SIMILAR MATTERS OF RECORD,
AND UNRECORDED LEASES AND OCCUPANCY AGREEMENTS (SUCH MATTERS AFFECTING TITLE,
THE "ENCUMBRANCES"), NONE OF WHICH, CONSIDERED INDIVIDUALLY OR ON A COMBINED
BASIS, ADVERSELY AFFECT OR DIMINISH THE USE, VALUE OR OPERATION OF THE
SUBSTITUTE FACILITY, AND NONE OF WHICH DIFFER
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MATERIALLY IN CONTENT, PURPOSE OR EFFECT FROM THE ENCUMBRANCES AFFECTING TITLE
TO THE FACILITY BEING SUBSTITUTED OUT; (IV) THE SUBSTITUTE FACILITY SHALL BE IN
COMPLIANCE WITH ALL STATE AND FEDERAL REGULATIONS, INCLUDING ALL LICENSING AND
OPERATING REQUIREMENTS, ALL STATE AND LOCAL BUILDING AND ZONING CODES, AND ALL
OTHER REQUIREMENTS NECESSARY TO OPERATE THE SUBSTITUTE FACILITY AS AN ASSISTED
LIVING FACILITY; (V) THE SUBSTITUTE FACILITY SHALL BE IN COMPLIANCE WITH ALL
STATE AND FEDERAL REGULATIONS AND ALL OTHER REQUIREMENTS NECESSARY TO ALLOW A
CHANGE OF OWNERSHIP (VI) THE SUBSTITUTE FACILITY BE IN MATERIAL COMPLIANCE WITH
ANY APPLICABLE LAWS, RULES OR REGULATIONS GOVERNING THE USE, HANDLING, STORAGE
AND DISPOSAL OF HAZARDOUS SUBSTANCES AND THAT PRIOR TO THE SUBSTITUTION ALC HAS
DELIVERED A PHASE I ENVIRONMENTAL REPORT DATED NO MORE THAN SIX (6) MONTHS PRIOR
TO THE EFFECTIVE DATE OF SUCH SUBSTITUTION EVIDENCING SUCH COMPLIANCE; (VI)
THERE HAVE BEEN NO MORE THAN TWO (2) PRIOR SUBSTITUTIONS UNDER THE MASTER LEASE
OR THIS SECTION 1.2.4 CONSUMMATED WITHIN THE TWELVE (12) MONTHS PRECEDING THE
DATE OF THE CLOSING OF THE PROPOSED SUBSTITUTION, AND (VII) THE SUBSTITUTE
FACILITY SHALL BE IN GOOD PHYSICAL AND MECHANICAL CONDITION AND REPAIR AND SHALL
NOT REQUIRE ANY CAPITAL IMPROVEMENTS OR REPAIRS IN EXCESS OF $30,000, WHICH
CAPITAL IMPROVEMENTS SHALL EITHER (A) BE FUNDED BY ALC WITHOUT REIMBURSEMENT BY
LTC, OR (B) IF FUNDED OR OTHERWISE PAID FOR BY LTC, BE TREATED AS AN EXPANSION
OF THE FACILITY IN QUESTION AND RESULT IN THE ADJUSTMENTS TO MINIMUM RENT
PROVIDED FOR IN SECTION 1.2.10 OF THIS MOU, AND IN ANY EVENT SHALL BE UNDERTAKEN
AND DILIGENTLY PURSUED TO COMPLETION BY ALC WITHIN SIX (6) MONTHS OF
CONSUMMATION OF THE SUBSTITUTION.
EACH SUBSTITUTION UNDER THIS MASTER LEASE SHALL BE TREATED AS AN EXCHANGE OF
PROPERTY, WITH THE RESULT BEING THAT LTC SHALL BE THE OWNER OF THE REAL PROPERTY
AND IMPROVEMENTS THEREON OF THE QUALIFYING SUBSTITUTE FACILITY AND THAT ALC,
INC. SHALL BE THE OWNER OF THE REAL PROPERTY AND IMPROVEMENTS THEREON OF THE
FACILITY BEING SUBSTITUTED OUT OF THE MASTER LEASE (THE "SUBSTITUTED FACILITY").
IN CONNECTION WITH THE FOREGOING, LTC
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SHALL HAVE THE SUBSTITUTED FACILITY, ON OR BEFORE THE DATE OF SUBSTITUTION,
RELEASED FROM ANY AND ALL LIENS AND ENCUMBRANCES SECURING MONETARY OBLIGATIONS.
ALC AGREES TO PAY ALL OF LTC'S REASONABLE COSTS AND OUT-OF-POCKET EXPENSES IN
CONNECTION WITH GOOD-FAITH EFFORTS TO CONSUMMATE ANY SUBSTITUTION HEREUNDER,
WHETHER OR NOT SUCH SUBSTITUTION IS COMPLETED, EXCEPTING ANY PRINCIPAL AND
ACCRUED INTEREST TO PAY OFF MONETARY OBLIGATIONS SECURED BY LIENS OR
ENCUMBRANCES AGAINST THE SUBSTITUTED FACILITY. IN ADDITION, IN LIEU OF LTC
CHARGING ALC FOR THE ACTUAL TIME AND EFFORTS OF ITS STAFF IN PROCESSING A
SUBSTITUTION HEREUNDER, EACH TIME ALC DELIVERS A SUBSTITUTION NOTICE, TOGETHER
WITH THAT