ex10_291.htm


    
      

    

    Exhibit
      10.29.1


     

    SUMMERVILLE

    SENIOR
      LIVING

    


    


    Granger
      Cobb

    President/CEO

    


    February
      22, 2005

    


    Herbert
      Wolas

    General
      Residential Corporation 11437 Dora Pegita Drive

    Studio
      City, CA 91604-4340

     

    Dear
      Herb:

     

    This
      letter is to memorialize our agreement with respect to the continuation of
      the
      lease between General Residential Corporation ("Lessor") and Summerville at
      Cobbco, Inc. ("Lessee") with respect to Casa Whittier.

     

    Provided
      that Lessor has entered into and is not in default under that certain Assisted
      Living Facility Lease, dated February 24, 2005 between Lessorand
      Lessee for the facility known as Summerville at Orange ("Orange Lease"), Lessor
      and Lessee hereby agree to extend that certain Lease of Improved Real Property,
      dated May 2, 1975 by and between Lessor and Lessee (by virtue of that certain
      Assignment and Estoppel agreement, dated June 1, 1999) for the facility known
      as
      Summerville at Whittier on the same terms and conditions, except that it will
      be
      on a month-to-month basis until either party shall provide the other with 30
      days written notice to terminate.

     

    Please
      acknowledge your agreement by signing where indicated below and faxing back
      to
      me at (925) 866-8506.

     

    Sincerely,

     

     

     

    Granger
      Cobb President/CEO

     

    Acknowledged
      and Agreed:

     

    /s/
      Herbert Wolas

     

    Herbert
      Wolas

    Its
      Authorized Agent

    General
      Residential Corporation

     

     

    
      
        

      

    

    3000
      Executive Parkway, Suite 530  ●  San Ramon,
      California 94583-4254  ● 
(925)
      866-1999  ● 
Fax (925)
      866-8506


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    Assisted
      Living Facility
      Lease

     

    This
      lease (hereafter "Lease") is made and entered into this 24th day of February,
      2005 ("Effective Date") by and between General Residential Corporation, Delaware
      Corporation (hereafter "Lessor") and Summerville at Cobbco, Inc., a California
      Corporation (hereafter "Lessee").

     

    WITNESSETH:

    That
      for
      and in consideration of the rental hereinafter reserved, and of the mutual
      covenants, agreements, and conditions hereinafter contained, Lessor does hereby
      lease, let, and demise unto Lessee and Lessee does hereby take, accept, and
      rent
      from Lessor, those certain premises (hereinafter referred to as the "Premises"
      or the "Facility") situated in the City of Orange, County of Orange, State
      of
      California, now commonly know as Summerville at Orange, 142 South Prospect
      Avenue, Orange, CA 92869 and more particularly described in Schedule A – Legal
      Description attached hereto and made a part hereof together with all
      easements, rights and appurtenances relating to the land and improvements and
      all fixtures and trade fixtures used in connection there with; together with
      all
      furnishings, equipment, supplies, inventory, and personal property located
      on or
      used in connection with the Premises and more particularly described in Schedule B – Inventory,
and any replacements
      thereof, including intangibles belonging to the
      Lessor and used in connection with the Premises, such as trademarks, trade
      names, trade styles, service marks, and similar items.

     

    This
      Lease is made for the term and upon the covenants and agreements hereinafter
      expressed.

     

    
      	
              ARTICLE
                I:

            	
              TERM

            


    

    1.01.
      The
      term of this Lease shall commence upon May 1, 2005, Commencement Date" or
      "Commencement").

    1.02.
      The
      initial term of this Lease ("Initial Term") shall, except as hereinafter
      provided, end at 11:59 pm on the 30th
      day of April,
      2030 or twenty-five (25) years from the Commencement Date. As used herein,
      "Lease Year" means any twelve (12) month period that commences on the
      Commencement Date, or any anniversary of the Commencement Date.

     

    
      	
              ARTICLE
                II:

            	
              RENTAL

            


    

    2.01.
      During the first year of the Lease Term, Lessee shall pay to Lessor as rent
      for
      the Premises an amount equal to $432,000 per year in equal monthly installments
      of $36,000.

    2.02.
      Effective on the one-year anniversary date of the Commencement Date (i.e.
      beginning the 13th
      full month) and
      thereafter on each subsequent anniversary date during the Term hereof, including
      any extensions, the rent then in effect shall be increased by the percentage
      increase of the Consumer Price Index for all Urban Consumers for the Los
      Angeles/Long Beach Department of Labor, Bureau of Statistics as reported for
      the
      month prior ("CPI"); provided, however than in no event shall the percentage
      increase be less than 2.5% nor greater than 5.5% for any one year.

    2.03.
      The
      rent for periods of tenancy of less than a month are to be calculated at a
      pro-rated daily rate. Rent is due and payable on the first (1st) day of each
      month, and each of the above rental amounts shall be paid on or before the
      ninth
      (9th) day
      of each
      such month in order to avoid imposition of a late charge. Any payment of rental
      amounts received by Lessor after the ninth (9th) day
      of any
      month shall incur a late charge equal to five percent (5%) of the rental amount
      then due, in order to compensate Lessor by this liquidated damage amount for
      damages suffered by reason of the late receipt of the rent amount from the
      Lessee. In addition, any payments still outstanding as of the fifteenth (15th)
      day of any
      month, including any late charges imposed, shall accrue interest in favor of
      Lessor in an amount equal to ten percent (10%) per annum until paid in
      full.


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    2.04.
      Upon the Commencement Date of the Lease, Lessee shall pay to Lessor first
      month's rent in the amount of $36,000.

    2.05.
      Upon the Commencement Date of the Lease, Lessee shall pay to Lessor a deposit
      in
      the amount of $216,000 ("Security Deposit") to ensure the faithful performance
      of the terms and conditions of the Lease. Lessor may deposit the Security
      Deposit in its general account and is under no obligation to pay Lessee interest
      thereon. Provided Lessee is not in default pursuant to Article )(X, Lessee
      may
      apply $36,000 (one-sixth of the Security Deposit) toward the rental payments
      due
      May 1, 2006; June 1, 2006; May 1, 2007; June 1, 2007; May 1, 2008; and June
      1,
      2008.

    2.06.
      Payments of rental hereunder are to be made to:

    General
      Residential Corporation Tax

    11437
      Dona Pegita Drive

    Studio
      City, CA 91604-4340 Attention: Herbert Wolas

     

    or
      to
      such other person or entity and at such other place as shall be designated
      in
      writing by notice given to Lessee, at least ten (10) days prior to next ensuing
      rental payment date. At the request of Lessor, payment will be made by wire
      transfer.

    2.07.
      Whenever Lessee shall be prevented in whole or in material part from the free,
      uninterrupted and unimpeded enjoyment of the use of the Premises, and fixtures
      therein, by reason of default of the Lessor, or by reason of Lessor's making
      any
      repairs, alterations, extensions or additions to the Premises, (but this shall
      not imply an obligation for Lessor to make any repairs except as otherwise
      provided herein), or by reason of condemnation or by reason of any casualty
      or
      by reason of eminent domain proceedings, or by any taking or repair occasioned
      thereby, then and in such cases, Lessee shall be allowed an abatement of rent
      and other charges payable hereunder in whole or part based upon the duration
      and
      the extent of such interrupted enjoyment. In the event Lessee receives any
      insurance proceeds pertaining to a loss covered under this paragraph, Lessor
      shall be entitled to be paid from said proceeds in an amount equal to the
      monthly rent then due.

     

    
      	
              ARTICLE
                III:

            	
              POSSESSION

            


    

    3.01.
      Lessee agrees that it is taking the property in "as is" condition.

    3.02.
      The
      Lessor agrees that the Lessee, upon paying the rental and performing the
      covenants of this Lease, may quietly have, hold and enjoy the Premises during
      the Term.

    3.03.
      Lessee shall not assume any of Lessor's duties, debts, liabilities, or
      obligations of any kind or nature and the consummation of the transaction
      contemplated herein shall not cause, effect or constitute the assumption by
      Lessee of any duties, debts, liabilities, or obligations of Lessor, which shall
      be and remain the sole and exclusive obligation of Lessor.

     

    
      	
              ARTICLE
                IV:

            	
              REPRESENTATIONS
                AND WARRANTIES
                OF LESSOR

            


    

    4.01.
      Lessor hereby represents and warrants to Lessee that the statements set forth
      in
      this Article IV are true and correct in all respects as of the Effective Date,
      as of the Commencement Date of this Lease and at all times during the Term
      of
      this Lease.


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    4.02.
      Organization and
      Qualification. Lessor is a Delaware Corporation that is duly organized,
      validly existing and in good standing under the laws of the State of Delaware.
      Lessor has the full power and authority to carry on the business in which it
      is
      engaged, to own the Premises, and to execute and deliver and perform under
      this
      Lease.

    4.03.
      Absence of Undisclosed
      Liabilities. Lessor has no debts, liabilities or obligations (whether
      absolute, accrued, contingent or otherwise) of any material nature whatsoever
      arising out of or relating to the Premises.

    4.04.
      Absence of Changes
      or
      Events. Solely with respect to the Premises, lessor has not:

    (i)           mortgaged,
      pledged or subjected to lien, charge, security interest or any other encumbrance
      or restriction on the Premises, or amended any similar document currently in
      effect with respect to such matters.

    (ii)          sold,
      transferred, leased to others or otherwise disposed of any material asset,
      or
      canceled or compromised any material debt or claim, or waived or released any
      right of substantial value;

    (iii)          received
      any notice of termination of any contract, lease or other agreement or suffered
      any damage, destruction or loss (whether or not covered by insurance) which,
      in
      any case or in the aggregate, has had or may have a Material Adverse Impact
      on
      the assets, operations or prospects of the Facility;

    (iv)          instituted,
      settled or agreed to settle any litigation, action or proceeding
      before any court or governmental body relating to the Facility;

    (v)           entered
      into any agreement or made any commitment to take
      any
      of the types of action described in subparagraphs (i) through (iv)
      above.

    4.05.
      Title to and Condition
      of Premises; Leases. Lessor agrees to furnish to the Lessee, at Lessee's
      cost, a preliminary title report that evidences Lessor's good and marketable
      title to the Premises, which is subject to no leases, subleases, agreements,
      encumbrances, liens or defects in title other than those disclosed in Schedule D — Liens
and
      Encumbrances attached hereto, such documents to be dated as of the
      Effective Date.

    4.06.
      Brokers, Finders,
      etc.
All negotiations relating to this Lease and the transactions contemplated
      hereby have been carried on without the intervention of any person acting on
      behalf of the Lessor in such manner as to give rise to any claim against Lessee
      for any brokerage or finder's commission, fee or similar
      compensation.

    4.07.
      Representative. Lessor
      hereby:

    (i)           
      acknowledges that Herbert Wolas is the manager of the Lessor and shall act
      as
      the representative of Lessor for the Term of the Lease (subject to this Section
      4.07);

    (ii)           authorizes
      Lessee to act upon the direction of Herbert Wolas as if such direction was
      given
      unanimously by Lessor; and

    (iii)          agrees
      that Lessor shall give Lessee ten (10) days prior written
      notice, in accordance with Article XXII hereto, if Lessor replaces Herbert
      Wolas
      as the manager and appoints a new manager.

     

    
      	
              ARTICLE
                V:

            	
              REPRESENTATIONS
                AND WARRANTIES
                LESSEE

            


    

    Lessee
      represents and warrants to Lessor that the following statements are true and
      correct in all respects as of the Effective Date, the Commencement Date and
      during the Term hereof:

    5.01.
      Organization, Standing
      and Qualification. Lessee is a corporation duly organized, validly
      existing and in good standing under the laws of the State of California, with
      full power and authority to carry on its business as now conducted, to lease
      or
      own and hold the Premises used by it in its business and to perform its
      obligations under this Lease. Lessee is qualified and in good standing to
      transact business in California.


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    5.02.
      Brokers, Finders,
      etc.
All negotiations relating to this Lease and the transactions contemplated
      hereby have been carried on by Lessee without the intervention of any person
      acting on behalf of Lessee in such manner as to give rise to any valid claim
      against Lessor for any brokerage or finder's commission, fee or similar
      compensation.

    5.03.
      Litigation.
There is
      no legal action, suit, arbitration, governmental investigation
      or other legal or administrative proceeding, nor any order, decree or judgment
      in progress, pending or in effect, or to the knowledge of Lessee threatened,
      against or relating to Lessee in connection with or relating to the transactions
      contemplated by this Lease, and Lessee does not know, or have any reason to
      be
      aware, of any basis for the same.

     

    
      	
              ARTICLE
                VI:

            	
              PRE
                AND POST CLOSING
                COVENANTS

            


    

    6.01.
      No Publicity.
Neither Lessor
      nor Lessee shall make public announcement with respect to
      this Lease or the transactions contemplated hereby without the express prior
      written consent of the other party. Each party shall hold in confidence, and
      shall cause all of their officers, directors, employees, trustees and agents
      hold in confidence, the terms of this Lease and the transactions contemplated
      hereby.

    6.02.
      Assisted Living
      Licensure. Lessee shall be responsible for maintaining its assisted
      living license, in Lessee's name, for the Facility.


     

    
      	
              ARTICLE
                VII:

            	
              HOLDING
                OVER

            


    

    7.01.
      Lessee shall have the option to hold over beyond the expiration date of this
      Lease unless Lessor shall, at least ninety (90) days before said expiration
      date, have given Lessee notice of its intention to terminate this Lease on
      said
      expiration date.

    7.02.
      If
      such notice is not given and Lessee elects to hold over, Lessee shall become
      a
      tenant from year to year upon the same terms as herein provided, until the
      tenancy shall be terminated at the end of any year by the giving of at least
      ninety (90) days written notice by either party hereto to the other, stating
      the
      intention of the party giving such notice to so terminate the
      tenancy.


     

    
      	
              ARTICLE
                VIII:

            	
              USE
                OF
                PREMISES

            


    

    8.01.
      The
      Premises may be used by the Lessee for the purpose of conducting any lawful
      business or enterprise, including, but not limited to, related to the housing,
      feeding and care of senior citizens including without limitation
      Alzheimer's/dementia care and/or assisted living.

    8.02.
      Lessee agrees that it will conduct its business on the Premises in a lawful
      manner and in compliance with all governmental laws, rules, regulations, and
      orders, and that Lessee will at its own cost and expense comply with all such
      governmental laws, rules, regulations, and orders as may be applicable to the
      business of Lessee conducted on the Premises.

    8.03.
      If
      at any time after the Commencement Date until expiration or sooner termination
      of this Lease, Lessee is prohibited by any federal, state or municipal law,
      rule
      or regulation from operating the Premises as provided herein, Lessee shall
      have
      the right to terminate this Lease upon 30 days written notice to Lessor,
      whereupon this Lease shall terminate 30 days after the date of such notice
      when
      Lessee surrenders possession of the Premises to Lessor; provided, however,
      that
      no such prohibition caused by Lessee's negligence or willful misconduct, or
      the
      gross negligence or willful misconduct of its employees or officers shall
      relieve Lessee of its obligations under this Lease.


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              ARTICLE
                IX:

            	
              EXTENSION

            


    

    9.01.
      Whenever Lessee shall be prevented from the free, uninterrupted, and unimpeded
      enjoyment of the use of the Premises and the fixtures therein by reason of
      default of the Lessor, or by reason of Lessor's making any repairs, alterations,
      extensions, or additions to the Premises, the fixtures therein, or the building
      of which the same are a part, or by reason of condemnations, casualty, or
      eminent domain proceeding, or any taking or repair occasioned thereby, or any
      other reason beyond the control of Lessee, then, and in each and all such cases,
      Lessee shall have the right of extensions, which right shall be cumulative
      and
      additional to any other rights given in such cases by this Lease or the law.
      The
      right of extension shall give Lessee the right (which shall be exercised at
      least ninety (90) days before the conclusion of the term) to add any such period
      or periods of loss of such enjoyment, or the aggregate of all such periods,
      to
      the Term of this Lease. If any of the matter and things enumerated in the first
      sentence of this paragraph occur during the last year of the Term, and
      materially interfere with Lessee's enjoyment of the Premises, Lessee may
      terminate this Lease upon thirty (30) days notice to Lessor.

    9.02.
      In
      the event that Lessee shall be in material default in the terms of this Lease
      at
      the time any notice of extension is required or offered to be given, this Lease
      shall (upon notice from Lessor), at Lessor's option, be terminated, and of
      no
      further force and effect, at the expiration of the then-current
      term.


     

    
      	
              ARTICLE
                X:

            	
              RIGHT
                OF FIRST
                OFFER

            


    

    10.01.
      Lessor shall not, at any time prior to the expiration of the term of the Lease,
      as it may be extended, make the Premises, or any interest therein, available
      for
      sale to third parties without first giving written notice thereof to Lessee
      ("Notice of Sale").

    10.02
      The
      Notice of Sale shall include the terms under which Lessor is willing to sell
      the
      Premises to Lessee.

    10.03
      For
      a period of fifteen (15) business days after receipt by Lessee of the Notice
      of
      Sale, Lessee shall have the right to give written notice to Lessor of Lessee's
      exercise of Lessee's right to purchase the Premises, or the interest to be
      sold,
      on the same terms, price and conditions set forth in the Notice of Sale. If
      Lessor does not receive written notice of Lessee's exercise of the right of
      first offer herein granted within said fifteen (15) business day period, there
      shall be a conclusive presumption that Lessee has elected not to exercise
      Lessee's right of first offer hereunder, and Lessor may sell the Premises,
      or
      the interest proposed to be sold, to any third party or parties.  If
      Lessee declines to exercise its right of first offer after receipt of the Notice
      of Sale, and, thereafter, Lessor and any prospective third party purchaser
      modify by more than 5% (i) the sales price, (ii) the amount of the down payment,
      or (iii) interest charged, or in the event that the sale is not consummated
      within 270 days after the date of the Notice of Sale, then Lessee's right of
      first offer shall be reinstated as of the occurrence of any of the
      aforementioned events.

     

    
      	
              ARTICLE
                XI:

            	
              UTILITIES

            


    

    11.01.
      Lessee covenants to pay during the Term all utilities, including without
      limitation, metered electric, water, and gas charges, and all telephone,
      television, cable, garbage removal charges in connection with its occupancy
      and
      use of the Premises.

     

    
      	
              ARTICLE
                XII:

            	
              COVENANTS
                AGAINST LIENS;
                TAXES

            


    

    12.01.
      Throughout the Term, all real and personal property taxes on the Premises and
      the fixtures and equipment in the Premises shall be assessed to and paid (before
      delinquency) by the Lessee. However, Lessee shall not be responsible for paying
      that portion of any increased property taxes that results solely from a sale
      or
      refinance of the Premises by Lessor. Lessee will be responsible for any
      penalties that may occur due to any delinquencies with respect to payment of
      taxes for which its responsible. In the event any payments under this Article
      become delinquent and are paid by Lessor, Lessee shall be responsible to
      reimburse Lessor for all such payments made, together with interest at the
      rate
      of ten percent (10%) per annum which Lessee shall include with the following
      month's rent.


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    12.02.
      Lessee covenants that it will not, during the Term, suffer or permit any lien
      to
      be attached to or upon the Premises, or any portion thereof, by reason of any
      act or omission on the part of Lessee, and hereby agrees to save and hold
      harmless Lessor from or against any such lien or claim of lien. In the event
      any
      such lien does attach or any claim of lien is made against the Premises which
      may be occasioned by any act or omission upon the part of Lessee, and shall
      not
      be released within fifteen (15) days after notice from Lessor to Lessee to
      do
      so, Lessor may (but this shall not be deemed to impose an obligation upon Lessor
      to do so) pay and discharge the same and relieve the Premises from any such
      lien, and Lessee agrees to repay and reimburse Lessor, upon demand, for or
      on
      account of any amount which may be paid by Lessor in discharging such lien
      or
      claim, together, but not limiting the same to the payment of any fees, costs,
      and/or charges in connection with any legal actions which may have been brought
      together with interest at the rate of ten percent (10%) per annum from the
      date
      of the expenditure by Lessor to the date of repayment by Lessee; provided,
      however, that if Lessee desires to contest the validity or correctness of any
      such lien it may do so provided that is shall first furnish Lessor with a good
      and sufficient bond within said 15 day period indemnifying Lessor against any
      loss, liability or damages, on account thereof.

    12.03.
      Lessor agrees that if it fails to pay any assessments or any interest,
      principal, costs or other charges upon any Mortgage or other lien or encumbrance
      affecting the Premises and to which this Lease may be subordinate when any
      of
      the same become due, or if Lessor fails to perform any covenant and/or agreement
      in this Lease contained on the part of the Lessor to be performed, then and
      in
      any such event or events, the Lessee, after the continuance of any such failure
      or default for fifteen (15) days after notice in writing thereof is given by
      the
      Lessee to the Lessor may (but this shall not be deemed to impose an obligation
      upon Lessee to do so) pay said assessments, interest, principal, costs and
      other
      charges and cure such defaults all on behalf of and at the expense of the
      Lessor, and do all necessary work and make all necessary payments in connection
      therewith including but not limiting the same to the payment of any fees, costs
      and/or charges in connection with any legal actions which may have been brought,
      and the Lessor agrees to pay to the Lessee forthwith the amount so paid by
      the
      Lessee, together with interest thereon at the rate of ten percent (10%) per
      annum, and agrees that the Lessee may withhold all or a portion of rental
      payments and other payments thereafter becoming due to the Lessor pursuant
      to
      the provisions of this Lease or any extensions thereof and may apply the same
      to
      the payment of such indebtedness of the Lessor to the Lessee until such
      indebtedness is fully paid with interest thereon as herein provided. However,
      if
      Lessor desires to contest the validity or correctness of any such lien it may
      do
      so, provided that it shall first furnish Lessee with a good and sufficient
      bond
      within said 15 day period indemnifying Lessee against any loss, liability,
      or
      damage on account thereof.

     

    
      	
              ARTICLE
                XIII:

            	
              REPAIRS

            


    

    13.01.
      Lessee shall keep the Premises including the fixtures, trade fixtures, and
      equipment in good condition and repair, excepting for obsolescence, ordinary
      physical depreciation, and ordinary wear and tear. Lessee shall replace any
      portion of the Premises or the personal property which have exhausted their
      useful life with comparable quality improvements for personal property
      items.


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    13.02.
      Lessor at all reasonable times shall have the right to post and keep posted
      on
      the Premises statutory notices of non-responsibility which Lessor may deem
      to be
      necessary for the protection of Lessor and said Premises from mechanics' liens
      or liens of a similar natures. Lessee shall give Lessor thirty (30) days prior
      written notice of all construction proposed to be undertaken by Lessee, in
      order
      to permit Lessor to post such notices of non-responsibility.

    13.03.
      Lessee shall have the right at any time to make such non-structural additions,
      repairs, alterations, changes, or improvements, in or to the Premises as Lessee
      may deem necessary, proper or expedient in the operation of the Premises,
      without Lessor's approval so long as the value of such work shall not exceed
      two
      hundred thousand dollars ($200,000) provided always, that no work done by Lessee
      shall adversely affect the structural strength of said building; and provided
      further, that Lessee shall pay promptly for all such work done by it or upon
      its
      order. Lessor shall have reasonable advance notice for all structural or
      non-structural changes in excess of two hundred thousand dollars ($200,000)
      in
      value and Lessor agrees not to unreasonably withhold approval.

    13.04.
      Lessor hereby reserves the right for itself or its duly authorized agents and
      representatives at all reasonable times during business hours of Lessee to
      enter
      upon the Premises for the purposes of inspecting the same or to show the same
      to
      any prospective purchaser, and for the purpose of making any necessary repairs
      to or upon the Premises, but such right shall be exercised reasonably and so
      as
      to cause the least possible inconvenience to Lessee, and so as not to
      unreasonably interfere with its business.

    13.05.
      Lessee shall, at the end of the Term, or of any extensions thereof, or at any
      other termination of this Lease, surrender the Premises together with any
      personal property belonging to Lessor, and alterations made thereto, in good
      order, repair, and condition, except for damage caused by obsolescence, ordinary
      physical deprecation, or ordinary wear and tear.

    13.06.
      This Article XIII is subject and subordinate to Article XIV of this
      Lease.

     

    
      	
              ARTICLE
                XIV:

            	
              DAMAGE
                BY
                CASUALTY

            


    

    14.01.
      If
      the Premises, or the building of which they are a part, shall be destroyed
      or
      damaged from any cause other than ordinary wear and tear, ordinary physical
      deprecation, obsolescence, or normally uninsurable casualty, Lessee shall
      forthwith repair, restore and rebuild the same with all reasonable dispatch
      and
      diligence including restorations and repair of all fixtures and equipment from
      insurance proceeds made available for that purpose in accordance with section
      15.01.

    14.02.
      Anything in this Article XIV to the contrary notwithstanding, if, by reason
      of
      any of the causes referred to in paragraph 14.01 hereof, the Premises or the
      building of which the same are a part shall be destroyed or damaged at any
      time
      prior to the last twelve (12) months of the Term and is not completely restored
      within a period of one year from and after the date of the casualty or if such
      damage or destruction occur during the last twelve (12) months of the Term
      and
      the Premises or the building of which the same are a part is not completely
      restored within a period of ninety (90) days from and after the date of the
      casualty, this Lease may be terminated upon written notice by Lessee to Lessor.
      Upon such termination Lessee shall be relieved from all liabilities
      hereunder except the liability to pay rent up to the date of such damage or
      destruction and any accrued charges, costs, and expenses required to be paid
      by
      Lessee hereunder, including the costs of restoring the
      premises.


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              ARTICLE
                XV:

            	
              INSURANCE

            


    

    15.01.
      Lessee agrees that it will, throughout the Term of this Lease, maintain or
      provide to be maintained in force fire insurance with extended coverage
      endorsement attached, to the extent of at least the full insurable replacement
      value thereof to current code (less deductible) on the Premises, and on all
      fixtures, trade fixtures, and equipment therein on which Lessor is legal owner
      and for loss of rents for at least twelve (12) months following any such
      insurable loss, in good and solvent insurance companies. The policies evidencing
      such fire and extended coverage insurance shall, by endorsement or otherwise,
      provide that the proceeds of such insurance shall be deposited with the first
      mortgagee or holder of a first deed of trust if it be an institutional lender
      named in a loss payable endorsement attached to the policy, or, in the absence
      of such attachment, in any bank or trust company agreed on by Lessor and Lessee,
      to constitute a trust fund for the repair, restoration, and rebuilding as
      provided in Article XIV of this Lease, to be withdrawn only on architect's
      certificates to pay for such work of repair, restoration, and rebuilding. The
      provisions of this paragraph shall not be deemed to prevent the attachment
      of
      the usual form of mortgagee clause to any first insurance policy carried by
      the
      Lessor on the Premises.

    15.02.
      Lessor and Lessee each hereby release the other, its officers, and employees,
      and waive any claim against the other, its officers, and employees, for damages
      to or destruction of each other's property, real or personal, caused by fire
      or
      any risk enumerated in a standard form of fire insurance policy and extended
      coverage endorsement, whether due to the negligence of either Lessor or Lessee,
      or otherwise.

    15.03.
      Lessee agrees that it will at all times during the Term of this Lease maintain
      or provide to be maintained in force general and professional liability
      insurance with responsible companies in such amounts and against such risks
      as
      is customarily maintained by operators of similar properties in the same general
      area, based on industry norms (currently $1 million per occurance and $3 million
      aggregate coverage per policy year).

    15.04.
      Lessee agrees that it will at all times during the Term of this Lease maintain
      or provide to be maintained in force insurance for liability in connection
      with
      the ownership and/or operation of motor vehicles by Lessee or its
      employees.

    15.05.
      Lessee shall cause to be issued or provided to Lessor, at any time upon request,
      appropriate certificates of insurance evidencing compliance with the foregoing
      covenants. Such certificates shall provide that if the insurance is canceled
      or
      materially changes during the policy period, the insurance carrier shall notify
      the party to whom such certificate is addressed thirty (30) days prior to the
      effective date of cancellations or material change.

     

    
      	
              ARTICLE
                XVI:

            	
              ASSIGNMENT
                AND
                SUBLETTING

            


    

    16.01.
      Lessee shall have the right to sublease, assign or transfer this Lease, the
      Premises or any part thereof for any lawful purpose permitted under this Lease
      with the previous written consent of the Lessor first had and obtained, such
      consent of Lessor not to be unreasonably withheld. Lessor's approval of
      assignment or transfer shall be deemed to remove Lessee from any liability
      under
      this Lease during the Term. However, Lessor's consent may be reasonably withheld
      if the proposed assignee does not provide adequate evidence of ability and
      capital to properly operate the Premises and business in question.

    16.02.
      This Lease binds, applies to and inures to the benefit of, as the case may
      be,
      the heirs, executors, administrators, successors, and assignees of the Lessor
      and the heirs, executors, administrators, successors and assignees of the
      Lessee.


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              ARTICLE
                XVII:

            	
              EMINENT
                DOMAIN

            


    

    17.01.
      If
      any significant or material part of the Premises shall be taken under the power
      of eminent domain, then and in any such events, Lessee may, by giving written
      notice to Lessor within sixty (60) days after such taking, terminate this Lease
      as of the date of such notice. In the event that Lessee elects not to exercise
      such right within said sixty (60) day period, then Lessor shall make such
      repairs and alterations as may be necessary to restore the affected portion
      of
      the Premises as nearly as practicable to complete units of like quality and
      character as existed just prior to such taking. The rent from and after any
      such
      taking shall be abated equitably to and as a result of the effect of the
      condemnation.

    17.02.
      The condemnation award shall belong solely to the Lessor. However, Lessee shall
      have the right to claim any compensation as may be separately awarded or
      receivable by Lessee in Lessee's own right on account of any cost or loss Lessee
      may suffer for the removal of its furniture, fixtures or equipment, the loss
      of
      the unamortized value of the improvements made by Lessee under this Lease,
      Lessee's lost profits due to the condemnation, or any other element of special
      damage separately recoverable by the Lessee.

     

    
      	
              ARTICLE
                XVIII:

            	
              DISPUTES
                BETWEEN
                PARTIES

            


    

    Notwithstanding
      anything to the contrary contained in this Lease, in any action, arbitration,
      or
      other proceeding between the parties hereto arising out of or relating to this
      Lease, the prevailing party in such action shall be entitled to its costs and
      expenses incurred, including reasonable attorneys' fees, in addition to such
      other relief as may be awarded.

     

    
      	
              ARTICLE
                XIX:

            	
              PERMITS
                AND
                LICENSES

            


    

    19.01.
      Lessor hereby irrevocably constitutes and appoints Lessee its
      attorney-in­fact with full power of substitution to apply for and secure any
      building permit or permission of any duly constituted authority for the purpose
      of doing any of the things which Lessee is required or permitted to do under
      the
      provisions of this Lease. Before exercising any authority to act for the Lessor
      as attorney-in-fact hereunder, Lessee shall give at least 5 business days prior
      written notice thereof to the Lessor and shall specify in said notice the act
      or
      actions intended to be taken under such authority, and shall submit for Lessor's
      approval all plans and specifications Lessee is required to submit to the duly
      constituted authority.

    19.02.
      Lessee agrees to indemnify and save harmless Lessor from loss or damage by
      reason of any appointment or authority granted in this Article XIX or by reason
      of any such applications or consent.

     

    
      	
              ARTICLE
                XX:

            	
              DEFAULT

            


    

    The
      occurrence of any of the following shall constitute an "Event of Default" by
      the
      party failing to perform its obligations hereunder or committing an act of
      bankruptcy or similar acts, as further provided in this Article
      )0(:

    20.01.
      Lessee or Lessor shall fail to make or cause to be made any payment required
      to
      be made hereunder and such failure shall continue for a period of 30 days after
      written notice thereof labeled "Notice of Default".

    20.02.
      Lessee or Lessor shall fail to keep, observe or perform any agreement, term
      or
      provision of this Lease, and such failure shall continue for a period of 30
      days
      after written notice thereof, labeled "Notice of Default", and shall have been
      given to the defaulting party by the other party hereto, which notice shall
      specify the event or events constituting the default, or if the matter alleged
      to be in default is not one which, by its nature, can be cured within thirty
      (30) days, then defaulting party shall have a reasonable length of time as
      judged by the nature of the matter, to cure the default; provided, however,
      that
      defaulting party must have commenced its efforts to cure within the thirty
      (30)
      day cure period and must diligently pursue its efforts to cure, and further
      provided that the other party shall not be deemed to be in violation of this
      Lease, and no Event of Default shall have occurred, if defaulting party is
      prevented from performing any of its obligations hereunder for any reason beyond
      its control, including without limitation, strikes, shortages, war, acts of
      God,
      acts of the other party hereto or its officers, directors, employees or agents,
      or any change of law, regulation or rule of federal, state or local government
      or agency thereof.


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    20.03.
      Lessee or Lessor, as the case may be, shall be dissolved or shall apply for
      or
      consent to the appointment of a receiver, trustee or liquidator of all or a
      substantial part of its assets, file a voluntary petition in bankruptcy, or
      admit in writing its inability to pay its debts as they become due, make a
      general assignment for the benefit of creditors, file or have filed against
      it,
      a petition or an answer seeking reorganization or arrangement with creditors
      or
      taking advantage of any insolvency law; or an order, judgment or decree shall
      be
      entered by a court of competent jurisdiction, on
      the
      application of a creditor, adjudicating Lessee or Lessor a bankrupt or insolvent
      or approving a petition seeking reorganization of Lessee or Lessor , or
      appointing a receiver, trustee or liquidator of Lessee or Lessor or all or
      a
      substantial part of its assets and such order shall remain undismissed,
      undischarged or unbonded for a period of 60 days.

     

    
      	
              ARTICLE
                XXI:

            	
              REMEDIES
                UPON
                DEFAULT

            


    

    21.01.
      Upon the determination of an Event of Default, the non-defaulting party may,
      at
      its discretion, without limiting its exercise of any right or remedy at law
      or
      in equity that it may have by reason of such default:

    (i)            Maintain
      this Lease in full force and effect and recover monetary charges
      or payments as they become due without terminating Lessee's right to
      possession.

    (ii)            Terminate
      Lessee's right to possession by any lawful means in which
      case this Lease shall terminate and Lessee shall immediately surrender
      possession of the Premises to Lessor. In such event, the non-defaulting party
      shall be entitled to recover from the defaulting party all damages incurred
      by
      reason of such default and any other right or remedy available to it under
      applicable law subject to this Lease.

    21.02.
      In
      the event of Lessee's default, all of Lessee's fixtures, furniture, equipment,
      improvements and additions, alterations, and other personal property shall
      remain a part of the Premises and in that event, and continuing during the
      length of said default, Lessor shall have the right to take the exclusive
      possession of same and to use same, rent or charge free, until all defaults
      are
      cured or, at its option, at any time during the Term of this Lease, to require
      Lessee to forthwith remove same.

    21.03.
      The non-defaulting party shall be under no obligations to observe or perform
      any
      covenant of this Lease on its part to be observed or performed that accrues
      after the date of any default by the other party hereunder, provided that once
      the default has been cured, such party shall no longer be relieved from said
      obligations and liabilities.

     

    
      	
              ARTICLE
                XXII:

            	
              NOTICES

            


    

    22.01.
      Any notices, demands, and the like, which are required to be given hereunder
      or
      which either party hereto may desire to give to the other shall be given in
      writing by personal delivery, by mailing the same by certified United States
      mail, return receipt requested, postage prepaid, or via prepaid private express
      mail service, or via facsimile transmission addressed to the


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    Lessor
      at:

     

    General
      Residential Corporation 11437

     

    Dona
      Pegita Drive

    Studio
      City, CA 91604-4340

     Fax
      #: (323) 654-2809

    Attention:
      Herbert Wolas

     

    or
      to
      Lessee care of:

     

    Summerville
      Senior Living, Inc.

    3000
      Executive Parkway, Suite 530

    San
      Ramon, CA 94583

    Fax
      # :
      (925) 866-8506

    Attention:
      Granger Cobb, President/CEO

     

    or
      to
      such other addresses as the respective parties may from time to time designate
      by notice given as provided in this Lease.

    22.02.
      If
      the Lessor be more than one person or entity, notice by Lessee or payment by
      Lessee to any one of them is notice or payment to all. If the Lessor be more
      than one person or entity, Lessee may act on notice from any Lessor, and in
      the
      case of conflicting notices may recognize any one of them as valid and disregard
      the others. If Lessor collectively forms a single partnership, corporation
      or
      limited liability company, Lessee may act on any notice given by any officer,
      partner, member or agent of such corporation, partnership or limited liability
      company, but may treat any notice in such case as of no effect unless signed
      by
      the President or a Vice-President of the corporation, a partner in the
      partnership or the manager of a limited liability company.


     

    
      	
              ARTICLE
                XXIII:

            	
              SHORT
                FORM
                LEASE

            


    

    23.01.
      As
      soon as possible after the execution and delivery of this Lease, the parties
      hereto agree to execute a short form of Lease attached as Schedule E – Short
Form
      of Lease
for recording. This Lease and such short form shall be construed together
      as one instrument.

    23.02.
      This Lease and such short form Lease are the only agreements between the parties
      hereto. All negotiations and oral agreements acceptable to both parties are
      included herein.


     

    
      	
              ARTICLE
                XXIV:

            	
              INDEMNIFICATION

            


    

    24.01.
      Lessee will indemnify and defend Lessor and save it harmless from and against
      any and all claims, actions, damages, liability, and expense (including without
      limitation attorney's fees) in connection with the loss of life, bodily injury
      or damage to Premises or business arising from any cause whatsoever occurring
      during the Term, except the willful misconduct or gross negligence of Lessor
      or
      its officers, directors, employees, or agents. Lessor will indemnify and defend
      Lessee and save it harmless from and against any and all claims, actions,
      damages, liability and expense (including without limitation attorneys fees)
      in
      connection with the loss of life, bodily injury or damage to Premises or
      business arising from any cause whatsoever occurring prior to the Commencement
      Date, except the willful misconduct or gross negligence of Lessee or its
      officers, directors, employees or agents. The provisions of this Article XXIV
      shall expressly survive termination of this Lease


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    24.02.
      Notwithstanding anything to the contrary herein contained, Lessor and Lessee
      do
      mutually each release and discharge the other from all suits, claims, and
      damages whatsoever for loss or damage to the Premises of the other (and their
      respective officers, directors, shareholders, agents, employees, contractors,
      or
      tenants) arising from an insured casualty or peril, caused by or occurring
      through or as a result of any acts or omissions, whether negligent or otherwise,
      of the parties or their respective officers, directors, shareholders, agents,
      employees, contractors, or tenants.

     

    
      	
              ARTICLE
                XXV:

            	
              MISCELLANEOUS
                PROVISIONS

            


    

    25.01.
      Whenever in this Lease any words of obligations or duty regarding either of
      the
      parties are used, such words shall have the same force and effect as though
      in
      the express form of covenants. Whenever appropriate from the context, the use
      of
      any gender shall include any other or all genders, and the singular number
      shall
      include the plural, and the plural shall include the singular.

    25.02.
      The captions heading the various articles of this Lease are for convenience
      and
      identification only, and shall not be deemed to limit or define the contents
      of
      their respective paragraphs.

    25.03.
      The waiver by either party of any breach of any term, covenant, or condition
      herein contained shall not be deemed to be a waiver of such term, covenant,
      or
      condition or any subsequent breach of the same, or any other term, covenant,
      or
      conditions herein contained. The subsequent acceptance of rent hereunder by
      Lessor shall not be deemed to be waiver of any preceding breach of Lessee of
      any
      term, covenant, or conditions of this Lease, other than the failure of Lessee
      to
      pay the particular rent so accepted, regardless of Lessor's knowledge of such
      preceding breach at the time of acceptance of such rent. No covenant, term,
      or
      conditions of this Lease shall be deemed to have been waived by either party
      unless such waiver be in writing and signed by that party.

    25.04.
      Lessee may make any payment or give any notice to Lessor, despite any succession
      or assignments, and be protected in so doing, until it has written notice from
      Lessor. If there be conflicting claims to money payable by Lessee under this
      Lease, or reasonable doubt as to whom the money is payable, Lessee may discharge
      its obligations to pay by depositing such money in the bank or trust company
      in
      the county in which the Premises is located, to abide the litigation of any
      such
      matters, but Lessee need not recognize any such adverse claims, and may pay
      the
      money to Lessor. All sums payable hereunder by either party to the other are
      payable in lawful money of the United States of America

    25.05.
      If
      either party hereto shall be delayed or prevented from the performance of any
      act required hereunder by reason of acts of God, strikes, lockouts, labor
      troubles, inability to procure materials, restrictive governmental laws or
      regulation or other causes without fault and beyond the control of the party
      obligated (financial inability excepted) performance of such acts shall be
      excused for the period of the delay and the period for the performance of any
      such acts shall be extended for a period equivalent to the period of such
      delay.

    25.06.
      Any provision of this Lease calling for interest to be paid on any amounts
      of
      money owed to either party shall not be deemed to be invalid in the event that
      the rate stated in the Lease is deemed to be usurious under the laws of the
      State of California then in effect. In such event, the maximum rate of interest
      which can be charged under the Lease shall not exceed the maximum rate allowable
      by the law at the time of the event giving rise to the interest
      change.

    25.07.
      This Lease may be executed in counterparts, by facsimile signature.

    25.08.
      The following schedules are attached hereto and by this reference made a part
      hereof.


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    Schedule
      A – Legal Description Schedule B - Inventory

    Schedule
      C - Liabilities

    Schedule
      D - Liens and Encumbrances

    Schedule
      E - Short Form
      Lease

     

    
      	
              ARTICLE
                XXVI:
                

            	
              ARBITRATION

            


    

    Either
      party may request arbitration of any matter in dispute under this Lease, upon
      which the following procedures shall apply. The party desiring such arbitration
      shall give notice to the other party. The parties shall select a mutually agreed
      upon arbitrator. If the parties cannot mutually agree upon an arbitrator, each
      party shall, within ten (10) days thereafter appoint an arbitrator, and advise
      the other party of the arbitrator so appointed. A third arbitrator shall, within
      ten (10) days following the appointment of the two (2) arbitrators, be appointed
      by the two arbitrators so appointed or by the American Arbitration Association
      (herein called the "AAA"), if the two arbitrators are unable to agree on the
      third arbitrator. If either party fails to appoint an arbitrator the arbitrator
      appointed by the other party shall resolve such dispute or make the
      determination in question. Any arbitrator(s) appointed shall be experienced
      in
      the issue with which the arbitration is concerned and shall have been actively
      engaged in such field for a period of at least ten (10) years before the date
      of
      his appointment as arbitrator hereunder. All arbitrators chosen or appointed
      shall (a) be sworn fairly and impartially to perform their respective duties
      as
      such arbitrator and (b) not be an employee or past employee of Lessor or Lessee
      or of any other person, partnership, corporation or other form of business
      or
      legal association or entity that controls, is controlled by or is under common
      control with Lessor or Lessee. Within sixty (60) days after the appointment
      of
      such arbitrator(s), such arbitrator(s) shall determine the matter which is
      the
      subject of the arbitration and shall issue a written opinion. The decision
      of
      the arbitrator(s) shall be conclusively binding upon the parties, and judgment
      upon the decision may be entered in any court having jurisdiction. Lessor and
      Lessee shall each pay fifty (50%) percent of the fees and expenses of the
      arbitrator(s) appointed. The losing party shall reimburse the prevailing party
      for the reasonable counsel fees and disbursements incurred by the prevailing
      party in connection with such arbitration.

     

    
      	
              ARTICLE
                XXVII:
                

            	
              GOVERNING
                LAW

            


    

    This
      Lease was negotiated in the State of California, which state the parties agree
      has a substantial relationship to the parties and to the transaction embodied
      hereby. This Lease and the obligations arising hereunder shall be governed
      by,
      and construed in accordance with, the laws of the State of California applicable
      to contracts made and performed in such state (without regard to principles
      of
      conflict laws) and any applicable law of the United States of America. To the
      fullest extent permitted by law, Lessor and Lessee hereby unconditionally and
      irrevocably waive any claim to assert that the law of any other jurisdiction
      governs this Lease. Any legal suit, action or proceeding against Lessor or
      Lessee arising out of or relating to this Lease may be instituted in any federal
      or state court in the County of Los Angeles, and State of California, and Lessor
      and Lessee waive any objections which they may now or hereinafter have based
      on
      venue and/or forum non conveniens of any such suit, action or proceeding, and
      Lessor and Lessee hereby irrevocably submit to the jurisdiction of any such
      court in any suit, action or proceeding.


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    IT
      WITNESS WHEREOF, the parties hereto have executed this Lease the day and year
      first above written.

     

    
      	 	
              LESSOR:

               

            
	 	
              General
                Residential Corporation

            
	 	 
	 	
              By:
                /s/ Herbert Wolas

            
	 	
              Name:
                Herbert Wolas

            
	 	
              Its:  Authorized
                Agent

            
	 	 
	 	 
	 	
              LESSEE:

               

            
	 	
              Summerville
                at Cobbco, Inc.

               

            
	 	
              By:
                /s/ Granger Cobb

            
	 	
              Name:
                Granger Cobb

            
	 	
              Its:
                President/CEO

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    SCHEDULE
      E

     

    SHORT
      FORM LEASE

    Memorandum
      of
      Lease

    Under
      date of May 1, 2005,

     

    General
      Residential Corporation, a Delaware Corporation, (hereafter "Lessor") and
      Summerville at Cobbco, Inc., a California Corporation (hereafter "Lessee")
      entered into a lease dated as of February 24, 2005 (the "Lease"), which
      provides, among other things, that in consideration of the rent therein reserved
      and upon the terms, conditions, covenants, and provisions set forth at length
      therein, Lessor leases, lets, and demises to Lessee and Lessee takes, accepts
      and rents from Lessor, for the term set forth in the Lease, those certain
      premises (hereinafter referred to as the "Premises" or the "Facility") situated
      in the City of Orange, County of Orange, State of California, now commonly
      know
      as Summerville at Orange, 142 South Prospect Avenue, Orange, California 92869
      and more particularly described in Schedule A — Legal
      Description  attached hereto and made a part hereof, together
      with all easements, rights and appurtenances relating to the land and
      improvements and all fixtures used in connection there with; together with
      all
      furnishings, equipment, supplies, inventory, and personal property located
      on or
      used in connection with the Premises.

     

    The
      Lease
      was made upon the terms, conditions, covenants, and provisions set forth at
      length therein, including, without limitation, the right of first offer for
      Lessee to purchase the Premises, which terms, conditions, covenants, and
      provisions are hereby incorporated herein with the same force and effect as
      if
      set out at length herein. In witness hereof, the parties have executed this
      Memorandum of Lease as of the day and year first above written.

     

    
      	 	
              LESSOR:

               

            
	 	
              General
                Residential Corporation

               

            
	 	
              By:
                /s/ Herbert Wolas

            
	 	
              Name:
                Herbert Wolas

            
	 	
              Its:  Authorized
                Agent

               

            
	 	 
	 	
              LESSEE:

               

            
	 	
              Summerville
                at Cobbco, Inc.

               

            
	 	
              By:
                /s/ Granger Cobb

            
	 	
              Name:
                Granger Cobb

            
	 	
              Its:
                President/CEO