ex10_261.htm


    
      

    

    
      EXHIBIT
        10.26.1

       

      MASTER
        LEASE

       

      Between

       

      NATIONWIDE
        HEALTH PROPERTIES, INC.,

       

      a
        Maryland corporation,

       

      as
        "Landlord"

       

      AND

       

      SUMMERVILLE
        AT CAMELOT PLACE LLC,

      a
        Delaware limited liability company,

       

      SUMMERVILLE
        AT HILLEN VALE LLC,

      a
        Delaware limited liability company,

       

      and

       

      SUMMERVILLE
        AT LAKEVIEW LLC,

      a
        Delaware limited liability company,

       

      collectively,
        as "Tenant"

       

       

      Dated:
        October 2, 2006


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        	
                TABLE
                  OF CONTENTS

              
	 	 	 	 	
                Page

              
	
                1.

              	
                Term

              	
                2

              
	
                2.

              	
                Rent

              	
                2

              
	 	 	
                2.1

              	
                Initial
                  Term Rent

              	
                2

              
	 	 	
                2.2

              	
                Renewal
                  Term Rent

              	
                3

              
	 	 	
                2.3

              	
                Payment
                  Terms

              	
                3

              
	 	 	
                2.4

              	
                Absolute
                  Net Lease

              	
                4

              
	
                3.

              	
                Late
                  Charges

              	
                4

              
	
                4.

              	
                Security
                  Deposit

              	
                4

              
	
                5.

              	
                Taxes
                  and Other Charges

              	
                5

              
	 	 	
                5.1

              	
                Protests

              	
                6

              
	 	 	
                5.2

              	
                Impound

              	
                6

              
	
                6.

              	
                Insurance

              	
                8

              
	
                7.

              	
                Use,
                  Regulatory Compliance and Preservation of Business

              	
                8

              
	 	 	
                7.1

              	
                Permitted
                  Use; Qualified Care

              	
                8

              
	 	 	
                7.2

              	
                Regulatory
                  Compliance

              	
                9

              
	 	 	
                7.3

              	
                Preservation
                  of Business

              	
                9

              
	
                8.

              	
                Acceptance,
                  Maintenance, Upgrade, Alteration and Environmental

              	
                9

              
	 	 	
                8.1

              	
                Acceptance
                  “AS IS”; No Liens

              	
                9

              
	 	 	
                8.2

              	
                Tenant’s
                  Maintenance Obligations

              	
                10

              
	 	 	
                8.3

              	
                Upgrade
                  Expenditures

              	
                10

              
	 	 	
                8.4

              	
                Alterations
                  by Tenant

              	
                11

              
	 	 	
                8.5

              	
                Hazardous
                  Materials

              	
                11

              
	 	 	
                8.6

              	
                Capital
                  Improvements funded by Landlord

              	
                12

              
	
                9.

              	
                Tenant
                  Property and Security Interest

              	
                13

              
	 	 	
                9.1

              	
                Tenant
                  Property

              	
                13

              
	 	 	
                9.2

              	
                Landlord’s
                  Security Interest and Financing Statements

              	
                13

              
	
                10.

              	
                Financial,
                  Management and Regulatory Reports

              	
                14

              
	
                11.

              	
                Representations
                  and Warranties

              	
                14

              
	
                12.

              	
                Events
                  of Default

              	
                14

              
	
                13.

              	
                Remedies

              	
                16

              
	 	 	
                13.1

              	
                General

              	
                16

              


      


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      


      
        	
                TABLE
                  OF CONTENTS

              
	 	 	 	 	
                Page

              
	 	 	
                13.2

              	
                Receivership

              	
                16

              
	 	 	
                13.3

              	
                Remedies
                  Cumulative; No Waiver

              	
                17

              
	 	 	
                13.4

              	
                Performance
                  of Tenant’s Obligations

              	
                17

              
	
                14.

              	
                Provisions
                  on Termination
                  

              	
                17

              
	 	 	
                14.1

              	
                Surrender
                  of Possession

              	
                17

              
	 	 	
                14.2

              	
                Removal
                  of Tenant Personal Property

              	
                18

              
	 	 	
                14.3

              	
                Management
                  of Premises

              	
                18

              
	 	 	
                14.4

              	
                Holding
                  Over

              	
                18

              
	 	 	
                14.5

              	
                Survival

              	
                18

              
	
                15.

              	
                Certain
Landlord
                  Rights 

              	
                19

              
	 	 	
                15.1

              	
                Entry
                  and Examination of Records

              	
                19

              
	 	 	
                15.2

              	
                Grant
                  Liens

              	
                19

              
	 	 	
                15.3

              	
                Estoppel
                  Certificates

              	
                19

              
	 	 	
                15.4

              	
                Conveyance
                  Release

              	
                19

              
	
                16.

              	
                Assignment
                  and Subletting
                  

              	
                20

              
	
                17.

              	
                Damage
                  by Fire or Other Casualty
                  

              	
                21

              
	
                18.

              	
                Condemnation 

              	
                21

              
	
                19.

              	
                Indemnification 

              	
                22

              
	
                20.

              	
                Disputes


              	
                22

              
	
                21.

              	
                Notices

              	
                22

              
	
                22.

              	
                Miscellaneous
                  

              	
                23

              
	
                23.

              	
                Option
                  to Purchase
                  

              	
                24

              
	
                24.

              	
                Memorandum
                  of Lease
                  

              	
                24

              
	
                25.

              	
                1031
                  Exchange
                  

              	
                25

              


      

      
        

          
            
              
              

            

            
              
              

              
                

              

            

            
              
              

            

          

        

         

      

      
        	
                
                  EXHIBITS
                    AND
                    SCHEDULES:

                

              
	
                
                  EXHIBIT
                    A

                

              	
                
                  LEGAL
                    DESCRIPTION

                

              
	
                
                  EXHIBIT
                    B

                

              	
                
                  LANDLORD
                    PERSONAL
                    PROPERTY

                

              
	
                
                  EXHIBIT
                    C

                

              	
                
                  FAIR
                    MARKET
                    VALUE

                

              
	
                
                  EXHIBIT
                    D

                

              	
                
                  PERMITTED
                    EXCEPTIONS

                

              
	
                
                  EXHIBIT
                    E

                

              	
                
                  CERTAIN
                    DEFINITIONS

                

              
	
                
                  EXHIBIT
                    F

                

              	
                
                  FINANCIAL,
                    MANAGEMENT AND
                    REGULATORY REPORTS

                

              
	
                
                  SCHEDULE
                    1

                

              	
                
                  IDENTITY
                    OF LANDLORD AND TENANT
                    ENTITIES

                

              
	
                
                  SCHEDULE
                    2

                

              	
                
                  FACILITY
                    INFORMATION: BUSINESS,
                    UNITS, ETC.

                

              
	
                
                  SCHEDULE
                    3

                

              	
                
                  CALCULATION
                    OF NHP’S WEIGHTED
                    AVERAGE COST OF
                    CAPITAL

                

              


      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      MASTER
        LEASE

       

       

      This
        "Master Lease" is entered into as of October 2, 2006, between
NATIONWIDE HEALTH PROPERTIES, INC., a Maryland corporation
("Landlord"), and SUMMERVILLE
        AT CAMELOT PLACE LLC,
a Delaware limited liability company, SUMMERVILLE AT HILLEN
        VALE LLC, a Delaware limited liability company, and SUMMERVILLE
        AT LAKEVIEW LLC, a Delaware limited liability company (collectively,
"Tenant"), for the respective real properties and improvements
        thereon (each a "Facility" and collectively, the
"Facilities") as set forth on Schedule 1 and as legally
        described on Exhibit
        A  and the "Landlord Personal Property"
associated therewith as described in Exhibit
        B  (collectively, the "Premises"), each
        used as a licensed healthcare facility of the type described on Schedule
        2
(individually as so utilized, and collectively, the
"Business"). Pursuant to its concurrent Amended and
        Restated Guaranty of Lease, Summerville Senior Living, Inc., a Delaware
        corporation ("Guarantor") has guaranteed Tenant's obligations
        hereunder. In consideration of the mutual covenants, conditions and agreements
        set forth herein, Landlord hereby leases the Premises to Tenant for the Term
        upon the terms and conditions provided below. Certain capitalized terms used
        in
        this Master Lease are defined on Exhibit
        E.

       

      RECOGNITION
        OF MASTER LEASE;

      IRREVOCABLE
        WAIVER OF CERTAIN RIGHTS

       

      Tenant
        and Landlord each acknowledge and agree that this Master Lease constitutes
        a
        single, indivisible lease of the entire Premises, and the Premises constitute
        a
        single economic unit. The Minimum Rent, Additional Rent, other amounts payable
        hereunder and all other provisions contained herein have been negotiated
        and
        agreed upon based on the intent to lease the entirety of the Premises as
        a
        single and inseparable transaction, and such Minimum Rent, Additional Rent,
        other amounts and other provisions would have been materially different had
        the
        parties intended to enter into separate leases or a divisible lease. Any
        Event
        of Default under this Master Lease shall constitute an Event of Default as
        to
        the entire Premises.

       

      Each
        of the entities comprising Tenant
        and Guarantor, in order to induce Landlord to enter into this Master Lease, to the
        extent
        permitted by law:

       

      A.            Agrees,
        acknowledges and is forever estopped from asserting to the contrary that
        the
        statements set forth in the first sentence of this Section are true, correct
        and
        complete;

       

      B.            Agrees,
        acknowledges and is forever estopped from asserting to the contrary that
        this
        Master Lease is a new and de novo lease, separate and distinct from any other
        lease between any of the entities comprising Tenant and any of the entities
        comprising Landlord that may have existed prior to the date hereof;

       

      C.            Agrees,
        acknowledges and is
forever estopped from
        asserting to the contrary that this Master Lease is
        a single lease pursuant to which the collective Premises are demised as a
        whole
        to Tenant;

       

      D.            Agrees,
        acknowledges and is forever estopped from asserting to the contrary that
        if,
        notwithstanding the provisions of this Section, this Master Lease were to
        be
        determined or found to be in any proceeding, action or arbitration under
        state
        or federal bankruptcy, insolvency, debtor-relief or other applicable laws
        to
        constitute multiple leases demising multiple properties, such multiple leases
        could not, by the debtor, trustee, or any other party, be selectively or
        individually assumed, rejected or assigned;


      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

       

      E.            Forever
        knowingly waives and relinquishes any and all rights under or benefits
        of

       

      the
        provisions of the Federal Bankruptcy Code Section 365 (11 U.S.C. § 365), or any
        successor or replacement thereof or any analogous state law, to selectively
        or
        individually assume, reject or assign the multiple leases comprising this
        Master
        Lease following a determination or finding in the nature of that described
        in
        the foregoing Section D.

       

      
        1.           Term.
          The "Term" of this Master Lease is the Initial Term
plus all Renewal Terms, and a "Lease Year" is the
twelve (12)
          month period commencing on October 1 of each year of the
          Term; provided, however that the first Lease Year shall commence on October
          2,
          2006 and end on September 30, 2007. The "Initial Term"
commences on October 2, 2006 (the "Effective Date")
and ends on September 30, 2016, and
          may be extended for two (2)
          separate "Renewal Terms" of ten (10) years each if:
          (a) at least twelve (12), but not more than fifteen (15)
          months prior to the end of the then current Term, Tenant delivers to
          Landlord a "Renewal Notice" that it desires to exercise its
          right to extend this Master Lease for one (1) Renewal Term; (b) there is
          no
          Event of Default on the date Landlord receives the Renewal Notice (the
          "Exercise Date") or on the last day of the
          then current Term; and (c) the Minimum Rent for the Renewal Term is determined
          pursuant to Section 2.2 within ninety (90) days after the
          Exercise Date.

         

        2.            Rent.
          During the Term, Tenant shall pay Landlord "Rent"
consisting of "Minimum Rent" plus
"Additional
          Rent" determined as provided in this
Section 2; provided, the Rent for any Lease Year shall not be less
          than
one hundred percent (100%) of the Rent for the previous Lease
          Year. The Rent for any month that begins or ends on other than the first
          or last
          day of a calendar month shall be prorated based on actual days
          elapsed.

      

       

      2.1            Initial
        Term Rent.

       

      (a)            During
        the Initial Term, the annual "Minimum
        Rent"
shall be an amount equal to the sum of (I) Landlord's Camelot
        Investment multiplied by eight
        and sixty
        one-hundredths
        percent
        (8.60%), and (II) Landlord's Lakeview/HillenVale Investment
multiplied by eight
        and seventy
        one-hundredths percent (8.70%) (the "Lease
        Rate"),
payable in advance in twelve (12) equal monthly installments.
        Commencing with the second (2nd) Lease Year and continuing thereafter during
        the
        Term (excluding the first Lease Year of any Renewal Term), Tenant agrees
        to pay
"Additional
        Rent" to Landlord monthly in advance together with the payment
        of Minimum Rent. Such Additional Rent (which shall be expressed as an annual
        amount but shall be payable in equal monthly installments) shall be equal
        to the
        sum of (i) the Additional Rent for the immediately preceding Lease Year and
        (ii)
        the product of (A) the Minimum Rent and Additional Rent due for the immediately
        preceding Lease Year and (B) the lesser of (x) three percent (3.0%) or (y)
        a
        percentage equal to five (5) times the percentage increase (the "CPI
        Increase")
in the United States Department of Labor, Bureau of Labor
        Statistics Consumer Price Index for All Urban Wage Earners and Clerical Workers,
        United States Average, Subgroup "All Items" (1982 –1984 = 100) (the "CPI"). In
        no event shall the CPI Increase be a negative number. The applicable CPI
        Increase shall be calculated annually for each Lease Year by comparing the
        CPI
        in effect on the first calendar day of the Lease Year for which Additional
        Rent
        is being calculated to the first calendar day of the immediately preceding
        Lease
        Year.


      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      (b)           As
        used herein, (i) "Landlord's
        Camelot Investment" means Landlord's investment in the Facility
        located at 49-A Leisure Lane, Medina, Ohio (the "Camelot
        Facility") in the amount of Ten Million Six Hundred Sixty-Five
        Thousand Dollars ($10,665,000),
        plus any amounts advanced by Landlord pursuant to
Section 8.6 with respect to the Camelot Facility, plus any other
        amount that, in accordance with any other term or provision of this Master
        Lease, is to be added to Landlord's Camelot Investment, and minus any
        amount that, in accordance with any term or provision of this Master Lease,
        is
        to be subtracted from Landlord's Camelot Investment; and (ii) "Landlord's
        Lakeview/HillenVale Investment" means Landlord's investment in
        (A) the Facility located at 4000 Lakeview Crossing, Groveport, Ohio (the
"Lakeview
        Facility"), and (B) the Facility located at 1615 Yauger Road,
        Mt. Vernon, Ohio (the "HillenVale
        Facility"), in the aggregate amount of Twenty-Two Million Two
        Hundred Eighty Thousand Dollars ($22,280,000),
        plus any amounts advanced by Landlord pursuant to
Section 8.6 with respect to the Lakeview Facility and/or
        HillenVale
        Facility, plus any other amount that, in accordance with any other term
        or provision of this Master Lease, is to be added to Landlord's
        Lakeview/HillenVale Investment, and minus any amount that, in
        accordance with any term or provision of this Master Lease, is to be subtracted
        from Landlord's Lakeview/HillenVale Investment.

       

      (c)           Concurrently
        with any increase or decrease in Landlord's Camelot Investment and/or Landlord's
        Lakeview/HillenVale Investment during the Term as described in Section
        2.1(b), the Rent then due and payable for the balance of the applicable
        Lease Year and Term shall be recalculated and reset based on the adjusted
        amount
        of Landlord's Camelot Investment and/or Landlord's Lakeview/HillenVale
        Investment, as the case may be.

       

      
        2.2            Renewal
          Term Rent. To establish a fair market Minimum Rent for the Premises
          during the Renewal Terms, the Minimum Rent for each Renewal Term shall
          be reset
          and expressed as an annual amount equal to the greater of (a) the product
          of (i)
          the total Minimum Rent and Additional Rent due for the last Lease Year
          of the
          Initial Term or the preceding Renewal Term, as the case may be, and (ii)
          one hundred three percent (103%); or (b) the product of (x) the
"Fair Market Value" of the Premises on the Exercise Date
          as
          established pursuant to Exhibit C, and (y) a percentage equal to
two hundred (200) basis points over NHP's Weighted Average Cost
          of Capital as of the Exercise Date. As used herein, "NHP's
Weighted Average Cost of Capital" as of any date of
          determination shall be determined and calculated in accordance with Schedule
          1 attached hereto. Commencing with the second (2'1)
          Lease Year of a
          Renewal Term, "Additional Rent" shall be calculated and payable
          on a monthly basis together with
          Minimum Rent as provided in Section 2.1.
Notwithstanding
          the foregoing, in
no event shall the Minimum Rent due for the first Lease Year of
          any
          Renewal Term be less than one hundred three percent (103%) nor greater
          than one
          hundred ten percent (110%) of the total Minimum Rent and Additional Rent
          due for
          the Lease Year immediately preceding the applicable Renewal
          Term.

      

       

      2.3           Payment
        Terms. All Rent and other payments to Landlord shall be paid by
wire
        transfer or ACH (Automated Clearing House) only. Minimum Rent
        and Additional Rent shall be paid in advance in equal monthly installments
        on or
        before the first (1st) business day of each calendar month.


      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      2.4           Absolute
        Net Lease. All Rent payments shall be absolutely net to Landlord,
        free of any and all Taxes, Other Charges, and operating or other expenses
        of any
        kind whatsoever, all of which shall be paid by Tenant. Tenant shall continue
        to
        perform its obligations under this Master Lease even if Tenant claims that
        it
        has been damaged by Landlord. Thus, Tenant shall at all times remain obligated
        under this Master Lease without any right of set­off, counterclaim,
        abatement, deduction, reduction or defense of any kind. Tenant's sole right
        to
        recover damages against Landlord under this Master Lease shall be to prove
        such
        damages in a separate action.

       

      3.           Late
        Charges. The late payment of Rent or other amounts due will cause
        Landlord to lose the use of such money and incur administrative and other
        expenses not contemplated under this Master Lease. While the exact amount
        of the
        foregoing is extremely difficult to ascertain, the parties agree that as
        a
        reasonable estimate of fair compensation to Landlord, if any Rent or other
        amount is not paid within (a) five (5) days after the due date for such
        payment, then Tenant shall thereafter pay to Landlord on demand a late
        charge equal to five percent (5%) of such delinquent
        amounts, and (b) ten (10) days after the due date for such payment,
        such unpaid amount shall accrue interest from such date at the
"Agreed Rate" of three percent (3%) plus
the Lease
        Rate.

       

      4.           Security
        Deposit: Guaranty.

       

      (a)           
        Pursuant to the parties' concurrent Letter of Credit Agreement,
Tenant shall deposit with Landlord and maintain during
        the Term one (1)
        or more letters of credit in an undrawn face amount equal to Four Hundred
        Three
        Thousand Eight Hundred Twenty-Five Dollars ($403,825) as a "Security
        Deposit" against the faithful performance by Tenant of its obligations
        under this Master Lease.

       

      (b)            Notwithstanding
        the foregoing, (i) at the end of the first Lease Year the amount of the Security
        Deposit shall be increased by the amount of $325,960 if the
        Lakeview/HillenVale Rent Coverage Ratio is less than 1.01 to 1; and
        (ii) at the end of the second Lease Year the amount of the Security Deposit
        shall be increased by the amount of $162,980 if the
        Lakeview/HillenVale Rent Coverage Ratio is less than 1.26 to 1. As used herein,
        "Lakeview/HillenVale Rent Coverage Ratio" means, as of the date
        of determination, the ratio of (i) the EBITDARM (as hereinafter defined)
        for the
        Lakeview Facility and HillenVale Facility for the immediately preceding two
        calendar quarters (a "Measuring Period"), minus (A) an
        assumed management fee equal to five percent (5%) of the Gross Revenues
(as hereinafter defined) generated during such Measuring
        Period from
        the Lakeview Facility and HillenVale Facility, and (B) one-half of the
        applicable annual CapEx Amount (as defined in Section 8.3 below) for the
        Lakeview Facility and HillenVale Facility at the commencement of the Measuring
        Period, multiplied by the aggregate number of assisted living units at
        the Lakeview Facility and HillenVale Facility, to (ii) the total amount of
        the
        Minimum Rent and Additional Rent due with respect to the Lakeview Facility
        and
        HillenVale Facility for the Measuring Period pursuant to the terms of this
        Master Lease


      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

      (c)           
        In the event that at any time following January 31, 2011 the Camelot Rent
        Coverage Ratio is less than 1.20 to 1, Tenant shall from time to time make
        deposits, which may be in the form of cash or supplemental letters of credit
        meeting the requirements of the Letter of Credit Agreement (the
"Supplemental Deposits"), to Landlord pursuant to Section 4(d)
        until such time as the total amount of the Security Deposit is increased
        as a
        result of such Supplemental Deposits by the amount of One Hundred Fifty-One
        Thousand Four Hundred Thirty-Five Dollars ($151,435); provided,
        however, Tenant's obligation to make such Supplemental Deposits shall not
        apply
        with respect to any Measuring Period (as hereinafter defined) for which the
        Camelot Rent Coverage Ratio equals or exceeds 1.20 to 1. As used herein,
        "Camelot Rent Coverage Ratio" means, as of the date of
        determination, the ratio of (i) the EBITDARM for the Camelot Facility for
        the
        Measuring Period, minus (A) an assumed management fee equal to five
        percent (5%) of the Gross Revenues (as hereinafter defined)
        generated during such Measuring Period from the Camelot Facility, and (B)
        one-half of the applicable annual CapEx Amount (as defined in Section 8.3
        below)
        for the Camelot Facility at the commencement of the Measuring Period,
multiplied by the aggregate number of assisted living units at the
        Camelot Facility, to (ii) the total amount of the Minimum Rent and Additional
        Rent due with respect to the Camelot Facility for the Measuring Period pursuant
        to the terms of this Master Lease. As used herein, "EBITDARM"
means, for any Measuring Period, the net income (or loss)
        of Tenant for
        such Measuring Period to the extent derived from the operation of the applicable
        Facility or Facilities, adjusted to add thereto any amounts deducted in
        determining such net income (or loss) for (v) interest expense, (w) income
        tax
        expense, (x) depreciation and amortization expense, (y) rental expense, and
        (z)
        management fee expense, in each case determined in conformity with generally
        accepted accounting principles, consistently applied.

       

      (d)            The
        Supplemental Deposits to be made by Tenant in accordance with Section 4(c)
        above
        shall be due on the thirtieth (30th) day
        of each
        calendar month (or last day of the month, in the case of February) following
        the
        Measuring Period in which the actual Camelot Rent Coverage Ratio fails to
        equal
        or exceed 1.20 to 1. The Supplemental Deposits shall be equal to five percent
        (5%) of the Gross Revenues from the Camelot Facility for the calendar month
        immediately preceding the date on which each Supplemental Deposit is due
        or such
        lesser amount as is required to fulfill the requirements of Section 4(c)
        above.
        As used herein, "Gross Revenues" means all of the revenues of the applicable
        Facility or Facilities other than the proceeds of the sale of any of the
        applicable Facility's or Facilities' equipment which has become worn out
        or
        obsolete, all insurance awards and condemnation proceeds, sales, use and
        occupancy or other taxes on receipts required to be accounted for by Tenant
        to
        governmental authorities and non-recurring revenues as reasonably approved
        by
        Landlord.

       

      5.            Taxes
        and Other Charges. At the commencement and end of the Term, all
        Taxes and Other Charges shall be prorated. Landlord shall promptly forward
        to
        Tenant copies of all bills and payment receipts for Taxes or Other Charges
        received by it. Tenant shall pay and discharge (including the filing of all
        required returns), prior to delinquency or imposition of any fine, penalty,
        interest or other cost ("Penalty"), (a) "Taxes", consisting of
        any property (real and personal) and other taxes and assessments levied or
        assessed with respect to this Master Lease, any portion of the Premises or
        Landlord, with respect to the Premises [including, without limitation, any
        state
        or county occupation tax, transaction privilege, franchise taxes, business
        privilege, rental tax or other excise taxes, and other assessments levied
        or
        assessed against the Premises, Tenant's interest therein or Landlord (with
        respect to this Master Lease and/or the Premises, but excluding any local,
        state
        or federal income tax based upon the net income of Landlord and any transfer
        tax
        or stamps for its transfer of any interest in any portion of the Premises
        to any
        Person other than Tenant or any of its Affiliates or other similar taxes
        attributable to Landlord, all of which shall be paid by Landlord)], and
(b) "Other Charges", consisting of any utilities and other
        costs and expenses of the Business or any portion of the Premises and all
        other
        charges, obligations or deposits assessed against any portion of the Premises
        during the Term with respect to the use or operation of the Premises. Tenant
        may
        pay the foregoing in permitted installments (whether or not interest accrues
        on
        the unpaid balance) when due and before any Penalty. Within thirty (30) days
of its receipt of Landlord's written notice of payment, Tenant
        shall pay
        Landlord an amount equal to any Taxes or Penalty that Landlord at any time
        is
        assessed or otherwise becomes responsible and for which Tenant is liable
        under
        this Master Lease, whether arising from the sole liability of Landlord or
        the
        joint liability of the parties.


      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

      5.1           Protests.
        Each party has the right, but not the obligation, in
        good
        faith to protest or contest (a "Protest") in whole or in part
        (a) the amount or payment
        of any Taxes or Other Charges and (b) the existence, amount
        or
        validity of any Lien (as defined in Section 8.1) by appropriate
        proceedings sufficient to prevent its collection or other realization and
        the
        sale, forfeiture or loss of any portion of the Premises or Rent to satisfy
        it
        (so long as it provides Landlord with reasonable security (including, without
        limitation a bond) to assure the foregoing). Tenant shall diligently prosecute
        any such Protest at its sole cost and expense and pay such Taxes, Other Charges
        or Lien before the imposition of any Penalty. Landlord will cooperate fully
        in
        any Protest that involves an amount assessed against it.

       

      5.2           Im
        ound. Tenant shall include with each Minimum Rent payment a
deposit
        of one-twelfth (1/12t)
        of the amount required to discharge the annual amount of real property
        Taxes secured by a Lien encumbering any portion of the Premises as and when
        they
        become due. The deposits shall not bear interest nor be held by Landlord
        in
        trust or as an agent of Tenant, but rather shall be applied to the payment
        of
        the related obligations. Provided that the impound deposits are then sufficient
        for payment of the applicable obligations, (a) the amounts held by
        Landlord
        shall be applied by Landlord directly to the payment of the related obligations
        in a timely fashion and prior to the imposition of any Penalty, and (b) if any Penalty results
        from
        Landlord's failure to timely make any such payment, such Penalty shall be
        borne
        by Landlord. If at any time within thirty (30) days prior to the due
        date the deposits shall be insufficient for the payment of the obligation
        in
        full, Tenant shall within ten (10) days after demand deposit the
        deficiency with Landlord. If deposits are in excess of the actual obligation,
        the required monthly deposits for the ensuing Lease Year shall be reduced
        proportionately and any such excess at the end of the final Lease Year shall
        be
        refunded to Tenant within thirty calendar (30) days. Tenant shall
        forward to Landlord or its designee all Tax bills, bond and assessment
        statements as soon as they are received. If Landlord transfers this Master
        Lease, it shall transfer all such deposits to the transferee, and Landlord
        shall
        thereafter have no liability of any kind with respect thereto.

      


      6.           Insurance.


      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

      6.1          
        Requirements. All insurance provided for in
        this Master Lease shall (i) be maintained under valid and enforceable policies
        issued by insurers licensed and approved to do business in the state(s) where
        the Premises are located and having general policyholders and financial ratings
        of not less than "A-" and "X", respectively, in the then current Best's
        Insurance Report, (ii) name Landlord as an additional insured and, for the
        casualty policy referenced in Section 6.1, as the owner and loss payable
        beneficiary, (iii) be on an "occurrence" basis (except as otherwise contemplated
        herein), (iv) cover all of Tenant's operations at the applicable Facility
        or
        portion of the Premises, (v) provide that the policy may not be canceled
        except
        upon not less than thirty (30) days prior written notice to Landlord
        and (vi) be primary and provide that any insurance with respect to any portion
        of the Premises maintained by Landlord is excess and noncontributing with
        Tenant's insurance. The parties hereby waive as to each other all rights
        of
        subrogation which any insurance carrier, or either of them, may have by reason
        of any provision in any policy issued to them, provided such waiver does
        not
        thereby invalidate such policy. Original policies or reasonably satisfactory
        insurer certificates evidencing the existence of the insurance required by
        this
        Master Lease and showing the interest of Landlord shall be provided to it
        prior
        to the commencement of the Term or, for a renewal policy, not less than ten
        (10) days prior to the expiration date of the policy being renewed. If
        Landlord is provided with a certificate, it may demand that Tenant provide
        a
        complete copy of the related policy within ten (10) days. During the
        Term, Tenant shall maintain the following insurance and any claims thereunder
        shall be adjudicated by and at the expense of it or its insurance
        carrier:

       

      (a)           
        Fire and Extended Coverage with respect to each Facility
        against loss or damage from all causes under standard "all risk" property
        insurance coverage with an agreed amount endorsement (such that the insurance
        carrier has accepted the amount of coverage and has agreed that there will
        be no
        co-insurance penalty), without exclusion for fire, lightning, windstorm,
        explosion, smoke damage, vehicle damage, sprinkler leakage, flood, vandalism,
        earthquake, malicious mischief or any other risks normally covered under
        an
        extended coverage endorsement, in amounts that are not less than the actual
        replacement value of such Facility and all Tenant Personal Property associated
        therewith (including the cost of compliance with changes in zoning and building
        codes and other laws and regulations, demolition and debris removal and
        increased cost of construction);

       

      (b)           
        Commercial General Public Liability Coverage with respect to
        each Facility (including products liability and broad form coverage) against
        claims for bodily injury, death or property damage occurring on, in or about
        the
        Premises, affording the parties protection of not less than One Million Dollars
        ($1,000,000) for bodily injury or death to any one person, not
        less than Three Million Dollars ($3,000,000) for any one
        accident, and not less than One Million Dollars ($1,000,000)
for property damage;

       

      (c)           
        Professional Liability Coverage with respect to each Facility
        for damages for injury, death, loss of service or otherwise on account of
        professional services rendered or which should have been rendered, in a minimum
        amount of One Million Dollars ($1,000,000) per claim and Three
        Million Dollars ($3,000,000) in the aggregate;


      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

      (d)           
        Worker's Compensation Coverage with respect to each Facility
        for injuries sustained by Tenant's employees in the course of their employment
        and otherwise consistent with all applicable legal requirements;

       

      (e)           
        Boiler and Pressure Vessel Coverage with respect to each
        Facility on any fixtures or equipment which are capable of bursting or
        exploding, in an amount not less than Five Million Dollars ($5,000,000)
for resulting damage to property, bodily injury or death
        and with an
        endorsement for boiler business interruption insurance;

       

      (f)           
        Business Interruption and Extra Expense Coverage with respect
        to each Facility for loss of rental value for a period not less than one (1)
        year; and

       

      (g)           
        Deductibles/Self-Insured Retentions for the above policies
        shall not be greater than Fifty Thousand Dollars ($50,000), and
        Landlord shall have the right at any time to require a lower such amount
        or set
        higher policy limits, to the extent commercially available and reasonable
        and
        customary for similar properties.

       

      6.2           Additional
        Requirements. If at the end of the Initial Term or any Renewal Term
        or upon Tenant's exercise of its option to purchase pursuant to Section 23,
Tenant is not in compliance with the requirements of  Section
        6.1 and any general liability insurance maintained by Tenant provides for
        coverage on a "claims-made" basis, Landlord may in its sole and absolute
        discretion require Tenant to purchase an "Extended Reporting Provision Option"
        (i.e., tail coverage) for such general liability policy for two (2)
        years.

       

      6.3           Payments
        to Landlord. During any Lease Year or portion thereof in which
        Tenant is not in compliance with the provisions of Section 6.1, Tenant
        shall pay Landlord, within ten (10) days of Landlord's demand therefor,
        for the estimated costs of the premiums of the general liability insurance
        policy maintained by Landlord, or contributions to self-insurance in lieu
        thereof, in connection with the Premises for the applicable period during
        which
        Tenant is not in compliance, which amount shall not exceed in any Lease Year
        the
        sum of six cents ($.06) multiplied by the total square footage
        of the Facilities located on the Premises (as adjusted at the end of each
        Lease
        Year for increases since the Effective Date in the CPI). Tenant shall have
        no
        right to receive any proceeds or other benefits from any such insurance.
        For
        purposes of this Section 6.3, Tenant shall not be in compliance with
Section 6.1 at any such time that any insurance required hereunder is
        provided to Tenant by or through a "captive" insurance company.

       

      7.            Use,
        Regulatory Compliance and Preservation of Business.

       

      7.1           Permitted
        Use; Qualified Care. Tenant shall continuously use and

       

      occupy
        each Facility during the Term (other than during a period of repair or
        reconstruction following damage or destruction thereto or as a result of
        condemnation) as a licensed facility engaged in the respective Business
        described on Schedule 2 with not less than the applicable number of units
        shown on Schedule 2, and for ancillary services relating thereto, but for
        no other purpose. Tenant shall not allow the average occupancy for any Facility
        for any trailing three (3) month period to be less than
fifty percent (50%). Tenant shall provide care, treatment
        and
        services to all customers of the Business in a manner consistent with all
        applicable laws.


      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

      7.2           Regulatory
        Compliance  . Tenant
        and the Premises shall comply in all material respects with all licensing
        and
        other laws and all CC&R's and other use or maintenance requirements
        applicable to the Business conducted thereon and, to the extent applicable,
        all
        Medicare, Medicaid and other third-party payor certification requirements,
        including timely filing properly completed cost and other required reports,
        timely paying all expenses shown thereon, and ensuring that the Premises
        continue to be fully certified for participation in Medicare and Medicaid
        throughout the Term and when they are returned to Landlord, all without any
        suspension, revocation, decertification or other material limitation. Further,
        Tenant shall not commit any act or omission that would in any way violate
        any
        certificate of occupancy affecting any Facility, result in closure of the
        Business conducted at any Facility or result in the sale or transfer of all
        or
        any portion of any related certificate of need, bed rights or other similar
        certificate or license. All inspection fees, costs and charges associated
        with a
        change of such licensure or certification shall be borne solely by
        Tenant.

       

      7.3           Preservation
        of Business. Tenant acknowledges that a fair return to Landlord on
        and protection of its investment in the Premises is dependent, in part, on
        Tenant's dedication to the Business and the concentration on each Facility
        of
        similar businesses of Tenant and its Affiliates in the geographical area
        of such
        Facility. Tenant further acknowledges that the diversion of residents or
        patient
        care activities from any Facility to other facilities owned or operated by
        Tenant or its Affiliates at any time during the Term will have a material
        adverse affect on the value and utility of such Facility. Therefore, Tenant
        agrees that during the Term and for a period of one (1) year
thereafter, neither Tenant nor any of its Affiliates shall, without
        the
        prior written consent of Landlord: (i) operate, own, participate in or otherwise
        receive revenues from any other business providing services similar to those
        of
        the Business of any Facility within the geographical radius of such Facility
        as
        set forth on Schedule 2, (ii) except as is necessary to provide
        residents or patients with an alternative level of care, recommend or solicit
        the removal or transfer of any resident or patient from any Facility to any
        other nursing, health care, senior housing or retirement housing facility
        or
        divert actual or potential residents, patients or care activities of the
        Business conducted at any Facility to any other facilities owned or operated
        by
        Tenant or its Affiliates or from which they receive any type of referral
        fees or
        other compensation for transfers, or (iii) employ for other businesses any
        management or supervisory personnel working on a daily basis at any Facility.
        Notwithstanding the foregoing, unless this Master Lease terminates as a result
        of an Event of Default by Tenant, the foregoing prohibition against employment
        shall not apply to unsolicited personnel who approach Tenant or its Affiliate
        directly and request employment by Tenant or such Affiliate. For purposes
        of
        this Section 7.3, an "Affiliate" shall not be deemed or construed to
        include Apollo Real Estate Investment Fund III, L.P., Apollo Real Estate
        Investment Fund IV, L.P. or any other Affiliates of such entities that are
        not
        affiliated with Summerville Senior Living, Inc.

       

      8.           Acceptance,
        Maintenance, Upgrade, Alteration and Environmental.

       

      8.1           Acceptance
        "AS IS"; No Liens. Tenant acknowledges that it is presently engaged
        in operations like the Business in the state(s) where the Premises are located
        and has expertise in this industry and, in deciding to enter into this Master
        Lease, has not relied on any representations or warranties, express or implied,
        of any kind from Landlord. Tenant has examined the condition of title to
        and
        thoroughly investigated the Premises, has selected the Premises to its own
        specifications, has concluded that no improvements or modifications to them
        are
        required in order to conduct the Business, and accepts them on an "AS
IS" basis and assumes all responsibility and cost for the
        correction of any observed or unobserved deficiencies or violations. It
        is expressly understood and agreed that any inspection by or on behalf of
        the
Landlord of the business conducted at the Premises or of
        the
        Premises is for Landlord's sole and exclusive benefit and is
        not directly or indirectly for the benefit of, nor should be
relied in any manner upon by, Tenant, its residents or
        any
        other third party. Notwithstanding its right to Protest set forth in
Section 5.1, Tenant shall not cause or permit any lien, levy or
        attachment to be placed or assessed against any portion of the Premises or
        the
        operation thereof (a "Lien") for any reason.


      
        
          
          

        

        
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      8.2            Tenant's
        Maintenance Obligations. Tenant shall (a) keep and
        maintain

       

      the
        Premises in good appearance, repair and condition and maintain proper
        housekeeping, (b) promptly make all repairs (interior and exterior, structural
        and nonstructural, ordinary and extraordinary, foreseen and unforeseen)
        necessary to keep each Facility in good and lawful order and condition and
        in
        substantial compliance with all applicable requirements and laws relating
        to the
        Business, including if applicable certification for participation in Medicare
        and Medicaid, and (c) keep and maintain all Landlord and Tenant Personal
        Property in good condition, ordinary wear and tear excepted, and repair and
        replace such property consistent with prudent industry practice.

       

      8.3            Upgrade
        Expenditures. Tenant shall include with each Minimum
        Rent

       

      payment,
        starting with the first ( ft)
        full
        month of the Term, a deposit for each Facility to be added to a reserve
        (the "CapEx Reserve") equal to one-twelfth (1/12th)
        of the Applicable
        Annual Reserve for such Facility (as adjusted at the end of each Lease Year
        for
        increases since the Effective Date in the CPI, the "CapEx Amount"),
multiplied by (ii) the aggregate number of assisted living
        care units at such Facility (the "Upgrade Minimum"), minus
(c) the Upgrade Overage (as hereinafter defined).
        As used herein, the
"Applicable Annual Reserve" means:

       

      
        	
                Age
                  of Facility (Years)

              	
                Applicable
                  Annual Reserve

              
	 	 
	
                Zero
                  through Three

              	
                $
                  200.00

              
	
                Four
                  through Seven

              	
                $
                  300.00

              
	
                Eight
                  or more Years

              	
                $
                  450.00

              


      

       

      Landlord
        shall not be deemed to hold the same in trust or as an agent for Tenant.
        Tenant
        acknowledges that the impounding of such funds in the CapEx Reserve shall
        constitute a true escrow, and that Tenant has no, and hereby waives any,
        interest in or right or title to any funds escrowed pursuant to this Section
        8.3, whether legal, equitable, beneficial or otherwise. From time to time,
        but not more often than once in any calendar month and provided that no Event
        of
        Default is then continuing, Landlord will pay to Tenant amounts from the
        CapEx
        Reserve to reimburse Tenant for Upgrade Expenditures made by Tenant during
        the
        prior rolling twenty-four (24) month period during the Term
        (or portion thereof), as reasonably determined by Landlord based on evidence
        of
        such expenditures submitted by Tenant. Landlord shall make the reimbursements
        to
        Tenant required hereunder within twenty-one (21) days after
        satisfaction of all conditions to such reimbursement. Landlord may require
        Tenant to procure mechanic's lien waivers, in form and substance reasonably
        satisfactory to Landlord, in connection with any Upgrade Expenditures in
        excess
        of Ten Thousand Dollars ($10,000). "Upgrade Expenditures" means
        expenditures in commercially reasonable amounts to Persons not affiliated
        with
        Tenant (unless otherwise reasonably approved by Landlord) for (x) upgrades
        or
        improvements to any Facility that have the effect of maintaining or improving
        its competitive position in its respective marketplace, including new or
        replacement wallpaper, tiles, window coverings, lighting fixtures, painting,
        upgraded landscaping, carpeting, architectural adornments, common area amenities
        and the like, but excluding capital improvements or repairs such as repairs
        or
        replacements of the roof, structural elements of the walls, parking area
        or the
        electrical, plumbing, HVAC or other mechanical or structural systems, and
        (y)
        other improvements to any Facility as reasonably approved by Landlord. Any
        amount remaining in the CapEx Reserve at the expiration of the Term or earlier
        termination of this Master Lease shall be retained by Landlord as additional
        or
        supplemental Rent hereunder; provided, however, that if Tenant exercises
        the option to purchase set forth in Section 23 below, any amount remaining
        in
        the CapEx Reserve at the expiration of Term shall be credited to the purchase
        price payable from Tenant to Landlord pursuant to the terms of the option
        to
        purchase. As used herein "Upgrade Overage"
means any amounts expended by Tenant
        on Upgrade Expenditures at the
        Facilities in the two immediately preceding Lease Years in excess of the
        Upgrade
        Minimum for the corresponding Lease Years (excluding any such amounts that
        are
        financed by Tenant and secured by a lien on the personal property relating
        thereto).


      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

      8.4            Alterations
        by Tenant.
Tenant may alter, improve, exchange, replace, modify
        or
        expand (collectively, "Alterations") the Facilities, equipment
        or appliances in the Premises from time to time as it may determine is desirable
        for the continuing and proper use and maintenance of the Premises; provided,
        that any Alterations in excess of One Hundred Thousand Dollars
($100,000) with respect to any individual Facility in any
        rolling twelve (12) month period shall require Landlord's
        prior written consent, which consent shall not be unreasonably withheld or
        delayed; provided further, that any Alterations to the Premises must satisfy
        the
        requirements set forth in Sections 4.04 (2) and (3) of Revenue Procedure
        2001-28, 2001-19 I.R.B. 1156. All Alterations shall immediately become a
        part of
        the Premises and the property of Landlord subject to this Master Lease, and
        except to the extent that Landlord in its sole discretion agrees to fund
        them
        following Tenant's written request therefor, the cost of all Alterations
        or
        other purchases, whether undertaken as an on-going licensing, Medicare, Medicaid
        or other regulatory requirement, or otherwise shall be borne solely by Tenant.
        All Alterations shall be done in a good and workmanlike manner in compliance
        with all applicable laws and the insurance required under this Master
        Lease.

       

      8.5            Hazardous
        Materials.
Tenant's use of the Premises shall comply with all Hazardous
        Materials Laws. If any Environmental Activities occur or are suspected to
        have
        occurred in violation of any Hazardous Materials Laws or if Tenant has received
        notice of any Hazardous Materials Claim against any portion of the Premises,
        Tenant shall promptly obtain all permits and approvals necessary to remedy
        any
        such actual or suspected problem through the removal of Hazardous Materials
        or
        otherwise, and upon Landlord's reasonable approval of the remediation plan,
        remedy any such problem to the satisfaction of Landlord and all applicable
        governmental authorities, in accordance with all Hazardous Materials Laws
        and
        good business practices. Tenant shall immediately advise Landlord in writing
        of
        (a) any Environmental Activities in violation of any Hazardous Materials
        Laws;
        (b) any Hazardous Materials Claims against Tenant or any portion of the
        Premises; (c) any remedial action taken by Tenant in response to any Hazardous
        Materials Claims or any Hazardous Materials on, under or about any portion
        of
        the Premises in violation of any Hazardous Materials Laws; (d) Tenant's
        discovery of any occurrence or condition on or in the vicinity of any portion
        of
        the Premises that materially increase the risk that any portion of the Premises
        will be exposed to Hazardous Materials; and (e) all communications to or
        from
        Tenant, any governmental authority or any other Person relating to Hazardous
        Materials Laws or Hazardous Materials Claims with respect to any portion
        of the
        Premises, including copies thereof. Notwithstanding any other provision of
        this
        Master Lease, if any Hazardous Materials are discovered on, under or about
        any
        portion of the Premises in violation of any Hazardous Materials Law and as
        a
        result of an act or intentional omission on the part of the Tenant, the Term
        shall be automatically extended and this Master Lease shall remain in full
        force
        and effect until the earlier to occur of the completion of all remedial action
        or monitoring, as approved by Landlord, in accordance with all Hazardous
        Materials Laws, or the date specified in a written notice from Landlord to
        Tenant terminating this Master Lease (which date may be subsequent to the
        date
        upon which the Term was to have expired). Landlord shall have the right,
        at
        Tenant's sole cost and expense (including, without limitation, Landlord's
        reasonable attorneys' fees and costs) and with counsel chosen by Landlord,
        to
        join and participate in, as a party if it so elects, any legal proceedings
        or
        actions initiated in connection with any Hazardous Materials
        Claims.


      
        
          
          

        

        
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      8.6            Capital
        Improvements funded by Landlord. Landlord shall provide Tenant (a)
        up to Two Hundred Thousand Dollars ($200,000), in the aggregate, for the
        cost of
        capital improvements to the Camelot Facility (either physical plant or
        furniture, fixtures and equipment); and (b) up to Two Hundred Thousand Dollars
        ($200,000), in the aggregate, for the cost of capital improvements to the
        Lakeview Facility and/or HillenVale Facility (either physical plant or
        furniture, fixtures and equipment), upon the following terms and
        conditions:

       

      8.6.1
        Landlord shall have the right to reasonably pre-approve such
        expenditures and to make payment directly to any or all applicable vendors
        if so
        desired by Landlord;

       

      8.6.2
        Such disbursements shall be requested by Tenant in writing from
        time to
        time (but not more often than once in any calendar month) and, the applicable
        improvements shall be completed by (a) February 1, 2007, with respect to
        the
        Camelot Facility, and (b) September 30, 2007, with respect to the Lakeview
        Facility and HillenVale Facility;

       

      8.6.3
        No Event of Default or event which, with the giving of notice or
        the
        passage of time, or both, would constitute an Event of Default hereunder
        shall
        have occurred and be continuing at the time of any such request for such
        amounts
        or any request for disbursement of such amounts;

       

      8.6.4
        With respect to any advance for capital improvements, Tenant shall
        comply with the provisions of Section 8.4 hereof;

       

      8.6.5
        In no event shall the funds provided by Landlord be used to remedy
        any
        condition which constitutes a default by Tenant under the provisions of this
        Master Lease; and

       

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      


      
        8.6.6
          Upon the date of any such disbursement by Landlord, (a) Landlord's
          Camelot Investment or Landlord's Lakeview/HillenVale Investment, as the
          case may
          be, shall be increased by the amount of such disbursement, and (b) the
          annual
          Minimum Rent payable by Tenant under this Master Lease shall be increased
          by the
          product of (i) the amount of such disbursement, and (ii) the Lease
          Rate.

      

       

      9.            Tenant
        Property and Security Interest.

       

      9.1            Tenant
        Property. Tenant shall obtain and install all items of furniture,
        fixtures, supplies and equipment not included as Landlord Personal Property
        as
        shall be necessary or reasonably appropriate to operate the Premises in
        compliance with this Master Lease ("Tenant Personal Property").
(Tenant Personal Property and "Tenant Intangible
Property" shall be collectively
        referred to herein as
"Tenant Property".) As used herein, "Tenant Intangible
        Property" means all the following at any time owned by Tenant in
        connection with its use of any portion of the Premises: Medicare, Medicaid
        and
        other accounts and proceeds thereof; rents, profits, income or revenue derived
        from such operation or use; all documents, chattel paper, instruments, contract
        rights (including contracts with residents, employees and third-party payors),
        deposit accounts, general intangibles (excluding intellectual property) and
        choses in action; refunds of any Taxes or Other Charges; licenses and permits
        necessary or desirable for Tenant's use of any portion of the Premises,
        including licensed Medicaid beds, any applicable certificate of need or other
        similar certificate, and the exclusive right to transfer, move or apply for
        the
        foregoing and manage the Business conducted at any portion of the Premises
        (including the right to apply for permission to reduce the licensed bed
        complement, take any of the licensed beds out of service or move the beds
        to a
        different location); and the right to use the names set forth on Schedule 2
and any other trade or other name now or hereafter associated with
        its
        operation of the Premises (excluding the "Summerville" name or any variation
        thereof and any other trade names and trademarks that are generally used
        by
        Tenant and its Affiliates in connection with the operation of their respective
        businesses).

       

      9.2            Landlord's
        Security Interest and Financing Statements. The parties intend that
        if Tenant defaults under this Master Lease, Landlord will control the Tenant
        Property so that Landlord or its designee can operate or re-let each Facility
        and the associated personal property intact for use as a licensed facility
        engaged in the applicable Business. Therefore, to implement the intention
        of the
        parties, and for the purpose of securing the payment and performance of Tenant's
        obligations under this Master Lease, Tenant, as debtor, hereby grants to
        Landlord, as secured party, a security interest in and an express contractual
        Lien upon, all of Tenant's right, title and interest in and to the Tenant
        Property and any and all products and proceeds thereof, in which Tenant now
        owns
        or leases or hereafter acquires an interest or right. This Master Lease
        constitutes a security agreement covering all such Tenant Property, and the
        security interest granted to Landlord is intended by the parties to be
        subordinate to any security interest granted in Tenant Personal Property
        in
        connection with the financing or leasing of all or any portion thereof, so
        long
        as the lessor or financier agrees to give Landlord written notice of any
        default
        by Tenant under the terms of such arrangement and a reasonable time following
        such notice to cure any such default and to consent to Landlord's written
        assumption of such arrangement upon curing such default. This security interest
        and agreement shall survive the termination of this Master Lease resulting
        from
        an Event of Default. Tenant shall pay all filing and reasonable record search
        fees and other costs for such additional security agreements, financing
        statements, fixture filings and other documents as Landlord may reasonably
        require to perfect or continue the perfection of its security
        interest.


      
        
          
          

        

        
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      10.           Financial,
        Management and Regulatory Reports. Tenant shall provide Landlord
        with the reports listed in Exhibit F at the time described therein, and
        such other information about it or the operations of the Premises/Business
        as
        Landlord may reasonably request from time to time. All financial information
        provided shall be prepared in accordance with generally accepted accounting
        principles consistently applied. If Tenant or any Guarantor becomes subject
        to
        any reporting requirements of the Securities and Exchange Commission during
        the
        Term, it shall concurrently deliver to Landlord such reports as are delivered
        pursuant to applicable securities laws. Tenant shall be assessed with a $500
        administrative fee for each instance in which Tenant fails to provide Landlord
        with the monthly, quarterly or annual financial reports listed in Exhibit F
within the time specified therein, which administrative fee shall
        be
        immediately due and payable to Landlord. Notwithstanding the foregoing, such
        administrative fee shall not be assessed to Tenant so long as (a) Tenant
        is not
        delinquent in the delivery of such financial reports more than two (2) times
        in
        any consecutive twelve (12) month period, and (b) Tenant remits any delinquent
        report to Landlord within five (5) business days of Landlord's written request
        therefor.

       

      11.           Representations
        and Warranties. Each party represents and warrants to the other
        that: (a) this Master Lease and all other documents executed or to be executed
        by it in connection herewith have been duly authorized and shall be binding
        upon
        it; (b) it is duly organized, validly existing and in good standing under
        the
        laws of the state of its formation and is duly authorized and qualified to
        perform this Master Lease within the state(s) where the Premises are located;
        and (c) neither this Master Lease nor any other document executed or to be
        executed in connection herewith violates the terms of any other agreement
        of
        such party.

       

      12.           Events
        of Default. So long as there is no Event of Default, Tenant shall
        peaceably and quietly have, hold and enjoy the Premises for the Term, free
        of
        any claim or other action not caused or created by Tenant or pursuant to
        Sections 17 or 18. The occurrence of any of the following events will
        constitute an "Event of Default" on the part of Tenant, and
        there shall be no cure period therefor except as otherwise expressly
        provided:

       

      (a)           Tenant's
        failure to pay (i) when due any Rent, or (ii) within five (5) days of
        when due, any Taxes, Other Charges or other required payments hereunder;
        provided, however, that Tenant's failure to pay Rent when due
        shall not be an Event of Default if such failure does not occur more than
        once
        in any Lease Year and Tenant delivers such Rent payment to Landlord within
        two
        (2) business days' of the date when due;

       

      (b)           (i)
        The revocation of any license required for the operation of any portion of
        the
        Business or any portion of the Premises or the certification of any portion
        of
        the Premises for provider status under Medicare or Medicaid, if applicable;
        (ii)
        the closure of any portion of the Business other than during a period of
        repair
        or reconstruction following damage or destruction thereto; (iii) the sale
        or
        transfer of all or any portion of any certificate of need, bed rights or
        other
        similar certificate or license relating to the any portion of Business or
        any
        portion of the Premises; or (iv) the use of any portion of the Premises other
        than for a licensed facility engaged in the applicable Business and for
        ancillary services relating thereto (each a "Catastrophic Event of
        Default");


      
        
          
          

        

        
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      (c)           Any
        other material suspension, termination or restriction placed upon Tenant,
        any
        license to operate any portion of the Business, any portion of the Premises
        or
        the ability to admit residents or patients (e.g., an admissions ban or
        non-payment for new admissions by Medicare or Medicaid resulting from an
        inspection survey); provided, however, if any such material suspension or
        restriction is curable by Tenant it shall not constitute an Event of Default
        if
        Tenant promptly commences to cure such breach and thereafter diligently pursues
        such cure to the completion thereof within the lesser of: (i) the time period
        in
        which the applicable governmental agency has given Tenant to undertake
        corrective action, or (ii) one hundred twenty (120) days after the occurrence
        of
        any such material suspension or restriction;

       

      (d)            A
        material default by Tenant or any Guarantor (i) or any Affiliate of either
        under
        the Guaranty, the Letter of Credit Agreement or any other lease, agreement
        or
        obligation between it and Landlord or any of its Affiliates which is not
        cured
        within any applicable cure period specified therein, or (ii) with respect
        to any
        such scheduled monetary obligation due under (A) any other lease or leases
        with
        any other party under which Tenant is obligated to make annual rental payments
        in excess of One Hundred Thousand Dollars ($100,000) which is not cured within
        any applicable cure period specified therein, or (B) any financing agreement
        with a then outstanding principal balance in excess of $500,000 with any
        other
        party which is not cured within any applicable cure period specified
        therein;

       

      (e)            Any
        misrepresentation by Tenant under this Master Lease or material misstatement
        or
        omission of fact in any written report, notice or communication from Tenant
        or
        any Guarantor to Landlord with respect to Tenant, any Guarantor, the Premises
        or
        the Business;

       

      The
        failure to perform or comply with the provisions of  Sections 6
or 16;

       

      (g)            (i)
        Tenant or any Guarantor shall generally not pay its debts as they
        become due, or shall admit in writing its inability to pay its debts generally,
        or shall make an assignment of all or substantially all of its property for
        the
        benefit of creditors; or (ii) a receiver, trustee or liquidator shall be
        appointed for either or them or any of their property, if withinfive (5)
        business days after Tenant receives written notice of such appointment
        Tenant does not inform Landlord in writing that they intend to cause such
        appointment to be discharged or such discharge is not diligently prosecuted
        to
        completion within ninety (90) days after the date of such appointment;
        (iii) the filing by either of them of a voluntary petition under any federal
        bankruptcy or state law to be adjudicated as bankrupt or for any arrangement
        or
        other debtor's relief; or (iv) the involuntary filing of such a petition
        against
        either of them by any other party, unless Tenant withinfive (5) business
        days after Tenant receives written notice of such filing informs Landlord
        in writing of their intent to cause such petition to be dismissed, such
        dismissal is diligently prosecuted and such petition is dismissed within
        ninety (90) days after filing; or

       

      (h)            The
        failure to perform or comply with any other provision of this Master Lease
        not
        requiring the payment of money unless (i) withinfive (5) business days
of Tenant's receipt of a written notice of default from Landlord,
        Tenant
        gives Landlord notice of its intent to cure such default; and (ii) Tenant
        cures
        it either (x) within thirty (30) days after such notice from Landlord
        or (y) if such default cannot with due diligence be so cured because of the
        nature of the default or delays beyond the reasonable control of Tenant and
        cure
        after such period will not have a materially adverse effect upon any portion
        of
        the Premises or any portion of the Business, then such default shall not
        constitute an Event of Default if Tenant uses its best efforts to cure such
        default by promptly commencing and diligently pursuing such cure to the
        completion thereof and cures it within one hundred twenty (120)
        days after
such notice from Landlord.


      
        
          
          

        

        
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      13.           Remedies.
        Upon the occurrence of an Event of Default, Landlord may exercise
        all rights and remedies under this Master Lease and the laws of the state(s)
        where the Premises are located that are available to a lessor of real and
        personal property in the event of a default by its lessee, and as to the
        Tenant
        Property, all remedies granted under the laws of such state(s) to a secured
        party under its Uniform Commercial Code. Landlord shall have no duty to mitigate
        damages unless required by applicable law and shall not be responsible or
        liable
        for any failure to relet any of the Premises or to collect any rent due upon
        any
        such reletting. Tenant shall pay Landlord, immediately upon demand, all
        reasonable expenses incurred by it in obtaining possession and reletting
        any of
        the Premises, including reasonable fees, commissions and costs of attorneys,
        architects, agents and brokers.

       

      13.1
        General. Without limiting the foregoing,
        Landlord shall have the right (but not the obligation) to do any of the
        following upon an Event of Default: (a) sue for the specific performance
        of any
        covenant of Tenant as to which it is in breach; (b) enter upon the Premises,
        terminate this Master Lease, dispossess Tenant from the Premises and/or collect
        money damages by reason of Tenant's breach, including the acceleration of
        all
        Rent which would have accrued after such termination and all obligations
        and
        liabilities of Tenant under this Master Lease which survive the termination
        of
        the Term; (c) elect to leave this Master Lease in place and sue for Rent
        and
        other money damages as the same come due; (d) (before or after repossession
        of
        the Premises pursuant to clause (b) above and whether or not this Master
        Lease
        has been terminated) relet any portion of the Premises to such tenant(s),
        for
        such term(s) (which may be greater or less than the remaining balance of
        the
        Term), rent, conditions (which may include concessions or free rent) and
        uses as
        it may determine in its sole discretion and collect and receive any rents
        payable by reason of such reletting; and (e) sell any Tenant Property in
        a non
        judicial foreclosure sale.

       

      13.2
        Receivership. Tenant acknowledges that a
        Catastrophic Event of Default will materially and irreparably impair the
        value
        of Landlord's investment in the Premises. Therefore, in addition to its other
        rights and remedies, upon a Catastrophic Event of Default Landlord shall
        have
        the right, as permitted and provided by applicable law, to petition any
        appropriate court for the appointment of a receiver to take possession of
        all or
        any portion of the Premises, to manage the operation of all or any portion
        of
        the Premises, to collect and disburse all rents, issues, profits and income
        generated thereby and to the extent applicable and possible, to preserve
        or
        replace any affected license or provider certification for the Premises or
        to
        otherwise substitute the licensee or provider thereof (the
"Receivership"). If Landlord commences the Receivership, the
        receiver shall be paid a reasonable fee for its services and all such fees
        and
        other reasonable expenses of the Receivership shall be paid in addition to,
        and
        not in limitation of, the Rent otherwise due to Landlord hereunder. Tenant
        irrevocably consents to the Receivership upon a Catastrophic Event of Default
        and thus stipulates to and agrees not to contest the appointment of a receiver
        under such circumstances and for such purposes.


      
        
          
          

        

        
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      13.3
        Remedies Cumulative; No Waiver. No right or
        remedy herein conferred upon or reserved to Landlord is intended to be exclusive
        of any other right or remedy, and each and every right and remedy shall be
        cumulative and in addition to any other right or remedy given hereunder or
        now
        or hereafter existing at law or in equity. Any notice or cure period provided
        herein shall run concurrently with any provided by applicable law. No failure
        of
        Landlord to insist at any time upon the strict performance of any provision
        of
        this Master Lease or to exercise any option, right, power or remedy contained
        herein shall be construed as a waiver, modification or relinquishment thereof
        as
        to any similar or different breach (future or otherwise) by Tenant. Landlord's
        receipt of any rent or other sum due hereunder (including any late charge)
        with
        knowledge of any breach shall not be deemed a waiver of such breach, and
        no
        waiver by Landlord of any provision of this Master Lease shall be effective
        unless expressed in a writing signed by it.

       

      13.4
        Performance of Tenant's Obligations. If Tenant
        at any time shall fail to make any payment or perform any act on its part
        required to be made or performed under this Master Lease within the applicable
        notice and/or cure period, if any, then Landlord may, without waiving or
        releasing Tenant from any obligations or default hereunder, make such payment
        or
        perform such act for the account and at the expense of Tenant, and enter
        upon
        any portion of the Premises for the purpose of taking all such action as
        may be
        reasonably necessary. No such entry shall be deemed an eviction of Tenant.
        All
        sums so paid by Landlord and all necessary and incidental costs and expenses
        (including reasonable attorneys' fees and expenses) incurred in connection
        with
        the performance of any such act by it, together with interest at the Agreed
        Rate
        from the date of the making of such payment or the incurring of such costs
        and
        expenses, shall at Landlord's option either be payable by Tenant to Landlord
        on
        demand or added to Landlord's Camelot Investment and/or Landlord's
        Lakeview/HillenVale Investment, as the case may be.

       

      14.   Provisions
        on
        Termination.

       

      14.1
        Surrender of Possession. On the expiration of
        the Term or earlier termination or cancellation of this Master Lease (the
        "Termination Date"), Tenant shall deliver to Landlord or its
        designee possession of (a) the Premises in a neat and clean condition and
        in as
        good a condition as existed at the date of their possession and occupancy,
        ordinary wear and tear excepted, (b) a fully operational, licensed and certified
        Business at the Premises including, at Tenant's sole cost, any Alterations
        necessitated by, or imposed in connection with, a change of ownership inspection
        survey for the transfer of operation of the Premises to Landlord or its
        designee, and (c) all patient charts and resident records along with appropriate
        resident consents if necessary and copies of all its books and records relating
        to any portion of the Business and any portion of the Premises. Accordingly,
        Tenant shall not at any time during or after the Term seek to transfer,
        surrender, allow to lapse, or grant any security interest or any other interest
        in and to, the licenses, permits or certifications relating to any portion
        of
        the Business or any portion of the Premises, nor shall Tenant commit or omit
        any
        act that would jeopardize the Business or any licensure or certification
        of any
        portion of the Premises. Tenant shall cooperate fully with Landlord or its
        designee in transferring or obtaining all necessary licenses and certifications
        for Landlord or its designee, and Tenant shall comply with all requests for
        an
        orderly transfer of the Business, facility license, and Medicare and Medicaid
        certifications and possession at the time of its surrender of the Premises
        to
        Landlord or its designee. Subject to all applicable laws, Tenant hereby assigns,
        effective upon the Termination Date, all rights to operate the Facilities
        to
        Landlord or its designee including all required licenses and permits and
        all
        rights to apply for or otherwise obtain them, and all other nonproprietary
        Tenant Intangible Property relating to any portion of the
        Premises.


      
        
          
          

        

        
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      14.2
        Removal of Tenant Personal Property. Provided
        that no Event of Default then exists, in connection with the surrender of
        the
        Premises Tenant may upon at least five (5) business days prior notice
        to Landlord remove from the Premises in a workmanlike manner all Tenant Personal
        Property, leaving the Premises in good and presentable condition and appearance,
        including repair of any damage caused by such removal; provided that Landlord
        shall have the right and option to purchase the Tenant Personal Property
        for its
        then fair market value during such five (5) business day notice period,
        in which case Tenant shall so convey the Tenant Personal Property to Landlord
        or
        its nominee by executing a bill of sale in a form reasonably required by
        Landlord. Title to any Tenant Personal Property which is not removed by Tenant
        as permitted above upon the expiration of the Term shall, at Landlord's
        election, vest in Landlord; provided, however, that Landlord may remove and
        store or dispose at Tenant's expense any or all of such Tenant Personal Property
        which is not so removed by Tenant without obligation or accounting to
        Tenant.

      


      14.3
        Management of Premises. Commencing on the
        Termination Date, Landlord or its designee, upon written notice to Tenant,
        may
        elect to assume the responsibilities and obligations for the management and
        operation of the Business and Tenant agrees to cooperate in a commercially
        reasonable manner to accomplish the transfer of such management and operation
        without interrupting the operation of the Business. To the extent permitted
        by
        applicable law, including any state licensure laws with respect to the operation
        of the Premises and subject to the parties agreeing on the form of a management
        agreement which shall include, at a minimum, an indemnity in favor of Tenant
        in
        form and substance acceptable to Tenant and from an entity acceptable to
        Tenant
        (all of which shall be at no cost or expense to Tenant), Tenant agrees that
        Landlord or its designee may operate the Business under Tenant's license
        and
        certification pending the issuance of new licenses and certifications to
        Landlord or its designee. Tenant shall not commit any act or be remiss in
        the
        undertaking of any act that would jeopardize any licensure or certification
        of
        any portion of the Premises, and Tenant shall comply with all reasonable
        requests for an orderly transfer of any and all facility and other licenses,
        Medicare and Medicaid certifications and possession of the Premises at the
        time
        of any such surrender.

      


      14.4
        Holding Over. If Tenant shall for any reason
        remain in possession of any portion of the Premises after the Termination
        Date,
        such possession shall be a month-to-month tenancy during which time Tenant
        shall
        pay as rental on the first (1") business day of each month one
        and one-half (1%) times the total of the monthly Minimum Rent payable
        with respect to the last Lease Year plus Additional Rent allocable to
        the month, all additional charges accruing during the month and all other
        sums,
        if any, payable by Tenant pursuant to this Master Lease. Nothing contained
        herein shall constitute the consent, express or implied, of Landlord to the
        holding over of Tenant after the Termination Date, nor shall anything contained
        herein be deemed to limit Landlord's remedies.

      


      14.5
        Survival. All representations, warranties,
        covenants and other obligations of Tenant under this Master Lease shall survive
        the Termination Date.


      
        
          
          

        

        
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      15.          Certain
        Landlord Rights.

       

      15.1
        Entry and Examination of Records. Landlord and
        its representatives may enter any portion of the Premises at any reasonable
        time
        after reasonable notice to Tenant to inspect the Premises for compliance,
        to
        exhibit the Premises for sale, lease or mortgaging, or for any other reason;
        provided that no such notice shall be required in the event of an emergency,
        upon an Event of Default or to post notices of non-responsibility under any
        mechanic's or materialman's lien law. No such entry shall unreasonably interfere
        with residents, patients, patient care or the Business. During normal business
        hours, Tenant will permit Landlord and its representatives, inspectors and
        consultants to examine all contracts, books and financial and other records
        (wherever kept) relating to Tenant's operations at any portion of the
        Premises.

       

      15.2
        Grant Liens. Without the consent of Tenant,
        Landlord may from time to time, directly or indirectly, create or otherwise
        cause to exist any Lien, title retention agreement or other encumbrance upon
        the
        Premises, or any portion thereof or interest therein (including this Master
        Lease), whether to secure any borrowing or other means of financing or
        refinancing or otherwise. Upon the request of Landlord, Tenant shall subordinate
        this Master Lease to the Lien of any such encumbrance pursuant to a written
        agreement ("SNDA") so long as (a) the SNDA provides that the Lien of such
        encumbrance is subject to the rights of Tenant under this Master Lease and
        that
        so long as no Event of Default shall exist, Tenant's occupancy shall not
        be
        disturbed if any Person takes possession of the applicable portion of the
        Premises through foreclosure proceeding or otherwise; and (b) no additional
        cost
        or expense (excluding ministerial costs to comply with notice requirements)
        shall be imposed on Tenant under the terms and conditions of the
        SNDA.

       

      15.3
        Estoppel Certificates. Each of Landlord and
        Tenant shall, at any time upon not less than ten (10) days prior
        written request by the other party, have an authorized representative execute,
        acknowledge and deliver to the requesting party or its designee a written
        statement certifying (a) that this Master Lease, together with any specified
        modifications, is in full force and effect, (b) the dates to which Rent and
        additional charges have been paid, (c) that no default by either party exists
        or
        specifying any such default and (d) as to such other matters as the requesting
        party may reasonably request.

       

      15.4
        Conveyance Release. If Landlord or any
        successor owner shall transfer the Premises in accordance with this Master
        Lease, they shall thereupon be released from all future liabilities and
        obligations hereunder arising or accruing from and after the date of such
        conveyance or other transfer, which instead shall thereupon be binding upon
        the
        new owner.


      
        
          
          

        

        
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      16.            Assignment
        and Subletting. Without the prior written consent of Landlord,
which
        may
        be withheld or conditioned at its sole discretion, this Master Lease shall
        not,
        nor shall any interest of Tenant herein, be assigned or encumbered by operation
        of law, nor shall Tenant voluntarily or involuntarily assign, mortgage, encumber
        or hypothecate any interest in this Master Lease or sublet any portion of
        the
        Premises (except if the Business is an assisted living facility, in the ordinary
        course of Tenant's business to occupants of the Premises or their immediate
        family members using Tenant's standard form occupancy lease). Any of the
        foregoing acts without such consent shall be void and shall, at Landlord's
        sole
        option, constitute an Event of Default giving rise to Landlord's right, among
        other things, to terminate this Master Lease. An assignment of this Master
        Lease
        by Tenant shall be deemed to include: (a) entering into a management or similar
        agreement relating to the operation or control of any portion of the Premises
        with a Person that is not an Affiliate of Tenant; provided, however, that
        Landlord shall not unreasonably withhold its consent to such a management
        agreement provided that the proposed manager has a general business reputation
        for providing quality healthcare services reasonably compatible with the
        services provided by Tenant and manages or operates a building or buildings
        comparable to the Facilities; (b) any change (voluntary or involuntary, by
        operation of law or otherwise, including the transfer, assignment, sale,
        hypothecation or other disposition of any equity interest in Tenant) in the
        Person that ultimately exert effective Control over the management of the
        affairs of Tenant as of the date hereof; provided that an initial public
        offering of Tenant (and the public trading of shares thereafter) shall not
        be
        deemed to be an assignment of the Lease so long as thereafter no Person or
        related group that did not have such ownership before the initial public
        offering holds twenty-five percent (25%) or more of the voting
        stock of Tenant without the prior consent of Landlord; or (c) the sale or
        other
        transfer of all or any portion of any certificate of need, bed rights or
        other
        similar certificate or license relating to any portion of the Business or
        any
        portion of the Premises. Notwithstanding the foregoing, Tenant may, without
        Landlord's prior written consent, assign this Master Lease or sublet the
        Premises or any portion thereof to an Affiliate of Tenant or Guarantor if
        all of
        the following are first satisfied: (i) such Affiliate fully assumes Tenant's
        obligations hereunder (in the case of an assignment); (ii) Tenant remains
        fully
        liable hereunder and Guarantor remains fully liable under the Guaranty; (iii)
        the use of the Premises remains unchanged; and (iv) Landlord in its reasonable
        discretion shall have approved the form and content of all documents for
        such
        assignment or sublease and received an executed counterpart thereof. In
        addition, Tenant may, with Landlord's prior written consent, which consent
        shall
        not be unreasonably withheld, if the proposed assignee, transferee or sublessee
        is not an Affiliate of Tenant or Guarantor but is a reputable person or entity
        of good character, having sufficient experience, assets and income, in
        Landlord's reasonable judgment, to bear the financial responsibilities of
        Tenant
        under this Master Lease and of Guarantor under the Guaranty, and (v) such
        person
        or entity has a general business reputation for providing quality healthcare
        services reasonably compatible with the services provided by Tenant and operates
        a building or buildings comparable to the Facilities; (w) such person or
        entity
        fully assumes Tenant's obligations hereunder and Guarantor's obligations
        under
        the Guaranty (in which event Tenant and Guarantor shall be released from
        their
        respective obligations under this Master Lease and the Guaranty arising from
        and
        after the effective date of the assumption); (x) the use of the Premises
        under
        the terms of such assignment or sublease is permitted by Section 7.1
hereof and (y) Landlord in its reasonable discretion shall have approved
        the
        form and content of all documents for such assignment or sublease and received
        an executed counterpart thereof. In no event shall Tenant sublet any portion
        of
        the Premises on any basis such that the rental to be paid by the sublessee
        would
        be based, in whole or in part, on either the income or profits derived by
        the
        business activities of the sublessee, or any other formula, such that any
        portion of the sublease rental received by Landlord would fail to qualify
        as
        "rents from real property" within the meaning of Section 856(d) of the U.S.
        Internal Revenue Code, or any similar or successor provision thereto.
        Notwithstanding anything to the contrary set forth herein, (i) the reduction
        or
        elimination of the equity interests of Apollo Real Estate Investment Fund
        III,
        L.P., Apollo Real Estate Investment Fund IV, L.P. or any other Affiliates
        of
        such entities in Tenant or Guarantor shall not be deemed or construed to
        be a
        change the Person that ultimately exerts effective Control over the management
        of the affairs of the Tenant so long as Guarantor or its Affiliate continues
        to
        manage the operations at the Premises, and (ii) with Landlord's prior written
        consent, which consent shall not be unreasonably withheld, there shall be
        no
        restrictions on changes in ownership (directly or indirectly) in Guarantor
        nor
        any restriction on the ability of Guarantor to merge into or engage in any
        business combination with any Person, so long as (A) Tenant complies, in
        all
        material respects, with any applicable licensing requirements arising out
        of any
        such change of ownership, merger or other business combination, (B) Guarantor
        remains fully liable for its obligations under the Guaranty (in the event
        that
        Guarantor remains a successor entity), (C) the proposed acquirer is not an
        Affiliate of Guarantor but is a reputable person or entity of good character,
        having sufficient experience, assets and income, in Landlord's reasonable
        judgment, to bear the financial responsibilities of Guarantor under the
        Guaranty, (D) such person or entity has a general business reputation for
        providing quality healthcare services reasonably compatible with the services
        provided by Tenant and operates a building or buildings comparable to the
        Facilities; (E) such person or entity guaranties the obligations of Tenant
        under
        this Master Lease; and (F) Landlord in its reasonable discretion shall have
        approved the form and content of all material documents relating to such
        transaction and received an executed counterpart thereof.


      
        
          
          

        

        
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      17.           Damage
        by Fire or Other Casualty. Tenant shall promptly notify Landlord of
        any damage or destruction of the Premises and diligently repair or reconstruct
        the Premises to a like or better condition than existed prior to such damage
        or
        destruction in accordance with Section 8.4. Any net insurance proceeds
        payable with respect to the casualty shall be paid directly to Landlord and,
        if
        an Event of Default has not occurred hereunder, used for the repair or
        reconstruction of the Premises pursuant to Landlord's reasonable disbursement
        requirements. If such proceeds are insufficient, Tenant shall provide the
        required additional funds; if they are more than sufficient, the surplus
        shall
        belong and be paid to Tenant. Tenant shall not have any right under this
        Master
        Lease, and hereby waives all rights under applicable law, to abate, reduce
        or
        offset rent by reason of any damage or destruction of the Premises by reason
        of
        an insured or uninsured casualty.

       

      18.           Condemnation.
        Except as provided to the contrary in this Section 18, this
        Master Lease shall not terminate and shall remain in full force and effect
        in
        the event of a taking or condemnation of the Premises, or any portion thereof,
        and Tenant hereby waives all rights under applicable law to abate, reduce
        or
        offset rent by reason of such taking. If during the Term all or substantially
        all (a "Complete Taking") or a smaller portion (a
"Partial Taking") of any Facility is taken or condemned
        by any
        competent public or quasi-public authority, then (a) in the case of a Complete
        Taking, Tenant may at its election made within thirty (30) days of the
        effective date of such Taking, terminate this Master Lease with respect to
        such
        Facility and the current Rent shall be equitably abated as of the effective
        date
        of such termination, or (b) in the case of a Partial Taking, the Rent shall
        be
        abated to the same extent as the resulting diminution in Fair Market Value
        of
        the applicable portion of the Premises. The resulting diminution in Fair
        Market
        Value on the effective date of a Partial Taking shall be as established pursuant
        to Exhibit C. In the event this Master Lease is terminated as to any
        Facility under this Section 18, then the Minimum Rent and Additional Rent
        due
        hereunder shall be shall be reduced by the product of (x) the amount of the
        then
        current Minimum Rent and Additional Rent, and (y) a fraction, the numerator
        of
        which is the amount received by Landlord as a result of the Complete Taking
        and
        the denominator of which is Landlord's Camelot Investment and Landlord's
        Lakeview/HillenVale Investment. Landlord alone shall be entitled to receive
        and
        retain any award for a taking or condemnation other than a temporary taking;
        provided, however, Tenant shall be entitled to submit its own claim in
        the event of any such taking or condemnation with respect to the value of
        Tenant's leasehold interest in any portion of the Premises and/or the relocation
        costs incurred by Tenant as a result thereof. In the event of a temporary
        taking
        of less than all or substantially all of the Premises, Tenant shall be entitled
        to receive and retain any and all awards for the temporary taking and the
        Minimum Rent and Additional Rent due under this Master Lease shall be not
        be
        abated during the period of such temporary taking.


      
        
          
          

        

        
          21

          
            

          

        

        
          
          

        

      

       

      19.           Indemnification.
        Tenant agrees to protect, indemnify, defend and save harmless
        Landlord, its directors, officers, shareholders, agents and employees from
        and
        against any and all foreseeable or unforeseeable liability, expense, loss,
        cost,
        deficiency, fine, penalty or damage (including consequential damages) of
        any
        kind or nature, including reasonable attorneys' fees, from any suits, claims
        or
        demands, on account of any matter or thing, action or failure to act arising
        out
        of or in connection with this Master Lease, the Premises or the operations
        of
        Tenant on any portion of the Premises, including (a) the breach by Tenant
        of any
        of its representations, warranties, covenants or other obligations hereunder,
        (b) any Protest, (c) all known and unknown Environmental Activities on any
        portion of the Premises, Hazardous Materials Claims or violations by Tenant
        of a
        Hazardous Materials Law with respect to any portion of the Premises, and
(d)
        upon or following the Termination Date, the correction of all
        deficiencies of a physical nature identified by, and any liability assessed
        or
        asserted by, any governmental agency or Medicare or Medicaid providers as
        a
        result of or arising out of or in connection with this Master Lease or the
        related change of ownership inspection and audit (including any overpayment
        to
        any Medicare, Medicaid or other third-party payor); but specifically excluding
        any such liability, expense, loss, cost, deficiency, fine, penalty or damages
        arising from the gross negligence or willful misconduct of Landlord or due
        to a
        breach by Landlord of its obligations under this Master Lease. Upon receiving
        knowledge of any suit, claim or demand asserted by a third party that Landlord
        believes is covered by this indemnity, it shall give Tenant notice of the
        matter. If Landlord does not elect to defend the matter with its own counsel
        at
        Tenant's expense, Tenant shall then defend Landlord at Tenant's expense
        (including Landlord's reasonable attorneys' fees and costs) with legal counsel
        satisfactory to Landlord

       

      20.           Disputes.
        If any party brings any action to interpret or enforce this
        Master
        Lease, or for damages for any alleged breach, the prevailing party shall
        be
        entitled to reasonable attorneys' fees and costs as awarded by the court
        in
        addition to all other recovery, damages and costs. EACH PARTY HEREBY
        WAIVES ANY RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
        COUNTERCLAIM BROUGHT BY EITHER PARTY AGAINST THE OTHER IN
        CONNECTION WITH ANY MATTER WHATSOEVER ARISING OUT OF OR IN ANY
        WAY CONNECTED WITH THIS MASTER LEASE, INCLUDING RELATIONSHIP OF
        THE PARTIES, TENANT'S USE AND OCCUPANCY OF ANY PORTION OF THE
        PREMISES, OR ANY CLAIM OF INJURY OR DAMAGE RELATING TO THE
        FOREGOING OR THE ENFORCEMENT OF ANY
REMEDY.

       

      21.           Notices.
        All notices and demands, certificates, requests, consents,
        approvals and other similar instruments under this Master Lease shall be
        in
        writing and sent by personal delivery, U. S. certified or registered mail
        (return receipt requested, postage prepaid) or FedEx or similar generally
        recognized overnight carrier regularly providing proof of delivery, addressed
        as
        follows:


      
        
          
          

        

        
          22

          
            

          

        

        
          
          

        

      

       

      
        	
                If
                  to Tenant:

              	 	
                If
                  to Landlord:

              
	 	 	 
	
                c/o
                  Summerville Senior Living, Inc.

              	 	
                Nationwide
                  Health Properties, Inc.

              
	
                3000
                  Executive Parkway, Suite 530

              	 	
                610
                  Newport Center Drive, Suite 1150

              
	
                San
                  Ramon, California 94583

              	 	
                Newport
                  Beach, California 92660-6429

              
	
                Attention:
                  Mr. Granger Cobb

              	 	
                Attention:
                  President and General Counsel

              
	
                Fax
                  No. (925) 866-8506

              	 	
                Fax
                  No. (949) 759-6876

              
	 	 	 
	
                With
                  a copy to:

              	 	
                With
                  a copy to:

              
	 	 	 
	
                Pircher,
                  Nichols & Meeks

              	 	
                Sherry
                  Meyerhoff Hanson & Crance, LLP

              
	
                1925
                  Century Park East, Suite 1700

              	 	
                610
                  Newport Center Drive, Suite 1200

              
	
                Los
                  Angeles, CA 90067

              	 	
                Newport
                  Beach, CA 92660

              
	
                Attention:
                  Real Estate Notices (GML) Fax

              	 	
                Attention:
                  Kevin L. Sherry, Esq.

              
	
                No.
                  (310) 201-8922

              	 	
                Fax
                  No. 949-719-1212

              


      

       

      A
        party
        may designate a different address by notice as provided above. Any notice
        or
        other instrument so delivered (whether accepted or refused) shall be deemed
        to
        have been given and received on the date of delivery established by U.S.
        Post
        Office return receipt or the carrier's proof of delivery or, if not so
        delivered, upon its receipt. Delivery to any officer, general partner or
        principal of a party shall be deemed delivery to such party.

       

      22.             Miscellaneous.
        Since each party has been represented by counsel and this Master
        Lease
        has
        been freely and fairly negotiated, all provisions shall be interpreted according
        to their fair meaning and shall not be strictly construed against any party.
        While nothing contained in this Master Lease should be deemed or construed
        to
        constitute an extension of credit by Landlord to Tenant, if a portion of
        any
        payment made to Landlord is deemed to violate any applicable laws regarding
        usury, such portion shall be held by Landlord to pay the future obligations
        of
        Tenant as such obligations arise and if Tenant discharges and performs all
        obligations hereunder, such funds will be reimbursed (without interest) to
        Tenant on the Termination Date. If any part of this Master Lease shall be
        determined to be invalid or unenforceable, the remainder shall nevertheless
        continue in full force and effect. Time is of the essence, and whenever action
        must be taken (including the giving of notice or the delivery of documents)
        hereunder during a certain period of time or by a particular date that ends
        or
        occurs on a Saturday, Sunday or federal holiday, then such period or date
        shall
        be extended until the immediately following business day. Whenever the words
        "including", "include" or "includes" are used in this Master Lease, they
        shall
        be interpreted in a non-exclusive manner as though the words "without
        limitation" immediately followed. Whenever the words day or days are used
        in
        this Master Lease, they shall mean "calendar day" or "calendar days" unless
        expressly provided to the contrary. The titles and headings in this Master
        Lease
        are for convenience of reference only and shall not in any way affect the
        meaning or construction of any provision. Unless otherwise expressly provided,
        references to any "Section" mean a section of this Master Lease (including
        all
        subsections), to any "Exhibit" or "Schedule" mean an exhibit or schedule
        attached hereto or to "Medicare" or "Medicaid" include any successor program.
        If
        more than one Person is Tenant hereunder, their liability and obligations
        hereunder shall be joint and several. Promptly upon the request of either
        party
        and at its expense, the parties shall prepare, enter into and record a suitable
        short form memorandum of this Master Lease. This Master Lease (a) contains
        the
        entire agreement of the parties as to the subject matter hereof and supersedes
        all prior or contemporaneous verbal or written agreements or understandings,
        (b)
        may be executed in several counterparts, each of which shall be deemed an
        original, but all of which shall constitute one and the same document, (c)
        may
        only be amended by a writing executed by the parties, (d) shall inure to
        the
        benefit of and be binding upon the successors and permitted assigns of the
        parties, (e) shall be governed by and construed and enforced in accordance
        with
        the internal laws of the State of Ohio, without regard to the conflict of
        laws
        rules thereof, and (f) incorporates by this reference any Exhibits and Schedules
        attached hereto.


      
        
          
          

        

        
          23

          
            

          

        

        
          
          

        

      

       

      23.           Option
        to Purchase. Provided no Event of Default exists on the Call
        Exercise Date or the closing date, Tenant shall have the option to purchase
        all
        but not less than all the Premises by giving Landlord written notice thereof
        (the "Call Exercise Date") not more than fifteen (15) days
before or after the date which is fifteen (15) months prior to the
        end of the then current Term. The purchase price shall be the greater of
        (a)
        Landlord's Camelot Investment and Landlord's Lakeview/HillenVale Investment,
        compounded each year after the commencement date of this Master Lease at
        a rate
        of three percent (3%) per annum, or (b) Landlord's Camelot
        Investment and Landlord's Lakeview/HillenVale Investment plus
fifty percent (50%) of the amount by which the Fair
        Market Value on the Call Exercise Date as established pursuant to Exhibit
        C  exceeds Landlord's Camelot Investment and Landlord's
        Lakeview/HillenVale Investment; provided that, if such Fair Market Value
        has not
        been finally determined within one hundred twenty days after the Call Exercise
        Date, Tenant's rights under this Section 23 shall terminate and
        thereafter be null and void and of no further force or effect. Once the purchase
        price is so established: (i) the parties shall sign the standard sale escrow
        instructions of a national title company (selected by Landlord and reasonably
        approved by Tenant) that are in form and substance reasonably satisfactory
        to
        Landlord and Tenant and without representations or warranties, due diligence
        or
        other contingencies in favor of Tenant except as otherwise provide for herein;
        (ii) Tenant shall deposit three percent (3%) of the purchase
        price with the title company, which may be retained by Landlord as liquidated
        damages as a result of the failure of escrow to close solely for any breach
        by
        Tenant of these terms or the escrow instructions (and which in no way shall
        liquidate or limit Landlord's damages by reason of any other breach of this
        Master Lease); (iii) the escrow shall close on the last day of the then current
        Term, at which time Tenant shall pay the purchase price in cash and Landlord
        shall deliver title to each of the Facilities subject only to those title
        exceptions shown in Exhibit D by customary limited warranty deed and
        other customary conveyancing documents; and (iv) Tenant shall pay all
        transaction costs. If Tenant fails to close the escrow for any reason other
        than
        a breach by Landlord, then Landlord shall have the right to extend the Term
        for
        an additional one (1) year period during which the Rent shall be
        calculated as if on the Call Exercise Date Tenant had instead exercised its
        right to extend the Term for a Renewal Term.

       

      24.            Memorandum
        of Lease. Landlord and Tenant shall, concurrently with the
        execution and delivery of this Master Lease, enter into a short form memorandum
        of this Master Lease, in form suitable for recording in the counties in which
        each of the Facilities are located. The short form memorandum shall be recorded
        in such county and state to provide constructive notice of this Master Lease
        and
        of the existence of Tenant's option to purchase set forth
        hereinabove.


      
        
          
          

        

        
          24

          
            

          

        

        
          
          

        

      

       

      25.            1031
        Exchange. Tenant acknowledges that Landlord may elect to consummate
the
        purchase of the Lakeview Facility and HillenVale Facility as a reverse like-kind
        exchange within the meaning of Section 1031 of Code (the "Exchange").
If Landlord so elects, Landlord may enter into a Qualified
        Exchange
        Accommodation Agreement (the "QEAA") with
        an
        "Exchange Accommodation Titleholder" (an "EAT") as that
        term
        is defined in Internal Revenue Service Revenue Procedure 2000-37, 2000-40
        I.R.B.
        1 (September 15, 2000) for the purpose of effectuating such Exchange. In
        such
        event, Tenant acknowledges that an EAT, rather than Landlord, shall take
        title
        to the Lakeview Facility and HillenVale Facility and shall lease the Lakeview
        Facility and HillenVale Facility to Landlord pursuant to a written lease
        (the
"Exchange
        Lease"); provided, however, Landlord and Tenant acknowledge and
        agree that Tenant shall have no obligations under such Exchange Lease and
        Tenant's only duties, covenants, obligations and liabilities shall be those
        set
        forth in this Master Lease and the transaction documents relating thereto
        to
        which Tenant is a party. Upon the completion or the termination of such Exchange
        (which shall occur no later than one hundred eighty (180) days after the
        Effective Date), Landlord or an Affiliate of Landlord may elect to either
        (a)
        acquire title to the Lakeview Facility and HillenVale Facility, terminate
        the
        Exchange Lease and continue this Master Lease, or (b) acquire the equity
        interests in such EAT, terminate the Exchange Lease and cause such EAT to
        join
        as a "Landlord" under this Master Lease, for the purposes of continuing the
        lease of the Lakeview Facility and HillenVale Facility pursuant to the terms
        of
        this Master Lease. In either such event, the termination of the Exchange
        Lease
        shall not result in a termination of this Master Leases with respect to the
        Lakeview Facility and/or HillenVale Facility, and in the event that Landlord
        proceeds under clause (b) above, Tenant shall attorn to and recognize the
        EAT as
        a "Landlord" (as its interest may appear) under this Master Lease. The
        provisions of this Section 25 shall be self-operative and no further instrument
        shall be required to effect the intent and purposes hereof provided, however,
        at
        the request of Landlord, at any time following a termination of the Exchange
        Lease, Tenant shall execute and deliver to Landlord such written amendment
        to
        this Master Lease or other confirmation confirming the same.

       

      [SIGNATURE
        PAGE TO FOLLOW]


      
        
          
          

        

        
          25

          
            

          

        

        
          
          

        

      


      
        IN
          WITNESS WHEREOF, this Master Lease has been executed by Landlord and
          Tenant as of the date first written above.

      

      
        


      

      
        	
                TENANT;

              	 	 
	
                SUMMERVILLE
                  AT CAMELOT PLACE LLC,

              	 	 
	
                a
                  Delaware limited liability company

              	 	 
	 	 	 	 
	
                By:

              	
                /s/
                  Granger Cobb

              	 	 
	
                Name:

              	
                Granger
                  Cobb

              	 	 
	
                Title:

              	
                President

              	 	 
	 	 	 	 
	
                SUMMERVILLE
                  AT HILLEN VALE LLC,

              	 	 
	
                a
                  Delaware limited liability company

              	 	 
	 	 	 	 
	
                By:

              	
                /s/
                  Granger Cobb

              	 	 
	
                Name:

              	
                Granger
                  Cobb

              	 	 
	
                Title:

              	
                President

              	 	 
	 	 	 	 
	
                SUMMERVILLE
                  AT LAKEVIEW LLC,

              	 	 
	
                a
                  Delaware limited liability company

              	 	 
	 	 	 	 
	
                By:

              	
                /s/
                  Granger
                  Cobb

              	 	 
	
                Name:

              	
                 Granger
                  Cobb

              	 	 
	
                Title:

              	
                President

              	 	 
	 	 	 	 
	
                LANDLORD;

              	 	 
	
                NATIONWIDE
                  HEALTH PROPERTIES, INC.,

              	 	 
	
                a
                  Maryland corporation 

              	 	 
	 	 	 	 
	
                By
                  :

              	
                /s/
                  Abdo H.
                  Khoury

              	 	 
	
                Name
                  :

              	
                Abdo
                  H. Khoury

              	 	 
	
                Title
                  :

              	
                Chief
                  Financial & Portfolio Officer

              	 	 
	 	
                Senior
                  Vice President

              	 	 


      

      
        


      

      
        SIGNATURE
          PAGE - MASTER LEASE