Sabra Health Care REIT, Inc. (Form: 8-K, Received: 11/05/2010 09:19:17)

Facility Name

Facility Address

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Applicable Radius
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[SNF/ALF]

[Urban/Rural]

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): November 3, 2010

SABRA HEALTH CARE REIT, INC.

(Exact name of registrant as specified in its charter)


Maryland	333-167040	27-2560479
(State of Incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

18500 Von Karman, Suite 550 Irvine, CA		92612
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number including area code: (949) 255-7100

Not Applicable

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01

Entry into a Material Definitive Agreement.

Distribution Agreement

Sun Healthcare Group, Inc. (“Sun”), Sabra Health Care REIT, Inc. (“Sabra”), and SHG Services, Inc. (“New Sun”) have entered into a distribution agreement, dated as of November 4, 2010 (the “Distribution Agreement”), that provides for various actions to be taken in connection with the distribution to Sun stockholders on a pro rata basis of all of the outstanding shares of common stock of New Sun (the “Separation”) and the merger of Sun with and into Sabra (the “REIT Conversion Merger”), the conditions to the Separation and the relationship between the parties subsequent to the Separation.

Pursuant to the Distribution Agreement, any liability arising from or relating to legal proceedings involving Sun’s healthcare business prior to the Separation will be assumed by New Sun, and New Sun will indemnify Sabra against any losses arising from or relating to such legal proceedings. The Distribution Agreement provides that any liability arising from or relating to legal proceedings involving Sun’s real property assets to be owned by Sabra will be assumed by Sabra and that Sabra will indemnify New Sun against any losses arising from or relating to such legal proceedings. Any liability arising from or relating to legal proceedings prior to the Separation, other than those arising from or relating to legal proceedings involving Sun’s healthcare business or such real property assets, will be assumed by New Sun.

In addition, the Distribution Agreement provides for cross-indemnities that require (i) Sabra to indemnify New Sun (and its subsidiaries, directors, officers, employees and agents and certain other related parties) against all losses arising from or relating to the liabilities being assumed by Sabra or the breach of the Distribution Agreement by Sabra and (ii) New Sun to indemnify Sabra (and its subsidiaries, directors, officers, employees and agents and certain other related parties) against all losses arising from or relating to the liabilities being assumed or retained by New Sun or the breach of the Distribution Agreement by New Sun.

Pursuant to the Distribution Agreement, each of the parties agrees to use commercially reasonable efforts to take or cause to be taken all actions, and do or cause to be done all things, reasonably necessary, proper or advisable to consummate the transactions contemplated by the Distribution Agreement. The Distribution Agreement provides that if any contemplated internal mergers and stock and asset transfers have not been effected on or prior to the date of the Separation, the parties will cooperate to effect these transfers as quickly thereafter as reasonably practicable. The entity retaining any asset or liability that should have been transferred prior to completion of the Separation will continue to hold that asset for the benefit of the party entitled thereto or that liability for the account of the party required to assume it, and must take any other action as may be reasonably requested by the party to whom such asset was to be transferred or by whom such liability was to be assumed in order to place such party, insofar as reasonably possible, in the same position as would have existed had such asset or liability been transferred or assumed as contemplated by the Distribution Agreement.

New Sun and Sabra have agreed in the Distribution Agreement that New Sun will pay all costs associated with the Separation and the other transactions contemplated by the Distribution Agreement that are incurred prior to the Separation. With limited exceptions, all costs relating to the Separation and the other transactions contemplated by the Distribution Agreement that are incurred after the Separation will be borne by the party incurring such costs.

With respect to any period in which Sabra has made or will make an election to be taxed as a real estate investment trust (“REIT”), New Sun will not make any indemnity payments to Sabra in an amount that could cause Sabra to fail to qualify as a REIT. The unpaid amount, if any, of such indemnity will be

placed in escrow and will be paid to Sabra only upon the satisfaction of certain conditions related to the REIT income requirements under the Internal Revenue Code of 1986, as amended. Any such amount held in escrow after five years will be released back to New Sun.

The Distribution Agreement also provides for the allocation of the net cash of Sun as of the Distribution Date between New Sun and Sabra as described in a schedule to the Distribution Agreement.

The Distribution Agreement is filed as Exhibit 2.1 to this Form 8-K and is incorporated herein by this reference. This description of the material terms of the Distribution Agreement is qualified in its entirety by reference to such exhibit.

Transition Services Agreement

New Sun and Sabra have entered into a transition services agreement, dated as of November 4, 2010 and effective as of the effective time of the REIT Conversion Merger (the “Transition Services Agreement”), pursuant to which New Sun may provide certain services to Sabra on a transitional basis following the Separation.

To the extent requested by Sabra, New Sun will provide Sabra with administrative and support services on a transitional basis pursuant to the Transition Services Agreement, including finance and accounting, human resources, legal support, and information systems support (each, a “Transition Service”) for a period of up to one year, subject to any permitted extensions contained therein. The Transition Services Agreement provides for Sabra to pay New Sun a rate per labor hour of actual services rendered.

The Transition Services Agreement provides that Sabra has the right to terminate a Transition Service after an agreed notice period. The Transition Services Agreement also contains provisions whereby Sabra generally agrees to indemnify New Sun for all claims, losses, damages, liabilities and other costs incurred by New Sun to a third party that arise in connection with the provision of a Transition Service, other than those costs resulting from New Sun’s gross negligence or willful misconduct.

The Transition Services Agreement is filed as Exhibit 10.1 to this Form 8-K and is incorporated herein by this reference. This description of the material terms of the Transition Services Agreement is qualified in its entirety by reference to such exhibit.

The Lease Agreements

Subsidiaries of New Sun (each a “Tenant”) and subsidiaries of Sabra (each a “Lessor”) have entered into multiple leases and master lease agreements, that, with certain exceptions, are expected to be effective as of the Separation (the “Lease Agreements”), that set forth the terms pursuant to which subsidiaries of New Sun will lease from subsidiaries of Sabra all of the real property that Sabra’s subsidiaries will own immediately following the Separation (representing 86 of the 202 properties that subsidiaries of Sun operated as of October 1, 2010). The parties to the Lease Agreements consist of multiple Lessors and multiple Tenants. The obligations of the Tenants under the Lease Agreements are guaranteed by New Sun.

The Lease Agreements provide for an initial term of between 10 and 15 years with no purchase options. Amounts due under the Lease Agreements are fixed (except for an annual rent escalator described below), and there is no contingent rental income based upon the revenues or net income which may be derived by subsidiaries of New Sun from the real property leased by New Sun pursuant to the Lease Agreements. Under the Lease Agreements, there is an annual rent escalator equal to the product of (a) the lesser of the percentage change in the Consumer Price Index (but not less than zero) or 2.5%, and (b) the prior year’s rent. The initial annual

aggregate base rent payable by subsidiaries of New Sun under the Lease Agreements is approximately $70.2 million.

At the option of the Tenant, the Lease Agreements may be extended for up to two five-year renewal terms beyond the initial term. If the Tenant elects to renew the term of the applicable Lease Agreement, the renewal will be effective as to all, but not less than all, of the leased property then subject to the applicable Lease Agreement. The term of the Lease Agreements is subject to termination prior to the expiration of the then current term upon default by the Tenant in its obligations, if not cured within any applicable cure periods set forth in the Lease Agreements, and certain other conditions described in the Lease Agreements, such as material damage to or destruction or condemnation of a leased property. In addition, in the event the Lessors are interested in disposing of any or all of the leased property which is the subject of the Lease Agreements, the Lease Agreements provide, with certain exceptions, that the Tenant will have a first right to negotiate with the Lessor with respect to the terms of the purchase of the affected leased property.

The Lease Agreements are commonly known as a triple-net lease. Accordingly, in addition to rent, the Tenant is required to pay the following: (i) all facility maintenance, (ii) all insurance required in connection with the leased properties and the business conducted on the leased properties, (iii) certain taxes levied on or with respect to the leased properties (other than taxes on the income of the Lessor) and (iv) all utilities and other services necessary or appropriate for the leased properties and the business conducted on the leased properties. Events of default under the Lease Agreements include the acceleration of indebtedness under New Sun’s credit facility resulting from a default by New Sun.

The Lease Agreements require that the Tenant utilize a leased property solely for the provision of healthcare services as specified in the Lease Agreements and related uses and such other uses as the Lessor of the leased property may otherwise approve. The Tenant is responsible for maintaining or causing to be maintained all licenses, certificates and permits necessary for the leased properties to comply with various healthcare and other regulations. With certain exceptions, the Tenant is also obligated to operate continuously each leased property as a provider of healthcare services.

The form of the Lease Agreements is filed as Exhibit 10.2 to this Form 8-K and the form of the Guaranty of the Lease Agreements by New Sun is filed as Exhibit 10.3 to this Form 8-K, and such agreements are incorporated herein by this reference. This description of the material terms of the Lease Agreements and the Guaranty is qualified in its entirety by reference to such exhibits.

Sabra Senior Secured Revolving Credit Facility

On November 3, 2010, Sabra Health Care Limited Partnership, of which Sabra is the sole general partner (the “Operating Partnership”), and certain subsidiaries of the Operating Partnership (together with the Operating Partnership, the “Borrowers”) entered into a Credit Agreement (the “Sabra Credit Agreement”) with certain lenders as set forth in the Sabra Credit Agreement and Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer (each as defined in the Sabra Credit Agreement).

The Sabra Credit Agreement provides for up to a $100.0 million senior secured revolving credit facility (up to $15.0 million of which may be utilized for letters of credit) and includes an accordion feature that allows the Borrowers, through the increase in commitments from existing lenders and/or the addition of new lenders, to increase the borrowing availability under the Sabra Credit Agreement by up to an additional $100.0 million. Borrowing availability under the Sabra Credit Agreement is subject to a borrowing base calculation based on, among other factors, the lesser of (i) the mortgageability cash flow (as such term is defined in the Sabra Credit Agreement) or (ii) the appraised value, in each case of the properties securing the Sabra Credit Agreement. The Sabra Credit Agreement will not be available for borrowing by Sabra until completion of the Separation and REIT Conversion Merger. At that time or soon thereafter, Sabra expects that approximately $87.6 million will initially be

available for borrowing under the Sabra Credit Agreement. Borrowing availability under the Sabra Credit Agreement terminates, and all borrowings mature, on November 3, 2013, subject to a one-year extension option.

Borrowings under the Sabra Credit Agreement bear interest on the outstanding principal amount at a rate equal to an applicable percentage plus, at the Borrowers’ option, either (a) a LIBOR rate determined by reference to the cost of funds for Eurodollar deposits for the interest period relevant to such borrowing (the “Eurodollar Rate”), or (b) a base rate determined by reference to the highest of (i) the federal funds rate plus one-half of 1.0%, (ii) the prime rate as announced by Bank of America (the “Base Rate”), and (iii) a LIBOR rate determined by reference to the cost of funds for Eurodollar deposits for a one-month period plus 1.0%. The applicable percentage for borrowings under the Sabra Credit Agreement is 3.00% per annum for borrowings at the Base Rate and 4.00% per annum for borrowings at the Eurodollar Rate.

In addition to paying interest on outstanding principal under the Sabra Credit Agreement, the Borrowers are required to pay a facility fee of 0.50% per annum to the lenders in respect of unused borrowings under the Sabra Credit Agreement.

The Sabra Credit Agreement is secured by, among other things, (i) a first priority lien against certain of the properties owned by certain subsidiaries of Sabra (collectively, the “Borrower Subsidiaries”) and will include initially certain of the properties that Sabra, through its subsidiaries, will acquire in connection with the Separation and REIT Conversion Merger, (ii) a first priority lien against all personal property owned from time to time by such Borrower Subsidiaries, and (iii) a first priority lien against the membership interests of the Borrower Subsidiaries which are owned by the Operating Partnership. The obligations of the Borrowers under the Sabra Credit Agreement are guaranteed by Sabra and certain subsidiaries of Sabra.

The Sabra Credit Agreement contains customary covenants that include restrictions on the ability to make acquisitions and other investments, pay dividends, incur additional indebtedness, engage in non-healthcare related business activities, enter into transactions with affiliates and sell or otherwise transfer certain assets as well as customary events of default. The Sabra Credit Agreement also requires Sabra, through the Borrowers, to comply with specified financial covenants, which include a maximum leverage ratio, a minimum fixed charge ratio and a minimum tangible net worth requirement.

The Sabra Credit Agreement is filed as Exhibit 10.4 to this Form 8-K and is incorporated herein by this reference. This description of the material terms of the Sabra Credit Agreement is qualified in its entirety by reference to such exhibit.

Indemnification Agreement

On November 4, 2010, the board of directors of Sabra (the “Sabra Board”) approved the form of indemnification agreement (“Indemnification Agreement”) to be entered into between Sabra and each person holding office as a director or officer of Sabra on or after such date. The Indemnification Agreement provides that Sabra will, in certain circumstances, indemnify each of the covered directors and officers to the maximum extent permitted by Maryland law for claims arising in such person’s capacity as a director or officer of Sabra. The rights of each director or officer party to an Indemnification Agreement are in addition to any other rights such person may have under Sabra’s charter, by-laws, or otherwise under Maryland law.

The Indemnification Agreement is filed as Exhibit 10.5 to this Form 8-K and is incorporated herein by this reference. This description of the material terms of the Indemnification Agreement is qualified in its entirety by reference to such exhibit.

Item 2.03

Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The disclosure in Item 1.01 under the heading “Sabra Senior Secured Revolving Credit Facility” is incorporated herein by reference into this Item 2.03.

Item 5.02

Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

(c) Appointment of Certain Officers

On November 4, 2010, the Sabra Board appointed (i) Richard K. Matros as Sabra’s Chief Executive Officer and President, (ii) Harold W. Andrews, Jr. as Sabra’s Executive Vice President, Chief Financial Officer and Secretary and (iii) Talya Nevo-Hacohen as Sabra’s Executive Vice President, Chief Investment Officer and Treasurer.

Richard K. Matros , age 56, will serve as Sabra’s Chairman, Chief Executive Officer and President. Mr. Matros has served as Chairman of the Board and Chief Executive Officer of Sun since 2001. Mr. Matros served as Chief Executive Officer and President of Bright Now! Dental from 1998 to 2000. From 1998 until its sale in May 2008, Mr. Matros was also the managing partner of CareMeridian, LLC (“CareMeridian”), a healthcare company that specialized in offering subacute and skilled nursing for patients suffering from traumatic brain injury, spinal cord injury and other catastrophic injuries, and continues to hold a partnership interest in a number of entities that own and lease real property to CareMeridian. Previously, from 1994-1997, he served Regency Health Services, Inc., a publicly held long-term care operator, holding positions as Chief Executive Officer, President, director and Chief Operating Officer. Prior to that time, from 1988 to 1994, he served Care Enterprises, Inc., holding positions as Chief Executive Officer, President, Chief Operating Officer, director and Executive Vice President—Operations. Mr. Matros currently serves on the Executive Committee of the Alliance for Quality Nursing Home Care, a Washington, D.C. based advocacy group for the long-term healthcare industry, on the board of directors of Smile Brands, Inc. and on the advisory board for RFE Investment Partners.

Harold W. Andrews, Jr. , age 46, will serve as Sabra’s Executive Vice President, Chief Financial Officer and Secretary. Mr. Andrews also serves as managing partner of Journey Health Properties, LLC and Journey Lane 5, LLC, two real estate holding entities he organized to own and lease specialized healthcare facilities and a commercial office building. From 1997 to May 2008, Mr. Andrews was also a partner and Chief Financial Officer of CareMeridian. Previously, from 1996 to 1997, Mr. Andrews served as the Vice President of Finance for Regency Health Services, Inc., a provider of post-acute care services. Prior to that time, he spent 10 years in public accounting at Arthur Andersen LLP, including serving as senior manager for publicly traded healthcare and real estate companies. Mr. Andrews is also a CPA and a member of the AICPA and Financial Executives International. He also serves on the boards of directors of Links Players International and Urban Health Alliance, two non-profit organizations.

Talya Nevo-Hacohen , age 51, will serve as Sabra’s Chief Investment Officer. Ms. Nevo-Hacohen currently serves as an advisor to private real estate developers and operators regarding property acquisitions and dispositions, corporate capitalization, and equity and debt capital raising. From August 2008 to February 2009, Ms. Nevo-Hacohen was a Managing Director with Cerberus Real Estate Capital Management, LLC, an affiliate of Cerberus Capital Management, L.P., a private investment firm. From 2003 to 2006, Ms. Nevo-Hacohen served as Senior Vice President—Capital Markets and Treasurer for HCP, Inc., a healthcare REIT. Previously, from 1993 to 2003, Ms. Nevo-Hacohen worked for Goldman, Sachs & Co. where she was a Vice President in the investment banking and finance, operations and administration divisions. Prior to her affiliation with Goldman Sachs, she practiced architecture and was associated with several architectural firms in New York.

(d) Election of Directors

On November 3, 2010, Mr. Matros, as the sole member of the Sabra Board, increased the authorized number of directors on the Sabra Board to five directors and elected Craig A. Barbarosh, Robert A. Ettl, Michael J. Foster and Milton J. Walters as directors of Sabra to fill the four vacancies.

On November 4, 2010, the Sabra Board appointed: (i) Mr. Barbarosh, Mr. Walters, and Mr. Foster to serve as members of the Audit Committee of the Sabra Board; (ii) Mr. Ettl, Mr. Barbarosh and Mr. Walters to serve as members of the Compensation Committee of the Sabra Board; and (iii) Mr. Ettl, Mr. Walters and Mr. Foster to serve as members of the Nominating and Governance Committee of the Sabra Board.

Item 9.01.

Financial Statements and Exhibits.

(d) Exhibits


2.1		Distribution Agreement, dated November 4, 2010, by and among Sun Healthcare Group, Inc., Sabra Health Care REIT, Inc. and SHG Services, Inc.*

10.1		Transition Services Agreement, dated November 4, 2010 and effective as of the effective time of the REIT Conversion Merger, by and between SHG Services, Inc. and Sabra Health Care REIT, Inc.

10.2		Form of Master Lease Agreement entered into between subsidiaries of SHG Services, Inc. and subsidiaries of Sabra Health Care REIT, Inc. that, with certain exceptions, is expected to be effective as of the Separation with respect to the 86 properties to be owned by subsidiaries of Sabra Health Care REIT, Inc. following the Separation and REIT Conversion Merger.

10.3		Form of Guaranty entered into by SHG Services, Inc. in favor of subsidiaries of Sabra Health Care REIT, Inc., as landlords under the Master Lease Agreements.

10.4		Credit Agreement, dated November 3, 2010, among Sabra Health Care Limited Partnership, Sabra Idaho, LLC, Sabra California II, LLC, Oakhurst Manor Nursing Center LLC, Sunset Point Nursing Center LLC, Sabra New Mexico, LLC, Sabra Ohio, LLC, Sabra Kentucky, LLC, Sabra NC, LLC, Sabra Connecticut II LLC, West Bay Nursing Center LLC and Orchard Ridge Nursing Center LLC, as Borrowers, Sabra Health Care REIT, Inc., as REIT Guarantor, the other guarantors party thereto, the lenders party thereto and Bank of America, N.A., as administrative agent, swing line lender and L/C issuer.

10.5		Form of Indemnification Agreement to be entered into with each of the directors and officers of Sabra.

*	Schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company hereby agrees to furnish supplementally copies of any of the omitted schedules and exhibits upon request by the Securities and Exchange Commission

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


SABRA HEALTH CARE REIT, INC.

/s/ Harold W. Andrews, Jr.
Name:		Harold W. Andrews, Jr.
Title:		Executive Vice President, Chief Financial Officer and Secretary

Dated: November 5, 2010

EXHIBIT INDEX


Exhibit Number		Description

2.1		Distribution Agreement, dated November 4, 2010, by and among Sun Healthcare Group, Inc., Sabra Health Care REIT, Inc. and SHG Services, Inc.*

10.1		Transition Services Agreement, dated November 4, 2010 and effective as of the effective time of the REIT Conversion Merger, by and between SHG Services, Inc. and Sabra Health Care REIT, Inc.

10.2		Form of Master Lease Agreement entered into between subsidiaries of SHG Services, Inc. and subsidiaries of Sabra Health Care REIT, Inc. that, with certain exceptions, is expected to be effective as of the Separation with respect to the 86 properties to be owned by subsidiaries of Sabra Health Care REIT, Inc. following the Separation and REIT Conversion Merger.

10.3		Form of Guaranty entered into by SHG Services, Inc. in favor of subsidiaries of Sabra Health Care REIT, Inc., as landlords under the Master Lease Agreements.

10.4		Credit Agreement, dated November 3, 2010, among Sabra Health Care Limited Partnership, Sabra Idaho, LLC, Sabra California II, LLC, Oakhurst Manor Nursing Center LLC, Sunset Point Nursing Center LLC, Sabra New Mexico, LLC, Sabra Ohio, LLC, Sabra Kentucky, LLC, Sabra NC, LLC, Sabra Connecticut II LLC, West Bay Nursing Center LLC and Orchard Ridge Nursing Center LLC, as Borrowers, Sabra Health Care REIT, Inc., as REIT Guarantor, the other guarantors party thereto, the lenders party thereto and Bank of America, N.A., as administrative agent, swing line lender and L/C issuer.

10.5		Form of Indemnification Agreement to be entered into with each of the directors and officers of Sabra.

*	Schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company hereby agrees to furnish supplementally copies of any of the omitted schedules and exhibits upon request by the Securities and Exchange Commission

Exhibit 2.1

DISTRIBUTION AGREEMENT

by and among

SUN HEALTHCARE GROUP, INC.,

SABRA HEALTH CARE REIT, INC.

and

SHG SERVICES, INC.

Dated as of November 4, 2010

TABLE OF CONTENTS


		Page

ARTICLE I DEFINITIONS			1
1.01.	General		1
1.02.	Rules of Construction		10

ARTICLE II PRE-DISTRIBUTION TRANSACTIONS; CERTAIN COVENANTS			11
2.01.	Corporate Restructuring Transactions		11
2.02.	Charters and Bylaws		11
2.03.	Transfer and Assignment of Certain Licenses and Permits		12
2.04.	Transfer of Assets and Assumption of Liabilities		12
2.05.	Financing Arrangements		12
2.06.	Consents		12
2.07.	Registration Statement		13
2.08.	State Securities Laws		13
2.09.	Listing Applications		13
2.10.	Director, Officer and Employee Resignations		13
2.11.	Ancillary Agreements		13
2.12.	Cash Allocation		14

ARTICLE III DISTRIBUTION TRANSACTIONS			14
3.01.	The Distribution		14
3.02.	Fractional Shares		14
3.03.	Restricted Stock Units		15

ARTICLE IV SURVIVAL, ASSUMPTION AND INDEMNIFICATION			15
4.01.	Survival of Agreements		15
4.02.	Ancillary Agreements		15
4.03.	Assumption and Indemnification		15
4.04.	Procedure for Indemnification		17
4.05.	Tax Procedures		19
4.06.	Characterization of Payments		20

ARTICLE V CERTAIN ADDITIONAL COVENANTS			20
5.01.	Further Assurances		20
5.02.	Receivables Collection And Other Payments		22

ARTICLE VI ACCESS TO INFORMATION			22
6.01.	Provision of Corporate Records		22
6.02.	Access to Information		23
6.03.	Litigation Support and Production of Witnesses		23
6.04.	Reimbursement		23
6.05.	Retention of Records		24
6.06.	Privileged Information		24
6.07.	Confidentiality		25

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ARTICLE VII NO REPRESENTATIONS OR WARRANTIES; EXCEPTIONS		26
7.01.	No Representations or Warranties; Exceptions	26

ARTICLE VIII CONDITIONS TO THE DISTRIBUTION		26
8.01.	Conditions to Obligations	26
8.02.	No Constraints	27
8.03.	Deferral of the Distribution Date	28
8.04.	Public Notice of the Deferred Distribution Date	28

ARTICLE IX INSURANCE		28
9.01.	Coverage	28
9.02.	Ownership of Existing Policies and Programs	28
9.03.	Pre-Distribution Insurance Claims	29
9.04.	D&O Insurance	30
9.05.	Non-Waiver of Rights to Coverage; Subrogation	30
9.06.	Scope of Affected Policies of Insurance	31
9.07.	Cooperation	31

ARTICLE X DISPUTE RESOLUTION AND ARBITRATION		31
10.01.	Sole and Exclusive Method for Resolution of Disputes	31
10.02.	Negotiation Between Executives	31
10.03.	Arbitration	32
10.04.	Selection of Arbitrators	32
10.05.	Rules	32
10.06.	Location	32
10.07.	Costs and Expenses	32
10.08.	Confidentiality	33

ARTICLE XI MISCELLANEOUS		33
11.01.	Termination	33
11.02.	Complete Agreement	33
11.03.	Expenses	33
11.04.	Governing Law	33
11.05.	Notices	34
11.06.	Amendment and Modification	34
11.07.	Successors and Assigns; No Third Party Beneficiaries	34
11.08.	Counterparts	35
11.09.	Severability	35
11.10.	Waiver of Compliance	35
11.11.	Waiver of Jury Trial	35
11.12.	Conflicts	35

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E XHIBITS :

EXHIBIT A		C ORPORATE R ESTRUCTURING T RANSACTIONS
EXHIBIT B		M ASTER L EASE
EXHIBIT C		N EW S UN P RO F ORMA B ALANCE S HEET
EXHIBIT D		S ABRA P RO F ORMA B ALANCE S HEET
EXHIBIT E		T AX A LLOCATION A GREEMENT
EXHIBIT F		T RANSITION S ERVICES A GREEMENT
EXHIBIT G-1		C ERTIFICATE OF I NCORPORATION OF N EW S UN
EXHIBIT G-2		B Y -L AWS OF N EW S UN
EXHIBIT H-1		A RTICLES OF A MENDMENT AND R ESTATEMENT OF S ABRA
EXHIBIT H-2		A MENDED AND R ESTATED B Y -L AWS OF S ABRA


S CHEDULES :

SCHEDULE 1.01( A )		P ROPERTIES
SCHEDULE 1.01( B )		S ABRA S UBSIDIARIES
SCHEDULE 2.12		C ASH A LLOCATION

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DISTRIBUTION AGREEMENT

THIS DISTRIBUTION AGREEMENT (this “ Agreement ”) is made and entered into as of this 4 ^th day of November, 2010, by and among Sun Healthcare Group, Inc., a Delaware corporation (“ Sun ”), Sabra Health Care REIT, Inc., a Maryland corporation (“ Sabra ”), and SHG Services, Inc., a Delaware corporation (“ New Sun ”).

W I T N E S S E T H:

WHEREAS, the board of directors of Sun has determined that it is appropriate and desirable to (a) separate Sun and its subsidiaries into two publicly-owned companies so that (i) the assets and liabilities relating to substantially all of Sun’s owned real property are allocated to Sabra (the “ Real Estate Business ”) and (ii) the other assets and liabilities relating to the historical operations of Sun are allocated to New Sun (the “ Healthcare Business ”), (b) distribute as a dividend to the holders of the issued and outstanding shares of common stock, par value $.01 per share, of Sun (“ Sun Common Stock ”) (i) all of the issued and outstanding shares of common stock, par value $.01 per share, of New Sun (“ New Sun Common Stock ”) on the basis of one share of New Sun Common Stock for every three shares of Sun Common Stock (the “ Distribution ”) and (ii) cash in an amount equal to $0.1335 for each share of Sun Common Stock and (c) at 5:00 p.m. Eastern Time on the date of the Distribution, merge Sun with and into Sabra, with Sabra surviving the merger (the “ REIT Conversion Merger ”);

WHEREAS, in connection with the REIT Conversion Merger, shares of common stock of Sabra, par value $.01 per share (“ Sabra Common Stock ”), will be electronically issued to holders of Sun Common Stock, or to such stockholders’ bank, broker or other nominee on such stockholders’ behalf by way of direct registration in book-entry form;

WHEREAS, immediately following the REIT Conversion Merger, New Sun will be renamed “Sun Healthcare Group, Inc.”; and

WHEREAS, the parties hereto have determined that it is necessary and desirable to set forth the principal corporate transactions required to effect the Distribution and the REIT Conversion Merger.

NOW THEREFORE, for valid consideration the sufficiency of which is hereby acknowledged and in consideration of the foregoing and the mutual agreements contained in this Agreement, the parties hereby agree as follows:

ARTICLE I

DEFINITIONS

1.01. General . As used in this Agreement, the following terms shall have the following meanings:

“ Action ” shall mean any demand, claim, action, suit, countersuit, arbitration, inquiry, proceeding or investigation by or before any federal, state, local, or foreign Governmental Authority or any arbitration or mediation panel or tribunal.

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“ Affiliate ” shall mean with respect to any specified Person, a Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such specified Person; provided, however, that for purposes of this Agreement, no Subsidiary or Affiliate of New Sun shall be deemed to be a Subsidiary or Affiliate of Sabra after the consummation of the Distribution and vice versa . As used herein, “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such entity, whether through ownership of voting securities or other interests, by contract or otherwise.

“ Agent ” shall mean American Stock Transfer & Trust Company, LLC or such trust company or bank designated by Sun, which shall act as agent for the holders of Sun Common Stock and the holders of New Sun Common Stock in connection with the Distribution and the holders of Sabra Common Stock in connection with the REIT Conversion Merger.

“ Agreement ” shall have the meaning set forth in the preamble to this Agreement.

“ Ancillary Agreements ” shall mean all the written agreements, instruments, understandings, assignments or other arrangements (other than this Agreement) entered into by the parties hereto or any other member of their respective Group in connection with the Corporate Restructuring Transactions, the Distribution and the other transactions contemplated hereby or thereby, including, without limitation, the following:

(i) the Lease Agreements;

(ii) the Tax Allocation Agreement;

(iii) the Transition Services Agreement; and

(iv) the Conveyance and Assumption Instruments.

“ Applicable Law ” shall mean all applicable laws, statutes, ordinances, orders, decrees, rules, regulations, policies or guidelines promulgated, or judgments, decisions, orders or arbitration awards entered, by any Governmental Entity.

“ Business Day ” shall mean any day other than a Saturday, Sunday or a day on which banking institutions located in the State of Delaware are authorized or obligated by law or executive order to close.

“ Code ” shall mean the Internal Revenue Code of 1986, as amended.

“ Consents ” shall have the meaning set forth in Section 2.06 of this Agreement.

“ Conveyance and Assumption Instruments ” shall mean, collectively, the various written agreements, instruments and other documents to be entered into to effect the Corporate Restructuring Transactions or otherwise effect the transfer of assets and the assumption of liabilities in the manner contemplated by this Agreement, the Ancillary Agreements and the Corporate Restructuring Transactions.

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“ Corporate Restructuring Transactions ” shall mean, collectively, (a) each of the mergers, transfers, conveyances, contributions, assignments, assumptions and other transactions described and set forth on Exhibit A attached hereto, including the repayment of the Sun Subordinated Notes and the Sun term loans, and (b) such other mergers, transfers, conveyances, contributions, assignments, assumptions and other transactions that may be appropriate or required to be accomplished, effected or consummated by Sun, New Sun or Sabra or any of their respective Subsidiaries and Affiliates in order to separate and divide, in a series of transactions, Sun so that: (i) the New Sun Assets, the New Sun Liabilities and the Healthcare Business shall be owned (and, in the case of New Sun Liabilities, retained or assumed, as the case may be), directly or indirectly, by New Sun; and (ii) the Sabra Assets, the Sabra Liabilities and the Real Estate Business are, after giving effect to the Distribution, owned (and, in the case of Sabra Liabilities, retained or assumed, as the case may be) directly or indirectly, by Sabra.

“ CPR Rules ” shall have the meaning set forth in Section 10.03 of this Agreement.

“ D&O Policies ” shall have the meaning set forth in Section 9.04 of this Agreement.

“ Disputes ” shall have the meaning set forth in Section 10.01 of this Agreement.

“ Distribution ” shall have the meaning set forth in the recitals of this Agreement.

“ Distribution Date ” shall mean the time and date, to be determined by the board of directors of Sun, or such committee of the board as shall be designated by the board of directors, as of which the Distribution shall be effected.

“ Distribution Record Date ” shall mean the time and date determined by the board of directors of Sun for purposes of determining the holders of record of Sun Common Stock entitled to participate in the Distribution.

“ Exchange Act ” shall mean the Securities Exchange Act of 1934, as amended, together with the rules and regulations promulgated thereunder.

“ Final Determination ” shall mean with respect to any issue (a) a decision, judgment, decree or other order by any court of competent jurisdiction, which decision, judgment, decree or other order has become final and not subject to further appeal, (b) a closing agreement (whether or not entered into under Section 7121 of the Code) or any other binding settlement agreement (whether or not with the IRS) entered into in connection with or in contemplation of an administrative or judicial proceeding, (c) the completion of the highest level of administrative proceedings if a judicial contest is not or is no longer available or (d) any other final disposition, including by reason of the expiration of the applicable statute of limitations.

“ Financing Transactions ” shall mean the New Sun Financing Transactions and the Sabra Financing Transactions.

“ Governmental Authority ” shall mean any federal, state, local, or foreign court, government, department, commission, board, bureau, agency, applicable stock exchange or other regulatory, administrative or governmental authority.

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“ Group ” shall mean, with respect to New Sun, the New Sun Group and, with respect to Sabra, the Sabra Group.

“ Healthcare Business ” shall have the meaning set forth in the recitals of this Agreement.

“ Income Tax ” shall have the meaning set forth in the Tax Allocation Agreement.

“ Indemnifiable Losses ” shall mean all Losses which are subject to being indemnified by Sun (or Sabra after the REIT Conversion Merger) or New Sun pursuant to Article IV.

“ Indemnifying Party ” shall mean a Person who or which is obligated under this Agreement to provide indemnification.

“ Indemnitee ” shall mean a Person who may seek indemnification under this Agreement.

“ Indemnity Payment ” shall mean an amount that an Indemnifying Party is required to pay to an Indemnitee pursuant to Article IV.

“ Information ” shall mean all records, books, contracts, instruments, computer data and other data and information (in each case, in whichever form or medium, including electronic media).

“ Insurance Charges ” shall have the meaning set forth in Section 9.03(b) of this Agreement.

“ Insurance Proceeds ” shall mean, with respect to any insured party, those monies, net of any applicable premium adjustment, retrospectively-rated premium, deductible, retention or cost of reserve paid or held by or for the benefit of such insured, which are either: (i) received by an insured from an insurance carrier; or (ii) paid by an insurance carrier on behalf of an insured.

“ IRS ” shall mean the U.S. Internal Revenue Service or any successor thereto, including, but not limited to its agents, representatives, and attorneys.

“ Law ” shall mean all laws, statutes, ordinances, orders, decrees, regulations, rules, policies or guidelines promulgated and other pronouncements of any Governmental Authority, and includes rules and regulations or any regulatory or self regulatory authority compliance with which is required by law.

“ Lease Agreements ” shall mean the Lease Agreements, substantially in the form of the Master Lease attached hereto as Exhibit B , which agreements will be entered into on or prior to the Distribution Date between Sabra and New Sun or members of their respective Groups.

“ Liabilities ” shall mean any and all debts, liabilities, obligations, responsibilities, response actions, losses, damages (whether compensatory, punitive or treble), fines, penalties and sanctions, absolute or contingent, matured or unmatured, liquidated or unliquidated, foreseen or unforeseen, joint, several or individual, asserted or unasserted, accrued or unaccrued, known or unknown, whenever arising, including without limitation those arising under or in connection with any Law (including any environmental Law), Action, threatened Action, order or consent

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decree of any Governmental Authority or any award of any arbitration tribunal, and those arising under any contract, guarantee, commitment or undertaking, whether sought to be imposed by a Governmental Authority, private party, or party to this Agreement, whether based in contract, tort, implied or express warranty, strict liability, criminal or civil statute, or otherwise, and including any costs, expenses, interest, attorneys’ fees, disbursement and expense of counsel, expert and consulting fees and costs related thereto or to the investigation or defense thereof.

“ Litigation Matters ” shall have the meaning set forth in Section 6.06(a) of this Agreement.

“ Losses ” shall mean all losses, liabilities, damages, claims, demands, judgments or settlements of any nature or kind, known or unknown, fixed, accrued, absolute or contingent, liquidated or unliquidated, including all reasonable costs and expenses (legal, accounting or otherwise as such costs are incurred) relating thereto, actually incurred by an Indemnitee.

“ NASDAQ ” shall mean the NASDAQ Global Select Market.

“ New Sun ” shall have the meaning set forth in the preamble to this Agreement.

“ New Sun Assets ” shall mean, collectively, all the rights and assets that are owned by New Sun or any of its Subsidiaries as of the Distribution Date, including without limitation:

(i) the capital stock of the New Sun Subsidiaries;

(ii) all the assets included on the New Sun Pro Forma Balance Sheet that are to be owned by New Sun or any of its Subsidiaries as of the Distribution Date;

(iii) all the assets and rights expressly allocated to New Sun or any of the New Sun Subsidiaries under this Agreement or any of the Ancillary Agreements;

(iv) any other asset acquired by Sun or any of its Subsidiaries from the date of the New Sun Pro Forma Balance Sheet to the Distribution Date that is owned by Sun or any of its Subsidiaries as of the Distribution Date and that is of a nature or type that would have resulted in such asset being included as an asset on the New Sun Pro Forma Balance Sheet had it been acquired on or prior to the date of the New Sun Pro Forma Balance Sheet, determined on a basis consistent with the determination of the assets included on the New Sun Pro Forma Balance Sheet; and

(v) all other assets of Sun or any of its Subsidiaries primarily used in, primarily related to, or primarily useful to the conduct of the Healthcare Business.

For purposes of this Agreement, an asset shall be deemed to be “primarily used”, “primarily related”, and “primarily useful” in the conduct of the Healthcare Business, if its use by the Healthcare Business, relative to other uses of the asset by Sun and its Subsidiaries, is its primary use. In the event that any dispute arises as to whether an asset is a New Sun Asset or a Sabra Asset, New Sun and Sabra shall negotiate in good faith after the date hereof to determine whether such asset should be a New Sun Asset or a Sabra Asset. In the event that the parties

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cannot resolve such dispute despite such good faith negotiations, then each party shall be entitled to any remedy available under Article X.

“ New Sun Common Stock ” shall have the meaning set forth in the recitals of this Agreement.

“ New Sun Financing Transactions ” shall mean the entry into by New Sun of a senior secured credit facility in the amount of $285,000,000, or such other financing transactions approved by the board of directors of the New Sun.

“ New Sun Group ” shall mean New Sun, the New Sun Subsidiaries and the corporation, partnerships, joint ventures, limited liability companies, investments and other entities that represent equity investments of New Sun or any of the New Sun Subsidiaries following the consummation of the Corporate Restructuring Transactions and the Distribution.

“ New Sun Liabilities ” shall mean all of the Liabilities of New Sun, the New Sun Subsidiaries and each of the other members of the New Sun Group, including, without limitation:

(i) all the Liabilities included on the New Sun Pro Forma Balance Sheet which remain outstanding as of the Distribution Date;

(ii) all other Liabilities that are incurred or which accrue or are accrued at any time prior to, on or after the date of the New Sun Pro Forma Balance Sheet and that arise or arose out of, or in connection with, the New Sun Assets or the Healthcare Business, determined on a basis consistent with the determination of the Liabilities of New Sun on the New Sun Pro Forma Balance Sheet;

(iii) all the Liabilities of New Sun, the New Sun Subsidiaries or any of the other members of the New Sun Group under, or to be retained or assumed by New Sun, any New Sun Subsidiary or any of the other members of the New Sun Group pursuant to this Agreement;

(iv) all Liabilities of any member of the New Sun Group, arising prior to the Distribution Date, to the extent primarily based upon, primarily arising out of or primarily resulting from (i) the conduct of the Healthcare Business, or (ii) any New Sun Assets; and

(v) all Liabilities of Sun other than the Sabra Liabilities.

“ New Sun Policy ” or “ New Sun Policies ” shall have the meaning set forth in Section 9.02(a) of this Agreement.

“ New Sun Pro Forma Balance Sheet ” shall mean the pro forma balance sheet of New Sun at June 30, 2010, attached hereto as Exhibit C .

“ New Sun Subsidiaries ” shall mean all of the Subsidiaries of Sun immediately prior to the Distribution other than Sabra and the Sabra Subsidiaries.

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“ No Gross Income Opinion ” shall have the meaning set forth in Section 4.05(a).

“ Person ” shall mean an individual, a partnership, a joint venture, a corporation, a trust, a limited liability company, an unincorporated organization, other entity or group (as defined in the Exchange Act), including any Governmental Authority.

“ Pre-Distribution Claims-Made Based Insurance Claim ” shall mean any claim made against the New Sun Group or Sabra Group and reported to the applicable insurer(s) on or prior to the Distribution Date in respect of a Liability occurring on or prior to the Distribution Date under a “claims-made-based” insurance policy maintained by Sun or its Subsidiaries in effect on or prior to the Distribution Date.

“ Pre-Distribution Insurance Claim ” shall mean a Pre-Distribution Claims-Made Based Insurance Claim or any Action (whether made prior to, on or following the Distribution Date) in respect of a Liability occurring on or prior to the Distribution Date under an “occurrence-based” insurance policy of Sun or any of its Subsidiaries in effect on or prior to the Distribution Date.

“ Privileged Information ” shall have the meaning set forth in Section 6.06(a) of this Agreement.

“ Properties ” shall mean the real property being transferred to Sabra and its Subsidiaries as listed on Schedule 1.01(A) .

“ Proxy Statement ” shall mean the definitive proxy statement dated September 29, 2010 as sent to the holders of shares of Sun Common Stock in connection with the Distribution and the REIT Conversion Merger including any amendments or supplements thereto.

“ Qualifying Income ” shall have the meaning set forth in Section 4.05(a) of this Agreement.

“ Real Estate Business ” shall have the meaning set forth in the recitals of this Agreement.

“ Registration Statements ” shall mean the registration statement on Form S-4 to effect the registration of the issuance and sale of Sabra Common Stock in the REIT Conversion Merger pursuant to the Securities Act and the registration statement on Form S-1 to effect the registration of the issuance and sale of New Sun Common Stock in the Distribution pursuant to the Securities Act.

“ REIT ” means an entity that is a real estate investment trust within the meaning of Section 856 of the Code.

“ REIT Conversion Merger ” shall have the meaning set forth in the recitals of this Agreement.

“ REIT Conversion Merger Date ” shall mean the close of business on the date, to be determined by the board of directors of Sun, or such committee of the board as shall be designated by the board of directors, as of which the REIT Conversion Merger shall be effected.

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“ Representative ” shall mean, with respect to any Person, any of such Person’s directors, officers, employees, agents, consultants, advisors, accountants, attorneys and other representatives.

“ Sabra ” shall have the meaning set forth in the preamble to this Agreement.

“ Sabra Assets ” shall mean, collectively, all the rights and assets that are owned by Sun or any of its Subsidiaries as of the Distribution Date (other than the New Sun Assets and the capital stock of New Sun), including without limitation:

(i) the capital stock of the Sabra Subsidiaries;

(ii) all the assets included on the Sabra Pro Forma Balance Sheet which will be owned by Sabra and its Subsidiaries as of the Distribution Date, including the Properties;

(iii) all the assets and rights expressly allocated to Sabra or any of its Subsidiaries under this Agreement and any of the Ancillary Agreements;

(iv) any other asset acquired by Sun or any of its Subsidiaries from the date of the Sabra Pro Forma Balance Sheet to the Distribution Date that is owned by Sun or any of its Subsidiaries and that is of a nature or type that would have resulted in such asset being included as an asset on the Sabra Pro Forma Balance Sheet had it been acquired on or prior to the date of the Sabra Pro Forma Balance Sheet, determined on a basis consistent with the determination of the assets included on the Sabra Pro Forma Balance Sheet; and

(v) all other assets of Sabra or any of its Subsidiaries primarily used in, primarily related to, or primarily useful to the conduct of the Real Estate Business.

For purposes of this Agreement, an asset shall be deemed to be “primarily used”, “primarily related”, and “primarily useful” in the conduct of the Real Estate Business, if its use by the Real Estate Business, relative to other uses of the asset by Sun and its Subsidiaries, is its primary use. In the event that any dispute arises as to whether an asset is a New Sun Asset or a Sabra Asset, New Sun and Sabra shall negotiate in good faith after the date hereof to determine whether such asset should be a New Sun Asset or a Sabra Asset. In the event that the parties cannot resolve such dispute despite such good faith negotiations, then each party shall be entitled to any remedy available under Article X.

“ Sabra Common Stock ” shall have the meaning set forth in the recitals of this Agreement.

“ Sabra Financing Transactions ” shall mean the entry into a secured revolving credit facility by Sabra in the amount of $100,000,000, the issuance by Sabra of senior unsecured notes in the amount of $225,000,000, or such other financing transactions approved by the board of directors of Sun and Sabra prior to the Distribution Date.

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“ Sabra Group ” shall mean Sabra, the Sabra Subsidiaries and the corporations, partnerships, joint ventures, investments, limited liability companies and other entities that represent equity investments of Sabra or any of the Sabra Subsidiaries following consummation of the Corporate Restructuring Transactions and the Distribution.

“ Sabra Indemnified Parties ” (and, with correlative meaning, “ Sabra Indemnified Party ”) shall mean Sun and each member of the Sabra Group and each of their respective Representatives and Affiliates and each of the heirs, executors, successors and assigns of any of the foregoing.

“ Sabra Liabilities ” shall mean all of the Liabilities of Sabra, including, without limitation:

(i) all the Liabilities included on the Sabra Pro Forma Balance Sheet which remain outstanding as of the Distribution Date;

(ii) all other Liabilities that are incurred or which otherwise accrue or are accrued at any time prior to, on or after the date of the Sabra Pro Forma Balance Sheet and that arise or arose out of, or in connection with, the Sabra Assets or the Real Estate Business, determined on a basis consistent with the determination of the Liabilities of Sabra on the Sabra Pro Forma Balance Sheet;

(iii) all the Liabilities of Sabra to be retained or assumed by Sabra pursuant to the Corporate Restructuring Transactions or this Agreement; and

(iv) all Liabilities of any member of the Sabra Group, arising prior to the Distribution Date, to the extent primarily based upon, primarily arising out of or primarily resulting from (i) the conduct of the Real Estate Business, or (ii) any Sabra Assets.

“ Sabra Pro Forma Balance Sheet ” shall mean the pro forma balance sheet of Sabra at June 30, 2010, attached hereto as Exhibit D .

“ Sabra Subsidiaries ” shall mean the Subsidiaries of Sun set forth on Schedule 1.01(B) hereto.

“ SEC ” shall mean the United States Securities and Exchange Commission.

“ Securities Act ” shall mean the Securities Act of 1933, as amended, together with the rules and regulations promulgated thereunder.

“ Share Distribution ” shall mean the distribution contemplated by Section 3.01 of this Agreement and upon the terms and subject to the conditions set forth herein.

“ Specified REIT Requirements ” shall have the meaning set forth in Section 4.05(a).

“ Subsidiary ” shall mean with respect to any specified Person, any corporation or other legal entity of which such Person or any of its Subsidiaries controls or owns, directly or indirectly, more than 50% of the stock or other equity interest entitled to vote on the election of

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members to the board of directors or similar governing body; provided, however , that for purposes of this Agreement, (a) the New Sun Subsidiaries shall be deemed to be Subsidiaries of New Sun and (b) the Sabra Subsidiaries shall be deemed to be Subsidiaries of Sabra.

“ Sun ” shall have the meaning set forth in the preamble to this Agreement.

“ Sun Common Stock ” shall have the meaning set forth in the recitals of this Agreement.

“ Sun Subordinated Notes ” shall mean the 9.125% Senior Subordinated Notes due 2015 in the aggregate principal amount of $200 million.

“ Tax ” shall have the meaning set forth in the Tax Allocation Agreement.

“ Tax Allocation Agreement ” shall mean the Tax Allocation Agreement, in the form attached hereto as Exhibit E , by and between Sun, Sabra and New Sun, which agreement shall be entered into on or prior to the Distribution Date.

“ Tax Return ” shall have the meaning set forth in the Tax Allocation Agreement.

“ Taxing Authority ” shall have the meaning set forth in the Tax Allocation Agreement.

“ Third Party ” shall mean a Person who is not a party hereto or a wholly-owned Subsidiary thereof.

“ Third Party Claim ” shall mean any demand, action, claim, suit, arbitration, inquiry, proceeding or investigation by or before any court, any federal, state, local or foreign Governmental Authority or any arbitration or mediation panel or tribunal asserted by a Third Party.

“ Transition Services Agreement ” shall mean the Transition Services Agreement, in the form attached hereto as Exhibit F , by and between Sabra and New Sun, which agreement shall become effective as of the Distribution Date.

“ Trust ” shall have the meaning set forth in Section 3.03 of this Agreement.

1.02. Rules of Construction. Unless the context otherwise requires:

(a) A capitalized term has the meaning assigned to it;

(b) References in the singular or to “him,” “her,” “it,” “itself,” or other like references, and references in the plural or the feminine or masculine reference, as the case may be, shall also, when the context so requires, be deemed to include the plural or singular, or the masculine or feminine reference, as the case may be;

(c) References to Articles, Sections, Exhibits and Schedules shall refer to articles, sections, exhibits and schedules of this Agreement, unless otherwise specified;

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(d) The headings in this Agreement are for convenience and identification only and are not intended to describe, interpret, define or limit the scope, extent or intent of this Agreement or any provision thereof;

(e) This Agreement shall be construed without regard to any presumption or other rule requiring construction against the party that drafted and caused this Agreement to be drafted;

(f) All monetary figures shall be in United States dollars unless otherwise specified; and

(g) References to “including” in this Agreement shall mean “including, without limitation,” whether or not so specified.

ARTICLE II

PRE-DISTRIBUTION TRANSACTIONS; CERTAIN COVENANTS

2.01. Corporate Restructuring Transactions . Each of Sun, Sabra and New Sun shall, and shall cause each of their respective Subsidiaries to, as applicable, take such action or actions as is necessary to cause, effect and consummate the Corporate Restructuring Transactions in accordance with Exhibit A hereto. Each of Sun, Sabra and New Sun hereby agrees that any one or more of the Corporate Restructuring Transactions may be modified, supplemented or eliminated; provided, however, that such modification, supplement or elimination is determined to be necessary or appropriate (a) to separate and divide Sun so that (i) the Real Estate Business shall be owned directly or indirectly by Sabra, and (ii) the Healthcare Business shall be owned directly or indirectly by New Sun, (b) to distribute the outstanding New Sun Common Stock pursuant to the Distribution or to make a cash distribution in connection with the Distribution, or (c) to merge Sun with and into Sabra.

2.02. Charters and Bylaws .

(a) Certificate of Incorporation and By-Laws of New Sun . On or prior to the Distribution Date, Sun and New Sun shall each take all necessary actions so that, as of the Distribution Date, the Certificate of Incorporation and By-Laws of New Sun will be substantially in the forms set forth in Exhibit G-1 and Exhibit G-2 , respectively.

(b) Articles of Amendment and Restatement and Amended and Restated By-Laws of Sabra . On or prior to the REIT Conversion Merger Date, Sun and Sabra shall each take all necessary actions so that, as of the REIT Conversion Merger Date, the Articles of Amendment and Restatement and the Amended and Restated By-Laws of Sabra will be substantially in the forms set forth in Exhibit H-1 and Exhibit H-2 , respectively.

(c) Certificate of Amendment to Certificate of Incorporation of New Sun . On or prior to the Distribution Date, Sun and New Sun shall each take all necessary actions so that, immediately following the REIT Conversion Merger, the Certificate of Amendment to the Certificate of Incorporation of New Sun to change the name of New Sun to “Sun Healthcare Group, Inc.” shall be filed with the Secretary of State of the State of Delaware.

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2.03. Transfer and Assignment of Certain Licenses and Permits .

(a) Licenses and Permits Relating to the Real Estate Business . On or prior to the Distribution Date, or as soon as reasonably practicable thereafter, each of the parties hereto shall (and, if applicable, shall cause any other Person over which it has direct or indirect control to) duly and validly transfer, or cause to be duly and validly transferred (to the extent transferable), to Sabra Subsidiaries or obtain, or cause to be obtained, as applicable, all licenses, permits and authorizations issued by any Governmental Authority that relate to the Real Estate Business but which are held in the name of New Sun or its Subsidiaries.

(b) Licenses and Permits Relating to the Healthcare Business . On or prior to the Distribution Date, or as soon as reasonably practicable thereafter, each of the parties hereto shall (and, if applicable, shall cause any other Person over which it has direct or indirect control to) duly and validly transfer or cause to be duly and validly transferred (to the extent transferable) to New Sun Subsidiaries all transferable licenses, permits and authorizations issued by any Governmental Authority that relate to the Healthcare Business but which are held in the name of Sun, Sabra or its Subsidiaries.

2.04. Transfer of Assets and Assumption of Liabilities . On or prior to the Distribution Date, the parties hereto shall and shall cause their respective Subsidiaries to execute instruments of assignment and transfer and to take such other corporate action as is necessary:

(a) to transfer to New Sun and its Subsidiaries all of the right, title and interest of Sun and the Sabra Group in the New Sun Assets and to take all action necessary to cause New Sun or its Subsidiaries to assume all of the New Sun Liabilities; and

(b) to transfer to Sun or Sabra and its Subsidiaries, in accordance with Exhibit A hereto, all of the right, title and interest of the New Sun Group in the Sabra Assets and to take all action necessary to cause Sun, Sabra or its Subsidiaries to assume all of the Sabra Liabilities.

2.05. Financing Arrangements . Each of the parties hereto agrees that it will use commercially reasonable efforts to enter into and consummate the Financing Transactions on terms satisfactory to each of them. Each of the parties hereto agrees that it will use commercially reasonable efforts to obtain, prior to the Distribution Date, all necessary consents, waivers or amendments to each bank credit agreement, debt security or other financing facility to which it or any of its Subsidiaries is a party or by which it or any of its Subsidiaries is bound, or to assign, repay or refinance such agreement, security or facility, in each case on terms satisfactory to Sun, Sabra and New Sun, as applicable, and to the extent necessary to permit the Corporate Restructuring Transactions, the Financing Transactions, the repayment of Sun Subordinated Notes and the repayment of the Sun term loans, the Distribution and the REIT Conversion Merger to be consummated without any material breach of the terms of such bank credit agreement, debt security or other financing facility.

2.06. Consents . The parties hereto shall use their commercially reasonable efforts to obtain any material third-party consents or approvals (the “ Consents ”) prior to the Corporate Restructuring Transactions or the Distribution Date, as applicable, that are required to

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consummate the Corporate Restructuring Transactions, the Distribution, the REIT Conversion Merger and the other transactions contemplated hereby.

2.07. Registration Statement . Each of New Sun and Sabra has prepared, and has caused to be filed with the SEC, the Registration Statements. New Sun and Sabra shall take all such actions as may be reasonably necessary or appropriate in order to maintain the effectiveness of the Registration Statements by order of the SEC through the effective time of the REIT Conversion Merger.

2.08. State Securities Laws . Prior to the Distribution Date, Sun, Sabra and New Sun shall take all such action as may be necessary or appropriate under the securities or blue sky laws of states or other political subdivisions of the United States in order to effect the Distribution and the REIT Conversion Merger in accordance with Applicable Law.

2.09. Listing Applications . Prior to the Distribution Date, (i) Sun shall, to the extent possible, give the NASDAQ not less than ten days advance notice of the Distribution Record Date in compliance with Rule 10b-17 under the Exchange Act and (ii) Sun, Sabra and New Sun shall prepare and file with the NASDAQ listing applications and related documents and shall take all such other actions with respect thereto as shall be necessary or desirable in order to cause the NASDAQ to list on or prior to the Distribution Date, subject to official notice of issuance, the New Sun Common Stock and the Sabra Common Stock.

2.10. Director, Officer and Employee Resignations .

(a) Resignation by Directors and Employees of the Sabra Group . Sabra shall cause all the directors and all employees of the Sabra Group to resign, effective as of the Distribution Date, from all boards of directors or similar governing bodies of each member of the New Sun Group on which they serve, and from all positions as officers or employees of any member of the New Sun Group, except as otherwise set forth in the Proxy Statement or mutually agreed to in writing on or prior to the Distribution Date by Sabra, on the one hand, and, New Sun, on the other hand.

(b) Resignations by Directors and Employees of the New Sun Group . New Sun shall cause all the directors and all employees of the New Sun Group to resign, effective as of the Distribution Date, from all boards of directors or similar governing bodies of Sun and each member of the Sabra Group on which they serve, and from all positions as officers or employees of Sun and any member of the Sabra Group, except as otherwise set forth in the Proxy Statement or mutually agreed to in writing on or prior to the Distribution Date by New Sun, on the one hand, and Sabra, on the other hand.

2.11. Ancillary Agreements . On or prior to the Distribution Date, each of Sun, Sabra and New Sun shall enter into, and/or where applicable shall cause such other members of their respective Groups to enter into (a) the Ancillary Agreements and (b) any other agreements in respect of the Corporate Restructuring Transactions, the Distribution and the REIT Conversion Merger as are reasonably necessary or appropriate in connection with the transactions contemplated hereby and thereby.

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2.12. Cash Allocation . On or prior to the Distribution Date, any cash or cash equivalents, marketable securities, bank accounts, lock boxes and other deposit arrangements shall be allocated in accordance with Schedule 2.12 .

ARTICLE III

DISTRIBUTION TRANSACTIONS

3.01. The Distribution .

(a) Duties and Obligations of Sun . Subject to the conditions herein, on or prior to the Distribution Date, Sun shall, as soon as practicable, instruct the Agent to distribute to the holders of Sun Common Stock, as of the Distribution Record Date, the following:

(x) one share of New Sun Common Stock for every three shares of Sun Common Stock which shall be electronically issued to the holders of Sun Common Stock or to such stockholders’ bank, broker or other nominee on such stockholders’ behalf by way of direct registration in book-entry form;

(y) cash, if applicable, in lieu of fractional shares obtained in the manner provided in Section 3.02; and

(z) a cash dividend in the amount of $0.1335 for each share of Sun Common Stock.

(b) Duties and Responsibilities of New Sun . All shares of New Sun Common Stock issued pursuant to the Distribution will be validly issued, fully paid and nonassessable and free of any preemptive (or similar) rights.

3.02. Fractional Shares .

(a) No Fractional Shares . Notwithstanding anything herein to the contrary, no fractional shares of New Sun Common Stock shall be issued in connection with the Distribution, and any such fractional share interests to which a stockholder would otherwise be entitled will not entitle such stockholder to vote or to any rights of a stockholder of New Sun. In lieu of any such fractional shares, each stockholder who, but for the provisions of this Section 3.02, would be entitled to receive a fractional share interest of New Sun Common Stock pursuant to the Distribution shall be paid cash without any interest thereon, as hereinafter provided. Sun shall instruct the Agent to determine the number of whole shares and fractional shares of New Sun Common Stock allocable to each stockholder, to aggregate all such fractional shares into whole shares, to sell the whole shares obtained thereby in the open market at the then prevailing prices on behalf of stockholders who otherwise would be entitled to receive fractional share interests and to distribute to each such stockholder his, her or its ratable share of the total proceeds of such sale, after making appropriate deductions of the amount required for federal income tax withholding purposes and after deducting any applicable transfer taxes. New Sun shall be obligated to pay any brokerage or other fees in connection with the sale of aggregated fractional shares of New Sun Common Stock.

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(b) Unclaimed Stock or Cash . Any New Sun Common Stock or cash in lieu of fractional shares and dividends or distributions with respect to New Sun Common Stock that remain unclaimed by any stockholder 180 days after the Distribution Date shall be returned to New Sun and any such stockholders shall look only to New Sun for the New Sun Common Stock and cash, if any, in lieu of fractional share interests and any such dividends or distributions to which they are entitled, subject in each case to applicable escheat or other abandoned property laws.

3.03. Restricted Stock Units . Subject to the conditions herein and the conditions to the REIT Conversion Merger, at the effective time of the REIT Conversion Merger, a grantor trust to be established by New Sun (the “ Trust ”) shall receive one share of Sabra Common Stock for every three shares of Sun Common Stock subject to a Sun restricted stock unit held by each director, executive officer and employee which has vested as of the Distribution Date but the payment of which has been deferred to a later date. At the time of the payment of the award, the trustee of the Trust shall deliver to the holder of such award, in satisfaction of New Sun’s obligations therefor, the shares of Sabra Common Stock subject to each unit, subject to any appropriate equitable adjustments to reflect future corporate transactions. New Sun hereby agrees and covenants to Sabra that New Sun, its Subsidiaries and the Trust shall not acquire any additional shares of Sabra Common Stock which would cause the Trust to own a number of shares in excess of those it needs to fulfill its obligations in respect of the Sun restricted stock units referred to in the preceding sentence.

ARTICLE IV

SURVIVAL, ASSUMPTION AND INDEMNIFICATION

4.01. Survival of Agreements . All covenants and agreements of the parties hereto contained in this Agreement shall survive the Distribution Date in accordance with their respective terms and shall not be merged into any deeds or other transfer or closing instruments or documents.

4.02. Ancillary Agreements . This Article IV shall not be applicable to any Indemnifiable Losses or Liabilities (a) governed by the Tax Allocation Agreement; or (b) which relate to or are otherwise expressly provided for in the Ancillary Agreements.

4.03. Assumption and Indemnification .

(a) Subject to Sections 4.02 and 4.03(c) and except as expressly provided in the Ancillary Agreements, from and after the Distribution Date, Sun and Sabra shall retain or assume, as the case may be, and shall indemnify, defend and hold harmless each member of the New Sun Group, and each of their Representatives and Affiliates, from and against, (i) all Sabra Liabilities, (ii) the use and operation of the Sabra Assets by Sabra following the Distribution, (iii) all Losses arising from or relating to or due to the failure to pay, perform or discharge in due course the Sabra Liabilities by any member of the Sabra Group who has an obligation with respect thereto and (iv) all Losses arising from or relating to any breach or violation of the covenants made in this Agreement by Sabra.

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(b) Subject to Sections 4.02 and 4.03(c) and except as expressly provided in the Ancillary Agreements, from and after the Distribution Date, New Sun shall retain or assume, as the case may be, and shall indemnify, defend and hold harmless the Sabra Indemnified Parties from and against, (i) all New Sun Liabilities, (ii) the use and operation of the New Sun Assets by New Sun following the Distribution, (iii) any and all Losses arising from or relating to or due to the failure to pay, perform or discharge in due course the New Sun Liabilities by any member of the New Sun Group who has an obligation with respect thereto and (iv) all Losses arising from or relating to any breach or violation of the covenants made in this Agreement by New Sun.

(c) The amount which an Indemnifying Party is required to pay to any Indemnitee pursuant to Sections 4.03(a) or (b) shall be reduced (including, without limitation, retroactively) by any Insurance Proceeds and other amounts (including, without limitation, amounts received from Third Parties in respect of other indemnification or contribution obligations of Third Parties) actually recovered by such Indemnitee in reduction of the related Indemnifiable Loss, it being understood and agreed that each member of the Sabra Group and the New Sun Group shall use its commercially reasonable efforts, at the expense of the Indemnifying Party, to collect any such proceeds or other such amounts to which it or any of its Subsidiaries is entitled, without regard to whether it is the Indemnitee hereunder. If an Indemnitee receives an Indemnity Payment in respect of an Indemnifiable Loss and subsequently receives Insurance Proceeds or other amounts in respect of such Indemnifiable Loss, then such Indemnitee shall pay to such Indemnifying Party an amount equal to the difference between (i) the sum of the amount of any Indemnity Payment and the amount of any Insurance Proceeds or other amounts actually received and (ii) the amount of the Indemnifiable Loss. An insurer or a Third Party (including, without limitation, purchasers under any asset purchase agreements, real estate agreements or any other agreements relating to New Sun Liabilities or Sabra Liabilities) who would otherwise be obligated to pay any claim shall not be relieved of the responsibility with respect thereto, or, solely by virtue of the indemnification provisions hereof, have any subrogation rights with respect thereto, it being expressly understood and agreed that no insurer or any other Third Party shall be entitled to a benefit it would not otherwise be entitled to receive in the absence of the indemnification provisions set forth herein.

(d) On the Distribution Date, New Sun shall assume (or shall cause one of its Subsidiaries to assume) (i) the prosecution of all claims which relate to the Healthcare Business that are either pending on or arise after the Distribution Date; (ii) in conjunction with Sabra pursuant to Section 4.03(e), the defense against all Third Party Claims arising from or relating to the Distribution or the REIT Conversion Merger; and (iii) the defense against all Third Party Claims which are New Sun Liabilities and are either pending on or arise after the Distribution Date. Sabra shall use commercially reasonable efforts to make available and shall cause its Subsidiaries to use commercially reasonable efforts to make available to New Sun and its Subsidiaries, at New Sun’s expense, (x) any personnel or any books, records or other documents within its control or which it otherwise has the ability to make available that New Sun or such Subsidiary reasonably believes are necessary or appropriate for such prosecution or defense as provided in this Article IV; and (y) such other assistance in support of the prosecution or defense of such litigation as New Sun or its Subsidiaries may reasonably request, including without limitation, the right to assert in the name of Sabra or any of its Subsidiaries such rights, claims, counterclaims or defenses that Sabra or any Sabra Subsidiary would be or would have been entitled to assert in such litigation or in the prosecution of or defense against such claim had the

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Distribution not occurred; provided, however , that no member of the Sabra Group shall be required to take any action, refrain from taking any action or make available any assistance if doing so would have the effect of increasing Liabilities of the Sabra Group.

(e) On the Distribution Date, Sabra shall assume (or shall cause one of its Subsidiaries to assume) (i) the prosecution of all claims which relate to the Real Estate Business that are either pending on or arise after the Distribution Date; (ii) in conjunction with New Sun pursuant to Section 4.03(d), the defense against all Third Party Claims arising from or relating to the Distribution or the REIT Conversion Merger; and (iii) the defense against all Third Party Claims which are Sabra Liabilities and are either pending on or arise after the Distribution Date. New Sun shall use commercially reasonable efforts to make available and shall cause its Subsidiaries to use commercially reasonable efforts to make available to Sabra and its Subsidiaries, at Sabra’s expense, (x) any personnel or any books, records or other documents within its control or which it otherwise has the ability to make available that Sabra or such Subsidiary reasonably believes are necessary or appropriate for such prosecution or defense as provided in this Article IV; and (y) such other assistance in support of the prosecution or defense of such litigation as Sabra or its Subsidiaries may reasonably request, including without limitation, the right to assert in the name of New Sun or any of its Subsidiaries such rights, claims, counterclaims or defenses that New Sun or any New Sun Subsidiary would be or would have been entitled to assert in such litigation or in the prosecution of or defense against such claim had the Distribution not occurred; provided, however , that no member of the New Sun Group shall be required to take any action, refrain from taking any action or make available any assistance if doing so would have the effect of increasing Liabilities of the New Sun Group.

4.04. Procedure for Indemnification .

(a) If any Indemnitee receives notice of the assertion of any Third Party Claim with respect to which an Indemnifying Party is obligated under this Agreement to provide indemnification, such Indemnitee shall promptly deliver to the Indemnifying Party a written notice thereof; provided, however, that the failure of any Indemnitee to give notice as provided in this Section 4.04 shall not relieve any Indemnifying Party of its obligations under this Article IV, except to the extent that such Indemnifying Party is actually prejudiced by such failure to give notice. Such written notice shall describe such Third Party Claim in reasonable detail and, if practicable, shall indicate the estimated amount of the Indemnifiable Loss that has been or may be sustained by such Indemnitee. Thereafter, such Indemnitee shall deliver to the Indemnifying Party, promptly after the Indemnitee’s receipt thereof, copies of all notices and documents (including court papers) received by the Indemnitee relating to such Third Party Claim.

(b) An Indemnifying Party, at the Indemnifying Party’s own expense and through counsel chosen by the Indemnifying Party (which counsel shall be reasonably satisfactory to the Indemnitee), may elect to defend any Third Party Claim. If the Indemnifying Party elects to defend a Third Party Claim, then, within fifteen Business Days after receiving notice of such Third Party Claim or sooner (but in no event less than five Business Days) if the nature of such Third Party Claim so requires, the Indemnifying Party shall notify the Indemnitee of its intent to do so. The Indemnitee shall thereupon use commercially reasonable efforts to make available to the Indemnifying Party, at the Indemnifying Party’s expense, such assistance in support of the prosecution or defense of such litigation as the Indemnifying Party may reasonably request,

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including without limitation, the right to assert in the name of the Indemnitee such rights, claims, counterclaims or defenses that the Indemnitee would be or would have been permitted to assert in such litigation or in the prosecution of a claim or counterclaim against a Third Party or in defense against such Third Party Claim had the Distribution not occurred. The Indemnifying Party shall pay the Indemnitee’s reasonable out-of-pocket expenses incurred in connection with such cooperation consistent with the provisions of this Article IV. Except as provided herein, after notice from an Indemnifying Party to an Indemnitee of its election to assume the defense of a Third Party Claim, the Indemnifying Party shall not be liable to the Indemnitee under this Article IV for any legal or other expenses subsequently incurred by the Indemnitee in connection with the defense thereof, unless the Indemnitee reasonably shall have concluded (upon advice of its counsel) that, with respect to such claims, the Indemnitee and the Indemnifying Party may have different, conflicting, or adverse legal positions or interests. If an Indemnifying Party elects not to defend against a Third Party Claim, or fails to notify an Indemnitee of its election as provided in this Section 4.04 within the period of fifteen (or five, if applicable) Business Days described above, the Indemnitee may defend, compromise and settle such Third Party Claim; provided, however , that no the Indemnitee may compromise or settle any such Third Party Claim without the prior written consent of the Indemnifying Party, which consent shall not be unreasonably withheld or delayed.

(c) Notwithstanding the foregoing, the Indemnifying Party shall not, without the prior written consent of the Indemnitee, settle or compromise any Third Party Claim or consent to the entry of any judgment which does not include as an unconditional term thereof the delivery by the claimant or plaintiff to the Indemnitee of a written release from all Liability in respect of such Third Party Claim.

(d) If the Indemnifying Party chooses to defend or to seek to compromise any Third Party Claim, the Indemnitee shall make available to the Indemnifying Party any personnel or any books, records or other documents within its control or which it otherwise has the ability to make available that are necessary or appropriate for such defense.

(e) Upon obtaining knowledge of any Indemnifiable Loss which does not result from a Third Party Claim, the Indemnitee shall promptly give written notice to the Indemnifying Party specifying the facts constituting the basis for such claim and the amount, to the extent known, of the claim asserted. If the Indemnifying Party disputes such claim of indemnification, the Indemnifying Party shall notify the Indemnitee within thirty days after the receipt of such notice. If such Indemnifying Party does not respond within such thirty-day period, such Indemnifying Party shall be deemed to have refused to accept responsibility to make payment. If such Indemnifying Party does not respond within such thirty-day period or rejects such claim in whole or in part, such Indemnitee shall be free to pursue such remedies as may be available to such party under Article X of this Agreement. If the Indemnifying Party does not dispute the Indemnitee’s claim of indemnification, the Indemnifying Party shall pay the amount of any valid claim within thirty days after receipt of notice from the Indemnitee.

(f) If the amount of any Indemnifiable Loss shall, at any time subsequent to the payment required by this Agreement, be reduced by recovery, settlement or otherwise, the amount of such reduction, less any expenses incurred in connection therewith, shall promptly be repaid by the Indemnitee to the Indemnifying Party.

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(g) In the event of payment by an Indemnifying Party to any Indemnitee in connection with any Third Party Claim, such Indemnifying Party shall be subrogated to and shall stand in the place of such Indemnitee as to any events or circumstances in respect of which such Indemnitee may have any right or claim relating to such Third Party Claim against any claimant or plaintiff asserting such Third Party Claim. Such Indemnitee shall cooperate with such Indemnifying Party in a reasonable manner, and at the cost and expense of such Indemnifying Party, in prosecuting any subrogated right or claim, including without limitation, permitting the Indemnifying Party to bring suit against such Third Party in the name of the Indemnitee.

4.05. Tax Procedures .

(a) With respect to any period in which Sabra has made or will make an election to be taxed as a REIT, notwithstanding any other provisions in this Agreement, any payments to be made by New Sun to any member of the Sabra Group pursuant to Sections 4.03(b), 4.03(c) or 4.04(f) for any calendar year shall not exceed the sum of (i) the amount that it is determined will not be gross income of Sabra for purposes of the requirements of Sections 856(c)(2) and (3) of the Code for any period in which Sabra has made an election to be taxed as a REIT, with such determination to be set forth in an opinion of outside tax counsel selected by Sabra, which such opinion shall be reasonably satisfactory to Sabra (such opinion is referred to as a “ No Gross Income Opinion ”) plus (ii) such additional amount that it is estimated can be paid to Sabra in such taxable year without causing Sabra to fail to meet the requirements of Sections 856(c)(2) and 856(c)(3) of the Code, determined (x) as if the payment of such amount did not constitute income described in Sections 856(c)(2)(A)-(H) and 856(c)(3)(A)(I) of the Code (“ Qualifying Income ”) and (y) by taking into account any other payments to Sabra during such taxable year that do not constitute Qualifying Income, which determination shall be (A) made by independent tax accountants to Sabra, and (B) submitted to and approved by Sabra’s outside tax counsel, and (iii) in the event that Sabra receives a ruling from the IRS holding that Sabra’s receipt of the additional amount otherwise to be paid under this Agreement either would constitute Qualifying Income or would be excluded from gross income of Sabra for purposes of Sections 856(c)(2) and (3) of the Code (the “ Specified REIT Requirements ”), the aggregate payments otherwise required to be made pursuant to Sections 4.03(b), 4.03(c) or 4.04(f) (determined without regard to this Section 4.05(a)) less the amount otherwise previously paid under clauses (i) and (ii) above.

(b) New Sun shall place the full amount of any payments otherwise to be made by New Sun pursuant to Sections 4.03(b), 4.03(c) or 4.04(f) in a mutually agreed escrow account upon mutually acceptable terms (which shall provide that (i) the amount in the escrow account shall be treated as the property of New Sun, unless it is released from such escrow account to any Sabra Indemnified Party, (ii) all income earned upon the amount in the escrow account shall be treated as the property of New Sun and reported, as and to the extent required by Applicable Law, by the escrow agent to the IRS, or any other taxing authority, on IRS Form 1099 or 1042S (or other appropriate form) as income earned by New Sun whether or not said income has been distributed during such taxable year and (iii) any portion thereof shall not be released to any Sabra Indemnified Party unless and until New Sun receives any of the following: (x) a letter from Sabra’s independent tax accountants indicating the amount that it is estimated can be paid at that time to the Sabra Indemnified Parties without causing Sabra to fail to meet the Specified REIT Requirements for the taxable year in which the payment would be made, which

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determination shall be made by such independent tax accountants, or (y) an opinion of outside tax counsel selected by Sabra, such opinion to be reasonably satisfactory to Sabra, to the effect that, based upon a change in Applicable Law after the date on which payment was first deferred hereunder, receipt of the additional amount otherwise to be paid pursuant to Sections 4.03(b), 4.03(c) or 4.04(f) either would be excluded from gross income of Sabra for purposes of the Specified REIT Requirements or would constitute Qualifying Income, in any of which events New Sun shall pay to the applicable Sabra Indemnified Parties the lesser of the unpaid amounts due pursuant to Sections 4.03(b), 4.03(c) or 4.04(f) (determined without regard to this Section 4.05) or the maximum amount stated in the letter referred to in (iii)(x) above).

(c) Any amount held in escrow pursuant to Section 4.05(b) for five years shall be released from such escrow to be used as determined by New Sun in its sole and absolute discretion.

(d) Sabra shall bear all costs and expenses with respect to the escrow.

(e) New Sun shall cooperate in good faith to amend this Section 4.05 at the reasonable request of Sabra in order to (i) maximize the portion of such payment that may be distributed to Sabra hereunder without causing Sabra to fail to meet the requirements of Sections 856(c)(2) and (3) of the Code, (ii) improve Sabra’s chances of securing a favorable ruling described in this Section 4.05, or (iii) assist Sabra in obtaining a favorable opinion from its outside tax counsel or determination from its tax accountants as described in this Section 4.05. Sabra shall reimburse New Sun for all reasonable costs and expenses of such cooperation.

4.06. Characterization of Payments . It is the intention of the parties to this Agreement that payments made pursuant to Sections 4.03(b), 4.03(c) or 4.04(f) are to be treated as relating back to the cash allocation made in accordance with Section 2.12 as a nontaxable adjustment to the amount of cash transferred by New Sun to Sun. The parties to this Agreement shall not take any position inconsistent with such intention before any Taxing Authority, except to the extent that a Final Determination with respect to the recipient party causes any such payment not to be so treated.

ARTICLE V

CERTAIN ADDITIONAL COVENANTS

5.01. Further Assurances .

(a) In addition to the actions specifically provided for elsewhere in this Agreement and in the Ancillary Agreements, each of the parties hereto shall use its commercially reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things reasonably necessary, proper or advisable under Applicable Laws, regulations and agreements to consummate and make effective the transactions contemplated by this Agreement, including without limitation, to (i) confirm New Sun’s title to all of the New Sun Assets and assumption of all New Sun Liabilities, to put New Sun in actual possession and operating control of the New Sun Assets, and to permit New Sun to exercise all rights and to perform its obligations with respect to the Healthcare Business and (ii) confirm Sabra’s title to all of the Sabra Assets and

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assumption of all Sabra Liabilities, to put Sabra in actual possession and operating control of the Sabra Assets, and to permit Sabra to exercise all rights and to perform its obligations with respect to the Real Estate Business. Without limiting the foregoing, each party hereto shall cooperate with the other party, and execute and deliver, or use its commercially reasonable efforts to cause to be executed and delivered, all instruments, including instruments of conveyance, assignment and transfer, and to make all filings with, and to obtain all consents, approvals or authorizations of, any Governmental Authority or any other Person under any permit, license, agreement, indenture or other instrument, and take all such other actions as such party may reasonably be requested to take by any other party hereto from time to time, consistent with the terms of this Agreement, in order to effectuate the provisions and purposes of this Agreement, the Corporate Restructuring Transactions and the other transactions contemplated hereby. If the Corporate Restructuring Transactions, including but not limited to, assignments of contracts, are not consummated prior to or at the Distribution Date for any reason, including but not limited to, the absence of receipt of any Consents, then the party hereto retaining such asset or Liability shall thereafter hold such asset in trust for the use and benefit of the party entitled thereto (at the expense of the party entitled thereto), or shall retain such Liability for the account of the party by whom such Liability is to be assumed pursuant hereto, as the case may be, and shall take such other action as may be reasonably requested by the party to whom such asset is to be transferred, or by whom such Liability is to be assumed, as the case may be, in order to place such party, insofar as reasonably possible, in the same position as if such asset or Liability had been transferred or assumed as contemplated hereby. If and when any such asset or Liability becomes transferable or assumable, the parties shall cooperate to effect such transfer or assumption as quickly thereafter as reasonably practicable. The parties hereto agree that, as of the Distribution Date, as between the parties, (x) New Sun shall be deemed to have acquired complete and sole beneficial ownership of all of the New Sun Assets, together with all rights, powers and privileges incident thereto, and shall be deemed to have assumed in accordance with the terms of this Agreement all of the New Sun Liabilities, and all duties, obligations and responsibilities incident thereto and (y) Sabra shall be deemed to have acquired complete and sole beneficial ownership of all of the Sabra Assets, together with all rights, powers and privileges incident thereto, and shall be deemed to have assumed in accordance with the terms of this Agreement all of the Sabra Liabilities, and all duties, obligations and responsibilities incident thereto.

(b) Without limiting the generality of Section 5.01(a), Sun, as the sole stockholder of New Sun and Sabra prior to the Distribution, shall ratify any actions taken by New Sun or Sabra on or prior to the Distribution Date which are reasonably necessary or desirable to be taken by New Sun and Sabra to effectuate the transactions contemplated by this Agreement or the Ancillary Agreements in a manner consistent with the terms of this Agreement or such Ancillary Agreements.

(c) If the New Sun Group elects to pursue any claim or right relating to the Healthcare Business, Sun and the Sabra Group, upon request and at the New Sun Group’s expense, shall use its commercially reasonable efforts to make available to the New Sun Group such assistance in support of the prosecution of such litigation as the New Sun Group may reasonably request, including without limitation, the right to assert, as needed, in the name of Sun, Sabra or any member of the Sabra Group such rights and claims that Sun, Sabra or such member would be or would have been permitted to assert in such litigation had the Distribution

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not occurred; provided, however , that neither Sun nor any member of the Sabra Group shall be required to take any action, refrain from taking any action or make available any assistance if doing so would have the effect of increasing Liabilities of Sun or the Sabra Group.

(d) If the Sabra group elects to pursue any claim or right relating to the Real Estate Business, New Sun, upon request and at Sun’s or the Sabra Group’s expense, shall use its commercially reasonable efforts to make available to Sun and the Sabra Group such assistance in support of the prosecution of such litigation as Sun and the Sabra Group may reasonably request, including without limitation, the right to assert, as needed, in the name of New Sun or any member of the New Sun Group such rights and claims that New Sun or such member would be or would have been permitted to assert in such litigation had the Distribution not occurred; provided, however , that no member of the New Sun Group shall be required to take any action, refrain from taking any action or make available any assistance if doing so would have the effect of increasing Liabilities of the New Sun Group.

5.02. Receivables Collection And Other Payments . If after the Distribution Date, Sun or the Sabra Group or the New Sun Group receives payments belonging to the other party, the recipient shall promptly account for and remit same to the other party.

ARTICLE VI

ACCESS TO INFORMATION

6.01. Provision of Corporate Records . From and after the Distribution Date, all such books, records and copies (where copies are delivered in lieu of originals) transferred to:

(a) New Sun Group, whether or not delivered, shall be the property of the New Sun Group; provided, however , that all such Information contained in such books, records or copies relating to the Sabra Group, the Real Estate Business, the Sabra Liabilities, or the Ancillary Agreements shall be subject to the applicable confidentiality provisions and restricted use provisions, if any, contained in this Agreement or the Ancillary Agreements and any confidentiality restrictions imposed by Applicable Law. Sabra, if it so elects, may retain copies of any original books and records delivered to New Sun along with those original books and records of the Sabra Group authorized herein to be retained; provided, however , that all such Information contained in such books, records or copies (whether or not delivered by the Sabra Group) relating to the New Sun Group, the Healthcare Business, and the New Sun Liabilities shall be subject to the applicable confidentiality provisions and restricted use provisions, if any, contained in this Agreement or the Ancillary Agreements and any confidentiality restrictions imposed by Applicable Law.

(b) Sabra Group, whether or not delivered, shall be the property of the Sabra Group; provided, however , that all such Information contained in such books, records or copies relating to the New Sun Group, the Healthcare Business, the New Sun Liabilities, or the Ancillary Agreements shall be subject to the applicable confidentiality provisions and restricted use provisions, if any, contained in this Agreement or the Ancillary Agreements and any confidentiality restrictions imposed by Applicable Law. New Sun, if it so elects, may retain copies of any original books and records delivered to Sabra along with those original books and

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records of the New Sun Group authorized herein to be retained; provided, however , that all such Information contained in such books, records or copies (whether or not delivered by the New Sun Group) relating to the Sabra Group, the Real Estate Business, and the Sabra Liabilities shall be subject to the applicable confidentiality provisions and restricted use provisions, if any, contained in this Agreement or the Ancillary Agreements and any confidentiality restrictions imposed by Applicable Law.

6.02. Access to Information . In addition to the provisions set forth in Section 6.01 above, from and after the Distribution Date and upon reasonable notice, each of the Sabra Group and the New Sun Group shall afford to the other and to the other’s Representatives at the expense of the other party, reasonable access and duplicating rights during normal business hours to all Information developed or obtained prior to the Distribution Date within such party’s possession relating to the other party or its businesses, its former businesses, its assets, its Liabilities, or the Ancillary Agreements, insofar as such access is reasonably requested by such other party, but subject to the applicable confidentiality provisions and restricted use provisions, if any, contained in this Agreement or the Ancillary Agreements and any confidentiality restrictions imposed by Applicable Law. In addition, without limiting the foregoing, Information may be requested under this Section 6.02 for audit, accounting, claims, intellectual property protection, litigation and Tax purposes, as well as for purposes of fulfilling disclosure and reporting obligations. In each case, the requesting party agrees to cooperate with the other party to minimize the risk of unreasonable interference with the other party’s business. In the event access to any Information otherwise required to be granted herein or in the Ancillary Agreements is restricted by Applicable Law or otherwise, the parties agree to take such actions as are reasonably necessary, proper or advisable to have such restrictions removed or to seek an exemption therefrom or to otherwise provide the requesting party with the benefit of the Information to the same extent such actions would have been taken on behalf of the requesting party had such a restriction existed and the Distribution not occurred.

6.03. Litigation Support and Production of Witnesses . After the Distribution Date, each member of the Sabra Group and the New Sun Group shall use commercially reasonable efforts to provide assistance to the other with respect to Litigation Matters and to make available to the other, upon written request: (a) such employees who have expertise or knowledge with respect to the other party’s business or products or matters in litigation, for the purpose of consultation and/or as a witness; and (b) its directors, officers, other employees and agents, as witnesses, in each case to the extent that the requesting party believes any such Person may reasonably be useful or required in connection with any legal, administrative or other proceedings in which the requesting party may from time to time be involved. The employing party agrees that such consultant or witness shall be made available to the requesting party upon reasonable notice to the same extent that such employing party would have made such consultant or witness available if the Distribution had not occurred. The requesting party agrees to cooperate with the employing party in giving consideration to business demands of such Persons.

6.04. Reimbursement . Except to the extent otherwise contemplated by this Agreement or any Ancillary Agreement, a party providing Information, consultant, or witness services to the other party under this Article VI shall be entitled to receive from the recipient, upon the presentation of invoices therefor, payments for such amounts, relating to supplies, disbursements, travel expenses, and other out-of-pocket expenses (including the direct and

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indirect costs of employees providing consulting and expert witness services in connection with litigation, but excluding direct and indirect costs of employees who provide Information or are fact witnesses) as may be reasonably incurred in providing such Information, consulting or witness services.

6.05. Retention of Records . Except as otherwise required by Applicable Law or agreed in writing, or as otherwise provided in the Tax Allocation Agreement, each member of the Sabra Group and the New Sun Group shall retain, for a period of five years or such longer period as may be required by Applicable Law, this Agreement or the Ancillary Agreements, all significant Information in such party’s possession or under its control relating to the business, former business, assets or Liabilities of the other party or this Agreement or the Ancillary Agreements and, after the expiration of such applicable period, prior to destroying or disposing of any of such Information, (a) the party proposing to dispose of or destroy any such Information shall provide no less than thirty days’ prior written notice to the other party, specifying the Information proposed to be destroyed or disposed of, and (b) if, prior to the scheduled date for such destruction or disposal, the other party requests in writing that any of the Information proposed to be destroyed or disposed of be delivered to such other party, the party proposing to dispose of or destroy such Information promptly shall arrange for the delivery of the requested Information to a location specified by, and at the expense of, the requesting party.

6.06. Privileged Information . In furtherance of the rights and obligations of the parties set forth in this Article VI:

(a) Each party hereto acknowledges that (i) Sun and the Sabra Group on the one hand, and the New Sun Group on the other hand, has or may obtain Information regarding a member of the other Group, or any of its operations, employees, assets or Liabilities (whether in documents or stored in any other form or known to its employees or agents), as applicable, that is or may be protected from disclosure pursuant to the attorney-client privilege, the work product doctrine or other applicable privileges (“ Privileged Information ”); (ii) there are a number of actual, threatened or future litigations, investigations, proceedings (including arbitration proceedings), claims or other legal matters that have been or may be asserted by or against, or otherwise affect, each or both of Sabra and New Sun (or members of either Group) (“ Litigation Matters ”); (iii) Sabra and New Sun have a common legal interest in Litigation Matters, in the Privileged Information, and in the preservation of the confidential status of the Privileged Information, in each case relating to the Real Estate Business or the Healthcare Business or any former businesses, the assets or the Liabilities of each party as it or they existed prior to the Distribution Date or relating to or arising from the relationship between the constituent elements of the Groups on or prior to the Distribution Date; and (iv) Sabra and New Sun intend that the transactions contemplated by this Agreement and the Ancillary Agreements and any transfer of Privileged Information in connection herewith or therewith shall not operate as a waiver of any potentially applicable privilege.

(b) Each of Sun, Sabra and New Sun agrees, on behalf of itself and each member of the Group of which it is a member, not to disclose or otherwise waive any privilege attaching to any Privileged Information relating to the Real Estate Business or the Healthcare Business or any former businesses or assets or Liabilities of either party or relating to or arising from the relationship between the Groups on or prior to the Distribution Date, without providing prompt

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written notice to and obtaining the prior written consent of the other, which consent shall not be unreasonably withheld and shall not be withheld if the other party certifies that such disclosure is to be made in response to a likely threat of suspension or debarment or similar action; provided, however , that Sabra and New Sun may make such disclosure or waiver with respect to Privileged Information if such Privileged Information relates, in the case of Sabra, solely to the Real Estate Business or the Sabra Liabilities as each existed prior to the Distribution Date or, in the case of New Sun, solely to the Healthcare Business, or the New Sun Liabilities, as each existed prior to the Distribution Date. In the event of a disagreement between any member of the Sabra Group and any member of the New Sun Group concerning the reasonableness of withholding such consent, no disclosure shall be made prior to (i) a final, nonappealable resolution of such disagreement by a court of competent jurisdiction if such requirement to disclose is part of a pending judicial proceeding; or (ii) a final determination by an arbitrator appointed pursuant to Article X if such requirement to disclose is not part of a pending judicial proceeding.

(c) Upon any member of the Sabra Group or any member of the New Sun Group receiving any subpoena or other compulsory disclosure notice from a court, other governmental agency or otherwise which requests disclosure of Privileged Information, in each case relating to the Real Estate Business or the Sabra Liabilities (in the case of the New Sun Group) or the Healthcare Business, or the New Sun Liabilities (in the case of the Sabra Group), as they or it existed prior to the Distribution Date or relating to or arising from the relationship between the constituent elements of the Groups on or prior to the Distribution Date, the recipient of the notice shall promptly provide to Sabra, in the case of receipt by a member of the New Sun Group, or to New Sun, in the case of receipt by a member of the Sabra Group, a copy of such notice, the intended response, and all materials or information relating to the other Group that might be disclosed. In the event of a disagreement as to the intended response or disclosure, unless and until the disagreement is resolved as provided in paragraph (b) above, Sabra and New Sun shall cooperate to assert all defenses to disclosure claimed by either Group, at the cost and expense of the Group claiming such defense to disclosure, and shall not disclose any disputed documents or information until all legal defenses and claims of privilege have been finally determined.

6.07. Confidentiality . From and after the Distribution Date, each of Sabra and New Sun shall hold, and shall use its commercially reasonable efforts to cause its employees, Affiliates and Representatives to hold, in strict confidence all Information concerning or belonging to the other party obtained by it prior to the Distribution Date or furnished to it by such other party pursuant to this Agreement or the Ancillary Agreements and shall not release or disclose such Information to any other Person, except its Representatives, who shall be bound by the provisions of this Section 6.07; provided, however , that Sabra and New Sun and their respective employees, Affiliates and Representatives may disclose such Information to the extent that (a) disclosure is compelled by judicial or administrative process or, in the opinion of such party’s counsel, by other requirements of Law, or (b) such party can show that such Information was (i) available to such party after the Distribution Date from Third Party sources other than employees or former employees of either party hereto, their Affiliates, former Affiliates, Representatives or former Representatives, on a nonconfidential basis prior to its disclosure to such party after the Distribution Date by the other party, (ii) in the public domain through no fault of such party, (iii) lawfully acquired by such party from Third Party sources other than employees or former employees of either party hereto, their Affiliates, former Affiliates, Representatives or former Representatives, after the time that it was furnished to such party

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pursuant to this Agreement or the Ancillary Agreements or (iv) is independently discovered or developed after the Distribution Date by employees of such party. Each of Sabra and New Sun and their respective Representatives and Affiliates shall be deemed to have satisfied its obligations under this Section 6.07 with respect to any Information if it exercises the same care with regard to such Information as it takes to preserve confidentiality for its own similar Information. Notwithstanding the foregoing, the confidentiality obligations regarding patient health information and other similar information of each Sabra Subsidiary that is a party to a Lease Agreement with a Subsidiary of New Sun shall be governed by a Business Associate Agreement to be executed by each such Sabra Subsidiary.

ARTICLE VII

NO REPRESENTATIONS OR WARRANTIES; EXCEPTIONS

7.01. No Representations or Warranties; Exceptions .

(a) New Sun understands and agrees that no member of the Sabra Group is, in this Agreement or in any Ancillary Agreement, representing or warranting to the New Sun Group in any way as to the Healthcare Business, the New Sun Liabilities, or the New Sun Assets, or as to any consents or approvals required in connection with the consummation of the transactions contemplated by this Agreement, it being agreed and understood as between the Groups, the members of the New Sun Group shall take all of the Healthcare Business “as is, where is” and that, except as provided in this Section 7.01 or in Section 5.01, the members of the New Sun Group shall bear the economic and legal risk that conveyances of the Healthcare Business shall prove to be insufficient or that the title of any member of the New Sun Group to any Healthcare Business shall be other than good and marketable and free from encumbrances.

(b) Sabra understands and agrees that no member of the New Sun Group is, in this Agreement or in any Ancillary Agreement, representing or warranting to the Sabra Group in any way as to the Real Estate Business, the Sabra Liabilities, or the Sabra Assets, or as to any consents or approvals required in connection with the consummation of the transactions contemplated by this Agreement, it being agreed and understood as between the Groups, the members of the Sabra Group shall take all of the Real Estate Business “as is, where is” and that, except as provided in this Section 7.01 or in Section 5.01, the members of the Sabra Group shall bear the economic and legal risk that conveyances of the Real Estate Business shall prove to be insufficient or that the title of any member of the Sabra Group to any Real Estate Business shall be other than good and marketable and free from encumbrances.

ARTICLE VIII

CONDITIONS TO THE DISTRIBUTION

8.01. Conditions to Obligations .

(a) The obligations of the parties hereto to consummate the Distribution are subject to the satisfaction or waiver, as determined by Sun in its sole discretion, of each of the following conditions:

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(i) Sun’s stockholders shall have approved the Distribution and adopted the agreement and plan of merger to implement the REIT Conversion Merger;

(ii) the Corporate Restructuring Transactions as set forth on Exhibit A shall have been completed;

(iii) New Sun’s listing application with the NASDAQ shall have been approved, subject to official notice of issuance;

(iv) no stop order shall be in effect with respect to New Sun’s registration statement on Form S-1 filed with the SEC to register under the Securities Act the distribution of shares of New Sun Common Stock;

(v) no stop order shall be in effect with respect to Sabra’s registration statement on Form S-4 filed with the SEC to register under the Securities Act the issuance of shares of Sabra Common Stock in the REIT Conversion Merger;

(vi) Sun, New Sun and Sabra shall have obtained all material authorizations, consents, approvals and clearances of third parties, including U.S. federal, state and local governmental agencies, to complete the Distribution and REIT Conversion Merger;

(vii) no preliminary or permanent injunction or other order, decree or ruling issued by a Governmental Authority, and no statute, rule, regulation or executive order promulgated or enacted by any Governmental Authority, shall be in effect preventing the consummation of the Distribution or the REIT Conversion Merger;

(viii) the Financing Transactions shall have been consummated, and all material consents, waivers or amendments to any mortgage indebtedness shall have been obtained, in each case, on terms satisfactory to Sun;

(ix) this Agreement and the Ancillary Agreements shall have been executed and delivered by appropriate parties;

(x) no litigation or proceeding challenging or seeking to restrain the Distribution or the REIT Conversion Merger shall be pending or threatened; and

(xi) all other conditions required to complete the REIT Conversion Merger shall have been satisfied or waived.

(b) The foregoing conditions are for the sole benefit of Sun and shall not give rise to any duty on the part of Sun or its board of directors to waive or not waive any such condition. Any determination made by the board of directors of Sun in good faith on or prior to the Distribution Date concerning the satisfaction or waiver of any or all of the conditions set forth in Section 8.01(a) shall be conclusive.

8.02. No Constraints . Notwithstanding the provisions of Section 8.01, the satisfaction or waiver of the conditions precedent to the Distribution set forth therein shall not:

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(a) create any obligation on the part of Sun or any other party hereto to effect the Distribution;

(b) limit, in any way, Sun’s right and power under Section 11.01 to terminate this Agreement and the process leading to the Distribution and to abandon the Distribution; or

8.03. Deferral of the Distribution Date . If the Distribution Date shall have been established by the board of directors of Sun but all the conditions precedent to the Distribution set forth in this Agreement have not theretofore been satisfied or waived, or Sun does not reasonably anticipate that they will be satisfied or waived, on or prior to the date established as the Distribution Date, the Distribution shall not occur at the time established and, Sun may, by resolution of its board of directors (or a committee thereof, so authorized), defer the Distribution Date to a later date.

8.04. Public Notice of the Deferred Distribution Date . If the Distribution Date is deferred in accordance with Section 8.03 and public announcement of the prior Distribution Date has theretofore been made, Sun shall promptly issue a public announcement with respect to such deferment and shall take such other actions as may be deemed necessary or desirable with respect to the dissemination of the public announcement.

ARTICLE IX

INSURANCE

9.01. Coverage . Subject to the provisions of this Article IX, coverage of Sabra and members of the Sabra Group under all Sun’s insurance policies shall cease as of the Distribution Date. From and after the Distribution Date, Sabra and its Subsidiaries shall be responsible for obtaining and maintaining all insurance coverages in their own right.

9.02. Ownership of Existing Policies and Programs .

(a) On the Distribution Date, Sun shall assign to New Sun, to the extent permitted under the policies, all property damage and business interruption, and liability insurance policies and programs, including, without limitation, primary and excess general and professional liability, Directors and Officers liability, automobile, workers’ compensation, property damage and business interruption, crime and fiduciary insurance policies, in effect on the Distribution Date (collectively, the “ New Sun Policies ” and individually, a “ New Sun Policy ”). Subject to the provisions of this Agreement, New Sun shall obtain all of the rights, benefits and privileges, if any, under the New Sun Policies. Except as expressly set forth in this Article IX, after the assignment of the New Sun Policies to New Sun, no member of the New Sun Group shall have any responsibility for or obligation to any member of the Sabra Group under the New Sun Policies relating to property damage and business interruption or liability or workers compensation matters for any period, whether prior to, on or after the Distribution Date.

(b) Without limiting any of the rights or obligations of the parties pursuant to this Article IX, Sabra and New Sun acknowledge that, as of immediately after the Distribution Date,

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New Sun intends to take such action as it may deem necessary or desirable to remove the members of the Sabra Group and their respective employees, officers and directors as insured parties under any New Sun Policy by any insurance carrier effective immediately following the Distribution Date. No member of the New Sun Group shall be deemed to have made any representation or warranty as to the availability of any coverage under any such insurance policy.

9.03. Pre-Distribution Insurance Claims .

(a) After the Distribution Date, the members of each of the New Sun Group and the Sabra Group shall have the right to assert Pre-Distribution Insurance Claims and the members of the Sabra Group shall have the right to participate with New Sun to resolve Pre-Distribution Insurance Claims under the applicable New Sun Policies up to the full extent of the applicable and available limits of liability of such policy. New Sun or Sabra, as the case may be, shall have primary control over those Pre-Distribution Insurance Claims for which the New Sun Group or the Sabra Group, respectively, bears the underlying loss, subject to the terms and conditions of the relevant policy of insurance governing such control. If a member of the Sabra Group is unable to assert a Pre-Distribution Insurance Claim because it is no longer an “insured” under an operating policy, then New Sun shall assert such claim in its own name and deliver the Insurance Proceeds to Sabra. Any Insurance Proceeds received by the New Sun Group for members of the Sabra Group shall be for the benefit of the Sabra Group. Any Insurance Proceeds received for the benefit of both the New Sun Group and the Sabra Group shall be distributed pro rata based on the respective share of the underlying loss.

(b) With respect to Pre-Distribution Insurance Claims, whether or not known or reported on or prior to the Distribution Date, Sabra shall, or shall cause the applicable member of the Sabra Group to, report as soon as practicable such claims arising from the Real Estate Business directly to the applicable insurer(s) and to New Sun, and Sabra shall, or shall cause the applicable member of Sabra Group to, individually, and not jointly, assume responsibility for, and shall pay to the appropriate insurance carriers, the New Sun Group or otherwise, any premiums, retrospectively-rated premiums, defense costs, indemnity payments or uninsured costs arising from any liability or workers compensation losses which are uninsured because of coverage terms or conditions of the operating policies covering such losses, or other charges (including, but not limited to, deductibles, self-insured retentions, reserves and the like) (collectively, “ Insurance Charges ”) whenever occurring, which shall become due and payable under the terms and conditions of any applicable New Sun Policy in respect of any Pre-Distribution Insurance Claims related to the Real Estate Business, whenever becoming known, which Insurance Charges are known or become known prior to, on or after the Distribution Date. To the extent that the terms of any applicable New Sun Policy provide that any member of the New Sun Group shall have an obligation to pay or guarantee the payment of any such Insurance Charges, New Sun shall be entitled to demand that Sabra make such payment directly to the Person or entity entitled thereto. In connection with any such demand, New Sun shall submit to Sabra a copy of any invoice or listing of claims received by New Sun pertaining to such Insurance Charges together with appropriate supporting documentation. In the event that Sabra fails to pay any such Insurance Charges when due and payable, whether at the request of the Person entitled to payment or upon demand by New Sun, the New Sun Group may (but shall not be required to) pay such Insurance Charges for and on behalf of the Sabra Group and, thereafter, Sabra shall promptly reimburse New Sun for such payment. New Sun shall, and shall cause each

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member of the New Sun Group to, cooperate and assist the applicable member of the Sabra Group with respect to such claims and shall arrange for the applicable member of the Sabra Group to post any such collateral in respect of the reimbursement obligations as may reasonably be requested by the insurers. Sabra agrees that Pre-Distribution Insurance Claims of members of the Sabra Group shall receive the same priority as Pre-Distribution Insurance Claims of members of the New Sun Group and be treated equitably in all respects, including in connection with deductibles, retentions, coinsurance and retrospective premium charges.

(c) New Sun shall not be liable to Sabra for claims, or portions of claims, not reimbursed by insurers under any policy for any reason, including coinsurance provisions, deductibles, quota share deductibles, self-insured retentions, bankruptcy or insolvency of any insurance carrier(s), policy limitations or restrictions (including exhaustion of limits), any coverage disputes, any failure to timely file a claim by any member of the New Sun Group or any member of the Sabra Group or any defect in such claim or its processing. In the event that insurable claims of both New Sun and Sabra (or the members of their respective Groups) exist relating to the same occurrence, the parties shall jointly defend and waive any conflict of interest necessary to the conduct of the joint defense and shall not settle or compromise any such claim without the consent of the other (which consent shall not be unreasonably withheld or delayed subject to the terms and conditions of the applicable insurance policy). Nothing in this Section 9.03 shall be construed to limit or otherwise alter in any way the obligations of the parties, including those created by this Agreement, by operation of Law or otherwise.

9.04. D&O Insurance . After the Distribution Date, to the extent that any claims have been duly reported on or before the Distribution Date under the directors and officers liability insurance policies or fiduciary liability insurance policies (collectively, “ D&O Policies ”) maintained by Sun prior to the Distribution and assumed by New Sun Group as of the Distribution Date, New Sun shall not, and shall cause the members of the New Sun Group not to, take any action that would limit the coverage of the individuals who acted as directors or officers of Sun or its Subsidiaries on or prior to the Distribution Date under any D&O Policies maintained by the members of the New Sun Group. New Sun shall, and shall cause members of the New Sun Group to, reasonably cooperate with the individuals who acted as directors and officers of Sun or its Subsidiaries on or prior to the Distribution Date in their pursuit of any coverage claims under such D&O Policies which could inure to the benefit of such individuals. New Sun shall, and shall cause members of the New Sun Group to, allow Sabra and its agents and representatives, upon reasonable prior notice and during regular business hours, to examine and make copies of the relevant D&O Policies maintained by New Sun and members of the New Sun Group pursuant to this Section 9.04. New Sun shall provide, and shall cause other members of the New Sun Group to provide, such cooperation as is reasonably requested by Sabra in order for Sabra to have in effect after the Distribution Date such new D&O Policies as Sabra deems appropriate with respect to claims reported after the Distribution Date.

9.05. Non-Waiver of Rights to Coverage; Subrogation . An insurance carrier that would otherwise be obligated to pay any claim shall not be relieved of the responsibility with respect thereto, or, solely by virtue of the provisions of this Agreement, have any subrogation rights with respect thereto. To the fullest extent permitted by Law, each of the parties hereto hereby contractually waives any and all rights of insurer subrogation under all pertinent policies with respect to the matters covered by this Agreement, and shall exercise commercially reasonable

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efforts to ensure such waiver of subrogation with respect to each of their respective insurers and all such pertinent policies. No insurance carrier or any third party shall be entitled to a benefit (i.e., a benefit they would not be entitled to receive had no Distribution occurred or in the absence of the provisions of this Agreement) by virtue of the provisions hereof. For the avoidance of doubt, no provision of this Agreement is intended or shall be construed in any way to prejudice or limit insurance coverage under any applicable policy of insurance or reinsurance.

9.06. Scope of Affected Policies of Insurance . The provisions of this Article IX relate solely to matters involving property damage and business interruption, and liability insurance policies and programs, including, without limitation, primary and excess general and professional liability, Directors and Officers liability, automobile, workers’ compensation, property damage and business interruption, crime and fiduciary insurance policies, and shall not be construed to affect any obligation of or impose any obligation on the parties with respect to any life, health and accident or dental or medical insurance.

9.07. Cooperation . The parties shall use commercially reasonable efforts to cooperate with respect to the various insurance matters contemplated by this Article IX.

ARTICLE X

DISPUTE RESOLUTION AND ARBITRATION

10.01. Sole and Exclusive Method for Resolution of Disputes . Any dispute or controversy arising out of or relating to this Agreement or any of the Ancillary Agreements other than the Tax Allocation Agreement and the Lease Agreements (“ Disputes ”) shall be resolved in accordance with the procedures specified in this Article X, which shall be the sole and exclusive procedures for the resolution of any such Disputes.

10.02. Negotiation Between Executives . The parties involved in any Dispute shall attempt to resolve such Dispute between them promptly by negotiation between executives who have authority to settle the Dispute and who are at a comparable or higher level of management than the persons who have been involved in the negotiation of this Agreement. Any party may give the other party written notice of any Dispute not resolved in the normal course of business. Within fifteen days (or such further time as the parties may agree) after delivery of such notice, the receiving party shall submit to the other a written response. The notice and response shall include (a) a statement of that party’s position and a summary of the arguments supporting that position, and (b) the name and title of the executive who will represent that party and of any other person who will accompany the executive. Within thirty days (or such further time as the parties may agree) after delivery of the initial notice, the executives of the parties shall meet at a mutually acceptable time and place, and thereafter continue to meet as often as they reasonably deem necessary, to use their good faith and commercially reasonable efforts to attempt to resolve the Dispute. All negotiations pursuant to this clause shall be confidential and shall be treated as compromise and settlement negotiations for purposes of applicable rules of evidence, and any documents or information exchanged pursuant to the preceding sentence shall be returned immediately following the earlier of the conclusion of negotiations or the institution of arbitration.

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10.03. Arbitration . If any Dispute has not been resolved by negotiation as provided in Section 10.02 within sixty days (or such further time as the parties may agree) after delivery of the initial notice of negotiation, or if the parties fail to meet within thirty days (or such further time as the parties may agree) after delivery of such notice, then, at the request of New Sun or Sabra, such Dispute shall be submitted to binding arbitration in accordance with the then prevailing CPR Rules for Non-Administered Arbitration (the “ CPR Rules ”).

10.04. Selection of Arbitrators . The arbitration will be conducted before a panel that shall consist of two independent and impartial arbitrators, one appointed by the New Sun Group, one appointed by the Sabra Group and a third independent and impartial arbitrator who shall chair the panel. The third arbitrator shall be selected as provided in Rule 5.2 of the CPR Rules. The parties acknowledge that each party may have confidential communications with its party-appointed arbitrator concerning that arbitrator’s selection and the selection of the third neutral arbitrator. The arbitrators selected shall be qualified by education, experience and training to render a decision upon the matter in dispute. Should a party fail to appoint an arbitrator, or should the two party appointed arbitrators fail to appoint a chairman within sixty days (or such further time as the parties may agree) following the claimant’s giving of notice to respondent, the remaining positions on the panel shall be filled by appointment of the CPR in accordance with the CPR Rules.

10.05. Rules . The arbitration shall proceed under the CPR Rules and shall be governed by the Federal Arbitration Act, 9 U.S.C. Section 1, et. seq. The arbitrators may, in their discretion, limit or expand discovery in any arbitration proceeding. The parties expressly covenant and agree to be bound by the decision of the arbitrators as a final determination of the Dispute, and the parties agree that a judgment of any court of competent jurisdiction within the United States may be entered upon the award. In rendering the award the arbitrators shall abide by (a) the terms and conditions of this Agreement and the Ancillary Agreements including, any and all restrictions, prohibitions or limitations on damages or remedies and (b) the law of the State of Delaware. The arbitrators shall not have jurisdiction or authority to add to, detract from or alter in any way the provisions of this Agreement and the Ancillary Agreements. Each party acknowledges that either party, in addition to all other remedies that may be available, shall be entitled to seek, and the arbitrators may award, equitable relief in the form of specific performance or any other equitable remedy that may then be available, as well as monetary damages for either party’s breach or threatened breach of this Agreement.

10.06. Location . The seat of any arbitration pursuant to this Article X shall be Orange County, California. All hearings in this arbitration shall be held at the seat or at such other place as the parties may agree.

10.07. Costs and Expenses . The arbitration panel may apportion the costs of arbitration between or among the parties in such manner as it deems reasonable, taking into account the circumstances of the Dispute, the conduct of the parties and the result of arbitration. The arbitration panel shall be empowered and directed to enter an award by default against either party to the arbitration who declines to pay when required by the arbitration panel its share of such fees and costs. In addition, the arbitration panel, shall be entitled to award to a party such party’s reasonable attorneys’ fees and expert fees, as determined by the arbitration panel

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considering those factors mentioned in the first sentence of this Section 10.07, incurred in connection with such party’s preparation for and participation in the arbitration.

10.08. Confidentiality . Except to the extent necessary to enforce the arbitration agreement or award, to enforce other rights of the parties hereunder, or as required by Applicable Law or the rules of any stock exchange on which the securities of any party or any of its Affiliates are listed or are in the process of being listed, the arbitrators and the parties, and their counsel, consultants and expert witnesses, shall maintain as confidential the fact of the arbitration proceedings, the arbitral award, and all documents prepared and submitted by each party, or its counsel, consultants and expert witnesses, in connection with the arbitration or exchanged by the parties in the discovery process.

ARTICLE XI

MISCELLANEOUS

11.01. Termination . Notwithstanding any provision hereof this Agreement may be terminated and the Distribution and the REIT Conversion Merger may be abandoned at any time prior to the Distribution Date by and in the sole discretion of the board of directors of Sun. In the event of such termination, no party hereto shall have any Liability to any Person by reason of this Agreement.

11.02. Complete Agreement . This Agreement and the Exhibits and Schedules hereto shall constitute the entire agreement among the parties hereto with respect to the subject matter hereof and shall supersede all previous contracts or agreements, whether oral or written, with respect to such subject matter.

11.03. Expenses . All fees and expenses associated with the Distribution that are incurred on or prior to the Distribution Date, including all fees and expenses associated with the Sabra Financing Transactions, and the other transactions contemplated by this Agreement, including all fees, expenses and disbursements to counsel and accountants, shall be borne by New Sun, except for (i) all fees and expenses incurred in connection with the enforcement of this Agreement, which shall be borne by the party incurring all such fees and expenses and (ii) all fees and expenses incurred in connection with the defense against all Third Party Claims arising from or relating to the Distribution or the REIT Conversion Merger pursuant to Sections 4.03(d) and 4.03(e), which shall be borne 50% by New Sun and 50% by Sabra. All fees and expenses associated with the Distribution that are incurred after the Distribution Date, including all fees and expenses associated with the Sabra Financing Transactions, and the other transactions contemplated by this Agreement, including all fees, expenses and disbursements to counsel and accountants, shall be borne by the party incurring all such fees and expenses.

11.04. Governing Law . This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware (other than the laws regarding choice of laws and conflicts of laws) as to all matters, including matters of validity, construction, effect, performance and remedies.

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11.05. Notices . All notices and other communications given or made pursuant hereto shall be in writing and shall be deemed to have been duly given or made (a) as of the date delivered, if delivered personally, (b) on the date the delivering party receives confirmation, if delivered by facsimile, (c) three Business Days after being mailed by registered or certified mail (postage prepaid, return receipt requested) or (d) one Business Day after being sent by overnight courier (providing proof of delivery), to the parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 11.05):

If to Sun:

Sun Healthcare Group, Inc.

18831 Von Karman, Suite 400

Irvine, California 92612

Facsimile: (949) 255-7055

Attention: Chief Executive Officer

If to New Sun:

SHG Services, Inc.

18831 Von Karman, Suite 400

Irvine, California 92612

Facsimile: (949) 255-7055

Attention: Chief Executive Officer

If to Sabra:

Sabra Health Care REIT, Inc.

18500 Von Karman, Suite 550

Irvine, California 92612

Facsimile: (949) 678-8868

Attention: Chief Executive Officer

11.06. Amendment and Modification . This Agreement may be amended, modified or supplemented only by a written agreement of the parties hereto.

11.07. Successors and Assigns; No Third Party Beneficiaries . This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns but neither this Agreement nor any of the rights, interests and obligations hereunder shall be assigned without the prior written consent of both New Sun and Sabra. Except for the provisions of Sections 4.03 and 4.04 relating to indemnification, which are also for the benefit of the Indemnitees, this Agreement is solely for the benefit of the parties hereto and their Subsidiaries and Affiliates and is not intended to confer upon any other Persons any rights or remedies hereunder.

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11.08. Counterparts . This Agreement may be executed by facsimile signatures and in any number of counterparts with the same effect as if all signatory parties had signed the same document. All counterparts shall be construed together and shall constitute one and the same instrument.

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

11.10. Waiver of Compliance . Any failure of any party to comply with any obligation, covenant, agreement or condition contained herein may be expressly waived in writing by the party to whom such obligation is owed, but such waiver or failure to insist upon strict compliance shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure.

11.11. Waiver of Jury Trial . Each party hereby agrees not to elect a trial by jury of any issue triable of right by jury, and waives any right to trial by jury fully to the extent that any such right shall now or hereafter exist with regard to this Agreement, or any claim, counterclaim or other action arising in connection therewith. This waiver of right to trial by jury is given knowingly and voluntarily by each party, and is intended to encompass individually each instance and each issue as to which the right to a trial by jury would otherwise accrue. The parties are hereby authorized to file a copy of this Section 11.11 in any proceeding as conclusive evidence of this waiver by each party.

11.12. Conflicts . In the case of any conflict or inconsistency between the provisions of this Agreement and the Tax Allocation Agreement, the provisions of the Tax Allocation Agreement shall govern and control.

[Signature Page Follows]

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


SUN HEALTHCARE GROUP, INC.

By:		/s/ Michael Newman
		Name: Michael Newman
		Title: Vice President

SABRA HEALTH CARE REIT, INC.

By:		/s/ Richard Matros
		Name: Richard Matros
		Title: Chairman & CEO

SHG SERVICES, INC.

By:		/s/ Michael Newman
		Name: Michael Newman
		Title: Vice President

Schedule 2.12

Cash Allocation

•

Cash on Sun’s balance sheet at October 31 will be allocated between New Sun and Sabra, net after payment of, or accrual for, all transaction expenses (“net Cash”)

•

Initially net Cash is to be allocated

•

to New Sun as follows: $40 million, plus an amount equal to ½ of Sabra debt service for November and Sabra operations costs paid by New Sun,

•

to Sabra as follows: $10 million, plus an amount equal to (i) the Clipper redemption costs, plus (ii) the unpaid taxes at the time of the Distribution due in connection with Sun’s EIN which are payable by Sabra for 2010,

•

Remaining net Cash is to be split equally between Sabra and New Sun, except that an amount equal to excess proceeds of the Sabra senior note offering is 100% allocable to Sabra

•

Certain cash received after the Distribution Date is to be split equally between Sabra and New Sun

•

Additional proceeds (approximately $10 million) of the GE mortgage financing closed in October

•

Any excess proceeds on deposit with the Subordinated Note Trustee following redemption of the Subordinated Notes in December

•

Transaction costs that were accrued but not paid prior to the Distribution Date shall be paid prior to December 31, 2010

•

Transaction costs (other than transfer taxes) that were not known or estimable prior to the Distribution Date will be shared equally between Sabra and New Sun in a true-up process that will occur prior to December 31, 2010 (all transaction costs must be identified by December 20, 2010 and paid no later than December 31, 2010)

•

All transfer taxes will be paid by New Sun, provided that with respect to jurisdictions where transfer taxes would not be paid until after December 31, 2010, New Sun will deposit with Sabra before that date 100% of the amounts accrued for transfer taxes as of the Distribution Date (but unpaid as of such deposit date) plus 50% of the estimated amount necessary to pay any remaining real estate transfer taxes in excess of such accrued amounts. Sabra will pay any outstanding real estate transfer taxes in full after such deposit is made. If the estimated amount used to determine the amount deposited with Sabra exceeds the actual transfer taxes due and payable as shown on the tax returns and reports filed with respect to such transactions, Sabra will return an amount of such excess to New Sun after all such taxes have been paid and such returns and reports have been filed so that the parties’ cash position with respect to such taxes is the same as it would have been if such amounts had been correctly estimated.

List of Omitted Schedules and Exhibits

Pursuant to Item 601(b)(2) of Regulation S-K, the following exhibits and disclosure letters to the Purchase Agreement have been omitted from this Exhibit 2.1:

Exhibits :


Exhibit A		Corporate Restructuring Transactions
Exhibit B		Master Lease
Exhibit C		New Sun Pro Forma Balance Sheet
Exhibit D		Sabra Pro Forma Balance Sheet
Exhibit E		Tax Allocation Agreement
Exhibit F		Transition Services Agreement
Exhibit G-1		Certificate of Incorporation of New Sun
Exhibit G-2		By-Laws of New Sun
Exhibit H-1		Articles of Amendment and Restatement of Sabra
Exhibit H-2		Amended and Restated By-Laws of Sabra

Schedules :


Schedule 1.01(A)		Properties
Schedule 1.01(B)		Sabra Subsidiaries

Exhibit 10.1

TRANSITION SERVICES AGREEMENT

THIS TRANSITION SERVICES AGREEMENT (including all schedules and exhibits hereto, this “ Agreement ”), dated as of November 4, 2010 and effective as of the effective time of the REIT Conversion Merger (as defined below), is entered into by and between SHG Services, Inc., a Delaware corporation (“ New Sun ”), and Sabra Health Care REIT, Inc., a Maryland corporation (“ Sabra ”) (each, a “ Party ” and collectively, the “ Parties ”).

RECITALS:

WHEREAS, the Board of Directors of Sun Healthcare Group, Inc. (“ Sun ”) has determined that it is appropriate and desirable to separate Sun and its subsidiaries into two publicly-owned companies so that (i) the assets and liabilities relating to substantially all of Sun’s owned real property are allocated to Sabra and (ii) the other assets and liabilities relating to the historical operations of Sun are allocated to New Sun;

WHEREAS, in order to effectuate the foregoing, New Sun and Sabra have entered into a Distribution Agreement, dated as of November 4, 2010 (the “ Distribution Agreement ”), which provides for, among other things, subject to the conditions and upon the terms set forth therein, the contribution to Sabra of certain assets, the assumption by New Sun and Sabra of certain liabilities, the distribution of New Sun common stock (the “ Distribution ”) to Sun stockholders as of a certain record date and the execution and delivery of certain other agreements in order to facilitate and provide for the foregoing;

WHEREAS, at 5:00 p.m. Eastern Time on the Distribution Date (as defined below), Sun will be merged with and into Sabra, with Sabra surviving the merger (the “ REIT Conversion Merger ”); and

WHEREAS, in order to facilitate an orderly transition under the Distribution Agreement, New Sun and Sabra have agreed to enter into transitional arrangements upon the terms and subject to the conditions contained in this Agreement.

Section 1. Definitions .

(a) For purposes of this Agreement, the following terms shall have the following meanings:

“ Additional Services ” has the meaning set forth in Section 2(b)(ii).

“ Agreement ” has the meaning set forth in the Preamble.

“ Change of Control Event ” has the meaning set forth in Section 7(j).

“ Charges ” has the meaning set forth in Section 3(a).

“ CPR Rules ” has the meaning set forth in Section 6(c).

“ Disputes ” has the meaning set forth in Section 6(a).

“ Distribution ” has the meaning set forth in the Recitals.

“ Distribution Agreement ” has the meaning set forth in the Recitals.

“ Distribution Date ” means the date on which Sun distributes as a dividend to its stockholders all of the outstanding shares of New Sun common stock as set forth in the Distribution Agreement.

“ Employment Tax ” means withholding, payroll, social security, workers compensation, unemployment, disability and any similar tax imposed by any Tax Authority, and any interest, penalties, additions to tax or additional amounts with respect to the foregoing imposed on any taxpayer or consolidated, combined or unitary group of taxpayers.

“ Governmental Authority ” means any federal, state, local, foreign or international court, government, department, commission, board, bureau, agency, applicable stock exchange or other regulatory, administrative or governmental authority.

“ Information ” means information, whether or not patentable or copyrightable, in written, oral, electronic or other tangible or intangible forms, including studies, reports, records, books, contracts, instruments, surveys, discoveries, ideas, concepts, know-how, techniques, designs, specifications, drawings, blueprints, diagrams, models, prototypes, samples, flow charts, data, computer data, disks, diskettes, tapes, computer programs or other software, marketing plans, customer names, communications by or to attorneys (including attorney-client privileged communications), memos and other materials prepared by attorneys or under their direction (including attorney work product), and other technical, financial, employee or business information or data.

“ Initial Services ” has the meaning set forth in Section 2(a).

“ Law ” means all laws, statutes, ordinances, orders, decrees, regulations, rules, policies or guidelines promulgated and other pronouncements of any Governmental Authority, and includes rules and regulations or any regulatory or self regulatory authority compliance with which is required by law.

“ New Sun ” has the meaning set forth in the Preamble.

“ Omitted Service ” has the meaning set forth in Section 2(b)(i).

“ Parties ” has the meaning set forth in the Preamble.

“ Person ” means any individual, person, entity, general partnership, limited partnership, limited liability partnership, limited liability company, corporation, joint venture, trust, business trust, cooperative, association, foreign trust or foreign business organization.

“ Provider Indemnitees ” has the meaning set forth in Section 7(c).

“ REIT Conversion Merger ” has the meaning set forth in the Recitals.

“ Sabra ” has the meaning set forth in the Preamble.

“ Service Period ” means, with respect to any Service, the period commencing on the Distribution Date and ending on the earliest of (i) the date Sabra terminates the provision of such Service pursuant to Section 4(b), (ii) the termination date (measured as the number of months from the Distribution Date) specified with respect to such Service on Schedule 1, unless extended pursuant to Section 4(a) or (iii) the failure of Sabra to cure a breach of its obligation to pay the Charges for the applicable Service in accordance with Section 3 within thirty (30) days after receipt of written notice from New Sun describing the breach.

“ Services ” has the meaning set forth in Section 2(b)(ii).

“ Subsidiary ” means, with respect to any specified Person, any corporation or other legal entity of which such Person or any of its Subsidiaries controls or owns, directly or indirectly, more than 50% of the stock or other equity interest entitled to vote on the election of members to the board of directors or similar governing body.

“ Sun ” has the meaning set forth in the Recitals.

“ Tax ” means: (i) any income, net income, gross income, gross receipts, profits, capital stock, franchise, property, ad valorem, stamp, excise, severance, occupation, service, sales, use, license, lease, transfer, import, export, customs duties, value added, alternative minimum, estimated or other similar tax (including any fee, assessment, or other charge in the nature of or in lieu of any tax) imposed by any Tax Authority, and any interest, penalties, additions to tax or additional amounts with respect to the foregoing imposed on any taxpayer or consolidated, combined or unitary group of taxpayers; and (ii) any Employment Tax.

“ Tax Authority ” means, with respect to any Tax, the governmental entity or political subdivision thereof that imposes such Tax, and the agency (if any) charged with the collection of such Tax for such entity or subdivision.

“ Third Party ” means any Person other than New Sun, Sabra and any of their respective Subsidiaries.

(b) Rules of Construction . Unless the context otherwise requires:

(i) A capitalized term has the meaning assigned to it;

(ii) References in the singular or to “him,” “her,” “it,” “itself,” or other like references, and references in the plural or the feminine or masculine reference, as the case may be, shall also, when the context so requires, be deemed to include the plural or singular, or the masculine or feminine reference, as the case may be;

(iii) References to Sections and Exhibits and Schedules shall refer to sections and exhibits and schedules of this Agreement, unless otherwise specified;

(iv) The headings in this Agreement are for convenience and identification only and are not intended to describe, interpret, define or limit the scope, extent or intent of this Agreement or any provision thereof;

(v) This Agreement shall be construed without regard to any presumption or other rule requiring construction against the Party that drafted and caused this Agreement to be drafted;

(vi) All monetary figures shall be in United States dollars unless otherwise specified;

(vii) References to “including” in this Agreement shall mean “including, without limitation,” whether or not so specified; and

(viii) References herein to this Agreement or any other agreements contemplated herein shall be deemed to refer to this Agreement or such other agreement as of 11:59 pm Eastern Daylight Time on the Distribution Date and as such time may be amended thereafter, unless otherwise specified.

Section 2. Services .

(a) Initial Services . Commencing on the Distribution Date, upon the terms and subject to the conditions contained in this Agreement, New Sun agrees to provide, or with respect to any service to be provided by a Subsidiary of New Sun, to cause such Subsidiary to provide, to Sabra or its Subsidiaries as designated on the Schedules, the applicable services (the “ Initial Services ”) set forth in Schedule 1 hereto.

(b) Omitted Services; Additional Services .

(i) If during the term of this Agreement, Sabra identifies a service that Sun previously provided to Sabra or any of its Subsidiaries during the six (6) months preceding the Distribution Date (excluding those services that were intentionally discontinued in the ordinary course of business other than as a result of the pendency of the transactions contemplated by the Distribution Agreement), but such service was inadvertently omitted from the Services set forth on the Schedules hereto (such service an “ Omitted Service ”), then upon the prior written consent of New Sun, which consent shall not be unreasonably withheld, delayed or conditioned such Omitted Service shall be added and considered as part of the Services pursuant to an addendum to Schedule 1. The Parties shall cooperate and act in good faith to agree upon the terms for the provision of any such Omitted Service.

(ii) From time to time after the Distribution Date, the Parties may identify additional services that are not Omitted Services that Sabra requests in accordance with the terms of this Agreement (the “ Additional Services ” and,

together with the Initial Services and any added Omitted Services, the “ Services ”). Upon the prior written consent of New Sun, which New Sun shall not have any obligation to provide, such Additional Services shall be added and considered as part of the Services pursuant to an addendum to Schedule 1, which addendum shall contain mutually agreeable terms for the provision of any such Additional Services.

(i) New Sun shall, and shall cause its Subsidiaries to, perform all Services to be provided by New Sun in a manner which is substantially similar in nature, quality and timeliness to the analogous services provided by Sun to its Subsidiaries prior to the Distribution Date.

(ii) New Sun shall, and shall cause its Subsidiaries to, perform its duties and responsibilities hereunder in good faith and consistent with its past practices. Neither New Sun nor any of its Subsidiaries shall be liable or held accountable, in damages or otherwise, for any error of judgment or any mistake of fact or applicable Law or for anything that New Sun or any of its Subsidiaries does or refrains from doing in good faith hereunder, except in the case of its gross negligence or willful misconduct.

(iii) Nothing in this Agreement shall require New Sun to perform or cause to be performed any Service in a manner that would constitute a violation of applicable Law, its Financial Code of Ethics or its Code of Conduct.

(iv) (1) Neither New Sun nor any of its Subsidiaries shall be required to perform or to cause to be performed any of the Services for the benefit of any Third Party or any other Person other than Sabra or its Subsidiaries, and (2) EXCEPT AS EXPRESSLY PROVIDED IN SECTION 2(c), EACH PARTY ACKNOWLEDGES AND AGREES THAT ALL SERVICES AND PRODUCTS ARE PROVIDED ON AN “AS-IS” BASIS AND THAT NEW SUN AND ITS SUBSIDIARIES MAKE NO WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE SERVICES AND PRODUCTS, AND HEREBY DISCLAIM ANY REPRESENTATION OR WARRANTY OF MERCHANTABILITY, FITNESS FOR ANY PARTICULAR PURPOSE, NON-INFRINGEMENT OR ANY OTHER WARRANTY WHATSOEVER.

(d) Changes To Services . Except as provided in Section 2(g) below, New Sun may make changes from time to time in the manner of performing the Services if New Sun is making similar changes in performing analogous services for itself. No such change shall affect the Charges for the applicable Service. If New Sun is no longer performing, or obtaining from Third Parties, analogous services for itself, New Sun shall not modify any such Service in a manner which would (i) materially increase Sabra’s costs therefor or (ii) materially degrade the functionality or standards related thereto, without the prior written consent of Sabra. Subject to the foregoing, if New Sun plans to implement any material change to any Service New Sun provides to Sabra or its Subsidiaries, but does not perform or obtain from Third Parties an analogous service for

itself, that will or may impact the Services or the costs thereof, (1) New Sun shall provide Sabra with not less than thirty (30) days prior written notice for Sabra to consider and implement alternative solutions for such affected Services, and (2) Sabra shall have fifteen (15) days after receipt of such notice to elect to (A) continue to receive the affected Services, in which event New Sun and Sabra shall mutually agree upon revised Charges for such Services during the remaining Service Period or (B) terminate such Services without incurring any penalty for such termination.

(e) Transitional Nature of Services . The Parties acknowledge the transitional nature of the Services and agree to cooperate in good faith and to use commercially reasonable efforts to effectuate a smooth transition of the Services from New Sun to Sabra (or its designee).

(f) Cooperation . In the event that (i) there is nonperformance of any Service as a result of an event described in Section 7(e), or (ii) the provision of a Service would violate applicable Law, the Parties agree to work together in good faith to arrange for an alternative means by which Sabra or its Subsidiaries may obtain, at Sabra’s sole cost, the Services so affected.

(g) Use Of Third Parties To Provide The Services . New Sun may perform its obligations through its Subsidiaries or, if New Sun is obtaining analogous services for itself from agents, subcontractors or independent contractors, New Sun may perform its obligations hereunder through the use of such agents, subcontractors or independent contractors. If New Sun is not obtaining analogous services for itself from Third Parties, New Sun may perform its obligations hereunder through the use of agents, subcontractors or independent contractors only upon obtaining the prior written consent of Sabra. Notwithstanding the foregoing, New Sun shall not be relieved of its obligations under this Agreement by use of such agents, subcontractors or independent contractors. Delegation of performance of any Service by New Sun in accordance with this Section 2(g) shall not affect the Charges for the applicable Service.

Section 3. Charges; Billing; Taxes .

(a) Charges For Services . The charges for the Services shall be determined in accordance with Schedule 1 (the “ Charges ”).

(b) Prepayment . In the event that New Sun is required in the course of providing the Services to make any payments on Sabra’s behalf in excess of $10,000, New Sun will use good faith efforts to provide notice of such payment at least five business days in advance of the applicable payment date and Sabra shall, at least three business days prior to the applicable date when such payments are to be made, pay to New Sun by wire transfer an amount equal to the sum of such payments. New Sun and Sabra acknowledge and agree that New Sun will have no responsibility to make any such payments on Sabra’s behalf if Sabra fails to wire the funds to New Sun as provided herein.

(c) Procedure . Charges for the Services shall be charged to and payable by Sabra. Amounts payable pursuant to the terms of this Agreement shall be paid

to New Sun, as directed by New Sun, on a monthly basis, which amounts shall be due within thirty (30) days after the date of invoice.

(d) Taxes . Sabra shall pay any and all Taxes incurred in connection with New Sun’s provision of the Services, including all sales, use, value-added, and similar Taxes, but excluding Taxes based on New Sun’s net income.

(e) No Set-Off . Sabra’s obligation to make any required payments under this Agreement shall not be subject to any unilateral right of offset, set-off, deduction or counterclaim, however arising.

Section 4. Term and Termination .

(a) Term . Unless otherwise terminated pursuant to Section 4(b), this Agreement shall terminate with respect to any Service at the close of business on the last day of the Service Period for such Service. Notwithstanding the foregoing, Sabra may elect to extend the Service Period for any Service by providing New Sun with written notice no later than 30 days prior to the termination of such Service Period; provided , however , that no Service Period, including any extension thereof, shall continue for longer than one year after the Distribution Date without the prior written consent of New Sun. This Agreement shall terminate immediately following the termination of all Service Periods, including any extensions thereof.

(b) Early Termination . Sabra shall have the right at any time during the term of this Agreement to terminate its obligation to purchase any individual Service, upon the giving of an advance written notice to New Sun of at least 10 days.

(c) Information Transmission . On or prior to the last day of each relevant Service Period, New Sun shall use commercially reasonable efforts and shall cause its Subsidiaries to use commercially reasonable efforts to support any transfer of Information concerning the relevant Services to Sabra or its Subsidiaries. If requested by Sabra, New Sun shall, and shall cause its Subsidiaries to, deliver to Sabra, within such time periods as the Parties may reasonably agree, all Information received or computed for the benefit of Sabra and its Subsidiaries during the Service Period, in electronic and/or hard copy form; provided , however , that (i) New Sun shall not have any obligation to provide or cause its Subsidiaries to provide Information in any non-standard format, and (ii) New Sun and its Subsidiaries shall be reimbursed for their reasonable out-of-pocket costs and expenses for providing Information in any format other than its standard format.

Section 5. Confidentiality; Protective Arrangements .

(a) New Sun And Sabra Obligations . Subject to Section 5(c), each of New Sun, on behalf of itself and each of its Subsidiaries, and Sabra, on behalf of itself and each of its Subsidiaries, agrees to hold, and to cause its respective directors, officers, employees, agents, accountants, counsel and other advisors and representatives to hold, in strict confidence, with at least the same degree of care that applies to Sun’s confidential and proprietary information pursuant to policies in effect prior to the Distribution Date, all Information regarding New Sun or its Subsidiaries on the one hand and all Information regarding Sabra or its Subsidiaries on the other hand that is in the possession of the other

Party (including Information in such Party’s possession prior to the Distribution Date or Information that has been furnished to the other Party’s respective directors, officers, employees, agents, accountants, counsel and other advisors and representatives at any time pursuant to this Agreement). Such Information shall not be used in any manner other than for such purposes as may be expressly permitted hereunder, except, in each case, to the extent that such Information has been (i) in the public domain through no fault of such Party or its Subsidiaries or any of their respective directors, officers, employees, agents, accountants, counsel and other advisors and representatives; (ii) later lawfully acquired from other sources by such Party (or any of its Subsidiaries), which sources are not themselves bound by a confidentiality obligation; or (iii) independently generated without reference to any proprietary or confidential Information of the other Party.

(b) No Release; Return Or Destruction . Each Party agrees not to release or disclose, or permit to be released or disclosed, any Information addressed in Section 5(a) to any other Person or Governmental Authority, except its directors, officers, employees, agents, accountants, counsel and other advisors and representatives who need to know such Information, and except in compliance with Section 6.07 of the Distribution Agreement. Without limiting the foregoing, when any Information furnished by either Party after the Distribution Date pursuant to this Agreement is no longer needed for the purposes contemplated by this Agreement, each Party shall, at such Party’s option, promptly after receiving a written request from the other Party either return to the other Party all such Information in a tangible form (including all copies thereof and all notes, extracts or summaries based thereon) or certify to the other Party that it has destroyed such Information (and such copies thereof and such notes, extracts or summaries based thereon).

(c) Protective Arrangements . In the event that either Party or any of their respective Subsidiaries determines on the advice of its counsel that it is required to disclose any Information pursuant to applicable Law or the rules or regulations of any Governmental Authority or receives any demand under lawful process or from any Governmental Authority to disclose or provide Information of the other Party that is subject to the confidentiality provisions hereof, such Party shall notify the other Party prior to disclosing or providing such Information and shall cooperate at the expense of the requesting Party in seeking any reasonable protective arrangements requested by such other Party. Subject to the foregoing, the Party that received such request, or its Subsidiaries, may thereafter disclose or provide Information to the extent required by applicable Law (as so advised by counsel).

Section 6. Dispute Resolution And Arbitration .

(a) Sole And Exclusive Method For Resolution Of Disputes . Any dispute, claim or controversy arising out of or relating to the Services or this Agreement (hereinafter “ Disputes ”) shall be resolved in accordance with the procedures specified in this Section 6, which shall be the sole and exclusive procedures for the resolution of any such Disputes.

(b) Negotiation Between Executives . The Parties involved in any Dispute shall attempt to resolve such Dispute between them promptly by negotiation

between executives who have authority to settle the Dispute and who are at a comparable or higher level of management than the Persons who have been involved in the negotiation of this Agreement. Any Party may give the other Party written notice of any Dispute not resolved in the normal course of business. Within fifteen (15) days (or such further time as the Parties may agree) after delivery of such notice, the receiving party shall submit to the other a written response. The notice and response shall include (a) a statement of that Party’s position and a summary of the arguments supporting that position, and (b) the name and title of the executive who will represent that Party and of any other person who will accompany the executive. Within thirty (30) days (or such further time as the Parties may agree) after delivery of the initial notice, the executives of the Parties shall meet at a mutually acceptable time and place, and thereafter continue to meet as often as they reasonably deem necessary, to use their good faith and commercially reasonable efforts to attempt to resolve the Dispute. All negotiations pursuant to this clause shall be confidential and shall be treated as compromise and settlement negotiations for purposes of applicable rules of evidence, and any documents or information exchanged pursuant to the preceding sentence shall be returned immediately following the earlier of the conclusion of negotiations or the institution of arbitration.

(c) Arbitration . If any Dispute has not been resolved by negotiation as provided in Section 6(b) within sixty (60) days (or such further time as the Parties may agree) after delivery of the initial notice of negotiation, or if the Parties fail to meet within thirty (30) days (or such further time as the Parties may agree) after delivery of such notice, then, at the request of New Sun or Sabra, such Dispute shall be submitted to binding arbitration in accordance with the then prevailing CPR Rules for Non-Administered Arbitration (the “ CPR Rules ”).

(d) Selection of Arbitrators . The arbitration shall be conducted before a panel that shall consist of two independent and impartial arbitrators, one appointed by New Sun and one appointed by Sabra and a third independent and impartial arbitrator who shall chair the panel. The third arbitrator shall be selected as provided in Rule 5.2 of the CPR Rules. The Parties acknowledge that each Party may have confidential communications with its party-appointed arbitrator concerning that arbitrator’s selection and the selection of the third neutral arbitrator. The arbitrators selected shall be qualified by education, experience and training to render a decision upon the matter in dispute. Should a Party fail to appoint an arbitrator, or should the two party-appointed arbitrators fail to appoint a chairman within sixty (60) days (or such further time as the Parties may agree) following the claimant’s giving of notice to respondent of such Dispute, the remaining positions on the panel shall be filled by appointment of the CPR in accordance with the CPR Rules.

(e) Rules . The arbitration shall proceed under the CPR Rules and shall be governed by the Federal Arbitration Act, 9 U.S.C. Section 1, et. seq. The arbitrators may, in their discretion, limit or expand discovery in any arbitration proceeding. The Parties expressly covenant and agree to be bound by the decision of the arbitrators as a final determination of the Dispute, and the Parties agree that a judgment of any court of competent jurisdiction within the United States may be entered upon the award. In rendering the award the arbitrators shall abide by (a) the terms and conditions of this Agreement including, any and all restrictions, prohibitions or limitations on damages or

remedies and (b) the Law of the State of California. The arbitrators shall not have jurisdiction or authority to add to, detract from or alter in any way the provisions of this Agreement. Each Party acknowledges that either Party, in addition to all other remedies that may be available, shall be entitled to seek, and the arbitrators may award, equitable relief in the form of specific performance or any other equitable remedy that may then be available, as well as monetary damages for either Party’s breach or threatened breach of this Agreement.

(f) Location . The seat of any arbitrations pursuant to this Section 6 shall be Orange County, California. All hearings in this arbitration shall be held at the seat or at such other place as the Parties may agree.

(g) Costs and Expenses . The arbitration panel may apportion the costs of arbitration between or among the Parties in such manner as it deems reasonable, taking into account the circumstances of the Dispute, the conduct of the Parties and the result of arbitration. The arbitration panel shall be empowered and directed to enter an award by default against either Party to the arbitration who declines to pay when required by the arbitration panel its share of such fees and costs. In addition, the arbitration panel, shall be entitled to award to a Party such Party’s reasonable attorneys’ fees and expert fees, as determined by the arbitration panel considering those factors mentioned in the first sentence of this Section 6(g), incurred in connection with such Party’s preparation for and participation in the arbitration.

(h) Confidentiality . Except to the extent necessary to enforce the arbitration agreement or award, to enforce other rights of the Parties hereunder, or as required by applicable Law or the rules of any stock exchange on which the securities of any Party or any of its Subsidiaries are listed or are in the process of being listed, the arbitrators and Parties, and their counsel, advisors, consultants and expert witnesses, shall maintain as confidential the fact of the arbitration proceedings, the arbitral award, and all documents prepared and submitted by each Party, or its counsel, advisors, consultants and expert witnesses, in connection with the arbitration or exchanged by the Parties in the discovery process.

(i) Breach of Confidentiality Provisions . Notwithstanding the foregoing, the Parties acknowledge that the breach of Section 5 (Confidentiality) by one Party may give rise to irreparable injury to the other Party which is not adequately compensable in damages or at Law. Accordingly, the Parties agree that in such event, the non-breaching Party may seek equitable relief to enforce or prevent violation of such Party’s respective rights and/or obligations under Section 5. Unless otherwise agreed in writing, the Parties shall continue to provide Services and honor all other commitments under this Agreement during the course of any Dispute being resolved pursuant to the provisions of this Section 6 with respect to all matters subject to such Dispute; provided , however , that this obligation shall only exist during the applicable Service Period.

Section 7. Miscellaneous .

(a) Mutual Cooperation . The Parties and their respective Subsidiaries shall cooperate with each other in connection with the performance of the Services

hereunder, including producing on a timely basis all Information that is reasonably requested with respect to the performance of Services and the transition of Services at the end of the applicable Service Period or any extension thereof; provided , however , that such cooperation shall not unreasonably disrupt the normal operations of the Parties and their respective Subsidiaries.

(b) Limitations on Liability .

(i) THE MAXIMUM LIABILITY OF NEW SUN AND ITS SUBSIDIARIES TO, AND THE SOLE REMEDY OF, SABRA AND ITS SUBSIDIARIES WITH RESPECT TO ANY AND ALL CLAIMS ARISING UNDER OR IN CONNECTION WITH THIS AGREEMENT, REGARDLESS OF THE THEORY UPON WHICH THE LIABILITY IS PREMISED, SHALL NOT EXCEED NEW SUN’S PROFITS FOR PERFORMING SERVICES HEREUNDER, WHICH SHALL BE DEEMED TO BE EQUAL TO THE AMOUNT RECEIVED BY NEW SUN AS SET FORTH ON SCHEDULE 1 THAT EXCEEDS NEW SUN’S COSTS OF PROVIDING SUCH SERVICES.

(ii) IN NO EVENT SHALL EITHER PARTY, ITS SUBSIDIARIES OR ITS DIRECTORS, OFFICERS, EMPLOYEES OR AGENTS BE LIABLE TO THE OTHER PARTY FOR INDIRECT, EXEMPLARY, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES IN CONNECTION WITH THE PERFORMANCE OF THIS AGREEMENT, EVEN IF THE PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, AND EACH PARTY HEREBY WAIVES ON BEHALF OF ITSELF AND ITS SUBSIDIARIES ANY CLAIM FOR SUCH DAMAGES, INCLUDING ANY CLAIM FOR PROPERTY DAMAGE OR LOST PROFITS, WHETHER ARISING IN CONTRACT, TORT OR OTHERWISE.

(iii) The foregoing limitations on liability in this Section 7(b) shall not apply to: (1) either Party’s liability for breaches of confidentiality under Section 5 (Confidentiality), and (2) either Party’s obligations under Section 7(c) (Third Party Claims).

(c) Third Party Claims . Sabra shall indemnify, defend and hold harmless New Sun, its Subsidiaries and each of their respective directors, officers and employees, and each of the successors and assigns of any of the foregoing (collectively, the “ Provider Indemnitees ”), from and against any and all claims of Third Parties relating to, arising out of or resulting from New Sun’s furnishing or failing to furnish the Services provided for in this Agreement, other than Third Party claims arising out of the gross negligence or willful misconduct of any Provider Indemnitee.

(d) Title To Intellectual Property . Sabra acknowledges that neither it nor any of its Subsidiaries shall acquire any right, title or interest (including any license rights or rights of use) in any intellectual property which is owned or licensed by New Sun or any of its Subsidiaries, by reason of the provision of the Services provided hereunder. Sabra shall not, and shall cause its Subsidiaries not to, remove or alter any copyright, trademark, confidentiality or other proprietary notices that appear on any

intellectual property owned or licensed by New Sun or any of its Subsidiaries, and Sabra shall, and shall cause its Subsidiaries to, reproduce any such notices on any and all copies thereof. Sabra shall not, and shall cause its Subsidiaries not to, attempt to decompile, translate, reverse engineer or make excessive copies of any intellectual property owned or licensed by New Sun or any of its Subsidiaries, and Sabra shall promptly notify New Sun of any such attempt, regardless of whether by Sabra, any of its Subsidiaries or any Third Party, of which Sabra becomes aware.

(e) Force Majeure . Neither Party shall be liable to the other if, and to the extent that, the performance or delay in performance of any of its obligations under this Agreement is prevented, restricted, delayed or interfered with due to circumstances beyond the reasonable control of such Party, including, but not limited to, government legislation, fires, floods, explosions, epidemics, accidents, acts of God, wars, acts of terrorism, riots, strikes, lockouts or other concerted acts of workers and/or acts of government. The Party claiming an event of force majeure shall promptly notify the other Party in writing, and provide full particulars of the cause or event and the date of first occurrence thereof, as soon as possible after the event and also keep the other Party informed of any further developments. The Party so affected shall use its commercially reasonable efforts to remove the cause of non-performance, and both the Parties shall resume performance hereunder with the utmost dispatch when such cause is removed unless this Agreement has previously been terminated under Section 4 hereof.

(f) Independent Contractors . The Parties each acknowledge that they are separate entities, each of which has entered into this Agreement for independent business reasons. The relationships of the Parties hereunder are those of independent contractors and nothing contained herein shall be deemed to create a joint venture, partnership or any other relationship.

(g) No Third Party Beneficiaries . Except as expressly provided in Section 7(c), the provisions of this Agreement are solely for the benefit of the Parties and their Subsidiaries and are not intended to confer upon any Person except the Parties and their Subsidiaries any rights or remedies hereunder. Except for the Provider Indemnitees, there are no Third Party beneficiaries of this Agreement and this Agreement shall not provide any Third Party with any remedy, claim, liability, reimbursement, claim of action or other right in excess of those existing without reference to this Agreement.

(h) Governing Law . This Agreement shall be governed by, and construed in accordance with, the Laws of the State of California (other than the Laws regarding choice of laws and conflicts of laws) as to all matters, including matters of validity, construction, effect, performance and remedies.

(i) Survival . Section 1 (Definitions), Sections 2(c)(v) (Performance of Services), Section 3 (Charges; Billing; Taxes), Section 5 (Confidentiality), Section 6 (Dispute Resolution and Arbitration), Section 7(b) (Limitations on Liability), Section 7(c) (Third Party Claims), Section 7(d) (Title to Intellectual Property) and Section 7(g) (No Third Party Beneficiaries) through Section 7(p) (Severability) shall survive any expiration or termination of this Agreement.

(j) Amendment; Assignment . This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective successors and permitted assigns; provided , however , that neither Party may assign its rights or delegate its obligations under this Agreement without the express prior written consent of the other Party hereto. Notwithstanding the foregoing, this Agreement shall be assignable by either Party in whole with the prior written consent of the other Party (which consent shall not be unreasonably withheld, delayed or conditioned) in connection with: (i) a merger or consolidation of such Party if (a) such Party is not the surviving entity, or (b) such Party’s stockholders constitute less than 70% of the surviving stockholders; (ii) the sale of all or substantially all of the assets of such Party; or (iii) the acquisition by a Third Party of at least 30% of the combined voting power of the then-outstanding securities of such Party entitled to vote generally in the election of directors (each such occurrence, a “ Change of Control Event ”), in each case so long as the resulting, surviving or transferee Person assumes all the obligations of the assignor hereunder by operation of law or pursuant to an agreement in form and substance reasonably satisfactory to the other Party. It shall not be deemed to be unreasonable for a Party to withhold consent to assignment in connection with a Change of Control Event on the basis that the proposed assignee is a competitor of such Party. In the event a Party effects a Change of Control Event without the other Party’s prior written consent to assign this Agreement as set forth above, the latter Party may terminate this Agreement, in its sole discretion, with effect immediately upon the occurrence of such Change of Control Event.

(k) Audit Assistance . Each of the Parties and their respective Subsidiaries is or may be subject to regulation and audit by Governmental Authorities, standards organizations, other regulatory authorities, customers or other parties to contracts with such Parties under applicable Law and contract provisions. If a Governmental Authority, standards organization, other regulatory authority or customer or other party to a contract with a Party or a Subsidiary of a Party exercises its right to examine or audit such Party’s or any of its Subsidiaries’ books, records, documents or accounting practices and procedures pursuant to such applicable Law, rules, regulations, standards or contract provisions and such audit or examination relates to the Services, the other Party shall provide, at the sole cost and expense of the requesting Party, all assistance requested by the Party that is subject to the audit in responding to such audits or requests for information, to the extent that such assistance or information is within the reasonable control of the cooperating Party and is related to the Services.

(l) No Waivers . Any failure of any Party to comply with any obligation, covenant, agreement or condition contained herein may be expressly waived in writing by the Party to whom such obligation is owed, but such waiver or failure to insist upon strict compliance shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure. The rights and remedies of the Parties and their Subsidiaries hereunder are cumulative and are not exclusive of any rights or remedies which they would otherwise have hereunder.

(m) Notices . All notices and other communications given or made pursuant hereto shall be in writing and shall be deemed to have been duly given or made (a) as of the date delivered, if delivered personally, (b) on the date the delivering party receives confirmation, if delivered by facsimile, (c) three (3) business days after being

mailed by registered or certified mail (postage prepaid, return receipt requested) or (d) one (1) business day after being sent by overnight courier (providing proof of delivery), to the Parties at the following addresses (or at such other address for a Party as shall be specified in a notice given in accordance with this Section 7(m)):

If to New Sun:

Sun Healthcare Group, Inc.

18831 Von Karman, Suite 400

Irvine, California 92612

Facsimile: (949) 255-7055

Attention: Chief Executive Officer

If to Sabra:

Sabra Health Care REIT, Inc.

18500 Von Karman Ave, Suite 550

Irvine, California 92612

Facsimile: (949) 678-8868

Attention: Chief Executive Officer

(n) Counterparts . This Agreement may be executed by facsimile signatures and in any number of counterparts with the same effect as if all signatory parties had signed the same document. All counterparts shall be construed together and shall constitute one and the same instrument.

(o) Complete Agreement . This Agreement and the Exhibits and Schedules hereto shall constitute the entire agreement among the Parties with respect to the subject matter hereof and shall supersede all previous contracts or agreements, whether oral or written, with respect to such subject matter. Notwithstanding any other provisions in this Agreement to the contrary, in the event and to the extent that there is a conflict between the provisions of this Agreement and the provisions of the Distribution Agreement, the provisions of this Agreement shall control.

(p) Severability . Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof. Any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. Upon such determination, the Parties shall negotiate in good faith in an effort to agree upon a suitable and equitable provision to effect the original intent of the Parties.

* * *

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first written above.


SHG SERVICES, INC.

By:		/s/ Michael Newman
Name:		Michael Newman
Title:		Vice President

SABRA HEALTH CARE REIT, INC.

By:		/s/ Rick Matros
Name:		Rick Matros
Title:		Chairman & CEO

Schedule 1

Consulting Services . The following departments of New Sun shall provide consulting and advisory services to Sabra, upon the request of Sabra, at an hourly rate as listed below, for a period of up to six months from the Distribution Date (such services are exclusive of any required services under the lease agreements or Tax Allocation Agreement which services will not be billed under this agreement and instead will be provided as set forth in the Tax Allocation Agreement or applicable lease agreement):


a.	MIS / IT	$	75.00
b.	Treasury	$	75.00
c.	Payroll	$	50.00
d.	Legal	$	150.00
e.	Risk Management	$	75.00
f.	Accounts Payable	$	50.00
g.	Financial Reporting	$	150.00
h.	Real Estate	$	75.00
i.	Tax	$	150.00
j.	HR / Benefits	$	75.00
k.	Accounting	$	75.00

Data Downloads . New Sun shall provide information and data downloads relevant to the transition process for a period of up to 90 days after the Distribution Date at no cost. Such downloads shall be in a format as requested by Sabra, so long as that format is currently available to New Sun. If such format is not available to New Sun, New Sun and Sabra will work together to determine the most appropriate format available to New Sun to be used. This data download will include details of all general ledger accounts that will be part of the opening balance sheet of Sabra.

Email Service. For a period of 90 days after the Distribution Date, New Sun shall forward to Sabra all emails received on New Sun’s system that are addressed to the employees of Sabra at no cost. In addition, New Sun shall provide to Sabra, as available, the historical email files of Sabra’s employees.

4.	W-2s and 1099s . New Sun shall timely process W-2s and 1099s for the FEIN of Sun for the fiscal year ended December 31, 2010 at no cost to Sabra.

HUD . New Sun shall, for all HUD audits of Sabra subsidiaries to be completed for the 2010 fiscal year, manage the completion of such audits, including the coordination of the preparation of financial statements by an independent auditing firm and all other coordination of the required reporting to HUD related to the fiscal year ending December 31, 2010. Sabra will be responsible for 12.5% of the external costs of such HUD audits, including audit and legal fees, and will reimburse New Sun within 30 days of receipt of supporting details of such costs.

6.	Tax Filings . All agreements related to tax filings are governed by the Tax Allocation Agreement between Sabra and New Sun dated September 23, 2010.

1099s for Stockholders . New Sun shall calculate the amount of E&P that is taxable to Sun’s stockholders in connection with dividend distributions to Sun’s stockholders pursuant to the separation of Sun into two publicly-owned companies, and shall provide such calculations to Sabra and to Sabra’s transfer agent for the purpose of the transfer agent distributing 1099s to the stockholders. All costs associated with the distribution will be the responsibility of New Sun.

Fixed Asset Database and Supporting Documents . New Sun shall provide to Sabra, at no cost, an electronic media file containing the relevant underlying detail transactional support for all fixed assets (and where relevant any intangible or other assets) and associated accumulated depreciation, including the gross value of the assets, useful lives of assets, dates the assets were placed into service, etc. This information will be provided based on both a GAAP book basis and on a tax basis. In addition, New Sun shall provide Sabra with the documentation for the asset valuation work completed as of the date of the Separation for Capital Lease testing at no cost to Sabra.

9.	Audit of Opening Balance Sheet . New Sun shall assist Sabra in the completion of Sabra’s opening balance sheet at no cost. Note: it is the responsibility of Sabra to pay all audit fees incurred in connection with any such audit of such balance sheet.

10.

Supporting and Other Documents. New Sun shall provide Sabra at no cost and to the extent available, copies of supporting and other related documents for the general ledger accounts that comprise the opening balance sheet of Sabra and the real estate owned by Sabra including but not limited to the following:

All loan documents and related debt compliance documents for 2009 and 2010.

HUD audit reports for 2008 and 2009

Insurance policies

Ground leases

Entitlement documentation

Building plans

Supporting documentation for any asset impairment testing for 2009 and 2010

Appraisals

Environmental reports

Title Policies

Property Condition Reports

Summary of Capx for the past 5 years for each facility by type of expenditure.

HR files for Rick Matros and Dale Krehbiel

All supporting documentation for Rick Matros non-cash compensation and the Sabra stock to be issued to New Sun employees

FAS 109 and FIN 48 workpapers related to Sabra deferred taxes

Copy of the Sun/PWC E&P study

Copy of Sun’s internal control structure documents.

Any other documents as reasonable requested by Sabra.

Exhibit 10.2

MASTER LEASE

This MASTER LEASE (the “ Master Lease ”) is entered into as of , 2010, by and among the entities listed as “Landlord” on Schedule 1A (individually and collectively, “ Landlord ”), and the entities listed as “Tenant” on Schedule 1B (individually and collectively, jointly and severally, “ Tenant ”).

RECITALS

A. Capitalized terms used in this Master Lease and not otherwise defined herein are defined in Article II hereof.

B. Landlord desires to lease the Leased Property to Tenant and Tenant desires to lease the Leased Property from Landlord upon the terms set forth in this Master Lease.

C. Pursuant to that certain Guaranty of Master Lease dated of even date herewith (as amended, supplemented or otherwise modified from time to time, the “ Guaranty ”), Guarantor agreed to guaranty the obligations of each of the entities comprising Tenant under this Master Lease.

D. A list of the ( ) facilities covered by this Master Lease is attached hereto as Exhibit A (each a “ Facility ”, and collectively, the “ Facilities ”).

E. Tenant and its Affiliates (as defined below) shall have exclusive and sole control over the operation of business conducted at the Facilities and all healthcare and other services provided to the residents and/or patients of the Facilities.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

ARTICLE I

1.1 Leased Property . Upon and subject to the terms and conditions hereinafter set forth, Landlord leases to Tenant and Tenant leases from Landlord all of Landlord’s rights and interest in and to the following with respect to each of the Facilities (collectively the “ Leased Property ”):

(a) the real property or properties described in Exhibit B attached hereto (collectively, the “ Land ”);

(b) all buildings, structures, Fixtures (as hereinafter defined) and other improvements of every kind now or hereafter located on the Land including, but not limited to, alleyways and connecting tunnels, sidewalks, utility pipes, conduits and lines (on-site and off-site to the extent Landlord has obtained any interest in the same), parking areas and roadways appurtenant to such buildings and structures and Capital Additions funded by Landlord of each such Facility (collectively, the “ Leased Improvements ”);

(c) all easements, rights and appurtenances relating to the Land and the Leased Improvements (collectively, the “ Related Rights ”);

(d) all equipment, machinery, fixtures, and other items of real and/or personal property, including all components thereof, now and hereafter located in, on or used in connection with and permanently affixed to or incorporated into the Leased Improvements, including 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, apparatus, sprinkler systems, fire and theft protection equipment, and built-in oxygen and vacuum systems, all of which, to the greatest extent permitted by law, are hereby deemed to constitute real estate, together with all replacements, modifications, alterations and additions thereto (collectively, the “ Fixtures ”); and

(e) all Personal Property located on the Land or in the Leased Improvements as of the Commencement Date, together with all replacements, modifications, alterations and substitutes therefor (whether or not constituting an upgrade) in accordance with the terms of this Master Lease or as required by the State in which the applicable Facility is located or by any other governmental entity to operate such Facility (collectively, “ Landlord’s Personal Property ”); provided, however that the term “Landlord’s Personal Property” shall expressly exclude (i) Tenant’s Cash, (ii) Tenant’s Accounts, (iii) the Intangible Property, (iv) Tenant’s Personal Property and (v) all proceeds of the foregoing.

The Leased Property is leased subject to all covenants, conditions, restrictions, easements and other matters affecting the Leased Property as of the Commencement Date and such subsequent covenants, conditions, restrictions, easement and other matters as may be agreed to by Landlord or Tenant in accordance with the terms of this Master Lease, whether or not of record, including any matters which would be disclosed by an inspection or accurate survey of the Leased Property.

1.2 Single, Indivisible Lease . This Master Lease constitutes one indivisible lease of the Leased Property and not separate leases governed by similar terms. The Leased Property constitutes one economic unit, and the Base Rent and all other provisions have been negotiated and agreed to based on a demise of all of the Leased Property to Tenant as a single, composite, inseparable transaction and would have been substantially different had separate leases or a divisible lease been intended. Except as expressly provided in this Master Lease for specific, isolated purposes (and then only to the extent expressly otherwise stated), all provisions of this Master Lease apply equally and uniformly to all of the Leased Property as one unit. An Event of Default with respect to any portion of the Leased Property is an Event of Default as to all of the Leased Property. The parties intend that the provisions of this Master Lease shall at all times be construed, interpreted and applied so as to carry out their mutual objective to create an indivisible lease of all of the Leased Property and, in particular but without limitation, that, for purposes of any assumption, rejection or assignment of this Master Lease under 11 U.S.C. Section 365, or any successor or replacement thereof or any analogous state law, this is one indivisible and non-severable lease and executory contract dealing with one legal and economic unit and that this Master Lease must be assumed, rejected or assigned as a whole with respect to all (and only as to all) of the Leased Property. The parties may amend this Master Lease from time to time to include one or more additional Facilities as part of the Leased Property and such

future addition to the Leased Property shall not in any way change the indivisible and nonseverable nature of this Master Lease and all of the foregoing provisions shall continue to apply in full force.

1.3 Joint and Several Obligations . Each of the entities comprising Tenant acknowledges that collectively they are jointly and severally liable for the payment of all sums payable and for the performance of all obligations performable by one or more of the Tenant entities. Notwithstanding the foregoing, however, no Tenant shall, by virtue of this Master Lease, have any rights to, or title or interest in, the Leased Property or Facility leased by another Tenant or any obligation to operate the same to the extent it is not licensed to do so under applicable law.

1.4 Term . The “ Term ” of this Master Lease is the Initial Term plus all Renewal Terms. The initial term of this Master Lease (the “ Initial Term ”) shall commence on , 2010 (the “ Commencement Date ”) and end on the last day of the calendar month in which the ( ) anniversary of the Commencement Date occurs, subject to renewal as set forth in Section 1.5 below.

1.5 Renewal Terms . The term of this Master Lease may be extended for two (2) separate “ Renewal Terms ” of five (5) years each if: (a) at least twelve (12) , but not more than eighteen (18) months prior to the end of the then current Term, Tenant delivers to Landlord a “ Renewal Notice ” that it desires to exercise its right to extend this Master Lease for one (1) Renewal Term; and (b) no Event of Default shall have occurred and be continuing on the date Landlord receives the Renewal Notice (the “ Exercise Date ”) or on the last day of the then current Term. During any such Renewal Term, except as otherwise specifically provided for herein, all of the terms and conditions of this Master Lease shall remain in full force and effect. Tenant may exercise such options to renew with respect to all (and no fewer than all) of the Facilities which are subject to this Master Lease as of the Exercise Date. Notwithstanding anything to the contrary in this Section 1.5, at the request of Tenant, Landlord, in its sole discretion, may waive any condition to Tenant’s right to renew this Master Lease, and once such condition has been waived, the same may not be used by Tenant as a means to negate the effectiveness of Tenant’s exercise of its renewal right for such Renewal Term.

ARTICLE II

2.1 Definitions . For all purposes of this Master 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 GAAP as at the time applicable; (iii) all references in this Master Lease to designated “Articles,” “Sections” and other subdivisions are to the designated Articles, Sections and other subdivisions of this Master Lease; (iv) the word “including” shall have the same meaning as the phrase “including, without limitation,” and other similar phrases; and (v) the words “herein,” “hereof” and “hereunder” and other words of similar import refer to this Master Lease as a whole and not to any particular Article, Section or other subdivision.

Accounts : All accounts, including deposit accounts and any Facility Mortgage Reserve Account (to the extent actually funded by Tenant), all rents, profits, income, revenues or rights to payment or reimbursement derived from the use of beds, units, rooms or other space within the Leased Property and/or from goods sold or leased or services rendered from the Leased Property (including, without limitation, Medicare, Medicaid and other third party reimbursed receivables) and all accounts receivable, in each case whether or not evidenced by a contract, document, instrument or chattel paper and whether or not earned by performance, including without limitation, the right to payment of management fees and all proceeds of the foregoing.

Additional Charges : All Impositions and all other amounts, liabilities and obligations which Tenant assumes or agrees to pay under this Master Lease and, in the event of any failure on the part of Tenant to pay any of those items, except where such failure is due to the acts or omissions of Landlord, every fine, penalty, interest and cost which may be added for non-payment or late payment of such items.

Adjusted CPI Increase : Means the CPI Increase, but in no event more than two and one-half percent (2.5%). In no event shall the Adjusted CPI Increase be less than zero.

Affiliate : When used with respect to any corporation, limited liability company, 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, limited liability company 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 securities, partnership interests or other equity interests.

Allocated Initial Investment : With respect to each Facility, at any given time, the “Allocated Initial Investment” allocated to such Facility as set forth on Exhibit D attached hereto.

Award : All compensation, sums or anything of value awarded, paid or received on a total or partial Taking.

Base Period : The period commencing on that date which is eighteen (18) months prior to the date any appraisal of the fair market value any Facility is made pursuant to the provisions of this Master Lease and ending on the date which is six (6) months prior to the date any such appraisal of the Facility is made.

Base Rent :

(A) During the Initial Term, means an annual amount equal to Dollars ($ ); provided , however , that commencing with the second (2 ^nd ) Lease Year and continuing each Lease Year thereafter during the Initial Term, the Base Rent shall increase to an annual amount equal to the sum of (i) the Base Rent for the immediately preceding Lease Year, and (ii) the Base Rent for the immediately preceding Lease Year multiplied by the Adjusted CPI Increase.

(B) The Base Rent for the first year of each Renewal Term shall be an annual amount equal to the sum of (i) the Base Rent for the immediately preceding Lease Year, and (ii) the Base Rent for the immediately preceding Lease Year multiplied by the Adjusted CPI Increase. Commencing with the second (2 ^nd ) Lease Year of any Renewal Term and continuing each Lease Year thereafter during such Renewal Term, the Base Rent shall increase to an annual amount equal to the sum of (i) the Base Rent for the immediately preceding Lease Year, and (ii) the Base Rent for the immediately preceding Lease Year multiplied by the Adjusted CPI Increase.

Business Day : Each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which national banks in the City of New York, New York are authorized, or obligated, by law or executive order, to close.

Buyer : As defined in Section 41.14(a).

Buyer’s Notice : As defined in Section 41.14(a).

Capital Additions : With respect to any Facility, one or more new buildings, or one or more additional structures annexed to any portion of any of the Leased Improvements of such Facility, or the material expansion of existing improvements, which are constructed on any parcel or portion of the Land of such Facility, during the Term, including construction of a new wing or new story.

Capital Addition Costs : The costs of any Capital Addition made to the Leased Property whether paid for by Tenant or Landlord, including (i) all permit fees and other costs imposed by any governmental authority, the cost of site preparation, the cost of construction including materials and labor, the cost of supervision and related design, engineering and architectural services, the cost of any fixtures, and if and to the extent approved by Landlord, the cost of construction financing; (ii) fees paid to obtain necessary licenses and certificates; (iii) the cost of any land contiguous to the Leased Property which is to become a part of the Leased Property purchased for the purpose of placing thereon the Capital Addition or any portion thereof or for providing means of access thereto, or parking facilities therefor, including the cost of surveying the same, but only to the extent approved by Landlord in writing and in advance if Landlord is funding such Capital Addition; (iv) the cost of insurance, real estate taxes, water and sewage charges and other carrying charges for such Capital Addition during construction; (v) the cost of title insurance; (vi) reasonable fees and expenses of legal counsel; (vii) filing, registration and recording taxes and fees; (viii) documentary stamp and similar taxes; and (ix) all reasonable costs and expenses of Landlord and any Person which has committed to finance the Capital Addition, including (a) the reasonable fees and expenses of their respective legal counsel; (b) printing expenses; (c) filing, registration and recording taxes and fees; (d) documentary stamp and similar taxes; (e) title insurance charges and appraisal fees; (f) rating agency fees; and (g) commitment fees charged by any Person advancing or offering to advance any portion of the financing for such Capital Addition.

Cash : Cash and cash equivalents and all instruments evidencing the same or any right thereto and all proceeds thereof.

Cash Price : As defined in Section 41.14(b).

Casualty Sale : As defined in Section 14.2(b).

CMS : Means the federal Centers for Medicare and Medicaid Services, and any successor Governmental Authority.

Code : The Internal Revenue Code of 1986 and, to the extent applicable, the Treasury Regulations promulgated thereunder, each as amended from time to time.

Commencement Date : As defined in Section 1.4.

Compensatory Payment : As defined in Section 14.2(a).

Compensatory Payment Date : As defined in Section 14.2(b).

Compensatory Payment Statement : As defined in Section 14.2(b).

Condemnation : The exercise of any governmental power, whether by legal proceedings or otherwise, by a Condemnor or a voluntary sale or transfer by Landlord to any Condemnor, either under threat of condemnation or while legal proceedings for condemnation are pending.

Condemnor : Any public or quasi-public authority, or private corporation or individual, having the power of Condemnation.

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, or, 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.

CPI Increase : Means the percentage change in (i) the CPI published for the beginning of each Lease Year, over (ii) the CPI published for the beginning of the immediately preceding Lease Year. If the percentage change is a negative number, the CPI Increase shall be equal to zero.

Date of Taking : The date the Condemnor has the right to possession of the property being condemned.

Discretionary Transferee : An entity that (a) has sufficient operating experience and history and sufficient assets and income, in Landlord’s reasonable judgment, to bear the financial responsibilities of Tenant under this Master Lease; (b) is, in Landlord’s reasonable judgment, a reputable person or entity of good character and has a general business reputation for providing quality healthcare services reasonably compatible with the services provided by Tenant; (c) shall not have, and whose Affiliates shall not have, within the twenty-four month period immediately preceding the date of any proposed assignment or transfer to such entity, had

any license or certification to operate any skilled nursing facility or assisted living facility revoked by any governmental authority due to either (1) a material and continuing failure by such proposed transferee or assignee or any of its Affiliates to operate such facility in substantial compliance with applicable law, which failure, as reasonably determined by Landlord, materially and adversely impacts (as a whole) such transferee’s or assignee’s business, operations, financial condition, or business reputation, or (2) due to the gross negligence or willful misconduct of such proposed transferee or assignee or any of its Affiliates; (d) shall be licensed or certified for the operation of the Leased Property as of the date of any proposed assignment or transfer to such entity and (e) if necessary, causes a replacement guarantor with sufficient assets and income, in Landlord’s reasonable judgment, to bear the financial responsibilities of Guarantor under the Guaranty to provide a replacement guaranty in substantially the same form as the Guaranty with respect to all obligations of the Tenant under this Master Lease arising or accruing from and after the date of the proposed assignment or transfer.

Encumbrance : Any mortgage, deed of trust, lien, encumbrance or other matter affecting title to any of the Leased Property, or any portion thereof or interest therein.

Environmental Costs : As defined in Section 32.4.

Environmental Laws : Environmental Laws shall mean any and all federal, state, municipal and local laws, statutes, ordinances, rules, regulations, guidances, policies, orders, decrees, judgments, whether statutory or common law, as amended from time to time, now or hereafter in effect, or promulgated, pertaining to the environment, public health and safety and industrial hygiene, including the use, generation, manufacture, production, storage, release, discharge, disposal, handling, treatment, removal, decontamination, cleanup, transportation or regulation of any Hazardous Substance, including the Industrial Site Recovery Act, the Clean Air Act, the Clean Water Act, the Toxic Substances Control Act, the Comprehensive Environmental Response Compensation and Liability Act, the Resource Conservation and Recovery Act, the Federal Insecticide, Fungicide, Rodenticide Act, the Safe Drinking Water Act and the Occupational Safety and Health Act.

Event of Default : As defined in Article XVI.

Excluded Portfolio Sale : As defined in Section 41.14(c).

Facilit(y)(ies) : The licensed skilled nursing facilities, assisted living facilities, mental heath facilities or other health care facilities and the unlicensed independent living facilities being operated on the Leased Property and identified on Exhibit A attached hereto.

Facility Mortgage : As defined in Section 13.1.

Facility Mortgage Reserve Account : As defined in Section 31.3(b).

Facility Mortgagee : As defined in Section 13.1.

Facility Mortgage Documents : Shall mean with respect to each Facility Mortgage and Facility Mortgagee, the applicable Facility Mortgage, loan or credit agreement, lease, note, collateral assignment instruments, guarantees, indemnity agreements and other documents or

instruments evidencing, securing or otherwise relating to the loan made, credit extended, lease or other financing vehicle pursuant thereto.

Facility Trade Names: Means the name(s) under which any Facility has done business during the Term.

Fair Market Rental : With respect to each Facility, the fair market rental value of the Leased Property of such Facility, or applicable portion thereof, determined in accordance with the appraisal procedures set forth in Article XXXIV.

Fair Market Value : With respect to each Facility, the fair market value of the applicable portion of the Leased Property comprising such Facility determined in accordance with the appraisal procedures set forth in Article XXXIV. For purposes of determining the Fair Market Value or Fair Market Rental, as the case may be, the applicable portion of the Leased Property shall be valued at its highest and best use which shall be presumed to be as a fully-permitted Facility operated in accordance with the provisions of this Master Lease. In addition, the following specific matters shall be factored in or out, as appropriate, in determining Fair Market Value or Fair Market Rental, as the case may be:

(i) The negative value of (a) any deferred maintenance or other items of repair or replacement of the Leased Property, (b) any then current or prior licensure or certification violations and/or admissions holds and (c) any other breach or failure of Tenant to perform or observe its obligations hereunder shall not be taken into account; rather, the Leased Property, and every part thereof shall be deemed to be in the condition required by this Master Lease (i.e., good order and repair) and Tenant shall at all times be deemed to have operated the Facility in compliance with and to have performed all obligations of the Tenant under this Master Lease.

(ii) The occupancy level of the applicable Facility shall be deemed to be the average occupancy during the Base Period.

(iii) For purposes of determining the Fair Market Value or Fair Market Rental of the applicable Facility, the value of Tenant Capital Additions shall be excluded so long as (a) Tenant provides Landlord with reasonably satisfactory documentation evidencing the costs and description of any Tenant Capital Additions and (b) a value can reasonably be allocated to such Tenant Capital Additions separately from the value of the Leased Property.

Financial Statements : For a fiscal year period, consolidated statements of Guarantor’s income, stockholders’ equity and comprehensive income and cash flows for such period and for the period from the beginning of the fiscal year to the end of such period and the related consolidated balance sheet as at the end of such period, together with the notes thereto, all in reasonable detail and setting forth in comparative form the corresponding figures for the corresponding period in the preceding fiscal year and prepared in accordance with GAAP and reported on by a “big four” or other nationally recognized accounting firm approved by Landlord, which approval will not be unreasonably withheld or delayed.

Financials : Unaudited income statements and balance sheets of any of (i) Guarantor or (ii) each Facility individually, and the Facilities, taken as a whole, whether or not fulfilling the requirements for Financial Statements.

Fiscal Year : The annual period commencing January 1 and terminating December 31 of each year.

Fixtures : As defined in Section 1.1(d).

GAAP : Generally accepted accounting principles consistent with those applied in the preparation of financial statements.

Guarantor : Sun and/or any successor entity that guaranties the payment or collection of all or any portion of the amounts payable by Tenant, or the performance by Tenant of all or any of its obligations, under this Master Lease, including any replacement guarantor consented to by Landlord in connection with the assignment of the Master Lease or a sublease of Leased Property pursuant to Article XXII.

Guarantor’s Credit Agreement : A loan agreement (however denominated) entered into from time to time by Guarantor and/or one or more of the entities comprising Tenant and/or other Affiliates of the entities comprising Tenant, as the same may be amended, modified or restated from time to time, which may be secured by all or substantially all of the assets of Guarantor and its subsidiaries, including, but not limited to, their Cash, Accounts, Personal Property, Intangible Personal Property, real property and leasehold estates in real property.

Guaranty: As defined in Recital C, together with any other guaranty executed by a Guarantor in favor of Landlord, as the same may be amended, supplemented or replaced from time to time.

Handling : As defined in Section 32.4.

Hazardous Substances : Collectively, any petroleum, petroleum product or byproduct or any substance, material or waste regulated or listed pursuant to any Environmental Law.

Impartial Appraiser : As defined in Section 13.2.

Impositions : Collectively, all taxes, including capital stock, franchise, margin and other state taxes of Landlord (or of Sabra as a result of its investment in Landlord), ad valorem, sales, use, single business, gross receipts, transaction privilege, rent or similar taxes; assessments including assessments for public improvements or benefits, whether or not commenced or completed prior to the date hereof and whether or not to be completed within the Term; ground rents; water, sewer and other utility levies and charges; excise tax levies; fees including license, permit, inspection, authorization and similar fees; and all other governmental charges, in each case whether general or special, ordinary or extraordinary, or foreseen or unforeseen, of every character in respect of the Leased Property and/or the Rent and all interest and penalties thereon attributable to any failure in payment by Tenant (other than failures arising from the acts or omissions of Landlord) which at any time prior to, during or in respect of the Term hereof may

be assessed or imposed on or in respect of or be a lien upon (i) Landlord or Landlord’s interest in the Leased Property, (ii) the Leased Property or any part thereof or any rent therefrom or any estate, right, title or interest therein, or (iii) any occupancy, operation, use or possession of, or sales from or activity conducted on or in connection with the Leased Property or the leasing or use of the Leased Property or any part thereof; provided, however, that nothing contained in this Master Lease shall be construed to require Tenant to pay (a) any tax based on net income (whether denominated as a franchise or capital stock or other tax) imposed on Landlord or any other Person, (b) any transfer, or net revenue tax of Landlord or any other Person except Tenant and its successors, (c) any tax imposed with respect to the sale, exchange or other disposition by Landlord of any Leased Property or the proceeds thereof, or (d) any principal or interest on any indebtedness on the Leased Property owed to a Facility Mortgagee for which Landlord is the obligor, except to the extent that any tax, assessment, tax levy or charge, which is otherwise included in this definition, and a tax, assessment, tax levy or charge set forth in clause (a) or (b) is levied, assessed or imposed in lieu thereof or as a substitute therefor.

Insurance Requirements : The terms of any insurance policy required by this Master Lease and all requirements of the issuer of any such policy and of any insurance board, association, organization or company necessary for the maintenance of any such policy.

Intangible Property : All documents, chattel paper, instruments, contract rights, general intangibles, causes of action, now owned or hereafter acquired by Tenant (including any right to any refund of any Impositions) arising from or in connection with Tenant’s operation or use of the Leased Property; all licenses and permits now owned or hereinafter acquired by Tenant, which are necessary or desirable for Tenant’s use of the Leased Property for its Primary Intended Use, including, if applicable, any certificate of need or similar certificate; the Facility Trade Names and the right to use the Facility Trade Names; and any and all third-party provider agreements (including Medicare and Medicaid/Medi-Cal). Notwithstanding the foregoing, Landlord and Tenant acknowledge and agree that, to the extent permitted by applicable law, any licensed beds or other bed rights, certificate of need or similar certificate, relating to the Leased Property, and the exclusive right to transfer, move or apply for the foregoing, shall at all times be deemed and construed to be the property of Landlord and a part of the Leased Property.

Large Portfolio Sale : As defined in Section 41.14(c).

Land : As defined in Section 1.1(a).

Landlord : As defined in the preamble.

Landlord’s Personal Property : As defined in Section 1.1(e).

Landlord Tax Returns : As defined in Section 4.1(b).

Lease Year : The first Lease Year for each Facility shall be the period commencing on the Commencement Date and ending on the last day of the calendar month in which the first (1st) anniversary of the Commencement Date occurs, and each subsequent Lease Year for each Facility shall be each period of twelve (12) full calendar months after the last day of the prior Lease Year.

Leased Improvements : As defined in Section 1.1(b).

Leased Property : As defined in Section 1.1.

Legal Requirements : All federal, state, county, municipal and other governmental statutes, laws (including common law and Environmental Laws), rules, policies, guidance, codes, orders, regulations, ordinances, permits, licenses, covenants, conditions, restrictions, judgments, decrees and injunctions affecting either the Leased Property, Tenant’s Personal Property and all Capital Additions or the construction, use or alteration thereof, whether now or hereafter enacted and in force, including any which may (i) require repairs, modifications or alterations in or to the Leased Property, Tenant’s Personal Property and all Tenant Capital Additions, (ii) in any way adversely affect the use and enjoyment thereof, or (iii) regulate the transport, handling, use, storage or disposal or require the cleanup or other treatment of any Hazardous Substance.

Limited Remedy Events of Default : As defined in Section 16.4.

LRED Damages : As defined in Section 16.4.

Minimum Aggregate Maintenance Amount : As defined in Section 9.1(e).

Minimum Repurchase Price : With respect to each Facility, the sum of (i) the Allocated Initial Investment with respect to such Facility plus (ii) any Capital Addition Costs funded by Landlord with respect to such Facility.

Negative Regulatory Action : As defined in Section 16.1(m).

Negotiation Period : As defined in Section 41.14(a).

Notice : A notice given in accordance with Article XXXV.

Notice of Interest : As defined in Section 41.14(a).

Occurrence Date : As defined in Section 16.4.

OFAC : As defined in Section 39.1.

Officer’s Certificate : A certificate of Tenant or Landlord, as the case may be, signed by an officer of such party authorized to so sign by resolution of its board of directors or by its sole member or by the terms of its by-laws or operating agreement, as applicable.

OTA : As defined in Section 36.1.

Overage Amount : As defined in Section 9.1(e).

Overdue Rate : On any date, a rate equal to five (5) percentage points above the Prime Rate, but in no event greater than the maximum rate then permitted under applicable law.

Payment Date : Any due date for the payment of the installments of Base Rent or any other sums payable under this Master Lease.

Permitted Leasehold Mortgage : A document creating or evidencing an encumbrance on Tenant’s leasehold interest in the Leased Property, granted as security for the obligations under Guarantor’s Credit Agreement, which provides that, in the event of the exercise by the lender of its rights thereunder, the lender shall be required to secure the approval of Landlord to the replacement of Tenant with respect to the affected portion of the Leased Property and contain the lender’s acknowledgment that such approval may be granted or withheld by Landlord in accordance with the provisions of Article XXII of this Master Lease, as such Article XXII may be amended or modified from time to time by Tenant and Landlord in the exercise of their sole discretion.

Person : Any individual, corporation, limited liability company, partnership, joint venture, association, joint stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other form of entity.

Personal Property : With respect to each Facility, all machinery, furniture and equipment, including phone systems and computers, trade fixtures, inventory, supplies and other personal property used in the operation of the Leased Property for its Primary Intended Use, other than Fixtures; provided , however , in no event shall Personal Property be deemed or construed to include the Intangible Property or Tenant’s Accounts.

Personal Property REIT Requirement : As defined in Section 40.1(d).

Post-Casualty Facility : As defined in Section 14.2(a).

Primary Intended Use : With respect to each Facility, the Primary Intended Use specified on Exhibit A attached hereto as it may be amended from time to time.

Prime Rate : On any date, a rate equal to the annual rate on such date publicly announced by Citibank, N.A. to be its prime rate for 90-day unsecured loans to its corporate borrowers of the highest credit standing, but in no event greater than the maximum rate then permitted under applicable law.

Proceeding : As defined in Section 23.1.(b)(vi).

Prohibited Person : As defined in Section 39.1.

Purchase Agreement : As defined in Section 41.14(a).

Renewal Term : A period for which the Term is renewed in accordance with Section 1.5.

Rent : Collectively, the Base Rent and Additional Charges.

Replacement Cost : As defined in Section 13.2.

Required Reconstruction Approvals : As defined in Section 14.2(a).

Sabra : Sabra Health Care REIT, Inc., a Maryland corporation.

SEC : The United States Securities and Exchange Commission.

Securities Act : The Securities Act of 1933, as amended, or any successor statute, and the rules and regulations promulgated thereunder.

Seller’s Notice : As defined in Section 41.14(a).

Small Portfolio Sale : As defined in Section 41.14(c).

Specialized Medical Equipment : Any non-affixed equipment (i) which is owned by Tenant or leased (from parties other than Landlord under the terms of this Master Lease) by Tenant and (ii) which is used by Tenant for lifting or transferring, or providing therapeutic interventions or other specialized medical services to, residents/patients.

State : With respect to each Facility, the state or commonwealth in which such Facility is located.

Sun : SHG Services, Inc., a Delaware corporation.

Taking : As defined in Section 15.1(a).

Tenant : As defined in the preamble.

Tenant Capital Addition : A Capital Addition funded by Tenant, as compared to Landlord.

Tenant’s Personal Property : Collectively, (i) the equipment and other Personal Property described on Exhibit C attached hereto, together with all replacements, modifications, alterations and substitutes therefor, (ii) inventory and supplies and other Personal Property leased (from parties other than Landlord under terms of this Master Lease) by Tenant and that is used by Tenant in the operation of the Facilities, and (iii) Specialized Medical Equipment.

Term : Collectively, the Initial Term plus the Renewal Term or Renewal Terms, if any.

Unavoidable Delays : Delays due to strikes, lock-outs, inability to procure materials, power failure, acts of God, governmental restrictions, enemy action, civil commotion, fire, unavoidable casualty or other causes beyond the control of the party responsible for performing an obligation hereunder, provided that lack of funds shall not be deemed a cause beyond the control of a party.

Unsuitable for Its Primary Intended Use : A state or condition of any Facility such that by reason of damage or destruction, or a partial taking by Condemnation, such Facility cannot be operated on a commercially practicable basis for its Primary Intended Use, taking into account, among other relevant factors, the number of useable beds/units, the amount of square footage and the estimated revenue affected by such damage or destruction.

ARTICLE III

3.1 Rent . During the Term, Tenant will pay to Landlord the Base Rent and Additional Charges in lawful money of the United States of America and legal tender for the payment of public and private debts, in the manner provided in Section 3.3. The Base Rent during any Lease Year is payable in advance in consecutive monthly installments on the first Business Day of each calendar month during that Lease Year. Unless otherwise agreed by the parties, Base Rent and Additional Charges shall be prorated as to any partial months at the beginning and end of the Term.

3.2 Late Payment of Rent . Tenant hereby acknowledges that late payment by Tenant to Landlord of Rent will cause Landlord to incur costs not contemplated hereunder, the exact amount of which is presently anticipated to be extremely difficult to ascertain. Such costs may include processing and accounting charges and late charges which may be imposed on Landlord by the terms of any loan agreement and other expenses of a similar or dissimilar nature. Accordingly, if any installment of Rent other than Additional Charges payable to a Person other than Landlord shall not be paid within five (5) days after its due date, Tenant will pay Landlord on demand a late charge equal to the lesser of (a) five percent (5%) of the amount of such installment or (b) the maximum amount permitted by law. The parties agree that this late charge represents a fair and reasonable estimate of the costs that Landlord will incur by reason of late payment by Tenant. The parties further agree that such late charge is Rent and not interest and such assessment does not constitute a lender or borrower/creditor relationship between Landlord and Tenant. Thereafter, if any installment of Rent other than Additional Charges payable to a Person other than Landlord shall not be paid within ten (10) days after its due date, the amount unpaid, including any late charges previously accrued (it being understood and agreed that such late charges shall cease to accrue after ten (10) days), shall bear interest at the Overdue Rate from the due date of such installment to the date of payment thereof, and Tenant shall pay such interest to Landlord on demand. The payment of such late charge or such interest shall not constitute waiver of, nor excuse or cure, any default under this Master Lease, nor prevent Landlord from exercising any other rights and remedies available to Landlord.

3.3 Method of Payment of Rent . Base Rent to be paid to Landlord shall be paid by electronic funds transfer debit transactions through wire transfer of immediately available funds and shall be initiated by Tenant for settlement on or before the Payment Date; provided , however , if the Payment Date is not a Business Day, then settlement shall be made on the next succeeding day which is a Business Day. Landlord shall provide Tenant with appropriate wire transfer information in a Notice from Landlord to Tenant. If Landlord directs Tenant to pay any Base Rent to any party other than Landlord, Tenant shall send to Landlord, simultaneously with such payment, a copy of the transmittal letter or invoice and a check whereby such payment is made or such other evidence of payment as Landlord may reasonably require.

3.4 Net Lease . Landlord and Tenant acknowledge and agree that (i) this Master Lease is and is intended to be what is commonly referred to as a “net, net, net” or “triple net” lease, and (ii) the Rent shall be paid absolutely net to Landlord, so that this Master Lease shall yield to Landlord the full amount or benefit of the installments of Base Rent and Additional Charges throughout the Term with respect to each Facility, all as more fully set forth in Article

IV and subject to any other provisions of this Master Lease which expressly provide for adjustment or abatement of Rent or other charges. If Landlord commences any proceedings for non-payment of Rent, Tenant will not interpose any counterclaim or cross complaint or similar pleading of any nature or description in such proceedings unless Tenant would lose or waive such claim by the failure to assert it. This shall not, however, be construed as a waiver of Tenant’s right to assert such claims in a separate action brought by Tenant. The covenants to pay Rent and other amounts hereunder are independent covenants, and Tenant shall have no right to hold back, offset or fail to pay any such amounts for default by Landlord or for any other reason whatsoever.

ARTICLE IV

4.1 Impositions .

(a) Subject to Article XII relating to permitted contests, Tenant shall pay, or cause to be paid, all Impositions before any fine, penalty, interest or cost may be added for non-payment. Tenant shall make such payments directly to the taxing authorities where feasible, and promptly furnish to Landlord copies of official receipts or other satisfactory proof evidencing such payments. Tenant’s obligation to pay Impositions shall be absolutely fixed upon the date such Impositions become a lien upon the Leased Property or any part thereof. If any 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 pay the same, and any accrued interest on the unpaid balance of such Imposition, in installments as the same respectively become due and before any fine, penalty, premium, further interest or cost may be added thereto.

(b) Landlord shall prepare and file all tax returns and reports as may be required by Legal Requirements with respect to Landlord’s net income, gross receipts, franchise taxes and taxes on its capital stock and any other returns required to be filed by or in the name of Landlord (the “ Landlord Tax Returns ”), and Tenant shall prepare and file all other tax returns and reports as may be required by Legal Requirements with respect to or relating to the Leased Property, and any Tenant Capital Additions and Tenant’s Personal Property.

(c) Any refund due from any taxing authority in respect of any Imposition paid by Tenant shall be paid over to or retained by Tenant.

(d) Landlord and Tenant shall, upon request of the other, provide such data as is maintained by the party to whom the request is made with respect to the Leased Property as may be necessary to prepare any required returns and reports. If any property covered by this Master Lease is classified as personal property for tax purposes, Tenant shall file all personal property tax returns in such jurisdictions where it must legally so file. Landlord, to the extent it possesses the same, and Tenant, to the extent it possesses the same, shall provide the other party, upon request, with cost and depreciation records necessary for filing returns for any property so classified as personal property. Where Landlord is legally required to file personal property tax returns, Tenant shall be provided with copies of assessment notices indicating a value in excess of the reported value in sufficient time for Tenant to file a protest.

(e) Billings for reimbursement by Tenant to Landlord of personal property or real property taxes and any taxes due under the Landlord Tax Returns, if and to the extent Tenant is responsible for such taxes under the terms of this Section 4.1, shall be accompanied by copies of a bill therefor and payments thereof which identify the personal property or real property or other tax obligations of Landlord with respect to which such payments are made.

(f) Impositions imposed or assessed in respect of the tax-fiscal period during which the Term terminates with respect to a Facility shall be adjusted and prorated between Landlord and Tenant with respect to such Facility, whether or not such Imposition is imposed or assessed before or after such termination, and Tenant’s obligation to pay its prorated share thereof shall survive such termination with respect to such Facility.

4.2 Utilities . Tenant shall pay or cause to be paid all charges for electricity, power, gas, oil, water and other utilities used in the Leased Property and any Tenant Capital Additions thereto. Tenant shall also pay or reimburse Landlord for all costs and expenses of any kind whatsoever which at any time with respect to the Term hereof with respect to any Facility may be imposed against Landlord by reason of any of the covenants, conditions and/or restrictions affecting the Leased Property or any portion thereof, or with respect to easements, licenses or other rights over, across or with respect to any adjacent or other property which benefits the Leased Property or any Capital Addition, including any and all costs and expenses associated with any utility, drainage and parking easements.

4.3 Impound Account . At Landlord’s option following the occurrence of an Event of Default (to be exercised by thirty (30) days’ written notice to Tenant) and provided Tenant is not already being required to impound such payments in accordance with the requirements of Section 31.3(b) below, Tenant shall be required to deposit, at the time of any payment of Base Rent, an amount equal to one-twelfth of Tenant’s estimated annual real and personal property taxes required pursuant to Section 4.1. Such amounts shall be applied to the payment of the obligations in respect of which said amounts were deposited in such order of priority as Landlord shall reasonably determine, on or before the respective dates on which the same or any of them would become delinquent. The reasonable cost of administering such impound account shall be paid by Tenant. Nothing in this Section 4.3 shall be deemed to affect any right or remedy of Landlord hereunder.

ARTICLE V

5.1 No Termination, Abatement, etc . Except as otherwise specifically provided in this Master Lease, Tenant shall remain bound by this Master Lease in accordance with its terms and shall not seek or be entitled to any abatement, deduction, deferment or reduction of Rent, or set-off against the Rent. The respective obligations of Landlord and Tenant shall not be affected by reason of (i) any damage to or destruction of the Leased Property or any portion thereof from whatever cause or any Condemnation of the Leased Property, any Capital Addition or any portion thereof; (ii) other than as a result of Landlord’s willful misconduct or gross negligence, the lawful or unlawful prohibition of, or restriction upon, Tenant’s use of the Leased Property, any Capital Addition or any portion thereof, the interference with such use by any Person or by reason of eviction by paramount title; (iii) any claim that Tenant has or might

have against Landlord by reason of any default or breach of any warranty by Landlord hereunder or under any other agreement between Landlord and Tenant or to which Landlord and Tenant are parties; (iv) any bankruptcy, insolvency, reorganization, composition, readjustment, liquidation, dissolution, winding up or other proceedings affecting Landlord or any assignee or transferee of Landlord; or (v) 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 (a) to modify, surrender or terminate this Master Lease or quit or surrender the Leased Property or any portion thereof; or (b) which may entitle Tenant to any abatement, reduction, suspension or deferment of the Rent or other sums payable by Tenant hereunder, except as otherwise specifically provided in this Master Lease. However, nothing shall preclude Tenant from bringing a separate action and Tenant is not waiving other rights and remedies not expressly waived herein. 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 the obligations to pay the same shall be terminated pursuant to the express provisions of this Master Lease or by termination of this Master Lease as to all or any portion of the Leased Property other than by reason of an Event of Default. Tenant’s agreement that any eviction by paramount title as described in item (ii) above shall not affect Tenant’s obligations under this Master Lease, shall not in any way discharge or diminish any obligation of any insurer under any policy of title or other insurance and, to the extent the recovery thereof is not necessary to compensate Landlord for any damages incurred by any such eviction, Tenant shall be entitled to a credit for any sums recovered by Landlord under any such policy of title or other insurance up to the maximum amount paid by Tenant to Landlord under this Section 5.1, and Landlord, upon request by Tenant, shall assign Landlord’s rights under such policies to Tenant provided such assignment does not adversely affect Landlord’s rights under any such policy and provided further that Tenant shall indemnify, defend, protect and save Landlord harmless from and against any liability, cost or expense of any kind that may be imposed upon Landlord in connection with any such assignment except to the extent such liability, cost or expense arises from the gross negligence or willful misconduct of Landlord.

ARTICLE VI

6.1 Ownership of the Leased Property .

(a) Landlord and Tenant acknowledge and agree that they have executed and delivered this Master Lease with the understanding that (i) the Leased Property is the property of Landlord, (ii) Tenant has only the right to the possession and use of the Leased Property upon the terms and conditions of this Master Lease, (iii) this Master Lease is a “true lease,” is not a financing lease, capital lease, mortgage, equitable mortgage, deed of trust, trust agreement, security agreement or other financing or trust arrangement, and the economic realities of this Master Lease are those of a true lease, (iv) the business relationship created by this Master Lease and any related documents is and at all times shall remain that of landlord and tenant, (v) this Master Lease has been entered into by each party in reliance upon the mutual covenants, conditions and agreements contained herein, and (vi) none of the agreements contained herein is intended, nor shall the same be deemed or construed, to create a partnership between Landlord and Tenant, to make them joint venturers, to make Tenant an agent, legal representative, partner,

subsidiary or employee of Landlord, nor to make Landlord in any way responsible for the debts, obligations or losses of Tenant.

(b) Each of the parties hereto covenants and agrees not to (i) file any income tax return or other associated documents; (ii) file any other document with or submit any document to any governmental body or authority; (iii) enter into any written contractual arrangement with any Person; or (iv) release any financial statements of Tenant, in each case that takes a position other than that this Master Lease is a “true lease” with Landlord as owner of the Leased Property (subject to the provisions set forth in Section 7.2(e)) and Tenant as the tenant of the Leased Property (subject to the provisions set forth in Section 7.2(e)), including (x) treating Landlord as the owner of such Leased Property eligible to claim depreciation deductions under Sections 167 or 168 of the Code with respect to such Leased Property; (y) Tenant reporting its Base Rent payments as rent expense under Section 162 of the Code; and (z) Landlord reporting the Base Rent payments as rental income under Section 61 of the Code.

(c) If Tenant should reasonably conclude that GAAP or the SEC require treatment different from that set forth in Section 6.1(b) for applicable non-tax purposes, then Tenant (x) shall promptly give prior Notice to Landlord, accompanied by a written statement that references the applicable pronouncement that controls such treatment and contains a brief description and/or analysis that sets forth in reasonable detail the basis upon which Tenant reached such conclusion, and (y) notwithstanding Section 6.1(b), Tenant may comply with such requirements.

(d) The Base Rent is the fair market rent for the use of the Leased Property and was agreed to by Landlord and Tenant on that basis, and the execution and delivery of, and the performance by Tenant of its obligations under, this Master Lease does not constitute a transfer of all or any part of the Leased Property.

(e) Tenant waives any claim or defense based upon the characterization of this Master Lease as anything other than a true lease and as a master lease of all of the Leased Property. Tenant stipulates and agrees (1) not to challenge the validity, enforceability or characterization of the lease of the Leased Property as a true lease and/or as a single, unseverable instrument pertaining to the lease of all, but not less than all, of the Leased Property, and (2) not to assert or take or omit to take any action inconsistent with the agreements and understandings set forth in Section 3.4 or this Section 6.1.

6.2 Landlord’s Personal Property . Tenant shall, during the entire Term, maintain all of Landlord’s Personal Property in good order, condition and repair as shall be necessary in order to operate the Facilities for the Primary Intended Use in compliance with all applicable licensure and certification requirements, all applicable Legal Requirements and Insurance Requirements, reasonable wear and tear and obsolescence excepted. If any of Landlord’s Personal Property requires replacement in order to comply with the foregoing, Tenant shall replace it with similar property of the same or better quality at Tenant’s sole cost and expense. At the expiration or earlier termination of this Master Lease, all of Landlord’s Personal Property shall be surrendered to Landlord with the Leased Property at the time of the surrender of the Leased Property in good operating condition.

6.3 Tenant’s Personal Property . Except as provided in Section 36.2, Landlord shall have no rights to Tenant’s Personal Property. Tenant shall, upon Landlord’s request, from time to time but not more frequently than one time per Lease Year, provide Landlord with a list of the Tenant’s Personal Property located at each of the Facilities.

ARTICLE VII

7.1 Condition of the Leased Property . Tenant acknowledges receipt and delivery of possession of the Leased Property and confirms that Tenant has examined and otherwise has knowledge of the condition of the Leased Property prior to the execution and delivery of this Master Lease and has found the same to be in good order and repair and, to the best of Tenant’s knowledge, free from Hazardous Substances not in compliance with Legal Requirements and satisfactory for its purposes hereunder. Regardless, however, of any examination or inspection made by Tenant and whether or not any patent or latent defect or condition was revealed or discovered thereby, Tenant is leasing the Leased Property “as is” in its present condition. Tenant waives any claim or action against Landlord in respect of the condition of the Leased Property including any defects or adverse conditions not discovered or otherwise known by Tenant as of the Commencement Date. LANDLORD MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, IN RESPECT OF THE LEASED PROPERTY OR ANY PART THEREOF, EITHER AS TO ITS FITNESS FOR USE, DESIGN OR CONDITION FOR ANY PARTICULAR USE OR PURPOSE OR OTHERWISE, OR AS TO THE NATURE OR QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, OR THE EXISTENCE OF ANY HAZARDOUS SUBSTANCE, IT BEING AGREED THAT ALL SUCH RISKS, LATENT OR PATENT, ARE TO BE BORNE SOLELY BY TENANT INCLUDING ALL RESPONSIBILITY AND LIABILITY FOR ANY ENVIRONMENTAL REMEDIATION AND COMPLIANCE WITH ALL ENVIRONMENTAL LAWS.

7.2 Use of the Leased Property .

(a) Tenant shall use or cause to be used the Leased Property and any Tenant Capital Additions thereto and the improvements thereon of each Facility for its Primary Intended Use. Tenant shall not use the Leased Property or any portion thereof or any Capital Addition thereto for any other use without the prior written consent of Landlord, which consent Landlord may withhold in its sole discretion.

(b) Tenant shall not commit or suffer to be committed any waste on the Leased Property or any Capital Addition thereto or cause or permit any nuisance thereon.

(c) Tenant shall neither suffer nor permit the Leased Property or any portion thereof to be used in such a manner as (i) might reasonably tend to impair Landlord’s title thereto or to any portion thereof or (ii) may make possible a claim of adverse use or possession, or an implied dedication of the Leased Property or any portion thereof.

(d) With respect to each of the Facilities and notwithstanding anything to the contrary that may be authorized by the terms of any applicable Legal Requirements, Tenant may not apply for permission to reduce the licensed bed complement, take any of the

licensed beds out of service or move the beds to a different location without the consent of Landlord which may be withheld in the sole discretion of Landlord.

(e) Tenant shall provide and maintain during the Term such Personal Property as shall be reasonably necessary and appropriate in order to operate the Facilities for the Primary Intended Use in compliance with all licensure and certification requirements and in compliance with all applicable Legal Requirements and Insurance Requirements and as required, in Tenant’s prudent business judgment, to meet the needs of residents of the Facility. All of the Personal Property described in this Section 7.2(e) (excluding Tenant’s Personal Property) shall at the expiration or earlier termination of this Master Lease be (i) deemed and construed to be Landlord’s Personal Property, and (ii) surrendered to Landlord in good operating condition.

7.3 Preservation of Business . Tenant acknowledges that a fair return to Landlord on and protection of its investment in the Leased Property is dependent, in part, on the concentration on the Leased Property during the Term of the health care business of Tenant and its Affiliates in the geographical area of the Leased Property. Tenant further acknowledges that diversion of residents and/or patients, as applicable, from any Facility to other facilities or institutions owned, operated or managed, whether directly or indirectly, by Tenant or its Affiliates will have a material adverse impact on the value and utility of the Leased Property. Accordingly, Landlord and Tenant agree that during the Term and for a period of one (1) year thereafter, neither Tenant nor any of its Affiliates shall, without the prior written consent of Landlord: (i) operate, own, participate in or otherwise receive revenues from any other business providing services or goods which are directly competitive with those provided in connection with any Facility and the Primary Intended Use (which Tenant did not operate, own, manage or have any interest in on the Commencement Date), within (A) a three (3) mile radius of any such Facility listed as “urban” on Exhibit A attached hereto or (B) a ten (10) mile radius of any such Facility listed as “rural” on Exhibit A attached hereto; provided , however , the foregoing shall not be deemed or construed to apply to any facilities acquired by Tenant or its Affiliates after the Commencement Date, whether by acquisition, lease or management agreement, as part of a transaction or series of related transactions involving two (2) or more facilities, provided that, (A) less than fifty percent (50%) of the facilities involved in any such transaction are located within the area protected by this Section 7.3 , or (ii) except as is necessary to provide residents or patients with an alternative level of care or as is otherwise necessary as a result of an admissions ban or non payment of stay or to ensure the health and welfare of other residents of any Facility, (A) recommend or solicit the removal or transfer of any resident or patient from any Facility to any other nursing, health care, senior housing or retirement housing facility or (B) divert actual or potential residents or patients of the business conducted at any Facility to any other facilities owned or operated by Tenant or its Affiliates or to facilities from which Tenant or its Affiliates receive any type of referral fees or other compensation for transfer. Tenant further agrees that during the last year of the Initial Term or any applicable Renewal Term (unless Tenant has elected to renew this Master Lease for the next applicable Renewal Term) and for a period of one (1) year after the expiration or earlier termination of the Term, Tenant shall not employ any management or supervisory personnel working at any Facility for any other business without the consent of Landlord in its reasonable discretion. Notwithstanding the foregoing, unless this Master Lease terminates as a result of an Event of Default by Tenant, the prohibition of employment during the one (1) year period after the expiration or earlier termination of the Term

shall not apply to unsolicited personnel who approach Tenant directly and request employment by Tenant.

ARTICLE VIII

8.1 Representations and Warranties . Each party represents and warrants to the other that: ( i ) this Master Lease and all other documents executed or to be executed by it in connection herewith have been duly authorized and shall be binding upon it; ( ii ) it is duly organized, validly existing and in good standing under the laws of the state of its formation and is duly authorized and qualified to perform this Master Lease within the State(s) where any portion of the Leased Property is located; and ( iii ) neither this Master Lease nor any other document executed or to be executed in connection herewith violates the terms of any other agreement of such party.

8.2 Compliance with Legal and Insurance Requirements, etc . Subject to Article XII regarding permitted contests, Tenant, at its expense, shall promptly (a) comply with all Legal Requirements and Insurance Requirements regarding the use, operation, maintenance, repair and restoration of the Leased Property and any Tenant’s Personal Property and Tenant Capital Additions thereto whether or not compliance therewith may require structural changes in any of the Leased Improvements or any Tenant Capital Additions thereto or interfere with the use and enjoyment of the Leased Property including such expenditures as are required to conform the Leased Property to such standards as may from time to time be required by Federal Medicare (Title 18) or Medicaid (Title 19) Programs, if applicable, or any other applicable programs or legislation, or capital improvements required by any other governmental agency having jurisdiction over any Leased Property as a condition to the continued operation of such Leased Property, approved for Medicare, Medicaid/Medi-Cal or similar programs, pursuant to present or future laws or governmental regulation, and (b) procure, maintain and comply with all licenses, certificates of need, provider agreements (but only to the extent Tenant, in its prudent business judgment, elects to participate in the Medicare, Medicaid or other third party payor programs) and other authorizations required for the use of the Leased Property or any Tenant’s Personal Property or Tenant Capital Additions for the applicable Primary Intended Use and any other use of the Leased Property or any Tenant’s Personal Property and Tenant Capital Additions then being made, and for the proper erection, installation, operation and maintenance of the Leased Property and any Tenant’s Personal Property and Tenant Capital Additions. In an emergency or in the event of a breach by Tenant of its obligations under this Section 8.2 which is not cured within any applicable cure period, Landlord may, but shall not be obligated to, enter upon the Leased Property and any Tenant Capital Additions thereto and take such reasonable actions and incur such reasonable costs and expenses to effect such compliance as it deems advisable to protect its interest in the Leased Property and any Tenant Capital Additions thereto, and Tenant shall reimburse Landlord for all such reasonable costs and expenses incurred by Landlord in connection with such actions. Tenant covenants and agrees that the Leased Property and any Tenant’s Personal Property and Tenant Capital Additions shall not be used for any unlawful purpose.

ARTICLE IX

9.1 Maintenance and Repair .

(a) Tenant, at its expense, shall maintain the Leased Property, and every portion thereof, any Tenant’s Personal Property and Tenant Capital Additions, and all private roadways, sidewalks and curbs appurtenant to the Leased Property, and which are under Tenant’s control in good order and repair 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 the Leased Property and any Tenant’s Personal Property and Tenant Capital Additions, and, with reasonable promptness, make all necessary and appropriate repairs thereto of every kind and nature, including those necessary to comply with changes in any Legal Requirements, 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 Date. All repairs shall be at least equivalent in quality to the original work. Tenant will not take or omit to take any action the taking or omission of which would reasonably be expected to materially impair the value or the usefulness of the Leased Property or any part thereof or any Capital Addition thereto for its Primary Intended Use.

(b) Landlord shall not under any circumstances be required to (i) build or rebuild any improvements on the Leased Property; (ii) make any repairs, replacements, alterations, restorations or renewals of any nature to the Leased Property, whether ordinary or extraordinary, structural or non-structural, foreseen or unforeseen, or to make any expenditure whatsoever with respect thereto; or (iii) maintain the 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 in effect at the time of the execution of this Master Lease or hereafter enacted.

(c) Nothing contained in this Master Lease and no action or inaction by Landlord shall be construed as (i) constituting the consent or request of Landlord, expressed 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 the Leased Property or any part thereof or any Capital Addition thereto; 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 may create, or in any way be the basis for, any right, title, interest, lien, claim or other encumbrance upon the estate of Landlord in the Leased Property, or any portion thereof or any Capital Addition thereto.

(d) Tenant shall, upon the expiration or earlier termination of the Term with respect to a Facility, vacate and surrender the Leased Property, Landlord’s Personal Property, the portion of Tenant’s Personal Property for which Landlord exercises its option pursuant to Section 36.2(a) and all Tenant Capital Additions, in each case with respect to such Facility, to Landlord in the condition in which such Leased Property and Landlord’s Personal Property were originally received from Landlord and such Tenant’s Personal Property and Tenant Capital Additions were originally introduced to such Facility, except as repaired, rebuilt,

restored, altered or added to as permitted or required by the provisions of this Master Lease and except for ordinary wear and tear.

(e) Without limiting Tenant’s obligations to maintain the Leased Property under this Master Lease, within thirty (30) days after the end of each Lease Year with respect to a Facility, Tenant shall provide Landlord with evidence satisfactory to Landlord in the reasonable exercise of Landlord’s discretion that Tenant has in such Lease Year spent, with respect to the Leased Property, at least an aggregate amount of $360.00 per bed (as such amount is increased by the percentage change in the CPI from the Commencement Date to the first day of such Lease Year) (the “ Minimum Aggregate Maintenance Amount ”) minus the Overage Amount (as hereinafter defined), for repair and maintenance of the Facilities excluding normal janitorial and cleaning but including such capital expenditures to the Facilities and replacements to Landlord’s Personal Property at the Facilities as Tenant deems to be necessary in the exercise of its reasonable discretion. If Tenant fails to make at least the above amount of expenditures and fails to either (i) cure such default within sixty (60) days after receipt of a written demand from Landlord, or (ii) obtain Landlord’s written approval, in its reasonable discretion, of a repair and maintenance program satisfactory to cure such deficiency, then the same shall be deemed an Event of Default hereunder. As used herein “ Overage Amount ” means any amounts expended by Tenant pursuant to this Section 9.1(e) in the two immediately preceding Lease Years in excess of the Minimum Aggregate Maintenance Amount (excluding any such amounts that are financed by Tenant and secured by a lien on the personal property relating thereto).

9.2 Encroachments, Restrictions, Mineral Leases, etc . If any of the Leased Improvements or Tenant Capital Additions shall, at any time, encroach upon any property, street or right-of-way, or shall violate any restrictive covenant or other agreement affecting the Leased Property, or any part thereof or any Capital Addition thereto, or shall impair the rights of others under any easement or right-of-way to which the Leased Property is subject, or the use of the Leased Property or any Capital Addition thereto is impaired, limited or interfered with by reason of the exercise of the right of surface entry or any other provision of a lease or reservation of any oil, gas, water or other minerals, then promptly upon the request of Landlord or any Person affected by any such encroachment, violation or impairment, Tenant, at its sole cost and expense, but subject to its right to contest the existence of any such encroachment, violation or impairment, shall protect, indemnify, save harmless and defend Landlord from and against all losses, liabilities, obligations, claims, damages, penalties, causes of action, costs and expenses (including reasonable attorneys’, consultants’ and experts’ fees and expenses) based on or arising by reason of any such encroachment, violation or impairment. In the event of an adverse final determination with respect to any such encroachment, violation or impairment, Tenant shall either (a) obtain valid and effective waivers or settlements of all claims, liabilities and damages resulting from each such encroachment, violation or impairment, whether the same shall affect Landlord or Tenant; or (b) make such changes in the Leased Improvements and any Tenant Capital Additions thereto, and take such other actions, as Tenant in the good faith exercise of its judgment deems reasonably practicable, to remove such encroachment or to end such violation or impairment, including, if necessary, the alteration of any of the Leased Improvements or any Tenant Capital Additions thereto, 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 and any Tenant Capital Additions thereto for the Primary Intended Use substantially in the manner and to the extent the Leased Improvements and Tenant Capital Additions were operated prior to the assertion of such

encroachment, violation or impairment. 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, to the extent the recovery thereof is not necessary to compensate Landlord for any damages incurred by any such encroachment, violation or impairment, Tenant shall be entitled to a credit for any sums recovered by Landlord under any such policy of title or other insurance up to the maximum amount paid by Tenant to Landlord under this Section 9.2 and Landlord, upon request by Tenant, shall assign Landlord’s rights under such policies to Tenant provided such assignment does not adversely affect Landlord’s rights under any such policy and provided further that Tenant shall indemnify, defend, protect and save Landlord harmless from and against any liability, cost or expense of any kind that may be imposed upon Landlord in connection with any such assignment except to the extent such liability, cost or expense arises from the gross negligence or willful misconduct of Landlord. Landlord agrees to use reasonable efforts to seek recovery under any policy of title or other insurance under which Landlord is an insured party for all losses, liabilities, obligations, claims, damages, penalties, causes of action, costs and expenses (including reasonable attorneys’, consultants’ and experts’ fees and expenses) based on or arising by reason of any such encroachment, violation or impairment as set forth in this Section 9.2; provided, however, that in no event shall Landlord be obligated to institute any litigation, arbitration or other legal proceedings in connection therewith unless Landlord is reasonably satisfied that Tenant has the financial resources needed to fund such litigation and Tenant and Landlord have agreed upon the terms and conditions on which such funding will be made available by Tenant including, but not limited to, the mutual approval of a litigation budget.

ARTICLE X

10.1 Construction of Capital Additions to the Leased Property . With respect to each Facility, no Capital Addition shall be made which would tie in or connect any Leased Improvements with any improvements on property adjacent to the Land of such Facility without Landlord’s approval which may be withheld in Landlord’s sole and absolute discretion. Except as provided above, Tenant shall, with respect to any Facility, have the right to make a Capital Addition without the consent of Landlord if the Capital Addition Cost for such Capital Addition does not exceed $100,000 in any period of twelve (12) consecutive months. All other Capital Additions shall be subject to Landlord’s review and approval which approval shall not be unreasonably withheld. For any Capital Addition which does not require the approval of Landlord, Tenant shall, prior to commencing construction of such Capital Addition, provide to Landlord a written description of such Capital Addition and on an ongoing basis supply Landlord with related documentation and information as Landlord may reasonably request. If Tenant desires to make a Capital Addition for which Landlord’s approval is required, Tenant shall submit to Landlord in reasonable detail a general description of the proposal, the projected cost of construction and such plans and specifications, permits, licenses, contracts and other information concerning the proposal as Landlord may reasonably request. Such description shall indicate the use or uses to which such Capital Addition will be put and the impact, if any, on current and forecasted gross revenues and operating income attributable thereto. It shall be reasonable for Landlord to condition its approval of any Capital Addition upon any or all of the following terms and conditions:

(a) Such construction shall be effected pursuant to detailed plans and specifications approved by Landlord, which approval shall not be unreasonably withheld;

(b) Such construction shall be conducted under the supervision of a licensed architect or engineer selected by Tenant and approved by Landlord, which approval shall not be unreasonably withheld;

(c) Landlord’s receipt, from the general contractor and/or applicable major subcontractor(s), of a performance and payment bond for the full value of such construction, which such bond shall name Landlord as an additional obligee and otherwise be in form and substance and issued by a Person reasonably satisfactory to Landlord; and

(d) In the case of a Tenant Capital Addition, such construction shall not be undertaken unless Tenant demonstrates to the reasonable satisfaction of Landlord the financial ability to complete the construction without adversely affecting its cash flow position or financial viability.

10.2 Construction Requirements for all Capital Additions . Whether or not Landlord’s review and approval is required, for all Capital Additions:

(a) Such construction shall not be commenced until Tenant shall have procured and paid for all municipal and other governmental permits and authorizations required therefor, 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 cost or expense to Landlord; and (ii) any plans required to be filed in connection with any such application which require the approval of Landlord as hereinabove provided shall have been so approved by Landlord;

(b) Such construction shall not, and 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 the electrical, water, plumbing, HVAC or other building systems of any such component in a manner that would violate applicable building codes or prudent industry practices;

(c) Tenant’s licensed architect or engineer shall certify to Landlord that the detailed plans and specifications conform to and comply with in all material respects all applicable building, subdivision and zoning codes, laws, ordinances and regulations imposed by all governmental authorities having jurisdiction over the Leased Property of the applicable Facility;

(d) During and following completion of such construction, the parking which is located in the applicable Facility or on the Land of such 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 that which is required by law; provided, however, with Landlord’s prior consent and at no additional expense to Landlord, (i) to the extent additional parking is not already a part of a Capital Addition, Tenant may construct additional parking on the Land; or (ii) Tenant may acquire off-site parking to serve such Facility as long as such parking shall be dedicated to, or otherwise made available to serve, such Facility;

(e) 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; and

(f) Promptly following the completion of such construction, Tenant shall deliver to Landlord “as built” drawings of such addition, certified as accurate by the licensed architect or engineer selected by Tenant to supervise such work, and copies of any new or revised certificates of occupancy.

10.3 Funding by Landlord . Tenant may request that Landlord fund a Capital Addition, in which case Tenant shall provide to Landlord any information about such Capital Addition which Landlord may reasonably request. Landlord may, but shall be under no obligation to, provide the funds necessary to meet the request. Within thirty (30) days of receipt of a request to fund a proposed Capital Addition, Landlord shall notify Tenant as to whether it will fund the proposed Capital Addition and, if so, the terms and conditions upon which it would do so, including the terms of any amendment to this Master Lease. Tenant shall have ten (10) Business Days to accept or reject Landlord’s funding proposal. In no event shall the portion of the projected Capital Addition Cost comprised of land, if any, materials, labor charges and fixtures be less than ninety percent (90%) of the total amount of the projected cost of such Capital Addition. If Landlord agrees to fund a proposed Capital Addition and Tenant accepts the terms thereof, Tenant shall provide Landlord with the following prior to any advance of funds:

(a) any information, certificates, licenses, permits or documents requested by Landlord which are necessary and obtainable to confirm that Tenant will be able to use the Capital Addition upon completion thereof in accordance with the Primary Intended Use, including all required federal, state or local government licenses and approvals;

(b) an Officer’s Certificate and, if requested, a certificate from Tenant’s architect, setting forth in reasonable detail the projected or actual Capital Addition Costs;

(c) an amendment to this Master Lease, in a form prepared by Landlord and reasonably agreed to by Tenant, providing for an increase in the Base Rent in amounts as agreed upon by the parties hereto and other provisions as may be necessary or appropriate;

(d) a deed conveying title to Landlord to any land acquired for the purpose of constructing the Capital Addition free and clear of any liens or encumbrances except those approved by Landlord, and accompanied by an ALTA survey thereof satisfactory to Landlord;

(e) for each advance, endorsements to any outstanding policy of title insurance covering the Leased Property or commitments therefor satisfactory in form and substance to Landlord (i) updating the same without any additional exception except those that do not materially affect the value of such land and do not interfere with the use of the Leased Property or as may be approved by Landlord , which approval shall not be unreasonably withheld and (ii) increasing the coverage thereof by an amount equal to the Fair Market Value of

the Capital Addition, except to the extent covered by the owner’s policy of title insurance referred to in subparagraph (f), below; and

(f) if appropriate, an owner’s policy of title insurance insuring fee simple title to any land conveyed to Landlord free and clear of all liens and encumbrances except those that do not materially affect the value of such land and do not interfere with the use of the Leased Property or are approved by Landlord, which approval shall not be unreasonably withheld;

(g) if requested by Landlord, a M.A.I. appraisal of the Leased Property indicating that the Fair Market Value of the Leased Property upon completion of the Capital Addition will exceed the Fair Market Value of the Leased Property immediately prior thereto by an amount not less than ninety-five percent (95%) of the cost of the Capital Addition; and

(h) such other billing statements, invoices, certificates, endorsements, opinions, site assessments, surveys, resolutions, ratifications, lien releases and waivers and other instruments and information reasonably required by Landlord.

ARTICLE XI

11.1 Liens . Subject to the provisions of Article XII relating to permitted contests, 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 the Leased Property or any Tenant Capital Addition thereto or any attachment, levy, claim or encumbrance in respect of the Rent, excluding, however, (i) this Master Lease; (ii) the matters that existed as of the Commencement Date with respect to such Facility; (iii) restrictions, liens and other encumbrances which are consented to in writing by Landlord; (iv) liens for Impositions which Tenant is not required to pay hereunder; (v) subleases permitted by Article XXII; (vi) liens for Impositions not yet delinquent; (vii) liens of mechanics, laborers, materialmen, suppliers or vendors for sums either disputed or not yet due, provided that (1) the payment of such sums shall not be postponed under any related contract for more than sixty (60) days after the completion of the action giving rise to such lien and such reserve or other appropriate provisions as shall be required by law or GAAP shall have been made therefor or (2) any such liens are in the process of being contested as permitted by Article XII; (viii) any liens which are the responsibility of Landlord pursuant to the provisions of Article XXXI; (ix) liens related to equipment leases for Tenant Personal Property which is used or useful in Tenant’s business on the Leased Property, provided that the payment of any sums due under such equipment leases shall either (1) be paid as and when due in accordance with the terms thereof, or (2) be in the process of being contested as permitted by Article XII, (x) liens granted as security for the obligations of Guarantor and its Affiliates under Guarantor’s Credit Agreement; provided , however , in no event shall the foregoing be deemed or construed to permit Tenant to encumber its leasehold interest in the Leased Property (other than pursuant to a Permitted Leasehold Mortgage) without the prior written consent of Landlord, which consent may be granted or withheld in Landlord’s sole discretion; and provided, further, that Tenant shall be required to provide Landlord with fully executed copies of any and all Permitted Leasehold Mortgages. For the avoidance of doubt the parties acknowledge and agree that Tenant has not granted any liens in favor of Landlord as security for its obligations hereunder and nothing contained herein shall

be deemed or construed to prohibit Tenant from pledging its Accounts and other Tenant Personal Property as collateral in connection with third party financing transactions.

ARTICLE XII

12.1 Permitted Contests . Tenant, upon prior written notice to Landlord, on its own or in Landlord’s name, 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 licensure or certification decision, Imposition, Legal Requirement, Insurance Requirement, lien, attachment, levy, encumbrance, charge or claim; provided, however, 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 Leased Property or any Tenant Capital Addition thereto; (ii) neither the Leased Property or any Tenant Capital Addition thereto, the Rent therefrom nor any part or interest in either thereof would be in any danger of being sold, forfeited, attached or lost pending the outcome of such proceedings; (iii) in the case of a Legal Requirement, neither Landlord nor Tenant would be in any danger of civil or criminal liability for failure to comply therewith pending the outcome of such proceedings; (iv) if any such contest shall involve a sum of money or potential loss in excess of Fifty Thousand Dollars ($50,000), Tenant shall deliver to Landlord an opinion of counsel reasonably acceptable to Landlord to the effect set forth in clauses (i), (ii) and (iii) above, to the extent applicable; (v) in the case of a Legal Requirement, Imposition, lien, encumbrance or charge, Tenant shall give such reasonable security as may be required by Landlord to insure ultimate payment of the same and to prevent any sale or forfeiture of the Leased Property or any Tenant Capital Addition thereto or the Rent by reason of such non-payment or noncompliance; (vi) in the case of an Insurance Requirement, the coverage required by Article XIII shall be maintained; and (vii) if such contest be finally resolved against Landlord or Tenant, Tenant shall promptly pay the amount required to be paid, together with all interest and penalties accrued thereon, or comply with the applicable Legal Requirement or Insurance Requirement. 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, Landlord shall join as a party therein. The provisions of this Article XII shall not be construed to permit Tenant to contest the payment of Rent or any other amount (other than Impositions or Additional Charges which Tenant may from time to time be required to impound with Landlord) payable by Tenant to Landlord hereunder. Tenant shall indemnify, defend, protect and save Landlord harmless from and against any liability, cost or expense of any kind that may be imposed upon Landlord in connection with any such contest and any loss resulting therefrom.

ARTICLE XIII

13.1 General Insurance Requirements . During the Term, Tenant shall at all times keep the Leased Property, and all property located in or on the Leased Property, including Capital Additions, the Fixtures and the Personal Property, insured with the kinds and amounts of insurance described below. Each element of insurance described in this Article shall be maintained with respect to the Leased Property of each Facility and the Personal Property and operations thereon. This insurance shall be written by companies approved to conduct business in the State in which the Leased Property is located. All liability type policies must name

Landlord as an “additional insured.” All property policies shall name Landlord as “loss payee.” All business interruption policies shall name Landlord as “loss payee” with respect to Rent only. Losses shall be payable to Landlord and/or Tenant as provided in Article XIV. In addition, the policies, as appropriate, shall name as an “additional insured” or “loss payee” the holder of any mortgage, deed of trust or other security agreement (“ Facility Mortgagee ”) securing any indebtedness or any other Encumbrance placed on the Leased Property in accordance with the provisions of Article XXXI (“ Facility Mortgage ”) by way of a standard form of mortgagee’s loss payable endorsement. Any loss adjustment shall require the written consent of Landlord, Tenant, and each Facility Mortgagee unless the amount of the loss is less than One Hundred Fifty Thousand Dollars ($150,000) in which event no consent shall be required. Evidence of insurance shall be deposited with Landlord and, if requested, with any Facility Mortgagee(s). The policies shall insure against the following risks with respect to each Facility:

(a) Loss or damage by fire, vandalism and malicious mischief, extended coverage perils commonly known as “Special Risk,” and all physical loss perils normally included in such Special Risk insurance, including but not limited to sprinkler leakage, earthquake (including earth movement) and windstorm in an amount not less than the insurable value on a replacement cost basis (as defined below in Section 13.2) and including a building ordinance coverage endorsement;

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

(c) Flood (when any of the improvements comprising the Leased Property of a Facility is located in whole or in part within a designated 100-year flood plain area) and such other hazards and in such amounts as may be customary for comparable properties in the area;

(d) Loss of rental value in an amount not less than twelve (12) months’ Rent payable hereunder or business interruption in an amount not less than twelve (12) months of income and normal operating expenses including 90-days ordinary payroll and Rent payable hereunder with an endorsement extending the period of indemnity by at least ninety (90) days (Building Ordinance—Increased Period of Restoration Endorsement) necessitated by the occurrence of any of the hazards described in Sections 13.1(a), 13.1(b) or 13.1(c);

(e) Claims for personal injury or property damage under a policy of comprehensive general public liability insurance with amounts not less than One Million Dollars ($1,000,000) combined single limit and Three Million Dollars ($3,000,000) in the annual aggregate;

(f) Medical professional liability with amounts not less than One Million Dollars ($1,000,000) combined single limit and Three Million Dollars ($3,000,000) in the annual aggregate; and

(g) During such time as Tenant is constructing any improvements, Tenant, at its sole cost and expense, shall carry, or cause to be carried (i) workers’ compensation

insurance and employers’ liability insurance covering all persons employed in connection with the improvements in statutory limits, (ii) a completed operations endorsement to the commercial general liability insurance policy referred to above, (iii) builder’s risk insurance, completed value form, covering all physical loss, in an amount and subject to policy conditions satisfactory to Landlord, and (iv) such other insurance, in such amounts, as Landlord deems reasonably necessary to protect Landlord’s interest in the Leased Property from any act or omission of Tenant’s contractors or subcontractors.

13.2 Replacement Cost . The term “ Replacement Cost ” shall mean the actual replacement cost of the insured property from time to time with new materials and workmanship of like kind and quality. If Landlord reasonably believes that the Replacement Cost has increased at any time during the Term, it shall have the right to have such Replacement Cost redetermined by an impartial national insurance company reasonably acceptable to both parties (the “ Impartial Appraiser ”). The determination of the Impartial Appraiser shall be final and binding on the parties hereto, and Tenant shall forthwith adjust the amount of the insurance carried pursuant to this Article to the amount so determined by the Impartial Appraiser, subject to the approval of the Facility Mortgagee, as applicable. Each party shall pay one-half (1/2) of the fee, if any, of the Impartial Appraiser. If Tenant has undertaken any structural alterations or additions to the Leased Property having a cost or value in excess of Two Hundred Fifty Thousand Dollars ($250,000), Landlord may at Tenant’s expense have the Replacement Cost redetermined at any time after such improvements are made, regardless of when the Replacement Cost was last determined.

13.3 Additional Insurance . In addition to the insurance described above, Tenant shall maintain such additional insurance upon notice from Landlord as may be reasonably required from time to time by any Facility Mortgagee and shall further at all times maintain adequate workers’ compensation coverage and any other coverage required by Legal Requirements for all Persons employed by Tenant on the Leased Property and any Tenant Capital Addition thereto in accordance with Legal Requirements.

13.4 Waiver of Subrogation . All insurance policies carried by either party covering the Leased Property and any Tenant Capital Addition thereto, Landlord’s Personal Property or Tenant’s Personal Property, including without limitation, contents, fire and casualty insurance, shall expressly waive any right of subrogation on the part of the insurer against the other party. Tenant shall pay any additional costs or charges for obtaining such waiver.

13.5 Policy Requirements . All of the policies of insurance referred to in this Article shall be written in form satisfactory to Landlord and any Facility Mortgagee and issued by insurance companies with a policyholder rating of “A-” and a financial rating of “X” in the most recent version of Best’s Key Rating Guide. The property loss insurance policy shall contain a Replacement Cost Endorsement. If Tenant obtains and maintains the general liability or professional malpractice insurance described in Sections 13.1(e) or (f) above on a “claims-made” basis, Tenant shall provide continuous liability coverage for claims arising during the Term either by obtaining an endorsement providing for an extended reporting period reasonably acceptable to Landlord in the event such policy is canceled or not renewed for any reason whatsoever, or by obtaining either (a) “tail” insurance coverage converting the policies to “occurrence” basis policies providing coverage for a period of at least three (3) years beyond the

expiration of the Term, or (b) retroactive coverage back to the commencement date (which date shall be at least three (3) years prior to the expiration of the Term) for the policy in effect prior to the expiration of the Term and maintaining such coverage for a period of at least three (3) years beyond the expiration of the Term. Tenant shall pay all of the premiums therefor, and deliver such policies or certificates thereof to Landlord prior to their effective date (and with respect to any renewal policy, prior to the expiration of the existing policy), and in the event of the failure of Tenant either to effect such insurance in the names herein called for or to pay the premiums therefor, or to deliver such policies or certificates thereof to Landlord, at the times required, Landlord shall be entitled, but shall have no obligation, to effect such insurance and pay the premiums therefor, in which event the cost thereof, together with interest thereon at the Overdue Rate, shall be repayable to Landlord upon demand therefor. Each insurer shall agree, by endorsement on the policy or policies issued by it, or by independent instrument furnished to Landlord, that it will give to Landlord thirty (30) days’ written notice before the policy or policies in question shall be altered, allowed to expire or cancelled. Notwithstanding any provision of this Article XIII to the contrary, Landlord acknowledges and agrees that the coverage required to be maintained by Tenant, including but not limited to the coverages required under Sections 13.1(e) and (f) and any workers’ compensation insurance, may be provided under one or more policies of self-insurance maintained by Guarantor and/or Tenant or their respective Affiliates.

13.6 Increase in Limits . If, from time to time after the Commencement Date, Landlord determines in the exercise of its reasonable business judgment that the limits of the personal injury or property damage-public liability insurance then carried are insufficient, Landlord may give Tenant Notice of acceptable limits for the insurance to be carried provided, in no event will Tenant be required to carry insurance in an amount which exceeds the reasonably estimated value of the Leased Property and all Tenant Capital Additions thereto; and, subject to the foregoing limitation, within ninety (90) days after the receipt of such Notice, the insurance shall thereafter be carried with limits as prescribed by Landlord until further increase pursuant to the provisions of this Section.

13.7 Blanket Policy . Notwithstanding anything to the contrary contained in this Article XIII, Tenant’s obligations to carry the insurance provided for herein may be brought within the coverage of a so-called blanket policy or policies of insurance carried and maintained by Tenant; provided, however, that the coverage afforded Landlord will not be reduced or diminished or otherwise be materially different from that which would exist under a separate policy meeting all other requirements hereof by reason of the use of the blanket policy, and provided further that the requirements of this Article XIII (including satisfaction of the Facility Mortgagee’s requirements and the approval of the Facility Mortgagee) are otherwise satisfied, and provided further that Tenant maintains specific allocations acceptable to Landlord.

13.8 No Separate Insurance . Tenant shall not, on Tenant’s own initiative or pursuant to the request or requirement of any third party, (i) take out separate insurance concurrent in form or contributing in the event of loss with that required in this Article to be furnished by, or which may reasonably be required to be furnished by, Tenant or (ii) increase the amounts of any then existing insurance by securing an additional policy or additional policies, unless all parties having an insurable interest in the subject matter of the insurance, including in all cases Landlord and all Facility Mortgagees, are included therein as additional insureds and

the loss is payable under such insurance in the same manner as losses are payable under this Master Lease. Notwithstanding the foregoing, nothing herein shall prohibit Tenant from insuring against risks not required to be insured hereby, and as to such insurance, Landlord and any Facility Mortgagee need not be included therein as additional insureds, nor must the loss thereunder be payable in the same manner as losses are payable hereunder except to the extent required to avoid a default under the Facility Mortgage.

ARTICLE XIV

14.1 Insurance Proceeds . All proceeds payable by reason of any loss or damage to the Leased Property, or any portion thereof, under any policy of insurance required to be carried hereunder shall be paid to Landlord and made available by Landlord to Tenant from time to time for the reasonable costs of reconstruction or repair, as the case may be, of any damage to or destruction of the Leased Property, or any portion thereof; provided, however, that if the total amount of proceeds payable is One Hundred Fifty Thousand Dollars ($150,000) or less, and, if no Event of Default has occurred and is continuing, the proceeds shall be paid to Tenant and, subject to the limitations set forth in this Article XIV used for the repair of any damage to the Leased Property, it being understood and agreed that Tenant shall have no obligation to rebuild any Tenant Capital Addition. Any excess proceeds of insurance remaining after the completion of the restoration or reconstruction of the Leased Property to substantially the same condition as existed immediately before the damage or destruction and with materials and workmanship of like kind and quality and to Landlord’s reasonable satisfaction shall be retained by Landlord free and clear of any claim thereto by Tenant. In the event neither Landlord nor Tenant is required or elects to repair and restore the Leased Property, all such insurance proceeds, other than proceeds reasonably attributed to any Tenant Capital Additions, which proceeds shall be and remain the property of Tenant, shall be retained by Landlord free and clear except as otherwise specifically provided below in this Article XIV. All salvage resulting from any risk covered by insurance for damage or loss to the Leased Property shall belong to Landlord.

14.2 Tenant’s Obligations Following Casualty .

(a) If a Facility and/or any Tenant Capital Additions to a Facility are damaged, whether or not from a risk covered by insurance carried by Tenant, except as otherwise provided herein, (i) Tenant shall restore such Leased Property (excluding any Tenant Capital Addition, it being understood and agreed that Tenant shall not be required to repair any Tenant Capital Addition), to substantially the same condition as existed immediately before such damage and (ii) such damage shall not terminate this Master Lease. Notwithstanding the foregoing, if Tenant cannot within a reasonable time after diligent efforts obtain the necessary government approvals needed to restore such Facility to substantially the same condition which existed prior to such damage (the “ Required Reconstruction Approvals ”), then Tenant shall pay to Landlord an amount (the “ Compensatory Payment ”) equal to the sum of: (i) the Fair Market Value of the affected Facility immediately before such damage or destruction less (ii) the Fair Market Value of the affected Facility immediately after such damage or destruction (the “ Post-Casualty Facility ”) less (iii) any insurance proceeds received by Landlord.

(b) Unless, within nine (9) months following the date of any applicable casualty, Tenant has provided Landlord with satisfactory evidence that it has obtained, or is in the process of and continuing to diligently obtain, the Required Reconstruction Approvals, Tenant shall be deemed to be unable to secure the Required Reconstruction Approvals and to be obligated to make the Compensatory Payment to Landlord (the “ Compensatory Payment Date ”). Landlord shall have a period of three (3) months after the Compensatory Payment Date to attempt to sell the affected Facility to an independent third party in an arms-length transaction and the gross purchase price payable to Landlord in connection with such transaction shall be deemed to be the Fair Market Value of the Post-Casualty Facility (a “ Casualty Sale ”). In the event a Casualty Sale occurs within such three (3) month period, Landlord shall provide Tenant with notice of the closing thereof and a written demand for the Compensatory Payment setting forth in reasonable detail the calculation thereof (the “ Compensatory Payment Statement ”). In the event a Casualty Sale does not occur within such three (3) month period, then the Fair Market Value of the Post-Casualty Facility shall be determined in the manner otherwise set forth in this Master Lease.

(c) The Compensatory Payment shall be due and payable ten (10) days after the later of (A) Tenant’s receipt of the Compensatory Payment Statement or (B) the date of determination of the Fair Market Value of the Post-Casualty Facility. Upon Landlord’s receipt of the Compensatory Payment (or upon the occurrence of a Casualty Sale, if earlier), this Master Lease shall terminate as to the affected Facility and the affected portion of the Leased Property and Tenant shall have no further rights or obligations with respect thereto other than Tenant’s right to retain any insurance proceeds allocated to any Tenant Capital Addition.

(d) If Tenant restores the affected Leased Property and the cost of the repair or restoration exceeds the amount of proceeds received by Landlord from the insurance required to be carried hereunder, Tenant shall provide Landlord with evidence reasonably acceptable to Landlord that Tenant has available to it any excess amounts needed to restore such Facility. Subject to the requirements of a Facility Mortgagee or the applicable insurance carrier, such difference shall be paid by Tenant after all insurance proceeds have been exhausted for application to the cost of repair and restoration.

14.3 No Abatement of Rent . Subject to the provisions of Section 14.7, this Master Lease shall remain in full force and effect and Tenant’s obligation to pay the Rent and all other charges required by this Master Lease shall remain unabated during the period required for adjusting insurance, satisfying Legal Requirements, repair and restoration.

14.4 Waiver . Tenant waives any statutory rights of termination which may arise by reason of any damage or destruction of the Leased Property but such waiver shall not affect any contractual rights granted to Tenant under this Article XIV.

14.5 Damage Near End of Term . If the damage or destruction contemplated hereunder occurs during the last year of the Initial Term or any Renewal Term, as applicable, of this Master Lease with respect to the applicable Facility (excluding, for purposes hereof, any exercised but not yet commenced Renewal Terms) and Tenant terminates any options it might then have to extend the Term of this Master Lease with respect to such Facility (taking into account any exercised but not yet commenced Renewal Terms), Tenant may, in lieu of repairing

and restoring the Leased Property as contemplated hereunder, terminate this Master Lease with respect to such Facility, effective as of the date of payment to Landlord of the greater of (a) the insurance proceeds attributable to such damage or destruction and (b) the cost to repair such damage or destruction as reasonably estimated by Landlord.

14.6 Insurance Proceeds Paid to Facility Mortgagee . Notwithstanding anything herein to the contrary, in the event that any Facility Mortgagee is entitled to any insurance proceeds, or any portion thereof, under the terms of any Facility Mortgage, such proceeds shall be applied, held and/or disbursed in accordance with the terms of the Facility Mortgage. In the event that the Facility Mortgagee elects to apply the insurance proceeds to the indebtedness secured by the Facility Mortgage, Tenant shall pay the Compensatory Payment to Landlord within one hundred eighty (180) days of the applicable casualty. In such case, (a) the Compensatory Payment shall be reduced on a dollar for dollar basis by amounts applied to pay the Facility Mortgage, and (b) the amounts so applied shall not be deemed to be “insurance proceeds received by Landlord” for purposes of calculating the amount of the Compensatory Payment. Landlord shall make commercially reasonable efforts to cause the net proceeds to be applied to the restoration of such Facility.

14.7 Termination of Master Lease; Abatement of Rent . In the event this Master Lease is terminated as to an affected Leased Property pursuant to this Article XIV following the damage to or destruction of all or any portion of the Leased Property, then (i) the Base Rent due hereunder from and after the effective date of such termination shall be reduced by an amount determined by multiplying a fraction, the numerator of which shall be the Minimum Repurchase Price for the affected Leased Property and the denominator of which shall be the Minimum Repurchase Price for all of the Leased Property then subject to the terms of this Master Lease by the Base Rent payable under this Master Lease immediately prior to the effective date of the termination of this Master Lease as to the affected Leased Property and (ii) Landlord shall retain any claim which Landlord may have against Tenant for failure to insure such Leased Property as required by Article XIII.

ARTICLE XV

15.1 Condemnation .

(a) Total Taking . If the Leased Property of, and any Tenant Capital Additions to, a Facility are totally and permanently taken by Condemnation (a “ Taking ”), this Master Lease shall terminate with respect to such Facility as of the day before the Date of Taking for such Facility.

(b) Partial Taking . If a portion of the Leased Property of, and any Tenant Capital Additions to, a Facility are taken by Condemnation, this Master Lease shall remain in effect if the affected Facility is not thereby rendered Unsuitable for Its Primary Intended Use, but if such Facility is thereby rendered Unsuitable for its Primary Intended Use, this Master Lease shall terminate with respect to such Facility as of the day before the Date of Taking for such Facility.

(c) Restoration . If there is a partial Taking of the Leased Property of, and Tenant Capital Additions to, a Facility and this Master Lease remains in full force and effect, Landlord shall make available to Tenant the portion of the Award necessary and specifically identified for restoration of the Leased Property (excluding any Tenant Capital Additions, it being understood and agreed that Tenant shall not be required to repair or restore any Tenant Capital Additions), and Tenant shall accomplish all necessary restoration whether or not the amount provided by the condemnor for restoration is sufficient and the Base Rent shall be reduced by such amount as may be agreed upon by Landlord and Tenant or, if they are unable to reach such an agreement within a period of thirty (30) days after the occurrence of the Taking, then the Base Rent for such Facility shall be proportionately reduced to the same extent as the resulting diminution in the Fair Market Rental of the Leased Property by reason of such partial Taking.

15.2 Award Distribution . Except as set forth below, the entire Award shall belong to and be paid to Landlord. Tenant shall, however, be entitled to pursue its own claim with respect to the Taking for Tenant’s lost profits value and moving expenses and, the portion of the Award, if any, allocated to any Tenant Capital Additions and Tenant’s Personal Property shall be and remain the property of Tenant free of any claim thereto by Landlord.

15.3 Temporary Taking . The taking of the Leased Property, or any part thereof, shall constitute a taking by Condemnation only when the use and occupancy by the taking authority has continued for longer than 180 consecutive days. During any shorter period, which shall be a temporary taking, all the provisions of this Master Lease shall remain in full force and effect and the Award allocable to the Term shall be paid to Tenant.

15.4 Condemnation Awards Paid to Facility Mortgagee . Notwithstanding anything herein to the contrary, in the event that any Facility Mortgagee is entitled to any Condemnation Award, or any portion thereof, under the terms of any Facility Mortgage, such award shall be applied, held and/or disbursed in accordance with the terms of the Facility Mortgage. In the event that the Facility Mortgagee elects to apply the Condemnation Award to the indebtedness secured by the Facility Mortgage in the case of a Taking as to which the restoration provisions apply, this Master Lease shall terminate as of the date of the Taking as to the affected Leased Property, unless within fifteen (15) days of the notice from the Facility Mortgagee Landlord agrees to make available to Tenant for restoration of such Leased Property funds equal to the amount applied by the Facility Mortgagee. Unless the Taking is such as to entitle Landlord or Tenant to terminate this Master Lease as to the affected Leased Property and Landlord or Tenant, as the case may be, shall elect to terminate this Master Lease as to the affected Leased Property in the time and in the manner provided, Landlord shall disburse such funds to Tenant and Tenant shall restore such Leased Property (as nearly as possible under the circumstances) to a complete architectural unit of the same general character and condition as such Leased Property existing immediately prior to such Taking.

15.5 Termination of Master Lease; Abatement of Rent . In the event this Master Lease is terminated with respect to the affected portion of the Leased Property as a result of a Taking, the Base Rent due hereunder from and after the effective date of such termination shall be reduced by an amount determined by multiplying a fraction, the numerator of which shall be the Minimum Purchase Price for the affected Leased Property and the denominator of

which shall be the Minimum Purchase Price for all of the Leased Property then subject to the terms of this Master Lease by the Base Rent payable under this Master Lease immediately prior to the effective date of the termination of this Master Lease as to the affected Leased Property.

ARTICLE XVI

16.1 Events of Default . Any one or more of the following shall constitute an “Event of Default”:

(a) Tenant shall fail to pay any installment of Rent within two (2) Business Days of when due;

(b) a default shall occur under any other lease or agreement between Landlord or an Affiliate of Landlord and Tenant or an Affiliate of Tenant, or any Guaranty or other instrument executed by Tenant or an Affiliate of Tenant in favor of Landlord or an Affiliate of Landlord, in every case, whether now or hereafter existing (excluding, however, the Transition Services Agreement, Distribution Agreement and Tax Allocation Agreement entered into between Affiliates of Tenant and Landlord), where the default is not cured within any applicable grace period set forth therein;

(i) admit in writing its inability to pay its debts generally as they become due;

(ii) file a petition in bankruptcy or a petition to take advantage of any insolvency act;

(iii) make an assignment for the benefit of its creditors;

(iv) consent to the appointment of a receiver of itself or of the whole or any substantial part of its property; or

(v) file a petition or answer seeking reorganization or arrangement under the Federal bankruptcy laws or any other applicable law or statute of the United States of America or any state thereof;

(d) Tenant or any Guarantor shall be adjudicated as bankrupt or a court of competent jurisdiction shall enter an order or decree appointing, without the consent of Tenant, a receiver of Tenant or of the whole or substantially all of its property, or approving a petition filed against it seeking reorganization or arrangement of Tenant under the Federal bankruptcy laws or any other applicable law or statute of the United States of America or any state thereof, and such judgment, order or decree shall not be vacated or set aside or stayed within sixty (60) days from the date of the entry thereof;

(e) Tenant or any Guarantor shall be liquidated or dissolved or Tenant is in default of the provisions set forth in Section 22.1 below;

(f) the estate or interest of Tenant in the Leased Property or any part thereof shall be levied upon or attached in any proceeding and the same shall not be vacated or discharged within the later of ninety (90) days after commencement thereof or thirty (30) days after receipt by Tenant of notice thereof from Landlord; provided, however, that such notice shall be in lieu of and not in addition to any notice required under applicable law;

(g) except as a result of damage, destruction or Condemnation, Tenant voluntarily ceases operations at any Facility;

(h) any of the representations or warranties made by Tenant hereunder or by Guarantor in the Guaranty proves to be untrue when made in any material respect which materially and adversely affects Landlord;

(i) any applicable license or third-party provider reimbursement agreements material to a Facility’s operation for its Primary Intended Use are at any time terminated or revoked or suspended for more than twenty (20) days and such termination, revocation or suspension is not stayed pending appeal and would reasonably be expected to have a material adverse affect on the entities comprising the Tenant, taken as a whole, or on the Leased Property, taken as a whole;

(j) any local, state or federal agency having jurisdiction over the operation of any Facility removes ten percent (10%) or more of the patients or residents located in such Facility other than during any period of repair or restoration following damage, destruction or a partial Taking;

(k) Tenant voluntarily transfers, at any time during the last year of the Term, ten (10) or more patients located in the Facility to any other facility in which Tenant or any Affiliate of Tenant has any ownership or other financial interest, including, without limitation, fees earned under any management agreement, provided that Tenant’s transfer of any patient to a different type of care facility as a result of such patient’s special needs that cannot be met at such Facility or at the request of such patient or his/her responsible party shall not be deemed a voluntary transfer;

(l) (i) the revocation of the health care license granted to Tenant for the operation of any Facility, (ii) if applicable, the decertification of any Facility from participation in the Medicare or Medicaid reimbursement program, or (iii) the issuance of an admissions ban or a stop placement order with respect to any Facility that remains in effect for a period of more than thirty (30) days (each a “ Negative Regulatory Action ”) where, in each instance, such Negative Regulatory Action (A) is not stayed pending the appeal thereof and (B) would reasonably be expected to have a material adverse affect on the entities comprising the Tenant, taken as a whole, or on the Leased Property, taken as a whole;

(m) the sale or transfer, without Landlord’s consent, of all or any portion of any certificate of need, bed rights or other similar certificate or license relating to the Leased Property;

(n) Tenant, by its acts or omissions, causes the occurrence of a default under any provision of any Facility Mortgage, related documents or obligations thereunder by

which such Tenant is bound or has agreed under the terms of this Master Lease to be bound, which default is not cured within the applicable time period;

(o) a default shall occur under Guarantor’s Credit Agreement, where the default is not cured within any applicable grace period set forth therein, and the lender thereunder elects to accelerate the loan as a result thereof or any other remedy available to such lender is exercised because of such default; provided, however, if such acceleration or other remedy is thereafter cancelled, then this Event of Default shall concurrently therewith cease to be outstanding; and

(p) if Tenant shall fail to observe or perform any other term, covenant or condition of this Master Lease and such failure is not cured by Tenant within thirty (30) days after notice thereof from Landlord, unless such failure cannot with due diligence be cured within a period of thirty (30) days, in which case such failure shall not be deemed to be an Event of Default if Tenant proceeds promptly and with due diligence to cure the failure and diligently completes the curing thereof within one hundred twenty (120) days after such notice from Landlord; provided, however, that such notice shall be in lieu of and not in addition to any notice required under applicable law.

No Event of Default (other than a failure to make payment of money) shall be deemed to exist under Section 16.1 during any time the curing thereof is prevented by an Unavoidable Delay, provided that upon the cessation of the Unavoidable Delay, Tenant remedies the default without further delay.

16.2 Certain Remedies . If an Event of Default shall have occurred, Landlord may terminate this Master Lease by giving Tenant no less than ten (10) days notice of such termination and the Term shall terminate and all rights of Tenant under this Master Lease shall cease. Subject to the limitations set forth in Section 16.4, Landlord shall have all rights at law and in equity available to Landlord as a result of any Event of Default; provided, however, although Tenant has the right under certain circumstances set forth in this Master Lease to purchase some or all of the Leased Property in lieu of fulfilling certain obligations imposed on Tenant under this Master Lease, in no event shall Landlord have the right to require Tenant to purchase any or all of the Facilities from Landlord (i.e., a so-called “put right,”) as a result of the occurrence of an Event of Default; and provided, further, that in the event that Landlord elects to exercise its option to purchase some or all of Tenant Personal Property in accordance with the provisions of Section 36.2(a), any damages which Landlord is entitled to recover from Tenant shall be reduced on a dollar for dollar basis by the amount due from Landlord to Tenant pursuant to Section 36.2(a). Tenant shall pay as Additional Charges all costs and expenses incurred by or on behalf of Landlord, including reasonable attorneys’ fees and expenses, as a result of any Event of Default hereunder. If an Event of Default shall have occurred and be continuing, whether or not this Master Lease has been terminated with respect to any one or more (including all, if so elected by Landlord) of the Facilities pursuant to Section 16.1, Tenant shall, to the extent permitted by law, if required by Landlord so to do, immediately surrender to Landlord possession of the Leased Property and any Tenant Capital Additions of the Facilities as to which Landlord has so elected to terminate this Master Lease and quit the same and Landlord may enter upon and repossess such Leased Property and such Tenant Capital Addition thereto by reasonable force, summary proceedings, ejectment or otherwise, and, to the extent permitted by

law, may remove Tenant and all other Persons (other than the residents of each Facility) and any of Tenant’s Personal Property from such Leased Property and such Tenant Capital Addition thereto.

16.3 Damages . (i) The termination of this Master Lease with respect to any one or more of the Facilities; (ii) the repossession of the Leased Property and any Tenant Capital Additions to any Facility; (iii) the failure of Landlord, notwithstanding reasonable good faith efforts, to relet the Leased Property or any portion thereof; (iv) the reletting of all or any portion of the Leased Property; or (v) the inability of Landlord to collect or receive any rentals due upon any such reletting, shall not relieve Tenant of its liabilities and obligations hereunder, all of which shall survive any such termination, repossession or reletting. If any such termination occurs, Tenant shall forthwith pay to Landlord all Rent due and payable with respect to the Facility terminated to and including the date of such termination. Thereafter:

Tenant shall forthwith pay to Landlord, at Landlord’s option, as and for liquidated and agreed current damages for the occurrence of an Event of Default, either:

(A) the sum of:

(i) the worth at the time of award of the unpaid Rent which had been earned at the time of termination with respect to the terminated Facility to the extent not previously paid by Tenant under this Section 16.3;

(ii) the worth at the time of award of the amount by which the unpaid Rent which would have been earned after termination with respect to the terminated Facility until the time of award exceeds the amount of such rental loss that Tenant proves could have been reasonably avoided;

(iii) the worth at the time of award of the amount by which the unpaid Rent for the balance of the Term after the time of award exceeds the amount of such rental loss that Tenant proves could be reasonably avoided, plus

(iv) any other amount necessary to compensate Landlord for all the detriment proximately caused by Tenant’s failure to perform its obligations under this Master Lease or which in the ordinary course of things would be likely to result therefrom.

As used in clauses (i) and (ii) above, the “worth at the time of award” shall be computed by allowing interest at the Overdue Rate. As used in clause (iii) above, the “worth at the time of award” shall be computed by discounting such amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of award plus one percent (1 %). For purposes of determining the worth at the time of the award, Additional Rent that would have been payable for the remainder of the Term shall be deemed to be the greater of (y) the same as the Additional Rent for the then current Lease Year or, if not determinable, the immediately preceding Lease Year; and (z) such other amount as Landlord shall demonstrate could reasonably have been earned.

or (B)

without termination of Tenant’s right to possession of the Leased Property, each installment of said Rent and other sums payable by Tenant to Landlord under the Lease as the same becomes due and payable, together with interest at the Overdue Rate from the date when due until paid, and Landlord may enforce, by action or otherwise, any other term or covenant of this Master Lease.

16.4 Limited Remedy Events of Default . Notwithstanding anything to the contrary herein contained or in any other transaction document executed concurrently herewith, or any other provisions of this Master Lease or any other concurrent transaction document, if Landlord is exercising remedies due solely to the Events of Default described in clauses (b), (h), (i), (j), (l), (n), (o) or (p) of Section 16.1 or upon the occurrence, for reasons other that the acts or omissions of Tenant, of an Event of Default under clause (e) of Section 16.1 (each a “ Limited Remedy Events of Default ”), the aggregate amount Tenant shall be required to pay to Landlord from and after the date of the occurrence of such Limited Remedy Event of Default (the “ Occurrence Date ”) shall be limited to the sum of (i) the present value of the unpaid Base Rent for the balance of the Term (excluding the portion of such rental loss that Tenant proves could be reasonably avoided) (determined using a discount rate of Eight percent (8.0%) per annum), (ii) any Additional Charges which are due and payable or have accrued under this Master Lease through the Occurrence Date, and (iii) any amounts of Additional Charges which are due and payable or have accrued under this Master Lease after the Occurrence Date while the Tenant remains in possession of the Leased Property after any Limited Remedy Event of Default that relate to insurance, utilities, repairs, maintenance, environmental maintenance, remediation and compliance and other customary costs and expenses of operating and maintaining the Leased Property in substantial compliance with the terms of this Master Lease (collectively, the “ LRED Damages ”). Landlord and Tenant hereby agree that the damages available to Landlord as a result of a Limited Remedy Event of Default shall be strictly limited to the LRED Damages and that nothing contained herein or in any other transaction document executed concurrently herewith shall entitle Landlord to additional reimbursement or monetary damages with respect to any such Limited Remedy Event of Default.

16.5 Receiver . Upon the occurrence of an Event of Default, and upon commencement of proceedings to enforce the rights of Landlord hereunder, but subject to any limitations of applicable law including any applicable health care licensure laws, Landlord shall be entitled, as a matter of right, to the appointment of a receiver or receivers acceptable to Landlord of the Leased Property and any Tenant Capital Addition thereto and of the revenues, earnings, income, products and profits thereof, pending the outcome of such proceedings, with such powers as the court making such appointment shall confer.

16.6 Waiver . If Landlord initiates judicial proceedings or if this Master Lease is terminated by Landlord pursuant to this Article with respect to a Facility, Tenant waives, to the extent permitted by applicable law, (i) any right of redemption, re-entry or repossession; and (ii) the benefit of any laws now or hereafter in force exempting property from liability for rent or for debt.

16.7 Application of Funds . Any payments received by Landlord under any of the provisions of this Master Lease during the existence or continuance of any Event of Default which are made to Landlord rather than Tenant due to the existence of an Event of Default shall

be applied to Tenant’s obligations in the order which Landlord may reasonably determine or as may be prescribed by the laws of the State.

ARTICLE XVII

17.1 Landlord’s Right to Cure Tenant’s Default . If Tenant shall fail to make any payment or to perform any act required to be made or performed hereunder when due or within any cure period provided for herein, Landlord, without waiving or releasing any obligation or default, may, but shall be under no obligation to, make such payment or perform such act for the account and at the expense of Tenant, and may, to the extent permitted by law, enter upon the Leased Property and any Tenant Capital Addition thereto for such purpose and take all such action thereon as, in Landlord’s opinion, may be necessary or appropriate therefor. No such entry shall be deemed an eviction of Tenant. All sums so paid by Landlord and all costs and expenses, including reasonable attorneys’ fees and expenses, so incurred, together with interest thereon at the Overdue Rate from the date on which such sums or expenses are paid or incurred by Landlord, shall be paid by Tenant to Landlord on demand.

ARTICLE XVIII

18.1 Purchase of the Leased Property . If Tenant purchases the Leased Property of any Facility from Landlord pursuant to any provision of this Master Lease, Landlord shall, upon receipt from Tenant of the applicable purchase price, together with full payment of any unpaid Rent due and payable with respect to any period ending on or before the date of the purchase, deliver to Tenant an appropriate deed or other conveyance conveying the entire interest of Landlord in and to the Leased Property to Tenant free and clear of all encumbrances other than (i) those that Tenant has agreed hereunder to pay or discharge; (ii) those mortgage liens, if any, which Tenant has agreed in writing to accept and to take title subject to; (iii) those liens and encumbrances which were in effect on the date of conveyance of such Leased Property to Landlord; and (iv) any other encumbrances permitted hereunder to be imposed on such Leased Property which are assumable at no cost to Tenant or to which Tenant may take subject without cost to Tenant; provided, however, that in no event shall Tenant be obligated to assume or take subject to any encumbrance with a principal balance in excess of the applicable purchase price. The difference between the applicable purchase price and the total of the encumbrances assumed or taken subject to shall be paid to Landlord or as Landlord may direct in immediately available funds. All expenses of such conveyance, including the cost of title insurance, reasonable attorneys’ fees incurred by Landlord in connection with such conveyance and release, transfer taxes and recording and escrow fees, shall be paid by Tenant.

ARTICLE XIX

19.1 Holding Over . If Tenant shall for any reason remain in possession of the Leased Property of, and/or Tenant Capital Additions to, a Facility after the expiration or earlier termination of the Term without the consent, or other than at the request, of Landlord, such possession shall be as a month-to-month tenant during which time Tenant shall pay as Base Rent each month twice the monthly Base Rent applicable to the prior Lease Year for such Facility, together with all Additional Charges and all other sums payable by Tenant pursuant to this Master Lease. During such period of month-to-month tenancy, Tenant shall be obligated to

perform and observe all of the terms, covenants and conditions of this Master Lease, but shall have no rights hereunder other than the right, to the extent given by law to month-to-month tenancies, to continue its occupancy and use of the Leased Property of, and/or any Tenant Capital Additions to, such Facility. Nothing contained herein shall constitute the consent, express or implied, of Landlord to the holding over of Tenant after the expiration or earlier termination of this Master Lease. Tenant shall be deemed to be holding over with the consent, or at the request, of Landlord if Landlord has not identified a replacement tenant or purchaser of the Leased Property that is duly licensed to operate the Facilities as of the expiration or earlier termination of this Master Lease and Tenant, in the exercise of its sole and absolute discretion, has agreed to continue to operate the Facilities for a defined period of time.

ARTICLE XX

20.1 Risk of Loss . The risk of loss or of decrease in the enjoyment and beneficial use of the Leased Property as a consequence of the damage or destruction thereof by fire, the elements, casualties, thefts, riots, wars or otherwise, or in consequence of foreclosures, attachments, levies or executions (other than by Landlord and Persons claiming from, through or under Landlord) is assumed by Tenant, and except as otherwise provided herein no such event shall entitle Tenant to any abatement of Rent.

ARTICLE XXI

21.1 General Indemnification . In addition to the other indemnities contained herein, and notwithstanding the existence of any insurance carried by or for the benefit of Landlord or Tenant, and without regard to the policy limits of any such insurance, Tenant shall protect, indemnify, save harmless and defend Landlord from and against all liabilities, obligations, claims, damages penalties, causes of action, costs and expenses, including reasonable attorneys’, consultants’ and experts’ fees and expenses, imposed upon or incurred by or asserted against Landlord by reason of: (i) any accident, injury to or death of Persons or loss of or damage to property occurring on or about the Leased Property or adjoining sidewalks under the control of Tenant; (ii) any use, misuse, non-use, condition, maintenance or repair by Tenant of the Leased Property; (iii) any failure on the part of Tenant to perform or comply with any of the terms of this Master Lease; (iv) the non-performance of any of the terms and provisions of any and all existing and future subleases of the Leased Property to be performed by any party thereunder; (v) any claim for malpractice, negligence or misconduct committed by any Person on or working from the Leased Property; and (vi) the violation by Tenant of any Legal Requirement. Any amounts which become payable by Tenant under this Article shall be paid within ten (10) days after liability therefor is determined by a final non appealable judgment or settlement or other agreement of the parties, and if not timely paid shall bear interest at the Overdue Rate from the date of such determination to the date of payment. Tenant, at its sole cost and expense, shall contest, resist and defend any such claim, action or proceeding asserted or instituted against Landlord. For purposes of this Article XXI, any acts or omissions of Tenant, or by employees, agents, assignees, contractors, subcontractors or others acting for or on behalf of Tenant (whether or not they are negligent, intentional, willful or unlawful), shall be strictly attributable to Tenant.

ARTICLE XXII

22.1 Subletting and Assignment . Tenant shall not, without Landlord’s prior written consent, which, except as specifically set forth herein, may be withheld in Landlord’s sole and absolute discretion, voluntarily or by operation of law assign (which term includes any sale, encumbering, pledge or other transfer or hypothecation) this Master Lease, master sublet all or any part of the Leased Property of any Facility or engage the services of any Person for the management or operation of any Facility. Tenant acknowledges that Landlord is relying upon the expertise of Tenant in the operation of the Facilities and that Landlord entered into this Master Lease with the expectation that Tenant would remain in and operate such Facilities during the entire Term and for that reason Landlord retains sole and absolute discretion in approving or disapproving any assignment or master sublease. Any (a) Change in Control (as such term is defined in Guarantor’s Credit Agreement); or (b) transfer of Tenant’s stock, partnership or membership interests (or the stock, partnership or membership interests of any entity(ies) that controls Tenant, other than Guarantor) or any dissolution or merger or consolidation of Tenant (or its controlling entity(ies)) with any other entity, which results in any Person and such Person’s Affiliates (other than an Affiliate of Guarantor) collectively owning greater than twenty-five percent (25%) of the total outstanding shares of any class of Tenant’s stock, partnership or membership interests (or the stock of its controlling entity(ies), other than Guarantor), or the sale or other transfer of all or substantially all of the assets of Tenant (or its controlling entity(ies)) other than to an Affiliate of Guarantor, shall constitute an assignment of Tenant’s interest in this Master Lease within the meaning of this Article XXII and the provisions requiring consent contained herein shall apply. Any sublease of more than ten percent (10%) of any Facility to any Person or its Affiliates (other than an Affiliate of Guarantor), in one transaction or in a series of transactions, shall be deemed to be a master sublease hereunder. For any sublease transaction not requiring the consent of Landlord hereunder, Tenant shall, within ten (10) days of entering into any such sublease, notify Landlord of the existence of such sublease and the identity of the subtenant and supply Landlord with a copy of the sublease, any related documentation and any other materials or information reasonably requested by Landlord.

22.2 Notwithstanding the foregoing, but subject to the rights of any Facility Mortgagee, and subject to Section 40.1, Tenant may, (I) without Landlord’s prior written consent, assign this Master Lease or sublease the Leased Property to an Affiliate of Tenant or Guarantor if all of the following are first satisfied: (w) such Affiliate fully assumes Tenant’s obligations hereunder; (x) Tenant remains fully liable hereunder and Guarantor remains fully liable under the Guaranty; (y) the use of the Leased Property remains unchanged; and (z) Landlord in its reasonable discretion shall have approved the form and content of all documents for such assignment or sublease and received an executed counterpart thereof; and (II) with Landlord’s prior written consent, which consent shall not be unreasonably withheld, assign this Master Lease or sublease the Facilities to Discretionary Transferees if all of the following are satisfied: (a) such Discretionary Transferees fully assume Tenant’s obligations hereunder or, in the case of a sublease, Tenant’s obligations hereunder with respect to the subleased Facility or Facilities, (b) the use of the Leased Property under the terms of such assignment or sublease is permitted by Section 7.2 hereof, and (c) Landlord in its reasonable discretion shall have approved the form and content of all documents for such assignment and assumption or sublease and received an executed counterpart thereof.

22.3 Permitted Occupancy Agreements . Notwithstanding the provisions of Section 22.1, Tenant may enter into an occupancy agreement with residents of the Leased Property without the prior written consent of Landlord provided that (i) the agreement does not provide for life care services; (ii) the agreement does not contain any type of rate lock provision or rate guaranty for more than one calendar year; (iii) the agreement does not provide for any rent reduction or waiver other than for an introductory period not to exceed thirty (30) days; (iv) Tenant may not collect rent for more than one month in advance other than one month of rent collected as security for the performance of the resident’s obligations to Tenant, which amount is held in a separate escrow account for the benefit of such resident; and (v) all residents of the Leased Property are accurately shown in accounting records for the Facility.

22.4 Costs . Tenant shall reimburse Landlord for Landlord’s reasonable costs and expenses incurred in conjunction with the processing and documentation of any assignment, master subletting or management arrangement, including reasonable attorneys’, architects’, engineers’ or other consultants’ fees whether or not such master sublease, assignment or management agreement is actually consummated.

22.5 No Release of Tenant’s Obligations; Exception . No assignment, subletting or management agreement shall relieve Tenant of its obligation to pay the Rent and to perform all of the other obligations to be performed by Tenant hereunder. The liability of Tenant and any immediate and remote successor in interest of Tenant (by assignment or otherwise), and the due performance of the obligations of this Master Lease on Tenant’s part to be performed or observed, shall not in any way be discharged, released or impaired by any (i) agreement which modifies any of the rights or obligations of the parties under this Master Lease, (ii) stipulation which extends the time within which an obligation under this Master Lease is to be performed, (iii) waiver of the performance of an obligation required under this Master Lease, or (iv) failure to enforce any of the obligations set forth in this Master Lease, provided that Tenant shall not be responsible for any additional obligations or liability arising as the result of any modification or amendment of this Master Lease by Landlord and any assignee of Tenant that is not an Affiliate of Tenant.

ARTICLE XXIII

23.1 Officer’s Certificates and Financial Statements .

(a) Officer’s Certificate . Each of Landlord and Tenant shall, at any time and from time to time upon receipt of not less than ten (10) Business Days’ prior written request from the other party hereto, furnish an Officer’s Certificate certifying (i) that this Master Lease is unmodified and in full force and effect, or that this Master Lease is in full force and effect as modified and setting forth the modifications; (ii) the dates to which the Rent has been paid; (iii) whether or not, to its actual knowledge, the other party hereto is in default in the performance of any covenant, agreement or condition contained in this Master Lease and, if so, specifying each such default of which such party may have knowledge; and (iv) responses to such other questions or statements of fact as such other party, any ground or underlying landlord, any purchaser or any current or prospective Facility Mortgagee shall reasonably request. Tenant’s failure to deliver such statement within such time shall constitute an acknowledgement by Tenant that (x) this Master Lease is unmodified and in full force and effect except as may be

represented to the contrary by Landlord; (y) Landlord is not in default in the performance of any covenant, agreement or condition contained in this Master Lease; and (z) the other matters set forth in such request, if any, are true and correct. Any such certificate furnished pursuant to this Article may be relied upon by the receiving party and any current or prospective Facility Mortgagee, ground or underlying landlord or purchaser of the Leased Property.

(b) Statements . Tenant shall furnish the following statements to Landlord:

(i) Within ninety-five (95) days after the end of Tenants’ Fiscal Years or concurrently with the filing by Guarantor of its annual report on Form 10K with the SEC, whichever is later: (i) Guarantor’s Financial Statements; (ii) Financials for each of the Facilities for the fiscal year last completed in each case certified by an Officer of Tenant; and (iii) a report with respect to Guarantor’s Financial Statements from Guarantor’s accountants, which report shall be unqualified as to going concern and scope of audit of Guarantor and its subsidiaries and shall provide in substance that (a) such consolidated financial statements present fairly the consolidated financial position of Guarantor and its subsidiaries as at the dates indicated and the results of their operations and cash flow for the periods indicated in conformity with GAAP and (b) that the examination by Guarantor’s accountants in connection with such Financial Statements has been made in accordance with generally accepted auditing standards;

(ii) Within fifty (50) days after the end of each of Tenant’s Fiscal Year quarters or concurrently with the filing by Guarantor of its quarterly report on Form 10Q with the SEC, whichever is later, a copy of Guarantor’s Financials for such period;

(iii) Upon Landlord’s request from time to time, such additional information and unaudited quarterly financial information concerning the Leased Property and Tenant as Landlord may require for its on-going filings with the SEC under both the Securities Act and the Securities Exchange Act of 1934, as amended, including, but not limited to, 10-Q Quarterly Reports, 10-K Annual Reports and registration statements to be filed by Landlord during the Term of this Master Lease, subject to the conditions that neither Tenant nor Guarantor shall be required to disclose information that is material non-public information or is subject to the quality assurance immunity or is subject to attorney-client privilege or the attorney work product doctrine; provided , however , in the event that Guarantor is no longer a registrant under the Securities Exchange Act of 1934, as amended, Tenant and/or Guarantor shall continue to provide to Landlord the same information that Guarantor would have included in filings on Form 10-Q and Form 10-K if it were such a registrant;

(iv) Within forty (40) days after the end of each month, a financial report for each of the Facilities for such month, including detailed statements of income and expense and detailed operational statistics regarding occupancy rates, patient mix and patient rates by type for each Facility; provided , however , that with respect to each calendar quarter, Tenant shall provide such financial reports for the final month thereof as soon as is reasonably practicable following the closing of the books for such

month and in sufficient time so that Landlord or its Affiliate is able to include the operational results for the entire quarter in its current Form 10-Q or Form 10-K (or supplemental report filed in connection therewith);

(v) Within fifteen (15) Business Days after Tenant’s receipt of a written request from Landlord, copies of the most recent surveys performed by the appropriate governmental agencies for licensing or certification purposes, and any plan of correction submitted by Tenant to such agencies along with evidence as to whether it has yet been approved, or is still under review, by the State;

(vi) Prompt Notice to Landlord of any action, proposal or investigation by any agency or entity, or complaint to such agency or entity, (any of which is called a “ Proceeding ”), known to Tenant, the result of which Proceeding would reasonably be expected to be to (a) revoke or suspend or terminate or modify in a way adverse to Tenant, or fail to renew or fully continue in effect, any license or certificate or operating authority pursuant to which Tenant carries on any part of the Primary Intended Use of all or any portion of the Leased Property, or (b) suspend, terminate, adversely modify, or fail to renew or fully continue in effect any cost reimbursement or cost sharing program by any state or federal governmental agency, including but not limited to Medicaid/Medi-Cal or Medicare or any successor or substitute therefor, if the effect thereof is or reasonably would reasonably be anticipated to be materially adverse to Tenant or the Leased Property, or (iii) seek return of or reimbursement for any funds previously advanced or paid pursuant to any such program, if the effect thereof is or reasonably would be anticipated to be materially adverse to Tenant or the Leased Property, or (iv) impose any bed hold, limitation on patient admission or similar restriction on the Leased Property for a period in excess of thirty (30) days, or (iv) prosecute any party with respect to the operation of any activity on the Leased Property or enjoin any party or seek any civil penalty in excess of Two Hundred Fifty Thousand Dollars ($250,000) in respect thereof;

(vii) As soon as it is prepared in a Lease Year, a capital and operating budget for each Facility for that and the following Lease Year; and

(viii) Within fifteen (15) Business Days after Tenant’s receipt of a written request from Landlord, copies of Medicaid/Medi-Cal rate letters.

Tenant further agrees to provide the financial and operational reports to be delivered to Landlord under this Master Lease in such electronic format(s) as may reasonably be required by Landlord from time to time in order to facilitate the integration of such information within Landlord’s internal financial and reporting database.

23.2 Public Offering Information . Tenant specifically agrees that Landlord may include financial information and such information concerning the operation of the Facilities (1) which is publicly available or (2) the inclusion of which is approved by Guarantor in writing, which approval may be withheld in Guarantor’s sole discretion, and which, in any case does not violate any provision of law including the Health Insurance Portability and Accountability Act, the confidentiality of the facility-patient relationship or the physician-patient

privilege under applicable laws, in offering memoranda or prospectuses, or similar publications in connection with syndications, private placements or public offerings of Sabra’s securities, and any other reporting requirements under applicable federal and State laws, including those of any successor to Landlord. Unless otherwise agreed by Tenant or Guarantor, neither Landlord nor Sabra shall revise or change the wording of information previously publicly disclosed by Tenant or Guarantor and furnished to Landlord or Sabra pursuant to Section 23.1 or this Section 23.2 and Landlord’s Form 10-Q or Form 10-K (or supplemental report filed in connection therewith) shall not disclose the operational results of the Facilities prior to Tenant’s or its Affiliate’s public disclosure thereof so long as Tenant or such Affiliate reports such information in a timely manner consistent with historical practices and SEC disclosure requirements. Tenant agrees to provide such other reasonable information necessary with respect to Tenant and its Leased Property to facilitate a public offering or to satisfy SEC disclosure requirements. Landlord shall provide to Tenant a copy of any information prepared by Landlord to be published, and Tenant shall have a reasonable period of time (not to exceed three (3) Business Days) after receipt of such information to notify Landlord of any corrections.

23.3 Landlord Obligations . Landlord acknowledges and agrees that certain of the information contained in the Financial Statements and/or in the Financials may be non-public financial or operational information with respect to Guarantor, the Tenants and/or the Leased Property. Landlord further agrees (i) to maintain the confidentiality of such non-public information; provided, however, Landlord shall have the right to share such information with its officers, employees, directors, Facility Mortgagee, accountants, attorneys and other consultants (the “Representatives”) provided that such Representative is advised of the confidential nature of such information and agrees to maintain the confidentiality thereof and (ii) that neither it nor any Representative shall engage in any transactions with respect to the stock or other equity or debt securities of Guarantor based on any such non-public information. In addition to the foregoing, Landlord agrees that, upon request of Tenant, it shall from time to time provide such information as may be reasonably requested by Tenant with respect to Landlord’s capital structure and/or any financing secured by this Master Lease or the Leased Property in connection with Tenant’s review of the treatment of this Master Lease under GAAP. In connection therewith, Tenant agrees to maintain the confidentiality of any such non-public information; provided, however, Tenant shall have the right to share such information with its Representatives so long as such Representative is advised of the confidential nature of such information and agrees to maintain the confidentiality thereof.

ARTICLE XXIV

24.1 Landlord’s Right to Inspect . Upon reasonable advance notice to Tenant, Tenant shall permit Landlord and its authorized representatives to inspect its Leased Property during usual business hours. Landlord shall take care to minimize any disturbance of or inconvenience to any residents of any Leased Property, except in the case of emergency, and to conduct such inspections in compliance with applicable laws governing the confidentiality of patient information, including the Health Insurance Portability and Accountability Act.

ARTICLE XXV

25.1 No Waiver . No failure by Landlord to insist upon the strict performance of any term hereof or to exercise any right, power or remedy hereunder and no acceptance of full or partial payment of Rent during the continuance of any default or Event of Default shall constitute a waiver of any such breach or of any such term. No waiver of any breach shall affect or alter this Master Lease, which shall continue in full force and effect with respect to any other then existing or subsequent breach.

ARTICLE XXVI

26.1 Remedies Cumulative . To the extent permitted by law, each legal, equitable or contractual right, power and remedy of Landlord now or hereafter provided either in this Master Lease or by statute or otherwise shall be cumulative and concurrent and shall be in addition to every other right, power and remedy and the exercise or beginning of the exercise by Landlord of any one or more of such rights, powers and remedies shall not preclude the simultaneous or subsequent exercise by Landlord of any or all of such other rights, powers and remedies.

ARTICLE XXVII

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

ARTICLE XXVIII

28.1 No Merger . There shall be no merger of this Master Lease or of the leasehold estate created hereby by reason of the fact that the same Person may acquire, own or hold, directly or indirectly, (i) this Master Lease or the leasehold estate created hereby or any interest in this Master Lease or such leasehold estate and (ii) the fee estate in the Leased Property.

ARTICLE XXIX

29.1 Conveyance by Landlord . If Landlord or any successor owner of the Leased Property shall convey the Leased Property other than as security for a debt, Landlord or such successor owner, as the case may be, shall thereupon be released from all future liabilities and obligations of the Landlord under this Master Lease arising or accruing from and after the date of such conveyance or other transfer and all such future liabilities and obligations shall thereupon be binding upon the new owner.

ARTICLE XXX

30.1 Quiet Enjoyment . So long as Tenant shall pay the Rent as the same becomes due and shall fully comply with all of the terms of this Master Lease and fully perform

its obligations hereunder, Tenant shall peaceably and quietly have, hold and enjoy the Leased Property for the Term, free of any claim or other action by Landlord or anyone claiming by, through or under Landlord, but subject to all liens and encumbrances of record as of the Commencement Date or thereafter provided for in this Master Lease or consented to by Tenant. No failure by Landlord to comply with the foregoing covenant shall give Tenant any right to cancel or terminate this Master Lease or abate, reduce or make a deduction from or offset against the Rent or any other sum payable under this Master Lease, or to fail to perform any other obligation of Tenant hereunder. Notwithstanding the foregoing, Tenant shall have the right, by separate and independent action to pursue any claim it may have against Landlord as a result of a breach by Landlord of the covenant of quiet enjoyment contained in this Article.

ARTICLE XXXI

31.1 Landlord’s Financing . Without the consent of Tenant, Landlord may from time to time, directly or indirectly, create or otherwise cause to exist any Facility Mortgage upon the Leased Property or any portion thereof or interest therein; provided, however, if Tenant has not consented to any such Facility Mortgage entered into by Landlord after the Commencement Date, Tenant’s obligations with respect thereto shall be subject to the limitations set forth in Section 31.3. This Master Lease is and at all times shall be subject and subordinate to any such Facility Mortgage which may now or hereafter affect the Leased Property or any portion thereof or interest therein and to all renewals, modifications, consolidations, replacements, restatements and extensions thereof or any parts or portions thereof; provided , however , that the subjection and subordination of this Master Lease and Tenant’s leasehold interest hereunder to any Facility Mortgage shall be conditioned upon the execution by the holder of each Facility Mortgage and delivery to Tenant of a nondisturbance and attornment agreement which provides that so long as there is not then outstanding an Event of Default under this Master Lease, the holder of such Facility Mortgage shall not disturb either Tenant’s leasehold interest or possession of the Leased Property in accordance with the terms hereof, or any of its rights, privileges and options. In connection with the foregoing and at the request of Landlord, Tenant shall promptly execute a subordination, nondisturbance and attornment agreement, in form and substance reasonably satisfactory to Tenant, which will incorporate the terms set forth in the preceding sentence. Except for the documents described in the preceding sentences, this provision shall be self-operative and no further instrument of subordination shall be required to give it full force and effect. If, in connection with obtaining any Facility Mortgage for the Leased Property or any portion thereof or interest therein, a Facility Mortgagee or prospective Facility Mortgagee shall request ( A ) cooperation from Tenant, Tenant shall provide the same at no cost or expense to Tenant, it being understood and agreed that Landlord shall be required to reimburse Tenant for all such costs and expenses so incurred by Tenant, including, but not limited to, its reasonable attorneys fees, or ( B ) reasonable amendments or modifications to this Master Lease as a condition thereto, Tenant hereby agrees to execute and deliver the same so long as any such amendments or modifications do not (i) increase Tenant’s monetary obligations under this Master Lease, (ii) materially and adversely increase Tenant’s non-monetary obligations under this Master Lease or (iii) materially diminish Tenant’s rights under this Master Lease.

31.2 Attornment . If Landlord’s interest in the Leased Property or any portion thereof or interest therein is sold, conveyed or terminated upon the exercise of any remedy

provided for in any Facility Mortgage Documents (or in lieu of such exercise), or otherwise by operation of law: (a) at the request and option of the new owner or superior lessor, as the case may be, Tenant shall attorn to and recognize the new owner or superior lessor as Tenant’s “landlord” under this Master Lease or enter into a new lease substantially in the form of this Master Lease with the new owner or superior lessor, and Tenant shall take such actions to confirm the foregoing within ten (10) days after request; and (b) the new owner or superior lessor shall not be (i) liable for any act or omission of Landlord under this Master Lease occurring prior to such sale, conveyance or termination; (ii) subject to any offset, abatement or reduction of rent because of any default of Landlord under this Master Lease occurring prior to such sale, conveyance or termination; (iii) bound by any previous modification or amendment to this Master Lease or any previous prepayment of more than one month’s rent, unless such modification, amendment or prepayment shall have been approved in writing by such Facility Mortgagee or, in the case of such prepayment, such prepayment of rent has actually been delivered to such new owner or superior lessor; or (iv) liable for any security deposit or other collateral deposited or delivered to Landlord pursuant to this Master Lease unless such security deposit or other collateral has actually been delivered to such new owner or superior lessor.

31.3 Compliance with Facility Mortgage Documents .

(a) Tenant acknowledges that any Facility Mortgage Documents executed by Landlord or any Affiliate of Landlord may impose certain obligations on the “borrower” or other counterparty thereunder to comply with or cause the operator and/or lessee of a Facility to comply with all representations, covenants and warranties contained therein relating to such Facility and the operator and/or lessee of such Facility, including, covenants relating to (i) the maintenance and repair of such Facility; (ii) maintenance and submission of financial records and accounts of the operation of such Facility and related financial and other information regarding the operator and/or lessee of such Facility and such Facility itself; (iii) the procurement of insurance policies with respect to such Facility; and (iv) without limiting the foregoing, compliance with all applicable Legal Requirements relating to such Facility and the operation of the Business thereof. For so long as any Facility Mortgages encumber the Leased Property or any portion thereof or interest therein, Tenant covenants and agrees, at its sole cost and expense and for the express benefit of Landlord, to operate the applicable Facility(ies) in strict compliance with the terms and conditions of the Facility Mortgage Documents (other than payment of any indebtedness evidenced or secured thereby) and to timely perform all of the obligations of Landlord relating thereto, or to the extent that any of such duties and obligations may not properly be performed by Tenant, Tenant shall cooperate with and assist Landlord in the performance thereof (other than payment of any indebtedness evidenced or secured thereby); provided, however, this Section 31.3(a) shall not be deemed to (A) impose on Tenant obligations which (i) increase Tenant’s monetary obligations under this Master Lease, (ii) materially and adversely increase Tenant’s non-monetary obligations under this Master Lease or (B) materially diminish Tenant’s rights under this Master Lease. For purposes of the foregoing, any proposed implementation of new occupancy or financial covenants or requirements with respect to payor mix shall be deemed to materially diminish Tenant’s rights under this Master Lease. Tenant hereby acknowledges and agrees, however, that an obligation under the applicable Facility Mortgage Documents to post impounds for property taxes with respect to any period not more than one (1) month in advance (whether now existing or later created) shall not be deemed or construed to increase Tenant’s monetary obligations under this Master Lease. If any new

Facility Mortgage Documents to be executed by Landlord or any Affiliate of Landlord would impose on Tenant any obligations under this Section 31.3(a), Landlord shall provide copies of the same to Tenant for informational purposes (but not for Tenant’s approval) prior to the execution and delivery thereof by Landlord or any Affiliate of Landlord.

(b) Without limiting or expanding Tenant’s obligations pursuant to Section 31.3(a), during the Term of this Master Lease, Tenant acknowledges and agrees that, except as expressly provided elsewhere in this Master Lease, it shall undertake at its own cost and expense the performance of any and all repairs, replacements, capital improvements, maintenance items and all other requirements relating to the condition of a Facility that are required by any Facility Mortgage Documents or by Facility Mortgagee, and Tenant shall be solely responsible and hereby covenants to fund and maintain any and all impound, escrow or other reserve or similar accounts required under any Facility Mortgage Documents as security for or otherwise relating to any operating expenses of a Facility, including any capital repair or replacement reserves and/or impounds or escrow accounts for Taxes or insurance premiums (each a “ Facility Mortgage Reserve Account ”); provided, however, this Section 31.3(b) shall not (i) increase Tenant’s monetary obligations under this Master Lease, (ii) materially and adversely increase Tenant’s non-monetary obligations under this Master Lease or (iii) materially diminish Tenant’s rights under this Master Lease, except to the extent that, with respect to any Facility, such obligations were provided for in a Facility Mortgage, or otherwise required by the Facility Mortgagee, secured by such Facility on the Commencement Date; and provided, further, that any amounts which Tenant is required to fund into a Facility Mortgage Reserve Account with respect to satisfy any repair or replacement reserve requirements imposed by a Facility Mortgagee shall be credited on a dollar for dollar basis against the mandatory expenditure obligations of Tenant for such applicable Facility(ies) under Section 9.1(e). During the Term of this Master Lease and provided that no Event of Default shall have occurred and be continuing hereunder, Tenant shall, subject to the terms and conditions of such Facility Mortgage Reserve Account and the requirements of the Facility Mortgagee(s) thereunder, have access to and the right to apply or use (including for reimbursement) to the same extent of Landlord all monies held in each such Facility Mortgage Reserve Account for the purposes and subject to the limitations for which such Facility Mortgage Reserve Account is maintained, and Landlord agrees to reasonably cooperate with Tenant in connection therewith. Landlord hereby acknowledges that funds deposited by Tenant in any Facility Mortgage Reserve Account are the property of Tenant and Landlord is obligated to return the portion of such funds not previously released to Tenant within fifteen (15) days following the earlier of (x) the expiration or earlier termination of this Master Lease with respect to such applicable Facility, (y) the maturity or earlier prepayment of the applicable Facility Mortgage, or (z) an involuntary prepayment or deemed prepayment arising out of the acceleration of the amounts due to a Facility Mortgagee as a result of the exercise of its remedies under the applicable Facility Mortgage; provided , however , that the foregoing shall not be deemed or construed to limit or prohibit Landlord’s right to bring any damage claim against Tenant for any breach of its obligations under this Master Lease that may have resulted in the loss of any impound funds held by a Facility Mortgagee.

ARTICLE XXXII

32.1 Hazardous Substances . Tenant shall not allow any Hazardous Substance to be located in, on, under or about the Leased Property or incorporated in any Facility; provided,

however, that Hazardous Substances may be brought, kept, used or disposed of in, on or about the Leased Property in quantities and for purposes similar to those brought, kept, used or disposed of in, on or about similar facilities used for purposes similar to the Primary Intended Use or in connection with the construction of facilities similar to the applicable Facility and which are brought, kept, used and disposed of in strict compliance with Legal Requirements. Tenant shall not allow the Leased Property to be used as a waste disposal site or for the manufacturing, handling, storage, distribution or disposal of any Hazardous Substance other than in the ordinary course of the business conducted at the Leased Property and in compliance with applicable Legal Requirements.

32.2 Notices . Tenant shall provide to Landlord, within five (5) Business Days after Tenant’s receipt thereof, a copy of any notice, or notification with respect to, (i) any violation of a Legal Requirement relating to Hazardous Substances located in, on, or under the Leased Property or any adjacent property; (ii) any enforcement, cleanup, removal, or other governmental or regulatory action instituted, completed or threatened with respect to the Leased Property; (iii) any claim made or threatened by any Person against Tenant or the Leased Property relating to damage, contribution, cost recovery, compensation, loss, or injury resulting from or claimed to result from any Hazardous Substance; and (iv) any reports made to any federal, state or local environmental agency arising out of or in connection with any Hazardous Substance in, on, under or removed from the Leased Property, including any complaints, notices, warnings or asserted violations in connection therewith.

32.3 Remediation . If Tenant becomes aware of a violation of any Legal Requirement relating to any Hazardous Substance in, on, under or about the Leased Property or any adjacent property, or if Tenant, Landlord or the Leased Property becomes subject to any order of any federal, state or local agency to repair, close, detoxify, decontaminate or otherwise remediate the Leased Property, Tenant shall immediately notify Landlord of such event and, at its sole cost and expense, cure such violation or effect such repair, closure, detoxification, decontamination or other remediation. If Tenant fails to implement and diligently pursue any such cure, repair, closure, detoxification, decontamination or other remediation, Landlord shall have the right, but not the obligation, to carry out such action and to recover from Tenant all of Landlord’s costs and expenses incurred in connection therewith.

32.4 Indemnity . Tenant shall indemnify, defend, protect, save, hold harmless, and reimburse Landlord for, from and against any and all costs, losses (including, losses of use or economic benefit or diminution in value), liabilities, damages, assessments, lawsuits, deficiencies, demands, claims and expenses (collectively, “ Environmental Costs ”) (whether or not arising out of third-party claims and regardless of whether liability without fault is imposed, or sought to be imposed, on Landlord) incurred in connection with, arising out of, resulting from or incident to, directly or indirectly, before or during (but not after) the Term or such portion thereof during which the Leased Property is leased to Tenant (i) the production, use, generation, storage, treatment, transporting, disposal, discharge, release or other handling or disposition of any Hazardous Substances from, in, on or about the Leased Property (collectively, “ Handling ”), including the effects of such Handling of any Hazardous Substances on any Person or property within or outside the boundaries of the Leased Property, (ii) the presence of any Hazardous Substances in, on, under or about the Leased Property and (iii) the violation of any Environmental Law. “Environmental Costs” include interest, costs of response, removal,

remedial action, containment, cleanup, investigation, design, engineering and construction, damages (including actual and consequential damages) for personal injuries and for injury to, destruction of or loss of property or natural resources, relocation or replacement costs, penalties, fines, charges or expenses, attorney’s fees, expert fees, consultation fees, and court costs, and all amounts paid in investigating, defending or settling any of the foregoing.

Without limiting the scope or generality of the foregoing, Tenant expressly agrees that, in the event of a breach by Tenant in its obligations under this Section 32.4 which is not cured within any applicable cure period. Tenant shall reimburse Landlord for any and all reasonable costs and expenses incurred by Landlord in connection with, arising out of, resulting from or incident to, directly or indirectly, before (with respect to any period of time in which Tenant or its Affiliate was in possession and control of the applicable Leased Property) or during (but not after) the Term or such portion thereof during which the Leased Property is leased to Tenant of the following:

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

(b) In bringing the Leased Property into compliance with all Legal Requirements; and

(c) Removing, treating, storing, transporting, cleaning-up and/or disposing of any Hazardous Substances used, stored, generated, released or disposed of in, on, from, under or about the Leased Property or off-site other than in the ordinary course of the business conducted at the Leased Property and in compliance with applicable Legal Requirements.

If any claim is made by Landlord for reimbursement for Environmental Costs incurred by it hereunder, Tenant agrees to pay such claim promptly, and in any event to pay such claim within thirty (30) calendar days after receipt by Tenant of written notice thereof and any amount not so paid within such thirty calendar day period shall bear interest at the Overdue Rate from the date due to the date paid in full.

32.5 Environmental Inspections . In the event Landlord has a reasonable basis to believe that Tenant is in breach of its obligations under the Article XXXIV, Landlord shall have the right, from time to time, during normal business hours and upon not less than five (5) days written notice to Tenant, except in the case of an emergency in which event no notice shall be required, to conduct an inspection of the Leased Property to determine the existence or presence of Hazardous Substances on or about the Leased Property. Landlord shall have the right to enter and inspect the Leased Property, conduct any testing, sampling and analyses it deems necessary and shall have the right to inspect materials brought into the Leased Property. Landlord may, in its discretion, retain such experts to conduct the inspection, perform the tests referred to herein, and to prepare a written report in connection therewith. All reasonable costs and expenses incurred by Landlord under this Section shall be paid on demand as Additional Charges by Tenant to Landlord. Failure to conduct an environmental inspection or to detect unfavorable conditions if such inspection is conducted shall in no fashion be intended as a release of any liability for environmental conditions subsequently determined to be associated

with or to have occurred during Tenant’s tenancy. Tenant shall remain liable for any environmental condition related to or having occurred during its tenancy regardless of when such conditions are discovered and regardless of whether or not Landlord conducts an environmental inspection at the termination of this Master Lease. The obligations set forth in this Article shall survive the expiration or earlier termination of this Master Lease.

ARTICLE XXXIII

33.1 Memorandum of Lease . Landlord and Tenant shall, promptly upon the request of either, enter into one or more short form memoranda of this Master Lease, in form suitable for recording under the laws of the State. Tenant shall pay all costs and expenses of recording any such memorandum and shall fully cooperate with Landlord in removing from record any such memorandum upon the expiration or earlier termination of the Term with respect to the applicable Facility.

ARTICLE XXXIV

34.1 Fair Market Value/Rental . If it becomes necessary to determine the Fair Market Value or Fair Market Rental of the Leased Property for any purpose of this Master Lease, Landlord and Tenant shall first attempt to agree on such Fair Market Value or Fair Market Rental, as the case may be. If Landlord and Tenant are not able to so agree within a reasonable period of time not to exceed thirty (30) days, then Landlord and Tenant shall attempt to agree upon a single appraiser to make such determination. If Landlord and Tenant are unable to agree upon a single appraiser within twenty (20) days thereafter, then each party shall have a period of ten (10) days in which to provide the other with the name of a person selected to act as appraiser on its behalf. The appraisers thus appointed, each of whom must be a member of the American Institute of Real Estate Appraisers (or any successor organization thereto) and experienced in appraising long term care/senior housing properties providing services similar to the portion of the Leased Property being appraised, shall, within forty-five (45) days after the date of the Notice appointing the first appraiser, proceed to appraise the Leased Property to determine the Fair Market Value or Fair Market Rental, as the case may be, thereof as of the relevant date (giving effect to the impact, if any, of inflation from the date of their decision to the relevant date); provided, however, that if only one appraiser has been so appointed, or if two appraisers have been so appointed but only one such appraiser has made such determination within fifty (50) days after the making of Tenant’s or Landlord’s request, then the determination of such appraiser shall be final and binding upon the parties. If two appraisers have been appointed and have made their determinations within the respective requisite periods set forth above and if the difference between the amounts so determined does not exceed ten percent (10%) of the lesser of such amounts, then the Fair Market Value or Fair Market Rental, as the case may be, shall be an amount equal to fifty percent (50%) of the sum of the amounts so determined. If the difference between the amounts so determined exceeds ten percent (10%) of the lesser of such amounts, then such two appraisers shall have twenty (20) days to appoint a third appraiser. If no such appraiser has been appointed within such twenty (20) days or within ninety (90) days of the original request for a determination of Fair Market Value or Fair Market Rental, as the case may be, whichever is earlier, either Landlord or Tenant may apply to any court having jurisdiction to have such appointment made by such court. Any appraiser appointed by the original appraisers or by such court shall be instructed to determine the Fair Market Value or Fair Market Rental, as

the case may be, within forty-five (45) days after appointment of such appraiser. The determination of the appraiser which differs most in terms of dollar amount from the determinations of the other two appraisers shall be excluded, and the average of the sum of the remaining two determinations shall be final and binding upon Landlord and Tenant as the Fair Market Value or Fair Market Rental of the Leased Property, as the case may be.

This provision for determining by appraisal shall be specifically enforceable to the extent such remedy is available under applicable law, and any determination hereunder shall be final and binding upon the parties except as otherwise provided by applicable law. Landlord and Tenant shall each pay the fees and expenses of the appraiser appointed by it and each shall pay one-half ( ¹ / 2 ) of the fees and expenses of the third appraiser.

ARTICLE XXXV

35.1 Notices . Any notice, request or other communication to be given by any party hereunder shall be in writing and shall be sent by registered or certified mail, postage prepaid and return receipt requested, by hand delivery or express courier service, by facsimile transmission or by an overnight express service to the following address:


To Tenant :		c/o Sun Healthcare Group, Inc.
		101 Sun Avenue, NE
		Albuquerque, NM 87109
		Attention: Director of Real Estate
		Fax Number: 505-468-4998
		Attention: General Counsel
		Fax Number: 505-468-8752

With a copy to:		Sun Healthcare Group, Inc.
(that shall not		18831 Von Karman, Suite 400
constitute notice)		Irvine, CA 92612
		Attention: General Counsel
		Fax Number: 949-255-7057

And with a copy to:		The Nathanson Group PLLC
(that shall not		One Union Square
constitute notice)		600 University Street, Suite 2000
		Seattle, WA 98101-1195
		Attention: Randi S. Nathanson, Esq.
		Fax Number: 206-299-9335

To Landlord :		c/o Sabra Health Care REIT, Inc.
		18500 Von Karman Avenue, Suite 550
		Irvine, CA 92612
		Attention: Chief Executive Officer
		Fax Number: - -


And with copy to		Sherry Meyerhoff Hanson & Crance LLP
(which shall not		610 Newport Center Drive, Suite 1200
constitute notice):		Newport Beach, CA 92660-6445
		Attention: Kevin L. Sherry, Esq.
		Fax Number: 949-719-1212

Or to such other address as either party may hereafter designate. Notice shall be deemed to have been given on the date of delivery if such delivery is made on a Business Day, or if not, on the first Business Day after delivery. If delivery is refused, Notice shall be deemed to have been given on the date delivery was first attempted. Notice sent by facsimile transmission shall be deemed given upon confirmation that such Notice was received at the number specified above or in a Notice to the sender.

ARTICLE XXXVI

36.1 Transfer of Operational Control of the Facilities . Upon the expiration or earlier termination of the Term Tenant shall enter into one or more Operations Transfer Agreement (each an “ OTA ”) in the form of Exhibit E hereto with respect to the Leased Property and shall transfer operational control of the Facilities to Landlord or Landlord’s nominee pursuant to the terms of such OTAs.

36.2 Landlord’s Option to Purchase Tenant’s Personal Property .

(a) Effective on not less than sixty (60) days prior written notice, or such shorter notice as shall be appropriate if this Master Lease is terminated prior to its expiration date, Landlord shall have the option to purchase some or all of Tenant’s Personal Property, at the expiration or termination of this Master Lease, for an amount equal to the then fair market value thereof, subject to, and with appropriate price adjustments for, all equipment leases, conditional sale contracts, UCC-1 financing statements and other encumbrances to which such personal property is subject.

(b) Any amounts due from Landlord to Tenant under this Section 36.2 shall be paid by wire transfer of immediately available funds to an account or accounts designated by written Notice from Tenant to Landlord.

ARTICLE XXXVII

37.1 Attorneys’ Fees . If Landlord or Tenant brings an action or other proceeding against the other to enforce or interpret any of the terms, covenants or conditions hereof or any instrument executed pursuant to this Master Lease, or by reason of any breach or default hereunder or thereunder, the party prevailing in any such action or proceeding and any appeal thereupon shall be paid all of its costs and reasonable outside attorneys’ fees incurred therein. In addition to the foregoing and other provisions of this Master Lease that specifically require Tenant to reimburse, pay or indemnify against Landlord’s attorneys’ fees, Tenant shall pay, as Additional Charges, all of Landlord’s reasonable outside attorneys’ fees incurred in connection with the administration or enforcement of this Master Lease, including reasonable attorneys’ fees incurred in connection with the renewal of this Master Lease for any Renewal

Term, the review, negotiation or documentation of any subletting, assignment, or management arrangement or any consent requested in connection therewith, and the collection of past due Rent.

ARTICLE XXXVIII

38.1 Brokers . Tenant warrants that it has not had any contact or dealings with any Person (other than its financial advisor, MTS Partners) or real estate broker which would give rise to the payment of any fee or brokerage commission in connection with this Master Lease, and Tenant shall indemnify, protect, hold harmless and defend Landlord from and against any liability with respect to any fee or brokerage commission arising out of any act or omission of Tenant. Landlord warrants that it has not had any contact or dealings with any Person or real estate broker which would give rise to the payment of any fee or brokerage commission in connection with this Master Lease, and Landlord shall indemnify, protect, hold harmless and defend Tenant from and against any liability with respect to any fee or brokerage commission arising out of any act or omission of Landlord.

ARTICLE XXXIX

39.1 Anti-Terrorism Representations . Tenant hereby represents and warrants that neither Tenant, nor, to the knowledge of Tenant, any persons or entities holding any legal or beneficial interest whatsoever in Tenant, are (i) the target of any sanctions program that is established by Executive Order of the President or published by the Office of Foreign Assets Control, U.S. Department of the Treasury (“ OFAC ”); (ii) designated by the President or OFAC pursuant to the Trading with the Enemy Act, 50 U.S.C. App. § 5, the International Emergency Economic Powers Act, 50 U.S.C. §§ 1701-06, the Patriot Act, Public Law 107-56, Executive Order 13224 (September 23, 2001) or any Executive Order of the President issued pursuant to such statutes; or ( iii ) named on the following list that is published by OFAC: “List of Specially Designated Nationals and Blocked Persons” (collectively, “ Prohibited Persons ”). Tenant hereby represents and warrants to Landlord that no funds tendered to Landlord by Tenant under the terms of this Master Lease are or will be directly or indirectly derived from activities that may contravene U.S. federal, state or international laws and regulations, including anti-money laundering laws. If the foregoing representations are untrue at any time during the Term and Landlord suffers actual damages as a result thereof, an Event of Default will be deemed to have occurred, without the necessity of notice to Tenant.

Tenant will not during the Term of this Master Lease knowingly engage in any transactions or dealings, or knowingly be otherwise associated with, any Prohibited Persons in connection with the use or occupancy of the Leased Property. A breach of the representations contained in this Section 39.1 by Tenant as a result of which Landlord suffers actual damages shall constitute a material breach of this Master Lease and shall entitle Landlord to any and all remedies available hereunder, or at law or in equity.

ARTICLE XL

40.1 REIT Protection .

(a) The parties hereto intend that Rent and other amounts paid by Tenant hereunder will qualify as “rents from real property” within the meaning of Section 856(d) of the Code, or any similar or successor provision thereto and this Agreement shall be interpreted consistent with this intent.

(b) Anything contained in this Master Lease to the contrary notwithstanding, Tenant shall not (i) sublet, assign or enter into a management arrangement for the Leased Property on any basis such that the rental or other amounts to be paid by the subtenant, assignee or manager thereunder would be based, in whole or in part, on either (x) the income or profits derived by the business activities of the subtenant, assignee or manager or (y) any other formula such that any portion of any amount received by Landlord would fail to qualify as “rents from real property” within the meaning of Section 856(d) of the Code, or any similar or successor provision thereto; (ii) furnish or render any services to the subtenant, assignee or manager or manage or operate the Leased Property so subleased, assigned or managed; (iii) sublet, assign or enter into a management arrangement for the Leased Property to any Person (other than a taxable REIT subsidiary of Landlord) in which Tenant or Landlord owns an interest, directly or indirectly (by applying constructive ownership rules set forth in Section 856(d)(5) of the Code); or (iv) sublet, assign or enter into a management arrangement for the Leased Property in any other manner which could cause any portion of the amounts received by Landlord pursuant to this Master Lease or any sublease to fail to qualify as “rents from real property” within the meaning of Section 856(d) of the Code, or any similar or successor provision thereto, or which could cause any other income of Landlord to fail to qualify as income described in Section 856(c)(2) of the Code. The requirements of this Section 40.1(a) shall likewise apply to any further subleasing by any subtenant.

(c) Anything contained in this Master Lease to the contrary notwithstanding, the parties acknowledge and agree that Landlord, in its sole discretion, may assign this Master Lease or any interest herein to another Person (including without limitation, a taxable REIT subsidiary) in order to maintain Landlord’s status as a REIT; provided, however, Landlord shall be required to (i) comply with any applicable legal requirements related to such transfer including, but not limited to, any requirements under any certificate of need or other health care law, rules or regulations and (ii) give Tenant notice of any such assignment; and, provided, further, that any such assignment shall be subject to all of the rights of Tenant hereunder including, but not limited to, its rights under Section 41.14 hereof.

(d) Anything contained in this Master Lease to the contrary notwithstanding, upon request of Landlord, Tenant shall cooperate with Landlord in good faith and at no cost or expense to Tenant, and provide such documentation and/or information as may be in Tenant’s possession or under Tenant’s control and otherwise readily available to Tenant regarding the valuation of the Leased Property in order to assist Landlord in its determination that Rent allocable for purposes of Section 856 of the Code to the Landlord’s Personal Property at the beginning and end of a calendar year does not exceed 15% of the total Rent due hereunder (the “ Personal Property REIT Requirement ”); provided , however , that this provision shall not be

interpreted to relieve Tenant from its obligations under Section 6.3 of this Agreement; and provided, further, that a violation by Tenant of its obligations under this Section 40.1(d) and/or a determination by Landlord that a violation of the Personal Property REIT Requirement has occurred shall not constitute an Event of Default under this Master Lease. Anything contained in this Master Lease to the contrary notwithstanding, Tenant shall take such reasonable action as may be requested by Landlord from time to time in order to ensure compliance with the Personal Property REIT Requirement as long as such compliance does not (i) increase Tenant’s monetary obligations under this Master Lease or (ii) materially and adversely increase Tenant’s non-monetary obligations under this Master Lease or (iii) materially diminish Tenant’s rights under this Master Lease. Accordingly, if requested by Landlord and at Landlord’s expense, Tenant shall cooperate with Landlord as may be necessary from time to time to more specifically identify and/or value the Landlord Personal Property in connection with the compliance with the Personal Property REIT Requirement. Landlord shall reimburse Tenant for the reasonable amount of any out of pocket expenses incurred by Tenant in satisfying the requirements of this Section 40.1(d).

ARTICLE XLI

41.1 Survival . Anything contained in this Master Lease to the contrary notwithstanding, all claims against, and liabilities and indemnities of, Tenant or Landlord arising prior to the expiration or earlier termination of the Term shall survive such expiration or termination.

41.2 Severability . If any term or provision of this Master Lease or any application thereof shall be held invalid or unenforceable, the remainder of this Master Lease and any other application of such term or provision shall not be affected thereby.

41.3 Non-Recourse . Tenant specifically agrees to look solely to the Leased Property for recovery of any judgment from Landlord. It is specifically agreed that no constituent partner in Landlord or officer or employee of Landlord shall ever be personally liable for any such judgment or for the payment of any monetary obligation to Tenant. The provision contained in the foregoing sentence is not intended to, and shall not, limit any right that Tenant might otherwise have to obtain injunctive relief against Landlord, or any action not involving the personal liability of Landlord. Furthermore, except as otherwise expressly provided herein, in no event shall Landlord ever be liable to Tenant for any indirect or consequential damages suffered by Tenant from whatever cause.

41.4 Licenses .

(a) Upon the expiration or earlier termination of the Term, Tenant shall, at no cost or expense to Tenant except as specifically set forth in Section 41.4(c), cooperate with Landlord or Landlord’s designee or nominee in connection with an orderly transfer of operational and financial responsibility for the Leased Property to Landlord or Landlord’s nominee or designee and the processing by Landlord or Landlord’s designee or nominee of any applications for all licenses, operating permits and other governmental authorizations and Tenant shall use its commercially reasonable efforts to transfer to Landlord or Landlord’s designee all

contracts with governmental or quasi-governmental entities related thereto; provided, however, nothing herein shall be construed as requiring Tenant to allow Landlord or Landlord’s designee or nominee to operate the Facility under Tenant’s license or to bill for goods sold or services rendered to the residents of the Facility under Tenant’s Medicare or Medicaid/Medi-Cal provider agreements. Notwithstanding the foregoing, on the effective date of any such transfer, Tenant shall assign to Landlord’s designee or nominee its Medicare and Medicaid provider agreements in accordance with and as permitted by any and all applicable laws and orders, rules, requirements and regulations of CMS and the State subject to any and all other applicable federal or State statutes and regulations regarding the same; provided , however , that the parties acknowledge and agree that Landlord’s designee or nominee (i) is not expected to have received “tie in” notice from CMS with respect to the Medicare provider agreement or a new Medicaid provider agreement as of such effective date, (ii) will not begin to bill for its services under Medicaid or Medicare until the tie in notice/new provider agreement and the required provider numbers have been received by such entity, and (iii) Tenant will not bill Medicare or Medicaid or any other provider for services provided by Landlord’s designee or nominee after the effective date.

(b) Subject to the limitations of any applicable Legal Requirements, including but not limited to, laws governing the confidentiality of resident and employee records, on the expiration or earlier termination of the Term, Tenant shall transfer to Landlord or Landlord’s designee or nominee the Facility’s business records, data, patient and resident records, and patient and resident trust accounts held by Tenant (but specifically excluding Tenant’s corporate financial records or proprietary materials) and which may be necessary for the lawful operation of the applicable Facility by Landlord or Landlord’s designee; provided that the costs and expenses of any such transfer or the processing of any such application shall be paid by Landlord or Landlord’s designee or nominee.

(c) Tenant shall indemnify, defend, protect and hold harmless Landlord from and against any loss, damage, cost or expense incurred by Landlord or Landlord’s designee or nominee in connection with the correction of any and all deficiencies of a physical plant nature identified by any governmental authority responsible for licensing the Leased Property in the course of any change of ownership inspection but only to the extent that, during the Term, such deficiencies were (i) previously included in a statement of deficiencies issued to Tenant by such governmental authority as part of a survey of the Facility conducted prior and unrelated to such change of ownership, and (ii) not corrected by Tenant.

(d) In the event of a conflict between the provisions of this Section 41.4 and any OTA executed by Tenant, on the one hand, and Landlord or Landlord’s nominee or designee, on the other hand, the provisions of the OTA shall control.

41.5 Successors and Assigns . This Master Lease shall be binding upon Landlord and its successors and assigns and, subject to the provisions of Article XXII, upon Tenant and its successors and assigns.

41.6 Governing Law . THIS MASTER LEASE WAS NEGOTIATED IN THE STATE OF CALIFORNIA, WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING TRANSACTION

EMBODIED HEREBY. ACCORDINGLY, IN ALL RESPECTS THIS MASTER LEASE (AND ANY AGREEMENT FORMED PURSUANT TO THE TERMS HEREOF) SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF CALIFORNIA (WITHOUT REGARD OF PRINCIPLES OR CONFLICTS OF LAW) AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA, EXCEPT THAT ALL PROVISIONS HEREOF RELATING TO THE CREATION OF THE LEASEHOLD ESTATE AND ALL REMEDIES SET FORTH IN ARTICLE XVI RELATING TO RECOVERY OF POSSESSION OF THE LEASED PROPERTY OF ANY FACILITY (SUCH AS AN ACTION FOR UNLAWFUL DETAINER OR OTHER SIMILAR ACTION) SHALL BE CONSTRUED AND ENFORCED ACCORDING TO, AND GOVERNED BY, THE LAWS OF THE STATE IN WHICH THE LEASED PROPERTY OF SUCH FACILITY IS LOCATED.

41.7 Waiver of Trial by Jury . EACH OF LANDLORD AND TENANT ACKNOWLEDGES THAT IT HAS HAD THE ADVICE OF COUNSEL OF ITS CHOICE WITH RESPECT TO ITS RIGHTS TO TRIAL BY JURY UNDER THE CONSTITUTION OF THE UNITED STATES AND THE STATE. EACH OF LANDLORD AND TENANT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING UNDER THIS MASTER LEASE (OR ANY AGREEMENT FORMED PURSUANT TO THE TERMS HEREOF) OR (ii) IN ANY MANNER CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF LANDLORD AND TENANT WITH RESPECT TO TIES LEASE (OR ANY AGREEMENT FORMED PURSUANT TO THE TERMS HEREOF) OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREINAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; EACH OF LANDLORD AND TENANT HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY A COURT TRIAL WITHOUT A JURY, AND THAT EITHER PARTY MAY FILE A COPY OF THIS SECTION WITH ANY COURT AS CONCLUSIVE EVIDENCE OF THE CONSENT OF EACH SUCH PARTY TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY.

41.8 Entire Agreement . This Master Lease and the Exhibits and Schedules hereto constitutes the entire and final agreement of the parties with respect to the subject matter hereof, and may not be changed or modified except by an agreement in writing signed by the parties and, with respect to the provisions set forth in Section 40.1, no such change or modification shall be effective without the explicit reference to such section by number and paragraph. Landlord and Tenant hereby agree that all prior or contemporaneous oral understandings, agreements or negotiations relative to the leasing of the Leased Property are merged into and revoked by this Master Lease.

41.9 Headings . All titles and headings to sections, subsections, paragraphs or other divisions of this Master Lease are only for the convenience of the parties and shall not be construed to have any effect or meaning with respect to the other contents of such sections, subsections, paragraphs or other divisions, such other content being controlling as to the agreement among the parties hereto.

41.10 Counterparts . This Master Lease may be executed in any number of counterparts, each of which shall be a valid and binding original, but all of which together shall constitute one and the same instrument.

41.11 Interpretation . Both Landlord and Tenant have been represented by counsel and this Master Lease and every provision hereof has been freely and fairly negotiated. Consequently, all provisions of this Master Lease shall be interpreted according to their fair meaning and shall not be strictly construed against any party.

41.12 Time of Essence . Time is of the essence of this Master Lease and each provision hereof in which time of performance is established.

41.13 Further Assurances . The parties’ agree to promptly sign all documents reasonably requested to give effect to the provisions of this Master Lease.

41.14 Right of First Opportunity .

(a) Except as otherwise specifically provided herein, in the event Landlord determines that it wants to sell any or all of the Leased Property at any time during the Initial Term or any Renewal Term, Landlord shall first in writing offer to enter into negotiations for such sale with the applicable Tenant or any Affiliate of such Tenant (a “ Seller’s Notice ”). If the applicable Tenant or an Affiliate thereof (“ Buyer ”) shall within ten (10) Business Days from receipt of Seller’s Notice give Landlord notice ( a “ Buyer’s Notice ”) that it wishes to enter into good faith negotiations for the purchase of the applicable Leased Property(ies) (a “ Notice of Interest ”) within the above-described ten (10) Business Day period, Landlord and Buyer shall enter into good faith negotiations for a period of thirty (30) days from Landlord’s receipt of the Notice of Interest (the “ Negotiation Period ”) for the sale and purchase of the applicable Leased Property(ies). If during the Negotiation Period a written agreement with respect to the purchase and sale of the applicable Leased Property(ies) (a “ Purchase Agreement ”) is executed by Landlord and Buyer, Landlord shall sell and Buyer shall purchase the applicable Leased Property(ies) on the terms and conditions set forth in the Purchase Agreement.

(b) If (i) a Notice of Interest is not given as set forth above, and Landlord in its sole discretion continues to desire to sell applicable Leased Property(ies) then, for a period of one (1) year after the expiration of the time within which a Notice of Interest was required to be given, or (ii) a Notice of Interest is given but Landlord and Buyer do not execute a Purchase Agreement during the Negotiation Period, and Landlord in its sole discretion continues to desire to sell applicable Leased Property(ies), then for a period of one (1) year from the expiration of the Negotiation Period, Landlord shall be free to sell applicable Leased Property(ies) to any third party for a Cash Price that is not less than ninety eight percent (98%) of a Cash Price offered by written notice to Landlord by Buyer during the Negotiation Period, free from any claim of any right to purchase the applicable Leased Property(ies) by Buyer, Guarantor or any Affiliate of Buyer or Guarantor (including, without limitation, any subsequent rights under this Section 41.14 with respect to the applicable Leased Property(ies), which shall be of no further force or effect). For purposes of the preceding sentence, a “ Cash Price ” shall be the amount to be received by Landlord in cash or equivalent upon the closing of the sale net of prorations and expenses to be borne by Landlord (excluding commissions). If the applicable

Leased Property(ies) are not sold within such one (1) year period, before entering into negotiations with any third party for the sale of the applicable Leased Property(ies) Landlord shall first offer to enter into negotiations for the sale thereof to Buyer pursuant to the process described above.

(c) The foregoing right of first offer (i) is not assignable by Tenant except to an Affiliate of Tenant, (ii) shall simultaneously and automatically terminate upon termination of this Master Lease, (iii) shall not under any circumstances be extended, modified or in any way altered except by a writing executed by Landlord and Tenant and (iv) shall not apply in the event of (A) a merger transaction or sale by Sabra involving all or substantially all of the assets of it and its subsidiaries, (B) a sale/leaseback transaction by Landlord with respect to any or all of the Leased Properties for financing purposes, (C) a sale or transfer to an Affiliate of Sabra or a joint venture entity in which Sabra or its Affiliate is the managing member or partner, or (D) an Excluded Portfolio Sale (as hereinafter defined) by Sabra and/or its Affiliates. For purposes of this Section 41.14(c), an “ Excluded Portfolio Sale” shall be defined as a sale by Sabra and/or its Affiliates in a single transaction or series of related transactions of more than ten facilities where less than fifty percent (50%) of the facilities included therein are leased to Tenant under the terms of this Master Lease. For the avoidance of doubt the parties acknowledge and agree that if (X) any of the Leased Properties are included in a single transaction or series of related transactions involving less than ten facilities, regardless of the percentage of the facilities included in such transaction or series of related transactions which are represented by the Leased Properties (a “ Small Portfolio Sale ”) or (Y) any of the Leased Properties are included in a single transaction or series of related transactions involving ten or more facilities, fifty percent (50%) or more of which are represented by the Leased Properties (a “ Large Portfolio Sale ”), then neither such Small Portfolio Sale nor such Large Portfolio Sale shall be deemed to be an Excluded Portfolio Sale and Landlord shall be required to offer Tenant the right to purchase the Leased Properties included in such Small Portfolio Sale or Large Portfolio Sale, as applicable, in accordance with the requirements of this Section 41.14.

(d) Except as otherwise specifically set forth in Section 41.14(b), any sale by Landlord of all or any portion of the Leased Property(ies) to a party other than Buyer, Guarantor or any Affiliate of Buyer or Guarantor pursuant to this Section 41.14 shall be subject in each instance to all of the rights of Tenant under this Master Lease, including the rights granted to Tenant under this Section 41.14.

SIGNATURES ON FOLLOWING PAGE

IN WITNESS WHEREOF , this Master Lease has been executed by Landlord and Tenant as of the date first written above.

LANDLORD :

[INSERT APPLICABLE SIGNATURE BLOCKS FOR LANDLORD ENTITIES.]

S-1

TENANT :

[INSERT APPLICABLE SIGNATURE BLOCKS FOR TENANT ENTITIES.]

S-2

EXHIBIT A

SCHEDULE OF FACILITIES

Defined Terms

“SNF” Skilled Nursing Facility

“ALF” Assisted Living Facility

A-1

EXHIBIT B

LEGAL DESCRIPTIONS

B-1

EXHIBIT C

TENANT PERSONAL PROPERTY

All of the following with respect to each of the Facilities: (i) vehicles, tools, spare and replacement parts, and similar property used by Tenant in connection with the operation of the Facilities; (ii) all customer lists, patient files and records related to former and current patients, and all books and records with respect to the operation of the Facilities; and (iii) all employee time recording devices, pagers, computers, computer software, hardware and discs used by Tenant in connection with the operation of the Facilities.

C-1

EXHIBIT D

SCHEDULE OF ALLOCATED INITIAL INVESTMENT AMOUNTS


Facility Name		Allocated Initial Investment
		$

D-1

EXHIBIT E

FORM OF OPERATIONS TRANSFER AGREEMENT

[ATTACHED]

E-1

OPERATIONS TRANSFER AGREEMENT

(INSERT FACILITY CITY AND STATE)

THIS AGREEMENT is made and entered into as of the day of , 20 (the “Execution Date”) by and between , a (“Licensee”) and , a (“New Operator”).

RECITALS

A. Licensee is the tenant and licensed operator of the Facility. Licensee leases the Facility from Landlord under the terms of the Lease.

B. Landlord and Licensee have agreed to terminate the Lease. DRAFTING NOTE: EXPAND THIS RECITAL AS NEEDED TO FIT THE FACTS OF THE PARTICULAR TRANSACTION.

C. In order to facilitate a transition of operational and financial responsibility from Licensee to New Operator in a manner which will ensure the continued operation of the Facility after the Effective Date in compliance with applicable law and in a manner which does not jeopardize the health and welfare of the residents of the Facility, Licensee and New Operator are desirous of documenting certain terms and conditions relevant to the transition of operational and financial responsibility from Licensee to New Operator.

D. Capitalized terms used herein and not otherwise defined shall have the meaning ascribed to them in Exhibit A.

NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants of the parties set forth herein, IT IS HEREBY AGREED AS FOLLOWS:

1. Change of Ownership .

1.1. New Operator agrees that, to the extent it has not previously done so, within two (2) business days after the Execution Date, New Operator shall file all applications and other documents required for the issuance of the Licensure Approvals and thereafter New Operator shall diligently proceed with securing the Licensure Approvals and shall (A) from time to time, upon request of Licensee, advise Licensee of the status of New Operator’s efforts to secure the Licensure Approvals, (B) promptly advise Licensee once New Operator has received confirmation of the date on which the New License will be issued and thus the anticipated Effective Date is known to New Operator and (C) promptly upon receipt of a request therefor from Licensee, New Operator shall provide Licensee with copies of the documents evidencing the New License and the other Licensure Approvals. Licensee shall reasonably and promptly cooperate with New Operator in filing any notices or furnishing any other documents required to be filed by Licensee in order to enable New Operator to obtain the Licensure Approvals and, upon request, Licensee will provide drafts of such notices to New Operator for its review and comment.

Exhibit E-1

1.2. On the Effective Date Licensee shall assign to New Operator its Medicare and Medicaid Provider Agreements in accordance with and as permitted by any and all applicable laws and orders, rules, requirements and regulations of CMS and the State subject to any and all other applicable federal or State statutes and regulations regarding the same. All liability under Licensee’s Medicare and Medicaid Provider Agreements prior to the Effective Date will be the responsibility of Licensee. New Operator and Licensee acknowledge and agree that New Operator is not expected to have received “tie in” notice from CMS with respect to the Medicare Provider Agreement or a new Medicaid Provider Agreement as of the Effective Date. Accordingly, in consideration for, and as a material inducement to, Licensee’s agreement to consummate the transaction provided for herein prior to New Operator’s receipt thereof, New Operator agrees that it will not begin to bill for its services under Medicaid or Medicare until the tie in notice/new Provider Agreement and the required provider numbers have been received by New Operator. Licensee will not bill Medicare or Medicaid or any other provider for services provided by New Operator after the Effective Date.

1.3. As between Licensee and the New Operator, the New Operator shall be solely responsible for the CHOW Liabilities; provided, however, that this shall not affect the liability, if any, of Licensee under any Lease Termination Agreement executed by and between Licensee and Landlord (the “LTA”). For the avoidance of doubt, the parties acknowledge and agree that it is their intent that in the event New Operator is required to make physical plant repairs, modifications or replacements to the Facility in order to obtain the New License and such repairs, modifications or replacements were the subject of deficiencies which Licensee received from the applicable local, State or federal governmental authorities during the period prior to the Effective Date, then Licensee, rather than New Operator shall be responsible for the reasonable cost thereof (the “Licensee Pre-Effective Date Physical Plant Regulatory Obligations”) but otherwise all such repairs, modifications and replacements shall be undertaken by New Operator at its sole cost and expenses.

1.4. In the event of a breach by New Operator prior to the Effective Date of its obligations under Section 1.1 that Licensee determines is reasonably likely to materially impair New Operator’s ability to secure the Licensure Approvals and which breach has not been cured within ten (10) days after receipt of written notice from Licensee or in the event the Effective Date has not occurred by the Outside Date, then Licensee shall have the right, but not the obligation, at anytime thereafter, on written notice to New Operator and Landlord, to declare this Agreement null and void and of no further force and effect, after which neither party shall have any further rights or obligations hereunder.

1.5. DRAFTING NOTE: DELETE THIS SECTION AND THE RELATED EXHIBIT IF NOT APPLICABLE. New Operator acknowledges and agrees that Licensee has advised New Operator that there may be residents at the Facility whose care is paid for by the Department of Veterans Affairs (the “VA Residents”) under the terms of a national and/ or local contract (the “Prime Contract”) between Licensee and the Department of Veterans Affairs (the “VA”). Accordingly, within three (3) business days

Exhibit E-2

after the Execution Date, New Operator shall (i) file all applications and other documents required by the VA (the “VA Contract Application”) for the issuance to New Operator as of the Effective Date of either (A) a contract between New Operator and the VA or (B) such other documentation acceptable to the VA, New Operator and Licensee with respect to the care provided by New Operator to the VA Residents from and after the Effective Date; provided, however, in no event shall such contract or other documents be acceptable to Licensee unless they specifically provide that Licensee shall have no financial or legal liability from and after the later of the Effective Date or the execution of such contract or other documentation for the care provided to the VA Residents at the Facility (the “New VA Contract”) and (ii) enter into a subcontract with New Operator in the form attached hereto as Schedule 1.5 (the “VA Subcontract”) to be effective for the limited period of time specified in the VA Subcontract if the VA has not issued the New VA Contract to New Operator as of the Effective Date. From and after the filing of the VA Contract Application, New Operator shall diligently proceed with securing the New VA Contract prior to the Effective Date and shall from time to time, upon request of Licensee, advise Licensee of the status of New Operator’s efforts to secure the VA Contract. New Operator acknowledges and agrees that in the event New Operator fails to satisfy the requirements of this Section 1.5 within the time periods set forth in this Section 1.5, then Licensee shall have the right, prior to the Effective Date, to transfer all of the VA Residents to other long term care facilities, including other facilities operated by Licensee, which have a contract in effect with the VA, it being understood and agreed that Licensee is at financial and legal risk in the event New Operator provides care to such residents under the Prime Contract, which risk can only be minimized by New Operator complying with the requirements of this Section 1.5 with respect to the New VA Contract and the VA Subcontract.

2. Conveyance of Licensee’s Property and Inventory; Assignment of Admission and Arbitration Agreements .

2.1. In consideration for the payment on the Effective Date in immediately available funds by New Operator to Licensee of the amount of the Inventory Consideration, Licensee shall transfer and convey the Inventory to New Operator on the Effective Date, in its “as is” condition without representations or warranties of any kind, express or implied; provided, however, notwithstanding the Inventory Consideration, Licensee’s only obligation shall be to ensure that the level of Inventory at the Facility prior to and on the Effective Date is in an amount and of a type that is consistent with the medical orders and clinical needs of residents and Licensee’s past practices with respect to its operations at the Facility and which meets any minimum requirements established under applicable federal and State law. Licensee shall have no obligation to deliver the Inventory to any location other than the Facility, it being understood and agreed that the presence of the Inventory at the Facility on the Effective Date shall constitute delivery thereof. New Operator shall pay any sales or use tax which may be payable with respect to the transfer of the Inventory to New Operator. Licensee shall execute a Bill of Sale in the form attached hereto as Schedule 2.1 which confirms the conveyance of the Inventory provided for herein.

Exhibit E-3

2.2. On the Effective Date, Licensee shall also transfer and convey to New Operator, in its “as is” condition, without representations or warranties of any kind, express or implied, all of its right, title and interest, if any, in and to the Tenant Personal Property, if any and to the extent the same exists, it being understood and agreed that Licensee is not making any representation or warranty as to whether or to what extent there is, or on the Effective Date will be, any Tenant Personal Property located at the Facility.

2.3. On the Effective Date, Licensee and New Operator will enter into an Assignment and Assumption Agreement in form attached hereto as Schedule 2.3 pursuant to which Licensee will assign to New Operator and New Operator will assume all of Licensee’s right, title and interest in and to and obligations under the Assigned Admission Agreements; provided, however, the Assignment and Assumption Agreement shall specifically provide that nothing therein shall be construed as imposing any liability on New Operator for the acts or omissions of Licensee under the Assigned Admission Agreements prior to the Effective Date and Licensee shall indemnify, defend and hold harmless New Operator from and against any loss, claim, demand or cause of action (including reasonable attorney’s fees) arising from or relating to Licensee providing services under any of the Assigned Admission Agreements prior to the Effective Date.

2.5 On the Effective Date all telephone numbers in use at the Facility will also be transferred to New Operator for continued use with the Facility.

3. Transfer of Resident Trust Funds .

3.1. On the Effective Date, Licensee shall prepare and deliver to New Operator a true, correct, and complete accounting and inventory (properly reconciled) of the Resident Trust Funds.

3.2. On the Effective Date, Licensee hereby agrees to transfer to New Operator the Resident Trust Funds and New Operator hereby agrees that it will accept such Resident Trust Funds in trust for the residents/responsible parties and be solely accountable to the residents/responsible parties for such Resident Trust Funds in accordance with the terms of this Agreement and applicable statutory and regulatory requirements in connection with the New Operator’s possession or use of such Resident Trust Funds.

3.3. Within ten (10) days after the Effective Date, Licensee shall prepare a final reconciliation comparing the actual Resident Trust Fund balance on the Effective Date to the amount of the Resident Trust Funds transferred to New Operator on the Effective Date and to the extent the former exceeds the latter, within five (5) days of delivery of the final reconciliation, Licensee shall remit such excess to New Operator or to the extent the latter exceeds the former, New Operator shall remit such excess to Licensee.

Exhibit E-4

3.4. New Operator shall have no ongoing responsibility to the applicable resident/responsible party and regulatory authorities in the event the Resident Trust Funds delivered by Licensee to New Operator pursuant to Section 3.2 are demonstrated to be less than the full amount of the Resident Trust Funds for such resident as of the Effective Date, for inaccuracies in the accounting and inventory provided by Licensee, or for claims which arise from actions or omissions of Licensee with respect to the Resident Trust Funds prior to the Effective Date, all of which shall be and remain the responsibility of Licensee.

3.5. Except as specifically set forth in Section 3.4, Licensee shall have no responsibility to the applicable resident/responsible party and regulatory authorities with respect to any Resident Trust Funds delivered to New Operator.

4. Cost Reports . Following the Effective Date, Licensee shall timely prepare and file with the appropriate Medicare and Medicaid agencies any final cost reports with respect to its operation of the Facility which are required to be filed by law under the terms of the [Medicare and Medicaid/Medi-Cal—DRAFTING NOTE: REVISE AS NEEDED BY TRANSACTION] Programs. Within five (5) business days of request by New Operator, Licensee shall provide New Operator with copies of such cost reports, together with copies of any amendments thereto and correspondence related to such final cost reports.

5. Employees .

5.1. Licensee shall terminate all of the Facility employees effective as of 11:59 p.m. on the day immediately prior to the Effective Date. Licensee shall pay directly to such employees any unpaid wages and benefits which Licensee is required by law or by the terms of Licensee’s standard policies and procedures to pay to the employees of the Facility as of the Effective Date. Licensee shall provide New Operator with a list of employees within ten (10) days after the Execution Date and shall permit New Operator, in cooperation and coordination with Licensee, to meet with the employees of the Facility prior to the Effective Date and to advise them of New Operator’s proposed plans with respect to the hiring of the employees of the Facility and the benefits which will be offered to the employees of the Facility. After the Execution Date of this Agreement and for so long as this Agreement remains in effect, Licensee will not transfer employees from the Facility to another facility owned or operated by Licensee or its affiliates without the consent of New Operator; provided, however, no such consent shall be needed if the request for transfer is initiated by the employee but in such event Licensee shall provide New Operator with notice thereof.

5.2. [ DRAFTING NOTE – APPROPRIATE OPTION TO BE SELECTED TO FIT EACH TRANSACTION ]

[ OPTION 1 : It is the understanding and belief of Licensee and New Operator that Licensee currently employs fewer than one hundred (100) at the Facility, and that Licensee is therefore not required to give notice to the employees of the Facility

Exhibit E-5

of the “closure” thereof under the WARN Act or under any comparable State law. However, the New Operator has advised the Licensee that it presently intends to offer employment to at least 2/3 of the employees of the Facility who, as of the Effective Date, work at the Facility and have been employed for twenty (20) hours or more per week on average and provide services solely to the Facility and in reliance on such statements Licensee and New Operator have agreed that a closure notice will not be provided to the employees of the Facility.]

[ OPTION 2 : It is the understanding and belief of Licensee and New Operator that Licensee currently employs more than one hundred (100) workers at the Facility, and that Licensee is therefore required to give notice to the employees of the Facility of the “closure” thereof under the WARN Act and/or under any comparable State law. However, the New Operator has advised the Licensee that it presently intends to offer employment to at least 2/3 of the employees of the Facility who, as of the Effective Date, work at the Facility and have been employed for twenty (20) hours or more per week on average and provide services solely to the Facility, with the terms of the offer of such employment and initial employment of such employees by New Operator to be substantially and materially similar to the current terms of employment of such employees (including but not limited to substantially and materially similar job titles, duties, schedules, seniority calculations, salary or pay rates, and benefits), and in reliance on such statements Licensee and New Operator have agreed that a closure notice will not be provided to the employees of the Facility. New Operator acknowledges and agrees that the provisions of this Section 5.2 are designed, in part, to ensure that Licensee is not required to give notice to employees of the Facility of the “closure” thereof under the WARN Act or any comparable State law. Accordingly, New Operator agrees to indemnify, defend and hold harmless Licensee and its affiliates from and against any damages, loss, costs or expenses, including, but not limited to, reasonable attorneys fees, which such party may incur under the WARN Act or any comparable State law in the event of the violation by New Operator of its obligations under this Section 5.2, including without limitation any violation which results from an allegation that the employees of the Facility were constructively terminated as a result of the terms and conditions of employment offered by New Operator.]

5.3 New Operator agrees to cooperate with Licensee to provide information concerning which employees, if any, are retained by New Operator and the service descriptions and salary levels for any such retained employees. Such employees whose employment is continued shall be referred to as the “Retained Employees.” Licensee or any of its affiliates shall not have the right to employ or offer to employ any employee, except any employee who declines to continue employment with New Operator, for a period of one year from the Effective Date.

5.4. Licensee shall offer and provide, as appropriate, group health plan continuation coverage pursuant to the requirements of COBRA to all of the employees of the Facility to whom it is required to offer the same under applicable law. Licensee acknowledges and agrees that New Operator is not assuming any of Licensee’s obligations to its employees under COBRA or otherwise. New Operator agrees to

Exhibit E-6

cooperate with Licensee in providing information concerning which employees, if any, are retained by New Operator after the Effective Date, and the nature of the benefits offered to each such employee. As of the Effective Date, Retained Employees shall be eligible for participation in a group health plan (as defined for purposes of Internal Revenue Code Section 4980B) established and maintained by New Operator for the general benefit of its employees and their dependents in accordance with the terms of New Operator’s plan. Notwithstanding the foregoing, in no event shall New Operator make any deduction, related to any group health or other employee benefit plan, from the salary of any Retained Employee unless and until such Retained Employee is actually and effectively covered by such group health or other employee benefit plan, as any such plan is administered by or for the benefit of New Operator.

6. Accounts Receivable .

6.1. Licensee shall retain whatever right, title and interest it may have in and to the Licensee’s A/R. New Operator acknowledges and agrees that (i) it shall do nothing to interfere with any and all rights that Licensee may have in or with respect to Licensee’s A/R, including, but not limited to, the right to collect the same and to enforce any and all of their rights with respect to Licensee’s A/R, and (ii) if it receives any proceeds with respect to the Licensee’s A/R, New Operator will hold such proceeds in trust for Licensee and shall promptly turn over those proceeds to Licensee, without demand, in the form received, without offset or deduction of any kind.

6.2. Within ten (10) business days after the Effective Date, Licensee shall provide New Operator with a schedule setting forth by patient its outstanding accounts receivable with respect to the Facility as of the Effective Date.

6.3. In furtherance and not in limitation of the requirements set forth in Section 6.1, payments received by New Operator or Licensee from and after the Effective Date from third party payors, including but not limited to Medicare, Medicaid, managed care and health insurance, shall be handled as follows:

6.3.1. If such payments either specifically indicate on the accompanying remittance advice, or if the parties agree, that they relate to the period prior to the Effective Date, Licensee shall be entitled to retain the same or, if received by New Operator, they shall be forwarded to Licensee by New Operator, along with the applicable remittance advice, promptly, but in no event more than ten (10) business days after receipt thereof;

6.3.2. If such payments indicate on the accompanying remittance advice, or if the parties agree that they relate to the period on or after the Effective Date, they shall be retained by New Operator or if received by Licensee, they shall be forwarded to New Operator by Licensee, along with the applicable remittance advice, promptly, but in no event more than ten (10) business days after receipt thereof; and

Exhibit E-7

6.3.3. If the period(s) for which such payments are made is not indicated on the accompanying remittance advice, the parties will contact the payer to ascertain the intent of payer and that intent shall be followed. If the parties are unable to ascertain the intent of the payer and the parties are unable to agree as to the periods to which such payments relate, the parties shall assume that each payment relates to the oldest outstanding unpaid receivables for reimbursement and, based on such assumption, the portion thereof which relates to the period on and after the Effective Date shall be retained by New Operator and the balance shall be remitted to Licensee promptly, but in no event more than ten (10) business days after receipt thereof or if received by Licensee, the balance due to New Operator shall be remitted to New Operator promptly, but in no event more than ten (10) business days after receipt thereof.

6.4. Any payments received by New Operator during the first forty-five (45) days after the Effective Date from or on behalf of private pay patients with outstanding balances as of the Effective Date, which fail to designate the period to which they relate (and which cannot be ascertained by contact with the payer), will first be remitted to Licensee by New Operator to be applied to reduce the patients’ pre-Effective Date balances, with any excess applied to reduce any balances due for services rendered by New Operator after the Effective Date. After such forty-five (45) day period, all non-designated payments will first be applied to any post-Effective Date balances, with the excess, if any, applied to the extent of any balances due for services rendered by Licensee prior to the Effective Date; provided, however, that any residents who are listed as private pay while Medicaid eligibility determinations are pending shall be disclosed to New Operator at the Effective Date with the intention that if Medicaid eligibility is established, the resident’s private resource contribution to the cost of care, if any, that relates to services rendered prior to the Effective Date shall be payable to Licensee and that which relates to services rendered from and after the Effective Date shall be payable to New Operator.

6.5. Nothing herein shall be deemed to limit in any way Licensee’s rights and remedies to recover accounts receivable due and owing Licensee under the terms of this Agreement.

6.6. In the event the parties mutually determine that any payment hereunder was misapplied by the parties, the party which erroneously received said payment shall remit the same to the other promptly, but in no event more than three (3) business days, after said determination is made; provided, however, that if either party believes the other party has misapplied any such funds and there is a disagreement, written notice shall be provided and the parties shall discuss the matter in good faith within ten (10) days of such notice.

6.7. For the nine (9) month period following the Effective Date or until Licensee receives payment of all accounts receivable attributed to the operation of the Facility prior to the Effective Date, whichever is sooner, New Operator shall provide Licensee with (i) an accounting by the 20th day of each month setting forth all amounts

Exhibit E-8

received by New Operator during the preceding month with respect to Licensee’s A/R which are set forth in the schedule provided by Licensee pursuant to Section 6.2 and (ii) copies of all remittance advices relating to such amounts received and any other reasonable supporting documentation as may be required for Licensee to determine the Licensee’s A/R that has been paid. New Operator shall deliver such accounting to Licensee at the following address: A/R Disposition Manager, Corporate Accounting, 101 Sun Avenue, NE, Albuquerque, NM 87109. Licensee shall have the right to inspect, at Licensee’s expense, all cash receipts of New Operator during weekday business hours in order to confirm New Operator’s compliance with the obligations imposed on it under this Section. In furtherance and not limitation of the foregoing, the New Operator agrees and acknowledges that the Licensee shall have the right to have Licensee’s Reconciliation Representative present at any time during normal business hours of the Facility for the period of the first sixty (60) calendar days following the Effective Date to inspect all cash receipts of New Operator and any and all other accounting records related to the reconciliation of the Licensee’s A/R, as such are related to the pre and post Effective Date periods, and in order to confirm New Operator’s compliance with the obligations imposed on it under this Agreement, including but not limited to this Section 6.7, with such access to include the Licensee’s Reconciliation Representative being allowed access to the Facility administrator’s and/or business office(s) and given access to review and photocopy, at Licensee’s expense, all deposits and financial and medical records reasonably applicable to the Licensee’s dates of service, as necessary in Licensee’s sole discretion. Further, following such 60 day period, the Licensee’s Reconciliation Representative will be allowed the same access to the Facility as per the foregoing sentence on a monthly basis at a date and time to be mutually agreed upon by the parties, with any and all records reasonably identified by Licensee’s Reconciliation Representative to be fully and readily available on such dates for inspection and photocopying.

6.8. Failure of either party to forward to the other party any payment received by such party in accordance with the terms of this Section 6, shall entitle the other party (among all other remedies allowed by law and this Agreement) to interest on the amount owed at the rate per annum equal to the Prime Rate as set forth in the Money Rates Section of The Wall Street Journal, as the same may change from time to time, plus six percent (6%) simple interest, until such payment has been paid. The payment of any interest imposed under this Section 6, if any, shall be made together with the underlying payment therefor.

6.9. The obligations of the parties to forward the accounts receivable payments pursuant to this Section 6 are absolute and unconditional and irrespective of any circumstances whatsoever which might constitute a legal or equitable discharge, recoupment, offset, counterclaim or defense of the parties, the right to assert any of which with respect to proceeds of any accounts receivable is hereby waived. All obligations under this Section 6 shall survive the issuance of the Licensure Approvals, the Effective Date and the transfer of the operations of the Facility to the New Operator.

Exhibit E-9

6.10. If, on the Effective Date, the New Operator is a party to, or if, after the Effective Date and while any of the Licensee A/R remain outstanding, New Operator enters into a financing arrangement with a New Operator Lender (which for purposes hereof shall include any additional or replacement of any such financing that is in place upon the Effective Date), New Operator shall cause such lender to execute and deliver a Lender Acknowledgment substantially in the form attached hereto as Exhibit B-1 , and addressed to Licensee and any lender designated by Licensee, confirming that the New Operator Lender has no lien on, or interest in, the Licensee A/R.

6.11 If on the Effective Date the New Operator is not a party to a financing arrangement with a New Operator Lender, then on the Effective Date it shall deliver the New Operator Representation Letter in the form attached hereto as Exhibit B-2 .

7. Costs and Prorations .

7.1. Following the Effective Date, as between New Operator and Licensee, revenues (to the extent that such revenues are not included in Licensee A/R and prorated in accordance with Section 6 above) and expenses, utility charges for the billing period in which the Effective Date occurs, prepaid expenses (including, but not limited to, transferable business licenses in effect for a period which extends beyond the Effective Date) and other related expense items attributable to the Facility shall be prorated between Licensee and New Operator as of the Effective Date. Licensee’s obligation with respect to the payment of real and personal property taxes that relate to the period prior to the Effective Date shall, prior to the Effective Date, be as set forth in the Lease and, from and after the Effective Date, shall be governed by the provisions of the LTA. In general, such prorations shall be made so that as between New Operator and Licensee, Licensee shall be reimbursed for prepaid expense items to the extent that the same are applied to expenses attributable to periods after the Effective Date and Licensee shall be charged for unpaid expenses to the extent that the same are attributable to periods prior to the Effective Date. This provision shall be implemented by New Operator remitting to Licensee any invoices (or the applicable portion thereof in the case of invoices which cover periods both prior to and after the Effective Date) which describe goods or services provided to the Facility before the Effective Date and by New Operator assuming responsibility for the payment of any invoices (or portions thereof) which describe goods or services provided to the Facility on and after the Effective Date; provided, however, that notwithstanding any provision of this Agreement to the contrary, any and all deposits paid by Licensee with respect to the Facility, including without limitation any and all utility deposits paid to, and/or cash or other collateral held by, any utility, insurance company or surety shall remain the sole and exclusive property of Licensee and New Operator shall have no right or interest therein or thereto.

7.2. All such prorations shall be made on the basis of actual days elapsed in the relevant accounting period and shall be based on the most recent information available to Licensee and/or New Operator. Utility charges which are not metered or read on the Effective Date shall be estimated based on prior charges, and shall be re-prorated upon receipt of statements therefor as of the Effective Date. Insurance premiums and

Exhibit E-10

payments shall not be pro-rated and New Operator shall obtain its own insurance coverage covering all periods commencing on and after the Effective Date.

7.3. All amounts which are subject to proration under the terms of this Agreement and which require adjustment after the Effective Date shall be settled within thirty (30) days after the Effective Date or, in the event the information necessary for such adjustment is not available within said thirty (30) day period, then within ten (10) business days of receipt of information by either party necessary to settle the amounts subject to proration, and, unless otherwise set forth herein, any payment owed shall be made within fifteen (15) days of a party’s receipt of a request for payment. In the event of a disagreement regarding any item(s) (or the amount of any item(s)) subject to proration under the terms of this Agreement, New Operator and Licensee shall negotiate in good faith to resolve any such disagreement within ten (10) days after either party articulates to the other a basis for disagreement. If the parties are unable to resolve such dispute within ten (10) days, then the parties shall appoint an Independent Accounting Firm, which shall review the items then subject to disagreement and determine the appropriate proration within thirty (30) days after such appointment. The parties agree to cooperate with the Independent Accounting Firm and provide it with such information as it reasonably requests to enable it to make such determination. The determination by the Independent Accounting Firm with respect to each item in dispute shall be conclusive and binding on the parties hereto. All fees and expenses billed by the Independent Accounting Firm in connection with the resolution of disputes under this section shall be borne one-half by New Operator and one-half by Licensee.

7.4. On the Effective Date, Licensee shall remove from the Facility any petty cash and any other funds maintained at or for the Facility immediately prior to the Effective Date, other than resident trust funds, which shall be handled in the manner set forth in Section 3.

7.5. This Agreement shall not affect, and Licensee shall retain, whatever right, title and interest it may have in and to any insurance proceeds or condemnation awards which may be due and owing to Licensee under the Lease, prior to the Effective Date, or under the LTA, from and after the Effective Date, as a result of any covered incidents of damage or destruction to, or takings of, the Facility or any part thereof occurring prior to the Effective Date even if the same are not paid until after the Effective Date. In furtherance of the foregoing, New Operator agrees (i) upon reasonable advance notice and during normal business hours to provide such access to the Facility as may be required by Licensee or any third party adjuster or representative of a condemning authority to settle any such insurance claims/condemnation proceedings and (ii) in the event any such insurance proceeds or condemnation awards are directed to New Operator or the Facility rather than to Licensee, to hold such insurance proceeds/condemnation awards in trust for Licensee and to remit the same to Licensee in the form received, without offset or deduction of any kind, within ten (10) days after receipt thereof.

7.6. In addition to any costs for which New Operator is responsible under Section 1 hereof, New Operator shall be solely responsible for all costs, fees and expenses incurred by it in connection with the transfer of operations of the Facility as

Exhibit E-11

contemplated hereunder, including but not limited to the cost of any training of the Facility’s employees which it may elect to undertake with the approval of Licensee, which approval shall not be unreasonably withheld provided such training is conducted in a manner which does not disrupt the operation of the Facility prior to the Effective Date, and the cost of any due diligence that it undertakes in furtherance of such transfer of operations, including but not limited to, the costs of any examination or copying by New Operator or its agents of any books, records, patient files or other operational or fiscal information and data of any kind of Licensee or the Facility. In furtherance and not in limitation of the foregoing, in the event that in the process of any such employee training and/or due diligence examinations Licensee shall incur any out of pocket costs or expenses related to the use of its employees, equipment and/or the provision of any such information, New Operator shall, within ten (10) days after a written demand therefor accompanied by reasonably detailed supporting documentation, reimburse Licensee for all reasonable out of pocket costs and expenses so incurred by it.

8. Access to Records .

8.1. On the Effective Date, Licensee shall deliver to New Operator all records necessary to the efficient, continued operation of the Facility. Nothing herein shall be construed as precluding Licensee from removing from the Facility (a) the originals of the financial records which relate to its operations at the Facility, (b) the originals of any proprietary materials related to its overall corporate operations, (c) the originals of all performance improvement data, (d) originals of employee records for all former employees not employed by New Operator, (e) copies of retained employee records, (f) originals of patient records for all former patients no longer residing at the Facility, (g) copies of records for all current patients residing at the facility and (h) legacy records stored either on-site or off-site.

8.2. From and after the Effective Date and, except as otherwise specifically provided below, for a period of five (5) years thereafter, New Operator shall allow Licensee and its agents and representatives (including, without limitation, any financial institutions having an interest in Licensee’s A/R) to have reasonable access to (upon reasonable prior written notice and during normal business hours), and to make copies of (at Licensee’s expense), the books and records and supporting material of the Facility relating to the period prior to the Effective Date which are in New Operator’s possession pursuant to Section 8.1, to the extent reasonably necessary to enable Licensee to among other things investigate and defend malpractice, employee or other claims, to file or defend cost reports and tax returns, to file exceptions to the Medicare routine cost limits for the cost reporting periods prior to and including the Effective Date and, for a period of one year after the Effective Date, to verify accounts receivable collections due Licensee.

8.3. Licensee shall have the right, at Licensee’s sole cost and expense, within five (5) days of the delivery of a request therefor to New Operator to enter the Facility and remove originals or copies of any such records delivered to New Operator for purposes of litigation involving a patient or employee to whom such record relates. If an

Exhibit E-12

officer of or counsel for Licensee certifies that an original of such record must be produced in order to comply with applicable law or the order of a court of competent jurisdiction in connection with such litigation then the records so removed shall be an original. Any record so removed shall promptly be returned to New Operator following its use, and nothing herein shall be interpreted to prohibit New Operator from retaining copies of any such documents. All cost of making and sending such copies shall be for the account of Licensee.

8.4. New Operator agrees to maintain such books, records and other material comprising records of the Facility’s operations prior to the Effective Date that have been received by New Operator from Licensee or otherwise, including, but not limited to, patient records and records of patient funds, to the extent required by law, but in no event less than five (5) years from the Effective Date, and shall, at Licensee’s request, allow Licensee a reasonable opportunity to remove such documents, at Licensee’s expense, at such time after such record retention period as New Operator shall decide to dispose of such documents.

8.5. In order to enable Licensee to investigate and defend claims and litigation initiated against Licensee and the affiliates, employees, officers and directors of Licensee for events that occurred prior to the Effective Date, New Operator agrees to cooperate, at Licensee’s sole cost and expense, in all reasonable respects with the defense and investigation of such claims and litigation including, without limitation, allowing Licensee, its agents, representatives and accountants, access, upon 48 hours prior written notice to the New Operator at the address set forth in this Agreement and the Administrator of the Facility at the address of the Facility and during normal business hours, to employees of the Facility for the purpose of conducting interviews, locating and identifying documents and allowing full access to the original books and records and supporting material of the Facility including, without limitation, complete patient records, personnel files, staffing records, training records, financial records, vendor contracts and reimbursement records related to the period prior to the Effective Date; provided , however , that (i) no such entry shall unreasonably interfere with residents, patients, patient care or the operation of the Facility, and (ii) such access to patient and personnel records shall be subject to applicable privacy laws, including applicable State licensure laws and/or the Health Insurance Portability and Accountability Act of 1996. Any copies made by Licensee pursuant to this Section 8.5 shall be made at Licensee’s cost and expense.

8.6. New Operator agrees to notify Licensee within three (3) business days of receipt by New Operator or the Facility of any request for medical records, notice of intent to commence litigation, summons, writs, complaints or other form of claim or litigation which either allege acts or omissions on the part of Licensee which occurred prior to the Effective Date or which identify Licensee or its affiliates, employees, officers or directors as a party or which relate to any of the Facility records retained by Licensee. All such notices shall be sent to: Office of the General Counsel, Sun Healthcare Group, Inc., 18831 Von Karman, Irvine, CA 92612.

Exhibit E-13

8.7. Following the Effective Date, in the event of a further transfer of operations of the Facility from New Operator to a subsequent operator of the Facility (each a “Subsequent Operator”), New Operator shall, as a condition to such transfer, expressly require in the transfer documentation (each a Subsequent OTA) that (i) the Subsequent Operator comply with the provisions of preceding Sections 8.2 through 8.5 (collectively, the “Facility Records Provisions”) as if Subsequent Operator were the New Operator hereunder and (ii) each Subsequent OTA shall incorporate the Facility Records Provisions for the express benefit of Licensee such that Licensee shall be an express third party beneficiary to the Facility Records Provisions of each such Subsequent OTA.

9. Operating Contracts and Vehicles .

9.1. Within five (5) days of the Execution Date, Licensee shall provide New Operator with a list (the “Operating Contract Schedule”) and copies of all Operating Contracts, other than the Master Operating Contracts, and within five (5) days of the Execution Date, Licensee shall provide New Operator with a list of the Master Operating Contracts and of any Excluded Affiliate Contracts (the “Master Operating Contract and Excluded Affiliate Contract Schedule”). The Operating Contract Schedule shall include the date on which each Operating Contract terminates, if and to the extent the same is reflected in the document or otherwise is contained in the records of Licensee. Within ten (10) days following receipt by New Operator of the Operating Contract Schedule and Operating Contracts, New Operator shall inform Licensee in writing of any Operating Contract which New Operator wishes to have assigned to it as of the Effective Date (the “Designated Operating Contracts”). New Operator acknowledges and agrees that the Operating Contracts shall not include the Master Operating Contracts or the Excluded Affiliate Contracts, that the Master Operating Contract Schedule and the list of Excluded Affiliate Contracts are being provided for informational purposes only, and that in no event will the New Operator have the right to designate a Master Operating Contract or an Excluded Affiliate Contract to be assigned to New Operator. New Operator further acknowledges and agrees that certain of the Operating Contracts or Master Operating Contracts may include Payor Contracts, and that it is and shall be the responsibility of New Operator to take such action as may be necessary to negotiate new Payor Contracts in its own name, or have any existing Payor Contracts assigned to New Operator on terms which include a full release of Licensee from all future liability under any such assigned Payor Contracts, prior to the Effective Date to the extent such New Operator is interested in receiving payments after the Effective Date for care provided to the residents covered by such Payor Contracts. Licensee shall provide commercially reasonable cooperation to New Operator in connection with the assignment of the Designated Operating Contracts to New Operator, it being understood and agreed that there can be no assurances that New Operator will be able to secure any third party consents needed to assign to New Operator any or all of the Designated Operating Contracts. Licensee shall terminate all of the Operating Contracts not assigned to New Operator and shall have the right to remove from the Facility any equipment which is subject to such unassigned Operating Contracts or to a Master Operating Contract.

Exhibit E-14

9.2. Licensee and New Operator acknowledge and agree that the Vehicle is located at the Facility and shall either be removed from the Facility, remain at the Facility for no additional consideration or sold by Licensee to New Operator all as set forth more fully in Exhibit C .

9.3. Licensee and New Operator acknowledge and agree that in the event Licensee terminates any of the Operating Contracts at the direction of New Operator but such termination will not be effective until after the Effective Date as a result of notice provisions set forth in such Operating Contacts (the “Termination Date”), if and to the extent that New Operator derives any benefit from the goods or services provided under such Operating Contract between the Effective Date and the Termination Date, New Operator shall, upon demand, reimburse Licensee for any payments under such Operating Contracts made by Licensee between the Effective Date and the Termination Date.

9.4 In the event that Licensee’s affiliates (“Sun Affiliates”), including without limitation SunDance, provide rehabilitation services or other services to the Facility (the “Affiliate Ancillary Services”) for any period after the Effective Date, New Operator shall be solely responsible for any and all payments with respect to the Affiliate Ancillary Services for the period from and after the Effective Date and in no event shall New Operator have the right to offset any amounts owed or claimed to be owed by Licensee to New Operator against any amounts owed by New Operator to the Sun Affiliates. New Operator further acknowledges and agrees that, if Sun Affiliates do not continue as vendors of supplies or services at the Facility after the Effective Date, Licensee shall have the right to remove or cause to be removed from the Facility on the Effective Date or, upon reasonable notice, any time within the forty five (45) day period subsequent to the Effective Date, any and all Ancillary Services Equipment or the provision of such similar services by Licensee, including but not limited to the provision of rehabilitation and/or therapy services therein, and specifically including but not limited to any equipment described in Exhibit D hereto, or any such property which may become located at the Facility at any time after the Execution Date and is identified by Licensee as being subject to the foregoing provisions. In furtherance of the same, New Operator shall allow Licensee, its agents and representatives to have reasonable access to (upon reasonable prior notice and during normal business hours) the Facility in order to remove any such Ancillary Services Equipment. Notwithstanding the foregoing, nothing herein shall be construed as granting New Operator any right or license to utilize, in any way, in furtherance of the operation of the Facility or otherwise, the aforesaid property during such period from the Effective Date until the removal of the same, if any. The Sun Affiliates and/or any third party owners of any such Ancillary Services Equipment shall be intended third party beneficiaries of this Section 9.4 and accordingly shall be entitled to enforce the obligations of New Operator hereunder.

10. Proprietary Information and Materials; Trade Names .

10.1 New Operator acknowledges and agrees that any and all proprietary and confidential materials and information located at and used in connection with the operation of the Facility and identified by Licensee in writing as being proprietary or

Exhibit E-15

confidential, including Licensee’s policy and procedure manuals, shall be and remain the property of Licensee and accordingly shall be removed by Licensee from the Facility on or immediately before the Effective Date; provided, however, that if New Operator so elects by written notice delivered to Licensee prior to the Effective Date, Licensee shall leave its policy and procedure manuals at the Facility for a period of up to thirty (30) days after the Effective Date and New Operator agrees to forward such manuals to a location designated by Licensee, at New Operator’s sole cost and expense, at the end of such thirty (30) day period, it being understood and agreed that the maintenance of such manuals until new manuals are delivered to the Facility by New Operator is critical to the ongoing compliance of the Facility after the Effective Date with applicable licensure and certification laws.

10.2 New Operator shall be permitted to use the name(s) under which the Facility has done business (the “Facility Trade Names”); provided, however, that nothing herein shall be construed as granting New Operator any right to use the name “SunBridge” or “Sun” or “Sun Healthcare Group” or “Harborside” or “Peak” any variation thereof. Licensee shall not use any Facility Trade Name in the same market in which the Facility is located in connection with any business that competes with the Facility.

11. Computer Systems and Telecommunications Equipment and Other Property .

11.1. New Operator acknowledges and agrees that Licensee has advised it that it intends to remove from the Facility the Computer and Telecom Systems.

11.2. Licensee acknowledges and agrees that in order to assist New Operator in ensuring the continued operation of the Facility after the Effective Date in compliance with applicable law and in a manner which does not jeopardize the health and welfare of the residents of the Facility, and subject to Licensee obtaining any required third party consents and to New Operator paying to Licensee no later than ten (10) days prior to the Effective Date, an amount equal to the rental and service payments described in Exhibit E due with respect thereto for such thirty (30) day period, Licensee shall leave the Computer and Telecom Systems in place and in effect at the Facility for a period of no more than thirty (30) days after the Effective Date, it being understood and agreed that if such payment is not timely made or if such consent is not obtained or if any requested software license agreement is not entered into or upon the expiration of such 30 day period then Licensee shall remove the Computer and Telecom Systems from the Facility as of the Effective Date or as soon thereafter as possible and in furtherance of the same New Operator will grant Licensee all necessary access to the Facility, upon reasonable notice from Licensee and during normal business hours to remove the Computer and Telecom Systems.

Exhibit E-16

11.3. Nothing in this Section 11 shall be construed as granting New Operator the right to (i) add any computer hardware or software to the Computer and Telecom Systems and/or Licensee’s corporate computer network, (ii) disconnect, copy, disclose, modify or in any manner change any of the hardware or software included within the Computer and Telecom Systems or (iii) take any action which does, or would reasonably be expected to, interfere with the operation of the Licensee’s corporate computer network including its email, internet and intranet systems, it being understood and agreed that a breach by New Operator of its obligations hereunder shall entitle Licensee to immediately remove the Computer and Telecom Systems from the Facility and to immediately discontinue any support services being provided to New Operator by Licensee and that upon any such breach New Operator shall allow Licensee immediate access to the Facility to remove the Computer and Telecom Systems.

12. Indemnification

12.1. Licensee acknowledges and agrees that it shall be responsible for all Medicare and Medicaid billing and cost reports filed with Medicare and Medicaid with respect to the Facility prior to the Effective Date. Accordingly, following the Effective Date, Licensee agrees to indemnify, defend and hold harmless New Operator from and against any and all Claims with respect to the Reimbursement Obligations.

12.2. New Operator agrees promptly after receipt thereof to provide Licensee with any documentation received by it which it believes may give rise to a claim by New Operator against Licensee under this Section 12 (an “Indemnity Notice”). Upon receipt of an Indemnity Notice, Licensee shall within thirty (30) days after receipt of the Indemnity Notice, in good faith, review the Claim and, if appropriate, Licensee shall, at its sole cost and expense, challenge, appeal or defend against the matter described in the Indemnity Notice within the applicable time periods required by law or agreement with the payor, and, in such event, no payment shall be due from Licensee to New Operator under this Section 12 until the earlier to occur of (i) the full and final resolution of such Claim on terms which require a payment by Licensee or new Operator or (ii) the recoupment from New Operator in whole or in part of the amount which is the subject of such Indemnity Notice, in which event payment shall be made within twenty (20) days following notice to Licensee of an event described in subparagraph (i) or (ii) hereof.

12.3. If Licensee fails or elects not to challenge or appeal the Claims described in the Indemnity Notice, Licensee shall indemnify New Operator against any Claims of New Operator within twenty (20) days following the thirty (30) day period described above. In addition to the foregoing, Licensee agrees to cooperate with New Operator in responding to any Claim and to make available to New Operator such documents and records as may be necessary to defend any such Claims.

12.4. All payments not made by Licensee to New Operator when due shall be subject to interest at the Prime Rate announced in the Money Rates section of The Wall Street Journal plus two percent (2%) from the date due to the date paid in full.

Exhibit E-17

13. Disclaimers .

13.1. New Operator acknowledges that, except as expressly set forth in this Agreement, neither Licensee nor any of its agents, employees, officers, directors or other representatives (collectively, “Licensee’s Representatives”) has made and no such person makes any representation, warranty, or covenant whatsoever, whether express or implied, with respect to any matter, thing or event.

13.2. Without limiting the generality of the foregoing, New Operator shall accept the Facility and any and all personal property transferred by Licensee to New Operator in connection with this Agreement, including, but not limited to, the Tenant Personal Property, the Inventory and the Vehicle in their “AS-IS” “WHERE-IS” condition as of the Effective Date, without any representation, warranty or recourse whatsoever except as may expressly be set forth in this Agreement. WITHOUT LIMITING THE FOREGOING, NO REPRESENTATION OR WARRANTY IS MADE REGARDING ANY OF THE PROPERTY TO BE TRANSFERRED TO THE NEW OPERATOR, INCLUDING, WITHOUT LIMITATION, NO REPRESENTATION AS TO THE MERCHANTABILITY OF ANY ITEM OR ITS FITNESS FOR A PARTICULAR PURPOSE OR THE HABITABILITY OR SUITABILITY OF THE FACILITY AND ANY AND ALL SUCH WARRANTIES ARE HEREBY EXPRESSLY DISCLAIMED.

13.3. New Operator acknowledges, on behalf of itself and its affiliates, that neither Licensee nor any of Licensee’s Representatives have made any representation or warranty to New Operator or to any of New Operator’s affiliates, except as specifically set forth in this Agreement. The inclusion of any information in an exhibit, schedule or any other disclosure relating to this Agreement shall not be construed as an admission that such information is material or that such information is required to be reflected in such exhibit, schedule or other disclosure.

13.4. No representation or warranty to New Operator has been or is made with respect to any continuing source of revenues or payments to New Operator or the Facility after the Effective Date, including any payments [from the VA or] under any Payor Contract, estimates, financial projections, or forecasts relating to Licensee, the Facility or any personal property transferred in connection with this Agreement that may have been delivered, communicated or mentioned to New Operator including the reasonableness of the assumptions underlying such estimates, projections and forecasts. With respect to any such estimate, projection or forecast that may have been delivered, communicated or mentioned by or on behalf of Licensee or by Licensee’s Representatives, New Operator acknowledges that (i) there are uncertainties inherent in attempting to make such estimates, projections and forecasts, (ii) New Operator is familiar with such uncertainties, (iii) New Operator is taking full responsibility for making its own evaluation of the adequacy and accuracy of all such estimates, projections and forecasts so furnished to it, and (iv) New Operator shall have no claim against Licensee, any of Licensee’s Representatives or any other person with respect thereto.

Exhibit E-18

13.5. New Operator agrees that, in entering into this Agreement and all of the documents contemplated by this Agreement, it has conducted and is relying solely and exclusively upon its own independent due diligence and investigations with respect to the Facility, its operations, the financial condition of the Facility, any provider agreements, Operating Contracts or personal property transferred in connection with this Agreement and the Facility Employees and that New Operator has not relied on any express or implied representation or warranty by Licensee or Licensee Representative not expressly contained in this Agreement.

14. Further Assurances . Each of the parties hereto agrees to execute and deliver any and all further agreements, documents or instruments necessary to effectuate this Agreement and the transactions referred to herein or contemplated hereby or reasonably requested by the other party to perfect or evidence their rights hereunder.

15. Notices . All notices to be given by either party to this Agreement to the other party hereto shall be in writing, and shall be (a) given in person, (b) deposited in the United States mail, certified or registered, postage prepaid, return receipt requested, or (c) sent by national overnight courier service or by facsimile transmission with confirmed receipt, each addressed as follows:


(a)	If to New Operator:

	And a copy to:

(b)	If to Licensee:	c/o SunBridge Healthcare, LLC
		101 Sun Avenue N.E.
		Albuquerque, NM 87109
		Attention: Director of Real Estate
		Fax Number: 505-468-4998
		Attention: General Counsel
		Fax Number: 505-468-4747

	And a copy to:	SunBridge Healthcare, LLC
		18831 Von Karman, Suite 400
		Irvine, CA 92612
		Attention: General Counsel
		Fax Number: 949-255-7055

	with copy to:	The Nathanson Group PLLC
		One Union Square
		600 University St., Suite 2000
		Seattle, WA 98101
		Attention: Randi S. Nathanson
		Fax Number: 206-299-9335

Exhibit E-19

Any such notice shall be deemed delivered when actually received or when delivery is first refused regardless of the method of delivery used. Any party to whom notices are to be sent pursuant to this Agreement may from time to time change its address for further communications thereunder by giving notice in the manner prescribed herein to all other parties hereto.

16. Payment of Expenses . Each party hereto shall bear its own legal, accounting and other expenses incurred in connection with the preparation and negotiation of this Agreement and the consummation of the transaction contemplated hereby, whether or not the transaction is consummated.

17. Entire Agreement; Amendment; Waiver . This Agreement, together with the other agreements referred to herein, constitutes the entire understanding between the parties with respect to the subject matter hereof, superseding all negotiations, prior discussions and preliminary agreements. This Agreement may not be modified or amended except in writing signed by the parties hereto. No waiver of any term, provision or condition of this Agreement in any one or more instances, shall be deemed to be or be construed as a further or continuing waiver of any such term, provision or condition of this Agreement. No failure to act shall be construed as a waiver of any term, provision, condition or rights granted hereunder. For the avoidance of doubt, the parties acknowledge and agree that nothing herein shall be construed, prior to the Effective Date, to expand any of the obligations of Licensee to Landlord under the Lease or, from and after the Effective Date, to expand the obligations of Licensee to Landlord under the Lease beyond those obligations which specifically survive termination of the Lease in accordance with the terms of the LTA.

18. Assignment . Neither this Agreement nor the rights, duties or obligations arising hereunder shall be assignable or delegable by either party hereto.

19. No Joint Venture; Third Party Beneficiaries . Nothing contained herein shall be construed as forming a joint venture or partnership between the parties hereto with respect to the subject matter hereof. The parties hereto do not intend that any third party, including, but not limited to, the Landlord, shall have any rights under this Agreement, except as expressly set forth herein.

20. Captions . The section headings contained herein are for convenience only and shall not be considered or referred to in resolving questions of interpretation.

21. Counterparts . This Agreement may be executed and delivered via facsimile and in one or more counterparts and all such counterparts taken together shall constitute a single original Agreement.

22. Governing Law . This Agreement shall be governed by and construed in accordance with the laws of the State without regard to principles of conflicts of law.

Exhibit E-20

23. Costs and Attorneys’ Fees . In the event of a dispute between the parties hereto with respect to the interpretation or enforcement of the terms hereof, the prevailing party shall be entitled to collect from the other its reasonable costs and attorneys fees, including its costs and fees on appeal.

24. Construction . Both parties acknowledge and agree that they have participated in the drafting and negotiation of this Agreement. Accordingly, in the event of a dispute between the parties hereto with respect to the interpretation or enforcement of the terms hereof no provision shall be construed so as to favor or disfavor either party hereto.

25. Guaranty . The due and timely performance of New Operator’s obligations under this Agreement are guaranteed by the Guarantor pursuant to the Guaranty Agreement.

Exhibit E-21

IN WITNESS WHEREOF, the parties hereby execute this Agreement as of the day and year first set forth above.

New Operator:


		By:
		Its:

Licensee:


		By:
		Its:

Exhibit E-22

GUARANTY

By its signature set forth below, , a (“Guarantor”), does hereby absolutely and unconditionally guarantee the full and complete payment and performance by (“New Operator”) of all of its obligations under that Operations Transfer Agreement dated as of (the “OTA”) by and between New Operator and , a (“Licensee”). Capitalized terms used herein and not otherwise defined shall have the meaning ascribed to them in the OTA. In furtherance and not in limitation of the foregoing, Guarantor does hereby agree as follows:

1. Guarantor does hereby waive all defenses that may be available to it as a surety under the laws of the State to the enforcement of obligations hereunder, including, but not limited to, the following:

(a) all notice of acceptance hereof, protest, demand and dishonor, presentment and demands of any kind now or hereafter provided for by any statute or rule of law;

(b) any and all requirements that Licensee institute any action or proceeding, or exhaust any or all of Licensee’s rights, remedies or recourse, against Licensee or anyone else as a condition precedent to bringing an action against Guarantor under this Guaranty, it being expressly agreed that the liability of Guarantor hereunder shall be primary and not secondary;

(c) any defense arising by reason of any disability, insolvency, bankruptcy, lack of authority or power, death, insanity, minority, dissolution or any other defense of New Operator, its successors and assigns, or Guarantor (even though rendering same void, unenforceable or otherwise uncollectible), it being agreed that Guarantor shall remain liable hereon regardless of whether New Operator or any other such person be found not liable thereon for any reason;

(d) the benefits of any and all statutes, laws, rules or regulations applicable in the State which may require the prior or concurrent joinder of any other party to any action on this Guaranty or which may require the exhaustion of remedies prior to a suit on this Guaranty, all as amended from time to time;

(e) any claim Guarantor or New Operator might otherwise have against Licensee by virtue of any right, remedy or recourse permitted it or them hereunder, under the OTA or otherwise available at law or equity;

(f) any failure, omission, delay or lack on the part of New Operator or Licensee to enforce, assert or exercise any right, power or remedy conferred on New Operator, Guarantor or Licensee in this Guaranty or the OTA or any action on

Exhibit E-23

the part of Licensee granting a waiver, indulgence or extension to New Operator or Guarantor;

(g) the voluntary or involuntary liquidation, dissolution, sale or other disposition of all or substantially all the assets of New Operator, marshaling of assets or liabilities, receiverships, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment of, or other similar proceeding affecting New Operator or any of its assets, or the disaffirmance of the OTA or any of its obligations thereunder in any such proceeding; and

(h) any release or other reduction of the obligations of New Operator under the OTA[; and

(i) Those rights and defenses being waived by Guarantor include, but are not limited to, any rights or defenses based upon Section 580a, 580b, 580d or 726 of the California Code of Civil Procedure. Without limiting the generality of the foregoing or any other provision hereof, Guarantor expressly waives, to the extent permitted by law, any and all rights and defenses, including without limitation, any rights of subrogation, reimbursement, indemnification and contribution, which might otherwise be available to Guarantor under California Civil Code Sections 2787 to 2855, inclusive, and 2899 and under California Code of Civil Procedure Sections 580a, 580b, 580d and 726 or any of such sections]. DRAFTING NOTE: THIS CLAUSE TO BE DELETED IF THE GUARANTY IS NOT GOVERNED BY CA LAW.

2. Guarantor agrees that no acts or omissions of Licensee taken after the date hereof shall in any way release, diminish, or affect the absolute nature of Guarantor’s obligations and liabilities hereunder. Guarantor’s obligations and liabilities under this Guaranty are primary, absolute and unconditional under any and all circumstances and until the obligations of New Operator under the OTA are fully and finally satisfied, such obligations and liabilities shall not be discharged or released, in whole or in part, by any act or occurrence which might, but for this Section 2, be deemed a legal or equitable discharge or release of Guarantor.

3. Guarantor does hereby acknowledge that it is executing this Guaranty knowingly and voluntarily and that the execution of this Guaranty is a material inducement to the willingness of Licensee to enter into the OTA and consummate the transaction provided for therein.

4. Guarantor does hereby represent and warrant that it has full power and authority to enter into this Guaranty and that this Guaranty is the valid and binding obligation of Guaranty and is enforceable against Guarantor in accordance with its terms except as such enforceability may be limited by creditors rights laws and general principals of equity.

Exhibit E-24

5. All rights, remedies and recourse afforded to Licensee by reason of this Guaranty, or otherwise, are separate and cumulative and may be pursued separately, successively or concurrently, as occasion therefor shall arise and are non exclusive and shall in no way limit or prejudice any other legal or equitable right, remedy or recourse which Licensee may have.

6. If for any reason whatsoever New Operator now or hereafter becomes indebted to Guarantor or any affiliate of any Guarantor, such indebtedness and all interest thereon shall at all times be subordinate in all respects to the obligations of New Operator to Licensee under the OTA.

7. If any provision of this Guaranty or the application thereof to any person or circumstance shall, for any reason and to any extent, be invalid or unenforceable, neither the remainder of this Guaranty nor the application of such provision to any other persons or circumstances shall be affected thereby, but rather the same shall be enforced to the greatest extent permitted by law.

8. In the event any legal action or proceeding is commenced to interpret or enforce the terms of, or obligations arising out of, this Guaranty, or to recover damages for the breach thereof, the party prevailing in any such action or proceedings shall be entitled to recover from the non-prevailing party all reasonable attorneys’ fees and reasonable costs and expenses incurred by the prevailing party. As used herein, “attorneys’ fees” shall mean the fees and expenses of counsel to the parties hereto, which may include printing, photocopying, duplicating and other expenses, air freight charges, and fees billed for law clerks, paralegals, librarians and others not admitted to the bar but performing services under the supervision of an attorney. The term “attorneys’ fees” shall also include, without limitation, all such fees and expenses incurred with respect to appeals, arbitrations and bankruptcy proceedings.

9. Any notices or demands under this Guaranty shall be sent to Licensee at the address set forth in the OTA and to Guarantor at the address set forth in the OTA for New Operator.

10. This Guaranty shall be governed by and construed in accordance with the laws of the State without regard to principles of conflicts of law.

IN WITNESS WHEREOF, Guarantor does hereby execute this Guaranty as of the day of , 20 .


By:
		Its:

Exhibit E-25

EXHIBIT A

DEFINITIONS

“ Affiliate Ancillary Services ” shall have the meaning set forth in Section 9.4.

“ Ancillary Services Equipment ” shall mean any and all property located at the Facility which is owned by Licensee, any Sun Affiliates, or any other third parties, as the same was used in the provision of Affiliate Ancillary Services at the Facility.

“ Assigned Admission Agreements ” shall mean the admissions agreements with the persons who are residing at the Facility on the Effective Date.

“ CHOW Liabilities ” shall mean any and all costs associated with the change of ownership process including, but not limited to, any physical plant or other changes required to bring the Facility into compliance with the currently effective licensure and certification or other legal requirements if and to the extent it is not currently in such compliance and such compliance is required as a matter of State or federal law and Licensee was not required prior to the Effective Date and independent of the change of ownership process to make such changes.

“ Claims ” shall mean claims, damages, liabilities, costs, expenses or other charges incurred by, assessed against or paid.

“ CMS” shall mean the United States Department of Health and Human Services’ Centers for Medicare & Medicaid Services.

“ COBRA ” shall mean Section 601, et seq. of ERISA and Section 4980B of the Internal Revenue Code.

“ Computer and Telecom Systems ” shall mean all of the computer hardware and software and other fixed assets described in Exhibit E which is owned or leased by Licensee or its affiliates, including SunBridge, SunDance and Sun.

“ Department ” shall mean .

“ Effective Date ” shall mean the date on which New Operator is duly licensed by the Department to operate the Facility under the laws of the State.

“ Excluded Affiliate Contracts ” shall mean contracts in effect between Licensee and its affiliates which will not be assigned to New Operator or otherwise continued with New Operator on the Effective Date.

“ Execution Date ” shall have the meaning set forth in the introductory paragraph to this Agreement.

Exhibit E-26

“ Facility ” shall mean .

“ Facility Trade Names ” shall have the meaning set forth in Section 10.2.

“ Facility Records Provisions ” shall have the meaning set forth in Section 8.

“ Guarantor” shall mean .

“ Guaranty ” shall mean the Guaranty Agreement of even date herewith executed by Guarantor in favor of Licensee.

“ Indemnity Notice ” shall have the meaning set forth in Section 12.2.

“ Independent Accounting Firm ” shall mean such independent accounting firm of national or regional reputation as is mutually appointed by the Licensee and the New Operator and having no current relationship with either Licensee or New Operator or any affiliate thereof.

“ Inventory ” shall mean all consumable inventories of every kind and nature whatsoever (specifically including, but not limited to, all pharmacy supplies, nursing supplies, medical supplies, housekeeping supplies, laundry supplies, maintenance supplies, office supplies, dietary supplies, other supplies and food) which are located at the Facility.

“ Inventory Consideration ” shall mean the sum of .

“ Landlord ” shall mean , a .

“ Lease ” shall mean that certain [Master Lease/Lease] dated as of by and between Landlord and Licensee.

“ Licensee’s A/R ” shall mean all unpaid accounts receivable with respect to the Facility which relate to the period prior to the Effective Date, including, but not limited to, any accounts receivable arising from rate adjustments which relate to the period prior to the Effective Date even if such adjustments occur after the Effective Date.

“ Licensee’s Reconciliation Representative ” shall mean an employee, representative or designated agent of Licensee.

“ Licensee’s Representatives ” shall have the meaning set forth in Section 13.1.

“ Licensure Approvals ” shall mean the receipt of all State and CMS approvals to operate [a skilled nursing facility/assisted living facility] with [Medicaid and Medicare certification]. DRAFTING NOTE: TO BE REVISED TO FIT THE TRANSACTION.

“ LTA ” shall have the meaning set forth in Section 1.3.

Exhibit E-27

“ Master Operating Contracts ” shall mean any contract in the name of Sun, SunBridge or any affiliate thereof which covers equipment located at, or services provided to, the Facility as well as other facilities operated by Licensee’s affiliates.

“ New License ” shall mean an actual physical license from the Department naming New Operator as the “licensee” of the Facility entitled to operate the Facility.

“ New Operator Lender ” shall mean a lender providing financing pursuant to which the accounts receivable of the Facility related to the period from and after the Effective Date are collateral for such financing.

“ Operating Contracts ” shall mean all vendor, service, equipment and other contracts and agreements in effect with respect to the Facility, including, but not limited to, the contract with SunDance Rehabilitation Corporation for the provision of rehabilitation services to the Facility, but specifically excluding Payor Contracts.

“ Outside Date ” shall mean .

“ Payor Contracts ” shall mean all contracts with various third party payors, such as managed care providers and commercial insurance companies, which are specific to the Facility and which are not Master Operating Contracts.

“ Prime Contract ” shall have the meaning set forth in Section 1.5. DELETE IF NO VA CONTRACT.

“ Reimbursement Obligations ” shall mean any obligation to repay payments from Medicare and Medicaid with respect to its operations at the Facility prior to the Effective Date.

“ Resident Trust Funds ” shall mean any resident trust funds and residents’ property held by Licensee as of the Effective Date in trust for residents at the Facility.

“ Retained Employees ” shall have the meaning set forth in Section 5.3.

“ State ” shall mean the State of .

“ Subsequent Operator ” shall have the meaning set forth in Section 8.7.

“ Subsequent OTA ” shall have the meaning set forth in Section 8.7.

“ Sun ” shall mean Sun Healthcare Group, Inc., a Delaware corporation.

“ Sun Affiliates ” shall have the meaning set forth in Section 9.4.

Exhibit E-28

“ SunBridge ” shall mean SunBridge Healthcare, LLC, a New Mexico limited liability company.

“ SunDance ” shall mean SunDance Rehabilitation Corporation, a Connecticut corporation.

“ Tenant Personal Property ” shall mean the property owned by Licensee and located at the Facility and more fully described in Exhibit F attached hereto.

“ Termination Date ” shall have the meaning set forth in Section 9.3.

[“ VA ” shall have the meaning set forth in Section 1.5.

“ VA Residents ” shall have the meaning set forth in Section 1.5.

“ VA Subcontract ” shall have the meaning set forth in Section 1.5.—DELETE IF NO VA CONTRACT]

“ Vehicle ” shall mean the vehicle(s), if any, listed on Exhibit C.

“ WARN Act ” shall mean the Worker Adjustment and Retraining Notification Act.

Exhibit E-29

EXHIBIT B-1

FORM OF LENDER ACKNOWLEDGEMENT

, 20

VIA FACSIMILE: [**Insert transferor fax no.**]

[**Insert transferor entity address**]

Attention:


		Re:		[Insert facility name]
				[Insert facility address] (the “Facility”)

The undersigned entity (“ Lender ”) has provided financing to (the “ Borrower ”), which is secured by, among other things, the accounts receivable of the Borrower. Lender has been advised that on , 20 (the “ Closing Date ”), the Borrower assumed operational and financial responsibility for the Facility, and that the Facility was previously operated by (“ Transferor ”), pursuant to that certain Operations Transfer Agreement dated as of , 20 (“ Transfer Agreement ”). The undersigned further acknowledges and agrees that the Transferor has granted to a perfected lien on the unpaid accounts receivable with respect to the Facility which relate solely to the period prior to the Closing Date, including, but not limited to, any accounts receivable arising from rate adjustments which relate to the period prior to the Closing Date even if such adjustments occur after the Closing Date (the “ Transferor A/R ”).

This letter will serve to confirm that, notwithstanding anything to the contrary which may be set forth in any agreements between Lender and the Borrower, Lender acknowledges that, in its capacity as a lender to the Borrower, it has no interest in, or lien on, the Transferor A/R and, subject to the provisions herein, agrees to hold in trust for your benefit and to remit promptly to Transferor, at Transferor’s address set forth above, any of the Transferor A/R which it may receive at any time after the Closing Date.


Sincerely,

[Insert Lender name]

By:
Name:
Title:

Exhibit E-30

EXHIBIT B-2

FORM OF NEW OPERATOR REPRESENTATION LETTER

, 20

VIA FACSIMILE:

Re: (the “Facility”)

Ladies and Gentlemen:

Pursuant to our obligations under Section 6.11 of the Operations Transfer Agreement dated , 20 (the “OTA”) for the transfer of operations for the Facility, please be advised and noticed that, the undersigned has not entered into any financing arrangement with any lender whereby the accounts receivable of the Facility have been used, pledged or hypothecated as collateral for such financing.

In the event that, within twelve (12) months following the date of this letter, we enter into any financing arrangement with a lender whereby the accounts receivable of the Facility are used, pledged or hypothecated as collateral for such financing, pursuant to our ongoing obligation under said Section 6.10 of the OTA, we will promptly and timely inform the addressees of this letter of such financing and use commercially reasonable efforts to cause the delivery to you of an appropriately executed Lender Acknowledgement, in the form attached as Exhibit “B-1” to the OTA.


Sincerely,



By:
Name:
Title:

Exhibit E-31

Exhibit “A”

[TO EXHIBIT B-2 OF THE OPERATIONS TRANSFER AGREEMENT]

FORM OF NEW LENDER LETTER

[SEE EXHIBIT B-1 OF THE OPERATIONS TRANSFER AGREEMENT FOR THE

FORM OF THE SAME]

Exhibit E-32

EXHIBIT C

VEHICLES LOCATED AT THE FACILITY AND PROPOSED

DISPOSITION THEREOF ON THE EFFECTIVE DATE

Exhibit E-33

EXHIBIT D

ANCILLARY SERVICES EQUIPMENT TO BE REMOVED

FROM FACILITY

Exhibit E-34

EXHIBIT E

COMPUTER HARDWARE AND SOFTWARE AND TELECOMMUNICATIONS

EQUIPMENT AND SERVICE INFORMATION

AND APPLICABLE RENT AND SERVICE FEE

Exhibit E-35

EXHIBIT F

TENANT PERSONAL PROPERTY

Exhibit E-36

Schedule 1.5

FORM OF VA SUBCONTRACT

SUBCONTRACT AGREEMENT

BETWEEN

AND

This Agreement (hereinafter referred to as “Subcontract”) constitutes the entire agreement between , hereafter, the “Prime Contractor,” and , hereafter, the “Subcontractor,” for services to be performed in furtherance of Prime Contractor’s Agreement No. for nursing home services to be rendered to the Department of Veterans Affairs (the “VA”), including all attachments, formal modifications, and amendments (the “Prime Contract”).

WHEREAS Prime Contractor, operating under the name of , was awarded the Prime Contract by the Department of Veterans Affairs (hereinafter referred to as the “Government”); and

WHEREAS Prime Contractor and Subcontractor have entered into an agreement dated , 20 (the “OTA”), whereby Subcontractor has to assume operational and financial responsibility for the long term care facility commonly known as (the “Facility”) as of the Effective Date (as defined in the OTA); and

WHEREAS under the terms of the OTA, Subcontractor is required to secure the New VA Contract (as defined in the OTA); and

WHEREAS the parties wish to allow Subcontractor for a limited period of time to continue to provide services to the residents of the Facility whose care is paid for by the VA under the terms of the Prime Contract in the event Subcontractor has not secured the New VA Contract as of the Effective Date;

NOW THEREFORE the parties agree as follows:

Exhibit E-37

ARTICLE I – SCOPE OF WORK AND PAYMENT

1. Incorporation Of Prime Contract . The Prime Contract, as currently resident in the Prime Contractor’s official contract file, is incorporated by reference herein. To give effect to the provisions contained therein, references in the Prime Contract to Prime Contractor shall be construed, for purposes of this Subcontract, as referring to Subcontractor, except as explicitly stated below.

2. Subcontractor Responsibility . During the Term (as hereinafter defined), Subcontractor shall (i) be responsible for and shall perform all requirements of the Prime Contract but only as they relate to the Facility, it being understood and agreed that certain obligations imposed on Prime Contractor under the Prime Contract are not specific to the Facility and thus will be and remain the responsibility of Prime Contractor and (ii) upon request shall provide to Prime Contractor such information with respect to its operation of the Facility during the Term as Prime Contractor may need to fulfill certain reporting obligations imposed on it under the terms of the Prime Contract. All work to be performed by Subcontractor under this Subcontract will be performed in accordance with the Prime Contract’s requirements.

3. Payment . Subcontractor shall be entitled to bill the VA for, and to collect when paid by the VA, all Amounts (as hereinafter defined) due and owing under the terms of the Prime Contract in connection with the services provided by Subcontractor thereunder at the Facility during the Term hereof; provided, however, if and to the extent any such amounts are paid to Prime Contractor rather than Subcontractor, they shall be remitted by Prime Contractor to Subcontractor in accordance with the provisions of Section 6 of the OTA; and provided, further, that to the extent Subcontractor receives during the Term of this Agreement any Amounts from the VA which relate to periods prior to the Term, it shall remit the same to Prime Contractor in accordance with the terms of Section 6 of the OTA. “Amounts” includes, without limitation, progress payments, final payments, credits, damages, incentives, and payments pursuant to claims, requests for equitable adjustment, or termination settlements.

ARTICLE II – RELATIONSHIP OF THE PARTIES

1. Cooperation . Both parties shall fully cooperate with each other to ensure that all requirements of the Prime Contract and any orders issued thereunder are satisfied, and that the transition of performance occurs without disruption or inconvenience to the Government. At the request of Subcontractor, Prime Contractor will execute any document which is necessary or desirable for the performance of the Prime Contract with respect to the Facility or for the implementation of this Subcontract.

2. Communications with Government . Prime Contractor will not initiate any communication with the Government which relates to services provided at the Facility or the payment therefore during the Term without the knowledge and consent of the Subcontractor. If the Government initiates any such communication, the Prime Contractor will, to the extent practicable, include the Subcontractor in the

Exhibit E-38

communication. Prime Contractor agrees to share and discuss with Subcontractor the contents of any meeting, conversation, or correspondence between itself and the Government which relates to services provided at the Facility or the payment therefore during the Term under the terms of the Prime Contract. Prime Contractor shall insure that all written communications from the Government referring to or relating to the Prime Contract and which relate to services rendered at the Facility during the Term are promptly forwarded to Subcontractor and Subcontractor shall insure that all written communications from the Government referring to or relating to the Prime Contact and which relate to service rendered at the Facility prior to the Term are promptly forwarded to Prime Contractor.

3. Agency and Power Of Attorney . Prime Contractor irrevocably appoints Subcontractor to act as its agent and attorney in fact for all purposes related to performance and administration of the Prime Contract as it relates to the Facility only, it being understood and agreed that Subcontractor shall have no authority to take any action with respect to the Prime Contract which would affect any other facility covered by the terms thereof which is owned or operated by Prime Contractor or any affiliate thereof. Subject to the foregoing limitation, the rights granted to Subcontractor under this Section II(3), shall include but not be limited to, the following:

(a) Subcontractor is authorized to respond to all Government requests, execute documents and in all other respects to act in the name of Prime Contractor with the power and authority to bind Prime Contractor.

(b) Subcontractor shall attend as Prime Contractor’s agent all meetings between the Government and Prime Contractor regarding the Prime Contract.

(c) Subcontractor may receive any and all amounts, funds, payments, credits and receipts from the Government or other parties relating to the Prime Contract, may negotiate any instruments constituting the same, and may deposit the same into accounts to be established by Prime Contractor for the sole benefit of Subcontractor.

4. Government Consent and Disclosure . Prime Contractor warrants to Subcontractor that it has notified the Government of its intent to enter into this Subcontract and has obtained the Government’s consent, if such consent is required by the Prime Contract or otherwise. The parties hereby agree that the contents of this Subcontract may be made known to the Government.

ARTICLE III – TERM AND TERMINATION

1. Term . Unless earlier terminated pursuant to Section III(2), the term of this Subcontract and period of performance shall commence on the Effective Date as defined in the OTA and shall continue until the earlier to occur of the execution of the New VA Contract by Subcontractor or the 45 ^th day after the Effective Date (the “Term”) , it being understood and agreed that in the event Subcontractor has not secured the New

Exhibit E-39

VA Contract within such forty five (45) day period, then Subcontractor shall have no further rights under this Subcontract and shall be required to take such action as may be necessary to promptly transfer the VA Residents (as defined in the OTA) from the Facility to other facilities in the same geographic area, including other facilities operated by Prime Contractor or Subcontractor, which have contracts in effect with the VA for the payment for the care rendered to the VA Residents. Notwithstanding the foregoing, this Subcontract shall be null and void and of no force and effect in the event Subcontractor has secured the New VA Contract as of the Effective Date and has provided Prime Contractor with evidence thereof.

2. Government Termination . This Subcontract shall terminate to the extent that the Government terminates the Prime Contract or that portion thereof which relates to the Facility. If and to the extent that the Prime Contract is terminated in whole or in part by the Government as to the Facility, Subcontractor shall be entitled to receive all compensation due the Prime Contractor in accordance with the applicable termination clause at FAR 52.212-4 Contract Terms and Conditions – Commercial Items (May 1999) which is set forth in Section D.1 of the Prime Contract and Subcontractor shall be required to take such action as may be necessary to promptly transfer the VA Residents from the Facility to other facilities in the same geographic area, including other facilities operated by Prime Contractor or Subcontractor, which have contracts in effect with the VA for the payment for the care rendered to the VA Residents.

ARTICLE IV –INSURANCE, INDEMNITY AND

COMPLIANCE WITH APPLICABLE LAWS

1. Insurance . Throughout the term of this Subcontract, each party shall procure and maintain in force and effect the types of insurance and levels of coverages listed in Section D.3 of the Prime Contract. A party shall provide proof of such insurance and levels of coverage to the other party upon reasonable request. Upon request, each such party shall make the other an additional named insured.

2. Indemnity . Subcontractor agrees to indemnify and defend and hold harmless Prime Contractor from and against any allegation of violation or violation of the Prime Contract or any legal requirements imposed by the Government in connection with the payments made under the Prime Contract, including, but not limited to, any allegations related to the care rendered by Subcontractor to the patients covered by the Prime Contract or for overpayment by the Government to Subcontractor for the services provided by Subcontractor during the Term of this Agreement under the Prime Contract.

3. Legal Requirements . The parties agree to take necessary precautions to assure compliance with all legal requirements pertaining to Government contracting generally and the Prime Contract in particular.

ARTICLE V – CONFIDENTIALITY

Exhibit E-40

1. Confidential Information . Confidential information marked as such, or known to the receiving party to be confidential and proprietary to the disclosing party (hereinafter referred to as “Confidential Information”), will not be disclosed to a third party, except as authorized by the disclosing party. The receiving party is authorized to use Confidential Information in furtherance of the objectives of the Subcontract and in the performance and administration of the Prime Contract and any orders issued thereunder, and is granted any necessary license or permission by the disclosing party to do so. Disclosure of Confidential Information to third parties is authorized solely to the extent that such information is known or available to the trade or to the public or to the receiving party, without restriction, at the time of disclosure or becomes publicly available through no action of the receiving party. It is agreed that each of the parties hereto will protect and restrict access to Confidential Information with the same diligence as if it were its own.

With respect to Confidential Information which will be disclosed or delivered to the Government, if the Information was marked with a restrictive notice by the originating party, the disclosing party will retain the restrictive notice, or will substitute the notice prescribed by the Government for such purposes, provided that the Prime Contract authorizes use of such a notice. If either party is notified that the Government proposes to disclose any such Confidential Information to a third party or is considering doing so, it will notify the other party. If the Prime Contractor receives such notice regarding Confidential Information of the Subcontractor, the Prime Contractor agrees to cooperate in either authorizing or contesting such disclosure.

In the event of an authorized disclosure by a party to a third party other than the Government, any restrictive notice will be retained on any information so disclosed.

Upon termination or expiration of this Subcontract and completion of all deliverable requirements contained in this Subcontract and in any orders issued thereunder outstanding as of the date of termination or expiration, the parties agree to return all Confidential Information and copies thereof in their possession to the disclosing party or destroy all such Confidential Information and copies and provide sworn statement attesting to such destruction to the disclosing party.

As between the Subcontractor and the Prime Contractor, the foregoing provisions as to the disclosure and use of Confidential Information shall expire five (5) years from the date such information is received by the receiving party.

2. Contract Information . There shall be no dissemination or publication, except within and between the Prime Contractor, the Subcontractor and the Government, of information developed under this Subcontract or contained in the reports to be furnished pursuant to this Subcontract, without prior written approval of the Subcontractor.

3. Survival . The provisions of this Article V shall survive termination or expiration of the Term of this Subcontract.

Exhibit E-41

ARTICLE VI – DISPUTES

1. Resolution of Disputes . For the purposes of this Subcontract, the terms “claim,” “certification” or “certify,” and “dispute” shall have the meaning of the same terms as used in the Contract Disputes Act of 1978 (41 U.S.C. §§ 601-613), FAR Subpart 33.2, Disputes and Appeals, and FAR 52.233-1, Disputes (7/02).

2. Procedure . To the extent that a claim or dispute between the Prime Contractor and the Subcontractor arises from the action or inaction of the Government (including the interpretation and construction of provisions of this Subcontract originating in the Prime Contract), the parties to this Subcontract will participate in the disputes process set forth in the Prime Contract in accordance with all applicable laws, regulations, and judicial and administrative rulings. In the event of a denial of a claim by the Contracting Officer with respect to services provided by Subcontractor during the Term, to the extent required by the terms of the Prime Contract, Prime Contractor shall, at the sole cost and expense of Subcontractor, appeal or file suit pursuant to the Contract Disputes Act and implementing regulations at the request of Subcontractor, or, to the extent permitted by the terms of the Prime Contract, permit the Subcontractor to proceed, at Subcontractor’s sole cost and expense, with such appeal or suit in the Prime Contractor’s name. The parties will be bound by the results of that process. Each party shall keep the other party reasonably updated with respect to any such appeals or legal proceeding which it is handling.

Subcontractor is authorized to settle and resolve all claims, demands and disputes relating to services provided by Subcontractor at the Facility under the terms of the Prime Contract during the Term, in the name and as the agent of the Prime Contractor. Subcontractor shall have no authority to resolve any claims, demands or disputes relating to services provided by Prime Contractor at the Facility prior to the Term or at any other facility covered by the Prime Contract, whether prior to, during or after the Term.

To the extent that a claim or dispute between the Prime Contractor and the Subcontractor does not arise from the action or inaction of the Government, but rather solely from the action or inaction of a party to this Subcontract, then it shall be resolved in accordance with the OTA.

3. Continuation of Performance . The Prime Contractor and the Subcontractor shall proceed diligently with performance of this Subcontract, pending final resolution of any request for relief, claim, appeal, dispute or action arising under or in connection with the Subcontract.

ARTICLE VII – MISCELLANEOUS

1. Waiver . The waiver or failure of either party to enforce the terms of this Subcontract shall not constitute a waiver of that party’s rights under this Subcontract with respect to any other violation of the same or other terms.

Exhibit E-42

2. Entire Agreement . This Subcontract and the OTA contain the entire understanding between the parties hereto relating to the subject matter hereof and supersede all prior negotiations, agreements, communications and writings with respect to this Subcontract. This Subcontract may only be amended by a writing signed by both parties hereto.

3. Severability . The provisions of this Subcontract are independent and severable. To the extent that any one provision is rendered inoperative, or is contrary to law, the parties agree that, to the extent possible, all other provisions of the Subcontract shall be given full force and effect.

4. Section Headings . Section headings are provided for purposes of convenience only, and do not limit the scope or effect of the provisions and clauses of this Subcontract.

5. Applicable Law . This Subcontract shall be interpreted, and construed under (in order of preference) the law applicable to Federal contracts, and the law of the State (as defined in the OTA).

6. Notices . Any notice or communication required to be given by this Subcontract must be delivered as if a notice under the OTA.

7. Authority . This Subcontract is executed by individuals who are duly authorized to legally bind their respective organizations.

Exhibit E-43

IN WITNESS WHEREOF, the parties have caused this Subcontract to be duly executed effective this day of , 20 .


		PRIME CONTRACTOR:

		By:

		Name:

		Title:

		SUBCONTRACTOR:

		By:

		Name:

		Title:

Exhibit E-44

Schedule 2.1

BILL OF SALE

In consideration of Ten Dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, , a (“Seller”) does hereby grant, bargain, sell, convey and transfer to , a (“Purchaser”) all of its right, title and interest, if any, in and to, all and singular, the __________________, as those terms are defined in that certain Operations Transfer Agreement dated , 20 between Seller and Purchaser (the “OTA”) free and clear of all liens and encumbrances.

Dated this day of , 20 .


By:
Its:

Exhibit E-45

Schedule 2.3

ASSIGNMENT AGREEMENT

This Agreement is made and entered into effective as of the day of , 200 (the “Effective Date”) by and between , a (“Assignor”) and , a (“Assignee”).

RECITALS

A. Assignor is the lessee of that [long term care/assisted living] facility known as and located at (the “Facility”).

B. Assignor and Assignee have entered into a certain Operations Transfer Agreement dated as of , 20 (the “OTA”), pursuant to which Assignor has agreed to transfer and assign to Assignee and Assignee has agreed to take and accept from Assignor, all of Assignor’s right title and interest in and to the Assigned Admission Agreements.

C. Assignor and Assignee are desirous of documenting the terms and conditions under which said assignment and assumption will occur.

D. Capitalized terms used herein and not otherwise defined shall have the meaning ascribed to them in the OTA.

NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants of the parties set forth herein, IT IS HEREBY AGREED AS FOLLOWS:

AGREEMENT

1. Assignment . As of the Effective Date, Assignor does hereby sell, assign, transfer and convey to Assignee all of Assignor’s right, title and interest, if any, in and to the Assigned Admission Agreements; provided, however, nothing herein shall be construed as imposing any liability on Assignee with respect to the Assigned Admission Agreements as a result of the acts or omissions of Assignor or of its officers, employees, contractors, agents or affiliates thereunder prior to the Effective Date or as imposing any liability on Assignor with respect to the Assigned Admission Agreements as a result of the acts or omissions of Assignee or of its officers, employees, contractors, agents or affiliates from and after the Effective Date.

2. Assumption . From and after the Effective Date, Assignee does hereby accept the sale, assignment, transfer and conveyance of Assignor’s right, title and interest, if any, in and to the Assigned Admission Agreements; provided, however, nothing herein shall be construed as imposing any liability on Assignee with respect to the Assigned

Exhibit E-46

Admission Agreements as a result of the acts or omissions of Assignor or its officers, employees, contractors, agents or affiliates thereunder prior to the Effective Date or as imposing any liability on Assignor with respect to the Assigned Admission Agreements as a result of the acts or omissions of Assignee or its officers, employees, contractors, agents or affiliates thereunder from and after the Effective Date.

3. Governing Law/Amendment . This Agreement shall be governed by and construed in accordance with the laws of the State and may not be amended or modified except by written instrument signed by the parties hereto.

4. Counterparts . This Agreement may be executed in counterparts, each of which shall be deemed to be an original, but all of which taken together shall constitute but one and the same instrument. Delivery of an executed counterpart of a signature page to this Agreement via telephone facsimile transmission or electronic mail shall be effective as delivery of a manually executed counterpart of this Agreement provided the manually executed counterpart is thereafter delivered unless such delivery is waived by the receiving party.

5. Attorneys’ Fees . In the event of a dispute among the parties hereto with respect to the subject matter hereof, the prevailing party in any such dispute shall be entitled to collect from the other any and all attorneys’ fees and costs.

6. Entirety . This Agreement represents the entire agreement of the parties with respect to the subject matter hereof, it being understood and agreed that nothing herein shall affect the rights and obligations of Assignor and Assignee under the OTA.

7. Notices . Any notice, request or other communication to be given by either party hereunder shall be in writing and shall be sent to the parties and in the manner specified in the OTA.

8. Severability . Should any one or more of the provisions hereof be deemed to be invalid or unenforceable said determination shall not affect the validity or enforceability of the remaining terms hereof.

9. Captions . The captions in this Agreement have been inserted for convenience of reference only and shall not be construed to define or to limit any of the terms or conditions hereof.

IN WITNESS WHEREOF, the parties hereby execute this Agreement as of the day and year first set forth above.

ASSIGNOR:


By:
Its:

Exhibit E-47

ASSIGNEE:


By:
Its:

Exhibit E-48

SCHEDULE 1A

SCHEDULE OF LANDLORD ENTITIES


Facility Name		Landlord Entity

SCHEDULE 1A-1

SCHEDULE 1B

SCHEDULE OF TENANT ENTITIES


Facility Name		Tenant Entity

SCHEDULE 1B-1

TABLE OF CONTENTS

MASTER LEASE


			Page No.

ARTICLE I				1

	1.1	Leased Property		1

	1.2	Single, Indivisible Lease		2

	1.4	Term		3

	1.5	Renewal Terms		3

ARTICLE II				3

	2.1	Definitions		3

ARTICLE III				14

	3.1	Rent		14

	3.2	Late Payment of Rent		14

	3.3	Method of Payment of Rent		14

	3.4	Net Lease		14

ARTICLE IV				15

	4.1	Impositions		15

	4.2	Utilities		16

	4.3	Impound Account		16

ARTICLE V				16

	5.1	No Termination, Abatement, etc.		16

ARTICLE VI				17

	6.1	Ownership of the Leased Property		17

	6.2	Landlord’s Personal Property		18

	6.3	Tenant’s Personal Property		19

ARTICLE VII				19

	7.1	Condition of the Leased Property		19

	7.2	Use of the Leased Property		19

	7.3	Preservation of Business		20

ARTICLE VIII				21

	8.1	Representations and Warranties		21

	8.2	Compliance with Legal and Insurance Requirements, etc.		21

(i)

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(continued)


			Page No.

ARTICLE IX				22

	9.1	Maintenance and Repair		22

	9.2	Encroachments, Restrictions, Mineral Leases, etc		23

ARTICLE X				24

	10.1	Construction of Capital Additions to the Leased Property		24

	10.2	Construction Requirements for all Capital Additions		25

	10.3	Funding by Landlord		26

ARTICLE XI				27

	11.1	Liens		27

ARTICLE XII				28

	12.1	Permitted Contests		28

ARTICLE XIII				28

	13.1	General Insurance Requirements		28

	13.2	Replacement Cost		30

	13.3	Additional Insurance		30

	13.4	Waiver of Subrogation		30

	13.5	Policy Requirements		30

	13.6	Increase in Limits		31

	13.7	Blanket Policy		31

	13.8	No Separate Insurance		31

ARTICLE XIV				32

	14.1	Insurance Proceeds		32

	14.2	Tenant’s Obligations Following Casualty		32

	14.3	No Abatement of Rent		33

	14.4	Waiver		33

	14.5	Damage Near End of Term		33

	14.6	Insurance Proceeds Paid to Facility Mortgagee		34

	14.7	Termination of Master Lease; Abatement of Rent		34

ARTICLE XV				34

	15.1	Condemnation		34

(ii)

TABLE OF CONTENTS

(continued)


			Page No.

	15.2	Award Distribution		35

	15.3	Temporary Taking		35

	15.4	Condemnation Awards Paid to Facility Mortgagee		35

	15.5	Termination of Master Lease; Abatement of Rent		35

ARTICLE XVI				36

	16.1	Events of Default		36

	16.2	Certain Remedies		38

	16.3	Damages		39

	16.4	Limited Remedy Events of Default		40

	16.5	Receiver		40

	16.6	Waiver		40

	16.7	Application of Funds		40

ARTICLE XVII				41

	17.1	Landlord’s Right to Cure Tenant’s Default		41

ARTICLE XVIII				41

	18.1	Purchase of the Leased Property		41

ARTICLE XIX				41

	19.1	Holding Over		41

ARTICLE XX				42

ARTICLE XXI				42

	21.1	General Indemnification		42

ARTICLE XXII				43

	22.1	Subletting and Assignment		43

	22.3	Permitted Occupancy Agreements		44

	22.4	Costs		44

	22.5	No Release of Tenant’s Obligations; Exception		44

ARTICLE XXIII				44

	23.1	Officer’s Certificates and Financial Statements		44

	23.2	Public Offering Information		46

	23.3	Landlord Obligations		47

(iii)

TABLE OF CONTENTS

(continued)


			Page No.

ARTICLE XXIV				47

	24.1	Landlord’s Right to Inspect		47

ARTICLE XXV				48

	25.1	No Waiver		48

ARTICLE XXVI				48

	26.1	Remedies Cumulative		48

ARTICLE XXVII				48

	27.1	Acceptance of Surrender		48

ARTICLE XXVIII				48

	28.1	No Merger		48

ARTICLE XXIX				48

	29.1	Conveyance by Landlord		48

ARTICLE XXX				48

	30.1	Quiet Enjoyment		48

ARTICLE XXXI				49

	31.1	Landlord’s Financing		49

	31.2	Attornment		49

	31.3	Compliance with Facility Mortgage Documents		50

ARTICLE XXXII				51

	32.1	Hazardous Substances		51

	32.2	Notices		52

	32.3	Remediation		52

	32.4	Indemnity		52

	32.5	Environmental Inspections		53

ARTICLE XXXIII				54

	33.1	Memorandum of Lease		54

ARTICLE XXXIV				54

	34.1	Fair Market Value/Rental		54

ARTICLE XXXV				55

	35.1	Notices		55

(iv)

TABLE OF CONTENTS

(continued)


			Page No.

ARTICLE XXXVI				56

	36.1	Transfer of Operational Control of the Facilities		56

	36.2	Landlord’s Option to Purchase Tenant’s Personal Property		56

ARTICLE XXXVII				56

	37.1	Attorneys’ Fees		56

ARTICLE XXXVIII				57

	38.1	Brokers		57

ARTICLE XXXIX				57

	39.1	Anti-Terrorism Representations		57

ARTICLE XL				58

	40.1	REIT Protection		58

ARTICLE XLI				59

	41.1	Survival		59

	41.2	Severability		59

	41.3	Non-Recourse		59

	41.4	Licenses		59

	41.5	Successors and Assigns		60

	41.6	Governing Law		60

	41.7	Waiver of Trial by Jury		61

	41.8	Entire Agreement		61

	41.9	Headings		61

	41.10	Counterparts		62

	41.11	Interpretation		62

	41.12	Time of Essence		62

	41.13	Further Assurances		62

	41.14	Right of First Opportunity		62

(v)

TABLE OF CONTENTS

(continued)

EXHIBITS AND SCHEDULES

EXHIBIT A SCHEDULE OF FACILITIES

EXHIBIT B LEGAL DESCRIPTIONS

EXHIBIT C TENANT PERSONAL PROPERTY

EXHIBIT D SCHEDULE OF ALLOCATED INITIAL INVESTMENT AMOUNTS

EXHIBIT E FORM OF OPERATIONS TRANSFER AGREEMENT

SCHEDULE 1A SCHEDULE OF LANDLORD ENTITIES

SCHEDULE 1B SCHEDULE OF TENANT ENTITIES

(vi)

Exhibit 10.3

GUARANTY OF MASTER LEASE

This GUARANTY OF MASTER LEASE (this “ Guaranty ”), is made and entered into as of the day of , 2010 by SHG SERVICES, INC ., a Delaware corporation (“ Guarantor ”), in favor of (collectively, “ Landlord ”).

RECITALS

A. Landlord and (collectively, “ Tenant ”), have entered into that certain Master Lease dated of even date herewith (the “ Master Lease ”). All initially-capitalized terms used and not otherwise defined herein shall have the same meanings given such terms in the Master Lease.

B. Guarantor acknowledges and agrees that this Guaranty is given in accordance with the requirements of the Master Lease and that Landlord would not have been willing to enter into the Master Lease unless Guarantor was willing to execute and deliver this Guaranty.

AGREEMENTS

NOW, THEREFORE , in consideration of Landlord entering into the Master Lease with Tenant, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Guarantor agrees as follows:

1. Guaranty . In consideration of the benefit derived or to be derived by it therefrom, as to the Master Lease, from and after the Commencement Date thereof, Guarantor hereby unconditionally and irrevocably guarantees (i) the payment when due of all Rent and all other sums payable by Tenant under the Master Lease, and (ii) the faithful and prompt performance when due of each and every one of the terms, conditions and covenants to be kept and performed by Tenant and its Affiliates under the Master Lease, and any and all amendments, modifications, extensions and renewals of the Master Lease, including without limitation all indemnification obligations, insurance obligations, and all obligations to operate, rebuild, restore or replace any facilities or improvements now or hereafter located on the Leased Property covered by the Master Lease (collectively, the “ Obligations ”). In the event of the failure of Tenant to pay any such Rent or other sums, or to render any other performance required of Tenant and its Affiliates under the Master Lease, when due or within any applicable cure period, Guarantor shall forthwith perform or cause to be performed all provisions of the Master Lease to be performed by Tenant and its Affiliates thereunder, and pay all reasonable costs of collection or enforcement and other damages that may result from the non-performance thereof to the full extent provided under the Master Lease. As to the Obligations, Guarantor’s liability under this Guaranty is without limit.

2. Survival of Obligations . The obligations of Guarantor under this Guaranty shall survive and continue in full force and effect notwithstanding:

(a) any amendment, modification, or extension of the Master Lease;

(b) any compromise, release, consent, extension, indulgence or other

action or inaction in respect of any terms of the Master Lease or any other guarantor;

(c) any substitution or release, in whole or in part, of any security for this Guaranty which a Landlord may hold at any time;

(d) any exercise or non-exercise by a Landlord of any right, power or remedy under or in respect of the Master Lease or any security held by Landlord with respect thereto, or any waiver of any such right, power or remedy;

(e) any bankruptcy, insolvency, reorganization, arrangement, adjustment, composition, liquidation, or the like of Tenant or any other guarantor;

(f) any limitation of Tenant’s liability under the Master Lease or any limitation of Tenant’s liability thereunder which may now or hereafter be imposed by any statute, regulation or rule of law, or any illegality, irregularity, invalidity or unenforceability, in whole or in part, of the Master Lease or any term thereof;

(g) any sale, lease, or transfer of all or any part of any interest in any Facility or any or all of the assets of Tenant to any other person, firm or entity other than to Landlord;

(h) any act or omission by Landlord with respect to any of the security instruments or any failure to file, record or otherwise perfect any of the same;

(i) any extensions of time for performance under the Master Lease, whether prior to or after the expiration of the Term;

(j) the release of Tenant from performance or observation of any of the agreements, covenants, terms or conditions contained in the Master Lease by operation of law or otherwise;

(k) the fact that Tenant may or may not be personally liable, in whole or in part, under the terms of the Master Lease to pay any money judgment;

(l) the failure to give Guarantor any notice of acceptance, default or otherwise;

(m) any other guaranty now or hereafter executed by Guarantor or anyone else in connection with the Master Lease;

(n) any rights, powers or privileges Landlord may now or hereafter have against any other person, entity or collateral; or

(o) any other circumstances, whether or not Guarantor had notice or knowledge thereof.

3. Primary Liability . The liability of Guarantor with respect to the Master Lease shall be primary, direct and immediate, and Landlord may proceed against Guarantor: (a) prior to or in lieu of proceeding against Tenant, its assets, any security deposit, or any other

guarantor; and (b) prior to or in lieu of pursuing any other rights or remedies available to Landlord. All rights and remedies afforded to Landlord by reason of this Guaranty or by law are separate, independent and cumulative, and the exercise of any rights or remedies shall not in any way limit, restrict or prejudice the exercise of any other rights or remedies.

In the event of any default under the Master Lease, a separate action or actions may be brought and prosecuted against Guarantor whether or not Tenant is joined therein or a separate action or actions are brought against Tenant. Landlord may maintain successive actions for other defaults. Landlord’s rights hereunder shall not be exhausted by its exercise of any of its rights or remedies or by any such action or by any number of successive actions until and unless all indebtedness and Obligations the payment and performance of which are hereby guaranteed have been paid and fully performed.

4. Obligations Not Affected . In such manner, upon such terms and at such times as Landlord in its sole discretion deems necessary or expedient, and without notice to Guarantor, Landlord may: (a) amend, alter, compromise, accelerate, extend or change the time or manner for the payment or the performance of any Obligation hereby guaranteed; (b) extend, amend or terminate the Master Lease; or (c) release Tenant by consent to any assignment (or otherwise) as to all or any portion of the Obligations hereby guaranteed. Any exercise or non-exercise by Landlord of any right hereby given Landlord, dealing by Landlord with Guarantor or any other guarantor, Tenant or any other person, or change, impairment, release or suspension of any right or remedy of Landlord against any person including Tenant and any other guarantor will not affect any of the Obligations of Guarantor hereunder or give Guarantor any recourse or offset against Landlord.

5. Waiver . With respect to the Master Lease, Guarantor hereby waives and relinquishes all rights and remedies accorded by applicable law to sureties and/or guarantors or any other accommodation parties, under any statutory provisions, common law or any other provision of law, custom or practice, and agrees not to assert or take advantage of any such rights or remedies including, but not limited to:

(a) any right to require Landlord to proceed against Tenant or any other person or to proceed against or exhaust any security held by Landlord at any time or to pursue any other remedy in Landlord’s power before proceeding against Guarantor or to require that Landlord cause a marshaling of Tenant’s assets or the assets, if any, given as collateral for this Guaranty or to proceed against Tenant and/or any collateral, including collateral, if any, given to secure Guarantor’s obligation under this Guaranty, held by Landlord at any time or in any particular order;

(b) any defense that may arise by reason of the incapacity or lack of authority of any other person or persons;

(c) notice of the existence, creation or incurring of any new or additional indebtedness or obligation or of any action or non-action on the part of Tenant, Landlord, any creditor of Tenant or Guarantor or on the part of any other person whomsoever under this or any other instrument in connection with any obligation or evidence of indebtedness held by Landlord or in connection with any obligation hereby guaranteed;

(d) any defense based upon an election of remedies by Landlord which

destroys or otherwise impairs the subrogation rights of Guarantor or the right of Guarantor to proceed against Tenant for reimbursement, or both;

(e) any defense based upon any statute or rule of law which provides that the obligation of a surety must be neither larger in amount nor in other respects more burdensome than that of the principal;

(f) any duty on the part of Landlord to disclose to Guarantor any facts Landlord may now or hereafter know about Tenant, regardless of whether Landlord has reason to believe that any such facts materially increase the risk beyond that which Guarantor intends to assume or has reason to believe that such facts are unknown to Guarantor or has a reasonable opportunity to communicate such facts to Guarantor, it being understood and agreed that Guarantor is fully responsible for being and keeping informed of the financial condition of Tenant and of all circumstances bearing on the risk of non-payment or non-performance of any Obligations or indebtedness hereby guaranteed;

(g) any defense arising because of Landlord’s election, in any proceeding instituted under the federal Bankruptcy Code, of the application of Section 1111(b)(2) of the federal Bankruptcy Code;

(h) any defense based on any borrowing or grant of a security interest under Section 364 of the federal Bankruptcy Code; and

(i) all rights and remedies accorded by applicable law to guarantors, including without limitation, any extension of time conferred by any law now or hereafter in effect and any requirement or notice of acceptance of this Guaranty or any other notice to which the undersigned may now or hereafter be entitled to the extent such waiver of notice is permitted by applicable law.

6. Warranties . With respect to the Master Lease, Guarantor warrants that: (a) this Guaranty is executed at Tenant’s request; and (b) Guarantor has established adequate means of obtaining from Tenant on a continuing basis financial and other information pertaining to Tenant’s financial condition. Guarantor agrees to keep adequately informed from such means of any facts, events or circumstances which might in any way affect Guarantor’s risks hereunder, and Guarantor further agrees that Landlord shall have no obligation to disclose to Guarantor information or material acquired in the course of Landlord’s relationship with Tenant.

7. No-Subrogation . Until all Obligations of Tenant under the Master Lease have been satisfied and discharged in full for one (1) year, Guarantor shall have no right of subrogation and waives any right to enforce any remedy which Landlord now has or may hereafter have against Tenant and any benefit of, and any right to participate in, any security now or hereafter held by Landlord with respect to the Master Lease.

8. Subordination . If for any reason whatsoever Tenant now or hereafter becomes indebted to Guarantor or any Affiliate of any Guarantor, such indebtedness and all interest thereon shall at all times be subordinate to Tenant’s obligation to Landlord to pay as and when due in accordance with the terms of the Master Lease the guaranteed Obligations. During any

time in which an Event of Default has occurred and is continuing under the Master Lease and not been cured within any cure period provided for therein (and provided that Guarantor has received written notice thereof), Guarantor agrees to make no claim for such indebtedness that does not recite that such claim is expressly subordinate to Landlord’s rights and remedies under the Master Lease.

9. No Delay . Any payments required to be made by Guarantor hereunder shall become due within ten (10) days of written demand therefor following the occurrence and continuance of an Event of Default under the Master Lease.

10. Application of Payments . With respect to the Master Lease, and with or without notice to Guarantor, Landlord, in Landlord’s sole discretion and at any time and from time to time and in such manner and upon such terms as Landlord deems appropriate, may (a) apply any or all payments or recoveries from Tenant or from any other guarantor under any other instrument or realized from any security, in such manner and order of priority as Landlord may determine, to any indebtedness or other obligation of Tenant with respect to the Master Lease and whether or not such indebtedness or other obligation is guaranteed hereby or is otherwise secured or is due at the time of such application, and (b) refund to Tenant any payment received by Landlord under the Master Lease.

11. Guaranty Default .

(a) As used herein, the term “ Guaranty Default ” shall mean one or more of the following events (subject to applicable cure periods):

(i) the failure of Guarantor to pay the amounts required to be paid hereunder within ten (10) days of written demand therefor following the occurrence and continuance of an Event of Default under the Master Lease; and

(ii) the failure of Guarantor to observe and perform any covenant, condition or agreement on its part to be observed or performed, other than as referred to in subsection (i) above, for a period of thirty (30) days after written notice of such failure has been given to Guarantor by Landlord, unless Landlord agrees in writing to an extension of such time prior to its expiration.

(b) Upon the occurrence of a Guaranty Default, Landlord shall have the right to bring such actions at law or in equity, including appropriate injunctive relief, as it deems appropriate to compel compliance, payment or deposit, and among other remedies to recover its reasonable attorneys’ fees in any proceeding, including any appeal therefrom and any post judgment proceedings.

12. Financial Statements . Within ninety five (95) days after the end of each of Guarantor’s Fiscal Years or concurrently with the filing by Guarantor of its annual report on Form 10K with the SEC, whichever is later, Guarantor shall deliver to Landlord a copy of its (consolidated) Financial Statements, which may be those contained in a copy of such annual report on Form 10-K, prepared in accordance with GAAP, consistently applied, and certified by an officer of Guarantor and reported on by a “Big Four” certified public accounting firm or other certified public accounting firm approved by Landlord, which approval will not be unreasonably withheld. Together with Guarantor’s Financial Statements furnished in

accordance with the preceding sentence, Guarantor shall deliver (a) an Officer’s Certificate of Guarantor stating that Guarantor is not in default in the performance or observance of any of the terms of this Guaranty, or if Guarantor is in default, specifying all such defaults, the nature thereof, and the steps being taken to remedy the same, and (b) a report with respect to the financial statements from Guarantor’s accountants, which report shall be unqualified as to going concern and scope of audit of Guarantor and its subsidiaries and shall provide in substance that (i) such consolidated financial statements present fairly the consolidated financial position of Guarantor and its subsidiaries as at the dates indicated and the results of their operations and cash flow for the periods indicated in conformity with GAAP, and (ii) that the examination by Guarantor’s accountants in connection with such consolidated financial statements has been made in accordance with generally accepted auditing standards.

13. Notices . Any notice, request or other communication to be given by any party hereunder shall be in writing and shall be sent by registered or certified mail, postage prepaid and return receipt requested, by hand delivery or express courier service, by facsimile transmission or by an overnight express service to the following address:


To Guarantor :		c/o Sun Healthcare Group, Inc.
		101 Sun Avenue, NE
		Albuquerque, NM 87109
		Attention: Director of Real Estate
		Fax Number: 505-468-4998
		Attention: General Counsel
		Fax Number: 505-468-8752

With a copy to: (that shall not constitute notice)		Sun Healthcare Group, Inc. 18831 Von Karman, Suite 400 Irvine, CA 92612 Attention: General Counsel Fax Number: 949-255-7057

And with a copy to: (that shall not constitute notice)		The Nathanson Group PLLC One Union Square 600 University Street, Suite 2000 Seattle, WA 98101-1195 Attention: Randi S. Nathanson, Esq. Fax Number: 206-299-9335

To Landlord :		c/o Sabra Health Care REIT, Inc.
		18500 Von Karman Avenue, Suite 550
		Irvine, CA 92612
		Attention: Chief Executive Officer
		Fax Number: - -

And with a copy to (which shall not constitute notice):		Sherry Meyerhoff Hanson & Crance LLP 610 Newport Center Drive, Suite 1200 Newport Beach, CA 92660-6445 Attention: Kevin L. Sherry, Esq. Fax Number: 949-719-1212

or to such other address as either party may hereafter designate. Notice shall be deemed to have been given on the date of delivery if such delivery is made on a Business Day, or if not, on the first Business Day after delivery. If delivery is refused, Notice shall be deemed to have been given on the date delivery was first attempted. Notice sent by facsimile transmission shall be deemed given upon confirmation that such Notice was received at the number specified above or in a Notice to the sender.

14. Miscellaneous .

(a) No term, condition or provision of this Guaranty may be waived except by an express written instrument to that effect signed by Landlord. No waiver of any term, condition or provision of this Guaranty will be deemed a waiver of any other term, condition or provision, irrespective of similarity, or constitute a continuing waiver of the same term, condition or provision, unless otherwise expressly provided.

(b) If any one or more of the terms, conditions or provisions contained in this Guaranty is found in a final award or judgment rendered by any court of competent jurisdiction to be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining terms, conditions and provisions of this Guaranty shall not in any way be affected or impaired thereby, and this Guaranty shall be interpreted and construed as if the invalid, illegal, or unenforceable term, condition or provision had never been contained in this Guaranty.

(c) THIS GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA, EXCEPT THAT THE LAWS OF THE STATE SHALL GOVERN THIS AGREEMENT TO THE EXTENT NECESSARY (I) TO OBTAIN THE BENEFIT OF THE RIGHTS AND REMEDIES SET FORTH HEREIN WITH RESPECT TO ANY OF THE LEASED PROPERTY AND (II) FOR PROCEDURAL REQUIREMENTS WHICH MUST BE GOVERNED BY THE LAWS OF THE STATE. GUARANTOR CONSENTS TO IN PERSONAM JURISDICTION BEFORE THE STATE AND FEDERAL COURTS OF CALIFORNIA AND AGREES THAT ALL DISPUTES CONCERNING THIS GUARANTY SHALL BE HEARD IN THE STATE AND FEDERAL COURTS LOCATED IN THE STATE OF CALIFORNIA. GUARANTOR FURTHER CONSENTS TO IN PERSONAM JURISDICTION BEFORE THE STATE AND FEDERAL COURTS OF EACH STATE WITH RESPECT TO ANY ACTION COMMENCED BY LANDLORD SEEKING TO RETAKE POSSESSION OF ANY OR ALL OF THE LEASED PROPERTY IN WHICH GUARANTOR IS REQUIRED TO BE NAMED AS A NECESSARY PARTY. GUARANTOR AGREES THAT SERVICE OF PROCESS MAY BE EFFECTED UPON IT UNDER ANY METHOD PERMISSIBLE UNDER THE LAWS OF THE STATE OF CALIFORNIA AND IRREVOCABLY WAIVES ANY OBJECTION TO VENUE IN THE STATE AND FEDERAL COURTS LOCATED IN THE STATE OF CALIFORNIA OR, TO THE EXTENT APPLICABLE IN ACCORDANCE WITH THE TERMS HEREOF, LOCATED IN THE STATES.

(d) EACH OF GUARANTOR, BY ITS EXECUTION OF THIS GUARANTY, AND LANDLORD, BY ITS ACCEPTANCE OF THIS

GUARANTY, HEREBY WAIVE TRIAL BY JURY AND THE RIGHT THERETO IN ANY ACTION OR PROCEEDING OF ANY KIND ARISING ON, UNDER, OUT OF, BY REASON OF OR RELATING IN ANY WAY TO THIS GUARANTY OR THE INTERPRETATION, BREACH OR ENFORCEMENT THEREOF.

(e) In the event of any suit, action, arbitration or other proceeding to interpret this Guaranty, or to determine or enforce any right or obligation created hereby, the prevailing party in the action shall recover such party’s reasonable costs and expenses incurred in connection therewith, including, but not limited to, reasonable attorneys’ fees and costs of appeal, post judgment enforcement proceedings (if any) and bankruptcy proceedings (if any). Any court, arbitrator or panel of arbitrators shall, in entering any judgment or making any award in any such suit, action, arbitration or other proceeding, in addition to any and all other relief awarded to such prevailing party, include in such-judgment or award such party’s reasonable costs and expenses as provided in this paragraph.

(f) Guarantor (i) represents that it has been represented and advised by counsel in connection with the execution of this Guaranty; (ii) acknowledges receipt of a copy of the Master Lease; and (iii) further represents that Guarantor has been advised by counsel with respect thereto. This Guaranty shall be construed and interpreted in accordance with the plain meaning of its language, and not for or against Guarantor or Landlord, and as a whole, giving effect to all of the terms, conditions and provisions hereof.

(g) Except as provided in any other written agreement now or at any time hereafter in force between Landlord and Guarantor, this Guaranty shall constitute the entire agreement of Guarantor with Landlord with respect to the subject matter hereof, and no representation, understanding, promise or condition concerning the subject matter hereof will be binding upon Landlord or Guarantor unless expressed herein.

(h) All stipulations, obligations, liabilities and undertakings under this Guaranty shall be binding upon Guarantor and its respective successors and assigns and shall inure to the benefit of Landlord and to the benefit of Landlord’s successors and assigns.

(i) Whenever the singular shall be used hereunder, it shall be deemed to include the plural (and vice-versa) and reference to one gender shall be construed to include all other genders, including neuter, whenever the context of this Guaranty so requires. Section captions or headings used in the Guaranty are for convenience and reference only, and shall not affect the construction thereof.

(j) Guarantor acknowledges and agrees that the spin off of Guarantor as a public corporation after the date of the execution of this Guaranty and the change of its name to Sun Healthcare Group, Inc. (the “ Restructuring Transaction ”) shall have no affect on this Guaranty or on the obligations of Guarantor hereunder and that this Guaranty is, and shall continue to be, an obligation of Guarantor both prior to and following the closing of the Restructuring Transaction and the change of the name of

Guarantor to Sun Healthcare Group, Inc.

[Signature Page to Follow]

EXECUTED as of the date first set forth above.


GUARANTOR:

SHG SERVICES, INC ., a Delaware corporation

By:
Name:
Title:

S-1

Exhibit 10.4

EXECUTION COPY

Published CUSIP Number: 78571QAA5

CREDIT AGREEMENT

Dated as of November 3, 2010

among

SABRA HEALTH CARE LIMITED PARTNERSHIP

SABRA IDAHO, LLC

SABRA CALIFORNIA II, LLC

OAKHURST MANOR NURSING CENTER LLC

SUNSET POINT NURSING CENTER LLC

SABRA NEW MEXICO, LLC

SABRA OHIO, LLC

SABRA KENTUCKY, LLC

SABRA NC, LLC

SABRA CONNECTICUT II LLC

WEST BAY NURSING CENTER LLC

ORCHARD RIDGE NURSING CENTER LLC,

as Borrowers,

SABRA HEALTH CARE REIT, INC.,

as REIT Guarantor,

THE OTHER GUARANTORS PARTY HERETO,

THE LENDERS PARTY HERETO,

BANK OF AMERICA, N.A.,

as Administrative Agent, Swing Line Lender and L/C Issuer,

and

MERRILL LYNCH, PIERCE, FENNER & SMITH,

as Sole Lead Arranger and Sole Book Manager

TABLE OF CONTENTS


Article and Section		Page

ARTICLE I DEFINITIONS AND ACCOUNTING TERMS		2
1.01	Defined Terms	2
1.02	Interpretive Provisions	36
1.03	Accounting Terms	36
1.04	Rounding	37
1.05	References to Agreements and Laws	37
1.06	Times of Day	37
1.07	Letter of Credit Amounts	37

ARTICLE II COMMITMENTS AND EXTENSION OF CREDITS		38
2.01	Commitments	38
2.02	Borrowings, Conversions and Continuations	40
2.03	Additional Provisions with respect to Letters of Credit	41
2.04	Additional Provisions with respect to Swing Line Loans	48
2.05	Repayment of Loans	50
2.06	Prepayments	51
2.07	Termination or Reduction of Commitments	51
2.08	Interest	52
2.09	Fees	52
2.10	Computation of Interest and Fees	54
2.11	Payments Generally	54
2.12	Sharing of Payments	56
2.13	Evidence of Debt	56
2.14	Joint and Several Liability of the Borrowers	57
2.15	Appointment of Parent Borrower as Legal Representative for Credit Parties	59
2.16	Cash Collateral	59
2.17	Defaulting Lenders	60
2.18	Extension of Maturity Date	62

ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY		63
3.01	Taxes	63
3.02	Illegality	65
3.03	Inability to Determine Rates	66
3.04	Increased Cost and Reduced Return; Capital Adequacy; Reserves on Eurodollar Loans	66
3.05	Funding Losses	67
3.06	Matters Applicable to all Requests for Compensation	68
3.07	Survival	68

ARTICLE IV CONDITIONS PRECEDENT TO EXTENSION OF CREDITS		68
4.01	Conditions to Closing Date	68
4.02	Conditions to Funding Date	70
4.03	Conditions to all Extensions of Credit	75

ARTICLE V REPRESENTATIONS AND WARRANTIES		76
5.01	Financial Statements; No Material Adverse Effect	76


5.02	Existence, Qualification and Power	76
5.03	Authorization; No Contravention	77
5.04	Binding Effect	77
5.05	Litigation	77
5.06	Compliance with ERISA	77
5.07	Environmental Matters	78
5.08	Margin Regulations; Investment Company Act	79
5.09	Compliance with Laws	79
5.10	Ownership of Property; Liens	80
5.11	Corporate Structure; Capital Stock, Etc.	80
5.12	Real Property Assets; Leases	80
5.13	Facility Leases; Additional Contractual Obligations	81
5.14	Investments	82
5.15	Solvency	82
5.16	Taxes	82
5.17	Insurance	82
5.18	No Default	82
5.19	Healthcare; Facility Representations and Warranties	82
5.20	Disclosure	84
5.21	Governmental Authorization; Other Consents	84
5.22	Anti-Terrorism Laws	84
5.23	Collateral Documents	85
5.24	Consummation of Separation	85

ARTICLE VI AFFIRMATIVE COVENANTS		85
6.01	Financial Statements	85
6.02	Certificates; Other Information	86
6.03	Preservation of Existence and Franchises	88
6.04	Books and Records	89
6.05	Compliance with Law	89
6.06	Payment of Obligations	89
6.07	Insurance	89
6.08	Maintenance of Property	90
6.09	Visits and Inspections	90
6.10	Use of Proceeds	91
6.11	Financial Covenants	91
6.12	Environmental Matters	92
6.13	REIT Status	93
6.14	Joinder as Borrower; Joinder as Guarantor	93
6.15	Further Assurances	94
6.16	Compliance With Facility Leases	95
6.17	Appraisals	95
6.18	Borrowing Base Certificates; Facility Leases	95

ARTICLE VII NEGATIVE COVENANTS		95
7.01	Liens	96
7.02	Indebtedness of the Borrowers (other than the Parent Borrower)	96
7.03	Secured Indebtedness of the REIT Guarantor and its Subsidiaries	97
7.04	Investments of Borrowers (other than the Parent Borrower)	98
7.05	[Reserved]	98
7.06	Fundamental Changes	98


7.07	Dispositions	99
7.08	Business Activities	99
7.09	Transactions with Affiliates and Insiders	99
7.10	Organization Documents; Fiscal Year	99
7.11	Modifications to Facility Leases	100
7.12	Ownership of Subsidiaries	100
7.13	No Further Negative Pledges	100
7.14	Limitation on Restricted Actions	101
7.15	Accounting Changes	101

ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES		101
8.01	Events of Default	101
8.02	Remedies Upon Event of Default	104
8.03	Application of Funds	105

ARTICLE IX ADMINISTRATIVE AGENT		106
9.01	Appointment and Authority	106
9.02	Rights as a Lender	106
9.03	Exculpatory Provisions	106
9.04	Reliance by Administrative Agent	107
9.05	Delegation of Duties	108
9.06	Resignation of Administrative Agent	108
9.07	Non-Reliance on Administrative Agent and Other Lenders	109
9.08	No Other Duties; Etc.	109
9.09	Administrative Agent May File Proofs of Claim	109
9.10	Collateral and Guaranty Matters	110
9.11	Addition/Removal of Borrowing Base Assets	111

ARTICLE X MISCELLANEOUS		112
10.01	Amendments, Etc.	112
10.02	Notices; Effectiveness; Electronic Communications	114
10.03	No Waiver; Cumulative Remedies; Enforcement	116
10.04	Expenses; Indemnity; Damage Waiver	116
10.05	Payments Set Aside	118
10.06	Successors and Assigns	119
10.07	Treatment of Certain Information; Confidentiality	123
10.08	Set-off	123
10.09	Interest Rate Limitation	124
10.10	Counterparts; Integration; Effectiveness	124
10.11	Survival of Representations and Warranties	125
10.12	Severability	125
10.13	Replacement of Lenders	125
10.14	Governing Law; Jurisdiction; etc.	126
10.15	WAIVER OF RIGHT TO TRIAL BY JURY	127
10.16	No Conflict	127
10.17	No Advisory or Fiduciary Responsibility	127
10.18	Electronic Execution of Assignments and Certain Other Documents	128
10.19	USA Patriot Act Notice	128
10.20	California Real Property Assets	128

iii


ARTICLE XI GUARANTY		129
11.01	The Guaranty	129
11.02	Obligations Unconditional	129
11.03	Reinstatement	130
11.04	Certain Additional Waivers	131
11.05	Remedies	131
11.06	Rights of Contribution	131
11.07	Guarantee of Payment; Continuing Guarantee	131
11.08	Release of Subsidiary Guarantors; Certain Exempt Subsidiaries	131

SCHEDULES


1.1A	Closing Date Mortgageability Amounts
2.01	Lenders and Commitments
4.02(l)	Opening Compliance Certificate -Pro Forma Calculations
5.01(b)	Scheduled Transfers
5.11	Corporate Structure; Capital Stock
5.12	Real Property Asset Matters
	Part I	Borrowing Base Assets
	Part II	Other Real Property Assets
	Part III	Delinquent Tenants
	Part IV	Material Sub-leases
5.13	Facility Leases
5.17	Insurance Certificates
5.22	Patriot Act Information
7.01	Liens
7.02	Borrowers Indebtedness
7.03	Investments
10.02	Notice Addresses

EXHIBITS

A	Form of Loan Notice
B	Form of Revolving Note
C-1	Form of Compliance Certificate
C-2	Form of Borrowing Base Certificate
D	Form of Assignment and Assumption
E-1	Form of Borrower Joinder Agreement
E-2	Form of Subsidiary Guarantor Joinder Agreement
F	Form of Lender Joinder Agreement
G	Form of Security and Pledge Agreement
I	Form of Parent Borrower Pledge Agreement

CREDIT AGREEMENT

This CREDIT AGREEMENT (as amended, modified, restated or supplemented from time to time, this “ Credit Agreement ” or this “ Agreement ”) is entered into as of November 3, 2010 by and among SABRA HEALTH CARE LIMITED PARTNERSHIP , a Delaware limited partnership (the “ Parent Borrower ”), SABRA IDAHO, LLC , a Delaware limited liability company, SABRA CALIFORNIA II, LLC , a Delaware limited liability company, OAKHURST MANOR NURSING CENTER LLC , a Massachusetts limited liability company, SUNSET POINT NURSING CENTER LLC , a Massachusetts limited liability company, SABRA NEW MEXICO, LLC , a Delaware limited liability company, SABRA OHIO, LLC , a Delaware limited liability company, SABRA KENTUCKY, LLC , a Delaware limited liability company, SABRA NC, LLC , a Delaware limited liability company, SABRA CONNECTICUT II LLC , a Delaware limited liability company, WEST BAY NURSING CENTER LLC , a Massachusetts limited liability company and ORCHARD RIDGE NURSING CENTER LLC , a Massachusetts limited liability company (each of the foregoing entities and each of the entities from time to time executing a Joinder Agreement pursuant to Section 6.14(a) hereof shall be hereinafter referred to individually as a “ Borrower ” and collectively with the Parent Borrower, the “ Borrowers ”), SABRA HEALTH CARE REIT, INC. , a Maryland corporation (together with its successors, the “ REIT Guarantor ”), the other Guarantors indentified herein, the Lenders (as defined herein), and BANK OF AMERICA, N.A. , as Administrative Agent, Swing Line Lender and L/C Issuer (each, as defined herein).

WHEREAS , Sun Healthcare Group, Inc. (“ Sun ”) seeks to restructure its business by separating its real estate assets and its operating assets into the following two separate publicly traded companies (SHG Services, Inc., a Delaware corporation and wholly owned subsidiary of Sun and Sabra Health Care REIT, Inc., a Maryland corporation and wholly owned subsidiary of Sun), subject to the approval of its stockholders and other conditions;

WHEREAS , SHG Services, Inc. (“ New Sun ”), shall own and operate all of Sun’s operating subsidiaries (New Sun to be renamed “ Sun Healthcare Group, Inc. ”);

WHEREAS , Sabra Health Care REIT, Inc. (the “ REIT Guarantor ”), following a series of internal corporate restructurings, shall own substantially all of Sun’s previously owned real property assets (and related mortgage indebtedness owed to third parties) and shall lease those assets to New Sun’s subsidiaries;

WHEREAS , Sun shall distribute on a pro rata basis all of the outstanding shares of common stock of New Sun, to Sun stockholders (the “ Separation ”), together with a cash distribution;

WHEREAS , prior to completion of the Separation, New Sun will enter into a new debt agreement (the “ New Sun Financing ”) and the Parent Borrower and Sabra Capital Corporation will issue the 8.125% senior unsecured notes (the “ Sabra Senior Notes ”), the proceeds of the New Sun Financing and the Sabra Senior Notes will be used to repay Sun’s 9.125% senior subordinated notes (the “ Sun Senior Notes ”) and the outstanding term loans under Sun’s existing credit facility;

WHEREAS , New Sun and the REIT Guarantor shall enter into certain agreements with each other, including multiple master lease agreements setting forth the terms pursuant to which subsidiaries of New Sun will lease from subsidiaries of the REIT Guarantor (including the Borrowers hereunder) substantially all of the real property that the REIT Guarantor’s subsidiaries shall own immediately following the restructuring of Sun’s business;

WHEREAS , immediately following the Separation, Sun will be merged with and into the REIT Guarantor with the REIT Guarantor surviving the merger as a Maryland corporation and the Sun stockholders receiving shares of the REIT Guarantor’s common stock in exchange for their shares of Sun common stock (the “ REIT Conversion Merger ”); and

WHEREAS , the Borrowers have requested that the Lenders hereunder provide a revolving credit facility in an amount of $100,000,000 (the “ Credit Facility ”), and the Lenders are willing to do so on the terms and conditions set forth herein.

NOW, THEREFORE , in consideration of these premises and the mutual covenants and agreements contained herein, the receipt and sufficiency of which are hereby acknowledged, the parties hereto covenant and agree as follows:

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

1.01 Defined Terms .

As used in this Credit Agreement, the following terms have the meanings set forth below:

“ Administrative Agent ” means Bank of America in its capacity as administrative agent for the Lenders under any of the Credit Documents, or any successor administrative agent.

“ Administrative Agent’s Fee Letter ” means the letter agreement dated as of September 7, 2010 among the Parent Borrower, the REIT Guarantor, the Arranger and the Administrative Agent, as amended and modified.

“ Administrative Agent’s Office ” means the Administrative Agent’s address and, as appropriate, account as set forth on Schedule 10.02 , or such other address or account as the Administrative Agent may from time to time notify the Borrowers and the Lenders.

“ Administrative Questionnaire ” means an Administrative Questionnaire in a form supplied by the Administrative Agent.

“ Affiliate ” means, with respect to any Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.

“ Agent-Related Persons ” means the Administrative Agent, together with its Affiliates (including, in the case of Bank of America in its capacity as the Administrative Agent, the Arranger), and the officers, directors, employees, agents and attorneys-in-fact of such Persons and Affiliates.

“ Aggregate Collateral Value Amount ” means, with respect to any pool of Borrowing Base Assets as of any date of determination, the sum of the respective Collateral Value Amounts of each of the Borrowing Base Assets in such pool.

“ Aggregate Commitments ” means the Commitments of all the Lenders.

“ Aggregate Mortgageability Amount ” means, with respect to any pool of Borrowing Base Assets as of any date of determination, the sum of the respective Mortgageability Amounts of each of the Borrowing Base Assets in such pool.

“ Aggregate Commitments ” means the Revolving Commitments of all the Lenders.

“ Aggregate Committed Amount ” has the meaning provided in Section 2.01(a) , as increased from time to time pursuant to Section 2.01(d).

“ Agreement ” has the meaning provided in the introductory paragraph hereof.

“ Applicable Percentage ” means (a) with respect to Loans that are Base Rate Loans, 3.00% per annum, (b) with respect to Loans that are Eurodollar Loans, 4.00% per annum, (c) with respect to the Letter of Credit Fee, 4.00% per annum and (d) with respect to the Unused Fee, 0.50% per annum.

“ Approved Fund ” means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

“ Arranger ” means Merrill Lynch, Pierce, Fenner & Smith Incorporated, successor by merger to, Banc of America Securities LLC, in its capacity as sole lead arranger and sole book manager.

“ Assignee Group ” means two or more Eligible Assignees that are Affiliates of one another or two or more Approved Funds managed by the same investment advisor.

“ Assignment and Assumption ” means an assignment and assumption entered into by a Lender and an assignee (with the consent of any party whose consent is required by Section 10.06(b) ), and accepted by the Administrative Agent, in substantially the form of Exhibit D or any other form approved by the Administrative Agent.

“ Assignment of Leases ” means an assignment of leases, rents and profits to the Administrative Agent with respect to the applicable Borrower’s interests in a Borrowing Base Asset (which assignment may be contained within the related Mortgage Instrument) as collateral

for the Obligations; provided that each such Assignment of Leases shall, subject to the terms and conditions of the applicable underlying lease, directly assign to the Administrative Agent the following: (a) all existing and future leases, subleases, tenancies, licenses, occupancy agreements or agreements to lease all or any portion of such Borrowing Base Asset (including, without limitation, any applicable Facility Lease), whether written or oral or for a definite period or month-to-month, together with any extensions, renewals, amendments, modifications or replacements thereof, and any options, rights of first refusal or guarantees of any tenant’s obligations under any lease now or hereafter in effect with respect to the Borrowing Base Asset (individually, for the purposes of this definition, a “ Lease ” and collectively, the “ Leases ”); and (b) all rents (including, without limitation, base rents, minimum rents, additional rents, percentage rents, parking, maintenance and deficiency rents and payments which are characterized under the terms of the applicable Lease as payments of interest and/or principal with respect to the applicable Borrowing Base Asset), security deposits, tenant escrows, income, receipts, revenues, reserves, issues and profits of the Borrowing Base Asset from time to time accruing, including, without limitation, (i) all rights to receive payments arising under, derived from or relating to any Lease, (ii) all lump sum payments for the cancellation or termination of any Lease, the waiver of any term thereof, or the exercise of any right of first refusal, call option, put option or option to purchase, and (iii) the return of any insurance premiums or ad valorem tax payments made in advance and subsequently refunded. In furtherance (and not limitation) of the foregoing, each Assignment of Leases shall, subject to the terms and conditions contained therein, assign to the Administrative Agent any and all of the applicable Borrower’s rights to collect or receive any payments with respect to the applicable Borrowing Base Asset. Finally, each Assignment of Leases shall, in any case, be in form and substance satisfactory to the Administrative Agent in its discretion and suitable for recording in the applicable jurisdiction; and “Assignments of Leases” means a collective reference to each such Assignment of Leases.

“ Attorney Costs ” means and includes all reasonable and documented fees, expenses and disbursements of any law firm or other external counsel.

“ Attributable Principal Amount ” means (a) in the case of capital leases, the amount of capital lease obligations determined in accordance with GAAP, (b) in the case of Synthetic Leases, an amount determined by capitalization of the remaining lease payments thereunder as if it were a capital lease determined in accordance with GAAP, (c) in the case of Securitization Transactions, the outstanding principal amount of such financing, after taking into account reserve amounts and making appropriate adjustments, determined by the Administrative Agent in its reasonable judgment and (d) in the case of Sale and Leaseback Transactions, the present value (discounted in accordance with GAAP at the debt rate implied in the applicable lease) of the obligations of the lessee for rental payments during the term of such lease.

“ Bank of America ” means Bank of America, N.A., together with its successors.

“ Bankruptcy Event ” means, with respect to any Person, the occurrence of any of the following: (a) the entry of a decree or order for relief by a court or governmental agency in an involuntary case under any applicable Debtor Relief Law or any other bankruptcy, insolvency or other similar law now or hereafter in effect, or the appointment by a court or governmental agency of a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of

such Person or for any substantial part of its Property or the ordering of the winding up or liquidation of its affairs by a court or governmental agency and such decree, order or appointment is not vacated or discharged within sixty (60) days of its filing; or (b) the commencement against such Person of an involuntary case under any applicable Debtor Relief Law or any other bankruptcy, insolvency or other similar law now or hereafter in effect, or of any case, proceeding or other action for the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of such Person or for any substantial part of its Property or for the winding up or liquidation of its affairs, and such involuntary case or other case, proceeding or other action shall remain undismissed for a period of sixty (60) consecutive days, or the repossession or seizure by a creditor of such Person of a substantial part of its Property; or (c) such Person shall commence a voluntary case under any applicable Debtor Relief Law or any other bankruptcy, insolvency or other similar law now or hereafter in effect, or consent to the entry of an order for relief in an involuntary case under any such law, or consent to the appointment of or the taking possession by a receiver, liquidator, assignee, creditor in possession, custodian, trustee, sequestrator (or similar official) of such Person or for any substantial part of its Property or make any general assignment for the benefit of creditors; or (d) the filing of a petition by such Person seeking to take advantage of any Debtor Relief Law or any other applicable Law, domestic or foreign, relating to bankruptcy, insolvency, reorganization, winding-up, or composition or adjustment of debts, or (e) such Person shall fail to contest in a timely and appropriate manner (and if not dismissed within sixty (60) days) or shall consent to any petition filed against it in an involuntary case under such bankruptcy laws or other applicable Law or consent to any proceeding or action relating to any bankruptcy, insolvency, reorganization, winding-up, or composition or adjustment of debts with respect to its assets or existence, or (f) such Person shall admit in writing an inability to pay its debts generally as they become due.

“ Base Rate ” means for any day a fluctuating rate per annum equal to the highest of (a) the Federal Funds Rate plus ¹ / 2 of 1%, (b) the rate of interest in effect for such day as publicly announced from time to time by Bank of America as its “prime rate” and (c) the Eurodollar Rate determined on such day (or if no such rate is determined on such day, the next preceding day for which a Eurodollar Rate is determined) for a Eurodollar Loan with an Interest Period of one month plus 1.00%. The “prime rate” is a rate set by Bank of America based upon various factors including Bank of America’s costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate. Any change in the “prime rate” announced by Bank of America shall take effect at the opening of business on the day specified in the public announcement of such change.

“ Base Rate Loan ” means a Loan that bears interest based on the Base Rate.

“ Borrower ” and “ Borrowers ” shall have the meanings given to such terms in the introductory paragraph hereof.

“ Borrower Joinder Agreement ” means a joinder agreement in the form of Exhibit E to be executed by each new Subsidiary of the REIT Guarantor that is required to become a Borrower in accordance with Section 6.14(a) hereof.

“ Borrower Materials ” has the meaning specified in Section 6.02 .

“ Borrowing ” means (a) a borrowing consisting of simultaneous Loans of the same Type and, in the case of Eurodollar Loans, having the same Interest Period, or (b) a borrowing of Swing Line Loans, as appropriate.

“ Borrowing Base Amount ” means, as of any date, an amount equal to the lesser of: (a) the Aggregate Mortgageability Amount as of such date for the Borrowing Base Assets and (b) the Aggregate Collateral Value Amount as of such date for the Borrowing Base Assets; provided , however , at no time shall more than 15% of the Borrowing Base Amount be attributable to Borrowing Base Assets subject to Eligible Ground Leases.

“ Borrowing Base Asset ” means a Real Property Asset which, as of any date of determination, satisfies all of the following requirements: (a) such Real Property Asset is 100% owned by a Borrower in fee simple or pursuant to the terms of an Eligible Ground Lease; (b) the Administrative Agent, on behalf of the Lenders, shall have received each of the Borrowing Base Asset Deliverables with respect to such Real Property Asset, in each case in form and substance acceptable to the Administrative Agent in its reasonable discretion; (c) such Real Property Asset is not subject to any Lien (other than a Permitted Lien) or any Negative Pledge (other than pursuant to an Eligible Ground Lease); (d) such Real Property Asset is free of all material mechanical and structural defects, or other adverse matters except for defects, conditions or matters individually or collectively which are not material to the profitable operation of such Real Property Asset; (e) such Real Property Asset has been fully developed for use as a Healthcare Facility; (f) such Real Property Asset is leased to and operated by an Eligible Tenant pursuant to a Facility Lease reasonably acceptable to the Administrative Agent (in connection with each Facility Lease, upon inclusion of any Borrowing Base Asset, the Administrative Agent, on behalf of the Lenders, will enter into an SNDA with the applicable Tenant or Tenants under such Facility Lease); (g) no required rental payment, principal or interest payment, payments of real property taxes (except taxes which are being contested in good faith and for which adequate reserves have been established in accordance with GAAP) or payments of premiums on insurance policies payable to the applicable Borrower-owner with respect to such Real Property Asset is past due beyond the earlier of the applicable grace period with respect thereto, if any, and sixty (60) days; (h) no event of default (after the expiration of any applicable notice and/or cure period) has occurred and is then-continuing under any Facility Lease applicable to such Real Property Asset; (i) no Facility Lease applicable to such Real Property Asset shall have been terminated without the prior written consent of the Required Lenders (which consent shall not be unreasonably withheld, delayed or conditioned); (j) no condemnation or condemnation proceeding shall have been instituted (and remain undismissed for a period of ninety (90) consecutive days), in each case, with respect to a material portion of the Real Property Asset; (k) no material casualty event shall have occurred with respect to the improvements located on such Real Property Asset which is not able to be fully remediated with available insurance proceeds and/or funds a Borrower has put into escrow; (l) no Hazardous Substances are located on or under such Real Property Asset and no other environmental conditions exist in connection with such Real Property Asset which constitute a violation of any

Environmental Law; and (m) such Real Property Asset shall have an Occupancy Rate equal to or greater than eighty percent 80%.

“ Borrowing Base Assets ” means a collective reference to all Borrowing Base Assets in existence at any given time.

“ Borrowing Base Asset Deliverables ” means, with respect to any Real Property Asset which is proposed for qualification as a “Borrowing Base Asset” hereunder, a collective reference to each of the following (with each such item to be in form and substance reasonably acceptable to the Administrative Agent) items to be satisfied as a condition to such Real Property Asset initially becoming a Borrowing Base Asset:

(a) a fully executed and notarized Mortgage Instrument and Assignments of Leases (or a fully executed and notarized amendment to such existing Mortgage Instrument and/or Assignments of Leases) with respect to such Real Property Asset and a related legal opinion from special local counsel to the Borrowers opining as to the propriety of the form of such documents for recording in the applicable jurisdiction and such other matters as may be reasonably required by the Administrative Agent;

(b) a fully executed copy of the Facility Lease with respect to such Real Property Asset, together with an estoppel certificate from the applicable Eligible Tenant and an SNDA with respect to such Facility Lease;

(c) in the case of a Real Property Asset which constitutes a leasehold interest, evidence that the applicable lease, a memorandum of lease with respect thereto, or other evidence of such lease in form and substance reasonably satisfactory to the Administrative Agent, has been properly recorded in all places to the extent necessary or desirable, in the reasonable judgment of the Administrative Agent, so as to enable the Mortgage Instrument encumbering such leasehold interest to effectively create a valid and enforceable first priority lien (subject to Permitted Liens and required landlord consents) on such leasehold interest in favor of the Administrative Agent (or such other Person as may be required or desired under local law) for the benefit of Lenders and that such lease qualifies as an Eligible Ground Lease hereunder, together with such estoppels, waivers and/or consents from the lessor under such Eligible Ground Lease as are required by the terms thereof or otherwise reasonably requested by the Administrative Agent;

(d) maps or plats of an as-built survey of the site constituting the Real Property Asset sufficient in all cases to delete the standard survey exception from the applicable Mortgage Policy;

(e) a FIRREA-compliant MAI appraisal, commissioned, reviewed and approved by the Administrative Agent with respect to such Real Property Asset;

(f) evidence as to the compliance of such Real Property Asset and the improvements related thereto with applicable zoning and use requirements (it being

understood that zoning letters or an appropriate zoning endorsement to the applicable Mortgage Policy shall be deemed satisfactory evidence of compliance);

(g) an ALTA mortgagee title insurance policy (or its equivalent in non-ALTA jurisdictions) with respect to the applicable Real Property Asset (the “ Mortgage Policy ”), assuring the Lenders that the Mortgage Instrument creates a valid and enforceable first priority mortgage lien on the applicable Real Property Asset, free and clear of all defects and encumbrances except Permitted Liens, which Mortgage Policy shall (i) be in an amount equal to the Borrowing Base Amount for such Real Property Asset, (ii) be from an insurance company reasonably acceptable to the Administrative Agent, (iii) include such available endorsements and reinsurance as the Administrative Agent may reasonably require and (iv) otherwise satisfy the reasonable title insurance requirements of the Administrative Agent;

(h) evidence as to whether the applicable Real Property Asset is in an area designated by the Federal Emergency Management Agency as having special flood or mud slide hazards (a “ Flood Hazard Property ”) and if such Real Property Asset is a Flood Hazard Property, (i) the applicable Borrower’s written acknowledgment of receipt of written notification from the Administrative Agent (A) as to the fact that such Real Property Asset is a Flood Hazard Property and (B) as to whether the community in which each such Flood Hazard Property is located is participating in the National Flood Insurance Program and (ii) copies of insurance policies or certificates of insurance evidencing flood insurance satisfactory to the Administrative Agent and naming the Administrative Agent as loss payee (subject to restrictions contained in Eligible Ground Leases) on behalf of the Lenders under a standard mortgagee endorsement;

(i) copies of all existing material subleases which would be required to be disclosed on Part IV of Schedule 5.12 hereof with respect to such Real Property Asset if approved as a Borrowing Base Asset;

(j) evidence that the Tenant under the applicable Facility Lease is an Eligible Tenant;

(k) a Phase I environmental assessment from an environmental consultant acceptable to the Administrative Agent, dated as of a date acceptable to the Administrative Agent and indicating that, as of such date, no Hazardous Substances or other conditions on, under or with respect to the applicable Real Property Asset constitute a violation of any Environmental Laws and that, in any case, no commercially unreasonable amount of any Hazardous Substances are located on or under such Real Property Asset, taking into account the use of such Real Property Asset;

(l) property condition report (evidencing no mechanical or structural defects, or other adverse matters except for defects, conditions or matters individually or collectively which are not material to the profitable operation of such Real Property Asset); and

(m) evidence of insurance coverage with respect to such Real Property Asset meeting the requirements set forth herein and establishing the Administrative Agent as loss payee (subject to restrictions contained in Eligible Ground Leases), as required pursuant to the terms hereof.

“ Borrowing Base Certificate ” shall mean a certificate substantially in the form of Exhibit C-2 hereto delivered to the Administrative Agent pursuant to Section 6.02(b) , Section 6.18 or more frequently at the option of the Parent Borrower and (a) setting forth each Real Property Asset of the Borrowers, identifying which such Real Property Assets are Borrowing Base Assets and certifying (subject to the qualifications set forth in clause (b) herein) the Collateral Value Amount and Mortgageability Amount with respect to each such Borrowing Base Asset, (b) certifying (in the Borrowers’ good faith and based upon its own information and the information made available to any Borrower by the applicable Tenants, which information the Borrowers believe in good faith to be true and correct in all material respects) (i) as to the calculation of the Borrowing Base Amount as of the date of such certificate and (ii) that each Real Property Asset used in the calculation of the Borrowing Base Amount meets each of the criteria for qualification as a Borrowing Base Asset and (c) providing such other information with respect to the Real Property Assets and/or the Borrowing Base Assets as the Administrative Agent may reasonably require.

“ Business ” or “ Businesses ” means, at any time, a collective reference to the businesses operated by the respective Credit Parties, as applicable, at such time.

“ Business Day ” means any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the Laws of, or are in fact closed in, in the State of New York or the state where the Administrative Agent’s Office is located and, if such day relates to any Eurodollar Loan, means any such day on which dealings in Dollar deposits are conducted by and between banks in the London interbank eurodollar market.

“ Capital Lease ” means a lease that would be capitalized on a balance sheet of the lessee prepared in accordance with GAAP.

“ Capital Stock ” means (a) in the case of a corporation, capital stock, (b) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of capital stock, (c) in the case of a partnership, partnership interests (whether general or limited), (d) in the case of a limited liability company, membership interests and (e) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person.

“ Cash Collateral ” means cash or deposit account balances pursuant to documentation in form and substance reasonably satisfactory to the Administrative Agent and the L/C Issuer pledged and deposited with or delivered to the Administrative Agent, for the benefit of the L/C Issuer and the Lenders, as collateral for the L/C Obligations.

“ Cash Equivalents ” means (a) securities issued or directly and fully guaranteed or insured by (i) the United States or any agency or instrumentality thereof (provided that the full

faith and credit of the United States is pledged in support thereof) having maturities of not more than twelve months from the date of acquisition, (b) time deposits and certificates of deposit of (i) any Lender, (ii) any domestic commercial bank of recognized standing having capital and surplus in excess of $500,000,000 or (iii) any bank whose short-term commercial paper rating from S&P is at least A-1 or the equivalent thereof or from Moody’s is at least P-1 or the equivalent thereof (each an “ Approved Bank ”), in each case with maturities of not more than two hundred seventy (270) days from the date of acquisition, (c) commercial paper and variable or fixed rate notes issued by any Approved Bank (or by the parent company thereof) or any variable rate notes issued by, or guaranteed by, any domestic corporation rated A-1 (or the equivalent thereof) or better by S&P or P-1 (or the equivalent thereof) or better by Moody’s and maturing within six months of the date of acquisition, (d) repurchase agreements entered into by any Person with a bank or trust company (including any of the Lenders) or recognized securities dealer having capital and surplus in excess of $500,000,000 for direct obligations issued by or fully guaranteed by the United States in which such Person shall have a perfected first priority security interest (subject to no other Liens) and having, on the date of purchase thereof, a fair market value of at least 100% of the amount of the repurchase obligations and (e) Investments (classified in accordance with GAAP as current assets) in money market investment programs registered under the Investment Company Act of 1940, as amended, that are administered by reputable financial institutions having capital of at least $500,000,000 and the portfolios of which are limited to Investments of the character described in the foregoing subclauses hereof.

“ Change in Law ” means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation or application thereof by any Governmental Authority or (c) the making or issuance of any request, guideline or directive (whether or not having the force of law) by any Governmental Authority.

“ Change of Control ” means the occurrence of any of the following events: (i) any Person or two or more Persons acting in concert shall have acquired beneficial ownership, directly or indirectly, of, or shall have acquired by contract or otherwise, or shall have entered into a contract or arrangement that, upon consummation, will result in its or their acquisition of or control over, voting stock of the REIT Guarantor (or other securities convertible into such voting stock) representing thirty-five percent (35%) or more of the combined voting power of all voting stock of the REIT Guarantor, (ii) during any period of up to twenty-four (24) consecutive months, commencing after the Separation Date, individuals who at the beginning of such twenty-four (24) month period were directors of the REIT Guarantor (together with any new director whose election by the REIT Guarantor’s Board of Directors or whose nomination for election by the REIT Guarantor’s shareholders was approved by a vote of at least a majority of the directors then still in office who either were directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the directors of the REIT Guarantor then in office. As used herein, “beneficial ownership” shall have the meaning provided in Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934 or (iii) the occurrence of a “Change of Control” or any equivalent term or concept under the Sabra Senior Note Indenture.

“ Closing Date ” means the first date all the conditions precedent in Section 4.01 are satisfied or waived in accordance with Section 10.01 .

“ Collateral ” means a collective reference to all real and personal Property (including without limitation, the Borrowing Base Assets) with respect to which Liens in favor of the Administrative Agent are either executed, identified or purported to be granted pursuant to and in accordance with the terms of the Collateral Documents.

“ Collateral Documents ” means a collective reference to the Mortgage Instruments, the Security Agreements, the Assignments of Leases and any UCC financing statements securing payment hereunder, or any other documents securing the Obligations under this Credit Agreement or any other Credit Document.

“ Collateral Value ” means, with respect to any Real Property Asset, an amount equal to the “as-is” appraised value of such Real Property Asset (on an individual, as opposed to portfolio value, basis), as determined by the most recently delivered FIRREA-compliant MAI appraisals commissioned, reviewed and approved by the Agent or otherwise acceptable to the Agent in its reasonable discretion (it being understood that (a) the Collateral Value will reflect any value adjustment by reason of the of the existence of the Facility Lease thereon, but shall otherwise be valued free of all liens and encumbrances and (b) no reappraisal will be required to determine Collateral Value except (i) at the option of the Borrowers, (ii) in connection with an extension of the Maturity Date, (iii) pursuant to Section 6.17 and (iv) in connection with the addition of a new Real Property Asset to the Borrowing Base with respect to such new Real Property Asset).

“ Collateral Value Amount ” means, with respect to any Real Property asset, an amount equal to (a) sixty-five percent (65%) multiplied by (b) the Collateral Value as of such date for such Borrowing Base Asset; provided , however, no single Borrowing Base Asset shall represent more than 20% of the Aggregate Collateral Value Amount.

“ Commitment ” means the Revolving Commitment, the L/C Commitment and the Swing Line Commitment.

“ Commitment Period ” means the period from and including the Closing Date to the earlier of (a) in the case of Revolving Loans and Swing Line Loans, the Maturity Date, and, in the case of the Letters of Credit, the Letter of Credit Expiration Date, and (b) the date on which the Revolving Commitments shall have been terminated as provided herein.

“ Compliance Certificate ” means a certificate substantially in the form of Exhibit C-1 ; provided that each such Compliance Certificate shall, in any case, include (without limitation): (a) a Borrowing Base Certificate in the form of Exhibit C-2 ; (b) an updated version of Schedules 5.11 , 5.12 , 5.13 and 5.17 along with a summary of changes made to such schedules since the previous delivery thereof; provided , further , that upon the delivery of such updated schedules, then Schedule 5.11 , Schedule 5.12, Schedule 5.13 and Schedule 5.17 shall each be deemed to have been amended and restated to read in accordance with the applicable updated schedule and the representations and warranties with respect thereto shall apply to such amended and restated schedules and (c) supporting documents and materials reasonably required by the

Administrative Agent for the evidencing of the calculations and certifications made in connection therewith.

“ Consolidated Cash Taxes ” means, as of any date for the four fiscal quarter period ending on such date with respect to the Consolidated Parties on a consolidated basis, the aggregate of all Federal, state and foreign income taxes, as determined in accordance with GAAP, to the extent the same are paid in cash; including, in any event, a pro rata share of the foregoing items and components attributable to interests in joint ventures; provided , however , that Consolidated Cash Taxes for the four (4) fiscal quarter period ending as of (a) December 31, 2010 shall be based on Consolidated Cash Taxes for the period from the Separation Date to the end of such fiscal quarter annualized, (b) March 31, 2011 shall be based on Consolidated Cash Taxes for the one fiscal-quarter period then ended multiplied by 4, (c) June 30, 2011 shall be based on Consolidated Cash Taxes for the two fiscal-quarter period then ended multiplied by 2 and (d) September 30, 2011 shall be based on Consolidated Cash Taxes for the three fiscal-quarter period then ended multiplied by 1 ¹ / 3 (exclusive of amounts paid or funded by Sun prior to the Separation and/or amounts required to be paid, indemnified or reimbursed by New Sun after the Separation pursuant to the tax allocation agreement executed in connection with the Separation).

“ Consolidated EBITDA ” means, for any period, for the Consolidated Parties, the sum of (a) net income of the Consolidated Parties, in each case, excluding any non-recurring or extraordinary gains and losses (including, without limitation, any costs related to an acquisition or other Disposition and all amounts allocated pursuant to the tax allocation agreement executed in connection with the Separation), plus (b) an amount which, in the determination of net income for such period pursuant to clause (a) above, has been deducted for or in connection with (i) Consolidated Interest Expense, (ii) the amount of income taxes (or minus the amount of tax benefits), (iii) depreciation and amortization, and (iv) non-cash compensation expenses to officers, directors and employees of the Consolidated Parties, in each case on a consolidated basis determined in accordance with GAAP; including, in any event, a pro rata share of the foregoing items and components attributable to interests in joint ventures; provided , however , that Consolidated EBITDA for the four (4) fiscal quarter period ending as of (a) December 31, 2010 shall be based on Consolidated EBITDA for the period from the Separation Date to the end of such fiscal quarter annualized, (b) March 31, 2011 shall be based on Consolidated EBITDA for the one fiscal-quarter period then ended multiplied by 4, (c) June 30, 2011 shall be based on Consolidated EBITDA for the two fiscal-quarter period then ended multiplied by 2 and (d) September 30, 2011 shall be based on Consolidated EBITDA for the three fiscal-quarter period then ended multiplied by 1 ¹ / 3 .

“ Consolidated Fixed Charge Coverage Ratio ” means, as of any date of determination, the ratio of (a) Consolidated EBITDA to (b) Consolidated Fixed Charges of the Consolidated Parties for the most recently completed four (4) fiscal quarters.

“ Consolidated Fixed Charges ” means, for any period, for the Consolidated Parties on a consolidated basis, the sum of (a) Consolidated Interest Expense, plus (b) current scheduled principal payments of Consolidated Funded Debt for such period (including, for purposes hereof, payments in connection with current scheduled reductions in commitments, but excluding any

“balloon” payment or final payment at maturity that is significantly larger than the scheduled payments that preceded it), plus (c) the aggregate amount of Consolidated Cash Taxes, plus (d) dividends and distributions on preferred stock, if any, for such period, in each case, as determined in accordance with GAAP; including, in any event, a pro rata share of the foregoing items and components attributable to interests in joint ventures; provided , however , that Consolidated Fixed Charges for the four (4) fiscal quarter period ending as of (a) December 31, 2010 shall be based on Consolidated Fixed Charges for the period from the Separation Date to the end of such fiscal quarter annualized, (b) March 31, 2011 shall be based on Consolidated Fixed Charges for the one fiscal-quarter period then ended multiplied by 4, (c) June 30, 2011 shall be based on Consolidated Fixed Charges for the two fiscal-quarter period then ended multiplied by 2 and (d) September 30, 2011 shall be based on Consolidated Fixed Charges for the three fiscal-quarter period then ended multiplied by 1 ¹ / 3 .

“ Consolidated Funded Debt ” means, as of any date of determination, all Funded Debt of the Consolidated Parties determined on a consolidated basis in accordance with GAAP; including, in any event, a pro rata share of the foregoing items and components attributable to interests in joint ventures.

“ Consolidated Interest Expense ” means, for any period, for the Consolidated Parties on a consolidated basis, all interest expense (net of interest income) and letter of credit fee expense, as determined in accordance with GAAP during such period; provided , that interest expenses shall, in any event, (a) include the interest component under Capital Leases and the implied interest component under Securitization Transactions and include a pro rata share of the foregoing items and components attributable to interests in joint ventures, and (b) exclude (i) the amortization of any deferred financing fees, debt issuance costs, commissions and expenses, (ii) any expense resulting from the discounting of any outstanding Indebtedness in connection with the application of purchase accounting in connection with any acquisition or other Disposition and (iii) non-cash costs associated with Swap Agreements; provided , however , that Consolidated Interest Expense for the four (4) fiscal quarter period ending as of (a) December 31, 2010 shall be based on Consolidated Interest Expense for the period from the Separation Date to the end of such fiscal quarter annualized, (b) March 31, 2011 shall be based on Consolidated Interest Expense for the one fiscal-quarter period then ended multiplied by 4, (c) June 30, 2011 shall be based on Consolidated Interest Expense for the two fiscal-quarter period then ended multiplied by 2 and (d) September 30, 2011 shall be based on Consolidated Interest Expense for the three fiscal-quarter period then ended multiplied by 1 ¹ / 3 .

“ Consolidated Leverage Ratio ” means, as of any date of determination, the ratio of (a) Consolidated Funded Debt to (b) Consolidated EBITDA for the most recently completed four (4) fiscal quarters.

“ Consolidated Parties ” means the REIT Guarantor and its Subsidiaries determined on a consolidated basis in accordance with GAAP.

“ Consolidated Tangible Net Worth ” means, for the Consolidated Parties as of any date of determination, (a) stockholders’ equity on a consolidated basis determined in accordance with

GAAP, but with no upward adjustments due to any revaluation of assets, less (b) all Intangible Assets, plus (c) all accumulated depreciation, all determined in accordance with GAAP.

“ Contractual Obligation ” means, as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound.

“ Control ” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled” have meanings correlative thereto. Without limiting the generality of the foregoing, a Person shall be deemed to be Controlled by another Person if such other Person possesses, directly or indirectly, power to vote twenty-five percent (25%) or more of the securities having ordinary voting power for the election of directors, managing general partners or the equivalent.

“ Credit Agreement ” has the meaning given to such term in the introductory paragraph hereof.

“ Credit Documents ” means this Credit Agreement, the Collateral Documents, the Notes, the Administrative Agent’s Fee Letter, the Letters of Credit, the Joinder Agreements, the Borrowing Base Certificates and the Compliance Certificates.

“ Credit Party ” means, as of any date, the Borrowers or any Guarantor which is a party to the Guaranty as of such date; and “ Credit Parties ” means a collective reference to each of them.

“ Daily Unused Fee ” means, for any day during the Commitment Period, an amount equal to (a) a daily percentage rate derived from the per annum Applicable Percentage multiplied by (b) the amount by which the Aggregate Commitments exceed the sum of the Outstanding Amount of Revolving Obligations (excluding the amount of any then-outstanding Swing Line Loans) as of the beginning of such day.

“ Debtor Relief Laws ” means the Bankruptcy Code of the United States, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.

“ Default ” means any event, act or condition that, with notice, the passage of time, or both, would constitute an Event of Default.

“ Default Rate ” means an interest rate equal to (a) the Base Rate plus (b) the Applicable Percentage, if any, applicable to Base Rate Loans plus (c) two percent (2%) per annum, to the fullest extent permitted by applicable Law.

“ Defaulting Lender ” means, subject to Section 2.17(b) , any Lender that, as determined by the Administrative Agent, (a) has failed to perform any of its funding obligations hereunder,

including in respect of its Loans or participations in respect of Letters of Credit or Swing Line Loans, within three Business Days of the date required to be funded by it hereunder, (b) has notified the Parent Borrower or the Administrative Agent that it does not intend to comply with its funding obligations or has made a public statement to that effect with respect to its funding obligations hereunder or under other agreements in which it commits to extend credit, (c) has failed, within three Business Days after request by the Administrative Agent, to confirm in a manner satisfactory to the Administrative Agent that it will comply with its funding obligations, or (d) has, or has a direct or indirect parent company that has, (i) become the subject of a proceeding under any Debtor Relief Law, (ii) had a receiver, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or a custodian appointed for it, or (iii) taken any action in furtherance of, or indicated its consent to, approval of or acquiescence in any such proceeding or appointment; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any equity interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority.

“ Disposition ” or “ Dispose ” means the sale, transfer, license, lease or other disposition (including any Sale and Leaseback Transaction) of any property by any Person, including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith.

“ Dollar ” or “ $ ” means the lawful currency of the United States.

“ Eligible Assignee ” means (a) a Lender; (b) an Affiliate of a Lender; (c) an Approved Fund; and (d) any other Person (other than a natural person) approved by (i) the Administrative Agent (such approval not to be unreasonably withheld or delayed), and (ii) unless an Event of Default has occurred and is continuing, the Parent Borrower (each such approval not to be unreasonably withheld or delayed); provided that notwithstanding the foregoing, “Eligible Assignee” shall not include the REIT Guarantor or any of the REIT Guarantor’s Affiliates or Subsidiaries.

“ Eligible Ground Lease ” means, at any time, a ground lease (a) under which a Borrower is the lessee and is the fee owner of (or leases) the structural improvements located thereon, (b) that has a remaining term of not less than thirty (30) years (including the initial term and any additional extension options that are solely at the option of such Borrower), (c) where no party to such lease is subject to a then-continuing Bankruptcy Event, (d) such ground lease (or a related document executed by the applicable ground lessor) contains customary provisions protective of a first mortgage lender to the lessee and (e) where such Borrower’s interest in the underlying Real Property Asset or the lease is not subordinate to any Lien other than the Eligible Ground Lease itself, any fee mortgage (if such fee mortgage has non-disturbed such Borrower pursuant to a non-disturbance agreement reasonable satisfactory to the Administrative Agent), any Permitted Liens and other encumbrances reasonably acceptable to the Administrative Agent, in their discretion.

“ Eligible Tenant ” means a Tenant which (a) is not in arrears on any required rental payment, principal or interest payment, payments of real property taxes or payments of

premiums on insurance policies with respect to its lease beyond the later of (i) the applicable grace period with respect thereto, if any, and (ii) sixty (60) days; (b) is not subject to a then-continuing Bankruptcy Event; and (c) is reasonably acceptable in all material respects to the Administrative Agent (it being understood that for purposes of this clause (c), Affiliates of SHG Services, Inc. (to be renamed Sun Healthcare Group, Inc.) will be deemed acceptable as of the Closing Date).

“ Environmental Laws ” means any and all federal, state, local, and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or governmental restrictions relating to pollution and the protection of the environment or the release of any Hazardous Substances into the environment, including those related to wastes, air emissions and discharges to waste or public systems.

“ Equity Transaction ” means, with respect to any member of the Consolidated Parties, any issuance or sale of shares of its Capital Stock, other than an issuance (a) to a Consolidated Party, (b) in connection with a conversion of debt securities to equity or one type of equity securities into another type of equity securities, (c) in connection with the exercise by a present or former employee, officer or director under a stock incentive plan, stock option plan or other equity-based compensation plan or arrangement, or (d) in connection with any acquisition permitted hereunder.

“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended.

“ ERISA Affiliate ” means any trade or business (whether or not incorporated) under common control with the REIT Guarantor within the meaning of Section 414(b) or (c) of the Internal Revenue Code (and Sections 414(m) and (o) of the Internal Revenue Code for purposes of provisions relating to Section 412 of the Internal Revenue Code).

“ ERISA Event ” means (a) a Reportable Event with respect to a Pension Plan; (b) a withdrawal by the REIT Guarantor or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by the REIT Guarantor or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a Plan amendment as a termination under Sections 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e) an event or condition that could reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the imposition of any liability by a Governmental Authority under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon the REIT Guarantor or any ERISA Affiliate.

“ Eurodollar Loan ” means a Loan that bears interest at a rate based on the Eurodollar Rate other than a Loan that bears interest at the Base Rate as determined by clause (c) of the first sentence of the definition of “Base Rate”.

“ Eurodollar Base Rate ” means:

(a) For any Interest Period with respect to a Eurodollar Loan, the rate per annum equal to the British Bankers Association LIBOR Rate (“ BBA LIBOR ”), as published by Reuters (or other commercially available source providing quotations of BBA LIBOR as designated by the Administrative Agent from time to time) at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, for Dollar deposits (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period. If such rate is not available at such time for any reason, then the “Eurodollar Rate” for such Interest Period shall be the rate per annum determined by the Administrative Agent to be the rate at which deposits in Dollars for delivery on the first day of such Interest Period in same day funds in the approximate amount of the Eurodollar Loan being made, continued or converted by Bank of America and with a term equivalent to such Interest Period would be offered by Bank of America’s London Branch to major banks in the London interbank eurodollar market at their request at approximately 11:00 a.m. (London time) two Business Days prior to the commencement of such Interest Period.

(b) For any day with respect to an interest rate calculation for a Base Rate Loan, the rate per annum equal to (i) BBA LIBOR at approximately 11:00 a.m., London time, two Business Days prior to such date for Dollar deposits (for delivery on such day) with a term equivalent to one month or (ii) if such rate is not available at such time for any reason, the rate determined by the Administrative Agent to be the rate at which deposits in Dollars for delivery on such day in same day funds in the approximate amount of the Base Rate Loan being made, continued or converted by Bank of America and with a term equivalent to one (1) month would be offered by Bank of America’s London Branch to major banks in the London interbank eurodollar market at approximately 11:00 a.m. (London time) two Business Days prior to such day.

(c) Notwithstanding the foregoing, for purposes of this Agreement, the Eurodollar Base Rate shall in no event be less than 1.75% at any time.

“ Eurodollar Rate ” means for any Interest Period with respect to any Eurodollar Loan or any Base Rate Loan bearing interest at a rate based on the Eurodollar Rate, a rate per annum determined by the Administrative Agent pursuant to the following formula:


Eurodollar Rate	=	Eurodollar Base Rate
		1.00 - Eurodollar Reserve Percentage

“ Eurodollar Reserve Percentage ” means, for any day during any Interest Period, the reserve percentage (expressed as a decimal, carried out to five decimal places) in effect on such day, whether or not applicable to any Lender, under regulations issued from time to time by the FRB for determining the maximum reserve requirement (including any emergency, supplemental or other marginal reserve requirement) with respect to Eurocurrency funding (currently referred to as “Eurocurrency liabilities”). The Eurodollar Rate for each outstanding Eurodollar Loan

shall be adjusted automatically as of the effective date of any change in the Eurodollar Reserve Percentage.

“ Event of Default ” has the meaning provided in Section 8.01 .

“ Excluded Taxes ” means, with respect to the Administrative Agent, any Lender or any other recipient of any payment to be made by or on account of any obligation of any Borrower hereunder, (a) taxes imposed on or measured by its overall net income (however denominated), and franchise taxes imposed on it (in lieu of net income taxes), by the jurisdiction (or any political subdivision thereof) under the Laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable Lending Office is located, (b) any branch profits taxes imposed by the United States or any similar tax imposed by any other jurisdiction in which any Borrower is located, (c) any backup withholding tax that is required by the Internal Revenue Code to be withheld from amounts payable to a Lender that has failed to comply with clause (A) of Section 3.01(e)(ii) and (d) in the case of a Foreign Lender (other than an assignee pursuant to a request by any Borrower under Section 10.13 ), any United States withholding tax that (i) is required to be imposed on amounts payable to such Foreign Lender pursuant to the Laws in force at the time such Foreign Lender becomes a party hereto (or designates a new Lending Office) or (ii) is attributable to such Foreign Lender’s failure or inability (other than as a result of a Change in Law) to comply with clause (B) of Section 3.01(e)(ii) , except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new Lending Office (or assignment), to receive additional amounts from the Borrowers with respect to such withholding tax pursuant to Section 3.01(a)(ii) or (iii) .

“ Extension of Credit ” means (i) any Borrowing and (ii) any L/C Credit Extension.

“ Facility Lease ” means a lease or master lease with respect to any Real Property Asset owned or leased by a Borrower from the applicable Borrower as lessor, to an Eligible Tenant, which, in the reasonable judgment of the Administrative Agent, is a commercial space lease or is a triple net lease such that such Eligible Tenant is required to pay all taxes, utilities, insurance, maintenance, casualty insurance payments and other expenses with respect to the subject Real Property Asset (whether in the form of reimbursements or additional rent) in addition to the base rental payments required thereunder such that net operating income for such Real Property Asset (before non-cash items and franchise or income taxes) equals the base rent paid thereunder; provided, that each such lease or master lease shall be in form and substance reasonably satisfactory to the Administrative Agent.

“ Federal Funds Rate ” means, for any day, the rate per annum equal to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day immediately succeeding such day; provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the immediately preceding Business Day as so published on the immediately succeeding Business Day, and (b) if no such rate is so published on such immediately succeeding Business Day, the Federal Funds Rate for such day shall be the average rate (rounded upward, if

necessary, to the next 1/100 ^th of 1%) charged to Bank of America on such day on such transactions as determined by the Administrative Agent.

“ Foreign Lender ” means any Lender that is organized under the Laws of a jurisdiction other than that in which any Borrower is resident for tax purposes. For purposes of this definition, the United States, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.

“ FRB ” means the Board of Governors of the Federal Reserve System of the United States.

“ Fronting Exposure ” means, at any time there is a Defaulting Lender, (a) with respect to the L/C Issuer, such Defaulting Lender’s Revolving Commitment Percentage of the outstanding L/C Obligations other than L/C Obligations as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders or Cash Collateralized in accordance with the terms hereof, and (b) with respect to the Swing Line Lender, such Defaulting Lender’s Revolving Commitment Percentage of Swing Line Loans other than Swing Line Loans as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders or Cash Collateralized in accordance with the terms hereof.

“ Fund ” means any Person (other than a natural person) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business.

“ Funded Debt ” means, as to any Person (or consolidated group of Persons) at a particular time, without duplication, all of the following, whether or not included as indebtedness or liabilities in accordance with GAAP:

(a) all obligations for borrowed money, whether current or long-term (including the Obligations hereunder), and all obligations evidenced by bonds, debentures, notes, loan agreements or other similar instruments;

(b) all purchase money indebtedness (including indebtedness and obligations in respect of conditional sales and title retention arrangements, except for customary conditional sales and title retention arrangements with suppliers that are entered into in the ordinary course of business) and all indebtedness and obligations in respect of the deferred purchase price of property or services (other than trade accounts payable incurred in the ordinary course of business and payable on customary trade terms);

(c) all direct obligations under letters of credit (including standby and commercial), bankers’ acceptances and similar instruments (including bank guaranties, surety bonds, comfort letters, keep-well agreements and capital maintenance agreements) to the extent such instruments or agreements support financial, rather than performance, obligations;

(d) the Attributable Principal Amount of capital leases and Synthetic Leases;

(e) the Attributable Principal Amount of Securitization Transactions;

(f) all preferred stock and comparable equity interests providing for mandatory redemption, sinking fund or other like payments;

(g) Support Obligations in respect of Funded Debt of another Person (other than Persons in such group, if applicable); and

(h) Funded Debt of any partnership or joint venture or other similar entity in which such Person is a general partner or joint venturer, and, as such, has personal liability for such obligations, but only to the extent there is recourse to such Person (or, if applicable, any Person in such consolidated group) for payment thereof.

For purposes hereof, the amount of Funded Debt shall be determined based on the outstanding principal amount in the case of borrowed money indebtedness under clause (a) and purchase money indebtedness and the deferred purchase obligations under clause (b), based on the maximum amount available to be drawn in the case of letter of credit obligations and the other obligations under clause (c), and based on the amount of Funded Debt that is the subject of the Support Obligations in the case of Support Obligations under clause (g). For purposes of clarification, “Funded Debt” of Person constituting a consolidated group shall not include inter-company indebtedness of such Persons, general accounts payable of such Persons which arise in the ordinary course of business, accrued expenses of such Persons incurred in the ordinary course of business or minority interests in joint ventures or limited partnerships (except to the extent set forth in clause (h) above). In addition, Funded Debt shall exclude (i) any foreign, federal, state, local or other taxes, or (ii) any indemnification, earnouts, adjustments or holdbacks of purchase price or similar obligations, in each case, incurred or assumed in connection with the acquisition or other Disposition of any business, assets or a Subsidiary, other than guarantees of indebtedness incurred by any Person acquiring all or any portion of such business, assets or Subsidiary for the purpose of financing such transaction.

“ Funding Date ” means the first date all the conditions precedent in Section 4.02 are satisfied or waived in accordance with Section 10.01 .

“ Funds From Operations ” means, with respect to any period, the REIT Guarantor’s net income (or loss), plus depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures as hereafter provided. Notwithstanding contrary treatment under GAAP, for purposes hereof, (a) “Funds From Operations” (i) shall include, and be adjusted to take into account, the REIT Guarantor’s interests in unconsolidated partnerships and joint ventures, on the same basis as consolidated partnerships and subsidiaries, as provided in the “white paper” issued in April 2002 by the National Association of Real Estate Investment Trusts, a copy of which has been provided to the Administrative Agent and the Lenders and (ii) shall exclude stock-based compensation expenses and the amortization of financing fees and (b) net income (or loss) shall not include gains (or, if applicable, losses) resulting from or in connection with (i) restructuring of indebtedness, (ii) sales of property or (iii) sales or redemptions of preferred stock.

“ GAAP ” means generally accepted accounting principles in effect in the United States as set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board from time to time applied on a consistent basis, subject to the provisions of Section 1.03 .

“ Governmental Authority ” means any nation or government, any state or other political subdivision thereof, and any agency, authority, instrumentality, regulatory body, court, administrative tribunal, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

“ Guarantor ” means, as of any date, the REIT Guarantor or any Subsidiary Guarantor which is a party to the Guaranty as of such date; and “ Guarantors ” means a collective reference to each of them.

“ Guaranty ” means the Guaranty made by the Guarantors under Article XI in favor of the Lenders, together with each joinder agreement delivered pursuant to Section 6.14 .

“ Hazardous Substance ” means any toxic or hazardous substance, including petroleum and its derivatives regulated under the Environmental Laws.

“ Healthcare Facilities ” means any skilled nursing facility, assisted living facility, independent living facility, continuing care retirement community, mental health facility, life science facility, medical office building, hospital or other property typically owned by healthcare real estate investment trusts and any ancillary businesses that are incidental to the foregoing.

“ Healthcare Laws ” has the meaning given to such term in Section 5.19(a) hereof.

“ Indebtedness ” means, as to any Person at a particular time, without duplication, all of the following, whether or not included as indebtedness or liabilities in accordance with GAAP:

(a) all Funded Debt;

(b) all contingent obligations under letters of credit (including standby and commercial), bankers’ acceptances and similar instruments (including bank guaranties, surety bonds, comfort letters, keep-well agreements and capital maintenance agreements) to the extent such instruments or agreements support financial, rather than performance, obligations;

(d) Support Obligations in respect of Indebtedness of another Person; and

(e) Indebtedness of any partnership or joint venture or other similar entity in which such Person is a general partner or joint venturer, and, as such, has personal

liability for such obligations, but only to the extent there is recourse to such Person for payment thereof.

For purposes hereof, the amount of Indebtedness shall be determined based on Swap Termination Value in the case of net obligations under Swap Contracts under clause (c) and based on the outstanding principal amount of the Indebtedness that is the subject of the Support Obligations in the case of Support Obligations under clause (d).

“ Indemnified Taxes ” means Taxes other than Excluded Taxes.

“ Indemnitees ” has the meaning provided in Section 10.04 .

“ Information ” has the meaning specified in Section 10.07 .

“ Intangible Assets ” means all assets consisting of goodwill, patents, trade names, trademarks, copyrights, franchises, experimental expense, organization expense, unamortized debt discount and expense, deferred assets (other than prepaid insurance and prepaid taxes), the excess of cost of shares acquired over book value of related assets and such other assets as are properly classified as “intangible assets” in accordance with GAAP.

“ Interest Payment Date ” means, (a) as to any Base Rate Loan (including Swing Line Loans), the last Business Day of each March, June, September and December and the Maturity Date and, in the case of any Swing Line Loan, any other dates reasonably determined by the Swing Line Lender, and (b) as to any Eurodollar Loan (other than Swing Line Loans), the last Business Day of each Interest Period for such Loan and the Maturity Date, the date of repayment of principal of such Loan, and where the applicable Interest Period exceeds three months, the date every three months after the beginning of such Interest Period. If an Interest Payment Date falls on a date that is not a Business Day, such Interest Payment Date shall be deemed to be the immediately succeeding Business Day.

“ Interest Period ” means, as to each Eurodollar Loan, the period commencing on the date such Eurodollar Loan is disbursed or converted to or continued as a Eurodollar Loan and ending on the date one, two, three or six months thereafter, as selected by the applicable Borrower in its Loan Notice; provided that:

(a) any Interest Period that would otherwise end on a day that is not a Business Day shall be extended to the immediately succeeding Business Day unless such Business Day falls in another calendar month, in which case such Interest Period shall end on the immediately preceding Business Day;

(b) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period; and

“ Internal Revenue Code ” means the Internal Revenue Code of 1986 as amended.

“ Investment ” means, as to any Person, any direct or indirect acquisition or investment by such Person, whether by means of (a) the purchase or other acquisition of Capital Stock of another Person, (b) a loan, advance (other than deposits with financial institutions available for withdrawal or demand, prepaid expenses, accounts receivable, advances to employees and similar items made or incurred in the ordinary course of business) or capital contribution to, guaranty or assumption of debt of, or purchase or other acquisition of any other debt or equity participation or interest in, another Person, including any partnership or joint venture interest in such other Person, or (c) the purchase or other acquisition (in one transaction or a series of transactions) of assets of another Person that constitute a business unit. For purposes of covenant compliance, the amount of any Investment shall be the amount actually invested, without adjustment for subsequent increases or decreases in the value of such Investment.

“ Involuntary Disposition ” means any loss of, damage to or destruction of, or any condemnation or other taking for public use of, any property of the Borrowers.

“ IRS ” means the United States Internal Revenue Service.

“ ISP ” means, with respect to any Letter of Credit, the “International Standby Practices 1998” published by the Institute of International Banking Law & Practice, Inc. (or such later version thereof as may be in effect at the time of issuance of such Letter of Credit).

“ Issuer Documents ” means with respect to any Letter of Credit, the Letter of Credit Application, and any other document, agreement and instrument entered into by the L/C Issuer and any Borrower or in favor of the L/C Issuer and relating to such Letter of Credit.

“ Joinder Agreements ” means any Borrower Joinder Agreement or Lender Joinder Agreement.

“ Laws ” means, collectively, all international, foreign, federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law.

“ L/C Advance ” means, with respect to each Lender, such Lender’s funding of its participation in any L/C Borrowing.

“ L/C Borrowing ” means any extension of credit resulting from a drawing under any Letter of Credit that has not been reimbursed or refinanced as a Borrowing of Revolving Loans in accordance with Section 2.03(c) .

“ L/C Commitment ” means, with respect to the L/C Issuer, the commitment of the L/C Issuer to issue and to honor payment obligations under Letters of Credit, and, with respect to each Lender, the commitment of such Lender to purchase participation interests in L/C Obligations up to such Lender’s Revolving Commitment Percentage thereof.

“ L/C Committed Amount ” has the meaning provided in Section 2.01(b) .

“ L/C Credit Extension ” means, with respect to any Letter of Credit, the issuance thereof or extension of the expiry date thereof, or the renewal or increase of the amount thereof.

“ L/C Issuer ” means Bank of America in its capacity as issuer of Letters of Credit hereunder, in each case together with its successors in such capacity.

“ L/C Obligations ” means, at any time, the sum of (a) the maximum amount available to be drawn under Letters of Credit then outstanding, assuming compliance with all requirements for drawings referenced therein, plus (b) the aggregate amount of all Unreimbursed Amounts, including L/C Borrowings. For purposes of computing the amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 1.07 . For all purposes of this Agreement, if on any date of determination a Letter of Credit has expired by its terms but any amount may still be drawn thereunder by reason of the operation of Rule 3.14 of the ISP, such Letter of Credit shall be deemed to be “outstanding” in the amount so remaining available to be drawn.

“ Lender ” means each of the Persons identified as a “Lender” on the signature pages hereto (and, as appropriate, includes the L/C Issuer and the Swing Line Lender) and each Person who joins as a Lender pursuant to the terms hereof, together with their respective successors and assigns.

“ Lender Joinder Agreement ” means a joinder agreement in the form of Exhibit F , executed and delivered in accordance with the provisions of Section 2.01(d) .

“ Lending Office ” means, as to any Lender, the office or offices of such Lender set forth in such Lender’s Administrative Questionnaire or such other office or offices as a Lender may from time to time notify the Borrowers and the Administrative Agent.

“ Letter of Credit ” means each standby (non-commercial) letter of credit issued hereunder.

“ Letter of Credit Application ” means an application and agreement for the issuance or amendment of a Letter of Credit in the form from time to time in use by the L/C Issuer.

“ Letter of Credit Expiration Date ” means the day that is five (5) Business Days prior to the Maturity Date then in effect (or, if such day is not a Business Day, the immediately preceding Business Day).

“ Letter of Credit Fee ” shall have the meaning given such term in Section 2.09(c) .

“ Lien ” means any mortgage, deed of trust, deed to secured debt, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, or preference, priority or other security interest or preferential arrangement of any kind or nature whatsoever (including any conditional sale or other title retention agreement, and any financing lease having substantially the same economic effect as any of the foregoing).

“ Loan ” means any Revolving Loan or Swing Line Loan, and the Base Rate Loans and Eurodollar Loans comprising such Loans.

“ Loan Notice ” means a notice of (a) a Borrowing of Loans (including Swing Line Loans), (b) a conversion of Loans from one Type to the other, or (c) a continuation of Eurodollar Loans, which, if in writing, shall be substantially in the form of Exhibit A .

“ Material Adverse Effect ” means (a) a material adverse change in, or a material adverse effect on, the operations, business, assets, properties, liabilities (actual or contingent), condition (financial or otherwise) or prospects of (i) any Borrower, (ii) the REIT Guarantor or (iii) the other Credit Parties, taken as a whole, (b) a material impairment of the rights and remedies of the Administrative Agent or any Lender under any Credit Document, or of the ability of (i) any Borrower, (ii) the REIT Guarantor or (iii) the other Credit Parties, takes as a whole, to perform its obligations under any Credit Document to which it is a party, or (c) a material adverse effect upon the legality, validity, binding effect or enforceability against any Borrower or any other Credit Party of any Credit Document to which it is a party.

“ Maturity Date ” means the later of (a) November 3, 2013 and (b) if maturity is extended pursuant to Section 2.18 , such extended maturity date as determined pursuant to such Section; provided , however , that, in each case, if such date is not a Business Day, the Maturity Date shall be the next preceding Business Day; provided , further , however , to the extent that the Separation and the REIT Conversion Merger do not occur prior to January 5, 2011, the Maturity Date shall occur as of such date.

“ Medicaid ” means the medical assistance programs administered by state agencies and approved by CMS pursuant to the terms of Title XIX of the Social Security Act, codified at 42 U.S.C. §§ 1396 et seq. and related regulations.

“ Medical Services ” means medical and health care services provided to a Person, including, but not limited to, medical and health care services provided to a Person which are covered by a policy of insurance, and includes, without limitation, physician services, nurse and therapist services, dental services, hospital services, skilled nursing facility services, comprehensive outpatient rehabilitation services, home health care services, residential and out-patient behavioral healthcare services, and medicine or health care equipment provided to a Person for a necessary or specifically requested valid and proper medical or health purpose.

“ Medicare ” means the program of health benefits for the aged and disabled administered by CMS pursuant to the terms of Title XVIII of the Social Security Act, codified at 42 U.S.C. 1395 §§ et seq. and related regulations.

“ Moody’s ” means Moody’s Investors Service, Inc. and any successor thereto.

“ Mortgageability Amount ” means, with respect to any Borrowing Base Asset and as of any date of determination, the maximum principal amount of a hypothetical mortgage loan that would be available to be borrowed against such Borrowing Base Asset assuming (a) an annual interest rate equal to the greater of (i) 7.50% and (ii) the then-applicable Treasury Rate plus 3.00%, (b) a 25-year amortization schedule and (c) a debt service coverage ratio on such loan of 1.50 to 1.00 (based on the most-recently calculated Mortgageability Cash Flow of such Borrowing Base Asset); provided , however , that at all times prior to the delivery of the Borrowing Base Certificate delivered in accordance with Section 6.02(c) , with respect to the fiscal quarter ending December 31, 2010, the Mortgageability Amount shall be the amount indicated for such fiscal quarter on Schedule 1.1A .

“ Mortgageability Cash Flow ” means, with respect to any Borrowing Base Asset and for the most recently ended four (4) fiscal quarter period for which financial information has been delivered to the Administrative Agent pursuant to the terms of this Credit Agreement, an amount equal to the most-recently calculated Net Revenues received by the applicable Borrower with respect to such Borrowing Base Asset in connection with a lease entered into between the applicable Borrower and a Person which is not an Affiliate of any Consolidated Party; provided , however , that Mortgageability Cash Flow for the four (4) fiscal quarter period ending as of (a) December 31, 2010 shall be based on Mortgageability Cash Flow for the period from the Separation Date to the end of such fiscal quarter annualized, (b) March 31, 2011 shall be based on Mortgageability Cash Flow for the one fiscal-quarter period then ended multiplied by 4, (c) June 30, 2011 shall be based on Mortgageability Cash Flow for the two fiscal-quarter period then ended multiplied by 2 and (d) September 30, 2011 shall be based on Mortgageability Cash Flow for the three fiscal-quarter period then ended multiplied by 1 ¹ / 3 . For purposes of computing Mortgageability Cash Flow for any applicable test period, any lease adjustments and/or modifications (including new leases with respect to new Borrowing Base Assets) shall be given pro forma effect as if such transaction had taken place as of the first day of such applicable test period

“ Mortgage Instrument ” means, for any Real Property Asset, a first lien priority fee or leasehold mortgage, deed of trust or deed to secure debt in favor of the Administrative Agent (for the benefit of the Lenders) with respect to such Real Property Asset. Each Mortgage Instrument shall be in form and substance satisfactory to the Administrative Agent and suitable for recording in the applicable jurisdiction.

“ Mortgage Policies ” shall have the meaning assigned to such term in the definition of “Borrowing Base Asset Deliverables” contained in this Section 1.01 .

“ Multiemployer Plan ” means any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which the REIT Guarantor or any ERISA Affiliate makes or is obligated to make contributions, or during the preceding five plan years, has made or been obligated to make contributions.

“ Negative Pledge ” means any agreement (other than this Credit Agreement or any other Credit Document) that in whole or in part prohibits the creation of any Lien on any assets of a Person; provided , however , that an agreement that establishes a maximum ratio of unsecured debt to unencumbered assets, or of secured debt to total assets, or that otherwise conditions a Person’s ability to encumber its assets upon the maintenance of one or more specified ratios that limit such Person’s ability to encumber its assets but that do not generally prohibit the encumbrance of its assets, or the encumbrance of specific assets, shall not constitute a “Negative Pledge” for purposes of this Credit Agreement; and provided further , however , that any provision under the Sabra Senior Note Indenture and/or any other document relating to the Sabra Senior Notes that may be included within this definition of “Negative Pledge” shall not constitute a “Negative Pledge” for purposes of the Credit Agreement.

“ Net Revenues ” shall mean, with respect to any Real Property Asset for the most recently ended four (4) fiscal quarter period for which financial information has been delivered to the Administrative Agent pursuant to the terms of this Credit Agreement, the sum of (a) rental payments received in cash by the applicable Borrower (whether in the nature of base rent, minimum rent, percentage rent, additional rent or otherwise, but exclusive of security deposits, earnest money deposits, advance rentals (which will be deemed Net Revenues in the month in which such rent is due), reserves for capital expenditures, charges, expenses or items required to be paid or reimbursed by the tenant thereunder (unless the Borrower becomes entitled to retain the same) and proceeds from a sale or other disposition) pursuant to the Facility Leases applicable to such Real Property Asset, minus (b) if applicable, expenses of the applicable Borrower related to such Real Property Asset (not including expenses paid or payable by the Tenants) minus (c) rental payments made by the applicable Borrower with respect to any Eligible Ground Lease (unless paid by a Tenant). It is understood that (i) adjustments will be permitted to allow a Borrower to accommodate temporary changes in the timing of payments and (ii) Net Revenues shall also include proceeds of business interruption or rent insurance.

“ Notes ” means the Revolving Notes; and “ Note ” means any one of them.

“ Obligations ” means, without duplication, (a) all advances to, and debts, liabilities, obligations, covenants and duties of, any Credit Party arising under any Credit Document or otherwise with respect to any Loan or Letter of Credit, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that accrue after the commencement by or against any Credit Party or any Affiliate thereof of any proceeding under any Debtor Relief Laws naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding and (b) all obligations under any Swap Contract of any Credit Party to which a Lender or any Affiliate of a Lender is a party.

“ Occupancy Rate ” means, with respect to any Real Property Asset, the percentage of (a) total patient days relating to such Real Property Asset for any reporting period divided by (b) the product of (i) total number of in-service beds at such Real Property Asset and (ii) the total days in such reporting period; provided , however, with respect to Real Property Assets which property type is medical office buildings or other office spaces, “ Occupancy Rate ” means, the (a) total

number of rented square footage at such Real Property Asset for any reporting period divided by (b) the total rentable square footage relating to such Real Property Asset for any reporting period.

“ Organization Documents ” means, (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating agreement; and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles of formation or organization of such entity.

“ Other Taxes ” means all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or under any other Credit Document or from the execution, delivery or enforcement of, or otherwise with respect to, this Credit Agreement or any other Credit Document.

“ Outstanding Amount ” means (a) with respect to Revolving Loans and Swing Line Loans on any date, the aggregate outstanding principal amount thereof after giving effect to any Borrowings and prepayments or repayments of Revolving Loans and Swing Line Loans, as the case may be, occurring on such date and (b) with respect to any L/C Obligations on any date, the amount of such L/C Obligations on such date after giving effect to any L/C Credit Extension occurring on such date and any other changes in the aggregate amount of the L/C Obligations as of such date, including as a result of any reimbursements of outstanding unpaid drawings under any Letters of Credit or any reductions in the maximum amount available for drawing under Letters of Credit taking effect on such date.

“ Parent Borrower ” has the meaning specified in the introductory paragraph hereto.

“ Participant ” has the meaning provided in Section 10.06(d) .

“ PBGC ” means the Pension Benefit Guaranty Corporation.

“ Pension Plan ” means any “employee pension benefit plan” (as such term is defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is subject to Title IV of ERISA and is sponsored or maintained by the REIT Guarantor or any ERISA Affiliate or to which the REIT Guarantor or any ERISA Affiliate contributes or has an obligation to contribute, or in the case of a multiple employer or other plan described in Section 4064(a) of ERISA, has made contributions at any time during the immediately preceding five plan years.

“ Permitted Liens ” means, as to any Person: (a) Liens securing taxes, assessments and other charges or levies imposed by any Governmental Authority (excluding any Lien imposed pursuant to any of the provisions of ERISA), in each case, which are not yet delinquent (other than those which are being contested in good faith and for which adequate reserves have been

established in accordance with GAAP); (b) Liens evidencing the claims of materialmen, mechanics, carriers, warehousemen or landlords for labor, materials, supplies or rentals, in each case, incurred in the ordinary course of business and which are not at the time required to be paid or discharged (other than those which are being contested in good faith and for which a bond or other assurance has been posted as required by applicable Law); provided , that with respect to any Borrowing Base Asset, no exception is taken therefor in the related Mortgage Policy or such Mortgage Policy otherwise affirmatively insures over such Liens in form and substance reasonably satisfactory to the Administrative Agent; (c) Liens consisting of deposits or pledges made, in the ordinary course of business, in connection with, or to secure payment of, obligations under workmen’s compensation, unemployment insurance or similar applicable Laws; (d) zoning restrictions, easements, rights-of-way, covenants, reservations and other rights, restrictions or encumbrances on the use of Real Property Assets, which do not materially detract from the value of such property or materially impair the use thereof for the business of such Person; (e) Liens in existence as of the Closing Date as set forth on Schedule 7.01 ; (f) Liens, if any, in favor of the Administrative Agent for the benefit of the Lenders; (g) Liens, if any, in favor of the L/C Issuer and/or Swing Line Lender to cash collateralize or otherwise secure the obligations of a Defaulting Lender or an Impacted Lender to fund risk participations hereunder; (h) Liens arising pursuant to Facility Leases; (i) any interest of title of a lessor under, and Liens arising from UCC financing statements (or equivalent filings, registrations or agreements in foreign jurisdictions) relating to, leases permitted by this Agreement; and (j) liens arising pursuant to leases or subleases of immaterial portions of any Real Property Asset owned by any of the Borrowers granted to others not interfering in any material respect with such Real Property Asset or the business of the applicable Borrower.

“ Person ” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.

“ Plan ” means any “employee benefit plan” (as such term is defined in Section 3(3) of ERISA) established by the REIT Guarantor or, with respect to any such plan that is subject to Section 412 of the Internal Revenue Code or Title IV of ERISA, any ERISA Affiliate.

“ Platform ” has the meaning specified in Section 6.02 .

“ Pledged Equity ” has the meaning specified in Section 1(b) of each of the Security Agreements.

“ Pro Forma Financial Statements ” means the unaudited balance sheet of the REIT Guarantor at June 30, 2010, giving effect to the Separation and REIT Conversion Merger as if the REIT Conversion Merger occurred on June 30, 2010 and the unaudited income statement reflecting the supplemental pro forma financial information of the REIT Guarantor for the year ended December 31, 2009 and six months ended June 30, 2010 as if the Separation and REIT Conversion had occurred at January 1, 2009.

“ Qualified REIT Subsidiary ” shall have the meaning given to such term in the Internal Revenue Code.

“ Real Property Asset ” means, a parcel of real or leasehold property, together with all improvements (if any) thereon (including all tangible personal property owned by the person owning such real or leasehold property) owned in fee simple or leased pursuant to an Eligible Ground Lease by any Person; “Real Property Assets” means a collective reference to each Real Property Asset.

“ Register ” has the meaning provided in Section 10.06(c) .

“ Registered Public Accounting Firm ” has the meaning specified in the Securities Laws and shall be independent of the Borrower as prescribed by the Securities Laws.

“ REIT ” means a real estate investment trust as defined in Sections 856-860 of the Internal Revenue Code.

“ REIT Conversion Merger ” has the meaning specified in the introductory paragraph hereto.

“ REIT Guarantor ” has the meaning specified in the introductory paragraph hereto.

“ Related Parties ” means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents, trustees and advisors of such Person and of such Person’s Affiliates.

“ Reportable Event ” means any of the events set forth in Section 4043(c) of ERISA, other than events for which the thirty-day notice period has been waived.

“ Request for Extension of Credit ” means (a) with respect to a Borrowing of Loans (including Swing Line Loans) or the conversion or continuation of Loans, a Loan Notice and (b) with respect to an L/C Credit Extension, a Letter of Credit Application.

“ Required Lenders ” means, as of any date of determination, two or more Lenders (except to the extent only one Lender exists as of such date) having more than 50% of the Aggregate Commitments or, if the commitment of each Lender to make Loans and the obligation of the L/C Issuer to make L/C Credit Extensions have been terminated pursuant to Article VIII , Lenders holding in the aggregate more than 50% of the Revolving Obligations (including, in each case, the aggregate amount of each Lender’s risk participation and funded participation in L/C Obligations and Swing Line Loans); provided that the Revolving Commitment of, and the portion of the Revolving Obligations held or deemed held by, any Defaulting Lender shall be excluded for purposes of making a determination of Required Lenders.

“ Responsible Officer ” means the chief executive officer, chief financial officer, chief investment officer and the controller of any Credit Party. Any document delivered hereunder that is signed by a Responsible Officer of a Credit Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Credit Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Credit Party.

“ Revolving Commitment ” means, with respect to each Lender, the commitment of such Lender to make Revolving Loans and to share in the Revolving Obligations hereunder up to such Lender’s Revolving Commitment Percentage thereof.

“ Revolving Commitment Percentage ” means, at any time for each Lender, a fraction (expressed as a percentage carried to the ninth decimal place), the numerator of which is such Lender’s Revolving Committed Amount and the denominator of which is the Aggregate Committed Amount. The initial Revolving Commitment Percentages are set forth on Schedule 2.01 .

“ Revolving Committed Amount ” means, with respect to each Lender, the amount of such Lender’s Revolving Commitment. The initial Revolving Committed Amounts are set forth on Schedule 2.01 .

“ Revolving Loan ” has the meaning provided in Section 2.01 .

“ Revolving Note ” means the promissory notes in the form of Exhibit B , if any, given to each Lender to evidence the Revolving Loans and Swing Line Loans of such Lender, as amended, restated, modified, supplemented, extended, renewed or replaced.

“ Revolving Obligations ” means the Revolving Loans, the L/C Obligations and the Swing Line Loans.

“ S-4 Registration Statement ” shall mean the registration statement of the REIT Guarantor on Form S-4 (No. 333-167040) filed with the SEC, as amended from time to time with (in the case of material amendments) the consent of the Administrative Agent, which was declared effective on September 28, 2010.

“ S&P ” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc. and any successor thereto.

“ Sabra Senior Notes ” shall have the meaning set forth in the introductory paragraph hereto.

“ Sabra Senior Note Indenture ” means the Indenture, dated as of October 27, 2010, by and among the Parent Borrower, Sabra Capital Corporation and the senior noteholders, as the same may be amended, restated, supplemented, replaced or otherwise modified from time to time.

“ Sale and Leaseback Transaction ” means, with respect to any Credit Party or any Subsidiary thereof, any arrangement, directly or indirectly, with any person whereby such Credit Party or Subsidiary thereof shall sell or transfer any property, real or personal, used or useful in its business, whether now owned or hereafter acquired, and thereafter rent or lease such property or other property that it intends to use for substantially the same purpose or purposes as the property being sold or transferred.

“ Sarbanes-Oxley ” means the Sarbanes-Oxley Act of 2002.

“ SEC ” means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions.

“ Securities Laws ” means the Securities Act of 1933, the Securities Exchange Act of 1934, Sarbanes-Oxley and the applicable accounting and auditing principles, rules, standards and practices promulgated, approved or incorporated by the SEC or the Public Company Accounting Oversight Board, as each of the foregoing may be amended and in effect on any applicable date hereunder.

“ Securitization Transaction ” means any financing or factoring or similar transaction (or series of such transactions) entered by any member of the Consolidated Parties pursuant to which such member of the Consolidated Parties may sell, convey or otherwise transfer, or grant a security interest in, accounts, payments, receivables, rights to future lease payments or residuals or similar rights to payment (the “ Securitization Receivables ”) to a special purpose subsidiary or affiliate (a “ Securitization Subsidiary ”) or any other Person.

“ Security Agreements ” means (a) the security and pledge agreement dated as of the date hereof in the form of Exhibit G and (b) the Parent Borrower pledge agreement dated as of the date hereof in the form of Exhibit H , in each case as amended, supplemented, restated or otherwise modified from time to time.

“ Separation ” shall have the meaning set forth in the introductory paragraph hereto.

“ Separation Date ” shall mean the date on which the Separation occurs.

“ Separation Documents ” shall mean the S-4 Registration Statement and (ii) the Distribution Agreement to be entered into by and among Sun, the REIT Guarantor and SHG Services, Inc.

“ Solvent ” means, with respect to any person on a particular date, that on such date (a) the fair value of the property of such Person is greater than the total amount of liabilities, including, without limitation, contingent liabilities, of such Person, (b) the present fair saleable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (c) such Person is able to realize upon its assets and pay its debts and other liabilities, contingent obligations and other commitments as they mature, (d) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay as such debts and liabilities mature, and (e) such Person is not engaged in a business or a transaction, and is not about to engage in a business or a transaction, for which such Person’s property would constitute unreasonably small capital after giving due consideration to the prevailing practice in the industry in which such Person is engaged. In computing the amount of contingent liabilities at any time, it is intended that such liabilities will be computed at the amount which, in light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.

“ SNDA ” means, with respect to any Facility Lease for the Borrowing Base Asset, a subordination, non disturbance and attornment agreement by and among Administrative Agent, on behalf of the Lenders and the Tenants who are a party to the Facility Lease, in form and substance reasonably acceptable to the Administrative Agent.

“ Subsidiary ” of a Person means a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of the shares of securities or other interests having ordinary voting power for the election of directors or other governing body (other than securities or interests having such power only by reason of the happening of a contingency) are at the time beneficially owned, or the management of which is otherwise controlled, directly, or indirectly through one or more intermediaries, or both, by such Person. Unless otherwise provided, “ Subsidiary ” shall refer to a Subsidiary of the REIT Guarantor.

“ Subsidiary Guarantor ” means each Subsidiary of the REIT Guarantor other than (a) the Borrowers, (b) the Unrestricted Subsidiaries, (c) any Subsidiary which, as of the Closing Date, is prohibited by the terms of secured project financing documents from being a Guarantor hereunder, (d) any Subsidiary that is not required by the provisions of this Agreement (including Section 11.08 ) to be a Guarantor hereunder and (e) any Subsidiary that is released from being a Guarantor hereunder by the provisions of this Agreement (including Section 11.08 ).

“ Subsidiary Guarantor Joinder Agreement ” means a joinder agreement in the form of Exhibit E-2 to be executed by each new Subsidiary of the REIT Guarantor that is required to become a Subsidiary Guarantor in accordance with Section 6.14(b) hereof.

“ Support Obligations ” means, as to any Person, (a) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation payable or performable by another Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such Indebtedness or other obligation of the payment or performance of such Indebtedness or other obligation, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation, or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such Indebtedness or other obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part), or (b) any Lien on any assets of such Person securing any Indebtedness or other obligation of any other Person, whether or not such Indebtedness or other obligation is assumed by such Person. The amount of any Support Obligations shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Support Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith.

“ Swap Contract ” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, that are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “ Master Agreement ”), including any such obligations or liabilities under any Master Agreement.

“ Swap Termination Value ” means, in respect of any one or more Swap Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and termination values determined in accordance therewith, such termination values, and (b) for any date prior to the date referenced in clause (a), the amounts determined as the mark-to-market values for such Swap Contracts, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts (which may include a Lender or any Affiliate of a Lender).

“ Swing Line Borrowing ” means a borrowing of a Swing Line Loan pursuant to Section 2.01(c) .

“ Swing Line Commitment ” means, with respect to the Swing Line Lender, the commitment of the Swing Line Lender to make Swing Line Loans, and with respect to each Lender, the commitment of such Lender to purchase participation interests in Swing Line Loans.

“ Swing Line Committed Amount ” has the meaning provided in Section 2.01(c) .

“ Swing Line Lender ” means Bank of America in its capacity as such, together with any successor in such capacity.

“ Swing Line Loan ” has the meaning provided in Section 2.01(c) .

“ Synthetic Lease ” means any synthetic lease, tax retention operating lease, off-balance sheet loan or similar off-balance sheet financing arrangement that is considered borrowed money indebtedness for tax purposes but is classified as an operating lease under GAAP.

“ Taxes ” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

“ Tenant ” means any Person who is a lessee with respect to any lease held by a Borrower as lessor or as an assignee of the lessor thereunder.

“ Transactions ” means a collective reference to (i) the entering into of this Credit Agreement and the other Credit Documents by the Borrowers and the Guarantors, (ii) the consummation of (a) the Separation and (b) the REIT Conversion Merger and (iii) the entering into of the Sabra Senior Note Indenture and the issuance of the Sabra Senior Notes.

“ Threshold Amount ” means (a) with respect to the Borrowers (other than the Parent Borrower), $500,000 and (b) with respect to each of the Parent Borrower and the REIT Guarantor, $20,000,000.

“ Treasury Rate ” means, as of any date of determination, the yield reported, as of 10:00 a.m. (New York City time) on such date (or to the extent such date is not a Business Day, the Business Day immediately preceding such date) on the display designated as page “PX-1” of the Bloomberg Financial Markets Services Screen (or such other display as may replace page “PX-1” of the Bloomberg Financial Markets Services Screen) for actively traded U.S. Treasury securities having a ten (10) year maturity as of such date, or (b) if such yields are not reported as of such time or the yields reported as of such time are not ascertainable, the Treasury Constant Maturity Series Yields reported, for the latest day for which such yields have been so reported as of such day in Federal Reserve Statistical Release H.15(519) (or any comparable successor publication) for actively traded U.S. Treasury securities having a constant maturity equal to ten (10) years.

“ Type ” means, with respect to any Revolving Loan, its character as a Base Rate Loan or a Eurodollar Loan.

“ Unfunded Pension Liability ” means the excess of a Pension Plan’s benefit liabilities under Section 4001(a)(16) of ERISA, over the current value of that Pension Plan’s assets, determined in accordance with the assumptions used for funding the Pension Plan pursuant to Section 412 of the Internal Revenue Code for the applicable plan year.

“ United States ” or “ U.S. ” means the United States of America.

“ Unreimbursed Amount ” has the meaning provided in Section 2.03(c)(i) .

“ Unrestricted Subsidiaries ” means the “Unrestricted Subsidiaries” as such term is defined from time to time in the Sabra Senior Note Indenture; provided , that to the extent the Sabra Senior Note Indenture is, for any reason, terminated, the term “Unrestricted Subsidiaries” shall, for the remainder of the term of this Agreement, have the meaning assigned to such term in the Sabra Senior Note Indenture immediately prior to the termination thereof.

“ Unused Fee ” shall have the meaning given such term in Section 2.09(a) .

“ Wholly Owned ” means, with respect to any direct or indirect Subsidiary of any Person, that 100% of the Capital Stock with ordinary voting power issued by such Subsidiary (other than directors’ qualifying shares and investments by foreign nationals mandated by applicable Law) is beneficially owned, directly or indirectly, by such Person.

1.02 Interpretive Provisions .

With reference to this Credit Agreement and each other Credit Document, unless otherwise provided herein or in such other Credit Document:

(a) The meanings of defined terms are equally applicable to the singular and plural forms of the defined terms.

(b) (i) The words “herein,” “hereto,” “hereof” and “hereunder” and words of similar import when used in any Credit Document shall refer to such Credit Document as a whole and not to any particular provision thereof.

(ii) Unless otherwise provided or required by context, Article, Section, Exhibit and Schedule references are to the Credit Document in which such reference appears.

(iii) The term “including” is by way of example and not limitation.

(iv) The term “documents” includes any and all instruments, documents, agreements, certificates, notices, reports, financial statements and other writings, however evidenced, whether in physical or electronic form.

(c) In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including”; the words “to” and “until” each mean “to but excluding”; and the word “through” means “to and including.”

(d) Section headings herein and in the other Credit Documents are included for convenience of reference only and shall not affect the interpretation of this Credit Agreement or any other Credit Document.

1.03 Accounting Terms .

(a) All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Credit Agreement shall be prepared in conformity with, GAAP applied on a consistent basis, as in effect from time to time.

(b) The Parent Borrower will provide a written summary of material changes in GAAP or in the consistent application thereof with each annual and quarterly Compliance Certificate delivered in accordance with Section 6.02(a) . If at any time any change in GAAP or in the consistent application thereof would affect the computation of any financial ratio or

requirement set forth in any Credit Document, and either the Parent Borrower or the Required Lenders shall object in writing to determining compliance based on such change, then such computations shall continue to be made on a basis consistent with the most recent financial statements delivered pursuant to Section 6.01(a) or (b) as to which no such objection has been made.

(c) The parties hereto acknowledge and agree that all calculations of the financial covenants in Section 6.11 shall be made on a pro forma basis with respect to any Disposition or acquisition occurring during the applicable period, retroactive to the beginning of such applicable period.

1.04 Rounding .

Any financial ratios required to be maintained by the Credit Parties pursuant to this Credit Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number).

1.05 References to Agreements and Laws .

Unless otherwise expressly provided herein, (a) references to Organization Documents, agreements (including the Credit Documents) and other contractual instruments shall be deemed to include all subsequent amendments, restatements, extensions, supplements and other modifications thereto, but only to the extent that such amendments, restatements, extensions, supplements and other modifications are not prohibited by any Credit Document; and (b) references to any Law shall include all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting such Law.

1.06 Times of Day .

Unless otherwise provided, all references herein to times of day shall be references to Eastern time (daylight or standard, as applicable).

1.07 Letter of Credit Amounts .

Unless otherwise specified herein, the amount of a Letter of Credit at any time shall be deemed to be the stated amount of such Letter of Credit in effect at such time; provided , however , that with respect to any Letter of Credit that, by its terms or the terms of any Issuer Document related thereto, provides for one or more automatic increases in the stated amount thereof, the amount of such Letter of Credit shall be deemed to be the maximum stated amount of such Letter of Credit after giving effect to all such increases, whether or not such maximum stated amount is in effect at such time.

ARTICLE II

COMMITMENTS AND EXTENSION OF CREDITS

2.01 Commitments .

Subject to the terms and conditions set forth herein:

(a) Revolving Loans . During the Commitment Period, each Lender severally agrees to make revolving credit loans (the “ Revolving Loans ”) to the Parent Borrower on any Business Day; provided that after giving effect to any such Revolving Loan, (i) with regard to the Lenders collectively, the aggregate outstanding principal amount of Revolving Obligations shall not exceed the lesser of (x) ONE HUNDRED MILLION DOLLARS ($100,000,000) (as such amount may be increased or decreased in accordance with the provisions hereof, the “ Aggregate Committed Amount ”) and (y) the Borrowing Base Amount for such date and (ii) with regard to each Lender individually, such Lender’s Revolving Commitment Percentage of Revolving Obligations shall not exceed its respective Revolving Committed Amount. Revolving Loans may consist of Base Rate Loans, Eurodollar Loans, or a combination thereof, as provided herein, and may be repaid and reborrowed in accordance with the provisions hereof.

(b) Letters of Credit . During the Commitment Period, (i) subject to the terms and conditions set forth herein, (A) the L/C Issuer agrees, in reliance upon the agreements of the Lenders set forth in this Section 2.01(b) and Section 2.03 (A) to issue Letters of Credit for the account of a Borrower on any Business Day, (B) to amend or renew Letters of Credit previously issued hereunder, and (C) to honor drafts under Letters of Credit; and (ii) the Lenders severally agree to purchase from the L/C Issuer a participation interest in the Letters of Credit issued hereunder in an amount equal to such Lender’s Revolving Commitment Percentage thereof; provided that (A) the aggregate principal amount of L/C Obligations shall not exceed the greater of (x) FIFTEEN MILLION DOLLARS ($15,000,000) and (y) an amount equal to FIFTEEN PERCENT (15%) of the Aggregate Committed Amount, the “ L/C Committed Amount ”), (B) with regard to the Lenders collectively, the aggregate principal amount of Revolving Obligations shall not exceed the lesser of (x) the Aggregate Committed Amount and (y) the Borrowing Base Amount for such date, and (C) with regard to each Lender individually, such Lender’s Revolving Commitment Percentage of Revolving Obligations shall not exceed its respective Revolving Committed Amount. Subject to the terms and conditions hereof, the Borrowers’ ability to obtain Letters of Credit shall be fully revolving, and accordingly the Borrowers may obtain Letters of Credit to replace Letters of Credit that have expired or that have been drawn upon and reimbursed.

(c) Swing Line Loans . During the Commitment Period, subject to the terms and conditions set forth herein, the Swing Line Lender may, in its discretion and in reliance upon the agreements of the other Lenders set forth in this Section 2.01(c) and Section 2.04 , make revolving credit loans (the “ Swing Line Loans ”) to the Parent Borrower on any Business Day; provided , that the aggregate principal amount of the Swing Line Loans shall not exceed (i) the greater of (x) FIFTEEN MILLION DOLLARS ($15,000,000) and (y) an amount equal to FIFTEEN PERCENT (15%) of the Aggregate Committed Amount (as such amount may be adjusted in accordance with the provisions hereof, the “ Swing Line Committed Amount ”), (ii)

with respect to the Lenders collectively, the aggregate principal amount of Revolving Obligations shall not exceed the lesser of (x) the Aggregate Committed Amount and (y) the Borrowing Base Amount on such date, and (iii) the Borrowers shall not use the proceeds of any Swing Line Loan to refinance any outstanding Swing Line Loan. Swing Line Loans shall be comprised solely of Base Rate Loans, and may be repaid and reborrowed in accordance with the provisions hereof. Immediately upon the making of a Swing Line Loan, each Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the Swing Line Lender a participation interest in such Swing Line Loan in an amount equal to the product of such Lender’s Revolving Commitment Percentage thereof. No Swing Line Loan shall remain outstanding for longer than five (5) Business Days.

(d) Increase in Revolving Commitments . Subject to the terms and conditions set forth herein, the Parent Borrower may, at any time prior to the then applicable Maturity Date, upon written notice to the Administrative Agent, cause an increase in the Aggregate Committed Amount by up to ONE HUNDRED MILLION DOLLARS ($100,000,000) (to an aggregate amount not more than TWO HUNDRED MILLION DOLLARS ($200,000,000) ); provided that such increase shall be conditioned and effective upon the satisfaction of the following conditions:

(i) the Borrowers shall obtain (whether through the Arranger or otherwise) commitments for the amount of the increase from existing Lenders or other commercial banks or financial institutions reasonably acceptable to the Administrative Agent, which other commercial banks and financial institutions shall join in this Credit Agreement as Lenders by a Lender Joinder Agreement substantially in the form of Exhibit F attached hereto or other arrangement reasonably acceptable to the Administrative Agent (it being understood that in no case shall any Lender be required to increase its Revolving Commitment without its written consent);

(ii) any such increase shall be in a minimum aggregate principal amount of $5,000,000 and integral multiples of $1,000,000 in excess thereof (or the remaining amount, if less);

(iii) if any Revolving Loans are outstanding at the time of any such increase, the Borrowers shall make such payments and adjustments on the Revolving Loans (including payment of any break-funding amounts owing under Section 3.05 ) as may be necessary to give effect to the revised commitment percentages and commitment amounts;

(iv) the Borrowers shall pay to the Administrative Agent and the Arranger all fees required under any fee letter due in connection with the syndication of the increase in the Revolving Committed Amount;

(v) the Borrowers shall have executed any new or amended and restated Notes (to the extent requested by the Lenders) to reflect the revised commitment amounts; and

(vi) the conditions to the making of a Revolving Loan set forth in Sections 4.03(b) and (c) shall be satisfied.

In connection with any such increase in the Revolving Commitments, Schedule 2.01 shall be revised to reflect the modified commitments and commitment percentages of the Lenders, and the Borrowers shall provide supporting corporate resolutions, legal opinions, promissory notes and other items as may be reasonably requested by the Administrative Agent and the Lenders in connection therewith. The Parent Borrower shall not be permitted to cause more than four (4) increases in the Aggregate Committed Amount following the Closing Date.

2.02 Borrowings, Conversions and Continuations .

(a) Each Borrowing, each conversion of Loans from one Type to the other, and each continuation of Eurodollar Loans shall be made upon the Parent Borrower’s irrevocable notice to the Administrative Agent, which may be given by telephone. Each such notice must be received by the Administrative Agent not later than 11:00 a.m. (i) with respect to Eurodollar Loans, three (3) Business Days prior to the requested date of any Borrowings, conversion or continuation, or (ii) with respect to Base Rate Loans, on the requested date of, any Borrowing, conversion or continuation. Each telephonic notice pursuant to this Section 2.02(a) must be confirmed promptly by delivery to the Administrative Agent of a written Loan Notice, appropriately completed and signed by a Responsible Officer of the Parent Borrower or the REIT Guarantor. Except as provided in Sections 2.03(c) and 2.04(c) , each Borrowing, conversion or continuation shall be in a principal amount of (i) with respect to Eurodollar Loans, $1,000,000 or a whole multiple of $500,000 in excess thereof or (ii) with respect to Base Rate Loans, $500,000 or a whole multiple of $100,000 in excess thereof. Each Loan Notice (whether telephonic or written) shall specify (i) whether the applicable request is with respect to Revolving Loans, (ii) whether such request is for a Borrowing, conversion, or continuation, (iii) the requested date of such Borrowing, conversion or continuation (which shall be a Business Day), (iv) the principal amount of Loans to be borrowed, converted or continued, (v) the Type of Loans to be borrowed, converted or continued, and (vi) if applicable, the duration of the Interest Period with respect thereto. If the Parent Borrower fails to specify a Type of Loan in a Loan Notice or if the Parent Borrower fails to give a timely notice requesting a conversion or continuation, then the applicable Loans shall be made as, or converted to, Base Rate Loans. Any automatic conversion to Base Rate Loans shall be effective as of the last day of the Interest Period then in effect with respect to the applicable Eurodollar Loans. If the Parent Borrower requests a Borrowing of, conversion to, or continuation of Eurodollar Loans in any Loan Notice, but fails to specify an Interest Period, the Interest Period will be deemed to be one month.

(b) Following receipt of a Loan Notice, the Administrative Agent shall promptly notify each Lender of the amount of its Revolving Commitment Percentage of the applicable Loans, and if no timely notice of a conversion or continuation is provided by the Parent Borrower, the Administrative Agent shall notify each Lender of the details of any automatic conversion to Base Rate Loans described in the preceding subsection. In the case of a Borrowing, each Lender shall make the amount of its Loan available to the Administrative Agent in immediately available funds at the Administrative Agent’s Office not later than 2:00 p.m. on the Business Day specified in the applicable Loan Notice. Upon satisfaction of the applicable

conditions set forth in Section 4.03 (and, if such Borrowing is the initial Extension of Credit, Section 4.01 ), the Administrative Agent shall make all funds so received available to the party referenced in the applicable Loan Notice in like funds as received by the Administrative Agent either by (i) crediting the account of the applicable party on the books of the Administrative Agent with the amount of such funds or (ii) wire transfer of such funds, in each case in accordance with instructions provided to (and reasonably acceptable to) the Administrative Agent by the Parent Borrower; provided , however , that if, on the date the Loan Notice with respect to such Borrowing is given by the Parent Borrower, there are Swing Line Loans or L/C Borrowings outstanding, then the proceeds of such Borrowing shall be applied, first , to the payment in full of any such L/C Borrowings, second , to the payment in full of any such Swing Line Loans, and third , to the party identified in the applicable Loan Notice as provided above.

(c) Except as otherwise provided herein, without the consent of the Required Lenders, a Eurodollar Loan may be continued or converted only on the last day of an Interest Period for such Eurodollar Loan. During the existence of a Default or Event of Default, (i) no Loan may be requested as, converted to or continued as a Eurodollar Loan if the Required Lenders shall have prohibited the same in writing to the Administrative Agent and (ii) at the request of the Required Lenders, any outstanding Eurodollar Loan shall be converted immediately to a Base Rate Loan.

(d) The Administrative Agent shall promptly notify the Parent Borrower and the Lenders of the interest rate applicable to any Interest Period for Eurodollar Loans upon determination of such interest rate. The determination of the Eurodollar Rate by the Administrative Agent shall be conclusive in the absence of manifest error. At any time that Base Rate Loans are outstanding, the Administrative Agent shall notify the Parent Borrower and the Lenders of any change in Bank of America’s prime rate used in determining the Base Rate promptly following the public announcement of such change.

(e) After giving effect to all Borrowings, all conversions of Loans from one Type to the other, and all continuations of Loans as the same Type, there shall not be more than five (5) Interest Periods in effect with respect to Loans.

2.03 Additional Provisions with respect to Letters of Credit .

(a) Obligation to Issue or Amend .

(i) The L/C Issuer shall not issue any Letter of Credit if:

(A)

the expiry date of such requested Letter of Credit would occur more than twelve (12) months after the date of issuance or last renewal, unless the Required Lenders have approved such expiry date; or

(B)

the expiry date of such requested Letter of Credit would occur after the Letter of Credit Expiration Date, unless all the Lenders have approved such expiry date.

(ii) The L/C Issuer shall be under no obligation to issue any Letter of Credit if:

(A)

the issuance of such Letter of Credit would violate one or more policies of the L/C Issuer;

(B)

such Letter of Credit is in an initial amount less than $50,000, is to be denominated in a currency other than Dollars or is not a standby (non-commercial) letter of credit;

(C)

any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain the L/C Issuer from issuing such Letter of Credit, or any Law applicable to the L/C Issuer or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over the L/C Issuer shall prohibit, or request that the L/C Issuer refrain from, the issuance of letters of credit generally or such Letter of Credit in particular or shall impose upon the L/C Issuer with respect to such Letter of Credit any restriction, reserve or capital requirement (for which the L/C Issuer is not otherwise compensated hereunder) not in effect on the Closing Date, or shall impose upon the L/C Issuer any unreimbursed loss, cost or expense which was not applicable on the Closing Date and which the L/C Issuer in good faith deems material to it;

(D)

any Lender is at that time a Defaulting Lender, unless the L/C Issuer has entered into arrangements, including the delivery of Cash Collateral, satisfactory to the L/C Issuer (in its sole discretion), with the Borrower or such Lender to eliminate the L/C Issuer’s actual or potential Fronting Exposure (after giving effect to Section 2.17(a)(iv) ) with respect to the Defaulting Lender arising from either the Letter of Credit then proposed to be issued or that Letter of Credit and all other L/C Obligations as to which the L/C Issuer has actual or potential Fronting Exposure, as it may elect in its sole discretion.

(E)

the Revolving Commitments have been terminated pursuant to Article VIII .

(iii) The L/C Issuer shall be under no obligation to amend any Letter of Credit if:

(A)

the L/C Issuer would have no obligation at such time to issue such Letter of Credit in its amended form under the terms hereof; or

(B)

the beneficiary of such Letter of Credit does not accept the proposed amendment to such Letter of Credit.

(iv) The L/C Issuer shall not amend any Letter of Credit if the Revolving Commitments have been terminated pursuant to Article VIII .

(b) Procedures for Issuance and Amendment .

(i) Each Letter of Credit shall be issued or amended, as the case may be, upon the request of the Parent Borrower delivered to the L/C Issuer (with a copy to the Administrative Agent) in the form of a Letter of Credit Application, appropriately completed and signed by a Responsible Officer of the Parent Borrower or the REIT Guarantor. Such Letter of Credit Application must be received by the L/C Issuer and the Administrative Agent not later than 11:00 a.m. at least two (2) Business Days (or such later date and time as the L/C Issuer may agree in a particular instance in its sole discretion) prior to the proposed issuance date or date of amendment, as the case may be. In the case of a request for an initial issuance of a Letter of Credit, such Letter of Credit Application shall specify in form and detail satisfactory to the L/C Issuer: (A) the proposed issuance date of the requested Letter of Credit (which shall be a Business Day); (B) the amount thereof; (C) the expiry date thereof; (D) the name and address of the beneficiary thereof; (E) the documents to be presented by such beneficiary in case of any drawing thereunder; (F) the full text of any certificate to be presented by such beneficiary in case of any drawing thereunder; (G) such other matters as the L/C Issuer may reasonably require and (H) the purpose and nature of the requested Letter of Credit. In the case of a request for an amendment of any outstanding Letter of Credit, such Letter of Credit Application shall specify in form and detail reasonably satisfactory to the L/C Issuer (A) the Letter of Credit to be amended; (B) the proposed date of amendment thereof (which shall be a Business Day); (C) the nature of the proposed amendment; and (D) such other matters as the L/C Issuer may reasonably require.

(ii) Promptly after receipt of any Letter of Credit Application, the L/C Issuer will confirm with the Administrative Agent (by telephone or in writing) that the Administrative Agent has received a copy of such Letter of Credit Application from the Parent Borrower and, if not, the L/C Issuer will provide the Administrative Agent with a copy thereof. Upon receipt by the L/C Issuer of confirmation from the Administrative Agent that the requested issuance or amendment is permitted in accordance with the terms hereof, then, subject to the terms and conditions hereof, the L/C Issuer shall, on the requested date, issue a Letter of Credit for the account of the applicable Person or enter into the applicable amendment, as the case may be, in each case in accordance with the L/C Issuer’s usual and customary business practices. Immediately upon the issuance of each Letter of Credit, each Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the L/C Issuer a risk participation in such Letter of Credit in an amount equal to the product of such Lender’s Revolving Commitment Percentage of such Letter of Credit.

(iii) Promptly after its delivery of any Letter of Credit or any amendment to a Letter of Credit to an advising bank with respect thereto or to the beneficiary thereof, the L/C Issuer will also deliver to the Parent Borrower and the Administrative Agent a true and complete copy of such Letter of Credit or amendment.

(i) Upon any drawing under any Letter of Credit, the L/C Issuer shall notify the Parent Borrower and the Administrative Agent thereof. To the extent such notice is provided (A) prior to 12:00 noon on the date of any payment by the L/C Issuer under a Letter of Credit (each such date, an “ Honor Date ”), the Parent Borrower shall reimburse the L/C Issuer through the Administrative Agent in an amount equal to the amount of such drawing on the Honor Date and (B) following 12:00 noon on the Honor Date, the Parent Borrower shall reimburse the L/C Issuer through the Administrative Agent in an amount equal to the amount of such drawing on the by not later than 11:00 a.m. on the Business Day immediately following the Honor Date. If the Parent Borrower fails to so reimburse the L/C Issuer by such time, the Administrative Agent shall promptly notify each Lender of the Honor Date, the amount of the unreimbursed drawing (the “ Unreimbursed Amount ”), and the amount of such Lender’s Revolving Commitment Percentage thereof. In such event, the Parent Borrower shall be deemed to have requested a Borrowing of Base Rate Loans to be disbursed on the Honor Date in an amount equal to the Unreimbursed Amount, without regard to the minimum and multiples specified in Section 2.02 for the principal amount of Base Rate Loans, the amount of the unutilized portion of the Aggregate Commitments or the conditions set forth in Section 4.03 . Any notice given by the L/C Issuer or the Administrative Agent pursuant to this Section 2.03(c)(i) may be given by telephone if immediately confirmed in writing; provided that the lack of such an immediate confirmation shall not affect the conclusiveness or binding effect of such notice.

(ii) Each Lender (including the Lender acting as L/C Issuer) shall upon any notice pursuant to Section 2.03(c)(i) make funds available to the Administrative Agent for the account of the L/C Issuer at the Administrative Agent’s Office in an amount equal to its Revolving Commitment Percentage of the Unreimbursed Amount not later than 1:00 p.m. on the Business Day specified in such notice by the Administrative Agent, whereupon, subject to the provisions of Section 2.03(c)(iii) , each Lender that so makes funds available shall be deemed to have made a Revolving Loan that is a Base Rate Loan to the Parent Borrower in such amount. The Administrative Agent shall remit the funds so received to the L/C Issuer.

(iii) With respect to any Unreimbursed Amount that is not fully refinanced by a Borrowing of Base Rate Loans for any reason, the Parent Borrower shall be deemed to have incurred from the L/C Issuer an L/C Borrowing in the amount of the Unreimbursed Amount that is not so refinanced, which L/C Borrowing shall be due and payable on demand (together with interest) and shall bear interest at the Default Rate. In such event, each Lender’s payment to the Administrative Agent for the account of the L/C Issuer pursuant to Section 2.03(c)(ii) shall be deemed payment in respect of its participation in

such L/C Borrowing and shall constitute an L/C Advance from such Lender in satisfaction of its participation obligation under this Section 2.03 .

(iv) Until each Lender funds its Revolving Loan or L/C Advance pursuant to this Section 2.03(c) to reimburse the L/C Issuer for any amount drawn under any Letter of Credit, interest in respect of such Lender’s Revolving Commitment Percentage of such amount shall be solely for the account of the L/C Issuer.

(v) Each Lender’s obligation to make Revolving Loans or L/C Advances to reimburse the L/C Issuer for amounts drawn under Letters of Credit, as contemplated by this Section 2.03(c) , shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any set-off, counterclaim, recoupment, defense or other right that such Lender may have against the L/C Issuer, the Borrowers or any other Person for any reason whatsoever; (B) the occurrence or continuance of a Default or Event of Default, (C) non-compliance with the conditions set forth in Section 4.03 , or (D) any other occurrence, event or condition, whether or not similar to any of the foregoing. No such making of an L/C Advance shall relieve or otherwise impair the obligation of the Borrowers to reimburse the L/C Issuer for the amount of any payment made by the L/C Issuer under any Letter of Credit, together with interest as provided herein.

(vi) If any Lender fails to make available to the Administrative Agent for the account of the L/C Issuer any amount required to be paid by such Lender pursuant to the foregoing provisions of this Section 2.03(c) by the time specified in Section 2.03(c)(ii) , the L/C Issuer shall be entitled to recover from such Lender (acting through the Administrative Agent), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to the L/C Issuer at a rate per annum equal to the Federal Funds Rate from time to time in effect. A certificate of the L/C Issuer submitted to any Lender (through the Administrative Agent) with respect to any amounts owing under this clause (vi) shall be conclusive absent manifest error.

(d) Repayment of Participations .

(i) At any time after the L/C Issuer has made a payment under any Letter of Credit and has received from any Lender such Lender’s L/C Advance in respect of such payment in accordance with Section 2.03(c) , if the Administrative Agent receives for the account of the L/C Issuer any payment in respect of the related Unreimbursed Amount or interest thereon (whether directly from the Parent Borrower or otherwise, including proceeds of Cash Collateral applied thereto by the Administrative Agent), the Administrative Agent will distribute to such Lender its Revolving Commitment Percentage thereof (appropriately adjusted, in the case of interest payments, to reflect the period of time during which such Lender’s L/C Advance was outstanding) in the same funds as those received by the Administrative Agent.

(ii) If any payment received by the Administrative Agent for the account of the L/C Issuer pursuant to Section 2.03(c)(i) is required to be returned under any of the

circumstances described in Section 10.05 (including pursuant to any settlement entered into by the L/C Issuer in its discretion), each Lender shall pay to the Administrative Agent for the account of the L/C Issuer its Revolving Commitment Percentage thereof on demand of the Administrative Agent, plus interest thereon from the date of such demand to the date such amount is returned by such Lender, at a rate per annum equal to the Federal Funds Rate from time to time in effect.

(e) Obligations Absolute . The obligations of the Borrowers to reimburse the L/C Issuer for each drawing under each Letter of Credit and to repay each L/C Borrowing shall be absolute, unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Credit Agreement under all circumstances, including the following:

(i) any lack of validity or enforceability of such Letter of Credit, this Credit Agreement, any other Credit Document or any other agreement or instrument relating thereto;

(ii) the existence of any claim, counterclaim, set-off, defense or other right that the Borrowers may have at any time against any beneficiary or any transferee of such Letter of Credit (or any Person for whom any such beneficiary or any such transferee may be acting), the L/C Issuer or any other Person, whether in connection with this Credit Agreement, the transactions contemplated hereby or by such Letter of Credit or any agreement or instrument relating thereto, or any unrelated transaction;

(iii) any draft, demand, certificate or other document presented under such Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; or any loss or delay in the transmission or otherwise of any document required in order to make a drawing under such Letter of Credit;

(iv) any payment by the L/C Issuer under such Letter of Credit against presentation of a draft or certificate that does not strictly comply with the terms of such Letter of Credit; or any payment made by the L/C Issuer under such Letter of Credit to any Person purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for the benefit of creditors, liquidator, receiver or other representative of or successor to any beneficiary or any transferee of such Letter of Credit, including any arising in connection with any proceeding under any Debtor Relief Law; or

(v) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including any other circumstance that might otherwise constitute a defense available to, or a discharge of, the Borrowers.

The Parent Borrower shall promptly examine a copy of each Letter of Credit and each amendment thereto that is delivered to it and, in the event of any claim of noncompliance with the Parent Borrower’s instructions or other irregularity, the Parent Borrower will immediately

notify the L/C Issuer. The Borrowers shall be conclusively deemed to have waived any such claim against the L/C Issuer and its correspondents unless such notice is given as aforesaid.

(f) Role of L/C Issuer . Each Lender and each Borrower agree that, in paying any drawing under a Letter of Credit, the L/C Issuer shall not have any responsibility to obtain any document (other than any sight draft, certificates and documents expressly required by the Letter of Credit) or to ascertain or inquire as to the validity or accuracy of any such document or the authority of the Person executing or delivering any such document. None of the L/C Issuer, any Agent-Related Person nor any of the correspondents, participants or assignees of the L/C Issuer shall be liable to any Lender for (i) any action taken or omitted in connection herewith at the request or with the approval of the Lenders or the Required Lenders, as applicable; (ii) any action taken or omitted in the absence of gross negligence or willful misconduct; or (iii) the due execution, effectiveness, validity or enforceability of any document or instrument related to any Letter of Credit or Letter of Credit Application. The Borrowers hereby assume all risks of the acts or omissions of any beneficiary or transferee with respect to its use of any Letter of Credit; provided, however, that this assumption is not intended to, and shall not, preclude a Borrower’s pursuing such rights and remedies as it may have against the beneficiary or transferee at law or under any other agreement. None of the L/C Issuer, any Agent-Related Person, nor any of the respective correspondents, participants or assignees of the L/C Issuer, shall be liable or responsible for any of the matters described in clauses (i) through (v) of Section 2.03(e) ; provided, however, that anything in such clauses to the contrary notwithstanding, the Borrowers may have a claim against the L/C Issuer, and the L/C Issuer may be liable to the Borrowers, to the extent, but only to the extent, of any direct, as opposed to consequential or exemplary, damages suffered by the Borrowers which the Borrowers prove were caused by the L/C Issuer’s willful misconduct or gross negligence or the L/C Issuer’s willful failure to pay under any Letter of Credit after the presentation to it by the beneficiary of a sight draft and certificate(s) strictly complying with the terms and conditions of a Letter of Credit. In furtherance and not in limitation of the foregoing, the L/C Issuer may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary, and the L/C Issuer shall not be responsible for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign a Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason.

(g) Cash Collateral . Upon the request of the Administrative Agent or the Required Lenders, (i) if the L/C Issuer has honored any full or partial drawing request under any Letter of Credit and such drawing has resulted in an L/C Borrowing, or (ii) if, as of the Letter of Credit Expiration Date, any Letter of Credit may for any reason remain outstanding and partially or wholly undrawn, the Parent Borrower shall immediately Cash Collateralize the then Outstanding Amount of all L/C Obligations (in an amount equal to such Outstanding Amount determined as of the date of such L/C Borrowing or the Letter of Credit Expiration Date, as the case may be). For purposes hereof, “ Cash Collateralize ” means to pledge and deposit with or deliver to the Administrative Agent, for the benefit of the L/C Issuer and the Lenders, as collateral for the L/C Obligations, cash or deposit account balances pursuant to documentation in form and substance satisfactory to the Administrative Agent and the L/C Issuer (which documents are hereby consented to by the Lenders). Derivatives of such term have corresponding meanings. Each

Borrower hereby grants to the Administrative Agent, for the benefit of the L/C Issuer and the Lenders, a security interest in all such cash, deposit accounts and all balances therein and all proceeds of the foregoing. Cash collateral shall be maintained in blocked, non-interest bearing deposit accounts with the Administrative Agent.

(h) Applicability of ISP . Unless otherwise expressly agreed by the L/C Issuer and the Parent Borrower when a Letter of Credit is issued, the rules of the ISP shall apply to each standby Letter of Credit.

(i) Letter of Credit Fees . The Borrowers shall pay Letter of Credit fees as set forth in Section 2.09 .

(j) Conflict with Letter of Credit Application . In the event of any conflict between the terms hereof and the terms of any Letter of Credit Application, the terms hereof shall control.

2.04 Additional Provisions with respect to Swing Line Loans .

(a) Borrowing Procedures . Each Swing Line Borrowing shall be made upon the Parent Borrower’s irrevocable notice to the Swing Line Lender and the Administrative Agent, which may be given by telephone; provided , however, that the Swing Line Lender shall not be under any obligation to make a Swing Line Loan if any Lender is at such time a Defaulting Lender, unless such Lender or Parent Borrower shall have made arrangements satisfactory to the Swing Line Lender to eliminate the Swing Line Lender’s risk with respect to such Lender. Each such notice must be received by the Swing Line Lender and the Administrative Agent not later than 1:00 p.m. on the requested borrowing date, and shall specify (i) the amount to be borrowed, which shall be a minimum of $500,000, and (ii) the requested borrowing date, which shall be a Business Day. Each such telephonic notice must be confirmed promptly by delivery to the Swing Line Lender and the Administrative Agent of a written Loan Notice, appropriately completed and signed by a Responsible Officer of the Parent Borrower or the REIT Guarantor. Promptly after receipt by the Swing Line Lender of any telephonic Loan Notice, the Swing Line Lender will confirm with the Administrative Agent (by telephone or in writing) that the Administrative Agent has also received such Loan Notice and, if not, the Swing Line Lender will notify the Administrative Agent (by telephone or in writing) of the contents thereof. Unless the Swing Line Lender has received notice (by telephone or in writing) from the Administrative Agent (including at the request of any Lender) prior to 2:00 p.m. on the date of the proposed Swing Line Borrowing (A) directing the Swing Line Lender not to make such Swing Line Loan as a result of the limitations set forth in this Article II, or (B) that one or more of the applicable conditions specified in Section 4.03 is not then satisfied, then, subject to the terms and conditions hereof, the Swing Line Lender will, not later than 3:00 p.m. on the borrowing date specified in such Loan Notice, make the amount of its Swing Line Loan available to the Parent Borrower by crediting the account of the Parent Borrower on the books of the Swing Line Lender in immediately available funds.

(b) Refinancing .

(i) The Swing Line Lender at any time in its sole and absolute discretion may request, on behalf of the Borrowers (which hereby irrevocably authorizes the Swing Line Lender to so request on its behalf), that each Lender make a Revolving Loan that is a Base Rate Loan in an amount equal to such Lender’s Revolving Commitment Percentage of Swing Line Loans then outstanding. Such request shall be made in writing (which written request shall be deemed to be a Loan Notice for purposes hereof) and in accordance with the requirements of Section 2.02 , without regard to the minimum and multiples specified therein for the principal amount of Base Rate Loans, the unutilized portion of the Aggregate Commitments or the conditions set forth in Section 4.03 . The Swing Line Lender shall furnish the Parent Borrower with a copy of the applicable Loan Notice promptly after delivering such notice to the Administrative Agent. Each Lender shall make an amount equal to its Revolving Commitment Percentage of the amount specified in such Loan Notice available to the Administrative Agent in immediately available funds for the account of the Swing Line Lender at the Administrative Agent’s Office not later than 2:00 p.m. on the day specified in such Loan Notice, whereupon, subject to Section 2.04(b)(ii) , each Lender that so makes funds available shall be deemed to have made a Revolving Loan that is a Base Rate Loan to the Borrowers in such amount. The Administrative Agent shall remit the funds so received to the Swing Line Lender.

(ii) If for any reason any Swing Line Loan cannot be refinanced by such a Borrowing of Revolving Loans in accordance with Section 2.04(b)(i) , the request for Revolving Loans submitted by the Swing Line Lender as set forth herein shall be deemed to be a request by the Swing Line Lender that each of the Lenders fund its risk participation in the relevant Swing Line Loan and each Lender’s payment to the Administrative Agent for the account of the Swing Line Lender pursuant to Section 2.04(b)(i) shall be deemed payment in respect of such participation.

(iii) If any Lender fails to make available to the Administrative Agent for the account of the Swing Line Lender any amount required to be paid by such Lender pursuant to the foregoing provisions of this Section 2.04(b) by the time specified in Section 2.04(b)(i) , the Swing Line Lender shall be entitled to recover from such Lender (acting through the Administrative Agent), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to the Swing Line Lender at a rate per annum equal to the Federal Funds Rate from time to time in effect. A certificate of the Swing Line Lender submitted to any Lender (through the Administrative Agent) with respect to any amounts owing under this clause (iii) shall be conclusive absent manifest error.

(iv) Each Lender’s obligation to make Revolving Loans or to purchase and fund risk participations in Swing Line Loans pursuant to this Section 2.04(b) shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any set-off, counterclaim, recoupment, defense or other right that such Lender may have against the Swing Line Lender, the Borrowers or any other Person for any reason whatsoever, (B) the occurrence or continuance of a Default or Event of Default, (C) non-compliance with the conditions set forth in Section 4.03 , or (D) any other

occurrence, event or condition, whether or not similar to any of the foregoing. No such purchase or funding of risk participations shall relieve or otherwise impair the obligation of the Borrowers to repay Swing Line Loans, together with interest as provided herein.

(i) At any time after any Lender has purchased and funded a risk participation in a Swing Line Loan, if the Swing Line Lender receives any payment on account of such Swing Line Loan, the Swing Line Lender will distribute to such Lender its Revolving Commitment Percentage of such payment (appropriately adjusted, in the case of interest payments, to reflect the period of time during which such Lender’s risk participation was funded) in the same funds as those received by the Swing Line Lender.

(ii) If any payment received by the Swing Line Lender in respect of principal or interest on any Swing Line Loan is required to be returned by the Swing Line Lender under any of the circumstances described in Section 10.05 (including pursuant to any settlement entered into by the Swing Line Lender in its discretion), each Lender shall pay to the Swing Line Lender its Revolving Commitment Percentage thereof on demand of the Administrative Agent, plus interest thereon from the date of such demand to the date such amount is returned, at a rate per annum equal to the Federal Funds Rate. The Administrative Agent will make such demand upon the request of the Swing Line Lender.

(d) Interest for Account of Swing Line Lender . The Swing Line Lender shall be responsible for invoicing the Borrowers (by delivery of an invoice or other notice to the Parent Borrower) for interest on the Swing Line Loans. Until each Lender funds its Revolving Loan or risk participation pursuant to this Section 2.04 to refinance such Lender’s Revolving Commitment Percentage of any Swing Line Loan, interest in respect thereof shall be solely for the account of the Swing Line Lender.

(e) Payments Directly to Swing Line Lender . The Parent Borrower shall make all payments of principal and interest in respect of the Swing Line Loans directly to the Swing Line Lender.

2.05 Repayment of Loans .

(a) Revolving Loans . The Borrowers shall repay to the Lenders on the Maturity Date the aggregate principal amount of Revolving Loans outstanding on such date.

(b) Swing Line Loans . The Borrowers shall repay each Swing Line Loan on the earliest to occur of (i) the date five (5) Business Days after such Loan is made and (ii) the Maturity Date.

2.06 Prepayments .

(a) Voluntary Prepayments . The Loans may be repaid in whole or in part without premium or penalty (except, in the case of Loans other than Base Rate Loans, amounts payable pursuant to Section 3.05 ); provided that (i) notice thereof must be received by 11:00 a.m. by the Administrative Agent (A) at least three (3) Business Days prior to the date of prepayment of Eurodollar Loans, and (B) on the Business Day prior to the date of prepayment of Base Rate Loans, and (ii) any such prepayment shall be in a minimum principal amount of $1,000,000 and integral multiples of $1,000,000 in excess thereof, in the case of Eurodollar Loans, and a minimum principal amount of $500,000 and integral multiples of $100,000 in excess thereof, in the case of Base Rate Loans, or, in each case, the entire principal amount thereof, if less. Each such notice of voluntary repayment hereunder shall specify the date and amount of prepayment and the Loans and Types of Loans which are to be prepaid. The Administrative Agent will give prompt notice to the applicable Lenders of any prepayment on the Loans and the Lender’s interest therein. Prepayments of Eurodollar Loans hereunder shall be accompanied by accrued interest thereon and breakage amounts, if any, under Section 3.05 .

(b) Mandatory Prepayments . If at any time (A) the aggregate principal amount of Revolving Obligations shall exceed the lesser of (x) the Aggregate Committed Amount and (y) the Borrowing Base Amount for such date, (B) the aggregate principal amount of L/C Obligations shall exceed the L/C Committed Amount, (C) the aggregate principal amount of Swing Line Loans shall exceed the Swing Line Committed Amount, immediate prepayment will be made on the Revolving Loans and/or to provide Cash Collateral to the L/C Obligations in an amount equal to such excess; provided , however , that the Borrowers shall not be required to provide Cash Collateral with respect to the L/C Obligations pursuant to this Section 2.06(b) unless after the prepayment in full of the Loans the aggregate Outstanding Amount of all Loans and all L/C Obligations exceed the Aggregate Commitments then in effect.

(c) Application . Within each Loan, prepayments will be applied first to Base Rate Loans, then to Eurodollar Loans in direct order of Interest Period maturities. In addition:

(i) Voluntary Prepayments . Voluntary prepayments shall be applied as specified by the Borrowers. Voluntary prepayments on the Revolving Obligations will be paid by the Administrative Agent to the Lenders ratably in accordance with their respective interests therein.

(ii) Mandatory Prepayments . Mandatory prepayments on the Revolving Obligations will be paid by the Administrative Agent to the Lenders ratably in accordance with their respective interests therein; provided that mandatory prepayments in respect of the Revolving Commitments under subsection (b) above shall be applied to the respective Revolving Obligations as appropriate.

2.07 Termination or Reduction of Commitments .

The Commitments hereunder may be permanently reduced in whole or in part by notice from the Parent Borrower to the Administrative Agent; provided that (i) any such notice thereof

must be received by 11:00 a.m. at least five (5) Business Days prior to the date of reduction or termination and any such prepayment, if any, shall be in a minimum principal amount of $5,000,000 and integral multiples of $1,000,000 in excess thereof; and (ii) the Commitments may not be reduced to an amount less than the Revolving Obligations then outstanding. The Administrative Agent will give prompt notice to the Lenders of any such reduction in Commitments. Any reduction of the Aggregate Commitments shall be applied to the Commitment of each Lender according to its Revolving Commitment Percentage thereof. All commitment or other fees accrued until the effective date of any termination of the Aggregate Commitments shall be paid on the effective date of such termination.

2.08 Interest .

(a) Subject to the provisions of subsection (b) below, (i) each Eurodollar Loan (other than Swing Line Loans) shall bear interest on the outstanding principal amount thereof for each Interest Period at a rate per annum equal to the Eurodollar Rate for such Interest Period plus the Applicable Percentage; (ii) each Loan that is a Base Rate Loan shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the Base Rate plus the Applicable Percentage; and (iii) each Swing Line Loan shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the Base Rate plus the Applicable Percentage.

(b) If any amount payable by the Borrowers under any Credit Document is not paid when due (after taking into account any applicable grace periods), whether at stated maturity, by acceleration or otherwise, such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Law. Furthermore, upon the written request of the Required Lenders, while any Event of Default exists, the Borrowers shall pay interest on the principal amount of all outstanding Obligations hereunder at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Law. Accrued and unpaid interest on past due amounts (including interest on past due interest) shall be due and payable upon demand.

(c) Interest on each Loan shall be due and payable in arrears on each Interest Payment Date applicable thereto and at such other times as may be specified herein. Interest hereunder shall be due and payable in accordance with the terms hereof before and after judgment, and before and after the commencement of any proceeding under any Debtor Relief Law.

2.09 Fees .

(a) Unused Fee . From and after the Closing Date, the Borrowers agree to pay the Administrative Agent for the ratable benefit of the Lenders an unused fee (the “ Unused Fee ”) for each calendar quarter (or portion thereof) in an amount equal to the sum of the Daily Unused Fees incurred during such period. The Unused Fee shall accrue at all times during the Commitment Period, including periods during which the conditions to Extensions of Credit in Section 4.03 may not be met, and shall be payable quarterly in arrears on the last Business Day of each March, June, September and December, commencing with the first such date to occur

after the Closing Date and on the Termination Date (and, if applicable, thereafter on demand); provided, that (i) no Unused Fee shall accrue on the Commitment of a Defaulting Lender so long as such Lender shall be a Defaulting Lender and (ii) any Unused Fee accrued with respect to the Commitment of a Defaulting Lender during the period prior to the time such Lender became a Defaulting Lender and unpaid at such time shall not be payable by the Borrower so long as such Lender shall be a Defaulting Lender. For purposes of clarification, Swing Line Loans shall not be considered outstanding for purposes of determining the unused portion of the Aggregate Commitments. The Administrative Agent shall distribute the Unused Fee to the Lenders pro rata in accordance with the respective Revolving Commitments of the Lenders.

(b) Upfront and Other Fees . The Borrowers agree to pay to the Administrative Agent for the benefit of the Lenders the upfront and other fees provided in the Administrative Agent’s Fee Letter.

(c) Letter of Credit Fee . The Borrower shall pay to the Administrative Agent for the account of each Lender in accordance with its Revolving Commitment Percentage a Letter of Credit fee (the “ Letter of Credit Fee ”) for each standby Letter of Credit equal to the Applicable Percentage times the daily amount available to be drawn under such Letter of Credit. For purposes of computing the daily amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 1.07 . Letter of Credit Fees shall be (i) due and payable on the last Business Day of each March, June, September and December, commencing with the first such date to occur after the issuance of such Letter of Credit, on the Letter of Credit Expiration Date and thereafter on demand and (ii) computed on a quarterly basis in arrears. Notwithstanding anything to the contrary contained herein, upon the request of the Required Lenders, while any Event of Default exists, all Letter of Credit Fees shall accrue at the Default Rate. Notwithstanding the foregoing, (1) no Letter of Credit Fees shall accrue in favor of a Defaulting Lender so long as such Lender shall be a Defaulting Lender and (2) any Letter of Credit Fees accrued in favor of a Defaulting Lender during the period prior to the time such Lender became a Defaulting Lender and unpaid at such time shall not be payable by the Borrowers so long as such Lender shall be a Defaulting Lender

(d) Administrative Agent’s Fees . The Borrowers agree to pay the Administrative Agent such fees as provided in the Administrative Agent’s Fee Letter or as may be otherwise agreed by the Administrative Agent and the Borrowers from time to time.

(e) Other Fees .

(i) The Borrowers shall pay to the Arranger and the Administrative Agent for their own respective accounts fees in the amounts and at the times specified in the Administrative Agent’s Fee Letter. Such fees shall be fully earned when paid and shall not be refundable for any reason whatsoever.

(ii) The Borrowers shall pay to the Lenders such fees as shall have been separately agreed upon in writing in the amounts and at the times so specified. Such fees shall be fully earned when paid and shall not be refundable for any reason whatsoever.

2.10 Computation of Interest and Fees .

All computations of interest for Base Rate Loans shall be made on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed. All other computations of fees and interest shall be made on the basis of a 360-day year and actual days elapsed (which results in more fees or interest, as applicable, being paid than if computed on the basis of a 365-day year). Interest shall accrue on each Loan for the day on which the Loan is made, and shall not accrue on a Loan, or any portion thereof, for the day on which the Loan or such portion is paid, provided that any Loan that is repaid on the same day on which it is made shall, subject to Section 2.11(a) , bear interest for one day. Each determination by the Administrative Agent of an interest rate or fee hereunder shall be conclusive and binding for all purposes, absent manifest error.

2.11 Payments Generally .

(a) All payments to be made by the Borrowers shall be made without condition or deduction for any counterclaim, defense, recoupment or setoff. Except as otherwise expressly provided herein, all payments by the Borrowers hereunder shall be made to the Administrative Agent, for the account of the Lenders to which such payment is owed, at the Administrative Agent’s Office in Dollars and in immediately available funds not later than 2:00 p.m. on the date specified herein. The Administrative Agent will promptly distribute to each Lender its Revolving Commitment Percentage (or other applicable share as provided herein) of such payment in like funds as received by wire transfer to such Lender’s Lending Office. All payments received by the Administrative Agent after 2:00 p.m. shall be deemed received on the immediately succeeding Business Day and any applicable interest or fee shall continue to accrue.

(b) Subject to the definition of “Interest Period,” if any payment to be made by the Borrowers shall come due on a day other than a Business Day, payment shall be made on the next following Business Day, and such extension of time shall be reflected in computing interest or fees, as the case may be.

(c) Unless the Borrowers or any Lender has notified the Administrative Agent, prior to the time any payment is required to be made by it to the Administrative Agent hereunder, that the Borrowers or such Lender, as the case may be, will not make such payment, the Administrative Agent may assume that the Borrowers or such Lender, as the case may be, has timely made such payment and may (but shall not be so required to), in reliance thereon, make available a corresponding amount to the Person entitled thereto. If and to the extent that such payment was not in fact made to the Administrative Agent in immediately available funds, then:

(i) if the Borrowers fail to make such payment, each Lender shall forthwith on demand repay to the Administrative Agent the portion of such assumed payment that was made available to such Lender in immediately available funds, together with interest thereon in respect of each day from and including the date such amount was made available by the Administrative Agent to such Lender to the date such amount is repaid to the Administrative Agent in immediately available funds at the Federal Funds Rate from time to time in effect; and

(ii) if any Lender failed to make such payment, such Lender shall forthwith on demand pay to the Administrative Agent the amount thereof in immediately available funds, together with interest thereon for the period from the date such amount was made available by the Administrative Agent to the Borrowers to the date such amount is recovered by the Administrative Agent (the “ Compensation Period ”) at a rate per annum equal to the Federal Funds Rate from time to time in effect. If such Lender pays such amount to the Administrative Agent, then such amount shall constitute such Lender’s Loan included in the applicable Borrowing. If such Lender does not pay such amount forthwith upon the Administrative Agent’s demand therefor, the Administrative Agent may make a demand therefor upon the Borrower, and the Borrowers shall pay such amount to the Administrative Agent, together with interest thereon for the Compensation Period at a rate per annum equal to the rate of interest applicable to the applicable Borrowing. Nothing herein shall be deemed to relieve any Lender from its obligation to fulfill its Commitment or to prejudice any rights that the Administrative Agent or the Borrowers may have against any Lender as a result of any default by such Lender hereunder.

A notice of the Administrative Agent to any Lender or the Borrowers with respect to any amount owing under this subsection (c) shall be conclusive, absent manifest error.

(d) If any Lender makes available to the Administrative Agent funds for any Loan to be made by such Lender as provided in the foregoing provisions of this Article II, and such funds are not made available to the Borrowers by the Administrative Agent because the conditions to the applicable Extension of Credit set forth in Section 4.03 are not satisfied or waived in accordance with the terms hereof or for any other reason, the Administrative Agent shall return such funds (in like funds as received from such Lender) to such Lender, without interest.

(e) The obligations of the Lenders hereunder to make Loans, to fund participations in Letters of Credit and Swing Line Loans and to make payments pursuant to Section 10.04(c) are several and not joint. The failure of any Lender to make any Loan, to fund any such participation or to make any payment under Section 10.04(c) on any date required hereunder shall not relieve any other Lender of its corresponding obligation to do so on such date, and no Lender shall be responsible for the failure of any other Lender to so make its Loan, to purchase its participation or to make its payment under Section 10.04(c) .

(f) Nothing herein shall be deemed to obligate any Lender to obtain the funds for any Loan in any particular place or manner or to constitute a representation by any Lender that it has obtained or will obtain the funds for any Loan in any particular place or manner.

(g) If at any time insufficient funds are received by or are available to the Administrative Agent to pay fully all amounts of principal, L/C Borrowings, interest and fees then due hereunder, such funds shall be applied (i) first, toward costs and expenses (including Attorney Costs and amounts payable under Article III) incurred by the Administrative Agent and each Lender, (ii) second, toward repayment of interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties, and (iii) third, toward repayment of principal and L/C Borrowings then due

hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal and L/C Borrowings then due to such parties.

2.12 Sharing of Payments .

If any Lender shall obtain on account of the Loans made by it, or the participations in L/C Obligations or in Swing Line Loans held by it (excluding any amounts applied by the Swing Line Lender to outstanding Swing Line Loans and excluding any amounts received by the L/C Issuer and/or Swing Line Lender to secure the obligations of a Defaulting Lender to fund risk participations hereunder), any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise, but excluding any payments made to a Lender in error by the Administrative Agent (which such payments shall be returned by the Lender to the Administrative Agent immediately upon such Lender’s obtaining knowledge that such payment was made in error)) in excess of its ratable share (or other share contemplated hereunder) thereof, such Lender shall immediately (a) notify the Administrative Agent of such fact, and (b) purchase from the other Lenders such participations in the Loans made by them and/or such subparticipations in the participations in L/C Obligations or Swing Line Loans held by them, as the case may be, as shall be necessary to cause such purchasing Lender to share the excess payment in respect of such Loans or such participations, as the case may be, pro rata with each of them; provided , however, that (i) if all or any portion of such excess payment is thereafter recovered from the purchasing Lender under any of the circumstances described in Section 10.06 (including pursuant to any settlement entered into by the purchasing Lender in its discretion), such purchase shall to that extent be rescinded and each other Lender shall repay to the purchasing Lender the purchase price paid therefor, together with an amount equal to such paying Lender’s ratable share (according to the proportion of (A) the amount of such paying Lender’s required repayment to (B) the total amount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in respect of the total amount so recovered, without further interest thereon and (ii) the provisions of this Section shall not be construed to apply to any payment obtained by the L/C Issuer or the Swing Line Lender to secure the obligations of Defaulting Lenders to fund such risk participations. The Borrowers agree that any Lender so purchasing a participation from another Lender may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set-off, but subject to Section 10.08 ) with respect to such participation as fully as if such Lender were the direct creditor of the Borrowers in the amount of such participation. The Administrative Agent will keep records (which shall be conclusive and binding in the absence of manifest error) of participations purchased under this Section and will in each case notify the Lenders following any such purchases or repayments. Each Lender that purchases a participation pursuant to this Section shall from and after such purchase have the right to give all notices, requests, demands, directions and other communications under this Credit Agreement with respect to the portion of the Revolving Obligations purchased to the same extent as though the purchasing Lender were the original owner of the Revolving Obligations purchased.

2.13 Evidence of Debt .

(a) The Extension of Credits made by each Lender shall be evidenced by one or more accounts or records maintained by such Lender and by the Administrative Agent in the ordinary

course of business. The accounts or records maintained by the Administrative Agent and each Lender shall be conclusive absent manifest error of the amount of the Extension of Credits made by the Lenders to the Borrowers and the interest and payments thereon. Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Borrowers hereunder to pay any amount owing with respect to the Obligations. In the event of any conflict between the accounts and records maintained by any Lender and the accounts and records of the Administrative Agent in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error. The Borrowers shall execute and deliver to the Administrative Agent a Note for each Lender requesting a Note, which Note shall evidence such Lender’s Loans in addition to such accounts or records. Each Lender may attach schedules to its Note and endorse thereon the date, Type (if applicable), amount and maturity of its Loans and payments with respect thereto.

(b) In addition to the accounts and records referred to in subsection (a), each Lender and the Administrative Agent shall maintain in accordance with its usual practice accounts or records evidencing the purchases and sales by such Lender of participations in Letters of Credit and Swing Line Loans. In the event of any conflict between the accounts and records maintained by the Administrative Agent and the accounts and records of any Lender in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error.

2.14 Joint and Several Liability of the Borrowers .

(a) Each of the Borrowers is accepting joint and several liability hereunder in consideration of the financial accommodation to be provided by the Lenders under this Credit Agreement, for the mutual benefit, directly and indirectly, of each of the Borrowers and in consideration of the undertakings of each of the Borrowers to accept joint and several liability for the obligations of each of them.

(b) Each of the Borrowers jointly and severally hereby irrevocably and unconditionally accepts, not merely as a surety but also as a co-debtor, joint and several liability with the other Borrowers with respect to the payment and performance of all of the Obligations arising under this Credit Agreement and the other Credit Documents, it being the intention of the parties hereto that all the Obligations shall be the joint and several obligations of each of the Borrowers without preferences or distinction among them.

(c) If and to the extent that any of the Borrowers shall fail to make any payment with respect to any of the obligations hereunder as and when due or to perform any of such obligations in accordance with the terms thereof, then in each such event, the other Borrowers will make such payment with respect to, or perform, such obligation.

(d) The obligations of each Borrower under the provisions of this Section 2.14 constitute full recourse obligations of such Borrower, enforceable against it to the full extent of its properties and assets, irrespective of the validity, regularity or enforceability of this Credit Agreement or any other circumstances whatsoever.

(e) Except as otherwise expressly provided herein, each Borrower hereby waives notice of acceptance of its joint and several liability, notice of occurrence of any Default or Event of Default (except to the extent notice is expressly required to be given pursuant to the terms of this Credit Agreement), or of any demand for any payment under this Credit Agreement (except to the extent demand is expressly required to be given pursuant to the terms of this Agreement), notice of any action at any time taken or omitted by the Lender under or in respect of any of the Obligations hereunder except as expressly provided herein, any requirement of diligence and, generally, all demands, notices and other formalities of every kind in connection with this Credit Agreement except as expressly provided herein. Each Borrower hereby assents to, and waives notice of, any extension or postponement of the time for the payment of any of the Obligations hereunder, the acceptance of any partial payment thereon, any waiver, consent or other action or acquiescence by the Lenders at any time or times in respect of any default by any Borrower in the performance or satisfaction of any term, covenant, condition or provision of this Credit Agreement, any and all other indulgences whatsoever by the Lenders in respect of any of the Obligations hereunder, and the taking, addition, substitution or release, in whole or in part, at any time or times, of any security for any of such Obligations or the addition, substitution or release, in whole or in part, of any Borrower. Without limiting the generality of the foregoing, each Borrower assents to any other action or delay in acting or any failure to act on the part of the Lender, including, without limitation, any failure strictly or diligently to assert any right or to pursue any remedy or to comply fully with applicable laws or regulations thereunder which might, but for the provisions of this Section 2.14 , afford grounds for terminating, discharging or relieving such Borrower, in whole or in part, from any of its obligations under this Section 2.14 , it being the intention of each Borrower that, so long as any of the Obligations hereunder remain unsatisfied, the obligations of such Borrower under this Section 2.14 shall not be discharged except by performance and then only to the extent of such performance. The obligations of each Borrower under this Section 2.14 shall not be diminished or rendered unenforceable by any winding up, reorganization, arrangement, liquidation, reconstruction or similar proceeding with respect to any reconstruction or similar proceeding with respect to any Borrower or any Lender. The joint and several liability of the Borrowers hereunder shall continue in full force and effect notwithstanding any absorption, merger, amalgamation or any other change whatsoever in the name, membership, constitution or place of formation of any Borrower or any Lender.

(f) The provisions of this Section 2.14 are made for the benefit of the Administrative Agent, L/C issuer, Swing Line Lender, the Lenders and their respective successors and assigns, and may be enforced by any such Person from time to time against any of the Borrowers as often as occasion therefor may arise and without requirement on the part of any Lender first to marshal any of its claims or to exercise any of its rights against any of the other Borrowers or to exhaust any remedies available to it against any of the other Borrowers or to resort to any other source or means of obtaining payment of any of the Obligations or to elect any other remedy. The provisions of this Section 2.14 shall remain in effect until all the Obligations hereunder shall have been paid in full or otherwise fully satisfied. If at any time, any payment, or any part thereof, made in respect of any of the Obligations, is rescinded or must otherwise be restored or returned by the Lenders upon the insolvency, bankruptcy or reorganization of any of the Borrowers, or otherwise, the provisions of this Section 2.14 will forthwith be reinstated and in effect as though such payment had not been made.

(f) Notwithstanding any provision to the contrary contained herein or in any other of the Credit Documents, the obligations of each Borrower hereunder shall be limited to an aggregate amount equal to the largest amount that would not render its obligations hereunder subject to avoidance under Section 548 of the Bankruptcy Code or any comparable provisions of any applicable state law.

2.15 Appointment of Parent Borrower as Legal Representative for Credit Parties .

Each of the Credit Parties hereby appoints the Parent Borrower to act as its exclusive legal representative for all purposes under this Credit Agreement and the other Credit Documents (including, without limitation, with respect to all matters related to Borrowings and the repayment of Loans and Letters of Credit as described in Article II and Article III hereof). Each of the Credit Parties acknowledges and agrees that (a) the Parent Borrower may execute such documents on behalf of all the Credit Parties as the Parent Borrower deems appropriate in its reasonable discretion and each Credit Party shall be bound by and obligated by all of the terms of any such document executed by the Parent Borrower on its behalf, (b) any notice or other communication delivered by the Administrative Agent or any Lender hereunder to the Parent Borrower shall be deemed to have been delivered to each of the Credit Parties and (c) the Administrative Agent and each of the Lenders shall accept (and shall be permitted to rely on) any document or agreement executed by the Parent Borrower on behalf of the Credit Parties (or any of them). The Borrowers must act through the Parent Borrower for all purposes under this Credit Agreement and the other Credit Documents. Notwithstanding anything contained herein to the contrary, to the extent any provision in this Credit Agreement requires any Credit Party to interact in any manner with the Administrative Agent or the Lenders, such Credit Party shall do so through the Parent Borrower.

2.16 Cash Collateral .

(a) Certain Credit Support Events . Upon the request of the Administrative Agent or the L/C Issuer (i) if the L/C Issuer has honored any full or partial drawing request under any Letter of Credit and such drawing has resulted in an L/C Borrowing, or (ii) if, as of the Letter of Credit Expiration Date, any L/C Obligation for any reason remains outstanding, the Borrower shall, in each case, immediately Cash Collateralize the then Outstanding Amount of all L/C Obligations. At any time that there shall exist a Defaulting Lender, immediately upon the request of the Administrative Agent, the L/C Issuer or the Swing Line Lender, the Borrower shall deliver to the Administrative Agent Cash Collateral in an amount sufficient to cover all Fronting Exposure (after giving effect to Section 2.17(a)(iv) and any Cash Collateral provided by the Defaulting Lender).

(b) Grant of Security Interest . All Cash Collateral (other than credit support not constituting funds subject to deposit) shall be maintained in blocked, non-interest bearing deposit accounts at Bank of America. The Borrower, and to the extent provided by any Lender, such Lender, hereby grants to (and subjects to the control of) the Administrative Agent, for the benefit of the Administrative Agent, the L/C Issuer and the Lenders (including the Swing Line Lender), and agrees to maintain, a first priority security interest in all such cash, deposit accounts and all balances therein, and all other property so provided as collateral pursuant hereto, and in all

proceeds of the foregoing, all as security for the obligations to which such Cash Collateral may be applied pursuant to Section 2.16(c) . If at any time the Administrative Agent determines that Cash Collateral is subject to any right or claim of any Person other than the Administrative Agent as herein provided, or that the total amount of such Cash Collateral is less than the applicable Fronting Exposure and other obligations secured thereby, the Borrower or the relevant Defaulting Lender will, promptly upon demand by the Administrative Agent, pay or provide to the Administrative Agent additional Cash Collateral in an amount sufficient to eliminate such deficiency.

(c) Application . Notwithstanding anything to the contrary contained in this Agreement, Cash Collateral provided under any of this Section 2.16 or Sections 2.01(b) , 2.01(c) , 2.03 , 2.04 , 2.06 , 2.17 or 8.02 in respect of Letters of Credit or Swing Line Loans shall be held and applied to the satisfaction of the specific L/C Obligations, Swing Line Loans, obligations to fund participations therein (including, as to Cash Collateral provided by a Defaulting Lender, any interest accrued on such obligation) and other obligations for which the Cash Collateral was so provided, prior to any other application of such property as may be provided for herein.

(d) Release . Cash Collateral (or the appropriate portion thereof) provided to reduce Fronting Exposure or other obligations shall be released promptly following (i) the elimination of the applicable Fronting Exposure or other obligations giving rise thereto (including by the termination of Defaulting Lender status of the applicable Lender (or, as appropriate, its assignee following compliance with Section 10.06(b)(vi) )) or (ii) the Administrative Agent’s good faith determination that there exists excess Cash Collateral; provided , however , (x) that Cash Collateral furnished by or on behalf of a Loan Party shall not be released during the continuance of a Default or Event of Default (and following application as provided in this Section 2.16 may be otherwise applied in accordance with Section 8.03 ), and (y) the Person providing Cash Collateral and the L/C Issuer or Swing Line Lender, as applicable, may agree that Cash Collateral shall not be released but instead held to support future anticipated Fronting Exposure or other obligations.

2.17 Defaulting Lenders .

(a) Adjustments . Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such time as that Lender is no longer a Defaulting Lender, to the extent permitted by applicable Law:

(i) Waivers and Amendments . That Defaulting Lender’s right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as set forth in Section 10.01 .

(ii) Reallocation of Payments . Any payment of principal, interest, fees or other amounts received by the Administrative Agent for the account of that Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Article VIII or otherwise, and including any amounts made available to the Administrative Agent by that Defaulting Lender pursuant to Section 10.09 ), shall be applied at such time or times as may be determined by the Administrative Agent as follows: first , to the payment of any

amounts owing by that Defaulting Lender to the Administrative Agent hereunder; second , to the payment on a pro rata basis of any amounts owing by that Defaulting Lender to the L/C Issuer or Swing Line Lender hereunder; third , if so determined by the Administrative Agent or requested by the L/C Issuer or Swing Line Lender, to be held as Cash Collateral for future funding obligations of that Defaulting Lender of any participation in any Swing Line Loan or Letter of Credit; fourth , as the Borrower may request (so long as no Default exists), to the funding of any Loan in respect of which that Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Administrative Agent; fifth , if so determined by the Administrative Agent and the Borrower, to be held in a non-interest bearing deposit account and released in order to satisfy obligations of that Defaulting Lender to fund Loans under this Agreement; sixth , to the payment of any amounts owing to the Lenders, the L/C Issuer or Swing Line Lender as a result of any judgment of a court of competent jurisdiction obtained by any Lender, the L/C Issuer or Swing Line Lender against that Defaulting Lender as a result of that Defaulting Lender’s breach of its obligations under this Agreement; seventh , so long as no Default exists, to the payment of any amounts owing to the Borrower as a result of any judgment of a court of competent jurisdiction obtained by the Borrower against that Defaulting Lender as a result of that Defaulting Lender’s breach of its obligations under this Agreement; and eighth , to that Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if (x) such payment is a payment of the principal amount of any Loans or L/C Borrowings in respect of which that Defaulting Lender has not fully funded its appropriate share and (y) such Loans or L/C Borrowings were made at a time when the conditions set forth in Section 4.03 were satisfied or waived, such payment shall be applied solely to pay the Loans of, and L/C Borrowings owed to, all non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Loans of, or L/C Borrowings owed to, that Defaulting Lender. Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender or to post Cash Collateral pursuant to this Section 2.17(a)(ii) shall be deemed paid to and redirected by that Defaulting Lender, and each Lender irrevocably consents hereto.

(iii) Certain Fees . That Defaulting Lender (x) shall not be entitled to receive any commitment fee pursuant to Section 2.09(a) for any period during which that Lender is a Defaulting Lender (and the Borrower shall not be required to pay any such fee that otherwise would have been required to have been paid to that Defaulting Lender) and (y) shall be limited in its right to receive Letter of Credit Fees as provided in Section 2.03(i) .

(iv) Reallocation of Applicable Percentages to Reduce Fronting Exposure . During any period in which there is a Defaulting Lender, for purposes of computing the amount of the obligation of each non-Defaulting Lender to acquire, refinance or fund participations in Letters of Credit or Swing Line Loans pursuant to Sections 2.03 and 2.04 , the “Revolving Commitment Percentage” of each non-Defaulting Lender shall be computed without giving effect to the Revolving Commitment of that Defaulting Lender; provided , that, (i) each such reallocation shall be given effect only if, at the date the applicable Lender becomes a Defaulting Lender, no Default exists; and (ii) the aggregate obligation of each non-Defaulting Lender to acquire, refinance or fund participations in

Letters of Credit and Swing Line Loans shall not exceed the positive difference, if any, of (1) the Revolving Commitment of that non-Defaulting Lender minus (2) the aggregate Outstanding Amount of the Revolving Loans of that Lender.

(b) Defaulting Lender Cure . If the Borrower, the Administrative Agent, the Swing Line Lender and the L/C Issuer agree in writing in their sole discretion that a Defaulting Lender should no longer be deemed to be a Defaulting Lender, the Administrative Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein (which may include arrangements with respect to any Cash Collateral), that Lender will, to the extent applicable, purchase that portion of outstanding Loans of the other Lenders or take such other actions as the Administrative Agent may determine to be necessary to cause the Loans and funded and unfunded participations in Letters of Credit and Swing Line Loans to be held on a pro rata basis by the Lenders in accordance with their Revolving Commitment Percentages (without giving effect to Section 2.17(a)(iv) ), whereupon that Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrower while that Lender was a Defaulting Lender; and provided , further , that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender.

2.18 Extension of Maturity Date .

(a) Request for Extension . The Parent Borrower may, by notice to the Administrative Agent (who shall promptly notify the Lenders) not earlier than 90 days and not later than 30 days prior to the Maturity Date (the “ Extension Date ”), make a one time request that each Lender extend such Lender’s Maturity Date for an additional year from the Maturity Date currently in effect (the “ Existing Maturity Date ”) subject to the conditions set forth in clause (b) below.

(b) Conditions to Effectiveness of Extension . Notwithstanding the foregoing, the extension of the Maturity Date pursuant to this Section shall not be effective with respect to any Lender unless:

(i) no Default or Event of Default has occurred and is continuing on the date of such extension and after giving effect thereto;

(ii) the representations and warranties contained in Article V and the other Credit Documents shall (A) with respect to representations and warranties that contain a materiality qualification, be true and correct and (B) with respect to representations and warranties that do not contain a materiality qualification, be true and correct in all material respects, in each case on and as of the Extension Date as if made on and as of such date except for any representation or warranty made as of an earlier date, which representation and warranty shall remain true and correct as of such earlier date, and except that for purposes of this Section 2.18 , the representations and warranties contained in Section 5.01 shall be deemed to refer to the most recent statements furnished pursuant to clauses (a) and (b) of Section 6.01 ;

(iii) the Administrative Agent shall have received (for distribution to the Lenders) and reviewed new appraisals for the Borrowing Base Assets, completed at the Borrowers’ expense and by an appraiser selected by the Administrative Agent and reasonably acceptable to the Borrowers (it being understood and agreed that, in the event the Outstanding Amount exceeds the Aggregate Collateral Value Amount as determined by such new appraisals, the Borrowers shall prepay the Loans in an amount equal to or greater than such excess in accordance with Section 2.06(b) );

(iv) the Borrowers shall pay to the Lenders on the Existing Maturity Date a fee (to be shared among the Lenders based upon their pro rata share of the Aggregate Commitments) equal to the product of (i) 0.40% multiplied by (ii) the then Aggregate Commitments.

ARTICLE III

TAXES, YIELD PROTECTION AND ILLEGALITY

3.01 Taxes .

(a) Payments Free of Taxes . Any and all payments by or on account of any obligation of the Credit Parties hereunder or under any other Credit Document shall be made free and clear of and without reduction or withholding for any Indemnified Taxes or Other Taxes, provided that if any Credit Party shall be required by applicable law to deduct any Indemnified Taxes (including any Other Taxes) from such payments, then (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section) the Administrative Agent or any Lender, as the case may be, receives an amount equal to the sum it would have received had no such deductions been made, (ii) such Credit Party shall make such deductions and (iii) such Credit Party shall timely pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law.

(b) Payment of Other Taxes by the Credit Parties . Without limiting the provisions of subsection (a) above, the Credit Parties shall timely pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law.

(c) Indemnification by the Credit Parties . The Credit Parties shall indemnify the Administrative Agent and each Lender, within 10 days after demand therefor, for the full amount of any Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) paid by the Administrative Agent or such Lender, as the case may be, and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A

certificate as to the amount of such payment or liability delivered to any Borrower by a Lender (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error.

(d) Evidence of Payments . As soon as practicable after any payment of Indemnified Taxes or Other Taxes by any Credit Party to a Governmental Authority, the Parent Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.

(e) Status of Lenders . (i) Each Lender shall deliver to the Parent Borrower and to the Administrative Agent, at the time or times prescribed by applicable laws or when reasonably requested by the Parent Borrower or the Administrative Agent, such properly completed and executed documentation prescribed by applicable Laws or by the taxing authorities of any jurisdiction and such other reasonably requested information as will permit the Parent Borrower or the Administrative Agent, as the case may be, to determine (A) whether or not payments made hereunder or under any other Loan Document are subject to Taxes, (B) if applicable, the required rate of withholding or deduction, and (C) such Lender’s entitlement to any available exemption from, or reduction of, applicable Taxes in respect of all payments to be made to such Lender by the Borrowers pursuant to this Agreement or otherwise to establish such Lender’s status for withholding tax purposes in the applicable jurisdiction.

(ii) Without limiting the generality of the foregoing, if such Borrower is resident for tax purposes in the United States,

(A) any Lender that is a “United States person” within the meaning of Section 7701(a)(30) of the Internal Revenue Code shall deliver to the Parent Borrower and the Administrative Agent executed originals of Internal Revenue Service Form W-9 or such other documentation or information prescribed by applicable laws or reasonably requested by the Parent Borrower or the Administrative Agent as will enable the Parent Borrower or the Administrative Agent, as the case may be, to determine whether or not such Lender is subject to backup withholding or information reporting requirements; and

(B) each Foreign Lender that is entitled under the Internal Revenue Code or any applicable treaty to an exemption from or reduction of withholding tax with respect to payments hereunder or under any other Loan Document shall deliver to the Parent Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the request of the Parent Borrower or the Administrative Agent, but only if such Foreign Lender is legally entitled to do so), whichever of the following is applicable:

(I) executed originals of Internal Revenue Service Form W-8BEN claiming eligibility for benefits of an income tax treaty to which the United States is a party,

(II) executed originals of Internal Revenue Service Form W-8ECI,

(III) executed originals of Internal Revenue Service Form W-8IMY and all required supporting documentation,

(IV) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under section 881(c) of the Internal Revenue Code, (x) a certificate to the effect that such Foreign Lender is not (A) a “bank” within the meaning of section 881(c)(3)(A) of the Internal Revenue Code, (B) a “10 percent shareholder” of the Borrower within the meaning of section 881(c)(3)(B) of the Internal Revenue Code, or (C) a “controlled foreign corporation” described in section 881(c)(3)(C) of the Internal Revenue Code and (y) duly completed copies of Internal Revenue Service Form W-8BEN, or

(V) executed originals of any other form prescribed by applicable laws as a basis for claiming exemption from or a reduction in United States Federal withholding tax duly completed together with such supplementary documentation as may be prescribed by applicable law to permit such Borrower or the Administrative Agent to determine the withholding or deduction required to be made.

(iii) Each Lender shall promptly (A) notify the Parent Borrower and the Administrative Agent of any change in circumstances which would modify or render invalid any claimed exemption or reduction, and (B) take such steps as shall not be materially disadvantageous to it, in the reasonable judgment of such Lender, and as may be reasonably necessary (including the re-designation of its Lending Office) to avoid any requirement of applicable Laws of any jurisdiction that the Borrower or the Administrative Agent make any withholding or deduction for taxes from amounts payable to such Lender.

3.02 Illegality .

If any Lender determines that any Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Lender or its applicable Lending Office to make, maintain or fund Eurodollar Loans, or to determine or charge interest rates based upon the Eurodollar Rate, then, on notice thereof by such Lender to the Borrowers through the Administrative Agent, any obligation of such Lender to make or continue Eurodollar Loans or to convert Base Rate Loans to Eurodollar Loans shall be suspended until such Lender notifies the Administrative Agent and the Borrowers that the circumstances giving rise to such determination no longer exist. Upon receipt of such notice, the Borrowers shall, upon demand from such

Lender (with a copy to the Administrative Agent), prepay or, if applicable, convert all Eurodollar Loans of such Lender to Base Rate Loans, either on the last day of the Interest Period therefor, if such Lender may lawfully continue to maintain such Eurodollar Loans to such day, or immediately, if such Lender may not lawfully continue to maintain such Eurodollar Loans. Upon any such prepayment or conversion, the Borrowers shall also pay accrued interest on the amount so prepaid or converted. Each Lender agrees to designate a different Lending Office if such designation will avoid the need for such notice and will not, in the good faith judgment of such Lender, otherwise be materially disadvantageous to such Lender.

3.03 Inability to Determine Rates .

If the Required Lenders determine that for any reason adequate and reasonable means do not exist for determining the Eurodollar Rate for any requested Interest Period with respect to a proposed Eurodollar Loan, or that the Eurodollar Rate for any requested Interest Period with respect to a proposed Eurodollar Loan does not adequately and fairly reflect the cost to such Lenders of funding such Loan, the Administrative Agent will promptly so notify the Parent Borrower and each Lender. Thereafter, the obligation of the Lenders to make or maintain Eurodollar Loans shall be suspended until the Administrative Agent (upon the instruction of the Required Lenders) revokes such notice. Upon receipt of such notice, the Borrowers may revoke any pending request for a Borrowing of, conversion to or continuation of Eurodollar Loans or, failing that, will be deemed to have converted such request into a request for a Borrowing of Base Rate Loans in the amount specified therein.

3.04 Increased Cost and Reduced Return; Capital Adequacy; Reserves on Eurodollar Loans .

(a) If any Lender determines that as a result of the introduction after the date hereof of or any change in or in the interpretation, after the date hereof, of any Law, or such Lender’s compliance therewith, there shall be any increase in the cost to such Lender of agreeing to make or making, funding or maintaining Eurodollar Loans or (as the case may be) issuing or participating in Letters of Credit, or a reduction in the amount received or receivable by such Lender in connection with any of the foregoing (excluding for purposes of this subsection (a) any such increased costs or reduction in amount resulting from (i) Indemnified Taxes or Other Taxes (as to which Section 3.01 shall govern), (ii) changes in the basis of taxation of overall net income or overall gross income by the United States or any foreign jurisdiction or any political subdivision of either thereof under the Laws of which such Lender is organized or has its Lending Office, and (iii) reserve requirements contemplated by Section 3.04(c) ), then from time to time upon demand of such Lender (with a copy of such demand to the Administrative Agent), the Borrowers shall pay to such Lender such additional amounts as will compensate such Lender for such increased cost or reduction.

(b) If any Lender determines that the introduction after the date hereof of any Law regarding capital adequacy or any change therein made after the date hereof or in the interpretation thereof made after the date hereof, or compliance by such Lender (or its Lending Office) therewith, has the effect of reducing the rate of return on the capital of such Lender or any corporation controlling such Lender as a consequence of such Lender’s obligations

hereunder (taking into consideration its policies with respect to capital adequacy and such Lender’s desired return on capital), then from time to time upon demand of such Lender (with a copy of such demand to the Administrative Agent), the Borrowers shall pay to such Lender such additional amounts as will compensate such Lender for such reduction.

(c) The Borrowers shall pay to each Lender, as long as such Lender shall be required to maintain reserves with respect to liabilities or assets consisting of or including Eurocurrency funds or deposits (currently known as “Eurocurrency liabilities”), additional interest on the unpaid principal amount of each Eurodollar Loan equal to the actual costs of such reserves allocated to such Loan by such Lender (as determined by such Lender in good faith, which determination shall be conclusive), which shall be due and payable on each date on which interest is payable on such Loan, provided the Borrowers shall have received at least fifteen (15) days’ prior written notice (with a copy to the Administrative Agent) of such additional interest from such Lender. If a Lender fails to give notice fifteen (15) days prior to the relevant Interest Payment Date, such additional interest shall be due and payable fifteen (15) days from receipt of such notice.

(d) Each Lender agrees to make reasonable efforts to designate a different Lending Office if such designation will avoid or reduce the amounts payable under this Section 3.04 and will not, in the good faith judgment of such Lender, otherwise be materially disadvantageous to such Lender

3.05 Funding Losses .

Upon demand of any Lender (with a copy to the Administrative Agent) from time to time, the Borrowers shall promptly compensate such Lender for and hold such Lender harmless from any loss, cost or expense incurred by it as a result of:

(a) any continuation, conversion, payment or prepayment of any Loan other than a Base Rate Loan on a day other than the last day of the Interest Period for such Loan (whether voluntary, mandatory, automatic, by reason of acceleration, or otherwise);

(b) any failure by the Borrowers (for a reason other than the failure of such Lender to make a Loan) to prepay, borrow, continue or convert any Loan other than a Base Rate Loan on the date or in the amount notified by the Borrowers; or

(c) any assignment of a Eurodollar Loan on a day other than the last day of the Interest Period therefor as a result of a request by the Borrowers pursuant to Section 10.13 ;

including any loss, cost or expense (other than loss of anticipated profits) arising from the liquidation or reemployment of funds obtained by it to maintain such Loan or from fees payable to terminate the deposits from which such funds were obtained. The Borrowers shall also pay any customary administrative fees charged by such Lender in connection with the foregoing.

For purposes of calculating amounts payable by the Borrowers to the Lenders under this Section 3.05 , each Lender shall be deemed to have funded each Eurodollar Loan made by it at

the Eurodollar Base Rate used in determining the Eurodollar Rate for such Loan by a matching deposit or other borrowing in the London interbank eurodollar market for a comparable amount and for a comparable period, whether or not such Eurodollar Loan was in fact so funded.

3.06 Matters Applicable to all Requests for Compensation .

(a) A certificate of the Administrative Agent or any Lender claiming compensation under this Article III and setting forth the additional amount or amounts to be paid to it hereunder shall be conclusive in the absence of manifest error (i) unless such amount or amounts result from or is with respect to any period prior to the date that is 120 days prior to the date on which the Administrative Agent or the applicable Lender makes a claim hereunder if the Administrative Agent or the applicable Lender prior to such date knew or could reasonably have been expected to know of the circumstances giving rise to the claim hereunder or the fact that such circumstances would result in the claim hereunder and (ii) provided that no compensation shall be claimed under this Article III unless the Administrative Agent or the applicable Lender is making similar claims to other similarly situated borrowers. In determining such amount, the Administrative Agent or such Lender may use any reasonable averaging and attribution methods.

(b) Upon any Lender’s making a claim for compensation under Section 3.01 , 3.02 or 3.04 , the Borrowers may replace such Lender in accordance with Section 10.13 .

3.07 Survival .

All of the Borrowers’ obligations under this Article III shall survive termination of the Aggregate Commitments and repayment of all other Obligations hereunder.

ARTICLE IV

CONDITIONS PRECEDENT TO EXTENSION OF CREDITS

The obligation of each Lender to make Extensions of Credit hereunder is subject to satisfaction of the following conditions precedent:

4.01 Conditions to Closing Date .

This Agreement shall become effective upon the satisfaction or waiver of the following conditions precedent:

(a) Certain Credit Documents, Organization Documents, Etc . The Administrative Agent’s receipt of the following, each of which shall be originals or facsimiles (followed promptly by originals) unless otherwise specified, each properly executed by a Responsible Officer of the signing Credit Party, each dated the Closing Date (or, in the case of certificates of governmental officials, a recent date before the Closing Date) and each in form and substance reasonably satisfactory to the Administrative Agent and its legal counsel:

(i) executed counterparts of this Credit Agreement (other than Schedule 4.02(l) and 5.17 which shall be delivered on the Funding Date) and the Administrative Agent’s Fee Letter, each properly executed by a Responsible Officer of the signing Credit Party;

(ii) a Note executed by the Borrowers in favor of each Lender requesting a Note;

(iii) copies of the Organization Documents of each Credit Party (other than the Subsidiary Guarantors) certified to be true and complete as of a recent date by the appropriate Governmental Authority of the state or other jurisdiction of its incorporation or organization, where applicable, and certified by a secretary or assistant secretary of such Credit Party to be true and correct as of the Closing Date;

(iv) such certificates of resolutions or other action, incumbency certificates and/or other certificates of Responsible Officers of each Credit Party (other than the Subsidiary Guarantors) as the Administrative Agent may require evidencing the identity, authority and capacity of each Responsible Officer thereof authorized to act as a Responsible Officer in connection with this Credit Agreement and the other applicable Credit Documents to which such Credit Party is a party; and

(v) such documents and certifications as the Administrative Agent may reasonably require to evidence that each Credit Party (other than the Subsidiary Guarantors) is duly organized or formed, and is validly existing, in good standing and qualified to engage in business in (A) the jurisdiction of its incorporation or organization and (B) each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification, except to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect.

(b) Opinions of Counsel . The Administrative Agent shall have received legal opinion with respect to the Credit Agreement (in each case dated as of the Closing Date, addressed to the Administrative Agent and in form and substance reasonably satisfactory to the Administrative Agent) from:

(i) Sherry Meyerhoff Hanson & Crance LLP, counsel for the Credit Parties;

(ii) Fried, Frank, Harris, Shriver & Jacobson LLP, special New York counsel for the Credit Parties; and

(iii) Venable LLP, special Maryland counsel for the REIT Guarantor.

(c) Sabra Senior Notes . The Administrative Agent shall have received satisfactory evidence that (i) the Sabra Senior Notes have been issued in accordance with the terms of the Sabra Senior Note Indenture, (ii) the Parent Borrower shall have received no less than $200 million in aggregate gross proceeds from the sale of the Sabra Senior Notes and (iii) the proceeds

received in connection with the sale of the Sabra Senior Notes are ready to be released from escrow pending the effective of this Agreement.

(d) Material Adverse Change . Except as disclosed in and contemplated by the Separation Documents, no material adverse change shall have occurred since December 31, 2009 in the business, assets, operations or financial condition of the Credit Parties, taken as a whole, or in the facts and information regarding such Credit Parties as of the Closing Date.

(e) Litigation . There shall not exist any pending or threatened action, suit, investigation or proceeding against any Credit Party or any of their Affiliates that could reasonably be expected to have a Material Adverse Effect or could otherwise materially and adversely effect the transactions set forth herein or contemplated hereby.

(f) Administrative Agent Fees and Expenses . Payment by the Credit Parties to the Administrative Agent of all fees and expenses relating to the preparation, execution and delivery of this Credit Agreement and the other Credit Documents which are due and payable on the Closing Date, including, without limitation, payment to the Administrative Agent of the fees set forth in the Administrative Agent’s Fee Letter, and reasonable and documented Attorney Costs, consultants’ fees, travel expenses and all reasonable fees and expenses associated with the due diligence done in connection with and the preparation of documentation with respect to the Borrowing Base Assets or other Collateral.

(g) Lender Fees . Payment by the Credit Parties to the Administrative Agent (on behalf of itself and the other Lenders) of all upfront/commitment fees as agreed upon among the Credit Parties, the Arranger and the respective Lenders.

Without limiting the generality of the provisions of the last paragraph of Section 9.03 , for purposes of determining compliance with the conditions specified in this Section 4.01 , each Lender that has signed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender.

4.02 Conditions to Funding Date .

The obligation of the Lenders to make the initial Extension of Credit hereunder is subject to the satisfaction in all material respects on or prior to the Funding Date of such of the following conditions as shall not have been expressly waived in writing by the Administrative Agent and Lenders:

(a) Delivery of Schedule 4.02(l) and Schedule 5.17 . Receipt by the Administrative Agent of a fully completed versions of Schedule 4.02(l) and Schedule 5.17 each in form and substance reasonably satisfactory to the Administrative Agent.

(b) Security Agreements . Receipt by the Administrative Agent of executed counterparts of the Security Agreements, each properly executed by a Responsible Officer of the signing Credit Party.

(c) Opinions of Counsel . The Administrative Agent shall have received legal opinion with respect to certain of the Credit Documents (other than the Credit Agreement) (in each case dated as of the Funding Date, addressed to the Administrative Agent and in form and substance reasonably satisfactory to the Administrative Agent) from:

(i) Sherry Meyerhoff Hanson & Crance LLP, counsel for the Credit Parties;

(ii) Fried, Frank, Harris, Shriver & Jacobson LLP, special New York counsel for the Credit Parties; and

(iii) special local counsel for the Borrowers for the states of California, Connecticut, Florida, Idaho, Kentucky, North Carolina, New Mexico and Ohio.

(d) Subsidiary Guarantor Joinder Agreement and Organization Documents of the Subsidiary Guarantors . The Administrative Agent’s receipt of the following, each of which shall be originals or facsimiles (followed promptly by originals) unless otherwise specified, each properly executed by a Responsible Officer of the signing Credit Party, each dated the Funding Date (or, in the case of certificates of governmental officials, a recent date before the Funding Date) and each in form and substance reasonably satisfactory to the Administrative Agent and its legal counsel:

(i) executed counterparts of a Subsidiary Guarantor Joinder Agreement with respect to each Subsidiary Guarantor required to be a Subsidiary Guarantor pursuant to Section 6.14(b) hereunder;

(ii) copies of the Organization Documents of each Subsidiary Guarantor certified to be true and complete as of a recent date by the appropriate Governmental Authority of the state or other jurisdiction of its incorporation or organization, where applicable, and certified by a secretary or assistant secretary of such Subsidiary Guarantor to be true and correct as of the Closing Date;

(iii) such certificates of resolutions or other action, incumbency certificates and/or other certificates of Responsible Officers of each Subsidiary Guarantor as the Administrative Agent may require evidencing the identity, authority and capacity of each Responsible Officer thereof authorized to act as a Responsible Officer in connection with this Credit Agreement and the other applicable Credit Documents to which such Subsidiary Guarantor is a party; and

(iv) such documents and certifications as the Administrative Agent may reasonably require to evidence that each Subsidiary Guarantor is duly organized or formed, and is validly existing, in good standing and qualified to engage in business in (A) the jurisdiction of its incorporation or organization and (B) each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification, except to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect.

(e) Personal Property Collateral . The Administrative Agent shall have received (in each case in form and substance reasonably satisfactory to the Administrative Agent):

(i) searches of Uniform Commercial Code filings in the state of incorporation of each Borrower or where a filing would need to be made in order to perfect the Administrative Agent’s security interest in the tangible personal property Collateral, copies of the financing statements on file in such jurisdictions and evidence that no Liens exist other than Permitted Liens;

(ii) UCC financing statements for each appropriate jurisdiction as is necessary, in the Administrative Agent’s sole discretion, to perfect the Administrative Agent’s security interest in the Collateral;

(iii) duly executed notices of grant of security interest as are necessary, in the Administrative Agent’s sole discretion, to perfect the Administrative Agent’s security interest in the Collateral;

(iv) all instruments and chattel paper in the possession of any of the Borrowers, together with allonges or assignments as may be necessary or appropriate to perfect the Administrative Agent’s security interest in the Collateral;

(v) duly executed consents as are necessary, in the Administrative Agent’s reasonable discretion, to perfect the Administrative Agent’s security interest in the Collateral;

(vi) in the case of any tangible personal property Collateral located at a premises leased by a Borrower, such estoppel letters, consents and waivers from the landlords on such real property as may be reasonably required by the Administrative Agent; and

(vii) certificates (if any) representing the Pledged Equity referred to in each of the Security Agreements accompanied by undated stock powers executed in blank and instruments evidencing any pledged debt indorsed in blank.

(f) Real Property Collateral (Borrowing Base Assets) . The Administrative Agent shall have received each of the Borrowing Base Asset Deliverables with respect to each Real Property Asset set forth on Schedule 5.12 attached hereto.

(g) Title Company Fees and Expenses . Payment by the Credit Parties to Chicago Title Insurance Company of all fees and expenses necessary for the recordation of mortgage documents with respect to the Borrowing Base Assets.

(h) Property and Liability Insurance . The Administrative Agent shall have received copies of all insurance policies or certificates thereof held by (or for the benefit of) the Borrowers or Tenants with respect to the Real Property Assets of the Borrowers, each such

policy shall name the Administrative Agent (on behalf of the Lenders) as an additional insured or loss payee (subject to restrictions contained in Eligible Ground Leases) under a standard mortgagee endorsement, as applicable and each provider of any such insurance shall agree, by endorsement upon the policy or policies issued by it or by independent instruments furnished to the Administrative Agent, that it will give the Administrative Agent thirty (30) days prior written notice before any such policy or policies shall be canceled.

(i) Officer’s Certificates . The Administrative Agent shall have received a certificate or certificates executed by a Responsible Officer of the REIT Guarantor as of the Funding Date, in a form reasonably satisfactory to the Administrative Agent, stating that (i) each Credit Party (other than the Subsidiary Guarantors) is in compliance with all existing financial obligations (whether pursuant to the terms and conditions of this Credit Agreement or otherwise), (ii) all governmental, shareholder and third party consents and approvals, if any, with respect to the Credit Documents and the transactions contemplated thereby have been obtained, (iii) no action, suit, investigation or proceeding is pending or threatened in any court or before any arbitrator or governmental instrumentality (A) that purports to affect (1) the REIT Guarantor, in a materially adverse manner, (2) the Borrowers, taken as a whole, in a materially adverse manner (3) the Credit Parties, taken as a whole, in a materially adverse manner, (4) the Transactions or (B) that could reasonably be expected to have a Material Adverse Effect on (1) the REIT Guarantor, (2) the Borrowers taken as a whole, (3) the transactions contemplated hereby or (4) the ability of the Credit Parties to perform their obligations under the Credit Documents or, (iv) immediately prior to and following the transactions contemplated herein, each of the Credit Parties shall be Solvent, and (v) as of the Funding Date, (A) no Default or Event of Default exists and (B) all representations and warranties contained herein and in the other Credit Documents are (i) with respect to representations and warranties that contain a materiality qualification, true and correct and (ii) with respect to representations and warranties that do not contain a materiality qualification, true and correct in all material respects.

(j) Opening Borrowing Base Certificate . Receipt by the Administrative Agent of a Borrowing Base Certificate as of the Funding Date, substantially in the form of Exhibit C-2 , duly completed and executed by a Responsible Officer of the Parent Borrower or the REIT Guarantor.

(k) Financial Statements . Receipt by the Administrative Agent and the Lenders of (i) the Pro Forma Financial Statements, (ii) pro forma projections of financial statements (balance sheet, income and cash flows) for each of the following four (4) fiscal quarters of the Consolidated Parties and each of the following three (3) fiscal years of the Consolidated Parties, and (iii) such other information relating to the Consolidated Parties as the Administrative Agent may reasonably require in connection with the structuring and syndication of credit facilities of the type described herein.

(l) Opening Compliance Certificate . Receipt by the Administrative Agent of a Compliance Certificate as of the Funding Date signed by a Responsible Officer of the Parent Borrower or the REIT Guarantor and including (i) pro forma calculations for the current fiscal quarter based on the amounts set forth on Schedule 4.02(l) (taking into account any Extension of Credit made or requested hereunder as of such date); (ii) pro forma calculations of all financial covenants contained herein for each of the following four (4) fiscal quarters (based on the

projections set forth in the materials delivered pursuant to clause (i) of this Section 4.01 ); and (iii) pro forma calculations of all financial covenants contained herein for each of the following four (4) fiscal years (based on the projections set forth in the materials delivered pursuant to clause (k) of this Section 4.02 ).

(m) Consents/Approvals . The Credit Parties shall have received all approvals, consents and waivers, and shall have made or given all necessary filings and notices as shall be required to consummate the Transactions without the occurrence of any default under, conflict with or violation of (i) any applicable Law or (ii) any agreement, document or instrument to which any Credit Party is a party or by which any of them or their respective properties is bound, except for such approvals, consents, waivers, filings and notices the receipt, making or giving of which would not reasonably be likely to have a Material Adverse Effect.

(n) Material Adverse Change . Except as disclosed in and contemplated by the Separation Documents, no material adverse change shall have occurred since December 31, 2009 in the business, assets, operations or financial condition of the Credit Parties, taken as a whole, or in the facts and information regarding such Credit Parties as of the Funding Date.

(o) Litigation . There shall not exist any pending or threatened action, suit, investigation or proceeding against any Credit Party or any of their Affiliates that could reasonably be expected to have a Material Adverse Effect or could otherwise materially and adversely effect the Transactions.

(p) Transactions . The Administrative Agent shall have received satisfactory evidence that the Transactions shall have been consummated, in each case, in accordance with their respective terms.

(q) Separation Documents . The Lenders shall have reviewed and approved all of the Separation Documents and there shall not have been any material modification, amendment, supplement or waiver to the Separation Documents without the prior written consent of the Administrative Agent, and the Separation shall have been consummated in accordance with the terms of the Separation Documents (without waiver of any material conditions precedent to the obligations of any party thereto that has not been approved by the Administrative Agent). The Administrative Agent shall have received a copy, certified by an officer of the Parent Borrower as true and complete, of each Separation Document as originally executed and delivered, together with all exhibits and schedules thereto.

(r) Administrative Agent Fees and Expenses . Payment by the Credit Parties to the Administrative Agent of all fees and expenses relating to the preparation, execution and delivery of this Credit Agreement and the other Credit Documents which are due and payable on the Funding Date, and reasonable and documented Attorney Costs, consultants’ fees, travel expenses and all reasonable fees and expenses associated with the due diligence done in connection with and the preparation of documentation with respect to the Borrowing Base Assets or other Collateral.

(s) Other . Receipt by the Lenders or the Administrative Agent of such other documents, instruments, agreements or information as reasonably requested by any Lender or the Administrative Agent, including, but not limited to, additional legal opinions, contribution agreements, corporate resolutions, indemnifications and information regarding litigation, tax, accounting, labor, insurance, pension liabilities (actual or contingent), real estate leases, debt agreements, property ownership and contingent liabilities of the Credit Parties.

Without limiting the generality of the provisions of the last paragraph of Section 9.03 , for purposes of determining compliance with the conditions specified in this Section 4.02 , each Lender that has signed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender.

4.03 Conditions to all Extensions of Credit .

The obligation of any Lender to make any Extension of Credit hereunder is subject to the satisfaction of such of the following conditions on or prior to the proposed date of the making of such Extension of Credit:

(a) The Administrative Agent shall receive the applicable Request for Extension of Credit and, with respect to the initial Extension of Credit, the conditions set forth in Section 4.02 shall have been met as of the Funding Date;

(b) No Default shall have occurred and be continuing immediately before the making of such Extension of Credit and no Default shall exist immediately thereafter;

(c) The representations and warranties of the Credit Parties contained in Article V of this Agreement and the other Credit Documents shall (i) with respect to representations and warranties that contain a materiality qualification, be true and correct and (ii) with respect to representations and warranties that do not contain a materiality qualification, be true and correct in all material respects, in each case on and as of the date of such Extension of Credit as if made on and as of such date except for any representation or warranty made as of an earlier date, which representation and warranty shall remain true and correct as of such earlier date, except that for purposes of this Section 4.03(c) , the representations and warranties contained in Section 5.01 shall be deemed to refer to the most recent statements furnished pursuant to clauses (a) and (b) of Section 6.01 ; and

(d) Immediately following the making of such Extension of Credit the sum of the outstanding principal balance of the Revolving Obligations shall not exceed the lesser of (i) the Aggregate Committed Amount and (ii) the Borrowing Base Amount for such date.

The making of such Extension of Credit hereunder shall be deemed to be a representation and warranty by the Borrowers on the date thereof as to the facts specified in clauses (b), (c), and (d) of this Section.

ARTICLE V

REPRESENTATIONS AND WARRANTIES

The Borrowers and the REIT Guarantor hereby represent and warrant (on their own behalf and on behalf of the Subsidiary Guarantors and/or the REIT Guarantor, as applicable) that, on and after the Funding Date:

5.01 Financial Statements; No Material Adverse Effect .

(a) The Pro Forma Financial Statements were prepared in good faith and the assumptions used in the preparation of the Pro Forma Financial Statements are reasonable, the pro forma adjustments used therein are appropriate to give effect to the transactions or circumstances described therein and the pro forma adjustments have been properly applied to the historical amounts in the compilation of those statements.

(b) Except as disclosed in the S-4 Registration Statement, during the period from December 31, 2009 to and including the Funding Date except as disclosed on Schedule 5.01(b) , there has been no sale, transfer or other disposition by any Consolidated Party of any material part of the business or Property of the Consolidated Parties, taken as a whole, and no purchase or other acquisition by any of them of any business or property (including any Capital Stock of any other Person) material in relation to the consolidated financial condition of the Consolidated Parties, taken as a whole, in each case, which is not reflected in the foregoing financial statements or in the notes thereto and has not otherwise been disclosed in writing to the Administrative Agent on or prior to the Funding Date.

(c) The financial statements delivered pursuant to Section 6.01(a) and (b) have been prepared in accordance with GAAP (except as may otherwise be permitted under Section 6.01(a) and (b) ) and present fairly (on the basis disclosed in the footnotes to such financial statements) the consolidated financial condition, results of operations and cash flows of the Consolidated Parties as of such date and for such periods.

(d) Except as disclosed in the S-4 Registration Statement, since December 31, 2009, there has been no event or circumstance, either individually or in the aggregate, that has had or could reasonably be expected to have a Material Adverse Effect.

5.02 Existence, Qualification and Power .

Each of the Credit Parties (a) is duly organized or formed, validly existing and, as applicable, in good standing under the Laws of the jurisdiction of its incorporation or organization, (b) has all requisite power and authority and all requisite governmental licenses, authorizations, consents and approvals to (i) own or lease its assets and carry on its business and (ii) execute, deliver and perform its obligations under the Credit Documents to which it is a party, and (c) is duly qualified and is licensed and, as applicable, in good standing under the Laws of each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification or license; except in each case referred to in clause (b)(i)

or (c), to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect.

5.03 Authorization; No Contravention .

The execution, delivery and performance by each Credit Party of each Credit Document to which such Person is party, have been duly authorized by all necessary corporate or other organizational action, and do not and will not (a) contravene the terms of any of such Person’s Organization Documents; (b) conflict with or result in any breach or contravention of, or the creation of any Lien under, or require any payment to be made under (i) any Contractual Obligation to which such Person is a party or affecting such Person or the properties of such Person or any of its Subsidiaries or (ii) any order, injunction, writ or decree of any Governmental Authority or any arbitral award to which such Person or its property is subject; or (c) violate any Law.

5.04 Binding Effect .

This Credit Agreement has been, and each other Credit Document, when delivered hereunder, will have been, duly executed and delivered by each Credit Party that is party thereto. This Credit Agreement constitutes, and each other Credit Document when so delivered will constitute, a legal, valid and binding obligation of such Credit Party, enforceable against each Credit Party that is party thereto in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditor’s rights generally and subject to general principals of equity, regardless of whether considered in a proceeding in equity or at law.

5.05 Litigation .

There are no actions, suits, proceedings, claims or disputes pending or, to the knowledge of any Credit Party after due and diligent investigation, threatened or contemplated, at law, in equity, in arbitration or before any Governmental Authority, by or against any Credit Party or against any of its properties or revenues that (a) purport to affect or pertain to this Credit Agreement or any other Credit Document, or any of the transactions contemplated hereby, or (b) either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

5.06 Compliance with ERISA .

(a) Each Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code and other Federal or state Laws. Each Plan that is intended to qualify under Section 401(a) of the Code has received a favorable determination letter from the IRS or an application for such a letter is currently being processed by the IRS with respect thereto and, to the knowledge of the Credit Parties, nothing has occurred which would prevent, or cause the loss of, such qualification. The REIT Guarantor and each ERISA Affiliate have made all required contributions to each Plan subject to Section 412 of the Code, and no application for a funding

waiver or an extension of any amortization period pursuant to Section 412 of the Code has been made with respect to any Plan.

(b) There are no pending or, to the knowledge of the Credit Parties, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan that could reasonably be expected to have a Material Adverse Effect. There has been no prohibited transaction or violation of the fiduciary responsibility rules under ERISA with respect to any Plan that has resulted or could reasonably be expected to result in a Material Adverse Effect.

(c) (i) No ERISA Event has occurred or is reasonably expected to occur; (ii) no Pension Plan has any Unfunded Pension Liability; (iii) neither the REIT Guarantor nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability under Title IV of ERISA with respect to any Pension Plan (other than premiums due and not delinquent under Section 4007 of ERISA); (iv) neither the REIT Guarantor nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability (and no event has occurred which, with the giving of notice under Section 4219 of ERISA, would result in such liability) under Sections 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and (v) neither the REIT Guarantor nor any ERISA Affiliate has engaged in a transaction that could be subject to Sections 4069 or 4212(c) of ERISA.

5.07 Environmental Matters .

Except as could not reasonably be expected to have a Material Adverse Effect:

(a) To the knowledge of the Responsible Officers of the Credit Parties, each of the Borrowing Base Assets and all operations with respect to each of the Borrowing Base Assets and the Real Property Assets owned by the Borrowers are in compliance with all applicable Environmental Laws in all material respects and there are no conditions relating to the Borrowing Base Assets, the other Real Property Assets owned by the Borrowers or the Businesses of the Borrowers that are likely to give rise to liability under any applicable Environmental Laws.

(b) To the knowledge of the Responsible Officers of the Credit Parties, none of the Borrowing Base Assets or other Real Property Assets owned by the Borrowers contains, or has previously contained, any Hazardous Substances at, on or under such property in amounts or concentrations that constitutes a violation of, or could give rise to liability under, applicable Environmental Laws.

(c) To the knowledge of the Responsible Officers of the Credit Parties, no Credit Party has received any written or verbal notice of, or inquiry from any Governmental Authority regarding, any violation, alleged violation, non-compliance, liability or potential liability regarding environmental matters or compliance with Environmental Laws with regard to any of the Borrowing Base Assets, any of the other Real Property Assets owned by the Borrowers or the Businesses of the Borrowers, nor does any Responsible Officer of any Credit Party have knowledge or reason to believe that any such notice will be received or is being threatened.

(d) To the knowledge of the Responsible Officers of the Credit Parties, no Credit Party has generated, treated, stored or disposed of Hazardous Substances at, on or under any of the Borrowing Base Assets or any of the other Real Property Assets owned by the Borrowers in violation of, or in a manner that could give rise to liability under, any applicable Environmental Law. To the knowledge of the Responsible Officers of the Credit Parties, Hazardous Substances have not been transported or disposed of from the Borrowing Base Assets or the other Real Property Assets owned by the Borrowers, in each case by or on behalf of any Borrower, in violation of, or in a manner that is likely to give rise to liability under, any applicable Environmental Law.

(e) To the knowledge of the Responsible Officers of the Credit Parties, no judicial proceeding or governmental or administrative action is pending or threatened, under any Environmental Law to which any Borrower is or will be named as a party, nor are there any consent decrees or other decrees, consent orders, administrative orders or other orders, or other administrative or judicial requirements outstanding under any Environmental Law with respect to the Borrowers, the Borrowing Base Assets, the other Real Property Assets owned by the Borrowers or the Businesses of the Borrowers.

5.08 Margin Regulations; Investment Company Act .

(a) No Credit Party is engaged or will engage, principally or as one of its important activities, in the business of purchasing or carrying margin stock (within the meaning of Regulation U issued by the FRB), or extending credit for the purpose of purchasing or carrying margin stock and no part of the Letters of Credit or proceeds of the Loans will be used, directly or indirectly, for the purpose of purchasing or carrying any margin stock.

(b) None of the Credit Parties (i) is or is required to be registered as an “investment company” under the Investment Company Act of 1940 or (ii) is subject to regulation under any other Law which limits its ability to incur the Obligations.

5.09 Compliance with Laws .

(a) Each Credit Party is in compliance in all material respects with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to it or to its properties, except in such instances in which (a) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted or (b) the failure to comply therewith, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.

(b) To the knowledge of the Responsible Officers of the Credit Parties, each of the Borrowing Base Assets, and the uses of the Borrowing Base Assets, are in compliance in all material respects with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to the Borrowing Base Assets (including, without limitation, building and zoning laws and Healthcare Laws), except in such instances in which (i) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently

conducted or (ii) the failure to comply therewith, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.

5.10 Ownership of Property; Liens .

Each Borrower has good record and marketable title in fee simple to, or valid leasehold interests in, all real property necessary or used in the ordinary conduct of its business (including, in any case, each of the Borrowing Base Assets), except for such defects in title as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The property of the Borrowers is subject to no Liens, other than Permitted Liens.

5.11 Corporate Structure; Capital Stock, Etc .

As of the Funding Date and as of each date on which such schedule is subsequently updated pursuant to the terms hereof through the delivery of a Compliance Certificate, Schedule 5.11 correctly sets forth the corporate structure of REIT Guarantor and each of its Subsidiaries (including each of the Credit Parties), as well as the entity and ownership structure of the Credit Parties and the correct legal name, tax identification number and the jurisdiction of formation of the Credit Parties. Also included on Schedule 5.11 is a listing, as of such date, of the number of shares of each class of Capital Stock outstanding with respect to each Borrower, the Persons holding equity interests in such Borrowers, their percentage equity or voting interest in the Borrowers and the number and effect, if exercised, of all outstanding options, warrants, rights of conversion or purchase and all other similar rights with respect thereto. Except as set forth on Schedule 5.11 , as of the Funding Date: (i) no Borrower has issued to any third party any securities convertible into any equity interest in such Borrower, or any options, warrants or other rights to acquire any securities convertible into any such equity interest, and (ii) the outstanding Capital Stock of each Borrower is owned by the Persons indicated on Schedule 5.11 , is validly issued, fully paid and non-assessable, and is free and clear of all Liens, warrants, options and rights of others of any kind whatsoever. Each Person owning a Borrowing Base Asset is a Borrower hereunder. Each Borrower is a Wholly Owned Subsidiary of the Parent Borrower. No Borrower (other than the Parent Borrower) holds or otherwise has any interest in any Capital Stock of any other Person.

5.12 Real Property Assets; Leases .

(a) Part I of Schedule 5.12 (as updated pursuant to the terms hereof through the delivery of a Compliance Certificate) is a true and complete list of (i) the street address of each Borrowing Base Asset, (ii) the Borrower which owns or leases, as applicable, each such Borrowing Base Asset, (iii) the facility type of each such Borrowing Base Asset, (iv) the Facility Leases to which each such Borrowing Base Asset is subject (or, in the case of the initial Borrowing Base Assets, will be subject on or prior to the Funding Date), together with the applicable Tenant and the termination date of such Facility Lease, (v) the name and address of the applicable Tenant and (vi) correctly sets forth the type of interest (fee or leasehold) held by each Borrower in its respective Borrowing Base Asset. Each parcel of real property identified on Part I of Schedule 5.12 is a Real Property Asset that qualifies as a Borrowing Base Asset pursuant to the terms hereof and is subject to a first priority lien (subject to Permitted Liens) in

favor of the Administrative Agent (for the benefit of the Lenders) pursuant to a properly-recorded Mortgage Instrument and Assignment of Leases.

(b) Part II of Schedule 5.12 (as updated pursuant to the terms hereof through the delivery of a Compliance Certificate) is a true and complete list as of the Funding Date of (i) the street address of each other Real Property Asset owned by any Borrower, (ii) the applicable Borrower which owns each such other Real Property Asset, (iii) the facility type of each such other Real Property Asset, (iv) the lease(s) to which each such other Real Property Asset is subject, and (v) the name and address of the Tenants with respect to each such other Real Property Asset.

(c) Part III of Schedule 5.12 (as updated pursuant to the terms hereof through the delivery of a Compliance Certificate) properly sets forth the names and addresses of all Tenants with respect to the Real Property Assets who are, to the knowledge of any Responsible Officer of the Credit Parties, (i) delinquent in paying any franchise, business, intangible, personal property taxes or real estate taxes due beyond the later of the applicable grace period with respect thereto, if any, and forty five (45) days and/or (ii) the subject of any Bankruptcy Event.

(d) Part IV of Schedule 5.12 (as updated pursuant to the terms hereof through the delivery of a Compliance Certificate) properly sets forth all subleases known by a Borrower to exist with respect to the Facility Leases relating to any of the Borrowing Base Assets, the termination of which could result in a material adverse effect on the applicable Tenant’s ability to continue to make scheduled payments to the applicable Borrower under the applicable Facility Lease, together with the applicable tenant with respect thereto, the remaining term of the sublease and whether or not such tenant is current on payments due thereunder.

(e) To the knowledge of the Responsible Officers of the Credit Parties, each of the facilities located on the Borrowing Base Properties owned by the Borrowers complies with the requirements of Section 6.08 of this Agreement. To the knowledge of the Responsible Officers of the Credit Parties, no condemnation or condemnation proceeding has been instituted and remained undismissed for a period in excess of ninety (90) consecutive days, in each case, with respect to a material portion of any Real Property Asset listed as a Borrowing Base Property on Part I of Schedule 5.12 . To the knowledge of the Responsible Officers of the Credit Parties, no material casualty event has occurred with respect to the improvements located on any Real Property Asset listed as a Borrowing Base Property on Part I of Schedule 5.12 which has not been (or, if applicable) will not be able to be) fully remediated with available insurance proceeds.

5.13 Facility Leases; Additional Contractual Obligations .

Schedule 5.13 (as updated pursuant to the terms hereof through the delivery of a Compliance Certificate) is a true, correct and complete listing of all Facility Leases as of the Funding Date (other than those set forth on Parts I or IV of Schedule 5.12 ). No event of default, or event or condition which with the giving of notice, the lapse of time, a determination of materiality, the satisfaction of any other condition or any combination of the foregoing, would constitute such an event of default, exists with respect to any such Facility Lease. No Facility Lease applicable to any such Borrowing Base Asset has been terminated without the prior

written consent of the Required Lenders (which consent shall not be unreasonably withheld or relayed). Except as set forth on Schedule 5.13 , no Borrower is a party to any contract or agreement that is subject to the Federal Assignment of Claims Act, as amended (31 U.S.C. Section 3727) or any similar state or local law.

5.14 Investments .

All Investments of each Borrower (other than the Parent Borrower) are Investments permitted pursuant to Sections 7.04 and 7.05 .

5.15 Solvency .

The Credit Parties are Solvent on a consolidated basis.

5.16 Taxes .

The Credit Parties have filed all Federal, state and other material tax returns and reports required to be filed, and have paid all Federal, state and other material taxes, assessments, fees and other governmental charges levied or imposed upon them or their properties (including all Real Property Assets), income or assets prior to delinquency, except those which are being contested in good faith by appropriate proceedings diligently conducted and for which adequate reserves have been provided in accordance with GAAP. There is no proposed tax assessment against any Credit Party that would, if made, have a Material Adverse Effect. Other than the tax allocation agreement executed in connection with the Separation, no Credit Party is party to any tax sharing agreement.

5.17 Insurance .

All insurance coverage of the Borrowers and all insurance coverage of the Tenants with respect to the Real Property Assets of the Borrowers, in each case, as in existence as of the Funding Date and as of each date on which such schedule is subsequently updated pursuant to the terms hereof through the delivery of a Compliance Certificate, is described on the certificates attached hereto as Schedule 5.17 .

5.18 No Default .

(a) No Credit Party is in default after all applicable notice and cure periods under or with respect to any Contractual Obligation that individually or in the aggregate could reasonably be expected to have a Material Adverse Effect.

(b) No Default has occurred and is continuing.

5.19 Healthcare; Facility Representations and Warranties .

(a) Compliance With Healthcare Laws . Without limiting the generality of Section 5.09 hereof or any other representation or warranty made herein, no Credit Party and, to

the knowledge of the Responsible Officers of the Credit Parties, no Tenant, is in material violation of any applicable statutes, laws, ordinances, rules and regulations of any Governmental Authority with respect to regulatory matters primarily relating to patient healthcare (including without limitation Section 1128B of the Social Security Act, as amended, 42 U.S.C. Section 1320a-7b (Criminal Penalties Involving Medicare or State Health Care Programs), commonly referred to as the “Federal Anti-Kickback Statute,” and Section 1877 of the Social Security Act, as amended, 42 U.S.C. Section 1395nn (Prohibition Against Certain Referrals), commonly referred to as “Stark Statute” (collectively, “ Healthcare Laws ”) where such violation would result in a Material Adverse Effect. The Credit Parties and, to the knowledge of the Responsible Officers of the Credit Parties, each of the Tenants, have maintained in all material respects all records required to be maintained by the Food and Drug Administration, Drug Enforcement Agency and State Boards of Pharmacy and the federal and state Medicare and Medicaid programs as required by the Healthcare Laws and, to the knowledge of the Responsible Officers of the Credit Parties, there are no notices of material violations of the Healthcare Laws with respect to any Credit Party, any Tenant or any of the Real Property Assets owned by any Borrower.

(b) Licenses, Permits, and Certifications .

(i) To the knowledge of the Responsible Officers of the Credit Parties, each Tenant has such permits, licenses, franchises, certificates and other approvals or authorizations of Governmental Authorities as are necessary under applicable law or regulations to own its properties and to conduct its business and to receive reimbursement under Medicare and Medicaid (including without limitation such permits as are required under such federal, state and other health care laws, and under similar licensure laws and such insurance laws and regulations, as are applicable thereto), if the failure to obtain such permits, licenses, franchises, certificates and other approvals or authorizations could reasonably be expected to result in a Material Adverse Effect. Notwithstanding the foregoing, no Borrower is the owner of any licenses or permits required for the provision of Medical Services at any of the Real Property Assets.

(ii) To the knowledge of the Responsible Officers of the Credit Parties, each Tenant has all Medicare, Medicaid and related agency supplier billing number(s) and related documentation necessary to receive reimbursement from Medicare and/or Medicaid for any Medical Service furnished by such Person in any jurisdiction where it conducts business if the failure to obtain billing number(s) or related documentation could reasonably be expected to result in a Material Adverse Effect. To the knowledge of the Responsible Officers of the Credit Parties, no Tenant is currently subject to suspension, revocation, renewal or denial of its Medicare and/or Medicaid certification, supplier billing number(s), or Medicare and/or Medicaid participation agreement(s).

(c) HIPAA Compliance . No Credit Party is a “covered entity” within the meaning of HIPAA. In addition, to the knowledge of the Responsible Officers of the Credit Parties, no Credit Party is the subject of any civil or criminal penalty, process, claim, action or proceeding, or any administrative or other regulatory review, survey, process or proceeding (other than

routine surveys or reviews conducted by any government health plan or other accreditation entity) that could reasonably be expected to cause a Material Adverse Effect.

(d) Medical Services . No Credit Party is in the business of providing Medical Services.

5.20 Disclosure .

Each Credit Party has disclosed to the Administrative Agent and the Lenders all agreements, instruments and corporate or other restrictions to which it or any of its Subsidiaries is subject, and all other matters known to it, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect. No report, financial statement, certificate or other information furnished (whether in writing or orally) by or on behalf of any Credit Party to the Administrative Agent or any Lender in connection with the transactions contemplated hereby and the negotiation of this Agreement or delivered hereunder or under any other Credit Document (in each case, as modified or supplemented by other information so furnished) contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that, with respect to projected financial information, the Credit Parties represent only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time.

5.21 Governmental Authorization; Other Consents .

Except for the filings, recordings and other actions necessary to create and perfect the Liens and security interests contemplated hereunder and under the other Credit Documents, no approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority or any other Person is necessary or required in connection with the execution, delivery or performance by, or enforcement against, any Credit Party of this Credit Agreement or any other Credit Document.

5.22 Anti-Terrorism Laws .

Neither any Credit Party nor any of its Subsidiaries is an “enemy” or an “ally of the enemy” within the meaning of Section 2 of the Trading with the Enemy Act of the United States of America (50 U.S.C. App. §§ 1 et seq .) (the “ Trading with the Enemy Act ”), as amended. Neither any Credit Party nor any of its Subsidiaries is in violation of (a) the Trading with the Enemy Act, as amended, (b) any of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or executive order relating thereto or (c) the Patriot Act. Set forth on Schedule 5.22 is the exact legal name of each Credit Party, the state of incorporation or organization, the chief executive office, the principal place of business, the jurisdictions in which the Credit Parties are qualified to do business, the federal tax identification number and organization identification number of each of the Credit Parties as of the Funding Date.

5.23 Collateral Documents .

The Collateral Documents create valid security interests in, and Liens on, the Collateral purported to be covered thereby, which security interests and Liens are currently perfected security interests and Liens, prior to all other Liens other than Permitted Liens.

5.24 Consummation of Separation .

On the Funding Date, the Separation and related transactions have been (or concurrently herewith will be) consummated substantially in accordance with the terms of the Separation Documents. As of the Funding Date, the Separation Documents have not been altered, amended or otherwise modified or supplemented or any condition thereof waived in any material respect without the prior written consent of the Administrative Agent. As of the Separation Date, each of the representations and warranties made in the Separation Documents by each of the parties thereto is true and correct in all material respects.

ARTICLE VI

AFFIRMATIVE COVENANTS

The Borrowers hereby covenant and agree (on their own behalf and on behalf of the Subsidiary Guarantors and/or REIT Guarantor, as applicable) that until the Obligations, together with interest, fees and other obligations hereunder, have been paid in full and the Revolving Commitments hereunder shall have terminated:

6.01 Financial Statements .

The Borrowers shall deliver to the Administrative Agent (and the Administrative Agent shall disseminate such information pursuant to the terms of Section 6.02 hereof), in form and detail reasonably satisfactory to the Administrative Agent and the Required Lenders:

(a) beginning with the fiscal year ending December 31, 2010, as soon as available, but in any event within ninety (90) days (or within five (5) days of such other time period required by the SEC) after the end of each fiscal year of the REIT Guarantor, a consolidated balance sheet of the Consolidated Parties as at the end of such fiscal year, and the related consolidated statements of earnings, shareholders’ equity and cash flows for such fiscal year (and beginning with the fiscal year ending 2011, setting forth in each case in comparative form the figures for the previous fiscal year), all in reasonable detail and prepared in accordance with GAAP, audited and accompanied by (i) a report and opinion of Pricewaterhouse Cooper LLP or another Registered Public Accounting Firm of nationally recognized standing reasonably acceptable to the Required Lenders, which report and opinion shall be prepared in accordance with generally accepted auditing standards and applicable Securities Laws and shall not be subject to any “going concern” or like qualification or exception or any qualification or exception as to the scope of such audit and (ii) beginning with the fiscal year ending December 31, 2011, an attestation report of such Registered Public Accounting Firm as to the Credit Party’s

internal controls pursuant to Section 404 of Sarbanes-Oxley expressing a conclusion to which the Required Lenders do not object; and

(b) beginning with the fiscal quarter ending March 31, 2011, as soon as available, but in any event within forty-five (45) days (or within five (5) days of such other time period required by the SEC) after the end of each of the first three (3) fiscal quarters of each fiscal year of the REIT Guarantor, a consolidated balance sheet of the Consolidated Parties as at the end of such fiscal quarter, and the related consolidated statements of earnings, shareholders’ equity and cash flows for such fiscal quarter and for the portion of the REIT Guarantor’s fiscal year then ended, setting forth in each case, beginning with the quarter ending March 31, 2012, in comparative form the figures for the corresponding fiscal quarter of the previous fiscal year and the corresponding portion of the previous fiscal year, all in reasonable detail and certified by a Responsible Officer of the REIT Guarantor as fairly presenting the financial condition, results of operations, shareholders’ equity and cash flows of the Consolidated Parties in accordance with GAAP, subject only to normal year-end audit adjustments and the absence of footnotes; provided, that the Administrative Agent hereby agrees that a Form 10-Q of the REIT Guarantor in form similar to that delivered to the SEC shall satisfy the requirements of this Section 6.01(b) .

6.02 Certificates; Other Information .

The Borrowers shall deliver to the Administrative Agent (and the Administrative Agent shall disseminate such information pursuant to the terms of this Section 6.02 ), in form and detail reasonably satisfactory to the Administrative Agent and the Required Lenders:

(a) concurrently with the delivery of the financial statements referred to in Sections 6.01(a) and (b) , a duly completed Compliance Certificate signed by a Responsible Officer of the Parent Borrower or the REIT Guarantor;

(b) within forty-five (45) days after the end of each fiscal quarter, a Borrowing Base Certificate calculated as of the end of the immediately prior fiscal quarter, duly completed and executed by a Responsible Officer of the Parent Borrower or the REIT Guarantor; provided, however, the Parent Borrower may, at its option, provide an updated Borrowing Base Certificate more frequently than quarterly;

(c) within forty-five (45) days following the date on which such statements and calculations are due to the respective Borrowers from the respective Tenants, quarterly operating statements and Occupancy Rate calculations concerning each of the then-existing Borrowing Base Assets;

(d) within thirty (30) days after the end of each fiscal year of the REIT Guarantor, beginning with the fiscal year ending December 31, 2010, an annual operating forecast of the REIT Guarantor containing, among other things, pro forma financial statements for the then current fiscal year and updated versions of the pro forma financial projections delivered in connection with Section 4.02(k) hereof;

(e) promptly after any request by the Administrative Agent, copies of any detailed audit reports, management letters or recommendations submitted to the board of directors by the independent accountants of the REIT Guarantor (or the audit committee of the board of directors of the REIT Guarantor) in respect of the REIT Guarantor (and, to the extent any such reports, letters or recommendations are prepared separately for any one or more of the Borrowers, such Borrower(s)) by independent accountants in connection with the accounts or books of the REIT Guarantor (or such Borrower(s)) or any audit of the REIT Guarantor (or such Borrower(s));

(f) promptly after the same are available, (i) copies of each annual report, proxy or financial statement or other report or communication sent to the stockholders of the REIT Guarantor, and copies of all annual, regular, periodic and special reports and registration statements which the REIT Guarantor may file or be required to file with the SEC under Section 13 or 15(d) of the Securities Exchange Act of 1934 or to a holder of any Indebtedness owed by the REIT Guarantor in its capacity as such holder and not otherwise required to be delivered to the Administrative Agent pursuant hereto and (ii) upon the request of the Administrative Agent, all reports and written information to and from the United States Environmental Protection Agency, or any state or local agency responsible for environmental matters, the United States Occupational Health and Safety Administration, or any state or local agency responsible for health and safety matters, or any successor agencies or authorities concerning environmental, health or safety matters;

(g) promptly upon receipt thereof, a copy of any other report or “management letter” submitted by independent accountants to the REIT Guarantor or any Credit Party in connection with any annual, interim or special audit of the books of the REIT Guarantor (or any such Credit Party(ies));

(h) promptly upon any Responsible Officer of any Credit Party becoming aware thereof, notice of (i) any matter that has resulted or could reasonably be expected to result in a Material Adverse Effect and (ii) any other Default or Event of Default; and

(i) promptly, such additional information regarding the business, financial or corporate affairs of the Borrowers, or compliance with the terms of the Credit Documents, as the Administrative Agent or any Lender (through the Administrative Agent) may from time to time reasonably request.

Documents required to be delivered pursuant to Section 6.01(a) or (b) or Section 6.02(b) , (c) , (d) , (e) or (f)(i) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (i) on which the Credit Parties post such documents, or provides a link thereto on the REIT Guarantor’s website on the Internet at the website address listed on Schedule 10.02 ; or (ii) on which such documents are posted on the Credit Parties’ behalf on an Internet or intranet website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or whether sponsored by the Administrative Agent); provided that: (A) the Borrowers shall deliver paper copies of such documents to the Administrative Agent or any Lender that requests the Borrowers to deliver such paper copies until a written request to cease delivering paper copies is given by the Administrative Agent or such Lender and (B) the Borrowers shall notify the Administrative Agent and each Lender (by

telecopier or electronic mail) of the posting of any such documents and provide to the Administrative Agent by electronic mail electronic versions (i.e., soft copies) of such documents. Notwithstanding anything contained herein, in every instance the Borrowers shall be required to provide paper copies of the Compliance Certificates required by Section 6.02(a) to the Administrative Agent. Except for such Compliance Certificates, the Administrative Agent shall have no obligation to request the delivery or to maintain copies of the documents referred to above, and in any event shall have no responsibility to monitor compliance by the Credit Parties with any such request for delivery, and each Lender shall be solely responsible for requesting delivery to it or maintaining its copies of such documents.

The Credit Parties hereby acknowledge that (x) the Administrative Agent will make available to the Lenders materials and/or information provided by or on behalf of the Credit Parties hereunder (collectively, the “ Borrower Materials ”) by posting the Borrower Materials on IntraLinks or another similar electronic system (the “ Platform ”) and (y) certain of the Lenders (each, a “ Public Lender ”) may have personnel who do not wish to receive material non-public information with respect to the Credit Parties or their Affiliates, or the respective securities of any of the foregoing, and who may be engaged in investment and other market-related activities with respect to such Person’s securities. Each of the Credit Parties hereby agrees that (ww) all Borrower Materials that are to be made available to Public Lenders shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof (xx) by marking Borrower Materials “PUBLIC,” the Credit Parties shall be deemed to have authorized the Administrative Agent and the Lenders to treat such Borrower Materials as not containing any material non-public information with respect to the Credit Parties or their securities for purposes of United States federal and state securities laws ( provided , however , that to the extent such Borrower Materials constitute Information, they shall be treated as set forth in Section 10.07 ); (yy) all Borrower Materials marked “PUBLIC” are permitted to be made available through a portion of the Platform designated as “Public Investor;” and (zz) the Administrative Agent shall be entitled to treat any Borrower Materials that are not marked “PUBLIC” as being suitable only for posting on a portion of the Platform not marked as “Public Investor.” Notwithstanding the foregoing, the Credit Parties shall be under no obligation to mark any Borrower Materials “PUBLIC”.

6.03 Preservation of Existence and Franchises .

Each Credit Party will do all things necessary to (a) preserve, renew and maintain in full force and effect its legal existence and good standing under the Laws of the jurisdiction of its organization except in a transaction permitted by Section 7.06 ; (b) take all reasonable action to maintain all rights, privileges, permits, licenses and franchises necessary or desirable in the normal conduct of its business, except to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect; and (c) preserve or renew all of its registered patents, trademarks, trade names and service marks, the non-preservation of which could reasonably be expected to have a Material Adverse Effect.

6.04 Books and Records .

Each Credit Party will maintain proper books of record and account, in which full, true and correct entries in conformity with GAAP consistently applied shall be made of all financial transactions and matters involving the assets and business of such Credit Party except, with respect to the Subsidiary Guarantors only, such failure could not reasonably be expected to have a Material Adverse Effect.

6.05 Compliance with Law .

Each Credit Party will comply in all material respects with the requirements of all Laws and all orders, writs, injunctions and decrees (including, without limitation, building and zoning laws and all Healthcare Laws) applicable to it or to its business or property (including, without limitation, each Real Property Asset owned by any Borrower), except in such instances in which (a) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted; or (b) the failure to comply therewith could not reasonably be expected to have a Material Adverse Effect; provided that to the extent a Credit Party is unable to comply with the provisions of this Section 6.05 due to a Tenant’s act or omission such violation shall not constitute a Default or Event of Default so long as the Parent Borrower delivers a new Borrowing Base Certificate removing the applicable Borrowing Base Asset within ten (10) Business Days of a Responsible Officer of the Parent Borrower becoming aware of such violation.

6.06 Payment of Obligations .

Each Credit Party will pay and discharge (or cause to be paid or discharged) (a) all tax liabilities, assessments and governmental charges or levies upon it or its properties or assets (including, without limitation, each Real Property Asset owned by any Borrower), unless the same are being contested in good faith by appropriate proceedings diligently conducted and adequate reserves in accordance with GAAP are being maintained by such Credit Party and (b) all lawful claims which, if unpaid, would by law become a Lien (other than a Permitted Lien) upon its property, subject to rights of contest as set forth in Section 7.01 except, with respect to the Subsidiary Guarantors only, such failure could not reasonably be expected to have a Material Adverse Effect; provided that to the extent a Credit Party is unable to comply with the provisions of this Section 6.06 due to a Tenant’s act or omission such violation shall not constitute a Default or Event of Default so long as the Parent Borrower delivers a new Borrowing Base Certificate removing the applicable Borrowing Base Asset within ten (10) Business Days of a Responsible Officer of the Parent Borrower becoming aware of such violation.

6.07 Insurance .

In addition to the requirements of any of the other Credit Documents, the Credit Parties shall maintain or cause to be maintained, with financially sound and reputable insurance companies not Affiliates of any Credit Party, insurance with respect to its properties and business against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar business, of such types and in such amounts as are customarily carried under similar

circumstances by such other Persons except, with respect to the Subsidiary Guarantors only, any failure to so maintain could not reasonably be expected to have a Material Adverse Effect. The Administrative Agent shall be named as loss payee or mortgagee (subject to restrictions contained in any Eligible Ground Lease), as its interest may appear, and/or additional insured with respect to any insurance procured with respect to the Borrowing Base Assets and each provider of any such insurance shall agree, by endorsement upon the policy or policies issued by it or by independent instruments furnished to the Administrative Agent, that it will give the Administrative Agent (i) thirty (30) days prior written notice before any such policy or policies shall be canceled and (ii) fifteen (15) days prior written notice before any policy or policies shall be altered; provided that to the extent a Credit Party is unable to comply with the provisions of this Section 6.07 due to a Tenant’s act or omission such violation shall not constitute a Default or Event of Default so long as the Parent Borrower delivers a new Borrowing Base Certificate removing the applicable Borrowing Base Asset within ten (10) Business Days of a Responsible Officer of the Parent Borrower becoming aware of such violation.

6.08 Maintenance of Property .

In addition to the requirements of any of the other Credit Documents, the Borrowers shall (a) protect and preserve, or cause to be protected and preserved all Borrowing Base Assets and maintain, or cause to be maintained, in good repair, working order and condition all Borrowing Base Assets, ordinary wear and tear excepted, in accordance with applicable Facility Leases and (b) from time to time make, or cause to be made, all needed and appropriate repairs, renewals, replacements and additions to such Borrowing Base Assets, so that the business carried on in connection therewith may be properly and advantageously conducted at all times in accordance with applicable Facility Leases; provided that to the extent a Credit Party is unable to comply with the provisions of this Section 6.08 due to a Tenant’s act or omission such violation shall not constitute a Default or Event of Default so long as the Parent Borrower delivers a new Borrowing Base Certificate removing the applicable Borrowing Base Asset within ten (10) Business Days of a Responsible Officer of the Parent Borrower becoming aware of such violation.

6.09 Visits and Inspections .

The Credit Parties (subject to applicable Facility Leases), shall permit representatives and independent contractors of the Administrative Agent and each Lender to: (a) visit and inspect all Borrowing Base Assets to the extent any such right to visit or inspect is within the control of such Person; (b) inspect and make extracts from their respective books and records, including but not limited to management letters prepared by independent accountants; and (c) discuss with its principal officers, and its independent accountants, its business, properties, condition (financial or otherwise), results of operations and performance. If requested by the Administrative Agent, the applicable Credit Party shall execute an authorization letter addressed to its accountants authorizing the Administrative Agent or any Lender to discuss the financial affairs of such Credit Party with its accountants.

6.10 Use of Proceeds .

The Borrowers shall use the proceeds of any Extension of Credit for general corporate purposes not in contravention of any Law or of any Credit Document, including, but not limited to the acquisition of Healthcare Facilities or companies owning Healthcare Facilities, funding working capital, dividends and capital expenditures (it being understood and agreed that no Borrower shall use such proceeds, whether directly or indirectly, and whether immediately, incidentally or ultimately, to purchase or carry margin stock (within the meaning of Regulation U of the FRB) or to extend credit to others for the purpose of purchasing or carrying margin stock or to refund indebtedness originally incurred for such purpose).

6.11 Financial Covenants .

(a) Consolidated Leverage Ratio . The Credit Parties shall cause the Consolidated Leverage Ratio, as of the end of each fiscal quarter, to be equal to or less than:


Fiscal Year	March 31	June 30	September 30	December 31
2010	N/A	N/A	N/A	6.25 to 1.0
2011	6.25 to 1.0	6.25 to 1.0	6.25 to 1.0	6.25 to 1.0
2012	5.75 to 1.0	5.75 to 1.0	5.75 to 1.0	5.75 to 1.0
2013 and thereafter	5.50 to 1.0	5.50 to 1.0	5.50 to 1.0	5.50 to 1.0

(b) Consolidated Fixed Charge Coverage Ratio . The Credit Parties shall cause the Consolidated Fixed Charge Coverage Ratio, as of the end of each fiscal quarter, to be equal to or greater than 1.75 to 1.00.

(c) Consolidated Tangible Net Worth . The Credit Parties shall cause the Consolidated Tangible Net Worth as of the end of each fiscal quarter to be equal to or greater than the sum of (i) an amount equal to $162,000,000 plus (ii) an amount equal to 85% of the net cash proceeds received by the Consolidated Parties from Equity Transactions during the period following the Closing Date and ending as of the last day of the fiscal quarter for which such calculation is being performed.

(d) Distribution Limitation . The Credit Parties shall cause the aggregate cash distributions to the REIT Guarantor’s shareholders made by the REIT Guarantor during the four (4) fiscal quarter period ending as of the end of each fiscal quarter to be equal to or less than ninety-five percent (95%) of the aggregate cumulative Funds From Operations accrued during such four (4) fiscal quarter period (or such greater amount as is required for the REIT Guarantor to maintain REIT status) (it being understood that, notwithstanding anything to the contrary contained in this Section 6.11(d), the REIT Guarantor may (i) distribute to the REIT Guarantor’s shareholders any and all cash proceeds received by the REIT Guarantor in connection with any issuance or sale of shares of its Capital Stock and (ii) make unlimited distributions to the REIT Guarantor’s shareholders payable solely in the form of common stock of the REIT Guarantor).

(e) Investments of REIT Guarantor and its Subsidiaries . The REIT Guarantor shall cause the sum of (a) the aggregate book value (on a GAAP basis) of Investments by the REIT Guarantor and its Subsidiaries in land (exclusive of any land which is included in a Facility Lease), development, unconsolidated joint ventures, mortgage loans or loans to tenants or operators (each a “ Non-Core Investment ”) minus (b) the aggregate amount of Indebtedness secured by such Non-Core Investment (including, in any event, a pro rata share of the foregoing attributable to interests in joint ventures) to at all times be less than an amount equal to 20% of Consolidated Tangible Net Worth.

6.12 Environmental Matters .

(a) Each of the Credit Parties shall comply or shall cause Tenant to comply with all Environmental Laws in respect of the Borrowing Base Assets. The Credit Parties shall promptly take all actions necessary to prevent the imposition of any Liens on any of the Borrowing Base Assets arising out of or related to any Environmental Laws.

(b) In respect of any Borrowing Base Asset, if any Credit Party shall (i) receive notice that any violation of any Environmental Law may have been committed or is about to be committed by such Person, (ii) receive notice that any administrative or judicial complaint or order has been filed or is about to be filed against any Credit Party alleging violations of any Environmental Law or requiring any such Person to take any action in connection with the release of any Hazardous Substance or (iii) receive any notice from a Governmental Authority or private party alleging that any such Person may be liable or responsible for costs associated with a response to or cleanup of a release of a Hazardous Substance or any damages caused thereby, the Credit Parties shall provide the Administrative Agent with a copy of such notice within ten (10) days after the receipt thereof by such Credit Party. To the extent requested by the Administrative Agent, any Borrower owning any Borrowing Base Asset or any Real Property Asset which is proposed for qualification as such shall execute and deliver to the Administrative Agent an environmental indemnity agreement with respect to thereto in form and substance acceptable to the Administrative Agent.

(c) At the request of the Required Lenders from time to time, in the event the Required Lenders have a reasonable basis to believe that Hazardous Materials in violation of Environmental Laws are present on any Borrowing Base Assets or to the extent a Default or Event of Default has occurred and is continuing, provide to the Lenders within 60 days after such request, at the expense of the Borrowers, an environmental site assessment report for any Borrowing Base Asset described in such request, prepared by an environmental consulting firm acceptable to the Administrative Agent, indicating the presence or absence of Hazardous Materials and the estimated cost of any compliance or required removal or remedial action in connection with any Hazardous Materials on such Borrowing Base Asset to cause such property to be in compliance with Environmental Laws; without limiting the generality of the foregoing, if the Administrative Agent determines at any time that a material risk exists that any such report will not be provided within the time referred to above, the Administrative Agent may retain an environmental consulting firm to prepare such report at the expense of the Credit Parties, and the Credit Parties hereby grant and agree to cause any Subsidiary that owns any property described in such request to grant at the time of such request to the Administrative Agent, the Lenders,

such firm and any agents or representatives thereof an irrevocable non-exclusive license, subject to the rights of tenants, to enter onto their respective properties to undertake such an assessment.

Notwithstanding the foregoing, to the extent a Credit Party is unable to comply with the provisions of this Section 6.12 due to a Tenant’s act or omission such violation shall not constitute a Default or Event of Default so long as the Parent Borrower delivers a new Borrowing Base Certificate removing the applicable Borrowing Base Asset within ten (10) Business Days of a Responsible Officer of the Parent Borrower becoming aware of such violation.

6.13 REIT Status .

Upon timely filing (taking into account any valid extensions) of the 2011 tax returns and, at all times thereafter, the REIT Guarantor will, and will cause each of its Subsidiaries to, operate its business at all times so as to satisfy all requirements necessary to qualify and maintain the REIT Guarantor’s qualification as a real estate investment trust under Sections 856 through 860 of the Internal Revenue Code. The REIT Guarantor will maintain adequate records so as to comply with all record-keeping requirements relating to its qualification as a real estate investment trust as required by the Internal Revenue Code and applicable regulations of the Department of the Treasury promulgated thereunder and will properly prepare and timely file (taking into account any valid extensions) with the Internal Revenue Service all returns and reports required thereby.

6.14 Joinder as Borrower; Joinder as Guarantor .

(a) As a condition to the inclusion of any Borrowing Base Asset in the Borrowing Base Amount, the Credit Parties shall (i) cause such Subsidiary to become a Borrower hereunder through the execution and delivery to the Administrative Agent of a Borrower Joinder Agreement on or before the earlier of (A) the date on which a Real Property Asset owned by such Subsidiary is included in any calculation (pro forma or otherwise) of the Borrowing Base Amount and (B) the deadline for the delivery of the next Compliance Certificate pursuant to Section 6.02(a) ), and (ii) cause such Subsidiary to deliver such other documentation as the Administrative Agent may reasonably request in connection with the foregoing, including, without limitation, certified resolutions and other organizational and authorizing documents of such Subsidiary, favorable opinions of counsel to such Subsidiary (which shall cover, among other things, the legality, validity, binding effect and enforceability of the documentation referred to above), all in form, content and scope reasonably satisfactory to the Administrative Agent. Notwithstanding the foregoing, no such Subsidiary may become a Borrower in accordance with the terms of this clause (a) unless and until the Lenders have received from the Borrowers any such documentation and other information requested by the Administrative Agent or any Lender pursuant to Section 10.19 .

(b) Upon the acquisition, incorporation or other creation of any other direct or indirect Subsidiary of the REIT Guarantor (other than (i) a Subsidiary which owns or is to own a Borrowing Base Asset, which shall be governed pursuant to clause (a) above, (ii) an Unrestricted Subsidiary, (iii) a Subsidiary that is not, as of the Funding Date, a Guarantor hereunder and (iv) a

Subsidiary that is not required, by the provisions of this Agreement (including Section 11.08 ), to be a Guarantor hereunder), the Credit Parties shall (i) cause such Subsidiary to become a Subsidiary Guarantor hereunder through the execution and delivery to the Administrative Agent of a Subsidiary Guarantor Joinder Agreement within thirty (30) days of the acquisition, incorporation or creation of such Subsidiary, and (ii) cause such Subsidiary to deliver such other documentation as the Administrative Agent may reasonably request in connection with the foregoing, including, without limitation, certified resolutions and other organizational and authorizing documents of such Subsidiary.

(c) The Borrowers shall at all times subject all Borrowing Base Assets and all of their respective personal property to first priority Liens (subject in any case to Permitted Liens) in favor of the Administrative Agent to secure the Obligations pursuant to the terms and conditions of the Credit Documents and such other additional security documents as the Administrative Agent shall reasonably request, and deliver all Borrowing Base Deliverables (and any updates to any of the information or materials delivered as a portion thereof) and such other documentation as the Administrative Agent may reasonably request in connection with the foregoing, all in form, content and scope reasonably satisfactory to the Administrative Agent. In furtherance of the Borrowers’ obligations under this Section 6.14 , each of the Borrowers hereby agree that they shall, from time to time, at their own expense, promptly execute, deliver, file and/or record all further instruments and documents, and take all further action, that may be necessary, or that the Administrative Agent may reasonably request (including, without limitation, the procurement of landlord consents with respect to the assignment of the applicable Borrower’s interests in any Borrowing Base Assets), in order to (a) properly evidence the Borrowers’ Obligations hereunder or under any Credit Document or (b) perfect, continue and protect the Liens and security interests granted or purported to be granted by any Collateral Documents and to enable the Administrative Agent to exercise and enforce its rights and remedies hereunder and under any other Credit Document with respect to any Collateral. The applicable Borrower(s) shall promptly deliver to the Administrative Agent a copy of each such instrument and evidence of its proper filing or recording, as necessary.

6.15 Further Assurances .

Each Credit Party shall, promptly upon request by the Administrative Agent, or any Lender through the Administrative Agent, (a) correct any material defect or error that may be discovered in any Credit Document or in the execution, acknowledgment, filing or recordation thereof, and (b) do, execute, acknowledge, deliver, record, re-record, file, re-file, register and re-register any and all such further acts, deeds, certificates, assurances and other instruments as the Administrative Agent, or any Lender through the Administrative Agent, may reasonably require from time to time in order to (i) carry out more effectively the purposes of the Credit Documents, (ii) perfect and maintain the validity, effectiveness and priority of any of the Collateral Documents and any of the Liens intended to be created thereunder and (iii) assure, convey, grant, assign, transfer, preserve, protect and confirm more effectively unto the Administrative Agent the rights granted or now or hereafter intended to be granted to the Administrative Agent under any Credit Document or under any other instrument executed in connection with any Credit Document to which any Credit Party is or is to be a party.

6.16 Compliance With Facility Leases .

Each Borrower shall perform and observe, in all material respects, all the terms and provisions of each Facility Lease to be performed or observed by it, maintain each such Facility Lease in full force and effect, use its commercially reasonable efforts to enforce, in all material respects, each such Facility Lease in accordance with its terms, take all such action to such end as may be from time to time reasonably requested by the Administrative Agent and, upon request of the Administrative Agent, make to each other party to each such Facility Lease such demands and requests for material information and reports or for material action as any Borrower is entitled to make under such Facility Lease.

6.17 Appraisals .

The Borrowers agree that (a) new appraisals will be required in conjunction with any extension granted pursuant to Section 2.18 , (b) the Administrative Agent shall have the right, once prior to the Maturity Date (but to the extent no Default or Event of Default has occurred and is continuing, not during the six (6) month period immediately prior to the Maturity Date), to request appraisals with respect to the Borrowing Base Assets and (c) the Parent Borrower may request that the Administrative Agent initiate a new appraisal at any time subject to the terms of this Section 6.17 . The Administrative Agent shall engage all appraisers with respect to such appraisals and that the Borrowers shall pay or reimburse to the Administrative Agent all reasonable and documented costs and expenses associated therewith to the extent required by and subject to the provisions of Section 10.04 hereof.

6.18 Borrowing Base Certificates; Facility Leases .

(a) A Responsible Officer of the Parent Borrower or the REIT Guarantor shall deliver an updated Borrowing Base Certificate upon (i) any amendment to any Facility Lease to the extent permitted by Section 7.11 hereof and (ii) any material casualty or condemnation event, in either case, to the extent that such amendment or casualty event or condemnation event has had, or could reasonably be expected to have, an effect (other than a de minimus effect) on the then applicable Borrowing Base Amount or eligibility of a Real Property Asset as a Borrowing Base Asset.

(b) The Borrowers shall perform and observe in all material respects, all the terms and provisions of each Facility Lease to be performed or observed by it.

ARTICLE VII

NEGATIVE COVENANTS

The Borrowers hereby covenant and agree (on their own behalf and on behalf of the Subsidiary Guarantors and/or Parent, as applicable) that until the Obligations, together with interest, fees and other obligations hereunder, have been paid in full and the Revolving Commitments hereunder shall have terminated:

7.01 Liens .

No Borrower (other than the Parent Borrower) shall, at any time, create, incur, assume or suffer to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired, or sign or file or suffer to exist under the Uniform Commercial Code of any jurisdiction a financing statement that names any Borrower as debtor, or assign any accounts or other right to receive income, other than other than Permitted Liens. The REIT Guarantor shall not create any Lien upon the Capital Stock of the Parent Borrower owned by the REIT Guarantor and the Parent Borrower shall not create any Lien upon the Capital Stock of the Borrowers.

7.02 Indebtedness of the Borrowers (other than the Parent Borrower) .

No Borrower (other than the Parent Borrower) shall create, incur, assume or suffer to exist any Indebtedness, except:

(a) Indebtedness under the Credit Documents;

(b) Indebtedness of the Borrowers set forth in Schedule 7.02 (and renewals, refinancings and extensions thereof); provided that (i) the amount of such Indebtedness is not increased at the time of such refinancing, refunding, renewal or extension except by an amount equal to a reasonable premium or other reasonable amount paid, and fees and expenses reasonably incurred, in connection with such refinancing and by an amount equal to any existing commitments unutilized thereunder and capitalized interest or reserves relating thereto and (ii) the terms relating to principal amount, amortization, maturity, collateral (if any) and subordination (if any), and other material terms taken as a whole, of any such refinancing, refunding, renewing or extending Indebtedness, and of any agreement entered into and of any instrument issued in connection therewith, are no less favorable in any material respect to the Borrowers or the Lenders than the terms of any agreement or instrument governing the Indebtedness being refinanced, refunded, renewed or extended and the interest rate applicable to any such refinancing, refunding, renewing or extending Indebtedness does not exceed the then applicable market interest rate;

(c) unsecured intercompany Indebtedness of any Borrower to any Credit Party; provided, that such Indebtedness be expressly subordinated in all respects to the Obligations on terms reasonably acceptable to the Administrative Agent;

(d) obligations (contingent or otherwise) of any Borrower or any Subsidiary thereof existing or arising under any Swap Contract, provided that (i) such obligations are (or were) entered into by such Person in the ordinary course of business for the purpose of directly mitigating risks associated with liabilities, commitments, investments, assets, or property held or reasonably anticipated by such Person, or changes in the value of securities issued by such Person (whether from floating to fixed rate interest or fixed to floating rate interest), and not for purposes of speculation or taking a “market view;” and (ii) such Swap Contract does not contain any provision exonerating the non-defaulting party from its obligation to make payments on outstanding transactions to the defaulting party;

(e) Indebtedness of the Borrowers arising solely from unsecured guarantees of Indebtedness of the Parent Borrower pursuant to any public or private debt offering (including, without limitation the Sabra Senior Notes and any additional senior or subordinated note issuance, convertible debentures, or similar public or private issuance, but specifically excluding any bank credit facility or similar debt facility);

(f) other (i) unsecured Indebtedness and (ii) purchase money Indebtedness (including obligations in respect of Capital Leases or Synthetic Leases) hereafter incurred to finance the purchase of fixed assets, and renewals, refinancings and extensions thereof, provided that such Indebtedness when incurred shall not exceed the purchase price of the asset(s) financed, in an aggregate principal amount for all such Indebtedness incurred pursuant to clauses (i) and (ii) above not to exceed $1,000,000 in the aggregate for all Borrowers at any one time outstanding;

(g) Indebtedness consisting of obligations to pay insurance premiums incurred in the ordinary course of business

(h) Indebtedness in respect of workers’ compensation claims, self-insurance obligations, indemnities, bankers’ acceptances, performance, completion and surety bonds or guarantees and similar types of obligations in the ordinary course of business;

(i) Indebtedness represented by cash management obligations and other obligations in respect of netting services, automatic clearinghouse arrangements, overdraft protections and similar arrangements in each case in connection with deposit accounts; and

(j) Guarantees with respect to Indebtedness permitted under clauses (a) through (e) of this Section 7.02 .

7.03 Secured Indebtedness of the REIT Guarantor and its Subsidiaries .

The covenant limiting the ability of the REIT Guarantor and certain of its Subsidiaries to incur secured indebtedness (and exceptions to such incurrence limitation) set forth in Section 4.08(b) and (d) of the Sabra Senior Note Indenture as in effect on the Closing Date hereof, shall be incorporated herein by reference in its entirety with the same effect as if set forth in full herein (with the defined terms used therein, including defined terms used in other defined terms, having the meanings assigned to them in the Sabra Senior Note Indenture) (the “ Incorporated Covenant ”). The Borrowers hereunder further covenant and agree that the Incorporated Covenant shall be as binding on the Borrowers as if set forth fully herein, provided that (i) the Incorporated Covenant shall run in favor of the Lenders hereunder (rather than the noteholders under the Sabra Senior Note Indenture), (ii) in the event of the amendment or modification of the covenant contained in Section 4.08(b) or (d) of the Sabra Senior Note Indenture, the Incorporated Covenant shall be as in effect immediately prior to such amendment or modification, unless the Required Lenders consent to such amendment or modification of the terms hereof, and (iii) in the event that the Sabra Senior Notes shall be refinanced, repaid, terminated or replaced by other senior notes, the Incorporated Covenant shall be as in effect immediately prior to such refinancing or replacement.

7.04 Investments of Borrowers (other than the Parent Borrower) .

No Borrower (other than the Parent Borrower) shall make any Investments, except:

(a) Investments held by any Borrower in the form of cash or Cash Equivalents;

(b) Investment in (i) any other Credit Party (other than the Subsidiary Guarantors) and (ii) any Subsidiary consisting of the transfer to such Subsidiary of Real Property Assets that do not constitute Borrowing Base Assets;

(d) Guarantees permitted by Section 7.02 ;

(e) acquisitions of personal property in the ordinary course of business to the extent required to continue to operate the Borrowers’ Businesses in the manner in which they are currently being operated;

(f) Investments in Real Property Assets;

(g) payroll, travel and similar advances to cover matters that are expected at the time of such advances ultimately to be treated as expenses in accordance with GAAP;

(h) Investments received in satisfaction of judgments or in settlements of debt or compromises of obligations incurred in the ordinary course of business;

(i) any Investment consisting of prepaid expenses, negotiable instruments held for collection and lease, endorsements for deposit or collection in the ordinary course of business, utility or workers compensation, performance and similar deposits entered into as a result of the operations of the business in the ordinary course of business;

(j) pledges or deposits by a Person under workers compensation laws, unemployment insurance laws or similar legislation, or deposits in connection with bids, tenders, contracts (other than for the payment of Indebtedness) or leases to which such Person is a party, or deposits as security for contested taxes or import duties or for the payment of rent, in each case incurred in the ordinary course of business

(k) Investments of a nature not contemplated in the foregoing clauses in an amount not to exceed $1,000,000 in the aggregate for all Borrowers at any time outstanding.

7.05 [ Reserved] .

7.06 Fundamental Changes .

Except as contemplated by the Transactions on or prior to the Funding Date, no Credit Party shall merge, dissolve, liquidate, consolidate with or into another Person; except that so long

as no Default or Event of Default exists or would result therefrom, (a) any Borrower may merge or consolidate with any other Borrower, (b) any Consolidated Party (including any Unrestricted Subsidiary) which is not a Credit Party may be merged or consolidated with or into any Credit Party provided that either such Credit Party shall be the continuing or surviving corporation or the continuing or surviving corporation shall become a Credit Party as herein provided, (c) any Subsidiary Guarantor may be merged or consolidated with or into any other Subsidiary Guarantor and (d) any Subsidiary Guarantor may dissolve, liquidate or wind up its affairs at any time provided that such dissolution, liquidation or winding up, as applicable, could not reasonably be expected to have a Material Adverse Effect.

7.07 Dispositions .

The Borrowers (other than the Parent Borrower) shall not make any sale, lease, transfer or other disposition of (i) any Borrowing Base Asset, except to the extent permitted pursuant to Section 9.11 hereof; or (ii) any other material assets of the Borrowers unless (A) such sale, lease, transfer or other disposition is performed in the ordinary course of the Borrowers’ Business, (B) such transaction consists of a sale, lease, transfer or other disposition by a Borrower of Real Property Assets (not constituting Borrowing Base Assets) to a Subsidiary of such Borrower or (C) the consideration paid in connection with such other material assets (1) is in cash or Cash Equivalents, (2) is in an amount not less than the fair market value of the Property disposed of and (3) does not exceed, in the aggregate during any calendar year (for the all Borrowers and all such sales, leases, transfers or other dispositions) $500,000. The Parent Borrower shall not, in any case, transfer, sell, lease, pledge or otherwise dispose of the Capital Stock of the Borrowers held by it without the prior written consent of the Administrative Agent (which consent may be granted or withheld in the sole discretion of the Administrative Agent).

7.08 Business Activities .

No Borrower shall engage, directly or indirectly, in any business activities other than owning, developing, managing and providing secured financing for real and personal property and similar interests in leasehold properties which are owned by or net leased to healthcare operators for use as Healthcare Facilities.

7.09 Transactions with Affiliates and Insiders .

Except as contemplated by the Separation Documents and except as permitted pursuant to Section 7.04(b)(ii) and clause (ii)(B) of Section 7.07 hereof, no Borrower shall, at any time, enter into any transaction of any kind with any Affiliate of any Borrower, whether or not in the ordinary course of business, other than on fair and reasonable terms substantially as favorable to such Borrower as would be obtainable by such Borrower at the time in a comparable arm’s length transaction with a Person other than an Affiliate.

7.10 Organization Documents; Fiscal Year .

No Credit Party shall (a) amend, modify or change, in any material respect, its organization documents or (b) change its fiscal year.

7.11 Modifications to Facility Leases .

The Borrowers (other than the Parent Borrower) shall not, without the prior written consent of the Required Lenders enter into any material amendment or modification or cancel or terminate any Facility Lease prior to its stated maturity. Notwithstanding the foregoing, the Borrowers may amend or modify or permit the amendment or modification of any Facility Lease without the Required Lenders’ prior written consent, except to the extent such amendment or modification: (i) decreases the rent or any other monetary obligations under any Facility Lease (except as set forth in the proviso to this sentence); (ii) shortens the term of any Facility Lease; (iii) releases or limits the liability of any guarantor under any Facility Lease; (iv) releases any security deposits or letters of credit or any other security or collateral under any Facility Lease; (v) consents to the assignment, delegation or other transfer of rights and obligations under any Facility Lease; or (vi) makes any other material change to the terms and conditions of any Facility Lease or increases in any material respect the obligations or liabilities of the applicable Borrower thereunder; provided , however , that to the extent such amendment, modification or restructuring of a Facility Lease involves the replacement of a Tenant, (A) the Borrowers shall have delivered to the Lenders and the Administrative Agent the (1) identity of such proposed new tenant (the “ New Tenant ”), (2) the proposed lease with such New Tenant (the “ New Lease ”) and (3) such other information as reasonably requested and (B) provided that (1) such New Tenant is an Eligible Tenant, (2) the New Lease provides for rent payments in each year which are at least eighty percent (80%) of the rent payments in each year due under the lease being amended, modified or replaced (the “ Existing Facility Lease ”) and (3) the New Lease is otherwise substantially similar in all material respects to the Existing Facility Lease, then within fifteen (15) Business Days after receiving the foregoing information from the Borrowers, if the Required Lenders have not either approved or disapproved such proposal, the Required Lenders shall be deemed to have approved such proposal.

7.12 Ownership of Subsidiaries .

Notwithstanding any other provisions of this Credit Agreement to the contrary, (a) no Borrower (other than the Parent Borrower) shall own any Capital Stock of any other entity; (b) no Person other than the Parent Borrower shall own any Capital Stock of any Borrower; and (c) no Borrower shall permit, create, incur, assume or suffer to exist any Lien on any Capital Stock of any Borrower (in the case of the Parent Borrower, only to the extent of the Capital Stock owned by the REIT Guarantor).

7.13 No Further Negative Pledges .

No Borrower will enter into, assume or become subject to any Negative Pledges or agreement prohibiting or otherwise restricting the existence of any Lien upon any of its Property in favor of the Administrative Agent (for the benefit of the Lenders) for the purpose of securing the Obligations, whether now owned or hereafter acquired, or requiring the grant of any security for any obligation if such Property is given as security for the Obligations, except (a) in connection with any Permitted Lien or any document or instrument governing any Permitted Lien, provided that any such restriction contained therein relates only to the asset or assets

100

subject to such Permitted Lien, (b) pursuant to customary restrictions and conditions contained in any agreement relating to the sale of any Property permitted under Section 7.05 or Section 7.07 , pending the consummation of such sale and (c) restrictions arising in connection with the Sabra Senior Notes.

7.14 Limitation on Restricted Actions .

The Borrowers (other than the Parent Borrower) will not directly or indirectly, create or otherwise cause or suffer to exist or become effective any encumbrance or restriction on the ability of any such Person to (a) pay dividends or make any other distributions to the REIT Guarantor on its Capital Stock or with respect to any other interest or participation in, or measured by, its profits, (b) pay any Indebtedness or other obligation owed to any Credit Party, (c) make loans or advances to any Credit Party, (d) sell, lease or transfer any of its properties or assets to any Credit Party, or (e) act as a Borrower and pledge its assets pursuant to the Credit Documents or any renewals, refinancings, exchanges, refundings or extension thereof, except (in respect of any of the matters referred to in clauses (a)-(d) above) for such encumbrances or restrictions existing under or by reason of (i) this Credit Agreement and the other Credit Documents, (ii) applicable Law, (iii) any Lien or any documentation or instrument governing any Lien permitted under Section 7.01 provided that any such restriction contained therein relates only to the asset or assets subject to such Lien, (v) customary restrictions and conditions contained in any agreement relating to the sale of any Borrowing Base Assets permitted under Section 7.05 or Section 7.07 , pending the consummation of such sale, or (vi) the Sabra Senior Note Indenture.

7.15 Accounting Changes .

No Borrower shall make any change in (a) accounting policies or reporting practices, except as required by GAAP, or (b) fiscal year.

ARTICLE VIII

EVENTS OF DEFAULT AND REMEDIES

8.01 Events of Default .

Any of the following shall constitute an Event of Default:

(a) Non-Payment . The Borrowers or any other Credit Party fails to pay (i) when and as required to be paid herein, any amount of principal of any Loan or any L/C Obligation, (ii) within three (3) Business Days after the same becomes due, any interest on any Loan or on any L/C Obligation, or any fee due hereunder, or (iii) within five (5) Business Days after the earlier of (A) a Responsible Officer of any Credit Party becoming aware that the same has not been paid when due or (B) written notice from the Administrative Agent to the Borrowers, any other fee payable herein or any other amount payable herein or under any other Credit Document becomes due; or

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(b) Specific Covenants . The Borrowers (or Credit Parties, as applicable) fail to perform or observe any term, covenant or agreement contained in any of Sections 6.03 , 6.06 , 6.10 , 6.11 , 6.14 , or 6.18 or Article VII ; or

(c) Other Defaults . (i) The Borrowers (or Credit Parties, as applicable) fail to perform or observe any term, covenant or agreement contained in any of Sections 6.01 or 6.02 and such failure continues for five (5) days or (ii) any Credit Party fails to perform or observe any other covenant or agreement (not specified in subsection (a), (b) or (c)(i) above) contained in any Credit Document on its part to be performed or observed and such failure continues for thirty (30) days after the earlier of (i) a Responsible Officer of the REIT Guarantor or any Borrower becoming aware of such default or (ii) written notice thereof by the Administrative Agent to the Parent Borrower (or, if such failure cannot be reasonably cured within such period, sixty (60) days, so long as the applicable Credit Party has diligently commenced such cure and is diligently pursuing completion thereof); or

(d) Representations and Warranties . Any representation, warranty, certification or statement of fact made or deemed made by the Credit Parties and contained in this Credit Agreement, in any other Credit Document, or in any document delivered in connection herewith or therewith shall be incorrect or misleading in any material respect when made or deemed made; or

(e) Cross-Default . (i) any Credit Party fails to perform or observe (beyond the applicable notice and grace or cure period with respect thereto, if any) any Contractual Obligation if such failure could reasonably be expected to have a Material Adverse Effect, or (ii) any Borrower or the REIT Guarantor fails to make any payment when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise and beyond the applicable notice and grace or cure period with respect thereto, if any) in respect of any Indebtedness (other than Indebtedness hereunder and Indebtedness under Swap Contracts) or otherwise fails to observe or perform any other agreement or condition relating to any such Indebtedness or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event occurs, the effect of which default or other event is to cause, or to permit the holder or holders of such Indebtedness (or a trustee or agent on behalf of such holder or holders) to cause, with the giving of notice if required, such Indebtedness to be demanded or to become due or to be repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an offer to repurchase, prepay, defease or redeem such Indebtedness to be made, prior to its stated maturity, or cash collateral in respect thereof to be demanded, in each case to the extent such Indebtedness or other obligation is in an amount (including undrawn committed or available amounts and including amounts owing to all creditors under any combined or syndicated credit arrangement) of more than the Threshold Amount; or (iii) there occurs under any Swap Contract an Early Maturity Date (as defined in such Swap Contract) resulting from (A) any event of default under such Swap Contract as to which a Borrower or the REIT Guarantor is the Defaulting Party (as defined in such Swap Contract) after expiration of any applicable notice and grace or cure periods or (B) any Termination Event (as so defined) under such Swap Contract as to which a Borrower or the REIT Guarantor is an Affected Party (as so defined) and, in either event, the Swap Termination Value owed by such Borrower as a result thereof is greater than the Threshold Amount; or

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(f) Insolvency Proceedings, Etc . Any Credit Party institutes or consents to the institution of any proceeding under any Debtor Relief Law, or makes an assignment for the benefit of creditors; or applies for or consents to the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer for it or for all or any material part of its properties; or any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer is appointed without the application or consent of such Credit party and the appointment continues undischarged or unstayed for sixty (60) calendar days; or any proceeding under any Debtor Relief Law relating to any Credit Party or to all or any material part of its property is instituted without the consent of such Credit Party and continues undismissed or unstayed for sixty (60) calendar days, or an order for relief is entered in any such proceeding and, in any case with respect to the Subsidiary Guarantors only, such action could reasonably be expected to have a Material Adverse Effect; or

(g) Inability to Pay Debts; Attachment . (i) Any Credit Party becomes unable or admits in writing its inability or fails generally to pay its debts as they become due, or (ii) any writ or warrant of attachment or execution or similar process is issued or levied against all or any material part of the properties of any Credit Party and is not released, vacated or fully bonded within thirty (30) days after its issue or levy and, in any case with respect to the Subsidiary Guarantors only, such action could reasonably be expected to have a Material Adverse Effect; or

(h) Judgments . There is entered against any Credit Party (i) any one or more final judgments or orders for the payment of money in an aggregate amount (as to all such judgments or orders) exceeding (A) with respect to the Borrowers and the REIT Guarantor, the Threshold Amount (to the extent not covered by independent third-party insurance as to which the insurer has been notified of the claim and does not dispute coverage) and (B) with respect to the Subsidiary Guarantors, an amount that could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, or (ii) any one or more non-monetary final judgments that have, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect and, in either case, (A) enforcement proceedings are commenced by any creditor upon such judgment or order, or (B) there is a period of ten (10) consecutive days during which a stay of enforcement of such judgment, by reason of a pending appeal or otherwise, is not in effect; or

(i) ERISA . (i) An ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan which has resulted or could reasonably be expected to result in liability of a Borrower or the REIT Guarantor under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess of the Threshold Amount, or (ii) a Borrower or the REIT Guarantor or any ERISA Affiliate fails to pay when due, after the expiration of any applicable notice and grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in excess of the Threshold Amount; or

(j) Invalidity of Credit Documents; Guaranty . (i) Any Credit Document, at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or as a result of satisfaction in full of all the Obligations or as a result of the Administrative Agent’s

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failure to record and/or file where and/or when appropriate any Collateral Documents or any continuation statements, ceases to be in full force and effect; or any Credit Party contests in any manner the validity or enforceability of any Credit Document; or any Credit Party denies that it has any or further liability or obligation under any Credit Document, or purports to revoke, terminate or rescind any Credit Document; (ii) except as the result of or in connection with a dissolution, merger or disposition of a Subsidiary Guarantor not prohibited by the terms of this Credit Agreement, the Guaranty shall cease to be in full force and effect, or any Guarantor hereunder shall deny or disaffirm such Guarantor’s obligations under such Guaranty, or any Guarantor shall default in the due performance or observance of any term, covenant or agreement on its part to be performed or observed pursuant to the Guaranty; or (iii) any Lien shall fail to be a first priority, perfected Lien on a material portion of the Collateral, taken as a whole; or

(k) Change of Control . There occurs any Change of Control.

8.02 Remedies Upon Event of Default .

If any Event of Default occurs and is continuing, the Administrative Agent shall, at the request of, or may, with the consent of, the Required Lenders, take any or all of the following actions:

(a) declare the commitment of each Lender to make Loans and any obligation of the L/C Issuer to make L/C Credit Extensions to be terminated, whereupon such commitments and obligation shall be terminated;

(b) declare the unpaid principal amount of all outstanding Loans, all interest accrued and unpaid thereon, and all other amounts owing or payable hereunder or under any other Credit Document to be immediately due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by the Borrowers;

(c) require that the Borrowers Cash Collateralize the L/C Obligations (in an amount equal to the then Outstanding Amount thereof); and

(d) exercise on behalf of itself and the Lenders all rights and remedies available to it and the Lenders under the Credit Documents;

provided, however, that upon the occurrence of an actual or deemed entry of an order for relief with respect to any Credit Party under the Bankruptcy Code of the United States, the obligation of each Lender to make Loans and any obligation of the L/C Issuer to make L/C Credit Extensions shall automatically terminate, the unpaid principal amount of all outstanding Loans and all interest and other amounts as aforesaid shall automatically become due and payable, and the obligation of the Borrowers to Cash Collateralize the L/C Obligations as aforesaid shall automatically become effective, in each case without further act of the Administrative Agent or any Lender.

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8.03 Application of Funds .

After the exercise of remedies provided for in Section 8.02 (or after the Loans have automatically become immediately due and payable and the L/C Obligations have automatically been required to provide Cash Collateral as set forth in the proviso to Section 8.02 ), any amounts received on account of the Obligations shall be applied by the Administrative Agent in the following order:

First , to payment of that portion of the Obligations constituting fees, indemnities, expenses and other amounts (other than principal and interest but including Attorney Costs and amounts payable under Article III ) payable to the Administrative Agent in its capacity as such;

Second , to payment of that portion of the Obligations constituting fees, indemnities and other amounts (other than principal and interest) payable to the Lenders (including Attorney Costs and amounts payable under Article III ), ratably among the Lenders in proportion to the amounts described in this clause Second payable to them;

Third , to payment of that portion of the Obligations constituting accrued and unpaid Letter of Credit Fees and interest on the Loans and L/C Borrowings and fees, premiums and scheduled periodic payments, and any interest accrued thereon, due under any Swap Contract between any Credit Party and any Lender, or any Affiliate of a Lender, ratably among the Lenders (and, in the case of such Swap Contracts, Affiliates of Lenders) and the L/C Issuer in proportion to the respective amounts described in this clause Third held by them;

Fourth , to (a) payment of that portion of the Obligations constituting unpaid principal of the Loans and L/C Borrowings, (b) payment of breakage, termination or other payments, and any interest accrued thereon, due under any Swap Contract between any Credit Party and any Lender, or any Affiliate of a Lender, (c) payments of amounts due under any Treasury Management Agreement between any Credit Party and any Lender, or any Affiliate of a Lender and (d) Cash Collateralize that portion of L/C Obligations comprised of the aggregate undrawn amount of Letters of Credit, ratably among the Lenders (and, in the case of such Swap Contracts, Affiliates of Lenders) and the L/C Issuer in proportion to the respective amounts described in this clause Fourth held by them; and

Last , the balance, if any, after all of the Obligations have been indefeasibly paid in full, to the Borrowers or as otherwise required by Law.

Subject to Section 2.03(c) , amounts used to provide Cash Collateral for the aggregate undrawn amount of Letters of Credit pursuant to clause Fourth above shall be applied to satisfy drawings under such Letters of Credit as they occur. If any amount remains on deposit as Cash Collateral after all Letters of Credit have either been fully drawn or expired, such remaining amount shall be applied to the other Obligations, if any, in the order set forth above.

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ARTICLE IX

ADMINISTRATIVE AGENT

9.01 Appointment and Authority .

Each of the Lenders hereby irrevocably appoints Bank of America to act on its behalf as the Administrative Agent hereunder and under the other Credit Documents and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto. The provisions of this Article are solely for the benefit of the Administrative Agent and the Lenders, and neither the Borrowers nor any other Credit Party shall have rights as a third party beneficiary of any of such provisions.

9.02 Rights as a Lender .

The Person serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as the Administrative Agent hereunder in its individual capacity. Such Person and its Affiliates may accept deposits from, lend money to, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with any Credit Party or other Affiliate thereof as if such Person were not the Administrative Agent hereunder and without any duty to account therefor to the Lenders.

9.03 Exculpatory Provisions .

The Administrative Agent shall not have any duties or obligations except those expressly set forth herein and in the other Credit Documents. Without limiting the generality of the foregoing, the Administrative Agent:

(a) shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing;

(b) shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Credit Documents that the Administrative Agent is required to exercise as directed in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Credit Documents), provided that the Administrative Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Administrative Agent to liability or that is contrary to any Credit Document or applicable law; and

(c) shall not, except as expressly set forth herein and in the other Credit Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information

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relating to any Credit Party or any of its Affiliates that is communicated to or obtained by the Person serving as the Administrative Agent or any of its Affiliates in any capacity.

Except as otherwise specifically set forth herein, the Administrative Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith shall be necessary, under the circumstances as provided in Sections 10.01 and 9.02 ) or (ii) in the absence of its own gross negligence or willful misconduct. The Administrative Agent shall be deemed not to have knowledge of any Default unless and until notice describing such Default is given to the Administrative Agent by the Borrowers or a Lender.

The Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Credit Agreement or any other Credit Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Credit Document or any other agreement, instrument or document, or the creation, perfection or priority of any Lien purported to be created by the Collateral Documents, (v) the value or the sufficiency of any Collateral, or (vi) the satisfaction of any condition set forth in Article IV or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.

9.04 Reliance by Administrative Agent .

The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to the making of a Loan, or the issuance of a Letter of Credit, that by its terms must be fulfilled to the satisfaction of a Lender, the Administrative Agent may presume that such condition is satisfactory to such Lender unless the Administrative Agent shall have received notice to the contrary from such Lender prior to the making of such Loan or the issuance of such Letter of Credit. The Administrative Agent may consult with legal counsel (who may be counsel for the Credit Parties), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

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9.05 Delegation of Duties .

The Administrative Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Credit Document by or through any one or more sub-agents appointed by the Administrative Agent. The Administrative Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties. The exculpatory provisions of this Article shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent.

9.06 Resignation of Administrative Agent .

The Administrative Agent may at any time give notice of its resignation to the Lenders and the Parent Borrower. Upon receipt of any such notice of resignation, the Required Lenders shall have the right, in consultation with the Parent Borrower, to appoint a successor, which shall be a bank with an office in the United States, or an Affiliate of any such bank with an office in the United States. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice of its resignation, then the retiring Administrative Agent may on behalf of the Lenders, appoint a successor Administrative Agent meeting the qualifications set forth above; provided that if the Administrative Agent shall notify the Parent Borrower and the Lenders that no qualifying Person has accepted such appointment, then such resignation shall nonetheless become effective in accordance with such notice and (a) the retiring Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Credit Documents (except that in the case of any collateral security held by the Administrative Agent on behalf of the Lenders under any of the Credit Documents, the retiring Administrative Agent shall continue to hold such collateral security until such time as a successor Administrative Agent is appointed) and (b) all payments, communications and determinations provided to be made by, to or through the Administrative Agent shall instead be made by or to each Lender directly, until such time as the Required Lenders appoint a successor Administrative Agent as provided for above in this Section, and such Lenders so acting shall have the benefit and protection of all provisions hereunder in favor of the Administrative Agent as if each of them were the Administrative Agent. Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring (or retired) Administrative Agent, and the retiring Administrative Agent shall be discharged from all of its duties and obligations hereunder or under the other Credit Documents (if not already discharged therefrom as provided above in this Section). The fees payable by the Borrowers to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrowers and such successor. After the retiring Administrative Agent’s resignation hereunder and under the other Credit Documents, the provisions of this Article and Section 10.04 shall continue in effect for the benefit of such retiring Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring Administrative Agent was acting as Administrative Agent.

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Any resignation by Bank of America as Administrative Agent pursuant to this Section shall also constitute its resignation as L/C Issuer and Swing Line Lender. Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, (i) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring L/C Issuer and Swing Line Lender, (ii) the retiring L/C Issuer and Swing Line Lender shall be discharged from all of their respective duties and obligations hereunder or under the other Credit Documents, and (iii) the successor L/C Issuer shall issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or make other arrangements satisfactory to the retiring L/C Issuer to effectively assume the obligations of the retiring L/C Issuer with respect to such Letters of Credit.

9.07 Non-Reliance on Administrative Agent and Other Lenders .

Each Lender acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Credit Agreement. Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Credit Agreement, any other Credit Document or any related agreement or any document furnished hereunder or thereunder.

9.08 No Other Duties; Etc .

Anything herein to the contrary notwithstanding, none of the bookrunners, arrangers, syndication agents, documentation agents or co-agents shall have any powers, duties or responsibilities under this Credit Agreement or any of the other Credit Documents, except in its capacity, as applicable, as the Administrative Agent, a Lender or the L/C Issuer hereunder.

9.09 Administrative Agent May File Proofs of Claim .

In case of the pendency of any proceeding under any Debtor Relief Law or any other judicial proceeding relative to any Credit Party, the Administrative Agent (irrespective of whether the principal of any Loan or L/C Obligation shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Parent Borrower) shall be entitled and empowered, by intervention in such proceeding or otherwise:

(a) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans, L/C Obligations and all other Obligations arising under the Credit Documents that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders, the L/C Issuer and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders and the Administrative Agent and their respective

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agents and counsel and all other amounts due the Lenders and the Administrative Agent under Sections 2.03(i) , 2.09 and 10.04 ) allowed in such judicial proceeding; and

(b) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender to make such payments to the Administrative Agent and, if the Administrative Agent shall consent to the making of such payments directly to the Lenders, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent under Sections 2.09 and 10.04 .

Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Lender to authorize the Administrative Agent to vote in respect of the claim of any Lender in any such proceeding.

9.10 Collateral and Guaranty Matters .

The Lenders irrevocably authorize the Administrative Agent, at its option and in its discretion, to release any Lien on any property granted to or held by the Administrative Agent under any Credit Document (i) upon termination of the Aggregate Commitments and payment in full of all Obligations (other than contingent indemnification obligations) and the expiration or termination of all Letters of Credit, (ii) that is transferred or to be transferred as part of or in connection with any Disposition permitted hereunder or under any other Credit Document, any Involuntary Disposition or any release or replacement of any Borrowing Base Asset permitted in accordance with Section 9.11 , or (iii) as approved in accordance with Section 10.01.

The Lenders irrevocably authorize the Administrative Agent to release any Subsidiary Guarantor (but not the REIT Guarantor) from its obligations under the Guaranty in accordance with Section 11.08. Upon request by the Administrative Agent at any time, the Required Lenders will confirm in writing the authority of the Administrative Agent to release any Subsidiary Guarantor from its obligations hereunder pursuant to this Section 9.10 .

Upon request by the Administrative Agent at any time, the Required Lenders will confirm in writing the Administrative Agent’s authority to release its interest in particular types or items of property pursuant to this Section 9.10 . Upon the release of any Subsidiary Guarantor pursuant to this Section 9.10 or Section 11.08 , the Administrative Agent shall (to the extent applicable) deliver to the Credit Parties, upon the Credit Parties’ request and at the Credit Parties’ expense, such documentation as is reasonably necessary to evidence the release of such Guarantor from its obligations under the Credit Documents.

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9.11 Addition/Removal of Borrowing Base Assets .

(a) The Borrowers may obtain releases of Borrowing Base Assets from the Liens and security interests of the Administrative Agent hereunder and under the Collateral Documents relating thereto and all Obligations hereunder and under the Collateral Documents through satisfaction of each of the following conditions:

(i) the applicable Borrower shall deliver to the Administrative Agent, not less than five (5) Business Days prior to the date of such requested release a written request for release of the applicable Borrowing Base Asset;

(ii) the applicable Borrower shall deliver, together with such request for release, a pro forma Compliance Certificate showing that, on a pro forma basis, after giving effect to such release, (A) all financial covenants contained herein shall be satisfied and (B) the outstanding principal amount of Obligations shall be less than (y) the Aggregate Committed Amount and (z) the Borrowing Base Amount (after giving effect to the removal of such Borrowing Base Asset from the calculation of the Borrowing Base Amount, if applicable, any prepayment of principal which will be made in connection with such release and any addition of any Borrowing Base Asset to occur in connection with such release);

(iii) a Responsible Officer of the REIT Guarantor, the Parent Borrower or any other Borrower shall certify in writing to the Administrative Agent that no Default or Event of Default shall exist immediately after giving effect to the applicable release, any prepayment of principal which will be made in connection with such release and any addition of any Borrowing Base Asset to occur in connection with such release;

(iv) the Administrative Agent shall have received evidence, acceptable to it in its discretion that the matters set forth in such request, Compliance Certificate and certification are true and correct in all material respects. To the extent all such conditions to release are satisfied, the Administrative Agent will, at the Borrowers’ expense, within five (5) Business Days thereafter deliver to the applicable Borrower such documentation as is reasonably necessary to evidence the release of the Administrative Agent’s security interest, if any, in the released Borrowing Base Asset(s) and release from all other Obligations; and

(v) the aggregate Collateral Value of the Borrowing Base Assets released (whether or not substituted therefore) in any fiscal year pursuant to this Section 9.12 shall not exceed $40,000,000 in the aggregate and the aggregate Collateral Value of the Borrowing Base Assets released (whether or not substituted therefore) prior to the Maturity Date shall not, in any case (and regardless of whether the $40,000,000 per year limitation is met during any given year), exceed $90,000,000 in the aggregate; and

(vi) after giving effect to any such release (x) there shall not be less than four (4) Borrowing Base Assets remaining in the Borrowing Base and (y) the Borrowing Base Amount shall not be less than $50,000,000.

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(b) The Borrowers shall deliver to the Administrative Agent, immediately upon a Responsible Officer of any Credit Party obtaining knowledge of a Borrowing Base Asset failing to qualify as such, a pro forma Borrowing Base Certificate (which certificate shall include an update to the information set forth on Schedule 5.12 ) demonstrating that, upon giving effect to the removal from the calculation of the Borrowing Base Amount of the Collateral Value or Mortgageability Amount (as applicable) attributable to such former Borrowing Base Asset, the Borrowers shall be in compliance with Section 2.01(a) hereof.

(c) The Borrowers shall not include any Real Property Asset as a Borrowing Base Asset on any schedule, Borrowing Base Certificate or Compliance Certificate delivered in connection with this Credit Agreement unless (i) such Real Property Asset meets the definition of Borrowing Base Asset and Borrowers have otherwise satisfied the requirements set forth in this Agreement and (ii) such Real Property Asset continues to qualify as a Borrowing Base Asset as of the date of such inclusion.

(d) The Borrowers may, at any time after the Closing Date, include additional Real Property Assets as Borrowing Base Assets to the extent the following conditions are satisfied:

(i) such additional Real Property Asset satisfies the requirements set forth in the definition of Borrowing Base Assets, including, without limitation, delivery of each of the Borrowing Base Asset Deliverables with respect thereto; and

(ii) receipt of a FIRREA-compliant MAI appraisal commissioned, reviewed and approved by the Administrative Agent and the Lenders with respect to such additional Real Property Asset; provided that (A) the Administrative Agent and the Lenders shall use reasonable efforts to approve or disapprove the appraisals within fifteen (15) Business Days after they are received and a failure to approve or disapprove the appraisals in such fifteen (15) Business Day period shall be deemed to mean that such appraisals are approved and (B) to the extent any such appraisal is denied approval, the Administrative Agent and the Lenders shall specify the reasons in writing to the Borrowers for such denial.

Administrative Agent hereby agrees that such Real Property Assets may be acquired through the acquisitions of direct or indirect interest in any entity holding title to such Real Property Asset(s).

ARTICLE X

MISCELLANEOUS

10.01 Amendments, Etc .

No amendment or waiver of any provision of this Credit Agreement or any other Credit Document, and no consent to any departure by the Borrower or any other Credit Party therefrom, shall be effective unless in writing signed by the Required Lenders and the Borrower or the

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applicable Credit Party, as the case may be, and acknowledged by the Administrative Agent, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided , however , that no such amendment, waiver or consent shall:

(a) extend or increase the Commitment of any Lender (or reinstate any Commitment terminated pursuant to Section 8.02 ) without the written consent of such Lender;

(b) postpone any date fixed by this Credit Agreement or any other Credit Document for any payment (excluding mandatory prepayments) of principal, interest, fees or other amounts due to the Lenders (or any of them) hereunder or under any other Credit Document without the written consent of each Lender directly affected thereby;

(c) reduce the principal of, or the rate of interest specified herein on, any Loan or L/C Borrowing, or any fees or other amounts payable hereunder or under any other Credit Document without the written consent of each Lender directly affected thereby; provided , however , that only the consent of the Required Lenders shall be necessary to amend the definition of “Default Rate” or to waive any obligation of the Borrower to pay interest or Letter of Credit Fees at the Default Rate;

(d) change Section 2.12 or Section 8.03 in a manner that would alter the pro rata sharing of payments required thereby without the written consent of each Lender;

(e) change any provision of this Section or the definition of “Required Lenders” or any other provision hereof specifying the number or percentage of Lenders required to amend, waive or otherwise modify any rights hereunder or make any determination or grant any consent hereunder without the written consent of each Lender;

(f) release all or substantially all of the Collateral in any transaction or series of related transactions without the written consent of each Lender; or

(g) release all or substantially all of the Subsidiary Guarantors from their obligations hereunder (other than as provided herein or as appropriate in connection with transactions permitted hereunder) or release the REIT Guarantor from the Guaranty;

and, provided further , that (i) no amendment, waiver or consent shall, unless in writing and signed by the L/C Issuer in addition to the Lenders required above, affect the rights or duties of the L/C Issuer under this Credit Agreement or any Issuer Document relating to any Letter of Credit issued or to be issued by it; (ii) no amendment, waiver or consent shall, unless in writing and signed by the Swing Line Lender in addition to the Lenders required above, affect the rights or duties of the Swing Line Lender under this Credit Agreement and (iii) no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent in addition to the Lenders required above, affect the rights or duties of the Administrative Agent under this Credit Agreement or any other Credit Document. Notwithstanding anything to the contrary herein, no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder, except that (x) the Commitment of any Defaulting Lender may not be

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increased or extended without the consent of such Lender and (y) any waiver, amendment or modification requiring the consent of all Lenders or each affected Lender that by its terms affects any Defaulting Lender more adversely than other affected Lenders shall require the consent of such Defaulting Lender.

10.02 Notices; Effectiveness; Electronic Communications .

(a) Notices Generally . Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in subsection (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopier as follows, and all notices and other communications expressly permitted hereunder to be given by telephone shall be made to the applicable telephone number, as follows:

(i) if to any Borrower, the Administrative Agent, the L/C Issuer or the Swing Line Lender, to the address, telecopier number, electronic mail address or telephone number specified for such Person on Schedule 10.02 ; and

(ii) if to any other Lender, to the address, telecopier number, electronic mail address or telephone number specified in its Administrative Questionnaire.

Notices and other communications sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices and other communications sent by telecopier shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next business day for the recipient). Notices and other communications delivered through electronic communications to the extent provided in subsection (b) below shall be effective as provided in such subsection (b).

(b) Electronic Communications . Notices and other communications to the Lenders hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures approved by the Administrative Agent, provided that the foregoing shall not apply to service of process or to notices to any Lender pursuant to Article II if such Lender has notified the Administrative Agent that it is incapable of receiving notices under such Article by electronic communication. The Administrative Agent or the Parent Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it, provided that approval of such procedures may be limited to particular notices or communications.

Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), provided that if such notice or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient, and (ii) notices or communications posted to an Internet or

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intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor.

(c) The Platform . THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE.” THE AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWER MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE BORROWER MATERIALS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION WITH THE BORROWER MATERIALS OR THE PLATFORM. In no event shall the Administrative Agent or any of its Related Parties (collectively, the “ Agent Parties ”) have any liability to the Credit Parties, any Lender, the L/C Issuer or any other Person for losses, claims, damages, liabilities or expenses of any kind (whether in tort, contract or otherwise) arising out of the Credit Parties’ or the Administrative Agent’s transmission of Borrower Materials through the Internet, except to the extent that such losses, claims, damages, liabilities or expenses are determined by a court of competent jurisdiction by a final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Agent Party; provided , however , that in no event shall any Agent Party have any liability to the Credit Parties, any Lender, the L/C Issuer or any other Person for indirect, special, incidental, consequential or punitive damages (as opposed to direct or actual damages).

(d) Change of Address, Etc . Each of the Credit Parties, the Administrative Agent, the L/C Issuer and the Swing Line Lender may change its address, telecopier or telephone number for notices and other communications hereunder by notice to the other parties hereto. Each other Lender may change its address, telecopier or telephone number for notices and other communications hereunder by notice to the Parent Borrower, the Administrative Agent, the L/C Issuer and the Swing Line Lender. In addition, each Lender agrees to notify the Administrative Agent from time to time to ensure that the Administrative Agent has on record (i) an effective address, contact name, telephone number, telecopier number and electronic mail address to which notices and other communications may be sent and (ii) accurate wire instructions for such Lender. Furthermore, each Public Lender agrees to cause at least one individual at or on behalf of such Public Lender to at all times have selected the “Private Side Information” or similar designation on the content declaration screen of the Platform in order to enable such Public Lender or its delegate, in accordance with such Public Lender’s compliance procedures and applicable Law, including United States Federal and state securities Laws, to make reference to Borrower Materials that are not made available through the “Public Side Information” portion of the Platform and that may contain material non-public information with respect to the Credit Parties or its securities for purposes of United States Federal or state securities laws.

(e) Reliance by Administrative Agent and Lenders . The Administrative Agent and the Lenders shall be entitled to rely and act upon any notices (including telephonic Loan Notices) purportedly given by or on behalf of the Credit Parties even if (i) such notices were not made in a

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manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein, or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof. The Credit Parties shall indemnify the Administrative Agent, each Lender and the Related Parties of each of them from all losses, costs, expenses and liabilities resulting from the reliance by such Person on each notice purportedly given by or on behalf of the Credit Parties. All telephonic notices to and other telephonic communications with the Administrative Agent may be recorded by the Administrative Agent, and each of the parties hereto hereby consents to such recording.

10.03 No Waiver; Cumulative Remedies; Enforcement .

No failure by any Lender or the Administrative Agent to exercise, and no delay by any such Person in exercising, any right, remedy, power or privilege hereunder or under any other Credit Document shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided, and provided under each other Credit Document, are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.

Notwithstanding anything to the contrary contained herein or in any other Credit Document, the authority to enforce rights and remedies hereunder and under the other Credit Documents against the Credit Parties or any of them shall be vested exclusively in, and all actions and proceedings at law in connection with such enforcement shall be instituted and maintained exclusively by, the Administrative Agent in accordance with Section 8.02 for the benefit of all the Lenders; provided , however , that the foregoing shall not prohibit (a) the Administrative Agent from exercising on its own behalf the rights and remedies that inure to its benefit (solely in its capacity as Administrative Agent) hereunder and under the other Credit Documents, (b) the L/C Issuer or the Swing Line Lender from exercising the rights and remedies that inure to its benefit (solely in its capacity as L/C Issuer or Swing Line Lender, as the case may be) hereunder and under the other Credit Documents, (c) any Lender from exercising setoff rights in accordance with Section 10.08 (subject to the terms of Section 2.12 ), or (d) any Lender from filing proofs of claim or appearing and filing pleadings on its own behalf during the pendency of a proceeding relative to any Credit Party under any Debtor Relief Law; and provided , further , that if at any time there is no Person acting as Administrative Agent hereunder and under the other Credit Documents, then (i) the Required Lenders shall have the rights otherwise ascribed to the Administrative Agent pursuant to Section 8.02 and (ii) in addition to the matters set forth in clauses (b), (c) and (d) of the preceding proviso and subject to Section 2.12 , any Lender may, with the consent of the Required Lenders, enforce any rights and remedies available to it and as authorized by the Required Lenders.

10.04 Expenses; Indemnity; Damage Waiver .

(a) Costs and Expenses . The Credit Parties shall pay (i) all reasonable out-of-pocket expenses incurred by the Administrative Agent and its Affiliates (including the reasonable fees, charges and disbursements of counsel for the Administrative Agent), in connection with the syndication of the credit facilities provided for herein, the preparation, negotiation, execution,

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delivery and administration of this Credit Agreement and the other Credit Documents or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (ii) all reasonable out-of-pocket expenses incurred by the L/C Issuer in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder and (iii) all out-of-pocket expenses incurred by the Administrative Agent or any Lender (including the fees, charges and disbursements of any counsel for the Administrative Agent or any Lender), in connection with the enforcement or protection of its rights (A) in connection with this Credit Agreement and the other Credit Documents, including its rights under this Section, or (B) in connection with Loans made or Letters of Credit issued hereunder, including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans or Letters of Credit.

(b) Indemnification by the Credit Parties . The Credit Parties shall indemnify the Administrative Agent (and any sub-agent thereof), each Lender, and each Related Party of any of the foregoing Persons (each such Person being called an “ Indemnitee ”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses (including the fees, charges and disbursements of any counsel for any Indemnitee), incurred by any Indemnitee or asserted against any Indemnitee by any third party or by any Borrower or any other Credit Party arising out of, in connection with, or as a result of (i) the execution or delivery of this Credit Agreement, any other Credit Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder or the consummation of the transactions contemplated hereby or thereby, or, in the case of the Administrative Agent (and any sub-agent thereof) and its Related Parties only, the administration of this Agreement and the other Credit Documents (including in respect of any matters addressed in Section 3.01 ), (ii) any Loan or Letter of Credit or the use or proposed use of the proceeds therefrom (including any refusal by the L/C Issuer to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), (iii) any actual or alleged presence or release of Hazardous Materials on or from any property owned or operated by any Credit Party, or any Environmental Liability related in any way to any Credit Party, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by any Borrower or any other Credit Party, and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses (x) are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee or (y) result from a claim brought by any Borrower or any other Credit Party against such Indemnitee for breach in bad faith of such Indemnitee’s obligations hereunder or under any other Credit Document, if such Borrower or such other Credit Party has obtained a final and nonappealable judgment in its favor on such claim as determined by a court of competent jurisdiction.

(c) Reimbursement by Lenders . To the extent that the Credit Parties for any reason fail to indefeasibly pay any amount required under subsection (a) or (b) of this Section to be paid by it to the Administrative Agent (or any sub-agent thereof), the L/C Issuer or any Related Party

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of any of the foregoing, each Lender severally agrees to pay to the Administrative Agent (or any such sub-agent), the L/C Issuer or such Related Party, as the case may be, such Lender’s Revolving Commitment Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount, provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent (or any such sub-agent) or the L/C Issuer in its capacity as such, or against any Related Party of any of the foregoing acting for the Administrative Agent (or any such sub-agent) or L/C Issuer in connection with such capacity. The obligations of the Lenders under this subsection (c) are subject to the provisions of Section 2.11(e) .

(d) Waiver of Consequential Damages, Etc . To the fullest extent permitted by applicable law, the Credit Parties shall not assert, and hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Credit Agreement, any other Credit Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Loan or Letter of Credit or the use of the proceeds thereof. No Indemnitee referred to in subsection (b) above shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed to such unintended recipients by such Indemnitee through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Credit Documents or the transactions contemplated hereby or thereby other than for direct or actual damages resulting from the gross negligence or willful misconduct of such Indemnitee as determined by a final and nonappealable judgment of a court of competent jurisdiction.

(e) Payments . All amounts due under this Section shall be payable not later than ten Business Days after demand therefor.

(f) Survival . The agreements in this Section shall survive the resignation of the Administrative Agent, the replacement of any Lender, the termination of the Aggregate Commitments and the repayment, satisfaction or discharge of all the other Obligations.

10.05 Payments Set Aside .

To the extent that any payment by or on behalf of the Credit Parties is made to the Administrative Agent or any Lender, or the Administrative Agent or any Lender exercises its right of set-off, and such payment or the proceeds of such set-off or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Administrative Agent or such Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Law or otherwise, then (a) to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such set-off had not occurred, and (b) each Lender severally agrees to pay to the Administrative Agent upon demand its applicable share (without duplication) of any amount so recovered from or repaid by the Administrative Agent, plus interest thereon from the date of such demand to the date such payment is made at a

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rate per annum equal to the Federal Funds Rate from time to time in effect. The obligations of the Lenders under clause (b) of the preceding sentence shall survive the payment in full of the Obligations and the termination of this Credit Agreement.

10.06 Successors and Assigns .

(a) Successors and Assigns Generally . The provisions of this Credit Agreement and the other Credit Documents shall be binding upon and inure to the benefit of the parties hereto and thereto and their respective successors and assigns permitted hereby, except that no Credit Party may assign or otherwise transfer any of its rights or obligations hereunder or thereunder without the prior written consent of the Administrative Agent and each Lender and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an assignee in accordance with the provisions of subsection (b) of this Section, (ii) by way of participation in accordance with the provisions of subsection (d) of this Section or (iii) by way of pledge or assignment of a security interest subject to the restrictions of subsection (f) of this Section (and any other attempted assignment or transfer by any party hereto shall be null and void). Nothing in this Credit Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in subsection (d) of this Section and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent, the L/C Issuer and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

(b) Assignments by Lenders . Any Lender may at any time assign to one or more assignees all or a portion of its rights and obligations under this Agreement and the other Credit Documents (including all or a portion of its Commitment and the Loans (including for purposes of this subsection (b), participations in L/C Obligations and in Swing Line Loans) at the time owing to it); provided that any such assignment shall be subject to the following conditions:

(i) Minimum Amounts .

(A) in the case of an assignment of the entire remaining amount of the assigning Lender’s Commitment and the Loans at the time owing to it or in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no minimum amount need be assigned; and

(B) in any case not described in subsection (b)(i)(A) of this Section, the aggregate amount of the Commitment (which for this purpose includes Loans outstanding thereunder) or, if the Commitment is not then in effect, the principal outstanding balance of the Loans of the assigning Lender subject to each such assignment, determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent or, if “Trade Date” is specified in the Assignment and Assumption, as of the Trade Date, shall not be less than $5,000,000 unless each of the Administrative Agent and, so long as no Event of Default has occurred and is continuing, the Parent Borrower otherwise consents (each such consent not to be unreasonably withheld or delayed); provided , however , that concurrent

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assignments to members of an Assignee Group and concurrent assignments from members of an Assignee Group to a single Eligible Assignee (or to an Eligible Assignee and members of its Assignee Group) will be treated as a single assignment for purposes of determining whether such minimum amount has been met.

(ii) Proportionate Amounts . Each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Credit Agreement with respect to the Loans or the Commitment assigned, except that this clause (ii) shall not apply to the Swing Line Lender’s rights and obligations in respect of Swing Line Loans;

(iii) Required Consents . No consent shall be required for any assignment except to the extent required by subsection (b)(i)(B) of this Section and, in addition:

(A) the consent of the Parent Borrower (such consent not to be unreasonably withheld or delayed) shall be required unless (1) an Event of Default has occurred and is continuing at the time of such assignment or (2) such assignment is to a Lender, an Affiliate of a Lender or an Approved Fund;

(B) the consent of the Administrative Agent (such consent not to be unreasonably withheld or delayed) shall be required if such assignment is to a Person that is not a Lender, an Affiliate of such Lender or an Approved Fund with respect to such Lender; and

(C) the consent of the L/C Issuer (such consent not to be unreasonably withheld or delayed) shall be required for any assignment that increases the obligation of the assignee to participate in exposure under one or more Letters of Credit (whether or not then outstanding); and

(D) the consent of the Swing Line Lender (such consent not to be unreasonably withheld or delayed) shall be required if such assignment is to a Person that is not a Lender for any assignment in respect of Revolving Loans and Revolving Commitments.

(iv) Assignment and Assumption . The parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee in the amount of $3,500; provided , however , that the Administrative Agent may, in its sole discretion, elect to waive such processing and recordation fee in the case of any assignment. The assignee, if it is not a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire.

(v) No Assignment to Borrower . No such assignment shall be made to any Credit Party or any of the Credit Parties’ Affiliates or Subsidiaries.

(vi) No Assignment to Natural Persons . No such assignment shall be made to a natural person.

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Subject to acceptance and recording thereof by the Administrative Agent pursuant to subsection (c) of this Section, from and after the effective date specified in each Assignment and Assumption, the assignee thereunder shall be a party to this Credit Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Credit Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Credit Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Credit Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 3.01 , 3.04 , 3.05, 10.04 and 10.05 with respect to facts and circumstances occurring prior to the effective date of such assignment). Upon request, the Borrowers (at their expense) shall execute and deliver a Note to the assignee Lender. Any assignment or transfer by a Lender of rights or obligations under this Credit Agreement that does not comply with this subsection shall be treated for purposes of this Credit Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with subsection (d) of this Section.

(c) Register . The Administrative Agent, acting solely for this purpose as an agent of the Borrowers, shall maintain at the Administrative Agent’s Office a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amounts of the Loans and L/C Obligations owing to, each Lender pursuant to the terms hereof from time to time (the “ Register ”). The entries in the Register shall be conclusive, and the Borrowers, the Administrative Agent and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Parent Borrower and any Lender at any reasonable time and from time to time upon reasonable prior notice.

(d) Participations . Any Lender may at any time, without the consent of, or notice to, the Credit Parties or the Administrative Agent, sell participations to any Person (other than a natural person or the Credit Parties or any of the Credit Parties’ Affiliates or Subsidiaries) (each, a “ Participant ”) in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or the Loans (including such Lender’s participations in L/C Obligations and/or Swing Line Loans) owing to it); provided that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Credit Parties, the Administrative Agent, the other Lenders and the L/C Issuer shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, waiver or other modification described in the first proviso to Section 10.01(a) that affects such Participant. Subject to subsection (e) of this Section, the Credit Parties agree that each Participant shall be entitled to the benefits of Sections 3.01 , 3.04 and 3.05 to the same extent as if it were a Lender and had

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acquired its interest by assignment pursuant to subsection (b) of this Section. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 10.08 as though it were a Lender, provided such Participant agrees to be subject to Section 2.13 as though it were a Lender.

(e) Limitation on Participant Rights . A Participant shall not be entitled to receive any greater payment under Section 3.01 or 3.04 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Parent Borrower’s prior written consent. A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 3.01 unless the Parent Borrower is notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Borrowers, to comply with Section 3.01(e) as though it were a Lender.

(f) Certain Pledges . Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement (including under its Note, if any) to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

(g) Resignation as L/C Issuer or Swing Line Lender after Assignment . Notwithstanding anything to the contrary contained herein, if at any time Bank of America assigns all of its Revolving Commitment and Revolving Loans pursuant to subsection (b) above, Bank of America may, (i) upon thirty days’ notice to the Parent Borrower and the Lenders, resign as L/C Issuer and/or (ii) upon thirty days’ notice to the Parent Borrower, resign as Swing Line Lender. In the event of any such resignation as L/C Issuer or Swing Line Lender, the Borrowers shall be entitled to appoint from among the Lenders a successor L/C Issuer or Swing Line Lender hereunder; provided , however , that no failure by the Borrowers to appoint any such successor shall affect the resignation of Bank of America as L/C Issuer or Swing Line Lender, as the case may be. If Bank of America resigns as L/C Issuer, it shall retain all the rights, powers, privileges and duties of the L/C Issuer hereunder with respect to all Letters of Credit outstanding as of the effective date of its resignation as L/C Issuer and all L/C Obligations with respect thereto (including the right to require the Lenders to make Base Rate Loans or fund risk participations in Unreimbursed Amounts pursuant to Section 2.03(c) ). If Bank of America resigns as Swing Line Lender, it shall retain all the rights of the Swing Line Lender provided for hereunder with respect to Swing Line Loans made by it and outstanding as of the effective date of such resignation, including the right to require the Lenders to make Base Rate Loans or fund risk participations in outstanding Swing Line Loans pursuant to Section 2.04(c) . Upon the appointment of a successor L/C Issuer and/or Swing Line Lender, (1) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring L/C Issuer or Swing Line Lender, as the case may be, and (2) the successor L/C Issuer shall issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or make other arrangements satisfactory to Bank of America to effectively assume the obligations of Bank of America with respect to such Letters of Credit.

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10.07 Treatment of Certain Information; Confidentiality .

Each of the Administrative Agent and the Lenders agree to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its Affiliates and to its and its Affiliates’ respective partners, directors, officers, employees, agents, trustees, advisors and representatives (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority purporting to have jurisdiction over it (including any self-regulatory authority, such as the National Association of Insurance Commissioners), (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party hereto, (e) in connection with the exercise of any remedies hereunder or under any other Credit Document or any action or proceeding relating to this Credit Agreement or any other Credit Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Credit Agreement or any Eligible Assignee invited to be a Lender pursuant to Section 2.01(d) or (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to any Borrower and its obligations, (g) with the consent of the Parent Borrower or (h) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section by the disclosing person or (ii) becomes available to the Administrative Agent, any Lender or any of their respective Affiliates on a nonconfidential basis from a source other than the Credit Parties.

For purposes of this Section, “ Information ” means all information received from any Credit Party or any Subsidiary thereof relating to any Credit Party or any Subsidiary thereof or their respective businesses, other than any such information that is available to the Administrative Agent or any Lender on a nonconfidential basis prior to disclosure by any Credit Party or any Subsidiary thereof, provided that, in the case of information received from a Credit Party or any such Subsidiary after the date hereof, such information is clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.

Each of the Administrative Agent and the Lenders acknowledge that (a) the Information may include material non-public information concerning the Credit Parties, (b) it has developed compliance procedures regarding the use of material non-public information and (c) it will handle such material non-public information in accordance with applicable Law, including United States Federal and state securities Laws.

10.08 Set-off .

If an Event of Default shall have occurred and be continuing, each Lender and each of their respective Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by applicable law, to set off and apply any and all deposits (general or special,

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time or demand, provisional or final, in whatever currency) at any time held and other obligations (in whatever currency) at any time owing by such Lender or any such Affiliate to or for the credit or the account of the Credit Parties against any and all of the obligations of the Credit Parties now or hereafter existing under this Agreement or any other Credit Document to such Lender, irrespective of whether or not such Lender shall have made any demand under this Credit Agreement or any other Credit Document and although such obligations of the Credit Parties may be contingent or unmatured or are owed to a branch or office of such Lender different from the branch or office holding such deposit or obligated on such indebtedness. The rights of each Lender and their respective Affiliates under this Section are in addition to other rights and remedies (including other rights of setoff) that such Lender or their respective Affiliates may have. Each Lender agrees to notify the Parent Borrower and the Administrative Agent promptly after any such setoff and application, provided that the failure to give such notice shall not affect the validity of such setoff and application. Notwithstanding the provisions of this Section 10.08 , if at any time any Lender or any of their respective Affiliates maintains one or more deposit accounts for the Borrowers or any other Credit Party into which Medicare and/or Medicaid receivables are deposited, such Person shall waive the right of setoff set forth herein.

10.09 Interest Rate Limitation .

Notwithstanding anything to the contrary contained in any Credit Document, the interest paid or agreed to be paid under the Credit Documents shall not exceed the maximum rate of non-usurious interest permitted by applicable Law (the “ Maximum Rate ”). If the Administrative Agent or any Lender shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the principal of the Loans or, if it exceeds such unpaid principal, refunded to the Borrowers. In determining whether the interest contracted for, charged, or received by the Administrative Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent permitted by applicable Law, (a) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Obligations hereunder.

10.10 Counterparts; Integration; Effectiveness .

This Credit Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Credit Agreement and the other Credit Documents constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Except as provided in Section 4.01 , this Credit Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto. Delivery of an executed counterpart of a signature page of this Credit Agreement by telecopy or other electronic imaging means shall be effective as delivery of a manually executed counterpart of this Credit Agreement.

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10.11 Survival of Representations and Warranties .

All representations and warranties made hereunder and in any other Credit Document or other document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery hereof and thereof. Such representations and warranties have been or will be relied upon by the Administrative Agent and each Lender, regardless of any investigation made by the Administrative Agent or any Lender or on their behalf and notwithstanding that the Administrative Agent or any Lender may have had notice or knowledge of any Default at the time of any Extension or Credit, and shall continue in full force and effect as long as any Loan or any other Obligation hereunder shall remain unpaid or unsatisfied or any Letter of Credit shall remain outstanding.

10.12 Severability .

If any provision of this Credit Agreement or the other Credit Documents is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this Credit Agreement and the other Credit Documents shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

10.13 Replacement of Lenders .

If any Lender can no longer make Eurodollar Loans under Section 3.02 or if any Lender is a Defaulting Lender, or if any Lender (a “ Non-Consenting Lender ”) refuses to consent to an amendment, modification or waiver of this Agreement that, pursuant to Section 10.01 , requires consent of 100% of the Lenders or if any other circumstance exists hereunder that gives the Borrowers the right to replace a Lender as a party hereto, then the Parent Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 10.06 ), all of its interests, rights and obligations under this Credit Agreement and the related Credit Documents to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment), provided that:

(a) the Borrowers shall have paid to the Administrative Agent the assignment fee specified in Section 10.06(b) ;

(b) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans and L/C Advances, accrued interest thereon, accrued fees and all other amounts payable to it hereunder and under the other Credit Documents (including any amounts under Section 3.05 ) from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrowers (in the case of all other amounts);

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(c) in the case of any such assignment resulting from a claim for compensation under Section 3.04 or payments required to be made pursuant to Section 3.01 , such assignment will result in a reduction in such compensation or payments thereafter; and

(d) such assignment does not conflict with applicable Laws.

A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Parent Borrower to require such assignment and delegation cease to apply.

10.14 Governing Law; Jurisdiction; etc. .

(a) GOVERNING LAW . THIS CREDIT AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

(b) SUBMISSION TO JURISDICTION . EACH BORROWER AND EACH OTHER CREDIT PARTY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK CITY AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF SUCH STATE, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS CREDIT AGREEMENT OR ANY OTHER CREDIT DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.

(c) WAIVER OF VENUE . EACH BORROWER AND EACH OTHER CREDIT PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS CREDIT AGREEMENT OR ANY OTHER CREDIT DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (B) OF THIS SECTION. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

(d) SERVICE OF PROCESS . EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN

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SECTION 10.02 . NOTHING IN THIS CREDIT AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.

10.15 WAIVER OF RIGHT TO TRIAL BY JURY .

EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS CREDIT AGREEMENT OR ANY OTHER CREDIT DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

10.16 No Conflict .

To the extent there is any conflict or inconsistency between the provisions hereof and the provisions of any other Credit Document, this Credit Agreement shall control.

10.17 No Advisory or Fiduciary Responsibility .

In connection with all aspects of each transaction contemplated hereby (including in connection with any amendment, waiver or other modification hereof or of any other Credit Document), each of the Borrowers, on behalf of themselves and the other Credit Parties, acknowledge and agree, and acknowledges its Affiliates’ understanding, that: (i) (A) the arranging and other services regarding this Credit Agreement provided by the Administrative Agent, the Lenders and the Arranger are arm’s-length commercial transactions between the Credit Parties and their respective Affiliates, on the one hand, and the Administrative Agent, the Lenders and the Arranger, on the other hand, (B) each of the Credit Parties has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (C) each of the Credit Parties is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Credit Documents; (ii) (A) the Administrative Agent, each Lender and each Arranger is and has been acting solely as a principal and, except as expressly agreed in writing by the relevant parties, has not been, is not, and will not be acting as an advisor, agent or fiduciary for any Credit Party or any of their respective Affiliates, or any other Person and (B) neither the Administrative Agent, any Lender nor any Arranger has any obligation to any Credit Party or any of their respective Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Credit Documents; and (iii) the Administrative Agent, the Lenders and the Arranger and their respective Affiliates may be engaged in a broad range of transactions that

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involve interests that differ from those of the Credit Parties and their respective Affiliates, and neither the Administrative Agent, any Lender nor any Arranger has any obligation to disclose any of such interests to the Credit Parties or any of their respective Affiliates. To the fullest extent permitted by law, each of the Credit Parties hereby waives and releases any claims that it may have against the Administrative Agent, the Lenders and the Arranger with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated hereby.

10.18 Electronic Execution of Assignments and Certain Other Documents .

The words “execution,” “signed,” “signature” and words of like import in any Assignment and Assumption or in any amendment or other modification hereof (including waivers and consents) shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.

10.19 USA Patriot Act Notice .

Each Lender that is subject to the Act (as hereinafter defined) and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the Borrowers that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “ Act ”), it is required to obtain, verify and record information that identifies each Credit Party, which information includes the name and address of each Credit Party and other information that will allow such Lender or the Administrative Agent, as applicable, to identify each Credit Party in accordance with the Act. The Borrowers shall, promptly following a request by the Administrative Agent or any Lender, provide all documentation and other information that the Administrative Agent or such Lender requests in order to comply with its ongoing obligations under applicable “know your customer” and anti-money laundering rules and regulations, including the Act.

10.20 California Real Property Assets .

NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN, AT ANY TIME THAT ANY OF THE OBLIGATIONS SHALL BE SECURED BY REAL PROPERTY ASSETS LOCATED IN CALIFORNIA, NO LENDER SHALL EXERCISE A RIGHT OF SETOFF, LENDER’S LIEN OR COUNTERCLAIM OR TAKE ANY COURT OR ADMINISTRATIVE ACTION OR INSTITUTE ANY PROCEEDING TO ENFORCE ANY PROVISION OF THIS AGREEMENT OR ANY CREDIT DOCUMENT UNLESS IT IS TAKEN WITH THE CONSENT OF THE REQUIRED LENDERS OR, TO THE EXTENT REQUIRED BY SECTION 8.3 OF THIS AGREEMENT, ALL OF THE LENDERS, IF SUCH SETOFF OR ACTION OR PROCEEDING WOULD OR MIGHT (PURSUANT TO SECTIONS 580a, 580b, 580d AND 726 OF THE CALIFORNIA CODE OF CIVIL PROCEDURE OR SECTION 2924 OF THE CALIFORNIA CIVIL CODE, IF APPLICABLE,

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OR OTHERWISE) AFFECT OR IMPAIR THE VALIDITY, PRIORITY, OR ENFORCEABILITY OF THE LIENS GRANTED TO THE ADMINISTRATIVE AGENT PURSUANT TO THE COLLATERAL DOCUMENTS OR THE ENFORCEABILITY OF THE OBLIGATIONS HEREUNDER, AND ANY ATTEMPTED EXERCISE BY ANY LENDER OR ANY SUCH RIGHT WITHOUT OBTAINING SUCH CONSENT OF THE PARTIES AS REQUIRED ABOVE, SHALL BE NULL AND VOID. THIS PARAGRAPH SHALL BE SOLELY FOR THE BENEFIT OF EACH OF THE LENDERS.

ARTICLE XI

GUARANTY

11.01 The Guaranty . Each of the Guarantors hereby jointly and severally guarantees to each Lender and the Administrative Agent as hereinafter provided, as primary obligor and not as surety, the prompt payment of the Obligations in full when due (whether at stated maturity, as a mandatory prepayment, by acceleration, as a mandatory cash collateralization or otherwise) strictly in accordance with the terms thereof. The Guarantors hereby further agree that if any of the Obligations are not paid in full when due (whether at stated maturity, as a mandatory prepayment, by acceleration, as a mandatory cash collateralization or otherwise), the Guarantors will, jointly and severally, promptly pay the same, without any demand or notice whatsoever, and that in the case of any extension of time of payment or renewal of any of the Obligations, the same will be promptly paid in full when due (whether at extended maturity, as a mandatory prepayment, by acceleration, as a mandatory cash collateralization or otherwise) in accordance with the terms of such extension or renewal.

Notwithstanding any provision to the contrary contained herein or in any other of the Credit Documents or Swap Contracts the obligations of each Guarantor under this Agreement and the other Credit Documents shall not exceed an aggregate amount equal to the largest amount that would not render such obligations subject to avoidance under applicable Debtor Relief Laws.

11.02 Obligations Unconditional . The obligations of the Guarantors under Section 11.01 are joint and several, absolute and unconditional, irrespective of the value, genuineness, validity, regularity or enforceability of any of the Credit Documents or Swap Contracts, or any other agreement or instrument referred to therein, or any substitution, release, impairment or exchange of any other guarantee of or security for any of the Obligations, and, to the fullest extent permitted by applicable law, irrespective of any other circumstance whatsoever which might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor, it being the intent of this Section 11.02 that the obligations of the Guarantors hereunder shall be absolute and unconditional under any and all circumstances. Each Guarantor agrees that such Guarantor shall have no right of subrogation, indemnity, reimbursement or contribution against the Borrowers or any other Guarantor for amounts paid under this Article XI until such time as the Obligations have been paid in full and the Commitments have expired or terminated. Without limiting the generality of the foregoing, it is agreed that, to the fullest extent permitted by law, the occurrence of any one or more of the following shall not alter or impair the liability of the Guarantor hereunder, which shall remain absolute and unconditional as described above:

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(a) at any time or from time to time, without notice to the Guarantor, the time for any performance of or compliance with any of the Obligations shall be extended, or such performance or compliance shall be waived;

(b) any of the acts mentioned in any of the provisions of any of the Credit Documents or any Swap Contract between any Credit Party and any Lender, or any Affiliate of a Lender, or any other agreement or instrument referred to in the Credit Documents or such Swap Contracts shall be done or omitted;

(c) the maturity of any of the Obligations shall be accelerated, or any of the Obligations shall be modified, supplemented, waived or amended in any respect, or any right under any of the Credit Documents or any Swap Contract between any Credit Party and any Lender, or any Affiliate of a Lender, or any other agreement or instrument referred to in the Credit Documents or any Swap Contract shall be waived or any other guarantee of any of the Obligations or any security therefor shall be released, impaired or exchanged in whole or in part or otherwise dealt with;

(d) any Lien granted to, or in favor of, the Administrative Agent or any Lender or Lenders as security for any of the Obligations shall fail to attach or be perfected, or shall be released in accordance with the terms of this Agreement;

(e) any of the Obligations shall be determined to be void or voidable (including, without limitation, for the benefit of any creditor of the Guarantor) or shall be subordinated to the claims of any Person (including, without limitation, any creditor of the Guarantor); or

(f) any other circumstance whatsoever which might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor.

With respect to its obligations hereunder, each Guarantor hereby expressly waives diligence, presentment, demand of payment, protest and all notices whatsoever, and any requirement that the Administrative Agent or any Lender exhaust any right, power or remedy or proceed against any Person under any of the Credit Documents or any Swap Contract between any Credit Party and any Lender, or any Affiliate of a Lender, or any other agreement or instrument referred to in the Credit Documents or any Swap Contract or against any other Person under any other guarantee of, or security for, any of the Obligations.

11.03 Reinstatement . The obligations of the Guarantors under this Article XI shall be automatically reinstated if and to the extent that for any reason any payment by or on behalf of any Person in respect of the Obligations is rescinded or must be otherwise restored by any holder of any of the Obligations, whether as a result of any proceedings in bankruptcy or reorganization or otherwise, and each Guarantor agrees that it will indemnify the Administrative Agent and each Lender on demand for all reasonable costs and expenses (including, without limitation, the fees, charges and disbursements of counsel) incurred by the Administrative Agent or such Lender in connection with such rescission or restoration, including any such costs and expenses

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incurred in defending against any claim alleging that such payment constituted a preference, fraudulent transfer or similar payment under any bankruptcy, insolvency or similar law.

11.04 Certain Additional Waivers . Each Guarantor agrees that such Guarantor shall have no right of recourse to security for the Obligations, except through the exercise of rights of subrogation pursuant to Section 11.02 and through the exercise of rights of contribution pursuant to Section 11.06 .

11.05 Remedies . The Guarantors agree that, to the fullest extent permitted by law, as between the Guarantors, on the one hand, and the Administrative Agent and the Lenders, on the other hand, the Obligations may be declared to be forthwith due and payable as provided in Section 8.02 (and shall be deemed to have become automatically due and payable in the circumstances provided in said Section 8.02 ) for purposes of Section 11.01 notwithstanding any stay, injunction or other prohibition preventing such declaration (or preventing the Obligations from becoming automatically due and payable) as against any other Person and that, in the event of such declaration (or the Obligations being deemed to have become automatically due and payable), the Obligations (whether or not due and payable by any other Person) shall forthwith become due and payable by the Guarantors for purposes of Section 11.01 . The Guarantors acknowledge and agree that their obligations hereunder are secured in accordance with the terms of the Collateral Documents and that the Lenders may exercise their remedies thereunder in accordance with the terms thereof.

11.06 Rights of Contribution . The Guarantors agree among themselves that, in connection with payments made hereunder, each Guarantor shall have contribution rights against the other Guarantors as permitted under applicable law. Such contribution rights shall be subordinate and subject in right of payment to the obligations of such Guarantors under the Credit Documents and no Guarantor shall exercise such rights of contribution until all Obligations have been paid in full and the Commitments have terminated.

11.07 Guarantee of Payment; Continuing Guarantee . The guarantee in this Article XI is a guaranty of payment and not of collection, is a continuing guarantee, and shall apply to all Obligations whenever arising.

11.08 Release of Subsidiary Guarantors; Certain Exempt Subsidiaries . Within five (5) Business Days following the written request by a Responsible Officer of Parent Borrower, the Administrative Agent, on behalf of the Lenders, shall release a Subsidiary Guarantor from its obligations under the Guaranty to the extent that the following conditions are satisfied to the reasonable satisfaction of the Administrative Agent: (a) there is no Event of Default existing under the Agreement either at the time of such request or at the time such Subsidiary Guarantor is released; and (b) such Responsible Officer of Parent Borrower delivers to Administrative Agent a certificate in form and substance reasonably satisfactory to the Administrative Agent stating that (i) such request is being made in connection with any of the following: (A) such Subsidiary Guarantor becoming an Unrestricted Subsidiary under the Sabra Senior Note Indenture; (B) such Subsidiary Guarantor is obtaining financing to be secured by, among other things, real property owned or ground leased by such Subsidiary Guarantor and the terms of such financing prohibits such Subsidiary Guarantor from remaining obligated under the Guaranty; (C)

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such Subsidiary Guarantor is acquiring an entity which owns, or assets which include, real property upon which existing financing is to be assumed by such Subsidiary Guarantor and the terms of such existing financing prohibit such Subsidiary Guarantor from remaining obligated under the Guaranty; (D) such Subsidiary Guarantor is acquiring an entity which owns, or assets which include, real property and, in connection therewith, such Subsidiary Guarantor is obtaining acquisition financing, the terms of which prohibit such Subsidiary Guarantor from remaining obligated under the Guaranty; or (E) such Subsidiary Guarantor is being released from its obligation with respect to the Sabra Senior Note Indenture for any reason not described in clauses (A) through (D) above and (ii) such Subsidiary Guarantor will also be released from its guaranty obligations under the Sabra Senior Notes.

In addition, a Subsidiary shall not be required to become a Subsidiary Guarantor hereunder (a) to the extent it is being acquired or being formed in connection with any of the transactions described in clauses (b)(i)(A) through (D) above, and the terms of the applicable financing documentation prohibit such Subsidiary from becoming a Subsidiary Guarantor hereunder, or (b) if such Subsidiary is otherwise not required by the terms of the Sabra Senior Note Indenture to become a guarantor of any of the obligations thereunder.

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


BORROWERS:	SABRA HEALTH CARE LIMITED PARTNERSHIP, a Delaware limited partnership

		By:	SABRA HEALTH CARE REIT, INC., Its General Partner

		By:	/s/ Harold Andrews
		Name:	Harold Andrews
		Title:	Treasurer and Secretary

	SABRA IDAHO, LLC
	SABRA CALIFORNIA II, LLC
	SUNSET POINT NURSING CENTER LLC
	SABRA NEW MEXICO, LLC
	SABRA OHIO, LLC
	SABRA KENTUCKY, LLC
	SABRA NC, LLC
	CONNECTICUT HOLDINGS I LLC
	SABRA CONNECTICUT II LLC
	WEST BAY NURSING CENTER LLC
	ORCHARD RIDGE NURSING CENTER LLC
	OAKHURST MANOR NURSING CENTER LLC

	By:	/s/ Brandi Riddle
	Name:	Brandi Riddle
	Title:	Treasurer


REIT GUARANTOR:	SABRA HEALTH CARE REIT, INC.,
	a Maryland corporation

	By:	/s/ Harold Andrews
	Name:	Harold Andrews
	Title:	Treasurer and Secretary


LENDERS:	BANK OF AMERICA, N.A.,
	as Administrative Agent

	By:	/s/ Amie L. Edwards
	Name:	Amie L. Edwards
	Title:	Senior Vice President

	BANK OF AMERICA, N.A., as L/C Issuer, Swing Line Lender and as a Lender

	By:	/s/ Amie L. Edwards
	Name:	Amie L. Edwards
	Title:	Senior Vice President


JPMORGAN CHASE BANK, N.A.,
as a Lender

By:		/s/ Marc Costantino
Name:		Marc Costantino
Title:		Executive Director


CITIBANK, N.A.,
as a Lender

By:		illegible
Name:		illegible
Title:		Vice President


WELLS FARGO BANK, NATIONAL ASSOCIATION, as a Lender

By:		/s/ Ross M. Berger
Name:		Ross M. Berger
Title:		Managing Director


ROYAL BANK OF CANADA,
as a Lender

By:		/s/ G. David Cole
Name:		G. David Cole
Title:		Authorized Signatory

Schedule 1.1A

Closing Date Mortgageability Amounts

Property Name

Operator

Address

City

State

Allocated Rent

Mortgageability Amount

Carmichael

Sun Healthcare

8336 Fair Oaks Blvd

Carmichael

1,408,054

10,585,407

Village at Northrise (Las Cruces)

Sun Healthcare

2880 N. Roadrunner Pkwy

Las Cruces

1,542,965

11,599,635

Sylvania

Sun Healthcare

5757 Whiteford Road

Sylvania

1,229,467

9,242,833

Orchard Ridge (New Port Richey)

Sun Healthcare

4927 Voorhees Road

New Port Ritchey

1,431,307

10,760,217

Woodland Hill (Asheboro)

Sun Healthcare

400 Vision Dr

Asheboro

1,133,187

8,519,024

Meridian

Sun Healthcare

1351 W. Pine Ave

Meridian

2,441,420

18,354,000

West Bay (Oldsmar)

Sun Healthcare

3865 Tampa Road

Oldsmar

1,095,841

8,238,266

Oakhurst (Ocala)

Sun Healthcare

1501 SE 24th Road

Ocala

2,708,482

20,361,708

Glen Hill (Danbury)

Sun Healthcare

1 Glen Hill Road

Danbury

1,621,558

12,190,478

Sunset Point (Clearwater)

Sun Healthcare

1980 Sunset Point Road

Clearwater

1,446,759

10,876,382

Bridge Point (Florence)

Sun Healthcare

7300 Woodspoint Drive

Florence

1,181,690

8,883,657

Aggregate Mortgageability Amount:

129,611,606

Schedule 2.01

LENDERS AND COMMITMENTS


Lender	Revolving Committed Amount		Revolving Commitment Percentage
Bank of America, N.A.	$	30,000,000.00		30.000000000	%
Citibank, N.A.	$	21,666,667.00		21.666666667	%
Wells Fargo Bank, National Association	$	21,666,667.00		21.666666667	%
JPMorgan Chase Bank, N.A.	$	21,666,666.00		21.666666666	%
Royal Bank of Canada	$	5,000,000.00		5.000000000	%

Total:	$	100,000,000.00		100.000000000	%

SCHEDULE 5.01(b)

The facility owned by Harford Gardens, LLC and located in Baltimore, Maryland will remain with New Sun after the Separation as it is contemplated that such facility will be sold in the near future.

SCHEDULE 5.11

Post-Separation Organizational Chart

*	Excluded as Credit Parties; all other entities are included as Credit Parties. Correct legal name, tax identification number and jurisdiction of formation of each of the Credit Parties is shown on Schedule 5.22

Schedule 5.11-2

Schedule 5.11-3

(1)	The 22 centers are as follows:

1 – Perrysburg

2 – Governor’s House

3 – Madison House

4 – Willows (CT)

5 – Twin Oaks

6 – Saugus

7 – Maplewood

8 – Point Place

9 – New Lebanon

10 – Forest View

11 – Pawtuxet Village

12 – Greenwood

13 – Seminole Estates

14 – Decatur Township

15 – Glenville

16 – Monroe House

17 – Boise

18 – Gooding/Bennett Hills

19 – New Lexington

20 – Willows (CA)

21 – Renaissance Terrace

22 – Etowah Landing

Schedule 5.11-4

SCHEDULE 5.12: PART I

BORROWING BASE ASSETS

APPLICABLE BORROWER

FACILITY NAME AND ADDRESS

TYPE OF
FACILITY

SUBJECT LEASE

APPLICABLE TENANT

LEASE

TERMINATION

DATE

OWNERSHIP
INTEREST OF
BORROWER
IN FACILITY

OAKHURST MANOR NURSING CENTER LLC,
a Massachusetts limited liability company

Oakhurst Care and Rehabilitation Center

1501 SE 24 ^th Road

Ocala, FL 64471

SNF ¹

Master Lease dated as of November 3, 2010 and described in Schedule 5.13

1501 S.E. 24 ^TH ROAD, LLC,
a Delaware limited liability company

December 31, 2020

(subject to extension as set forth therein)

Fee

SABRA NEW MEXICO, LLC,
a Delaware limited liability company

The Village at Northrise

2880 N. Roadrunner Pkwy

Las Cruces, NM 88011

SNF

Master Lease dated as of November 3 and described in Schedule 5.13

PEAK MEDICAL ASSISTED LIVING, LLC,
a Delaware limited liability company

December 31, 2020

(subject to extension as set forth therein)

Fee

ORCHARD RIDGE NURSING CENTER LLC,
a Massachusetts limited liability company

Orchard Ridge Care and Rehabilitation Center

4927 Voorhees Road

New Port Richey, FL 34653

SNF

Master Lease dated as of November 3 and described in Schedule 5.13

4927 VOORHEES ROAD, LLC,
a Delaware limited liability company

December 31, 2020

(subject to extension as set forth therein)

Fee

SUNSET POINT NURSING CENTER LLC,
a Massachusetts limited liability company

Sunset Point Care and Rehabilitation Center

1980 Sunset Point Road

Clearwater, FL 33765

SNF

Master Lease dated as of November 3 and described in Schedule 5.13

1980 SUNSET POINT ROAD, LLC,
a Delaware limited liability company

December 31, 2020

(subject to extension as set forth therein)

Fee

¹	SNF=Skilled Nursing Facility

SABRA CALIFORNIA II, LLC,
a Delaware limited liability company

Carmichael Care and Rehabilitation Center

8336 Fair Oaks Blvd.

Carmichael, CA 95608

SNF

Master Lease dated as of November 3 and described in Schedule 5.13

SUNBRIDGE CARMICHAEL REHABILITATION CENTER,
a California corporation

December 31, 2020 (subject to extension as set forth therein)

Fee

SABRA IDAHO, LLC,
a Delaware limited liability company

Meridian Care and Rehabilitation Center

1351 W. Pine Ave.

Meridian, ID 83642

SNF

Master Lease dated as of November 3 and described in Schedule 5.13

SUNBRIDGE HEALTHCARE, LLC,
a New Mexico limited liability company

December 31, 2020 (subject to extension as set forth therein)

Fee

SABRA CONNECTICUT II, LLC,
a Delaware limited liability company

Glen Hill Care and Rehabilitation Center

1 Glen Hill Road

Danbury, CT 06811

SNF

Master Lease dated as of November 3 and described in Schedule 5.13

HARBORSIDE DANBURY LIMITED PARTNERSHIP,
a Massachusetts limited partnership

December 31, 2020 (subject to extension as set forth therein)

Fee

SABRA KENTUCKY, LLC,
a Delaware limited liability company

Bridge Point Care and Rehabilitation Center

7300 Woodspoint Drive

Florence, KY 41045

SNF

Master Lease dated as of November 3 and described in Schedule 5.13

WOODSPOINT, LLC,
a Delaware limited liability company,

doing business in Kentucky as Woodspoint Nursing, LLC

December 31, 2020 (subject to extension as set forth therein)

Fee

SABRA OHIO, LLC,
a Delaware limited liability company

Sylvania Care and Rehabilitation Center

5757 Whiteford Road

Sylvania, OH 43560

SNF

Master Lease dated as of November 3 and described in Schedule 5.13

HARBORSIDE SYLVANIA, LLC,
a Delaware limited liability company

December 31, 2020 (subject to extension as set forth therein)

Fee

WEST BAY NURSING CENTER LLC,
a Massachusetts limited

West Bay Care and Rehabilitation Center

3865 Tampa Road

SNF

Master Lease dated as of November 3 and described in Schedule 5.13

3865 TAMPA ROAD, LLC,
a Delaware limited liability company

December 31, 2020 (subject to extension as set forth therein)

Fee

liability company

Oldsmar, FL 34677

SABRA NC, LLC,
a Delaware limited liability company

Woodland Hill Care and Rehabilitation Center

400 Vision Dr.

Asheboro, NC 27203

SNF

Master Lease dated as of November 3 and described in Schedule 5.13

SUNBRIDGE REGENCY-NORTH CAROLINA, INC.,
a North Carolina corporation

December 31, 2020 (subject to extension as set forth therein)

Fee

SCHEDULE 5.12: PART II

OTHER REAL PROPERTY ASSETS OWNED BY A BORROWER

None.

SCHEDULE 5.12: PART III

DELINQUENT TENANTS UNDER FACILITY LEASES

None.

SCHEDULE 5.12: PART IV

MATERIAL SUBLEASES

None.

SCHEDULE 5.13

FACILITY LEASES

•

That certain Master Lease dated as of November 3, 2010 by and among the entities listed as “Landlord” below and the entities listed as “Tenant” below and pursuant to which Landlord has leased to Tenant the skilled nursing facilities described therein.


Landlord Entities		Tenant Entities
OAKHURST MANOR NURSING CENTER LLC, a Massachusetts limited liability company		1501 S.E. 24 ^TH ROAD, LLC, a Delaware limited liability company

SABRA NEW MEXICO, LLC, a Delaware limited liability company		PEAK MEDICAL ASSISTED LIVING, LLC, a Delaware limited liability company

ORCHARD RIDGE NURSING CENTER LLC, a Massachusetts limited liability company		4927 VOORHEES ROAD, LLC, a Delaware limited liability company

SUNSET POINT NURSING CENTER LLC, a Massachusetts limited liability company		1980 SUNSET POINT ROAD, LLC, a Delaware limited liability company

SABRA CALIFORNIA II, LLC, a Delaware limited liability company		SUNBRIDGE CARMICHAEL REHABILITATION CENTER, a California corporation

SABRA IDAHO, LLC, a Delaware limited liability company		SUNBRIDGE HEALTHCARE, LLC, a New Mexico limited liability company

SABRA CONNECTICUT II, LLC, a Delaware limited liability company		HARBORSIDE DANBURY LIMITED PARTNERSHIP, a Massachusetts limited partnership

SABRA KENTUCKY, LLC, a Delaware limited liability company		WOODSPOINT, LLC, a Delaware limited liability company, doing business in Kentucky as Woodspoint Nursing, LLC

SABRA OHIO, LLC, a Delaware limited liability company		HARBORSIDE SYLVANIA, LLC, a Delaware limited liability company

WEST BAY NURSING CENTER LLC, a Massachusetts limited liability company		3865 TAMPA ROAD, LLC, a Delaware limited liability company

SABRA NC, LLC, a Delaware limited liability company		SUNBRIDGE REGENCY-NORTH CAROLINA, INC., a North Carolina corporation

SCHEDULE 5.22

CREDIT PARTIES


ENTITY NAME	ADDRESS	STATE OF FORMATION	STATES WHERE QUALIFIED AS OF FUNDING DATE	FEIN	ORGANIZATION IDENTIFICATION NUMBER
BORROWERS
SABRA HEALTH CARE LIMITED PARTNERSHIP, a Delaware limited partnership	18500 Von Karman Avenue, Suite 550 Irvine, CA 92612	DE	CA	27-2712888	4822888

OAKHURST MANOR NURSING CENTER LLC, a Massachusetts limited liability company	18500 Von Karman Avenue, Suite 550 Irvine, CA 92612	MA	FL	04-3072232	000992162

SABRA NEW MEXICO, LLC, a Delaware limited liability company	18500 Von Karman Avenue, Suite 550 Irvine, CA 92612	DE	NM	27-3541140	4875576

ORCHARD RIDGE NURSING CENTER LLC, a Massachusetts limited liability company	18500 Von Karman Avenue, Suite 550 Irvine, CA 92612	MA	FL	04-3072231	000992161

SUNSET POINT NURSING CENTER LLC, a Massachusetts limited liability company	18500 Von Karman Avenue, Suite 550 Irvine, CA 92612	MA	FL	04-3072233	000992163

SABRA CALIFORNIA II, LLC, a Delaware limited liability company	18500 Von Karman Avenue, Suite 550 Irvine, CA 92612	DE	CA	27-3540830	4875570

SABRA IDAHO, LLC, a Delaware limited liability company	18500 Von Karman Avenue, Suite 550 Irvine, CA 92612	DE	ID	27-3541245	4875578

SABRA CONNECTICUT II, LLC, a Delaware limited liability company	18500 Von Karman Avenue, Suite 550 Irvine, CA 92612	DE	CT	27-3541049	4875575

SABRA KENTUCKY, LLC, a Delaware limited liability company	18500 Von Karman Avenue, Suite 550 Irvine, CA 92612	DE	KY	27-3662491	4884367

SABRA OHIO, LLC, a Delaware limited liability company	18500 Von Karman Avenue, Suite 550 Irvine, CA 92612	DE	OH	27-3540905	4875573

WEST BAY NURSING CENTER LLC,	18500 Von Karman Avenue, Suite 550	MA	FL	04-3072226	000992160

a Massachusetts limited liability company

Irvine, CA 92612

SABRA NC, LLC,
a Delaware limited liability company