ex10_263.htm


    
      

    

    Exhibit
      10.26.3

     

    SECOND
      AMENDMENT TO MASTER LEASE

    


    


    This
      SECOND AMENDMENT TO MASTER LEASE (the "Amendment")
is entered into as of January 2, 2007 (the
"Effective Date")
by and among NATIONWIDE HEALTH
      PROPERTIES, INC., a
      Maryland corporation, and NHP McCLAIN, LLC, a Delaware limited
      liability company (collectively, "Landlord"); SUMMERVILLE AT
CAMELOT PLACE LLC, a Delaware limited liability
      company, SUMMERVILLE AT HILLEN VALE LLC, a
      Delaware limited liability company, SUMMERVILLE AT LAKEVIEW LLC,
a Delaware limited liability company, and SUMMERVILLE AT
RIDGEWOOD GARDENS LLC, a Delaware limited liability
      company (individually and collectively, "Existing Tenant"); SUMMERVILLE
      AT NORTH HILLS LLC, a Delaware limited liability company, and
THE INN AT MEDINA LLC, a Delaware limited liability company
      (collectively, the "Additional Tenant" and, together with
      Existing Tenant, "Tenant"); and SUMMERVILLE SENIOR
      LIVING, INC., a Delaware corporation
("Guarantor").

    


    RECITALS

    


    A.    Landlord,
      as
      lessor, and Existing Tenant, as lessee, are parties to that certain Master
      Lease
      dated as of October 2, 2006, as amended by that certain First Amendment to
      Master Lease (the "First Amendment") dated as of December 1,
      2006 (as amended, the "Master Lease"),
pursuant to which, among other things,
      Landlord leases to Existing
      Tenant the "Premises" described therein. Initially capitalized terms used but
      not otherwise defined in this Amendment shall have the meanings given to them
      in
      the Master Lease.

    


    B.    In
      connection
      with the Master Lease, Landlord and Existing Tenant are also parties to that
      certain Letter of Credit Agreement dated as of October 2, 2006, as amended
      by
      the First Amendment (as amended, the "LC Agreement"), pursuant
      to which, among other things, Existing Tenant posted with Landlord the Letter
      or
      Letters of Credit described therein as partial collateral for the performance
      of
      its obligations under the Master Lease.

    


    C.    Pursuant
      to
      that certain Amended and Restated Guaranty of Lease dated as of October 2,
      2006,
      as amended by the First Amendment (as amended, the "Guaranty"),
Guarantor, among other things, guaranteed to Landlord the
      performance
      by Existing Tenant of its obligations under the Master Lease and LC
      Agreement.

    


    D.           Additional
      Tenant, as buyer, and North Hills Management Co., Inc., an Ohio corporation,
      The
      Inn at Medina Management Company, Inc., an Ohio corporation, and The Inn at
      Medina Limited, an Ohio limited liability company (collectively,
"Seller"), have entered into that certain Residential Facility
      Purchase Agreement dated as of December 7, 2006 (the "Purchase
Agreement"), pursuant to the terms and conditions of
      which Additional Tenant has agreed to acquire, among other things, fee title
      to
      (i) that certain real property located at 1575 Bowers Lane, Zanesville, Ohio
      and
      all improvements thereon, which is presently operated as a one hundred-three
      (103) unit assisted living facility, and (ii) that certain real property located
      at 100 High Point Drive, Medina, Ohio and all improvements thereon, which is
      presently operated as a ninety (90) unit assisted living facility (collectively,
      the "Additional Facilities").


    
      
        
        

      

      
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    E.    Additional
      Tenant has agreed to assign its rights to purchase the Additional Facilities
      to
      Landlord pursuant to the terms and conditions of that certain Assignment of
      Purchase Agreement dated of even date herewith between Additional Tenant and
      Landlord.

    


    F.    Additional
      Tenant desires to lease the Additional Facilities from Landlord upon the closing
      of Landlord's acquisition thereof Accordingly, Landlord and Tenant desire to
      amend the Master Lease to, among other things: (i) join Additional Tenant to
      the
      Master Lease, (ii) add the Additional Facilities to the Premises demised
      thereunder, and (iii) make certain other revisions and modifications, all as
      more particularly set forth herein. In connection therewith, Guarantor desires
      to affiim to Landlord its obligations under the Guaranty notwithstanding the
      amendment of the Master Lease set forth in this Amendment.

    


    AGREEMENT

    


    NOW,
      THEREFORE, taking into account the foregoing Recitals, and in
      consideration of the mutual covenants and agreements contained herein, and
      for
      other good and valuable consideration, the receipt and sufficiency of which
      are
      hereby acknowledged, the parties hereto agree as follows:

    


    1.            Joinder
      of Additional Tenant; Addition of Additional Premises. Additional
      Tenant is hereby joined to the Master Lease as a Tenant thereunder. The
      Additional Facility and associated Landlord Personal Property are hereby added
      to the Premises demised under the Master Lease.

    


    2.           Amendments
      to Master Lease. The Master Lease is hereby specifically amended as
      set forth in this Section 2.

    


    


    (a)           Exhibit
      A, Exhibits B-1 and B-2 and Exhibit F attached hereto are hereby
      added to and incorporated into Exhibit A, Exhibit B and Exhibit F
respectively, of the Master Lease.

    


    (b)           Schedule
      1 and Schedule 2 of the Master Lease are hereby deleted in their
      entirety and substituted with Schedule 1 and Schedule 2 attached
      hereto.

    


    (c)            Section
      2.1(a),   and f_cj of the Master Lease are hereby deleted and
      substituted with
      the
      following:

    


    "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%),
      (ii) Landlord's Lakeview/HillenVale Investment multiplied by
eight and seventy one-hundredths percent (8.70%),
      (iii)
Landlord's Ridgewood Investment multiplied by eight
      and seventy one-hundredths percent (8.70%), and
      Landlord's North Hills/Medina Investment multiplied by eight
      and fifty one-hundredths percent (8.50%) (each rate,
      the "Lease Rate" for such Facility), 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.


    
      
        
        

      

      
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    (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; (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; (iii)
      "Landlord's Ridgewood Investment" means Landlord's investment in the
      Facility located at 2001 Ridgewood Drive, Salem, Virginia (the
"Ridgewood Facility") in the amount of Eleven Million Two
      Hundred Thousand Dollars ($11,200,000), plus any
      amounts advanced by Landlord pursuant to Section 8.6  with
      respect to the Ridgewood 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 Ridgewood Investment, and minus any amount that, in
      accordance with any term or provision of this Master Lease, is to be subtracted
      from Landlord's Ridgewood Investment, and (iv)
"Landlord's North Hills/Medina Investment" means
      Landlord's investment in (X) the Facility located at 1575 Bowers Lane,
      Zanesville, Ohio (the "North Hills Facility"), and (Y) the
      Facility located at 100 High Point Drive, Medina, Ohio (the "Medina
      Facility"), in the aggregate amount of Twenty-Five Million Six Hundred
      Thirteen Thousand Dollars ($25,613,000), plus any
      amounts advanced by Landlord pursuant to Section 8.6 with respect to the
      North Hills Facility and/or the Medina 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 North Hills/Medina Investment, and minus any
      amount that, in accordance with any term or provision of this Master Lease,
      is
      to be subtracted from Landlord's North Hills/Medina Investment.


    
      
        
        

      

      
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    (c)            Concurrently
      with any increase or decrease in Landlord's Camelot Investment,
      Landlord's Lakeview/HillenVale Investment, Landlord's Ridgewood Investment
      and/or Landlord's North Hills/Medina 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, Landlord's Lakeview/HillenVale
      Investment, Landlord's Ridgewood Investment and/or Landlord's North Hills/Medina
      Investment, as the case may be."

    


    (d)             Section
      4 of the Master Lease is hereby deleted in its entirety and substituted with
      the
      following:

    


    "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 Seven Hundred Fifty-Four
      Thousand Seven Hundred Fifty Dollars ($754,750) 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.


    
      
        
        

      

      
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    (c)            If
      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 "Camelot Supplemental Deposits"),
to Landlord pursuant to Section 4(1) until such time as the
      total amount of the Security Deposit is increased as a result of such Camelot
      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 Camelot Supplemental Deposits shall not apply
      with respect to any Measuring Period 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 generated during such Measuring Period from the Camelot Facility,
      and (B) one-half of the applicable annual CapEx Amount 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.

    


    (d)           If
      at any time following June 30, 2010, the Ridgewood 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 "Ridgewood Supplemental
Deposits"), to Landlord pursuant to Section 4(f)
until such time as the total amount
      of the Security Deposit is increased as
      a result of such Ridgewood Supplemental Deposits by the amount of
Eighty-Four Thousand Seven Hundred Fifty Dollars ($84,750);
provided, however, Tenant's obligation to make such Ridgewood
      Supplemental Deposits shall not apply with respect to any Measuring Period
      for
      which the Ridgewood Rent Coverage Ratio equals or exceeds 1.20 to 1. As used
      herein, "Ridgewood Rent Coverage Ratio" means,
      as of the date of determination, the ratio of (1) the EBITDARM for the Ridgewood
      Facility for the Measuring Period, minus (A) an assumed management fee
      equal to five percent (5%) of the Gross Revenues generated during such Measuring
      Period from the Ridgewood Facility, and (B) one-half of the applicable annual
      CapEx Amount for the Ridgewood Facility at the commencement of the Measuring
      Period, multiplied by the aggregate number of assisted living units at
      the Ridgewood Facility, to (ii) the total amount of the Minimum Rent and
      Additional Rent due with respect to the Ridgewood Facility for the Measuring
      Period pursuant to the terms of this Master Lease.

    


    (e)            If
      at any time following June 30, 2010, the North Hills/Medina 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
"NH/Medina Supplemental Deposits"), to
      Landlord pursuant to Section 4(1) until such time as the total amount of
      the Security Deposit is increased as a result of such NH/Medina Supplemental
      Deposits by the amount of Three Hundred Sixty-Two Thousand Eight Hundred
      Fifty Dollars ($362,850); provided, however, Tenant's obligation to
      make such NH/Medina Supplemental Deposits shall not apply with respect to any
      Measuring Period for which the North Hills/Medina Rent Coverage Ratio equals
      or
      exceeds 1.20 to 1. As used herein, "North Hills/Medina Rent Coverage
      Ratio" means, as of the date of determination, the ratio of (i) the
      EBITDARM for the North Hills Facility and the Medina Facility for the Measuring
      Period, minus (A) an assumed management fee equal to five percent (5%)
      of the Gross Revenues generated during such Measuring Period from the North
      Hills Facility and the Medina Facility, (B) one-half of the applicable annual
      CapEx Amount for the North Hills Facility at the commencement of the Measuring
      Period, multiplied by the aggregate number of assisted living units at
      the North Hills Facility, and (C) one-half of the applicable annual CapEx Amount
      for the Medina Facility at the commencement of the Measuring Period,
multiplied by the aggregate number of assisted living units at the
      Medina Facility, to (ii) the total amount of the Minimum Rent and Additional
      Rent due with respect to the North Hills Facility and the Medina Facility for
      the Measuring Period pursuant to the tellas of this Master
      Lease.


    
      
        
        

      

      
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    (0            The
      Supplemental Deposits to be made by Tenant in accordance with
      Section 4(c), (d) and (e) 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,
      Ridgewood Rent Coverage Ratio or North Hills/Medina Rent Coverage Ratio, as
      applicable, 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,
      Ridgewood Facility or North Hills and Medina Facilities, as applicable, 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), (d) and (e) above.

    


    (g)             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 non­recurring revenues as reasonably approved
      by Landlord. 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."

    


    (e)             Section
      6.1(a) of the Master Lease is hereby deleted and substituted with the
following:

    


    "(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 (if located in a 100-year
      or
      less flood zone), vandalism, earthquake (if located in an area known for risk
      of
      loss due to seismic activity), 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);"

     

    
      
        
        

      

      
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    (f)           The
      following is hereby added at the beginning of the second paragraph of Section
8.3 of the Master Lease:

    


    "For
      purposes of determining the Applicable Annual Reserve with respect to the
      Ridgewood Facility, the Ridgewood Facility shall be deemed to have eighty (80)
      units."

    


    (g)           The
      third sentence of Section 13.4 of the Master Lease is hereby deleted and
      substituted with the following:

    


    "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, Landlord's Lakeview/HillenVale
      Investment, Landlord's Ridgewood Investment, and/or Landlord's North
      Hills/Medina Investment, as the case may be."

    


    (h)           The
      forth sentence of Section 18 of the Master Lease is hereby deleted and
substituted
      with the following:

    


    "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 the sum of Landlord's Camelot Investment, Landlord's
      Lakeview/HillenVale Investment, Landlord's Ridgewood Investment and Landlord's
      North Hills/Medina Investment."

    


    (1)           Section
      23 of the Master Lease is hereby deleted in its entirety and substituted
with
      the
      following:

    

      
        
          
          

        

        
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    "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
      (excluding the Ridgewood Facility) 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, Landlord's Lakeview/HillenVale Investment and
      Landlord's
      North Hills/Medina Investment, compounded each Lease Year (including any partial
      Lease Year if the closing does not occur on the last day of a Lease Year) after
      the commencement date of this Master Lease at a rate of three percent
      (3%) per Lease Year, or (b) Landlord's Camelot Investment, Landlord's
      Lakeview/HillenVale Investment and Landlord's North Hills/Medina Investment,
      compounded each Lease Year (including any partial Lease Year if the closing
      does
      not occur on the last day of a Lease Year) after the commencement date of this
      Master Lease at a rate equal to the actual percentage increase in the CPI each
      Lease Year during the period of determination. 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."

    


    Section
      25 of the Master Lease is hereby deleted in its entirety and substituted
      with the following:

    


    "1031
      Exchange. Tenant acknowledges that Nationwide Health Properties,
      Inc. ("NHP") elected 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"). Accordingly, NHP entered
      into a Qualified Exchange Accommodation Agreement (the "QEAA") with an "Exchange
      Accommodation Titleholder" as that teim 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. Tenant acknowledges that NHP McClain, LLC, a
      Delaware limited liability company ("NHP McClain"), rather than
      NHP, took title to the Lakeview Facility and HillenVale Facility and leased
      the
      Lakeview Facility and HillenVale Facility to NHP pursuant to a written lease
      (the "Exchange Lease"). NHP McClain and Landlord acknowledge
      and agree that Tenant has 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. Effective as of December 1, 2006, Landlord completed the Exchange,
      acquired all of the membership interest in NHP McClain and terminated the
      Exchange Lease. Accordingly, NHP McClain is hereby joined as a "Landlord" under
      this Master Lease, for the purposes of continuing the lease of the Lakeview
      Facility and HillenVale Facility to Tenant pursuant to the terms of this Master
      Lease. Tenant hereby agrees to attorn to and recognize NHP McClain as a
      "Landlord" under this Master Lease with respect to the Lakeview Facility and
      HillenVale Facility."


    
      
        
        

      

      
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    2.            Tax
      Impound and CapEx Expenditures. From and after the date Landlord
      acquires fee title to the North Hills Facility and the Medina Facility, the
      North Hills Facility and Medina Facility shall be added as a portion of the
      Premises leased to Tenant under the terms of the Master Lease. Accordingly,
      with
      each payment of Minimum Rent payable by Tenant with respect to the North Hills
      Facility and the Medina Facility, Tenant shall make tax impound deposits and
      CapEx Reserve deposits for the North Hills Facility and the Medina Facility
      in
      accordance with the terms of Section 5.2 and Section 8.3 of the
      Master Lease.

    


    3.           Amendment
      to LC Agreement. In the LC Agreement and Exhibit A to the LC
      Agreement, all references to "Five Hundred Seventy-Three Thousand Three Hundred
      Twenty-Five Dollars ($573,325)" as the Letter of Credit Amount are hereby
      deleted and replaced with "Seven Hundred Fifty-Four Thousand Seven Hundred
      Fifty
      Dollars ($754,750)".

    


    4.           Enforcement
      of Rights. Landlord has the right to enforce the covenants,
      representations and warranties of Seller under the Purchase Agreement with
      respect to the Additional Facilities; provided, however, Landlord agrees upon
      request of Tenant either to enforce the same against Seller at Tenant's cost
      and
      expense or, to the extent assignable, to assign its rights thereto in order
      to
      enable Tenant to enforce the same against Seller.

    


    5.           Reaffirmation
      of Obligations.

    


    (a)            Notwithstanding
      the amendments to the Master Lease contained herein, Tenant and Landlord each
      hereby acknowledges and reaffillus its respective obligations under the Master
      Lease (as modified hereby), the LC Agreement and all other documents executed
      by
      such party in connection therewith.

    


    (b)            Notwithstanding
      the amendments to the Master Lease contained herein, Guarantor hereby
      acknowledges and reaffirms its obligations under the Guaranty and all documents
      executed by Guarantor in connection therewith, and further agrees that any
      reference made in the Guaranty to the Master Lease or any terms or conditions
      contained therein shall mean such Master Lease or such terms or conditions
      as
      amended by this Amendment.

    


    6.            Interpretation.
      This Amendment shall be construed as a whole and in accordance
      with
      its fair meaning. Headings are for convenience only and shall not be used in
      construing meaning.

    


    7.            Further
      Instruments. Each party will, whenever and as often as it shall be
      reasonably requested so to do by another party, cause to be executed,
      acknowledged or delivered any and all such further instruments and documents
      as
      may be necessary or proper, in the reasonable opinion of the requesting party,
      in order to carry out the intent and purpose of this Amendment.


    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    


    8.            Incorporation
      of Recitals. The Recitals to this Amendment are incorporated hereby
      by reference.

    


    9.            Counterparts.
      This Amendment may be executed in counterparts, all of which
      executed counterparts shall together constitute a single document. Signature
      pages may be detached from the counterparts and attached to a single copy of
      this document to physically form one document.

    


    10.            Attorneys'
      Fees. In the event of any dispute or litigation concerning the
      enforcement, validity or interpretation of this Amendment, or any part thereof,
      the losing party shall pay all costs, charges, fees and expenses (including
      reasonable attorneys' fees) paid or incurred by the prevailing party, regardless
      of whether any action or proceeding is initiated relative to such dispute and
      regardless of whether any such litigation is prosecuted to
      judgment.

    


    11.            Effect
      of Amendment. Except as specifically amended pursuant to the terms
      of this Amendment, the terms and conditions of the Master Lease shall remain
      unmodified and in full force and effect. In the event of any inconsistencies
      between the terms of this Amendment and any terms of the Master Lease, the
      terms
      of this Amendment shall govern and prevail.

    


    12.            Entire
      Agreement. This Amendment contains the entire agreement between the
parties
      relating to the subject matters contained herein. Any oral representations
      or
      statements concerning the subject matters herein shall be of no force or
      effect.


    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    


    
      


    

    
      IN
        WITNESS WHEREOF, the parties have executed this Amendment as of
        the date first above written.

    

    
      


    

    
      	
              TENANT:  

            	 
	 	 	 	 
	
              SUMMERVILLE
                AT CAMELOT PLACE LLC,

            	 
	
              a
                Delaware limited liability company

            	 
	 	 	 	 
	
              By:

            	
              /s/
                Granger Cobb 

            	 
	 	
              Granger
                Cobb 

            	 
	 	
              President 

            	 
	 	 	 	 
	
              SUMMERVILLE
                AT HILLEN VALE LLC,

            	 
	
              a
                Delaware limited liability company

            	 
	 	 	 	 
	
              By:

            	
              /s/
                Granger Cobb 

            	 
	 	
              Granger
                Cobb 

            	 
	 	
              President 

            	 
	 	 	 	 
	
              SUMMERVILLE
                AT LAKEVIEW LLC,

            	 
	
              a
                Delaware limited liability company

            	 
	 	 	 	 
	
              By:

            	
              /s/
                Granger Cobb 

            	 
	 	
              Granger
                Cobb 

            	 
	 	
              President 

            	 
	 	 	 	 
	
              SUMMERVILLE
                AT RIDGEWOOD GARDENS LLC,

            	 
	
              a
                Delaware limited liability company

            	 
	 	 	 	 
	
              By:

            	
              /s/
                Granger Cobb 

            	 
	 	
              Granger
                Cobb 

            	 
	 	
              President 

            	 
	 	 	 	 
	
              SUMMERVILLE
                AT NORTH HILLS LLC,

            	 
	
              a
                Delaware limited liability company

            	 
	 	 	 	 
	
              By:

            	
              /s/
                Granger Cobb 

            	 
	 	
              Granger
                Cobb 

            	 
	 	
              President 

            	 
	 	 	 	 
	
              THE
                INN AT MEDINA
                LLC,

            	 
	
              a
                Delaware limited liability company

            	 
	 	 	 	 
	
              By:

            	
              /s/
                Granger Cobb 

            	 
	 	
              Granger
                Cobb 

            	 
	 	
              President 

            	 


    

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    
      	
              GURANTOR:  

            	 
	 	 	 	 
	
              SUMMERVILLE
                SENIOR LIVING, INC.,

            	 
	
              a
                Delaware corporation

            	 
	 	 	 	 
	
              By:

            	
              /s/
                Granger Cobb 

            	 
	 	
              Granger
                Cobb 

            	 
	 	
              President 

            	 
	 	 	 	 
	
              LANDLORD:  

            	 
	 	 	 	 
	
              NATIONWIDE
                HEALTH PROPERTIES, INC.,

            	 
	
              a
                Maryland corporation

            	 
	 	 	 	 
	
              By:

            	
              /s/David
                Snyder

            	 
	
              Name:

            	
              David
                Snyder

            	 
	
              Title:

            	
              Vice
                President & Controller

            	 
	 	 	 	 
	 	 	 	 
	
              NHP
                McCLAIN,LLC,

            	 
	
              a
                Delaware limited liability company

            	 
	 	 	 	 
	
              BY:

            	
              NATIONWIDE
                HEALTH PROPERTIES,INC.,

            	 
	 	
              a
                Maryland corporation,

            	 
	 	
              its
                sole member

            	 
	 	 	 	 
	 	
              By:

            	
              /s/David
                Snyder

            	 
	 	
              Name:

            	
              David
                Snyder

            	 
	 	
              Title:

            	
              Vice
                President & Controller

            	 


    

    


     

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