FIFTH AMENDMENT TO CONSOLIDATED AMENDED AND RESTATED MASTER LEASE

Exhibit 10.7

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 10, 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 (1 ^st ) 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 (2 ^nd ) through twelfth (12 ^th ) 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 (12 ^th ) 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 (2 ^nd ) through the twelfth (12 ^th ) 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 (2 ^nd ) through twelfth (12 ^th ) Lease Years, as applicable (the “ Adjustment Date ”), and (ii) the product of the Non-Texas Base Rent during the first (1 ^st ) 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;