Document:

Exhibit 10.6

 

AMENDED
AND RESTATED SUBTENANT SECURITY AGREEMENT

(LEASE
NO. 1)

 

THIS
AMENDED AND RESTATED SUBTENANT SECURITY AGREEMENT (this “Agreement”) is entered into
as of this 30th day of June, 2008 by and among (i) each of the
parties identified on the signature page hereof as the Subtenants (each a “Subtenant”
and collectively, the “Subtenants”), and (ii) each of the parties
identified on the signature page hereof as the Secured Parties
(collectively, the “Secured Parties”).

 

W  I  T  N  E  S
S  E  T  H:

 

WHEREAS, certain of the Secured Parties and Five Star Quality Care Trust (“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, pursuant to various Sublease Agreements
as further described on Exhibit A attached hereto as the Subleases
(collectively, the “Subleases”), Tenant subleases certain of the
premises demised under the Original Lease to the Subtenants, subject to and
upon the terms and conditions set forth in the Subleases; and 

 

WHEREAS, pursuant to the Original Lease, certain
of the Secured Parties and certain of the Subtenants are parties to that
certain Security Agreement dated as of December 31, 2001 and/or that
certain Security Agreement dated as of October 25, 2002, as confirmed from
time to time (as so confirmed, collectively, the “Original Subtenant
Security Agreements”), pursuant to which the Subtenants granted to such
Secured Parties a first and perfected lien and security interest in certain
collateral related to the properties demised under the Original Lease which
they sublease pursuant to the Subleases; and 

 

WHEREAS, as of the date hereof, the Secured Parties and Tenant are amending,
restating and bifurcating the Original Lease into two separate leases, one of
which shall be named the Amended and Restated Master Lease Agreement(Lease No. 1),
(the “Amended Lease No.1”); and 

 

WHEREAS, pursuant to the Amended Lease No. 1, the
Subtenants are required to grant to the Secured Parties a first 

 

 

and perfected lien and security interest in certain
collateral related to the properties demised under the Amended Lease No. 1
which they sublease pursuant to the Subleases (collectively, the “Subleased
Properties”); and

 

WHEREAS, in connection with the foregoing the Subtenants and
the Secured Parties wish to amend and restate the Original Subtenant Security
Agreements into two separate security agreements, one of which shall act as
security for the payment and performance of the Obligations (as hereinafter
defined), all subject to and upon the terms and conditions herein set forth;

 

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, the Subtenants and the Secured Parties hereby agree that
the Original Subtenant Security Agreements are hereby amended and restated,
effective as of the date hereof, to read as follows:

 

Section 1. 
Definitions.  As used in
this Agreement, the following terms shall have the meanings specified
below.  Except as otherwise defined,
terms defined in the Uniform Commercial Code and used herein without definition
shall have the meanings given such terms in the Uniform Commercial Code.

 

“Affiliated
Person” shall
have the meaning given such term in the Amended Lease No. 1.

 

“Amended
Lease No. 1” shall have the meaning given such term in the recitals to this
Agreement.

 

“Business
Day” shall
have the meaning given such term in the Amended Lease No. 1.

 

“Collateral” shall mean all of each Subtenant’s
right, title and interest in and under or arising out of all and any personal
property, intangibles and fixtures of any type or description (other than
Excluded Collateral), wherever located and now existing or hereafter arising,
or which constitute or arise from the operation, maintenance or repair of its
Subleased Properties or any portion thereof, together with any and all
additions and accessions thereto and replacements, products, proceeds
(including, without limitation, proceeds of insurance) and supporting
obligations thereof, including, but not limited to, the following:

 

(a)                        all goods, including, without limitation,
all Equipment; and 

 

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(b)                                 all General Intangibles; and

 

(c)                                  all other personal property or fixtures
of any nature whatsoever which relate to the operation, maintenance or repair
of each Subleased Property, or any portion thereof, and all property from time
to time described in any financing statement signed by such Subtenant naming
the Secured Parties as secured parties; and 

 

(d)                                 all claims, rights, powers or privileges and remedies
relating to the foregoing or arising in connection therewith, including,
without limitation, all Licenses and Permits which such Subtenant legally may
grant a security interest in, rights to make determinations, to exercise any
election (including, but not limited to, election of remedies) or option or to
give or receive any notice, consent, waiver or approval; all liens, security,
guaranties, endorsements, warranties and indemnities and all insurance, eminent
domain and condemnation awards and claims therefor relating thereto or arising
in connection therewith; all rights to property forming the subject matter of
any of the foregoing, including, without limitation, rights to stoppage in
transit and rights to returned or repossessed property; all writings relating
to the foregoing or arising in connection therewith; and 

 

(e)                                  all contract rights, general intangibles
and other property rights of any nature whatsoever arising out of or in
connection with any of the foregoing (other than Excluded Collateral),
including, without limitation, payments due or to become due, whether as
repayments, reimbursements, contractual obligations, indemnities, damages or
otherwise. 

 

“Equipment” shall mean all buildings, structures,
improvements, fixtures and items of machinery, equipment and other tangible
personal property which constitute, arise from or relate to the operation,
maintenance or repair of each Subtenant’s Subleased Properties or any portion
thereof, together with all repairs, replacements, improvements, substitutions,
extensions or renewals thereof or additions thereto, all parts, additions and
accessories incorporated therein or affixed thereto, and all “equipment” as
such term is defined in the Uniform Commercial Code, and all cash and non-cash
proceeds therefrom.

 

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“Event
of Default” shall
have the meaning given such term in Section 6.

 

“Excluded
Collateral”
shall mean (a) all Accounts of each
Subtenant, (b) all Deposit Accounts and Securities Accounts of each
Subtenant, (c) all Chattel Paper of each Subtenant, (d) all General
Intangibles relating to such Accounts or Chattel Paper, (e) all Support
Obligations relating to any of the foregoing, (f) all Instruments or
Investment Property evidencing or arising from any Accounts or Chattel Paper, (g) all
documents, books, records or other information pertaining to any of the
foregoing (including, without limitation, customer lists, credit files,
computer programs, printouts, tapes, discs, punch cards, data processing
software and other computer materials and records and related property and
rights), (h) all accessions to, substitutions for, and all
replacements, products and proceeds of the foregoing (including without
limitation, proceeds of insurance policies insuring any of the foregoing) and (i) any
of the Subleases under which any Subtenant is a party.

 

“Facilities” shall have the meaning given such term
in the Amended Lease No. 1.

 

“General
Intangibles” shall
mean all present and future general intangibles and contract rights (other than
Excluded Collateral) which constitute, arise from or relate to the operation,
maintenance or repair of each Subtenant’s Subleased Properties, or any portion
thereof, including, but not limited to, all causes of action, corporate or
business records, inventions, designs, patents, patent applications,
trademarks, trademark registrations and applications therefor, goodwill, trade
names, trade secrets, trade processes, copyrights, copyright registrations and
applications therefor, franchises, customer lists, computer programs, claims
under guaranties, tax refund claims, rights and claims against carriers and
shippers, leases, claims under insurance policies, all rights to
indemnification and all other intangible personal property of every kind and
nature which constitutes, arises from or relates to the operation, maintenance
or repair of such Subleased Properties, or any portion thereof.

 

“Instrument” shall have the meaning given such term
in Article 9 of the Uniform Commercial Code.

 

“Leased
Property”
shall have the meaning given such term in the Amended Lease No. 1.

 

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“Licenses” shall mean all certificates of need (if
any), licenses, permits, rights of use, covenants or rights otherwise
benefiting or permitting the use and operation of each Subtenant’s Subleased
Properties or any part thereof pertaining to the operation, maintenance or
repair of such Subleased Properties or any portion thereof.

 

“Obligations” 
shall mean each and every obligation and liability of Tenant to the
Secured Parties under the Original Lease and Amended Lease No. 1 or any
other document or agreement executed and delivered pursuant thereto, including,
without limitation, the payment of the rent and the payment and performance of
each and every other obligation of Tenant to the Secured Parties, whether
direct or indirect, absolute or contingent, due or to become due.

 

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

 

“Original
Subtenant Security Agreements” shall have the meaning given such term in the recitals
to this Agreement.

 

“Overdue
Rate” shall
have the meaning given such term in the Amended Lease No. 1.

 

“Permits” shall mean all permits, approvals,
consents, waivers, exemptions, variances, franchises, orders, authorizations,
rights and licenses obtained or hereafter obtained from any federal, state or
other governmental authority or agency relating to the operation, maintenance
or repair of each Subtenant’s Subleased Properties, or any portion thereof.

 

“Person”
shall have the meaning
given such term in the Amended Lease No. 1.

 

“Property” shall have the meaning given such term
in the Amended Lease No. 1.

 

“Rent” shall have the meaning given such term
in the Amended Lease No. 1.

 

“Secured
Parties” shall have the meaning given such term in the
preamble to this Agreement.

 

“Subleased
Properties” shall have the meaning given such term in the
recitals.

 

“Subleases”
shall have the meaning given such term in the recitals to this Agreement.

 

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“Subtenants”
shall have the
meaning given such term in the preamble to this Agreement.

 

“Tenant”
shall have the meaning given such term in the recitals to this Agreement.

 

“Uniform
Commercial Code” means Article 9 of the Uniform Commercial Code as in effect in the
Commonwealth of Massachusetts from time to time.

 

Section 2. 
Security Interest.  As security
for the prompt payment and performance of all the Obligations, each Subtenant
hereby grants, pledges, transfers and assigns to the Secured Parties, their
successors and assigns and all other holders from time to time of the
Obligations, a continuing security interest under the Uniform Commercial Code
from time to time in effect in the jurisdiction in which any of the Collateral
is located in and a continuing lien upon all of such Subtenant’s right, title
and interest in the Collateral, together with any and all additions thereto and
replacements, products and proceeds thereof, whether now existing or hereafter
arising or acquired and wherever located.

 

Section 3. 
General Representations, Warranties and Covenants. 
Each Subtenant represents, warrants and covenants, which
representations, warranties and covenants shall survive execution and delivery
of this Agreement, as follows:

 

(a)                                  Each of the warranties and
representations of such Subtenant contained herein or in any other document
executed by such Subtenant in connection herewith are true and correct on the
date hereof.

 

(b)                                 Except for the lien granted to the
Secured Parties pursuant to this Agreement and any liens permitted under the
Amended Lease No. 1, each Subtenant is, and as to the Collateral acquired
from time to time after the date hereof such Subtenant will be, the owner of
all the Collateral free from any lien, security interest, encumbrance or other
right, title or interest of any Person, except for the security interest of the
Secured Parties therein, and such Subtenant shall defend the Collateral against
all claims and demands of all Persons at any time claiming the same or any
interest therein adverse to the Secured Parties.  The lien granted in this Agreement by such
Subtenant to the Secured Parties in the Collateral is not prohibited by and
does not constitute a default under any agreements or other instruments
constituting a part of the 

 

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Collateral, and no
consent is required of any Person to effect such lien which has not been
obtained.

 

(c)                                  Except as permitted under the Amended
Lease No. 1, there is no financing statement (or similar statement or
instrument of registration under the law of any jurisdiction) now on file or
registered in any public office covering any interest of any kind in the
Collateral, or intended so to be, which has not been terminated, and so long as
this Agreement remains in effect or any of the Obligations or any obligations
of any Affiliated Person of such Subtenant to the Secured Parties remain
unpaid, such Subtenant will not execute and there will not be on file in any
public office any financing statement (or similar statement or instrument of
registration under the law of any jurisdiction) or statements relating to the
Collateral, except financing statements filed or to be filed in respect of and
covering the security interest of the Secured Parties.

 

(d)                                 The chief executive office and the
principal place of business of each Subtenant are as set forth in Schedule 1
and such Subtenant will not move its chief executive office or establish any
other principal place of business except to such new location as such Subtenant
may establish in accordance with this Section 3(d).  The location of each Facility comprising a
portion of such Subtenant’s Subleased Properties is as set forth in Schedule
2.  The originals of all documents
evidencing Collateral and the only original books of account and records of
each Subtenant relating thereto are, and will continue to be, kept at such
chief executive office or the applicable Facility, as the case may be, or at
such new location as such Subtenant may establish in accordance with this Section 3(d).  No Subtenant shall move its chief executive
office or establish any other principal place of business until (i) such
Subtenant shall have given to the Secured Parties not less than ten (10) days’
prior written notice of its intention to do so, which notice shall clearly
describe such new location and provide such other information in connection
therewith as the Secured Parties may reasonably request, and (ii) with
respect to such new location, such Subtenant shall have taken such action,
satisfactory to the Secured Parties (including, without limitation, all action
required by Section 5), to maintain the security interest of the
Secured Parties in the Collateral.

 

(e)                                  All tangible personal property owned on
the date hereof by such Subtenant to be used in connection with the operation
or maintenance of each Subleased Property of such Subtenant, or any portion
thereof, is located at each applicable 

 

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Subleased Property or is
in transit to such Subleased Property from the vendor thereof.  Each Subtenant agrees that (i) all such
property held by such Subtenant on the date hereof, once at each applicable
Subleased Property, shall remain at such Subleased Property and (ii) all
such property subsequently acquired by such Subtenant shall immediately upon
acquisition be transferred to and remain at the applicable Subleased Property.

 

(f)                                    Such Subtenant’s corporate name and
organizational identification number are as set forth on Schedule 1
attached hereto.  The name under which
each of the Facilities is operated is set forth on Schedule 2.  Each Subtenant agrees that it shall not (i) change
such names without providing the Secured Parties with thirty (30) days’ prior
written notice and making all filings and taking all such other actions as the
Secured Parties determine are necessary or appropriate to continue or perfect
the security interest granted hereunder, (ii) change its corporate
organizational number, nor (iii) conduct its business in any other name or
take title to any Collateral in any other name while this Agreement remains in
effect.  Except as otherwise set forth on
Schedule 1, no Subtenant has ever had any other name or conducted
business in any other name in any jurisdiction. 
Each Subtenant’s organizational structure is as set forth on Schedule
1 attached hereto.  Subject to the
terms and conditions of the Amended Lease No. 1 and the Subleases, no
Subtenant shall change its organizational structure or jurisdiction of
organization without giving at least thirty (30) days’ prior written notice
thereof to the Secured Parties.

 

(g)                                 The Secured Parties are authorized (but
are under no obligation) to make, upon ten (10) Business Days’ notice to
the applicable Subtenant (except in the case of exigent circumstances, in which
circumstances upon such notice, if any, as may then be reasonably practical),
any payments which in the Secured Parties’ opinion are necessary to:

 

(i)                                     discharge any liens which have or may take priority
over the lien hereof; and

 

(ii)                                  pay all premiums payable on the insurance policies
referred to in the Amended Lease No. 1 or any other document or agreement
executed in connection therewith or herewith, upon the failure of Tenant to
make such payments within the time permitted therein.

 

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No
Subtenant shall have any claim against the Secured Parties by reason of its
decision not to make any payments or perform such obligations permitted under
this Section 3(g).  Each
Subtenant shall repay to the Secured Parties any sums paid by the Secured
Parties upon demand.  Any sums paid and
expenses incurred by the Secured Parties pursuant to this paragraph shall bear
interest at the Overdue Rate.

 

(h)                                 If any of the Collateral at any time becomes
evidenced by an Instrument, the Subtenant which owns such Collateral shall
promptly deliver such Instrument to the Secured Parties, appropriately endorsed
to the order of the Secured Parties, to be held pursuant to this Agreement.

 

(i)                                     No Subtenant shall sell, transfer, change
the registration, if any, of, dispose of, attempt to dispose of, or
substantially modify or abandon the Collateral or any material part thereof,
other than as permitted under the Amended Lease No. 1, without the prior
written consent of the Secured Parties. 
Except as permitted under the Amended Lease No. 1, no Subtenant
shall create, incur, assume or suffer to exist any lien upon any of the
Collateral without the prior written consent of the Secured Parties.

 

(j)                                     No Subtenant shall assert against the
Secured Parties any claim or defense which such Subtenant may have against any
seller of the Collateral or any part thereof or against any Person with respect
to the Collateral or any part thereof.

 

(k)                                  Each Subtenant shall, upon demand, pay to
the Secured Parties the amount of any and all reasonable expenses, including
the reasonable fees and expenses of its counsel and of any experts and agents,
which the Secured Parties may incur in connection with (i) the
administration of this Agreement, (ii) the custody or preservation of, or
the sale of, collection from, or other realization upon, any of the Collateral,
(iii) the exercise or enforcement of any of the rights of the Secured
Parties hereunder and under such other agreements or (iv) the failure by
such Subtenant to perform or observe any of the provisions hereof.

 

(l)                                     Each Subtenant shall indemnify and hold
harmless the Secured Parties from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind and nature whatsoever which may be
imposed on, incurred by or asserted against the Secured Parties in any way
relating to or arising 

 

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out of this Agreement or
arising out of such Subtenant’s obligations under any other documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or the enforcement of any of the terms hereof or
of any such other documents.

 

Section 4. 
Special Provisions Concerning Equipment. 
No Subtenant shall impair the rights of the Secured Parties in the
Equipment.  Regardless of the manner of
the affixation of any Equipment to real property, the Equipment so attached
shall at all times constitute and remain personal property.  Each Subtenant retains all liability and
responsibility in connection with its Equipment and the liability of such
Subtenant to pay the Obligations shall in no way be affected or diminished by
reason of the fact that such Equipment may be lost, destroyed, stolen or
damaged or for any reason whatsoever have become unavailable to such
Subtenant.  Upon the request of the
Secured Parties, any Subtenant shall provide to the Secured Parties a current
list of its Equipment.

 

Section 5. 
Financing Statements; Documentary Stamp Taxes.

 

(a)                                  Each Subtenant shall, at its own expense,
make, execute, endorse, acknowledge, file and/or deliver to the Secured Parties
from time to time such lists, descriptions and designations of inventory,
warehouse receipts, bills of lading, documents of title, vouchers, invoices,
schedules, confirmatory assignments, conveyances, financing statements,
transfer endorsements, powers of attorney, certificates, reports and other
assurances or instruments and take such further steps relating to the
Collateral and other property or rights covered by the security interest hereby
granted, which the Secured Parties reasonably deem appropriate or advisable to
perfect, preserve or protect their security interest in the Collateral.  Each Subtenant authorizes the Secured Parties
to file any such financing statements without the signature of such Subtenant
and such Subtenant will pay all applicable filing fees and related expenses.  To the extent permitted by law, a carbon,
photographic or other reproduction of this Agreement or a financing statement
shall be sufficient as a financing statement.

 

(b)                                 Each Subtenant shall procure, pay for,
affix to any and all documents and cancel any documentary tax stamps required
by and in accordance with, applicable law with respect to its Collateral, and
the Subtenants shall indemnify and hold harmless the Secured Parties from and
against any liability 

 

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(including interest and
penalties) in respect of such documentary stamp taxes.

 

Section 6. 
Event of Default.  For purposes
of this Agreement, the term “Event of Default” shall mean (a) the
occurrence of an Event of Default under the Amended Lease No. 1 or any
document or agreement executed in connection therewith; (b) the failure of
any Subtenant to comply with any of its covenants or obligations under this
Agreement and the continuance thereof for a period of ten (10) Business
Days after written notice thereof; (c) any representation or warranty
contained herein or made by any Subtenant in connection herewith shall prove to
have been false or misleading in any material respect when made; or (d) the
occurrence of any default or event of default under any document, instrument or
agreement evidencing the Obligations.

 

Section 7. 
Remedies.

 

(a)                                  Upon the occurrence and during the
continuance of an Event of Default, in addition to any rights and remedies now
or hereafter granted under applicable law, under the Amended Lease No. 1
or under any other documents or agreements entered into in connection herewith
or therewith, and not by way of limitation of any such rights and remedies, the
Secured Parties shall have all of the rights and remedies of a secured party
under the Uniform Commercial Code as enacted in any applicable jurisdiction,
and the right, without notice to, or assent by, any Subtenant, in the name of
such Subtenant or in the name of the Secured Parties or otherwise:

 

(i)                                              with respect to the General Intangibles
to ask for, demand, collect, receive, compound and give acquittance therefor or
any part thereof, to extend the time of payment of, compromise or settle for
cash, credit or otherwise, and upon any terms and conditions, any thereof, to
exercise and enforce any rights and remedies in respect thereof, and to file
any claims, commence, maintain or discontinue any actions, suits or other
proceedings deemed by the Secured Parties necessary or advisable for the
purpose of collecting or enforcing payment and performance thereof;

 

(ii)                                           to take possession of any or all of the
Collateral and to use, hold, store, operate, merge and/or control the same and
to exclude 

 

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such Subtenant and
all Persons claiming under it wholly or partly therefrom, and, for that
purpose, to enter, with the aid and assistance of any Person or Persons and
with or without legal process, any premises where the Collateral, or any part
thereof, are, or may be, placed or assembled, and to remove any such Collateral;

 

(iii)                                        from time to time, at the expense of such Subtenant,
to make all such repairs, replacements, alterations, additions and improvements
to and of the Collateral as the Secured Parties may reasonably deem proper; to
carry on the business and to exercise all rights and powers of such Subtenant
in respect to the Collateral, as the Secured Parties shall deem best, including
the right to enter into any and all such agreements with respect to the
leasing, management and/or operation of the Collateral or any part thereof as
the Secured Parties may see fit; to collect and receive all rents, issues,
profits, fees, revenues and other income of the same and every part thereof
which rents, issues, profits, fees, revenues and other income may be applied to
pay the expenses of holding and operating the Collateral and of conducting the
business thereof, and of all maintenance, repairs, replacements, alterations,
additions and improvements, and to make all payments which the Secured Parties
may be required or may elect to make, if any, for taxes, assessments, insurance
and other charges upon the Collateral or any part thereof, and all other
payments which the Secured Parties may be required or authorized to make under
any provision of this Agreement (including, without limitation, reasonable
legal costs and attorneys’ fees);

 

(iv)                                       to execute any instrument and do all other things
necessary and proper to protect and preserve and realize upon the Collateral
and the other rights contemplated hereby;

 

(v)                                          upon notice to such effect, to require any Subtenant
to deliver, at such Subtenant’s expense, any or all Collateral which is
reasonably movable to the Secured Parties at a 

 

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place designated
by the Secured Parties, and after delivery thereof such Subtenant shall have no
further claim to or interest in the Collateral; and

 

(vi)                                       without obligation to resort to other security, at any
time and from time to time, to sell, re-sell, assign and deliver all or any of
the Collateral, in one or more parcels at the same or different times, and all
right, title and interest, claim and demand therein and right of redemption
thereof, at public or private sale, for cash, upon credit or for future
delivery, and at such price or prices and on such terms as the Secured Parties
may determine, with the amounts realized from any such sale to be applied to
the Obligations in the manner determined by the Secured Parties.

 

Each
Subtenant hereby agrees that all of the foregoing may be effected without
demand, advertisement or notice (except as hereinafter provided or as may be
required by law), all of which (except as hereinafter provided) are hereby
expressly waived, to the maximum extent permitted by law.  The Secured Parties shall not be obligated to
do any of the acts hereinabove authorized and in the event that the Secured
Parties elect to do any such act, the Secured Parties shall not be responsible
to any Subtenant.

 

(b)                                 Upon the occurrence and during the
continuance of an Event of Default, the Secured Parties may take legal
proceedings for the appointment of a receiver or receivers (to which the
Secured Parties shall be entitled as a matter of right) to take possession of
the Collateral pending the sale thereof pursuant either to the powers of sale
granted by this Agreement or to a judgment, order or decree made in any
judicial proceeding for the foreclosure or involving the enforcement of this
Agreement.  If, after the exercise of any
or all of such rights and remedies, any of the Obligations shall remain unpaid
or unsatisfied, such Subtenant shall remain liable for any deficiency or
performance thereof, as applicable.

 

(c)                                  Upon any sale of any of the Collateral,
whether made under the power of sale hereby given or under judgment, order or
decree in any judicial proceeding for the foreclosure or involving the
enforcement of this Agreement:

 

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(i)                                              the Secured Parties may bid for and
purchase the property being sold and, upon compliance with the terms of sale,
may hold, retain and possess and dispose of such property in its own absolute
right without further accountability, and may, in paying the purchase money
therefor, deliver any instruments evidencing the Obligations or agree to the
satisfaction of all or a portion of the Obligations in lieu of cash in payment
of the amount which shall be payable thereon, and such instruments, in case the
amounts so payable thereon shall be less than the amount due thereon, shall be
returned to the Secured Parties after being appropriately stamped to show
partial payment;

 

(ii)                                           the Secured Parties may make and deliver
to the purchaser or purchasers a good and sufficient deed, bill of sale and
instrument of assignment and transfer of the property sold;

 

(iii)                                        all right, title, interest, claim and demand
whatsoever, either at law or in equity or 
otherwise, of any Subtenant of, in and to the property so sold shall be
divested; such sale shall be a perpetual bar both at law and in equity against
such Subtenant, its successors and assigns, and against any and all Persons
claiming or who may claim the property sold or any part thereof from, through
or under such Subtenant, its successors or assigns;

 

(iv)                                       the receipt of the Secured Parties or of the officers
thereof making such sale shall be a sufficient discharge to the purchaser or
purchasers at such sale for his or their purchase money, and such purchaser or
purchasers, and his or their assigns or personal representatives, shall not,
after paying such purchase money and receiving such receipt of the Secured
Parties or of such officer therefor, be obliged to see to the application of
such purchase money or be in any way answerable for any loss, misapplication or
nonapplication thereof; and

 

(v)                                          to the extent that it may lawfully do so, each
Subtenant agrees that it will not at any time 

 

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insist upon, or
plead, or in any manner whatsoever claim or take advantage of, any
appraisement, valuation, stay, extension or redemption laws, or any law
permitting it to direct the order in which the Collateral or any part thereof
shall be sold, now or at any time hereafter in force, which may delay, prevent
or otherwise affect the performance or enforcement of this Agreement or any
other document, the Amended Lease No. 1 or any other document or agreement
entered into in connection herewith or therewith, and each Subtenant hereby
expressly waives all benefit or advantage of any such laws and covenants that
it will not hinder, delay or impede the execution of any power granted or
delegated to the Secured Parties in this Agreement, but will suffer and permit
the execution of every such power as though no such laws were in force.

 

In the
event of any sale of Collateral pursuant to this Section 7, the
Secured Parties shall, at least ten (10) days before such sale, give the
applicable Subtenant written notice of its intention to sell, except that, if
the Secured Parties shall determine in its reasonable discretion that any of
such Collateral threatens to decline in value, any such sale may be made upon
three (3) days’ written notice to the applicable Subtenant, which time
periods each Subtenant hereby agrees are reasonable.

 

(d)  The Secured Parties are hereby
irrevocably appointed the true and lawful attorney-in-fact of each Subtenant in
its name and stead, to make all necessary deeds, bills of sale and instruments
of assignment and transfer of the property sold pursuant to this Section 7
and for such other purposes as are necessary or desirable to effectuate the
provisions of this Agreement, and for that purpose it may execute and deliver
all necessary deeds, bills of sale and instruments of assignment and transfer,
and may substitute one or more Persons with like power, each Subtenant hereby
ratifying and confirming all that its said attorney, or such substitute or
substitutes, shall lawfully do by virtue hereof.  If so requested by the Secured Parties or by
any purchaser, each Subtenant shall ratify and confirm any such sale or
transfer by executing and delivering to the Secured Parties or to such
purchaser all property, deeds, bills of sale, instruments or assignment and
transfer and releases as may be designated in any such request.

 

15

 

Section 8. 
Application of Moneys.  All moneys
which the Secured Parties shall receive pursuant hereto shall first be applied
(to the extent thereof) to the payment of all reasonable costs and expenses
incurred in connection with the administration and enforcement of, or the
preservation of any rights under, this Agreement or the Amended Lease No. 1
(including, without limitation, the reasonable fees and disbursements of its
counsel and agents) and the balance, if any, shall be applied first to accrued
and unpaid interest, charges and fees on, and then to outstanding principal of,
any Obligations or any other obligations of Tenant or the Subtenants (or their
affiliates) to the Secured Parties, and then to any other amounts outstanding
on any such Obligations and then as required by law to any other parties having
an interest therein.

 

Section 9. 
Waivers, Etc.  Each
Subtenant, on its own behalf and on behalf of its successors and assigns,
hereby waives presentment, demand, notice, protest and, except as is otherwise
specifically provided herein, all other demands and notices in connection with
this Agreement or the enforcement of the rights of the Secured Parties
hereunder or in connection with any Obligations or any Collateral; waives all
rights to require a marshaling of assets by the Secured Parties; consents to
and waives notice of (i) the substitution, release or surrender of any
Collateral, (ii) the addition or release of Persons primarily or
secondarily liable on any Obligation or on any Collateral, (iii) the
acceptance of partial payments on any Collateral and/or the settlement or
compromise thereof, (iv) any requirement of diligence or promptness on the
part of the Secured Parties in the enforcement of any rights in respect of any
Collateral or any other agreement or instrument directly or indirectly relating
thereto, and (v) any enforcement of any present or future agreement or
instrument relating directly or indirectly to the Collateral.  No delay or omission on the part of the
Secured Parties or any holder of Obligations in exercising any right hereunder
shall operate as a waiver of such right or of any other right hereunder.  No waiver of any such right on any one
occasion shall be construed as a bar to or waiver of any such right on any
future occasion.  No course of dealing
between any Subtenant and the Secured Parties or any holder of Obligations, nor
any failure to exercise, nor any delay in exercising, on the part of the
Secured Parties or any holder of Obligations, any right, power or privilege
hereunder or under any of the Obligations, shall operate as a waiver thereof;
nor shall any single or partial exercise of any right, power or privilege hereunder
or thereunder preclude any other or further exercise thereof, or the exercise
of any other right, power or privilege.

 

16

 

Each
Subtenant further waives any right it may have under the constitution of any
state or commonwealth in which any of the Collateral may be located, or under
the Constitution of the United States of America, to notice (except for notice
specifically required hereby) or to a judicial hearing prior to the exercise of
any right or remedy provided by this Agreement to the Secured Parties, and
waives its rights, if any, to set aside or invalidate any sale duly consummated
in accordance with the foregoing 
provisions hereof on the grounds (if such be the case) that the sale was
consummated without a prior judicial hearing. 
EACH SUBTENANT’S WAIVERS UNDER THIS SECTION 9 HAVE BEEN MADE
VOLUNTARILY, INTELLIGENTLY AND KNOWINGLY AND AFTER SUCH SUBTENANT HAS BEEN
APPRISED AND COUNSELED BY ITS ATTORNEYS AS TO THE NATURE THEREOF AND ITS
POSSIBLE ALTERNATIVE RIGHTS.

 

The
Secured Parties shall not be required to marshal any present or future security
for (including without limitation this Agreement and the Collateral pledged
hereunder), or guaranties of, the Obligations or any of them, or to resort to
such security or guaranties in any particular order; and all of the rights
hereunder and in respect of such securities and guaranties shall be cumulative
and in addition to all other rights, however existing or arising.  To the maximum extent permitted by applicable
law, each Subtenant hereby agrees that it will not invoke any law relating to
the marshalling of collateral, which might cause delay in or impede the
enforcement of the Secured Parties’ rights under this Agreement or under any
other instrument evidencing any of the Obligations or under which any of the
Obligations is outstanding or by which any of the Obligations is secured or
guaranteed, and, to the maximum extent permitted by applicable law, each
Subtenant hereby irrevocably waives the benefits of all such laws.

 

Section 10. 
Further Assurances as to Collateral; Attorney-in-Fact. 
From time to time hereafter, each Subtenant will execute and deliver, or
will cause to be executed and delivered, such additional instruments,
certificates or documents (including, without limitation, financing statements,
renewal statements, mortgages, collateral assignments and other security
documents), and will take all such actions as the Secured Parties may
reasonably request, for the purposes of implementing or effectuating the
provisions of this Agreement or of more fully perfecting or renewing the
Secured Parties’ rights with respect to the Collateral (or with respect to any
additions thereto or replacements or proceeds thereof or with respect to any
other property or assets hereafter acquired by such Subtenant which may be
deemed to be a part of the Collateral) pursuant hereto and thereto.  The Secured Parties are hereby 

 

17

 

appointed the attorney-in-fact, with full power of
substitution, of the Subtenants for the purpose of carrying out the provisions
of this Agreement and taking any action, including, without limitation,
executing, delivering and filing applications, certificates, instruments and
other documents and papers with governmental authorities, and executing any
instruments, including without limitation financing or continuation statements,
deeds to secure debt, mortgages, assignments, conveyances, assignments and
transfers which are required to be taken or executed by any Subtenant under
this Agreement, on its behalf and in its name which appointment is coupled with
an interest, is irrevocable and durable and shall survive the subsequent
dissolution, disability or incapacity of such Subtenant.

 

Section 11. 
Arbitration.  The Secured
Parties or any Subtenant may elect to submit any dispute hereunder that has an
amount in controversy in excess of $250,000 to arbitration hereunder.  Any such dispute shall be resolved 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 the Secured Parties or any Subtenant shall elect to submit any such
dispute to arbitration hereunder, the Secured Parties and such Subtenant 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 the Secured Parties or such Subtenant 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 

 

18

 

the third arbitrator and the expenses incident to the
proceedings shall be borne equally between the Secured Parties and such
Subtenant, 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 the Secured Parties and one to the Subtenants.  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.

 

Section 12. 
Appointment of Agent for Secured Parties.  Each of the Secured Parties hereby appoints SPTMNR
Properties Trust as its agent for the following purposes under this Agreement
(including, without limitation, the full power and authority to act on the
Secured Parties’ behalf for such purposes): (i) to give or receive
notices, demands, claims and other communications on behalf of the Secured
Parties under this Agreement, and (ii) to receive and hold any and all
Collateral which is to be delivered from time to time by the Subtenants to the
Secured Parties in accordance with the terms and conditions of this Agreement.

 

Section 13. 
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 electronic confirmation 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 electronic confirmation of 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 

 

19

 

required delivery shall automatically be extended to
the next Business Day.

 

(c)                                  All such notices shall be addressed,

 

if to the Secured Parties
to:

 

c/o Senior Housing
Properties Trust

400 Centre Street

Newton,
Massachusetts  02458

Attn:  Mr. David J. Hegarty

[Telecopier No. (617)
796-8349]

 

if to any Subtenant 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 successor and assigns shall have the right
from time to time and at any time during the term of this Agreement to change
their respective notice 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 or to such other address as
the party to whom such notice is directed may have designated in writing to the
other parties hereto.

 

Section 14. 
Miscellaneous.

 

(a)                                  Each Subtenant agrees that its
obligations and the rights of the Secured Parties hereunder and in respect of
the Obligations may be enforced by specific performance hereof and thereof and
by temporary, preliminary and/or final injunctive relief relating hereto and
thereto, without necessity for proof by the Secured Parties or any holder of
the Obligations that it would otherwise suffer irreparable harm, and each
Subtenant hereby consents to the issuance of such specific and injunctive
relief.

 

(b)                                 None of the terms and conditions of this
Agreement may be changed, waived, modified or varied in any manner whatsoever
unless in writing duly signed by the Subtenants and the Secured Parties.  No notice to or demand on any Subtenant in
any case shall entitle any Subtenant to any other or further notice or demand
in similar or other 

 

20

 

circumstances or
constitute a waiver of any of the rights of the Secured Parties to any other or
further action in any circumstances without notice or demand.

 

(c)                                  The obligations of each Subtenant
hereunder shall remain in full force and effect without regard to, and shall
not be impaired by, (i) any bankruptcy, insolvency, reorganization,
arrangement, readjustment, composition, liquidation or the like of Tenant; (ii) any
exercise or non-exercise, or any waiver of, any right, remedy, power or
privilege under or in respect of this Agreement, the Amended Lease No. 1
or any document or agreement executed in connection herewith or therewith, the
Obligations or any security for any of the Obligations; or (iii) any
amendment to or modification of any of the Amended Lease No. 1 or any
document or agreement executed in connection herewith or therewith, the
Obligations or any security for any of the Obligations; whether or not such
Subtenant shall have notice or knowledge of any of the foregoing.  The rights and remedies of the Secured
Parties herein provided for are cumulative and not exclusive of any rights or
remedies which the Secured Parties would otherwise have, including, without
limitation, under the Amended Lease No. 1 or any document or agreement
executed in connection herewith or therewith. 
This Agreement is intended as a supplement for and is not intended to
supersede in any respect the Amended Lease No. 1 or any document or
agreement executed in connection herewith or therewith.

 

(d)                                 This Agreement shall be binding upon each
Subtenant and its successors and assigns and shall inure to the benefit of the
Secured Parties, and its respective successors and assigns.  All agreements, representations and
warranties made herein shall survive the execution and delivery of this
Agreement.

 

(e)                                  The descriptive headings of the several
sections of this Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any provision of this Agreement.

 

(f)                                    Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibitions or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

 

21

 

(g)                                 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 (i) where
this Agreement is executed or delivered; or (ii) where any payment or
other performance required by this Agreement is made or required to be made; or
(iii) where any breach of any provision of this Agreement occurs, or any
cause of action otherwise accrues; or (iv) where any action or other
proceeding is instituted or pending; or (v) the nationality, citizenship,
domicile, principle place of business, or jurisdiction of organization or
domestication of any party; or (vi) whether the laws of the forum
jurisdiction otherwise would apply the laws of a jurisdiction other than the
Commonwealth of Massachusetts; or (vii) any combination of the
foregoing.  Notwithstanding the
foregoing, to the extent that matters of title, or creation, perfection and
priority of the security interests created hereby, or procedural issues of
foreclosures are required to be governed by the laws of the state in which the
Collateral, or relevant part thereof, is located, the laws of such State shall
apply.

 

Section 15. 
NONLIABILITY OF TRUSTEES.  THE
DECLARATIONS OF TRUST ESTABLISHING CERTAIN ENTITIES COMPRISING THE SECURED
PARTIES, COPIES OF 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.

 

Section 16.  Original Security Agreements.  The Secured Parties and Subtenants
acknowledge and agree that this Agreement amends and restates the Original
Subtenant Security Agreements in their entirety with respect to the Collateral
and that this Agreement shall govern the rights and obligations of the Secured
Parties and Subtenants with respect to the Collateral from and after the date
of this Agreement.  Notwithstanding the foregoing,
the Original Subtenant Security Agreements shall continue to govern the rights
and obligations of the Secured 

 

22

 

Parties and Subtenants with respect to the Collateral
prior to the date of this Agreement.

 

[Remainder of page intentionally
left blank.]

 

23

 

IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
under seal as of the date first above written.

 

	
   

  	
  SUBTENANTS:

  
	
   

  	
   

  
	
   

  	
  FIVE STAR QUALITY CARE-AZ, LLC,

  
	
   

  	
  FIVE STAR QUALITY CARE-CA, LLC,

  
	
   

  	
  FIVE STAR QUALITY
  CARE-COLORADO, LLC,

  
	
   

  	
  FIVE STAR QUALITY CARE-FL, LLC,

  
	
   

  	
  FIVE STAR QUALITY CARE-GA, LLC,

  
	
   

  	
  FIVE STAR QUALITY CARE-GHV,
  LLC,

  
	
   

  	
  FIVE STAR QUALITY CARE-IA, LLC,

  
	
   

  	
  FIVE STAR QUALITY CARE-IL, LLC,

  
	
   

  	
  FIVE STAR QUALITY CARE-KS, LLC,

  
	
   

  	
  FIVE STAR QUALITY CARE-MD, LLC,

  
	
   

  	
  FIVE STAR QUALITY CARE-MN, LLC,

  
	
   

  	
  FIVE STAR QUALITY CARE-MO, LLC,

  
	
   

  	
  FIVE STAR QUALITY CARE-MS, LLC,

  
	
   

  	
  FIVE STAR QUALITY CARE-NE, LLC,

  
	
   

  	
  FIVE STAR QUALITY CARE-NC, LLC,

  
	
   

  	
  FIVE STAR QUALITY CARE-SAVANNAH
  LLC,

  
	
   

  	
  FIVE
  STAR QUALITY CARE-TX, LLC,

  
	
   

  	
  FIVE STAR QUALITY CARE-WI, LLC,

  
	
   

  	
  FIVE STAR QUALITY CARE-WY, LLC,

  
	
   

  	
  FIVE STAR QUALITY CARE-VA, LLC,
  

  
	
   

  	
  MORNINGSIDE OF GALLATIN, LLC, 

  
	
   

  	
  MORNINGSIDE OF BELMONT, LLC

  
	
   

  	
  FIVE STAR QUALITY CARE-IA,
  INC.,

  
	
   

  	
  FIVE STAR QUALITY CARE-NE,
  INC.,

  
	
   

  	
  THE HEARTLANDS RETIREMENT COMMUNITY – ELLICOTT CITY I, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Travis K.
  Smith

  
	
   

  	
   

  	
  Travis
  K. Smith

  
	
   

  	
   

  	
  Vice
  President of each of the

  foregoing entities

  

 

 

	
   

  	
  MORNINGSIDE OF ANDERSON, L.P.,

  MORNINGSIDE OF ATHENS, LIMITED

  PARTNERSHIP, MORNINGSIDE OF COLUMBUS,

  L.P., MORNINGSIDE OF DALTON, LIMITED

  PARTNERSHIP, MORNINGSIDE OF EVANS,

  LIMITED PARTNERSHIP, MORNINGSIDE OF

  GREENWOOD, L.P. and MORNINGSIDE
  OF

  KENTUCKY, LIMITED PARTNERSHIP

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  LifeTrust
  America, Inc.,

  
	
   

  	
   

  	
  General
  Partner of each of 

  the foregoing entities

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Travis K.
  Smith

  
	
   

  	
   

  	
   

  	
  Travis
  K. Smith

  
	
   

  	
   

  	
   

  	
  Vice
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  MORNINGSIDE OF BELLGRADE, RICHMOND,

  LLC, MORNINGSIDE OF CHARLOTTESVILLE,

  LLC, MORNINGSIDE OF NEWPORT NEWS, LLC

  and MORNINGSIDE OF SKIPWITH – 

  RICHMOND, LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  LifeTrust
  America, Inc.,

  
	
   

  	
   

  	
  Member
  of each of the 

  foregoing entities

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Travis K.
  Smith

  
	
   

  	
   

  	
   

  	
  Travis
  K. Smith

  
	
   

  	
   

  	
   

  	
  Vice
  President

  
					

 

 

	
   

  	
  SECURED PARTIES:

  
	
   

  	
   

  
	
   

  	
  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

  

 

 

EXHIBIT A

 

SUBLEASES

 

1.     Sublease Agreement, dated December 31,
2001, by and between Five Star Quality Care Trust, a Maryland business trust,
as sublandlord, and Five Star Quality Care-AZ, LLC, a Delaware limited
liability company, as subtenant, as amended by that certain Letter Agreement
dated March 1, 2004 by and among Five Star Quality Care Trust, as
sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as
subtenants, as further amended by that certain Letter Agreement dated June 30,
2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain
Affiliates of Five Star Quality Care, Inc., as subtenants.

 

2.     Sublease Agreement, dated December 31, 2001, by
and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord,
and Five Star Quality Care-Colorado, LLC, Delaware limited liability company,
as subtenant, as amended by that certain Letter Agreement dated March 1,
2004 by and among Five Star Quality Care Trust, as sublandlord, and Certain
Affiliates of Five Star Quality Care, Inc., as subtenants, as further
amended by that certain Letter Agreement dated as of June 30, 2008, by and
among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of
Five Star Quality Care, Inc., as subtenants.

 

3.     Sublease Agreement, dated December 31, 2001, by
and between Five Star Quality Care Trust, a Maryland business trust, as
sublandlord, and Five Star Quality Care-IA, LLC, a Delaware limited liability
company, as subtenant, as amended by that certain Letter Agreement dated March 1,
2004 by and among Five Star Quality Care Trust, as sublandlord, and Certain
Affiliates of Five Star Quality Care, Inc., as subtenants, as further
amended by that certain Letter Agreement dated June 30, 2008 by and among
Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five
Star Quality Care, Inc., as subtenants.

 

4.     Sublease Agreement, dated December 31, 2001, by
and between Five Star Quality Care Trust, a Maryland business trust, as
sublandlord, and Five Star Quality Care-WY, LLC, a Delaware limited liability
company, as subtenant, as amended by that certain Letter Agreement dated March 1,
2004 by and among Five Star Quality Care Trust, as sublandlord, and Certain
Affiliates of Five Star Quality Care, Inc., as subtenants, as further
amended by that certain Letter Agreement dated June 30, 2008 by

 

 

and among Five Star Quality Care Trust, as
sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as
subtenants.

 

5.     Sublease Agreement, dated December 31,
2001, by and between Five Star Quality Care Trust, a Maryland business trust,
as sublandlord, and Five Star Quality Care-IA, Inc., a Delaware
corporation, as subtenant, as amended by that certain Letter Agreement dated March 1,
2004 by and among Five Star Quality Care Trust, as sublandlord, and Certain
Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain
Letter Agreement dated June 30, 2008 by and among Five Star Quality Care
Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc.,
as subtenants.

 

6.     Sublease Agreement, dated December 31,
2001, by and between Five Star Quality Care Trust, a Maryland business trust,
as sublandlord, and Five Star Quality Care-NE, Inc., a Delaware
corporation, as subtenant, as amended by that certain Letter Agreement dated March 1,
2004 by and among Five Star Quality Care Trust, as sublandlord, and Certain
Affiliates of Five Star Quality Care, Inc., as subtenants, as further
amended by that certain Letter Agreement dated June 30, 2008 by and among
Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five
Star Quality Care, Inc., as subtenants.

 

7.     Sublease Agreement, dated October 25,
2002, by and between FVE-CHS LLC (predecessor by merger to Five Star Quality
Care Trust), as sublandlord, and Five Star Quality Care-MD, LLC, a Delaware
limited liability company, as subtenant, as amended by that certain Letter
Agreement dated March 1, 2004 by and among Five Star Quality Care Trust,
as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as
subtenants, as
further amended by that certain Letter Agreement dated June 30, 2008 by
and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates
of Five Star Quality Care, Inc., as subtenants.

 

8.     Sublease Agreement, dated October 25,
2002, by and between FVE-CHS LLC (predecessor by merger to Five Star Quality
Care Trust), as sublandlord, and Five Star Quality Care-NC, LLC, a Delaware
limited liability company, as subtenant, as amended by that certain Letter
Agreement dated March 1, 2004 by and among Five Star Quality Care Trust,
as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as
subtenants, as
further amended by that certain Letter Agreement dated June 30, 2008 by
and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates
of Five Star Quality Care, Inc., as subtenants.

 

 

9.     Sublease Agreement, dated October 25,
2002, by and between FVE-CHS LLC (predecessor by merger to Five Star Quality
Care Trust), as sublandlord, and Five Star Quality Care-VA, LLC, a Delaware
limited liability company, as subtenant, as amended by that certain First
Amendment to Sublease Agreement, dated May 30, 2003, by and between
FVE-CHS LLC (predecessor by merger to Five Star Quality Care Trust), as
sublandlord, and Five Star Quality Care-VA, LLC, as subtenant, and that certain
Letter Agreement dated March 1, 2004 by and among Five Star Quality Care
Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc.,
as subtenants, as
further amended by that certain Letter Agreement dated June 30, 2008 by
and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates
of Five Star Quality Care, Inc., as subtenants.

 

10.              Sublease
Agreement, dated September 30, 2003, by and between FVE-CHS LLC
(predecessor by merger to Five Star Quality Care Trust), as sublandlord, and
Five Star Quality Care-CA, LLC, a Delaware limited liability company, as
subtenant, as amended by that certain Letter Agreement dated March 1, 2004
by and among Five Star Quality Care Trust, as sublandlord, and Certain
Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter
Agreement dated June 30, 2008 by and among Five Star Quality Care Trust,
as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as
subtenants.

 

11.        Sublease Agreement, dated March 1,
2004, by and between Five Star Quality Care Trust, a Maryland business trust,
as sublandlord, and The Heartlands Retirement Community - Ellicott City I, Inc.,
a Maryland corporation, as subtenant, as amended by that certain Letter Agreement dated June 30,
2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain
Affiliates of Five Star Quality Care, Inc., as subtenants.

 

12.        Sublease Agreement, dated June 23,
2004, by and between Five Star Quality Care Trust, a Maryland business trust,
as sublandlord, and Five Star Quality Care-MO, LLC, a Delaware limited
liability company, as subtenant, as amended by that certain Letter Agreement
dated June 30, 2008 by and among Five Star Quality Care Trust, as
sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as
subtenants.

 

13.        Sublease Agreement, dated November 19,
2004, by and between Five Star Quality Care Trust, a Maryland business trust,
as sublandlord, and Morningside of Skipwith-Richmond, LLC, a Delaware limited
liability company, as subtenant, as amended by that certain Letter Agreement dated June 30,
2008 by and among 

 

 

Five Star Quality Care Trust, as sublandlord, and
Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

 

14.        Sublease Agreement, dated November 19,
2004, by and between Five Star Quality Care Trust, a Maryland business trust,
as sublandlord, and Morningside of Newport News, LLC, a Delaware limited
liability company, as subtenant, as amended by that certain Letter Agreement dated June 30,
2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain
Affiliates of Five Star Quality Care, Inc., as subtenants.

 

15.        Sublease Agreement, dated November 19,
2004, by and between Five Star Quality Care Trust, a Maryland business trust,
as sublandlord, and Morningside of Charlottesville, LLC, a Delaware limited
liability company, as subtenant, as amended by that certain Letter Agreement dated June 30,
2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain
Affiliates of Five Star Quality Care, Inc., as subtenants.

 

16.        Sublease Agreement, dated November 19,
2004, by and between Five Star Quality Care Trust, a Maryland business trust,
as sublandlord, and Morningside of Bellgrade, Richmond, LLC, a Delaware limited
liability company, as subtenant, as amended by that certain Letter Agreement dated June 30,
2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain
Affiliates of Five Star Quality Care, Inc., as subtenants.

 

17.        Sublease Agreement, dated November 19,
2004, by and between Five Star Quality Care Trust, a Maryland business trust,
as sublandlord, and Morningside of Gallatin, LLC, a Delaware limited liability
company, as subtenant, as
amended by that certain Letter Agreement dated June 30, 2008 by and among
Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five
Star Quality Care, Inc., as subtenants.

 

18.        Sublease Agreement, dated November 19,
2004, by and between Five Star Quality Care Trust, a Maryland business trust,
as sublandlord, and Morningside of Anderson, L.P., a Delaware limited
partnership, as subtenant, as amended by that certain Letter Agreement dated June 30, 2008 by
and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates
of Five Star Quality Care, Inc., as subtenants.

 

19.        Sublease Agreement, dated November 19,
2004, by and between Five Star Quality Care Trust, a Maryland business trust,
as sublandlord, and Morningside of Evans, Limited Partnership, a Delaware
limited partnership, as subtenant, as amended by that certain Letter Agreement dated June 30,
2008 by and among Five 

 

 

Star Quality Care Trust, as sublandlord, and Certain
Affiliates of Five Star Quality Care, Inc., as subtenants.

 

20.        Sublease Agreement, dated November 19,
2004, by and between Five Star Quality Care Trust, a Maryland business trust,
as sublandlord, and Morningside of Athens, Limited Partnership, a Delaware
limited partnership, as subtenant, as amended by that certain Letter Agreement dated June 30,
2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain
Affiliates of Five Star Quality Care, Inc., as subtenants.

 

21.        Sublease Agreement, dated November 19,
2004, by and between Five Star Quality Care Trust, a Maryland business trust,
as sublandlord, and Morningside of Columbus, L.P., a Delaware limited
partnership, as subtenant, as amended by that certain Letter Agreement dated June 30, 2008 by
and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates
of Five Star Quality Care, Inc., as subtenants.

 

22.        Sublease Agreement, dated November 19,
2004, by and between Five Star Quality Care Trust, a Maryland business trust,
as sublandlord, and Morningside of Dalton, Limited Partnership, a Delaware
limited partnership, as subtenant, as amended by that certain Letter Agreement dated June 30,
2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain
Affiliates of Five Star Quality Care, Inc., as subtenants.

 

23.        Sublease Agreement, dated June 3,
2005, by and between Five Star Quality Care Trust, a Maryland business trust,
as sublandlord, and Morningside of Greenwood, L.P., a Delaware limited
partnership, as subtenant, as amended by that certain Letter Agreement dated June 30, 2008 by
and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates
of Five Star Quality Care, Inc., as subtenants.

 

24.        Sublease Agreement, dated October 31,
2005, by and between Five Star Quality Care Trust, a Maryland business trust,
as sublandlord, and Five Star Quality Care-GHV, LLC, a Maryland limited
liability company, as subtenant, as amended by that certain Letter Agreement dated June 30,
2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain
Affiliates of Five Star Quality Care, Inc., as subtenants.

 

25.        Amended and Restated
Sublease Agreement, dated September 1, 2006, by and between Five Star
Quality Care Trust, a Maryland business trust, as Sublandlord, and Five Star
Quality Care-CA, LLC, a Delaware limited liability company, as Subtenant, as amended by that certain Letter
Agreement dated June 30, 2008 by and among Five Star Quality Care Trust,
as sublandlord, and 

 

 

Certain Affiliates of
Five Star Quality Care, Inc., as subtenants.

 

26.        Sublease Agreement, dated September 1,
2006, by and between Five Star Quality Care Trust, a Maryland business trust,
as Sublandlord, and Five Star Quality Care-FL, LLC, a Delaware limited
liability company, as Subtenant, as amended by that certain Letter Agreement dated June 30,
2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain
Affiliates of Five Star Quality Care, Inc., as subtenants.

 

27.        Sublease Agreement, dated September 1,
2006, by and between Five Star Quality Care Trust, a Maryland business trust,
as Sublandlord, and Five Star Quality Care-IL, LLC, a Maryland limited
liability company, as Subtenant, as amended by that certain Letter Agreement dated June 30,
2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain
Affiliates of Five Star Quality Care, Inc., as subtenants.

 

28.        Sublease Agreement, dated October 1,
2006, by and between Five Star Quality Care Trust, a Maryland business trust,
as Sublandlord, and Five Star Quality Care-MS, LLC, a Maryland limited
liability company, as Subtenant, as amended by that certain Letter Agreement dated June 30,
2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain
Affiliates of Five Star Quality Care, Inc., as subtenants.

 

29.        Second Amended
and Restated Sublease Agreement, dated November 1, 2006, by and between
Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and
Five Star Quality Care-GA, LLC, a Delaware limited liability company, as
subtenant, as amended
by that certain Letter Agreement dated June 30, 2008 by and among Five
Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star
Quality Care, Inc., as subtenants.

 

30.        Second Amended and Restated
Sublease Agreement, dated November 6, 2006, by and between Five Star
Quality Care Trust, a Maryland business trust, as Sublandlord, and Morningside
of Kentucky, Limited Partnership, a Delaware limited partnership, as Subtenant,
as amended by that
certain Letter Agreement dated June 30, 2008 by and among Five Star
Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality
Care, Inc., as subtenants.

 

31.        Amended and Restated
Sublease Agreement, dated January 1, 2007, by and between Five Star
quality Care Trust, a Maryland business trust, and Morningside of Belmont, LLC,
a Delaware limited liability company, as amended by that certain Letter 

 

 

Agreement dated June 30,
2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain
Affiliates of Five Star Quality Care, Inc., as subtenants.

 

32.        Amended and Restated Sublease Agreement,
dated January 4, 2008, by and between Five Star Quality Care Trust, a
Maryland business trust, as sublandlord, and Five Star Quality Care-WI, LLC, a
Delaware limited liability company, as subtenant, as amended by that certain
Letter Agreement dated June 30, 2008 by and among Five Star Quality Care
Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc.,
as subtenants.

 

33.        Sublease Agreement, dated February 7,
2008, by and between Five Star Quality Care Trust, a Maryland business trust,
as sublandlord, and Five Star Quality Care-TX, LLC, a Maryland limited
liability company, as subtenant, as amended by that certain Letter Agreement
dated June 30, 2008 by and among Five Star Quality Care Trust, as
sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as
subtenants.

 

34.        Second Amended and Restated Sublease Agreement, dated February 17,
2008, by and between Five Star Quality Care Trust, a Maryland business trust,
as sublandlord, and Five Star Quality Care-NE, LLC, a Delaware limited
liability company, as subtenant, as amended by that certain Letter Agreement
dated June 30, 2008 by and among Five Star Quality Care Trust, as
sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as
subtenants.

 

35.        Sublease Agreement, dated March 1,
2008, by and between Five Star Quality Care Trust, a Maryland business trust,
as sublandlord, and Five Star Quality Care-MN, LLC, a Maryland limited
liability company, as subtenant, as amended by that certain Letter Agreement
dated June 30, 2008 by and among Five Star Quality Care Trust, as
sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as
subtenants.

 

36.        Sublease Agreement, dated April 1,
2008, by and between Five Star Quality Care Trust, a Maryland business trust,
as sublandlord, and Five Star Quality Care-Savannah, LLC, a Delaware limited
liability company, as subtenant, as amended by that certain Letter Agreement
dated June 30, 2008 by and among Five Star Quality Care Trust, as
sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as
subtenants.

 

37.        Confirmatory Sublease Agreement, dated as
of June 30, 2008 but effective as of October 25, 2002, by and between
Five Star Quality Care Trust, a Maryland business trust and successor by 

 

 

merger to FVE-CHS LLC, a Delaware limited liability
company, as sublandlord, and Five Star Quality Care-KS, LLC, a Delaware limited
liability company, as subtenant, as amended by that certain Letter Agreement
dated March 1, 2004 by and among Five Star Quality Care Trust, as
sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as
subtenants, as further amended by that certain Letter Agreement dated June 30,
2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain
Affiliates of Five Star Quality Care, Inc., as subtenants.

 

 

SCHEDULE 1

 

	
  Subtenant Name, Organizational

  Structure & Corporate Identification

  Number:

  	
   

  	
  Chief Executive

  Office & Principal

  Place of Business:

  	
   

  	
  Other Names

  
	
  Five Star Quality
  Care-AZ, LLC,

  a Delaware limited liability company

  No:
                                                         

  	
   

  	
  400 Centre Street

  Newton, MA 02458

  	
   

  	
  SHOPCO-AZ, LLC

  
	
  Five Star Quality Care-CA,
  LLC,

  a Delaware limited liability company

  No:
                                                         

  	
   

  	
  400 Centre Street

  Newton, MA 02458

  	
   

  	
  SHOPCO-CA, LLC

  
	
  Five Star Quality
  Care-Colorado, LLC,

  a Delaware limited liability company

  No:
                                                         

  	
   

  	
  400 Centre Street

  Newton, MA 02458

  	
   

  	
  SHOPCO-Colorado, LLC

  
	
  Five Star Quality
  Care-GA, LLC,

  a Delaware limited liability company

  No:
                                                         

  	
   

  	
  400 Centre Street

  Newton, MA 02458

  	
   

  	
  SHOPCO-GA, LLC

  
	
  Five Star Quality
  Care-IA, LLC,

  a Delaware limited liability company

  No:
                                                         

  	
   

  	
  400 Centre Street

  Newton, MA 02458

  	
   

  	
  SHOPCO-IA, LLC

  
	
  Five Star Quality
  Care-IA, INC.,

  a Delaware corporation

  No:
                                                         

  	
   

  	
  400 Centre Street

  Newton, MA 02458

  	
   

  	
  SHOPCO-IA, INC.

  
	
  Five Star Quality
  Care-KS, LLC,

  a Delaware limited liability company

  No:                                                        

  	
   

  	
  400 Centre, St.

  Newton, MA 02458

  	
   

  	
  SHOPCO-KS, LLC

  
	
  Five Star
  Quality Care-MD, LLC,

  a Delaware limited liability company

  No:
                                                         

  	
   

  	
  400 Centre
  Street

  Newton, MA 02458

  	
   

  	
  None.

  
	
  Five Star
  Quality Care-MO, LLC,

  a Delaware limited liability company

  No:
                                                         

  	
   

  	
  400 Centre
  Street

  Newton, MA 02458

  	
   

  	
  SHOPCO-MO, LLC

  
	
  Five Star Quality
  Care-NC, LLC,

  a Delaware limited liability company

  No:
                                                         

  	
   

  	
  400 Centre Street

  Newton, MA 02458

  	
   

  	
  None.

  
	
  Five Star Quality
  Care-NE, LLC,

  a Delaware limited liability company

  No:
                                                         

  	
   

  	
  400 Centre Street

  Newton, MA 02458

  	
   

  	
  SHOPCO-NE, LLC

  
	
  Five Star Quality
  Care-NE, INC.,

  a Delaware corporation

  No:                                                        

  	
   

  	
  400 Centre Street

  Newton, MA 02458

  	
   

  	
  SHOPCO-NE, Inc.

  
	
  Five Star Quality
  Care-Savannah, LLC,

  a Delaware limited liability company

  No:
                                                         

  	
   

  	
  400 Centre Street

  Newton, MA 02458

  	
   

  	
  None.

  
	
  Five Star Quality
  Care-VA, LLC,

  a Delaware limited liability company

  No:
                                                         

  	
   

  	
  400 Centre Street

  Newton, MA 02458

  	
   

  	
  None.

  
	
  Five Star Quality
  Care-WI, LLC,

  a Delaware limited liability company

  No:
                                                         

  	
   

  	
  400 Centre Street

  Newton, MA 02458

  	
   

  	
  SHOPCO-WI, LLC

  
	
  Five Star Quality Care-WY,
  LLC,

  a Delaware limited liability company

  No:
                                                         

  	
   

  	
  400 Centre Street

  Newton, MA 02458

  	
   

  	
  SHOPCO-WY, LLC

  

 

 

	
  Subtenant Name, Organizational

  Structure & Corporate Identification

  Number:

  	
   

  	
  Chief Executive

  Office & Principal

  Place of Business:

  	
   

  	
  Other Names

  
	
  The Heartlands
  Retirement Community - Ellicott City I, Inc.,

  a Maryland corporation

  No.
                                                         

  	
   

  	
  400 Centre
  Street

  Newton, MA 02458

  	
   

  	
  None.

  
	
  Morningside of
  Skipwith-Richmond, LLC,

  a Delaware limited liability company

  No.
                                                         

  	
   

  	
  400 Centre Street

  Newton, MA 02458

  	
   

  	
  None.

  
	
  Morningside of Newport
  News, LLC,

  a Delaware limited liability company

  No.
                                                         

  	
   

  	
  400 Centre Street

  Newton, MA 02458

  	
   

  	
  None.

  
	
  Morningside of
  Charlottesville, LLC,

  a Delaware limited liability company

  No.
                                                         

  	
   

  	
  400 Centre Street

  Newton, MA 02458

  	
   

  	
  None.

  
	
  Morningside of
  Bellgrade, Richmond, LLC, 

  a Delaware limited liability company

  No.
                                                         

  	
   

  	
  400 Centre Street

  Newton, MA 02458

  	
   

  	
  None.

  
	
  Morningside of Gallatin,
  LLC,

  a Delaware limited liability company

  No.
                                                         

  	
   

  	
  400 Centre Street

  Newton, MA 02458

  	
   

  	
  None.

  
	
  Morningside of
  Anderson, L.P.,

  a Delaware limited partnership

  No.
                                                         

  	
   

  	
  400 Centre Street

  Newton, MA 02458

  	
   

  	
  None.

  
	
  Morningside of
  Kentucky, Limited Partnership,

  a Delaware limited partnership

  No.
                                                         

  	
   

  	
  400 Centre Street

  Newton, MA 02458

  	
   

  	
  None.

  
	
  Morningside of Evans,
  Limited Partnership,

  a Delaware limited partnership

  No.
                                                         

  	
   

  	
  400 Centre Street

  Newton, MA 02458

  	
   

  	
  None.

  
	
  Morningside of Athens,
  Limited Partnership,

  a Delaware limited partnership

  No.
                                                         

  	
   

  	
  400 Centre Street

  Newton, MA 02458

  	
   

  	
  None.

  
	
  Morningside of
  Columbus, L.P.,

  a Delaware limited partnership

  No.
                                                         

  	
   

  	
  400 Centre Street

  Newton, MA 02458

  	
   

  	
  None.

  
	
  Morningside of Dalton,
  Limited Partnership,

  a Delaware limited partnership

  No.
                                                         

  	
   

  	
  400 Centre Street

  Newton, MA 02458

  	
   

  	
  None.

  

 

 

	
  Subtenant Name, Organizational

  Structure & Corporate Identification

  Number:

  	
   

  	
  Chief Executive

  Office & Principal

  Place of Business:

  	
   

  	
  Other Names

  
	
  Morningside of Belmont,
  LLC,

  a Delaware limited liability company

  No.
                                                         

  	
   

  	
  400 Centre Street

  Newton, MA 02458

  	
   

  	
  None.

  
	
  Morningside of
  Greenwood, L.P.,

  a Delaware limited partnership

  No.
                                                         

  	
   

  	
  400 Centre Street

  Newton, MA 02458

  	
   

  	
  None.

  
	
  Five Star Quality
  Care-GHV, LLC,

  a Maryland limited liability company

  No.
                                                         

  	
   

  	
  400 Centre Street

  Newton, MA 02458

  	
   

  	
  None.

  
	
  Five Star Quality
  Care-FL, LLC,

  a Delaware limited liability company

  No.
                                                         

  	
   

  	
  400 Centre Street

  Newton, MA 02458

  	
   

  	
  None.

  
	
  Five Star Quality
  Care-IL, LLC,

  a Maryland limited liability company

  No.
                                                         

  	
   

  	
  400 Centre Street

  Newton, MA 02458

  	
   

  	
  None.

  
	
  Five Star Quality
  Care-MS, LLC,

  a Maryland limited liability company

  No.
                                                         

  	
   

  	
  400 Centre Street

  Newton, MA 02458

  	
   

  	
  None.

  
	
  Five Star Quality
  Care-TX, LLC,

  a Maryland limited liability company

  No.
                                                         

  	
   

  	
  400 Centre Street

  Newton, MA 02458

  	
   

  	
  None.

  
	
  Five Star Quality
  Care-MN, LLC,

  a Maryland limited liability company

  No.
                                                         

  	
   

  	
  400 Centre Street

  Newton, MA 02458

  	
   

  	
  None.

  

 

 

SCHEDULE 2

 

The Facilities

 

	
  State:

  	
   

  	
  Facility:

  	
   

  	
  Subtenant:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARIZONA:

  	
   

  	
  LA
  MESA HEALTHCARE CENTER

  2470 S. Arizona Avenue

  Yuma, AZ 85364

  	
   

  	
  Five
  Star Quality Care-AZ, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SUNQUEST
  VILLAGE OF YUMA

  265 E. 24th Street

  Yuma, AZ 85364

  	
   

  	
  Five
  Star Quality Care-AZ, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  CALIFORNIA:

  	
   

  	
  LANCASTER
  HEALTHCARE CENTER

  1642 West Avenue J

  Lancaster, CA 93534

  	
   

  	
  Five
  Star Quality Care-CA, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  LEISURE
  POINTE

  1371 Parkside Drive  San

  Bernardino, CA 92404

  	
   

  	
  Five
  Star Quality Care-CA, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  RIO LAS PALMAS

  877 East March Lane

  Stockton, CA 95207

  	
   

  	
  Five
  Star Quality Care-CA, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  VAN
  NUYS HEALTH CARE CENTER

  6835 Hazeltine Street

  Van Nuys, CA 91405

  	
   

  	
  Five
  Star Quality Care-CA, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  COLORADO:

  	
   

  	
  CHERRELYN
  HEALTHCARE CENTER

  5555 South Elati Street

  Littleton, CO 80120

  	
   

  	
  Five
  Star Quality Care-Colorado, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  LA
  VILLA GRANDE CARE CENTER

  2501 Little Bookcliff Drive

  Grand Junction, CO 81501

  	
   

  	
  Five Star Quality
  Care-Colorado, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MANTEY
  HEIGHTS REHABILITATION & CARE CENTER

  2835 Patterson Road

  Grand Junction, CO 81501

  	
   

  	
  Five
  Star Quality Care-Colorado, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SKYLINE
  RIDGE NURSING & REHABILITATION CENTER

  515 Fairview

  Canon City, CO 81212

  	
   

  	
  Five
  Star Quality Care-Colorado, LLC

  

 

 

	
  State:

  	
   

  	
  Facility:

  	
   

  	
  Subtenant:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  FLORIDA:

  	
   

  	
  BUENA
  VIDA

  8901 Tamiami Trail East

  Naples, FL 34113

  	
   

  	
  Five
  Star Quality Care-FL, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  COURT
  AT PALM-AIRE

  2701 North Course Drive

  Pompano Beach, FL 33069

  	
   

  	
  Five
  Star Quality Care-FL, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  GEORGIA:

  	
   

  	
  COLLEGE PARK HEALTHCARE CENTER

  1765 Temple Avenue

  College Park, GA 30337

  	
   

  	
  Five Star Quality Care-GA, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MORNINGSIDE
  OF ATHENS

  1291 Cedar Shoals Drive

  Athens, GA 30605

  	
   

  	
  Morningside
  of Athens, Limited Partnership

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MORNINGSIDE OF COLUMBUS

  7100 South Stadium Drive

  Columbus, GA 31909

  	
   

  	
  Morningside of Columbus, L.P.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MORNINGSIDE
  OF DALTON

  2470 Dug Gap Road

  Dalton, GA 30720

  	
   

  	
  Morningside
  of Dalton, Limited Partnership

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MORNINGSIDE
  OF EVANS

  353 N. Belair Road

  Evans, GA 30809

  	
   

  	
  Morningside
  of Evans, Limited Partnership

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  NORTHLAKE GARDENS

  1300 Montreal Road

  Tucker, GA 30084

  	
   

  	
  Five Star Quality Care-GA,
  LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SENIOR LIVING OF MARSH
  VIEW

  7410 Skidaway Road

  Savannah, GA 31406-6446

  	
   

  	
  Five Star Quality Care-GA,
  LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SAVANNAH SQUARE

  One Savannah Square Drive

  Savannah, GA 31406

  	
   

  	
  Five Star Quality
  Care-Savannah, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ILLINOIS:

  	
   

  	
  BRENDEN
  GARDENS

  900 South Wind Road

  Springfield, IL 62703

  	
   

  	
  Five
  Star Quality Care-IL, LLC

  

 

 

	
  State:

  	
   

  	
  Facility:

  	
   

  	
  Subtenant:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  IOWA:

  	
   

  	
  PARK PLACE

  114 East Green Street

  Glenwood, IA 51534

  	
   

  	
  Five Star Quality Care-IA, INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  PRAIRIE
  RIDGE CARE & REHABILITATION

  308 Prairie Street

  Mediapolis, IA 52637

  	
   

  	
  Five
  Star Quality Care-IA, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  UNION PARK HEALTH SERVICES

  2348 East 9th Street

  Des Moines, IA 50316

  	
   

  	
  Five Star Quality Care-IA, INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  WESTRIDGE
  QUALITY CARE & REHABILITATION

  600 Manor Drive

  Clarinda, IA 51632

  	
   

  	
  Five
  Star Quality Care-IA, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  KANSAS:

  	
   

  	
  OVERLAND PARK PLACE

  6555 West 75th Street

  Overland Park, KS 66204

  	
   

  	
  Five Star Quality
  Care-KS, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  KENTUCKY:

  	
   

  	
  ASHWOOD PLACE

  102 Leonardwood

  Frankfort, KY 40601

  	
   

  	
  Morningside of Kentucky,
  Limited Partnership

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MORNINGSIDE OF MAYFIELD

  1517 West Broadway

  Mayfield, KY 42066

  	
   

  	
  Morningside of Kentucky,
  Limited Partnership

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  THE NEIGHBORHOOD OF
  SOMERSET

  100 Neighborly Drive

  Somerset, KY 42501

  	
   

  	
  Morningside of Kentucky,
  Limited Partnership

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  MARYLAND:

  	
   

  	
  HEARTLANDS AT ELLICOTT
  CITY

  3004 North Ridge Road

  Ellicott City, MD 21043

  	
   

  	
  The Heartlands Retirement
  Community - Ellicott City I, Inc.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ASPENWOOD

  14400 Homecrest Road

  Silver Spring, MD 20906

  	
   

  	
  Five Star Quality
  Care-MD, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  HEARTFIELDS AT BOWIE

  7600 Laurel Bowie Road

  Bowie, MD 20715

  	
   

  	
  Five Star Quality
  Care-MD, LLC

  

 

 

	
  State:

  	
   

  	
  Facility:

  	
   

  	
  Subtenant:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  HEARTFIELDS AT EASTON

  700 Port Street

  Easton, MD 21601

  	
   

  	
  Five Star Quality
  Care-MD, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  HEARTFIELDS AT
  FREDERICK

  (Dearbought Community)

  1820 Latham Drive

  Frederick, MD 21701

  	
   

  	
  Five Star Quality
  Care-MD, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  HEARTLANDS AT SEVERNA
  PARK

  715 Benfield Road

  Severna Park, MD 21146

  	
   

  	
  Five Star Quality
  Care-MD, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  MINNESOTA:

  	
   

  	
  WELLSTEAD OF ROGERS

  20500 and 20600 S. Diamond Lake Road

  Rogers, MN 55374

  	
   

  	
  Five Star Quality
  Care-MN, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  MISSISSIPPI:

  	
   

  	
  HERMITAGE GARDENS AT
  OXFORD

  1488 Belk Boulevard

  Oxford, MS 38655

  	
   

  	
  Five Star Quality Care-MS,
  LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  HERMITAGE GARDENS AT
  SOUTHAVEN

  108 Clarington Drive

  Southaven, MS 38671

  	
   

  	
  Five Star Quality Care-MS,
  LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  MISSOURI:

  	
   

  	
  ARBOR
  VIEW (BEVERLY MANOR)

  1317 North 36th Street

  St. Joseph, MO 64506

  	
   

  	
  Five
  Star Quality Care-MO, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  NEBRASKA:

  	
   

  	
  ASHLAND
  CARE CENTER

  1700 Furnace Street

  Ashland, NE 68003

  	
   

  	
  Five
  Star Quality Care-NE, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BLUE
  HILL CARE CENTER

  414 North Wilson Street

  Blue Hill, NE 68930

  	
   

  	
  Five
  Star Quality Care-NE, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  CENTENNIAL
  PARK RETIREMENT VILLAGE

  510 Centennial Circle

  North Platte, NE 69101

  	
   

  	
  Five
  Star Quality Care-NE, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  CENTRAL
  CITY CARE CENTER

  2720 South 17th Avenue

  Central City, NE 68462

  	
   

  	
  Five
  Star Quality Care-NE, INC.

  

 

 

	
  State:

  	
   

  	
  Facility:

  	
   

  	
  Subtenant:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  GRETNA
  COMMUNITY CARE CENTER

  700 South Highway 6

  Gretna, NE 68028

  	
   

  	
  Five
  Star Quality Care-NE, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ROSE BROOK CARE CENTER

  Route 1 Box 83A

  Edgar, NE 68935

  	
   

  	
  Five Star Quality Care-NE, INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SUTHERLAND
  CARE CENTER

  333 Maple Street

  Sutherland, NE 69165

  	
   

  	
  Five
  Star Quality Care-NE, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  WAVERLY
  CARE CENTER

  11041 North 137th Street

  Waverly, NE 68462

  	
   

  	
  Five
  Star Quality Care-NE, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  WESTGATE ASSISTED LIVING

  3030 South 80th Street

  Omaha, NE 68124

  	
   

  	
  Five Star Quality Care-NE,
  LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  NORTH CAROLINA:

  	
   

  	
  HEARTFIELDS AT CARY

  1050 Crescent Green Drive

  Cary, NC 27511

  	
   

  	
  Five Star Quality
  Care-NC, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  PENNSYLVANIA:

  	
   

  	
  FRANCISCAN
  MANOR

  71 Darlington Road

  Beaver Falls, PA 15010

  	
   

  	
  Five
  Star Quality Care-GHV, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MOUNT
  VERNON OF ELIZABETH

  145 Broadlawn Drive

  Elizabeth, PA 15037

  	
   

  	
  Five
  Star Quality Care-GHV, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MOUNT
  VERNON OF SOUTH PARK

  1400 Riggs Road

  South Park, PA 15129

  	
   

  	
  Five
  Star Quality Care-GHV, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  OVERLOOK
  GREEN

  5250 Meadowgreen Drive

  Pittsburgh, PA 15236

  	
   

  	
  Five Star Quality
  Care-GHV, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  RIDGEPOINTE

  5301 Brownsville Road

  Pittsburgh, PA 15236

  	
   

  	
  Five Star Quality Care-GHV, LLC

  

 

 

	
  State:

  	
   

  	
  Facility:

  	
   

  	
  Subtenant:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ROLLING HILLS MANOR

  600 Newport Drive

  Baldwin, PA 15234

  	
   

  	
  Five Star Quality Care-GHV, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SOUTH CAROLINA:

  	
   

  	
  MORNINGSIDE OF ANDERSON

  1304 McLees Road

  Anderson, SC 29621

  	
   

  	
  Morningside of Anderson,
  L.P.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MORNINGSIDE OF GREENWOOD

  116 Enterprise Court

  Greenwood, SC 29649

  	
   

  	
  Morningside of Greenwood,
  L.P.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TENNESSEE:

  	
   

  	
  MORNINGSIDE OF GALLATIN

  1085 Hartsville Pike

  Gallatin, TN 37066

  	
   

  	
  Morningside of Gallatin,
  LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MORNINGSIDE OF BELMONT

  1710 Magnolia Boulevard

  Nashville, TN 37212

  	
   

  	
  Morningside of Belmont,
  LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  WALKING HORSE MEADOWS

  207 Uffelman Drive

  Clarksville, TN 37043

  	
   

  	
  Morningside of Belmont,
  LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TEXAS:

  	
   

  	
  HERITAGE PLACE AT BOERNE

  120 Crosspoint Drive

  Bourne, TX 78006

  	
   

  	
  Five Star Quality Care-TX,
  LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  HERITAGE PLACE AT
  FREDERICKSBURG

  96 Frederick Road

  Fredericksburg, TX 78624

  	
   

  	
  Five Star Quality Care-TX,
  LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  VIRGINIA:

  	
   

  	
  MORNINGSIDE OF CHARLOTTESVILLE

  491 Crestwood Drive

  Charlottesville, VA 22903

  	
   

  	
  Morningside of
  Charlottesville, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MORNINGSIDE OF BELLGRADE

  2800 Polo Parkway

  Midlothian, VA 28113

  	
   

  	
  Morningside of Bellgrade,
  Richmond, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MORNINGSIDE OF NEWPORT
  NEWS

  655 Denbigh Boulevard

  Newport News, VA 23608

  	
   

  	
  Morningside of Newport
  News, LLC

  

 

 

	
  State:

  	
   

  	
  Facility:

  	
   

  	
  Subtenant:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MORNINGSIDE IN THE WEST
  END

  3000 Skipwith Road

  Richmond, VA 23294

  	
   

  	
  Morningside of
  Skipwith-Richmond, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  DOMINION VILLAGE AT
  CHESAPEAKE

  2865 Forehand Drive

  Chesapeake, VA 23323

  	
   

  	
  Five Star Quality
  Care-VA, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  DOMINION VILLAGE AT
  POQUOSON

  531 Wythe Creek Road

  Poquoson, VA 23662

  	
   

  	
  Five Star Quality
  Care-VA, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  DOMINION VILLAGE AT
  WILLIAMSBURG

  4132 Longhill Road

  Williamsburg, VA 23188

  	
   

  	
  Five Star Quality
  Care-VA, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  HEARTFIELDS AT
  FREDERICKSBURG

  20 HeartFields Lane

  Fredericksburg, VA 22405

  	
   

  	
  Five Star Quality
  Care-VA, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  HEARTFIELDS AT RICHMOND

  500 North Allen Avenue

  (Corner of Grace)

  Richmond, VA 23220

  	
   

  	
  Five Star Quality
  Care-VA, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  WISCONSIN:

  	
   

  	
  MANORPOINTE-OAK
  CREEK  INDEPENDENT
  SENIOR APARTMENTS

  700 East Stonegate Drive

  Oak Creek, WI 53154

  	
   

  	
  Five Star Quality Care-WI,
  LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MEADOWMERE-MADISON
  ASSISTED LIVING

  5601 Burke Road

  Madison, WI 53718

  	
   

  	
  Five
  Star Quality Care-WI, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MEADOWMERE/MITCHELL
  MANOR-OAK CREEK ASSISTAED LIVING AND CBRF

  701 East Puetz Road

  Oak Creek, WI 53154

  	
   

  	
  Five
  Star Quality Care-WI, LLC

  

 

 

	
  State:

  	
   

  	
  Facility:

  	
   

  	
  Subtenant:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MEADOWMERE-NORTHSHORE ASSISTED LIVING

  10803 North Port Washington Road

  Mequon, WI 53902

  	
   

  	
  Five Star Quality Care-WI, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MEADOWMERE-SOUTHPORT
  ASSISTED LIVING

  8350 and 8351 Sheridan Road

  Kenosha, WI 53143

  	
   

  	
  Five
  Star Quality Care-WI, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MITCHELL
  MANOR SENIOR LIVING

  5301 West Lincoln Avenue

  West Allis, WI 53219

  	
   

  	
  Five Star Quality Care-WI,
  LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  RIVER
  HILLS WEST HEALTHCARE CENTER

  321 Riverside Drive

  Pewaukee, WI 53072

  	
   

  	
  Five Star Quality Care-WI,
  LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SUNNY
  HILL HEALTH CARE CENTER

  4325 Nakoma Road

  Madison, WI 53711

  	
   

  	
  Five
  Star Quality Care-WI, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  WOODLAND
  HEALTHCARE CENTER

  18741 West Bluemound Road

  Brookfield, WI 53045

  	
   

  	
  Five
  Star Quality Care-WI, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  WYOMING:

  	
   

  	
  LARAMIE
  CARE CENTER

  503 South 18th Street

  Laramie, WY 82070

  	
   

  	
  Five
  Star Quality Care-WY, LLCExhibit 10.7

 

AMENDED AND RESTATED MASTER LEASE AGREEMENT

(LEASE NO. 2),

 

dated as of June 30, 2008,

 

by and among

 

CERTAIN AFFILIATES OF SENIOR
HOUSING PROPERTIES TRUST,

 

AS LANDLORD,

 

AND

 

CERTAIN AFFILIATES OF FIVE STAR QUALITY CARE,
INC.,

JOINTLY AND SEVERALLY,

 

AS TENANT

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE 1

  	
  DEFINITIONS

  	
  1

  
	
  1.1

  	
  “Additional Charges”

  	
  2

  
	
  1.2

  	
  “Additional Rent”

  	
  2

  
	
  1.3

  	
  “Affiliated Person”

  	
  2

  
	
  1.4

  	
  “Agreement”

  	
  2

  
	
  1.5

  	
  “Applicable Laws”

  	
  2

  
	
  1.6

  	
  “Applicable
  Percentage”

  	
  3

  
	
  1.7

  	
  “Award”

  	
  3

  
	
  1.8

  	
  “Base Net Patient
  Revenues”

  	
  3

  
	
  1.9

  	
  “Base Year”

  	
  3

  
	
  1.10

  	
  “Business Day”

  	
  4

  
	
  1.11

  	
  “Capital Addition”

  	
  4

  
	
  1.12

  	
  “Capital
  Expenditure”

  	
  4

  
	
  1.13

  	
  “Change in Control”

  	
  4

  
	
  1.14

  	
  “Claim”

  	
  4

  
	
  1.15

  	
  “Code”

  	
  5

  
	
  1.16

  	
  “Commencement Date”

  	
  5

  
	
  1.17

  	
  “Condemnation”

  	
  5

  
	
  1.18

  	
  “Condemnor”

  	
  5

  
	
  1.19

  	
  “Consolidated
  Financials”

  	
  5

  
	
  1.20

  	
  “Date of Taking”

  	
  5

  
	
  1.21

  	
  “Default”

  	
  5

  
	
  1.22

  	
  “Disbursement Rate”

  	
  5

  
	
  1.23

  	
  “Distribution”

  	
  6

  
	
  1.24

  	
  “Easement Agreement”

  	
  6

  
	
  1.25

  	
  “Encumbrance”

  	
  6

  
	
  1.26

  	
  “Entity”

  	
  6

  
	
  1.27

  	
  “Environment”

  	
  6

  
	
  1.28

  	
  “Environmental
  Obligation”

  	
  6

  
	
  1.29

  	
  “Environmental
  Notice”

  	
  6

  
	
  1.30

  	
  “Event of Default”

  	
  6

  
	
  1.31

  	
  “Excess Net Patient
  Revenues”

  	
  6

  
	
  1.32

  	
  “Extended Terms”

  	
  7

  
	
  1.33

  	
  “FF&E Estimate”

  	
  7

  
	
  1.34

  	
  “FF&E Reserve”

  	
  7

  
	
  1.35

  	
  “FF&E Reserve
  Payment”

  	
  7

  
	
  1.36

  	
  “FF&E Reserve
  Pledge”

  	
  7

  
	
  1.37

  	
  “FSQ”

  	
  7

  
	
  1.38

  	
  “Facility”

  	
  7

  
	
  1.39

  	
  “Facility Mortgage”

  	
  7

  
	
  1.40

  	
  “Facility Mortgagee”

  	
  7

  
	
  1.41

  	
  “Facility Trade
  Names”

  	
  8

  
	
  1.42

  	
  “Financial Officer’s
  Certificate”

  	
  8

  
	
  1.43

  	
  “Fiscal Year”

  	
  8

  
	
  1.44

  	
  “Five Star”

  	
  8

  
	
  1.45

  	
  “Fixed Term”

  	
  8

  
	
  1.46

  	
  “Fixtures”

  	
  8

  
				

 

i

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  1.47

  	
  “GAAP”

  	
  8

  
	
  1.48

  	
  “Government
  Agencies”

  	
  8

  
	
  1.49

  	
  “Guarantor”

  	
  9

  
	
  1.50

  	
  “Guaranty”

  	
  9

  
	
  1.51

  	
  “Hazardous
  Substances”

  	
  9

  
	
  1.52

  	
  “Immediate Family”

  	
  10

  
	
  1.53

  	
  “Impositions”

  	
  10

  
	
  1.54

  	
  “Incidental
  Documents”

  	
  11

  
	
  1.55

  	
  “Indebtedness”

  	
  11

  
	
  1.56

  	
  “Insurance
  Requirements”

  	
  11

  
	
  1.57

  	
  “Interest Rate”

  	
  12

  
	
  1.58

  	
  “Land”

  	
  12

  
	
  1.59

  	
  “Landlord”

  	
  12

  
	
  1.60

  	
  “Landlord Default”

  	
  12

  
	
  1.61

  	
  “Landlord Liens”

  	
  12

  
	
  1.62

  	
  “Lease Year”

  	
  12

  
	
  1.63

  	
  “Leased
  Improvements”

  	
  12

  
	
  1.64

  	
  “Leased Intangible
  Property”

  	
  12

  
	
  1.65

  	
  “Leased Personal Property”

  	
  13

  
	
  1.66

  	
  “Leased Property”

  	
  13

  
	
  1.67

  	
  “Legal Requirements”

  	
  13

  
	
  1.68

  	
  “Lien”

  	
  13

  
	
  1.69

  	
  “Manager”

  	
  13

  
	
  1.70

  	
  “Management
  Agreement”

  	
  13

  
	
  1.71

  	
  “Minimum Rent”

  	
  14

  
	
  1.72

  	
  “Net Patient
  Revenues”

  	
  14

  
	
  1.73

  	
  “Notice”

  	
  15

  
	
  1.74

  	
  “Officer’s
  Certificate”

  	
  15

  
	
  1.75

  	
  “Original Leases”

  	
  15

  
	
  1.76

  	
  “Original
  Rehabilitation Hospital Lease”

  	
  15

  
	
  1.77

  	
  “Original Sunrise
  Lease”

  	
  15

  
	
  1.78

  	
  “Overdue Rate”

  	
  15

  
	
  1.79

  	
  “Parent”

  	
  15

  
	
  1.80

  	
  “Permitted
  Encumbrances”

  	
  15

  
	
  1.81

  	
  “Permitted Liens”

  	
  15

  
	
  1.82

  	
  “Permitted Use”

  	
  16

  
	
  1.83

  	
  “Person”

  	
  16

  
	
  1.84

  	
  “Pledge Agreement”

  	
  16

  
	
  1.85

  	
  “Property”

  	
  16

  
	
  1.86

  	
  “Provider
  Agreements”

  	
  16

  
	
  1.87

  	
  “Records”

  	
  16

  
	
  1.88

  	
  “Regulated Medical
  Wastes”

  	
  16

  
	
  1.89

  	
  “Rehabilitation
  Hospital Properties”

  	
  16

  
	
  1.90

  	
  “Rent”

  	
  16

  
	
  1.91

  	
  “SEC”

  	
  16

  
	
  1.92

  	
  “Security Agreement”

  	
  16

  
	
  1.93

  	
  “Senior Housing
  Properties”

  	
  17

  
					

 

ii

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  1.94

  	
  “State”

  	
  17

  
	
  1.95

  	
  “Subordinated
  Creditor”

  	
  17

  
	
  1.96

  	
  “Subordination
  Agreement”

  	
  17

  
	
  1.97

  	
  “Subsidiary”

  	
  17

  
	
  1.98

  	
  “Successor Landlord”

  	
  17

  
	
  1.99

  	
  “Tenant”

  	
  17

  
	
  1.100

  	
  “Tenant’s Personal
  Property”

  	
  17

  
	
  1.101

  	
  “Term”

  	
  18

  
	
  1.102

  	
  “Third Party Payor
  Programs”

  	
  18

  
	
  1.103

  	
  “Third Party Payors”

  	
  18

  
	
  1.104

  	
  “Unsuitable for Its
  Permitted Use”

  	
  18

  
	
  1.105

  	
  “Work”

  	
  18

  
	
  ARTICLE 2

  	
  LEASED
  PROPERTY AND TERM

  	
  18

  
	
  2.1

  	
  Leased Property

  	
  18

  
	
  2.2

  	
  Condition of Leased
  Property

  	
  20

  
	
  2.3

  	
  Fixed Term

  	
  20

  
	
  2.4

  	
  Extended Terms

  	
  20

  
	
  2.5

  	
  Limitations on Term

  	
  21

  
	
  ARTICLE 3

  	
  RENT

  	
  21

  
	
  3.1

  	
  Rent

  	
  21

  
	
  3.2

  	
  Late Payment of
  Rent, Etc.

  	
  27

  
	
  3.3

  	
  Net Lease

  	
  28

  
	
  3.4

  	
  No Termination,
  Abatement, Etc.

  	
  28

  
	
  3.5

  	
  Prorations, Etc.

  	
  29

  
	
  ARTICLE 4

  	
  USE OF THE
  LEASED PROPERTY

  	
  29

  
	
  4.1

  	
  Permitted Use

  	
  29

  
	
  4.2

  	
  Compliance with
  Legal/Insurance Requirements, Etc.

  	
  31

  
	
  4.3

  	
  Compliance with Medicaid
  and Medicare Requirements

  	
  32

  
	
  4.4

  	
  Environmental
  Matters

  	
  32

  
	
  ARTICLE 5

  	
  MAINTENANCE
  AND REPAIRS

  	
  34

  
	
  5.1

  	
  Maintenance and
  Repair

  	
  34

  
	
  5.2

  	
  Tenant’s Personal
  Property

  	
  38

  
	
  5.3

  	
  Yield Up

  	
  38

  
	
  5.4

  	
  Management Agreement

  	
  40

  
	
  ARTICLE 6

  	
  IMPROVEMENTS,
  ETC.

  	
  41

  
	
  6.1

  	
  Improvements to the
  Leased Property

  	
  41

  
	
  6.2

  	
  Salvage

  	
  42

  
	
  ARTICLE 7

  	
  LIENS

  	
  42

  
	
  7.1

  	
  Liens

  	
  42

  
	
  7.2

  	
  Landlord’s Lien

  	
  42

  
	
  ARTICLE 8

  	
  PERMITTED
  CONTESTS

  	
  43

  
	
  ARTICLE 9

  	
  INSURANCE AND
  INDEMNIFICATION

  	
  44

  
	
  9.1

  	
  General Insurance
  Requirements

  	
  44

  
	
  9.2

  	
  Waiver of
  Subrogation

  	
  44

  
	
  9.3

  	
  Form Satisfactory,
  Etc.

  	
  45

  
							

 

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  Page

  
	
   

  	
   

  	
   

  
	
  9.4

  	
  No Separate
  Insurance; Self-Insurance

  	
  45

  
	
  9.5

  	
  Indemnification of
  Landlord

  	
  46

  
	
  ARTICLE 10

  	
  CASUALTY

  	
  46

  
	
  10.1

  	
  Insurance Proceeds

  	
  46

  
	
  10.2

  	
  Damage or
  Destruction

  	
  47

  
	
  10.3

  	
  Damage Near End of
  Term

  	
  49

  
	
  10.4

  	
  Tenant’s Property

  	
  49

  
	
  10.5

  	
  Restoration of
  Tenant’s Property

  	
  50

  
	
  10.6

  	
  No Abatement of Rent

  	
  50

  
	
  10.7

  	
  Waiver

  	
  50

  
	
  ARTICLE 11

  	
  CONDEMNATION

  	
  50

  
	
  11.1

  	
  Total Condemnation,
  Etc.

  	
  50

  
	
  11.2

  	
  Partial Condemnation

  	
  51

  
	
  11.3

  	
  Abatement of Rent

  	
  52

  
	
  11.4

  	
  Temporary
  Condemnation

  	
  52

  
	
  11.5

  	
  Allocation of Award

  	
  53

  
	
  ARTICLE 12

  	
  DEFAULTS AND
  REMEDIES

  	
  53

  
	
  12.1

  	
  Events of Default

  	
  53

  
	
  12.2

  	
  Remedies

  	
  56

  
	
  12.3

  	
  Tenant’s Waiver

  	
  57

  
	
  12.4

  	
  Application of Funds

  	
  57

  
	
  12.5

  	
  Landlord’s Right to
  Cure Tenant’s Default

  	
  58

  
	
  12.6

  	
  Trade Names

  	
  58

  
	
  ARTICLE 13

  	
  HOLDING OVER

  	
  58

  
	
  ARTICLE 14

  	
  LANDLORD
  DEFAULT

  	
  59

  
	
  ARTICLE 15

  	
  PURCHASE
  RIGHTS

  	
  59

  
	
  ARTICLE 16

  	
  SUBLETTING
  AND ASSIGNMENT

  	
  60

  
	
  16.1

  	
  Subletting and
  Assignment

  	
  60

  
	
  16.2

  	
  Required Sublease
  Provisions

  	
  62

  
	
  16.3

  	
  Permitted Sublease

  	
  63

  
	
  16.4

  	
  Sublease Limitation

  	
  64

  
	
  ARTICLE 17

  	
  ESTOPPEL
  CERTIFICATES AND FINANCIAL STATEMENTS

  	
  64

  
	
  17.1

  	
  Estoppel
  Certificates

  	
  64

  
	
  17.2

  	
  Financial Statements

  	
  64

  
	
  17.3

  	
  Reimbursement,
  Licensure, Etc.

  	
  66

  
	
  ARTICLE 18

  	
  LANDLORD’S
  RIGHT TO INSPECT

  	
  67

  
	
  ARTICLE 19

  	
  EASEMENTS

  	
  67

  
	
  19.1

  	
  Grant of Easements

  	
  67

  
	
  19.2

  	
  Exercise of Rights
  by Tenant

  	
  68

  
	
  19.3

  	
  Permitted
  Encumbrances

  	
  68

  
	
  ARTICLE 20

  	
  FACILITY
  MORTGAGES

  	
  68

  
	
  20.1

  	
  Landlord
  May Grant Liens

  	
  68

  
	
  20.2

  	
  Subordination of
  Lease

  	
  68

  
	
  20.3

  	
  Notice to Mortgagee
  and Superior Landlord

  	
  70

  
							

 

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  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE 21

  	
  ADDITIONAL
  COVENANTS OF TENANT

  	
  70

  
	
  21.1

  	
  Prompt Payment of
  Indebtedness

  	
  70

  
	
  21.2

  	
  Conduct of Business

  	
  71

  
	
  21.3

  	
  Maintenance of
  Accounts and Records

  	
  71

  
	
  21.4

  	
  Notice of
  Litigation, Etc.

  	
  71

  
	
  21.5

  	
  Indebtedness of
  Tenant

  	
  72

  
	
  21.6

  	
  Distributions,
  Payments to Affiliated Persons, Etc.

  	
  73

  
	
  21.7

  	
  Prohibited
  Transactions

  	
  73

  
	
  21.8

  	
  Liens and
  Encumbrances

  	
  73

  
	
  21.9

  	
  Merger; Sale of
  Assets; Etc.

  	
  74

  
	
  21.10

  	
  Notice of Change of
  Name, Etc.

  	
  74

  
	
  ARTICLE 22

  	
  ARBITRATION

  	
  74

  
	
  ARTICLE 23

  	
  MISCELLANEOUS

  	
  76

  
	
  23.1

  	
  Limitation on
  Payment of Rent

  	
  76

  
	
  23.2

  	
  No Waiver

  	
  76

  
	
  23.3

  	
  Remedies Cumulative

  	
  76

  
	
  23.4

  	
  Severability

  	
  76

  
	
  23.5

  	
  Acceptance of
  Surrender

  	
  77

  
	
  23.6

  	
  No Merger of Title

  	
  77

  
	
  23.7

  	
  Conveyance by
  Landlord

  	
  77

  
	
  23.8

  	
  Quiet Enjoyment

  	
  77

  
	
  23.9

  	
  No Recordation

  	
  78

  
	
  23.10

  	
  Notices

  	
  78

  
	
  23.11

  	
  Construction

  	
  79

  
	
  23.12

  	
  Counterparts;
  Headings

  	
  79

  
	
  23.13

  	
  Applicable Law, Etc.

  	
  80

  
	
  23.14

  	
  Right to Make
  Agreement

  	
  80

  
	
  23.15

  	
  Attorneys’ Fees

  	
  80

  
	
  23.16

  	
  Nonliability of
  Trustees

  	
  80

  
	
  23.17

  	
  Original Leases

  	
  81

  
				

 

v

 

AMENDED AND RESTATED MASTER LEASE AGREEMENT

(LEASE NO. 2)

 

THIS AMENDED AND RESTATED MASTER LEASE AGREEMENT  (LEASE NO. 2)
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 each of the parties identified on the
signature page hereof as a tenant, jointly and severally, as tenant (“Tenant”).

 

W  I  T
N  E  S  S  E  T  H :

 

WHEREAS, certain entities
comprising Landlord and certain entities comprising Tenant are parties to that
certain Amended Master Lease Agreement, dated as of January 11, 2002, as
the same has been amended to date (as so amended, the “Original Sunrise
Lease”); and

 

WHEREAS, certain other entities
comprising Landlord and certain other entities comprising Tenant are parties to
that certain Amended and Restated Master Lease Agreement, dated as of October 1,
2006, as the same has been amended to date (as so amended, the “Original
Rehabilitation Hospital Lease” and, together with the Original Sunrise
Lease, collectively, the “Original Leases”); and

 

WHEREAS, Landlord and Tenant wish to
amend, restate and consolidate the Original Leases into a single lease 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 Leases are hereby
amended, restated and consolidated in their entirety, 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. 2), 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, 

 

2

 

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.

 

1.6          “Applicable
Percentage”  shall
mean three and 50/100 percent (3.50%).

 

1.7          “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).

 

1.8          “Base
Net Patient Revenues”  shall
mean Three Hundred Fifteen Million One Hundred Fifty-Nine Thousand Six Hundred
Sixty-Five Thousand and No/100s Dollars ($315,159,665.00), which amount is
allocated amongst the Senior Housing Properties as specified on Schedule 1
attached hereto and made a part hereof; 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 any
such 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 with respect to such Property for such Lease Year, Base
Net Patient Revenues shall be reduced as follows:  (a) in the event of the termination of
this Agreement with respect to any such Property pursuant to Article 10,
11 or 12, all Net Patient 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 Net Patient Revenues;
(b) in the event of a partial closing of any Facility affecting the number
of units, or the services provided, at such Facility, Net Patient 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
Net Patient Revenues attributable to units no longer in service shall be
subtracted from Base Net Patient Revenues throughout the period of such
closing; and (c) in the event of any other change in circumstances
affecting any Facility, Base Net Patient Revenues shall be equitably adjusted
in such manner as Landlord and Tenant shall reasonably agree.

 

1.9          “Base
Year”  shall mean
the 2005 Fiscal Year.

 

3

 

1.10        “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.

 

1.11        “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.

 

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

 

1.13        “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.

 

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

 

4

 

1.15        “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.

 

1.16        “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.

 

1.17        “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.

 

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

 

1.19        “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.

 

1.20        “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.

 

1.21        “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.

 

1.22        “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, 

 

5

 

however, that in no event shall the Disbursement
Rate exceed eleven and one-half percent (11.5%).

 

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

 

1.24        “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.

 

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

 

1.26        “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.

 

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

 

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

 

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

 

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

 

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

 

6

 

1.32        “Extended
Terms”  shall have
the meaning given such term in Section 2.4.

 

1.33        “FF&E Estimate”  shall have the meaning given such term in Section 5.1.2.

 

1.34        “FF&E
Reserve”  shall
mean, with respect to any Senior Housing Property, a reserve account established
and maintained in accordance with Section 5.1.2.

 

1.35        “FF&E Reserve Payment”  shall mean, with respect to any Senior
Housing Property, with respect to any Lease Year, or portion thereof, the
Applicable Percentage of Net Patient Revenues at such Property for such Lease
Year, or portion thereof.

 

1.36        “FF&E
Reserve Pledge”  shall mean the Assignment and Security
Agreement, dated as of October 1, 2002, made by certain Entities
comprising Tenant for the benefit of certain Entities comprising Landlord with
respect to the FF&E Reserve, as it may be amended, restated, supplemented
or otherwise modified from time to time.

 

1.37        “FSQ”  shall mean FSQ, Inc., a Delaware
corporation, and its permitted successors and assigns.

 

1.38        “Facility”  shall mean, with respect to
any Property, the skilled nursing/intermediate care/independent living/assisted
living/special care facility or the rehabilitation hospital being operated on
such Property, and, specifically including, without limitation, (a) with
respect to the Facility known as New England Rehabilitation Hospital in Woburn,
Massachusetts, the right to operate the 198 beds licensed at such Facility, (b) with
respect to the Facility known as Braintree Rehabilitation Hospital in
Braintree, Massachusetts, the right to operate the 187 beds licensed at such
Facility, and (c) any other tangible or intangible rights associated with,
or incidental to, any licenses, registrations and permits used by such
hospitals in the conduct of their business and provision of patient services.

 

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

 

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

 

7

 

1.41        “Facility Trade Names”  shall mean, with respect to any Property, any
of the names under which Tenant operates, or has operated, the Facility at such
Property at any time during the Term.

 

1.42        “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.

 

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

 

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

 

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

 

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

 

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

 

1.48        “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.

 

8

 

1.49        “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.

 

1.50        “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.

 

1.51        “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

 

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

 

9

 

(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.

 

1.52        “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.

 

1.53        “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
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 

 

10

 

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.

 

1.54        “Incidental
Documents”  shall
mean, collectively, any Guaranty, any Security Agreement, any Pledge Agreement
and the FF&E Reserve Pledge.

 

1.55        “Indebtedness”  shall mean (a) with
respect to each Senior Housing Property (without duplication), all obligations,
contingent or otherwise, which in accordance with GAAP should be reflected
on  the obligor’s balance sheet as
liabilities and (b) with respect to either Rehabilitation Hospital
Property (without duplication), (i) all obligations for borrowed money, (ii) the
maximum amount available to be drawn under all surety bonds, letters of credit
and bankers’ acceptances issued or created for the account of Tenant and, without
duplication, all unreimbursed drafts drawn thereunder, (iii) all
obligations to pay the deferred purchase price of property or services,
excluding trade payables incurred in the ordinary course of business, but
including all indebtedness created or arising under any conditional sale or
other title retention agreement with respect to property acquired by Tenant, (iv) all
leases required, in accordance with GAAP, to be recorded as capital leases on
Tenant’s balance sheet, (v) the principal balance outstanding and owing by
Tenant under any synthetic lease, tax retention operating lease or similar
off-balance sheet financing product, and (vi) all guaranties of or other
liabilities with respect to the debt of another Person.

 

1.56        “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 

 

11

 

Fire Underwriters (or any other body exercising similar functions)
binding upon Landlord, Tenant, any Manager or the Leased Property.

 

1.57        “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.

 

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

 

1.59        “Landlord”  shall have the meaning
given such term in the preambles to this Agreement and shall refer to each such
Entity comprising Landlord hereunder and include its and their respective
permitted successors and assigns.

 

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

 

1.61        “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.

 

1.62        “Lease
Year”  shall mean
any Fiscal Year during the Term or any portion thereof at the beginning or end
of the Term.

 

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

 

1.64        “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 

 

12

 

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 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.

 

1.65        “Leased
Personal Property”  shall have the meaning given such
term in Section 2.1(e).

 

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

 

1.67        “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.

 

1.68        “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.

 

1.69        “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.

 

1.70        “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 

 

13

 

accordance with the applicable provisions of this Agreement, together
with all amendments, modifications and supplements thereto.

 

1.71        “Minimum
Rent”  shall mean
the sum of Seventy-Eight Million Seven Hundred Twelve Thousand Eight Hundred
Ten and 00/100s Dollars ($78,712,810.00) per annum.

 

1.72        “Net
Patient Revenues”  shall
mean, with respect to the Senior Housing Properties, for each Fiscal Year
during the Term, all revenues and receipts (determined on an accrual basis and
in all material respects in accordance with GAAP) of every kind derived from
renting, using and/or operating such Properties, or any portion thereof,
including, but not limited to:  all
patient, client or resident 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 any such Property, or any portion thereof, including, without limitation,
any other arrangements with third parties relating to the possession or use of
any portion of such Property; and proceeds, if any, from business interruption
or other loss of income insurance; provided, however, that Net
Patient 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 such Property, such as home
health care, to persons that are not patients, clients or 

 

14

 

residents at such Property; revenues attributable to child care
services provided primarily to employees of such Property; any proceeds from
any sale of such Property or from the refinancing of any debt encumbering such
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 Tenant or applied for the purpose for which they were collected;
and interest income from any bank account or investment of Tenant.

 

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

 

1.74        “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.

 

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

 

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

 

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

 

1.78        “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.

 

1.79        “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.

 

1.80        “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.

 

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

 

15

 

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

 

1.83        “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.

 

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

 

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

 

1.86        “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.

 

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

 

1.88        “Regulated
Medical Wastes” 
shall mean all materials generated by Tenant, subtenants, patients,
occupants or the operators of the Leased Property 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.

 

1.89        “Rehabilitation
Hospital Properties”  shall
mean, collectively, the Property which includes the Facility known as New
England Rehabilitation Hospital in Woburn, Massachusetts, and the Property
which includes the Facility known as the Braintree Rehabilitation Hospital in
Braintree, Massachusetts.

 

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

 

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

 

1.92        “Security
Agreement”  shall
mean any security agreement made by Tenant or any assignee, subtenant or other 

 

16

 

transferee for the benefit of Landlord, as it or they may be amended,
restated, supplemented or otherwise modified from time to time.

 

1.93        “Senior
Housing Properties”  shall
mean, collectively, all of the Properties other than the Rehabilitation
Hospital Properties.

 

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

 

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

 

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

 

1.97        “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).

 

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

 

1.99        “Tenant”  shall have the meaning
given such term in the preambles to this Agreement and shall refer to each such
Entity comprising Tenant hereunder, whether the original Entities named herein
or any of their respective permitted successors or assigns, jointly and
severally with each and every other Entity or Entities then comprising Tenant
hereunder.

 

1.100              “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 and located at any
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

 

17

 

than any items included within the definitions of Fixtures and Leased
Personal Property.

 

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

 

1.102              “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.

 

1.103              “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.

 

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

 

1.105              “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 

 

18

 

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-32 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;

 

(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 (collectively, the “Leased Personal Property”);

 

(f)            all
of the Leased Intangible Property; and

 

19

 

(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 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
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 for such Property and shall expire on June 30, 2026.

 

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 two (2) consecutive renewal terms of ten (10) years
each (collectively, the “Extended Terms”).

 

20

 

Each Extended Term shall commence on the day
succeeding the expiration of the Fixed Term or the preceding Extended Term, as
the case may be.  All of the terms,
covenants and provisions of this Agreement shall apply to each Extended Term,
except that Tenant shall have no right to extend the Term beyond the expiration
of the Extended Terms.  If Tenant shall
elect to exercise either of the aforesaid options, it shall do so by giving
Landlord Notice thereof, which Notice shall be given not later than (a) June 30,
2024, in the case of the first Extended Term, or (b) June 30, 2034,
in the case of the second Extended Term, it being understood and agreed that
time shall be of the essence with respect to the giving of each such
Notice.  If Tenant shall fail to give
either such Notice, this Agreement shall automatically terminate at the end of
the Fixed Term or the preceding Extended Term, as applicable, 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 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 or the preceding Extended Term, as applicable, and
Tenant shall have no further option to extend the Term of this Agreement.

 

2.5          Limitations
on Term.  Notwithstanding
anything contained in Section 2.3 or Section 2.4 to the
contrary, the Term of this Agreement with respect to any Property shall not
extend beyond the term of any ground lease (including all renewals and
extensions thereof) pursuant to which Landlord leases such Property.

 

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. 

 

21

 

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 5.1.3(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 5.1.3(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 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.

 

22

 

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, with respect to the Senior Housing Properties, in an amount, not
less than zero, equal to four percent (4%) of Excess Net Patient Revenues with
respect to such Properties.

 

(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 each Senior Housing Property shall be calculated based
on Net Patient 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.

 

(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 Net
Patient Revenues for each Senior Housing 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, and (ii) a statement showing Tenant’s calculation of Additional
Rent due for such preceding Lease Year, or portion thereof, based on the Net
Patient 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 

 

23

 

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 Senior Housing Properties in accordance with its
usual and customary practices and in all material respects in accordance with
GAAP, which will accurately record all Net Patient 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 Net Patient Revenues for such Lease Year. 
Landlord, at its own expense, except as provided hereinbelow, shall have
the right, exercisable by Notice to Tenant, by its accountants or
representatives, to audit the information set forth in the Officer’s
Certificates 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.  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 compromised with Landlord,
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 

 

24

 

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.

 

(e)           Confidentiality.  Any proprietary information obtained by
Landlord with respect to Tenant pursuant to the provisions of this Agreement
shall be treated as confidential, except that such information may be used,
subject to appropriate confidentiality safeguards, 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.

 

(f)            Survival.  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 

 

25

 

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 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 

 

26

 

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.

 

(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)           FF&E Reserve Payment.  Tenant shall pay or cause to be paid all
FF&E Reserve Payments required pursuant to Section 5.1.2.

 

(e)           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.

 

(f)            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 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 

 

27

 

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 or 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 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

 

28

 

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.

 

3.5          Prorations, Etc.  It is understood and agreed that, with
respect to each Rehabilitation Hospital Property, (i) all items of
revenue, cost and expense, rights, remedies, claims, losses, damages,
liabilities and obligations with respect to the period prior to the applicable
Commencement Date for such Property shall be for the account of Landlord, (ii) Landlord
shall retain its right, title and interest in and to all unpaid accounts
receivable with respect to each such Facility which relate to the period prior
to the applicable Commencement Date, and Tenant shall promptly turn over any
such amounts collected or received by Tenant on account thereof, and (iii) in
the event that Tenant shall assume any liability for any period prior to the
applicable Commencement Date in connection with its participation in any Third
Party Payor Program with respect to either Rehabilitation Hospital Property,
Landlord shall indemnify and hold Tenant harmless from any such liability only
to the extent the same relates to the period commencing on October 26,
2004 and ending on the applicable Commencement Date.

 

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, (i) each Senior Housing Property as a skilled nursing/intermediate
care/independent living/assisted 

 

29

 

living/special
care facility as currently operated, and any uses necessary or incidental
thereto, subject to and in accordance with applicable Legal Requirements and (ii) each
Rehabilitation Hospital Property as a rehabilitation hospital, clinic or
professional level health or medical services facility, and any uses necessary
or incidental thereto, subject to and in accordance with all applicable Legal
Requirements.  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 any 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 5.1.3(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 and appropriate adjustments to Additional Rent (if
applicable) 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 

 

30

 

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 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 Interest Rate multiplied by
the net proceeds of sale received by Landlord. 
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 Interest Rate multiplied by the
projected net proceeds determined by reference to such Offer.

 

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 5.1.3(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, 

 

31

 

repair, alteration and restoration of any Property and the terms and
conditions of any ground lease affecting any Property, (b) perform (or
cause to be performed) 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 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
each Facility, 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 

 

32

 

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 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, (i) to
clean up and remove from and about such Property all Hazardous Substances
thereon, (ii) to contain and prevent any further release or threat of
release of Hazardous Substances on or about such Property and (iii) 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 

 

33

 

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 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 thereto of every kind 

 

34

 

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 any 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 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         FF&E
Reserve.  Certain
Entities comprising Landlord have previously established the FF&E Reserve
for each Senior Housing Property.  Tenant
shall, as Additional Charges, with respect to each Lease Year, or portion
thereof, deposit, or cause to be deposited, the FF&E Reserve Payment into
the FF&E Reserve for each Senior Housing Property, of which amounts shall
be applied to (a) replacements and renewals to such Property’s furniture,
furnishings, fixtures, soft goods, case goods, vehicles and equipment, but
specifically excluding any fixed asset supplies or software, and (b) routine
repairs and maintenance to the Facility located on such Property which are
normally capitalized under GAAP, such as exterior and interior repainting,
resurfacing building walls, floors, roofs and parking areas, and replacing
folding walls and the like, but which are not major repairs, alterations,
improvements, renewals or replacements to such Facility’s building’s structure
or exterior façade or to its mechanical, electrical, heating, ventilating, air
conditioning, plumbing or vertical transportation systems.  Any additional funds required for repairs,
maintenance, renovations and replacements to and at any Senior Housing Property
in excess of those on deposit for such Property in the applicable FF&E
Reserve shall be advanced in accordance with Section 5.1.3(b).

 

Tenant shall
prepare, with respect to each Senior Housing Property, an estimate (the “FF&E
Estimate”) of FF&E 

 

35

 

Reserve expenditures necessary at such Property during the ensuing
Fiscal Year, and shall submit such FF&E Estimate to Landlord, on or before December 1
of the preceding Lease Year, for its 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 the FF&E Estimate, such
FF&E Estimate shall be deemed approved by Landlord. Tenant shall,
consistent with the FF&E Estimate approved by Landlord, from time to time
make expenditures from the FF&E Reserve to be applied to the cost of
repairs, maintenance, renovations and replacements to and at such Property in
accordance with this Agreement provided that Tenant shall not materially
deviate from the FF&E Estimate approved by Landlord without the prior
approval of Landlord, which approval shall not be unreasonably withheld,
delayed or conditioned, except in the case of emergency where immediate action
is necessary to prevent imminent harm to person or property.  All amounts from the FF&E Reserve shall
be paid to Persons who are not Affiliated Persons of Tenant without mark-up or
allocated internal costs by Tenant or its Affiliated Persons.

 

On and before September 30,
2002, funds in the FF&E Reserve and all property purchased with those funds
shall be the property of Landlord and all FF&E Reserve Payments shall
constitute Additional Charges.  After September 30,
2002, funds deposited in the FF&E Reserve and all property purchased with
those funds deposited after September 30, 2002 shall be the property of
Tenant.  Upon the expiration or sooner
termination of this Agreement, funds in the FF&E Reserve and all property
purchased with those funds during the Term shall be paid, granted and assigned
to Landlord as Additional Charges.

 

Tenant agrees that
it will, from time to time, execute such reasonable documentation as may be
requested by Landlord and/or any Superior Mortgagee to assist Landlord and/or
any Superior Mortgagee in establishing or perfecting the Superior Mortgagee’s
security interest in Landlord’s residual interest in the funds which are in the
FF&E Reserve; provided, however, that no such documentation
shall contain any amendment to or modification of any of the provisions of this
Agreement.

 

5.1.3         Landlord’s
Obligations.

 

(a)           Except
as otherwise expressly provided in this Agreement, Landlord shall not, under
any circumstances, be 

 

36

 

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 to any Property at the expense of
Landlord pursuant to any law in effect on the applicable Commencement Date with
respect to such Property or thereafter. 
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 obligation to make such required
repair, renovation or replacement.

 

5.1.4         Nonresponsibility
of Landlord, Etc.   All materialmen, contractors, artisans,
mechanics and laborers and other persons contracting with Tenant with respect
to 

 

37

 

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 for 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, subject to the
completion of a transfer of ownership approved by the Massachusetts Department
of Public Health with respect to each Rehabilitation Hospital Property, vacate
and surrender the Leased Property or such Property (as applicable) to Landlord
in 

 

38

 

substantially the same condition as 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, ordinary wear and
tear excepted.

 

In addition, upon the expiration or earlier
termination of this Agreement with respect to any Senior Housing Property,
Tenant shall, at Landlord’s sole cost and expense, use its good faith efforts
to transfer to (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 located on
such Property as then operated.  If requested
by Landlord, Tenant shall continue to manage one or more of the Facilities
located at the Senior Housing Properties after the expiration of the Term with
respect to such Properties 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.

 

In addition, upon the expiration or earlier
termination of this Agreement with respect to either Rehabilitation Hospital
Property, Tenant shall, at Landlord’s reasonable cost and expense, use its best
efforts to complete the transfer of ownership of the hospital business and the
related hospital operations and records necessary for such operation 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 operation of the
hospitals at such Properties.  Until such
transfer of ownership is approved by the Massachusetts Department of Public
Health, it is understood that Tenant shall continue as owner and licensee of
the hospital business and the related hospital operations conducted at the
Facilities located at the Rehabilitation Hospital Properties after the
termination of this Agreement and for so long thereafter as is necessary for
Landlord or Landlord’s nominee to obtain all necessary licenses, operating
permits and other governmental authorizations. 
If a new tenant is not licensed upon the expiration or termination of
this Agreement in connection with a Default or Event of Default by Tenant, then,
during such post termination period, Tenant shall pay hold over rent in
accordance with Section 13. 
Otherwise, during such period, Minimum Rent with respect to each
applicable

 

39

 

Rehabilitation Hospital Property shall be payable in
an amount equal to seventy-five percent (75%) of the Minimum Rent attributable
to such Rehabilitation Hospital Property for the last month of the Term for the
first six (6) months after the expiration date and fifty percent (50%) of
such Minimum Rent thereafter.  If
necessary, Landlord and Tenant shall negotiate in good faith to agree upon the
Minimum Rent attributable to each Rehabilitation Hospital Property, it being
acknowledged and agreed that the Minimum Rent attributable to each
Rehabilitation Hospital Property shall equal the fair market rent for such
Rehabilitation Hospital Property.  If
Landlord and Tenant are unable to agree upon the Minimum Rent attributable to
either Rehabilitation Hospital Property within thirty (30) days following the
commencement of such negotiations, then the Minimum Rent attributable to such
Rehabilitation Hospital Property shall be determined by arbitration in
accordance with Section 22.

 

It is expressly understood and agreed that any
transfer with respect to a Rehabilitation Hospital Property pursuant to this Section 5.3
or any other Section of this Agreement is not a transfer of ownership of
the hospital and is not a transfer of the right, title and interest related to
the licenses granted by the Massachusetts Department of Public Health to
operate the Facilities thereon or any other permit, license or certification
used in the operation of such Facilities that is otherwise by its terms
non-transferable.  Any such change in
ownership and licensee shall be subject, in all events, to the approval of each
and every applicable Government Agency, including, without limitation, the
Massachusetts Department of Public Health, and Applicable Law, Tenant being
obligated to cooperate in and facilitate such approval process.

 

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 

 

40

 

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.

 

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 

 

41

 

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 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 

 

42

 

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 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 

 

43

 

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 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 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.

 

44

 

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 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,
upon Notice to Tenant, but not the obligation, 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, 

 

45

 

Tenant shall give
Landlord prompt Notice thereof.  Tenant
shall not self-insure (or permit any Person to self-insure).

 

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) 

 

46

 

shall be paid directly to
Landlord (subject to the provisions of Section 10.2) and all loss
adjustments with respect to losses 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 

 

47

 

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 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 

 

48

 

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 (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 

 

49

 

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.  With respect to any Senior
Housing Property, if Tenant is not required to restore and does not, in fact,
restore, Tenant shall pay over to Landlord the amount, if any, of insurance
proceeds received by Tenant with respect to Tenant’s Personal Property which
was purchased with funds from the FF&E Reserve.

 

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, and Tenant and Landlord shall seek the
Award for their interests in the applicable Property as provided in Section 11.5.

 

50

 

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 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, (d) architect’s
certificates, (e) conditional lien waivers of 

 

51

 

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 the preceding
paragraph, Tenant depositing the amount thereof with Landlord and (h) 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
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.

 

52

 

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 (other than
any such Tenant’s Personal Property which is located at a Senior Housing
Property and was purchased with the FF&E Reserve), 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.

 

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
(including, without limitation, funding of the FF&E Reserve) 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 

 

53

 

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

 

(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 

 

54

 

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 any or all of the
Entities comprising Tenant or any Guarantor; or

 

(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;

 

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.

 

55

 

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 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 Net Patient 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, 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 

 

56

 

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 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.

 

57

 

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 (provided that no such Notice
shall 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 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, including the
management of any Facility by Landlord or its designee, and Tenant hereby
irrevocably appoints, in the event of such election by Landlord, Landlord or
its designee as manager of any such Facility and its attorney in fact for such
purpose, irrevocably and coupled with an interest in the name and stead of
Tenant.  No such entry shall be deemed an
eviction of Tenant.  All 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.

 

12.6                        Trade Names.  If this Agreement is terminated with respect
to any Rehabilitation Hospital Property for any reason, Landlord shall, upon
the request of Tenant, cause the name of the business conducted upon such
Property to be changed to a name other than a Facility Trade Name or any
approximation or abbreviation thereof and sufficiently dissimilar to such name
as to be unlikely to cause confusion with such name; provided, however,
that Tenant shall not thereafter use a Facility Trade Name in the same market
in which such Property is located in connection with any business that competes
with such Property or the Facility located thereon.

 

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 

 

58

 

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.

 

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 

 

59

 

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 Tenant’s Personal
Property is subject (except that any such property which is located at a Senior
Housing Property and was purchased with the FF&E Reserve shall be
transferred to Landlord as provided in Section 5.1.2).  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 applicable 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 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 

 

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direct
or indirect Change in Control of any or all of the Entities comprising 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 (a) 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; (b) 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; (c) 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 discretion and which security
agreement shall constitute an Incidental Document hereunder; and (d) 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

 

61

 

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 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, 

 

62

 

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 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 at the Senior Housing Properties, (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 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, and provided
further that any and all such subleases are transferred and assigned to
Landlord as additional security for Tenant’s obligations hereunder.  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 

 

63

 

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 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 reports or
statements to Landlord:

 

(a)                                  within
forty-five (45) days after each of the first three fiscal quarters of any
Fiscal Year, the most 

 

64

 

recent
Consolidated Financials, accompanied by the 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
thirty (30) days after the end of each calendar month, a monthly report with
respect to each Rehabilitation Hospital Property, such report to include (i) a
balance sheet and a current month and year to date income statement, showing
each item of actual and projected income and expense, reflecting the operating
results of the Facility located at such Property, in each case prepared in
accordance with GAAP, (ii) a statement of capital expenditures prepared on
a Facility by Facility basis and on a combined basis with respect to all of the
Rehabilitation Hospital Properties, (iii) occupancy percentages, payor mix
and average rate on a Facility by Facility basis and on a combined basis with
respect to all of the Rehabilitation Hospital Properties, and (iv) such
additional information as Landlord may from time to time reasonably require,
accompanied by a Financial Officer’s Certificate.

 

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

 

(e)                                  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 Net Patient
Revenues, Tenant 

 

65

 

shall not be
required to provide audited financials with respect to any individual Facility
unless Landlord shall agree to pay the costs thereof;

 

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

 

(g)                                 promptly,
upon Notice from Landlord, such other information concerning the business,
financial condition and affairs of Tenant or any Guarantor 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                        Reimbursement,
Licensure, Etc.  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 each 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 

 

66

 

participation of
Tenant as Landlord may reasonably request from time to time.

 

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) that 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

 

67

 

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

 

68

 

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 “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 5.1.3(b) or
with respect to any insurance or 

 

69

 

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.  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 5.1.3(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, 

 

70

 

(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 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.  None of the
Entities comprising Tenant shall engage in any business other than the leasing
and operation of its Properties (including any incidental or ancillary business
relating thereto) and each Entity comprising 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 

 

71

 

Fifty Thousand Dollars
($250,000), or any event or condition 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; or

 

(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);
or

 

72

 

(g)                                 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 and Section 21.5, 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 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,
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 

 

73

 

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), no Entity comprising Tenant shall (a) 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, (b) merge into or with or
consolidate with any other Entity, or (c) 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                 Notice of Change of Name, Etc. 
Tenant shall give prompt notice to Landlord of any change in (a) the
name (operating or otherwise) of any Entity comprising Tenant or any Facility, (b) the
number of beds in any bed category for which any Facility is licensed or the
number of beds in any bed category available for use at any Facility (except
for changes in the election made with respect to the beds for reimbursement
maximization purposes), and (c) the patient and/or child care services
that are offered at any Facility.

 

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.

 

74

 

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
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.

 

75

 

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 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 

 

76

 

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 all or any portion of 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, 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 

 

77

 

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.

 

(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]

 

78

 

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.  Each Entity comprising Tenant hereunder shall
be jointly and severally liable for the payment and performance of each and
every obligation and liability of Tenant hereunder.

 

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

 

79

 

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

 

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

 

80

 

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.

 

23.17                 Original
Leases.  Landlord and Tenant acknowledge
and agree that this Agreement amends and restates the Original Leases in their
entirety 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 Leases shall continue to
govern the rights and obligations of the parties with respect to the Leased
Property prior to the date of this Agreement.

 

81

 

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

 

	
   

  	
  LANDLORD:

  
	
   

  	
   

  
	
   

  	
  CCC
  FINANCING I TRUST,

  
	
   

  	
  CCC OF
  KENTUCKY TRUST,

  
	
   

  	
  CCC
  OHIO HEALTHCARE TRUST,

  
	
   

  	
  CCC
  PUEBLO NORTE TRUST, each

  
	
   

  	
  a Maryland
  business trust

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Richard
  A. Doyle

  
	
   

  	
   

  	
   Richard A.
  Doyle

  
	
   

  	
   

  	
   Treasurer
  and Chief Financial

   Officer of each of

  
	
   

  	
   

  	
   the
  foregoing entities

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CCC
  INVESTMENTS I, L.L.C.,

  
	
   

  	
  CCCP
  SENIOR LIVING LLC,

  
	
   

  	
  CCDE
  SENIOR LIVING LLC,

  
	
   

  	
  CCFL
  SENIOR LIVING LLC,

  
	
   

  	
  CCOP
  SENIOR LIVING LLC,

  
	
   

  	
  CCSL
  SENIOR LIVING LLC,

  
	
   

  	
  LTJ
  SENIOR COMMUNITIES LLC, each

  
	
   

  	
  a Delaware
  limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Richard
  A. Doyle

  
	
   

  	
   

  	
   Richard A.
  Doyle

  
	
   

  	
   

  	
   Treasurer
  and Chief Financial

   Officer of each of

  
	
   

  	
   

  	
   the foregoing
  entities

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CCC
  FINANCING LIMITED, L.P.,

  
	
   

  	
  a Delaware
  limited partnership

  
	
   

  	
   

  
	
   

  	
  By:

  	
  CCC RETIREMENT
  TRUST,

  
	
   

  	
   

  	
  its General
  Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
    /s/ Richard
  A. Doyle

  
	
   

  	
   

  	
   

  	
   Richard A.
  Doyle

  
	
   

  	
   

  	
   

  	
   Treasurer
  and Chief Financial

   Officer

  

 

82

 

	
   

  	
  CCC
  RETIREMENT COMMUNITIES II, L.P.,

  
	
   

  	
  a Delaware
  partnership

  
	
   

  	
   

  
	
   

  	
  By:

  	
  CRESTLINE
  VENTURES LLC,

  
	
   

  	
   

  	
  its General
  Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
    /s/ Richard
  A. Doyle

  
	
   

  	
   

  	
   

  	
   Richard A.
  Doyle

  
	
   

  	
   

  	
   

  	
   Treasurer
  and Chief Financial

   Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HRES1
  PROPERTIES TRUST,

  
	
   

  	
  a Maryland real
  estate investment trust

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Richard
  A. Doyle

  
	
   

  	
   

  	
  Richard A. Doyle

  
	
   

  	
   

  	
  Treasurer and
  Chief Financial

  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LEISURE
  PARK VENTURE LIMITED

  PARTNERSHIP, a Delaware limited

  partnership

  
	
   

  	
   

  
	
   

  	
  By:

  	
  CCC LEISURE PARK
  CORPORATION,

  
	
   

  	
   

  	
  its General
  Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
    /s/ Richard
  A. Doyle

  
	
   

  	
   

  	
   

  	
   Richard A.
  Doyle

  
	
   

  	
   

  	
   

  	
   Treasurer
  and Chief Financial

   Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PANTHER
  HOLDINGS LEVEL I, L.P.,

  
	
   

  	
  a Delaware
  limited partnership

  
	
   

  	
   

  
	
   

  	
  By:

  	
  PANTHER GENPAR
  TRUST,

  
	
   

  	
   

  	
  its General
  Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
    /s/ Richard
  A. Doyle

  
	
   

  	
   

  	
   

  	
   Richard A.
  Doyle

  
	
   

  	
   

  	
   

  	
   Treasurer
  and Chief Financial

   Officer

  
						

 

83

 

	
   

  	
  TENANT:

  
	
   

  	
   

  
	
   

  	
  FS
  COMMONWEALTH LLC,

  
	
   

  	
  FS
  PATRIOT LLC,

  
	
   

  	
  each a Maryland
  limited liability

  company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Travis
  K. Smith

  
	
   

  	
   

  	
  Travis K. Smith

  
	
   

  	
   

  	
  Vice President
  of both

  
	
   

  	
   

  	
  of the foregoing
  entities

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  FS
  TENANT HOLDING COMPANY TRUST,

  
	
   

  	
  FS
  TENANT POOL III TRUST,

  
	
   

  	
  each  a Maryland business trust

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Travis
  K. Smith

  
	
   

  	
   

  	
  Travis K. Smith

  
	
   

  	
   

  	
  Vice President
  of both

  
	
   

  	
   

  	
  of the foregoing
  entities

  

 

84

 

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

 

EXHIBITS A-1 through A-32 (Land)

 

85

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