Fourth Amendment to Master Lease, dated as of November 2, 2017, by and among CTR Partnership, L.P. and the entities party thereto as tenants and guarantors

During the period (the “Transition Period”) commencing with the Fourth Amendment Date and terminating on the first day of the first calendar month after the date that is nine (9) months from the Fourth Amendment Date (such date, the “Transition Period

Tenant and PSM agree to take all steps that are commercially reasonable to facilitate the Operational Transfers including, without limitation, Tenant entering into and complying with an operations transfer agreement(s) with New Operator(s) on substantially the same form as was executed by Tenant as of March 21, 2017 in connection with the Third Amendment (as modified pursuant hereto, the “OTA”). Landlord and Tenant agree to the making of only such modifications thereto as are reasonably necessary to (i) reflect the terms and conditions set forth in this Fourth Amendment, (ii) accommodate more than one New Operator (if necessary), (iii) provide that as of the Transition Date, Tenant will leave the Transitioned Facilities with supply and inventory levels consistent with those levels of supplies and inventory in place at the time Tenant took possession of the Transitioned Facilities under the Lease and Tenant will convey said supplies and inventory to New Operator for no additional consideration on the Transition Date (as more particularly set forth in the OTA), and (iv) if requested, create a separate (but substantively identical) OTA for each Facility and/or for each Transition Date (as defined below). During the Transition Period, Tenant and PSM shall grant New Operator(s) reasonable access to the Premises and Tenant’s (and/or each Facility’s) books and records in relation to the operations thereof.  Tenant and PSM hereby agree to reasonably and promptly cooperate with New Operator(s) in connection with its efforts to obtain the licenses, permits and other authorizations needed for New Operator(s) to operate the Premises for its current use from and after the Operations Transfer, including, without limitation, by filing, submitting or otherwise distributing such applications and notices as New Operator may reasonably request, provided that Tenant shall not be required to incur any material expense in doing so.  The OTA shall provide, and Tenant, PSM, and Guarantor hereby agree, that the business, operations, and all other items and property transferred to New Operator in connection with an Operations Transfer, shall be transferred and conveyed to New Operator free and clear of all liens, encumbrances, obligations, and liabilities occurring, existing, accruing or arising prior to the Transition Date. 

The effective date of the Operations Transfer(s) (the “Transition Date”) shall be as set forth in the OTA, and shall occur prior to the Transition Period Expiration Date. Notwithstanding anything contained herein to the contrary, Landlord shall undertake commercially reasonable efforts to cause all Operations Transfers to occur on the same Transition Date. 

Effective as of the Fourth Amendment Date, Tenant, Guarantor, and PSM hereby agree that the compensation payable to PSM under each PSM Management Agreement shall be limited to the following: (i) until all Deferred Rent has been paid in full pursuant to Section 5 of this Fourth Amendment, a monthly sum equal to five percent (5%) of the

Base Rent.  Effective as of October 1, 2017, new Sections 2.1.1(A), 2.1.1(B), and 2.1.1(C) are hereby added to the Master Lease: 

Exhibit B to Master Lease. Effective as of the Transition Date, the legal descriptions of the Transitioned Facilities shall be deemed deleted and removed from Exhibit B to the Master Lease.  

Schedule 1 to Master Lease. Effective as of the Transition Date, the Transitioned Facilities shall be deemed deleted and removed from Schedule 1 to the Master Lease. 

Right of First Refusal. Effective as of the Fourth Amendment Date, Section 25.6 of the Lease is hereby amended and restated in its entirety to read as follows: “25.6  The provisions of this Article XXV shall terminate and be of no further force or effect on the earlier to occur of:  (i) the Transition Date (if more than one Transition Date, the Transition Date on which this Lease is terminated with respect to the first Transitioned Facility), and (ii) March 31, 2018.”

November 2017 Rent. Notwithstanding anything in the Lease to the contrary, Landlord and Tenant hereby agree as follows with respect to the payment of Base Rent for the month of November 2017: (i) on or before November 6, 2017, Tenant shall pay to Landlord partial Base Rent for the month of November 2017 in the amount of $650,000, and (ii) on or before November 13, 2017, Tenant shall pay to Landlord the balance of the Base Rent payable under the Lease for November 2017.

December 2017 Bed Tax Payment. Tenant shall fulfill its responsibility to fund the full and timely payment of the Bed Taxes for all of the Facilities attributable to the period from July 1, 2017 through September 30, 2017 (such amount, the “December 2017 Bed Tax Liability”) as follows: 

Tenant shall pay to Landlord as Additional Rent, and for deposit into the Tax Reserve, the following amounts at the following times (each, a “Tenant 2017 Bed Tax Deposit”):  (A) on or before November 15, 2017, the amount of $308,855.33, and (B) on or before December 11, 2017, the amount of $209,710.66, plus the positive difference, if any, between (1) the sum of the aggregate Tenant 2017 Bed Tax Deposits made pursuant to clauses (A) and (B) above plus any bed taxes paid from escrow with respect to the Sale Beds under contract to be sold, and (2) the Landlord 2017 Bed Tax Advance (as defined below).

On or before December 15, 2017, provided that Tenant has timely paid to Landlord the Tenant 2017 Bed Tax Deposits and there is no Event of Default then in existence and continuing, Landlord shall make a final Tax Advance (the “Landlord 2017 Bed Tax Advance”) in an amount sufficient to cause the balance of the total outstanding Tax Advance to be Six Million Five Hundred Thousand Dollars (US$6,500,000).

Notwithstanding anything in Section 4.5.6 of the Lease to the contrary, the amounts deposited into the Tax Reserve pursuant to Sections 4(a)(i) and (ii) shall be used by Landlord to discharge the December 2017 Bed Tax Liability; provided, however, that if by December 15, 2017 the amounts deposited into the Tax Reserve pursuant to Sections 4(a)(i) and (ii) are not sufficient to pay and discharge in full the December 2017 Bed Tax Liability, Tenant shall be required to immediately deposit into the Tax Reserve cash sufficient to cover any shortage therein.

February 2018 Bed Tax Payment. Tenant shall further pay to Landlord as Additional Rent, and for deposit into the Tax Reserve, on or before February 10, 2018, Tenant’s prorata share of the Bed Tax amount due for the Transitioned Facilities for the period from October 1, 2017 to the Transition Date; provided however that if the Transition Date is after December 31, 2017 (i) the amount due on February 10, 2018 shall be limited to the Bed Tax due thereon for the period from October 1, 2017 through December 31, 2017; and (ii) the Bed Tax due for periods from and after January 1, 2018 up until the actual Transition Date shall be paid by Tenant to Landlord not less than five (5) days prior to their respective due dates.

Impositions for Transitioned Facilities. With respect to the Transitioned Facilities, following the Transition Date Tenant shall remain obligated to timely pay to Landlord, as Additional Rent, all Real Property Impositions and Bed Taxes accruing for the Transitioned Facilities prior to the Transition Date, regardless of whether such payments fall due before or after the Transition Date. Tenant shall deposit into the Tax Reserve the amount of any pre-Transition Date accrued Real Property Impositions and Bed Taxes not less than ten (10) days prior to the due date of such Real Property Impositions or Bed Taxes. Provided that Tenant has timely complied with such obligations, Landlord shall cause to be paid from the Tax Reserve, on the date that is five (5) days before due, the pre-Transition Date Real Property Impositions and Bed Taxes with respect to the Transitioned Facilities. Excepting interest and penalties accruing thereafter due to Tenant’s failure to timely or fully remit sufficient payments hereunder to the Tax Reserve, in no event will Tenant be responsible to pay any Impositions with respect to a Transitioned Facility accruing and attributable to periods after the Facility’s Transition Date.  If Tenant has timely remitted in full to the Tax Reserve the payments required hereunder, Landlord shall be responsible for all interest and penalties if Real Property Impositions and Bed Taxes are not paid timely to the applicable taxing authorities.  

Impositions for Retained Facilities. Commencing January 1, 2018, except as otherwise set forth in this Fourth Amendment, Tenant’s obligation to pay to Landlord the Additional Rent referred to in Section 4.5.5 of the Lease (as set forth in the Third Amendment) shall cease with respect to the Retained Facilities; further, excepting the Landlord 2017 Bed Tax Advance, Landlord shall not be required to make any further Tax Advances from and after the date of this Fourth Amendment.  

Impositions, General. Section 4.1.1 of the Lease is hereby amended and restated as follows: “4.1.1.  Tenant will fund and pay directly to the taxing authorities all Real Property Impositions, Bed Taxes, and other Impositions attributable to any tax period or portion thereof occurring during the Term, when due and before any fine, penalty, premium, interest or other cost may be added for late or non-payment.  If any such Real Property Imposition, Bed Tax, or other 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 Real Property Imposition, Bed Tax, or other Imposition), Tenant may exercise the option to pay same (and any accrued interest on the unpaid balance thereof) in installments (provided no such installments shall extend beyond the Term) and, in such event, shall pay such installments during the Term before any fine, penalty, premium, further interest or cost may be added thereto. Tenant shall deliver to Landlord, on or before the due date of the underlying Real Property Imposition or Bed Tax, copies of the invoice therefor, the check delivered for payment thereof (if paid by check) and an original receipt evidencing such payment or other proof of payment satisfactory to Landlord.”

Impositions; Mortgage and Default. Section 4.5.1 of the Lease is hereby amended and restated as follows: “4.5.1.  If required under the terms of any Facility Mortgage Document or at Landlord’s option (to be exercised by thirty (30) days’ written notice to Tenant) following (A) the occurrence and during the continuation of an Event of Default, or (B) following the occurrence of more than one (1) Event of Default in any twelve (12) month period and for the remainder of the Term, Tenant shall include with each payment of Base Rent a sum equal one-twelfth (1/12^th) of the amount required to discharge the annual amount of Real Property Impositions and Bed Taxes. Landlord may, at its option, from time to time require that any particular deposit be greater than one-twelfth (1/12^th) of the estimated annual Real Property Impositions and Bed Taxes if necessary to provide a sufficient fund (the “Tax Reserve”) from which to make payment of such Real Property Impositions and Bed Taxes on or before the next due date of any installment thereof; provided, however, such Tax Reserve shall not, in any event, exceed at any given time that amount that is one hundred twenty percent (120%) of the sum of the estimated Real Property Impositions and Bed Taxes payable at any time during the period that is sixty (60) days following any such given date of determination. Additionally, Landlord may change its estimate of any Real Property Imposition or Bed Taxes for any period on the basis of an actual, pending, or threatened (in writing) change in an assessment or tax rate applicable to any Real Property Impositions or Bed Taxes. In such event, Tenant shall deposit with Landlord the amount in excess of the sums previously deposited with Landlord for the applicable period within ten (10) days after Landlord’s request therefor necessary to satisfy any such change in assessment or tax rate.  If at any time within thirty (30) days before the due date of any Real Property Imposition or Bed Taxes, the deposits are insufficient for the payment in full of the obligation for which the deposits are being held, Tenant shall remit the amount of the deficiency to Landlord within ten (10) days after written demand from Landlord.  If Landlord elects (to the extent permitted hereby), to require Tenant to impound Real Property Impositions and Bed Taxes hereunder, Tenant shall, as soon as they are received, deliver to Landlord copies of all notices, demands, claims, bills and receipts in relation to the Real Property Impositions and Bed Taxes.”

Additional Rent. Nothing in this Fourth Amendment shall cancel, terminate, reduce, modify, or otherwise alter in any manner whatsoever (or be deemed to cancel, terminate, reduce, modify or otherwise alter) Tenant’s obligation to pay “Additional Rent” (as defined in Section 2.2 of the Lease) as and when set forth in Section 2.2 of the Lease.  Landlord shall have no further liability or obligation to deposit or otherwise contribute any amounts to the Tax Advance or the Tax Reserve, except as may be set forth in Section 4(b) above. 

Payment of Deferred Rent.  Concurrently with the execution and delivery of this Fourth Amendment, on the Fourth Amendment Date Tenant shall pay to Landlord Base Rent for the month of October 2017 (as adjusted pursuant to this Amendment). In partial consideration for Landlord’s willingness to agree to this Fourth Amendment, Tenant hereby agrees to pay to Landlord, as Additional Rent, the following outstanding amounts (the “Deferred Rent”) pursuant to the terms and conditions of this Section 5: (i) unpaid Base Rent for the month of September 2017 in the amount of Seven Hundred Fifty Thousand Dollars (US$750,000), and (ii) the outstanding balance of the Tax Advance, as increased by the Landlord 2017 Bed Tax Advance and any other amounts hereafter contributed thereto by Landlord. Notwithstanding Section 2.4 of the Lease to the contrary, the amount of Deferred Rent outstanding from time to time shall accrue interest at the Agreed Rate, provided that, solely for purposes of this Section 5 (and without modifying the use of such term as set forth in the Lease), “Agreed Rate” shall mean 6.25%, with such interest calculated on the daily outstanding balance thereunder as reasonably determined by Landlord, and notwithstanding the following two sentences, at Tenant’s election Tenant shall be allowed to pay any or all of the outstanding Deferred Rent and any accrued interest thereon earlier than scheduled herein, but not later. Tenant and Guarantor hereby agree that the Deferred Rent (including any accrued but unpaid interest and other sums due with respect thereto) shall be paid, if not sooner, as follows: (i) notwithstanding anything in Section 6.14 of the Lease to the contrary (and except as expressly set forth in the following paragraph of this Section 5), Tenant shall cause any net Bed Sale Proceeds to be paid to Landlord and applied, for Tenant’s benefit, to reduce the outstanding balance of the Deferred Rent (provided, for the avoidance of doubt, that “net” Bed Sale Proceeds to be applied to the reduction of Deferred Rent shall mean the gross Bed Sale Proceeds, net of any Bed Taxes paid from with respect to the underlying Sale Beds and commissions, legal fees, and other reasonable transaction costs incurred in connection with the sale of the Sale Beds, and (ii) commencing on October 15, 2018 and continuing on the fifteenth (15^th) day of each calendar month thereafter to and including January 15, 2023 (the “Deferred Rent Outside Date”), Tenant shall be required to pay to Landlord as Additional Rent One Hundred Thousand Dollars (US$100,000) per month. On the Deferred Rent Outside Date Tenant shall be required to pay to Landlord, as Additional Rent, the entire remaining outstanding balance of the Deferred Rent, if any, including all accrued and unpaid interest and other sums due thereon.  Payments made by Tenant pursuant to this Section 5 shall first be applied to accrued and unpaid interest on the Deferred Rent and then to reduce the principal amount of the Deferred Rent. For the avoidance of doubt, Landlord, Tenant, and Guarantor agree that the Deferred Rent is not a loan, but rather constitutes deferred Base Rent and Additional Rent payable upon the terms set forth herein, and as such is not evidenced or secured by any arrangement other than this Lease and the Guaranty and the obligation to pay the Deferred Rent on the terms set forth in this Section 5 does not constitute a lender or borrower/creditor relationship between Landlord and Tenant. Further, Guarantor hereby agrees that for the avoidance of doubt, Tenant’s obligations under this Section 5 shall be included in the definition of “Guaranteed Obligations” as such term is used in the Guaranty.  Landlord’s willingness to agree to the payment of Deferred Rent on the terms and conditions set forth in this Section 5 is conditioned upon Tenant’s ongoing compliance with the terms and conditions of the Master Lease; therefore, upon the occurrence of an Event of Default Landlord may elect (in its sole and absolute discretion) to declare all amounts of Deferred Rent (and all accrued, but unpaid interest thereon), together with all other sums

Improvement Projects. Subject to the terms and conditions set forth herein, Landlord has agreed to fund the cost of completing those capital repairs and improvements to the Transitioned Facilities more particularly described on Schedule 2 attached hereto and incorporated herein by reference (each, an “Improvement Project” and, collectively, the “Improvement Projects”).  Tenant shall prosecute the Improvement Projects in a diligent and workmanlike manner and, to the extent possible, shall complete the Improvement Projects prior to the Transition Date. Tenant shall cause the Improvement Projects to be completed in accordance with the provisions of Section 7.4 and, as applicable, Section 7.5 of the Lease. Prior to commencing any Improvement Projects, Tenant shall provide such written documentation as may be reasonably requested by Landlord with respect to such Improvement Projects.  Tenant shall complete each Improvement Project in accordance with, and Landlord shall fund any Improvement Project pursuant to, the terms and conditions set forth in Section 5 of the Second Amendment; provided, however, that Tenant’s Base Rent shall not be increased as a result of any disbursement by Landlord in connection with any Improvement Project. Notwithstanding anything herein to the contrary, during the Transition Period Tenant shall continue to maintain the Transitioned Facilities at Tenant’s expense as required by Section 7.1 of the Lease, but shall have no obligation to make or account for Required Capital Expenditures under Section 7.6 with respect to the Transitioned Facilities. 

Amendment to Guaranty. Effective as of the Fourth Amendment Date, Landlord, Tenant and Guarantor hereby agree that the Guaranty shall be deemed amended as follows and Landlord, Tenant, and Guarantor agree to enter into any additional documentation reasonably required by the other to document the amendments to the Guaranty provided for herein: 

So long as no Event of Default has occurred and is continuing, and so long as Tenant has not committed an event of default that remains uncured in connection with its obligations under any OTA, then effective as of the Transition Date (if there is more than one Transition Date, then with respect to each Transitioned Facility, effective as of the Transition Date on which this Lease is terminated with respect to such Transitioned Facility), the Guaranty shall, solely with respect to any Guaranteed Obligations pertaining to the Transitioned Facilities, be terminated. Said termination of the Guaranty solely with respect to the Guaranteed Obligations pertaining to the Transitioned Facilities shall be of no force or effect whatsoever with respect to the Guaranteed Obligations pertaining to the Retained Facilities and each Guarantor shall remain jointly

Notwithstanding anything to the contrary herein, upon satisfaction of the Burn-Off Conditions (as defined below), the Guaranty shall, solely with respect to Christopher T. Cook (“Cook”), terminate and be of no further force or effect with respect to any liabilities arising from and after the date of such termination.  A termination of the Guaranty with respect to Cook pursuant hereto shall be of no force of effect whatsoever with respect to the remaining Guarantors and each such remaining Guarantor shall remain jointly and severally liable to Landlord for the faithful performance of the Guaranty.  As used herein, “Burn-Off Conditions” shall mean the following: (i) no Event of Default has occurred and is continuing as of the date of determination, (ii) at Tenant’s election, either: (A) (1) all Deferred Rent shall have been paid and satisfied in full pursuant to the provisions of Section 5 above and Tenant has paid the entire outstanding balance of the Deferred Rent on or before the Deferred Rent Outside Date, and (2) Tenant shall have deposited with Landlord an additional security deposit in cash (the “Burn-Off Deposit”) (or by the posting by Tenant, from a reputable issuer reasonably acceptable to Landlord, of a Letter of Credit pursuant to Section 3.2 of the Lease) in an amount equal to one (1) monthly payment of then Base Rent, or (B) (1) Tenant shall have paid to Landlord outstanding amounts of Deferred Rent such that the outstanding balance of the Deferred Rent (including any amounts of accrued but unpaid interest) is less than $2,500,000, and (2) Tenant shall have deposited with Landlord (in cash or by the posting by Tenant, from a reputable issuer reasonably acceptable to Landlord, of a Letter of Credit pursuant to Section 3.2 of the Lease) a Burn-Off Deposit in an amount equal to three (3) monthly payments of then Base Rent.  The Burn-Off Deposit shall be held by Landlord as an additional Security Deposit under the Lease pursuant to, and in accordance with, the terms set forth in Section 3.1 of the Lease and Landlord may, from time to time, without prejudice to any other right or remedy, apply such Burn-Off Deposit to the obligations due from Tenant under the Lease.  Within ten (10) Business Days after any increase in Base Rent, Tenant shall deposit with Landlord cash in the amount necessary to make the Burn-Off Deposit equal to one (1) monthly installment (or three (3) monthly installments, as applicable) of Base Rent.  If Landlord applies the Burn-Off Deposit (or any portion thereof), Tenant shall replenish the Burn-Off Deposit in full within five (5) Business Days after demand by Landlord. For the avoidance of doubt, the depositing by Tenant with Landlord of the Burn-Off Deposit shall not alter, cancel, amend, change, or otherwise modify in any respect Landlord’s rights pursuant to Section 3.1 of the Lease to require Tenant to deposit with Landlord the Security Deposit on the terms set forth in Section 3.1 of the Lease and Landlord’s right to require Tenant to deposit the Security Deposit with Landlord pursuant to Section 3.1 of the Lease shall be in addition to, and not in limitation of, any rights Landlord has with respect to the Burn-Off Deposit.  In no event shall the Burn-Off Deposit be deemed to be the satisfaction by Tenant of its obligations pursuant to Section 3.1 of the Lease (with respect to the Security Deposit) or Tenant’s rights or obligations under Section 6.12.1 of the Lease (with respect to the Additional Deposit). 

Definitions.  Exhibit A to the Master Lease is hereby amended by replacing or adding the following defined terms, as applicable, as follows: 

1.15 to 1.00 for Testing Dates during the period commencing October 1, 2018 and expiring on September 30, 2019, 

1.20 to 1.00 for Testing Dates during the period commencing October 1, 2019 and expiring on September 30, 2021, 

1.25 to 1.00 for Testing Dates during the period commencing October 1, 2021 and for each successive measurement period for the remainder of the Term.”