LEONARD, STREET AND DEINARD7/10/12 DRAFT

AFFILIATION AND LEASE AGREEMENT

AMONG

CITY OF Virginia(Lessor)

AND

ST. MARY’S DULUTH CLINIC HEALTH SYSTEMd/b/a Essentia Health East

and its subsidiary Essentia Health – Virginia

(Tenant)

dated as of

_________________________

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TABLE OF CONTENTS

1. Parties; General.................................................................................................................11.1 Effective Date...........................................................................................................11.2 Operating Company.................................................................................................1

2. Property..............................................................................................................................22.1 Real Estate...............................................................................................................22.2 Other Assets.............................................................................................................22.3 Excluded Assets.......................................................................................................4

3. Assignment and Assumption of Liabilities......................................................................43.1 Intentional Acts........................................................................................................43.2 Insured Liabilities....................................................................................................43.3 Undisclosed Legal Proceedings..............................................................................43.4 Borrowed Money.....................................................................................................5

4. Tail Coverage......................................................................................................................5

5. Special Indemnification for Assumed Liabilities............................................................5

6. Net Asset Valuation............................................................................................................5

7. Other Considerations........................................................................................................57.1 Hospital Employees.................................................................................................57.2 Other Agreements....................................................................................................57.3 Capital Contribution................................................................................................5

8. Use of Assets.......................................................................................................................5

9. Operations before Closing Date.......................................................................................6

10. Long Term Debt.................................................................................................................6

11. Sublease..............................................................................................................................6

12. EH and EH-Virginia Representations.............................................................................612.1 Good Standing; Authority........................................................................................612.2 No Conflict...............................................................................................................712.3 Survival....................................................................................................................7

13. City Representations.........................................................................................................713.1 Authority..................................................................................................................713.2 No Conflict...............................................................................................................713.3 Financial Statements...............................................................................................713.4 License; Permits......................................................................................................813.5 Notice of Termination..............................................................................................8

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13.6 Collective Bargaining and Employment Agreements..............................................813.7 No Proceedings........................................................................................................813.8 Environmental Compliance.....................................................................................813.9 Change in Use..........................................................................................................813.10 Survival................................................................................................................9

14. Closing; Closing Date........................................................................................................914.1 Representations and Warranties of the Parties.......................................................914.2 Tail Coverage..........................................................................................................914.3 Net Asset Valuation..................................................................................................914.4 Regulatory and Other Third Party Approvals.........................................................914.5 Motor Vehicle Transfers..........................................................................................914.6 Current Bonds Requirements...................................................................................914.7 Title Commitment.....................................................................................................914.8 Observance and Performance of this Agreement....................................................9

15. Closing Deliveries...............................................................................................................915.1 Assignment and Assumption Agreement................................................................1015.2 Consents.................................................................................................................1015.3 Officer’s Certificate...............................................................................................1015.4 Bond Counsel Opinion...........................................................................................1015.5 Tenant’s Counsel Opinion.....................................................................................1015.6 IRS Determination Letter.......................................................................................1015.7 Estoppel Certificates..............................................................................................1015.8 Other Documents...................................................................................................10

16. Indemnification for Breach of Representation and Warranty....................................1016.1 General..................................................................................................................1016.2 City Indemnification Escrow.................................................................................11

17. Term..................................................................................................................................1217.1 Initial Term............................................................................................................1217.2 Renewal..................................................................................................................1217.3 Termination by Tenant During Initial Term..........................................................1217.4 Termination by Lessor...........................................................................................1317.5 Transition Plan......................................................................................................1417.6 Transfer at Termination.........................................................................................1417.7 Other Termination Provisions; Illegality..............................................................15

18. Rent...................................................................................................................................15

19. Repairs, Capital Improvements and Additions.............................................................1619.1 Capital Improvements............................................................................................1619.2 Repairs...................................................................................................................1619.3 Signage..................................................................................................................16

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20. Taxes and Assessments....................................................................................................1620.1 Special Assessments...............................................................................................1620.2 Tax-exemption........................................................................................................16

21. Insurance..........................................................................................................................1621.1 Policies..................................................................................................................1621.2 Certificates.............................................................................................................1721.3 Professional Liability Claims................................................................................1721.4 Commercial Reasonableness.................................................................................17

22. Tax Compliance...............................................................................................................1722.1 Representations and Covenants as to Private Business Use of Leased Property. 1722.2 Representations as to Status of the Tenant............................................................1822.3 Change in Ownership of the Leased Property.......................................................1822.4 Management Contract Restrictions.......................................................................1822.5 Miscellaneous Covenants......................................................................................19

23. Environmental Matters...................................................................................................20

24. No Shop; No Sale.............................................................................................................20

25. Option to Purchase..........................................................................................................2025.1 Transfer Expenses..................................................................................................2025.2 Arbitration Related to Purchase Option................................................................20

26. Permitted Tenancy Uses..................................................................................................20

27. Liens..................................................................................................................................21

28. Destruction/Damage........................................................................................................2128.1 Repair....................................................................................................................2128.2 Termination............................................................................................................21

29. Condemnation..................................................................................................................21

30. Default...............................................................................................................................2230.1 Delayed Rent Payment...........................................................................................2230.2 Uncured Breach.....................................................................................................2230.3 Tenant Bankruptcy.................................................................................................22

31. Effect of Default...............................................................................................................2231.1 Cancellation...........................................................................................................2231.2 Other Penalty.........................................................................................................2231.3 Reletting.................................................................................................................23

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32. Access by Lessor..............................................................................................................23

33. Advisory Meetings...........................................................................................................23

34. General Indemnity...........................................................................................................23

35. Quiet Enjoyment..............................................................................................................23

36. Assignment and Subletting.............................................................................................24

37. Medicare/Medicaid Access Clause.................................................................................24

38. Dispute Resolution...........................................................................................................2438.1 Negotiations...........................................................................................................2438.2 Mediation...............................................................................................................24

39. Miscellaneous...................................................................................................................2539.1 Recording...............................................................................................................2539.2 Captions.................................................................................................................2539.3 Governing Law......................................................................................................2539.4 Waiver....................................................................................................................2539.5 Construction..........................................................................................................2539.6 Severability............................................................................................................2539.7 No Partnership/Joint Venture................................................................................2639.8 Estoppel Certificate...............................................................................................2639.9 Notices...................................................................................................................2639.10 Entire Agreement...............................................................................................2639.11 Modification and Waiver...................................................................................2639.12 Binding Effect....................................................................................................2639.13 Expenses............................................................................................................2639.14 Limitation of Obligation....................................................................................2639.15 Cumulative Rights..............................................................................................27

40. Exhibits.............................................................................................................................27

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1. Parties; General. This Affiliation and Lease Agreement (the “Lease” or the “Agreement”) is by and among:

The City of Virginia, Minnesota, a home rule city and political subdivision of the State of Minnesota (“City”) and its permitted successors and assigns (“Lessor”)

and

St. Mary’s Duluth Clinic Health System d/b/a Essentia Health East, a Minnesota nonprofit corporation (“EH”) exempt from taxation under Section 501 of the Internal Revenue Code and EH-Virginia, a Delaware limited liability company that is a wholly-owned subsidiary of EH that EH has elected to treat as disregarded for income tax purposes (“EH-Virginia”) and their permitted successors and assigns (jointly and severally, “Tenant”). The City, EH and EH-Virginia are each individually a “Party” and are collectively the “Parties.”

WHEREAS, EH, working with EH-Virginia staff, physicians and the community of Virginia will create a sustainable, high quality health care system to serve Virginia and surrounding areas, delivering value to patients and their families through focus on quality clinical services, customer service, safety and cost; and

WHEREAS, the foundation of this health care system will be the development of a secondary health care regional hub in Virginia furnishing primary care (family practice) and specialty services, including, but not limited to: pediatrics; obstetrics; general surgery (24/7 coverage); cardiology; oncology; ENT; pulmonary; ophthalmology; anesthesiology; orthopedics; podiatry; urgent care; and emergency services that meet certification for Level 3 trauma designation. Most EH-Virginia providers will be domiciled in Virginia with consultative services and support from Duluth.

NOW, THEREFORE, the Parties agree as follows:

1.1 Effective Date. The effective date of this Lease is 12:01 a.m. on the day following Closing Date, as that term is used in Section 14 (the “Effective Date”).

1.2 Operating Company. Through its subsidiary, EH-Virginia, EH is intending to operate the health care facilities including the hospital and nursing home located at 901 9th Street North, Virginia, Minnesota (“Hospital”) and the medical arts building, also located at 901 9th Street North (“Medical Arts Building”). The Hospital and the Medical Arts Building are currently collectively known as Virginia Regional Medical Center (“Medical Center”). The Parties acknowledge that (i) the City is the tenant under a lease of the building located at 1101 9th Street North, Virginia, Minnesota from the Housing and Redevelopment Authority of the City of Virginia (the “1101 Building”), (ii) the City sublets the 1101 Building to EH under that certain Sublease Agreement effective as of April 1, 2005 (“Sublease”) and (iii) that this Lease is not intended to alter the terms of the Sublease. EH and EH-Virginia each represent and warrant that EH is exempt from federal income tax under Section 501(c)(3) of the Internal Revenue Code and EH-Virginia is a single member limited liability company that is an income

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tax-disregarded constituent entity of EH, and covenants to maintain such status throughout all Terms of this Lease.

2. Property. Lessor hereby leases to Tenant and Tenant leases from Lessor the following property (the “Leased Property”):

2.1 Real Estate. The real estate comprising the Medical Center, legally described on Exhibit A attached, together with all buildings thereon (the “Premises”).

2.2 Other Assets. All personal property and assets of the City used in, related to, or arising from the operation of the Medical Center, wherever located and whether or not reflected in its books and records (the "Assets"), other than the Excluded Assets (as defined in Section 2.3). Except as specifically provided otherwise in this Agreement, the Assets will be leased by the City to EH-Virginia in accordance with this Agreement AS IS, WHERE IS AND WITH ALL FAULTS, and without any representation or warranty whatsoever, express or implied. The Assets shall include the following:

(a) Property and Equipment. All equipment, accessories, furniture, fixtures, computers, furnishings, and other miscellaneous tangible personal property owned by the City as of the Closing Date and used in, or related to the Medical Center, including, without limitation, the items listed on Exhibit B that are owned by the City on the Closing Date, and specifically excluding any assets listed on Exhibit B that are assets leased pursuant to capital leases (the "Property and Equipment").

(b) Warranties and Guarantees. To the extent assignable, all rights of the City under any warranty or guarantee with respect to the Assets by any manufacturer, supplier or other transferor.

(c) Inventory and Supplies. All inventory and supplies used in, related to or arising from the Medical Center.

(d) Rights Under Assumed Contracts. All rights of the City under any contracts, indentures, guarantees, leases (capital or other), commitments, or other agreements identified in Exhibit C (the "Assumed Contracts"); provided, however, that in the event that any of such contracts, indentures, guarantees, leases, commitments, or other agreements identified in Exhibit   C requires the consent to assignment by a third Party (the “Contracts Requiring Consent”), then the City shall use reasonable efforts to procure such third Party consent and provide evidence thereof to EH-Virginia, and in the event such third Party consent is not obtained on or before the Closing, then EH-Virginia shall perform the obligations of the City under such contracts and indemnify the City against any claims and liabilities arising out of the absence of consent; provided, however, that City covenants to continue to cooperate with EH-Virginia to obtain such consent.

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(e) Intellectual Property. All interests of the City in any copyrights, patents, trademarks, trade names, logos, trade secrets, phone numbers, and other intellectual property used in, related to or arising from the Medical Center, together with any pending applications for any of the foregoing, including without limitation, all rights in the names "Virginia Regional Medical Center.”

(f) Intangibles and Goodwill. All general intangibles of the City used in, related to or arising from the Medical Center, including goodwill.

(g) Governmental Rights. To the extent assignable, all rights of the City under any approvals, permits, licenses, orders, registrations, certificates, and similar rights obtained from governments and governmental agencies, including Medicare and Medicaid certifications, provider numbers and provider agreements.

(h) Patient Lists and Medical Records. All patient and supplier lists, patient medical records, advertising and promotional materials, personnel records and other records relating to services provided by the City.

(i) Prepayments. All rights of the City under any deposits, prepayments, refunds, rights of recovery, rights of set off and rights of recoupment with respect to the Assets.

(j) Accounts Receivable. All accounts, notes, and other receivables in favor of the City existing on the Closing, including accounts receivable attributable to Medicare or Medicaid, and including accounts receivable that have been sent to a collection agency and payments due from third Party payors but withheld by such third Party payors.

(k) Work in Progress. Any payments due the City for services provided by the Medical Center prior to the Closing, including services attributable to Medicare or Medicaid, which were not billed as of the Closing but which are billed within one month of the Closing.

(l) Business Records. All business records related to the ownership of the Assets and the operation of the Medical Center (provided that the City shall have access to such records as they existed as of the Closing Date to the extent reasonably necessary following the Closing).

(m) Cash and Cash Equivalents. All cash, cash equivalents and investment assets owned by, associated with or attributable to the Medical Center, including any cash collected by the City following the Closing Date with respect to the Accounts Receivable, excluding (i) five hundred thousand dollars ($500,000) to be held in escrow under Section 16 and (ii) cash, reserves and other liquid assets pledged to pay the Current Bonds

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[second exclusion initially conceptually suggested by bond counsel; unclear whether necessary].

(n) Reserves. Except as may otherwise be specified in this Agreement, cash and equivalents held in reserve for debt service, repair and replacement, capital improvements or any other purpose pursuant to the terms of any financing secured by the Assets or the Medical Center.

2.3 Excluded Assets. The following property and assets of the City are excluded from Lease to EH-Virginia pursuant to this Agreement (the "Excluded Assets"):

(a) Rights Under Contracts that are not Assumed Contracts. All rights of the City under any contracts, indentures, guarantees, commitments or other agreements that are not Assumed Contracts.

(b) Rights Under Other Agreements. Any of the rights of the City under this Lease or any other agreement between the City and EH-Virginia.

3. Assignment and Assumption of Liabilities. In partial consideration for the transfer and sale of the Assets, at Closing, the City shall assign and EH-Virginia, but not EH, shall assume all debts, obligations, accounts payable, claims, and any and all other liabilities of or against the City to the extent related to the operation of the Medical Center, including without limitation, liabilities incurred by the City for acts or omissions attributable to Medical Center officers, directors, employees, contractors or other agents before the Closing Date, (the “Assumed Liabilities”), together with the benefit of all of the defenses, privileges and immunities afforded by applicable law (including, without limitation, Minnesota Statutes, Chapter 466), specifically excluding the following (the “Excluded Liabilities”):

3.1 Intentional Acts. Any and all liabilities arising from actions determined by a court of competent jurisdiction to be intentional torts or criminal acts not covered by insurance, committed by any representatives, employees or agents of the Medical Center prior to the Closing Date.

3.2 Insured Liabilities. Any liabilities, to the extent such liabilities are within the terms of insurance policies of the Medical Center at the time such liabilities accrue or become known. Any liabilities in excess of available insurance, which may become payable by the Medical Center, are within the assumption of liabilities undertaken by EH-Virginia. The City shall cooperate with EH-Virginia in securing payment of any insurance and any amounts received by the City shall be held in trust by the City for use by EH-Virginia for the sole purpose of paying such liabilities.

3.3 Undisclosed Legal Proceedings. Any lawsuits, administrative claims or other judicial or quasi-judicial proceedings (including Medicare claims and JCAHO matters) which have been commenced and of which the Hospital Management Group (Hospital Chief Executive Officer, Hospital Chief Financial Officer and

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City Attorney has actual knowledge and which have not been disclosed to EH in a writing before the Closing Date.

3.4 Borrowed Money. Any liability incurred by the Hospital or by the Medical Center for borrowed money that has not been disclosed in writing to EH before the Closing Date.

Nothing in this Section shall be construed to limit the joint and several obligation of EH and EH-Virginia, as Tenant, to pay (as Rent under this Lease) the amounts necessary to pay principal and interest on all Current Bonds as defined in Section 18 hereof.

4. Tail Coverage. The Parties agree that, prior to the Closing Date, the City will acquire tail coverage for liabilities incurred by the City in respect of the Medical Center prior to Closing, in the amounts and types specified in Exhibit E.

5. Special Indemnification for Assumed Liabilities. EH-Virginia’s assumption of liabilities pursuant to Section 3 shall comprise an indemnification of the City against and in respect of all uninsured claims, losses, liabilities, damages, costs, and expenses (including reasonable attorneys’ fees) to the extent associated with the Assumed Liabilities. The process for indemnification specified in Section 14 shall apply to the City’s requests for indemnification pursuant to this Section 5. The provisions of this Section 5 survive the Closing.

6. Net Asset Valuation. Within ninety (90) days [confirm] after Closing, certain of the Medical Center Assets and Assumed Liabilities shall be valued by mutual agreement using the methodology particularly defined in Exhibit F. If the Parties cannot agree on Net Asset Valuation, the matter shall be submitted to binding arbitration in accordance with the rules of the American Arbitration Association.

7. Other Considerations.

7.1 Hospital Employees. As of the Closing Date, Hospital employees will become employees of EH-Virginia, pursuant to the provisions of Exhibit G.

7.2 Other Agreements. The Parties agree to enter into such other documents as may be necessary and appropriate to carry out the transactions contemplated herein.

7.3 Capital Contribution. On of the Closing Date, EH will contribute Seven Million Dollars cash to EH-Virginia to fund Medical Center capital improvements.

8. Use of Assets. On and after the Closing Date, the income, cash or capital assets of EH-Virginia will be directed for local use, the fulfillment of the charitable mission of EH-Virginia, with the priority being the advancement of the provision of health care services in the Medical Center service area. Any tangible assets made available to EH-Virginia pursuant to this Agreement may be disposed of via sale, if possible, or abandonment, if sale is not possible, and the proceeds of any sale shall be retained by EH-Virginia. EH-Virginia shall maintain annual audited books and records that are fully separate from those of any other EH-Virginia affiliate.

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EH-Virginia shall not become part of any EH obligated group or similar facility. EH-Virginia assets may not be pledged to support EH or any EH affiliate or attributed to EH or an EH affiliate without the consent of the City. EH-Virginia shall not make any distribution in form or substance to EH or any EH affiliate; provided, however, that EH-Virginia may acquire services and goods from or through EH on terms substantially similar to those made to other EH facilities.

EH and EH-Virginia shall use and manage the Leased Property in accordance with Section 22 hereof.

9. Operations before Closing Date. From the date of this Agreement to the Closing Date, the City shall operate the Medical Center in the usual and customary manner consistent with the manner in which the Medical Center has been operated prior to the Closing Date. During the interim period date of this Agreement to the Closing Date, the City will not enter into any material written contracts with respect to the operations of the Medical Center other than in the ordinary course of business without the prior written consent of EH.

10. Long Term Debt. From the date of this Agreement to the Closing Date, the City shall not incur any additional long term debt secured by the Medical Center or its operations without the prior written consent of EH.

11. Sublease. The Parties hereby ratify and confirm that the Sublease shall remain in full force and effect.

12. EH and EH-Virginia Representations. EH represents and warrants to the City as follows:

12.1 Good Standing; Authority. EH is a nonprofit corporation duly organized and validly existing in good standing under the laws of the State of Minnesota, organized and operated exclusively for charitable purposes and specifically and primarily to engage in and conduct charitable, educational, and scientific activities generally including the provision of hospital and other related healthcare services; it is an organization described in Sections 170(c)(2), 501(c)(3) and 509(a)(1 or 2) of the Internal Revenue Code of 1986, as amended ("IRC"); a public charity within the meaning of the IRC, and it is exempt from federal income taxation under Section 501(a) of the IRC: EH-Virginia is a Delaware limited liability company qualified to do business in Minnesota that is a wholly-owned subsidiary of EH that EH has elected to treat as a disregarded entity for federal income tax purposes. EH and EH-Virginia each has all legal right and full corporate power and authority to own and use its properties and assets as presently used and contemplated to be used, to conduct its business and activities as presently conducted and contemplated to be conducted and to enter into, perform its obligations under and comply with the terms and provisions of this Agreement, and the execution and delivery of this Agreement and the full compliance with and performance of the obligations of EH-Virginia and EH under this Agreement have been duly and validly authorized by all necessary corporate action on the

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part of EH and EH-Virginia. The use of the Leased Property is within the exempt purpose of EH.

12.2 No Conflict. The execution and delivery of this Agreement and the performance of and compliance with the terms and provisions of this Agreement on the part of EH and EH-Virginia will not violate the articles of incorporation, bylaws or other governing instruments of EH or EH-Virginia or conflict with or result in a material breach of or default under any law, statute, rule, regulation, order, judgment or decree of any governmental authority or under any material contract, deed, mortgage, or other instrument or document to which EH or EH-Virginia is subject.

12.3 Survival. The representations and warranties of EH and EH-Virginia pursuant to this Section 12 are made as of the date hereof, again at Closing and shall survive the Closing Date.

13. City Representations. Except as disclosed in the Disclosure Schedule attached to this Agreement as Exhibit I, City represents and warrants to EH as follows:

13.1 Authority. City is a home rule city and political subdivision of the State of Minnesota and Virginia Regional Medical Center an enterprise fund of the City of Virginia, Minnesota; the City has all legal right and full corporate power and authority to own and use its properties and assets as presently used and contemplated to be used, to conduct its business and activities as presently conducted and contemplated to be conducted and to enter into, perform its obligations under and comply with the terms and provisions of this Agreement, and the execution and delivery of this Agreement and the full compliance with and performance of the obligations of City under this Agreement have been duly and validly authorized by all necessary corporate action on the part of City.

13.2 No Conflict. The execution and delivery of this Agreement and the performance of and compliance with the terms and provisions of this Agreement on the part of City will not violate or conflict with or result in a material breach of or default under the City Charter or other governing instruments of City under any law, statute, rule, regulation, order, judgment or decree of any governmental authority or under any material contract, deed, mortgage, or other instrument or document to which City is subject.

13.3 Financial Statements. The audited financial statements of Medical Center for the fiscal years ending ____, ____, and ____, copies of which have been provided to EH by City, have been prepared in conformance with generally accepted government accounting principles and procedures applied on a basis consistent with prior periods and present fairly in all material respects the financial condition of Medical Center as of the represented dates thereof and the results of operations of Medical Center for the periods covered thereby.

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13.4 License; Permits. No licenses or permits in connection with the operation of the Medical Center have been denied, revoked, restricted or suspended or threatened to be denied, revoked or suspended during the past three (3) years.

13.5 Notice of Termination. Hospital has not received notice that any Party to any material contract, commitment or arrangement intends to cancel or terminate any such contract, commitment or arrangement. No contract, commitment or arrangement has been negotiated or renegotiated in anticipation of the transactions contemplated hereby.

13.6 Collective Bargaining and Employment Agreements. Medical Center is not a Party to any collective bargaining agreements or any other written employment agreements with employees, nor is Medical Center a Party to any other written contract or understanding that contains any severance pay liabilities or obligations, except for accrued, unused vacation pay or accrued and unused sick leave pay for employees.

There is not now pending nor has there been in the past three (3) years any claims against City by any former or present employee based on employment discrimination, wrongful discharge or unfair labor practices related to the Medical Center, nor has there been any material labor dispute, work stoppage, walkout or strike. City has received no claim asserting (and has no knowledge of) any failure to comply with applicable federal and state laws and regulations relating to employment or labor, including laws and regulations relating to wages, hours, collective bargaining, withholding taxes and employee heath and benefits.

13.7 No Proceedings. To the actual knowledge of the Hospital Management Group, during the last three (3) years there has been no proceeding, or investigation (including any environmental, building, labor, zoning or safety investigation) relating to the Hospital which would have a material adverse effect on the Hospital. For purposes of this Section 13.7, “material adverse effect” is an event or occurrence that will be materially adverse to the Medical Center or its business prospects.

13.8 Environmental Compliance. To the actual knowledge of Hospital Management Group, the premises are in material compliance with all applicable environmental laws, there are no hazardous substances present at the Medical Center premises in a quantity or condition requiring removal or remediation under applicable laws or which could subject City to material liability under applicable laws and there have been no spills or releases of hazardous substances associated with any underground storage tank(s) currently or formerly operated on the Medical Center premises.

13.9 Change in Use. The City on ___________, 2012 held a duly noticed public hearing regarding the change in use of the Leased Property (caused by this Lease) and the reissuance of the Current Bonds as qualified 501(c) (3) bonds, all in accordance with U.S. Treasury Regulations, Section 1.141-12(f).

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13.10 Survival. The representations and warranties of the City pursuant to this Section 13 shall survive the Closing Date for a period of six (6) months.

14. Closing; Closing Date. Unless otherwise agreed, the date of closing of the transaction contemplated by this Agreement (the “Closing Date”) shall occur at a place mutually agreed to by the Parties sixty (60) days subsequent to the complete execution hereof, subject to the satisfaction of the following Conditions Precedent:

14.1 Representations and Warranties of the Parties. The representations and warranties of the Parties contained in this Agreement, subject to the Disclosures made by the Parties at execution hereof, shall be true and correct as of the Closing Date.

14.2 Tail Coverage. The tail coverage specified in Section 4 and Exhibit E shall have been acquired.

14.3 Net Asset Valuation. The Net Asset Valuation identified in Section 6 shall have been completed. [Address issue of audit delay. Should this just be a closing estimate, mutually agreed on?]

14.4 Regulatory and Other Third Party Approvals. EH-Virginia and the City shall have each received all authorizations, consents and approvals of governments, governmental agencies and other third parties required in connection with this Agreement. The approvals or consents that are required are listed in Exhibit H.

14.5 Motor Vehicle Transfers. Title to the motor vehicles listed in Exhibit D.

14.6 Current Bonds Requirements. The City has taken all steps necessary under the Internal Revenue Code of 1986, as amended, and related Treasury Regulations to reissue the Current Bonds as “qualified 501(c)(3) bonds,” and Tenant has delivered all documents required to be delivered by Tenant under section 15 hereof.

14.7 Title Commitment. The City shall have delivered evidence of its title to the Premises that is acceptable to EH.

14.8 Observance and Performance of this Agreement. The City, EH-Virginia and EH shall have observed and performed all covenants and agreements required by this Agreement to be observed or performed by the Parties and, in particular, shall have worked in good faith to satisfy the Conditions Precedent.

If the Closing Date does not occur by December 14, 2012 because any Condition Precedent has not been satisfied or waived by the Party benefitted by the Condition Precedent, then this Agreement shall terminate and shall be void and have no further force or effect.

15. Closing Deliveries. The Parties agree to deliver the following documents, duly executed as appropriate at the Closing:

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15.1 Assignment and Assumption Agreement. An Assignment and Assumption Agreement under which the City will assign and EH-Virginia will assume all of the Assumed Contracts, substantially in the form of Exhibit J;

15.2 Consents. Such consents to assumption and assignment of contracts requiring consent as have been received.

15.3 Officer’s Certificate. Officers Certificates, substantially in the form of Exhibit K for City, Exhibit L-1 for EH and Exhibit L-2 for EH-Virginia.

15.4 Bond Counsel Opinion. Opinion of nationally-recognized bond counsel selected by the City (“Bond Counsel”) this Lease will not impair the tax-exempt status of the Current Bonds.

15.5 Tenant’s Counsel Opinion. Opinion of counsel to EH and EH-Virginia in a form acceptable to Bond Counsel, and on which Bond Counsel may rely in delivering the opinion under Section 15.4, including at a minimum the opinion that: each Tenant entity has the power to enter into this Lease; this Lease is binding and valid obligation of the each Tenant and enforceable in accordance with its terms, and that EH is an organization described in Section 501(c)(3) of the Code, exempt from federal income taxation under Section 501(a) of the Code, and not a “private foundation” as defined in Section 509(a) of the Code, and that EH-Virginia is a single member limited liability company entitled to pass-through treatment afforded for federal income tax purposes by virtue of the status of its sole member EH as a 501(c)(3) organization.

15.6 IRS Determination Letter. A determination letter from the Internal Revenue Service to the effect that EH is an organization described in Section 501(c)(3) of the Code, exempt from federal income taxation under Section 501(a) of the Code, and not a “private foundation” as defined in Section 509(a) of the Code.

15.7 Estoppel Certificates. Estoppel certificates from tenants of Medical Arts Building. [List needed; subset of Exhibit C.]

15.8 Other Documents. Such other transfer and consent agreements and instruments as may be necessary to complete the transaction.

At the Closing, each of the Parties herein agrees to execute and deliver any and all further agreements, documents or instruments reasonably necessary to consummate the transactions contemplated by this Agreement.

16. Indemnification for Breach of Representation and Warranty.

16.1 General. Each Party (the Indemnifying Party) shall indemnify, defend and hold the other Parties (the Indemnified Parties) harmless at all times from and after the Closing Date for the applicable period of survival specified in this Agreement against and in respect of all claims, losses, liabilities, damages, costs and expenses (including reasonable attorneys’ fees) which an Indemnified Party may suffer or

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incur as a result of a material breach by the Indemnifying Party of any of its representations and warranties in this Agreement.

No Party is assuming or is obligated or liable for any of the liabilities of another Party, except as expressly provided herein.

If a claim by a third Party is made against an Indemnified Party, and if the Indemnified Party intends to seek indemnity with respect to such claim under this Section, such Indemnified Party shall promptly notify the Indemnifying Party of such claim. The Indemnifying Party shall have thirty days after receipt of the notice to undertake, conduct and control, through counsel of such Party’s choosing (subject to the consent of the Indemnified Party) and at such Party’s expense, the settlement or defense of it, and the Indemnified Party shall cooperate with the Indemnifying Party in connection with such efforts; provided that: (i) the Indemnifying Party shall not by this agreement permit to exist any lien, encumbrance or other adverse charge upon any asset of any Indemnified Party; (ii) the Indemnifying Party shall permit the Indemnified Party to participate in such settlement or defense through counsel chosen by the Indemnified Party, provided that the fees and expenses of such counsel shall be borne by the Indemnified Party, and (iii) the Indemnifying Party shall agree promptly to reimburse the Indemnified Party for the full amount of any loss resulting from such claim and all related expense (except for fees and expenses under (ii) above) incurred by the Indemnified Party pursuant to this Section. So long as the Indemnifying Party is reasonably contesting any such claim in good faith, the Indemnified Party shall not pay or settle any such claim. If the Indemnifying Party does not notify the Indemnified Party within thirty days after receipt of the Indemnified Party’s notice of a claim of indemnity under this Section that such Party elects to undertake the defense of such claim, the Indemnified Party shall have the right to contest, settle or compromise the claim in the exercise of the Indemnified Party’s exclusive discretion at the expense of the Indemnifying Party.

Notwithstanding any other provision of this Lease to the contrary, no Party shall be liable to other Parties for any indirect, special, incidental or consequential loss or damage of any kind, including lost profits (whether or not the non-claiming Party has been advised of the possibility of such loss or damage), attributable to breach of representation or warranty.

16.2 City Indemnification Escrow. The Parties agree that five hundred thousand dollars ($500,000) of Hospital funds shall be placed in escrow with a mutually agreed financial institution at Closing, subject to terms mutually agreed between the Parties and the financial institution. The escrowed funds shall be used to defray the City’s indemnification responsibilities under Sections 13.2 through 13.8 and this Section 16 during the survival period specified in Section 13.9. Any escrowed funds remaining after satisfaction of EH claims under Section 16.1, along with accumulated interest thereon, shall be transferred to EH-Virginia.

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17. Term.

17.1 Initial Term. The initial Term shall commence on the Effective Date and continue for twenty (20) years (the “Initial Term”).

17.2 Renewal. Provided Tenant is not in default, Tenant shall have the right to renew this Lease for an additional term of twenty five (25) years (the “Renewal Term”) by giving Lessor written notice of its intent to so extend at least 365 days before the expiration of the Initial Term. All of the terms and conditions of this Lease shall govern the Renewal Term.

17.3 Termination by Tenant During Initial Term. Notwithstanding the foregoing, Tenant may terminate this Lease after the fifth anniversary of the Effective Date but before the seventh anniversary by giving Lessor at least 365 days prior notice if City has failed to issue revenue bonds for Medical Center capital needs, secured solely by Rent payments under this Lease (“New Bonds”) in an aggregate principal amount of $10,000,000 during the first five years of the Initial Term, provided that, prior to such termination, Tenant shall pay the outstanding balance of any Current Bonds issued before the Effective Date to improve the Medical Center.

Tenant may also terminate this Lease after the eleventh anniversary of the Effective Date, but before the thirteenth anniversary by giving the Lessor at least 365 days prior notice if the City has failed to issue additional New Bonds for Medical Center capital needs in an aggregate principal amount of $15,000,000.

The City shall not be deemed to have failed to issue revenue bonds under Sections 17.3 and 17.4 if: (i) Tenant has not requested the City to issue such bonds; (ii) the Tenant declines to agree to terms associated with the sale of the bonds required by a nationally recognized municipal bond investment banking firm knowledgeable in health care finance; (iii) the City has approved the issuance of such bonds, but the bonds are not sold; (iv) the issuance of such bonds on a tax-exempt basis is not authorized by state or federal law then in effect, as determined by bond counsel, or (v) Bond Counsel is unable to determine that the bonds may be issued on a tax-exempt basis because of an act or omission of Tenant.

Notwithstanding anything to the contrary in this Section, if the City issues any tax-exempt bonds for City purposes (referred to as “City Bonds’) in the same calendar year in which any New Bonds are issued, and such City Bonds would have been eligible for designation as “qualified tax-exempt obligations” for the purposes of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended (such designation referred to as “Bank Qualified”) if the New Bonds had not been issued, then Tenant agrees pay to the City the amount required to reimburse the City for loss of Bank Qualified designation for any City Bonds issued in that calendar year. The amount payable to the City shall be calculated as follows: (i) the present value of the total debt service payable on the City bonds to their stated maturity dates, less (ii) the present value of the total debt service that would have

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been payable on the City Bonds to their stated maturity dates if the City bonds had been Bank Qualified, in each case valued as of the date of issuance of the City Bonds. For the purposes of this paragraph, present value will be calculated using the actual yield on the City Bonds (for federal arbitrage purposes), and the assumed yield if the City Bonds had been Bank Qualified as determined by a well-qualified mutually agreed upon independent financial advisor based on the best available market evidence as of the date of acceptance of the bid or proposal from the purchaser of the City bonds. If the Parties cannot mutually agree upon a financial advisor, each Party will select a financial advisor and the two advisors so selected will select a third to perform the calculation. The amount described in this paragraph be payable by Tenant to the City within 15 days after Tenant’s receipt from the City of written notice as to the amount calculated by the City’s financial advisor. All fees incurred by the City with respect to the calculation of the amount payable under this paragraph, and the collection of amounts due with respect thereto from the Tenant, shall be the sole obligation of the Tenant, payable along with any payment under this paragraph.

The City will use its best efforts to schedule issuance of City Bonds in calendar years when no New Bonds are expected to be issued, so as to minimize the need for payments by Tenant under the preceding paragraph; provided that nothing in herein will limit the City’s discretion to issue City Bonds at any time.

17.4 Termination by Lessor. Lessor may terminate the Lease if:

At any time following the Effective Date of the Lease, after providing Tenant at least 90 days prior notice:

Tenant proposes to assign or transfer its rights under this lease to an unrelated third party;

Tenant proposes to dissolve EH-Virginia; Tenant proposes to merge EH-Virginia with any other unrelated third

party; or Tenant proposes to sell or otherwise transfer all or substantially all the

Assets to an unrelated third party.

At any time after the fifth anniversary of the Initial Term, after providing Tenant at least 90 days prior notice but prior to the sixth anniversary:

Tenant fails to provide at Medical Center or an adjacent building primary care physician services, which may include urgent care and walk-in services; or

Tenant fails to provide surgical and obstetrical services at the Hospital 24 hours a day, 7 days a week, 365 days a year.

At any time after the fifth anniversary of the Initial Term, but before the sixth anniversary:

If Tenant’s aggregate payroll (gross W-2) for Tenant employees furnishing hospital and support services at the Medical Center and the EH

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Virginia Clinic does not exceed the sum of $7 million greater than the City’s and EH payroll for such services at the effective date.

At any time after the fifth anniversary of the Lease, but not before the seventh anniversary, after providing the Tenant at least 365 days prior notice, if Essentia has not requested the issuance of New Bonds in an aggregate amount of $10,000,000.

At any time after the eleventh anniversary of the Lease, but before the thirteenth anniversary, after providing the Tenant at least 365 days prior notice, if Essentia has not requested the issuance of New Bonds in an additional aggregate amount of $15,000,000.

Tenant shall not be deemed to have failed to request the issuance of New Bonds under this Section 17.4 if EH elects to acquire alternative financing in an amount equal to the relevant New Bond issue amount.

17.5 Transition Plan. Immediately upon the issuance of notice of termination hereof, Tenant agrees to collaborate with Lessor to develop a transition plan for Lessor to resume control and operation of the Leased Property. Tenant will be immediately available as a resource to Lessor for a period of up to twelve (12) months following termination to assist Lessor in resuming its operational responsibilities. Tenant will furnish transition services to Lessor without charge, but computed at its costs, not to exceed $250,000 in the aggregate. Additional transition services requested by Lessor shall be provided by Tenant at Tenant’s costs, which Lessor shall reimburse.

The Parties shall reasonably cooperate in the transition, with particular attention directed toward patient needs and employee transitions.

17.6 Transfer at Termination. The Assets and Liabilities transferred to or assumed by Tenant under this Lease, along with all other EH-Virginia assets and liabilities, shall be transferred to the City after then Net Asset Valuation of EH-Virginia has been mutually determined according to Exhibit F. In the event the Net Asset Valuation at termination is less than the Net Asset Valuation determined as of the Closing Date, Tenant shall pay the difference in such value to the Lessor in cash. Lessor shall not be required to reimburse Tenant, and Tenant shall not be entitled to retain any Assets, if the Net Asset Valuation at termination by Tenant or at the end of the term exceeds the Net Asset Valuation as of the Closing Date.

The transfer of Assets and Liabilities back to the City may, at the sole option of the City, be accompanied by transfer of all membership interests in EH-Virginia to the City.

Any EH Clinic-Virginia assets, as well as associated liabilities, transferred to Tenant for hospital operations within twelve (12) months of the Lease Effective Date shall be returned for use at the EH Clinic – Virginia.

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Any remaining unspent portion of the $7 million cash transfer from EH to EH-Virginia for capital improvements to the Hospital facility as set forth in Section 7.4 will remain with the Medical Center and will not be reflected in the Net Asset Valuation.

Any dispute relating to the calculation of Net Asset Valuation under this Section 17.6 shall be submitted to binding arbitration in accordance with the rules of the American Arbitration Association.

17.7 Other Termination Provisions; Illegality. This Lease may also be terminated pursuant to Sections 25, 28, 29, 30 and 31 hereof. In addition, this Lease may be terminated by either Party if: (i) in the opinion of well-qualified independent legal counsel selected by mutual agreement of the Parties (if the Parties cannot agree on the selection of independent counsel, the Parties shall each select one independent counsel who shall select the counsel to be ultimately retained by the Parties); (ii) there is a change in federal or state laws or regulations, their interpretation by express statement or opinion by a government agency, or new federal or state legislation, that would cause this Lease to become illegal; (iii) the Parties are unable to amend this Lease to comply after a period of good faith negotiation; and (iv) independent counsel concludes that there is no reasonable and fair way to revise the Lease so as to revise the contractual relationship in a manner compliant with the law and with substantially similar terms. If independent counsel concludes that the Lease may be reasonably and fairly revised with substantially similar terms, the Parties must agree to those terms and amend the Lease accordingly, unless otherwise mutually agreed at that time.

18. Rent.

Tenant shall pay Lessor as rent for the Leased Property the amounts set forth or described on Exhibit M attached hereto (the “Rent”). All Rent payments shall be paid on or before the dates set forth on Exhibit N. All rent payments shall be equal to the principal and interest due and payable on all Current Bonds outstanding as of the date of this Lease, together with principal and interest due and payable on any New Bonds issued under Section 19 hereof. The term “Current Bonds” means the outstanding principal amount of: (a) the portion of the City’s $2,455,000 General Obligation Public Improvement and Refunding Bonds, Series 2005A (the “Series 2005A Bonds”) that financed certain hospital infrastructure improvements, which portion was issued in the original principal amount of $1,640,000 and is referred to herein as the “Series 2005A Infrastructure Project Bonds”; (b) the City’s $4,145,000 General Obligation Hospital Improvement bonds, Series 2006A (the “Series 2006A Bonds”); and (c) the City’s $4,645,000 General Obligation Health Care Facility Revenue Refunding Bonds, Series 2009A (the “Series 2009A Bonds”).

In the event New Bonds are issued by the City as set forth in Sections 17 and 19 of this Lease, the rent payments shall be adjusted to reflect the additional principal and interest due on said bonds and to otherwise comply with the provisions of Minnesota Statutes, Section 447.47.

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19. Repairs, Capital Improvements and Additions.

19.1 Capital Improvements. City agrees to use its best efforts to issue not less than $10 million in principal amount of New Bonds (as defined in Section 17.3 hereof), before the fifth anniversary of the Effective Date. City agrees to use its best efforts to issue additional New Bonds in a principal amount of $15 million during the sixth through tenth years of the Initial Term of the Lease. Tenant agrees to make $7 million of capital improvements to the Hospital during the first five (5) years of the Lease (the “Improvements”). Any New Bonds shall not be general obligations of the City and the full faith and credit and taxing powers of the City shall not be pledged to such New Bonds. The Improvements made pursuant to the terms of this Lease will be the property of City and City will hold title to the Improvements.

19.2 Repairs. Tenant shall keep and maintain the Leased Property in good condition and repair, including replacements as may be reasonably necessary. Tenant shall take good care of the Leased Property and shall at all times keep the same in first-class order and condition, ordinary wear and tear excepted, and shall at its expense make all necessary repairs.

19.3 Signage. Tenant shall be permitted to install on the Leased Property and shall have the obligation to maintain, both at its sole expense, one or more name identification signs as may be reasonably necessary or appropriate to identify services provided, ingress and egress points, and service areas. All signs installed and maintained by Tenant shall be in compliance with all legal requirements.

20. Taxes and Assessments.

20.1 Special Assessments. Tenant shall pay all taxes and installments of special assessments due and payable during each calendar year of the Term with respect to the Leased Property. However, in the event this Lease shall terminate on a day other than the last day of a calendar year, Tenant shall only pay a pro-rata share of taxes and installments of special assessments due and payable in that calendar year.

20.2 Tax-exemption. EH shall maintain its income tax-exempt status throughout the term of this Lease and continue to treat EH-Virginia as a disregarded entity for federal income tax purposes. Lessor agrees to cooperate with Tenant’s efforts to have that portion of the Leased Property consisting of the hospital building to continue to be exempt from taxes. Tenant shall continue to pay all property taxes due and payable on the Medical Arts Building.

21. Insurance.

21.1 Policies. During the Term, Tenant shall keep in full force and effect, at its sole expense, a program of self-funding, insurance or a combination of the two, for the following:

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(a) Fire and extended coverage insurance insuring the Leased Property for the full insurable value and naming Lessor as owner and as a loss payee consistent with Section 28.

(b) Commercial general coverage insuring both Lessor and Tenant against any and all losses, claims, demands or actions whatsoever for injury to or death of any one or more persons, for damage to property, including contractual liability coverage insuring Tenant’s indemnity obligations set forth herein, arising from Tenant’s conduct and operation of Tenant’s business on the Leased Premises. Such coverage shall provide a limit of not less than One Million and No/100 Dollars ($1,000,000.00) per occurrence and Five Million and No/100 Dollars ($5,000,000.00) in the aggregate.

(c) Professional liability coverage with limits of liability set and maintained by Tenant at levels consistent with prudent business practice.

21.2 Certificates. Upon request, Tenant shall furnish Lessor with certificates evidencing that such insurance is in effect. All such insurance shall provide that Lessor shall be notified in writing at least 10 days before cancellation, material change or nonrenewal and shall name the City as additional insured.

21.3 Professional Liability Claims. Tenant’s professional liability insurance shall cover claims incurred during the Term.

21.4 Commercial Reasonableness. Tenant represents and warrants that all coverages it shall maintain under this Section 21, whether self-funded, insured or both, shall be coverages that are commercially reasonable for a medical center that owns its facilities and equipment, and is not leasing its assets in a manner similar to the arrangements within this Lease.

22. Tax Compliance. While any Current Bonds (as defined in Section 18) or New Bonds (as defined in Section 17.3) are outstanding, Tenant agrees as follows:

22.1 Representations and Covenants as to Private Business Use of the Leased Property. The Tenant hereby represents and warrants that: (i) none of the activities to be conducted by the Tenant with respect to the Leased Property will constitute an unrelated trade or business of the Tenant (within the meaning of Section 513(a) of the Code); and (ii) over the life of the Current Bonds and any New Bonds, less than an amount equal to five percent (5%) of the principal amount of the Current Bonds and any New Bonds will (A) finance property used for a private business use (as such term is used in Section 141(b) of the Code and modified under Section 145(a) of the Code), and less than five percent (5%) of the Current Bonds and any New Bonds will be secured directly or indirectly by any interest in property used for a private business use or will be paid from money derived from a private business use, and (B) finance property to be used in

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an unrelated trade or business of the Tenant (within the meaning of Section 513 of the Code).

22.2 Representations as to Status of the Tenant. EH makes the following representations regarding the status of EH. As of the date of this Lease, EH is a nonprofit corporation organized and existing under the laws of the State of Minnesota and is qualified to do business in the State of Minnesota. EH: (i) is an organization described in Section 501(c)(3) of the Code; (ii) is exempt from federal income taxation under Section 501(a) of the Code; (iii) is not a “private foundation” as defined in Section 509(a) of the Code; (iv) has received a determination letter from the Internal Revenue Service to the effect that clauses (i), (ii), and (iii) are applicable to EH; (v) such determination letter has not been modified, limited, or revoked, and EH is in compliance with all terms, conditions, and limitations, if any, contained in such determination letter; and (vi) the facts and circumstances which form the basis of such determination letter, as represented to the Internal Revenue Service, continue substantially to exist. EH will take no action nor suffer any action to be taken by others which will alter, change, or destroy the status of EH as an organization described in Section 501(c)(3) of the Code and exempt from federal income taxation under Section 501(a) of the Code (or any successor sections of a subsequent federal income tax statute or code).

22.3 Change in Ownership of the Leased Property. The Tenant represents that the Tenant will hold leasehold title to the Leased Property for federal income tax purposes. The Leased Property will be used in pursuit of the exempt purposes of Tenant. The Tenant recognizes that a change in use of the Leased Property, or a change in the ownership of the Leased Property, could result in interest on the Current Bonds or any New Bonds becoming includable in gross income for federal income tax purposes, gross income to the Tenant from an unrelated trade or business, or the denial of an interest deduction under the Code. This Section 22.3 shall not apply to any portion of the Leased Property which may be sold or otherwise disposed of by the Tenant as a result of the normal wear and tear or obsolescence of such property.

22.4 Management Contract Restrictions. The Tenant shall not enter into, materially modify, or extend a management or service agreement with respect to any portion of the Leased Property with any entity, other than a political subdivision or an entity described in Section 501(c)(3) of the Code, unless such agreement: (i) complies with Revenue Procedure 97-13, 1997-1 C.B. 632, issued January 10, 1997, and Revenue Procedure 2001-39, 2001-2 C.B. 38, issued June 20, 2001, or any subsequent revenue procedure, regulation, or other written statements of the Internal Revenue Service or the United States Department of the Treasury that establishes superseding rules or regulations with respect to permissible management or service agreements or establishes “safe harbors” with respect to such agreements; or (ii) in a written opinion of Bond Counsel, delivered to the Tenant, Bond Counsel states that such management or service agreement will not cause any outstanding Current Bonds or New Bonds to be deemed to be a “private

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activity bond” that is not a “qualified 501(c)(3) bond” (within the meaning of Section 145 of the Code).

22.5 Miscellaneous Covenants.

(a) The Tenant will provide to Lessor all information necessary to enable Lessor to complete and file the Information Return for Tax-Exempt Private Activity Bond Issues, Internal Revenue Form 8038 (Rev. April 2011) for reissuance of the Current Bonds as soon as possible after the Closing Date, and for any New Bonds upon the date of issuance of such bonds, all to the extent required under Section 149(e) of the Code, and the Arbitrage Rebate and Penalty in Lieu of Arbitrage Rebate, Internal Revenue Service Form 8038-T, or applicable successor form, pursuant to Section 148(f) of the Code.

(b) The Tenant will comply with, and make all filings required by, all effective rules, rulings, or regulations promulgated by the United States Department of the Treasury or the Internal Revenue Service with respect to obligations described in Sections 103 and 145 of the Code, such as the Current Bonds and any New Bonds.

(c) EH covenants to continue to conduct its operations and those of EH-Virginia in a manner that will result in EH continuing to qualify as an organization described in Section 501(c)(3) of the Code, including but not limited to the timely filing of all returns, reports, and requests for determination with the Internal Revenue Service and the timely notification of the Internal Revenue Service of all changes in the organization and purposes of the Tenant from the organization and purposes previously disclosed to the Internal Revenue Service.

(d) The Tenant shall not divert any substantial part of its corpus or income for a purpose or purposes other than those for which it is organized and operated.

(e) The Tenant has not used and will not use or cause to be used the Leased Property or invest the proceeds of any New Bonds in a manner that will result in the Outstanding Bonds or New Bonds Note becoming a private activity bond (other than a “qualified 501(c)(3) bond”) within the meaning of Sections 141 and 145 of the Code.

(f) The Leased Property does not include any airplane, skybox or private luxury box, a facility primarily used for gambling, or a store the principal business of which is the sale of alcohol beverages for consumption off premises.

(g) The Tenant shall not use (or permit the use of) any portion of the Leased Property to be used for sectarian instruction or as a place of religious worship.

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(h) The Tenant agrees to rebate all rebate amounts related to the Current Bonds or any New Bonds required to be rebated to the United States of America pursuant to Section 148(f) of the Code.

23. Environmental Matters. Tenant shall indemnify Lessor against any and all liabilities arising out of or resulting from the use, storage, generation or disposal of any hazardous substances, as defined by federal, state or local law, in or on the Premises (“Environmental Liability”) during the Term(s) hereof. Lessor shall indemnify Tenant against any and all Environmental Liability existing as of the commencement of the initial Term of this Lease or arising out of or resulting from occurrences on the Premises before the commencement of the initial Term of this Lease.

24. No Shop; No Sale. Lessor shall not sell the Medical Center or the Leased Property during the term of this Lease.

25. Option to Purchase. In the event that the City is unable or unwilling to issue the New Bonds as set forth in Section 17.3, and subject to amendment of the City Charter to permit the City’s sale of the Leased Property, and compliance with any City Charter or City ordinance requirements, then Tenant may elect to exercise this option to purchase, provided that Tenant is not in default under the Lease. Tenant shall have the right to offer to purchase the Leased Property at any time within twelve (12) months after the sixth anniversary of the Effective date of this Lease where the City is unwilling or unable to issue the New Bonds as set forth in Section 17.3. In addition, in the event that the City has been unable or unwilling to issue additional New Bonds in an aggregate amount of $15,000,000 during years six through ten of this Lease, then Tenant shall once again have the same option to exercise its right to purchase as set forth herein, during the twelve (12) month period following the eleventh anniversary of the Effective Date of the Lease, provided that Tenant is not in Default and no Event of Default has occurred that is continuing under this Lease. Lastly, upon 365 days notice to Landlord prior to the expiration of the Renewal Term, Tenant shall have the same right to purchase the Leased Property. The purchase price for the Leased Property shall be the greater of (i) the fair market value of the Leased Property as adjusted to reflect a liability equal to the dollar value of any EH-Virginia indemnification of the City pursuant to Section 5 or (ii) the outstanding principal amount of any outstanding Current Bonds and New Bonds, plus accrued interest, plus any applicable redemption premium for such bonds.

25.1 Transfer Expenses. The Tenant shall pay all expenses of the transfer of title of the Leased Property. Upon the Tenant’s purchase of the Leased Property, the City shall convey fee title to the Tenant.

25.2 Arbitration Related to Purchase Option. Should Tenant and City fail to reach an agreement satisfying the provisions of this Section 25 within one hundred eighty (180) days after Tenant’s notice to City of Tenant’s election to purchase, this matter shall be submitted to binding arbitration in accordance with the rules of the American Arbitration Association.

26. Permitted Tenancy Uses. Tenant shall use the Leased Property only for the provision of health care services (i.e., hospital services, emergency services, skilled nursing services,

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medical clinic services, etc.) in a professional and competent manner which will not jeopardize the tax-exempt status of the Parties or any tax-exempt bonds issued with respect to the Leased Property. Additionally, Tenant shall not use the Leased Property or operate the Hospital in any manner that is contrary to, or in violation of, any authority, law, ordinance, rule or regulation applicable to Lessor or Tenant or in any way which will cause the Tenant, its affiliates or subcontractors to be in violation of the directives of their sponsoring or accrediting organizations. Tenant shall at all times maintain and use the Leased Property only in a careful, safe and proper manner.

27. Liens. In the event that any mechanics’ or material providers’ liens shall attach to the Leased Property as a result of Tenant’s repairs, maintenance, improvements or additions, Tenant shall arrange for the discharge of same before the time that execution may be levied to satisfy the lien. The Tenant shall not encumber the Leased Property with a leasehold mortgage without the prior written consent of the City and only then in connection with the issuance of the New Bonds if required for marketability of the New Bonds.

28. Destruction/Damage.

28.1 Repair. Subject to the requirements of any bonds or other permitted indebtedness then in effect, in the case of damage or destruction by fire or other casualty, Tenant, with the consent of the Landlord, which may not be unreasonably withheld, shall cause the damage to be repaired and the Leased Property to be restored with all reasonable dispatch, subject to delays beyond the reasonable control of Lessor. To the extent all or a portion of the Leased Property are rendered untenantable, all payments and charges Tenant is required to make pursuant to the terms of this Lease shall abate until Tenant can take possession of the repaired Leased Property or thirty (30) days after completion of Tenant’s work, whichever occurs first. All insurance proceeds from casualty insurance covering the Leased Property shall be used to make the repairs or restoration. In the event that such insurance proceeds exceed the actual cost to make the repairs or restoration, such excess shall belong to Tenant. In the event that such insurance proceeds are insufficient to pay the actual cost of repairs or restoration, Tenant shall complete the repairs.

28.2 Termination. Notwithstanding, if all of the improvements on the Leased Property are totally destroyed by fire or other casualty or if the damage shall be so extensive that 75 percent or more of the improvements on the Leased Property are destroyed or if Tenant fails to rebuild the Leased Property within one hundred eighty (180) days of the date of such damage, Lessor shall have the option to terminate this Lease effective the date of damage. If Lessor exercises this option to terminate, all insurance proceeds from the casualty insurance covering the Leased Property shall be paid to and belong to Lessor.

29. Condemnation. If the whole or any part of the Leased Property shall be taken under the power of eminent domain or by purchase or other acquisition in lieu of condemnation, this Lease shall terminate as to the part so taken on the date (“Taking Date”) Tenant is

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required to yield possession thereof to the condemning authority. Effective with the Taking Date, the Rent shall be reduced in proportion to the diminution of value to Tenant of the Leased Property so taken. If the amount of the Leased Property so taken substantially impairs the usefulness of the remaining Leased Property for use by Tenant, Tenant may, by notice to Lessor delivered at least 60 days before the Taking Date, terminate this Lease as of the Taking Date. All compensation or damages awarded for such taking under the power of eminent domain, whether for the whole or part of the Leased Property, shall be apportioned between Lessor and Tenant as their interests may appear.

30. Default. It shall be the right of Lessor to declare this Lease forfeited, and to exercise its rights pursuant to Section 29 hereof, upon the occurrence of any of the following:

30.1 Delayed Rent Payment. A Rent payment from Tenant shall be and remains unpaid in whole or in part for a period of 10 days or more after the same is due and payable;

30.2 Uncured Breach. Tenant’s violation or default in any of the covenants, agreements, stipulations, or conditions herein, which violation or default shall continue for a period of 30 days after written notice from Lessor of such violation or default or within such reasonable time thereafter as Lessor may deem necessary to cure such default where such default is of such a nature as to reasonably require more than 30 days to cure;

30.3 Tenant Bankruptcy. Tenant’s adjudication as a bankrupt or the filing of a petition in bankruptcy or for any arrangement under the Bankruptcy Code or Tenant’s insolvency or the appointment of a receiver of Tenant’s property; or

31. Effect of Default. In the event of any default hereunder, as set forth in Section 30 hereof, the rights of Lessor, in addition to any other remedy provided at law or in equity, shall be as follows:

31.1 Cancellation. Lessor shall have the right to cancel and terminate this Lease, as well as all of the right, title, and interest of Tenant hereunder, by giving to Tenant not less than 30 days’ notice of the cancellation and termination. Such notice may be given on the same date and in the same document as the applicable notice set forth in Section 15 hereof. On expiration of the time fixed in such notice, this Lease and the right, title, and interest of Tenant hereunder shall terminate in the same manner and with the same force and effect, except as to Tenant’s liability for Rent and Tenant’s other obligations which survive termination of this Lease, as if the date fixed in the notice of cancellation and termination were the end of any Term herein originally determined.

31.2 Other Penalty. Lessor may elect, but shall not be obligated, to make any payment required of Tenant herein or comply with any agreement, term or condition required hereby to be performed by Tenant, and Lessor shall have the right to enter the Premises for the purpose of correcting or remedying any such default

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and to remain until the default has been corrected or remedied, but any expenditure for such correction by Lessor shall not be deemed to waive or release the default of Tenant or the right of Lessor to take any action as may be otherwise permissible hereunder in the case of any default.

31.3 Reletting. After termination of the Lease by Lessor, Lessor may re-enter the Premises without further notice and may re-let the Leased Property or any part thereof for any Term, at the rent and on terms as Lessor may choose. Reletting of the Leased Property by Lessor shall not constitute a waiver of Lessors’ right to enforce the obligation of Tenant to pay Rent through the Term, but all Rent received by Lessor through such re-letting shall be applied to reduce the amount of Tenant’s remaining Rent obligation.

Pursuit of one remedy shall not bar Lessor from thereafter pursuing any other lawful remedy.

32. Access by Lessor. Lessor shall have the right to enter the Premises upon prior written notice to inspect the same.

33. Advisory Meetings. The Tenant desires that Virginia Regional Medical Center Hospital Commission (the “Commission”) act as an advisory board to the Tenant on certain issues requested by or presented by the Tenant. Tenant will request at least one meeting annually with the Commission to present, along with EH-Virginia’s most recent audited financial statements, an annual written status report on the operations of the Medical Center and on Tenant’s compliance with the provisions of Section 17.4. The Tenant may, at the Tenant’s discretion, call additional meetings for information and advisory purposes. The Commission shall not have decision making authority regarding operation of the Hospital.

34. General Indemnity. Tenant hereby releases Lessor and agrees to indemnify Lessor from any and all uninsured liability or responsibility of Tenant (or anyone claiming through or under Tenant by way of subrogation or otherwise, but only so long as this will not prejudice any actual insurance coverage) for any and all liabilities, obligations, costs, damages or causes or action, including attorneys fees, resulting from any injury to person or property or from loss of life or otherwise relating to the use, occupancy or enjoyment of the Leased Property by Tenant. This covenant shall survive the termination of this Lease for any reason and the expiration of the Term for any reason.

Notwithstanding the foregoing, Tenant’s release and indemnity of Lessor shall not apply in circumstances where the cause of damage or liability is a breach of duty or the negligence or misconduct of Lessor, its agents and employees.

35. Quiet Enjoyment. Subject to all the conditions, terms and provisions contained in this Lease, Lessor covenants that (a) this Lease constitutes the valid and binding obligation of the Lessor, enforceable against it in accordance with its terms and (b) Tenant, upon paying the Rent and observing and keeping all terms, covenants, agreements and conditions of this Lease on its part to be observed and kept, shall quietly have and enjoy

8951186v4 23

the Leased Property during the Term, without hindrance by Lessor. Tenant may, in its discretion and at its expense, obtain a policy of title insurance insuring Tenant’s interest under this Lease.

36. Assignment and Subletting. Neither Tenant nor Lessor may assign this Lease, nor may Tenant sublet the Leased Property or any part thereof, to an unaffiliated organization without the prior written consent of the other Party. Notwithstanding anything contained herein, transfers of ownership or membership interest in Tenant by way of corporate organization or reorganization involving Tenant, its parent or its subsidiaries and their respective assigns or the transfer of the rights of Tenant as part of such organization or reorganization shall not constitute as assignment or subletting pursuant to the terms of this Lease.

37. Medicare/Medicaid Access Clause. Tenant agrees, until the expiration of 4 years after the last furnishing of services pursuant to this Lease, to make available, upon request, to the Secretary of the Department of Health and Human Services, the Comptroller General of the United States or any of their duly authorized representatives, this Lease and the books, documents and records of Tenant that are necessary to verify the nature and extent of the cost of such services, in accordance with the requirements and procedures set forth in 42 C.F.R. §§ 420.300 420.304. If Tenant carries out any of the duties hereunder through a subcontract with a related organization as defined in 42 C.F.R. § 420.301, having a value or cost of $10,000 or more over a 12-month period, such subcontract shall contain a clause to the effect that until the expiration of 4 years after furnishing of such services pursuant to such subcontract, the related organization shall make available, upon written request, to the Secretary or, upon request, to the Comptroller General, or any of their duly authorized representatives, the subcontract and the books, documents and records of such origination that are necessary to verify the nature and extent of the costs of such services, in accordance with the requirements and procedures set forth in 42 CFR §§ 420.200 through 420.304.

38. Dispute Resolution.

In order to provide a mechanism for resolving disputes regarding the foregoing provisions, the Parties agree as follows:

38.1 Negotiations. Within thirty (30) calendar days after either Party’s receipt of a written notice of a dispute from the other Party, the Dispute shall be submitted for resolution through good faith negotiations between representatives of the Parties with authority to resolve the matter. Such persons shall negotiate in good faith to resolve the matter within sixty (60) calendar days (unless the Parties mutually agree to extend the negotiations). The negotiations shall be considered to have failed if, after at least three (3) joint meetings, either Party determines that no reasonable resolution can be reached and provides written notice to the other representatives of a request for mediation.

38.2 Mediation. Any Dispute which cannot be resolved by the negotiation provisions of paragraph (a) shall be subject to the following mediation process:

8951186v4 24

(a) The mediation shall be conducted by one mediator who shall be selected jointly by the Parties within ten (10) calendar days after notice of the request for mediation. If the Parties cannot agree on a mediator, the third shall be appointed by a court of competent jurisdiction upon motion of either Party. Each Party shall share equally in the cost of the jointly appointed or court appointed mediator.

(b) The mediation shall be non-binding and shall commence within five (5) calendar days after the selection of the mediator.

(c) The mediation shall continue until the earlier of (i) thirty (30) calendar days after selection of the mediator, or (ii) the date the Dispute is settled or the mediator declares that the Parties are at an impasse and the Dispute cannot be resolved.

39. Miscellaneous.

39.1 Recording. This Lease may be recorded or the Parties may agree to execute a short form or memorandum of this Lease in a manner sufficient to enable it to be recorded in the governmental office in which there would be recorded a deed covering the Leased Property which short form or memorandum will set forth the actual occupancy of Tenant, the initial Term and the options to renew or extend.

39.2 Captions. The headings or captions herein are inserted for convenience of reference only and are not to be considered in the construction of the provisions hereof.

39.3 Governing Law. This Lease shall be governed by the laws of the State of Minnesota.

39.4 Waiver. The receipt of Rent by Lessor, with knowledge of any breach of this Lease by Tenant or of any default on the part of Tenant in the observation or performance of any of the terms, covenants or conditions of this Lease, shall not be deemed to be a waiver of any provision of this Lease.

39.5 Construction. Although this Lease may have been drafted by counsel for one of the Parties, this Lease has been subject to negotiation and modification before final execution and, accordingly is not to be construed for or against either the Lessor or the Tenant but is to be construed as if mutually drawn according to the general tenor of the language.

39.6 Severability. If any provision of this Lease is held to be illegal, invalid or unenforceable under present or future laws, such provision shall be fully severable and this Lease shall be construed and enforced as if such illegal, invalid or unenforceable provision had never constituted a part hereof, and the remaining provisions shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance here from. Furthermore, in lieu of such illegal, invalid or unenforceable provision, there shall

8951186v4 25

be added automatically as part of this Lease a legal, valid and enforceable provision as similar in terms to the illegal, invalid or unenforceable provision as may be possible.

39.7 No Partnership/Joint Venture. Any intention to create a joint venture, partnership or agency relation between the Parties hereto is hereby expressly disclaimed.

39.8 Estoppel Certificate. Within ten days after each request by Lessor, Tenant shall deliver an estoppel certificate to Lessor in writing, acknowledged and in proper form for recording. Each estoppel certificate shall contain the following information certified by the person executing it on behalf of Tenant: (a) whether Tenant is in possession of the Leased Property; (b) whether this Lease is unmodified and in full force and effect; (c) whether Tenant contends that Lessor is in default under this Lease in any respect; (d) whether there are then existing set offs or defenses against the enforcement of any right or remedy of Lessor or any duty or obligation of Tenant and, if so, specifying the same in details; and (e) the date, if any, to which rent or charges have been paid in advance.

39.9 Notices. Any notice or other communication required or permitted hereunder shall be in writing and shall be deemed to have been given: (1) when received, if delivered by hand; or (2) when deposited, if placed in the mails for delivery by certified mail, postage prepaid return receipt requested, addressed to the appropriate Party as follows: If to Lessor at _____, with a copy to Leonard, Street and Deinard, P.A., at 150 South Fifth Street, Minneapolis, MN 55402, and if to Tenant at _____ with a copy to General Counsel at 502 East Second Street, Duluth, Minnesota 55805. Addresses may be changed by written notice.

39.10 Entire Agreement. This Lease represents the only agreement between the Parties concerning the subject matter hereof and supersedes all prior agreements whether written or oral, relating thereto. No provision in the organizational documents of EH or EH-Virginia shall operate so as to modify any of the duties of EH or EH-Virginia hereunder, nor to relieve either of such duties.

39.11 Modification and Waiver. No proposed amendment, modification or waiver of any provision hereof shall be binding unless set forth in a written document signed by all Parties.

39.12 Binding Effect. The terms, conditions and covenants herein shall be binding upon and inure to the benefit of the Parties hereto and their successors and permitted assigns and shall run with the Leased Property.

39.13 Expenses. Except as otherwise provided herein, each Party shall bear and pay for its own costs and expenses including, without limitation, all fees and disbursements of attorneys, accountants and financial consultants.

39.14 Limitation of Obligation. Lessor shall not be required to provide any services or do any act in connection with the Leased Property except as specifically set forth

8951186v4 26

herein and the Rent reserved hereunder shall be paid to Lessor without any claim on the part of Tenant or diminution or abatement.

39.15 Cumulative Rights. No right or remedy herein conferred upon or reserved to Tenant or Lessor is intended to be exclusive of any other right or remedy provided by law, but each shall be cumulative and in addition to every other right or remedy given herein or hereafter existing at law or in equity or by statute.

40. Exhibits. The Exhibits to this Lease are as follows:

(a) Exhibit A: Legal Description of the Leased Property

(b) Exhibit B: List of Property and Equipment

(c) Exhibit C: List of Assumed Contracts

(d) Exhibit D: List of Vehicles

(e) Exhibit E: Tail Coverage

(f) Exhibit F: Net Asset Valuation

(g) Exhibit G: Employee Hiring Terms

(h) Exhibit H: Governmental and Third Party Consents

(i) Exhibit I: City’s Disclosure Schedule

(j) Exhibit J: Assignment and Assumption Agreement

(k) Schedule 1: Contracts

(l) Exhibit K: City Officer’s Certificate

(m) Exhibit L-1: EH Officer’s Certificate

(n) Exhibit L-2: EH-Virginia Officer’s Certificate

(o) Exhibit M: Rent

(p) Exhibit N: Rent Payment Dates

(remainder of page left blank intentionally)

8951186v4 27

CITY OF VIRGINIA, MINNESOTA

By_______________________________________

Its

By_______________________________________Its Deputy Clerk

STATE OF MINNESOTA )) ss.

COUNTY OF __________ )

The foregoing instrument was acknowledged before me this ______ day of ____, by _____, the _____ of the City of Virginia, Minnesota, a municipal corporation and political subdivision, duly organized and existing under the laws of the State of Minnesota, on behalf of the City.

________________________________________

Notary Public

8951186v4

ST. MARY’S DULUTH CLINIC HEALTHSYSTEM d/b/a ESSENTIA HEALTH EAST

By_______________________________________

Its President

STATE OF MINNESOTA )) ss.

COUNTY OF __________ )

The foregoing instrument was acknowledged before me this ___ day of ____________, 20__, by __________________, the President of St. Mary’s Duluth Clinic Health System d/b/a Essentia Health East, a Minnesota nonprofit corporation, on behalf of the corporation.

_________________________________________

Notary Public

8951186v4

ESSENTIA HEALTH – VIRGINIA

By_______________________________________

Its _______________________________________

STATE OF MINNESOTA )) ss.

COUNTY OF __________ )

The foregoing instrument was acknowledged before me this ___ day of ____________, 20__, by __________________, the __________ of EH-Virginia, a Delaware limited liability company, on behalf of the company.

_________________________________________

Notary Public

8951186v4

EXHIBIT A

LEGAL DESCRIPTION OF THE LEASED PROPERTY

[See attached PDF – Owners and Encumbrances Report.]

8951186v4 Exhibit A – Page 1

EXHIBIT B

LIST OF PROPERTY AND EQUIPMENT

Attached is a list of the tangible personal property owned or used by the Medical Center in its operations. The list shall be updated as of Closing to delete obsolete equipment that has been disposed and new equipment acquired since execution of the Lease. [List not attached; has been e-mailed to Faye Witt 6/9/12.]

8951186v4 Exhibit B – Page 1

EXHIBIT C

LIST OF ASSUMED CONTRACTS

DRAFT 6/21/12

Contract Title Date Name of Other Party DescriptionItem

Number1 Agreement for Radiological Services 07/__/1997 Radiological Associates of Duluth, LTD. Radiology services

2 Agreement for Hospitalist Services 02/01/2012 Evergreen Hospitalists, PLLC Hospitalist services

3 Coverage Services Agreement 03/09/2012 Emergency Staffing Solutions of Minnesota ER coverage

4 Medical Director Agreement 03/01/2009 RehabCare Group Management Services, Inc. Rehab medical director

5 Medical Director Agreement Virginia Convalescent Center 08/26/2010 Dr. Edmund Draper VRCC medical director

6 Medical Director Agreement Sleep Lab 08/01/2008 Joseph Martinelli, M.C. Sleep Lab medical director

7 Agreement Between VRMC and Wapiti Medical Group for Cardiac Rehab Medical Director

04/01/2011 Wapiti Cardiac Rehab medical director

8 Professional Services Agreement between VRMC and Dr. Winston Schandorf for Professional Services

02/03/2010 Dr. Winston Schandorf Diabetes Center medical director

9 Professional Services Agreement between VRMC and Range Medical Services, LTD. for Professional Services of Kassamali Jamal, M.D.

01/01/2002 Range Medical Services, Ltd. Respiratory Medicine medical director

10 Professional Services Agreement between VRMC and Range Medical Services, LTD. for Professional Services of Kassamali Jamal, M.D.

01/01/2002 Range Medical Services, Ltd. Pulmonary Medicine medical director

11 Professional Services Agreement between VRMC and Range Medical Services, LTD.

02/10/1997 Range Medical Services, Ltd. Critical Care medical director

12 Agreement for Rehabilitative Services 01/01/2012 Iron Range Rehabilitation Center Therapy services

13 Pharmacy Agreement

First Amendment

Second Amendment

Cardinal Health HIPAA Agreement

Amendment to Master Sales Agreement

07/01/2006

09/01/2006

06/01/2010

10/6/2010

Cardinal Health 109, Inc.

Cardinal Health 109, Inc.

Cardinal Health 109, Inc.

Cardinal Health 109, Inc.

Pharmacy management services

First Amendment

Second Amendment

HIPPA Agreement

14 Pharmacy Services Agreement

First Amendment

Second Amendment

09/30/2004

07/01/2007

10/25/2010

Cardinal Health 101, Inc.

Cardinal Health Pharmacy Services, LLC

Cardinal Health Pharmacy Services, LLC

Pharmacy services agreement

First Amendment

Second Amendment

8951186v4 Exhibit C – Page 1

Business Associate Agreement 09/30/2004 Cardinal Health Clinic Services and Consulting Business Associate Agreement15 Acute Rehabilitation Agreement

First Modification Agreement

Extension and Second Modification Agreement

01/01/2007

01/01/2008

01/01/2010

RehabCare Group Management Services, Inc.

RehabCare Group Management Services, Inc.

RehabCare Group Management Services, Inc.

Therapy program management

First Modification

Extension and Second Modification

16 Memorial Blood Centers Hospital Agreement 01/01/2008 Memorial Blood Centers Blood banking services

17 Extension of Lease Agreement (original Lease dated 2/2/1999 attached as an Exhibit)

03/10/2010 Iron Range Rehabilitation Center Lease of space

18 Lease

Extension of Lease Agreement

04/01/2004

03/10/2010

Northern Foot & Ankle Associates, P.A. Lease of space

Extension19 Lease (extension and modification of original lease dated 10/30/1998) 09/12/2007 Northern Refractive Surgery Center, Ltd. Lease of space

20 Blue Cross Blue Shield of Minnesota (signature pages only) 01/15/2011 Blue Cross and Blue Shield of Minnesota Payor Contract

21 HealthShare, Inc. Hospital Contract 07/07/2010 HealthShare, Inc. Payor Contract

22 Medica Health Plans, Medical Insurance Company and Medica Health Plans of Wisconsin Associate Clinic Participation Agreement and VRMC

08/01/2011 Medica Health Plans; Medica Health Plans Payor Contract

23 Amendment to the Hospital Participation Agreement between Medica Health Plans, Medica Insurance Company, Medica Health Plans of Wisconsin, and Medica Self-Insured d/b/a/ Medica Self-Insured and VRMC

07/01/2011 Medica Health Plans,; Medica Insurance Company; Medica Health Plans of Wisconsin; Medica Self-Insured d/b/a Medica Self-Insured

Payor Contract

24 Amendment to the Associate Clinic Participation Agreement between Medica Self-Insured d/b/a Medica Self-Insured and VRMC

08/01/2011 Medica Self-Insured d/b/a Medica Self-Insured Payor Contract

25 Amendment to the Clinic/Physician Participation Agreement between Medica Self-Insured d/b/a SelectCare and VRMC

08/15/2011 Medica Self-Insured d/b/a SelectCare Payor Contract

26 HealthPartners, Inc. and Northern Physician Services, Inc. unknown HealthPartners, Inc. Payor Contract

27 One Health Plan of Minnesota, Inc. 03/01/2003 One Health Plan of Minnesota, Inc. Payor Contract PPO

28 Facility Services Agreement between PreferredOne Community Health Plan and VRMC

09/01/1999 PreferredOne Community Health Plan Minneapolis, MN

Payor Contract

29 System Participation Agreement between UCare Minnesota and VRMC 07/01/2009 UCare Minnesota and affiliates Payor Contract

30 Physician Participation Agreement Date is only a Bar Code

ChoiceCare Network Payor Contract

8951186v4 Exhibit C – Page 2

31 Agreement between Virginia Regional Medical Center and Minnesota Nurses Association

Letter of Understanding – Contract Extension between Virginia Regional Medical Center and Minnesota Nurses Association

--/--/2007

11/18/2010

Minnesota Nurses Association Labor Contract

Extension of Labor Contract to 8/1/2011

32 Agreement between Virginia Regional Medical Center, Virginia Minnesota and Licensed Practical Nurses Local Union #730, American Federation of State, County and Municipal Employees, AFL-CIO

__/__/2011 Licensed Practical Nurses Local Union #730, American Federation of State, County and Municipal Employees, AFL-CIO

Labor Contract

33 Agreement between The American Federation of State, County & Municipal Employees, AFL-CIO, Local 730 Service & Support Unit and Virginia Regional Medical Center

05/01/2011 Agreement between The American Federation of State, County & Municipal Employees, AFL-CIO, Local 730 Service & Support Unit

Labor Contract

34 Equipment Lease Agreement 10/07/2010 Metro Sales, Inc. Business Office equipment lease (MP171SPF and MP28515P)

35 Equipment Lease Agreement 08/31/2010 Metro Sales, Inc. Business office equipment lease

36 Equipment Lease Agreement 03/18/2011 Metro Sales, Inc. Business office equipment lease

37 Equipment Lease Agreement 07/29/2011 Metro Sales, Inc. Business office equipment lease

39 Equipment Lease Agreement 10/31/2011 Metro Sales, Inc. Business office equipment lease

40 Equipment Lease Agreement 12/13/2011 Metro Sales, Inc. Business office equipment lease

41 Equipment Lease Agreement 12/29/2011 Metro Sales, Inc. Business office equipment lease

42 Lease Agreement 01/31/2008 Xerox Business office equipment lease

43 Lease Agreement 1/30/2008 Xerox Business office equipment lease

44 Airgas, Inc. 01/22/2009 Airgas, Inc. Bulk Medical Oxygen

45 Rehabilitation Hospital Outpatient Dialysis Services Agreement 11/12/2010 Bio-Medical Applications of Minnesota, Inc., d/b/a/ FMC Hibbing

Outpatient dialysis services

46 Rehabilitation Hospital Outpatient Dialysis Services Agreement 11/12/2010 Bio-Medical Applications of Minnesota, Inc., d/b/a/ FMC Eveleth

Outpatient dialysis services

47 Local Loop Service Order 11/03/2006 Northeast Service Cooperative Internet service, local loop, public internet

48 An Agreement to Share Bioelectronic Engineering Services between Clinical Engineering Support Services, Virginia Regional Medical Center and Iron Range Rehab Center

01/01/2010 Iron Range Rehabilitation Center Sharing biomedical electronic services

49 An Agreement to Share Maintenance Services between Maintenance Services, Virginia Regional Medical Center and Iron Range Rehab Center

01/01/2010 Iron Range Rehabilitation Center Sharing maintenance services

50 An Agreement to Share Internet Access Services between Computer Services, Virginia Regional Medical Center and Memorial Blood Centers

02/01/2007 Memorial Blood Centers Internet access services

51 Eventis Service Order Agreement 03/23/2010 Eventis Telecom, Inc. Telecommunication services

52 Placed Capital Equipment Agreement 05/13/2011 Smith & Nephew, Inc., Endoscopy Division Endoscopy equipment lease

8951186v4 Exhibit C – Page 3

53 2009 Service Contract for Virginia Regional Medical Center 12/11/2008 Radiation Physics Consultants, Inc. Annual evaluation of diagnostic equipment

54 Equipment Lease Agreement 9/14/2007 Dade Behring Finance Co., LLC Lab instrument

55 License Agreement 3/20/2009 Dornier Medtech America, Inc. Urology equipment license agreement

56 Service Agreement Quotation 04/04/2012 Johnson & Johnson Health Care, J&J Health Care Systems, Inc

Sterilization system

57 Service Agreement Quotation 08/10/2012 Johnson & Johnson Health Care, J&J Health Care Systems, Inc.

Sterilization systems

58 Lease Agreement 12/18/2008 Leasing Associates of Barrington, Inc. Hematology system lease

59 Alliance Agreement 04/01/2008 Philips Healthcare Service agreement

60 Service Agreement 01/07/2009 Philips Medical Systems, N.A. Service Agreement

61 Rental and Service Agreement 09/24/2003 Omnicell Pharmacy equipment rental and service agreement

62 Contract for Imaging Products 02/14/2011 Mallinckrodt Inc. Imaging products

63 Abbott Nutrition Pump Lease Agreement 10/31/2008 Abbott Laboratories, Inc. Lease of enteral nutrition feeding pumps

64 Software License and Service Agreement 1/1/2007 QuadraMed Software license, professional services, support and maintenance agreement

65 Verification Services Contract __/__/2006 St. Luke’s Hospital of Duluth, Inc. d/b/a lake Superior Credentials Verification Service

Credentialing service

66 HealthStar Staffing Inc. Agreement 03/27/2012 HealthStar Nursing Home Staffing Agreement

67 GE Healthcare Service Contracts and Addendum 01/07/2006 GE Healthcare Mri contrast media, amendment and service, support agreements

68 Allscripts Master Agreement, Addendum, Software Maintenance Agreement, Hardware Maintenace Agreement, NEED CONTRACT

10/28/2010 Allscripts Master agreement, hardware maintenance, software maintenance

69 CPSI Agreement, Electronic Billing Outsourcing Agreement, Agreement and Outsourcing Support Agreement

04/08/1991 Computer Programs & Systems, Inc. Electronic AP/AR system

70 CPSI Payroll processing and Electronic Paystub Agreement 11/02/2010 Computer Programs & Systems, Inc. Payroll processing

71 XcelPortal and Xtract Agreements __/__/____ Excelon Development Inc. CPSI portal

72 eDocs-SOP __/__/____ Edocument Resources Maintenance Renewal

73 Mediacom Online Service Agreement 08/10/2009 Mediacom Minnesota LLC Intranet service agreement

74 Laundry Service Agreement 04/08/2010 Lake Superior Laundry Laundry services

75 Maintenance Agreement 03/__/2009 Thyssen Krupp Elevator Elevator services contract

76 Service Agreement 11/16/2007

12/27/2011

Trane Building Automation Service agreements for chiller and equipment

8951186v4 Exhibit C – Page 4

77 Purchase Terms Control Unit Targis 07/16/2010 Urologix Inc Purchase agreement

78 Agreement for Rehabilitative Services 01/01/2012 Iron Range Rehabilitation Center Service agreement

79 Professional Services Agreement 08/26/2010 Dr. Dennis Carlson DDS Professional Services Agreement

80 Snow Plowing Agreement 11/1/2011 R & A Construction Snow plowing services

81 Lease and Service Agreement 1/1/2011 Orthopedic Associates of Duluth P.A. Lease and services agreement

82 Master Agreement 2/24/2010 Abbot Diabetes Care Sales Corporation Glucose Strips83 Price Quote Point of Care products 9/26/2011 Abbot Laboratories, Inc. equipment84 Single Site Agreement 1/1/2011 Ethicon, Inc. Suture and endo-mechanical products, etc.

8951186v4 Exhibit C – Page 5

EXHIBIT D

LIST OF VEHICLES

VRMC owned vehicles

Year Make Model VIN Number

2002 GMC Bus 1GDJG31G621210009

2003 GMC Van 1GTGG25UX31185822

1999 GMC Pickup 2GTEK19V6X1533084

8951186v4 Exhibit D – Page 1

EXHIBIT E

TAIL COVERAGE

[Tom Crook/Steve Feltman to provide declarations page for Med Mal and D&O/EPL tail coverages that will be purchased.]

8951186v4 Exhibit E – Page 1

EXHIBIT F

NET ASSET VALUATION

Net Asset Valuation shall be defined as: the net book value of the difference between (i) the current assets (other than current portion of limited use assets) plus unrestricted investments such as plant improvement or replacement funds which are associated with the Leased Property and (ii) the current liabilities (other than nursing home trust agreements payable and current maturities of long-term debt) plus long-term accrued compensation and benefits (net of any corresponding long-term assets) which are associated with the Leased Property as set forth on the balance sheet of Medical Center’s audited financial statements dated as of the Closing Date. The initial Net Asset Valuation as of Closing shall be “Initial NAV.” On termination of the Lease, when the Lease requires a comparison of Initial NAV with Net Asset Valuation on termination, a calculation of Net Asset Valuation (“Terminal NAV”) shall be made by computing the net book value of the difference between (i) the current assets (other than current portion of limited use assets) plus unrestricted investments such as plant improvement or replacement funds, less any unspent cash or investment funds remaining from EH’s initial $7 million contribution, which are associated with the Leased Property and EH-Virginia and (ii) the current liabilities (other than nursing home trust agreements payable and current maturities of long-term debt) plus long-term accrued compensation and benefits (net of any corresponding long-term assets) which are associated with the Leased Property and EH-Virginia as set forth on the balance sheet of Medical Center’s audited financial statements dated as of the date of termination. Terminal NAV current assets and current liabilities shall be adjusted to reflect amounts due from and payable to Essentia Health or an affiliate of Essentia Health other than EH-Virginia.

8951186v4 Exhibit F – Page 1

EXHIBIT G

EMPLOYEE HIRING TERMS

Years of Service:

Essentia Health will recognize continuous years of service at the Hospital for purposes of seniority, benefits eligibility, retirement plan eligibility and vesting, time off and sick leave accruals and recognition events.

Pay and Benefits:

Upon closing, all non-union employees will retain their current rates of pay and will continue to participate in substantially the same benefits as when they were hospital employees. Current benefits to be continued following closing in substantially the same form include dental insurance, life insurance, long-term disability insurance, flexible benefits and time-off plans. Voluntary benefits will be available for continuation by through direct-pay by the employee but will no longer be offered through payroll deduction.

Upon closing, Essentia Health will provide non-union employees coverage under an alternative health insurance plan that, to the extent possible, is similar to the current plan and is available to employees of a 501(c) organization.

Upon closing, all eligible employees will participate in the Essentia Health Retirement Plan.

Effective January 1, 2014 non-union employees will be offered the same employer-sponsored benefits and compensation programs as similarly situated Essentia Health employees.

Payroll:

EH– Virginia employees will move to the Essentia Health pay dates and pay period schedule. Employees are paid bi-weekly with the payroll period beginning with the day shift on Monday and ending after the night shift on Sunday, two weeks later.

Collective Bargaining Agreements:

1. a) Except as set forth in subpart c and d below, upon closing EH – Virginia will honor the following collective bargaining agreements: Virginia Regional Medical Center and Minnesota Nurses Association (“MNA”) – 7/1/11-6/30/13 (the “MNA Agreement”); VRMC and Licensed Practical Nurses Local 730 (AFSCME) – 1/1/12-12/31/13 (the “LPN Agreement”); and Virginia Hospital Commission of Virginia, Minnesota and Local 730, AFSCME, dated May 1, 2011 for the period – 1/1/12-12/31/13 (the “Service and Support Unit Agreement", and, together with the LPN Agreement, the “AFSCME Agreements”).

b) EH Virginia will recognize the MNA as the exclusive representative of the registered nurses employed by EH Virginia and, except as set forth below, agrees that it will be bound by the terms and conditions of the MNA Agreement. EH-Virginia will recognize

8951186v4 Exhibit G – Page 1

AFSCME, Local 730 as the exclusive representative of the licensed practical nurses and the services and support units employed by EH-Virginia and, except as set forth below, agrees that it will be bound by the terms and conditions of the AFSCME Agreements. 

c) EH Virginia will engage in good faith bargaining of the terms contained within:

Article 3.A & 3.B.2, Compensatory Time Off; Article 3.B.1, ; Article 3.O.2, Banked Hours; Article 4.D, Baylor Plan; Articles 17.A.1 and 17.A.2, Insurance, of the MNA Agreement;

Article 17.3, Hospital/Medical Coverage, of the LPN Agreement; and

Article12.3, Hospital/Medical Coverage, of the Service and Support Unit Agreement.

8951186v4 Exhibit G – Page 2

EXHIBIT H

GOVERNMENTAL AND THIRD PARTY CONSENTS

1. Hospital and Nursing Home Licensure

2. Medicare CHOW

3. Ionizing Radiation Licenses

4. Pharmacy Licenses?

5. CLIA Licenses

6. Accreditation?

7. Medicaid and Private Payor Consents

8. Other?

8951186v4 Exhibit H – Page 1

DRAFT 6/21/12

Contract Consents Contract Title Date Name of Other Party Description

Item Number

2 Consent Agreement for Hospitalist Services 02/01/2012 Evergreen Hospitalists, PLLC Hospitalist services

6 Consent Medical Director Agreement Sleep Lab 08/01/2008 Joseph Martinelli, M.C. Sleep Lab medical director

12 Consent Agreement for Rehabilitative Services 01/01/2012 Iron Range Rehabilitation Center Therapy services

13 30 day notice b4 closing

Pharmacy Agreement (no consent but notice 30 days b4 closing_

First Amendment

Second Amendment

Cardinal Health HIPAA Agreement

Amendment to Master Sales Agreement

07/01/2006

09/01/2006

06/01/2010

10/6/2010

Cardinal Health 109, Inc.

Cardinal Health 109, Inc.

Cardinal Health 109, Inc.

Cardinal Health 109, Inc.

Pharmacy management services

First Amendment

Second Amendment

HIPPA Agreement

14 30 day notice b4 closing

Pharmacy Services Agreement

First Amendment

Second Amendment

Business Associate Agreement

09/30/2004

07/01/2007

10/25/2010

09/30/2004

Cardinal Health 101, Inc.

Cardinal Health Pharmacy Services, LLC

Cardinal Health Pharmacy Services, LLC

Cardinal Health Clinic Services and Consulting

Pharmacy services agreement

First Amendment

Second Amendment

Business Associate Agreement16 Consent Memorial Blood Centers Hospital Agreement 01/01/2008 Memorial Blood Centers Blood banking services

21 Consent HealthShare, Inc. Hospital Contract 07/07/2010 HealthShare, Inc. Payor Contract

27 Consent One Health Plan of Minnesota, Inc. 03/01/2003 One Health Plan of Minnesota, Inc. Payor Contract PPO

28 Consent Facility Services Agreement between PreferredOne Community Health Plan and VRMC

09/01/1999 PreferredOne Community Health Plan Minneapolis, MN

Payor Contract

34 Notice Equipment Lease Agreement 10/07/2010 Metro Sales, Inc. Business Office equipment lease (MP171SPF and MP28515P)

35 Notice Equipment Lease Agreement 08/31/2010 Metro Sales, Inc. Business office equipment lease

36 Notice Equipment Lease Agreement 03/18/2011 Metro Sales, Inc. Business office equipment lease

37 Notice Equipment Lease Agreement 07/29/2011 Metro Sales, Inc. Business office equipment lease

39 Notice Equipment Lease Agreement 10/31/2011 Metro Sales, Inc. Business office equipment lease

8951186v4 Exhibit H – Page 2

40 Notice Equipment Lease Agreement 12/13/2011 Metro Sales, Inc. Business office equipment lease

41 Notice Equipment Lease Agreement 12/29/2011 Metro Sales, Inc. Business office equipment lease

45 Consent Rehabilitation Hospital Outpatient Dialysis Services Agreement 11/12/2010 Bio-Medical Applications of Minnesota, Inc., d/b/a/ FMC Hibbing

Outpatient dialysis services

46 Consent Rehabilitation Hospital Outpatient Dialysis Services Agreement 11/12/2010 Bio-Medical Applications of Minnesota, Inc., d/b/a/ FMC Eveleth

Outpatient dialysis services

47 Consent Local Loop Service Order 11/03/2006 Northeast Service Cooperative Internet service, local loop, public internet

51 Consent Eventis Service Order Agreement 03/23/2010 Eventis Telecom, Inc. Telecommunication services

54 NOT Assignable

Equipment Lease Agreement 9/14/2007 Dade Behring Finance Co., LLC Lab instrument

58 NOT Assignable

Lease Agreement 12/18/2008 Leasing Associates of Barrington, Inc. Hematology system lease

62 Consent Contract for Imaging Products 02/14/2011 Mallinckrodt Inc. Imaging products

63 Consent Abbott Nutrition Pump Lease Agreement 10/31/2008 Abbott Laboratories, Inc. Lease of enteral nutrition feeding pumps

64 Consent Software License and Service Agreement 1/1/2007 QuadraMed Software license, professional services, support and maintenance agreement

67 Consent GE Healthcare Service Contracts and Addendum 01/07/2006 GE Healthcare Mri contrast media, amendment and service, support agreements

73 Consent Mediacom Online Service Agreement 08/10/2009 Mediacom Minnesota LLC Intranet service agreement

77 Consent Purchase Terms Control Unit Targis 07/16/2010 Urologix Inc Purchase agreement

81 Consent Lease and Service Agreement 1/1/2011 Orthopedic Associates of Duluth P.A. Lease and services agreement

82 Consent Master Agreement 2/24/2010 Abbot Diabetes Care Sales Corporation Glucose Strips84 Consent Single Site Agreement 1/1/2011 Ethicon, Inc. Suture and endo-mechanical products, etc.

8951186v4 Exhibit H – Page 3

EXHIBIT I

CITY’S DISCLOSURE SCHEDULE

[To come.]

8951186v4 Exhibit I – Page 1

EXHIBIT J

ASSIGNMENT AND ASSUMPTION AGREEMENT

THIS ASSIGNMENT AND ASSUMPTION AGREEMENT, made effective on and as of _________ __, 2012, by and between the City of Virginia, Minnesota (“Assignor”) and Essentia Health – Virginia (“Assignee”).

1. Assignor and Assignee are parties to that certain Lease dated __________ __, 2012 (the “Lease”). Pursuant to and effective at the Effective Date of the Lease (as that term is defined therein), Assignor agrees to transfer and contribute to Assignee, and Assignee agrees to accept, all right, title, and interest of Assignor in and to those contracts, subject to the liabilities associated therewith, described on Schedule 1 attached hereto (the “Contracts”).

2. For good and valuable consideration paid by Assignee to Assignor, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound hereunder, Assignor does hereby grant, bargain, sell, convey, transfer, assign and deliver the Contracts to Assignee.

3. For the consideration aforesaid, Assignor hereby irrevocably constitutes and appoints Assignee the true and lawful attorney of Assignor, with full power of substitution, and gives and grants unto Assignee full power and authority in the name of Assignor, at any time and from time to time, (a) to collect, assert or enforce any claim, right or title of any kind in or to the Contracts, to institute and prosecute all actions, suits and proceedings which Assignee may deem proper in order to collect, assert or enforce any such claim, right or title, to defend and compromise all actions, suits and proceedings in respect of any of the Contracts, and to do all such acts and things in relation thereto as Assignee shall deem advisable, and (b) to take all action which Assignee may deem reasonable and proper in order to provide for Assignee the benefits of or under any of the Contracts where any required consent of a third party to the assignment thereof to Assignee shall not have been obtained; with like power and as fully as Assignee could or might have done.

4. This Assignment and Assumption Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns.

IN WITNESS WHEREOF, the parties have executed the Agreement on the date first set forth above.

[SIGNATURE PAGES FOLLOW]

8951186v4 Exhibit J – Page 1

[SIGNATURE PAGE 1 OF 2]

CITY OF VIRGINIA, MINNESOTA

By:___________________________________

Its:____________________________________

8951186v4 Exhibit J – Page 2

[SIGNATURE PAGE 2 OF 2]

ESSENTIA HEALTH - VIRGINIA

By:____________________________________Its:____________________________________

8951186v4 Exhibit J – Page 3

S CHEDULE 1

CONTRACTS

[From Exhibit C.]

8951186v4 Exhibit J – Page 4

EXHIBIT K

CITY OFFICER’S CERTIFICATE

The undersigned, the _____________ of the City of Virginia, Minnesota (“City”) hereby certifies, on behalf of City, pursuant to Section 15.3 the Affiliation and Lease Agreement made and entered into as of this ___ day of _____________, 2012 by and among the City, St. Mary’s Duluth Clinic Health System d/b/a Essentia Health East and Essentia Health – Virginia (“Lease”), as follows:

1. All of the representations and warranties made by City in Section 13 of the Affiliation and Lease Agreement are true and correct in all material respects on and as of the date hereof, except as previously qualified in the City’s disclosure schedule furnished at execution of the Lease and, as further qualified by any supplementing disclosure schedule attached hereto;

2. City has performed and complied with all of its covenants as applicable under the Affiliation and Lease Agreement, which were to be performed and complied with by it prior to or on the date hereof;

3. City has obtained prior to the date hereof all necessary approvals to authorize City to execute and deliver the Affiliation and Lease Agreement and to perform its obligations thereunder; and

4. City has satisfied all of the conditions precedent listed in Section 14 of the Affiliation and Lease Agreement, including procuring all of the third party consents specified in Exhibit H.

IN WITNESS WHEREOF, I have hereunto set my hand as of the effective date set forth in paragraph 1 of this Certificate.

___________________________________

____________________, _____________

8951186v4 Exhibit K– Page 1

EXHIBIT L-1

ESSENTIA OFFICER’S CERTIFICATE

The undersigned, the _____________ of the St. Mary’s Duluth Clinic Health System d/b/a Essentia Health East (“Essentia”) hereby certifies, on behalf of Essentia, pursuant to Section 15.3 the Affiliation and Lease Agreement made and entered into as of this ___ day of ________, 2012 by and among the City of Virginia, Minnesota, Essentia and Essentia Health – Virginia as follows:

1. All of the representations and warranties made by Essentia in Section 12 of the Affiliation and Lease Agreement are true and correct in all material respects on and as of the date hereof;

2. Essentia has performed and complied with all of its covenants as applicable under the Affiliation and Lease Agreement, which were to be performed and complied with by it prior to or on the date hereof;

3. Essentia has obtained prior to the date hereof all necessary approvals from its board of directors to authorize Essentia to execute and deliver the Affiliation and Lease Agreement and to perform its obligations thereunder; and

4. Essentia has satisfied all of the conditions precedent listed in Section 14 of the Affiliation and Lease Agreement and procured all necessary third party consents.

IN WITNESS WHEREOF, I have hereunto set my hand as of the effective date set forth in paragraph 1 of this Certificate.

___________________________________

____________________, _____________

8951186v4 Exhibit L-1 – Page 1

EXHIBIT L-2

ESSENTIA HEALTH – VIRGINIA OFFICER’S CERTIFICATE

The undersigned, the _____________ of Essentia Health – Virginia (“EH-Virginia”) hereby certifies, on behalf of EH-Virginia, pursuant to Section 15.3 the Affiliation and Lease Agreement made and entered into as of this ___ day of __________, 2012 by and among the City of Virginia, Minnesota, St. Mary’s Duluth Clinic Health System d/b/a Essentia Health East and EH-Virginia, as follows:

1. All of the representations and warranties made by EH-Virginia in Section 12 of the Affiliation and Lease Agreement are true and correct in all material respects on and as of the date hereof;

2. EH-Virginia has performed and complied with all of its covenants as applicable under the Affiliation and Lease Agreement, which were to be performed and complied with by it prior to or on the date hereof;

3. EH-Virginia has obtained prior to the date hereof all necessary approvals from its governing board to authorize EH-Virginia to execute and deliver the Affiliation and Lease Agreement and to perform its obligations thereunder; and

4. EH-Virginia has satisfied all of the conditions precedent listed in Section 14 of the Affiliation and Lease Agreement, including procuring all of the third party consents specified in Exhibit H.

IN WITNESS WHEREOF, I have hereunto set my hand as of the effective date set forth in paragraph 1 of this Certificate.

___________________________________

____________________, _____________

8951186v4 Exhibit L-2 – Page 1

EXHIBIT M

RENT

[Springsted computing; should have by 7/5/12.]

8951186v4 Exhibit M – Page 1

EXHIBIT N

RENT PAYMENT DATES

8951186v4 Exhibit N – Page 1