**Exhibit 10.9**

 

**AMENDEDAND RESTATED MASTER LEASE AGREEMENT(LEASE NO. 2),**

 

dated as of August4, 2009,

 

by and among

 

**CERTAINAFFILIATES OF SENIOR HOUSING PROPERTIES TRUST,**

 

AS LANDLORD,

 

AND

 

**CERTAINAFFILIATES OF FIVE STAR QUALITY CARE, INC.,**

 

AS TENANT

 

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** **

Table of Contents

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

 

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Table of Contents

 
| ** **    | ** **                                      | **Page**   |
|---------------|-------------------------------------------------|------------|
| ** **    | ** **                                      | ** ** |
| 1.53          | “Interest  Rate”                      | 12         |
| 1.54          | “Land”                                | 12         |
| 1.55          | “Landlord”                            | 12         |
| 1.56          | “Landlord  Default”                   | 12         |
| 1.57          | “Landlord  Liens”                     | 12         |
| 1.58          | “Lease  Year”                         | 13         |
| 1.59          | “Leased  Improvements”                | 13         |
| 1.60          | “Leased  Intangible Property”         | 13         |
| 1.61          | “Leased  Personal Property”           | 13         |
| 1.62          | “Leased  Property”                    | 13         |
| 1.63          | “Legal  Requirements”                 | 13         |
| 1.64          | “Lien”                                | 14         |
| 1.65          | “Manager”                             | 14         |
| 1.66          | “Management  Agreement”               | 14         |
| 1.67          | “Minimum  Rent”                       | 14         |
| 1.68          | “Notice”                              | 14         |
| 1.69          | “Officer’s  Certificate”         | 14         |
| 1.70          | “Original  Leases”                    | 14         |
| 1.71          | “Other  Leases”                       | 14         |
| 1.72          | “Overdue  Rate”                       | 15         |
| 1.73          | “Parent”                              | 15         |
| 1.74          | “Permitted  Encumbrances”             | 15         |
| 1.75          | “Permitted  Use”                      | 15         |
| 1.76          | “Person”                              | 15         |
| 1.77          | “Pledge  Agreement”                   | 15         |
| 1.78          | “Property”                            | 15         |
| 1.79          | “Provider  Agreements”                | 15         |
| 1.80          | “Regulated  Medical Wastes”           | 16         |
| 1.81          | “Rehabilitation  Hospital Properties” | 16         |
| 1.82          | “Rent”                                | 16         |
| 1.83          | “Rules”                               | 16         |
| 1.84          | “SEC”                                 | 16         |
| 1.85          | “Security  Agreement”                 | 16         |
| 1.86          | “Senior  Housing Properties”          | 16         |
| 1.87          | “State”                               | 16         |
| 1.88          | “Subordinated  Creditor”              | 16         |
| 1.89          | “Subordination  Agreement”            | 16         |
| 1.90          | “Subsidiary”                          | 17         |
| 1.91          | “Successor  Landlord”                 | 17         |
| 1.92          | “Tenant”                              | 17         |
| 1.93          | “Tenant’s  Personal Property”    | 17         |
| 1.94          | “Term”                                | 17         |
| 1.95          | “Third  Party Payor Programs”         | 17         |
| 1.96          | “Third  Party Payors”                 | 17         |
| 1.97          | “Unsuitable  for Its Permitted Use”   | 17         |
| 1.98          | “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         |
| 2.4           | Extended  Terms                                 | 20         |

 

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Table of Contents

 
| ** **     | ** **                                           | **Page**   |
|----------------|------------------------------------------------------|------------|
| ** **     | ** **                                           | ** ** |
| 2.5            | Limitations  on Term                                 | 21         |
| **ARTICLE 3**  | **RENT**                                             | **21**     |
| 3.1            | Rent                                                 | 21         |
| 3.2            | Late  Payment of Rent, Etc.                          | 28         |
| 3.3            | Net  Lease                                           | 28         |
| 3.4            | No  Termination, Abatement, Etc.                     | 28         |
| **ARTICLE 4**  | **USE OF THE  LEASED PROPERTY**                      | **29**     |
| 4.1            | Permitted  Use                                       | 29         |
| 4.2            | Compliance  with Legal/Insurance Requirements, Etc.  | 31         |
| 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                                | 39         |
| **ARTICLE 6**  | **IMPROVEMENTS,  ETC.**                              | **39**     |
| 6.1            | Improvements  to the Leased Property                 | 39         |
| 6.2            | Salvage                                              | 40         |
| **ARTICLE 7**  | **LIENS**                                            | **40**     |
| **ARTICLE 8**  | **PERMITTED  CONTESTS**                              | **40**     |
| **ARTICLE 9**  | **INSURANCE AND  INDEMNIFICATION**                   | **41**     |
| 9.1            | General  Insurance Requirements                      | 41         |
| 9.2            | Waiver  of Subrogation                               | 42         |
| 9.3            | Form Satisfactory,  Etc.                        | 42         |
| 9.4            | No  Separate Insurance; Self-Insurance               | 43         |
| 9.5            | Indemnification  of Landlord                         | 43         |
| **ARTICLE 10** | **CASUALTY**                                         | **44**     |
| 10.1           | Insurance  Proceeds                                  | 44         |
| 10.2           | Damage  or Destruction                               | 45         |
| 10.3           | Damage  Near End of Term                             | 47         |
| 10.4           | Tenant’s  Property                              | 47         |
| 10.5           | Restoration  of Tenant’s Property               | 47         |
| 10.6           | No  Abatement of Rent                                | 48         |
| 10.7           | Waiver                                               | 48         |
| **ARTICLE 11** | **CONDEMNATION**                                     | **48**     |
| 11.1           | Total  Condemnation, Etc.                            | 48         |
| 11.2           | Partial  Condemnation                                | 48         |
| 11.3           | Abatement  of Rent                                   | 50         |
| 11.4           | Temporary  Condemnation                              | 50         |
| 11.5           | Allocation  of Award                                 | 50         |
| **ARTICLE 12** | **DEFAULTS AND  REMEDIES**                           | **51**     |
| 12.1           | Events  of Default                                   | 51         |
| 12.2           | Remedies                                             | 53         |
| 12.3           | Tenant’s  Waiver                                | 55         |
| 12.4           | Application  of Funds                                | 55         |
| 12.5           | Landlord’s  Right to Cure Tenant’s Default | 55         |
| 12.6           | Trade  Names                                         | 56         |

 

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Table of Contents

 
| ** **     | ** **                                          | **Page**   |
|----------------|-----------------------------------------------------|------------|
| ** **     | ** **                                          | ** ** |
| **ARTICLE 13** | **HOLDING OVER**                                    | **56**     |
| **ARTICLE 14** | **LANDLORD  DEFAULT**                               | **57**     |
| **ARTICLE 15** | **PURCHASE  RIGHTS**                                | **57**     |
| **ARTICLE 16** | **SUBLETTING AND  ASSIGNMENT**                      | **58**     |
| 16.1           | Subletting  and Assignment                          | 58         |
| 16.2           | Required  Sublease Provisions                       | 60         |
| 16.3           | Permitted  Sublease                                 | 61         |
| 16.4           | Sublease  Limitation                                | 62         |
| **ARTICLE 17** | **ESTOPPEL  CERTIFICATES AND FINANCIAL STATEMENTS** | **62**     |
| 17.1           | Estoppel  Certificates                              | 62         |
| 17.2           | Financial  Statements                               | 62         |
| 17.3           | General  Operations                                 | 64         |
| **ARTICLE 18** | **LANDLORD’S  RIGHT TO INSPECT**               | **65**     |
| **ARTICLE 19** | **EASEMENTS**                                       | **65**     |
| 19.1           | Grant  of Easements                                 | 65         |
| 19.2           | Exercise  of Rights by Tenant                       | 66         |
| 19.3           | Permitted  Encumbrances                             | 66         |
| **ARTICLE 20** | **FACILITY  MORTGAGES**                             | **66**     |
| 20.1           | Landlord  May Grant Liens                      | 66         |
| 20.2           | Subordination  of Lease                             | 66         |
| 20.3           | Notice  to Mortgagee and Superior Landlord          | 68         |
| **ARTICLE 21** | **ADDITIONAL  COVENANTS OF TENANT**                 | **69**     |
| 21.1           | Prompt  Payment of Indebtedness                     | 69         |
| 21.2           | Conduct  of Business                                | 69         |
| 21.3           | Maintenance  of Accounts and Records                | 69         |
| 21.4           | Notice  of Litigation, Etc.                         | 70         |
| 21.5           | Prohibited  Transactions                            | 70         |
| 21.6           | Notice  of Change of Name, Etc.                     | 70         |
| **ARTICLE 22** | **ARBITRATION**                                     | **70**     |
| 22.1           | Disputes                                            | 70         |
| 22.2           | Selection  of Arbitrators                           | 71         |
| 22.3           | Location  of Arbitration                            | 71         |
| 22.4           | Scope  of Discovery                                 | 71         |
| 22.5           | Arbitration  Award                                  | 71         |
| 22.6           | Costs                                               | 72         |
| 22.7           | Final  Judgment                                     | 72         |
| 22.8           | Payment                                             | 72         |
| **ARTICLE 23** | **MISCELLANEOUS**                                   | **73**     |
| 23.1           | Limitation  on Payment of Rent                      | 73         |
| 23.2           | No  Waiver                                          | 73         |
| 23.3           | Remedies  Cumulative                                | 73         |
| 23.4           | Severability                                        | 73         |
| 23.5           | Acceptance  of Surrender                            | 74         |
| 23.6           | No  Merger of Title                                 | 74         |
| 23.7           | Conveyance  by Landlord                             | 74         |
| 23.8           | Quiet  Enjoyment                                    | 74         |
| 23.9           | No  Recordation                                     | 75         |
| 23.10          | Notices                                             | 75         |
| 23.11          | Construction                                        | 76         |

 

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Table of Contents

 
| ** ** | ** **                | **Page**   |
|------------|---------------------------|------------|
| ** ** | ** **                | ** ** |
| 23.12      | Counterparts;  Headings   | 76         |
| 23.13      | Applicable  Law, Etc.     | 77         |
| 23.14      | Right  to Make Agreement  | 77         |
| 23.15      | Attorneys’  Fees     | 77         |
| 23.16      | Nonliability  of Trustees | 78         |
| 23.17      | Original  Leases          | 78         |

 

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**AMENDEDAND RESTATED MASTER LEASE AGREEMENT(LEASE NO. 2)**

 

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

 

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

 

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

##  

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

##  

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

##  

## **1.5               “Agreement” **shall mean thisAmended and Restated Master Lease Agreement (Lease No. 2), including allschedules and exhibits attached hereto, as it and they may be amended from timeto time as herein provided.

##  

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

 

2

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## disposal, transport or handling of Hazardous Substances orRegulated Medical Wastes, underground improvements (including, withoutlimitation, treatment or storage tanks, or water, gas or oil wells), orpollutants, contaminants or hazardous or toxic substances, materials or wastes,whether solid, liquid or gaseous in nature.

##  

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

##  

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

##  

## **1.9               “BaseGross Revenues” **shallmean the Gross Revenues with respect to each Senior Housing 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 ofany Facility 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.

##  

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

 

3

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

##  

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

##  

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

 

4

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## Guarantor of any individual notnominated or appointed by vote of a majority of the directors of Tenant or suchGuarantor in office immediately prior to the nomination or appointment of suchindividual.

##  

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

##  

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

##  

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

##  

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

##  

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

##  

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

##  

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

 

5

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

##  

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

##  

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

##  

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

##  

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

##  

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

##  

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

##  

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

##  

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

##  

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

##  

## **1.31             “ExcessGross Revenues” **shallmean, with respect to each Senior Housing Property, the amount of GrossRevenues for any Lease Year, or portion thereof, in excess of Base Gross 

 

6

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## Revenues or the pro-rated portion thereof in the case of aLease Year which is not a full twelve-month period.

##  

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

##  

## **1.33            ****“Facility” **shall mean,with respect to any Property, the skilled nursing/intermediate care/independentliving/assisted living/special care/group home facility or the rehabilitationhospital being operated or proposed to be operated on such Property, and specifically including, without limitation, (a) withrespect to the Facility known as New England Rehabilitation Hospital in Woburn,Massachusetts, the right to operate the 198 beds licensed at such Facility, (b) withrespect to the Facility known as Braintree Rehabilitation Hospital inBraintree, Massachusetts, the right to operate the 187 beds licensed at suchFacility, and (c) any other tangible or intangible rights associated with,or incidental to, any licenses, registrations and permits used by suchhospitals in the conduct of their business and provision of patient services.

##  

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

##  

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

##  

## **1.36            **“**Facility Trade Names**”  shallmean, with respect to the Rehabilitation Hospital Properties, any of the namesunder which Tenant operates, or has operated, the Facility at such Property atany time during the Term.

##  

## **1.37             “FinancialOfficer’s Certificate” **shallmean, as to any Person, a certificate of the chief executive officer, chieffinancial officer or chief accounting officer (or such officers’ authorizeddesignee) of such Person, duly authorized, accompanying the financialstatements required to be delivered by such Person pursuant to Section 17.2,in which such officer shall certify (a) that such statements have beenproperly prepared in accordance with GAAP and are true, correct and complete inall material respects and fairly present the consolidated financial conditionof such Person at and as of the dates thereof and the results of its and theiroperations for the periods covered thereby, and (b) in the event that thecertifying party is an officer of Tenant and the certificate is 

 

7

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## being given in such capacity, that no Event of Default hasoccurred and is continuing hereunder.

##  

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

##  

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

##  

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

##  

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

##  

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

##  

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

##  

## **1.44             “GrossRevenues”**  shall mean,with respect to each Senior Housing 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 charges are paid over to such physiciansand unaffiliated 

 

8

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## providers of services, or are separately billed and notincluded in comprehensive fees; contractual allowances (relating to any periodduring the Term) for billings not paid by or received from the appropriategovernmental agencies 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.

##  

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

##  

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

 

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

##  

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

####  

#### (b)           whichis or becomes defined as a “hazardous waste”, “hazardous material” or “hazardoussubstance” or “pollutant” or “contaminant” under any present or future federal,state or local statute, regulation, rule or ordinance or amendmentsthereto including, without limitation, the Comprehensive 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 any politicalsubdivision 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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## **1.48             “ImmediateFamily” **shallmean, with respect to any individual, such individual’s spouse, parents,brothers, sisters, children (natural or adopted), stepchildren, grandchildren,grandparents, parents-in-law, brothers-in-law, sisters-in-law, nephews andnieces.

##  

## **1.49             “Impositions” **shall mean,collectively, all taxes (including, without limitation, all taxes imposed underthe laws of any State, as such laws may be amended from time to time, and allad valorem, sales and use, or similar taxes as the same relate to or areimposed upon Landlord, Tenant or the business conducted upon the LeasedProperty), assessments (including, without limitation, all assessments forpublic improvements or benefit, whether or not commenced or completed prior tothe date hereof), ground rents (including any minimum rent under any groundlease, and any additional rent or charges thereunder), water, sewer or otherrents and charges, excises, tax levies, fees (including, without limitation,license, permit, inspection, authorization and similar fees), and all othergovernmental charges, in each case whether general or special, ordinary orextraordinary, foreseen or unforeseen, of every character in respect of theLeased Property or the business conducted thereon by Tenant (including allinterest and penalties thereon due to any failure in payment by Tenant), whichat any time prior to, during or in respect of the Term hereof may be assessedor imposed on or in respect of or be a lien upon (a) Landlord’s interestin the Leased Property, (b) the Leased Property or any part thereof or anyrent therefrom or any estate, right, title or interest therein, or (c) anyoccupancy, operation, use or possession of, or sales from, or activityconducted on, or in connection with the Leased Property or the leasing or useof the Leased Property or any part thereof by Tenant; provided, however,that nothing contained herein shall be construed to require Tenant to pay andthe term “Impositions” shall not include (i) any tax based on net incomeimposed on Landlord, (ii) any net revenue tax of Landlord, (iii) anytransfer fee (but excluding any mortgage or similar tax payable in connectionwith a Facility Mortgage) or other tax imposed with respect to the sale,exchange or other disposition by Landlord of the Leased Property or theproceeds thereof, (iv) any single business, gross receipts tax,transaction privilege, rent or similar taxes as the same relate to or areimposed upon Landlord, (v) any interest or penalties imposed on Landlordas a result of the failure of Landlord to file any return or report timely andin the form prescribed by law or to pay any tax or imposition, except to theextent such failure is a result of a breach by Tenant of its obligationspursuant to Section 3.1.3, 

 

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## (vi) any impositions imposed on Landlord that are aresult of Landlord not being considered a “United States person” as defined in Section 7701(a)(30)of the Code, (vii) any impositions that are enacted or adopted by theirexpress terms as a substitute for any tax that would not have been payable byTenant pursuant to the terms of this Agreement or (viii) any impositionsimposed as a result of a breach of covenant or representation by Landlord inany agreement governing Landlord’s conduct or operation or as a result of thenegligence or willful misconduct of Landlord.

##  

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

##  

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

##  

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

##  

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

##  

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

##  

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

##  

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

##  

## **1.57             “LandlordLiens” **shallmean liens on or against the Leased Property or any payment of Rent (a) whichresult from any act of, or any claim against, Landlord or any owner of a director indirect interest in the Leased Property (other than the lessor under anyground lease affecting any portion of the Leased Property), or which resultfrom any violation by Landlord of any terms of this Agreement, or (b) whichresult from liens 

 

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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.

##  

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

##  

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

##  

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

##  

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

##  

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

##  

## **1.63             “LegalRequirements” **shallmean all federal, state, county, municipal and other governmental statutes,laws, rules, orders, regulations, ordinances, judgments, decrees andinjunctions affecting the Leased Property or the maintenance, construction,alteration or operation thereof, whether now or hereafter enacted or inexistence, including, without limitation, (a) all permits, licenses,authorizations, certificates of need, authorizations and regulations necessary 

 

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## to operate any Property for its Permitted Use, and (b) allcovenants, agreements, restrictions and encumbrances contained in anyinstruments at any time in force affecting any Property, including those whichmay (i) require material repairs, modifications or alterations in or toany Property or (ii) in any way materially and adversely affect the useand enjoyment thereof, but excluding any requirements arising as a result ofLandlord’s status as a real estate investment trust.

##  

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

##  

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

##  

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

##  

## **1.67             “MinimumRent” **shallmean the sum of Forty Nine Million Nine Hundred Sixty Four Thousand and Two and00/100s Dollars ($49,964,002.00) per annum.

##  

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

##  

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

##  

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

##  

## **1.71             “OtherLeases” **shallmean (i) that certain Amended and Restated Master Lease Agreement (Lease No. 1),dated as of the date hereof, by and among certain Affiliated Persons of SeniorHousing Properties Trust, as landlord, and Five Star Quality Care Trust, astenant, and (ii) that certain Amended and 

 

14

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## Restated Master Lease Agreement (Lease No. 4), dated asof the date hereof, by and among certain Affiliated Persons of Senior HousingProperties Trust, as landlord, and certain Affiliated Persons of Five Star, astenant.

##  

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

##  

## **1.73             “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.

##  

## **1.74             “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 any otherencumbrances as may have been granted or caused by Landlord or otherwiseconsented to in writing by Landlord from time to time.

##  

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

##  

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

##  

## **1.77            **“**Pledge Agreement”**  shall mean, collectively, any pledge agreementmade in favor of Landlord with respect to the stock or other equity interestsof Tenant or any assignee, subtenant or other transferee, as it or they may beamended, restated, supplemented or otherwise modified from time to time.

##  

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

##  

## **1.79             “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.

 

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## **1.80            ****“Regulated Medical Wastes”**  shall mean all materials generated by Tenant,subtenants, patients, occupants or the operators of the Leased Property whichare now or may hereafter be subject to regulation pursuant to the MaterialWaste Tracking Act of 1988, or any Applicable Laws promulgated by any Government Agencies.

##  

## **1.81        “RehabilitationHospital Properties” **shall mean, collectively, the Property which includes theFacility known as New England Rehabilitation Hospital in Woburn, Massachusetts,and the Property which includes the Facility known as the BraintreeRehabilitation Hospital in Braintree, Massachusetts.

##  

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

##  

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

##  

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

##  

## **1.85             “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.

##  

## **1.86             “Senior Housing Properties” **shallmean, collectively, all of the Properties other than the RehabilitationHospital Properties and each such Property shall be a Senior Housing Property.

##  

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

##  

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

##  

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

 

16

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##  

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

##  

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

##  

## **1.92            ****“Tenant****” **shall have the meaning given such term in the preambles tothis Agreement and shall refer to each such Entity comprising Tenant hereunder,whether the original Entities named herein or any of their respective permittedsuccessors or assigns, jointly and severally with each and every other Entityor Entities then comprising Tenant hereunder.

##  

## **1.93             “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.

##  

## **1.94             “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.

##  

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

##  

## **1.96             “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.

##  

## **1.97             “Unsuitablefor Its Permitted Use” **shallmean, with respect to any Facility, a state or condition of such Facility 

 

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## such that (a) following any damage or destructioninvolving a Facility, (i) such Facility cannot be operated on acommercially practicable basis for its Permitted Use and it cannot reasonablybe expected to be restored to substantially the same condition as existedimmediately before such damage or destruction, and as otherwise required by Section 10.2.4,within twelve (12) months following such damage or destruction or such longerperiod of time as to which business interruption insurance is available tocover Rent and other costs related to the applicable Property following suchdamage or destruction, (ii) the damage or destruction, if uninsured,exceeds $1,000,000 or (iii) the cost of such restoration exceeds tenpercent (10%) of the fair market value of such Property immediately prior tosuch damage or destruction, or (b) as the result of a partial taking byCondemnation, such Facility cannot be operated, in the good faith judgment ofTenant, on a commercially practicable basis for its Permitted Use.

##  

## **1.98             “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-50 attached hereto and made a part hereof (the “Land”);

####  

#### (b)           allbuildings, structures and other improvements of every kind including, but notlimited to, alleyways and connecting tunnels, sidewalks, utility pipes,conduits and lines (on-site and off-site), parking areas and roadwaysappurtenant to such buildings and structures presently situated upon the Land(collectively, the “Leased Improvements”);

####  

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

 

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####  

#### (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 protection equipment,all of which, to the maximum extent permitted by law, are hereby deemed by theparties hereto to constitute real estate, together with all replacements,modifications, alterations and additions thereto, but specifically excludingall items included within the category of Tenant’s Personal Property(collectively, the “Fixtures”);

####  

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

####  

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

####  

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

####  

## **2.2               Conditionof Leased Property.** Tenant acknowledges receipt and delivery ofpossession of the Leased Property and Tenant accepts the Leased Property in its“as is” condition, subject to the rights of parties in possession, the existingstate of title, including all covenants, conditions, restrictions,reservations, mineral leases, easements and other matters of record or that arevisible or apparent on the Leased Property, all applicable Legal Requirements,the lien of any financing instruments, mortgages and deeds of trust existingprior to the applicable Commencement Date for any Property or permitted by theterms of this Agreement, and such other matters which would be disclosed by aninspection of the Leased Property and the record title thereto or by anaccurate survey thereof.  TENANTREPRESENTS THAT IT HAS INSPECTED THE LEASED PROPERTY AND 

 

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## ALL OF THE FOREGOING AND HAS FOUND THE CONDITION THEREOFSATISFACTORY AND IS NOT RELYING ON ANY REPRESENTATION OR WARRANTY OF LANDLORDOR LANDLORD’S AGENTS OR EMPLOYEES WITH RESPECT THERETO AND TENANT WAIVES ANYCLAIM OR ACTION AGAINST LANDLORD IN RESPECT OF THE CONDITION OF THE LEASEDPROPERTY.  LANDLORD MAKES NO WARRANTY ORREPRESENTATION, 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 June 30, 2026.

##  

## **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 ten (10) years each (each an “Extended Term”).

##  

If andto the extent Tenant shall exercise the options, the first Extended Term shallcommence on July 1, 2026 and expire on June 30, 2036 and the secondExtended Term shall commence on July 1, 2036 and expire on June 30,2046.  All of the terms, covenants andprovisions of this Agreement shall apply to each Extended Term, except thatTenant shall have no right to extend the Term beyond June 30, 2046.  If Tenant shall elect to exercise the optionto extend the Term for the first Extended Term, it shall do so by givingLandlord Notice thereof not later than June 30, 2024, and if Tenant shallelect to exercise its option to extend the Term for the second Extended Termafter having elected to extend the Term for the first Extended Term, it shalldo so by giving Landlord Notice not later than June 30, 2034, it beingunderstood and agreed that time shall be of the

 

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essence with respect to the giving of any suchNotice.  If Tenant shall fail to give anysuch Notice, this Agreement shall automatically terminate at the end of theFixed Term or the first Extended Term as applicable and Tenant shall have nofurther option to extend the Term of this Agreement.  If Tenant shall give such Notice, theextension of this Agreement shall be automatically effected without theexecution of any additional documents; it being understood and agreed, however,that Tenant and Landlord shall execute such documents and agreements as eitherparty 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 Landlordat the expiration of the first Extended Term in the condition required by Section 5.3and shall comply with all of its other obligations relating to such Propertiesas if the Term had expired at the end of the first Extended Term.

 

## **2.5          Limitations onTerm. **Notwithstanding anything contained in Section 2.3or Section 2.4 to the contrary, the Term of this Agreement withrespect to any Property shall not extend beyond the term of any ground lease(including renewals and extensions thereof) pursuant to which Landlord leasessuch 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 

 

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## Agreement), Minimum Rent and Additional Rent to Landlord andAdditional Charges to the party to whom such Additional Charges are payable,during the Term.  All payments toLandlord shall be made by wire transfer of immediately available federal fundsor by other means acceptable to Landlord in its sole discretion.  Rent for any partial calendar month shall beprorated on a per diem basis.

##  

### **3.1.1           MinimumRent.**

###  

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

####  

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

####  

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

####  

#### (d)           **Adjustments of Minimum Rent Following Partial Lease Termination**.  Subject to Section 4.1.1(b), ifthis Agreement shall terminate with respect to any Property but 

 

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#### less than allof the Leased Property, Minimum Rent shall be reduced by the affected Property’sallocable share of Minimum Rent determined in accordance with the applicableprovisions of this Agreement.

####  

### **3.1.2           AdditionalRent**.

###  

#### (a)           **Amount****.** Tenant shall pay additional rent (“AdditionalRent”) with respect to each Lease Year during the Term in an amount, notless than zero, equal to four percent (4%) of Excess Gross Revenues at eachSenior Housing 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 Senior Housing 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 Year (or any portion thereof occurring during theTerm), Tenant shall deliver, or cause to be delivered, to Landlord (i) afinancial report setting forth the Gross Revenues for each Senior HousingProperty for such preceding Lease Year, or portion thereof, together with an Officer’sCertificate from Tenant’s chief financial or accounting officer certifying thatsuch report is true and correct, and (ii) a statement showing Tenant’scalculation of Additional Rent due for such preceding Lease Year, or portionthereof, based on the Gross Revenues set forth in such financial report,together with an Officer’s Certificate from Tenant’s chief financial oraccounting officer certifying that such statement is true and correct.

####  

If the annual AdditionalRent for such preceding Lease Year as set forth in Tenant’s statement thereofexceeds the amount previously paid with respect thereto by Tenant, Tenant shallpay such excess to Landlord at such time as the statement is delivered,together with interest at the Interest Rate, which interest shall accrue fromthe close 

 

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of such precedingLease Year until the date that such statement is required to be delivered and,thereafter, such interest shall accrue at the Overdue Rate, until the amount ofsuch difference shall be paid or otherwise discharged.  If the annual Additional Rent for suchpreceding Lease Year as shown in such statement is less than the amountpreviously paid with respect thereto by Tenant, provided that no Event ofDefault shall have occurred and be continuing, Landlord shall grant Tenant acredit against the Additional Rent next coming due in the amount of suchdifference, together with interest at the Interest Rate, which interest shallaccrue from the date of payment by Tenant until the date such credit is appliedor paid, as the case may be.  If suchcredit cannot be made because the Term has expired prior to application in fullthereof, provided no Event of Default has occurred and is continuing, Landlordshall pay the unapplied balance of such credit to Tenant, together withinterest at the Interest Rate, which interest shall accrue from the date ofpayment by Tenant until the date of payment by Landlord.

 

#### (d)           **Confirmation of Additional Rent****.** Tenant shall utilize, or cause to be utilized,an accounting system for the Senior Housing 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 (3) years after the expiration of each Lease Year,reasonably adequate records conforming to such accounting system showing allGross Revenues for such Lease Year. Landlord, at its own expense, except as provided hereinbelow, shall havethe right, exercisable by Notice to Tenant, by its accountants orrepresentatives, to audit the information set forth in the Officer’sCertificate referred to in subparagraph (c) above and, in connection withsuch 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 

 

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#### shall forthwithpay 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.  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 

 

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### cause to be discharged) as andwhen due and 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 such Imposition),Tenant may exercise the option to pay the same (and any accrued interest on theunpaid balance of such Imposition) in installments and, in such event, shallpay, or cause to pay, such installments during the Term as the same become dueand before any fine, penalty, premium, further interest or cost may be addedthereto.  Landlord, at its expense,shall, to the extent required or permitted by Applicable Laws, prepare andfile, or cause to be prepared and filed, all tax returns and pay all taxes duein respect of Landlord’s net income, gross receipts, sales and use, singlebusiness, transaction privilege, rent, ad valorem, franchise taxes and taxes onits capital stock or other equity interests, and Tenant, at its expense, shall,to the extent required or permitted by Applicable Laws and regulations, prepareand file all other tax returns and reports in respect of any Imposition as maybe required by Government Agencies. Provided no Event of Default shall have occurred and be continuing, ifany refund shall be due from any taxing authority in respect of any Impositionpaid by or on behalf of Tenant, the same shall be paid over to or retained byTenant.  Landlord and Tenant shall, uponrequest of the other, provide such data as is maintained by the party to whomthe request is made with respect to the Leased Property as may be necessary toprepare any required returns and reports. In the event Government Agencies classify any property covered by thisAgreement as personal property, Tenant shall file, or cause to be filed, allpersonal property tax returns in such jurisdictions where it may legally sofile.  Each party shall, to the extent itpossesses the same, provide the other, upon request, with cost and depreciationrecords necessary for filing returns for any property so classified as personalproperty.  Where 

 

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#### Landlord islegally required to file personal property tax returns for property covered bythis Agreement, Landlord shall provide Tenant with copies of assessment noticesin sufficient time for Tenant to file a protest.  All Impositions assessed against suchpersonal property shall be (irrespective of whether Landlord or Tenant shallfile the relevant return) paid by Tenant not later than the last date on whichthe same may be made without interest or penalty, subject to the provisions of Article 8.

####  

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

 

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

####  

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

####  

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

####  

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

 

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##  

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

##  

In theevent of any failure by Tenant to pay any Additional Charges when due, Tenantshall promptly pay and discharge, as Additional Charges, every fine, penalty,interest and cost which is added for non-payment or late payment of 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 amount of theinstallments or amounts of the Rent throughout the Term, subject to any otherprovisions of this Agreement which expressly provide otherwise, including thoseprovisions for adjustment or abatement of such Rent.

##  

## **3.4         ****No Termination, 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 

 

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## Leased Property, or any portion thereof,from whatever cause or any Condemnation, (b) the lawful or unlawfulprohibition of, or restriction upon, Tenant’s use of the Leased Property, orany portion thereof, or the interference with such use by any Person or byreason of eviction by paramount title; (c) any claim which Tenant may haveagainst Landlord by reason of any default (other than a monetary default) orbreach of any warranty by Landlord under this Agreement or any other agreementbetween Landlord 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 orquit or surrender the Leased Property, or any portion thereof, or (b) whichwould entitle Tenant to any abatement, reduction, suspension or deferment ofthe Rent or 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.

##  

# **ARTICLE 4**

 

# **USEOF THE LEASED PROPERTY**

 

## **4.1               Permitted Use.**

##  

### **4.1.1           PermittedUse.**

###  

#### (a)           Tenantshall, at all times during the Term, and at any other time that Tenant shall bein possession of any Property, continuously use and operate, or cause to beused and operated, (i) each Senior Housing Property as a skillednursing/intermediate care/independent living/assisted living/ special care/grouphome facility as currently operated, and any uses incidental thereto, and (ii) each Rehabilitation Hospital Property as arehabilitation hospital, clinic or professional level health or medicalservices facility, and any uses incidental thereto.  Tenant 

 

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#### shallnot use (and shall not permit any Person to use) anyProperty, or any portion thereof, for any other use without the prior writtenconsent of Landlord, which approval shall not be unreasonably withheld, delayedor conditioned.  No use shall be made orpermitted to be made of any Property and no acts shall be done thereon whichwill cause the cancellation of any insurance policy covering such Property orany part thereof (unless another adequate policy is available) or which wouldconstitute a default under any ground lease affecting such Property, nor shallTenant sell or otherwise provide to residents or patients therein, or permit tobe kept, used or sold in or about any Property any article which may beprohibited by law or by the standard form of fire insurance policies, or anyother insurance policies required to be carried hereunder, or fire underwriter’sregulations.  Tenant shall, at its solecost (except as expressly provided in Section 5.1.2(b)), comply orcause to be complied with all Insurance Requirements.  Tenant shall not take or omit to take, orpermit to be taken or omitted to be taken, any action, the taking or omissionof which materially impairs the value or the usefulness of any Property or anypart thereof for its Permitted Use.

####  

#### (b)           Inthe event that, in the reasonable determination of Tenant, it shall no longerbe economically practical to operate any Property as currently operated,****Tenant shall give Landlord Notice thereof, which Noticeshall set forth in reasonable detail the reasons therefor.  Thereafter, Landlord and Tenant shallnegotiate in good faith to agree on an alternative use for such Property,appropriate adjustments to the Additional Rent (if applicable) and other relatedmatters; provided, however, in no event shall the Minimum Rent bereduced or abated as a result thereof. If Landlord and Tenant fail to agree on an alternative use for suchProperty within sixty (60) days after commencing negotiations 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,

 

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#### then, effectiveas of the date of such sale, this Agreement shall terminate with respect tosuch Property, and the Minimum Rent shall be reduced by an amount equal to theproduct of the net proceeds of sale received by Landlord multiplied by theInterest Rate.  If Landlord shall reject(or be deemed to have rejected) such Offer, then, effective as of the proposeddate of such sale, this Agreement shall terminate with respect to suchProperty, and the Minimum Rent shall be reduced by an amount equal to the productof the projected net proceeds determined by reference to such Offer multipliedby 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(or cause 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’stitle thereto or to any portion thereof, or (b) may reasonably allow aclaim or claims for adverse usage or adverse possession by the public, as such,or of implied dedication of such Property, or any portion thereof.

###  

## **4.2               Compliancewith Legal/Insurance Requirements, Etc.** Subject to the provisions of Section 5.1.2(b) andArticle 8, Tenant, at its sole expense, shall (a) comply with(or cause to be complied with) all material Legal Requirements and InsuranceRequirements in respect of the use, operation, maintenance, repair, alterationand restoration of any Property and with the terms and conditions of any groundlease affecting any Property, (b) perform (or cause to be performed) in atimely fashion all of Landlord’s obligations under any ground lease affectingany Property and (c) procure, maintain and comply with (or cause to beprocured, maintained and complied with) all material

 

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## licenses, certificates of need, permits, provider agreementsand other authorizations and agreements required for any use of any Propertyand Tenant’s Personal Property, if any, then being made, and for the propererection, installation, operation and maintenance of the Leased Property or anypart 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               Environmental Matters**.

##  

### **4.4.1           Restriction on Use, Etc.** During the Term and any other time that Tenantshall be in possession of any Property, Tenant shall not, and shall not permitany Person to, store, spill upon, dispose of or transfer to or from suchProperty any Hazardous Substance, except in compliance with all ApplicableLaws.  During the Term and any other timethat Tenant shall be in possession of any Property, Tenant shall maintain (orshall cause to be maintained) such Property at all times free of any HazardousSubstance (except in compliance with all Applicable Laws).  Tenant shall promptly:  (a) upon receipt of notice or knowledge,notify Landlord in writing of any material change in the nature or extent ofHazardous Substances at any Property, (b) transmit to Landlord a copy ofany report which is required to be filed by Tenant or any Manager with respectto any Property pursuant to SARA Title III or any other Applicable Laws, (c) transmitto Landlord copies of any citations, orders, notices or other governmentalcommunications received by Tenant or any Manager or their respective agents orrepresentatives with respect thereto (collectively, “Environmental Notice”),which Environmental Notice requires a written response or any action to betaken and/or if such Environmental Notice gives notice of and/or presents amaterial risk of any material violation of any Applicable Laws and/or presentsa material risk of any material cost, expense, loss or damage (an “EnvironmentalObligation”), (d) observe and comply with (or cause to be observed andcomplied with) all Applicable Laws relating to the 

 

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### use, maintenance and disposal ofHazardous Substances and all orders or directives from any official, court oragency of competent jurisdiction relating to the use or maintenance orrequiring the removal, treatment, containment or other disposition thereof, and(e) pay or otherwise dispose (or cause to be paid or otherwise disposed)of any fine, charge or Imposition related thereto, unless Tenant or any Managershall contest the same in good faith and by appropriate proceedings and theright to use and the value of any of the Leased Property is not materially andadversely affected thereby.

###  

If, atany time prior to the termination of this Agreement, Hazardous Substances(other than those maintained in accordance with Applicable Laws) are discoveredon any Property, subject to Tenant’s right to contest the same in accordancewith Article 8, Tenant shall take (and shall cause to be taken) allactions and incur any and all expenses, as are required by any GovernmentAgency and by Applicable Laws, (x) to clean up and remove from and aboutsuch Property all Hazardous Substances thereon, (y) to contain and preventany further release or threat of release of Hazardous Substances on or aboutsuch Property and (z) to use good faith efforts to eliminate any furtherrelease or threat 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 anyIndemnitee resulting from, either directly or indirectly, the presence in, uponor under the soil or ground water of any Property or any properties surroundingsuch Property of any Hazardous Substances in violation of any Applicable Laws,except to the extent the same arise from the acts or omissions of Landlord orany other Indemnitee or during any period that Landlord or a Person designatedby Landlord (other than Tenant) is in possession of such Property from andafter the Commencement Date for such Property. Tenant’s duty herein includes, but is not limited to, costs associatedwith personal injury or property damage claims as a result of the presenceprior to the expiration or sooner termination of the Term and the surrender ofsuch Property to Landlord in accordance with 

 

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###  

### the terms of this Agreement of HazardousSubstances in, upon or under the soil or ground water of such Property inviolation of any Applicable Laws.  UponNotice from Landlord and any other of the Indemnitees, Tenant shall undertakethe defense, at Tenant’s sole cost and expense, of any indemnification dutiesset forth herein, 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 AdditionalCharge, any cost, expense, loss or damage (including, without limitation,reasonable attorneys’ fees) reasonably incurred by Landlord and arising from afailure of Tenant to observe and perform (or to cause to be observed andperformed) the requirements of this Section 4.4, which amountsshall bear interest from the date ten (10) Business Days after writtendemand therefor is given to Tenant until paid by Tenant to Landlord at theOverdue Rate.

 

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

###  

# **ARTICLE 5**

 

# **MAINTENANCEAND REPAIRS**

 

## **5.1               Maintenanceand Repair.**

##  

### **5.1.1           Tenant’s General Obligations.** Tenant shall keep (or cause to be kept), atTenant’s sole cost and expense, the Leased Property and all private roadways,sidewalks and curbs appurtenant thereto (and Tenant’s Personal Property) ingood order and repair, reasonable wear and tear excepted (whether or not theneed for such repairs occurs as a result of Tenant’s or any Manager’s use, anyprior use, the elements or the age of the Leased Property or Tenant’s PersonalProperty or any portion thereof), and shall promptly make or cause to be madeall necessary and appropriate repairs and replacements to each Property ofevery 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 andregulations relating to any such work. Tenant shall not take or 

 

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### omit to take (or permit anyPerson to take or omit to take) any action, the taking or omission of whichwould materially and adversely impair the value or the usefulness of the LeasedProperty or any material part thereof for its Permitted Use.  Tenant’s obligations under this Section 5.1.1shall be limited in the event of any casualty or Condemnation as set forth in Article 10and Article 11 and Tenant’s obligations with respect to HazardousSubstances are as set forth in Section 4.4.

###  

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

###  

#### (a)           Exceptas otherwise expressly provided in this Agreement, Landlord shall not, underany circumstances, be required to build or rebuild any improvement on theLeased Property, or to make any repairs, replacements, alterations,restorations or renewals of any nature or 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 thereof and such other information with respect thereto asLandlord may reasonably require. Provided that no Event of Default shall have occurred and be continuingand Tenant shall otherwise comply with the applicable provisions of Article 6,Landlord shall, within ten (10) Business Days after such Notice, subjectto and in accordance with the applicable provisions of Article 6,disburse such required funds to Tenant (or, if Tenant shall so elect, directlyto the Manager or any other Person performing the required work) and, upon suchdisbursement, the Minimum Rent shall be adjusted as provided in Section 3.1.1(c).  

 

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####  

#### Notwithstandingthe foregoing, Landlord may elect not to disburse such required funds toTenant; provided, however, that if Landlord shall elect not to disburse suchrequired funds as aforesaid, Tenant’s obligation to make such required repair,renovation or replacement shall be deemed waived by Landlord, and,notwithstanding anything contained in this Agreement to the contrary, Tenantshall have no obligation to make such required repair, renovation or replacement.

####  

### **5.1.3           Nonresponsibility of Landlord,Etc.** All materialmen, contractors, artisans,mechanics and laborers and other persons contracting with Tenant with respectto the Leased Property, or any part thereof, are hereby charged with noticethat liens on the Leased Property or on Landlord’s interest therein areexpressly prohibited and that they must look solely to Tenant to secure paymentfor any work done or material furnished to Tenant or any Manager or for anyother purpose during the term of this Agreement.

###  

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

 

## **5.2              Tenant’s Personal Property.** Tenant shall provide and maintain (or cause tobe provided and maintained) throughout the Term all such Tenant’s PersonalProperty as shall be necessary in order to operate in compliance withapplicable material Legal Requirements and Insurance Requirements and otherwisein accordance with customary practice in the industry for the 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 

 

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##  

## its designee may assume Tenant’s rights and obligationsunder such agreement upon Landlord’s purchase of the same in accordance withthe provisions of Article 15 and the assumption of management oroperation of the Facility by Landlord or its designee.

##  

## **5.3                 Yield Up.** Upon the expiration or sooner termination ofthis Agreement (or the termination of this Agreement with respect to anyProperty), Tenant shall, subject to the completion of a transfer of ownershipapproved by the Massachusetts Department of Public Health with respect to eachRehabilitation Hospital Property, vacate and surrender the Leased Property orsuch Property (as applicable) to Landlord in substantially the same conditionin which such Property was in on its Commencement Date, except as repaired,rebuilt, restored, altered or added to as permitted or required by theprovisions of this Agreement, reasonable wear and tear excepted (and casualtydamage and Condemnation, in the event that this Agreement is terminatedfollowing a casualty or Condemnation in accordance with Article 10or Article 11 excepted).

##  

In addition, upon the expiration or earliertermination of this Agreement with respect to any Senior Housing Property,Tenant shall, at Landlord’s sole cost and expense, use its good faith effortsto transfer (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 located onsuch Property as then operated.  Ifrequested by Landlord, Tenant shall continue to manage one or more of theFacilities located at the Senior Housing Properties after the expiration of theTerm with respect to such Properties for up to one hundred eighty (180) days,on such reasonable terms (which shall include an agreement to reimburse Tenantfor its reasonable out-of-pocket costs and expenses, and reasonableadministrative costs), as Landlord shall reasonably request.

 

Inaddition, upon the expiration or earlier termination of this Agreement withrespect to either Rehabilitation Hospital Property, Tenant shall, at Landlord’sreasonable cost and expense, use its best efforts to complete the transfer ofownership of the hospital business and the related hospital operations andrecords necessary for such operation to, and cooperate with Landlord orLandlord’s nominee in connection with the processing of all applications for,licenses, operating 

 

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permits and other governmental authorizations and allcontracts, including contracts with governmental or quasi-governmentalentities, which may be necessary for the operation of the hospitals at suchProperties.  Until such transfer ofownership is approved by the Massachusetts Department of Public Health, it isunderstood that Tenant shall continue as owner and licensee of the hospitalbusiness and the related hospital operations conducted at the Facilitieslocated at the Rehabilitation Hospital Properties after the termination of thisAgreement and for so long thereafter as is necessary for Landlord or Landlord’snominee to obtain all necessary licenses, operating permits and othergovernmental authorizations.  If a newtenant is not licensed upon the expiration or termination of this Agreement inconnection with a Default or Event of Default by Tenant, then, during such posttermination period, Tenant shall pay hold over rent in accordance with Section 13.  Otherwise, during such period, Minimum Rentwith respect to each applicable Rehabilitation Hospital Property shall bepayable in an amount equal to seventy-five percent (75%) of the Minimum Rentattributable to such Rehabilitation Hospital Property for the last month of theTerm for the first six (6) months after the expiration date and fiftypercent (50%) of such Minimum Rent thereafter. If necessary, Landlord and Tenant shall negotiate in good faith to agreeupon the Minimum Rent attributable to each Rehabilitation Hospital Property, itbeing acknowledged and agreed that the Minimum Rent attributable to eachRehabilitation Hospital Property shall equal the fair market rent for suchRehabilitation Hospital Property.  IfLandlord and Tenant are unable to agree upon the Minimum Rent attributable toeither Rehabilitation Hospital Property within thirty (30) days following thecommencement of such negotiations, then the Minimum Rent attributable to suchRehabilitation Hospital Property shall be determined by arbitration inaccordance with Section 22. It is expressly understood and agreed that any transfer with respect toa Rehabilitation Hospital Property pursuant to this Section 5.3 orany other Section of this Agreement is not a transfer of ownership of thehospital and is not a transfer of the right, title and interest related to thelicenses granted by the Massachusetts Department of Public Health to operatethe Facilities thereon or any other permit, license or certification used inthe operation of such Facilities that is otherwise by its termsnon-transferable.  Any such change inownership and licensee shall be subject, in all events, to the approval of eachand every applicable Government Agency, including, without limitation, theMassachusetts Department of Public Health, and Applicable Law, Tenant beingobligated to cooperate in and facilitate such approval process.

 

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

##  

# **ARTICLE 6**

 

# **IMPROVEMENTS,ETC.**

 

## **6.1               Improvementsto the Leased Property. **Tenantshall not make, construct or install (or permit to be made, constructed orinstalled) any Capital Additions without, in each instance, obtaining Landlord’sprior written consent, which consent shall not be unreasonably withheld, delayedor conditioned provided that (a) construction or installation of the samewould not adversely affect or violate any material Legal Requirement orInsurance Requirement applicable to any Property and (b) Landlord shallhave received an Officer’s Certificate certifying as to the satisfaction of theconditions set out in clause (a) above; provided, however,that no such consent shall be required in the event immediate action isrequired to prevent imminent harm to person or property.  No Capital Addition shall be made which wouldtie in or connect any Leased Improvements with any other improvements onproperty adjacent to any Property (and not part of the Land) including, withoutlimitation, tie-ins of buildings or other structures or utilities.  Except as permitted herein, Tenant shall notfinance the cost of any construction of such improvement by the granting of alien on or security interest in the Leased Property or such improvement, orTenant’s interest therein, without the prior written consent of Landlord, whichconsent may be withheld by Landlord in Landlord’s sole discretion.  Any such improvements shall, upon theexpiration or sooner termination of this 

 

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## Agreement, remain or pass to and become the property ofLandlord, free and clear of all encumbrances other than Permitted Encumbrances.

##  

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

##  

# **ARTICLE 7**

 

# **LIENS**

 

Subjectto Article 8, Tenant shall use its best efforts not, directly orindirectly, to create or allow to remain and shall promptly discharge (or causeto be discharged), at its expense, any lien, encumbrance, attachment, titleretention agreement or claim upon the Leased Property, or any portion thereof,or Tenant’s leasehold interest therein or any attachment, levy, claim orencumbrance in respect of the Rent, other than (a) Permitted Encumbrances,(b) restrictions, liens and other encumbrances which are consented to inwriting by Landlord, (c) liens for those taxes of Landlord which Tenant isnot required to pay hereunder, (d) subleases permitted by Article 16,(e) liens for Impositions or for sums resulting from noncompliance withLegal Requirements so long as (i) the same are not yet due and payable, or(ii) are being contested in accordance with Article 8, (f) liensof mechanics, laborers, materialmen, suppliers or vendors incurred in theordinary course of business that are not yet due and payable or are for sumsthat are being contested in accordance with Article 8, (g) anyFacility Mortgages or other liens which are the responsibility of Landlord pursuantto the provisions of Article 20 and (h) Landlord Liens and anyother voluntary liens created by Landlord.

 

# **ARTICLE 8**

 

# **PERMITTEDCONTESTS**

 

Tenantshall have the right to contest the amount or validity of any Imposition, LegalRequirement, Insurance Requirement, Environmental Obligation, lien, attachment,levy, encumbrance, charge or claim (collectively, “Claims”) as to theLeased Property, by appropriate legal proceedings, conducted in good faith andwith due diligence, provided that (a) the foregoing shall in no way beconstrued as relieving, modifying

 

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or extending Tenant’s obligation to pay (or cause tobe 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 trust shall permit Tenant to exercise the rightsgranted pursuant to this Article 8) or any interest therein orresult in or reasonably be expected to result in a lien attaching to the LeasedProperty, or any portion thereof, (c) no part of the Leased Property norany Rent therefrom shall be in any immediate danger of sale, forfeiture,attachment or loss, and (d) Tenant shall indemnify and hold harmlessLandlord from and against any cost, claim, damage, penalty or reasonableexpense, including reasonable attorneys’ fees, incurred by Landlord inconnection therewith or as a result thereof. Landlord agrees to join in any such proceedings if required legally toprosecute such contest, provided that Landlord shall not thereby be subjectedto any liability therefor (including, without limitation, for the payment ofany costs or expenses in connection therewith) unless Tenant agrees byagreement in form and substance reasonably satisfactory to Landlord, to assumeand indemnify Landlord with respect to the same.  Tenant shall be entitled to any refund of anyClaims and such charges and penalties or interest thereon which have been paidby Tenant or paid by Landlord to the extent that Landlord has been fully reimbursedby Tenant.  If Tenant shall fail (x) topay or cause to be paid any Claims when finally determined, (y) to providereasonable security therefor or (z) to prosecute or cause to be prosecutedany such contest diligently and in good faith, Landlord may, upon reasonablenotice to Tenant (which notice shall not be required if Landlord shallreasonably determine that the same is not practicable), pay such charges,together with interest and penalties due with respect thereto, and Tenant shallreimburse Landlord therefor, upon demand, as Additional Charges.

 

# **ARTICLE 9**

 

# **INSURANCEAND INDEMNIFICATION**

 

## **9.1               GeneralInsurance Requirements.** Tenant shall, at all times during the Term andat any other time Tenant shall be in possession of any Property, or any portionthereof, keep (or cause to be kept) such Property and all property locatedtherein or thereon, insured against the risks and in such amounts as is againstsuch risks and in such amounts as Landlord shall reasonably require and may becommercially reasonable.  Tenant shallprepare a proposal setting forth the insurance Tenant 

 

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## proposes to be maintained with respect to each Propertyduring the ensuing Fiscal Year and shall submit such proposal to Landlord on orbefore December 1 of the preceding Lease Year for Landlord’s review andapproval, which approval shall not be unreasonably withheld, delayed orconditioned.  In the event that Landlordshall fail to respond within thirty (30) days after receipt of such proposal,such proposal shall be deemed approved.

##  

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

##  

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

 

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## five (5) days prior to the effective date of thepolicies or renewal policies (which, for renewal policies, shall be prior tothe expiration of the existing policy), Tenant shall deliver to Landlord copiesof enforceable binders for such insurance coverage.  Tenant shall deliver (or cause to bedelivered) to Landlord certificates evidencing such insurance coverage withinfive (5) days after the effective date of such policies, and thereafterTenant shall deliver to Landlord the policies or renewal policies promptly uponreceipt by Tenant.  All such policiesshall provide Landlord (and any Facility Mortgagee if required by the same)thirty (30) days prior written notice of any material change or cancellation ofsuch policy.  In the event Tenant shallfail to effect (or cause to be effected) such insurance as herein required, topay (or cause to be paid) the premiums therefor or to deliver (or cause to bedelivered) such policies or certificates to Landlord or any Facility Mortgagee atthe times required, Landlord shall have the right, but not the obligation, uponNotice to Tenant, to acquire such insurance and pay the premiums therefor,which amounts shall be payable to Landlord, upon demand, as Additional Charges,together with interest accrued thereon at the Overdue Rate from the date suchpayment is made until (but excluding) the date repaid.

##  

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

 

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## the maximum extent permitted by law, imposed upon orincurred by or asserted against Landlord by reason of the following, except tothe extent caused by Landlord’s gross negligence or willful misconduct:  (a) any accident, injury to or death ofpersons or loss of or damage to property occurring on or about any Property orportion thereof or adjoining sidewalks or rights of way, (b) any past,present or future use, misuse, non-use, condition, management, maintenance orrepair by Tenant, any Manager or anyone claiming under any of them or Tenant’sPersonal Property or any litigation, proceeding or claim by governmentalentities or other third parties to which Landlord is made a party orparticipant relating to any Property or portion thereof or Tenant’s PersonalProperty or such use, misuse, non-use, condition, management, maintenance, orrepair thereof including, failure to perform obligations (other thanCondemnation proceedings) to which Landlord is made a party, (c) anyImpositions that are the obligations of Tenant to pay pursuant to theapplicable provisions of this Agreement, and (d) any failure on the partof Tenant or anyone claiming under Tenant to perform or comply with any of theterms of this Agreement.  Tenant, at itsexpense, shall contest, resist and defend any such claim, action or proceedingasserted or instituted against Landlord (and shall not be responsible for anyduplicative attorneys’ fees incurred by Landlord) or may compromise orotherwise dispose of the same, with Landlord’s prior written consent (which consentmay not be unreasonably withheld, delayed or conditioned).  The obligations of Tenant under this Section 9.5are in addition to the obligations set forth in Section 4.4 andshall survive the termination of this Agreement.

##  

# **ARTICLE10**

 

# **CASUALTY**

 

## **10.1             InsuranceProceeds.** Except as provided in the last clause of thissentence, all proceeds payable by reason of any loss or damage to any Property,or any portion thereof, and insured under any policy of insurance required by Article 9(other than the proceeds of any business interruption insurance) shall be paiddirectly to Landlord (subject to the provisions of Section 10.2)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 

 

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## losses may be adjusted without Landlord’s consent.  If Tenant is required to reconstruct orrepair any Property as provided herein, such proceeds shall be paid out byLandlord from time to time for the reasonable costs of reconstruction or repairof such Property necessitated by such damage or destruction, subject to and inaccordance with the provisions of Section 10.2.4.  Provided no Default or Event of Default hasoccurred and is continuing, any excess proceeds of insurance remaining afterthe completion of the restoration shall be paid to Tenant.  In the event that the provisions of Section 10.2.1are applicable, the insurance proceeds shall be retained by the party entitledthereto pursuant to Section 10.2.1.

##  

## **10.2             Damage or Destruction**.

##  

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

###  

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

###  

### **10.2.3         Insufficient Insurance Proceeds.**  If the cost of the repair or restoration ofthe applicable Facility exceeds the amount of insurance proceeds received byLandlord and Tenant pursuant to Section 9.1, Tenant shall giveLandlord Notice thereof which notice shall set forth in reasonable detail thenature of such deficiency and whether Tenant shall pay and assume the amount ofsuch deficiency (Tenant having no obligation to do so, except that, if Tenantshall elect to make such funds available, the same shall become an irrevocableobligation of Tenant pursuant to this Agreement).  In the event Tenant shall elect not to payand assume the amount of such 

 

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### deficiency, Landlord shall havethe right (but not the obligation), exercisable at Landlord’s sole election byNotice to Tenant, given within sixty (60) days after Tenant’s notice of thedeficiency, to elect to make available for application to the cost of repair orrestoration the amount of such deficiency; provided, however, insuch event, upon any disbursement by Landlord thereof, the Minimum Rent shallbe 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,Tenant shall be strictly liable and solely responsible for the amount of anydeductible and shall, upon any insurable loss, pay over the amount of suchdeductible to Landlord at the time and in the manner herein provided forpayment of the applicable proceeds to Landlord.

###  

### **10.2.4         Disbursement of Proceeds.** In the event Tenant is required to restore anyProperty pursuant to Section 10.2 and this Agreement is notterminated as to such Property pursuant to this Article 10, Tenantshall commence (or cause to be commenced) promptly and continue diligently toperform (or cause to be performed) the repair and restoration of such Property(hereinafter called the “Work”), so as to restore (or cause to berestored) the applicable Property in material compliance with all Legal Requirementsand so that 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) theabsence of any Event of Default, (b) its approval of plans andspecifications of an architect satisfactory to Landlord (which approval shallnot be unreasonably withheld, delayed or 

 

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### conditioned), (c) generalcontractors’ estimates, (d) architect’s certificates, (e) conditionallien waivers of general contractors, if available, (f) evidence ofapproval by all governmental authorities and other regulatory bodies whoseapproval is required, (g), if Tenant has elected to advance deficiency fundspursuant to Section 10.2.3, Tenant depositing the amount thereofwith Landlord and (h) such other certificates as Landlord may, from timeto time, reasonably require.

###  

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

 

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

 

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

##  

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

##  

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

 

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

##  

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

##  

# **ARTICLE11**

 

# **CONDEMNATION**

 

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

##  

## **11.2             PartialCondemnation.** In the event of a Condemnation of less than thewhole of any Property such that such Property is still suitable for itsPermitted Use, Tenant shall, to the extent of the Award and any additionalamounts disbursed by Landlord as hereinafter provided, commence (or cause to becommenced) promptly and continue diligently to restore (or cause to berestored) the untaken portion of the applicable Leased Improvements so thatsuch Leased Improvements shall constitute a complete architectural unit of thesame general character and condition (as nearly as may be possible under thecircumstances) as such Leased Improvements existing immediately prior to suchCondemnation, in material compliance with all Legal Requirements, subject tothe provisions of this Section 11.2.  If the cost of the repair or restoration ofthe affected Property exceeds the amount of the Award, Tenant shall give 

 

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## Landlord Notice thereof which notice shall set forth inreasonable detail the nature of such deficiency and whether Tenant shall payand assume the amount of such deficiency (Tenant having no obligation to do so,except that if Tenant shall elect to make such funds available, the same shallbecome an irrevocable obligation 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, toelect 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 andspecifications of an architect satisfactory to Landlord (which approval shallnot be unreasonably withheld, delayed or conditioned), (c) generalcontractors’ estimates, (d) architect’s certificates, (e) conditionallien waivers of general contractors, if available, (f) evidence ofapproval by all governmental authorities and other regulatory bodies whoseapproval is required, (g), if Tenant has elected to advance deficiency fundspursuant to the preceding paragraph, Tenant depositing the amount thereof withLandlord and (h) such other certificates as Landlord may, from time totime, reasonably require.  Landlord’sobligation under this Section 11.2 to disburse the Award and suchother amounts shall be subject to (x) the collection thereof by Landlordand (y) the satisfaction of any applicable requirements of any FacilityMortgage, and the release of such Award by the applicable FacilityMortgagee.  Tenant’s obligation torestore the Leased Property shall be subject to the release of the Award by theapplicable Facility Mortgagee to Landlord.

 

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##  

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

##  

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

 

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# **ARTICLE 12**

 

# **DEFAULTSAND REMEDIES**

 

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

##  

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

####  

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

####  

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

####  

#### (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

 

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#### (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

####  

#### (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 

 

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#### failed tocomply with applicable Medicare and/or Medicaid regulations in the operation ofany Facility, as a result of which failure Tenant is declared ineligible toreceive reimbursements under the Medicare and/or Medicaid programs for suchFacility;

####  

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 and all rights ofTenant under this Agreement with respect thereto shall cease.  Landlord shall have and may exercise allrights and remedies available at law and in equity to Landlord as a result ofTenant’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, 

 

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## repossession or reletting. In the event of any such termination, Tenant shall forthwith pay toLandlord all Rent due and payable with respect to the Leased Property, orterminated portion thereof, through and including the date of suchtermination.  Thereafter, Tenant, untilthe end of what would have been the Term of this Agreement in the absence ofsuch termination, and whether or not the Leased Property, or any portionthereof, shall have been relet, shall be liable to Landlord for, and shall payto Landlord, as current damages, the Rent (Additional Rent to be reasonablycalculated by Landlord based on historical Gross Revenues) and other chargeswhich would be payable hereunder for the remainder of the Term had suchtermination not occurred, less the net proceeds, if any, of any reletting ofthe Leased Property, or any portion thereof, after deducting all reasonableexpenses in connection with such reletting, including, without limitation, allrepossession costs, brokerage commissions, legal expenses, attorneys’ fees,advertising, expenses of employees, alteration costs and expenses ofpreparation for such reletting.  Tenantshall pay such current damages to Landlord monthly on the days on which theMinimum Rent would have been payable hereunder if this Agreement had not beenso 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.

 

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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 advisableand necessary for the purpose of reletting the Leased Property; and the makingof such alterations, repairs and decorations shall not operate or be construedto release Tenant from liability hereunder as aforesaid.  Landlord shall in no event be liable in anyway whatsoever for any failure to relet all or any portion of the LeasedProperty, or, in the event that the Leased Property is relet, for failure tocollect the rent under such reletting. To the maximum extent permitted by law, Tenant hereby expressly waivesany and all rights of redemption granted under any present or future laws inthe event of Tenant being evicted or dispossessed, or in the event of Landlordobtaining possession of the Leased Property, by reason of the occurrence andcontinuation of an Event of Default hereunder.

 

## **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 

 

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## releasing any Event of Default, may (but shall not beobligated to), at any time thereafter, make such payment or perform such actfor the account and at the expense of Tenant, and may, to the maximum extentpermitted by law, enter upon the Leased Property, or any portion thereof, forsuch purpose and take all such action thereon as, in Landlord’s sole andabsolute discretion, may be necessary or appropriate therefor.  No such entry shall be deemed an eviction ofTenant.  All reasonable costs andexpenses (including, without limitation, reasonable attorneys’ fees) incurredby Landlord in connection therewith, together with interest thereon (to theextent permitted by law) at the Overdue Rate from the date such sums are paidby Landlord until repaid, shall be paid by Tenant to Landlord, on demand.

##  

## **12.6       ****Trade Names**.  If this Agreementis terminated with respect to either or both of the Rehabilitation HospitalProperties for any reason, Landlord shall, upon the request of Tenant, causethe name of the business conducted upon such Property to be changed to a nameother than a Facility Trade Name or any approximation or abbreviation thereofand sufficiently dissimilar to such name as to be unlikely to cause confusionwith such name; provided, however, that Tenant shall notthereafter use a Facility Trade Name in the same market in which such Propertyis located in connection with any business that competes with such Property orthe Facility located thereon.

##  

# **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.

 

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# ** **

# **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 suchdefault shall continue for a period of thirty (30) days after Notice thereoffrom Tenant to Landlord and any applicable Facility Mortgagee, or suchadditional period as may be reasonably required to correct the same, Tenant maydeclare the occurrence of a “Landlord Default” by a second Notice toLandlord and to such Facility Mortgagee. Thereafter, Tenant may forthwith cure the same and, subject to theprovisions of the following paragraph, invoice Landlord for costs and expenses(including reasonable attorneys’ fees and court costs) incurred by Tenant incuring the same, together with interest thereon (to the extent permitted bylaw) from the date Landlord receives Tenant’s invoice until paid, at theOverdue Rate.  Tenant shall have no rightto terminate this Agreement for any default by Landlord hereunder and no right,for any such default, to offset or counterclaim against any Rent or othercharges due hereunder.

 

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, 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.

 

# **ARTICLE15**

 

# **PURCHASE RIGHTS**

 

Landlordshall have the option to purchase Tenant’s Personal Property, at the expirationor sooner termination of this Agreement, for an amount equal to the then fairmarket value thereof (current replacement cost as determined by agreement ofthe parties or, in the absence of such agreement, appraisal), subject to, andwith appropriate price adjustments for, all equipment leases, conditional salecontracts, UCC-1 

 

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financing statements and other encumbrances to whichTenant’s Personal Property is subject. Upon the expiration or sooner termination of this Agreement, Tenantshall use its reasonable efforts to transfer and assign, or cause to betransferred and assigned, to Landlord or its designee, or assist Landlord orits designee in obtaining, any contracts, licenses, and certificates requiredfor the then operation of the Leased Property. Notwithstanding the foregoing, Tenant expressly acknowledges and agreesthat nothing contained in this Article 15 shall diminish, impair orotherwise modify Landlord’s rights under the Security Agreement and that anyamounts paid by Landlord in order to purchase Tenant’s Personal Property inaccordance with this Article 15 shall be applied first to Tenant’scurrent and past due obligations under this Agreement in such order as Landlordmay reasonably determine or as may be prescribed by the laws of the applicableState and any balance shall be paid to Tenant.

 

# **ARTICLE 16**

 

# **SUBLETTINGAND ASSIGNMENT**

 

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

##  

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 

 

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than Tenant or any Manager, their respective employeesor residents or patients of Tenant), Landlord may collect the rents from suchassignee, subtenant or occupant, as the case may be, and apply the net amountcollected to the Rent herein reserved, but no such collection shall be deemed awaiver of the provisions set forth in the first paragraph of this Section 16.1,the acceptance by Landlord of such assignee, subtenant or occupant, as the casemay be, as a tenant, or a release of Tenant from the future performance byTenant of its covenants, agreements or obligations 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 in form andsubstance satisfactory to Landlord in its sole discretion and which securityagreement shall constitute an Incidental Document hereunder; and (d) inthe case of a sublease, an assignment which assigns all of such subtenant’sright, title and interest in such sublease to Landlord to secure Tenant’sobligations under this Agreement and the Incidental Documents, which assignmentshall be in form and substance satisfactory to Landlord in its sole discretionand which assignment shall constitute an Incidental 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 bedeemed to be a waiver of the prohibition set forth in this Section 16.1.  No assignment, subletting or occupancy shall 

 

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affect any Permitted Use.  Any subletting, assignment or other transferof Tenant’s interest under this Agreement in contravention of this Section 16.1shall be voidable at Landlord’s option.

 

## **16.2             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 over allof the right, title and interest of Tenant, as sublessor under such sublease,and such subtenant shall, at Landlord’s option, attorn to Landlord pursuant tothe then executory provisions of such sublease, except that neither Landlordnor any Facility Mortgagee, as holder of a mortgage or as Landlord under thisAgreement, 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 theretoforeaccrued to 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 any credits, except forservices, repairs, maintenance and restoration provided for under the subleasethat are performed after the date of such attornment, (vii) be responsiblefor any monies owing by Tenant to the credit of such subtenant unless actuallydelivered to Landlord by Tenant, or (viii) be required to remove anyPerson occupying any portion of the Leased Property; and (c) in the eventthat such subtenant receives a written Notice from Landlord or any FacilityMortgagee stating that an Event of Default has occurred and is continuing, suchsubtenant shall thereafter be obligated to pay all rentals accruing under suchsublease directly to the party giving such Notice or as such party maydirect.  All rentals received from suchsubtenant by Landlord or the Facility Mortgagee, as the case may be, shall becredited against the amounts owing by Tenant under this Agreement and suchsublease shall provide that the subtenant thereunder shall, at the request ofLandlord, execute a suitable instrument in confirmation of such agreement

 

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## to attorn.  Anoriginal counterpart of each such sublease and assignment and assumption, dulyexecuted by Tenant and such subtenant or assignee, as the case may be, in formand substance reasonably satisfactory to Landlord, shall be delivered promptlyto Landlord and (x) in the case of an assignment, the assignee shallassume in writing and agree to keep and perform all of the terms of thisAgreement on the part of Tenant to be kept and performed and shall be, andbecome, jointly and severally liable with Tenant for the performance thereofand (y) in the case of either an assignment or subletting, Tenant shallremain primarily liable, as principal rather than as surety, for the promptpayment of the Rent and for the performance and observance of all of the covenantsand 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 Senior Housing Properties, (b) subleasespace at any Property for laundry, commissary or child care purposes or otherconcessions in furtherance of the Permitted Use, so long as such subleases willnot reduce the number of units at any Facility, will not violate or affect anyLegal Requirement or Insurance Requirement, and Tenant shall provide suchadditional insurance coverage applicable to the activities to be conducted insuch subleased space as Landlord and any Facility Mortgagee may reasonablyrequire, and (c) enter into one or more subleases with Affiliated Personsof Tenant with respect to the Leased Property, or any portion thereof, providedTenant gives Landlord Notice of the material terms and conditions thereof.  Landlord and Tenant acknowledge and agreethat if Tenant enters into one (1) or more subleases with AffiliatedPersons of Tenant with respect to any Property, or any portion thereof, inaccordance with the preceding clause (c), Tenant may allocate the rent andother charges with respect to the affected Property in any reasonable manner; provided,however, that such allocation shall not affect Tenant’s (nor anyGuarantor’s) liability for the Rent and other obligations of Tenant under thisAgreement; and, provided, further, that Tenant shall giveLandlord prompt written notice of any allocation or reallocation of the rentand 

 

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## other charges with respect to the affected Property and, inany event, Tenant shall give Landlord written notice of the amount of suchallocations at least ten (10) Business Days prior to the date thatLandlord or Senior Housing Properties Trust is required to file any tax returnsin 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 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 

 

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#### recent Consolidated Financials,accompanied by a Financial 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)           withinthirty (30) days after the end of each calendar month, a monthly report withrespect to each Rehabilitation Hospital Property, such report to include (i) abalance sheet and a current month and year to date income statement, showingeach item of actual and projected income and expense, reflecting the operatingresults of the Facility located at such Property, in each case prepared inaccordance with GAAP, (ii) a statement of capital expenditures prepared ona Facility by Facility basis and on a combined basis with respect to all of theRehabilitation Hospital Properties, (iii) occupancy percentages, payor mixand average rate on a Facility by Facility basis and on a combined basis withrespect to all of the Rehabilitation Hospital Properties, and (iv) suchadditional information as Landlord may from time to time reasonably require,accompanied by a Financial Officer’s Certificate.

####  

#### (d)           withinforty-five (45) days after the end of each month, an unaudited operatingstatement and statement of capital expenditures with respect to the SeniorHousing Properties, prepared on a Facility by Facility basis and a combinedbasis with respect to all of the Senior Housing Properties, including occupancypercentages and average rate, accompanied by a Financial Officer’s Certificate;

####  

#### (e)           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 

 

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#### therewith; provided,however, that, except as to calculations pertaining to Gross Revenues,Tenant shall not be required to provide audited financials with respect to anyindividual Facility unless Landlord shall agree to pay for the cost thereof;

####  

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

####  

#### (g)           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

 

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####  

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

####  

# **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 

 

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####  

#### effect, Tenant will perform all obligations,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 therequirements of such Manager’s Management Agreement or that such consent is notrequired.

####  

## **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 

 

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## subordination shall be required.  In confirmation of such subordination, Tenantshall promptly execute, acknowledge and deliver any instrument that Landlord,the lessor under any such lease or the holder of any such mortgage or thetrustee or beneficiary of any deed of trust or any of their respectivesuccessors in interest may reasonably request to evidence such subordination.  Any such subordination, however, shall besubject to the provisions of, and conditioned upon receipt by Tenant of thenondisturbance agreement described in, the penultimate sentence of this Section 20.2.  Any lease to which this Agreement is, at thetime referred to, subject and subordinate is herein called “Superior Lease”and the lessor of a Superior Lease or its successor in interest at the timereferred to is herein called “Superior Landlord” and any mortgage ordeed of trust to which this Agreement is, at the time referred to, subject andsubordinate is herein called “Superior Mortgage” and the holder, trusteeor beneficiary of a Superior Mortgage or any successor in interest thereto isherein called “Superior Mortgagee”. Tenant shall have no obligations under any Superior Lease or SuperiorMortgage other than those expressly set forth in this Section 20.2,unless Tenant shall agree otherwise pursuant to any agreement between Tenantand such Superior Landlord or 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 

 

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such Superior Lease or Superior Mortgage, or by anyprevious prepayment of Rent for more than one (1) month in advance of thedate due hereunder, which was not approved in writing by the Superior Landlordor the Superior Mortgagee thereto, (e) liable to Tenant beyond theSuccessor Landlord’s interest in the Leased Property and the rents, income,receipts, revenues, issues and profits issuing from the Leased Property, (f) responsiblefor the performance of any work to be done by the Landlord under this Agreementto render the Leased Property ready for occupancy by Tenant (subject toLandlord’s obligations under Section 5.1.2(b) or with respectto any insurance proceeds or Awards), or (g) required to remove any Personoccupying the Leased Property or any part thereof, except if such person claimsby, through or under the Successor Landlord. Tenant agrees at any time and from time to time to execute a suitableinstrument in confirmation of Tenant’s agreement to attorn, as aforesaid andLandlord agrees to provide Tenant with an instrument of nondisturbance andattornment from each such Superior Mortgagee and Superior Landlord (other thanthe lessors under any ground leases with respect to the Leased Property, or anyportion thereof) in form and substance reasonably satisfactory to Tenantwhereby such Superior Mortgagee or Superior Lessor, as applicable, shall agreeto recognize Tenant’s possessory and other rights under this Agreementnotwithstanding any foreclosure or lease termination, subject to the provisionsof this Section 20.2. Notwithstanding the foregoing, any Successor Landlord shall be liable (a) topay to Tenant any amounts owed under Section 5.1.2(b), (b) topay to Tenant any portions of insurance proceeds or Awards received by Landlordor the Successor Landlord required to be paid to Tenant pursuant to the termsof this Agreement, and (c) to recognize any reduction in Minimum Rentattributable 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 

 

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##  

## such Facility Mortgagee or Superior Landlord shall betreated as performance by Landlord.

##  

# **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 

 

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## such change occurs, or in separate schedules to suchfinancial statements, information sufficient to show the effect of any suchchanges on such financial statements.

##  

## **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, ofTenant.  Forthwith upon Tenant obtainingknowledge of any Default, Event of Default or any default or event of defaultunder any agreement relating to Indebtedness for money borrowed in an aggregateamount exceeding, at any one time, Two Hundred Fifty Thousand Dollars($250,000), or any event or condition that would be required to be disclosed ina current report filed by Tenant on Form 8-K or in Part II of aquarterly report on Form 10-Q if Tenant were required to file such reportsunder the Securities Exchange Act of 1934, as amended, Tenant shall furnishNotice thereof to Landlord specifying the nature and period of existencethereof and what action Tenant has taken or is taking or proposes to take withrespect thereto.

##  

## **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       ****Notice of Change of Name, Etc****.**  Tenant shall give prompt notice to Landlordof any change in (a) the name (operating or otherwise) of any Entitycomprising Tenant or any Facility, (b) the number of beds in any bedcategory for which any Facility is licensed or the number of beds in any bedcategory available for use at any Facility (except for changes in the electionmade with respect to the beds for reimbursement maximization purposes), and (c) thepatient and/or child care services that are offered at any Facility.

##  

# **ARTICLE22**

 

# **ARBITRATION**

 

## **22.1       ****Disputes**.  Any disputes, claims or controversies betweenor among the parties hereto arising out of or relating

 

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## tothis Agreement or the transactions contemplated hereby, including disputes,claims or controversies relating to the meaning, interpretation, effect,validity, performance or enforcement of this Agreement (all of which arereferred to as “Disputes”) or relating in any way to such a Dispute orDisputes, shall on the demand of any party to such Dispute be resolved throughbinding and final arbitration in accordance with the Commercial Arbitration Rules (the“Rules”) of the American Arbitration Association (“AAA”) then ineffect, except as modified herein.  Forthe avoidance of doubt, a Dispute shall include a Dispute made derivatively onbehalf of one party against another party.

##  

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

##  

## **22.3            ****Location of Arbitration**.  The place of arbitration shall be Boston,Massachusetts unless otherwise agreed by the parties.

##  

## **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 

 

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## and the validity, effect andinterpretation of this arbitration agreement shall be governed by the FederalArbitration Act, 9 U.S.C. §1 et seq.  TheArbitration Award shall be in writing and may, but shall not be required to,briefly state the findings of fact and conclusions 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.  The party against which the Arbitration Awardassesses a monetary obligation shall pay that obligation on or before the 30th day following thedate of the Arbitration Award or such other date as the Arbitration Award mayprovide.

 

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# **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 themaximum permissible under Applicable Laws, the benefit of which may be assertedby Tenant as a defense, and if, from any circumstance whatsoever, fulfillmentof any 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, shall constitutea 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 thesimultaneous or subsequent exercise by Landlord of any or all of such otherrights, 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 

 

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## Agreement, but rather the effect thereof shall be confinedto the clause, sentence, paragraph, section or provision so held to be invalid,illegal or ineffective, and this Agreement shall be construed as if suchinvalid, illegal or ineffective provisions had never been contained therein.

##  

## **23.5             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 by Landlord hereunder, (b) all Permitted Encumbrances, (c) liensas to obligations of Landlord that are either not yet due or which are beingcontested in good faith and by proper proceedings, provided the same do notmaterially interfere with Tenant’s ability to operate any Facility and (d) liensthat have been consented to in writing by Tenant.  Except as otherwise 

 

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## provided in this Agreement, no failure by Landlord to complywith the foregoing covenant shall give Tenant any right to cancel or terminatethis Agreement or abate, reduce or make a deduction from or offset against theRent or any other sum payable under this Agreement, or to fail to perform anyother 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.

####  

#### (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]

 

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

 

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## reference only and shall not limit or affect the meaning ofthe provisions hereof.

##  

## **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 ajurisdiction other than Massachusetts; or (g) any combination of theforegoing.  Notwithstanding theforegoing, the laws of the State shall apply to the perfection and priority ofliens upon and the disposition 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 orapproval which has not been given or taken, or at the time of the transactioninvolved shall not have been given or taken. Each party covenants that it has and will continue to have throughoutthe term of this Agreement and any extensions thereof, the full right to enterinto this Agreement and perform its obligations hereunder.

##  

## **23.15           Attorneys’Fees**. If any lawsuit or arbitration or other 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.

 

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##  

## **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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78

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**INWITNESS WHEREOF**,the parties have executed this Agreement as a sealed instrument as of the dateabove first written.

 

 
|   | **LANDLORD:**                 |
|--------|-------------------------------|
|   | ** **                    | ** ** |
|   | **SPTIHS PROPERTIES TRUST**   |
|   | ** **                    | ** ** |
|   | By:                           | /s/ David J. Hegarty |
|   |                          | David J. Hegarty |
|   |                          | President |
|   |                          |   |
|   | **SPTMNR PROPERTIES TRUST**   |
|   | ** **                    | ** ** |
|   | By:                           | /s/ David J. Hegarty |
|   |                          | David J. Hegarty |
|   |                          | President |
|   |                          |   |
|   | **SNH/LTA PROPERTIES GA LLC** |
|   | ** **                    | ** ** |
|   | By:                           | /s/ David J. Hegarty |
|   |                          | David J. Hegarty |
|   |                          | President |
|   |                          |   |
|   | **SNH/LTA PROPERTIES TRUST**  |
|   | ** **                    | ** ** |
|   | By:                           | /s/ David J. Hegarty |
|   |                          | David J. Hegarty |
|   |                          | President |
|   |                          |   |
|   | **O.F.C. CORPORATION**        |
|   | ** **                    |
|   | By:                           | /s/ David J. Hegarty |
|   |                          | David J. Hegarty |
|   |                          | President |
|   |                          |   |
|   | **SNH CHS PROPERTIES TRUST**  |
|   | ** **                    | ** ** |
|   | By:                           | /s/ David J. Hegarty |
|   |                          | David J. Hegarty |
|   |                          | President |
|   |                          |   |
|   | **CCC OF KENTUCKY TRUST**     |
|   | ** **                    | ** ** |
|   | By:                           | /s/ David J. Hegarty |
|   |                          | David J. Hegarty |
|   |                          | President |

 

79

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|   | **LEISURE PARK VENTURE LIMITED PARTNERSHIP** |
|--------|----------------------------------------------|
|   | ** **                                   | ** ** |
|   | By:                                          | CCC Leisure Park Corporation, |
|   |                                         | its General Partner |
|   |                                         |   |
|   |                                         | By: | /s/ David J. Hegarty |
|   |                                         |   | David J. Hegarty |
|   |                                         |   | President |
|   |                                         |   |
|   | **CCDE SENIOR LIVING LLC**                   |
|   | ** **                                   | ** ** |
|   | By:                                          | /s/ David J. Hegarty |
|   |                                         | David J. Hegarty |
|   |                                         | President |
|   |                                         |   |
|   | **CCOP SENIOR LIVING LLC**                   |
|   | ** **                                   | ** ** |
|   | By:                                          | /s/ David J. Hegarty |
|   |                                         | David J. Hegarty |
|   |                                         | President |
|   |                                         |   |
|   | **CCC PUEBLO NORTE TRUST**                   |
|   | ** **                                   | ** ** |
|   | By:                                          | /s/ David J. Hegarty |
|   |                                         | David J. Hegarty |
|   |                                         | President |
|   |                                         |   |
|   | **CCC RETIREMENT COMMUNITIES II, L.P.**      |
|   | ** **                                   | ** ** |
|   | By:                                          | Crestline Ventures LLC, |
|   |                                         | its General Partner |
|   |                                         |   |
|   |                                         | By: | /s/ David J. Hegarty |
|   |                                         |   | David J. Hegarty |
|   |                                         |   | President |
|   |                                         |   |
|   | **CCC INVESTMENTS I, L.L.C.**                |
|   | ** **                                   | ** ** |
|   | By:                                          | /s/ David J. Hegarty |
|   |                                         | David J. Hegarty |
|   |                                         | President |

 

80

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|   | **CCC FINANCING I TRUST**          |
|--------|------------------------------------|
|   | ** **                         | ** ** |
|   | By:                                | /s/ David J.  Hegarty |
|   |                               | David J. Hegarty |
|   |                               | President |
|   |                               |   |
|   | **CCC FINANCING LIMITED, L.P.**    |
|   | ** **                         | ** ** |
|   | By:                                | CCC Retirement Trust, |
|   |                               | its General Partner |
|   |                               |   |
|   |                               | By: | /s/ David J. Hegarty |
|   |                               |   | David J. Hegarty |
|   |                               |   | President |
|   |                               |   |
|   | **SNH SOMERFORD PROPERTIES TRUST** |
|   | ** **                         | ** ** |
|   | By:                                | /s/ David J. Hegarty |
|   |                               | David J. Hegarty |
|   |                               | President |
|   |                               |   |
|   | **HRES1 PROPERTIES TRUST**         |
|   | ** **                         | ** ** |
|   | By:                                | /s/ David J. Hegarty |
|   |                               | David J. Hegarty |
|   |                               | President |

 

81

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|   | **TENANT:**                          |
|--------|--------------------------------------|
|   | ** **                           | ** ** |
|   | **FIVE  STAR QUALITY CARE TRUST**    |
|   | ** **                           | ** ** |
|   | 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 |
|   |                                 |   |
|   | **FS COMMONWEALTH LLC**              |
|   | ** **                           | ** ** |
|   | By:                                  | /s/ Bruce J. Mackey Jr. |
|   |                                 | Bruce J. Mackey Jr. |
|   |                                 | President |
|   |                                 |   |
|   | **FS PATRIOT LLC**                   |
|   | ** **                           | ** ** |
|   | By:                                  | /s/ Bruce J. Mackey Jr. |
|   |                                 | Bruce J. Mackey Jr. |
|   |                                 | President |

 

82

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**SCHEDULE1**

 

Schedule omitted.

 

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**EXHIBITSA-1 THROUGH A-50**

 

**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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