THIRD AMENDED AND RESTATED MASTER LEASE AGREEMENT

This THIRD AMENDED AND RESTATED MASTER LEASE AGREEMENT (this agreement, as it may be amended, restated, renewed, supplemented, extended or replaced by the parties hereto from time to time, this “ Lease ”) is made and entered into as of July 25, 2008 (the “ Effective Date ”), between VENTAS REALTY, LIMITED PARTNERSHIP , a Delaware limited partnership (“ VR Landlord ”), and VENTAS FRAMINGHAM, LLC , a Delaware limited liability company (“ Farmingham Landlord ”, and together with VR Landlord, and their respective successors and assigns, individually and collectively, “ Landlord ”), and each of the entities identified on Schedule 1 attached hereto, as the same may be modified (including the addition of other tenants) from time to time pursuant to Section  17 , Section 39 or Section 40 of this Lease (together with their permitted successors and assigns, individually and collectively, “ Tenant ”).

WHEREAS , Landlord owns the real property described by the common addresses set forth on Exhibit A attached hereto and legally described in Exhibits A-1 through A-14 attached hereto; and

WHEREAS , SW Assisted Living, LLC; Summerville at Mentor, LLC; Summerville at Heritage Place, LLC; Summerville at Barrington Court LLC; Summerville at Atherton Court LLC; Summerville at Roseville Gardens LLC; and Summerville at Golden Pond LLC (collectively, the “ Mentor Tenants ”) entered into that certain Second Amended and Restated Master Lease Agreement dated as of April 20, 2006 (the “ Mentor Master Lease ”), pursuant to which VR Landlord leased to the Mentor Tenants those certain Facilities set forth, along with the corresponding Tenant, on Schedule 1 as Facility Nos. 1 through 7 (collectively, the “ Mentor Properties ”) located on the real property legally described in, respectively, Exhibits A-1 through A-7 attached hereto; and

WHEREAS , Summerville 3, LLC; Summerville 5 LLC; Summerville 14 LLC; Summerville 15 LLC; Summerville 16 LLC; and Summerville 17 LLC (collectively, the “ Farm Pond Tenants ”) entered into that certain Second Amended and Restated Master Lease Agreement – Farm Pond dated as of March 24, 2006 (the “ Farm Pond Master Lease ”), pursuant to which Landlord leased to the Farm Pond Tenants those certain Facilities set forth, along with the corresponding Tenant, on Schedule 1 as Facility Nos. 8 through 14 (collectively, the “ Farm Pond Properties ”) located on the real property legally described in, respectively, Exhibits A-8 through A-14 attached hereto; and

WHEREAS , Summerville Senior Living, Inc., a Delaware corporation (“ Summerville ”, and together with its permitted successors and assigns, the “ Previous Guarantor ”) entered into that certain Guaranty dated as of April 20, 2006, and that certain Second Amended and Restated Indemnification Agreement dated as of March 24, 2006 (collectively, the “ Previous Guaranties ”), each for the benefit of Landlord; and

WHEREAS , Landlord alleged that events of default arose under the Mentor Master Lease, the Farm Pond Master Lease and the Previous Guaranties as set forth in that certain letter (the “ Forbearance Letter ”) dated May 10, 2007 from VR Landlord to the Previous Guarantor

(the alleged events of default, as described in the Forbearance Letter, are referred to herein as the “ Forbearance Events ”); and

WHEREAS , Previous Guarantor, formerly the indirect owner of each Tenant, and certain other persons and entities entered into that certain Agreement and Plan of Merger dated as of March 29, 2007 with Emeritus Corporation (“ Emeritus ,” and collectively with its affiliates, successors and assigns, the “ Purchaser ”) pursuant to which, through a series of transactions, Purchaser acquired Previous Guarantor and thereby, indirectly, all of the interests of the Previous Guarantor, direct and indirect, in each Tenant (the “ Acquisition ”); and

WHEREAS , the Mentor Master Lease created certain option rights relative to the Mentor Properties and the Farm Pond Master Lease created certain right of first offer rights relative to the Farm Pond Properties, but such option and right of first offer rights were personal to Tenant, not transferable and not applicable upon the occurrence of an Event of Default under such leases; and

WHEREAS , Landlord is willing to waive any claim of default with respect to the Forbearance Events and allow the aforesaid option and right of first offer rights to remain in this Lease and not to be terminated, notwithstanding the Acquisition and the existence of the Forbearance Events, subject to Tenant’s entry into, and the terms and conditions of, this Lease; and

WHEREAS , Landlord and Tenant desire to combine, amend and restate the Mentor Master Lease and Farm Pond Master Lease in order to document Landlord’s waiver of any claim of default with respect to the Forbearance Events, as requested by Previous Guarantor and Purchaser, to document certain terms that Landlord will require as consideration for its aforesaid waiver and as conditions precedent thereto and otherwise as a result of the Forbearance Events and to document certain other agreements between Landlord and Tenant relative to the combination of the Mentor Master Lease and Farm Pond Master Lease; and

WHEREAS , Landlord desires to lease the Premises to Tenant, and Tenant desires to lease the Premises from Landlord; and

WHEREAS , as of the Effective Date, Emeritus (together with its permitted successors and assigns, the “ Emeritus Guarantor ”) is entering into a Guaranty for the benefit of Landlord (as amended, restated, renewed, supplemented, extended or replaced from time to time, the “ Emeritus Guaranty ”) in the form attached hereto as Exhibit L ; and

NOW, THEREFORE, Landlord and Tenant hereby agree upon the leasing and demising of the Premises by Landlord to Tenant, and combine, amend and restate the Mentor Master Lease and the Farm Pond Master Lease, upon the terms and conditions of this Lease.

1.   Leased Property; Term; Joint and Several Liability; Limitation on Rights .

1.1   Leased Property .  Effective as of the Commencement Date applicable to each Leased Property as set forth on Schedule 1 , upon and subject to Section 1.3 below and to the other terms and conditions hereinafter set forth, Landlord hereby leases to Tenant, and Tenant hereby leases from Landlord, all of the following:

1.1.1   Land .  The parcels of land more particularly described in Exhibits A-1 through A-14 attached hereto, together with all easements and interests appurtenant thereto (collectively, the “ Land ”; each parcel of Land described in such Exhibits A-1 through A-14 , as amended from time to time, together with such appurtenances with respect to such parcel, being referred to herein as a “ Leased Land ”);

1.1.2   Leased Improvements .  All buildings, structures, Fixtures (as hereinafter defined) and other improvements of every kind, including, but not limited to, alleyways, sidewalks, utility pipes, conduits and lines, parking areas and roadways appurtenant to such buildings and structures situated upon the Land as of the date hereof and Alterations upon the Land (collectively, the “ Leased Improvements ”);

1.1.3   Intangible Property .  The interest, if any, of Landlord in and to any of the following intangible property owned by Landlord in connection with the Land and the Leased Improvements (collectively, the “ Intangibles ”): (i) to the extent assignable or transferable, the interest, if any, of Landlord in and to each and every guaranty and warranty concerning the Leased Improvements, including, without limitation, any roofing, air conditioning, heating, elevator and other guaranty or warranty relating to the construction, maintenance or repair of the Leased Improvements or any portion thereof; and (ii) the interest, if any, of Landlord in and to all Authorizations to the extent the same can be assigned or transferred in accordance with applicable law; and

1.1.4   Landlord’s Personal Property .  All tangible personal property owned by Landlord and located at the Land or the Leased Improvements (together with any replacements thereof pursuant to Section 6.3 below, “ Landlord’s Personal Property ”).

SUBJECT, HOWEVER, to the Permitted Encumbrances (as hereinafter defined).

1.2   Term .  Landlord hereby leases the Premises to Tenant for (i) an initial term (the “ Initial Term ”), as to each Leased Property, commencing as of the Commencement Date applicable to such Leased Property as set forth on Schedule 1 and expiring at midnight on the expiration date set forth on Schedule 1 as to such Leased Property (the “ Initial Expiration Date ”) and (ii) as to each Leased Property, the Extended Terms provided for in Section 43 , unless this Lease is sooner terminated as provided herein.  In the case of each Leased Property, the Initial Term applicable thereto, as extended pursuant to Section 43 hereof and as revised as to such Leased Property pursuant to any applicable Landlord Contraction(s) (as defined below), is referred to as the “ Term ” for such Leased Property.  Landlord shall have the limited right to contract the Term (each, a “ Landlord Contraction ”) as to each Leased Property in order to facilitate an Operational Transfer pursuant to Section 37 .   In the case of each Leased Property, the Initial Expiration Date applicable thereto, as extended pursuant to Section  43 hereof and as revised as to such Leased Property pursuant to any applicable Landlord Contraction(s), is herein referred to as the “ Expiration Date ” for such Leased Property.  Landlord and Tenant acknowledge and agree that (i) as provided on Schedule 1 and/or on account of any Landlord Contraction(s) as to a particular Leased Property(ies), individual Leased Properties will have applicable thereto different Expiration Dates and (ii) Tenant may be obligated to operate a particular Leased Property(ies) beyond the Expiration Date(s) applicable thereto in accordance with Section 37 .

1.3   Joint and Several Liability; Limitation on Rights .  Notwithstanding anything contained herein to the contrary, if there is at any time more than one person or entity constituting the “Tenant” hereunder, each such person or entity shall be jointly and severally liable for the payment and performance of all obligations and liabilities of Tenant hereunder, including, without limitation, the obligations and liabilities of each other Tenant hereunder, including, without limitation, each such other Tenant’s obligation to pay Rent hereunder; provided, however, that, without limitation of the joint and several nature of the obligations of each Tenant hereunder, the possessory and leasehold rights that are created by this Lease shall be limited and confined in the case of each Tenant to the applicable Facility(ies) identified as being leased to and to be operated by such Tenant on Schedule 1 attached hereto, the Leased Land on which such Facility is located and the Intangibles and Landlord’s Personal Property that specifically relate to such Leased Land.  If there is at any time more than one person or entity constituting “Landlord” hereunder, then, subject to and without limitation of Section  31 and Section  38 hereof, each such person or entity shall be jointly and severally liable for the payment and performance of all obligations and liabilities of Landlord hereunder.

1.4   Medicare; Medicaid; CON .  Tenant acknowledges that, at present, assisted living facilities and independent living facilities do not participate in Medicare or, except in the case of the Golden Pond Property, Medicaid, and are not regulated or inspected by Governmental Authorities or other Persons administering Third Party Payor Programs to the same degree and extent as hospitals and/or skilled nursing facilities (e.g. through the issuance of certificates of need, periodic surveys of the quality of care, issuance of deficiency reports, assignment of deficiency ratings of a particular scope or severity or constituting immediate jeopardy events, etc.), and agrees that, in the event that, during the Term, any of the Leased Properties determines to participate in Medicare or, other than the Golden Pond Property, Medicaid, and/or becomes subject to increased levels of regulation or inspection by Governmental Authorities or any of the other aforesaid Persons, Landlord shall be entitled from time to time to impose, and Tenant shall be obligated to comply with, such additional covenants and other obligations relating to the Leased Properties and Tenant’s leasing and operation thereof as Landlord or its Affiliates customarily impose upon tenants entering into new leases with Landlord or its Affiliates for properties like the Leased Properties and/or as Landlord from time to time determines, in its reasonable discretion, are consistent with the practices of commercial landlords entering into new leases for properties like the Leased Properties.

1.5   Amended and Restated Lease .  This Lease combines, amends and restates the Mentor Master Lease and Farm Pond Master Lease in their entirety and shall govern and control as to all events, acts, omissions, liabilities and obligations first occurring, arising or accruing from and after the Effective Date.

1.5.1   Without limitation of the other provisions of this Section  1.5 , the terms of the Mentor Master Lease and the Farm Pond Master Lease shall continue to govern and control as to all events, acts, omissions, liabilities and obligations occurring, arising and accruing prior to the Effective Date, provided that, in the event that (i) prior to the Effective Date, (a) a default or breach of the terms of the Mentor Master Lease or the Farm Pond Master Lease shall have occurred, (b) any act, event or omission to act shall have occurred, or circumstance shall have arisen, relative to any Legal Requirement, Authorization, or Permitted Encumbrance affecting any of the Leased Properties that is or is potentially adverse to Landlord or Tenant, or (c) any casualty or condemnation shall have occurred relative to any of the Leased

Properties, and (ii) as of the Effective Date, such default or breach remains uncured or such act, event, omission to act or circumstance continues to be adverse or potentially adverse to Landlord or Tenant or such casualty or condemnation has not been fully repaired and restored with all claims on account thereof finally settled and paid and with the affected Leased Property re-opened for use in accordance with its Primary Intended Use and the other provisions of this Lease, the provisions of this Lease relative to cure periods, whether and when an Event of Default shall be deemed to have occurred, rights and remedies on account of any breach or default or Event of Default, contest rights, Lease enforcement rights, casualty, condemnation, insurance and indemnification shall govern and control.  Subject to the foregoing, (x) any breach or default that occurred, arose or accrued under the Mentor Master Lease or the Farm Pond Master Lease prior to the Effective Date and was not cured prior to such date is, and shall be deemed to be, a breach or default under this Lease, to which the cure periods, rights and remedies and other provisions of this Lease referenced in the preceding sentence shall be applicable, and (y) with respect to any breach or default described in subsection (x) above, although the cure periods, rights and remedies and other provisions of this Lease referenced in the preceding sentence shall be applicable, the portion of any cure period under the Mentor Master Lease or the Farm Pond Master Lease that has elapsed as of the Effective Date shall be counted in determining whether and when the applicable cure period under this Lease has expired (for example, if (A) a breach or default occurs under the Mentor Master Lease prior to the Effective Date, (B) such breach or default remains uncured as of the Effective Date, (C) Tenant receives from Landlord a written notice of default relative thereto prior to the Effective Date, and (D) by the terms of this Lease, for a breach or default of the nature assumed in this example a cure period of thirty (30) days following Tenant’s receipt of written notice of default is allowed prior to such breach or default becoming an Event of Default under this Lease, then, as to such breach or default, an Event of Default shall occur if such breach or default is not cured on or prior to the thirtieth (30th) day following Tenant’s receipt of the aforesaid notice of default, notwithstanding that such notice was received prior to the Effective Date).

1.5.2   Each of Landlord and Tenant hereby represents and warrants to the other party that, as of the Effective Date, it has not issued to such other party any notice of default under this Lease by such other party that has not been cured or, as and to the extent set forth in Section  24.1.8 , waived by the issuing party.

2.   Definitions .  For all purposes of this Lease, except as otherwise expressly provided or unless the context otherwise requires, (i) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with GAAP, (ii) all references in this Lease to designated “Sections”, “Subsections” and other subdivisions are to the designated Sections, Subsections and other subdivisions of this Lease, (iii) the words “herein”, “hereof” and “hereunder” and other words of similar import mean and refer to this Lease as a  whole and not to any particular Section, Subsection or other subdivision, (iv) the terms defined in Exhibit B attached hereto have the meanings assigned to them in such exhibit and include the plural as well as the singular and (v) without limitation of the definition of “Unit” set forth in Exhibit B attached hereto, all references in this Lease to “licensed beds” or words of similar import mean and refer, in the case of each Leased Property, to licensed beds or licensed units, and all references in this Lease to “operational beds” or words of similar import mean and refer, in the case of each Leased Property, to operational beds or operational units, in each case as applicable depending upon, and to the extent, if any, affected by, the particular licensing measure used by the responsible Governmental Authorities in regulating Facilities operated for the Primary

Intended Use that is applicable to such Leased Property (e.g. in some states, assisted living facilities are issued licenses for a specified number of beds and in other states they are issued licenses for a specified number of units).

3.   Rent .

3.1   Fixed Rent .

3.1.1   Rental Payments .   Tenant shall pay to Landlord, in advance and without demand, on or prior to the fifth (5th) day of each calendar month (or the next Business Day, if such 5 ^th day is not a Business Day) during the Term, in lawful money of the United States of America, by wire transfer and pursuant to the wiring instructions attached hereto as Schedule 3.1.1 , or at such place, by such means or to such Person(s) as Landlord from time to time may designate in writing, the Fixed Rent (and Additional Rent in those instances described in Section 3.3 below) payable in respect of such month.  Landlord may, by written notice to Tenant at any time and from time to time, elect to require that Rent (or portions thereof designated by Landlord) owing hereunder be paid to a lock box.  Fixed Rent (and Additional Rent in those instances described in Section 3.3 below)   shall be paid in equal, consecutive monthly installments; provided , however , that the last monthly payment of Fixed Rent (and the aforesaid Additional Rent) shall be prorated as to any partial month.

3.1.2   Rental Amounts .  Fixed Rent as of the Effective Date shall equal Fifteen Million Nine Hundred Sixty Seven Thousand One Hundred Thirty Eight and 2/100 Dollars ($15,967,138.02) in aggregate, and, without limitation of Section 1.3 or Section 28 hereof, such Fixed Rent shall be allocated or attributed for certain purposes of this Lease to the Leased Properties in the respective amounts set forth in Schedule 3.1.2 attached hereto.  Commencing upon the date, as to each Tenant and its respective Leased Property, set forth in Schedule 3.1.2 (the “ Rent Escalation Date ”), and upon the applicable Rent Escalation Date of each calendar year thereafter during the applicable Term, the Fixed Rent applicable to each Leased Property for the ensuing Lease Year shall be an amount equal to the sum of (x) the Prior Period Fixed Rent applicable to such Lease Year and such Leased Property, plus (y) the product of (a) the Prior Period Fixed Rent applicable to such Lease Year and such Leased Property and (b) provided the Rent Escalation Condition has been satisfied with respect to such Lease Year for the Premises, the amount equal to the greater of:

3.1.2.1   In the case of any Lease Year of the Initial Term of this Lease as it applies to any Leased Property, (1) the percentage amount applicable to such Leased Property as set forth on Schedule 3.1.2 (the “ Minimum Rent Escalation Amount ”)   or (2) seventy-five percent (75%) of the CPI Increase, expressed as a percentage, for the Lease Year for which such calculation is being performed.

3.1.2.2   In the case of any Lease Year of the first or second Extended Term of this Lease as it applies to any Mentor Property, (1) the Minimum Rent Escalation Amount or (2) seventy-five percent (75%) of the CPI Increase, expressed as a percentage, for the Lease Year for which such calculation is being performed, provided, however, that, in the case of the first Lease Year of any Extended Term of this Lease as it applies to any Mentor Property, the Fixed Rent for such Lease Year shall equal the greater of (i) the aforesaid sum of (x) plus (y) referenced above (with the product referenced in (y) calculated as

described in this Section  3.1.2.2 ) for such Lease Year or (ii) the Fair Market Rental as determined in accordance with Section 43.2 and Section 43.3 hereof.

3.1.2.3   In the case of any Lease Year of the first or second Extended Term of this Lease as it applies to any Farm Pond Property, (1) the Minimum Rent Escalation Amount or (2) seventy-five percent (75%) of the CPI Increase, expressed as a percentage, for the Lease Year for which such calculation is being performed, provided, however, that (A) in the case of the first Lease Year of the first Extended Term of this Lease as it applies to any Farm Pond Property, the Fixed Rent for such Lease Year shall equal one hundred five percent (105%) of the Prior Period Fixed Rent for such Lease Year, and (B) in the case of the first Lease Year of the second Extended Term of this Lease as it applies to any Farm Pond Property, the Fixed Rent for such Lease Year shall equal the greater of (i) one hundred three percent (103%) of the Prior Period Fixed Rent for such Lease Year or (ii) the Fair Market Rental as determined in accordance with Section  43.2   and Section  43.3   hereof.

3.1.2.4   Notwithstanding anything contained herein to the contrary, if the Rent Escalation Condition fails with respect to any one or more Lease Years applicable to any Leased Property(ies), the Fixed Rent determined for the next Lease Year with respect to which the Rent Escalation Condition is satisfied shall be determined as if the Rent Escalation Condition had been satisfied for all previous Lease Years and as to all Leased Properties and the Fixed Rent had been escalated pursuant to, and in accordance with, the terms of this Section  3.1.2   for all prior Lease Years and as to all Leased Properties.  By way of illustration only, if:  (I) the Rent Escalation Condition has failed for both the Lease Year commencing as of October 1, 2009 and the Lease Year commencing as of October 1, 2010; but (II) the Rent Escalation Condition is satisfied for the Lease Year commencing as of October 1, 2011, the Fixed Rent for the Lease Year commencing as of October 1, 2011 shall be determined, and the Fixed Rent for all other Lease Years shall be adjusted in mid-Lease Year as of October 1, 2011, as if the Rent Escalation Condition for the two preceding Lease Years commencing October 1 (and all other prior Lease Years commencing on a different calendar date) had been satisfied as to all Leased Properties such that, for example, the Fixed Rent for the Lease Year commencing as of October 1, 2011 shall include, and be determined on the basis of, the escalations for all prior Lease Years which would have occurred pursuant to this Section 3.1.2   had the Rent Escalation Condition for all prior Lease Years and as to all Leased Properties been satisfied.

3.1.3   Fixed Rent Determinations .  Promptly after the publication of the Cost of Living Index for the month that is one (1) month prior to the month containing the last day of any Lease Year (e.g., the month of August, in the case of a Lease Year ending on September 30), Landlord shall calculate the CPI Increase and the Fixed Rent applicable to each Leased Property that has its applicable Lease Year ending on the aforesaid last day for the next Lease Year and submit such determination of Fixed Rent applicable to such Leased Property(ies) for Tenant’s approval, which determination shall be deemed approved, absent written notice from Tenant setting forth with reasonable specificity and detail any manifest errors in such determination by Landlord within thirty (30) days after its submission to Tenant.  In the event Landlord and Tenant are unable to determine Fixed Rent applicable to such Leased Property(ies) for any Lease Year on or prior to the commencement of such Lease Year, Tenant shall pay Fixed Rent applicable to such Leased Property(ies) for such Lease Year assuming an increase over the Prior Period Fixed Rent applicable to such Lease Year and such Leased Property(ies) calculated

pursuant to the applicable Minimum Rent Escalation Amount for each such Leased Property until the correct Fixed Rent applicable to such Leased Property(ies) is determined for such Lease Year.  If the Fixed Rent applicable to such Leased Property(ies) ultimately determined for any such Lease Year exceeds the assumed amount, Tenant shall pay any deficiency, together with interest thereon at the Prime Rate, with the first installment of Fixed Rent owing after such determination is made.  If the Fixed Rent applicable to such Leased Property(ies) ultimately determined for any such Lease Year is less than the assumed amount, any excess amounts paid by Tenant on account of the Fixed Rent for such Lease Year shall be credited against the next installment(s) of Fixed Rent due and owing hereunder.  At either party’s written request, following the determination of Fixed Rent for a particular Lease Year and applicable to a particular Leased Property(ies), both parties shall, not later than five (5) Business Days after the non-requesting party’s receipt of such request, execute and enter into a written instrument memorializing the amount of the Fixed Rent for the Premises and the respective amounts thereof that are applicable to each Leased Property.

3.2   Additional Rent .  In addition to Fixed Rent, Tenant shall pay and discharge as and when due and payable the following (collectively “ Additional Rent ”) (any costs or expenses paid or incurred by Landlord on behalf of Tenant that constitute Additional Rent shall be reimbursed by Tenant to Landlord within fifteen (15) days after the presentation by Landlord to Tenant of invoices therefor):

3.2.1   Impositions .  Subject to the escrow provisions contained in Section 3.3   below and to the provisions of Section  13 below, Tenant shall pay all Impositions when due, and regardless of the period to which they relate, and in any event before any fine, penalty, interest or cost may be added for non-payment, such payments to be made directly to the taxing authorities where feasible.  Tenant shall, promptly upon request, furnish to Landlord copies of official receipts or other satisfactory evidence of 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 same (and any accrued interest on the unpaid balance of such Imposition) in installments (provided no such installments shall extend beyond the Term) and, in such event, shall pay such installments during the Term before any fine, penalty, premium, further interest or cost may be added thereto.

3.2.2   Utility Charges .  Tenant shall pay any and all charges for electricity, power, gas, oil, water, sanitary and storm sewer, refuse collection, medical waste disposal and other utilities used or consumed in connection with each Leased Property during the Term.  In the event Landlord is billed directly by any utility company for any utilities or services supplied to Tenant during the Term, Landlord shall send Tenant the bill and, provided Tenant receives the bill on a timely basis from Landlord, Tenant shall pay the same before it is due.  Landlord shall have no obligation or liability with respect to any interruption or failure in the supply of any such utilities.

3.2.3   Insurance Premiums .  Tenant shall pay all premiums for the insurance coverage required to be maintained pursuant to Section  14   hereof.

3.2.4   Other Charges .  Tenant shall pay all other amounts, liabilities, obligations, costs and expenses paid or incurred with respect to the ownership, repair, replacement, restoration, maintenance and operation of the Premises.

3.2.5   Late Payment of Rent .  If any installment of Fixed Rent or Additional Rent (but only as to those Additional Rent payments that are payable directly to Landlord or Landlord’s agent or assignee) shall not be paid on its due date, Tenant shall pay to Landlord for such overdue installment, on demand, (i) interest computed at the Overdue Rate on the amount of such installment, from the due date of such installment to the date of payment thereof, plus (ii) an administrative fee of One Thousand Dollars ($1,000.00).  In the event of any failure by Tenant to pay any Additional Rent when due, Tenant shall in addition promptly pay and discharge, as Additional Rent, every fine, penalty, interest and cost that may be added for non-payment or late payment of such items.

3.2.6   Consent Expenses .  Tenant shall pay, as Additional Rent, on behalf of Landlord, or reimburse Landlord for, any and all actual, reasonable out-of-pocket costs or expenses paid or incurred by Landlord, including, without limitation, reasonable attorneys’ fees, in connection with any of the following activities undertaken by or on behalf of Landlord under this Lease:  (i) any inspections performed by Landlord or any of Landlord’s Representatives pursuant to any inspection rights granted hereunder relative to any restoration work performed on account of any Casualty or Condemnation; (ii) any inspections performed by Landlord or any of Landlord’s Representatives of one or more Leased Properties pursuant to any inspection rights granted hereunder (other than the inspection rights referenced in subsection (i) above) (provided, however, that Tenant’s payment/reimbursement obligation pursuant to this subsection (ii) shall be limited to Two Thousand Dollars ($2,000.00) in the aggregate each calendar year during the Term); (iii) the review, execution, negotiation or delivery of any consent, waiver, estoppel, subordination agreement or approval requested of Landlord by Tenant hereunder, including, without limitation, any request for consent to Alterations, any so-called “landlord’s waiver”, or the negotiation or approval of the terms of, or any instruments associated with, any AR Financing; (iv) the review by Landlord or Landlord’s Representatives of any Plans and Specifications or Restoration Plans and Specifications; (v) the review by Landlord or Landlord’s Representatives of any request by Tenant for any other approval or consent hereunder, or any waiver of any obligation of Tenant hereunder; (vi) any assistance provided by Landlord in connection with a permitted contest pursuant to Section  13 ; and (viii) any other negotiation, request or other activity comparable to any of the foregoing (collectively, such expenses, “ Consent Expenses ”).  Tenant shall reimburse Landlord for (or pay on behalf of Landlord) any Consent Expenses within twenty (20) days after the presentation by Landlord to Tenant of invoices therefor.

3.2.7   Further Obligations .  Without limitation of Tenant’s other obligations under this Section 3.2 , in the case of the Barrington Court Property, the Atherton Court Property, the Somer Park Property, or the Golden Pond Property, Tenant shall pay and discharge, or cause to be paid and discharged, as and when due and payable any Impositions, utility charges of the nature referenced in Section 3.2.2 above, insurance premiums and/or other amounts, liabilities, obligations, costs and expenses relating to such Leased Property, in each of the foregoing cases to the extent the same relate to periods prior to the date such Leased Property became part of the Premises.

3.3   Escrow Deposits .  As of the Effective Date, Tenant shall pay such additional amounts as are necessary pursuant to this Section  3.3 so that Tenant is in compliance with this Section  3.3 as of the Effective Date.

3.3.1   Escrow .  Tenant shall, on the fifth (5 ^th ) day of each calendar month during the Term applicable to each Leased Property (or the next Business Day, if such 5 ^th day is not a Business Day), pay to and deposit with Landlord a sum equal to (i) one twelfth (1/12th) of the Impositions to be levied, charged, filed, assessed or imposed upon or against such Leased Property during the twelve (12) months from and after the Effective Date (or any subsequent twelve (12) month period), plus (ii) a sum equal to the product of (x) one-twelfth (1/12th) of the premiums for the insurance policies required pursuant to Section  14   hereof that are payable during such twelve (12) month period times (y) a fraction, the numerator of which equals the Fixed Rent applicable to such Leased Property and the denominator of which equals the aggregate Fixed Rent for the Premises.  If the amount of the aforesaid Impositions to be levied, charged, filed, assessed or imposed, or the aforesaid insurance premiums to be paid, during such twelve (12) month period (or any subsequent twelve (12) month period hereunder) cannot be determined as of the Effective Date (or the commencement of any subsequent twelve (12) month period), such amount for the purpose of computing the deposit to be made by Tenant hereunder shall be estimated by Landlord with an appropriate adjustment to be promptly made between Landlord and Tenant as soon as such amount becomes determinable.  Landlord may, at its option, from time to time require that any particular deposit be greater than one-twelfth (1/12th) of the estimated Imposition and/or insurance premium amount payable during any twelve (12) month period, if such additional deposit is required to provide a sufficient fund from which to make payment of all Impositions on or before the next due date of any installment thereof, or to make payment of any required insurance premiums not later than the due date thereof.  Tenant shall deliver to Landlord copies of all notices, demands, claims, bills and receipts in relation to the Impositions and insurance premiums promptly upon receipt thereof by Tenant.  The actual or estimated amounts on account of Impositions and insurance premiums shall be adjusted annually as to each Leased Property.

3.3.2   Landlord’s Deposit .  The escrow deposits made by Tenant pursuant to this Section  3.3 shall be deposited by Landlord in an account (the “ Escrow Account ”) of Landlord or with any Facility Mortgagee, in the sole discretion of Landlord, and may be commingled with other assets of Landlord or such Facility Mortgagee.  Landlord shall not be liable to Tenant or any other Person for any consequent loss of principal or interest on funds held in the Escrow Account.  Furthermore, neither Landlord nor any Facility Mortgagee shall bear responsibility for the financial condition of, nor any act or omission by, any Lending Institution at which the Escrow Account is located.  The interest from deposits into the Escrow Account shall be retained in the Escrow Account to be applied in accordance with the terms of this Section  3.3 .  

3.3.3   Use of Deposits .  Tenant shall pay any and all Impositions and insurance premiums when due and regardless of whether or not the funds then held in the Escrow Account are sufficient to reimburse Tenant therefor.  The sums deposited by Tenant under this Section  3.3 shall be held by Landlord or any Facility Mortgagee, and, provided that no default or Event of Default by Tenant exists hereunder, shall be used to reimburse Tenant for any Impositions and/or insurance premiums, as applicable, paid by Tenant, upon delivery by Tenant to Landlord or such Facility Mortgagee, as applicable, of documentation evidencing the payment

of such Impositions and/or insurance premiums, which reimbursement shall be provided within five (5) Business Days after the presentation of such evidence (if Landlord is holding the Escrow Account) or within five (5) Business Days after Landlord’s receipt of the appropriate reimbursement funds from the Facility Mortgagee that is holding the Escrow Account (if a Facility Mortgagee is holding the Escrow Account).  If Tenant fails to pay any Impositions or insurance premiums when due and owing hereunder to the applicable taxing authority or insurance carrier, Landlord or any Facility Mortgagee may, but shall not be obligated to, pay such Impositions or insurance premiums from any funds in the Escrow Account.  Upon the occurrence of any Event of Default, Landlord or any Facility Mortgagee may apply any funds held in the Escrow Account to cure such Event of Default or on account any damages suffered or incurred by Landlord in connection therewith.  Relative to the foregoing, provided that (i) no default or Event of Default by Tenant exists hereunder, (ii) Tenant provides to Landlord, not less than twenty (20) days in advance of the applicable due date, (x) clear and detailed instructions relative to the payee, place, amount and required manner of payment of the Impositions and/or insurance premiums referenced above and (y) originals or copies, as necessary, of the applicable invoices or bills and (iii) there are sufficient funds in the Escrow Account to pay the applicable invoices or bills, Landlord agrees to make, or if a Facility Mortgagee is holding the Escrow Account Landlord agrees to cooperate reasonably with Tenant to attempt to arrange for the Facility Mortgagee to make, direct payment of such invoices and bills from the Escrow Account, rather than require Tenant first to make payment thereof and then seek reimbursement.

3.3.4   Deficits .  Landlord shall have no liability whatsoever to Tenant if any deposits held by Landlord under this Section  3.3 are not sufficient to reimburse Tenant for any Imposition or insurance premium paid by Tenant.  Landlord may change its estimate of any Imposition or insurance premium for any period on the basis of a change in an assessment or tax rate or of a prior miscalculation or for any other good faith reason.  In such event, Tenant shall deposit with Landlord the amount in excess of the sums previously deposited with Landlord for the applicable period within ten (10) days after Landlord’s request therefor.

3.3.5   Transfers; Refund .  In connection with any assignment of the Landlord’s interest under this Lease, the assigning Landlord or any predecessor shall have the right, and the obligation, to transfer all amounts deposited pursuant to the provisions of this Section 3.3 and still in its possession to such assignee and, upon such transfer, the assigning Landlord or any such predecessor, as the case may be, transferring the deposits shall thereupon be completely released from all liability with respect to such deposits so transferred, and Tenant shall look solely to said assignee in reference thereto.  As of the applicable Expiration Date for each Leased Property, any sums held by Landlord under this Section 3.3   allocable to such Leased Property   shall be returned to Tenant, only as and when the conditions of Section 3.4.3 for the return of the Security Deposit relative to such Leased Property have been met and provided that any and all Impositions or insurance premiums due and owing hereunder with respect to such Leased Property have been paid in full.

3.4   Security Deposit .

3.4.1   Cash Security Deposit; Application .  Unless Landlord has made the LC Election, Tenant shall pay (or shall have paid) to Landlord upon the Effective Date an amount equal to $10,501,585.52 (subject to increase as described in Section  3.4.3 below and subject to Section  3.4.4 hereof, the “ Security Amount ”) as security (together with any Coverage Based Security Deposit under Section  8.2.5 , the “ Security Deposit ”) for the full and faithful

performance by Tenant of each and every term, provision, covenant and condition of this Lease.  Upon the occurrence of an Event of Default, Landlord may, but shall not be required to, use, apply or retain the whole or any part of the Security Deposit (whether by drawing upon any Letter of Credit or applying any cash Security Deposit held by it) for the payment of any Rent in default or for any other sum that Landlord may expend or be required to expend by reason of Tenant’s default, including any damages or deficiency in the reletting of the Premises, whether such damages or deficiency accrue before or after summary proceedings or other re-entry by Landlord.  Tenant shall not be entitled to any interest on the Security Deposit and Landlord may commingle the Security Deposit with its other funds.  In case of a sale or transfer of the Premises by Landlord, or any cessation of Landlord’s interest therein, whether in whole or in part, Landlord may pay over or refund to Tenant any unapplied part of the Security Deposit (or, in the case of any such partial transfer or cessation, such portion as Landlord allocates to such part of the Premises, in its reasonable discretion) or transfer any Letter of Credit if the LC Election has been made, with any fees incident to such transfer being paid by Tenant (which transfer, in the case of any such partial transfer or cessation, shall require Tenant to cause any Letter of Credit to be reissued as separate Letters of Credit satisfying the requirements of Section 3.4.2 as to the remaining Leased Properties) to the successor owner of the Premises, and from and after such payment or refund, Landlord shall be relieved of all liability with respect thereto.  The provisions of the preceding sentence shall apply to every subsequent sale or transfer of the Premises or any part thereof.

3.4.2   LC Election .  At any time, and from time to time, Landlord or Tenant may elect (such election, a “ LC Election ”), in its sole discretion and by written notice to the other party, to cause Tenant to post the Security Deposit in the form of an irrevocable, standby Letter of Credit with a face value of the full Security Amount (the “ Letter of Credit ”).  Within ten (10) days after notice of an LC Election, Tenant shall deliver to Landlord a Letter of Credit satisfying the requirements of this Section  3.4.2   in the place and stead of the cash Security Deposit, whereupon Landlord shall return any unapplied portion of a cash Security Deposit then held by Landlord.  The Letter of Credit shall: (i) be in form and substance acceptable to Landlord in its reasonable discretion; (ii) name Landlord as its sole beneficiary; (iii) expressly allow Landlord to draw upon it at any time, or from time to time, in whole or in part, by delivering to the issuer, at an office of the issuer located in New York, New York, Louisville, Kentucky or Chicago, Illinois, a written notice that Landlord is entitled to draw thereon pursuant to the terms of this Lease; (iv) be issued by an FDIC-insured Lending Institution that is reasonably satisfactory to Landlord, but shall in all events have a credit rating of “AA” (or the equivalent) or higher from one of the Rating Agencies; and (v) be expressly unconditional, irrevocable and fully transferable.  The Letter of Credit (and any renewals or replacements thereof) shall be for a term of not less than one (1) year.  Tenant agrees that it shall from time to time, as necessary, renew or replace the original and any subsequent Letter of Credit not less than thirty (30) days prior to its stated expiration date so that it will remain in full force and effect until the later of sixty (60) days after the last day of any Term under this Lease or the date on which Tenant’s obligations under this Lease are satisfied in full.  If Tenant fails to furnish such renewal or replacement at least 30 days prior to the stated expiration date of the Letter of Credit, Tenant may immediately draw upon such Letter of Credit.  If the credit ratings test set forth in subsection (iv) above shall at any time cease to be satisfied as to the issuer of the Letter of Credit, Landlord may, upon five (5) days written notice to Tenant, draw upon such Letter of Credit.  Without limitation of Landlord’s right thereafter to make a LC Election, Landlord shall hold the proceeds of any such draw upon the Letter of Credit as a portion of the Security Deposit

pursuant to the terms of this Lease.  Any renewal of or replacement for the original or any subsequent Letter of Credit shall be in an amount not less than the Security Amount and shall otherwise meet the requirements for the original Letter of Credit as set forth above.

3.4.3   Increase; Restoration of Security Deposit .  Tenant, within ten (10) days after the occurrence of any increase in the Fixed Rent due hereunder or within ten (10) days after an increase in the required Security Amount as provided in Section  3.4.4 hereof, as applicable, shall deposit with Landlord cash in, or increase the face amount of the Letter of Credit by, the amount necessary to ensure that the Security Deposit hereunder (exclusive of any Coverage Based Security Deposit) then equals the Required Number of Months of annual Fixed Rent based upon the increased Fixed Rent due hereunder or the required Security Amount as provided in Section  3.4.4 hereof, as applicable.  In the event the Security Deposit (or any portion thereof) is applied (or drawn upon from time to time in full or partial amounts in the case of the Letter of Credit and any renewals or replacements thereof) by Landlord on account of any Event(s) of Default by Tenant hereunder or as otherwise expressly provided in this Section  3.4 , Tenant shall replenish said Security Deposit in full, within ten (10) days after demand therefor, by paying to Landlord the amount so applied or, in the case of the Letter of Credit, restoring the Letter(s) of Credit to its (their) full amount.  Tenant’s failure to timely increase the Security Deposit, or to timely replenish and restore the Security Deposit, after demand as aforesaid shall be an Event of Default.  If: (i) no Event of Default has occurred and is continuing hereunder and (ii) Tenant has fully performed and satisfied all of its obligations under the Lease (including, without limitation and as applicable, its obligations relative to any Operational Transfer(s)), then the Security Deposit, or the remaining unapplied portion thereof, shall be paid or returned to Tenant within sixty (60) days after the expiration or termination of this Lease and the surrender of all of the Premises to Landlord in the condition required hereunder; provided, however, that Landlord may retain an amount, as it shall reasonably determine, to secure the payment of any Rent, the amount of which Landlord is then unable to determine finally (and Landlord shall return any such retained amount to Tenant promptly following the final determination of such Rent amount and the full payment to Landlord of such Rent).  If this Lease is terminated or expires with respect to a Leased Property, but not all of the Premises, and: (x) no Event of Default has occurred and is continuing hereunder and (y) Tenant has fully performed and satisfied all of its obligations under the Lease (including, without limitation and as applicable, its obligations relative to any Operational Transfer(s)) with respect to such terminated or expired Leased Property, then, subject to and without limitation of Section  3.4.4 hereof, the unapplied portion of the Security Deposit (exclusive of any Coverage Based Security Deposit) that exceeds the required Security Amount (after such giving effect to such expiration or termination), if any, shall be paid or returned to Tenant within sixty (60) days after the expiration or termination of this Lease as it applies to such Leased Property and the surrender of such Leased Property to Landlord in the condition required hereunder; provided, however, that Landlord may retain an amount, as it shall reasonably determine, to secure the payment of any Rent, the amount of which Landlord is then unable to determine finally (and Landlord shall return any such retained amount to Tenant promptly following the final determination of such Rent amount and the full payment to Landlord of such Rent).  The Security Deposit shall not be deemed an advance payment of Rent or a measure of Landlord’s damages for any default hereunder by Tenant, nor shall it be a bar or defense to any action that Landlord may at any time commence against Tenant.

3.4.4   Security Amount .  Notwithstanding anything to the contrary contained in this Section  3.4 and notwithstanding any provisions of this Section  3.4 describing or defining the Security Amount in terms of a Required Number of Months or referencing the increasing of the Security Amount due to increases in the amount of Fixed Rent and notwithstanding any provisions of Section  3.4.3 hereof providing for a partial return of the Security Deposit upon the termination of this Lease as it applies to a part or all of the Premises, unless and until the closings occur under all five (5) of the Purchase Agreements (as defined in Section  17.10 hereof) in accordance with the terms of the Purchase Agreements, the Security Amount required hereunder shall initially equal $10,501,585.52, with such required amount to increase by two percent (2%) on each October 1 during the Term (e.g. $10,501,585.52 as of the Effective Date, $10,711,617.23 as of October 1, 2008, $10,925,849.57 as of October 1, 2009, etc.).  Nothing contained in this Section  3.4.4 shall limit Tenant’s obligations relative to the making of any required Coverage Based Security Deposit.

3.5   Net Lease .  The Rent shall be paid absolutely net to Landlord, free of all Impositions, utility charges, operating expenses, insurance premiums or any other charges or expenses in connection with the Premises, without any rights of deduction, set-off or abatement, so that this Lease shall yield to Landlord the full amount of the installments of Fixed Rent, throughout the Term. This Lease is intended to be and shall be construed as an absolutely net lease pursuant to which Landlord shall not, under any circumstances or conditions, whether presently existing or hereafter arising, and whether foreseen or unforeseen by the parties, be required to make any payment or expenditure of any kind whatsoever or be under any other obligation or liability whatsoever, except as expressly set forth herein.

3.6   Emeritus Guaranty .   On the Effective Date, Tenant shall cause to be delivered to Landlord the Emeritus Guaranty made by the Emeritus Guarantor guaranteeing all of Tenant’s obligations under this Lease and assuming and replacing the Previous Guarantor’s obligations under the Previous Guaranties and Landlord shall cause to be delivered to Previous Guarantor a release of the Previous Guaranties made by Landlord releasing all of Previous Guarantor’s obligations under the Previous Guaranties, whether arising or accruing prior to, or from and after, the Effective Date (but such release shall not impair the liability of the Emeritus Guarantor as aforesaid on account of its assumption of the Previous Guarantor’s obligations under the Previous Guaranties).

4.   Impositions .

4.1   Payment of Impositions .  Subject to Section  13 relating to permitted contests, Tenant shall pay all Impositions payable during the Term as set forth in Section  3.2.1 and for any tax period occurring during the Term, irrespective of whether the Impositions for such tax period are due and payable after the Term.  Tenant’s obligation to pay such Impositions shall be deemed absolutely fixed upon the date such Impositions become a lien upon the Leased Property or any part thereof.  If any refund shall be due from any taxing authority in respect of any Imposition paid by Tenant during the Term, the same shall be paid over to or retained by Tenant but only if no Event of Default shall have occurred hereunder and be continuing.  If an Event of Default shall exist hereunder, such refund shall be paid over to and retained by Landlord.  If Tenant nevertheless receives such refund, Tenant shall, upon receipt, immediately pay such refund over to Landlord in full.  Any such funds retained by Landlord due to an Event of Default shall be applied to amounts due and owing to Landlord under this Lease, as Landlord shall determine in its sole discretion, and, if funds remain after such application, such funds shall

continue to be held by Landlord for application on account of additional amounts due and owing to Landlord under this Lease as the same arise.  In the event any Governmental Authority classifies any property covered by this Lease as personal property, Tenant shall file any personal property tax returns that are required with respect thereto.  Subject to the terms of Section  13 , Tenant may, upon notice to Landlord, at Tenant’s option and at Tenant’s sole cost and expense, protest, appeal, or institute tax contests to effect a reduction of real estate or personal property assessments and Landlord, at Tenant’s expense as aforesaid, shall cooperate with Tenant in such protest, appeal, or other action to the extent required by law and reasonably requested by Tenant.

4.2   Notice of Impositions .  Landlord or Landlord’s designee shall use reasonable efforts to give prompt notice to Tenant of all Impositions payable by Tenant hereunder of which Landlord at any time has knowledge (which notice shall be deemed properly given if given pursuant to Section  33 hereof or by an e-mail notification to Tenant at jcalhoun@emeritus.com and swalling@emeritus.com), provided, however, that any failure by Landlord to provide such notice to Tenant shall in no way relieve Tenant of its obligation to timely pay the Impositions.  Tenant shall deliver to Landlord, not more than five (5) days prior to the due date of each Imposition, copies of the invoice for such Imposition, the check delivered for payment thereof and an original receipt evidencing such payment or other proof of payment satisfactory to Landlord.

4.3   Adjustment of Impositions .  Any Imposition imposed in respect of the tax-fiscal period during which the Term terminates or expires shall be adjusted and prorated between Landlord and Tenant, whether or not such Imposition is imposed before or after such termination or expiration, and Tenant’s obligation to pay its prorated share thereof shall survive such termination or expiration.

5.   No Affect or Impairment, etc.   The respective obligations of Landlord and Tenant shall not be affected or impaired by reason of (i) any damage to, or destruction of, any Leased Property or any portion thereof, from whatever cause, or any Condemnation of any Leased Property or any portion thereof (except as otherwise expressly and specifically provided in Section  15 or Section  16 ), (ii) the interruption or discontinuation of any service or utility servicing any Leased Property, (iii) the lawful or unlawful prohibition of, or restriction upon, Tenant’s use of any Leased Property, or any portion thereof, due to the interference with such use by any Person or eviction by paramount title, (iv) any claim that Tenant has or might have against Landlord on account of any breach of warranty or default by Landlord under this Lease or any other agreement by which Landlord is bound, (v) any bankruptcy, insolvency, reorganization, composition, readjustment, liquidation, dissolution, winding up or other proceedings affecting Landlord or any assignee or transferee of Landlord, (iv) the revocation, suspension or non-renewal of any license, permit, approval or other Authorization, (vii) any withholding, non-payment, reduction or other adverse change respecting any Facility Provider Agreement or other Third Party Payor Program, (viii) any admissions hold under any Third Party Payor Program, or (ix) for any other cause whether similar or dissimilar to any of the foregoing other than a discharge of Tenant from any such obligations as a matter of law.  Tenant hereby specifically waives all rights, arising from any occurrence whatsoever, which may now or hereafter be conferred upon it by law (x) to modify, surrender or terminate this Lease or quit or surrender any Leased Property or any portion thereof, or (y) that would entitle Tenant to any abatement, reduction, suspension or deferment of the Rent or other sums payable by Tenant hereunder.  The obligations of Landlord and 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 and to the extent the obligations to pay the same shall be terminated by termination of this Lease as to any Leased Property other than by reason of an Event of Default.

6.   Premises; Tenant’s Personal Property .

6.1   Ownership of the Premises .  Tenant acknowledges that the Premises are the property of Landlord and that Tenant has only the right to the possession and use of the Premises upon and subject to the terms and conditions of this Lease.  Notwithstanding anything to the contrary contained in this Lease, in the case of any easement or other rights that are appurtenant to any Leased Property, Tenant agrees that Landlord does not make any representation or warranty relative to Landlord’s title thereto or whether such appurtenances are encumbered, and Landlord shall not be obligated to discharge any liens or encumbrances with respect to, or otherwise to defend, Landlord’s right, title and interest, if any, in any such appurtenances.  Tenant agrees that such appurtenances shall constitute Permitted Encumbrances, as to which Tenant shall have the obligations set forth in Section  8.2.6 and Section  23 .

6.2   Tenant’s Personal Property .  Tenant shall provide and maintain during the entire Term all such Tenant’s Personal Property and Landlord’s Personal Property as shall be necessary to maintain the Authorizations in effect and to operate each Facility in compliance with all licensure and certification requirements, in compliance with all applicable Legal Requirements and Insurance Requirements and otherwise in accordance with customary practice in the industry for the Primary Intended Use of each Leased Property.  Except as otherwise agreed in writing by Landlord in its sole discretion, upon the expiration or earlier termination of this Lease as it applies to any Leased Property, (i) Tenant’s Personal Property that is to be transferred to Landlord pursuant to Section  35 below shall include all of the foregoing required Tenant’s Personal Property, and any other Tenant’s Personal Property (excluding certain specific items of Tenant’s Personal Property described in Section  35 below), in high quality condition and (ii) Landlord’s Personal Property shall be returned to Landlord, and left at or in such Leased Property, in high quality condition.

6.3   Landlord’s Personal Property .  Tenant may, from time to time, in Tenant’s reasonable discretion, without notice to or approval of Landlord, sell or dispose of any item of Landlord’s Personal Property; provided, however, that, unless such item is functionally obsolete, Tenant shall promptly replace such item with an item of similar quality, use and functionality, and any such replacement item (other than items that, by the terms of Section 35 below, are to be retained by Tenant upon the expiration or termination of this Lease) shall, for purposes of this Lease, continue to be treated as part of “Landlord’s Personal Property.”  Tenant shall, promptly upon Landlord’s request from time to time, provide such information as Landlord may reasonably request relative to any sales, dispositions or replacements of Landlord’s Personal Property pursuant to this Section  6.3 .

7.   Condition and Use of Each Leased Property .

7.1   Condition of Each Leased Property .  Tenant acknowledges receipt and delivery of possession of each Leased Property.  Tenant is leasing each Leased Property “ AS IS ” “ WHERE IS ” and Tenant waives any claim or action against Landlord in respect of the condition of each Leased Property.   LANDLORD MAKES NO WARRANTY OR

REPRESENTATION, EXPRESS OR IMPLIED, IN RESPECT OF ANY LEASED PROPERTY OR ANY PART THEREOF, EITHER AS TO ITS FITNESS, DESIGN OR CONDITION FOR ANY PARTICULAR USE OR PURPOSE OR THE QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, LATENT OR PATENT, OR OTHERWISE, IT BEING AGREED THAT ALL SUCH RISKS ARE TO BE BORNE BY TENANT.  TENANT ACKNOWLEDGES THAT EACH LEASED PROPERTY HAS BEEN INSPECTED BY TENANT AND THAT TENANT HAS FOUND EACH LEASED PROPERTY TO BE IN GOOD ORDER AND REPAIR AND SATISFACTORY FOR ITS PURPOSES HEREUNDER.

7.2   Use of Each Leased Property .

7.2.1   Primary Intended Use .  During the entire Term, Tenant shall use each Facility (including, without limitation, the Leased Improvements thereon) solely for its Primary Intended Use (and shall not change, or consent to or acquiesce in the change of, such Primary Intended Use) and shall operate each Facility in a manner consistent with a high quality healthcare facility and, if any Third Party Payor Programs apply to such Facility, sound reimbursement principles under any such Third Party Payor Programs.  No use shall be made or permitted to be made of any Leased Property, and no acts shall be done, that would cause the cancellation of any insurance policy covering such Leased Property or any part thereof, nor shall Tenant sell or otherwise provide to occupants or patients therein, or permit to be kept, used or sold in or about such Leased Property, any article that may be prohibited by any Legal Requirements or by the standard form of fire insurance policies, or any other insurance policies required to be carried hereunder, or fire underwriters’ regulations.

7.2.2   Authorizations Appurtenant .  The Authorizations for any Facility shall, to the maximum extent permitted by law, relate and apply exclusively to such Facility, and Tenant acknowledges and agrees that, subject to all applicable Legal Requirements, the Authorizations are appurtenant to the Facilities to which they apply, both during and following the termination or expiration of the Term.  In jurisdictions where any Authorization(s) is/are issued to a Tenant or its subtenant, as the Facility operator, Tenant agrees that (i) such  Authorizations shall nevertheless remain the property of Landlord and be held by Tenant or such subtenant, in trust for the benefit of Landlord pursuant to a revocable, temporary license that may be revoked by Landlord at any time, and (ii) in connection with an Operational Transfer or as otherwise required by Landlord, Tenant shall cooperate with Landlord, in accordance with Section  37.1   hereof, to turn over all of Tenant’s rights in connection with such Authorizations to Landlord or Successor Operator, as applicable.  This Section  7.2.2 shall survive the expiration or earlier termination of this Lease.

7.3   Authorization Collateral .  To the fullest extent permitted by applicable law, Tenant hereby grants to Landlord a first priority security interest in, and lien upon, all Authorizations issued to, leased or licensed to, or held by, Tenant, including, but not limited to, Tenant’s interest in and rights under all Facility Provider Agreements, with respect to the Facilities (collectively, the “ Authorization Collateral ”) to secure the performance of all of Tenant’s obligations under this Lease, including, but not limited to, its obligation to engage in, assist with and facilitate any Operational Transfer.  Tenant represents and warrants to Landlord that attached hereto on Schedule  7.3 is a detailed list and description of all of the Authorization Collateral.  Notwithstanding anything contained herein to the contrary, Tenant shall not (under any circumstances) grant any lien upon, security interest in and to or otherwise pledge,

encumber, hypothecate, transfer or assign, in whole or in part, the Authorization Collateral to any Person, irrespective of the priority of such security interest, pledge or hypothecation.  The security interest and lien granted by this Section  7.3   shall be in addition to any lien of Landlord that may now or at any time hereafter be provided by law.  The provisions of Section  21.1.1.1 below shall be applicable to the security interest and lien referenced in this Section  7.3 .

7.4   Granting of Easements, etc .  Landlord may, from time to time, with respect to any Leased Property: (i) grant easements, covenants and restrictions, and other rights in the nature of easements, covenants and restrictions, (ii) release existing easements, covenants and restrictions, or other rights in the nature of easements, covenants or restrictions, that are for the benefit of such Leased Property, (iii) dedicate or transfer unimproved portions of such Leased Property for road, highway or other public purposes, (iv) execute petitions to have such Leased Property annexed to any municipal corporation or utility district, (v) execute amendments to any easements, covenants and restrictions affecting such Leased Property and (vi) execute and deliver to any Person any instrument appropriate to confirm or effect such grants, releases, dedications and transfers (to the extent of its interests in such Leased Property) with Tenant’s reasonable consent provided that it shall be unreasonable for Tenant to withhold its consent if such easement or other instrument or action contemplated by this Section  7.4 does not unreasonably interfere with the conduct of the business of Tenant on such Leased Property.  If any easement or other instrument or action contemplated by this Section  7.4 unreasonably interferes with the conduct of business by the applicable Tenant(s) at a Leased Property, Landlord shall obtain Tenant’s prior written consent to such proposed easement, instrument or action, which consent may be granted or withheld by Tenant in its sole discretion (and which consent shall be deemed given if not expressly denied by Tenant, in writing, within five (5) Business Days of Tenant’s receipt of such request).

8.   Negative and Affirmative Covenants of Tenant .

8.1   Negative Covenants .   Tenant covenants and agrees with Landlord that:

8.1.1   Issuance of Equity Interests .  Subject to the applicable provisions of Section  24 below, no Tenant shall issue or allow to be created any stocks, shares, partnership or membership interests or other ownership interests in any Tenant, other than the stocks, shares, partnership or membership interests and other ownership interests that are outstanding on the date hereof or any security or other instrument that is outstanding on the date hereof and by its terms is convertible into or exchangeable for stock, shares, partnership or membership interests or other ownership interests in any Tenant.

8.1.2   Change in Business or Organizational Status .  No Tenant shall make any material change in the scope or nature of its business objectives or operations, or undertake or participate in activities other than in continuance of its present business.  No Tenant shall amend, modify or alter its Tenant Org Docs in a manner that would make any material change in its purpose clause or the scope or nature of its business operations or would violate Section  45 below or allow itself to be dissolved, voluntarily or involuntarily.

8.1.3   Affiliate Transactions and Payments .  No Tenant shall enter into, or be a party to, any transaction with an Affiliate of any Tenant or any of the partners, members or shareholders of any Tenant except in the ordinary course of business and on terms that are fully disclosed to Landlord in advance and are no less favorable to any Tenant or such

Affiliate than would be obtained in a comparable arm’s-length transaction with an unrelated third party; provided, however, Tenant may enter into management agreements with respect to each Facility with any Affiliate of any Tenant or any Guarantor which provide for management fees of up to five percent (5%) of the gross revenues of such Facility and provided further that any such Affiliate, as manager, as well as any other property manager of a Facility, shall enter into a subordination agreement relative thereto and in favor of Landlord on the terms set forth in Exhibit F attached hereto.  After the occurrence of an Event of Default and until such Event of Default is cured, no Tenant shall make any payments or distributions (including, without limitation, salaries, bonuses, fees, principal, interest, dividends, liquidating distributions, management fees, cash flow distributions or lease payments) to any Guarantor or any Affiliate of any Tenant or any Guarantor, or any shareholder, member, partner or other equity interest holder of any Tenant, any Guarantor or any Affiliate of any Tenant or any Guarantor.

8.1.4   ERISA .  No Tenant shall engage in any transaction that would cause any obligation, or action taken or to be taken, hereunder (or the exercise by Landlord of any of its rights under this Lease) to be a non-exempt (under a statutory or administrative class exemption) prohibited transaction under ERISA.  Each Tenant shall deliver to Landlord such certifications or other evidence from time to time throughout the Term, as reasonably requested by Landlord, that (i) such Tenant is not and does not maintain an “employee benefit plan”, as defined in Section 3(3) of ERISA, that is subject to Title I of ERISA, or a “governmental plan” within the meaning of Section 3(3) of ERISA; (ii) such Tenant is not subject to state statutes regulating investments and fiduciary obligations with respect to governmental plans; and (iii) one or more of the following circumstances is true:  (x) equity interests in such Tenant are publicly offered securities, within the meaning of 29 C.F.R. §2510.3-101(b)(2); (y) less than twenty-five percent (25%) of each outstanding class of equity interests in such Tenant are held by “benefit plan investors” within the meaning of 29 C.F.R. §2510.3-101(f)(2); or (z) such Tenant qualifies as an “operating company” or a “real estate operating company” within the meaning of 29 C.F.R. §2510.3-101(c) or (e).

8.1.5   Debt Cancellation; Other Indebtedness; Guaranties .  No Tenant shall cancel or otherwise forgive or release any claim or debt owed to any Tenant by any Person, except for adequate consideration and in the ordinary course of such Tenant’s business.  No Tenant shall create, incur, assume, or permit to exist any indebtedness other than (i) trade debt incurred in the ordinary course of Tenant’s business (which shall not include so-called “accounts receivable” financing, which shall be governed by the terms of Section  21.2 ); or (ii) any AR Financing pursuant to Section  21.2 .  No Tenant shall create, incur, assume, or permit to exist any guarantee of any loan or other indebtedness except for the endorsement of negotiable instruments for collection in the ordinary course of business.

8.1.6   Assets; Investing .  No Tenant shall purchase or own any property other than property necessary for, or incidental to, the operation of the applicable Facility(ies) for its/their Primary Intended Use(s).  No Tenant shall purchase or otherwise acquire, hold, or invest in securities (whether capital stock or instruments evidencing indebtedness) of any Person.  No Tenant shall make loans or advances to any Person, except for cash balances temporarily invested in short-term or money market securities.

8.1.7   Liens; Waste .  No Tenant shall create, incur, assume or suffer to exist any lien, charge, encumbrance, easement or restriction on any portion of any of the Leased Properties or the Lease Collateral other than (x) Permitted Encumbrances (other than

Permitted Encumbrances under clause (ii), (vii) or (viii) of the definition thereof that arise on account of a breach of this Lease by Tenant) and (y) a lien upon the Accounts Collateral in accordance with Section 21.2 below.  No Tenant shall commit or suffer to be committed any waste on any Leased Property, nor shall any Tenant cause or permit any nuisance thereon. Tenant shall not take or omit to take any action, the taking or omission of which may materially impair the value or the usefulness of any Leased Property or any part thereof for its Primary Intended Use.

8.1.8   Zoning .  No Tenant shall initiate or consent to any zoning reclassification of any portion of any of the Leased Properties or seek any variance under any existing zoning ordinance or use (or permit the use of) any portion of any of the Leased Properties in any manner that could result in such use becoming a non-conforming use under any zoning ordinance or any other applicable land use law, rule or regulation.

8.1.9   Contracts .  Except as otherwise permitted in this Lease, no Tenant shall execute or modify any material contracts or agreements with respect to any Facility except for contracts and modifications approved by Landlord (which approval shall not be unreasonably withheld).  Contracts made in the ordinary course of business and that are in an amount less than $100,000.00 per Facility per annum or are cancelable upon thirty (30) days written notice or less without penalty shall not be considered “material” for purposes of this Section.

8.1.10   No Joint Assessment .  No Tenant shall suffer, permit or initiate the joint assessment of any Leased Property (i) with any other real property constituting a tax lot separate from such Leased Property, or (ii) with any portion of such Leased Property that may be deemed to constitute personal property, or any other procedure whereby the lien of any taxes that may be levied against any such personal property shall be assessed or levied or charged to such Leased Property.

8.1.11   Use-Specific Negative Covenants .  No Tenant shall:

8.1.11.1   Transfer any Authorizations to any location other than the Facility operated by such Tenant or as otherwise required by the terms of this Lease nor pledge any Authorizations as collateral security for any loan or indebtedness except as required by the terms of this Lease.

8.1.11.2   Rescind, withdraw, revoke, amend, supplement, or otherwise alter the nature, tenor or scope of (i) any Authorization for any Facility or (ii) any applicable Facility Provider Agreement for any Facility.

8.1.11.3   Amend or otherwise change, by consent, acquiescence or otherwise, any Facility’s (i) licensed bed or unit capacity, and/or (ii) number or type of beds or units (licensed, operational or otherwise), and/or (iii) licensing category or type, and/or (iv) number of beds or units (licensed, operational or otherwise) participating in governmental payment programs, in each case as the same exist on the Commencement Date for each Facility, or apply for approval of any of the foregoing amendments or changes, provided, however, that, notwithstanding the foregoing, Tenant may, without the prior approval of Landlord, (x) remove from service beds or units at a particular Facility so long as the number of beds or units in service at such Facility is not less than (a) in the case of the Facility known as

Summerville at South Windsor, 85 beds, (b) in the case of the Facility known as Summerville at Mentor, 89 beds, (c) in the case of the Facility known as Summerville at Heritage Place, 146 beds, (d) in the case of the Original Farm Pond Property, 95 units in service for the provision of assisted living services and 119 units in service for the provision of independent living services, and (e) in the case of all other Facilities, a number equal to ninety five percent (95%) of the number of licensed beds or units for such Facility set forth in Schedule  17.1.13 attached hereto and further so long as any such removal from service does not impair the continued licensure of any such out-of-service beds or units and (y) make amendments or changes of the nature referenced in this Section so long as Tenant may, without the necessity of any governmental or other regulatory approval, consent of application, revoke or otherwise unwind any such amendments or changes and return to the pre-amendment and pre-change status quo.

8.1.11.4   Replace or transfer all or any part of any Facility’s licensed beds or units to another location or apply for approval of any such replacement or transfer.

8.1.11.5   Jeopardize in any manner any Tenant’s participation in any material Third Party Payor Program to which any Tenant is subject at any time during the Term or any resident’s or patient’s entitlement to reimbursement from Medicaid for amounts paid by such resident or patient to any Tenant, as applicable.

8.1.11.6   Enter into any patient or resident care agreements with patients or residents or with any other Persons that deviate in any material respect from the standard form customarily used by any Tenant at the applicable Facility, provided, however, that (i) Tenant may so materially deviate from its standard and customarily used form of patient or resident care agreement for a particular Facility so long as such deviation (a) does not cause such agreement not to satisfy the requirements of any of clauses (i) through (v) in the definition of “Approved Residency Agreement” and (b) if it was allowed and made in all of Tenant’s patient or resident care agreements for such Facility, would not have a Material Adverse Effect on such Facility, any Tenant or any Guarantor, and (ii) Tenant may so materially deviate from its other standard and customarily used forms for a particular Facility so long as such deviation, if it was allowed and made in all of Tenant’s agreements for such Facility using such form, would not have a Material Adverse Effect on such Facility, any Tenant or any Guarantor.

8.1.11.7   Change the terms of any Facility Provider Agreement, any Third Party Payor Program or its normal billing, payment or reimbursement policies and procedures with respect thereto (including, without limitation, the amount and timing of finance charges, fees and write-offs); provided that a Tenant may enter into changes that do not have a material adverse effect on (i) the business or financial position or results of operations of such Tenant, (ii) the ability of such Tenant to perform, or of Landlord to enforce, the terms of this Lease or (iii) the value of the Leased Properties taken as a whole.

8.1.11.8   Assign or transfer any of its interest in any Authorization or assign, pledge, hypothecate, transfer or remove, or permit any other Person to assign, transfer, pledge, hypothecate or remove, any records pertaining to any Facility, including, without limitation, patient records and medical and clinical records, except for (i) removal of such patient records as directed by the patients owning such records, and (ii) transfers of the foregoing to an assignee of Tenant’s rights under this Lease that is expressly permitted by

Section  24.1.2 if all of the requirements of Section  24 have been complied with or waived in writing by Landlord, or Landlord has otherwise consented in writing to such transfer.

8.1.12   Indemnification Claims .  Tenant shall not make any claim or claims under any indemnity provision of that certain Operations Transfer Agreement, dated on or about August 1, 2005, between certain of the Farm Pond Tenants and the prior owners and operators of the respective Farm Pond Properties, that, in the aggregate, exceed $2,825,000.00 without the prior written consent of Landlord, not to be unreasonably withheld.

8.2   Affirmative Covenants .  Until all of Tenant’s obligations hereunder have been performed and discharged in full, Tenant covenants and agrees as follows:

8.2.1   Perform Obligations .  Tenant shall perform or cause to be performed, as and when due, all of its obligations under this Lease, the Authorizations (including, but not limited to, any Facility Provider Agreements), any Permitted Encumbrances, any Insurance Requirements and any Legal Requirements. Prior to the date hereof, Tenant has taken all necessary action to obtain all Authorizations (including, but not limited to, the Facility Provider Agreements) required for the operation of each of the Facilities for its Primary Intended Use and shall take all necessary action to maintain such Authorizations (including, but not limited to, the Facility Provider Agreements) during the Term.

8.2.2   Proceedings to Enjoin or Prevent Construction .  If any proceedings are filed seeking to enjoin or otherwise prevent or declare invalid or unlawful Tenant’s construction, occupancy, maintenance, or operation of any Facility or any portion thereof for its Primary Intended Use, Tenant shall cause such proceedings to be vigorously contested in good faith, and shall, without limiting the generality of the foregoing, use all reasonable commercial efforts to bring about a favorable and speedy disposition of all such proceedings and any other proceedings.

8.2.3   Documents and Information .

8.2.3.1   Furnish Information .  Tenant shall (i) promptly supply Landlord with such information concerning its financial condition, licensing, affairs and property as Landlord may reasonably request from time to time hereafter and in the format reasonably designated by Landlord and, without limitation of the foregoing, promptly, and in any event within ten (10) days, after a request from Landlord, Tenant shall provide to Landlord such additional information regarding Tenant, Tenant’s financial condition or the Facilities as Landlord, or any existing or proposed creditor of Landlord or Ventas, Inc. (including, without limitation, any existing or proposed Facility Mortgagee), or any auditor or underwriter of Landlord or Ventas, Inc., may require from time to time; and (ii) promptly notify Landlord in writing of any condition or event that constitutes a breach of any term, condition, warranty, representation, or provision of this Lease or any other agreement between Landlord or its Affiliates and any Tenant, any Guarantor or any of their Affiliates, and of any event or condition having a Material Adverse Effect on any Facility, any Tenant, any Guarantor or any Affiliate of any Tenant or any Guarantor and of any Event of Default.  Tenant shall notify Landlord, in writing and within ten (10) Business Days, if any Tenant is advised, in writing, formally or informally, by its insurance carrier, reinsurance provider, accountants, actuary, any Governmental Authority, or any Third Party Payor Program provider of any actual, pending, threatened or contemplated increase in its reserves for expenses relating to malpractice or

professional liability claims or any material increase in the premium costs for malpractice or professional liability insurance (as used in this sentence, an increase in such premium costs of fifty percent (50%) or more over the previously applicable premium costs shall be deemed “material”) (any of the foregoing, a “ Reserve Event ”).

8.2.3.2   Further Assurances .  Tenant shall, upon request of Landlord from time to time, execute, deliver, and furnish such documents as may be necessary or appropriate to consummate fully the transactions contemplated under this Lease.

8.2.3.3   Material Communications .  Tenant shall transmit to Landlord, within five (5) Business Days after receipt thereof, any Actuarial Correspondence or any material communication affecting one or more Facilities, any Tenant, any Guarantor, any Affiliate of any Tenant or any Guarantor, this Lease, the Legal Requirements, the Insurance Requirements, the Facility Provider Agreements or the Authorizations, and Tenant shall promptly respond to inquiries by Landlord with respect to such information. Tenant shall notify Landlord in writing promptly after any Tenant obtains knowledge of any potential, threatened or existing litigation or proceeding against, or investigation of, any Tenant, any Guarantor, any Affiliate of any Tenant or any Guarantor or any Facility that may affect the right to operate one or more of the Facilities, any Facility Provider Agreements, any of the Authorizations, the right to receive regular reimbursement under any Third Party Payor Program, any resident’s or patient’s entitlement to reimbursement from Medicaid for amounts paid by such resident or patient to any Tenant, as applicable, or Landlord’s title to any Facility or any Tenant’s interest therein.

8.2.3.4   Operator Reports; Actuarial Reports .  Tenant shall provide Landlord with accurate and complete copies of any and all of the census information concerning the number of licensed beds or units, as applicable, occupied by bona fide residents or patients, financial statements and other reports, materials and information concerning any Tenant, the Facilities and each Tenant’s business operations and compliance with material laws, ordinances, rules, regulations, Authorizations and Facility Provider Agreements that are submitted by Tenant to any Governmental Authorities or any provider pursuant to any Third Party Payor Program (including any Health Department), for any of the Facilities (the “ Operator Reports ”) promptly, and in any event, within five (5) Business Days, after the submission thereof.  All Operator Reports shall be accurate in all material respects as of the date of such Operator Reports.  Tenant shall provide Landlord with any and all Actuarial Reports received by, or prepared by or on behalf of, any Tenant within ten (10) Business Days after the receipt or submission thereof by or to any Tenant.

8.2.4   Compliance With Laws .  Tenant shall comply with all Insurance Requirements and shall comply in all material respects with all Legal Requirements (and Landlord shall have no responsibility for such compliance).  Tenant shall keep all Authorizations and Facility Provider Agreements in full force and effect.

8.2.5   Financial Covenants .  The following financial covenants shall be met throughout the Term of this Lease:

8.2.5.1   Portfolio Coverage Ratio .  Tenant shall maintain, for each twelve (12) month period ending at the end of a fiscal quarter of Tenant (each such 12 month period ending as aforesaid, a “ Test Period ”), a Portfolio Coverage Ratio of not less than:

If Tenant fails to maintain a Portfolio Coverage Ratio that satisfies the above-referenced applicable requirement for a particular Test Period ending on or prior to the expiration of the Initial Term as to any Leased Property, Tenant shall not be considered in default of this Section  8.2.5 provided and on the condition that all of the following conditions and requirements are met:

(i)   Tenant has not failed to maintain a Portfolio Coverage Ratio that satisfies the above-referenced applicable requirements with respect to four (4) other previous Test Periods ending on or prior to the expiration of the Initial Term as to any Leased Property.

(ii)   The Portfolio Coverage Ratio has not, for more than two (2) consecutive Test Periods, been more than 0.05 less than the required ratio (for example, if the required ratio is 1.10 to 1.00, this requirement would be violated if, for example, the Portfolio Coverage Ratio equaled less than 1.05 to 1.00 for three (3) consecutive Test Periods).

(iii)   Within ten (10) days after receipt of a written notice from Landlord specifying that Tenant has failed to maintain a Portfolio Coverage Ratio that satisfies the above-referenced applicable requirement, (a) Tenant deposits with Landlord an additional Security Deposit (herein, a “ Coverage Based Security Deposit ”), in cash or in the form of a Letter of Credit satisfying the requirements of Section  3.4 above, in the amount by which the Cash Flow would have needed to be higher in order for the Portfolio Coverage Ratio, for such Test Period, to have satisfied the above-referenced applicable requirement (but, for purposes of calculating the amount of the required Coverage Based Security Deposit under this Lease, with such Portfolio Coverage Ratio to be calculated by reference only to the Facilities demised under this Lease and the Cash Flow from, and Fixed Rent, and all other debt service and lease payments, relating to, such Facilities) and (b) each of the tenants under the Other Leases (other than the Brighton Lease, the Fairwood Lease and the Whitehall Lease) deposits with its landlord a Coverage Based Security Deposit in accordance with the provisions of Section 8.2.5 of its Other Lease and in an amount calculated by reference only to the Facilities demised under its Other Lease and the Cash Flow from, and Fixed Rent, and all other debt service and lease payments relating to, such Facilities (subject to increase as provided in subsection (v) below, the aggregate amount of the additional security deposits pursuant to subsections (a) and (b) above is referred to herein as the “ Shortfall Amount ”).

(iv)   In the event Landlord holds a Coverage Based Security Deposit pursuant to this Section  8.2.5 and, for two (2) consecutive subsequent Test Periods, the above-referenced applicable Portfolio Coverage Ratio requirement(s) is (are) satisfied, Landlord shall, promptly after receipt of reasonably satisfactory evidence of the foregoing and provided no Event of Default exists and no event has occurred or condition has arisen that, with notice or the passage of time or both, may become an Event of Default, return to Tenant

the Coverage Based Security Deposit portion of the Security Deposit, which return shall not preclude Tenant from thereafter making a further Coverage Based Security Deposit if the applicable Portfolio Coverage Ratio requirement referenced above is not satisfied as to a subsequent Test Period.

(v)   In the event Landlord holds a Coverage Based Security Deposit, then, as to each subsequent Test Period until such deposit is returned to Tenant as provided in subsection (iv) above, the Portfolio Coverage Ratio shall be calculated and, if Tenant has failed to maintain a Portfolio Coverage Ratio that satisfies the above-referenced applicable requirement, the amounts referenced in subsections (iii)(a) and (b) above shall be calculated for such Test Period, and, if the amount calculated for such Test Period pursuant to subsection (iii)(a) above exceeds the amount of the Coverage Based Security Deposit then being held by Landlord, within ten (10) days after receipt of a written demand from Landlord, (a) Tenant shall deliver to and deposit with Landlord an additional Coverage Based Security Deposit in the amount of such excess, (b) each of the tenants under the Other Leases (other than the Brighton Lease, the Fairwood Lease and the Whitehall Lease) shall deliver to and deposit with its landlord an additional Coverage Based Security Deposit in the amount, if any, by which the amount calculated for such Test Period pursuant to subsection (iii)(b) above exceeds the amount of the Coverage Based Security Deposit then being held by its landlord, and (c) after the additional deposits referenced in subsections (a) and (b) of this subsection (v), the aggregate amount of the Coverage Based Security Deposits then being held by Landlord under this Lease and the respective landlords under the Other Leases (other than the Brighton Lease, the Fairwood Lease and the Whitehall Lease) shall be the applicable Shortfall Amount for such Test Period.

(vi)   Landlord shall be entitled to treat any Coverage Based Security Deposit as part of the Security Deposit and shall have the same rights and protections with respect thereto (including, without limitation, rights to draw upon any Letter of Credit deposited under this Section  8.2.5 ) as it has with respect to the portion of the Security Deposit that was deposited pursuant to Section  3.4 .

8.2.6   Permitted Encumbrances .  Tenant shall, at its own cost, fully observe, perform and comply with all Permitted Encumbrances as the same apply to or bind Landlord or the Premises.  No Tenant shall cause, or permit its respective Tenant Parties to cause, whether by act or omission, any breach of, default under or termination of any Permitted Encumbrance applicable to or binding upon Landlord or the Premises.

8.3   Authorization Non-Compliance .  In the event that Tenant shall receive a complaint or notice from a private party to any Third Party Payor Program or Governmental Authority alleging, asserting or suggesting that Tenant is not in compliance with any Legal Requirement, any license, permit, approval or other Authorization or any certification for reimbursement under any Facility Provider Agreement or other Third Party Payor Program, Tenant shall, within five (5) Business Days, send notice to Landlord, whereupon Tenant shall remedy any condition causing such complaint, notice or non-compliance promptly, and in any case within any cure period allowed therefor by the applicable agency or authority, in the case of such non-compliance.

9.   Maintenance of Facilities .

9.1   Maintenance and Repair .

9.1.1   Facility Repair.   Tenant, at its sole expense, shall keep each Leased Property (and Tenant’s Personal Property) in good and safe order and repair, except for ordinary wear and tear and damage by Casualty and Condemnation (whether or not the need for such repairs occurs as a result of Tenant’s use, any prior use, the elements or the age of such Leased Property, Tenant’s Personal Property, or any portion thereof).  Without limitation of the foregoing, Tenant shall promptly make all necessary and appropriate repairs and replacements (capital and otherwise) to each Facility, of every kind and nature, whether interior or exterior, structural or non-structural, ordinary or extraordinary, foreseen or unforeseen or arising by reason of a condition existing prior to the commencement of the Term (concealed or otherwise), including, but not limited to, any roof repairs or replacements or parking lot repairs or replacements, such that each Leased Property is maintained in a high quality operating and structural condition for use for its Primary Intended Use.  Tenant shall maintain, repair and replace each Facility such that no deferred maintenance items exist at, in or on any Leased Property at any time and all systems, components, and elements (structural and otherwise) have a useful life determined in the exercise of Landlord’s reasonable judgment that exceeds the then applicable Expiration Date by not less than three (3) years (and not less than seven (7) years as to structural items).  Tenant shall have in place service and maintenance contracts with duly licensed contractors or repair services providing for regular maintenance and repair of any and all major systems serving each Leased Property, including, but not limited to, the HVAC systems, life safety systems, plumbing systems and elevator and conveyor systems.  Landlord may from time to time as to any one or more Leased Properties, and at Tenant’s sole expense (but no more than once every three (3) years at Tenant’s expense), cause an engineer designated by Landlord, in its sole discretion, to inspect one or more Leased Properties and issue a report (a “ Leased Property Condition Report ”) with respect to the condition of any such Leased Properties.  Tenant shall, at its own expense, make any and all repairs or replacements recommended by such Leased Property Condition Report.  All repairs shall be made in a good and workmanlike manner and in accordance with all Legal Requirements relating to such work.  Landlord shall not under any circumstances be required to repair, replace, build or rebuild any improvements on any Leased Property, or to make any repairs, replacements, alterations, restorations or renewals of any nature or description to any Leased Property, whether ordinary or extraordinary, structural or non-structural, foreseen or unforeseen, or to make any expenditure whatsoever with respect thereto, or to maintain any Leased Property in any way.  Tenant hereby waives, to the extent permitted by law, the right to make repairs at the expense of Landlord pursuant to any law currently in effect or hereafter enacted.

9.1.2   Notice of Non-Responsibility .  Except as expressly set forth in this Lease, nothing contained in this Lease and no action or inaction by Landlord shall be construed as:  (i) constituting the consent or request of Landlord, express or implied, to any contractor, subcontractor, laborer, materialman or vendor to, or for the performance of, any labor or services or the furnishing of any materials or other property for the construction, alteration, addition, repair or demolition of or to any Leased Property or any part thereof; or (ii) giving Tenant any right, power or permission to contract for or permit the performance of any labor or services or the furnishing of any materials or other property in such fashion as would permit the making of any claim against Landlord in respect thereof or to make any agreement that might

create, or in any way be the basis for, any right, title, interest, lien, claim or other encumbrance upon the estate of Landlord in any Leased Property, or any portion thereof.  Landlord may post, at Tenant’s sole cost, such notices of non-responsibility upon, or of record against, any Leased Property to prevent the lien of any contractor, subcontractor, laborer, materialmen or vendor providing work, services or supplies to Tenant from attaching against the Premises.  Tenant agrees to promptly execute and record any such notice of non-responsibility at Tenant’s sole cost.

9.1.3   Vacation and Surrender .  Tenant shall, upon the expiration or sooner termination of the Term as to any Leased Property, vacate and surrender the applicable Leased Property to Landlord in a high quality, broom clean condition consistent with the requirements of Section  9.1.1 , except as repaired, rebuilt, restored, altered or added to as permitted or required by the provisions of this Lease and except for damage from Casualty or Condemnation.  Each Leased Property so returned to Landlord shall include any and all Alterations, which shall be and remain the property of Landlord as part of such Leased Property (except for Alterations that Landlord requests, in writing, that Tenant remove, which Alterations shall be promptly and completely removed by Tenant).  Tenant shall repair, at Tenant’s sole cost, any damage to a Leased Property resulting from Tenant’s vacation from or surrender of such Leased Property and/or the removal of any Alterations therefrom, whether effected by Tenant or Landlord.

9.2   Encroachments .  If any of the Leased Improvements on any Leased Property shall, at any time, encroach upon any property, street or right-of-way adjacent to such Leased Property, then, promptly upon the request of Landlord, Tenant shall, at its expense, subject to its right to contest the existence of any encroachment and, in such case, in the event of any adverse final determination, either (i) obtain valid waivers or settlements of all claims, liabilities and damages resulting from each such encroachment, whether the same shall affect Landlord or Tenant, or (ii) make such changes in the Leased Improvements, and take such other actions, as Tenant, in the good faith exercise of its judgment deems reasonably practicable, to remove such encroachment, including, if necessary, the alteration of any of the Leased Improvements, and in any event take all such actions as may be necessary in order to be able to continue the operation of the Leased Improvements for the Primary Intended Use substantially in the manner and to the extent the Leased Improvements were operated prior to the assertion of such encroachment.  Any such alteration shall be made in conformity with the applicable requirements of Section  11 .  Tenant’s obligations under this Section  9.2 shall be in addition to and shall in no way discharge or diminish any obligation of any insurer under any policy of title or other insurance and Tenant shall not be entitled to a credit for any sums recovered by Landlord under any such policy of title or other insurance.

10.   Tenant’s Representations and Warranties .  Tenant hereby makes the following representations and warranties, as of the date hereof, to Landlord and acknowledges that Landlord is granting the Lease in reliance upon such representations and warranties. Tenant’s representations and warranties shall survive the expiration or termination of this Lease and, except to the extent otherwise specifically limited, shall continue in full force and effect, and remain true and correct, until Tenant’s obligations hereunder have been performed in full.

10.1   Organization and Good Standing .  Each Tenant is a limited liability company, duly organized, validly existing and in good standing under the laws of the State of Delaware.  Each Tenant is qualified to do business in and is in good standing under the laws of

the State in which the Facility operated by such Tenant is located.  Tenant has delivered true and complete copies of the documents, certificates and agreements pursuant to which each Tenant is organized to do business (the “ Tenant Org Docs ”).

10.2   Power and Authority .  Each Tenant has the power and authority to execute, deliver and perform this Lease and to make itself jointly and severally liable for the obligations of each other Tenant.  Each Tenant has taken all requisite action necessary to authorize the execution, delivery and performance of such Tenant’s obligations under this Lease.

10.3   Enforceability .  This Lease constitutes a legal, valid, and binding obligation of each Tenant enforceable in accordance with its terms, subject to the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar law affecting creditor’s rights generally, including, without limitation, fraudulent transfer or conveyance laws.

10.4   Consents .  The execution, delivery and performance of this Lease will not require any consent, approval, authorization, order, or declaration of, or any filing or registration with, any court, any Governmental Authority, or any other Person, except as set forth on Schedule 10.4 attached hereto.

10.5   No Violation .  The execution, delivery and performance of this Lease (i) do not and will not conflict with, and do not and will not result in a breach of, any Tenant Org Docs; and (ii) do not and will not violate in any material respect any order, writ, injunction, decree, statute, rule or regulation applicable to any Tenant or any of the Facilities.

10.6   Reports and Statements .  All reports, statements (financial or otherwise), certificates and other data furnished by or on behalf of Tenant or any Guarantor to Landlord in connection with this Lease, and all representations and warranties made herein or in any certificate or other instrument delivered in connection herewith, are and will be, to the best of Tenant’s knowledge, true and correct in all material respects as of the date of such report, statement, certificate or other data.

10.7   No Default .  As of the date hereof, (i) there is no existing Event of Default under this Lease; and (ii) no event has occurred which, with the giving of notice or the passage of time, or both, would constitute or result in such an Event of Default.

10.8   Adverse Matters .  To the best of Tenant’s knowledge and except as set forth on Schedule 10.8 attached hereto, no Tenant nor any of their respective officers, directors, members or managing employees or other contractors, subcontractors, employees or agents has engaged in any activities that are prohibited under criminal law, or are cause for civil penalties or mandatory or permissive exclusion from any Third Party Payor Program or any governmental health care program.  To the best of Tenant’s knowledge, there is no, and there shall continue to be no, threatened, existing or pending revocation, suspension, termination, probation, restriction, limitation or non-renewal affecting any Tenant or any Facility with regard to participation in any Third Party Payor Program or the applicable Authorizations to which any Tenant or Facility presently or at any time hereafter is/are subject or with regard to any resident’s or patient’s entitlement to reimbursement from Medicaid for amounts paid by such resident or patient to any Tenant, as applicable.

10.9   Certification .  Each Tenant has obtained any and all Authorizations necessary or advisable to operate its Facility(ies) for its Primary Intended Use and to be, and to continue to be, validly licensed and certified to operate its applicable Facility in accordance with all applicable governmental rules and regulations and the requirements of all applicable Governmental Authorities.

10.10   No Reimbursement Audits or Appeals .   There are no current, pending or outstanding reimbursement audits regarding any Third Party Payor Program nor any appeals pending at any Facility.

10.11   No Recoupments Efforts .   There are no current or pending recoupment efforts regarding any Third Party Payor Program at (or with respect to) any Facility.  Tenant is not a participant in any federal program whereby any Governmental Authority may have the right to recover funds by reason of the advance of federal funds.

10.12   Professional Liability Reserves .  For each Facility, the applicable Tenant or Guarantor has accrued, and will periodically (on an annual basis and upon any Reserve Event) accrue, reserves for expenses relating to malpractice and professional liability claims that are adequate and complete in the exercise of commercially reasonable judgment and normal commercial practice, which reserves have been, and will be, approved by its independent auditors and its independent actuary.

10.13   Primary Intended Use .  Each Facility is being operated for its Primary Intended Use and contains the number of licensed and operational beds or units described on Schedule 10.13 attached hereto (and with regard to the Jensen Beach Land Parcel, such parcel shall remain vacant land or, without limitation of Landlord’s approval rights relative to Alterations, be used as a skilled nursing, assisted living, independent living and/or Alzheimer’s care facility that is complimentary to the Primary Intended Use of the Jensen Beach Property).

10.14   Compliance with Laws .  Each Tenant is in substantial compliance with all applicable federal, state and local laws, regulations and guidelines (including, without limitation, any government payment program requirements and disclosure of ownership and related information requirements), quality and safety standards, accepted professional standards and principles that apply to professionals providing services to assisted or independent living facilities, in each case, as applicable, accreditation standards, and requirements of applicable Governmental Authorities, including, without limitation, those requirements relating to the physical structure and environment of each Leased Property, licensing, quality and adequacy of medical care, distribution of pharmaceuticals, rate setting, equipment, personnel, operating policies, additions to facilities and services and fee splitting.  No Tenant has committed any act which may give any Governmental Authority the right to cause Tenant to lose any applicable Authorizations.

10.15   Ownership of Authorizations .  The Authorizations:  (i) are not, and have not been, transferred to any location other than the Facility to which such Authorizations relate; (ii) are not, and have not been, pledged as collateral security for any loan or indebtedness other than pursuant to the terms of this Lease; (iii) are held free from restrictions or conflicts that would materially impair the use or operation of each Facility for its Primary Intended Use; and (iv) are not provisional, probationary or restricted in any way.  

10.16   Third Party Payor Programs .  There is no threatened or pending revocation, suspension, termination, probation, restriction, limitation, fine, civil monetary penalty, recoupment or non-renewal affecting any Tenant or any Leased Property in respect of any Third Party Payor Programs to which Tenant or any Facility is subject.  All cost reports and financial reports, if any, submitted by any Tenant pursuant to any Third Party Payor Program have been and will continue to be materially accurate and complete and have not been and will not be misleading in any material respects.

11.   Alterations .

11.1   Alterations .  Tenant shall not (i) make any Capital Alterations on or to any Leased Property, (ii) enlarge or reduce the size of any Facility and/or (iii) make any Capital Alterations or other Alterations that would tie in or connect with any improvements on property adjacent to the Land.  Tenant may, without Landlord’s consent, make any alterations, additions, or improvements (collectively, with the alterations described in items (i) – (iii) of the preceding sentence, “ Alterations ”) to any Leased Property if such Alterations are not of the type described in clause (i), (ii) or (iii) above, so long as in each case:  (w) the same do not (A) decrease the value of the Leased Property, (B) affect the exterior appearance of the Leased Property, or (C) affect the structural components of the Leased Property or the main electrical, mechanical, plumbing, elevator or ventilating and air conditioning systems for any Facility, (x) the same are consistent in terms of style, quality and workmanship to the original Leased Property and Fixtures, (y) the same are constructed and performed in accordance with the provisions of Section  11.2 below and (z) the cost thereof does not exceed, in the aggregate, $250,000.00 for any consecutive twelve (12) month period with respect to any single Facility.  Except for those limited Alterations that expressly do not require Landlord’s consent pursuant to the preceding sentence, all Alterations shall be subject to Landlord’s prior written consent, in Landlord’s reasonable discretion.  To the extent Landlord’s prior written consent shall be required in connection with any Alterations, Landlord may impose such conditions thereon in connection with its reasonable approval thereof as Landlord deems appropriate.  Notwithstanding the foregoing, Landlord agrees that painting, landscaping, and replacement of floor, wall and window coverings shall be deemed Alterations that do not require Landlord’s consent, regardless of the cost thereof, so long as the same meet the requirements of clauses (x) and (y) above, and the cost thereof shall not be counted towards the above-referenced $250,000.00 threshold.

11.2   Construction Requirements for all Alterations .  For all Alterations of any Leased Property, the following shall apply and shall be in addition to and not in lieu of any other requirements that Landlord may impose on Tenant in connection with the making of any Alterations and, except as described in this Section  11.2 , the following shall apply whether or not Landlord’s consent to the subject Alteration is required:

11.2.1   Plans and Specifications .  Prior to commencing any Alterations, Tenant shall have submitted to Landlord a written proposal describing in reasonable

detail such proposed Alteration and shall provide to Landlord for approval (or information, in the case of Alterations that do not require Landlord’s consent) such plans and specifications, permits, licenses, construction budgets and other information (collectively, the “ Plans and Specifications ”) as Landlord shall request, showing in reasonable detail the scope and nature of the proposed Alteration.

11.2.2   Permits .  Such construction shall not commence until Tenant shall have procured and paid for all municipal and other governmental permits and authorizations required therefor (as well as any permits or approvals required in connection with any Permitted Encumbrance), and Landlord shall join in the application for such permits or authorizations whenever such action is necessary; provided, however, that (i) any such joinder shall be at no liability, cost or expense to Landlord; and (ii) any Plans and Specifications required to be filed in connection with any such application that require the approval of Landlord shall have been so approved by Landlord.

11.2.3   No Impairment .  Such construction shall not, and prior to commencement of such construction Tenant’s licensed architect or engineer shall certify to Landlord that such construction shall not, impair the structural strength of any component of the applicable Facility or overburden or impair the operating efficiency of the electrical, water, plumbing, HVAC or other building systems of any such Facility.  The aforesaid certification shall not be required in the case of Alterations that do not require Landlord’s consent.

11.2.4   Compliance Certification .  Prior to commencing any Alterations, Tenant’s licensed architect or engineer shall certify to Landlord that the Plans and Specifications conform to and comply with all Insurance Requirements and all applicable building, subdivision and zoning codes, laws, ordinances, regulations and other Legal Requirements.  The aforesaid certification shall not be required in the case of Alterations that do not require Landlord’s consent.

11.2.5   Parking .  During and following completion of such construction, the parking that is located on the Land adjoining the applicable Facility shall remain adequate for the operation of such Facility for its Primary Intended Use and in no event shall such parking be less than is required by any applicable Legal Requirements or was located on the Land adjoining such Facility prior to such construction.

11.2.6   Materials; Quality .  All work done in connection with such construction shall be done promptly and in a good and workmanlike manner using first-class materials and in conformity with all Legal Requirements.

11.2.7   As-Builts .  Promptly following the completion of the construction of any Alterations, Tenant shall deliver to Landlord:  (i) “as built” drawings of any Capital Alterations included therein, certified as accurate by the licensed architect or engineer selected by Tenant to supervise such work; and (ii) a certificate from Tenant’s licensed architect or engineer certifying to Landlord that such Alterations have been completed in compliance with the Plans and Specifications and all applicable Legal Requirements.  The certification referenced in subsection (ii) above shall not be required in the case of Alterations that do not require Landlord’s consent.

11.2.8   Certificate of Occupancy .  If, by reason of the construction of any Alteration, a new or revised certificate of occupancy for any component of the applicable Facility is required, Tenant shall obtain such certificate in compliance with all applicable Legal Requirements and furnish a copy of the same to Landlord promptly upon receipt thereof.

11.2.9   Lien Waivers .  Upon completion of any Alteration, Tenant shall promptly deliver to Landlord final lien waivers from each and every general contractor and subcontractor that provided goods or services in connection with such Alteration indicating that such contractor or subcontractor has been paid in full for such goods or services, together with such other evidence as Landlord may reasonably require to satisfy Landlord that no liens have been created in connection with such Alteration.  The deliveries referenced in this Section  11.2.9 shall not be required in the case of Alterations that do not require Landlord’s consent, unless and to the extent requested in writing by Landlord.

11.3   Capital Expenditures Account .

11.3.1   Required Capital Expenditures .

11.3.1.1   As used in this Lease, (i) “ Required Leased Property Annual Capital Expenditures Amount ” shall mean, as to each Lease Year applicable to a particular Leased Property, an amount equal to the product of (a) the Required Per Unit Annual Capital Expenditures Amount that is applicable during such Lease Year (calculated as a weighted average in the event of any change in such Required Per Unit Annual Capital Expenditures Amount during such Lease Year) times (b) the aggregate number of Units at such Leased Property during such Lease Year (calculated as a weighted average in the event of any change in the number of such Units during such Lease Year), but, subject to Section  11.3.4 , below, with such amount to be prorated for any partial Lease Year, and (ii) “ Capital Expenditures ” shall mean expenditures by Tenant on repairs, replacements and improvements to the Premises (including any part of Landlord’s Personal Property or Tenant’s Personal Property other than any part thereof that, by the terms of Section  35 below, is to be retained by Tenant upon the expiration or termination of this Lease and excluding the Hurricane Renovations referenced in Section  11.3.5 below) that (a) in accordance with GAAP, constitute capital expenditures, (b) are contemplated by the Annual Capital Expenditure Budget and (c) have been completed in a good, workmanlike and lien free fashion and in compliance with all Legal Requirements and with the terms of Sections  11.1 and 11.2 applicable to any Alterations.

11.3.1.2   Within thirty (30) days following the end of each respective Lease Year (or of any partial Lease Year resulting from the expiration or termination of this Lease) (such Lease Year (or partial Lease Year, if applicable), the “ Subject Lease Year ”), Tenant shall deliver to Landlord a report (a “ Capital Expenditures Report ”) on each Leased Property as to which a Lease Year has so ended, certified as true, correct and complete by Tenant pursuant to an Officer’s Certificate, summarizing and describing in reasonable detail all of the Capital Expenditures made by Tenant during such Subject Lease Year and the two (2) Lease Years preceding it (such Subject Lease Year, together with the two (2) Lease Years preceding it, the “ Subject Three Lease Years ”), on both an aggregate basis as to all Leased Properties as to which a Lease Year has so ended and broken down for each such Leased Property, and such receipts and other information as Landlord may reasonably request relative to the Capital Expenditures made by Tenant during such Subject Three Lease Years relative to each such Leased Property.  If, as to a particular Leased Property and a particular Subject Lease Year,

the sum of (i) the amount of the Capital Expenditures so made by Tenant at such Leased Property during the applicable Subject Three Lease Years and so reported to Landlord, plus (ii) the amount of any Capital Expenditures Deposits previously made by Tenant with respect to such Leased Property and such Subject Three Lease Years, and minus (iii) the amount of any payments made to Tenant from the Capital Expenditures Account with respect to such Leased Property and such Subject Three Lease Years (such sum, as  to a particular Leased Property and a particular Subject Lease Year, the “ Actual Leased Property Three Lease Years Capital Expenditures Amount ”) is less than the sum of the Required Leased Property Annual Capital Expenditures Amounts with respect to such Leased Property for the Lease Years included in such Subject Three Lease Years (such sum, as to a particular Leased Property and a particular Subject Lease Year, the “ Required Leased Property Three Lease Years Capital Expenditures Amount ”), Tenant shall, on or prior to the due date of the Capital Expenditures Report for such Subject Lease Year, deposit (herein, a “ Capital Expenditures Deposit ”) into an interest bearing account (the “ Capital Expenditures Account ”) under the sole dominion and control of Landlord (or any Facility Mortgagee) an amount equal to the amount by which such Required Leased Property Three Lease Years Capital Expenditures Amount exceeds such Actual Leased Property Three Lease Years Capital Expenditures Amount.  If, as to a particular Leased Property and a particular Subject Lease Year, the applicable Actual Leased Property Three Lease Years Capital Expenditures Amount exceeds the applicable Required Leased Property Three Lease Years Capital Expenditures Amount, then, provided no default or Event of Default by Tenant exists hereunder, within five (5) Business Days after Tenant’s presentation of its Capital Expenditures Report for such Subject Lease Year reflecting such greater expenditure at such Leased Property (if Landlord is holding the Capital Expenditures Account) or within five (5) Business Days after Landlord’s receipt of the necessary funds from the Facility Mortgagee that is holding the Capital Expenditures Account (if a Facility Mortgagee is holding the Capital Expenditures Account), Landlord shall pay to Tenant the lesser of (a) the amount by which the applicable Actual Leased Property Three Lease Years Capital Expenditures Amount so made by Tenant at such Leased Property and so reported to Landlord exceeds the applicable Required Three Lease Years Capital Expenditures Amount or (b) the net amount of funds in the Capital Expenditures Account that are attributable to Capital Expenditures Deposits previously made with respect to such Leased Property.  Attached hereto as Schedule  11.3.1 is an example of the application of this Section  11.3.1 .

11.3.2   Capital Expenditures Account .  The Capital Expenditures Account shall be maintained with a Lending Institution reasonably satisfactory to Landlord or with any Facility Mortgagee, and, for purposes of Section 11.3.1.2 (b) above and the other terms of this Lease, Landlord shall, with respect to each Capital Expenditures Deposit, keep records allocating such deposit to the appropriate Leased Property(ies) hereunder.  Landlord shall not be liable to Tenant or any other Person for any decline in the value of the funds held in the Capital Expenditures Account.  Furthermore, neither Landlord nor any Facility Mortgagee shall bear responsibility for the financial condition of, nor any act or omission by, any Lending Institution at which the Capital Expenditures Account is located.  The interest from deposits into the Capital Expenditures Account shall be retained in the Capital Expenditures Account to be applied in accordance with the terms of this Section  11.3 .  Tenant hereby grants to Landlord a first priority security interest in the Capital Expenditures Account pursuant to the Uniform Commercial Code (the “ UCC ”) of the State whose laws govern the perfection of such security interest, and the provisions of Section  21.1.1.1 below shall be applicable to such security interest.  Upon the occurrence of any Event of Default, Landlord or any Facility Mortgagee may apply any funds

held in the Capital Expenditures Account to cure such Event of Default or on account of any damages suffered or incurred by Landlord in connection therewith.  In connection with any assignment of Landlord’s interest under this Lease, the assigning Landlord or any predecessor shall have the right, and the obligation, to transfer all amounts in the Capital Expenditures Account and still in its possession or control to such assignee and, upon such transfer, the assigning Landlord or any such predecessor, as the case may be, transferring any such amounts shall thereupon be completely released from all liability with respect to such amounts so transferred, and Tenant shall look solely to said assignee in reference thereto.

11.3.3   Disposition of Capital Expenditures Account .  As described above, within thirty (30) days following the expiration or termination of this Lease, Tenant shall deliver to Landlord a Capital Expenditures Report with respect to the Lease Year or partial Lease Year immediately preceding such expiration or termination, and, if applicable, make a deposit into the Capital Expenditures Account.  If, on the basis of such Capital Expenditures Report, Tenant is entitled to a payment as described in Section  11.3.1 above, then, notwithstanding anything to the contrary contained in such Section  11.3.1 , such payment shall be due and payable to Tenant only as and when the conditions of Section  3.4.3 for the return of the Security Deposit have been met.  Except as provided in the preceding sentence, upon the expiration or termination of this Lease, all funds in the Capital Expenditures Account (including, without limitation, any funds that are required to be deposited therein by Tenant with respect to the Lease Year or partial Lease Year immediately preceding such expiration or termination) shall automatically and without further action of the parties become the property of Landlord, without any obligation on Landlord’s part to credit Tenant in any manner therefor.  The obligations of Landlord and Tenant under this Section  11.3 shall survive the expiration or termination of this Lease.

11.3.4   Certain Divisions and Calculations .  In the event that this Lease is terminated as to one or more Leased Properties (but not all of the Premises) on account of any event, circumstance or transaction to which Section  17.9 or Section  40 is applicable, then, for purposes of dividing any amounts then held in the Escrow Account or the Capital Expenditures Account between the amounts that will continue to be held under this Lease and the amounts that will be transferred to corresponding accounts under a New Lease entered into pursuant to Section  40 hereof or for any other purpose under this Lease, any such amounts so held in the Escrow Account or the Capital Expenditures Account shall be allocated to and among each terminated, and each non-terminated, Leased Property as determined by Landlord, in its sole discretion if any such termination results from an Event of Default and otherwise in its reasonable discretion.  In addition, in the event of (i) any termination of this Lease as to one or more Leased Properties (but not all of the Premises) on account of any New Lease under Section  40 or (ii) any combination of leases pursuant to Section  39 , calculations of the applicable amounts of the Required Leased Property Annual Capital Expenditures Amount, Actual Leased Property Three Lease Years Capital Expenditures Amount, required Capital Expenditures Deposits and similar items shall be made with respect to the Transferred Premises (in the case of Section  40 ) or the combined properties under the Section 39 Lease (in the case of Section  39 ) the same as if all of such Transferred Premises or combined properties, as applicable, had been under the New Lease or Section 39 Lease relating thereto, as applicable, during any partial Lease Year preceding the Property Transfer Date (in the case of Section  40 ) or Section 39 Date (in the case of Section 39 ) applicable thereto.

11.3.5   Hurricane Renovations Escrow .  As of the Effective Date, Landlord continues to hold the sum of One Million Six Hundred Fifty Eight Thousand One Hundred Eighty Six and 13/100 Dollars ($1,658,186.13), plus interest on such amount since December 31, 2007, representing the remaining amount, plus interest thereon, credited to Landlord from the sellers of the Farm Pond Properties located in Florida on account of certain hurricane repairs and capital improvement items which have yet to be completed (collectively, the “ Hurricane Renovations ”) (such deposit is referred to herein as the “ Hurricane Renovations Escrow Deposit ”), in an account (the “ Hurricane Renovations Escrow Account ”) of Landlord or, in Landlord’s sole discretion, with any Facility Mortgagee, which deposit may be commingled with other assets of Landlord or such Facility Mortgagee.  Landlord shall not be liable to Tenant or any other Person for any consequent loss of principal or interest on funds held in the Hurricane Renovations Escrow Account.  Furthermore, neither Landlord nor any Facility Mortgagee shall bear responsibility for the financial condition of, nor any act or omission by, any Lending Institution at which the Hurricane Renovations Escrow Account is located.  The interest from deposits into the Hurricane Renovations Escrow Account shall be retained in the Hurricane Renovations Escrow Account to be applied in accordance with the terms of this Section 11.3.5 .  Provided that no default or Event of Default by Tenant exists hereunder, and subject to the terms and conditions of this Section 11.3.5 , the Hurricane Renovations Escrow Deposit shall be used by Landlord to directly pay third parties for any out-of-pocket costs incurred by Tenant for the Hurricane Renovations (“ Hurricane Renovations Costs ”), upon delivery by Tenant to Landlord of documentation evidencing such Hurricane Renovations Costs, which payment shall be provided within ten (10) Business Days after the presentation of such evidence (if Landlord is holding the Hurricane Renovations Escrow Account) or within ten (10) Business Days after Landlord’s receipt of the appropriate funds from the Facility Mortgagee that is holding the Hurricane Renovations Escrow Account (if a Facility Mortgagee is holding the Hurricane Renovations Escrow Account).  Landlord shall have no obligation to make any payment for any Hurricane Renovations Costs that are: (i) in the aggregate, in excess of the Hurricane Renovations Escrow Deposit, (ii) for Hurricane Renovations made without the prior written approval of Landlord (not to be unreasonably withheld or delayed), or (iii) in the aggregate, for an amount less than $25,000 for any single payment request by Tenant (however, such lesser amounts that satisfy the other conditions of this Section 11.3.5   and are paid by Tenant shall be reimbursed by Landlord in accordance with this Section 11.3.5 ).  Promptly following the Effective Date, and in any event on or prior to July 31, 2008, Tenant shall commence any remaining Hurricane Renovations (including, without limitation, the replacement of windows at the Subject Farm Pond Properties that are located in Florida (other than the Summerville at Lake Mary Property, if such property is demised pursuant to this Lease)) and Tenant shall thereafter proceed diligently and continuously to complete such Hurricane Renovations and shall complete such Hurricane Renovations on or prior to December 31, 2008.   Upon completion of the Hurricane Renovations and payment or reimbursement of the Hurricane Renovation Costs, any amount remaining in the Hurricane Renovations Escrow Account shall be deposited into the Capital Expenditures Account.  The obligations of Landlord and Tenant under this Section 11.3.5   shall survive the expiration or termination of this Lease.

11.4   Annual Capital Expenditure Budget .  On or prior to January 31 of each calendar year, Tenant shall deliver to Landlord, at Tenant’s expense, a budget (the “ Annual Capital Expenditure Budget ”) setting forth Tenant’s reasonable estimate of the capital repairs, replacements and improvements to the Premises that Tenant anticipates will be necessary in such

calendar year to comply with the maintenance, repair and replacement obligations contained in Section  9 hereof and maintain the Leased Properties in a high quality condition, and, on or prior to the December 15 preceding the commencement of such calendar year, Tenant shall deliver to Landlord, at Tenant’s expense, a preliminary draft of the aforesaid Annual Capital Expenditure Budget for such calendar year.  Tenant shall perform any and all capital repairs, replacements or improvements contemplated by the Annual Capital Expenditure Budget within twenty-four (24) months after the commencement of the calendar year to which such Annual Capital Expenditure Budget relates.  If Tenant has not completed such capital repairs, replacements or improvements within such twenty-four (24) month period, Landlord may, but shall not be obligated to, complete such capital repairs, replacements or improvements, in which case Landlord may reimburse itself for the cost of any such work by withdrawing funds from the Capital Expenditures Account sufficient to pay for such capital repairs, replacements or improvements, and Tenant shall, within ten (10) days following demand therefor by Landlord, (i) restore to the Capital Expenditures Account any amount so withdrawn therefrom and paid to Landlord and (ii) to the extent there were insufficient funds in the Capital Expenditures Account fully to reimburse Landlord for the cost of such work, pay to Landlord any remaining unreimbursed amount.  In the event of any payment by Tenant pursuant to subsection (i) and/or (ii) above, Tenant shall be entitled to include the amount thereof in its next Capital Expenditures Report.

12.   Liens .  Subject to the provisions of Section  13   below governing a permitted contest by Tenant, Tenant will not, directly or indirectly, create or allow to remain, and will promptly discharge at its expense, any lien, encumbrance, attachment, title retention agreement or claim upon any Leased Property or any attachment, levy, claim or encumbrance in respect of the Rent, not including, however, (i) liens for those taxes of Landlord that Tenant is not required to pay hereunder, (ii) liens for Impositions or for sums resulting from noncompliance with Legal Requirements, so long as (1) the same are not yet payable or (2) such liens are in the process of being contested as permitted by Section  13 , (iii) liens of mechanics, laborers, materialmen, suppliers or vendors for sums either disputed in good faith or not yet due, provided that (1) such lien and such reserve or other appropriate provisions as shall be required by law or generally accepted accounting principles shall have been made therefor and (2) any such liens are in the process of being contested as permitted by Section  13 , and (iv) any liens that are expressly the responsibility of Landlord hereunder.  Notwithstanding the foregoing, Tenant shall bond over any lien affecting the applicable Leased Property if Landlord shall request or if any applicable Facility Mortgagee shall so require.

13.   Permitted Contests .  Tenant, on its own or on Landlord’s behalf (or in Landlord’s name), but at Tenant’s expense, may contest, by appropriate legal proceedings, conducted in good faith and with due diligence, the amount, validity or application, in whole or in part, of any Imposition or any lien, attachment, levy, encumbrance, charge or claim not otherwise permitted by Section  12 , provided that (i) in the case of an unpaid Imposition, lien, attachment, levy, encumbrance, charge, or claim, the commencement and continuation of such proceedings shall suspend the collection thereof from Landlord and from the applicable Leased Property, (ii) neither the applicable Leased Property nor any Rent therefrom nor any part thereof or interest therein would be reasonably likely to be in danger of being sold, forfeited, attached or lost, (iii) Tenant shall indemnify and hold harmless Landlord and the Landlord Indemnified Parties from and against any Losses incurred by Landlord or the Landlord Indemnified Parties in connection with any such contest or as a result thereof, (iv) Tenant shall give such security as may be demanded by Landlord to insure ultimate payment of, or compliance with, the same and

to prevent any sale or forfeiture of the affected Leased Property or the Rent by reason of such non-payment or non-compliance; provided, however, the provisions of this Section  13 shall not be construed to permit Tenant to contest the payment of Rent or any other sums payable by Tenant to Landlord hereunder, (v) in the case of the contest of an Insurance Requirement, the coverage required by Section  14   shall be maintained, and (vi) if such contest is resolved against Landlord or Tenant, Tenant shall, as Additional Rent due hereunder, pay to the appropriate payee the amount required to be paid, together with all interest and penalties accrued thereon, within ten (10) days after such determination (or within such shorter period as may be required by the terms of such determination), and comply, within any cure period allowed therefor by the applicable agency or authority (or if no such cure period shall be allowed or specified by the applicable agency or authority, promptly and diligently following the effective date of such determination); provided, however, that this subsection (vi) is not intended, and shall not be construed, to afford Tenant any cure or grace period beyond the effective date of any final unappealable determination.  Landlord, at Tenant’s expense, shall execute and deliver to Tenant such authorizations and other documents as may reasonably be required in any such contest, and, if reasonably requested by Tenant or if Landlord so desires, shall join as a party therein.  The terms of this Section  13 shall survive the expiration or sooner termination of this Lease.

14.   Insurance .

14.1   General Insurance Requirements .  Tenant shall obtain and maintain, or cause to be maintained, insurance for Tenant and the Leased Properties providing insurance coverages of such types, against such risks, in such amounts, with such deductibles and self-insurance retentions and with such endorsements as (i) Landlord, in its sole discretion, from time to time deems (1) commercially reasonable (in light of such factors, including, without limitation, the availability and cost of particular types and amounts of coverages, as Landlord, in its sole discretion, deems appropriate) and/or (2) consistent with the insurance coverages that are maintained by owners of properties similar to the Leased Properties or (ii) as may be required from time to time by any Facility Mortgagee, but with such insurance coverages at all times to include (without limitation of the preceding provisions for greater coverages) at least the following minimum coverages:

14.1.1   Coverage for loss or damage by fire, lightning, wind and such other perils as are included in a standard “all risk” or “special causes of loss” endorsement and against loss or damage by other risks and hazards covered by a standard property insurance policy, including, without limitation, riot, civil commotion, vandalism, malicious mischief, burglary and theft, relative to each Leased Property, in each case (i) in an amount equal to one hundred percent (100%) of the Full Replacement Cost of such Leased Property; (ii) containing an agreed amount endorsement with respect to the Leased Improvements and Tenant’s Personal Property at such Leased Property waiving all co-insurance provisions; (iii) containing (a) an “Ordinance or Law Coverage” or “Enforcement” endorsement and (b) “demolition” insurance and “increased cost of construction” insurance, if any of the Leased Improvements at, or the use of, such Leased Property shall at any time constitute legal non-conforming structures or uses; and (iv) having a deductible not exceeding Two Hundred Fifty T