Document:

ex10_6.htm

     

     

     

      
        

      

    

    

      FIFTH
AMENDMENT TO CONSOLIDATED

      AMENDED
AND RESTATED MASTER LEASE

      

      This
Fifth Amendment to Consolidated Amended and Restated Master Lease (this “Amendment”) is
executed and delivered as of August 10th, 2007 by and between STERLING
ACQUISITION CORP., a Kentucky corporation (“Lessor”), the address
of which is 9690 Deereco Road, Suite 100, Timonium, MD 21093, and DIVERSICARE
LEASING CORP., a Tennessee corporation, the address of which is 1621 Galleria
Boulevard, Brentwood, TN  37027.

      

      RECITALS:

      

      A. Lessee
has executed and delivered to Lessor a Consolidated Amended and Restated Master
Lease dated as of November 8, 2000, but effective as of October 1, 2000, as
amended by a First Amendment to Consolidated Amended and Restated Master Lease
dated as of September 30, 2001, a Second 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 Lease dated as of
October 20, 2006 (the “Third Amendment”),
and a Fourth Amendment to Consolidated Amended and Restated Master Lease dated
as of April 1, 2007 (the “Existing Master
Lease”) 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 May
17, 2007 and an Operations Transfer Agreement effective as of July 20, 2007
among the Texas Sublessees (as defined below) and Senior Management Services of
America North Texas, Inc., a Texas corporation (“SMSA”), and certain affiliates
of SMSA, the Texas Sublessees are acquiring from SMSA its 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 liability company
(“OHI
Texas”).  Pursuant to the SMSA Master Lease, SMSA had leased
the Texas Facilities from OHI Texas.

      

      C. Concurrently
with the execution of this Amendment, (i) OHI Texas and the Texas Sublessees
have terminated the SMSA Master Lease and (ii) OHI Texas has transferred to
Lessor the Texas Facilities to Lessor.

      

      D. Lessee
and Lessor desire to amend the Existing Lease to add the Texas Facilities to the
Existing 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
assigned to such term in the Master Lease.  From and after the date of
this Amendment, each reference in the Existing Master Leases or the other
Transaction Documents to the “Lease” or “Master Lease” means, as applicable, the
Existing Master Lease or Existing Master Leases as modified by this
Amendment.

      

      (b)           In
addition to the other definitions contained herein, when used in this Amendment
the following terms shall have the following meanings:

      

      Asbestos Clean-Up
Costs: means the actual, out of pocket cost of completing a Required
Asbestos Clean-Up, which amount does not include any amounts paid to Lessee or
any Affiliate 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) Estates Healthcare
Center located at 201 Sycamore School Road, Fort Worth, Texas 76134, and (ii) as
Doctors Healthcare Center and located at 9009 White Rock Trail, Dallas, Texas
75238.

       

      Existing Asbestos Containing
Materials: means the asbestos containing materials on 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 and Rehabilitation Center
of Humble located in Humble, Texas.

       

      Katy Facility: means
the Facility commonly known as the Oakmont Nursing and Rehabilitation Center of
Katy located in Katy, Texas.

       

      LaSalle: means
LaSalle Bank National Association.

       

      LaSalle Loans: means
the following loans and credit facilities extended by LaSalle to Lessee, the
Sublessees and certain of their Affiliates: (i) certain revolving loans in an
aggregate amount of up to Fifteen Million and No/100 Dollars ($15,000,000.00) to
support 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 and No/100 Dollars ($6,000,000.00) to support working capital
needs of Lessee, the Sublessees and 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 Hundred Thousand and No/100 Dollars
($16,500,000.00) (the "Term Loan").

       

      Lien: means any
interest in Property securing an obligation owed to, or a claim by, any Person
(other than the owner of the Property), whether such interest shall be based on
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 or events or the existence of some future circumstance or
circumstances, 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 security agreement, 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, other
title exceptions and encumbrances affecting any real property and the retained
security title of a conditional vendor or lessor.

       

      Lease Documents:
means the following documents: this Lease, the Guaranty, the Letter of Credit
Agreement, the Security Agreement, the Pledge Agreements, the Subordination
Agreements, Texas Pledge Agreements, Texas Sublessees Guaranty, Texas Sublessee
Security Agreement, the Stock Issuance and Subscription Agreement, the
Subordinated Note, and any security agreements, pledge agreements, letter of
credit agreements, guarantees, notes or other documents which evidence, secure
or otherwise relate to this Lease, or the transactions 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 Lessee and
Lessor.

       

      Master Texas
Sublessee:  DIVERSICARE TEXAS I, LLC, Delaware limited
liability company.

       

      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 thru September 30,
2006), the amount set forth for such period in the Master Lease 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 the Improvement Allowance Adjustment Amount (as adjusted during
such Lease Year);

       

      (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 Term plus Improvement Allowance
Adjustment Amount, increased by a percentage equal to two (2) times the
percentage increase in the CPI (if positive) from the commencement date of the
first Renewal Term to the Adjustment Date in each of the second (2nd) through
twelfth (12th) Lease
Years, as applicable (the “Adjustment Date”),
and (ii) the product of the Base Amount as of the end of the first Lease Year
plus the Improvement Allowance Adjustment Amount and the following
factor:

       

      
        	
                Lease
      Year During

                First Renewal Term

                 

              	
                Applicable Factor

              
	
                2

              	
                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 be less 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) the
Non-Texas Base Rent during the last Lease Year of the Initial Term and (b) the
Fair Market Rent for the Facilities other than the Texas Facilities on the first
day of such Renewal Term as agreed upon by Lessor and Lessee, or, if prior to
the commencement of the Renewal Term they are unable to agree, as determined by
an appraisal pursuant to Article XXXII of this Lease; provided, however, that the
Non-Texas Base Rent for the first Lease Year of the second Renewal Term shall
not exceed one hundred ten percent (110%) of the Non-Texas Base Rent for the
Lease Year immediately 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) the Non-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 the
Adjustment 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) Lease
Year of the second Renewal Term and the following factor:

       

      
        	
                Lease
      Year During

                Second Renewal Term

                 

              	
                Applicable Factor

              
	
                2

              	
                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 the Renewal
Term be less than the Non-Texas Base Rent during the preceding Lease
Year.

       

      Pre-Existing Hazardous
Substances: means Hazardous Substances located on, under about or with
respect to the Treemont Facility prior to February 1, 2003 or the Katy Facility
prior to July 1, 2003 or the Humble Facility prior to July 1, 2003.

       

      Pre-Existing Environmental
Conditions: means any Contamination or other environmental condition on,
under, about or with respect to the Treemont Facility prior to February 1, 2003
or the Katy Facility prior to July 1, 2003 or the Humble Facility prior to July
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 Texas Facilities
until January 31, 2008, Three Hundred Twenty Eight Thousand Five Hundred Ninety
Two and 79/100 Dollars ($328,592.79), which equal an annual Base Rent of Three
Million Nine Hundred 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 Texas Annualized
Base Rent, increased by the product of (i) the Initial Texas Annualized Base
Rent and (ii) the lesser of one (1) times the
change in CPI (expressed as a percentage) and two and 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 of the 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 Lease Year and (ii) the lesser of one (1) times the
increase, if any, in CPI (expressed as a percentage) and two and one-half
percent (2.5%).

       

      Texas Facilities:
means the Facilities located on the real property described in Exhibits A-1 through A-7 to this
Amendment.

      

      Texas Pledge
Agreements:  means the Pledge Agreements dated as of the same
date as 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 limited liability
company, DIVERSICARE ESTATES, LLC, Delaware limited liability company,
DIVERSICARE HUMBLE, LLC, Delaware limited liability company, DIVERSICARE KATY,
LLC, Delaware limited liability 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 this Amendment
from the Texas Sublessees in favor Lessor.

      

      Texas Sublessee Security
Agreement: means the Security Agreement dated as of the same date as this
Amendment from the Texas Sublessees in favor of Lessor.

      

      Non-Texas Facilities:
means the Facilities leased pursuant to this Lease other than the Texas
Facilities.

      

      (c)           The
following definitions defined in §2.1 of the Existing Master Lease are hereby
amended in their entirety as follows:

      

      Base Rent: means the
sum of (i) the Non-Texas Base Rent and (ii) the Texas Base Rent.

      

      Commencement
Date:  October 1, 2000 for the Non-Texas Facilities, and August
11, 2007 for the Texas Facilities.

       

      Expiration Date:
means the First Renewal Term Expiration Date, the Second Renewal Term Expiration
Date, the First Texas Renewal Term Expiration Date, or the Second Texas Renewal
Term Expiration Date, as applicable.

       

      Facilit(y)(ies): Each
health care facility on the Land, including the Leased Property associated with
such Facility, and together, all such facilities on the Leased Properties; all
of which Facilities are collectively listed on Exhibit B to this
Amendment.

       

      Intercreditor
Agreement: means the Subordination and Intercreditor Agreement of even
date herewith by and between Lessor and LaSalle and any replacement
intercreditor agreement between Lessor and any working capital lender to whom a
first priority security interest in accounts receivable from the Facilities has
been granted in accordance with the requirements of Section 39.5 of this
Lease.

       

      Land:                      The
real property described in listed on attached Exhibit A to the
Existing Master Lease and Exhibit A to this
Amendment.

      

      Permitted
Encumbrances: Encumbrances listed on attached Exhibit C to the
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
Section 2.1 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 is not cured within the applicable cure period, if any.

       

      *           *           *

       

      (r)           LaSalle
(or its successors and assigns) or any working capital lender to whom a first
priority security interest in accounts receivable from the Facilities has been
granted in accordance with the requirements of Section 39.5 of this Lease,
declares an event of default under the loan documents evidencing or securing the
LaSalle Loans or Line of Credit Documents, and accelerates any or all of the
indebtedness evidenced and secured thereby, or commences any action against
Lessee or Sublessee to realize on such lender’s interest in the accounts
receivable from the Facilities.

       

      2. Renewal
Options.  Section 1.3 of the Existing Master Lease is hereby
amended and restated as follows:

       

      1.3           Options to
Renew.

      

      (a)           Lessee
is hereby granted two (2) options to renew this Lease (an “All Facilities
Option”) for an additional, successive period of twelve (12) Lease Years,
for a maximum Term if such options are exercised of thirty (30) Lease Years, on
the following terms and conditions:

      

      (i)           the
second option to renew is exercisable only by Notice to Lessor at least three
hundred sixty-five (365) days prior to the expiration of the first Renewal
Term;

      

      (ii)            the
absence of any Event of Default both at the time a renewal option is exercised
and at the commencement of a Renewal Term is a condition precedent to any
renewal of the Term;

      

      (iii)           during
a Renewal Term, all of the terms and conditions of this Lease shall remain in
full force and effect; and

      

      (iv)           Lessee
may exercise its options to renew with respect to all (and no fewer than all) of
the Leased Properties.

      

      Lessee
and Lessor acknowledge and agree that Lessee exercised the first All Facilities
Option pursuant to the Third Amendment such that, as of the date of this
Amendment, the Expiration Date of the current Term of this Lease for all of the
Facilities, including the Texas 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 to the
Texas Facilities only (the “Texas Options”) until
September 30, 2030, with respect to the first such Texas Option, and May 31,
2035, with respect to the second such Texas Option, on the following terms and
conditions:

      

      (i)           
a Texas Option is exercisable only by Notice to Lessor at least three hundred
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 is exercised and
at the commencement of a Renewal Term is a condition precedent to any renewal of
the Term;

      

      (iii)           during
a Renewal Term, all of the terms and conditions of this Lease shall remain in
full force and effect; provided, however, that the Base Rent shall be equal to
the Texas Facilities Base Rent and the Security Deposit shall be reduced to an
amount equal to the Texas Facilities Base Rent divided by four (4) (such that it
is equal to three months Base Rent);

      

      (iv)           Lessee
may exercise its options to renew with respect to all (and no fewer than 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 which Lessee
exercises an All Facilities Option (for avoidance of doubt, because an All
Facilities Option is exercised as to all of the Facilities, including the Texas
Facilities, Lessee would not need to exercise a Texas Facilities Option for any
period 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 lieu thereof, Lessee’s environmental obligations with
regard to the Texas Facilities shall be governed by 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 as follows:

      

      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
control and Lessee’s Personal Property in good order and repair, whether or not
the need for such repairs arises out of Lessee’s use, any prior use, the
elements or the age of the Leased Property or any portion thereof, or any cause
whatsoever except the act or negligence of Lessor, and with reasonable
promptness shall make all necessary and appropriate repairs thereto of every
kind and nature, whether interior or exterior, structural or non-structural,
ordinary or extraordinary, foreseen or unforeseen or arising by reason of a
condition existing prior to the Commencement Date (concealed or otherwise) or
existing after February 1, 2003 with respect to the Treemont Facility, and July
1, 2003 with respect to the Katy Facility and the Humble Facility; provided,
however, that Lessee shall be permitted to prosecute claims against Lessor’s
predecessor in title for breach of any representation or warranty 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 a quality basis and in a manner consistent with
the standards of the highest quality competing facilities in the market areas
served by the Leased Properties.  All repairs shall, to the extent
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 be replaced.  Lessee will not take or omit to take any
action the taking or omission of which might materially impair the value or the
usefulness of the Leased Properties or any parts thereof for the Primary
Intended Use.

      

      5. Section
8.2.1.4 of the Existing Master Lease is hereby amended and restated in its
entirety as follows:

      

      8.2.1.4                      Equipment
Financing.  The aggregate amount of
principal,  interest and lease payments due from Lessee and/or
Sublessee with respect to any equipment leases or financing secured by equipment
utilized in the operation of the Facilities shall not at any time 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 or suffer to exist any Debt which is
secured by a Lien in any of the Property with respect to which 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.

      

      7. Section
8.5 of the Existing Master Lease is hereby amended and restated in its entirety
as follows:

      

      8.5           Other
Facilities.  Neither Lessee nor any Affiliate shall own,
operate or manage any nursing home, rest home, assisted living facility,
subacute facility, retirement center or similar health care facility within a
ten (10) mile radius of any Facility, other than any Facility which is a Leased
Property under this Lease or which Lessee or any Affiliate of Lessee owns or
operates as of the Commencement Date and set forth on Schedule C attached
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 malpractice insurance
coverage required pursuant to Sections 13.2.4 and 13.2.5 of the Lease, are
currently unavailable generally in the nursing home industry at commercially
affordable rates and that Lessee currently maintains and has in place for all of
the Facilities general liability and malpractice insurance with single limit
coverage of One Hundred Thousand Dollars ($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 hereby agrees that, the
provisions of Sections 13.2.4 and 13.2.5 of the Lease to the contrary
notwithstanding, until such time as the insurance coverage required therein is
generally available in the nursing home industry at commercially affordable
rates, Lessee shall not be required obtain the coverages required therein and
Lessor agrees to accept Lessee’s current coverage in lieu thereof for the
Non-Texas Facilities for the first Renewal Term of the Lease.  Lessee
shall not be deemed to be in default of the provisions of Article XIII of the
Lease as a result thereof.  Lessee shall provide Lessor, on an annual
basis, information from its insurance carrier and from comparable insurance
carriers of the costs of insurance premiums to meet Lessor’s insurance
requirements.  At such time as the premium amounts quoted are
commercially affordable, Lessee shall immediately purchase any and all insurance
policies 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 of the Lease nor does it modify the provisions
thereof.  Notwithstanding the foregoing, Lessee acknowledges and
agrees that the provisions of this Paragraph 5 shall not be applicable in the
event of any Transfer.  Lessee acknowledges and agrees that Lessor
shall have the right to withhold its consent to any proposed Transfer unless,
among other things, the Transferee agrees to provide the insurance coverage
required by the provisions of Sections 13.2.4 and 13.2.5 of the
Lease.

       

      (b)           Lessor
hereby agrees that, the provisions of Sections 13.2.4 and 13.2.5 of the Lease to
the contrary notwithstanding Lessee's failure to obtain the coverages required
by Sections 13.2.4 and 13.2.5 for the Texas Facilities shall not be an Event of
Default under this Lease.  Lessee shall not be required to obtain the
coverages required therein and Lessor agrees to accept such lesser coverage, if
any, as Lessee elects to 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 of the 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
as follows:

      

      39.1           Security Deposit.
Prior to the date of this Amendment, Lessor was holding as the Security Deposit
the sum of $340,000 in cash.  Concurrently with the delivery of this
Amendment, (A) Lessor shall return to Lessee the $340,000 in cash, and (B)
Lessee shall deliver to Lessor a Security Deposit in the amount equal to
$8,116,726.10, in the form of an absolute, unconditional site draft letter of
credit for a term of one (1) year (renewable automatically) issued by an “A”
rated financial institution (“Security Deposit”),
which Lessor shall hold as security for the full and faithful performance by
Lessee of each and every term, provision, covenant and condition of this Lease
in accordance with, and subject to, the terms and conditions of the Letter of
Credit Agreement.  If at any time the Security Deposit is in the form
of cash, the Security Deposit shall be deposited by Lessor into an account which
shall earn interest for the benefit of Lessee, which cash shall remain on
deposit as security and be available to Lessor as provided in this
Article.  The Security Deposit shall not be considered an advance
payment of Rent (or of any other sum payable to Lessee 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
acknowledges and agrees that Lessor is not acting as a trustee or in any
fiduciary capacity in controlling or using the Security
Deposit.  Notwithstanding the foregoing, if at any time the Security
Deposit is in the form of cash, then (i) Lessor shall maintain the Security
Deposit separate and apart from Lessor’s general and/or other funds and (ii)
provided that Lessee is not then in default, Lessor shall disburse to Lessee the
earnings on the Security Deposit on a quarterly basis.  The Security
Deposit, less any portion thereof applied as provided in Section 39.3 or
the Letter of Credit Agreement, shall be returned to Lessee within sixty
(60) days following the expiration of the Term or earlier termination of this
Lease.

      

      10. Section
39.5 of the Existing Master Lease is hereby amended and restated in its entirety
as follows:

      

      39.5           Line of Credit; A/R
Replacement Security Deposit.

      

      (a)           Line of
Credit.  Prior to the date of this Amendment, pursuant to the
Security Agreement, Lessee has granted to Lessor a first priority security
interest in the accounts receivable generated by the
Facilities.  LaSalle currently has a security interest in the accounts
receivable from the Facilities to secure the LaSalle Loans. Lessor and LaSalle
have entered into the Intercreditor Agreement pursuant to which Lessor has
agreed to subordinate its security interest in the accounts receivable generated
by the Facilities.  If Lessee and/or the Sublessees, or any Affiliate
of Lessee (other than Affiliates who are the operators of the Florida Managed
Facilities, as defined in the Settlement and Restructuring Agreement), obtain,
concurrently with or after the date of this Amendment, a working capital line of
credit (the “Line of
Credit”) from a third-party working capital lender that requires that, in
order to secure the Line of Credit, Lessee and/or the Sublessees must grant to
the working capital lender a first priority security interest in the accounts
receivable from the Facilities accruing during the Term, then Lessor will
subordinate its security interest in the accounts receivable from the Facilities
accruing during the Term to the security interest of such working capital
lender, provided that:

      

      (i)           The
working capital lender executes and delivers to Lessor an intercreditor
agreement in form and substance reasonably satisfactory to Lessor;
and

      

      (ii)           The
lien of Lessor in accounts receivable from the Facilities shall be subordinated
to the lien of the working capital lender therein only to the extent of amounts
advanced from time to time by the working capital lender to Lessee and/or the
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
documents evidencing the Line of Credit (the “Line of Credit
Documents”) with respect to principal amounts advanced;

      

      (iii)           Lessee
delivers to Lessor the A/R Replacement Security Deposit and the Letter of Credit
Agreement (as defined below);

      

      (iv)           The
LaSalle Loans have been repaid in full or, in the alternative, the Temporary
Revolving Loan and the Term Loan have been repaid, and an amendment to the
Intercreditor Agreement with the holder of the remaining LaSalle Loans is
entered into providing for the priority cap contemplated by sub-paragraph
39(a)(ii) above (the "LaSalle Amendment") in form and substance reasonably
satisfactory to Lessor; and

      

      (v)           As
of the date of entry by Lessor into the intercreditor agreement, of the LaSalle
Amendment, no Event of Default has occurred and is continuing.

      

      (b)           Lessee
acknowledges and agrees that on the occurrence of a “Default”, “Event of
Default” or similar event or occurrences which causes the lender under the Line
of Credit Documents to accelerate any or all of the indebtedness thereby or to
exercise any rights or remedies under such documents to realize on its interest
in the accounts receivable from the Facilities, or to cease funding under the
Line of Credit, which is not cured within any applicable cure period under the
Line of Credit Documents or any written agreement by lender, shall constitute an
Event of Default under this Lease.

      

      (c)           Concurrently
with the delivery of the intercreditor agreement by Lessor pursuant to Section
39.5(a)(i) above or the LaSalle Amendment, Lessee shall deliver to Lessor al
Security Deposit in an amount equal to the sum of (i) six (6) times the monthly
Non-Texas Base Rent (the “Initial Amount”) plus
(ii) three (3) times the monthly 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 (renewable automatically) issued by an “A” rated financial
institution (“A/R
Replacement Security Deposit”), which Lessor shall hold as security for
the full and faithful performance by Lessee of each and every term, provision,
covenant and condition of this Lease in accordance with, and subject to, the
terms and conditions of the Letter of Credit Agreement.   On
August 31, 2008, and each subsequent anniversary of such date thereafter, the
amount of the A/R Replacement Security Deposit required to be maintained by
Lessee on deposit with Lessor shall be reduced by 16.66% (or 1/6) of the Initial
Amount if and only if on the applicable anniversary date (i) Lessee has
maintained a Stressed Coverage Ratio for the trailing twelve months 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 three times the monthly Base Rent payable under this Lease on
the date of delivery of the A/R Replacement Security Deposit.  Upon
delivery to Lessor of the A/R Replacement Security Deposit and the intercreditor
agreement pursuant to this Section 39.5(a)(i) or the LaSalle Amendment, the
amount of the Security Deposit required under Section 39.1 shall be set equal to
the A/R Replacement Security Deposit.

      

      11. Single, indivisible
Lease.  The Master Lease constitutes one indivisible lease of
the Leased Properties, and not separate leases governed by similar terms. The
Leased Properties constitute one economic unit, and the Base Rent and all other
provisions have been negotiated and agreed to based on a demise of all of the
Leased Properties as a single, composite, inseparable transaction and would have
been substantially different had separate leases or a divisible lease been
intended. Except as expressly provided herein for specific, isolated purposes
(and then only to the extent expressly otherwise stated), all provisions of this
Lease apply equally and uniformly to all the Leased Properties as one unit. An
Event of Default with respect to any Leased Property is an Event of Default as
to all of the Leased Properties. The parties intend that the provisions of this
Lease shall at all times be construed, interpreted and applied so as to carry
out their mutual objective to create an indivisible lease of all the Leased
Properties and, in particular but without limitation, that for purposes of any
assumption, rejection or assignment of this Lease under 11 U.S.C. 365, this is
one indivisible and non-severable lease and executory contract dealing with one
legal and economic unit which must be assumed, rejected or assigned as a whole
with respect to all (and only all) the Leased Properties covered
hereby.

      

      12. Representations and
Warranties of Lessee.  Lessee hereby represents and warrants to
Lessor 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 provision contained in any agreement or instrument to
which Lessee is or may become a party or by which Lessee is or may be bound or
affected

      

      13. Execution and
Counterparts.  This Amendment may be executed in any number of
counterparts, each of which, when so executed and delivered, shall be deemed to
be an original, but when taken together shall constitute one and the same
Amendment.

      

      14. Headings.  Section
headings used in this Amendment are for reference only and shall not affect the
construction of the Amendment.

      

      15. Enforceability.  Except
as expressly and specifically set forth herein, the Existing Master Lease
remains unmodified and in full force and effect.  In the event of any
discrepancy between the Existing Master Lease and this Amendment, the terms and
conditions of this Amendment will control and the Existing Master Lease is
deemed amended to conform hereto.

      

      [SIGNATURE
PAGES, ACKNOWLEDGEMENTS, AND JOINDER FOLLOW]

      
        
          
            

             

             

             

          

           

        

        
           

          
            

          

        

        
           

          
            Signature
Page to

            FIFTH
AMENDMENT TO CONSOLIDATED

            AMENDED
AND RESTATED MASTER LEASE

            

            

          

        

      

      

      LESSOR:

      

      STERLING
ACQUISITION CORP., a Kentucky corporation

      

      

      By:    /s/ Daniel J.
Booth       

      Name:     Daniel J.
Booth            

      Title:        Chief
Operating Officer         

      

      

      

      STATE OF
MARYLAND                   )

      ) ss.

      COUNTY OF
BALTIMORE                )

      

      This
instrument was acknowledged before me on the      9th           day
of August, 2007, by Daniel J.
Booth                           
, the   of
STERLING ACQUISITION CORP., a Kentucky corporation, on behalf of said
company.

       

                                                               
Judith A.
Jacobs                            

                                          Notary
Public,   Baltimore
 County,  Maryland

      My commission expires: May 1,
2008

      

      

      

      
        
          
            Signature Page 1 of 2

            

          

           

        

        
           

          
            

          

        

        
           

          
            Signature
Page to

            FIFTH
AMENDMENT TO CONSOLIDATED

            AMENDED
AND RESTATED MASTER LEASE

            

            

          

        

      
            

      LESSEE:

      

      DIVERSICARE
LEASING CORP., a Tennessee corporation

      

      

      By:          /s/ Glynn
Riddle

      Name:           Glynn
Riddle          

      Title:             EVP
& CFO        

      

      

      STATE
OF  Tennessee                              )

                      )
SS

      COUNTY OF
Williamson                           )

      

      This instrument was acknowledged before
me on the 
9th       day of August, 2007,
by   Glynn
Riddle                                              
, the EVP
&CFO                    
 of DIVERSICARE LEASING CORP., a Tennessee corporation, on behalf of
said company

       

                                                  Brenda
Wimsatt                              

      Notary Public,    Williamson        County,   TN           

      My commission expires:
07/25/2009

      

      

      
        
          
            Signature Page 2 of 2

            

          

           

        

        
           

          
            

          

        

        
           

          
            Acknowledgement
to

            FIFTH
AMENDMENT TO CONSOLIDATED

            AMENDED
AND RESTATED MASTER LEASE

            

            

          

        

      

      The undersigned hereby consent to the
transactions contemplated by this Fifth Amendment to Consolidated Amended and
Restated Master Lease (the “Fifth Amendment”),
ratify and affirm their respective Guaranties, Pledge Agreements, Security
Agreements, Subordination Agreements and other Transaction Documents, and
acknowledge and agree that the performance of the  Master Lease and
obligations described therein are secured by their Guaranties, Pledge
Agreements, Security Agreement, Subordination Agreement and other Transaction
Documents on the same terms and conditions in effect prior to this
Amendment.

      

      ADVOCAT,
INC. a Delaware corporation

      
        

        By:          /s/ Glynn
Riddle

        Name:           Glynn
Riddle          

        Title:             EVP
& CFO        

        

        

        STATE
OF  Tennessee                              )

                        )
SS

        COUNTY OF
Williamson                           )

        

        This foregoing instrument was
acknowledged before me on the 
9th       day of August, 2007,
by   Glynn
Riddle                                              
, the EVP
&CFO                    
 of ADVOCAT, INC. a Delaware corporation, on behalf of the
corporation, who acknowledged the same to be his or her free act and deed and
the free act and deed of the corporation.

         

                                                    Brenda
Wimsatt                              

        Notary Public,    Williamson        County,   TN           

        My commission expires:
07/25/2009

      

      

       

      
        
          
            Acknowledgement
– Page 1 of 4

            

          

           

        

        
           

          
            

          

        

        
           

          
            Acknowledgement
to

            FIFTH
AMENDMENT TO CONSOLIDATED

            AMENDED
AND RESTATED MASTER LEASE

            

            

          

        

      

      

      DIVERSICARE
MANAGEMENT SERVICES CO., a Tennessee corporation

      

      
        By:          /s/ Glynn
Riddle

        Name:           Glynn
Riddle          

        Title:             EVP
& CFO        

        

        

        STATE
OF  Tennessee                              )

                        )
SS

        COUNTY OF
Williamson                           )

        

        This foregoing instrument was
acknowledged before me on the 
9th       day of August, 2007,
by   Glynn
Riddle                                              
, the EVP
&CFO                    
 of DIVERSICARE MANAGEMENT SERVICES CO., a Tennessee
corporation, on behalf of the corporation, who acknowledged the same to be his
or her free act and deed and the free act and deed of the
corporation.

         

                                                    Brenda
Wimsatt                              

        Notary Public,    Williamson        County,   TN           

        My commission expires:
07/25/2009

        

      

       

      

      
        
          
            Acknowledgement
– Page 2  of 4

            

          

           

        

        
           

          
            

          

        

        
           

          
            Acknowledgement
to

            FIFTH
AMENDMENT TO CONSOLIDATED

            AMENDED
AND RESTATED MASTER LEASE

            

            

          

        

      

      ADVOCAT
FINANCE INC., a Delaware corporation

      

      
        By:          /s/ Glynn
Riddle

        Name:           Glynn
Riddle          

        Title:             EVP
& CFO        

        

        

        STATE
OF  Tennessee                              )

                        )
SS

        COUNTY OF
Williamson                           )

        

        This foregoing instrument was
acknowledged before me on the 
9th       day of August, 2007,
by   Glynn
Riddle                                              
, the EVP
&CFO                
of ADVOCAT FINANCE INC., a Delaware corporation, on behalf of
the corporation, who acknowledged the same to be his or her free act and deed
and the free act and deed of the corporation.

         

                                                    Brenda
Wimsatt                              

        Notary Public,    Williamson        County,   TN           

        My commission expires:
07/25/2009

       

      
        
          
            Acknowledgement
– Page  3 of 4

            

          

           

        

        
           

          
            

          

        

        
           

          
            Acknowledgement
to

            FIFTH
AMENDMENT TO CONSOLIDATED

            AMENDED
AND RESTATED MASTER LEASE

            

            

          

        

      

      

      STERLING
HEALTH CARE MANAGEMENT, INC., a Kentucky corporation

      

                                                      By:          /s/ Glynn
Riddle

      
        Name:           Glynn
Riddle          

        Title:             EVP
& CFO        

        

        

        STATE
OF  Tennessee                              )

                        )
SS

        COUNTY OF
Williamson                           )

        

        This foregoing instrument was
acknowledged before me on the 
9th       day of August, 2007,
by   Glynn
Riddle                                              
, the EVP
&CFO                
of STERLING HEALTH CARE MANAGEMENT, INC., a Kentucky
corporation, on behalf of the corporation, who acknowledged the same to be his
or her free act and deed and the free act and deed of the
corporation.

         

                                                    Brenda
Wimsatt                              

        Notary Public,    Williamson        County,   TN           

        My commission expires:
07/25/2009

      

      :

      

      
        
          
            Acknowledgement
– Page 4  of 4

            

          

           

        

        
           

          
            

          

        

        
           

          
            List
of Exhibits and Schedules to

            FIFTH
AMENDMENT TO CONSOLIDATED

            AMENDED
AND RESTATED MASTER LEASE

            

            

          

        

      

      Exhibit
A                      Legal
Description of Texas Facilities

      

      Exhibit
B                      List
of Facilities and Facility Trade Names

      

      Exhibit
C                      Permitted
Encumbrances for Texas Facilities

      

      Exhibit
D                      Texas
Environmental Matters

      

      Schedule
C                                Excepted
Facilities to Radius Requirements

      

      
        
          
            Page 1 of
1

            

          

           

        

        
           

          
            

          

        

        
           

          
            EXHIBIT
A

            

            

          

        

      

       

      
        Legal
description of the real property for the following facilities:

        

        A-1           Treemont

        A-2           Doctors
Healthcare Center

        A-3           Estate’s
Healthcare Center

        A-4           Katy
Facility

        A-5           Humble
Facility

        A-6           Normandy
Terrace Southeast

        A-7           Heritage
Oaks Estate

      
        
          
            Exhibit A
- Page 1 of 1

            

          

           

        

        
           

          
            

          

        

        
           

          
            EXHIBIT
B

            

            

          

        

      

      

      
        	
                1. 

              	
                Arbor
      Oaks Health & Rehab Center (Stillmeadow)

              	
                105
      Russellville Road, Route 2, Highway 67 South

              	
                Malvern

              	
                Hot
      Spring

              	
                AR

              	
                72104

              
	
                2. 

              	
                Ash
      Flat Nursing & Rehab Center

              	
                66
      Ozbirn Lane

              	
                Ash
      Flat

              	
                Sharp

              	
                AR

              	
                72513

              
	
                3. 

              	
                Best
      Care, Inc.

              	
                2159
      Dogwood Ridge

              	
                Wheelersburg

              	
                Scioto

              	
                OH

              	
                45694

              
	
                4. 

              	
                Boone
      Health Care Center, Inc.

              	
                Lick
      Creek Road, P.O. Box 605

              	
                Danville

              	
                Boone

              	
                WV

              	
                25053

              
	
                5. 

              	
                Boyd
      Nursing and Rehab Center

              	
                12800
      Princeland Drive

              	
                Ashland

              	
                Boyd

              	
                KY

              	
                41102

              
	
                6. 

              	
                Canterbury
      Health Center

              	
                1720
      Knowles Road

              	
                Phenix
      City

              	
                Russell

              	
                AL

              	
                36867

              
	
                7. 

              	
                Carter
      Nursing & Rehab Center

              	
                250
      McDavid Boulevard, P.O. Box 904

              	
                Grayson

              	
                Carter

              	
                KY

              	
                41143

              
	
                8. 

              	
                Conway
      Health & Rehab Center (Faulkner)

              	
                2603
      Dave Ward Drive

              	
                Conway

              	
                Faulkner

              	
                AR

              	
                72032

              
	
                9. 

              	
                Des
      Arc Nursing & Rehab Center

              	
                2216
      West Main, P.O. box 143B

              	
                Des
      Arc

              	
                Prairie

              	
                AR

              	
                72040

              
	
                10. 

              	
                Elliott
      Nursing & Rehab Center

              	
                Howard
      Creek Road, P.O. Box 694, Route 32 East

              	
                Sandy
      Hook

              	
                Elliott

              	
                KY

              	
                41171

              
	
                11. 

              	
                Garland
      Nursing & Rehab Center and Apts.

              	
                610
      Carpenter Dam Road

              	
                Hot
      Springs

              	
                Garland

              	
                AR

              	
                71901

              
	
                12. 

              	
                Hardee
      Manor Care Center

              	
                401
      Orange Place

              	
                Wauchula

              	
                Hardee

              	
                FL

              	
                33873

              
	
                13. 

              	
                Laurel
      Manor Health Center

              	
                902
      Buchanan Road, P.O. Box 505

              	
                New
      Tazewell

              	
                Claiborne

              	
                TN

              	
                37825

              
	
                14. 

              	
                Laurel
      Nursing  & Rehab Center

              	
                HC
      75, Box 153, Clinic Road

              	
                Ivydale

              	
                Clay

              	
                WV

              	
                25113

              
	
                15. 

              	
                Lynwood
      Nursing Home

              	
                4164
      Halls Mill Road

              	
                Mobile

              	
                Mobile

              	
                AL

              	
                36693

              
	
                16. 

              	
                Manor
      House of Dover

              	
                537
      Spring Street, P.O. Box 399

              	
                Dover

              	
                Stewart

              	
                TN

              	
                37058

              
	
                17. 

              	
                Mayfield
      Rehab and Special Care Center

              	
                200
      Mayfield Drive

              	
                Smyrna

              	
                Rutherford

              	
                TN

              	
                37167

              
	
                18. 

              	
                Northside
      Health Care

              	
                700
      Hutchins Ave

              	
                Gadsden

              	
                Etowah

              	
                AL

              	
                35901

              
	
                19. 

              	
                Ouachita
      Nursing /Pine Manor Apts.

              	
                1411
      Country Club Road

              	
                Camden

              	
                Ouachita

              	
                AR

              	
                71701

              
	
                20. 

              	
                Pocahontas
      Nursing & Rehab Center

              	
                105
      Country Club Road

              	
                Pocahontas

              	
                Randolph

              	
                AR

              	
                72455

              
	
                21. 

              	
                Rich
      Mountain Nursing & Rehab Center

              	
                306
      Hornbeck

              	
                Mena

              	
                Polk

              	
                AR

              	
                71953

              
	
                22. 

              	
                Sheridan
      Nursing & Rehab Center

              	
                113
      South Briarwood Drive

              	
                Sheridan

              	
                Grant

              	
                AR

              	
                72150

              
	
                23. 

              	
                South
      Shore Nursing & Rehab Center

              	
                James
      Hannah Drive, P.O. box 489

              	
                South
      Shore

              	
                Greenup

              	
                KY

              	
                41175

              
	
                24. 

              	
                The
      Pines Nursing & Rehab Center

              	
                524
      Carpenter Dam Road

              	
                Hot
      Springs

              	
                Garland

              	
                AR

              	
                71901

              
	
                25. 

              	
                Walnut
      Ridge Nursing & Rehab Center

              	
                1500
      West Main

              	
                Walnut
      Ridge

              	
                Lawrence

              	
                AR

              	
                72476

              
	
                26. 

              	
                West
      Liberty Nursing & Rehab Center

              	
                774
      Liberty Road, P.O. Box 219, Route 5 Wells Hill

              	
                West
      Liberty

              	
                Morgan

              	
                KY

              	
                41472

              
	
                27. 

              	
                Westside
      Health Care Center

              	
                4320
      Judith Lane

              	
                Huntsville

              	
                Madison

              	
                AL

              	
                35805

              
	
                28. 

              	
                Wurtland
      Nursing & Rehab Center

              	
                100
      Wurtland Avenue, P.O. Box 677

              	
                Wurtland

              	
                Greenup

              	
                KY

              	
                41144

              
	
                29. 

              	
                Doctors
      Healthcare

              	
                9009
      White Rock Trail

              	
                Dallas

              	
                Dallas

              	
                TX

              	
                75238

              
	
                30. 

              	
                Estates
      at Ft. Worth

              	
                201
      Sycamore School Road

              	
                Fort
      Worth

              	
                Tarrant

              	
                TX

              	
                76134

              
	
                31. 

              	
                Heritage
      Oaks Estates

              	
                2001
      N. 6th Street

              	
                Ballinger

              	
                Runnels

              	
                TX

              	
                76821

              
	
                32. 

              	
                Humble

              	
                8450
      Will Clayton Parkway

              	
                Humble

              	
                Harris

              	
                TX

              	
                77338

              
	
                33. 

              	
                IHS
      of Dallas at Treemont

              	
                5550
      Harvest Hill Road

              	
                Dallas

              	
                Dallas

              	
                TX

              	
                75230

              
	
                34. 

              	
                Katy

              	
                1525
      Tull Drive

              	
                Katy

              	
                Harris

              	
                TX

              	
                77499

              
	
                35. 

              	
                Normandy
      Terrace

              	
                841
      Rice Road

              	
                San
      Antonio

              	
                Bexar

              	
                TX

              	
                78220

              

      

      
        
          
            Exhibit B
- Page 1 of 1

            

          

           

        

        
           

          
            

          

        

        
           

          
            EXHIBIT
C

            

            

          

        

      

      (Treemont)

      

      1.           The
following, all according to plat recorded in Volume 72249, Page 69, of the Map
Records of Dallas county, Texas:

      

      
        	
                 
      

              	
                A.

              	
                Sanitary
      sewer easement ten (10) feet in width along the south property
      line(s),

              

      

      
        	
                 
      

              	
                B.

              	
                Lone
      Star Gas line easement forth (40) feet in width located north of and
      adjacent to the sanitary sewer easement described above,
    and

              

      

      
        	
                 
      

              	
                C.

              	
                Lone
      Star Gas line easement twenty (20) feet in width along the southerly west
      property line(s)

              

      

      

      2.           Right-of-Way
Easement executed by Daniel P. Robinowitz to Lone Star Gas Company, dated
October 17, 1972, recorded in Volume 72221, Page 3214, Deed Records of Dallas
County, Texas.

      

      3.           Right-of-Way
Easement executed by Daniel P. Robinowitz, Trustee to Dallas Power and Light
Company and Southwestern Bell Telephone Company, dated November 21, 1973,
recorded in Volume 74003, Page 1466, Deed Records of Dallas County,
Texas.

      

      4.           Sanitary
sewer pipeline easement to Milton H. friend, Jr., dated July 2, 1976, executed
by L&N Consultants, Inc., recorded in Volume 76129, Page 2511, of the Deed
Records of Dallas County, Texas.

      

      5.           Right
of Way Easement to the City of Dallas for sanitary sewer mains, dated April 29,
1977, executed by Tri-South Mortgage Investors, recorded in Volume 77138, Page
511, of the Deed Records of Dallas County, Texas.

      

      6.           Right
of Way Easement to the city of Dallas for water mains, dated October 18, 1995,
executed by Cambridge Group of Texas, Inc., recorded in Volume 95212, Page 1978,
of the Deed Records of Dallas County, Texas.

      

      7.           Right
of Entry Agreement to Warner Amex Cable Communications, Inc., dated December 3,
1981, recorded in Volume 82013, Page 2153, of the Deed Records of Dallas County,
Texas.

      

      8.           Rights
and remedies of co-tenants, contractual or otherwise, including but not limited
to, terms, conditions, covenants, options, restrictions, by-laws, and easements
contained in the Condominium Declaration executed by Cambridge Group of Texas,
Inc., dated June 7, 1996, recorded in Volume 96160, Page 1556, of the
condominium Records of Dallas County, Texas.

      

      
        
          
          

        

        
          Exhibit C - Page 1 of 5

          
            

          

        

        
          
          

        

      

      9.           Annual
maintenance charge and/or current assessments as set out in instrument dated
June 7, 1996, and recorded in Volume 96160, Page 1556 of the Deed Records of
Dallas County, Texas.

      

      10.           Memorandum
of easement to TCI Cablevision of Dallas, Inc., dated August 11, 2000, executed
by Treemont Retirement Community, recorded in Volume 2000186, Page 5906, of the
Deed Records of Dallas County, Texas

      

      (Doctors
Healthcare Center)

      

      1.           Easement
granted by Doctors Hospital Foundation, Inc. to the City of Dallas, dated
06/21/1963, filed 07/11/1963, recorded in Volume 104, Page 1204, Deed Records of
Dallas County, Texas.

      

      2.           Terms,
conditions and stipulations of that certain Boundary Line Agreement by and
between Richardson Independent School District and IHS Acquisition No. 128,
Inc., dated 05/07/1998, filed 07/01/1998, recorded in Volume 98127, Page 358,
Deed Records, Dallas County, Texas.

      

      3.           Terms,
conditions and stipulations of that certain Utility and Retaining Wall Easement
Agreement by and between IHS Doctors and Lake White Rock Limited Partnership,
dated 11/18/1998, filed 12/11/1998, recorded in Volume 98241, Page 1293, Deed
Records, Dallas County, Texas.

      

      (Estates
Healthcare Center)

      

      1.           Encroachment
of payment and fencing along the west property line as shown on ALTA/ACSM Land
Title Survey prepared by Charles F. Stark, RPLS No. 5084, dated November 30,
1998, last revised January 4, 1999.

      

      2.           Location
of sign into the right-of-way of Sycamore Road along the north property line as
shown on ALTA/ACSM Land Title Survey prepared by Charles F. Stark, RPLS No.
5084, dated November 30, 1998, last revised January 4, 1999.

      

      3.           Public
open space easement in the northeast corner as shown on the plat recorded in
volume 388-101, Page 22, Map of records of Tarrant County, Texas.

      

      4.           Easement
along the south and west sides of property as shown on the plat recorded in
volume 388-101, Page 22, Map of records of Tarrant County, Texas.

      

      5.           Easement
granted by American Care Center, Inc. to Texas Electric Service company, dated
January 1, 1977, filed April 21, 1977, recorded in Volume 6218 Page 234, Deed
Records of Tarrant County, Texas.

      

      
        
          
          

        

        
          Exhibit C - Page 2 of 5

          
            

          

        

        
          
          

        

      

      (Katy)

      

      
        	
                (1)

              	
                The
      following restrictive covenants of record itemized below, but the Company
      insures that any such restrictive covenants have not been violated so as
      to affect, and that future violation thereof will not affect, the validity
      or priority of the mortgage hereby insured (insert specific recording date
      or delete this exception):

              

      

      

      Restrictive
Covenants as set out in Volume 336, Page 107 of the Map Records ofHarris County,
Texas.  (As to Tract 1)

      

      
        	
                (2)

              	
                An
      easement 8 feet wide along the northerly property line, and an aerial
      easement 5 feet wide from a plane 20 feet above the ground upward, located
      adjacent thereto for the use of public utilities as reflected by plat
      recorded in Volume 304, Page 27 of the Map Record of Harris County,
      Texas.  (As to Tracts 1 and
2)

              

      

      

      
        	
                (3)

              	
                An
      easement 40 feet wide along the west property line granted to
      Missouri-Kansas-Texas Railroad Company by instrument recorded under
      Clerk’s File No. E520271 of the Real Property Records of Harris County,
      Texas.  (As to Tract 1)

              

      

      

      
        	
                (4)

              	
                Provisions
      of Agreement recorded under clerk’s File No. E538369 of the Real Property
      Records of Harris County, Texas, relating to use of above described
      railroad easement.  (As to Tract
1)

              

      

      

      
        	
                (5)

              	
                Sanitary
      sewer easement 8 feet wide along the northerly property line as evidenced
      by instrument recorded under Clerk’s File No. G636760 of the Real Property
      Records, and as shown on the recorded plat.  (As to Tracts 1 and
      2)

              

      

      

      
        	
                (6)

              	
                Easements
      10 and 5 feet in width, together with adjoining aerial easements 10 feet
      wide from a plane 16 feet above the ground upward located adjacent
      thereto, as granted to Houston Lighting & Power Company by instrument
      recorded under Clerk’s File No. K123137 of the Real Property Records of
      Harris County, Texas, and located as shown on sketch attached
      thereto.  (As to Tract 1)

              

      

      

      
        	
                (7)

              	
                A
      water meter easement 10 feet by 20 feet located in the northerly portion
      as reflected by the recorded plat. (As to Tract
  1)

              

      

      

      
        	
                (8)

              	
                1⁄2
      of all the oil, gas and other minerals, the royalties, bonuses, rentals
      and all other rights in connection with same are excepted herefrom as the
      same are set forth in instrument recorded under Clerk’s File No. D726377
      of the Real Property Records of Harris County, Texas.  Leasing
      rights waived therein.  (As to Tracts 1 and
  2)

              

      

      

      
        	
                (9)

              	
                Building
      line 10 feet from Tull Road as reflected by the recorded
      plat.  (As to Tract 1)

              

      

      

      
        
          
          

        

        
          Exhibit C
- Page 3 of 5

          
            

          

        

        
          
          

        

      

      (Humble)

      

      
        	
                (1)

              	
                Easement
      5 feet in width, together with adjoining aerial easement 10 feet wide from
      a plane 16 feet above the ground upward located adjacent thereto, as
      granted to Houston Lighting & Power Company by instrument recorded
      under Clerk’s File No. J713687 of the Real Property Records of Harris
      County, Texas, and located as shown on sketch attached
      thereto.

              

      

      

      
        	
                (2)

              	
                Easement
      6 feet in width, together with adjoining aerial easements 2 feet
      6  inches wide from a plane 14 feet above the ground upward
      located adjacent thereto, as granted to Houston Lighting & Power
      Company by instrument recorded under Clerk’s File No. R782989 of the Real
      Property Records of Harris County, Texas, and located as shown on sketch
      attached thereto.

              

      

      

      
        	
                (3)

              	
                1⁄2
      of all the oil, gas and other minerals, the royalties, bonuses, rentals
      and all other rights in connection with same are expected herefrom as the
      same are set forth in instrument recorded in Volume 5448, Page 421 of the
      Deed Records of Harris County, Texas.  Leasing rights waived
      therein.

              

      

      

      
        	
                (4)

              	
                Subject
      to the restrictions and regulations imposed by Ordinances of the City of
      Houston, recorded in Volume 5448, Page 421 of the Deed Records of Harris
      County, Texas, as amended under Clerk’s File No. J-040968 of the Real
      Property Records of Harris County, Texas, regarding the Houston
      Intercontinental Airport.

              

      

      

      (Normandy Terrace
Southeast)

      

      
        	
                (1)

              	
                Restrictive
      covenants described in instrument recorded in Volume 1259, Page 505, Deed
      Records of Bexar County, Texas, as noted on survey.  (As to Lots
      40, 41, 42 and 59, NCB 10755)  Any covenant, condition or
      restriction indicating a preference, limitation or discrimination based on
      race, color, religion, sex, handicap, familial status, or national origin
      to the extent such covenants, conditions or restrictions violate 42 USC
      3604(c), is deleted.

              

      

      

      
        	
                (2)

              	
                The
      following easements and/or building lines, all according to the plats
      recorded in Volume 4080, Page 220, Volume 5140, Page 208, Volume 5940,
      Page 67, Volume 6600, Page 52, and Volume 6700, Page 161, Deed and Plat
      Records, Bexar County, Texas, as shown on
  survey.

              

      

      

      
        	
                (3)

              	
                Encroachment
      of improvements over the 30′ setback line along Rice Road (as to Tract
      A).

              

      

      

      
        	
                (4)

              	
                Location
      of the fence along the North and South property lines of Tract
      B.

              

      

      

      (Heritage Oaks)

      

      
        	
                (1)

              	
                Right
      of Way Easement from Milton Bryan to North Runnels Water Supply Corp.,
      dated 08/26/76 recorded in Volume 458, Page 146, Deed Records of Runnels
      County, Texas, as noted on survey.

              

      

      

      
        	
                (2)

              	
                Fifteen
      Foot (15′) Electrical Utility Easement and Right-of-Way executed by
      Dorothea Spencer to West Texas Utilities Company dated 10/12/92, recorded
      in Volume 77, Page 292, Real Property Records of Runnels County, Texas, as
      shown on survey.

              

      

      

      

      
        
          
            Exhibit C
- Page  4 of 5

            

          

           

        

        
           

          
            

          

        

        
           

          
            EXHIBIT
D

            

            

          

        

      

      7.3B                      Texas Environmental
Matters.

      

      7.3B.1                      Prohibition Against Use of
Hazardous Substances.  Lessee shall not permit, conduct or
allow the generation, introduction, presence, maintenance, use, receipt,
acceptance, treatment, manufacture, production, installation, management,
storage, disposal or release of any Hazardous Substance on the Leased
Properties, except for (i) those types and quantities of Hazardous Substances
necessary for and ordinarily associated with the conduct of Lessee’s business
and used in full compliance with all Environmental Laws and (ii) Pre-Existing
Hazardous Substances.

      

      7.3B.2                      Notice of Environmental
Claims, Actions or Contaminations.  Lessee shall notify Lessor,
in writing, immediately upon learning of any existing, pending or threatened:
(i) investigation, inquiry, claim or action by any governmental authority in
connection with any Environmental Laws, (ii) Third Party Claims, (iii)
Regulatory Actions, and/or (iv) Contamination of any portion of the Leased
Properties.

      

      7.3B.3                      Costs of Remedial Actions
with Respect to Environmental Matters.  If any investigation
and/or Clean Up of any Hazardous Substance or other environmental condition on,
under, about or with respect to a Leased Property is required by any
Environmental Law (other than Pre-Existing Hazardous Substances or Pre-Existing
Environmental Conditions), Lessee shall complete, at its own expense, such
investigation and/or Clean Up or cause any other Person who may be legally
responsible to complete such investigation and/or Clean Up.

      

      7.3B.4                      Delivery of Environmental
Documents.  Lessee shall deliver to Lessor complete copies of
any and all Environmental Documents that may now be in, or at any time hereafter
come into, the possession of Lessee.

      

      7.3B.5                      Environmental
Audit.  Upon the reasonable request of Lessor, but no more than
three (3) times during (i) the Initial Term or (ii) a Renewal Term, unless a
prior audit or Lessor’s or Lessee’s records indicate the presence (whether
current or past) of a Release or threatened Release of any Hazardous Substances
on, in, under, about and adjacent to any Leased Property in which case Lessor
may request more than three such Environmental Audits during a given period,
Lessee shall, at Lessee’s expense, upon and within thirty (30) days of a written
request therefor from Lessor, deliver an Environmental Audit to
Lessor.  Lessee shall not be responsible for any costs or expenses of
an audit requested by Lessor solely in connection with a sale or financing of
such Leased Property by Lessor.  All tests and samplings shall be
conducted using generally accepted and scientifically valid technology and
methodologies.  Lessee shall give the engineer or environmental
consultant conducting the Environmental Audit reasonable and complete access to
the Leased Properties and to all records in the possession of Lessee that may
indicate the presence (whether current or past) of a Release or threatened
Release of any Hazardous Substances on, in, under, about and adjacent to any
Leased Property.  Lessee also shall provide the engineer or
environmental consultant full access to and the opportunity to interview such
persons as may be employed in connection with the Leased Properties as the
engineer or consultant deems appropriate.  However, neither Lessor nor
any Facility Mortgagee shall be entitled to request an Environmental Audit from
Lessee unless (i) after the Commencement Date there have been changes,
modifications or additions to Environmental Laws as applied to or affecting any
of the Leased Properties; (ii) a significant change in the condition of any of
the Leased Properties has occurred; (iii) there are fewer than six (6) months
remaining in the Term; or (iv) Lessor or a Facility Mortgagee has another good
reason for requesting such certificate or certificates.  If the
Environmental Audit discloses the presence of Contamination or any noncompliance
with Environmental Laws, Lessee shall immediately perform all of Lessee’s
obligations under this Lease with respect to such Hazardous Substances or
noncompliance.

      

      
        
          
          

        

        
          Exhibit D - Page 1 of
7

          
            

          

        

        
          
          

        

      

      7.3B.6                      Entry onto Leased Properties
for Environmental Matters.  If Lessee fails to provide an
Environmental Audit as and when required by Subparagraph (e) above, in addition
to Lessor’s other remedies Lessee shall permit Lessor and any Facility Mortgagee
from time to time, by its employees, agents, contractors or representatives, to
enter upon the Leased Properties for the purpose of conducting such
Investigations as Lessor may desire, the expense of which shall be paid or
reimbursed promptly by Lessee as an Additional Charge.  Lessor, any
Facility Mortgagee exercising such right of entry and the employees, agents,
contractors, consultants and/or representatives thereof, shall conduct any such
Investigation in a manner that does not unreasonably interfere with Lessee’s use
of and operations on the Leased Properties (however, reasonable temporary
interference with such use and operations is permissible if the investigation
cannot otherwise be reasonably and inexpensively conducted).  Other
than in an emergency, Lessor and any Facility Mortgagee exercising such right of
entry shall provide Lessee with prior notice before entering any of the Leased
Properties to conduct such Investigation, and shall provide copies of any
reports or results to Lessee, and Lessee shall cooperate fully in such
Investigation.

      

      7.3B.7                      Environmental Matters Upon
Termination of the Lease or Expiration of Term.  Upon the
expiration or earlier termination of the Term, Lessee shall cause the Leased
Properties to be delivered free of any and all Regulatory Actions and Third
Party Claims and otherwise in compliance with all Environmental Laws with
respect thereto, and in a manner and condition that is reasonably required to
ensure that the Leased Properties may then be used for their Primary Intended
Use without being restricted by any environmental condition existing as of the
date of such expiration or earlier termination of the Term; provided, that
Lessee shall not be required to take any of the foregoing actions with respect
to Pre-Existing Hazardous Substances or Pre-Existing Environmental
Conditions.

      

      
        
          
          

        

        
          Exhibit D - Page 2 of
7

          
            

          

        

        
          
          

        

      

      7.3B.8                      Compliance with
Environmental Laws.  Lessee shall comply with, and cause its
agents, servants and employees to comply with, and shall use reasonable efforts
to cause each occupant and user of any of the Leased Properties, and the agents,
servants and employees of such occupants and users to comply with, each and
every Environmental Law applicable to Lessee, the Leased Properties and each
such occupant or user with respect to the Leased
Properties.  Specifically, but without limitation:

      

      (i)           Maintenance of Licenses and
Permits.  Lessee shall obtain and maintain (and Lessee shall
use reasonable efforts to cause each tenant, occupant and user to obtain and
maintain) all permits, certificates, licenses and other consents and approvals
required by any applicable Environmental Law from time to time with respect to
Lessee, each and every part of the Leased Properties and/or the conduct of any
business at a Facility or related thereto;

      

      (ii)           Contamination.  Lessee
shall not cause, suffer or permit any Contamination (other than with respect to
or resulting from Pre-Existing Hazardous Substances or Pre-Existing
Environmental Conditions);

      

      (iii)           Clean
Up.  If a Contamination occurs (other than to the extent it
arise out of Pre-Existing Hazardous Substances or Pre-Existing Environmental
Conditions), Lessee promptly shall Clean Up and remove any Hazardous Substance
or cause the Clean Up and the removal of any Hazardous Substance and in any such
case such Clean Up and removal of the Hazardous Substance shall be effected to
Lessor’s reasonable satisfaction and in any event in strict compliance with
applicable Environmental Laws;

      

      (iv)           Discharge of
Lien.  Within twenty (20) days of the date any lien is imposed
against the Leased Properties or any part thereof under any Environmental Law
(other than a lien to the extent it arises out of Pre-Existing Hazardous
Substances or Pre-Existing Environmental Conditions), Lessee shall cause such
lien to be discharged (by payment, by bond or otherwise to Lessor’s absolute
satisfaction);

      

      (v)           Notification of
Lessor.  Within three (3) Business Days after receipt by Lessee
of Notice or discovery by Lessee of any fact or circumstance that might result
in a breach or violation of any Environmental Law, Lessee shall give Lessor
Notice of such fact or circumstance; and

      

      (vi)           Requests, Orders and
Notices.  Within three (3) Business Days after receipt of any
request, order or other notice relating to the Leased Properties under any
Environmental Law, Lessee shall forward a copy thereof to Lessor.

      

      
        
          
          

        

        
          Exhibit D - Page 3 of
7

          
            

          

        

        
          
          

        

      

      7.3B.9                      Environmental Related
Remedies.  In the event of a breach by Lessee beyond any
applicable notice and/or grace period of its covenants with respect to
environmental matters, Lessor may, in its sole discretion, do any one or more of
the following (the exercise of one right or remedy hereunder not precluding the
simultaneous or subsequent exercise of any other right or remedy
hereunder):

      

      (i)           Cause a Clean
Up.  Cause the Clean Up of any Hazardous Substance or other
environmental condition on or under the Leased Properties, or both (except to
the extent such Clean-Up relates to Pre-Existing Hazardous Substances or
Pre-Existing Environmental Conditions), at Lessee’s cost and expense;
or

      

      (ii)           Payment of Regulatory
Damages.  Pay on behalf of Lessee any damages, costs, fines or
penalties imposed on Lessee or Lessor as a result of any Regulatory Actions;
or

      

      (iii)           Payments to Discharge
Liens.  Subject to Section 12.1, on behalf of Lessee, make any
payment or perform any other act or cause any act to be performed that will
prevent a lien in favor of any federal, state or local governmental authority
from attaching to the Leased Properties or that will cause the discharge of any
lien then attached to the Leased Properties; or

      

      (iv)           Payment of Third Party
Damages.  Pay, on behalf of Lessee, any damages, cost, fines or
penalties imposed on Lessee as a result of any Third Party Claims;
or

      

      (v)           Demand of
Payment.  Demand that Lessee make immediate payment of all of
the costs of such Clean Up and/or exercise of the remedies set forth in this
Section 7.2 incurred by Lessor and not paid by Lessee as of the date of such
demand.

      

      7.3B.10                      Environmental
Indemnification.  Lessee shall and does hereby indemnify, and
shall defend and hold harmless, Lessor, each Facility Mortgagee and the
principals, officers, directors, agents and employees of Lessor and each
Facility Mortgagee, from each and every incurred and potential claim, cause of
action, damage, demand, obligation, fine, laboratory fee, liability, loss,
penalty, imposition settlement, levy, lien removal, litigation, judgment,
proceeding, disbursement, expense and/or cost (including without limitation the
cost of each and every Clean Up), however defined and of whatever kind or
nature, known or unknown, foreseeable or unforeseeable, contingent, incidental,
consequential or otherwise (including, but not limited to, attorneys’ fees,
consultants’ fees, experts’ fees and related expenses, capital, operating and
maintenance costs, incurred in connection with (i) any Investigation or
monitoring of site conditions, and (ii) any Clean-Up required or performed by
any federal, state or local governmental entity or performed by any other entity
or person because of the presence of any Hazardous Substance, Release,
threatened Release or any Contamination on, in, under or about any of the Leased
Properties) that may be asserted against, imposed on, suffered or incurred by,
each and every indemnitee arising out of or in any way related to, or allegedly
arising out of or due to any environmental matter (except to the extent it
arises out of Pre-Existing Hazardous Substances or Pre-Existing Environmental
Conditions) including, but not limited to, any one or more of the
following:

      

      
        
          
          

        

        
          Exhibit D - Page 4 of
7

          
            

          

        

        
          
          

        

      

      (i)           Release Damage or
Liability.  The presence of Contamination in, on, at, under or
near a Leased Property or migrating to a Leased Property from another
location;

      

      (ii)           Injuries.  All
injuries to health or safety (including wrongful death), or to the environment,
by reason of environmental matters relating to the condition of or activities
past or present on, at, in or under a Leased Property, other than with respect
to or resulting from Pre-Existing Hazardous Substances or Pre-Existing
Environmental Conditions;

      

      (iii)           Violations of
Law.  All violations, and alleged violations, of any
Environmental Law relating to a Leased Property or any activity on, in, at or
under a Leased Property, other than with respect to or resulting from
Pre-Existing Hazardous Substances or Pre-Existing Environmental
Conditions;

      

      (iv)           Misrepresentation.  All
material misrepresentations relating to environmental matters in any documents
or materials furnished by Lessee to Lessor and/or its representatives in
connection with the Lease;

      

      (v)           Event of
Default.  Each and every Event of Default relating to
environmental matters;

      

      (vi)           Lawsuits.  Any
and all lawsuits brought or threatened, settlements reached and governmental
orders relating to any Hazardous Substances at, on, in or under a Leased
Property, and all demands of governmental authorities, and all policies and
requirements of Lessor’s, based upon or in any way related to any Hazardous
Substances at, on, in or under a Leased Property, other than with respect to or
resulting from Pre-Existing Hazardous Substances or Pre-Existing Environmental
Conditions; and

      

      (vii)           Presence of
Liens.  All liens imposed upon any of the Leased Properties in
favor of any governmental entity or any person as a result of the presence,
disposal, release or threat of release of Hazardous Substances at, on, in, from
or under a Leased Property, other than with respect to or resulting from
Pre-Existing Hazardous Substances or Pre-Existing Environmental
Conditions.

      

      
        
          
          

        

        
          Exhibit D - Page 5 of
7

          
            

          

        

        
          
          

        

      

      7.3B.11                      Rights Cumulative and
Survival.  The rights granted Lessor under this Section are in
addition to and not in limitation of any other rights or remedies available to
Lessor under this Lease or allowed at law or in equity or rights of
indemnification provided to Lessor in any agreement pursuant to which Lessor
purchased any of the Leased Property.  The payment and indemnification
obligations set forth in this Section 7.3B shall survive the expiration or
earlier termination of the Term.

      

      7.4           Exculpation.  Notwithstanding
anything to the contrary in this Lease, Lessee shall not be liable for any
costs, loss, liability, damage or expense arising from or in connection with the
Clean-Up of any Pre-Existing Hazardous Substances or Pre-Existing Environmental
Conditions.  If any Clean-Up is required to be performed by any
federal, state or local governmental entity solely because of the presence of
any Pre-Existing Hazardous Substances or Pre-Existing Environmental Conditions
and if the Treemont Facility, the Katy Facility or the Humble Facility will no
longer be permitted under applicable law to operate for their Primary Intended
Use unless such Clean-Up is performed (a “Required Clean-Up”),
then Lessee shall promptly notify Lessor of such Required
Clean-Up.  If Lessor elects in writing not to perform such Required
Clean-Up, then Lessee may elect within thirty (30) days of such determination to
terminate this Lease as to such Facility only.  If Lessor elects to
perform such Required Clean-Up, then Lessor shall promptly undertake and
diligently pursue the remediation of the applicable Pre-Existing Hazardous
Substances or Pre-Existing Environmental Conditions.

      

      7.5           Asbestos
Remediation.  If any Clean-Up of any Existing Asbestos
Containing Materials is required to be performed by any federal, state or local
governmental entity and if the Doctors & Fort Worth Facilities will no
longer be permitted under applicable law to operate for their Primary Intended
Use unless such Clean-Up is performed (a “Required Asbestos
Clean-Up”), then Lessee shall promptly notify Lessor of such Required
Asbestos Clean-Up.  Within thirty (30) days of the determination that
a Required Asbestos Clean-Up must be done, Lessee shall provide Lessor with an
estimate of the Asbestos Clean-Up Cost.  Lessor shall fund one half of
the Asbestos Clean-Up Cost (which funding may be in the form of an agreement to
abate Base Rent for a period of time commencing on the date that Lessee
commences the Required Asbestos Clean-Up).  Lessee shall promptly
undertake and diligently perform such Required Asbestos Clean-Up and, upon
completion, shall provide Lessor with an accounting of all Asbestos Clean-Up
Costs, including adequate evidence of payment by Lessee of such
costs.  Notwithstanding the foregoing, if such Required Asbestos
Clean-Up would not have been required by, or otherwise come to the attention of,
any governmental entity, but for the renovations or alterations of the Facility
occurring after the Commencement Date or as a result of the actions or omissions
of Lessee, a Sublessee, a Manager or other agent of Lessee, including the
failure to abide by Asbestos Management Plans, then Lessor shall have no
obligation to fund any portion of the Asbestos Clean-Up Costs and Lessee shall
be solely responsible for such Required Asbestos Clean-Up.  Lessee
acknowledges receipt of copies of the Asbestos Management
Plans.

      
        
          
            Exhibit D
- Page 6 of 7

            

          

           

        

        
           

          
            

          

        

        
           

          
            SCHEDULE
C

            

            

          

        

      

      Excepted Facilities to
Radius Restriction

      

      

      Alabama                                Westside
Healthcare                                                       Huntsville,
Alabama

      Windsor
House                                                               Huntsville,
Alabama

      

      

      Florida                                Golfview
Nursing
Home                                                     St.
Petersburg, Florida

      

      

       

      
        
          
            SCHEDULE
C - Page 1 of 1ex10_7.htm

     

     

    
      
        

      

    SIXTH
AMENDMENT TO CONSOLIDATED

    AMENDED
AND RESTATED MASTER LEASE

    

    This
Sixth Amendment to Consolidated Amended and Restated Master Lease (this “Amendment”) is
executed and delivered as of March 14th, 2008 by and between STERLING
ACQUISITION CORP., a Kentucky corporation (“Lessor”), the address
of which is 9690 Deereco Road, Suite 100, Timonium, MD 21093, and DIVERSICARE
LEASING CORP., a Tennessee corporation, the address of which is 1621 Galleria
Boulevard, Brentwood, TN  37027.

     

    RECITALS:

    

    A.           Lessee
has executed and delivered to Lessor a Consolidated Amended and Restated Master
Lease dated as of November 8, 2000, but effective as of October 1, 2000, as
amended by a First Amendment to Consolidated Amended and Restated Master Lease
dated as of September 30, 2001, a Second 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 Lease dated as of
October 20, 2006 (the “Third Amendment”), a
Fourth Amendment to Consolidated Amended and Restated Master Lease dated as of
April 1, 2007, and a Fifth Amendment to Consolidated Amended and Restated Master
Lease dated as of August 10, 2007 (the “Existing Master
Lease”) pursuant to which Lessee leased from Lessor certain healthcare
facilities.

     

    B.           Pursuant
to that certain Unimproved Property Contract (the “Paris Purchase
Agreement”) dated as of September 4, 2007 between Haynes, Haynes and
Jones, a general partnership, and Omega Healthcare Investors, Inc., a Maryland
corporation (“Omega”), Omega has
the right to acquire that certain parcel of unimproved land described on
attached Exhibit A and located in Paris, Texas (the “Paris
Land”).

     

     C.           Omega
is the parent corporation of Lessor and intends to assign its right to purchase
the Paris Land to Lessor.

     

    D.           Lessor
and Lessee desire to have a skilled nursing facility constructed on the Paris
Land (the “Paris
Facility”) and for Lessee to lease the Paris Facility from Lessor
pursuant to the Existing Master Lease.

     

    E.           Lessee
and Lessor desire to amend the Existing Master Lease to add the Paris Facility
to the Existing 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
assigned to such term in the Master Lease.  From and after the date of
this Amendment, each reference in the Existing Master Leases or the other
Transaction Documents to the “Lease” or “Master Lease” means, as applicable, the
Existing Master Lease or Existing Master Leases as modified by this
Amendment.

     

    (b) In
addition to the other definitions contained herein, when used in this Amendment
the following terms shall have the following meanings:

     

    “Acquisition Date”
means the date that the Land described in Exhibit A to this
Amendment is acquired by Lessor or its Affiliates.

     

    “Actual Funded Amount”
means (i) the amount actually expended for the acquisition of the Paris Land by
Lessor and the amount actually advanced and disbursed by Lessor for completion
of the Paris Facility in accordance with this Amendment, as of a given date,
plus (ii) the allocated bed costs set forth in the Construction
Budget.

     

    “Closing Date” means
the date that Lessor acquires the Paris Facility.

     

    “Construction Budgets”
means the detailed budget for the construction of the Paris Facility attached as
Schedule 1,
which sets forth Lessee’s good faith estimate of the Project Costs on an
itemized basis and designates each item by amount, whether such item constitutes
an item of Hard Costs or Soft Costs and the amount of proceeds, if any, of the
Maximum Funded Amount allocable to each item of Hard Costs and Soft
Costs.

     

    “Developer’s Fees”
means the fees and commissions, including Developer’s Overhead, payable to
Lessee or any Affiliate of Lessee for services rendered in connection with the
development, construction management or leasing of the Paris Facility, as set
forth on the Construction Budget.

     

    “Developer’s Overhead”
means costs incurred by Lessee and set forth on the Construction Budget for
developer’s overhead and profit.

     

    “Event of Force
Majeure” is any event or condition of Force Majeure, not existing as of
the Closing Date, not reasonably foreseeable as of such date and not reasonably
within the control of Lessee, that prevents in whole or in material part the
performance by Lessee of its obligations under this Amendment or that renders
the performance of such obligations so difficult as to make such performance
commercially unreasonable.

     

    “Funded Amount” means
(i) the amount actually expended for the acquisition of the Paris Land and
completion of the Paris Facility as of a given date, plus (ii) the allocated bed
costs set forth in the Construction Budget.

     

    “Hard Costs” means
costs paid to renovate and complete the Paris Facility, including without
limitation, demolition costs, site preparation costs, contractor’s fees, and
costs of labor and material paid or necessarily incurred by Lessee in connection
with the construction of the Paris Facility, but excluding Developer’s Fees,
Developer’s Overhead and Contractor’s Overhead, and the contingency reserve, if
any, set forth on the Construction Budget.

     

    “Initial Paris Base
Rent” means an annual amount equal to (i) the Actual Funded Amount as of
the first day of the applicable month during the applicable Lease Year multiplied by (ii) ten and
one quarter percent (10.25%).

     

    “In Service Date”
shall be the date of completion of construction and licensing of the Paris
Facility for its intended use as a skilled nursing facility.

     

    “Joinder Agreement”
means the Joinder Agreement and Amendment to Texas Collateral Documents from the
Paris Sublessee, the Texas Sublessees, and Lessor dated as of the date of this
Amendment.

     

    “Maximum Funded
Amount” means Seven Million Dollars ($7,000,000).

     

    “Plans and
Specifications” means the written plans and specification for the
construction of the Paris Facility submitted by Lessee and approved by Lessor,
as such plans and specifications may be amended as set forth in this
Amendment.

     

    “Paris Base Rent Commencement
Date” shall be the earlier of (i) the 15th day of
the calendar month following the In Service Date or (ii) August 15,
2009.

     

    “Paris Base Rent”
shall be:

     

    (a)           During
the first Renewal Term, the Paris Base Rent shall be:

     

    (1)           Prior
to the Paris Base Rent Commencement Date, no Paris Base Rent shall be due and
owing;

     

    (2)           During
the twelve month period commencing on the Paris Base Rent Commencement Date, the
Initial Paris Base Rent;

     

    (3)           Subject
to sub-sections (a)(4) of this defined term, during each subsequent twelve month
period commencing on the anniversary of the Paris Base Rent Commencement Date
(the “Adjustment
Date”), until the end of the Term (including any Renewal Terms), the
Paris Base Rent for the previous Lease Year, increased by the product of (i) the
Paris Base Rent during the immediately preceding Lease Year and (ii) the lesser of one (1) times the
increase, if any, in the CPI (expressed as a percentage) from the Paris Base
Rent Commencement Date to the applicable Adjustment Date and two and one-half
percent (2.5%).

     

    Under no
circumstances will the Paris Base Rent in any twelve month period be less than
the Paris Base Rent during the preceding twelve month.

     

    (4)           If,
after the Paris Rent Reset Date, the Paris Formula Rent is greater than the
Paris Scheduled Rent, then

     

    (A)           for
the twelve month period after the Paris Rent Reset Date,  the Paris
Base Rent shall be equal to the Paris Formula Rent; and

     

    (B)           during
each subsequent twelve month period commencing on the anniversary of the Paris
Rent Reset Date (the “Adjustment Date”), until the end of the Term (including
any Renewal Terms), Paris Base Rent for the previous Lease Year, increased by
the product of (i) the Paris Base Rent during the immediately preceding Lease
Year and (ii) the lesser of one (1) times the increase, if any, in the CPI
(expressed as a percentage) from the Paris Rent Reset Date to the applicable
Adjustment Date and two and one-half percent (2.5%).

     

    Under no
circumstances will the Paris Base Rent in any Lease Year be less than the Paris
Base Rent during the preceding Lease Year.

     

    Under no
circumstances will the Paris Base Rent in any Lease Year during the Renewal Term
be less than the Paris Base Rent during the preceding Lease Year.

     

    Paris Cash
Flow:  For any period, the sum of (a) Net Income of Lessee
arising solely from the operation of the Paris Facility for the applicable
period, and (b) the amounts deducted in computing Lessee’s Net Income for the
period for (i) the provision for self-insured, professional and general
liability, (ii) depreciation, (iii) amortization, (iv) Paris Base Rent, (v)
interest (including payments in the nature of interest under Capitalized Leases
and interest on any Purchase Money Financing for personal property used in
connection with the Paris Facility), (vi) income taxes (or, if greater, income
tax actually paid during the period attributable to the Paris Facility), and
(vii) management fees payable in connection with the Paris Facility, and less
(c) an imputed management fee equal to six percent (6%) of Gross Revenues for
the Paris Facility, and less (d) the Cash Cost of Self-Insured Professional and
General Liability attributable to the Paris Facility.  The Cash Cost
of Self-Insured Professional and General Liability shall mean:  For
any period, the average total per bed cash expenditure associated with
professional and general liability related settlements, judgments, legal fees or
administration for skilled nursing facilities in the State of Texas as from time
to time estimated and published by Aon Risk Consultants, or its successors, for
the American Health Care Association, multiplied by the average number of
occupied beds in the Paris Facility.

     

    “Paris Formula Rent”
means the sum of:

     

    (a)           the
Paris Scheduled Rent; plus

     

    (b)           one
half of (i) the average annual Paris Cash Flow for the twenty four month period
ending prior to the Paris Rent Reset Date, less (ii) the Paris Scheduled Rent
multiplied by
1.2.

     

    “Paris Rent Reset
Date” means the first day of the sixth full Lease Year after the Paris
Base Rent Commencement Date.

     

    “Paris Scheduled Rent”
means the Paris Base Rent as of the Paris Rent Reset Date as calculated pursuant
to subsection (a)(3) of the definition of Paris Base Rent.

     

    “Paris Sublessee”
means Diversicare Paris, LLC, a Delaware limited liability company.

     

    “Project Costs” means
all Hard Costs, Soft Costs, Developer’s Fees, Contractor’s Overhead and other
costs and fees associated with the construction of the Construction
Facilities.

     

    “Soft Costs” means
premiums for title, casualty and other insurance required by Lessor under the
Paris Purchase Agreement or this Lease; the cost of recording and filing the
closing documents under the Paris Purchase Agreement and any tax levied upon
such filing; real estate taxes and other assessments that Lessee is obligated to
pay; fees and disbursements of the Lessor’s attorneys, architects and engineers,
appraisers, environmental engineers and surveyors; architectural design and
monitoring fees; permit fees; all fees and expenses payable under that certain
Development Agreement dated as of October 31, 2007 between OHI Asset (TX) Paris,
LLC, a Delaware limited liability company, and LMG Development, LLC, a Texas
limited liability company; allocated best costs as set forth in the Construction
Budget;  and interest (including any reserve for interest set forth on
the Construction Budgets), fees and miscellaneous transaction closing costs and
charges payable by Lessee to Lessor as they become due and payable.

     

    “Survey Requirements”
means the survey requirements set forth in Exhibit B to this
Amendment.

     

    “Target Completion
Date” means July 1, 2009.

     

    “Title Company” means
a title company selected by Lessor and reasonably acceptable to
Lessee.

     

    (c) The
following definitions defined in §2.1 of the Existing Master Lease and §1 of the
Fifth Amendment are hereby amended in their entirety as follows:

     

    (1)           §2.1
of the Existing Master Lease:

     

    Base Rent: means the
sum of (i) the Non-Texas Base Rent, (ii) the Texas Base Rent, and (iii) subject
to Section 1(c) of this Amendment, the Paris Base Rent.

     

    Commencement
Date:  October 1, 2000 for the Non-Texas Facilities (other than
the Paris Facility), August 11, 2007 for the Texas Facilities, and the Closing
Date for the Paris Facility.

     

    Expiration Date:
means the First Renewal Term Expiration Date, the Second Renewal Term Expiration
Date, the First Texas Renewal Term Expiration Date, or the Second Texas Renewal
Term Expiration Date, as applicable.

     

    Facilit(y)(ies): Each
health care facility on the Land, including the Leased Property associated with
such Facility, and together, all such facilities on the Leased Properties; all
of which Facilities are collectively listed on Exhibit C to this
Amendment.

     

    Land:  The
real property described in listed on attached Exhibit A to the
Existing Master Lease, Exhibit A to the
Fifth Amendment and Exhibit A to this
Amendment.

     

    Lease Year: October
1, 2000 through September 30, 2001, and each twelve month period thereafter,
except that for purposes of determining the Texas Base Rent and the Paris Base
Rent, “Lease Year” shall mean (i) with respect to the Texas Base Rent, the
twelve month period commencing on February 1 and ending January 31, and each
twelve month period thereafter, and (ii) with respect to the Paris Base Rent,
the twelve month period commencing on the Paris Base Rent Commencement Date, and
each twelve month period thereafter commencing on the anniversary of the Paris
Base Rent Commencement Date.

     

    Leased
Property:  The portion of the Land on which a Facility is
located, the legal description of which is set forth beneath the Facility’s name
on Exhibits A-1
through A-28 to the Existing Master Lease, Exhibit A-1 through
A-7 to the Fifth Amendment, and Exhibit A to this Amendment, the Leased
Improvements  on such portion of the Land, the Related Rights with
respect to such portion of the land, and Lessor’s Personal Property with respect
to such Facility.

     

    Permitted
Encumbrances: Encumbrances listed on attached Exhibit B to the
Existing Master Lease, Exhibit C to the
Fifth Amendment, and Exhibit D to this
Amendment.

     

    (2)           §1
of the Fifth Amendment:

     

    Pre-Existing Hazardous
Substances: means Hazardous Substances located on, under, about or with
respect to the Treemont Facility prior to February 1, 2003, or the Katy Facility
prior to July 1, 2003, or the Humble Facility prior to July 1, 2003, or the
Paris Facility prior to the Acquisition Date for the Paris
Facility.

     

    Pre-Existing Environmental
Conditions: means any Contamination or other environmental condition on,
under, about or with respect to the Treemont Facility prior to February 1, 2003,
or the Katy Facility prior to July 1, 2003, or the Humble Facility prior to July
1, 2003, or the Paris Facility prior to the Acquisition Date for the Paris
Facility.

     

    Texas Facilities:
means, except as otherwise expressly provided herein with respect to the Paris
Facility, the Facilities located on the real property described in Exhibits A-1 through
A-7 to the
Fifth Amendment and Exhibit A to this
Amendment.

     

    Texas Pledge
Agreements: means the Pledge Agreements dated as of the same date as the
Fifth Amendment, as amended by the Joinder Agreement, from the equity owners of
the Texas Sublessees in favor of Lessor.

     

    Texas Sublessees:
means (i) the Master Texas Sublessee, (ii) Diversicare Ballinger, LLC,
Diversicare Doctors, LLC, Diversicare Estates, LLC, Diversicare Humble, LLC,
Diversicare Katy, LLC, Diversicare Normandy Terrace, LLC, and Diversicare
Treemont, LLC, each a Delaware limited liability company, and (iii) the Paris
Sublessee.

     

    Texas Sublessees
Guaranty: means the Guaranty dated as of the same date as the Fifth
Amendment, as joined in by Paris Sublessee pursuant to the Joinder Agreement, in
favor of Lessor.

     

    Texas Sublessee Security
Agreement: means the Security Agreement dated as of the same date as the
Fifth Amendment, as joined in by Paris Sublessee pursuant to the Joinder
Agreement,  in favor of Lessor.

    

    (d) For
purposes of the adjustments to Texas Base Rent provided for in subparagraphs (3)
and (4) of the definition of Texas Base Rent set forth in Section 1 of the Fifth
Amendment, the “change” or “increase” in CPI referred to therein shall be deemed
to mean the “change” or increase” in CPI from the Commencement Date to the
commencement of the twelve month period (being February 1 through January 31)
for which the adjustment in Texas Base Rent, if any, is to be made.

     

    2. Paris Base Rent; Rent Reset;
Termination Option; a “Texas Facility”; Delay.

     

    (a) Paris Base Rent Commencement
Date.  Commencing as of the Paris Base Rent Commencement Date,
Lessee shall pay the Paris Base Rent pursuant to the terms and conditions of
Article III of the Master Lease.  Notwithstanding anything in this
Amendment to the contrary, Lessor shall have no obligation to make further
advances of the Funded Amount on or after the Paris Base Rent Commencement
Date.

     

    (b) Paris Base Rent
Reset.  As soon as reasonably possible after the fifth
anniversary of the Paris Base Rent Commencement Date, Lessor and Lessee shall
calculate the Paris Formula Rent.  If the Paris Formula Rent is
greater than the Paris Scheduled Rent, then the Paris Base Rent shall be reset
to the Paris Formula Rent effective as of the Paris Rent Reset
Date.

     

    (c) Paris Termination
Option.  Pursuant to written notice delivered to Lessor not
more than thirty (30) days prior to, nor later than, the fifth anniversary of
the Paris Base Rent Commencement Date (“Paris Termination
Notice”), Lessee may elect to terminate the Master Lease as to the Paris
Facility only.  After delivery of the Paris Termination Notice, this
Lease shall be terminated as to the Paris Facility only effective on the earlier
of (i) a date set by written notice given by Lessor at least thirty (30) days
prior to the effective date, and (ii) the first day of the sixth month after
fifth anniversary of the Paris Base Rent Commencement Date (the “Paris Termination
Date”).  If the Paris Termination Notice is delivered, then
Lessee shall have no further obligation to pay Paris Base Rent for periods from
and after the Paris Termination Date.

     

    (d) For all
purposes under this Lease other than the calculation of Base Rent, the Paris
Facility shall constitute a Texas Facility.

     

    (e) In the
event that Lessee is unable to obtain completion of the Paris Facility as
described in Section 6(a) below by the Target Completion Date due to an Event of
Force Majeure or Lessor Delay, then the Target Completion Date and the Paris
Base Rent Commencement Date shall each be extended by one (1) day for each one
(1) day of delay in the completion of the Paris Facility caused by such Event of
Force Majeure or Lessor Delay.  For purposes of this Amendment, the
term “Lessor Delay” shall mean any delay in achieving completion of the Paris
Facility as described in Section 6(a) below arising solely and directly as a
result of:

     

    (i) Lessor’s
failure to furnish any information or documents in accordance with this
Amendment and the continuation of such failure after the receipt of written
notice from Lessee to Lessor, to the extent such failure causes a delay in
completion;

     

    (ii) Lessor’s
failure or delay in giving approval or consent (or comments or corrections)
where Lessor’s approval or consent (or comments or corrections), as applicable,
is required herein and has been requested in writing by Lessee, to the extent
such failure or delay causes a delay in completion; and

     

    (iii) Lessor’s
failure to perform or comply with its obligations under this Amendment and the
continuation of such failure after the receipt of written notice from Lessee to
Lessor, to the extent such failure causes a delay.

     

    3. Accrual of Financing
Costs.  During the period from the Closing Date until the Base
Rent Commencement Date, financing costs on the Actual Funded Amount shall accrue
monthly at the rate of ten and one-quarter percent (10.25%) per
annum.  In the month such financing costs accrues, such financing
costs shall be deemed to have been advanced as part of the Actual Funded Amount
for all purposes under this Amendment.

     

    4. Sublease;
Management.  Lessee may sublease the Paris Facility to the
Master Texas Sublessee and the Master Texas Sublessee may sublease the Facility
to the Paris Sublessee.  The Paris Sublessee shall guaranty this Lease
and provide the same collateral to secure this Lease as are provided by all
other Sublessees under this Lease.  The form of sublease between
Lessee and the Paris Sublessee (the “Paris Sublease”)
shall be subject to Lessor’s reasonable approval.  All equity owners
of the Paris Sublessee shall (i) pledge their interests in the Sublessee to
secure the Lease and the other Transaction Documents, and (ii) subordinate any
management, consulting or other agreements between the Paris Sublessee and such
equity owners (or any of their affiliates) to the Paris Sublease, this Lease and
the other Transaction Documents.  Pursuant to Section 8.4 of the
Existing Master Lease, Lessor hereby consents to the management of the Paris
Facility by Diversicare Management Services Co., an Affiliate of Lessee, under
its current form of Management Agreement with the Lessee or Sublessee, as the
case may be, of the other Facilities covered by the Existing Master
Lease.

     

    5. Regulatory
Approvals.  Lessee will be required to, or to cause Paris
Sublessee to, apply for, and to diligently pursue at its own expense, all
licenses and regulatory approvals to operate the Paris Facility as a skilled
nursing facility (the “Licenses”).  Lessee represents and warrants
that it knows of no facts or circumstances that would make it unlikely that the
Licenses will be issued.  Lessor covenants and agrees that it will
cooperate in good faith with Lessee and use commercially reasonable efforts,
where necessary or required from Lessor as owner of the Paris Land, to enable
and assist Lessee to obtain the Licenses.

     

    6. Construction of the Paris
Facility.

     

    (a) Commencement and Completion
of Construction.  Lessee shall commence substantial on-site
construction of the Paris Facility within sixty (60) days of the Closing Date
and, subject to a temporary suspension of performance pursuant to Section 16
below, or Lessor Delay, will continue diligently to complete the Paris Facility
on or before the Target Completion Date (or as soon thereafter as reasonably
possible) and will supply such moneys and perform such duties as may be
necessary in connection therewith.  The Paris Facility will be
complete for purposes of this Section only at such time as (i) all improvements
to the Paris Facility called for in the Plans and Specifications have been
installed or completed in a manner satisfactory to Lessor and (ii) the local
public authority has issued a final certificate of occupancy for the Paris
Facility subject only to such conditions as may be acceptable to
Lessor.

     

    (b) Lessor’s Architect; Approval
of Plans.  Lessor may retain the services of architects and
engineers, including architects and engineers employed by Lessor (the “Lessor’s
Architect”), to act as Lessor’s agent in reviewing the Plans and Specifications
and the progress of construction and in making such certifications and
performing such other tasks and duties as Lessor deems
appropriate.  Lessee will pay all reasonable fees, costs and expenses
of the Lessor’s Architect within ten (10) days after demand by Lessor,
accompanied by a reasonably detailed invoice or statement of the amount due from
Lessor’s Architect.  Lessee, at Lessee’s option, may utilize and
retain the services of Lessor’s Architect or may retain the services of its own
architects and engineers (the “Lessee’s Architect”)
to develop and prepare the Plans and Specifications for construction of the
Paris Facility.  Whether Lessee utilizes Lessor’s Architect or
Lessee’s Architect as the “Project Architect” to develop and prepare the Plans
and Specifications, Lessee shall be responsible for payment of the fees, costs
and expenses of the Project Architect in developing and preparing the Plans and
Specifications.  Lessor and Lessee shall cooperate with each other in
developing the Plans and Specifications.  Lessee shall cause the
Project Architect to deliver to Lessor the Plans and Specifications for review
and approval by Lessor.  The Plans and Specifications shall be subject
to Lessor’s approval within ten (10) Business Days of receipt by Lessor of a
complete set of the Plans and Specifications.  Lessor’s approval shall
not be unreasonably withheld, delayed or conditioned.  If Lessor does
not approve the same, Lessor shall advise Lessee in writing specifically of the
changes required in the Plans and Specifications so that they will meet with
Lessor’s approval.  If Lessor provides Lessee comments as to the Plans
and Specifications, Lessee shall provide revised Plans and Specifications to
Lessor within ten (10) Business Days and Lessor shall review such revised Plans
and Specifications and within ten (10) Business Days of receipt give its
approval or provide the changes required for approval to be
given.  This process shall continue in accordance with these time
frames until such time as Lessor and Lessee have finally approved the Plans and
Specifications.  The review by Lessor of the Plans and Specifications
is for Lessor’s benefit only, and Lessor’s approval of any such Plans and
Specifications shall impose no liability on Lessor, express or implied,
including without limitation any representation or warranty that such Plans and
Specifications are complete or accurate, or that such Plans and Specifications
comply with zoning or other land use laws, local building department
requirements, or any applicable public or private covenants, conditions or
restrictions, and shall not in any way relieve Lessee of its obligation to
perform its work in accordance with this Amendment and all applicable laws and
requirements.

     

    (c) Plans and
Specifications.  Lessee will deliver to Lessor accurate and
complete copies of the approved Plans and Specifications and all other contract
documents requested by Lessor, including all modifications
thereof.  Lessee represents and warrants that the Plans and
Specifications and construction of the Paris Facility pursuant to thereto comply
and will comply with all applicable governmental laws and regulations and
requirements, zoning and subdivision ordinances, and standards and regulations
of all governmental bodies exercising jurisdiction over the Paris Facility,
including health care licensing.  Lessee agrees to provide to Lessor a
certification of the Project Architect to such effect as well as the approvals
of any governmental body or agency exercising jurisdiction of the Paris
Facility.  Except as provided below, Lessee will not make, or cause or
permit to be made, any change to the Plans and Specifications unless a request
for the change has been submitted in writing to Lessor and approved in writing
by the construction manager or general contractor, as the case may be, any
tenants whose approval is required, Lessor and such other parties as Lessor may
require.  Lessor’s approval may be subject to such terms and
conditions as Lessor reasonably may prescribe.  Under no circumstances
will any failure by Lessor to respond to a request for approval of a change in
the Plans and Specifications be deemed to constitute approval of the
request.  Lessee will deliver promptly to Lessor copies of all
bulletins, addenda, change orders and modifications to the Plans and
Specifications.  Lessor has the right at all times to require strict
compliance with the original Plans and Specifications, but Lessee may effect
changes in the Plans and Specifications from time to time, without first
obtaining Lessor’s approval, if (i) the changes do not impair the structural
integrity, design concept or architectural appearance of the Paris Facility or
change the useable area of the Paris Facility in any way, (ii) the changes will
not result in a default in any other obligation to any other party or authority
and (iii) the changes will not result in a net increase or decrease in the total
Project Costs of TWO HUNDRED FIFTY THOUSAND DOLLARS ($250,000.00) or more in the
aggregate for all changes.  Notwithstanding the foregoing, to the
extent that the cost to complete the Paris Facility exceeds the Maximum Funded
Amount (whether or not as a result of any such changes in the Plans and
Specifications), Lessee will be responsible for payment of the
excess.

     

    (d) Character of
Construction.  All construction will be in accordance with the
Plans and Specifications, of sound materials, in good and workmanlike manner,
free and clear of all liens, claims and encumbrances (other than the liens and
security interests securing the obligations of the Lessee under this Lease), and
in compliance with all laws, ordinances, regulations and restrictions affecting
the Paris Facility and all requirements of all governmental authorities having
jurisdiction over the Paris Facility and of the appropriate board of fire
underwriters or other similar body, if any, and any applicable health care
authority related to the Licenses.  Lessee will furnish Lessor with
evidence of such compliance as Lessor requires from time to time.

     

    (e) Construction Contract and
Architectural/Engineering Agreement.

     

    (i) The
identity of the construction manager(s) or general contractor(s), as the case
may be, and the Project Architect, and the contracts under which each is
retained in connection with the Paris Facility must be approved by Lessor in
writing prior to the commencement of construction, which approval shall not be
unreasonably withheld.  Any change to the construction manager(s) or
general contractor(s), as the case may be, and the Project Architect in
connection with the Paris Facility must be approved by Lessor in
writing.  Lessee will execute the construction management agreement or
general contract(s) between Lessee and the construction manager or general
contractor(s) covering all work to be done in connection with the Paris
Facility.  Upon request of Lessor, Lessee will promptly furnish to
Lessor executed copies of the construction management, general contracts, and
all subcontracts between the construction manager or general contractor(s) and
all of their subcontractors and suppliers.  Upon request of Lessor,
Lessee will promptly furnish to Lessor any amendments or modifications
(including change orders) to any of the foregoing.  Lessee will not
modify or amend or permit to be modified or amended (including by way of change
order) any construction management agreement, construction contract or
construction subcontract without Lessor’s prior written approval; provided,
however, that Lessor’s prior approval need not be obtained with respect to any
change order that results from a change in the Plans and Specifications with
respect to which Lessor’s consent is not required pursuant to Section 1(g)
above.  Upon request of Lessor, Lessee will also furnish to Lessor an
executed copy of the architectural and/or engineering agreement between Lessee
and the Project Architect with respect to the Paris Facility.

     

    (ii) Lessee
will perform its obligations under the contracts described in subparagraph (i)
above, and will use reasonable best efforts to cause each other party to such
contracts to perform its obligations under such contracts.

     

    (iii) Lessee
will enforce or cause to be enforced the prompt performance of the contracts
described in subparagraph (i) above and will allow Lessor to take advantage of
all rights and benefits of such contracts.  In addition, effective
upon the expiration or termination of this Lease as to the Paris Facility,
Lessee hereby assigns to Lessor all warranties given to Lessee under the
contracts described in subparagraph (i) above.  Lessee shall deliver
such further documents and agreements as may be reasonably requested by Lessor
in connection with the assignment of warranties provided for in this
Section.

     

    (f) Records and
Reports.  Lessee will keep accurate and complete books and
records relating to the construction of the Paris Facility, and Lessor will have
access thereto during usual business hours upon 24 hours advance
notice.  Lessee will furnish or cause to be furnished to Lessor from
time to time, promptly upon request, (i) copies and lists of all paid and unpaid
bills for labor and materials with respect to the Paris Facility, (ii)
Construction Budgets and revisions thereof showing the estimated cost of the
Paris Facility and the source of the funds required at any given time to
complete and pay for the same, (iii) receipted bills or other evidence of
payment with respect to the cost of the Paris Facility, and (iv) such reports as
to other matters relating to the Paris Facility as Lessor may
request.  This paragraph will supplement any similar provision in this
Lease.

     

    (g) Access.  Notwithstanding
anything to the contrary contained in this Lease, Lessee will, and will cause
the Paris Sublessee to, permit Lessor’s representatives to have access to the
Paris Facility at all reasonable times and to conduct such investigations and
inspections thereof as Lessor shall determine necessary, including without
limitation in connection with inspecting the Paris Facility and all work done,
labor performed and materials furnished in connection with the construction
thereof.  Lessee will, and will cause the Paris Sublessee to,
cooperate and cause the construction manager or general contractor, as the case
may be, to cooperate with Lessor and its representatives and agents during such
inspections.  Notwithstanding the foregoing, Lessee will, and will
cause the Paris Sublessee to, be responsible for making inspections as to the
Paris Facility during the course of construction and will determine to their own
satisfaction that the work done or materials supplied by the contractors and
subcontractors has been properly supplied or done in accordance with applicable
contracts.  All inspections that may be performed by Lessor and its
agents will be exclusively for the benefit of Lessor and will impose no
obligation whatever upon Lessor for the benefit of any person.  Lessee
will, and will cause the Paris Sublessee to, hold Lessor harmless from, and
Lessor will have no liability or obligation of any kind to Lessee, the Paris
Sublessee or creditors of any of them in connection with, any defective,
improper or inadequate workmanship or materials brought in or related to the
Paris Facility, or any construction lien arising as a result of such workmanship
or materials.  No inspection by Lessor will create any obligation on
Lessor or relieve Lessee or the Paris Sublessee of any obligation.

     

    (h) Damage by Fire or Other
Casualty.  If the Paris Facility is partially or totally
damaged or destroyed by fire or other casualty or taken under the power of
eminent domain, proceeds of such event will be applied as provided in this
Lease.

     

    (i) Payment of
Costs.  Lessee will pay when due all obligations incurred by
Lessee, or the Paris Sublessee for the Paris Facility, including any cost for
restoration.

     

    7. Disbursements of Funded
Amount.  Upon satisfaction of the conditions set forth in
subparagraphs (a) and (b) below, Lessor will disburse from time to time (but no
more frequently than once per month) to Lessee advances of the Funded Amount,
subject to the limitations set forth in Section 7 below.

     

    (a) Lessor
has received:

     

    (i) a request
for disbursement, in the form of AIA 706 (the “Request”), executed
by an executive officer of Lessee and setting forth, among other things, the
portion of the Funded Amount that Lessee then is requesting be disbursed, the
amount that Lessee in good faith believes to be the cost to complete
construction (after disbursement of the portion of the Funded Amount then being
requested), a detailed breakdown of the costs and expenses incurred in the
construction of the Paris Facility to the date of Request, a detailed cost
breakdown of the percentage of completion of the construction of the Paris
Facility (including both Hard Costs and Soft Costs) to the date of the Request,
the amounts then due and unpaid with respect to such construction, such other
information or documentation as may be required by the Title Company and the
date upon which the disbursement is desired, provided that the date of the
payment must not be less than seven (7) Business Days after the date upon which
the Lessor receives the Request and the other items set forth in clauses (ii)
through (vi) below;

     

    (ii) A
certification from Lessee that, as of the date of the Request, no Event of
Default exists under this Amendment or any of the Transaction Documents, all
representations and warranties set forth in this Amendment and all of the other
Transaction Documents are accurate and complete, and there are no actions, suits
or proceedings pending, or to the knowledge of the person making the
certification, threatened or involving (or that could involve) Lessee, the Paris
Sublessee or all or any part of the Facilities and that could impair the
Facilities or the ability of Lessee and the Paris Sublessee to perform under
this Amendment or any of the other Transaction Documents;

     

    (iii) Certificates
of the Project Architect, Lessor’s Architect (if not the Project Architect) and
Lessee, certified to Lessor and Lessee and certifying that (a) the Request is
correct and, to the best of its knowledge, all work on the Paris Facility up to
the date thereof has been done in substantial compliance with the Plans and
Specifications therefor; (b) to the date thereof, there has been no material
deviation from the budgeted cost of the Paris Facility or construction progress
schedule, except as authorized by Lessee and approved by Lessor; and (c) the
undisbursed portion of the Funded Amount will be sufficient to meet all known
costs to complete the work covered by the Plans and Specifications, after giving
effect to all amounts previously disbursed, plus the amount then requested;
and

     

    (iv) Evidence
that Lessee have delivered the items described in (i) – (iii) above to
Lessor.

     

    (b) Upon the
request of Lessor, the Title Company is prepared, without condition, to issue to
Lessor a date-down endorsement, dated as of the date of the disbursement,
insuring Lessor’s title to the Paris Facility subject to no other exceptions
than are set forth on the Title Policies delivered to Lessor at
closing.

     

    8. Limitation on
Disbursements.  In no event will Lessor pay amounts in excess
of the lesser of: (i)
the amounts actually paid in acquiring the Paris Land and for labor, services or
materials incorporated into the Paris Facility; and (ii) the Maximum Funded
Amount.

     

    9. Sufficiency of Funded
Amount.  Lessor shall be entitled to not make a disbursement,
or to make a disbursement in an amount less than the amount requested, if Lessor
is not satisfied in its sole discretion that following the requested
disbursement the undisbursed proceeds of the Funded Amount budgeted for the
construction of the Paris Facility will be at least equal to the sum of 100% of
the estimated Project Costs to complete the Paris Facility in accordance with
the Plans and Specifications (including all costs incurred in connection with
changes in the Plans and Specifications).  If at any time it appears
to Lessor that the undisbursed balance of the Funded Amount is less than the
amount required by this Section, Lessor may give written notice to Lessee
specifying the amount of the deficiency and Lessee immediately will deposit with
Lessor the amount of the deficiency, which will be expended first in the same
manner as the Funded Amount before any further payment of the Funded Amount will
be made by Lessor.  Lessor may reasonably determine the cost of
construction of the Paris Facility and Lessee will be obligated to pay any sums
so determined in excess of the Funded Amount prior to any payment under this
Amendment.

     

    10. Payments to Contractor,
Subcontractors and Suppliers.  In order to induce the Title
Company to insure Lessor’s title to the Paris Facility without exception for the
construction or mechanics’ liens, Lessor may make payments either through the
Title Company or directly to any contractor, subcontractor or supplier
furnishing labor or materials to the Paris Facility.

     

    11. Lessor’s Right to
Cure.  If Lessee fails to perform any of Lessee’s undertakings
set forth in this Amendment or in any other Transaction Document and fails to
cure the same within any grace or cure period applicable thereto, upon such
Notice as may be expressly required herein or therein (or, if Lessor reasonably
determines that the giving of such Notice would risk loss to the Paris Facility
or cause damage to Lessor, upon such Notice as is practical under the
circumstances), and without waiving or releasing any obligation of Lessee,
Lessor may, but will not be required to, perform the same, and Lessee will
reimburse Lessor any amounts expended by Lessor in so doing.

     

    12. Application of
Advances.  Lessee will apply each payment of Funded Amount
against amounts due and payable for construction of the Paris Facility or
obligations in connection therewith as set forth in each
Request.  Nothing contained in this Amendment will impose upon Lessor
any obligation to see to the proper application of the advances by Lessee or any
other party.

     

    13. Construction or Other
Liens.  In the event any construction or other lien or
encumbrance is filed or attached against the Paris Facility or any part thereof
without the prior written consent of Lessor, and the same is not being contested
by Lessee in accordance with Article XII of the Existing Master Lease, Lessor
may, at its option and without regard to the priority of such construction or
other lien or encumbrance, and without regard to any defenses that Lessee may
have with respect to the lien or encumbrance, pay the same, and Lessee will
reimburse all amounts expended by Lessor for such purpose within ten (10) days
of written notice thereof.

     

    14. Conditions to Final
Payment.  Lessor shall be entitled to withhold the final
payment of the Funded Amount unless and until all of the following conditions
have been fulfilled to Lessor’s satisfaction:

     

    (a) All
conditions for all previous disbursements have been, and, as of the date of the
final disbursement continue to be, fulfilled.

     

    (b) Lessor
have received, at least seven (7) Business Days prior to the final payment, the
following items, all of which Lessee agree to obtain and submit to Lessor at
Lessee’ sole expense:

     

    (i) A final
“as built” survey prepared and certified in accordance with the Survey
Requirements;

     

    (ii) Certificates
of the Project Architect, Lessor’s Architect (if not the Project Architect), and
Lessee certified to both Lessor and Lessee and certifying that (a) to the best
of its knowledge, the Paris Facility are complete in accordance with the Plans
and Specifications therefor; (b) to the date thereof, there has been no material
deviation from the budgeted cost of the Paris Facility or construction progress
schedule, except as authorized by Lessee and approved by Lessor; and (c) the
amount of the final payment will be sufficient to meet all known costs to
complete the work covered by the Plans and Specifications; and

     

    (iii) A final,
unconditional certificate of occupancy for the Paris Facility.

     

    15. Guaranty of
Completion.  Subject to a temporary suspension of performance
pursuant to Section 16 or Lessor Delay, but regardless of whether the cost
thereof exceeds the amount of the Maximum Funded Amount, Lessee will diligently
and continuously carry out or cause to be carried out the construction of the
Paris Facility so as to insure the completion of construction of the Paris
Facility, the opening of the Paris Facility and the acquisition of all Licenses
for the Paris Facility, all by the applicable Target Completion
Date.  Regardless of whether the cost thereof exceeds the amount of
the Funded Amount, Lessee will be responsible for payment of all costs of
completing, opening and licensing the Paris Facility, including the payment of
all costs in excess of the Construction Budgets.  Promptly following
receipt of written notice from Lessor specifying the defect or departure, Lessee
will correct any structural defects in the Paris Facility or any departure from
the Plans and Specifications not previously approved by Lessor.  The
approval or absence of disapproval by Lessor of any payment of Funded Amount
shall not constitute a waiver of Lessor’s right to require compliance with this
Section.

     

    16. Force
Majeure.  Upon the occurrence and during the continuance of an
Event of Force Majeure and the giving of written notice thereof to Lessor,
Lessee shall be temporarily released without any liability on its part from the
performance of its obligations to construct the Paris Facility under this
Amendment, except for the obligation to pay any amounts due and owing
thereunder, but only to the extent and only for the period that its performance
of each such obligation is prevented by the Event of Force
Majeure.  Such notice shall include a description of the nature of the
Event of Force Majeure, and its cause and possible
consequences.  Lessee shall promptly notify Lessor of the termination
of such event.  Upon the request of Lessor, Lessee shall provide
confirmation of the existence of the circumstances constituting an Event of
Force Majeure.  Such evidence may consist of a statement of an
appropriate governmental department or agency where available, or a statement
describing in detail the facts claimed to constitute an Event of Force
Majeure.  During the period that the performance by Lessee has been
suspended by reason of an Event of Force Majeure, Lessor may likewise suspend
the performance of all or part of its obligations under this Amendment to the
extent that such suspension is commercially reasonable and, notwithstanding
anything in this Amendment to the contrary, Lessor shall have no obligation to
make disbursements of the Funded Amount.

     

    17. Expenses of
Lessor.  All costs incurred by Lessor in connection with the
acquisition and construction of the Paris Facility and this Amendment,
including, but not limited to, Lessor’s legal counsel and due diligence costs,
title insurance, survey, appraisal, UCC searches and filing fees, environmental
and building assessments, consulting fees and brokers’ fees, if any, shall be
added to the Funded Amount; provided, however, to the extent the Maximum Funded
Amount has been funded by Lessor, such costs shall be paid (or reimbursed) to
Lessor by Lessee.

     

    18. Amendments to Certain
Provisions of Existing Master Lease.  Section 8.3 of the
Existing Master Lease is hereby amended to add the following new Section 8.3.3
as follows:

     

    8.3.3                      Paris Facility Capital
Expenditures.  Notwithstanding the provisions of Section 8.3.2
and as an exception thereto, Lessee shall not be required to expend any Minimum
Qualified Capital Expenditures during the first three (3) Lease Years, following
the Paris Base Rent Commencement Date.  During such period, the number
of licensed beds in the Paris Facility shall be excluded from and not used in
the calculations for determining the Minimum Qualified Capital Expenditures
under Section 8.3.2.  During the fourth Lease Year following the Paris
Base Rent Commencement Date, Lessee shall expend with respect to the Paris
Facility at least One Hundred Fifty Dollars ($150.00) per-licensed-bed as
Minimum Qualified Capital Expenditures to improve the Paris
Facility.  During the fifth Lease Year following the Paris Base Rent
Commencement Date, Lessee shall expend with respect to the Paris Facility at
least Two Hundred Dollars ($200.00) per-licensed bed as Minimum Qualified
Capital Expenditure to improve the Paris Facility.  Beginning with the
sixth Lease Year following the Paris Base Rent Commencement Date and continuing
for the remainder of the Term, Lessee shall expend with respect to the Paris
Facility at least the amount of Minimum Qualified Capital Expenditures
per-licensed-bed to improve the Paris Facility as may be required from time to
time under Section 8.3.2, above.

     

    19. Single, indivisible
Lease.  The Master Lease constitutes one indivisible lease of
the Leased Properties, and not separate leases governed by similar
terms.  The Leased Properties constitute one economic unit, and the
Base Rent and all other provisions have been negotiated and agreed to based on a
demise of all of the Leased Properties as a single, composite, inseparable
transaction and would have been substantially different had separate leases or a
divisible lease been intended.  Except as expressly provided herein
for specific, isolated purposes (and then only to the extent expressly otherwise
stated), all provisions of this Lease apply equally and uniformly to all the
Leased Properties as one unit.  An Event of Default with respect to
any Leased Property is an Event of Default as to all of the Leased
Properties.  The parties intend that the provisions of this Lease
shall at all times be construed, interpreted and applied so as to carry out
their mutual objective to create an indivisible lease of all the Leased
Properties and, in particular but without limitation, that for purposes of any
assumption, rejection or assignment of this Lease under 11 U.S.C. 365, this is
one indivisible and non-severable lease and executory contract dealing with one
legal and economic unit which must be assumed, rejected or assigned as a whole
with respect to all (and only all) the Leased Properties covered
hereby.

     

    20. Conditions to Commencement
of Construction and Obligations of Lessor and Lessee under this
Amendment.  Lessee shall not commence construction unless and
until the the Acquisition Date has occurred (the “Commencement
Conditions”).  If the Commencement Conditions have not occurred
on or before June 30, 2008, as such date may be extended by mutual agreement of
Lessor and Lessee, then either Lessor or Lessee may terminate their obligations
under this Amendment by written notice to other and this Amendment shall be of
no further force or effect.  If the Commencement Conditions have not
been satisfied on or before April 15, 2008, then the Target Completion Date and
the Rent Commencement Date shall each be extended one day for each day after
April 15, 2008 that the Commencement Conditions have not been
satisfied.

     

    21. Representations and
Warranties of Lessee.  Lessee hereby represents and warrants to
Lessor that (i) it has the right and power and is duly authorized to enter into
this Amendment; and (ii) the execution of this Amendment does not and will not
constitute a breach of any provision contained in any agreement or instrument to
which Lessee is or may become a party or by which Lessee is or may be bound or
affected.

     

    22. Execution and
Counterparts.  This Amendment may be executed in any number of
counterparts, each of which, when so executed and delivered, shall be deemed to
be an original, but when taken together shall constitute one and the same
Amendment.

     

    23. Headings.  Section
headings used in this Amendment are for reference only and shall not affect the
construction of the Amendment.

     

    24. Enforceability.  Except
as expressly and specifically set forth herein, the Existing Master Lease
remains unmodified and in full force and effect.  In the event of any
discrepancy between the Existing Master Lease and this Amendment, the terms and
conditions of this Amendment will control and the Existing Master Lease is
deemed amended to conform hereto.

     

    [SIGNATURE
PAGES AND ACKNOWLEDGEMENTS FOLLOW]

    

    

    

    
      
        
                                                                             

        

         

      

      
         

        
          

        

      

      
         

        
          Signature
Page to

          SIXTH
AMENDMENT TO CONSOLIDATED

          AMENDED
AND RESTATED MASTER LEASE

          

          

        

      

    

    LESSOR:

    

    STERLING
ACQUISITION CORP.,

    a
Kentucky corporation

    

    

    By:   /s/ C. Taylor Pickett                                                                                           

    Name:   
C. Taylor Pickett

    Title:
Chief Executive Officer

    

    

    STATE OF
MARYLAND                            )

    
 

    COUNTY OF
BALTIMORE                         )

    

    This
instrument was acknowledged before me on the   14th       
day of   March   , 2008,
by   C. Taylor
Pickett          ,
the     
CEO             
of STERLING ACQUISITION CORP., a Kentucky corporation, on behalf of said
company.

    

                                               Judith A.
Jacobs           
   

    Notary Public,    
Baltimore       
 County,    MD   

    My commission expires: May 1,
2008

    

    

    
      
        
          Signature
Page 1 of 2

        

         

      

      
         

        
          

        

      

      
         

        
          Signature
Page to

          SIXTH
AMENDMENT TO CONSOLIDATED

          AMENDED
AND RESTATED MASTER LEASE

          

          

        

      

    

    LESSEE:

    

    DIVERSICARE
LEASING CORP.,

    a
Tennessee corporation

    

    

    By:   /s/ Glynn
Riddle                                                                        

    Name:   
Glynn Riddle

    Title:     
EVP & CFO

    

    

    STATE
OF Tennessee                                        )

    

    COUNTY
OF Williamson                                     )

    

    This
instrument was acknowledged before me on the   14th   day
of    March                
, 2008, by   Glynn
Riddle               
, the   EVP &
CFO              of
DIVERSICARE LEASING CORP., a Tennessee corporation, on behalf of said
company

    

    

                                            Jacqueline S.
Reed                           

    Notary Public,    Williamson    County, 
TENN

    My commission expires: January 24,
2010

    

    

    

    
      
        
                                                                                     
Signature Page 2 of 2

        

         

      

      
         

        
          

        

      

      
         

        
          Acknowledgment
to

          SIXTH
AMENDMENT TO CONSOLIDATED

          AMENDED
AND RESTATED MASTER LEASE

          

          

        

      

    

    The
undersigned hereby consent to the transactions contemplated by this Sixth
Amendment to Consolidated Amended and Restated Master Lease (the “Sixth Amendment”),
ratify and affirm their respective Guaranties, Pledge Agreements, Security
Agreements, Subordination Agreements and other Transaction Documents, and
acknowledge and agree that the performance of the  Master Lease and
obligations described therein are secured by their Guaranties, Pledge
Agreements, Security Agreement, Subordination Agreement and other Transaction
Documents on the same terms and conditions in effect prior to this
Amendment.

     

    ADVOCAT,
INC. a Delaware corporation

    

    

    
      By:   /s/ Glynn
Riddle                                                                        

      Name:   
Glynn Riddle

      Title:     
EVP & CFO

    

     

    

    

    

    
      STATE
OF Tennessee                                      )

      

      COUNTY
OF Williamson                                  )

      

      This
instrument was acknowledged before me on the   14th   day
of    March                
, 2008, by   Glynn
Riddle               
, the   EVP &
CFO              of ADVOCAT,
INC. a Delaware corporation, on behalf of the corporation, who acknowledged the
same to be his or her fee act and deed and the free act and deed of the
corporation.

      

       

                                              Jacqueline S.
Reed                           

      Notary Public,    Williamson    County, 
TENN

      My commission expires: January 24,
2010

      
 

    

    

    
      
        
          Acknowledgment
Page 1 of 5

        

         

      

      
         

        
          

        

      

      
         

        
          Acknowledgment
to

          SIXTH
AMENDMENT TO CONSOLIDATED

          AMENDED
AND RESTATED MASTER LEASE

          

          

        

      

    

    DIVERSICARE
MANAGEMENT SERVICES CO.,

    a
Tennessee corporation

    

    

    
      
        By:   /s/ Glynn
Riddle                                                                        

        Name:   
Glynn Riddle

        Title:     
EVP & CFO

      

    

                                                                               

     

      STATE
OF Tennessee                                      )

      

      COUNTY
OF Williamson                                  )

      

      This
instrument was acknowledged before me on the   14th   day
of    March                
, 2008, by   Glynn
Riddle               
, the   EVP &
CFO              of
DIVERSICARE MANAGEMENT SERVICES CO., a Tennessee corporation, on behalf of the
corporation, who acknowledged the same to be his or her free act and deed and
the free act and deed of the corporation.

    

    

    

                                     

     

     

                                            
 Jacqueline S.
Reed                           
 

    Notary Public,    Williamson    County, 
TENN

    My commission expires: January 24,
2010

    

    
 

    

    
      
        
          Acknowledgment
Page 2 of 5

        

         

      

      
         

        
          

        

      

      
         

        
          Acknowledgment
to

          SIXTH
AMENDMENT TO CONSOLIDATED

          AMENDED
AND RESTATED MASTER LEASE

          

          

        

      

    

    ADVOCAT
FINANCE INC.,

    a
Delaware corporation

    

    

    
      
        
          By:   /s/ Glynn
Riddle                                                                        

          Name:  
Glynn Riddle

          Title:    
EVP & CFO

        

      

                                                                                 

       

        STATE
OF Tennessee                                      )

        

        COUNTY
OF Williamson                                  )

        

        This
instrument was acknowledged before me on the   14th   day
of    March                
, 2008, by   Glynn
Riddle               
, the   EVP &
CFO              of 
ADVOCAT FINANCE INC., a Delaware corporation, on behalf of the corporation, who
acknowledged the same to be his or her free act and deed and the free act and
deed of the corporation.

      

      

                                       

       

       

                                              
 Jacqueline S.
Reed                           
 

      Notary Public,    Williamson    County, 
TENN

      My commission expires: January 24,
2010

    

     

    
 

    

    
      
        
          Acknowledgment
Page 3 of 5

        

         

      

      
         

        
          

        

      

      
         

        
          Acknowledgment
to

          SIXTH
AMENDMENT TO CONSOLIDATED

          AMENDED
AND RESTATED MASTER LEASE

          

          

        

      

    

    STERLING
HEALTH CARE

    MANAGEMENT,
INC., a Kentucky corporation

    

    

     

      
        
          By:   /s/ Glynn
Riddle                                                                        

          Name:   
Glynn Riddle

          Title:     
EVP & CFO

        

      

                                                                                 

       

        STATE
OF Tennessee                                      )

        

        COUNTY
OF Williamson                                  )

        

        This
instrument was acknowledged before me on the   14th   day
of    March                
, 2008, by   Glynn
Riddle               
, the   EVP &
CFO              of  STERLING
HEALTH CARE MANAGEMENT, INC., a Kentucky corporation, on behalf of said
corporation, who acknowledged the same to be his or her free act and deed and
the free act and deed of the corporation.

      

    

    

    

     

                             

     

                                            Jacqueline S.
Reed                           
 

    Notary
Public,    Williamson    County, 
TENN

    My commission expires: January 24,
2010

     

    

    

    

    
      
        
          Acknowledgment
Page 4 of 5

        

         

      

      
         

        
          

        

      

      
         

        
          Acknowledgment
to

          SIXTH
AMENDMENT TO CONSOLIDATED

          AMENDED
AND RESTATED MASTER LEASE

          

          

        

      

    

    DIVERSICARE
TEXAS I, LLC

    

    

    
      
        
          By:   /s/ Glynn
Riddle                                                                        

          Name:   
Glynn Riddle

          Title:     
EVP & CFO

        

      

                                                                                                                             

    

    
    

    

    

    DIVERSICARE
BALLINGER, LLC

    DIVERSICARE
DOCTORS, LLC

    DIVERSICARE
ESTATES, LLC

    DIVERSICARE
HUMBLE, LLC

    DIVERSICARE
KATY, LLC

    DIVERSICARE
NORMANDY TERRACE, LLC

    DIVERSICARE
TREEMONT, LLC

    

    BY:           DIVERSICARE
TEXAS I, LLC,

    its sole
member

    

    By:  /s/ Glynn
Riddle                                                              

    Name:  Glynn Riddle

    Title:    EVP
&CFO

    

    

    
      STATE
OF Tennessee                                      )

      

      COUNTY
OF Williamson                                  )

      

      This
foregoing instrument was acknowledged before me on the   14th   day
of    March                
, 2008, by   Glynn
Riddle               
, who is   EVP
&
CFO                   
of
DIVERSICARE TEXAS I, LLC, on behalf of itself and as the sole member of each of
DIVERSICARE BALLINGER, LLC, DIVERSICARE DOCTORS, LLC, DIVERSICARE ESTATES, LLC,
DIVERSICARE HUMBLE, LLC, DIVERSICARE KATY, LLC, DIVERSICARE NORMANDY TERRACE,
LLC, and DIVERSICARE TREEMONT, LLC, each a Delaware limited liability company,
on behalf of the limited liability companies, who acknowledged the same to be
his or her free act and deed and the free act and deed of the limited liability
companies.

    

    

    

       

       

                                              
 Jacqueline S.
Reed                           
 

      Notary Public,    Williamson    County, 
TENN

      My commission expires: January 24,
2010

       

       

    

    

    

    

    
      
        
          Acknowledgment
Page 5 of 5

        

         

      

      
         

        
          

        

      

      
         

        
          List
of Exhibits and Schedules to

          SIXTH
AMENDMENT TO CONSOLIDATED

          AMENDED
AND RESTATED MASTER LEASE

          

          

        

      

    

    Exhibit
A                      Legal
Description of Paris Facility

    

    Exhibit
B                      Survey
Requirements

    

    Exhibit
C                      List
of Facilities and Facility Trade Names

    

    Exhibit
D                      Permitted
Encumbrances for Paris Facility

    

    Schedule
1                   Construction
Budget

    

    

    

    
      
         

      

      
         

        
          

        

      

      
         

        
          Exhibit
and Schedules to

          SIXTH
AMENDMENT TO CONSOLIDATED

          AMENDED
AND RESTATED MASTER LEASE

          

          

        

      

    

    EXHIBIT
A

    

    

    

      Situated within the Limits of the City
of Paris, County of Lamar, and State of Texas, part of the Reddin Russell Survey
#786, and being part of a called and being a part of a called 172.5 acre tract
of land conveyed to May Belle Dunagan by deed recorded in Vol. 208, Page 316, of
the Deed Records of said County and State.

      

      Beginning at a 1⁄2” iron pin (f) for
corner at the Easterly Northeast corner of a called 31.61 acre tract of land
conveyed to North Lamar Independent School District by deed recording in Vol.
714, Page 748, of said Deed Records, said North Lamar ISD 31.61 acre tract
originally being a part of said Dunagan 172.5 acre tract.

      

      Thence North 26.57’07” West a distance
of 798.43 feet to a 1⁄2” capped (NELSON SURVEYING) iron pin (f) for corner at the
Northerly Northeast corner of said North Lamar ISD 31.61 acre
tract;

      

      Thence South 86.45’33” East a distance
of 505.04 feet to a 1⁄2” capped (NELSON SURVEYING) iron pin (s) for
corner;

      

      Thence South 35.43’12” East a distance
of 448.76 feet to a 1⁄2” capped (NELSON SURVEYING) iron pin (s) for
corner;

      

      Thence along the Northwesterly Boundary
Line of said Stillhouse Road/ Lamar County Road 41100 as follows: South
54.43’04” West a distance of 43.45 feet to a 1⁄2” capped (NELSON SURVEYING) iron
pin (f); South 55.2’33” West a distance of 162.05 feet to a 1⁄2” capped (NELSON
SURVEYING) iron pin (f); South 51.44’20” West a distance of 98.92 feet to a 1⁄2”
capped (NELSON SURVEYING) iron pin (f); South 45.17’45” West a distance of
105.04 feet to a 1⁄2” capped (NELSON SURVEYING) iron pin (f); South 48.54’59” West
a distance of 106.10 feet to the place of beginning and containing 286,225.28
square feet, or 6.5708 acres of land.

    

    Note:    Legal
description will be revised as appropriate to match legal description of deed
delivered to Lessor on the Acquisition Date.

    
      
        
          Exhibit A
– Page 1 of 1

        

         

      

      
         

        
          

        

      

      
         

        
          Exhibit
and Schedules to

          SIXTH
AMENDMENT TO CONSOLIDATED

          AMENDED
AND RESTATED MASTER LEASE

          

          

        

      

    

    Exhibit
B

    

    SURVEY
REQUIREMENTS

    

    A staked,
boundary survey of the property (including a legally adequate property
description and a statement of acreage).  The survey shall be prepared
by a surveyor or engineer duly licensed to practice as such in the State of
_______________, acceptable to the Lessor and the title company, shall be
certified to the lender and the title company, and shall be a [specify either
“Urban”, “Suburban”, “Rural” or “Mountain”] “ALTA/ACSM LAND TITLE SURVEY”
meeting the currently effective Accuracy Standards adopted by ALTA and
ACSM.  The survey shall also incorporate items 1, 2, 3, 4, 6, 7, 8, 9,
10, 11, 13, 14, 16, 17 and 18 listed in Table A of the Minimum Standard Detail
Requirements for ALTA/ACSM Land Title Surveys, jointly established and adopted
by ALTA and ACSM in 2005.

    

    

    SURVEY
CERTIFICATION

    

    

    _______________________
certify to (name of lessor) and (name of title company) that this map or plat
and the survey on which it is based were made (i) in accordance with the
“Minimum Standard Detail Requirements for ALTA/ACSM Land Title Surveys” jointly
established and adopted by ALTA and ACSM in 2005, and incorporates items 1, 2,
3, 4, 6, 7, 8, 9, 10, 11, 13, 14, 16, 17 and 18 listed in Table A thereof, (ii)
pursuant to the Accuracy Standards adopted by ALTA and ACSM and in effect on the
date of this certification for a(n) [insert either “Urban”, “Suburban”, “Rural”,
or “Mountain”] Survey, and (iii) after a review of (name of title company)
Commitment No. _____, effective date ___________, 200_ and the instruments
referred to therein as exceptions to title.

    

    

    Date:
                                                      _______________________________

                    (signature
of surveyor)

    

    
      
        
          Exhibit B
– Page 1 of 1

        

         

      

      
         

        
          

        

      

      
         

        
          Exhibit
and Schedules to

          SIXTH
AMENDMENT TO CONSOLIDATED

          AMENDED
AND RESTATED MASTER LEASE

          

          

        

      

    

    EXHIBIT
C

    

    
      	 
      	
              Name

            	
              Street
      Address

            	
              City

            	
              County

            	
              State

            	
              Zip

            
	
              1. 

            	
              Arbor
      Oaks Health & Rehab Center (Stillmeadow)

            	
              105
      Russellville Road, Route 2, Highway 67 South

            	
              Malvern

            	
              Hot
      Spring

            	
              AR

            	
              72104

            
	
              2. 

            	
              Ash
      Flat Nursing & Rehab Center

            	
              66
      Ozbirn Lane

            	
              Ash
      Flat

            	
              Sharp

            	
              AR

            	
              72513

            
	
              3. 

            	
              Best
      Care, Inc.

            	
              2159
      Dogwood Ridge

            	
              Wheelersburg

            	
              Scioto

            	
              OH

            	
              45694

            
	
              4. 

            	
              Boone
      Health Care Center, Inc.

            	
              Lick
      Creek Road, P.O. Box 605

            	
              Danville

            	
              Boone

            	
              WV

            	
              25053

            
	
              5. 

            	
              Boyd
      Nursing and Rehab Center

            	
              12800
      Princeland Drive

            	
              Ashland

            	
              Boyd

            	
              KY

            	
              41102

            
	
              6. 

            	
              Canterbury
      Health Center

            	
              1720
      Knowles Road

            	
              Phenix
      City

            	
              Russell

            	
              AL

            	
              36867

            
	
              7. 

            	
              Carter
      Nursing & Rehab Center

            	
              250
      McDavid Boulevard, P.O. Box 904

            	
              Grayson

            	
              Carter

            	
              KY

            	
              41143

            
	
              8. 

            	
              Conway
      Health & Rehab Center (Faulkner)

            	
              2603
      Dave Ward Drive

            	
              Conway

            	
              Faulkner

            	
              AR

            	
              72032

            
	
              9. 

            	
              Des
      Arc Nursing & Rehab Center

            	
              2216
      West Main, P.O. box 143B

            	
              Des
      Arc

            	
              Prairie

            	
              AR

            	
              72040

            
	
              10. 

            	
              Elliott
      Nursing & Rehab Center

            	
              Howard
      Creek Road, P.O. Box 694, Route 32 East

            	
              Sandy
      Hook

            	
              Elliott

            	
              KY

            	
              41171

            
	
              11. 

            	
              Garland
      Nursing & Rehab Center and Apts.

            	
              610
      Carpenter Dam Road

            	
              Hot
      Springs

            	
              Garland

            	
              AR

            	
              71901

            
	
              12. 

            	
              Hardee
      Manor Care Center

            	
              401
      Orange Place

            	
              Wauchula

            	
              Hardee

            	
              FL

            	
              33873

            
	
              13. 

            	
              Laurel
      Manor Health Center

            	
              902
      Buchanan Road, P.O. Box 505

            	
              New
      Tazewell

            	
              Claiborne

            	
              TN

            	
              37825

            
	
              14. 

            	
              Laurel
      Nursing  & Rehab Center

            	
              HC
      75, Box 153, Clinic Road

            	
              Ivydale

            	
              Clay

            	
              WV

            	
              25113

            
	
              15. 

            	
              Lynwood
      Nursing Home

            	
              4164
      Halls Mill Road

            	
              Mobile

            	
              Mobile

            	
              AL

            	
              36693

            
	
              16. 

            	
              Manor
      House of Dover

            	
              537
      Spring Street, P.O. Box 399

            	
              Dover

            	
              Stewart

            	
              TN

            	
              37058

            
	
              17. 

            	
              Mayfield
      Rehab and Special Care Center

            	
              200
      Mayfield Drive

            	
              Smyrna

            	
              Rutherford

            	
              TN

            	
              37167

            
	
              18. 

            	
              Northside
      Health Care

            	
              700
      Hutchins Ave

            	
              Gadsden

            	
              Etowah

            	
              AL

            	
              35901

            
	
              19. 

            	
              Ouachita
      Nursing /Pine Manor Apts.

            	
              1411
      Country Club Road

            	
              Camden

            	
              Ouachita

            	
              AR

            	
              71701

            
	
              20. 

            	
              Pocahontas
      Nursing & Rehab Center

            	
              105
      Country Club Road

            	
              Pocahontas

            	
              Randolph

            	
              AR

            	
              72455

            
	
              21. 

            	
              Rich
      Mountain Nursing & Rehab Center

            	
              306
      Hornbeck

            	
              Mena

            	
              Polk

            	
              AR

            	
              71953

            
	
              22. 

            	
              Sheridan
      Nursing & Rehab Center

            	
              113
      South Briarwood Drive

            	
              Sheridan

            	
              Grant

            	
              AR

            	
              72150

            
	
              23. 

            	
              South
      Shore Nursing & Rehab Center

            	
              James
      Hannah Drive, P.O. box 489

            	
              South
      Shore

            	
              Greenup

            	
              KY

            	
              41175

            
	
              24. 

            	
              The
      Pines Nursing & Rehab Center

            	
              524
      Carpenter Dam Road

            	
              Hot
      Springs

            	
              Garland

            	
              AR

            	
              71901

            
	
              25. 

            	
              Walnut
      Ridge Nursing & Rehab Center

            	
              1500
      West Main

            	
              Walnut
      Ridge

            	
              Lawrence

            	
              AR

            	
              72476

            
	
              26. 

            	
              West
      Liberty Nursing & Rehab Center

            	
              774
      Liberty Road, P.O. Box 219, Route 5 Wells Hill

            	
              West
      Liberty

            	
              Morgan

            	
              KY

            	
              41472

            
	
              27. 

            	
              Westside
      Health Care Center

            	
              4320
      Judith Lane

            	
              Huntsville

            	
              Madison

            	
              AL

            	
              35805

            
	
              28. 

            	
              Wurtland
      Nursing & Rehab Center

            	
              100
      Wurtland Avenue, P.O. Box 677

            	
              Wurtland

            	
              Greenup

            	
              KY

            	
              41144

            
	
              29. 

            	
              Doctors
      Healthcare

            	
              9009
      White Rock Trail

            	
              Dallas

            	
              Dallas

            	
              TX

            	
              75238

            
	
              30. 

            	
              Estates
      at Ft. Worth

            	
              201
      Sycamore School Road

            	
              Fort
      Worth

            	
              Tarrant

            	
              TX

            	
              76134

            
	
              31. 

            	
              Heritage
      Oaks Estates

            	
              2001
      N. 6th Street

            	
              Ballinger

            	
              Runnels

            	
              TX

            	
              76821

            
	
              32. 

            	
              Humble

            	
              8450
      Will Clayton Parkway

            	
              Humble

            	
              Harris

            	
              TX

            	
              77338

            
	
              33. 

            	
              IHS
      of Dallas at Treemont

            	
              5550
      Harvest Hill Road

            	
              Dallas

            	
              Dallas

            	
              TX

            	
              75230

            
	
              34. 

            	
              Katy

            	
              1525
      Tull Drive

            	
              Katy

            	
              Harris

            	
              TX

            	
              77499

            
	
              35. 

            	
              Normandy
      Terrace

            	
              841
      Rice Road

            	
              San
      Antonio

            	
              Bexar

            	
              TX

            	
              78220

            
	
              36. 

            	
              Paris
      Facility

            	
              ###  Stillhouse
      Road

            	
              Paris

            	
              Lamar

            	
              TX

            	 
      

    

    

    

    
      
        
          Exhibit C
– Page 1 of 1

        

         

      

      
         

        
          

        

      

      
         

        
          Exhibit
and Schedules to

          SIXTH
AMENDMENT TO CONSOLIDATED

          AMENDED
AND RESTATED MASTER LEASE

          

          

        

      

    

    EXHIBIT
D

    

    Permitted
Exceptions

    

    

    
      	
              1.

            	
              Easement
      to Texas Power & Light Co. dated 07/08/52 and recorded
      in Book 327, Page 397, Lamar County Deed
  Records.

            

    

    

    
      	
              2.

            	
              Easement
      to Texas Power & Light Co., dated 05/09/56 and recorded
      in Book 349, Page 456, Lamar County Deed
  Records.

            

    

    

    
      	
              3.

            	
              Easement
      to Texas Power & Light Co., dated 05/12/66 and recorded
      in Book 443, Page 175, Lamar County Deed
  Records.

            

    

    

    
      	
              4.

            	
              Easement
      to Texas Power & Light Co, dated 03/21/68 and recorded
      in Book 469, Page 237, Lamar County Deed
  Records.

            

    

    

    
      	
              5.

            	
              Right
      of Way Easement to Lamar County Water Supply dated 02/09/83, and recorded
      in Book 655, Page 112, Lamar County Deed
  Records.

            

    

    

    
      	
              6.

            	
              Easement
      and Right of Way to Texas Power & Light Co., dated 05/17/49, and recorded
      in Book 308, Page 600, Lamar County Deed
  Records.

            

    

    
      
        
          Exhibit D
– Page 1 of 1

        

         

      

      
         

        
          

        

      

      
         

        
          Exhibit
and Schedules to

          SIXTH
AMENDMENT TO CONSOLIDATED

          AMENDED
AND RESTATED MASTER LEASE

          

          

        

      

    

    SCHEDULE
1

    

    Construction
Budget

    

    

 

    
      
        	 
      	 	 	 	 	 	 	 	
                Omega/Paris

              	 
	 
      	 	 	 	 	 	 	 	
                Estimated
      Project Cost

              	 
	
                FACILITY
      DESCRIPTION

              	 	 	 	 	 	 	 	 	 
	
                Size
      in Square Feet

              	 	 	 	 	 	 	 	 	45,000	 
	
                Stories

              	 	 	 	 	 	 	 	 	1	 
	
                Units

              	 	 	 	 	 	 	 	 	70	 
	
                Beds

              	 	 	 	 	 	 	 	 	120	 
	
                Medicaid
      Beds

              	 	 	 	 	 	 	 	 	 	 
	
                Double
      Occupancy (Units)

              	 	 	 	 	 	 	 	 	50	 
	 
      	 	 	 	 	 	 	 	 	 	 
	
                Approximate
      Land Size (Acres)

              	 	 	 	 	 	 	 	 	6.489	 
	
                Approximate
      Land Size (SF)

              	 	 	 	 	 	 	 	 	282,661	 
	
                Units
      per Acre

              	 	 	 	 	 	 	 	 	11	 
	
                Beds
      per Acre

              	 	 	 	 	 	 	 	 	18	 
	 
      	 	 	 	 	 	 	 	 	 	 
	 
      	 	 	 	 	 	 	 	 	 	 
	
                DEVELOPMENT
      COST ANALYSIS

              	 	 	 	 	 	 	 	 	 	 
	 
      	 	 	 	 	 	 	 	 	 	 
	
                Total
      Development Cost

              	 	 	 	 	 	 	 	 	6,841,902	 
	
                Total
      Development Cost per Sq. Ft.

              	 	 	 	 	 	 	 	 	152.04	 
	
                Total
      Development Cost per Unit

              	 	 	 	 	 	 	 	 	97,741	 
	
                Total
      Development Cost per Bed

              	 	 	 	 	 	 	 	 	57,016	 
	 
      	 	 	 	 	 	 	 	 	 	 
	
                Land
      Cost [1]

              	 	 	 	 	 	 	 	 	175,203	 
	
                Land
      Cost per Sq. Ft.

              	 	 	 	 	 	 	 	 	0.62	 
	
                Land
      Cost per Acre

              	 	 	 	 	 	 	 	 	27,000	 
	
                Land
      Cost per Unit

              	 	 	 	 	 	 	 	 	2,503	 
	
                Land
      Cost per Bed

              	 	 	 	 	 	 	 	 	1,460	 
	 
      	 	 	 	 	 	 	 	 	 	 
	
                Building
      Cost

              	 	 	 	 	 	 	 	 	4,000,635	 
	
                Building
      Cost per Sq. Ft.

              	 	 	 	 	 	 	 	 	88.90	 
	
                Building
      Cost per Unit

              	 	 	 	 	 	 	 	 	57,152	 
	
                Building
      Cost per Bed

              	 	 	 	 	 	 	 	 	33,339	 
	 
      	 	 	 	 	 	 	 	 	 	 
	
                FF&
      E

              	 	 	 	 	 	 	 	 	552,500	 
	
                FF&
      E per Sq. Ft.

              	 	 	 	 	 	 	 	 	12.28	 
	
                FF&
      E per Unit

              	 	 	 	 	 	 	 	 	7,893	 
	
                FF&
      E per Bed

              	 	 	 	 	 	 	 	 	4,604	 
	 
      	 	 	 	 	 	 	 	 	 	 
	
                Ach.
      & Eng. Fees

              	 	 	 	 	 	 	 	 	184,500	 
	
                Site
      Work

              	 	 	 	 	 	 	 	 	602,000	 
	
                Interest
      Expense [2]

              	 	 	 	 	 	 	 	 	315,000	 
	
                Contingency
      [3]

              	 	 	2.90	%	 	 	10.0	%	 	 	400,064	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 
	
                Medicaid
      Bed Contract [4]

              	 	$	4,167	 	 	$	4,000	 	 	 	408,000	 
	
                Title

              	 	 	 	 	 	 	 	 	 	 	35,000	 
	
                Misc.
      Administrative Project Exp.

              	 	 	 	 	 	 	 	 	 	 	7,500	 
	
                Closing
      Fee

              	 	 	 	 	 	 	 	 	 	 	5,000	 
	
                Property
      Tax

              	 	 	 	 	 	 	 	 	 	 	25,000	 
	
                Developer's
      Fee

              	 	 	 	 	 	 	 	 	 	 	80,000	 
	
                Points
      [5]

              	 	 	1.15	%	 	 	0.00	%	 	 	0	 
	
                Appraisal

              	 	 	 	 	 	 	 	 	 	 	4,500	 
	
                Insurance
      Premium

              	 	 	 	 	 	 	 	 	 	 	12,000	 
	
                Legal
      (Transaction Specific)

              	 	 	 	 	 	 	 	 	 	 	35,000	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 
	
                TOTAL
      CONSTRUCTION COSTS

              	 	 	 	 	 	 	 	 	 	 	6,841,902	 
	
                Cost
      per Bed

              	 	 	140	 	 	 	 	 	 	 	48,871	 
	
                Cost
      per Bed

              	 	 	120	 	 	 	 	 	 	 	57,016	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 
	
                Resulting
      Annual Rent at 10.25%

              	 	 	 	 	 	 	 	 	 	 	701,294.90

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00141-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00141-of-00352.parquet"}]]