**Exhibit10.52**

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**AMENDED AND RESTATED MASTER LEASE AGREEMENT,**

dated as of October 1, 2006,

by and among

**HRES1PROPERTIES TRUST,**

AS LANDLORD,

AND

**FS PATRIOT LLC**

**and**

**FS COMMONWEALTH LLC, JOINTLY AND SEVERALLY**,

AS TENANT

 

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

 

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| 1.52      |   | “Leased Improvements”                     |       | 10 |
|-----------|--------|-----------------------------------------------------|------------|----|
| 1.53      |   | “Leased Intangible Property”              |       | 10 |
| 1.54      |   | “Leased Property”                         |       | 11 |
| 1.55      |   | “Legal Requirements”                      |       | 11 |
| 1.56      |   | “Lien”                                    |       | 11 |
| 1.57      |   | “Manager”                                 |       | 11 |
| 1.58      |   | “Management Agreement”                    |       | 11 |
| 1.59      |   | “Minimum Rent”                            |       | 12 |
| 1.60      |   | “Notice”                                  |       | 12 |
| 1.61      |   | “Officer’s Certificate”              |       | 12 |
| 1.62      |   | “Overdue Rate”                            |       | 12 |
| 1.63      |   | “Parent”                                  |       | 12 |
| 1.64      |   | “Permitted Encumbrances”                  |       | 12 |
| 1.65      |   | “Permitted Liens”                         |       | 12 |
| 1.66      |   | “Permitted Use”                           |       | 12 |
| 1.67      |   | “Person”                                  |       | 12 |
| 1.68      |   | “Pledge Agreement”                        |       | 12 |
| 1.69      |   | “Property”                                |       | 13 |
| 1.70      |   | “Provider Agreements”                     |       | 13 |
| 1.71      |   | “Records”                                 |       | 13 |
| 1.72      |   | “Regulated Medical Wastes”                |       | 13 |
| 1.73      |   | “Rent”                                    |       | 13 |
| 1.74      |   | “SEC”                                     |       | 13 |
| 1.75      |   | “Security Agreement”                      |       | 13 |
| 1.76      |   | “State”                                   |       | 13 |
| 1.77      |   | “Subordinated Creditor”                   |       | 13 |
| 1.78      |   | “Subordination Agreement”                 |       | 13 |
| 1.79      |   | “Subsidiary”                              |       | 13 |
| 1.80      |   | “Successor Landlord”                      |       | 14 |
| 1.81      |   | “Tenant”                                  |       | 14 |
| 1.82      |   | “Tenant’s Personal Property”         |       | 14 |
| 1.83      |   | “Term”                                    |       | 14 |
| 1.84      |   | “Third Party Payor Programs”              |       | 14 |
| 1.85      |   | “Third Party Payors”                      |       | 14 |
| 1.86      |   | “Unsuitable for Its Permitted Use”        |       | 14 |
| 1.87      |   | “Work”                                    |       | 15 |
| ARTICLE 2 |   | LEASED PROPERTY AND TERM                            | ** ** | 15 |
|  2.1 |   | Leased Property.                                    |       | 15 |
|  2.2 |   | Condition of Leased Property.                       |       | 16 |
|  2.3 |   | Fixed Term.                                         |       | 17 |
|  2.4 |   | Extended Term.                                      |       | 17 |
| ARTICLE 3 |   | RENT                                                | ** ** | 18 |
|  3.1 |   | Rent.                                               |       | 18 |
|  3.2 |   | Late Payment of Rent, Etc.                          |       | 21 |
|  3.3 |   | Net Lease.                                          |       | 21 |
|  3.4 |   | No Termination, Abatement, Etc.                     |       | 21 |
|  3.5 |   | Prorations, Etc.                                    |       | 22 |
| ARTICLE 4 |   | USE OF THE LEASED PROPERTY                          | ** ** | 23 |
|  4.1 |   | Permitted Use.                                      |       | 23 |
|  4.2 |   | Compliance with Legal/Insurance Requirements, Etc.  |       | 25 |
|  4.3 |   | Compliance with Medicaid and Medicare Requirements. |       | 25 |
|  4.4 |   | Environmental Matters.                              |       | 25 |

 

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| ARTICLE 5  |   | MAINTENANCE AND REPAIRS                              |   | 27 |
|------------|--------|------------------------------------------------------|--------|----|
|  5.1  |   | Maintenance and Repair.                              |   | 27 |
|  5.2  |   | Tenant’s Personal Property.                     |   | 29 |
|  5.3  |   | Yield Up.                                            |   | 30 |
|  5.4  |   | Management Agreement.                                |   | 31 |
| ARTICLE 6  |   | IMPROVEMENTS, ETC.                                   |   | 31 |
|  6.1  |   | Improvements to the Leased Property.                 |   | 31 |
|  6.2  |   | Salvage.                                             |   | 32 |
| ARTICLE 7  |   | LIENS                                                |   | 32 |
|  7.1  |   | Liens.                                               |   | 32 |
|  7.2  |   | Landlord’s Lien.                                |   | 33 |
| ARTICLE 8  |   | PERMITTED CONTESTS                                   |   | 33 |
| ARTICLE 9  |   | INSURANCE AND INDEMNIFICATION                        |   | 34 |
|  9.1  |   | General Insurance Requirements.                      |   | 34 |
|  9.2  |   | Waiver of Subrogation.                               |   | 35 |
|  9.3  |   | Form Satisfactory, Etc.                              |   | 35 |
|  9.4  |   | No Separate Insurance; Self-Insurance.               |   | 36 |
|  9.5  |   | Indemnification of Landlord.                         |   | 36 |
| ARTICLE 10 |   | CASUALTY                                             |   | 37 |
| 10.1       |   | Insurance Proceeds.                                  |   | 37 |
| 10.2       |   | Damage or Destruction.                               |   | 38 |
| 10.3       |   | Damage Near End of Term.                             |   | 40 |
| 10.4       |   | Tenant’s Property.                              |   | 40 |
| 10.5       |   | Restoration of Tenant’s Property.               |   | 40 |
| 10.6       |   | No Abatement of Rent.                                |   | 40 |
| 10.7       |   | Waiver.                                              |   | 41 |
| ARTICLE 11 |   | CONDEMNATION                                         |   | 41 |
| 11.1       |   | Total Condemnation, Etc.                             |   | 41 |
| 11.2       |   | Partial Condemnation.                                |   | 41 |
| 11.3       |   | Abatement of Rent.                                   |   | 42 |
| 11.4       |   | Temporary Condemnation.                              |   | 42 |
| 11.5       |   | Allocation of Award.                                 |   | 43 |
| ARTICLE 12 |   | DEFAULTS AND REMEDIES                                |   | 43 |
| 12.1       |   | Events of Default.                                   |   | 43 |
| 12.2       |   | Remedies.                                            |   | 46 |
| 12.3       |   | Tenant’s Waiver.                                |   | 47 |
| 12.4       |   | Application of Funds.                                |   | 48 |
| 12.5       |   | Landlord’s Right to Cure Tenant’s Default. |   | 48 |
| 12.6       |   | Trade Names.                                         |   | 48 |
| ARTICLE 13 |   | HOLDING OVER                                         |   | 49 |
| ARTICLE 14 |   | LANDLORD DEFAULT                                     |   | 49 |
| ARTICLE 15 |   | PURCHASE RIGHTS                                      |   | 50 |
| ARTICLE 16 |   | SUBLETTING AND ASSIGNMENT                            |   | 50 |
| 16.1       |   | Subletting and Assignment.                           |   | 50 |
| 16.2       |   | Required Sublease Provisions.                        |   | 52 |
| 16.3       |   | Permitted Sublease.                                  |   | 53 |
| 16.4       |   | Sublease Limitation.                                 |   | 54 |
| ARTICLE 17 |   | ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS       |   | 54 |
| 17.1       |   | Estoppel Certificates.                               |   | 54 |
| 17.2       |   | Financial Statements.                                |   | 55 |

 

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| 17.3       |   | Reimbursement, Licensure, Etc.                      |   | 56 |
|------------|--------|-----------------------------------------------------|--------|----|
| ARTICLE 18 |   | LANDLORD’S RIGHT TO INSPECT                    |   | 57 |
| ARTICLE 19 |   | EASEMENTS                                           |   | 57 |
| 19.1       |   | Grant of Easements.                                 |   | 57 |
| 19.2       |   | Exercise of Rights by Tenant.                       |   | 58 |
| 19.3       |   | Permitted Encumbrances.                             |   | 58 |
| ARTICLE 20 |   | FACILITY MORTGAGES                                  |   | 58 |
| 20.1       |   | Landlord May Grant Liens.                           |   | 58 |
| 20.2       |   | Subordination of Lease.                             |   | 58 |
| 20.3       |   | Notice to Mortgagee and Superior Landlord.          |   | 60 |
| ARTICLE 21 |   | ADDITIONAL COVENANTS OF TENANT                      |   | 60 |
| 21.1       |   | Prompt Payment of Indebtedness.                     |   | 60 |
| 21.2       |   | Conduct of Business.                                |   | 61 |
| 21.3       |   | Maintenance of Accounts and Records.                |   | 61 |
| 21.4       |   | Notice of Litigation, Etc.                          |   | 61 |
| 21.5       |   | Indebtedness of Tenant.                             |   | 62 |
| 21.6       |   | Distributions, Payments to Affiliated Persons, Etc. |   | 63 |
| 21.7       |   | Prohibited Transactions.                            |   | 63 |
| 21.8       |   | Liens and Encumbrances.                             |   | 63 |
| 21.9       |   | Merger; Sale of Assets; Etc.                        |   | 64 |
| 21.10      |   | Bankruptcy Remote Entities.                         |   | 64 |
| 21.11      |   | Notice of Change of Name, Etc.                      |   | 64 |
| ARTICLE 22 |   | ARBITRATION                                         |   | 64 |
| ARTICLE 23 |   | MISCELLANEOUS                                       |   | 66 |
| 23.1       |   | Limitation on Payment of Rent.                      |   | 66 |
| 23.2       |   | No Waiver.                                          |   | 66 |
| 23.3       |   | Remedies Cumulative.                                |   | 66 |
| 23.4       |   | Severability.                                       |   | 67 |
| 23.5       |   | Acceptance of Surrender.                            |   | 67 |
| 23.6       |   | No Merger of Title.                                 |   | 67 |
| 23.7       |   | Conveyance by Landlord.                             |   | 67 |
| 23.8       |   | Quiet Enjoyment.                                    |   | 67 |
| 23.9       |   | No Recordation.                                     |   | 68 |
| 23.10      |   | Notices.                                            |   | 68 |
| 23.11      |   | Construction.                                       |   | 69 |
| 23.12      |   | Counterparts; Headings.                             |   | 69 |
| 23.13      |   | Applicable Law, Etc.                                |   | 70 |
| 23.14      |   | Right to Make Agreement.                            |   | 70 |
| 23.15      |   | Attorneys’ Fees.                               |   | 70 |
| 23.16      |   | Nonliability of Trustees.                           |   | 70 |

 

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**AMENDED AND RESTATED MASTER LEASE AGREEMENT**

**THIS AMENDED AND RESTATED MASTER LEASE AGREEMENT** is entered into as of October 1, 2006,by and among (i) **HRES1 PROPERTIES TRUST**,a Maryland real estate investment trust, as landlord (“Landlord”), and(ii) **FS PATRIOT LLC**and **FS COMMONWEALTH LLC**, each a Marylandlimited liability company, jointly and severally, as tenant (“Tenant”).

**W****ITNESSETH :**

**WHEREAS**, Landlord and Tenant areparties to that certain Master Lease Agreement, dated as of March 3, 2006 (asamended, the “Original Lease”); and

**WHEREAS**, Landlord and Tenant wishto amend and restate the Original Lease to make such modifications as are setforth herein.

**NOW, THEREFORE,**in consideration of the mutual covenants hereincontained and other good and valuable consideration, the mutual receipt andlegal sufficiency of which are hereby acknowledged, Landlord and Tenant herebyagree that the Original Lease is hereby amended and restated in its entirety,as follows:

**ARTICLE 1**

**DEFINITIONS**

For all purposes of this Agreement, except as otherwise expresslyprovided or unless the context otherwise requires, (a) the terms defined inthis Article shall have the meanings assigned to them in this Article andinclude the plural as well as the singular, (b) all accounting terms nototherwise defined herein shall have the meanings assigned to them in accordancewith GAAP, (c) all references in this Agreement to designated “Articles”, “Sections”and other subdivisions are to the designated Articles, Sections and other subdivisionsof this Agreement, and (d) the words “herein”, “hereof”, “hereunder” and otherwords of similar import refer to this Agreement as a whole and not to anyparticular Article, Section or other subdivision.

## **1.1          “Additional Charges” **shall have the meaninggiven such term in Section 3.1.3.

## **1.2          “Affiliated Person” **shall mean, withrespect to any Person, (a)  in the caseof any such Person which is a partnership, any partner in such partnership, (b)in the case of 

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## any such Person which is a limited liabilitycompany, any member of such company, (c) any other Person which is a Parent, aSubsidiary, or a Subsidiary of a Parent with respect to such Person or to oneor more of the Persons referred to in the preceding clauses (a) and (b), (d)any other Person who is an officer, director, trustee or employee of, orpartner in or member of, such Person or any Person referred to in the precedingclauses (a), (b) and (c), and (e) any other Person who is a member of theImmediate Family of such Person or of any Person referred to in the precedingclauses (a) through (d).

## **1.3          “Agreement” **shall mean this Amended and RestatedMaster Lease Agreement, including all exhibits attached hereto, as it and theymay be amended from time to time as herein provided.

## **1.4          “Applicable Laws” **shall mean allapplicable laws, statutes, regulations, rules, ordinances, codes, licenses,permits and orders, from time to time in existence, of all courts of competentjurisdiction and Government Agencies, and all applicable judicial and administrativeand regulatory decrees, judgments and orders, including common law rulings anddeterminations, relating to injury to, or the protection of, real or personalproperty or human health or the Environment, including, without limitation, allvalid and lawful requirements of courts and other Government Agenciespertaining to reporting, licensing, permitting, investigation, remediation andremoval of underground improvements (including, without limitation, treatmentor storage tanks, or water, gas or oil wells), or emissions, discharges,releases or threatened releases of Hazardous Substances, chemical substances,pesticides, petroleum or petroleum products, pollutants, contaminants orhazardous or toxic substances, materials or wastes whether solid, liquid orgaseous in nature, into the Environment, or relating to the manufacture,processing, distribution, use, treatment, storage, disposal, transport orhandling of Hazardous Substances or Regulated Medical Wastes, undergroundimprovements (including, without limitation, treatment or storage tanks, orwater, gas or oil wells), or pollutants, contaminants or hazardous or toxicsubstances, materials or wastes, whether solid, liquid or gaseous in nature.

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

 

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## **1.6          “Business Day” **shall mean any dayother than Saturday, Sunday, or any other day on which banking institutions inThe Commonwealth of Massachusetts are authorized by law or executive action toclose.

## **1.7          “Capital Addition” **shall mean, withrespect to any Property, any renovation, repair or improvement to suchProperty, the cost of which constitutes a Capital Expenditure.

## **1.8          “Capital Expenditure” **shall mean anyexpenditure treated as capital in nature in accordance with GAAP.

## **1.9         **“**Change in Control”**  shall mean (a) the acquisition by any Person,or two or more Persons acting in concert, of beneficial ownership (within themeaning of Rule 13d-3 of the SEC) of 9.8% or more, or rights, options orwarrants to acquire 9.8% or more, of the outstanding shares of voting stock orother voting interests of either or both Entities comprising Tenant or anyGuarantor, as the case may be, or the power to direct the management andpolicies of Tenant or any Guarantor, directly or indirectly, (b) the merger orconsolidation of either or both Entities comprising Tenant or any Guarantorwith or into any other Person (other than the merger or consolidation of anyPerson into either or both Entities comprising Tenant or any Guarantor thatdoes not result in a Change in Control of either or both Entities comprisingTenant or such Guarantor under clauses (a), (c) or (d) of this definition), (c)any one or more sales or conveyances to any Person of all or any materialportion of its assets (including capital stock or other equity interests) orbusiness of either or both Entities comprising Tenant or any Guarantor, as thecase may be, or (d) the cessation, for any reason, of the individuals who atthe beginning of any twenty-four (24) consecutive month period (commencing onthe date hereof) constituted the board of directors of either or both Entitiescomprising Tenant or any Guarantor (together with any new directors whoseelection by such Board or whose nomination for election by the shareholders ofeither or both Entities comprising Tenant or such Guarantor, as the case maybe, was approved by a vote of a majority of the directors then still in officewho were either directors at the beginning of any such period or whose electionor nomination for election was previously so approved) to constitute a majorityof the board of directors of either or both Entities comprising Tenant or anyGuarantor then in office.

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

 

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

## **1.12        “Commencement Date” **shall mean October1, 2006.

## **1.13        “Condemnation” **shall mean, withrespect to any Property, or any portion thereof, (a) the exercise of anygovernmental power with respect to such Property, whether by legal proceedingsor otherwise, by a Condemnor of its power of condemnation, (b) a voluntary saleor transfer of such Property by Landlord to any Condemnor, either under threatof condemnation or while legal proceedings for condemnation are pending, or (c)a taking or voluntary conveyance of such Property, or any interest therein, orright accruing thereto or use thereof, as the result or in settlement of anycondemnation or other eminent domain proceeding affecting such Property,whether or not the same shall have actually been commenced.

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

## **1.15        “Consolidated Financials”**  shall mean, for any Fiscal Year or otheraccounting period of Five Star, annual audited and quarterly unauditedfinancial statements of Five Star prepared on a consolidated basis, includingFive Star’s consolidated balance sheet and the related statements of income andcash flows, all in reasonable detail, and setting forth in comparative form thecorresponding figures for the corresponding period in the preceding FiscalYear, and prepared in accordance with GAAP throughout the periods reflected.

## **1.16        “Date of Taking” **shall mean, withrespect to any Property, the date the Condemnor has the right to possession ofsuch Property, or any portion thereof, in connection with a Condemnation.

## **1.17        “Default” **shall mean any eventor condition which with the giving of notice and/or lapse of time would ripeninto an Event of Default.

## **1.18        “Disbursement Rate” **shall mean an annualrate of interest, as of the date of determination, equal to the greater of (i)the Interest Rate,  and (ii) the perannum rate for ten (10) year U.S. Treasury Obligations as published in TheWall Street Journal plus four hundred (400) basis points; provided, however,that in no event shall the Disbursement Rate exceed eleven and one-half percent(11.5%).

 

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## **1.19        “Distribution” **shall mean (a) anydeclaration or payment of any dividend (except ordinary cash dividends payablein common stock or other equity interests of either or both Entities comprisingTenant) on or in respect of any shares of any class of capital stock or otherequity interests of either or both Entities comprising Tenant, (b) anypurchase, redemption, retirement or other acquisition of any shares of anyclass of capital stock of a corporation, (c) any other distribution on or in respectof any shares of any class of capital stock of a corporation or (d) any returnof capital to shareholders.

## **1.20        “Easement Agreement” **shall mean anyconditions, covenants and restrictions, easements, declarations, licenses andother agreements which are Permitted Encumbrances and such other agreements asmay be granted in accordance with Section 19.1.

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

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

## **1.23        “Environment” **shall mean soil,surface waters, ground waters, land, stream, sediments, surface or subsurfacestrata and ambient air.

## **1.24        “Environmental Obligation” **shall have themeaning given such term in Section 4.4.1.

## **1.25        “Environmental Notice” **shall have themeaning given such term in Section 4.4.1.

## **1.26        “Event of Default” **shall have themeaning given such term in Section 12.1.

## **1.27        “Extended Term” **shall have themeaning given such term in Section 2.4.

## **1.28        “Facility” **shall mean, withrespect to any Property, the rehabilitation hospital being operated on suchProperty, and, specifically including, without limitation, (i) with respect tothe Facility known as New England Rehabilitation Hospital, Woburn,Massachusetts, the right to operate the 198 

##  

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## beds licensed at such Facility, (ii) withrespect to the Facility known as Braintree Rehabilitation Hospital, the rightto operate the 187 beds licensed at such Facility, and (iii) any other tangibleor intangible rights associated with, or incidental to, any licenses,registrations and permits used by such hospitals in the conduct of theirbusiness and provision of patient services.

## **1.29        “Facility Mortgage” **shall mean anyEncumbrance placed upon the Leased Property, or any portion thereof, inaccordance with Article 20.

## **1.30        “Facility Mortgagee” **shall mean theholder of any Facility Mortgage.

## **1.31       **“**Facility Trade Names**”  shall mean, with respect to any Property, anyof the names under which Tenant operates, or has operated, the Facility at suchProperty at any time during the Term.

## **1.32        “Financial Officer’s Certificate” **shall mean, as toany Person, a certificate of the chief executive officer, chief financialofficer or chief accounting officer (or such officers’ authorized designee) ofsuch Person, duly authorized, accompanying the financial statements required tobe delivered by such Person pursuant to Section 17.2, in which suchofficer shall certify (a) that such statements have been properly prepared inaccordance with GAAP and are true, correct and complete in all materialrespects and fairly present the consolidated financial condition of such Personat and as of the dates thereof and the results of its and their operations forthe periods covered thereby, and (b), in the event that the certifying party isan officer of Tenant and the certificate is being given in such capacity, thatno Event of Default has occurred and is continuing hereunder.

## **1.33        “Fiscal Year” **shall mean thecalendar year or such other annual period designated by Tenant and approved byLandlord.

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

## **1.35        “Fixed Term” **shall have themeaning given such term in Section 2.3.

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

 

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## **1.37        “GAAP” **shall mean generallyaccepted accounting principles consistently applied.

## **1.38        “Government Agencies” **shall mean anycourt, agency, authority, board (including, without limitation, environmentalprotection, planning and zoning), bureau, commission, department, office orinstrumentality of any nature whatsoever of any governmental orquasi-governmental unit of the United States or any State or any county or anypolitical subdivision of any of the foregoing, whether now or hereafter inexistence, having jurisdiction over Tenant or any Property, or any portionthereof, or any Facility operated thereon.

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

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

## **1.41       **“**Hazardous Substances”**  shall mean any substance:

#### (a)           the presence ofwhich requires or may hereafter require notification, investigation orremediation under any federal, state or local statute, regulation, rule,ordinance, order, action or policy; or

#### (b)           which is or becomesdefined as a “hazardous waste”, “hazardous material” or “hazardous substance”or “pollutant” or “contaminant” under any present or future federal, state orlocal statute, regulation, rule or ordinance or amendments thereto including,without limitation, the Comprehensive Environmental Response, Compensation andLiability Act (42 U.S.C. Section 9601 etseq.) and the ResourceConservation and Recovery Act (42 U.S.C. Section 6901 etseq.)and the regulations promulgated thereunder; or

#### (c)           which is toxic,explosive, corrosive, flammable, infectious, radioactive, carcinogenic,mutagenic or otherwise hazardous and is or becomes regulated by any governmentalauthority, agency, department, commission, board, agency or instrumentality ofthe United States, any state of the United States, or any political subdivisionthereof; or

 

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#### (d)           the presence ofwhich on any Property, or any portion thereof, causes or materially threatensto cause an unlawful nuisance upon such Property, or any portion thereof, or toadjacent properties or poses or materially threatens to pose a hazard to suchProperty, or any portion thereof, or to the health or safety of persons on orabout such Property, or any portion thereof; or

#### (e)           without limitation,which contains gasoline, diesel fuel or other petroleum hydrocarbons orvolatile organic compounds; or

#### (f)            without limitation,which contains polychlorinated biphenyls (PCBs) or asbestos or ureaformaldehyde foam insulation; or

#### (g)           without limitation,which contains or emits radioactive particles, waves or material; or

#### (h)           without limitation,constitutes Regulated Medical Wastes.

## **1.42        “Immediate Family” **shall mean, withrespect to any individual, such individual’s spouse, parents, brothers,sisters, children (natural or adopted), stepchildren, grandchildren,grandparents, parents-in-law, brothers-in-law, sisters-in-law, nephews andnieces.

## **1.43        “Impositions” **shall mean, collectively,all taxes (including, without limitation, all taxes imposed under the laws ofany State, as such laws may be amended from time to time, and all ad valorem,sales and use, or similar taxes as the same relate to or are imposed uponLandlord, Tenant or the business conducted upon the Leased Property),assessments (including, without limitation, all assessments for publicimprovements or benefit, whether or not commenced or completed prior to thedate hereof), ground rents (including any minimum rent under any ground lease,and any additional rent or charges thereunder), water, sewer or other rents andcharges, excises, tax levies, fees (including, without limitation, license,permit, inspection, authorization and similar fees), and all other governmentalcharges, in each case whether general or special, ordinary or extraordinary,foreseen or unforeseen, of every character in respect of the Leased Property orthe business conducted thereon by Tenant (including all interest and penaltiesthereon due to any failure in payment by Tenant), which at any time prior to,during or in respect of the Term hereof may be assessed or imposed on or inrespect of or be a lien upon (a) Landlord’s interest in the Leased Property,(b) 

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## the Leased Property or any part thereof orany rent therefrom or any estate, right, title or interest therein, or (c) anyoccupancy, operation, use or possession of, or sales from, or activityconducted on, or in connection with the Leased Property or the leasing or useof the Leased Property or any part thereof by Tenant; provided, however,that nothing contained herein shall be construed to require Tenant to pay andthe term “Impositions” shall not include (i) any tax based on net incomeimposed on Landlord, (ii) any net revenue tax of Landlord, (iii) any transferfee (but excluding any mortgage or similar tax payable in connection with aFacility Mortgage) or other tax imposed with respect to the sale, exchange orother disposition by Landlord of the Leased Property or the proceeds thereof, (iv)any single business, gross receipts tax, transaction privilege, rent or similartaxes as the same relate to or are imposed upon Landlord, (v) any interest orpenalties imposed on Landlord as a result of the failure of Landlord to fileany return or report timely and in the form prescribed by law or to pay any taxor imposition, except to the extent such failure is a result of a breach byTenant of its obligations pursuant to Section 3.1.3, (vi) anyimpositions imposed on Landlord that are a result of Landlord not beingconsidered a “United States person” as defined in Section 7701(a)(30) of theCode, (vii) any impositions that are enacted or adopted by their express termsas a substitute for any tax that would not have been payable by Tenant pursuantto the terms of this Agreement or (viii) any impositions imposed as a result ofa breach of covenant or representation by Landlord in any agreement governingLandlord’s conduct or operation or as a result of the negligence or willfulmisconduct of Landlord.

## **1.44        “Incidental Documents” **shall mean theGuaranty, the Security Agreement, the Pledge Agreement any and other pledge orsecurity agreement issued or executed by an assignee or transferee pursuant to Section16.1.

## **1.45        “Indebtedness” **shall mean (withoutduplication), (i) all obligations for borrowed money, (ii) the maximum amountavailable to be drawn under all surety bonds, letters of credit and bankers’acceptances issued or created for the account of Tenant and, withoutduplication, all unreimbursed drafts drawn thereunder, (iii) all obligations topay the deferred purchase price of property or services, excluding tradepayables incurred in the ordinary course of business, but including allindebtedness created or arising under any conditional sale or other titleretention agreement with respect to property acquired by Tenant, (iv) allleases required, in accordance with GAAP, to be recorded as capital leases onTenant’s balance sheet, (v) the principal balance outstanding and owing byTenant under any synthetic lease, tax retention operating lease or similaroff-balance 

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## sheet financing product, and (vi) allguaranties of or other liabilities with respect to the debt of another Person.

## **1.46        “Insurance Requirements” **shall mean all termsof any insurance policy required by this Agreement and all requirements of theissuer of any such policy and all orders, rules and regulations and any otherrequirements of the National Board of Fire Underwriters (or any other bodyexercising similar functions) binding upon Landlord, Tenant, any Manager or theLeased Property.

## **1.47        “Interest Rate” **shall mean ninepercent (9%) per annum.

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

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

## **1.50        “Landlord Default” **shall have themeaning given such term in Article 14.

## **1.51        “Landlord Liens” **shall mean liens onor against the Leased Property or any payment of Rent (a) which result from anyact of, or any claim against, Landlord or any owner of a direct or indirectinterest in the Leased Property (other than the lessor under any ground leaseaffecting any portion of the Leased Property), or which result from anyviolation by Landlord of any terms of this Agreement, or (b) which result fromliens in favor of any taxing authority by reason of any tax owed by Landlord orany fee owner of a direct or indirect interest in the Leased Property (otherthan the lessor under any ground lease affecting any portion of the LeasedProperty); provided, however, that “Landlord Lien” shallnot include any lien resulting from any tax for which Tenant is obligated topay or indemnify Landlord against until such time as Tenant shall have alreadypaid to or on behalf of Landlord the tax or the required indemnity with respectto the same.

## **1.52        “Leased Improvements” **shall have themeaning given such term in Section 2.1(b).

## **1.53        “Leased Intangible Property” **shall mean allagreements, service contracts, equipment leases, booking agreements and otherarrangements or agreements affecting the ownership, repair, maintenance,management, leasing or operation of the Leased Property, or any portionthereof,  to which 

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## Landlord is a party; all books, records andfiles relating to the leasing, maintenance, management or operation of theLeased Property, or any portion thereof, belonging to Landlord; alltransferable or assignable permits, certificates of occupancy, operatingpermits, sign permits, development rights and approvals, certificates,licenses, warranties and guarantees, rights to deposits, trade names, servicemarks, telephone exchange numbers identified with the Leased Property, and allother transferable intangible property, miscellaneous rights, benefits andprivileges of any kind or character belonging to Landlord with respect to theLeased Property.

## **1.54        “Leased Property”** shall have the meaning given such term in Section 2.1.

## **1.55        “Legal Requirements” **shall mean allfederal, state, county, municipal and other governmental statutes, laws, rules,orders, regulations, ordinances, judgments, decrees and injunctions affectingthe Leased Property or the maintenance, construction, alteration or operationthereof, whether now or hereafter enacted or in existence, including, withoutlimitation, (a) all permits, licenses, authorizations, certificates of need,authorizations and regulations necessary to operate any Property for itsPermitted Use, and (b) all covenants, agreements, restrictions and encumbrancescontained in any instruments at any time in force affecting any Property,including those which may (i) require material repairs, modifications oralterations in or to any Property or (ii) in any way materially and adverselyaffect the use and enjoyment thereof, but excluding any requirements arising asa result of Landlord’s status as a real estate investment trust.

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

## **1.57       ****“Manager”** shall mean, with respect to any Property, the operator or manager underany Management Agreement from time to time in effect with respect to suchProperty, and its permitted successors and assigns.

## **1.58       **“**Management Agreement”**  shall mean, with respect to any Property, anyoperating or management agreement from time to time entered into by Tenant withrespect to such Property in accordance with the applicable provisions of thisAgreement, 

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## together with all amendments, modificationsand supplements thereto.

## **1.59        “Minimum Rent”**  shall mean the sum of Ten Million Two HundredFifty Thousand Dollars ($10,250,000) per annum.

## **1.60        “Notice”**  shall mean a notice given in accordance with Section23.10.

## **1.61        “Officer’s Certificate” **shall mean acertificate signed by an officer or other duly authorized individual of thecertifying Entity duly authorized by the board of directors or other governingbody of the certifying Entity.

## **1.62        “Overdue Rate” **shall mean, on anydate, a perannum rate of interest equal to the lesser of fifteenpercent (15%) and the maximum rate then permitted under applicable law.

## **1.63        “Parent” **shall mean, withrespect to any Person, any Person which owns directly, or indirectly throughone or more Subsidiaries or Affiliated Persons, twenty percent (20%) or more ofthe voting or beneficial interest in, or otherwise has the right or power(whether by contract, through ownership of securities or otherwise) to control,such Person.

## **1.64        “Permitted Encumbrances” **shall mean, withrespect to any Property, all rights, restrictions, and easements of record setforth on Schedule B to the applicable owner’s or leasehold title insurancepolicy issued to Landlord with respect to such Property, plus any otherencumbrances as may have been granted or caused by Landlord or otherwiseconsented to in writing by Landlord from time to time.

## **1.65        “Permitted Liens” **shall mean any Liensgranted in accordance with Section 21.8(a).

## **1.66        “Permitted Use”**  shall mean, with respect to any Property, anyuse of such Property permitted pursuant to Section 4.1.1.

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

## **1.68       **“**Pledge Agreement”**  shall mean the Amended and Restated PledgeAgreement, dated as of the date hereof, made by FSQ, Inc. in favor of Landlordwith respect to the stock or 

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## other equity interests of Tenant, as amended,restated, supplemented or otherwise modified from time to time.

## **1.69        “Property” **shall have the meaninggiven such term in Section 2.1.

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

## **1.71        “Records” **shall have themeaning given such term in Section 7.2.

## **1.72        “Regulated Medical Wastes”**  shall mean all materials generated byTenant, subtenants, patients, occupants or the operators of the Leased Propertywhich are now or may hereafter be subject to regulation pursuant to theMaterial Waste Tracking Act of 1988, or any Applicable Laws promulgated by anyGovernment Agencies.

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

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

## **1.75        “Security Agreement” **shall mean anysecurity agreement made by Tenant for the benefit of Landlord, as it may beamended, restated, supplemented or otherwise modified from time to time.

## **1.76        “State” **shall mean TheCommonwealth of Massachusetts.

## **1.77        “Subordinated Creditor” **shall mean anycreditor of Tenant which is a party to a Subordination Agreement in favor ofLandlord.

## **1.78        “Subordination Agreement” **shall mean anyagreement (and any amendments thereto) executed by a Subordinated Creditorpursuant to which the payment and performance of Tenant’s obligations to suchSubordinated Creditor are subordinated to the payment and performance of Tenant’sobligations to Landlord under this Agreement.

## **1.79        “Subsidiary” **shall mean, withrespect to any Person, any Entity (a) in which such Person owns directly, orindirectly 

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## through one or more Subsidiaries, twentypercent (20%) or more of the voting or beneficial interest or (b) which suchPerson otherwise has the right or power to control (whether by contract,through ownership of securities or otherwise).

## **1.80        “Successor Landlord”  **shall have themeaning given such term in Section 20.2.

## **1.81        “Tenant” **shall have themeaning given such term in the preambles to this Agreement and shall alsoinclude their respective permitted successors and assigns, and, in each case,shall refer to each such Entity comprising Tenant hereunder, whether theoriginal Entities named herein or any of their successors or assigns, jointlyand severally with each and every other Entity or Entities then comprisingTenant hereunder.

## **1.82         “Tenant’s Personal Property” **shall mean all motorvehicles and consumable inventory and supplies, furniture, furnishings,equipment, movable walls and partitions, equipment and machinery and all othertangible personal property of Tenant and Tenant’s receivables, if any, acquiredby Tenant on and after the date hereof and located at the Leased Property orused in Tenant’s business at the Leased Property and all modifications,replacements, alterations and additions to such personal property installed atthe expense of Tenant, other than any items included within the definition ofFixtures.

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

## **1.84        “Third Party Payor Programs”**  shall mean all third party payor programs inwhich Tenant presently or in the future may participate, including, withoutlimitation, Medicare, Medicaid, CHAMPUS, Blue Cross and/or Blue Shield, ManagedCare Plans, other private insurance programs and employee assistance programs.

## **1.85        “Third Party Payors” **shall mean Medicare,Medicaid, CHAMPUS, Blue Cross and/or Blue Shield, private insurers and anyother Person which presently or in the future maintains Third Party PayorPrograms.

## **1.86        “Unsuitable for Its Permitted Use” **shall mean, withrespect to any Facility, a state or condition of such Facility such that (a)following any damage or destruction involving a Facility, (i) such Facilitycannot be operated on a commercially practicable basis for its Permitted Useand it cannot reasonably 

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## be expected to be restored to substantiallythe same condition as existed immediately before such damage or destruction,and as otherwise required by Section 10.2.4, within twelve (12) monthsfollowing such damage or destruction or such longer period of time as to whichbusiness interruption insurance is available to cover Rent and other costsrelated to the applicable Property following such damage or destruction, (ii)the damage or destruction, if uninsured, exceeds $1,000,000 or (iii) the costof such restoration exceeds ten percent (10%) of the fair market value of suchProperty immediately prior to such damage or destruction, or (b) as the resultof a partial taking by Condemnation, such Facility cannot be operated, in thegood faith judgment of Tenant, on a commercially practicable basis for itsPermitted Use.

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

**ARTICLE 2**

**LEASED PROPERTY AND TERM**

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

#### (a)           those certain tracts, pieces andparcels of land, as more particularly described in Exhibits A-1 through A-2,attached hereto and made a part hereof (the “Land”);

#### (b)           all buildings, structures and otherimprovements of every kind including, but not limited to, alleyways andconnecting tunnels, sidewalks, utility pipes, conduits and lines (on-siteand off-site), parking areas and roadways appurtenant to such buildingsand structures presently situated upon the Land (collectively, the “LeasedImprovements”);

#### (c)           all easements, rights andappurtenances relating to the Land and the Leased Improvements;

#### (d)           all equipment, machinery, fixtures,and other items of property, now or hereafter permanently affixed to orincorporated into the Leased Improvements, including, without limitation, allfurnaces, boilers, heaters, 

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#### electricalequipment, heating, plumbing, lighting, ventilating, refrigerating,incineration, air and water pollution control, waste disposal, air-cooling andair-conditioning systems and apparatus, sprinkler systems and fire and theftprotection equipment, all of which, to the maximum extent permitted by law, arehereby deemed by the parties hereto to constitute real estate, together withall replacements, modifications, alterations and additions thereto, butspecifically excluding all items included within the category of Tenant’sPersonal Property (collectively, the “Fixtures”);

#### (e)           all machinery,equipment, furniture, furnishings, moveable walls or partitions, computers ortrade fixtures or other personal property of any kind or description used oruseful in Tenant’s business on or in the Leased Improvements, and located on orin the Leased Improvements, and all modifications, replacements, alterationsand additions to such personal property, except items, if any, included withinthe category of Fixtures, but specifically excluding all items included withinthe category of Tenant’s Personal Property;

#### (f)            all of the LeasedIntangible Property; and

#### (g)           any and all leasesof space in the Leased Improvements.

## **2.2          Condition of Leased Property.** Tenant acknowledges receipt and delivery ofpossession of the Leased Property and Tenant accepts the Leased Property in its“as is” condition, subject to the rights of parties in possession, the existingstate of title, including all covenants, conditions, restrictions, reservations,mineral leases, easements and other matters of record or that are visible orapparent on the Leased  Property, allapplicable Legal Requirements, the lien of any financing instruments, mortgagesand deeds of trust existing prior to the Commencement Date or permitted by theterms of this Agreement, and such other matters which would be disclosed by aninspection of the Leased Property and the record title thereto or by anaccurate survey thereof.  TENANT REPRESENTSTHAT IT HAS INSPECTED THE LEASED PROPERTY AND ALL OF THE FOREGOING AND HASFOUND THE CONDITION THEREOF SATISFACTORY AND IS NOT RELYING ON ANYREPRESENTATION OR WARRANTY OF LANDLORD OR LANDLORD’S AGENTS OR EMPLOYEES WITHRESPECT THERETO AND TENANT WAIVES ANY CLAIM OR ACTION AGAINST LANDLORD INRESPECT OF THE CONDITION OF THE LEASED PROPERTY.  LANDLORD MAKES NO WARRANTY OR REPRESENTATION,EXPRESS OR IMPLIED, IN RESPECT OF THE LEASED PROPERTY OR ANY PART THEREOF,EITHER AS TO ITS FITNESS FOR USE, DESIGN OR 

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## CONDITION FOR ANY PARTICULAR USE OR PURPOSEOR OTHERWISE, AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, LATENTOR PATENT, IT BEING AGREED THAT ALL SUCH RISKS ARE TO BE BORNE BY TENANT.  To the maximum extent permitted by law,however, Landlord hereby assigns to Tenant all of Landlord’s rights to proceedagainst any predecessor in interest or insurer for breaches of warranties orrepresentations or for latent defects in the Leased Property.  Landlord shall fully cooperate with Tenant inthe prosecution of any such claims, in Landlord’s or Tenant’s name, all atTenant’s sole cost and expense.  Tenantshall indemnify, defend, and hold harmless Landlord from and against any loss,cost, damage or liability (including reasonable attorneys’ fees) incurred byLandlord in connection with such cooperation.

## **2.3          Fixed Term.** The initial term of this Agreement (the “FixedTerm”) shall commence on the Commencement Date and shall expire on June 30,2026.

## **2.4          Extended Term.** Provided that no Event of Default shall haveoccurred and be continuing, Tenant shall have the right to extend the Term forone renewal term of twenty (20) years (the “Extended Term”).

The Extended Term shall commence on the day succeeding the expirationof the Fixed Term.  All of the terms,covenants and provisions of this Agreement shall apply to the Extended Term,except that Tenant shall have no right to extend the Term beyond the expirationof the Extended Term.  If Tenant shallelect to exercise the aforesaid option, it shall do so by giving LandlordNotice thereof not later than June 30, 2025, it being understood and agreedthat time shall be of the essence with respect to the giving of suchNotice.  If Tenant shall fail to givesuch Notice, this Agreement shall automatically terminate at the end of theFixed Term and Tenant shall have no further option to extend the Term of thisAgreement.  If Tenant shall give suchNotice, the extension of this Agreement shall be automatically effected withoutthe execution of any additional documents; it being understood and agreed, however,that Tenant and Landlord shall execute such documents and agreements as eitherparty shall reasonably require to evidence the same.  Notwithstanding the provisions of theforegoing sentence, if, subsequent to the giving of such Notice, an Event ofDefault shall occur, at Landlord’s option, the extension of this Agreementshall cease to take effect and this Agreement shall automatically terminate atthe end of the Fixed Term, and Tenant shall have no further option to extendthe Term of this Agreement.

 

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**ARTICLE 3**

**RENT**

## **3.1          Rent.** Tenant shall pay, in lawful money of theUnited States of America which shall be legal tender for the payment of publicand private debts, without offset, abatement, demand or deduction (unlessotherwise expressly provided in this Agreement), Minimum Rent to Landlord andAdditional Charges to the party to whom such Additional Charges are payable,during the Term.  All payments toLandlord shall be made by wire transfer of immediately available federal fundsor by other means acceptable to Landlord in its sole discretion.  Rent for any partial calendar month shall beprorated on a per diem basis.

### **3.1.1           Minimum Rent.**

#### (a)           **Payments**.  Minimum Rent shall be paid in equal monthlyinstallments in arrears on the first Business Day of each calendar month duringthe Term.

#### (b)           **Allocation of Minimum Rent. **Minimum Rent may be allocated andreallocated among the Properties comprising the Leased Property by agreementamong Landlord and Tenant; provided, however that in no eventshall the Minimum Rent allocated to any Property be less than the monthlyamount payable by Landlord on account of any Facility Mortgage and/or ground ormaster lease with respect to such Property nor shall the aggregate amount ofMinimum Rent allocated among the Properties exceed the total amount payable forthe Leased Property.

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

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#### Minimum Rentpaid by Tenant for such preceding calendar month.

#### (d)           **Adjustments of Minimum Rent Following Partial LeaseTermination**.  Subject to Section4.1.1(b), if this Agreement shall terminate with respect to any Propertybut less than all of the Leased Property, Minimum Rent shall be reduced by theaffected Property’s allocable share of Minimum Rent determined in accordancewith the applicable provisions of this Agreement.

### **3.1.2          ****Intentionally Deleted**.

### **3.1.3           Additional Charges.** In addition to the Minimum Rent payablehereunder, Tenant shall pay (or cause to be paid) to the appropriate partiesand discharge (or cause to be discharged) as and when due and payable thefollowing (collectively, “Additional Charges”):

#### (a)           **Impositions.** Subject to Article 8 relating topermitted contests, Tenant shall pay, or cause to be paid, all Impositionsbefore any fine, penalty, interest or cost (other than any opportunity cost asa result of a failure to take advantage of any discount for early payment) maybe added for non-payment, such payments to be made directly to the taxing authoritieswhere feasible, and shall promptly, upon request, furnish to Landlord copies ofofficial receipts or other reasonably satisfactory proof evidencing suchpayments.  If any such Imposition may, atthe option of the taxpayer, lawfully be paid in installments (whether or notinterest shall accrue on the unpaid balance of such Imposition), Tenant mayexercise the option to pay the same (and any accrued interest on the unpaidbalance of such Imposition) in installments and, in such event, shall pay, or causeto pay, such installments during the Term as the same become due and before anyfine, penalty, premium, further interest or cost may be added thereto.  Landlord, at its expense, shall, to theextent required or permitted by Applicable Law, prepare and file, or cause tobe prepared and filed, all tax returns and pay all taxes due in respect ofLandlord’s net income, gross receipts, sales and use, single business,transaction privilege, rent, ad valorem, franchise taxes and taxes on itscapital stock or other equity interests, and Tenant, at its expense, shall, tothe extent required or permitted by Applicable Laws and regulations, prepareand file all other tax returns and reports in respect of any Imposition as maybe required by Government Agencies.  Providedno Event of Default shall have occurred and be continuing, if any refund shallbe due 

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#### from anytaxing authority in respect of any Imposition paid by or on behalf of Tenant,the same shall be paid over to or retained by Tenant.  Landlord and Tenant shall, upon request ofthe other, provide such data as is maintained by the party to whom the requestis made with respect to the Leased Property as may be necessary to prepare anyrequired returns and reports.  In theevent Government Agencies classify any property covered by this Agreement aspersonal property, Tenant shall file, or cause to be filed, all personalproperty tax returns in such jurisdictions where it may legally so file.  Each party shall, to the extent it possessesthe same, provide the other, upon request, with cost and depreciation recordsnecessary for filing returns for any property so classified as personalproperty.  Where Landlord is legallyrequired to file personal property tax returns for property covered by thisAgreement, Landlord shall provide Tenant with copies of assessment notices insufficient time for Tenant to file a protest. All Impositions assessed against such personal property shall be(irrespective of whether Landlord or Tenant shall file the relevant return)paid by Tenant not later than the last date on which the same may be madewithout interest or penalty, subject to the provisions of Article 8.

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

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

#### (c)           **Insurance Premiums.** Tenant shall pay or cause to be paid allpremiums for the insurance coverage required to be maintained pursuant to Article9.

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

#### (e)           **Reimbursement for Additional Charges.** If Tenant pays or causes to be paid propertytaxes or similar or 

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#### otherAdditional Charges attributable to periods after the end of the Term, whetherupon expiration or sooner termination of this Agreement (other than terminationby reason of an Event of Default), Tenant may, within a reasonable time afterthe end of the Term, provide Notice to Landlord of its estimate of suchamounts.  Landlord shall promptlyreimburse Tenant for all payments of such taxes and other similar AdditionalCharges that are attributable to any period after the Term of this Agreement.

## **3.2          Late Payment of Rent, Etc.**  If any installment of Minimum Rent orAdditional Charges (but only as to those Additional Charges which are payable directlyto Landlord) shall not be paid within ten (10) days after its due date, Tenantshall pay Landlord, on demand, as Additional Charges, a late charge (to theextent permitted by law) computed at the Overdue Rate on the amount of suchinstallment, from the due date of such installment to the date of paymentthereof. To the extent that Tenant pays any Additional Charges directly toLandlord or any Facility Mortgagee pursuant to any requirement of thisAgreement, Tenant shall be relieved of its obligation to pay such AdditionalCharges to the Entity to which they would otherwise be due.  If any payments due from Landlord to Tenantshall not be paid within ten (10) days after its due date, Landlord shall payto Tenant, on demand, a late charge (to the extent permitted by law) computedat the Overdue Rate on the amount of such installment from the due date of suchinstallment to the date of payment thereof.

In the event of any failure by Tenant to pay any Additional Chargeswhen due, Tenant shall promptly pay and discharge, as Additional Charges, everyfine, penalty, interest and cost which is added for non-payment or late paymentof such items.  Landlord shall have alllegal, equitable and contractual rights, powers and remedies provided either inthis Agreement or by statute or otherwise in the case of non-payment of theAdditional Charges as in the case of non-payment of the Minimum Rent.

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

## **3.4          No Termination, Abatement, Etc.**  Except asotherwise specifically provided in this Agreement, each of Landlord and 

##  

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## Tenant, to the maximum extent permitted bylaw, shall remain bound by this Agreement in accordance with its terms andshall not take any action without the consent of the other to modify, surrenderor terminate this Agreement.  Inaddition, except as otherwise expressly provided in this Agreement, Tenantshall not seek, or be entitled to, any abatement, deduction, deferment or reductionof the Rent, or set-off against the Rent, nor shall the respectiveobligations of Landlord and Tenant be otherwise affected by reason of (a) anydamage to or destruction of the Leased Property, or any portion thereof, fromwhatever cause or any Condemnation, (b) the lawful or unlawful prohibition of,or restriction upon, Tenant’s use of the Leased Property, or any portionthereof, or the interference with such use by any Person or by reason ofeviction by paramount title; (c) any claim which Tenant may have againstLandlord by reason of any default (other than a monetary default) or breach ofany warranty by Landlord under this Agreement or any other agreement betweenLandlord and Tenant, or to which Landlord and Tenant are parties; (d) anybankruptcy, insolvency, reorganization, composition, readjustment, liquidation,dissolution, winding up or other proceedings affecting Landlord or any assigneeor transferee of Landlord; or (e) for any other cause whether similar ordissimilar to any of the foregoing (other than a monetary default by Landlord).  Except as otherwise specifically provided inthis Agreement, Tenant hereby waives all rights arising from any occurrencewhatsoever, which may now or hereafter be conferred upon it by law (a) tomodify, surrender or terminate this Agreement or quit or surrender the LeasedProperty, or any portion thereof, or (b) which would entitle Tenant to anyabatement, reduction, suspension or deferment of the Rent or other sums payableor other obligations to be performed by Tenant hereunder.  The obligations of Tenant hereunder shall beseparate and independent covenants and agreements, and the Rent and all othersums payable by Tenant hereunder shall continue to be payable in all eventsunless the obligations to pay the same shall be terminated pursuant to the expressprovisions of this Agreement.

## **3.5          Prorations, Etc.**  It is understood and agreed that (i) allitems of revenue, cost and expense, rights, remedies, claims, losses, damages,liabilities and obligations with respect to the period prior to the CommencementDate shall be for the account of Landlord, (ii) Landlord shall retain itsright, title and interest in and to all unpaid accounts receivable with respectto each Facility which relate to the period prior to the Commencement Date, andTenant shall promptly turn over any such amounts collected or received byTenant on account thereof, and (iii) in the event that Tenant shall assume 

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## any liability for any period prior to theCommencement Date in connection with its participation in any Third Party PayorProgram, Landlord shall indemnify and hold Tenant harmless from any suchliability only to the extent the same relates to the period commencing onOctober 26, 2004 and ending on the Commencement Date.

** **

**ARTICLE 4**

**USE OF THE LEASED PROPERTY**

## **4.1          Permitted Use.**

### **4.1.1           Permitted Use.**

#### (a)           Tenant shall, at alltimes during the Term, and at any other time that Tenant shall be in possessionof any Property, continuously use and operate, or cause to be used andoperated, such Property as a rehabilitation hospital, clinic or professionallevel health or medical services facility, and any uses necessary or incidentalthereto, subject to and in accordance with all applicable LegalRequirements.  Tenant shall not use (andshall not permit any Person to use) any Property, or any portion thereof, forany other use without the prior written consent of Landlord, which approvalshall not be unreasonably withheld, delayed or conditioned.  No use shall be made or permitted to be madeof any Property and no acts shall be done thereon which will cause thecancellation of any insurance policy covering such Property or any part thereof(unless another adequate policy is available), nor shall Tenant sell orotherwise provide to patients therein, or permit to be kept, used or sold in orabout any Property any article which may be prohibited by law or by thestandard form of fire insurance policies, or any other insurance policiesrequired to be carried hereunder, or fire underwriter’s regulations.  Tenant shall, at its sole cost (except asexpressly provided in Section 5.1.2(b)), comply or cause to be compliedwith all Insurance Requirements.  Tenantshall not take or omit to take, or permit to be taken or omitted to be taken,any action, the taking or omission of which materially impairs the value or theusefulness of any Property or any part thereof for its Permitted Use.

#### (b)           In the event that,in the reasonable determination of Tenant, it shall no longer be economicallypractical to operate any Property as currently operated,****

#### ** **

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#### Tenant shallgive Landlord Notice thereof, which Notice shall set forth in reasonable detailthe reasons therefor.  Thereafter,Landlord and Tenant shall negotiate in good faith to agree on an alternativeuse for such Property; provided, however, in no event shall theMinimum Rent be reduced or abated as a result thereof.  If Landlord and Tenant fail to agree on analternative use for such Property within sixty (60) days after commencingnegotiations as aforesaid, Tenant may market such Property for sale to a thirdparty.  If Tenant receives a bona fideoffer (an “Offer”) to purchase such Property from a Person having thefinancial capacity to implement the terms of such Offer, Tenant shall giveLandlord Notice thereof, which Notice shall include a copy of the Offerexecuted by such third party.  In theevent that Landlord shall fail to accept or reject such Offer within thirty(30) days after receipt of such Notice, such Offer shall be deemed to berejected by Landlord.  If Landlord shallsell the Property pursuant to such Offer, then, effective as of the date ofsuch sale, this Agreement shall terminate with respect to such Property, andthe Minimum Rent shall be reduced by an amount equal to nine percent (9%) ofthe net proceeds of sale received by Landlord in the case of an AdditionalProperty.  If Landlord shall reject (orbe deemed to have rejected) such Offer, then, effective as of the proposed dateof such sale, this Agreement shall terminate with respect to such Property, andthe Minimum Rent shall be reduced by an amount equal to nine percent (9%) ofthe projected net proceeds determined by reference to such Offer.

### **4.1.2       Necessary Approvals.** Tenant shall proceed with all due diligenceand exercise reasonable efforts to obtain and maintain, or cause to be obtainedand maintained, all approvals necessary to use and operate, for its PermittedUse, each Property and the Facility located thereon under applicable law and,without limiting the foregoing, shall exercise reasonable efforts to maintain(or cause to be maintained) appropriate certifications for reimbursement andlicensure.

### **4.1.3       Lawful Use, Etc.** Tenant shall not, and shall not permit anyPerson to use or suffer or permit the use of any Property or Tenant’s PersonalProperty, if any, for any unlawful purpose. Tenant shall not, and shall not permit any Person to, commit or sufferto be committed any waste on any Property, or in any Facility, nor shall Tenantcause or permit any unlawful nuisance thereon or therein.  Tenant shall not, and shall not permit anyPerson to, suffer nor permit any Property, or any 

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### portion thereof, to be used in such a manneras (i) may materially and adversely impair Landlord’s title thereto or to anyportion thereof, or (ii) may reasonably allow a claim or claims for adverseusage or adverse possession by the public, as such, or of implied dedication ofsuch Property, or any portion thereof.

## **4.2          Compliance with Legal/InsuranceRequirements, Etc.** Subject to the provisions of Section5.1.2(b) and Article 8, Tenant, at its sole expense, shall (i)comply with (or cause to be complied with) all material Legal Requirements andInsurance Requirements in respect of the use, operation, maintenance, repair,alteration and restoration of any Property, and (ii) procure, maintain andcomply with (or cause to be procured, maintained and complied with) allmaterial licenses, certificates of need, permits, provider agreements and otherauthorizations and agreements required for any use of any Property and Tenant’sPersonal Property, if any, then being made, and for the proper erection,installation, operation and maintenance of the Leased Property or any partthereof.

## **4.3          Compliance with Medicaid andMedicare Requirements.**  Tenant, at its sole cost and expense, shallmake (or shall cause to be made), whatever improvements (capital or ordinary)as are required to conform each Property to such standards as may, from time totime, be required by Federal Medicare (Title 18) or Medicaid (Title 19) for theFacilities, to the extent Tenant is a participant in such programs with respectto such Property, or any other applicable programs or legislation, or capitalimprovements required by any other governmental agency having jurisdiction overany Property as a condition of the continued operation of such Property for itsPrimary Intended Use.

## **4.4          Environmental Matters**.

### **4.4.1           Restriction on Use, Etc.** During the Term and any other time that Tenantshall be in possession of any Property, Tenant shall not, and shall not permitany Person to, store, spill upon, dispose of or transfer to or from suchProperty any Hazardous Substance, except in compliance with all ApplicableLaws.  During the Term and any other timethat Tenant shall be in possession of any Property, Tenant shall maintain (orshall cause to be maintained) such Property at all times free of any HazardousSubstance (except in compliance with all Applicable Laws).  Tenant shall promptly:  (a) upon receipt of notice or knowledge,notify Landlord in writing of any material change in the nature or extent ofHazardous Substances at any Property, (b) transmit to Landlord a copy of anyreport which is required to be filed by Tenant or any Manager with respect to 

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### any Property pursuant to SARA Title III orany other Applicable Law, (c) transmit to Landlord copies of any citations,orders, notices or other governmental communications received by Tenant or anyManager or their respective agents or representatives with respect thereto(collectively, “Environmental Notice”), which Environmental Noticerequires a written response or any action to be taken and/or if suchEnvironmental Notice gives notice of and/or presents a material risk of anymaterial violation of any Applicable Law and/or presents a material risk of anymaterial cost, expense, loss or damage (an “Environmental Obligation”),(d) observe and comply with (or cause to be observed and complied with) allApplicable Laws relating to the use, maintenance and disposal of HazardousSubstances and all orders or directives from any official, court or agency ofcompetent jurisdiction relating to the use or maintenance or requiring theremoval, treatment, containment or other disposition thereof, and (e) pay orotherwise dispose (or cause to be paid or otherwise disposed) of any fine,charge or Imposition related thereto, unless Tenant or any Manager shallcontest the same in good faith and by appropriate proceedings and the right touse and the value of any of the Leased Property is not materially and adverselyaffected thereby.

If, at any time prior to the termination of this Agreement, HazardousSubstances (other than those maintained in accordance with Applicable Laws) arediscovered on any Property, subject to Tenant’s right to contest the same inaccordance with Article 8, Tenant shall take (and shall cause to betaken) all actions and incur any and all expenses, as are required by anyGovernment Agency and by Applicable Law, (i) to clean up and remove from andabout such Property all Hazardous Substances thereon, (ii) to contain andprevent any further release or threat of release of Hazardous Substances on orabout such Property and (iii) to use good faith efforts to eliminate any furtherrelease or threat of release of Hazardous Substances on or about such Property.

### **4.4.2           Indemnification of Landlord.** Tenant shall protect, indemnify and holdharmless Landlord and each Facility Mortgagee, their trustees, officers,agents, employees and beneficiaries, and any of their respective successors orassigns with respect to this Agreement (collectively, the “Indemnitees”and, individually, an “Indemnitee”) for, from and against any and alldebts, liens, claims, causes of action, administrative orders or notices,costs, fines, penalties or expenses (including, without limitation, reasonableattorney’s fees and expenses) imposed upon, incurred by or asserted against anyIndemnitee resulting from, either directly or indirectly, the 

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### presence in, upon or under the soil or groundwater of any Property or any properties surrounding such Property of anyHazardous Substances in violation of any Applicable Law, except to the extentthe same arise from the acts or omissions of Landlord or any other Indemniteeor during any period that Landlord or a Person designated by Landlord (otherthan Tenant) is in possession of such Property from and after the datehereof.  Tenant’s duty herein includes,but is not limited to, costs associated with personal injury or property damageclaims as a result of the presence prior to the expiration or soonertermination of the Term and the surrender of such Property to Landlord inaccordance with the terms of this Agreement of Hazardous Substances in, upon orunder the soil or ground water of such Property in violation of any ApplicableLaw.  Upon Notice from Landlord and anyother of the Indemnitees, Tenant shall undertake the defense, at Tenant’s solecost and expense, of any indemnification duties set forth herein, in which event,Tenant shall not be liable for payment of any duplicative attorneys’ feesincurred by any Indemnitee.

Tenant shall, upon demand, pay (or cause to be paid) to Landlord, as anAdditional Charge, any cost, expense, loss or damage (including, without limitation,reasonable attorneys’ fees) reasonably incurred by Landlord and arising from afailure of Tenant to observe and perform (or to cause to be observed and performed) the requirements of this Section4.4, which amounts shall bear interest from the date ten (10) Business Daysafter written demand therefor is given to Tenant until paid by Tenant toLandlord at the Overdue Rate.

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

**ARTICLE 5**

**MAINTENANCE AND REPAIRS**

## **5.1          Maintenance and Repair.**

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

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### necessary and appropriate repairs andreplacements thereto of every kind and nature, whether interior or exterior,structural or nonstructural, ordinary or extraordinary, foreseen or unforeseenor arising by reason of a condition existing prior to the commencement of theTerm (concealed or otherwise).  Allrepairs shall be made in a good, workmanlike manner, consistent with industrystandards for comparable Facilities in like locales, in accordance with allapplicable federal, state and local statutes, ordinances, codes, rules andregulations relating to any such work. Tenant shall not take or omit to take (or permit any Person to take oromit to take) any action, the taking or omission of which would materially andadversely impair the value or the usefulness of the Leased Property or anymaterial part thereof for its Permitted Use. Tenant’s obligations under this Section 5.1.1 shall be limited inthe event of any casualty or Condemnation as set forth in Article 10 andArticle 11 and Tenant’s obligations with respect to Hazardous Substancesare as set forth in Section 4.4.

### **5.1.2           Landlord’s Obligations.**

#### (a)           Except as otherwiseexpressly provided in this Agreement, Landlord shall not, under anycircumstances, be required to build or rebuild any improvement on the LeasedProperty, or to make any repairs, replacements, alterations, restorations orrenewals of any nature or description to the Leased Property, whether ordinaryor extraordinary, structural or nonstructural, foreseen or unforeseen, or tomake any expenditure whatsoever with respect thereto, or to maintain the LeasedProperty in any way.  Except as otherwiseexpressly provided in this Agreement, Tenant hereby waives, to the maximumextent permitted by law, the right to make repairs at the expense of Landlordpursuant to any law in effect on the date hereof or hereafter enacted.  Landlord shall have the right to give, recordand post, as appropriate, notices of nonresponsibility under any mechanic’slien laws now or hereafter existing.

#### (b)           If, pursuant to theterms of this Agreement, Tenant is required to make any expenditures inconnection with any repair, maintenance or renovation with respect to any Property,Tenant may, at its election, advance such funds or give Landlord Noticethereof, which Notice shall set forth, in reasonable detail, the nature of therequired repair, renovation or replacement, the estimated cost thereof and suchother information with respect thereto as Landlord may reasonably require.  Provided that no Event of Default shall haveoccurred and be continuing and Tenant 

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#### shallotherwise comply with the applicable provisions of Article 6, Landlordshall, within ten (10) Business Days after such Notice, subject to and inaccordance with the applicable provisions of Article 6, disburse suchrequired funds to Tenant (or, if Tenant shall so elect, directly to the Manageror any other Person performing the required work) and, upon such disbursement,the Minimum Rent shall be adjusted as provided in Section 3.1.1(c).  Notwithstanding the foregoing, Landlord mayelect not to disburse such required funds to Tenant; provided, however, that ifLandlord shall elect not to disburse such required funds as aforesaid, Tenant’sobligation to make such required repair, renovation or replacement shall bedeemed waived by Landlord, and, notwithstanding anything contained in thisAgreement to the contrary, Tenant shall have no obligation to make such requiredrepair, renovation or replacement.

## **5.1.3       Nonresponsibility of Landlord, Etc.** Allmaterialmen, contractors, artisans, mechanics and laborers and other personscontracting with Tenant with respect to the Leased Property, or any partthereof, are hereby charged with notice that liens on the Leased Property or onLandlord’s interest therein are expressly prohibited and that they must looksolely to Tenant to secure payment for any work done or material furnished toTenant or any Manager or for any other purpose during the term of thisAgreement.

Nothing contained in this Agreement shall be deemed or construed in anyway as constituting the consent or request of Landlord, express or implied, byinference or otherwise, to any contractor, subcontractor, laborer ormaterialmen for the performance of any labor or the furnishing of any materialsfor any alteration, addition, improvement or repair to the Leased Property orany part thereof or as giving Tenant any right, power or authority to contractfor or permit the rendering of any services or the furnishing of any materialsthat would give rise to the filing of any lien against the Leased Property orany part thereof nor to subject Landlord’s estate in the Leased Property or anypart thereof to liability under any mechanic’s lien law of any State in anyway, it being expressly understood Landlord’s estate shall not be subject toany such liability.

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

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## Permitted Use.  If, from and after the Commencement Date,Tenant acquires an interest in any item of tangible personal property (otherthan motor vehicles) on, or in connection with, the Leased Property, or anyportion thereof, which belongs to anyone other than Tenant, Tenant shallrequire the agreements permitting such use to provide that Landlord or itsdesignee may assume Tenant’s rights and obligations under such agreement uponLandlord’s purchase of the same in accordance with the provisions of Article15 and the assumption of management or operation of the Facility byLandlord or its designee.

## **5.3          Yield Up.** Upon the expiration or sooner termination ofthis Agreement, Tenant shall, subject to the completion of a transfer ofownership approved by the Massachusetts Department of Public Health, vacate andsurrender the Leased Property to Landlord in the condition in which the LeasedProperty was on the Commencement Date, except as repaired, rebuilt, restored,altered or added to as permitted or required by the provisions of thisAgreement, ordinary wear and tear excepted.

In addition, upon the expiration or earlier termination of thisAgreement, Tenant shall, at Landlord’s reasonable cost and expense, use itsbest efforts to complete the transfer of ownership of the hospital business andthe related hospital operations and records necessary for such operation to,and cooperate with, Landlord or Landlord’s nominee in connection with theprocessing of all applications for licenses, operating permits and other governmentalauthorizations and all contracts, including contracts with governmental orquasi-governmental entities, which may be necessary for the operation of thehospitals at the Facilities.  Until thetransfer of ownership is approved by the Massachusetts Department of PublicHealth, it is understood that Tenant shall continue as owner and licensee ofthe hospital business and the related hospital operations conducted at theFacilities after the termination of this Agreement and for so long thereafter asis necessary for Landlord or Landlord’s nominee to obtain all necessarylicenses, operating permits and other governmental authorizations.  If a new tenant is not licensed upon theexpiration or termination of this Agreement in connection with a Default orEvent of Default by Tenant, then, during such post termination period, Tenantshall pay hold over rent in accordance with Section 13.  Otherwise, during such period, Minimum Rentshall be payable in an amount equal to 75% of the Minimum Rent payable for thelast month of the Term for the first six (6) months after the expiration dateand 50% of such Minimum Rent thereafter.

It is expressly understood and agreed that any transfer pursuant toSection 5.3 or any other Section of this Agreement 

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is not a transfer of ownership of the hospital and isnot a transfer of the right, title and interest related to the licenses grantedby the Massachusetts Department of Public Health to operate the Facilities orany other permit, license or certification used in the operation of theFacilities that is otherwise by its terms non-transferable.  Any change in ownership and licensee shall besubject, in all events, to the approval of each and every applicable GovernmentAgency, including, without limitation, the Massachusetts Department of PublicHealth, and Applicable Law, Tenant being obligated to cooperate in andfacilitate such approval process.

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

# **ARTICLE 6**

# **IMPROVEMENTS,ETC.**

## **6.1          Improvements to the Leased Property. **Tenant shall notmake, construct or install (or permit to be made, constructed or installed) anyCapital Additions without, in each instance, obtaining Landlord’s prior writtenconsent, which consent shall not be unreasonably withheld, delayed or conditionedprovided that (a) construction or installation of the same would not adverselyaffect or violate any material Legal Requirement or Insurance Requirementapplicable to any Property and (b) Landlord shall have received an Officer’sCertificate certifying as to the satisfaction of the conditions set out inclause (a) above; provided, however, that no such consent shallbe required in the event immediate action is required to prevent imminent harmto person or property.  Prior tocommencing construction of any Capital Addition, Tenant shall submit toLandlord, in 

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## writing, a proposal setting forth, in reasonable detail, any suchproposed improvement and shall provide to Landlord such plans andspecifications, and such permits, licenses, contracts and such otherinformation concerning the same as Landlord may reasonably request.  Landlord shall have thirty (30) days toreview all materials submitted to Landlord in connection with any suchproposal.  Failure of Landlord to respondto Tenant’s proposal within thirty (30) days after receipt of all informationand materials requested by Landlord in connection with the proposed improvementshall be deemed to constitute approval of the same.  Without limiting the generality of theforegoing, such proposal shall indicate the approximate projected cost ofconstructing such proposed improvement and the use or uses to which it will beput.  No Capital Addition shall be madewhich would tie in or connect any Leased Improvements with any otherimprovements on property adjacent to any Property (and not part of the Land)including, without limitation, tie-ins of buildings or other structuresor utilities.  Except as permittedherein, Tenant shall not finance the cost of any construction of suchimprovement by the granting of a lien on or security interest in the LeasedProperty or such improvement, or Tenant’s interest therein, without the priorwritten consent of Landlord, which consent may be withheld by Landlord inLandlord’s sole discretion.  Any suchimprovements shall, upon the expiration or sooner termination of thisAgreement, remain or pass to and become the property of Landlord, free andclear of all encumbrances other than Permitted Encumbrances.

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

# **ARTICLE 7**

# **LIENS**

## **7.1          Liens.** Subject to Article8, Tenant shall use its best efforts not, directly or indirectly, to createor allow to remain and shall promptly discharge (or cause to be discharged), atits expense, any lien, encumbrance, attachment, title retention agreement orclaim upon the Leased Property, or any portion thereof, or Tenant’s leaseholdinterest therein or any attachment, levy, claim or encumbrance in respect ofthe Rent, other than (a) Permitted Encumbrances, (b) restrictions, liens andother encumbrances which are consented to in writing by Landlord, (c) liens forthose taxes of Landlord which Tenant is not required to pay hereunder, (d)subleases permitted by Article 16, (e) liens for Impositions or for sumsresulting from 

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## noncompliance with Legal Requirements so long as (i) the same are notyet due and payable, or (ii) are being contested in accordance with Article8, (f) liens of mechanics, laborers, materialmen, suppliers or vendorsincurred in the ordinary course of business that are not yet due and payable orare for sums that are being contested in accordance with Article 8, (g)any Facility Mortgages or other liens which are the responsibility of Landlordpursuant to the provisions of Article 20 and (h) Landlord Liens and anyother voluntary liens created by Landlord.

## **7.2          Landlord’sLien.** Inaddition to any statutory landlord’s lien and in order to secure payment of theRent and all other sums payable hereunder by Tenant, and to secure payment ofany loss, cost or damage which Landlord may suffer by reason of Tenant’s breachof this Agreement, Tenant hereby grants unto Landlord, to the maximum extentpermitted by Applicable Law, a security interest in and an express contractuallien upon Tenant’s Personal Property (except motor vehicles), and Tenant’sinterest in all ledger sheets, files, records, documents and instruments(including, without limitation, computer programs, tapes and related electronicdata processing) relating to the operation of the Facilities (the “Records”)and all proceeds therefrom, subject to any Permitted Encumbrances; and suchTenant’s Personal Property shall not be removed from the Leased Property at anytime when an Event of Default has occurred and is continuing.

Upon Landlord’s request, Tenant shall execute and deliver to Landlordfinancing statements in form sufficient to perfect the security interest ofLandlord in Tenant’s Personal Property and the proceeds thereof in accordancewith the provisions of the applicable laws of the State.  During the continuance of an Event ofDefault, Tenant hereby grants Landlord an irrevocable limited power ofattorney, coupled with an interest, to execute all such financing statements inTenant’s name, place and stead.  Thesecurity interest herein granted is in addition to any statutory lien for theRent.

# **ARTICLE 8**

# **PERMITTEDCONTESTS**

Tenant shall have the right to contest the amount or validity of anyImposition, Legal Requirement, Insurance Requirement, Environmental Obligation,lien, attachment, levy, encumbrance, charge or claim (collectively, “Claims”)as to the Leased Property, by appropriate legal proceedings, conducted in goodfaith and with due diligence, provided that (a) the 

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foregoing shall in no way be construed as relieving,modifying or extending Tenant’s obligation to pay (or cause to be paid) anyClaims as finally determined, (b) such contest shall not cause Landlord orTenant to be in default under any mortgage or deed of trust encumbering theLeased Property, or any portion thereof (Landlord agreeing that any suchmortgage or deed of trust shall permit Tenant to exercise the rights grantedpursuant to this Article 8) or any interest therein or result in orreasonably be expected to result in a lien attaching to the Leased Property, orany portion thereof, (c) no part of the Leased Property nor any Rent therefromshall be in any immediate danger of sale, forfeiture, attachment or loss, and(d) Tenant shall indemnify and hold harmless Landlord from and against anycost, claim, damage, penalty or reasonable expense, including reasonableattorneys’ fees, incurred by Landlord in connection therewith or as a resultthereof.  Landlord agrees to join in anysuch proceedings if required legally to prosecute such contest, provided thatLandlord shall not thereby be subjected to any liability therefor (including,without limitation, for the payment of any costs or expenses in connectiontherewith) unless Tenant agrees by agreement in form and substance reasonablysatisfactory to Landlord, to assume and indemnify Landlord with respect to thesame.  Tenant shall be entitled to anyrefund of any Claims and such charges and penalties or interest thereon whichhave been paid by Tenant or paid by Landlord to the extent that Landlord hasbeen fully reimbursed by Tenant.  IfTenant shall fail (x) to pay or cause to be paid any Claims when finallydetermined, (y) to provide reasonable security therefor or (z) to prosecute orcause to be prosecuted any such contest diligently and in good faith, Landlordmay, upon reasonable notice to Tenant (which notice shall not be required ifLandlord shall reasonably determine that the same is not practicable), pay suchcharges, together with interest and penalties due with respect thereto, andTenant shall reimburse Landlord therefor, upon demand, as Additional Charges.

# **ARTICLE 9**

# **INSURANCE AND INDEMNIFICATION**

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

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## proposes to be maintained with respect to each Property during theensuing Fiscal Year, and shall submit such proposal to Landlord on or beforeDecember 1 of the preceding year, for Landlord’s review and approval, whichapproval shall not be unreasonably withheld, delayed or conditioned.  In the event that Landlord shall fail torespond within thirty (30) days after receipt of such proposal, such proposalshall be deemed approved.

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

## **9.3          FormSatisfactory, Etc.** All insurance policies and endorsementsrequired pursuant to this Article 9 shall be fully paid for,nonassessable, and issued by reputable insurance companies authorized to do businessin the State and having a general policy holder’s rating of no less than A inBest’s latest rating guide.  Allproperty, business interruption, liability and flood insurance policies withrespect to each Property shall include no deductible in excess of Two HundredFifty Thousand Dollars ($250,000).  Atall times, all property, business interruption, liability and flood insurancepolicies, with the exception of worker’s compensation insurance coverage, shallname Landlord and any Facility Mortgagee as additional insureds, as theirinterests may appear.  All lossadjustments shall be payable as provided in Article 10, except thatlosses under liability  and worker’scompensation insurance policies shall be payable directly to the party entitledthereto.  Tenant shall cause allinsurance premiums to be paid and shall deliver (or cause to be delivered)policies or certificates thereof to Landlord prior to their effective date(and, with respect to any renewal policy, prior to the expiration of the existingpolicy).  All such policies shall provideLandlord (and any Facility 

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## Mortgagee if required by the same) thirty (30) days prior writtennotice of any material change or cancellation of such policy.  In the event Tenant shall fail to effect (orcause to be effected) such insurance as herein required, to pay (or cause to bepaid) the premiums therefor or to deliver (or cause to be delivered) suchpolicies or certificates to Landlord or any Facility Mortgagee at the timesrequired, Landlord shall have the right, upon Notice to Tenant, but not theobligation, to acquire such insurance and pay the premiums therefor, whichamounts shall be payable to Landlord, upon demand, as Additional Charges,together with interest accrued thereon at the Overdue Rate from the date suchpayment is made until (but excluding) the date repaid.

## **9.4          NoSeparate Insurance; Self-Insurance.** Tenant shall not take (or permit any Person totake) out separate insurance, concurrent in form or contributing in the eventof loss with that required by this Article 9, or increase the amount ofany existing insurance by securing an additional policy or additional policies,unless all parties having an insurable interest in the subject matter of suchinsurance, including Landlord and all Facility Mortgagees, are included thereinas additional insureds and the loss is payable under such insurance in the samemanner as losses are payable under this Agreement.  In the event Tenant shall take out any suchseparate insurance or increase any of the amounts of the then existinginsurance, Tenant shall give Landlord prompt Notice thereof.  Tenant shall not self-insure (or permit anyPerson to self-insure).

## **9.5          Indemnificationof Landlord.** Notwithstanding the existence of any insuranceprovided for herein and without regard to the policy limits of any suchinsurance, Tenant shall protect, indemnify and hold harmless Landlord for, fromand against all liabilities, obligations, claims, damages, penalties, causes ofaction, costs and reasonable expenses (including, without limitation,reasonable attorneys’ fees), to the maximum extent permitted by law, imposedupon or incurred by or asserted against Landlord by reason of the following,except to the extent caused by Landlord’s gross negligence or willful misconduct:  (a) any accident, injury to or death ofpersons or loss of or damage to property occurring on or about any Property orportion thereof or adjoining sidewalks or rights of way, (b) any past, presentor future use, misuse, non-use, condition, management, maintenance or repair byTenant, any Manager or anyone claiming under any of them or Tenant’s PersonalProperty or any litigation, proceeding or claim by governmental entities orother third parties to which Landlord is made a party or participant relatingto the any Property or portion thereof or 

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## Tenant’s Personal Property or such use, misuse, non-use, condition,management, maintenance, or repair thereof including, failure to performobligations (other than Condemnation proceedings) to which Landlord is made aparty, (c) any Impositions that are the obligations of Tenant to pay pursuantto the applicable provisions of this Agreement, and (d) any failure on the partof Tenant or anyone claiming under Tenant to perform or comply with any of theterms of this Agreement.  Tenant, at itsexpense, shall contest, resist and defend any such claim, action or proceedingasserted or instituted against Landlord (and shall not be responsible for anyduplicative attorneys’ fees incurred by Landlord) or may compromise orotherwise dispose of the same, with Landlord’s prior written consent (whichconsent may not be unreasonably withheld, delayed or conditioned).  The obligations of Tenant under this Section9.5 are in addition to the obligations set forth in Section 4.4 andshall survive the termination of this Agreement.

# **ARTICLE10**

# **CASUALTY**

## **10.1        InsuranceProceeds.** Except as provided in the last clause of thissentence, all proceeds payable by reason of any loss or damage to any Property,or any portion thereof, and insured under any policy of insurance required by Article9 (other than the proceeds of any business interruption insurance) shall bepaid directly to Landlord (subject to the provisions of Section 10.2)and all loss adjustments with respect to losses payable to Landlord shallrequire the prior written consent of Landlord, which consent shall not beunreasonably withheld, delayed or conditioned; provided, however,that, so long as no Event of Default shall have occurred and be continuing, allsuch proceeds less than or equal to Two Hundred Fifty Thousand Dollars($250,000) shall be paid directly to Tenant and such losses may be adjustedwithout Landlord’s consent.  If Tenant isrequired to reconstruct or repair any Property as provided herein, suchproceeds shall be paid out by Landlord from time to time for the reasonablecosts of reconstruction or repair of such Property necessitated by such damageor destruction, subject to and in accordance with the provisions of Section10.2.4.  Provided no Default or Eventof Default has occurred and is continuing, any excess proceeds of insuranceremaining after the completion of the restoration shall be paid to Tenant.  In the event that the provisions of Section10.2.1 are applicable, the insurance proceeds shall be retained by theparty entitled thereto pursuant to Section 10.2.1.

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## **10.2        Damageor Destruction**.

### **10.2.1         Damageor Destruction of Leased Property**.  If, during the Term, any Property shall betotally or partially destroyed and the Facility located thereon is therebyrendered Unsuitable for Its Permitted Use, either Landlord or Tenant may, bythe giving of Notice thereof to the other, terminate this Agreement withrespect to such affected Property, whereupon, this Agreement shall terminatewith respect to such affected Property and Landlord shall be entitled to retainthe insurance proceeds payable on account of such damage.  In such event, Tenant shall pay to Landlordthe amount of any deductible under the insurance policies covering suchFacility, the amount of any uninsured loss and any difference between thereplacement cost of the affected Property and the casualty insurance proceedstherefor.

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

### **10.2.3         InsufficientInsurance Proceeds.**  If the cost of the repair or restoration ofthe applicable Facility exceeds the amount of insurance proceeds received byLandlord and Tenant pursuant to Section 9.1, Tenant shall give LandlordNotice thereof which notice shall set forth in reasonable detail the nature ofsuch deficiency and whether Tenant shall pay and assume the amount of suchdeficiency (Tenant having no obligation to do so, except that, if Tenant shallelect to make such funds available, the same shall become an irrevocableobligation of Tenant pursuant to this Agreement).  In the event Tenant shall elect not to payand assume the amount of such deficiency, Landlord shall have the right (butnot the obligation), exercisable at Landlord’s sole election by Notice toTenant, given within sixty (60) days after Tenant’s notice of the deficiency,to elect to make available for application to the cost of repair or restorationthe amount of such deficiency; provided, however, in such event,upon any disbursement by Landlord thereof, the Minimum Rent shall be adjustedas provided in Section 3.1.1(c). In the event that neither Landlord nor Tenant shall elect to make suchdeficiency available for restoration, either Landlord or Tenant may terminatethis Agreement with respect to the affected Property by Notice to the other,whereupon, this Agreement shall so terminate and insurance proceeds shall bedistributed as provided in Section 10.2.1.  It is expressly understood and agreed,however, that, notwithstanding anything in this Agreement to the contrary, 

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### Tenant shall be strictly liable and solely responsible for the amountof any deductible and shall, upon any insurable loss, pay over the amount ofsuch deductible to Landlord at the time and in the manner herein provided forpayment of the applicable proceeds to Landlord.

### **10.2.4         Disbursementof Proceeds.** In the event Tenant is required to restore anyProperty pursuant to Section 10.2 and this Agreement is not terminatedas to such Property pursuant to this Article 10, Tenant shall commence(or cause to be commenced) promptly and continue diligently to perform (orcause to be performed) the repair and restoration of such Property (hereinaftercalled the “Work”), so as to restore (or cause to be restored) theapplicable Property in material compliance with all Legal Requirements and sothat such Property shall be, to the extent practicable, substantiallyequivalent in value and general utility to its general utility and valueimmediately prior to such damage or destruction.  Subject to the terms hereof, Landlord shalladvance the insurance proceeds and any additional amounts payable by Landlordpursuant to Section 10.2.3 or otherwise deposited with Landlord toTenant regularly during the repair and restoration period so as to permitpayment for the cost of any such restoration and repair.  Any such advances shall be made not more thanmonthly within ten (10) Business Days after Tenant submits to Landlord awritten requisition and substantiation therefor on AIA Forms G702 and G703 (oron such other form or forms as may be reasonably acceptable to Landlord).  Landlord may, at its option, conditionadvancement of such insurance proceeds and other amounts on (i) the absence ofany Event of Default, (ii) its approval of plans and specifications of anarchitect satisfactory to Landlord (which approval shall not be unreasonablywithheld, delayed or conditioned), (iii) general contractors’ estimates, (iv)architect’s certificates, (v) conditional lien waivers of general contractors,if available, (vi) evidence of approval by all governmental authorities andother regulatory bodies whose approval is required, (vii), if Tenant haselected to advance deficiency funds pursuant to Section 10.2.3, Tenantdepositing the amount thereof with Landlord and (viii) such other certificatesas Landlord may, from time to time, reasonably require.

Landlord’s obligation to disburse insurance proceeds under this Article10 shall be subject to the release of such proceeds by any FacilityMortgagee to Landlord.

Tenant’s obligation to restore the applicable Property pursuant to thisArticle 10 shall be subject to the release of available insuranceproceeds by the applicable Facility 

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Mortgagee to Landlord or directly to Tenant and, inthe event such proceeds are insufficient, Landlord electing to make suchdeficiency available therefor (and disbursement of such deficiency).

## **10.3        DamageNear End of Term.** Notwithstanding any provisions of Section10.1 or 10.2 to the contrary, if damage to or destruction of any Propertyoccurs during the last twelve (12) months of the Term and if such damage ordestruction cannot reasonably be expected to be fully repaired and restoredprior to the date that is six (6) months prior to the end of the Term, theprovisions of Section 10.2.1 shall apply as if such Property hadbeen totally or partially destroyed and the Facility thereon renderedUnsuitable for its Permitted Use.

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

## **10.5        Restorationof Tenant’s Property.** If Tenant is required to restore any Propertyas hereinabove provided, Tenant shall either (a) restore all alterations andimprovements made by Tenant and Tenant’s Personal Property, or (b) replace suchalterations and improvements and Tenant’s Personal Property with improvementsor items of the same or better quality and utility in the operation of suchProperty.

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

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##  

## **10.7        Waiver.** Tenant herebywaives any statutory rights of termination which may arise by reason of anydamage or destruction of the Leased Property, or any portion thereof.

# **ARTICLE11**

# **CONDEMNATION**

## **11.1        TotalCondemnation, Etc.** If either (i) the whole of any Property shall be taken by Condemnationor (ii) a Condemnation of less than the whole of any Property renders anyProperty Unsuitable for Its Permitted Use, this Agreement shall terminate withrespect to such Property, Tenant and Landlord shall seek the Award for theirinterests in the applicable Property as provided in Section 11.5.

## **11.2        PartialCondemnation**.  In the event of a Condemnation of less thanthe whole of any Property such that such Property is still suitable for itsPermitted Use, Tenant shall, to the extent of the Award and any additionalamounts disbursed by Landlord as hereinafter provided, commence (or cause to becommenced) promptly and continue diligently to restore (or cause to berestored) the untaken portion of the applicable Leased Improvements so thatsuch Leased Improvements shall constitute a complete architectural unit of thesame general character and condition (as nearly as may be possible under thecircumstances) as such Leased Improvements existing immediately prior to suchCondemnation, in material compliance with all Legal Requirements, subject tothe provisions of this Section 11.2.  Ifthe cost of the repair or restoration of the affected Property exceeds theamount of the Award, Tenant shall give Landlord Notice thereof which noticeshall set forth in reasonable detail the nature of such deficiency and whetherTenant shall pay and assume the amount of such deficiency (Tenant having noobligation to do so, except that if Tenant shall elect to make such fundsavailable, the same shall become an irrevocable obligation of Tenant pursuantto this Agreement).  In the event Tenantshall elect not to pay and assume the amount of such deficiency, Landlord shallhave the right (but not the obligation), exercisable at Landlord’s soleelection by Notice to Tenant given within sixty (60) days after Tenant’s Noticeof the deficiency, to elect to make available for application to the cost ofrepair or restoration the amount of such deficiency; provided, however, in suchevent, upon any disbursement by Landlord thereof, the Minimum Rent shall beadjusted as provided in Section 3.1.1(c). In the event that neither Landlord nor Tenant shall elect to make suchdeficiency available for restoration, either Landlord or Tenant may terminatethis 

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## Agreement with respect to the affected Property and the entire Awardshall be allocated as set forth in Section 11.5.

Subject to the terms hereof, Landlord shall contribute to the cost ofrestoration that part of the Award necessary to complete such repair orrestoration, together with severance and other damages awarded for the takenLeased Improvements and any deficiency Landlord has agreed to disburse, toTenant regularly during the restoration period so as to permit payment for thecost of such repair or restoration. Landlord may, at its option, condition advancement of such Award andother amounts on (a) the absence of any Event of Default, (b) its approval ofplans and specifications of an architect satisfactory to Landlord (whichapproval shall not be unreasonably withheld, delayed or conditioned), (c)general contractors’ estimates, (iv) architect’s certificates, (d) conditionallien waivers of general contractors, if available, (e) evidence of approval byall governmental authorities and other regulatory bodies whose approval isrequired, (f), if Tenant has elected to advance deficiency funds pursuant tothe preceding paragraph, Tenant depositing the amount thereof with Landlord and(g) such other certificates as Landlord may, from time to time, reasonablyrequire.  Landlord’s obligation underthis Section 11.2 to disburse the Award and such other amounts shall besubject to (x) the collection thereof by Landlord and (y) the satisfaction ofany applicable requirements of any Facility Mortgage, and the release of suchAward by the applicable Facility Mortgagee. Tenant’s obligation to restore the Leased Property shall be subject tothe release of the Award by the applicable Facility Mortgagee to Landlord.

## **11.3        Abatementof Rent.** Other than as specifically provided in thisAgreement, this Agreement shall remain in full force and effect and Tenant’sobligation to make all payments of Rent and to pay all other charges as andwhen required under this Agreement shall remain unabated during the Termnotwithstanding any Condemnation involving the Leased Property, or any portionthereof.  The provisions of this Article11 shall be considered an express agreement governing any Condemnationinvolving the Leased Property and, to the maximum extent permitted by law, nolocal or State statute, law, rule, regulation or ordinance in effect during theTerm which provides for such a contingency shall have any application in suchcase.

## **11.4        TemporaryCondemnation. **Inthe event of any temporary Condemnation of any Property or Tenant’s interesttherein, this Agreement shall continue in full force and effect and Tenantshall continue to pay (or cause to be paid), in the manner and on the termsherein specified, the full amount of the Rent. 

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## Tenant shall continue to perform and observe (or cause to be performedand observed) all of the other terms and conditions of this Agreement on thepart of the Tenant to be performed and observed.  Provided no Event of Default has occurred andis continuing, the entire amount of any Award made for such temporaryCondemnation allocable to the Term, whether paid by way of damages, rent orotherwise, shall be paid to Tenant. Tenant shall, promptly upon the termination of any such period oftemporary Condemnation, at its sole cost and expense, restore the affectedProperty to the condition that existed immediately prior to such Condemnation,in material compliance with all applicable Legal Requirements, unless suchperiod of temporary Condemnation shall extend beyond the expiration of the Term,in which event Tenant shall not be required to make such restoration.

## **11.5        Allocationof Award.** Except as provided in Section 11.4 andthe second sentence of this Section 11.5, the total Award shall besolely the property of and payable to Landlord. Any portion of the Award made for the taking of Tenant’s leaseholdinterest in the Leased Property, loss of business during the remainder of theTerm, the taking of Tenant’s Personal Property, the taking of Capital Additionspaid for by Tenant and Tenant’s removal and relocation expenses shall be thesole property of and payable to Tenant (subject to the provisions of Section11.2).  In any Condemnationproceedings, Landlord and Tenant shall each seek its own Award in conformityherewith, at its own expense.

# **ARTICLE 12**

# **DEFAULTS AND REMEDIES**

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

#### (a)           should Tenant fail to make anypayment of the Rent or any other sum payable hereunder when due; or

#### (b)           should Tenant fail to maintain theinsurance coverages required under Article 9; or

#### (c)           should Tenant default in the dueobservance or performance of any of the terms, covenants or agreementscontained herein to be performed or observed by it (other than as specified inclauses (a) and (b) above) and should such default continue for a period ofthirty (30) days after Notice thereof from Landlord to Tenant; provided,

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#### however,that if such default is susceptible of cure but such cure cannot beaccomplished with due diligence within such period of time and if, in addition,Tenant commences to cure or cause to be cured such default within thirty (30)days after Notice thereof from Landlord and thereafter prosecutes the curing ofsuch default with all due diligence, such period of time shall be extended tosuch period of time (not to exceed an additional ninety (90) days in theaggregate) as may be necessary to cure such default with all due diligence; or

#### (d)           should any obligation of Tenant in respectof any Indebtedness for money borrowed or for any material property orservices, or any guaranty relating thereto, be declared to be or become due andpayable prior to the stated maturity thereof, or should there occur and becontinuing with respect to any such Indebtedness any event of default under anyinstrument or agreement evidencing or securing the same, the effect of which isto permit the holder or holders of such instrument or agreement or a trustee,agent or other representative on behalf of such holder or holders, to cause anysuch obligations to become due prior to its stated maturity; or

#### (e)           should an event of default by Tenant,any Guarantor or any Affiliated Person as to Tenant or any Guarantor occur andbe continuing beyond the expiration of any applicable cure period under any ofthe Incidental Documents; or

#### (f)            should Tenant or any Guarantorgenerally not be paying its debts as they become due or should Tenant or anyGuarantor make a general assignment for the benefit of creditors; or

#### (g)           should any petition be filed by oragainst Tenant or any Guarantor under the Federal bankruptcy laws, or shouldany other proceeding be instituted by or against Tenant or any Guarantorseeking to adjudicate Tenant or any Guarantor a bankrupt or insolvent, orseeking liquidation, reorganization, arrangement, adjustment or composition ofTenant’s debts under any law relating to bankruptcy, insolvency orreorganization or relief of debtors, or seeking the entry of an order forrelief or the appointment of a receiver, trustee, custodian or other similarofficial for Tenant or any Guarantor or for any substantial part of theproperty of Tenant or any Guarantor and such proceeding is not dismissed withinone hundred eighty (180) days after institution thereof; or

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#### (h)           should Tenant or any Guarantor causeor institute any proceeding for its dissolution or termination; or

#### (i)            should the estate or interest ofTenant in the Leased Property or any part thereof be levied upon or attached inany proceeding and the same shall not be vacated or discharged within the laterof (x) ninety (90) days after commencement thereof, unless the amount indispute is less than $250,000, in which case Tenant shall give notice toLandlord of the dispute but Tenant may defend in any suitable way, and (y) twohundred seventy (270) days after receipt by Tenant of Notice thereof fromLandlord (unless Tenant shall be contesting such lien or attachment in goodfaith in accordance with Article 8); or

#### (j)            should there occur any direct orindirect Change in Control of either or both of the Entities comprising Tenantor any Guarantor, except as otherwise permitted by Article 16; or

#### (k)           should a final unappealabledetermination be made by the applicable Government Agency that Tenant shallhave failed to comply with applicable Medicare and/or Medicaid regulations inthe operation of any Facility, as a result of which failure Tenant is declaredineligible to receive reimbursements under the Medicare and/or Medicaidprograms for such Facility;

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

Upon the occurrence of an Event of Default, Landlord may, in additionto any other remedies provided herein, enter upon the Leased Property, or anyportion thereof, and take possession of any and all of Tenant’s PersonalProperty, if any, and the Records, without liability for trespass or conversion(Tenant hereby waiving any right to notice or hearing prior to such taking ofpossession by Landlord) and sell the same at public or private sale, aftergiving Tenant reasonable Notice of the time and place of any public or privatesale, at which sale Landlord or its assigns may purchase all or any portion ofTenant’s 

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Personal Property, if any, unless otherwise prohibitedby law.  Unless otherwise provided by lawand without intending to exclude any other manner of giving Tenant reasonablenotice, the requirement of reasonable Notice shall be met if such Notice isgiven at least ten (10) days before the date of sale.  The proceeds from any such disposition, lessall expenses incurred in connection with the taking of possession, holding andselling of such property (including, reasonable attorneys’ fees) shall beapplied as a credit against the indebtedness which is secured by the securityinterest granted in Section 7.2. Any surplus shall be paid to Tenant or as otherwise required by law andTenant shall pay any deficiency to Landlord, as Additional Charges, upondemand.

## **12.2        Remedies.** None of (a) thetermination of this Agreement pursuant to Section 12.1, (b) therepossession of the Leased Property, or any portion thereof, (c) the failure ofLandlord to relet the Leased Property, or any portion thereof, nor (d) thereletting of all or any of portion of the Leased Property, shall relieve Tenantof its liability and obligations hereunder, all of which shall survive any suchtermination, repossession or reletting. In the event of any such termination, Tenant shall forthwith pay toLandlord all Rent due and payable with respect to the Leased Property, orterminated portion thereof, through and including the date of suchtermination.  Thereafter, Tenant, untilthe end of what would have been the Term of this Agreement in the absence ofsuch termination, and whether or not the Leased Property, or any portionthereof, shall have been relet, shall be liable to Landlord for, and shall payto Landlord, as current damages, the Rent and other charges which would bepayable hereunder for the remainder of the Term had such termination not occurred,less the net proceeds, if any, of any reletting of the Leased Property, or anyportion thereof, after deducting all reasonable expenses in connection withsuch reletting, including, without limitation, all repossession costs,brokerage commissions, legal expenses, attorneys’ fees, advertising, expensesof employees, alteration costs and expenses of preparation for suchreletting.  Tenant shall pay such currentdamages to Landlord monthly on the days on which the Minimum Rent would have beenpayable hereunder if this Agreement had not been so terminated with respect tosuch of the Leased Property.

At any time after such termination, whether or not Landlord shall havecollected any such current damages, as liquidated final damages beyond the dateof such termination, at Landlord’s election, Tenant shall pay to Landlord anamount equal to the present value (as reasonably determined by Landlord) of the

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excess, if any, of the Rent and other charges whichwould be payable hereunder from the date of such termination (assuming that,for the purposes of this paragraph, annual payments by Tenant on account ofImpositions would be the same as payments required for the immediatelypreceding twelve calendar months, or if less than twelve calendar months haveexpired since the Commencement Date, the payments required for such lesserperiod projected to an annual amount) for what would be the then unexpired termof this Agreement if the same remained in effect, over the fair market rentalfor the same period.  Nothing containedin this Agreement shall, however, limit or prejudice the right of Landlord toprove and obtain in proceedings for bankruptcy or insolvency an amount equal tothe maximum allowed by any statute or rule of law in effect at the time when,and governing the proceedings in which, the damages are to be proved, whetheror not the amount be greater than, equal to, or less than the amount of theloss or damages referred to above.

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

## **12.3        Tenant’sWaiver.** IFTHIS AGREEMENT IS TERMINATED PURSUANT TO SECTION 12.1 OR 12.2, TENANTWAIVES, TO THE EXTENT PERMITTED BY LAW, ANY RIGHT TO A TRIAL BY JURY IN THEEVENT OF SUMMARY PROCEEDINGS TO ENFORCE THE REMEDIES SET FORTH IN THIS 

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## ARTICLE 12, AND THE BENEFIT OF ANY LAWS NOW ORHEREAFTER IN FORCE EXEMPTING PROPERTY FROM LIABILITY FOR RENT OR FOR DEBT.

## **12.4        Applicationof Funds.** Any payments received by Landlord under any ofthe provisions of this Agreement during the existence or continuance of anyEvent of Default (and any payment made to Landlord rather than Tenant due tothe existence of any Event of Default) shall be applied to Tenant’s current andpast due obligations under this Agreement in such order as Landlord maydetermine or as may be prescribed by the laws of the State.  Any balance shall be paid to Tenant.

## **12.5        Landlord’sRight to Cure Tenant’s Default.** If an Event of Default shall have occurred andbe continuing, Landlord, after written notice to Tenant (provided that no suchnotice shall be required if Landlord shall reasonably determine immediateaction is necessary to protect person or property), without waiving orreleasing any obligation of Tenant and without waiving or releasing any Eventof Default, may (but shall not be obligated to), at any time thereafter, makesuch payment or perform such act for the account and at the expense of Tenant,and may, to the extent permitted by law, enter upon the Leased Property, or anyportion thereof, for such purpose and take all such action thereon as, inLandlord’s opinion, may be necessary or appropriate therefor, including themanagement of any Facility by Landlord or its designee, and Tenant herebyirrevocably appoints, in the event of such election by Landlord, Landlord orits designee as manager of any such Facility and its attorney in fact for suchpurpose, irrevocably and coupled with an interest in the name and stead ofTenant.  All costs and expenses(including, without limitation, reasonable attorneys’ fees) incurred byLandlord in connection therewith, together with interest thereon (to the extentpermitted by law) at the Overdue Rate from the date such sums are paid byLandlord until repaid, shall be paid by Tenant to Landlord, on demand.

## **12.6       ****Trade Names**.  If this Agreement is terminated with respectto any Property for any reason, Landlord shall, upon the request of Tenant,cause the name of the business conducted upon such Property to be changed to aname other than a Facility Trade Name or any approximation or abbreviationthereof and sufficiently dissimilar to such name as to be unlikely to causeconfusion with such name; provided, however, that Tenant shallnot thereafter use a Facility Trade Name in the same market in which suchProperty is located in connection with any business that competes with suchProperty or the Facility located thereon.

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##  

# **ARTICLE13**

# **HOLDINGOVER**

Any holding over by Tenant after the expiration or sooner terminationof this Agreement shall be treated as a daily tenancy at sufferance at a rateequal to two (2) times the Minimum Rent and other charges herein provided(prorated on a daily basis).  Tenantshall also pay to Landlord all damages (direct or indirect) sustained by reasonof any such holding over.  Otherwise,such holding over shall be on the terms and conditions set forth in thisAgreement, to the extent applicable. Nothing contained herein shall constitute the consent, express orimplied, of Landlord to the holding over of Tenant after the expiration orearlier termination of this Agreement.

# **ARTICLE14**

# **LANDLORDDEFAULT**

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

If Landlord shall in good faith dispute the occurrence of any LandlordDefault and Landlord, before the expiration of the applicable cure period,shall give Notice thereof to Tenant, setting forth, in reasonable detail, thebasis therefor, no Landlord Default shall be deemed to have occurred andLandlord shall have no obligation with respect thereto until final adversedetermination thereof.  If Tenant andLandlord shall fail, in good faith, to resolve any such dispute within ten (10)

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days after Landlord’s Notice of dispute, either maysubmit the matter for resolution in accordance with Article 22.

# **ARTICLE15**

# **PURCHASERIGHTS**

Landlord shall have the option to purchase Tenant’s Personal Property,at the expiration or sooner termination of this Agreement, for an amount equalto the then fair market value thereof (current replacement cost as determinedby agreement of the parties or, in the absence of such agreement, appraisal),subject to, and with appropriate price adjustments for, all equipment leases,conditional sale contracts, UCC-1 financing statements and otherencumbrances to which such Personal Property is subject.  Upon the expiration or sooner termination ofthis Agreement, Tenant shall use its reasonable efforts to transfer and assign,or cause to be transferred and assigned, to Landlord or its designee, or assistLandlord or its designee in obtaining, any contracts, licenses, andcertificates required for the then operation of the Leased Property.  Notwithstanding the foregoing, Tenantexpressly acknowledges and agrees that nothing contained in this Article 15shall diminish, impair or otherwise modify Landlord’s rights under the SecurityAgreement and that any amounts paid by Landlord in order to purchase Tenant’sPersonal Property in accordance with this Article 15 shall be applied first toTenant’s current and past due obligations under this Agreement in such order asLandlord may reasonably determine or as may be prescribed by the laws of theState and any balance shall be paid to Tenant.

# **ARTICLE16**

# **SUBLETTINGAND ASSIGNMENT**

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

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## any Manager approved by Landlord pursuant to the applicable provisionsof this Agreement or residents and patients of Tenant, or the Leased Property,or any portion thereof, to be offered or advertised for assignment orsubletting.

For purposes of this Section 16.1, an assignment of thisAgreement shall be deemed to include, without limitation, any direct orindirect Change in Control of either or both of the Entities comprising Tenant.

If this Agreement is assigned or if the Leased Property, or anyportion, thereof is sublet (or occupied by anybody other than Tenant or anyManager, their respective employees or residents or patients of Tenant),Landlord may collect the rents from such assignee, subtenant or occupant, asthe case may be, and apply the net amount collected to the Rent hereinreserved, but no such collection shall be deemed a waiver of the provisions setforth in the first paragraph of this Section 16.1, the acceptance byLandlord of such assignee, subtenant or occupant, as the case may be, as a tenant,or a release of Tenant from the future performance by Tenant of its covenants,agreements or obligations contained in this Agreement.

Any assignment or transfer of Tenant’s interest under this Agreement(including any sublease which is permitted pursuant to the terms of Section16.3 below) shall be subject to such assignee’s or transferee’s delivery toLandlord of (i) a Guaranty, which Guaranty shall be in form and substancesatisfactory to Landlord in its sole discretion and which Guaranty shall constitutean Incidental Document hereunder; (ii) a pledge of the stock, partnership,membership or other ownership interests of such assignee or other transferee tosecure Tenant’s obligations under this Agreement and the Incidental Documents,which pledge shall be in form and substance satisfactory to Landlord in itssole discretion and which pledge shall constitute an Incidental Documenthereunder; (iii) a security agreement granting Landlord a security interest inall of such assignee’s or transferee’s right, title and interest in and to anypersonal property, intangibles and fixtures (other than accounts receivable)with respect to any Property which is subject to any such assignment ortransfer to secure Tenant’s obligations under this Agreement and the IncidentalDocuments, which security agreement shall be in form and substance satisfactoryto Landlord in its sole discretion and which security agreement shallconstitute an Incidental Document hereunder; and (iv) in the case of asublease, an assignment which assigns all of such subtenant’s right, title andinterest in such sublease to Landlord to secure Tenant’s obligations under thisAgreement and the Incidental Documents, 

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which assignment shall be in form and substancesatisfactory to Landlord in its sole discretion and which assignment shallconstitute an Incidental Document hereunder.

No subletting or assignment shall in any way impair the continuingprimary liability of Tenant hereunder (unless Landlord and Tenant expresslyotherwise agree that Tenant shall be released from all obligations hereunder),and no consent to any subletting or assignment in a particular instance shallbe deemed to be a waiver of the prohibition set forth in this Section 16.1.  No assignment, subletting or occupancy shallaffect any Permitted Use.  Anysubletting, assignment or other transfer of Tenant’s interest under thisAgreement in contravention of this Section 16.1 shall be voidable atLandlord’s option.

## **16.2        RequiredSublease Provisions.** Any sublease of all or any portion of theLeased Property entered into on or after the date hereof shall provide (a) thatit is subject and subordinate to this Agreement and to the matters to whichthis Agreement is or shall be subject or subordinate; (b) that in the event oftermination of this Agreement or reentry or dispossession of Tenant by Landlordunder this Agreement, Landlord may, at its option, terminate such sublease ortake over all of the right, title and interest of Tenant, as sublessor undersuch sublease, and such subtenant shall, at Landlord’s option, attorn toLandlord pursuant to the then executory provisions of such sublease, exceptthat neither Landlord nor any Facility Mortgagee, as holder of a mortgage or asLandlord under this Agreement, if such mortgagee succeeds to that position,shall (i) be liable for any act or omission of Tenant under such sublease, (ii)be subject to any credit, counterclaim, offset or defense which theretoforeaccrued to such subtenant against Tenant, (iii) be bound by any previousmodification of such sublease not consented to in writing by Landlord or by anyprevious prepayment of more than one (1) month’s rent, (iv) be bound by anycovenant of Tenant to undertake or complete any construction of the applicableProperty, or any portion thereof, (v) be required to account for any securitydeposit of the subtenant other than any security deposit actually delivered toLandlord by Tenant, (vi) be bound by any obligation to make any payment to suchsubtenant or grant any credits, except for services, repairs, maintenance andrestoration provided for under the sublease that are performed after the dateof such attornment, (vii) be responsible for any monies owing by Tenant to thecredit of such subtenant unless actually delivered to Landlord by Tenant, or(viii) be required to remove any Person occupying any portion of the LeasedProperty; and (c), in the 

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## event that such subtenant receives a written Notice from Landlord orany Facility Mortgagee stating that an Event of Default has occurred and is continuing,such subtenant shall thereafter be obligated to pay all rentals accruing undersuch sublease directly to the party giving such Notice or as such party maydirect.  All rentals received from suchsubtenant by Landlord or the Facility Mortgagee, as the case may be, shall becredited against the amounts owing by Tenant under this Agreement and suchsublease shall provide that the subtenant thereunder shall, at the request ofLandlord, execute a suitable instrument in confirmation of such agreement toattorn.  An original counterpart of eachsuch sublease and assignment and assumption, duly executed by Tenant and suchsubtenant or assignee, as the case may be, in form and substance reasonablysatisfactory to Landlord, shall be delivered promptly to Landlord and (a) inthe case of an assignment, the assignee shall assume in writing and agree tokeep and perform all of the terms of this Agreement on the part of Tenant to bekept and performed and shall be, and become, jointly and severally liable with Tenantfor the performance thereof and (b) in case of either an assignment orsubletting, Tenant shall remain primarily liable, as principal rather than assurety, for the prompt payment of the Rent and for the performance andobservance of all of the covenants and conditions to be performed by Tenanthereunder.

##                 The provisions of this Section 16.2shall not be deemed a waiver of the provisions set forth in the first paragraphof Section 16.1.

##                 **16.3        Permitted Sublease.**  Notwithstanding the foregoing, including,without limitation, Section 16.2, but subject to the provisions of Section16.4 and any other express conditions or limitations set forth herein,Tenant may, in each instance after Notice to Landlord, (a) sublease space atany Property for laundry, commissary or child care purposes or otherconcessions in furtherance of the Permitted Use, so long as such subleases willnot reduce the number of units at any Facility, will not violate or affect anyLegal Requirement or Insurance Requirement, and Tenant shall provide suchadditional insurance coverage applicable to the activities to be conducted insuch subleased space as Landlord and any Facility Mortgagee may reasonablyrequire, and (b) enter into one or more subleases with wholly ownedsubsidiaries of Tenant with respect to the Leased Property, or any portionthereof, provided Tenant gives Landlord Notice of the material terms andconditions thereof, and providedfurther that any and all suchsublease are transferred and assigned to Landlord as additional Security for 

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## Tenant’s obligations hereunder. Landlord and Tenant acknowledge and agree that if Tenant enters into one(1) or more subleases with wholly owned subsidiaries of Tenant with respect toany Property, or any portion thereof, in accordance with the preceding clause(b), Tenant may allocate the rent and other charges with respect to theaffected Property in any reasonable manner; provided, however,that such allocation shall not affect Tenant’s (nor any Guarantor’s) liabilityfor the Rent and other obligations of Tenant under this Agreement; and, provided,further, that Tenant shall give Landlord prompt written notice of anyallocation or reallocation of the rent and other charges with respect to theaffected Property and, in any event, Tenant shall give Landlord written noticeof the amount of such allocations at least ten (10) Business Days prior to thedate that Landlord or Senior Housing Properties Trust is required to file anytax returns in any State where such affected Lease Property is located.

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

# **ARTICLE 17**

# **ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS**

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

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

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

#### (a)           within forty-five (45) days aftereach of the first three fiscal quarters of any Fiscal Year, the most recentConsolidated Financials, accompanied by the Financial Officer’s Certificate;

#### (b)           within ninety (90) days after the endof each Fiscal Year, the most recent Consolidated Financials and financials ofTenant for such year, certified by an independent certified public accountantreasonably satisfactory to Landlord and accompanied by a Financial Officer’sCertificate;

#### (c)           Intentionally Deleted;

#### (d)           at any time and from time to timeupon not less than twenty (20) days Notice from Landlord or such additionalperiod as may be reasonable under the circumstances, any ConsolidatedFinancials, Tenant financials or any other audited or unaudited financialreporting information required to be filed by Landlord with any securities andexchange commission, the SEC or any successor agency, or any other governmentalauthority, or required pursuant to any order issued by any court, governmentalauthority or arbitrator in any litigation to which Landlord is a party, forpurposes of compliance therewith;

#### (e)           promptly, after receipt or sendingthereof, copies of all notices given or received by Tenant under any ManagementAgreement; and

#### (f)            promptly, upon Notice from Landlord,such other information concerning the business, financial condition and affairsof Tenant or any Guarantor as Landlord reasonably may request from time totime.

Landlord may at any time, and from time to time, provide any FacilityMortgagee with copies of any of the foregoing statements, subject to Landlordobtaining the agreement of such Facility Mortgagee to maintain such statementsand the information therein as confidential.

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**17.3        Reimbursement,Licensure, Etc. **Tenant covenants and agrees to furnish toLandlord, within thirty (30) days after receipt or modification thereof, copiesof:

#### (a)           all licenses authorizing Tenant orany Manager to operate any Facility for its Primary Intended Use;

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

#### (c)           if required under Applicable Law withrespect to any Facility, a license for each individual employed asadministrator with respect to such Facility;

#### (d)           all reports of surveys, statements ofdeficiencies, plans of correction, and all material correspondence relatingthereto, including, without limitation, all reports and material correspondenceconcerning compliance with or enforcement of licensure, Medicare/Medicaid, andaccreditation requirements, including physical environment and Life Safety Codesurvey reports (excluding, however, correspondence which may be subject to anyattorney client privilege); and

#### (e)           with reasonable promptness, suchother confirmation as to the licensure and Medicare and Medicaid participationof Tenant as Landlord may reasonably request from time to time.

### **17.3.2    ****Monthly Reports**.  Tenant shall prepare and furnish to Landlordfor each Property, within thirty (30) days after the end of each calendar monthduring the term of this Agreement, a monthly report, such report to include (i)a balance sheet and a current month and year to date income statement, showingeach item of actual and projected income and expense, reflecting the operatingresults of the Facility located at such Property, in each case prepared inaccordance with GAAP, (ii) a statement of capital expenditures prepared on aFacility by Facility basis and on a combined basis, (iii) occupancypercentages, payor mix and average rate on a Facility by Facility basis and ona combined basis, and (iv) such additional information as Landlord may fromtime to time reasonably require.  Eachmonthly report shall be accompanied by a Financial Officer’s Certificate.

 

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

Tenant shall permit Landlord and its authorized representatives toinspect the Leased Property, or any portion thereof, during usual businesshours upon not less than forty-eight (48) hours’ notice and to make such repairsas Landlord is permitted or required to make pursuant to the terms of thisAgreement, provided that any inspection or repair by Landlord or itsrepresentatives will not unreasonably interfere with Tenant’s use and operationof the Leased Property and further provided that in the event of an emergency,as determined by Landlord in its reasonable discretion, prior Notice shall notbe necessary.

# **ARTICLE19EASEMENTS**

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

#### (a)           the instrument creating, modifying orabandoning any such easement, right-of-way or other interest is satisfactory toand approved by Landlord (which approval shall not be unreasonably withheld,delayed or conditioned);

#### (b)           Landlord receives an Officer’sCertificate from Tenant stating (i) that such grant, modification orabandonment is not detrimental to the proper conduct of business on suchProperty, (ii) the consideration, if any, being paid for such grant,modification or abandonment (which consideration shall be paid by Tenant),(iii) that such grant, modification or abandonment does not impair the use orvalue of such Property for the Permitted Use, and (iv) that, for as long asthis Agreement shall be in effect, Tenant will perform all obligations, if any,of Landlord under any such instrument; and

#### (c)           Landlord receives evidencesatisfactory to Landlord that the Manager has granted its consent to suchgrant, modification or abandonment in accordance with the 

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

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

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

# **ARTICLE20**

# **FACILITYMORTGAGES**

## **20.1        LandlordMay Grant Liens.** Without the consent of Tenant, Landlord may,from time to time, directly or indirectly, create or otherwise cause to existany lien, encumbrance or title retention agreement (“Encumbrance”) uponthe Leased Property, or any portion thereof, or interest therein, whether tosecure any borrowing or other means of financing or refinancing.

## **20.2        Subordinationof Lease.** This Agreement and any and all rights ofTenant hereunder are and shall be subject and subordinate to any ground ormaster lease, and all renewals, extensions, modifications and replacementsthereof, and to all mortgages and deeds of trust, which may now or hereafteraffect the Leased Property, or any portion thereof, or any improvements thereonand/or any of such leases, whether or not such mortgages or deeds of trustshall also cover other lands and/or buildings and/or leases, to each and everyadvance made or hereafter to be made under such mortgages and deeds of trust,and to all renewals, modifications, replacements and extensions of such leasesand such mortgages and deeds of trust and all consolidations of such mortgagesand deeds of trust.  This section shallbe self-operative and no further instrument of subordination shall berequired.  In confirmation of suchsubordination, Tenant shall promptly execute, acknowledge and deliver anyinstrument that Landlord, the lessor under any such lease or the holder of anysuch mortgage or the trustee or beneficiary of any deed of trust or any oftheir respective successors in interest may reasonably request to evidence suchsubordination.  Any lease to which thisAgreement is, at the time referred to, subject and subordinate is herein called

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## “Superior Lease” and the lessor of a Superior Lease or itssuccessor in interest at the time referred to is herein called “SuperiorLandlord” and any mortgage or deed of trust to which this Agreement is, atthe time referred to, subject and subordinate is herein called “SuperiorMortgage” and the holder, trustee or beneficiary of a Superior Mortgage isherein called “Superior Mortgagee”. Tenant shall have no obligations under any Superior Lease or SuperiorMortgage other than those expressly set forth in this Section 20.2.

If any Superior Landlord or Superior Mortgagee or the nominee ordesignee of any Superior Landlord or Superior Mortgagee shall succeed to therights of Landlord under this Agreement (any such person, “SuccessorLandlord”), whether through possession or foreclosure action or delivery ofa new lease or deed, or otherwise, at such Successor Landlord’s request, Tenantshall attorn to and recognize the Successor Landlord as Tenant’s landlord underthis Agreement and Tenant shall promptly execute and deliver any instrumentthat such Successor Landlord may reasonably request to evidence such attornment(provided that such instrument does not alter the terms of this Agreement),whereupon, this Agreement shall continue in full force and effect as a directlease between the Successor Landlord and Tenant upon all of the terms,conditions and covenants as are set forth in this Agreement, except that theSuccessor Landlord (unless formerly the landlord under this Agreement or itsnominee or designee) shall not be (a) liable in any way to Tenant for any actor omission, neglect or default on the part of any prior Landlord under thisAgreement, (b) responsible for any monies owing by or on deposit with any priorLandlord to the credit of Tenant (except to the extent actually paid ordelivered to the Successor Landlord), (c) subject to any counterclaim or setoffwhich theretofore accrued to Tenant against any prior Landlord, (d) bound byany modification of this Agreement subsequent to such Superior Lease orMortgage, or by any previous prepayment of Rent for more than one (1) month inadvance of the date due hereunder, which was not approved in writing by theSuperior Landlord or the Superior Mortgagee thereto, (e) liable to Tenantbeyond the Successor Landlord’s interest in the Leased Property and the rents,income, receipts, revenues, issues and profits issuing from the LeasedProperty, (f) responsible for the performance of any work to be done by theLandlord under this Agreement to render the Leased Property ready for occupancyby Tenant (subject to Landlord’s obligations under Section 5.1.2(b) orwith respect to any insurance or Condemnation proceeds), or (g) required toremove any Person occupying the Leased Property or any part thereof, except ifsuch person claims by, through or under the Successor Landlord.  

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## Tenant agrees at any time and from time to time to execute a suitableinstrument in confirmation of Tenant’s agreement to attorn, as aforesaid andLandlord agrees to provide Tenant with an instrument of nondisturbance andattornment from each such Superior Mortgagee and Superior Landlord (other thanthe lessors under any ground leases with respect to the Leased Property, or anyportion thereof) in form and substance reasonably satisfactory to Tenant.  Notwithstanding the foregoing, any SuccessorLandlord shall be liable (a) to pay to Tenant any amounts owed under Section5.1.2(b), and (b) to pay to Tenant any portions of insurance proceeds orAwards received by Landlord or the Successor Landlord required to be paid toTenant pursuant to the terms of this Agreement, and, as a condition to anymortgage, lien or lease in respect of the Leased Property, or any portionthereof, and the subordination of this Agreement thereto, the mortgagee,lienholder or lessor, as applicable, shall expressly agree, for the benefit ofTenant, to make such payments, which agreement shall be embodied in aninstrument in form reasonably satisfactory to Tenant.

## **20.3        Noticeto Mortgagee and Superior Landlord.**  Subsequent to the receipt by Tenant of Noticefrom Landlord as to the identity of any Facility Mortgagee or Superior Landlordunder a lease with Landlord, as ground lessee, which includes the LeasedProperty, or any portion thereof, as part of the demised premises and whichcomplies with Section20.1 (which Notice shall be accompanied bya copy of the applicable mortgage or lease), no Notice from Tenant to Landlordas to a default by Landlord under this Agreement shall be effective withrespect to a Facility Mortgagee or Superior Landlord unless and until a copy ofthe same is given to such Facility Mortgagee or Superior Landlord at theaddress set forth in the above described Notice, and the curing of any ofLandlord’s defaults within the applicable notice and cure periods set forth in Article 14by such Facility Mortgagee or Superior Landlord shall be treated as performanceby Landlord.

# **ARTICLE21**

# **ADDITIONALCOVENANTS OF TENANT**

## **21.1        PromptPayment of Indebtedness.** Tenant shall (a) pay or cause to be paid whendue all payments of principal of and premium and interest on Tenant’sIndebtedness for money borrowed and shall not permit or suffer any suchIndebtedness to become or remain in default beyond any applicable grace or cureperiod, (b) pay or cause to be paid when due all lawful claims for labor andrents with respect to the Leased Property, (c) pay or cause to be paid when dueall trade payables and (d) pay or cause to 

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## be paid when due all other of Tenant’s Indebtedness upon which it is orbecomes obligated, except, in each case, other than that referred to in clause(a), to the extent payment is being contested in good faith by appropriateproceedings in accordance with Article 8 and if Tenant shall have setaside on its books adequate reserves with respect thereto in accordance withGAAP, if appropriate, or unless and until foreclosure, distraint sale or othersimilar proceedings shall have been commenced.

## **21.2        Conductof Business.** Tenant shall not engage in any business otherthan the leasing and operation of the Leased Property (including any incidentalor ancillary business relating thereto) and shall do or cause to be done allthings necessary to preserve, renew and keep in full force and effect and ingood standing its corporate existence and its rights and licenses necessary toconduct such business.

## **21.3        Maintenanceof Accounts and Records.** Tenant shall keep true records and books ofaccount of Tenant in which full, true and correct entries will be made ofdealings and transactions in relation to the business and affairs of Tenant inaccordance with GAAP.  Tenant shall applyaccounting principles in the preparation of the financial statements of Tenantwhich, in the judgment of and the opinion of its independent public accountants,are in accordance with GAAP, where applicable, except for changes approved bysuch independent public accountants. Tenant shall provide to Landlord either in a footnote to the financialstatements delivered under Section 17.2 which relate to the period inwhich such change occurs, or in separate schedules to such financialstatements, information sufficient to show the effect of any such changes onsuch financial statements.

## **21.4        Noticeof Litigation, Etc. **Tenantshall give prompt Notice to Landlord of any litigation or any administrativeproceeding to which it may hereafter become a party of which Tenant has noticeor actual knowledge which involves a potential liability equal to or greaterthan Two Hundred Fifty Thousand Dollars ($250,000) or which may otherwiseresult in any material adverse change in the business, operations, property,prospects, results of operation or condition, financial or other, ofTenant.  Forthwith upon Tenant obtainingknowledge of any Default, Event of Default or any default or event of defaultunder any agreement relating to Indebtedness for money borrowed in an aggregateamount exceeding, at any one time, Two Hundred Fifty Thousand Dollars($250,000), or any event or condition that would be required to be disclosed ina current report filed by Tenant on Form 8-K or in Part II of a quarterlyreport on Form 10-Q if Tenant were required to file such reports underthe 

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## Securities Exchange Act of 1934, as amended, Tenant shall furnishNotice thereof to Landlord specifying the nature and period of existencethereof and what action Tenant has taken or is taking or proposes to take withrespect thereto.

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

#### (a)           Indebtedness of Tenant to Landlord;

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

#### (c)           Indebtedness of Tenant in respect ofjudgments or awards (i) which have been in force for less than the applicableappeal period and in respect of which execution thereof shall have been stayedpending such appeal or review, or (ii) which are fully covered by insurancepayable to Tenant, or (iii) which are for an amount not in excess of $250,000in the aggregate at any one time outstanding and (x) which have been in forcefor not longer than the applicable appeal period, so long as execution is notlevied thereunder or (y) in respect of which an appeal or proceedings forreview shall at the time be prosecuted in good faith in accordance with theprovisions of Article 8, and in respect of which execution thereof shallhave been stayed pending such appeal or review;

#### (d)           Unsecured borrowings of Tenant fromits Affiliated Persons which are by their terms expressly subordinate pursuantto a Subordination Agreement to the payment and performance of Tenant’sobligations under this Agreement; or

#### (e)           Indebtedness for purchase moneyfinancing in accordance with Section 21.8 (a) and other operatingliabilities incurred in the ordinary course of Tenant’s business;

#### (f)            Indebtedness of Tenant as guarantoror borrower secured by Liens permitted under Section 21.8(c); or

#### (g)           A guaranty of Five Star’s obligationsunder its revolving line of credit.

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

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

## **21.8        Liensand Encumbrances.** Except as permitted by Section 7.1 and Section21.5, Tenant shall not create or incur or suffer to be created or incurredor to exist any Lien on this Agreement or any of Tenant’s assets, properties,rights or income, or any of its interest therein, now or at any time hereafterowned, other than:

#### (a)           Security interests securing thepurchase price of equipment or personal property whether acquired before orafter the Commencement Date; provided, however, that (i) suchLien shall at all times be confined solely to the asset in question and (ii)the aggregate principal amount of Indebtedness secured by any such Lien shallnot exceed the cost of acquisition or construction of the property subjectthereto;

#### (b)           Permitted Encumbrances;

#### (c)           Securityinterests in Accounts or Chattel Paper, in Support Obligations, GeneralIntangibles or Deposit Accounts relating to such Accounts or Chattel Paper, inany Instruments or Investment Property evidencing or arising from such Accountsor Chattel Paper, in any documents, books, records or other information(including, without limitation, computer programs, tapes, discs, punch cards,data processing software and related property and rights) maintained withrespect to any property described in this Section 21.8(c) or in any Proceeds ofany of the foregoing (capitalized terms used in this Section 21.8(c) withoutdefinition being used as defined in or for purposes of 

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#### Article 9 of the Uniform Commercial Code as in effect in theCommonwealth of Massachusetts); and

#### (d)           As permitted pursuant to Section21.5.

## **21.9        Merger;Sale of Assets; Etc.** Without Landlord’s prior written consent(which consent may be given or withheld in Landlord’s sole discretion), neitherEntity comprising Tenant shall (i) sell, lease (as lessor or sublessor),transfer or otherwise dispose of, or abandon, all or any material portion ofits assets (including capital stock or other equity interests) or business toany Person, (ii) merge into or with or consolidate with any other Entity, or(iii) sell, lease (as lessor or sublessor), transfer or otherwise dispose of,or abandon, any personal property or fixtures or any real property; provided,however, that, notwithstanding the provisions of clause (iii) preceding,Tenant may dispose of equipment or fixtures which have become inadequate,obsolete, worn-out, unsuitable, undesirable or unnecessary, providedsubstitute equipment or fixtures having equal or greater value and utility (butnot necessarily having the same function) have been provided.

## **21.10      BankruptcyRemote Entities**. At Landlord’s request, Tenant shall make such amendments, modificationsor other changes to its charter documents and governing bodies (including,without limitation, Tenant’s board of directors), and take such other actions,as may from time to time be necessary to qualify Tenant as a “bankruptcy remoteentity”, providedthat Landlord shall reimburse Tenant for allcosts and expenses reasonably incurred by Tenant in connection with the makingof such amendments or modifications.

## **21.11     ****Notice of Change of Name, Etc.**  Tenant shall give prompt notice to Landlordof any change in (a) the name (operating or otherwise) of Tenant or anyFacility, (b) the number of beds in any bed category for which any Facility islicensed or the number of beds in any bed category available for use at anyFacility (except for changes in the election made with respect to the beds forreimbursement maximization purposes), and (c) the patient and/or child careservices that are offered at any Facility.

# **ARTICLE22**

# **ARBITRATION**

Landlord or Tenant may elect to submit any dispute hereunder that hasan amount in controversy in excess of 

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$250,000 to arbitration hereunder.  Any such arbitration shall be conducted inBoston, Massachusetts in accordance with the Commercial Arbitration Rules ofthe American Association then pertaining and the decision of the arbitratorswith respect to such dispute shall be binding, final and conclusive on theparties.

In the event Landlord or Tenant shall elect to submit any such disputeto arbitration hereunder, Landlord and Tenant shall each appoint and pay allfees of a fit and impartial person as arbitrator with at least ten (10) years’recent professional experience in the general subject matter of thedispute.  Notice of such appointmentshall be sent in writing by each party to the other, and the arbitrators soappointed, in the event of their failure to agree within thirty (30) days afterthe appointment of the second arbitrator upon the matter so submitted, shallappoint a third arbitrator.  If eitherLandlord or Tenant shall fail to appoint an arbitrator, as aforesaid, for aperiod of twenty (20) days after written notice from the other party to makesuch appointment, then the arbitrator appointed by the party having made suchappointment shall appoint a second arbitrator and the two (2) so appointedshall, in the event of their failure to agree upon any decision within thirty(30) days thereafter, appoint a third arbitrator.  If such arbitrators fail to agree upon athird arbitrator within forty five (45) days after the appointment of thesecond arbitrator, then such third arbitrator shall be appointed by theAmerican Arbitration Association from its qualified panel of arbitrators, andshall be a person having at least ten (10) years’ recent professionalexperience as to the subject matter in question.  The fees of the third arbitrator and theexpenses incident to the proceedings shall be borne equally between Landlordand Tenant, unless the arbitrators decide otherwise.  The fees of respective counsel engaged by theparties, and the fees of expert witnesses and other witnesses called for theparties, shall be paid by the respective party engaging such counsel or callingor engaging such witnesses.

The decision of the arbitrators shall be rendered within thirty (30)days after appointment of the third arbitrator. Such decision shall be in writing and in duplicate, one counterpartthereof to be delivered to Landlord and one to Tenant.  A judgment of a court of competentjurisdiction may be entered upon the award of the arbitrators in accordancewith the rules and statutes applicable thereto then obtaining.

Landlord and Tenant acknowledge and agree that, to the extent any suchdispute shall involve any Manager and be subject to arbitration pursuant tosuch Manager’s Management Agreement, 

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Landlord and Tenant shall cooperate to consolidate any such arbitrationhereunder and under such Management Agreement into a single proceeding.

**ARTICLE 23**

 

**MISCELLANEOUS**

** **

**3.1          Limitation on Payment of Rent.** All agreements between Landlord and Tenantherein are hereby expressly limited so that in no contingency or eventwhatsoever, whether by reason of acceleration of Rent, or otherwise, shall theRent or any other amounts payable to Landlord under this Agreement exceed themaximum permissible under applicable law, the benefit of which may be assertedby Tenant as a defense, and if, from any circumstance whatsoever, fulfillmentof any provision of this Agreement, at the time performance of such provisionshall be due, shall involve transcending the limit of validity prescribed bylaw, or if from any circumstances Landlord should ever receive as fulfillmentof such provision such an excessive amount, then, ipsofacto, theamount which would be excessive shall be applied to the reduction of theinstallment(s) of Minimum Rent next due and not to the payment of suchexcessive amount.  This provision shallcontrol every other provision of this Agreement and any other agreementsbetween Landlord and Tenant.

 

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

 

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

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**23.4        Severability.** Any clause, sentence, paragraph, section orprovision of this Agreement held by a court of competent jurisdiction to beinvalid, illegal or ineffective shall not impair, invalidate or  nullify the remainder of this Agreement, butrather the effect thereof shall be confined to the clause, sentence, paragraph,section or provision so held to be invalid, illegal or ineffective, and thisAgreement shall be construed as if such invalid, illegal or ineffectiveprovisions had never been contained therein.

 

## **23.5        Acceptanceof Surrender.** No surrender to Landlord of this Agreement orof the Leased Property or any part thereof, or of any interest therein, shallbe valid or effective unless agreed to and accepted in writing by Landlord andno act by Landlord or any representative or agent of Landlord, other than sucha written acceptance by Landlord, shall constitute an acceptance of any suchsurrender.

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

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

## **23.8        QuietEnjoyment.** Tenant shall peaceably and quietly have, holdand enjoy the Leased Property for the Term, free of hindrance or molestation byLandlord or anyone claiming by, through or under Landlord, but subject to (a)any Encumbrance permitted under Article 20 or otherwise permitted to becreated by Landlord hereunder, (b) all Permitted Encumbrances, (c) liens as toobligations of Landlord that are either not yet due or which are beingcontested in good faith and by proper proceedings, provided the same do notmaterially interfere with 

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## Tenant’s ability to operate any Facility and (d) liens that have beenconsented to in writing by Tenant. Except as otherwise provided in this Agreement, no failure by Landlordto comply with the foregoing covenant shall give Tenant any right to cancel orterminate this Agreement or abate, reduce or make a deduction from or offsetagainst the Rent or any other sum payable under this Agreement, or to fail toperform any other obligation of Tenant hereunder.

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

## **23.10      Notices.**

#### (a)           Any and all notices, demands,consents, approvals, offers, elections and other communications required orpermitted under this Agreement shall be deemed adequately given if in writingand the same shall be delivered either in hand, by telecopier with writtenacknowledgment of receipt, or by mail or Federal Express or similar expeditedcommercial carrier, addressed to the recipient of the notice, postpaid andregistered or certified with return receipt requested (if by mail), or with allfreight charges prepaid (if by Federal Express or similar carrier).

#### (b)           All notices required or permitted tobe sent hereunder shall be deemed to have been given for all purposes of thisAgreement upon the date of acknowledged receipt, in the case of a notice bytelecopier, and, in all other cases, upon the date of receipt or refusal,except that whenever under this Agreement a notice is either received on a daywhich is not a Business Day or is required to be delivered on or before aspecific day which is not a Business Day, the day of receipt or requireddelivery shall automatically be extended to the next Business Day.

#### (c)           All such notices shall be addressed,

if to Landlord:

c/o Senior HousingProperties Trust400 Centre StreetNewton, Massachusetts  02458Attn:  Mr. David J. Hegarty[Telecopier No. (617) 796-8349]

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if to Tenant to:

c/o Five Star Quality Care, Inc.400 Centre StreetNewton, Massachusetts  02458Attn:  Evrett W. Benton[Telecopier No. (617) 796-8385]

#### (d)           By notice given as herein provided,the parties hereto and their respective successors and assigns shall have theright from time to time and at any time during the term of this Agreement tochange their respective addresses effective upon receipt by the other partiesof such notice and each shall have the right to specify as its address anyother address within the United States of America.

## **23.11      Construction.** Anythingcontained in this Agreement to the contrary notwithstanding, all claimsagainst, and liabilities of, Tenant or Landlord arising prior to any date oftermination or expiration of this Agreement with respect to the Leased Propertyshall survive such termination or expiration. In no event shall Landlord be liable for any consequential damagessuffered by Tenant as the result of a breach of this Agreement by Landlord.  Neither this Agreement nor any provisionhereof may be changed, waived, discharged or terminated except by an instrumentin writing signed by the party to be charged. All the terms and provisions of this Agreement shall be binding upon andinure to the benefit of the parties hereto and their respective successors andassigns. Each term or provision of this Agreement to be performed by Tenantshall be construed as an independent covenant and condition.  Time is of the essence with respect to theprovisions of this Agreement.  Except asotherwise set forth in this Agreement, any obligations of Tenant (includingwithout limitation, any monetary, repair and indemnification obligations) andLandlord shall survive the expiration or sooner termination of thisAgreement.  Each Entity comprising Tenanthereunder shall be jointly and severally liable for the payment and performanceof with each and every obligation and liability of Tenant hereunder.

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

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## **23.13      ApplicableLaw, Etc.** This Agreement shall be interpreted, construed, applied and enforced inaccordance with the laws of The Commonwealth of Massachusetts applicable tocontracts between residents of Massachusetts which are to be performed entirelywithin Massachusetts, regardless of (i) where this Agreement is executed ordelivered; or (ii) where any payment or other performance required by thisAgreement is made or required to be made; or (iii) where any breach of anyprovision of this Agreement occurs, or any cause of action otherwise accrues;or (iv) where any action or other proceeding is instituted or pending; or (v)the nationality, citizenship, domicile, principal place of business, orjurisdiction of organization or domestication of any party; or (vi) whether thelaws of the forum jurisdiction otherwise would apply the laws of a jurisdictionother than Massachusetts; or (vii) any combination of the foregoing.  Notwithstanding the foregoing, the laws ofthe State shall apply to the perfection and priority of liens upon and thedisposition of any Property.

## **23.14      Rightto Make Agreement.** Each party warrants, with respect to itself, thatneither the execution of this Agreement, nor the consummation of anytransaction contemplated hereby, shall violate any provision of any law, or anyjudgment, writ, injunction, order or decree of any court or governmentalauthority having jurisdiction over it; nor result in or constitute a breach ordefault under any indenture, contract, other commitment or restriction to whichit is a party or by which it is bound; nor require any consent, vote orapproval which has not been given or taken, or at the time of the transactioninvolved shall not have been given or taken. Each party covenants that it has and will continue to have throughoutthe term of this Agreement and any extensions thereof, the full right to enterinto this Agreement and perform its obligations hereunder.

## **23.15      Attorneys’Fees**.  Ifany lawsuit or arbitration or other legal proceeding arises in connection withthe interpretation or enforcement of this Agreement, the prevailing partytherein shall be entitled to receive from the other party the prevailing party’scosts and expenses, including reasonable attorneys’ fees incurred in connectiontherewith, in preparation therefor and on appeal therefrom, which amounts shallbe included in any judgment therein.

## **23.16      Nonliabilityof Trustees**.  THE DECLARATIONS OF TRUST ESTABLISHING CERTAINENTITIES COMPRISING LANDLORD, COPIES OF WHICH, TOGETHER WITH ALL AMENDMENTSTHERETO (COLLECTIVELY, THE “DECLARATIONS”), ARE DULY FILED WITH THEDEPARTMENT OF ASSESSMENTS AND TAXATION OF THE STATE OF MARYLAND, PROVIDE THAT 

##  

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THE NAMES OF SUCH ENTITIES REFER TO THE TRUSTEES UNDERSUCH DECLARATIONS COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY,AND THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF SUCH ENTITIESSHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANYOBLIGATION OF, OR CLAIM AGAINST, SUCH ENTITIES. ALL PERSONS DEALING WITH SUCH ENTITIES, IN ANY WAY, SHALL LOOK ONLY TOTHE ASSETS OF SUCH ENTITIES FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OFANY OBLIGATION.

**IN WITNESS WHEREOF**, the parties have executed this Agreement as a sealedinstrument as of the date above first written.
| ** ** | **LANDLORD:**              |
|------------|----------------------------|
| ** ** | ** **                 |
| ** ** | **HRES1 PROPERTIES TRUST** |
| ** ** | ** **                 |
| ** ** | ** **                 |
|       | By:                        |    /s/ David  J. Hegarty |
|       |                       | David J. Hegarty, President |
| ** ** |                       |
| ** ** | **TENANT:**                |
| ** ** | ** **                 |
| ** ** | **FS PATRIOT LLC**         |
| ** ** | ** **                 |
| ** ** | ** **                 |
|       | By:                        |    /s/ Evrett  W. Benton |
|       |                       | Evrett W. Benton |
|       |                       | President |
| ** ** |                       |
| ** ** |                       |
| ** ** | **FS COMMONWEALTH LLC**    |
| ** ** | ** **                 |
|       | By:                        |    /s/ Evrett  W. Benton |
|       |                       | Evrett W. Benton |
|       |                       | President |

 

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The followingexhibits have been omitted and will be supplementally furnished to theSecurities and Exchange Commission upon request:

EXHIBITS A-1through A-2

 

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