Exhibit 10.8 

FIRST AMENDMENT TO LEASE AGREEMENT
 
THIS FIRST AMENDMENT TO LEASE AGREEMENT (“Amendment”) is entered into as of June
29, 2005 (“Effective Date”), by and between CNL RETIREMENT DSL1 ALABAMA, LP, a
Delaware limited partnership (“Landlord”) and ALABAMA SOMERBY, LLC, a Delaware
limited liability company (“Tenant”).
 
W I T N E S S E T H :
 
WHEREAS, Landlord, as landlord, and Tenant, as tenant, entered in to that
certain Lease Agreement dated August 25, 2003 (the “Lease”), whereby Landlord
leased to Tenant certain real property and improvements commonly known as
“University Park” and located in Jefferson County, Alabama, as more particularly
described in Exhibit “A” of the Lease (the “Property”); and
 
WHEREAS, Landlord, Tenant and certain of their affiliates also entered into an
Earn Out Agreement dated as of August 25, 2003 (the “Earn Out Agreement”); and
 
WHEREAS, the Earn Out Agreement entitles Daniel Senior Living, L.L.C. (“Daniel”)
and American Retirement Corporation (“ARC” and, together with Daniel, the
“Beneficiaries”) to receive additional funds from Landlord upon the meeting of
certain conditions, which have been met; and
 
WHEREAS, simultaneously with the execution hereof, Landlord is making a payment
to the Beneficiaries as required under the Earn Out Agreement; and
 
WHEREAS, pursuant to paragraph 4(b) of the Earn Out Agreement, upon such payment
to the Beneficiaries, Landlord and Tenant are to amend the Lease to provide for
an additional rental payment reimbursing Landlord for amounts advanced under the
Earn Out Agreement.
 
NOW, THEREFORE, in consideration of the mutual covenants herein contained and
other good and valuable consideration, the mutual receipt and legal sufficiency
of which are hereby acknowledged, Landlord and Tenant hereby agree as follows:
 
1.  Recitals. The above recitals are true and correct and their terms and
provisions are incorporated herein for all purposes.
 
2.  The following definitions are hereby added to the Lease:
 
“First Earn Out Payment Rent” shall mean an amount equal to Two Hundred
Sixty-Two Thousand One Hundred Eighty-Nine and 08/100 Dollars ($262,198.08) per
year, payable in monthly installments pursuant to Section 3.13.
 
3.  Landlord’s Adjusted Investment Amount. For purposes of determining the
amount of Landlord’s Adjusted Investment Amount, as defined in the Lease, Three
Million Five Hundred Thousand and No/100 Dollars ($3,500,000.00) of the amount
funded as of the Effective Date pursuant to the Earn Out Agreement is hereby
allocated to the Property.
 

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4.  The following provision shall be added to the Lease as Section 3.13:
 
First Earn Out Rent After First Earn Out Payment. Upon the funding of the First
Earn Out Payment (as defined in the Earn Out Agreement) and continuing through
the end of the ninth Accounting Year of the Initial Term (but not thereafter),
First Earn Out Payment Rent shall be due at the same time and under the same
terms as Minimum Rent is due under the Lease (except as otherwise expressly
provided herein).
 
5.  The following provision shall be added to the Lease as Section 3.14:
 
Escalation of First Earn Out Payment Rent. Commencing on the first day of the
Fourth Accounting Year and on the first day of each Accounting Year thereafter
(through and including the first day of the ninth Accounting Year, but not
thereafter), First Earn Out Payment Rent shall escalate at a rate of two and one
half percent (2.5%) per annum.
 
6.  The following provision shall be added to the Lease as Section 3.15:
 
Imputed Interest. In the event that any payments of First Earn Out Payment Rent
hereunder include or are deemed to include any unstated or imputed interest, the
rate for determining the amount of such payments that will constitute such
unstated or imputed interest will be the "short-term federal rate" (as such term
is defined in Section 1274(d) of the Code and the regulations, rulings and
pronouncements promulgated thereunder) as of the date hereof which the parties
hereto acknowledge is (1.21%), and the parties hereto shall prepare and file all
tax returns to be filed with any taxing authority in a manner consistent with
the foregoing and shall take no position inconsistent therewith in any tax
return, in any discussion with or proceeding before any taxing authority, or
otherwise.
 
7.  Second CMC Mortgage Loan. The definition of “Mortgage” set forth in Section
19.4 of the Lease shall be deemed to refer to both the first mortgage loan
advanced as of the date of the Lease and the second mortgage loan being used to
fund the payment being made pursuant to the Earn Out Agreement as of the
Effective Date and all of the provisions of Section 19.4 applying to the first
mortgage shall also apply to the second mortgage.
 
8.  Property Expenses. The following paragraph is hereby added at the end of
Exhibit “H”:
 
Notwithstanding anything contained in the foregoing, in no event shall costs and
expenses relating to the hiring or termination of any corporate-level personnel
of the Tenant or Manager who are not direct employees of the Facility, including
but not limited to the executive director of the Facility, be paid as a Property
Expense payable from Total Facility Revenue, but rather shall be a cost borne by
Tenant or Manager independently.
 
9.  Assignment of Daniel interests in Tenant to ARC. Landlord consents to the
assignment by Daniel to ARC of all of its membership interests in and to the
Tenant.
 
10.  Full Force and Effect. Except as herein provided, all other terms,
conditions and provisions of the Lease shall remain in full force and effect and
cannot be modified unless said modification is reduced to writing and signed by
all parties.
 
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11.  Successors and Assigns. This Amendment is binding upon and shall inure to
the benefit of the parties hereto and their respective successors and assigns as
may be permitted under the Lease.
 
12.  Counterparts. This Amendment may be executed in one or more counterparts,
any one of which need not contain the signature of more than one party and all
of which taken together shall constitute one and the same agreement.
 

 
[SIGNATURES ON FOLLOWING PAGE]
 
 
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IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
above first written.
 

 

 
LANDLORD:
 
CNL RETIREMENT DSL1 ALABAMA, LP,
a Delaware limited partnership
 
By: CNL Retirement DSL1 GP, LLC, a
Delaware limited liability company,
its sole general partner
 
 
By: ____________________________
Name: __________________________
Title: ___________________________
 

 
TENANT:
 
ALABAMA SOMERBY, LLC, a Delaware limited liability company
 
By: ARC Somerby Holdings, Inc., a Tennessee corporation, Managing Member
 
By: ____________________________
Name: __________________________
Title: ___________________________
 

 
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