Exhibit 10.3

May 25, 2010

Via Hand Delivery
Raymond L. Tyler
1400 Vintage Circle,
Franklin, Tennessee 37064

      Re: Termination of Employment

Dear Ray:

     This letter will confirm the terms of the agreement (the “Agreement”) between Raymond L. Tyler (“Tyler”) and Advocat Inc. and/or any of its wholly-owned subsidiaries (collectively the “Company”). Capitalized terms used in this letter but not defined herein shall have the meaning ascribed to them in the Employment Agreement between Tyler and the Company dated March 31, 2006 as amended March 9, 2009 (“Employment Agreement”).

     1. Tyler has submitted, and the Company has accepted, a notice of termination of employment with the Company pursuant to the Constructive Discharge provisions effective as of the close of business on May 25, 2010 (“Date of Termination”). In return for the agreements set forth herein, the Company will pay Tyler a lump sum payment of $308,000 as provided in the Employment Agreement, payable pursuant to Section 409A(a)(2)(B)(i) of the Internal Revenue Code (“Section 409A”), on the six month anniversary of the Date of Termination. The foregoing sum shall be offset by any amounts that Tyler may owe the Company at the time of termination. The Company shall also pay Tyler in a lump sum on his Date of Termination an amount equal to his accrued but unused vacation time. For a period of eighteen months after his Date of Termination, if requested by Tyler, the Company shall continue to pay his disability insurance premium and if Tyler elects to continue COBRA benefits, the Company shall reimburse Tyler for the cost of such health insurance benefits.

     Tyler’s outstanding stock options and stock appreciation rights (“SARs”) shall be deemed vested, and the options and SARs shall remain exercisable until December 31, 2010. In addition, pursuant to the requirements of Section 409A, the amount of Tyler’s bonus for 2008 and 2009 that he deferred under the 2008 Stock Purchase Plan for Key Personnel plus accrued dividends will be paid to Tyler on October 14, 2011, and the Company will report 50% of such amount to the IRS for tax year 2010, with respect to which there shall be an additional tax of 20%.

     2. Tyler will return any Company property in his possession, custody, or control including, without limitation, all records, memoranda, etc. relating to the business of the Company whether made by Tyler or otherwise coming into his possession. Tyler acknowledges that all such property is confidential and will remain the property of the Company.

     3. On behalf of Tyler and his heirs, representatives, and assigns, Tyler discharges and releases the Company and its affiliates and agents (collectively the “Released Parties”) from all claims, obligations, and demands that Tyler had, has, or may have arising out of or related to

his employment and/or the termination of his employment. Without limiting the generality of the foregoing, Tyler discharges and releases any claims, causes of action, liabilities, covenants, agreements, obligations, damages, and/or demands of every nature, character, and description under Title VII of the Civil Rights Act of 1964, the Fair Labor Standards Act, the Americans with Disabilities Act, the Family and Medical Leave Act, the Tennessee Human Rights Act, the Civil Rights Act of 1991, the Age Discrimination in Employment Act, the Older Worker Benefit Protection Act, the Employee Retirement Income Security Act of 1974 (except with respect to benefits to which Tyler has a vested entitlement), and all other federal, state, and local laws including any laws regarding wrongful discharge, breach of contract, retaliation, infliction of emotional distress (collectively, the “Released Claims”).

     4. Tyler agrees and understands that the effect of this Agreement is to waive and release any and all claims, causes of action, liabilities, covenants, agreements, obligations, damages and/or demands of every nature, character, and description, without limitation in law, equity, or otherwise, that Tyler had, has, or may have, whether known or unknown, against any of the Released Parties for any liability, whether vicarious, derivative, direct, or indirect. The foregoing includes, without limitation, any claims for damages (actual or punitive), back wages, future wages, commission payments, bonuses, reinstatement, past and future employee benefits (except to which there is vested entitlement) including contributions to the Company’s employee benefit plans, compensatory damages, penalties, equitable relief, attorneys’ fees, costs of court, interest, and any and all other loss, expense, or detriment of whatever kind arising out of or related in any way to your employment by the Company and/or the termination of such employment. However, Tyler does not by virtue of this Agreement waive or release any claims that arise after his signature below.

     5. Tyler will not initiate, or cause to be initiated, any lawsuit based on the Released Claims. Except as prohibited by law, Tyler will indemnify the Company and all other Released Parties for any sum of money that any of them may hereafter be compelled to pay Tyler, his heirs, representatives, or assigns and any of the Company’s legal fees and/or costs associated therewith on account Tyler bringing or allowing to be brought on his behalf legal action based upon the Released Claims. Furthermore, Tyler understands and agrees that this Agreement does not constitute any admission by the Company of any liability or of any violation of any federal, state, or local laws.

     6. Tyler and the Company will treat the terms, conditions, amount, and circumstances relating to this Agreement as confidential, except as disclosure may be required by applicable law. Tyler may disclose the terms of this Agreement to his tax advisor or counsel, provided that they agree to maintain the confidentiality of this Agreement. If Tyler is required to make any disclosure required by law, Tyler agrees to inform the Company immediately and prior to any such disclosure. Obligations under this paragraph shall terminate to the extent that information contained herein is made public by the Company in the course of its compliance with public disclosure obligations.

     7. Tyler shall have a period of up to 21 calendar days in which to consider entering into this Agreement. Tyler acknowledges that he has had the opportunity to read and review this Agreement and seek legal advice. Tyler freely and voluntarily, and without coercion, agrees to

and understands the significance and consequences of the terms of this Agreement. Tyler agrees not to sign this Agreement prior to the Date of Termination. Following the date of Tyler’s signature below, Tyler shall have a period of 7 calendar days within which to revoke his acceptance of this Agreement, in which case this Agreement shall be null and void. If Tyler does not exercise his right to revoke this Agreement within 7 calendar days of Tyler’s signature, this Agreement shall be held in full force and effect as of the 8 ^th calendar day (the “Effective Date”) and each party shall be obligated to comply with its requirements. The parties agree that any changes made to this Agreement (whether material or immaterial) as a result of the negotiation of the parties do not restart the running of the 21-day period noted above.

     8. Tyler and the Company will not engage in any conduct, verbal or otherwise, that would disparage or harm the reputation of the other. Such conduct shall include, without limitation, any negative statements made verbally or in writing by Tyler or the Company about the other.

     9. Tyler will at all times maintain strict confidentiality of, and will not give to any person, firm, association, corporation or governmental agency any information concerning the affairs, business, clients, customers or other relationships of the Company except as required by law. Tyler will not make use of this type of information for his own purposes or for the benefit of any person or organization other than the Company. Tyler will also use his best efforts to prevent the disclosure of this information by others.

     10. For a period of Twelve (12) months following the termination of his employment, Tyler will not use his status with the Company to obtain loans, goods or services from another organization on terms that would not be available to Tyler in the absence of his relationship to the Company.

     11. For a period of Twelve (12) months following the termination of his employment, Tyler will not (and Tyler will not assist others to) directly or indirectly, hire any employee of the Company or solicit or encourage any such employee to leave the employ of the Company.

     12. In his letter dated April 23, 2010, Tyler indicated that he believed that certain of the non-compete provisions of Section IX(C) of Tyler’s Employment Agreement would not apply since his termination of employment is pursuant to a Constructive Discharge. The Company acknowledges that the provisions of the second sentence of Section IX(C) of Tyler’s Employment Agreement do not apply to his termination as Tyler’s termination is pursuant to a Constructive Discharge. However, Tyler and the Company confirm and agree that all other confidentiality, non-solicit, non-hire and related provisions will continue to apply according to their terms. Specifically, Sections IX(A), (B), (D) and (E), as well as the first and the last sentence in Section IX (C) shall survive this Agreement and continue to apply according to their terms.

     13. As part of his employment, Tyler acknowledges and agrees that he has obtained knowledge, information, and expertise regarding the operations of the Company that may be useful to the Company in prosecuting, defending and otherwise managing current and future litigation matters by or against the Company. Therefore, Tyler will, with reasonable notice after

the Date of Termination, furnish information as may be in his possession and cooperate with the Company as may reasonably be requested in connection with any claims or legal actions in which the Company is or may become a party.

     14. In response to inquiries from his prospective employers, Tyler agrees that the Company may provide his dates of employment with the Company, job titles while employed by the Company, and final salary. Tyler agrees to advise any prospective employers to contact the Human Resources Department of the Company with regard to any references or other inquiries.

     15. Tyler acknowledges that his breach or threatened or attempted breach of any provision of this Agreement would cause irreparable harm to the Company not compensable in monetary damages. Notwithstanding the parties’ agreement to arbitrate disputes, Tyler consents to the issuance of a temporary restraining order and preliminary injunction by a court of competent jurisdiction to prohibit and enjoin any breach of a provision of this Agreement.

     16. Except with respect to the release of claims provided for above, the provisions of this Agreement shall be severable, and the invalidity of any provisions or portion thereof shall not affect the validity of the other provisions. To the extent that a court of competent jurisdiction deems any provision of this Agreement unenforceable (except the release of claims), such court shall modify the terms of the Agreement by adding, deleting, or changing in its discretion any language necessary to make such provision enforceable to the maximum extent permitted by law, and the parties expressly agree to be bound by any such provision as reformed by such court. If this Agreement is not enforceable in whole or in part after such severance or reformation, the Company shall have a contractual right of restitution, recoupment, and set-off to recover from Tyler any consideration paid to him under this Agreement.

     17. This Agreement constitutes the entire agreement between the parties with respect to its subject matter and, except as expressly set forth above, supersedes all previous agreements and understandings between the parties. This Agreement may not be modified except in a writing signed by both parties. This Agreement shall be governed by and construed in accordance with the laws of the State of Tennessee and without regard to any rule of construction under which an agreement may be construed against the drafter or any rule regarding conflicts of law. Any dispute among the parties hereto shall be settled by arbitration in Nashville, Tennessee, in accordance with the rules then obtaining of the American Arbitration Association and judgment upon the award rendered may be entered in any court having jurisdiction thereof.

     Tyler has carefully read this Agreement. Tyler hereby accepts and agrees to all of the terms and conditions of this Agreement.

Advocat Inc.
/s/ William R. Council III				/s/ Raymond L. Tyler
By: William R. Council, III				Raymond L. Tyler
Title:		President		Date: May 25, 2010
Date:		May 25, 2010

Exhibit 10.4
Execution Copy

LEASE AGREEMENT
(WITH OPTION TO PURCHASE)

     This Lease Agreement (“Lease”) is made and entered into as of the 14th day of July 2010 (the “Effective Date”), by and between A.B.E., LLC, a West Virginia limited liability company (herein called the “Lessor”), and DIVERSICARE ROSE TERRACE, LLC, a Delaware limited liability company (herein called the “Lessee”).

RECITALS

     WHEREAS, Lessor owns certain real property located in Milton, Cabell County, West Virginia, as more particularly described on Exhibit A attached hereto (the “Land”); and

     WHEREAS, Lessor and Lessee have agreed to construct, furnish, and equip certain improvements on the Land so as to qualify the improvements for licensure by the West Virginia Department of Health (“WVDH”) as a fully licensed skilled nursing facility having ninety (90) licensed beds (the “Facility”); and

     WHEREAS, upon completion of the Facility, Lessor desires to lease the hereinafter described Leased Property to Lessee, and Lessee desires to lease the same from Lessor, upon the terms, covenants and conditions hereinafter set forth.

     NOW THEREFORE, in consideration of the mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which is acknowledged, the parties to this Lease hereby covenant and agree as follows:

ARTICLE 1

      1.1 Lease and Leased Property . Upon and subject to the covenants, stipulations, terms and conditions hereinafter set forth, Lessor hereby leases, demises and lets to Lessee, and Lessee hereby leases, rents and hires from Lessor, for the Term hereof (beginning on the Commencement Date as more particularly set forth herein) the following described property (collectively, the “Leased Property”):

          1.1.1 the real property more particularly described in Exhibit A attached hereto and made a part hereof together with all easements, rights, hereditaments and appurtenances thereto belonging or otherwise benefitting such real property (the “Land”);

          1.1.2 the Facility (as hereinafter defined), and all structures, Fixtures (as hereinafter defined) and other improvements of every kind now or hereafter situated on the Land including, but not limited to, alleyways, crosswalks, sidewalks, utility pipes, conduits and lines (on-site and off-site), drainage and all above-ground and underground utility structures, drives, parking areas and roadways appurtenant to such improvements (collectively, the “Leased Improvements”);

          1.1.3 to the extent owned and installed in the Leased Improvements by Lessor, all permanently affixed equipment, machinery, fixtures, and other items of real and/or personal property, so permanently affixed or attached to or incorporated into the Land or Leased Improvements such that an interest in them arises under applicable real estate law and the same are deemed to be fixtures and accessions to the land and a part thereof, including all components thereof, now and hereafter located in, on or used in connection with, and permanently affixed to or incorporated into the Land or Leased Improvements, including, without limitation, all furnaces, boilers, heaters, electrical equipment, heating,

plumbing, lighting, ventilating, refrigerating, incineration, air and water pollution control, waste disposal, air-cooling and air-conditioning systems and apparatus (other than individual units), sprinkler systems and fire and theft protection equipment, and built-in oxygen and vacuum systems, together with all replacements, modifications, alterations and additions thereto (collectively, the “Fixtures”), but specifically excluding all items included within the category of Lessee’s Personal Property as defined below;

          1.1.4 to the extent owned and installed in the Leased Improvements by Lessor, all equipment, machinery, furnishings, furniture, trade fixtures, appliances and other items of personal property (excluding consumable inventory and supplies), and all components thereof, now or hereafter installed on the Land by Lessor and used, maintained or operated in connection with the Leased Improvements and specifically including the Facility FF&E defined herein (collectively, “Lessor’s Personal Property”), but specifically excluding all items included within the category of “Lessee’s Personal Property”; and

          1.1.5 to the extent permitted by law, all permits, approvals and other intangible property or any interest therein now or hereafter owned or held by Lessor in connection with the Leased Property or the use thereof or any business or businesses now or hereafter conducted by Lessee therefrom, including all licenses, permits, contract rights, agreements, water rights and reservations, zoning rights, business licenses and warranties (including those relating to construction or fabrication) related to the Leased Property, or any part thereof, specifically including the right to the use of (and Lessor hereby grants to Lessee the exclusive right to the use of) the name Rose Terrace Health and Rehabilitation Center and any derivatives thereof (collectively, “Permits and General Intangibles”).

      1.2 Definitions . For all purposes of this Lease, except as otherwise expressly provided or unless the context otherwise requires, (i) the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular, (ii) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles as at the time applicable, consistently applied, (iii) all references in this Lease to designated “Articles”, “Sections” and other subdivisions are to the designated Articles, Sections and other subdivisions of this Lease and (iv) the words “herein”, “hereof” and “hereunder” and other words of similar import refer to this Lease as a whole and not to any particular Article, Section or other subdivision. For purposes of this Lease, the following terms shall have the meanings indicated:

      Affiliate : When used with respect to any corporation or partnership, the term “Affiliate” shall mean any person which, directly or indirectly, controls or is controlled by or is under common control with such corporation or partnership. For the purposes of this definition, “control” (including the correlative meanings of the terms “controlled by” and “under common control with”), as used with respect to any person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such person, through the ownership of voting shares, partnership interests or other equity interests. The term “person” shall mean any natural person, trust, partnership, corporation, joint venture or other legal entity.

      Architect : Jones & Jones Associates Architects PC, 6120 Peters Creek Road, Roanoke, VA 24019.

      Business Day : Each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which federally chartered banks located in the State of West Virginia, are authorized, or obligated, by law or executive order, to close.

      Citation : Any operational or physical plant deficiency set forth in writing with respect to the Facility by any governmental body or agency, or Medicaid or Medicare intermediary, having regulatory oversight over the Facility, with respect to which the scope and severity of the penalty for such deficiency, if not cured, is one or more of the following: Loss of licensure or certification of need, decertification of the Facility from participation in the Medicare and/or Medicaid programs, appointments of a temporary manager or denial of payment for new admissions.

      Commencement Date : As defined in Section 2.1 hereof.

      Completion Date : The date on which the construction of the Improvements has been substantially completed such that Lessor has received the following: (i) a Certificate of Substantial Completion from the Architect, and (ii) a certificate of occupancy or its equivalent issued by the appropriate Governmental Authority having jurisdiction over the Leased Property which permits the occupancy of the Improvements for its Primary Intended Use. For purposes of this Lease, “ substantially completed ” shall mean that the Improvements and other work which Developer is obligated to perform hereunder have been completed in accordance with the Plans, notwithstanding the fact that Punch List Items remain to be performed.

      Construction Contracts : The contracts between Lessor and its General Contractor or any other contractor (including subcontractors) relating to rendering of services or furnishing of materials in connection with the construction of the Improvements, contracts between the General Contractor and any subcontractor and contracts between any of the foregoing and any other person relating to rendering of services or furnishing of materials in connection with construction of the Improvements.

      CPI : The United States Department of Labor, Bureau of Labor Statistics Revised Consumer Price Index for All Urban Consumers (1982-84=100), U.S. City Average, All Items, if that index is not available at the time in question, the index designated by such Department as the successor to such index, and if there is no index so designated, an index for an area in the United States that most closely corresponds to the entire United States, published by such Department, or if none, by any other instrumentality of the United States, calculated in this Lease as the CPI attributable to the month three (3) months prior to the applicable date herein.

      Declaration : The Declaration of Easements and Restrictions to be made and executed by A.B.E. LLC (“ABE”) and the New Entity described in Sec. 1.3 hereof imposing certain easements and restrictions upon the property of ABE adjacent to the Land for the use and benefit of the Lessee and any future owners and occupants of the Land in the form attached hereto as Exhibit F and incorporated herein by this reference.

      Development Budget : The detailed budget for the cost of the construction and development of the Improvements as agreed upon by Lessor and Lessee and containing such budget information as Lessor and Lessee may request and approve.

      Development Costs : All costs and expenses of construction and development of the Improvements and the Facility FF&E, in accordance with the Plans up to (but not to exceed without the approval of both Lessor and Lessee) the total amount set forth in the Development Budget, plus the value allocated to the Land of $750,000.00. Without limiting the foregoing, it is intended that Development Costs include all amounts funded, advanced or accrued by Lessor hereunder in the development of the Leased Property in accordance with the Development Budgets and the Plans, up to but not to exceed without the approval of both Lessor and Lessee the total amount set forth in the Development Budget.

      Facility : The fully licensed skilled nursing facility located on the Land and known as the Rose Terrace Health and Rehabilitation Center.

      Facility FF&E : The equipment, machinery, furnishings, furniture, trade fixtures, appliances and other items of personal property necessary, appropriate or required for the operation and occupancy of the Facility as a skilled nursing facility identified in the Plans, with vendors and items to be selected by Lessee, and to be initially installed in the Facility by Lessor in accordance with the Plans.

      General Contractor : AB Contracting, Inc., a West Virginia corporation, having an address of 5521 Ohio River Road, Point Pleasant, West Virginia 25550.

      Governmental Authority : The United States, the state, county, city and political subdivisions in which the Land is located or which exercise jurisdiction over the Land or the construction or operation of the Improvements thereon, and any court administrator, agency, department, commission, board, bureau or instrumentality of any of them which exercises jurisdiction over the Land or the construction or operation of the Improvements thereon, specifically including, without limitation, WVDH.

      Governmental Requirement : Any law, ordinance, order, rule, regulation, decree or similar edict of a Governmental Authority, including environmental, occupational, health, safety, zoning and other land use ordinances and regulations.

      Hazardous Materials : Any material or substance that is defined or classified under any Hazardous Materials Laws as a hazardous or toxic substance, material, waste or pollutant, or toxic or hazardous pursuant to regulations promulgated now or hereafter under any Hazardous Materials Laws, or presents a risk to human health or the environment under other applicable federal, state or local laws, ordinances, or regulations, as now in effect or as may be passed or promulgated in the future. “Hazardous Materials” specifically includes asbestos or any substance containing asbestos, the group of organic compounds known as polychlorinated biphenyls, flammable explosives, radioactive materials, medical waste, chemicals known to cause cancer or reproductive toxicity, pollutants, effluents, contaminants, emissions or related materials, petroleum and petroleum based products, and urea formaldehyde.

      Hazardous Materials Law : Any federal, state or local law, regulation or ordinance relating to environmental conditions, medical waste and industrial hygiene, including the Resource Conservation and Recovery Act of 1976 (“RCRA”), the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (“CERCLA”), as amended by the Superfund Amendments and Reauthorization Act of 1986 (“SARA”), the Hazardous Materials Transportation Act, the Federal Water Pollution Control Act, the Clean Air Act, the Clean Water Act, the Toxic Substances Control Act, the Safe Drinking Water Act, and any amendments, modifications or supplements thereto, and all similar federal, state and local environmental statutes and ordinances, whether heretofore or hereafter enacted or effective and all regulations, orders, or decrees heretofore or hereafter promulgated thereunder.

      Improvements : The Facility and other improvements to be constructed in accordance with the Plans, including any and all site preparation, landscaping and drainage work necessary to construct and operate the Facility for its Primary Intended Use.

      Intangible Property : shall mean all licenses and permits now owned or hereinafter acquired by Lessee, necessary or desirable for Lessee’s use of the Leased Property under this Lease, including, without limitation, if applicable, any certificate of need or other similar certificate; and the right to use any trade or other name now or hereafter associated with the operation of the Leased Property by Lessee, including, without limitation, the name “Rose Terrace Health and Rehabilitation Center”, but specifically excluding the name “Diversicare” or any derivative thereof.

      Lease Year : A period of twelve (12) successive calendar months commencing on the Commencement Date (as defined in Article 2 hereof) and on the same date in each successive calendar year during the Term of this Lease.

      Notice : Any notice given hereunder in accordance with Article 22 hereof.

      Offsite Improvements : The extension of the drive extending from Route 60 to the boundary of the Property (the “Driveway Extension”), the extension to the boundary of the Land of utility lines sufficient (by volume) and satisfactory to serve the Facility for its Primary Intended Use, including any lift station for sewage disposal into the sewer system for the City of Milton, and storm drainage facility of the flow of surface water to facilitate proper drainage of water flow from the Property into storm water detention basins or retention pond areas located on adjacent property (the “Utility Improvements”), all to be constructed by Lessor, at Lessor’s cost and expense, pursuant to the Declaration.

      Overdue Rate : On any date, a rate of interest equal to two percentage points above the Prime Rate, but in no event greater than the maximum rate then permitted under applicable law.

      Plans : (i) The final plans and specifications for the construction of the Improvements and the Facility FF&E to be installed in the Facility, which have been prepared by the Architect and approved by Lessor and Lessee and (ii) all amendments, modifications and supplements thereto which do not require the approval of Lessor and Lessee or which have been approved by Lessor and Lessee subsequent to the execution of this Lease.

      Primary Intended Use : As defined in Section 7.2.1 hereof.

      Prime Rate : On any date, a rate of interest equal to the annual rate of interest published by The Wall Street Journal from time to time as the Prime Rate (such rate is currently published in the column “Money Rates” as the “base rate on corporate loans posted by at least 75% of the nation’s 30 largest banks”). If a range of rates is published as the Prime Rate by The Wall Street Journal, then the “Prime Rate”, for the purposes of this Lease, shall be the highest rate in such range. Each change in the Prime Rate as published by The Wall Street Journal shall be effective, for the purposes of this Lease, to change the Interest Rate as of the date that such change is published in The Wall Street Journal.

      Punch List Items : Minor details of construction, mechanical adjustments or decorations which remain to be completed following the Completion Date that do not (i) prevent the issuance of a certificate of use and occupancy (or the local equivalent thereof) for the Improvements and/or (ii) materially interfere with the use of the Improvements for the Primary Intended Use.

      Term; Term of this Lease; Lease Term; Term hereof : As and when used in this Lease, the foregoing defined terms each shall mean and include the Initial Term of this Lease as defined in Article 2 hereof, and, to the extent this Lease is extended and renewed as provided herein, the Renewal Term of this Lease as defined in Article 2 hereof.

      Total Project Costs : The total amount of all Development Costs expended and actually advanced and disbursed by Lessor in accordance with this Agreement, including the final advance of proceeds representing retainage withheld for completion or correction of any particular items of construction, in the total aggregate amount of up to $7,104,818.00, as set forth on Exhibit B attached hereto.

      Unavoidable Delays : Delays due to strikes, slowdowns, lock-outs or similar labor action; inability to procure equipment or materials; power failure; acts of God; delays, denials, challenges, restrictions or regulations by any federal, state or local governmental, quasi-governmental or regulatory

authority or agency; enemy action, war, revolution, riot, terrorism, vandalism, civil insurrection or commotion; fire; unavoidable casualty or other events, conditions or causes beyond the reasonable control of the party responsible for performing an act or obligation hereunder, provided that lack of funds shall not be deemed a cause beyond the control of either party hereto.

      WVDH : The West Virginia Department of Health and Human Resources, Office of Health Facilities, Licensure and Certification.

      WVDH Approvals: All licenses, permits, certificates of need and other approvals of WVDH necessary to operate the Primary Intended Use on the Leased Property.

     1.3 Lessor . The parties acknowledge that following the Effective Date hereof, Lessor intends to and will form the single asset entity described in Sec. 3.9.6 hereof for the purpose of owning, developing, constructing and leasing the Leased Property to Lessee in accordance with this Lease (the “New Entity”). Lessor intends to and will assign its interest in this Lease to such New Entity. Provided that (i) Lessor and such New Entity execute and deliver to Lessee a written assignment and assumption agreement pursuant to which such New Entity expressly assumes all the covenants, agreements, duties and obligations of the Lessor under this Lease and agrees to be bound by all the terms and conditions of this Lease and (ii) the owner(s) of such New Entity execute the Joinder with respect to Sec. 23.13 hereof, then such New Entity shall, as of the date of such assignment, be deemed to be, and Lessee will recognize and attorn to such New Entity as, the Lessor under and for purposes of this Lease. The parties agree that an addendum to this Lease shall be executed evidencing such New Entity as the Lessor under this Lease once the same has been established as provided herein.

ARTICLE 2

      2.1 Term; Commencement Date . The initial term of this Lease (the “Initial Term”) and the payment of the Rent due hereunder shall commence on the Commencement Date (as herein defined) and shall remain in effect for a period of twenty (20) years, expiring at midnight on the date that is two hundred forty (240) calendar months from the Commencement Date, unless terminated sooner pursuant to the provisions of this Lease. The Commencement Date shall be the date on which the last of the following conditions occurs or is satisfied (i) the construction of the Facility has been completed as evidenced by a Certificate of Substantial Completion by the Architect and the Facility FF&E for the Facility has been installed, (ii) all means of access, ingress and egress to and from the Facility, and the Offsite Improvements, have been substantially completed, are in good working order and are available for use by Lessee, (iii) a final and permanent certificate of occupancy for the Facility permitting the legal use and occupancy of the Leased Property as a fully licensed skilled nursing facility having ninety (90) beds has been obtained from the applicable local governmental authority having jurisdiction; and (iv) all physical plant inspections and regulatory approvals of the Facility from the applicable governmental authorities necessary for the Facility to be licensed by WVDH as a skilled nursing facility having ninety (90) beds have been obtained. In all events, the Commencement Date shall be no later than the Outside Date specified in Section 3.4, below. The parties agree that an addendum to this Lease shall be executed evidencing the Commencement Date once the same has been established as provided herein.

      2.2 Renewal . Provided that no Event of Default hereunder has occurred and is continuing at the time, Lessee shall have the option and right to renew and extend the Term of this Lease for two (2) additional successive periods of five (5) years each (each a “Renewal Term”). Lessee shall exercise this option and right to renew and extend the Term of this Lease by giving Lessor written notice of its intent and election to do so not less than six (6) months prior to the expiration of the then existing Term. Lessee’s leasing of the Leased Property during such Renewal Term shall be upon and subject to the same terms, covenants and conditions set forth in this Lease.

ARTICLE 3

      3.1 Development Budget; Plans . For a period of forty-five (45) days after the Effective Date, Lessor and Lessee will attempt to agree upon the Development Budget and the Plans. Lessee shall submit the Plans to WVDH for its review and approval. The final Development Budget and the Plans, as agreed to by Lessor and Lessee, and, as to the Plans, as approved by WVDH, may not be modified or amended without approval of the other except as specifically provided herein. If, despite their good faith efforts, Lessor and Lessee are unable to agree upon the Development Budget or the Plans within such forty-five (45) day period, then Lessor and Lessee shall each have the right to terminate this Lease upon Notice to the other provided, however, such right to terminate shall expire if and when agreement is reached.

          3.1.1 Contracting for Construction . Lessor will engage the General Contractor to construct the Improvements. Lessor is entitled to exercise its discretion in the allocation and apportionment of the work on the Improvements and to engage such other contractors as Lessor deems necessary and appropriate to construct the Improvements in a timely and cost-efficient manner. Lessor will negotiate and prepare the Construction Contracts, and will fulfill all of the responsibilities of the owner under such contracts. In connection with the negotiation of the Construction Contracts with the General Contractor, Lessor will (unless Lessee otherwise consents) cause the General Contractor at all times to maintain:

               3.1.1.1 Builder’s risk insurance covering the construction of the Improvements, in a face amount of not less than the full insurable value of the Improvements and materials supplied in connection with the Improvements;

               3.1.1.2 Liability insurance against claims for personal injury, death or property damage suffered by members of the public or others in or about the Land or adjacent land used in connection with the construction of the Improvements or occurring by reason of the ownership, maintenance, use or operation by Lessor, the General Contractor or any subcontractor, agent or employee thereof of any equipment, vehicles or other facilities in connection with the Property or the construction of the Improvements, in amounts of at least $1,000,000.00 per occurrence and $2,000,000.00 aggregate for personal injury or death and $100,000.00 for property damage.

               3.1.1.3 Workers’ compensation and employer’s liability insurance as may be required under any Governmental Requirement;

               3.1.1.4 Fire, casualty and extended coverage insurance on the Improvements of an insurable nature in a face amount of not less than the full insurable value thereof and such other insurance customarily carried by persons engaged in holding or operating property similar to the Property, such insurance to be obtained on or before the termination of the applicable builder’s risk insurance.

     All such insurance maintained pursuant to subsections 3.1.1.1, 3.1.1.2 and 3.1.1.4 of this Section 3.1.1 shall name Lessor and Lessee as an additional insured. All insurance maintained pursuant to subsection 3.1.1.1 of this Section 3.1.1 shall name Lessor, Lessee and the General Contractor, jointly, as loss payee and all insurance maintained pursuant to subsection 3.1.1.4 of this Section 3.1.1 shall name Lessor and Lessee, jointly, as loss payee.

     If the Improvements are totally or partially destroyed from a risk/hazard covered by the insurance described in this Section 3.1.1, Lessor shall cause such Improvements to be restored to substantially the same condition as existed immediately before the damage or destruction. In the case of any loss or damage to the Improvements, or any portion thereof, all insurance proceeds payable under any policy of

insurance required by this Section 3.1.1 shall be made available by the loss payees to Lessor for reconstruction or repair, as the case may be.

      3.2 Construction of Improvements; Offsite Improvements . Lessor shall construct the Improvements, in accordance with the Plans. The Facility will be equipped with the Facility FF&E in accordance with the Plans, which property shall be and remain “Lessor’s Personal Property” hereunder. Lessee shall have no responsibility for any costs associated with construction and equipping of the Facility in accordance with the Plans, including without limitation any construction costs required for site improvements necessary for construction of the Facility, installation of the Facility FF&E, installation or extension of utilities, obtaining the licenses and approvals, and any requirements of Owner’s construction lender. Lessor shall use its best efforts to cause the Improvements to be completed and equipped with the Facility FF&E substantially in accordance with the Plans for an amount not to exceed the Total Project Costs set forth on Exhibit B attached hereto, and the Commencement Date to occur by the Anticipated Commencement Date set forth in Sec. 3.6 hereof. Such work shall be performed by Lessor on a turnkey basis, at the sole cost and expense of Lessor, pursuant to a guaranteed price contract with the General Contractor being responsible for any and all cost overruns (distinguished, however, from any change orders requested by Lessee after approval of the final Plans resulting in an increase in Lessor’s cost of construction). If and to the extent the total amount of Development Costs shall exceed the Total Project Costs as set forth on Exhibit B (other than as a result of any change orders requested by Lessee after approval of the final Plans resulting in an increase in Lessor’s cost of construction), Lessor shall pay and shall not be reimbursed by Lessee for such excess amount and such excess amount shall not be included as a part of the Total Project Costs for purposes of determining the amount of Rent under Sec. 4.1 or the amount of the Purchase Price under Sec. 23.1. Lessor covenants and agrees that the Facility will be constructed with all new, good quality material in a good and workmanlike manner, in accordance with good construction practices, and in accordance with the approved final Plans (as the same may be modified or supplemented) and all applicable codes, ordinances and laws, including, without limitation, the requirements of the Americans with Disabilities Act, the zoning ordinances and building code of the city, county or other political subdivision having jurisdiction in which the Facility is located, provided, however, Lessee represents and warrants to Lessor that so long as the Facility is constructed in substantial conformance with the Plans, it will comply with the requirements of WVDH for the construction of a skilled nursing facility.

          3.2.1 Lessor and Lessee acknowledge that the Declaration contains covenants and obligations on the part of Lessor relative to the construction of the Offsite Improvements. Lessor, at Lessor’s cost and expense, will complete the Offsite Improvements. The Offsite Improvements shall not be included as a part of the Plans. The cost and expense of the Offsite Improvements shall be separately borne and paid for by Lessor and shall not be a part of the Development Costs hereunder. As soon as reasonably practical after the Effective Date, Lessor, at its cost and expense, shall commence and diligently pursue completion of the construction and installation of the Offsite Improvements in a timely manner so as to facilitate the construction and completion of the Improvements by the Anticipated Commencement Date. The Offsite Improvements shall be constructed and installed as provided and set forth in the Declaration, in a good and workmanlike manner, and in accordance with all applicable laws, rules, ordinances, regulations and standards. Lessor shall be responsible for all costs and expenses in connection with the construction and installation of the Offsite Improvements. As soon as reasonably practical after the Effective Date, Lessor shall provide Lessee with detailed drawings which show the character, scope and location of the work to be performed in constructing and extending the Offsite Improvements to the property line of the Land.

          3.2.2 Lessor will keep accurate and complete books and records relating to the construction of the Improvements and installation of the Facility FF&E. Lessee will have access thereto during normal business hours upon 24 hours advance notice. Lessor will furnish or cause to be furnished

to Lessee from time to time, promptly upon request, (i) copies and lists of all paid and unpaid invoices for labor and materials with respect to the Improvements and the Facility FF&E, (ii) construction budgets and revisions thereof showing the estimated cost of the Improvements and the Facility FF&E, and the source of the funds required at any given time to complete and pay for the same, (iii) receipted bills, releases and waivers of liens, or other evidence of payment with respect to the cost of the Improvements and the Facility FF&E, and (iv) such other information establishing the payment and satisfaction of Lessor’s obligations relating to the construction of the Improvements and installation of the FF&E as Lessee may reasonable request.

          3.2.3 Lessor shall ensure that no construction liens or other liens or encumbrances shall be filed or recorded against or shall otherwise affect the Leased Property or any part thereof, or the Lessor’s interest therein, in respect of materials supplied or work done or to be done in connection with the construction of the Improvements and installation of the FF&E by Lessor hereunder. If any such lien is filed against the Leased Property, or any part thereof, or Lessor’s interest therein, in respect of materials supplied or work done or to be done in connection with the construction of the Improvements and installation of the FF&E by Lessor, then Lessor shall be responsible for the prompt payment and/or discharge of such lien. If the Lessor fails to discharge or cause any such lien to be discharged (by filing any bond required by law, payment or otherwise) within thirty (30) days after receipt of notice from Lessee of the filing or recording of the lien, then, in addition to any other rights or remedies of Landlord under this Lease or applicable law, Lessee may (but shall not be obligated to) discharge the lien by paying the amount claimed into court and the amount so paid, and all costs and expenses (including attorneys costs and expenses) plus interest at the Overdue Rate from the date paid, shall be immediately due and payable by the Lessor to Lessee upon demand.

      3.3 Change Orders . Lessor may not, without obtaining the prior written approval of Lessee, change the Plans, permit the Plans to be changed or permit construction of the Improvements other than in accordance with the Plans, which approval shall not be unreasonably withheld, delayed or conditioned by Lessee provided that (i) any such change does not (A) change the basic structure or character of the Facility; (B) materially increase or decrease in any manner the size of the Facility, or any component thereof; (C) materially change the appearance of the Facility; (D) result in the substitution of inferior materials or methods of construction; and (E) materially change or reduce the quality of the basic building systems, including the mechanical, electrical, sprinkler, plumbing, life-safety, heating, air conditioning and ventilation systems within the Facility; (ii) does not delay or extend the Commencement Date; or (iii) does not increase the financial commitment (including, without limitation, the amount of Rent) or obligations or risk of legal liability on the part of Lessee under this Lease.

      3.4 Progress of Construction; Access to Improvements . Lessor shall consult with designated representatives of Lessee during construction of the Improvements and with respect to furnishing and installing the Facility FF&E. Lessee shall be responsible for selecting the vendors and items of, and ordering through Lessee’s account, the Facility FF&E to be paid for and installed by Lessor as part of the Development Costs. Prior to the commencement of construction of the Improvements, Lessor shall provide Lessee with a complete set of stamped blueprints and the project manual for the construction of the Improvements, stamped by the Architect, and written confirmation or other acknowledgement from WVDH of its approval of the final Plans. Lessor and its General Contractor will be available to meet with Lessee or its designated representatives (which may at Lessee’s option, be by telephone conference call) not less often than monthly, or as needed, and will provide Lessee with updates concerning the development and construction of the Improvements). Upon request by Lessee from time to time, Lessor will provide Lessee a written report concerning the development and construction of the Improvements and addressing any specific questions or concerns raised by Lessee. Lessor shall provide Lessee with copies of (i) all architect’s certificates submitted to Lessor or its mortgage lender and (ii) all approvals, permits, inspection reports, and other governmental consents required to commence, perform

and complete the work to be performed by Lessor when and as obtained by or submitted to Lessor. Lessee and its agents and representatives shall, at all reasonable times, have access to the Land and the Improvements in order to inspect the progress and performance of the construction of the Improvements to determine compliance with the Plans and to conduct such other investigations and inspections as Lessee deems reasonably necessary. Lessor will cause its General Contractor to cooperate with Lessee and its designated representative during such inspections. If Lessee shall in good faith give Lessor Notice of defective construction, change in the scope of work, substitution of inferior materials or methods of construction, or other material deviation from, the Plans approved by Lessee, Lessor agrees to cause its contractors to promptly make any necessary corrections; provided, however, that the exercise or non-exercise by Lessor of its rights hereunder shall not operate as a waiver of any right of Lessee to require good and workmanlike construction of the Improvements in accordance with the Plans. In the event Lessor shall dispute the substance of Lessee’s notice, Lessor and Lessee shall submit the matter to a mutually acceptable third party architect for determination, whose decision shall be binding on both parties. On or before the Commencement Date, Lessor shall provide Lessee with a complete set of the as-built blueprints of the Improvements as constructed by Lessor together with manuals for (i) operation/maintenance data and materials for equipment and (ii) spare materials and equipment as required by individual sections of the project specifications manual.

      3.5 Lessee Furniture, Furnishings and Equipment . Lessor shall be responsible for equipping the Facility with the Facility FF&E, which shall be installed in consultation with Lessee’s designated representative. Lessee shall be responsible for furnishing and equipping the Facility with such consumable inventory and supplies, and such other furniture, furnishings, equipment and other personal property in addition to the Facility FF&E, if any, as may be necessary, appropriate or required for the operation and occupancy of the Facility as a skilled nursing facility. Any such inventory, supplies, furniture, furnishings and equipment to be supplied by Lessee shall fully conform to the requirements of WVDH for occupancy of a skilled nursing facility shall be timely installed on the Leased Property so as not to delay the Commencement Date. Lessor shall grant Lessee and its contractors non-exclusive access to the Leased Property during the period prior to the Commencement Date, at reasonable times, for the purpose of installing any such inventory, supplies, furniture, furnishings and equipment to be supplied by Lessee; provided, however, that (i) such period of early access to the Leased Property by Lessee shall not be construed as possession or acceptance of the Leased Property by Lessee, (ii) such entry shall be at Lessee’s sole risk and Lessee shall defend, indemnify and hold Lessor harmless from and against any claim, loss or liability of any nature arising from Lessee’s activities at the Property prior to the Commencement Date and (iii) such entry shall be completed at times and in a manner that does not interfere with Lessor’s construction of the Facility.

      3.6 Commencement of Construction; Delay of Commencement Date; Termination by Lessee. Construction of the Improvements will commence as soon as practical after Lessor and Lessee have agreed upon the Development Budget and Plans and the Plans have been approved by WVDH and will be diligently prosecuted to completion in a timely manner so that the Commencement Date shall occur on a date that is on or before June 1, 2011 (the “Anticipated Commencement Date”) but not later than the date that is on or before October 1, 2011 (the “Outside Date”). Such anticipated Completion Date and Outside Date may be extended for each day of delay as a result of any Unavoidable Delay not the fault of Lessor or Lessee. If construction of the Improvements has not commenced on or before August 31, 2010 and such delay is not due to any fault on the part of Lessee or Unavoidable Delays, then Lessee shall have the right to terminate this Lease by giving Lessor Notice of its intent to terminate this Lease and this Lease shall be terminated and shall be null and void with no further obligations between the parties. If the Commencement Date has not occurred on or before the Outside Date and such delay is not due to any fault on the part of Lessee or Unavoidable Delays, then Lessee shall have the right to terminate this Lease by giving Lessor Notice of its intent to terminate this Lease whereupon this Lease shall be terminated and shall be null and void with no further obligations between the parties.

      3.7 Compliance with Governmental Requirements; Inspection by Licensing Authority. Lessor will ensure that the physical plant aspects of the Facility fully comply in all respects with all Governmental Requirements and all other requirements, including but not limited to the requirements of the applicable Governmental Authority for the issuance of a permit for the operation of a skilled nursing facility on the Land, and the requirements of all federal and state health and life safety code agencies. Lessee will coordinate all necessary interim and final inspections and approvals by WVDH. Lessor will coordinate all necessary interim and final inspections and approvals by any other authorities required to inspect and approve the Facility. Applications for and the procurement of all licenses, permits, and certificates (specifically including, but not limited to, building permits and certificates of occupancy) that are required to develop and construct or to occupy the Improvements are the responsibility of Lessor (other than the WVDH Approvals required to operate a skilled nursing facility at the Land). Application for and the procurement of the WVDH Approvals required to operate a skilled nursing facility at the Land shall be the responsibility of Lessee. Lessor shall cooperate with and assist Lessee in obtaining such WVDH Approvals for the Facility.

      3.8 Condition of Premises; Acceptance . Lessor shall provide Lessee with not less than ten (10) Business Days advance notice of the date of the Completion Date of the construction and equipping of the Facility in accordance with the Plans. Within ten (10) Business Days after such Completion Date, Lessor and Lessee will conduct a walk-through inspection of the Improvements and Lessee shall prepare and deliver a written list of any defects, omissions or other items not constructed or furnished in conformance with the Plans. Lessee shall obtain any inspections required by WVDH upon completion of the Facility. Lessee shall be entitled to be present when such inspection is made. Lessee and Lessor shall likewise inspect the Offsite Improvements and Lessee shall prepare a written list of any defects, omissions or other items of the Offsite Improvements not constructed in conformance with the Declaration. Except for Punch List Items, Lessor shall cause all defects, omissions or other items noted by Lessor and Lessee (as well as any defects noted by the applicable Government Authority, including WVDH) to be promptly completed or repaired prior to the Commencement Date. Upon Lessor curing the noted defects and/or omissions, or if no defects and/or omissions have been pointed out as herein provided, Lessor shall deliver possession of the Facility, and Lessee shall be deemed to have accepted the Facility in its then condition on the Completion Date subject to Lessee’s repair or correction of the Punch List Items and any latent defects (as defined in Sec. 8.1). All Punch List Items, other than those reasonably requiring more than thirty (30) days to complete due to long scheduling or ordering time or other reasonable factors, shall be completed by Lessor within thirty (30) days after the Completion Date. Any Punch List Items reasonably requiring more than thirty (30) days to complete shall be diligently pursued and completed by Lessor as promptly as practicable. Except for Punch List Items and latent defects, Lessee accepts the Leased Property as of the Commencement Date on an “as-is” basis; provided, however, Lessor will provide Lessee with a construction warranty as issued by Lessor’s general contractor warranting the building structure for the Facility for a period of one (1) year from the date of completion and a standard fifteen (15) year roof repair warranty, transferable to Lessee or otherwise naming Lessee as an owner or beneficiary thereunder. All other transferable warranties, operating manuals, guaranties or sureties of the materials and workmanship provided by any contractors, subcontractors, suppliers or manufacturers, relating to the improvements, fixtures and personal property constructed or installed upon the Leased Property shall be transferred by Lessor to Lessee at the Commencement Date.

      3.9 Representations, Warranties and Covenants of Lessor . As a material inducement to Lessee to enter into this Lease, Lessor represents, warrants and covenants to Lessee that as of Commencement Date:

          3.9.1 The Improvements will have been constructed and equipped in accordance with the Plans, as amended or supplemented with the provisions of this Article 3, and the Improvements will

be in compliance in all material respects with all applicable statutes, rules, regulations and requirements of all applicable governmental entities or agencies having jurisdiction over the Improvements, and its operation including without limitation the Americans with Disabilities Act, and the building code requirements of the city, county or other political subdivision in which the Facility is located.

          3.9.2 The Improvements will be free from any material structural, electrical or mechanical defects and there will be no physical condition of the Improvements that could reasonably be expected to have a material adverse effect on the Lessee’s ability to use and operate the Leased Property for its Primary Intended Use.

          3.9.3 There will be no physical condition of the Land or the Leased Improvements of which Lessor is aware that could reasonably be expected to have a material adverse effect on Lessee’s ability to use and operate the Leased Property for its Primary Intended Use.

          3.9.4 The Land will be zoned or classified under applicable zoning ordinances or other land use regulations to permit the use and occupancy of the Leased Property as a skilled nursing facility. The Leased Improvements will be in compliance with all zoning or other land use regulations, public health, building code or other similar laws applicable thereto.

          3.9.5 Lessor will be the sole owner of and will have good and marketable fee simple title to the Leased Property free and clear of all liens, encumbrances, rights or claims of other parties, limitations or restrictions on use, or other matters except for (i) Taxes (as hereinafter defined) for the year 2010 not yet due and payable, (ii) easements for the installation and maintenance of public utilities serving the Leased Property and such other easements that do not adversely affect, impede or hinder the use, occupancy and enjoyment of the Leased Property by Lessee for its Primary Intended Use and (iii) those matters set forth on Exhibit C attached hereto (collectively the “Permitted Exceptions”). The Declaration will have been recorded in the real estate records of the Office of the County Clerk for Cabell County.

          3.9.6 Lessor will be a single asset entity that owns only the Leased Property. Lessor covenants with Lessee that, at all times during the Term of the Lease, Lessor shall maintain its status as a single asset entity and shall not acquire or own any material assets other than the Leased Property or engage in any business or activity other than the ownership, operation and maintenance of the Leased Property and activities incidental thereto.

          3.9.7 There will be no encroachments upon the Land and no encroachments of any Leased Improvements onto adjacent property. None of the Leased Improvements will violate set-back, building or side lines, nor will they encroach on any easements located on the Leased Property. All utilities serving the Facility will be in accordance with the Plans.

          3.9.8 Lessor has complied with, and to the actual knowledge of Lessor without investigation, all prior owners and occupants of the Land have complied with, all applicable Hazardous Materials Laws. Except as duly licensed or authorized by appropriate governmental authorities or otherwise permitted by such Hazardous Materials Laws, neither Lessor, its affiliates or agents have allowed the use, generation, treatment, handling, release, emission, manufacture, discharge, voluntary transmission, storage or removal of any Hazardous Materials on, at, over, in, from or upon the Land, nor to the actual knowledge of Lessor without investigation, has the Land ever been used for any of the foregoing. To the actual knowledge of Lessor without investigation, there are no polychlorinated biphenyls or friable asbestos or any substance containing asbestos in condition or amount deemed hazardous by any Hazardous Materials Laws present at the Leased Property. Lessor has not at any time engaged in nor permitted, nor to the actual knowledge of Lessor without investigation,, has any prior

owner or any tenant or other occupant of the Land engaged in or permitted, any dumping discharge, disposal, spillage or leakage (whether legal or illegal, accidental or intentional) of Hazardous Materials at, on, in, from or about the Land that would subject the Leased Property or Lessee to any clean-up obligations imposed by any governmental authorities. Lessor has not received or been issued any notice, demand, request for information, citation, summons, or complaint regarding an alleged failure to comply with any Hazardous Materials Laws. To the actual knowledge of Lessor without investigation,, the Leased Property is not subject to any existing, pending or threatened investigation or inquiry by any governmental authority for failure to comply with any Hazardous Materials Laws. To the actual knowledge of Lessor without investigation, there are no underground storage tanks on the Land, and, to the actual knowledge of Lessor without investigation, the Land is free of dangerous levels of naturally emitted radon. To the actual knowledge of Lessor without investigation, no portion of the Land has ever been used as a landfill, garbage or refuse dump site or waste disposal facility. Lessor will comply, or cause its contractors to comply, with all applicable Hazardous Materials Laws in connection with the use, storage, disposal or discharge of Hazardous Materials on or from the Land in the construction of the Leased Improvements. During the Term, Lessor will indemnify and hold harmless Lessee from and against all liabilities, obligations, claims, penalties, costs and expenses (including, without limitation, reasonable attorneys fees and expenses) which may be imposed upon, or incurred, suffered by, or asserted against Lessee by reason of the presence, use, maintenance, storage, release, disposal or discharge of any Hazardous Materials on, in, under or from the Land prior to the Commencement Date or any violation of any Hazardous Materials Laws arising out of or relating to conditions, circumstances or events prior to the Commencement Date.

          3.9.9 Lessor shall provide and deliver to Lessee, prior to the Commencement Date, for Lessee’s use and benefit in determining the accuracy of the representations, warranties and covenants of Lessor set forth in this Section 3.5, copies of any surveys, title insurance commitments, title insurance policies or title reports, environmental assessments, engineering reports, evidence of compliance with zoning, building codes and other land use laws or regulations, and evidence of utility availability with respect to the Leased Property issued or obtained in connection with Lessor’s financing of construction of the Facility or otherwise in the possession or control of Lessor; provided, however, such materials will be delivered “as is” for informational purposes only, without representation or warranty of any nature from Lessor. Lessee, at Lessee’s cost and expense, shall have the benefit of and may obtain, at Lessee’s option, the simultaneous issue of a leasehold title policy, at the then standard simultaneous issue rates of the title insurance company up to the full amount of the Facility Mortgage securing the financing of construction of the Improvements, in connection with any mortgagee policy issued in favor of such Facility Mortgagee, reflecting title to the Leased Property to be as represented in Section 3.9.5, above.

      3.10 Failure to Construct . If Lessor fails to construct or cause construction of the Improvements in accordance with the Plans to be completed by the Outside Date, then Lessee, at Lessee’s option, shall have the right (but shall not be obligated) to complete the Improvements in accordance with the Plans and expend such sums as Lessee reasonably deems proper in order so to complete the Improvements. The amount of any and all expenditures made by Lessee pursuant to this Section 3.9 shall be immediately due and payable by Lessor to Lessee, and Lessor agrees to pay the same to Lessee, promptly upon written demand therefor, together with interest thereon from the date of such expenditure to the date paid by Lessee at a daily rate equal to the Overdue Rate. Until so repaid by Lessor to Lessee, the amount of such expenditures made by Lessee shall not be deemed to be or included as a part of the Total Project Costs for purposes of this Lease. Upon any assumption by Lessee of the obligation to complete the Improvements as provided herein, Lessor shall forthwith surrender and deliver to Lessee, or Lessee’s designee, any funds which have been received from Lessor’s lender but have not been disbursed by Lessor, and all records, plans, specifications, permits and other governmental approvals, purchase agreements, contracts, receipts for deposits, unpaid bills and all other records, papers and documents in the possession of Lessor relating to the Improvements.

      3.11 Conditions to Lease. The obligations of Lessor and Lessee to develop, construct and lease the Facility as provided in this Lease are subject to and conditioned upon the satisfaction of the following conditions on or before the date that is forty-five (45) days after the Effective Date hereof (the “Satisfaction Date”):

          3.11.1 Lessee, at Lessee’s cost and expense, shall have obtained the approval of the West Virginia Health Care Authority, and any extension of the Certificate of Need previously approved for the Facility, necessary or required for the development, construction and lease of the Facility contemplated by this Lease. Lessee agrees to use its best efforts to obtain such approval and extension.

          3.11.2 Lessor, at Lessor’s cost and expense, shall have obtained a valid and binding commitment for a loan from the Existing Facility Mortgagee identified in Sec. 17.1 hereof for the financing of the cost of construction of the Improvements on terms reasonably acceptable to Lessor. Lessor agrees to use its best efforts to obtain such loan.

     If either of the foregoing conditions have not been satisfied on or before the Satisfaction Date, then either of Lessor or Lessee may and shall have the right to terminate this Lease by giving written notice thereof to the other party within fifteen (15) days after the Satisfaction Date, in which event all rights and obligations of the parties under this Lease shall cease and this Lease shall terminate and be of no further force and effect.

ARTICLE 4

      4.1 Rent . Lessee covenants and agrees to pay to Lessor, as rental (“Rent”) for the Leased Property during each lease year of the Term of this Lease, in lawful money of the United States of America, at Lessor’s address set forth herein or at such other address as Lessor may from time to time designate in writing, annual Rent in an amount equal to the Total Project Costs times 10.25%, such annual amount to be paid in twelve (12) equal monthly installments without demand, setoff or other reduction of any manner, except as otherwise expressly provided for herein, each due and payable, in advance beginning on the Commencement Date and, subject to adjustment commencing with the Second Lease Year as provided in Section 4.2 hereof, continuing on the same day of each calendar month thereafter for the remainder of the Term. Promptly following the Completion Date, Lessor and Lessee will execute an addendum to this Lease setting forth the amount of Rent to be paid hereunder beginning on the Commencement Date based upon the Total Project Costs as provided herein.

      4.2 Adjustment to Rent . The annual Rent payable during each Lease Year of the Term of this Lease, including each Renewal Term, shall be adjusted as follows:

          4.2.1 Commencing on the anniversary date of the Commencement Date that is the beginning of the second Lease Year, and continuing on each anniversary of the Commencement Date thereafter during each Lease Year of the Term of this Lease (each an “Adjustment Date”), the annual Rent payable hereunder shall be increased by the product of (i) the amount of the annual Rent payable during the initial Lease Year and (ii) the lesser of one (1) times the increase, if any, in CPI (expressed as a percentage) between the Commencement Date and each Adjustment Date and two and one-half percent (2.5%). In no event shall the Rent in any Lease Year during the Term of this Lease be less than the Rent payable during the preceding Lease Year as a result of the adjustment provided for in this Section 4.2.1.

      4.3 Security Deposit . Concurrent with the Commencement Date, Lessee shall deposit with Lessor a sum equal to three (3) monthly installments of Rent (the “Security Deposit”) which shall be held by Lessor as security for the full and faithful performance by Lessee of each and every term, provision, covenant and condition of this Lease. Lessee may satisfy the Security Deposit obligation in whole or in

part by providing an irrevocable, unconditional letter of credit issued by a national bank or financial institution reasonably acceptable to Lessor naming Lessor as beneficiary (the “Letter of Credit”). The Letter of Credit, if any, meeting the requirements of this Section 4.3 shall be maintained in full force and effect by Lessee for the benefit of Lessor for the full Term of this Lease. Within thirty (30) days prior to any expiration of the Letter of Credit, Lessee shall cause the same to be renewed and shall deliver the renewed Letter of Credit to Lessor. If Lessee defaults in respect of any of the terms, provisions, covenants and conditions of this Lease, including, but not limited to, payment of any Rent and other sums of money payable by Lessee, Lessor may, but shall not be required to, in addition to and not in lieu of any other rights and remedies available to Lessor use, apply or retain the whole or any part of the Security Deposit to the payment of any sum in default, or any other sum, including but not limited to, any damages or deficiency in reletting the Leased Property, which Lessor may expend or be required to expend by reason of Lessee’s default. Whenever, and as often as, Lessor has used the Security Deposit to cure Lessee’s default hereunder, Lessee shall, within thirty (30) days after Notice from Lessor, deposit additional money (or additional or substitute Letter of Credit) with Lessor sufficient to restore the Security Deposit to the full amount originally paid. Upon delivery of a substitute Letter of Credit to Lessor, Lessor shall return the existing Letter of Credit to Lessee for cancellation. In the event there exists no uncured Event of Default on the part of Lessee hereunder at the time, the full amount of the Security Deposit (or the original of the Letter of Credit) then on deposit with Lessor shall be returned to Lessee promptly upon the expiration or earlier termination of this Lease.

      4.4 Late Payment . If any installment of Rent owing by Lessee to Lessor under this Lease shall not be paid within ten (10) days of the date when due, such unpaid amount shall thereafter bear interest at the Overdue Rate from the due date thereof until the date of payment, which Lessee shall pay to Lessor on demand as a late charge (to the extent permitted by law) and, in such event, the parties hereby agree that such late charge will represent a fair and reasonable estimate of the costs Lessor will incur by reason of the late payment by Lessee.

      4.5 Proration for Partial Periods . The Rent for any month during the Term which begins or ends on other than the first or last day of a calendar month shall be prorated based on actual days elapsed.

ARTICLE 5

      5.1 Property Taxes . Subject to Article 10 relating to permitted contests, Lessee will pay, or cause to be paid, all real and personal property taxes and assessments levied or assessed against the Leased Property and applicable to the periods of time within the Term of this Lease (collectively “Taxes”) 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 or required, and will promptly, upon request, furnish to Lessor copies of receipts or other satisfactory proof evidencing such payments. If any such Taxes may, at the option of the taxpayer, lawfully be paid in installments (whether or not interest shall accrue on the unpaid balance of such Taxes), Lessee may exercise the option to pay the same (and any accrued interest on the unpaid balance of such Taxes) in installments and in such event, shall pay such installments during the Term hereof as the same respectively become due and before any fine, penalty, premium, further interest or cost may be added thereto. Lessee may, at Lessee’s sole cost and expense, protest, appeal or institute such other proceedings as Lessee may deem appropriate to effect a reduction of Taxes and Lessor, at Lessee’s expense as aforesaid, shall cooperate with Lessee in such protest, appeal or other action. Lessee shall reimburse Lessor for Lessor’s direct costs of cooperating with Lessor in such protest, appeal or other action. If Lessee elects not to contest Taxes, Lessor shall have the right to do so in its own name and at its sole cost and expense. If any refund shall be due from any taxing authority in respect of any Taxes paid by Lessee, the same shall be paid over to or retained by Lessee. In case any person or entity to whom any sum is directly payable by Lessee under any of the provisions of this Lease shall

refuse to accept payment of such sum from Lessee, Lessee shall thereupon give written notice of such fact to Lessor and shall pay such sum directly to Lessor, and Lessor shall thereupon pay such sum to such person or entity. To the extent Lessee so pays any Taxes to Lessor, Lessee shall be relieved of its obligation under this Lease to pay such Taxes to the entity to which such Taxes would otherwise be due. Lessor and Lessee shall, upon request of the other, provide such data and information as is maintained by the party to whom the request is made with respect to the Leased Property as may be necessary to prepare any required returns and reports with any taxing authorities.

      5.2 Notice of Taxes . Lessor shall promptly upon its receipt thereof deliver to Lessee any and all notices of assessments, valuations for purposes of assessments, invoices, bills or other notices regarding Taxes which it may from time to time receive relating to the Leased Property or any part thereof; provided that Lessor’s failure to do so shall in no way diminish Lessee’s obligation hereunder to pay such Taxes, but such failure shall obviate any default hereunder for a reasonable time after Lessee receives notice of any Taxes that it is obligated to pay.

      5.3 Proration of Taxes . Taxes imposed in respect of the tax-fiscal period during which the Term of this Lease commences and terminates shall be adjusted and prorated between Lessor and Lessee, whether or not such Taxes is imposed before or after such commencement or termination, so that Lessor shall be responsible for Taxes assessed and imposed on the Leased Property prior to the Commencement Date and after the termination of the lease Term. Lessee’s obligation to pay its prorated share thereof after termination shall survive such termination.

      5.4 License Fees and Business Taxes . Lessee shall pay directly to the applicable taxing or governmental authority having jurisdiction all license fees (including all application fees) and business occupation taxes or bed tax charged or assessed by the State of West Virginia and any political subdivision thereof for the licensing and operation of a skilled nursing facility applicable to periods of time within the Term of this Lease which are levied, rated, charged or assessed against or in respect of the business carried on in the Leased Property by Lessee or in respect of the use, operation or occupancy thereof or any part thereof by Lessee (provided, however, that Lessor shall pay all building permit and other fees for the initial construction of the Facility).

      5.5 Utility Charges . Lessee will pay or cause to be paid when due, to the appropriate supplier, all charges and deposits for electricity, power, gas, oil, water and all other utilities used in, on or by the Leased Property during the Term.

      5.6 Insurance Premiums . Lessee will contract for, in its own name, and will pay or cause to be paid all premiums for the insurance coverage required to be maintained by Lessee pursuant to Article 11 during the Term.

      5.7 Absolute Net Lease . All rent payments shall be absolutely net to Lessor free of real property taxes and assessments, sales and use taxes, and other taxes, assessments, utility charges, operating expenses, refurnishings, insurance premiums or any other charge or expense in connection with the Leased Property. All expenses and charges, whether for upkeep, maintenance, repair, refurnishing, refurbishing, restoration, replacement, insurance premiums, taxes, utilities, occupational licenses and other permits and other operating or other charges of a like nature or otherwise, shall be paid by Lessee. This provision is not in derogation of the specific provisions of this Lease, but in expansion thereof and as an indication of the general intentions of the parties hereto. Lessee shall at all times remain obligated under this Lease without any right of set off, counterclaim, abatement, deduction, reduction or defense of any kind, except as otherwise specifically set forth in this Lease.

ARTICLE 6

      6.1 Ownership of the Leased Property . Lessee acknowledges that the Leased Property is the property of Lessor and that Lessee has only the right to the exclusive possession and use of the Leased Property upon the terms and conditions of this Lease.

      6.2 Lessee’s Personal Property . All machinery, equipment, furniture, furnishings, inventory, supplies, movable walls or partitions, computers (and all associated software), trade fixtures or other personal property at the Leased Property now or hereafter owned by Lessee (or leased by Lessee from parties other than Lessor), if any, and located at or used in connection with the business operated by Lessee on the Leased Property, together with all replacements, alterations, additions and accessions thereto, shall belong to Lessee and be a part of “Lessee’s Personal Property.” Lessee may, at its expense, from time to time during the Term of this Lease install, affix or assemble or place on the Land or in the Leased Improvements any items of the Lessee’s Personal Property and may remove, replace or substitute for the same from time to time in the ordinary course of Lessee’s business. Such property shall at all times remain the personal property of Lessee. Upon the expiration or earlier termination of this Lease, Lessee may and shall have the right to remove all of Lessee’s Personal Property from the Leased Property subject, however, to the provisions of Article 28 below. Lessee shall, at its expense, repair all damage to the Leased Property caused by any removal of Lessee’s Personal Property, and Lessor may prevent such removal until proof, reasonably satisfactory to Lessor, is presented by Lessee reflecting its ability to repair any damage caused by such removal. Anything herein to the contrary notwithstanding, Lessee may not remove Lessee’s Personal Property from the Leased Property during or after the Lease Term if an Event of Default on the part of Lessee shall have occurred and be continuing at the time or in the event such removal is in accordance with a plan of Lessee to discontinue business operations from the Leased Property prior to the expiration of the Term of this Lease, except in the case of early termination of this Lease by Lessee as allowed and provided for elsewhere in this Lease.

      6.3 Landlord’s Security Interest . For the purpose of securing the payment and performance of Lessee’s obligations under this Lease, Lessee, as debtor, hereby grants to Lessor, as secured party, a security interest in and an express contractual lien upon, all of Lessee’s right, title and interest in and to Lessee’s Personal Property and in and to the Intangible Property and any and all products and proceeds thereof, in which Lessee now owns or hereafter acquires an interest or right, including any leased Lessee’s Personal Property. This Lease constitutes a security agreement covering all such Lessee’s Personal Property and the Intangible Property. The security interest granted to Lessor in this Section 6.3 is intended by Lessor and Lessee to be subordinate to any security interest granted in connection with the financing or leasing of all or any portion of Lessee’s Personal Property or to any working capital lender of Lessee so long as (i) the lessor or financier of such Lessee’s Personal Property agrees to give Lessor written notice of any default by Lessee under the terms of such lease or financing arrangement, to give Lessor a reasonable time following such notice to cure any such default and to consent to Lessor’s written assumption of such lease or financing arrangement upon Lessor’s curing of any defaults thereunder or (ii) Lessor and Lessee’s working capital lender execute an intercreditor agreement reasonably acceptable to Lessor. This security agreement and the security interest created herein shall survive the termination of this Lease if such termination results from the occurrence of an Event of Default, otherwise the security agreement and the security interest herein shall automatically terminate upon the expiration or sooner termination of this Lease.

      6.4 Financing Statements . If required by Lessor at any time during the Term, Lessee will execute and deliver to Lessor, in form reasonably satisfactory to Lessor, additional security agreements, financing statements, fixture filings and such other documents as Lessor may reasonably require to perfect or continue the perfection of Lessor’s security interest in Lessee’s Personal Property and the Intangible Property and any and all products and proceeds thereof now owned or hereafter acquired by

Lessee. Lessee shall pay all fees and costs that Lessor may incur in filing such documents in public offices where required to perfect the security interest of Lessor and in obtaining such record searches as Lessor may reasonably require. In the event Lessee fails to execute any financing statements or other documents for the perfection or continuation of Lessor’s security interest, Lessee hereby appoints Lessor as its true and lawful attorney in fact to execute any such documents on its behalf, which power of attorney shall be irrevocable and is deemed to be coupled with an interest.

      6.5 Excluded Lessee’s Personal Property . Anything in this Lease to the contrary notwithstanding, Lessor acknowledges and agrees that for purposes of Lessor’s security interest in Lessee’s Personal Property under Section 6.3, Lessee’s Personal Property shall not be deemed to include the following (the “Excluded Lessee’s Personal Property”): (i) Lessee’s continuous quality improvement program, manuals and materials; management information systems; policy, procedure and educational manuals and materials and similar proprietary property, and (ii) computer hardware and related equipment which is integrated with the computer system maintained by Lessee’s Affiliates and related computer software, provided, however, that Lessee shall cause all data that is reasonably necessary for the continuing operation of the Facility following the termination or expiration of this Lease, and which may be assessed through such computers or software, to be made available to Lessor in a reasonably accessible form without material cost to Lessor.

ARTICLE 7

      7.1 Licenses and Permits . Lessee shall make timely application to WVDH as soon as practical following commencement of construction of the Facility and thereafter to such other governmental regulatory bodies as may be required for the issuance of a license to operate the Facility as a skilled nursing facility and provide to Lessor written confirmation of filing by Lessee of its application for licensure and status thereof, together with acknowledgment by WVDH that said application is under consideration or that it is prepared to issue a license to Lessee upon completion of construction of the Facility. Lessee shall diligently pursue the issuance of the license, including any necessary amendment, transfer or cancellation of the existing license for the Facility as may be required by WVDH. Lessor shall cooperate with and use commercially reasonable efforts, where necessary or required, to assist Lessee in obtaining the license. Lessor shall commit no act that would hinder Lessee’s ability to obtain licensure to operate the Facility as a skilled nursing facility having ninety (90) licensed beds. At no time during the Term of this Lease or any option period shall Lessee surrender its license or the certificate of need to operate the Leased Property as a skilled nursing facility, nor transfer or make any attempt to transfer its license or the certificate of need to operate the Leased Property as a skilled nursing facility, either in whole or in part, to any other location, facility, entity or person for operation of a skilled nursing facility other than the Leased Property. Lessor covenants that during the Term of this Lease it will cooperate with Lessee and use commercially reasonable efforts, where necessary or required from Lessor as the owner of the Leased Property, to enable Lessee to obtain and maintain any licenses, permits and approvals needed by Lessee to use and operate the Leased Property for its Primary Intended Use under applicable local, state and federal law, and will obtain and maintain in force and effect any licenses, or certificates of need, permits and approvals necessary or required to be obtained and maintained by the owner of the Leased Property in order to use and operate the Leased Property for its Primary Intended Use.

      7.2 Use of the Leased Property.

          7.2.1 Permitted Use. Lessee shall use or cause the Leased Property to be used as a skilled nursing facility having ninety (90) beds licensed by WVDH for the provision of skilled nursing services to the elderly and/or other health-care oriented services for the elderly, and, in connection therewith, may use the Leased Property for the provision of food services, recreational services,