2017 Form of Restricted Stock Unit Award Agreement

25% of the Stock Units will vest based on the Company’s absolute total return to stockholders (“TSR”) (the “Absolute TSR Units”)

25% of the Stock Units will vest based on the Company’s TSR compared to the performance of the FTSE NAREIT Equity Healthcare REIT Index (the “Relative TSR Units”)

25% of the Stock Units will vest based on growth in “Gross Real Estate Investments” (defined in Exhibit A) (the “Asset Growth Units”)

25% of the Stock Units will vest based on growth in “AFFO Per Share” (defined in Exhibit A) (the “AFFO Per Share Growth Units”)

Grantee:

Date:

(Signature)

Company:

Date:

(Signature)

Title:

Stock Units

This Agreement evidences an award of stock units for Shares in the number set forth on the cover sheet and subject to the vesting and other conditions set forth herein, in the Plan and on the cover sheet (the “Stock Units”). 

Transfer of Unvested Stock Units

Except as authorized by the Committee in writing, unvested Stock Units may not be sold, assigned, transferred, pledged, hypothecated or otherwise encumbered, whether by operation of law or otherwise, nor may the Stock Units be made subject to execution, attachment or similar process.  If you attempt to do any of these things without the Committee’s written authorization, the Stock Units will immediately become forfeited.

Vesting

The Company will issue your Stock Units in the name set forth on the cover sheet.

Your rights under this Stock Units grant and this Agreement shall vest in accordance with the vesting schedule set forth on the cover sheet so long as you continue in Service through the vesting dates set forth on the cover sheet.

Notwithstanding your vesting schedule, the unvested Stock Units will become fully vested (which shall be interpreted as meaning 150% of the “Target Award” will vest) upon the termination of your Service by the Company other than for Cause (other than death or Disability) or by you for Good Reason.

Change in Control

Notwithstanding the vesting schedule set forth above or anything to the contrary contained in the Plan, (i) if a Change in Control that is not an Unfavorable Limited Change in Control (defined below) occurs before July 1, 2019, the unvested Stock Units will become fully vested (which shall be interpreted as meaning 150% of the “Target Award” will vest) as of the date of the Change in Control, (ii) in the event of a Change in Control that constitutes an Unfavorable Limited Change in Control (defined below), the Grantee’s unvested Stock Units shall not vest due to the Change in Control and shall instead immediately be forfeited and (iii) if a Change in Control that is not an Unfavorable Limited Change in Control occurs on or after July 1, 2019, and on or before December 31, 2019, performance under all performance goals will be measured

up to the date of the Change in Control in the manner described in Exhibit A, with any Stock Units that vest based on such performance being deemed vested as of the date of the Change in Control, and any Stock Units that do not vest based on such performance being forfeited as of the date of the Change in Control.

For purposes of this Agreement, the following definitions shall apply:

“IPO” means the Company’s first underwritten public primary offering of its Common Stock.

“Limited Change in Control” means a Change in Control resulting from (i) the consummation of a merger or consolidation of the Company with any other entity or the issuance of voting securities in connection with a merger or consolidation of the Company or MedEquities Realty Operating Partnership, LP, other than (A) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving or parent entity) at least 50.1% of the combined voting power of the voting securities of the Company or such surviving or parent entity outstanding immediately after such merger or consolidation or (B) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no “person” (as such term is used in Section 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) is or becomes the beneficial owner, directly or indirectly, of securities of the Company representing 50% or more of either of the then outstanding shares of common stock or the combined voting power of the Company’s then outstanding voting securities; or (ii) the consummation of the sale or disposition by the Company of all or substantially all of the Company’s assets (or any transaction or series of transactions within a period of twelve months ending on the date of the last sale or disposition having a similar effect).

“Unfavorable Limited Change in Control” means a Limited Change in Control that occurs within thirty six (36) months following the consummation of an IPO if, in the Limited Change in Control, the Total Return Per Share to Stockholders is less than $15.00 per share; provided, however, that, notwithstanding the foregoing, a Limited Change in Control shall not constitute an Unfavorable Limited Change in Control if at any time following one hundred eighty (180) days after the consummation of an IPO, (A) the highest sixty (60) trading-day volume weighted average price for a Share is equal to or exceeds $15.00 per Share, and (B) the total

trading volume of Common Stock during such sixty (60) trading-day period is at least 5.6 million shares.

“Total Return Per Share to Stockholders” means the sum of (i) the aggregate amount of cash and the fair market value (determined as set forth below) of any securities or other property or consideration directly or indirectly paid and received per share of Common Stock in connection with any Limited Change in Control, including any liquidating distributions, plus (ii) the aggregate amount of cash and the fair market value (determined as set forth below) of any securities or other property or consideration distributed by the Company per share of Common Stock  following the consummation of an IPO.  For purposes of computing fair market value of any securities or other property or consideration other than cash, (x) publicly-traded securities shall be valued at the average of their 4:00 p.m. closing prices (as reported in The Wall Street Journal) for the five trading days prior to the date which is two business days prior to the date of announcement of the Limited Change in Control and (y) any other securities, property or consideration shall be valued at the fair market value thereof as determined in good faith by the Board.”

Delivery

As your Stock Units vest, the Company will issue the Shares to which the then vested Stock Units relate.  The resulting aggregate number of vested Shares will be rounded to the nearest whole number, and you cannot vest in more than the maximum number of Shares covered by this grant.  The issuance of Shares underlying any Stock Units that vest shall be made within two and one-half months after the last day of the Performance Period (or, if for any reason the Stock Units vest before the last day of the Performance Period, within two and one-half months after the date the Stock Units vest).

Evidence of Issuance

The issuance of the Shares under the grant of Stock Units evidenced by this Agreement shall be evidenced in such a manner as the Company, in its discretion, will deem appropriate, including, without limitation, book-entry, registration or issuance of one or more Share certificates.  You will have no further rights with regard to a Stock Unit once the Share related to such Stock Unit has been issued.

Forfeiture of Unvested Stock Units

Unless the termination of your Service triggers accelerated vesting of your Stock Units, or other treatment pursuant to the terms of this Agreement, the Plan, or in an employment or any other written agreement between the Company or any Affiliate, as applicable, and you, you will automatically forfeit to the Company all of the unvested Stock Units in the event you are no longer providing Service for any reason. To the extent any such agreement or

arrangement provides for “full” (or words of similar import) vesting of the Stock Units, it shall be interpreted as meaning 150% of the “Target Award” will vest.

Leaves of Absence

For purposes of this Agreement, your Service does not terminate when you go on a bona fide leave of absence that was approved by your employer in writing if the terms of the leave provide for continued Service crediting, or when continued Service crediting is required by applicable law.  Your Service terminates in any event when the approved leave ends unless you immediately return to active employee work.

Your employer may determine, in its discretion, which leaves count for this purpose, and when your Service terminates for all purposes under the Plan in accordance with the provisions of the Plan. Notwithstanding the foregoing, the Company may determine, in its discretion, that a leave counts for this purpose even if your employer does not agree.

Withholding Taxes

You agree as a condition of this grant that you will make acceptable arrangements to pay any withholding or other taxes that may be due as a result of the vesting or receipt of the Stock Units within a reasonable period of time, or you shall forfeit the Shares.  In the event that the Company or any Affiliate determines that any federal, state, local or foreign tax or withholding payment is required relating to the vesting or receipt of Shares arising from this grant, the Company or any Affiliate shall have the right to require such payments from you, or withhold such amounts from other payments due to you from the Company or any Affiliate (including withholding the delivery of vested Shares otherwise deliverable under this Agreement).

Retention Rights

This Agreement and the grant evidenced hereby do not give you the right to be retained by the Company or any Affiliate in any capacity. Unless otherwise specified in an employment or other written agreement between the Company or any Affiliate and you, the Company or any Affiliate reserves the right to terminate your Service at any time and for any reason.

Stockholder Rights

You, or your estate or heirs, do not have any of the rights of a stockholder with respect to any vested or unvested Stock Units (other than with respect to the Dividend Equivalent Rights described below) until the Shares have been issued to you and either a certificate evidencing your Shares have been issued or an appropriate entry has been made on the Company’s books.

Your grant shall be subject to the terms of Section 18 of the Plan in the event of merger, liquidation or reorganization in the event the Company is subject to such corporate activity.

Dividend Equivalent Rights

You shall also be entitled to Dividend Equivalent Rights with respect to your Stock Units, as described herein.  If the Company declares a normal cash dividend on its Shares and the record date of such dividend is prior to the earlier of the date your Stock Units are settled in full or terminate, you will receive a dividend equivalent credit equal to such normal cash dividend for each outstanding Stock Unit.  Any such dividend equivalent credits shall be accumulated (without interest) and shall be subject to the same terms and conditions as are applicable to the Stock Units to which the dividend equivalents relate, including, without limitation, the restrictions on transfer, forfeiture, vesting and payment provisions contained in this Agreement.  For avoidance of doubt, dividend equivalents shall be paid in cash on the date the Stock Units to which they relate are converted into Shares.

Clawback

If the Company adopts a “clawback” or recoupment policy, this Award will be subject to repayment to the Company to the extent so provided under the terms of such policy.

Applicable Law

This Agreement will be interpreted and enforced under the laws of the State of Maryland, other than any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Agreement to the substantive law of another jurisdiction.

The Plan

The text of the Plan is incorporated in this Agreement by reference.

Certain capitalized terms used in this Agreement are defined in the Plan, and have the meaning set forth in the Plan.

This Agreement and the Plan constitute the entire understanding between you and the Company regarding this grant; except that any written employment, consulting, confidentiality, non-competition, non-solicitation and/or severance agreement between you and the Company or any Affiliate shall supersede this Agreement with respect to its subject matter, except as set forth above under “Change in Control.” Any other prior agreements, commitments or negotiations concerning this grant are superseded.

Data Privacy

In order to administer the Plan, the Company may process personal data about you.  Such data includes, but is not limited to, information provided in this Agreement and any changes thereto, other appropriate personal and financial data about you such as your

contact information, payroll information and any other information that might be deemed appropriate by the Company to facilitate the administration of the Plan.

By accepting this grant, you give explicit consent to the Company to process any such personal data.

Code Section 409A

It is intended that this Award comply with Code Section 409A or an exemption to Code Section 409A, and this Award shall be interpreted accordingly.  To the extent that the Company determines that you would be subject to the additional 20% tax imposed on certain non-qualified deferred compensation plans pursuant to Code Section 409A as a result of any provision of this Agreement, such provision shall be deemed amended to the minimum extent necessary to avoid application of such additional tax.  The nature of any such amendment shall be determined by the Company. For purposes of this Award, a termination of Service only occurs upon an event that would be a separation from service within the meaning of Code Section 409A.

The determination of Gross Real Estate Investments will ignore the balance sheet classification resulting from the purchase price allocation for GAAP accounting purposes as required by ASC 805, Business Combinations (“ASC 805”), including asset acquisitions.

Costs directly attributable to the acquisition of real estate investments, referred to as acquisition costs, shall be excluded unless these costs generate incremental cash revenue to the Company from such investment as outlined in the underlying contractual arrangements.

Any non-cash impairment charges incurred on real estate investments shall reduce the amount of Gross Real Estate Investments at the time such impairment charge is recognized.

Any increase in Gross Real Estate Investments as a result of the application of GAAP accounting principles included in ASC 805 (including asset acquisition accounting) shall be reduced by any corresponding liability recorded, whether partially or in total.  

Any non-cash gain or loss recognized upon initial application of ASC 805 to a real estate acquisition shall be excluded.  This would include any adjustments to the fair value of assumed debt in a real estate investment transaction.

Any lease incentives, tenant allowances or other amounts that generate incremental cash revenue to the Company under the contractual arrangement shall be included in the determination of Gross Real Estate Investments, whether or not such amounts increase real estate investments for GAAP accounting purposes.  All other such items shall be excluded.

Any capital expenditures paid by the Company on owned real estate properties shall be included in the determination of Gross Real Estate Investments to the extent the Company earns a return on those invested dollars.  

The Gross Real Estate Investment attributable to Lakeway Hospital shall be determined as the Company’s consolidated basis, less any equity cash contributions by non-controlling interests.  

Any other consolidated non-wholly owned investments shall be included at the Company’s consolidated basis, after application of the guidance for determining Gross Real Estate Investments included herein, less any equity cash contributions from third-party non-controlling interest holders.

Any items not specifically addressed in this section impacting the Company’s basis in its real estate investments for GAAP accounting purposes shall follow the GAAP accounting treatment.