Document:

Exhibit 10.2

 

FIRST MODIFICATION AGREEMENT

 

THIS FIRST MODIFICATION AGREEMENT (this “Amendment”) is made
effective as of June 30, 2008, by and among (a) TESSCO TECHNOLOGIES INCORPORATED, a Delaware corporation (“TESSCO”),
TESSCO SERVICE SOLUTIONS, INC., a Delaware corporation, TESSCO INCORPORATED, a
Delaware corporation, TESSCO COMMUNICATIONS INCORPORATED, a Delaware
corporation, WIRELESS SOLUTIONS INCORPORATED, a Maryland corporation, TESSCO
BUSINESS SERVICES, LLC, a Delaware limited liability company, TESSCO SUPPLY CHAIN SERVICES, LLC, a Delaware
limited liability company, TESSCO PRODUCT SOLUTIONS, LLC, a Delaware limited
liability company, TESSCO INTEGRATED SOLUTIONS, LP, a Delaware limited
partnership, and GW SERVICE SOLUTIONS, INC., a Delaware corporation (the aforementioned
entities, including TESSCO, being
hereinafter called collectively the “Borrowers”);  (b) SUNTRUST BANK  and WACHOVIA BANK, NATIONAL ASSOCIATION, as
Lenders (in such capacity, the “Lenders”); and (c) SUNTRUST BANK,
as Administrative Agent (in such capacity, the “Agent”).

 

RECITALS

 

Pursuant to a Credit Agreement dated as of May 31, 2007 by and
among the Borrowers, the Lenders, and the Agent (as the same may from time to
time be amended, restated, supplemented, or otherwise modified, the “Credit
Agreement”), the Lenders agreed to make available to the Borrowers a
revolving credit facility (the “Revolving Credit Facility”) pursuant to
which the Lenders would make loans and other credit accommodations
(collectively, the “Loans”) to or for the benefit of the Borrowers in an
aggregate principal amount not to exceed $50,000,000 at any one time
outstanding.  The Borrowers’ obligation
to repay the Loans with interest is evidenced by the Borrowers’ Revolving
Credit Note dated May 31, 2007 from the Borrowers made payable to the
Lenders in the principal amount of up to $50,000,000 (as the same may from time
to time be amended, restated, supplemented, or otherwise modified, the “Note”).

 

As used herein, the term “Loan Documents” means collectively, the
Credit Agreement, the Note, and all other documents now or hereafter executed
and delivered by the Borrowers or any other party or parties to evidence,
secure, or guarantee, or in connection with, the Revolving Credit Facility.

 

The Borrowers have now requested that the Lenders and the Agent make
certain modifications to the Credit Agreement, and the Lenders and the Agent
have agreed to do so, subject to and upon the terms and conditions hereinafter
set forth.

 

AGREEMENTS

 

Now, therefore, in consideration of the premises and the mutual
agreements herein contained, and for other good and valuable consideration,
receipt of which is hereby acknowledged, the parties hereto agree as follows:

 

1.             Recitals;
Defined Terms.  The parties hereto
acknowledge that the above Recitals are true and correct and agree that the
same are incorporated herein.  Unless the
context clearly indicates otherwise, each term used in this Agreement which is
defined in the Recitals shall have 

 

 

the
meaning given to such term in the Recitals, and each capitalized term used
herein which is not otherwise defined herein shall have the meaning given to
such term in the Credit Agreement.

 

2.                                       Amendments to
Credit Agreement.

 

(a)           Effective as of the
effective date of this Agreement, Section 2.7 of the Credit Agreement is
hereby deleted, and the following is inserted in lieu thereof:

 

“SECTION 2.7 Use of Proceeds.  The Borrowers shall use the proceeds of the
Loans solely to refinance the Existing Facility and for working capital,
Capital Expenditures, and Permitted Acquisitions by the Borrowers, including
the payment of fees and expenses incurred in connection with such transactions,
and to purchase not more than $15,000,000 of issued and outstanding stock
during the term of the Credit Facility.”

 

(b)           Effective as of the
effective date of this Agreement, Section 10.7 of the Credit Agreement is
hereby deleted, and the following is inserted in lieu thereof:

 

SECTION 10.7 Limitations on
Dividends and Distributions.  Declare
or pay any dividends upon any of its capital stock; purchase, redeem, retire or
otherwise acquire, directly or indirectly, any shares of its capital stock, or
make any distribution of cash, property or assets among the holders of shares
of its capital stock, or make any change in its capital structure; provided
that (a) any Subsidiary (including any Subsidiary that is also a Borrower)
may pay cash dividends to any of the Borrowers, and (b) the Borrowers may
purchase up to $15,000,000 of their issued and outstanding stock in the aggregate
during the term of the Credit Facility.

 

3.             Representations
and Warranties.  In order to induce
the Lenders and the Agent to enter into this Agreement, the Borrowers represent
and warrant to the Lenders and the Agent that as of the date hereof (a) no
Event of Default exists under the provisions of the Loan Documents, (b) except
as to matters of which the Borrowers have advised the Agent in a writing and
which have been acknowledged by the Agent, all of the representations and
warranties of the Borrowers in the Loan Documents are true and correct on the
date hereof as if the same were made on the date hereof (provided that any
representation or warranty that speaks “as of the Closing Date” or as of any
other specific date shall continue to speak as of such date, notwithstanding), (c) no
material adverse change has occurred in the business, financial condition,
prospects or operations of the Borrowers since the date of the most recent
financial statement of the Borrowers furnished to the Lenders and the Agent in
accordance with the provisions of the Loan Documents, and (d) this
Agreement constitutes the legal, valid and binding obligation of the Borrowers,
jointly and severally enforceable in accordance with its terms, except as such enforcement may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar state or
federal debtor relief laws from time to time in effect which affect the
enforcement of creditors’ rights in general and the availability of equitable
remedies.  If any of the foregoing
representations and warranties shall prove to be false, incorrect or misleading
in any material respect, the Lenders and the Agent may, in their absolute and
sole discretion, declare that a default has occurred and exists under the
provisions of the Loan Documents, and the Lenders and the Agent shall be
entitled to all of the 

 

 

rights
and remedies set forth in the Loan Documents as the result of the occurrence of
such default.

 

4.             Ratification and
No Novation.  The Borrowers hereby
ratify and confirm all of their obligations, liabilities and indebtedness under
the provisions of the Credit Agreement, the Note, and the other Loan Documents,
as the same may be amended and modified by this Agreement.  The Lenders, the Agent, and the Borrowers
agree that it is their intention that nothing herein shall be construed to
extinguish, release or discharge or constitute, create or effect a novation of,
or an agreement to extinguish any of the obligations, indebtedness and
liabilities of the Borrowers or any other party under the provisions of the
Loan Documents.  The Borrowers agree that
all of the provisions of the Credit Agreement and the other Loan Documents
shall remain and continue in full force and effect as the same may be modified
and amended by this Agreement.  In the
event of any conflict between the provisions of this Agreement and the
provisions of the Loan Documents, the provisions of this Agreement shall
control.

 

5.             Fees, Costs and
Expenses.  The Borrowers shall pay to
the Agent and the Lenders on demand all costs and expenses both now and
hereafter paid or incurred with respect to the preparation, negotiation,
execution, administration and enforcement of this Agreement and all documents
related thereto, including, without limitation, reasonable attorney’s fees and
expenses, recording costs and costs of record searches.

 

6.             Applicable Law.  This Agreement shall be construed in
accordance with and governed by the laws of the State of Maryland.

 

7.             Binding Effect.  This Agreement shall be binding upon and
inure to the benefit of the Lenders, the Agent, and the Borrowers, and their
respective successors and assigns.

 

[Remainder of Page Intentionally Left Blank]

 

 

IN WITNESS WHEREOF, the parties hereto have each caused this Agreement
to be executed and sealed, the day and year first above written.

 

 

	
  WITNESS:

  	
   

  	
  BORROWERS:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  TESSCO
  TECHNOLOGIES INCORPORATED

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/
  David M. Young

  	
   

  	
  By:

  	
  /s/
  Robert B. Barnhill, Jr.

  
	
   

  	
   

  	
   

  	
  Robert
  B. Barnhill, Jr.

  
	
   

  	
   

  	
   

  	
  President
  and Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  TESSCO
  SERVICE SOLUTIONS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ David M. Young

  	
   

  	
  By:

  	
  /s/
  Robert B. Barnhill, Jr.

  
	
   

  	
   

  	
   

  	
  Robert
  B. Barnhill, Jr.

  
	
   

  	
   

  	
   

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  TESSCO
  INCORPORATED

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/
  David M. Young

  	
   

  	
  By:

  	
  /s/
  Robert B. Barnhill, Jr.

  
	
   

  	
   

  	
   

  	
  Robert
  B. Barnhill, Jr.

  
	
   

  	
   

  	
   

  	
  President
  and Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  TESSCO COMMUNICATIONS INCORPORATED

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ David M. Young

  	
   

  	
  By:

  	
  /s/ Robert B. Barnhill, Jr.

  
	
   

  	
   

  	
   

  	
  Robert B. Barnhill, Jr.

  
	
   

  	
   

  	
   

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  WIRELESS SOLUTIONS INCORPORATED

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/
  David M. Young

  	
   

  	
  By:

  	
  /s/
  Robert B. Barnhill, Jr.

  
	
   

  	
   

  	
   

  	
  Robert
  B. Barnhill, Jr.

  
	
   

  	
   

  	
   

  	
  President

  

 

 

	
   

  	
   

  	
  TESSCO
  BUSINESS SERVICES, LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/
  David M. Young

  	
   

  	
  By:

  	
  /s/
  Robert B. Barnhill, Jr.

  
	
   

  	
   

  	
   

  	
  Robert
  B. Barnhill, Jr.

  
	
   

  	
   

  	
   

  	
  President
  and Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  TESSCO
  SUPPLY CHAIN SERVICES, LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/
  David M. Young

  	
   

  	
  By:

  	
  /s/
  Robert B. Barnhill, Jr.

  
	
   

  	
   

  	
   

  	
  Robert
  B. Barnhill, Jr.

  
	
   

  	
   

  	
   

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  TESSCO
  PRODUCT SOLUTIONS, LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/
  David M. Young

  	
   

  	
  By:

  	
  /s/
  Robert B. Barnhill, Jr.

  
	
   

  	
   

  	
   

  	
  Robert
  B. Barnhill, Jr.

  
	
   

  	
   

  	
   

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  TESSCO
  INTEGRATED SOLUTIONS, LP

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Tessco
  Product Solutions, LLC,

  
	
   

  	
   

  	
   

  	
  its
  general partner

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/
  David M. Young

  	
   

  	
   

  	
  By: 

  	
  /s/
  Robert B. Barnhill, Jr.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Robert
  B. Barnhill, Jr.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  GW
  SERVICE SOLUTIONS, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/
  David M. Young

  	
   

  	
  By:

  	
  /s/
  Robert B. Barnhill, Jr.

  
	
   

  	
   

  	
   

  	
  Robert
  B. Barnhill, Jr.

  
	
   

  	
   

  	
   

  	
  President

  

 

 

	
   

  	
   

  	
  LENDERS:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  WACHOVIA BANK, NATIONAL ASSOCIATION

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Lucy Campbell

  
	
   

  	
   

  	
   

  	
  Lucy Campbell

  
	
   

  	
   

  	
   

  	
  VP - Credit Products

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SUNTRUST BANK

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Gregory Farno

  
	
   

  	
   

  	
   

  	
  Gregory Farno

  
	
   

  	
   

  	
   

  	
  Senior Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ADMINISTRATIVE
  AGENT:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SUNTRUST
  BANK

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  Gregory Farno

  
	
   

  	
   

  	
   

  	
  Gregory Farno

  
	
   

  	
   

  	
   

  	
  Senior Vice PresidentExhibit 10.1

 

AMENDED AND RESTATED MASTER LEASE AGREEMENT

(LEASE NO. 1),

 

dated as of June 30, 2008,

 

by and among

 

CERTAIN AFFILIATES OF SENIOR HOUSING PROPERTIES TRUST,

 

AS LANDLORD,

 

AND

 

FIVE STAR QUALITY CARE TRUST,

 

AS TENANT

 

 

	
  ARTICLE 1

  	
   

  	
  DEFINITIONS

  	
   

  	
  1

  
	
  1.1

  	
   

  	
  “Additional Charges”

  	
   

  	
  1

  
	
  1.2

  	
   

  	
  “Additional Rent”

  	
   

  	
  2

  
	
  1.3

  	
   

  	
  “Affiliated Person”

  	
   

  	
  2

  
	
  1.4

  	
   

  	
  “Agreement”

  	
   

  	
  2

  
	
  1.5

  	
   

  	
  “Applicable Laws”

  	
   

  	
  2

  
	
  1.6

  	
   

  	
  “Award”

  	
   

  	
  3

  
	
  1.7

  	
   

  	
  “Base Gross
  Revenues”

  	
   

  	
  3

  
	
  1.8

  	
   

  	
  “Base Year”

  	
   

  	
  3

  
	
  1.9

  	
   

  	
  “Business Day”

  	
   

  	
  3

  
	
  1.10

  	
   

  	
  “Capital Addition”

  	
   

  	
  3

  
	
  1.11

  	
   

  	
  “Capital
  Expenditure”

  	
   

  	
  4

  
	
  1.12

  	
   

  	
  “Change in Control”

  	
   

  	
  4

  
	
  1.13

  	
   

  	
  “Claim”

  	
   

  	
  4

  
	
  1.14

  	
   

  	
  “Code”

  	
   

  	
  4

  
	
  1.15

  	
   

  	
  “Commencement Date”

  	
   

  	
  4

  
	
  1.16

  	
   

  	
  “Condemnation”

  	
   

  	
  5

  
	
  1.17

  	
   

  	
  “Condemnor”

  	
   

  	
  5

  
	
  1.18

  	
   

  	
  “Consolidated
  Financials”

  	
   

  	
  5

  
	
  1.19

  	
   

  	
  “Date of Taking”

  	
   

  	
  5

  
	
  1.20

  	
   

  	
  “Default”

  	
   

  	
  5

  
	
  1.21

  	
   

  	
  “Disbursement Rate”

  	
   

  	
  5

  
	
  1.22

  	
   

  	
  “Distribution”

  	
   

  	
  5

  
	
  1.23

  	
   

  	
  “Easement Agreement”

  	
   

  	
  6

  
	
  1.24

  	
   

  	
  “Encumbrance”

  	
   

  	
  6

  
	
  1.25

  	
   

  	
  “Entity”

  	
   

  	
  6

  
	
  1.26

  	
   

  	
  “Environment”

  	
   

  	
  6

  
	
  1.27

  	
   

  	
  “Environmental
  Obligation”

  	
   

  	
  6

  
	
  1.28

  	
   

  	
  “Environmental
  Notice”

  	
   

  	
  6

  
	
  1.29

  	
   

  	
  “Event of Default”

  	
   

  	
  6

  
	
  1.30

  	
   

  	
  “Excess Gross
  Revenues”

  	
   

  	
  6

  
	
  1.31

  	
   

  	
  “Extended Term”

  	
   

  	
  6

  
	
  1.32

  	
   

  	
  “Facility”

  	
   

  	
  6

  
	
  1.33

  	
   

  	
  “Facility Mortgage”

  	
   

  	
  6

  
	
  1.34

  	
   

  	
  “Facility Mortgagee”

  	
   

  	
  7

  
	
  1.35

  	
   

  	
  “Financial Officer’s
  Certificate”

  	
   

  	
  7

  
	
  1.36

  	
   

  	
  “Fiscal Year”

  	
   

  	
  7

  
	
  1.37

  	
   

  	
  “Five Star”

  	
   

  	
  7

  
	
  1.38

  	
   

  	
  “Fixed Term”

  	
   

  	
  7

  
	
  1.39

  	
   

  	
  “Fixtures”

  	
   

  	
  7

  
	
  1.40

  	
   

  	
  “GAAP”

  	
   

  	
  7

  
	
  1.41

  	
   

  	
  “Government
  Agencies”

  	
   

  	
  7

  
	
  1.42

  	
   

  	
  “Gross Revenues”

  	
   

  	
  7

  
	
  1.43

  	
   

  	
  “Guarantor”

  	
   

  	
  9

  
	
  1.44

  	
   

  	
  “Guaranty”

  	
   

  	
  9

  
	
  1.45

  	
   

  	
  “Hazardous
  Substances”

  	
   

  	
  9

  
	
  1.46

  	
   

  	
  “Immediate Family”

  	
   

  	
  10

  
	
  1.47

  	
   

  	
  “Impositions”

  	
   

  	
  10

  
	
  1.48

  	
   

  	
  “Incidental Documents”

  	
   

  	
  11

  
	
  1.49

  	
   

  	
  “Indebtedness”

  	
   

  	
  11

  
	
  1.50

  	
   

  	
  “Insurance
  Requirements”

  	
   

  	
  11

  
	
  1.51

  	
   

  	
  “Interest Rate”

  	
   

  	
  11

  
	
  1.52

  	
   

  	
  “LTA GMAC Leased
  Property”

  	
   

  	
  11

  

 

 

	
  1.53

  	
   

  	
  “LTA GMAC Leases”

  	
   

  	
  11

  
	
  1.54

  	
   

  	
  “LTA GMAC Property”

  	
   

  	
  12

  
	
  1.55

  	
   

  	
  “Land”

  	
   

  	
  12

  
	
  1.56

  	
   

  	
  “Landlord”

  	
   

  	
  12

  
	
  1.57

  	
   

  	
  “Landlord Default”

  	
   

  	
  12

  
	
  1.58

  	
   

  	
  “Landlord Liens”

  	
   

  	
  12

  
	
  1.59

  	
   

  	
  “Lease Year”

  	
   

  	
  12

  
	
  1.60

  	
   

  	
  “Leased
  Improvements”

  	
   

  	
  12

  
	
  1.61

  	
   

  	
  “Leased Intangible
  Property”

  	
   

  	
  12

  
	
  1.62

  	
   

  	
  “Leased Property”

  	
   

  	
  13

  
	
  1.63

  	
   

  	
  “Legal Requirements”

  	
   

  	
  13

  
	
  1.64

  	
   

  	
  “Lien”

  	
   

  	
  13

  
	
  1.65

  	
   

  	
  “Manager”

  	
   

  	
  13

  
	
  1.66

  	
   

  	
  “Management
  Agreement”

  	
   

  	
  13

  
	
  1.67

  	
   

  	
  “Master Lease
  Agreement No. 3”

  	
   

  	
  13

  
	
  1.68

  	
   

  	
  “Minimum Rent”

  	
   

  	
  14

  
	
  1.69

  	
   

  	
  “Notice”

  	
   

  	
  14

  
	
  1.70

  	
   

  	
  “Officer’s
  Certificate”

  	
   

  	
  14

  
	
  1.71

  	
   

  	
  “Original Lease”

  	
   

  	
  14

  
	
  1.72

  	
   

  	
  “Overdue Rate”

  	
   

  	
  14

  
	
  1.73

  	
   

  	
  “Parent”

  	
   

  	
  14

  
	
  1.74

  	
   

  	
  “Permitted
  Encumbrances”

  	
   

  	
  14

  
	
  1.75

  	
   

  	
  “Permitted Liens”

  	
   

  	
  14

  
	
  1.76

  	
   

  	
  “Permitted Use”

  	
   

  	
  14

  
	
  1.77

  	
   

  	
  “Person”

  	
   

  	
  14

  
	
  1.78

  	
   

  	
  “Pledge Agreement”

  	
   

  	
  15

  
	
  1.79

  	
   

  	
  “Property”

  	
   

  	
  15

  
	
  1.80

  	
   

  	
  “Provider
  Agreements”

  	
   

  	
  15

  
	
  1.81

  	
   

  	
  “Records”

  	
   

  	
  15

  
	
  1.82

  	
   

  	
  “Regulated Medical
  Wastes”

  	
   

  	
  15

  
	
  1.83

  	
   

  	
  “Rent”

  	
   

  	
  15

  
	
  1.84

  	
   

  	
  “SEC”

  	
   

  	
  15

  
	
  1.85

  	
   

  	
  “Security Agreement”

  	
   

  	
  15

  
	
  1.86

  	
   

  	
  “State”

  	
   

  	
  15

  
	
  1.87

  	
   

  	
  “Subordinated
  Creditor”

  	
   

  	
  15

  
	
  1.88

  	
   

  	
  “Subordination
  Agreement”

  	
   

  	
  15

  
	
  1.89

  	
   

  	
  “Subsidiary”

  	
   

  	
  16

  
	
  1.90

  	
   

  	
  “Successor Landlord”

  	
   

  	
  16

  
	
  1.91

  	
   

  	
  “Tenant”

  	
   

  	
  16

  
	
  1.92

  	
   

  	
  “Tenant’s Personal
  Property”

  	
   

  	
  16

  
	
  1.93

  	
   

  	
  “Term”

  	
   

  	
  16

  
	
  1.94

  	
   

  	
  “Third Party Payor
  Programs”

  	
   

  	
  16

  
	
  1.95

  	
   

  	
  “Third Party Payors”

  	
   

  	
  16

  
	
  1.96

  	
   

  	
  “Unsuitable for Its
  Permitted Use”

  	
   

  	
  16

  
	
  1.97

  	
   

  	
  “Work”

  	
   

  	
  17

  
	
  ARTICLE 2

  	
   

  	
  LEASED PROPERTY AND TERM

  	
   

  	
  17

  
	
  2.1

  	
   

  	
  Leased Property

  	
   

  	
  17

  
	
  2.2

  	
   

  	
  Condition of Leased
  Property

  	
   

  	
  18

  
	
  2.3

  	
   

  	
  Fixed Term

  	
   

  	
  19

  
	
  2.4

  	
   

  	
  Extended Terms

  	
   

  	
  19

  
	
  ARTICLE 3

  	
   

  	
  RENT

  	
   

  	
  20

  
	
  3.1

  	
   

  	
  Rent

  	
   

  	
  20

  

 

2

 

	
  3.2

  	
   

  	
  Late Payment of
  Rent, Etc.

  	
   

  	
  26

  
	
  3.3

  	
   

  	
  Net Lease

  	
   

  	
  26

  
	
  3.4

  	
   

  	
  No Termination,
  Abatement, Etc.

  	
   

  	
  26

  
	
  ARTICLE 4

  	
   

  	
  USE OF THE LEASED PROPERTY

  	
   

  	
  27

  
	
  4.1

  	
   

  	
  Permitted Use

  	
   

  	
  27

  
	
  4.2

  	
   

  	
  Compliance with
  Legal/Insurance Requirements, Etc.

  	
   

  	
  29

  
	
  4.3

  	
   

  	
  Compliance with
  Medicaid and Medicare Requirements

  	
   

  	
  30

  
	
  4.4

  	
   

  	
  Environmental
  Matters

  	
   

  	
  30

  
	
  ARTICLE 5

  	
   

  	
  MAINTENANCE AND REPAIRS

  	
   

  	
  32

  
	
  5.1

  	
   

  	
  Maintenance and
  Repair

  	
   

  	
  32

  
	
  5.2

  	
   

  	
  Tenant’s Personal
  Property

  	
   

  	
  34

  
	
  5.3

  	
   

  	
  Yield Up

  	
   

  	
  34

  
	
  5.4

  	
   

  	
  Management Agreement

  	
   

  	
  35

  
	
  ARTICLE 6

  	
   

  	
  IMPROVEMENTS, ETC.

  	
   

  	
  36

  
	
  6.1

  	
   

  	
  Improvements to the
  Leased Property

  	
   

  	
  36

  
	
  6.2

  	
   

  	
  Salvage

  	
   

  	
  36

  
	
  ARTICLE 7

  	
   

  	
  LIENS

  	
   

  	
  37

  
	
  7.1

  	
   

  	
  Liens

  	
   

  	
  37

  
	
  7.2

  	
   

  	
  Landlord’s Lien

  	
   

  	
  37

  
	
  ARTICLE 8

  	
   

  	
  PERMITTED CONTESTS

  	
   

  	
  38

  
	
  ARTICLE 9

  	
   

  	
  INSURANCE AND INDEMNIFICATION

  	
   

  	
  39

  
	
  9.1

  	
   

  	
  General Insurance
  Requirements

  	
   

  	
  39

  
	
  9.2

  	
   

  	
  Waiver of
  Subrogation

  	
   

  	
  39

  
	
  9.3

  	
   

  	
  Form Satisfactory,
  Etc.

  	
   

  	
  39

  
	
  9.4

  	
   

  	
  No Separate
  Insurance; Self-Insurance

  	
   

  	
  40

  
	
  9.5

  	
   

  	
  Indemnification of
  Landlord

  	
   

  	
  41

  
	
  ARTICLE 10

  	
   

  	
  CASUALTY

  	
   

  	
  41

  
	
  10.1

  	
   

  	
  Insurance Proceeds

  	
   

  	
  41

  
	
  10.2

  	
   

  	
  Damage or
  Destruction

  	
   

  	
  42

  
	
  10.3

  	
   

  	
  Damage Near End of
  Term

  	
   

  	
  44

  
	
  10.4

  	
   

  	
  Tenant’s Property

  	
   

  	
  44

  
	
  10.5

  	
   

  	
  Restoration of
  Tenant’s Property

  	
   

  	
  44

  
	
  10.6

  	
   

  	
  No Abatement of Rent

  	
   

  	
  45

  
	
  10.7

  	
   

  	
  Waiver

  	
   

  	
  45

  
	
  ARTICLE 11

  	
   

  	
  CONDEMNATION

  	
   

  	
  45

  
	
  11.1

  	
   

  	
  Total Condemnation,
  Etc.

  	
   

  	
  45

  
	
  11.2

  	
   

  	
  Partial Condemnation

  	
   

  	
  45

  
	
  11.3

  	
   

  	
  Abatement of Rent

  	
   

  	
  46

  
	
  11.4

  	
   

  	
  Temporary
  Condemnation

  	
   

  	
  47

  
	
  11.5

  	
   

  	
  Allocation of Award

  	
   

  	
  47

  
	
  ARTICLE 12

  	
   

  	
  DEFAULTS AND REMEDIES

  	
   

  	
  48

  
	
  12.1

  	
   

  	
  Events of Default

  	
   

  	
  48

  
	
  12.2

  	
   

  	
  Remedies

  	
   

  	
  50

  
	
  12.3

  	
   

  	
  Tenant’s Waiver

  	
   

  	
  52

  
	
  12.4

  	
   

  	
  Application of Funds

  	
   

  	
  52

  
	
  12.5

  	
   

  	
  Landlord’s Right to
  Cure Tenant’s Default

  	
   

  	
  52

  

 

3

 

	
  ARTICLE 13

  	
   

  	
  HOLDING OVER

  	
   

  	
  53

  
	
  ARTICLE 14

  	
   

  	
  LANDLORD DEFAULT

  	
   

  	
  53

  
	
  ARTICLE 15

  	
   

  	
  PURCHASE RIGHTS

  	
   

  	
  54

  
	
  ARTICLE 16

  	
   

  	
  SUBLETTING AND ASSIGNMENT

  	
   

  	
  54

  
	
  16.1

  	
   

  	
  Subletting and
  Assignment

  	
   

  	
  54

  
	
  16.2

  	
   

  	
  Required Sublease
  Provisions

  	
   

  	
  56

  
	
  16.3

  	
   

  	
  Permitted Sublease

  	
   

  	
  57

  
	
  16.4

  	
   

  	
  Sublease Limitation

  	
   

  	
  58

  
	
  ARTICLE 17

  	
   

  	
  ESTOPPEL CERTIFICATES AND FINANCIAL
  STATEMENTS

  	
   

  	
  58

  
	
  17.1

  	
   

  	
  Estoppel
  Certificates

  	
   

  	
  58

  
	
  17.2

  	
   

  	
  Financial Statements

  	
   

  	
  59

  
	
  17.3

  	
   

  	
  General Operations

  	
   

  	
  60

  
	
  ARTICLE 18

  	
   

  	
  LANDLORD’S RIGHT TO INSPECT

  	
   

  	
  61

  
	
  ARTICLE 19

  	
   

  	
  EASEMENTS

  	
   

  	
  61

  
	
  19.1

  	
   

  	
  Grant of Easements

  	
   

  	
  61

  
	
  19.2

  	
   

  	
  Exercise of Rights
  by Tenant

  	
   

  	
  62

  
	
  19.3

  	
   

  	
  Permitted
  Encumbrances

  	
   

  	
  62

  
	
  ARTICLE 20

  	
   

  	
  FACILITY MORTGAGES

  	
   

  	
  62

  
	
  20.1

  	
   

  	
  Landlord
  May Grant Liens

  	
   

  	
  62

  
	
  20.2

  	
   

  	
  Subordination of
  Lease

  	
   

  	
  62

  
	
  20.3

  	
   

  	
  Notice to Mortgagee
  and Superior Landlord

  	
   

  	
  64

  
	
  ARTICLE 21

  	
   

  	
  ADDITIONAL COVENANTS OF TENANT

  	
   

  	
  64

  
	
  21.1

  	
   

  	
  Prompt Payment of
  Indebtedness

  	
   

  	
  64

  
	
  21.2

  	
   

  	
  Conduct of Business

  	
   

  	
  65

  
	
  21.3

  	
   

  	
  Maintenance of
  Accounts and Records

  	
   

  	
  65

  
	
  21.4

  	
   

  	
  Notice of
  Litigation, Etc.

  	
   

  	
  65

  
	
  21.5

  	
   

  	
  Indebtedness of
  Tenant

  	
   

  	
  66

  
	
  21.6

  	
   

  	
  Distributions,
  Payments to Affiliated Persons, Etc.

  	
   

  	
  67

  
	
  21.7

  	
   

  	
  Prohibited
  Transactions

  	
   

  	
  67

  
	
  21.8

  	
   

  	
  Liens and
  Encumbrances

  	
   

  	
  67

  
	
  21.9

  	
   

  	
  Merger; Sale of
  Assets; Etc.

  	
   

  	
  68

  
	
  21.10

  	
   

  	
  LTA GMAC Properties

  	
   

  	
  68

  
	
  ARTICLE 22

  	
   

  	
  ARBITRATION

  	
   

  	
  69

  
	
  ARTICLE 23

  	
   

  	
  MISCELLANEOUS

  	
   

  	
  70

  
	
  23.1

  	
   

  	
  Limitation on
  Payment of Rent

  	
   

  	
  70

  
	
  23.2

  	
   

  	
  No Waiver

  	
   

  	
  70

  
	
  23.3

  	
   

  	
  Remedies Cumulative

  	
   

  	
  70

  
	
  23.4

  	
   

  	
  Severability

  	
   

  	
  71

  
	
  23.5

  	
   

  	
  Acceptance of
  Surrender

  	
   

  	
  71

  
	
  23.6

  	
   

  	
  No Merger of Title

  	
   

  	
  71

  
	
  23.7

  	
   

  	
  Conveyance by
  Landlord

  	
   

  	
  71

  
	
  23.8

  	
   

  	
  Quiet Enjoyment

  	
   

  	
  71

  
	
  23.9

  	
   

  	
  No Recordation

  	
   

  	
  72

  
	
  23.10

  	
   

  	
  Notices

  	
   

  	
  72

  
	
  23.11

  	
   

  	
  Construction

  	
   

  	
  73

  
	
  23.12

  	
   

  	
  Counterparts;
  Headings

  	
   

  	
  73

  
	
  23.13

  	
   

  	
  Applicable Law, Etc.

  	
   

  	
  74

  
	
  23.14

  	
   

  	
  Right to Make
  Agreement

  	
   

  	
  74

  
	
  23.15

  	
   

  	
  Attorneys’ Fees

  	
   

  	
  74

  
	
  23.16

  	
   

  	
  Property Specific
  Representations and Warranties

  	
   

  	
  75

  

 

4

 

	
  23.17

  	
   

  	
  Nonliability of Trustees

  	
   

  	
  76

  
	
  23.18

  	
   

  	
  Beverly Manor
  Allowance

  	
   

  	
  77

  
	
  23.19

  	
   

  	
  Savannah Square
  Lease

  	
   

  	
  77

  
	
  23.20

  	
   

  	
  Original Lease

  	
   

  	
  77

  

 

5

 

AMENDED AND RESTATED MASTER LEASE AGREEMENT

(LEASE NO. 1)

 

THIS AMENDED AND RESTATED MASTER LEASE AGREEMENT  (LEASE NO. 1)
is entered into as of June 30, 2008 by and among each of the parties
identified on the signature page hereof as a landlord, as landlord
(collectively, “Landlord”), and FIVE STAR QUALITY CARE
TRUST, a Maryland business trust, as tenant (“Tenant”).

 

W  I  T
N  E  S  S  E  T  H :

 

WHEREAS, Landlord and Tenant are
parties to that
certain Second Amended and Restated Lease Agreement, dated as of November 19,
2004, as the same has been amended to date (as so amended, the “Original
Lease”); and

 

WHEREAS, Landlord and Tenant wish to
amend, restate and bifurcate the Original Lease into two separate leases and to
make such other modifications thereto as are set forth herein;

 

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

 

ARTICLE 1

 

DEFINITIONS

 

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

 

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

 

 

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

 

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

 

1.4          “Agreement”  shall mean this Amended and
Restated Master Lease Agreement (Lease No. 1), including all schedules and
exhibits attached hereto, as it and they may be amended from time to time as
herein provided.

 

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

 

2

 

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

 

1.7          “Base Gross Revenues”  shall mean the amount of Gross Revenues for the Leased
Property and the LTA GMAC Leased Property for the Base Year, provided, however,
that in the event that, with respect to any Lease Year, or portion thereof, for
any reason (including, without limitation, a casualty or Condemnation) there
shall be a reduction in the number of units available at any Facility located
at the Leased Property or in the services provided at such Facility from the
number of such units or the services provided during the Base Year, in
determining Additional Rent payable for such Lease Year, Base Gross Revenues
shall be reduced as follows:  (a) in
the event of the termination of this Agreement with respect to any Property
pursuant to Article 10, 11 or 12, all Gross Revenues for such
Property for the period during the Base Year equivalent to the period after the
termination of this Agreement with respect to such Property shall be subtracted
from Base Gross Revenues; (b) in the event of a partial closing of any
Facility affecting the number of units, or the services provided, at such
Facility, Gross Revenues attributable to units or services at such Facility
shall be ratably allocated among all units in service at such Facility during
the Base Year and all such Gross Revenues attributable to units no longer in
service shall be subtracted from Base Gross Revenues throughout the period of
such closing; and (c) in the event of any other change in circumstances
affecting any Facility, Base Gross Revenues shall be equitably adjusted in such
manner as Landlord and Tenant shall reasonably agree.

 

1.8          “Base Year”  shall mean, with respect to each
Property, the calendar year specified as the Base Year with respect to such
Property on Schedule 1 attached hereto and made a part hereof and, with
respect to each LTA GMAC Property, the 2006 calendar year.

 

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

 

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

 

3

 

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

 

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

 

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

 

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

 

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

 

4

 

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

 

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

 

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

 

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

 

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

 

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

 

1.22                        “Distribution”  shall mean (a) any declaration or payment of any
dividend (except ordinary cash dividends payable in common stock or other
equity interests of Tenant) on or in respect of any shares of any class of
capital stock or other equity interests of Tenant, (b) any purchase,
redemption, retirement or other acquisition of any shares of any class of 

 

5

 

capital
stock of a corporation, (c) any other distribution on or in respect of any
shares of any class of capital stock of a corporation or (d) any return of
capital to shareholders.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

1.30                        “Excess Gross Revenues”  shall mean the amount of Gross Revenues for any Lease Year,
or portion thereof, in excess of Base Gross Revenues for the equivalent period
during the Base Year.

 

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

 

1.32                        “Facility”  shall mean, with respect to any Property, the skilled
nursing/intermediate care/independent living/assisted living/special care/group
home facility being operated or proposed to be operated on such Property.

 

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

 

6

 

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

 

1.35                        “Financial Officer’s
Certificate”  shall mean, as to any Person, a
certificate of the chief executive officer, chief financial officer or chief
accounting officer (or such officers’ authorized designee) of such Person, duly
authorized, accompanying the financial statements required to be delivered by
such Person pursuant to Section 17.2, in which such officer shall
certify (a) that such statements have been properly prepared in accordance
with GAAP and are true, correct and complete in all material respects and
fairly present the consolidated financial condition of such Person at and as of
the dates thereof and the results of its and their operations for the periods
covered thereby, and (b) in the event that the certifying party is an
officer of Tenant and the certificate is being given in such capacity, that no
Event of Default has occurred and is continuing hereunder.

 

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

 

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

 

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

 

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

 

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

 

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

 

1.42                        “Gross Revenues”  shall mean, for each Fiscal Year during the Term, in the
aggregate, all revenues and receipts (determined on an accrual basis and in all
material respects in 

 

7

 

accordance
with GAAP) of every kind derived from renting, using and/or operating the
Leased Property and the LTA GMAC Leased Property and parts thereof, including,
but not limited to:  all rents and
revenues received or receivable for the use of or otherwise by reason of all
units, beds and other facilities provided, meals served, services performed,
space or facilities subleased or goods sold on the Leased Property or the LTA
GMAC Leased Property, or any portion thereof, including, without limitation,
any other arrangements with third parties relating to the possession or use of
any portion of the Leased Property or the LTA GMAC Leased Property; and
proceeds, if any, from business interruption or other loss of income insurance;
provided, however, that Gross Revenues shall not include the
following:  revenue from professional
fees or charges by physicians and unaffiliated providers of services, when and
to the extent such charges are paid over to such physicians and unaffiliated
providers of services, or are separately billed and not included in
comprehensive fees; contractual allowances (relating to any period during the
Term) for billings not paid by or received from the appropriate governmental
agencies or third party providers; allowances according to GAAP for
uncollectible accounts, including credit card accounts and charity care or
other administrative discounts; all proper patient billing credits and
adjustments according to GAAP relating to health care accounting; provider
discounts for hospital or other medical facility utilization contracts and
credit card discounts; any amounts actually paid by Tenant for the cost of any
federal, state or local governmental programs imposed specially to provide or
finance indigent patient care; federal, state or municipal excise, sales, use,
occupancy or similar taxes collected directly from patients, clients or
residents or included as part of the sales price of any goods or services;
insurance proceeds (other than proceeds from business interruption or other
loss of income insurance); Award proceeds (other than for a temporary
Condemnation); revenues attributable to services actually provided off-site or
otherwise away from the Leased Property or the LTA GMAC Leased Property, such
as home health care, to persons that are not patients, clients or residents at
the Leased Property or the LTA GMAC Leased Property; revenues attributable to
child care services provided primarily to employees of the Leased Property or
the LTA GMAC Leased Property; any proceeds from any sale of the Leased Property
or the LTA GMAC Leased Property or from the refinancing of any debt encumbering
the Leased Property or the LTA GMAC Leased Property; proceeds from the
disposition of furnishings, fixture and equipment no longer necessary for the
operation of the Facility located thereon; any security deposits and other
advance deposits, until and unless the same are forfeited to 

 

8

 

Tenant
or applied for the purpose for which they were collected; and interest income
from any bank account or investment of Tenant.

 

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

 

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

 

1.45                        “Hazardous
Substances”  shall mean
any substance:

 

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

 

(b)                                 which is or becomes defined as a
“hazardous waste”, “hazardous material” or “hazardous substance” or “pollutant”
or “contaminant” under any present or future federal, state or local statute,
regulation, rule or ordinance or amendments thereto including, without
limitation, the Comprehensive Environmental Response, Compensation and
Liability Act (42 U.S.C. Section 9601 et  seq.) and the
Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et  seq.)
and the regulations promulgated thereunder; or

 

(c)                                  which is toxic, explosive,
corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic or
otherwise hazardous and is or becomes regulated by any governmental authority,
agency, department, commission, board, agency or instrumentality of the United
States, any state of the United States, or any political subdivision thereof;
or

 

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

 

9

 

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

 

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

 

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

 

(h)                                 without limitation, constitutes
Regulated Medical Wastes.

 

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

 

1.47                        “Impositions”  shall mean, collectively, all taxes (including, without
limitation, all taxes imposed under the laws of any State, as such laws may be
amended from time to time, and all ad valorem, sales and use, or similar taxes
as the same relate to or are imposed upon Landlord, Tenant or the business
conducted upon the Leased Property), assessments (including, without
limitation, all assessments for public improvements or benefit, whether or not
commenced or completed prior to the date hereof), ground rents (including any
minimum rent under any ground lease, and any additional rent or charges
thereunder), water, sewer or other rents and charges, excises, tax levies, fees
(including, without limitation, license, permit, inspection, authorization and
similar fees), and all other governmental charges, in each case whether general
or special, ordinary or extraordinary, foreseen or unforeseen, of every
character in respect of the Leased Property or the business conducted thereon
by Tenant (including all interest and penalties thereon due to any failure in
payment by Tenant), which at any time prior to, during or in respect of the
Term hereof may be assessed or imposed on or in respect of or be a lien upon (a) Landlord’s
interest in the Leased Property, (b) the Leased Property or any part
thereof or any rent therefrom or any estate, right, title or interest therein,
or (c) any occupancy, operation, use or possession of, or sales from, or
activity conducted on, or in connection with the Leased Property or the leasing
or use of the Leased Property or any part thereof by Tenant; provided, however,
that nothing contained herein shall be construed to require Tenant to pay and
the term “Impositions” shall not include (i) any tax based on net income 

 

10

 

imposed
on Landlord, (ii) any net revenue tax of Landlord, (iii) any transfer
fee (but excluding any mortgage or similar tax payable in connection with a
Facility Mortgage) or other tax imposed with respect to the sale, exchange or
other disposition by Landlord of the Leased Property or the proceeds thereof, (iv) any
single business, gross receipts tax, transaction privilege, rent or similar
taxes as the same relate to or are imposed upon Landlord, (v) any interest
or penalties imposed on Landlord as a result of the failure of Landlord to file
any return or report timely and in the form prescribed by law or to pay any tax
or imposition, except to the extent such failure is a result of a breach by
Tenant of its obligations pursuant to Section 3.1.3, (vi) any
impositions imposed on Landlord that are a result of Landlord not being
considered a “United States person” as defined in Section 7701(a)(30) of
the Code, (vii) any impositions that are enacted or adopted by their
express terms as a substitute for any tax that would not have been payable by
Tenant pursuant to the terms of this Agreement or (viii) any impositions
imposed as a result of a breach of covenant or representation by Landlord in
any agreement governing Landlord’s conduct or operation or as a result of the
negligence or willful misconduct of Landlord.

 

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

 

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

 

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

 

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

 

1.52                        “LTA GMAC Leased Property”  shall mean the “Leased Property,” as defined
therein, under the LTA GMAC Leases.

 

1.53                        “LTA GMAC
Leases”  shall mean, collectively, the Leases, dated
as of November 19, 2004, by and among certain Affiliated Persons of
Landlord and certain Affiliated Persons of 

 

11

 

Tenant,
together with all modifications, amendments and supplements thereto.

 

1.54                        “LTA GMAC Property”  shall mean a “Property,” as defined therein,
under the LTA GMAC Leases.

 

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

 

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

 

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

 

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

 

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

 

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

 

1.61                        “Leased Intangible Property”  shall mean all agreements, service contracts, equipment
leases, booking agreements and other arrangements or agreements affecting the
ownership, repair, maintenance, management, leasing or operation of the Leased
Property, or any portion thereof, to which Landlord is a party; all books,
records and files relating to the leasing, maintenance, management or operation
of the Leased Property, or any portion thereof, belonging to Landlord; all
transferable or assignable permits, certificates of occupancy, operating
permits, sign permits, development rights and 

 

12

 

approvals,
certificates, licenses, warranties and guarantees, rights to deposits, trade
names, service marks, telephone exchange numbers identified with the Leased
Property, and all other transferable intangible property, miscellaneous rights,
benefits and privileges of any kind or character belonging to Landlord with
respect to the Leased Property.

 

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

 

1.63                        “Legal Requirements”  shall mean all federal, state, county, municipal and other
governmental statutes, laws, rules, orders, regulations, ordinances, judgments,
decrees and injunctions affecting the Leased Property or the maintenance,
construction, alteration or operation thereof, whether now or hereafter enacted
or in existence, including, without limitation, (a) all permits, licenses,
authorizations, certificates of need, authorizations and regulations necessary
to operate any Property for its Permitted Use, and (b) all covenants,
agreements, restrictions and encumbrances contained in any instruments at any
time in force affecting any Property, including those which may (i) require
material repairs, modifications or alterations in or to any Property or (ii) in
any way materially and adversely affect the use and enjoyment thereof, but
excluding any requirements arising as a result of Landlord’s status as a real
estate investment trust.

 

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

 

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

 

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

 

1.67                        “Master Lease Agreement No. 3”
 shall mean that certain Amended and Restated
Master Lease Agreement (Lease No. 3), dated as of June 30, 2008,
among SNH Somerford Properties 

 

13

 

Trust,
SPTIHS Properties Trust, SPTMNR Properties Trust and Tenant, as it may be
amended, restated, supplemented or otherwise modified from time to time.

 

1.68                        “Minimum Rent”  shall mean the sum of Fifty-Two Million Two Hundred
Thirty-Six Thousand Eight Hundred Twenty-Five and 00/100s Dollars
($52,236,825.00) per annum.

 

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

 

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

 

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

 

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

 

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

 

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

 

1.75                        “Permitted Liens”  shall mean any Liens granted in accordance with Section 21.8(a).

 

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

 

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

 

14

 

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

 

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

 

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

 

1.81        “Records”  shall have the meaning given
such term in Section 7.2.

 

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

 

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

 

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

 

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

 

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

 

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

 

1.88        “Subordination Agreement”  shall mean any agreement (and any amendments thereto)
executed by a Subordinated Creditor pursuant to which the payment and
performance of Tenant’s 

 

15

 

obligations
to such Subordinated Creditor are subordinated to the payment and performance
of Tenant’s obligations to Landlord under this Agreement.

 

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

 

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

 

1.91        “Tenant”  shall have the meaning given
such term in the preambles to this Agreement and shall also include its
permitted successors and assigns.

 

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

 

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

 

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

 

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

 

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

 

16

 

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

 

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

 

ARTICLE 2

 

LEASED PROPERTY AND TERM

 

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

 

(a)           those
certain tracts, pieces and parcels of land, as more particularly described in Exhibits
A-1 through A-82 attached hereto and made a part hereof (the “Land”);

 

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

 

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

 

17

 

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

 

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

 

(f)            all of
the Leased Intangible Property; and

 

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

 

2.2          Condition of Leased Property.  Tenant acknowledges receipt and delivery of
possession of the Leased Property and Tenant accepts the Leased Property in its
“as is” condition, subject to the rights of parties in possession, the existing
state of title, including all covenants, conditions, restrictions,
reservations, mineral leases, easements and other matters of record or that are
visible or apparent on the Leased 
Property, all applicable Legal Requirements, the lien of any financing
instruments, mortgages and deeds of trust existing prior to the applicable
Commencement Date for any Property or permitted by the terms of this Agreement,
and such other matters which would be disclosed by an inspection of the Leased
Property and the record title thereto or by an accurate survey thereof.  TENANT REPRESENTS THAT IT HAS INSPECTED THE
LEASED PROPERTY AND ALL OF THE FOREGOING AND HAS FOUND THE CONDITION THEREOF
SATISFACTORY AND IS NOT RELYING ON ANY REPRESENTATION OR WARRANTY OF LANDLORD
OR LANDLORD’S AGENTS OR EMPLOYEES WITH 

 

18

 

RESPECT
THERETO AND TENANT WAIVES ANY CLAIM OR ACTION AGAINST LANDLORD IN RESPECT OF
THE CONDITION OF THE LEASED PROPERTY. 
LANDLORD MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, IN
RESPECT OF THE LEASED PROPERTY OR ANY PART THEREOF, EITHER AS TO ITS
FITNESS FOR USE, DESIGN OR CONDITION FOR ANY PARTICULAR USE OR PURPOSE OR
OTHERWISE, AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, LATENT OR
PATENT, IT BEING AGREED THAT ALL SUCH RISKS ARE TO BE BORNE BY TENANT.  To the maximum extent permitted by law,
however, Landlord hereby assigns to Tenant all of Landlord’s rights to proceed
against any predecessor in interest or insurer for breaches of warranties or
representations or for latent defects in the Leased Property.  Landlord shall fully cooperate with Tenant in
the prosecution of any such claims, in Landlord’s or Tenant’s name, all at
Tenant’s sole cost and expense.  Tenant
shall indemnify, defend, and hold harmless Landlord from and against any loss,
cost, damage or liability (including reasonable attorneys’ fees) incurred by
Landlord in connection with such cooperation.

 

2.3          Fixed Term.  The initial term of this Agreement (the “Fixed
Term”) with respect to each Property commenced on the Commencement Date
with respect to such Property and shall expire on December 31, 2022.

 

2.4          Extended Terms.  Provided that no Event of Default shall have
occurred and be continuing, Tenant shall have the right to extend the Term for
one renewal term of fifteen (15) years (the “Extended Term”).

 

The Extended Term shall commence on the day succeeding
the expiration of the Fixed Term.  All of
the terms, covenants and provisions of this Agreement shall apply to the
Extended Term, except that Tenant shall have no right to extend the Term beyond
the expiration of the Extended Term.  If
Tenant shall elect to exercise the aforesaid option, it shall do so by giving
Landlord Notice thereof not later than December 31, 2020, it being
understood and agreed that time shall be of the essence with respect to the
giving of such Notice.  If Tenant shall
fail to give such Notice, this Agreement shall automatically terminate at the
end of the Fixed Term and Tenant shall have no further option to extend the
Term of this Agreement.  If Tenant shall
give such Notice, the extension of this Agreement shall be automatically
effected without the execution of any additional documents; it being understood
and agreed, however, that Tenant and Landlord shall execute such documents and
agreements as either party shall reasonably require to evidence the same.  Notwithstanding the provisions of the
foregoing sentence, if, subsequent to the giving of such Notice, an Event of
Default 

 

19

 

shall
occur, at Landlord’s option, the extension of this Agreement shall cease to
take effect and this Agreement shall automatically terminate at the end of the
Fixed Term, and Tenant shall have no further option to extend the Term of this
Agreement.

 

ARTICLE 3

 

RENT

 

3.1          Rent.  Tenant shall pay, in
lawful money of the United States of America which shall be legal tender for
the payment of public and private debts, without offset, abatement, demand or
deduction (unless otherwise expressly provided in this Agreement), Minimum Rent
and Additional Rent to Landlord and Additional Charges to the party to whom
such Additional Charges are payable, during the Term.  All payments to Landlord shall be made by wire
transfer of immediately available federal funds or by other means acceptable to
Landlord in its sole discretion.  Rent
for any partial calendar month shall be prorated on a per diem basis.

 

3.1.1           Minimum Rent.

 

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

 

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

 

(c)           Adjustments of Minimum Rent Following
Disbursements Under Sections 5.1.2(b), 10.2.3 and 11.2.  Effective on the date of each disbursement to
pay for the cost of any repairs, maintenance, renovations or replacements
pursuant to Sections 5.1.2(b), 10.2.3 or 11.2, the annual Minimum Rent
shall be increased by a per  annum amount equal to the
Disbursement Rate times the amount so disbursed.  If any such disbursement is made during any
calendar month on a day other than the first Business Day of such calendar
month, Tenant shall pay to Landlord on the 

 

20

 

first
Business Day of the immediately following calendar month (in addition to the
amount of Minimum Rent payable with respect to such calendar month, as adjusted
pursuant to this paragraph (c)) the amount by which Minimum Rent for the
preceding calendar month, as adjusted for such disbursement on a per diem
basis, exceeded the amount of Minimum Rent paid by Tenant for such preceding
calendar month.

 

(d)           Adjustments of Minimum Rent Following Partial
Lease Termination. 
Subject to Section 4.1.1(b), if this Agreement shall
terminate with respect to any Property but less than all of the Leased
Property, Minimum Rent shall be reduced by the affected Property’s allocable
share of Minimum Rent determined in accordance with the applicable provisions
of this Agreement.

 

3.1.2           Additional Rent.

 

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

 

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

 

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

 

21

 

of
independent certified public accountants proposed by Tenant and approved by
Landlord (which approval shall not be unreasonably withheld, delayed or
conditioned), and (iii) a statement showing Tenant’s calculation of
Additional Rent due for such preceding Lease Year based on the Gross Revenues
set forth in such financial report, together with an Officer’s Certificate from
Tenant’s chief financial or accounting officer certifying that such statement
is true and correct.

 

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

 

(d)           Confirmation of Additional Rent.  Tenant shall utilize, or cause to be utilized,
an accounting system for the Leased Property in accordance with its usual and
customary practices and in all material respects in accordance with GAAP, which
will accurately record all Gross Revenues and Tenant shall retain, for at least
three (3) years after the expiration of each Lease Year, reasonably
adequate records conforming to such accounting system showing all Gross
Revenues for such Lease Year.  Landlord,
at its own expense, except as provided hereinbelow, shall have the right,
exercisable by Notice to 

 

22

 

Tenant,
by its accountants or representatives, to audit the information set forth in
the Officer’s Certificate referred to in subparagraph (c) above and, in
connection with such audits, to examine Tenant’s books and records with respect
thereto (including supporting data and sales and excise tax returns).  Landlord shall begin such audit as soon as
reasonably possible following its receipt of the applicable Officer’s
Certificate and shall complete such audit as soon as reasonably possible
thereafter.  All such audits shall be
performed at the location where such books and records are customarily kept and
in such a manner so as to minimize any interference with Tenant’s business
operations.  If any such audit discloses
a deficiency in the payment of Additional Rent and either Tenant agrees with
the result of such audit or the matter is otherwise determined, Tenant shall
forthwith pay to Landlord the amount of the deficiency, as finally agreed or
determined, together with interest at the Interest Rate, from the date such
payment should have been made to the date of payment thereof, and if the amount
of such deficiency exceeds five percent (5%) of the Additional Rent that should
have been paid for any Lease Year, Tenant shall forthwith pay to Landlord the
aggregate amount of all costs and expenses incurred by Landlord in connection
with any such audit.  If any such audit
discloses that Tenant paid more Additional Rent for any Lease Year than was due
hereunder, and either Landlord agrees with the result of such audit or the
matter is otherwise determined, provided no Event of Default has occurred and
is continuing, Landlord shall, at Landlord’s option, either grant Tenant a
credit or pay to Tenant an amount equal to the amount of such overpayment
against Additional Rent next coming due in the amount of such difference, as
finally agreed or determined, together with interest at the Interest Rate,
which interest shall accrue from the time of payment by Tenant until the date
such credit is applied or paid, as the case may be; provided, however,
that, upon the expiration or sooner termination of the Term, provided no Event
of Default has occurred and is continuing, Landlord shall pay the unapplied
balance of such credit to Tenant, together with interest at the Interest Rate,
which interest shall accrue from the date of payment by Tenant until the date
of payment from Landlord.  Any dispute
concerning the correctness of an audit shall be settled by arbitration pursuant
to the provisions of Article 22.

 

Any proprietary
information obtained by Landlord with respect to Tenant pursuant to the
provisions of this 

 

23

 

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

 

3.1.3       Additional Charges.
 In addition to the Minimum Rent and Additional
Rent payable hereunder, Tenant shall pay (or cause to be paid) to the
appropriate parties and discharge (or cause to be discharged) as and when due
and payable the following (collectively, “Additional Charges”):

 

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

 

24

 

by or on behalf of Tenant, the same shall be paid over
to or retained by Tenant.  Landlord and
Tenant shall, upon request of the other, provide such data as is maintained by
the party to whom the request is made with respect to the Leased Property as
may be necessary to prepare any required returns and reports.  In the event Government Agencies classify any
property covered by this Agreement as personal property, Tenant shall file, or
cause to be filed, all personal property tax returns in such jurisdictions
where it may legally so file.  Each party
shall, to the extent it possesses the same, provide the other, upon request,
with cost and depreciation records necessary for filing returns for any
property so classified as personal property. 
Where Landlord is legally required to file personal property tax returns
for property covered by this Agreement, Landlord shall provide Tenant with
copies of assessment notices in sufficient time for Tenant to file a
protest.  All Impositions assessed
against such personal property shall be (irrespective of whether Landlord or
Tenant shall file the relevant return) paid by Tenant not later than the last
date on which the same may be made without interest or penalty, subject to the
provisions of Article 8.

 

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

 

Reference is made
to that certain Development Agreement, dated as of 2003, between the City of
Rogers, Minnesota (the “City of Rogers”) and SNH CHS Properties Trust,
as successor by assignment from Dignified Assisted Living, Inc. (the “Development
Agreement”).  Notwithstanding
anything contained in this Agreement to the contrary, the Impositions payable
by Tenant hereunder shall not include any of the Tax Increments described in
the Development Agreement.  So long as
the Development Agreement remains outstanding, (i) SNH CHS Properties Trust
shall pay all of the Tax Increments directly to the City of Rogers under the
Development Agreement; (ii) SNH CHS Properties Trust shall be entitled to
receive any portion of the Reimbursement Amount (as described in the
Development Agreement) paid by the City of Rogers under the Development
Agreement, and (iii) Tenant shall pay to Landlord the fixed amount of $15,000
per year.

 

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

 

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

 

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

 

(e)           Reimbursement for Additional Charges.  If Tenant pays or causes to be paid property
taxes or similar or other Additional Charges attributable to periods after the 

 

25

 

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

 

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

 

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

 

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

 

3.4          No Termination, Abatement, Etc.    Except as otherwise specifically provided in
this Agreement, each of Landlord and Tenant, to the maximum extent permitted by
law, shall remain 

 

26

 

bound
by this Agreement in accordance with its terms and shall not take any action
without the consent of the other to modify, surrender or terminate this
Agreement.  In addition, except as
otherwise expressly provided in this Agreement, Tenant shall not seek, or be
entitled to, any abatement, deduction, deferment or reduction of the Rent, or
set-off against the Rent, nor shall the respective obligations of Landlord and
Tenant be otherwise affected by reason of (a) any damage to or destruction
of the Leased Property, or any portion thereof, from whatever cause or any
Condemnation, (b) the lawful or unlawful prohibition of, or restriction
upon, Tenant’s use of the Leased Property, or any portion thereof, or the
interference with such use by any Person or by reason of eviction by paramount
title; (c) any claim which Tenant may have against Landlord by reason of
any default (other than a monetary default) or breach of any warranty by
Landlord under this Agreement or any other agreement between Landlord and
Tenant, or to which Landlord and Tenant are parties; (d) any bankruptcy,
insolvency, reorganization, composition, readjustment, liquidation,
dissolution, winding up or other proceedings affecting Landlord or any assignee
or transferee of Landlord; or (e) for any other cause whether similar or
dissimilar to any of the foregoing (other than a monetary default by
Landlord).  Except as otherwise
specifically provided in this Agreement, Tenant hereby waives all rights
arising from any occurrence whatsoever, which may now or hereafter be conferred
upon it by law (a) to modify, surrender or terminate this Agreement or
quit or surrender the Leased Property, or any portion thereof, or (b) which
would entitle Tenant to any abatement, reduction, suspension or deferment of
the Rent or other sums payable or other obligations to be performed by Tenant
hereunder.  The obligations of Tenant
hereunder shall be separate and independent covenants and agreements, and the
Rent and all other sums payable by Tenant hereunder shall continue to be
payable in all events unless the obligations to pay the same shall be
terminated pursuant to the express provisions of this Agreement.

 

ARTICLE 4

 

USE OF THE LEASED
PROPERTY

 

4.1          Permitted Use.

 

4.1.1           Permitted Use.

 

(a)           Tenant shall, at all times during the Term, and at any other
time that Tenant shall be in possession of any Property, continuously use and
operate, or cause to be used and operated, such Property as a skilled nursing/ 

 

27

 

intermediate
care/independent living/assisted living/ special care/group home facility as
currently operated, and any uses incidental thereto.  Tenant shall not use (and shall not permit
any Person to use) any Property, or any portion thereof, for any other use
without the prior written consent of Landlord, which approval shall not be
unreasonably withheld, delayed or conditioned. 
No use shall be made or permitted to be made of any Property and no acts
shall be done thereon which will cause the cancellation of any insurance policy
covering such Property or any part thereof (unless another adequate policy is
available) or which would constitute a default under any ground lease affecting
such Property, nor shall Tenant sell or otherwise provide to residents or
patients therein, or permit to be kept, used or sold in or about any Property
any article which may be prohibited by law or by the standard form of fire
insurance policies, or any other insurance policies required to be carried
hereunder, or fire underwriter’s regulations. 
Tenant shall, at its sole cost (except as expressly provided in Section 5.1.2(b)),
comply or cause to be complied with all Insurance Requirements.  Tenant shall not take or omit to take, or
permit to be taken or omitted to be taken, any action, the taking or omission
of which materially impairs the value or the usefulness of any Property or any
part thereof for its Permitted Use.

 

(b)           In the event that, in the reasonable determination of
Tenant, it shall no longer be economically practical to operate any Property as
currently operated,  Tenant shall
give Landlord Notice thereof, which Notice shall set forth in reasonable detail
the reasons therefor.  Thereafter,
Landlord and Tenant shall negotiate in good faith to agree on an alternative
use for such Property, appropriate adjustments to the Additional Rent and other
related matters; provided, however, in no event shall the Minimum
Rent be reduced or abated as a result thereof. 
If Landlord and Tenant fail to agree on an alternative use for such
Property within sixty (60) days after commencing negotiations as aforesaid,
Tenant may market such Property for sale to a third party.  If Tenant receives a bona fide offer (an “Offer”)
to purchase such Property from a Person having the financial capacity to
implement the terms of such Offer, Tenant shall give Landlord Notice thereof,
which Notice shall include a copy of the Offer executed by such third
party.  In the event that Landlord shall
fail to accept or reject such Offer within thirty (30) days after receipt of
such Notice, such Offer shall be deemed to be 

 

28

 

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

 

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

 

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

 

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

 

29

 

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

 

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

 

4.4          Environmental Matters.

 

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

 

30

 

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

 

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

 

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

 

31

 

the Indemnitees, Tenant shall undertake the defense, at
Tenant’s sole cost and expense, of any indemnification duties set forth herein,
in which event, Tenant shall not be liable for payment of any duplicative
attorneys’ fees incurred by any Indemnitee.

 

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

 

4.4.3           Survival.  The provisions of this Section 4.4
shall survive the expiration or sooner termination of this Agreement.

 

ARTICLE 5

 

MAINTENANCE AND REPAIRS

 

5.1          Maintenance and
Repair.

 

5.1.1           Tenant’s General Obligations.  Tenant shall keep (or cause to be kept), at
Tenant’s sole cost and expense, the Leased Property and all private roadways,
sidewalks and curbs appurtenant thereto (and Tenant’s Personal Property) in
good order and repair, reasonable wear and tear excepted (whether or not the
need for such repairs occurs as a result of Tenant’s or any Manager’s use, any
prior use, the elements or the age of the Leased Property or Tenant’s Personal
Property or any portion thereof), and shall promptly make or cause to be made
all necessary and appropriate repairs and replacements to each Property of
every kind and nature, whether interior or exterior, structural or
nonstructural, ordinary or extraordinary, foreseen or unforeseen or arising by
reason of a condition existing prior to the Commencement Date for such Property
(concealed or otherwise).  All repairs
shall be made in a good, workmanlike manner, consistent with industry standards
for comparable Facilities in like locales, in accordance with all applicable
federal, state and local statutes, ordinances, codes, rules and
regulations relating to any such work. 
Tenant shall not take or omit to take (or permit any Person to take or
omit to take) any action, the taking or omission of which would materially and
adversely impair the value or the usefulness of the Leased Property or any
material part thereof for its Permitted Use. 
Tenant’s obligations under this Section 5.1.1 shall be
limited 

 

32

 

in the event of any casualty or Condemnation as set forth in
Article 10 and Article 11 and Tenant’s obligations with
respect to Hazardous Substances are as set forth in Section 4.4.

 

5.1.2           Landlord’s
Obligations.

 

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

 

(b)           If, pursuant to the terms of this Agreement, Tenant is
required to make any expenditures in connection with any repair, maintenance or
renovation with respect to any Property, Tenant may, at its election, advance
such funds or give Landlord Notice thereof, which Notice shall set forth, in
reasonable detail, the nature of the required repair, renovation or
replacement, the estimated cost thereof and such other information with respect
thereto as Landlord may reasonably require. 
Provided that no Event of Default shall have occurred and be continuing
and Tenant shall otherwise comply with the applicable provisions of Article 6,
Landlord shall, within ten (10) Business Days after such Notice, subject
to and in accordance with the applicable provisions of Article 6,
disburse such required funds to Tenant (or, if Tenant shall so elect, directly
to the Manager or any other Person performing the required work) and, upon such
disbursement, the Minimum Rent shall be adjusted as provided in Section 3.1.1(c).  Notwithstanding the foregoing, Landlord may
elect not to disburse such required funds to Tenant; provided, however, that if
Landlord shall elect not to disburse such required funds as aforesaid, Tenant’s
obligation to make such required repair, renovation or replacement shall be
deemed waived by Landlord, and, notwithstanding anything contained in this
Agreement to the contrary, Tenant shall have no 

 

33

 

obligation
to make such required repair, renovation or replacement.

 

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

 

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

 

5.2          Tenant’s Personal Property.  Tenant shall provide and maintain (or cause to
be provided and maintained) throughout the Term all such Tenant’s Personal
Property as shall be necessary in order to operate in compliance with
applicable material Legal Requirements and Insurance Requirements and otherwise
in accordance with customary practice in the industry for the Permitted
Use.  If, from and after the Commencement
Date with respect to any Property, Tenant acquires an interest in any item of
tangible personal property (other than motor vehicles) on, or in connection
with, the Leased Property, or any portion thereof, which belongs to anyone
other than Tenant, Tenant shall require the agreements permitting such use to
provide that Landlord or its designee may assume Tenant’s rights and
obligations under such agreement upon Landlord’s purchase of the same in
accordance with the provisions of Article 15 and the assumption of
management or operation of the Facility by Landlord or its designee.

 

5.3          Yield Up.  Upon the expiration or sooner termination of
this Agreement (or the termination of this Agreement with respect to any
Property), Tenant shall vacate and surrender the 

 

34

 

Leased
Property or such Property (as applicable) to Landlord in substantially the same
condition in which such Property was in on its Commencement Date, except as
repaired, rebuilt, restored, altered or added to as permitted or required by
the provisions of this Agreement, reasonable wear and tear excepted (and
casualty damage and Condemnation, in the event that this Agreement is
terminated following a casualty or Condemnation in accordance with Article 10
or Article 11 excepted).

 

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

 

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

 

35

 

ARTICLE 6

 

IMPROVEMENTS, ETC.

 

6.1          Improvements to the Leased
Property.  Tenant shall not make, construct
or install (or permit to be made, constructed or installed) any Capital
Additions without, in each instance, obtaining Landlord’s prior written consent,
which consent shall not be unreasonably withheld, delayed or conditioned
provided that (a) construction or installation of the same would not
adversely affect or violate any material Legal Requirement or Insurance
Requirement applicable to any Property and (b) Landlord shall have
received an Officer’s Certificate certifying as to the satisfaction of the
conditions set out in clause (a) above; provided, however,
that no such consent shall be required in the event immediate action is
required to prevent imminent harm to person or property.  Prior to commencing construction of any
Capital Addition, Tenant shall submit to Landlord, in writing, a proposal
setting forth, in reasonable detail, any such proposed improvement and shall
provide to Landlord such plans and specifications, and such permits, licenses,
contracts and such other information concerning the same as Landlord may
reasonably request.  Landlord shall have
thirty (30) days to review all materials submitted to Landlord in connection
with any such proposal.  Failure of
Landlord to respond to Tenant’s proposal within thirty (30) days after receipt
of all information and materials requested by Landlord in connection with the
proposed improvement shall be deemed to constitute approval of the same.  Without limiting the generality of the
foregoing, such proposal shall indicate the approximate projected cost of
constructing such proposed improvement and the use or uses to which it will be
put.  No Capital Addition shall be made
which would tie in or connect any Leased Improvements with any other
improvements on property adjacent to any Property (and not part of the Land)
including, without limitation, tie-ins of buildings or other structures or
utilities.  Except as permitted herein,
Tenant shall not finance the cost of any construction of such improvement by
the granting of a lien on or security interest in the Leased Property or such
improvement, or Tenant’s interest therein, without the prior written consent of
Landlord, which consent may be withheld by Landlord in Landlord’s sole
discretion.  Any such improvements shall,
upon the expiration or sooner termination of this Agreement, remain or pass to
and become the property of Landlord, free and clear of all encumbrances other
than Permitted Encumbrances.

 

6.2          Salvage.  All materials which are scrapped or removed in
connection with the making of either Capital Additions or 

 

36

 

non-Capital Additions or repairs
required by Article 5 shall be or become the property of the party
that paid for such work.

 

ARTICLE 7

 

LIENS

 

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

 

7.2          Landlord’s Lien.  In addition to any statutory landlord’s lien
and in order to secure payment of the Rent and all other sums payable hereunder
by Tenant, and to secure payment of any loss, cost or damage which Landlord may
suffer by reason of Tenant’s breach of this Agreement, Tenant hereby grants
unto Landlord, to the maximum extent permitted by Applicable Law, a security
interest in and an express contractual lien upon Tenant’s Personal Property
(except motor vehicles), and Tenant’s interest in all ledger sheets, files,
records, documents and instruments (including, without limitation, computer
programs, tapes and related electronic data processing) relating to the
operation of the Facilities (the “Records”) and all proceeds therefrom,
subject to any Permitted Encumbrances; and such Tenant’s Personal Property
shall not be removed from the Leased Property at any time when an Event of
Default has occurred and is continuing.

 

Upon Landlord’s request, Tenant shall execute and
deliver to Landlord financing statements in form sufficient to perfect 

 

37

 

the
security interest of Landlord in Tenant’s Personal Property and the proceeds
thereof in accordance with the provisions of the applicable laws of the
State.  During the continuance of an
Event of Default, Tenant hereby grants Landlord an irrevocable limited power of
attorney, coupled with an interest, to execute all such financing statements in
Tenant’s name, place and stead.  The
security interest herein granted is in addition to any statutory lien for the
Rent.

 

ARTICLE 8

 

PERMITTED CONTESTS

 

Tenant shall have the right to contest the amount or
validity of any Imposition, Legal Requirement, Insurance Requirement,
Environmental Obligation, lien, attachment, levy, encumbrance, charge or claim
(collectively, “Claims”) as to the Leased Property, by appropriate legal
proceedings, conducted in good faith and with due diligence, provided that (a) the
foregoing shall in no way be construed as relieving, modifying or extending
Tenant’s obligation to pay (or cause to be paid) any Claims as finally
determined, (b) such contest shall not cause Landlord or Tenant to be in
default under any mortgage or deed of trust encumbering the Leased Property, or
any portion thereof (Landlord agreeing that any such mortgage or deed of trust
shall permit Tenant to exercise the rights granted pursuant to this Article 8)
or any interest therein or result in or reasonably be expected to result in a
lien attaching to the Leased Property, or any portion thereof, (c) no part
of the Leased Property nor any Rent therefrom shall be in any immediate danger
of sale, forfeiture, attachment or loss, and (d) Tenant shall indemnify
and hold harmless Landlord from and against any cost, claim, damage, penalty or
reasonable expense, including reasonable attorneys’ fees, incurred by Landlord
in connection therewith or as a result thereof. 
Landlord agrees to join in any such proceedings if required legally to
prosecute such contest, provided that Landlord shall not thereby be subjected
to any liability therefor (including, without limitation, for the payment of
any costs or expenses in connection therewith) unless Tenant agrees by
agreement in form and substance reasonably satisfactory to Landlord, to assume
and indemnify Landlord with respect to the same.  Tenant shall be entitled to any refund of any
Claims and such charges and penalties or interest thereon which have been paid
by Tenant or paid by Landlord to the extent that Landlord has been fully
reimbursed by Tenant.  If Tenant shall
fail (x) to pay or cause to be paid any Claims when finally determined, (y) to
provide reasonable security therefor or (z) to prosecute or cause to be
prosecuted 

 

38

 

any
such contest diligently and in good faith, Landlord may, upon reasonable notice
to Tenant (which notice shall not be required if Landlord shall reasonably
determine that the same is not practicable), pay such charges, together with
interest and penalties due with respect thereto, and Tenant shall reimburse
Landlord therefor, upon demand, as Additional Charges.

 

ARTICLE 9

 

INSURANCE AND INDEMNIFICATION

 

9.1          General Insurance Requirements.  Tenant shall, at all times during the Term and
at any other time Tenant shall be in possession of any Property, or any portion
thereof, keep (or cause to be kept) such Property and all property located
therein or thereon, insured against the risks and in such amounts as is against
such risks and in such amounts as Landlord shall reasonably require and may be
commercially reasonable.  Tenant shall
prepare a proposal setting forth the insurance Tenant proposes to be maintained
with respect to each Property during the ensuing Fiscal Year and shall submit
such proposal to Landlord on or before December 1 of the preceding Lease
Year for Landlord’s review and approval, which approval shall not be
unreasonably withheld, delayed or conditioned. 
In the event that Landlord shall fail to respond within thirty (30) days
after receipt of such proposal, such proposal shall be deemed approved.

 

9.2          Waiver of Subrogation.  Landlord and Tenant agree that (insofar as and
to the extent that such agreement may be effective without invalidating or
making it impossible to secure insurance coverage from responsible insurance
companies doing business in any State) with respect to any property loss which
is covered by insurance then being carried by Landlord or Tenant, the party
carrying such insurance and suffering said loss releases the others of and from
any and all claims with respect to such loss; and they further agree that their
respective insurance companies (and, if Landlord or Tenant shall self insure in
accordance with the terms hereof, Landlord or Tenant, as the case may be) shall
have no right of subrogation against the other on account thereof, even though
extra premium may result therefrom.  In
the event that any extra premium is payable by Tenant as a result of this
provision, Landlord shall not be liable for reimbursement to Tenant for such
extra premium.

 

9.3          Form Satisfactory, Etc.   All insurance policies and endorsements
required pursuant to this Article 9 shall be fully paid for,
nonassessable, and issued by reputable insurance 

 

39

 

companies
authorized to do business in the State and having a general policy holder’s
rating of no less than A in Best’s latest rating guide.  All property, business interruption,
liability and flood insurance policies with respect to each Property shall
include no deductible in excess of Two Hundred Fifty Thousand Dollars
($250,000).  At all times, all property,
business interruption, liability and flood insurance policies, with the
exception of worker’s compensation insurance coverage, shall name Landlord and
any Facility Mortgagee as additional insureds, as their interests may
appear.  All loss adjustments shall be
payable as provided in Article 10, except that losses under liability
and worker’s compensation insurance policies shall be payable directly to the
party entitled thereto.  Tenant shall
cause all insurance premiums to be paid and shall deliver (or cause to be
delivered) policies or certificates thereof to Landlord prior to their
effective date (and, with respect to any renewal policy, prior to the
expiration of the existing policy).  All
such policies shall provide Landlord (and any Facility Mortgagee if required by
the same) thirty (30) days prior written notice of any material change or
cancellation of such policy.  In the
event Tenant shall fail to effect (or cause to be effected) such insurance as
herein required, to pay (or cause to be paid) the premiums therefor or to
deliver (or cause to be delivered) such policies or certificates to Landlord or
any Facility Mortgagee at the times required, Landlord shall have the right,
but not the obligation, upon Notice to Tenant, to acquire such insurance and
pay the premiums therefor, which amounts shall be payable to Landlord, upon
demand, as Additional Charges, together with interest accrued thereon at the
Overdue Rate from the date such payment is made until (but excluding) the date
repaid.

 

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

 

40

 

9.5          Indemnification of Landlord.  Notwithstanding the existence of any insurance
provided for herein and without regard to the policy limits of any such
insurance, Tenant shall protect, indemnify and hold harmless Landlord for, from
and against all liabilities, obligations, claims, damages, penalties, causes of
action, costs and reasonable expenses (including, without limitation,
reasonable attorneys’ fees), to the maximum extent permitted by law, imposed
upon or incurred by or asserted against Landlord by reason of the following,
except to the extent caused by Landlord’s gross negligence or willful
misconduct:  (a) any accident,
injury to or death of persons or loss of or damage to property occurring on or
about any Property or portion thereof or adjoining sidewalks or rights of way, (b) any
past, present or future use, misuse, non-use, condition, management,
maintenance or repair by Tenant, any Manager or anyone claiming under any of
them or Tenant’s Personal Property or any litigation, proceeding or claim by
governmental entities or other third parties to which Landlord is made a party
or participant relating to any Property or portion thereof or Tenant’s Personal
Property or such use, misuse, non-use, condition, management, maintenance, or
repair thereof including, failure to perform obligations (other than
Condemnation proceedings) to which Landlord is made a party, (c) any
Impositions that are the obligations of Tenant to pay pursuant to the applicable
provisions of this Agreement, and (d) any failure on the part of Tenant or
anyone claiming under Tenant to perform or comply with any of the terms of this
Agreement.  Tenant, at its expense, shall
contest, resist and defend any such claim, action or proceeding asserted or
instituted against Landlord (and shall not be responsible for any duplicative
attorneys’ fees incurred by Landlord) or may compromise or otherwise dispose of
the same, with Landlord’s prior written consent (which consent may not be unreasonably
withheld, delayed or conditioned).  The
obligations of Tenant under this Section 9.5 are in addition to the
obligations set forth in Section 4.4 and shall survive the
termination of this Agreement.

 

ARTICLE 10

 

CASUALTY

 

10.1        Insurance Proceeds.  Except as provided in the last clause of this
sentence, all proceeds payable by reason of any loss or damage to any Property,
or any portion thereof, and insured under any policy of insurance required by Article 9
(other than the proceeds of any business interruption insurance) shall be paid
directly to Landlord (subject to the provisions of Section 10.2)
and all loss adjustments with respect to losses 

 

41

 

payable
to Landlord shall require the prior written consent of Landlord, which consent
shall not be unreasonably withheld, delayed or conditioned; provided, however,
that, so long as no Event of Default shall have occurred and be continuing, all
such proceeds less than or equal to Two Hundred Fifty Thousand Dollars
($250,000) shall be paid directly to Tenant and such losses may be adjusted
without Landlord’s consent.  If Tenant is
required to reconstruct or repair any Property as provided herein, such
proceeds shall be paid out by Landlord from time to time for the reasonable
costs of reconstruction or repair of such Property necessitated by such damage
or destruction, subject to and in accordance with the provisions of Section 10.2.4.  Provided no Default or Event of Default has
occurred and is continuing, any excess proceeds of insurance remaining after
the completion of the restoration shall be paid to Tenant.  In the event that the provisions of Section 10.2.1
are applicable, the insurance proceeds shall be retained by the party entitled
thereto pursuant to Section 10.2.1.

 

10.2        Damage or Destruction.

 

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

 

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

 

10.2.3         Insufficient Insurance Proceeds. 
If the cost of the repair or restoration of the applicable Facility
exceeds the amount of insurance proceeds received by Landlord and Tenant
pursuant to Section 9.1, Tenant shall give Landlord Notice thereof
which notice shall set forth in reasonable detail the nature of such deficiency
and whether Tenant shall pay and assume the amount of such deficiency (Tenant
having no 

 

42

 

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

 

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

 

43

 

(a) the absence of any Event of Default, (b) its
approval of plans and specifications of an architect satisfactory to Landlord
(which approval shall not be unreasonably withheld, delayed or conditioned), (c) general
contractors’ estimates, (d) architect’s certificates, (e) conditional
lien waivers of general contractors, if available, (f) evidence of
approval by all governmental authorities and other regulatory bodies whose
approval is required, (g), if Tenant has elected to advance deficiency funds
pursuant to Section 10.2.3, Tenant depositing the amount thereof
with Landlord and (h) such other certificates as Landlord may, from time
to time, reasonably require.

 

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

 

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

 

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

 

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

 

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

 

44

 

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

 

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

 

ARTICLE 11

 

CONDEMNATION

 

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

 

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

 

45

 

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

 

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

 

11.3        Abatement of Rent.  Other than as specifically provided in this
Agreement, this Agreement shall remain in full 

 

46

 

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

 

11.4        Temporary Condemnation. 
In the
event of any temporary Condemnation of any Property or Tenant’s interest
therein, this Agreement shall continue in full force and effect and Tenant
shall continue to pay (or cause to be paid), in the manner and on the terms
herein specified, the full amount of the Rent. 
Tenant shall continue to perform and observe (or cause to be performed
and observed) all of the other terms and conditions of this Agreement on the
part of the Tenant to be performed and observed.  Provided no Event of Default has occurred and
is continuing, the entire amount of any Award made for such temporary
Condemnation allocable to the Term, whether paid by way of damages, rent or
otherwise, shall be paid to Tenant. 
Tenant shall, promptly upon the termination of any such period of
temporary Condemnation, at its sole cost and expense, restore the affected
Property to the condition that existed immediately prior to such Condemnation,
in material compliance with all applicable Legal Requirements, unless such
period of temporary Condemnation shall extend beyond the expiration of the
Term, in which event Tenant shall not be required to make such restoration.

 

11.5        Allocation of Award.  Except as provided in Section 11.4
and the second sentence of this Section 11.5, the total Award shall
be solely the property of and payable to Landlord.  Any portion of the Award made for the taking
of Tenant’s leasehold interest in the Leased Property, loss of business during
the remainder of the Term, the taking of Tenant’s Personal Property, the taking
of Capital Additions paid for by Tenant and Tenant’s removal and relocation
expenses shall be the sole property of and payable to Tenant (subject to the
provisions of Section 11.2). 
In any Condemnation proceedings, Landlord and Tenant shall each seek its
own Award in conformity herewith, at its own expense.

 

47

 

ARTICLE 12

 

DEFAULTS AND REMEDIES

 

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

 

(a)           should Tenant fail to make any payment of the Rent or any
other sum payable hereunder when due; or

 

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

 

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

 

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

 

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

 

48

 

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

 

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

 

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

 

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

 

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

 

(k)           should a final unappealable determination be made by the
applicable Government Agency that Tenant shall have failed to comply with
applicable Medicare and/or Medicaid regulations in the operation of any
Facility, as a result of which failure Tenant is declared ineligible to receive
reimbursements under the Medicare and/or Medicaid programs for such Facility;
or

 

(l)            should there occur an “Event of
Default”, as defined therein, under either of the LTA GMAC Leases;

 

49

 

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

 

Upon the occurrence of an Event of Default, Landlord
may, in addition to any other remedies provided herein, enter upon the Leased
Property, or any portion thereof, and take possession of any and all of Tenant’s
Personal Property, if any, and the Records, without liability for trespass or
conversion (Tenant hereby waiving any right to notice or hearing prior to such
taking of possession by Landlord) and sell the same at public or private sale,
after giving Tenant reasonable Notice of the time and place of any public or
private sale, at which sale Landlord or its assigns may purchase all or any
portion of Tenant’s Personal Property, if any, unless otherwise prohibited by
law.  Unless otherwise provided by law
and without intending to exclude any other manner of giving Tenant reasonable
notice, the requirement of reasonable Notice shall be met if such Notice is
given at least ten (10) days before the date of sale.  The proceeds from any such disposition, less
all expenses incurred in connection with the taking of possession, holding and
selling of such property (including, reasonable attorneys’ fees) shall be
applied as a credit against the indebtedness which is secured by the security
interest granted in Section 7.2. 
Any surplus shall be paid to Tenant or as otherwise required by law and
Tenant shall pay any deficiency to Landlord, as Additional Charges, upon
demand.

 

12.2        Remedies.  None of (a) the termination of this
Agreement pursuant to Section 12.1, (b) the repossession of
the Leased Property, or any portion thereof, (c) the failure of Landlord
to relet the Leased Property, or any portion thereof, nor (d) the
reletting of all or any of portion of the Leased Property, shall relieve Tenant
of its liability and obligations hereunder, all of which shall survive any such
termination, repossession or reletting. 
In the event of any such termination, Tenant shall forthwith pay to
Landlord all Rent due and payable with respect to the Leased Property, or
terminated portion thereof, through and including the date of such
termination.  Thereafter, Tenant, until
the end of what would have been the Term of this Agreement in the absence of
such 

 

50

 

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

 

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

 

In case of any Event of Default, re-entry, expiration
and dispossession by summary proceedings or otherwise, Landlord may (a) relet
the Leased Property or any part or parts thereof, either in the name of
Landlord or otherwise, for a term or terms which may at Landlord’s option, be
equal to, less than or exceed the period which would otherwise have constituted
the balance of 

 

51

 

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

 

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

 

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

 

12.5        Landlord’s Right to Cure Tenant’s
Default.  If an Event of Default shall have occurred and
be continuing, Landlord, after Notice to Tenant (which Notice shall not be
required if Landlord shall reasonably determine immediate action is necessary
to protect person or property), without waiving or releasing any obligation of
Tenant and without waiving or releasing any Event of Default, may (but shall
not be obligated to), at any time thereafter, make such payment or perform such
act for the account and at the expense of Tenant, and may, to the maximum
extent permitted by law, enter upon the Leased Property, or any portion thereof,
for such purpose and take all such action thereon as, in Landlord’s sole and
absolute discretion, may be necessary or appropriate therefor.  No such entry shall be deemed an eviction of
Tenant.  All reasonable 

 

52

 

costs
and expenses (including, without limitation, reasonable attorneys’ fees)
incurred by Landlord in connection therewith, together with interest thereon
(to the extent permitted by law) at the Overdue Rate from the date such sums
are paid by Landlord until repaid, shall be paid by Tenant to Landlord, on
demand.

 

ARTICLE 13

 

HOLDING OVER

 

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

 

ARTICLE 14

 

LANDLORD DEFAULT

 

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

 

53

 

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

 

ARTICLE 15

 

PURCHASE RIGHTS

 

Landlord shall have the option to purchase Tenant’s
Personal Property, at the expiration or sooner termination of this Agreement,
for an amount equal to the then fair market value thereof (current replacement
cost as determined by agreement of the parties or, in the absence of such
agreement, appraisal), subject to, and with appropriate price adjustments for,
all equipment leases, conditional sale contracts, UCC-1 financing statements
and other encumbrances to which such Personal Property is subject.  Upon the expiration or sooner termination of
this Agreement, Tenant shall use its reasonable efforts to transfer and assign,
or cause to be transferred and assigned, to Landlord or its designee, or assist
Landlord or its designee in obtaining, any contracts, licenses, and
certificates required for the then operation of the Leased Property.  Notwithstanding the foregoing, Tenant
expressly acknowledges and agrees that nothing contained in this Article 15
shall diminish, impair or otherwise modify Landlord’s rights under the Security
Agreement and that any amounts paid by Landlord in order to purchase Tenant’s
Personal Property in accordance with this Article 15 shall be
applied first to Tenant’s current and past due obligations under this Agreement
in such order as Landlord may reasonably determine or as may be prescribed by
the laws of the State and any balance shall be paid to Tenant.

 

ARTICLE 16

 

SUBLETTING AND ASSIGNMENT

 

16.1        Subletting and Assignment.  Except as provided in Section 16.3,
Tenant shall not, without Landlord’s prior written consent (which consent may
be given or withheld in Landlord’s sole and absolute discretion), assign,
mortgage, pledge, hypothecate, encumber or otherwise transfer this Agreement or
sublease or permit the sublease (which term shall be deemed to 

 

54

 

include
the granting of concessions, licenses and the like), of the Leased Property, or
any portion thereof, or suffer or permit this Agreement or the leasehold estate
created hereby or any other rights arising under this Agreement to be assigned,
transferred, mortgaged, pledged, hypothecated or encumbered, in whole or in
part, whether voluntarily, involuntarily or by operation of law, or permit the
use or operation of the Leased Property, or any portion thereof, by anyone
other than Tenant, any Manager approved by Landlord pursuant to the applicable
provisions of this Agreement or residents and patients of Tenant, or the Leased
Property, or any portion thereof, to be offered or advertised for assignment or
subletting.

 

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

 

If this Agreement is assigned or if the Leased
Property, or any portion thereof, is sublet (or occupied by anybody other than
Tenant or any Manager, their respective employees or residents or patients of
Tenant), Landlord may collect the rents from such assignee, subtenant or
occupant, as the case may be, and apply the net amount collected to the Rent
herein reserved, but no such collection shall be deemed a waiver of the
provisions set forth in the first paragraph of this Section 16.1,
the acceptance by Landlord of such assignee, subtenant or occupant, as the case
may be, as a tenant, or a release of Tenant from the future performance by
Tenant of its covenants, agreements or obligations contained in this Agreement.

 

Any assignment or transfer of Tenant’s interest under
this Agreement shall be subject to such assignee’s or transferee’s delivery to
Landlord of (i) a Guaranty, which Guaranty shall be in form and substance
satisfactory to Landlord in its sole discretion and which Guaranty shall
constitute an Incidental Document hereunder; (ii) a pledge of the stock,
partnership, membership or other ownership interests of such assignee or other
transferee to secure Tenant’s obligations under this Agreement and the
Incidental Documents, which pledge shall be in form and substance satisfactory
to Landlord in its sole discretion and which pledge shall constitute an
Incidental Document hereunder; (iii) a security agreement granting
Landlord a security interest in all of such assignee’s or transferee’s right,
title and interest in and to any personal property, intangibles and fixtures
(other than accounts receivable) with respect to any Property which is subject
to any such assignment or transfer to secure Tenant’s obligations under this
Agreement and the Incidental Documents, which security agreement shall be in
form and substance satisfactory to Landlord in its sole

 

55

 

discretion
and which security agreement shall constitute an Incidental Document hereunder;
and (iv) in the case of a sublease, an assignment which assigns all of
such subtenant’s right, title and interest in such sublease to Landlord to
secure Tenant’s obligations under this Agreement and the Incidental Documents,
which assignment shall be in form and substance satisfactory to Landlord in its
sole discretion and which assignment shall constitute an Incidental Document
hereunder.

 

No subletting or assignment shall in any way impair
the continuing primary liability of Tenant hereunder (unless Landlord and
Tenant expressly otherwise agree that Tenant shall be released from all
obligations hereunder), and no consent to any subletting or assignment in a
particular instance shall be deemed to be a waiver of the prohibition set forth
in this Section 16.1.  No
assignment, subletting or occupancy shall affect any Permitted Use.  Any subletting, assignment or other transfer
of Tenant’s interest under this Agreement in contravention of this Section 16.1
shall be voidable at Landlord’s option.

 

16.2        Required Sublease Provisions.  Any sublease of all or any portion of the
Leased Property shall provide (a) that it is subject and subordinate to
this Agreement and to the matters to which this Agreement is or shall be
subject or subordinate; (b) that in the event of termination of this
Agreement or reentry or dispossession of Tenant by Landlord under this
Agreement, Landlord may, at its option, terminate such sublease or take over
all of the right, title and interest of Tenant, as sublessor under such
sublease, and such subtenant shall, at Landlord’s option, attorn to Landlord
pursuant to the then executory provisions of such sublease, except that neither
Landlord nor any Facility Mortgagee, as holder of a mortgage or as Landlord
under this Agreement, if such mortgagee succeeds to that position, shall (i) be
liable for any act or omission of Tenant under such sublease, (ii) be
subject to any credit, counterclaim, offset or defense which theretofore
accrued to such subtenant against Tenant, (iii) be bound by any previous
modification of such sublease not consented to in writing by Landlord or by any
previous prepayment of more than one (1) month’s rent, (iv) be bound
by any covenant of Tenant to undertake or complete any construction of the
applicable Property, or any portion thereof, (v) be required to account
for any security deposit of the subtenant other than any security deposit
actually delivered to Landlord by Tenant, (vi) be bound by any obligation
to make any payment to such subtenant or grant any credits, except for
services, repairs, maintenance and restoration provided for under the sublease
that are performed 

 

56

 

after
the date of such attornment, (vii) be responsible for any monies owing by
Tenant to the credit of such subtenant unless actually delivered to Landlord by
Tenant, or (viii) be required to remove any Person occupying any portion
of the Leased Property; and (c) in the event that such subtenant receives
a written Notice from Landlord or any Facility Mortgagee stating that an Event
of Default has occurred and is continuing, such subtenant shall thereafter be
obligated to pay all rentals accruing under such sublease directly to the party
giving such Notice or as such party may direct. 
All rentals received from such subtenant by Landlord or the Facility
Mortgagee, as the case may be, shall be credited against the amounts owing by
Tenant under this Agreement and such sublease shall provide that the subtenant
thereunder shall, at the request of Landlord, execute a suitable instrument in
confirmation of such agreement to attorn. 
An original counterpart of each such sublease and assignment and
assumption, duly executed by Tenant and such subtenant or assignee, as the case
may be, in form and substance reasonably satisfactory to Landlord, shall be
delivered promptly to Landlord and (x) in the case of an assignment, the
assignee shall assume in writing and agree to keep and perform all of the terms
of this Agreement on the part of Tenant to be kept and performed and shall be,
and become, jointly and severally liable with Tenant for the performance
thereof and (y) in the case of either an assignment or subletting, Tenant
shall remain primarily liable, as principal rather than as surety, for the
prompt payment of the Rent and for the performance and observance of all of the
covenants and conditions to be performed by Tenant hereunder.

 

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

 

16.3        Permitted Sublease. 
Notwithstanding the foregoing, including, without limitation, Section 16.2,
but subject to the provisions of Section 16.4 and any other express
conditions or limitations set forth herein, Tenant may, in each instance after
Notice to Landlord, (a) enter into third party residency agreements with
respect to the units located at the Facilities, (b) sublease space at any
Property for laundry, commissary or child care purposes or other concessions in
furtherance of the Permitted Use, so long as such subleases will not reduce the
number of units at any Facility, will not violate or affect any Legal
Requirement or Insurance Requirement, and Tenant shall provide such additional
insurance coverage applicable to the activities to be conducted in such
subleased space as Landlord and any Facility Mortgagee may reasonably require,
and (c) enter 

 

57

 

into
one or more subleases with Affiliated Persons of Tenant with respect to the
Leased Property, or any portion thereof, provided Tenant gives Landlord
Notice of the material terms and conditions thereof.  Landlord and Tenant acknowledge and agree
that if Tenant enters into one (1) or more subleases with Affiliated
Persons of Tenant with respect to any Property, or any portion thereof, in
accordance with the preceding clause (c), Tenant may allocate the rent and
other charges with respect to the affected Property in any reasonable manner; provided,
however, that such allocation shall not affect Tenant’s (nor any
Guarantor’s) liability for the Rent and other obligations of Tenant under this
Agreement; and, provided, further, that Tenant shall give
Landlord prompt written notice of any allocation or reallocation of the rent
and other charges with respect to the affected Property and, in any event,
Tenant shall give Landlord written notice of the amount of such allocations at
least ten (10) Business Days prior to the date that Landlord or Senior
Housing Properties Trust is required to file any tax returns in any State where
such affected Property is located.

 

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

 

ARTICLE 17

 

ESTOPPEL CERTIFICATES AND
FINANCIAL STATEMENTS

 

17.1        Estoppel Certificates.  At any time and from time to time, but not
more than a reasonable number of times per year, upon not less than ten (10) Business
Days prior Notice by either party, the party receiving such Notice shall
furnish to the other an Officer’s Certificate certifying that this Agreement is
unmodified and in full force and effect (or that this Agreement is in full
force and effect as modified and setting forth the modifications), the date to
which the Rent has been paid, that no Default or an Event of Default has
occurred and is continuing or, if a Default or an Event of Default shall exist,
specifying in reasonable detail the nature thereof, and the steps being taken
to remedy the same, and such additional information as the requesting party may
reasonably request.  Any such certificate

 

58

 

furnished
pursuant to this Section 17.1 may be relied upon by the requesting
party, its lenders and any prospective purchaser or mortgagee of the Leased
Property, or any portion thereof, or the leasehold estate created hereby.

 

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

 

(a)           within forty-five (45) days after each of the first three
fiscal quarters of any Fiscal Year, the most recent Consolidated Financials,
accompanied by a Financial Officer’s Certificate;

 

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

 

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

 

(d)           at any time and from time to time upon not less than twenty
(20) days Notice from Landlord or such additional period as may be reasonable
under the circumstances, any Consolidated Financials, Tenant financials or any
other audited or unaudited financial reporting information required to be filed
by Landlord with any securities and exchange commission, the SEC or any
successor agency, or any other governmental authority, or required pursuant to
any order issued by any court, governmental authority or arbitrator in any
litigation to which Landlord is a party, for purposes of compliance therewith; provided,
however, that, except as to calculations pertaining to Gross Revenues,
Tenant shall not be required to provide audited financials with respect to any
individual Facility unless Landlord shall agree to pay for the cost thereof;

 

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

 

59

 

(f)            promptly, upon Notice from
Landlord, such other information concerning the business, financial condition
and affairs of Tenant, any Guarantor, and/or any Affiliated Party of Tenant which
is a party to an LTA GMAC Lease as Landlord reasonably may request from time to
time.

 

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

 

17.3        General Operations. 
Tenant
covenants and agrees to furnish to Landlord, within thirty (30) days after
receipt or modification thereof, copies of:

 

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

 

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

 

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

 

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

 

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

 

60

 

ARTICLE 18

 

LANDLORD’S RIGHT TO INSPECT

 

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

 

ARTICLE 19

 

EASEMENTS

 

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

 

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

 

(b)           Landlord receives an Officer’s Certificate from Tenant
stating (i) that such grant, modification or abandonment is not
detrimental to the proper conduct of business on such Property, (ii) the
consideration, if any, being paid for such grant, modification or abandonment
(which consideration shall be paid by Tenant), (iii) that such grant,
modification or abandonment does not impair the use or value of such Property
for the Permitted Use, and (iv) that, for as long as this Agreement shall
be in effect, Tenant will perform all obligations, if any, of Landlord under
any such instrument; and

 

(c)           Landlord receives evidence satisfactory to Landlord that the
Manager has granted its consent to such grant, modification or abandonment in
accordance with the 

 

61

 

requirements
of such Manager’s Management Agreement or that such consent is not required.

 

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

 

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

 

ARTICLE 20

 

FACILITY MORTGAGES

 

20.1        Landlord May Grant Liens.  Without the consent of Tenant, Landlord may,
from time to time, directly or indirectly, create or otherwise cause to exist
any lien, encumbrance or title retention agreement (“Encumbrance”) upon
the Leased Property, or any portion thereof, or interest therein, whether to
secure any borrowing or other means of financing or refinancing.

 

20.2        Subordination of Lease.  This Agreement and any and all rights of
Tenant hereunder are and shall be subject and subordinate to any ground or
master lease, and all renewals, extensions, modifications and replacements
thereof, and to all mortgages and deeds of trust, which may now or hereafter
affect the Leased Property, or any portion thereof, or any improvements thereon
and/or any of such leases, whether or not such mortgages or deeds of trust
shall also cover other lands and/or buildings and/or leases, to each and every
advance made or hereafter to be made under such mortgages and deeds of trust,
and to all renewals, modifications, replacements and extensions of such leases
and such mortgages and deeds of trust and all consolidations of such mortgages
and deeds of trust.  This section shall
be self-operative and no further instrument of subordination shall be
required.  In confirmation of such
subordination, Tenant shall promptly execute, acknowledge and deliver any
instrument that Landlord, the lessor under any such lease or the holder of any
such mortgage or the trustee or beneficiary of any deed of trust or any of
their respective successors in interest may reasonably request to evidence such
subordination.  Any lease to which this
Agreement is, at the time referred to, subject and subordinate is herein called

 

62

 

“Superior
Lease” and the lessor of a Superior Lease or its successor in interest at
the time referred to is herein called “Superior Landlord” and any
mortgage or deed of trust to which this Agreement is, at the time referred to,
subject and subordinate is herein called “Superior Mortgage” and the
holder, trustee or beneficiary of a Superior Mortgage is herein called “Superior
Mortgagee”.  Tenant shall have no
obligations under any Superior Lease or Superior Mortgage other than those
expressly set forth in this Section 20.2.

 

If any Superior Landlord or Superior Mortgagee or the
nominee or designee of any Superior Landlord or Superior Mortgagee shall
succeed to the rights of Landlord under this Agreement (any such person, “Successor
Landlord”), whether through possession or foreclosure action or delivery of
a new lease or deed, or otherwise, at such Successor Landlord’s request, Tenant
shall attorn to and recognize the Successor Landlord as Tenant’s landlord under
this Agreement and Tenant shall promptly execute and deliver any instrument
that such Successor Landlord may reasonably request to evidence such attornment
(provided that such instrument does not alter the terms of this Agreement),
whereupon, this Agreement shall continue in full force and effect as a direct
lease between the Successor Landlord and Tenant upon all of the terms,
conditions and covenants as are set forth in this Agreement, except that the
Successor Landlord (unless formerly the landlord under this Agreement or its
nominee or designee) shall not be (a) liable in any way to Tenant for any
act or omission, neglect or default on the part of any prior Landlord under
this Agreement, (b) responsible for any monies owing by or on deposit with
any prior Landlord to the credit of Tenant (except to the extent actually paid
or delivered to the Successor Landlord), (c) subject to any counterclaim
or setoff which theretofore accrued to Tenant against any prior Landlord, (d) bound
by any modification of this Agreement subsequent to such Superior Lease or
Mortgage, or by any previous prepayment of Rent for more than one (1) month
in advance of the date due hereunder, which was not approved in writing by the
Superior Landlord or the Superior Mortgagee thereto, (e) liable to Tenant
beyond the Successor Landlord’s interest in the Leased Property and the rents,
income, receipts, revenues, issues and profits issuing from the Leased
Property, (f) responsible for the performance of any work to be done by
the Landlord under this Agreement to render the Leased Property ready for
occupancy by Tenant (subject to Landlord’s obligations under Section 5.1.2(b) or
with respect to any insurance or Condemnation proceeds), or (g) required
to remove any Person occupying the Leased Property or any part thereof, except
if such person claims by, through or under the Successor Landlord.  

 

63

 

Tenant
agrees at any time and from time to time to execute a suitable instrument in
confirmation of Tenant’s agreement to attorn, as aforesaid and Landlord agrees
to provide Tenant with an instrument of nondisturbance and attornment from each
such Superior Mortgagee and Superior Landlord (other than the lessors under any
ground leases with respect to the Leased Property, or any portion thereof) in
form and substance reasonably satisfactory to Tenant.  Notwithstanding the foregoing, any Successor
Landlord shall be liable (a) to pay to Tenant any amounts owed under Section 5.1.2(b),
and (b) to pay to Tenant any portions of insurance proceeds or Awards
received by Landlord or the Successor Landlord required to be paid to Tenant
pursuant to the terms of this Agreement, and, as a condition to any mortgage,
lien or lease in respect of the Leased Property, or any portion thereof, and
the subordination of this Agreement thereto, the mortgagee, lienholder or
lessor, as applicable, shall expressly agree, for the benefit of Tenant, to
make such payments, which agreement shall be embodied in an instrument in form
reasonably satisfactory to Tenant.

 

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

 

ARTICLE 21

 

ADDITIONAL COVENANTS OF TENANT

 

21.1        Prompt Payment of Indebtedness.  Tenant shall (a) pay or cause to be paid
when due all payments of principal of and premium and interest on Tenant’s
Indebtedness for money borrowed and shall not permit or suffer any such
Indebtedness to become or remain in default beyond any applicable grace or cure
period, (b) pay or cause to be paid when due all lawful claims for labor
and rents with respect to the Leased Property, (c) pay or cause to be paid
when due all trade payables and (d) pay or cause to 

 

64

 

be
paid when due all other of Tenant’s Indebtedness upon which it is or becomes
obligated, except, in each case, other than that referred to in clause (a), to
the extent payment is being contested in good faith by appropriate proceedings
in accordance with Article 8 and if Tenant shall have set aside on
its books adequate reserves with respect thereto in accordance with GAAP, if
appropriate, or unless and until foreclosure, distraint sale or other similar
proceedings shall have been commenced.

 

21.2        Conduct of Business.  Tenant shall not engage in any business other
than the leasing and operation of the Leased Property (including any incidental
or ancillary business relating thereto) and the leasing and operation of the
leased property under Master Lease Agreement No. 3 (including any
incidental or ancillary business relating thereto).  Tenant shall do or cause to be done all
things necessary to preserve, renew and keep in full force and effect and in
good standing its corporate existence and its rights and licenses necessary to
conduct such business.

 

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

 

21.4        Notice of Litigation, Etc. 
Tenant
shall give prompt Notice to Landlord of any litigation or any administrative
proceeding to which it may hereafter become a party of which Tenant has notice
or actual knowledge which involves a potential liability equal to or greater
than Two Hundred Fifty Thousand Dollars ($250,000) or which may otherwise
result in any material adverse change in the business, operations, property,
prospects, results of operation or condition, financial or other, of Tenant.  Forthwith upon Tenant obtaining knowledge of
any Default, Event of Default or any default or event of default under any
agreement relating to Indebtedness for money borrowed in an aggregate amount
exceeding, at any one time, Two Hundred Fifty Thousand Dollars ($250,000), or
any event or condition 

 

65

 

that
would be required to be disclosed in a current report filed by Tenant on Form 8-K
or in Part II of a quarterly report on Form 10-Q if Tenant were
required to file such reports under the Securities Exchange Act of 1934, as
amended, Tenant shall furnish Notice thereof to Landlord specifying the nature
and period of existence thereof and what action Tenant has taken or is taking
or proposes to take with respect thereto.

 

21.5        Indebtedness of Tenant.  Tenant shall not create, incur, assume or
guarantee, or permit to exist, or become or remain liable directly or
indirectly upon, any Indebtedness except the following:

 

(a)           Indebtedness of Tenant to Landlord;

 

(b)           Indebtedness of Tenant for Impositions, to the extent that
payment thereof shall not at the time be required to be made in accordance with
the provisions of Article 8;

 

(c)           Indebtedness of Tenant in respect of judgments or awards (i) which
have been in force for less than the applicable appeal period and in respect of
which execution thereof shall have been stayed pending such appeal or review,
or (ii) which are fully covered by insurance payable to Tenant, or (iii) which
are for an amount not in excess of $250,000 in the aggregate at any one time
outstanding and (x) which have been in force for not longer than the
applicable appeal period, so long as execution is not levied thereunder or (y) in
respect of which an appeal or proceedings for review shall at the time be
prosecuted in good faith in accordance with the provisions of Article 8,
and in respect of which execution thereof shall have been stayed pending such
appeal or review;

 

(d)           Unsecured borrowings of Tenant from its Affiliated Persons
which are by their terms expressly subordinate pursuant to a Subordination
Agreement to the payment and performance of Tenant’s obligations under this
Agreement;

 

(e)           Indebtedness for purchase money financing in accordance with
Section 21.8(a) and other operating liabilities incurred in
the ordinary course of Tenant’s business;

 

(f)            Indebtedness of Tenant as
guarantor or borrower secured by Liens permitted under Section 21.8(c);

 

66

 

(g)           Indebtedness of Tenant permitted under Master Lease
Agreement No. 3; or

 

(h)           A guaranty of Five Star’s obligations under its revolving
line of credit.

 

21.6        Distributions, Payments to
Affiliated Persons, Etc.   Tenant shall not declare, order, pay or make,
directly or indirectly, any Distributions or any payment to any Affiliated
Person of Tenant (including payments in the ordinary course of business) or set
apart any sum or property therefor, or agree to do so, if, at the time of such
proposed action, or immediately after giving effect thereto, any Event of
Default shall have occurred and be continuing. 
Otherwise, as long as no Event of Default shall have occurred and be
continuing, Tenant may make Distributions and payments to Affiliated Persons; provided,
however, that any such payments shall at all times be subordinate to
Tenant’s obligations under this Agreement.

 

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

 

21.8        Liens and Encumbrances.  Except as permitted by Section 7.1,
Section 21.5 and Master Lease Agreement No. 3, Tenant shall
not create or incur or suffer to be created or incurred or to exist any Lien on
this Agreement or any of Tenant’s assets, properties, rights or income, or any
of its interest therein, now or at any time hereafter owned, other than:

 

(a)           Security interests securing the purchase price of equipment
or personal property whether acquired before or after the applicable
Commencement Date for any Property; provided, however, that (i) such
Lien shall at all times be confined solely to the asset in question and (ii) the
aggregate principal amount of Indebtedness secured by any such Lien shall not
exceed the cost of acquisition or construction of the property subject thereto;

 

(b)           Permitted Encumbrances;

 

(c)           Security interests in Accounts or
Chattel Paper, in Support Obligations, General Intangibles or Deposit Accounts
relating to such Accounts or Chattel Paper, in any Instruments or Investment
Property evidencing or arising from such Accounts or Chattel Paper, in any
documents, 

 

67

 

books, records or other information (including, without
limitation, computer programs, tapes, discs, punch cards, data processing
software and related property and rights) maintained with respect to any
property described in this Section 21.8(c) or in any Proceeds of any
of the foregoing (capitalized terms used in this Section 21.8(c) without
definition being used as defined in or for purposes of Article 9 of the
Uniform Commercial Code as in effect in the Commonwealth of Massachusetts); and

 

(d)           As permitted pursuant to Section 21.5.

 

21.9        Merger; Sale of Assets; Etc.  Without Landlord’s prior written consent
(which consent may be given or withheld in Landlord’s sole discretion), Tenant
shall not (i) sell, lease (as lessor or sublessor), transfer or otherwise
dispose of, or abandon, all or any material portion of its assets (including
capital stock or other equity interests) or business to any Person, (ii) merge
into or with or consolidate with any other Entity, or (iii) sell, lease
(as lessor or sublessor), transfer or otherwise dispose of, or abandon, any
personal property or fixtures or any real property; provided, however,
that, notwithstanding the provisions of clause (iii) preceding, Tenant may
dispose of equipment or fixtures which have become inadequate, obsolete,
worn-out, unsuitable, undesirable or unnecessary, provided substitute equipment
or fixtures having equal or greater value and utility (but not necessarily
having the same function) have been provided.

 

21.10      LTA GMAC
Properties.  Landlord and Tenant expressly acknowledge and
agree that, effective automatically upon the release of any LTA GMAC Property
from the applicable GMAC Financing (as such term is defined in the LTA GMAC
Leases), such LTA GMAC Property shall be added to and demised under this
Agreement in accordance with the terms and conditions hereof, the Minimum Rent
payable hereunder shall be ratably increased by an amount determined by
Landlord, and the Minimum Rent, as defined therein, under the applicable LTA
GMAC Lease shall be reduced by the amount of such increase.  The addition of any such LTA GMAC Property in
accordance with the terms hereof shall be automatic without any requirement
that Landlord or Tenant take any action or execute any document, instrument,
amendment or confirmation with respect thereto. 
Notwithstanding the foregoing, Landlord and Tenant shall execute and
deliver such documents, instruments, agreements and confirmations as the other
party shall reasonably request with respect to the foregoing.

 

68

 

ARTICLE 22

 

ARBITRATION

 

Landlord or Tenant may elect to submit any dispute
hereunder that has an amount in controversy in excess of $250,000 to
arbitration hereunder.  Any such
arbitration shall be conducted in Boston, Massachusetts in accordance with the
Commercial Arbitration Rules of the American Association then pertaining
and the decision of the arbitrators with respect to such dispute shall be
binding, final and conclusive on the parties.

 

In the event Landlord or Tenant shall elect to submit
any such dispute to arbitration hereunder, Landlord and Tenant shall each
appoint and pay all fees of a fit and impartial person as arbitrator with at
least ten (10) years’ recent professional experience in the general
subject matter of the dispute.  Notice of
such appointment shall be sent in writing by each party to the other, and the
arbitrators so appointed, in the event of their failure to agree within thirty
(30) days after the appointment of the second arbitrator upon the matter so
submitted, shall appoint a third arbitrator. 
If either Landlord or Tenant shall fail to appoint an arbitrator, as
aforesaid, for a period of twenty (20) days after written notice from the other
party to make such appointment, then the arbitrator appointed by the party
having made such appointment shall appoint a second arbitrator and the two (2) so
appointed shall, in the event of their failure to agree upon any decision
within thirty (30) days thereafter, appoint a third arbitrator.  If such arbitrators fail to agree upon a
third arbitrator within forty five (45) days after the appointment of the
second arbitrator, then such third arbitrator shall be appointed by the American
Arbitration Association from its qualified panel of arbitrators, and shall be a
person having at least ten (10) years’ recent professional experience as
to the subject matter in question.  The
fees of the third arbitrator and the expenses incident to the proceedings shall
be borne equally between Landlord and Tenant, unless the arbitrators decide
otherwise.  The fees of respective
counsel engaged by the parties, and the fees of expert witnesses and other
witnesses called for the parties, shall be paid by the respective party
engaging such counsel or calling or engaging such witnesses.

 

The decision of the arbitrators shall be rendered
within thirty (30) days after appointment of the third arbitrator.  Such decision shall be in writing and in
duplicate, one counterpart thereof to be delivered to Landlord and one to 

 

69

 

Tenant.  A judgment of a court of competent
jurisdiction may be entered upon the award of the arbitrators in accordance
with the rules and statutes applicable thereto then obtaining.

 

Landlord and Tenant acknowledge and agree that, to the
extent any such dispute shall involve any Manager and be subject to arbitration
pursuant to such Manager’s Management Agreement, Landlord and Tenant shall
cooperate to consolidate any such arbitration hereunder and under such
Management Agreement into a single proceeding.

 

ARTICLE 23

 

MISCELLANEOUS

 

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

 

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

 

23.3        Remedies Cumulative. 
To the
maximum extent permitted by law, each legal, equitable or contractual right,
power and remedy of Landlord or Tenant, now or hereafter provided either in
this Agreement or by statute or otherwise, shall be cumulative and concurrent
and shall be in addition to every 

 

70

 

other
right, power and remedy and the exercise or beginning of the exercise by
Landlord or Tenant (as applicable) of any one or more of such rights, powers
and remedies shall not preclude the simultaneous or subsequent exercise by
Landlord of any or all of such other rights, powers and remedies.

 

23.4        Severability.  Any clause, sentence, paragraph, section or
provision of this Agreement held by a court of competent jurisdiction to be
invalid, illegal or ineffective shall not impair, invalidate or nullify the
remainder of this Agreement, but rather the effect thereof shall be confined to
the clause, sentence, paragraph, section or provision so held to be invalid,
illegal or ineffective, and this Agreement shall be construed as if such
invalid, illegal or ineffective provisions had never been contained therein.

 

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

 

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

 

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

 

23.8        Quiet Enjoyment.  Tenant shall peaceably and quietly have, hold
and enjoy the Leased Property for the Term, free of hindrance or molestation by
Landlord or anyone claiming by, 

 

71

 

through
or under Landlord, but subject to (a) any Encumbrance permitted under Article 20
or otherwise permitted to be created by Landlord hereunder, (b) all
Permitted Encumbrances, (c) liens as to obligations of Landlord that are
either not yet due or which are being contested in good faith and by proper
proceedings, provided the same do not materially interfere with Tenant’s
ability to operate any Facility and (d) liens that have been consented to
in writing by Tenant.  Except as
otherwise provided in this Agreement, no failure by Landlord to comply with the
foregoing covenant shall give Tenant any right to cancel or terminate this
Agreement or abate, reduce or make a deduction from or offset against the Rent
or any other sum payable under this Agreement, or to fail to perform any other
obligation of Tenant hereunder.

 

23.9        No Recordation. 
Neither Landlord nor Tenant shall record this Agreement.

 

23.10      Notices.

 

(a)           Any and all notices, demands, consents, approvals, offers,
elections and other communications required or permitted under this Agreement
shall be deemed adequately given if in writing and the same shall be delivered
either in hand, by telecopier with written acknowledgment of receipt, or by
mail or Federal Express or similar expedited commercial carrier, addressed to
the recipient of the notice, postpaid and registered or certified with return
receipt requested (if by mail), or with all freight charges prepaid (if by
Federal Express or similar carrier).

 

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

 

72

 

(c)           All such notices shall be addressed,

 

if to Landlord:

 

c/o
Senior Housing Properties Trust

400
Centre Street

Newton,
Massachusetts  02458

Attn:  Mr. David J. Hegarty

[Telecopier
No. (617) 796-8349]

 

if to Tenant to:

 

c/o
Five Star Quality Care, Inc.

400
Centre Street

Newton,
Massachusetts  02458

Attn:  Mr. Bruce J. Mackey Jr.

[Telecopier
No. (617) 796-8385]

 

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

 

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

 

23.12      Counterparts; Headings.  This Agreement may be executed in two or more
counterparts, each of which shall 

 

73

 

constitute
an original, but which, when taken together, shall constitute but one
instrument and shall become effective as of the date hereof when copies hereof,
which, when taken together, bear the signatures of each of the parties hereto
shall have been signed.  Headings in this
Agreement are for purposes of reference only and shall not limit or affect the
meaning of the provisions hereof.

 

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

 

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

 

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

 

74

 

therefor
and on appeal therefrom, which amounts shall be included in any judgment
therein.

 

23.16      Property Specific Representations
and Warranties.  Tenant represents and warrants to Landlord
that, with respect to the Property located in Overland Park, Kansas, as of October 25,
2002, and, with respect to the Property located in Ellicott City, Maryland, as
of November 19, 2004:

 

(a)           All (if any) leases, subleases, licenses, concessions, and
similar agreements granting an interest to any other person or entity for the
use and occupancy of any portion of such Property, and all (if any) agreements
in place whereby residents are in occupancy at such Property, are legal, valid,
binding, enforceable and in full force and effect, and to the best of Tenant’s
knowledge, no party is in breach or default, and no event has occurred which
with notice or lapse of time, or both, would constitute a breach or default, or
permit termination, modification, or acceleration under such agreements, and no
party has repudiated any provision of such agreements;

 

(b)           Tenant has not received written notice of any pending or
threatened condemnation actions with respect to such Property or any part
thereof;

 

(c)           There are no actions, suits or proceedings pending against
such Property in any court of law, or in equity or before any court,
administrative agency, commission or other public governmental authority;

 

(d)           To Tenant’s knowledge, each Property is duly licensed and
currently complies with licensing under applicable state and local laws to
operate such Property in the manner that it is presently being operated, and
Tenant has not received any notices of violations of any laws or regulations,
other than those violations of law, rules, regulations, ordinances, orders or
requirements noted in or issued by any Federal, state, county, municipal or
other department or governmental agency having jurisdiction against or
affecting either Property whenever noted or issued;

 

(e)           To Tenant’s knowledge, Tenant has not violated any
requirements of law currently applicable to either Property or any part thereof
with respect to:  (i) the
installation, existence or removal of or exposure to asbestos or
asbestos-containing materials; (ii) the existence, discharge or removal of
or exposure to hazardous 

 

75

 

materials; (iii) air
emissions, water discharges, noise emissions and any other environmental,
health or safety matter; and (iv) effects on the environment of such
Property or any part thereof or of any activity heretofore, now or hereafter
conducted on such Property (collectively, the “Relevant Environmental Laws”);

 

(f)            Tenant has not received any
notice of any claim or citation of noncompliance with respect to any violation
of Relevant Environmental Laws and, to Tenant’s knowledge, there are no facts,
circumstances, conditions or occurrences on either Property that could
reasonably be expected to result in the violation of any such Relevant
Environmental Laws or cause such Property to be subject to any restrictions on
the existing or contemplated development, use or transferability thereof under
any Relevant Environmental Laws;

 

(g)           To Tenant’s knowledge, each Property and the uses thereof
comply in all material respects with all applicable building and zoning
ordinances and codes;

 

(h)           No governmental authority having jurisdiction over either
Property has issued any citations with respect to any material deficiencies or
other matters that fail to conform to applicable statutes, regulations or
ordinances that have not been corrected as of October 25, 2002 with
respect to the Property located in Overland Park, Kansas or November 19,
2004 with respect to the Property located in Ellicott City, Maryland; Tenant
has not received written or oral notice from any agency supervising or having
authority over either Property requiring such Property or any service, staff,
or practice provided at such Property to be modified, restricted or conditioned
as to service or eligibility or be reworked or redesigned or additional
furniture, fixtures, equipment or inventory to be provided at such Property so
as to conform or comply with any existing in any applicable law, code or
standard; and

 

(i)            There has been no material
adverse change with respect to the physical condition of the Overland Park
Property or the operations at the Overland Park Property since April 1,
2002 and there has been no material adverse change with respect to the physical
condition of the Ellicott City Property or the operations at the Ellicott City
Property since November 2, 2002.

 

23.17      Nonliability of Trustees.  THE DECLARATIONS OF TRUST ESTABLISHING
CERTAIN ENTITIES COMPRISING LANDLORD, COPIES OF 

 

76

 

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

 

23.18      Beverly Manor Allowance. 
Landlord
and Tenant acknowledge and agree that Landlord has satisfied all of its
obligations with respect to the “Allowance” as described in Section 3.1.1(d) of
the Original Lease regarding the Facility commonly known as Beverly Manor and
located in St. Joseph, Missouri.

 

23.19      Savannah Square Lease. 
Landlord
and Tenant acknowledge and agree that the “Savannah Square Leased Property” (as
defined in the Original Lease) was released from the financing secured thereby
as of April 1, 2008, and that the Savannah Square Leased Property was
automatically added to and demised under the Original Lease as of such date.

 

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

 

[Remainder of page intentionally
left blank.]

 

77

 

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

 

	
   

  	
  LANDLORD:

  
	
   

  	
   

  	
   

  
	
   

  	
  ELLICOTT
  CITY LAND I LLC, ELLICOTT 

  CITY LAND II LLC, SNH CHS 

  PROPERTIES TRUST, SPTIHS 

  PROPERTIES TRUST, SPTMNR 

  PROPERTIES TRUST, SNH/LTA 

  PROPERTIES TRUST, SNH/LTA 

  PROPERTIES GA LLC, and SAVANNAH 

  SQUARE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Richard
  A. Doyle

  
	
   

  	
   

  	
  Richard A. Doyle

  
	
   

  	
   

  	
  Treasurer and
  Chief Financial 

  
	
   

  	
   

  	
  Officer of each
  of the

  
	
   

  	
   

  	
  foregoing
  entities

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  TENANT:

  
	
   

  	
   

  
	
   

  	
  FIVE
  STAR QUALITY CARE TRUST

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Travis
  K. Smith

  
	
   

  	
   

  	
  Travis K. Smith

  
	
   

  	
   

  	
  Vice President

  
					

 

 

The following exhibits have been omitted and will be supplementally
furnished to the Securities and Exchange Commission upon request:

 

EXHIBITS A-1 through A-82 (Land)

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