**Exhibit 10.12**

 

**EXECUTION VERSION (1)**

 

**AMENDMENT NO. 1 TO**

**AMENDED AND RESTATED MASTER LEASE AGREEMENT**

 

THISAMENDMENT NO. 1 TO AMENDED AND RESTATED MASTER LEASE AGREEMENT (this “**Amendment**”) is made as of August 4,2009 by and among SNH FM Financing LLC, a Delaware limited liability company,SNH FM Financing Trust, a Maryland real estate investment trust, and EllicottCity Land I, LLC, a Delaware limited liability company, collectively aslandlord (“**Landlord**”) and FVE FMFinancing, Inc., a Maryland corporation**,**astenant (“**Tenant**”).

 

RECITALS

 

A.            Landlord andTenant are parties to that certain Amended and Restated Master Lease Agreementdated as of the date hereof (as the same may be amended, restated, modified orsupplemented from time to time, the “Lease Agreement”).

 

B.            SNH FMFinancing LLC and Citibank, N.A., a national banking association (“Lender”)are parties to that certain Master Credit Facility Agreement dated as of August 4,2009 (as the same may be amended, restated, modified or supplemented from timeto time, the “Master Agreement”) pursuant to which Lender established a $512,934,000Term Loan in favorof Landlord.

 

C.            Immediatelyafter the execution of the Master Agreement, the Lender’s interests under theMaster Agreement were assigned by the Lender to Fannie Mae, that bodycorporate duly organized under the Federal National Mortgage AssociationCharter Act, as amended, 12 U.S.C. §1716 etseq. and dulyorganized and existing under the laws of the United States, and its successorsand assigns (“Fannie Mae”), pursuant to that certain Assignment of Master CreditFacility Agreement and Other Loan Documents dated as of August 4, 2009.

 

D.            Landlord and Tenant haveagreed to amend the Lease Agreement in certain respects pursuant to thisAmendment so long as the Term Loan established pursuant to the Master Agreementremains outstanding or if Fannie Mae becomes Successor Landlord pursuant to theLease Agreement.  After the Term Loan isno longer outstanding and if Fannie Mae is not the Successor Landlord pursuantto the Lease Agreement, this Amendment shall no longer be in full force andeffect.

 

E.             Landlord andTenant intend these Recitals to be a material part of this Amendment.

 

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NOW,THEREFORE, the parties hereto, in consideration of the mutual promises andagreements set forth herein, and other good and valuable consideration, thereceipt and sufficiency of which is hereby acknowledged, hereby agree asfollows:

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# **Section 1.****             ****Capitalized Terms****.**  All capitalized terms used in this Amendmentwhich are not specifically defined herein shall have the respective meaningsset forth in the Lease Agreement, and if not defined therein then therespective meanings set forth in the Master Agreement.

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# **Section 2.****             ****Amendments****.**

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## (i)            Section 1.34 of the Lease Agreementis hereby deleted and replaced in its entirety with the following:

 

“**1.34 **“**Facility**”shall mean, with respect to any Property, the skilled nursing/independentliving/assisted living facility being operated or proposed to be operated onsuch Property.”

 

## (ii)           Section. 1.35 of the Lease Agreement ishereby deleted and replaced in its entirety with the following:

 

“**1.35**  “**Facility Mortgage**”shall mean all of the Loan Documents as defined in the Master Agreement.”

 

## (iii)          Section 1.36 of the Lease Agreementis hereby deleted and replaced in its entirety with the following:

 

“**1.36**  “**Facility Mortgagee**”shall mean Fannie Mae or any subsequent holder of any Facility Mortgage.”

 

## (iv)          Section 1.52 of the Lease Agreementis hereby deleted and replaced in its entirety with the following:

 

“**1.52**  “**Insurance Requirements**”shall mean all terms of any insurance policy required by this Agreement and anyFacility Mortgage and all requirements of the issuer of any such policy and allorders, rules and regulations and any other requirements of the NationalBoard of Fire Underwriters (or any other body exercising similar functions)binding upon Landlord, Tenant or the Leased Property.”

 

## (v)           Section 1.55 of the Lease Agreementis hereby deleted and replaced in its entirety with the following:

 

“**1.55**      “**Landlord**”shall have the meaning given such term in the preambles to this Agreement,shall also include its successors and assigns including any Facility Mortgageethat forecloses on its Facility Mortgage and becomes a Successor Landlord.”

 

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## (vi)          Section 1.65 of the Lease Agreementis hereby deleted and replaced in its entirety with the following:

 

“**1.65**      Intentionally Deleted.”

 

## (vii)         Section 1.66 of the Lease Agreementis hereby deleted and replaced in its entirety with the following:

 

“**1.66**  Intentionally Deleted.”

 

## (viii)        Section 1.73 of the Lease Agreementis hereby deleted and replaced in its entirety with the following:

 

“**1.73**  “**Permitted Encumbrances**”shall mean, with respect to any Property, all rights, restrictions, andeasements of record set forth on Schedule B to the applicable owner’s orleasehold title insurance policy issued to Landlord with respect to suchProperty, plus any other encumbrances as may have been granted or caused byLandlord or otherwise consented to in writing by Landlord and FacilityMortgagee from time to time.”

 

## (ix)           Section 1.76 of the Lease Agreementis hereby deleted and replaced in its entirety with the following:

 

“**1.76**  Intentionally Deleted.”

 

## (x)            Section 1.83 of the Lease Agreementis hereby deleted and replaced in its entirety with the following:

 

“**1.83**  “**Single Purpose**”shall mean, with respect to Tenant at all times since its formation:

 

### **(a)**           has been a duly formed and existing partnership, corporation or limitedliability company, as the case may be;

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### **(b)**           has been duly qualified in each jurisdiction in which such qualificationwas at such time necessary for the conduct of its business;

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### **(c)**           has complied with the provisions of its organizational documents and thelaws of its jurisdiction of formation in all respects;

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### **(d)**           has observed all customary formalities regarding its partnership orcorporate existence, as the case may be;

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### **(e)**           has accurately maintained its income and expense statements, accountingrecords and other partnership or corporate documents separate from those of anyother Person;

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### **(f)**            has not commingled its assets or funds with those of any other Person orif it has commingled assets or funds, its assets and funds are separatelyaccounted for in the books and records of the party in whose name any assets orfunds are held;

 

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### **(g)**           has identified itself in all dealings with creditors (other than tradecreditors in the ordinary course of business and creditors for the constructionof improvements to property on which such Person has a non-contingent contractto purchase such property) under its own name and as a separate and distinctentity;

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### **(h)**           has been adequately capitalized in light of its contemplated businessoperations;

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### **(i)**            has not assumed, guaranteed or become obligated for the liabilities ofany other Person (except in connection with the Term Loan or as otherwisecontemplated by the Loan Documents or the endorsement of negotiable instrumentsin the ordinary course of business) or otherwise held out its credit as beingavailable to satisfy the obligations of any other Person;

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### **(j)**            has not acquired obligations or securities of any other Person;

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### **(k)**           has not entered into and was not a party to any transaction with anyAffiliated Person, except in the ordinary course of business and on terms whichare no less favorable to such Affiliated Person than would be obtained in acomparable arm’s-length transaction with an unrelated third party;

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### **(l)**            has paid the salaries of its own employees, if any, and maintained asufficient number of employees in light of its contemplated business operations(or has entered into agreements with third parties or Affiliates to provide allrequired services that would otherwise be provided by such number of employeesin a manner consistent with (k) above;

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### **(m)**          has allocated fairly and reasonably any overhead for shared office space;

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### **(n)**           has not engaged in any business or activity other than the leasing,operation and maintenance of the Leased Property, and activities incidentalthereto;

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### **(o)**           has not acquired, operated or owned any assets other than (A) theLeased Property and (B) such incidental personal property as may benecessary for the operation of the Leased Property;

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### **(p)**           has maintained its assets in such a manner that it will not be costly ordifficult to segregate, ascertain or identify it individual assets from thoseof any other Person;

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### **(q)**           has not made any loans or advances to any Person;

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### **(r)**            has not failed to either hold itself out to the public as a legal entityseparate and distinct from any other Person or to conduct its business solelyin its

 

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### **own name or fail to correct any knownmisunderstanding regarding its separate identity;**

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### **(s)**           has not engaged in a non-exempt prohibited transaction described in Section 406of ERISA or Section 4975 of the Internal Revenue Code; and

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## (xi)           Section 3.1.1(b) of the LeaseAgreement is hereby deleted and replaced in its entirety with the following:

#### ** **

#### **“(b) **Allocation ofMinimum Rent.  Minimum Rent may be allocated and reallocatedamong the Properties comprising the Leased Property by agreement among Landlordand Tenantand upon the prior writtenconsent of the Facility Mortgagee; provided, however that in no event shall the MinimumRent allocated to any Property be less than the monthly amount payable byLandlord on account of any Facility Mortgage and/or ground or master lease withrespect to such Property nor shall the aggregate amount of Minimum Rentallocated among the Properties exceed the total amount payable for the LeasedProperty.

#### ** **

## (xii)          Section 3.4 of the Lease Agreementis amended such that each of Landlord and Tenant, to the maximum extentpermitted by law, shall remain bound by the Lease Agreement in accordance withits terms and shall not take any action without the consent of the other andthe prior written consent of the Facility Mortgagee to modify, surrender orterminate the Lease Agreement.

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## (xiii)         Section 4.1.1(a) of the LeaseAgreement is hereby deleted and replaced in its entirety with the following:

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**“4.1.1**     **PermittedUse**.  (a)  Tenant shall, at alltimes during the Term, and at any other time that Tenant shall be in possessionof any Property, continuously use and operate, or cause to be used andoperated, such Property as a skilled nursing/independent living/assisted livingfacility as currently 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, except as may be permitted bythe Master Agreement.  No use shall bemade or permitted to be made of any Property and no acts shall be done thereonwhich will cause the cancellation of any insurance policy covering suchProperty or any part thereof (unless another adequate policy is available), norshall Tenant sell or otherwise provide to residents or patients therein, orpermit to be kept, used or sold in or about any Property any article which maybe prohibited by law or by the standard form of fire insurance policies, or anyother insurance policies 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 

 

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impairsthe value or the usefulness of any Property or any part thereof for itsPermitted Use.”

 

## (xiv)        Section 4.1.1(b) of the LeaseAgreement is hereby deleted from the Lease Agreement.

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## (xv)         Section 4.1.2 of the Lease Agreementis hereby deleted and replaced in its entirety with the following:

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**“4.1.2****    ****NecessaryApprovals****.** Tenant shall proceed with all due diligenceand obtain and maintain, or cause to be obtained and maintained, all approvalsnecessary to use and operate, for its Permitted Use, each Property and theFacility located thereon under Applicable Laws and, without limiting theforegoing, shall maintain (or cause to be maintained) appropriate certificationsfor reimbursement and licensure.”

 

## (xvi)        Section 4.1.3 of the Lease Agreementis hereby deleted and replaced in its entirety with the following:

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**“4.1.3****    ****LawfulUse, 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 adversely impair Landlord’s title thereto orto any portion thereof, or (b) may reasonably allow a claim or claims foradverse usage or adverse possession by the public, as such, or of implieddedication of such Property, or any portion thereof.”

 

## (xvii)       Section 4.4 of the Lease Agreementis hereby deleted and replaced in its entirety with the following:

 

“**4.4****       ****Environmental Matters.**

 

**4.4.1****      ****Restrictionon 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 with respect to any Propertypursuant to SARA Title III or any other Applicable Laws, (c) transmit toLandlord copies of any citations, orders, notices or other governmentalcommunications

 

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receivedby Tenant or its respective agents or representatives with respect thereto(collectively, “Environmental Notice”), which Environmental Noticerequires a written response or any action to be taken and/or if suchEnvironmental Notice gives notice of and/or presents a material risk of anymaterial violation of any Applicable Laws and/or presents a material risk ofany material cost, expense, loss or damage (an “Environmental Obligation”),(d) observe and comply with (or cause to be observed and complied with)all Applicable Laws relating to the use, maintenance and disposal of HazardousSubstances and all orders or directives from any official, court or agency ofcompetent jurisdiction relating to the use or maintenance or requiring theremoval, treatment, containment or other disposition thereof, and (e) payor otherwise dispose (or cause to be paid or otherwise disposed) of any fine,charge or Imposition related thereto, unless Tenant shall contest the same ingood faith and by appropriate proceedings and the right to use and the value ofany of the Leased Property is not affected thereby.

 

If, at any time prior to the termination of this Agreement,Hazardous Substances (other than those maintained in accordance with ApplicableLaws) are discovered on any Property, subject to Tenant’s right to contest thesame in accordance with Article 8, Tenant shall take (and shallcause to be taken) all actions and incur any and all expenses, as are requiredby any Government Agency and by Applicable Laws, (x) to clean up andremove from and about such Property all Hazardous Substances thereon, (y) tocontain and prevent any further release or threat of release of HazardousSubstances on or about such Property and (z) to use good faith efforts toeliminate any further release or threat of release of Hazardous Substances onor about such Property.

 

**4.4.2****      ****Indemnificationof 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, liabilities, damages, causes of action, administrativeorders or notices, costs, fines, penalties or expenses (including, withoutlimitation, reasonable attorney’s fees and expenses) imposed upon, incurred byor asserted against any Indemnitee resulting from, either directly orindirectly, the presence in, upon or under the soil or ground water of anyProperty or any properties surrounding such Property of any Hazardous Substancesin violation of any Applicable Laws, except to the extent the same arise fromthe gross negligence or willful misconduct of Landlord or any other Indemniteeor during any period that Landlord or a Person designated by Landlord (otherthan Tenant) is in possession of such Property from and after the CommencementDate for such Property.  Tenant’s dutyherein includes, but is not limited to, costs associated with personal injuryor property damage claims as a result of the presence prior to the expirationor sooner termination of the Term and the surrender of such Property toLandlord in accordance with the terms of this Agreement of Hazardous Substancesin, upon or under the soil or ground water of such Property in violation of anyApplicable

 

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Laws.  Upon Notice from Landlord and any other ofthe Indemnitees, Tenant shall undertake the defense, at Tenant’s sole cost andexpense, of any indemnification duties set forth herein, in which event, Tenantshall not be liable for payment of any duplicative attorneys’ fees incurred byany Indemnitee

 

Tenant shall, upon demand, pay (or cause to be paid)to Landlord, as an Additional Charge, any cost, expense, loss or damage(including, without limitation, reasonable attorneys’ fees) reasonably incurredby Landlord and arising from a failure of Tenant to observe and perform (or tocause to be observed and performed) the requirements of this Section 4.4,which amounts shall bear interest from the date ten (10) Business Daysafter written demand therefor is given to Tenant until paid by Tenant toLandlord at the Overdue Rate.”

 

## (xviii)      Section 6.1 of the Lease Agreementis hereby deleted from the Lease Agreement and replaced in its entirety withthe following:

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“6.1         **Improvements to the Leased Property****. **Tenant shall not make,construct or install (or permit to be made, constructed or installed) anyCapital Additions without, in each instance, obtaining Successor Landlord’sprior written consent, which consent shall be provided or not provided pursuantto the terms of the Facility Mortgage; provided, however, that nosuch consent shall be required in the event immediate action is required toprevent imminent harm to person or property and no consent shall be required ifit would not have been required by the Facility Mortgage.  Prior to commencing construction of anyCapital Addition for which consent is required, Tenant shall submit toSuccessor Landlord, in writing, a proposal setting forth, in reasonable detail,any such proposed improvement and shall provide to Successor Landlord suchplans and specifications, and such permits, licenses, contracts and such otherinformation concerning the same as Successor Landlord may reasonablyrequest.  Successor Landlord shall havethirty (30) days to review all materials submitted to Successor Landlord inconnection with any such proposal. Failure of Successor Landlord to respond to Tenant’s proposal withinthirty (30) days after receipt of all information and materials requested bySuccessor Landlord in connection with the proposed improvement shall be deemedto constitute rejection of the same. Without limiting the generality of the foregoing, such proposal shallindicate the approximate projected cost of constructing such proposed improvementand the use or uses to which it will be put. No Capital Addition shall be made which would tie in or connect anyLeased Improvements with any other improvements on property adjacent to anyProperty (and not part of the Land) including, without limitation, tie-ins ofbuildings or other structures or utilities. Except as permitted herein, Tenant shall not finance the cost of anyconstruction of such improvement by the granting of a lien on or securityinterest in the Leased Property or such improvement, or Tenant’s interesttherein, without the prior written consent of Successor Landlord, which consentmay be withheld by Successor Landlord in Successor Landlord’s solediscretion.  Any such improvements shall,upon the expiration or sooner termination of this Agreement, remain or pass toand become

 

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theproperty of Successor Landlord, free and clear of all encumbrances other thanPermitted Encumbrances.”

 

## (xix)         Article 7 (entitled “**Liens**”) of the Lease Agreement is herebydeleted and replaced in its entirety with the following:

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“Subject to Article 8, Tenant shall not,directly or indirectly, create or allow to remain and shall promptly discharge(or cause to be discharged), at its expense, any lien, encumbrance, attachment,title retention agreement or claim upon the Leased Property, or any portionthereof, or Tenant’s leasehold interest therein or any attachment, levy, claimor encumbrance in respect of the Rent, other than (a) PermittedEncumbrances, (b) restrictions, liens and other encumbrances which areconsented to in writing by Landlord and Facility Mortgagee, (c) liens forthose taxes of Landlord which Tenant is not required to pay hereunder, (d) subleasespermitted by Article 16, (e) liens for Impositions or for sumsresulting from noncompliance with Legal Requirements so long as (i) thesame are not yet due and payable, or (ii) are being contested inaccordance with Article 8, (f) liens of mechanics, laborers,materialmen, suppliers or vendors incurred in the ordinary course of businessthat are not yet due and payable or are for sums that are being contested inaccordance with Article 8, (g) any Facility Mortgages or otherliens which are the responsibility of Landlord pursuant to the provisions of Article 20and (h) Landlord Liens and any other voluntary liens created by Landlord.”

 

## (xx)          Article 8 (entitled “**Permitted Contests**”) of the Lease Agreementis hereby deleted and replaced in its entirety with the following:

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## “Tenant shall have the right to contest theamount or validity of any Imposition, Legal Requirement, Insurance Requirement(other than insurance premiums), 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) no part of theLeased Property nor any Rent therefrom shall be in any immediate danger ofsale, forfeiture, attachment or loss, (c) Landlord (or any FacilityMortgagee) shall not be susceptible of being subject to imprisonment orsusceptible of being subject to prosecution for a crime, nor shall the LeasedProperty or any part thereof be subject to being condemned or vacated, norshall the certificate of occupancy for the Leased Property be suspended orthreatened to be suspended by reason of non-compliance or by reason of suchcontest; (d) before the commencement of such contest, if Landlord or anyFacility Mortgagee may be subject to any civil fines or penalties or othercriminal penalties or if Landlord may be liable to any independent third partyas a result of such noncompliance, Tenant shall furnish to Landlord either (i) abond of a surety company satisfactory to Landlord, in form and substancereasonably satisfactory to Landlord, and in an amount equal to one hundredtwenty percent (120%) of the

 

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## sumof (1) the cost of such compliance, (2) the criminal or civilpenalties or fines that may accrue by reason of such non-compliance (asreasonably estimated by Landlord), and (3) the amount of such liability toindependent third parties (as reasonably estimated by Landlord), and shallindemnify Landlord (and any Facility Mortgagee) against the cost of suchcompliance and liability resulting from or incurred in connection with suchcontest or non-compliance (except that Tenant shall not be required to furnishsuch bond to Landlord if Tenant has otherwise furnished any similar bondrequired by law to the appropriate Governmental Agency and has named Landlordas a beneficiary thereunder), or (ii) other security reasonablysatisfactory in all respects to Landlord; (e) such non-compliance orcontest shall not constitute or result in a violation (either with the givingof notice or the passage of time or both) of the terms of any mortgage or deedof trust, or if such deed of trust or mortgage shall condition suchnon-compliance or contest upon the taking of action or furnishing of securityby Landlord, such action shall be taken or such security shall be furnished atthe expense of Tenant; and (f) Tenant shall keep Landlord regularlyadvised as to the status of such proceedings.

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Landlord agrees to join in any such proceedings ifrequired legally to prosecute such contest, provided that Landlord shall notthereby be subjected to any liability therefor (including, without limitation,for the payment of any costs or expenses in connection therewith) unless Tenantagrees by agreement in form and substance reasonably satisfactory to Landlord,to assume and 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 penalties due with respect thereto, and Tenant shallreimburse Landlord therefor, upon demand, as Additional Charges.”

 

## (xxi)         Section 9.5 of the Lease Agreementis hereby deleted and replaced in its entirety with the following:

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**“9.5****       ****Indemnificationof Landlord / Facility Mortgagee****.** 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 and anyFacility Mortgagee for, from and against all liabilities, obligations, claims,damages, penalties, causes of action, costs and reasonable expenses (including,without limitation, reasonable attorneys’ fees), to the maximum extentpermitted by law, imposed upon or incurred by or asserted against Landlord orFacility Mortgagee by reason of the following, except to the extent caused byLandlord’s or such Facility Mortgagee’s gross negligence or

 

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willfulmisconduct:  (a) any accident,injury to or death of persons or loss of or damage to property occurring on orabout any Property or portion thereof or adjoining sidewalks or rights of way, (b) anypast, present or future use, misuse, non-use, condition, management,maintenance or repair by Tenant 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.”

 

## (xxii)        The following is added to Article 10of the Lease Agreement:

 

“**10.8****     ****Facility Mortgage ProvisionsControl****.**  Notwithstanding anything to the contrarycontained in this Article 10, all provisions of this Agreement pertainingto insurance and the use of casualty proceeds are subject to the requirementsset forth in any Facility Mortgage.  Atall times and including in the event a Facility Mortgagee becomes the Landlordunder this Agreement, to the extent that there is any conflict between theterms and conditions of this Agreement and the provisions regarding insuranceand the use of casualty proceeds set forth in a Facility Mortgage, the termsand conditions of the Facility Mortgage will control.”

 

## (xxiii)       The following is added to Article 11of the Lease Agreement:

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“**11.6****     ****Facility Mortgagee ProvisionsControl****. **Notwithstandinganything to the contrary contained in this Article 11, all provisions ofthis Agreement pertaining to condemnation and the use of condemnation proceedsare subject to the requirements set forth in any Facility Mortgage.  At all times and including in the event aFacility Mortgagee becomes the Landlord under this Agreement, to the extentthat there is any conflict between the terms and conditions of this Agreementand the provisions regarding condemnation and the use of condemnation proceedsset forth in a Facility Mortgage, the terms and conditions of the FacilityMortgage will control.”

 

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## (xxiv)       Section 12.1(c) of the LeaseAgreement is hereby deleted and replaced in its entirety with the following:

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“(c)         should Tenant default in the due observance orperformance of any of the terms, covenants or agreements contained herein to beperformed or observed by it (other than as specified in clauses (a) and (b) above)and should such default continue for a period of thirty (30) days after Noticethereof from Landlord to Tenant; provided, however, that if inLandlord’s judgment such default is susceptible of cure but such cure cannot beaccomplished with due diligence within such period of time and if, in addition,in Landlord’s judgment Tenant commences to cure or cause to be cured suchdefault within thirty (30) days after Notice thereof from Landlord and if inLandlord’s judgment thereafter prosecutes the curing of such default with alldue diligence, such period of time shall be extended to such period of time(not to exceed an additional sixty (60) days in the aggregate) as may benecessary to cure such default with all due diligence; or”

 

## (xxv)        Section 12.1(i) of the LeaseAgreement is hereby deleted and replaced in its entirety with the following:

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“(i)          should the estate or interest of Tenant in theLeased Property or any part thereof be levied upon or attached in anyproceeding and the same shall not be vacated, bonded, fully insured ordischarged within ninety (90) days after commencement thereof, unless theamount in dispute is less than $250,000, in which case Tenant shall give noticeto Landlord of the dispute but Tenant may defend in any suitable way; or”

 

## (xxvi)       The second paragraph of Article 14of the Lease Agreement is hereby deleted and replaced in its entirety with thefollowing:

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“If Landlord shall in good faith dispute theoccurrence of any Landlord Default and Landlord, before the expiration of theapplicable cure period, shall give Notice thereof to Tenant, setting forth, inreasonable detail, the basis therefor, no Landlord Default shall be deemed tohave occurred and Landlord shall have no obligation with respect thereto untilfinal adverse determination thereof.”

 

## (xxvii)      Article 15 (entitled “**Purchase Rights**”) of the Lease Agreement ishereby deleted and replaced in its entirety with the following:

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“Subject to the security interest of any FacilityMortgagee, Landlord shall have the option to purchase Tenant’s PersonalProperty, at the expiration or sooner termination of this Agreement, for anamount equal to the then fair market value thereof (current replacement cost asdetermined by agreement of the parties or, in the absence of such agreement,appraisal), subject to, and with appropriate price adjustments for, allequipment leases, conditional sale contracts, UCC-1 financing statements andother 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

 

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andassigned, to Landlord or its designee, or assist Landlord or its designee inobtaining, any contracts, licenses, and certificates required for the thenoperation of the Leased Property. Notwithstanding the foregoing, Tenant expressly acknowledges and agreesthat nothing contained in this Article 15 shall diminish, impair orotherwise modify Landlord’s rights under the Security Agreement and that anyamounts paid by Landlord in order to purchase Tenant’s Personal Property inaccordance with this Article 15 shall be applied first to Tenant’scurrent and past due obligations under this Agreement in such order as Landlordmay reasonably determine or as may be prescribed by the laws of the applicableState and any balance shall be paid to Tenant.”

 

## (xxviii)     Subsection (a) of Section 16.2of the Lease Agreement is hereby deleted and replaced in its entirety with thefollowing:

##  

“(a) that it is subject and subordinate to thisAgreement and any Facility Mortgage and to the matters to which this Agreementis or shall be subject or subordinate;”

 

## (xxix)       Section 16.3 of the Lease Agreementis hereby deleted and replaced in its entirety with the following:

##  

“**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, will not violate any requirementsof the Facility Mortgage, and Tenant shall provide such additional insurancecoverage applicable to the activities to be conducted in such subleased spaceas Landlord and any Facility Mortgagee may require, and (c) enter into oneor more subleases with Affiliated Persons of Tenant with respect to the LeasedProperty, or any portion thereof, provided Tenant gives Landlord Noticeof the material terms and conditions thereof and Facility Mortgagee consentsthereto.”

 

## (xxx)        Article 18 (entitled “**Landlord’s Right to Inspect**”) of the LeaseAgreement is hereby deleted and replaced in its entirety with the following:

 

“Tenant shall permit Landlord and its authorizedrepresentatives and Facility Mortgagee and its authorized representatives toinspect the Leased Property, or any portion thereof, during usual businesshours upon not less than forty-eight (48) hours’ notice and to make suchrepairs as Landlord is permitted or required to make pursuant to the terms ofthis Agreement, provided that any inspection or repair by Landlord or itsrepresentatives will not unreasonably interfere with Tenant’s use and operationof the Leased Property and further

 

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providedthat in the event of an emergency, as determined by Landlord in its reasonablediscretion, prior Notice shall not be necessary.”

 

## (xxxi)       Section 19.1(c) of the LeaseAgreement is hereby deleted and replaced in its entirety with the following:

##  

“(c)         Landlord receives consent from any FacilityMortgagee.”

 

## (xxxii)      Section 20.2  of the Lease Agreement is hereby deleted andreplaced in its entirety with the following:

##  

“**20.2****     ****Subordination of Lease****.** This Agreement and any and all rights ofTenant hereunder are and shall be subject and subordinate to all mortgages anddeeds of trust, which may now or hereafter affect the Leased Property, or anyportion thereof, or any improvements thereon and/or any of such leases, whetheror not such mortgages or deeds of trust shall also cover other lands and/orbuildings and/or leases, to each and every advance made or hereafter to be madeunder such mortgages and deeds of trust, and to all renewals, modifications,replacements and extensions of such leases and such mortgages and deeds oftrust and all consolidations of such mortgages and deeds of trust.  This section shall be self-operative and nofurther instrument of subordination shall be required.  In confirmation of such subordination, Tenantshall promptly execute, acknowledge and deliver any instrument that Landlord,the lessor under any such lease or the holder of any such mortgage or thetrustee or beneficiary of any deed of trust or any of their respectivesuccessors in interest may reasonably request to evidence suchsubordination.  Any such subordination,however, shall be subject to the provisions of, and conditioned upon receipt byTenant of the nondisturbance agreement described in, the penultimate sentenceof this Section 20.2.  Anymortgage or deed of trust to which this Agreement is, at the time referred to,subject and subordinate is herein called “Superior Mortgage” and theholder, trustee or beneficiary of a Superior Mortgage or any successor ininterest thereto is herein called “Superior Mortgagee”.  Tenant shall have no obligations under anySuperior Mortgage other than those expressly set forth in this Section 20.2,unless Tenant shall agree otherwise pursuant to any agreement between Tenantand such Superior Mortgagee.

 

If any Superior Mortgagee shall succeed to therights of Landlord under this Agreement (any such person, “SuccessorLandlord”), whether through possession, termination of lease, foreclosureaction, assignment of lease or grant of deed, or otherwise, Tenant shall attornto and recognize the Successor Landlord as Tenant’s landlord under thisAgreement and Tenant shall promptly execute and deliver any instrument thatsuch Successor Landlord may reasonably request to evidence such attornment(provided that such instrument does not alter the terms of this Agreement),whereupon, this Agreement shall continue in full force and effect as a directlease between the Successor Landlord and Tenant upon all of the terms,conditions and covenants as are set forth in this Agreement, except that theSuccessor Landlord (unless formerly the landlord under this Agreement or its

 

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nomineeor designee) shall not be (a) liable in any way to Tenant for any act oromission, neglect or default on the part of any prior Landlord under thisAgreement, (b) responsible for any monies owing by or on deposit with anyprior Landlord to the credit of Tenant (except to the extent actually paid ordelivered to the Successor Landlord), (c) subject to any counterclaim orsetoff which theretofore accrued to Tenant against any prior Landlord, (d) boundby any modification of this Agreement subsequent to such Superior Mortgage, orby any previous prepayment of Rent for more than one (1) month in advanceof the date due hereunder, which was not approved in writing by 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 forthe performance of any work to be done by the Landlord under this Agreement torender the Leased Property ready for occupancy by Tenant (subject to Landlord’sobligations under Section 5.1.2(b) or with respect to anyinsurance proceeds or Awards), or (g) required to remove any Personoccupying the Leased Property or any part thereof, except if such person claimsby, through or under the Successor Landlord. Tenant agrees at any time and from time to time to execute a suitableinstrument in confirmation of Tenant’s agreement to attorn, as aforesaid andLandlord agrees to provide Tenant with an instrument of nondisturbance andattornment from such Superior Mortgagee in form and substance reasonablysatisfactory to Tenant whereby such Superior Mortgagee shall agree to recognizeTenant’s possessory and other rights under this Agreement notwithstanding anyforeclosure or lease termination, subject to the provisions of this Section 20.2.”

 

## (xxxiii)            Section 20.3 of the Lease Agreement ishereby deleted and replaced in its entirety with the following:

 

“**20.3****     ****Notice to Facility Mortgagee****.** Subsequent to the receipt by Tenant of Noticefrom Landlord as to the identity of any Facility Mortgagee (which Notice shallbe accompanied by a copy of the applicable mortgage), no Notice from Tenant toLandlord as to a default by Landlord under this Agreement shall be effectivewith respect to a Facility Mortgagee unless and until a copy of the same isgiven to such Facility Mortgagee at the address set forth in the above describedNotice, and the curing of any of Landlord’s defaults within the applicablenotice and cure periods set forth in Article 14 by such FacilityMortgagee shall be treated as performance by Landlord.”

 

## (xxxiv)           Section 21.2 of the Lease Agreement is herebydeleted and replaced in its entirety with the following:

##  

“**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 thingsnecessary to preserve, renew and keep in full force and effect and in goodstanding its corporate existence and its rights and licenses necessary toconduct such business.  Tenant shallmaintain itself as a Single Purpose entity.”

 

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## (xxxv)      The following is added to Article 21of the Lease Agreement:

##  

**“21.7****     ****Indebtednessof Tenant****.** Tenant shall not create, incur, assume orguarantee, or permit to exist, or become or remain liable directly orindirectly upon, any Indebtedness except the following:

 

(a)           Indebtedness of Tenant toLandlord ;

 

(b)           Indebtedness of Tenant forImpositions, to the extent that payment thereof shall not at the time berequired to be made in accordance with the provisions of Article 8;

 

(c)           Indebtedness of Tenant inrespect of judgments or awards (i) which have been in force for less thanthe applicable appeal period and in respect of which execution thereof shallhave been stayed pending such appeal or review, or (ii) which are fullycovered by insurance payable to Tenant, or (iii) which are for an amountnot in excess of $250,000 in the aggregate at any one time outstanding and (x) whichhave been in force for not longer than the applicable appeal period, so long asexecution is not levied thereunder or (y) in respect of which an appeal orproceedings for review shall at the time be prosecuted in good faith inaccordance with the provisions of Article 8, and in respect ofwhich execution thereof shall have been stayed pending such appeal or review;

 

(d)           Indebtedness for purchasemoney financing in accordance with Section 21.9(a) and otheroperating liabilities incurred in the ordinary course of Tenant’s business; and

 

(e)           Indebtedness of Tenant toFacility Mortgagee.

 

**21.8****       ****Distributions,Payments to Affiliated Persons, Etc.****** Tenant shall not declare, order, pay or make,directly or indirectly, any Distributions or any payment to any AffiliatedPerson of Tenant (including payments in the ordinary course of business) or setapart any sum or property therefor, or agree to do so, if, at the time of suchproposed action, or immediately after giving effect thereto, any Event ofDefault shall have occurred and be continuing. Otherwise, as long as no Eventof Default shall have occurred and be continuing, Tenant may make Distributionsand payments to Affiliated Persons; provided, however, that anysuch payments shall at all times be subordinate to Tenant’s obligations underthis Agreement.

 

**21.9****       ****Liens andEncumbrances****.** Except as permitted by Section 7.1and Section 21.7, Tenant shall not create or incur or suffer to becreated or incurred or to exist any Lien on this Agreement or any of Tenant’sassets, properties, rights or income, or any of its interest therein, now or atany time hereafter owned, other than:

 

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(a)           Securityinterests securing the purchase price of equipment or personal property whetheracquired before or after the Commencement Date; provided, however,that (i) such Lien shall at all times be confined solely to the asset inquestion and (ii) the aggregate principal amount of Indebtedness securedby any such Lien shall not exceed the cost of acquisition or construction ofthe property subject thereto;

 

(b)           Permitted Encumbrances; and

 

(c)           Liens in favor of FacilityMortgagee.

 

**21.10****     ****Merger;Sale of Assets; Etc****.** Without Landlord’s prior written consent(which consent may be given or withheld in Landlord’s sole discretion) andexcept as otherwise permitted under this Agreement, Tenant shall not (i) sell,lease (as lessor or sublessor), transfer or otherwise dispose of, or abandon,all or any material portion of its assets (including capital stock or otherequity interests) or business to any Person, (ii) merge into or with orconsolidate with any other Entity, or (iii) sell, lease (as lessor orsublessor), transfer or otherwise dispose of, or abandon, any personal propertyor fixtures or any real property; provided, however, that,notwithstanding the provisions of clause (iii) preceding, Tenant maydispose of equipment or fixtures which have become inadequate, obsolete,worn-out, unsuitable, undesirable or unnecessary, provided substitute equipmentor fixtures having equal or greater value and utility (but not necessarilyhaving the same function) have been provided.”

##  

## (xxxvi)     Article 22 of the Lease Agreement ishereby deleted in its entirety and such Article 22 is renamed “**Intentionally Deleted**”, except that itshall remain in full force and effect solely as between Landlord and Tenantinsofar as the holder of landlord’s interest hereunder shall be a subsidiary ofSenior Housing Properties Trust and the holder of tenant’s interest hereundershall be a subsidiary of Five Star Quality Care, Inc..

##  

## (xxxvii)    In the event that Fannie Mae becomesSuccessor Landlord then Section 23.13 of the Lease Agreement isimmediately and automatically without any further action of any party deletedfrom the Lease Agreement and replaced in its entirety with the following:

##  

**“23.13****  ****ApplicableLaw, Etc.**  ThisAgreement shall be interpreted, construed, applied and enforced in accordancewith the laws of the District of Columbia applicable to contracts betweenresidents of the District of Columbia which are to be performed entirely withinthe District of Columbia, regardless of (a) where this Agreement isexecuted or delivered; or (b) where any payment or other performancerequired 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,principal place of business, or jurisdiction of organization or domesticationof any party; or (f) whether the laws of the forum jurisdiction otherwisewould apply the laws of a jurisdiction other than the District of Columbia; or (g) anycombination of the

 

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foregoing.  Notwithstanding the foregoing, the laws ofthe State shall apply to the perfection and priority of liens upon and thedisposition of any Property.”

 

## (xxxviii)          The following is added to Article 23 of theLease Agreement:

##  

“**23.18****   ****Facility Mortgagee as Third-PartyBeneficiary**.  FacilityMortgagee is a third-party beneficiary of each provision of this Agreementwhich provides Facility Mortgagee with any rights and remedies and the FacilityMortgagee has the right to enforce such provisions in this Agreement.

 

**23.19  Master Agreement andFacility Mortgage Provisions Control**.  To the extent that there is any conflictbetween the terms and conditions of this Agreement and the Master Agreement orFacility Mortgage, the terms and conditions of the Master Agreement or FacilityMortgage will control.  By way ofexample, no Capital Addition will be made pursuant to Section 6.1 of theAgreement, no lien will be placed on any property interest of the Tenant, andthe Leased Property will not be used or operated in any manner, in each casewhich violates any term or condition of the Master Agreement or the FacilityMortgage.  Tenant agrees not to take anyaction or omit to take any action that will cause Landlord to be in default ofany provisions in the Master Agreement or the Facility Mortgage.

 

**23.20****     ****Breachof Covenants**.  If Tenantis aware of a breach of any covenant or a potential breach of any covenantunder the Facility Mortgage or the Lease Agreement or the SASA (as definedherein), Tenant shall promptly make Landlord and Facility Mortgagee aware ofsuch breach or potential breach in writing.

 

**23.21**  **Subordination, Assignment and Security Agreement**.  Landlord, Tenant, Facility Mortgagee andcertain affiliates of the Tenant, which affiliates are sub-tenants (“Sub-Tenant”)under certain approved sub-leases under this Agreement (“Sub-Lease”), haveentered into a Subordination, Assignment and Security Instrument (“SASA”) foreach Property subject to this Agreement. Pursuant to each SASA, Tenant and Sub-Tenant have assigned certaincollateral to Facility Mortgagee as security for payments due under thisAgreement and the Sub-Lease (“Lease Collateral”).  If Facility Mortgagee becomes the Landlordunder this Agreement, all obligations of the Tenant and Sub-Tenant set forth inthe SASA shall continue to be valid obligations and the assignment and securityinterest in the Lease Collateral shall continue in full force and effect solong as Facility Mortgagee is the Landlord under this Agreement.  In addition, during the period in which theFacility Mortgagee is the Landlord, any default under any SASA by the Tenant orSub-Tenant shall be an event of default under this Agreement.  To the extent that there is any conflictbetween the terms and conditions of this Agreement and the SASA, the terms andconditions of the SASA control.

 

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**23.22.****    ****Assignmentof Rents and Leases.**

 

Thefollowing terms, when used in this Section, shall have the following meanings:

 

“Leases” means all present and future leases,subleases, licenses, concessions or grants or other possessory interests now orhereafter in force, whether oral or written, covering or affecting theProperties known as Aspenwood, Heartfields at Easton, Heartlands at EllicottCity and Heartlands at Severna Park (the “Maryland Properties”) or any portionof the Maryland Properties (including proprietary leases or occupancyagreements if Tenant is a cooperative housing corporation), and allmodifications, extensions or renewals thereof. The term “Leases” shall also include any residency, occupancy,admission, and care agreements pertaining to residents of the MarylandProperties, any and all collateral securing the Leases and shall alsospecifically include, without limitation, this Agreement.

 

“Master Agreement” shall mean that certain MasterCredit Facility Agreement by and between SNH FM Financing LLC****and Citibank, N.A. (“Lender”) dated as ofthe date hereof.

 

“Rents” means all rents (whether from residential ornon-residential space), revenues and other income of the Maryland Properties,including subsidy payments received from any sources (including but not limitedto payments under any Housing Assistance Payments Contract), parking fees,laundry and vending machine income and fees and charges for food, healthcareand other services provided at the Maryland Properties, whether now due, pastdue, or to become due, resident and tenant security deposits, any and allcollateral securing the payments of Rents, entrance fees, application fees, processingfees, community fees and any other amounts or fees deposited by any resident ortenant (whether forfeited or not) together with and including all proceeds fromany private insurance for residents to cover rental charges and charges forservices at or in connection with the Maryland Properties, and the right tothird party payments due for the rents or services of residents at the MarylandProperties.

 

(a)           Tothe extent permitted by applicable law, Tenant absolutely and unconditionallyassigns and transfers to Landlord Tenant’s right, title and interest in allRents.  To the extent permitted byapplicable law, it is the intention of Tenant to establish a present, absoluteand irrevocable transfer and assignment to Landlord of Tenant’s right, titleand interest in all Rents and to authorize and empower Landlord to collect andreceive all Rents owed to Tenant without the necessity of further action on thepart of Tenant.  Promptly upon request byLandlord, Tenant agrees to execute and deliver further confirmation of suchassignments as Landlord may from time to time require.  To the extent permitted by applicable law,Tenant and Landlord intend this assignment of Rents to be immediately effectiveand to constitute an absolute present assignment and not an assignment foradditional security only.  However, ifthis present, absolute and unconditional assignment of Rents is not enforceableby its terms under the laws of the State is located, then it is the intentionof Tenant that in this circumstance 

 

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this Agreement create and perfect a lien on Tenant’sright, title and interest in all Rents in favor of Landlord, which lien shallbe effective as of the date of this Agreement and shall secure all obligationsof Tenant under this Agreement.

 

(b)           After the occurrence of anEvent of Default, Tenant authorizes Landlord to collect, sue for and compromiseRents and directs each resident and tenant of the Maryland Properties to payall Rents to, or as directed by, Landlord. However, until the occurrence of an Event of Default, Landlord herebygrants to Tenant a revocable license to collect and receive all Rents, to holdall Rents in trust for the benefit of Landlord and subject to the terms of thisAgreement, to apply all Rents to pay the current costs and expenses ofmanaging, operating and maintaining the Maryland Properties, includingAdditional Charges, resident and tenant improvements and other capitalexpenditures and otherwise to apply such Rents and retain them as its soleproperty, all to the extent such Rents are attributable to periods during whichan Event of Default has not occurred (each a “Nondefault Period”).  Subject to the terms of this Agreement, Rentsattributable to Nondefault Periods may be retained by Tenant free and clear of,and released from, Landlord’s rights with respect to Rents under thisAgreement.  From and after the occurrenceof an Event of Default, and without the necessity of Landlord entering upon andtaking and maintaining control of the Maryland Properties directly, or by areceiver, Tenant’s license to collect Rents shall automatically terminate andLandlord shall without notice be entitled to all Rents as they become due andpayable, including Rents then due and unpaid. Tenant shall pay to Landlord upon demand all Rents to which Landlord isentitled.  At any time on or after thedate of Landlord’s demand for Rents, Landlord may give, and Tenant herebyirrevocably authorizes Landlord to give, notice to all residents and tenants ofthe Maryland Properties instructing them to pay all Rents to Landlord.  No resident or tenant shall be obligated toinquire further as to the occurrence or continuance of an Event of Default, andno resident or tenant shall be obligated to pay to Tenant any amounts which are actually paid toLandlord in response to such a notice. Any such notice by Landlord shall be delivered to each resident andtenant personally, by mail or by delivering such demand to each rental unit.  Tenant shall not interfere with and shallcooperate with Landlord’s collection of such Rents.  After an Event of Default, Landlord isfurther authorized to give notice to all third party payment payors (other thangovernmental entities) at Landlord’s option, instructing them to pay all thirdparty payments which would be otherwise paid to Tenant to Landlord, to theextent permitted by law.

 

(c)           Tothe extent permitted by applicable law, Tenant absolutely and unconditionallyassigns and transfers to Landlord all of Tenant’s right, title and interest in,to and under the Leases, including Tenant’s right, power and authority tomodify the terms of any such Lease, or extend or terminate any such Lease.  To the extent permitted by applicable law, itis the intention of Tenant to establish a present, absolute and irrevocabletransfer and assignment to Landlord of all of Tenant’s right, title andinterest in, to and under the Leases.  Tothe extent permitted by applicable law, Tenant and Landlord intend thisassignment of the

 

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Leases to be immediately effective and to constitutean absolute present assignment and not an assignment for additional securityonly.  However, if this present, absoluteand unconditional assignment of the Leases is not enforceable by its termsunder the laws of the State, then it is the intention of Tenant that in thiscircumstance this Agreement create and perfect a lien on the Leases in favor ofLandlord, which lien shall be effective as of the date of this Agreement and shallsecure all obligations of Tenant under this Agreement.  Notwithstanding the foregoing or (c) below,the parties may agree to remove any Maryland Property from the terms of thisAgreement in connection with a release of any of the Maryland Properties pursuantto the terms and conditions of the Master Agreement.

 

(d)           UntilLandlord gives notice to Tenant of Landlord’s exercise of its rights under thisSection 23.22, Tenant shall have all rights, power and authority grantedto Tenant under any Lease (except as otherwise limited by this Section orany other provision of this Sublease), including the right, power and authorityto modify the terms of any Lease or extend or terminate any Lease.  If an Event of Default has occurred and iscontinuing and at the option of Landlord, the permission given to Tenantpursuant to the preceding sentence to exercise all rights, power and authorityunder Leases shall terminate.  Tenantshall comply with and observe Tenant’s material obligations under all Leases,including Tenant’s obligations pertaining to the maintenance and disposition ofresident or tenant security deposits.

 

(e)           Tenantrepresents and warrants to Landlord that Tenant has not executed any priorassignment of Rents or Leases or any such assignments have been terminated andTenant covenants and agrees that it will not perform any acts and has notexecuted, and shall not execute, any instrument which would prevent Landlordfrom exercising its rights under this Section 23.22, and that at the timeof execution of this Agreement there has been no anticipation or prepayment ofany Rents for more than two months prior to the due dates of such Rents.  Tenant shall not collect or accept payment ofany Rents more than two months prior to the due dates of such Rents.

 

(f)            Tenanthereby authorizes Landlord to file financing statements, continuationstatements and financing statement amendments in such form as Landlord mayrequire to perfect or continue the perfection of the security interest hereingranted and Tenant agrees, if Landlord so requests, to execute and deliver toLandlord such financing statements, continuation statementsand amendments.

 

(g)           The liens and securityinterests provided for herein, and all rights of Landlord in and to the Rentsand Lease, shall be subordinate in all respects to all right, title andinterest of Lender in and to the same.

 

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(h)           Tenant acknowledges andagrees that Landlord may and shall assign to Lender the liens and securityinterests provided for herein and all rights of Landlord in and to the Rentsand Leases.”

 

## (xxxix)      All references to “Manager” or anyprovisions relating thereto in the Lease Agreement are hereby deleted in theirentirety.

##  

## (xl)           All references to “Management Agreement”or any provisions relating thereto in the Lease Agreement are hereby deleted intheir entirety.

##  

## (xli)          All references to “Pledge Agreement” orany provisions relating thereto in the Lease Agreement are hereby deleted intheir entirety.

##  

## (xlii)         All references to “Security Agreement” orany provisions relating thereto in the Lease Agreement are hereby deleted intheir entirety.

##  

# **Section 3.****             **Full Force and Effect.  Except as expressly modified hereby, theLease Agreement and all of the terms, conditions, covenants, agreements andprovisions thereof remain in full force and effect and are hereby ratified andaffirmed.

#  

# **Section 4.****             **Counterparts.  This Amendment may be executed incounterparts by the parties hereto, and each such counterpart shall be consideredan original and all such counterparts shall constitute one and the sameinstrument.

#  

# **Section 5.****             **Governing Law.  THIS AMENDMENT SHALL BE GOVERNED BY,INTERPRETED, CONSTRUED AND ENFORCED PURSUANT TO AND IN ACCORDANCE WITH THE LAWSOF THE DISTRICT OF COLUMBIA (EXCLUDING THE LAW APPLICABLE TO CONFLICTS ORCHOICE OF LAW).  THIS PROVISION WASKNOWINGLY, WILLINGLY AND VOLUNTARILY AGREED TO BY LANDLORD AND TENANT UPONCONSULTATION WITH INDEPENDENT LEGAL COUNSEL EACH SELECTED BY LANDLORD’S ANDTENANT’S FREE WILL.

#  

# **Section 6.****             **Consent to Jurisdiction.  LANDLORD AND TENANT EACH AGREES THAT ANYCONTROVERSY ARISING UNDER OR IN RELATION TO THIS AMENDMENT SHALL BE LITIGATEDIN THE DISTRICT OF COLUMBIA.  THE LOCALAND FEDERAL COURTS AND AUTHORITIES WITH JURISDICTION IN THE DISTRICT OFCOLUMBIA SHALL HAVE JURISDICTION OVER ALL CONTROVERSIES WHICH MAY ARISEUNDER OR IN RELATION TO THIS AMENDMENT, INCLUDING THOSE CONTROVERSIES RELATINGTO THE EXECUTION, JURISDICTION, BREACH, ENFORCEMENT OR COMPLIANCE WITH THISAMENDMENT OR ANY OTHER ISSUE ARISING UNDER, RELATING TO, OR IN CONNECTION WITHTHIS AMENDMENT.  LANDLORD AND TENANT EACHIRREVOCABLY CONSENTS TO SERVICE, JURISDICTION, AND VENUE OF SUCH COURTS FOR ANYLITIGATION ARISING FROM THIS AMENDMENT, AND WAIVES ANY OTHER VENUE TO WHICH ITMIGHT BE ENTITLED BY VIRTUE OF DOMICILE, HABITUAL RESIDENCE OR OTHERWISE.

 

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# THIS PROVISION WAS KNOWINGLY,WILLINGLY AND VOLUNTARILY AGREED TO BY LANDLORD AND TENANT UPON CONSULTATIONWITH INDEPENDENT LEGAL COUNSEL EACH SELECTED BY LANDLORD’S AND TENANT’S FREEWILL.

#  

# **Section 7.****             **Waiver of Jury Trial.  LANDLORD AND TENANT EACH (I) COVENANTSAND AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING UNDERTHIS AMENDMENT TRIABLE BY A JURY AND (II) WAIVES ANY RIGHT TO TRIAL BYJURY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST.  THIS WAIVER IS INTENDED TO ENCOMPASSINDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A JURY TRIALWOULD OTHERWISE ACCRUE.  THIS PROVISIONWAS KNOWINGLY, WILLINGLY AND VOLUNTARILY AGREED TO BY LANDLORD AND TENANT UPONCONSULTATION WITH INDEPENDENT LEGAL COUNSEL EACH SELECTED BY LANDLORD’S ANDTENANT’S FREE WILL.

#  

# **Section 8.****             **Duration of Amendment.  This Amendment will no longer be in fullforce and effect in the event that the Term Loan is no longer outstanding andif Fannie Mae is not the Successor Landlord pursuant to the Lease Agreement.

 

*[The Remainder of This Page Has Been Intentionally Left Blank.]*

 

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INWITNESS WHEREOF, the parties hereto have executed this Amendment as of the dayand year first above written.

 
|       | LANDLORD:                                                       |
|------------|-----------------------------------------------------------------|
|       |                                                            |
| ** ** | **SNH  FM Financing LLC**, a Delaware limited liability company |
|       |                                                            |   |
|       | By:                                                             | /s/  David J. Hegarty |
|       | Name:                                                           | David  J. Hegarty |
|       | Title:                                                          | President |

 

*[Signatures continue on following page.]*

 

S-1

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| ** ** | **SNH  FM Financing Trust**, a Maryland real estate investment trust |
|------------|----------------------------------------------------------------------|
|       |                                                                 |   |
|       | By:                                                                  | /s/  David J. Hegarty |
|       | Name:                                                                | David  J. Hegarty |
|       | Title:                                                               | President |

 

*[Signatures continue on following page.]*

 

S-2

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| ** ** | **Ellicott  City Land I, LLC**, a Delaware limited liability company |
|------------|----------------------------------------------------------------------|
|       |                                                                 |   |
|       | By:                                                                  | /s/  David J. Hegarty |
|       | Name:                                                                | David  J. Hegarty |
|       | Title:                                                               | President |

 

*[Signatures continue on following page.]*

 

S-3

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|       | TENANT:                                                  |
|------------|----------------------------------------------------------|
|       |                                                     |
| ** ** | **FVE  FM Financing, Inc.**, a Maryland corporation |
|       |                                                     |   |
|       | By:                                                      | /s/  Bruce J. Mackey Jr. |
|       | Name:                                                    | Bruce  J. Mackey Jr. |
|       | Title:                                                   | President |

 

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