SUBSTITUTION NOTICE ALC SHALL REMIT TO LTC THE SUM OF TEN THOUSAND
DOLLARS ($10,000) AS A FLAT AND NON-ACCOUNTABLE FEE TO REIMBURSE LTC FOR ITS
INTERNAL OVERHEAD COSTS AND OVERHEAD EXPENSES DEVOTED TO EFFECTING A
SUBSTITUTION.
ALC SHALL NOT HAVE THE RIGHT TO EFFECT A SUBSTITUTION OF A FACILITY IF ANY
MONETARY LIEN ON THE FACILITY MAY NOT BE VOLUNTARILY PREPAID BY LTC. WITHOUT
LIMITATION TO THE FOREGOING, ALC SHALL BE RESPONSIBLE FOR ALL ACCELERATION OR
PREPAYMENT CHARGES (BUT NOT PRINCIPAL AND ACCRUED INTEREST CHARGES) INCURRED BY
LTC IN CONNECTION WITH EFFECTING A PAYOFF OF ANY LIENS OR ENCUMBRANCES.
ALC
SHALL HAVE THE RIGHT TO INQUIRE OF LTC REGARDING THE EXISTENCE OF, AND LTC SHALL
PROVIDE A WRITTEN STATEMENT SUMMARIZING, THE THEN CURRENTLY APPLICABLE
ACCELERATION OR PREPAYMENT CHARGES ASSOCIATED WITH PAYOFF OF ANY LIENS OR
ENCUMBRANCES AFFECTING ANY FACILITY ALC IS CONSIDERING SUBSTITUTING, SUCH
SUMMARY TO BE PROVIDED TO ALC PRIOR TO ITS ELECTION, IF ANY, TO DELIVER A
SUBSTITUTION NOTICE TO LTC.
NOTWITHSTANDING ANY OF THE FORGOING, ALC SHALL NOT HAVE THE RIGHT TO CLOSE ANY
SUBSTITUTION OF A
FACILITY UNDER EITHER OF THE MASTER LEASES DURING THE LAST
TWENTY-FOUR (24) MONTHS OF THE TERM (OR ANY EXTENDED TERM) OF SAID
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MASTER LEASE UNLESS ALC HAS GIVEN LTC ITS NOTICE TO EXTEND THE TERM OF THE
RELEVANT MASTER LEASE.
FURTHERMORE, ALC SHALL NOT BE ENTITLED TO SUBSTITUTE ANY OF THE FIVE (5)
FACILITIES LOCATED IN THE STATE OF WASHINGTON THAT ARE CURRENTLY ENCUMBERED BY
WASHINGTON STATE REVENUE BONDS (THE "WA BONDS") UNTIL DECEMBER 2, 2015.
ALC HEREBY AGREES THAT IT SHALL CLOSE, DIVEST ITSELF OF, OR LEASE THE
SUBSTITUTED FACILITY TO AN UNAFFILIATED THIRD-PARTY, BUT IN ANY EVENT ALC AND
ITS AFFILIATES SHALL PERMANENTLY CEASE TO OPERATE THE SUBSTITUTED FACILITY AS AN
ASSISTED LIVING OR OTHER HEALTHCARE RELATED FACILITY WITHIN ONE (1) YEAR OF THE
EFFECTIVE DATE OF SUCH SUBSTITUTION.
ALC'S FAILURE TO DO SO SHALL CONSTITUTE AN
EVENT OF DEFAULT UNDER THE APPLICABLE MASTER LEASE.
LTC AND ALC HEREBY AGREE THAT THE SUBSTITUTION AS SET FORTH IN THIS
SECTION 1.2.4 REPRESENTS THE ENTIRE CONSIDERATION FOR SUCH QUALIFYING SUBSTITUTE
FACILITY AND THAT THERE SHALL BE NO ALTERATION OF ANY MINIMUM RENT DUE UNDER THE
APPLICABLE MASTER LEASE TO LTC, AND NEITHER LTC NOR ALC SHALL BE ENTITLED ANY
OTHER CONSIDERATION WHETHER IN THE FORM OF CASH OR OTHERWISE.
1.2.5.
INSURANCE.
THE LANGUAGE SET FORTH IN EXHIBIT D
ATTACHED HERETO SHALL REPLACE ARTICLES XIII AND XIV OF THE MASTER LEASE.
1.2.6.
SUBLETTING.
(THE FOLLOWING LANGUAGE MODIFIES
SECTION 22 OF THE MASTER LEASE AS FOLLOWS)
"SUBJECT TO THE PERMITTED EXCEPTIONS
SET FORTH IN SECTION 22.3 BELOW, ALC MAY NOT ASSIGN, SUBLEASE OR SUBLET,
ENCUMBER, APPROPRIATE, PLEDGE OR OTHERWISE TRANSFER, THE LEASE OR THE LEASEHOLD
OR OTHER INTEREST IN THE LEASED PROPERTY WITHOUT LTC'S CONSENT, WHICH MAY BE
WITHHELD IN LTC'S SOLE AND ABSOLUTE DISCRETION.
NOTWITHSTANDING THE FORGOING IN
THIS SECTION 22, ALC MAY SUBLET ONE OR MORE FACILITY TO A SUBSIDIARY OF ALC OR
EHSI, PROVIDED
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THAT