**Exhibit 10.7**FIFTH AMENDMENT TO CONSOLIDATEDAMENDED AND RESTATED MASTER LEASE     This Fifth Amendment to Consolidated Amended and Restated Master Lease (this“Amendment”) is executed and delivered as of August 10, 2007 by and between STERLINGACQUISITION CORP., a Kentucky corporation (“Lessor”), the address of which is 9690 DeerecoRoad, Suite 100, Timonium, MD 21093, and DIVERSICARE LEASING CORP., a Tennessee corporation, theaddress of which is 1621 Galleria Boulevard, Brentwood, TN 37027.RECITALS:     A. Lessee has executed and delivered to Lessor a Consolidated Amended and Restated MasterLease dated as of November 8, 2000, but effective as of October 1, 2000, as amended by a FirstAmendment to Consolidated Amended and Restated Master Lease dated as of September 30, 2001, aSecond Amendment to Consolidated Amended and Restated Master Lease dated as of June 15, 2005 (the“Second Amendment”), a Third Amendment to Consolidated Amended and Restated Master Leasedated as of October 20, 2006 (the “Third Amendment”), and a Fourth Amendment toConsolidated Amended and Restated Master Lease dated as of April 1, 2007 (the “Existing MasterLease”) pursuant to which Lessee leased from Lessor certain healthcare facilities.     B. Pursuant to that certain First Amended Chapter 11 Plan Proposed by the Debtors dated May17, 2007 and an Operations Transfer Agreement effective as of July 20, 2007 among the TexasSublessees (as defined below) and Senior Management Services of America North Texas, Inc., a Texascorporation (“SMSA”), and certain affiliates of SMSA, the Texas Sublessees are acquiring from SMSAits rights as tenant under that certain Consolidated Master Lease dated as of June 1, 2005 (the“SMSA Master Lease”) between SMSA and OHI Asset (TX), LLC, a Delaware limited liabilitycompany (“OHI Texas”). Pursuant to the SMSA Master Lease, SMSA had leased the TexasFacilities from OHI Texas.     C. Concurrently with the execution of this Amendment, (i) OHI Texas and the Texas Sublesseeshave terminated the SMSA Master Lease and (ii) OHI Texas has transferred to Lessor the TexasFacilities to Lessor.     D. Lessee and Lessor desire to amend the Existing Lease to add the Texas Facilities to theExisting Master Lease on the terms and conditions of this Amendment.     NOW THEREFORE, the parties agree as follows:1. Definitions.     (a) Any capitalized term used but not defined in this Amendment will have the meaning assignedto such term in the Master Lease. From and after the date of this Amendment, each reference in theExisting Master Leases or the other Transaction Documents to the “Lease”
 

 
or “Master Lease” means, as applicable, the Existing Master Lease or Existing Master Leases asmodified by this Amendment.     (b) In addition to the other definitions contained herein, when used in this Amendment thefollowing terms shall have the following meanings:     Asbestos Clean-Up Costs: means the actual, out of pocket cost of completing aRequired Asbestos Clean-Up, which amount does not include any amounts paid to Lessee or anyAffiliate of Lessee without the written consent of Lessor.     Asbestos Management Plans: means the Asbestos Management Plans dated March 19,2004 for Lessor by ATC Associates, Inc. for the Doctors & Fort Worth Facilities.     Doctors & Fort Worth Facilities: means Facilities commonly known as (i) EstatesHealthcare Center located at 201 Sycamore School Road, Fort Worth, Texas 76134, and (ii) asDoctors Healthcare Center and located at 9009 White Rock Trail, Dallas, Texas 75238.     Existing Asbestos Containing Materials: means the asbestos containing materialson the Doctors & Fort Worth Facilities identified in the Asbestos Management Plans.     First Texas Renewal Term Expiration Date: September 30, 2030.     Humble Facility: means the Facility commonly known as Oakmont Nursing andRehabilitation Center of Humble located in Humble, Texas.     Katy Facility: means the Facility commonly known as the Oakmont Nursing andRehabilitation Center of Katy located in Katy, Texas.     LaSalle: means LaSalle Bank National Association.     LaSalle Loans: means the following loans and credit facilities extended byLaSalle to Lessee, the Sublessees and certain of their Affiliates: (i) certain revolvingloans in an aggregate amount of up to Fifteen Million and No/100 Dollars ($15,000,000.00) tosupport working capital needs of Lessee, the Sublessees and certain of their Affiliates,(ii) certain transition revolving loans in an aggregate amount of up to Six Million andNo/100 Dollars ($6,000,000.00) to support working capital needs of Lessee, the Sublesseesand certain of their Affiliates for the six months following date of this Amendment (the“Temporary Revolving Loan”), and (iii) a term loan of Sixteen Million Five HundredThousand and No/100 Dollars ($16,500,000.00) (the “Term Loan”).     Lien: means any interest in Property securing an obligation owed to, or a claimby, any Person (other than the owner of the Property), whether such interest shall be basedon common law, statute, or contract, whether such interest shall be recorded or perfected,and whether such interest shall be contingent upon the occurrence of some future event orevents or the existence of some future circumstance or circumstances,
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including, without limitation, judgment liens, the lien or security interest arising,from a mortgage, deed of trust, debenture, charge, guarantee, encumbrance, pledge,hypothecation, assignment, deposit arrangement, security agreement, loan and securityagreement, adverse claim or charge, conditional sale or trust receipt, or from a lease,consignment, or bailment for security purposes, and also including reservations, exceptions,encroachments, easements, rights-of-way, covenants, conditions, restrictions, leases, othertitle exceptions and encumbrances affecting any real property and the retained securitytitle of a conditional vendor or lessor.     Lease Documents: means the following documents: this Lease, the Guaranty, theLetter of Credit Agreement, the Security Agreement, the Pledge Agreements, the SubordinationAgreements, Texas Pledge Agreements, Texas Sublessees Guaranty, Texas Sublessee SecurityAgreement, the Stock Issuance and Subscription Agreement, the Subordinated Note, and anysecurity agreements, pledge agreements, letter of credit agreements, guarantees, notes orother documents which evidence, secure or otherwise relate to this Lease, or thetransactions contemplated by this Lease; and any and all amendments, modifications,extensions and renewals of any of the foregoing documents     Letter of Credit Agreement: means the Letter of Credit Agreement between Lesseeand Lessor.     Master Texas Sublessee: DIVERSICARE TEXAS I, LLC, Delaware limited liabilitycompany.     Non-Texas Base Rent:     (A) During the Initial Term, the Non-Texas Base Rent shall be:(1) For the first Initial Term (being the period of October 1, 2000 thruSeptember 30, 2006), the amount set forth for such period in the MasterLease as it existed prior to the Third Amendment;(2) For the first (1st) Lease Year of the first Renewal Term(October 1, 2006 thru September 30, 2007), the Base Amount plus theImprovement Allowance Adjustment Amount (as adjusted during such LeaseYear);(3) For each of the second (2nd) through twelfth(12th) Lease Years of the first Renewal Term, the lesser of (i)the Base Amount as of the end of first (1st) Lease Year of the Renewal Termplus Improvement Allowance Adjustment Amount, increased by a percentageequal to two (2) times the percentage increase in the CPI (if positive) fromthe commencement date of the first Renewal Term to the Adjustment Date ineach of the second (2nd) through twelfth (12th) Lease Years, asapplicable (the “Adjustment Date”), and (ii) the product of the BaseAmount as of the end of the first Lease Year plus the Improvement AllowanceAdjustment Amount and the following factor:
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     Lease Year During  First Renewal Term Applicable Factor2  1.030 3  1.061 4  1.093 5  1.126 6  1.159 7  1.194 8  1.230 9  1.267 10  1.305 11  1.344 12  1.384 Under no circumstances will the Non-Texas Base Rent in any Lease Year beless than the Non-Texas Base Rent during the preceding Lease Year.     (B) During the second Renewal Term, the Non-Texas Base Rent shall be:     (1) For the first Lease Year of the second Renewal Term, the greater of (a) theNon-Texas Base Rent during the last Lease Year of the Initial Term and (b) the FairMarket Rent for the Facilities other than the Texas Facilities on the first day ofsuch Renewal Term as agreed upon by Lessor and Lessee, or, if prior to thecommencement of the Renewal Term they are unable to agree, as determined by anappraisal pursuant to Article XXXII of this Lease; *provided, however*, that theNon-Texas Base Rent for the first Lease Year of the second Renewal Term shall notexceed one hundred ten percent (110%) of the Non-Texas Base Rent for the Lease Yearimmediately preceding the commencement of the second Renewal Term; and     (2) For each of the second (2nd) through the twelfth(12th) Lease Years during the second Renewal Term, the lesser of (i) theNon-Texas Base Rent for the first (1st) Lease Year of the second Renewal Term,increased by a percentage equal to two (2) times the percentage increase in the CPI(if positive) from the commencement date of the second Renewal Term to theAdjustment Date in each of the second (2nd) through twelfth(12th) Lease Years, as applicable (the “Adjustment Date”), and(ii) the product of the Non-Texas Base Rent during the first (1st) LeaseYear of the second Renewal Term and the following factor:
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     Lease Year During  Second Renewal Term Applicable Factor2  1.030 3  1.061 4  1.093 5  1.126 6  1.159 7  1.194 8  1.230 9  1.267 10  1.305 11  1.344 12  1.384 Under no circumstances will the Non-Texas Base Rent in any Lease Year during theRenewal Term be less than the Non-Texas Base Rent during the preceding Lease Year.     Pre-Existing Hazardous Substances: means Hazardous Substances located on, underabout or with respect to the Treemont Facility prior to February 1, 2003 or the KatyFacility prior to July 1, 2003 or the Humble Facility prior to July 1, 2003.     Pre-Existing Environmental Conditions: means any Contamination or otherenvironmental condition on, under, about or with respect to the Treemont Facility prior toFebruary 1, 2003 or the Katy Facility prior to July 1, 2003 or the Humble Facility prior toJuly 1, 2003.     Property: means any and all real, personal, or mixed property and assets,including, without limitation, all types of tangible and intangible property.     Second Texas Renewal Term Expiration Date: May 31, 2035.     Texas Base Rent: During the Term, the Texas Base Rent shall be:     (1) For each month during the period from the Commencement Date for the TexasFacilities until January 31, 2008, Three Hundred Twenty Eight Thousand Five Hundred NinetyTwo and 79/100 Dollars ($328,592.79), which equal an annual Base Rent of Three Million NineHundred Forty Three Thousand One Hundred Thirteen and 48/100 Dollars ($3,943,113.48) (the“Initial Texas Annualized Base Rent”);     (3) For period from February 1, 2008 thru January 31, 2009, the Initial TexasAnnualized Base Rent, increased by the product of (i) the Initial Texas Annualized Base Rentand (ii) the *lesser*of one (1) times the change in CPI (expressed as a percentage) and twoand one-half percent (2.5%).     (4) For the subsequent twelve month period (being February 1, 2009 thru January 31,2010) and each succeeding twelve month (being February 1 thru January 31) until the end ofthe Term (including any Renewal Terms), the Texas Base Rent for the previous Lease Year,increased by the product of (i) the Texas Base Rent during the immediately preceding LeaseYear and (ii) the *lesser*of one (1) times the increase, if any, in CPI (expressed as apercentage) and two and one-half percent (2.5%).
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     Texas Facilities: means the Facilities located on the real property describedin Exhibits A-1 through A-7 to this Amendment.     Texas Pledge Agreements: means the Pledge Agreements dated as of the same dateas this Amendment from the equity owners of the Texas Sublessees in favor Lessor.     Texas Sublessees: means the Master Texas Sublessee and DIVERSICARE BALLINGER,LLC, Delaware limited liability company, DIVERSICARE DOCTORS, LLC, Delaware limitedliability company, DIVERSICARE ESTATES, LLC, Delaware limited liability company, DIVERSICAREHUMBLE, LLC, Delaware limited liability company, DIVERSICARE KATY, LLC, Delaware limitedliability company, DIVERSICARE NORMANDY TERRACE, LLC, Delaware limited liability company,and DIVERSICARE TREEMONT, LLC, Delaware limited liability company.     Texas Sublessees Guaranty: means the Guaranty dated as of the same date as thisAmendment from the Texas Sublessees in favor Lessor.     Texas Sublessee Security Agreement: means the Security Agreement dated as ofthe same date as this Amendment from the Texas Sublessees in favor of Lessor.     Non-Texas Facilities: means the Facilities leased pursuant to this Lease otherthan the Texas Facilities.     (c) The following definitions defined in §2.1 of the Existing Master Lease are hereby amendedin their entirety as follows:     Base Rent: means the sum of (i) the Non-Texas Base Rent and (ii) the Texas BaseRent.     Commencement Date: October 1, 2000 for the Non-Texas Facilities, and August11, 2007 for the Texas Facilities.     Expiration Date: means the First Renewal Term Expiration Date, the SecondRenewal Term Expiration Date, the First Texas Renewal Term Expiration Date, or the SecondTexas Renewal Term Expiration Date, as applicable.     Facilit(y)(ies): Each health care facility on the Land, including the LeasedProperty associated with such Facility, and together, all such facilities on the LeasedProperties; all of which Facilities are collectively listed on Exhibit B to thisAmendment.     Intercreditor Agreement: means the Subordination and Intercreditor Agreement ofeven date herewith by and between Lessor and LaSalle and any replacement intercreditoragreement between Lessor and any working capital lender to whom a first priority securityinterest in accounts receivable from the Facilities has been granted in accordance with therequirements of Section 39.5 of this Lease.
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     Land: The real property described in listed on attached Exhibit A tothe Existing Master Lease and Exhibit A to this Amendment.     Permitted Encumbrances: Encumbrances listed on attached Exhibit C tothe Existing Master Lease and Exhibit C to this Amendment.     (d) The subparagraphs (m) and (r) of the definition of “Event of Default” set forth in Section2.1 of the Existing Master Lease is hereby amended and restated as follows:*      *      *     (n) A default occurs under the any Texas Sublessee Guaranty, Texas Pledge Agreement,the Texas Sublessee Security Agreement, or the Letter of Credit Agreement, which default isnot cured within the applicable cure period, if any.*      *      *     (r) LaSalle (or its successors and assigns) or any working capital lender to whom afirst priority security interest in accounts receivable from the Facilities has been grantedin accordance with the requirements of Section 39.5 of this Lease, declares an event ofdefault under the loan documents evidencing or securing the LaSalle Loans or Line of CreditDocuments, and accelerates any or all of the indebtedness evidenced and secured thereby, orcommences any action against Lessee or Sublessee to realize on such lender’s interest in theaccounts receivable from the Facilities.     2. Renewal Options. Section 1.3 of the Existing Master Lease is hereby amended andrestated as follows:     1.3 Options to Renew.     (a) Lessee is hereby granted two (2) options to renew this Lease (an “AllFacilities Option”) for an additional, successive period of twelve (12) Lease Years, fora maximum Term if such options are exercised of thirty (30) Lease Years, on the followingterms and conditions:     (i) the second option to renew is exercisable only by Notice to Lessor at leastthree hundred sixty-five (365) days prior to the expiration of the first RenewalTerm;     (ii)  the absence of any Event of Default both at the time a renewal option isexercised and at the commencement of a Renewal Term is a condition precedent to anyrenewal of the Term;     (iii) during a Renewal Term, all of the terms and conditions of this Leaseshall remain in full force and effect; and
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     (iv) Lessee may exercise its options to renew with respect to all (and no fewerthan all) of the Leased Properties.Lessee and Lessor acknowledge and agree that Lessee exercised the first All FacilitiesOption pursuant to the Third Amendment such that, as of the date of this Amendment, theExpiration Date of the current Term of this Lease for all of the Facilities, including theTexas Facilities, is the First Renewal Term Expiration Date of September 30, 2018.     (b) Lessee is also hereby granted two (2) options to renew this Lease with respect tothe Texas Facilities only (the “Texas Options”) until September 30, 2030, withrespect to the first such Texas Option, and May 31, 2035, with respect to the second suchTexas Option, on the following terms and conditions:     (i) a Texas Option is exercisable only by Notice to Lessor at least threehundred sixty-five (365) days prior to the expiration of the prior period;     (ii)  the absence of any Event of Default both at the time a Texas Option isexercised and at the commencement of a Renewal Term is a condition precedent to anyrenewal of the Term;     (iii) during a Renewal Term, all of the terms and conditions of this Leaseshall remain in full force and effect; provided, however, that the Base Rent shallbe equal to the Texas Facilities Base Rent and the Security Deposit shall be reducedto an amount equal to the Texas Facilities Base Rent divided by four (4) (such thatit is equal to three months Base Rent);     (iv) Lessee may exercise its options to renew with respect to all (and no fewerthan all) of the Texas Facilities, and as to no other Facilities; and     (v) Lessee may not exercise a Texas Option for any period with respect to whichLessee exercises an All Facilities Option (for avoidance of doubt, because an AllFacilities Option is exercised as to all of the Facilities, including the TexasFacilities, Lessee would not need to exercise a Texas Facilities Option for anyperiod for which an All Facilities Option has been exercised).3. Environmental Amendments. Notwithstanding anything to the contrary in this Lease, (i)Section 7.3 of the Existing Lease shall not apply to the Texas Facilities; and (ii) in lieuthereof, Lessee’s environmental obligations with regard to the Texas Facilities shall be governedby Exhibit D to this Amendment, which is incorporated herein by this reference.4. Section 9.1.1 of the Existing Master Lease is hereby amended and restated in its entirety asfollows:
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     9.1.1 Lessee, at its expense, will keep the Leased Properties, and all landscaping,private roadways, sidewalks and curbs appurtenant thereto which are under Lessee’s controland Lessee’s Personal Property in good order and repair, whether or not the need for suchrepairs arises out of Lessee’s use, any prior use, the elements or the age of the LeasedProperty or any portion thereof, or any cause whatsoever except the act or negligence ofLessor, and with reasonable promptness shall make all necessary and appropriate repairsthereto of every kind and nature, whether interior or exterior, structural ornon-structural, ordinary or extraordinary, foreseen or unforeseen or arising by reason of acondition existing prior to the Commencement Date (concealed or otherwise) or existing afterFebruary 1, 2003 with respect to the Treemont Facility, and July 1, 2003 with respect to theKaty Facility and the Humble Facility; provided, however, that Lessee shall be permitted toprosecute claims against Lessor’s predecessor in title for breach of any representation orwarranty made to or on behalf of Lessor, or for latent defects in any Leased Property.Lessee shall at all times maintain, operate and otherwise manage the Leased Properties on aquality basis and in a manner consistent with the standards of the highest quality competingfacilities in the market areas served by the Leased Properties. All repairs shall, to theextent reasonably achievable, be at least equivalent in quality to the original work or,subject to the provisions of Paragraph 9.1.4, below, the property to be repaired shall bereplaced. Lessee will not take or omit to take any action the taking or omission of whichmight materially impair the value or the usefulness of the Leased Properties or any partsthereof for the Primary Intended Use.5. Section 8.2.1.4 of the Existing Master Lease is hereby amended and restated in its entirety asfollows:          8.2.1.4 Equipment Financing. The aggregate amount of principal, interest andlease payments due from Lessee and/or Sublessee with respect to any equipment leases orfinancing secured by equipment utilized in the operation of the Facilities shall not at anytime during the Term exceed $1,000,000.00 in any one Lease Year.6. The Existing Master Lease is hereby amended to add the following new Section 8.2.5 as follows:     8.2.5 Indebtedness. Neither Lessee nor any Sublessee will create, incur orsuffer to exist any Debt which is secured by a Lien in any of the Property with respect towhich Lessor has been granted a Lien in pursuant to the Lease Documents, except: (i) The equipment financing permitted under Section 8.2.1.4;  (ii) The Line of Credit permitted under Section 39.5;  (iii) The LaSalle Loans; and  (iv) Any Debt owed to Lessor or any Affiliate of Lessor.
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7. Section 8.5 of the Existing Master Lease is hereby amended and restated in its entirety asfollows:     8.5 Other Facilities. Neither Lessee nor any Affiliate shall own, operate ormanage any nursing home, rest home, assisted living facility, subacute facility, retirementcenter or similar health care facility within a ten (10) mile radius of any Facility, otherthan any Facility which is a Leased Property under this Lease or which Lessee or anyAffiliate of Lessee owns or operates as of the Commencement Date and set forth on Schedule Cattached hereto.8. Paragraph 5 of the Second Amended is hereby amended and restated in its entirety as follows:     5. Insurance.     (a) Lessor acknowledges that the liability insurance coverage and the malpracticeinsurance coverage required pursuant to Sections 13.2.4 and 13.2.5 of the Lease, arecurrently unavailable generally in the nursing home industry at commercially affordablerates and that Lessee currently maintains and has in place for all of the Facilities generalliability and malpractice insurance with single limit coverage of One Hundred ThousandDollars ($100,000.00) per occurrence and Five Hundred Thousand Dollars ($500,000.00)cumulative, with a deductible of Twenty Five Thousand Dollars ($25,000.00). Lessor herebyagrees that, the provisions of Sections 13.2.4 and 13.2.5 of the Lease to the contrarynotwithstanding, until such time as the insurance coverage required therein is generallyavailable in the nursing home industry at commercially affordable rates, Lessee shall not berequired obtain the coverages required therein and Lessor agrees to accept Lessee’s currentcoverage in lieu thereof for the Non-Texas Facilities for the first Renewal Term of theLease. Lessee shall not be deemed to be in default of the provisions of Article XIII of theLease as a result thereof. Lessee shall provide Lessor, on an annual basis, informationfrom its insurance carrier and from comparable insurance carriers of the costs of insurancepremiums to meet Lessor’s insurance requirements. At such time as the premium amountsquoted are commercially affordable, Lessee shall immediately purchase any and all insurancepolicies necessary to meet the requirements of Sections 13.2.4 and 13.2.5 of the Lease.This provision does not relieve Lessee from its agreement of indemnity under Article XXI ofthe Lease nor does it modify the provisions thereof. Notwithstanding the foregoing, Lesseeacknowledges and agrees that the provisions of this Paragraph 5 shall not be applicable inthe event of any Transfer. Lessee acknowledges and agrees that Lessor shall have the rightto withhold its consent to any proposed Transfer unless, among other things, the Transfereeagrees to provide the insurance coverage required by the provisions of Sections 13.2.4 and13.2.5 of the Lease.     (b) Lessor hereby agrees that, the provisions of Sections 13.2.4 and 13.2.5 of theLease to the contrary notwithstanding Lessee’s failure to obtain the coverages required bySections 13.2.4 and 13.2.5 for the Texas Facilities shall not be an Event of
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Default under this Lease. Lessee shall not be required to obtain the coveragesrequired therein and Lessor agrees to accept such lesser coverage, if any, as Lessee electsto maintain for the Texas Facilities for the Term of the Lease, including any Renewal Term.This provision does not relieve Lessee from its agreement of indemnity under Article XXI ofthe Lease nor does it modify the provisions thereof.9. Section 39.1 of the Existing Master Lease is hereby amended and restated in its entirety asfollows:     39.1 Security Deposit. Prior to the date of this Amendment, Lessor was holdingas the Security Deposit the sum of $340,000 in cash. Concurrently with the delivery of thisAmendment, (A) Lessor shall return to Lessee the $340,000 in cash, and (B) Lessee shalldeliver to Lessor a Security Deposit in the amount equal to $8,116,726.10, in the form of anabsolute, unconditional site draft letter of credit for a term of one (1) year (renewableautomatically) issued by an “A” rated financial institution (“Security Deposit”),which Lessor shall hold as security for the full and faithful performance by Lessee of eachand every term, provision, covenant and condition of this Lease in accordance with, andsubject to, the terms and conditions of the Letter of Credit Agreement. If at any time theSecurity Deposit is in the form of cash, the Security Deposit shall be deposited by Lessorinto an account which shall earn interest for the benefit of Lessee, which cash shall remainon deposit as security and be available to Lessor as provided in this Article. The SecurityDeposit shall not be considered an advance payment of Rent (or of any other sum payable toLessee under this Lease) or a measure of Lessor’s damages in case of a default by Lessee.The Security Deposit shall not be considered a trust fund, and Lessee expressly acknowledgesand agrees that Lessor is not acting as a trustee or in any fiduciary capacity incontrolling or using the Security Deposit. Notwithstanding the foregoing, if at any timethe Security Deposit is in the form of cash, then (i) Lessor shall maintain the SecurityDeposit separate and apart from Lessor’s general and/or other funds and (ii) provided thatLessee is not then in default, Lessor shall disburse to Lessee the earnings on the SecurityDeposit on a quarterly basis. The Security Deposit, less any portion thereof applied asprovided in Section 39.3 or the Letter of Credit Agreement, shall be returned to Lesseewithin sixty (60) days following the expiration of the Term or earlier termination of thisLease.10. Section 39.5 of the Existing Master Lease is hereby amended and restated in its entirety asfollows:     39.5 Line of Credit; A/R Replacement Security Deposit.     (a) Line of Credit. Prior to the date of this Amendment, pursuant to theSecurity Agreement, Lessee has granted to Lessor a first priority security interest in theaccounts receivable generated by the Facilities. LaSalle currently has a security interestin the accounts receivable from the Facilities to secure the LaSalle Loans. Lessor andLaSalle have entered into the Intercreditor Agreement pursuant to which Lessor has agreed tosubordinate its security interest in the accounts receivable generated by the
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Facilities. If Lessee and/or the Sublessees, or any Affiliate of Lessee (other thanAffiliates who are the operators of the Florida Managed Facilities, as defined in theSettlement and Restructuring Agreement), obtain, concurrently with or after the date of thisAmendment, a working capital line of credit (the “Line of Credit”) from athird-party working capital lender that requires that, in order to secure the Line ofCredit, Lessee and/or the Sublessees must grant to the working capital lender a firstpriority security interest in the accounts receivable from the Facilities accruing duringthe Term, then Lessor will subordinate its security interest in the accounts receivable fromthe Facilities accruing during the Term to the security interest of such working capitallender, provided that:     (i) The working capital lender executes and delivers to Lessor an intercreditoragreement in form and substance reasonably satisfactory to Lessor; and     (ii) The lien of Lessor in accounts receivable from the Facilities shall besubordinated to the lien of the working capital lender therein only to the extent ofamounts advanced from time to time by the working capital lender to Lessee and/orthe Sublessees with respect to the Facilities and only in the amount of$17,400,000.00, plus interest, penalties and other charges under the loan documentsevidencing the Line of Credit (the “Line of Credit Documents”) with respectto principal amounts advanced;     (iii) Lessee delivers to Lessor the A/R Replacement Security Deposit and theLetter of Credit Agreement (as defined below);     (iv) The LaSalle Loans have been repaid in full or, in the alternative, theTemporary Revolving Loan and the Term Loan have been repaid, and an amendment to theIntercreditor Agreement with the holder of the remaining LaSalle Loans is enteredinto providing for the priority cap contemplated by sub-paragraph 39(a)(ii) above(the “LaSalle Amendment”) in form and substance reasonably satisfactory toLessor; and     (v) As of the date of entry by Lessor into the intercreditor agreement of theLaSalle Amendment, no Event of Default has occurred and is continuing.     (b) Lessee acknowledges and agrees that on the occurrence of a “Default”, “Event ofDefault” or similar event or occurrences which causes the lender under the Line of CreditDocuments to accelerate any or all of the indebtedness thereby or to exercise any rights orremedies under such documents to realize on its interest in the accounts receivable from theFacilities, or to cease funding under the Line of Credit, which is not cured within anyapplicable cure period under the Line of Credit Documents or any written agreement bylender, shall constitute an Event of Default under this Lease.     (c) Concurrently with the delivery of the intercreditor agreement by Lessor pursuant toSection 39.5(a)(i) above or the LaSalle Amendment, Lessee shall deliver to
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Lessor a Security Deposit in an amount equal to the sum of (i) six (6) times themonthly Non-Texas Base Rent (the “Initial Amount”) plus (ii) three (3) times themonthly Texas Base Rent then payable under this Lease, in the form of an absolute,unconditional site draft letter of credit for a term of one (1) year (renewableautomatically) issued by an “A” rated financial institution (“A/R Replacement SecurityDeposit”), which Lessor shall hold as security for the full and faithful performance byLessee of each and every term, provision, covenant and condition of this Lease in accordancewith, and subject to, the terms and conditions of the Letter of Credit Agreement. On August31, 2008, and each subsequent anniversary of such date thereafter, the amount of the A/RReplacement Security Deposit required to be maintained by Lessee on deposit with Lessorshall be reduced by 16.66% (or 1/6) of the Initial Amount if and only if on the applicableanniversary date (i) Lessee has maintained a Stressed Coverage Ratio for the trailing twelvemonths of at least 1.45 and (ii) no Event of Default exists. Notwithstanding the foregoing,at no time shall the A/R Replacement Security Deposit be less than an amount equal to threetimes the monthly Base Rent payable under this Lease on the date of delivery of the A/RReplacement Security Deposit. Upon delivery to Lessor of the A/R Replacement SecurityDeposit and the intercreditor agreement pursuant to this Section 39.5(a)(i) or the LaSalleAmendment, the amount of the Security Deposit required under Section 39.1 shall be set equalto the A/R Replacement Security Deposit.11. Single, indivisible Lease. The Master Lease constitutes one indivisible lease of theLeased Properties, and not separate leases governed by similar terms. The Leased Propertiesconstitute one economic unit, and the Base Rent and all other provisions have been negotiated andagreed to based on a demise of all of the Leased Properties as a single, composite, inseparabletransaction and would have been substantially different had separate leases or a divisible leasebeen intended. Except as expressly provided herein for specific, isolated purposes (and then onlyto the extent expressly otherwise stated), all provisions of this Lease apply equally and uniformlyto all the Leased Properties as one unit. An Event of Default with respect to any Leased Propertyis an Event of Default as to all of the Leased Properties. The parties intend that the provisionsof this Lease shall at all times be construed, interpreted and applied so as to carry out theirmutual objective to create an indivisible lease of all the Leased Properties and, in particular butwithout limitation, that for purposes of any assumption, rejection or assignment of this Leaseunder 11 U.S.C. 365, this is one indivisible and non-severable lease and executory contract dealingwith one legal and economic unit which must be assumed, rejected or assigned as a whole withrespect to all (and only all) the Leased Properties covered hereby.12. Representations and Warranties of Lessee. Lessee hereby represents and warrants toLessor that (i) it has the right and power and is duly authorized to enter into this Agreement; and(ii) the execution of this Agreement does not and will not constitute a breach of any provisioncontained in any agreement or instrument to which Lessee is or may become a party or by whichLessee is or may be bound or affected13. Execution and Counterparts. This Amendment may be executed in any number ofcounterparts, each of which, when so executed and delivered, shall be deemed to be an original, butwhen taken together shall constitute one and the same Amendment.
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14. Headings. Section headings used in this Amendment are for reference only and shall notaffect the construction of the Amendment.15. Enforceability. Except as expressly and specifically set forth herein, the ExistingMaster Lease remains unmodified and in full force and effect. In the event of any discrepancybetween the Existing Master Lease and this Amendment, the terms and conditions of this Amendmentwill control and the Existing Master Lease is deemed amended to conform hereto.*[SIGNATURE PAGES, ACKNOWLEDGEMENTS, AND JOINDER FOLLOW]*
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*Signature Page to*