MASTER LEASE AGREEMENT

THIS FIRST AMENDMENT TO SECOND AMENDED AND RESTATED MASTER LEASE AGREEMENT (this “ Master Lease ”), is made and entered into on this 26 ^th day of August, 2008 (the “ Effective Date ”) by and among the lessor entities identified on the signature page hereof (collectively, the “ Lessor ,” and where the context requires, each, a “ Lessor ”), the lessee entities listed on the signature page hereof (collectively, jointly and severally, the “ Lessee ,” and where the context requires, each, a “ Lessee ”), OMEGA HEALTHCARE INVESTORS, INC., a Maryland corporation (“ Omega ”), and the guarantor entities identified on the signature page hereof (each a “ Guarantor ” and collectively, the “ Guarantors ”).

The circumstances underlying the execution of this Master Lease are as follows:

A.   Lessor, as landlord, and Lessee, as lessee, are parties to that certain Second Amended and Restated Master Lease dated as of February 1, 2008, (as amended, the “ Existing Lease ”), pursuant to which, as of the Effective Date, Lessee leases forty (40) facilities from Lessor.  All terms used in this Amendment and not defined herein shall have the meanings assigned to them in the Existing Lease.

B.   Lessor and Lessee desire to amend the Existing Master Lease to (i) reflect the new Non-Litchfield Facilities Base Rent and certain other changes to the Existing Lease after the sale by Lessor of, and termination of the Existing Lease with respect to, the Future Transition Facilities, (ii) provide for a Lessor funded capital improvement allowance; and (iii) increase the Base Rent payable under the Existing Lease if and to the extent such capital improvement funds are advance by Lessor to Lessee.

NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1.   Partial Termination of Lease and Release of Lessees .

Lessor and Lessee acknowledge and agree that the Proposed Sale of the Future Transition Facilities  occurred as of July 1, 2008 and accordingly that from and after such date (i) the Future Transition Facilities are no longer subject to the terms of the Existing Lease and accordingly any and all references thereto in the Existing Lease, including, but not limited to, in Exhibits A, B and C, shall be and hereby are deleted, (ii) SunBridge Regency Rehab Hospitals, Inc. and SunBridge San Bernardino Rehabilitation Hospital, Inc. are released from further obligations as Lessees under the Existing Lease and any and all references to them as Lessees under the Lease shall be and hereby are deleted, and (iii) Section A(ii) of the definition of Non-Litchfield Base Rent shall be deleted in its entirety and the following inserted in lieu thereof:

For the period from February 1, 2008 through June 30, 2008, the monthly sum of Two Million Eighty Five Thousand One Hundred Seventy Five and 44/100 Dollars ($2,085,175.44) and for the period from July 1, 2008 through December 31, 2008 the monthly sum of One Million Nine Hundred Forty Three Thousand Five Hundred Eight and 77/100 Dollars ($1,943,508.77).  For purposes of calculating the Non-Litchfield Base Rent as of January 1, 2009, Lessor and Lessee agree that in 2008 the Non-Litchfield Base Rent on an annualized basis is Twenty Three Million Three Hundred Twenty Two Thousand One Hundred Five and 19/100 Dollars ($23,322,105.19) (the “ 2008 Annualized Non-Litchfield Base Rent ”).

2.   Definitions .

(a)           Any capitalized term used but not defined in this Amendment will have the meaning assigned to such term in the Existing Lease.

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

Actual Cost : means the actual cost of services or materials incorporated into the Approved Project or the Approved Projects, which amount does not include any amounts paid to Lessee or any Affiliate of Lessee without the written consent of Lessor, but does include the Accrued Financing Costs.

Accrued Financing Costs : is defined in Section 6 of this Amendment.

Additional Rent Commencement Date : means, for each Approved Project, the earlier to occur of (i) the Substantial Completion Date or (ii) the first day of the fifteenth (15 ^th ) month following the Approved Project Start Date for such Approved Project.

Additional Project Rent : means, with respect to each Approved Project, an amount equal to (A) the Funded Amount for such Approved Project multiplied by (B) ten percent (10.00%).

Approved Amount : means the maximum amount that Lessor has agreed to fund with respect to any Approved Project. For the avoidance of doubt, the Approved Amount includes all Accrued Financing Costs.

Approved Project or Approved Projects : means one, some or all of the improvements and repairs to the Eligible Facilities which are suggested by Lessee and approved by Lessor pursuant to this Amendment.

Approved Project Start Date : means, for each Approved Project, the first day of the first month following the date such Approved Project is approved by Lessor.

Cost Overrun : is defined in Section 3(c) of this Amendment.

Eligible Facilities : means the Eligible Litchfield Facilities and the Eligible Non-Litchfield Facilities.

Eligible Litchfield Facilities : means (i) any Litchfield Facility consented to in writing by Lessor, and (ii) any of the following Litchfield Facilities:

Eligible Non-Litchfield Facilities : means (i) any Non-Litchfield Facility consented to in writing by Lessor, and (ii) any of the following Non-Litchfield Facilities:

Funded Amount : means, with respect to each Approved Project, the aggregate funds expended by Lessor and all Accrued Financing Costs on such Approved Project, and with respect to all Approved Projects, the aggregate funds expended by Lessor and all Accrued Financing Costs on all Approved Projects.

Maximum Funded Amount : means the aggregate maximum amount which Lessor has agreed to make available to Lessee to cover the Actual Cost of all of the Approved Projects, to wit, Twenty Five Million and no/100 Dollars ($25,000,000).

Plans and Specifications : means the written plans and specification for an Approved Project to be submitted by Lessee and approved by Lessor, as such plans and specifications may be amended as set forth in this Amendment.

Project Costs : means all costs and fees paid or accrued in connection with an Approved Project.

Proposed Project : is defined in Section 3(a) of this Amendment.

Substantial Completion Date : is defined in Section 3(b) of this Amendment.

Title Company : means Chicago Title Insurance Company or such other national title company as may be selected by Lessor and reasonably acceptable to Lessee.

Unallocated Funds : means the Maximum Funded Amount less the sum of (i) the Funded Amount for all completed Approved Projects and (ii) the Approved Amount for all pending Approved Projects.

(c)           From and after the date of this Amendment, each reference to the Existing Lease, means the Existing Lease as modified by this Amendment.

3.   Approved Projects .

(a)   Approval .  At any time prior to December 31, 2009, Lessee may submit Plans and Specifications and a proposed budget to Lessor for a capital improvement to one or more of the Eligible Facilities (each a “ Proposed Project ”).  In addition, Lessee will deliver to Lessor such other information regarding a Proposed Project as Lessor may reasonably request.   If Lessor approves such Proposed Project and an Approved Amount for such Proposed Project in writing, then such Proposed Project shall be an Approved Project. Lessor shall not unreasonably withhold, condition or delay its approval of a Proposed Project; provided, however, in no event shall Lessor withhold its approval or denial of approval of a Proposed Project for more than sixty (60) days from the date the same is submitted to Lessor for its review; and provided, further, in the event Lessor elects to disapprove a Proposed Project, Lessor shall provide Lessee with a reasonably detailed explanation of the reasons for such disapproval and Lessee shall have a period of thirty (30) days after the receipt thereof to address Lessor’s objections and resubmit the Proposed Project to Lessor for approval; and provided, further Lessor shall not withhold its approval of the Proposed Project related to the SunBridge Care & Rehab-Shoals facility (the “Shoals Facility”) solely on the basis of the fact that Lessee has advised Lessor that in order to implement that Proposed Project it intends to reduce the licensed bed capacity of  the SunBridge Care & Rehab-Tuscumbia  facility, which Lessee also leases from Lessor, by ten (10) beds and to increase the licensed bed capacity of the Shoals Facility by ten (10) beds.  Lessor shall have no obligation to consider or approve any Proposed Project submitted at any time after December 31, 2009.

(b)   Commencement and Completion of Approved Projects .  Except as otherwise provided herein, Lessee shall commence construction of each Approved Project within sixty (60) days of the Approved Project Start Date for each Approved Project and will continue diligently to complete each Approved Project within twenty (20) months of the Approved Start Date (or as soon thereafter as reasonably possible in light of any delays in completion caused by an Unavoidable Delay) and will supply such moneys and perform such duties as may be necessary in connection therewith. Lessee agrees to provide to Lessor from time to time with evidence that it has secured all approvals of any governmental body or agency exercising jurisdiction of the applicable Facility required in connection with the work then being undertaken by Lessee with respect to the applicable Approved Project.  An Approved Project will be complete only at such time as (i) all improvements to the Approved Project called for in the Plans and Specifications have been substantially installed or completed in a manner reasonably satisfactory to Lessor and (ii) if required under law, a public authority has issued a final certification, consent or approval for such Approved Project subject only to such conditions as may be reasonably acceptable to Lessor (the “ Substantial Completion Date ”).

(c)            Plans and Specifications .

(i)           Lessee shall be responsible for payment of the fees, costs and expenses 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. Lessor shall not unreasonably withhold, condition or delay its approval of the Plans and Specifications; provided, however, in no event shall Lessor withhold its approval or denial of approval of the Plans and Specifications for an Approved Project for more than sixty (60) days from the date the same are submitted to Lessor for its review; and provided, further, in the event Lessor elects to disapprove the Plans and Specifications for an Approved Project, Lessor shall provide Lessee with a reasonably detailed explanation of the reasons for such disapproval and Lessee shall have a period of thirty (30) days after the receipt thereof to address Lessor’s objections and resubmit the Plans and Specifications for an Approved Project to Lessor for approval.  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.

(ii)           With respect to each Approved Project, as of the applicable Approved Project Start Date, Approved Project Rent Commencement Date, and Substantial Completion Date, Lessee represents and warrants that the Plans and Specifications and construction pursuant thereto 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 applicable Facility, including health care licensing, environmental protection, energy, equal employment regulations and appropriate supervising boards of fire underwriters and similar agencies.

(iii)           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 Lessor and such other parties as Lessor may reasonably require.  Lessor shall not unreasonably withhold, condition or delay its approval of a change to the Plans and Specifications; provided, however, in no event shall Lessor withhold its approval or denial of approval of a change to the Plans and Specifications for more than ten (10) business days from the date the same is submitted to Lessor for its review; and provided, further, in the event Lessor elects to disapprove a change to the Plans and Specifications, Lessor shall provide Lessee with a reasonably detailed explanation of the reasons for such disapproval and Lessee shall have a period of thirty (30) days after the receipt thereof to address Lessor’s objections and resubmit the change to the Plans and Specifications to Lessor for approval.  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.

(iv)           Lessee may affect 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 Approved Project or change the usefulness of the Approved Project 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, individually or together with any changes previously made to the Plans and Specifications, result in a net increase in the total Approved Amount of more than five percent (5%).  Lessee will deliver promptly to Lessor copies of all addenda, change orders and modifications to the Plans and Specifications.   Notwithstanding the foregoing, to the extent that the cost to complete the applicable Approved Project exceeds the Approved Amount (whether or not as a result of any such changes in the Plans and Specifications) (a “ Cost Overrun ”), Lessee will be responsible for payment of the excess unless there are Unallocated Funds available in an amount not less than the amount of the Cost Overrun, in which case Lessor shall, upon Lessee’s request, make available additional funds up to fifteen percent (15%) of the original Approved Amount with respect to an Approved Project and, in such event the Approved Amount for such Approved Project shall be increased accordingly and thereafter any and all references herein to the Approved Amount shall be the Approved Amount as so adjusted.

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