Revenue Sharing Agreement

REVENUE SHARING AGREEMENT


THIS REVENUE SHARING AGREEMENT (this "Agreement") made as of the 30th day of September, 2001, by and among ADVOCAT INC., a Delaware corporation ("Advocat"), of 277 Mallory Station Road, Suite 130, Franklin, Tennessee 37067, DIVERSICARE LEASING CORP., a Tennessee corporation ("DLC"), of 277 Mallory Station Road, Suite 130, Franklin, Tennessee 37067, OMEGA HEALTHCARE INVESTORS, INC., a Maryland corporation ("Omega"), of 900 Victors Way, Suite 350, Ann Arbor, Michigan 48108, and OHI SUNSHINE, INC., a Florida corporation ("Sunshine"), of 900 Victors Way, Suite 350, Ann Arbor, Michigan 48108.


R E C I T A L S:


A. DLC is the current operator of the those two certain skilled-nursing facilities commonly known as DeSoto Health Care Manor, Arcadia, Florida ("DeSoto"), and Leesburg Health Care Center, Leesburg, Florida ("Leesburg") pursuant to that certain Florida Lease Agreement dated May 10, 1994 by and between Counsel Nursing Properties, Inc., a Delaware corporation ("CNP") and DLC.


B. Omega is the current mortgagee of both DeSoto and Leesburg.


C. Advocat, DLC, and Omega, among others, are parties to that certain Settlement and Restructuring Agreement made as of October 1, 2000 (the "Settlement Agreement"), whereby Advocat and DLC agreed, upon the satisfaction of certain conditions, to cause the transfer of title from CNP to Omega, or its designees, of both DeSoto and Leesburg.


D. Omega has elected to designate Sunshine, a wholly-owned subsidiary of Omega, to take title to DeSoto and Leesburg when and if Phillip Castleberg, or his related entities, has successfully completed the transfer of the operating license from DLC to his related entities (the "New Operator"), and CNP has agreed to transfer title to DeSoto and Leesburg to Sunshine in connection with such transfer of the operations.


E. As contemplated in part by the Settlement Agreement, the parties have agreed that after the contemplated transfer of DeSoto and Leesburg to Sunshine, Advocat and Sunshine shall share all future net income and net sale proceeds received from the operations, leasing and/or sale of DeSoto and Leesburg by Sunshine and its respective affiliates as further set forth herein.


NOW, THEREFORE, in consideration of the foregoing and the mutual covenants contained herein, and for other good and valuable consideration, the receipt and adequacy of which are acknowledged hereby, Advocat, DLC, Omega, and Sunshine covenant and agree as follows:


A G R E E M E N T:


1. Revenue Sharing. From and after the date of the transfer of DeSoto and/or Leesburg to Sunshine, all "Net Rental Revenue", "Net Income" and "Net Sale Proceeds" received by Omega, Sunshine, or their respective affiliates from the operations, leasing and/or sale of either DeSoto or Leesburg (each, a "Facility"), shall be shared by Advocat and Sunshine as follows: (a) eighty percent (80%) of all Net Rental Revenue, Net Income and Net Sale Proceeds shall be paid to or retained by Sunshine, and (b) twenty percent (20%) of all Net Rental Revenue, Net Income and Net Sale Proceeds shall be paid to or retained by Advocat. As used herein, "Net Rental Revenue" shall mean any rental payments or other sums received in connection with the leasing of a Facility, less reasonable and prudent third-party expenses incurred in connection with the leasing of such Facility, including, without limitation, all third-party costs of collection or enforcement of the lease or to preserve or protect the operation of the Facility as a licensed nursing home, reasonable legal fees, insurance costs and real estate taxes, and less the costs of the acquisition of such Facility, including reasonable attorneys fees and transfer or stamp taxes. As used herein, "Net Income" shall mean any sums (other than Net Rental Revenue) received in connection with the ownership or operation of a Facility, less all expenses incurred in connection with and specifically related to the acquisition, ownership or operation of such Facility, including, without limitation, all reasonable and pruden ...