Exhibit 10.9


 


AMENDED
AND RESTATED MASTER LEASE AGREEMENT

(LEASE NO. 2),


 


dated as of August
4, 2009,


 


by and among


 


CERTAIN
AFFILIATES OF SENIOR HOUSING PROPERTIES TRUST,


 


AS LANDLORD,


 


AND


 


CERTAIN
AFFILIATES OF FIVE STAR QUALITY CARE, INC.,


 


AS TENANT


 

















 


Table of Contents


 


	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE 1

  	
  DEFINITIONS

  	
  1

  
	
  1.1

  	
  “AAA”

  	
  2

  
	
  1.2

  	
  “Additional
  Charges”

  	
  2

  
	
  1.3

  	
  “Additional
  Rent”

  	
  2

  
	
  1.4

  	
  “Affiliated
  Person”

  	
  2

  
	
  1.5

  	
  “Agreement”

  	
  2

  
	
  1.6

  	
  “Applicable
  Laws”

  	
  2

  
	
  1.7

  	
  “Arbitration
  Award”

  	
  3

  
	
  1.8

  	
  “Award”

  	
  3

  
	
  1.9

  	
  “Base
  Gross Revenues”

  	
  3

  
	
  1.10

  	
  “Business
  Day”

  	
  3

  
	
  1.11

  	
  “Capital
  Addition”

  	
  4

  
	
  1.12

  	
  “Capital
  Expenditure”

  	
  4

  
	
  1.13

  	
  “Change
  in Control”

  	
  4

  
	
  1.14

  	
  “Claim”

  	
  5

  
	
  1.15

  	
  “Code”

  	
  5

  
	
  1.16

  	
  “Commencement
  Date”

  	
  5

  
	
  1.17

  	
  “Condemnation”

  	
  5

  
	
  1.18

  	
  “Condemnor”

  	
  5

  
	
  1.19

  	
  “Consolidated
  Financials”

  	
  5

  
	
  1.20

  	
  “Date
  of Taking”

  	
  5

  
	
  1.21

  	
  “Default”

  	
  6

  
	
  1.22

  	
  “Disbursement
  Rate”

  	
  6

  
	
  1.23

  	
  “Disputes”

  	
  6

  
	
  1.24

  	
  “Easement
  Agreement”

  	
  6

  
	
  1.25

  	
  “Encumbrance”

  	
  6

  
	
  1.26

  	
  “Entity”

  	
  6

  
	
  1.27

  	
  “Environment”

  	
  6

  
	
  1.28

  	
  “Environmental
  Obligation”

  	
  6

  
	
  1.29

  	
  “Environmental
  Notice”

  	
  6

  
	
  1.30

  	
  “Event
  of Default”

  	
  6

  
	
  1.31

  	
  “Excess
  Gross Revenues”

  	
  6

  
	
  1.32

  	
  “Extended
  Term”

  	
  7

  
	
  1.33

  	
  “Facility”

  	
  7

  
	
  1.34

  	
  “Facility
  Mortgage”

  	
  7

  
	
  1.35

  	
  “Facility
  Mortgagee”

  	
  7

  
	
  1.36

  	
  “Facility
  Trade Names”

  	
  7

  
	
  1.37

  	
  “Financial
  Officer’s Certificate”

  	
  7

  
	
  1.38

  	
  “Fiscal
  Year”

  	
  8

  
	
  1.39

  	
  “Five
  Star”

  	
  8

  
	
  1.40

  	
  “Fixed
  Term”

  	
  8

  
	
  1.41

  	
  “Fixtures”

  	
  8

  
	
  1.42

  	
  “GAAP”

  	
  8

  
	
  1.43

  	
  “Government
  Agencies”

  	
  8

  
	
  1.44

  	
  “Gross
  Revenues”

  	
  8

  
	
  1.45

  	
  “Guarantor”

  	
  9

  
	
  1.46

  	
  “Guaranty”

  	
  9

  
	
  1.47

  	
  “Hazardous
  Substances”

  	
  10

  
	
  1.48

  	
  “Immediate
  Family”

  	
  11

  
	
  1.49

  	
  “Impositions”

  	
  11

  
	
  1.50

  	
  “Incidental
  Documents”

  	
  12

  
	
  1.51

  	
  “Indebtedness”

  	
  12

  
	
  1.52

  	
  “Insurance
  Requirements”

  	
  12

  



 

















 


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  Page

  
	
   

  	
   

  	
   

  
	
  1.53

  	
  “Interest
  Rate”

  	
  12

  
	
  1.54

  	
  “Land”

  	
  12

  
	
  1.55

  	
  “Landlord”

  	
  12

  
	
  1.56

  	
  “Landlord
  Default”

  	
  12

  
	
  1.57

  	
  “Landlord
  Liens”

  	
  12

  
	
  1.58

  	
  “Lease
  Year”

  	
  13

  
	
  1.59

  	
  “Leased
  Improvements”

  	
  13

  
	
  1.60

  	
  “Leased
  Intangible Property”

  	
  13

  
	
  1.61

  	
  “Leased
  Personal Property”

  	
  13

  
	
  1.62

  	
  “Leased
  Property”

  	
  13

  
	
  1.63

  	
  “Legal
  Requirements”

  	
  13

  
	
  1.64

  	
  “Lien”

  	
  14

  
	
  1.65

  	
  “Manager”

  	
  14

  
	
  1.66

  	
  “Management
  Agreement”

  	
  14

  
	
  1.67

  	
  “Minimum
  Rent”

  	
  14

  
	
  1.68

  	
  “Notice”

  	
  14

  
	
  1.69

  	
  “Officer’s
  Certificate”

  	
  14

  
	
  1.70

  	
  “Original
  Leases”

  	
  14

  
	
  1.71

  	
  “Other
  Leases”

  	
  14

  
	
  1.72

  	
  “Overdue
  Rate”

  	
  15

  
	
  1.73

  	
  “Parent”

  	
  15

  
	
  1.74

  	
  “Permitted
  Encumbrances”

  	
  15

  
	
  1.75

  	
  “Permitted
  Use”

  	
  15

  
	
  1.76

  	
  “Person”

  	
  15

  
	
  1.77

  	
  “Pledge
  Agreement”

  	
  15

  
	
  1.78

  	
  “Property”

  	
  15

  
	
  1.79

  	
  “Provider
  Agreements”

  	
  15

  
	
  1.80

  	
  “Regulated
  Medical Wastes”

  	
  16

  
	
  1.81

  	
  “Rehabilitation
  Hospital Properties”

  	
  16

  
	
  1.82

  	
  “Rent”

  	
  16

  
	
  1.83

  	
  “Rules”

  	
  16

  
	
  1.84

  	
  “SEC”

  	
  16

  
	
  1.85

  	
  “Security
  Agreement”

  	
  16

  
	
  1.86

  	
  “Senior
  Housing Properties”

  	
  16

  
	
  1.87

  	
  “State”

  	
  16

  
	
  1.88

  	
  “Subordinated
  Creditor”

  	
  16

  
	
  1.89

  	
  “Subordination
  Agreement”

  	
  16

  
	
  1.90

  	
  “Subsidiary”

  	
  17

  
	
  1.91

  	
  “Successor
  Landlord”

  	
  17

  
	
  1.92

  	
  “Tenant”

  	
  17

  
	
  1.93

  	
  “Tenant’s
  Personal Property”

  	
  17

  
	
  1.94

  	
  “Term”

  	
  17

  
	
  1.95

  	
  “Third
  Party Payor Programs”

  	
  17

  
	
  1.96

  	
  “Third
  Party Payors”

  	
  17

  
	
  1.97

  	
  “Unsuitable
  for Its Permitted Use”

  	
  17

  
	
  1.98

  	
  “Work”

  	
  18

  
	
  ARTICLE 2

  	
  LEASED
  PROPERTY AND TERM

  	
  18

  
	
  2.1

  	
  Leased
  Property

  	
  18

  
	
  2.2

  	
  Condition
  of Leased Property

  	
  19

  
	
  2.3

  	
  Fixed
  Term

  	
  20

  
	
  2.4

  	
  Extended
  Terms

  	
  20

  



 


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  Page

  
	
   

  	
   

  	
   

  
	
  2.5

  	
  Limitations
  on Term

  	
  21

  
	
  ARTICLE 3

  	
  RENT

  	
  21

  
	
  3.1

  	
  Rent

  	
  21

  
	
  3.2

  	
  Late
  Payment of Rent, Etc.

  	
  28

  
	
  3.3

  	
  Net
  Lease

  	
  28

  
	
  3.4

  	
  No
  Termination, Abatement, Etc.

  	
  28

  
	
  ARTICLE 4

  	
  USE OF THE
  LEASED PROPERTY

  	
  29

  
	
  4.1

  	
  Permitted
  Use

  	
  29

  
	
  4.2

  	
  Compliance
  with Legal/Insurance Requirements, Etc.

  	
  31

  
	
  4.3

  	
  Compliance
  with Medicaid and Medicare Requirements

  	
  32

  
	
  4.4

  	
  Environmental
  Matters

  	
  32

  
	
  ARTICLE 5

  	
  MAINTENANCE
  AND REPAIRS

  	
  34

  
	
  5.1

  	
  Maintenance
  and Repair

  	
  34

  
	
  5.2

  	
  Tenant’s
  Personal Property

  	
  36

  
	
  5.3

  	
  Yield
  Up

  	
  37

  
	
  5.4

  	
  Management
  Agreement

  	
  39

  
	
  ARTICLE 6

  	
  IMPROVEMENTS,
  ETC.

  	
  39

  
	
  6.1

  	
  Improvements
  to the Leased Property

  	
  39

  
	
  6.2

  	
  Salvage

  	
  40

  
	
  ARTICLE 7

  	
  LIENS

  	
  40

  
	
  ARTICLE 8

  	
  PERMITTED
  CONTESTS

  	
  40

  
	
  ARTICLE 9

  	
  INSURANCE AND
  INDEMNIFICATION

  	
  41

  
	
  9.1

  	
  General
  Insurance Requirements

  	
  41

  
	
  9.2

  	
  Waiver
  of Subrogation

  	
  42

  
	
  9.3

  	
  Form Satisfactory,
  Etc.

  	
  42

  
	
  9.4

  	
  No
  Separate Insurance; Self-Insurance

  	
  43

  
	
  9.5

  	
  Indemnification
  of Landlord

  	
  43

  
	
  ARTICLE 10

  	
  CASUALTY

  	
  44

  
	
  10.1

  	
  Insurance
  Proceeds

  	
  44

  
	
  10.2

  	
  Damage
  or Destruction

  	
  45

  
	
  10.3

  	
  Damage
  Near End of Term

  	
  47

  
	
  10.4

  	
  Tenant’s
  Property

  	
  47

  
	
  10.5

  	
  Restoration
  of Tenant’s Property

  	
  47

  
	
  10.6

  	
  No
  Abatement of Rent

  	
  48

  
	
  10.7

  	
  Waiver

  	
  48

  
	
  ARTICLE 11

  	
  CONDEMNATION

  	
  48

  
	
  11.1

  	
  Total
  Condemnation, Etc.

  	
  48

  
	
  11.2

  	
  Partial
  Condemnation

  	
  48

  
	
  11.3

  	
  Abatement
  of Rent

  	
  50

  
	
  11.4

  	
  Temporary
  Condemnation

  	
  50

  
	
  11.5

  	
  Allocation
  of Award

  	
  50

  
	
  ARTICLE 12

  	
  DEFAULTS AND
  REMEDIES

  	
  51

  
	
  12.1

  	
  Events
  of Default

  	
  51

  
	
  12.2

  	
  Remedies

  	
  53

  
	
  12.3

  	
  Tenant’s
  Waiver

  	
  55

  
	
  12.4

  	
  Application
  of Funds

  	
  55

  
	
  12.5

  	
  Landlord’s
  Right to Cure Tenant’s Default

  	
  55

  
	
  12.6

  	
  Trade
  Names

  	
  56

  



 


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  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE 13

  	
  HOLDING OVER

  	
  56

  
	
  ARTICLE 14

  	
  LANDLORD
  DEFAULT

  	
  57

  
	
  ARTICLE 15

  	
  PURCHASE
  RIGHTS

  	
  57

  
	
  ARTICLE 16

  	
  SUBLETTING AND
  ASSIGNMENT

  	
  58

  
	
  16.1

  	
  Subletting
  and Assignment

  	
  58

  
	
  16.2

  	
  Required
  Sublease Provisions

  	
  60

  
	
  16.3

  	
  Permitted
  Sublease

  	
  61

  
	
  16.4

  	
  Sublease
  Limitation

  	
  62

  
	
  ARTICLE 17

  	
  ESTOPPEL
  CERTIFICATES AND FINANCIAL STATEMENTS

  	
  62

  
	
  17.1

  	
  Estoppel
  Certificates

  	
  62

  
	
  17.2

  	
  Financial
  Statements

  	
  62

  
	
  17.3

  	
  General
  Operations

  	
  64

  
	
  ARTICLE 18

  	
  LANDLORD’S
  RIGHT TO INSPECT

  	
  65

  
	
  ARTICLE 19

  	
  EASEMENTS

  	
  65

  
	
  19.1

  	
  Grant
  of Easements

  	
  65

  
	
  19.2

  	
  Exercise
  of Rights by Tenant

  	
  66

  
	
  19.3

  	
  Permitted
  Encumbrances

  	
  66

  
	
  ARTICLE 20

  	
  FACILITY
  MORTGAGES

  	
  66

  
	
  20.1

  	
  Landlord
  May Grant Liens

  	
  66

  
	
  20.2

  	
  Subordination
  of Lease

  	
  66

  
	
  20.3

  	
  Notice
  to Mortgagee and Superior Landlord

  	
  68

  
	
  ARTICLE 21

  	
  ADDITIONAL
  COVENANTS OF TENANT

  	
  69

  
	
  21.1

  	
  Prompt
  Payment of Indebtedness

  	
  69

  
	
  21.2

  	
  Conduct
  of Business

  	
  69

  
	
  21.3

  	
  Maintenance
  of Accounts and Records

  	
  69

  
	
  21.4

  	
  Notice
  of Litigation, Etc.

  	
  70

  
	
  21.5

  	
  Prohibited
  Transactions

  	
  70

  
	
  21.6

  	
  Notice
  of Change of Name, Etc.

  	
  70

  
	
  ARTICLE 22

  	
  ARBITRATION

  	
  70

  
	
  22.1

  	
  Disputes

  	
  70

  
	
  22.2

  	
  Selection
  of Arbitrators

  	
  71

  
	
  22.3

  	
  Location
  of Arbitration

  	
  71

  
	
  22.4

  	
  Scope
  of Discovery

  	
  71

  
	
  22.5

  	
  Arbitration
  Award

  	
  71

  
	
  22.6

  	
  Costs

  	
  72

  
	
  22.7

  	
  Final
  Judgment

  	
  72

  
	
  22.8

  	
  Payment

  	
  72

  
	
  ARTICLE 23

  	
  MISCELLANEOUS

  	
  73

  
	
  23.1

  	
  Limitation
  on Payment of Rent

  	
  73

  
	
  23.2

  	
  No
  Waiver

  	
  73

  
	
  23.3

  	
  Remedies
  Cumulative

  	
  73

  
	
  23.4

  	
  Severability

  	
  73

  
	
  23.5

  	
  Acceptance
  of Surrender

  	
  74

  
	
  23.6

  	
  No
  Merger of Title

  	
  74

  
	
  23.7

  	
  Conveyance
  by Landlord

  	
  74

  
	
  23.8

  	
  Quiet
  Enjoyment

  	
  74

  
	
  23.9

  	
  No
  Recordation

  	
  75

  
	
  23.10

  	
  Notices

  	
  75

  
	
  23.11

  	
  Construction

  	
  76

  



 


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  23.12

  	
  Counterparts;
  Headings

  	
  76

  
	
  23.13

  	
  Applicable
  Law, Etc.

  	
  77

  
	
  23.14

  	
  Right
  to Make Agreement

  	
  77

  
	
  23.15

  	
  Attorneys’
  Fees

  	
  77

  
	
  23.16

  	
  Nonliability
  of Trustees

  	
  78

  
	
  23.17

  	
  Original
  Leases

  	
  78

  



 


5
















 


AMENDED
AND RESTATED MASTER LEASE AGREEMENT

(LEASE NO. 2)


 


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


 


W I T N E S S E T H :


 


WHEREAS, Landlord and
Tenant are parties to certain
Amended and Restated Master Lease Agreements, dated as of June 30, 2008
(collectively, the “Original Leases”); and


 


WHEREAS, the landlords
and tenants under the Original Leases are conveying their interests in certain
of the properties demised thereunder and, in connection therewith, Landlord and
Tenant and the landlords and tenants under the Original Leases wish to amend
and restate the Original Leases into separate leases and to make certain other
modifications thereto as are set forth herein;


 


NOW,
THEREFORE, in
consideration of the mutual covenants herein contained and for other good and
valuable consideration, the mutual receipt and legal sufficiency of which are
hereby acknowledged, Landlord and Tenant hereby agree that, effective as of the
date hereof, the Original Leases are hereby amended and restated but only with
respect to the Leased Property (as hereinafter defined), as follows:


 


ARTICLE
1


 


DEFINITIONS


 


For
all purposes of this Agreement, except as otherwise expressly provided or
unless the context otherwise requires, (a) the terms defined in this Article shall
have the meanings assigned to them in this Article and include the plural
as well as the singular, (b) all accounting terms not otherwise defined
herein shall have the meanings assigned to them in accordance with GAAP, (c) all
references in this Agreement to designated “Articles”, “Sections” and other
subdivisions are to the designated Articles, Sections and other subdivisions of
this Agreement, and (d) the words “herein”, “hereof”, “hereunder” and
other words of similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision.


 

















 


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


 


1.2               “Additional
Charges”  shall
have the meaning given such term in Section 3.1.3.


 


1.3               “Additional
Rent”  shall
have the meaning given such term in Section 3.1.2(a).


 


1.4               “Affiliated
Person”  shall
mean, with respect to any Person, (a)  in the case of any such Person
which is a partnership, any partner in such partnership, (b) in the case
of any such Person which is a limited liability company, any member of such
company, (c) any other Person which is a Parent, a Subsidiary, or a
Subsidiary of a Parent with respect to such Person or to one or 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, or partner in
or member of, such Person or any Person referred to in the preceding clauses
(a), (b) and (c), and (e) any other Person who is a member of the
Immediate Family of such Person or of any Person referred to in the preceding
clauses (a) through (d).


 


1.5               “Agreement”  shall mean this
Amended and Restated Master Lease Agreement (Lease No. 2), including all
schedules and exhibits attached hereto, as it and they may be amended from time
to time as herein provided.


 


1.6               “Applicable
Laws”  shall
mean all applicable laws, statutes, regulations, rules, ordinances, codes,
licenses, permits and orders, from time to time in existence, of all courts of
competent jurisdiction and Government Agencies, and all applicable judicial and
administrative and regulatory decrees, judgments and orders, including common
law rulings and determinations, relating to injury to, or the protection of,
real or personal property or human health or the Environment, including,
without limitation, all valid and lawful requirements of courts and other
Government Agencies pertaining to reporting, licensing, permitting,
investigation, remediation and removal of underground improvements (including,
without limitation, treatment or storage tanks, or water, gas or oil wells), or
emissions, discharges, releases or threatened releases of Hazardous Substances,
chemical substances, pesticides, petroleum or petroleum products, pollutants,
contaminants or hazardous or toxic substances, materials or wastes whether
solid, liquid or gaseous in nature, into the Environment, or relating to the
manufacture, processing, distribution, use, treatment, storage, 


 


2

















 


disposal, transport or handling of Hazardous Substances or
Regulated Medical Wastes, underground improvements (including, without
limitation, treatment or storage tanks, or water, gas or oil wells), or
pollutants, contaminants or hazardous or toxic substances, materials or wastes,
whether solid, liquid or gaseous in nature.


 


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


 


1.8               “Award”  shall mean all
compensation, sums or other value awarded, paid or received by virtue of a
total or partial Condemnation of any Property (after deduction of all
reasonable legal fees and other reasonable costs and expenses, including,
without limitation, expert witness fees, incurred by Landlord, in connection
with obtaining any such award).


 


1.9               “Base
Gross Revenues”  shall
mean the Gross Revenues with respect to each Senior Housing Property, for the
respective calendar years or the respective dollar amount set forth on Schedule
1 attached hereto and made a part hereof, as applicable; provided, however,
that in the event that, with respect to any Lease Year, or portion thereof, for
any reason (including, without limitation, a casualty or Condemnation) there
shall be a reduction in the number of units available at any Facility located
at the applicable Property or in the services provided at such Facility from
the number of such units or the services on the applicable Commencement Date,
in determining Additional Rent payable with respect to such Property for such
Lease Year, Base Gross Revenues shall be reduced as follows:  (a) in the event of a partial closing of
any Facility affecting the number of units, or the services provided, at such
Facility, Gross Revenues attributable to units or services at such Facility
shall be ratably allocated among all units in service at such Facility on the
applicable Commencement Date and all such Gross Revenues attributable to units
no longer in service shall be subtracted from Base Gross Revenues throughout
the period of such closing; and (b) in the event of any other change in
circumstances affecting any Facility, Base Gross Revenues shall be equitably
adjusted in such manner as Landlord and Tenant shall reasonably agree.


 


1.10             “Business
Day”  shall mean any
day other than Saturday, Sunday, or any other day on which banking institutions
in The Commonwealth of Massachusetts are authorized by law or executive action
to close.


 


3

















 


1.11             “Capital
Addition”  shall
mean, with respect to any Property, any renovation, repair or improvement to such
Property, the cost of which constitutes a Capital Expenditure.


 


1.12             “Capital
Expenditure”  shall
mean any expenditure treated as capital in nature in accordance with GAAP.


 


1.13             “Change in Control”  shall mean (a) the
acquisition by any Person, or two or more Persons acting in concert, of
beneficial ownership (within the meaning of Rule 13d-3 of the SEC) of 9.8%
or more, or rights, options or warrants to acquire 9.8% or more, of the
outstanding shares of voting stock or other voting interests of Tenant or any
Guarantor, as the case may be, or the power to direct the management and
policies of Tenant or any Guarantor, directly or indirectly, (b) the
merger or consolidation of Tenant or any Guarantor with or into any Person or
the merger or consolidation of any Person into Tenant or any Guarantor (other
than the merger or consolidation of any Person into Tenant or any Guarantor
that does not result in a Change in Control of Tenant or such Guarantor under
clauses (a), (c), (d), (e) or (f) of this definition), (c) any
one or more sales, conveyances, dividends or distributions to any Person of all
or any material portion of the assets (including capital stock or other equity
interests) or business of Tenant or any Guarantor, whether or not otherwise a
Change in Control, (d) the cessation, for any reason, of the individuals
who at the beginning of any twenty-four (24) consecutive month period
(commencing on the date hereof) constituted the board of directors of Tenant or
any Guarantor (together with any new directors whose election by such board or
whose nomination for election by the shareholders of Tenant or such Guarantor
was approved by a vote of a majority of the directors then still in office who
were either directors at the beginning of any such period or whose election or
nomination for election was previously so approved, but excluding any
individual whose initial nomination for, or assumption of, office as a member
of such board of directors occurs as a result of an actual or threatened
solicitation of proxies or consents for the election or removal of one or more
directors by any Person other than a solicitation for the election of one or
more directors by or on behalf of the board of directors) to constitute a
majority of the board of directors of Tenant or such Guarantor then in office,
or (e) the adoption of any proposal (other than a precatory proposal) by
Tenant or any Guarantor not approved by vote of a majority of the directors of
Tenant or any Guarantor, as the case may be, in office immediately prior to the
making of such proposal, or (f) the election to the board of directors of
Tenant or any 


 


4

















 


Guarantor of any individual not
nominated or appointed by vote of a majority of the directors of Tenant or such
Guarantor in office immediately prior to the nomination or appointment of such
individual.


 


1.14             “Claim”  shall have the
meaning given such term in Article 8.


 


1.15             “Code”  shall mean the
Internal Revenue Code of 1986 and, to the extent applicable, the Treasury
Regulations promulgated thereunder, each as from time to time amended.


 


1.16             “Commencement
Date”  shall
mean, with respect to each Property, the calendar date specified as the
Commencement Date with respect to such Property on Schedule 1 attached
hereto and made a part hereof.


 


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


 


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


 


1.19             “Consolidated
Financials” 
shall mean, for any Fiscal Year or other accounting period of Five Star,
annual audited and quarterly unaudited financial statements of Five Star
prepared on a consolidated basis, including Five Star’s consolidated balance
sheet and the related statements of income and cash flows, all in reasonable
detail, and setting forth in comparative form the corresponding figures for the
corresponding period in the preceding Fiscal Year, and prepared in accordance
with GAAP throughout the periods reflected.


 


1.20             “Date
of Taking”  shall
mean, with respect to any Property, the date the Condemnor has the right to
possession of such Property, or any portion thereof, in connection with a
Condemnation.


 


5

















 


1.21             “Default”  shall mean any
event or condition which with the giving of notice and/or lapse of time would
ripen into an Event of Default.


 


1.22             “Disbursement
Rate”  shall
mean an annual rate of interest, as of the date of determination, equal to the
greater of (a) eight percent (8%) and (b) the per annum rate for ten (10) year
U.S. Treasury Obligations as published in The Wall Street Journal plus
three hundred (300) basis points; provided, however, that in no
event shall the Disbursement Rate exceed eleven and one-half percent (11.5%).


 


1.23             “Disputes”  shall
have the meaning given such term in Section 22.1.


 


1.24             “Easement
Agreement”  shall
mean any conditions, covenants and restrictions, easements, declarations,
licenses and other agreements which are Permitted Encumbrances and such other
agreements as may be granted in accordance with Section 19.1.


 


1.25             “Encumbrance”  shall have the
meaning given such term in Section 20.1.


 


1.26             “Entity”  shall mean any
corporation, general or limited partnership, limited liability company or
partnership, stock company or association, joint venture, association, company,
trust, bank, trust company, land trust, business trust, cooperative, any
government or agency, authority or political subdivision thereof or any other
entity.


 


1.27             “Environment”  shall mean
soil, surface waters, ground waters, land, stream, sediments, surface or
subsurface strata and ambient air.


 


1.28             “Environmental
Obligation”  shall
have the meaning given such term in Section 4.4.1.


 


1.29             “Environmental
Notice”  shall
have the meaning given such term in Section 4.4.1.


 


1.30             “Event
of Default”  shall
have the meaning given such term in Section 12.1.


 


1.31             “Excess
Gross Revenues”  shall
mean, with respect to each Senior Housing Property, the amount of Gross
Revenues for any Lease Year, or portion thereof, in excess of Base Gross 


 


6

















 


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


 


1.32             “Extended
Term”  shall
have the meaning given such term in Section 2.4.


 


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


 


1.34             “Facility
Mortgage”  shall
mean any Encumbrance placed upon the Leased Property, or any portion thereof,
in accordance with Article 20.


 


1.35             “Facility
Mortgagee”  shall
mean the holder of any Facility Mortgage.


 


1.36             “Facility Trade Names”  shall
mean, with respect to the Rehabilitation Hospital Properties, any of the names
under which Tenant operates, or has operated, the Facility at such Property at
any time during the Term.


 


1.37             “Financial
Officer’s Certificate”  shall
mean, as to any Person, a certificate of the chief executive officer, chief
financial officer or chief accounting officer (or such officers’ authorized
designee) of such Person, duly authorized, accompanying the financial
statements required to be delivered by such Person pursuant to Section 17.2,
in which such officer shall certify (a) that such statements have been
properly prepared in accordance with GAAP and are true, correct and complete in
all material respects and fairly present the consolidated financial condition
of such Person at and as of the dates thereof and the results of its and their
operations for the periods covered thereby, and (b) in the event that the
certifying party is an officer of Tenant and the certificate is 


 


7

















 


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


 


1.38             “Fiscal
Year”  shall
mean the calendar year or such other annual period designated by Tenant and
approved by Landlord.


 


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


 


1.40             “Fixed
Term”  shall
have the meaning given such term in Section 2.3.


 


1.41             “Fixtures”  shall have the
meaning given such term in Section 2.1(d).


 


1.42             “GAAP”  shall mean
generally accepted accounting principles consistently applied.


 


1.43             “Government
Agencies”  shall
mean any court, agency, authority, board (including, without limitation,
environmental protection, planning and zoning), bureau, commission, department,
office or instrumentality of any nature whatsoever of any governmental or
quasi-governmental unit of the United States or any State or any county or any
political subdivision of any of the foregoing, whether now or hereafter in
existence, having jurisdiction over Tenant or any Property, or any portion
thereof, or any Facility operated thereon.


 


1.44             “Gross
Revenues”  shall mean,
with respect to each Senior Housing Property, for each Fiscal Year during the
Term, in the aggregate, all revenues and receipts (determined on an accrual
basis and in all material respects in accordance with GAAP) of every kind
derived from renting, using and/or operating such Property and parts thereof,
including, but not limited to:  all rents
and revenues received or receivable for the use of or otherwise by reason of
all units, beds and other facilities provided, meals served, services
performed, space or facilities subleased or goods sold on such Property, or any
portion thereof, including, without limitation, any other arrangements with
third parties relating to the possession or use of any portion of such
Property; and proceeds, if any, from business interruption or other loss of
income insurance; provided, however, that Gross Revenues shall
not include the following:  revenue from
professional fees or charges by physicians and unaffiliated providers of
services, when and to the extent such charges are paid over to such physicians
and unaffiliated 


 


8

















 


providers of services, or are separately billed and not
included in comprehensive fees; contractual allowances (relating to any period
during the Term) for billings not paid by or received from the appropriate
governmental agencies or third party providers; allowances according to GAAP for
uncollectible accounts, including credit card accounts and charity care or
other administrative discounts; all proper patient billing credits and
adjustments according to GAAP relating to health care accounting; provider
discounts for hospital or other medical facility utilization contracts and
credit card discounts; any amounts actually paid by Tenant for the cost of any
federal, state or local governmental programs imposed specially to provide or
finance indigent patient care; federal, state or municipal excise, sales, use,
occupancy or similar taxes collected directly from patients, clients or
residents or included as part of the sales price of any goods or services;
insurance proceeds (other than proceeds from business interruption or other
loss of income insurance); Award proceeds (other than for a temporary
Condemnation); revenues attributable to services actually provided off-site or
otherwise away from such Property, such as home health care, to persons that
are not patients, clients or residents at such Property; revenues attributable
to child care services provided primarily to employees of such Property; any
proceeds from any sale of such Property or from the refinancing of any debt
encumbering such Property; proceeds from the disposition of furnishings,
fixture and equipment no longer necessary for the operation of the Facility
located thereon; any security deposits and other advance deposits, until and
unless the same are forfeited to Tenant or applied for the purpose for which
they were collected; reimbursements for provider, bed or occupancy taxes
charged by any Governmental Agency to the extent previously included in Gross
Revenues; and interest income from any bank account or investment of Tenant.


 


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


 


1.46             “Guaranty”  shall mean any guaranty agreement executed by
a Guarantor in favor of Landlord pursuant to which the payment or performance
of Tenant’s obligations under this Agreement are guaranteed, together with all
modifications, amendments and supplements thereto.


 


9

















 


1.47             “Hazardous
Substances”  shall mean
any substance:


 


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


 


(b)           which
is or becomes defined as a “hazardous waste”, “hazardous material” or “hazardous
substance” or “pollutant” or “contaminant” under any present or future federal,
state or local statute, regulation, rule or ordinance or amendments
thereto including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act (42 U.S.C. Section 9601 et  seq.)
and the Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et
seq.) 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 governmental authority, agency, department, commission, board, agency or
instrumentality of the United States, any state of the United States, or any political
subdivision thereof; or


 


(d)           the
presence of which on any Property, or any portion thereof, causes or materially
threatens to cause an unlawful nuisance upon such Property, or any portion
thereof, or to adjacent properties or poses or materially threatens to pose a
hazard to such Property, or any portion thereof, or to the health or safety of
persons on or about such Property, or any portion thereof; or


 


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


 


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


 


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


 


(h)           without
limitation, constitutes Regulated Medical Wastes.


 


10
















 


1.48             “Immediate
Family”  shall
mean, with respect to any individual, such individual’s spouse, parents,
brothers, sisters, children (natural or adopted), stepchildren, grandchildren,
grandparents, parents-in-law, brothers-in-law, sisters-in-law, nephews and
nieces.


 


1.49             “Impositions”  shall mean,
collectively, all taxes (including, without limitation, all taxes imposed under
the laws of any 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 upon Landlord, Tenant or the business conducted upon the Leased
Property), assessments (including, without limitation, all assessments for
public improvements or benefit, whether or not commenced or completed prior to
the date hereof), ground rents (including any minimum rent under any ground
lease, and any additional rent or charges thereunder), water, sewer or other
rents and charges, excises, tax levies, fees (including, without limitation,
license, permit, inspection, authorization and similar fees), and all other
governmental charges, in each case whether general or special, ordinary or
extraordinary, foreseen or unforeseen, of every character in respect of the
Leased Property or the business conducted thereon by Tenant (including all
interest and penalties thereon 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 in respect of or be a lien upon (a) Landlord’s interest
in the Leased Property, (b) the Leased Property or any part thereof or any
rent therefrom or any estate, right, title or interest therein, or (c) any
occupancy, operation, use or possession of, or sales from, or activity
conducted on, or in connection with the Leased Property or the leasing or use
of the Leased Property or any part thereof by Tenant; provided, however,
that nothing contained herein shall be construed to require Tenant to pay and
the term “Impositions” shall not include (i) any tax based on net income
imposed on Landlord, (ii) any net revenue tax of Landlord, (iii) any
transfer fee (but excluding any mortgage or similar tax payable in connection
with a Facility Mortgage) or other tax imposed with respect to the sale,
exchange or other disposition by Landlord of the Leased Property or the
proceeds thereof, (iv) any single business, gross receipts tax,
transaction privilege, rent or similar taxes as the same relate to or are
imposed upon Landlord, (v) any interest or penalties imposed on Landlord
as a result of the failure of Landlord to file any return or report timely and
in the form prescribed by law or to pay any tax or imposition, except to the
extent such failure is a result of a breach by Tenant of its obligations
pursuant to Section 3.1.3, 


 


11

















 


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


 


1.50             “Incidental Documents”  shall
mean, collectively, any Guaranty, any Security Agreement and any Pledge
Agreement.


 


1.51             “Indebtedness”  shall mean all
obligations, contingent or otherwise, which in accordance with GAAP should be
reflected on the obligor’s balance sheet as liabilities.


 


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


 


1.53             “Interest Rate” 
shall mean, with respect to each
Property, the per annum interest rate specified as the Interest Rate with
respect to such Property on Schedule 1 attached hereto and made a part
hereof.


 


1.54             “Land”  shall have the
meaning given such term in Section 2.1(a).


 


1.55             “Landlord”  shall have the
meaning given such term in the preambles to this Agreement and shall also
include their respective successors and assigns.


 


1.56             “Landlord
Default”  shall
have the meaning given such term in Article 14.


 


1.57             “Landlord
Liens”  shall
mean liens on or against the Leased Property or any payment of Rent (a) which
result from any act of, or any claim against, Landlord or any owner of a direct
or indirect interest in the Leased Property (other than the lessor under any
ground lease affecting any portion of the Leased Property), or which result
from any violation by Landlord of any terms of this Agreement, or (b) which
result from liens 


 


12

















 


in favor of any taxing authority by reason of any tax owed
by Landlord or any fee owner of a direct or indirect interest in the Leased
Property (other than the lessor under any ground lease affecting any portion of
the Leased Property); provided, however, that “Landlord Lien”
shall not include any lien resulting from any tax for which Tenant is obligated
to pay or indemnify Landlord against until such time as Tenant shall have
already paid to or on behalf of Landlord the tax or the required indemnity with
respect to the same.


 


1.58             “Lease
Year”  shall
mean any Fiscal Year or portion thereof during the Term.


 


1.59             “Leased
Improvements”  shall
have the meaning given such term in Section 2.1(b).


 


1.60             “Leased
Intangible Property”  shall
mean all agreements, service contracts, equipment leases, booking agreements
and other arrangements or agreements affecting the ownership, repair,
maintenance, management, leasing or operation of the Leased Property, or any
portion thereof, to which Landlord is a party; all books, records and files
relating to the leasing, maintenance, management or operation of the Leased
Property, or any portion thereof, belonging to Landlord; all transferable or
assignable permits, certificates of occupancy, operating permits, sign permits,
development rights and approvals, certificates, licenses, warranties and
guarantees, rights to deposits, trade names, service marks, telephone exchange
numbers identified with the Leased Property, and all other transferable
intangible property, miscellaneous rights, benefits and privileges of any kind
or character belonging to Landlord with respect to the Leased Property.


 


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


 


1.62             “Leased Property”  shall have
the meaning given such term in Section 2.1.


 


1.63             “Legal
Requirements”  shall
mean all federal, state, county, municipal and other governmental statutes,
laws, rules, orders, regulations, ordinances, judgments, decrees and
injunctions affecting the Leased Property or the maintenance, construction,
alteration or operation thereof, whether now or hereafter enacted or in
existence, including, without limitation, (a) all permits, licenses,
authorizations, certificates of need, authorizations and regulations necessary 


 


13

















 


to operate any Property for its Permitted Use, and (b) all
covenants, agreements, restrictions and encumbrances contained in any
instruments at any time in force affecting any Property, including those which
may (i) require material repairs, modifications or alterations in or to
any Property or (ii) in any way materially and adversely affect the use
and enjoyment thereof, but excluding any requirements arising as a result of
Landlord’s status as a real estate investment trust.


 


1.64             “Lien”  shall mean any
mortgage, security interest, pledge, collateral assignment, or other
encumbrance, lien or charge of any kind, or any transfer of property or assets
for the purpose of subjecting the same to the payment of Indebtedness or
performance of any other obligation in priority to payment of general
creditors.


 


1.65             “Manager”  shall mean, with respect to any Property, the
operator or manager under any Management Agreement from time to time in effect
with respect to such Property, and its permitted successors and assigns.


 


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


 


1.67             “Minimum
Rent”  shall
mean the sum of Forty Nine Million Nine Hundred Sixty Four Thousand and Two and
00/100s Dollars ($49,964,002.00) per annum.


 


1.68             “Notice”  shall mean a
notice given in accordance with Section 23.10.


 


1.69             “Officer’s
Certificate”  shall
mean a certificate signed by an officer or other duly authorized individual of
the certifying Entity duly authorized by the board of directors or other
governing body of the certifying Entity.


 


1.70             “Original
Leases”  shall have the meaning given such term in the
recitals to this Agreement.


 


1.71             “Other
Leases”  shall
mean (i) that certain Amended and Restated Master Lease Agreement (Lease No. 1),
dated as of the date hereof, by and among certain Affiliated Persons of Senior
Housing Properties Trust, as landlord, and Five Star Quality Care Trust, as
tenant, and (ii) that certain Amended and 


 


14

















 


Restated Master Lease Agreement (Lease No. 4), dated as
of the date hereof, by and among certain Affiliated Persons of Senior Housing
Properties Trust, as landlord, and certain Affiliated Persons of Five Star, as
tenant.


 


1.72             “Overdue
Rate”  shall
mean, on any date, a per  annum rate of interest equal to the
lesser of fifteen percent (15%) and the maximum rate then permitted under
Applicable Laws.


 


1.73             “Parent”  shall mean,
with respect to any Person, any Person which owns directly, or indirectly
through one or more Subsidiaries or Affiliated Persons, twenty percent (20%) or
more of the 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.


 


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


 


1.75             “Permitted
Use”  shall mean,
with respect to any Property, any use of such Property permitted pursuant to Section 4.1.1.


 


1.76             “Person”  shall mean any
individual or Entity, and the heirs, executors, administrators, legal
representatives, successors and assigns of such Person where the context so
admits.


 


1.77             “Pledge Agreement”  shall mean, collectively, any pledge agreement
made in favor of Landlord with respect to the stock or other equity interests
of Tenant or any assignee, subtenant or other transferee, as it or they may be
amended, restated, supplemented or otherwise modified from time to time.


 


1.78             “Property”  shall have the
meaning given such term in Section 2.1.


 


1.79             “Provider
Agreements”  shall mean all participation, provider and
reimbursement agreements or arrangements now or hereafter in effect for the
benefit of Tenant or any Manager in connection with the operation of any
Facility relating to any right of payment or other claim arising out of or in
connection with Tenant’s participation in any Third Party Payor Program.


 


15

















 


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


 


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


 


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


 


1.83             “Rules”  shall
have the meaning given such term in Section 22.1.


 


1.84             “SEC”  shall mean the
Securities and Exchange Commission.


 


1.85             “Security
Agreement”  shall
mean, collectively, any security agreement made by Tenant or any assignee,
subtenant or other transferee for the benefit of Landlord, as it or they may be
amended, restated, supplemented or otherwise modified from time to time.


 


1.86             “Senior Housing Properties”  shall
mean, collectively, all of the Properties other than the Rehabilitation
Hospital Properties and each such Property shall be a Senior Housing Property.


 


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


 


1.88             “Subordinated
Creditor”  shall
mean any creditor of Tenant which is a party to a Subordination Agreement in
favor of Landlord.


 


1.89             “Subordination
Agreement”  shall
mean any agreement (and any amendments thereto) executed by a Subordinated
Creditor pursuant to which the payment and performance of Tenant’s obligations
to such Subordinated Creditor are subordinated to the payment and performance
of Tenant’s obligations to Landlord under this Agreement.


 


16

















 


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


 


1.91             “Successor
Landlord”  shall
have the meaning given such term in Section 20.2.


 


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


 


1.93             “Tenant’s
Personal Property”  shall
mean all motor vehicles and consumable inventory and supplies, furniture,
furnishings, equipment, movable walls and partitions, equipment and machinery
and all other tangible personal property of Tenant, if any, acquired by Tenant
on and after the applicable Commencement Date for any Property and located at
such Property or used in Tenant’s business at the Leased Property and all
modifications, replacements, alterations and additions to such personal
property installed at the expense of Tenant, other than any items included
within the definitions of Fixtures and Leased Personal Property.


 


1.94             “Term”  shall mean,
collectively, the Fixed Term and the Extended Term, to the extent properly
exercised pursuant to the provisions of Section 2.4, unless sooner
terminated pursuant to the provisions of this Agreement.


 


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


 


1.96             “Third
Party Payors”  shall
mean Medicare, Medicaid, CHAMPUS, Blue Cross and/or Blue Shield, private
insurers and any other Person which presently or in the future maintains Third
Party Payor Programs.


 


1.97             “Unsuitable
for Its Permitted Use”  shall
mean, with respect to any Facility, a state or condition of such Facility 


 


17

















 


such that (a) following any damage or destruction
involving a Facility, (i) such Facility cannot be operated on a
commercially practicable basis for its Permitted Use and it cannot reasonably
be expected to be restored to substantially the same condition as existed
immediately before such damage or destruction, and as otherwise required by Section 10.2.4,
within twelve (12) months following such damage or destruction or such longer
period of time as to which business interruption insurance is available to
cover Rent and other costs related to the applicable Property following such
damage or destruction, (ii) the damage or destruction, if uninsured,
exceeds $1,000,000 or (iii) the cost of such restoration exceeds ten
percent (10%) of the fair market value of such Property immediately prior to
such damage or destruction, or (b) as the result of a partial taking by
Condemnation, such Facility cannot be operated, in the good faith judgment of
Tenant, on a commercially practicable basis for its Permitted Use.


 


1.98             “Work”  shall have the
meaning given such term in Section 10.2.4.


 


ARTICLE
2


 


LEASED PROPERTY
AND TERM


 


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


 


(a)           those
certain tracts, pieces and parcels of land, as more particularly described in Exhibits
A-1 through A-50 attached hereto and made a part hereof (the “Land”);


 


(b)           all
buildings, structures and other improvements of every kind including, but not
limited to, alleyways and connecting tunnels, sidewalks, utility pipes,
conduits and lines (on-site and off-site), parking areas and roadways
appurtenant to such buildings and structures presently situated upon the Land
(collectively, the “Leased Improvements”);


 


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


 


18

















 


(d)           all
equipment, machinery, fixtures, and other items of property, now or hereafter
permanently affixed to or incorporated into the Leased Improvements, including,
without limitation, all furnaces, boilers, heaters, electrical equipment,
heating, plumbing, lighting, ventilating, refrigerating, incineration, air and
water pollution control, waste disposal, air-cooling and air-conditioning
systems and apparatus, sprinkler systems and fire and theft protection equipment,
all of which, to the maximum extent permitted by law, are hereby deemed by the
parties hereto to constitute real estate, together with all replacements,
modifications, alterations and additions thereto, but specifically excluding
all items included within the category of Tenant’s Personal Property
(collectively, the “Fixtures”);


 


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


 


(f)            all
of the Leased Intangible Property; and


 


(g)           any
and all leases of space in the Leased Improvements.


 


2.2               Condition
of Leased Property.  Tenant acknowledges receipt and delivery of
possession of the Leased Property and Tenant accepts the Leased Property in its
“as is” condition, subject to the rights of parties in possession, the existing
state of title, including all covenants, conditions, restrictions,
reservations, mineral leases, easements and other matters of record or that are
visible or apparent on the Leased Property, all applicable Legal Requirements,
the lien of any financing instruments, mortgages and deeds of trust existing
prior to the applicable Commencement Date for any Property or permitted by the
terms of this Agreement, and such other matters which would be disclosed by an
inspection of the Leased Property and the record title thereto or by an
accurate survey thereof.  TENANT
REPRESENTS THAT IT HAS INSPECTED THE LEASED PROPERTY AND 


 


19

















 


ALL OF THE FOREGOING AND HAS FOUND THE CONDITION THEREOF
SATISFACTORY AND IS NOT RELYING ON ANY REPRESENTATION OR WARRANTY OF LANDLORD
OR LANDLORD’S AGENTS OR EMPLOYEES WITH RESPECT THERETO AND TENANT WAIVES ANY
CLAIM OR ACTION AGAINST LANDLORD IN RESPECT OF THE CONDITION OF THE LEASED
PROPERTY.  LANDLORD MAKES NO WARRANTY OR
REPRESENTATION, EXPRESS OR IMPLIED, IN RESPECT OF THE LEASED PROPERTY OR ANY PART THEREOF,
EITHER AS TO ITS FITNESS FOR USE, DESIGN OR CONDITION FOR ANY PARTICULAR USE OR
PURPOSE OR OTHERWISE, AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN,
LATENT OR PATENT, IT BEING AGREED THAT ALL SUCH RISKS ARE TO BE BORNE BY
TENANT.  To the maximum extent permitted
by law, however, Landlord hereby assigns to Tenant all of Landlord’s rights to
proceed against any predecessor in interest or insurer for breaches of
warranties or representations or for latent defects in the Leased
Property.  Landlord shall fully cooperate
with Tenant in the prosecution of any such claims, in Landlord’s or Tenant’s
name, all at Tenant’s sole cost and expense. 
Tenant shall indemnify, defend, and hold harmless Landlord from and
against any loss, cost, damage or liability (including reasonable attorneys’
fees) incurred by Landlord in connection with such cooperation.


 


2.3               Fixed
Term.  The initial term of this Agreement (the “Fixed
Term”) with respect to each Property commenced on the Commencement Date
with respect to such Property and shall expire on June 30, 2026.


 


2.4               Extended
Terms.  Provided that no Event of Default shall have
occurred and be continuing, Tenant shall have the right to extend the Term for
two renewal terms of ten (10) years each (each an “Extended Term”).


 


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


 


20
















 


essence with respect to the giving of any such
Notice.  If Tenant shall fail to give any
such Notice, this Agreement shall automatically terminate at the end of the
Fixed Term or the first Extended Term as applicable and Tenant shall have no
further option to extend the Term of this Agreement.  If Tenant shall give such Notice, the
extension of this Agreement shall be automatically effected without the
execution of any additional documents; it being understood and agreed, however,
that Tenant and Landlord shall execute such documents and agreements as either
party shall reasonably require to evidence the same.  Notwithstanding the provisions of the
foregoing sentence, if, subsequent to the giving of such Notice, an Event of
Default shall occur, at Landlord’s option, the extension of this Agreement
shall cease to take effect and this Agreement shall automatically terminate at
the end of the Fixed Term or the Extended Term, as applicable, and Tenant shall
have no further option to extend the Term of this Agreement.


 


Notwithstanding
the foregoing, Tenant shall have no right to extend the Term for the second
Extended Term with respect to any Properties located in the State of
California.  If Tenant shall extend the
Term for the second Extended Term, the definition of Leased Property shall
exclude any Properties located in the State of California during the second
Extended Term, Minimum Rent shall be reduced by the Minimum Rent allocated
thereto by the parties, and Tenant shall surrender such Properties to Landlord
at the expiration of the first Extended Term in the condition required by Section 5.3
and shall comply with all of its other obligations relating to such Properties
as if the Term had expired at the end of the first Extended Term.


 


2.5          Limitations on
Term.  Notwithstanding anything contained in Section 2.3
or Section 2.4 to the contrary, the Term of this Agreement with
respect to any Property shall not extend beyond the term of any ground lease
(including renewals and extensions thereof) pursuant to which Landlord leases
such Property.


 


ARTICLE
3


 


RENT


 


3.1               Rent.
 Tenant shall pay, in
lawful money of the United States of America which shall be legal tender for
the payment of public and private debts, without offset, abatement, demand or
deduction (unless otherwise expressly provided in this 


 


21

















 


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


 


3.1.1           Minimum
Rent.


 


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


 


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


 


(c)           Adjustments of Minimum Rent Following Disbursements Under Sections
5.1.2(b), 10.2.3 and 11.2.  Effective on the date of each disbursement to
pay for the cost of any repairs, maintenance, renovations or replacements
pursuant to Sections 5.1.2(b), 10.2.3 or 11.2, the annual Minimum Rent
shall be increased by a per  annum amount equal to the
Disbursement Rate times the amount so disbursed.  If any such disbursement is made during any
calendar month on a day other than the first Business Day of such calendar
month, Tenant shall pay to Landlord on the first Business Day of the
immediately following calendar month (in addition to the amount of Minimum Rent
payable with respect to such calendar month, as adjusted pursuant to this
paragraph (c)) the amount by which Minimum Rent for the preceding calendar
month, as adjusted for such disbursement on a per diem basis, exceeded the
amount of Minimum Rent paid by Tenant for such preceding calendar month.


 


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


 


22

















 


less than all
of the Leased Property, Minimum Rent shall be reduced by the affected Property’s
allocable share of Minimum Rent determined in accordance with the applicable
provisions of this Agreement.


 


3.1.2           Additional
Rent.


 


(a)           Amount.  Tenant shall pay additional rent (“Additional
Rent”) with respect to each Lease Year during the Term in an amount, not
less than zero, equal to four percent (4%) of Excess Gross Revenues at each
Senior Housing Property.


 


(b)           Quarterly Installments.  Installments of Additional Rent for each Lease
Year during the Term, or portion thereof, shall be calculated and paid
quarterly in arrears.  Quarterly payments
of Additional Rent for each Senior Housing Property shall be calculated based
on Gross Revenues for such quarter during the preceding year and shall be due
and payable and delivered to Landlord on the first Business Day of each
calendar quarter, or portion thereof, thereafter occurring during the Term,
together with an Officer’s Certificate setting forth the calculation of
Additional Rent due and payable for such quarter.


 


(c)           Reconciliation of Additional Rent.  In addition, within seventy-five (75) days
after the end of each Lease Year (or any portion thereof occurring during the
Term), Tenant shall deliver, or cause to be delivered, to Landlord (i) a
financial report setting forth the Gross Revenues for each Senior Housing
Property for such preceding Lease Year, or portion thereof, together with an Officer’s
Certificate from Tenant’s chief financial or accounting officer certifying that
such report is true and correct, and (ii) a statement showing Tenant’s
calculation of Additional Rent due for such preceding Lease Year, or portion
thereof, based on the Gross Revenues set forth in such financial report,
together with an Officer’s Certificate from Tenant’s chief financial or
accounting officer certifying that such statement is true and correct.


 


If the annual Additional
Rent for such preceding Lease Year as set forth in Tenant’s statement thereof
exceeds the amount previously paid with respect thereto by Tenant, Tenant shall
pay such excess to Landlord at such time as the statement is delivered,
together with interest at the Interest Rate, which interest shall accrue from
the close 


 


23

















 


of such preceding
Lease Year until the date that such statement is required to be delivered and,
thereafter, such interest shall accrue at the Overdue Rate, until the amount of
such difference shall be paid or otherwise discharged.  If the annual Additional Rent for such
preceding Lease Year as shown in such statement is less than the amount
previously paid with respect thereto by Tenant, provided that no Event of
Default shall have occurred and be continuing, Landlord shall grant Tenant a
credit against the Additional Rent next coming due in the amount of such
difference, together with interest at the Interest Rate, which interest shall
accrue from the date of payment by Tenant until the date such credit is applied
or paid, as the case may be.  If such
credit cannot be made because the Term has expired prior to application in full
thereof, provided no Event of Default has occurred and is continuing, Landlord
shall pay the unapplied balance of such credit to Tenant, together with
interest at the Interest Rate, which interest shall accrue from the date of
payment by Tenant until the date of payment by Landlord.


 


(d)           Confirmation of Additional Rent.  Tenant shall utilize, or cause to be utilized,
an accounting system for the Senior Housing Properties in accordance with its
usual and customary practices and in all material respects in accordance with
GAAP, which will accurately record all Gross Revenues and Tenant shall retain,
for at least three (3) years after the expiration of each Lease Year,
reasonably adequate records conforming to such accounting system showing all
Gross Revenues for such Lease Year. 
Landlord, at its own expense, except as provided hereinbelow, shall have
the right, exercisable by Notice to Tenant, by its accountants or
representatives, to audit the information set forth in the Officer’s
Certificate referred to in subparagraph (c) above and, in connection with
such audits, to examine Tenant’s books and records with respect thereto
(including supporting data and sales and excise tax returns).  Landlord shall begin such audit as soon as
reasonably possible following its receipt of the applicable Officer’s
Certificate and shall complete such audit as soon as reasonably possible
thereafter.  All such audits shall be
performed at the location where such books and records are customarily kept and
in such a manner so as to minimize any interference with Tenant’s business
operations.  If any such audit discloses
a deficiency in the payment of Additional Rent and either Tenant agrees with
the result of such audit or the matter is otherwise determined, Tenant 


 


24

















 


shall forthwith
pay to Landlord the amount of the deficiency, as finally agreed or determined,
together with interest at the Interest Rate, from the date such payment should
have been made to the date of payment thereof, and if the amount of such
deficiency exceeds five percent (5%) of the Additional Rent that should have
been paid for any Lease Year, Tenant shall forthwith pay to Landlord the
aggregate amount of all costs and expenses incurred by Landlord in connection
with any such audit.  If any such audit
discloses that Tenant paid more Additional Rent for any Lease Year than was due
hereunder, and either Landlord agrees with the result of such audit or the
matter is otherwise determined, provided no Event of Default has occurred and
is continuing, Landlord shall, at Landlord’s option, either grant Tenant a
credit or pay to Tenant an amount equal to the amount of such overpayment
against Additional Rent next coming due in the amount of such difference, as
finally agreed or determined, together with interest at the Interest Rate,
which interest shall accrue from the time of payment by Tenant until the date
such credit is applied or paid, as the case may be; provided, however,
that, upon the expiration or sooner termination of the Term, provided no Event
of Default has occurred and is continuing, Landlord shall pay the unapplied
balance of such credit to Tenant, together with interest at the Interest Rate,
which interest shall accrue from the date of payment by Tenant until the date
of payment from Landlord.  Any dispute
concerning the correctness of an audit shall be settled by arbitration pursuant
to the provisions of Article 22.


 


Any proprietary
information obtained by Landlord with respect to Tenant pursuant to the
provisions of this Agreement shall be treated as confidential, except that such
information may be disclosed or used, subject to appropriate confidentiality
safeguards, pursuant to court order or in any litigation between the parties
and except further that Landlord may disclose such information to its
prospective lenders, provided that Landlord shall direct such lenders to
maintain such information as confidential. 
The obligations of Tenant and Landlord contained in this Section 3.1.2
shall survive the expiration or earlier termination of this Agreement.


 


3.1.3           Additional Charges.  In addition to the Minimum Rent and Additional
Rent payable hereunder, Tenant shall pay (or cause to be paid) to the
appropriate parties and discharge (or 


 


25

















 


cause to be discharged) as and
when due and payable the following (collectively, “Additional Charges”):


 


(a)           Impositions.  Subject to Article 8 relating to
permitted contests, Tenant shall pay, or cause to be paid, all Impositions
before any fine, penalty, interest or cost (other than any opportunity cost as
a result of a failure to take advantage of any discount for early payment) may
be added for non-payment, such payments to be made directly to the taxing
authorities where feasible, and shall promptly, upon request, furnish to
Landlord copies of official receipts or other reasonably satisfactory proof
evidencing such payments.  If any such
Imposition may, at the option of the taxpayer, lawfully be paid in installments
(whether or not interest shall accrue on the unpaid balance of such Imposition),
Tenant may exercise the option to pay the same (and any accrued interest on the
unpaid balance of such Imposition) in installments and, in such event, shall
pay, or cause to pay, such installments during the Term as the same become due
and before any fine, penalty, premium, further interest or cost may be added
thereto.  Landlord, at its expense,
shall, to the extent required or permitted by Applicable Laws, prepare and
file, or cause to be prepared and filed, all tax returns and pay all taxes due
in respect of Landlord’s net income, gross receipts, sales and use, single
business, transaction privilege, rent, ad valorem, franchise taxes and taxes on
its capital stock or other equity interests, and Tenant, at its expense, shall,
to the extent required or permitted by Applicable Laws and regulations, prepare
and file all other tax returns and reports in respect of any Imposition as may
be required by Government Agencies. 
Provided no Event of Default shall have occurred and be continuing, if
any refund shall be due from any taxing 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 of the other, provide such data as is maintained by the party to whom
the request is made with respect to the Leased Property as may be necessary to
prepare any required returns and reports. 
In the event Government Agencies classify any property covered by this
Agreement as personal property, Tenant shall file, or cause to be filed, all
personal property tax returns in such jurisdictions where it may legally so
file.  Each party shall, to the extent it
possesses the same, provide the other, upon request, with cost and depreciation
records necessary for filing returns for any property so classified as personal
property.  Where 


 


26

















 


Landlord is
legally required to file personal property tax returns for property covered by
this Agreement, Landlord shall provide Tenant with copies of assessment notices
in sufficient 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 made without interest or penalty, subject to the provisions of Article 8.


 


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


 


(b)           Utility Charges.  Tenant shall pay or cause to be paid all
charges for electricity, power, gas, oil, water and other utilities used in
connection with the Leased Property.


 


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


 


(d)           Other Charges.  Tenant shall pay or cause to be paid all other
amounts, liabilities and obligations, including, without limitation, ground
rents, if any, and all amounts payable under any equipment leases and all
agreements to indemnify Landlord under Sections 4.4.2 and 9.5.


 


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


 


27

















 


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


 


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


 


3.3               Net
Lease.  The Rent shall be absolutely net to Landlord
so that this Agreement shall yield to Landlord the full amount of the
installments or amounts of the Rent throughout the Term, subject to any other
provisions of this Agreement which expressly provide otherwise, including those
provisions for adjustment or abatement of such Rent.


 


3.4          No Termination, Abatement, Etc.    Except as otherwise specifically provided in
this Agreement, each of Landlord and Tenant, to the maximum extent permitted by
law, shall remain bound by this Agreement in accordance with its terms and
shall not take any action without the consent of the other to modify, surrender
or terminate this Agreement.  In
addition, except as otherwise expressly provided in this Agreement, Tenant
shall not seek, or be entitled to, any abatement, deduction, deferment or
reduction of the Rent, or set-off against the Rent, nor shall the respective
obligations of Landlord and Tenant be otherwise affected by reason of (a) any
damage to or destruction of the 


 


28

















 


Leased Property, or any portion thereof,
from whatever cause or any Condemnation, (b) the lawful or unlawful
prohibition of, or restriction upon, Tenant’s use of the Leased Property, or
any portion thereof, or the interference with such use by any Person or by
reason of eviction by paramount title; (c) any claim which Tenant may have
against Landlord by reason of any default (other than a monetary default) or
breach of any warranty by Landlord under this Agreement or any other agreement
between Landlord and Tenant, or to which Landlord and Tenant are parties; (d) any
bankruptcy, insolvency, reorganization, composition, readjustment, liquidation,
dissolution, winding up or other proceedings affecting Landlord or any assignee
or transferee of Landlord; or (e) for any other cause whether similar or
dissimilar to any of the foregoing (other than a monetary default by
Landlord).  Except as otherwise
specifically provided in this Agreement, Tenant hereby waives all rights
arising from any occurrence whatsoever, which may now or hereafter be conferred
upon it by law (a) to modify, surrender or terminate this Agreement or
quit or surrender the Leased Property, or any portion thereof, or (b) which
would entitle Tenant to any abatement, reduction, suspension or deferment of
the Rent or other sums payable or other obligations to be performed by Tenant
hereunder.  The obligations of Tenant
hereunder shall be separate and independent covenants and agreements, and the
Rent and all other sums payable by Tenant hereunder shall continue to be
payable in all events unless the obligations to pay the same shall be
terminated pursuant to the express provisions of this Agreement.


 


ARTICLE 4


 


USE
OF THE LEASED PROPERTY


 


4.1               Permitted Use.


 


4.1.1           Permitted
Use.


 


(a)           Tenant
shall, at all times during the Term, and at any other time that Tenant shall be
in possession of any Property, continuously use and operate, or cause to be
used and operated, (i) each Senior Housing Property as a skilled
nursing/intermediate care/independent living/assisted living/ special care/group
home facility as currently operated, and any uses incidental thereto, and (ii) each Rehabilitation Hospital Property as a
rehabilitation hospital, clinic or professional level health or medical
services facility, and any uses incidental thereto.  Tenant 


 


29

















 


shall
not use (and shall not permit any Person to use) any
Property, or any portion thereof, for any other use without the prior written
consent of Landlord, which approval shall not be unreasonably withheld, delayed
or conditioned.  No use shall be made or
permitted to be made of any Property and no acts shall be done thereon which
will cause the cancellation of any insurance policy covering such Property or
any part thereof (unless another adequate policy is available) or which would
constitute a default under any ground lease affecting such Property, nor shall
Tenant sell or otherwise provide to residents or patients therein, or permit to
be kept, used or sold in or about any Property any article which may be
prohibited by law or by the standard form of fire insurance policies, or any
other insurance policies required to be carried hereunder, or fire underwriter’s
regulations.  Tenant shall, at its sole
cost (except as expressly provided in Section 5.1.2(b)), comply or
cause to be complied with all Insurance Requirements.  Tenant shall 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 the usefulness 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 economically practical to operate any Property as currently operated,  Tenant shall give Landlord Notice thereof, which Notice
shall set forth in reasonable detail the reasons therefor.  Thereafter, Landlord and Tenant shall
negotiate in good faith to agree on an alternative use for such Property,
appropriate adjustments to the Additional Rent (if applicable) and other related
matters; provided, however, in no event shall the Minimum Rent be
reduced or abated as a result thereof. 
If Landlord and Tenant fail to agree on an alternative use for such
Property within sixty (60) days after commencing negotiations as aforesaid,
Tenant may market such Property for sale to a third party.  If Tenant receives a bona fide offer (an “Offer”)
to purchase such Property from a Person having the financial capacity to
implement the terms of such Offer, Tenant shall give Landlord Notice thereof,
which Notice shall include a copy of the Offer executed by such third
party.  In the event 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 be rejected by Landlord.  If Landlord shall sell the Property pursuant
to such Offer,


 


30
















 


then, effective
as of the date of such sale, this Agreement shall terminate with respect to
such Property, and the Minimum Rent shall be reduced by an amount equal to the
product of the net proceeds of sale received by Landlord multiplied by the
Interest Rate.  If Landlord shall reject
(or be deemed to have rejected) such Offer, then, effective as of the proposed
date of such sale, this Agreement shall terminate with respect to such
Property, and the Minimum Rent shall be reduced by an amount equal to the product
of the projected net proceeds determined by reference to such Offer multiplied
by the Interest Rate.


 


4.1.2           Necessary Approvals.  Tenant shall proceed with all due diligence
and exercise reasonable efforts to obtain and maintain, or cause to be obtained
and maintained, all approvals necessary to use and operate, for its Permitted
Use, each Property and the Facility located thereon under Applicable Laws and,
without limiting the foregoing, shall exercise reasonable efforts to maintain
(or cause to be maintained) appropriate certifications for reimbursement and
licensure.


 


4.1.3           Lawful Use, Etc.   Tenant shall not, and shall not permit any
Person to use or suffer or permit the use of any Property or Tenant’s Personal
Property, if any, for any unlawful purpose. 
Tenant shall not, and shall not permit any Person to, commit or suffer
to be committed any waste on any Property, or in any Facility, nor shall Tenant
cause or permit any unlawful nuisance thereon or therein.  Tenant shall not, and shall not permit any
Person to, suffer nor permit any Property, or any portion thereof, to be used
in such a manner as (a) may materially and adversely impair Landlord’s
title thereto or to any portion thereof, or (b) may reasonably allow a
claim or claims for adverse usage or adverse possession by the public, as such,
or of implied dedication of such Property, or any portion thereof.


 


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


 


31

















 


licenses, certificates of need, permits, provider agreements
and other authorizations and agreements required for any use of any Property
and Tenant’s Personal Property, if any, then being made, and for the proper
erection, installation, operation and maintenance of the Leased Property or any
part thereof.


 


4.3               Compliance
with Medicaid and Medicare Requirements.  Tenant, at its sole cost and expense, shall
make (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 to
time, be required by Federal Medicare (Title 18) or Medicaid (Title 19) for
skilled and/or intermediate care nursing programs, to the extent Tenant is a
participant in such programs with respect to such Property, or any other
applicable programs or legislation, or capital improvements required by any
other governmental agency having jurisdiction over any Property as a condition
of the continued operation of such Property for its Permitted Use.


 


4.4               Environmental Matters.


 


4.4.1           Restriction on Use, Etc.   During the Term and any other time that Tenant
shall be in possession of any Property, Tenant shall not, and shall not permit
any Person to, store, spill upon, dispose of or transfer to or from such
Property any Hazardous Substance, except in compliance with all Applicable
Laws.  During the Term and any other time
that Tenant shall be in possession of any Property, Tenant shall maintain (or
shall cause to be maintained) such Property at all times free of any Hazardous
Substance (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 of
Hazardous Substances at any Property, (b) transmit to Landlord a copy of
any report which is required to be filed by Tenant or any Manager with respect
to any Property pursuant to SARA Title III or any other Applicable Laws, (c) transmit
to Landlord copies of any citations, orders, notices or other governmental
communications received by Tenant or any Manager or their respective agents or
representatives with respect thereto (collectively, “Environmental Notice”),
which Environmental Notice requires a written response or any action to be
taken and/or if such Environmental Notice gives notice of and/or presents a
material risk of any material violation of any Applicable Laws and/or presents
a material risk of any material cost, expense, loss or damage (an “Environmental
Obligation”), (d) observe and comply with (or cause to be observed and
complied with) all Applicable Laws relating to the 


 


32

















 


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


 


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


 


4.4.2           Indemnification of Landlord.  Tenant shall protect, indemnify and hold
harmless Landlord and each Facility Mortgagee, their trustees, officers,
agents, employees and beneficiaries, and any of their respective successors or
assigns with respect to this Agreement (collectively, the “Indemnitees”
and, individually, an “Indemnitee”) for, from and against any and all
debts, liens, claims, causes of action, administrative orders or notices,
costs, fines, penalties or expenses (including, without limitation, reasonable
attorney’s fees and expenses) imposed upon, incurred by or asserted against any
Indemnitee resulting from, either directly or indirectly, the presence in, upon
or under the soil or ground water of any Property or any properties surrounding
such Property of any Hazardous Substances in violation of any Applicable Laws,
except to the extent the same arise from the acts or omissions of Landlord or
any other Indemnitee or during any period that Landlord or a Person designated
by Landlord (other than Tenant) is in possession of such Property from and
after the Commencement Date for such Property. 
Tenant’s duty herein includes, but is not limited to, costs associated
with personal injury or property damage claims as a result of the presence
prior to the expiration or sooner termination of the Term and the surrender of
such Property to Landlord in accordance with 


 


33

















 


the terms of this Agreement of Hazardous
Substances in, upon or under the soil or ground water of such Property in
violation of any Applicable Laws.  Upon
Notice from Landlord and any other of the Indemnitees, Tenant shall undertake
the defense, at Tenant’s sole cost and expense, of any indemnification duties
set forth herein, in which event, Tenant shall not be liable for payment of any
duplicative attorneys’ fees incurred by any Indemnitee.


 


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


 


4.4.3           Survival.  The provisions of this Section 4.4
shall 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), at
Tenant’s sole cost and expense, the Leased Property and all private roadways,
sidewalks and curbs appurtenant thereto (and Tenant’s Personal Property) in
good order and repair, reasonable wear and tear excepted (whether or not the
need for such repairs occurs as a result of Tenant’s or any Manager’s use, any
prior use, the elements or the age of the Leased Property or Tenant’s Personal
Property or any portion thereof), and shall promptly make or cause to be made
all necessary and appropriate repairs and replacements to each Property of
every kind and nature, whether interior or exterior, structural or
nonstructural, ordinary or extraordinary, foreseen or unforeseen or arising by
reason of a condition existing prior to the Commencement Date for such Property
(concealed or otherwise).  All repairs
shall be made in a good, workmanlike manner, consistent with industry standards
for comparable Facilities in like locales, in accordance with all applicable
federal, state and local statutes, ordinances, codes, rules and
regulations relating to any such work. 
Tenant shall not take or 


 


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


 


5.1.2           Landlord’s
Obligations.


 


(a)           Except
as otherwise expressly provided in this Agreement, Landlord shall not, under
any circumstances, be required to build or rebuild any improvement on the
Leased Property, or to make any repairs, replacements, alterations,
restorations or renewals of any nature or description to the Leased Property,
whether ordinary or extraordinary, structural or nonstructural, foreseen or
unforeseen, or to make any expenditure whatsoever with respect thereto, or to
maintain the Leased Property in any way. 
Except as otherwise expressly provided in this Agreement, Tenant hereby
waives, to the maximum extent permitted by law, the right to make repairs at
any Property at the expense of Landlord pursuant to any law in effect on the
Commencement Date for such Property or thereafter enacted.  Landlord shall have the right to give, record
and post, as appropriate, notices of nonresponsibility under any mechanic’s
lien laws now or hereafter existing.


 


(b)           If,
pursuant to the terms of this Agreement, Tenant is required to make any
expenditures in connection with any repair, maintenance or renovation with
respect to any Property, Tenant may, at its election, advance such funds or
give Landlord Notice thereof, which Notice shall set forth, in reasonable
detail, the nature of the required repair, renovation or replacement, the
estimated cost thereof and such other information with respect thereto as
Landlord may reasonably require. 
Provided that no Event of Default shall have occurred and be continuing
and Tenant shall otherwise comply with the applicable provisions of Article 6,
Landlord shall, within ten (10) Business Days after such Notice, subject
to and in accordance with the applicable provisions of Article 6,
disburse such required funds to Tenant (or, if Tenant shall so elect, directly
to the Manager or 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).  


 


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


 


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


 


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


 


5.2              Tenant’s Personal Property.  Tenant shall provide and maintain (or cause to
be provided and maintained) throughout the Term all such Tenant’s Personal
Property as shall be necessary in order to operate in compliance with
applicable material Legal Requirements and Insurance Requirements and otherwise
in accordance with customary practice in the industry for the Permitted Use.  If, from and after the Commencement Date with
respect to any Property, Tenant acquires an interest in any item of tangible
personal property (other than motor vehicles) on, or in connection with, the
Leased Property, or any portion thereof, which belongs to anyone other than
Tenant, Tenant shall require the agreements permitting such use to provide that
Landlord or 


 


36

















 


its designee may assume Tenant’s rights and obligations
under such agreement upon Landlord’s purchase of the same in accordance with
the provisions of Article 15 and the assumption of management or
operation of the Facility by Landlord or its designee.


 


5.3                 Yield Up.  Upon the expiration or sooner termination of
this Agreement (or the termination of this Agreement with respect to any
Property), Tenant shall, subject to the completion of a transfer of ownership
approved by the Massachusetts Department of Public Health with respect to each
Rehabilitation Hospital Property, vacate and surrender the Leased Property or
such Property (as applicable) to Landlord in substantially the same condition
in which such Property was in on its Commencement Date, except as repaired,
rebuilt, restored, altered or added to as permitted or required by the
provisions of this Agreement, reasonable wear and tear excepted (and casualty
damage and Condemnation, in the event that this Agreement is terminated
following a casualty or Condemnation in accordance with Article 10
or Article 11 excepted).


 


In addition, upon the expiration or earlier
termination of this Agreement with respect to any Senior Housing Property,
Tenant shall, at Landlord’s sole cost and expense, use its good faith efforts
to transfer (or cause to be transferred) to and cooperate with Landlord or
Landlord’s nominee in connection with the processing of all applications for
licenses, operating permits and other governmental authorizations and all
contracts, including contracts with governmental or quasi-governmental Entities
which may be necessary for the use and operation of the Facility located on
such Property as then operated.  If
requested by Landlord, Tenant shall continue to manage one or more of the
Facilities located at the Senior Housing Properties after the expiration of the
Term with respect to such Properties for up to one hundred eighty (180) days,
on such reasonable terms (which shall include an agreement to reimburse Tenant
for its reasonable out-of-pocket costs and expenses, and reasonable
administrative costs), as Landlord shall reasonably request.


 


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


 


37

















 


permits and other governmental authorizations and all
contracts, including contracts with governmental or quasi-governmental
entities, which may be necessary for the operation of the hospitals at such
Properties.  Until such transfer of
ownership is approved by the Massachusetts Department of Public Health, it is
understood that Tenant shall continue as owner and licensee of the hospital
business and the related hospital operations conducted at the Facilities
located at the Rehabilitation Hospital Properties after the termination of this
Agreement and for so long thereafter as is necessary for Landlord or Landlord’s
nominee to obtain all necessary licenses, operating permits and other
governmental authorizations.  If a new
tenant is not licensed upon the expiration or termination of this Agreement in
connection with a Default or Event of Default by Tenant, then, during such post
termination period, Tenant shall pay hold over rent in accordance with Section 13.  Otherwise, during such period, Minimum Rent
with respect to each applicable Rehabilitation Hospital Property shall be
payable in an amount equal to seventy-five percent (75%) of the Minimum Rent
attributable to such Rehabilitation Hospital Property for the last month of the
Term for the first six (6) months after the expiration date and fifty
percent (50%) of such Minimum Rent thereafter. 
If necessary, Landlord and Tenant shall negotiate in good faith to agree
upon the Minimum Rent attributable to each Rehabilitation Hospital Property, it
being acknowledged and agreed that the Minimum Rent attributable to each
Rehabilitation Hospital Property shall equal the fair market rent for such
Rehabilitation Hospital Property.  If
Landlord and Tenant are unable to agree upon the Minimum Rent attributable to
either Rehabilitation Hospital Property within thirty (30) days following the
commencement of such negotiations, then the Minimum Rent attributable to such
Rehabilitation Hospital Property shall be determined by arbitration in
accordance with Section 22. 
It is expressly understood and agreed that any transfer with respect to
a Rehabilitation Hospital Property pursuant to this Section 5.3 or
any other Section of this Agreement is not a transfer of ownership of the
hospital and is not a transfer of the right, title and interest related to the
licenses granted by the Massachusetts Department of Public Health to operate
the Facilities thereon or any other permit, license or certification used in
the operation of such Facilities that is otherwise by its terms
non-transferable.  Any such change in
ownership and licensee shall be subject, in all events, to the approval of each
and every applicable Government Agency, including, without limitation, the
Massachusetts Department of Public Health, and Applicable Law, Tenant being
obligated to cooperate in and facilitate such approval process.


 


38

















 


5.4              Management Agreement.  Tenant shall not, without Landlord’s prior
written consent (which consent shall not be unreasonably withheld, delayed or
conditioned), enter into, amend or modify the provisions of any Management
Agreement with respect to any Property. 
Any Management Agreement entered into pursuant to the provisions of this
Section 5.4 shall be subordinate to this Agreement and shall
provide, inter  alia, that all amounts due from Tenant to Manager
thereunder shall be subordinate to all amounts due from Tenant to Landlord
(provided that, as long as no Event of Default has occurred and is continuing,
Tenant may pay all amounts due to Manager thereunder pursuant to such
Management Agreement) and for termination thereof, at Landlord’s option, upon
the termination of this Agreement. 
Tenant shall not take any action, grant any consent or permit any action
under any such Management Agreement which might have a material adverse effect
on Landlord, without the prior written consent of Landlord, which consent shall
not be unreasonably withheld, delayed or conditioned.


 


ARTICLE 6


 


IMPROVEMENTS,
ETC.


 


6.1               Improvements
to the Leased Property.  Tenant
shall not make, construct or install (or permit to be made, constructed or
installed) any Capital Additions without, in each instance, obtaining Landlord’s
prior written consent, which consent shall not be unreasonably withheld, delayed
or conditioned provided that (a) construction or installation of the same
would not adversely affect or violate any material Legal Requirement or
Insurance Requirement applicable to any Property and (b) Landlord shall
have received an Officer’s Certificate certifying as to the satisfaction of the
conditions set out in clause (a) above; provided, however,
that no such consent shall be required in the event immediate action is
required to prevent imminent harm to person or property.  No Capital Addition shall be made which would
tie in or connect any Leased Improvements with any other improvements on
property adjacent to any Property (and not part of the Land) including, without
limitation, tie-ins of buildings or other structures or utilities.  Except as permitted herein, Tenant shall not
finance the cost of any construction of such improvement by the granting of a
lien on or security interest in the Leased Property or such improvement, or
Tenant’s interest therein, without the prior written consent of Landlord, which
consent may be withheld by Landlord in Landlord’s sole discretion.  Any such improvements shall, upon the
expiration or sooner termination of this 


 


39

















 


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


 


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


 


ARTICLE 7


 


LIENS


 


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


 


ARTICLE 8


 


PERMITTED
CONTESTS


 


Tenant
shall have the right to contest the amount or validity of any Imposition, 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 good faith and
with due diligence, provided that (a) the foregoing shall in no way be
construed as relieving, modifying


 


40
















 


or extending Tenant’s obligation to pay (or cause to
be paid) any Claims as finally determined, (b) such contest shall not
cause Landlord or Tenant to be in default under any mortgage or deed of trust
encumbering the Leased Property, or any portion thereof (Landlord agreeing that
any such mortgage or deed of trust shall permit Tenant to exercise the rights
granted pursuant to this Article 8) or any interest therein or
result in or reasonably be expected to result in a lien attaching to the Leased
Property, or any portion thereof, (c) no part of the Leased Property nor
any Rent therefrom shall be in any immediate danger of sale, forfeiture,
attachment or loss, and (d) Tenant shall indemnify and hold harmless
Landlord from and against any cost, claim, damage, penalty or reasonable
expense, including reasonable attorneys’ fees, incurred by Landlord in
connection therewith or as a result thereof. 
Landlord agrees to join in any such proceedings if required legally to
prosecute such contest, provided that Landlord shall not thereby be subjected
to any liability therefor (including, without limitation, for the payment of
any costs or expenses in connection therewith) unless Tenant agrees by
agreement in form and substance reasonably satisfactory to Landlord, to assume
and indemnify Landlord with respect to the same.  Tenant shall be entitled to any refund of any
Claims and such charges and penalties or interest thereon which have been paid
by Tenant or paid by Landlord to the extent that Landlord has been fully reimbursed
by Tenant.  If Tenant shall fail (x) to
pay or cause to be paid any Claims when finally determined, (y) to provide
reasonable security therefor or (z) to prosecute or cause to be prosecuted
any such contest diligently and in good faith, Landlord may, upon reasonable
notice to Tenant (which notice shall not be required if Landlord shall
reasonably determine that the same is not practicable), pay such charges,
together with interest and penalties due with respect thereto, and Tenant shall
reimburse Landlord therefor, upon demand, as Additional Charges.


 


ARTICLE 9


 


INSURANCE
AND INDEMNIFICATION


 


9.1               General
Insurance Requirements.  Tenant shall, at all times during the Term and
at any other time Tenant shall be in possession of any Property, or any portion
thereof, keep (or cause to be kept) such Property and all property located
therein or thereon, insured against the risks and in such amounts as is against
such risks and in such amounts as Landlord shall reasonably require and may be
commercially reasonable.  Tenant shall
prepare a proposal setting forth the insurance Tenant 


 


41

















 


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


 


9.2               Waiver
of Subrogation.  Landlord and Tenant agree that (insofar as and
to the extent that such agreement may be effective without invalidating or
making it impossible to secure insurance coverage from responsible insurance
companies doing business in any State) with respect to any property loss which
is covered by insurance then being carried by Landlord or Tenant, the party
carrying such insurance and suffering said loss releases the others of and from
any and all claims with respect to such loss; and they further agree that their
respective insurance companies (and, if Landlord or Tenant shall self insure in
accordance with the terms hereof, Landlord or Tenant, as the case may be) shall
have no right of subrogation against the other on account thereof, even though
extra premium may result therefrom.  In
the 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
extra premium.


 


9.3               Form Satisfactory,
Etc.   All insurance policies and endorsements
required pursuant to this Article 9 shall be fully paid for,
nonassessable, and issued by reputable insurance companies authorized to do
business in the State and having a general policy holder’s rating of no less
than A in Best’s latest rating guide. 
All property, business interruption, liability and flood insurance
policies with respect to each Property shall include no deductible in excess of
Two Hundred Fifty Thousand Dollars ($250,000). 
At all times, all property, business interruption, liability and flood
insurance policies, with the exception of worker’s compensation insurance
coverage, shall name Landlord and any Facility Mortgagee as additional
insureds, as their interests may appear. 
All loss adjustments shall be payable as provided in Article 10,
except that losses under liability and worker’s compensation insurance policies
shall be payable directly to the party entitled thereto.  Tenant shall cause all insurance premiums to
be paid prior to the effective date of any policy, if required by such policy,
or pursuant to an installment payment plan if permissible under such
policy.  Not more than twenty five (25)
days nor less than 


 


42

















 


five (5) days prior to the effective date of the
policies or renewal policies (which, for renewal policies, shall be prior to
the expiration of the existing policy), Tenant shall deliver to Landlord copies
of enforceable binders for such insurance coverage.  Tenant shall deliver (or cause to be
delivered) to Landlord certificates evidencing such insurance coverage within
five (5) days after the effective date of such policies, and thereafter
Tenant shall deliver to Landlord the policies or renewal policies promptly upon
receipt by Tenant.  All such policies
shall provide Landlord (and any Facility Mortgagee if required by the same)
thirty (30) days prior written notice of any material change or cancellation of
such policy.  In the event Tenant shall
fail to effect (or cause to be effected) such insurance as herein required, to
pay (or cause to be paid) the premiums therefor or to deliver (or cause to be
delivered) such policies or certificates to Landlord or any Facility Mortgagee at
the times required, Landlord shall have the right, but not the obligation, upon
Notice to Tenant, to acquire such insurance and pay the premiums therefor,
which amounts shall be payable to Landlord, upon demand, as Additional Charges,
together with interest accrued thereon at the Overdue Rate from the date such
payment is made until (but excluding) the date repaid.


 


9.4               No
Separate Insurance; Self-Insurance.  Tenant shall not take (or permit any Person to
take) out separate insurance, concurrent in form or contributing in the event
of loss with that required by this Article 9, or increase the
amount of any existing insurance by securing an additional policy or additional
policies, unless all parties having an insurable interest in the subject matter
of such insurance, including Landlord and all Facility Mortgagees, are included
therein as additional insureds and the loss is payable under such insurance in
the same manner as losses are payable under this Agreement.  In the event Tenant shall take out any such
separate insurance or increase any of the amounts of the then existing
insurance, Tenant shall give Landlord prompt Notice thereof.  Tenant shall not self-insure (or permit any
Person to self-insure) with respect to any insurance required to be carried hereunder
by Tenant.


 


9.5               Indemnification
of Landlord.  Notwithstanding the existence of any insurance
provided for herein and without regard to the policy limits of any such
insurance, Tenant shall protect, indemnify and hold harmless Landlord for, from
and against all liabilities, obligations, claims, damages, penalties, causes of
action, costs and reasonable expenses (including, without limitation,
reasonable attorneys’ fees), to 


 


43

















 


the maximum extent permitted by law, imposed upon 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 of
persons or loss of or damage to property occurring on or about any Property or
portion thereof or adjoining sidewalks or rights of way, (b) any past,
present or future use, misuse, non-use, condition, management, maintenance or
repair by Tenant, any Manager or anyone claiming under any of them or Tenant’s
Personal Property or any litigation, proceeding or claim by governmental
entities or other third parties to which Landlord is made a party or
participant relating to any Property or portion thereof or Tenant’s Personal
Property or such use, misuse, non-use, condition, management, maintenance, or
repair thereof including, failure to perform obligations (other than
Condemnation proceedings) to which Landlord is made a party, (c) any
Impositions that are the obligations of Tenant to pay pursuant to the
applicable provisions of this Agreement, and (d) any failure on the part
of Tenant or anyone claiming under Tenant to perform or comply with any of the
terms of this Agreement.  Tenant, at its
expense, shall contest, resist and defend any such claim, action or proceeding
asserted or instituted against Landlord (and shall not be responsible for any
duplicative attorneys’ fees incurred by Landlord) or may compromise or
otherwise dispose of the same, with Landlord’s prior written consent (which consent
may not be unreasonably withheld, delayed or conditioned).  The obligations of Tenant under this Section 9.5
are in addition to the obligations set forth in Section 4.4 and
shall survive the termination of this Agreement.


 


ARTICLE
10


 


CASUALTY


 


10.1             Insurance
Proceeds.  Except as provided in the last clause of this
sentence, all proceeds payable by reason of any loss or damage to any Property,
or any portion thereof, and insured under any policy of insurance required by Article 9
(other than the proceeds of any business interruption insurance) shall be paid
directly to Landlord (subject to the provisions of Section 10.2)
and all loss adjustments with respect to losses payable to Landlord shall
require the prior written consent of Landlord, which consent shall not be
unreasonably withheld, delayed or conditioned; provided, however,
that, so long as no Event of Default shall have occurred and be continuing, all
such proceeds less than or equal to Two Hundred Fifty Thousand Dollars
($250,000) shall be paid directly to Tenant and such 


 


44

















 


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


 


10.2             Damage or Destruction.


 


10.2.1         Damage or Destruction of Leased
Property. 
If, during the Term, any Property shall be totally or partially
destroyed and the Facility located thereon is thereby rendered Unsuitable for
Its Permitted Use, either Landlord or Tenant may, by the giving of Notice
thereof to the other, terminate this Agreement with respect to such affected
Property, whereupon, this Agreement shall terminate with respect to such
affected Property and Landlord shall be entitled to retain the insurance
proceeds payable on account of such damage. 
In such event, Tenant shall pay to Landlord the amount of any deductible
under the insurance policies covering such Facility, the amount of any
uninsured loss and any difference between the replacement cost of the affected
Property and the casualty insurance proceeds therefor.


 


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


 


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


 


45

















 


deficiency, Landlord shall have
the right (but not the obligation), exercisable at Landlord’s sole election by
Notice to Tenant, given within sixty (60) days after Tenant’s notice of the
deficiency, to elect to make available for application to the cost of repair or
restoration the amount of such deficiency; provided, however, in
such event, upon any disbursement by Landlord thereof, the Minimum Rent shall
be adjusted as provided in Section 3.1.1(c).  In the event that neither Landlord nor Tenant
shall elect to make such deficiency available for restoration, either Landlord
or Tenant may terminate this Agreement with respect to the affected Property by
Notice to the other, whereupon, this Agreement shall so terminate and insurance
proceeds shall be distributed as provided in Section 10.2.1.  It is expressly understood and agreed,
however, that, notwithstanding anything in this Agreement to the contrary,
Tenant shall be strictly liable and solely responsible for the amount of any
deductible and shall, upon any insurable loss, pay over the amount of such
deductible to Landlord at the time and in the manner herein provided for
payment of the applicable proceeds to Landlord.


 


10.2.4         Disbursement of Proceeds.  In the event Tenant is required to restore any
Property pursuant to Section 10.2 and this Agreement is not
terminated as to such Property pursuant to this Article 10, Tenant
shall commence (or cause to be commenced) promptly and continue diligently to
perform (or cause to be performed) the repair and restoration of such Property
(hereinafter called the “Work”), so as to restore (or cause to be
restored) the applicable Property in material compliance with all Legal Requirements
and so that such Property shall be, to the extent practicable, substantially
equivalent in value and general utility to its general utility and value
immediately prior to such damage or destruction.  Subject to the terms hereof, Landlord shall
advance the insurance proceeds and any additional amounts payable by Landlord
pursuant to Section 10.2.3 or otherwise deposited with Landlord to
Tenant regularly during the repair and restoration period so as to permit
payment for the cost of any such restoration and repair.  Any such advances shall be made not more than
monthly within ten (10) Business Days after Tenant submits to Landlord a
written requisition and substantiation therefor on AIA Forms G702 and G703 (or
on such other form or forms as may be reasonably acceptable to Landlord).  Landlord may, at its option, condition
advancement of such insurance proceeds and other amounts on (a) the
absence of any Event of Default, (b) its approval of plans and
specifications of an architect satisfactory to Landlord (which approval shall
not be unreasonably withheld, delayed or 


 


46

















 


conditioned), (c) general
contractors’ estimates, (d) architect’s certificates, (e) conditional
lien waivers of general contractors, if available, (f) evidence of
approval by all governmental authorities and other regulatory bodies whose
approval is required, (g), if Tenant has elected to advance deficiency funds
pursuant to Section 10.2.3, Tenant depositing the amount thereof
with Landlord and (h) such other certificates as Landlord may, from time
to time, reasonably require.


 


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


 


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


 


10.3             Damage
Near End of Term.  Notwithstanding any provisions of Section 10.1
or 10.2 to the contrary, if damage to or destruction of any Property occurs
during the last twelve (12) months of the Term and if such damage or
destruction cannot reasonably be expected to be fully repaired and restored
prior to the date that is six (6) months prior to the end of the Term, the
provisions of Section 10.2.1 shall apply as if such Property had
been totally or partially destroyed and the Facility thereon rendered
Unsuitable for its Permitted Use.


 


10.4             Tenant’s
Property.  All
insurance proceeds payable by reason of any loss of or damage to any of Tenant’s
Personal Property shall be paid to Tenant and, to the extent necessary to
repair or replace Tenant’s Personal Property in accordance with Section 10.5,
Tenant shall hold such proceeds in trust to pay the cost of repairing or
replacing damaged Tenant’s Personal Property.


 


10.5             Restoration
of Tenant’s Property.  If Tenant is required to restore any Property
as hereinabove provided, Tenant shall either (a) restore all alterations
and improvements made by Tenant and Tenant’s Personal Property, or (b) replace
such alterations and improvements and Tenant’s Personal Property with
improvements or items of the same or better quality and utility in the
operation of such Property.


 


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10.6             No
Abatement of Rent.  This Agreement shall remain in full force and
effect and Tenant’s obligation to make all payments of Rent and to pay all
other charges as and when required under this Agreement shall remain unabated
during the Term notwithstanding any damage involving the Leased Property, or
any portion thereof (provided that Landlord shall credit against such payments
any amounts paid to Landlord as a consequence of such damage under any business
interruption insurance obtained by Tenant hereunder).  The provisions of this Article 10
shall be considered an express agreement governing any cause of damage or
destruction to the Leased Property, or any portion thereof, and, to the maximum
extent permitted by law, no local or State statute, laws, rules, regulation or
ordinance in effect during the Term which provide for such a contingency shall
have any application in such case.


 


10.7             Waiver.
 Tenant hereby waives
any statutory rights of termination which may arise by reason of any damage or
destruction of the Leased Property, or any portion thereof.


 


ARTICLE
11


 


CONDEMNATION


 


11.1             Total
Condemnation, Etc. 
If either (a) the whole of any Property shall be taken by
Condemnation or (b) a Condemnation of less than the whole of any Property
renders any Property Unsuitable for Its Permitted Use, this Agreement shall
terminate with respect to such Property, and Tenant and Landlord shall seek the
Award for their interests in the applicable Property as provided in Section 11.5.


 


11.2             Partial
Condemnation.  In the event of a Condemnation of less than the
whole of any Property such that such Property is still suitable for its
Permitted Use, Tenant shall, to the extent of the Award and any additional
amounts disbursed by Landlord as hereinafter provided, commence (or cause to be
commenced) promptly and continue diligently to restore (or cause to be
restored) the untaken portion of the applicable Leased Improvements so that
such Leased Improvements shall constitute a complete architectural unit of the
same general character and condition (as nearly as may be possible under the
circumstances) as such Leased Improvements existing immediately prior to such
Condemnation, in material compliance with all Legal Requirements, subject to
the provisions of this Section 11.2.  If the cost of the repair or restoration of
the affected Property exceeds the amount of the Award, Tenant shall give 


 


48

















 


Landlord Notice thereof which notice shall set forth in
reasonable detail the nature of such deficiency and whether Tenant shall pay
and assume the amount of such deficiency (Tenant having no obligation to do so,
except that if Tenant shall elect to make such funds available, the same shall
become an irrevocable obligation of Tenant pursuant to this Agreement).  In the event Tenant shall elect not to pay
and assume the amount of such deficiency, Landlord shall have the right (but
not the obligation), exercisable at Landlord’s sole election by Notice to
Tenant given within sixty (60) days after Tenant’s Notice of the deficiency, to
elect to make available for application to the cost of repair or restoration
the amount of such deficiency; provided, however, in such event,
upon any disbursement by Landlord thereof, the Minimum Rent shall be adjusted
as provided in Section 3.1.1(c). 
In the event that neither Landlord nor Tenant shall elect to make such
deficiency available for restoration, either Landlord or Tenant may terminate
this Agreement with respect to the affected Property and the entire Award shall
be allocated as set forth in Section 11.5.


 


Subject
to the terms hereof, Landlord shall contribute to the cost of restoration that
part of the Award necessary to complete such repair or restoration, together
with severance and other damages awarded for the taken Leased Improvements and
any deficiency Landlord has agreed to disburse, to Tenant regularly during the
restoration period so as to permit payment for the cost of such repair or
restoration.  Landlord may, at its
option, condition advancement of such Award and other amounts on (a) the
absence of any Event of Default, (b) its approval of plans and
specifications of an architect satisfactory to Landlord (which approval shall
not be unreasonably withheld, delayed or conditioned), (c) general
contractors’ estimates, (d) architect’s certificates, (e) conditional
lien waivers of general contractors, if available, (f) evidence of
approval by all governmental authorities and other regulatory bodies whose
approval is required, (g), if Tenant has elected to advance deficiency funds
pursuant to the preceding paragraph, Tenant depositing the amount thereof with
Landlord and (h) such other certificates as Landlord may, from time to
time, reasonably require.  Landlord’s
obligation under this Section 11.2 to disburse the Award and such
other amounts shall be subject to (x) the collection thereof by Landlord
and (y) the satisfaction of any applicable requirements of any Facility
Mortgage, and the release of such Award by the applicable Facility
Mortgagee.  Tenant’s obligation to
restore the Leased Property shall be subject to the release of the Award by the
applicable Facility Mortgagee to Landlord.


 


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11.3             Abatement
of Rent.  Other than as specifically provided in this
Agreement, this Agreement shall remain in full force and effect and Tenant’s
obligation to make all payments of Rent and to pay all other charges as and
when required under this Agreement shall remain unabated during the Term
notwithstanding any Condemnation involving the Leased Property, or any portion
thereof.  The provisions of this Article 11
shall be considered an express agreement governing any Condemnation involving
the Leased Property and, to the maximum extent permitted by law, no local or
State statute, law, rule, regulation or ordinance in effect during the Term
which provides for such a contingency shall have any application in such case.


 


11.4             Temporary
Condemnation.  In
the event of any temporary Condemnation of any Property or Tenant’s interest
therein, this Agreement shall continue in full force and effect and Tenant
shall continue to pay (or cause to be paid), in the manner and on the terms
herein specified, the full amount of the Rent. 
Tenant shall continue to perform and observe (or cause to be performed
and observed) all of the other terms and conditions of this Agreement on the
part of the Tenant to be performed and observed.  Provided no Event of Default has occurred and
is continuing, the entire amount of any Award made for such temporary
Condemnation allocable to the Term, whether paid by way of damages, rent or
otherwise, shall be paid to Tenant. 
Tenant shall, promptly upon the termination of any such period of
temporary Condemnation, at its sole cost and expense, restore the affected
Property to the condition that existed immediately prior to such Condemnation,
in material compliance with all applicable Legal Requirements, unless such
period 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             Allocation
of Award.  Except as provided in Section 11.4
and the second sentence of this Section 11.5, the total Award shall
be solely the property of and payable to Landlord.  Any portion of the Award made for the taking
of Tenant’s leasehold interest in the Leased Property, loss of business during
the remainder of the Term, the taking of Tenant’s Personal Property, the taking
of Capital Additions paid for by Tenant and Tenant’s removal and relocation
expenses shall be the sole property of and payable to Tenant (subject to the
provisions of Section 11.2). 
In any Condemnation proceedings, Landlord and Tenant shall each seek its
own Award in conformity herewith, at its own expense.


 


50
















 


ARTICLE 12


 


DEFAULTS
AND REMEDIES


 


12.1             Events
of Default.  The occurrence of any one or more of the
following events shall constitute an “Event of Default” hereunder:


 


(a)           should
Tenant fail to make any payment of the Rent or any other sum payable hereunder
when due, which failure shall continue for at least five (5) Business Days
after Notice from Landlord to Tenant; or


 


(b)           should
Tenant fail to maintain the insurance coverages required under Article 9;
or


 


(c)           should
Tenant default in the due observance or performance of any of the terms,
covenants or agreements contained herein to be performed or observed by it
(other than as specified in clauses (a) and (b) above) and should
such default continue for a period of thirty (30) days after Notice thereof from
Landlord to Tenant; provided, however, that if such default is
susceptible of cure but such cure cannot be accomplished 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 of such default with all due
diligence, such period of time shall be extended to such period of time (not to
exceed an additional ninety (90) days in the aggregate) as may be necessary to
cure such default with all due diligence; or


 


(d)           should
any material obligation of Tenant in respect of any Indebtedness for money
borrowed or for any material property or services, or any guaranty relating
thereto, be declared to be or become due and payable prior to the stated
maturity thereof, or should there occur and be continuing with respect to any
such Indebtedness any event of default under any instrument or agreement
evidencing or securing the same, the effect of which is to 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 any such
obligations to become due prior to its stated maturity; or


 


51

















 


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


 


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


 


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


 


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


 


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


 


(j)            should
there occur any direct or indirect Change in Control of any or all of the
Entities comprising Tenant or any Guarantor; or


 


(k)           should
a final unappealable determination be made by the applicable Government Agency
that Tenant shall have 


 


52

















 


failed to
comply with applicable Medicare and/or Medicaid regulations in the operation of
any Facility, as a result of which failure Tenant is declared ineligible to
receive reimbursements under the Medicare and/or Medicaid programs for such
Facility;


 


then,
and in any such event, Landlord, in addition to all other remedies available to
it, may terminate this Agreement with respect to any or all of the Leased
Property by giving Notice thereof to Tenant and upon the expiration of the
time, if any, fixed in such Notice, this Agreement shall terminate with respect
to all or the designated portion of the Leased Property and all rights of
Tenant under this Agreement with respect thereto shall cease.  Landlord shall have and may exercise all
rights and remedies available at law and in equity to Landlord as a result of
Tenant’s breach of this Agreement.


 


Upon
the occurrence of an Event of Default, Landlord may, in addition to any other
remedies provided herein, enter upon the Leased Property, or any portion
thereof, and take possession of any and all of Tenant’s Personal Property, if
any, without liability for trespass or conversion (Tenant hereby waiving any
right to notice or hearing prior to such taking of possession by Landlord) and
sell the same at public or private sale, after giving Tenant reasonable Notice
of the time and place of any public or private sale, at which sale Landlord or
its assigns may purchase all or any portion of Tenant’s Personal Property, if
any, unless otherwise prohibited by law. 
Unless otherwise provided by law and without intending to exclude any
other manner of giving Tenant reasonable notice, the requirement of reasonable
Notice shall be met if such Notice is given at least ten (10) days before
the date of sale.  The proceeds from any
such disposition, less all expenses incurred in connection with the taking of
possession, holding and selling of such property (including, reasonable
attorneys’ fees) shall be applied as a credit against the indebtedness which is
secured by any Security Agreement granted by Tenant.  Any surplus shall be paid to Tenant or as
otherwise required by law and Tenant shall pay any deficiency to Landlord, as
Additional Charges, upon demand.


 


12.2             Remedies.
 None of (a) the
termination of this Agreement pursuant to Section 12.1, (b) the
repossession of the Leased Property, or any portion thereof, (c) the
failure of Landlord to relet the Leased Property, or any portion thereof, nor (d) the
reletting of all or any of portion of the Leased Property, shall relieve Tenant
of its liability and obligations hereunder, all of which shall survive any such
termination, 


 


53

















 


repossession or reletting. 
In the event of any such termination, Tenant shall forthwith pay to
Landlord all Rent due and payable with respect to the Leased Property, or
terminated portion thereof, through and including the date of such
termination.  Thereafter, Tenant, until
the end of what would have been the Term of this Agreement in the absence of
such termination, and whether or not the Leased Property, or any portion
thereof, shall have been relet, shall be liable to Landlord for, and shall pay
to Landlord, as current damages, the Rent (Additional Rent to be reasonably
calculated by Landlord based on historical Gross Revenues) and other charges
which would be payable 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 any portion thereof, after deducting all reasonable
expenses in connection with such reletting, including, without limitation, all
repossession costs, brokerage commissions, legal expenses, attorneys’ fees,
advertising, expenses of employees, alteration costs and expenses of
preparation for such reletting.  Tenant
shall pay such current damages to Landlord monthly on the days on which the
Minimum Rent would have been payable hereunder if this Agreement had not been
so terminated with respect to such of the Leased Property.


 


At any
time after such termination, whether or not Landlord shall have collected any
such current damages, as liquidated final damages beyond the date of such
termination, at Landlord’s election, Tenant shall pay to Landlord an amount
equal to the present value (as reasonably determined by Landlord) of the
excess, if any, of the Rent and other charges which would be payable hereunder
from the date of such termination (assuming that, for the purposes of this
paragraph, annual payments by Tenant on account of Impositions and Additional
Rent would be the same as payments required for the immediately preceding
twelve calendar months, or if less than twelve calendar months have expired
since the applicable Commencement Date for any Property, the payments required
for such lesser period projected to an annual amount) for what would be the
then unexpired term of this Agreement if the same remained in effect, over the
fair market rental for the same period. 
Nothing contained in this Agreement shall, however, limit or prejudice
the right of Landlord to prove and obtain in proceedings for bankruptcy or
insolvency an amount equal to the 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, whether or not the amount be greater than, equal to,
or less than the amount of the loss or damages referred to above.


 


54

















 


In
case of any Event of Default, re-entry, expiration and dispossession by summary
proceedings or otherwise, Landlord may (a) relet the Leased Property or
any part or parts thereof, either in the name of Landlord or otherwise, 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 the balance of the Term and
may grant concessions or free rent to the extent that Landlord considers
advisable and necessary to relet the same, and (b) make such reasonable
alterations, repairs and decorations in the Leased Property, or any portion
thereof, as Landlord, in its sole and absolute discretion, considers advisable
and necessary for the purpose of reletting the Leased Property; and the making
of such alterations, repairs and decorations shall not operate or be construed
to release Tenant from liability hereunder as aforesaid.  Landlord shall in no event be liable in any
way whatsoever for any failure to relet all or any portion of the Leased
Property, or, in the event that the Leased Property is relet, for failure to
collect the rent under such reletting. 
To the maximum extent permitted by law, Tenant hereby expressly waives
any and all rights of redemption granted under any present or future laws in
the event of Tenant being evicted or dispossessed, or in the event of Landlord
obtaining possession of the Leased Property, by reason of the occurrence and
continuation of an Event of Default hereunder.


 


12.3             Tenant’s
Waiver.  IF THIS AGREEMENT IS TERMINATED PURSUANT TO SECTION 12.1
OR 12.2, TENANT WAIVES, TO THE EXTENT PERMITTED BY LAW, ANY RIGHT TO A
TRIAL BY JURY IN THE EVENT OF SUMMARY PROCEEDINGS TO ENFORCE THE REMEDIES SET
FORTH IN THIS ARTICLE 12, AND THE BENEFIT OF ANY LAWS NOW OR HEREAFTER
IN FORCE EXEMPTING PROPERTY FROM LIABILITY FOR RENT OR FOR DEBT.


 


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


 


12.5             Landlord’s
Right to Cure Tenant’s Default.  If an Event of Default shall have occurred and
be continuing, Landlord, after Notice to Tenant (which Notice shall not be
required if Landlord shall reasonably determine immediate action is necessary
to protect person or property), without waiving or releasing any obligation of
Tenant and without waiving or 


 


55

















 


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


 


12.6        Trade Names.  If this Agreement
is terminated with respect to either or both of the Rehabilitation Hospital
Properties for any reason, Landlord shall, upon the request of Tenant, cause
the name of the business conducted upon such Property to be changed to a name
other than a Facility Trade Name or any approximation or abbreviation thereof
and sufficiently dissimilar to such name as to be unlikely to cause confusion
with such name; provided, however, that Tenant shall not
thereafter use a Facility Trade Name in the same market in which such Property
is located in connection with any business that competes with such Property or
the Facility located thereon.


 


ARTICLE 13


 


HOLDING
OVER


 


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


 


56

















 


ARTICLE 14


 


LANDLORD
DEFAULT


 


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


 


If
Landlord shall in good faith dispute the occurrence of any Landlord Default and
Landlord, before the expiration of the applicable cure period, shall give
Notice thereof to Tenant, setting forth, in reasonable detail, the basis
therefor, no Landlord Default shall be deemed to have occurred and Landlord
shall have no obligation with respect thereto until final adverse determination
thereof.  If Tenant and Landlord shall
fail, in good faith, to resolve any such dispute within ten (10) days
after Landlord’s Notice of dispute, either may submit the matter for resolution
in accordance with Article 22.


 


ARTICLE
15


 


PURCHASE RIGHTS


 


Landlord
shall have the option to purchase Tenant’s Personal Property, at the expiration
or sooner termination of this Agreement, for an amount equal to the then fair
market value thereof (current replacement cost as determined by 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 


 


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financing statements and other encumbrances to which
Tenant’s Personal Property is subject. 
Upon the expiration or sooner termination of this Agreement, Tenant
shall use its reasonable efforts to transfer and assign, or cause to be
transferred and assigned, to Landlord or its designee, or assist Landlord or
its designee in obtaining, any contracts, licenses, and certificates required
for the then operation of the Leased Property. 
Notwithstanding the foregoing, Tenant expressly acknowledges and agrees
that nothing contained in this Article 15 shall diminish, impair or
otherwise modify Landlord’s rights under the Security Agreement and that any
amounts paid by Landlord in order to purchase Tenant’s Personal Property in
accordance with this Article 15 shall be applied first to Tenant’s
current and past due obligations under this Agreement in such order as Landlord
may reasonably determine or as may be prescribed by the laws of the applicable
State and any balance shall be paid to Tenant.


 


ARTICLE 16


 


SUBLETTING
AND ASSIGNMENT


 


16.1             Subletting and Assignment.  Except as provided in Section 16.3,
Tenant shall not, without Landlord’s prior written consent (which consent may
be given or withheld in Landlord’s sole and absolute discretion), assign,
mortgage, pledge, hypothecate, encumber or otherwise transfer this Agreement or
sublease or permit the sublease (which term shall be deemed to include the
granting of concessions, licenses and the like), of the Leased Property, or any
portion thereof, or suffer or permit this Agreement or the leasehold estate
created hereby or any other rights arising under this Agreement to be assigned,
transferred, mortgaged, pledged, hypothecated or encumbered, in whole or in
part, whether voluntarily, involuntarily or by operation of law, or permit the
use or operation of the Leased Property, or any portion thereof, by anyone
other than Tenant, any Manager approved by Landlord pursuant to the applicable
provisions of this Agreement or residents and patients of Tenant, or the Leased
Property, or any portion thereof, to be offered or advertised for assignment or
subletting.


 


For
purposes of this Section 16.1, an assignment of this Agreement
shall be deemed to include, without limitation, any direct or indirect Change
in Control of any or all of the Entities comprising Tenant.


 


If
this Agreement is assigned or if the Leased Property, or any portion thereof,
is sublet (or occupied by anybody other 


 


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than Tenant or any Manager, their respective employees
or residents or patients of Tenant), Landlord may collect the rents from such
assignee, subtenant or occupant, as the case may be, and apply the net amount
collected to the Rent herein reserved, but no such collection shall be deemed a
waiver of the provisions set forth in the first paragraph of this Section 16.1,
the acceptance by Landlord of such assignee, subtenant or occupant, as the 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 shall be
subject to such assignee’s or transferee’s delivery to Landlord of (a) a
Guaranty, which Guaranty shall be in form and substance satisfactory to
Landlord in its sole discretion and which Guaranty shall constitute an
Incidental Document hereunder; (b) a pledge of the stock, partnership,
membership or other ownership interests of such assignee or other transferee to
secure Tenant’s obligations under this Agreement and the Incidental Documents,
which pledge shall be in form and substance satisfactory to Landlord in its
sole discretion and which pledge shall constitute an Incidental Document
hereunder; (c) a security agreement granting Landlord a security interest
in all of such assignee’s or transferee’s right, title and interest in and to
any personal property, intangibles and fixtures (other than accounts
receivable) with respect to any Property which is subject to any such
assignment or transfer to secure Tenant’s obligations under this Agreement and
the Incidental Documents, which security agreement shall be in form and
substance satisfactory to Landlord in its sole discretion and which security
agreement shall constitute an Incidental Document hereunder; and (d) in
the case of a sublease, an assignment which assigns all of such subtenant’s
right, title and interest in such sublease to Landlord to secure Tenant’s
obligations under this Agreement and the Incidental Documents, which assignment
shall be in form and substance satisfactory to Landlord in its sole discretion
and which assignment shall constitute an Incidental Document hereunder.


 


No
subletting or assignment shall in any way impair the continuing primary
liability of Tenant hereunder (unless Landlord and Tenant expressly otherwise
agree that Tenant shall be released from all obligations hereunder), and no
consent to any subletting or assignment in a particular instance shall be
deemed to be a waiver of the prohibition set forth in this Section 16.1.  No assignment, subletting or occupancy shall 


 


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


 


16.2             Required
Sublease Provisions.  Any sublease of all or any portion of the
Leased Property shall provide (a) that it is subject and subordinate to
this Agreement and to the matters to which this Agreement is or shall be
subject or subordinate; (b) that in the event of termination of this
Agreement or reentry or dispossession of Tenant by Landlord under this
Agreement, Landlord may, at its option, terminate such sublease or take over all
of the right, title and interest of Tenant, as sublessor under such sublease,
and such subtenant shall, at Landlord’s option, attorn to Landlord pursuant to
the then executory provisions of such sublease, except that neither Landlord
nor any Facility Mortgagee, as holder of a mortgage or as Landlord 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 theretofore
accrued to such subtenant against Tenant, (iii) be bound by any previous
modification of such sublease not consented to in writing by Landlord or by any
previous prepayment of more than one (1) month’s rent, (iv) be bound
by any covenant of Tenant to undertake or complete any construction of the
applicable Property, or any portion thereof, (v) be required to account
for any security deposit of the subtenant other than any security deposit
actually delivered to Landlord by Tenant, (vi) be bound by any obligation
to make any payment to such subtenant or grant any credits, except for
services, repairs, maintenance and restoration provided for under the sublease
that are performed after the date of such attornment, (vii) be responsible
for any monies owing by Tenant to the credit of such subtenant unless actually
delivered to Landlord by Tenant, or (viii) be required to remove any
Person occupying any portion of the Leased Property; and (c) in the event
that such subtenant receives a written Notice from Landlord or any Facility
Mortgagee stating that an Event of Default has occurred and is continuing, such
subtenant shall thereafter be obligated to pay all rentals accruing under such
sublease directly to the party giving such Notice or as such party may
direct.  All rentals received from such
subtenant by Landlord or the Facility Mortgagee, as the case may be, shall be
credited against the amounts owing by Tenant under this Agreement and such
sublease shall provide that the subtenant thereunder shall, at the request of
Landlord, execute a suitable instrument in confirmation of such agreement


 


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to attorn.  An
original counterpart of each such sublease and assignment and assumption, duly
executed by Tenant and such subtenant or assignee, as the case may be, in form
and substance reasonably satisfactory to Landlord, shall be delivered promptly
to Landlord and (x) in the case of an assignment, the assignee shall
assume in writing and agree to keep and perform all of the terms of this
Agreement on the part of Tenant to be kept and performed and shall be, and
become, jointly and severally liable with Tenant for the performance thereof
and (y) in the case of either an assignment or subletting, Tenant shall
remain primarily liable, as principal rather than as surety, for the prompt
payment of the Rent and for the performance and observance of all of the covenants
and conditions to be performed by Tenant hereunder.


 


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


 


16.3             Permitted
Sublease. 
Notwithstanding the foregoing, including, without limitation, Section 16.2,
but subject to the provisions of Section 16.4 and any other express
conditions or limitations set forth herein, Tenant may, in each instance after
Notice to Landlord, (a) enter into third party residency agreements with
respect to the units located at the Senior Housing Properties, (b) sublease
space at any Property for laundry, commissary or child care purposes or other
concessions in furtherance of the Permitted Use, so long as such subleases will
not reduce the number of units at any Facility, will not violate or affect any
Legal Requirement or Insurance Requirement, and Tenant shall provide such
additional insurance coverage applicable to the activities to be conducted in
such subleased space as Landlord and any Facility Mortgagee may reasonably
require, and (c) enter into one or more subleases with Affiliated Persons
of Tenant with respect to the Leased Property, or any portion thereof, provided
Tenant gives Landlord Notice of the material terms and conditions thereof.  Landlord and Tenant acknowledge and agree
that if Tenant enters into one (1) or more subleases with Affiliated
Persons of Tenant with respect to any Property, or any portion thereof, in
accordance with the preceding clause (c), Tenant may allocate the rent and
other charges with respect to the affected Property in any reasonable manner; provided,
however, that such allocation shall not affect Tenant’s (nor any
Guarantor’s) liability for the Rent and other obligations of Tenant under this
Agreement; and, provided, further, that Tenant shall give
Landlord prompt written notice of any allocation or reallocation of the rent
and 


 


61

















 


other charges with respect to the affected Property and, in
any event, Tenant shall give Landlord written notice of the amount of such
allocations at least ten (10) Business Days prior to the date that
Landlord or Senior Housing Properties Trust is required to file any tax returns
in any State where such affected Property is located.


 


16.4             Sublease
Limitation.  Anything contained in this Agreement to the
contrary notwithstanding, Tenant shall not sublet the Leased Property, or any
portion thereof, on any basis such that the rental to be paid by any sublessee
thereunder would be based, in whole or in part, on the net income or profits
derived by the business activities of such sublessee, any other formula such
that any portion of such sublease rental would fail to qualify as “rents from
real property” within the meaning of Section 856(d) of the Code, or
any similar or successor provision thereto or would otherwise disqualify
Landlord for treatment as a real estate investment trust.


 


ARTICLE 17


 


ESTOPPEL
CERTIFICATES AND FINANCIAL STATEMENTS


 


17.1             Estoppel
Certificates.  At any time and from time to time, but not
more 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 Notice shall
furnish to the other an Officer’s Certificate certifying that this Agreement is
unmodified and in full force and effect (or that this Agreement is in full
force and effect as modified and setting forth the modifications), the date to
which the Rent has been paid, that no Default or an Event of Default has
occurred 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 taken
to remedy the same, and such additional information as the requesting party may
reasonably request.  Any such certificate
furnished pursuant to this Section 17.1 may be relied upon by the
requesting party, its lenders and any prospective purchaser or mortgagee of the
Leased Property, or any portion thereof, or the leasehold estate created
hereby.


 


17.2             Financial
Statements.  Tenant shall furnish or cause Five Star to
furnish, as applicable, the following statements to Landlord:


 


(a)           within
forty-five (45) days after each of the first three fiscal quarters of any
Fiscal Year, the most 


 


62

















 


recent Consolidated Financials,
accompanied by a Financial Officer’s Certificate;


 


(b)           within
ninety (90) days after the end of each Fiscal Year, the most recent
Consolidated Financials and financials of Tenant for such year, certified by an
independent certified public accountant reasonably satisfactory to Landlord and
accompanied by a Financial Officer’s Certificate;


 


(c)           within
thirty (30) days after the end of each calendar month, a monthly report with
respect to each Rehabilitation Hospital Property, such report to include (i) a
balance sheet and a current month and year to date income statement, showing
each item of actual and projected income and expense, reflecting the operating
results of the Facility located at such Property, in each case prepared in
accordance with GAAP, (ii) a statement of capital expenditures prepared on
a Facility by Facility basis and on a combined basis with respect to all of the
Rehabilitation Hospital Properties, (iii) occupancy percentages, payor mix
and average rate on a Facility by Facility basis and on a combined basis with
respect to all of the Rehabilitation Hospital Properties, and (iv) such
additional information as Landlord may from time to time reasonably require,
accompanied by a Financial Officer’s Certificate.


 


(d)           within
forty-five (45) days after the end of each month, an unaudited operating
statement and statement of capital expenditures with respect to the Senior
Housing Properties, prepared on a Facility by Facility basis and a combined
basis with respect to all of the Senior Housing Properties, including occupancy
percentages and average rate, accompanied by a Financial Officer’s Certificate;


 


(e)           at
any time and from time to time upon not less than twenty (20) days Notice from
Landlord or such additional period as may be reasonable under the
circumstances, any Consolidated Financials, Tenant financials or any other
audited or unaudited financial reporting information required to be filed by
Landlord with any securities and exchange commission, the SEC or any successor
agency, or any other governmental authority, or required pursuant to any order
issued by any court, governmental authority or arbitrator in any litigation to
which Landlord is a party, for purposes of compliance 


 


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


 


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


 


(g)           promptly,
upon Notice from Landlord, such other information concerning the business,
financial condition and affairs of Tenant and/or any Guarantor as Landlord
reasonably may request from time to time.


 


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


 


17.3             General
Operations.  Tenant
covenants and agrees to furnish to Landlord, promptly upon request of Landlord,
copies of:


 


(a)           all
licenses authorizing Tenant or any Manager to operate any Facility for its
Permitted Use;


 


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


 


(c)           if
required under Applicable Laws with respect to any Facility, a license for each
individual employed as administrator with respect to such Facility;


 


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


 


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(e)           with
reasonable promptness, such other confirmation as to the licensure and Medicare
and Medicaid participation of Tenant as Landlord may reasonably request from
time to time.


 


ARTICLE 18


 


LANDLORD’S
RIGHT TO INSPECT


 


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


 


ARTICLE
19


 


EASEMENTS


 


19.1             Grant
of Easements.  Provided no Event of Default has occurred and
is continuing, Landlord will join in granting and, if necessary, modifying or
abandoning such rights-of-way, easements and other interests as may be
reasonably requested by Tenant for ingress and egress, and electric, telephone,
gas, water, sewer and other utilities so long as:


 


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


 


(b)           Landlord
receives an Officer’s Certificate from Tenant stating (i) that such grant,
modification or abandonment is not detrimental to the proper conduct of
business on such Property, (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 or value of such Property for the Permitted Use, and (iv) that,
for as long as this Agreement shall be in 


 


65

















 


effect, Tenant will perform all obligations,
if any, of Landlord under any such instrument; and


 


(c)           Landlord
receives evidence satisfactory to Landlord that the Manager has granted its
consent to such grant, modification or abandonment in accordance with the
requirements of such Manager’s Management Agreement or that such consent is not
required.


 


19.2             Exercise
of Rights by Tenant.  So long as no Event of Default has occurred
and is continuing, Tenant shall have the right to exercise all rights of
Landlord under the Easement Agreements and, in connection therewith, Landlord
shall execute and promptly return to Tenant such documents as Tenant shall
reasonably request.  Tenant shall perform
all obligations of Landlord under the Easement Agreements.


 


19.3             Permitted
Encumbrances.  Any agreements entered into in accordance with
this Article 19 shall be deemed a Permitted Encumbrance.


 


ARTICLE 20


 


FACILITY
MORTGAGES


 


20.1             Landlord May Grant Liens.  Without the consent of Tenant, Landlord may,
from time to time, directly or indirectly, create or otherwise cause to exist
any lien, encumbrance or title retention agreement (“Encumbrance”) upon
the Leased Property, or any portion thereof, or interest therein, to secure any
borrowing or other means of financing or refinancing, provided that any such
Encumbrance shall comply with the provisions of Article 8 and Section 20.2.


 


20.2             Subordination
of Lease.  This Agreement and any and all rights of
Tenant hereunder are and shall be subject and subordinate to any ground or
master lease, and to all mortgages and deeds of trust, which may now or
hereafter affect the Leased Property, or any portion thereof, or any
improvements thereon and/or any of such leases, whether or not such mortgages
or deeds of trust shall also cover other lands and/or buildings and/or leases,
to each and every advance made or hereafter to be made under such mortgages and
deeds of trust, and to all renewals, modifications, replacements and extensions
of such leases and such mortgages and deeds of trust and all consolidations of
such mortgages and deeds of trust.  This
section shall be self-operative and no further instrument of 


 


66

















 


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


 


If any
Superior Landlord or Superior Mortgagee shall succeed to the rights of Landlord
under this Agreement (any such person, “Successor Landlord”), whether
through possession, termination of lease, foreclosure action, assignment of
lease or grant of deed, or otherwise, Tenant shall attorn to and recognize the
Successor Landlord as Tenant’s landlord under this Agreement and Tenant shall
promptly execute and deliver any instrument that 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 direct lease between the Successor
Landlord and Tenant upon all of the terms, conditions and covenants as are set
forth in this Agreement, except that the Successor Landlord (unless formerly
the landlord under this Agreement or its nominee or designee) shall not be (a) liable
in any way to Tenant for any act or omission, neglect or default on the part of
any prior Landlord under this Agreement, (b) responsible for any monies
owing by or on deposit with any prior Landlord to the credit of Tenant (except
to the extent actually paid or delivered to the Successor Landlord), (c) subject
to any counterclaim or setoff which theretofore accrued to Tenant against any
prior Landlord, (d) bound by any modification of this Agreement subsequent
to 


 


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such Superior Lease or Superior Mortgage, or by any
previous prepayment of Rent for more than one (1) month in advance of the
date due hereunder, which was not approved in writing by the Superior Landlord
or the Superior Mortgagee thereto, (e) liable to Tenant beyond the
Successor Landlord’s interest in the Leased Property and the rents, income,
receipts, revenues, issues and profits issuing from the Leased Property, (f) responsible
for the performance of any work to be done by the Landlord under this Agreement
to render the Leased Property ready for occupancy by Tenant (subject to
Landlord’s obligations under Section 5.1.2(b) or with respect
to any insurance proceeds or Awards), or (g) required to remove any Person
occupying the Leased Property or any part thereof, except if such person claims
by, through or under the Successor Landlord. 
Tenant agrees at any time and from time to time to execute a suitable
instrument in confirmation of Tenant’s agreement to attorn, as aforesaid and
Landlord agrees to provide Tenant with an instrument of nondisturbance and
attornment from each such Superior Mortgagee and Superior Landlord (other than
the lessors under any ground leases with respect to the Leased Property, or any
portion thereof) in form and substance reasonably satisfactory to Tenant
whereby such Superior Mortgagee or Superior Lessor, as applicable, shall agree
to recognize Tenant’s possessory and other rights under this Agreement
notwithstanding any foreclosure or lease termination, subject to the provisions
of this Section 20.2. 
Notwithstanding the foregoing, any Successor Landlord shall be liable (a) to
pay to Tenant any amounts owed under Section 5.1.2(b), (b) to
pay to Tenant any portions of insurance proceeds or Awards received by Landlord
or the Successor Landlord required to be paid to Tenant pursuant to the terms
of this Agreement, and (c) to recognize any reduction in Minimum Rent
attributable to the provisions of Section 4.1.1(b).


 


20.3             Notice
to Mortgagee and Superior Landlord.  Subsequent to the receipt by Tenant of Notice
from Landlord as to the identity of any Facility Mortgagee or Superior Landlord
under a lease with Landlord, as ground lessee, which includes the Leased
Property, or any portion thereof, as part of the demised premises and which
complies with Section 20.1 (which Notice shall be accompanied by a
copy of the applicable mortgage or lease), no Notice from Tenant to Landlord as
to a default by Landlord under this Agreement shall be effective with respect
to a Facility Mortgagee or Superior Landlord unless and until a copy of the
same is given to such Facility Mortgagee or Superior Landlord at the address
set forth in the above described Notice, and the curing of any of Landlord’s
defaults within the applicable notice and cure periods set forth in Article 14
by 


 


68

















 


such Facility Mortgagee or Superior Landlord shall be
treated as performance by Landlord.


 


ARTICLE
21


 


ADDITIONAL
COVENANTS OF TENANT


 


21.1             Prompt
Payment of Indebtedness.  Tenant shall (a) pay or cause to be paid
when due all payments of principal of and premium and interest on Tenant’s
Indebtedness for money borrowed and shall not permit or suffer any such
Indebtedness to become or remain in default beyond any applicable grace or cure
period, (b) pay or cause to be paid when due all lawful claims for labor
and rents with respect to the Leased Property, (c) pay or cause to be paid
when due all trade payables and (d) pay or cause to be paid when due all
other of Tenant’s Indebtedness upon which it is or becomes obligated, except,
in each case, other than that referred to in clause (a), to the extent payment
is being contested in good faith by appropriate proceedings in accordance with Article 8
and if Tenant shall have set aside on its books adequate reserves with respect
thereto in accordance with GAAP, if appropriate, or unless and until
foreclosure, distraint sale or other similar proceedings shall have been
commenced.


 


21.2             Conduct
of Business.  None of the Entities comprising Tenant shall
engage in any business other than the leasing and operation of its Properties
(including any incidental or ancillary business relating thereto) and the
leasing and operation of the leased property under the Other Leases (including
any incidental or ancillary business relating thereto).  Each Entity comprising Tenant shall do or
cause to be done all things necessary to preserve, renew and keep in full force
and effect and in good standing its corporate existence and its rights and
licenses necessary to conduct such business.


 


21.3             Maintenance
of Accounts and Records.  Tenant shall keep true records and books of
account of Tenant in which full, true and correct entries will be made of
dealings and transactions in relation to the business and affairs of Tenant in
accordance with GAAP.  Tenant shall apply
accounting principles in the preparation of the financial statements of Tenant
which, in the judgment of and the opinion of its independent public
accountants, are in accordance with GAAP, where applicable, except for changes
approved by such independent public accountants.  Tenant shall provide to Landlord either in a
footnote to the financial statements delivered under Section 17.2
which relate to the period in which 


 


69

















 


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


 


21.4             Notice
of Litigation, Etc.  Tenant
shall give prompt Notice to Landlord of any litigation or any administrative
proceeding to which it may hereafter become a party of which Tenant has notice
or actual knowledge which involves a potential liability equal to or greater
than Two Hundred Fifty Thousand Dollars ($250,000) or which may otherwise
result in any material adverse change in the business, operations, property,
prospects, results of operation or condition, financial or other, of
Tenant.  Forthwith upon Tenant obtaining
knowledge of any Default, Event of Default or any default or event of default
under any agreement relating to Indebtedness for money borrowed in an aggregate
amount exceeding, at any one time, Two Hundred Fifty Thousand Dollars
($250,000), or any event or condition that would be required to be disclosed in
a current report filed by Tenant on Form 8-K or in Part II of a
quarterly report on Form 10-Q if Tenant were required to file such reports
under the Securities Exchange Act of 1934, as amended, Tenant shall furnish
Notice thereof to Landlord specifying the nature and period of existence
thereof and what action Tenant has taken or is taking or proposes to take with
respect thereto.


 


21.5             Prohibited
Transactions.  Tenant
shall not permit to exist or enter into any agreement or arrangement whereby it
engages in a transaction of any kind with any Affiliated Person as to Tenant or
any Guarantor, except on terms and conditions which are commercially
reasonable.


 


21.6        Notice of Change of Name, Etc.  Tenant shall give prompt notice to Landlord
of any change in (a) the name (operating or otherwise) of any Entity
comprising Tenant or any Facility, (b) the number of beds in any bed
category for which any Facility is licensed or the number of beds in any bed
category available for use at any Facility (except for changes in the election
made with respect to the beds for reimbursement maximization purposes), and (c) the
patient and/or child care services that are offered at any Facility.


 


ARTICLE
22


 


ARBITRATION


 


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


 


70
















 


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


 


22.2             Selection of Arbitrators.  There shall be
three arbitrators.  If there are (a) only
two parties to the Dispute, each party shall select one arbitrator within 15
days after receipt by respondent of a copy of the demand for arbitration and (b) more
than two parties to the Dispute, all claimants, on the one hand, and all
respondents, on the other hand, shall each select, by the vote of a majority of
the claimants or the respondents, as the case may be, one arbitrator.  The two party-nominated arbitrators shall
jointly nominate the third and presiding arbitrator within 15 days of the
nomination of the second arbitrator.  If
any arbitrator has not been nominated within the time limit specified herein,
then the AAA shall provide a list of proposed arbitrators in accordance with
the Rules, and the arbitrator shall be appointed by the AAA in accordance with
a listing, striking and ranking procedure, with each party having a limited
number of strikes, excluding strikes for cause. 
For the avoidance of doubt, the arbitrators appointed by the parties to
such Dispute may be affiliates or interested persons of such parties but the
third arbitrator elected by the party arbitrators or by the AAA shall be
unaffiliated with either party.


 


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


 


22.4             Scope of Discovery.  There shall be only limited documentary
discovery of documents directly related to the issues in dispute, as may be
ordered by the arbitrators.


 


22.5             Arbitration
Award.  In rendering an award or decision (the “Arbitration
Award”), the arbitrators shall be required to follow the laws of the
Commonwealth of Massachusetts.  Any
arbitration proceedings or Arbitration Award rendered hereunder 


 


71

















 


and the validity, effect and
interpretation of this arbitration agreement shall be governed by the Federal
Arbitration Act, 9 U.S.C. §1 et seq.  The
Arbitration Award shall be in writing and may, but shall not be required to,
briefly state the findings of fact and conclusions of law on which it is based.


 


22.6             Costs.  Except to the extent expressly provided by
this Agreement or as otherwise agreed between the parties, each party involved
in a Dispute shall bear its own costs and expenses (including attorneys’ fees),
and the arbitrators shall not render an award that would include shifting of
any such costs or expenses (including attorneys’ fees) or, in a derivative case
or class action by a holder of any party, award any portion of such party’s
award to the claimant or the claimant’s attorneys.  Each party (or, if there are more than two
parties to the Dispute, all claimants, on the one hand, and all respondents, on
the other hand, respectively) shall bear the costs and expenses of its (or their)
selected arbitrator and the parties (or, if there are more than two parties to
the Dispute, all claimants, on the one hand, and all respondents, on the other
hand) shall equally bear the costs and expenses of the third appointed
arbitrator.


 


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


 


22.8             Payment.  Any monetary award shall be made and payable
in U.S. dollars free of any tax, deduction or offset.  The party against which the Arbitration Award
assesses a monetary obligation shall pay that obligation on or before the 30th day following the
date of the Arbitration Award or such other date as the Arbitration Award may
provide.


 


72

















 


ARTICLE
23


 


MISCELLANEOUS


 


23.1             Limitation
on Payment of Rent.  All agreements between Landlord and Tenant
herein are hereby expressly limited so that in no contingency or event
whatsoever, whether by reason of acceleration of Rent, or otherwise, shall the
Rent or any other amounts payable to Landlord under this Agreement exceed the
maximum permissible under Applicable Laws, the benefit of which may be asserted
by Tenant as a defense, and if, from any circumstance whatsoever, fulfillment
of any provision of this Agreement, at the time performance of such provision
shall be due, shall involve transcending the limit of validity prescribed by
law, or if from any circumstances Landlord should ever receive as fulfillment
of such provision such an excessive amount, then, ipso  facto, the
amount which would be excessive shall be applied to the reduction of the
installment(s) of Minimum Rent next due and not to the payment of such
excessive amount.  This provision shall
control every other provision of this Agreement and any other agreements
between Landlord and Tenant.


 


23.2             No
Waiver.  No failure by Landlord or Tenant to insist
upon the strict performance of any term hereof or to exercise any right, power
or remedy consequent upon a breach thereof, and no acceptance of full or
partial payment of Rent during the continuance of any such breach, shall constitute
a waiver of any such breach or of any such term.  To the maximum extent permitted by law, no
waiver of any breach shall affect or alter this Agreement, which shall continue
in full force and effect with respect to any other then existing or subsequent
breach.


 


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 or hereafter provided either
in this Agreement or by statute or otherwise, shall be cumulative and
concurrent and shall be in addition to every other right, power and remedy and
the exercise or beginning of the exercise by Landlord or Tenant (as applicable)
of any one or more of such rights, powers and remedies shall not preclude the
simultaneous or subsequent exercise by Landlord of any or all of such other
rights, powers and remedies.


 


23.4             Severability.
 Any clause, sentence,
paragraph, section or provision of this Agreement held by a court of competent
jurisdiction to be invalid, illegal or ineffective shall not impair, invalidate
or nullify the remainder of this 


 


73

















 


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


 


23.5             Acceptance
of Surrender.  No surrender to Landlord of this Agreement or
of the Leased Property or any part thereof, or of any interest therein, shall
be valid or effective unless agreed to and accepted in writing by Landlord and
no act by Landlord or any representative or agent of Landlord, other than such
a written acceptance by Landlord, shall constitute an acceptance of any such
surrender.


 


23.6             No
Merger of Title.  It is expressly acknowledged and agreed that
it is the intent of the parties that there shall be no merger of this Agreement
or of the leasehold estate created hereby by reason of the fact that the same
Person may acquire, own or hold, directly or indirectly this Agreement or the
leasehold estate created hereby and the fee estate or ground landlord’s
interest in the Leased Property.


 


23.7             Conveyance
by Landlord.  If Landlord or any successor owner of all or
any portion of the Leased Property shall convey all or any portion of the
Leased Property in accordance with the terms hereof other than as security for
a debt, and the grantee or transferee of such of the Leased Property shall
expressly assume all obligations of Landlord hereunder arising or accruing from
and after the date of such conveyance or transfer, Landlord or such successor
owner, as the case may be, shall thereupon be released from all future
liabilities and obligations of Landlord under this Agreement with respect to
such of the Leased Property arising or accruing from and after the date of such
conveyance or other transfer and all such future liabilities and obligations
shall thereupon be binding upon the new owner.


 


23.8             Quiet
Enjoyment.  Tenant shall peaceably and quietly have, hold
and enjoy the Leased Property for the Term, free of hindrance or molestation by
Landlord or anyone claiming by, through or under Landlord, but subject to (a) any
Encumbrance permitted under Article 20 or otherwise permitted to be
created by Landlord hereunder, (b) all Permitted Encumbrances, (c) liens
as to obligations of Landlord that are either not yet due or which are being
contested in good faith and by proper proceedings, provided the same do not
materially interfere with Tenant’s ability to operate any Facility and (d) liens
that have been consented to in writing by Tenant.  Except as otherwise 


 


74

















 


provided in this Agreement, no failure by Landlord to comply
with the foregoing covenant shall give Tenant any right to cancel or terminate
this Agreement or abate, reduce or make a deduction from or offset against the
Rent or any other sum payable under this Agreement, or to fail to perform any
other obligation of Tenant hereunder.


 


23.9             No
Recordation. 
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 or permitted under this Agreement shall be deemed
adequately given if in writing and the same shall be delivered either in hand,
by telecopier with written acknowledgment of receipt, or by mail or Federal
Express or similar expedited commercial carrier, addressed to the recipient of
the notice, postpaid and registered or certified with return receipt requested
(if by mail), or with all freight charges prepaid (if by Federal Express or
similar carrier).


 


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


 


(c)           All such
notices shall be addressed,


 


if to Landlord:


 


c/o
Senior Housing Properties Trust


400
Centre Street


Newton,
Massachusetts 02458


Attn:  Mr. David J. Hegarty


[Telecopier No. (617)
796-8349]


 


75

















 


if to Tenant to:


 


c/o Five Star Quality Care, Inc.


400
Centre Street


Newton,
Massachusetts 02458


Attn:  Mr. Bruce J. Mackey Jr.


[Telecopier No. (617)
796-8385]


 


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


 


23.11           Construction.  Anything contained in this Agreement to the
contrary notwithstanding, all claims against, and liabilities of, Tenant or
Landlord arising prior to any date of termination or expiration of this Agreement
with respect to the Leased Property shall survive such termination or
expiration.  In no event shall Landlord
be liable for any consequential damages suffered by Tenant as the result of a
breach of this Agreement by Landlord. 
Neither this Agreement nor any provision hereof may be changed, waived,
discharged or terminated except by an instrument in writing signed by the party
to be charged.  All the terms and
provisions of this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns.  Each term or provision of this Agreement to
be performed by Tenant shall be construed as an independent covenant and
condition.  Time is of the essence with
respect to the provisions of this Agreement. 
Except as otherwise set forth in this Agreement, any obligations of
Tenant (including without limitation, any monetary, repair and indemnification
obligations) and Landlord shall survive the expiration or sooner termination of
this Agreement.  Each Entity comprising
Tenant hereunder shall be jointly and severally liable for the payment and
performance of each and every obligation and liability of Tenant hereunder.


 


23.12           Counterparts;
Headings.  This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but which, when taken
together, shall constitute but one instrument and shall become effective as of
the date hereof when copies hereof, which, when taken together, bear the
signatures of each of the parties hereto shall have been signed.  Headings in this Agreement are for purposes
of 


 


76

















 


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


 


23.13           Applicable
Law, Etc. 
This Agreement shall be interpreted, construed, applied and enforced in
accordance with the laws of The Commonwealth of Massachusetts applicable to
contracts between residents of Massachusetts which are to be performed entirely
within Massachusetts, regardless of (a) where this Agreement is executed
or delivered; or (b) where any payment or other performance required by
this Agreement is made or required to be made; or (c) where any breach of
any provision of this Agreement occurs, or any cause of action otherwise
accrues; or (d) where any action or other proceeding is instituted or
pending; or (e) the nationality, citizenship, domicile, principal place of
business, or jurisdiction of organization or domestication of any party; or (f) whether
the laws of the forum jurisdiction otherwise would apply the laws of a
jurisdiction other than Massachusetts; or (g) any combination of the
foregoing.  Notwithstanding the
foregoing, the laws of the State shall apply to the perfection and priority of
liens upon and the disposition of any Property.


 


23.14           Right
to Make Agreement.  Each party warrants, with respect to itself,
that neither the execution of this Agreement, nor the consummation of any
transaction contemplated hereby, shall violate any provision of any law, or any
judgment, writ, injunction, order or decree of any court or governmental
authority having jurisdiction over it; nor result in or constitute a breach or
default under any indenture, contract, other commitment or restriction to which
it is a party or by which it is bound; nor require any consent, vote or
approval which has not been given or taken, or at the time of the transaction
involved shall not have been given or taken. 
Each party covenants that it has and will continue to have throughout
the term of this Agreement and any extensions thereof, the full right to enter
into this Agreement and perform its obligations hereunder.


 


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


 


77

















 


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


 


23.17           Original Leases.  Landlord and Tenant acknowledge and agree
that this Agreement amends and restates the Original Leases in their entirety
with respect to the Leased Property as of the date of this Agreement and that
this Agreement shall govern the rights and obligations of the parties with
respect to the Leased Property from and after the date of this Agreement.  Notwithstanding the foregoing, the Original
Leases shall continue to govern the rights and obligations of the parties with
respect to the Leased Property prior to the date of this Agreement.


 


[Remainder
of page intentionally left blank.]


 


78
















 


IN
WITNESS WHEREOF,
the parties have executed this Agreement as a sealed instrument as of the date
above first written.


 


 


	
   

  	
  LANDLORD:

  
	
   

  	
   

  	
   

  
	
   

  	
  SPTIHS PROPERTIES TRUST

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David J. Hegarty

  
	
   

  	
   

  	
  David J. Hegarty

  
	
   

  	
   

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
  SPTMNR PROPERTIES TRUST

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David J. Hegarty

  
	
   

  	
   

  	
  David J. Hegarty

  
	
   

  	
   

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
  SNH/LTA PROPERTIES GA LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David J. Hegarty

  
	
   

  	
   

  	
  David J. Hegarty

  
	
   

  	
   

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
  SNH/LTA PROPERTIES TRUST

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David J. Hegarty

  
	
   

  	
   

  	
  David J. Hegarty

  
	
   

  	
   

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
  O.F.C. CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David J. Hegarty

  
	
   

  	
   

  	
  David J. Hegarty

  
	
   

  	
   

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
  SNH CHS PROPERTIES TRUST

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David J. Hegarty

  
	
   

  	
   

  	
  David J. Hegarty

  
	
   

  	
   

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
  CCC OF KENTUCKY TRUST

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David J. Hegarty

  
	
   

  	
   

  	
  David J. Hegarty

  
	
   

  	
   

  	
  President

  



 


79

















 


	
   

  	
  LEISURE PARK VENTURE LIMITED PARTNERSHIP

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  CCC Leisure Park Corporation,

  
	
   

  	
   

  	
  its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ David J. Hegarty

  
	
   

  	
   

  	
   

  	
  David J. Hegarty

  
	
   

  	
   

  	
   

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
  CCDE SENIOR LIVING LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David J. Hegarty

  
	
   

  	
   

  	
  David J. Hegarty

  
	
   

  	
   

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
  CCOP SENIOR LIVING LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David J. Hegarty

  
	
   

  	
   

  	
  David J. Hegarty

  
	
   

  	
   

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
  CCC PUEBLO NORTE TRUST

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David J. Hegarty

  
	
   

  	
   

  	
  David J. Hegarty

  
	
   

  	
   

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
  CCC RETIREMENT COMMUNITIES II, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Crestline Ventures LLC,

  
	
   

  	
   

  	
  its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ David J. Hegarty

  
	
   

  	
   

  	
   

  	
  David J. Hegarty

  
	
   

  	
   

  	
   

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
  CCC INVESTMENTS I, L.L.C.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David J. Hegarty

  
	
   

  	
   

  	
  David J. Hegarty

  
	
   

  	
   

  	
  President

  



 


80

















 


	
   

  	
  CCC FINANCING I TRUST

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David J.
  Hegarty

  
	
   

  	
   

  	
  David J. Hegarty

  
	
   

  	
   

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
  CCC FINANCING LIMITED, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  CCC Retirement Trust,

  
	
   

  	
   

  	
  its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ David J. Hegarty

  
	
   

  	
   

  	
   

  	
  David J. Hegarty

  
	
   

  	
   

  	
   

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
  SNH SOMERFORD PROPERTIES TRUST

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David J. Hegarty

  
	
   

  	
   

  	
  David J. Hegarty

  
	
   

  	
   

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
  HRES1 PROPERTIES TRUST

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David J. Hegarty

  
	
   

  	
   

  	
  David J. Hegarty

  
	
   

  	
   

  	
  President

  



 


81

















 


	
   

  	
  TENANT:

  
	
   

  	
   

  	
   

  
	
   

  	
  FIVE
  STAR QUALITY CARE TRUST

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Bruce J. Mackey Jr.

  
	
   

  	
   

  	
  Bruce J. Mackey Jr.

  
	
   

  	
   

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
  FS
  TENANT HOLDING COMPANY TRUST

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Bruce J. Mackey Jr.

  
	
   

  	
   

  	
  Bruce J. Mackey Jr.

  
	
   

  	
   

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
  FS COMMONWEALTH LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Bruce J. Mackey Jr.

  
	
   

  	
   

  	
  Bruce J. Mackey Jr.

  
	
   

  	
   

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
  FS PATRIOT LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Bruce J. Mackey Jr.

  
	
   

  	
   

  	
  Bruce J. Mackey Jr.

  
	
   

  	
   

  	
  President

  



 


82

















 


SCHEDULE
1


 


Schedule omitted.


 

















 


EXHIBITS
A-1 THROUGH A-50


 


LAND


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


Certain Schedules and
Exhibits to this agreement have been omitted and will be furnished supplementally
to the Securities and Exchange Commission upon request.