**Exhibit 10.14**

 

**AMENDEDAND RESTATED MASTER LEASE AGREEMENT**

**(LEASENO. 4),**

 

dated as of August4, 2009,

 

by and among

** **

**CERTAIN AFFILIATES OF SENIOR HOUSING PROPERTIES TRUST,**

 

AS LANDLORD,

 

AND

** **

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

 

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| 1.53          |       | Insurance  Requirements           | 12     |
|---------------|------------|-----------------------------------|--------|
| 1.54          |       | Interest  Rate                    | 12     |
| 1.55          |       | Land                              | 12     |
| 1.56          |       | Landlord                          | 12     |
| 1.57          |       | Landlord  Default                 | 12     |
| 1.58          |       | Landlord  Liens                   | 12     |
| 1.59          |       | Lease  Year                       | 13     |
| 1.60          |       | Leased  Improvements              | 13     |
| 1.61          |       | Leased  Intangible Property       | 13     |
| 1.62          |       | Leased  Personal Property         | 13     |
| 1.63          |       | Leased  Property                  | 13     |
| 1.64          |       | Legal  Requirements               | 13     |
| 1.65          |       | Lien                              | 14     |
| 1.66          |       | Manager                           | 14     |
| 1.67          |       | Management  Agreement             | 14     |
| 1.68          |       | Minimum  Rent                     | 14     |
| 1.69          |       | New  Seasons Properties           | 14     |
| 1.70          |       | Notice                            | 14     |
| 1.71          |       | Officer’s  Certificate       | 14     |
| 1.72          |       | Original  Leases                  | 14     |
| 1.73          |       | Other  Leases                     | 14     |
| 1.74          |       | Overdue  Rate                     | 15     |
| 1.75          |       | Parent                            | 15     |
| 1.76          |       | Permitted  Encumbrances           | 15     |
| 1.77          |       | Permitted  Use                    | 15     |
| 1.78          |       | Person                            | 15     |
| 1.79          |       | Pledge  Agreement                 | 15     |
| 1.80          |       | Prime  Rate                       | 16     |
| 1.81          |       | Property                          | 16     |
| 1.82          |       | Provider  Agreements              | 16     |
| 1.83          |       | Regulated  Medical Wastes         | 16     |
| 1.84          |       | Rent                              | 16     |
| 1.85          |       | Rules                             | 16     |
| 1.86          |       | SEC                               | 16     |
| 1.87          |       | Security  Agreement               | 16     |
| 1.88          |       | State                             | 16     |
| 1.89          |       | Subordinated  Creditor            | 16     |
| 1.90          |       | Subordination  Agreement          | 16     |
| 1.91          |       | Subsidiary                        | 17     |
| 1.92          |       | Successor  Landlord               | 17     |
| 1.93          |       | Tax  Regulatory Agreement         | 17     |
| 1.94          |       | Tenant                            | 17     |
| 1.95          |       | Tenant’s  Personal Property  | 17     |
| 1.96          |       | Term                              | 17     |
| 1.97          |       | Third  Party Payor Programs       | 17     |
| 1.98          |       | Third  Party Payors               | 18     |
| 1.99          |       | Unsuitable  for Its Permitted Use | 18     |
| 1.100         |       | Work                              | 18     |
| **ARTICLE 2** | ** ** | **LEASED  PROPERTY AND TERM**     | **18** |
| 2.1           |       | Leased  Property                  | 18     |
| 2.2           |       | Condition  of Leased Property     | 19     |
| 2.3           |       | Fixed  Term                       | 20     |

 

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| 2.4            |       | Extended  Terms                                      | 20     |
|----------------|------------|------------------------------------------------------|--------|
| 2.5            |       | Limitations  on Term                                 | 21     |
| **ARTICLE 3**  | ** ** | **RENT**                                             | **22** |
| 3.1            |       | Rent                                                 | 22     |
| 3.2            |       | Late  Payment of Rent, Etc.                          | 28     |
| 3.3            |       | Net  Lease                                           | 28     |
| 3.4            |       | No  Termination, Abatement, Etc.                     | 29     |
| **ARTICLE 4**  | ** ** | **USE OF THE  LEASED PROPERTY**                      | **30** |
| 4.1            |       | Permitted  Use                                       | 30     |
| 4.2            |       | Compliance  with Legal/Insurance Requirements, Etc.  | 32     |
| 4.3            |       | Compliance  with Medicaid and Medicare Requirements  | 32     |
| 4.4            |       | Environmental  Matters                               | 32     |
| **ARTICLE 5**  | ** ** | **MAINTENANCE  AND REPAIRS**                         | **34** |
| 5.1            |       | Maintenance  and Repair                              | 34     |
| 5.2            |       | Tenant’s  Personal Property                     | 36     |
| 5.3            |       | Yield  Up                                            | 37     |
| 5.4            |       | Management  Agreement                                | 37     |
| **ARTICLE 6**  | ** ** | **IMPROVEMENTS,  ETC.**                              | **38** |
| 6.1            |       | Improvements  to the Leased Property                 | 38     |
| 6.2            |       | Salvage                                              | 39     |
| **ARTICLE 7**  | ** ** | **LIENS**                                            | **39** |
| **ARTICLE 8**  | ** ** | **PERMITTED  CONTESTS**                              | **39** |
| **ARTICLE 9**  | ** ** | **INSURANCE AND  INDEMNIFICATION**                   | **40** |
| 9.1            |       | General  Insurance Requirements                      | 40     |
| 9.2            |       | Waiver  of Subrogation                               | 41     |
| 9.3            |       | Form Satisfactory,  Etc.                        | 41     |
| 9.4            |       | No  Separate Insurance; Self-Insurance               | 42     |
| 9.5            |       | Indemnification  of Landlord                         | 42     |
| **ARTICLE 10** | ** ** | **CASUALTY**                                         | **43** |
| 10.1           |       | Insurance  Proceeds                                  | 43     |
| 10.2           |       | Damage  or Destruction                               | 44     |
| 10.3           |       | Damage  Near End of Term                             | 46     |
| 10.4           |       | Tenant’s  Property                              | 46     |
| 10.5           |       | Restoration  of Tenant’s Property               | 46     |
| 10.6           |       | No  Abatement of Rent                                | 46     |
| 10.7           |       | Waiver                                               | 47     |
| **ARTICLE 11** | ** ** | **CONDEMNATION**                                     | **47** |
| 11.1           |       | Total Condemnation, Etc.                             | 47     |
| 11.2           |       | Partial  Condemnation                                | 47     |
| 11.3           |       | Abatement  of Rent                                   | 48     |
| 11.4           |       | Temporary  Condemnation                              | 49     |
| 11.5           |       | Allocation  of Award                                 | 49     |
| **ARTICLE 12** | ** ** | **DEFAULTS AND  REMEDIES**                           | **49** |
| 12.1           |       | Events  of Default                                   | 49     |
| 12.2           |       | Remedies                                             | 52     |
| 12.3           |       | Tenant’s  Waiver                                | 54     |
| 12.4           |       | Application  of Funds                                | 54     |
| 12.5           |       | Landlord’s  Right to Cure Tenant’s Default | 54     |

 

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| **ARTICLE 13** | ** ** | **HOLDING OVER**                                    | **55** |
|----------------|------------|-----------------------------------------------------|--------|
| **ARTICLE 14** | ** ** | **LANDLORD  DEFAULT**                               | **55** |
| **ARTICLE 15** | ** ** | **PURCHASE  RIGHTS**                                | **56** |
| **ARTICLE 16** | ** ** | **SUBLETTING AND  ASSIGNMENT**                      | **56** |
| 16.1           |       | Subletting  and Assignment                          | 56     |
| 16.2           |       | Required  Sublease Provisions                       | 58     |
| 16.3           |       | Permitted  Sublease                                 | 59     |
| 16.4           |       | Sublease  Limitation                                | 60     |
| **ARTICLE 17** | ** ** | **ESTOPPEL  CERTIFICATES AND FINANCIAL STATEMENTS** | **60** |
| 17.1           |       | Estoppel  Certificates                              | 60     |
| 17.2           |       | Financial  Statements                               | 61     |
| 17.3           |       | General  Operations                                 | 62     |
| **ARTICLE 18** | ** ** | **LANDLORD’S  RIGHT TO INSPECT**               | **63** |
| **ARTICLE 19** | ** ** | **EASEMENTS**                                       | **63** |
| 19.1           |       | Grant  of Easements                                 | 63     |
| 19.2           |       | Exercise  of Rights by Tenant                       | 64     |
| 19.3           |       | Permitted  Encumbrances                             | 64     |
| **ARTICLE 20** | ** ** | **FACILITY  MORTGAGES**                             | **64** |
| 20.1           |       | Landlord  May Grant Liens                      | 64     |
| 20.2           |       | Subordination  of Lease                             | 64     |
| 20.3           |       | Notice  to Mortgagee and Superior Landlord          | 66     |
| **ARTICLE 21** | ** ** | **ADDITIONAL  COVENANTS OF TENANT**                 | **67** |
| 21.1           |       | Prompt  Payment of Indebtedness                     | 67     |
| 21.2           |       | Conduct  of Business                                | 67     |
| 21.3           |       | Maintenance  of Accounts and Records                | 67     |
| 21.4           |       | Notice  of Litigation, Etc.                         | 68     |
| 21.5           |       | Prohibited  Transactions                            | 68     |
| 21.6           |       | Tax  Regulatory Agreement                           | 68     |
| **ARTICLE 22** | ** ** | **ARBITRATION**                                     | **69** |
| 22.1           |       | Disputes                                            | 69     |
| 22.2           |       | Selection  of Arbitrators                           | 69     |
| 22.3           |       | Location  of Arbitration                            | 69     |
| 22.4           |       | Scope  of Discovery                                 | 70     |
| 22.5           |       | Arbitration  Award                                  | 70     |
| 22.6           |       | Costs                                               | 70     |
| 22.7           |       | Final  Judgment                                     | 70     |
| 22.8           |       | Payment                                             | 70     |
| **ARTICLE 23** | ** ** | **MISCELLANEOUS**                                   | **71** |
| 23.1           |       | Limitation  on Payment of Rent                      | 71     |
| 23.2           |       | No  Waiver                                          | 71     |
| 23.3           |       | Remedies  Cumulative                                | 71     |
| 23.4           |       | Severability                                        | 72     |
| 23.5           |       | Acceptance  of Surrender                            | 72     |
| 23.6           |       | No  Merger of Title                                 | 72     |
| 23.7           |       | Conveyance  by Landlord                             | 72     |
| 23.8           |       | Quiet  Enjoyment                                    | 72     |
| 23.9           |       | No  Recordation                                     | 73     |
| 23.10          |       | Notices                                             | 73     |
| 23.11          |       | Construction                                        | 74     |
| 23.12          |       | Counterparts;  Headings                             | 75     |

 

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| 23.13 |   | Applicable  Law, Etc.     | 75 |
|-------|--------|---------------------------|----|
| 23.14 |   | Right  to Make Agreement  | 75 |
| 23.15 |   | Attorneys’  Fees     | 76 |
| 23.16 |   | Nonliability  of Trustees | 76 |
| 23.17 |   | Original  Leases          | 76 |

 

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**AMENDEDAND RESTATED MASTER LEASE AGREEMENT(LEASE NO. 4)**

 

**THISAMENDED AND RESTATED MASTER LEASE AGREEMENT** is entered into as of August 4, 2009 by and amongeach of the parties identified on the signature pages hereof as a landlord(collectively, “Landlord”), and each of the parties identified on thesignature pages hereof as a tenant (jointly and severally, “Tenant”).

 

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

 

**WHEREAS,** Landlord andTenant are parties to certainAmended and Restated Master Lease Agreements, dated as of June 30, 2008 and July1, 2008 (collectively, the “Original Leases”); and

 

**WHEREAS,**the landlordsand tenants under the Original Leases are conveying their interests in certainof the 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 plural aswell as the singular, (b) all accounting terms not otherwise defined hereinshall 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” and otherwords 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 Section22.1.

##  

## **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               “AdditionalRent Properties” **shall mean, collectively, all of the Properties other thanthe New Seasons Properties and each such Property shall be an Additional RentProperty.

##  

## **1.5               “AffiliatedPerson” **shallmean, with respect to any Person, (a)  inthe case of any such Person which is a partnership, any partner in suchpartnership, (b) in the case of any such Person which is a limited liabilitycompany, any member of such company, (c) any other Person which is a Parent, aSubsidiary, or a Subsidiary of a Parent with respect to such Person or to oneor more of the Persons 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 the ImmediateFamily of such Person or of any Person referred to in the preceding clauses (a)through (d).

##  

## **1.6               “Agreement” **shall mean thisAmended and Restated Master Lease Agreement (Lease No. 4), including allschedules and exhibits attached hereto, as it and they may be amended from timeto time as herein provided.

##  

## **1.7               “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,without limitation, treatment or storage tanks, or water, gas or oil wells), oremissions, discharges, releases or threatened releases of Hazardous Substances,chemical substances, pesticides, petroleum 

 

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## or petroleum products, pollutants, contaminants or hazardousor toxic substances, materials or wastes whether solid, liquid or gaseous innature, into the Environment, or relating to the manufacture, processing,distribution, use, treatment, storage, disposal, transport or handling ofHazardous Substances or 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.

##  

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

##  

## **1.9               “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 all reasonablelegal fees and other reasonable costs and expenses, including, withoutlimitation, expert witness fees, incurred by Landlord, in connection withobtaining any such award).

##  

## **1.10             “BaseGross Revenues” **shallmean the Gross Revenues with respect to each Additional Rent Property, for therespective calendar years or the respective dollar amount set forth on Schedule1 attached 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 with respect to such Property for suchLease Year, Base Gross Revenues shall be reduced as follows:  (a) in the event of a partial closing of anyFacility affecting the number of units, or the services provided, at suchFacility, Gross Revenues attributable to units or services at such Facilityshall be ratably allocated among all units in service at such Facility on theapplicable Commencement Date and all such Gross Revenues attributable to unitsno longer in service shall be subtracted from Base Gross Revenues throughoutthe period of such closing; and (b) in the event of any other change incircumstances affecting any Facility, Base Gross Revenues shall be equitablyadjusted in such manner as Landlord and Tenant shall reasonably agree.

##  

## **1.11             “BusinessDay” **shall mean anyday other than Saturday, Sunday, or any other day on which banking institutions

 

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## in The Commonwealth of Massachusetts are authorized by lawor executive action to close.

##  

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

##  

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

##  

## **1.14             “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% ormore, 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) the merger orconsolidation of Tenant or any Guarantor with or into any Person or the mergeror consolidation of any Person into Tenant or any Guarantor (other than themerger or consolidation of any Person into Tenant or any Guarantor that doesnot result in a Change in Control of Tenant or such Guarantor under clauses(a), (c), (d), (e) or (f) of this definition), (c) any one or more sales,conveyances, dividends or distributions to any Person of all or any materialportion of the assets (including capital stock or other equity interests) orbusiness of Tenant or any Guarantor, whether or not otherwise a Change inControl, (d) the cessation, for any reason, of the individuals who at thebeginning of any twenty-four (24) consecutive month period (commencing on thedate hereof) constituted the board of directors of Tenant or any Guarantor(together with any new directors whose election by such board or whose nominationfor election by the shareholders of Tenant or such Guarantor was approved by avote of a majority of the directors then still in office who were eitherdirectors at the beginning of any such period or whose election or nominationfor election was previously so approved, but excluding any individual whoseinitial nomination for, or assumption of, office as a member of such board ofdirectors occurs as a result of an actual or threatened solicitation of proxiesor consents for the election or removal of one or more directors by any Personother than a solicitation for the election of one or more directors by or onbehalf of the board of directors) to constitute a majority of the board ofdirectors of Tenant or such Guarantor then in office, or (e) the adoption ofany proposal (other than a precatory proposal) by Tenant or any Guarantor notapproved by vote of a majority of the directors of Tenant or any Guarantor, asthe case may be, in 

 

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##  

## office immediately prior to themaking of such proposal, or (f) the election to the board of directors ofTenant or any Guarantor of any individual not nominated or appointed by vote ofa majority of the directors of Tenant or such Guarantor in office immediatelyprior to the nomination or appointment of such individual.

##  

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

##  

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

##  

## **1.17             “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.

##  

## **1.18             “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 Property byLandlord to any Condemnor, either under threat of condemnation or while legalproceedings for condemnation are pending, or (c) a taking or voluntaryconveyance of such Property, or any interest therein, or right accruing theretoor use thereof, as the result or in settlement of any condemnation or othereminent domain proceeding affecting such Property, whether or not the sameshall have actually been commenced.

##  

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

##  

## **1.20             “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.

##  

## **1.21             “Dateof Taking” **shallmean, with respect to any Property, the date the Condemnor has the right topossession of 

 

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##  

## such Property, or any portion thereof, in connection with aCondemnation.

##  

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

##  

## **1.23             “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%).

##  

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

##  

## **1.25             “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.

##  

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

##  

## **1.27             “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.

##  

## **1.28             “Environment” **shall meansoil, surface waters, ground waters, land, stream, sediments, surface orsubsurface strata and ambient air.

##  

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

##  

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

##  

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

 

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## **1.32             “ExcessGross Revenues” **shallmean, with respect to each Additional Rent Property, the amount of GrossRevenues for any Lease Year, or portion thereof, in excess of Base GrossRevenues or the pro-rated portion thereof in the case of a Lease Year which isnot a full twelve-month period.

##  

## **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        “Fair Market Rental” **shall mean the rate of Minimum Rent that will be payable forthe New Seasons Properties (including all Capital Additions funded by Landlord)on the terms of this Agreement during the applicable period, in the thencurrent market, assuming a willing tenant not compelled to lease and a willinglandlord not compelled to rent, taking into account the Permitted Use, the rateof minimum or base rent then being charged for comparable lease terms forcomparable properties (in terms of both size and location) in the vicinity ofeach of the New Seasons Properties, and otherwise taking into account allrelevant factors, and assuming that no Event of Default exists.  Fair Market Rental shall be determined inaccordance with the arbitration procedures set forth in Article 22hereof if not agreed upon in writing by Landlord and Tenant.

##  

## **1.38             “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 been properlyprepared in accordance with GAAP and are true, correct and complete in allmaterial respects and fairly present the consolidated financial condition ofsuch 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 the 

 

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##  

## certifying party is an officer of Tenant and the certificateis being given in such capacity, that no Event of Default has occurred and iscontinuing hereunder.

##  

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

##  

## **1.40            **“**Five Star”**  shall mean Five Star Quality Care, Inc., aMaryland corporation, and its permitted successors and assigns.

##  

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

##  

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

##  

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

##  

## **1.44             “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.

##  

## **1.45             “GrossRevenues”**  shall mean,with respect to each Additional Rent Property, for each Fiscal Year during theTerm, in the aggregate, all revenues and receipts (determined on an accrualbasis and in all material respects in accordance with GAAP) of every kindderived from renting, using and/or operating such Property and parts thereof,including, but not limited to:  all rentsand revenues received or receivable for the use of or otherwise by reason ofall units, beds and other facilities provided, meals served, servicesperformed, space or facilities subleased or goods sold on such Property, or anyportion thereof, including, without limitation, any other arrangements withthird parties relating to the possession or use of any portion of suchProperty; and proceeds, if any, from business interruption or other loss ofincome insurance; provided, however, that Gross Revenues shallnot include the following:  revenue fromprofessional fees or charges by physicians and unaffiliated providers ofservices, when and to the extent such 

 

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##  

## charges are paid over to such physicians and unaffiliatedproviders of services, or are separately billed and not included incomprehensive fees; contractual allowances (relating to any period during theTerm) for billings not paid by or received from the appropriate governmentalagencies or third party providers; allowances according to GAAP foruncollectible accounts, including credit card accounts and charity care orother administrative discounts; all proper patient billing credits andadjustments according to GAAP relating to health care accounting; providerdiscounts for hospital or other medical facility utilization contracts andcredit card discounts; any amounts actually paid by Tenant for the cost of anyfederal, state or local governmental programs imposed specially to provide orfinance indigent patient care; federal, state or municipal excise, sales, use,occupancy or similar taxes collected directly from patients, clients orresidents or included as part of the sales price of any goods or services;insurance proceeds (other than proceeds from business interruption or otherloss of income insurance); Award proceeds (other than for a temporaryCondemnation); revenues attributable to services actually provided off-site orotherwise away from such Property, such as home health care, to persons thatare not patients, clients or residents at such Property; revenues attributableto child care services provided primarily to employees of such Property; anyproceeds from any sale of such Property or from the refinancing of any debtencumbering such Property; proceeds from the disposition of furnishings,fixture and equipment no longer necessary for the operation of the Facilitylocated thereon; any security deposits and other advance deposits, until andunless the same are forfeited to Tenant or applied for the purpose for whichthey were collected; reimbursements for provider, bed or occupancy taxescharged by any Governmental Agency to the extent previously included in GrossRevenues; and interest income from any bank account or investment of Tenant.

##  

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

##  

## **1.47            **“**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.

 

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##  

## **1.48            **“**Hazardous Substances”**  shall mean any 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 amendments theretoincluding, without limitation, the Comprehensive Environmental Response,Compensation and Liability Act (42 U.S.C. Section 9601 etseq.)and the Resource Conservation and Recovery Act (42 U.S.C. Section 6901 etseq.) and the regulations promulgated thereunder; or

####  

#### (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 portionthereof, or to adjacent properties or poses or materially threatens to pose ahazard to such Property, or any portion thereof, or to the health or safety ofpersons on or 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.

 

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##  

## **1.49             “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.

##  

## **1.50             “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, 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 interest in theLeased Property, (b) the Leased Property or any part thereof or any renttherefrom 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 income imposedon Landlord, (ii) any net revenue tax of Landlord, (iii) any transfer fee (butexcluding any mortgage or similar tax payable in connection with a FacilityMortgage) or other tax imposed with respect to the sale, exchange or otherdisposition by Landlord of the Leased Property or the proceeds thereof, (iv) anysingle business, gross receipts tax, transaction privilege, rent or similartaxes as the same relate to or are imposed upon Landlord, (v) any interest orpenalties imposed on Landlord as a result of the failure of Landlord to fileany return or report timely and in the form prescribed by law or to pay any taxor imposition, except to the extent such failure is a result of a breach byTenant of its obligations pursuant to Section 3.1.3, 

 

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##  

## (vi) any impositions imposed on Landlord that are a resultof Landlord not being considered a “United States person” as defined in Section7701(a)(30) of the Code, (vii) any impositions that are enacted or adopted bytheir express terms as a substitute for any tax that would not have beenpayable by Tenant pursuant to the terms of this Agreement or (viii) anyimpositions imposed as a result of a breach of covenant or representation byLandlord in any agreement governing Landlord’s conduct or operation or as aresult of the negligence or willful misconduct of Landlord.

##  

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

##  

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

##  

## **1.53            ****“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 and anyother requirements of the National Board of Fire Underwriters (or any otherbody exercising similar functions) binding upon Landlord, Tenant, any Manageror the Leased Property.

##  

## **1.54             “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.

##  

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

##  

## **1.56             “Landlord” **shall have themeaning given such term in the preambles to this Agreement and shall alsoinclude their respective successors and assigns.

##  

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

##  

## **1.58             “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 

 

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##  

## in favor of any taxing authority by reason of any tax owedby Landlord 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.

##  

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

##  

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

##  

## **1.61             “LeasedIntangible Property” **shallmean all agreements, service contracts, equipment leases, booking agreementsand other arrangements or agreements affecting the ownership, repair,maintenance, management, leasing or operation of the Leased Property, or anyportion thereof, to which Landlord is a party; all books, records and filesrelating to the leasing, maintenance, management or operation of the LeasedProperty, or any portion thereof, belonging to Landlord; all transferable orassignable permits, certificates of occupancy, operating permits, sign permits,development rights and approvals, certificates, licenses, warranties andguarantees, rights to deposits, trade names, service marks, telephone exchangenumbers identified with the Leased Property, and all other transferableintangible property, miscellaneous rights, benefits and privileges of any kindor character belonging to Landlord with respect to the Leased Property.

##  

## **1.62            ****“Leased Personal Property” **shall have the meaning given such term in Section2.1(e).

##  

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

##  

## **1.64             “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 

 

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##  

## covenants, agreements, restrictions and encumbrancescontained in any instruments at any time in force affecting any Property,including those which may (i) require material repairs, modifications oralterations in or to any Property or (ii) in any way materially and adverselyaffect the use and enjoyment thereof, but excluding any requirements arising asa result of Landlord’s status as a real estate investment trust.

##  

## **1.65             “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.

##  

## **1.66            ****“Manager”**  shall mean, with respect to any Property, theoperator or manager under any Management Agreement from time to time in effectwith respect to such Property, and its permitted successors and assigns.

##  

## **1.67            **“**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.

##  

## **1.68             “MinimumRent” **shallmean the sum of Twenty Million Eight Hundred Seventy One Thousand Eight HundredFive and 00/100s Dollars ($20,871,805.00) per annum.

##  

## **1.69            ****“New Seasons Properties” **shallmean, collectively, the Properties identified as a New Seasons Property on Schedule1 attached hereto and made a part hereof.

##  

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

##  

## **1.71             “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.

##  

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

##  

## **1.73             “OtherLeases” **shallmean (i) that certain Amended and Restated Master Lease Agreement (Lease No. 1),dated as of 

 

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##  

## the date hereof, by and among certain Affiliated Persons ofSenior Housing Properties Trust, as landlord, and Five Star Quality Care Trust,as tenant, and (ii) that certain Amended and Restated Master Lease Agreement(Lease No. 2), dated as of the date hereof, by and among certain AffiliatedPersons of Senior Housing Properties Trust, as landlord, and certain AffiliatedPersons of Five Star, as tenant.

##  

## **1.74             “OverdueRate” **shallmean, on any date, a perannum rate of interest equal to (i) withrespect to the Additional Rent Properties, the lesser of fifteen percent (15%)and the maximum rate then permitted under Applicable Laws, and (ii) withrespect to the New Seasons Properties, the lesser of (A) the greater of (1) fifteenpercent (15%) and (2) the Prime Rate plus three hundred (300) basis points, and(B) the maximum rate then permitted under Applicable Laws.

##  

## **1.75             “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.

##  

## **1.76             “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.

##  

## **1.77             “PermittedUse” **shall mean,with respect to any Property, any use of such Property permitted pursuant to Section4.1.1.

##  

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

##  

## **1.79            **“**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.

 

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##  

## **1.80        “Prime Rate” **shallmean the annual floating rate of interest, determined daily and expressed as apercentage from time to time announced by the Wall Street Journal as the“Prime Rate”.

##  

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

##  

## **1.82             “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.

##  

## **1.83             “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.

##  

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

##  

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

##  

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

##  

## **1.87             “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.

##  

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

##  

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

##  

## **1.90             “SubordinationAgreement” **shallmean any agreement (and any amendments thereto) executed by a SubordinatedCreditor pursuant to which the payment and performance of Tenant’s 

 

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##  

## obligations to such Subordinated Creditor are subordinatedto the payment and performance of Tenant’s obligations to Landlord under thisAgreement.

##  

## **1.91             “Subsidiary” **shall mean,with respect to any Person, any Entity (a) in which such Person owns directly,or indirectly through one or more Subsidiaries, twenty percent (20%) or more ofthe voting or beneficial interest or (b) which such Person otherwise has theright or power to control (whether by contract, through ownership of securitiesor otherwise).

##  

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

##  

## **1.93        “Tax Regulatory Agreement” **shall mean thatcertain Tax Regulatory Agreement from NewSeasons of Mt. Arlington, L.P. to NewJersey Health Care Facilities Financing Authority entered into on October 4,2000 pursuant to the Authority’s issuance of Revenue Bonds (NewSeasons of Mt.Arlington Assisted Living Project) Series 2000A.

##  

## **1.94             “Tenant” **shallhave the meaning given such term in the preambles to this Agreement and shallrefer to each such Entity comprising Tenant hereunder, whether the originalEntities named herein or any of their respective permitted successors orassigns, jointly and severally with each and every other Entity or Entitiesthen comprising Tenant hereunder.

##  

## **1.95             “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.

##  

## **1.96             “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.

##  

## **1.97             “ThirdParty Payor Programs”** shall mean all third party payor programs in which Tenant presently orin the future may participate, including, without limitation, Medicare, 

 

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##  

## Medicaid, CHAMPUS, Blue Cross and/or Blue Shield, ManagedCare Plans, other private insurance programs and employee assistance programs.

##  

## **1.98             “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.

##  

## **1.99             “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, within twelve(12) months following such damage or destruction or such longer period of timeas to which business interruption insurance is available to cover Rent andother costs related to the applicable Property following such damage ordestruction, (ii) the damage or destruction, if uninsured, exceeds $1,000,000or (iii) the cost of such restoration exceeds ten percent (10%) of the fairmarket value of such Property immediately prior to such damage or destruction,or (b) as the result of a partial taking by Condemnation, such Facility cannotbe operated, in the good faith judgment of Tenant, on a commerciallypracticable basis for its Permitted Use.

##  

## **1.100           “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-25 attached hereto and made a part hereof (the “Land”);

 

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####  

#### (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 situated upon the 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 existing

 

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##  

## state of title, including all covenants, conditions,restrictions, reservations, mineral leases, easements and other matters ofrecord or that are visible or apparent on the Leased Property, all applicableLegal Requirements, the lien of any financing instruments, mortgages and deedsof trust existing prior to the applicable Commencement Date for any Property orpermitted by the terms of this Agreement, and such other matters which would bedisclosed by an inspection of the Leased Property and the record title theretoor by an accurate survey thereof.  TENANTREPRESENTS THAT IT HAS INSPECTED THE LEASED PROPERTY AND ALL OF THE FOREGOINGAND HAS FOUND THE CONDITION THEREOF SATISFACTORY AND IS NOT RELYING ON ANYREPRESENTATION OR WARRANTY OF LANDLORD OR LANDLORD’S AGENTS OR EMPLOYEES WITHRESPECT THERETO AND TENANT WAIVES ANY CLAIM OR ACTION AGAINST LANDLORD INRESPECT 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 April 30, 2017.

##  

## **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 May 1, 2017 and expire on April 30, 2032 and the second ExtendedTerm shall commence on May 1, 2032 and expire on April 30, 2047.  All of the terms, covenants and provisions ofthis Agreement shall apply to each

 

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Extended Term, except that during the second ExtendedTerm, the Minimum Rent shall be adjusted so that the portion of the MinimumRent attributable to the New Seasons Properties shall be the Fair Market RentalValue thereof, and Tenant shall have no right to extend the Term beyond April 30,2047.  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 April 30, 2015, and if Tenantshall elect to exercise 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 April 30, 2030, it beingunderstood and agreed that time shall be of the essence with respect to thegiving 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 the secondExtended Term with respect to any Properties located in the State ofCalifornia.  If Tenant shall extend theTerm for the second Extended Term, the definition of Leased Property shallexclude any Properties located in the State of California during the secondExtended Term, Minimum Rent shall be reduced by the Minimum Rent allocatedthereto by the parties, and Tenant shall surrender such Properties to Landlord atthe expiration of the first Extended Term in the condition required by Section5.3 and shall comply with all of its other obligations relating to suchProperties as if the Term had expired at the end of the first Extended Term.

 

## **2.5               Limitations on Term**.  Notwithstandinganything contained in Section 2.3 or Section 2.4 to the contrary,the Term of this Agreement with respect to any Property shall not 

 

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##  

## extend beyond the term of anyground lease (including renewals and extensions thereof) pursuant to whichLandlord leases such Property.

##  

# **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. Rent for any partial calendar month shall be prorated on a per diembasis.

##  

### **3.1.1           Minimum Rent.**

###  

#### (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 

 

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####  

#### month (inaddition to the amount of Minimum Rent payable with respect to such calendarmonth, as adjusted pursuant to this paragraph (c)) the amount by which MinimumRent for the preceding calendar month, as adjusted for such disbursement on aper diem basis, exceeded the amount of Minimum Rent paid by Tenant for suchpreceding calendar month.

####  

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

####  

#### (e)           **Periodic Adjustments ofMinimum Rent.**  Effectiveas of January 1, 2018 and each January 1 thereafter through January 1, 2032(each, an “Effective Date”), Minimum Rent shall automatically beadjusted so that the portion of the Minimum Rent attributable to the NewSeasons Properties shall equal the product derived by multiplying the annualrate of Minimum Rent payable for the New Seasons Properties under thisAgreement immediately prior to the respective Effective Date by 1.03.

####  

### **3.1.2           Additional Rent**.

###  

#### (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 eachAdditional Rent Property.

####  

#### (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 Additional Rent Property shall be calculated basedon Gross Revenues for such quarter during the preceding year and shall be dueand payable and delivered to Landlord on the first Business Day of eachcalendar quarter, or portion thereof, thereafter occurring during the Term,together with an Officer’s Certificate setting forth the calculation ofAdditional Rent due and payable for such quarter.

####  

#### (c)           **Reconciliation of Additional Rent****.** In addition, within seventy-five (75) daysafter the end of each Lease 

 

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#### Year (or anyportion thereof occurring during the Term), Tenant shall deliver, or cause tobe delivered, to Landlord (i) a financial report setting forth the GrossRevenues for each Additional Rent Property for such preceding Lease Year, orportion thereof, together with an Officer’s Certificate from Tenant’s chieffinancial or accounting officer certifying that such report is true andcorrect, and (ii) a statement showing Tenant’s calculation of Additional Rentdue for such preceding Lease Year, or portion thereof, based on the GrossRevenues set forth in such financial report, together with an Officer’sCertificate from Tenant’s chief financial or accounting officer certifying thatsuch 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 that no Eventof Default 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 Additional Rent Properties in accordance with itsusual and customary practices and in all material respects in accordance withGAAP, which will accurately record all Gross Revenues and Tenant shall retain,for at least three 

 

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####  

#### (3) years afterthe expiration of each Lease Year, reasonably adequate records conforming tosuch accounting system showing all Gross Revenues for such Lease Year.  Landlord, at its own expense, except asprovided hereinbelow, shall have the right, exercisable by Notice to Tenant, byits accountants or representatives, to audit the information set forth in theOfficer’s Certificate referred to in subparagraph (c) above and, in connectionwith such audits, to examine Tenant’s books and records with respect thereto(including supporting data and sales and excise tax returns).  Landlord shall begin such audit as soon asreasonably possible following its receipt of the applicable Officer’sCertificate and shall complete such audit as soon as reasonably possiblethereafter.  All such audits shall beperformed at the location where such books and records are customarily kept andin such a manner so as to minimize any interference with Tenant’s businessoperations.  If any such audit disclosesa deficiency in the payment of Additional Rent and either Tenant agrees withthe result of such audit or the matter is otherwise determined, Tenant shallforthwith pay to Landlord the amount of the deficiency, as finally agreed or determined,together with interest at the Interest Rate, from the date such payment shouldhave been made to the date of payment thereof, and if the amount of suchdeficiency exceeds five percent (5%) of the Additional Rent that should havebeen paid for any Lease Year, Tenant shall forthwith pay to Landlord theaggregate amount of all costs and expenses incurred by Landlord in connectionwith any such audit.  If any such auditdiscloses that 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.  

 

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#### 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 added for non-payment, such payments to be made directly to the taxingauthorities where feasible, and shall promptly, upon request, furnish toLandlord copies of official receipts or other reasonably satisfactory proofevidencing such payments.  If any suchImposition may, at the option of the taxpayer, lawfully be paid in installments(whether or not interest shall accrue on the unpaid balance of suchImposition), Tenant may exercise the option to pay the same (and any accruedinterest on the unpaid balance of such Imposition) in installments and, in suchevent, shall pay, or cause to pay, such installments during the Term as thesame become due and before any fine, penalty, premium, further interest or costmay be added thereto.  Landlord, at itsexpense, shall, to the extent required or permitted by Applicable Laws, prepareand file, or cause to be prepared and filed, all tax returns and pay all taxesdue in 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,

 

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#### to the extentrequired or permitted by Applicable Laws and regulations, prepare and file allother tax returns and reports in respect of any Imposition as may be requiredby Government Agencies.  Provided noEvent of Default shall have occurred and be continuing, if any refund shall bedue from any taxing authority in respect of any Imposition paid by or on behalfof Tenant, the same shall be paid over to or retained by Tenant.  Landlord and Tenant shall, upon request ofthe other, provide such data as is maintained by the party to whom the requestis made with respect to the Leased Property as may be necessary to prepare anyrequired returns and reports.  In theevent Government Agencies classify any property covered by this Agreement aspersonal property, Tenant shall file, or cause to be filed, all personalproperty tax returns in such jurisdictions where it may legally so file.  Each party shall, to the extent it possessesthe same, provide the other, upon request, with cost and depreciation recordsnecessary for filing returns for any property so classified as personalproperty.  Where Landlord is legallyrequired to file personal property tax returns for property covered by thisAgreement, Landlord shall provide Tenant with copies of assessment notices insufficient time for Tenant to file a protest. All Impositions assessed against such personal property shall be(irrespective of whether Landlord or Tenant shall file the relevant return)paid by Tenant not later than the last date on which the same may be madewithout 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 Article9.

####  

#### (d)           **Other Charges****.** Tenant shall pay or cause to be paid all otheramounts, liabilities and obligations, including, without limitation, groundrents, if any, and 

 

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#### all amountspayable under any equipment leases and all agreements to indemnify Landlordunder 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, Tenantshall pay Landlord, on demand, as Additional Charges, a late charge (to theextent 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 toLandlord or any Facility Mortgagee pursuant to any requirement of thisAgreement, Tenant shall be relieved of its obligation to pay such AdditionalCharges to the Entity to which they would otherwise be due.  If any payments due from Landlord to Tenantshall not be paid within ten (10) days after its due date, Landlord shall payto Tenant, on demand, a late charge (to the extent permitted by law) computedat the Overdue Rate on the amount of such installment from the due date of suchinstallment 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 suchitems.  Landlord shall have all legal,equitable and contractual rights, powers and remedies provided either in thisAgreement or by statute or otherwise in the case of non-payment of theAdditional Charges as in the case of non-payment of the Minimum Rent andAdditional Rent.

 

## **3.3               NetLease.** The Rent shall be absolutely net to Landlordso that this Agreement shall yield to Landlord the full 

 

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## amount of the installments or amounts of the Rent throughoutthe Term, subject to any other provisions of this Agreement which expresslyprovide otherwise, including those provisions for adjustment or abatement ofsuch 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 prohibition of,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, readjustment, liquidation,dissolution, winding up or other proceedings affecting Landlord or any assigneeor transferee of Landlord; or (e) for any other cause whether similar ordissimilar to any of the foregoing (other than a monetary default byLandlord).  Except as otherwisespecifically provided in this Agreement, Tenant hereby waives all rightsarising from any occurrence whatsoever, which may now or hereafter be conferredupon it by law (a) to modify, surrender or terminate this Agreement or quit orsurrender the Leased Property, or any portion thereof, or (b) which wouldentitle Tenant to any abatement, reduction, suspension or deferment of the Rentor other sums payable or other obligations to be performed by Tenanthereunder.  The obligations of Tenanthereunder shall be separate and independent covenants and agreements, and theRent and all other sums payable by Tenant hereunder shall continue to bepayable in all events unless the obligations to pay the same shall beterminated pursuant to the express provisions of this Agreement.

 

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# ** **

# **ARTICLE4**

 

# **USE OF THELEASED PROPERTY**

# ** **

## **4.1               PermittedUse.**

##  

### **4.1.1           Permitted Use.**

###  

#### (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 insurance policies required to be carriedhereunder, or fire underwriter’s regulations. Tenant shall, at its sole cost (except as expressly provided in Section5.1.2(b)), comply or cause to be complied with all InsuranceRequirements.  Tenant shall not take oromit to take, or permit to be taken or omitted to be taken, any action, thetaking or omission of which materially impairs the value or the usefulness ofany Property or any part 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 shall negotiatein good faith to agree on an alternative use for such Property, appropriateadjustments to the Additional Rent (if applicable) and other related matters; provided,however, 

 

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#### in no eventshall the Minimum Rent be reduced or abated as a result thereof.  If Landlord and Tenant fail to agree on analternative use for such Property within sixty (60) days after commencingnegotiations as aforesaid, Tenant may market such Property for sale to a third party.  If Tenant receives a bona fide offer (an “Offer”)to purchase such Property from a Person having the financial capacity toimplement the terms of such Offer, Tenant shall give Landlord Notice thereof,which Notice shall include a copy of the Offer executed by such thirdparty.  In the event that Landlord shallfail to accept or reject such Offer within thirty (30) days after receipt ofsuch Notice, such Offer shall be deemed to be rejected by Landlord.  If Landlord shall sell the Property pursuantto such Offer, then, effective as of the date of such sale, this Agreementshall terminate with respect to such Property, and the Minimum Rent shall bereduced by an amount equal to the product of the net proceeds of sale receivedby Landlord multiplied by the Interest Rate. If Landlord shall reject (or be deemed to have rejected) such Offer,then, effective as of the proposed date of such sale, this Agreement shallterminate with respect to such Property, and the Minimum Rent shall be reducedby an amount equal to the product of the projected net proceeds determined byreference 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 maintain, or cause to be obtainedand maintained, all approvals necessary to use and operate, for its PermittedUse, each Property and the Facility located thereon under Applicable Laws and,without limiting the foregoing, shall exercise reasonable efforts to maintain (orcause to be maintained) appropriate certifications for reimbursement andlicensure.

###  

### **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’s titlethereto or to any portion thereof, or (b) may reasonably allow a claim orclaims for adverse usage or adverse possession by the public, as 

 

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### such, or of implied dedicationof such Property, or any portion thereof.

###  

## **4.2               Compliancewith Legal/Insurance Requirements, Etc.** Subject to the provisions of Section 5.1.2(b)and Article 8, Tenant, at its sole expense, shall (a) comply with (orcause 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 governmental agency having jurisdiction over any Property as a conditionof the continued operation of such Property for its Permitted Use.

##  

## **4.4               EnvironmentalMatters**.

##  

### **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 of anyreport which is 

 

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### required to be filed by Tenantor any Manager with respect to any Property pursuant to SARA Title III or anyother Applicable Laws, (c) transmit to Landlord copies of any citations,orders, notices or other governmental communications received by Tenant or anyManager or their 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) allApplicable 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) pay orotherwise dispose (or cause to be paid or otherwise disposed) of any fine,charge or Imposition related thereto, unless Tenant or any Manager shallcontest the same in good faith and by appropriate proceedings and the right touse and the value of any of the Leased Property is not materially and adverselyaffected 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 incur any and all expenses, as are required by any GovernmentAgency and by Applicable Laws, (x) to clean up and remove from and about suchProperty all Hazardous Substances thereon, (y) to contain and prevent anyfurther release or threat of release of Hazardous Substances on or about suchProperty and (z) to use good faith efforts to eliminate any further release orthreat of release of Hazardous Substances on or about such Property.

 

### **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 any

 

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### Indemnitee resulting from,either directly or indirectly, the presence in, upon or under the soil orground water of any Property or any properties surrounding such Property of anyHazardous Substances in violation of any Applicable Laws, except to the extentthe same arise from the acts or omissions 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 Laws.  Upon Notice fromLandlord and any other of the Indemnitees, Tenant shall undertake the defense,at Tenant’s sole cost and expense, of any indemnification duties set forthherein, in which event, Tenant shall not be liable for payment of anyduplicative attorneys’ fees incurred by any Indemnitee.

###  

Tenantshall, upon demand, pay (or cause to be paid) to Landlord, as an Additional Charge,any cost, expense, loss or damage (including, without limitation, reasonableattorneys’ fees) reasonably incurred by Landlord and arising from a failure ofTenant to observe and perform (or to cause to be observed and performed) therequirements of this Section 4.4, which amounts shall bear interest fromthe date ten (10) Business Days after written demand therefor is given toTenant until paid 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.

###  

# **ARTICLE5**

 

# **MAINTENANCE ANDREPAIRS**

# ** **

## **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 

 

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###  

### Leased Property or Tenant’sPersonal Property or any portion thereof), and shall promptly make or cause tobe made all necessary and appropriate repairs and replacements to each Propertyof every kind and nature, whether interior or exterior, structural ornonstructural, ordinary or extraordinary, foreseen or unforeseen or arising byreason of a condition existing prior to the Commencement Date for such Property(concealed or otherwise).  All repairsshall be made in a good, workmanlike manner, consistent with industry standardsfor comparable Facilities in like locales, in accordance with all applicablefederal, state and local statutes, ordinances, codes, rules and regulationsrelating to any such work.  Tenant shallnot take or omit to take (or permit any Person to take or omit to take) anyaction, the taking or omission of which would materially and adversely impairthe value or the usefulness of the Leased Property or any material part thereoffor its Permitted Use.  Tenant’sobligations under this Section 5.1.1 shall be limited in the event ofany casualty or Condemnation as set forth in Article 10 and Article 11and Tenant’s obligations with respect to Hazardous Substances are as set forthin 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 description to the Leased Property,whether ordinary or extraordinary, structural or nonstructural, foreseen orunforeseen, or to make any expenditure whatsoever with respect thereto, or tomaintain the Leased Property in any way. Except as otherwise expressly provided in this Agreement, Tenant herebywaives, to the maximum extent permitted by law, the right to make repairs atany Property at the expense of Landlord pursuant to any law in effect on theCommencement Date for such Property or thereafter enacted.  Landlord shall have the right to give, recordand post, as appropriate, notices of nonresponsibility under any mechanic’slien 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 

 

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####  

#### thereof andsuch other information with respect thereto as Landlord may reasonablyrequire.  Provided that no Event ofDefault shall have occurred and be continuing and Tenant shall otherwise complywith the applicable provisions of Article 6, Landlord shall, within ten (10)Business Days after such Notice, subject to and in accordance with theapplicable provisions of Article 6, disburse such required funds toTenant (or, if Tenant shall so elect, directly to the Manager or any otherPerson performing the required work) and, upon such disbursement, the Minimum Rentshall 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 notice thatliens on the Leased Property or on Landlord’s interest therein are expresslyprohibited and that they must look solely to Tenant to secure payment for anywork 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 

 

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## Term all such Tenant’s Personal Property as shall benecessary in order to operate in compliance with applicable material LegalRequirements and Insurance Requirements and otherwise in accordance withcustomary practice in the industry for the Permitted Use.  If, from and after the Commencement Date withrespect to any Property, Tenant acquires an interest in any item of tangiblepersonal property (other than motor vehicles) on, or in connection with, theLeased Property, or any portion thereof, which belongs to anyone other thanTenant, Tenant shall require the agreements permitting such use to provide thatLandlord or its designee may assume Tenant’s rights and obligations under suchagreement upon Landlord’s purchase of the same in accordance with theprovisions of Article 15 and the assumption of management or operationof 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 anyProperty), Tenant shall vacate and surrender the Leased Property or suchProperty (as applicable) to Landlord in substantially the same condition inwhich such Property 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).

##  

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 

 

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## respect to any Property. Any Management Agreement entered into pursuant to the provisions of thisSection 5.4 shall be subordinate to this Agreement and shall provide, interalia, that all amounts due from Tenant to Manager thereunder shall besubordinate to all amounts due from Tenant to Landlord (provided that, as longas no Event of Default has occurred and is continuing, Tenant may pay allamounts due to Manager thereunder pursuant to such Management Agreement) andfor termination thereof, at Landlord’s option, upon the termination of thisAgreement.  Tenant shall not take anyaction, grant any consent or permit any action under any such ManagementAgreement which might have a material adverse effect on Landlord, without theprior written consent of Landlord, which consent shall not be unreasonablywithheld, delayed or conditioned.

##  

# **ARTICLE6**

 

# **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 of thesame would not adversely affect or violate any material Legal Requirement orInsurance Requirement applicable to any Property and (b) Landlord shall havereceived an Officer’s Certificate certifying as to the satisfaction of theconditions set out in clause (a) above; provided, however, thatno such consent shall be required in the event immediate action is required toprevent imminent harm to person or property. 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 security interestin the Leased Property or such improvement, or Tenant’s interest therein,without the prior written consent of Landlord, which consent may be withheld byLandlord in Landlord’s sole discretion. Any such improvements shall, upon the expiration or sooner terminationof this Agreement, remain or pass to and become the property of Landlord, freeand clear of all encumbrances other than Permitted Encumbrances.

 

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## **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.

##  

# **ARTICLE7**

 

# **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 in writing by Landlord, (c)liens for those taxes of Landlord which Tenant is not required to payhereunder, (d) subleases permitted by Article 16, (e) liens forImpositions or for sums resulting from noncompliance with Legal Requirements solong as (i) the same are not yet due and payable, or (ii) are being contestedin accordance 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 other lienswhich are the responsibility of Landlord pursuant to the provisions of Article20 and (h) Landlord Liens and any other voluntary liens created byLandlord.

 

# **ARTICLE8**

 

# **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 shall notcause Landlord or Tenant to be in default under any mortgage or deed of trustencumbering the Leased Property, or any portion thereof (Landlord agreeing thatany such mortgage or deed of 

 

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trust shall permit Tenant to exercise the rightsgranted pursuant to this Article 8) or any interest therein or result inor reasonably be expected to result in a lien attaching to the Leased Property,or any portion thereof, (c) no part of the Leased Property nor any Renttherefrom shall be in any immediate danger of sale, forfeiture, attachment orloss, and (d) Tenant shall indemnify and hold harmless Landlord from andagainst any cost, claim, damage, penalty or reasonable expense, includingreasonable attorneys’ fees, incurred by Landlord in connection therewith or asa result thereof.  Landlord agrees tojoin in any such proceedings if required legally to prosecute such contest,provided that Landlord shall not thereby be subjected to any liability therefor(including, without limitation, for the payment of any costs or expenses inconnection therewith) unless Tenant agrees by agreement in form and substancereasonably satisfactory to Landlord, to assume and indemnify Landlord withrespect to the same.  Tenant shall beentitled to any refund of any Claims and such charges and penalties or interestthereon which have been paid by Tenant or paid by Landlord to the extent thatLandlord has been fully reimbursed by Tenant. If Tenant shall fail (x) to pay or cause to be paid any Claims whenfinally determined, (y) to provide reasonable security therefor or (z) toprosecute or cause to be prosecuted any such contest diligently and in good faith,Landlord may, upon reasonable notice to Tenant (which notice shall not berequired if Landlord shall reasonably determine that the same is notpracticable), pay such charges, together with interest and penalties due withrespect thereto, and Tenant shall reimburse Landlord therefor, upon demand, asAdditional Charges.

 

# **ARTICLE9**

 

# **INSURANCE ANDINDEMNIFICATION**

# ** **

## **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 Lease Yearfor Landlord’s review and approval, which approval shall not be unreasonablywithheld, delayed or conditioned.  In theevent 

 

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## 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               FormSatisfactory, 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, liability and flood insurancepolicies with respect to each Property shall include no deductible in excess ofTwo Hundred Fifty Thousand Dollars ($250,000). At all times, all property, business interruption, liability and floodinsurance policies, with the exception of worker’s compensation insurancecoverage, shall name Landlord and any Facility Mortgagee as additionalinsureds, as their interests may appear. All loss adjustments shall be payable as provided in Article 10,except that losses under liability and worker’s compensation insurance policiesshall be payable directly to the party entitled thereto.  Tenant shall cause all insurance premiums tobe paid prior to the effective date of any policy, if required by such policy,or pursuant to an installment payment plan if permissible under suchpolicy.  Not more than twenty five (25)days nor less than five (5) days prior to the effective date of the policies orrenewal policies (which, for renewal policies, shall be prior to the expirationof the existing policy), Tenant shall deliver to Landlord copies of enforceablebinders for such insurance coverage. Tenant shall deliver (or cause to be delivered) to 

 

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## Landlord certificates evidencing such insurance coveragewithin five (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 the amount ofany existing insurance by securing an additional policy or additional policies,unless all parties having an insurable interest in the subject matter of suchinsurance, including Landlord and all Facility Mortgagees, are included thereinas additional insureds and the loss is payable under such insurance in the samemanner as losses are payable under this Agreement.  In the event Tenant shall take out any suchseparate insurance or increase any of the amounts of the then existinginsurance, Tenant shall give Landlord prompt Notice thereof.  Tenant shall not self-insure (or permit anyPerson to self-insure) with respect to any insurance required to be carriedhereunder 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 willfulmisconduct:  (a) any accident, injury toor death of persons or loss of or damage to property occurring on or about anyProperty 

 

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## or portion thereof or adjoining sidewalks or rights of way, (b)any past, present or future use, misuse, non-use, condition, management,maintenance or repair by Tenant, any Manager or anyone claiming under any ofthem or Tenant’s Personal Property or any litigation, proceeding or claim bygovernmental entities or other third parties to which Landlord is made a partyor participant 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 part ofTenant 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 Section9.5 are in addition to the obligations set forth in Section 4.4 andshall survive the termination of this Agreement.

##  

# **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 Article9 (other than the proceeds of any business interruption insurance) shall bepaid directly to Landlord (subject to the provisions of Section 10.2)and all loss adjustments with respect to losses payable to Landlord shallrequire the prior written consent of Landlord, which consent shall not beunreasonably withheld, delayed or conditioned; provided, however,that, so long as no Event of Default shall have occurred and be continuing, allsuch proceeds less than or equal to Two Hundred Fifty Thousand Dollars($250,000) shall be paid directly to Tenant and such losses may be adjustedwithout Landlord’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 reasonable costsof reconstruction or repair of such Property necessitated by such damage ordestruction, 

 

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## subject to and in accordance with the provisions of Section10.2.4.  Provided no Default or Eventof Default has occurred and is continuing, any excess proceeds of insuranceremaining after the completion of the restoration shall be paid to Tenant.  In the event that the provisions of Section10.2.1 are applicable, the insurance proceeds shall be retained by the partyentitled thereto pursuant to Section 10.2.1.

##  

## **10.2             Damageor 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.

###  

### **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, promptlyrestore 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 give LandlordNotice thereof which notice shall set forth in reasonable detail the nature ofsuch deficiency and whether Tenant shall pay and assume the amount of suchdeficiency (Tenant having no obligation to do so, except that, if Tenant shallelect 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 toTenant, given within sixty (60) days after Tenant’s notice of the deficiency,to elect to make available for application to the cost of repair or restorationthe amount of such deficiency; provided, however, in such event,upon any disbursement by 

 

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### Landlord thereof, the MinimumRent shall be adjusted as provided in Section 3.1.1(c).  In the event that neither Landlord nor Tenantshall elect to make such deficiency available for restoration, either Landlordor Tenant may terminate this Agreement with respect to the affected Property byNotice to the other, whereupon, this Agreement shall so terminate and insuranceproceeds shall be distributed as provided in Section 10.2.1.  It is expressly understood and agreed,however, that, notwithstanding anything in this Agreement to the contrary, Tenantshall 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 not terminatedas to such Property pursuant to this Article 10, Tenant shall commence(or cause to be commenced) promptly and continue diligently to perform (orcause to be performed) the repair and restoration of such Property (hereinaftercalled the “Work”), so as to restore (or cause to be restored) theapplicable Property in material compliance with all Legal Requirements and sothat such Property shall be, to the extent practicable, substantiallyequivalent in value and general utility to its general utility and valueimmediately 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) the absence ofany Event of Default, (b) its approval of plans and specifications of anarchitect satisfactory to Landlord (which approval shall not be unreasonablywithheld, delayed or conditioned), (c) general contractors’ estimates, (d) architect’scertificates, (e) conditional lien waivers of general contractors, ifavailable, (f) evidence of approval by all governmental authorities and otherregulatory bodies whose approval is required, (g), if Tenant has elected toadvance deficiency funds pursuant to Section 10.2.3, Tenant depositing 

 

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### the amount thereof with Landlordand (h) such other certificates as Landlord may, from time to time, reasonablyrequire.

###  

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

 

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 had beentotally or partially destroyed and the Facility thereon rendered Unsuitable forits Permitted Use.

##  

## **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 alterations andimprovements made by Tenant and Tenant’s Personal Property, or (b) replace suchalterations and improvements and Tenant’s Personal Property with improvementsor items of the same or better quality and utility in the operation of suchProperty.

##  

## **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 

 

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## consequence of such damage under any business interruptioninsurance obtained by Tenant hereunder). The provisions of this Article 10 shall be considered an expressagreement governing any cause of damage or destruction to the Leased Property,or any portion thereof, and, to the maximum extent permitted by law, no localor State statute, laws, rules, regulation or ordinance in effect during theTerm which provide for such a contingency shall have any application in suchcase.

##  

## **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 by Condemnationor (b) a Condemnation of less than the whole of any Property renders anyProperty Unsuitable for Its Permitted Use, this Agreement shall terminate withrespect to such Property, and Tenant and Landlord shall seek the Award fortheir interests in the applicable Property as provided in Section 11.5.

##  

## **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 of the affected Propertyexceeds the amount of the Award, Tenant shall give Landlord Notice thereofwhich notice shall set forth in reasonable detail the nature of such deficiencyand whether Tenant shall pay and assume the amount of such deficiency (Tenanthaving no obligation to do so, except that if Tenant shall elect to make suchfunds available, the same shall become an irrevocable obligation of Tenantpursuant to this Agreement).  In theevent Tenant shall elect not to pay and assume the amount of such deficiency,Landlord shall have the right (but not the 

 

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## obligation), exercisable at Landlord’s sole election byNotice to Tenant given within sixty (60) days after Tenant’s Notice of the deficiency,to elect to make available for application to the cost of repair or restorationthe amount of such deficiency; provided, however, in such event,upon any disbursement by Landlord thereof, the Minimum Rent shall be adjustedas provided 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, togetherwith severance and other damages awarded for the taken Leased Improvements andany deficiency 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 and specificationsof an architect satisfactory to Landlord (which approval shall not beunreasonably withheld, delayed or conditioned), (c) general contractors’estimates, (d) architect’s certificates, (e) conditional lien waivers ofgeneral contractors, if available, (f) evidence of approval by all governmentalauthorities and other regulatory bodies whose approval is required, (g), ifTenant has elected to advance deficiency funds pursuant to the precedingparagraph, Tenant depositing the amount thereof with Landlord and (h) suchother certificates as Landlord may, from time to time, reasonably require.  Landlord’s obligation under this Section 11.2to disburse the Award and such other amounts shall be subject to (x) thecollection thereof by Landlord and (y) the satisfaction of any applicablerequirements of any Facility Mortgage, and the release of such Award by theapplicable Facility Mortgagee.  Tenant’sobligation to restore the Leased Property shall be subject to the release ofthe Award by the applicable 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 Article11 shall

 

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##  

## be considered an express agreement governing anyCondemnation involving the Leased Property and, to the maximum extent permittedby law, no local or State statute, law, rule, regulation or ordinance in effectduring the Term which provides for such a contingency shall have anyapplication 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 which event Tenant shall not be required to make such restoration.

 

## **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:

 

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#### (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 suchdefault is susceptible of cure but such cure cannot be accomplished with duediligence within such period of time and if, in addition, Tenant commences tocure or cause to be cured such default within thirty (30) days after Noticethereof from Landlord and thereafter prosecutes the curing of such default withall due diligence, such period of time shall be extended to such period of time(not to exceed an additional ninety (90) days in the aggregate) as may benecessary to cure such default with all due diligence; or

####  

#### (d)           shouldany material obligation of Tenant in respect of any Indebtedness for moneyborrowed or for any material property or services, or any guaranty relatingthereto, be declared to be or become due and payable prior to the statedmaturity thereof, or should there occur and be continuing with respect to anysuch Indebtedness any event of default under any instrument or agreementevidencing or securing the same, the effect of which is to permit the holder orholders of such instrument or agreement or a trustee, agent or otherrepresentative on behalf of such holder or holders, to cause any suchobligations to become due prior to its stated maturity; or

####  

#### (e)           shouldan event of default by Tenant, any Guarantor or any Affiliated Person as toTenant or any Guarantor occur and be continuing beyond the expiration of anyapplicable cure period under any of the Incidental Documents; or

####  

#### (f)            shouldTenant or any Guarantor generally not be paying its debts as they become due orshould Tenant or any Guarantor make a general assignment for the benefit ofcreditors; or

 

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#### (g)           shouldany petition 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)           shouldTenant or any Guarantor cause or institute any proceeding for its dissolutionor termination; or

####  

#### (i)            shouldthe estate 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 give notice to Landlord of the dispute but Tenant may defend inany suitable way, and (y) two hundred seventy (270) days after receipt byTenant of Notice thereof from Landlord (unless Tenant shall be contesting suchlien or attachment in good faith in accordance with Article 8); or

####  

#### (j)            shouldthere occur any direct or indirect Change in Control of any or all of theEntities comprising Tenant or any Guarantor; or

####  

#### (k)           shoulda final unappealable determination be made by the applicable Government Agencythat Tenant shall have failed to comply with applicable Medicare and/orMedicaid regulations in the operation of any Facility, as a result of whichfailure Tenant is declared ineligible to receive reimbursements under theMedicare and/or Medicaid programs for such Facility;

####  

then,and in any such event, Landlord, in addition to all other remedies available toit, may terminate this Agreement with respect to any or all of the LeasedProperty by giving Notice thereof to Tenant and upon the expiration of thetime, if any, fixed in such Notice, this Agreement shall terminate with respectto all or the designated portion of the Leased Property 

 

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andall rights of Tenant under this Agreement with respect thereto shallcease.  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.

 

Uponthe occurrence of an Event of Default, Landlord may, in addition to any otherremedies provided herein, enter upon the Leased Property, or any portionthereof, and take possession of any and all of Tenant’s Personal Property, ifany, without liability for trespass or conversion (Tenant hereby waiving anyright to notice or hearing prior to such taking of possession by Landlord) andsell the same at public or private sale, after giving Tenant reasonable Noticeof the time and place of any public or private sale, at which sale Landlord orits assigns may purchase all or any portion of Tenant’s Personal Property, ifany, unless otherwise prohibited by law. Unless otherwise provided by law and without intending to exclude anyother manner of giving Tenant reasonable notice, the requirement of reasonableNotice shall be met if such Notice is given at least ten (10) days beforethe date of sale.  The proceeds from anysuch disposition, less all expenses incurred in connection with the taking ofpossession, holding and selling of such property (including, reasonableattorneys’ fees) shall be applied as a credit against the indebtedness which issecured by any Security Agreement granted by Tenant.  Any surplus shall be paid to Tenant or asotherwise required by law and Tenant shall pay any deficiency to Landlord, asAdditional Charges, upon demand.

 

## **12.2             Remedies.** None of (a) thetermination of this Agreement pursuant to Section 12.1, (b) therepossession of the Leased Property, or any portion thereof, (c) thefailure of Landlord to relet the Leased Property, or any portion thereof, nor (d) thereletting of all or any of portion of the Leased Property, shall relieve Tenantof its liability 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 

 

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## such termination not occurred, less the net proceeds, ifany, of any reletting of the Leased Property, or any portion thereof, afterdeducting all reasonable expenses in connection with such reletting, including,without limitation, all repossession costs, brokerage commissions, legal expenses,attorneys’ fees, advertising, expenses of employees, alteration costs andexpenses of preparation for such reletting. Tenant shall pay such current damages to Landlord monthly on the days onwhich the Minimum Rent would have been payable hereunder if this Agreement hadnot been so terminated with respect to such of the Leased Property.

##  

At anytime after such termination, whether or not Landlord shall have collected anysuch current damages, as liquidated final damages beyond the date of suchtermination, at Landlord’s election, Tenant shall pay to Landlord an amountequal to the present value (as reasonably determined by Landlord) of theexcess, if any, of the Rent and other charges which would be payable hereunderfrom the date of such termination (assuming that, for the purposes of thisparagraph, annual payments by Tenant on account of Impositions and AdditionalRent would be the same as payments required for the immediately precedingtwelve calendar months, or if less than twelve calendar months have expiredsince the applicable Commencement Date for any Property, the payments requiredfor such lesser period projected to an annual amount) for what would be thethen unexpired term of this Agreement if the same remained in effect, over thefair market 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.

 

Incase of any Event of Default, re-entry, expiration and dispossession by summaryproceedings or otherwise, Landlord may (a) relet the Leased Property orany part or parts thereof, either in the name of Landlord or otherwise, for aterm or terms which may at Landlord’s option, be equal to, less than or exceedthe period which would otherwise have constituted the balance of the Term andmay grant concessions or free rent to the extent that Landlord considersadvisable and necessary to relet the same, and (b) make such reasonablealterations, repairs and decorations in the Leased Property, or any portionthereof, as Landlord, in its sole and absolute discretion, considers 

 

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advisable and necessary for the purpose of relettingthe Leased Property; and the making of such alterations, repairs anddecorations shall not operate or be construed to release Tenant from liabilityhereunder as aforesaid.  Landlord shallin no event be liable in any way whatsoever for any failure to relet all or anyportion of the Leased Property, or, in the event that the Leased Property isrelet, for failure 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’sWaiver.** 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             Applicationof 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 andpast due obligations under this Agreement in such order as Landlord maydetermine or as may be prescribed by the laws of the State.  Any balance shall be paid to Tenant.

##  

## **12.5             Landlord’sRight 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) 

 

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## at the Overdue Rate from the date such sums are paid byLandlord until repaid, shall be paid by Tenant to Landlord, on demand.

 

# **ARTICLE 13**

 

# **HOLDINGOVER**

 

Anyholding over by Tenant after the expiration or sooner termination of thisAgreement shall be treated as a daily tenancy at sufferance at a rate equal totwo (2) times the Minimum Rent and other charges herein provided (proratedon a daily basis).  Tenant shall also payto Landlord all damages (direct or indirect) sustained by reason of any suchholding over.  Otherwise, such holdingover shall be on the terms and conditions set forth in this Agreement, to theextent applicable.  Nothing containedherein shall constitute the consent, express or implied, of Landlord to theholding over of Tenant after the expiration or earlier termination of thisAgreement.

 

# **ARTICLE 14**

 

# **LANDLORDDEFAULT**

 

IfLandlord shall default in the performance or observance of any of its covenantsor obligations set forth in this Agreement or any obligation of Landlord, ifany, under any agreement affecting the Leased Property, the performance ofwhich is not Tenant’s obligation pursuant to this Agreement, and any such defaultshall continue for a period of thirty (30) days after Notice thereof fromTenant to Landlord and any applicable Facility Mortgagee, or such additionalperiod as may be reasonably required to correct the same, Tenant may declarethe occurrence of a “Landlord Default” by a second Notice to Landlordand 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.

 

IfLandlord shall in good faith dispute the occurrence of any Landlord Default andLandlord, before the expiration of the applicable cure period, shall giveNotice thereof to Tenant, 

 

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setting forth, in reasonable detail, the basistherefor, no Landlord Default shall be deemed to have occurred and Landlordshall have no obligation with respect thereto until final adverse determinationthereof.  If Tenant and Landlord shallfail, 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 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.

 

# **ARTICLE16**

 

# **SUBLETTING ANDASSIGNMENT**

 

## **16.1             Sublettingand 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 

 

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## this Agreement or the leasehold estate created hereby or anyother rights arising under this Agreement to be assigned, transferred,mortgaged, pledged, hypothecated or encumbered, in whole or in part, whethervoluntarily, involuntarily or by operation of law, or permit the use oroperation of the Leased Property, or any portion thereof, by anyone other thanTenant, any Manager approved by Landlord pursuant to the applicable provisionsof this Agreement or residents and patients of Tenant, or the Leased Property,or any portion thereof, to be offered or advertised for assignment orsubletting.

##  

Forpurposes of this Section 16.1, an assignment of this Agreementshall be deemed to include, without limitation, any direct or indirect Changein Control of any or all of the Entities comprising Tenant.

 

Ifthis Agreement is assigned or if the Leased Property, or any portion thereof,is sublet (or occupied by anybody other than Tenant or any Manager, theirrespective employees or residents or patients of Tenant), Landlord may collectthe rents from such assignee, subtenant or occupant, as the case may be, andapply the net amount collected to the Rent herein reserved, but no suchcollection shall be deemed a waiver of the provisions set forth in the firstparagraph of this Section 16.1, the acceptance by Landlord of suchassignee, subtenant or occupant, as the case may be, as a tenant, or a releaseof Tenant from the future performance by Tenant of its covenants, agreements orobligations contained in this Agreement.

 

Anyassignment or transfer of Tenant’s interest under this Agreement shall besubject to such assignee’s or transferee’s delivery to Landlord of (a) aGuaranty, which Guaranty shall be in form and substance satisfactory toLandlord in its sole discretion and which Guaranty shall constitute anIncidental Document hereunder; (b) a pledge of the stock, partnership,membership or other ownership interests of such assignee or other transferee tosecure Tenant’s obligations under this Agreement and the Incidental Documents,which pledge shall be in form and substance satisfactory to Landlord in itssole discretion and which pledge shall constitute an Incidental Documenthereunder; (c) a security agreement granting Landlord a security interestin all of such assignee’s or transferee’s right, title and interest in and toany personal property, intangibles and fixtures (other than accountsreceivable) with respect to any Property which is subject to any suchassignment or transfer to secure Tenant’s obligations under this Agreement andthe Incidental Documents, which security agreement shall be 

 

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in form and substance satisfactory to Landlord in itssole discretion and which security agreement shall constitute an IncidentalDocument hereunder; and (d) in the case of a sublease, an assignment whichassigns all of such subtenant’s right, title and interest in such sublease toLandlord to secure Tenant’s obligations under this Agreement and the IncidentalDocuments, which assignment shall be in form and substance satisfactory toLandlord in its sole discretion and which assignment shall constitute anIncidental Document hereunder.

 

Nosubletting or assignment shall in any way impair the continuing primaryliability of Tenant hereunder (unless Landlord and Tenant expressly otherwiseagree that Tenant shall be released from all obligations hereunder), and noconsent to any subletting or assignment in a particular instance shall be deemedto be a waiver of the prohibition set forth in this Section 16.1.  No assignment, subletting or occupancy shallaffect any Permitted Use.  Anysubletting, assignment or other transfer of Tenant’s interest under thisAgreement in contravention of this Section 16.1 shall be voidableat Landlord’s option.

 

## **16.2             RequiredSublease Provisions.** Any sublease of all or any portion of theLeased Property shall provide (a) that it is subject and subordinate tothis Agreement and to the matters to which this Agreement is or shall besubject or subordinate; (b) that in the event of termination of thisAgreement or reentry or dispossession of Tenant by Landlord under thisAgreement, Landlord may, at its option, terminate such sublease or take overall of the right, title and interest of Tenant, as sublessor under suchsublease, and such subtenant shall, at Landlord’s option, attorn to Landlordpursuant to the then executory provisions of such sublease, except that neitherLandlord nor any Facility Mortgagee, as holder of a mortgage or as Landlordunder this Agreement, if such mortgagee succeeds to that position, shall (i) beliable for any act or omission of Tenant under such sublease, (ii) besubject to any credit, counterclaim, offset or defense which theretofore accruedto such subtenant against Tenant, (iii) be bound by any previousmodification of such sublease not consented to in writing by Landlord or by anyprevious prepayment of more than one (1) month’s rent, (iv) be boundby any covenant of Tenant to undertake or complete any construction of theapplicable Property, or any portion thereof, (v) be required to accountfor any security deposit of the subtenant other than any security depositactually delivered to Landlord by Tenant, (vi) be bound by any obligationto make any payment to such subtenant or grant

 

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##  

## any credits, except for services, repairs, maintenance andrestoration provided for under the sublease that are performed after the dateof such attornment, (vii) be responsible for any monies owing by Tenant tothe credit of such subtenant unless actually delivered to Landlord by Tenant,or (viii) be required to remove any Person occupying any portion of theLeased Property; and (c) in the event that such subtenant receives awritten Notice from Landlord or any Facility Mortgagee stating that an Event ofDefault has occurred and is continuing, such subtenant shall thereafter beobligated to pay all rentals accruing under such sublease directly to the partygiving such Notice or as such party may direct. All rentals received from such subtenant by Landlord or the FacilityMortgagee, as the case may be, shall be credited against the amounts owing byTenant under this Agreement and such sublease shall provide that the subtenantthereunder shall, at the request of Landlord, execute a suitable instrument inconfirmation of such agreement to attorn. An original counterpart of each such sublease and assignment andassumption, duly executed by Tenant and such subtenant or assignee, as the casemay be, in form and substance reasonably satisfactory to Landlord, shall bedelivered promptly to Landlord and (x) in the case of an assignment, theassignee shall assume in writing and agree to keep and perform all of the termsof this Agreement on the part of Tenant to be kept and performed and shall be,and become, jointly and severally liable with Tenant for the performancethereof and (y) in the case of either an assignment or subletting, Tenantshall remain primarily liable, as principal rather than as surety, for theprompt payment of the Rent and for the performance and observance of all of thecovenants and conditions to be performed by Tenant hereunder.

##  

Theprovisions of this Section 16.2 shall not be deemed a waiver of theprovisions set forth in the first paragraph of Section 16.1.

 

## **16.3             PermittedSublease.** Notwithstanding the foregoing, including, without limitation, Section 16.2,but subject to the provisions of Section 16.4 and any other expressconditions or limitations set forth herein, Tenant may, in each instance afterNotice to Landlord, (a) enter into third party residency agreements withrespect to the units located at the Facilities, (b) sublease space at anyProperty for laundry, commissary or child care purposes or other concessions infurtherance of the Permitted Use, so long as such subleases will not reduce thenumber of units at any Facility, will not violate or affect any LegalRequirement or Insurance Requirement, and Tenant shall 

 

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## provide such additional insurance coverage applicable to theactivities to be conducted in such subleased space as Landlord and any FacilityMortgagee may reasonably require, and (c) enter into one or more subleaseswith Affiliated Persons of Tenant with respect to the Leased Property, or anyportion thereof, provided Tenant gives Landlord Notice of the materialterms and conditions thereof.  Landlordand Tenant acknowledge and agree 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 inany reasonable manner; provided, however, that suchallocation shall not affect Tenant’s (nor any Guarantor’s) liability for theRent and other obligations 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             SubleaseLimitation.** 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**

 

# **ESTOPPELCERTIFICATES AND FINANCIAL STATEMENTS**

 

## **17.1             EstoppelCertificates.** 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 

 

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## 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 or mortgagee of theLeased Property, or any portion thereof, or the leasehold estate createdhereby.

##  

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

##  

#### (a)           withinforty-five (45) days after each of the first three fiscal quarters of anyFiscal Year, the most recent Consolidated Financials, accompanied by aFinancial Officer’s Certificate;

####  

#### (b)           withinninety (90) days after the end of each Fiscal Year, the most recentConsolidated Financials and financials of Tenant for such year, certified by anindependent certified public accountant reasonably satisfactory to Landlord andaccompanied by 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)           atany time and from time to time upon not less than twenty (20) days Notice fromLandlord or such additional period as may be reasonable under thecircumstances, any Consolidated Financials, Tenant financials or any otheraudited or unaudited financial reporting information required to be filed byLandlord with any securities and exchange commission, the SEC or any successoragency, or any other governmental authority, or required pursuant to any orderissued by any court, governmental authority or arbitrator in any litigation towhich Landlord is 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 individualFacility unless Landlord shall agree to pay for the cost thereof;

 

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#### (e)           promptly,after receipt or sending thereof, copies of all notices given or received byTenant under any Management Agreement; and

####  

#### (f)            promptly,upon Notice from Landlord, such other information concerning the business,financial condition and affairs of Tenant and/or any Guarantor as Landlordreasonably may request 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             GeneralOperations. **Tenantcovenants and agrees to furnish to Landlord, promptly upon request of Landlord,copies of:

##  

#### (a)           alllicenses authorizing Tenant or any Manager to operate any Facility for itsPermitted Use;

####  

#### (b)           allMedicare and Medicaid certifications, together with provider agreements and allmaterial correspondence relating thereto with respect to any Facility(excluding, however, correspondence which may be subject to any attorney clientprivilege);

####  

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

####  

#### (d)           allreports of surveys, statements of deficiencies, plans of correction, and allmaterial correspondence relating thereto, including, without limitation, allreports and material correspondence concerning compliance with or enforcementof licensure, Medicare/Medicaid, and accreditation requirements, includingphysical environment and Life Safety Code survey reports (excluding, however,correspondence which may be subject to any attorney client privilege); and

####  

#### (e)           withreasonable promptness, such other confirmation as to the licensure and Medicareand Medicaid participation of Tenant as Landlord may reasonably request fromtime to time.

 

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# **ARTICLE 18**

 

# **LANDLORD’SRIGHT 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             Grantof 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)           theinstrument creating, modifying or abandoning any such easement, right-of-way orother interest is satisfactory to and approved by Landlord (which approvalshall not be 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 of such Manager’sManagement Agreement or that such consent is not required.

####  

## **19.2             Exerciseof 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             PermittedEncumbrances.** 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             Subordinationof 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             Noticeto 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             PromptPayment 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             Conductof Business.** None of the Entities comprising Tenant shallengage in any business other than the leasing and operation of its Properties(including any incidental or ancillary business relating thereto) and theleasing and operation of the leased property under the Other Leases (includingany incidental or ancillary business relating thereto).  Each Entity comprising Tenant shall do orcause to be done all things necessary to preserve, renew and keep in full forceand effect and in good standing its corporate existence and its rights andlicenses necessary to conduct such business.

##  

## **21.3             Maintenanceof 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.

 

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##  

## **21.4             Noticeof Litigation, Etc. **Tenantshall give prompt Notice to Landlord of any litigation or any administrativeproceeding to which it may hereafter become a party of which Tenant has noticeor actual knowledge which involves a potential liability equal to or greaterthan Two Hundred Fifty Thousand Dollars ($250,000) or which may otherwiseresult in any material adverse change in the business, operations, property,prospects, results of operation or condition, financial or other, of Tenant.  Forthwith upon Tenant obtaining knowledge ofany Default, Event of Default or any default or event of default under anyagreement relating to Indebtedness for money borrowed in an aggregate amountexceeding, at any one time, Two Hundred Fifty Thousand Dollars ($250,000), orany event or condition that would be required to be disclosed in a currentreport filed by Tenant on Form 8-K or in Part II of a quarterlyreport on Form 10-Q if Tenant were required to file such reports under theSecurities Exchange Act of 1934, as amended, Tenant shall furnish Noticethereof to Landlord specifying the nature and period of existence thereof andwhat action Tenant has taken or is taking or proposes to take with respectthereto.

##  

## **21.5             ProhibitedTransactions. **Tenantshall not permit to exist or enter into any agreement or arrangement whereby itengages in a transaction of any kind with any Affiliated Person as to Tenant orany Guarantor, except on terms and conditions which are commerciallyreasonable.

##  

## **21.6        Tax RegulatoryAgreement.**  During the Term, Tenant shall (a) complywith all Facility Restrictions, Rental Restrictions, Low and Moderate IncomeOccupancy Requirements, Low and Moderate Income Units Requirements andResidency Agreement Provisions for Low and Moderate Income Units (as theforegoing terms are defined in the Tax Regulatory Agreement) contained in theTax Regulatory Agreement (collectively, the “Requirements”) and (b) shallprepare, maintain on file for inspection by Landlord, and submit any and allreports, certifications, statements and information (the “Reports”) asare required under the Tax Regulatory Agreement.  The Reports shall include, but are notlimited to, the detailing of facts as the Authority (as defined in the TaxRegulatory Agreement) reasonably determines are sufficient to establishcompliance with the restrictions contained in the Tax Regulatory Agreement,such as copies of completed Form 8703, Tenant Income Certifications, andcertifications as to compliance with the terms of the Tax Regulatory Agreement,and shall include, but shall not be limited to, all certifications and reportsof compliance with the Requirements required by the Authority.  

 

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## Tenant shallsubmit the Reports at least five (5) days prior to the required submissiondate, and Tenant shall simultaneously provide Landlord with a copy of theReports.

 

# **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 Disputes, shall on the demand ofany party to such Dispute be resolved through binding and final arbitration inaccordance with the Commercial Arbitration Rules (the “Rules”) ofthe American Arbitration Association (“AAA”) then in effect, except asmodified herein.  For the avoidance ofdoubt, a Dispute shall include a Dispute made derivatively on behalf of oneparty 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 of arbitration shall be Boston,Massachusetts unless otherwise agreed by the parties.

 

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## **22.4            ****Scope of Discovery**.  There shall be only limited documentarydiscovery of documents directly related to the issues in dispute, as may beordered by the arbitrators.

##  

## **22.5             ArbitrationAward**.  In rendering an award or decision (the “ArbitrationAward”), the arbitrators shall be required to follow the laws of theCommonwealth of Massachusetts.  Anyarbitration proceedings or Arbitration Award rendered hereunder and thevalidity, effect and interpretation of this arbitration agreement shall begoverned by the Federal Arbitration Act, 9 U.S.C. §1 et seq.  The Arbitration Award shall be in writing andmay, but shall not be required to, briefly state the findings of fact andconclusions of law on which it is based.

##  

## **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 (or their)selected arbitrator and the parties (or, if there are more than two parties tothe Dispute, all claimants, on the one hand, and all respondents, on the otherhand) shall equally bear the costs and expenses of the third appointedarbitrator.

##  

## **22.7            ****Final Judgment**.  The Arbitration Award shall be final andbinding upon the parties thereto and shall be the sole and exclusive remedybetween such parties relating to the Dispute, including any claims,counterclaims, issues or accounting presented to the arbitrators.  Judgment upon the Arbitration Award may beentered in any court having jurisdiction. To the fullest extent permitted by law, no application or appeal to anycourt of competent jurisdiction may be made in connection with any question oflaw arising in the course of arbitration or with respect to any award madeexcept for actions relating to enforcement of this agreement to arbitrate orany arbitral award issued hereunder and except for actions seeking interim orother provisional relief in aid of arbitration proceedings in any court ofcompetent jurisdiction.

##  

## **22.8            ****Payment**.  Any monetary award shall be made and payablein U.S. dollars free of any tax, deduction or offset.  

 

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## The party against which theArbitration Award assesses a monetary obligation shall pay that obligation onor before the 30th day following the date of the ArbitrationAward or such other date as the Arbitration Award may provide.

 

# **ARTICLE23**

 

# **MISCELLANEOUS**

 

## **23.1             Limitationon 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 the maximumpermissible under Applicable Laws, the benefit of which may be asserted byTenant as a defense, and if, from any circumstance whatsoever, fulfillment ofany provision of this Agreement, at the time performance of such provisionshall be due, shall involve transcending the limit of validity prescribed bylaw, or if from any circumstances Landlord should ever receive as fulfillmentof such provision such an excessive amount, then, ipsofacto, theamount which would be excessive shall be applied to the reduction of theinstallment(s) of Minimum Rent next due and not to the payment of suchexcessive amount.  This provision shallcontrol every other provision of this Agreement and any other agreementsbetween Landlord and Tenant.

##  

## **23.2             NoWaiver.** 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             RemediesCumulative. **Tothe maximum extent permitted by law, each legal, equitable or contractualright, power and remedy of Landlord or Tenant, now or hereafter provided eitherin this Agreement or by statute or otherwise, shall be cumulative andconcurrent and shall be in addition to every other right, power and remedy andthe exercise or beginning of the exercise by Landlord or Tenant (as applicable)of any one or more of such rights, powers and remedies shall not preclude the 

 

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## simultaneous or subsequent exercise by Landlord of any orall of such other rights, powers and remedies.

##  

## **23.4             Severability.** Any clause, sentence,paragraph, section or provision of this Agreement held by a court of competentjurisdiction to be invalid, illegal or ineffective shall not impair, invalidateor nullify the remainder of this Agreement, but rather the effect thereof shallbe confined to the clause, sentence, paragraph, section or provision so held tobe invalid, illegal or ineffective, and this Agreement shall be construed as ifsuch invalid, illegal or ineffective provisions had never been containedtherein.

##  

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

 

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## by Landlord hereunder, (b) all Permitted Encumbrances, (c) liensas to obligations of Landlord that are either not yet due or which are being contestedin good faith and by proper proceedings, provided the same do not materiallyinterfere with Tenant’s ability to operate any Facility and (d) liens thathave been consented to in writing by Tenant. Except as otherwise provided in this Agreement, no failure by Landlordto comply with the foregoing covenant shall give Tenant any right to cancel orterminate this Agreement or abate, reduce or make a deduction from or offsetagainst the Rent or any other sum payable under this Agreement, or to fail to performany other obligation of Tenant hereunder.

##  

## **23.9             NoRecordation.** Neither Landlord nor Tenant shall record this Agreement.

##  

## **23.10           Notices.**

##  

#### (a)           Anyand all notices, 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)           Allnotices required or permitted to be sent hereunder shall be deemed to have beengiven for all purposes of this Agreement upon the date of acknowledged receipt,in the case of a notice by telecopier, and, in all other cases, upon the dateof receipt 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.

 

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####  

#### (c)           All suchnotices shall be addressed,

####  

if to Landlord:

 

c/oSenior Housing Properties Trust

400Centre Street

Newton,Massachusetts 02458

Attn:  Mr. David J. Hegarty

[Telecopier No. (617)796-8349]

 

if to Tenant to:

 

c/o Five Star Quality Care, Inc.

400Centre Street

Newton,Massachusetts 02458

Attn:  Mr. Bruce J. Mackey Jr.

[Telecopier No. (617)796-8385]

 

#### (d)           Bynotice given as herein provided, the parties hereto and their respectivesuccessors and assigns shall have the right from time to time and at any timeduring the term of this Agreement to change their respective addresseseffective upon receipt by the other parties of such notice and each shall havethe right to specify as its address any other address within the United Statesof America.

####  

## **23.11           Construction.** Anything contained inthis Agreement to the contrary notwithstanding, all claims against, andliabilities of, Tenant or Landlord arising prior to any date of termination orexpiration of this Agreement with respect to the Leased Property shall survivesuch termination or expiration.  In noevent shall Landlord be liable for any consequential damages suffered by Tenantas the result of a breach of this Agreement by Landlord.  Neither this Agreement nor any provisionhereof may be changed, waived, discharged or terminated except by an instrumentin writing signed by the party to be charged. All the terms and provisions of this Agreement shall be binding upon andinure to the benefit of the parties hereto and their respective successors andassigns.  Each term or provision of thisAgreement to be performed by Tenant shall be construed as an independentcovenant and condition.  Time is of theessence with respect to the provisions of this Agreement.  Except as otherwise set forth in this Agreement,any obligations of Tenant (including without limitation, any monetary, repairand indemnification obligations) and Landlord shall survive the expiration orsooner termination of this Agreement. Each Entity comprising Tenant hereunder shall be jointly and severally 

 

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## liable for the payment and performance of each and everyobligation and liability of Tenant hereunder.

##  

## **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           ApplicableLaw, Etc.** This Agreement shall be interpreted, construed, applied and enforced inaccordance with the laws of The Commonwealth of Massachusetts applicable tocontracts between residents of Massachusetts which are to be performed entirelywithin Massachusetts, regardless of (a) where this Agreement is executedor delivered; or (b) where any payment or other performance required bythis Agreement is made or required to be made; or (c) where any breach ofany provision of this Agreement occurs, or any cause of action otherwiseaccrues; or (d) where any action or other proceeding is instituted orpending; or (e) the nationality, citizenship, domicile, principal place ofbusiness, or jurisdiction of organization or domestication of any party; or (f) whetherthe laws of the forum jurisdiction otherwise would apply the laws of a jurisdictionother than Massachusetts; or (g) any combination of the foregoing.  Notwithstanding the foregoing, the laws ofthe State shall apply to the perfection and priority of liens upon and thedisposition of any Property.

##  

## **23.14           Rightto 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 or approvalwhich has not been given or taken, or at the time of the transaction involvedshall not have been given or taken.  Eachparty covenants that it has and will continue to have throughout the term ofthis Agreement and any extensions thereof, the full right to enter into thisAgreement and perform its obligations hereunder.

 

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## **23.15           Attorneys’Fees**. If any lawsuit or arbitration or other legal proceeding arises inconnection with the interpretation or enforcement of this Agreement, theprevailing party therein shall be entitled to receive from the other party theprevailing party’s costs and expenses, including reasonable attorneys’ feesincurred in connection therewith, in preparation therefor and on appealtherefrom, which amounts shall be included in any judgment therein.

##  

## **23.16           Nonliability of Trustees**.  THE DECLARATIONS OFTRUST ESTABLISHING CERTAIN ENTITIES COMPRISING LANDLORD, COPIES OF WHICH,TOGETHER WITH ALL AMENDMENTS THERETO (COLLECTIVELY, THE “DECLARATIONS”),ARE DULY FILED WITH THE DEPARTMENT OF ASSESSMENTS AND TAXATION OF THE STATE OFMARYLAND, PROVIDE THAT THE NAMES OF SUCH ENTITIES REFER TO THE TRUSTEES UNDERSUCH DECLARATIONS COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY,AND THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF SUCH ENTITIESSHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANYOBLIGATION OF, OR CLAIM AGAINST, SUCH ENTITIES. ALL PERSONS DEALING WITH SUCH ENTITIES, IN ANY WAY, SHALL LOOK ONLY TOTHE ASSETS OF SUCH ENTITIES FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OFANY OBLIGATION.

##  

## **23.17          ****Original Leases****.**  Landlord and Tenant acknowledge and agreethat this Agreement amends and restates the Original Leases in their entiretywith respect to the Leased Property as of the date of this Agreement and thatthis Agreement shall govern the rights and obligations of the parties withrespect to the Leased Property from and after the date of this Agreement.  Notwithstanding the foregoing, the OriginalLeases shall continue to govern the rights and obligations of the parties withrespect to the Leased Property prior to the date of this Agreement.

 

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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 SOMERFORD PROPERTIES TRUST** |
| ** ** | ** **                         |
|       |                               |
|       | By:                                | /s/ David J. Hegarty |
|       |                               | David J. Hegarty |
|       |                               | President |
|       |                               |
|       |                               |
| ** ** | **SNH NS PROPERTIES TRUST**        |
|       |                               |
|       |                               |
|       | By:                                | /s/ David J. Hegarty |
|       |                               | David J. Hegarty |
|       |                               | President |
|       |                               |
|       |                               |
| ** ** | **SNH/LTA PROPERTIES TRUST**       |
|       |                               |
|       |                               |
|       | By:                                | /s/ David J. Hegarty |
|       |                               | David J. Hegarty |
|       |                               | President |
|       |                               |
|       |                               |
| ** ** | **SPTIHS PROPERTIES TRUST**        |
|       |                               |
|       |                               |
|       | By:                                | /s/ David J. Hegarty |
|       |                               | David J. Hegarty |
|       |                               | President |
|       |                               |   |
|       |                               |
| ** ** | **SNH CHS PROPERTIES TRUST**       |
| ** ** | ** **                         |
|       |                               |
|       | By:                                | /s/ David J. Hegarty |
|       |                               | David J. Hegarty |
|       |                               | President |

 

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| ** ** | **SNH/LTA PROPERTIES GA LLC**                |
|------------|----------------------------------------------|
| ** ** | ** **                                   |
|       |                                         |
|       | By:                                          | /s/ David J. Hegarty |
|       |                                         | David J. Hegarty |
|       |                                         | President |
|       |                                         |
|       |                                         |
| ** ** | **CCOP SENIOR LIVING LLC**                   |
|       |                                         |
|       |                                         |
|       | By:                                          | /s/ David J. Hegarty |
|       |                                         | David J. Hegarty |
|       |                                         | President |
|       |                                         |
|       |                                         |
| ** ** | **TENANT:**                                  |
|       |                                         |
| ** ** | **FIVE STAR QUALITY CARE TRUST**             |
| ** ** | ** **                                   |
|       |                                         |
|       | By:                                          | /s/ Bruce J. Mackey Jr. |
|       |                                         | Bruce J. Mackey Jr. |
|       |                                         | President |
|       |                                         |
|       |                                         |
| ** ** | **FIVE STAR QUALITY CARE - NS  TENANT, LLC** |
|       |                                         |
|       |                                         |
|       | By:                                          | /s/ Bruce J. Mackey Jr. |
|       |                                         | Bruce J. Mackey Jr. |
|       |                                         | President |
|       |                                         |
|       |                                         |
| ** ** | **FS TENANT HOLDING COMPANY TRUST**          |
|       |                                         |
|       |                                         |
|       | By:                                          | /s/ Bruce J. Mackey Jr. |
|       |                                         | Bruce J. Mackey Jr. |
|       |                                         | President |

 

78

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**SCHEDULE1**

 

Schedule omitted.

 

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**EXHIBITSA-1 THROUGH A-25**

 

**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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