AdCare Health Systems Inc. entered into separate sublease agreements pursuant to which each Subleasor will lease one of ten skilled nursing facilities located in Arkansas, and owned by a subsidiary of AdCare, to a subsidiary of Aria Health Group, LLC commencing on March 1, 2015, subject to, among other things: such Sublessee's receipt of all licenses and other approvals from the State of Arkansas to operate such facility; and approval of the mortgage lender with respect to such facility. Each sublease agreement is structured as triple net lease wherein the Sublessee is responsible for the day-to-day operation, ongoing maintenance, taxes and insurance for the duration of the sublease. Pursuant to each sublease agreement, the initial lease term is five years with a five-year renewal option.

The annual rent under all of the sublease agreements in the first year will be $6.5 million in the aggregate, and the annual rent under each sublease will escalate at 2% each year through the initial term and 3% per year upon renewal. The sublease agreements are cross-defaulted.