Document:

Unassociated Document

    Exhibit
10.12

     

    AMENDED
AND RESTATED LEASE AGREEMENT

     

    THIS AMENDED AND RESTATED LEASE
AGREEMENT (this “Lease”) is
made and entered into effective the 31st day of
December, 2009, by and between MVI
HEALTH CENTER, LP, a
Delaware limited partnership (“Lessor”),
and PM MANAGEMENT - BABCOCK NC,
LLC, a Texas limited liability company (“Lessee”),
collectively, the “Parties”
and each a “Party”.

     

    W I T N E
S S E T H

     

    WHEREAS,
pursuant to that certain Lease Agreement dated December 31, 2008 (the “Original
Lease”) by and between Lessee and SNF MESA VISTA, LLC, a Texas
limited liability company (the “Seller”),
the Lessee previously leased a 144-bed nursing home commonly known as Mesa Vista
Health Center (the “Facility”)
located on certain real property in San Antonio, Bexar County, Texas, as more
particularly described in Exhibit
A attached hereto and incorporated herein for all purposes (the “Land” and,
together with the Facility, the “Property”);
and

     

    WHEREAS,
pursuant to that certain Purchase and Sale Agreement dated December 31 2009, by
and between the Lessor and the Seller (the “Purchase
Agreement”), the Lessor has acquired the Property and certain personal
property used in connection with the operation and maintenance of the Property
(collectively, the “Personal
Property”) from the Seller; and

     

    WHEREAS,
pursuant to the terms of that certain Assignment and Assumption Agreement of
even date herewith by and among the Lessor, the Seller, and the Lessee (the
“Assignment
Agreement”), the terms of which are incorporated herein by reference, the
Seller has agreed to assign the Original Lease to Lessor, and Lessor has agreed
to assume from Seller, all of the Seller’s liabilities and obligations related
to the Original Lease to the extent such liabilities and obligations arise
during and relate to the period from and after the closing of the transaction
contemplated by the Purchase Agreement and solely to the extent provided for in
this Amended and Restated Lease Agreement, and the Lessee has consented to the
assignment and assumption on the terms described herein; and

     

    WHEREAS,
the Lessee desires to continue to lease the Property and the Personal Property
from Lessor; and

     

    WHEREAS,
the Lessor and Lessee desire to modify and amend the Original Lease in certain
respects, and the Original Lease is hereby amended and restated in its entirety
by the terms of this Lease.

     

    NOW,
THEREFORE, for and in consideration of the premises and other good and valuable
consideration, the receipt and adequacy of which are forever acknowledged and
confessed, the Parties hereto acknowledge and warrant that the foregoing
recitals are true and correct and binding upon the Parties, and further agree as
follows:

     

    1.           LEASED PREMISES.
Lessor hereby leases, rents and lets unto Lessee, and Lessee hereby leases,
rents and hires from Lessor, for the Lease Term (as hereinafter defined) and
subject to all of the covenants and conditions hereinafter stated, all right,
title and interest of Lessor in and to the following (collectively, the “Leased
Premises”):

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (a)           Lessor’s
fee interest in the Land, together with all improvements, buildings and fixtures
located thereon or within, whether leased or owned by Lessor.

     

    (b)           All
rights, privileges, easements and appurtenances thereunto appertaining, together
with all Personal Property owned or leased by Lessor located in or about and
which are employed in the operation of the Leased Premises, including machinery,
Lessor’s Equipment (as hereinafter defined), furniture and
furnishings.

     

    2.           TERM.

     

    (a)           Lease
Term.  The term of this Lease shall be for a period of fifteen
(15) years, commencing as of 12:01 a.m., December 31, 2009 (the “Commencement
Date”), and expiring on 12:01 a.m. on the last day of the 180th full
calendar month following the Commencement Date unless sooner terminated or
extended as hereinafter provided (as it may be extended as provided herein, the
“Term” or
“Lease
Term”).  Lessee shall have one (1) option to renew the
then-current Lease Term for an additional five (5) years upon delivery to Lessor
of written notice of exercise on or before the date that is one-hundred eighty
(180) days prior to the last day of the then-current Lease Term.

     

    (b)           Continuation of
Licenses.  In the event this Lease terminates, Lessee agrees to
allow the Facility to continue to be operated under all of its applicable
operating licenses and agrees to cooperate fully with any successor operator in
the transition from the application of its licenses to the application of the
successor’s licenses.

     

    3.        RENT, SECURITY DEPOSIT, AND
OTHER FINANCIAL CONSIDERATIONS.

     

    (a)           Rent.  During
the Term of this Lease, including any renewal period, Lessee shall pay to Lessor
monthly Rent in the amounts set forth on Schedule
3(a)
attached hereto and incorporated herein for all purposes.  All monthly
Rent shall be due and paid to Lessor on
or before the first (1st) day of
each month in the Term.  This Lease is intended to be a “triple net”
lease, such that that the  set forth on Schedule
3(a)
attached hereto will be absolutely net to Lessor; accordingly, Lessee shall be
solely responsible for timely payment of any and all costs associated with
operating the Leased Premises, including specifically, without limitation, Taxes
as set forth in Section 11(a), below, utility costs
as described in Section 11(b), below, insurance
premiums as provided in Section 12, below, and the
costs of repair, upkeep, refurbishment, restoration, replacement, maintenance
and operation of the Leased Premises, as more specifically set forth
below.  Except as otherwise provided herein, Lessee shall at all times
remain obligated to pay Rent under this Lease without any right of set-off,
counterclaim, abatement, deduction, reduction or defense of any
kind.  Lessee’s sole right to recover damages against Lessor by reason
of a breach or alleged breach of Lessor’s obligations under this Lease shall be
to prove such damages in a separate action against Lessor. 
The  Rent for any month during the Term which begins or ends on other
than the first or last calendar day of a calendar month shall be prorated based
on actual days elapsed.  All  Rent shall be paid to Lessor
by Lessee by wire transfer or check and shall be due without prior notice
or demand; provided, however, that if, at
any time, any loan documents of Lessor’s mortgage lender require payment of
Rent, Taxes, insurance or any other amounts due hereunder via a lock box, escrow
or other arrangement, Lessee will comply with such requirements.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (b)           Assignment of
Contracts.  Schedule
3(b), attached hereto and made a part hereof for all purposes lists all
of the agreements, leases (whether operating or capital), contracts and
commitments to which the Lessee is a party with respect to the Facility as of
the effective date of this lease (collectively, the “Facility
Contracts”).  Upon the termination of this Lease or in the
event of an Event of Default of Lessee (as hereinafter defined), Lessee shall
immediately assign to Lessor all Facility Contracts and all other agreements,
leases, contracts and commitments relating to the Facility, free and clear of
all claims, liens, security interests and other encumbrances, other than as
provided for in the immediately following sentence. Notwithstanding anything
contained in this Lease to the contrary, any transfer or assignment of
any Facility Contract, agreement, lease, contract, commitment relating to the
Facility, or any other asset of the Lessee shall be subject to (i) the lien
of Wells Fargo Foothill, Inc., as collateral agent for certain lenders (in
such capacity, together with its successors and assigns, in such capacity,
"First Lien
Collateral Agent") to the extent that First Lien Collateral Agent has a
lien on such Facility Contract, agreement, lease, contract, commitment relating
to the Facility, or asset pursuant to certain security agreements entered
into by and between First Lien Collateral Agent and Lessee; and (ii) the lien
of Silver Point Finance, LLC as collateral agent for certain lenders
(in such capacity, together with its successors and assigns, in such capacity,
"Second
Lien Collateral Agent") to the extent that Second Lien Collateral Agent
has a lien on such Facility Contract, agreement, lease, contract, commitment
relating to the Facility, or asset pursuant to certain security agreements
entered into by and between Second Lien Collateral Agent and
Lessee.

     

    (c)           Security
Deposit.  On the Effective Date, Lessee shall deposit with
Lessor and maintain during the Term of this Lease (subject to the terms hereof)
a sum equal to Seven Hundred Forty Seven Thousand Five Hundred and 00/100
dollars ($747,500.00) (“Security Deposit
Amount”), subject to the provisions below.  Once the Facility
achieves a monthly  lease coverage ratio of 1.10 as measured by
monthly net operating income divided by monthly rent for six consecutive months,
the Security Deposit shall be reduced to One Hundred Twenty Four Thousand Five
Hundred and 00/100 dollars ($124,500.00) as determined in a manner, and as
evidenced by supporting documentation, deemed satisfactory to Lessor in its
reasonable discretion.  The Security Deposit represents a
security deposit against the faithful performance by Lessee of the terms and
conditions contained in this Lease, including the payment of all
Rent.  Lessor may, from time to time, draw against the Security
Deposit Amount without Lessee’s approval to cure any Event of
Default.  In the event of any such draw, Lessee shall promptly
replenish the amount available thereunder to the full Security Deposit
Amount.  In the event that Lessee has fully complied with the terms of
this Lease and no Event of Default exists, the Security Deposit shall be
returned to Lessee in accordance with applicable law upon termination of this
Lease.

     

    (d)           Transfer of
Beds.  Lessee will not transfer or encumber any of the beds
within the Facility, including without limitation the eighty-five (85) Medicaid
beds assigned to the Facility, without Lessor’s written consent.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    4.           USE OF LEASED
PREMISES/COMPLIANCE, WITH LAW.

     

    (a)           Use of Leased
Premises. During
the Lease Term, Lessee shall use the Leased Premises for the sole and exclusive
purpose of operating a nursing home, which shall be continuously open and
operating. Lessee, to the best of its ability and knowledge, shall operate the
Facility in accordance with standards at least equal to those prescribed by all
governmental bodies having jurisdiction over (i) the Facility and (ii) its
eligibility to receive reimbursement or other payment from public funds with
respect to services rendered to patients eligible to benefit from any public
program providing for such reimbursement or other payment.

     

    (b)           Compliance with the
Law.  Lessee, to the best of its ability and knowledge, shall
maintain and conduct Lessee’s business on the Leased Premises in a lawful manner
and shall timely and fully comply with all applicable federal, state and local
laws, statutes and ordinances and all regulations, orders and directives of
appropriate governmental and accrediting agencies, as such laws, statutes,
ordinances, regulations, orders, and directives now exist or may hereafter be
enacted, and, at Lessee’s sole cost and expense, make any repairs, changes or
modifications in, or to the Leased Premises required by any of the
foregoing.

     

    (c)           Waste;
Nuisance.  Lessee shall not perform or fail to perform any acts
or carry on or permit to exist any practices that may injure or damage the
Leased Premises in any respect or that may constitute a public or private
nuisance or menace to Lessee’s employees, residents, visitors, or invitees, or
to the owners or occupants of adjacent property, or that may violate the
provisions of any required insurance on the Leased Premises or that may diminish
the coverage under such insurance or render such insurance void. Lessee shall
not commit or suffer to exist any waste upon the Leased Premises.

     

    5.           REPRESENTATIONS AND
WARRANTIES AND COVENANTS OF LESSOR.

     

    (a)           Organizational
Capacity.  Lessor represents and warrants that it (i) is duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization, and (ii) has all requisite power and
authority to carry on its business as now conducted and as presently proposed to
be conducted.

     

    (b)           Lawful and Corporate
Authority.  Lessor has the lawful authority to enter into this
Lease and is duly authorized and empowered to execute, deliver and perform its
obligations under this Lease.

     

    (c)           Binding Effect. This
Lease has been duly executed and delivered by Lessor and constitutes a valid and
binding obligation enforceable against Lessor in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the rights of
creditors generally, and except as enforceability may be subject to general
principles of equity.

     

    (d)           Quiet
Enjoyment. So long as
Lessee is not in default hereunder, Lessee shall have quiet enjoyment of the
Leased Premises.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (e)           Brokers and
Finders.  Unless otherwise disclosed in writing, neither Lessor
nor any officer or director thereof has engaged any finder or broker in
connection with the transactions contemplated hereunder.

     

    6.           COVENANTS OF
LESSEE.  As a material inducement to Lessor to enter into this
Lease, Lessee covenants and agrees as follows:

     

    (a)           [Intentionally
deleted.]

     

    (b)           Records and Reporting
Requirements.  Lessee agrees to promptly provide to Lessor the
reports and information regarding Lessee and the operation of the Facility
specified in Schedule
6(b)
attached hereto and incorporated herein. 

     

    (c)           Covenants Related to
Hazardous Materials.  Lessee’s obligations with respect to
Hazardous Materials Laws (defined below), including Lessee’s covenants related
to Hazardous Materials (defined below), environmental indemnity, remediation,
environmental inspection, and Lessor’s participation in Hazardous Materials
Claims (defined below), are exclusively addressed in this Agreement in this
Section 6(c). Lessee’s use of the Property shall comply with all Hazardous
Materials Laws.  For purposes hereof, the term “Hazardous
Materials” shall mean (a) any petroleum products and/or by-products
(including any fraction thereof), flammable substances, explosives, radioactive
materials, known carcinogens or mutagens or any other substance which pose a
hazard to any portion of the Property or to Persons on or about any portion of
the Property or cause any portion of the Property to be in violation of any
Hazardous Materials Laws; (b) asbestos in any form which is friable;
(c) urea formaldehyde in foam insulation or any other form;
(d) transformers or other equipment which contain dielectric fluid
containing levels of polychlorinated biphenyls in excess of fifty (50) parts per
million or any other more restrictive standard then prevailing; (e) medical
wastes and biohazards; (f) radon gas; and (g) any other hazardous,
toxic or dangerous waste, substance or material, pollutant or contaminant
heretofore, now or hereafter regulated, prohibited, restricted or controlled by
any federal, state, county or local law, ordinance, rule,  regulation,
policy, code or permit, including but not limited to, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C.
Section 9601 et seq.),
as amended, the Resource Conservation and Recovery Act (42 U.S.C. Section 6901
et seq.), as amended,
and the Texas Solid Waste Disposal Act (Tex. Health & Safety Code Section
361.001, et seq.), as
amended, and including materials listed in the United States Department of
Transportation Hazardous Materials Table (49 CFR 172.101), as amended from time
to time, which is applicable to the Property (collectively, “Hazardous
Materials Laws”).  The term “Hazardous
Materials Claims” shall mean any and all enforcement, clean-up, removal
or other governmental or regulatory actions, or notices of material violations,
or orders threatened, instituted or completed pursuant to any Hazardous Material
Laws, together with all claims, causes of actions, demands, proceedings or suits
made or threatened by any third party against any portion of the Property or
against Lessor or Lessee relating to damage, contribution, cost recovery
compensation, loss or injury resulting from any Hazardous Materials.  
The term “Environmental
Activities” shall mean Lessee’s or Lessee Party’s (as herein defined)
use, generation, spilling, depositing, leaching, dumping, transportation,
handling, discharge, production, treatment, storage, release or disposal of any
Hazardous Materials to or from any portion of the Property or caused to be
located on or present on or under any portion of the Property while this Lease
is in effect.  The term “Lessee
Party” shall mean any manager or operator of the Facility engaged by it
or any subtenant of any portion of the Premises.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (i)           Lessee Notices to
Lessor.  Lessee shall immediately advise Lessor in writing
of:

     

    (a)           any
Environmental Activities in violation of any Hazardous Materials
Laws;

     

    (b)           any
Hazardous Materials Claims against Lessee, any Lessee Party, or any portion of
the Property relating to activities or omissions committed by anyone on the
Property during the Term;

     

    (c)           any
remedial action taken by Lessee or any Lessee Party in response to any Hazardous
Materials Claims or any Hazardous Materials on, under or about any portion of
the Property at levels in violation of any Hazardous Materials
Laws;

     

    (d)           Lessee’s
or any Lessee Party’s discovery of any occurrence or condition on or in the
vicinity of any portion of the Property that materially increases the risk that
any portion of the Property will be exposed to Hazardous Materials;
and

     

    (e)           all
communications to or from Lessee, any Lessee Party, any governmental authority
or any other Person relating to Hazardous Materials Laws or Hazardous Materials
Claims with respect to any portion of the Property, including copies
thereof.

     

    (ii)           Remediation.  If
(i) during the Lease Term, Lessee or any Lessee Party becomes aware of a
violation or a suspected violation by anyone other than Lessor of any Hazardous
Material Laws relating to any Hazardous Materials in, on or under the Property
or any adjacent property thereto; (ii) Lessee or any Lessee Party has received
any Hazardous Materials Claim relating to activities or omissions committed on
the Property or any portion thereof (other than those committed by Lessor or
Lessor’s agents) during the Term; or (iii) Lessee’s or any Lessee Party’s
actions, including but not limited to, any renovations or repairs to the
Property during the Lease Term, cause the Lessee or any Lessee Party to be
obligated to remediate any environmental conditions disclosed in the Phase I
Environmental Assessments Report for the Property (“Existing
Environmental Conditions”), then Lessee covenants and agrees that it
shall (a) immediately notify Lessor of such event; (b) promptly obtain all
permits and approvals necessary to remedy any such actual or suspected problem
through the removal of Hazardous Materials or otherwise; (c) if remediation is
required, submit a remediation plan to Lessor for approval, which shall not be
unreasonably withheld; and (d) at Lessee’s sole cost and expense, cure such
violation or effect such repair, closure, detoxification, decontamination or
other remediation.  Notwithstanding the foregoing, Lessee shall be
entitled to seek contribution from any person whose act or omission caused, in
whole or in part, the presence of Hazardous Materials on the Property
constituting such violation to the satisfaction of all applicable governmental
authorities, in accordance with all Hazardous Materials Laws and the remediation
plan approved by Lessor.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (iii)           Lessee’s Covenant of
 Environmental
Indemnity.  Lessee covenants and agrees that it shall
indemnify, defend, protect, save, hold harmless, and reimburse Lessor and its
directors, officers, shareholders, partners, managers, members, affiliates,
agents, employees, successors and assigns for, from and against any and all
costs, losses (including, losses of use or deficiencies), demands, claims and
expenses (collectively, “Environmental
Costs”)
(whether or not arising out of third-party claims and regardless of whether
liability without fault is imposed, or sought to be imposed, on Lessor, but
excluding any Environmental Costs to the extent they arise from acts or
omissions of Lessor) incurred in connection with, arising out of, resulting from
or incident to, directly or indirectly (i) the production, use, generation,
spilling, depositing, leaching, dumping, storage, treatment, transporting,
disposal, discharge, release or other handling or disposition of any Hazardous
Materials or resulting from any Environmental Activities (collectively, “Handling”)
from, in, on or about the Property (but not adjacent thereto unless caused or
contributed to by Lessee), including the effects of such Handling of any
Hazardous Materials upon any person or property within or outside the boundaries
of the Property, (ii) Lessee’s or any Lessee Party’s violation of any Hazardous
Material Laws on or with respect to the Property during the Lease Term, and
(iii) the imposition of any lien on the Property related to any Environmental
Activities.  “Environmental
Costs” include interest, costs of response, removal, remedial action,
containment, cleanup, investigation, design, engineering and construction,
damages (including actual, consequential and punitive damages) for personal
injuries and for injury to, destruction of or loss of property or natural
resources, relocation or replacement costs, penalties, fines, charges or
expenses, attorney’s fees, expert fees, consultation fees, and court costs, and
all amounts paid in investigating, defending or settling any of the
foregoing.  Notwithstanding anything to the contrary, in no event shall
Lessee be liable for or required to provide any indemnity to the extent any
environmental condition is caused by acts of Lessor (“Lessor
Environmental Conditions”).  Without limiting the scope or
generality of the foregoing, except to the extent that Environmental Costs arise
from Lessor Environmental Conditions, and provided such costs and expenses (i)
do not duplicate costs and expenses incurred by Lessee, and (ii) are otherwise
reasonable, Lessee expressly covenants and agrees to reimburse Lessor for any
and all costs and expenses incurred by Lessor:

     

    (a)           In
investigating any and all matters relating to the Handling during the Lease Term
of any Hazardous Materials, in, on, from, under or about the
Property;

     

    (b)           In
bringing the Property into compliance with all Hazardous Material Laws to the
extent such noncompliance relates to activities or omissions committed by anyone
other than Lessor on the Property during the Lease Term;

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (c)           Removing,
treating, storing, transporting, cleaning-up and/or disposing of any Hazardous
Materials handled in, on, from, under or about the Property or offsite resulting
from Handling of Hazardous Materials from, in, under, on or about the Property
by anyone other than Lessor during the Lease Term (but not adjacent thereto
unless caused or contributed to by activities or omissions by anyone other than
Lessor on the Property during the Lease Term); and

     

    (d)           If
any claim is made hereunder, Lessee agrees to pay such claim promptly, and in
any event to pay such claim within thirty (30) calendar days after receipt by
Lessee of notice thereof.

     

    (iv)           Lessee’s Covenants
Concerning Environmental Inspections and
Operation and Maintenance Programs.  Lessor and Lessor’s
Lender, at Lessor’s sole cost and expense except as set forth below in this
Section, shall have the right, from time to time, and upon not less than three
(3) days written notice to Lessee, except in the case of any emergency in which
event no notice shall be required, to conduct an inspection of the Property to
determine the existence or presence of Hazardous Materials on, at, in, under,
about, to or from any portion of the Property and/or the documentation relative
to Hazardous Materials or any other environmental matters, in Lessee’s
possession.  Lessor shall have the right to enter and inspect the
Property, conduct any testing, sampling and analyses it deems necessary and
shall have the right to inspect materials brought into the
Property.  Lessor may, in its discretion, retain such experts to
conduct the inspection, perform the tests referred to herein, and to prepare a
written report in connection therewith.  Provided that Lessor’s
environmental inspection detects any violation of or liability under Hazardous
Materials Laws arising from activities or omissions committed by anyone other
than Lessor on the Property during the Lease Term, Lessee covenants and agrees
to pay all costs and expenses incurred by Lessor under this Section on
demand by Lessor.  Failure to conduct an environmental inspection or
to detect unfavorable conditions if such inspection is conducted shall in no
fashion be intended as a release of any liability for environmental conditions
subsequently determined to have occurred other than as a result of Lessor’s
action during Lessee’s tenancy.  Lessee shall remain liable for any
breach of its covenants under Sections 6(c)(i), 6(c)(ii) and 6(c)(iii)
regardless of when such conditions are discovered and regardless of whether or
not Lessor conducts an environmental inspection at the termination of this
Lease.

     

    (v)           Participation in Hazardous
Materials Claims.  Lessor shall have the right, at Lessor’s
sole cost and expense, with counsel chosen by Lessor, to join and participate
in, as a party if it so elects, any legal proceedings or actions initiated in
connection with any Hazardous Materials Claims.  Notwithstanding the
foregoing, Lessor shall be entitled to appoint counsel at Lessee’s expense, to
the extent such Hazardous Materials Claim imposes liability on Lessee under
Sections 6(c)(ii) or 6(c)(iii), (i) if the Claim involves remedies that, if
awarded to the adverse party, are reasonably likely to have a material adverse
effect on the Lessee or the Lessor and (ii) if the Lessor has available to it
one or more defenses or counterclaims that are inconsistent with the defenses or
counterclaims asserted by Lessee and the defenses and counterclaims available to
Lessor may not be asserted by the Lessee.  Lessee covenants and agrees to
reimburse Lessor on demand for the reasonable costs and fees for counsel
appointed by Lessor pursuant to the preceding sentence to the extent not
caused by Lessor.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (d)           Delivery of Regulatory
Reports.  Lessee shall timely deliver all
regulatory reports required to be delivered by it pursuant to Section 8, below.

     

    (e)           Maintenance.  Lessee
shall maintain and repair the Leased Premises as required under Section 9, below.

     

    (f)           Books and
Records/Audits.  Lessee shall keep and maintain or cause to be
kept and maintained at all times at the Facility or at the main office of
Lessee’s parent entity, or at such other place as Lessor or Lessor’s lender may
approve in writing, (i) books of accounts and records in accordance with
generally acceptable accounting principals adequate to reflect the results of
the operation of the Facility and to provide the financial statements required
to be provided hereunder and other reports reasonably requested from time to
time by Lessor or Lessor’s lender, and (ii) copies of written contracts,
correspondence and other documents affecting the Facility customarily maintained
by facilities such as the Facility in the ordinary course of
business.  Lessor and Lessor’s lender and their designated agents
shall have the right to inspect and copy any of the foregoing upon reasonable
advance notice to Lessee and subject to laws and regulations respecting patient
confidentiality.  Additionally, Lessee acknowledges that Lessor’s
lender shall have the right, one time during each fiscal year upon reasonable
advance notice to Lessee, to audit such records at the expense of Lessor or such
lender, and Lessee shall reasonably cooperate with such audit(s).

     

    7.           REPRESENTATIONS AND
WARRANTIES OF LESSEE.

     

    (a)           Organizational
Capacity.  Lessee represents and warrants that it (i) is duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization, and (ii) has all requisite power and authority to
carry on its business as now conducted and as presently proposed to be
conducted.

     

    (b)           Lawful and Corporate
Authority.  Lessee has the lawful authority to enter into this
Lease and is duly authorized and empowered to execute, deliver and perform its
obligations under this Lease.

     

    (c)           Binding Effect. This
Lease has been duly executed and delivered by Lessee and constitutes a valid and
binding obligation enforceable against Lessee in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the rights of
creditors generally, and except as enforceability may be subject to general
principles of equity.

     

    (d)           Conflict. The
execution and delivery of this Lease, the performance by Lessee of its
obligations hereunder and the consummation of the transactions contemplated
hereby will not violate any law, regulation, rule or ordinance or any order,
judgment, or decree of any federal, state or local court and do not conflict
with or constitute a breach of, or a default under the terms and conditions of
any agreement, instrument or commitment to which Lessee is a party or by which
Lessee, is bound.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (e)           Litigation. Except as
identified in Schedule
7(e)
attached hereto and incorporated herein for all purposes, there is no action,
suit, proceeding, inquiry or investigation by or before any court, governmental
agency or public board or body pending or, to the knowledge of Lessee,
threatened against Lessee which (i) affects or seeks to prohibit, restrain or
enjoin the execution and delivery of this Lease, (ii) affects or questions the
validity or enforceability of this Lease, (iii) questions the power or
authority of Lessee to carry out the transactions contemplated by, or to perform
its obligation under, this Lease, or (iv) might result in a material adverse
change in the ability of Lessee to perform any of its obligations
hereunder.

     

    (f)           Qualified
Operator.  Lessee is an experienced operator in the delivery of
quality care for the residents that will reside in the Facility. Lessee has
demonstrated a history of quality care as defined by all regulatory authorities
with jurisdiction over the Facility and, other than as disclosed to Lessor in
writing, Lessee has not received as to any facility that it owns, leases or
operates any of the following sanctions: (i) termination of Medicare
certification termination of Medicaid certification; (ii) cancellation of
Medicare certification; (iii) termination of Medicaid certification (iv)
cancellation of Medicaid certification; (v) exclusion or suspension from the
Medicare or Medicaid Programs; (vi) civil penalties pursuant to state law; (vii)
Medicaid or Medicare monetary penalties; (viii) denial of payment for new
admissions; or (ix) denial of a facility long term care license. Lessee has and
will maintain all necessary licenses to operate the Facility, including without
limitation any regulatory licenses held in the name of Lessor.

     

    (g)           Acceptance.  Lessee,
as both a prior owner and tenant of the Facility prior to Lessor’s acquisition
of the Facility, acknowledges prior opportunity to inspect and investigate the
Leased Premises and all improvements thereon, either independently or through
agents of Lessee’s own choosing, and in leasing the Leased Premises Lessee is
not relying on any statements of Lessor or Lessor’s agents as to the condition
of the Leased Premises and/or improvements thereon, including, but not limited
to, heating, ventilation and air conditioning systems, sewerage, environmental
issues, roof, foundations, soils, geology, lot size, suitability of the Leased
Premises and/or improvements thereon for Lessee’s intended purpose, plumbing,
utilities, structural integrity of improvements and/or compliance with any
local, city, county, state and/or federal statutes, codes or ordinances.
EXECUTION OF THIS LEASE BY LESSEE SHALL CONSTITUTE AN ACKNOWLEDGMENT BY LESSEE
THAT THE LEASED PREMISES WERE ACCEPTED BY LESSEE WITHOUT REPRESENTATION OR
WARRANTY OF ANY KIND OR NATURE, EXPRESS OR IMPLIED, IN AN “AS IS” CONDITION,
BASED SOLELY ON LESSEE’S OWN INSPECTION.

     

    (h)           Condition
of Leased Premises. LESSEE
HAS INSPECTED THE PHYSICAL AND TOPOGRAPHIC CONDITION OF THE LEASED PREMISES AND
ALL EQUIPMENT AND OTHER FACILITIES LOCATED THEREON AND THEREIN, AND ACCEPTS THE
SAME “AS IS”, IN ITS EXISTING PHYSICAL AND TOPOGRAPHIC CONDITION. LESSOR
DISCLAIMS ANY AND ALL WARRANTIES OF HABITABILITY, MERCHANTABILITY, SUITABILITY,
FITNESS FOR ANY PARTICULAR PURPOSE, AND ANY OTHER EXPRESS OR IMPLIED WARRANTY
NOT EXPRESSLY SET FORTH IN THIS LEASE.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    8.           REGULATORY
REPORTS/DEFAULT. This Section 8 does not
apply to notices or reports involving Hazardous Materials Claims, Environmental
Costs, or violations or alleged violations of Hazardous Materials Laws, which
are exclusively dealt with in Section 6(c).  Lessee will immediately deliver to
Lessor copies of all threatened or actual regulatory sanctions, disciplinary
notices, survey reports, plans of correction, proceedings and financial
reporting (including monthly census reports) required by regulatory entities,
and keep Lessor informed as to all plans of correction and resolution. Lessee
acknowledges that the time limits to cure deficiencies may be shorter than the
cure periods set forth in Section 15(a)(ii) below
and, in such event, Lessee agrees that Lessor will have the opportunity to
exercise its default rights sooner than the time stated in Section 15(a)(ii) if Lessor, in its sole judgment, deems it
necessary or prudent to do so to preserve eligibility for Medicaid or Medicare,
assure resident care and/or, if required, coordinate a change of ownership
application. Lessee shall indemnify, hold harmless and defend Lessor from and
against any and all claims, liabilities, causes of action, losses, costs and
expenses (including reasonable attorneys’ fees) which are asserted against
Lessor as a result of any breach by or failure of Lessee to comply with all
regulatory requirements to which the Leased Premises are subject, including
without limitation any regulatory requirements pursuant to any licenses held in
the name of Lessor.

     

    9.           MAINTENANCE AND
REPAIR.

     

    (a)           General Maintenance.
Throughout the Lease Term, Lessee, at Lessee’s sole cost and expense, shall keep
and maintain the Leased Premises  and all parts thereof (including
Lessor’s Equipment) in good working order and condition, ordinary wear and tear
excepted. Lessee shall be responsible for the maintenance, repair and
replacement, if necessary, of the roof, foundation, all structural components,
the heating, ventilation and air conditioning system of the Facility and all
plumbing, electrical and equipment systems of the Facility and the grounds,
driveways, walkways, paving and parking lots of the Leased Premises. Lessee will
be responsible for maintenance and repair of all trade fixtures, equipment and
machinery constituting a part of the Leased Premises or maintained by Lessee in
and on the Leased Premises. Routine maintenance, repair and replacement
operations undertaken by Lessee pursuant to Lessee’s obligations hereunder shall
not require Lessor’s consent. Lessee will be responsible for all health and
safety upgrades and improvements required of any regulatory authority with
jurisdiction over the Leased Premises and/or Lessee’s operation therein. Lessee
acknowledges that Lessor shall have no obligations concerning repairs to or
maintenance of the Leased Premises other than to assign to Lessee the right to
pursue warranty claims, if any, for maintenance and repair required by this
section.

     

    (b)           Notice of Improvements by
Lessee. Lessee shall give to Lessor prior written notice of all capital
improvements to the Facility costing in excess of Ten Thousand and No/100
Dollars ($10,000.00) individually and Twenty Thousand and No/100 Dollars
($20,000.00) in the aggregate annually as promptly and as reasonably practical
under the circumstances.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    10.           EQUIPMENT.

     

    (a)           Lessor’s Equipment.
All equipment, furniture and furnishings on hand as of the Commencement Date and
identified on Schedule
10(a)
attached hereto and incorporated herein for all purposes and all replacements,
substitutions or enhancements thereof shall constitute a part of the Leased
Premises and shall be and remain the personal property of Lessor (“Lessor’s
Equipment”).

     

    (b)           Lessee’s Equipment.
All equipment, furniture and furnishings acquired by Lessee and not constituting
Lessor’s Equipment shall be and remain the personal property of Lessee (“Lessee’s
Equipment”) and shall be tagged or marked by Lessee as such.

     

    (c)           Disposition of Obsolete
Equipment. Lessor and Lessee recognize that portions of Lessor’s
Equipment may become inadequate, obsolete, worn out, unsuitable, undesirable or
unnecessary in the operation of the Leased Premises. In any instance in which
Lessee in its sole and reasonable discretion determines that any items of
Lessor’s Equipment has become inadequate, obsolete, worn out, unsuitable,
undesirable or unnecessary in the operation of the Leased Premises, Lessee may
remove such items of Lessor’s Equipment from the Leased Premises, and (on behalf
of Lessor) sell, trade-in, exchange or otherwise dispose of same without any
responsibility or accountability to Lessor therefor; provided, however, that Lessee
shall substitute and install in the Leased Premises other equipment having equal
or greater utility (but not necessarily the same function) in the operation of
the Leased Premises, and provided further that such removal and substitution
shall not impair the operations of the Leased Premises. All such substitute
equipment shall constitute Lessor’s Equipment and shall be held by Lessee on the
same terms and conditions as items originally comprising Lessor’s Equipment.
Lessee shall execute and deliver to Lessor such documents as may from time to
time be requested to confirm the title of Lessor to any items of Lessor’s
Equipment. Lessee will not remove or permit the removal of any Lessor’s
Equipment from the Leased Premises except in accordance with the provisions of
this Section.

     

    11.           TAXES AND
UTILITIES.

     

    (a)           Taxes. Lessee shall
be responsible for the payment of any and all Taxes, during the Lease Term. For
the purposes of this Lease, “Taxes”,
shall mean: (a) all real estate taxes and assessments on the Leased
Premises, and taxes and
assessments levied in substitution or supplementation in whole or in part of
such taxes, (b) all personal property taxes for the Personal Property, including
license expenses, (c) all taxes imposed on services of Lessor’s agents and
employees with respect to services rendered in connection with the Leased
Premises, (d) all other taxes, fees or assessments now or hereafter levied by
any governmental authority on the Leased Premises, its contents, Lessor’s
Equipment and/or on the operation and use of the Leased Premises by Lessee, and
(e) all reasonable costs and fees incurred in connection with seeking reductions
in or refunds in Taxes, including, without limitation, any costs incurred by
Lessor to challenge the tax valuation of the Leased Premises, but excluding
income taxes. For the purpose of determining real estate taxes and assessments
for any given calendar year, the amount to be included in Taxes for such year
shall be as follows: (i) with respect to any special assessment that is payable
in installments, Taxes for such year shall include the amount of the installment
(and any interest) due and payable during such year; and (ii) with respect to
all other real estate taxes, Taxes for such year shall, at Lessor’s election,
include either the amount accrued, assessed or otherwise imposed for such year
or the amount due and payable for such year, provided that Lessor’s election
shall be applied consistently throughout the Lease Term. If a reduction in Taxes
is obtained for any year of the Lease Term during which Lessee paid the same,
Taxes payable by Lessee for such year will be retroactively adjusted and Lessor
shall provide Lessee with a credit, if any, based on such adjustment. Likewise,
if the total of taxes paid by Lessee to Lessor during any year is less than the
total amount of all Taxes due and payable by Lessee, then Lessee shall pay
Lessor the amount of any deficiency within thirty (30) days after Lessee’s
receipt of a statement therefor from Lessor.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (b)           Utilities. Lessee
shall be solely responsible for and shall promptly pay all charges for utilities
in respect of the Leased Premises, including, without limitation, charges for
water, gas, electricity, sewer service, refuse disposal, telephone service and
similar services incurred in connection with the operation of the Leased
Premises during the Lease Term.

     

    12.           INSURANCE.

     

    (a)           General Insurance
Requirements.  During the Term, Lessee shall at all times keep
the Leased Premises, and all property located in or on the Leased Property,
including Lessor’s Equipment, insured with the kinds and amounts of insurance
described below. All insurance provided for in this Lease other than as set
forth in (vi) below shall be maintained under valid
and enforceable policies issued by insurers of recognized responsibility,
licensed and approved to do business in Texas, having a general policyholder’s
rating of not less than A-X or better by Best’s Key Rating Guide and with a
claims paying ability rating from Standard & Poor’s of at least AA and the
equivalent rating from at least one other rating agency.  All policies
of insurance required under this Lease (other than “umbrella/excess” liability
policies) shall name Lessor, and Lessor’s lender, if applicable, as additional
insureds. All policies of insurance required herein may be in the form of
“blanket” or “umbrella/excess” type policies; provided, that any “blanket”
policies shall allocate to the Property the full amount of insurance required
hereunder and any “umbrella/excess” liability policies shall follow underlying
policies which specifically name Lessor, and Lessor’s lender, if applicable, as
additional insureds.  Original policies or satisfactory certificates
of insurance or renewal policies, as applicable, from the insurers or agents or
brokers on the insurers’ behalf evidencing the existence of all insurance
coverage required by this Lease and showing the interest of the Lessor shall be
provided to Lessor prior to the date of this Amended and Restated Lease
Agreement and within ten (10) Business Days of Lessor’s request and shall
provide that the subject policy may not be canceled, modified or reduced except
upon not less than ten (10) Business Days prior written notice to Lessor as
provided by Lessee.  Any claims under any policies of insurance
described in this Lease shall be adjudicated by and at the expense of Lessee or
of its insurance carrier, but shall be subject to joint control of Lessee and
Lessor.  Lessee shall provide no less than thirty (30) days
cancellation notice of insurance coverage to Lessor and Lessor’s Lender, if
applicable.  The policies shall insure against the following
risks:

     

    (i)           Loss
or damage by fire, vandalism and malicious mischief, extended coverage perils
commonly known as special form perils, earthquake (if earthquake coverage is
customary in the geographical area in which the Leased Premises is located),
sinkhole and windstorm in an amount not less than the insurable value on a
replacement costs basis (as defined below in Section 12(b)) and including a
building ordinance coverage endorsement;

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (ii)           Loss
or damage by explosion of steam boilers, pressure vessels or similar apparatus,
now or hereafter installed in the Facility, in such limits with respect to any
one accident as may be reasonably requested by Lessor from time to
time;

     

    (iii)           Flood
(when the Leased Premises is located in whole or in part within a designated
100-year flood plain area) and such other hazards and in such amounts as may be
customary for comparable properties in the area;

     

    (iv)           Loss
of rental value in an amount not less than twelve (12) months’ Rent payable
hereunder or business interruption in an amount not less than twelve (12) months
of income and normal operating expenses including payroll and Rent payable
hereunder with an endorsement extending the period of indemnity by at least
ninety (90) days (Building Ordinance - Increased Period of Restoration
Endorsement) necessitated by the occurrence of any of the hazards described in
Section 12(a).

     

    (v)           Claims
for bodily injury or personal property damage under a policy of commercial
general liability insurance with amounts not less than One Million Dollars
(1,000,000) combined single limit and Five Million Dollars ($5,000,000) in the
annual aggregate; and

     

    (vi)           Medical
professional liability with amounts not less than Three Hundred Thousand Dollars
($300,000) combined single limit and Six Hundred Thousand Dollars ($600,000) in
the annual aggregate. 

     

    The
insurance required under (vi) above may be provided through Capwest Imperial
Assurance, Ltd., a Cayman Island domiciled captive insurance company (the “Captive
Insurer”).  No changes shall be permitted to the terms of
coverage provided by the Captive Insurer without Lessor’s prior written
consent.  Lessee shall provide Lessor with annual audited financial
statements for the Captive Insurer.  In the event (i) the Captive
Insurer shall cease to exist as a legal entity, (ii) in Lessor’s discretion
there is a material change to the financial condition of the Captive Insurer or
(iii) the number or dollar amount of claims are made in an amount which in
Lessor’s discretion would be reasonably likely to cause a material adverse
change to the financial condition of the Captive Insurer, then Lessee shall
obtain and maintain such other insurance in such amounts and from such providers
as is requested by Lessor from time to time.

     

    (b)           Replacement Cost. The
term “replacement
cost” shall mean the actual replacement cost of the insured property from
time to time with new materials and workmanship of like kind and quality. If
either Party believes that the replacement cost has increased or decreased at
any time during the Term, it shall have the right to have such replacement cost
redetermined by an impartial national insurance company reasonably acceptable to
both Parties (the “impartial
appraiser”). The Party desiring to have the replacement cost so
redetermined shall forthwith, on receipt of such determination by the impartial
appraiser, give written notice thereof to the other Party hereto. The
determination of the impartial appraiser shall be final and binding on the
Parties hereto, and Lessee shall forthwith increase or decrease the amount of
the insurance carried pursuant to this Article to the amount so determined by
the impartial appraiser. Each Party shall pay one-half (1/2) of the fee, if any,
of the impartial appraiser.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (c)           Additional
Insurance.  In addition to the insurance described above,
Lessee shall at all times maintain any other coverage required by legal
requirements for all persons employed by Lessee or any Lessee Party on the
Leased Premises.

     

    (d)           Waiver of
Subrogation.  Lessor and Lessee hereby waive any right of
subrogation and right of recovery or cause of action for injury or lawsuit to
the extent that such injury or loss is covered by fire, extended coverage, “all
risk” or similar policies covering real property or personal property required
to be obtained and maintained under this Lease by the waiving party (or which
would have been covered if the party claiming such right of subrogation or
recovery or cause of action had carried the insurance required by this Lease) or
covered by any other insurance maintained by the waiving
party.  Written notice of the terms of the above mutual waiver shall
be given to the insurance carriers of Lessor and Lessee, and the parties’
insurance policies shall be properly endorsed, if necessary, to prevent the
invalidation of the policies by reason of such waivers.

     

    (e)           Increase in
Limits.  If either Party shall at any time reasonably believe
the limits of the insurance required hereunder to be insufficient, the Parties
shall endeavor to agree in writing on the proper and reasonable limits for such
insurance to be carried and such insurance shall thereafter be carried with the
limits thus agreed on until further change pursuant to the provisions of this
Section. If the Parties shall be unable to agree thereon, the proper and
reasonable limits for such insurance to be carried shall be determined by an
impartial third party reasonably selected by Lessor and Lessee.

     

    (f)           Deductible
Amounts.  The policies of insurance which Lessee is required to
provide under this Lease will not have deductibles or self-insured retentions in
excess of twenty five thousand dollars ($25,000) for professional liability
insurance and ten thousand dollars ($10,000) for property insurance, unless a
greater amount is approved by Lessor in writing, and with such approval not to
be unreasonably withheld if such deductible or self-insured retention is not
available on commercially reasonable economic terms.

     

    (g)           No Separate
Insurance.  Lessee shall not, on Lessee’s own initiative or
pursuant to the request or requirement of any third party, (i) take out separate
insurance concurrent in form or contributing in the event of loss with that
required in this Section 12 to be furnished by, or
which may reasonably be required to be furnished by, Lessee or (ii) increase the
amounts of any then existing insurance by securing an additional policy or
additional policies, unless all parties having an insurable interest in the
subject matter of the insurance, including in all cases Lessor, are included
therein as additional insured and the loss is payable under such insurance in
the same manner as losses are payable under this Lease. Lessee shall immediately
notify Lessor of the taking out of any such separate insurance or of the
increasing of any of the amounts of the then existing insurance by securing an
additional policy or additional policies.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    13.           DAMAGE, DESTRUCTION AND
CONDEMNATION.

     

    (a)           Damage or
Destruction.  If the Facility shall be damaged or destroyed (in
whole or in part) at any time during the Lease Term:

     

    (i)           there
shall be no abatement or reduction in the amount of Rent payable by Lessee under
this Lease, with Lessee maintaining business interruption
insurance;

     

    (ii)           Lessee
shall promptly give written notice thereof to Lessor, and

     

    (iii)           Lessee
shall promptly replace, repair, rebuild or restore the Facility to substantially
the same condition, value and utility as an operating entity as existed prior to
such damage or destruction, with such changes, alterations and modifications
(including the substitution and addition of other property) as may be desired by
Lessee and approved by Lessor and as will not impair the over-all operating
utility, use or service capacity or the character of the Facility.

     

    If the
claim for loss resulting from such damage or destruction is not greater than
Fifty Thousand and No/100 Dollars ($50,000.00), Lessee shall apply to the
replacement, repair, rebuilding or restoration of the Facility so much as may be
necessary of any net proceeds of insurance resulting from claims for such
losses.

     

    If the
claim for loss resulting from such damage or destruction exceeds Fifty Thousand
and No/100 Dollars ($50,000.00), at the Lessor’s option, (i) the Lessor will
hold and disburse all net proceeds of insurance, or (ii) all net proceeds of
insurance shall be paid into a special trust fund, maintained by Lessor’s
designated trustee (the “Trustee”).
The Trustee, upon receipt of a certificate of the Authorized Representative of
Lessee that payments are required for such purpose, shall apply so much as may
be necessary of the net proceeds of such insurance to the payment of the costs
of such replacement, repair, rebuilding or restoration, either on completion
thereof or as the work progresses, at the option of Lessee. Each such
certificate of Lessee shall be accompanied by a certificate of an architect or
engineer (who shall be selected by Lessee and satisfactory to the Trustee) in
charge of the rebuilding, repairing or restoring, dated not more than thirty
(30) days prior to such direction, setting forth in substance that (i) the sum
then directed to be applied either has been paid by Lessee, or is justly due, to
contractors, subcontractors, materialmen, engineers, architects or other persons
who shall have rendered services or furnished materials or improvements for the
rebuilding, repairing or restoring therein specified; the names of such persons;
a brief description of such services or materials or improvements and the
several amounts so paid or due to each of such persons; and a statement that
none of the costs of the services or materials or improvements described in such
certificate has been or is being made the basis, in any previous or then pending
direction for payment under this Section and that the sum then directed to be
applied does not exceed the value of the services or materials or improvements
described in the certificate, and (ii) that, except for the amount, if any,
stated (pursuant to (i) preceding) in such certificate to be due for services or
materials or improvements, there is not outstanding any indebtedness known to
the persons signing such certificate which is then due for labor, wages,
materials, supplies or services which, if unpaid, might become the basis of a
vendor’s, mechanic’s, laborer’s or materialmen’s lien upon the Facility or any
part thereof. Pending the expenditure of such special fund, the Trustee,
pursuant to the written direction of Lessor, shall invest the same in a
federally insured bank.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    At
Lessor’s option, in the event the net proceeds of insurance are not sufficient
to pay in full costs of such replacement, repair, rebuilding or restoration,
Lessee shall nonetheless supervise the completion of the work thereof and Lessor
shall pay from its own moneys, deposited with the Trustee prior to commencement
of the repair within thirty (30) days of invoice submission, that portion of the
costs thereof in excess of such net proceeds without offsetting Rent
payments.

     

    All such
replacements, repairs, rebuilding or restorations made pursuant to this
Section 13(a) shall automatically
become a part of the Facility as if the same were specifically described
herein.Any balance of such net proceeds remaining after payment of all the costs
of such replacement, repair, rebuilding or restoration shall be paid to
Lessor.

     

    Notwithstanding
the foregoing to the contrary, in the event the Leased Premises are damaged or
destroyed to the extent of fifty percent (50%) or more of the replacement cost
value thereof, then Lessor, in Lessor’s sole discretion, may elect to terminate
this Lease, in which event Lessor shall be entitled to receive the insurance
proceeds and, after the effective date of termination, neither Lessor nor Lessee
shall have any further obligations pursuant to this Lease. In the event Lessor
elects to terminate this Lease pursuant to the foregoing right to do so, Lessor
shall notify Lessee in writing of such election within thirty (30) days-of the
date of damage or destruction.

     

    (b)           Condemnation.  If
at any time during the Lease Term the whole or any part of title to, or the use
of the Facility shall be taken by condemnation, Lessor shall have no obligation
to restore or replace the Facility and there shall be no abatement or reduction
in the amounts payable by Lessee under this Lease unless the number of licensed
beds is decreased or portions of the Facility no longer are
accessible.  Lessor shall cooperate fully with Lessee in the handling
and conduct of any condemnation proceeding with respect to the Facility. In no
event shall Lessor voluntarily settle, or consent to the settlement of, any
condemnation proceeding with respect to the Facility without the prior written
consent of Lessee.  Upon the occurrence of any such condemnation,
unless the Lessor elects to terminate this Lease in accordance with
Section  13(d) hereof, Lessor shall, in
Lessor’s sole discretion, either: restore the Facility (excluding any land taken
by condemnation) to substantially the same condition, value and utility as an
operating entity as existed prior to such condemnation; or acquire, by
construction or otherwise, facilities of substantially the same nature and value
as an operating entity as the Facility (“Substitute
Facilities”). Such Substitute Facilities shall be available for use by
Lessee without the payment of any Rent or use charge other than as provided in
this Lease. Lessee shall deliver to Lessor such documents as may be necessary or
appropriate to convey the title to such Substitute Facilities.  Upon
any such condemnation, unless this Lease is terminated by the Lessor in
accordance with Section 13(d):

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (i)           The
net proceeds of any award in any condemnation proceedings shall be paid to and
held by the Trustee in a special trust fund. The Trustee, upon receipt of a
certificate of the Authorized Representative of Lessee that payments are
required for such purpose, shall apply so much as may be necessary of such net
proceeds to the payment of the costs of the restoration of the Facility or the
acquisition of Substitute Facilities, either on completion thereof or as the
restoration or acquisition progresses, at the option of Lessee. Pending the
expenditure of moneys held by the Trustee in such special trust fund, the
Trustee, pursuant to the written direction of Lessor, shall invest the same in a
federally insured bank.

     

    (ii)           In
the event the net proceeds of any condemnation award are not sufficient to pay
in full the costs of restoration of the Facility or acquisition of Substitute
Facilities, Lessee, with Lessor’s approval, shall nonetheless complete such
restoration or acquisition and Lessor shall pay from its own moneys that portion
of the costs thereof in excess of such net proceeds without offsetting Rent
payments.

     

    (iii)           The
Facility, as so restored, or the Substitute Facilities, whether or not requiring
the expenditure of Lessee’s own moneys, shall automatically become a part of the
Leased Premises.

     

    (c)           Condemnation
Award-Lessee.  Lessee shall be entitled to the proceeds of any
condemnation award or portion thereof made for damage to or taking of any
property which, at the time of such damage or taking, is not part of the
Facility, Lessor’s property, or which would become Lessor’s property upon
termination of this Lease pursuant to the terms hereof, or for damages
attributed to its loss of all or part of the leasehold.

     

    (d)           Lease
Termination.  Notwithstanding the other provisions of Section
13(b), in the event the
number of licensed beds is decreased ten percent (10%) or more for a period of
one hundred eight (180) days by the taking, other portions of the Facility are
taken, or land outside of the Facility is taken so as to impair access to or use
of the Facility, either party shall have the option to terminate this
Lease.  The electing party shall notify the other party in writing, of
such election to terminate within thirty (30) days of the date the condemning
authority notifies Lessor, and Lessor notifies Lessee, of its intent to take
possession of the condemned property.

     

    14.           SURRENDER OF
POSSESSION.  Upon the expiration of termination of the Lease
Term, howsoever effected, Lessee shall forthwith surrender the Leased Premises
to Lessor in as good working order and condition as on the Commencement Date,
ordinary wear and tear excepted. Lessor’s Equipment and all inventory acquired
by Lessee during the Lease Term and on hand as of the date of expiration or
termination shall also be surrendered to Lessor.  Lessee shall execute
and deliver to Lessor such bills of sale and assignments as Lessor may
reasonably require to effect the intent of this Section 14. Lessee may remove Lessee’s Equipment from the
Leased Premises upon the expiration or termination of the Lease Term; provided;
however, that Lessee shall be responsible for and shall immediately repair any
damage to the Leased Premises caused by the removal of Lessee’s Equipment.
Lessee will cooperate with any successor lessee or licensee to transfer
operations.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    15.           DEFAULT AND LEASE
TERMINATION.

     

    (a)           Events of Default of
Lessee.  Each of the following acts, omissions .or Occurrences
shall constitute an “Event of Default
of Lessee” hereunder:

     

    (i)           Failure
by Lessee to pay or cause to be paid, within five (5) business days of the date
required Rent specified to be paid under Section 3
hereof;

     

    (ii)           Breach
by HARDEN HEALTHCARE, LLC, a Texas limited company of any of its obligations
under that certain Guaranty and Surety Agreement of even date herewith in favor
of Lessor;

     

    (iii)           Failure
of Lessee to observe and perform any other covenant, condition or agreement of
Lessee under this Agreement within thirty days (30) after the date Lessee
receives written notice of such failure of performance, or, with respect to
failures of performance not susceptible of cure within thirty (30) days upon
approval in writing by Lessor, the failure of Lessee to commence a cure within
said thirty (30) day period and to thereafter diligently prosecute same to
completion;

     

    (iv)           The
vacating of the Leased Premises by Lessee prior to an effective termination of
this Lease as provided herein;

     

    (v)           If
Lessee: (i) becomes insolvent, or makes a transfer in fraud of creditors, or
makes an assignment for the benefit of creditors, or admits in writing its
inability to pay its debts as they become due; (ii) generally is not paying its
debts as such debts become due and Lessor, in good faith, determines that such
event or condition could lead to Lessee’s inability to perform its obligations
hereunder; (iii) has a receiver, trustee or custodian appointed for, or take
possession of, all or substantially all of its assets or its leasehold estate in
the Leased Premises, either in a proceeding brought by Lessee or in a proceeding
brought against Lessee or Lessee consents to or acquiesces in such appointment
or possession; (iv) files a petition for relief under the United States
Bankruptcy Code or any other present or future federal or state insolvency,
bankruptcy or similar or an involuntary petition for relief is filed against
Lessee under any applicable law, or any composition, rearrangement, extension,
reorganization or other relief of debtors now or hereafter existing is requested
or consented to by Lessee; (v) fails to have discharged within a period of sixty
(60) days any attachment, sequestration or similar writ levied upon any property
of Lessee (exclusive of the Leased Premises); or (vi) fails to pay within ninety
(90) days any final money judgment against Lessee; or (vii) Lessee shall make a
transfer in fraud of creditors or shall make an assignment for the benefit of
creditors;

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (vi)           The
enforcement or threatened enforcement by regulatory authorities of any
regulation or law or of powers to terminate, suspend or severely sanction the
operation of the Facility and jeopardizing the nursing home license or Medicaid
or Medicare certification.

     

    (b)           Remedies of
Lessor.  Upon the occurrence and continuance beyond any
applicable cure period of any of the Events of Default of Lessee specified in
this Agreement, Lessor shall have the option to pursue any one or more or a
combination of the following remedies without any notice to or demand upon
Lessee whatsoever:

     

    (i)           Terminate
this Lease, in which event Lessee shall immediately surrender the Leased
Premises to Lessor, and if Lessee fails to surrender the Leased Premises, Lessor
may, without prejudice to any other remedy which Lessor may have, expel or
remove Lessee and any other person who may be occupying the Leased Premises, or
any part thereof. In such event Lessor may seek such damages and remedies as are
available at law or in equity for Lessee’s breach of this Lease.

     

    (ii)           Enter
upon and take possession of the Leased Premises and expel or remove Lessee and
any other person who may be occupying the Leased Premises or any part thereof
without terminating this Lease, and exercise Lessor’s reasonable efforts to
relet the Leased Premises, as Lessee’s agent, and receive the proceeds
thereof.  Lessee will cooperate with any successor lessee or licensee
to transfer operations and Lessee covenants and agrees to pay Lessor on demand
any cost or expense incurred by Lessor in connection with reletting the Leased
Premises or any deficiency in rent that may arise by reason of such reletting,
including, without limitation, brokerage fees, advertising expenses, preparation
expenses (including re-decoration of the Leased Premises), reasonable legal
expenses, and the cost of performing such of Lessee’s obligations as Lessor
determines to be necessary and reasonable. Notwithstanding any election by
Lessor to re-take possession of the Leased Premises pursuant to this provision,
Lessor may at any time thereafter, upon written notice to Lessee, terminate this
Lease and, in such event, neither Lessor nor Lessee shall have any further
rights, obligations or liabilities hereunder after the date of termination,
except to the extent that covenants related to environmental indemnities are
expressly said to survive termination of this lease.

     

    (iii)           Enter
upon the Leased Premises and take such actions as may be required to cure the
Event of Default of Lessee. Lessee covenants and agrees to reimburse Lessor on
demand for any expenses, direct or indirect, which Lessor may incur in thus
effecting compliance with Lessee’s obligations under this Lease.

     

    (iv)           Pursue
change of ownership applications and proceedings with regulatory authorities
regulating the nursing home license and Medicaid and Medicaid certification.
Lessee hereby acknowledges and agrees that it will cooperate with any subsequent
licensee in preparation of a final cost report.

     

    (v)           Lessor
may pursue all of its legal and equitable remedies, including specific
performance.

     

    Pursuit
of any of the foregoing remedies shall not preclude pursuit of any of the other
foregoing remedies or any other remedies herein provided or any other remedies
provided at law or in equity, nor shall pursuit of any remedy herein provided
constitute a forfeiture or waiver of any Rent or other amounts due to Lessor
hereunder or of any damages accruing to Lessor by reason of the violation of any
of the terms, provisions or covenants herein contained. No waiver by Lessor of
any violation or breach of any of the terms, provisions or covenants herein
contained shall be deemed or construed to constitute a waiver of any other
violation or breach of any of the terms, provisions, or covenants herein
contained. Forbearance by Lessor to enforce one or more of the remedies herein
provided upon an Event of Default of Lessee shall not be deemed or construed to
constitute a waiver of such default. To the extent any amounts due to Lessor
under the terms of this Lease, whether as a result of an Event of Default of
Lessee or otherwise, are not timely paid, such amounts shall bear interest at
the rate of eighteen percent (18%) per annum from the date such amounts were due
until paid to Lessor; provided, however, that regardless of whether Section
15(a) provides for notice and cure, such interest shall not commence to accrue
until thirty days (30) after the date Lessee receives written notice of unpaid
amounts.  In the event Lessor takes possession of the Leased Premises and thereafter is
unable to make a lease with a new tenant, after attempting in good faith to
secure a new tenant, which results in Lessor realizing the benefit of this
Lease, including the recoupment of all expenses and costs paid by Lessor, Lessor
shall have the right to demand and recover from Lessee the present value of the
difference between the amount to be received by Lessor under the new lease and
the amount which would have been payable by Lessee hereunder, plus any costs and
expenses due and owing Lessor pursuant to this Section.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (c)           Lessor’s Lien.  Lessor
shall have at all times during the Term of this Lease, a valid lien for all
rents and other sums of money becoming due hereunder from Lessee, upon all
goods, accounts, wares, merchandise, inventory, furniture, fixtures, equipment,
vehicles and other personal property and effects of Lessee situated in or upon
the Leased Premises, and such property shall not be removed therefrom except in
accordance with the terms of this Lease or in the ordinary course of business
without the approval and consent of Lessor until all arrearages in Rent as well
as any and all other sums of money then due to Lessor hereunder shall first have
been paid and discharged in full.  Alternatively, the lien hereby
granted may be foreclosed in the manner and form provided by law for foreclosure
of security interests or in any other manner and form provided by
law.  The statutory lien for Rent, if any, is not hereby waived and
the express contractual lien herein granted is in addition thereto and
supplementary thereto.  Lessee agrees to execute and deliver to Lessor
from time to time during the Term of this Agreement such financing statements as
may be required by Lessor in order to perfect the Lessor’ lien provided herein
or granted or created by state law.  Notwithstanding anything in this
Section 15(c) or any other provision of this Lease to the contrary, any Lien in
favor of Lessor (whether granted pursuant to this Lease or by statute or
otherwise) shall be subordinated as provided for in that certain Landlord Waiver
and Consent Agreement, dated December 31, 2009, by and among Lessor, Lessee,
First Lien Collateral Agent and Second Lien Collateral Agent.

     

    (d)           Events of Default of
Lessor.  Failure of Lessor to observe and perform any covenant,
condition or agreement of Lessor under this Lease within thirty (30) days after
the date Lessor receives written notice of such failure of performance, or, with
respect to failures of performance not susceptible of cure within thirty (30)
days upon approval in writing by Lessee, the failure of Lessor to commence a
cure within said thirty (30) day period and to thereafter diligently prosecute
same to completion (each, an “Event of Default
of Lessor”) shall give the Lessee the remedies set forth in Section 15(e) below.

     

    (e)           Remedies of
Lessee.  Upon the occurrence and continuance beyond any
applicable cure period of any Event of Default of Lessor specified in the
foregoing Section 15(d),
Lessee shall have the option to pursue any one or combination of the following
remedies without any notice to or demand upon Lessor whatsoever:

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (i)           Terminate
this Lease, in which event Lessee shall surrender the Leased Premises and
Medicaid or Medicare certifications to Lessor upon notice to
Lessor.

     

    (ii)           Take
such actions as may be reasonably required to cure the Event of Default of
Lessor; and Lessor covenants and agrees to reimburse Lessee on demand for any
reasonable and necessary expense, direct or indirect, which Lessee may incur in
thus effecting compliance with Lessor’s obligations under this
Lease.

     

    16.           LIENS.

     

    (a)           Prohibition Against
Liens.  Subject to Section 16(b), Lessee and Lessor agree as
follows:  Lessee covenants that it will not create or suffer to be
created any lien, encumbrance or charge upon the Leased Premises, Rent payable
hereunder, or any part thereof. In the event any mechanic’s lien, affidavit,
charge or order (“lien”) is
filed against the Leased Premises or Rent payable hereunder as a result of
Lessee’s actual or alleged act or omission, whether or not such lien is
enforceable, Lessee agrees to cause such lien to be discharged of record by
payment, bonding or otherwise no later than fifteen (15) days after receipt by
Lessee of notice of the filing of such lien, but in all events, prior to the
commencement of foreclosure proceedings. If Lessee shall fail to cause such lien
to be discharged or bonded against within such period, then, in addition to any
other right or remedy, Lessor may, but shall not be obligated to, discharge the
same either by paying the amounts claimed to be due or by procuring the
discharge of such lien by bonding proceedings or other legal proceedings. Any
amount so paid and all costs and expenses incurred in connection therewith,
together with interest at the maximum lawful rate thereon from the respective
dates of the payment or incurring of the cost and expense to discharge the same,
shall constitute an obligation of Lessee and shall be paid by Lessee to Lessor
on demand. Nothing herein shall prevent Lessee from contesting the validity of
the lien in any manner it chooses so long as such contest is pursued with
reasonable diligence. In the event such contest is determined adversely
(allowing for appeal to the highest appellate court), Lessee shall promptly pay
in full the required amount, together with any interest, penalties, costs or
other charges necessary to release such lien. Lessee shall indemnify Lessor in
accordance with Section 16(a) below. In no event and
under no circumstances shall Lessee cause or suffer to exist any lien against or
encumbrance upon Lessor’s interest in the Leased Premises.

     

    (b)           Waiver and Consent
Agreement.  Notwithstanding anything in this Lease to the
contrary, the liens on Lessee’s assets in favor of (i) First Lien Collateral
Agent and its successors and assigns to the extent that First Lien Collateral
Agent has a lien on such assets pursuant to certain security agreements
entered into by and between First Lien Collateral Agent and Lessee; and (ii)
Second Lien Collateral Agent and its successors and assigns to the extent that
Second Lien Collateral Agent has a lien on such assets pursuant to certain
security agreements entered into by and between Second Lien Collateral Agent and
Lessee, are in each case, expressly permitted hereby, and in each case, may and
shall remain on such assets after any transfer of such assets to Lessor or
otherwise. Lessor agrees to execute a waiver and consent agreement in the form
attached hereto as Schedule
16(c).

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    17.           LIABILITIES AND
INDEMNIFICATION.  LESSEE SHALL INDEMNIFY AND HOLD LESSOR
HARMLESS FROM AND AGAINST ANY LIABILITY, LOSS, CLAIM, SUIT, CAUSE OF ACTION,
JUDGMENT, LIEN, PENALTY, FINE, DAMAGE, LIABILITY, DEFICIENCY, COST AND EXPENSE
(INCLUDING, WITHOUT LIMITATION, THE DEFENSE OF ALL OF THE AFORESAID, COURT
COSTS, REASONABLE ATTORNEYS’ FEES AND COSTS OF INVESTIGATION) OF ANY NATURE,
KIND OR DESCRIPTION SUFFERED OR INCURRED BY LESSOR AND/OR THE LEASED
PREMISES ARISING OUT
OF, OR CAUSED BY OR RESULTING FROM (OR ALLEGED TO ARISE OUT OF, BE CAUSED BY OR
RESULT FROM) (IN WHOLE OR IN PART) ANY ACT OR OMISSION OF LESSEE OR LESSEE’S
OFFICERS, DIRECTORS, REPRESENTATIVES, AGENTS, EMPLOYEES, INDEPENDENT
CONTRACTORS, GUESTS AND INVITEES, OR ANY INJURY TO OR DEATH OF ANY PERSON OR
PERSONS OR DAMAGE TO OR DESTRUCTION OF THE PROPERTY OF ANY PERSON OR PERSONS
OCCURRING IN, ON OR ABOUT THE LEASED PREMISES AND FOR ANY BREACH OF THIS
LEASE.  LESSEE AGREES TO USE AND OCCUPY THE LEASED PREMISES AND PLACE
ITS IMPROVEMENTS THEREIN AND THEREON AT ITS OWN RISK. LESSEE SHALL BE
RESPONSIBLE FOR THE SAFETY AND WELL-BEING OF LESSEE’S OFFICERS, DIRECTORS,
REPRESENTATIVES, AGENTS, EMPLOYEES, INDEPENDENT CONTRACTORS, GUESTS AND INVITEES
AT OR ABOUT THE LEASED PREMISES. THE FOREGOING INDEMNITIES SHALL SURVIVE
EXPIRATION OR EARLIER TERMINATION OF THIS LEASE.  This provision does
not apply to indemnification by Lessee for Hazardous Materials Claims,
Environmental Costs, or issues involving violations or alleged violations of
Hazardous Materials Laws, which are exclusively dealt with in
Section 6(c).

     

    18.           INSPECTION.  Lessor,
Lessor’s lender and their respective agents and representatives shall have the
right to enter and inspect the Leased Premises during normal business hours and
upon at least three (3) days advance written notice to Lessee, except in the
case of any emergency in which event no notice shall be required, for the
purpose of inspecting the same and satisfying the requirements of Lessee’s
lender (subject to laws and regulations respecting patient
confidentiality).  Such right of Lessor, Lessor’s lender and their
respective agents and representatives shall not be construed to obligate Lessor,
Lessor’s lender and their respective agents and representatives to notify Lessee
of any defect observed therein.  In connection with any such
inspection, Lessor shall, and shall cause its lender and any agents and
representatives to, use reasonable efforts to avoid interfering with the
operations of the Facility.

     

    19.           MANAGEMENT OF LEASED
PREMISES. Lessee may, with Lessor’s prior written approval, enter into a
management or similar agreement regarding the Leased Premises. Any permitted
management agreement pertaining to the Leased Premises shall be subject and
subordinate to this Lease and the rights of Lessor hereunder and shall not
relieve Lessee of any liability or obligations hereunder. Lessee also may
contract with its affiliated companies for ancillary services so long as the
affiliates deliver an industry standard, or better level of care or services at
contract rates equal to, or lower, than other competitive
providers.

     

    20.           MEDICARE, MEDICAID AND OTHER
PAYOR REIMBURSEMENT.   Lessee shall cause to be properly
prepared, signed and timely filed all claims, costs reports or other
documentation required by Medicare, Medicaid and any other third-party payor
programs for operation of the Facility by Lessee during the Lease
Term.  In addition to the foregoing, Lessee shall deliver to Lessor,
within thirty (30) days following the date on which such reports are due, all of
the foregoing described cost reports.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    21.           SUBORDINATION OF MANAGEMENT
AGREEMENT TO LEASE.  Lessee stipulates, covenants and agrees
that the Management Agreement between Lessee and Trisun Healthcare, LLC, a Texas
limited liability company, (the “Management
Agreement”) is subordinated in all respects to this Lease.  The
Lessee agrees to provide the Lessor with any subordination agreement and
estoppel certificates reasonably requested by the Lessor, executed by such
manager and evidencing the subordinate status of the Management Agreement and
the absence of any default by Lessee pursuant to such Management
Agreement.  Lessee further covenants and agrees that it will not
distribute to or pay itself or to any affiliate of Lessee any management fees or
other compensation during any month of the Term until it has first paid Rent and
other sums payable to Landlord under this Agreement.  Lessee further
covenants and agrees not to modify or terminate the Management Agreement without
Lessor’s prior written consent.

     

    22.           ESTOPPEL
CERTIFICATES.  Lessee shall, at any time upon not less than
five (5) business days prior written request by Lessor or Lessor’s lender,
execute, acknowledge and deliver to Lessor or its designee, or Lessor’s lender,
as applicable, a statement in writing, executed by an officer, manager or
general partner of Lessee, certifying that this Lease is unmodified and in full
force and effect (or, if there have been any modifications, that this Lease is
in full force and effect as modified, and setting forth such modifications), the
dates to which Rent and additional charges hereunder have been paid, certifying
that, to the knowledge of Lessee, no default by either Lessor or Lessee exists
hereunder or specifying each such default and as to other matters as Lessor may
reasonably request.

     

    23.           MISCELLANEOUS
PROVISIONS.

     

    (a)           Additional
Assurances.  The provisions of this Lease shall be
self-operative and shall not require further agreement by the Parties except as
may be provided herein to the contrary; provided, however, at the reasonable
request of either Party, the other Party shall execute such additional
instruments and take such additional acts as may reasonably be necessary to
effectuate this Lease.

     

    (b)           Legal Fees and
Costs.  In the event either Lessor or Lessee institutes any
proceedings to enforce or interpret any provision of this Lease, the prevailing
party will be entitled to recover its legal expenses, including, without
limitation, reasonable attorneys’ fees, costs and necessary disbursements, in
addition to any other relief to which such Party shall be entitled.

     

    (c)           Assignment or
Subletting.  Lessee shall not assign this Lease or any interest
herein (including, without limitation, the right to use the Leased Premises),
whether by operation of law or otherwise, or sublet the Leased Premises or any
part thereof, without the prior written consent of Lessor. For purposes of this
subsection, (i) a transfer or sale of greater than fifty percent (50%) of the
voting interest or capital stock of Lessee or any entity directly or indirectly
controlling Lessee to any other person or entity, or (ii) the merger or
consolidation of Lessee or any entity directly or indirectly controlling Lessee
with or into an unrelated third party, with such third party remaining as the
surviving entity, shall each be deemed an assignment requiring the consent of
Lessor. Any assignment by Lessee in violation of the provisions of this Section
23(c) may be deemed void by
Lessor and shall not operate to release Lessee from any liability hereunder.
Lessor may assign its interest under this Lease and, from and after the
effective date of assignment, Lessor shall be released from any further
obligations hereunder.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (d)           Notices.  Any
notice which a Party is required or may desire to give the other shall be in
writing and shall be sent by personal delivery or by (i) United States
registered or certified mail, return receipt requested, postage prepaid, (ii)
facsimile, or (iii) FedEx or similar generally recognized overnight carrier
regularly providing proof of delivery, addressed as follows:

     

    
      	
              To
      Lessee:

            	
              PM
      Management -  Babcock NC, LLC

              c/o
      TRISUN Healthcare, LLC

              Attention:
      Steve Wood

              1703
      West Fifth Street, Suite 800

              Austin,
      Texas 78703

              Telephone:
      (512) 634-4942

              Facsimile:  (512)
      _________

              E-Mail:
      wood@hardenhealthcare.com

            	 
      
	
              With
      a copy to:

            	
              Harden
      Healthcare, LLC

              Attn:  General
      Counsel

              1703
      West Fifth Street, Suite 800

              Austin,
      Texas 78703

              Telephone
      No:  (512) 344-4235

              Telecopy
      No.: (512) 524-3325

              E-Mail:
      bhanson@hardenhealthcare.com

               

              And:

              And:

              Graves,
      Dougherty, Hearon & Moody, P.C.

              Attention:
      Edward McHorse

              401
      Congress Avenue, Suite 2200

              Austin,
      Texas 78701

              Telephone:
      (512) 480-5750

              Fax:
      (512) 480-5850

              E-Mail:
      emchorse@gdhm.com

               

            	 
      
	 
      	 
      

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
       

      
        
          
            
              	
                      To
      Lessor:

                    	
                      MVI HEALTH
      CENTER, LP

                      c/o
      Cornerstone Growth & Income REIT, Inc.

                      Attn:  Sharon
      C. Kaiser

                      Chief
      Financial Officer

                      1920
      Main Street, Suite 400

                      Irvine,
      CA 92614

                      Telephone
      No.:  949.263.4326

                      Telecopy
      No.:    949.250.0592

                    	 
      
	 	 	 
	
                      with copies
      to:   

                    	
                      Servant Healthcare Investments, LLC

                      Attn:
      Kevin Maddron

                      1000
      Legion Place, Ste. 1650

                      Orlando,
      FL 32801

                      Telephone
      No.:   407.999.7772

                      Telecopy
      No.:     407.999.7759

                    	 
      
	 	 	 
	and:  	
                      Michael A. Okaty, Esq.

                      Foley
      & Lardner LLP

                      111
      N. Orange Avenue, Suite 1800

                      Orlando,
      FL 32801

                      Telephone:  407-423-7656

                      Fax:  407-648-1743

                      E-mail:  mokaty@foley.com

                    	 
	 
      	 
      

            

          

        

      

      Any
notice so given by mail shall be deemed to have been given as of the date of
delivery (whether accepted or refused) established by U.S. Post Office return
receipt, printed confirmation of successful facsimile transmission or the
overnight carrier’s proof of delivery, as the case may be, whether accepted or
refused. Any such notice not so given shall be deemed given upon receipt of the
same by the Party to whom the same is to be given. Any Party hereto may
designate a different address for itself by notice to the other Party in
accordance with this Section 23(d). In the event a Party
is not a natural person, delivery to an officer, director or partner of such
Party shall be deemed delivery to such Party.

    

     

    (e)           Severability.  In
the event any provision of this Lease is held to be invalid, illegal or
unenforceable for any reason and in any respect, such invalidity, illegality or
unenforceability shall in no event affect, prejudice or disturb the validity of
the remainder of this Lease, which shall be and remain in full force and effect,
enforceable in accordance with its terms.

     

    (f)           Post-Commencement Date
Access to Information.  Lessee acknowledges that subsequent to
the Commencement Date Lessor may need access to information or documents in the
control or possession of Lessee for the purposes of audits, compliance with
government requirements and regulations, and the prosecution or defense of third
party claims or for other legitimate purposes. Accordingly, Lessee agrees that,
subsequent to the Commencement Date, for the entire Term, including any renewal
period, and for [four (4)] years thereafter, Lessee will (i) retain all
financial and operating records related to the Facility, and (ii) make available
to Lessor, Lessor’s agents, independent auditors and/or governmental agencies,
to the extent permitted by applicable laws and regulations, all such financial
and operating records and such documents and information in respect of the
Leased Premises to the extent necessary to facilitate audits, compliance with
governmental requirements and regulations and during the time of the indemnities
of Lessee by Lessor established under this Lease hereof the prosecution or
defense of third party claims.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (g)           Relationship of
Parties.  Nothing contained in this Lease shall be deemed or
construed by the Parties hereto or by any third person to create the
relationship of principal and agent, partnership or joint venture or of any
association between Lessor and Lessee, and no provision contained in this Lease
or any acts of the Parties hereto shall be deemed to create any relationship
between Lessor and Lessee other than the relationship of landlord and
tenant.

     

    (h)           Choice of Law and
Venue.  The Parties agree that this Lease shall be governed by
and construed in accordance with the laws of the State of Texas, and that the
courts of such state shall be the exclusive courts of jurisdiction and venue for
any litigation, special proceeding or other proceeding as between the Parties
that may be brought, or arise out of, in connection with or by reason of this
Lease.

     

    (i)           Gender,
Number.  Whenever the context of this Lease requires, the
gender of all words herein shall include the masculine, feminine and neuter, and
the number of all words herein shall include the singular and
plural.

     

    (j)           Amendment;
Counterparts.  No changes in or amendments to this Lease shall
be recognized unless and until made in writing and signed by all Parties hereto
or their respective successors and assigns. This Lease may be executed in two or
more counterparts, each and all of which shall be deemed an original and all of
which together shall constitute but one and the same instrument.

     

    (k)           Divisions and
Headings.  The divisions of this Lease and the use of captions
and headings in connection therewith are solely for convenience and shall have
no legal effect in construing the provisions of this Lease.

     

    (l)           Late
Charge.  In addition to its other remedies, Lessor shall have
the right, without notice or demand, to add to the amount of any payment of Rent
required to be made by Lessee hereunder and which is not received by Lessor by
the due date thereof required by this Lease, an amount equal to five percent
(5%) of such delinquent amount for each month or portion thereof that such
amount remains outstanding to compensate Lessor for the loss of use of such
funds and the administrative costs caused by such delinquency, the Parties
agreeing that Lessor’s damage by virtue of such delinquencies would be extremely
difficult and impracticable to compute and the amount stated herein represents a
reasonable estimate thereof. Any waiver by Lessor of any late charges or failure
to claim the same shall not constitute a waiver of other late charges or other
remedies available to Lessor.

     

    (m)           Controlling
Person.  The relationship between Lessor and Lessee is an arms
length third party relationship and Lessor is not a “Controlling Person” (as
that term is defined by applicable laws, rules or regulations) as to Lessee’s
rights and obligations under the terms of this Lessee, Lessor having no rights
or abilities, acting alone or in concert with others, to directly or indirectly
influence, direct or cause the direction of management, expenditure of money
(other than in accordance with the provisions of this Lease) or policies of
Lessee.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (n)           Recitals, Exhibits and
Schedules.  The recitals included in the preamble to this Lease
are true and correct and, together with all schedules and exhibits attached
hereto, are incorporated herein by reference.

     

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    WITNESS OUR SIGNATURES to this Amended
and Restated Lease Agreement on this, the 31st day of December,
2009.

     

    
       

      
        
          
            
              
                
                  
                    
                      
                        	 	
                                LESSOR:
      

                                
MVI HEALTH CENTER,
      LP, 

                                a
      Delaware limited partnership

                                 

                              
	 	
                                BY:

                                 

                              	

                                MVI
      Health Center GP, LLC,

                                
                                  a
      Delaware limited liability company,

                                  as
      its General Partner

                                

                              
	 	 	 
	 	

                                BY:

                              	

                                CGI
      Healthcare Operating Partnership, L.P.,

                                
                                  a
      Delaware limited partnership,

                                  as
      its sole Member

                                

                              
	 	 	 
	 	

                                BY:

                              	

                                Cornerstone
      Growth & Income Operating

                                Partnership,
      L.P., a Delaware limited partnership,

                                as
      its General Partner

                              
	 	 	 
	 	

                                BY:

                              	

                                Cornerstone
      Growth & Income REIT, Inc.,

                                
                                  a
      Maryland corporation,

                                  as
      its General
Partner

                                

                              

                      

                    

                  

                

              

            

          

        

      

      
        
          	 	 	 
	 	 	 	 
	 	
                  By:
      

                	/s/ Terry
      G. Roussel	 
	 	 	

                  Terry
      G. Roussel, President and

                  Chief
      Executive Officer

                	 
	 	 	 	 
	 	 	 	 

        

      

    

    
      
         

        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      	 	
                                              LESSEE:

                                              

                                              PM MANAGEMENT – BABCOCK NC,
      LLC, a Texas limited liability company

                                               

                                            
	 	
                                              BY:

                                            	

                                              MAJOR TIMBERS, LLC, its
      Manager

                                            

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

        
          
            
              	 	 	 
	 	
                      By:
      

                    	/s/ Lew
      Little	 
	 	 	

                      Name:
      Lew Little

                      Title:  Manager

                    	 
	 	 	 	 
	 	 	 	 

            

          

        

      

      
 

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    EXHIBIT
A

    

    DESCRIPTION
OF THE LAND

    

    

    Lot 1,
Block 2, New City Block 17341, NORTH HOLLOW KNOLL, an addition to the City of
San Antonio, Bexar County, Texas, according to the map or plat thereof, recorded
in Volume 9569, Page(s) 38 of the Deed and Plat Records of Bexar County,
Texas.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    EXHIBIT
B

    

    FORM
OF LEASE GUARANTY

    

    GUARANTY
AND SURETY AGREEMENT

    

    THIS GUARANTY AND SURETY
AGREEMENT (this “Agreement”)
is made as of December 31, 2009, by HARDEN HEALTHCARE, LLC, a
Texas limited liability company (“Guarantor”)
in favor of MVI HEALTH CENTER,
LP, a Delaware limited partnership (“Obligee”).

     

    WITNESSETH

     

    WHEREAS, pursuant to that
certain Lease Agreement dated December 31, 2008 (the “Original
Lease”) by and between PM MANAGEMENT – BABCOCK NC,
LLC, a Texas limited liability company (“Obligor”)
and SNF MESA VISTA, LLC,
a Texas limited liability company (the “Seller”),
the Obligor previously leased a 144-bed nursing home commonly known as Mesa
Vista Health Center (the “Facility”)
located on certain real property in San Antonio, Bexar County, Texas (the “Land”
and, together with the Facility, the “Property”);
and

     

    WHEREAS, pursuant to that
certain Purchase and Sale Agreement dated December 31 2009, by and between the
Obligee and the Seller (the “Purchase
Agreement”), the Obligee has acquired the Property and certain personal
property used in connection with the operation and maintenance of the Property
from the Seller; and

     

    WHEREAS, pursuant to the terms
of the Purchase Agreement, the Seller has agreed to assign the Original Lease,
which has been modified and restated in its entirety by the Amended and Restated
Lease in the form attached hereto as Exhibit
A (the Original Lease, as modified by such Amended and Restated Lease,
the “Lease”),
and Obligee has agreed to assume from Seller, all of the Seller’s liabilities
and obligations related to the Lease to the extent such liabilities and
obligations arise during and relate to the period from and after the date of the
closing of the transaction contemplated by the Purchase Agreement and solely to
the extend provided for in the Amended and Restated Lease, and the Obligor has
consented to such assignment and assumption, all pursuant to that certain
Assignment and Assumption Agreement dated December 31, 2009 by and between
Obligee and Seller, a copy of which is attached hereto as Exhibit
B; and

     

    WHEREAS, it is a material
condition to Obligee agreeing to enter into the Purchase Agreement, the
Assignment and Assumption Agreement attached hereto as Exhibit
B and the Lease attached hereto as Exhibit
A, and to consummate the transactions contemplated thereby that the
Guarantor executes and delivers this Agreement to provide assurances of the due
and timely payment of the Guaranteed Obligations (defined below);

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    NOW, THEREFORE, for and in
consideration of the premises and other good and valuable consideration, the
receipt and adequacy of which are forever acknowledged and confessed, the
Parties hereto acknowledge and warrant that the foregoing recitals are true and
correct and binding upon the Parties, and further agree as follows:

     

    GUARANTY

     

    In
consideration for the purchase of the Property by Obligee and the assumption by
Obligee of the Lease on the terms provided for in the Assignment and Assumption
Agreement, Guarantor does hereby guarantee to Obligee Obligor’s full and prompt
performance of Obligor’s obligations under the Lease (the “Guaranteed
Obligations”) pursuant to the terms and conditions established
therein.

     

    The
liability of Guarantor under this Agreement shall be absolute, unconditional and
irrevocable. This Agreement is absolute and continuing and is a guarantee of
payment and not of collection and the liability of Guarantor is primary and
unconditional.  Accordingly, Guarantor agrees to pay the Guaranteed
Obligations to Obligee automatically and without written demand therefor,
without any withholding, deduction, counterclaim (unless a compulsory
counterclaim) or set-off for any reason or on any account whatsoever, subject to
the terms hereof and provided that Guarantor shall make payment of the
Guaranteed Obligations in the event that Obligor has failed or will fail to
fully pay the Guaranteed Obligations in accordance with the provisions of the
Lease such that payment to Obligee shall be made on the due date thereof,
without delay, either from Obligor or Guarantor.  This Agreement is in
no way conditional upon any requirement that Obligee first attempt to collect
the Guaranteed Obligations from Obligor or resort to any security or other means
of obtaining payment of the Guaranteed Obligations.

     

    Guarantor
hereby waives notice of acceptance of this Agreement, notices of default,
non-performance, partial performance, non-payment or partial payments in
protest, notice of protest, and all other notices or formalities to which
Obligor or Guarantor might otherwise be entitled pursuant to the Lease or by
law. Additionally, Guarantor hereby waives all rights, defenses and benefits
accruing from time to time to sureties under applicable law (including, without
limitation, all rights under the Texas Business and Commerce
Code).  No failure or delay on Obligee’s part in exercising any power,
right or privilege hereunder shall impair any such power, right or privilege or
be construed as a waiver of or acquiescence therein.

     

    Guarantor
expressly waives any and all rights of subrogation, reimbursement, indemnity,
exoneration, contribution or any other claim which it may now or hereafter have
against Obligor or any other person directly or contingently liable for the
obligations and liabilities guaranteed hereunder, or against or with respect to
Obligor’s property (including, without limitation, property collateralizing
Obligor’s obligations and liabilities to Obligees) arising from the existence or
performance of this Agreement until the full and indefeasible payment and
performance of the obligations and liabilities under the Lease and the
termination of the Lease.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Obligee
may, without notice to Guarantor, and without eliminating or in any way
impairing the validity of Guarantor’s obligations to Obligee under this
Agreement, grant modifications, additions or changes to the Lease, make
amendments or modifications to the Guaranteed Obligations, extend time for
performance, and take any such other appropriate acts related to Obligor’s
performance of its obligations under the Lease as Obligee deems necessary or
appropriate. Guarantor hereby waives their right to require Obligee to (a)
proceed against Obligor or any other sublessee, assignee or other transferee of
Obligor, (b) proceed against or exhaust any security or collateral Obligee may
hold, or (c) pursue any other right or remedy for Obligee’s benefit, before
proceeding against Guarantor for the obligations guaranteed herein. Guarantor
hereby agrees that Obligee may unqualifiedly exercise in its sole discretion any
or all rights and remedies available to it against Obligor or any other person
without impairing Obligee’s rights and remedies under this Agreement, and
Guarantor’s liabilities and obligations under this Agreement will remain
independent and unconditional.

     

    Without
limiting the foregoing, this Agreement shall be a continuing guarantee, and
(whether or not Guarantor shall have notice or knowledge of any of the
following) the liability and obligation of Guarantor hereunder shall be absolute
and unconditional irrespective of, and shall not be released or
otherwise affected by (a) the release or impairment of any security given to
secure the Guaranteed Obligations; (b) any lack of validity or enforceability of
the Lease, or any other agreement or instrument relating thereto; (c) any
bankruptcy, insolvency, reorganization, arrangement, readjustment, composition
or liquidation or similar proceedings relating to Obligor, or its properties or
creditors; (d) any impairment, modification, change, release or limitation of
liability or obligation under the Lease resulting from the operation of any
present or future provision of the Bankruptcy Reform Act of 1978 or any other
similar federal or state statute, or from the decisions of any court; or (e) any
other circumstances which might otherwise constitute a defense available to, or
a discharge of, any person or entity in respect of the Lease, or Guarantor in
respect of this Agreement.  To the extent that Obligor makes any
payment which Obligee is required by any applicable legal requirement to return
to Obligor, its trustee, its receiver or any other party, this Agreement and
Guarantor’s obligations hereunder shall be revived and shall continue in full
force and effect as if the payment had not been made.

     

    Guarantor
agrees that one or more successive or concurrent actions may be brought herein
against Guarantor, either in the same action in which Obligor is sued, or in
separate actions as often as deemed advisable. The prevailing party in any such
action shall be entitled to recover its costs including reasonable expenses and
attorneys’ fees. In the event any claim or action, or action on any judgment,
based on this Agreement, is made or brought against Guarantor, Guarantor agrees
not to assert against Obligee any set-off, defense or counterclaim (other than
compulsory counterclaims) which Obligor may have, and, further, Guarantor agrees
not to deduct, set-off, or seek to counterclaim for or recoup, any amounts which
are or may be owed by Obligee to Guarantor, or for any loss of contribution from
any other guarantor, if any.

     

    All
rights and claims of Guarantor now or hereafter existing including, without
limitation, rights to any payments, distributions or dividends from Obligor
(collectively the “Guarantor
Claims”) against Obligor or any of the Obligor’s property shall be
subordinate and subject in right of payment to the prior payment in full of the
Guaranteed Obligations to Obligee.  No Guarantor’s Claims shall, in
any event, be payable from Obligor to Guarantor while any amount owed to Obligee
by Obligor or Guarantor is due, unpaid and outstanding.  In addition, Guarantor
hereby covenants and agrees that, until the Guaranteed Obligations have been paid or
performed in full under this Agreement,
Guarantor will:

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              A.

            	
              Not,
      without Obligee’s prior written consent, which consent shall not be
      unreasonably withheld, delayed or denied: issue, sell, transfer, assign,
      or allow any shareholder of Guarantor to sell, transfer, or assign, any
      capital stock or similar ownership interests in Guarantor which would
      result in any person not presently a shareholder of the Guarantor directly
      or indirectly owning capital stock or similar ownership interests in
      Guarantor representing fifty percent (50%) or more of the combined voting
      power of Guarantor’s then-outstanding capital stock or any class of
      ownership interests in Guarantor;

            

    

     

    
      
        	
                 
      

              	
                B.

              	
                Promptly
      notify Obligee of: (i) any breach or non-performance of, or any default
      under, any contractual obligation of Guarantor which could have a material
      adverse effect on Guarantor’s financial condition, and (ii) any action,
      suit, litigation or proceeding which may exist at any time which could
      have a material adverse effect on Guarantor’s financial condition; and
      (iii) the occurrence of any event or development that could have a
      material adverse effect on Guarantor’s financial
  condition;

              
	 	 	 
	 	

                C.

              	

                Pay
      all taxes, assessments, governmental charges and other obligations
      applicable to or assessed against Guarantor when due the failure of which
      to pay could have a material adverse effect on Guarantor’s financial
      condition, except as may be contested in good faith or those as to which a
      bona fide dispute may exist;
and

              

      

    

     

    
      	
               
      

            	
              D.

            	
              Execute
      and deliver to Obligee such further instruments and do such other further
      acts as are reasonably required to carry out the purposes of this
      Agreement and;

            

    

     

    
      	
               
      

            	
              E.

            	
              Provide
      Obligee with Guarantor’s audited financial statements within ten (10) days
      following issuance thereof but in no event later than May 30th
      of each calendar year.

            

    

     

    This
Agreement shall inure to the benefit of Obligee’s successors and assigns, and
shall be binding on Guarantor’s successors and assigns.

     

    The
invalidity or unenforceability of any provision of this Agreement shall not
effect the validity or enforceability of this Agreement as a whole, which shall
remain in full force and effect in all other respects.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    The
validity of this Agreement, its construction, interpretation, and enforcement,
and the rights of Obligee and Guarantor shall be determined under, governed by,
and construed in accordance with the laws of the State of Texas, without regard
to principles of conflicts of law.

     

    Time
shall be of the essence with respect to all of Guarantor’s obligations under
this Agreement.

     

    All
notices, requests, demands and other communications required or permitted to be
given under this Agreement shall be delivered personally, or sent by a courier
company and addressed as follows:

     

    If
to Guarantor, to:

    

    Harden
Healthcare, LLC

    Attn:  General
Counsel

    1703 West
Fifth Street, Suite 800

    Austin,
Texas 78703

    Telephone
No:  (512) 344-4235

    Telecopy
No.: (512) 524-3325

    

    with a
copy, which shall not constitute notice, to:

     

    Graves
Dougherty Hearon & Moody, PC

    Attn:  Edward
McHorse

    401
Congress Avenue, Suite 2200

    Austin,
Texas 78701

    Telephone
No:  (512) 480-5750

    Telecopy
No.: (512) 480-5850

    

    If to
Obligee, to:

    

    
      	
              MVI
      HEALTH CENTER, LP

              c/o
      Cornerstone Growth & Income REIT, Inc.

              Attn:  Sharon
      C. Kaiser

              Chief
      Financial Officer

              1920
      Main Street, Suite 400

              Irvine,
      CA  92614

              Telephone
      No.:  949.263.4326

              Telecopy
      No.:    949.250.0592

               

            

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        
          	
                  with
      a copy, which shall not constitute notice, to:

                   

                  Servant
      Healthcare Investments, LLC

                  1000
      Legion Place

                  Suite
      1650

                  Orlando,
      Florida 32801

                  Attn:  John
      Mark Ramsey

                  Telephone
      No.:   (407) 999-7772

                  Telecopier
      No.:   (407) 999-5210

                  with
      a copy, which shall not constitute notice, to:

                
	 
	
                  Foley
      & Lardner LLP

                  111
      North Orange Avenue, Suite 1800

                  Orlando,
      Florida  32801

                  Attn: Michael
      A. Okaty, Esquire

                  Telephone
      No.: (407) 423-7656

                  Telecopier
      No.:  (407) 648-1743

                
	 

        

      

    

    Any such
notice shall be deemed delivered upon delivery or refusal to accept delivery as
indicated in writing by the person attempting to make personal service or by
written confirmation of delivery from the courier company.  Any party
to whom notices are to be sent pursuant to this Agreement may from time to time
change its address for future communication hereunder by giving notice in the
manner prescribed herein to all other persons named above, provided that the
address change shall not be effective until five (5) business days after the
notice of change has been given.

     

    This
Agreement may be transmitted and/or signed by facsimile or a .pdf attachment to
an email. The effectiveness of any such signatures shall, subject to applicable
law, have the same force and effect as manually signed originals and shall be
binding on all parties hereto. Obligee may also require that any such signature
be confirmed by a manually signed original thereof; provided, however, that the
failure to request or deliver the same shall not limit the effectiveness of any
facsimile signature.

     

    Guarantor
represents, warrants and covenants to Obligee as an inducement to entering into
the Lease with Obligor that this Agreement (i) constitutes a legal, valid and
binding obligation of the Guarantor enforceable in accordance with its terms,
(ii) is being entered into by Guarantor in order to provide commercial benefit
for the Guarantor’s business interests and (iii) does not and will not violate
or conflict with any of the Guarantor’s organizational documents, and to
Guarantor’s knowledge, does not and will not violate or conflict with any
material agreement by which it is bound, or any material legal requirement to
which Guarantor is subject, nor is any consent or approval required that has not
been received or that will not be obtained in connection with the execution,
delivery or performance, validity or enforceability of this
Agreement.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    The
person executing this Agreement on behalf of Guarantor has the authority to do
so, without any further required approval from any other person or entity. The
undersigned acknowledges that he/she has been afforded the opportunity to reed
this document carefully and to review it with an attorney of his/her choice
before signing it. The undersigned acknowledges having read and understood the
meaning and effect of this document before signing it.

     

    IN
WITNESS WHEREOF, Guarantor has executed this agreement this 31st day of
December, 2009, as evidenced by the signature of its duly authorized
representative below.

     

    GUARANTOR:

    

    HARDEN HEALTHCARE, LLC, a

    Texas
limited liability company

    

    

    By:  __________________________________

    Name:  _______________________________

    Title:  ________________________________

     

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SCHEDULE 3(a)

    

    RENT

    

    

    Lessee shall pay to Lessor, on or
before the first day of each calendar month during the Term, one-twelfth
(1/12th) of the
“Lease Payment” set forth below, at Lessor’s address set forth in Section 23(d)
of this Agreement or such other address as Lessor may from time to time
designate in writing in accordance with the notice requirements of Section 23(d)
of this Agreement.

    

    
      
        
          	 
      	
                  Lease
      Basis

                	 
      	
                  $13,000,000

                
	 
      	
                  Lease
      Bumps

                	 
      	
                  2.5%
      bumps

                
	 
      	
                  Starting
      Lease Rate

                	
                  11.50%

                
	 
      	 
      	 
      	 
      
	
                  Year

                	
                  Lease
      Start Date

                	
                  Lease
      Rate

                	
                  Lease
      Payment

                
	
                  1

                	
                  1/1/2010

                	
                  11.50%

                	
                  $1,495,000

                
	
                  2

                	
                  1/1/2011

                	
                  11.79%

                	
                  $1,532,375

                
	
                  3

                	
                  1/1/2012

                	
                  12.08%

                	
                  $1,570,684

                
	
                  4

                	
                  1/1/2013

                	
                  12.38%

                	
                  $1,609,951

                
	
                  5

                	
                  1/1/2014

                	
                  12.69%

                	
                  $1,650,200

                
	
                  6

                	
                  1/1/2015

                	
                  13.01%

                	
                  $1,691,455

                
	
                  7

                	
                  1/1/2016

                	
                  13.34%

                	
                  $1,733,742

                
	
                  8

                	
                  1/1/2017

                	
                  13.67%

                	
                  $1,777,085

                
	
                  9

                	
                  1/1/2018

                	
                  14.01%

                	
                  $1,821,512

                
	
                  10

                	
                  1/1/2019

                	
                  14.36%

                	
                  $1,867,050

                
	
                  11

                	
                  1/1/2020

                	
                  14.72%

                	
                  $1,913,726

                
	
                  12

                	
                  1/1/2021

                	
                  15.09%

                	
                  $1,961,570

                
	
                  13

                	
                  1/1/2022

                	
                  15.47%

                	
                  $2,010,609

                
	
                  14

                	
                  1/1/2023

                	
                  15.85%

                	
                  $2,060,874

                
	
                  15

                	
                  1/1/2024

                	
                  16.25%

                	
                  $2,112,396

                
	
                  16

                	
                  1/1/2025

                	
                  16.66%

                	
                  $2,165,206

                
	
                  17

                	
                  1/1/2026

                	
                  17.07%

                	
                  $2,219,336

                
	
                  18

                	
                  1/1/2027

                	
                  17.50%

                	
                  $2,274,819

                
	
                  19

                	
                  1/1/2028

                	
                  17.94%

                	
                  $2,331,690

                
	
                  20

                	
                  1/1/2029

                	
                  18.38%

                	
                  $2,389,982

                

        

      

    

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SCHEDULE 3(b)

    

    FACILITY
CONTRACTS

    

    

    
      	
               
      

            	
              1.

            	
              Hospice
      Services Agreement, dated February 25, 2009, by and between AMED Community
      Hospice and Mesa Vista Inn

            

    

    
      	
               
      

            	
              2.

            	
              Contract,
      undated, by and between A-Right Landscaping and Mesa Vista
    Inn

            

    

    
      	
               
      

            	
              3.

            	
              Customer
      Agreement, dated April 1, 2008, by and between Iron Mountain and Mesa
      Vista Inn

            

    

    
      	
               
      

            	
              4.

            	
              Agreement
      for Services, dated December 11, 2008, by and between Community Portable
      X-Ray, Inc. and Mesa Vista Inn

            

    

    
      	
               
      

            	
              5.

            	
              Laboratory
      Services Agreement, dated July 1, 2009, by and between CYTO Specialty
      Laboratories, Inc. and Mesa Vista
Inn

            

    

    
      	
               
      

            	
              6.

            	
              Proposal,
      dated January 1, 2009, by and between Exotic Tropical Plants and Mesa
      Vista Inn

            

    

    
      	
               
      

            	
              7.

            	
              Clinical
      Affiliation Agreement, dated July 10, 2009, by and between Galen College
      of Nursing and TRISUN Healthcare, LLC with respect to nursing internships
      at Mesa Vista Inn

            

    

    
      	
               
      

            	
              8.

            	
              Laboratory
      Services Agreement, January 1, 2009, by and between Professional Clinical
      Laboratory, Inc. and Mesa Vista Inn

            

    

    
      	
               
      

            	
              9.

            	
              Medical
      Director Agreement, dated May 1, 2009, by and between Dr. Lovelash Manocha
      and Mesa Vista Inn

            

    

    
      	
               
      

            	
              10.

            	
              Sales
      and Service Agreement, dated August 18, 2009, by and between Nestle Waters
      North America, Inc. and Mesa Vista
Inn

            

    

    
      	
               
      

            	
              11.

            	
              Nursing
      Home Dialysis Transfer Agreement, dated April 24, 2009, by and between
      SAKDC Davita Dialysis Partners, LP and Mesa Vista
  Inn

            

    

    
      	
               
      

            	
              12.

            	
              Residential
      Services Agreement, dated May 29, 2009, by and between Odyssey Healthcare
      Operating A, LP and Mesa Vista Inn

            

    

    
      	
               
      

            	
              13.

            	
              Facility
      Agreement, undated, by and between Penny’s From Heaven Foundation Therapy
      Dogs for Animal Assisted Activities and Mesa Vista
  Inn

            

    

    
      	
               
      

            	
              14.

            	
              Pharmacy
      Services Agreement, dated December 1, 2008, by and between MBS Pharmacy
      and Mesa Vista Inn

            

    

    
      	
               
      

            	
              15.

            	
              Respiratory
      Therapy Equipment Agreement, dated January 1, 2009, by and between
      Omnicare, Inc. and TRISUN Healthcare, LLC with respect to, among other
      facilities, Mesa Vista Inn

            

    

    
      	
               
      

            	
              16.

            	
              Bulk
      Video Services Agreement, dated __ of November 2008, by and between Time
      Warner Cable San Antonio, LP and Mesa Vista
Inn

            

    

    
      	
               
      

            	
              17.

            	
              Memorandum
      of Agreement, dated November 3, 2008, by and between TMF Health Quality
      Institute and Mesa Vista Inn

            

    

    
      	
               
      

            	
              18.

            	
              Hospice
      Services Agreement, dated February 27, 2009, by and between Lighthouse
      Hospice and Mesa Vista Inn

            

    

    
      	
               
      

            	
              19.

            	
              Facility
      Participation Agreement, dated October 1, 2009, by and between United
      HealthCare Insurance Company and Mesa Vista
Inn

            

    

    
      	
               
      

            	
              20.

            	
              Service
      Provider Agreement, dated January 16, 2008, by and between United
      Ambulance, LLC and Mesa Vista Inn

            

    

    
      	
               
      

            	
              21.

            	
              Nursing
      Facility Services Agreement, dated April 9, 2009, by and between Family
      Hospice, Ltd. (dba VistaCare) and Mesa Vista
Inn

            

    

    
      	
               
      

            	
              22.

            	
              Certificate
      of Waiver issued by CMS to PM Management – Babcock NC,
  LLC

            

    

    
      	
               
      

            	
              23.

            	
              City
      of San Antonio Alarm System Permit issued to TRISUN Care Center
      Babcock

            

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SCHEDULE 6(b)

    

    As soon
as available and in any event within 60 days after the end of each of Lessee’s
fiscal years during the Lease Term, Lessee shall deliver or cause to be
delivered to Lessor unaudited financial statements (balance sheet and the
related statements of income and retained earnings)  for such year in
such form and detail as Lessor may reasonably require and, commencing with the
second full fiscal year of operations of the Property, setting forth in
comparative form the figures for the previous fiscal year.  Such
financial statements will be accompanied by a certificate signed by an
appropriate officer of Lessee stating that such financial statements fairly
present the financial position of the Lessee and the Property in conformity with
GAAP.

    

    As soon
as available and in any event within 7 days after the end of each calendar month
during the Lease Term, Lessee shall deliver or cause to be delivered to Lessor
unaudited financial statements (balance sheet and the related statements of
income and retained earnings) of Lessee for the month then ended in such form
and detail as Lessor may reasonably require.  Such financial
statements will be accompanied by a certificate signed by an appropriate officer
of Lessee stating that such financial statements fairly present the financial
position of the Lessee and the Property in conformity with GAAP.

    

    As soon
as available and in any event within 30 days after the end of each of Lessee’s
fiscal quarters during the Lease Term, Lessee shall deliver or cause to be
delivered to Lessor unaudited financial statements (balance sheet and the
related statements of income and retained earnings) of Lessee for the fiscal
quarter then ended in such form and detail as Lessor may reasonably
require.  Such financial statements will be accompanied by a
certificate signed by an appropriate officer of Lessee stating that such
financial statements fairly present the financial position of the Lessee and the
Property in conformity with GAAP.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    SCHEDULE 7(e)

    

    LITIGATION

    

    Reveles
(Worker Injury):

    

    Roberto
Reveles is a former Certified Nurse Assistant who reported a workplace injury to
his left knee on July 24, 2006.  He reported an injury to his right knee in
January 2007 and alleged that injury occured while receiving treatment
for his left knee. TRISUN (an affiliate of Tenant) paid all of the medical
expenses associated with the injuries and also provided Reveles wage
replacement benefits during each period that he could not work as a result of
his injuries.  In July 2007, Reveles's doctors released him to his full
duties without restrictions.  TRISUN immediately reinstated him to
full-time employment as a CAN at the Facility.  Reveles held that position
until August 19, 2009.  On that date, TRISUN separated his employment in
response to complaints by residents that he treated them too roughly. 
Through the date of his discharge, Reveles performed all of the duties of CNA
without any physical limitations and evidenced no symptoms of pain or
discomfort.

     

    Following
his reported injuries, Reveles filed a demand for arbitration pursuant to
TRISUN's Associate Injury Plan and sought additional treatment for both
knees.  On November 3 and 4, 2009, the parties arbitrated Reveles's
claims.  The hearing closed on December 7, 2009, after the parties
submitted post-hearing briefs.  The decision on the case is due from the
Arbitrator by January 6, 2009.  Once the decision issues, the matter should
be resolved once and forever. Outside counsel has advised that they expect
to prevail on the merits and do not expect an appeal of the matter, as the
grounds for appeal of the arbitration are very narrow.

    

    

    Kathryn
Pelech (Pre-Suit)

     

    
      
        
          
            
              	
                      Case
      Open Date:         
          

                    	
                      4/22/09

                    	 
      
	
                      Dates
      of Residency:       

                    	
                      11/4/05–11/7/08?
      and 11/14/08-12/22/08

                    	 
      
	
                      Status:                           

                    	
                      Letter
      of Representation and Medical Records Release requested from attorney
      Howard
      Davis

                    
	
                      Plaintiff’s
      Counsel:    

                    	
                      Howard
      E. Davis

                    	 
      
	
                      Defense
      Counsel:         

                    	
                      N/A

                    	 
      
	
                      Expense
      Reserve:         

                    	
                      $7,500.00

                    	 
      
	
                      Liability
      Reserve:       

                    	
                      $1,000.00

                    	 
      
	Brief
      Narrative:               This
      is a patient that had a well documented history of attempting to get out
      of her bed unassisted (though call light was always in
      reach).  Unfortunately, she did fall after getting out of bed
      (again) unassisted at an unspecified time.  Resident was sent to the
      ER (contusion to right eye), treated and returned to the Facility. 
      Patient remains a resident of Mesa Vista.  Records were produced in
      April ’09, and since that time, Facility has not heard anything from the
      lawyer representing the Resident.  The file remains open. 
      Lessee does not view this potential case, if filed, to be material in any
      respect to the financial condition, operations or results of the
      Facility.  At this time no suit has been
filed.

            

          

        

      

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SCHEDULE
10(a)

    

    SCHEDULE
OF LESSOR’S EQUIPMENT

    

    
      
        	 
      	
                Quantity

              	
                Item

              
	
                Dining
      Room Furniture

              
	 
      	
                64

              	
                Kwalu
      Dining Room Chairs

              
	 
      	
                26

              	
                42"
      Dining Table Tops

              
	 
      	
                26

              	
                Queen
      Anne Table Base

              
	
                Office
      Furniture

              
	 
      	
                11

              	
                HON
      #10673NN - Desk

              
	 
      	
                17

              	
                HON
      #E4022 - Key Board Trays

              
	 
      	
                2

              	
                HON
      #3301EC62T - Executive Chairs

              
	 
      	
                16

              	
                HON
      #4002EC62T - Swivel Chairs

              
	 
      	
                13

              	
                HON
      #4002HJ70T - Swivel Chairs

              
	 
      	
                10

              	
                HON
      #534 Putty - 4 Drawer File Cabinets

              
	 
      	
                3

              	
                HON
      #584LE Taupe - 36"W 4 Drawer Lateral Files

              
	 
      	
                29

              	
                HON
      #6545NAW26 - Guest Chairs

              
	 
      	
                1

              	
                HON
      #94220 - Bookcase w/Glass Doors

              
	 
      	
                3

              	
                HON
      #94229NN - 4 Drawer Lateral File

              
	 
      	
                1

              	
                HON
      #94236 - Hutch w/Glass Doors

              
	 
      	
                2

              	
                HON
      #94243NN - Credenza

              
	 
      	
                2

              	
                HON
      #94271NN - Executive Desk

              
	 
      	
                2

              	
                HON
      #94283R - Pedestal Desk Right

              
	 
      	
                2

              	
                HON
      #94284L - Pedestal Desk Left

              
	 
      	
                1

              	
                HON
      #94448 - 48" Round Table Top

              
	 
      	
                1

              	
                HON
      #94011 - Queen Anne Base Kit

              
	 
      	
                2

              	
                HON
      #94212L NN LH L-Desk

              
	 
      	
                2

              	
                HON
      #94211R NN R-Desk

              
	
                Televisions

              	 
      
	 
      	
                2

              	
                LG
      50PG20 - 50" plasma TV

              
	 
      	
                144

              	
                Dynex
      26" LCD TV Model #DX-LCD26-0

              
	
                Appliances

              	 
      
	 
      	
                2

              	
                Fridgidaire
      30" Freestanding Electric Range

              
	 
      	
                2

              	
                Fridgidaire
      30" Recirculating Range Hood

              
	 
      	
                5

              	
                Frididaire
      20.5 Cu Ft. Top Mount Refrigerator

              
	
                Whirlpool
      Tub

              
	 
      	
                1

              	
                MasterCare
      MB-68-AH Entrée Bath

              

         

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        	
                Resident
      Room Furniture

              
	 
      	
                144

              	
                Matrix
      MM5174-ZL74700 - Patient Beds

              
	 
      	
                144

              	
                Head/Foot
      Board brackets with Bed Rails

              
	 
      	
                144

              	
                Head
      and Footboards

              
	 
      	
                144

              	
                #4198015
      Mattresses

              
	 
      	
                96

              	
                Three
      Drawer Bedside Chests

              
	 
      	
                48

              	
                30"
      Three Drawer Chests

              
	 
      	
                48

              	
                24"
      Wardrobe - 2 Drawers

              
	 
      	
                48

              	
                48"
      Wardrobe - 4 Drawers

              
	 
      	
                95

              	
                Overbed
      Tables

              
	 
      	
                144

              	
                Low
      Back Resident Chairs - CAE581G3

              
	
                Parlor
      Furniture

              
	 
      	
                3

              	
                Wing
      Chairs

              
	 
      	
                1

              	
                Dresser
      With Marble Top

              
	 
      	
                2

              	
                Classico
      End Tables

              
	
                Library
      Furniture

              
	 
      	
                1

              	
                Sofa

              
	 
      	
                2

              	
                Wing
      Chairs

              
	 
      	
                2

              	
                Occasional
      Chairs

              
	 
      	
                2

              	
                Classico
      End Tables

              
	
                Day
      Room Furniture

              
	 
      	
                2

              	
                Sofas

              
	 
      	
                4

              	
                Wing
      Chairs

              
	 
      	
                4

              	
                Lounge
      Chairs

              
	 
      	
                4

              	
                Collingwood
      Chrest

              
	 
      	
                2

              	
                Media
      Consoles

              
	
                Private
      Dining Furniture

              
	 
      	
                1

              	
                Rectangular
      Table

              
	 
      	
                2

              	
                Arm
      Chair

              
	 
      	
                6

              	
                Side
      Chairs

              
	 
      	
                1

              	
                China
      Hutch and base

              
	 
      	
                1

              	
                Universal
      Sideboard

              
	
                Artwork

              	 
      
	 
      	
                88

              	
                Framed
      Art Pieces

              
	
                Kitchen

              	 
      
	 
      	 
      	
                Kitchen
      Equipment

              
	
                Laundry

              	 
      
	 
      	 
      	
                Laundry
      Equipment

              
	
                Serving
      Pantries

              
	 
      	 
      	
                Serving
      Pantry Equipment

              

      

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
16(c)

    

    FORM
OF WAIVER AND CONSENT

    

    

    LANDLORD
WAIVER AND CONSENT AGREEMENT

    (“Waiver and
Consent”)

    

    The undersigned, SNF MESA VISTA
ACQUISITION, LLC, a Florida limited liability company (“Lessor”), is the
lessor under a certain lease agreement dated December ____, 2009, (the “Lease”) with PM MANAGEMENT – BABCOCK NC,
LLC, a Texas limited liability company (“Tenant”), as lessee
with respect to premises consisting of approximately  rentable square
feet of space in the building located at 5756 N. Knoll Drive, San Antonio, Texas
78240 and as more particularly described in Exhibit “A” attached hereto (the
“Real
Property”).

    

    The Lessor understands that it has or
may hereafter acquire an interest in the following described personal property
located on the Real Property:  All of Tenant’s personal property,
including, without limitation, inventory, work-in-process, documents of title,
accounts receivable, contract rights, general intangibles, chattel paper and
instruments now owned, existing or hereafter acquired or arising, all goods and
services the sale, lease or performance of which give rise to any account,
contract right or general intangible of the Tenant and all proceeds of the
foregoing; all equipment, machinery, furnishings, window treatments, furniture
and fixtures now owned or hereafter acquired by Tenant and all replacements or
substitutions thereof and all accessories, parts and equipment now or hereafter
affixed thereto and all accessories, equipment and parts now or hereafter
attached or added thereto or used in connection therewith (the “Encumbered Personal
Property”); provided, however, that the Encumbered Personal Property
shall not include any portion of the “Leased Premises” or the “Lessor’s
Equipment” as such terms are defined in Sections 1.1 and 9.1, respectively, of
the Lease.  Encumbered Personal Property shall expressly also exclude
property owned by Lessor, including, without limitation, the security deposit
held pursuant to the Lease and all property identified in Schedule 10(a) of the
Lease and replacements and substitutions thereof and any property which,
pursuant to the terms of Lease, transfers or reverts to Lessor upon termination
of, or Lessee’s default under, the Lease.

    

    Intending to be legally bound and to
induce (i) WELLS FARGO FOOTHILL, INC., a California corporation, as a lender and
as agent (in such capacity, “First Lien Agent”)
for certain other lenders (“First Lien Lenders”)
under that certain First Lien Credit and Guaranty Agreement, dated as of
November 28, 2007, among Tenant, the other signatory parties thereto, First Lien
Agent and First Lien Lenders and (ii) SILVER POINT FINANCE, LLC, a Delaware
limited liability company, as a lender and as agent (in such capacity, “Second Lien Agent”)
for certain other lenders (“Second Lien Lenders”)
under that certain Second Lien Credit and Guaranty Agreement, dated as of
November 28, 2007, among Tenant, the other signatory parties thereto, Second
Lien Agent and Second Lien Lenders, to enter into certain financial arrangements
with Tenant, the undersigned Lessor hereby covenants and agrees with First Lien
Agent and Second Lien Agent, their respective successors and assigns, that: (a)
the Lease and the Non-Competition Side Letter Agreement represent the entire
agreement between Tenant and Lessor with respect to the Real Property and leased
premises and have not been assigned, modified, supplemented or amended in any
way and constitute the legal, valid and binding obligation of Lessor enforceable
against Lessor in accordance with their respective terms, and are in full force
and effect, (b) this Waiver and Consent constitutes the legal, valid and binding
obligation of Lessor in accordance with its terms, (c) Tenant is not in default
in the payment of any rent, additional rent or other charges under the Lease,
and Tenant is not in default in the performance of any other obligation of
Tenant under the Lease and Lessor is not in default in the performance of any
obligation of Lessor under the Lease, and (d) Tenant has granted Lessor a lien
on the Encumbered Personal Property, provided, however, that the undersigned, or
any successor to the undersigned’s interest in the Real Property consents that
such lien on Encumbered Personal Property shall be subordinate and inferior in
all respects to the rights therein of Superior Lienholder, its successors and
assigns, and any successor to Superior Lienholder’s said interest.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    As used
in this agreement, the term “Superior Lienholder”
shall mean:

    

    (a)           as
of the date hereof and continuing until such time as First Lien Agent has
notified Lessor in writing that Lessor shall no longer be required to follow the
instructions of First Lien Agent and shall instead follow the instructions of
Second Lien Agent (the “First Lien Agent
Notice”) – First Lien Agent; and

    

    (b)           beginning
on the date Lessor receives the First Lien Agent Notice and thereafter – Second
Lien Agent.

    

    Supererior
Lienholder’s address for notice purposes shall be the address set forth on the
signature pages hereto.

    

    Lessor acknowledges, understands and
agrees that First Lien Agent and Second Lien Agent, at any time and from time to
time, may change or amend their respective financial agreements with Tenant
without the consent of or notice to Lessor, without incurring responsibility to
Lessor and without impairing, modifying or releasing any of First Lien Agent’s
or Second Lien Agent’s respective rights or any of the obligations of Lessor
under this Waiver and Consent.  This Waiver and Consent shall be
binding upon Lessor and shall inure to the benefit of First Lien Agent, Second
Lien Agent and their respective successors and assigns.

    

    No term or provision contained herein
may be modified, amended or waived except by written agreement or consent signed
by the parties to be bound hereby.

    

    The validity of this Waiver and
Consent, its construction, interpretation, and enforcement, and the rights of
the parties hereto shall be determined under, governed by, and construed in
accordance with the internal laws of the State of Texas. The parties hereto
agree that all actions or proceedings arising in connection with this Waiver and
Consent shall be tried and litigated only in the State of Texas.

    

    All of the covenants, representations
and agreements herein made by or on behalf of the Lessor shall constitute
covenants running with the Real Property.

    

    

    

    

    [signature
page follows]

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    IN WITNESS WHEREOF, the undersigned
Lessor has executed and is delivering this Waiver and Consent intending to be
legally bound hereby and for good and valuable consideration the receipt and
sufficiency thereof is hereby acknowledged and with the understanding that it
will be relied upon by First Lien Agent and Second Lien Agent in connection with
their respective financial agreements with Tenant this __ day of ,
2009.

    
 

    
      	
              Dated:  ______________________

            
	
              , a
      Texas                                           

            
	
              By:                                           ,
      a Texas                                ,
      its general partner

               

              By:  ______________________________

                                              ,                                           

               

            
	
              Address:

              _________________________________

              Attn:                                                                   
      

              _________________________________

              _________________________________

               

              Telephone:
      (___)___-____

               

            

    

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    
      
        
          	
                  Dated:  _______________________

                
	 
	
                  WELLS
      FARGO FOOTHILL, INC.,

                  as
      First Lien Agent

                   

                
	
                  By_______________________________

                  Its_______________________________

                
	 
	
                  Address:       2450 Colorado
      Avenue

                  Suite
      3000 West

                  Santa
      Monica, CA 90404

                

        

      

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    
      
        
          	
                  Dated:  _______________________

                
	 
	
                  SILVER
      POINT FINANCE, LLC,

                  as
      Second Lien Agent

                   

                
	
                  By_______________________________

                  Its_______________________________

                
	 
	
                  Address:_______________________

                  _______________________

                  ________________________Unassociated Document

    Exhibit
10.16 

    

    AMENDMENT
TO

    LICENSE
AGREEMENT

    BETWEEN

    BAXTER

    AND

    ZIOPHARM
ONCOLOGY, INC.

     

    This
Amendment, effective September 24, 2009 is an Amendment to the License Agreement
dated November 3, 2006, as amended, between Baxter Healthcare S.A. having an
address at Hertistrasse 2, CH-8304, Wallisellen Switzerland and Baxter
International, Inc. having an address at One Baxter Parkway, Deerfield, IL 60015
(collectively, “Baxter”) on the one hand and Ziopharm Oncology, Inc. having an
address at 1 First Avenue, Parris Building # 34, Charlestown, MA 02129
(hereinafter “Licensee”).

     

    WHEREAS,
Baxter and Licensee wish to amend the license grant of the License
Agreement;

     

    NOW,
THEREFORE, in consideration of the mutual agreement hereinafter set forth,
Baxter and Licensee hereby agree to amend the License Agreement as
follows:

     

    Section
2.1 is changed to read as follows:

     

    “2.1         Grant. Subject
to the conditions hereunder,

     

    
      	
               
      

            	
              (a)

            	
              Baxter
      hereby grants to Licensee a world-wide royalty bearing (pursuant to
      Article 3) exclusive right and license, with the right to grant
      sublicenses, under Licensed Patents to use, market, sell, offer to sell,
      make, have made and import Licensed Products in the Territory;
      and

            

    

     

    
      	
               
      

            	
              (b)

            	
              Baxter
      hereby grants to Licensee a world-wide, non-royalty bearing exclusive
      right and license, with the right to grant sublicenses, under the
      Intangible Property Rights to use, market, sell, offer to sell, make, have
      made and import Licensed Products in the
  Territory.”

            

    

     

    Article 4
is deleted in its entirety.

     

    In all
other respects, the License Agreement shall remain in full force and effect,
unless further amended by written agreement.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    IN
WITNESS WHEREOF, the parties hereto have duly executed this Amendment effective
the day and year first above-written.

     

    ZIOPHARM
ONCOLOGY, INC.

     

    By: 
/s/ Richard
Bagley 

    
      

    

    Name: Richard
Bagley

    Title: President, COO,
CFO

     

    
      
        	 	BAXTER
      HEALTHCARE S.A.	 
	 	 	 	 
	
                 

              	
                By:
      

              	/s/
      John W. Cornell	 
	 	 	Name: John
      W. Cornell	 
	 	 	Title: Assistant
      General Counsel	 
	 	 	 	 
	 	 	 	 
	 	BAXTER
      INTERNATIONAL INC.	 
	 	 	 	 
	 	By:	/s/
      John W. Cornell	 
	 	 	Name: John
      W. Cornell	 
	 	 	Title: Assistant
      General Counsel

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00170-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00170-of-00352.parquet"}]]