--------------------------------------------------------------------------------

 
__________________________________________
 
FIRST AMENDMENT TO
SECOND AMENDED AND RESTATED
 
MASTER LEASE AGREEMENT
 
__________________________________________
 

 
Among
 
OMEGA HEALTHCARE INVESTORS, INC.
 

 
THE LESSOR ENTITIES IDENTIFIED ON THE SIGNATURE PAGE HEREOF
 
THE LESSEE ENTITIES IDENTIFIED ON THE SIGNATURE PAGE HEREOF
 

 
AND
 

 
THE GUARANTOR ENTITIES IDENTIFIED ON THE SIGNATURE PAGE HEREOF
 
Dated As Of
 

 
August 26, 2008

 
 

--------------------------------------------------------------------------------

 

FIRST AMENDMENT TO
SECOND AMENDED AND RESTATED
MASTER LEASE AGREEMENT

THIS FIRST AMENDMENT TO SECOND AMENDED AND RESTATED MASTER LEASE AGREEMENT (this
“Master Lease”), is made and entered into on this 26th day of August, 2008 (the
“Effective Date”) by and among the lessor entities identified on the signature
page hereof (collectively, the “Lessor,” and where the context requires, each, a
“Lessor”), the lessee entities listed on the signature page hereof
(collectively, jointly and severally, the “Lessee,” and where the context
requires, each, a “Lessee”), OMEGA HEALTHCARE INVESTORS, INC., a Maryland
corporation (“Omega”), and the guarantor entities identified on the signature
page hereof (each a “Guarantor” and collectively, the “Guarantors”).
 
RECITALS
 
The circumstances underlying the execution of this Master Lease are as follows:
 
A. Lessor, as landlord, and Lessee, as lessee, are parties to that certain
Second Amended and Restated Master Lease dated as of February 1, 2008, (as
amended, the “Existing Lease”), pursuant to which, as of the Effective Date,
Lessee leases forty (40) facilities from Lessor.  All terms used in this
Amendment and not defined herein shall have the meanings assigned to them in the
Existing Lease.
 
B. Lessor and Lessee desire to amend the Existing Master Lease to (i) reflect
the new Non-Litchfield Facilities Base Rent and certain other changes to the
Existing Lease after the sale by Lessor of, and termination of the Existing
Lease with respect to, the Future Transition Facilities, (ii) provide for a
Lessor funded capital improvement allowance; and (iii) increase the Base Rent
payable under the Existing Lease if and to the extent such capital improvement
funds are advance by Lessor to Lessee.
 
NOW, THEREFORE, in consideration of the foregoing and other good and valuable
consideration the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
 
1. Partial Termination of Lease and Release of Lessees.
 
Lessor and Lessee acknowledge and agree that the Proposed Sale of the Future
Transition Facilities  occurred as of July 1, 2008 and accordingly that from and
after such date (i) the Future Transition Facilities are no longer subject to
the terms of the Existing Lease and accordingly any and all references thereto
in the Existing Lease, including, but not limited to, in Exhibits A, B and C,
shall be and hereby are deleted, (ii) SunBridge Regency Rehab Hospitals, Inc.
and SunBridge San Bernardino Rehabilitation Hospital, Inc. are released from
further obligations as Lessees under the Existing Lease and any and all
references to them as Lessees under the Lease shall be and hereby are deleted,
and (iii) Section A(ii) of the definition of Non-Litchfield Base Rent shall be
deleted in its entirety and the following inserted in lieu thereof:

For the period from February 1, 2008 through June 30, 2008, the monthly sum of
Two Million Eighty Five Thousand One Hundred Seventy Five and 44/100 Dollars
($2,085,175.44) and for the period from July 1, 2008 through December 31, 2008
the monthly sum of One Million Nine Hundred Forty Three Thousand Five Hundred
Eight and 77/100 Dollars ($1,943,508.77).  For purposes of calculating the
Non-Litchfield Base Rent as of January 1, 2009, Lessor and Lessee agree that in
2008 the Non-Litchfield Base Rent on an annualized basis is Twenty Three Million
Three Hundred Twenty Two Thousand One Hundred Five and 19/100 Dollars
($23,322,105.19) (the “2008 Annualized Non-Litchfield Base Rent”).
 
2. Definitions.
 
(a)           Any capitalized term used but not defined in this Amendment will
have the meaning assigned to such term in the Existing Lease.

(b)           In addition to the other definitions contained herein, when used
in this Amendment the following terms shall have the following meanings:
 
Actual Cost: means the actual cost of services or materials incorporated into
the Approved Project or the Approved Projects, which amount does not include any
amounts paid to Lessee or any Affiliate of Lessee without the written consent of
Lessor, but does include the Accrued Financing Costs.

Accrued Financing Costs: is defined in Section 6 of this Amendment.

Additional Rent Commencement Date: means, for each Approved Project, the earlier
to occur of (i) the Substantial Completion Date or (ii) the first day of the
fifteenth (15th) month following the Approved Project Start Date for such
Approved Project.

Additional Project Rent: means, with respect to each Approved Project, an amount
equal to (A) the Funded Amount for such Approved Project multiplied by (B) ten
percent (10.00%).

Approved Amount: means the maximum amount that Lessor has agreed to fund with
respect to any Approved Project. For the avoidance of doubt, the Approved Amount
includes all Accrued Financing Costs.

Approved Project or Approved Projects: means one, some or all of the
improvements and repairs to the Eligible Facilities which are suggested by
Lessee and approved by Lessor pursuant to this Amendment.

Approved Project Start Date: means, for each Approved Project, the first day of
the first month following the date such Approved Project is approved by Lessor.

Cost Overrun: is defined in Section 3(c) of this Amendment.

Eligible Facilities: means the Eligible Litchfield Facilities and the Eligible
Non-Litchfield Facilities.

Eligible Litchfield Facilities: means (i) any Litchfield Facility consented to
in writing by Lessor, and (ii) any of the following Litchfield Facilities:

Name
Address
Capitol Care Center
8211 Ustick Road, Boise, ID
Cheyenne Mountain Care Center
835 Tenderfoot Hill Road, Colorado Springs, CO
Pikes Peak Care Center
2719 North Union Boulevard, Colorado Springs, CO

Eligible Non-Litchfield Facilities: means (i) any Non-Litchfield Facility
consented to in writing by Lessor, and (ii) any of the following Non-Litchfield
Facilities:

Name
Address
SunBridge Care & Rehab for Decatur
1350 14th Avenue SE, Decatur, AL
SunBridge Care & Rehab for Dunbar
501 Caldwell Lane, Dunbar, WV
Idaho Falls Care Center
3111 Channing Way, Idaho Falls, ID
SunBridge Care & Rehab for Milford
19 Veterans Memorial Drive, Milford, MA
SunBridge Care & Rehab for Mount Olive
228 Smith Chapel Road, Mount Olive, NC
SunBridge Pine Lodge Care & Rehab
405 Stanford Road, Beckley, WV
SunBridge Care & Rehab for Putnam
300 Seville Road, Hurricane, WV
SunBridge Care & Rehab - Shoals
500 John Aldridge Drive, Tuscumbia, AL

Funded Amount: means, with respect to each Approved Project, the aggregate funds
expended by Lessor and all Accrued Financing Costs on such Approved Project, and
with respect to all Approved Projects, the aggregate funds expended by Lessor
and all Accrued Financing Costs on all Approved Projects.

Maximum Funded Amount: means the aggregate maximum amount which Lessor has
agreed to make available to Lessee to cover the Actual Cost of all of the
Approved Projects, to wit, Twenty Five Million and no/100 Dollars ($25,000,000).

Plans and Specifications: means the written plans and specification for an
Approved Project to be submitted by Lessee and approved by Lessor, as such plans
and specifications may be amended as set forth in this Amendment.
 
Project Costs: means all costs and fees paid or accrued in connection with an
Approved Project.
 
Proposed Project: is defined in Section 3(a) of this Amendment.
 
Substantial Completion Date: is defined in Section 3(b) of this Amendment.
 
Title Company: means Chicago Title Insurance Company or such other national
title company as may be selected by Lessor and reasonably acceptable to Lessee.
 
Unallocated Funds: means the Maximum Funded Amount less the sum of (i) the
Funded Amount for all completed Approved Projects and (ii) the Approved Amount
for all pending Approved Projects.
 
(c)           From and after the date of this Amendment, each reference to the
Existing Lease, means the Existing Lease as modified by this Amendment.

3. Approved Projects.
 
(a) Approval.  At any time prior to December 31, 2009, Lessee may submit Plans
and Specifications and a proposed budget to Lessor for a capital improvement to
one or more of the Eligible Facilities (each a “Proposed Project”).  In
addition, Lessee will deliver to Lessor such other information regarding a
Proposed Project as Lessor may reasonably request.   If Lessor approves such
Proposed Project and an Approved Amount for such Proposed Project in writing,
then such Proposed Project shall be an Approved Project. Lessor shall not
unreasonably withhold, condition or delay its approval of a Proposed Project;
provided, however, in no event shall Lessor withhold its approval or denial of
approval of a Proposed Project for more than sixty (60) days from the date the
same is submitted to Lessor for its review; and provided, further, in the event
Lessor elects to disapprove a Proposed Project, Lessor shall provide Lessee with
a reasonably detailed explanation of the reasons for such disapproval and Lessee
shall have a period of thirty (30) days after the receipt thereof to address
Lessor’s objections and resubmit the Proposed Project to Lessor for approval;
and provided, further Lessor shall not withhold its approval of the Proposed
Project related to the SunBridge Care & Rehab-Shoals facility (the “Shoals
Facility”) solely on the basis of the fact that Lessee has advised Lessor that
in order to implement that Proposed Project it intends to reduce the licensed
bed capacity of  the SunBridge Care & Rehab-Tuscumbia  facility, which Lessee
also leases from Lessor, by ten (10) beds and to increase the licensed bed
capacity of the Shoals Facility by ten (10) beds.  Lessor shall have no
obligation to consider or approve any Proposed Project submitted at any time
after December 31, 2009.
 
(b) Commencement and Completion of Approved Projects.  Except as otherwise
provided herein, Lessee shall commence construction of each Approved Project
within sixty (60) days of the Approved Project Start Date for each Approved
Project and will continue diligently to complete each Approved Project within
twenty (20) months of the Approved Start Date (or as soon thereafter as
reasonably possible in light of any delays in completion caused by an
Unavoidable Delay) and will supply such moneys and perform such duties as may be
necessary in connection therewith. Lessee agrees to provide to Lessor from time
to time with evidence that it has secured all approvals of any governmental body
or agency exercising jurisdiction of the applicable Facility required in
connection with the work then being undertaken by Lessee with respect to the
applicable Approved Project.  An Approved Project will be complete only at such
time as (i) all improvements to the Approved Project called for in the Plans and
Specifications have been substantially installed or completed in a manner
reasonably satisfactory to Lessor and (ii) if required under law, a public
authority has issued a final certification, consent or approval for such
Approved Project subject only to such conditions as may be reasonably acceptable
to Lessor (the “Substantial Completion Date”).
 
(c)           Plans and Specifications.
 
(i)           Lessee shall be responsible for payment of the fees, costs and
expenses in developing and preparing the Plans and Specifications.  Lessor and
Lessee shall cooperate with each other in developing the Plans and
Specifications.  Lessee shall cause the Project Architect to deliver to Lessor
the Plans and Specifications for review and approval by Lessor. Lessor shall not
unreasonably withhold, condition or delay its approval of the Plans and
Specifications; provided, however, in no event shall Lessor withhold its
approval or denial of approval of the Plans and Specifications for an Approved
Project for more than sixty (60) days from the date the same are submitted to
Lessor for its review; and provided, further, in the event Lessor elects to
disapprove the Plans and Specifications for an Approved Project, Lessor shall
provide Lessee with a reasonably detailed explanation of the reasons for such
disapproval and Lessee shall have a period of thirty (30) days after the receipt
thereof to address Lessor’s objections and resubmit the Plans and Specifications
for an Approved Project to Lessor for approval.  The review by Lessor of the
Plans and Specifications is for Lessor’s benefit only, and Lessor’s approval of
any such Plans and Specifications shall impose no liability on Lessor, express
or implied, including without limitation any representation or warranty that
such Plans and Specifications are complete or accurate, or that such Plans and
Specifications comply with zoning or other land use laws, local building
department requirements, or any applicable public or private covenants,
conditions or restrictions, and shall not in any way relieve Lessee of its
obligation to perform its work in accordance with this Amendment and all
applicable laws and requirements.
 
(ii)           With respect to each Approved Project, as of the applicable
Approved Project Start Date, Approved Project Rent Commencement Date, and
Substantial Completion Date, Lessee represents and warrants that the Plans and
Specifications and construction pursuant thereto will comply with all applicable
governmental laws and regulations and requirements, zoning and subdivision
ordinances, and standards and regulations of all governmental bodies exercising
jurisdiction over the applicable Facility, including health care licensing,
environmental protection, energy, equal employment regulations and appropriate
supervising boards of fire underwriters and similar agencies.
 
(iii)           Except as provided below, Lessee will not make, or cause or
permit to be made, any change to the Plans and Specifications unless a request
for the change has been submitted in writing to Lessor and approved in writing
by Lessor and such other parties as Lessor may reasonably require.  Lessor shall
not unreasonably withhold, condition or delay its approval of a change to the
Plans and Specifications; provided, however, in no event shall Lessor withhold
its approval or denial of approval of a change to the Plans and Specifications
for more than ten (10) business days from the date the same is submitted to
Lessor for its review; and provided, further, in the event Lessor elects to
disapprove a change to the Plans and Specifications, Lessor shall provide Lessee
with a reasonably detailed explanation of the reasons for such disapproval and
Lessee shall have a period of thirty (30) days after the receipt thereof to
address Lessor’s objections and resubmit the change to the Plans and
Specifications to Lessor for approval.  Under no circumstances will any failure
by Lessor to respond to a request for approval of a change in the Plans and
Specifications be deemed to constitute approval of the request.
 
(iv)           Lessee may affect changes in the Plans and Specifications from
time to time, without first obtaining Lessor’s approval, if (i) the changes do
not impair the structural integrity, design concept or architectural appearance
of the Approved Project or change the usefulness of the Approved Project in any
way, (ii) the changes will not result in a default in any other obligation to
any other party or authority and (iii) the changes will not, individually or
together with any changes previously made to the Plans and Specifications,
result in a net increase in the total Approved Amount of more than five percent
(5%).  Lessee will deliver promptly to Lessor copies of all addenda, change
orders and modifications to the Plans and Specifications.   Notwithstanding the
foregoing, to the extent that the cost to complete the applicable Approved
Project exceeds the Approved Amount (whether or not as a result of any such
changes in the Plans and Specifications) (a “Cost Overrun”), Lessee will be
responsible for payment of the excess unless there are Unallocated Funds
available in an amount not less than the amount of the Cost Overrun, in which
case Lessor shall, upon Lessee’s request, make available additional funds up to
fifteen percent (15%) of the original Approved Amount with respect to an
Approved Project and, in such event the Approved Amount for such Approved
Project shall be increased accordingly and thereafter any and all references
herein to the Approved Amount shall be the Approved Amount as so adjusted.
 
(v)           Lessee will, after receipt of written notice from Lessor, promptly
correct any material departure from the Plans and Specifications for an Approved
Project, if such departure required Lessor’s approval and was not previously
approved by Lessor. The approval or absence of disapproval by Lessor of any
payment of Funded Amount shall not constitute a waiver of Lessor’s right to
require compliance with this Section.
 
(d)           Lessor’s Architect.  Lessor may retain the services of architects
and engineers, including architects and engineers employed by Lessor (the
“Lessor’s Architect”), to act as Lessor’s agent in reviewing the Plans and
Specifications and the progress of construction and in making such
certifications and performing such other tasks and duties as Lessor deems
appropriate. Subject to the limitation set forth in Section 14, Lessee will pay
all reasonable fees, costs and expenses of the Lessor’s Architect within ten
(10) days after demand by Lessor, accompanied by a reasonably detailed invoice
or statement of the amount due from Lessor’s Architect.
 
(e)           Character of Construction.  All construction will be in accordance
with the Plans and Specifications, of sound materials, in good and workmanlike
manner, free and clear of all liens, claims and encumbrances (other than the
liens and security interests securing the obligations of the Lessee under this
Lease), and in compliance with all laws, ordinances, regulations and
restrictions affecting the applicable Facility and all requirements of all
governmental authorities having jurisdiction over the applicable Facility and of
the appropriate board of fire underwriters or other similar body, if any, and
any applicable health care authority.  Lessee will furnish Lessor with evidence
of such compliance as Lessor requires from time to time.
 
(f)           Construction Contract and Architectural/Engineering Agreement.
 
(i) Upon the request of Lessor, if applicable, a list of the construction
manager(s) or general contractor(s), as the case may be, and, if applicable, the
architect and/or engineer, and the contracts under which each is retained in
connection with an Approved Project shall be provided by Lessee to Lessor.  Upon
request of Lessor, if applicable, Lessee will promptly furnish to Lessor
executed copies of the construction management agreement or general contract(s)
between Lessee and the construction manager or general contractor(s) covering
all work to be done in connection with the Approved Project and executed copies
of all subcontracts between the construction manager or general contractor(s)
and all of their subcontractors and suppliers. Upon request of Lessor, if
applicable, Lessee will promptly furnish to Lessor any amendments or
modifications (including change orders) to any of the foregoing.  Lessee will
not modify or amend or permit to be modified or amended (including by way of
change order) any construction management agreement, construction contract or
construction subcontract without Lessor's prior written approval; provided,
however, that Lessor's prior approval need not be obtained with respect to any
change order that results from a change in the Plans and Specifications with
respect to which Lessor's consent is not required pursuant to this
Amendment.  Upon request of Lessor, Lessee will also furnish to Lessor an
executed copy of the architectural and/or engineering agreement, if any, between
Lessee and the architect and/or engineer with respect to the Approved Project.
 
(ii) Lessee will perform its obligations under the contracts described in
subparagraph (i) above, and will use commercially reasonable efforts to cause
each other party to such contracts to perform its obligations under such
contracts.
 
(iii) Lessee will enforce or cause to be enforced the prompt performance of the
contracts described in subparagraph (i) above and will allow Lessor to take
advantage of all rights and benefits of such contracts.  In addition, Lessee
hereby assigns to Lessor all warranties given to Lessee under the contracts
described in subparagraph (i) above.
 
(g)           Records and Reports. Lessee will keep accurate and complete books
and records relating to the Approved Projects, and Lessor will have access
thereto during usual business hours upon 48 hours advance notice. If not
reflected in a Request (as defined below), Lessee will furnish or cause to be
furnished to Lessor from time to time, promptly upon request, (i) copies and
lists of all paid and unpaid bills for labor and materials with respect to the
Approved Projects, (ii) construction budgets and revisions thereof showing the
estimated cost of the Approved Projects and the source of the funds required at
any given time to complete and pay for the same, (iii) receipted bills or other
evidence of payment with respect to the cost of the Approved Projects, and (iv)
such reports as to other matters relating to the Approved Projects as Lessor may
request.  This paragraph will supplement any similar provision in this Lease.
 
(h)           Access.  Notwithstanding anything to the contrary contained in
this Lease, Lessee will permit Lessor's representatives to have access to any
Facility at which an Approved Project is being performed at all reasonable times
and to conduct such investigations and inspections thereof as Lessor shall
determine necessary, including without limitation in connection with inspecting
all work done, labor performed and materials furnished in connection with each
Approved Project.  Lessee will cooperate and, if applicable, will cause the
construction manager or general contractor, as the case may be, to cooperate
with Lessor and its representatives and agents during such
inspections.  Notwithstanding the foregoing, Lessee will be responsible for
making inspections during the course of construction and will determine to their
own satisfaction that the work done or materials supplied by the contractors and
subcontractors has been properly supplied or done in accordance with applicable
contracts.  All inspections that may be performed by Lessor and its agents will
be exclusively for the benefit of Lessor and will impose no obligation whatever
upon Lessor for the benefit of any person. Lessee will hold Lessor harmless
from, and Lessor will have no liability or obligation of any kind to Lessee or
creditors of Lessee in connection with, any defective, improper or inadequate
workmanship or materials brought in or related to an Approved Project, or any
construction lien arising as a result of such workmanship or materials.  No
inspection by Lessor will create any obligation on Lessor or relieve Lessee of
any obligation.
 
(i)           Right to Withdraw an Approved Project. Notwithstanding anything to
the contrary set forth in this Section 3, Lessee shall have the right, on
written notice to Lessor, to withdraw an Approved Project within thirty (30)
days after the date on which the same is approved by Lessor pursuant to Section
3(b) or the date on which Lessor requires any changes to the Plans and
Specifications for the Approved Project pursuant to Section 3(c).
 
4. Disbursements of Approved Amount.
 
(a) Upon satisfaction of the conditions set forth in subparagraphs (b) and (c)
below, Lessor will disburse from time to time (but no more frequently than once
per month) to Lessee advances of the Approved Amount for an Approved Project,
subject to the limitations set forth in Section 5(c) and Section 7
below.  Lessor may condition the final disbursement of the Approved Amount for
an Approved Project on the delivery to Lessor of evidence that there are no
mechanics or materialmen’s liens on the applicable Facility, that all lien
waivers have been signed and delivered to Lessee and that any punch list items
have been corrected.
 
(b) Disbursement of the Approved Amount shall be subject to the receipt by
Lessor of the following:
 
(i) a request for disbursement, in the form of AIA 706 (the “Request”), executed
by an officer of Lessee and setting forth, among other things, the portion of
the Approved Amount that Lessee then is requesting be disbursed, the amount that
Lessee in good faith believes to be the cost to complete construction (after
disbursement of the portion of the Approved Amount then being requested) of each
Approved Project, a detailed breakdown of the costs and expenses incurred in the
construction of each Approved Project to the date of Request, a detailed cost
breakdown of the percentage of completion of the construction of the Approved
Project to the date of the Request, the amounts then due and unpaid with respect
to such construction, such other information or documentation as may be required
by the Title Company and the date upon which the disbursement is desired,
provided that the date of the disbursement must not be less than five (5)
Business Days after the date upon which the Lessor receives the Request and the
other items set forth in clauses (ii) and (iii) below;
 
(ii) a certification from Lessee that, as of the date of the Request, no Event
of Default exists under this Lease, all representations and warranties set forth
in this Lease are accurate and complete in all material respects, and there are
no actions, suits or proceedings pending, or to the knowledge of Lessee,
threatened or involving (or that would reasonably be expected to involve)
Lessee, or all or any part of the Facilities and that could impair the
Facilities or the ability of Lessee to perform under this Lease;
 
(iii) if applicable, certificates of Lessee’s architect and/or engineer,
Lessor’s Architect, if any, and Lessee, certified to Lessor and Lessee and
certifying that (a) the Request is correct and, to the best of its knowledge,
all work on the Approved Project up to the date thereof has been done in
substantial compliance with the Plans and Specifications for the Approved
Project; (b) to the date thereof, there has been no material deviation from the
budgeted cost of the Approved Project or construction progress schedule, except
as authorized by Lessee and approved by Lessor; and (c) the undisbursed portion
of the Approved Amount will be sufficient to meet all known costs to complete
the work covered by the Plans and Specifications for the Approved Project, after
giving effect to all amounts previously disbursed, plus the amount then
requested.
 
(c) Upon the request of Lessor, the Title Company is prepared, without
condition, to issue to Lessor a date-down endorsement, dated as of the date of
the disbursement, insuring Lessor’s title to the Facility at which the
applicable Approved Project is being completed subject to no other exceptions
than are set forth on the Title Policies delivered to Lessor on the Commencement
Date, exceptions after the Commencement Date granted by or arising from the acts
or omissions of Lessor and exceptions otherwise approved in writing by Lessor.
 
5. Approved Project Rent.
 
(a)           For each Approved Project, commencing as of the Additional Rent
Commencement Date, either (i) the annual Litchfield Base Rent shall be increased
by the Additional Project Rent if such Approved Project is a Litchfield
Facility, or (ii) the annual Non-Litchfield Base Rent shall be increased by the
Additional Project Rent if such Approved Project is a Non-Litchfield Facility.
 
(b)           From and after the applicable Additional Rent Commencement Date,
such Additional Project Rent shall be part of the Litchfield Base Rent or
Non-Litchfield Base Rent, as applicable, for all purposes under this Lease,
including, but not limited to, annual increase as set forth in the Existing
Lease pursuant to the formulas set forth in the definitions of Litchfield Base
Rent or Non-Litchfield Base Rent, as applicable.
 
(c)           Notwithstanding anything in this Amendment to the contrary, Lessor
shall have no obligation to make further advances of the Funded Amount with
regard to an Approved Project on or after the applicable Additional Rent
Commencement Date.  Any amounts advanced with respect to an Approved Project
after the applicable Additional Rent Commencement Date shall be included in the
calculation of Additional Project Rent immediately upon disbursement.
 
6. Accrual of Financing Costs.  For each Approved Project, during the period
from the Approved Project Start Date until the applicable Additional Rent
Commencement Date, financing costs on the portion of any Funded Amount actually
advanced for such Approved Project shall accrue at the rate of ten percent (10%)
per annum (the “Accrued Financing Costs”).  In the month such financing costs
accrue, such financing costs shall be deemed to have been advanced as part of
the Funded Amount for all purposes under this Amendment; provided, however, in
calculating the Additional Project Rent there shall be no compounding of the
Accrued Financing Costs. Any amounts payable under this Section shall constitute
“Rent” under this Lease.
 
7. Limitation on Disbursements.  In addition to the limitation set forth in
Section 5(c) with respect to the outside date for any disbursement of the
Approved Amount for an Approved Project, in no event will Lessor pay amounts in
excess of (A) the lesser of (i) the Actual Cost of an Approved Project or the
Approved Amount for any given Approved Project; or (B) the Maximum Funded Amount
for all Approved Projects.  Lessor shall have no obligation to make any advance
of the Approved Amount (i) with respect to a given Approved Project, after the
twentieth (20) month after the Approved Project Start Date for such Approved
Project, and (ii) after October 31, 2011.
 
8. Sufficiency of Funded Amount.  Lessor shall be entitled to not make a
disbursement, or to make a disbursement in an amount less than the amount
requested, if Lessor is not satisfied in its sole discretion that following the
requested disbursement the undisbursed proceeds of the Approved Amount for any
Approved Project plus the lesser of (i) fifteen percent (15%) of the original
Approved Amount for such Approved Project and (ii) any Unallocated Funds will be
at least equal to the sum of the estimated Project Costs to complete the
Approved Project in accordance with the Plans and Specifications (including all
costs incurred in connection with changes in the Plans and Specifications).  If
at any time it appears to Lessor that the sum of the undisbursed balance of the
Approved Amount plus the lesser of (i) fifteen percent (15%) of the original
Approved Amount for such Approved Project and (ii) any Unallocated Funds is less
than the amount required by this Section, Lessor may give written notice to
Lessee specifying the amount of the deficiency and Lessee immediately will
deposit with Lessor the amount of the deficiency, which will be expended first
in the same manner as the Funded Amount before any further payment of the Funded
Amount will be made by Lessor.
 
9. Payments to Contractor, Subcontractors and Suppliers.   At Lessor’s option,
Lessor may make payments either through the Title Company or directly to any
contractor, subcontractor or supplier furnishing labor or materials in
connection with an Approved Project.
 
10. Lessor's Right to Cure.  If Lessee fails to perform any of Lessee’s
undertakings set forth in this Amendment when due or within any applicable cure
period provided for herein (or within ten (10) days in the case of a monetary
default or thirty (30) days in the case of a non-monetary default, where no
other cure period is specified), Lessor may, but will not be required to,
perform the same, and Lessee will reimburse Lessor any amounts expended by
Lessor in so doing.
 
11. Application of Advances.  Lessee will apply each payment of Funded Amount
against amounts due and payable for construction of the Approved Project or
obligations in connection therewith as set forth in each Request.  Nothing
contained in this Agreement will impose upon Lessor any obligation to see to the
proper application of the advances by Lessee or any other party.
 
12. Construction or Other Liens.  In the event any construction or other lien or
encumbrance is filed or attached against a Facility or any part thereof without
the prior written consent of Lessor, Lessor may, at its option and without
regard to the priority of such construction or other lien or encumbrance, and
without regard to any defenses that Lessee may have with respect to the lien or
encumbrance, pay the same, and Lessee will reimburse all amounts expended by
Lessor for such purpose within ten (10) days of written notice thereof.
 
13. Guaranty of Completion.   Regardless of whether the cost of an Approved
Project is less than, equal to or in excess of the amount of the Approved Amount
plus the lesser of (i) fifteen percent (15%) of the original Approved Amount for
such Approved Project and (ii) any Unallocated Funds, Lessee will be responsible
for payment of all costs of completing each Approved Project, subject, however,
to Lessee’s right to seek reimbursement from Lessor, and Lessor’s obligation to
reimburse Lessee, for the Approved Amount plus the lesser of (i) fifteen percent
(15%) of the original Approved Amount for such Approved Project and (ii) any
Unallocated Funds, all in accordance with the terms of this Amendment.
 
14. Unavoidable Delay.  Upon the occurrence and during the continuance of an
Unavoidable Delay with respect to an Approved Project and the giving of written
notice thereof to Lessor, Lessee shall be temporarily released without any
liability on their part from the performance of their obligations to complete
such Approved Project, except for the obligation to pay any amounts due and
owing from Lessee (using the funds provided by Lessor under this Amendment, if
applicable), but only to the extent and only for the period that their
performance of each such obligation is prevented by the Unavoidable Delay.  Such
notice shall include a description of the nature of the Unavoidable Delay, and
its cause and possible consequences. Lessee shall promptly notify Lessor of the
termination of the event giving rise to the Unavoidable Delay.  During the
period that the performance by Lessee has been suspended by reason of an Event
of Force Majeure, Lessor may likewise suspend the performance of all or part of
its obligations under this Amendment to the extent that such suspension is
commercially reasonable and, notwithstanding anything in this Agreement to the
contrary, Lessor shall have no obligation to make disbursements of the Funded
Amount with respect to such Approved Project other than with respect to requests
for reimbursement submitted by Lessee for work completed at the applicable
Approved Project prior to the onset of any such Unavoidable Delay.
 
15. Expenses of Lessor.  All reasonable costs incurred by Lessor in connection
with the Approved Projects, including, but not limited to, Lessor’s reasonable
legal counsel and due diligence costs, title insurance, survey, UCC searches and
filing fees, if any, shall, and the fees of Lessor’s Architect, at the option of
Lessee, either (i) be added to the Funded Amount for an Approved Project or (ii)
paid by Lessee; provided, however, in no event shall such costs and expenses
exceed an amount equal to one half of one percent (1/2 of 1%) of the Approved
Project Amount.
 
16. Enforceability of Lease.  Except as expressly and specifically set forth in
this Amendment, the Existing Lease remain unmodified and in full force and
effect.
 
17. Execution and Counterparts.  This Amendment may be executed in any number of
counterparts, each of which, when so executed and delivered, shall be deemed to
be an original, but when taken together shall constitute one and the same
Amendment.
 
18. Headings; Exhibits.  Section headings used in this Amendment are for
reference only and shall not affect the construction of the Agreement.  All
exhibits and attachments attached hereto are incorporated herein by this
reference.
 
19. Entire Agreement.  This Amendment together with the Existing Lease and the
other Transaction Documents is intended by the parties to be a complete and
exclusive statement of the agreement and understanding of the parties in respect
of the subject matter contained herein and therein.
 
 
SIGNATURES ON FOLLOWING PAGE
 

 
 
 
 

--------------------------------------------------------------------------------

 
Signature Pages To
FIRST AMENDMENT TO SECOND AMENDED AND RESTATED MASTER LEASE

IN WITNESS WHEREOF, the parties hereby execute this Second Amended and Restated
Master Lease effective as of the day and year first set forth above.
 
LESSOR:
 
DELTA INVESTORS I, LLC, a Maryland limited liability company, and
DELTA INVESTORS II, LLC, a Maryland limited liability company
OHI ASSET, LLC, a Delaware limited liability company
OHI ASSET (CA), LLC, a Delaware limited liability company
OHI ASSET (CO), LLC, a Delaware limited liability company
OHI ASSET (ID), LLC, a Delaware limited liability company

 
By:
OMEGA HEALTHCARE INVESTORS, INC., a Maryland corporation, Its Member

 
By:          /s/Daniel J. Booth 
Name:     Daniel J. Booth    
Title:      Chief Operating Officer              
 
OHIMA, INC., a Massachusetts corporation
 

By:    /s/ Daniel J. Booth           
Name:       Daniel J. Booth               
Title:          Chief Operating Officer          
 
OMEGA:
 
OMEGA HEALTHCARE INVESTORS, INC., a Maryland corporation
 

 
By:     /s/ Daniel J. Booth          
Name:        Daniel J. Booth             
Title:          Chief Operating Officer
                   
STATE OF MARYLAND                   )
) ss.
COUNTY OF BALTIMORE                )

This instrument was acknowledged before me on the  2nd  day of _September_,
2008, by _Daniel J. Booth________________________, the COO  of OHIMA, Inc., a
Massachusetts corporation, and Omega Healthcare Investors, Inc., a Maryland
corporation, the sole member of Delta Investors I, LLC, a Maryland limited
liability company, Delta Investors II, LLC, a Maryland limited liability
company, OHI Asset, LLC, a Delaware limited liability company, OHI Asset (CA),
LLC, a Delaware limited liability company, OHI Asset (CO), LLC, a Delaware
limited liability company, OHI Asset (ID), LLC, a Delaware limited liability
company, on behalf of said corporations and companies.

_Judith A. Jacobs___________________________________
Notary Public, Baltimore__________ County, __MD____
My commission expires: May 12, 2012

Signature Page - 1 & 2 of 4
 
 

--------------------------------------------------------------------------------

 
Signature Pages To
FIRST AMENDMENT TO SECOND AMENDED AND RESTATED MASTER LEASE

 
LESSEE:
 
SUNBRIDGE CARE ENTERPRISES, INC., a Delaware corporation
SUNBRIDGE CIRCLEVILLE HEALTH CARE CORP., an Ohio corporation
SUNBRIDGE BECKLEY HEALTH CARE CORP., a West Virginia corporation
SUNBRIDGE PUTNAM HEALTH CARE CORP., a West Virginia corporation
SUNBRIDGE BRASWELL ENTERPRISES, INC., a California corporation
SUNBRIDGE MEADOWBROOK REHABILITATION CENTER, a California corporation
SUNBRIDGE DUNBAR HEALTH CARE CORP., a West Virginia corporation
SUNBRIDGE MARION HEALTH CARE CORP., an Ohio corporation
SUNBRIDGE SALEM HEALTH CARE CORP., a West Virginia corporation
SUNBRIDGE REGENCY-NORTH CAROLINA, INC., a North Carolina corporation
SUNBRIDGE HEALTHCARE CORPORATION, a New Mexico corporation
SUNBRIDGE SHANDIN HILLS REHABILITATION CENTER, a California corporation
SUNBRIDGE REGENCY-TENNESSEE, INC., a Tennessee corporation
FALMOUTH HEALTHCARE, LLC, a Delaware limited liability company
MASHPEE HEALTHCARE, LLC, a Delaware limited liability company
WAKEFIELD HEALTHCARE, LLC, a Delaware limited liability company
WESTFIELD HEALTHCARE, LLC, a Delaware limited liability company
PEAK MEDICAL COLORADO NO. 2, INC., a Delaware corporation
PEAK MEDICAL OF IDAHO, INC., a Delaware corporation
PEAK MEDICAL OF BOISE, INC., a Delaware corporation
 

By:         /s/ Mike Berg  
Name:      Mike Berg               
Title:        Secretary              
 
GUARANTOR:
 
SUN HEALTHCARE GROUP, INC., a Delaware corporation
PEAK MEDICAL CORPORATION, a Delaware corporation
HARBORSIDE HEALTHCARE CORPORATION, a Delaware corporation
 
By:           /s/ Mike Berg
Name:      Mike Berg                
Title:        Secretary             
 
STATE OF __NM________             )
) ss.
COUNTY OF Bernalillo____              )

This instrument was acknowledged before me on the 26th  day of
_August___________, 2008, by __Michael T. Berg______, the  Secretary of Sun
Healthcare Group, Inc., a Delaware corporation, Peak Medical Corporation, a
Delaware corporation, Harborside Healthcare Corporation, a Delaware corporation,
SunBridge Care Enterprises, Inc., a Delaware corporation, SunBridge Circleville
Health Care Corp., an Ohio corporation, SunBridge Beckley Health Care Corp., a
West Virginia corporation, SunBridge Putnam Health Care Corp., a West Virginia
corporation, SunBridge Braswell Enterprises, Inc., a California corporation,
SunBridge Meadowbrook Rehabilitation Center, a California corporation, SunBridge
Dunbar Health Care Corp., a West Virginia corporation, SunBridge Marion Health
Care Corp., an Ohio corporation, SunBridge Salem Health Care Corp., a West
Virginia corporation, SunBridge Regency-North Carolina, Inc., a North Carolina
corporation, SunBridge Healthcare Corporation, a New Mexico
corporation,  SunBridge Shandin Hills Rehabilitation Center, a California
corporation, SunBridge Regency-Tennessee, Inc., a Tennessee corporation,
Falmouth Healthcare, LLC, a Delaware limited liability company, Mashpee
Healthcare, LLC, a Delaware limited liability company, Wakefield Healthcare,
LLC, a Delaware limited liability company, Westfield Healthcare, LLC, a Delaware
limited liability company, Peak Medical Colorado No. 2, Inc., a Delaware
corporation, Peak Medical of Idaho, Inc., a Delaware corporation, and Peak
Medical of Boise, Inc., a Delaware corporation, on behalf of said corporations
and companies.

_Anne Rider___________________________________
Notary Public, _NM_________ County, _Bernalillo_____
My commission expires: 6/16/2010

 

Signature Page - 3 &4 of 4
 
 

--------------------------------------------------------------------------------