Document:

Exhibit

SABRA HEALTH CARE REIT, INC.
DIRECTORS’ COMPENSATION POLICY 
(Effective June 15, 2016)
Directors of Sabra Health Care REIT, Inc., a Maryland corporation (the “Company”), who are not employed by the Company or one of its subsidiaries (“non-employee directors”) are entitled to the compensation set forth below for their service as a member of the Board of Directors (the “Board”) of the Company.  The Board has the right to amend this policy from time to time.
	
		
	Cash Compensation
	 

	Annual Retainer
	$55,000

	Additional Chair/Lead Independent Director Retainer
	$20,000

	Additional Committee Chair Retainers
	 

	Audit Committee Chair
	$15,000

	Compensation Committee Chair
	$10,000

	Nominating and Governance Committee Chair
	$10,000

	Committee Meeting Fee (per meeting)
	$1,000

	 
	 

	Equity Compensation
	 

	Annual Equity Award
	$105,000

Cash Compensation 
Each non-employee director will be entitled to an annual cash retainer while serving on the Board in the amount set forth above (the “Annual Retainer”).  A non-employee director who serves as the Chair of the Board or the Company’s Lead Independent Director will be entitled to an additional annual cash retainer while serving in that position in the amount set forth above (the “Additional Chair/Lead Independent Director Retainer”).  A non-employee director who serves as the Chair of the Audit Committee, the Compensation Committee or the Nominating and Governance Committee of the Board will be entitled to an additional annual cash retainer while serving in that position in the applicable amount set forth above (an “Additional Committee Chair Retainer”).  A non-employee director who attends a meeting of the Audit Committee, the Compensation Committee or the Nominating and Governance Committee of the Board (each, a “Committee Meeting”) will be entitled to a fee for attendance at the meeting in the amount set forth above (a “Committee Meeting Fee”); provided that the Committee Meeting Fee for a particular Committee Meeting will be reduced to $500 if the meeting is either (1) a telephonic meeting lasting for less than thirty minutes, or (2) a meeting that is held as an in-person meeting but the non-employee director attends the meeting other than in person. 
The amounts of the Annual Retainer, Additional Chair/Lead Independent Director Retainer, and Additional Committee Chair Retainers reflected above are expressed as annualized amounts.  These retainers will be paid on a quarterly basis, at the end of each quarter in arrears, and will be pro-rated if a non-employee director serves (or serves in the corresponding position, as the case may be) for only a portion of the quarter (with the proration based on the number of calendar days in the quarter that the director served as a non-employee director or held the particular position, as the case may be).  Committee Meeting Fees for attendance at one or more meetings that occur in a particular quarter will be paid at the end of that quarter.

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Equity Awards
Annual Equity Awards for Non-Employee Directors 
On the date of each annual meeting of the Company’s stockholders, each non-employee director then in office will automatically be granted an award of restricted stock units (an “Annual RSU Award”) determined by dividing (1) the Annual Equity Award grant value set forth above by (2) the per-share closing price of the Company’s common stock on the date of such annual meeting (rounded down to the nearest whole unit).  Each Annual RSU Award will vest in equal monthly installments over the one-year period following the date of grant.  Should the annual meeting of the Company’s stockholders in the year following the year in which the award was granted occur prior to the last vesting date of the award, the outstanding and unvested portion of the award will vest on the day prior to that annual meeting.  In the event that more than one annual meeting of the Company’s stockholders occurs during a given fiscal year, Annual RSU Awards will be made only in connection with the first such meeting to occur in that year. 
For each new non-employee director appointed or elected to the Board other than on the date of an annual meeting of the Company’s stockholders, on the date that the new non-employee director first becomes a member of the Board, the new non-employee director will automatically be granted a pro-rata portion of the Annual RSU Award (a “Pro-Rata Annual RSU Award”) determined by dividing (1) a pro-rata portion of the Annual Equity Award grant value set forth above by (2) the per-share closing price of the Company’s common stock on the date the new non-employee director first became a member of the Board.  The pro-rata portion of the Annual Equity Award grant value for purposes of a Pro-Rata Annual RSU Award will equal the Annual Equity Award grant value set forth above multiplied by a fraction (not greater than one), the numerator of which is 12 minus the number of whole months that as of the particular grant date had elapsed since the Company’s last annual meeting of stockholders at which Annual RSU Awards were granted by the Company to non-employee directors, and the denominator of which is 12, with the result to be rounded down to the nearest whole unit.  Each Pro-Rata Annual RSU Award will vest in equal monthly installments based on the number of whole months remaining in the period beginning with the month following the month in which the Pro-Rata Annual RSU Award was granted and ending with the month in which the next scheduled annual meeting of the Company’s stockholders in which Annual RSU Awards will be granted.
Provisions Applicable to All Non-Employee Director Equity Awards
Each restricted stock unit award will be made under and subject to the terms and conditions of the Company’s 2009 Performance Incentive Plan (the “2009 Plan”) or any successor equity compensation plan approved by the Company’s stockholders and in effect at the time of grant, and will be evidenced by, and subject to the terms and conditions of, an award agreement in the form approved by the Board to evidence such type of grant pursuant to this policy (the “Form of Award Agreement”).  To the extent then vested, restricted stock units will generally be paid in an equal number of shares of the Company’s common stock on the earlier to occur of (1) that date that is five years following the original grant date, (2) the date the non-employee director ceases to be a member of the Board, or (3) the occurrence of a “change in control.”
Restricted stock unit awards granted under the 2009 Plan are generally forfeited as to the unvested portion of the award upon the non-employee director’s termination of service as a director for any reason.  However, vesting of a non-employee director’s outstanding and unvested restricted stock units will accelerate upon a change in control of the Company or should the director’s services terminate due to the director’s death or disability.
Non-employee directors are entitled to receive dividend equivalents with respect to outstanding and unpaid restricted stock units granted pursuant to this policy.  Dividend equivalents, if any, are paid in the form of a credit of additional restricted stock units under the 2009 Plan and are subject to the same vesting, payment and other provisions as the underlying restricted stock units.
  The definition of “change in control” and specific payment, termination and dividend equivalent provisions applicable to an award are set forth in the related Form of Award Agreement.

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Elective Grants of Equity Awards
Non-employee directors may participate in the Company’s Non-Employee Directors Stock-For-Fees Program, pursuant to which they may elect that certain of their cash retainers be converted into the right to receive an award of stock units under the 2009 Plan.
Expense Reimbursement 
All non-employee directors will be entitled to reimbursement from the Company for their reasonable travel (including airfare and ground transportation), lodging and meal expenses incident to meetings of the Board or committees thereof or in connection with other Board-related business.  The Company will make reimbursement to a non-employee director within a reasonable amount of time following submission by the non-employee director of reasonable written substantiation for the expenses.
 

3Exhibit

AGREEMENT REGARDING DISPOSITION
OF ASSETS AND LEASE AMENDMENTS

THIS AGREEMENT REGARDING DISPOSITION OF ASSETS AND LEASE AMENDMENTS (this “Agreement”) is entered into as of July 29, 2016, by and between SABRA HEALTH CARE REIT, INC., a Maryland corporation (“Sabra”), and GENESIS HEALTHCARE INC., a Delaware corporation (“Genesis”), with reference to the following Recitals:
RECITALS
A.Subsidiaries of Sabra, as landlord (collectively, “Landlord”) and subsidiaries of Genesis, as tenant, (collectively, “Tenant”) are parties to certain Leases and Master Leases (as amended from time to time, collectively, the “Leases”) with respect to inter alia, those certain healthcare facilities identified on Schedule 1 attached hereto (each a “Subject Facility” and, collectively, the “Subject Facilities”).
B.Subject to the terms and conditions set forth herein, the parties mutually desire to cause the Subject Facilities to be sold to unaffiliated third parties and to provide for the early termination of the applicable Lease with respect to each Subject Facility concurrently with the consummation of each such sale.
C.As a condition to Sabra’s willingness to execute and deliver this Agreement, the parties have also included the provisions of Section 5 below with respect to the Leases, Transferred Facilities and guaranties of leases relating thereto. 
NOW, THEREFORE, in consideration of the recitals set forth above (which by this reference are incorporated herein) and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1.Agreement to Market for Sale.  Tenant intends to enter into brokerage agreements with Blueprint Healthcare Real Estate Advisors (“Blueprint”) and/or other commercial real estate brokers reasonably acceptable to Landlord for the sale of the Subject Facilities. Landlord hereby agrees to use commercially reasonable efforts to cooperate with the sale of the Subject Facilities; provided, however, that Tenant hereby acknowledges and agrees that Landlord shall have no obligation to sell any Subject Facility unless the net sales proceeds to be delivered to Landlord upon the closing of such sale are acceptable to Landlord and Tenant in their reasonable, discretion.  The parties acknowledge that each sale of a Subject Facility or group of Subject Facilities under a PSA (as defined below) is intended to be an independent transaction and not contingent upon the closing of the sale of another Subject Facility outside of the subject PSA.
2.Tenant’s and Landlord’s Agreement to Cooperate in Sale. Tenant hereby agrees to use its commercially reasonable efforts to facilitate the sale of the Subject Facilities, including, without limitation, by (a) entering into, and faithfully complying with, commercially reasonable purchase and sale agreements (each a “PSA”) and operations transfer agreements (each an “OTA”) with any proposed purchaser thereof (or its designee, and in such capacity, the “New Operator”), 

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which are reasonably acceptable to Tenant and shall, inter alia, (i) provide for the proration of operational revenues and expenses, (ii) include commercially reasonable and customary representations and warranties from Tenant as to physical plant and operational matters and reasonable and customary post-closing indemnities for operational liabilities, including improper billings, from a net-worth entity reasonably acceptable to the New Operator (iii) provide for the conveyance to the New Operator of Tenant’s interest in the personal property at the Subject Facilities as of the closing thereunder (but specifically excluding any IT equipment and any personal property owned by third parties or affiliates of Genesis other than Tenant) for value  agreed by Tenant; and (iv) grant the New Operator reasonable access to the Premises and Tenant’s books and records relating to the operations thereof (but specifically excluding the policies and procedure manuals and other proprietary information of Tenant); (b) reasonably cooperating (at New Operator’s sole cost and expense) with the New Operator in connection with its efforts to obtain the licenses, permits and other authorizations needed to operate the applicable Subject Facilities for their current use from and after the sale thereof, including, without limitation, by filing, submitting or otherwise distributing such applications and notices as the New Operator may reasonably request; (c) in Tenant’s capacity as the party in possession of the Subject Facilities, delivering such customary affidavits as the title company handling the sale of the Subject Facilities may reasonably require in order to issue the title policy required under the applicable PSA; and (d) continuing to operate the Subject Facilities in material compliance with all legal and licensing requirements as set forth in the Leases. Tenant also agrees to promptly reimburse Landlord for its reasonable out of pocket legal fees and costs incurred in connection the execution and delivery of this Agreement and the sale of the Subject Facilities. Subject to the provisions of Section 1 above, Landlord hereby agrees to use its commercially reasonable efforts to cooperate with, and assist where necessary, Tenant with its facilitation of the sale of the Subject Facilities, including, without limitation, by (a) joining in the execution and delivery of each PSA for purposes of agreeing to convey title to the Subject Facilities and related landlord personal property to the prospective purchasers of the Subject Facilities (“Purchasers”) at closing, (b) cooperating with the due diligence investigations of any such Purchasers, and (c) providing Purchasers and their representatives, subject to the terms of commercially reasonable confidentiality agreements, access to all books, records, files, reports, and information that are (I) in Landlord’s control or possession, (II) relate to the applicable Subject Facilities, and (III) would typically be disclosed in connection with the sale of a commercial healthcare facility as contemplated hereunder. 
3.Agreement to Amend the Leases; Base Rent Reduction. Landlord and Tenant hereby agree that on and subject to the terms and conditions set forth herein, the applicable Lease shall be amended to release therefrom any and all rights, duties and obligations, including, without limitation, rights of occupancy and use and duties and obligations for certain rent and other payment obligations, solely with respect to the applicable Subject Facility on and as of 11:59 p.m. on the date immediately prior to the date on which the closing of the sale of such Subject Facility occurs (as applicable to each Subject Facility, the “Termination Date”). Effective as of the applicable Termination Date, the annual Base Rent payable under the Lease shall be reduced by the product of (a) the net sales proceeds payable to Landlord in connection with the sale of such Subject Facility (after deducting closing and transaction costs incurred, but without regard to operating prorations (which shall be to the benefit or cost of Tenant)), and (b) Seven and one-half percent (7.5%) (the applicable “Rent Credit Amount”).  Rent Credit Amounts attributable to the sales of Subject 

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Facilities that (i) are leased under the Arden, Kentucky and Ohio Leases shall be applied to each such applicable Lease, (ii) are leased under any other Lease shall be applied to the Connecticut, Other Centers and Revolver Leases (the “Allocated Leases”) in the following percentages: (A) Connecticut = 16.62%; (B) Other Centers = 21.42%; and (C) Revolver = 61.96%.  Tenant acknowledges that it is anticipated that the annual Base Rent payable by Tenant under the terms of the applicable Leases immediately prior to the Termination Date that is attributable to any Subject Facility (in each case, a “Subject Facility Base Rent Amount”) that is sold will be greater than the applicable Rent Credit Amount associated with such Subject Facility (in each case, the “Subject Facility Rent Credit Amount”) and that Landlord is not willing to release Tenant from its obligation to pay the amount equal to the difference between the Subject Facility Base Rent Amount and the Subject Facility Rent Credit Amount (such difference, the “Subject Facility Excess Rent”). Within thirty (30) days following the execution and delivery of this Agreement, Landlord and Tenant shall enter into amendments to each of the applicable Leases as are necessary to effectuate the changes to the expiration dates of the Initial Terms and Base Rent amounts set forth in the first five (5) columns of the lease amendment summary attached hereto as Schedule 2 (“Lease Amendment Summary”).  As further reflected in the Lease Amendment Summary, at such time as a sale of the last Subject Facility leased under the applicable Arden, Kentucky and Ohio Leases occurs all Subject Facility Excess Rent with respect thereto shall be reallocated to the Base Rent payment obligations under the Allocated Leases in the following percentages: (A) Connecticut = 16.62%; (B) Other Centers = 21.42%; and (C) Revolver = 61.96%. The Base Rent payable under such Allocated Leases shall also be subject to such reductions at the time periods and in such amounts as are specified in the column entitled “Additional Provisions” set forth in the Lease Amendment Summary (the “Base Rent Reductions”). The parties agree to cooperate with one another and execute such lease amendments as are necessary from time to time to evidence the reallocation of the Subject Facility Excess Rent and Base Rent Reductions described above. 
4.HUD Debt.  The parties hereto acknowledge that certain of the Subject Facilities are subject to HUD debt (the “HUD Facilities”) and that the repayment or assumption of such debt will be necessary to effectuate the sale of such HUD Facilities.  Nevertheless, the parties desire to market such HUD Facilities for sale under mutually acceptable terms with the understanding that (a) such HUD Facilities are pledged under a Lease that includes properties other than the HUD Facilities and it will be necessary to amend the HUD loan documents and such Lease in order to consummate a sale, and (b) the additional costs and expenses incurred in connection with the sale of the HUD Facilities (including, without limitation, any loan assumption and/or prepayment fee) shall be borne by Genesis.
5.Remaining Leases; Cooperation regarding Transferred Facilities.  The parties hereto acknowledge that, in addition to the sale of the Subject Facilities contemplated hereunder, Sabra is considering the sale or joint venture of the ownership interest in other facilities subject to the Leases, as amended in accordance with the terms hereinabove.  In connection with any such sale or joint venture, it may be necessary to (a) create a separate lease or master lease governing Tenant’s lease obligations with respect to such sold or joint ventured property, and/or (b) reallocate the Base Rent payable under the Leases to more appropriately reflect the economic performance of the assets thereunder. Accordingly, Landlord shall have the right from time to time during the applicable lease term, by notice to Tenant, to require that Tenant execute an amendment to the 

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applicable Lease pursuant to which one or more facilities (individually, a “Transferred Facility” or collectively, “Transferred Facilities”) are separated and removed from the applicable Lease, and, in such event, simultaneously with the execution of such amendment, Landlord (or the subsequent owner) and Tenant (or its affiliate) shall execute a substitute lease with respect to such Transferred Facilities (each a “Substitute Lease”), provided, however, that in no event shall Landlord seek to amend any Lease to include the Eagle Crest facility (formerly known as the Carmichael facility) located at 8336 Fair Oaks Blvd., Carmichael, CA (“Eagle Crest”). The economic terms of any such amendment to such Lease, the related Substitute Lease and any other Lease impacted thereby shall be subject to good faith negotiations and mutually acceptable to Landlord and Tenant; provided, however, in no event shall such economic terms increase Tenant’s overall payment obligations from the obligations due under the applicable Leases prior to such transaction. In connection with any such transaction, Genesis hereby agrees to execute and deliver (a) a new guaranty of lease with respect to the obligations due under the Substitute Lease, and (b) an amended and restated guaranty of lease with respect to the obligations due under any Leases amended in connection therewith.
6.Term of this Agreement; Default.  Unless extended in writing by the parties hereto, this Agreement, and all rights and obligations hereunder, shall automatically terminate with respect to any remaining Subject Facilities if a contract for the sale of such Subject Facilities has not been executed and consummated on or before October 31, 2017.  For the avoidance of doubt, if a material default occurs hereunder and such default is not cured within sixty (60) days following written notice thereof, the same shall constitute an Event of Default under the subject Leases and the non-defaulting party’s rights and remedies under such Leases in connection with such default shall survive the expiration of this Agreement. 
7.Sale of Additional Facilities.  Landlord acknowledges that Tenant may elect to market, or cause Blueprint to market, the Subject Facilities for sale along with certain other healthcare facilities which Genesis and/or its direct or indirect affiliates currently lease from third party landlords (such landlords the “Third Party Landlords” and each such sale, a “Combined Sale”). Landlord acknowledges that any consummation of a Combined Sale shall be subject in all respects to the mutual consent of Landlord and the applicable Third Party Landlords. Landlord agrees to negotiate in good faith with Tenant regarding a sale of Eagle Crest and the reallocation of the rent allocated to Eagle Crest among the Connecticut and Other Centers Leases.
8.Miscellaneous.
(a)This Agreement shall constitute the entire agreement between the parties with respect to the subject matter hereof, and no variation or modification thereof shall be valid and enforceable, except by an agreement in writing, executed and approved in the same manner as this Agreement.
(b)If any party commences an action against another other to interpret or enforce any of the terms of this Agreement or because of the breach by another party of any of the terms hereof, the losing party shall pay to the prevailing party reasonable attorneys’ fees, costs and expenses incurred in connection with the prosecution or defense of such action, whether or not the action is prosecuted to a final judgment.  

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(c)This Agreement shall inure solely to the benefit of the parties hereto and their respective successors and assigns.  No third party shall have the right to derive or claim any benefit hereunder and shall have no right to enforce or rely upon any provision of this Agreement.
(d)This Agreement shall be governed by and construed and enforced in accordance with the applicable laws of the state of California, without regard to the conflict of laws rules thereof; provided that that the law of the applicable state or commonwealth shall govern procedures for enforcing, in the respective state or commonwealth, provisional and other remedies directly related to each Subject Facility.
(e)Each party will, whenever and as often as it shall be reasonably requested so to do by another party, cause to be executed, acknowledged or delivered, any and all such further instruments and documents as may be necessary or proper, in the reasonable opinion of the requesting party, in order to carry out the intent and purpose of this Agreement.
(f)This Agreement may be executed and delivered (including by facsimile or Portable Document Format (pdf) transmission) in counterparts, all of which executed counterparts shall together constitute a single document.  Signature pages may be detached from the counterparts and attached to a single copy of this document to physically form one document.  Any such facsimile documents and signatures shall have the same force and effect as manually-signed originals and shall be binding on the parties hereto.

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IN WITNESS WHEREOF, this Agreement has been executed and delivered as of the date first set forth above. 
GENESIS:
GENESIS HEALTHCARE, INC.,  
a Delaware corporation

By:    /s/ Michael Sherman                
Name:    Michael Sherman                
Title:    Senior Vice President                

[SIGNATURES CONTINUE ON NEXT PAGE]

S-1

SABRA:
SABRA HEALTH CARE REIT, INC.,  
a Maryland corporation

By:    /s/ Talya Nevo-Hacohen            
Name:    Talya Nevo-Hacohen                
Title:    Chief Investment Officer            

S-2

SCHEDULE 1

SCHEDULE OF SUBJECT FACILITIES

	
				
	Facility Name
	Facility Address
	Type of Facility
	Licensed Beds

	Bradford Square Care and Rehabilitation Center
	1040 U.S. 127
South Frankfort, KY 40601
	SNF
	100

	Klondike Care and Rehabilitation Center
	3802 Klondike Lane
Louisville, KY 40218
	SNF
	62

	Regency Care and Rehabilitation Center
	1550 Raydale Drive
Louisville, KY 40219
	SNF
	110

	Kensington Manor Care and Rehabilitation Center
	225 St. John Road
Elizabethtown, KY 42701 
 
	SNF
	82

	Countryside Care and Rehabilitation Center
	47 Margo Avenue
Bardwell, KY 42023
	SNF
	61

	Hopkins Care and Rehabilitation Center
	460 South College Street
Woodburn, KY 42170
	SNF
	50

	Heartland Villa Care and Rehabilitation Center
	8005 U.S. Highway 60 West
Lewisport, KY 42351
	SNF
	69

	Edmonson Care and Rehabilitation Center
	813 South Main Street
Brownsville, KY 42104
	SNF
	94

	Colonial Manor Care and Rehabilitation Center
	2365 Nashville Road
Bowling Green, KY 42101
	SNF
	48

	Barkley Center
	4747 Alben Barkley Drive
Paducah, KY 42001
	SNF
	86

	Magnolia Village Care and Rehabilitation Center
	1381 Campbell Lane
Bowling Green, KY 42101
	SNF
	60

	Hillside Villa Care and Rehabilitation Center
	1500 Pride Avenue
Madisonville, KY 42341
	SNF
	71

	Heritage Place Assisted Living Center
	3362 Buckland Square
Owensboro, KY 42301
	SNF
	68

	Bridge Point Care and
Rehabilitation Center
	7300 Woodspoint Drive
Florence, KY 41045

	SNF
	151

Schedule 1-1

	
				
	Facility Name
	Facility Address
	Type of Facility
	Licensed Beds

	Sylvania Care and
Rehabilitation Center
	5757 Whiteford Road
Sylvania, OH 43560

	SNF
	150

	New Lexington Care
and Rehabilitation Center
	920 South Main Street
New Lexington, OH 43764
	SNF
	100

	Point Place Care and
Rehabilitation Center
	6101 North Summit
Toledo, OH 43611
	SNF
	98

	Perrysburg Care and
Rehabilitation Center
	28546 Starbright Boulevard
Perrysburg, OH 43551
	SNF
	93

	Bryan Care and
Rehabilitation Center
	1104 Wesley Avenue
Bryan, OH 43506
	SNF
	159

	Twin Rivers Care and
Rehabilitation Center
	395 Harding Avenue
Defiance, OH 43512
	SNF
	93

	New Lebanon Care and
Rehabilitation Center
	101 Mills Place
New Lebanon, OH 45345
	SNF
	120

	Butte Care and
Rehabilitation Center
	2400 Continental Drive
Butte, MT  59701

	SNF
	100

	Whitefish Care and
Rehabilitation Center
	1305 E. Seventh Street
Whitefish, MT  59937

	SNF
	100

	Deer Lodge Care and
Rehabilitation Center
	1100 Texas Avenue
Deer Lodge, MT  59722

	SNF
(HUD Facility)
	60

	Missouri River Care and
Rehabilitation Center
	1130 Seventeenth Ave. S.
Great Falls, MT  59405

	SNF
(HUD Facility)
	278

	Decatur Township Care and
Rehabilitation Center
	4851 Tincher Road
Indianapolis, IN 46221
	SNF
	88

	Fountain City Care and
Rehabilitation Center
	5131 Warm Springs Road
Columbus, GA 31909

	SNF
	210

	Etowah Landing Care and
Rehabilitation Center
	809 South Broad Street
Rome, GA 30161
	SNF
	100

	Arden House
	850 Mix Avenue
Hamden, Connecticut

	SNF
(HUD Facility)
	360

Schedule 1-2

SCHEDULE 2

LEASE AMENDMENT SUMMARY

Schedule 2-1

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