Second Amended And Restated Lease Agreement

SECOND AMENDED AND RESTATED LEASE AGREEMENT
(Clearwater Health & Rehabilitation)


THIS SECOND AMENDED AND RESTATED LEASE AGREEMENT (the "Lease") is made and entered into as of the 1st day of October 1, 1998, effective as of the Commencement Date, by and between EBT Healthcare Properties, L.P., a Delaware limited partnership (hereinafter referred to as the "Lessor") and Centennial HealthCare Properties Corporation, a Georgia corporation, formerly known as WelCare International Properties Corporation, a Georgia corporation (hereinafter referred to as the "Lessee").


W I T N E S S E T H :


WHEREAS, Lessor is the owner of that certain real property, more particularly described on Exhibit "A" attached hereto and incorporated herein by reference, improved with a 60-bed nursing home facility known as Clearwater Health & Rehabilitation (the "Facility"), together with Lessor's easements and appurtenances in adjoining and adjacent land, highways, roads, streets, lanes, whether public or private, reasonably required for the installation, maintenance, operation and service of sewer, water, gas, power, and other utility lines and for driveways and approaches to and from abutting highways for the use and benefit of the above-described parcel of real estate, together with that certain personal property, fixtures, equipment and supplies used in connection with such real estate and improvements (the "Premises");


WHEREAS, Lessor and Lessee entered into that certain Lease Agreement dated as of October 1, 1993, whereby Lessor agreed to lease to Lessee the Premises (the "Original Lease"); and


WHEREAS, Lessor and Lessee entered into that certain Amended and Restated Lease Agreement dated as of July 6, 1994, whereby Lessor and Lessee agreed to amend and restate the Original Lease in its entirety; and


WHEREAS, Lessor and Lessee desire to amend and restate the Amended and Restated Lease Agreement in its entirety as provided in this Lease.


NOW THEREFORE, in consideration of Ten Dollars ($10.00) in hand paid by each party to the other, the mutual promises herein contained and other good and valuable consideration, the receipt, adequacy and sufficiency of which are hereby acknowledged, the parties do hereby agree as follows:


1. Ownership. Lessor is the owner of the Facility which is located on the Premises.


2. Term. The term of this Lease shall be deemed to have commenced on the 1st day of October, 1993 (the "Commencement Date"), and shall end on the 30th day of September, 2006 unless sooner terminated, and Lessee is hereby granted an option to extend this Lease for two (2) additional five (5) year periods on the same terms as provided in this Lease; provided, however, that at the time of such election to extend, unless Lessee and Lessor shall have otherwise agreed in writing upon the rent to be paid during the extension term(s), Lessee shall provide Lessor with a letter from a third-party appraiser reasonably acceptable to Lessor stating that the Base Rent (as hereinafter defined) and any other sums payable under this Lease constitute a fair market rental rate for the Premises (the "Fair Rental Rate"). Lessee shall pay the reasonable fees and charges of such appraiser. If the Fair Rental Rate is greater than or less than the Base Rent at the time of the extension of this Lease, then the Lessee can either (i) elect not to extend this Lease, or (ii) pay as Base Rent an amount equal to the Fair Rental Rate. Lessee must notify the Lessor in writing of its election to exercise any of the renewal extensions at least three (3) months prior to the expiration of the then current lease term. Lessor and Lessee agree that they both shall be bound by the appraiser's determination of the Fair Rental Rate to the extent herein indicated.


3. Rental Payments.


A. Base Rent. Lessee shall pay to Lessor the amounts set forth on Exhibit "B" as rent for the Premises in arrears upon the last day of each and every month during the term of this Lease (the "Base Rent").


B. Additional Rent. Lessee shall pay to Lessor, monthly in arrears, $127.00 for each 1/8% that the LIBOR Rate (as hereinafter defined) exceeds 7.475% as additional rent (the "Additional Rent"). Further, the Base Rent shall be reduced $127.00 for each 1/8% that the LIBOR Rate decreases below 7.475% (the "Base Rent Reduction"). The Additional Rent and the Base Rent Reduction shall be calculated based on the LIBOR Rate on the first calendar day of each month during the Lease Term (the "Rate Adjustment Date"). The LIBOR Rate shall mean the average of London Interbank Offered Rates for a term of one month (the "One Month LIBOR"), as reasonably determined by Lessor or its Mortgagee as of each Rate Adjustment Date. The One Month LIBOR (in U.S. dollar deposits) will be obtained from the appropriate Bloomberg display page available at the close of business announced on the last business day of the month, for every month covered by the Lease Term. In the event that Bloomberg ceases publication, or ceases to publish the One Month LIBOR, Lessor or its Mortgagee shall select a comparable publication to determine the One Month LIBOR.


C. Payment of Rent. Lessor and Lessee acknowledge and agree that this Lease and all Base Rent, Base Rent Reduction, and Additional Rent (together, the "Rent") payable hereunder may be assigned as additional collateral for a mortgage loan or loans to Lessor. In such event, Lessor and Lessee mutually agree that, if required by the lender (the "Mortgagee") pursuant to such mortgage loan (the "Mortgage"), all payments of Rent shall be made to a lockbox or another account designated by Mortgagee (a "Lockbox Account") and Mortgagee is hereby authorized by Lessor and Lessee to debit such account each month for the amount equal to the monthly debt service payments due pursuant to the promissory note secured by the Mortgage. Payments so made by the Lessee shall be credited as payments of Rent made under this Lease and shall satisfy the obligations of Lessee hereunder, to the extent so paid. If payments of Rent are not made a Lockbox Account for the benefit of Mortgagee, then such payments shall be made to Lessor at Lessor's address as provided in Section 31 of this Lease or such other address as Lessor shall specify pursuant to Section 31 at least thirty (30) days prior to a payment date.


D. Debt Service Reserve Fund. No security deposit is required of Lessee pursuant to this Lease except as follows. If required by Mortgagee, pursuant to the terms of the Mortgage and this Lease, Lessor shall deposit into an account with Mortgagee pursuant to a Debt Service reserve Escrow and Security Agreement (the "Deposit Agreement") an amount equal to two months debt service on the Premises to serve as a debt service reserve fund, which may increase if debt service payments increase (the "Debt Service Reserve Fund"). The Debt Service Reserve Fund shall be governed by the terms of the Deposit Agreement. Notwithstanding the foregoing, if Lessee provides Lessor with additional funds to enable the deposit of additional debt service reserves as contemplated by the Deposit Agreement, then amounts pledged to Mortgagee as a Debt Service Reserve Fund shall, upon repayment in full of the Mortgage or upon any release of the Debt Service Reserve Fund (or any portion thereof) by the Mortgagee (the "Release Date"), be deemed a security deposit of Lessee and shall be refunded to Lessee to the extent Lessee funded such amounts.


4. Net Lease. This Lease is intended to be a net lease in that it is the intention of the parties hereto that the Rent payable to Lessor shall not be reduced by any cost or charge whatsoever and that all expenses and charges related to the ownership and operation of the Premises after the date of this Lease, whether for upkeep, maintenance; compliance with environmental, health and safety laws (including the Americans with Disabilities Act); insurance; taxes; utilities; federal, state and municipal requirements; and other charges of a like nature or type or otherwise shall be paid by Lessee, subject to the other terms of this Lease. This provision is not in derogation of specific provisions herein, but in expansion thereof and as an indication of the general intentions of the parties hereto.


5. Taxes and Assessments. Lessee hereby agrees to pay to the public authorities charged with collection thereof, promptly as the same become due and payable, all taxes, assessments, and other public charges levied upon or assessed against the Premises and/or any building, structure, fixture or improvements now or hereafter located thereon, or arising in respect of the occupance, use or possession of the Premises, and which become due and payable.


6. Fuel, Utility Services. Lessee hereby agrees to pay for all fuel, electricity, heat or power, gas and water, or any other utility charges incurred upon the Premises after the date of this Lease.


7. Compliance with Laws. Lessee covenants that in the use and occupation of the Premises and the buildings, structures, fixtures and improvements thereon, and the sidewalks adjacent thereto, Lessee will comply in all material respects with all authorities in any manner affecting the Premises or any building, structures, fixtures and improvements thereon or the use thereof and the terms of the Mortgage. Lessee further agrees that it will not permit any unlawful occupation, business or trade to be conducted on the Premises, or any use to be made thereof contrary to any law, ordinance or regulation with respect thereto.


8. Repairs, Alterations and Additions.


A. General. Lessee shall be further obliged to pay from the Gross Revenues of the Premises any expense for repairing any improvements upon the Premises, including, without limitation, extermination and landscaping, and Lessee shall make all reasonable repairs and replacements necessary to maintain the Premises and all furniture and fixtures in a reasonably good, tenantable and wholesome condition, complying in all material respects with all applicable laws, regulations, ordinances, licenses and requirements of all authorities having jurisdiction over the Premises. Lessor, however, is not hereby relieved of responsibility of maintenance assumed by it pursuant to the Mortgage. For purposes of this Lease, "Gross Revenues" shall mean the amount equal to the sum of all revenues received or receivable from the operation of the Facility less contractual allowances for billings not paid or received from applicable governmental agencies or other third party payors as determined during each calendar year.


9. Insurance. Lessee shall maintain insurance as follows:


(a) Professional liability insurance in at least the amount of $1,000,000 per occurrence, $2,000,000 aggregate with a $10,000,000 umbrella. All such liability insurance shall name each of Lessor and Mortgagee as an additional insured;


(b) Liability insurance in an amount equal to at least $1,000,000 per occurrence, $2,000,000 aggregate, with a $10,000,000 umbrella. All such liability insurance shall name each of Lessor and Mortgagee as an additional insured;


(c) "All-risk" coverage on the Facility, including all improvements, equipment and inventory, in an amount not less than the replacement cost thereof, insuring against such potential causes of loss as shall be required by Lessor, including but not limited to loss or damage from wind, fire, ice, subsidence and, if requested by Lessor, earthquake;


(d) Business income insurance (including rental value if the Facility is leased in whole or part) equal to not less than twelve (12) months estimated gross revenues less expenses not ordinarily incurred during the period of business interruption; and


(e) Workers compensation insurance as required by the laws of the State where the Facility is located.


Each of the policies described in (c) and (d) shall name Lessor (or, if directed by Lessor, Mortgagee) as mortgagee and loss payee under a standard non-contributory mortgagee and lender loss payable clause, and shall provide that Lessor and Mortgagee shall receive not less than thirty (30) days written notice prior to cancellation. The proceeds of either of the policies described in (c) and (d) shall be payable by check jointly payable to Lessee and to Lessor (or, if directed by Lessor, Mortgagee) and delivered to Lessor (or, if directed by Lessor, Mortgagee).


Lessee appoints Lessor and Mortgagee as Lessee's attorney-in-fact to cause the issuance of or an endorsement of any policy to bring Lessee into compliance herewith and, at the sole option of Lessor and Mortgagee, to make any claim for, receive payment for, and execute and endorse any documents, checks or other instruments in payment for loss, t ...