to purchase the Leased
Property at any time after the 12th anniversary of the Commencement Date (the
“Purchase Option”) until the expiration of the Term of the Lease subject to the
terms set forth below:  

(a)

There shall be no defaults or Events of Defaults hereunder.  

(b)

Tenant may exercise the Option by giving Landlord six months notice of such
Purchase Option exercise, and the closing of the sale and purchase shall occur
in 180 days or on such date as otherwise agreed to by the parties (the “Closing
Date”).

(c)

In the event Tenant gives notice of its election to purchase the Leased Property
but fails to close the purchase of the Leased Property within the time allowed
herein, Tenant shall be liable for all of Landlord’s documented costs and
expenses relating to the Tenant’s election to exercise the Purchase Option,
including, but not limited to, reasonable attorneys’ fees.

(d)

The purchase price shall be Forty-Nine Million Dollars ($49,000,000).

(e)

The Purchase Option shall not be assignable by Tenant other than to an
Affiliate.

(f)

The Purchase Option is in addition to the Purchase Refusal Right detailed in
Article XV.

19.2.

Closing.

  The applicable purchase price shall be paid in full at the closing although
Tenant may, at its option, use all or any portion of the purchase price as may
be necessary to discharge any mortgages or other liens or encumbrances affecting
Landlord's interest in the Leased Property.  

(a)

At the closing, Landlord shall convey to Tenant or its nominee by quitclaim
deed, quitclaim bill of sale and assignment, all of Landlord's right, title and
interest to

33

the Leased Property (including, without limitation, all Licenses, to the extent
assignable), but free and clear of all mortgages, deeds of trust, liens and
other encumbrances whatsoever, excepting real estate taxes not yet due and
payable, easements, restrictive covenants and other matters encumbering the
 Leased Property on the Commencement Date.  In all other respects, the sale by
Landlord shall be on a “where is, as is” basis with no representations,
warranties or indemnifications.  Upon such conveyance neither party shall have
any further rights or obligations hereunder. Tenant shall, however, cure any
monetary Event of Default as of the closing date.  

(b)

The closing costs and expenses in connection with the transfer of the Leased
Property to Tenant or its nominee, including, but not limited to, real property
conveyance or transfer fees or deed stamps, title search fees, title insurance
commitment fees, and title insurance premiums, survey fees, environmental
assessment fees, recording fees and the fees of any escrow agent shall be paid
by Tenant.  Tenant and Landlord shall each be solely responsible for their own
legal fees incurred in connection with the transfer of the Leased Property to
Tenant.   Landlord shall be solely responsible for Landlord's legal fees
incurred in clearing any encumbrances or exceptions to title to any portion of
the Leased Property (other than any such matter created by Tenant) which title
matter Landlord is required to have cleared or removed pursuant to this Section.

(c)

If the Leased Property is damaged to such an extent that Tenant exercises its
right to terminate under Article XI, the Tenant may terminate its obligation to
purchase the Property if the Tenant has exercised the Purchase Option.  The
Tenant shall be entitled to all insurance proceeds, if the Tenant purchases the
Leased Property. If the Tenant elects not to purchase the Leased Property, the
applicable Lease provisions shall apply.

(d)

If Landlord shall be unable to give title and make conveyance as required
hereunder for any reason beyond Landlord's control (after Landlord uses
reasonable efforts to perform) and without such inability being a default by
Landlord, the obligations of both parties under this Purchase Option shall
terminate; provided, however, that Tenant may, at Tenant's election, accept such
title as Landlord is able to convey, without warranty as to known defects and
without reduction of the Purchase Price.  

(e)

In the event any portion of the Leased Property is taken by eminent domain after
the Tenant exercises the Purchase Option, the Tenant shall have the option to
either (i) terminate the exercise of the Purchase Option and the provisions of
this Article shall become null and void or (ii) consummate the purchase of the
Leased Property and pay the full Purchase Price and receive an assignment and
transfer of all condemnation awards paid or payable with respect to such taking.
In addition, if the taking occurs prior to Tenant’s exercise of the Purchase
Option, Tenant may exercise the Purchase Option and the foregoing provisions
shall apply.

(f)

In the event of a default by either party hereunder, the other party shall have
the right to seek specific performance.

(g)

Landlord and Tenant agree that there shall be no adjustment for real estate
taxes or assessments constituting a lien on the Leased Property.  Rent and other
amounts due and payable hereunder shall be prorated up to the Closing Date.  The
Tenant shall pay the cost of the

34

documentary tax stamps to record the deed and all other adjustments shall be
made in accordance with Tennessee law and custom.

(h)

To enable Landlord to make conveyance as herein provided, Landlord may, on the
closing date, use the purchase money or any portion thereof to clear the title
of any or all encumbrances or interests.

(i)

Upon the recording of the aforesaid deed, all of the Landlord's right, title and
interest in this Lease will be deemed to have been conveyed and transferred to
the grantee in the deed.

ARTICLE XX.
INTENTIONALLY DELETED

ARTICLE XXI.
MISCELLANEOUS

21.1.

Notices.

  Landlord and Tenant 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 as follows:

If to Tenant:

National HealthCare Corporation

100 Vine Street

Suite 1400, City Center

Murfreesboro, Tennessee 37130

 

With a copy to:

John Lines

National HealthCare Corporation

100 Vine Street

Suite 1400, City Center

Murfreesboro, Tennessee 37130

If to Landlord:

National Health Investors, Inc.

222 Robert Rose Drive

Murfreesboro, Tennessee 37129

With a copy to:

John Brittingham

Harwell Howard Hyne Gabbert & Manner, P.C.

333 Commerce Street, Suite 1500

Nashville, Tennessee 37201

and shall be served by (i) personal delivery, (ii) certified mail, return
receipt requested, postage prepaid, or (iii) nationally recognized overnight
courier.  All notices shall be deemed to be given upon the earlier of actual
receipt or three (3) days after mailing, or one (1) 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.

35

21.2.

Advertisement of Leased Property.

  In the event the parties hereto have not executed a renewal lease of any
Leased Property within ninety (90) days prior to the expiration of the Term,
then Landlord or its agent shall have the right to enter such 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 one
hundred eighty (180) days prior to the expiration of the Term “for sale” or “for
rent” notices or signs.

21.3.

Entire Agreement.

  This Agreement and the individual Leases contain the entire agreement between
Landlord and Tenant with respect to the subject matter hereof and thereof.  No
representations, warranties, and agreements have been made by Landlord except as
set forth in this Lease.

21.4.

Severability.

  If any term or provision of this Agreement is held or deemed by Landlord to be
invalid or unenforceable, such holding shall not affect the remainder of this
Agreement 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 therefor, in which event the Lease for such Leased
Property shall forthwith terminate as if by expiration of the Term.

21.5.

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 Agreement or
the intent of any provision hereof.

21.6.

Governing Law.

 This Lease as to the Facility shall be governed by and construed in accordance
with the laws of the State of Tennessee as to all matters other than (i) those
matters relating to the enforcement or exercise of any possessory or summary
remedies of Landlord which shall be governed by the laws of the State where each
Facility is located and (ii) matters which under applicable procedural conflicts
of laws rules require the application of the laws of the State where each
Facility is located.

21.7.

Recording of Lease.

  Tenant shall not record this Agreement.  Tenant may, however, record a
memorandum of Lease approved by Landlord; provided, however, such lease shall
not disclose the Base Rent or other economic terms of the Lease.  

21.8.

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 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
Agreement or exercise any other remedy granted herein on account of such
existing default.

21.9.

Binding Effect.

  This Agreement and each Lease will be binding upon and inure to the benefit of
the heirs, successors, personal representatives, and permitted assigns of
Landlord and Tenant.

36

21.10.

Authority.

  The persons executing this Agreement on behalf of Tenant warrant that (a)
Tenant has the power and authority to enter into this Agreement or such Lease;
(b) Tenant is qualified to do business in the state in which the Leased Property
is located; and (c) they are authorized to execute this Lease on behalf of
Tenant.  Tenant shall, at the request of Landlord, provide evidence satisfactory
to Landlord confirming these representations.

21.11.

Transfer of Permits, Etc.

  Upon the expiration or earlier termination of the Term hereof, Tenant shall
transfer and relinquish to Landlord or Landlord’s nominee and cooperate with
Landlord or Landlord’s nominee in connection with the processing by Landlord or
such nominee of all Licenses, operating permits, certificates of need and other
governmental authorization and all contracts, the nursing home and/or health
care facility license, and any other contracts with governmental or
quasi-governmental entities which may be necessary or appropriate for the
operation by Landlord or such nominee of the Leased Property for the purposes of
operating a nursing home and health care facility; provided that the costs and
expenses of any such transfer or the processing of any such application shall be
paid by Landlord or Landlord’s nominee.  Any such permits, Licenses,
certificates and contracts which are held in Landlord’s name now or at the
termination of the Lease shall remain the property of Landlord.  To the extent
permitted by law, Tenant hereby irrevocably appoints Landlord, its successors
and assigns and any nominee or nominees specifically designated by Landlord or
any successor or assign as Tenant’s attorney-in-fact to execute, acknowledge,
deliver and file all documents appropriate to such transfer or processing of any
such application on behalf of Tenant; this power of attorney is coupled with an
interest and is irrevocable.

21.12.

Modification.

  This Agreement may only be modified by a writing signed by both Landlord and
Tenant.

21.13.

Incorporation by Reference.

  All schedules and exhibits referred to in this Agreement are incorporated into
this Agreement.

21.14.

No Merger.

  The surrender of this Agreement by Tenant or the cancellation of this
Agreement by agreement of Tenant and Landlord or the termination of this
Agreement  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 any applicable Leased
Property.

21.15.

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.

21.16.

Waiver of Jury Trial.

  To the extent that there is any claim by one party against the other that is
not to be settled by arbitration as provided in Article XVI hereof, Landlord and
Tenant waive trial by jury in any action, proceeding or counterclaim brought by
either 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 will not interpose, and waives the right to interpose, any
counterclaim in any such proceeding.

37

21.17.

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 Fifty Thousand Dollars ($50,000.00), 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 IV 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.

21.18.

Construction of Lease.

  This Agreement 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 Agreement is the product of all their efforts, that
they express their agreement, and agree that they shall not be interpreted in
favor of either Landlord or Tenant or against either Landlord or Tenant merely
because of their efforts in preparing such document.

21.19.

Counterparts.

  This Agreement and each Lease may be executed in duplicate counterparts, each
of which shall be deemed an original hereof or thereof.

21.20.

Relationship of Landlord and Tenant.

  The relationship of Landlord and Tenant is the relationship of lessor and
lessee.  Landlord and Tenant are not partners, joint venturers, or associates.

21.21.

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

38

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.

21.22.

Landlord’s Status as a REIT.

  Tenant acknowledges that Landlord intends to elect to be taxed as a real
estate investment trust (“REIT”) under the Code.  Tenant shall not do anything
which would adversely affect Landlord’s status as a REIT.  Tenant hereby agrees
to modifications of this Lease which do not materially adversely affect Tenant’s
rights and liabilities if such modifications are required to retain or clarify
Landlord’s status as a REIT.

21.23.

Sale of Real Estate Assets.

  Notwithstanding any other provision of this Agreement, Landlord shall not be
required to sell or transfer Leased Property, or any portion thereof, which is a
real estate asset as defined in Section 856(c)(6) of the Code, to Tenant if
Landlord’s counsel advises Landlord that such sale or transfer may not be a sale
of property described in Section 857(b)(6)(C) of the Code.  If Landlord
determines not to sell such property pursuant to the above sentence, Tenant’s
right, if any, to purchase the Leased Property shall continue and be exercisable
at such time as the transaction, upon the advice of Landlord’s counsel, would be
a sale of property described in Section 857(b)(6)(C) of the Code.

21.24.

Rights of First Refusal

.  The counties in which the Leased Property is located shall not be subject to
the rights of first refusal contained in Section 13.02 in Amendment No. 5 to the
Master Agreement to Lease dated December 27, 2005 between National Health
Investors, Inc. and National HealthCare Corporation.  

(Signature Page to Follow)

39

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.

LANDLORD:

NHI-REIT OF NORTHEAST, LLC

By: /s/ J. Justin Hutchens

Name:  J. Justin Hutchens

Title:  President

STATE OF TENNESSEE

)

COUNTY OF RUTHERFORD

)

Personally appeared before me, the undersigned, a Notary Public of said county
and state, J. Justin Hutchens with whom I am personally acquainted, or proved to
me on the basis of satisfactory evidence, and who, upon oath, acknowledged
himself to be the President of NHI-REIT of Northeast, LLC, the within named
bargainor, a Delaware limited liability company and that he, as such President,
being authorized so to do, executed the foregoing instrument for the purposes
therein contained by signing the name of the limited liability company by
himself as such President.

Witness my hand this _____ day of __________________.

_________________________________________

Notary Public

My Commission Expires: ____________________

 

TENANT:

NHC/OP, L.P.

By:  NHC Delaware, Inc.

Its:  General Partner

By: /s/ Stephen F. Flatt

Name:  

Steve Flatt

Title:   

VP

NATIONAL HEALTHCARE CORPORATION

By: /s/ John K. Lines

Name:  

John Lines

Title:   

SVP

STATE OF TENNESSEE

)

COUNTY OF _____________

)

Personally appeared before me, the undersigned, a Notary Public of said county
and state, ________________________________________, with whom I am personally
acquainted, or proved to me on the basis of satisfactory evidence, and who, upon
oath, acknowledged himself to be the ______________________ of NHC Delaware,
Inc. the general partner of NHC/OP, L.P. the within named bargainor, and that
he, as such ________________________, being authorized so to do, executed the
foregoing instrument for the purposes therein contained by signing the name of
the corporation by himself as such _________________________.

Witness my hand this _____ day of __________________.

_________________________________________

Notary Public

My Commission Expires: ____________________

STATE OF TENNESSEE

)

COUNTY OF _____________

)

Personally appeared before me, the undersigned, a Notary Public of said county
and state, ________________________________________, with whom I am personally
acquainted, or proved to me on the basis of satisfactory evidence, and who, upon
oath, acknowledged himself to be the ______________________ of National
Healthcare Corporation, the within named bargainor, and that he, as such
________________________, being authorized so to do, executed the foregoing
instrument for the purposes therein contained by signing the name of the
corporation by himself as such _________________________.

Witness my hand this _____ day of __________________.

_________________________________________

Notary Public

My Commission Expires: ____________________

The Subtenants sign below to acknowledge that they are the owners of the
personal property, including, but not limited to, furniture, equipment and
inventory, and by signing below agree that the provisions of Section 10.2(d) and
Section 18.8 shall apply to them as well as to the Tenant and that the
provisions of Section 2.8 shall apply to them.

SUBTENANTS:

BUCKLEY HEALTHCARE CENTER, LLC

By:  NHC/OP, L.P.

Its:  Managing Member

By:  NHC Delaware, Inc.

Its:  General Partner

By: /s/ Stephen F. Flatt

Name:  

Steve Flatt

Title:   

VP

STATE OF TENNESSEE

)

COUNTY OF _____________

)

Personally appeared before me, the undersigned, a Notary Public of said county
and state, ________________________________________, with whom I am personally
acquainted, or proved to me on the basis of satisfactory evidence, and who, upon
oath, acknowledged himself to be the ______________________ of NHC Delaware,
Inc. the general partner of NHC/OP, L.P. the Managing Member of Buckley
HealthCare Center, LLC the within named bargainor, and that he, as such
________________________, being authorized so to do, executed the foregoing
instrument for the purposes therein contained by signing the name of the
corporation by himself as such _________________________.

Witness my hand this _____ day of __________________.

_________________________________________

Notary Public

My Commission Expires: ____________________

HOLYOKE HEALTHCARE CENTER, LLC

By:  NHC/OP, L.P.

Its:  Managing Member

By:  NHC Delaware, Inc.

Its:  General Partner

By: /s/ Stephen F. Flatt

Name:  

Steve Flatt

Title:   

VP

STATE OF TENNESSEE

)

COUNTY OF _____________

)

Personally appeared before me, the undersigned, a Notary Public of said county
and state, ________________________________________, with whom I am personally
acquainted, or proved to me on the basis of satisfactory evidence, and who, upon
oath, acknowledged himself to be the ______________________ of NHC Delaware,
Inc. the general partner of NHC/OP, L.P. the Managing Member of Holyoke
HealthCare Center, LLC the within named bargainor, and that he, as such
________________________, being authorized so to do, executed the foregoing
instrument for the purposes therein contained by signing the name of the
corporation by himself as such _________________________.

Witness my hand this _____ day of __________________.

_________________________________________

Notary Public

My Commission Expires: ____________________

JOHN ADAMS HEALTHCARE CENTER, LLC

By:  NHC/OP, L.P.

Its:  Managing Member

By:  NHC Delaware, Inc.

Its:  General Partner

By: /s/ Stephen F. Flatt

Name:  

Steve Flatt

Title:   

VP

STATE OF TENNESSEE

)

COUNTY OF _____________

)

Personally appeared before me, the undersigned, a Notary Public of said county
and state, ________________________________________, with whom I am personally
acquainted, or proved to me on the basis of satisfactory evidence, and who, upon
oath, acknowledged himself to be the ______________________ of NHC Delaware,
Inc. the general partner of NHC/OP, L.P. the Managing Member of John Adams
HealthCare Center, LLC the within named bargainor, and that he, as such
________________________, being authorized so to do, executed the foregoing
instrument for the purposes therein contained by signing the name of the
corporation by himself as such _________________________.

Witness my hand this _____ day of __________________.

_________________________________________

Notary Public

My Commission Expires: ____________________

TAUNTON HEALTHCARE CENTER, LLC

By:  NHC/OP, L.P.

Its:  Managing Member

By:  NHC Delaware, Inc.

Its:  General Partner

By: /s/ Stephen F. Flatt

Name:  

Steve Flatt

Title:   

VP

STATE OF TENNESSEE

)

COUNTY OF _____________

)

Personally appeared before me, the undersigned, a Notary Public of said county
and state, ________________________________________, with whom I am personally
acquainted, or proved to me on the basis of satisfactory evidence, and who, upon
oath, acknowledged himself to be the ______________________ of NHC Delaware,
Inc. the general partner of NHC/OP, L.P. the Managing Member of Taunton
HealthCare Center, LLC the within named bargainor, and that he, as such
________________________, being authorized so to do, executed the foregoing
instrument for the purposes therein contained by signing the name of the
corporation by himself as such _________________________.

Witness my hand this _____ day of __________________.

_________________________________________

Notary Public

My Commission Expires: ____________________

HEARTLAND HEALTHCARE CENTER, LLC

By:  NHC/OP, L.P.

Its:  Managing Member

By:  NHC Delaware, Inc.

Its:  General Partner

By: /s/ Stephen F. Flatt

Name:  

Steve Flatt

Title:   

VP

STATE OF TENNESSEE

)

COUNTY OF _____________

)

Personally appeared before me, the undersigned, a Notary Public of said county
and state, ________________________________________, with whom I am personally
acquainted, or proved to me on the basis of satisfactory evidence, and who, upon
oath, acknowledged himself to be the ______________________ of NHC Delaware,
Inc. the general partner of NHC/OP, L.P. the Managing Member of Heartland
HealthCare Center, LLC the within named bargainor, and that he, as such
________________________, being authorized so to do, executed the foregoing
instrument for the purposes therein contained by signing the name of the
corporation by himself as such _________________________.

Witness my hand this _____ day of __________________.

_________________________________________

Notary Public

My Commission Expires: ____________________

PEARL STREET HEALTHCARE CENTER, LLC

By:  NHC/OP, L.P.

Its:  Managing Member

By:  NHC Delaware, Inc.

Its:  General Partner

By: /s/ Stephen F. Flatt

Name:  

Steve Flatt

Title:   

VP

STATE OF TENNESSEE

)

COUNTY OF _____________

)

Personally appeared before me, the undersigned, a Notary Public of said county
and state, ________________________________________, with whom I am personally
acquainted, or proved to me on the basis of satisfactory evidence, and who, upon
oath, acknowledged himself to be the ______________________ of NHC Delaware,
Inc. the general partner of NHC/OP, L.P. the Managing Member of Pearl Street
HealthCare Center, LLC the within named bargainor, and that he, as such
________________________, being authorized so to do, executed the foregoing
instrument for the purposes therein contained by signing the name of the
corporation by himself as such _________________________.

Witness my hand this _____ day of __________________.

_________________________________________

Notary Public

My Commission Expires: ____________________

VILLA CREST HEALTHCARE CENTER, LLC

By:  NHC/OP, L.P.

Its:  Managing Member

By:  NHC Delaware, Inc.

Its:  General Partner

By: /s/ Stephen F. Flatt

Name:  

Steve Flatt

Title:   

VP

STATE OF TENNESSEE

)

COUNTY OF _____________

)

Personally appeared before me, the undersigned, a Notary Public of said county
and state, ________________________________________, with whom I am personally
acquainted, or proved to me on the basis of satisfactory evidence, and who, upon
oath, acknowledged himself to be the ______________________ of NHC Delaware,
Inc. the general partner of NHC/OP, L.P. the Managing Member of Villa Crest
HealthCare Center, LLC the within named bargainor, and that he, as such
________________________, being authorized so to do, executed the foregoing
instrument for the purposes therein contained by signing the name of the
corporation by himself as such _________________________.

Witness my hand this _____ day of __________________.

_________________________________________

Notary Public

My Commission Expires: ____________________

SCHEDULE A

Leased Property

EPSOM MANOR/HEARTLAND PLACE

901 Suncook Valley Hwy, Epsom, NH

Tract I

All that piece or parcel of property situate in the Town of Epsom, County of
Merrimack, State of New Hampshire, as shown on a plan entitled “ALTA/ACSM
Survey, Epsom Manor (Tax Map U-5, Lot 27), Route 28, Epsom, New Hampshire” (two
sheets), dated April 1996, last revised June 24, 1996; prepared by Costello,
Lomasney & deNapoli, Inc., and recorded in the Merrimack County Registry of
Deeds as Plan #13670; bounded and described as follows:

Beginning at a point on the northwesterly highway line of New Hampshire Route 28
(having a 100 foot right-of-way at this point) at its intersection with the
division line between the parcel herein described on the northeast and land now
or formerly of TwinStar Cable, Inc. (TM U-5, Lot 26) on the southwest; said
point being the southeasterly corner of the parcel herein described and marked
with an iron pin;

Thence, northwesterly along said land of TwinStar Cable, Inc. and land of N.E.
Investment 1, Ltd. (TM U-5, Lot 23) on a bearing of North 51° 39' 09” West, a
distance of 932.47 feet to a point marked by a wood hub in a pile of stones;

Thence, further northwesterly along said land of N.E. Investment 1, Ltd., on a
bearing of North 51° 33' 48” West, a distance of 570.84 feet to a point marked
by an iron pin in a pile of stones, on the division line between the parcel
herein described on the southeast and land now or formerly of James Robert
Carpenter and the Estate of John T. Carpenter (TM U-6, Lot 1) on the northwest;

Thence, northeasterly along said land of Carpenter on a bearing of North 43° 18'
49” East, a distance of 844.66 feet to a point on the southwesterly highway line
of New Hampshire Route 9 and U.S. Routes 4 and 202; said point being a distance
of 1.01 feet southwesterly from an iron pin, and being a distance of 3.65 feet
southwesterly from a stone bound;

Thence, southeasterly along said highway line on a bearing of South 52° 43' 38”
East, a distance of 16.33 feet to a point on the division line between the
parcel herein described on the northwest and land now or formerly of D. Frank
Duris (TM U-5, Lot 39) on the southeast;

Thence, southwesterly along said land of Duris on a bearing of South 43° 18’ 49”
West, a distance of 249.32 feet to a point marked by an iron pin; said pin being
approximately 3.3 feet distant southwesterly from an iron pin found;

Thence, southeasterly along said land of Duris and lands of Armond J. Nolin, III
and Vikki J. Nolin (TM U-5, Lot 38), Albert A. Beaudoin, Sr. and Susan J.
Beaudoin (TM U-5, Lot 37), Robert A. May, Jr. (TM U-5, Lot 36), Frederick Robert
Carrick and Eve Carrick (TM U-5, Lot 35), and Michael R. Chasse (TM U-5, Lot 34)
on a bearing of South 55° 23' 13” East, a distance of 769.33 feet to a point on
the division line between the parcel herein described on the

Epsom Manor/Heartland Place

southwest and land now or formerly of Betty Ann Audet (TM U-5, Lot 32) on the
northeast, said point being marked by an iron pipe;

Thence, further southeasterly along said land of Audet on a bearing of South 54°
24' 40” East, a distance of 100.00 feet to a point on the division line between
the parcel herein described on the west and other land of Betty Ann Audet (TM
U-5, Lot 31) on the east; said point being marked by an iron pin;

Thence, southerly along said land of Audet on a bearing of South 00° 16' 02”
West, a distance of 225.70 feet to a point marked by a drill hole in a boulder.

Thence, southeasterly further along said land of Audet on a bearing of South 70°
35' 44” East, a distance of 70.96 feet to a point on the division line between
the parcel herein described on the southwest and land now or formerly of Raymond
W. and Dorothy Regina Towle (TM U-5, Lot 30) on the northeast; said point being
marked by an iron pin;

Thence, further southeasterly along said land of Towle and land now or formerly
of Lawrence M., Regina M., and Steven A. Wiley (TM U-5, Lot 29) on a bearing of
South 67° 45' 06” East, a distance of 274.96 feet to a point on the westerly
line of Old New Hampshire Route 28; said point being marked by an iron pin;

Thence, southeasterly, northerly, and southeasterly in that order across said
Old New Hampshire Route 28 on the following courses: South 67° 45' 06” East, a
distance of 25.04 feet; North 25° 21' 20” East, a distance of 37.76 feet; South
28° 34' 47” East, a distance of 30.93 feet to a point on the division line
between the parcel herein described on the west and land now or formerly of
Frederick A. and Eleanor M. Noyes (TM U-5, Lot 28) on the east; said point being
marked by an iron pin.

Thence, further southeasterly along said land of Noyes on a bearing of South 28°
34' 47” East, a distance of 176.24 feet to a point; said point being marked by
an iron pin.

Thence, further southeasterly along said land of Noyes on a bearing of South 68°
42' 12” East, a distance of 70.27 feet to a point on the northwesterly highway
line of New Hampshire Route 28 (said right-of-way being 66 feet at this point);
said point being marked by an iron pin;

Thence, southwesterly along said highway line a bearing of South 54° 17' 48”
West, a distance of 336.85 feet to a point near a New Hampshire highway bound;

Thence, northwesterly and southwesterly further along said highway line on the
following courses: North 35° 42' 12” West, a distance of 17.00 feet to an iron
pin; South 54° 17' 48” West, a distance of 244.19 feet to the point or place of
beginning.

INCLUDED IN THE ABOVE DESCRIPTION OF TRACT 1, BUT EXCLUDED FROM THIS CONVEYANCE
IS THE FOLLOWING DESCRIBED TRACT OF LAND.

A certain tract or parcel of land, together with any buildings and improvements
now or hereafter located thereon, situated in the Town of Epsom, County of
Merrimack and State of New Hampshire, shown as 27,929 Sq. Ft. to be annexed to
Tax Map U-5 Lot 28 on a plan of land entitled “Lot Line Adjustment Plat, Land of
Epsom Corners Development Corp. Tax Map U-5 Lot 28 and Elder Trust of Florida,
Inc. Tax Map U-5 Lot 27, Location Routes 4, 202 and 9 and Route 28 – Epsom, NH
Merrimack County”, dated May 23, 2003, Scale 1” = 50’, prepared by FWS Land
Surveying P.L.L.C., recorded at the Merrimack County Registy of Deeds as Plan
#16805, and further bounded and described as follows:

Epsom Manor/Heartland Place

Beginning at a calculated boundary point on the lot line between Tax Map U-5
Lots 27 and 28 on said Plan and continuing S 26° 36’ 18” W along said Tax Map
U-5 Lot 27, a distance of 3.25 feet to a point;

thence continuing S 26° 36’ 18” W along said Tax Map U-5 Lot 27, a distance of
32.99 feet to a calculated boundary point;

thence turning and running N 70° 32’ 19” W along said Tax Map U-5 Lot 27, a
distance of 312.87 feet to a calculated boundary point;

thence turning and running N 73° 22’ 57” W along said Tax Map U-5 Lot 27, a
distance of 86.55 feet to a calculated boundary point;

thence turning and running N 02° 31’ 11” W along said Tax Map U-5 Lot 27, a
distance of 226.14 feet to a calculated boundary point;

thence turning and running N 58° 10’ 26” W along said Tax Map U-5 Lot 27, a
distance of 857.59 feet to a calculated boundary point;

thence turning and running N 31° 49’ 34” E along said Tax Map U-5 Lot 27, a
distance of 20.00 feet to a calculated boundary point;

thence turning and running S 58° 10’ 26” E, a distance of 769.33 feet to a
calculated boundary point;

thence turning and running S 57° 11’ 53” E, a distance of 100.00 feet to a
calculated boundary point;

thence turning and running S 02° 31’ 11” E, a distance of 225.70 feet to a
calculated boundary point;

thence turning and running S 73° 22’ 57” E, a distance of 70.96 feet to a
calculated boundary point;

thence turning and running S 70° 32’ 19” E, a distance of 300.00 feet to a
calculated boundary point;

thence turning and running N 26° 36’ 18” E, a distance of 25.56 feet to a 5/8”
rebar found;

thence turning and running S 42° 12’ 39” E, a distance of 16.09 feet to the
point of beginning.

Tract II

All those pieces or parcels of property situate in the Town of Epsom, County of
Merrimack, State of New Hampshire, as shown on a plan entitled “ALTA/ACSM
Survey, Land of Management Realty Corp. (Tax Map U-5, Lots 16 and 16-1), Route
28, Epsom, New Hampshire,” dated April 1996, last revised June 24, 1996;
prepared by Costello, Lomasney & deNapoli, Inc., and recorded in the Merrimack
County Registry of Deeds as Plan #13671, bounded and described as follows:

(Tax Map U-5, Lot 16)

Beginning at a point on the southeasterly highway line of NH Route 28 (having a
100 foot right-of-way) at its intersection with the division line between the
parcel herein described on the southwest and land now or formerly of Timothy and
Denise Emery (Tax Map U-5, Lot 15) on the northeast; said point being the
northeast corner of the parcel herein described;

Thence, southeasterly, southwesterly, and southeasterly, in that order, along
said land of Emery on the following courses: South 46° 45' 10” East, a distance
of 65.51 feet to a point; South 51°

Epsom Manor/Heartland Place

09' 16” West a distance of 63.00 feet to an iron pin; South 48° 43' 24” East, a
distance of 305.74 feet through an iron pin to a point on the division line
between the parcel herein described on the northwest and land now or formerly of
Management Realty Inc. (Tax Map U-5, Lot 11) on the southeast;

Thence, southwesterly along said land of Management Realty Inc. on the following
courses: South 44° 35' 44” West, a distance of 499.98 feet to an iron pipe;
South 42°41' 21” West, a distance of 678.17 feet to an iron pipe on the division
line between the parcel herein described on the east and land now or formerly of
Donald L. and Susan E. Bowne(Tax Map U-11, Lot 8) on the west;

Thence, northwesterly along said land of Bowne on a bearing of North 31° 48' 07”
West, a distance of 137.71 feet to a point on the division line between the
parcel herein described on the southeast and other land of Management Realty
Corp. (Tax Map U-5, Lot 16-1) on the northwest;

Thence, northeasterly and northwesterly, in that order, along said other land of
Management Realty Corp. on the following courses: North 54° 17' 48” East, a
distance of 200.00 feet to an iron pin; North 31° 48' 07” West, a distance of
450.00 feet to a point on the southeasterly highway line of said NH Route 28;

Thence, northeasterly along said highway line on a bearing of North 54° 17' 48”
East, a distance of 898.61 feet passing through or along side of two New
Hampshire highway bounds to the point or place of beginning.

Excepting and reserving the following Tract of land:

Being shown as the Southwest corner of Lot TU-5, Lot 16 as it borders the
Southerly line of Lot 16 as shown on said Plan and being bounded and described
as follows:

Beginning at an iron pipe, said point being the Southwest corner of Lot 16;
thence

North 31° 48' 07” West, a distance of 137.71 feet to a point, said point being
the southwest corner of Lot 16-1; thence

North 54° 17' 48” East, a distance of 200.00 feet along the Southerly boundary
of Lot 16- 1 to an iron rebar; thence

South 31° 48' 07” East to the southerly boundary of Lot 16 and the Northerly
boundary of Lot 11; thence

South 42° 41' 21” West along the Southerly boundary of Lot 16 and the Northerly
boundary of Lot 11 to point of beginning.

Meaning and intending to describe the same premises conveyed to Elder Trust of
Florida, Inc. by Foreclosure Deed dated July 30, 2001 and recorded in the
Merrimack County Registry of Deeds at Book 2285, Page 1196.

Tract III

A certain tract or parcel of land, together with any buildings and improvements
now or hereafter located thereon, situated in the Town of Epsom, County of
Merrimack and State of New Hampshire, shown as 1,526 Sq. Ft. to be annexed to
Tax Map U-5 Lot 27 on a plan of land entitled “Lot Line Adjustment Plat, Land of
Epsom Corners Development Corp. Tax Map U-5 Lot 28 and Elder Trust of Florida,
Inc. Tax Map U-5 Lot 27, Location Routes 4, 202 and 9 and Route 28 – Epsom, NH
Merrimack County”, dated May 23, 2003, Scale 1” = 50’, prepared by FWS Land
Surveying P.L.L.C., recorded at the Merrimack County Registry of Deeds as Plan
#16805, and further bounded and described as follows:

Epsom Manor/Heartland Place

Beginning at a 5/8” rebar with cap found “Noyes RLS #84” at a common point of
Tax Map U-5 Lots 27 and 28 as shown on said Plan;

thence continuing N  32° 15’ 57” W along said Tax Map U-5 Lot 27, a distances of
200.22 feet to a point;

thence turning and running N 26° 36’ 18” E, a distance of 3.25 feet to a
calculated boundary point;

thence turning and running S 42° 12’ 39” E along the new property line of said
Tax Map U-5 Lot 28, a distance of 72.20 feet to a calculated boundary point;

thence turning and running S 24° 35’ 54” E along the new property line of said
Tax Map U-5 Lot 28, a distance of 114.27 feet to the point of beginning.

Also conveyed hereby to the Grantee, its successors and/or assigns, are two
non-exclusive easements for ingress and egress as follows:

Easement #1

Commencing on the Southwesterly side of said Tax Map U-5 Lot 28 on an existing
ten (10) foot wide gravel right-of-way; thence following said ten (10) foot wide
gravel right-of-way which turns sharply to the right and runs close to the
southerly border of said Tax Map U-5 Lot 28 for slightly more than half the
distance thereof; thence turning to the right and crossing the boundary of said
Tax Map U-5 Lot 28 and said Tax Map U-5 Lot 27 connecting with the ten (10) foot
wide access easement on said Tax Map U-5 Lot 27. (See Merrimack County Registry
of Deeds Plan #13670)

Easement #2

Easement #2 shall become effective, except as stated below, upon the annexation
of twenty-five (25) foot strip of land running along the westerly boundary of
said Tax Map U-5 Lot 28 when Old NH Route 28 is abandoned by the Town of Epsom.
 The easement shall be ten (10) feet in width and located in the said
twenty-five (25) foot portion to the Old NH Route 28, being annexed to said Tax
Map U-5 Lot 28 upon abandonment by said Town running from NH Route 4, 202 and 9
to the new Southwest corner of said Tax Map U-5 Lot 28, crossing over onto said
Tax Map U-5 Lot 27 and intersecting with Easement #1 above, as well as crossing
a portion of the premises granted to the Grantor herein by the Grantee herein on
near or even date herewith and as it is currently constructed.  This easement is
effective immediately on any portion thereof where the underlying fee owned by
Grantor. (See Merrimack County Registry of Deeds Plan #13670)

Epsom Manor/Heartland Place

BUCKLEY NURSING HOME (North)

95 Laurel Street, Greenfield, MA

Land with the buildings thereon located in Greenfield, Franklin County,
Massachusetts, described on a Survey entitled “ALTA/ACSM Title Insurance Survey,
#95 Laurel Street, Greenfield,” by R.E. Cameron & Associates dated December 20,
1996, revised June 20, 2001, Job No. 2568, as follows:

Beginning at the most southerly corner of parcel on the northwesterly sideline
of Laurel Street; thence,

N 64° 41' 10” W, 133.34 feet to a point; thence,

S 25° 18' 50” W, 132.00 feet to a point; thence,

N 79° 22' 41” W, 212.95 feet to now or formerly the Boston and Maine Railroad;
thence,

Along a curve to the right with a radius of 3,363.62 feet and a length of 295.84
feet to a point; thence,

N 34° 19' 32” E, 180.43 feet to a point; thence,

Along a curve to the right with a radius of 3,404.87 feet and a length of 838.17
feet to a point; thence,

S 38° 19' 43” W, 155.28 feet to a point; thence,

S 41° 48' 50” W, 540.00 feet to a point; thence,

S 48° 11' 10” E, 133.34 feet to Laurel Street; thence,

S 41° 48' 50” W, 305.42 feet to a point; thence,

S 25° 18' 50” W, 18.58 feet to the point of beginning.

Containing 207,967 square feet more or less; 4.774 Acres.

Buckley Nursing Home

BUCKLEY NURSING HOME (South)

282 Cabot Street, Holyoke, MA

Beginning at the most easterly corner of parcel at the most westerly
intersection of Linden Street and Cabot Street; thence,

S 37° 56' 56” W, 255.00 feet to a point; thence,

N 52° 03' 04” E, 118.00 feet to a point; thence,

N 37° 56' 56” E, 105.00 feet to a point; thence,

N 52° 03' 04” E, 118.00 feet to Locust Street; thence,

N 37° 56' 56” E, 150.00 feet to the intersection of Locust Street and Cabot
Street; thence,

S 52° 03' 04” E, 236.00 feet to the intersection of Cabot Street and Linden
Street; thence,

S 37° 56' 56” W, 255.00 feet to the point of beginning.

Containing 47,790 square feet more or less 1.097 Acres.

The above property was surveyed by R. E. Cameron & Associates, Inc., Scott D.
Cameron PLS 35393, on December 20, 1996, revised June 26, 2001.

Buckley Nursing Home

JOHN ADAMS CONTINUING CARE

211 Franklin Street, Quincy, MA

Two certain parcels of land together with the buildings thereon, situated on
Franklin Street, Quincy, Norfolk County, Commonwealth of Massachusetts, as shown
on a Plan entitled “Plan of Land Situated in Quincy, Mass., Belonging to Heirs
of John L. Miller, Sept. 1915,” recorded with said Registry of Deeds in Book
1323, Page 569, and as more particularly described in two deeds recorded with
said Registry of Deeds in Book 6317, Page 594, and Book 6317, Page 595, and more
particularly described as follows:

Parcel I:

Beginning at the westerly sideline of Franklin Street at the most southeasterly
corner of parcel; thence,

S 75° 30' 10” W, 137.00 feet to a point; thence,

N 14° 29' 50” W, 92.74 feet to a point; thence,

N 65° 40' 04” E, 12.19 feet to a point; thence,

N 14° 29' 50” W, 68.50 feet to Parcel II; thence,

N 75° 30' 10” E, 125.00 feet to Franklin Street; thence,

S 14° 29' 50” E, 163.34 feet to the point of beginning.

Parcel II:

Beginning at the westerly sideline of Franklin Street at the most southeasterly
corner of parcel adjoining Parcel I; thence,

S 75° 30' 10” W, 125.00 feet to a point; thence, N 14° 29' 50” W, 82.67 feet to
a point; thence,

N 75° 30' 10” E, 125.00 feet to Franklin Street; thence,

S 14° 29' 50” E, 82.67 feet to the point of beginning.

Said parcels are also shown on a Survey entitled “Plan of Land, John Adams
Nursing Home, 211 Franklin Street, Quincy, Massachusetts” by R.E. Cameron &
Associates, Inc., dated January 29, 1997, revised June 20, 2001, Job No. 2580.

John Adams Continuing Care

LONGMEADOW OF TAUNTON

68 Dean Street, Taunton, MA

Parcel 1

Beginning at a point on the north side of Dean Street that is S 78°-07’-53” W,
188.49 feet from a Mass. Highway Bound at station 34+95;

thence S 78°-07'-53” W, 131.55 feet to a Mass. Highway bound and by Dean Street;

thence S 81°-33'-58” W, 72.05 feet by Dean Street;

thence N 30°-12'-10” W, 322.56 feet by land now or formerly of O'Neill;

thence N 71°-18'-00” E, 273.62 feet by Parcel 2;

thence S 17°-24'-00” E, 344.69 feet by Parcel 2 to the point of beginning.

Containing 78,349 square feet; 1.799 Acres.

The above property was surveyed by R. E. Cameron & Associates, Inc., Scott D.
Cameron, PLS 35393 on April 25, 1997 and revised July 27, 2001.

Parcel 2

Beginning at a point on the north side of Dean Street that is S 78°-07’-53” W,
88.49 feet from a Mass. Highway Bound at station 34+95; thence S 78°-07’-53” W,
100.00 feet by Dean Street; thence N 17°-24’-00” W, 344.69 feet by Parcel 1;
thence S 71°-18’-00” W, 273.62 feet by Parcel 1; thence S 79°-29-’10” W, 134.96
feet by land now or formerly of O’Neill; thence N 28°-40’-30” W, 385.71 feet by
land now or formerly of South Bay Corporation; thence N 15°-27’-00” E,254.48
feet by land now or formerly of Penn Central Railroad Co.; thence N 65°-50’30”
E, 360.00 feet by land now or formerly of the City of Taunton; thence S
29°-05’-00” E, 642.61 feet by lands now or formerly of Gebelien and Finn; thence
S 55°-49’-00” W, 45.00 feet by land now or formerly of Gordon; thence S
17°-24’-00” E, 356.64 feet by said Gordon to point of beginning. Containing
354,063 square feet. 8.128 Acres. The above property was surveyed by R.E.
Cameron & Associates, Inc., Scott D. Cameron, PLS 35393 on April 25, 1997 and
revised July 27, 2001.

Longmeadow  of Taunton

MAPLE LEAF HEALTHCARE CENTER

198 Pearl Street, Manchester, NH

All that piece or parcel of property situate in the City of Manchester, County
of Hillsborough, State of New Hampshire, as shown on a plan entitled “ALTA/ACSM
Survey, Maple Leaf Health Care Center, Inc., (Tax Map 3, Lot 8), 198 Pearl
Street, Manchester, New Hampshire,” dated April 1996, last revised June 24,
1996; prepared by Costello, Lomasney & deNapoli, Inc. and recorded in the
Hillsborough County Registry of Deeds as Plan #28073; bounded and described as
follows:

Beginning at a point at the intersection of the easterly street line of Beech
Street (having a 50 foot right-of-way) and the northerly street line of Pearl
Street (having a 50 foot right-of-way), said point being a stone bound, and
being the southwest corner of the parcel herein described;

Thence, northerly along said Beech Street street line on a bearing of North 11°
00' 00” East, a distance of 141.64 feet to an iron pin to be set on the division
line between the parcel herein described on the south and land now or formerly
of John J. and Kathleen M. Stevens (Tax Map 3, Lot 2A) on the north;

Thence, easterly along said land of Stevens and land now or formerly of Emil and
Michalena Krupa (Tax Map 3, Lot 9) on a bearing of South 79° 01' 00” East, a
distance of 220.85 feet to an iron pin to be set on the westerly street line of
Ash Street (having a 50 foot right-of-way);

Thence, southerly along said street line on a bearing of South 11° 00' 00” West,
a distance of 141.58 feet to an iron pin to be set on the northerly street line
of Pearl Street;

Thence, westerly along said street line on a bearing of North 79° 01' 57” West,
a distance of 220.85 feet to the point or place of beginning.

Subject to matters or the effects of matters shown on said Plan #28073, and also
plan entitle, “ Real Estate Property, St. George’s R.C. Parish” dated January
23, 1954, and recorded in the said Registry as Plan #991. Also subject to terms
of the Hill-Burton Act.

Maple Leaf Healthcare Center

VILLA CREST NURSING AND RETIREMENT CENTER

1276 Hanover Street, Manchester, NH

All those pieces or parcels of property situate in the City of Manchester,
County of Hillsborough, State of New Hampshire, as shown on a plan entitled
“ALTA/ACSM Survey, Villa Crest, Inc., (Tax Map 501, Lots 3 & 3B), 1276 Hanover
Street, Manchester, NH”, dated April 1996, last revised June 24, 1996; prepared
by Costello, Lomasney & deNapoli, Inc.; and recorded in the Hillsborough County
Registry of Deeds as Plan #28074, bounded and described as follows:

Nursing Home Parcel (Tax Map 501, Lot 3)

Beginning at a point on the northerly street line of Hanover Street (having a 66
foot right-of-way) at its intersection with the division line between the parcel
herein described on the east and land now or formerly of Frank E. Sienko and
Laurie J. Baker (Tax Map 501, Lot 3A) on the west; said division line also being
the westerly street line of former Tina Avenue; and said point being the
southwesterly corner of the parcel herein described;

Thence, northerly and westerly along said land of Sienko and Baker on the
following courses: along a curve to the left with a radius of 763.19 feet, a
distance of 67.93 feet (said curve having a chord line running North 02° 05' 44”
West); North 87° 47' 23” West, a distance of 98.81 feet to a point on the
division line between the parcel herein described on the east and land now or
formerly of Henry J. & Mary G. Stefanik (Tax Map 501, Lot 2) on the West;

Thence, northerly and westerly along said land of Stefanik on the following
courses: North 04° 53' 35” East, a distance of 20.67 feet; South 85° 46' 44”
West, a distance of 50.11 feet to a point on the division line between the
parcel herein described on the east and land now or formerly of Vivian S. Morey
(Tax Map 501, Lot 1) on the west;

Thence, northerly and westerly along said land of Morey on the following
courses: North 03° 11' 58” East, a distance of 174.93 feet; South 88° 56' 18”
West, a distance of 100.00 feet to a point on the division line between the
parcel herein described on the east and other land now or formerly of Management
Realty Corporation (Tax Map 502, Lot 2) on the west;

Thence, northerly along said land of Management Realty Corporation, generally
following a stone wall, in part, on the following courses: North 06° 44' 13”
East, a distance of 59.70 feet; North 04° 34' 09” East, a distance of 87.62
feet; North 03° 24' 11” East, a distance of 94.71 feet; North 02° 53' 25” East,
a distance of 71.32 feet; North 07° 19' 04” East, a distance of 35.15 feet;
North 04° 37' 10” East, a distance of 57.35 feet; North 01° 50' 00” East, a
distance of 65.19 feet; North 05° 00' 13” East, a distance of 67.24 feet to a
point at the junction of 2 stone walls and on the division line between the
parcel herein described on the south and land now or formerly of Eric and Eileen
Krimmer (Tax Map 498, Lot 14A) on the north; said point also being at the center
of Farmer Street, a proposed public way that was dedicated by a subdivision plan
in 1899, but for which no record of layout, construction or acceptance has been
found.

Thence, easterly along said land of Krimmer, land now or formerly of Federal
National Mortgage Association (Tax Map 498, Lot 9A), and land now or formerly of
John W. and Debra

Villa Crest Nursing and Retirement Center

D. Lappas (Tax Map 498, Lot 9C), generally following a stone wall and portions
of a fence on the following courses: South 65° 10' 50” East, a distance of
129.63 feet; South 67° 04' 45” East, a distance of 33.15 feet; South 68° 15' 46”
East, a distance of 12.24 feet; South 63° 39' 26” East, a distance of 77.14
feet; South 63° 34' 38” East, a distance of 87.50 feet; South 58° 01' 22” East,
a distance of 45.06 feet to a point on the approximate centerline of Farmer
Street;

Thence, southerly across said Farmer Street as referenced herein, on a bearing
of South 04° 49' 12” West, a distance of 16.95 feet to a point on the division
line between the parcel herein described on the west and land now or formerly of
William D. and Eleanor M. Kelliher (Tax Map 501 Lot 12), on the east; said point
being at the end of a stone wall;

Thence, further southerly along said stone wall and land of Kelliher, land now
or formerly of Stanley A. and Gladys J. Kowaleski (Tax map 501, Lot 9), land now
or formerly of Theodore Henry and Barbara Ann Bukowski (Tax Map 501, Lot 8), and
land now or formerly of Anthony J. Cappello and Irene J. Ficek (Tax Map 501, Lot
4) on the following courses: South 04° 48' 58” West, a distance of 43.93 feet;
South 01° 55' 03” West, a distance of 103.80 feet; South 02° 14' 34” West, a
distance of 31.59 feet; South 03° 57' 10” West, a distance of 96.78 feet; South
01° 54' 51” West; a distance of 84.16 feet; South 02° 50' 15” West, a distance
of 101.10 feet; South 02° 14' 32” West, a distance of 40.87 feet to a point on
the division line between the parcel herein described on the north and other
land of Management Realty Corporation (Tax Map 501, Lot 3B) on the south;

Thence, westerly along said Lot 3B on a bearing of North 83° 48' 06” West, a
distance of 78.19 feet to a point;

Thence, southerly further along said Lot 3B on the following courses: along a
curve to the right with a radius of 813.19 feet, a distance of 90.00 feet (said
curve having a chord line running South 04° 49' 13” East); along a curve to the
left with a radius of 25.00 feet, a distance of 40.25 feet (said curve having a
chord line running South 47° 45' 28” East), said last-mentioned courses being
along the easterly line of former Tina Avenue; to a point on the northerly
street line of said Hanover Street;

Thence, westerly along said street line on a bearing of South 86° 05' 40” West,
a distance of 76.56 feet to the point or place of beginning.

Second  Parcel (Tax Map 501, Lot 3B)

Beginning at a point on the northerly street line of Hanover Street (having a 66
foot right-of-way) at its intersection with the division line between the parcel
herein described on the west and land now or formerly of Anthony J. Cappello &
Irene J. Ficek (Tax Map 501, Lot 4) on the east; said point being at the end of
a stone wall on said division line; and said point being southeasterly corner of
the parcel herein described.

Thence, westerly along said street line on a bearing of South 86° 05' 40” West,
a distance of 40.20 feet to a point on the division line between the parcel
herein described on the east and

Villa Crest Nursing and Retirement Center

other land of Management Realty Corporation (Tax Map 501, Lot 3) on the west,
said division line also being the easterly line of former Tina Avenue;

Thence, northerly along said other land of Management Realty Corporation on the
following courses: along the curve to the right with a radius of 25.00 feet; a
distance of 40.25 feet (said curve having a chord line running North 47° 45' 28”
West); along a curve to the left with a radius of 813.19 feet, a distance of
90.00 feet to a point (said curve having a chord line running North 04° 49' 13”
West);

Thence, easterly further along with other land of Management Realty Corporation
on a bearing of South 83° 48' 06” East, a distance of 78.19 feet to a point on
the first-mentioned division line between the parcel herein described on the
west and land now or formerly of Cappello and Ficek on the east, said point
being in a stone wall on said division line;

Thence, southerly along said land of Cappello and Ficek following a stone wall
on the following courses: South 02° 14' 32” West, a distance of 76.19 feet;
South 09° 43' 00” West, a distance of 13.07 feet; South 07° 32' 42” East, a
distance of 13.78 feet to the point or place of beginning.

Villa Crest Nursing and Retirement Center