ex10_241.htm


    
      
        

      

    

    Exhibit
      10.24.1

     

     

    [Fairfield,
      CA] 

    [Hillsborough,
      NJ] 

    [Manahawkin,
      NJ] 

    [Ocoee,
      FL] 

    [Ontario,
      CA]

     [Port
      Orange, FL]

     [Torrington,
      CT]

     [Voorhees,
      NJ] 

    [Westminster,
      MD] 

    [Woodbridge,
      VA]

    
       

      
        

        

      

      AMENDED
        AND RESTATED MASTER LEASE 

       

      among
        

       

      HEALTH
        CARE PROPERTY INVESTORS, INC., and 

       

      WESTMINSTER
        HCP, LLC 

       

      as
        their
        interests may appear, as Lessor 

       

      AND
        

       

      LH
        ASSISTED LIVING, LLC, 

       

      SUMMERVILLE
        AT COBBCO, INC., 

       

      SUMMERVILLE
        AT HILLSBOROUGH, L.L.C., 

       

      SUMMERVILLE
        AT OCOEE, INC., 

       

      SUMMERVILLE
        AT PORT ORANGE, INC., 

       

      SUMMERVILLE
        AT PRINCE WILLIAM, INC., 

       

      SUMMERVILLE
        AT STAFFORD, L.L.C., 

       

      SUMMERVILLE
        AT VOORHEES, L.L.C., 

       

      AND
        SUMMERVILLE AT WESTMINSTER, INC.

       

      collectively,
        as Lessee 

       

      Dated
        as
        of April 20, 2005


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      TABLE
        OF CONTENTS

       

      
        	 	 	 	
                Page

              
	 	 
	
                ARTICLE  I.

              	
                1

              
	 	 	 	 
	 	
                1.1

              	
                Leased
                  Property; Term

              	
                1

              
	 	 
	
                ARTICLE
                  II.

              	
                2

              
	 	 	 	 
	 	
                2.1

              	
                Definitions

              	
                2

              
	 	 
	
                ARTICLE
                  III

              	
                18

              
	 	 	 	 
	 	
                3.1

              	
                Rent

              	
                18

              
	 	
                3.2

              	
                Additional
                  Charges

              	
                19

              
	 	
                3.3

              	
                Late
                  Payment of Rent

              	
                19

              
	 	
                3.4

              	
                Net
                  Lease

              	
                21

              
	 	
                3.5

              	
                Separate
                  Account

              	
                21

              
	 	 
	
                ARTICLE
                  IV.

              	
                21

              
	 	 	 	 
	 	
                4.1

              	
                Impositions

              	
                21

              
	 	
                4.2

              	
                Utilities

              	
                22

              
	 	
                4.3

              	
                Insurance

              	
                22

              
	 	
                4.4

              	
                Impound
                  Account

              	
                22

              
	 	
                4.5

              	
                Tax
                  Service

              	
                22

              
	 	 
	
                ARTICLE
                  V.

              	
                23

              
	 	 	 	 
	 	
                5.1

              	
                No
                  Termination, Abatement, etc

              	
                23

              
	 	
                5.2

              	
                Termination
                  with Respect to Fewer than All of the Facilities

              	
                23

              
	 	
                5.3

              	
                Abatement
                  Procedures

              	
                23

              
	 	 
	
                ARTICLE
                  VI.

              	
                24

              
	 	 	 	 
	 	
                6.1

              	
                Ownership
                  of the Leased Property

              	
                24

              
	 	
                6.2

              	
                Personal
                  Property

              	
                24

              
	 	
                6.3

              	
                Transfer
                  of Personal Property and Capital Additions to Lessor

              	
                24

              
	 	 
	
                ARTICLE
                  VII.

              	
                24

              
	 	 	 	 
	 	
                7.1

              	
                Condition
                  of the Leased Property

              	
                24

              
	 	
                7.2

              	
                Use
                  of the Leased Property

              	
                25

              
	 	
                7.3

              	
                Lessor
                  to Grant Easements, etc

              	
                26

              
	 	
                7.4

              	
                Preservation
                  of Facility Value

              	
                26

              


      

       

      
        
          
          

        

        
          i

          
            

          

        

        
          
          

        

      

       

      
        	
                ARTICLE
                  VIII.

              	
                27

              
	 	 	 	 
	 	
                8.1

              	
                Compliance
                  with Legal and Insurance Requirements, Instruments, etc.

              	
                27

              
	 	 	 	 
	 	 
	
                ARTICLE
                  IX.

              	
                27

              
	 	 	 	 
	 	
                9.1

              	
                Maintenance
                  and Repair

              	
                27

              
	 	
                9.2

              	
                Encroachments,
                  Restrictions, Mineral Leases, etc

              	
                28

              
	 	
                9.3

              	
                Capital
                  Projects

              	
                29

              
	 	
                9.4

              	
                Inspections;
                  Due Diligence Fee

              	
                30

              
	 	 
	
                ARTICLE
                  X

              	
                31

              
	 	 	 	 
	 	
                10.1

              	
                Construction
                  of Capital Additions to the Leased Property

              	
                31

              
	 	 
	
                ARTICLE
                  XI.

              	
                31

              
	 	 	 	 
	 	
                11.1

              	
                Liens

              	
                31

              
	 	 
	
                ARTICLE
                  XII.

              	
                31

              
	 	 	 	 
	 	
                12.1

              	
                Permitted
                  Contests

              	
                31

              
	 	 
	
                ARTICLE
                  XIII

              	
                32

              
	 	 	 	 
	 	
                13.1

              	
                General
                  Insurance Requirements

              	
                32

              
	 	
                13.2

              	
                Replacement
                  Cost

              	
                33

              
	 	
                13.2

              	
                Replacement
                  Cost

              	
                33

              
	 	
                13.3

              	
                Additional
                  Insurance

              	
                33

              
	 	
                13.4

              	
                Waiver
                  of Subrogation

              	
                34

              
	 	
                13.5

              	
                Policy
                  Requirements

              	
                34

              
	 	
                13.6

              	
                Increase
                  in Limits

              	
                34

              
	 	
                13.7

              	
                Blanket
                  Policies and Policies Covering Muliple Locations

              	
                34

              
	 	
                13.8

              	
                No
                  Separate Insurance

              	
                34

              
	 	 
	
                ARTICLE
                  XIV

              	
                35

              
	 	 	 	 
	 	
                14.1

              	
                Insurance
                  Proceeds

              	
                35

              
	 	
                14.2

              	
                Insured
                  Casualty

              	
                35

              
	 	
                14.3

              	
                Uninsured
                  Casualty

              	
                36

              
	 	
                14.4

              	
                No
                  Abatement of Rent

              	
                36

              
	 	
                14.5

              	
                Waiver

              	
                37

              
	 	 
	
                ARTICLE
                  XIV

              	
                37

              
	 	 	 	 
	 	
                15.1

              	
                Condemnation

              	
                37

              


      

       

      
        
          
          

        

        
          ii

          
            

          

        

        
          
          

        

      

       

      
        	
                ARTICLE
                  XVI

              	
                38

              
	 	 	 	 
	 	
                16.1

              	
                Events
                  of Default

              	
                38

              
	 	
                16.2

              	
                Certain
                  Remedies

              	
                40

              
	 	
                16.3

              	
                Damages

              	
                41

              
	 	
                16.4

              	
                Receiver

              	
                42

              
	 	
                16.5

              	
                Lessee's
                  Obligation to Purchase

              	
                42

              
	 	
                16.6

              	
                Waiver

              	
                42

              
	 	
                16.7

              	
                Application
                  of Funds

              	
                42

              
	 	
                16.8

              	
                Facility
                  Operating Deficiencies

              	
                42

              
	 	
                16.9

              	
                Lessor's
                  Right of Appraisal

              	
                44

              
	 	
                16.10

              	
                Lessor's
                  Security Interest

              	
                44

              
	 	 
	
                ARTICLE
                  XVII.

              	
                45

              
	 	 	 	 
	 	
                17.1

              	
                Lessor's
                  Right to Cure Lessee's Default

              	
                45

              
	 	 
	
                ARTICLE
                  XVIII.

              	
                46

              
	 	 	 	 
	 	
                18.1

              	
                Purchase
                  of the Leased Property; Rights of Lessee Prior to Closing.

              	
                46

              
	 	 
	
                ARTICLE
                  XIX

              	
                47

              
	 	 	 	 
	 	
                19.1

              	
                Renewal
                  Terms

              	
                47

              
	 	
                19.2

              	
                Lessor's
                  Rights of Renewal and Early Termination

              	
                47

              
	 	 
	
                ARTICLE
                  XX

              	
                48

              
	 	 	 	 
	 	
                20.1

              	
                Holding
                  Over

              	
                48

              
	 	 
	
                ARTICLE
                  XXI

              	
                48

              
	 	 	 	 
	 	
                21.1

              	
                Letters
                  of Credit

              	
                48

              
	 	
                21.2

              	
                Times
                  for Obtaining Letters of Credit

              	
                49

              
	 	
                21.3

              	
                Amounts
                  for Letters of Credit

              	
                49

              
	 	
                21.4

              	
                Uses
                  of Letters of Credit

              	
                49

              
	 	 
	
                ARTICLE
                  XXII.

              	
                50

              
	 	 	 	 
	 	
                22.1

              	
                Risk
                  of Loss

              	
                50

              
	 	 
	
                ARTICLE
                  XXIII.

              	
                50

              
	 	 	 	 
	 	
                23.1

              	
                General
                  Indemnification

              	
                50

              


      

       

      
        
          
          

        

        
          iii

          
            

          

        

        
          
          

        

      

       

      
        	
                ARTICLE
                  XXIV

              	
                51

              
	 	 	 	 
	 	
                24.1

              	
                Transfers.

              	
                51

              
	 	 
	
                ARTICLE
                  XXV.

              	
                60

              
	 	 	 	 
	 	
                25.1

              	
                Officer's
                  Certificates and Financial Statements

              	
                60

              
	 	 
	
                ARTICLE
                  XXVI

              	
                62

              
	 	 	 	 
	 	
                26.1

              	
                Lessor's
                  Right to Inspect and Show the Leased Property

              	
                62

              
	 	 
	
                ARTICLE
                  XXVII.

              	
                62

              
	 	 	 	 
	 	
                27.1

              	
                No
                  Waiver

              	
                62

              
	 	 
	
                ARTICLE
                  XXVIII

              	
                62

              
	 	 	 	 
	 	
                28.1

              	
                Remedies
                  Cumulative

              	
                62

              
	 	 
	
                ARTICLE
                  XXIX

              	
                63

              
	 	 	 	 
	 	
                29.1

              	
                Acceptance
                  of Surrender

              	
                63

              
	 	 
	
                ARTICLE
                  XXX

              	
                63

              
	 	 	 	 
	 	
                30.1

              	
                No
                  Merger

              	
                63

              
	 	 
	
                ARTICLE
                  XXXI

              	
                63

              
	 	 	 	 
	 	
                31.1

              	
                Conveyance
                  by Lessor

              	
                63

              
	 	
                31.2

              	
                New
                  Lease

              	
                63

              
	 	 
	
                ARTICLE
                  XXXII

              	
                65

              
	 	 	 	 
	 	
                32.1

              	
                Quiet
                  Enjoyment

              	
                65

              
	 	 
	
                ARTICLE
                  XXXIII

              	
                65

              
	 	 	 	 
	 	
                33.1

              	
                Notices

              	
                65

              
	 	 
	
                ARTICLE
                  XXXIV

              	
                66

              
	 	 	 	 
	 	
                34.1

              	
                Appraiser

              	
                66

              
	 	 
	
                ARTICLE
                  XXXV

              	
                66

              
	 	 	 	 
	 	
                35.1

              	
                Lessee’s
                  Option to Purchase the Leased Property

              	
                66

              
	 	
                35.2

              	
                Defaults

              	
                67

              
	 	
                35.3

              	
                Escrow
                  Provisions

              	
                69

              
	 	
                35.4

              	
                Assurances

              	
                70

              


      

       

      
        
          
          

        

        
          iv

          
            

          

        

        
          
          

        

      

       

      
        	
                ARTICLE
                  XXXVI

              	
                70

              
	 	 	 	 
	 	
                36.1

              	
                Lessor
                  May Grant Liens

              	
                70

              
	 	
                36.2

              	
                Attornment

              	
                71

              
	 	 
	
                ARTICLE
                  XXXVII.

              	
                71

              
	 	 	 	 
	 	
                37.1

              	
                Hazardous
                  Substances

              	
                71

              
	 	
                37.2

              	
                Notices

              	
                71

              
	 	
                37.3

              	
                Remediation

              	
                71

              
	 	
                37.4

              	
                Indemnity

              	
                72

              
	 	
                37.5

              	
                Environmental
                  Inspection

              	
                73

              
	 	 
	
                ARTICLE
                  XXXVIII.

              	
                73

              
	 	 	 	 
	 	
                38.1

              	
                Memorandum
                  of Lease

              	
                73

              
	 	 
	
                ARTICLE
                  XXXIX

              	
                73

              
	 	 	 	 
	 	
                39.1

              	
                Sale
                  of Assets

              	
                73

              
	 	 
	
                ARTICLE
                  XL

              	
                74

              
	 	 	 	 
	 	
                40.1

              	
                Subdivision

              	
                74

              
	 	 
	
                ARTICLE
                  XLI

              	
                74

              
	 	 	 	 
	 	
                41.1

              	
                Authority

              	
                74

              
	 	 
	
                ARTICLE
                  XLII

              	
                74

              
	 	 	 	 
	 	
                42.1

              	
                Attorneys'
                  Fee

              	
                74

              
	 	 
	
                ARTICLE
                  XLIII.

              	
                75

              
	 	 	 	 
	 	
                43.1

              	
                Brokers

              	
                75

              
	 	 
	
                ARTICLE
                  XLIV.

              	
                75

              
	 	 	 	 
	 	
                44.1

              	
                Submission
                  to Arbitration

              	
                75

              
	 	 
	
                ARTICLE
                  XLV

              	
                76

              
	 	 	 	 
	 	
                45.1

              	
                Miscellaneous

              	
                76

              
	 	 
	
                ARTICLE
                  XLVI.

              	
                81

              
	 	 	 	 
	 	
                46.1

              	
                Restatement
                  of Original Leases

              	
                81

              
	 	
                46.2

              	
                Original
                  Guaranties

              	
                82

              


      

       

      
        
          
          

        

        
          v

          
            

          

        

        
          
          

        

      

       

      
        	 	 
	
                ARTICLE
                  XLVII

              	
                82

              
	 	 	 	 
	 	
                47.1

              	
                Provisions
                  Relating to Master Lease

              	
                82

              
	 	
                47.2

              	
                Treatment
                  of Lease

              	
                82

              
	 	 
	
                ARTICLE
                  XLVIII.

              	
                82

              
	 	 	 	 
	 	
                48.1

              	
                Radon
                  Gas. Radon is a naturally occurring radioactive gas that, when
                  it has
                  accumulated in a building in sufficient quantities, may present
                  health
                  risks to persons who are exposed to it over time. Levels of radon
                  that
                  exceed federal and state guidelines have been found in buildings
                  in
                  Florida. Additional information regarding radon and radon testing
                  may be
                  obtained from your county public health unit

              	
                82

              


      

      


       

      
        	
                Exhibits:

              	 	 
	 	 	 
	
                Exhibit
                  A

              	 	
                Legal
                  Description of the Land

              
	
                Exhibit
                  B

              	 	
                List
                  of Lessor's Personal Property

              
	
                Exhibit
                  C

              	 	
                Description
                  of Facilities and Certain Material Terms

              
	
                Exhibit
                  D

              	 	
                Form
                  of Letter of Credit

              
	
                Exhibit
                  E

              	 	
                [Intentionally
                  Omitted]

              
	
                Exhibit
                  F

              	 	
                Original
                  Leases

              


      

       

      
        
          
          

        

        
          vi

          
            

          

        

        
          
          

        

      


      AMENDED
        AND RESTATED MASTER LEASE

       

      THIS
        AMENDED AND RESTATED MASTER LEASE ("Lease") is dated as of the 20th day of
        April, 2005
        (the "Restatement Date"), and is among HEALTH CARE PROPERTY INVESTORS, INC.,
        a
        Maryland corporation, and WESTMINSTER HCP, LLC, a Delaware limited liability
        company (as their interests may appear, "Lessor") and LH ASSISTED LIVING,
        LLC, a
        Delaware limited liability company, SUMMERVILLE AT COBBCO, INC., a California
        corporation, SUMMERVILLE AT HILLSBOROUGH, L.L.C., a New Jersey limited liability
        company, SUMMERVILLE AT OCOEE, INC., a Delaware corporation, SUMMERVILLE
        AT PORT
        ORANGE, INC., a Delaware corporation, SUMMERVILLE AT PRINCE WILLIAM, INC.,
        a
        Delaware corporation, SUMMERVILLE AT STAFFORD, L.L.C., a New Jersey limited
        liability company, SUMMERVILLE AT VOORHEES, L.L.C., a New Jersey limited
        liability company, and SUMMERVILLE AT WESTMINSTER, INC., a Maryland corporation
        (collectively, and jointly and severally, "Lessee").

       

      ARTICLE
        I. 

       

      1.1    Leased
        Property; Term

       

      Upon
        and
        subject to the terms and conditions hereinafter set forth, Lessor leases
        to
        Lessee and Lessee leases from Lessor all of Lessor's rights and interests
        in and
        to the following with respect to each Facility (as defined below) (collectively
        the "Leased Property"):

       

      (a)           the
        real property or properties described in Exhibit A attached hereto
        (collectively, the "Land");

       

      (b)           all
        buildings, structures, Fixtures (as hereinafter defined) and other improvements
        of every kind now or hereafter located on the Land including, alleyways and
        connecting tunnels, sidewalks, utility pipes, conduits and lines (on-site
        and
        off-site to the extent Lessor has obtained any interest in the same), parking
        areas and roadways appurtenant to such buildings and structures and Capital
        Additions funded by Lessor of each such Facility (collectively, the "Leased
        Improvements");

       

      (c)            all
        easements, rights and appurtenances relating to the Land and the Leased
        Improvements (collectively, the "Related Rights");

       

      (d)            all
        equipment, machinery, fixtures, and other items of real and/or personal
        property, including all components thereof, now and hereafter located in,
        on or
        used in connection with and permanently affixed to or incorporated into the
        Leased Improvements, including all furnaces, boilers, heaters, electrical
        equipment, heating, plumbing, lighting, ventilating, refrigerating,
        incineration, air and water pollution control, waste disposal, air-cooling
        and
        air-conditioning systems, apparatus, sprinkler systems, fire and theft
        protection equipment, and built-in oxygen and vacuum systems, all of which,
        to
        the greatest extent permitted by law, are hereby deemed to constitute real
        estate, together with all replacements, modifications, alterations and additions
        thereto (collectively, the "Fixtures"); and


      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      


      (e)             the
        machinery, equipment, furniture and other personal property described on
        Exhibit
        B attached hereto, together with all replacements and substitutes therefor
        (collectively, "Lessor's Personal Property").

       

      SUBJECT,
        HOWEVER, to the easements, encumbrances, covenants, conditions and restrictions
        and other matters which affect the Leased Property of each Facility as of
        (a)
        with respect to the Group 1 Facilities and Group 2 Facilities, the Original
        Lease Commencement Date and (b) with respect to the Group 3 Facilities, the
        Restatement Date, with respect to each portion of the Leased Property of
        such
        Facility or which are created thereafter as permitted under the Original
        Leases
        or hereunder to have and to hold for (1) a fixed term with respect to each
        Facility (with respect to each Facility, the "Fixed Term") commencing on
        the
        Restatement Date and ending at 11:59 p.m. Los Angeles time on the applicable
        Expiration Date (as defined below), and (2) the Extended Terms provided for
        in
        Article XIX unless this Lease is earlier terminated as hereinafter
        provided.

       

      ARTICLE
        II.

       

      2.1             Definitions.
        For all purposes of this Lease, except as otherwise expressly provided
        or
        unless the context otherwise requires, (i) the terms defined in this Article
        have the meanings assigned to them in this Article and include the plural
        as
        well as the singular; (ii) all accounting terms not otherwise defined herein
        have the meanings assigned to them in accordance with GAAP as at the time
        applicable; (iii) all references in this Lease to designated "Articles,"
        "Sections" and other subdivisions are to the designated Articles, Sections
        and
        other subdivisions of this Lease; (iv) the word "including" shall have the
        same
        meaning as the phrase "including, without limitation," and other similar
        phrases; and (v) the words "herein," "hereof' and "hereunder" and other similar
        words refer to this Lease as a whole and not to any particular Article, Section
        or other subdivision:

       

      Additional
        Charges: As defined in Article III.

       

      Affiliate:
        Any Person which, directly or indirectly (including through one or more
        intermediaries), controls or is controlled by or is under common control
        with
        any other Person, including any Subsidiary of a Person. For purposes of this
        definition, the definition of "Controlling Person" below, and Article XXIV
        below, the term "control" (including the correlative meanings of the terms
        "controlled by" and "under common control with"), as used with respect to
        any
        Person, shall mean the possession, directly or indirectly (including through
        one
        or more intermediaries), of the power to direct or cause the direction of
        the
        management and policies of such Person, through the ownership of voting
        securities, partnership interests or other equity interests. Without limiting
        the generality of the foregoing, when used with respect to any corporation,
        the
        term "Affiliate" shall also include (i) any Person which owns, directly or
        indirectly (including through one or more intermediaries), Fifty Percent
        (50%)
        or more of any class of voting security or equity interests of such corporation,
        (ii) any Subsidiary of such corporation and (iii) any Subsidiary of a Person
        described in clause (i).

       

      Allocated
        Initial Investment: With respect to each Facility, the "Allocated Initial
        Investment" allocated to such Facility as set forth on Exhibit C attached
        hereto.


      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      


      Allocated
        Minimum Rent: With respect to each Facility, the amount of Minimum Rent
        allocated to such Facility as set forth on Exhibit C attached hereto
        (subject to increase as set forth in Article III).

       

      Allocated
        Value: As defined in the definition of Transfer Consideration in this
        Article II and as further determined in accordance with the appraisal procedures
        set forth in Article XXXIV.

       

      Annual
        Minimum Capital Project Amount: With respect to each Group 3 Facility,
        during each Lease Year with respect to such Group 3 Facility, the following
        amounts:

       

      (i)            With
        respect to the Hillsborough Facility, Thirty Thousand Eight Hundred Dollars
        ($30,800.00).

       

      (ii)            With
        respect to the Manahawkin Facility, Thirty Thousand Eight Hundred Dollars
        ($30,800.00).

       

      (iii)            With
        respect to the Ocoee Facility, Thirty-Four Thousand Dollars
        ($34,000.00).

       

      (iv)            With
        respect to the Port Orange Facility, Thirty-Four Thousand Dollars
        ($34,000.00).

       

      (v)            With
        respect to the Torrington Facility, Twenty-Seven Thousand Two Hundred Dollars
        ($27,200.00).

       

      Notwithstanding
        the foregoing, Lessor and Lessee acknowledge that the initial Annual Minimum
        Capital Project Amount for each Group 3 Facility represents an amount equal
        to
        (A) the number of licensed units located at such Group 3 Facility times
(B) Four Hundred Dollars ($400.00). In the event that the number
        of licensed
        units for any Group 3 Facility is increased or decreased in accordance with
        the
        terms of this Lease, the Allocated Minimum Capital Project Amount for such
        Group
        3 Facility shall be increased, or decreased, as applicable, by an amount
        equal
        to (1) the number of such licensed units increased or decreased at such Group
        3
        Facility times (2) Four Hundred Dollars ($400.00).

       

      Annual
        Minimum Capital Project Amount Overage: With respect to each Group 3
        Facility for any Lease Year, an amount equal to (i) the sum of (a) the Capital
        Project Costs incurred and paid by Lessee in funding Capital Projects for
        each
        Group 3 Facility in the immediately preceding two (2) Lease Years and for
        which
        Lessor has received paid invoices, receipts or other commercially reasonable
        evidence or supporting information as is customary to evidence such
        expenditures, verifying the cost and payment of funding such Capital Projects,
        and an Officer's Certificate certifying that the applicable item(s) of Capital
        Projects have been completed, less (b) the amounts disbursed by Lessor to
        Lessee
        from any Replacement Reserve on account of such Capital Projects to such
        Group 3
        Facility in accordance with the terms of Section 9.3.1, in excess of (ii)
        the
        Annual Minimum Capital Project Amount for such Group 3 Facility for such
        prior
        two (2) Lease Year period.

       

      Appraiser:
        As defined in Article XXXIV.


      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      


      Appreciation
        Amount: With respect to any Group 1 Facility, the Fair Market Value of such
        Facility less the Minimum Repurchase Price for such Facility.

       

      Award:
        All compensation, sums or anything of value awarded, paid or received
        on a
        total or partial Condemnation.

       

      Bankruptcy
        Code: The United Stated Bankruptcy Code (11 U.S.C. § 101 et seq.), and any
        successor statute or legislation thereto.

       

      Base
        Period: The period commencing on that date which is eighteen (18) months
        prior to the date any appraisal of any Facility is made pursuant to the
        provisions of Article XXXIV and ending on the date which is six (6) months
        prior
        to the date any such appraisal of such Facility is made.

       

      BLS:
        Bureau of Labor Statistics, U.S. Department of Labor.

       

      Business
        Day: Each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day
        on which national banks in the City of New York, New York are authorized,
        or
        obligated, by law or executive order, to close.

       

      Capital
        Additions: With respect to any Facility, one or more new buildings, or one
        or more additional structures annexed to any portion of any of the Leased
        Improvements of such Facility, or the material expansion of existing
        improvements, which are constructed on any parcel or portion of the Land
        of such
        Facility, during the Term, including construction of a new wing or new story,
        or
        the renovation of existing improvements on the Leased Property of such Facility
        in order to provide a functionally new facility needed to provide services
        not
        previously offered in such Facility.

       

      Capital
        Addition Costs: The costs of any Capital Addition made to the Leased
        Property whether paid for by Lessee or Lessor, including (i) all permit fees
        and
        other costs imposed by any governmental authority, the cost of site preparation,
        the cost of construction including materials and labor, the cost of supervision
        and related design, engineering and architectural services, the cost of any
        fixtures, and if and to the extent approved by Lessor, the cost of construction
        financing; (ii) fees paid to obtain necessary licenses and certificates;
        (iii)
        if and to the extent approved by Lessor in writing and in advance, the cost
        of
        any land contiguous to the Leased Property which is to become a part of the
        Leased Property purchased for the purpose of placing thereon the Capital
        Addition or any portion thereof or for providing means of access thereto,
        or
        parking facilities therefor, including the cost of surveying the same; (iv)
        the
        cost of insurance, real estate taxes, water and sewage charges and other
        carrying charges for such Capital Addition during construction; (v) the cost
        of
        title insurance; (vi) reasonable fees and expenses of legal counsel; (vii)
        filing, registration and recording taxes and fees; (viii)
        documentary stamp and similar taxes; and (ix) all reasonable costs and expenses
        of Lessor and any Person which has committed to finance the Capital Addition,
        including (a) the reasonable fees and expenses of their respective legal
        counsel; (b) printing expenses; (c) filing, registration and recording taxes
        and
        fees; (d) documentary stamp and similar taxes; (e) title insurance charges
        and
        appraisal fees; (f) rating agency fees; and (g) commitment fees charged by
        any
        Person advancing or offering to advance any portion of the financing for
        such
        Capital Addition.


      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

      Capital
        Project: Repairs and replacements to the Leased Property, or any portion
        thereof, which are categorized under GAAP as a capital expense and not as
        an
        operating expense; provided, however, that in no event shall the term "Capital
        Project" be deemed to include any Capital Additions.

       

      Capital
        Project Costs: All out-of-pocket costs reasonably incurred by Lessee in
        connection with a Capital Project, excluding, however, any amounts that are
        financed by Lessee and secured by a lien on the Personal Property relating
        thereto.

       

      Cash
        Flow: With respect to each Facility, the net income from such Facility,
        determined on the basis of GAAP applied on a consistent basis, plus the sum
        of
        (i) depreciation and amortization expense; plus (ii) Allocated Minimum Rent
        payable hereunder for such Facility; plus (iii) management fees for such
        Facility; less the sum of (y) a management fee allowance of Five Percent
        (5%) of
        Gross Revenues for such Facility during the corresponding period plus (z)
        an
        annual Two Hundred Dollar ($200) per unit reserve for maintenance and other
        contingent expenses for such Facility, pro-rated for the corresponding
        period.

       

      Cash
        Flow Coverage: With respect to each Facility, for any period, calculated as
        of the last day of the period, the ratio of Cash Flow for such Facility
        attributable to such period to the total Allocated Minimum Rent payable for
        such
        period under this Lease.

       

      Close
        of Escrow: As defined in Article )00(V.

       

      Code:
        The Internal Revenue Code of 1986, as amended.

       

      Commercial
        Occupancy Arrangement: Any commercial (as opposed to resident or patient)
        Occupancy Arrangement.

       

      Collateral:
        As defined in Section 16.10.1.

       

      Condemnation:
        The exercise of any governmental power, whether by legal proceedings
        or
        otherwise, by a Condemnor or a voluntary sale or transfer by Lessor to any
        Condemnor, either under threat of condemnation or while legal proceedings
        for
        condemnation are pending.

       

      Condemnor:
        Any public or quasi-public authority, or private corporation or individual,
        having the power of Condemnation.

       

      Consolidated
        Financials: For any fiscal year or other accounting period for any Person
        and its consolidated Subsidiaries, statements of earnings and retained earnings
        and of changes in financial position for such period and for the period from
        the
        beginning of the respective fiscal year to the end of such period and the
        related balance sheet as at the end of such period, together with the notes
        thereto, all in reasonable detail and setting forth in comparative form the
        corresponding figures for the corresponding period in the preceding fiscal
        year,
        and prepared in accordance with GAAP.


      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      


      Consolidated
        Net Worth: At any time, the sum of the following for any Person and its
        consolidated Subsidiaries, on a consolidated basis determined in accordance
        with
        GAAP:

       

      (i)            the
        amount of capital or stated capital (after deducting the cost of any shares
        held
        in its treasury), plus

       

      (ii)            the
        amount of capital surplus and retained earnings (or, in the case of a capital
        surplus or retained earnings deficit, minus the amount of such deficit),
        minus

       

      (iii)            the
        sum of the following (without duplication of deductions in respect of items
        already deducted in arriving at surplus and retained earnings): (a) unamortized
        debt discount and expense; and (b) any write-up in book value of assets
        resulting from a revaluation thereof subsequent to the most recent Consolidated
        Financials prior to the date hereof, excluding, however, any (i) net write-up
        in
        value of foreign currency in accordance with GAAP, (ii) write-up resulting
        from
        a reversal of a reserve for bad debts or depreciation, and (iii) write-up
        resulting from a change in methods of accounting for inventory.

       

      Controlling
        Person: Any (i) Person(s) which, directly or indirectly (including through
        one or more intermediaries), controls Lessee and would be deemed an Affiliate
        of
        Lessee, including any partners, shareholders, principals, members, trustees
        and/or beneficiaries of any such Person(s) to the extent the same control
        Lessee
        and would be deemed an Affiliate of Lessee, and (ii) Person(s) which controls,
        directly or indirectly (including through one or more intermediaries), any
        other
        Controlling Person(s) and which would be deemed an Affiliate of any such
        Controlling Person(s).

       

      Cost
        of Living Index: The Consumer Price Index for All Urban Consumers, U.S. City
        Average (1982-1984
        = 100), published by the BLS, or such other renamed index. If the BLS
        changes the publication frequency of the Cost of Living Index so that a Cost
        of
        Living Index is not available to make a cost-of-living adjustment as specified
        herein, the cost-of-living adjustment shall be based on the percentage
        difference between the Cost of Living Index for the closest preceding month
        for
        which a Cost of Living Index is available and the Cost of Living Index for
        the
        comparison month as required by this Lease. If the BLS changes the base
        reference period for the Cost of Living Index from 1982-84
        =
        100, the cost-of-living adjustment shall be determined with the use of
        such conversion formula or table as may be published by the BLS. If the BLS
        otherwise substantially revises, or ceases publication of the Cost of Living
        Index, then a substitute index for determining cost-of-living adjustments,
        issued by the BLS or by a reliable governmental or other nonpartisan
        publication, shall be reasonably selected by Lessor.

       

      County:
        The County or Township in which the Leased Property is located.

       

      CPI
        Increase: The percentage increase, if any, in (i) the Cost of Living Index
        published for the month which is two (2)
        months prior to the commencement of the applicable Lease Year, over
        (ii)
        the Cost of Living Index published for the month which is fourteen (14)
        months prior to the commencement of the applicable Lease
        Year.

       

      Date
        of Taking: The date the Condemnor has the right to possession of the
        property being condemned.


      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      


      Deeds:
        As defined in the Group 3 Facility Contract of Acquisition. 

       

      Environmental
        Costs: As defined in Article XXXVII.

       

      Environmental
        Laws: Environmental Laws shall mean any and all federal, state, municipal
        and local laws, statutes, ordinances, rules, regulations, guidances, policies,
        orders, decrees, judgments, whether statutory or common law, as amended from
        time to time, now or hereafter in effect, or promulgated, pertaining to the
        environment, public health and safety and industrial hygiene, including the
        use,
        generation, manufacture, production, storage, release, discharge, disposal,
        handling, treatment, removal, decontamination, clean-up, transportation or
        regulation of any Hazardous Substance, including the Clean Air Act, the Clean
        Water Act, the Toxic Substances Control Act, the Comprehensive Environmental
        Response Compensation and Liability Act, the Resource Conservation and Recovery
        Act, the Federal Insecticide, Fungicide, Rodenticide Act, the Safe Drinking
        Water Act and the Occupational Safety and Health Act.

       

      Escrow:
        As defined in Article XXXV. 

       

      Escrow
        Holder: As defined in Article XXXV. 

       

      Event
        of Default: As defined in Article XVI.

       

      Expiration
        Date: With respect to each Facility, the expiration date set forth on
Exhibit C attached hereto.

       

      Extended
        Term(s): With respect to each Facility, as defined in Article XIX and set
        forth on Exhibit C attached hereto.

       

      Facility:
        Each facility being (and to be) operated or proposed to be operated on,
        the
        Leased Property and any Capital Additions, as more particularly described
        on
Exhibit C  attached hereto.

       

      Facility
        Mortgage: As defined in Article XIII. 

       

      Facility
        Mortgagee: As defined in Article XIII.

       

      Facility
        Operating Deficiency: A deficiency in the conduct of the operation of any
        Facility which, in the reasonable determination of Lessor, if not corrected
        within a reasonable time, would have the likely effect of jeopardizing such
        Facility's licensure or certification under government reimbursement
        programs.

       

      Fair
        Market Rental:

       

      (a)            With
        respect to the Group 1 Facilities, the higher of the following (including
        any
        appropriate periodic escalations therein) determined in accordance with the
        appraisal procedures set forth in Article XXXIV and this definition: (i)
        the
        fair market rental value of the Leased Property and all Capital Additions
        of
        such Facility, or applicable portion(s) thereof, based upon the greater of
        (A)
        the Minimum Repurchase Price for such Facility and (B) Lessor's Shared
        Appreciation Purchase Price for such Facility, multiplied by the then current
        lease rate available in the open market for sale-leaseback transactions of
        similar facilities, and (ii) the fair market rental value of the Leased Property
        and all Capital Additions of such Facility, or applicable portion(s) thereof,
        assuming the same is exposed on the open market at the time of the appraisal
        and
        taking into account, among other relevant factors, the income generated from
        the
        Leased Property and all Capital Additions of such Facility, or applicable
        portion(s) thereof, but specifically excluding brokerage commissions and
        other
        similar payments by Lessor that do not directly inure to the benefit of
        lessees.


      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

      (b)            With
        respect to the Group 2 Facilities and Group 3 Facilities, the higher of the
        following (including any appropriate periodic escalations therein) determined
        in
        accordance with the appraisal procedures set forth in Article XXXIV and this
        definition: (i) the fair market rental value of the Leased Property and all
        Capital Additions of such Facility, or applicable portion(s) thereof, based
        upon
        the Fair Market Value thereof multiplied by the then current lease rate
        available in the open market for sale-leaseback transactions of similar
        facilities, and (ii) the fair market rental value of the Leased Property
        and all
        Capital Additions of such Facility, or applicable portion(s) thereof, assuming
        the same is exposed on the open market at the time of the appraisal and taking
        into account, among other relevant factors, the income generated from the
        Leased
        Property and all Capital Additions of such Facility, or applicable portion(s)
        thereof, but specifically excluding brokerage commissions and other Lessor
        payments that do not directly inure to the benefit of lessees.

       

      Fair
        Market Value: With respect to each Facility, the fair market value of the
        Leased Property and all Capital Additions of such Facility, or applicable
        portion(s) thereof, determined in accordance with the appraisal procedures
        set
        forth in Article XXXIV and this definition. Fair Market Value shall be the
        higher value obtained by assuming that the Leased Property and all Capital
        Additions of such Facility is either unencumbered by this Lease or encumbered
        by
        this Lease. Fair Market Value shall also be the higher value obtained by
        valuing
        the Leased Property and all Capital Additions of such Facility for their
        highest
        and best use or as a fully-permitted Facility operated in accordance with
        the
        provisions of this Lease. In addition, the following specific matters shall
        be
        factored in or out, as appropriate, in determining Fair Market
        Value:

       

      (i)            The
        negative value of (a) the cost of any maintenance or other items of repair
        or
        replacement of the Leased Property or any Capital Additions of such Facility
        reasonably required to restore such Leased Property or Capital Additions
        to the
        condition required pursuant to Section 9.1.1 below, (b) any then current
        or
        prior licensure or certification violations and/or admissions holds and (c)
        any
        other breach or failure of Lessee to perform or observe its obligations
        hereunder shall not be taken into account; rather, the Leased Property and
        all
        Capital Additions of such Facility, and every part thereof, shall be deemed
        to
        be in the condition required by this Lease (i.e., good order and repair)
        and
        Lessee shall at all times be deemed to have operated such Facility in compliance
        with and to have performed all obligations of the Lessee under this
        Lease.

       

      (ii)            The
        occupancy level of the applicable Facility shall be deemed to be the greatest
        of
        (a) the occupancy level as of the date any appraisal of such Facility is
        performed in accordance with the provisions of Article XXXIV, (b) the average
        occupancy level during the Base Period, or (c) the average occupancy level
        for
        facilities similar to such Facility in the same general geographic area as
        of
        the date any appraisal of such Facility is performed in accordance with the
        provisions of Article XXXIV.


      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

      (iii)            If
        the applicable Facility's Primary Intended Use includes a mixed use, then
        whichever of the following produces the highest positive value shall be taken
        into account: (a) the resident mix, patient mix, case mix, and/or diagnostic
        related group or acuity mix, as applicable, as of the date any appraisal
        of such
        Facility is performed in accordance with the provisions of Article XXXIV,
        (b)
        the average of such mix during the Base Period, or (c) the average of such
        mix
        for facilities similar to such Facility in the same general geographic area
        as
        of the date any appraisal of such Facility is performed in accordance with
        the
        provisions of Article XXXIV.

       

      Finally,
        in determining Fair Market Value in connection with a sale or transfer of
        the
        Leased Property and all Capital Additions of any Facility to Lessee pursuant
        to
        the terms of this Lease, the positive or negative effect on the value of
        the
        Leased Property and all Capital Additions of such Facility attributable to
        such
        factors as the interest rate, amortization schedule, maturity date, prepayment
        penalty and other terms and conditions of any encumbrance placed thereon
        by
        Lessor which will not be removed at or prior to the date of such sale or
        transfer shall be taken into account.

       

      Fairfield
        Facility: That certain Facility located in Fairfield, California.


       

      Fixed
        Term: As defined in Article I.

       

      Fixtures:
        With respect to each Facility, the Fixtures (as defined in Article I)
        of
such
        Facility.

       

      GAAP:
        Generally accepted accounting principles.

       

      Gross
        Revenues: With respect to each Facility, all revenues received or receivable
        from or by reason of the operation of such Facility or any other use of the
        Leased Property of such Facility, Lessee's Personal Property and all Capital
        Additions, including all revenues received or receivable for the use of or
        otherwise attributable to units, rooms, beds and other facilities provided,
        meals served, services performed (including ancillary services), space or
        facilities subleased or goods sold on or from the Leased Property and all
        Capital Additions of such Facility; provided, however, that Gross Revenues
        shall
        not include:

       

      (i)            bad
        debt in accordance with GAAP;

       

      (ii)            non-operating
        revenues such as interest income or income from the sale of assets not sold
        in
        the ordinary course of business; and

       

      (iii)
        federal, state or local excise taxes and any tax based upon or measured by
        such
        revenues, where any such federal, state or local excise tax is added to or
        made
        a part of the amount billed to the patient or other recipient of such services
        or goods, whether included in the billing or stated separately.


      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

       

      Gross
        Revenues for each Lease Year of such Facility shall include all cost report
        settlement amounts received in or payable during such Lease Year in accordance
        with GAAP relating to health care accounting, regardless of the year that
        such
        settlement amounts are applicable to; provided, however, that to the extent
        settlement amounts are applicable to years, or portions thereof, prior to
        the
        Restatement Date, such settlement amounts shall not be included in Gross
        Revenues for the Lease Year of such Facility in which such settlement amounts
        are received or paid. Gross Revenues shall also include the Gross Revenues
        of
        any Occupant under a Commercial Occupancy Arrangement, i.e., the Gross Revenues
        generated from the operations conducted on or from such subleased, licensed
        or
        other used or occupied portion of the Leased Property and all Capital Additions
        of such Facility shall be included directly in the Gross Revenues; provided,
        however, that the rent received or receivable by Lessee from or under such
        Commercial Occupancy Arrangement shall be excluded from Gross Revenues for
        such
        purpose.

       

      Group
        1 Facilities: Each of those Facilities identified as a Group 1 Facility on
Exhibit C attached hereto.

       

      Group
        2 Facilities: Each of those Facilities identified as a Group 2 Facility on
Exhibit C attached hereto.

       

      Group
        3 Facilities: Each of those Facilities identified as a Group 3 Facility on
Exhibit C attached hereto.

       

      Group
        3 Facility Contract of Acquisition: The agreement of even date herewith by
        and between Lessor and Lessee, or Lessee's Affiliate(s), relative to the
        acquisition by Lessor of the Leased Property of the Group 3
        Facilities.

       

      Group
        3 Facility Escalator: With respect to the Group 3 Facilities for any given
        Lease Year, an amount equal to the greater of (i) Seventy-Five Percent (75%)
        the
        applicable CPI Increase and (ii) Two and Three-Quarters Percent
        (2.75%).

       

      Group
        3 Facility Purchase Price: With respect to each Group 3 Facility, the sum of
        (a) the Minimum Repurchase Price for such Group 3 Facility, plus (b) an amount
        which, upon the closing, equals an annually compounded return equal to Three
        Percent (3%) per year on the Allocated Initial Investment for such Group
        3
        Facility accruing from and after the Restatement Date and any Capital Addition
        Costs funded by Lessor for such Group 3 Facility accruing from and after
        the
        date of funding.

       

      Group
        3 Facility Put Event Price: With respect to any Group 3 Facility, the sum of
        (a) the Minimum Repurchase Price for such Group 3 Facility, plus (b) an amount
        which, upon the closing, equals an annually compounded return equal to the
        Group
        3 Facility Escalator per year on the Allocated Initial Investment for such
        Group
        3 Facility accruing from and after the Restatement Date and any Capital Addition
        Costs funded by Lessor for such Group 3 Facility accruing from and after
        the
        date of funding.

       

      
        Guarantor.      
                Guarantor: Summerville Senior Living,
          Inc., a Delaware corporation. 

         

        Guaranty:
          The Guaranty of Obligations of even date herewith executed by 

         

        
          
            
            

          

          
            10

            
              

            

          

          
            
            

          

        

         

        Handling:
          As defined in Article XXXVII.

      

       

      Hazardous
        Substances: Collectively, any petroleum, petroleum product or byproduct or
        any substance, material or waste regulated or listed pursuant to any
        Environmental Law.

       

      HCP:
        Health Care Property Investors, Inc., a Maryland corporation.
Hillsborough Facility: That certain Facility located in Hillsborough, New
        Jersey.

       

      Impositions:
        Collectively, all taxes, including capital stock, franchise and other
        state
        taxes of Lessor (and, if Lessor is not HCP, of HCP as a result of its investment
        in Lessor), ad valorem, sales, use, single business, gross receipts, transaction
        privilege, rent or similar taxes; assessments including assessments for public
        improvements or benefits, whether or not commenced or completed prior to
        the
        date hereof and whether or not to be completed within the Term; ground rents;
        water, sewer and other utility levies and charges; excise tax levies; fees
        including license, permit, inspection, authorization and similar fees; and
        all
        other governmental charges, in each case whether general or special, ordinary
        or
        extraordinary, or foreseen or unforeseen, of every character in respect of
        the
        Leased Property, any Capital Additions and/or the Rent and all interest and
        penalties thereon attributable to any failure in payment by Lessee which
        at any
        time prior to, during or in respect of the Term hereof may be assessed or
        imposed on or in respect of or be a lien upon (i) Lessor or Lessor's interest
        in
        the Leased Property or any Capital Additions, (ii) the Leased Property, any
        Capital Additions or any parts thereof or any rent therefrom or any estate,

        right, title or interest therein, or (iii) any occupancy, operation, use
        or
        possession of, or sales from or activity conducted on or in connection with
        the
        Leased Property, any Capital Additions or the leasing or use of the Leased
        Property, any Capital Additions or any parts thereof; provided, however,
        that
        nothing contained in this Lease shall be construed to require Lessee to pay
        (a)
        any tax based on net income (whether denominated as a franchise or capital
        stock
        or other tax) imposed on Lessor or any other Person, (b) any transfer, or
        net
        revenue tax of Lessor or any other Person except Lessee and its successors,
        (c)
        any tax imposed with respect to the sale, exchange or other disposition by
        Lessor of any Leased Property, any Capital Additions or the proceeds thereof,
        or
        (d) except as expressly provided elsewhere in this Lease, any principal or
        interest on any indebtedness on the Leased Property for which Lessor is the
        obligor, except to the extent that any tax, assessment, tax levy or charge,
        of
        the type described in any of clauses (a), (b), (c) or (d) above is levied,
        assessed or imposed in lieu of or as or as a substitute for any tax, assessment,
        levy or charge which is otherwise included in this definition of an
        "Imposition."

       

      Insurance
        Requirements: The terms of any insurance policy required by this Lease and
        all requirements of the issuer of any such policy and of any insurance board,
        association, organization or company necessary for the maintenance of any
        such
        policy.

       

      Intangible
        Property: With respect to each Facility, all accounts, proceeds of accounts,
        rents, profits, income or revenues derived from the use of rooms or other
        space
        within the Leased Property of such Facility or the providing of services
        in or
        from the Leased Property and all Capital Additions of such Facility; documents,
        chattel paper, instruments, contract rights, deposit accounts, general
        intangibles, causes of action, now owned or hereafter acquired by Lessee
        (including any right to any refund of any Impositions) arising from or in
        connection with Lessee's operation or use of the Leased Property and all
        Capital
        Additions of such Facility; all licenses and permits now owned or hereinafter
        acquired by Lessee, which are necessary or desirable for Lessee's use of
        the
        Leased Property and all Capital Additions of such Facility for its Primary
        Intended Use, including, if applicable, any certificate of need or similar
        certificate; the right to use any trade name or other name associated with
        such
        Facility (excluding, however, the name "Summerville"); and any and all
        third-party provider agreements (including Medicare and
        Medicaid).


      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

       

      Land:
        With respect to each Facility, the Land (as defined in Article I) relating
        to such
        Facility.

       

      Lease:
        As defined in the preamble. 

       

      Lease
        Year:

       

      (a)            With
        respect to the Group 1 Facilities and Group 2 Facilities, the first Lease
        Year
        for such Facilities shall be the period commencing on the Restatement Date
        and
        ending on the day immediately prior to the next occurring Lease Year Reference
        Date, and each subsequent Lease Year for such Facilities shall be each period
        of
        twelve (12) full calendar months after the last day of the prior Lease Year;
        provided, however, that the last Lease Year for any Group 1 Facility or Group
        2
        Facility during the Term may be a period of less than twelve (12) full calendar
        months and shall end on the last day of the Term for such Facility.

       

      (b)            With
        respect to the Group 3 Facilities, the first Lease Year for such Facilities
        shall be the period of twelve (12) full calendar months from and after the
        Restatement Date, unless the Restatement Date is a day other than the first
        (1st) day of a calendar month, in which case the first Lease Year for such
        Facilities shall be the period commencing on the Restatement Date and ending
        on
        the last day of the eleventh (11th) month following the month in which the
        Restatement Date occurs and each subsequent Lease Year for such Facilities
        shall
        be each period of twelve (12) full calendar months after the last day of
        the
        prior Lease Year; provided, however, that the last Lease Year for any Group
        3
        Facility during the Term may be a period of less than twelve (12) full calendar
        months and shall end on the last day of the Term for such Facility.

       

      Lease
        Year Reference Date: With respect to each Group 1 Facility and Group 2
        Facility, the Lease Year Reference Date set forth on Exhibit C attached
        hereto.

       

      Leased
        Improvements: With respect to each Facility, the Leased Improvements (as
        defined in Article I) of such Facility.

       

      Leased
        Property: With respect to each Facility, the Leased Property (as defined in
        Article I) of such Facility.

       

      Legal
        Requirements: All federal, state, county, municipal and other governmental
        statutes, laws (including common law and Environmental Laws), rules, policies,
        guidance, codes, orders, regulations, ordinances, permits, licenses, covenants,
        conditions, restrictions, judgments, decrees and injunctions, including those
        affecting any of the Leased Property, Lessee's Personal Property and all
        Capital
        Additions or the construction, use or alteration thereof, whether now or
        hereafter enacted and in force, including any which may (i) require repairs,
        modifications or alterations in or to the Leased Property, Lessee's Personal
        Property and all Capital Additions, (ii) in any way adversely affect the
        use and
        enjoyment thereof, or (iii) regulate the transport, handling, use, storage
        or
        disposal or require the cleanup or other treatment of any Hazardous
        Substance.


      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

       

      Lessee:
        As defined in the preamble.

       

      Lessee's
        Personal Property: With respect to each Facility, the Personal Property
        other than Lessor's Personal Property, allocable or relating to such
        Facility.

       

      Lessor:
        As defined in the preamble.

       

      Lessor's
        Personal Property: With respect to each Facility, Lessor's Personal Property
        (as defined in Article I) allocable or relating to such Facility.

       

      Lessor's
        Preferred Appreciation Amount: With respect to each Group 1 Facility, an
        amount which, upon the closing, equals an annually compounded return equal
        to
        Two and Fifty One-Hundredths Percent (2.50%) per year on the sum of (i) the
        Allocated Initial Investment accruing from and after the applicable Original
        Lease Commencement Date for such Group 1 Facility and (ii) all other Capital
        Addition Costs funded by Lessor for such Group 1 Facility accruing from and
        after the date of funding.

       

      Lessor's
        Shared Appreciation Amount: With respect to each Group 1 Facility, an amount
        equal to (i) Lessor's Preferred Appreciation Amount plus (ii) Fifty Percent
        (50%) of the sum of (a) the Appreciation Amount, less (b) Lessor's Preferred
        Appreciation Amount.

       

      Lessor's
        Shared Appreciation Purchase Price: With respect to each Group 1 Facility,
        an amount equal to the Minimum Repurchase Price plus Lessor's Shared
        Appreciation Amount.

       

      Letter
        of Credit Amount: As defined in Section 21.3.

       

      Letter
        of Credit Date: As defined in Section 21.2.

       

      Manahawkin
        Facility: That certain Facility located in Manahawkin, New Jersey. Master
        Sublease: As defined in Article XXIV.

       

      Minimum
        Rent: The sum of Allocated Minimum Rent for all of the
        Facilities.

       

      Minimum
        Repurchase Price: At any given time with respect to a Facility, the sum of
        (i) the Allocated Initial Investment for such Facility plus (ii) all Capital
        Addition Costs funded by Lessor for such Facility.

       

      New
        Lease: As defined in Section 31.2.1.


      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      


      New
        Lease Effective Date: As defined in Section 31.2.1.

       

      Occupancy
        Arrangement: Any sublease, license or other arrangement with a Person for
        the right to use, occupy or possess any portion of the Leased Property and/or
        any Capital Additions.

       

      Occupant:
        Any Person under an Occupancy Arrangement. 

       

      Ocoee
        Facility: That certain Facility located in Ocoee, Florida.

       

      Officer's
        Certificate: A certificate of Lessee signed by an officer authorized to so
        sign by its board of directors, by-laws or equivalent governing documents
        or
        managers.

       

      Ontario
        Facility: That certain Facility located in Ontario, California.


       

      Opening
        Deposit: As defined in Article XXXV.

       

      Original
        Guaranties: Collectively, (i) that certain Guaranty of Obligations dated
        November 5, 1997 by Granger Cobb and Tina Cobb in favor of Lessor, (ii) that
        certain Guaranty of Obligations dated November 13, 1997 by Granger Cobb and
        Tina
        Cobb in favor of Lessor, (iii) that certain Guaranty of Obligations dated
        June
        20, 1997 by Summerville Healthcare Group, Inc. in favor of Lessor, (iv) that
        certain Guaranty of Obligations dated February 11, 1998 by Summerville
        Healthcare Group, Inc. in favor of Lessor, (v) that certain Guaranty of
        Obligations dated May 26, 1998 by Summerville Healthcare Group, Inc. in favor
        of
        Lessor and (vi) that certain Guaranty of Obligations dated September 1, 1998
        by
        Summerville Healthcare Group, Inc. in favor of Lessor.

       

      Original
        Lease Commencement Date. With respect to each Group 1 Facility and Group 2
        Facility, the "Original Lease Commencement Date" as defined in the applicable
        Original Lease and as set forth on Exhibit C  attached
        hereto.

       

      Original
        Leases: Those certain leases described in Exhibit F attached hereto.


       

      Outside
        Closing Date: As defined in Article XXXV.

       

      Overdue
        Rate: On any date, a rate equal to Two Percent (2%) above the Prime Rate,
        but in no event greater than the maximum rate then permitted under applicable
        law.

       

      Payment
        Date: Any due date for the payment of the installments of Minimum Rent or
        any other sums payable under this Lease.

       

      Person:
        Any individual, corporation, partnership, joint venture, association,
        joint
        stock company, trust, unincorporated organization, government or any agency
        or
        political subdivision thereof or any other form of entity.

       

      Personal
        Property: With respect to each Facility, all machinery, furniture and
        equipment, including phone systems and computers, trade fixtures, inventory,
        supplies and other personal property used or useful in the use of the Leased
        Property and any Capital Additions of such Facility for its Primary Intended
        Use, other than Fixtures.


      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

       

      Port
        Orange Facility: That certain Facility located in Port Orange,
        Florida.

       

      Primary
        Intended Use: With respect to each Facility, the "Primary Intended Use" as
        set forth on Exhibit C attached hereto.

       

      Prime
        Rate: On any date, a rate equal to the annual rate on such date announced by
        the Bank of New York to be its prime, base or reference rate for 90-day
        unsecured loans to its corporate borrowers of the highest credit standing
        but in
        no event greater than the maximum rate then permitted under applicable law.
        If
        the Bank of New York discontinues its use of such prime, base or reference
        rate
        or ceases to exist, Lessor shall designate the prime, base or reference rate
        of
        another state or federally chartered bank based in New York to be used for
        the
        purpose of calculating the Prime Rate hereunder.

       

      Prohibited
        Area: With respect to each Facility, the "Prohibited Area" as set forth on
        Schedule 7.4.1 attached hereto.

       

      Put
        Event: An Event of Default hereunder pursuant to any of Sections 16.1(a)
        (arising out of any material default under any such other lease or other
        agreement or instrument), 16.1(c), 16.1(e) (arising out of (i) a breach or
        default by Lessee during the Term of any of its obligations or covenants
        pursuant to Sections 7.2.1, 7.2.2, 7.2.3, 7.2.5, 7.4, 37.1 or 37.2 or (ii)
        any
        other failure of Lessee to obtain and maintain all material licenses, permits
        and other authorizations to use and operate any Facility for its Primary
        Intended Use in accordance with all Legal Requirements), 16.1(j), 16.1(k)
        (arising out of a breach of any material representation or warranty of Lessee
        or
        any Guarantor in any such document), 16.1(1) and/or 16.1(o). Notwithstanding
        that Lessor and Lessee have specifically defined a "Put Event" for the limited
        purpose of setting forth the circumstances under which Lessor shall be entitled
        to the remedy set forth in Section 16.5, in no event shall this definition
        derogate the materiality of any other Event of Default (including any Event
        of
        Default which does not constitute a Put Event) or otherwise limit Lessor's
        rights and remedies upon the occurrence of any such Event of Default, including
        those rights and remedies set forth in Sections 16.2, 16.3, 16.4, 16.8, 16.9
        and/or 16.10.

       

      Renewal
        Group: Those Facilities identified in the aggregate as a Renewal Group on
Exhibit C attached hereto.

       

      Rent:
        Collectively, the Minimum Rent and Additional Charges. 

       

      Replacement
        Reserve: As defined in Section 9.3.

       

      Restatement
        Date: As defined in the preamble.

       

      Sale
        of Business: A Transfer of the type described in any of clauses (iv), (v) or
        (vi) of Section 24.1 below, unless such Transfer involves only the stock
        and/or
        assets of Lessee and Lessee has no substantial assets other than its interests
        in (a) the Leased Property and any Capital Additions pursuant to this Lease,
        (b)
        the business and operations on the Leased Property and any Capital Additions
        and
        (c) Lessee's Personal Property.


      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      


      SEC:
        Securities and Exchange Commission. 

       

      Separated
        Property: As defined in Section 31.2.

       

      Shareholder's
        Equity: With respect to any Person, the shareholder's equity of such Person
        determined on a consolidated basis in accordance with GAAP.

       

      State:
        With respect to each Facility, the State or Commonwealth in which the
        Leased
        Property for such Facility is located.

       

      Subsidiaries:
        Corporations, partnerships, limited liability companies, business trusts
        or
        other legal entities with respect to which a Person owns, directly or indirectly
        (including through one or more intermediaries), more than 50% of the voting
        stock or partnership, membership or other equity interest,
        respectively.

       

      Term:
        Collectively, the Fixed Term and any Extended Term(s), as the context
        may
        require, unless earlier terminated.

       

      Torrington
        Facility: That certain Facility located in Torrington,
        Connecticut.

       

      Transaction
        Documents: Collectively, this Lease, the Group 3 Facility Contract of
        Acquisition, the Deeds, and the Guaranty.

       

      Transfer:
        As defined in Article XXIV.


      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

      

       

      Transfer
        Consideration: With respect to any Transfer constituting a Master Sublease
        of a Transfer Consideration Facility (other than a Master Sublease entered
        into
        in connection with a Sale of Business), "Transfer Consideration" shall mean
        Fifty Percent (50%) of the positive difference, if any, between the Fair
        Market
        Rental and the Allocated Minimum Rent payable by Lessee under this Lease
        determined on a monthly basis with respect to such Transfer Consideration
        Facility, prorating such Minimum Rent, as appropriate, if less than all of
        the
        applicable Transfer Consideration Facility is Master Subleased. Fifty Percent
        (50%) of the difference shall be paid by Lessee to Lessor monthly when the
        Allocated Minimum Rent is due for such Transfer Consideration Facility;
        provided, however, that in no event shall the total Transfer Consideration
        to
        which Lessor is entitled in connection with any such Master Sublease exceed
        the
        total consideration given directly or indirectly (including through one or
        more
        intermediaries) to Lessee, to any Controlling Person(s) or to any other Person
        in exchange for, in connection with, related to or arising out of the
        transaction(s) as to which such Master Sublease is a part. With respect to
        any
        other Transfer relating to any Transfer Consideration Facility (i.e., a
        Transfer other than pursuant to a Master Sublease, but including a Master
        Sublease which is part of a Sale of Business) "Transfer Consideration" shall
        mean Fifty Percent (50%) of the sum of (a) any and all consideration given
        directly or indirectly (including through one or more intermediaries) to
        Lessee,
        to any Controlling Person(s) or to any other Persons in exchange for, in
        connection with, related to or arising out of such Transfer, less (b) the
        Net
        Book Value Adjustment (as hereinafter defined); provided, however, that if
        such
        Transfer constitutes a Sale of Business or is a Master Sublease of any Transfer
        Consideration Facility entered into in connection with a Sale of Business,
        then
        "Transfer Consideration" shall mean Fifty Percent (50%) of the Allocated
        Value
        (as hereinafter defined) of the sum of (i) any and all suchconsideration
        given
        directly or indirectly (including through one or more intermediaries) to
        Lessee,
        to any Controlling Person(s) or to any other Person in exchange for, in
        connection with, related to or arising out of such Sale of Business, less
        (ii)
        the Net Book Value Adjustment. As used herein, the term "Net Book Value
        Adjustment" shall mean the book value of any cash or cash equivalents,
        receivables and any other tangible assets of Lessee or of any Controlling
        Person(s) or other transferor(s), as the case may be, being transferred,
        conveyed or sold, directly or indirectly, in connection with such Transfer
        or
        Sale of Business, as the case may be, net of any liabilities relating to
        such
        transferred assets being assumed, directly or indirectly, by the transferee
        in
        connection with such Transfer (e.g., accounts payable, accrued vacation,
        equipment leases, etc., but specifically excluding, without limitation, the
        obligations under this Lease), all as determined in accordance with GAAP.
        As
        used herein, the term "Allocated Value" shall mean the sum of clauses (i)
        and
        (ii) above allocated to the Leased Property of the applicable Transfer
        Consideration Facility, any Capital Additions and Lessee's operations thereon
        (including any and all business, enterprise and goodwill value), determined
        by
        the appraisal procedures set forth in Article XXXIV and based upon (x) the
        present value of the then current earnings before interest, taxes, depreciation,
        amortization and rents (including Rents under this Lease) ("EBITDAR") of
        the
        applicable Transfer Consideration Facility over the remaining Term of this
        Lease
        with respect to such Transfer Consideration Facility (taking into account
        any
        unexercised Extended Term(s)), less the present value of the remaining Allocated
        Minimum Rent to be paid under this Lease for such Transfer Consideration
        Facility for such period(s), as compared to (y) the sum of the following
        with
        respect to all operations being transferred, conveyed or sold, directly or
        indirectly, in connection with a Sale of Business: (1) with respect to all
        operations conducted at leased facilities (including the applicable Transfer
        Consideration Facility), the present value of the then current EBITDAR of
        all
        such operations over the remaining terms of all such leases (taking into
        account
        any unexercised extension options thereunder), less the present value of
        the
        remaining rents to be paid under such leases for such period(s), and (2)
        with
        respect to any operations conducted at owned facilities, the EBITDAR of such
        operations capitalized at the appropriate market capitalization rate, less
        debt
        which is being assumed, directly or indirectly, by the transferee (taking
        into
        account the positive or negative value of such assumed debt attributable
        to the
        interest rate, amortization schedule, maturity date, prepayment penalties
        and
        other relevant terms thereof). As used herein, the term "consideration" shall
        mean and include money, services, property and other things of value, including
        payment of costs, cancellation or forgiveness of indebtedness, discounts,
        rebates, barter and the like. For purposes of Section 24.1.2.2 and the payment
        of Transfer Consideration to Lessor as provided in this Lease, if any such
        consideration given in exchange for, in connection with, related to or arising
        out of such Transfer is in a form other than cash (such as in kind, equity
        interests, indebtedness, earn-outs or other deferred payments, consulting
        or
        management fees, etc.), Lessor shall be entitled to receive the applicable
        Transfer Consideration on account thereof in cash based upon the present
        fair
        market value of such consideration at the time of the Transfer. Notwithstanding
        anything to the contrary contained in this Lease, Lessee shall have no
        obligation to pay Transfer Consideration in connection with any Transfer
        relating to any Facility that is not a Transfer Consideration Facility. Lessee
        acknowledges and agrees that the terms under which Lessor is entitled to
        the
        payment of Transfer Consideration pursuant to this Lease and the amount thereof
        has been freely negotiated and represents a fair and equitable division with
        Lessor of the consideration payable in connection with a Transfer taking
        into
        account, among other things, Lessor's investment in the Leased Property,
        the
        terms of this Lease and the inherent risks of owning and leasing real
        property.


      
        
          
          

        

        
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      Transfer
        Consideration Facilities: Each of those Facilities identified as a Transfer
        Consideration Facility on Exhibit C attached hereto.

       

      Unsuitable
        for Its Primary Intended Use: With respect to each Facility, a state or
        condition of such Facility such that by reason of damage or destruction or
        Condemnation, in the good faith judgment of Lessor, such Facility cannot
        be
        operated on a commercially practicable basis for its Primary Intended
        Use.

       

      ARTICLE
        III.

       

      3.1            Rent.
        From and after the Restatement Date, Lessee will pay to Lessor in lawful
        money of the United States of America which shall be legal tender for the
        payment of public and private debts, without offset or deduction, the amounts
        set forth hereinafter as Minimum Rent during the Term. Payments of Minimum
        Rent
        shall be made by wire transfer of funds initiated by Lessee to Lessor's account
        or to such other Person as Lessor from time to time may designate in writing,
        in
        advance on or before the first day of each calendar month.

       

      3.1.1    Minimum
        Rent.

       

      (a)            Subject
        to upward adjustments as provided in subsections (b), (c) and (d) below,
        for the
        period from the Restatement Date through the expiration of the first Lease
        Year,
        Lessee shall pay to Lessor as monthly "Allocated Minimum Rent" for each Facility
        the amounts allocated to and set forth opposite such Facility on Exhibit
        C  attached hereto and incorporated herein by this reference. The
        first monthly payment of Allocated Minimum Rent for each Facility shall be
        payable on the Restatement Date (prorated as to any partial calendar month
        at
        the beginning of the Term).

       

      (b)            With
        respect to the Group 1 Facilities, commencing upon the expiration of the
        first
        Lease Year for such Group 1 Facilities and upon the expiration of each Lease
        Year thereafter during the Term for such Group 1 Facilities (i.e., including
        the
        Extended Term), the monthly Allocated Minimum Rent in effect as of the
        expiration of the immediately preceding Lease Year for such Group 1 Facilities
        shall be increased by an amount equal to one-twelfth (1/12th) of the product
        of
        (i) Twenty-Five Hundredths Percent (.25%) times (ii) the Minimum Repurchase
        Price for such Group 1 Facilities.

       

      (c)            With
        respect to the Group 2 Facilities, commencing upon the expiration of the
        first
        Lease Year for the Group 2 Facilities and upon the expiration of each Lease
        Year
        thereafter during the Term for such Group 2 Facilities (including each Extended
        Term, if either), the then current monthly Allocated Minimum Rent for such
        Group
        2 Facilities for such Lease Year shall be adjusted by the applicable CPI
        Increase; provided, however, that in no event shall the monthly Allocated
        Minimum Rent for any Group 2 Facility after any such adjustment be less than
        One
        Hundred Two and One-Half Percent (102.5%) nor more than One Hundred Five
        Percent
        (105%) of the monthly Allocated Minimum Rent in effect for such Group 2 Facility
        immediately prior to such adjustment, notwithstanding the actual percentage
        change in the CPI Increase.


      
        
          
          

        

        
          18

          
            

          

        

        
          
          

        

      

       

      (d)            With
        respect to the Group 3 Facilities, commencing upon the expiration of the
        first
        Lease Year for such Group 3 Facilities and upon the expiration of each Lease
        Year thereafter during the Fixed Term for such Group 3 Facilities, the then
        current monthly Allocated Minimum Rent for such Group 3 Facilities for such
        Lease Year shall be adjusted by an amount equal to the applicable Group 3
        Facility Escalator. Upon the commencement of the first (1st) Lease
        Year of
        each Extended Term for the Group 3 Facilities, if any, the initial monthly
        Allocated Minimum Rent for each Group 3 Facility shall be equal to the greater
        of (a) the then current monthly Fair Market Rental for such Group 3 Facility
        and
        (b) the monthly Allocated Minimum Rent payable for such Group 3 Facility
        during
        the last Lease Year of the immediately preceding Term. Commencing upon the
        expiration of the first (1st) Lease
        Year of
        each Extended Term for the Group 3 Facilities, if any, and upon the expiration
        of each Lease Year thereafter during such Extended Term, the then-current
        monthly Allocated Minimum Rent for each Group 3 Facility shall be adjusted
        by an
        amount equal to the applicable Group 3 Facility Escalator.

       

      If
        any
        adjustment for any Facility provided for in subsections (b), (c) or (d) shall
        not have been made at the commencement of the Lease Year for which applicable,
        Lessee shall continue to pay monthly Allocated Minimum Rent for such Facility
        at
        the last rate applicable until Lessee receives Lessor's written notice as
        to
        such adjustment. Within ten (10) days after Lessee's receipt of Lessor's
        notice,
        Lessee shall pay to Lessor an amount equal to the new monthly Allocated Minimum
        Rent for such Facility times the number of months from the commencement
        of the then current Lease Year to the date of receipt of Lessor's notice,
        less
        the aggregate amount paid by Lessee on account of monthly Allocated Minimum
        Rent
        for such Facility for the same period. Thereafter, Lessee shall pay monthly
        Allocated Minimum Rent for such Facility for the applicable Lease Year at
        the
        new rate set forth in Lessor's notice.

       

      3.2             Additional
        Charges. In addition to the Minimum Rent, (i) Lessee shall also pay and
        discharge as and when due and payable all other amounts, liabilities,
        obligations and Impositions which Lessee assumes or agrees to pay under this
        Lease; and (ii) in the event of any failure on the part of Lessee to pay
        any of
        those items referred to in clause (i) above, Lessee shall also promptly pay
        and
        discharge every fine, penalty, interest and cost which may be added for
        nonpayment or late payment of such items (the items referred to in clauses
        (i)
        and (ii) above being referred to herein collectively as the "Additional
        Charges").

       

      3.3             Late
        Payment of Rent.

       

      (a)             LESSEE
        HEREBY ACKNOWLEDGES THAT LATE PAYMENT BY LESSEE TO LESSOR OF RENT WILL CAUSE
        LESSOR TO INCUR COSTS NOT CONTEMPLATED HEREUNDER, THE EXACT AMOUNT OF WHICH
        IS
        PRESENTLY ANTICIPATED TO BE EXTREMELY DIFFICULT TO ASCERTAIN. SUCH COSTS
        MAY
        INCLUDE PROCESSING AND ACCOUNTING CHARGES AND LATE CHARGES WHICH MAY BE IMPOSED
        ON LESSOR BY THE TERMS OF ANY LOAN AGREEMENT AND OTHER EXPENSES OF A SIMILAR
        OR
        DISSIMILAR NATURE. ACCORDINGLY, IF ANY INSTALLMENT OF RENT OTHER THAN ADDITIONAL
        CHARGES PAYABLE TO A PERSON OTHER THAN LESSOR SHALL NOT BE PAID WITHIN THREE
        (3)
        BUSINESS DAYS AFTER ITS DUE DATE, LESSEE WILL PAY LESSOR ON DEMAND A LATE
        CHARGE
        EQUAL TO THE LESSER OF (I) FIVE PERCENT (5%) OF THE AMOUNT OF SUCH INSTALLMENT
        OR (II) THE MAXIMUM AMOUNT PERMITTED BY LAW. THE PARTIES AGREE THAT THIS
        LATE
        CHARGE REPRESENTS A FAIR AND REASONABLE ESTIMATE OF THE COSTS THAT LESSOR
        WILL
        INCUR BY REASON OF LATE PAYMENT BY LESSEE. THE PARTIES FURTHER AGREE THAT
        SUCH
        LATE CHARGE IS RENT AND NOT INTEREST AND SUCH ASSESSMENT DOES NOT CONSTITUTE
        A
        LENDER OR BORROWER/CREDITOR RELATIONSHIP BETWEEN LESSOR AND LESSEE. N ADDITION,
        THE AMOUNT UNPAID, INCLUDING ANY LATE CHARGES, SHALL BEAR INTEREST AT THE
        OVERDUE RATE COMPOUNDED MONTHLY FROM THE DUE DATE OF SUCH INSTALLMENT TO
        THE
        DATE OF PAYMENT THEREOF, AND LESSEE SHALL PAY SUCH INTEREST TO LESSOR ON
        DEMAND.
        THE PAYMENT OF SUCH LATE CHARGE OR SUCH INTEREST SHALL NOT CONSTITUTE WAIVER
        OF,
        NOR EXCUSE OR CURE, ANY DEFAULT UNDER THIS LEASE, NOR PREVENT LESSOR FROM
        EXERCISING ANY OTHER RIGHTS AND REMEDIES AVAILABLE TO LESSOR.

       

      
        
          
          

        

        
          19

          
            

          

        

        
          
          

        

      

       

      
        Lessor's
          Initials:      /s/
          EJH

      

       

      Lessee's
        Initials:    ________

       

      (b)    If
        Lessee
        shall, during any six (6) month period, be more than five (5) Business Days
        delinquent in the payment of any Rent due and payable by Lessee hereunder
        on
        three (3) or more occasions then, notwithstanding anything herein to the
        contrary, Lessor may, by written notice to Lessee, elect to require Lessee
        to
        pay all Minimum Rent payable hereunder quarterly in advance. Such right of
        Lessor shall be in addition to and not in lieu of any other right of remedy
        available to Lessor hereunder or at law on account of an Event of Default
        by
        Lessee hereunder.

       

      (i)    For
        purposes
        of this Section 3.3(b), the following terms and conditions shall
        apply:

       

      (A)            If
        at any given time Lessee shall be more than five (5) Business Days delinquent
        in
        the payment of any Rent due and payable hereunder with respect to more than
        one
        (1) Facility, such delinquency shall only constitute a single occasion of
        delinquency, despite the fact that such delinquency has occurred with respect
        to
        the payment of Rent for more than one (1) Facility.

       

      (B)            If
        the date upon which any Rent is due and payable hereunder is not a Business
        Day,
        such date shall be deemed to be the next Business Day following such
        date.


      
        
          
          

        

        
          20

          
            

          

        

        
          
          

        

      

       

      SIMILAR
        OR DISSIMILAR NATURE. ACCORDINGLY, IF ANY INSTALLMENT OF RENT OTHER THAN
        ADDITIONAL CHARGES PAYABLE TO A PERSON OTHER THAN LESSOR SHALL NOT BE PAID
        WITHIN THREE (3) BUSINESS DAYS AFTER ITS DUE DATE, LESSEE WILL PAY LESSOR
        ON
        DEMAND A LATE CHARGE EQUAL TO THE LESSER OF (I) FIVE PERCENT (5%) OF THE
        AMOUNT
        OF SUCH INSTALLMENT OR (II) THE MAXIMUM AMOUNT PERMITTED BY LAW. THE PARTIES
        AGREE THAT THIS LATE CHARGE REPRESENTS A FAIR AND REASONABLE ESTIMATE OF
        THE
        COSTS THAT LESSOR WILL INCUR BY REASON OF LATE PAYMENT BY LESSEE. THE PARTIES
        FURTHER AGREE THAT SUCH LATE CHARGE IS RENT AND NOT INTEREST AND SUCH ASSESSMENT
        DOES NOT CONSTITUTE A LENDER OR BORROWER/CREDITOR RELATIONSHIP BETWEEN LESSOR
        AND LESSEE. IN ADDITION, THE AMOUNT UNPAID, INCLUDING ANY LATE CHARGES, SHALL
        BEAR INTEREST AT THE OVERDUE RATE COMPOUNDED MONTHLY FROM THE DUE DATE OF
        SUCH
        INSTALLMENT TO THE DATE OF PAYMENT THEREOF, AND LESSEE SHALL PAY SUCH INTEREST
        TO LESSOR ON DEMAND. THE PAYMENT OF SUCH LATE CHARGE OR SUCH INTEREST SHALL
        NOT
        CONSTITUTE WAIVER OF, NOR EXCUSE OR CURE, ANY DEFAULT UNDER THIS LEASE, NOR
        PREVENT LESSOR FROM EXERCISING ANY OTHER RIGHTS AND REMEDIES AVAILABLE TO
        LESSOR.

       

      Lessor's
        Initials:    ___________

       

      
        Lessee's
          Initials:      /s/
          GC

      

       

      (b)    If
        Lessee
        shall, during any six (6) month period, be more than five (5) Business Days
        delinquent in the payment of any Rent due and payable by Lessee hereunder
        on
        three (3) or more occasions then, notwithstanding anything herein to the
        contrary, Lessor may, by written notice to Lessee, elect to require Lessee
        to
        pay all Minimum Rent payable hereunder quarterly in advance. Such right of
        Lessor shall be in addition to and not in lieu of any other right of remedy
        available to Lessor hereunder or at law on account of an Event of Default
        by
        Lessee hereunder.

       

      (i)    For
        purposes
        of this Section 3.3(b), the following terms and conditions shall
        apply:

       

      (A)            If
        at any given time Lessee shall be more than five (5) Business Days delinquent
        in
        the payment of any Rent due and payable hereunder with respect to more than
        one
        (1) Facility, such delinquency shall only constitute a single occasion of
        delinquency, despite the fact that such delinquency has occurred with respect
        to
        the payment of Rent for more than one (1) Facility.

       

      (B)           If
        the date upon which any Rent is due and payable hereunder is not a Business
        Day,
        such date shall be deemed to be the next Business Day following such
        date.


      
        
          
          

        

        
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      3.4            Net
        Lease. This Lease is and is intended to be what is commonly referred to as a
        "net, net, net" or "triple net" lease. The Rent shall be paid absolutely
        net to
        Lessor, so that this Lease shall yield to Lessor the full amount of the
        installments of Minimum Rent and Additional Charges throughout the Term with
        respect to each Facility.

       

      3.5            Separate
        Account. Lessee shall deposit the gross receipts of each Facility into a
        separate, segregated bank account, and Lessee shall provide copies of all
        bank
        statements of such account to Lessor upon Lessor's request.

       

      ARTICLE
        IV.

       

      4.1             Impositions.

       

      4.1.1            Subject
        to Article XII relating to permitted contests, Lessee shall pay, or cause
        to be
        paid, all Impositions before any fine, penalty, interest or cost may be added
        for non-payment. Lessee shall make such payments directly to the taxing
        authorities where feasible, and promptly furnish to Lessor copies of official
        receipts or other satisfactory proof evidencing such payments. Lessee's
        obligation to pay Impositions shall be absolutely fixed upon the date such
        Impositions become a lien upon the Leased Property, any Capital Additions
        or any
        part(s) thereof. If any Imposition 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, Lessee may pay the same, and any accrued interest
        on
        the unpaid balance of such Imposition, in installments as the same respectively
        become due and before any fine, penalty, premium, further interest or cost
        may
        be added thereto.

       

      4.1.2            Lessor
        shall prepare and file all tax returns and reports as may be required by
        Legal
        Requirements with respect to Lessor's net income, gross receipts, franchise
        taxes and taxes on its capital stock, and Lessee shall prepare and file all
        other tax returns and reports as may be required by Legal
        Requirements.

       

       
         4.1.3    Any refund due from
        any taxing authority in respect of any Imposition paid by Lessee shall be
        paid
        over to or retained by Lessee if no Event of Default shall have occurred
        hereunder and be continuing. Any other refund shall be paid over to or retained
        by Lessor.

       

      4.1.4            Lessor
        and Lessee shall, upon request of the other, provide such data as is maintained
        by the party to whom the request is made with respect to the Leased Property
        and
        all Capital Additions as may be necessary to prepare any required returns
        and
        reports. If any property covered by this Lease is classified as personal
        property for tax purposes, Lessee shall file all personal property tax returns
        in such jurisdictions where it must legally so file. Lessor, to the extent
        it
        possesses the same, and Lessee, to the extent it possesses the same, shall
        provide the other party, upon request, with cost and depreciation records
        necessary for filing returns for any property so classified as personal
        property. Where Lessor is legally required to file personal property tax
        returns
        and to the extent practicable, Lessee shall be provided with copies of
        assessment notices indicating a value in excess of the reported value in
        sufficient time for Lessee to file a protest.


      
        
          
          

        

        
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       4.1.5             Lessee
        may, upon notice to Lessor, at Lessee's option and at Lessee's sole cost
        and
        expense, protest, appeal, or institute such other proceedings as Lessee may
        deem
        appropriate to effect a reduction of real estate or personal property
        assessments and Lessor, at Lessee's expense as aforesaid, shall reasonably
        cooperate with Lessee in such protest, appeal, or other action but at no
        cost or
        expense to Lessor. Billings for reimbursement by Lessee to Lessor of personal
        property or real property taxes shall be accompanied by copies of a bill
        therefor and payments thereof which identify the personal property or real
        property with respect to which such payments are made.

       

       4.1.6             Lessor
        shall give prompt notice to Lessee of all Impositions payable by Lessee
        hereunder of which Lessor has knowledge, but Lessor's failure to give any
        such
        notice shall in no way diminish Lessee's obligations hereunder to pay such
        Impositions.

       

      4.1.7             Impositions
        imposed in respect of the tax-fiscal period during which the Term terminates
        with respect to any Facility shall be adjusted and prorated between Lessor
        and
        Lessee with respect to such Facility, whether or not such Imposition is imposed
        before or after such termination.

       

      4.2             Utilities.
        Lessee shall pay or cause to be paid all charges for electricity, power,
        gas, oil, water and other utilities used in the Leased Property and all Capital
        Additions. Lessee shall also pay or reimburse Lessor for all costs and expenses
        of any kind whatsoever which at any time with respect to the Term hereof
        with
        respect to any Facility may be imposed against Lessor by reason of any of
        the
        covenants, conditions and/or restrictions affecting the Leased Property of
        such
        Facility, any Capital Additions of such Facility and/or any part(s) thereof,
        or
        with respect to easements, licenses or other rights over, across or with
        respect
        to any adjacent or other property which benefits the Leased Property and/or
        any
        Capital Additions of such Facility, including any and all costs and expenses
        associated with any utility, drainage and parking easements.

       

      4.3             Insurance.
        Lessee shall pay or cause to be paid all premiums for the insurance coverage
        required to be maintained by Lessee hereunder.

       

      4.4             Impound
        Account. Lessor may, at its option to be exercised by thirty (30) days'
        written notice to Lessee, require Lessee to deposit, at the time of any payment
        of Minimum Rent, an amount equal to one-twelfth of Lessee's estimated annual
        taxes, of every kind and nature, required pursuant to Section 4.1 plus
        one-twelfth of Lessee's estimated annual insurance premiums required pursuant
        to
        Section 4.3 into an impound account as directed by Lessor. Such amounts shall
        be
        applied to the payment of the obligations in respect of which said amounts
        were
        deposited in such order of priority as Lessor shall determine, on or before
        the
        respective dates on which the same or any of them would become delinquent.
        The
        cost of administering such impound account shall be paid by Lessee. Nothing
        in
        this Section 4.4 shall be deemed to affect any right or remedy of Lessor
        hereunder.

       

       4.5
        Tax Service. If requested by Lessor, Lessee shall, at its sole cost and
        expense, cause to be furnished to Lessor a tax reporting service, to be
        designated by Lessor, covering the Leased Property and all Capital
        Additions.


      
        
          
          

        

        
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      ARTICLE
        V.

       

      5.1             No
        Termination, Abatement, etc. Except as otherwise specifically provided in
        this Lease, Lessee shall remain bound by this Lease in accordance with its
        terms
        and shall not seek or be entitled to any abatement, deduction, deferment
        or
        reduction of Rent, or set-off against the Rent. The respective obligations
        of
        Lessor and Lessee shall not be affected by reason of (i) any damage to or
        destruction of the Leased Property, any Capital Additions and/or any part(s)
        thereof from whatever cause and/or any Condemnation of the Leased Property,
        any
        Capital Additions and/or any part(s) thereof; (ii) the lawful or unlawful
        prohibition of, or restriction upon, Lessee's use of the Leased Property,
        any
        Capital Additions and/or any part(s) thereof, the interference with such
        use by
        any Person or by reason of eviction by paramount title; (iii) any claim that
        Lessee has or might have against Lessor by reason of any default or breach
        of
        any warranty by Lessor hereunder or under any other agreement between Lessor
        and
        Lessee or to which Lessor and Lessee are parties; (iv) any bankruptcy,
        insolvency, reorganization, composition, readjustment, liquidation, dissolution,
        winding up or other proceedings affecting Lessor or any assignee or transferee
        of Lessor; or (v) for any other cause, whether similar or dissimilar to any
        of
        the foregoing, other than a discharge of Lessee from any such obligations
        as a
        matter of law. Lessee hereby specifically waives all rights arising from
        any
        occurrence whatsoever which may now or hereafter be conferred upon it by
        law (a)
        to modify, surrender or terminate this Lease or quit or surrender the Leased
        Property, any Capital Additions and/or any part(s) thereof; or (b) which
        may
        entitle Lessee to any abatement, reduction, suspension or deferment of the
        Rent
        or other sums payable by Lessee hereunder, except as otherwise specifically
        provided in this Lease. The obligations of Lessor and Lessee hereunder shall
        be
        separate and independent covenants and agreements and the Rent and all other
        sums payable by Lessee hereunder shall continue to be payable in all events
        unless the obligations to pay the same shall be terminated pursuant to the
        express provisions of this Lease or by termination of this Lease other than
        by
        reason of an Event of Default.

       

      5.2             Termination
        with Respect to Fewer than All of the Facilities. Wherever in this Lease the
        action of terminating the Lease with respect to a Facility (or action of
        similar
        import) is discussed, such action shall mean the termination of Lessee's
        rights
        in and to the Leased Property relating to such Facility. Notwithstanding
        anything in this Lease to the contrary, if this Lease shall be terminated
        by
        Lessor or Lessee pursuant to rights granted hereunder with respect to any
        Facility, such termination shall not affect the applicable Term of this Lease
        with respect to the balance of the Facilities not so terminated by Lessor,
        and
        this Lease shall continue in full force and effect with respect to each other
        such Facility, except that the total Minimum Rent payable hereunder shall
        be
        reduced by the amount of Allocated Minimum Rent with respect to such Facility
        as
        to which this Lease has so terminated, subject, however, to Lessor's right,
        in
        the event of a termination because of an Event of Default, to recover damages
        with respect to any such Facility as to which this Lease has been terminated
        as
        provided in Article XVI. Nothing contained in this Section 5.2 shall serve
        in
        any way to limit Lessor's ability, pursuant to Section 16.2 below, to terminate
        this Lease with respect to any or all of the Facilities if an Event of Default
        shall have occurred under this Lease, regardless of whether such Event of
        Default emanated primarily from a single Facility.

       

      5.3             Abatement
        Procedures. In the event of a partial taking by Condemnation of any Facility
        as described in Section 15.1.2, which taking by Condemnation does not render
        the
        Leased Property of such Facility Unsuitable for its Primary Intended Use,
        this
        Lease shall not terminate with respect to the Leased Property of such Facility,
        but the monthly Allocated Minimum Rent for such Facility shall be abated
        in the
        manner and to the extent that is fair, just and equitable to both Lessee
        and
        Lessor, primarily taking into consideration, along with other relevant factors,
        the number of usable beds affected by such partial taking by Condemnation.
        If
        Lessor and Lessee are unable to agree upon the amount of such abatement within
        sixty (60) days after such partial taking by Condemnation, either party may
        submit the matter to arbitration as provided in Article XLIV
        below.


      
        
          
          

        

        
          24

          
            

          

        

        
          
          

        

      

       

      ARTICLE
        VI.

       

      6.1             Ownership
        of the Leased Property. Lessee acknowledges that the Leased Property is the
        property of Lessor and that Lessee has only the right to the exclusive
        possession and use of the Leased Property upon the terms and conditions of
        this
        Lease. Upon the expiration or earlier termination of this Lease with respect
        to
        any Facility Lessee shall, at its expense, repair and restore the Leased
        Property relating to such Facility to the condition required by Section
        9.1.4.

       

      6.2             Personal
        Property. During the Term, Lessee shall, as necessary and at its expense,
        install, affix or assemble or place on any parcels of the Land or in any
        of the
        Leased Improvements, any items of Lessee's Personal Property and replacements
        thereof which shall be the property of and owned by Lessee. Except as provided
        in Sections 6.3 and 16.10, Lessor shall have no rights to Lessee's Personal
        Property. With respect to each Facility, Lessee shall provide and maintain
        during the entire Term applicable to such Facility all Personal Property
        necessary in order to operate such Facility in compliance with all licensure
        and
        certification requirements, all Legal Requirements and all Insurance
        Requirements and otherwise in accordance with customary practice in the industry
        for its Primary Intended Use.

       

      6.3             Transfer
        of Personal Property and Capital Additions to Lessor. Upon the expiration or
        earlier termination of this Lease with respect to a Facility, all Capital
        Additions not owned by Lessor and Lessee's Personal Property relating to
        such
        Facility shall become the property of Lessor, free of any encumbrance and
        Lessee
        shall execute all documents and take any actions reasonably necessary to
        evidence such ownership and discharge any encumbrance.

       

      ARTICLE
        VII.

       

      7.1             Condition
        of the Leased Property. Lessee acknowledges receipt and delivery of
        possession of the Leased Property of each Facility and that Lessee has examined
        and otherwise has knowledge of the condition of the Leased Property of each
        Facility prior to the execution and delivery of this Lease and, as of (i)
        with
        respect to the Group 1 Facilities and Group 2 Facilities, the Original Lease
        Commencement Date and (ii) with respect to the Group 3 Facilities, the
        Restatement Date, has found the same to be in good order and repair, free
        from
        Hazardous Substances not in compliance with Legal Requirements, and satisfactory
        for its purposes hereunder. Regardless, however, of any examination or
        inspection made by Lessee and whether or not any patent or latent defect
        or
        condition was revealed or discovered thereby, Lessee is leasing the Leased
        Property of each Facility "as is" in its present condition. Lessee waives
        any
        claim or action against Lessor in respect of the condition of the Leased
        Property of each Facility including any defects or adverse conditions not
        discovered or otherwise known by Lessee as of (a) with respect to the Group
        1
        Facilities and Group 2 Facilities, the Original Lease Commencement Date and
        (b)
        with respect to the Group 3 Facilities, the Restatement Date. LESSOR MAKES
        NO
        WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, IN RESPECT OF THE LEASED
        PROPERTY OR ANY PART THEREOF, EITHER AS TO ITS FITNESS FOR USE, DESIGN OR
        CONDITION FOR ANY PARTICULAR USE OR PURPOSE OR OTHERWISE, OR AS TO THE NATURE
        OR
        QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, OR THE EXISTENCE OF ANY
        HAZARDOUS SUBSTANCE, IT BEING AGREED THAT ALL SUCH RISKS, LATENT OR PATENT,
        ARE
        TO BE BORNE SOLELY BY LESSEE INCLUDING ALL RESPONSIBILITY AND LIABILITY FOR
        ANY
        ENVIRONMENTAL REMEDIATION AND COMPLIANCE WITH ALL ENVIRONMENTAL
        LAWS.


      
        
          
          

        

        
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      7.2            Use
        of the Leased Property

       

        
        7.2.1             Lessee
        covenants that it will obtain and maintain all authorization and approvals
        needed to use and operate the Leased Property, all Capital Additions and
        each
        Facility for such Facility's respective Primary Intended Use and any other
        use
        conducted on the Leased Property and any Capital Additions as may be permitted
        from time to time hereunder in accordance with Legal Requirements including
        applicable licenses, provider agreements, permits, and Medicare and/or Medicaid
        certification.

       

        
        7.2.2             Lessee
        shall use or cause to be used the Leased Property, all Capital Additions
        and the
        improvements thereon of each Facility for its Primary Intended Use. Lessee
        shall
        not use the Leased Property, any Capital Additions or any part(s) thereof
        for
        any other use without the prior written consent of Lessor, which consent
        Lessor
        may withhold in its sole discretion.

       

      7.2.3             Lessee
        shall operate continuously the entire Leased Property and all Capital Additions
        of each Facility in accordance with its Primary Intended Use; provided, however,
        that Lessee shall be relieved of such obligation to continuously operate
        the
        Leased Property and all Capital Additions of each Facility to the extent
        reasonably necessary (a) to complete any repair or restoration of the Leased
        Property and Capital Additions of any Facility pursuant to the terms of Sections
        14.2, 14.3 and 15.1.3, as applicable, (b) to complete any Capital Additions
        to
        the Leased Property or any Facility that are consented to by Lessor in
        accordance with the terms of Section 10.1 below, and (c) as a result of any
        cause described in Section 45.1.16 below. Lessee shall devote the entirety
        of
        each Facility and all Capital Additions thereto to the Primary Intended Use,
        except for areas reasonably required for office or storage space uses incidental
        to the Primary Intended Use. Lessee shall not modify the services offered
        or
        take any other action (e.g., removing patients or residents from any Facility
        or
        directing patients or residents, or prospective patients or residents, to
        another Facility) which would materially reduce Gross Revenues or the Fair
        Market Value of any such Facility. Lessee shall at all times maintain an
        adequate staff for the service of its residents and/or patients, in each
        case
        assuming an occupancy and/or use level for each Facility which is not less
        than
        the average occupancy and/or use level for similar facilities in the State.
        Lessee shall employ its best judgment, efforts and abilities to operate
        the entirety of each Facility in such a manner so as to maximize Gross Revenues
        and to enhance the reputation and attractiveness of each
        Facility.


      
        
          
          

        

        
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      7.2.4             Lessee
        shall conduct its business at each Facility in conformity with the highest
        standards of patient or resident care practice provided in similar facilities
        in
        the State.

       

        
         7.2.5     Lessee shall not
        commit or suffer to be committed any waste on the Leased Property and/or
        on or
        to any Capital Additions or cause or permit any nuisance to exist thereon
        or
        with respect thereto.

       

      7.2.6             Lessee
        shall neither suffer nor permit the Leased Property, any Capital Additions,
        or
        any part(s) thereof, or Lessee's Personal Property, to be used in such a
        manner
        as (i) might reasonably tend to impair Lessor's title thereto or to any portion
        thereof or (ii) may make possible a claim of adverse use or possession, or
        an
        implied dedication of the Leased Property, any Capital Additions or any part(s)
        thereof.

       

      7.3            Lessor
        to Grant Easements, etc. Lessor shall, from time to time so long as no Event
        of Default has occurred and is continuing, at the request of Lessee and at
        Lessee's cost and expense, but subject to the approval of Lessor, which approval
        shall not be unreasonably withheld or delayed (i) grant easements and other
        rights in the nature of easements; (ii) release existing easements or other
        rights in the nature of easements which are for the benefit of the Leased
        Property; (iii) dedicate or transfer unimproved portions of the Leased Property
        for road, highway or other public purposes; (iv) execute petitions to have
        the
        Leased Property annexed to any municipal corporation or utility district;
        (v)
        execute amendments to any covenants, conditions and restrictions affecting
        the
        Leased Property; and (vi) execute and deliver to any Person any instrument
        appropriate to confirm or effect such grants, releases, dedications and
        transfers to the extent of its interest in the Leased Property, but only
        upon
        delivery to Lessor of an Officer's Certificate stating that such grant release,
        dedication, transfer, petition or amendment is not detrimental to the proper
        conduct of the business of Lessee on the Leased Property and does not materially
        reduce the value of the Leased Property.

       

      7.4            Preservation
        of Facility Value. Lessee acknowledges that a fair return to Lessor on its
        investment in the Leased Property and all Capital Additions is dependent,
        in
        part, on the concentration on the Leased Property during the Term of the
        assisted living business of Lessee and its Affiliates in the geographical
        area
        of the Leased Property. Lessee further acknowledges that diversion of residents
        and/or patients, as applicable, from any Facility to other facilities or
        institutions owned, operated or managed, whether directly or indirectly,
        by
        Lessee or its Affiliates will have a material adverse impact on the value
        and
        utility of the Leased Property and all Capital Additions. Accordingly, Lessor
        and Lessee agree as follows:

       

      7.4.1             During
        the Term with respect to each Facility and for a period of two (2) years
        thereafter, neither Lessee nor any of its Affiliates, directly or indirectly,
        shall operate, own, manage or have any interest in or otherwise participate
        in
        or receive revenues from any other facility or institution providing services
        or
        similar goods to those provided in connection with any Facility and the Primary
        Intended Use within the Prohibited Area. All distances shall be measured
        on a
        straight line rather than on a driving distance basis. In the event that
        any
        portion of such other facility or institution is located within such Prohibited
        Area the entire facility or institution shall be deemed located within such
        Prohibited Area.


      
        
          
          

        

        
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        7.4.2             [Intentionally
        Omitted]

       

      7.4.3             Except
        as required for medically appropriate reasons, prior to and after the expiration
        or earlier termination of this Lease, Lessee shall not recommend or solicit
        the
        removal or transfer of any resident or patient from any Facility to any other
        facility or institution.

       

      ARTICLE
        VIII.

       

      8.1            Compliance
        with Legal and Insurance Requirements, Instruments, etc.  Subject
        to Article XII regarding permitted contests, Lessee, at its expense, shall
        promptly (i) comply with all Legal Requirements and Insurance Requirements
        regarding the use, operation, maintenance, repair and restoration of the
        Leased
        Property, Lessee's Personal Property and all Capital Additions whether or
        not
        compliance therewith may require structural changes in any of the Leased
        Improvements or Capital Additions thereto or interfere with the use and
        enjoyment of the Leased Property and (ii) procure, maintain and comply with
        all
        licenses, certificates of need, provider agreements and other authorizations
        required for the use of the Leased Property, Lessee's Personal Property and
        all
        Capital Additions for the applicable Primary Intended Use and any other use
        of
        the Leased Property, Lessee's Personal Property and all Capital Additions
        then
        being made, and for the proper erection, installation, operation and maintenance
        of the Leased Property, Lessee's Personal Property and all Capital Additions.
        Lessor may, but shall not be obligated to, enter upon the Leased Property
        and
        all Capital Additions thereto and take such actions and incur such costs
        and
        expenses to effect such compliance as it deems advisable to protect its interest
        in the Leased Property and Capital Additions thereto, and Lessee shall reimburse
        Lessor for all costs and expenses incurred by Lessor in connection with such
        actions. Lessee covenants and agrees that the Leased Property, Lessee's Personal
        Property and all Capital Additions shall not be used for any unlawful
        purpose.

       

      ARTICLE
        IX.

       

      9.1    Maintenance
        and
        Repair

       

      9.1.1             Lessee,
        at its expense, shall maintain the Leased Property, and every portion thereof,
        Lessee's Personal Property and all Capital Additions, and all private roadways,
        sidewalks and curbs appurtenant to the Leased Property, and which are under
        Lessee's control in good order and repair whether or not the need for such
        repairs occurs as a result of Lessee's use, any prior use, the elements or
        the
        age of the Leased Property, Lessee's Personal Property and all Capital
        Additions, and, with reasonable promptness, make all necessary and appropriate
        repairs thereto of every kind and nature, including those necessary to comply
        with changes in any Legal Requirements, whether interior or exterior, structural
        or nonstructural, ordinary or extraordinary, foreseen or unforeseen or arising
        by reason of a condition existing prior to (a) with respect to the Group
        1
        Facilities and Group 2 Facilities, the applicable Original Lease Commencement
        Date, and (b) with respect to the Group 3 Facilities, the Restatement Date.
        All
        repairs shall be at least equivalent in quality to the original work. Lessee
        will not take or omit to take any action the taking or omission of which
        might
        materially impair the value or the usefulness of the Leased Property of any
        Facility or any part thereof or any Capital Addition thereto for its Primary
        Intended Use.


      
        
          
          

        

        
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      9.1.2             Lessor
        shall not under any circumstances be required to (i) build or rebuild any
        improvements on the Leased Property or any Capital Additions; (ii) make any
        repairs, replacements, alterations, restorations or renewals of any nature
        to
        the Leased Property, whether ordinary or extraordinary, structural or
        nonstructural, foreseen or unforeseen, or to make any expenditure whatsoever
        with respect thereto; or (iii) maintain the Leased Property or any Capital
        Additions in any way. Lessee hereby waives, to the extent permitted by law,
        the
        right to make repairs at the expense of Lessor pursuant to any law in effect
        at
        the time of the execution of this Lease or hereafter enacted.

       

      9.1.3             Nothing
        contained in this Lease and no action or inaction by Lessor shall be construed
        as (i) constituting the consent or request of Lessor, expressed or implied,
        to
        any contractor, subcontractor, laborer, materialman or vendor to or for the
        performance of any labor or services or the furnishing of any materials or
        other
        property for the construction, alteration, addition, repair or demolition
        of or
        to the Leased Property or any part thereof or any Capital Addition thereto;
        or
        (ii) giving Lessee any right, power or permission to contract for or permit
        the
        performance of any labor or services or the furnishing of any materials or
        other
        property in such fashion as would permit the making of any claim against
        Lessor
        in respect thereof or to make any agreement that may create, or in any way
        be
        the basis for, any right, title, interest, lien, claim or other encumbrance
        upon
        the estate of Lessor in the Leased Property, or any portion thereof or any
        Capital Addition thereto.

       

      9.1.4             Unless
        Lessor shall convey any of the Leased Property to Lessee pursuant to the
        provisions of this Lease, Lessee shall, upon the expiration or earlier
        termination of the Term with respect to a Facility, vacate and surrender
        the
        Leased Property, Lessee's Personal Property and all Capital Additions in
        each
        case with respect to such Facility, to Lessor in the condition in which such
        Leased Property was originally received from Lessor and such Lessee's Personal
        Property and Capital Additions were originally introduced to such Facility,
        except as repaired, rebuilt, restored, altered or added to as permitted or
        required by the provisions of this Lease and except for ordinary wear and
        tear.

       

      9.2            Encroachments,
        Restrictions, Mineral Leases, etc. If any of the Leased Improvements or
        Capital Additions shall, at any time, encroach upon any property, street
        or
        right-of-way, or shall violate any restrictive covenant or other agreement
        affecting the Leased Property, or any part thereof or any Capital Addition
        thereto, or shall impair the rights of others under any easement or right-of-way
        to which the Leased Property is subject, or the use of the Leased Property
        or
        any Capital Addition thereto is impaired, limited or interfered with by reason
        of the exercise of the right of surface entry or any other provision of a
        lease
        or reservation of any oil, gas, water or other minerals, then promptly upon
        the
        request of Lessor or any Person affected by any such encroachment, violation
        or
        impairment, Lessee, at its sole cost and expense, but subject to its right
        to
        contest the existence of any such encroachment, violation or impairment,
        shall
        protect, indemnify, save harmless and defend Lessor from and against all
        losses,
        liabilities, obligations, claims, damages, penalties, causes of action, costs
        and expenses (including reasonable attorneys', consultants' and experts'
        fees
        and expenses) based on or arising by reason of any such encroachment, violation
        or impairment. In the event of an adverse final determination with respect
        to
        any such encroachment, violation or impairment, Lessee shall either (i) obtain
        valid and effective waivers or settlements of all claims, liabilities and
        damages resulting from each such encroachment, violation or impairment, whether
        the same shall affect Lessor or Lessee; or (ii) make such changes in the
        Leased
        Improvements and any Capital Addition thereto, and take such other actions,
        as
        Lessee in the good faith exercise of its judgment deems reasonably practicable,
        to remove such encroachment or to end such violation or impairment, including,
        if necessary, the alteration of any of the Leased Improvements or any Capital
        Addition thereto, and in any event take all such actions as may be necessary
        in
        order to be able to continue the operation of the Leased Improvements and
        any
        Capital Addition thereto for the Primary Intended Use substantially in the
        manner and to the extent the Leased Improvements and Capital Additions were
        operated prior to the assertion of such encroachment, violation or impairment.
        Lessee's obligations under this Section 9.2 shall be in addition to and shall
        in
        no way discharge or diminish any obligation of any insurer under any policy
        of
        title or other insurance and, to the extent the recovery thereof is not
        necessary to compensate Lessor for any damages incurred by any such
        encroachment, violation or impairment, Lessee shall be entitled to a credit
        for
        any sums recovered by Lessor under any such policy of title or other
        insurance.


      
        
          
          

        

        
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      9.3            Capital
        Projects.

       

      9.3.1              Without
        in any way limiting Lessee's obligations under this Article IX, Lessee shall
        expend during each Lease Year for the Group 3 Facilities, no less than the
        Annual Minimum Capital Project Amount for each of the Group 3 Facilities
        for
        Capital Projects to such Group 3 Facilities. Such Capital Projects shall
        be
        performed and completed in compliance with the applicable provisions of this
        Lease, including the applicable provisions of Article X hereof. Promptly
        following the expiration of each Lease Year for the Group 3 Facilities, Lessee
        shall furnish to Lessor reasonable documentary evidence as to the completion
        of
        all Capital Projects for such Lease Year required pursuant to this Section
        9.3,
        together with the costs thereof. If Lessee fails to expend during each Lease
        Year the applicable Annual Minimum Capital Project Amount for Capital Projects
        to any Group 3 Facility, then, without limiting any rights or remedies afforded
        Lessor pursuant to the terms of this Lease for a breach by Lessee of its
        obligation hereunder, Lessee shall promptly deposit with Lessor as a repair
        and
        replacement reserve with respect to such Group 3 Facility (a "Replacement
        Reserve") for Capital Projects to such Group 3 Facility, an amount equal
        to (a)
        the Annual Minimum Capital Project Amount for such Group 3 Facility less
        (b) the
        sum of (i) the amounts expended by Lessee during such Lease Year on account
        of
        Capital Projects to such Group 3 Facility and (ii) the Annual Minimum Capital
        Project Amount Overage for such Group 3 Facility. So long as no Event of
        Default
        or an event or circumstance has occurred which with notice or passage of
        time,
        or both, would constitute an Event of Default hereunder has occurred, if
        (i) a
        Replacement Reserve has been established for any Group 3 Facility and (ii)
        Lessee expends in any Lease Year an amount in excess of the applicable Annual
        Minimum Capital Project Amount for Capital Projects for such Group 3 Facility,
        Lessor shall, to the extent funds are available for such purpose in such
        Replacement Reserve, disburse to Lessee the Capital Project Costs incurred
        and
        paid by Lessee during such Lease Year in performing such Capital Projects
        to
        such Group 3 Facility in excess of the applicable Annual Minimum Capital
        Project
        Amount for such Group 3 Facility for such Lease Year. Any such disbursement
        from
        any Replacement Reserve shall be paid by Lessor to Lessee within fifteen
        (15)
        days following: (a) receipt by Lessor of a written request from Lessee for
        disbursement from the Replacement Reserve for such Group 3 Facility and a
        certification by Lessee in form and substance reasonably satisfactory to
        Lessor
        that the applicable item of Capital Project for such Group 3 Facility has
        been
        completed; (b) delivery to Lessor of paid invoices, receipts or other evidence
        reasonably satisfactory to Lessor, verifying (1) the Capital Project Costs
        for
        such Capital Project and (2) that Lessee has expended in the applicable Lease
        Year an amount in excess of the applicable Annual Minimum Capital Project
        Amount
        for Capital Projects for such Group 3 Facility; and (c) delivery to Lessor
        of
        affidavits, lien waivers or other evidence satisfactory to Lessor showing
        that
        all materialmen, laborers, subcontractors and any other parties who might
        or
        could claim statutory or common law liens and are furnishing or have furnished
        material or labor to the Leased Property of such Group 3 Facility have been
        paid
        all amounts due for labor and materials furnished to the Leased Property
        of such
        Group 3 Facility. Lessor shall not be required to make advances from any
        Replacement Reserve more frequently than once in any thirty (30) day period.
        Amounts held in the Replacement Reserve for any Group 3 Facility may not
        be used
        to pay for or reimburse Lessee for Capital Project Costs for any other
        Facility.


      
        
          
          

        

        
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      9.3.2             No
        Replacement Reserve shall be or be deemed to be escrow or trust funds, but,
        at
        Lessor's option and in Lessor's discretion, may either be held in a separate
        account or be commingled by Lessor with the general funds of Lessor. Lessee
        shall not be entitled to any interest on any funds contained in any Replacement
        Reserve. The Replacement Reserves are solely for the protection of Lessor
        and
        the Leased Property of the Group 3 Facilities and entail no responsibility
        on
        Lessor's part beyond the payment of the respective items for which they are
        held
        following receipt of bills, invoices or statements therefor in accordance
        with
        the terms of this Section 9.3 and beyond the allowing of due credit for the
        sums
        actually received. Upon assignment of this Lease by Lessor, any funds in
        any
        Replacement Reserve shall be turned over to the assignee and any responsibility
        of Lessor, as assignor, with respect thereto shall terminate.

       

      9.3.3             If
        any funds remain in any Replacement Reserve upon the expiration or earlier
        termination of this Lease with respect to any Group 3 Facility, the same
        shall
        be paid over to Lessor as an Additional Charge and Rent under this Lease
        and
        shall be in addition to Minimum Rent and all other Additional Charges payable
        hereunder.

       

      9.4            Inspections;
        Due Diligence Fee. Without limiting Lessor's rights pursuant to Section 26.1
        hereof, from time to time during the Term, Lessor and its agents shall have
        the
        right to inspect the Leased Property and any portion thereof and all systems
        contained therein at any reasonable time to determine Lessee's compliance
        with
        its obligations under this Lease. Lessor shall provide Lessee with at least
        two
        (2) Business Days' prior written notice prior to any inspections of the Leased
        Property pursuant to the terms of this Section 9.4, except in the event of
        an
        emergency, in which case no prior notice shall be required. Lessee shall
        reimburse Lessor for all costs and expenses incurred by Lessor in connection
        with the inspections provided for in this Section 9.4 promptly following
        its
        receipt of Lessor's invoice therefore, which costs shall not exceed One Thousand
        Dollars ($1,000.00) annually.


      
        
          
          

        

        
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      ARTICLE
        X.

       

      10.1
        Construction of Capital Additions to the Leased Property. Without the
        prior written consent of Lessor which consent may be withheld or granted
        by
        Lessor in its sole and absolute discretion, Lessee shall make no Capital
        Additions on or structural alterations to the Leased Property and shall not
        enlarge or reduce the size of any Facility.

       

      ARTICLE
        XI.

       

      11.1
        Liens. Subject to the provisions of Article XII relating to permitted
        contests, Lessee will not directly or indirectly create or allow to remain
        and
        will promptly discharge at its expense any lien, encumbrance, attachment,
        title
        retention agreement or claim upon the Leased Property of any Facility or
        any
        Capital Addition thereto or any attachment, levy, claim or encumbrance in
        respect of the Rent, excluding, however, (i) this Lease; (ii) the matters
        that
        existed as of (a) with respect to the Group 1 Facilities and Group 2 Facilities,
        the Original Lease Commencement Date, with respect to such Group 1 Facility
        or
        Group 2 Facility and (b) with respect to the Group 3 Facilities, the Restatement
        Date, with respect to such Group 3 Facility; (iii) restrictions, liens and
        other
        encumbrances which are consented to in writing by Lessor, or any easements
        granted pursuant to the provisions of Section 7.3; (iv) liens for Impositions
        which Lessee is not required to pay hereunder; (v) subleases permitted by
        Article XXIV; (vi) liens for Impositions not yet delinquent; (vii) liens
        of
        mechanics, laborers, materialmen, suppliers or vendors for amounts not yet
        due;
        and (viii) any liens which are the responsibility of Lessor pursuant to the
        provisions of Article XXXVI.

       

      ARTICLE
        XII.

       

      12.1
        Permitted Contests. Lessee, upon prior written notice to Lessor, on its
        own or in Lessor's name, at Lessee's expense, may contest, by appropriate
        legal
        proceedings conducted in good faith and with due diligence, the amount, validity
        or application, in whole or in part, of any licensure or certification decision,
        Imposition, Legal Requirement, Insurance Requirement, lien, attachment, levy,
        encumbrance, charge or claim; subject, however, to the further requirement
        that
        (i) in the case of an unpaid Imposition, lien, attachment, levy, encumbrance,
        charge or claim, the commencement and continuation of such proceedings shall
        suspend the collection thereof from Lessor and from the Leased Property or
        any
        Capital Addition thereto; (ii) neither the Leased Property or any Capital
        Addition thereto, the Rent therefrom nor any part or interest in either thereof
        would be in any danger of being sold, forfeited, attached or lost pending
        the
        outcome of such proceedings; (iii) in the case of a Legal Requirement, neither
        Lessor nor Lessee would be in any danger of civil or criminal liability for
        failure to comply therewith pending the outcome of such proceedings; (iv)
        if any
        such contest shall involve a sum of money or potential loss in excess of
        Fifty
        Thousand Dollars ($50,000), Lessee shall deliver to Lessor and its counsel
        an
        opinion of legal counsel reasonably acceptable to Lessor to the effect set
        forth
        in clauses (i), (ii) and (iii) above, to the extent applicable; (v) in the
        case
        of a Legal Requirement, Imposition, lien, encumbrance or charge, Lessee shall
        give such reasonable security as may be required by Lessor to insure ultimate
        payment of the same and to prevent any sale or forfeiture of the Leased Property
        or any Capital Addition thereto or the Rent by reason of such nonpayment
        or
        noncompliance; and (vi) in the case of an Insurance Requirement, the coverage
        required by Article XIII shall be maintained. If any such contest is finally
        resolved against Lessor or Lessee, Lessee shall promptly pay the amount required
        to be paid, together with all interest and penalties accrued thereon, or
        comply
        with the applicable Legal Requirement or Insurance Requirement. Lessor, at
        Lessee's expense, shall execute and deliver to Lessee such authorizations
        and
        other documents as may reasonably be required in any such contest, and, if
        reasonably requested by Lessee or if Lessor so desires, Lessor shall join
        as a
        party therein. The provisions of this Article XII shall not be construed
        to
        permit Lessee to contest the payment of Rent or any other amount payable
        by
        Lessee to Lessor hereunder. Lessee shall indemnify, defend, protect and save
        Lessor harmless from and against any liability, cost or expense of any kind
        that
        may be imposed upon Lessor in connection with any such contest and any loss
        resulting therefrom.


      
        
          
          

        

        
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      ARTICLE
        XIII.

       

      13.1
        General Insurance Requirements. During the Term, Lessee shall at all
        times keep the Leased Property, and all property located in or on the Leased
        Property, including Capital Additions, the Fixtures and the Personal Property,
        insured with the kinds and amounts of insurance described below. Each element
        of
        insurance described in this Article shall be maintained with respect to the
        Leased Property of each Facility, including the Capital Additions, Fixtures,
        Personal Property and operations thereon. This insurance shall be written
        by
        companies authorized to do insurance business in the State in which the Leased
        Property is located. All liability type policies must name Lessor as an
        "additional insured." All property, loss of rental and business interruption
        type policies shall name Lessor as "loss payee." Losses shall be payable
        to
        Lessor and/or Lessee as provided in Article XIV. In addition, the policies,
        as
        appropriate, shall name as an "additional insured" or "loss payee" the holder
        of
        any mortgage, deed of trust or other security agreement ("Facility Mortgagee")
        securing any indebtedness or any other Encumbrance placed on the Leased Property
        in accordance with the provisions of Article XXXVI ("Facility Mortgage")
        by way
        of a standard form of mortgagee's loss payable endorsement. Any loss adjustment
        shall require the written consent of Lessor, Lessee, and each Facility
        Mortgagee. Evidence of insurance shall be deposited with Lessor and, if
        requested, with any Facility Mortgagee(s). If any provision of any Facility
        Mortgage requires deposits of insurance to be made with such Facility Mortgagee,
        Lessee shall either pay to Lessor monthly the amounts required and Lessor
        shall
        transfer such amounts to each Facility Mortgagee, or, pursuant to written
        direction by Lessor, Lessee shall make such deposits directly with such Facility
        Mortgagee. The policies shall insure against the following risks with respect
        to
        each Facility:

       

      13.1.1
        Loss or damage by fire, vandalism and malicious mischief, extended coverage
        perils commonly known as special form perils, earthquake (including earth
        movement), sinkhole and windstorm in an amount not less than the insurable
        value
        on a replacement cost basis (as defined below in Section 13.2) and including
        a
        building ordinance coverage endorsement;


      
        
          
          

        

        
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      13.1.2
        Loss or damage by explosion of steam boilers, pressure vessels or similar
        apparatus, now or hereafter installed in each Facility, in such limits with
        respect to any one accident as may be reasonably requested by Lessor from
        time
        to time;

       

      13.1.3
        Flood (when the Leased Property of a Facility is located in whole or in part
        within a designated 100-year flood plain area) and such other hazards and
        in
        such amounts as may be customary for comparable properties in the
        area;

       

      13.1.4
        Loss of rental value in an amount not less than twelve (12) months' Rent
        payable
        hereunder or business interruption in an amount not less than twelve (12)
        months
        of income and normal operating expenses including payroll and Rent payable
        hereunder with an endorsement extending the period of indemnity by at least
        ninety (90) days (Building Ordinance - Increased Period of Restoration
        Endorsement) necessitated by the occurrence of any of the hazards described
        in
        Sections 13.1.1, 13.1.2 or 13.1.3;

       

      13.1.5
        Claims for bodily injury or property damage under a policy of commercial
        general
        liability insurance with amounts not less than One Million and No/100 Dollars
        ($1,000,000.00) combined single limit and Three Million No/100 Dollars
        ($3,000,000.00) in the annual aggregate, with respect to each Facility;
        and

       

      13.1.6
        Medical professional liability with amounts not less than One Million Dollars
        ($1,000,000) combined single limit and Three Million Dollars ($3,000,000)
        in the
        annual aggregate, with respect to each Facility.

       

      13.2
        Replacement Cost. The term "replacement cost" shall mean the actual
        replacement cost of the insured property from time to time with new materials
        and workmanship of like kind and quality. If either party believes that the
        replacement cost has increased or decreased at any time during the Term,
        it
        shall have the right to have such replacement cost redetermined by an impartial
        national insurance company reasonably acceptable to both parties (the "impartial
        appraiser"). The party desiring to have the replacement cost so redetermined
        shall forthwith, on receipt of such determination by the impartial appraiser,
        give written notice thereof to the other party hereto. The determination
        of the
        impartial appraiser shall be final and binding on the parties hereto, and
        Lessee
        shall forthwith increase or decrease the amount of the insurance carried
        pursuant to this Article to the amount so determined by the impartial appraiser.
        Each party shall pay one-half (1/2) of the fee, if any, of the impartial
        appraiser. If Lessee has made improvements to the Leased Property of any
        Facility including any Capital Additions thereto, Lessor may at Lessee's
        expense
        have the replacement cost redetermined at any time after such improvements
        are
        made, regardless of when the replacement cost was last determined.

       

      13.3
        Additional Insurance. In addition to the insurance described above,
        Lessee shall maintain such additional insurance as may be reasonably required
        from time to time by any Facility Mortgagee and shall further at all times
        maintain adequate workers' compensation coverage and any other coverage required
        by Legal Requirements for all Persons employed by Lessee on the Leased Property
        of any Facility and any Capital Addition thereto in accordance with Legal
        Requirements.


      
        
          
          

        

        
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      13.4
        Waiver of Subrogation. All insurance policies carried by either party
        covering the Leased Property of any Facility and any Capital Addition thereto
        and Lessee's Personal Property including contents, fire and casualty insurance,
        shall expressly waive any right of subrogation on the part of the insurer
        against the other party. Each party waives any claims it has against the
        other
        party to the extent such claim is covered by insurance.

       

      13.5
        Policy Requirements. All of the policies of insurance referred to in this
        Article shall be written in form satisfactory to Lessor and by insurance
        companies with a policyholder rating of "A-" and a financial rating of "X"
        in
        the most recent version of Best's Key Rating Guide. Lessee shall pay all
        of the
        premiums therefor, and deliver such policies or certificates thereof to Lessor
        prior to their effective date (and with respect to any renewal policy, at
        least
        thirty (30) days prior to the expiration of the existing policy), and in
        the
        event of the failure of Lessee either to effect such insurance in the names
        herein called for or to pay the premiums therefor, or to deliver such policies
        or certificates thereof to Lessor, at the times required, Lessor shall be
        entitled, but shall have no obligation, to effect such insurance and pay
        the
        premiums therefor, in which event the cost thereof, together with interest
        thereon at the Overdue Rate, shall be repayable to Lessor upon demand therefor.
        Each insurer shall agree, by endorsement on the policy or policies issued
        by it,
        or by independent instrument furnished to Lessor, that it will give to Lessor
        thirty (30) days' written notice before the policy or policies in question
        shall
        be altered, allowed to expire or cancelled. Each policy shall have a deductible
        or deductibles, if any, which are no greater than those normally maintained
        for
        similar facilities in the State.

       

      13.6
        Increase in Limits. If either party shall at any time believe the limits
        of the insurance required hereunder to be either excessive or insufficient,
        the
        parties shall endeavor to agree in writing on the proper and reasonable limits
        for such insurance to be carried and such insurance shall thereafter be carried
        with the limits thus agreed on until further change pursuant to the provisions
        of this Section. If the parties shall be unable to agree thereon, the proper
        and
        reasonable limits for such insurance to be carried shall be determined by
        an
        impartial third party reasonably selected by Lessor. Nothing herein shall
        permit
        the amount of insurance to be reduced below the amount or amounts required
        by
        any of the Facility Mortgagees.

       

      13.7
        Blanket Policies and Policies Covering Multiple Locations.
Notwithstanding anything to the contrary contained in this Article,
        Lessee's
        obligations to carry the casualty insurance provided for herein may be brought
        within the coverage of a blanket policy or policies of insurance carried
        and
        maintained by Lessee; provided, however, that the coverage afforded Lessor
        will
        not be reduced or diminished or otherwise be different from that which would
        exist under a separate policy for each Facility meeting all other requirements
        of this Lease by reason of the use of such blanket policy of insurance, and
        provided further that the requirements of this Article XIII are otherwise
        satisfied. For any liability policies covering one or more of the Facilities
        or
        any other facilities in addition to the Facilities, Lessor may require excess
        limits as Lessor reasonably determines.

       

      13.8
        No Separate Insurance. Lessee shall not, on Lessee's own initiative or
        pursuant to the request or requirement of any third party, (i) take out separate
        insurance concurrent in form or contributing in the event of loss with that
        required in this Article to be furnished by, or which may reasonably be required
        to be furnished by, Lessee or (ii) increase the amounts of any then existing
        insurance by securing an additional policy or additional policies, unless
        all
        parties having an insurable interest in the subject matter of the insurance,
        including in all cases Lessor and all Facility Mortgagees, are included therein
        as additional insured and the loss is payable under such insurance in the
        same
        manner as losses are payable under this Lease. Lessee shall immediately notify
        Lessor of the taking out of any such separate insurance or of the increasing
        of
        any of the amounts of the then existing insurance by securing an additional
        policy or additional policies.


      
        
          
          

        

        
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      ARTICLE
        XIV.

       

      14.1
        Insurance Proceeds. All proceeds payable by reason of any loss or damage
        to the Leased Property, any Capital Additions or any part(s) or portion(s)
        thereof, under any policy of insurance required to be carried hereunder shall
        be
        paid to Lessor and made available by Lessor to Lessee from time to time for
        the
        reasonable costs of reconstruction or repair, as the case may be, of any
        damage
        to or destruction of the Leased Property, any Capital Additions or any part(s)
        or portion(s) thereof. Any excess proceeds of insurance remaining after the
        completion of the restoration or reconstruction of the Leased Property and
        any
        Capital Additions (or in the event neither Lessor nor Lessee is required
        or
        elects to repair and restore, all such insurance proceeds) shall be retained
        by
        Lessor except as otherwise specifically provided below in this Article XIV.
        All
        salvage resulting from any risk covered by insurance shall belong to
        Lessor.

       

      14.2
        Insured Casualty.

       

      14.2.1
        If
        the Leased Property and/or any Capital Additions of a Facility are damaged
        or
        destroyed from a risk covered by insurance carried by Lessee such that such
        Facility thereby is rendered Unsuitable for its Primary Intended Use, Lessee
        shall either (i) restore such Leased Property and such Capital Additions
        to
        substantially the same condition as existed immediately before such damage
        or
        destruction and Lessor shall, pursuant to the terms of Section 14.1 above,
        make
        available to Lessee from time to time the insurance proceeds received by
        Lessor
        on account of such damage or destruction to the extent necessary for the
        reasonable costs of such restoration, or (ii) offer to acquire the Leased
        Property of such Facility from Lessor for a purchase price equal to (x) with
        respect to any Group 1 Facility, the greater of (1) the Minimum Repurchase
        Price
        for such Facility and (2) Lessor's Shared Appreciation Purchase Price for
        such
        Facility immediately prior to such damage or destruction, (y) with respect
        to
        any Group 2 Facility, the greater of (1) the Minimum Repurchase Price for
        such
        Facility and (2) the Fair Market Value of such Facility immediately prior
        to
        such damage or destruction, and (z) with respect to any Group 3 Facility,
        the
        Group 3 Facility Purchase Price for such Facility immediately prior to such
        damage or destruction. If Lessor does not accept Lessee's offer to so purchase
        the Leased Property of such Facility, Lessee may either withdraw such offer
        and
        proceed to restore the Leased Property of such Facility to substantially
        the
        same condition as existed immediately before such damage or destruction or
        terminate the Lease in which event Lessor shall be entitled to retain the
        insurance proceeds.


      
        
          
          

        

        
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      14.2.2
        If the Leased Property and/or any Capital
        Additions of a Facility are damaged from a risk covered by insurance carried
        by
        Lessee, but such Facility is not thereby rendered Unsuitable for its Primary
        Intended Use, Lessee shall restore such Leased Property and such Capital
        Additions to substantially the same condition as existed immediately before
        such
        damage and Lessor shall, pursuant to the terms of Section 14.1 above, make
        available to Lessee from time to time the insurance proceeds received by
        Lessor
        on account of such damage or destruction to the extent necessary for the
        reasonable costs of such restoration. Such damage shall not terminate this
        Lease; provided, however, that if Lessee cannot within a reasonable time
        after
        diligent efforts obtain the necessary government approvals needed to restore
        and
        operate such Facility for its Primary Intended Use, Lessee may offer to purchase
        the Leased Property of such Facility for a purchase price equal to (i) with
        respect to any Group 1 Facility, the greater of (a) the Minimum Repurchase
        Price
        for such Facility and (b) Lessor's Shared Appreciation Purchase Price for
        such
        Facility immediately prior to such damage, (ii) with respect to any Group
        2
        Facility, the greater of (a) the Minimum Repurchase Price of such Facility
        and
        (b) the Fair Market Value of such Facility immediately prior to such damage,
        and
        (iii) with respect to any Group 3 Facility, the Group 3 Facility Purchase
        Price
        for such Facility immediately prior to such damage. If Lessee shall make
        such
        offer and Lessor does not accept the same, Lessee may either (A) withdraw
        such
        offer and proceed to restore the Leased Property of such Facility to
        substantially the same condition as existed immediately before such damage
        or
        destruction and in such event Lessor shall, pursuant to the terms of Section
        14.1 above, make available to Lessee from time to time the insurance proceeds
        received by Lessor on account of such damage or destruction to the extent
        necessary for the reasonable costs of such restoration, or (B) terminate
        the
        Lease with respect to such Facility, in which event Lessor shall be entitled
        to
        retain the insurance proceeds.

       

      14.2.3
        If
        the cost of the repair or restoration of a Facility exceeds the amount of
        proceeds received by Lessor from the insurance required to be carried hereunder,
        Lessee shall contribute any excess amounts needed to restore such Facility.
        Such
        difference shall be paid by Lessee to Lessor together with any other insurance
        proceeds, for application to the cost of repair and restoration.

       

      14.2.4
        If
        Lessor accepts Lessee's offer to purchase the Leased Property of a Facility,
        this Lease shall terminate as to such Facility upon payment of the purchase
        price and Lessor shall remit to Lessee all insurance proceeds pertaining
        to the
        Leased Property of such Facility then held by Lessor.

       

      14.3
        Uninsured Casualty. If the Leased Property and/or any Capital Additions
        of a Facility is damaged or destroyed from a risk not covered by insurance
        carried by Lessee, whether or not such damage or destruction renders such
        Facility Unsuitable for its Primary Intended Use, Lessee at its expense shall
        restore the Leased Property of such Facility to substantially the same condition
        it was in immediately before such damage or destruction and such damage or
        destruction shall not terminate this Lease.

       

      14.4
        No Abatement of Rent. This Lease shall remain in full force and effect
        and Lessee's obligation to pay the Rent and all other charges required by
        this
        Lease shall remain unabated during the period required for adjusting insurance,
        satisfying Legal Requirements, repair and restoration.


      
        
          
          

        

        
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      14.5
        Waiver. Lessee waives any statutory rights of termination which may arise
        by reason of any damage or destruction of the Leased Property and/or any
        Capital
        Additions.

       

      ARTICLE
        XV.

       

      15.1
        Condemnation

       

      15.1.1
        Total Taking. If the Leased Property and any Capital Additions of a
        Facility is totally and permanently taken by Condemnation, this Lease shall
        terminate with respect to such Facility as of the day before the Date of
        Taking
        for such Facility.

       

      15.1.2
        Partial Taking. If a portion of the Leased Property and any Capital
        Additions of a Facility is taken by Condemnation, this Lease shall remain
        in
        effect if the affected Facility is not thereby rendered Unsuitable for Its
        Primary Intended Use, but if such Facility is thereby rendered Unsuitable
        for
        its Primary Intended Use, this Lease shall terminate with respect to such
        Facility as of the day before the Date of Taking for such Facility.

       

      15.1.3
        Restoration. If there is a partial taking of the Leased Property and any
        Capital Additions of a Facility and this Lease remains in full force and
        effect
        pursuant to Section 15.1.2, Lessor shall make available to Lessee the portion
        of
        the Award necessary and specifically identified for restoration of such Leased
        Property and any such Capital Additions and Lessee shall accomplish all
        necessary restoration whether or not the amount provided by the condemnor
        for
        restoration is sufficient.

       

      15.1.4
        Award-Distribution. The entire Award for any total Condemnation or
        partial Condemnation described in Section 15.1.2 above that renders the affected
        Facility Unsuitable for Its Primary Intended Use shall belong to and be paid
        to
        Lessor, except that, subject to the rights of the Facility Mortgagees, Lessee
        shall be entitled to receive from the Award, if and to the extent such Award
        specifically includes such item, lost profits value and moving expenses,
        provided, that in any event Lessor shall receive from the Award, subject
        to the
        rights of the Facility Mortgagees no less than (i) with respect to any Group
        1
        Facility, the greater of (a) the Minimum Repurchase Price for the applicable
        Facility and (b) Lessor's Shared Appreciation Purchase Price for the applicable
        Facility prior to the institution of the Condemnation, (ii) with respect
        to any
        Group 2 Facility, the greater of (a) the Minimum Repurchase Price for the
        applicable Facility and (b) the Fair Market Value of the applicable Facility
        prior to the institution of the Condemnation and (iii) with respect to any
        Group
        3 Facility, the Group 3 Facility Purchase Price for such Facility prior to
        the
        institution of the Condemnation. The entire Award for any partial Condemnation
        described in Section 15.1.2 above that does not render the affected Facility
        Unsuitable for Its Primary Intended Use shall belong to and be paid to Lessor,
        subject to Lessor's obligations pursuant to Section 15.1.3 above.

       

      15.1.5
        Temporary Taking. The taking of the Leased Property, any Capital
        Additions and/or any part(s) thereof, shall constitute a taking by Condemnation
        only when the use and occupancy by the taking authority has continued for
        longer
        than 180 consecutive days. During any shorter period, which shall be a temporary
        taking, all the provisions of this Lease shall remain in full force and effect
        and the Award allocable to the Term shall be paid to Lessee.


      
        
          
          

        

        
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      15.1.6
        Sale Under Threat of Condemnation. A sale by Lessor to any Condemnor,
        either under threat of Condemnation or while Condemnation proceedings are
        pending, shall be deemed a Condemnation for purposes of this Lease. Lessor
        may,
        without any obligation to Lessee, agree to sell and/or convey to any Condemnor
        all or any portion of the Leased Property free from this Lease and the rights
        of
        Lessee hereunder without first requiring that any action or proceeding be
        instituted or pursued to judgment; provided, however, that Lessor shall provide
        Lessee with at least sixty (60) days' prior written notice of such sale or
        conveyance, subject to the requirements of any such Condemnor.

       

      ARTICLE
        XVI.

       

      16.1            Events
        of Default. Any one or more of the following shall constitute an "Event of
        Default":

       

      (a)            a
        default shall occur under any other lease or other agreement or instrument,
        including the Group 3 Facility Contract of Acquisition, now or hereafter
        with or
        in favor of Lessor or any Affiliate of Lessor and made by or with Lessee
        or any
        Affiliate of Lessee where the default is not cured within any applicable
        grace
        period set forth therein;

       

      (b)           A
        default shall occur under any New Lease hereafter with or infavor of Lessor
        or
        any Affiliate of Lessor and made by or with Lessee or any Affiliate of Lessee
        where the default is not cured within any applicable grace period set forth
        therein;

       

      (c)            Lessee
        shall fail to pay any installment of Rent when the same becomes due and payable
        and such failure is not cured by Lessee within a period of five (5) days
        after
        notice thereof from Lessor; provided, however, that such notice shall be
        in lieu
        of and not in addition to any notice required under applicable law with respect
        to such non-payment of Rent;

       

      (d)            Lessee
        shall fail to obtain a letter of credit as required by Article XXI;

       

      (e)             except
        as otherwise specifically provided for in this Section 16.1, if Lessee shall
        fail to observe or perform any other term, covenant or condition of this
        Lease
        and such failure is not cured by Lessee within thirty (30) days after notice
        thereof from Lessor, unless such failure cannot with due diligence be cured
        within a period of thirty (30) days, in which case such failure shall not
        be
        deemed to be an Event of Default if Lessee proceeds promptly and with due
        diligence to cure the failure and diligently completes the curing thereof;
        provided, however, that such notice shall be in lieu of and not in addition
        to
        any notice required under applicable law;


      
        
          
          

        

        
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                (f)

              	
                Lessee
                  or any guarantor of Lessee's obligations hereunder
                  shall:

              


      

      
        	 


      

       

      (i)        
        admit
        in
        writing its inability to pay its debts generally as they become due

       

      (ii)     
              file a petition in bankruptcy or a petition
        to take advantage of  any insolvency act,

       

      (iii)     
             make an assignment for the benefit of its
        creditors,

       

      (iv)          consent
        to the appointment of a receiver of itself or of the whole or any substantial
        part of its property, or

       

      (v)            file
        a petition or answer seeking reorganization or arrangement under the Federal
        bankruptcy laws or any other applicable law or statute of the United States
        of
        America or any state thereof;

       

      (g)            Lessee
        or any guarantor of Lessee's obligations hereunder (including Guarantor)
        shall
        be adjudicated as bankrupt or a court of competent jurisdiction shall enter
        an
        order or decree appointing, without the consent of Lessee, a receiver of
        Lessee
        or of the whole or substantially all of its property, or approving a petition
        filed against it seeking reorganization or arrangement of Lessee under the
        Federal bankruptcy laws or any other applicable law or statute of the United
        States of America or any state thereof, and such judgment, order or decree
        shall
        not be vacated or set aside or stayed within sixty (60) days from the date
        of
        the entry thereof;

       

      (h)            Lessee
        or any guarantor of Lessee's obligations hereunder (including Guarantor)
        shall
        be liquidated or dissolved, or shall begin proceedings toward such liquidation
        or dissolution, or shall, in any manner, permit the sale or divestiture of
        substantially all its assets;

       

      (i)            the
        estate or interest of Lessee in the Leased Property, any Capital Additions
        or
        any part(s) thereof shall be levied upon or attached in any proceeding and
        the
        same shall not be vacated or discharged within the later of ninety (90) days
        after commencement thereof or thirty (30) days after receipt by Lessee of
        notice
        thereof from Lessor; provided, however, that such notice shall be in lieu
        of and
        not in addition to any notice required under applicable law;

       

      (j)            any
        Transfer occurs without Lessor's consent, if such consent is required under
        Article XXIV;

       

      (k)            any
        of the representations or warranties made by Lessee or Guarantor in the Group
        3
        Facility Contract of Acquisition, Guaranty or any other Transaction Document,
        proves to be untrue when made in any material respect which materially and
        adversely affects Lessor;


      
        
          
          

        

        
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      (1)             any
        applicable license or third-party provider reimbursement agreements material
        to
        a Facility's operation for its Primary Intended Use are at any time terminated
        or revoked or suspended for more than twenty (20) days;

       

      (m)            any
        local, state or federal agency having jurisdiction over the operation of
        any
        Facility removes Ten Percent (10%) or more of the patients or residents located
        in such Facility;

       

      (n)           Lessee
        fails to give notice to Lessor not later than ten (10) days after Lessee's
        receipt thereof of any Class A or equivalent fine notice from any governmental
        authority or officer acting on behalf thereof relating to any
        Facility;

       

      (o)           Lessee
        fails to cure or abate any Class A or equivalent violation occurring during
        the
        Term that is claimed by any governmental authority, or any officer acting
        on
        behalf thereof, of any law, order, ordinance, rule or regulation pertaining
        to
        the operation of any Facility, and within the time permitted by such authority
        for such cure or abatement;

       

      (p)           Lessee
        fails to notify Lessor within twenty-four (24) hours after receipt of any
        notice
        from any governmental agency terminating or suspending or threatening
        termination or suspension, of any material license or certification relating
        to
        any Facility;

       

      (q)           Lessee
        fails to give notice to Lessor not later than ten (10) days after any notice,
        claim or demand from any governmental authority or any officer acting on
        behalf
        thereof, of any violation of any law, order, ordinance, rule or regulation
        with
        respect to the operation of any Facility;

       

      (r)            any
        proceedings are instituted against Lessee by any governmental authority which
        are reasonably likely to result in (i) the revocation of any license granted
        to
        Lessee for the operation of any Facility, (ii) the decertification of any
        Facility from participation in the Medicare or Medicaid reimbursement program,
        or (iii) the issuance of a stop placement order against Lessee;

       

      (s)            any
        default and acceleration of any indebtedness of Lessee or any Affiliate of
        Lessee has occurred; and

       

      (t)           any
        material default shall occur under any guaranty of Lessee's obligations
        hereunder (including the Guaranty).

       

      16.2          Certain
        Remedies. If an Event of Default shall have occurred, Lessor may terminate
        this Lease with respect to the Facility from which such Event of Default
        emanated, if any, and any one or more (including all, if so elected by Lessor)
        of the Facilities, regardless of whether such Event of Default emanated
        primarily from a single Facility, by giving Lessee notice of such termination
        and the Term shall terminate and all rights of Lessee under this Lease shall
        cease with respect to all such Facilities as to which Lessor has elected
        to so
        terminate this Lease. Lessor shall have all rights at law and in equity
        available to Lessor as a result of any Event of Default. Lessee shall pay
        as
        Additional Charges all costs and expenses incurred by or on behalf of Lessor,
        including reasonable attorneys' fees and expenses, as a result of any Event
        of
        Default hereunder. If an Event of Default shall have occurred and be continuing,
        whether or not this Lease has been terminated with respect to any one or
        more
        (including all, if so elected by Lessor) of the Facilities pursuant to this
        Section 16.2, Lessee shall, to the extent permitted by law, if required by
        Lessor so to do, immediately surrender to Lessor possession of the Leased
        Property and any Capital Additions of the Facilities as to which Lessor has
        so
        elected to terminate this Lease and quit the same and Lessor may enter upon
        and
        repossess such Leased Property and such Capital Addition thereto by reasonable
        force, summary proceedings, ejectment or otherwise, and may remove Lessee
        and
        all other Persons and any of Lessee's Personal Property from such Leased
        Property and such Capital Addition thereto.


      
        
          
          

        

        
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      16.3
        Damages. (i) The repossession of the Leased Property and any Capital
        Additions of any Facility; (ii) the failure of Lessor, notwithstanding
        reasonable good faith efforts, to relet the Leased Property or any portion
        thereof; (iii) the reletting of all or any portion of the Leased Property;
        or
        (iv) the failure or inability of Lessor to collect or receive any rentals
        due
        upon any such reletting, shall not relieve Lessee of its liabilities and
        obligations hereunder, all of which shall survive any such repossession or
        reletting. In addition, the termination of this Lease with respect to any
        one or
        more of the Facilities shall not relieve Lessee of its liabilities and
        obligations hereunder with respect to such terminated Facility(ies) that
        are
        intended to survive the termination of this Lease, including, without
        limitation, the obligations set forth in this Section 16.3, and Sections
        16.5,
        16.9, 23, 37.4 and 45.1.6. If any such termination occurs, Lessee shall
        forthwith pay to Lessor all Rent due and payable with respect to the Facility
        terminated to and including the date of such termination. Thereafter following
        any such termination, Lessee shall forthwith pay to Lessor, at Lessor's option,
        as and for liquidated and agreed current damages for an Event of Default
        by
        Lessee, the sum of:

       

      (i)            the
        worth at the time of award of the unpaid Rent which had been earned at the
        time
        of termination with respect to the terminated Facility,

       

      (ii)            the
        worth at the time of award of the amount by which the unpaid Rent which would
        have been earned after termination with respect to the terminated Facility
        until
        the time of award exceeds the amount of such rental loss that Lessee proves
        could have been reasonably avoided,

       

      (iii)           the
        worth at the time of award of the amount by which the unpaid Rent for the
        balance of the Term for the terminated Facility after the time of award exceeds
        the amount of such rental loss that Lessee proves could be reasonably avoided,
        plus

       

      (iv)           any
        other amount necessary to compensate Lessor for all the detriment proximately
        caused by Lessee's failure to perform its obligations under this Lease or
        which
        in the ordinary course of things would be likely to result
        therefrom.

       

      As
        used
        in clauses (i) and (ii) above, the "worth at the time of award" shall be
        computed by allowing interest at the Overdue Rate. As used in clause (iii)
        above, the "worth at the time of award" shall be computed by discounting
        such
        amount at the discount rate of the Federal Reserve Bank of San Francisco
        at the
        time of award plus One Percent (1%). Alternatively, if Lessor does not elect
        to
        terminate this Lease, then without termination of Lessee's right to possession
        of the Leased Property, Lessee shall pay to Lessor, at Lessor's option, as
        and
        for agreed damages for such Event of Default, each installment of said Rent
        and
        other sums payable by Lessee to Lessor under the Lease as the same becomes
        due
        and payable, together with interest at the Overdue Rate from the date when
        due
        until paid, and Lessor may enforce, by action or otherwise, any other term
        or
        covenant of this Lease.


      
        
          
          

        

        
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      16.4
        Receiver. Upon the occurrence of an Event of Default, and upon
        commencement of proceedings to enforce the rights of Lessor hereunder, Lessor
        shall be entitled, as a matter of right, to the appointment of a receiver
        or
        receivers acceptable to Lessor of the Leased Property and any Capital Addition
        thereto of the revenues, earnings, income, products and profits thereof,
        pending
        the outcome of such proceedings, with such powers as the court making such
        appointment shall confer.

       

      16.5
        Lessee's Obligation to Purchase. Upon the occurrence of a Put Event with
        respect to any Facility, Lessor shall be entitled to require Lessee to purchase
        the Leased Property of such Facility on the first Minimum Rent Payment Date
        occurring not less than thirty (30) days after the date specified in a notice
        from Lessor requiring such purchase for an amount equal to (i)
        with
        respect to any Group 1 Facility, the greater of (a) the Minimum Repurchase
        Price
        for such Facility and (b) Lessor's Shared Appreciation Purchase Price for
        such
        Facility, (ii) with respect to any Group 2 Facility, the greater of (a) the
        Minimum Repurchase Price of such Facility and (b) the Fair Market Value of
        such
        Facility and (iii) with respect to any Group 3 Facility, the Group 3 Facility
        Put Event Price for such Facility, plus, in either event, all Rent then due
        and
        payable (excluding the installment of Minimum Rent due on the purchase date)
        with respect to such Facility. If Lessor exercises such right, Lessor shall
        convey the Leased Property of such Facility to Lessee on the date fixed therefor
        in accordance with the provisions of Article XVIII upon receipt of the purchase
        price therefor and this Lease shall thereupon terminate with respect to such
        Facility. Any purchase by Lessee of the Leased Property of a Facility pursuant
        to this Section shall be in lieu of the damages specified in Section 16.3
        with
        respect to such Facility.

       

      16.6
        Waiver. If Lessor initiates judicial proceedings or if this Lease is
        terminated by Lessor pursuant to this Article with respect to a Facility,
        Lessee
        waives, to the extent permitted by applicable law, (i) any right of redemption,
        re-entry or repossession; and (ii) the benefit of any laws now or hereafter
        in
        force exempting property from liability for rent or for debt.

       

      16.7
        Application of Funds. Any payments received by Lessor under any of the
        provisions of this Lease during the existence or continuance of any Event
        of
        Default which are made to Lessor rather than Lessee due to the existence
        of an
        Event of Default shall be applied to Lessee's obligations in the order which
        Lessor may determine or as may be prescribed by the laws of the
        State.

       

      16.8
        Facility Operating Deficiencies. On notice or request therefor by Lessor
        to Lessee, upon the occurrence of a Facility Operating Deficiency specified
        with
        particularity in Lessor's notice, and for a period equal to the greater of
        six
        (6) months or the time necessary fully to remedy the Facility Operating
        Deficiency, Lessee shall engage the services of a management company,
        unaffiliated with Lessee and approved by Lessor, to assume responsibility
        for
        management of the applicable Facility for the purpose of taking all steps
        reasonably necessary to remedy the Facility Operating Deficiency(ies). Pursuant
        to a written agreement among the management company, Lessee and Lessor, the
        management company will have complete responsibility for operation of the
        applicable Facility, subject to Lessee's retaining only such power and authority
        as shall be required by the State as the minimum level of power and authority
        to
        be possessed by the licensed operator of a facility of the type of such Facility
        in the State. The management company shall provide the following
        services:


      
        
          
          

        

        
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      (a)           furnish
        an on-site, full-time licensed administrator and controller approved by Lessor
        who shall be an employee of the management company;

       

      (b)           take
        all steps reasonably necessary to keep such Facility fully licensed by the
        State, certified as a provider under applicable government reimbursement
        programs and duly accredited by applicable agencies and bodies;

       

      (c)           perform
        all of Lessee's obligations hereunder with respect to maintenance and repair
        of
        such Facility;

       

      (d)           conduct
        at the onset of the management company's engagement, and monthly thereafter,
        reviews and/or audits of Facility operations in at least the following
        departments and services: patient and resident care, activities and therapy,
        dietary, medical records, drugs and medicines, supplies, housekeeping and
        maintenance, and report the results of such reviews and/or audits in writing
        to
        Lessor no later than five (5) days after the end of each calendar
        month;

       

      (e)           immediately
        upon receipt thereof, deliver to Lessor by overnight courier copies of all
        communications received from any regulatory agency with respect to such
        Facility; and

       

      (f)           with
        respect to the Facility Operating Deficiency(ies) which gave rise to the
        request
        to Lessee to engage the management company, prepare and deliver to Lessor
        within
        five (5) days after the commencement of the management company's
        responsibilities at such Facility a comprehensive written report of the nature
        and extent of the Facility Operating Deficiency(ies) and advise Lessor orally
        by
        telephone no later than noon local time on each Friday thereafter as to steps
        being taken by the management company to remedy the same and the status of
        any
        threatened or actual governmental administrative action with respect
        thereto.

       

      The
        management company shall have complete access to such Facility, its records,
        offices and facilities, in order that it may carry out its duties. If Lessee
        shall fail to designate a management company acceptable to Lessor within
        five
        (5) days after receipt of the notice of request therefor, Lessor may designate
        such management company by further notice to Lessee. Lessee shall be responsible
        for payment of all fees and expenses reasonably charged and incurred by the
        management company in carrying out its duties, provided that the management
        fee
        chargeable by a management company designated by Lessor, as hereinabove
        provided, shall not exceed Seven Percent (7%) of Gross
        Revenues.


      
        
          
          

        

        
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      16.9
        Lessor's Right of Appraisal. Without limiting any other right or remedy
        of Lessor hereunder, upon the expiration or earlier termination of this Lease
        with respect to any Facility, and whether or not Lessor has ever declared
        or
        given notice to Lessee of an Event of Default, Lessor shall have the right
        to
        conduct an appraisal of the Leased Property and all Capital Additions of
        such
        Facility in accordance with the appraisal procedures set forth in Article
        XXXIV
        in order to determine the negative value, if any, upon the Fair Market Value
        by
        reason of any of the following (the "Negative FMV"): (a) any deferred
        maintenance or other items of repair or replacement of the Leased Property
        which
        Lessee has failed to perform or observe in accordance with the terms of this
        Lease; (b) any then current or prior licensure or certification violations
        and/or admission holds; and/or (c) any other breach or failure of Lessee
        to
        perform or observe its obligations under this Lease; and/or (d) the occupancy
        level and/or resident mix, patient mix, case mix, or diagnostic related group
        or
        acuity mix, as applicable, of such Facility as of the date of termination
        as
        compared to the average occupancy level or mix of facilities similar to such
        Facility and in the same general geographic location. In the event of any
        such
        Negative FMV, the cash value thereof, together with the costs and expenses
        incurred by Lessor in connection with the appraisal procedures pursuant to
        Article XXXIV, shall be paid by Lessee to Lessor upon demand as an Additional
        Charge hereunder; provided, however, that (i) if a Replacement Reserve exists
        for such Facility, the amounts payable by Lessee to Lessor hereunder on account
        of Negative FMV for such Facility shall first be reduced by the amounts held
        by
        Lessor in such Replacement Reserve for such Facility and (ii) Lessee shall
        not
        be obligated to pay to Lessor the cash value of any Negative FMV for any
        Facility if it is determined pursuant to this Section 16.9 that the amount
        of
        such Negative FMV for such Facility is less than One Hundred Thousand Dollars
        ($100,000.00). If it is deteimined pursuant to this Section 16.9 that the
        amount
        of the Negative FMV of any Facility is equal to or greater than One Hundred
        Thousand Dollars ($100,000.00), the entire cash value of such Negative FMV
        (less
        any amounts, if any, held by Lessor in a Replacement Reserve for such Facility)
        shall be paid by Lessee to Lessor upon demand as an Additional Charge hereunder.
        Notwithstanding anything to the contrary contained in this Section 16.9,
        in no
        event shall the provisions of clause (ii) above be deemed to limit any of
        Lessor's rights or remedies hereunder with respect to the matters described
        in
        clauses (a), (b), (c) or (d) above, except to the extent relating to Lessor's
        right to receive the cash value of the Negative FMV for the applicable Facility.
        The obligation of Lessee to pay such amount, if any, shall survive the
        expiration or earlier termination of this Lease with respect to any such
        Facility.

       

      16.10
        Lessor's Security Interest. The parties intend that if an Event of
        Default occurs under this Lease, Lessor will control Lessee's Personal Property
        and the Intangible Property so that Lessor or its designee or nominee can
        operate or re-let each Facility intact for its Primary Intended Use.
        Accordingly, to implement such intention, and for the purpose of securing
        the
        payment and performance obligations of Lessee hereunder, Lessor and Lessee
        agree
        as follows:

       

      16.10.1
        Lessee, as debtor, hereby grants to Lessor, as secured party, a security
        interest and an express contractual lien upon all of Lessee's right, title
        and
        interest in and to Lessee's Personal Property and in and to the Intangible
        Property and any and all products, rents, proceeds and profits thereof in
        which
        Lessee now owns or hereafter acquires an interest or right, including any
        leased
        Lessee's Personal Property (collectively, the "Collateral"). This Lease
        constitutes a security agreement covering all such Collateral. The security
        interest granted to Lessor with respect to Lessee's Personal Property in
        this
        Section 16.10 is intended by Lessor and Lessee to be subordinate to any security
        interest granted in connection with the financing or leasing of all or any
        portion of the Lessee's Personal Property so long as the lessor or financier
        of
        such Lessee's Personal Property agrees to give Lessor written notice of any
        default by Lessee under the terms of such lease or financing arrangement,
        to
        give Lessor a reasonable time following such notice to cure any such default
        and
        consents to Lessor's written assumption of such lease or financing arrangement
        upon Lessor's curing of any such defaults. This security agreement and the
        security interest created herein shall survive the expiration or earlier
        termination of this Lease with respect to any or all of the
        Facilities.

       

      
        
          
          

        

        
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      16.10.2
        Lessee hereby authorizes Lessor to file such financing statements, continuation
        statements and other documents as may be necessary or desirable to perfect
        or
        continue the perfection of Lessor's security interest in the Collateral.
        In
        addition, if required by Lessor at any time during the Term, Lessee shall
        execute and deliver to Lessor, in form reasonably satisfactory to Lessor,
        additional security agreements, financing statements, fixture filings and
        such
        other documents as Lessor may reasonably require to perfect or continue the
        perfection of Lessor's security interest in the Collateral. In the event
        Lessee
        fails to execute any financing statement or other documents for the perfection
        or continuation of Lessor's security interest, Lessee hereby appoints Lessor
        as
        its true and lawful attorney-in-fact to execute any such documents on its
        behalf, which power of attorney shall be irrevocable and is deemed to be
        coupled
        with an interest.

       

      16.10.3
        Lessee will give Lessor at least thirty (30) days' prior written notice of
        any
        change in Lessee's name, identity, jurisdiction of organization or corporate
        structure. With respect to any such change, Lessee will promptly execute
        and
        deliver such instruments, documents and notices and take such actions, as
        Lessor
        deems necessary or desirable to create, perfect and protect the security
        interests of Lessor in the Collateral.

       

      16.10.4
        Upon the occurrence of an Event of Default, Lessor shall be entitled to exercise
        any and all rights or remedies available to a secured party under the Uniform
        Commercial Code, or available to a lessor under the laws of the State, with
        respect to Lessee's Personal Property and the Intangible Property, including
        the
        right to sell the same at public or private sale.

       

      ARTICLE
        XVII.

       

      17.1
        Lessor's Right to Cure Lessee's Default. If Lessee shall fail to make any
        payment or to perform any act required to be made or performed hereunder,
        upon
        at least thirty (30) days' prior written notice (except in the event of an
        emergency, in which case no prior notice shall be required) Lessor, without
        waiving or releasing any obligation or default, may, but shall be under no
        obligation to, make such payment or perform such act for the account and
        at the
        expense of Lessee, and may, to the extent permitted by law, enter upon the
        Leased Property and any Capital Addition thereto for such purpose and take
        all
        such action thereon as, in Lessor's opinion, may be necessary or appropriate
        therefor. No such entry shall be deemed an eviction of Lessee. All sums so
        paid
        by Lessor and all reasonable costs and expenses, including reasonable attorneys'
        fees and expenses, so incurred, together with interest thereon at the Overdue
        Rate from the date on which such sums or expenses are paid or incurred by
        Lessor, shall be paid by Lessee to Lessor on demand.


      
        
          
          

        

        
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      ARTICLE
        XVIII.

       

      18.1
        Purchase of the Leased Property; Rights of Lessee Prior to
        Closing.

       

      18.1.1
        Generally. If Lessee purchases the Leased Property of any Facility from
        Lessor pursuant to any provision of this Lease, Lessor shall, upon receipt
        from
        Lessee of the applicable purchase price, together with full payment of any
        unpaid Rent due and payable with respect to any period ending on or before
        the
        date of the purchase, deliver to Lessee an appropriate deed or other conveyance
        conveying the entire interest of Lessor in and to such Leased Property to
        Lessee
        free and clear of all encumbrances other than (i) those that Lessee has agreed
        hereunder to pay or discharge; (ii) those mortgage liens, if any, which Lessee
        has agreed in writing to accept and to take title subject to; (iii) those
        liens
        and encumbrances which were in effect on the date of conveyance of such Leased
        Property to Lessor; and (iv) any other encumbrances permitted hereunder to
        be
        imposed on such Leased Property which are assumable at no cost to Lessee
        or to
        which Lessee may take subject without cost to Lessee. The difference between
        the
        applicable purchase price and the total of the encumbrances assumed or taken
        subject to shall be paid to Lessor or as Lessor may direct in immediately
        available funds. All expenses of such conveyance, including the cost of title
        insurance, attorneys' fees incurred by Lessor in connection with such conveyance
        and release, transfer taxes and recording and escrow fees, shall be paid
        by
        Lessee.

       

      18.1.2
        Rights of Lessee Prior to Closing. Notwithstanding anything to the
        contrary in this Lease, or at law or in equity, if Lessee exercises any right
        or
        option of Lessee to purchase or acquire the Leased Property of any Facility
        pursuant to any of the provisions of this Lease, or Lessor shall exercise
        its
        right to require Lessee to purchase the Lease Property of any Facility pursuant
        to Section 16.5 hereof (herein, a "Purchase Right/Obligation Exercise"),
        the
        following shall pertain:

       

      (a)            Such
        Purchase Right/Obligation Exercise (and any purchase or other separate contract
        formed upon such Purchase Right/Obligation Exercise) shall not under any
        circumstances cause a termination of this Lease, and this Lease shall remain
        in
        full force and effect to and until the consummation of the closing in accordance
        with the terms thereof;

       

      (b)           Lessee
        hereby acknowledges and agrees that Lessee shall not under any circumstances
        be
        entitled to possession of the Leased Property of any Facility under the terms
        of
        any purchase or other separate contract formed upon such Purchase
        Right/Obligation Exercise until the closing thereof, and that Lessee's
        possession of the Leased Property of such Facility shall be solely by way
        of
        this Lease;

       

      (c)    In
        no event
        shall Lessee be deemed a vendee in possession; and


      
        
          
          

        

        
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      (d)            In
        the event that an Event of Default shall occur at anytime during the period
        from
        such Purchase Right/Obligation Exercise to and until closing, Lessor shall
        be
        entitled to exercise any and all rights or remedies available to a landlord
        against a defaulting tenant, whether at law or equity, including those set
        forth
        in Article XVI hereof, and specifically including the right to recover
        possession of the Leased Property of such Facility through summary proceedings
        (such as unlawful detainer or other similar action permitted by law), and
        in no
        event shall Lessor be required to bring an action for ejectment or any other
        similar non-expedited proceeding.

       

      ARTICLE
        XIX.

       

      19.1
        Renewal Terms. With respect to each Facility, provided that no Event of
        Default, or event which, with notice or lapse of time or both, would constitute
        an Event of Default, has occurred and is continuing, either at the date of
        exercise or upon the commencement of an Extended Term (as hereunder defined),
        then Lessee shall have the right to renew this Lease with respect to all
        (but
        not less than all) of the Facilities in a Renewal Group for the Extended
        Term
        set forth on Exhibit C upon giving written notice to Lessor of such
        renewal not less than twenty-four (24) months and not more than twenty-seven
        (27) months prior to the expiration of the then current Term, and delivering
        to
        Lessor concurrent with such notice a reaffirmation of the Guaranty executed
        by
        Guarantor stating, in substance, that Guarantor's obligations under the Guaranty
        shall extend to this Lease, as extended by the Extended Term. With respect
        to
        each Facility, during each Extended Term, all of the terms and conditions
        of
        this Lease shall continue in full force and effect.

       

      Notwithstanding
        anything to the contrary in this Section 19.1, (i) subject to the terms of
        clause (ii) below, Lessee may exercise its right to renew the Term of this
        Lease
        with respect to less than all of the Facilities in the Renewal Group of which
        the Group 1 Facilities are a part so long as Lessee concurrently therewith
        exercises its purchase option with respect to the balance of such Group 1
        Facilities in the manner and within the time provided in Article XXXV below,
        (ii) Lessee may only exercise its right to renew the Term of this Lease for
        a
        Group 1 Facility for the Extended Term if, and only if, such Group 1 Facility
        has an average Cash Flow Coverage of not less than 1.5 for the period of
        twenty-four (24) months immediately preceding Lessee's exercise of its option
        to
        renew hereunder and (iii) Lessor, in its sole discretion, may waive the
        condition to Lessee's right to renew this Lease that no Event of Default,
        or
        event which, with notice or lapse of time or both, would constitute an Event
        of
        Default, have occurred or be continuing, and the same may not be used by
        Lessee
        as a means to negate the effectiveness of Lessee's exercise of its renewal
        right
        for such Extended Term.

       

      19.2
        Lessor's Rights of Renewal and Early Termination. In order to facilitate
        the transfer of the operations of each Facility to a third party and/or to
        locate a replacement lessee, Lessor shall have the one time right to either
        (i)
        terminate this Lease with respect to any such Facility up to four (4) months
        early or (ii) extend the Term of this Lease with respect to any such Facility
        for up to one (1) year. Such right of early termination shall be exercised
        by
        Lessor, if at all, by written notice from Lessor to Lessee given not less
        than
        sixty (60) days prior to the date Lessor desires to terminate this Lease
        with
        respect to any such Facility and stating the date of such termination (which
        date shall not be earlier than four (4) months prior to the expiration of
        the
        Term). In the event that Lessor shall exercise such right of early termination
        within the time and in the manner herein provided, this Lease shall terminate
        with respect to the applicable Facility on the date of termination specified
        in
        Lessor's notice. Such right of extension shall be exercised by Lessor, if
        at
        all, by written notice from Lessor to Lessee given not less than four (4)
        months
        prior to the expiration of the Term with respect to such Facility and stating
        the date through which Lessor is extending the Term of this Lease with respect
        to such Facility (which date shall not be later than one (1) year after the
        originally scheduled expiration date). In the event that Lessor shall exercise
        such right of extension, all of the terms and conditions of this Lease shall
        continue in full force and effect with respect to such Facility and Lessee
        shall
        continue to pay Rent for and during such extension period at the same Minimum
        Rent rates as were in effect upon the expiration of the originally scheduled
        Term for such Facility; provided, however, that Lessor shall have the right
        to
        terminate this Lease with respect to any such Facility during any such extension
        period upon not less than sixty (60) days prior written notice to Lessee.
        In
        such event, this Lease, as previously extended, shall terminate with respect
        to
        such Facility upon the date specified in Lessor's notice of
        termination.


      
        
          
          

        

        
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      ARTICLE
        XX.

       

      20.1
        Holding Over. Except as provided in Section 19.2, if Lessee shall for any
        reason remain in possession of the Leased Property and/or any Capital Additions
        of a Facility after the expiration or earlier termination of the Term, such
        possession shall be as a month-to-month tenant during which time Lessee shall
        pay as Minimum Rent each month twice the sum of (i) monthly Minimum Rent
        applicable to the prior Lease Year for such Facility, plus (ii) all Additional
        Charges and all other sums payable by Lessee pursuant to this Lease. During
        such
        period of month-to-month tenancy, Lessee shall be obligated to perform and
        observe all of the terms, covenants and conditions of this Lease, but shall
        have
        no rights hereunder other than the right, to the extent given by law to
        month-to-month tenancies, to continue its occupancy and use of the Leased
        Property and/or any Capital Additions of such Facility. Nothing contained
        herein
        shall constitute the consent, express or implied, of Lessor to the holding
        over
        of Lessee after the expiration or earlier termination of this
        Lease.

       

      ARTICLE
        XXI.

       

      21.1
        Letters of Credit. Subject to Section 31.2.4 below, during the entire
        Term and for sixty (60) days after the expiration or earlier termination
        of this
        Lease, Lessee shall have obtained letters of credit from a financial institution
        satisfactory to Lessor but in any event with (a) not less than $100 Million
        in
        net current assets, (b) a financial rating of not less than 60 as rated by
        Sheshonoff Information Services, Inc. (or any equivalent rating thereto from
        any
        successor or substitute rating service selected by Lessor) and (c) an investment
        grade rating from each of Standard and Poors Corporation and Moody's Investors
        Service, naming Lessor as beneficiary to secure Lessee's obligations hereunder
        and Lessee's and any Affiliate of Lessee's obligations under any other lease
        or
        other agreement or instrument with or in favor of Lessor or any Affiliate
        of
        Lessor, at the times, in the amounts and for the purposes set forth below.
        Each
        letter of credit shall be in substantially the form of Exhibit D hereto.
        Each letter of credit shall be for a term of not less than one (1) year and
        irrevocable during that term. Each letter of credit shall provide that it
        will
        be honored upon a signed statement by Lessor that Lessor is entitled to draw
        upon any letter of credit under this Lease, and shall require no signature
        or
        statement from any party other than Lessor. No notice to Lessee shall be
        required to enable Lessor to draw upon the letter of credit. Each letter
        of
        credit shall also provide that following the honor of any drafts in an amount
        less than the aggregate amount of the letter of credit, the financial
        institution shall return the original letter of credit to Lessor and Lessor's
        rights as to the remaining amount of the letter of credit will not be
        extinguished. In the event of a transfer of Lessor's interest in the Leased
        Property, Lessor shall have the right to transfer the letter of credit to
        the
        transferee and thereupon shall, without any further agreement between the
        parties, be released by Lessee from all liability therefor, and it is agreed
        that the provisions hereof shall apply to every transfer or assignment of
        the
        letter of credit to a new Lessor. The letter of credit may be assigned as
        security in connection with a Facility Mortgage. If the financial institution
        from which Lessee has obtained a letter of credit shall admit in writing
        its
        inability to pay its debts generally as they become due, file a petition
        in
        bankruptcy or a petition to take advantage of any insolvency act, make an
        assignment for the benefit of its creditors consent to the appointment of
        a
        receiver of itself or of the whole or any substantial part of its property,
        or
        file a petition or answer seeking reorganization or arrangement under the
        Federal bankruptcy laws or any other applicable law or statute of the United
        States of America or any state thereof, then Lessee shall obtain a replacement
        letter of credit within thirty (30) days of such act from another financial
        institution satisfactory to Lessor.


      
        
          
          

        

        
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      21.2
        Times for Obtaining Letters of Credit. The initial letter of credit shall
        be obtained and delivered to Lessor on or prior to the execution and delivery
        of
        this Lease. The letters of credit covering subsequent periods shall be obtained
        and delivered to Lessor not less than thirty (30) days prior to the expiration
        of the then existing letter of credit ("Letter of Credit Date"). The term
        for
        each such letter of credit shall begin no later than the expiration date
        of the
        previous letter of credit and shall comply with all requirements of this
        Article
        XXI.

       

      21.3
        Amounts for Letters of Credit. Letters of credit covering each Lease Year
        during the term shall be in an amount equal to one-half (1/2) of the aggregate
        annual Allocated Minimum Rent payable by Lessee under this Lease for each
        of the
        Group 2 Facilities for the applicable Lease Year (the "Letter of Credit
        Amount").

       

      21.4
        Uses of Letters of Credit. Lessor shall have the right to draw upon a
        letter of credit up to its full amount whenever (a) an Event of Default
        hereunder has occurred, (b) an event of default under any other lease or
        agreement between Lessor or an Affiliate of Lessor and Lessee or an Affiliate
        of
        Lessee or under any other letter of credit, guaranty, mortgage, deed of trust,
        or other instrument now or hereafter executed by Lessee or an Affiliate of
        Lessee in favor of Lessor or an Affiliate of Lessor has occurred or (c) an
        event
        or circumstance has occurred which with notice or passage of time, or both,
        would constitute an Event of Default hereunder or an event of default under
        any
        such other lease, agreement, letter of credit, guaranty, mortgage, deed of
        trust
        or other instrument, notwithstanding that transmittal of any such notice
        may be
        barred by applicable law. In addition, if Lessee fails to obtain a satisfactory
        letter of credit prior to the applicable Letter of Credit Date, Lessor may
        draw
        upon the full amount of the then existing letter of credit without giving
        any
        notice or time to cure to Lessee. No such draw shall (i) cure or constitute
        a
        waiver of an Event of Default, (ii) be deemed to fix or determine the amounts
        to
        which Lessor is entitled to recover under this Lease or otherwise, or (iii)
        be
        deemed to limit or waive Lessor's right to pursue any remedies provided for
        in
        this Lease. If all or any portion of a letter of credit is drawn against
        by
        Lessor, Lessee shall, within two (2) business days after demand by Lessor,
        cause
        the issuer of such letter of credit to issue Lessor, at Lessee's expense,
        a
        replacement or supplementary letter of credit in substantially the form attached
        hereto as Exhibit D such that at all times during the Term, Lessor shall
        have the ability to draw on one or more letters of credit totaling, in the
        aggregate, the amount required pursuant to Section 21.3.


      
        
          
          

        

        
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      ARTICLE
        XXII.

       

      22.1
        Risk of Loss. The risk of loss or of decrease in the enjoyment and
        beneficial use of the Leased Property and any Capital Additions as a consequence
        of the damage or destruction thereof by fire, the elements, casualties, thefts,
        riots, wars or otherwise, or in consequence of foreclosures, attachments,
        levies
        or executions (other than by Lessor and Persons claiming from, through or
        under
        Lessor) is assumed by Lessee, and no such event shall entitle Lessee to any
        abatement of Rent.

       

      ARTICLE
        XXIII.

       

      23.1
        General Indemnification. In addition to the other indemnities contained
        herein, and notwithstanding the existence of any insurance carried by or
        for the
        benefit of Lessor or Lessee, and without regard to the policy limits of any
        such
        insurance, Lessee shall protect, indemnify, save harmless and defend Lessor
        from
        and against all liabilities, obligations, claims, damages, penalties, causes
        of
        action, costs and expenses, including reasonable attorneys', consultants'
        and
        experts' fees and expenses, imposed upon or incurred by or asserted against
        Lessor by reason of: (i) any accident, injury to or death of Persons or loss
        of
        or damage to property occurring on or about the Leased Property or adjoining
        sidewalks; (ii) any use, misuse, non-use, condition, maintenance or repair
        by
        Lessee of the Leased Property; (iii) any failure on the part of Lessee to
        perform or comply with any of the terms of this Lease; (iv) the
        non­performance of any of the terms and provisions of any and all existing
        and future subleases of the Leased Property to be performed by any party
        thereunder; (v) any claim for malpractice, negligence or misconduct committed
        by
        any Person on or working from the Leased Property; and (vi) the violation
        of any
        Legal Requirement. Any amounts which become payable by Lessee under this
        Article
        shall be paid within ten (10) days after liability therefor is determined
        by
        litigation or otherwise, and if not timely paid shall bear interest at the
        Overdue Rate from the date of such determination to the date of payment.
        Lessee,
        at its sole cost and expense, shall contest, resist and defend any such claim,
        action or proceeding asserted or instituted against Lessor or may compromise
        or
        otherwise dispose of the same as Lessee sees fit; provided, however, that
        any
        legal counsel selected by Lessee to defend Lessor shall be reasonably
        satisfactory to Lessor. All indemnification covenants are intended to apply
        to
        losses, damages, injuries, claims, etc. incurred directly by the indemnified
        parties and their property, as well as by the indemnifying party or any third
        party, and their property. For purposes of this Article XXIII, any acts or
        omissions of Lessee, or by employees, agents, assignees, contractors,
        subcontractors or others acting for or on behalf of Lessee (whether or not
        they
        are negligent, intentional, willful or unlawful), shall be strictly attributable
        to Lessee. It is understood and agreed that payment shall not be a condition
        precedent to enforcement of the foregoing indemnification
        obligations.


      
        
          
          

        

        
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      ARTICLE
        XXIV.

       

      24.1
        Transfers.

       

      24.1.1               Prohibition.
        Subject to the provisions of Sections 24.1.10, 24.1.11, 24.1.12 and 24.1.13
        below, Lessee shall not, without Lessor's prior written consent, which consent
        may not be unreasonably withheld or delayed, either directly or indirectly
        or
        through one or more step transactions or tiered transactions, voluntarily
        or by
        operation of law, (i) assign, convey, sell, pledge, mortgage, hypothecate
        or
        otherwise encumber, transfer or dispose of all or any part of this Lease
        or
        Lessee's leasehold estate hereunder, (ii) Master Sublease all or any part
        of the
        Leased Property and/or any Capital Additions of any Facility, (iii) engage
        the
        services of any Person that is not an Affiliate of Lessee for the management
        or
        operation of more than ten percent (10%) of the Leased Property and/or any
        Capital Additions of any Facility, (iv) convey, sell, assign, transfer or
        dispose of any stock or partnership, membership or other interests (whether
        equity or otherwise) in Lessee (which shall include any conveyance, sale,
        assignment, transfer or disposition of any stock or partnership, membership
        or
        other interests (whether equity or otherwise) in any Controlling Person(s)),
        if
        such conveyance, sale, assignment, transfer or disposition results, directly
        or
        indirectly, in a change in control of Lessee (or in any Controlling Person(s)),
        (v) dissolve, merge or consolidate Lessee (which shall include any dissolution,
        merger or consolidation of any Controlling Person) with any other Person,
        if
        such dissolution, merger or consolidation, directly or indirectly, results
        in a
        change in control of Lessee or in any Controlling Person(s), (vi) sell, convey,
        assign, or otherwise transfer all or substantially all of the assets of Lessee
        (which shall include any sale, conveyance, assignment, or other transfer
        of all
        or substantially all of the assets of any Controlling Person) or (vii) enter
        into or permit to be entered into any agreement or arrangement to do any
        of the
        foregoing (each of the aforesaid acts referred to in clauses (i) through
        (vii)
        being referred to herein as a "Transfer"). Any Occupancy Arrangement with
        respect to more than Ten Percent (10%) of any Facility in the aggregate to
        any
        Person and/or its Affiliates, directly or indirectly, or through one or more
        step transactions or tiered transactions, shall be deemed to be a "Master
        Sublease" hereunder. For any Occupancy Arrangement transaction not requiring
        the
        consent of Lessor hereunder (i.e., an Occupancy Arrangement not constituting
        a
        Master Sublease or an engagement of a Person and/or its Affiliates, directly
        or
        indirectly, to manage not more than ten percent (10%) of any Facility), Lessee
        shall, within ten (10) days of entering into any such Occupancy Arrangement
        or
        management engagement, notify Lessor of the existence of such Occupancy
        Arrangement or management engagement and the identity of the Occupant or
        manager, as the case may be, and supply Lessor with a copy of the agreement
        relating to such Occupancy Arrangement or management engagement and any other
        related documentation, materials or information reasonably requested by Lessor.
        Notwithstanding the foregoing or any other provisions of this Lease to the
        contrary, Lessee acknowledges that it is Lessor's practice not to permit
        hypothecations or pledges of leasehold interests by its lessees. Accordingly,
        Lessee hereby agrees that Lessor shall have the right to approve or disapprove
        of any such hypothecation or pledge of the leasehold estate created hereby
        by
        Lessee in Lessor's sole and absolute discretion, and if Lessor shall approve
        the
        same Lessor shall be entitled to impose such conditions in connection therewith
        as Lessor deems appropriate.


      
        
          
          

        

        
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      24.1.2
        Consent.

       

      24.1.2.1                   Subject
        to the provisions of Sections 24.1.10, 24.1.11, 24.1.12 and 24.1.13 below,
        prior
        to any Transfer, Lessee shall first notify Lessor of its desire to do so
        and
        shall submit in writing to Lessor: (a) the name of the proposed Occupant,
        assignee, manager or other transferee; (b) the terms and provisions of the
        Transfer, including any agreements in connection therewith; and (c) such
        financial information as Lessor reasonably may request concerning the proposed
        Occupant, assignee, manager or other transferee. Except as otherwise provided
        in
        Sections 24.1.10, 24.1.11, 24.1.12 or 24.1.13 below, Lessor may, as a condition
        to granting such consent, which consent may not be unreasonably withheld
        or
        delayed, and in addition to any other reasonable conditions imposed by Lessor,
        require that the obligations of any Occupant, assignee, manager or other
        transferee which is an Affiliate of another Person be guaranteed by its parent
        or Controlling Person and, except as expressly set forth in Section 24.1.3
        below, that any Guaranty of this Lease be reaffirmed by the applicable Guarantor
        notwithstanding such Transfer. In exercising its right of reasonable approval
        or
        disapproval to a proposed Transfer, Lessor shall be entitled to take into
        account any fact or factor which Lessor reasonably deems relevant to such
        decision, including the following, all of which are agreed to be reasonable
        factors for Lessor's consideration:

       

      (i)                The
        financial strength of the proposed Occupant, assignee, manager or other
        transferee, including the adequacy of its working capital. In connection
        with a
        Transfer resulting from a merger or consolidation to which Summerville Senior
        Living, Inc., a Delaware corporation ("SSL") is a party, Lessor shall be
        entitled to compare the Consolidated Net Worth and debt to equity ratio of
        the
        surviving party following the effectiveness of such event as compared to
        the
        Consolidated Net Worth and debt to equity ratio of Guarantor prior to such
        event.

       

      (ii)                The
        operating experience of the proposed Occupant, assignee, manager or other
        transferee with respect to businesses of the nature, type and size of the
        applicable Facility.

       

      (iii)                The
        quality and reputation of the proposed Occupant, assignee, manager or other
        transferee.

       

      (iv)                Whether
        such Transfer will cause a breach or violation of any material agreements
        to
        which Lessee or any Controlling Person is a party.

       

      (v)                Whether
        there then exists any Event of Default by Lessee pursuant to this
        Lease.

       

      Moreover,
        Lessor shall be entitled to be reasonably satisfied that each and every
        covenant, condition or obligation imposed upon Lessee by this Lease and each
        and
        every right, remedy or benefit afforded Lessor by this Lease is not impaired
        or
        diminished by such Transfer. No withholding of consent by Lessor for any
        reason
        deemed sufficient by Lessor shall give rise to any claim by Lessee or any
        other
        Person or entitle Lessee to terminate this Lease or to any abatement of
        Rent.


      
        
          
          

        

        
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      24.1.2.2
        In connection with any Transfer, Lessor shall be entitled to receive the
        applicable Transfer Consideration, if any.

       

      24.1.2.3
        The consent by Lessor to any Transfer shall not constitute a consent to any
        subsequent Transfer or to any subsequent or successive Transfer. Any purported
        or attempted Transfer contrary to the provisions of this Article shall be
        void
        and, at the option of Lessor, shall terminate this Lease.

       

      24.1.3
        Release of Existing Lessee and Guarantor Upon Certain  Transfers.
Upon the consummation of any Transfer by Lessee that (a) constitutes
        an
        assignment of Lessee's interest in this Lease, (b) requires Lessor's prior
        written consent pursuant to the terms of this Article XXIV, and (c) receives
        such prior written consent by Lessor, Lessor shall release Lessee and Guarantor
        from all obligations arising under this Lease and the Guaranty, as applicable,
        following the effective date of such Transfer, so long as each of the following
        conditions is met:

       

      (i)            The
        Consolidated Net Worth of the assignee (if the assignee's stock is not listed
        for trading on the American Stock Exchange or the New York Stock Exchange
        or
        authorized for quotation on the NASDAQ National Market), or the Shareholder's
        Equity of the assignee (if the assignee's stock is listed for trading on
        the
        American Stock Exchange or the New York Stock Exchange or authorized for
        quotation on the NASDAQ National Market), immediately following the
        effectiveness of such Transfer shall be greater than an amount equal to the
        greater of (a) the Consolidated Net Worth of SSL as of the Restatement Date,
        and
        (b) the Shareholder's Equity of SSL immediately following a public offering
        of
        SSL's stock which constitutes a bona fide public distribution of such stock
        pursuant to a firm commitment underwriting or a plan of distribution registered
        under the Securities Act of 1933 and results in such stock being listed for
        trading on the American Stock Exchange or the New York Stock Exchange or
        authorized for quotation on the NASDAQ National Market immediately upon the
        completion of such public offering, if any, in each case as reasonably
        determined by Lessor.

       

      (ii)            The
        debt to equity ratio of the assignee following the effectiveness of such
        Transfer shall be less than an amount equal to the lesser of (a) the debt
        to
        equity ratio of SSL as of the Restatement Date and (b) the debt to equity
        ratio
        of SSL immediately following a public offering of SSL's stock which constitutes
        a bona fide public distribution of such stock pursuant to a firm commitment
        underwriting or a plan of distribution registered under the Securities Act
        of
        1933 and results in such stock being listed for trading on the American Stock
        Exchange or the New York Stock Exchange or authorized for quotation on the
        NASDAQ National Market immediately upon the completion of such public offering,
        if any, in each case as reasonably determined by Lessor. For purposes of
        this
        clause (ii), "debt" shall include the capitalized value of any leases required
        to be capitalized in accordance with GAAP to which SSL and/or such assignee
        (and/or their consolidated Subsidiaries) are parties and the same shall be
        demonstrated by financial statements prepared in accordance with GAAP and
        reasonably satisfactory to Lessor.


      
        
          
          

        

        
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      (iii)            The
        assignee shall have adequate experience and skill in (i) operating facilities
        comparable to the applicable Facility(ies) and (ii) a business of the nature,
        type and size of the business of SSL immediately prior to the effectiveness
        of
        such Transfer, as determined by Lessor in its reasonable
        discretion.

       

      24.1.4
        Attornment and Related Matters. Any Occupancy Arrangement (whether or not
        the same constitutes a Master Sublease) or management engagement shall be
        expressly subject and subordinate to all applicable terms and conditions
        of this
        Lease and provide that Lessor, at its option and without any obligation to
        do
        so, may require any Occupant or manager to attorn to Lessor, in which event
        Lessor shall undertake the obligations of Lessee, as sublessor, licensor
        or
        otherwise under such Occupancy Arrangement or management engagement from
        the
        time of the exercise of such option to the termination of such Occupancy
        Arrangement or management engagement and in such case Lessor shall not be
        liable
        for any prepaid rents, fees or other charges or for any prepaid security
        deposits paid by such Occupant to Lessee or for any other prior defaults
        of
        Lessee under such Occupancy Arrangement or management engagement. In the
        event
        that Lessor shall not require such attornment with respect to any Occupancy
        Arrangement or management engagement, then such Occupancy Arrangement or
        management engagement shall automatically terminate upon the expiration or
        earlier termination of this Lease, including any early termination by mutual
        agreement of Lessor and Lessee. Furthermore, any Occupancy Arrangement,
        management engagement or other agreement regarding a Transfer shall expressly
        provide that the Occupant, assignee, manager or other transferee shall furnish
        Lessor with such financial, operational or other information about the physical
        condition of the applicable Facility, including the information required
        by
        Section 25.1.2 herein, as Lessor may request from time to time.

       

      24.1.5
        Assignment of Lessee's Rights Against Occupant Under a Master
        Sublease. If Lessor shall consent to a Master Sublease, then the written
        instrument of consent, executed and acknowledged by Lessor, Lessee and the
        Occupant thereunder, shall contain a provision substantially similar to the
        following:

       

      (i)                Lessee
        and such Occupant hereby agree that, if such Occupant shall be in default
        of any
        of its obligations under the Master Sublease, which default also constitutes
        an
        Event of Default by Lessee under this Lease, then Lessor shall be permitted
        to
        avail itself of all of the rights and remedies available to Lessee against
        such
        Occupant in connection therewith.

       

      (ii)                Without
        limiting the generality of the foregoing, Lessor shall be permitted (by
        assignment of a cause of action or otherwise) to institute an action or
        proceeding against such Occupant in the name of Lessee in order to enforce
        Lessee's rights under the Master Sublease, and also shall be permitted to
        take
        all ancillary actions (e.g., serve default notices and demands) in the name
        of
        Lessee as Lessor reasonably shall determine to be necessary. Lessee agrees
        to
        cooperate with Lessor, and to execute such documents as shall be reasonably
        necessary, in connection with the implementation of the foregoing rights
        of
        Lessor. Lessee expressly acknowledges and agrees that the exercise by Lessor
        of
        any of the foregoing rights and remedies shall not constitute an election
        of
        remedies, and shall not in any way impair Lessor's entitlement to pursue
        other
        rights and remedies directly against Lessee.


      
        
          
          

        

        
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      24.1.6
        Costs. Lessee shall reimburse Lessor for Lessor's reasonable costs and
        expenses incurred in conjunction with the processing and documentation of
        any
        request to Transfer, including attorneys', architects', engineers' or other
        consultants' fees whether or not such Transfer is actually
        consummated.

      


      24.1.7
        No Release of Lessee's Obligations. Except as expressly set forth in
        Section 24.1.3 above, no Transfer shall relieve Lessee of its obligation
        to pay
        the Rent and to perform all of the other obligations to be performed by Lessee
        hereunder. Except as expressly set forth in Section 24.1.3 above, the liability
        of Lessee named herein and any immediate and remote successor in interest
        of
        Lessee (i.e., by means of any Transfer), and the due performance of the
        obligations of this Lease on Lessee's part to be performed or observed, shall
        not in any way be discharged, released or impaired by any (i) agreement which
        modifies any of the rights or obligations of the parties under this Lease,
        (ii)
        stipulation which extends the time within which an obligation under this
        Lease
        is to be performed, (iii) waiver of the performance of an obligation required
        under this Lease, or (iv) failure to enforce any of the obligations set forth
        in
        this Lease. Except as expressly set forth in Section 24.1.3 above, if any
        Occupant, assignee, manager or other transferee defaults in any performance
        due
        hereunder, Lessor may proceed directly against the Lessee named herein and/or
        any immediate and remote successor in interest of Lessee without exhausting
        its
        remedies against such Occupant, assignee, manager or other
        transferee.

      


      24.1.8
        REIT Protection. Anything contained in this Lease to the contrary
        notwithstanding, no Transfer shall be consummated on any basis such that,
        based
        on the reasonable advice of Lessor's outside counsel, the status of Lessor
        as a
        real estate investment trust could be jeopardized because (i) the rental
        or
        other amounts to be paid by the Occupant, assignee, manager or other transferee
        thereunder would be based, in whole or in part, on the income or profits
        derived
        by the business activities of the Occupant, assignee, manager or other
        transferee; (ii) the Transfer is with any Person in which Lessee or Lessor
        owns
        an interest, directly or indirectly (by applying constructive ownership rules
        set forth in Section 856(d)(5) of the Code); or (iii) the Transfer is to
        be
        consummated with a Person or in a manner which could cause any portion of
        the
        amounts received by Lessor pursuant to this Lease or any Occupancy Arrangement
        to fail to qualify as "rents from real property" within the meaning of Section
        856(d) of the Code, or any similar or successor provision thereto or which
        could
        cause any other income of Lessor to fail to qualify as income described in
        Section 856(c)(2) of the Code. Lessee shall provide such information as Lessor's
        outside counsel may reasonably request to provide its advice regarding the
        foregoing, and in rendering such advice, Lessor's counsel shall be entitled
        to
        rely on factual representations from Lessee and Lessor; provided, however,
        that
        Lessee shall have no liability therefor if Lessee has provided such information
        and representations in good faith and after a reasonably diligent review
        and
        inquiry of the subject matter thereof.


      
        
          
          

        

        
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      24.1.9
        Transfers In Bankruptcy. In the event of a Transfer pursuant to the
        provisions of the Bankruptcy Code, all consideration payable or otherwise
        to be
        delivered in connection with such Transfer shall be paid or delivered to
        Lessor,
        shall be and remain the exclusive property of Lessor and shall not constitute
        property of Lessee or of the estate of Lessee within the meaning of the
        Bankruptcy Code. Any consideration constituting Lessor's property pursuant
        to
        the immediately preceding sentence and not paid or delivered to Lessor shall
        be
        held in trust for the benefit of Lessor and be promptly paid or delivered
        to
        Lessor. For purposes of this Section 24.1.9, the term "consideration" shall
        mean
        and include money, services, property and any other thing of value such as
        payment of costs, cancellation or forgiveness of indebtedness, discounts,
        rebates, barter and the like. If any such consideration is in a form other
        than
        cash (such as in kind, equity interests, indebtedness earn-outs, or other
        deferred payments, consulting or management fees, etc.) Lessor shall be entitled
        to receive in cash the then present fair market value of such
        consideration.

       

      24.1.10
        Public Offering/Public Trading. Notwithstanding anything to the contrary
        in this Article XXIV, Lessor's consent shall not be required in connection
        with,
        and the provisions of Section 24.1.2.2 (i.e., payment of Transfer Consideration)
        shall not apply to, any Transfer of any stock of Lessee or any Controlling
        Person(s) as a result of a public offering of Lessee's or such Controlling
        Person's stock which (a) constitutes a bona fide public distribution of such
        stock pursuant to a firm commitment underwriting or a plan of distribution
        registered under the Securities Act of 1933 and (b) results in such stock
        being
        listed for trading on the American Stock Exchange or the New York Stock Exchange
        or authorized for quotation on the NASDAQ National Market immediately upon
        the
        completion of such public offering. In addition, so long as such stock of
        Lessee
        or any such Controlling Person(s) is listed for trading on any such exchange
        or
        authorized for quotation on such market, the transfer or exchange of such
        stock
        over such exchange or market shall not be deemed a Transfer hereunder unless
        the
        same constitutes a tender or similar offer (whether in one transaction or
        in any
        step or series of transactions) to acquire an interest in the outstanding
        and
        issued securities of Lessee or such Controlling Person(s) that results, directly
        or indirectly, in a change in control of Lessee or such Controlling
        Person(s).

       

      24.1.11
        Certain Other Transfers. Notwithstanding anything to the contrary in this
        Article XXIV, but subject to the provisions of Section 24.1.8 above, so long
        as
        SSL has other significant assets other than its interest (whether direct
        or
        indirect) in this Lease, the Facilities and any other leases of facilities
        between Lessor or an Affiliate of Lessor and SSL or an Affiliate of Lessee,
        Lessor shall consent to any Transfer resulting from (a) a sale or
        transfer of all or substantially all of the outstanding capital stock of
        SSL or
        a sale or transfer of all or substantially all of the assets of SSL, in each
        case to a single purchaser or transferee in a single transaction or (b) a
        merger, consolidation or stock exchange to which SSL is a party, and the
        provisions of Section 24.1.2.2 (i.e., payment of Transfer Consideration)
        shall
        not apply to such Transfer, so long as each of the following conditions is
        met:


      
        
          
          

        

        
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      (i)                 The
        Consolidated Net Worth of the purchaser or transferee resulting from a Transfer
        pursuant to clause (a) above or the surviving party resulting from a Transfer
        pursuant to clause (b) above, as the case may be, following the effectiveness
        of
        such event shall be greater than the average Consolidated Net Worth of SSL
        for
        the twelve (12) month period immediately prior to the effectiveness of such
        event, as reasonably determined by Lessor.

       

      (ii)                The
        debt to equity ratio of the purchaser or transferee resulting from a Transfer
        pursuant to clause (a) above or the surviving party resulting from a Transfer
        pursuant to clause (b) above, as the case may be, following the effectiveness
        of
        such event shall be less than the average debt to equity ratio of SSL for
        the
        twelve (12) month period immediately prior to the effectiveness of such event,
        as reasonably determined by Lessor. For purposes of this clause (ii), "debt"
        shall include the capitalized value of any leases required to be capitalized
        in
        accordance with GAAP to which SSL and/or such transferee or surviving entity
        (and/or their consolidated Subsidiaries) are parties and the same shall be
        demonstrated by financial statements prepared in accordance with GAAP and
        reasonably satisfactory to Lessor.

       

      (iii)                The
        purchaser or transferee resulting from a Transfer pursuant to clause (a)
        above
        or the other party(s) to the Transfer pursuant to clause (b) above, as the
        case
        may be, shall have sufficient operating experience and history with respect
        to a
        business of the nature, type and size of the business of SSL as the same
        exists
        prior to the effectiveness of such event, as reasonably determined by Lessor.
        Such purchaser or transferee or other party to such Transfer, as the case
        may
        be, shall be deemed to have "sufficient operating experience and history"
        if,
        (A) the core management team of such purchaser, transferee or other party,
        as
        the case may be, has an average of not less than three (3) years' operating
        experience with respect to the operation and management of facilities of
        the
        type and nature operated and/or managed by SSL and its Subsidiary(ies), or
        (B)
        such transferee or purchaser or other party, as the case may be, shall
        immediately following the effectiveness of such Transfer, and for a period
        of
        not less than one (1) year thereafter, retain and/or hire in a full-time
        management or consulting capacity a majority of the principal officers of
        SSL
        who were in the employment of SSL prior to the effectiveness of
        Transfer.

       

      (iv)                Except
        in the case of a Transfer as to which such transferee or purchaser or surviving
        party, as the case may be, assumes the obligations of SSL under the applicable
        Guaranty as a matter of law, such transferee or purchaser or surviving party
        shall execute either (A) a written assumption of such Guaranty in form and
        substance reasonably acceptable to Lessor or (B) a new guaranty of this Lease
        consistent in form and substance with such Guaranty.

       

      (v)                No
        Event of Default shall have occurred and be continuing
        hereunder.


      
        
          
          

        

        
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      (vi)      
        [Intentionally Omitted].

       

      (vii)                Lessor
        shall receive the applicable information required by Section 24.1.2.1(i)
        with
        respect to each such proposed Transfer and the proposed purchaser or transferee
        resulting therefrom.

       

      As
        used
        in this Section 24.1.11, "other significant assets" shall mean that SSL has
        other net current assets, whether direct or indirect, other than its interests
        (whether direct or indirect) in this Lease, the Facilities and the facilities
        covered thereby and any other facilities leased by SSL or an Affiliate of
        SSL
        from Lessor or an Affiliate of Lessor, which in the aggregate total not less
        than $10,000,000.00 or represent at least Forty Percent (40%) of the total
        net
        current assets of SSL, including its interests (whether direct or indirect)
        in
        the Facilities and any other facilities leased by SSL or any Affiliate of
        SSL
        from Lessor or an Affiliate of Lessor.

       

      24.1.12
        Affiliate Transactions. Notwithstanding anything to the contrary
        contained in this Article XXIV but subject to the provisions of Section 24.1.8
        above, Lessor's consent shall not be required in connection with, and the
        provisions of Section 24.1.2.2 (i.e., payment of Transfer Consideration)
        shall
        not apply to, any assignment of Lessee's interest in this Lease to any
        Affiliate(s) of Lessee, so long as in connection therewith, each of the
        following conditions is met:

       

      (a)           In
        connection with such assignment, there is no change in the use of the Leased
        Property of any Facility from its Primary Intended Use;

       

      (b)           No
        Event of Default shall have occurred and be continuing hereunder;

       

      (c)           The
        assignee shall assume all of the obligations of Lessee hereunder accruing
        subsequent to the effective date of such assignment by an instrument in writing
        in form and substance reasonably satisfactory to Lessor. A copy of such executed
        assumption shall be delivered to Lessor along with the notice specified in
        clause (e) below;

       

      (d)           Except
        as expressly set forth in subsection (f) below, the original Lessee shall
        not be
        released from any of the obligations of the Lessee hereunder, whether occurring
        prior to or after the effective date of such transaction, and if requested
        by
        Lessor, shall execute a written guaranty of the "Lessee's" obligations under
        this Lease in a form satisfactory to Lessor. In addition, Guarantor shall
        not be
        released from any of its obligations under the Guaranty and shall, if requested
        by Lessor, execute a written reaffirmation of such Guaranty in a form
        satisfactory to Lessor; and

       

      (e)             Within
        ten (10) days after the effectiveness of such transaction, Lessee shall notify
        Lessor in writing of the occurrence of such event, the effective date thereof,
        the facts placing the same within the provisions of this Section 24.1.12
        and any
        other change in the address for billings and notices to the Lessee pursuant
        to
        this Lease, accompanied by an executed copy of the assumption or written
        guaranty as required pursuant to this Lease.


      
        
          
          

        

        
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      (f)    Notwithstanding
        anything to the contrary contained in this

      Section
        24.1.12, the original Lessee following an assignment to any Affiliate(s)
        of
        Lessee as provided in this Section 24.1.12 shall be released from all
        obligations under this Lease upon the dissolution or liquidation of such
        original Lessee.

       

      24.1.13
        Transfer Involving Apollo Real Estate Investment Fund. Notwithstanding
        anything to the contrary contained in this Article XXIV but subject to the
        provisions of Section 24.1.8 above, Lessor's consent shall not be required
        in
        connection with, and the provisions of Section 24.1.2.2 (i.e., payment of
        Transfer Consideration) shall not apply to, any Transfer resulting from the
        reduction or elimination of any equity interest held by Apollo Real Estate
        Investment Fund III, L.P. and/or Apollo Real Estate Investment Fund IV, L.P.
        in
        SSL, so long as in connection therewith, each of the following conditions
        is
        met:

       

      (a)            Guarantor
        shall not be released from any of its obligations under the Guaranty and
        shall,
        if requested by Lessor, execute a written reaffirmation of such Guaranty
        in a
        form satisfactory to Lessor;

       

      (b)            The
        Consolidated Net Worth of SSL (if SSL's stock is not listed for trading on
        the
        American Stock Exchange or the New York Stock Exchange or authorized for
        quotation on the NASDAQ National Market), or the Shareholder's Equity of
        SSL (if
        SSL's stock is listed for trading on the American Stock Exchange or the New
        York
        Stock Exchange or authorized for quotation on the NASDAQ National Market),
        immediately following the effectiveness of such Transfer shall be equal to
        or
        greater than an amount equal to the greater of (a) the Consolidated Net Worth
        of
        SSL as of the Restatement Date, and (b) the Shareholder's Equity of SSL
        immediately following a public offering of SSL's stock which constitutes
        a bona
        fide public distribution of such stock pursuant to a firm commitment
        underwriting or a plan of distribution registered under the Securities Act
        of
        1933 and results in such stock being listed for trading on the American Stock
        Exchange or the New York Stock Exchange or authorized for quotation on the
        NASDAQ National Market immediately upon the completion of such public offering,
        if any, in each case as reasonably determined by Lessor;

       

      (c)             The
        debt to equity ratio of SSL following the effectiveness of such Transfer
        shall
        be equal to or less than an amount equal to the lesser of (a) the debt to
        equity
        ratio of SSL as of the Restatement Date and (b) the debt to equity ratio
        of SSL
        immediately following a public offering of SSL's stock which constitutes
        a bona
        fide public distribution of such stock pursuant to a firm commitment
        underwriting or a plan of distribution registered under the Securities Act
        of
        1933 and results in such stock being listed for trading on the American Stock
        Exchange or the New York Stock Exchange or authorized for quotation on the
        NASDAQ National Market immediately upon the completion of such public offering,
        if any, in each case as reasonably determined by Lessor. For purposes of
        this
        clause (iii), "debt" shall include the capitalized value of any leases required
        to be capitalized in accordance with GAAP to which SSL (and/or its consolidated
        Subsidiaries) are parties and the same shall be demonstrated by financial
        statements prepared in accordance with GAAP and reasonably satisfactory to
        Lessor; and


      
        
          
          

        

        
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      (d)            The
        Persons comprising senior management of SSL following the effectiveness of
        such
        Transfer shall have adequate experience and skill in (i) operating facilities
        comparable to the Facilities and (ii) a business of the nature, type and
        size of
        the business of SSL immediately prior to the effectiveness of such Transfer,
        as
        determined by Lessor in its reasonable discretion.

       

      ARTICLE
        XXV.

       

      25.1
        Officer's Certificates and Financial Statements

       

      25.1.1
        Officer's Certificate. At any time and from time to time upon Lessee's
        receipt of not less than ten (10) days' prior written request by Lessor,
        Lessee
        shall furnish to Lessor an Officer's Certificate certifying (i) that this
        Lease
        is unmodified and in full force and effect, or that this Lease is in full
        force
        and effect as modified and setting forth the modifications; (ii) the dates
        to
        which the Rent has been paid; (iii) whether or not, to the best knowledge
        of
        Lessee, Lessor is in default in the performance of any covenant, agreement
        or
        condition contained in this Lease and, if so, specifying each such default
        of
        which Lessee may have knowledge; and (iv) responses to such other questions
        or
        statements of fact as Lessor, any ground or underlying lessor, any purchaser
        or
        any current or prospective Facility Mortgagee shall reasonably request. Lessee's
        failure to deliver such statement within such time shall constitute an
        acknowledgement by Lessee that (x) this Lease is unmodified and in full force
        and effect except as may be represented to the contrary by Lessor; (y) Lessor
        is
        not in default in the performance of any covenant, agreement or condition
        contained in this Lease; and (z) the other matters set forth in such request,
        if
        any, are true and correct. Any such certificate furnished pursuant to this
        Article may be relied upon by Lessor and any current or prospective Facility
        Mortgagee, ground or underlying lessor or purchaser of the Leased
        Property.

       

      25.1.2
        Statements. Lessee shall furnish the following statements to Lessor:

       

      (a)            within
        120 days after the end of each of Lessee's and Guarantor's fiscal years,
        a copy
        of the audited consolidated balance sheets of Lessee, its consolidated
        Subsidiaries and Guarantor as of the end of such fiscal year, and related
        audited consolidated statements of income, changes in common stock and other
        stockholders' equity and changes in the financial position of Lessee, its
        consolidated Subsidiaries and Guarantor for such fiscal year, prepared in
        accordance with GAAP applied on a basis consistently maintained throughout
        the
        period involved, such consolidated financial statements to be certified by
        nationally recognized certified public accountants;

       

      (b)           within
        120 days after the end of each of Lessee's and Guarantor's fiscal years,
        and
        together with the annual audit report furnished in accordance with clause
        (a)
        above, an Officer's Certificate stating that to the best of the signer's
        knowledge and belief after making due inquiry, Lessee is not in default in
        the
        performance or observance of any of the terms of this Lease, or if Lessee
        shall
        be in default, specifying all such defaults, the nature thereof, and the
        steps
        being taken to remedy the same;


      
        
          
          

        

        
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      (c)           within
        thirty (30) days after the end of each month for those months occurring from
        the
        Restatement Date to three months after the first month in which the average
        Cash
        Flow Coverage for any Facility equals or exceeds 1.3 for such month, all
        consolidated financial reports Lessee produces for reporting purposes and
        detailed statements of income and detailed operational statistics regarding
        occupancy rates, patient and resident mix and patient and resident rates
        by type
        for such Facility; and thereafter within sixty (60) days after the end of
        each
        of Lessee's quarters, all quarterly consolidated financial reports Lessee
        produces for reporting purposes and detailed statements of income and detailed
        operational statistics regarding occupancy rates, patient and resident mix
        and
        patient and resident rates by type for such Facility;

       

      (d)           within
        120 days after the end of each of Lessee's fiscal years, a copy of each cost
        report filed with the appropriate governmental agency for each
        Facility;

       

      (e)            within
        thirty (30) days after they are required to be filed with the SEC, copies
        of any
        annual reports and of information, documents and other reports, or copies
        of
        such portions of any of the foregoing as the SEC may prescribe, which Lessee
        is
        required to file with the SEC pursuant to Section 13 or 15(d) of the Securities
        Exchange Act of 1934;

       

      (f)            immediately
        upon Lessee's receipt thereof, copies of all written communications received
        by
        Lessee from any regulatory agency relating to (i) surveys of any Facility
        for
        purposes of licensure, Medicare and Medicaid certification and accreditation
        and
        (ii) any proceeding, formal or informal, with respect to cited deficiencies
        with
        respect to services and activities provided and performed at any Facility,
        including patient and resident care, patient and resident activities, patient
        and resident therapy, dietary, medical records, drugs and medicines, supplies,
        housekeeping and maintenance, or the condition of such Facility, and involving
        an actual or threatened warning, imposition of a fine or a penalty, or
        suspension, termination or revocation of such Facility's license to be operated
        in accordance with its Primary Intended Use;

       

      (g)            within
        120 days after the end of each fiscal year of the financial institution issuing
        the letter of credit required under Article XXI, a copy of the audited
        consolidated balance sheets of such financial institution as of the end of
        such
        fiscal year, and related unaudited consolidated statements of income, changes
        in
        common stock and other stockholders equity and changes in the financial position
        of such financial institution and its consolidated subsidiaries for each
        such
        fiscal year, prepared in accordance with generally accepted accounting
        principles applied on a basis consistently maintained throughout the period
        involved, such consolidated financial statements to be certified by nationally
        recognized certified public accountants;

       

      (h)            immediately
        upon Lessee's receipt thereof, copies of all claims, reports, complaints,
        notices, warnings or asserted violations relating in any way to the Leased
        Property or Lessee's use thereof; and

       

      (i)             with
        reasonable promptness, such other information respecting (i) the financial
        and
        operational condition and affairs of Lessee and each Facility, (ii) the physical
        condition of the Leased Property and any Capital Addition thereto and (iii)
        any
        suspected Transfer, including the then equity or voting ownership in Lessee
        or
        in any Controlling Person, in each case as Lessor may reasonably request,
        in the
        form of a questionnaire or otherwise, from time to time.


      
        
          
          

        

        
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      25.1.3
        Charges. Lessee acknowledges that the failure to furnish Lessor with any
        of the certificates or statements required by this Article XXV will cause
        Lessor
        to incur costs and expenses not contemplated hereunder, the exact amount
        of
        which is presently anticipated to be extremely difficult to ascertain.
        Accordingly, if Lessee fails to furnish Lessor with any of the certificates
        or
        statements required by this Article XXV, Lessee shall pay to Lessor upon
        demand
        $1,000 for each such failure as Additional Charges. The parties agree that
        this
        charge represents a fair and reasonable estimate of the costs that Lessor
        will
        incur by reason of Lessee's failure to furnish Lessor with such certificates
        and
        statements.

       

      25.1.4
        Lessee's Submission of Certificates/Statements. Lessee shall be obligated
        to furnish Lessor with all certificates and statements required under this
        Article XXV by (i) delivery of printed copies of the same to Lessor at its
        address set forth in Article XXXIII below or any other address that Lessor
        may
        from time to time designate in writing and (ii) electronic delivery of the
        same
        to Lessor at any electronic mail address that Lessor may from time to time
        designate in writing.

       

      ARTICLE
        XXVI.

       

      26.1
        Lessor's Right to Inspect and Show the Leased Property. Lessee shall
        permit Lessor and its authorized representatives upon two (2) Business Days'
        prior notice to (i) inspect the Leased Property of any Facility and any Capital
        Addition thereto and (ii) exhibit the same to prospective purchasers and
        lenders, and during the last twelve (12) months of the Term, to prospective
        lessees or managers, in each instance during usual business hours and subject
        to
        any reasonable security, health, safety or confidentiality requirements of
        Lessee or any Legal Requirement or Insurance Requirement. Lessee shall cooperate
        with Lessor in exhibiting the Leased Property of any Facility and any Capital
        Additions thereto to prospective purchasers, lenders, lessees and
        managers.

       

      ARTICLE
        XXVII.

       

      27.1
        No Waiver. No failure by Lessor to insist upon the strict performance of
        any term hereof or to exercise any right, power or remedy hereunder and no
        acceptance of full or partial payment of Rent during the continuance of any
        default or Event of Default shall constitute a waiver of any such breach
        or of
        any such term. No waiver of any breach shall affect or alter this Lease,
        which
        shall continue in full force and effect with respect to any other then existing
        or subsequent breach.

       

      ARTICLE
        XXVIII.

       

      28.1
        Remedies Cumulative. Each legal, equitable or contractual right, power
        and remedy of Lessor now or hereafter provided either in this Lease or by
        statute or otherwise shall be cumulative and concurrent and shall be in addition
        to every other right, power and remedy and the exercise or beginning of the
        exercise by Lessor of any one or more of such rights, powers and remedies
        shall
        not preclude the simultaneous or subsequent exercise by Lessor of any or
        all of
        such other rights, powers and remedies.


      
        
          
          

        

        
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      ARTICLE
        XXIX.

       

      29.1
        Acceptance of Surrender. No surrender to Lessor of this Lease or of the
        Leased Property or any Capital Additions or any part(s) thereof or of any
        interest therein, shall be valid or effective unless agreed to and accepted
        in
        writing by Lessor and no act by Lessor or any representative or agent of
        Lessor,
        other than such a written acceptance by Lessor, shall constitute an acceptance
        of any such surrender.

       

      ARTICLE
        XXX.

       

      30.1
        No Merger. There shall be no merger of this Lease or of the leasehold
        estate created hereby by reason of the fact that the same Person may acquire,
        own or hold, directly or indirectly, (i) this Lease or the leasehold estate
        created hereby or any interest in this Lease or such leasehold estate and
        (ii)
        the fee estate in the Leased Property or any part(s) thereof.

       

      ARTICLE
        XXXI.

       

      31.1
        Conveyance by Lessor. If Lessor or any successor owner of the Leased
        Property shall convey the Leased Property other than as security for a debt,
        Lessor or such successor owner, as the case may be, shall thereupon be released
        from all future liabilities and obligations of the Lessor under this Lease
        arising or accruing from and after the date of such conveyance or other transfer
        and all such future liabilities and obligations shall thereupon be binding
        upon
        the new owner.

       

      31.2
        New Lease. Lessor shall have the right, at any time and from time to time
        during the Term for any purpose, by written notice to Lessee, to require
        Lessee
        to execute an amendment to this Lease whereby the Leased Property of one
        or more
        Facilities (individually, a "Separated Property" or collectively, the "Separated
        Properties") is separated and removed from this Lease, and to simultaneously
        execute a substitute lease with respect to such Separated Property(ies),
        in
        which case:

       

      31.2.1
        Lessor and Lessee shall execute a new lease (the "New Lease") for such Separated
        Property(ies), effective as of the date specified in Section 31.2.3. below
        (the
        "New Lease Effective Date"), in the same form and substance as this Lease,
        but
        with such changes thereto as necessary to reflect the separation of the
        Separated Property(ies) from the balance of the Leased Property, including
        specifically the following:

       

      (i)
        The total monthly
        Minimum Rent payable under such New Lease shall be the total applicable monthly
        Allocated Minimum Rent with respect to such Separated
        Property(ies);


      
        
          
          

        

        
          64

          
            

          

        

        
          
          

        

      


      (ii)            All
        Minimum Rent rental escalations under the New Lease shall be at the times
        and in
        the amounts set forth in this Lease for Minimum Rent increases for the
        applicable Separated Property(ies); and

       

      (iii)           The
        New Lease shall provide that the lessee thereunder shall be responsible for
        the
        payment, performance and satisfaction of all duties, obligations and liabilities
        arising under this Lease, insofar as they relate to the Separated Property(ies),
        that were not paid, performed and satisfied in full prior to the effective
        date
        of the New Lease (and Lessee under this Lease shall also be responsible for
        the
        payment, performance and satisfaction of the aforesaid duties, obligations
        and
        liabilities not paid, performed and satisfied in full prior to the effective
        date of such New Lease).

       

      31.2.2
        Lessor and Lessee shall also execute an amendment to this Lease effective
        as of
        the New Lease Effective Date reflecting the separation of the Separated
        Property(ies) from the balance of the Leased Property and making such
        modifications to this Lease as are necessitated thereby.

       

      31.2.3
        In
        the case of any New Lease that is entered into in accordance with this Section
        31.2 such New Lease shall be effective on the date which is the earlier of
        (i)
        the date the New Lease is fully executed and delivered by the parties thereto
        and (ii) the date specified in the written notice from Lessor to Lessee
        requiring a New Lease as described above, which date shall be no sooner than
        ten
        (10) days after the date such notice is issued.

       

      31.2.4
        If
        such Separated Property(ies) is a Group 2 Facility, Lessee's obligation to
        provide letters of credit in accordance with Article XXI of this Lease shall
        be
        segregated so that (a) the applicable Lessee shall be required to provide
        a
        letter of credit pursuant to the New Lease, on the same terms and conditions
        as
        set forth in this Lease, except that "Letter of Credit Amount" under the
        New
        Lease shall mean an amount equal to the then existing Letter of Credit Amount
        under this Lease (prior to the amendment contemplated in Section 31.2.2 above),
        times a fraction, the numerator of which is the sum of the then existing
        annual
        Allocated Minimum Rent for the Separated Property(ies), and the denominator
        of
        which is the sum of the then existing total annual Minimum Rent payable for
        all
        Facilities (including the Separated Property(ies)), and (b) the "Letter of
        Credit Amount" under this Lease (as amended) shall be reduced by the "Letter
        of
        Credit Amount" for the New Lease determined in accordance with subsection
        (a)
        above. If such Separated Property(ies) is a Group 1 Facility or Group 3
        Facility, the applicable Lessee under the New Lease shall have no obligation
        to
        provide a letter of credit to secure its obligations thereunder, and the
        terms
        of this Section 31.2.4 shall not apply.

       

      31.2.5
        Lessee and Lessor shall take such actions and execute and deliver such
        documents, including without limitation the New Lease and an amendment to
        this
        Lease, as are reasonably necessary and appropriate to effectuate the provisions
        and intent of this Section 31.2.

       

      31.2.6 
        Each party shall bear its own costs and expenses in connection with any New
        Lease entered into in accordance with this Section 31.2.


      
        
          
          

        

        
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      ARTICLE
        XXXII.

       

      32.1
        Quiet Enjoyment. So long as Lessee shall pay the Rent as the same becomes
        due and shall fully comply with all of the terms of this Lease and fully
        perform
        its obligations hereunder, Lessee shall peaceably and quietly have, hold
        and
        enjoy the Leased Property of each Facility for the Term, free of any claim
        or
        other action by Lessor or anyone claiming by, through or under Lessor, but
        subject to all liens and encumbrances of record as of (i) with respect to
        the
        Group 1 Facilities and the Group 2 Facilities, the Original Lease Commencement
        Date and (ii) with respect to the Group 3 Facilities, the Restatement Date,
        or
        created thereafter as permitted under the Original Leases or hereunder or
        thereafter consented to by Lessee. No failure by Lessor to comply with the
        foregoing covenant shall give Lessee any right to cancel or terminate this
        Lease
        or abate, reduce or make a deduction from or offset against the Rent or any
        other sum payable under this Lease, or to fail to perform any other obligation
        of Lessee hereunder. Notwithstanding the foregoing, Lessee shall have the
        right,
        by separate and independent action to pursue any claim it may have against
        Lessor as a result of a breach by Lessor of the covenant of quiet enjoyment
        contained in this Article.

       

      ARTICLE
        XXXIII.

       

      33.1
        Notices. Any notice, consent, approval, demand or other communication
        required or permitted to be given hereunder (a "notice") must be in writing
        and
        may be served personally or by U.S. Mail. If served by U.S. Mail, it shall
        be
        addressed as follows:

       

      
        	
                 

              	
                If
                  to Lessor:

              	
                Health
                  Care Property Investors, Inc. 

                3760
                  Kilroy Airport Way, Suite 300 

                Long
                  Beach, California 90806 

                Attn:
                  Legal Department

              


      

       
        Fax: (562) 733-5200

       

       

      
        	
                 

              	
                with
                  a copy to:

              	
                Latham
                  & Watkins LLP

              


      

       
        650 Town Center Drive, 20th Floor

       
        Costa Mesa, California 92626

       
        Attn: David C. Meckler, Esq.

       
        Fax: (714) 755-8290


       

       

      
        	
                 

              	
                If
                  to Lessee:

              	
                c/o
                  Summerville Senior Living, Inc. 

                3000
                  Executive Parkway, Suite 530 

                San
                  Ramon, California 94583 

                Attn:
                  Granger Cobb

              


      

       
        Fax: (925) 866-8506

       

      


      
        	
                 

              	
                with
                  a copy to:

              	
                Pircher,
                  Nichols & Meeks

              


      

       
        1925 Century Park East, 17th Floor

       
        Los Angeles, California 90067

       
        Attn: Gary Laughlin, Esq.

        Fax:
        (310) 201-8922



      
        
          
          

        

        
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      Any
        notice which is personally served shall be effective upon the date of service;
        any notice given by U.S. Mail shall be deemed effectively given, if deposited
        in
        the United States Mail, registered or certified with return receipt requested,
        postage prepaid and addressed as provided above, on the date of receipt,
        refusal
        or non-delivery indicated on the return receipt. In lieu of notice by U.S.
        Mail,
        either party may send notices by facsimile or by a nationally recognized
        overnight courier service which provides written proof of delivery (such
        as
        U.P.S. or Federal Express). Any notice sent by facsimile shall be effective
        upon
        confirmation of receipt in legible form, and any notice sent by a nationally
        recognized overnight courier shall be effective on the date of delivery to
        the
        party at its address specified above as set forth in the courier's delivery
        receipt. Either party may, by notice to the other from time to time in the
        manner herein provided, specify a different address for notice
        purposes.

       

      ARTICLE
        XXXIV.

       

      34.1
        Appraiser. If it becomes necessary to determine the Fair Market Value,
        Fair Market Rental of any Facility for any purpose of this Lease or the
        Allocated Value for purposes of determining any Transfer Consideration payable
        to Lessor in connection with a Sale of Business pursuant to this Lease or
        the
        Negative FMV for purposes of Section 16.9, the same shall be determined by
        an
        independent appraisal firm, in which one or more of the members, officers
        or
        principals of such firm are Members of the Appraisal Institute (or any successor
        organization thereto), as may be reasonably selected by Lessor (the
        "Appraiser"). Lessor shall cause such Appraiser to determine the Fair Market
        Value, Fair Market Rental or Allocated Value or Negative FMV of such Facility
        as
        of the relevant date (giving effect to the impact, if any, of inflation from
        the
        date of the Appraiser's decision to the relevant date) and the determination
        of
        such Appraiser shall be final and binding upon the parties. A written report
        of
        such Appraiser shall be delivered and addressed to each of Lessor and Lessee.
        To
        the extent consistent with sound appraisal practice as then existing at the
        time
        of any such appraisal, an appraisal of Fair Market Value for purposes of
        this
        Lease shall take into account and shall give appropriate consideration to
        all
        three customary methods of appraisal (i.e., the cost approach, the sales
        comparison approach and the income approach), and no one method or approach
        shall be deemed conclusive simply by reason of the nature of Lessor's business
        or because such approach may have been used for purposes of determining the
        fair
        market value of such Facility at the time of acquisition thereof by Lessor.
        This
        provision for determination by appraisal shall be specifically enforceable
        to
        the extent such remedy is available under applicable law, and any determination
        hereunder shall be final and binding upon the parties except as otherwise
        provided by applicable law. Except as otherwise provided in Section 16.9,
        Lessor
        and Lessee shall each pay one-half of the fees and expenses of the Appraiser
        and
        one-half of all other costs and expenses incurred in connection with such
        appraisal.

       

      ARTICLE
        XXXV.

       

      35.1
        Lessee's Option to Purchase the Leased Property.

       

      35.1.1
        Group 1 Facilities. Provided no Event of Default has occurred and is
        continuing hereunder, Lessee shall have the option to purchase the Leased
        Property of the Group 1 Facilities, or either of them, upon the expiration
        of
        the Fixed Term or the Extended Term for such Group 1 Facilities, at the greater
        of (i) the Minimum Repurchase Price for such Group 1 Facility(ies) and (ii)
        Lessor's Shared Appreciation Purchase Price for such Group 1 Facility(ies),
        provided that in the event Lessee does not elect to purchase both of the
        Group 1
        Facilities pursuant to the terms of this Section, concurrent with Lessee's
        election to exercise its purchase option hereunder, the Term of this Lease
        for
        the remaining Group 1 Facility is extended for the Extended Term in accordance
        with the terms of Article XIX.


      
        
          
          

        

        
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      35.1.2
        Group 3 Facilities. Provided no Event of Default has occurred and is
        continuing hereunder, Lessee shall have the option to purchase the Leased
        Property of all (but not less than all) of the Group 3 Facilities upon the
        expiration of the tenth (10th) Lease Year for such Group 3 Facilities, for
        an
        amount equal to the sum of Group 3 Facility Purchase Price for all of the
        Group
        3 Facilities.

       

      35.1.3
        General. Lessee shall exercise the option(s) to purchase the Leased
        Property set forth in Sections 35.1.1 and/or 35.1.2 above, as applicable,
        by
(i)    opening
        an escrow (the "Escrow") with and by depositing either (1) cash or (2) a
        letter
        of credit from a financial institution and in form in each case acceptable
        to
        Lessor, the sum of Two and One-Half Percent (21/2%) of (A) with respect to
        the
        Group 1 Facility(ies), the Minimum Repurchase Price and (B) with respect
        to the
        Group 3 Facilities, the sum of the Group 3 Facility Purchase Price for all
        of
        the Group 3 Facilities (the "Opening Deposit") and a copy of this Lease with
        a
        national title company reasonably acceptable to Lessor ("Escrow Holder")
        and
        giving written notice to Lessor of such deposit with Escrow Holder no earlier
        than fifteen (15) months and not less than twelve (12) months prior to the
        expiration of (x) with respect to the Group 1 Facility(ies), the Fixed Term
        or
        the Extended Term, as applicable, and (y) with respect to the Group 3
        Facilities, the tenth (10th) Lease
        Year for
        such Facilities, and (ii) delivering to Lessor concurrent with such notice
        a
        reaffirmation of the Guaranty executed by Guarantors stating, in substance,
        that
        Guarantors' obligations under the Guaranty shall extend to the purchase contract
        formed by Lessor and Lessee upon proper and timely exercise of such option.
        If
        Lessee shall not be entitled to exercise such option (e.g., by reason of
        an
        Event of Default) or shall be entitled to exercise the same but shall fail
        to do
        so within the time and in the manner herein provided, such option shall lapse
        and thereafter not be exercisable by Lessee. No failure by Lessor to notify
        Lessee of any defect in any attempted exercise of the foregoing option shall
        be
        deemed a waiver by Lessor of the right to insist upon Lessee's exercise of
        such
        option in strict accordance with the provisions hereof. In the event that
        Lessee
        shall properly and timely exercise such option, then such transaction shall
        be
        consummated on or within ten (10) days after the expiration of (i) with respect
        to the Group 1 Facility(ies), the Fixed Term or the Extended Term, as
        applicable, and (ii)    with
        respect to the Group 3 Facilities, the tenth (10th) Lease
        Year for
        such Facilities, but in either case subject to any delays resulting from
        (A) a
        cause described in Section 45.1.16 below or (B) Lessor's breach of its
        obligations set forth in this Section 35 (the "Outside Closing
        Date").

       

      35.2
        Defaults.

       

      
        
          
          

        

        
          68

          
            

          

        

        
          
          

        

      

      
         

        (a)
          Liquidated Damages. IF, FOLLOWING A VALID AND PROPER EXERCISE OF THE FOREGOING
          OPTION(S), LESSEE FAILS TO COMPLETE THE PURCHASE OF THE LEASED PROPERTY
          AND SUCH
          FAILURE CONSTITUTES A BREACH HEREOF, THEN LESSOR, AT ITS OPTION, MAY TERMINATE
          THE PURCHASE CONTRACT FORMED BY LESSEE'S EXERCISE OF SUCH OPTION(S) AND
          THE
          ESCROW BY GIVING WRITTEN NOTICE TO LESSEE AND ESCROW HOLDER AND, THEREUPON,
          THE
          ESCROW SHALL BE CANCELLED, ALL DOCUMENTS SHALL BE RETURNED TO THE RESPECTIVE
          PARTIES WHO DEPOSITED THE SAME, AND LESSEE SHALL PAY ALL TITLE AND ESCROW
          CANCELLATION CHARGES AND ALL OF LESSOR'S REASONABLE LEGAL FEES AND COSTS.
          IN
          ADDITION, LESSOR AND LESSEE AGREE THAT, BASED ON THE CIRCUMSTANCES NOW
          EXISTING,
          KNOWN OR UNKNOWN, IT WOULD BE EXCESSIVELY COSTLY AND IMPRACTICABLE TO ESTABLISH
          LESSOR'S DAMAGES BY REASON OF LESSEE'S DEFAULT RESULTING IN A FAILURE OF
          THE
          ESCROW TO CLOSE, AND, THEREFORE, LESSOR AND LESSEE AGREE THAT IT WOULD
          BE
          REASONABLE TO AWARD LESSOR LIQUIDATED DAMAGES IN THE AMOUNT OF THE OPENING
          DEPOSIT PLUS ANY ACCRUED INTEREST ON THE OPENING DEPOSIT. BY THEIR RESPECTIVE
          INITIALS SET FORTH BELOW, LESSOR AND LESSEE ACKNOWLEDGE AND AGREE THAT
          THE
          OPENING DEPOSIT, PLUS ANY INTEREST ACCRUED ON THE OPENING DEPOSIT, TOGETHER
          WITH
          PAYMENT OF LESSOR'S LEGAL FEES AND COSTS, IS REASONABLE AS LIQUIDATED DAMAGES
          FOR A DEFAULT OF LESSEE UNDER THE PURCHASE CONTRACT FORMED BY LESSEE'S
          EXERCISE
          OF SUCH OPTION THAT RESULTS IN A FAILURE OF THE ESCROW TO CLOSE AND SHALL
          BE IN
          LIEU OF ANY OTHER RELIEF, RIGHT OR REMEDY, AT LAW OR IN EQUITY, TO WHICH
          LESSOR
          MIGHT OTHERWISE BE ENTITLED BY REASON OF A LESSEE'S DEFAULT THAT RESULTS
          IN A
          FAILURE OF THE ESCROW TO CLOSE, BUT NOTHING CONTAINED HEREIN SHALL LIMIT
          LESSOR'S RIGHTS AND REMEDIES FOR LESSEE'S DEFAULT OCCURRING AFTER THE CLOSE
          OF
          ESCROW OR FOR LESSEE'S DEFAULT UNDER THIS LEASE. ESCROW HOLDER IS HEREBY
          AUTHORIZED AND INSTRUCTED TO RELEASE THE OPENING DEPOSIT PLUS ACCRUED INTEREST
          THEREON TO LESSOR UPON THE DELIVERY OF UNILATERAL WRITTEN INSTRUCTIONS
          THEREOF
          TO ESCROW HOLDER BY LESSOR AND ABSENT ANY OBJECTION ON THE PART OF LESSEE
          THERETO, AND ESCROW HOLDER IS HEREBY RELIEVED OF ALL LIABILITY THEREFOR.
          IF
          LESSEE ATTEMPTS TO INTERFERE WITH THE RELEASE OF ANY SUCH SUMS BY ESCROW
          HOLDER
          TO LESSOR, OR COMMENCES ANY ACTION AGAINST LESSOR OR THE LEASED PROPERTY
          ARISING
          OUT OF THIS ARTICLE, THEN LESSOR SHALL NOT BE LIMITED IN THE AMOUNT OF
          DAMAGES
          IT MAY RECOVER FROM LESSEE.

         

      

      Lessor's
        Initials: /s/ EJH

       

      Lessee's
        Initials:   __________

       

      (b)             Other
        Defaults by Lessee or its Affiliates. A default under any other lease or
        other agreement or instrument, including any purchase contract formed upon
        exercise of any other option, with or in favor of Lessor or any Affiliate
        of
        Lessor and made by or with Lessee or any Affiliate of Lessee where such default
        is not cured within the applicable time

       

      
        
          
          

        

        
          69

          
            

          

        

        
          
          

        

      


      CONSTITUTES
        A BREACH HEREOF, THEN LESSOR, AT ITS OPTION, MAY TERMINATE THE PURCHASE CONTRACT
        FORMED BY LESSEE'S EXERCISE OF SUCH OPTION(S) AND THE ESCROW BY GIVING WRITTEN
        NOTICE TO LESSEE AND ESCROW HOLDER AND, THEREUPON, THE ESCROW SHALL BE
        CANCELLED, ALL DOCUMENTS SHALL BE RETURNED TO THE RESPECTIVE PARTIES WHO
        DEPOSITED THE SAME, AND LESSEE SHALL PAY ALL TITLE AND ESCROW CANCELLATION
        CHARGES AND ALL OF LESSOR'S REASONABLE LEGAL FEES AND COSTS. IN ADDITION,
        LESSOR
        AND LESSEE AGREE THAT, BASED ON THE CIRCUMSTANCES NOW EXISTING, KNOWN OR
        UNKNOWN, IT WOULD BE EXCESSIVELY COSTLY AND IMPRACTICABLE TO ESTABLISH LESSOR'S
        DAMAGES BY REASON OF LESSEE'S DEFAULT RESULTING IN A FAILURE OF THE ESCROW
        TO
        CLOSE, AND, THEREFORE, LESSOR AND LESSEE AGREE THAT IT WOULD BE REASONABLE
        TO
        AWARD LESSOR LIQUIDATED DAMAGES IN THE AMOUNT OF THE OPENING DEPOSIT PLUS
        ANY
        ACCRUED INTEREST ON THE OPENING DEPOSIT. BY THEIR RESPECTIVE INITIALS SET
        FORTH
        BELOW, LESSOR AND LESSEE ACKNOWLEDGE AND AGREE THAT THE OPENING DEPOSIT,
        PLUS
        ANY INTEREST ACCRUED ON THE OPENING DEPOSIT, TOGETHER WITH PAYMENT OF LESSOR'S
        LEGAL FEES AND COSTS, IS REASONABLE AS LIQUIDATED DAMAGES FOR A DEFAULT OF
        LESSEE UNDER THE PURCHASE CONTRACT FORMED BY LESSEE'S EXERCISE OF SUCH OPTION
        THAT RESULTS IN A FAILURE OF THE ESCROW TO CLOSE AND SHALL BE IN LIEU OF
        ANY
        OTHER RELIEF, RIGHT OR REMEDY, AT LAW OR IN EQUITY, TO WHICH LESSOR MIGHT
        OTHERWISE BE ENTITLED BY REASON OF A LESSEE'S DEFAULT THAT RESULTS IN A FAILURE
        OF THE ESCROW TO CLOSE, BUT NOTHING CONTAINED HEREIN SHALL LIMIT LESSOR'S
        RIGHTS
        AND REMEDIES FOR LESSEE'S DEFAULT OCCURRING AFTER THE CLOSE OF ESCROW OR
        FOR
        LESSEE'S DEFAULT UNDER THIS LEASE. ESCROW HOLDER IS HEREBY AUTHORIZED AND
        INSTRUCTED TO RELEASE THE OPENING DEPOSIT PLUS ACCRUED INTEREST THEREON TO
        LESSOR UPON THE DELIVERY OF UNILATERAL WRITTEN INSTRUCTIONS THEREOF TO ESCROW
        HOLDER BY LESSOR AND ABSENT ANY OBJECTION ON THE PART OF LESSEE THERETO,
        AND
        ESCROW HOLDER IS HEREBY RELIEVED OF ALL LIABILITY THEREFOR. IF LESSEE ATTEMPTS
        TO INTERFERE WITH THE RELEASE OF ANY SUCH SUMS BY ESCROW HOLDER TO LESSOR,
        OR
        COMMENCES ANY ACTION AGAINST LESSOR OR THE LEASED PROPERTY ARISING OUT OF
        THIS
        ARTICLE, THEN LESSOR SHALL NOT BE LIMITED IN THE AMOUNT OF DAMAGES IT MAY
        RECOVER FROM LESSEE.

       

      Lessor's
        Initials:     ___________

       

      Lessee's
        Initials:      /s/
        GC   ____

       

      (b)          Other
        Defaults by Lessee or its Affiliates. A default under any other lease or
        other agreement or instrument, including any purchase contract formed upon
        exercise of any other option, with or in favor of Lessor or any Affiliate
        of
        Lessor and made by or with Lessee or any Affiliate of Lessee where such default
        is not cured within the applicable time period, if any, shall be deemed a
        default under this Article XXXV and the purchase contract formed upon proper
        exercise by Lessee of the option herein provided, entitling Lessor, as seller,
        at its option, to terminate such purchase contract and the Escrow and upon
        any
        such termination the Opening Deposit plus all accrued interest thereon shall
        be
        paid over to Lessee as provided in Section 35.2(a) above.

       

      
        
          
          

        

        
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      (c)            Defaults
        by Lessor. Subject to the provisions of Article XXXIX, if following a valid
        and proper exercise of the foregoing option to purchase the Leased Property
        of
        the applicable Facility(ies), Lessor fails to complete the sale of the Leased
        Property of such Facility(ies) at the time required herein, Lessee shall
        have
        the right to seek specific performance of the provisions of this Article
        XXXV.

       

      35.3
        Escrow Provisions.

      (a)            Opening
        of Escrow. Escrow shall be deemed open when the Opening Deposit and a copy
        of
        this Lease are delivered to Escrow Holder.

       

      (b)            General
        and Supplemental Instructions. Lessee and Lessor each shall execute, deliver
        and
        be bound by such further escrow instructions or other instruments as may
        be
        reasonably requested by the other party or by Escrow Holder from time to
        time,
        so long as the same are consistent with the provisions of this
        Lease.

       

      (c)            Disposition
        of Opening Deposits. Escrow Holder shall hold the Opening Deposit in
        interest-bearing accounts. All interest earned on the Opening Deposit shall
        accrue to Lessee's benefit unless Lessor is entitled thereto under Section
        35.2(a). With full knowledge that Escrow shall not have closed, Lessee
        nevertheless agrees to relieve Escrow Holder of all liabilities in making
        such
        payment and for any failure to recover said sum in the event that Escrow
        does
        not close at anytime thereafter; provided, however, that the foregoing release
        shall not extend to any willful misconduct by Escrow Holder or any negligent
        acts by Escrow Holder or other acts by Escrow Holder that are inconsistent
        with
        the terms of this Section 35. The Opening Deposit plus interest thereon shall
        be
        (i) applied against the purchase price (as herein determined) if Escrow closes,
        (ii) returned to Lessee in full if Escrow does not close for any reason other
        than Lessee's default, or (iii) be paid to Lessor as nonrefundable liquidated
        damages under Section 35.2(a), if Escrow fails to close under the provisions
        of
        hereof as a result of Lessee's default.

       

      (d)            Closing
        Funds. At least one (1) business day before the Close of Escrow (as hereinafter
        defined), Escrow Holder shall calculate and Lessee shall wire cash into Escrow
        (using wiring instructions reasonably satisfactory to Escrow Holder) in an
        amount which, when added to the Opening Deposit and all accrued interest
        shall
        equal the purchase price for the Leased Property of the applicable Facility(ies)
        plus any other sums payable by Lessee pursuant to the provisions
        hereof.

       

      (e)       Close
        of Escrow. Escrow shall close on the Outside Closing Date. The term "Close
        of
        Escrow" as used in this Article shall mean the time and date that an appropriate
        deed or other conveyance document conveying Lessor's entire interest in the
        Leased Property of the applicable Facility(ies), subject to the permitted
        liens
        and encumbrances described in Article XVIII hereof, is recorded in appropriate
        records of the county in which the Leased Property of the applicable
        Facility(ies) is located. The Outside Closing Date shall not be extended
        for any
        reason.


      
        
          
          

        

        
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      (f)           Closing
        Costs. The closing costs of consummating the purchase of the Leased Property
        of
        the applicable Facility(ies) shall be paid by Lessee as provided in Article
        XVIII.

       

      35.4
        Assurances. At any
        time within one hundred twenty (120) days of the anticipated date of Close
        of
        Escrow, Lessor may request Lessee to provide reasonable assurances that it
        will
        be able to consummate the purchase of the Leased Property of the applicable
        Facility(ies), including that Lessee has a firm, written commitment from
        a
        reputable lending institution to finance such purchase and/or has sufficient
        liquidity to pay any balance of the purchase price owing by Lessee on the
        date
        of the Close of Escrow; provided, however, that in no event shall Lessee
        be
        entitled to exercise such option conditioned upon Lessee obtaining any such
        financing. If Lessee does not provide such assurances to Lessor within fifteen
        (15) days of request therefor, such event shall be considered a default under
        this Article rendering the exercise of the option to purchase null and void,
        causing any such option to lapse and entitling Lessor to the liquidated damages
        set forth in Section 35.2(a), but only if Lessor's request was in writing
        and
        stated in capital letters in bold type that Lessee's failure to provide such
        assurances to Lessor within fifteen (15) days of request therefor would be
        considered a default under this Article rendering the exercise of the option
        to
        purchase null and void, causing any such option to lapse and entitling Lessor
        to
        the liquidated damages set forth in Section 35.2(a).

       

      ARTICLE
        XXXVI.

       

      36.1
        Lessor May Grant Liens.
        Without the consent of Lessee, Lessor may, from time to time,
        directly or indirectly, create or otherwise cause to exist any ground lease,
        mortgage, trust deed, lien, encumbrance or title retention agreement
        (collectively, an "encumbrance") upon the Leased Property and any Capital
        Additions or any part(s) or portion(s) thereof or interests therein. This
        Lease
        is and at all times shall be subject and subordinate to any such encumbrance
        which may now or hereafter affect the Leased Property and/or any such Capital
        Additions or any part(s) or portion(s) thereof and to all renewals,
        modifications, consolidations, replacements and extensions thereof. This
        clause
        shall be self-operative and no further instrument of subordination shall
        be
        required; provided, however, that in confirmation of such subordination,
        Lessee
        shall execute promptly any certificate or document that Lessor or any ground
        or
        underlying lessor, mortgagee or beneficiary may request for such purposes;
        provided further, however, that any such subjection and subordination of
        this
        Lease or Lessee's leasehold interest hereunder to any such encumbrance imposed
        after the Restatement Date shall be conditioned upon the execution by the
        holder
        of such encumbrance and delivery to Lessee of a non-disturbance and attornment
        agreement in form reasonably satisfactory to Lessor, Lessee and such holder
        of
        such encumbrance and which provides, in substance, that so long as no Event
        of
        Default has occurred, the holder of such encumbrance shall not disturb either
        Lessee's leasehold interest or possession of the Leased Property in accordance
        with the terms hereof. Lessee shall also promptly execute and deliver to
        Lessor
        and such holder of such encumbrance such non- disturbance and attornment
        agreement if requested by Lessor and/or such holder. If, in connection with
        obtaining financing or refinancing for the Leased Property of any Facility
        and/or any Capital Additions thereto, a Facility Mortgagee or prospective
        Facility Mortgagee shall request reasonable modifications to this Lease as
        a
        condition to such financing or refinancing, Lessee shall not withhold or
        delay
        its consent thereto.


      
        
          
          

        

        
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      36.2
        Attornment. If Lessor's interest in the Leased Property and/or any
        Capital Additions or any part(s) or portion(s) thereof is sold or conveyed
        upon
        the exercise of any remedy provided for in any Facility Mortgage, or otherwise
        by operation of law: (i) at the new owner's option, Lessee shall attorn to
        and
        recognize the new owner as Lessee's Lessor under this Lease or enter into
        a new
        lease substantially in the form of this Lease with the new owner, and Lessee
        shall take such actions to confirm the foregoing within ten (10) days after
        request; and (ii) the new owner shall not be (a) liable for any act or omission
        of Lessor under this Lease occurring prior to such sale or conveyance, or
        (b)
        subject to any offset, abatement or reduction of rent because of any default
        of
        Lessor under this Lease occurring prior to such sale or conveyance.

       

      ARTICLE
        XXXVII.

       

      37.1
        Hazardous Substances. Lessee shall not allow any Hazardous Substance to
        be located in, on, under or about the Leased Property or incorporated in
        any
        Facility; provided, however, that Hazardous Substances may be brought, kept,
        used or disposed of in, on or about the Leased Property or any Capital Additions
        of any Facility in quantities and for purposes similar to those brought,
        kept,
        used or disposed of in, on or about similar facilities used for purposes
        similar
        to the Primary Intended Use of such Facility or in connection with the
        construction of facilities similar to such Facility and which are brought,
        kept,
        used and disposed of in strict compliance with Legal Requirements. Lessee
        shall
        not allow the Leased Property or any Capital Additions to be used as a waste
        disposal site or, except as permitted in the immediately preceding sentence,
        for
        the manufacturing, handling, storage, distribution or disposal of any Hazardous
        Substance.

       

      37.2
        Notices. Lessee shall provide to Lessor promptly, and in any event
        immediately upon Lessee's receipt thereof, a copy of any notice, or notification
        with respect to, (i) any violation of a Legal Requirement relating to Hazardous
        Substances located in, on, or under the Leased Property or any Capital Additions
        or any adjacent property thereto; (ii) any enforcement, cleanup, removal,
        or
        other governmental or regulatory action instituted, completed or threatened
        with
        respect to the Leased Property or any Capital Additions; (iii) any claim
        made or
        threatened by any Person against Lessee or the Leased Property or any Capital
        Additions relating to damage, contribution, cost recovery, compensation,
        loss,
        or injury resulting from or claimed to result from any Hazardous Substance;
        and
        (iv) any reports made to any federal, state or local environmental agency
        arising out of or in connection with any Hazardous Substance in, on, under
        or
        removed from the Leased Property or any Capital Additions, including any
        complaints, notices, warnings or asserted violations in connection
        therewith.

       

      37.3
        Remediation. If Lessee becomes aware of a violation of any Legal
        Requirement relating to any Hazardous Substance in, on, under or about the
        Leased Property or any Capital Additions or any adjacent property thereto,
        or if
        Lessee, Lessor or the Leased Property or any Capital Additions becomes subject
        to any order of any federal, state or local agency to repair, close, detoxify,
        decontaminate or otherwise remediate the Leased Property and any Capital
        Additions, Lessee shall immediately notify Lessor of such event and, at its
        sole
        cost and expense, cure such violation or effect such repair, closure,
        detoxification, decontamination or other remediation. If Lessee fails to
        implement and diligently pursue any such cure, repair, closure, detoxification,
        decontamination or other remediation, Lessor shall have the right, but not
        the
        obligation, to carry out such action and to recover from Lessee all of Lessor's
        costs and expenses incurred in connection therewith.


      
        
          
          

        

        
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      37.4
        Indemnity. Lessee shall indemnify, defend, protect, save, hold harmless,
        and reimburse Lessor for, from and against any and all costs, losses (including,
        losses of use or economic benefit or diminution in value), liabilities, damages,
        assessments, lawsuits, deficiencies, demands, claims and expenses (collectively,
        "Environmental Costs") (whether or not arising out of third-party claims
        and
        regardless of whether liability without fault is imposed, or sought to be
        imposed, on Lessor) incurred in connection with, arising out of, resulting
        from
        or incident to, directly or indirectly, before or during the Term (i) the
        production, use, generation, storage, treatment, transporting, disposal,
        discharge, release or other handling or disposition of any Hazardous Substances
        from, in, on or about the Leased Property or any Capital Additions or any
        part(s) or portion(s) thereof (collectively, "Handling"), including the effects
        of such Handling of any Hazardous Substances on any Person or property within
        or
        outside the boundaries of the Leased Property or any Capital Additions, (ii)
        the
        presence of any Hazardous Substances in, on, under or about the Leased Property
        or any Capital Additions or any part(s) or portion(s) thereof and (iii) the
        violation of any Legal Requirements (including Environmental Laws).
        "Environmental Costs" include interest, costs of response, removal, remedial
        action, containment, cleanup, investigation, design, engineering and
        construction, damages (including actual, consequential and punitive damages)
        for
        personal injuries and for injury to, destruction of or loss of property or
        natural resources, relocation or replacement costs, penalties, fines, charges
        or
        expenses, attorney's fees, expert fees, consultation fees, and court costs,
        and
        all amounts paid in investigating, defending or settling any of the
        foregoing.

       

      Without
        limiting the scope or generality of the foregoing, Lessee expressly agrees
        to
        reimburse Lessor for any and all costs and expenses incurred by
        Lessor:

       

      (a)            In
        investigating any and all matters relating to the Handling of any Hazardous
        Substances, in, on, from, under or about the Leased Property or any Capital
        Additions or any part(s) or portion(s) thereof;

       

      (b)            In
        bringing the Leased Property or any Capital Additions into compliance with
        all
        Legal Requirements; and

       

      (c)            Removing,
        treating, storing, transporting, cleaning-up and/or disposing of any Hazardous
        Substances used, stored, generated, released or disposed of in, on, from,
        under
        or about the Leased Property or any Capital Additions or any part(s) or
        portion(s) thereof or offsite.

       

      If
        any
        claim is made hereunder, Lessee agrees to pay such claim promptly, and in
        any
        event to pay such claim within thirty (30) calendar days after receipt by
        Lessee
        of notice thereof. If any such claim is not so paid and Lessor is ultimately
        found or agrees to be responsible therefore, Lessee agrees also to pay interest
        on the amount paid from the date of the first notice of such claim, at the
        Overdue Rate.

       

      
        
          
          

        

        
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      37.5
        Environmental Inspection. Lessor shall have the right, from time to time,
        and upon not less than five (5) days' written notice to Lessee, except in
        the
        case of an emergency in which event no notice shall be required, to conduct
        an
        inspection of the Leased Property and all Capital Additions or any part(s)
        or
        portion(s) thereof at any reasonable time to determine the existence or presence
        of Hazardous Substances on or about such Leased Property or any such Capital
        Additions, if Lessor has reasonable belief to suspect that Lessee has not
        fully
        complied with the terms of this Article XXXVII. Lessor shall have the right
        to
        enter and inspect the Leased Property and all Capital Additions, conduct
        any
        testing, sampling and analyses it deems necessary and shall have the right
        to
        inspect materials brought into the Leased Property or any such Capital
        Additions; provided, however, that Lessor shall (i) conduct its activities
        on
        the Leased Property or any such Capital Additions pursuant to the terms of
        this
        Section 37.5 in a commercially reasonable manner designed to minimize the
        impact
        of such activities on Lessee's operation of applicable Facility, (ii) restore
        the Leased Property and any such Capital Additions to substantially the same
        condition as existed immediately prior to Lessor's inspection thereof and
        (iii)
        indemnify, defend, protect, save, hold harmless, and reimburse Lessee for,
        from
        and against any and all loss, cost or expense, including costs and reasonable
        legal fees, arising out of any damage to persons or property occurring in
        or
        about the Leased Property and any such Capital Additions, or any liens filed
        against the Leased Property or any such Capital Additions, in either case
        resulting directly from Lessor's inspection of the Leased Property and any
        such
        Capital Additions pursuant to the terms of this Section 37.5. Lessor may,
        in its
        discretion, retain such experts to conduct the inspection, perform the tests
        referred to herein, and to prepare a written report in connection therewith.
        All
        costs and expenses incurred by Lessor under this Section shall be paid on
        demand
        as Additional Charges by Lessee to Lessor. Failure to conduct an environmental
        inspection or to detect unfavorable conditions if such inspection is conducted
        shall in no fashion be intended as a release of any liability for environmental
        conditions subsequently determined to be associated with or to have occurred
        during Lessee's tenancy. Lessee shall remain liable for any environmental
        condition related to or having occurred during its tenancy regardless of
        when
        such conditions are discovered and regardless of whether or not Lessor conducts
        an environmental inspection at the termination of the Lease. The obligations
        set
        forth in this Article shall survive the expiration or earlier termination
        of the
        Lease.

       

      ARTICLE
        XXXVIII.

       

      38.1
        Memorandum of Lease. Lessor and Lessee shall, promptly upon the request
        of either, enter into one or more short form memoranda of this Lease, in
        form
        suitable for recording under the laws of the State. Lessee shall pay all
        costs
        and expenses of recording any such memorandum and shall fully cooperate with
        Lessor in removing from record any such memorandum upon the expiration or
        earlier termination of the Term with respect to the applicable
        Facility.

       

      ARTICLE
        XXXIX.

       

      39.1
        Sale of Assets. Notwithstanding any other provision of this Lease, Lessor
        shall not be required to (i) sell or transfer the Leased Property, or any
        portion thereof, which is a real estate asset as defined in Section
        856(c)(5)(B), or functionally equivalent successor provision, of the Code,
        to
        Lessee if Lessor's counsel advises Lessor that such sale or transfer may
        not be
        a sale of property described in Section 857(b)(6)(C), or functionally equivalent
        successor provision, of the Code or (ii) sell or transfer the Leased Property,
        or any portion thereof, to Lessee if Lessor's counsel advises Lessor that
        such
        sale or transfer could result in an unacceptable amount of gross income for
        purposes of the Ninety-Five percent (95%) gross income test contained in
        Section
        856(c)(2), or functionally equivalent successor provision, of the Code. If
        Lessee has the right or obligation to purchase the Leased Property or any
        portion thereof pursuant to the terms herein, and if Lessor determines not
        to
        sell such Leased Property pursuant to the above sentence, then Lessee shall
        purchase such Leased Property, upon and subject to all applicable terms and
        conditions set forth in this Lease, including the provisions of Article XXXV,
        at
        such time as the transaction, upon the advice of Lessor's counsel, would
        be a
        sale of property (to the extent the Leased Property is a real estate asset)
        described in Section 857(b)(6)(C), or functionally equivalent successor
        provision, of the Code, and would not result in an unacceptable amount of
        gross
        income for purposes of the Ninety-Five Percent (95%) gross income test contained
        in Section 856(c)(2), or functionally equivalent successor provision of the
        Code
        and until such time Lessee shall lease the Leased Property and all Capital
        Additions from Lessor at the Fair Market Rental.


      
        
          
          

        

        
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      ARTICLE
        XL.

       

      40.1
        Subdivision. If the Land is in excess of that which is required to
        operate any Facility in accordance with its Primary Intended Use, Lessor
        may,
        with Lessee's prior consent, which consent shall not be unreasonably withheld,
        conditioned or delayed, subdivide the Land and amend this Lease and the legal
        description attached hereto as Exhibit A such that the Land contains only
        so much of the Land as is necessary to operate such Facility in accordance
        with
        its Primary Intended Use. If Lessor subdivides the Land relating to any Facility
        there shall be no change in the Rent payable hereunder. After any such
        subdivision, Lessee shall have no rights to any land which is no longer part
        of
        the Leased Property and Lessor may sell, lease or develop any land which
        is no
        longer part of the Leased Property; provided, however, that Lessor will not
        develop or allow such land to be used for any purpose that would materially
        adversely affect Lessee's use of such Facility, including, without limitation,
        as a facility or institution providing services or similar goods to those
        provided in connection with such Facility and its Primary Intended Use. If
        Lessor elects to subdivide the Land Lessee shall cooperate with Lessor and
        take
        all actions reasonably requested by Lessor to effect such
        subdivision.

       

      ARTICLE
        XLI.

       

      41.1
        Authority. If Lessee is a corporation, trust, or partnership, Lessee, and
        each individual executing this Lease on behalf of Lessee, represent and warrant
        that each is duly authorized to execute and deliver this Lease on behalf
        of
        Lessee and shall within thirty (30) days after execution of this Lease deliver
        to Lessor evidence of such authority satisfactory to Lessor.

       

      ARTICLE
        XLII.

       

      42.1
        Attorneys' Fees. If Lessor or Lessee brings an action or other proceeding
        (including an arbitration pursuant to Article XLIV) against the other to
        enforce
        any of the terms, covenants or conditions hereof or any instrument executed
        pursuant to this Lease, or by reason of any breach or default hereunder or
        thereunder, the party prevailing in any such action or proceeding and any
        appeal
        thereupon shall be paid all of its costs and reasonable attorneys' fees incurred
        therein. In addition to the foregoing and other provisions of this Lease
        that
        specifically require Lessee to reimburse, pay or indemnify against Lessor's
        attorneys' fees, Lessee shall pay, as Additional Charges, all of Lessor's
        reasonable attorneys' fees incurred in connection with the administration
        or
        enforcement of this Lease, including attorneys' fees incurred in connection
        with
        Lessee's exercise of its option to purchase the Leased Property or renew
        this
        Lease for any Extended Term, the review of any letters of credit, the review,
        negotiation or documentation of any subletting, assignment, or management
        arrangement or any consent requested in connection therewith, and the collection
        of past due Rent.


      
        
          
          

        

        
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      ARTICLE
        XLIII.

       

      43.1
        Brokers. Lessee warrants that it has not had any contact or dealings with
        any Person or real estate broker which would give rise to the payment of
        any fee
        or brokerage commission in connection with this Lease, and Lessee shall
        indemnify, protect, hold harmless and defend Lessor from and against any
        liability with respect to any fee or brokerage commission arising out of
        any act
        or omission of Lessee. Lessor warrants that it has not had any contact or
        dealings with any Person or real estate broker which would give rise to the
        payment of any fee or brokerage commission in connection with this Lease,
        and
        Lessor shall indemnify, protect, hold harmless and defend Lessee from and
        against any liability with respect to any fee or brokerage commission arising
        out of any act or omission of Lessor.

       

      ARTICLE
        XLIV.

       

      44.1
        Submission to Arbitration.

       

      44.1.1
        Except as provided in Section 44.2 below, any controversy, dispute or claim
        of
        whatsoever nature arising out of, in connection with, or in relation to the
        interpretation, performance or breach of this Lease, including any claim
        based
        on contract, tort or statute, shall be determined by final and binding,
        confidential arbitration administered by the American Arbitration Association
        ("AAA") in accordance with its then-existing Commercial Arbitration Rules
        by a
        sole arbitrator selected in accordance with such AAA rules. Any arbitration
        hereunder shall be governed by the United States Arbitration Act, 9 U.S.C.
        1-16
        (or any successor legislation thereto), and judgment upon the award rendered
        by
        the arbitrator may be entered by any state or federal court having jurisdiction
        thereof. Neither
        Lessor, Lessee nor the arbitrator shall disclose the existence, content or
        results of any arbitration hereunder without the prior written consent of
        all
        parties; provided, however, that either party may disclose the existence,
        content or results of any such arbitration to its partners, officers, directors,
        employees, agents, attorneys and accountants and to any other Person to whom
        disclosure is required by applicable Legal Requirements, including pursuant
        to
        an order of a court of competent jurisdiction. Unless otherwise agreed by
        the
        parties, any arbitration hereunder shall be held at a neutral location selected
        by the arbitrator in the major metropolitan area in the State closest in
        proximity to the Leased Property. The cost of the arbitrator and the expenses
        relating to the arbitration (exclusive of legal fees) shall be borne equally
        by
        Lessor and Lessee unless otherwise specified in the award of the arbitrator.
        Such fees and costs paid or payable to the arbitrator shall be included in
        "costs and reasonable attorneys' fees" for purposes of Article XLII and the
        arbitrator shall specifically have the power to award to the prevailing party
        pursuant to such Article XLII such party's costs and expenses incurred in
        such
        arbitration, including fees and costs paid to the arbitrator.


      
        
          
          

        

        
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      44.1.2
        The provisions of this Article XLIV shall not apply to:

       

      (a)            Any
        unlawful detainer or other similar summary or expedited proceeding for ejectment
        or recovery of possession of the Leased Property and Capital Additions or
        any
        portion(s) thereof instituted by Lessor in accordance with applicable Legal
        Requirements as the result of an Event of Default or alleged Event of Default
        by
        Lessee pursuant to this Lease. In addition, if permitted by applicable Legal
        Requirements, Lessor shall be entitled in connection with any such proceeding
        to
        seek any damages to which it is entitled at law, including those set forth
        in
        Article XVI.

       

      (b)            Any
        specific controversy, dispute, question or issue as to which this Lease
        specifically provides another method of determining such controversy, dispute,
        question or issue and provides that a determination pursuant to such method
        is
        final and binding, unless both Lessor and Lessee agree in writing to waive
        such
        procedure and proceed instead pursuant to this Article XLIV.

       

      (c)             Any
        request or application for an order or decree granting any provisional or
        ancillary remedy (such as a temporary restraining order or injunction) with
        respect to any right or obligation of either party to this Lease, and any
        preliminary determination of the underlying controversy, dispute, question
        or
        issue as is required to determine whether or not to grant such relief. A
        final
        and binding determination of such underlying controversy, dispute, question
        or
        issue shall be made by an arbitration conducted pursuant to this Article
        XLIV
        after an appropriate transfer or reference to the arbitrator selected pursuant
        to this Article XLIV upon motion or application of either party hereto. Any
        ancillary or provisional relief which is granted pursuant to this clause
        (c)
        shall continue in effect pending an arbitration determination and entry of
        judgment thereon pursuant to this Article XLIV.

       

      ARTICLE
        XLV.

       

      45.1
        Miscellaneous

       

      45.1.1
        Survival. Anything contained in this Lease to the contrary
        notwithstanding, all claims against, and liabilities and indemnities of,
        Lessee
        or Lessor arising prior to the expiration or earlier termination of the Term
        shall survive such expiration or termination. In addition, all claims against,
        and all liabilities and indemnities hereunder of Lessee shall continue in
        full
        force and effect and in favor of the Lessor named herein and its successors
        and
        assigns, notwithstanding any conveyance of the Leased Property to
        Lessee.

       

      45.1.2
        Severability. If any term or provision of this Lease or any application
        thereof shall be held invalid or unenforceable, the remainder of this Lease
        and
        any other application of such term or provision shall not be affected
        thereby.


      
        
          
          

        

        
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      45.1.3
        Non-Recourse. Lessee specifically agrees to look solely to the Leased
        Property for recovery of any judgment from Lessor. It is specifically agreed
        that no constituent partner in Lessor or officer, director or employee of
        Lessor
        shall ever be personally liable for any such judgment or for the payment
        of any
        monetary obligation to Lessee. The provision contained in the foregoing sentence
        is not intended to, and shall not, limit any right that Lessee might otherwise
        have to obtain injunctive relief against Lessor, or any action not involving
        the
        personal liability of Lessor. Furthermore, except as otherwise expressly
        provided herein, in no event shall Lessor ever be liable to Lessee for any
        indirect or consequential damages suffered by Lessee from whatever
        cause.

       

      45.1.4
        Licenses. Upon the expiration or earlier termination of the Term with
        respect to any Facility, Lessee shall use its best efforts to transfer to
        Lessor
        or Lessor's nominee a fully operational Facility and shall cooperate with
        Lessor
        or Lessor's designee or nominee in connection with the processing by Lessor
        or
        Lessor's designee or nominee of any applications for all licenses, operating
        permits and other governmental authorization, all contracts, including contracts
        with governmental or quasi-governmental entities, business records, data,
        patient and resident records, and patient and resident trust accounts, which
        may
        be necessary or useful for the operation of such Facility; provided that
        the
        costs and expenses of any such transfer or the processing of any such
        application shall be paid by Lessor or Lessor's designee or nominee. Lessee
        shall not commit any act or be remiss in the undertaking of any act that
        would
        jeopardize the licensure or certification of such Facility, and Lessee shall
        comply with all requests for an orderly transfer of the same upon the expiration
        or early termination of the Term. In addition, upon request, Lessee shall
        promptly deliver copies of all books and records relating to the Leased Property
        of such Facility and all Capital Additions and operations thereon to Lessor
        or
        Lessor's designee or nominee. Lessee shall indemnify, defend, protect and
        hold
        harmless Lessor from and against any loss, damage, cost or expense incurred
        by
        Lessor or Lessor's designee or nominee in connection with the correction
        of any
        and all deficiencies of a physical nature identified by any governmental
        authority responsible for licensing the Leased Property of any Facility and
        all
        Capital Additions thereon in the course of any change of ownership inspection
        and audit.

       

      45.1.5
        Successors and Assigns. This Lease shall be binding upon Lessor and its
        successors and assigns and, subject to the provisions of Article XXIV, upon
        Lessee and its successors and assigns.

       

      45.1.6
        Termination Date. If this Lease is terminated by Lessor or Lessee under
        any provision hereof with respect to any one or more (including all, if
        applicable) of the Facilities, and upon the expiration of the Term applicable
        to
        a Facility (collectively, the "termination date"), the following shall
        pertain:

       

      (i)            Lessee
        shall vacate and surrender the Leased Property, Lessee's Personal Property
        and
        all Capital Additions relating to the applicable Facility to Lessor in the
        condition required by Section 9.1.4. Prior to such vacation and surrender,
        Lessee shall remove any items which Lessee is permitted or required to remove
        hereunder. Lessee shall, at Lessee's cost, repair any damage to such Leased
        Property and any Capital Additions caused by such vacation and/or removal
        of any
        items which Lessee is required or permitted hereunder to remove. Any items
        which
        Lessee is permitted to remove but fails to remove prior to the surrender
        to
        Lessor of such Leased Property, Lessee's Personal Property and Capital Additions
        shall be deemed abandoned by Lessee, and Lessor may retain or dispose of
        the
        same as Lessor sees fit without claim by Lessee thereto or to any proceeds
        thereof. If Lessor elects to remove and dispose of any such items abandoned
        by
        Lessee, the cost of such removal and disposal shall be an Additional Charge
        payable by Lessee to Lessor upon demand.


      
        
          
          

        

        
          79

          
            

          

        

        
          
          

        

      

       

      (ii)            Without
        limiting the provisions of Section 45.1.1 above, upon any such termination
        or
        expiration of this Lease with respect to a Facility, the following shall
        pertain:

       

      (A)            Lessee
        agrees to defend, protect, indemnify, defend and hold harmless Lessor from
        and
        against any and all claims, costs, losses, expenses, damages, actions, and
        causes of action for which Lessee is responsible under this Lease (including
        Lessee's indemnification obligations under Articles XXIII and )00(VII) and
        which
        accrue or have accrued on or before the termination date.

       

      (B)            Lessee
        shall remain liable for the cost of all utilities used in or at the Leased
        Property and any Capital Additions relating to such Facility through the
        termination date and accrued and unpaid, whether or not then billed, as of
        the
        termination date until full payment thereof by Lessee. Lessee shall obtain
        directly from the companies providing such services closing statements for
        all
        services rendered through the termination date and shall promptly pay the
        same.
        If any utility statement with respect to such Leased Property and any Capital
        Additions includes charges for a period partially prior to and partially
        subsequent to the termination date, such charges shall be prorated as between
        Lessor and Lessee, with Lessee responsible for the portion thereof (based
        upon a
        fraction the numerator of which is the number of days of service on such
        statement through the termination date and the denominator of which is the
        total
        number of days of service on such statement) through the termination date
        and
        Lessor shall be responsible for the balance. The party receiving any such
        statement which requires proration hereunder shall promptly pay such statement
        and the other party shall, within ten (10) days after receipt of a copy of
        such
        statement, remit to the party paying the statement any amount for which such
        other party is responsible hereunder.

       

      (C)            Lessee
        shall remain responsible for any and all Impositions imposed against the
        Leased
        Property, the Personal Property and any Capital Additions with a lien date
        prior
        to the termination date (irrespective of the date of billing therefor) and
        for
        its pro rata share of any Impositions imposed in respect of the tax-fiscal
        period during which the Term terminates as provided in Section 4.1.7, and
        Lessee
        shall indemnify and hold Lessor harmless with respect to any claims for such
        Impositions or resulting from nonpayment thereof.

       

      (D)           Lessee
        shall (y) execute all documents and take any actions reasonably necessary
        to (1)
        cause the transfer to Lessor of all of Lessee's Personal Property and any
        Capital Additions not owned by Lessor, as provided in Section 6.3 in each
        case
        free of any encumbrance, as provided in Section 6.3 and (2) remove this Lease
        and/or any memorandum hereof as a matter affecting title to the Leased Property
        as provided in Article XXXVIII and (z) comply with its covenants set forth
        in
        Section 45.1.4.


      
        
          
          

        

        
          80

          
            

          

        

        
          
          

        

      


      (E)            Lessee
        shall continue to observe the covenants of Lessee set forth in Sections 7.4.1,
        7.4.2 and 7.4.3 and any other covenant or agreement of Lessee in this Lease
        which is intended to survive the expiration or sooner termination of this
        Lease.

       

      (F)            Lessee
        shall remain responsible for and shall promptly pay to Lessor any Additional
        Charge owed to Lessor pursuant to Section 16.9.

       

      45.1.7
        Governing Law. THIS LEASE WAS NEGOTIATED IN THE STATE OF CALIFORNIA,
        WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES
        AND
        TO THE UNDERLYING TRANSACTION EMBODIED HEREBY. ACCORDINGLY, IN ALL RESPECTS
        THIS
        LEASE (AND ANY AGREEMENT FORMED PURSUANT TO THE TERMS HEREOF) SHALL BE GOVERNED
        BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE
        STATE OF CALIFORNIA (WITHOUT REGARD OF PRINCIPLES OR CONFLICTS OF LAW) AND
        ANY
        APPLICABLE LAWS OF THE UNITED STATES OF AMERICA, EXCEPT THAT ALL PROVISIONS
        HEREOF RELATING TO THE CREATION OF THE LEASEHOLD ESTATE AND ALL REMEDIES
        SET
        FORTH IN ARTICLE XVI RELATING TO RECOVERY OF POSSESSION OF THE LEASED PROPERTY
        OF ANY FACILITY (SUCH AS AN ACTION FOR UNLAWFUL DETAINER OR OTHER SIMILAR
        ACTION) SHALL BE CONSTRUED AND ENFORCED ACCORDING TO, AND GOVERNED BY, THE
        LAWS
        OF THE STATE IN WHICH THE LEASED PROPERTY OF SUCH FACILITY IS
        LOCATED.

       

      45.1.8
        Waiver of Trial by Jury. EACH OF LESSOR AND LESSEE ACKNOWLEDGES THAT IT
        HAS HAD THE ADVICE OF COUNSEL OF ITS CHOICE WITH RESPECT TO ITS RIGHTS TO
        TRIAL
        BY JURY UNDER THE CONSTITUTION OF THE UNITED STATES AND THE STATE. EACH OF
        LESSOR AND LESSEE HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY
        CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING UNDER THIS LEASE (OR
        ANY
        AGREEMENT FORMED PURSUANT TO THE TERMS HEREOF) OR (ii) IN ANY MANNER CONNECTED
        WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF LESSOR AND LESSEE WITH RESPECT
        TO THIS LEASE (OR ANY AGREEMENT FORMED PURSUANT TO THE TERMS HEREOF) OR ANY
        OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION
        HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER
        NOW EXISTING OR HEREINAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR
        TORT OR
        OTHERWISE; EACH OF LESSOR AND LESSEE HEREBY AGREES AND CONSENTS THAT, SUBJECT
        TO
        THE PROVISIONS OF ARTICLE XLIV ABOVE, ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE
        OF
        ACTION SHALL BE DECIDED BY A COURT TRIAL WITHOUT A JURY, AND THAT EITHER
        PARTY
        MAY FILE A COPY OF THIS SECTION WITH ANY COURT AS CONCLUSIVE EVIDENCE OF
        THE
        CONSENT OF EACH SUCH PARTY TO THE WAIVER OF ITS RIGHT TO TRIAL BY
        JURY.

      


      


      LESSOR'S
        INITIALS: /s/ EJH___________


      
        
          
          

        

        
          81

          
            

          

        

        
          
          

        

      

       

      LESSEE'S
        INITIALS: /s/ GC

       

      45.1.9
        Lessee Counterclaim and Equitable Remedies. Lessee hereby waives the
        right to interpose counterclaim in any summary proceeding instituted by Lessor
        against Lessee or in any action instituted by Lessor for unpaid Rent under
        this
        Lease. In the event that Lessee claims or asserts that Lessor has violated
        or
        failed to perform a covenant of Lessor not to unreasonably withhold or delay
        Lessor's consent or approval hereunder, or in any case where Lessor's
        reasonableness in exercising its judgment is in issue, Lessee's sole remedy
        shall be an action for specific performance, declaratory judgment or injunction,
        and in no event shall Lessee be entitled to any monetary damages for a breach
        of
        such covenant, and in no event shall Lessee claim or assert any claims for
        monetary damages in any action or by way of set-off defense or counterclaim,
        and
        Lessee hereby specifically waives the right to any monetary damages or other
        remedies in connection with any such claim or assertion.

       

      45.1.10
        Entire Agreement. This Lease, together with the other Transaction
        Documents, the Exhibits hereto and thereto and such other documents as are
        contemplated hereunder or thereunder, constitutes the entire agreement of
        the
        parties with respect to the subject matter hereof; and may not be changed
        or
        modified except by an agreement in writing signed by the parties. Lessor
        and
        Lessee hereby agree that all prior or contemporaneous oral understandings,
        agreements or negotiations relative to the leasing of the Leased Property
        are
        merged into and revoked by this Lease. Without limiting the generality of
        the
        foregoing, any schedules, abstracts of Original Leases (as well as the Original
        Leases themselves) and any other materials prepared in connection with this
        Lease are hereby merged into and revoked by this Lease.

       

      45.1.11
        Headings. All titles and headings to sections, subsections, paragraphs or
        other divisions of this Lease are only for the convenience of the parties
        and
        shall not be construed to have any effect or meaning with respect to the
        other
        contents of such sections, subsections, paragraphs or other divisions, such
        other content being controlling as to the agreement among the parties
        hereto.

       

      45.1.12
        Counterparts. This Lease may be executed in any number of counterparts,
        each of which shall be a valid and binding original, but all of which together
        shall constitute one and the same instrument.

       

      45.1.13
        Joint and Several. If more than one Person is the Lessee under this
        Lease, the liability of such Persons under this Lease shall be joint and
        several.

       

      45.1.14
        Interpretation. Both Lessor and Lessee have been represented by counsel
        and this Lease and every provision hereof has been freely and fairly negotiated.
        Consequently, all provisions of this Lease shall be interpreted according
        to
        their fair meaning and shall not be strictly construed against any
        party.

       

      45.1.15
        Time of Essence. Time is of the essence of this Lease and each provision
        hereof in which time of performance is established.


      
        
          
          

        

        
          82

          
            

          

        

        
          
          

        

      

       

      45.1.16
        Force Majeure. In the event that either Lessor or Lessee is delayed in
        performing its respective obligations pursuant to this Lease by any cause
        beyond
        the reasonable control of the party required to perform such obligation,
        the
        time period for performing such obligation shall be extended by a period
        of time
        equal to the period of the delay. For purposes of this Lease:

       

      (a)            A
        cause shall be beyond the reasonable control of a party to this Lease when
        such
        cause would affect any person similarly situated (such as power outage, labor
        strike, Act of God or trucker's strike) but shall not be beyond the reasonable
        control of such party when peculiar to such party (such as financial inability
        or failure to order long lead time material sufficiently in
        advance).

       

      (b)            This
        Section shall not apply to any obligation to pay money or otherwise perform
        any
        financial obligation hereunder.

       

      (c)             In
        the event of any occurrence which a party believes constitutes a cause beyond
        the reasonable control of such party and which will delay any performance
        by
        such party, such party shall promptly in writing notify the other party of
        the
        occurrence and nature of such cause, the anticipated period of delay and
        the
        steps being taken by such party to mitigate the effects of such delay. Failure
        to give such notice promptly, shall deem such occurrence or event not to
        be a
        cause beyond the reasonable control of such party.

       

      45.1.17
        Further Assurances. The parties agree to promptly sign all documents
        reasonably requested to give effect to the provisions of this
        Lease.

       

      ARTICLE
        XLVI.

       

      46.1
        Restatement of Original Leases. This Lease amends, consolidates,
        supersedes and restates in their entirety the Original Leases, and, to the
        extent applicable, shall constitute an assignment by each lessee under the
        Original Leases to all parties constituting "Lessee" hereunder, jointly and
        severally. Lessor and Lessee acknowledge and agree that from and after the
        Restatement Date, Lessee shall occupy the Leased Property of each Facility
        pursuant to the Original Leases, as amended, consolidated and restated by
        this
        Lease. Notwithstanding the foregoing amendment, consolidation and restatement
        of
        the Original Leases, the following obligations of Lessor and Lessee under
        the
        Original Leases, prior to amendment hereby, shall be preserved and continue
        subsequent to such termination:

       

      (i)            The
        applicable "Lessee" under each Original Lease shall remain responsible for
        and
        shall indemnify and hold Lessor harmless from and against any and all claims,
        liabilities, damages, actions and causes of action, costs and expenses,
        including attorneys' fees, for which such Person is responsible pursuant
        to the
        Original Leases and which accrue or have accrued on or before the Restatement
        Date. The applicable "Lessor" under each Original Lease shall remain responsible
        for and shall indemnify and hold the applicable "Lessee" harmless from and
        against any and all claims, liabilities, damages, actions and causes of action,
        costs and expenses, including attorneys' fees, for which such Person is
        responsible pursuant to the Original Leases and which accrue or have accrued
        on
        or before the Restatement Date.

       

      
        
          
          

        

        
          83

          
            

          

        

        
          
          

        

      

       

      (ii)             The
        applicable "Lessee" under each Original Lease shall remain responsible for
        all
        obligations of the lessee under each applicable Original Lease which have
        accrued on or before the Restatement Date until full and complete payment
        and/or
        performance of the same. The applicable "Lessor" under each Original Lease
        shall
        remain responsible for all obligations of the lessor under each applicable
        Original Lease which have accrued on or before the Restatement Date until
        full
        and complete payment and/or performance of the same.

       

      46.2
        Original Guaranties. The applicable "Guarantor" under each of the
        Original Guaranties is hereby released from all obligations under such Original
        Guaranties.

       

      ARTICLE
        XLVII.

       

      47.1
        Provisions. Relating to Master Lease. Lessor and Lessee hereby
        acknowledge and agree that, except as otherwise expressly provided herein
        to the
        contrary, this Lease is and the parties intend the same for all purposes
        to be
        treated as a single, integrated and indivisible agreement. Lessor and Lessee
        acknowledge their desire to amend the terms and conditions of the Original
        Leases by executing this Master Lease, thereby covering all of the Facilities
        in
        a single, integrated and indivisible agreement.

       

      47.2
        Treatment of Lease. Lessor and Lessee hereby acknowledge and agree that
        this Lease shall be treated as an operating lease for all purposes and not
        as a
        synthetic lease, financing lease or loan, and that Lessor shall be entitled
        to
        all the benefits of ownership of the Leased Property, including depreciation
        for
        all federal, state and local tax purposes.

       

      ARTICLE
        XLVIII.

       

      48.1
        Radon Gas. Radon is a naturally occurring radioactive gas that, when it
        has accumulated in a building in sufficient quantities, may present health
        risks
        to persons who are exposed to it over time. Levels of radon that exceed federal
        and state guidelines have been found in buildings in Florida. Additional
        information regarding radon and radon testing may be obtained from your county
        public health unit.

       

      [SIGNATURE
        PAGE FOLLOWS]


      
        
          
          

        

        
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        IN
          WITNESS WHEREOF, the parties have
          caused this Lease to be executed and attested by their respective officers
          thereunto duly authorized.

      

      
        


      

      
        	
                HEALTH
                  CARE PROPERTY

              	 	
                LH
                  ASSISTED LIVING, LLC,

              
	
                INVESTORS,
                  INC., a Maryland corporation

              	 	
                a
                  Delaware limited liability company

              
	 	 	 	 	 
	
                By:

              	
                /s/
                  Edward J. Henning

              	 	
                By:

              	 
	 	
                Edward
                  J. Henning

              	 	 	
                Granger
                  Cobb, President

              
	
                Its:Senior
                  Vice President

              	 	 	 
	 	 	 	 	 
	
                WITNESSES

              	 	
                WITNESSES

              
	 	 	 	 	 	 	 	 
	
                /s/
                  Sandra Burg   

              	 	 	 
	
                 (signature)

              	 	
                (signature)

              
	
                Name:
                  Sandra Burg

              	 	
                Name:

              	 
	
                 (print)

              	 	
                 (print)

              
	 	 	 	 	 	 	 	 
	
                /s/
                  Brian J. Maas

              	 	 	 
	 	
                (signature)

              	 	 	
                (signature)

              
	
                Name:
                  

              	  Brian
                J. Maas	 	
                Name:

              	 
	 	 	 	 	 	 	 	 
	
                WESTMINSTER
                  HCP, LLC, a Delaware

              	 	
                SUMMERVILLE
                  AT COBBCO, INC.,

              
	
                limited
                  liability company

              	 	
                a
                  California corporation

              
	 	 	 	 	 	 	 	 
	
                By:

              	
                HCPI/Tennessee,
                  LLC, a Delaware limited liability company, its Sole Member

              	 	
                By:

              	 
	 	 	 	 	 	 	 	
                Granger
                  Cobb, President and Chief Executive Officer

              
	 	 	 	 	 	 
	 	
                By:

              	
                Health
                  Care Property Investors, Inc., a Maryland corporation, its Managing
                  Member

              	 	
                WITNESSES 

              
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	
                (signature)

              
	 	 	
                By:

              	
                /s/  Edward
                  J. Henning

              	 	 	 
	 	 	 	
                Edward
                  J. Henning

              	 	 	
                Name:

              	 
	 	 	
                Its:
                  Senior Vice President

              	 	
                (print)

              
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	
                (signature)

              
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 
	
                WITNESSES

              	 	 	 
	 	 	 	 	 	 	 	 
	
                /s/
                  Sandra Burg 

              	 	
                Name:

              	 
	 	
                (signature)   

              	 	 	 
	
                Name:

              	
                Sandra
                  Burg 

              	 	 	 
	 	 	
                (print) 

              	 	 	 	 
	 	 	 	 	 	 	 	 
	
                /s/
                  Brian J. Maas

              	 	 	 	 	 	 
	 	 	
                (signature) 

              	 	 	 	 
	
                Name:

              	
                Brian
                  J. Maas 

              	 	 	 


      


      
        
          
          

        

        
          85

          
            

          

        

        
          
          

        

      

      
        


      

      
        IN
          WITNESS WHEREOF, the parties have
          caused this Lease to be executed and attested by their respective officers
          thereunto duly authorized.

      

      
        


      

      
        	
                HEALTH
                  CARE PROPERTY

              	 	
                LH
                  ASSISTED LIVING, LLC,

              
	
                INVESTORS,
                  INC., a Maryland corporation

              	 	
                a
                  Delaware limited liability company

              
	 	 	 	 	 	 	 
	
                By:

              	 	 	 	 	
                By:

              	
                /s/
                  Granger Cobb

              
	 	 	 	 	 	 	
                Granger
                  Cobb, President

              
	
                Its:

              	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	
                WITNESSES 

              	 	
                WITNESSES

              
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	
                /s/
                  Frank Tsai

              
	 	 	
                (signature) 

              	 	 	
                (signature)

              	 	 
	 	 	 	 	 	
                Name:

              	
                Frank
                  Tsai

              	 	 
	
                Name:

              	 	 	 	
                (print)

              	 	 
	 	 	
                (print) 

              	 	 	 	 	 
	 	 	 	 	 	
                /s/
                  Melanie Werdel

              
	 	 	
                (signature) 

              	 	 	
                (signature)

              	 	 
	
                Name:

              	 	 	
                Name:
                  Melanie Werdel

              
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	
                WESTMINSTER
                  HCP, LLC, a Delaware

              	 	
                SUMMERVILLE
                  AT COBBCO, INC.,

              
	
                limited
                  liability company

              	 	
                a
                  California corporation

              
	 	 	 	 	 	 	 	 	 
	
                By:

              	 	
                HCPI/Tennessee,
                  LLC, a Delaware limited liability company, its Sole Member

              	 	
                By:

              	
                /s/
                  Granger Cobb

              
	 	 	 	 	 	 	
                Granger
                  Cobb, President and Chief Executive Officer

              
	 	 	 	 	 	 	 	 	 
	 	 	
                By:

              	
                Health
                  Care Property Investors, Inc., a Maryland corporation, its Managing
                  Member

              	 	
                WITNESSES

              
	 	 	 	 	 	 
	 	 	 	 	 	
                /s/
                  Frank Tsai

              
	 	 	 	 	 	 	
                (signature)

              	 	 
	 	 	 	 	 	 	 	 	 
	 	 	
                By:

              	 	 	
                Name:

              	
                Frank
                  Tsai

              
	 	 	 	 	 	 	
                (print)

              	 	 
	 	 	
                Its:

              	 	 	 	 	 	 
	 	 	 	 	 	
                /s/
                  Melanie Werdel

              
	 	 	 	 	 	 	
                (signature)

              	 	 
	 	 	 	 	 	 	 	 	 
	
                WITNESSES

              	 	 	 	 	 
	 	 	 	 	 	
                Name:

              	
                Melanie
                  Werdel

              
	 	 	
                (signature) 

              	 	 	 	 	 
	
                Name:

              	 	 	 	 	 	 	 	 
	 	 	
                (print) 

              	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	
                (signature) 

              	 	 	 	 	 
	
                Name:

              	 	 	 	 	 	 	 	 


      

      
        

          
            
              
              

            

            
              86

              
                

              

            

            
              
              

            

          

        

         

      

      
        	 	
                SUMMERVILLE
                  AT HILLSBOROUGH, L.L.C.,

              
	 	
                a
                  New Jersey limited liability company

              
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	
                By:

              	
                /s/
                  Granger Cobb

              
	 	 	
                Granger
                  Cobb, President

              
	 	
                WITNESSES

              
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	
                /s/
                  Frank Tsai

              
	 	 	
                (signature)

              	 	 	 	 
	 	 	 	 	 	 	 
	 	
                Name:

              	
                Frank
                  Tsai

              
	 	 	
                (print)

              	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	
                /s/
                  Melanie Werdel

              
	 	 	
                (signature)

              	 	 	 	 
	 	
                Name:

              	
                Melanie
                  Werdel

              	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	
                SUMMERVILLE
                  AT OCOEE, INC.,

              
	 	
                a
                  Delaware corporation

              
	 	 	 	 	 	 	 
	 	
                By:

              	
                  /s/
                  Granger Cobb

              
	 	 	
                Granger
                  Cobb, President

              
	 	 	 	 	 	 	 
	 	
                WITNESSES

              
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	
                /s/
                  Frank Tsai

              
	 	 	
                (signature)

              	 	 	 	 
	 	
                Name:

              	
                Frank
                  Tsai

              	 	 	 	 
	 	 	
                (print)

              	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	
                /s/
                  Melanie Werdel

              
	 	 	
                (signature)

              	 	 	 	 
	 	
                Name:

              	
                Melanie
                  Werdel

              


      

      
        

          
            
              
              

            

            
              87

              
                

              

            

            
              
              

            

          

        

      

      
        


      

      
        	 	
                SUMMERVILLE
                  AT PORT ORANGE, INC.,

              
	 	
                a
                  Delaware corporation

              
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	
                By:

              	
                /s/
                  Granger Cobb

              
	 	 	
                Granger
                  Cobb, President

              
	 	 
	 	
                WITNESSES

              
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	
                /s/
                  Frank Tsai

              
	 	 	
                (signature)

              
	 	 	 
	 	
                Name:

              	
                Frank
                  Tsai

              
	 	 	
                (print)

              
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	
                /s/
                  Melanie Werdel

              
	 	 	
                (signature)

              
	 	 	 
	 	
                Name:

              	
                Melanie
                  Werdel

              
	 	 	 	 	 	 	 
	 	
                SUMMERVILLE
                  AT PRINCE WILLIAM,

              
	 	
                INC.,

              
	 	
                a
                  Delaware corporation

              
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	
                By:

              	
                /s/
                  Granger Cobb

              
	 	 	
                Granger
                  Cobb, President

              
	 	 	 	 	 	 	 
	 	
                WITNESSES

              
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	
                /s/
                  Frank Tsai

              
	 	 	
                (signature)

              
	 	 	 
	 	
                Name:

              	
                Frank
                  Tsai

              
	 	 	
                (print)    

              
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	
                /s/
                  Melanie Werdel

              
	 	 	
                (signature)    

              
	 	 	 
	 	
                Name:

              	
                Melanie
                  Werdel

              


      

      
        

          
            
              
              

            

            
              88

              
                

              

            

            
              
              

            

          

        

         

      

      
        	 	
                SUMMERVILLE
                  AT STAFFORD, L.L.C.,

              
	 	
                a
                  New Jersey limited liability company

              
	 	 	 
	 	
                By:

              	
                /s/
                  Granger Cobb

              
	 	 	
                Granger
                  Cobb, President

              
	 	 
	 	
                WITNESSES

              
	 	 	 	 	 	 	 	 	 
	 	
                /s/
                  Frank Tsai

              
	 	 	
                (signature)

              
	 	
                Name:

              	
                Frank
                  Tsai

              
	 	 	
                (print)

              
	 	 	 	 	 	 	 	 	 
	 	
                /s/
                  Melanie Werdel

              
	 	 	
                (signature)

              
	 	
                Name:

              	
                Melanie
                  Werdel

              
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	
                SUMMERVILLE
                  AT VOORHEES, L.L.C.,

              
	 	
                a
                  New Jersey limited liability company

              
	 	 	 	 	 	 	 	 	 
	 	
                By:

              	
                /s/
                  Granger Cobb

              
	 	 	
                Granger
                  Cobb, President

              
	 	 
	 	
                WITNESSES

              
	 	 	 	 	 	 	 	 	 
	 	
                /s/
                  Frank Tsai

              
	 	 	
                (signature)

              
	 	
                Name:

              	
                Frank
                  Tsai

              
	 	 	
                (print)

              
	 	 	 	 	 	 	 	 	 
	 	
                /s/
                  Melanie Werdel

              
	 	 	
                (signature)

              
	 	
                Name:

              	
                Melanie
                  Werdel

              


      

      
        

          
            
              
              

            

            
              89

              
                

              

            

            
              
              

            

          

        

         

      

      
        	 	
                SUMMERVILLE
                  AT WESTMINSTER,

              
	 	
                INC.,

              
	 	
                a
                  Maryland corporation

              
	 	 	 	 	 	 	 	 	 
	 	
                By:

              	
                /s/
                  Granger Cobb

              
	 	 	
                Granger
                  Cobb, President

              
	 	 	 	 	 	 	 	 	 
	 	
                WITNESSES

              
	 	 	 	 	 	 	 	 	 
	 	
                /s/
                  Frank Tsai

              
	 	 	
                (signature)

              
	 	 	 
	 	
                Name:

              	
                Frank
                  Tsai

              
	 	 	
                (print)

              
	 	 	 	 	 	 	 	 	 
	 	
                /s/
                  Melanie Werdel

              
	 	 	
                (signature)

              
	 	 	 
	 	
                Name:

              	
                Melanie
                  Werdel

              


      

      
         

      

    

     

     90