**Exhibit 10.11**

 

**AMENDEDAND RESTATED MASTER LEASE AGREEMENT,**

 

dated as of August4, 2009,

 

by and among

 

**SNH FM FINANCING LLC, SNH FMFINANCING TRUST AND ELLICOTT CITY LAND I, LLC,**

 

COLLECTIVELY ASLANDLORD,

 

AND

 

**FVEFM FINANCING, INC.,**

 

AS TENANT

 

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| **ARTICLE 1** | **DEFINITIONS**                       | **1** |
|---------------|---------------------------------------|-------|
| 1.1           | AAA                                   | 2     |
| 1.2           | Additional  Charges                   | 2     |
| 1.3           | Additional  Rent                      | 2     |
| 1.4           | Affiliated  Person                    | 2     |
| 1.5           | Agreement                             | 2     |
| 1.6           | Applicable  Laws                      | 2     |
| 1.7           | Arbitration  Award                    | 3     |
| 1.8           | Award                                 | 3     |
| 1.9           | Base  Gross Revenues                  | 3     |
| 1.10          | Business  Day                         | 3     |
| 1.11          | Capital  Addition                     | 3     |
| 1.12          | Capital  Expenditure                  | 4     |
| 1.13          | Change  in Control                    | 4     |
| 1.14          | Claim                                 | 5     |
| 1.15          | Code                                  | 5     |
| 1.16          | Commencement  Date                    | 5     |
| 1.17          | Condemnation                          | 5     |
| 1.18          | Condemnor                             | 5     |
| 1.19          | Consolidated  Financials              | 5     |
| 1.20          | Date  of Taking                       | 5     |
| 1.21          | Default                               | 5     |
| 1.22          | Disbursement  Rate                    | 6     |
| 1.23          | Disputes                              | 6     |
| 1.24          | Easement  Agreement                   | 6     |
| 1.25          | Encumbrance                           | 6     |
| 1.26          | Entity                                | 6     |
| 1.27          | Environment                           | 6     |
| 1.28          | Environmental Obligation              | 6     |
| 1.29          | Environmental  Notice                 | 6     |
| 1.30          | Event  of Default                     | 6     |
| 1.31          | Excess  Gross Revenues                | 6     |
| 1.32          | Existing  Financing                   | 7     |
| 1.33          | Extended  Term                        | 7     |
| 1.34          | Facility                              | 7     |
| 1.35          | Facility  Mortgage                    | 7     |
| 1.36          | Facility  Mortgagee                   | 7     |
| 1.37          | Financial  Officer’s Certificate | 7     |
| 1.38          | Fiscal  Year                          | 7     |
| 1.39          | Five  Star                            | 7     |
| 1.40          | Fixed  Term                           | 7     |
| 1.41          | Fixtures                              | 7     |
| 1.42          | GAAP                                  | 8     |
| 1.43          | Government  Agencies                  | 8     |
| 1.44          | Gross  Revenues                       | 8     |
| 1.45          | Guarantor                             | 9     |
| 1.46          | Guaranty                              | 9     |
| 1.47          | Hazardous  Substances                 | 9     |
| 1.48          | Immediate  Family                     | 10    |
| 1.49          | Impositions                           | 10    |
| 1.50          | Incidental  Documents                 | 11    |
| 1.51          | Indebtedness                          | 11    |
| 1.52          | Insurance  Requirements               | 12    |

 

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| 1.53          | Interest  Rate                    | 12     |
|---------------|-----------------------------------|--------|
| 1.54          | Land                              | 12     |
| 1.55          | Landlord                          | 12     |
| 1.56          | Landlord  Default                 | 12     |
| 1.57          | Landlord  Liens                   | 12     |
| 1.58          | Lease  Year                       | 12     |
| 1.59          | Leased  Improvements              | 12     |
| 1.60          | Leased  Intangible Property       | 12     |
| 1.61          | Leased  Personal Property         | 13     |
| 1.62          | Leased  Property                  | 13     |
| 1.63          | Legal  Requirements               | 13     |
| 1.64          | Lien                              | 13     |
| 1.65          | Manager                           | 13     |
| 1.66          | Management  Agreement             | 14     |
| 1.67          | Minimum  Rent                     | 14     |
| 1.68          | Notice                            | 14     |
| 1.69          | Officer’s  Certificate       | 14     |
| 1.70          | Original  Leases                  | 14     |
| 1.71          | Overdue  Rate                     | 14     |
| 1.72          | Parent                            | 14     |
| 1.73          | Permitted  Encumbrances           | 14     |
| 1.74          | Permitted  Use                    | 14     |
| 1.75          | Person                            | 15     |
| 1.76          | Pledge  Agreement                 | 15     |
| 1.77          | Property                          | 15     |
| 1.78          | Provider  Agreements              | 15     |
| 1.79          | Regulated  Medical Wastes         | 15     |
| 1.80          | Rent                              | 15     |
| 1.81          | Rules                             | 15     |
| 1.82          | SEC                               | 15     |
| 1.83          | Security  Agreement               | 15     |
| 1.84          | State                             | 15     |
| 1.85          | Subordinated  Creditor            | 16     |
| 1.86          | Subordination  Agreement          | 16     |
| 1.87          | Subsidiary                        | 16     |
| 1.88          | Successor  Landlord               | 16     |
| 1.89          | Tenant                            | 16     |
| 1.90          | Tenant’s  Personal Property  | 16     |
| 1.91          | Term                              | 16     |
| 1.92          | Third  Party Payor Programs       | 16     |
| 1.93          | Third  Party Payors               | 17     |
| 1.94          | Unsuitable  for Its Permitted Use | 17     |
| 1.95          | Work                              | 17     |
| **ARTICLE 2** | **LEASED  PROPERTY AND TERM**     | **17** |
| 2.1           | Leased  Property                  | 17     |
| 2.2           | Condition  of Leased Property     | 18     |
| 2.3           | Fixed  Term                       | 19     |
| 2.4           | Extended  Terms                   | 19     |
| **ARTICLE 3** | **RENT**                          | **20** |
| 3.1           | Rent                              | 20     |
| 3.2           | Late  Payment of Rent, Etc.       | 26     |
| 3.3           | Net  Lease                        | 27     |

 

2

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| 3.4            | No  Termination, Abatement, Etc.                     | 27     |
|----------------|------------------------------------------------------|--------|
| **ARTICLE 4**  | **USE OF THE  LEASED PROPERTY**                      | **28** |
| 4.1            | Permitted  Use                                       | 28     |
| 4.2            | Compliance  with Legal/Insurance Requirements, Etc.  | 30     |
| 4.3            | Compliance  with Medicaid and Medicare Requirements  | 30     |
| 4.4            | Environmental  Matters                               | 31     |
| **ARTICLE 5**  | **MAINTENANCE  AND REPAIRS**                         | **33** |
| 5.1            | Maintenance  and Repair                              | 33     |
| 5.2            | Tenant’s  Personal Property                     | 35     |
| 5.3            | Yield  Up                                            | 35     |
| 5.4            | Management  Agreement                                | 36     |
| **ARTICLE 6**  | **IMPROVEMENTS,  ETC.**                              | **36** |
| 6.1            | Improvements  to the Leased Property                 | 36     |
| 6.2            | Salvage                                              | 37     |
| **ARTICLE 7**  | **LIENS**                                            | **37** |
| **ARTICLE 8**  | **PERMITTED  CONTESTS**                              | **38** |
| **ARTICLE 9**  | **INSURANCE AND  INDEMNIFICATION**                   | **39** |
| 9.1            | General  Insurance Requirements                      | 39     |
| 9.2            | Waiver  of Subrogation                               | 39     |
| 9.3            | Form Satisfactory,  Etc.                        | 39     |
| 9.4            | No  Separate Insurance; Self-Insurance               | 40     |
| 9.5            | Indemnification  of Landlord                         | 41     |
| **ARTICLE 10** | **CASUALTY**                                         | **42** |
| 10.1           | Insurance  Proceeds                                  | 42     |
| 10.2           | Damage  or Destruction                               | 42     |
| 10.3           | Damage  Near End of Term                             | 44     |
| 10.4           | Tenant’s  Property                              | 45     |
| 10.5           | Restoration  of Tenant’s Property               | 45     |
| 10.6           | No  Abatement of Rent                                | 45     |
| 10.7           | Waiver                                               | 45     |
| **ARTICLE 11** | **CONDEMNATION**                                     | **45** |
| 11.1           | Total Condemnation, Etc.                             | 45     |
| 11.2           | Partial  Condemnation                                | 46     |
| 11.3           | Abatement  of Rent                                   | 47     |
| 11.4           | Temporary  Condemnation                              | 47     |
| 11.5           | Allocation  of Award                                 | 48     |
| **ARTICLE 12** | **DEFAULTS AND  REMEDIES**                           | **48** |
| 12.1           | Events  of Default                                   | 48     |
| 12.2           | Remedies                                             | 51     |
| 12.3           | Tenant’s  Waiver                                | 52     |
| 12.4           | Application  of Funds                                | 52     |
| 12.5           | Landlord’s  Right to Cure Tenant’s Default | 53     |
| **ARTICLE 13** | **HOLDING OVER**                                     | **53** |
| **ARTICLE 14** | **LANDLORD  DEFAULT**                                | **53** |
| **ARTICLE 15** | **PURCHASE  RIGHTS**                                 | **54** |
| **ARTICLE 16** | **SUBLETTING AND  ASSIGNMENT**                       | **55** |
| 16.1           | Subletting  and Assignment                           | 55     |
| 16.2           | Required  Sublease Provisions                        | 56     |
| 16.3           | Permitted  Sublease                                  | 57     |

 

3

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| 16.4           | Sublease  Limitation                                | 58     |
|----------------|-----------------------------------------------------|--------|
| **ARTICLE 17** | **ESTOPPEL  CERTIFICATES AND FINANCIAL STATEMENTS** | **58** |
| 17.1           | Estoppel  Certificates                              | 58     |
| 17.2           | Financial  Statements                               | 59     |
| 17.3           | General  Operations                                 | 60     |
| **ARTICLE 18** | **LANDLORD’S  RIGHT TO INSPECT**               | **61** |
| **ARTICLE 19** | **EASEMENTS**                                       | **61** |
| 19.1           | Grant  of Easements                                 | 61     |
| 19.2           | Exercise  of Rights by Tenant                       | 62     |
| 19.3           | Permitted  Encumbrances                             | 62     |
| **ARTICLE 20** | **FACILITY  MORTGAGES**                             | **62** |
| 20.1           | Landlord  May Grant Liens                      | 62     |
| 20.2           | Subordination  of Lease                             | 62     |
| 20.3           | Notice  to Mortgagee and Superior Landlord          | 64     |
| **ARTICLE 21** | **ADDITIONAL  COVENANTS OF TENANT**                 | **65** |
| 21.1           | Prompt  Payment of Indebtedness                     | 65     |
| 21.2           | Conduct  of Business                                | 65     |
| 21.3           | Maintenance  of Accounts and Records                | 65     |
| 21.4           | Notice  of Litigation, Etc.                         | 65     |
| 21.5           | Prohibited  Transactions                            | 66     |
| 21.6           | Existing  Financing                                 | 66     |
| **ARTICLE 22** | **ARBITRATION**                                     | **66** |
| 22.1           | Disputes                                            | 66     |
| 22.2           | Selection  of Arbitrators                           | 67     |
| 22.3           | Location  of Arbitration                            | 67     |
| 22.4           | Scope  of Discovery                                 | 67     |
| 22.5           | Arbitration  Award                                  | 67     |
| 22.6           | Costs                                               | 68     |
| 22.7           | Final  Judgment                                     | 68     |
| 22.8           | Payment                                             | 68     |
| **ARTICLE 23** | **MISCELLANEOUS**                                   | **68** |
| 23.1           | Limitation  on Payment of Rent                      | 68     |
| 23.2           | No  Waiver                                          | 69     |
| 23.3           | Remedies  Cumulative                                | 69     |
| 23.4           | Severability                                        | 69     |
| 23.5           | Acceptance  of Surrender                            | 69     |
| 23.6           | No  Merger of Title                                 | 70     |
| 23.7           | Conveyance  by Landlord                             | 70     |
| 23.8           | Quiet  Enjoyment                                    | 70     |
| 23.9           | No  Recordation                                     | 70     |
| 23.10          | Notices                                             | 71     |
| 23.11          | Construction                                        | 72     |
| 23.12          | Counterparts;  Headings                             | 72     |
| 23.13          | Applicable  Law, Etc.                               | 72     |
| 23.14          | Right  to Make Agreement                            | 73     |
| 23.15          | Attorneys’  Fees                               | 73     |
| 23.16          | Nonliability  of Trustees                           | 73     |
| 23.17          | Original  Leases                                    | 73     |

 

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**AMENDEDAND RESTATED MASTER LEASE AGREEMENT**

** **

**THISAMENDED AND RESTATED MASTER LEASE AGREEMENT** is entered into as of August 4, 2009 by and among SNHFM FINANCING LLC, a Delaware limited liability company, SNH FM FINANCING TRUST,a Maryland real estate investment trust, and ELLICOTT CITY LAND I, LLC, aDelaware limited liability company, collectively as landlord (“Landlord”),and FVE FM FINANCING, INC., a Maryland corporation, as tenant (“Tenant”).

 

**W**** I T N E S S E T H :**

 

**WHEREAS,** certainaffiliates of Landlord and Tenant are parties to certain Amended and Restated Master Lease Agreements,dated as of June 30, 2008 (collectively, the “Original Leases”);and

 

**WHEREAS,**the landlordsand tenants under the Original Leases are conveying their interests in certain ofthe properties demised thereunder and, in connection therewith, Landlord andTenant and the landlords and tenants under the Original Leases wish to amendand restate the Original Leases into separate leases and to make certain othermodifications thereto as are set forth herein;

 

**NOW,THEREFORE,**inconsideration of the mutual covenants herein contained and for other good andvaluable consideration, the mutual receipt and legal sufficiency of which arehereby acknowledged, Landlord and Tenant hereby agree that, effective as of thedate hereof, the Original Leases are hereby amended and restated but only withrespect to the Leased Property (as hereinafter defined), as follows:

 

# **ARTICLE1**

 

# **DEFINITIONS**

 

Forall purposes of this Agreement, except as otherwise expressly provided orunless the context otherwise requires, (a) the terms defined in this Article shallhave the meanings assigned to them in this Article and include the pluralas well as the singular, (b) all accounting terms not otherwise definedherein shall have the meanings assigned to them in accordance with GAAP, (c) allreferences in this Agreement to designated “Articles”, “Sections” and othersubdivisions are to the designated Articles, Sections and other subdivisions ofthis Agreement, and (d) the words “herein”, “hereof”, “hereunder” andother words of similar import refer to this Agreement as a whole and not to anyparticular Article, Section or other subdivision.

 

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## **1.1              ****“AAA”** shall have the meaning given such term in Section 22.1.

##  

## **1.2               “AdditionalCharges” **shallhave the meaning given such term in Section 3.1.3.

##  

## **1.3               “AdditionalRent” **shallhave the meaning given such term in Section 3.1.2(a).

##  

## **1.4               “AffiliatedPerson” **shallmean, with respect to any Person, (a)  in the case of any such Personwhich is a partnership, any partner in such partnership, (b) in the caseof any such Person which is a limited liability company, any member of suchcompany, (c) any other Person which is a Parent, a Subsidiary, or aSubsidiary of a Parent with respect to such Person or to one or more of thePersons referred to in the preceding clauses (a) and (b), (d) anyother Person who is an officer, director, trustee or employee of, or partner inor member of, such Person or any Person referred to in the preceding clauses(a), (b) and (c), and (e) any other Person who is a member of theImmediate Family of such Person or of any Person referred to in the precedingclauses (a) through (d).

##  

## **1.5               “Agreement” **shall mean thisAmended and Restated Master Lease Agreement, including all schedules andexhibits attached hereto, as it and they may be amended from time to time asherein provided.

##  

## **1.6               “ApplicableLaws” **shallmean all applicable laws, statutes, regulations, rules, ordinances, codes,licenses, permits and orders, from time to time in existence, of all courts ofcompetent jurisdiction and Government Agencies, and all applicable judicial andadministrative and regulatory decrees, judgments and orders, including commonlaw rulings and determinations, relating to injury to, or the protection of,real or personal property or human health or the Environment, including,without limitation, all valid and lawful requirements of courts and otherGovernment Agencies pertaining to reporting, licensing, permitting, investigation,remediation and removal of underground improvements (including, withoutlimitation, treatment or storage tanks, or water, gas or oil wells), oremissions, discharges, releases or threatened releases of Hazardous Substances,chemical substances, pesticides, petroleum or petroleum products, pollutants,contaminants or hazardous or toxic substances, materials or wastes whethersolid, liquid or gaseous in nature, into the Environment, or relating to themanufacture, processing, distribution, use, treatment, storage, disposal,transport or handling of Hazardous Substances or 

 

2

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## Regulated Medical Wastes, underground improvements(including, without limitation, treatment or storage tanks, or water, gas oroil wells), or pollutants, contaminants or hazardous or toxic substances,materials or wastes, whether solid, liquid or gaseous in nature.

##  

## **1.7              ****“Arbitration Award” **shall have the meaning given such term in Section 22.5.

##  

## **1.8               “Award” **shall mean allcompensation, sums or other value awarded, paid or received by virtue of atotal or partial Condemnation of any Property (after deduction of allreasonable legal fees and other reasonable costs and expenses, including,without limitation, expert witness fees, incurred by Landlord, in connectionwith obtaining any such award).

##  

## **1.9               “BaseGross Revenues” **shallmean the Gross Revenues with respect to each Property, for the respectivecalendar years or the respective dollar amount set forth on Schedule 1attached hereto and made a part hereof, as applicable; provided, however,that in the event that, with respect to any Lease Year, or portion thereof, forany reason (including, without limitation, a casualty or Condemnation) thereshall be a reduction in the number of units available at any Facility locatedat the applicable Property or in the services provided at such Facility fromthe number of such units or the services on the applicable Commencement Date,in determining Additional Rent payable for such Lease Year, Base Gross Revenuesshall be reduced as follows:  (a) inthe event of a partial closing of any Facility affecting the number of units,or the services provided, at such Facility, Gross Revenues attributable tounits or services at such Facility shall be ratably allocated among all unitsin service at such Facility on the applicable Commencement Date and all suchGross Revenues attributable to units no longer in service shall be subtractedfrom Base Gross Revenues throughout the period of such closing; and (b) inthe event of any other change in circumstances affecting any Facility, BaseGross Revenues shall be equitably adjusted in such manner as Landlord andTenant shall reasonably agree.

##  

## **1.10             “BusinessDay” **shall mean anyday other than Saturday, Sunday, or any other day on which banking institutionsin The Commonwealth of Massachusetts are authorized by law or executive actionto close.

##  

## **1.11             “CapitalAddition” **shallmean, with respect to any Property, any renovation, repair or improvement tosuch Property, the cost of which constitutes a Capital Expenditure.

 

3

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## **1.12             “CapitalExpenditure” **shallmean any expenditure treated as capital in nature in accordance with GAAP.

##  

## **1.13             “Change in Control”**  shall mean (a) theacquisition by any Person, or two or more Persons acting in concert, ofbeneficial ownership (within the meaning of Rule 13d-3 of the SEC) of 9.8%or more, or rights, options or warrants to acquire 9.8% or more, of theoutstanding shares of voting stock or other voting interests of Tenant or anyGuarantor, as the case may be, or the power to direct the management andpolicies of Tenant or any Guarantor, directly or indirectly, (b) themerger or consolidation of Tenant or any Guarantor with or into any Person orthe merger or consolidation of any Person into Tenant or any Guarantor (otherthan the merger or consolidation of any Person into Tenant or any Guarantorthat does not result in a Change in Control of Tenant or such Guarantor underclauses (a), (c), (d), (e) or (f) of this definition), (c) anyone or more sales, conveyances, dividends or distributions to any Person of allor any material portion of the assets (including capital stock or other equityinterests) or business of Tenant or any Guarantor, whether or not otherwise aChange in Control, (d) the cessation, for any reason, of the individualswho at the beginning of any twenty-four (24) consecutive month period(commencing on the date hereof) constituted the board of directors of Tenant orany Guarantor (together with any new directors whose election by such board orwhose nomination for election by the shareholders of Tenant or such Guarantorwas approved by a vote of a majority of the directors then still in office whowere either directors at the beginning of any such period or whose election ornomination for election was previously so approved, but excluding anyindividual whose initial nomination for, or assumption of, office as a memberof such board of directors occurs as a result of an actual or threatenedsolicitation of proxies or consents for the election or removal of one or moredirectors by any Person other than a solicitation for the election of one ormore directors by or on behalf of the board of directors) to constitute a majorityof the board of directors of Tenant or such Guarantor then in office, or (e) theadoption of any proposal (other than a precatory proposal) by Tenant or anyGuarantor not approved by vote of a majority of the directors of Tenant or anyGuarantor, as the case may be, in office immediately prior to the making ofsuch proposal, or (f) the election to the board of directors of Tenant orany Guarantor of any individual not nominated or appointed by vote of amajority of the directors of Tenant or such Guarantor in office immediatelyprior to the nomination or appointment of such individual.

 

4

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## **1.14             “Claim” **shall have themeaning given such term in Article 8.

##  

## **1.15             “Code” **shall mean theInternal Revenue Code of 1986 and, to the extent applicable, the TreasuryRegulations promulgated thereunder, each as from time to time amended.

##  

## **1.16             “CommencementDate” **shallmean, with respect to each Property, the calendar date specified as theCommencement Date with respect to such Property on Schedule 1 attachedhereto and made a part hereof.

##  

## **1.17             “Condemnation” **shall mean, with respect to any Property, or any portionthereof, (a) the exercise of any governmental power with respect to suchProperty, whether by legal proceedings or otherwise, by a Condemnor of itspower of condemnation, (b) a voluntary sale or transfer of such Propertyby Landlord to any Condemnor, either under threat of condemnation or whilelegal proceedings for condemnation are pending, or (c) a taking orvoluntary conveyance of such Property, or any interest therein, or rightaccruing thereto or use thereof, as the result or in settlement of anycondemnation or other eminent domain proceeding affecting such Property,whether or not the same shall have actually been commenced.

##  

## **1.18             “Condemnor” **shall mean anypublic or quasi-public Person, having the power of Condemnation.

##  

## **1.19             “ConsolidatedFinancials”** shall mean, for any Fiscal Year or other accounting period of Five Star,annual audited and quarterly unaudited financial statements of Five Starprepared on a consolidated basis, including Five Star’s consolidated balancesheet and the related statements of income and cash flows, all in reasonabledetail, and setting forth in comparative form the corresponding figures for thecorresponding period in the preceding Fiscal Year, and prepared in accordancewith GAAP throughout the periods reflected.

##  

## **1.20             “Dateof Taking” **shallmean, with respect to any Property, the date the Condemnor has the right to possessionof such Property, or any portion thereof, in connection with a Condemnation.

##  

## **1.21             “Default” **shall mean anyevent or condition which with the giving of notice and/or lapse of time wouldripen into an Event of Default.

 

5

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## **1.22             “DisbursementRate” **shallmean an annual rate of interest, as of the date of determination, equal to thegreater of (a) eight percent (8%) and (b) the per annum rate for ten (10) yearU.S. Treasury Obligations as published in The Wall Street Journal plusthree hundred (300) basis points; provided, however, that in noevent shall the Disbursement Rate exceed eleven and one-half percent (11.5%).

##  

## **1.23            ****“Disputes” **shallhave the meaning given such term in Section 22.1.

##  

## **1.24             “EasementAgreement” **shallmean any conditions, covenants and restrictions, easements, declarations,licenses and other agreements which are Permitted Encumbrances and such otheragreements as may be granted in accordance with Section 19.1.

##  

## **1.25             “Encumbrance” **shall have themeaning given such term in Section 20.1.

##  

## **1.26             “Entity” **shall mean anycorporation, general or limited partnership, limited liability company orpartnership, stock company or association, joint venture, association, company,trust, bank, trust company, land trust, business trust, cooperative, anygovernment or agency, authority or political subdivision thereof or any otherentity.

##  

## **1.27             “Environment” **shall meansoil, surface waters, ground waters, land, stream, sediments, surface or subsurfacestrata and ambient air.

##  

## **1.28             “EnvironmentalObligation” **shallhave the meaning given such term in Section 4.4.1.

##  

## **1.29             “EnvironmentalNotice” **shallhave the meaning given such term in Section 4.4.1.

##  

## **1.30             “Eventof Default” **shallhave the meaning given such term in Section 12.1.

##  

## **1.31             “ExcessGross Revenues” **shallmean, with respect to each Property, the amount of Gross Revenues for any LeaseYear, or portion thereof, in excess of Base Gross Revenues or the pro-ratedportion thereof in the case of a Lease Year which is not a full twelve-monthperiod.

 

6

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## **1.32            **“**Existing Financing**”  shall mean the financing secured by one ormore Encumbrances on the Leased Property in effect as of the date of this Agreement.

##  

## **1.33             “ExtendedTerm” **shallhave the meaning given such term in Section 2.4.

##  

## **1.34             “Facility” **shall mean,with respect to any Property, the skilled nursing/intermediate care/independentliving/assisted living/special care/group home facility being operated orproposed to be operated on such Property.

##  

## **1.35             “FacilityMortgage” **shallmean any Encumbrance placed upon the Leased Property, or any portion thereof,in accordance with Article 20.

##  

## **1.36             “FacilityMortgagee” **shallmean the holder of any Facility Mortgage.

##  

## **1.37             “FinancialOfficer’s Certificate” **shallmean, as to any Person, a certificate of the chief executive officer, chieffinancial officer or chief accounting officer (or such officers’ authorizeddesignee) of such Person, duly authorized, accompanying the financialstatements required to be delivered by such Person pursuant to Section 17.2,in which such officer shall certify (a) that such statements have beenproperly prepared in accordance with GAAP and are true, correct and complete inall material respects and fairly present the consolidated financial conditionof such Person at and as of the dates thereof and the results of its and theiroperations for the periods covered thereby, and (b) in the event that thecertifying party is an officer of Tenant and the certificate is being given insuch capacity, that no Event of Default has occurred and is continuinghereunder.

##  

## **1.38             “FiscalYear” **shallmean the calendar year or such other annual period designated by Tenant andapproved by Landlord.

##  

## **1.39            **“**Five Star”**  shall mean Five Star Quality Care, Inc.,a Maryland corporation, and its permitted successors and assigns.

##  

## **1.40             “FixedTerm” **shallhave the meaning given such term in Section 2.3.

##  

## **1.41             “Fixtures” **shall have themeaning given such term in Section 2.1(d).

 

7

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## **1.42             “GAAP” **shall meangenerally accepted accounting principles consistently applied.

##  

## **1.43             “GovernmentAgencies” **shallmean any court, agency, authority, board (including, without limitation,environmental protection, planning and zoning), bureau, commission, department,office or instrumentality of any nature whatsoever of any governmental orquasi-governmental unit of the United States or any State or any county or anypolitical subdivision of any of the foregoing, whether now or hereafter inexistence, having jurisdiction over Tenant or any Property, or any portionthereof, or any Facility operated thereon.

##  

## **1.44             “GrossRevenues”**  shall mean,with respect to each Property, for each Fiscal Year during the Term, in theaggregate, all revenues and receipts (determined on an accrual basis and in allmaterial respects in accordance with GAAP) of every kind derived from renting,using and/or operating such Property and parts thereof, including, but notlimited to:  all rents and revenuesreceived or receivable for the use of or otherwise by reason of all units, bedsand other facilities provided, meals served, services performed, space or facilitiessubleased or goods sold on such Property, or any portion thereof, including,without limitation, any other arrangements with third parties relating to thepossession or use of any portion of such Property; and proceeds, if any, frombusiness interruption or other loss of income insurance; provided, however,that Gross Revenues shall not include the following:  revenue from professional fees or charges byphysicians and unaffiliated providers of services, when and to the extent suchcharges are paid over to such physicians and unaffiliated providers ofservices, or are separately billed and not included in comprehensive fees;contractual allowances (relating to any period during the Term) for billingsnot paid by or received from the appropriate governmental agencies or thirdparty providers; allowances according to GAAP for uncollectible accounts,including credit card accounts and charity care or other administrativediscounts; all proper patient billing credits and adjustments according to GAAPrelating to health care accounting; provider discounts for hospital or othermedical facility utilization contracts and credit card discounts; any amountsactually paid by Tenant for the cost of any federal, state or localgovernmental programs imposed specially to provide or finance indigent patientcare; federal, state or municipal excise, sales, use, occupancy or similartaxes collected directly from patients, clients or residents or included aspart of the sales price of any goods or services; 

 

8

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## insurance proceeds (other than proceeds from businessinterruption or other loss of income insurance); Award proceeds (other than fora temporary Condemnation); revenues attributable to services actually providedoff-site or otherwise away from such Property, such as home health care, topersons that are not patients, clients or residents at such Property; revenuesattributable to child care services provided primarily to employees of suchProperty; any proceeds from any sale of such Property or from the refinancingof any debt encumbering such Property; proceeds from the disposition offurnishings, fixture and equipment no longer necessary for the operation of theFacility located thereon; any security deposits and other advance deposits,until and unless the same are forfeited to Tenant or applied for the purposefor which they were collected; reimbursements for provider, bed or occupancytaxes charged by any Governmental Agency to the extent previously included inGross Revenues; and interest income from any bank account or investment ofTenant.

##  

## **1.45            **“**Guarantor”**  shall mean Five Star and each and every otherguarantor of Tenant’s obligations under this Agreement, and each such guarantor’ssuccessors and assigns.

##  

## **1.46            **“**Guaranty”** shall mean any guaranty agreement executed bya Guarantor in favor of Landlord pursuant to which the payment or performanceof Tenant’s obligations under this Agreement are guaranteed, together with allmodifications, amendments and supplements thereto.

##  

## **1.47            **“**HazardousSubstances”**  shall meanany substance:

##  

#### (a)           thepresence of which requires or may hereafter require notification, investigationor remediation under any federal, state or local statute, regulation, rule,ordinance, order, action or policy; or

####  

#### (b)           whichis or becomes defined as a “hazardous waste”, “hazardous material” or “hazardoussubstance” or “pollutant” or “contaminant” under any present or future federal,state or local statute, regulation, rule or ordinance or amendmentsthereto including, without limitation, the Comprehensive EnvironmentalResponse, Compensation and Liability Act (42 U.S.C. Section 9601 etseq.) and the Resource Conservation and Recovery Act (42 U.S.C. Section 6901etseq.) and the regulations promulgated thereunder; or

 

9

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#### (c)           whichis toxic, explosive, corrosive, flammable, infectious, radioactive,carcinogenic, mutagenic or otherwise hazardous and is or becomes regulated byany governmental authority, agency, department, commission, board, agency orinstrumentality of the United States, any state of the United States, or anypolitical subdivision thereof; or

####  

#### (d)           thepresence of which on any Property, or any portion thereof, causes or materiallythreatens to cause an unlawful nuisance upon such Property, or any portion thereof,or to adjacent properties or poses or materially threatens to pose a hazard tosuch Property, or any portion thereof, or to the health or safety of persons onor about such Property, or any portion thereof; or

####  

#### (e)           withoutlimitation, which contains gasoline, diesel fuel or other petroleumhydrocarbons or volatile organic compounds; or

####  

#### (f)            withoutlimitation, which contains polychlorinated biphenyls (PCBs) or asbestos or ureaformaldehyde foam insulation; or

####  

#### (g)           withoutlimitation, which contains or emits radioactive particles, waves or material;or

####  

#### (h)           withoutlimitation, constitutes Regulated Medical Wastes.

####  

## **1.48             “ImmediateFamily” **shallmean, with respect to any individual, such individual’s spouse, parents,brothers, sisters, children (natural or adopted), stepchildren, grandchildren,grandparents, parents-in-law, brothers-in-law, sisters-in-law, nephews andnieces.

##  

## **1.49             “Impositions” **shall mean,collectively, all taxes (including, without limitation, all taxes imposed underthe laws of any State, as such laws may be amended from time to time, and allad valorem, sales and use, or similar taxes as the same relate to or areimposed upon Landlord, Tenant or the business conducted upon the LeasedProperty), assessments (including, without limitation, all assessments forpublic improvements or benefit, whether or not commenced or completed prior tothe date hereof), ground rents (including any minimum rent under any groundlease, and any additional rent or charges thereunder), water, sewer or otherrents and charges, excises, tax levies, fees (including, without limitation,license, permit, 

 

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## inspection, authorization and similar fees), and all othergovernmental charges, in each case whether general or special, ordinary orextraordinary, foreseen or unforeseen, of every character in respect of theLeased Property or the business conducted thereon by Tenant (including allinterest and penalties thereon due to any failure in payment by Tenant), whichat any time prior to, during or in respect of the Term hereof may be assessedor imposed on or in respect of or be a lien upon (a) Landlord’s interestin the Leased Property, (b) the Leased Property or any part thereof or anyrent therefrom or any estate, right, title or interest therein, or (c) anyoccupancy, operation, use or possession of, or sales from, or activityconducted on, or in connection with the Leased Property or the leasing or useof the Leased Property or any part thereof by Tenant; provided, however,that nothing contained herein shall be construed to require Tenant to pay andthe term “Impositions” shall not include (i) any tax based on net incomeimposed on Landlord, (ii) any net revenue tax of Landlord, (iii) anytransfer fee (but excluding any mortgage or similar tax payable in connectionwith a Facility Mortgage) or other tax imposed with respect to the sale,exchange or other disposition by Landlord of the Leased Property or theproceeds thereof, (iv) any single business, gross receipts tax,transaction privilege, rent or similar taxes as the same relate to or areimposed upon Landlord, (v) any interest or penalties imposed on Landlordas a result of the failure of Landlord to file any return or report timely andin the form prescribed by law or to pay any tax or imposition, except to theextent such failure is a result of a breach by Tenant of its obligationspursuant to Section 3.1.3, (vi) any impositions imposed onLandlord that are a result of Landlord not being considered a “United Statesperson” as defined in Section 7701(a)(30) of the Code, (vii) anyimpositions that are enacted or adopted by their express terms as a substitutefor any tax that would not have been payable by Tenant pursuant to the terms ofthis Agreement or (viii) any impositions imposed as a result of a breachof covenant or representation by Landlord in any agreement governing Landlord’sconduct or operation or as a result of the negligence or willful misconduct ofLandlord.

##  

## **1.50             “Incidental Documents” **shallmean, collectively, any Guaranty, any Security Agreement and any PledgeAgreement.

##  

## **1.51             “Indebtedness” **shall mean allobligations, contingent or otherwise, which in accordance with GAAP should bereflected on the obligor’s balance sheet as liabilities.

 

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## **1.52            ****“Insurance Requirements” **shall mean allterms of any insurance policy required by this Agreement and all requirementsof the issuer of any such policy and all orders, rules and regulations andany other requirements of the National Board of Fire Underwriters (or any otherbody exercising similar functions) binding upon Landlord, Tenant, any Manageror the Leased Property.

##  

## **1.53             “Interest Rate” **shall mean, with respect to eachProperty, the per annum interest rate specified as the Interest Rate withrespect to such Property on Schedule 1 attached hereto and made a parthereof.

##  

## **1.54             “Land” **shall have themeaning given such term in Section 2.1(a).

##  

## **1.55             “Landlord” **shall have themeaning given such term in the preambles to this Agreement and shall alsoinclude its permitted successors and assigns.

##  

## **1.56             “LandlordDefault” **shallhave the meaning given such term in Article 14.

##  

## **1.57             “LandlordLiens” **shallmean liens on or against the Leased Property or any payment of Rent (a) whichresult from any act of, or any claim against, Landlord or any owner of a director indirect interest in the Leased Property (other than the lessor under anyground lease affecting any portion of the Leased Property), or which resultfrom any violation by Landlord of any terms of this Agreement, or (b) whichresult from liens in favor of any taxing authority by reason of any tax owed byLandlord or any fee owner of a direct or indirect interest in the LeasedProperty (other than the lessor under any ground lease affecting any portion ofthe Leased Property); provided, however, that “Landlord Lien”shall not include any lien resulting from any tax for which Tenant is obligatedto pay or indemnify Landlord against until such time as Tenant shall havealready paid to or on behalf of Landlord the tax or the required indemnity withrespect to the same.

##  

## **1.58             “LeaseYear” **shallmean any Fiscal Year or portion thereof during the Term.

##  

## **1.59             “LeasedImprovements” **shallhave the meaning given such term in Section 2.1(b).

##  

## **1.60             “LeasedIntangible Property” **shallmean all agreements, service contracts, equipment leases, booking 

 

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## agreements and other arrangements or agreements affectingthe ownership, repair, maintenance, management, leasing or operation of theLeased Property, or any portion thereof, to which Landlord is a party; allbooks, records and files relating to the leasing, maintenance, management oroperation of the Leased Property, or any portion thereof, belonging toLandlord; all transferable or assignable permits, certificates of occupancy,operating permits, sign permits, development rights and approvals,certificates, licenses, warranties and guarantees, rights to deposits, tradenames, service marks, telephone exchange numbers identified with the LeasedProperty, and all other transferable intangible property, miscellaneous rights,benefits and privileges of any kind or character belonging to Landlord withrespect to the Leased Property.

##  

## **1.61            ****“Leased Personal Property” **shall have the meaning given such term in Section 2.1(e).

##  

## **1.62             “Leased Property”**  shall havethe meaning given such term in Section 2.1.

##  

## **1.63             “LegalRequirements” **shallmean all federal, state, county, municipal and other governmental statutes,laws, rules, orders, regulations, ordinances, judgments, decrees andinjunctions affecting the Leased Property or the maintenance, construction,alteration or operation thereof, whether now or hereafter enacted or inexistence, including, without limitation, (a) all permits, licenses,authorizations, certificates of need, authorizations and regulations necessaryto operate any Property for its Permitted Use, and (b) all covenants,agreements, restrictions and encumbrances contained in any instruments at anytime in force affecting any Property, including those which may (i) requirematerial repairs, modifications or alterations in or to any Property or (ii) inany way materially and adversely affect the use and enjoyment thereof, butexcluding any requirements arising as a result of Landlord’s status as a realestate investment trust.

##  

## **1.64             “Lien” **shall mean anymortgage, security interest, pledge, collateral assignment, or otherencumbrance, lien or charge of any kind, or any transfer of property or assetsfor the purpose of subjecting the same to the payment of Indebtedness orperformance of any other obligation in priority to payment of generalcreditors.

##  

## **1.65            ****“Manager”**  shall mean, with respect to any Property, theoperator or manager under any Management Agreement from time 

 

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## to time in effect with respect to such Property, and itspermitted successors and assigns.

##  

## **1.66            **“**Management Agreement”**  shall mean, with respect to any Property, anyoperating or management agreement from time to time entered into by Tenant withrespect to such Property in accordance with the applicable provisions of thisAgreement, together with all amendments, modifications and supplements thereto.

##  

## **1.67             “MinimumRent” **shallmean the sum of Sixty Million Two Hundred Seventeen Thousand One Hundred Twentyand 00/100s Dollars ($60,217,120.00) per annum.

##  

## **1.68             “Notice” **shall mean anotice given in accordance with Section 23.10.

##  

## **1.69             “Officer’sCertificate” **shallmean a certificate signed by an officer or other duly authorized individual ofthe certifying Entity duly authorized by the board of directors or othergoverning body of the certifying Entity.

##  

## **1.70             “OriginalLeases”**  shall have the meaning given such term in therecitals to this Agreement.

##  

## **1.71             “OverdueRate” **shallmean, on any date, a perannum rate of interest equal to thelesser of fifteen percent (15%) and the maximum rate then permitted underApplicable Laws.

##  

## **1.72             “Parent” **shall mean,with respect to any Person, any Person which owns directly, or indirectlythrough one or more Subsidiaries or Affiliated Persons, twenty percent (20%) ormore of the voting or beneficial interest in, or otherwise has the right orpower (whether by contract, through ownership of securities or otherwise) tocontrol, such Person.

##  

## **1.73             “PermittedEncumbrances” **shallmean, with respect to any Property, all rights, restrictions, and easements ofrecord set forth on Schedule B to the applicable owner’s or leasehold titleinsurance policy issued to Landlord with respect to such Property, plus anyother encumbrances as may have been granted or caused by Landlord or otherwiseconsented to in writing by Landlord from time to time.

##  

## **1.74             “PermittedUse” **shall mean,with respect to any Property, any use of such Property permitted pursuant to Section 4.1.1.

 

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## **1.75             “Person” **shall mean anyindividual or Entity, and the heirs, executors, administrators, legalrepresentatives, successors and assigns of such Person where the context soadmits.

##  

## **1.76            **“**Pledge Agreement”**  shall mean, collectively, any pledgeagreement made in favor of Landlord with respect to the stock or other equityinterests of Tenant or any assignee, subtenant or other transferee, as it orthey may be amended, restated, supplemented or otherwise modified from time totime.

##  

## **1.77             “Property” **shall have themeaning given such term in Section 2.1.

##  

## **1.78             “ProviderAgreements”** shall mean all participation, provider andreimbursement agreements or arrangements now or hereafter in effect for thebenefit of Tenant or any Manager in connection with the operation of anyFacility relating to any right of payment or other claim arising out of or inconnection with Tenant’s participation in any Third Party Payor Program.

##  

## **1.79             “RegulatedMedical Wastes”** shall mean all materials generated by Tenant, subtenants, patients,occupants or the operators of the Leased Property which are now or mayhereafter be subject to regulation pursuant to the Material Waste Tracking Actof 1988, or any Applicable Laws promulgated by any Government Agencies.

##  

## **1.80             “Rent” **shall mean,collectively, the Minimum Rent, Additional Rent and Additional Charges.

##  

## **1.81            ****“Rules” **shallhave the meaning given such term in Section 22.1.

##  

## **1.82             “SEC” **shall mean theSecurities and Exchange Commission.

##  

## **1.83             “SecurityAgreement” **shallmean, collectively, any security agreement made by Tenant or any assignee,subtenant or other transferee for the benefit of Landlord, as it or they may beamended, restated, supplemented or otherwise modified from time to time.

##  

## **1.84             “State” **shall mean,with respect to any Property, the state, commonwealth or district in which suchProperty is located.

 

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## **1.85             “SubordinatedCreditor” **shallmean any creditor of Tenant which is a party to a Subordination Agreement infavor of Landlord.

##  

## **1.86             “SubordinationAgreement” **shallmean any agreement (and any amendments thereto) executed by a SubordinatedCreditor pursuant to which the payment and performance of Tenant’s obligationsto such Subordinated Creditor are subordinated to the payment and performanceof Tenant’s obligations to Landlord under this Agreement.

##  

## **1.87             “Subsidiary” **shall mean,with respect to any Person, any Entity (a) in which such Person ownsdirectly, or indirectly through one or more Subsidiaries, twenty percent (20%)or more of the voting or beneficial interest or (b) which such Personotherwise has the right or power to control (whether by contract, throughownership of securities or otherwise).

##  

## **1.88             “SuccessorLandlord” **shallhave the meaning given such term in Section 20.2.

##  

## **1.89             “Tenant” **shall have themeaning given such term in the preambles to this Agreement.

##  

## **1.90             “Tenant’sPersonal Property” **shallmean all motor vehicles and consumable inventory and supplies, furniture,furnishings, equipment, movable walls and partitions, equipment and machineryand all other tangible personal property of Tenant, if any, acquired by Tenanton and after the applicable Commencement Date for any Property and located atsuch Property or used in Tenant’s business at the Leased Property and allmodifications, replacements, alterations and additions to such personalproperty installed at the expense of Tenant, other than any items includedwithin the definitions of Fixtures and Leased Personal Property.

##  

## **1.91             “Term” **shall mean,collectively, the Fixed Term and the Extended Term, to the extent properlyexercised pursuant to the provisions of Section 2.4, unless soonerterminated pursuant to the provisions of this Agreement.

##  

## **1.92             “ThirdParty Payor Programs”** shall mean all third party payor programs in which Tenant presently orin the future may participate, including, without limitation, Medicare,Medicaid, CHAMPUS, Blue Cross and/or Blue Shield, Managed Care Plans, otherprivate insurance programs and employee assistance programs.

 

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## **1.93             “ThirdParty Payors” **shallmean Medicare, Medicaid, CHAMPUS, Blue Cross and/or Blue Shield, privateinsurers and any other Person which presently or in the future maintains ThirdParty Payor Programs.

##  

## **1.94             “Unsuitablefor Its Permitted Use” **shallmean, with respect to any Facility, a state or condition of such Facility suchthat (a) following any damage or destruction involving a Facility, (i) suchFacility cannot be operated on a commercially practicable basis for itsPermitted Use and it cannot reasonably be expected to be restored tosubstantially the same condition as existed immediately before such damage ordestruction, and as otherwise required by Section 10.2.4, withintwelve (12) months following such damage or destruction or such longer periodof time as to which business interruption insurance is available to cover Rentand other costs related to the applicable Property following such damage ordestruction, (ii) the damage or destruction, if uninsured, exceeds$1,000,000 or (iii) the cost of such restoration exceeds ten percent (10%)of the fair market value of such Property immediately prior to such damage ordestruction, or (b) as the result of a partial taking by Condemnation,such Facility cannot be operated, in the good faith judgment of Tenant, on acommercially practicable basis for its Permitted Use.

##  

## **1.95             “Work” **shall have themeaning given such term in Section 10.2.4.

##  

# **ARTICLE2**

 

# **LEASED PROPERTYAND TERM**

 

## **2.1               LeasedProperty.** Upon and subject to the terms and conditions hereinafter set forth,Landlord leases to Tenant and Tenant leases from Landlord all of Landlord’sright, title and interest in and to all of the following (each of items (a) through(g) below which relates to any single Facility, a “Property” and,collectively, the “Leased Property”):

##  

#### (a)           thosecertain tracts, pieces and parcels of land, as more particularly described in ExhibitsA-1 through A-27 attached hereto and made a part hereof (the “Land”);

####  

#### (b)           allbuildings, structures and other improvements of every kind including, but notlimited to, alleyways and connecting tunnels, sidewalks, utility pipes,conduits and lines (on-site and off-site), parking areas and roadwaysappurtenant to such buildings and structures presently 

 

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#### situated uponthe Land (collectively, the “Leased Improvements”);

####  

#### (c)           alleasements, rights and appurtenances relating to the Land and the LeasedImprovements;

####  

#### (d)           allequipment, machinery, fixtures, and other items of property, now or hereafterpermanently affixed to or incorporated into the Leased Improvements, including,without limitation, all furnaces, boilers, heaters, electrical equipment,heating, plumbing, lighting, ventilating, refrigerating, incineration, air andwater pollution control, waste disposal, air-cooling and air-conditioningsystems and apparatus, sprinkler systems and fire and theft protectionequipment, all of which, to the maximum extent permitted by law, are herebydeemed by the parties hereto to constitute real estate, together with allreplacements, modifications, alterations and additions thereto, butspecifically excluding all items included within the category of Tenant’sPersonal Property (collectively, the “Fixtures”);

####  

#### (e)           allmachinery, equipment, furniture, furnishings, moveable walls or partitions,computers or trade fixtures or other personal property of any kind ordescription used or useful in Tenant’s business on or in the LeasedImprovements, and located on or in the Leased Improvements, and allmodifications, replacements, alterations and additions to such personalproperty, except items, if any, included within the category of Fixtures, butspecifically excluding all items included within the category of Tenant’sPersonal Property (collectively, the “Leased Personal Property”);

####  

#### (f)            allof the Leased Intangible Property; and

####  

#### (g)           anyand all leases of space in the Leased Improvements.

####  

## **2.2               Conditionof Leased Property.** Tenant acknowledges receipt and delivery ofpossession of the Leased Property and Tenant accepts the Leased Property in its“as is” condition, subject to the rights of parties in possession, the existingstate of title, including all covenants, conditions, restrictions,reservations, mineral leases, easements and other matters of record or that arevisible or apparent on the Leased Property, all applicable Legal Requirements,the lien of any financing instruments, mortgages and deeds of trust existing 

 

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## prior to the applicable Commencement Date for any Propertyor permitted by the terms of this Agreement, and such other matters which wouldbe disclosed by an inspection of the Leased Property and the record titlethereto or by an accurate survey thereof. TENANT REPRESENTS THAT IT HAS INSPECTED THE LEASED PROPERTY AND ALL OFTHE FOREGOING AND HAS FOUND THE CONDITION THEREOF SATISFACTORY AND IS NOTRELYING ON ANY REPRESENTATION OR WARRANTY OF LANDLORD OR LANDLORD’S AGENTS OREMPLOYEES WITH RESPECT THERETO AND TENANT WAIVES ANY CLAIM OR ACTION AGAINSTLANDLORD IN RESPECT OF THE CONDITION OF THE LEASED PROPERTY.  LANDLORD MAKES NO WARRANTY OR REPRESENTATION,EXPRESS OR IMPLIED, IN RESPECT OF THE LEASED PROPERTY OR ANY PART THEREOF,EITHER AS TO ITS FITNESS FOR USE, DESIGN OR CONDITION FOR ANY PARTICULAR USE ORPURPOSE OR OTHERWISE, AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN,LATENT OR PATENT, IT BEING AGREED THAT ALL SUCH RISKS ARE TO BE BORNE BYTENANT.  To the maximum extent permittedby law, however, Landlord hereby assigns to Tenant all of Landlord’s rights toproceed against any predecessor in interest or insurer for breaches ofwarranties or representations or for latent defects in the LeasedProperty.  Landlord shall fully cooperatewith Tenant in the prosecution of any such claims, in Landlord’s or Tenant’sname, all at Tenant’s sole cost and expense. Tenant shall indemnify, defend, and hold harmless Landlord from andagainst any loss, cost, damage or liability (including reasonable attorneys’fees) incurred by Landlord in connection with such cooperation.

##  

## **2.3               FixedTerm.** The initial term of this Agreement (the “FixedTerm”) with respect to each Property commenced on the Commencement Datewith respect to such Property and shall expire on December 31, 2028.

##  

## **2.4               ExtendedTerms.** Provided that no Event of Default shall haveoccurred and be continuing, Tenant shall have the right to extend the Term fortwo renewal terms of fifteen (15) years each (each an “Extended Term”).

##  

If andto the extent Tenant shall exercise the options, the first Extended Term shallcommence on January 1, 2029 and expire on December 31, 2043 and thesecond Extended Term shall commence on January 1, 2044 and expire on December 31,2058.  All of the terms, covenants andprovisions of this Agreement shall apply to each Extended Term, except thatTenant shall have no right to extend the Term beyond December 31,2058.  If Tenant shall elect to exercisethe option to extend the Term for the first Extended Term, it shall do so bygiving Landlord Notice thereof not later than December 31, 2026, and ifTenant shall elect to exercise

 

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its option to extend the Term for the second ExtendedTerm after having elected to extend the Term for the first Extended Term, itshall do so by giving Landlord Notice not later than December 31, 2041, itbeing understood and agreed that time shall be of the essence with respect tothe giving of any such Notice.  If Tenantshall fail to give any such Notice, this Agreement shall automaticallyterminate at the end of the Fixed Term or the first Extended Term as applicableand Tenant shall have no further option to extend the Term of thisAgreement.  If Tenant shall give suchNotice, the extension of this Agreement shall be automatically effected withoutthe execution of any additional documents; it being understood and agreed,however, that Tenant and Landlord shall execute such documents and agreementsas either party shall reasonably require to evidence the same.  Notwithstanding the provisions of theforegoing sentence, if, subsequent to the giving of such Notice, an Event ofDefault shall occur, at Landlord’s option, the extension of this Agreementshall cease to take effect and this Agreement shall automatically terminate atthe end of the Fixed Term or the Extended Term, as applicable, and Tenant shallhave no further option to extend the Term of this Agreement.

 

Notwithstandingthe foregoing, Tenant shall have no right to extend the Term for eitherExtended Term with respect to any Properties located in the State ofCalifornia.  If Tenant shall extend theTerm, the definition of Leased Property shall exclude any Properties located inthe State of California during the Extended Term(s), Minimum Rent shall bereduced by the Minimum Rent allocated thereto by the parties, and Tenant shallsurrender such Properties to Landlord at the expiration of the Fixed Term inthe condition required by Section 5.3 and shall comply with all ofits other obligations relating to such Properties as if the Term had expired atthe end of the Fixed Term.

 

# **ARTICLE3**

 

# **RENT**

 

## **3.1               Rent.** Tenant shall pay, inlawful money of the United States of America which shall be legal tender forthe payment of public and private debts, without offset, abatement, demand ordeduction (unless otherwise expressly provided in this Agreement), Minimum Rentand Additional Rent to Landlord and Additional Charges to the party to whomsuch Additional Charges are payable, during the Term.  All payments to Landlord shall be made bywire transfer of immediately available federal funds or by other meansacceptable to Landlord in its sole discretion. 

 

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##  

## Rent for any partial calendar month shall be prorated on aper diem basis.

##  

### **3.1.1           MinimumRent.**

###  

#### (a)           **Payments**. Minimum Rent shall be paid in equal monthly installments in arrears onthe first Business Day of each calendar month during the Term.

####  

#### (b)           **Allocation of Minimum Rent****. **Minimum Rent may be allocated and reallocated among theProperties comprising the Leased Property by agreement among Landlord andTenant; provided, however that in no event shall the Minimum Rentallocated to any Property be less than the monthly amount payable by Landlordon account of any Facility Mortgage and/or ground or master lease with respectto such Property nor shall the aggregate amount of Minimum Rent allocated amongthe Properties exceed the total amount payable for the Leased Property.

####  

#### (c)           **Adjustments of Minimum Rent Following Disbursements Under Sections5.1.2(b), 10.2.3 and 11.2****.**  Effective on the date of each disbursement topay for the cost of any repairs, maintenance, renovations or replacementspursuant to Sections 5.1.2(b), 10.2.3 or 11.2, the annual Minimum Rentshall be increased by a perannum amount equal to theDisbursement Rate times the amount so disbursed.  If any such disbursement is made during anycalendar month on a day other than the first Business Day of such calendarmonth, Tenant shall pay to Landlord on the first Business Day of theimmediately following calendar month (in addition to the amount of Minimum Rentpayable with respect to such calendar month, as adjusted pursuant to thisparagraph (c)) the amount by which Minimum Rent for the preceding calendarmonth, as adjusted for such disbursement on a per diem basis, exceeded theamount of Minimum Rent paid by Tenant for such preceding calendar month.

####  

#### (d)           **Adjustments of Minimum Rent Following Partial Lease Termination**.  Subject to Section 4.1.1(b), ifthis Agreement shall terminate with respect to any Property but less than allof the Leased Property, Minimum Rent shall be reduced by the affected Property’sallocable share of Minimum Rent determined in accordance with the applicableprovisions of this Agreement.

 

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### **3.1.2           AdditionalRent**.

###  

#### (a)           **Amount****.** Tenant shall pay additional rent (“AdditionalRent”) with respect to each Lease Year during the Term in an amount, notless than zero, equal to four percent (4%) of Excess Gross Revenues at eachProperty.

####  

#### (b)           **Quarterly Installments****.** Installments of Additional Rent for each LeaseYear during the Term, or portion thereof, shall be calculated and paidquarterly in arrears.  Quarterly paymentsof Additional Rent for each Property shall be calculated based on GrossRevenues for such quarter during the preceding year and shall be due andpayable and delivered to Landlord on the first Business Day of each calendarquarter, or portion thereof, thereafter occurring during the Term, togetherwith an Officer’s Certificate setting forth the calculation of Additional Rentdue and payable for such quarter.

####  

#### (c)           **Reconciliation of Additional Rent****.** In addition, within seventy-five (75) daysafter the end of each Lease Year (or any portion thereof occurring during theTerm), Tenant shall deliver, or cause to be delivered, to Landlord (i) afinancial report setting forth the Gross Revenues for each Property for suchpreceding Lease Year, or portion thereof, together with an Officer’sCertificate from Tenant’s chief financial or accounting officer certifying thatsuch report is true and correct, and (ii) a statement showing Tenant’scalculation of Additional Rent due for such preceding Lease Year, or portionthereof, based on the Gross Revenues set forth in such financial report,together with an Officer’s Certificate from Tenant’s chief financial oraccounting officer certifying that such statement is true and correct.

####  

If the annual AdditionalRent for such preceding Lease Year as set forth in Tenant’s statement thereofexceeds the amount previously paid with respect thereto by Tenant, Tenant shallpay such excess to Landlord at such time as the statement is delivered,together with interest at the Interest Rate, which interest shall accrue fromthe close of such preceding Lease Year until the date that such statement isrequired to be delivered and, thereafter, such interest shall accrue at theOverdue Rate, until the amount of such difference shall be paid or otherwisedischarged.  If the annual AdditionalRent for such preceding Lease Year as shown in such statement is less than theamount previously paid with respect thereto by Tenant, provided 

 

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that no Event ofDefault shall have occurred and be continuing, Landlord shall grant Tenant acredit against the Additional Rent next coming due in the amount of suchdifference, together with interest at the Interest Rate, which interest shallaccrue from the date of payment by Tenant until the date such credit is appliedor paid, as the case may be.  If suchcredit cannot be made because the Term has expired prior to application in fullthereof, provided no Event of Default has occurred and is continuing, Landlordshall pay the unapplied balance of such credit to Tenant, together withinterest at the Interest Rate, which interest shall accrue from the date ofpayment by Tenant until the date of payment by Landlord.

 

#### (d)           **Confirmation of Additional Rent****.** Tenant shall utilize, or cause to be utilized,an accounting system for the Leased Property in accordance with its usual andcustomary practices and in all material respects in accordance with GAAP, whichwill accurately record all Gross Revenues and Tenant shall retain, for at leastthree (3) years after the expiration of each Lease Year, reasonablyadequate records conforming to such accounting system showing all GrossRevenues for such Lease Year.  Landlord,at its own expense, except as provided hereinbelow, shall have the right,exercisable by Notice to Tenant, by its accountants or representatives, toaudit the information set forth in the Officer’s Certificate referred to insubparagraph (c) above and, in connection with such audits, to examineTenant’s books and records with respect thereto (including supporting data andsales and excise tax returns).  Landlordshall begin such audit as soon as reasonably possible following its receipt ofthe applicable Officer’s Certificate and shall complete such audit as soon asreasonably possible thereafter.  All suchaudits shall be performed at the location where such books and records arecustomarily kept and in such a manner so as to minimize any interference withTenant’s business operations.  If anysuch audit discloses a deficiency in the payment of Additional Rent and eitherTenant agrees with the result of such audit or the matter is otherwisedetermined, Tenant shall forthwith pay to Landlord the amount of thedeficiency, as finally agreed or determined, together with interest at theInterest Rate, from the date such payment should have been made to the date ofpayment thereof, and if the amount of such deficiency exceeds five percent (5%)of the Additional Rent that should have been paid for any Lease Year, Tenantshall forthwith pay to Landlord the 

 

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#### aggregateamount of all costs and expenses incurred by Landlord in connection with anysuch audit.  If any such audit disclosesthat Tenant paid more Additional Rent for any Lease Year than was duehereunder, and either Landlord agrees with the result of such audit or thematter is otherwise determined, provided no Event of Default has occurred andis continuing, Landlord shall, at Landlord’s option, either grant Tenant acredit or pay to Tenant an amount equal to the amount of such overpaymentagainst Additional Rent next coming due in the amount of such difference, asfinally agreed or determined, together with interest at the Interest Rate,which interest shall accrue from the time of payment by Tenant until the datesuch credit is applied or paid, as the case may be; provided, however,that, upon the expiration or sooner termination of the Term, provided no Eventof Default has occurred and is continuing, Landlord shall pay the unappliedbalance of such credit to Tenant, together with interest at the Interest Rate,which interest shall accrue from the date of payment by Tenant until the dateof payment from Landlord.  Any disputeconcerning the correctness of an audit shall be settled by arbitration pursuantto the provisions of Article 22.

####  

Any proprietaryinformation obtained by Landlord with respect to Tenant pursuant to theprovisions of this Agreement shall be treated as confidential, except that suchinformation may be disclosed or used, subject to appropriate confidentialitysafeguards, pursuant to court order or in any litigation between the partiesand except further that Landlord may disclose such information to itsprospective lenders, provided that Landlord shall direct such lenders tomaintain such information as confidential. The obligations of Tenant and Landlord contained in this Section 3.1.2shall survive the expiration or earlier termination of this Agreement.

 

### **3.1.3           Additional Charges.** In addition to the Minimum Rent and AdditionalRent payable hereunder, Tenant shall pay (or cause to be paid) to theappropriate parties and discharge (or cause to be discharged) as and when dueand payable the following (collectively, “Additional Charges”):

###  

#### (a)           **Impositions****.** Subject to Article 8 relating topermitted contests, Tenant shall pay, or cause to be paid, all Impositionsbefore any fine, penalty, interest or cost (other than any opportunity cost asa result of a failure to take advantage of any discount for early payment) maybe 

 

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#### added fornon-payment, such payments to be made directly to the taxing authorities wherefeasible, and shall promptly, upon request, furnish to Landlord copies ofofficial receipts or other reasonably satisfactory proof evidencing suchpayments.  If any such Imposition may, atthe option of the taxpayer, lawfully be paid in installments (whether or notinterest shall accrue on the unpaid balance of such Imposition), Tenant mayexercise the option to pay the same (and any accrued interest on the unpaidbalance of such Imposition) in installments and, in such event, shall pay, orcause to pay, such installments during the Term as the same become due andbefore any fine, penalty, premium, further interest or cost may be addedthereto.  Landlord, at its expense,shall, to the extent required or permitted by Applicable Laws, prepare andfile, or cause to be prepared and filed, all tax returns and pay all taxes duein respect of Landlord’s net income, gross receipts, sales and use, singlebusiness, transaction privilege, rent, ad valorem, franchise taxes and taxes onits capital stock or other equity interests, and Tenant, at its expense, shall,to the extent required or permitted by Applicable Laws and regulations, prepareand file all other tax returns and reports in respect of any Imposition as maybe required by Government Agencies. Provided no Event of Default shall have occurred and be continuing, ifany refund shall be due from any taxing authority in respect of any Impositionpaid by or on behalf of Tenant, the same shall be paid over to or retained byTenant.  Landlord and Tenant shall, uponrequest of the other, provide such data as is maintained by the party to whomthe request is made with respect to the Leased Property as may be necessary toprepare any required returns and reports. In the event Government Agencies classify any property covered by thisAgreement as personal property, Tenant shall file, or cause to be filed, allpersonal property tax returns in such jurisdictions where it may legally sofile.  Each party shall, to the extent itpossesses the same, provide the other, upon request, with cost and depreciationrecords necessary for filing returns for any property so classified as personalproperty.  Where Landlord is legallyrequired to file personal property tax returns for property covered by this Agreement,Landlord shall provide Tenant with copies of assessment notices in sufficienttime for Tenant to file a protest.  AllImpositions assessed against such personal property shall be (irrespective ofwhether Landlord or Tenant shall file the relevant return) paid by Tenant notlater than the last 

 

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#### date on whichthe same may be made without interest or penalty, subject to the provisions of Article 8.

####  

Landlord shall giveprompt Notice to Tenant of all Impositions payable by Tenant hereunder of whichLandlord at any time has knowledge; provided, however, thatLandlord’s failure to give any such notice shall in no way diminish Tenant’sobligation hereunder to pay such Impositions.

 

#### (b)           **Utility Charges****.** Tenant shall pay or cause to be paid allcharges for electricity, power, gas, oil, water and other utilities used inconnection with the Leased Property.

####  

#### (c)           **Insurance Premiums****.** Tenant shall pay or cause to be paid allpremiums for the insurance coverage required to be maintained pursuant to Article 9.

####  

#### (d)           **Other Charges****.** Tenant shall pay or cause to be paid all otheramounts, liabilities and obligations, including, without limitation, groundrents, if any, and all amounts payable under any equipment leases and allagreements to indemnify Landlord under Sections 4.4.2 and 9.5.

####  

#### (e)           **Reimbursement for Additional Charges****.** If Tenant pays or causes to be paid propertytaxes or similar or other Additional Charges attributable to periods after theend of the Term, whether upon expiration or sooner termination of thisAgreement (other than termination by reason of an Event of Default), Tenantmay, within a reasonable time after the end of the Term, provide Notice toLandlord of its estimate of such amounts. Landlord shall promptly reimburse Tenant for all payments of such taxesand other similar Additional Charges that are attributable to any period afterthe Term of this Agreement.

####  

## **3.2               LatePayment of Rent, Etc.** If any installment of Minimum Rent, Additional Rent or AdditionalCharges (but only as to those Additional Charges which are payable directly toLandlord) shall not be paid within ten (10) days after its due date,Tenant shall pay Landlord, on demand, as Additional Charges, a late charge (tothe extent permitted by law) computed at the Overdue Rate on the amount of suchinstallment, from the due date of such installment to the date of paymentthereof. To the extent that Tenant pays any Additional Charges directly to 

 

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## Landlord or any Facility Mortgagee pursuant to anyrequirement of this Agreement, Tenant shall be relieved of its obligation topay such Additional Charges to the Entity to which they would otherwise bedue.  If any payments due from Landlordto Tenant shall not be paid within ten (10) days after its due date,Landlord shall pay to Tenant, on demand, a late charge (to the extent permittedby law) computed at the Overdue Rate on the amount of such installment from thedue date of such installment to the date of payment thereof.

##  

In theevent of any failure by Tenant to pay any Additional Charges when due, Tenantshall promptly pay and discharge, as Additional Charges, every fine, penalty,interest and cost which is added for non-payment or late payment of such items.  Landlord shall have all legal, equitable andcontractual rights, powers and remedies provided either in this Agreement or bystatute or otherwise in the case of non-payment of the Additional Charges as inthe case of non-payment of the Minimum Rent and Additional Rent.

 

## **3.3               NetLease.** The Rent shall be absolutely net to Landlordso that this Agreement shall yield to Landlord the full amount of theinstallments or amounts of the Rent throughout the Term, subject to any otherprovisions of this Agreement which expressly provide otherwise, including thoseprovisions for adjustment or abatement of such Rent.

##  

## **3.4               NoTermination, Abatement, Etc.**  Except as otherwise specifically provided inthis Agreement, each of Landlord and Tenant, to the maximum extent permitted bylaw, shall remain bound by this Agreement in accordance with its terms andshall not take any action without the consent of the other to modify, surrenderor terminate this Agreement.  Inaddition, except as otherwise expressly provided in this Agreement, Tenantshall not seek, or be entitled to, any abatement, deduction, deferment orreduction of the Rent, or set-off against the Rent, nor shall the respectiveobligations of Landlord and Tenant be otherwise affected by reason of (a) anydamage to or destruction of the Leased Property, or any portion thereof, fromwhatever cause or any Condemnation, (b) the lawful or unlawful prohibitionof, or restriction upon, Tenant’s use of the Leased Property, or any portionthereof, or the interference with such use by any Person or by reason ofeviction by paramount title; (c) any claim which Tenant may have againstLandlord by reason of any default (other than a monetary default) or breach ofany warranty by Landlord under this Agreement or any other agreement betweenLandlord and Tenant, or to which Landlord and Tenant are parties; (d) anybankruptcy, insolvency, reorganization, composition, 

 

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## readjustment, liquidation, dissolution, winding up or otherproceedings affecting Landlord or any assignee or transferee of Landlord; or (e) forany other cause whether similar or dissimilar to any of the foregoing (otherthan a monetary default by Landlord). Except as otherwise specifically provided in this Agreement, Tenanthereby waives all rights arising from any occurrence whatsoever, which may nowor hereafter be conferred upon it by law (a) to modify, surrender orterminate this Agreement or quit or surrender the Leased Property, or anyportion thereof, or (b) which would entitle Tenant to any abatement,reduction, suspension or deferment of the Rent or other sums payable or otherobligations to be performed by Tenant hereunder.  The obligations of Tenant hereunder shall beseparate and independent covenants and agreements, and the Rent and all othersums payable by Tenant hereunder shall continue to be payable in all eventsunless the obligations to pay the same shall be terminated pursuant to theexpress provisions of this Agreement.

##  

# **ARTICLE 4**

 

# **USEOF THE LEASED PROPERTY**

 

## **4.1               Permitted Use.**

##  

### **4.1.1           PermittedUse.**

###  

#### (a)           Tenantshall, at all times during the Term, and at any other time that Tenant shall bein possession of any Property, continuously use and operate, or cause to beused and operated, such Property as a skilled nursing/ intermediatecare/independent living/assisted living/ special care/group home facility ascurrently operated, and any uses incidental thereto.  Tenant shall not use (and shall not permitany Person to use) any Property, or any portion thereof, for any other usewithout the prior written consent of Landlord, which approval shall not beunreasonably withheld, delayed or conditioned. No use shall be made or permitted to be made of any Property and no actsshall be done thereon which will cause the cancellation of any insurance policycovering such Property or any part thereof (unless another adequate policy isavailable) or which would constitute a default under any ground lease affectingsuch Property, nor shall Tenant sell or otherwise provide to residents orpatients therein, or permit to be kept, used or sold in or about any Propertyany article which may be prohibited by law or by the standard form of fireinsurance policies, or any other 

 

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#### insurancepolicies required to be carried hereunder, or fire underwriter’sregulations.  Tenant shall, at its solecost (except as expressly provided in Section 5.1.2(b)), comply orcause to be complied with all Insurance Requirements.  Tenant shall not take or omit to take, orpermit to be taken or omitted to be taken, any action, the taking or omissionof which materially impairs the value or the usefulness of any Property or anypart thereof for its Permitted Use.

####  

#### (b)           Inthe event that, in the reasonable determination of Tenant, it shall no longerbe economically practical to operate any Property as currently operated,****Tenant shall give Landlord Notice thereof, which Noticeshall set forth in reasonable detail the reasons therefor.  Thereafter, Landlord and Tenant shallnegotiate in good faith to agree on an alternative use for such Property,appropriate adjustments to the Additional Rent and other related matters; provided,however, in no event shall the Minimum Rent be reduced or abated as aresult thereof.  If Landlord and Tenantfail to agree on an alternative use for such Property within sixty (60) daysafter commencing negotiations as aforesaid, Tenant may market such Property forsale to a third party.  If Tenant receivesa bona fide offer (an “Offer”) to purchase such Property from a Personhaving the financial capacity to implement the terms of such Offer, Tenantshall give Landlord Notice thereof, which Notice shall include a copy of theOffer executed by such third party.  Inthe event that Landlord shall fail to accept or reject such Offer within thirty(30) days after receipt of such Notice, such Offer shall be deemed to berejected by Landlord.  If Landlord shallsell the Property pursuant to such Offer, then, effective as of the date ofsuch sale, this Agreement shall terminate with respect to such Property, andthe Minimum Rent shall be reduced by an amount equal to the product of the netproceeds of sale received by Landlord multiplied by the Interest Rate.  If Landlord shall reject (or be deemed to haverejected) such Offer, then, effective as of the proposed date of such sale,this Agreement shall terminate with respect to such Property, and the MinimumRent shall be reduced by an amount equal to the product of the projected netproceeds determined by reference to such Offer multiplied by the Interest Rate.

####  

### **4.1.2           Necessary Approvals.** Tenant shall proceed with all due diligenceand exercise reasonable efforts to obtain and

 

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### maintain, or cause to beobtained and maintained, all approvals necessary to use and operate, for itsPermitted Use, each Property and the Facility located thereon under ApplicableLaws and, without limiting the foregoing, shall exercise reasonable efforts tomaintain (or cause to be maintained) appropriate certifications forreimbursement and licensure.

###  

### **4.1.3           Lawful Use, Etc.** Tenant shall not, and shall not permit anyPerson to use or suffer or permit the use of any Property or Tenant’s PersonalProperty, if any, for any unlawful purpose. Tenant shall not, and shall not permit any Person to, commit or sufferto be committed any waste on any Property, or in any Facility, nor shall Tenantcause or permit any unlawful nuisance thereon or therein.  Tenant shall not, and shall not permit anyPerson to, suffer nor permit any Property, or any portion thereof, to be usedin such a manner as (a) may materially and adversely impair Landlord’stitle thereto or to any portion thereof, or (b) may reasonably allow a claimor claims for adverse usage or adverse possession by the public, as such, or ofimplied dedication of such Property, or any portion thereof.

###  

## **4.2               Compliancewith Legal/Insurance Requirements, Etc.** Subject to the provisions of Section 5.1.2(b) andArticle 8, Tenant, at its sole expense, shall (a) comply with(or cause to be complied with) all material Legal Requirements and InsuranceRequirements in respect of the use, operation, maintenance, repair, alterationand restoration of any Property and with the terms and conditions of any groundlease affecting any Property, (b) perform (or cause to be performed) in atimely fashion all of Landlord’s obligations under any ground lease affectingany Property and (c) procure, maintain and comply with (or cause to beprocured, maintained and complied with) all material licenses, certificates ofneed, permits, provider agreements and other authorizations and agreementsrequired for any use of any Property and Tenant’s Personal Property, if any,then being made, and for the proper erection, installation, operation andmaintenance of the Leased Property or any part thereof.

##  

## **4.3               Compliancewith Medicaid and Medicare Requirements.**  Tenant, at its sole cost and expense, shallmake (or shall cause to be made), whatever improvements (capital or ordinary)as are required to conform each Property to such standards as may, from time totime, be required by Federal Medicare (Title 18) or Medicaid (Title 19) forskilled and/or intermediate care nursing programs, to the extent Tenant is aparticipant in such programs with respect to such Property, or any otherapplicable programs or legislation, or capital improvements required by anyother 

 

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## governmental agency having jurisdiction over any Property asa condition of the continued operation of such Property for its Permitted Use.

##  

## **4.4               Environmental Matters**.

##  

### **4.4.1           Restriction on Use, Etc.** During the Term and any other time that Tenantshall be in possession of any Property, Tenant shall not, and shall not permitany Person to, store, spill upon, dispose of or transfer to or from suchProperty any Hazardous Substance, except in compliance with all ApplicableLaws.  During the Term and any other timethat Tenant shall be in possession of any Property, Tenant shall maintain (orshall cause to be maintained) such Property at all times free of any HazardousSubstance (except in compliance with all Applicable Laws).  Tenant shall promptly:  (a) upon receipt of notice or knowledge,notify Landlord in writing of any material change in the nature or extent ofHazardous Substances at any Property, (b) transmit to Landlord a copy ofany report which is required to be filed by Tenant or any Manager with respectto any Property pursuant to SARA Title III or any other Applicable Laws, (c) transmitto Landlord copies of any citations, orders, notices or other governmentalcommunications received by Tenant or any Manager or their respective agents orrepresentatives with respect thereto (collectively, “Environmental Notice”),which Environmental Notice requires a written response or any action to betaken and/or if such Environmental Notice gives notice of and/or presents amaterial risk of any material violation of any Applicable Laws and/or presentsa material risk of any material cost, expense, loss or damage (an “EnvironmentalObligation”), (d) observe and comply with (or cause to be observed andcomplied with) all Applicable Laws relating to the use, maintenance anddisposal of Hazardous Substances and all orders or directives from anyofficial, court or agency of competent jurisdiction relating to the use ormaintenance or requiring the removal, treatment, containment or otherdisposition thereof, and (e) pay or otherwise dispose (or cause to be paidor otherwise disposed) of any fine, charge or Imposition related thereto,unless Tenant or any Manager shall contest the same in good faith and byappropriate proceedings and the right to use and the value of any of the LeasedProperty is not materially and adversely affected thereby.

###  

If, atany time prior to the termination of this Agreement, Hazardous Substances(other than those maintained in accordance with Applicable Laws) are discoveredon any Property, subject to Tenant’s right to contest the same in accordancewith Article 8, Tenant shall take (and shall cause to be taken) allactions and 

 

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incur any and all expenses, as are required by anyGovernment Agency and by Applicable Laws, (x) to clean up and remove fromand about such Property all Hazardous Substances thereon, (y) to containand prevent any further release or threat of release of Hazardous Substances onor about such Property and (z) to use good faith efforts to eliminate anyfurther release or threat of release of Hazardous Substances on or about suchProperty.

 

### **4.4.2           Indemnification of Landlord.** Tenant shall protect, indemnify and holdharmless Landlord and each Facility Mortgagee, their trustees, officers,agents, employees and beneficiaries, and any of their respective successors orassigns with respect to this Agreement (collectively, the “Indemnitees”and, individually, an “Indemnitee”) for, from and against any and alldebts, liens, claims, causes of action, administrative orders or notices,costs, fines, penalties or expenses (including, without limitation, reasonableattorney’s fees and expenses) imposed upon, incurred by or asserted against anyIndemnitee resulting from, either directly or indirectly, the presence in, uponor under the soil or ground water of any Property or any properties surroundingsuch Property of any Hazardous Substances in violation of any Applicable Laws,except to the extent the same arise from the acts or omissions of Landlord orany other Indemnitee or during any period that Landlord or a Person designatedby Landlord (other than Tenant) is in possession of such Property from andafter the Commencement Date for such Property. Tenant’s duty herein includes, but is not limited to, costs associatedwith personal injury or property damage claims as a result of the presenceprior to the expiration or sooner termination of the Term and the surrender ofsuch Property to Landlord in accordance with the terms of this Agreement ofHazardous Substances in, upon or under the soil or ground water of suchProperty in violation of any Applicable Laws. Upon Notice from Landlord and any other of the Indemnitees, Tenant shallundertake the defense, at Tenant’s sole cost and expense, of anyindemnification duties set forth herein, in which event, Tenant shall not beliable for payment of any duplicative attorneys’ fees incurred by anyIndemnitee.

###  

Tenantshall, upon demand, pay (or cause to be paid) to Landlord, as an AdditionalCharge, any cost, expense, loss or damage (including, without limitation,reasonable attorneys’ fees) reasonably incurred by Landlord and arising from afailure of Tenant to observe and perform (or to cause to be observed andperformed) the requirements of this Section 4.4, which amounts shallbear interest from the date ten (10) Business Days 

 

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after written demand therefor is given to Tenant untilpaid by Tenant to Landlord at the Overdue Rate.

 

### **4.4.3           Survival.** The provisions of this Section 4.4shall survive the expiration or sooner termination of this Agreement.

###  

# **ARTICLE 5**

 

# **MAINTENANCEAND REPAIRS**

 

## **5.1               Maintenance and Repair.**

##  

### **5.1.1           Tenant’s General Obligations.** Tenant shall keep (or cause to be kept), atTenant’s sole cost and expense, the Leased Property and all private roadways,sidewalks and curbs appurtenant thereto (and Tenant’s Personal Property) ingood order and repair, reasonable wear and tear excepted (whether or not theneed for such repairs occurs as a result of Tenant’s or any Manager’s use, anyprior use, the elements or the age of the Leased Property or Tenant’s PersonalProperty or any portion thereof), and shall promptly make or cause to be madeall necessary and appropriate repairs and replacements to each Property of everykind and nature, whether interior or exterior, structural or nonstructural,ordinary or extraordinary, foreseen or unforeseen or arising by reason of acondition existing prior to the Commencement Date for such Property (concealedor otherwise).  All repairs shall be madein a good, workmanlike manner, consistent with industry standards forcomparable Facilities in like locales, in accordance with all applicablefederal, state and local statutes, ordinances, codes, rules andregulations relating to any such work. Tenant shall not take or omit to take (or permit any Person to take oromit to take) any action, the taking or omission of which would materially andadversely impair the value or the usefulness of the Leased Property or anymaterial part thereof for its Permitted Use. Tenant’s obligations under this Section 5.1.1 shall belimited in the event of any casualty or Condemnation as set forth in Article 10and Article 11 and Tenant’s obligations with respect to HazardousSubstances are as set forth in Section 4.4.

###  

### **5.1.2           Landlord’sObligations.**

###  

#### (a)           Exceptas otherwise expressly provided in this Agreement, Landlord shall not, underany circumstances, be required to build or rebuild any improvement on theLeased Property, or to make any repairs, replacements, alterations,restorations or renewals of any nature or 

 

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#### description tothe Leased Property, whether ordinary or extraordinary, structural ornonstructural, foreseen or unforeseen, or to make any expenditure whatsoeverwith respect thereto, or to maintain the Leased Property in any way.  Except as otherwise expressly provided inthis Agreement, Tenant hereby waives, to the maximum extent permitted by law,the right to make repairs at any Property at the expense of Landlord pursuantto any law in effect on the Commencement Date for such Property or thereafterenacted.  Landlord shall have the rightto give, record and post, as appropriate, notices of nonresponsibility underany mechanic’s lien laws now or hereafter existing.

####  

#### (b)           If,pursuant to the terms of this Agreement, Tenant is required to make anyexpenditures in connection with any repair, maintenance or renovation withrespect to any Property, Tenant may, at its election, advance such funds orgive Landlord Notice thereof, which Notice shall set forth, in reasonabledetail, the nature of the required repair, renovation or replacement, theestimated cost thereof and such other information with respect thereto asLandlord may reasonably require. Provided that no Event of Default shall have occurred and be continuingand Tenant shall otherwise comply with the applicable provisions of Article 6,Landlord shall, within ten (10) Business Days after such Notice, subjectto and in accordance with the applicable provisions of Article 6,disburse such required funds to Tenant (or, if Tenant shall so elect, directlyto the Manager or any other Person performing the required work) and, upon suchdisbursement, the Minimum Rent shall be adjusted as provided in Section 3.1.1(c).  Notwithstanding the foregoing, Landlord mayelect not to disburse such required funds to Tenant; provided, however, that ifLandlord shall elect not to disburse such required funds as aforesaid, Tenant’sobligation to make such required repair, renovation or replacement shall bedeemed waived by Landlord, and, notwithstanding anything contained in thisAgreement to the contrary, Tenant shall have no obligation to make suchrequired repair, renovation or replacement.

####  

### **5.1.3           Nonresponsibility of Landlord,Etc.** All materialmen, contractors, artisans,mechanics and laborers and other persons contracting with Tenant with respectto the Leased Property, or any part thereof, are hereby charged with noticethat liens on the Leased Property or on Landlord’s interest therein areexpressly prohibited and that they must look solely 

 

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### to Tenant to secure payment forany work done or material furnished to Tenant or any Manager or for any otherpurpose during the term of this Agreement.

###  

Nothingcontained in this Agreement shall be deemed or construed in any way asconstituting the consent or request of Landlord, express or implied, byinference or otherwise, to any contractor, subcontractor, laborer ormaterialmen for the performance of any labor or the furnishing of any materialsfor any alteration, addition, improvement or repair to the Leased Property orany part thereof or as giving Tenant any right, power or authority to contractfor or permit the rendering of any services or the furnishing of any materialsthat would give rise to the filing of any lien against the Leased Property orany part thereof nor to subject Landlord’s estate in the Leased Property or anypart thereof to liability under any mechanic’s lien law of any State in anyway, it being expressly understood Landlord’s estate shall not be subject toany such liability.

 

## **5.2              Tenant’s Personal Property.** Tenant shall provide and maintain (or cause tobe provided and maintained) throughout the Term all such Tenant’s PersonalProperty as shall be necessary in order to operate in compliance withapplicable material Legal Requirements and Insurance Requirements and otherwisein accordance with customary practice in the industry for the PermittedUse.  If, from and after the CommencementDate with respect to any Property, Tenant acquires an interest in any item oftangible personal property (other than motor vehicles) on, or in connectionwith, the Leased Property, or any portion thereof, which belongs to anyoneother than Tenant, Tenant shall require the agreements permitting such use toprovide that Landlord or its designee may assume Tenant’s rights andobligations under such agreement upon Landlord’s purchase of the same inaccordance with the provisions of Article 15 and the assumption ofmanagement or operation of the Facility by Landlord or its designee.

##  

## **5.3                 Yield Up.** Upon the expiration or sooner termination ofthis Agreement (or the termination of this Agreement with respect to any Property),Tenant shall vacate and surrender the Leased Property or such Property (asapplicable) to Landlord in substantially the same condition in which suchProperty was in on its Commencement Date, except as repaired, rebuilt,restored, altered or added to as permitted or required by the provisions ofthis Agreement, reasonable wear and tear excepted (and casualty damage andCondemnation, in the event that this Agreement is terminated following acasualty or Condemnation in accordance with Article 10 or Article 11excepted).

 

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Inaddition, upon the expiration or earlier termination of this Agreement, Tenantshall, at Landlord’s sole cost and expense, use its good faith efforts totransfer (or cause to be transferred) to and cooperate with Landlord orLandlord’s nominee in connection with the processing of all applications forlicenses, operating permits and other governmental authorizations and allcontracts, including contracts with governmental or quasi-governmental Entitieswhich may be necessary for the use and operation of the Facility as thenoperated.  If requested by Landlord,Tenant shall continue to manage one or more of the Facilities after theexpiration of the Term for up to one hundred eighty (180) days, on suchreasonable terms (which shall include an agreement to reimburse Tenant for itsreasonable out-of-pocket costs and expenses, and reasonable administrativecosts), as Landlord shall reasonably request.

 

## **5.4              Management Agreement**.  Tenant shall not, without Landlord’s priorwritten consent (which consent shall not be unreasonably withheld, delayed orconditioned), enter into, amend or modify the provisions of any ManagementAgreement with respect to any Property. Any Management Agreement entered into pursuant to the provisions of thisSection 5.4 shall be subordinate to this Agreement and shallprovide, interalia, that all amounts due from Tenant to Managerthereunder shall be subordinate to all amounts due from Tenant to Landlord(provided that, as long as no Event of Default has occurred and is continuing,Tenant may pay all amounts due to Manager thereunder pursuant to suchManagement Agreement) and for termination thereof, at Landlord’s option, uponthe termination of this Agreement.  Tenantshall not take any action, grant any consent or permit any action under anysuch Management Agreement which might have a material adverse effect onLandlord, without the prior written consent of Landlord, which consent shallnot be unreasonably withheld, delayed or conditioned.

##  

# **ARTICLE 6**

 

# **IMPROVEMENTS,ETC.**

 

## **6.1               Improvementsto the Leased Property. **Tenantshall not make, construct or install (or permit to be made, constructed orinstalled) any Capital Additions without, in each instance, obtaining Landlord’sprior written consent, which consent shall not be unreasonably withheld,delayed or conditioned provided that (a) construction or installation ofthe same would not adversely affect or violate any material Legal Requirementor Insurance Requirement applicable to any Property and (b) Landlord shallhave received an Officer’s 

 

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## Certificate certifying as to the satisfaction of theconditions set out in clause (a) above; provided, however,that no such consent shall be required in the event immediate action isrequired to prevent imminent harm to person or property.  No Capital Addition shall be made which wouldtie in or connect any Leased Improvements with any other improvements onproperty adjacent to any Property (and not part of the Land) including, withoutlimitation, tie-ins of buildings or other structures or utilities.  Except as permitted herein, Tenant shall notfinance the cost of any construction of such improvement by the granting of alien on or security interest in the Leased Property or such improvement, orTenant’s interest therein, without the prior written consent of Landlord, whichconsent may be withheld by Landlord in Landlord’s sole discretion.  Any such improvements shall, upon theexpiration or sooner termination of this Agreement, remain or pass to andbecome the property of Landlord, free and clear of all encumbrances other thanPermitted Encumbrances.

##  

## **6.2               Salvage.** All materials whichare scrapped or removed in connection with the making of either CapitalAdditions or non-Capital Additions or repairs required by Article 5shall be or become the property of the party that paid for such work.

##  

# **ARTICLE 7**

 

# **LIENS**

 

Subjectto Article 8, Tenant shall use its best efforts not, directly orindirectly, to create or allow to remain and shall promptly discharge (or causeto be discharged), at its expense, any lien, encumbrance, attachment, titleretention agreement or claim upon the Leased Property, or any portion thereof,or Tenant’s leasehold interest therein or any attachment, levy, claim orencumbrance in respect of the Rent, other than (a) Permitted Encumbrances,(b) restrictions, liens and other encumbrances which are consented to inwriting by Landlord, (c) liens for those taxes of Landlord which Tenant isnot required to pay hereunder, (d) subleases permitted by Article 16,(e) liens for Impositions or for sums resulting from noncompliance withLegal Requirements so long as (i) the same are not yet due and payable, or(ii) are being contested in accordance with Article 8, (f) liensof mechanics, laborers, materialmen, suppliers or vendors incurred in theordinary course of business that are not yet due and payable or are for sumsthat are being contested in accordance with Article 8, (g) anyFacility Mortgages or other liens which are the responsibility of Landlordpursuant to the provisions of 

 

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Article 20 and (h) Landlord Liens and any other voluntaryliens created by Landlord.

 

# **ARTICLE 8**

 

# **PERMITTEDCONTESTS**

 

Tenantshall have the right to contest the amount or validity of any Imposition, LegalRequirement, Insurance Requirement, Environmental Obligation, lien, attachment,levy, encumbrance, charge or claim (collectively, “Claims”) as to theLeased Property, by appropriate legal proceedings, conducted in good faith andwith due diligence, provided that (a) the foregoing shall in no way beconstrued as relieving, modifying or extending Tenant’s obligation to pay (orcause to be paid) any Claims as finally determined, (b) such contest shallnot cause Landlord or Tenant to be in default under any mortgage or deed oftrust encumbering the Leased Property, or any portion thereof (Landlordagreeing that any such mortgage or deed of trust shall permit Tenant toexercise the rights granted pursuant to this Article 8) or anyinterest therein or result in or reasonably be expected to result in a lienattaching to the Leased Property, or any portion thereof, (c) no part ofthe Leased Property nor any Rent therefrom shall be in any immediate danger ofsale, forfeiture, attachment or loss, and (d) Tenant shall indemnify andhold harmless Landlord from and against any cost, claim, damage, penalty orreasonable expense, including reasonable attorneys’ fees, incurred by Landlordin connection therewith or as a result thereof. Landlord agrees to join in any such proceedings if required legally toprosecute such contest, provided that Landlord shall not thereby be subjectedto any liability therefor (including, without limitation, for the payment ofany costs or expenses in connection therewith) unless Tenant agrees byagreement in form and substance reasonably satisfactory to Landlord, to assumeand indemnify Landlord with respect to the same.  Tenant shall be entitled to any refund of anyClaims and such charges and penalties or interest thereon which have been paidby Tenant or paid by Landlord to the extent that Landlord has been fullyreimbursed by Tenant.  If Tenant shallfail (x) to pay or cause to be paid any Claims when finally determined, (y) toprovide reasonable security therefor or (z) to prosecute or cause to beprosecuted any such contest diligently and in good faith, Landlord may, uponreasonable notice to Tenant (which notice shall not be required if Landlordshall reasonably determine that the same is not practicable), pay such charges,together with interest and 

 

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penalties due with respect thereto, and Tenant shallreimburse Landlord therefor, upon demand, as Additional Charges.

 

# **ARTICLE 9**

 

# **INSURANCEAND INDEMNIFICATION**

 

## **9.1               GeneralInsurance Requirements.** Tenant shall, at all times during the Term andat any other time Tenant shall be in possession of any Property, or any portionthereof, keep (or cause to be kept) such Property and all property locatedtherein or thereon, insured against the risks and in such amounts as is againstsuch risks and in such amounts as Landlord shall reasonably require and may becommercially reasonable.  Tenant shallprepare a proposal setting forth the insurance Tenant proposes to be maintainedwith respect to each Property during the ensuing Fiscal Year and shall submitsuch proposal to Landlord on or before December 1 of the preceding LeaseYear for Landlord’s review and approval, which approval shall not beunreasonably withheld, delayed or conditioned. In the event that Landlord shall fail to respond within thirty (30) daysafter receipt of such proposal, such proposal shall be deemed approved.

##  

## **9.2               Waiverof Subrogation.** Landlord and Tenant agree that (insofar as andto the extent that such agreement may be effective without invalidating ormaking it impossible to secure insurance coverage from responsible insurancecompanies doing business in any State) with respect to any property loss whichis covered by insurance then being carried by Landlord or Tenant, the partycarrying such insurance and suffering said loss releases the others of and fromany and all claims with respect to such loss; and they further agree that theirrespective insurance companies (and, if Landlord or Tenant shall self insure inaccordance with the terms hereof, Landlord or Tenant, as the case may be) shallhave no right of subrogation against the other on account thereof, even thoughextra premium may result therefrom.  Inthe event that any extra premium is payable by Tenant as a result of thisprovision, Landlord shall not be liable for reimbursement to Tenant for suchextra premium.

##  

## **9.3               Form Satisfactory,Etc.** All insurance policies and endorsementsrequired pursuant to this Article 9 shall be fully paid for,nonassessable, and issued by reputable insurance companies authorized to dobusiness in the State and having a general policy holder’s rating of no lessthan A in Best’s latest rating guide. All property, business interruption,

 

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## liability and flood insurance policies with respect to eachProperty shall include no deductible in excess of Two Hundred Fifty ThousandDollars ($250,000).  At all times, allproperty, business interruption, liability and flood insurance policies, with theexception of worker’s compensation insurance coverage, shall name Landlord andany Facility Mortgagee as additional insureds, as their interests mayappear.  All loss adjustments shall bepayable as provided in Article 10, except that losses under liabilityand worker’s compensation insurance policies shall be payable directly to theparty entitled thereto.  Tenant shallcause all insurance premiums to be paid prior to the effective date of anypolicy, if required by such policy, or pursuant to an installment payment planif permissible under such policy.  Notmore than twenty five (25) days nor less than five (5) days prior to theeffective date of the policies or renewal policies (which, for renewalpolicies, shall be prior to the expiration of the existing policy), Tenantshall deliver to Landlord copies of enforceable binders for such insurancecoverage.  Tenant shall deliver (or causeto be delivered) to Landlord certificates evidencing such insurance coverage withinfive (5) days after the effective date of such policies, and thereafterTenant shall deliver to Landlord the policies or renewal policies promptly uponreceipt by Tenant.  All such policiesshall provide Landlord (and any Facility Mortgagee if required by the same)thirty (30) days prior written notice of any material change or cancellation ofsuch policy.  In the event Tenant shallfail to effect (or cause to be effected) such insurance as herein required, topay (or cause to be paid) the premiums therefor or to deliver (or cause to bedelivered) such policies or certificates to Landlord or any Facility Mortgageeat the times required, Landlord shall have the right, but not the obligation,upon Notice to Tenant, to acquire such insurance and pay the premiums therefor,which amounts shall be payable to Landlord, upon demand, as Additional Charges,together with interest accrued thereon at the Overdue Rate from the date suchpayment is made until (but excluding) the date repaid.

##  

## **9.4               NoSeparate Insurance; Self-Insurance.** Tenant shall not take (or permit any Person totake) out separate insurance, concurrent in form or contributing in the eventof loss with that required by this Article 9, or increase theamount of any existing insurance by securing an additional policy or additionalpolicies, unless all parties having an insurable interest in the subject matterof such insurance, including Landlord and all Facility Mortgagees, are includedtherein as additional insureds and the loss is payable under such insurance inthe same manner as losses are payable under this Agreement.  

 

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## In the event Tenant shall take out any such separateinsurance or increase any of the amounts of the then existing insurance, Tenantshall give Landlord prompt Notice thereof. Tenant shall not self-insure (or permit any Person to self-insure) withrespect to any insurance required to be carried hereunder by Tenant.

##  

## **9.5               Indemnificationof Landlord.** Notwithstanding the existence of any insuranceprovided for herein and without regard to the policy limits of any suchinsurance, Tenant shall protect, indemnify and hold harmless Landlord for, fromand against all liabilities, obligations, claims, damages, penalties, causes ofaction, costs and reasonable expenses (including, without limitation,reasonable attorneys’ fees), to the maximum extent permitted by law, imposedupon or incurred by or asserted against Landlord by reason of the following,except to the extent caused by Landlord’s gross negligence or willful misconduct:  (a) any accident, injury to or death ofpersons or loss of or damage to property occurring on or about any Property orportion thereof or adjoining sidewalks or rights of way, (b) any past,present or future use, misuse, non-use, condition, management, maintenance orrepair by Tenant, any Manager or anyone claiming under any of them or Tenant’sPersonal Property or any litigation, proceeding or claim by governmentalentities or other third parties to which Landlord is made a party orparticipant relating to any Property or portion thereof or Tenant’s PersonalProperty or such use, misuse, non-use, condition, management, maintenance, orrepair thereof including, failure to perform obligations (other thanCondemnation proceedings) to which Landlord is made a party, (c) anyImpositions that are the obligations of Tenant to pay pursuant to theapplicable provisions of this Agreement, and (d) any failure on the partof Tenant or anyone claiming under Tenant to perform or comply with any of theterms of this Agreement.  Tenant, at itsexpense, shall contest, resist and defend any such claim, action or proceedingasserted or instituted against Landlord (and shall not be responsible for anyduplicative attorneys’ fees incurred by Landlord) or may compromise orotherwise dispose of the same, with Landlord’s prior written consent (whichconsent may not be unreasonably withheld, delayed or conditioned).  The obligations of Tenant under this Section 9.5are in addition to the obligations set forth in Section 4.4 andshall survive the termination of this Agreement.

 

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# **ARTICLE10**

 

# **CASUALTY**

 

## **10.1             InsuranceProceeds.** Except as provided in the last clause of thissentence, all proceeds payable by reason of any loss or damage to any Property,or any portion thereof, and insured under any policy of insurance required by Article 9(other than the proceeds of any business interruption insurance) shall be paiddirectly to Landlord (subject to the provisions of Section 10.2) andall loss adjustments with respect to losses payable to Landlord shall requirethe prior written consent of Landlord, which consent shall not be unreasonablywithheld, delayed or conditioned; provided, however, that, solong as no Event of Default shall have occurred and be continuing, all suchproceeds less than or equal to Two Hundred Fifty Thousand Dollars ($250,000)shall be paid directly to Tenant and such losses may be adjusted withoutLandlord’s consent.  If Tenant isrequired to reconstruct or repair any Property as provided herein, suchproceeds shall be paid out by Landlord from time to time for the reasonablecosts of reconstruction or repair of such Property necessitated by such damageor destruction, subject to and in accordance with the provisions of Section 10.2.4.  Provided no Default or Event of Default hasoccurred and is continuing, any excess proceeds of insurance remaining afterthe completion of the restoration shall be paid to Tenant.  In the event that the provisions of Section 10.2.1are applicable, the insurance proceeds shall be retained by the party entitledthereto pursuant to Section 10.2.1.

##  

## **10.2             Damage or Destruction**.

##  

### **10.2.1         Damage or Destruction of LeasedProperty**. If, during the Term, any Property shall be totally or partiallydestroyed and the Facility located thereon is thereby rendered Unsuitable forIts Permitted Use, either Landlord or Tenant may, by the giving of Noticethereof to the other, terminate this Agreement with respect to such affectedProperty, whereupon, this Agreement shall terminate with respect to suchaffected Property and Landlord shall be entitled to retain the insuranceproceeds payable on account of such damage. In such event, Tenant shall pay to Landlord the amount of any deductibleunder the insurance policies covering such Facility, the amount of anyuninsured loss and any difference between the replacement cost of the affectedProperty and the casualty insurance proceeds therefor.

 

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### **10.2.2         Partial Damage or Destruction.** If, during the Term, any Property shall betotally or partially destroyed but the Facility is not rendered Unsuitable forIts Permitted Use, Tenant shall, subject to Section 10.2.3,promptly restore such Facility as provided in Section 10.2.4.

###  

### **10.2.3         Insufficient Insurance Proceeds.**  If the cost of the repair or restoration ofthe applicable Facility exceeds the amount of insurance proceeds received byLandlord and Tenant pursuant to Section 9.1, Tenant shall giveLandlord Notice thereof which notice shall set forth in reasonable detail thenature of such deficiency and whether Tenant shall pay and assume the amount ofsuch deficiency (Tenant having no obligation to do so, except that, if Tenantshall elect to make such funds available, the same shall become an irrevocableobligation of Tenant pursuant to this Agreement).  In the event Tenant shall elect not to payand assume the amount of such deficiency, Landlord shall have the right (but notthe obligation), exercisable at Landlord’s sole election by Notice to Tenant,given within sixty (60) days after Tenant’s notice of the deficiency, to electto make available for application to the cost of repair or restoration theamount of such deficiency; provided, however, in such event, uponany disbursement by Landlord thereof, the Minimum Rent shall be adjusted asprovided in Section 3.1.1(c). In the event that neither Landlord nor Tenant shall elect to make suchdeficiency available for restoration, either Landlord or Tenant may terminatethis Agreement with respect to the affected Property by Notice to the other,whereupon, this Agreement shall so terminate and insurance proceeds shall bedistributed as provided in Section 10.2.1.  It is expressly understood and agreed,however, that, notwithstanding anything in this Agreement to the contrary,Tenant shall be strictly liable and solely responsible for the amount of anydeductible and shall, upon any insurable loss, pay over the amount of suchdeductible to Landlord at the time and in the manner herein provided forpayment of the applicable proceeds to Landlord.

###  

### **10.2.4         Disbursement of Proceeds.** In the event Tenant is required to restore anyProperty pursuant to Section 10.2 and this Agreement is notterminated as to such Property pursuant to this Article 10, Tenantshall commence (or cause to be commenced) promptly and continue diligently toperform (or cause to be performed) the repair and restoration of such Property(hereinafter called the “Work”), so as to restore (or cause to be restored)the applicable Property in material compliance with all Legal Requirements andso that such Property shall be, to 

 

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###  

### the extent practicable,substantially equivalent in value and general utility to its general utilityand value immediately prior to such damage or destruction.  Subject to the terms hereof, Landlord shalladvance the insurance proceeds and any additional amounts payable by Landlordpursuant to Section 10.2.3 or otherwise deposited with Landlord toTenant regularly during the repair and restoration period so as to permitpayment for the cost of any such restoration and repair.  Any such advances shall be made not more thanmonthly within ten (10) Business Days after Tenant submits to Landlord awritten requisition and substantiation therefor on AIA Forms G702 and G703 (oron such other form or forms as may be reasonably acceptable to Landlord).  Landlord may, at its option, conditionadvancement of such insurance proceeds and other amounts on (a) theabsence of any Event of Default, (b) its approval of plans andspecifications of an architect satisfactory to Landlord (which approval shallnot be unreasonably withheld, delayed or conditioned), (c) generalcontractors’ estimates, (d) architect’s certificates, (e) conditionallien waivers of general contractors, if available, (f) evidence ofapproval by all governmental authorities and other regulatory bodies whoseapproval is required, (g), if Tenant has elected to advance deficiency funds pursuantto Section 10.2.3, Tenant depositing the amount thereof withLandlord and (h) such other certificates as Landlord may, from time totime, reasonably require.

###  

Landlord’sobligation to disburse insurance proceeds under this Article 10shall be subject to the release of such proceeds by any Facility Mortgagee toLandlord.

 

Tenant’sobligation to restore the applicable Property pursuant to this Article 10shall be subject to the release of available insurance proceeds by theapplicable Facility Mortgagee to Landlord or directly to Tenant and, in theevent such proceeds are insufficient, Landlord electing to make such deficiencyavailable therefor (and disbursement of such deficiency).

 

## **10.3             DamageNear End of Term.** Notwithstanding any provisions of Section 10.1or 10.2 to the contrary, if damage to or destruction of any Property occursduring the last twelve (12) months of the Term and if such damage ordestruction cannot reasonably be expected to be fully repaired and restoredprior to the date that is six (6) months prior to the end of the Term, theprovisions of Section 10.2.1 shall apply as if such Property hadbeen totally or partially destroyed and the Facility thereon renderedUnsuitable for its Permitted Use.

 

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## **10.4             Tenant’sProperty. **Allinsurance proceeds payable by reason of any loss of or damage to any of Tenant’sPersonal Property shall be paid to Tenant and, to the extent necessary torepair or replace Tenant’s Personal Property in accordance with Section 10.5,Tenant shall hold such proceeds in trust to pay the cost of repairing orreplacing damaged Tenant’s Personal Property.

##  

## **10.5             Restorationof Tenant’s Property.** If Tenant is required to restore any Propertyas hereinabove provided, Tenant shall either (a) restore all alterationsand improvements made by Tenant and Tenant’s Personal Property, or (b) replacesuch alterations and improvements and Tenant’s Personal Property withimprovements or items of the same or better quality and utility in theoperation of such Property.

##  

## **10.6             NoAbatement of Rent.** This Agreement shall remain in full force andeffect and Tenant’s obligation to make all payments of Rent and to pay allother charges as and when required under this Agreement shall remain unabatedduring the Term notwithstanding any damage involving the Leased Property, orany portion thereof (provided that Landlord shall credit against such paymentsany amounts paid to Landlord as a consequence of such damage under any businessinterruption insurance obtained by Tenant hereunder).  The provisions of this Article 10shall be considered an express agreement governing any cause of damage ordestruction to the Leased Property, or any portion thereof, and, to the maximumextent permitted by law, no local or State statute, laws, rules, regulation orordinance in effect during the Term which provide for such a contingency shallhave any application in such case.

##  

## **10.7             Waiver.** Tenant hereby waivesany statutory rights of termination which may arise by reason of any damage ordestruction of the Leased Property, or any portion thereof.

 

# **ARTICLE11**

 

# **CONDEMNATION**

 

## **11.1             TotalCondemnation, Etc.** If either (a) the whole of any Property shall be taken byCondemnation or (b) a Condemnation of less than the whole of any Propertyrenders any Property Unsuitable for Its Permitted Use, this Agreement shallterminate with respect to such Property, and Tenant and Landlord shall seek theAward for their interests in the applicable Property as provided in Section 11.5.

 

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## **11.2             PartialCondemnation.** In the event of a Condemnation of less thanthe whole of any Property such that such Property is still suitable for itsPermitted Use, Tenant shall, to the extent of the Award and any additionalamounts disbursed by Landlord as hereinafter provided, commence (or cause to becommenced) promptly and continue diligently to restore (or cause to berestored) the untaken portion of the applicable Leased Improvements so thatsuch Leased Improvements shall constitute a complete architectural unit of thesame general character and condition (as nearly as may be possible under thecircumstances) as such Leased Improvements existing immediately prior to suchCondemnation, in material compliance with all Legal Requirements, subject tothe provisions of this Section 11.2.  If the cost of the repair or restoration ofthe affected Property exceeds the amount of the Award, Tenant shall giveLandlord Notice thereof which notice shall set forth in reasonable detail thenature of such deficiency and whether Tenant shall pay and assume the amount ofsuch deficiency (Tenant having no obligation to do so, except that if Tenantshall elect to make such funds available, the same shall become an irrevocableobligation of Tenant pursuant to this Agreement).  In the event Tenant shall elect not to payand assume the amount of such deficiency, Landlord shall have the right (butnot the obligation), exercisable at Landlord’s sole election by Notice to Tenantgiven within sixty (60) days after Tenant’s Notice of the deficiency, to electto make available for application to the cost of repair or restoration theamount of such deficiency; provided, however, in such event, uponany disbursement by Landlord thereof, the Minimum Rent shall be adjusted asprovided in Section 3.1.1(c). In the event that neither Landlord nor Tenant shall elect to make suchdeficiency available for restoration, either Landlord or Tenant may terminatethis Agreement with respect to the affected Property and the entire Award shallbe allocated as set forth in Section 11.5.

##  

Subjectto the terms hereof, Landlord shall contribute to the cost of restoration thatpart of the Award necessary to complete such repair or restoration, together withseverance and other damages awarded for the taken Leased Improvements and anydeficiency Landlord has agreed to disburse, to Tenant regularly during therestoration period so as to permit payment for the cost of such repair orrestoration.  Landlord may, at itsoption, condition advancement of such Award and other amounts on (a) theabsence of any Event of Default, (b) its approval of plans andspecifications of an architect satisfactory to Landlord (which approval shallnot be unreasonably withheld, delayed or conditioned), (c) generalcontractors’ estimates, 

 

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(d) architect’s certificates, (e) conditionallien waivers of general contractors, if available, (f) evidence ofapproval by all governmental authorities and other regulatory bodies whoseapproval is required, (g), if Tenant has elected to advance deficiency fundspursuant to the preceding paragraph, Tenant depositing the amount thereof withLandlord and (h) such other certificates as Landlord may, from time totime, reasonably require.  Landlord’sobligation under this Section 11.2 to disburse the Award and suchother amounts shall be subject to (x) the collection thereof by Landlordand (y) the satisfaction of any applicable requirements of any FacilityMortgage, and the release of such Award by the applicable FacilityMortgagee.  Tenant’s obligation torestore the Leased Property shall be subject to the release of the Award by theapplicable Facility Mortgagee to Landlord.

 

## **11.3             Abatementof Rent.** Other than as specifically provided in thisAgreement, this Agreement shall remain in full force and effect and Tenant’sobligation to make all payments of Rent and to pay all other charges as andwhen required under this Agreement shall remain unabated during the Termnotwithstanding any Condemnation involving the Leased Property, or any portionthereof.  The provisions of this Article 11shall be considered an express agreement governing any Condemnation involvingthe Leased Property and, to the maximum extent permitted by law, no local orState statute, law, rule, regulation or ordinance in effect during the Termwhich provides for such a contingency shall have any application in such case.

##  

## **11.4             TemporaryCondemnation. **Inthe event of any temporary Condemnation of any Property or Tenant’s interesttherein, this Agreement shall continue in full force and effect and Tenantshall continue to pay (or cause to be paid), in the manner and on the termsherein specified, the full amount of the Rent. Tenant shall continue to perform and observe (or cause to be performedand observed) all of the other terms and conditions of this Agreement on thepart of the Tenant to be performed and observed.  Provided no Event of Default has occurred andis continuing, the entire amount of any Award made for such temporaryCondemnation allocable to the Term, whether paid by way of damages, rent orotherwise, shall be paid to Tenant. Tenant shall, promptly upon the termination of any such period oftemporary Condemnation, at its sole cost and expense, restore the affectedProperty to the condition that existed immediately prior to such Condemnation,in material compliance with all applicable Legal Requirements, unless suchperiod of temporary Condemnation shall extend beyond the expiration of theTerm, in 

 

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##  

## which event Tenant shall not be required to make suchrestoration.

##  

## **11.5             Allocationof Award.** Except as provided in Section 11.4and the second sentence of this Section 11.5, the total Award shallbe solely the property of and payable to Landlord.  Any portion of the Award made for the takingof Tenant’s leasehold interest in the Leased Property, loss of business duringthe remainder of the Term, the taking of Tenant’s Personal Property, the takingof Capital Additions paid for by Tenant and Tenant’s removal and relocationexpenses shall be the sole property of and payable to Tenant (subject to theprovisions of Section 11.2). In any Condemnation proceedings, Landlord and Tenant shall each seek itsown Award in conformity herewith, at its own expense.

 

# **ARTICLE 12**

 

# **DEFAULTSAND REMEDIES**

 

## **12.1             Eventsof Default.** The occurrence of any one or more of thefollowing events shall constitute an “Event of Default” hereunder:

##  

#### (a)           shouldTenant fail to make any payment of the Rent or any other sum payable hereunderwhen due, which failure shall continue for at least five (5) Business Daysafter Notice from Landlord to Tenant; or

####  

#### (b)           shouldTenant fail to maintain the insurance coverages required under Article 9;or

####  

#### (c)           shouldTenant default in the due observance or performance of any of the terms,covenants or agreements contained herein to be performed or observed by it(other than as specified in clauses (a) and (b) above) and shouldsuch default continue for a period of thirty (30) days after Notice thereoffrom Landlord to Tenant; provided, however, that if such defaultis susceptible of cure but such cure cannot be accomplished with due diligencewithin such period of time and if, in addition, Tenant commences to cure orcause to be cured such default within thirty (30) days after Notice thereoffrom Landlord and thereafter prosecutes the curing of such default with all duediligence, such period of time shall be extended to such period of time (not toexceed an additional ninety (90) days in the aggregate) as may be necessary tocure such default with all due diligence; or

 

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#### (d)           should anymaterial obligation of Tenant in respect of any Indebtedness for money borrowedor for any material property or services, or any guaranty relating thereto, bedeclared to be or become due and payable prior to the stated maturity thereof,or should there occur and be continuing with respect to any such Indebtednessany event of default under any instrument or agreement evidencing or securingthe same, the effect of which is to permit the holder or holders of suchinstrument or agreement or a trustee, agent or other representative on behalfof such holder or holders, to cause any such obligations to become due prior toits stated maturity; or

####  

#### (e)           should an eventof default by Tenant, any Guarantor or any Affiliated Person as to Tenant orany Guarantor occur and be continuing beyond the expiration of any applicablecure period under any of the Incidental Documents; or

####  

#### (f)            should Tenantor any Guarantor generally not be paying its debts as they become due or shouldTenant or any Guarantor make a general assignment for the benefit of creditors;or

####  

#### (g)           should anypetition be filed by or against Tenant or any Guarantor under the Federalbankruptcy laws, or should any other proceeding be instituted by or againstTenant or any Guarantor seeking to adjudicate Tenant or any Guarantor abankrupt or insolvent, or seeking liquidation, reorganization, arrangement,adjustment or composition of Tenant’s debts under any law relating tobankruptcy, insolvency or reorganization or relief of debtors, or seeking theentry of an order for relief or the appointment of a receiver, trustee,custodian or other similar official for Tenant or any Guarantor or for anysubstantial part of the property of Tenant or any Guarantor and such proceedingis not dismissed within one hundred eighty (180) days after institutionthereof; or

####  

#### (h)           should Tenantor any Guarantor cause or institute any proceeding for its dissolution ortermination; or

####  

#### (i)            should theestate or interest of Tenant in the Leased Property or any part thereof belevied upon or attached in any proceeding and the same shall not be vacated ordischarged within the later of (x) ninety (90) days after commencementthereof, unless the amount in dispute is less than $250,000, in which caseTenant shall 

 

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####  

#### givenotice to Landlord of the dispute but Tenant may defend in any suitable way,and (y) two hundred seventy (270) days after receipt by Tenant of Noticethereof from Landlord (unless Tenant shall be contesting such lien orattachment in good faith in accordance with Article 8); or

####  

#### (j)            should thereoccur any direct or indirect Change in Control of Tenant or any Guarantor; or

####  

#### (k)           should a finalunappealable determination be made by the applicable Government Agency thatTenant shall have failed to comply with applicable Medicare and/or Medicaidregulations in the operation of any Facility, as a result of which failureTenant is declared ineligible to receive reimbursements under the Medicareand/or Medicaid programs for such Facility;

####  

then, and in any such event, Landlord, in addition toall other remedies available to it, may terminate this Agreement with respectto any or all of the Leased Property by giving Notice thereof to Tenant andupon the expiration of the time, if any, fixed in such Notice, this Agreementshall terminate with respect to all or the designated portion of the LeasedProperty and all rights of Tenant under this Agreement with respect theretoshall cease.  Landlord shall have and mayexercise all rights and remedies available at law and in equity to Landlord asa result of Tenant’s breach of this Agreement.

 

Upon the occurrence of an Event of Default, Landlordmay, in addition to any other remedies provided herein, enter upon the LeasedProperty, or any portion thereof, and take possession of any and all of Tenant’sPersonal Property, if any, without liability for trespass or conversion (Tenanthereby waiving any right to notice or hearing prior to such taking ofpossession by Landlord) and sell the same at public or private sale, aftergiving Tenant reasonable Notice of the time and place of any public or privatesale, at which sale Landlord or its assigns may purchase all or any portion ofTenant’s Personal Property, if any, unless otherwise prohibited by law.  Unless otherwise provided by law and withoutintending to exclude any other manner of giving Tenant reasonable notice, therequirement of reasonable Notice shall be met if such Notice is given at leastten (10) days before the date of sale. The proceeds from any such disposition, less all expenses incurred inconnection with the taking of possession, holding and selling of such property(including, reasonable attorneys’ fees) shall be applied as a credit againstthe indebtedness which is secured by any Security Agreement granted byTenant.  Any surplus shall be paid to 

 

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Tenant or as otherwise required by law and Tenantshall pay any deficiency to Landlord, as Additional Charges, upon demand.

 

## **12.2****            ****Remedies****.** None of (a) the termination of thisAgreement pursuant to Section 12.1, (b) the repossession ofthe Leased Property, or any portion thereof, (c) the failure of Landlordto relet the Leased Property, or any portion thereof, nor (d) the relettingof all or any of portion of the Leased Property, shall relieve Tenant of itsliability and obligations hereunder, all of which shall survive any suchtermination, repossession or reletting. In the event of any such termination, Tenant shall forthwith pay toLandlord all Rent due and payable with respect to the Leased Property, orterminated portion thereof, through and including the date of suchtermination.  Thereafter, Tenant, untilthe end of what would have been the Term of this Agreement in the absence ofsuch termination, and whether or not the Leased Property, or any portionthereof, shall have been relet, shall be liable to Landlord for, and shall payto Landlord, as current damages, the Rent (Additional Rent to be reasonablycalculated by Landlord based on historical Gross Revenues) and other chargeswhich would be payable hereunder for the remainder of the Term had suchtermination not occurred, less the net proceeds, if any, of any reletting ofthe Leased Property, or any portion thereof, after deducting all reasonableexpenses in connection with such reletting, including, without limitation, allrepossession costs, brokerage commissions, legal expenses, attorneys’ fees,advertising, expenses of employees, alteration costs and expenses of preparationfor such reletting.  Tenant shall paysuch current damages to Landlord monthly on the days on which the Minimum Rentwould have been payable hereunder if this Agreement had not been so terminatedwith respect to such of the Leased Property.

##  

At any time after such termination, whether or notLandlord shall have collected any such current damages, as liquidated finaldamages beyond the date of such termination, at Landlord’s election, Tenantshall pay to Landlord an amount equal to the present value (as reasonablydetermined by Landlord) of the excess, if any, of the Rent and other chargeswhich would be payable hereunder from the date of such termination (assumingthat, for the purposes of this paragraph, annual payments by Tenant on accountof Impositions and Additional Rent would be the same as payments required forthe immediately preceding twelve calendar months, or if less than twelvecalendar months have expired since the applicable Commencement Date for anyProperty, the payments required for such lesser period projected 

 

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to an annual amount) for what would be the thenunexpired term of this Agreement if the same remained in effect, over the fairmarket rental for the same period. Nothing contained in this Agreement shall, however, limit or prejudicethe right of Landlord to prove and obtain in proceedings for bankruptcy orinsolvency an amount equal to the maximum allowed by any statute or rule oflaw in effect at the time when, and governing the proceedings in which, thedamages are to be proved, whether or not the amount be greater than, equal to,or less than the amount of the loss or damages referred to above.

 

In case of any Event of Default, re-entry, expirationand dispossession by summary proceedings or otherwise, Landlord may (a) reletthe Leased Property or any part or parts thereof, either in the name ofLandlord or otherwise, for a term or terms which may at Landlord’s option, beequal to, less than or exceed the period which would otherwise have constitutedthe balance of the Term and may grant concessions or free rent to the extentthat Landlord considers advisable and necessary to relet the same, and (b) makesuch reasonable alterations, repairs and decorations in the Leased Property, orany portion thereof, as Landlord, in its sole and absolute discretion,considers advisable and necessary for the purpose of reletting the LeasedProperty; and the making of such alterations, repairs and decorations shall notoperate or be construed to release Tenant from liability hereunder asaforesaid.  Landlord shall in no event beliable in any way whatsoever for any failure to relet all or any portion of theLeased Property, or, in the event that the Leased Property is relet, forfailure to collect the rent under such reletting.  To the maximum extent permitted by law,Tenant hereby expressly waives any and all rights of redemption granted underany present or future laws in the event of Tenant being evicted ordispossessed, or in the event of Landlord obtaining possession of the LeasedProperty, by reason of the occurrence and continuation of an Event of Defaulthereunder.

 

## **12.3****            ****Tenant’s Waiver****.** IF THIS AGREEMENT IS TERMINATED PURSUANT TO SECTION 12.1OR 12.2, TENANT WAIVES, TO THE EXTENT PERMITTED BY LAW, ANY RIGHT TO ATRIAL BY JURY IN THE EVENT OF SUMMARY PROCEEDINGS TO ENFORCE THE REMEDIES SETFORTH IN THIS ARTICLE 12, AND THE BENEFIT OF ANY LAWS NOW OR HEREAFTERIN FORCE EXEMPTING PROPERTY FROM LIABILITY FOR RENT OR FOR DEBT.

##  

## **12.4****            ****Application of Funds****.** Any payments received by Landlord under any ofthe provisions of this Agreement during the existence or continuance of anyEvent of Default (and any payment made to Landlord rather than Tenant due tothe existence of any Event of Default) shall be applied to Tenant’s current 

 

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## and past due obligations underthis Agreement in such order as Landlord may determine or as may be prescribedby the laws of the State.  Any balanceshall be paid to Tenant.

##  

## **12.5****            ****Landlord’s Right to Cure Tenant’s Default****.** If an Event of Default shall have occurred andbe continuing, Landlord, after Notice to Tenant (which Notice shall not berequired if Landlord shall reasonably determine immediate action is necessaryto protect person or property), without waiving or releasing any obligation ofTenant and without waiving or releasing any Event of Default, may (but shallnot be obligated to), at any time thereafter, make such payment or perform suchact for the account and at the expense of Tenant, and may, to the maximumextent permitted by law, enter upon the Leased Property, or any portionthereof, for such purpose and take all such action thereon as, in Landlord’ssole and absolute discretion, may be necessary or appropriate therefor.  No such entry shall be deemed an eviction ofTenant.  All reasonable costs andexpenses (including, without limitation, reasonable attorneys’ fees) incurredby Landlord in connection therewith, together with interest thereon (to theextent permitted by law) at the Overdue Rate from the date such sums are paidby Landlord until repaid, shall be paid by Tenant to Landlord, on demand.

##  

# **ARTICLE 13**

# ** **

# **HOLDING OVER**

# ** **

Any holding over by Tenant after the expiration orsooner termination of this Agreement shall be treated as a daily tenancy atsufferance at a rate equal to two (2) times the Minimum Rent and othercharges herein provided (prorated on a daily basis).  Tenant shall also pay to Landlord all damages(direct or indirect) sustained by reason of any such holding over.  Otherwise, such holding over shall be on theterms and conditions set forth in this Agreement, to the extentapplicable.  Nothing contained hereinshall constitute the consent, express or implied, of Landlord to the holdingover of Tenant after the expiration or earlier termination of this Agreement.

 

# **ARTICLE 14**

# ** **

# **LANDLORD DEFAULT**

# ** **

If Landlord shall default in the performance orobservance of any of its covenants or obligations set forth in this Agreementor any obligation of Landlord, if any, under any 

 

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agreement affecting the Leased Property, theperformance of which is not Tenant’s obligation pursuant to this Agreement, andany such default shall continue for a period of thirty (30) days after Noticethereof from Tenant to Landlord and any applicable Facility Mortgagee, or suchadditional period as may be reasonably required to correct the same, Tenant maydeclare the occurrence of a “Landlord Default” by a second Notice toLandlord and to such Facility Mortgagee. Thereafter, Tenant may forthwith cure the same and, subject to theprovisions of the following paragraph, invoice Landlord for costs and expenses(including reasonable attorneys’ fees and court costs) incurred by Tenant incuring the same, together with interest thereon (to the extent permitted bylaw) from the date Landlord receives Tenant’s invoice until paid, at theOverdue Rate.  Tenant shall have no rightto terminate this Agreement for any default by Landlord hereunder and no right,for any such default, to offset or counterclaim against any Rent or othercharges due hereunder.

 

If Landlord shall in good faith dispute the occurrenceof any Landlord Default and Landlord, before the expiration of the applicablecure period, shall give Notice thereof to Tenant, setting forth, in reasonabledetail, the basis therefor, no Landlord Default shall be deemed to haveoccurred and Landlord shall have no obligation with respect thereto until finaladverse determination thereof.  If Tenantand Landlord shall fail, in good faith, to resolve any such dispute within ten (10) daysafter Landlord’s Notice of dispute, either may submit the matter for resolutionin accordance with Article 22.

 

# **ARTICLE 15**

# ** **

# **PURCHASERIGHTS**

# ** **

Landlord shall have the option to purchase Tenant’sPersonal Property, at the expiration or sooner termination of this Agreement,for an amount equal to the then fair market value thereof (current replacementcost as determined by agreement of the parties or, in the absence of suchagreement, appraisal), subject to, and with appropriate price adjustments for,all equipment leases, conditional sale contracts, UCC-1 financing statementsand other encumbrances to which Tenant’s Personal Property is subject.  Upon the expiration or sooner termination ofthis Agreement, Tenant shall use its reasonable efforts to transfer and assign,or cause to be transferred and assigned, to Landlord or its designee, or assistLandlord or its designee in obtaining, any contracts, licenses, andcertificates required for the then operation of the Leased Property.  Notwithstanding the foregoing, Tenantexpressly acknowledges and 

 

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agrees that nothing contained in this Article 15shall diminish, impair or otherwise modify Landlord’s rights under the SecurityAgreement and that any amounts paid by Landlord in order to purchase Tenant’sPersonal Property in accordance with this Article 15 shall beapplied first to Tenant’s current and past due obligations under this Agreementin such order as Landlord may reasonably determine or as may be prescribed bythe laws of the applicable State and any balance shall be paid to Tenant.

 

# **ARTICLE 16**

# ** **

# **SUBLETTINGAND ASSIGNMENT**

# ** **

## **16.1****            ****Subletting and Assignment****.** Except as provided in Section 16.3,Tenant shall not, without Landlord’s prior written consent (which consent maybe given or withheld in Landlord’s sole and absolute discretion), assign,mortgage, pledge, hypothecate, encumber or otherwise transfer this Agreement orsublease or permit the sublease (which term shall be deemed to include thegranting of concessions, licenses and the like), of the Leased Property, or anyportion thereof, or suffer or permit this Agreement or the leasehold estatecreated hereby or any other rights arising under this Agreement to be assigned,transferred, mortgaged, pledged, hypothecated or encumbered, in whole or inpart, whether voluntarily, involuntarily or by operation of law, or permit theuse or operation of the Leased Property, or any portion thereof, by anyoneother than Tenant, any Manager approved by Landlord pursuant to the applicableprovisions of this Agreement or residents and patients of Tenant, or the LeasedProperty, or any portion thereof, to be offered or advertised for assignment orsubletting.

##  

For purposes of this Section 16.1, anassignment of this Agreement shall be deemed to include, without limitation,any direct or indirect Change in Control of Tenant.

 

If this Agreement is assigned or if the LeasedProperty, or any portion thereof, is sublet (or occupied by anybody other thanTenant or any Manager, their respective employees or residents or patients ofTenant), Landlord may collect the rents from such assignee, subtenant oroccupant, as the case may be, and apply the net amount collected to the Rentherein reserved, but no such collection shall be deemed a waiver of theprovisions set forth in the first paragraph of this Section 16.1,the acceptance by Landlord of such assignee, subtenant or occupant, as the casemay be, as a tenant, or a release of Tenant from the future performance byTenant of its 

 

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covenants, agreements or obligations contained in thisAgreement.

 

No subletting or assignment shall in any way impairthe continuing primary liability of Tenant hereunder (unless Landlord andTenant expressly otherwise agree that Tenant shall be released from allobligations hereunder), and no consent to any subletting or assignment in aparticular instance shall be deemed to be a waiver of the prohibition set forthin this Section 16.1.  Noassignment, subletting or occupancy shall affect any Permitted Use.  Any subletting, assignment or other transferof Tenant’s interest under this Agreement in contravention of this Section 16.1shall be voidable at Landlord’s option.

 

## **16.2****            ****Required Sublease Provisions****.** Any sublease of all or any portion of theLeased Property shall provide (a) that it is subject and subordinate to thisAgreement and to the matters to which this Agreement is or shall be subject orsubordinate; (b) that in the event of termination of this Agreement or reentryor dispossession of Tenant by Landlord under this Agreement, Landlord may, atits option, terminate such sublease or take over all of the right, title andinterest of Tenant, as sublessor under such sublease, and such subtenant shall,at Landlord’s option, attorn to Landlord pursuant to the then executoryprovisions of such sublease, except that neither Landlord nor any Facility Mortgagee,as holder of a mortgage or as Landlord under this Agreement, if such mortgageesucceeds to that position, shall (i) be liable for any act or omission ofTenant under such sublease, (ii) be subject to any credit, counterclaim,offset or defense which theretofore accrued to such subtenant against Tenant, (iii) bebound by any previous modification of such sublease not consented to in writingby Landlord or by any previous prepayment of more than one (1) month’srent, (iv) be bound by any covenant of Tenant to undertake or complete anyconstruction of the applicable Property, or any portion thereof, (v) berequired to account for any security deposit of the subtenant other than anysecurity deposit actually delivered to Landlord by Tenant, (vi) be boundby any obligation to make any payment to such subtenant or grant any credits,except for services, repairs, maintenance and restoration provided for underthe sublease that are performed after the date of such attornment, (vii) beresponsible for any monies owing by Tenant to the credit of such subtenantunless actually delivered to Landlord by Tenant, or (viii) be required toremove any Person occupying any portion of the Leased Property; and (c) inthe event that such subtenant receives a 

 

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## written Notice from Landlord orany Facility Mortgagee stating that an Event of Default has occurred and iscontinuing, such subtenant shall thereafter be obligated to pay all rentalsaccruing under such sublease directly to the party giving such Notice or assuch party may direct.  All rentalsreceived from such subtenant by Landlord or the Facility Mortgagee, as the casemay be, shall be credited against the amounts owing by Tenant under thisAgreement and such sublease shall provide that the subtenant thereunder shall,at the request of Landlord, execute a suitable instrument in confirmation ofsuch agreement to attorn.  An originalcounterpart of each such sublease and assignment and assumption, duly executedby Tenant and such subtenant or assignee, as the case may be, in form andsubstance reasonably satisfactory to Landlord, shall be delivered promptly toLandlord and (x) in the case of an assignment, the assignee shall assumein writing and agree to keep and perform all of the terms of this Agreement onthe part of Tenant to be kept and performed and shall be, and become, jointlyand severally liable with Tenant for the performance thereof and (y) inthe case of either an assignment or subletting, Tenant shall remain primarilyliable, as principal rather than as surety, for the prompt payment of the Rentand for the performance and observance of all of the covenants and conditionsto be performed by Tenant hereunder.

##  

The provisions of this Section 16.2 shallnot be deemed a waiver of the provisions set forth in the first paragraph of Section 16.1.

 

## **16.3****            ****Permitted Sublease****.**  Notwithstanding the foregoing, including,without limitation, Section 16.2, but subject to the provisions of Section 16.4and any other express conditions or limitations set forth herein, Tenant may,in each instance after Notice to Landlord, (a) enter into third partyresidency agreements with respect to the units located at the Facilities, (b) subleasespace at any Property for laundry, commissary or child care purposes or otherconcessions in furtherance of the Permitted Use, so long as such subleases willnot reduce the number of units at any Facility, will not violate or affect anyLegal Requirement or Insurance Requirement, and Tenant shall provide suchadditional insurance coverage applicable to the activities to be conducted insuch subleased space as Landlord and any Facility Mortgagee may reasonablyrequire, and (c) enter into one or more subleases with Affiliated Personsof Tenant with respect to the Leased Property, or any portion thereof, providedTenant gives Landlord Notice of the material terms and conditions thereof.  Landlord and Tenant acknowledge and agree 

 

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## that if Tenant enters into one (1) ormore subleases with Affiliated Persons of Tenant with respect to any Property,or any portion thereof, in accordance with the preceding clause (c), Tenant mayallocate the rent and other charges with respect to the affected Property in anyreasonable manner; provided, however, that such allocation shallnot affect Tenant’s (nor any Guarantor’s) liability for the Rent and otherobligations of Tenant under this Agreement; and, provided, further,that Tenant shall give Landlord prompt written notice of any allocation orreallocation of the rent and other charges with respect to the affectedProperty and, in any event, Tenant shall give Landlord written notice of theamount of such allocations at least ten (10) Business Days prior to thedate that Landlord or Senior Housing Properties Trust is required to file anytax returns in any State where such affected Property is located.

##  

## **16.4****            ****Sublease Limitation****.** Anything contained in this Agreement to thecontrary notwithstanding, Tenant shall not sublet the Leased Property, or anyportion thereof, on any basis such that the rental to be paid by any sublesseethereunder would be based, in whole or in part, on the net income or profitsderived by the business activities of such sublessee, any other formula suchthat any portion of such sublease rental would fail to qualify as “rents fromreal property” within the meaning of Section 856(d) of the Code, orany similar or successor provision thereto or would otherwise disqualifyLandlord for treatment as a real estate investment trust.

##  

# **ARTICLE 17**

# ** **

# **ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS**

# ** **

## **17.1****            ****Estoppel Certificates****.** At any time and from time to time, but notmore than a reasonable number of times per year, upon not less than ten (10) BusinessDays prior Notice by either party, the party receiving such Notice shallfurnish to the other an Officer’s Certificate certifying that this Agreement isunmodified and in full force and effect (or that this Agreement is in fullforce and effect as modified and setting forth the modifications), the date towhich the Rent has been paid, that no Default or an Event of Default hasoccurred and is continuing or, if a Default or an Event of Default shall exist,specifying in reasonable detail the nature thereof, and the steps being takento remedy the same, and such additional information as the requesting party mayreasonably request.  Any such certificatefurnished pursuant to this Section 17.1 may be relied upon by therequesting party, its lenders and any prospective purchaser

 

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## or mortgagee of the Leased Property, or any portion thereof,or the leasehold estate created hereby.

##  

## **17.2****            ****Financial Statements****.** Tenant shall furnish or cause Five Star tofurnish, as applicable, the following statements to Landlord:

##  

#### (a)           within forty-five(45) days after each of the first three fiscal quarters of any Fiscal Year, themost recent Consolidated Financials, accompanied by a Financial Officer’sCertificate;

####  

#### (b)           within ninety(90) days after the end of each Fiscal Year, the most recent ConsolidatedFinancials and financials of Tenant for such year, certified by an independentcertified public accountant reasonably satisfactory to Landlord and accompaniedby a Financial Officer’s Certificate;

####  

#### (c)           withinforty-five (45) days after the end of each month, an unaudited operatingstatement and statement of capital expenditures prepared on a Facility byFacility basis and a combined basis, including occupancy percentages andaverage rate, accompanied by a Financial Officer’s Certificate;

####  

#### (d)           at any time andfrom time to time upon not less than twenty (20) days Notice from Landlord orsuch additional period as may be reasonable under the circumstances, anyConsolidated Financials, Tenant financials or any other audited or unauditedfinancial reporting information required to be filed by Landlord with anysecurities and exchange commission, the SEC or any successor agency, or anyother governmental authority, or required pursuant to any order issued by anycourt, governmental authority or arbitrator in any litigation to which Landlordis a party, for purposes of compliance therewith; provided, however,that, except as to calculations pertaining to Gross Revenues, Tenant shall notbe required to provide audited financials with respect to any individual Facilityunless Landlord shall agree to pay for the cost thereof;

####  

#### (e)           promptly, afterreceipt or sending thereof, copies of all notices given or received by Tenantunder any Management Agreement; and

 

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#### (f)            promptly, uponNotice from Landlord, such other information concerning the business, financialcondition and affairs of Tenant and/or any Guarantor as Landlord reasonably mayrequest from time to time.

####  

Landlordmay at any time, and from time to time, provide any Facility Mortgagee withcopies of any of the foregoing statements, subject to Landlord obtaining theagreement of such Facility Mortgagee to maintain such statements and theinformation therein as confidential.

 

## **17.3****            ****General Operations****. **Tenant covenants and agrees to furnish to Landlord, promptlyupon request of Landlord, copies of:

##  

#### (a)           all licensesauthorizing Tenant or any Manager to operate any Facility for its PermittedUse;

####  

#### (b)           all Medicareand Medicaid certifications, together with provider agreements and all materialcorrespondence relating thereto with respect to any Facility (excluding,however, correspondence which may be subject to any attorney client privilege);

####  

#### (c)           if requiredunder Applicable Laws with respect to any Facility, a license for eachindividual employed as administrator with respect to such Facility;

####  

#### (d)           all reports ofsurveys, statements of deficiencies, plans of correction, and all materialcorrespondence relating thereto, including, without limitation, all reports andmaterial correspondence concerning compliance with or enforcement of licensure,Medicare/Medicaid, and accreditation requirements, including physicalenvironment and Life Safety Code survey reports (excluding, however,correspondence which may be subject to any attorney client privilege); and

####  

#### (e)           with reasonablepromptness, such other confirmation as to the licensure and Medicare andMedicaid participation of Tenant as Landlord may reasonably request from timeto time.

 

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# **ARTICLE 18**LANDLORD’S RIGHT TO INSPECT

# ** **

Tenantshall permit Landlord and its authorized representatives to inspect the LeasedProperty, or any portion thereof, during usual business hours upon not lessthan forty-eight (48) hours’ notice and to make such repairs as Landlord ispermitted or required to make pursuant to the terms of this Agreement, providedthat any inspection or repair by Landlord or its representatives will notunreasonably interfere with Tenant’s use and operation of the Leased Propertyand further provided that in the event of an emergency, as determined byLandlord in its reasonable discretion, prior Notice shall not be necessary.

 

# **ARTICLE19**EASEMENTS

# ** **

## **19.1****            ****Grant of Easements****.** Provided no Event of Default has occurred andis continuing, Landlord will join in granting and, if necessary, modifying orabandoning such rights-of-way, easements and other interests as may bereasonably requested by Tenant for ingress and egress, and electric, telephone,gas, water, sewer and other utilities so long as:

##  

#### (a)           the instrumentcreating, modifying or abandoning any such easement, right-of-way or otherinterest is satisfactory to and approved by Landlord (which approval shall notbe unreasonably withheld, delayed or conditioned);

####  

#### (b)           Landlordreceives an Officer’s Certificate from Tenant stating (i) that such grant,modification or abandonment is not detrimental to the proper conduct ofbusiness on such Property, (ii) the consideration, if any, being paid forsuch grant, modification or abandonment (which consideration shall be paid byTenant), (iii) that such grant, modification or abandonment does notimpair the use or value of such Property for the Permitted Use, and (iv) that,for as long as this Agreement shall be in effect, Tenant will perform allobligations, if any, of Landlord under any such instrument; and

####  

#### (c)           Landlordreceives evidence satisfactory to Landlord that the Manager has granted itsconsent to such grant, modification or abandonment in accordance with the 

 

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#### requirements ofsuch Manager’s Management Agreement or that such consent is not required.

####  

## **19.2****            ****Exercise of Rights by Tenant****.** So long as no Event of Default has occurredand is continuing, Tenant shall have the right to exercise all rights ofLandlord under the Easement Agreements and, in connection therewith, Landlordshall execute and promptly return to Tenant such documents as Tenant shallreasonably request.  Tenant shall performall obligations of Landlord under the Easement Agreements.

##  

## **19.3****            ****Permitted Encumbrances****.** Any agreements entered into in accordance withthis Article 19 shall be deemed a Permitted Encumbrance.

##  

# **ARTICLE 20**

# ** **

# **FACILITYMORTGAGES**

# ** **

## **20.1****            ****Landlord May Grant Liens****.** Without the consent of Tenant, Landlord may,from time to time, directly or indirectly, create or otherwise cause to existany lien, encumbrance or title retention agreement (“Encumbrance”) uponthe Leased Property, or any portion thereof, or interest therein, to secure anyborrowing or other means of financing or refinancing, provided that any suchEncumbrance shall comply with the provisions of Article 8 and Section 20.2.

##  

## **20.2****            ****Subordination of Lease****.** This Agreement and any and all rights ofTenant hereunder are and shall be subject and subordinate to any ground ormaster lease, and to all mortgages and deeds of trust, which may now orhereafter affect the Leased Property, or any portion thereof, or anyimprovements thereon and/or any of such leases, whether or not such mortgagesor deeds of trust shall also cover other lands and/or buildings and/or leases,to each and every advance made or hereafter to be made under such mortgages anddeeds of trust, and to all renewals, modifications, replacements and extensionsof such leases and such mortgages and deeds of trust and all consolidations ofsuch mortgages and deeds of trust.  Thissection shall be self-operative and no further instrument of subordinationshall be required.  In confirmation ofsuch subordination, Tenant shall promptly execute, acknowledge and deliver anyinstrument that Landlord, the lessor under any such lease or the holder of anysuch mortgage or the trustee or beneficiary of any deed of trust or any oftheir respective successors in interest may reasonably request to evidence suchsubordination.  Any such subordination,however, shall be 

 

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##  

## subject to the provisions of, and conditioned upon receiptby Tenant of the nondisturbance agreement described in, the penultimatesentence of this Section 20.2. Any lease to which this Agreement is, at the time referred to, subjectand subordinate is herein called “Superior Lease” and the lessor of aSuperior Lease or its successor in interest at the time referred to is hereincalled “Superior Landlord” and any mortgage or deed of trust to whichthis Agreement is, at the time referred to, subject and subordinate is hereincalled “Superior Mortgage” and the holder, trustee or beneficiary of aSuperior Mortgage or any successor in interest thereto is herein called “SuperiorMortgagee”.  Tenant shall have noobligations under any Superior Lease or Superior Mortgage other than thoseexpressly set forth in this Section 20.2, unless Tenant shall agreeotherwise pursuant to any agreement between Tenant and such Superior Landlordor Superior Mortgagee, as applicable.

##  

If anySuperior Landlord or Superior Mortgagee shall succeed to the rights of Landlordunder this Agreement (any such person, “Successor Landlord”), whetherthrough possession, termination of lease, foreclosure action, assignment oflease or grant of deed, or otherwise, Tenant shall attorn to and recognize theSuccessor Landlord as Tenant’s landlord under this Agreement and Tenant shallpromptly execute and deliver any instrument that such Successor Landlord mayreasonably request to evidence such attornment (provided that such instrumentdoes not alter the terms of this Agreement), whereupon, this Agreement shallcontinue in full force and effect as a direct lease between the SuccessorLandlord and Tenant upon all of the terms, conditions and covenants as are setforth in this Agreement, except that the Successor Landlord (unless formerlythe landlord under this Agreement or its nominee or designee) shall not be (a) liablein any way to Tenant for any act or omission, neglect or default on the part ofany prior Landlord under this Agreement, (b) responsible for any moniesowing by or on deposit with any prior Landlord to the credit of Tenant (exceptto the extent actually paid or delivered to the Successor Landlord), (c) subjectto any counterclaim or setoff which theretofore accrued to Tenant against anyprior Landlord, (d) bound by any modification of this Agreement subsequentto such Superior Lease or Superior Mortgage, or by any previous prepayment ofRent for more than one (1) month in advance of the date due hereunder,which was not approved in writing by the Superior Landlord or the SuperiorMortgagee thereto, (e) liable to Tenant beyond the Successor Landlord’sinterest in the Leased Property and the rents, income, receipts, revenues,issues and profits issuing from the Leased Property, (f) responsible for 

 

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the performance of any work to be done by the Landlordunder this Agreement to render the Leased Property ready for occupancy byTenant (subject to Landlord’s obligations under Section 5.1.2(b) orwith respect to any insurance proceeds or Awards), or (g) required toremove any Person occupying the Leased Property or any part thereof, except ifsuch person claims by, through or under the Successor Landlord.  Tenant agrees at any time and from time totime to execute a suitable instrument in confirmation of Tenant’s agreement toattorn, as aforesaid and Landlord agrees to provide Tenant with an instrumentof nondisturbance and attornment from each such Superior Mortgagee and SuperiorLandlord (other than the lessors under any ground leases with respect to theLeased Property, or any portion thereof) in form and substance reasonablysatisfactory to Tenant whereby such Superior Mortgagee or Superior Lessor, asapplicable, shall agree to recognize Tenant’s possessory and other rights underthis Agreement notwithstanding any foreclosure or lease termination, subject tothe provisions of this Section 20.2.  Notwithstanding the foregoing, any SuccessorLandlord shall be liable (a) to pay to Tenant any amounts owed under Section 5.1.2(b),(b) to pay to Tenant any portions of insurance proceeds or Awards receivedby Landlord or the Successor Landlord required to be paid to Tenant pursuant tothe terms of this Agreement, and (c) to recognize any reduction in MinimumRent attributable to the provisions of Section 4.1.1(b).

 

## **20.3****            ****Notice to Mortgagee and Superior Landlord****.** Subsequent to the receipt by Tenant of Noticefrom Landlord as to the identity of any Facility Mortgagee or Superior Landlordunder a lease with Landlord, as ground lessee, which includes the LeasedProperty, or any portion thereof, as part of the demised premises and whichcomplies with Section 20.1 (which Notice shall be accompanied by acopy of the applicable mortgage or lease), no Notice from Tenant to Landlord asto a default by Landlord under this Agreement shall be effective with respectto a Facility Mortgagee or Superior Landlord unless and until a copy of thesame is given to such Facility Mortgagee or Superior Landlord at the addressset forth in the above described Notice, and the curing of any of Landlord’sdefaults within the applicable notice and cure periods set forth in Article 14by such Facility Mortgagee or Superior Landlord shall be treated as performanceby Landlord.

 

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# **ARTICLE21**

 

# **ADDITIONALCOVENANTS OF TENANT**

# ** **

## **21.1****            ****Prompt Payment of Indebtedness****.** Tenant shall (a) pay or cause to be paidwhen due all payments of principal of and premium and interest on Tenant’sIndebtedness for money borrowed and shall not permit or suffer any suchIndebtedness to become or remain in default beyond any applicable grace or cureperiod, (b) pay or cause to be paid when due all lawful claims for laborand rents with respect to the Leased Property, (c) pay or cause to be paidwhen due all trade payables and (d) pay or cause to be paid when due allother of Tenant’s Indebtedness upon which it is or becomes obligated, except,in each case, other than that referred to in clause (a), to the extent paymentis being contested in good faith by appropriate proceedings in accordance with Article 8and if Tenant shall have set aside on its books adequate reserves with respectthereto in accordance with GAAP, if appropriate, or unless and untilforeclosure, distraint sale or other similar proceedings shall have beencommenced.

##  

## **21.2****            ****Conduct of Business****.** Tenant shall not engage in any business otherthan the leasing and operation of the Leased Property (including any incidentalor ancillary business relating thereto). Tenant shall do or cause to be done all things necessary to preserve, renewand keep in full force and effect and in good standing its corporate existenceand its rights and licenses necessary to conduct such business.

##  

## **21.3****            ****Maintenance of Accounts and Records****.** Tenant shall keep true records and books ofaccount of Tenant in which full, true and correct entries will be made ofdealings and transactions in relation to the business and affairs of Tenant inaccordance with GAAP.  Tenant shall applyaccounting principles in the preparation of the financial statements of Tenantwhich, in the judgment of and the opinion of its independent publicaccountants, are in accordance with GAAP, where applicable, except for changesapproved by such independent public accountants.  Tenant shall provide to Landlord either in afootnote to the financial statements delivered under Section 17.2which relate to the period in which such change occurs, or in separateschedules to such financial statements, information sufficient to show theeffect of any such changes on such financial statements.

##  

## **21.4****            ****Notice of Litigation, Etc.**** **Tenant shall give prompt Notice to Landlord of anylitigation or any administrative proceeding to which it may hereafter become aparty of which 

 

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## Tenant has notice or actual knowledge which involves apotential liability equal to or greater than Two Hundred Fifty Thousand Dollars($250,000) or which may otherwise result in any material adverse change in thebusiness, operations, property, prospects, results of operation or condition,financial or other, of Tenant.  Forthwithupon Tenant obtaining knowledge of any Default, Event of Default or any defaultor event of default under any agreement relating to Indebtedness for moneyborrowed in an aggregate amount exceeding, at any one time, Two Hundred FiftyThousand Dollars ($250,000), or any event or condition that would be requiredto be disclosed in a current report filed by Tenant on Form 8-K or in Part IIof a quarterly report on Form 10-Q if Tenant were required to file suchreports under the Securities Exchange Act of 1934, as amended, Tenant shallfurnish Notice thereof to Landlord specifying the nature and period ofexistence thereof and what action Tenant has taken or is taking or proposes totake with respect thereto.

##  

## **21.5****            ****Prohibited Transactions****. **Tenant shall not permit to exist or enter into any agreementor arrangement whereby it engages in a transaction of any kind with anyAffiliated Person as to Tenant or any Guarantor, except on terms and conditionswhich are commercially reasonable.

##  

## **21.6****            ****Existing Financing**.  Tenant shall, atLandlord’s option at such time as the Existing Financing shall no longerconstitute an Encumbrance on one or more Properties, amend this Agreement suchthat the applicable Property shall no longer be subject to this Agreement but shallbe subject to such other lease between Landlord and/or one or more Affiliatesof Landlord and Tenant and/or one or more Affiliated of Tenant as Landlordshall designate by Notice to Tenant, the terms of which other lease shall beconsistent with the terms of this Agreement, but for the minimum rentthereunder, which shall be established by Landlord (with a correspondingreduction in the Minimum Rent hereunder).

##  

# **ARTICLE22**

# ** **

# **ARBITRATION**

# ** **

## **22.1****            ****Disputes**.  Any disputes, claims or controversies betweenor among the parties hereto arising out of or relating to this Agreement or thetransactions contemplated hereby, including disputes, claims or controversiesrelating to the meaning, interpretation, effect, validity, performance orenforcement of this Agreement (all of which are referred to as “Disputes”)or relating in any way to such a Dispute or 

 

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## Disputes,shall on the demand of any party to such Dispute be resolved through bindingand final arbitration in accordance with the Commercial Arbitration Rules (the“Rules”) of the American Arbitration Association (“AAA”) then ineffect, except as modified herein.  Forthe avoidance of doubt, a Dispute shall include a Dispute made derivatively onbehalf of one party against another party.

##  

## **22.2****            ****Selection of Arbitrators**.  There shall bethree arbitrators.  If there are (a) onlytwo parties to the Dispute, each party shall select one arbitrator within 15days after receipt by respondent of a copy of the demand for arbitration and (b) morethan two parties to the Dispute, all claimants, on the one hand, and allrespondents, on the other hand, shall each select, by the vote of a majority ofthe claimants or the respondents, as the case may be, one arbitrator.  The two party-nominated arbitrators shalljointly nominate the third and presiding arbitrator within 15 days of thenomination of the second arbitrator.  Ifany arbitrator has not been nominated within the time limit specified herein,then the AAA shall provide a list of proposed arbitrators in accordance withthe Rules, and the arbitrator shall be appointed by the AAA in accordance witha listing, striking and ranking procedure, with each party having a limitednumber of strikes, excluding strikes for cause. For the avoidance of doubt, the arbitrators appointed by the parties tosuch Dispute may be affiliates or interested persons of such parties but thethird arbitrator elected by the party arbitrators or by the AAA shall beunaffiliated with either party.

##  

## **22.3****            ****Location of Arbitration**.  The place ofarbitration shall be Boston, Massachusetts unless otherwise agreed by theparties.

##  

## **22.4****            ****Scope of Discovery**.  There shall be onlylimited documentary discovery of documents directly related to the issues indispute, as may be ordered by the arbitrators.

##  

## **22.5****            ****Arbitration Award**.  In rendering anaward or decision (the “Arbitration Award”), the arbitrators shall berequired to follow the laws of the Commonwealth of Massachusetts.  Any arbitration proceedings or ArbitrationAward rendered hereunder and the validity, effect and interpretation of thisarbitration agreement shall be governed by the Federal Arbitration Act, 9U.S.C. §1 et seq.  The Arbitration Awardshall be in writing and may, but shall not be required to, briefly state thefindings of fact and conclusions of law on which it is based.

 

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## **22.6****            ****Costs**.  Except to the extent expressly provided bythis Agreement or as otherwise agreed between the parties, each party involvedin a Dispute shall bear its own costs and expenses (including attorneys’ fees),and the arbitrators shall not render an award that would include shifting ofany such costs or expenses (including attorneys’ fees) or, in a derivative caseor class action by a holder of any party, award any portion of such party’saward to the claimant or the claimant’s attorneys.  Each party (or, if there are more than twoparties to the Dispute, all claimants, on the one hand, and all respondents, onthe other hand, respectively) shall bear the costs and expenses of its (ortheir) selected arbitrator and the parties (or, if there are more than twoparties to the Dispute, all claimants, on the one hand, and all respondents, onthe other hand) shall equally bear the costs and expenses of the thirdappointed arbitrator.

##  

## **22.7****            ****Final Judgment**.  The ArbitrationAward shall be final and binding upon the parties thereto and shall be the soleand exclusive remedy between such parties relating to the Dispute, includingany claims, counterclaims, issues or accounting presented to thearbitrators.  Judgment upon the ArbitrationAward may be entered in any court having jurisdiction.  To the fullest extent permitted by law, noapplication or appeal to any court of competent jurisdiction may be made inconnection with any question of law arising in the course of arbitration orwith respect to any award made except for actions relating to enforcement ofthis agreement to arbitrate or any arbitral award issued hereunder and exceptfor actions seeking interim or other provisional relief in aid of arbitrationproceedings in any court of competent jurisdiction.

##  

## **22.8****            ****Payment**.  Any monetary award shall be made and payablein U.S. dollars free of any tax, deduction or offset.  The party against which the Arbitration Awardassesses a monetary obligation shall pay that obligation on or before the 30th day following the dateof the Arbitration Award or such other date as the Arbitration Award mayprovide.

##  

# **ARTICLE 23**

# ** **

# **MISCELLANEOUS**

# ** **

## **23.1****            ****Limitation on Payment of Rent****.** All agreements between Landlord and Tenantherein are hereby expressly limited so that in no contingency or eventwhatsoever, whether by reason of acceleration of Rent, or otherwise, shall theRent or any other amounts payable to Landlord under this Agreement exceed 

 

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## the maximum permissible underApplicable Laws, the benefit of which may be asserted by Tenant as a defense,and if, from any circumstance whatsoever, fulfillment of any provision of thisAgreement, at the time performance of such provision shall be due, shallinvolve transcending the limit of validity prescribed by law, or if from anycircumstances Landlord should ever receive as fulfillment of such provisionsuch an excessive amount, then, ipsofacto, the amount whichwould be excessive shall be applied to the reduction of the installment(s) ofMinimum Rent next due and not to the payment of such excessive amount.  This provision shall control every otherprovision of this Agreement and any other agreements between Landlord andTenant.

##  

## **23.2****            ****No Waiver****.** No failure by Landlord or Tenant to insistupon the strict performance of any term hereof or to exercise any right, poweror remedy consequent upon a breach thereof, and no acceptance of full orpartial payment of Rent during the continuance of any such breach, shallconstitute a waiver of any such breach or of any such term.  To the maximum extent permitted by law, nowaiver of any breach shall affect or alter this Agreement, which shall continuein full force and effect with respect to any other then existing or subsequentbreach.

##  

## **23.3****            ****Remedies Cumulative****. **To the maximum extent permitted by law, each legal,equitable or contractual right, power and remedy of Landlord or Tenant, now orhereafter provided either in this Agreement or by statute or otherwise, shallbe cumulative and concurrent and shall be in addition to every other right,power and remedy and the exercise or beginning of the exercise by Landlord orTenant (as applicable) of any one or more of such rights, powers and remediesshall not preclude the simultaneous or subsequent exercise by Landlord of anyor all of such other rights, powers and remedies.

##  

## **23.4****            ****Severability****.** Any clause, sentence, paragraph, section orprovision of this Agreement held by a court of competent jurisdiction to beinvalid, illegal or ineffective shall not impair, invalidate or nullify theremainder of this Agreement, but rather the effect thereof shall be confined tothe clause, sentence, paragraph, section or provision so held to be invalid,illegal or ineffective, and this Agreement shall be construed as if suchinvalid, illegal or ineffective provisions had never been contained therein.

##  

## **23.5****            ****Acceptance of Surrender****.** No surrender to Landlord of this Agreement orof the Leased Property or any part thereof, or 

 

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## of any interest therein, shallbe valid or effective unless agreed to and accepted in writing by Landlord andno act by Landlord or any representative or agent of Landlord, other than sucha written acceptance by Landlord, shall constitute an acceptance of any suchsurrender.

##  

## **23.6****            ****No Merger of Title****.** It is expressly acknowledged and agreed thatit is the intent of the parties that there shall be no merger of this Agreementor of the leasehold estate created hereby by reason of the fact that the samePerson may acquire, own or hold, directly or indirectly this Agreement or theleasehold estate created hereby and the fee estate or ground landlord’sinterest in the Leased Property.

##  

## **23.7****            ****Conveyance by Landlord****.** If Landlord or any successor owner of all orany portion of the Leased Property shall convey all or any portion of theLeased Property in accordance with the terms hereof other than as security fora debt, and the grantee or transferee of such of the Leased Property shallexpressly assume all obligations of Landlord hereunder arising or accruing fromand after the date of such conveyance or transfer, Landlord or such successorowner, as the case may be, shall thereupon be released from all futureliabilities and obligations of Landlord under this Agreement with respect tosuch of the Leased Property arising or accruing from and after the date of suchconveyance or other transfer and all such future liabilities and obligationsshall thereupon be binding upon the new owner.

##  

## **23.8****            ****Quiet Enjoyment****.** Tenant shall peaceably and quietly have, holdand enjoy the Leased Property for the Term, free of hindrance or molestation byLandlord or anyone claiming by, through or under Landlord, but subject to (a) anyEncumbrance permitted under Article 20 or otherwise permitted to becreated by Landlord hereunder, (b) all Permitted Encumbrances, (c) liensas to obligations of Landlord that are either not yet due or which are beingcontested in good faith and by proper proceedings, provided the same do notmaterially interfere with Tenant’s ability to operate any Facility and (d) liensthat have been consented to in writing by Tenant.  Except as otherwise provided in thisAgreement, no failure by Landlord to comply with the foregoing covenant shallgive Tenant any right to cancel or terminate this Agreement or abate, reduce ormake a deduction from or offset against the Rent or any other sum payable underthis Agreement, or to fail to perform any other obligation of Tenant hereunder.

##  

## **23.9****            ****No Recordation****.**  Neither Landlord nor Tenant shall record thisAgreement.

 

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## **23.10****         ****Notices****.**

##  

#### (a)           Any and allnotices, demands, consents, approvals, offers, elections and othercommunications required or permitted under this Agreement shall be deemedadequately given if in writing and the same shall be delivered either in hand,by telecopier with written acknowledgment of receipt, or by mail or FederalExpress or similar expedited commercial carrier, addressed to the recipient ofthe notice, postpaid and registered or certified with return receipt requested(if by mail), or with all freight charges prepaid (if by Federal Express orsimilar carrier).

####  

#### (b)           All noticesrequired or permitted to be sent hereunder shall be deemed to have been givenfor all purposes of this Agreement upon the date of acknowledged receipt, inthe case of a notice by telecopier, and, in all other cases, upon the date ofreceipt or refusal, except that whenever under this Agreement a notice iseither received on a day which is not a Business Day or is required to bedelivered on or before a specific day which is not a Business Day, the day ofreceipt or required delivery shall automatically be extended to the nextBusiness Day.

####  

#### (c)           Allsuch notices shall be addressed,

####  

if to Landlord:

 

c/o Senior Housing Properties Trust

400 Centre Street

Newton, Massachusetts 02458

Attn:  Mr. DavidJ. Hegarty

[TelecopierNo. (617) 796-8349]

 

if to Tenant to:

 

c/o Five Star QualityCare, Inc.

400 Centre Street

Newton, Massachusetts 02458

Attn:  Mr. BruceJ. Mackey Jr.

[TelecopierNo. (617) 796-8385]

 

#### (d)           By notice givenas herein provided, the parties hereto and their respective successors andassigns shall have the right from time to time and at any time during the termof this Agreement to change their respective addresses 

 

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#### effectiveupon receipt by the other parties of such notice and each shall have the rightto specify as its address any other address within the United States ofAmerica.

####  

## **23.11****         ****Construction****.** Anything contained in this Agreement to thecontrary notwithstanding, all claims against, and liabilities of, Tenant orLandlord arising prior to any date of termination or expiration of thisAgreement with respect to the Leased Property shall survive such termination orexpiration.  In no event shall Landlordbe liable for any consequential damages suffered by Tenant as the result of abreach of this Agreement by Landlord. Neither this Agreement nor any provision hereof may be changed, waived,discharged or terminated except by an instrument in writing signed by the partyto be charged.  All the terms andprovisions of this Agreement shall be binding upon and inure to the benefit ofthe parties hereto and their respective successors and assigns.  Each term or provision of this Agreement tobe performed by Tenant shall be construed as an independent covenant andcondition.  Time is of the essence withrespect to the provisions of this Agreement. Except as otherwise set forth in this Agreement, any obligations ofTenant (including without limitation, any monetary, repair and indemnificationobligations) and Landlord shall survive the expiration or sooner termination ofthis Agreement.

##  

## **23.12****         ****Counterparts; Headings****.** This Agreement may be executed in two or morecounterparts, each of which shall constitute an original, but which, when takentogether, shall constitute but one instrument and shall become effective as ofthe date hereof when copies hereof, which, when taken together, bear thesignatures of each of the parties hereto shall have been signed.  Headings in this Agreement are for purposesof reference only and shall not limit or affect the meaning of the provisionshereof.

##  

## **23.13****         ****Applicable Law, Etc.**  This Agreement shall be interpreted,construed, applied and enforced in accordance with the laws of The Commonwealthof Massachusetts applicable to contracts between residents of Massachusettswhich are to be performed entirely within Massachusetts, regardless of (a) wherethis Agreement is executed or delivered; or (b) where any payment or otherperformance required by this Agreement is made or required to be made; or (c) whereany breach of any provision of this Agreement occurs, or any cause of actionotherwise accrues; or (d) where any action or other proceeding isinstituted or pending; or (e) the nationality, citizenship, domicile, principalplace of business, or jurisdiction of organization or domestication of anyparty; or (f) whether the 

 

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## laws of the forum jurisdictionotherwise would apply the laws of a jurisdiction other than Massachusetts; or (g) anycombination of the foregoing. Notwithstanding the foregoing, the laws of the State shall apply to theperfection and priority of liens upon and the disposition of any Property.

##  

## **23.14****         ****Right to Make Agreement****.** Each party warrants, with respect to itself,that neither the execution of this Agreement, nor the consummation of anytransaction contemplated hereby, shall violate any provision of any law, or anyjudgment, writ, injunction, order or decree of any court or governmentalauthority having jurisdiction over it; nor result in or constitute a breach ordefault under any indenture, contract, other commitment or restriction to whichit is a party or by which it is bound; nor require any consent, vote orapproval which has not been given or taken, or at the time of the transactioninvolved shall not have been given or taken. Each party covenants that it has and will continue to have throughoutthe term of this Agreement and any extensions thereof, the full right to enterinto this Agreement and perform its obligations hereunder.

##  

## **23.15****         ****Attorneys’ Fees**.  If any lawsuit or arbitration or other legalproceeding arises in connection with the interpretation or enforcement of thisAgreement, the prevailing party therein shall be entitled to receive from theother party the prevailing party’s costs and expenses, including reasonableattorneys’ fees incurred in connection therewith, in preparation therefor andon appeal therefrom, which amounts shall be included in any judgment therein.

##  

## **23.16****         ****Nonliability of Trustees**.  THE DECLARATION OF TRUST ESTABLISHING SNH FMFINANCING TRUST, A COPY OF WHICH, TOGETHER WITH ALL AMENDMENTS THERETO(COLLECTIVELY, THE “DECLARATION”), IS DULY FILED WITH THE DEPARTMENT OFASSESSMENTS AND TAXATION OF THE STATE OF MARYLAND, PROVIDES THAT THE NAME “SNHFM FINANCING TRUST” REFERS TO THE TRUSTEES UNDER SUCH DECLARATION COLLECTIVELYAS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND THAT NO TRUSTEE, OFFICER,SHAREHOLDER, EMPLOYEE OR AGENT OF SNH FM FINANCING TRUST SHALL BE HELD TO ANYPERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIMAGAINST, SNH FM FINANCING TRUST.  ALLPERSONS DEALING WITH SNH FM FINANCING TRUST, IN ANY WAY, SHALL LOOK ONLY TO THEASSETS OF SNH FM FINANCING TRUST FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCEOF ANY OBLIGATION.

##  

## **23.17****         ****Original Leases****.**  Landlord and Tenant acknowledge and agreethat this Agreement amends and restates the Original 

 

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## Leasesin their entirety with respect to the Leased Property as of the date of thisAgreement and that this Agreement shall govern the rights and obligations ofthe parties with respect to the Leased Property from and after the date of thisAgreement.  Notwithstanding theforegoing, the Original Leases shall continue to govern the rights andobligations of the parties with respect to the Leased Property prior to thedate of this Agreement.

 

 

*[Remainder of page intentionally left blank.]*

 

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**IN WITNESS WHEREOF**, the parties have executedthis Agreement as a sealed instrument as of the date above first written.

 

 
| ** ** | **LANDLORD:**                 |
|------------|-------------------------------|
|       |                          |   |
| ** ** | **SNH FM FINANCING LLC**      |
| ** ** | ** **                    |   |
|       |                          |   |
|       | By:                      | /s/ David J. Hegarty |
|       |                          | David J. Hegarty |
|       |                          | President |
|       |                          |   |
|       |                          |   |
| ** ** | **SNH FM FINANCING TRUST**    |
|       |                          |   |
|       |                          |   |
|       | By:                           | /s/ David J. Hegarty |
|       |                          | David J. Hegarty |
|       |                          | President |
|       |                          |   |
|       |                          |   |
| ** ** | **ELLICOTT CITY LAND I, LLC** |
|       |                          |   |
|       |                          |   |
|       | By:                           | /s/ David J. Hegarty |
|       |                          | David J. Hegarty |
|       |                          | President |
|       |                          |   |
|       |                          |   |
| ** ** | **TENANT:**                   |
|       |                          |   |
| ** ** | **FVE FM FINANCING, INC.**    |
| ** ** | ** **                    |
|       |                          |   |
|       | By:                           | /s/ Bruce J. Mackey Jr. |
|       |                          | Bruce J. Mackey Jr. |
|       |                          | President |

 

 

[SIGNATURE PAGE TOAMENDED AND RESTATED MASTER LEASE AGREEMENT]

 

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**SCHEDULE 1**

 

Schedule omitted.

 

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**EXHIBITS A-1 THROUGH A-27**

 

**LAND**

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Certain Schedules andExhibits to this agreement have been omitted and will be furnished supplementallyto the Securities and Exchange Commission upon request.

 

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