Common use of Annual Operating Budget Clause in Contracts

Annual Operating Budget. Manager shall, on or before December 20 in each calendar year during the Term, deliver to SNH TRS for SNH TRS’s approval, an annual operating budget for the Facility for the next calendar year (the “Annual Operating Budget”) which shall include separate line items for Capital Replacements and set forth an estimate, on a monthly basis, of Gross Revenues and Facility Expenses, together with an explanation of anticipated changes to Resident charges, payroll rates and positions, non-wage cost increases, the proposed methodology and formula employed by Manager in allocating shared Facility Expenses, and all other factors differing from the then current calendar year. The Annual Operating Budget shall be accompanied by a narrative description of operating objectives and assumptions. If SNH TRS does not approve an Annual Operating Budget or any portion thereof, it shall do so, to the extent practicable, on a line item basis. Manager and SNH TRS shall cooperate to resolve disputed items, provided if the Annual Operating Budget is not approved by SNH TRS within thirty (30) days of SNH TRS’s receipt, Manager shall operate under the expired Annual Operating Budget until a new Annual Operating Budget is approved, provided that line items for Impositions, insurance premiums and utilities shall be the amounts actually incurred for such items. If agreement on the Annual Operating Budget cannot be reached within forty-five (45) days of SNH TRS’s receipt (which time may be extended upon mutual agreement of the parties), the matter shall be resolved by arbitration. The Annual Operating Budget as approved by SNH TRS, or as resolved by arbitration, will be the “Approved Budget” for the applicable calendar year. Manager will obtain SNH TRS’s prior approval for any expenditure which will, or is reasonably expected to, result in a variance of five percent (5%) or more of any Approved Budget. For that portion of the Term ending December 31, [2017], except as otherwise agreed by SNH TRS and Manager, the Approved Budget will be the budget of the prior manager of the Facility, a copy of which has been previously provided to Manager.

Annual Operating Budget. Manager shall, on or before December 20 in each calendar year during the Term, deliver to SNH TRS for SNH TRS’s approval, an annual operating budget for the Facility for the next calendar year (the “Annual Operating Budget”) which shall include separate line items for Capital Replacements and set forth an estimate, on a monthly basis, of Gross Revenues and Facility Expenses, together with an explanation of anticipated changes to Resident charges, payroll rates and positions, non-wage cost increases, the proposed methodology and formula employed by Manager in allocating shared Facility Expenses, and all other factors differing from the then current calendar year. The Annual Operating Budget shall be accompanied by a narrative description of operating objectives and assumptions. If SNH TRS does not approve an Annual Operating Budget or any portion thereof, it shall do so, to the extent practicable, on a line item basis. Manager and SNH TRS shall cooperate to resolve disputed items, provided if the Annual Operating Budget is not approved by SNH TRS within thirty (30) days of SNH TRS’s receipt, Manager shall operate under the expired Annual Operating Budget until a new Annual Operating Budget is approved, provided that line items for Impositions, insurance premiums and utilities shall be the amounts actually incurred for such items. If agreement on the Annual Operating Budget cannot be reached within forty-five (45) days of SNH TRS’s receipt (which time may be extended upon mutual agreement of the parties), the matter shall be resolved by arbitration. The Annual Operating Budget as approved by SNH TRS, or as resolved by arbitration, will be the “Approved Budget” for the applicable calendar year. Manager will obtain SNH TRS’s prior approval for any expenditure which will, or is reasonably expected to, result in a variance of five percent (5%) % or more of any Approved Budget. For that portion of the Term ending December 31, [2017], except as otherwise agreed by SNH TRS and Manager, the Approved Budget will be the budget of the prior manager of the Facility, a copy of which has been previously provided to Manager.

Annual Operating Budget. Manager shall, on or before December 20 in each calendar year during the Term, deliver to SNH TRS for SNH TRS’s approval, an annual operating budget for the Facility for the next calendar year (the “Annual Operating Budget”) which shall include separate line items for Capital Replacements and set forth an estimate, on a monthly basis, of Gross Revenues and Facility Expenses, together with an explanation of anticipated changes to Resident charges, payroll rates and positions, non-wage cost increases, the proposed methodology and formula employed by Manager in allocating shared Facility Expenses, and all other factors differing from the then current calendar year. The Annual Operating Budget shall be accompanied by a narrative description of operating objectives and assumptions. If SNH TRS does not approve an Annual Operating Budget or any portion thereof, it shall do so, to the extent practicable, on a line item basis. Manager and SNH TRS shall cooperate to resolve disputed items, provided if the Annual Operating Budget is not approved by SNH TRS within thirty (30) days of SNH TRS’s receipt, Manager shall operate under the expired Annual Operating Budget until a new Annual Operating Budget is approved, provided that line items for Impositions, insurance premiums and utilities shall be the amounts actually incurred for such items. If agreement on the Annual Operating Budget cannot be reached within forty-five (45) days of SNH TRS’s receipt (which time may be extended upon mutual agreement of the parties), the matter shall be resolved by arbitration. The Annual Operating Budget as approved by SNH TRS, or as resolved by arbitration, will be the “Approved Budget” for the applicable calendar year. Manager will obtain SNH TRS’s prior approval for any expenditure which will, or is reasonably expected to, result in a variance of five percent (5%) % or more of any Approved Budget. For that portion of the Term ending December 31, [2017]2015, except as otherwise agreed by SNH TRS and Manager, the Approved Budget will be the budget of the prior manager of the Facility, a copy of which has been previously provided to Manager.

Annual Operating Budget. Manager shall, on or before December 20 in each calendar year during the Term, deliver to SNH TRS Owner for SNH TRSOwner’s approval, an annual operating budget for the Facility Community for the next calendar year (the “Annual Operating Budget”) which shall include separate line items for Capital Replacements and set forth an estimate, on a monthly basis, of Gross Revenues and Facility Community Expenses, together with an explanation of anticipated changes to Resident Tenants charges, payroll rates and positions, non-wage cost increases, the proposed methodology and formula employed by Manager in allocating shared Facility Community Expenses, and all other factors differing from the then current calendar year. The Annual Operating Budget shall be accompanied by a narrative description of operating objectives and assumptions. If SNH TRS Owner does not approve an Annual Operating Budget or any portion thereof, it shall do so, to the extent practicable, on a line item basis. Manager and SNH TRS Owner shall cooperate to resolve disputed items, provided if the Annual Operating Budget is not approved by SNH TRS Owner within thirty (30) days of SNH TRSOwner’s receipt, Manager shall operate under the expired Annual Operating Budget until a new Annual Operating Budget is approved, provided that line items for Impositions, insurance premiums and utilities shall be the amounts actually incurred for such items. If agreement on the Annual Operating Budget cannot be reached within forty-five (45) days of SNH TRSOwner’s receipt (which time may be extended upon mutual agreement of the parties), the matter shall be resolved by arbitration. The Annual Operating Budget as approved by SNH TRSOwner, or as resolved by arbitration, will be the “Approved Budget” for the applicable calendar year. Manager will obtain SNH TRSOwner’s prior approval for any expenditure which will, or is reasonably expected to, result in a variance of five percent (5%) % or more of any Approved Budget. For that portion of the Term ending December 31, [2017], except as otherwise agreed by SNH TRS and Manager, the Approved Budget will be the budget of the prior manager of the Facility, a copy of which has been previously provided to Manager.

Annual Operating Budget. Manager shallNo later than October 1 of each Operating Year, on or before December 20 in each calendar year during the Term, deliver to SNH TRS Operator shall submit for SNH TRS’s Owner's review and approval, an annual operating a proposed budget on a monthly basis for the Facility for Operational Phase Services to be performed in the next calendar year succeeding Operating Year, substantially in the form of Exhibit C (the “"Annual Operating Budget”) which shall include separate line items for Capital Replacements and set forth an estimate, on a monthly basis, of Gross Revenues and Facility Expenses, together with an explanation of anticipated changes to Resident charges, payroll rates and positions, non-wage cost increases, the proposed methodology and formula employed by Manager in allocating shared Facility Expenses, and all other factors differing from the then current calendar year"). The proposed Annual Operating Budget shall be accompanied based on Operator's assessment of such services for such Operating Year and shall reflect the most economical and reasonable means of performing such activities in accordance with the Standards of Performance. The proposed Annual Operating Budget shall include: (i) the proposed amount to be spent annually for Reimbursable Costs and the Management Fee then in effect; (ii) the proposed amounts to be spent for the purchase of Materials and Services in accordance with Section 3.8, identifying the items to be purchased; and (iii) a proposed inventory plan. Each proposed Annual Operating Budget shall identify and list separately capital items. Within thirty (30) Days after Owner receives Operator's proposal for such Annual Operating Budget, Owner shall notify Operator in writing of Owner's approval or any proposed changes to the Annual Operating Budget, and projections reflected therein as Owner may deem necessary or appropriate. Within fifteen (15) Days following receipt of any such notice of proposed changes from Owner, Operator shall either confirm to Owner its ability to perform the Work during such period in accordance with Owner's proposed changes, or object to Owner's proposed changes, stating in detail the reasons for such objection. Owner and Operator shall use their best efforts to agree upon an Annual Operating Budget, which shall be approved in writing by a narrative description of operating objectives and assumptionsboth Parties, which approval shall not be unreasonably withheld. If SNH TRS does Owner and Operator are unable to agree upon an Annual Operating Budget, Owner and Operator shall present the dispute for dispute resolution in accordance with Article VIII. Each Annual Operating Budget shall remain in effect throughout the applicable Operating Year, subject to updating, revision and amendment as may be proposed by either Party and consented to in writing by the other Party, which consent may not approve be unreasonably withheld. If, during any Operating Year, Operator determines that any category within an Annual Operating Budget or any portion thereof, it shall do so, to the extent practicable, on a line item basis. Manager and SNH TRS shall cooperate to resolve disputed items, provided if the Annual Operating Budget is not approved by SNH TRS within thirty (30) days of SNH TRS’s receipt, Manager shall operate under the expired Annual Operating Budget until a new Annual Operating Budget is approved, provided that line items for Impositions, insurance premiums and utilities shall be the amounts actually incurred will vary for such items. If agreement on the Annual Operating Budget cannot be reached within forty-five (45) days of SNH TRS’s receipt (which time may be extended upon mutual agreement of the parties), the matter shall be resolved Year by arbitration. The Annual Operating Budget as approved by SNH TRS, or as resolved by arbitration, will be the “Approved Budget” for the applicable calendar year. Manager will obtain SNH TRS’s prior approval for any expenditure which will, or is reasonably expected to, result in a variance of five more than ten percent (510%) or more of any Approved Budget. For that portion twenty thousand dollars ($20,000), whichever is greater, Operator shall immediately notify Owner and shall follow Owner's instructions regarding further expenditures for the operation and maintenance of the Term ending December 31, [2017], except as otherwise agreed by SNH TRS and Manager, the Approved Budget will be the budget of the prior manager of the Facility, a copy of which has been previously provided Facility pursuant to Manager.this

Annual Operating Budget. Manager shallNot later than thirty (30) days prior to the beginning of each Fiscal Year commencing with the first Fiscal Year in which Borrower reasonably expects to realize Operating Revenues, the operating budget of Borrower for the first three (3) months of such Fiscal Year and not later than thirty (30) days after the beginning of each Fiscal Year commencing with the first Fiscal Year in which Borrower reasonably expects to realize Operating Revenues, the operating budget of Borrower for the last nine (9) months of such Fiscal Year, certified, in each case, by an Authorized Official of the Borrower (collectively, the “Initial Operating Budget”), which (i) shall include, on or before December 20 an aggregate and month-by-month basis, reasonable estimates of all Operating Revenues expected to be received and all Operating Costs (by category) expected to be incurred during such Fiscal Year and during each month in each calendar such Fiscal Year, (ii) shall include such other information as may be reasonably requested by the Loan Servicer and (iii) shall be prepared on a basis consistent from year during to year and month to month in sufficient detail to permit meaningful comparisons, and shall include a statement of the Termassumptions on which it is based. Borrower may amend the Initial Operating Budget, deliver to SNH TRS as the same may have been previously amended, for SNH TRS’s approval, any Fiscal Year by furnishing the Loan Servicer an annual amended operating budget of Borrower for such Fiscal Year, certified by an Authorized Official of the Facility for the next calendar year Borrower (the “Annual Amended Operating Budget”) ), which shall include separate line items for Capital Replacements and set forth an estimate, on a monthly basis, of Gross Revenues and Facility Expensesthe same information as is contained in the Initial Operating Budget, together with an explanation of anticipated any changes to Resident charges, payroll rates and positions, non-wage cost increases, the proposed methodology and formula employed by Manager in allocating shared Facility Expenses, and all other factors differing from the then current calendar yearInitial Operating Budget, as the same may have been previously amended. The Annual Initial Operating Budget shall be accompanied by a narrative description of operating objectives and assumptions. If SNH TRS does not approve an Annual Operating Budget or any portion thereofBudget, it shall do so, to as the extent practicable, on a line item basis. Manager and SNH TRS shall cooperate to resolve disputed items, provided if the Annual Operating Budget is not approved by SNH TRS within thirty (30) days of SNH TRS’s receipt, Manager shall operate under the expired Annual Operating Budget until a new Annual Operating Budget is approved, provided that line items for Impositions, insurance premiums and utilities shall be the amounts actually incurred for such items. If agreement on the Annual Operating Budget cannot be reached within forty-five (45) days of SNH TRS’s receipt (which time same may be extended upon mutual agreement of the parties)amended by any Amended Operating Budget, the matter shall be resolved by arbitration. The Annual Operating Budget is hereinafter referred to as approved by SNH TRS, or as resolved by arbitration, will be the “Approved Operating Budget” for the applicable calendar year. Manager will obtain SNH TRS’s prior approval for any expenditure which will, or is reasonably expected to, result in a variance of five percent (5%) or more of any Approved Budget. For that portion of the Term ending December 31, [2017], except as otherwise agreed by SNH TRS and Manager, the Approved Budget will be the budget of the prior manager of the Facility, a copy of which has been previously provided to Manager”.

Annual Operating Budget. Manager shall(a) As soon as it is available, on or before December 20 but in any event at least thirty (30) days prior to the commencement of each calendar year during Fiscal Year, the Term, deliver Borrower shall submit to SNH TRS OPIC for SNH TRS’s approval, an annual operating budget for approval by OPIC the Facility for the next calendar year (the “Annual Operating Budget”) which shall include separate line items Budget for Capital Replacements and set forth an estimate, on a monthly basis, of Gross Revenues and Facility Expenses, together with an explanation of anticipated changes to Resident charges, payroll rates and positions, non-wage cost increases, such Fiscal Year prepared by the proposed methodology and formula employed by Manager in allocating shared Facility Expenses, and all other factors differing from the then current calendar yearBorrower. The Each Annual Operating Budget shall be consistent with the Financial Model and be accompanied by a narrative description certificate of operating objectives an Authorized Officer of the Borrower certifying that the budget is a reasonable estimate for the period covered thereby and assumptionsis in compliance with the requirements of this Section 6.07. (b) A proposed Annual Operating Budget shall become effective on the later of (i) the first day of the relevant Fiscal Year and (ii) the date OPIC advises the Borrower that OPIC has approved such Annual Operating Budget. If SNH TRS OPIC does not approve an Annual Operating Budget Budget, OPIC shall advise the Borrower of the items that are disapproved and the reason for such disapproval. (c) If all or any portion thereofpart of an Annual Operating Budget is disapproved, it the Borrower shall do socomply with all approved aspects of such Annual Operating Budget. With respect to those aspects of any Annual Operating Budget that are not approved, the Borrower and OPIC shall continue to the extent practicable, on a line item basis. Manager discuss such aspects in good faith and SNH TRS shall cooperate to resolve disputed items, provided if the Annual Operating Budget is not for the preceding fiscal year related to such disapproved items shall be applicable and shall for all purposes hereof be deemed to be part of the approved by SNH TRS within thirty (30) days of SNH TRS’s receipt, Manager shall operate under the expired Annual Operating Budget for the current Fiscal Year until a new Annual Operating Budget is approved, provided that line items for Impositions, insurance premiums and utilities shall be the amounts actually incurred for such items. If agreement on time as such aspects of the Annual Operating Budget cannot be reached within forty-five (45) days of SNH TRS’s receipt (which time may be extended upon mutual agreement of the parties), the matter shall be resolved by arbitration. The Annual Operating Budget as approved by SNH TRS, or as resolved by arbitration, will be the “Approved Budget” for the applicable calendar year. Manager will obtain SNH TRS’s prior approval for any expenditure which will, or is reasonably expected to, result current Fiscal Year have been approved in a variance of five percent (5%) or more of any Approved Budget. For that portion of the Term ending December 31, [2017], except as otherwise agreed writing by SNH TRS and Manager, the Approved Budget will be the budget of the prior manager of the Facility, a copy of which has been previously provided to ManagerOPIC.

Annual Operating Budget. Manager shallWith the exception of the first year, on annually thereafter, but no later than December 1 of (or before December 20 in date to be determined by Department) each calendar year during the Termof this Agreement or any exercised extensions, deliver to SNH TRS for SNH TRS’s approval, an annual operating budget for the Facility for the next calendar year (the “Management shall provide a recommended Annual Operating Budget”) which , Exhibit J for the twelve-month period beginning October 1 of the following year. The Annual Operating Budget including the accompanying percentages and ratios shall include separate line items for Capital Replacements be used by the Department and set forth an estimateManagement as a means of controlling the revenues and expenses of Management and to measure Management’s performance under this Agreement. The Annual Operating Budget shall contain all the materials and details required in the Preliminary Budget Estimate, on a monthly basispursuant to Article 4.01 above, of Gross Revenues updated to reflect the then-current conditions and Facility Expenses, together with an explanation of anticipated changes to Resident charges, payroll rates and positions, non-wage cost increases, the proposed methodology and formula employed by Manager in allocating shared Facility Expenses, and all other factors differing from the then current calendar yearcircumstances. The Annual Operating Budget shall be accompanied presented in a monthly format, in total and by a narrative description of operating objectives and assumptions. If SNH TRS does not approve an Annual Operating Budget or any portion thereofunit, it shall do so, with comparisons to the extent practicable, on a line item basis. Manager prior year and SNH TRS shall cooperate to resolve disputed items, provided if the Annual Operating Budget is not approved by SNH TRS within thirty (30) days of SNH TRS’s receipt, Manager shall operate under the expired Annual Operating Budget until a new Annual Operating Budget is approved, provided that line items for Impositions, insurance premiums current year budget and utilities shall be the amounts actually incurred for such items. If agreement on the Annual Operating Budget cannot be reached within forty-five (45) days of SNH TRS’s receipt (which time may be extended upon mutual agreement of the parties), the matter shall be resolved by arbitrationactual. The Annual Operating Budget as and any subsequent amendments thereto, shall be subject to approval by the Department. Management, in making expenditures hereunder, shall not exceed the expenditure percentages and ratios that are approved annually for each line item of the approved Annual Operating Budget without the prior approval of an amendment to said Budget by the Department. Upon request of Management, the Department shall consider, at MDAD’s discretion, modifications to the Annual Operating Budget that are reasonably necessary for effective operation and/or beneficial to the financial performance of the hotel. Monthly, in conjunction with the Monthly Financial Statement required pursuant to Article 4.04, Management shall report all deviations from the dollar amounts approved for each dollar line item in the Annual Operating Budget, so that the Department may amend such Budget. In the event that Management is required to make expenditures in excess of the amount included in a monthly increment of the approved Annual Operating Budget because of emergencies or operational necessity such expenditures must be approved by SNH TRSthe Department, or as resolved by arbitrationManagement shall make such expenditures and shall promptly advise the Department of such action and the Annual Operating Budget shall be amended to reflect same. Within 10 calendar days of the date of notice of award of this Agreement, will be Management shall submit to the “Approved Budget” Department for its consideration a proposed Annual Operating Budget for the applicable calendar yearfirst year of this Agreement. Manager will obtain SNH TRS’s prior Approval of the Annual Operating budget shall not be construed as authority for Management to spend all monies budgeted. Approval of the Annual Operating Budget shall not deprive the County of the right to examine expenditures under this Agreement, including but not limited to expenditures previously approved or authorized in the Budget process, to determine compliance with the terms of this Agreement. The terms of this Agreement cannot be modified or altered by approval for any expenditure which will, or is reasonably expected to, result in a variance of five percent (5%) or more of any Approved Annual Operating Budget. For that portion , and, in the event of a conflict, the terms of this Agreement shall govern the payment obligations of the Term ending December 31, [2017], except as otherwise agreed by SNH TRS and Manager, the Approved Budget will be the budget of the prior manager of the Facility, a copy of which has been previously provided to ManagerCounty.

Annual Operating Budget. Manager shall, on or before December November 20 in each calendar year during the Term, deliver to SNH TRS Company for SNH TRSCompany’s approval, an annual operating budget for the Facility Community for the next calendar year (the “Annual Operating Budget”) which shall include separate line items for Capital Replacements and set forth an estimate, on a monthly basis, of Gross Revenues and Facility Community Expenses, as well as an estimate of EBITDA for such calendar year, together with an explanation of anticipated changes to Resident charges, payroll rates and positions, non-wage cost increases, the proposed methodology and formula employed by Manager in allocating shared Facility Community Expenses, and all other factors differing from the then current calendar year. The Annual Operating Budget shall be accompanied by a narrative description of operating objectives and assumptions. If SNH TRS Company does not approve an Annual Operating Budget or any portion thereof, it shall do so, to the extent practicable, on a line item basis. Manager and SNH TRS Company shall cooperate to resolve disputed items, provided if the Annual Operating Budget is not approved by SNH TRS within thirty (30) days of SNH TRS’s receiptCompany, Manager shall operate under the expired Annual Operating Budget until a new Annual Operating Budget is approved, provided that line items for Impositions, insurance premiums and utilities shall be the amounts actually incurred for such items. If agreement on the Annual Operating Budget cannot be reached within forty-five (45) days of SNH TRSCompany’s receipt (which time may be extended upon mutual agreement of the parties), the matter shall be resolved by arbitration. The Annual Operating Budget as approved by SNH TRSCompany, or as resolved by arbitration, will be the “Approved Budget” for the applicable calendar year. Except for expenditures incurred to remedy any emergency threatening the safety of the Community or its Residents, invitees or employees or imminent material physical damage to the Community (for which Manager shall provide Company an accounting promptly after remedying such emergency), Manager will obtain SNH TRSCompany’s prior approval for any expenditure which will, or is reasonably expected to, result in a variance of equal to or greater than five percent (5%) or more of any the Approved Budget. For that portion of the Term ending December 31, [2017], except as otherwise agreed by SNH TRS and Manager, the Approved Budget will be the budget of the prior manager of the Facility, a copy of which has been previously provided to Manager.

Annual Operating Budget. Manager shall, on or before December 20 in A. Management Company shall submit to Owner for its review at least thirty (30) days prior to the beginning of each calendar year during Fiscal Year after the Term, deliver to SNH TRS for SNH TRS’s approval, an annual operating Effective Date a preliminary draft of the budget for the Facility for the next calendar year (the “"Annual Operating Budget”") which shall include separate line items for Capital Replacements and set forth an estimate, on a monthly basis, of Gross Revenues and Facility Expenses, together with an explanation the estimated financial results of anticipated changes to Resident charges, payroll rates and positions, non-wage cost increases, the proposed methodology and formula employed by Manager in allocating shared Facility Expenses, and all other factors differing from operation of the then current calendar yearHotel during the next Fiscal Year. The Such Annual Operating Budget shall be accompanied by a narrative description of operating objectives project the estimated Gross Revenues, departmental profits, Deductions, and assumptionsOperating Profit for the forthcoming Fiscal Year for the Hotel. If SNH TRS does not approve an In preparing the Annual Operating Budget for each Fiscal Year, Management Company's goal will be the maximization of the long-term Operating Profit of the Hotel, in keeping with the Marriott Standards and the general standards of the hotel industry for similar properties. If there are material items in any given Annual Operating Budget which have been budgeted at significantly different amounts from the amounts actually experienced (or projected) for the same items in the preceding Fiscal Year, Management Company agrees to take reasonable steps to ensure that, at Owner's request, qualified personnel from Management Company's staff are available to explain these differences to Owner. A meeting (or meetings) for such purpose shall be held, at Owner's request, within a reasonable period of time after the submission to Owner of the preliminary draft of the Annual Operating Budget. Management Company will at all times give good faith consideration to Owner's suggestions regarding any portion thereofAnnual Operating Budget. Management Company shall thereafter submit to Owner, it by no later than thirty (30) days after the beginning of such Fiscal Year, the final Annual Operating Budget. B. [Intentionally omitted] C. Each Annual Operating Budget will constitute a standard to which Management Company shall do souse its reasonable best efforts to adhere. It is understood, to the extent practicablehowever, on a line item basis. Manager and SNH TRS shall cooperate to resolve disputed items, provided if that the Annual Operating Budget is an estimate only and that unforeseen circumstances such as, but not approved by SNH TRS within thirty (30) days limited to, the costs of SNH TRS’s receiptlabor, Manager shall operate under the expired Annual Operating Budget until a new Annual Operating Budget is approvedmaterials, provided that line items for Impositionsservices and supplies, insurance premiums casualty, operation of law, or economic and utilities shall be the amounts actually incurred for such items. If agreement on market conditions may make adherence to the Annual Operating Budget cannot be reached within forty-five (45) days of SNH TRS’s receipt (which time may be extended upon mutual agreement of the parties)impracticable, the matter and Management Company shall be resolved entitled to depart therefrom for such reasons; provided, however, that nothing herein shall be deemed to authorize Management Company to take any action prohibited by arbitration. The this Agreement nor to reduce Management Company's other rights or obligations hereunder. D. Management Company shall notify Owner of any significant variations from the Annual Operating Budget as approved by SNH TRS, or as resolved by arbitration, will be the “Approved Budget” for the applicable calendar year. Manager will obtain SNH TRS’s prior approval for any expenditure which will, or is reasonably expected to, result in a variance of five percent (5%) or more of any Approved Budget. For that portion promptly after Management Company learns of the Term ending December 31same, [2017]but in no event later than the date on which Management Company is required to give Owner the Accounting Period Statement covering the period in which such variation occurs. Any such notice shall set forth in reasonable detail the nature, except as otherwise agreed extent and, if known by SNH TRS and ManagerManagement Company, the Approved Budget will be cause of such variation, and recommendations of appropriate actions, either to correct the budget of the prior manager of the Facilityvariation or to prevent or minimize its occurrence or effect. Owner and Management Company shall, a copy of which has been previously provided at Owner's request, meet to Managerreview such variations and to take appropriate action with respect thereto.

Annual Operating Budget. Manager shall, on or 7.01 Not later than thirty (30) days before December 20 in the end of each calendar year Fiscal Year after the Opening Date during the Term, Manager shall prepare in advance and deliver to SNH TRS Tenant for SNH TRSTenant’s approval, an annual operating which shall not be unreasonably withheld or delayed, a Capital Budget, Marketing Budget and operations budget for the Facility next Fiscal Year for the next calendar year Facility (the “Annual Operating Budget”) in which shall include separate line items for Capital Replacements and set each proposed expenditure will be designated either as required or desirable), setting forth an estimateestimate of Non-Routine Capital Expenditures, on a monthly basis, of Gross Total Facility Revenues and Facility Expenses, together with an explanation of anticipated changes to Resident charges, occupancy fees, payroll rates and positions, non-wage cost increases, the proposed methodology and formula employed by Manager in allocating shared Facility Expenses, and all other factors differing from the then current calendar yearFiscal Year. The budget, as proposed (the “Annual Operating Budget Budget”), shall be accompanied considered by a narrative description Tenant and, in consultation between Tenant and Manager, the budget for the Facility for the ensuing Fiscal Year will be prepared by the Manager with the final contents of operating objectives the budget to be determined mutually by Manager and assumptionsTenant. If SNH TRS does not approve an there is a delay in the preparation of the proposed Annual Operating Budget Budget, or any portion thereof, it if Tenant shall do so, fail to approve the extent practicable, on a line item basis. Manager and SNH TRS shall cooperate to resolve disputed items, provided if the proposed Annual Operating Budget is not approved by SNH TRS within thirty (30) days of SNH TRS’s receiptBudget, Manager shall operate under the expired Annual Operating Approved Budget (increased but not decreased by the GDP Deflator) until a new Annual Operating Budget budget is approved, provided that line items for Impositions, insurance premiums and utilities shall be the amounts actually incurred for such items. If agreement on the Annual Operating Budget consensus cannot be reached between the parties as to the Approved Budget within forty-five sixty (4560) days of SNH TRSTenant’s receipt (which time may be extended upon mutual agreement of the parties)proposed Annual Operating Budget, the matter shall be resolved by arbitrationsubmitted to the Expert to determine, pursuant to Section 18.12, whether Tenant unreasonably withheld or delayed its approval of the proposed Annual Operating Budget, and such determination shall be final and binding on the parties. The If the Expert determines that Tenant unreasonably withheld or delayed such approval, the proposed Annual Operating Budget as approved by SNH TRS, or as resolved by arbitration, will shall be deemed the “Approved Budget” for the applicable calendar year. Manager will obtain SNH TRS’s prior approval shall make a diligent and commercially reasonable effort to operate the Facility as provided herein so that the actual Total Facility Revenues and Facility Expenses of the Facility during any Fiscal Year shall be consistent with the Approved Budget for that Fiscal Year. Except as otherwise expressly provided for in this Agreement and except for expenditures relating to the health and safety of Residents or Facility employees, Manager shall not make expenditures for any expenditure which willitem aggregating materially in excess of the amount budgeted, or is reasonably expected to, result in a variance defined as more than the greater of five percent (5%) or more and Five Thousand and NO/100 Dollars ($5,000.00) of any Approved Budget. For that portion of the Term ending December 31, [2017], except as otherwise agreed by SNH TRS and Manager, the Approved Budget will be the budget of the prior manager of each budgeted Facility Expense line item for the Facility, a copy of which has been previously provided to Managerwithout Tenant’s prior written approval.

Annual Operating Budget. Manager shall, within the time limits set forth on or before December 20 in each calendar year during the TermExhibit E, deliver to SNH TRS Owner for SNH TRSOwner’s approval, an annual operating approval a draft operations budget for the Facility next Fiscal Year for the next calendar year (the “Annual Operating Budget”) which shall include separate line items for Capital Replacements Facility, and a final operations budget, and set forth an estimate, on a monthly an Accounting Period basis, of Gross Revenues and Facility Expenses, together with an explanation of anticipated changes to Resident resident charges, payroll rates and positions, non-wage cost increases, the proposed methodology and formula employed by Manager in allocating shared Facility Shared Expenses, and all other factors differing from the then current calendar yearFiscal Year. The budget, as proposed, shall be considered by Owner and, in consultation between Owner and Manager, the budget for the Facility for the ensuing Fiscal Year will be prepared by the Manager with the final contents of the budget to be determined mutually by Manager and Owner (the “Annual Operating Budget”). The proposed Annual Operating Budget shall be accompanied by include, in form and content at least consistent with that provided for in the 2010 Annual Operating Budget, a narrative description of underlying assumptions, operating objectives and assumptionsrelevant competitive analysis. Such annual budget process shall be conducted on an open book basis, and Owner shall have the right, at all reasonable times during the usual business hours of the Manager, to examine and make copies of books of account and other information (including electronic copies thereof) maintained or collected by Manager and its Affiliates with respect to each item to be included in the budget. Such right may be exercised through any agent or employee designated by Owner or by an independent public accountant or chartered accountant designated by Owner. If SNH TRS does not approve an Annual Operating Budget or any portion thereof, it shall do so, to the extent practicable, on a line item basis. Manager and SNH TRS shall cooperate to resolve disputed items, provided if the new Annual Operating Budget is not approved finalized, or if Owner shall fail to approve the newly proposed budget, in each case, by SNH TRS within thirty (30) days December 15 of SNH TRS’s receiptthe then expiring year, Manager shall operate under the expired Annual Operating Budget Budget, increased by 50% of the percentage change in the Index between October of such expiring year and October of the year immediately preceding such expiring year, until a new budget is approved or determined pursuant to the procedures established in Section 7.2; provided, however that if [the BLS / Statistics Canada] changes the publication frequency of the Index so that the Index is not available for October of the applicable year, adjustment shall be based on fifty percent (50%) of the percentage difference between the Index for the closest preceding month for which the Index is available and the Index for the same month of the preceding year. During any period the Facility is operating under the expired Annual Operating Budget is approvedBudget, variance reports will be based on the expired Annual Operating Budget. Manager shall use diligent and good faith efforts to operate the Facility as provided herein so that line items for Impositionsthe actual Gross Revenues, insurance premiums costs, and utilities Facility Expenses of the Facility during any applicable period of Owner’s fiscal year shall be the amounts actually incurred for such items. If agreement on at least consistent with the Annual Operating Budget cannot be reached within forty-five (45) days of SNH TRS’s receipt (which time may be extended upon mutual agreement of the parties), the matter shall be resolved by arbitration. The Annual Operating Budget as approved by SNH TRS, or as resolved by arbitration, will be the “Approved Budget” for the applicable calendar year. Manager will obtain SNH TRS’s prior approval for any expenditure which will, or is reasonably expected to, result in a variance of five percent (5%) or more of any Approved Budget. For that portion of the Term ending December 31, [2017], except as otherwise agreed by SNH TRS and Manager, the Approved Budget will be the budget of the prior manager of the Facility, a copy of which has been previously provided to Manager.

Annual Operating Budget. Manager shall[*****] the beginning of each Fiscal Year commencing with the first Fiscal Year in which Borrower reasonably expects to realize Operating Revenues, the operating budget of Borrower for the first three (3) months of such Fiscal Year and [*****] of each Fiscal Year commencing with the first Fiscal Year in which Borrower reasonably expects to realize Operating Revenues, the operating budget of Borrower for the last nine (9) months of such Fiscal Year, certified, in each case, by an Authorized Official of the Borrower (collectively, the “Initial Operating Budget”), which (i) shall include, on or before December 20 an aggregate and month-by-month basis, reasonable estimates of all Operating Revenues expected to be received and all Operating Costs (by category) expected to be incurred during such Fiscal Year and during each month in each calendar such Fiscal Year, (ii) shall include such other information as may be reasonably requested by the Loan Servicer and (iii) shall be prepared on a basis consistent from year during to year and month to month in sufficient detail to permit meaningful comparisons, and shall include a statement of the Termassumptions on which it is based. Borrower may amend the Initial Operating Budget, deliver to SNH TRS as the same may have been previously amended, for SNH TRS’s approval, any Fiscal Year by furnishing the Loan Servicer an annual amended operating budget of Borrower for such Fiscal Year, certified by an Authorized Official of the Facility for the next calendar year Borrower (the “Annual Amended Operating Budget”) ), which shall include separate line items for Capital Replacements and set forth an estimate, on a monthly basis, of Gross Revenues and Facility Expensesthe same information as is contained in the Initial Operating Budget, together with an explanation of anticipated any changes to Resident charges, payroll rates and positions, non-wage cost increases, the proposed methodology and formula employed by Manager in allocating shared Facility Expenses, and all other factors differing from the then current calendar yearInitial Operating Budget, as the same may have been previously amended. The Annual Initial Operating Budget shall be accompanied by a narrative description of operating objectives and assumptions. If SNH TRS does not approve an Annual Operating Budget or any portion thereofBudget, it shall do so, to as the extent practicable, on a line item basis. Manager and SNH TRS shall cooperate to resolve disputed items, provided if the Annual Operating Budget is not approved by SNH TRS within thirty (30) days of SNH TRS’s receipt, Manager shall operate under the expired Annual Operating Budget until a new Annual Operating Budget is approved, provided that line items for Impositions, insurance premiums and utilities shall be the amounts actually incurred for such items. If agreement on the Annual Operating Budget cannot be reached within forty-five (45) days of SNH TRS’s receipt (which time same may be extended upon mutual agreement of the parties)amended by any Amended Operating Budget, the matter shall be resolved by arbitration. The Annual Operating Budget is hereinafter referred to as approved by SNH TRS, or as resolved by arbitration, will be the “Approved Operating Budget” for the applicable calendar year. Manager will obtain SNH TRS’s prior approval for any expenditure which will, or is reasonably expected to, result in a variance of five percent (5%) or more of any Approved Budget. For that portion of the Term ending December 31, [2017], except as otherwise agreed by SNH TRS and Manager, the Approved Budget will be the budget of the prior manager of the Facility, a copy of which has been previously provided to Manager”.

Annual Operating Budget. Manager shallBorrower shall prepare and deliver to Administrative Agent (with sufficient copies for each of the Lenders), on or before December 20 in the beginning of each calendar year during the Term, deliver to SNH TRS for SNH TRS’s approvalFiscal Year of Borrower, an annual operating budget for the Facility each Asset including all planned capital expenditures for the next calendar year each Asset for such ensuing Fiscal Year (the “Annual Operating Budget”) which shall include separate line items for Capital Replacements and set forth an estimate, on a monthly basis, of Gross Revenues and Facility Expenses, together with an explanation of anticipated changes to Resident charges, payroll rates and positions, non-wage cost increases, the proposed methodology and formula employed by Manager in allocating shared Facility Expenses, and all other factors differing from the then current calendar year"ANNUAL OPERATING BUDGET"). The Annual Operating Budget shall be accompanied by prepared and submitted in a narrative description of operating objectives form reasonably acceptable to Administrative Agent and assumptionsshall set forth in reasonable detail budgeted monthly Gross Income from Operations and monthly capital and other expenses for the Property. If SNH TRS does not approve an Each Annual Operating Budget or any portion thereofshall contain, it among other things, limitations on management fees and third party service fees, as required hereunder, and, on and after the Optional Prepayment Date, in no event shall do somanagement fees be permitted to be paid to an Affiliate of Borrower except as if the Property Manager Agreement is renewed in accordance with Section 5.1(v). Administrative Agent shall have the right to approve each proposed Annual Operating Budget, which approval for the period prior to the extent practicable, on Optional Prepayment Date and as long as no Event of Default is continuing (i) shall not be unreasonably withheld and (ii) shall be deemed given in the event Administrative Agent fails to respond to Borrower's written request to approve a line item basis. Manager and SNH TRS shall cooperate to resolve disputed items, provided if the proposed Annual Operating Budget is not approved by SNH TRS within thirty (30) days after receipt by Administrative Agent of SNH TRS’s receipt, Manager shall operate under such request accompanied by the expired proposed Annual Operating Budget until a new and all information required in order to adequately review the same, and Borrower sends an additional written request for approval and Administrative Agent fails to respond to Borrower's second request within ten (10) days thereof. In the event that Administrative Agent's approval is required and Administrative Agent objects to the proposed Annual Operating Budget is approvedsubmitted by Borrower, provided that line items for Impositions, insurance premiums and utilities shall be the amounts actually incurred for such items. If agreement on the Annual Operating Budget cannot be reached within forty-five (45) days of SNH TRS’s receipt (which time may be extended upon mutual agreement of the parties), the matter shall be resolved by arbitration. The Annual Operating Budget as approved by SNH TRS, or as resolved by arbitration, will be the “Approved Budget” for the applicable calendar year. Manager will obtain SNH TRS’s prior approval for any expenditure which will, or is reasonably expected to, result in a variance of five percent (5%) or more of any Approved Budget. For that portion of the Term ending December 31, [2017], except as otherwise agreed by SNH TRS and Manager, the Approved Budget will be the budget of the prior manager of the Facility, a copy of which has been previously provided to Manager.Administrative

Annual Operating Budget. The Manager shall, on or before December November 20 in each calendar year during the Term, deliver to SNH TRS the applicable Company for SNH TRS’s approval, an annual operating budget for the Facility each Community for the next calendar year (the each, an “Annual Operating Budget”) which shall include separate line items for Routine Capital Replacements and any Major Renovation or Repositioning for that Community and set forth an estimate, on a monthly basis, of Gross Revenues and Facility ExpensesCommunity Expenses for that Community, as well as an estimate of EBITDA for that Community for such calendar year, together with an explanation of anticipated changes to Resident charges, payroll rates and positions, non-wage cost increases, the proposed methodology and formula employed by the Manager in allocating shared Facility Community Expenses, and all other factors differing from the then current calendar year. The Each Annual Operating Budget shall be accompanied by a narrative description of operating objectives and assumptions. If SNH TRS a Company does not approve an Annual Operating Budget or any portion thereof, it shall do so, to the extent practicable, on a line item basis. The Manager and SNH TRS each Company shall cooperate to resolve disputed items, provided if the Annual Operating Budget is not approved by SNH TRS within thirty (30) days of SNH TRS’s receipta Company, the Manager shall operate under the expired Annual Operating Budget for the applicable Community until a new Annual Operating Budget is approved, provided that line items for Impositions, insurance premiums and utilities for that Community shall be the amounts actually incurred for such items. If agreement on the an Annual Operating Budget cannot be reached within forty-five (45) days of SNH TRSthe applicable Company’s receipt (which time may be extended upon mutual agreement of the parties), the matter shall be resolved by arbitration. The An Annual Operating Budget as approved by SNH TRSthe applicable Company, or as resolved by arbitration, will be the “Approved Budget” for the applicable Community for the applicable calendar year. Except for expenditures incurred to remedy any emergency threatening the safety of a Community or its Residents, invitees or employees or imminent material physical damage to a Community (for which the Manager shall provide the applicable Company an accounting promptly after remedying such emergency), the Manager will obtain SNH TRSthe applicable Company’s prior approval for any expenditure which will, or is reasonably expected to, result in a variance of equal to or greater than five percent (5%) or more of any Approved Budget. For that portion of the Term ending December 31, [2017], except as otherwise agreed by SNH TRS and Manager, the Approved Budget will be for the budget of the prior manager of the Facility, a copy of which has been previously provided to Managerapplicable Community.

Annual Operating Budget. Manager shallNo later than one hundred twenty (120) Days prior to the beginning of each Operating Year, on or before December 20 in each calendar year during the TermOperator shall submit, deliver to SNH TRS for SNH TRS’s Owner's review and approval, an annual operating a proposed budget on a monthly basis for the Facility for Operational Phase Services to be performed in the next calendar year succeeding Operating Year, substantially in the form of Exhibit C (the “"Annual Operating Budget”) which shall include separate line items for Capital Replacements and set forth an estimate, on a monthly basis, of Gross Revenues and Facility Expenses, together with an explanation of anticipated changes to Resident charges, payroll rates and positions, non-wage cost increases, the proposed methodology and formula employed by Manager in allocating shared Facility Expenses, and all other factors differing from the then current calendar year"). The proposed Annual Operating Budget shall be accompanied based on Operator's assessment of such Services for such Operating Year and shall reflect the most economical and reasonable means of performing such activities in accordance with the Standards of Performance. The proposed Annual Operating Budget shall include: (i) the proposed amount to be spent annually for Reimbursable Costs and the Management Fee then in effect; (ii) the proposed amounts to be spent for the purchase of Materials and Services in accordance with Section 3.8, identifying the items to be purchased; and (iii) a proposed inventory plan. Each proposed Annual Operating Budget shall identify and list separately capital items. Within thirty (30) Days after Owner receives Operator's proposal for such Annual Operating Budget, Owner shall notify Operator in writing of Owner's approval or any proposed changes to the Annual Operating Budget, and projections reflected therein as Owner may deem necessary or appropriate. Within fifteen (15) Days following receipt of any such notice of proposed changes from Owner, Operator shall either confirm to Owner its ability to perform the Work during such period in accordance with Owner's proposed changes, or object to Owner's proposed changes, stating in detail the reasons for such objection. Owner and Operator shall use their best efforts to agree upon an Annual Operating Budget, which shall be approved in writing by a narrative description of operating objectives and assumptionsboth Parties, which approval shall not be unreasonably withheld. If SNH TRS does Owner and Operator are unable to agree upon an Annual Operating Budget, Owner and Operator shall present the dispute for dispute resolution in accordance with Article VIII. Each Annual Operating Budget shall remain in effect throughout the applicable Operating Year, subject to updating, revision and amendment as may be proposed by either Party and consented to in writing by the other Party, which consent may not approve be unreasonably withheld. If, during any Operating Year, Operator determines that any category within an Annual Operating Budget will vary for such Operating Year by more than ten percent (10%) or any portion thereoftwenty-five thousand dollars ($25,000), it whichever is greater, Operator shall do soimmediately notify Owner and shall follow Owner's instructions regarding further expenditures for the operation and maintenance of the Facility pursuant to this Agreement. Until such time as Operator receives such instructions, Operator shall continue to operate and maintain the Facility according to the extent practicable, on a line item basis. Manager and SNH TRS shall cooperate to resolve disputed items, provided if terms of this Agreement as permitted under the Annual Operating Budget is not approved by SNH TRS within thirty (30) days of SNH TRS’s receiptthen in effect. At no time, Manager without Owner consent, shall operate under the expired Operator be entitled to make expenditures in any Annual Operating Budget until a new Annual Operating Budget is approvedcategory which exceed the amount allocated for such category; provided, provided however, that line items for Impositionsthe foregoing limitation shall not apply in the case of Emergencies, insurance premiums and utilities which shall be the amounts actually incurred for such items. If agreement on the Annual Operating Budget cannot be reached within forty-five (45) days of SNH TRS’s receipt (which time may be extended upon mutual agreement of the parties), the matter shall be resolved governed by arbitration. The Annual Operating Budget as approved by SNH TRS, or as resolved by arbitration, will be the “Approved Budget” for the applicable calendar year. Manager will obtain SNH TRS’s prior approval for any expenditure which will, or is reasonably expected to, result in a variance of five percent (5%) or more of any Approved Budget. For that portion of the Term ending December 31, [2017], except as otherwise agreed by SNH TRS and Manager, the Approved Budget will be the budget of the prior manager of the Facility, a copy of which has been previously provided to ManagerSection 3.13.