ex10_273.htm


    
      

    

    
      Exhibit
        10.27.3

       

      LEASE
        AGREEMENT

       

      This
        agreement ("Lease") is made between Hobart Retirement L.L.C., an Indiana
        limited
        liability company ("Landlord"), and Summerville 2 LLC, a Delaware limited
        liability company ("Tenant").

       

      Whereas,
        Landlord owns a 66-unit assisted living facility known as Brentwood Assisted
        Living Community, 1420 St. Mary's Circle, Hobart, IN 46342 (the "Facility"
        or
        the "ALF"), licensed as a "Residential Care Facility" under Indiana law (Indiana
        Administrative Code 410-16.2-5-1, hereafter the "ALF Licensing Law (the
        "Premises" shall mean the ALF and the parcel on which it is
        located).

       

      Whereas,
        the Landlord desires to lease to the Tenant, and the Tenant desires to lease
        from the Landlord, the Premises and related personal property, subject to
        Tenant
        obtaining a license pursuant to the ALF Licensing Law (the "License") to
        operate
        the Facility;

       

      Therefore,
        in consideration of the premises, covenants, representations, warranties
        and
        agreements set forth herein, the sufficiency of which is acknowledged by
        the
        Landlord and the Tenant, the parties agree as follows.

       

      
        	
                1.

              	
                DEFINITIONS

              


      

       

      Capitalized
        terms, if not defined within the text of this Lease, have the meanings stated
        below.

       

      1.1           "Additional
        Rent" shall mean amounts payable by Tenant pursuant to this Lease
        other than Base Rent and Variable Rent.

       

      1.2           "Affiliate"
        means, as to any Person in question, another Person that directly
        or indirectly controls, is controlled by, or is under common control with,
        the
        Person in question; for such purpose, "control" means possession, directly
        or
        indirectly, of the legal power to direct or cause the direction of the
        management and policies of a Person whether through ownership of voting
        securities, by contract, or otherwise.

       

      1.3           "Affiliated
        Lessors" means LaPorte Retirement L.L.C., Niles Retirement L.L.C.,
        and Elkhart Retirement L.L.C., which are entering into the Other Leases with
        the
        Affilated Tenants for the Other Facilities; in the event that any of the
        Other
        Facilities is sold to a party which is not an Affiliate of Landlord, the
        new
        owner shall not be considered an Affiliated Lessor, and in such event, the
        meaning of "Other Leases" as defined below shall be modified to exclude the
        lease relating to the sold property, and the meaning of "Other Facilities"
        as
        defined below shall be modified to exclude the sold property.

       

      1.4           "Affiliated
        Tenants" means the tenants (either Tenant or an Affiliate or Affiliates
        of Tenant) under the Other Leases.


      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

       

      1.5           "Agreement
        To Lease" means the Agreement To Lease between, among others, Landlord, the
        Affiliated Lessors and Summerville.

       

      1.6           "ALF"
        has the meaning stated in the first recital paragraph.

       

      1.7           "ALF
        Licensing Law" has the meaning stated in the first recital
        paragraph.

       

      1.8           "Apollo"
        means Apollo Real Estate Advisors, L.P.

       

      1.9           "Amortization"
        means expense relating to the allocation of cost of an intangible asset,
        over
        the useful life of the asset, in accordance with GAAP, during a
        period.

       

      1.10           "Authorized
        Assignee" means an Affiliate of Granger Cobb or a Subsidiary of
        Summerville.

       

      1.11           "Base
        Rent" means the fixed rent described in Section 6.1 below.

       

      1.12           "Business
        Day" means any day other than a Saturday, a Sunday, or a federal holiday,
        i.e.,
        New Year's Day, Memorial Day, July 4, Labor Day, Thanksgiving, or Christmas.
        If
        any such holiday day falls on a weekend and federal offices are closed on
        a
        preceding or following non-weekend day to observe such holiday, such preceding
        or following day shall not be a "Business Day" for purposes hereof.

       

      1.13           "Calendar
        Quarter" means a three-month period beginning on January 1, April
        1,
        July 1, or September 1.

       

      1.14           "Combined
        Facilities" means the Facility plus the Other Facilities.

       

      1.15           "Commencement
        Date" means November 1, 2004.

       

      1.16           "Continuing
        Operations" of the Facility shall mean that the Equipment and Supplies
        at the Facility, at the time that possession of the Facility is returned
        to
        Landlord or Landlord's nominee, are sufficient for operation of the Facility
        (i)
        consistent with good practices of the assisted living and retirement housing
        industry; and (ii) consistent with any methods of operations adopted by Tenant
        which involve the use of Equipment or Supplies not otherwise required under
        subsection (i) hereof, e.g., provision of specialized therapy or recreational
        activities for Residents.

       

      1.17           "Default
        Rate" shall mean the prime rate as published in the Wall Street Journal plus
        five percent (5%) per annum, but in no event exceeding the maximum legal
        rate of
        interest permitted by applicable law.


      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      1.18           "Depreciation"
        means expense relating to the allocation of cost of a tangible asset, over
        the
        useful life of the assets, in accordance with GAAP, as to the Facility and
        Equipment during a period.

       

      1.19     "Draw
        Request" has the meaning stated in Section 7.2.

       

      1.20           "Earnings"
        means Revenues less expenses of operation of the Facility, determined in
        accordance with GAAP.

       

      1.21           "EBITDARM"
        means the Facility's Earnings before Interest, Income Tax, Depreciation,
        Amortization, Base Rent, Variable Rent, and Management Fees; provided, that
        for
        purposes of calculating EBITDARM, the amount of Variable Rent shall be assumed
        to be one-half percent of the Revenue of the Facility during the Calendar
        Quarter, without regard to payment of Variable Rent, which shall be on an
        annual
        basis as provided in Section 6.2 and Section 6.3.

       

      1.22           "Equipment"
        means all tangible personal property, other than Supplies, located at the
        Premises as of the Commencement Date. Equipment shall include, but shall
        not be
        limited to, the following: beds, furniture, equipment in care of Residents,
        food
        server preparation and distribution equipment, housekeeping equipment,
        maintenance equipment, activities equipment, and all buses, vans or vehicles
        used in the operation of a Facility.

       

      1.23           "Escrow
        Account" has the meaning stated in Section 9.3.

       

      1.24           "Escrow
        Deposit" means payment of a Tax Escrow or Insurance Escrow as described in
        Section 6.4.

       

      1.25           "Event
        of Default" has the meaning stated in Section 23.1.

       

      1.26           "Extension
        Term" has the meaning stated in Section 3.2.

      


      1.27           "Facility"
        has the meaning stated in the first recital paragraph.

      


      1.28           "Firm
        Offer" has the meaning stated in Section 40(A).

      


      1.29           "GAAP"
        means generally accepted accounting principles.

      


      1.30           "Good
        Condition" means a condition of the Leased Property consistent with the Start
        Date Condition, subject to ordinary wear and tear not preventable by diligent
        repairs and maintenance as required by Section 11, casualty or condemnation
        as
        provided by Sections 18-20, capital improvements as required by Section 24,
        and
        replacement/repair of personal property as required by Section 29 of this
        Lease;
        provided, that "diligence", for this purpose, shall not require extraordinary
        expenditures beyond what would be financially prudent for an owner of property
        seeking to maximize the return on the property over a period of thirty
        years.


      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      1.31           "HUD
        Standards" has the meaning stated in Section 7.2.

       

      1.32           "Income
        Tax" means the combination of federal, state, county and municipal income
        tax,
        due with respect to the Earnings of the Facility during a period.

       

      1.33           "Interest"
        means the interest expense of the Facility, in accordance with GAAP, during
        a
        period.

       

      1.34           "Initial
        Term" has the meaning stated in Section 3.

       

      1.35           "Insurance
        Escrow" has the meaning stated in Section 6.4. 1.36"Lease" or "Lease Agreement"
        means this Lease Agreement.

       

      1.37           "Leased
        Property" means the Premises, Equipment, and Supplies delivered by Landlord
        to
        Tenant pursuant to this Lease.

       

      1.38           "Lease
        Term" has the meaning stated in Section 3.1.

       

      1.39           "Lease
        Year" means a 12-month period during the Lease Term, beginning on the
        Commencement Date or any anniversary thereof.

       

      1.40           "License"
        has the meaning stated in the second recital paragraph.

       

      1.41           "Management
        Agreement" means the agreement pursuant to which Tenant has engaged the
        Management Company to provide services to assist Tenant in operation of the
        Facility.

       

      1.42           "Management
        Fee" means the compensation payable by Tenant to the Management Company pursuant
        to the Management Agreement.

       

      1.43           "Management
        Company" has the meaning stated in Section 2.3.

       

      1.44           "Mortgage"
        means any real estate mortgage(s), promissory note(s), trust indentures(s)
        or
        loan agreement(s) that relate(s) to or constitute(s) a lien or liens upon
        the
        Leased Premises.

       

      1.45           "Mortgagee"
        shall mean any mortgagee or trustee pursuant to any deed of trust or indenture
        of any Mortgage affecting the Leased Premises, whether in effect as of the
        Commencement Date or executed subsequently as authorized by Section 21
        below.

       

      1.46           "Mortgagee
        Reserve Fund" has the meaning stated in Section 7.3.

       

      1.47           "Net
        Rent" shall mean the combination of Base Rent and Variable
        Rent.


      
        
          
          

        

        
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      1.48           "New
        Mortgage" has the meaning stated in Section 21.

       

      1.49           "New
        Mortgagee" has the meaning stated in Section 21.

       

      1.50           "Non-restoring
        Party" has the meaning stated in Section 20.2

       

      1.51           "Notice"
        has the meaning stated in Section 25.

       

      1.52           "Offer
        Period" has the meaning stated in Section 40(A).

       

      1.53           "Other
        Facilities" shall mean the facilities, other than the Facility, identified
        in the Leased Facilities Summary attached as Exhibit
        A hereto
        (including the street address and legal description of the Premises and each
        of
        the Other Facilities).

       

      1.54           "Other
        Leases" shall mean those leases of even date herewith between the Affiliated
        Lessors and the Affiliated Tenants for the Other Facilities.

       

      1.55           "Performance
        Trigger Event" has the meaning stated in Sections 4.2, 4.3, and
        4.4.

       

      1.56           "Plan
        of Correction" has the meaning stated in Section 4.5.

       

      1.57           "Possession
        Period" means the period beginning on the Commencement Date
        and
        ending on the Repossession Date.

       

      1.58           "Premises"
        or "Leased Premises" has the meaning stated in the first recital paragraph;
        provided, that for purposes hereof, the Premises shall include the real estate
        upon which the Facility is located and all easements, rights, and appurtenances
        attached thereto, the building and accessory buildings, if any, located on
        such
        real estate, and all fixtures attached to such real estate, building or
        accessory buildings, including, without limitations, all mechanical fixtures,
        electrical fixtures, plumbing fixtures, heating and cooling fixtures and
        kitchen
        fixtures, and all landscaping, lawn, trees and shrubs.

       

      1.59           "Qualifying
        Repairs and Replacements" shall have the meaning stated in Section
        7.3.

       

      1.60           "Rent
        Differential" has the meaning stated in Section 23.5B.

       

      1.61           "Rent
        Ratio" means, for any Calendar Quarter, the financial performance of
        the
        Facility as measured by the following fraction:

       

      EBITDARM
        minus Replacement
        Reserve Quarterly Payments

      Base
        Rent
        For Calendar Quarter

       

      1.62           "Replacement
        Reserve Fund" means the fund established and maintained as described in Section
        7 below.


      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

      1.63           "Replacement
        Reserve Installment" shall have the meaning stated in Section 7.1
        below.

       

      1.64           "Replacement
        Reserve Payments" means payments by Tenant to the Replacement Reserve
        Fund.

       

      1.65           "Replacement
        Reserve Quarterly Payments" means Replacement Reserve Payments due for a
        Calendar Quarter.

       

      1.66           "Repossession
        Date" means a date, whether during or after the Scheduled Lease Term, upon
        which
        Landlord or Landlord's nominee takes possession of the Premises, with or
        without
        terminating this Lease.

      


      1.67           "Repair
        Maximum" has the meaning stated in Section 4.4. 1.68 "Reserve Account" has
        the
        meaning stated in Section 7.3.

      


      1.69           "Revenue"
        means all receipts from the operations of the Facility during a period,
        determined in accordance with GAAP, subject only to bad debt actually
        experienced and not subject to an allowance for bad debt. "Revenue" shall
        not
        include proceeds of casualty insurance and condemnation awards; provided,
        however, that insurance or condemnation proceeds which are received as
        replacement of operating income that would have been received during a period,
        but for the insured event or condemnation event, shall be included as "Revenue"
        for such period.

       

      1.70           "Resident"
        means a person residing overnight at a Facility.

       

      1.71           "Resident
        Capacity" means the size of the Facility as measured by the number of Residents
        allowed by law to simultaneously reside at the Facility.

       

      1.72           "Resident
        Liability Claim" means a claim for monetary damages asserted by a Resident
        or
        the legal representative of a Resident arising from care and accommodations,
        or
        deficiencies thereof, furnished to a Resident.

       

      1.73           "Restoration
        Cost" has the meaning stated in Section 4.4.

       

      1.74           "Restoring
        Party" has the meaning stated in Section 20.2

       

      1.75           "Start
        Date Condition" means the condition of the Leased Property as of the
        Commencement Date.

       

      1.76           "Scheduled
        Lease Term" means the period beginning on the Commencement Date and ending
        on
        the day before the tenth anniversary of the Commencement Date; provided,
        that if
        Tenant has exercised one or more options toextend as described in Section
        3 of
        this Lease, the "Scheduled Lease Term" shall extend until the end of the
        Extension Term(s) for which this Lease has been extended.


      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

      1.77           "Security
        Deposit" means the amount collected by Landlord from Tenant as described
        in
        Section 8.

       

      1.78           "Security
        Deposit Interest" means interest payable by Landlord upon the Security Deposit
        as described in Section 8.

       

      1.79           "Subsidiary"
        means, as to a Person, a corporation or limited liability company in which
        such
        Person holds majority ownership and direct control.

       

      1.80           "Successor
        Manager" has the meaning stated in Section 22.4(B).

       

      1.81           "Summerville"
        means Summerville Senior Living, Inc.

       

      1.82           "State"
        means the state in which the Facility is located.

       

      1.83           "Supplies"
        means new or used tangible personal property used by the Facility
        staff in the operation of the Premises as of the Commencement Date which
        in the
        normal course of business will be consumed by the staff or residents of the
        Premises within twelve (12) months thereafter. Supplies shall include, but
        shall
        not be limited to, the following: linens, dishes, foodstuffs, nursing supplies,
        housekeeping supplies, maintenance supplies and activity supplies.

       

      1.84           "Taxes"
        has the meaning stated in Section 9, and shall not include Income Tax.

      


      1.85           "Tax
        Escrow" has the meaning stated in Section 6.4.

       

      1.86           "Termination
        Deficiency" has the meaning stated in Section 23.5C.

       

      1.87     "T-Bill
        Rate"
        means, for any month, the result of the most recent auction of 13-week U.S.
        Treasury bills sold at discount from face value as published in the Wall
        Street
        Journal on the last Business Day of the month.

       

      1.88           "Unrelated
        Party" has the meaning stated in Section 23.5(F)(1).

       

      1.89           "Variable
        Rent" has the meaning stated in Section 6.2.

       

      1.90           For
        purposes of this Lease, the singular shall include the plural and the plural
        shall include the singular; any gender shall include the other gender; headings
        are for convenience only, and shall not affect the interpretation of this
        Lease.

       

      1.91           Additional
        definitions are set forth within the text of this Lease and within the text
        of
        the Agreement To Lease, which is incorporated by reference as a part of this
        Lease.


      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

      
        	
                2.

              	
                GRANT
                  OF LEASE AND POSSESSION

              


      

       

      2.1            Subject
        to the terms, conditions, representations, warranties, covenants and
        agreements set forth herein, Landlord hereby demises and leases to Tenant,
        and
        Tenant hereby leases and takes from the Landlord, the Leased Property. Tenant
        shall have and hold the Leased Property for the term of years set forth herein,
        unless said term shall be sooner ended and terminated or extended under the
        terms and provisions hereof

       

      2.2            Transfer
        of control of the Facility to Tenant shall be pursuant to the terms hereof
        and the terms of the Agreement To Lease.

       

      2.3            Transfer
        of control of the Facility, and the continuation of this Lease, shall
be
        subject to the condition that Tenant enters into and operates in accordance
        with
        a Management Agreement with Summerville, or an Authorized Assignee (such
        party
        entering a Management Agreement with Tenant, the "Management Company"), pursuant
        to which the Management Company has supervisory control of the Facility and
        its
        operations, and that such an agreement remain in effect with the Management
        Company, throughout the Lease Term, unless and until this Lease shall have
        been
        assigned to a Person meeting the standards of Section 22.1 below.

       

      2.4            At
        such time as Tenant takes possession of the Leased Property, Tenant,
by
        its
        acceptance thereof, acknowledges that the Landlord shall not be required,
        to
        make any repairs or improvements upon the Leased Premises or Equipment during
        the term of this Lease, or pay for such repairs or improvements, except as
        may
        be expressly provided herein.

       

      
        	
                3.

              	
                LEASE
                  TERM

              


      

       

      3.1            The
        term of this Lease ("Lease Term") shall begin at 12:01 am on the Commencement
        Date and shall extend for an Initial Term of ten years together with all
        Extension Terms as provided below, subject to any termination rights pursuant
        to
        this Lease, including, without limitation, as set forth in Section 4 or Section
        23 below.

       

      3.2            The
        Lease Term shall be extended after the Initial Term for up to three additional
        terms of five years each (each, an "Extension Term") if, not less than nine
        (9)
        months before the end of the Initial Term or an Extension Term, Tenant gives
        notice of its election to extend this Lease, and simultaneous notice of
        extension is given by the Affiliated Tenants to the Affiliated Lessors extending
        the Other Leases. If Tenant does not give a timely notice to extend as provided
        herein, and Landlord has not given Tenant a written notice of the pending
        deadline for exercise of Tenant's right of extension as described herein,
        Landlord shall, after nine (9) month deadline as described above has passed,
        give Tenant notice that Tenant's extension right is due to expire, and Tenant
        may, notwithstanding the above, extend this Lease for an Extension Term by
        notice to Landlord given within three (3) Business Days of Tenant's receipt
        of
        such notice from Landlord.


      
        
          
          

        

        
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                4.

              	
                PERFORMANCE
                  TRIGGERS

              


      

       

      4.1            In
        addition to Landlord's right to terminate this Lease for default in Tenant's
        obligations as provided in Section 23.1, Landlord shall have the right, in
        conformance with Section 4.5 below, to terminate this Lease upon the occurrence
        of any of Performance Trigger Event described in Section 4.2, 4.3, and 4.4
        below.

       

      4.2            Continuation
        of the Lease Term shall be conditioned on the operations of the Combined
        Facilities, on an aggregated basis, satisfying the following Rent Ratio
        requirements:

      


      
        	
                First
                  Lease Year

              	
                1.00

              
	
                Second
                  Lease Year

              	
                1.06

              
	
                Third
                  Lease Year

              	
                1.07

              
	
                Fourth
                  Lease Year

              	
                1.08

              
	
                Fifth
                  Lease Year

              	
                1.09

              
	
                Sixth
                  & following Lease Years

              	
                1.10

              


      

       

      Failure
        to satisfy such requirements during any two consecutive Calendar Quarters
        shall
        be a Performance Trigger Event.

       

      4.3            Continuation
        of the Lease Term shall be conditioned upon there not being any
        final
        judgment entered against Tenant, based on a Resident Liability Claim, exceeding
        Tenant's ability to pay. A judgment shall be considered final when it is
        no
        longer subject to appeal. Tenant shall be deemed able to pay a judgment if
        its
        resources exceed the judgment amount, based on the combination of the following
        factors: (1) the insurance available to Tenant for payment of the claim,
        as
        confirmed in writing by the insurer; (2) Tenant's liquid net worth as of
        the
        most recent financial statement of Tenant furnished to Landlord in accordance
        with the Agreement To Lease; and (3) Tenant's ability to borrow or otherwise
        obtain funds to satisfy the judgment, as confirmed by a written commitment
        to
        lend, received by Tenant and provided to Landlord within seven (7) Business
        Days
        of the date of entry of the final judgment, from a party or parties with
        the
        capability of providing the promised funds. The entry of a judgment against
        Tenant based on a Resident Liability Claim, and the conclusion of the appeal
        process or expiration of time such that the judgment is no longer subject
        to
        appeal, and the expiration of an additional seven (7) Business Days thereafter
        without Tenant having furnished Landlord with documentation as described
        above,
        demonstrating Tenant's ability to pay such judgment, shall constitute a
        Performance Trigger Event.

       

      4.4            Continuation
        of the Lease Term shall be conditioned on the Facility and the
        Other
        Facilities being maintained in Good Condition or sufficiently close thereto
        that
        the cost of restoration to Good Condition does not exceed the Repair Maximum
        as
        described below. The expenditure reasonably determined to be necessary, during
        an inspection by a qualified inspector (retained by Landlord with Tenant's
        reasonable consent) to repair or replace any portion of the Facility and/or
        Other Facilities and/or to perform services necessary to restore the Facility
        and/or Other Facilities to Good Condition is referred to hereafter as the
        "Restoration Cost"; Tenant shall maintain the Facility and Other Facilities
        at
        all times so that the Restoration Cost shall at no time be greater than $200,000
        (such amount, the "Repair Maximum"). Issuance of a written report by a qualified
        inspector identifying conditions at the Facility and/or Other Facilities
        which
        cause the Restoration Cost to exceed the Repair Maximum shall constitute
        a
        Performance Trigger Event.


      
        
          
          

        

        
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      4.5            Upon
        the occurrence of any Performance Trigger Event, Tenant shall provide
        Landlord, within ten (10) business days, with a written plan ("Plan of
        Correction") describing Tenant's plans, if any, to remedy the condition giving
        rise to the Performance Trigger Event, i.e., to cause the Rent Ratio requirement
        to be met for the following Quarter, to satisfy the judgment, or to restore
        the
        Facility and/or Other Facilities to a condition such that the remaining
        Restoration Cost will not exceed the Repair Maximum (any such remedy, the
        "Cure"). Failure of Tenant to submit a timely Plan of Correction, detailing
        a
        proposed Cure which can feasibly be accomplished within ninety (90) days,
        shall
        be an Event of Default. If Tenant submits a timely Plan of Correction, Tenant's
        failure to complete the proposed Cure within ninety (90) days shall be an
        Event
        of Default. Notwithstanding the above, failure to maintain the Leased Property
        in Good Condition shall not be an Event of Default if such failure is the
        result
        of casualty loss and Tenant has complied with the other terms of this Lease,
        including the duty as to restoration as described in Section 18 and Section
        20
        below.

       

      
        	
                5.

              	
                USE
                  AND CONDITION OF PROPERTY

              


      

       

      5.1            Nothing
        set forth in this Lease shall be construed as a warranty by the Landlord
        that the Equipment shall continue in working order after the Commencement
        Date,
        nor shall anything set forth herein be construed as a warranty as to the
        condition of the Equipment or Supplies on the Commencement Date.

       

      5.2            Landlord
        makes no warranty of the Leased Premises, Equipment or Supplies
        for any purpose, except as expressly provided herein and in the Agreement
        To
        Lease, and Tenant agrees that as of the Commencement Date, with the exception
        of
        any breach of Landlord's representations and warranties contained in this
        Lease
        and the Agreement To Lease, Tenant shall be deemed to have accepted the Leased
        Premises, Equipment and Supplies "as is" and with any and all "faults." Neither
        Landlord nor its agents have made any representations with respect to the
        Leased
        Premises, the Equipment
        or the Supplies, except as expressly set forth in this Lease or in the Agreement
        To Lease.

       

      5.3            Tenant
        shall not use the Leased Premises for a purpose other than the provision
        of
        retirement housing and/or assisted living accommodations and care for persons
        age 62 or older. No Residents younger than age 62 shall be admitted to the
        Facility without Landlord's prior written consent.

       

      5.4            Tenant
        shall not do or permit to be done any act or thing upon the Leased Premises
        which will invalidate or be in conflict with any fire or hazard insurance
        policies or increase the rate for fire or hazard insurance covering the Leased
        Property. Tenant shall not do or permit to be done any act or thing upon
        the
        Leased Premises which subjects the Landlord to any liability or responsibility
        for injury to any person or persons or to property by reason of said acts
        being
        conducted on the Leased Premises. The Leased Property shall be used in a
        reasonably careful, safe and proper manner; no nuisance, trade or occupation
        which is known in insurance as "extra or especially hazardous" shall be
        permitted; no waste shall be committed or permitted.


      
        
          
          

        

        
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      5.5            Tenant
        will comply with all present and future laws, ordinances, rules and regulations
        of any governmental authority affecting the Leased Premises or any part thereof.
        In particular and without limiting the generality of the foregoing, Tenant
        will
        maintain and continue in force at all times all permits, licenses and other
        governmental approvals now or hereafter required in connection with the
        construction or operation of the Premises, including, but not limited to,
        the
        requirements of the ALF Licensing Law or any law in replacement thereof;
        and all
        required business licenses, whether federal, state or local.

       

      5.6            Tenant
        may contest any alleged legal requirement, without compliance, at Tenant's
        sole expense, after prior or concurrent written notice to Landlord, by
        appropriate administrative or legal proceedings conducted in good faith and
        with
        due diligence, provided that (a) neither the Leased Premises, nor any part
        thereof, nor the operation thereof; nor any license, permit or approval relating
        thereto shall be in danger of being lost or interfered with, and (b) Landlord
        shall not be in any danger of any criminal or civil liability for failure
        to
        comply therewith, and no part of the Leased Premises shall be subject to
        the
        imposition of any lien or other charge as a result of such failure; provided,
        that any alleged legal requirement may be contested without compliance, even
        if
        such failure may result in the imposition of a lien, if Tenant places funds
        in
        escrow or posts a bond sufficient to prevent the imposition of a lien other
        than
        as to such escrowed amount.

       

      5.7            Tenant's
        right to occupancy of the Leased Premises includes the benefit of
        any
        easements benefiting the real estate upon which the Facility is located.
        No
        rights, easements or licenses shall be acquired by Tenant by implication
        in fact
        or in law, or otherwise, except as expressly set forth in this Lease. Landlord
        shall not enter into any easements or other agreements that will restrict
        or
        interfere with Tenant's use and operation of the Leased Premises as provided
        herein without first obtaining Tenant's express written consent thereto,
        which
        Tenant may withhold if Tenant reasonably believes that the same could restrict
        or interfere with Tenant's use and operation of the Leased Premises as provided
        herein.

       

      
        	
                6.

              	
                RENT

              


      

       

      6.1            Tenant
        shall pay to Landlord Base Rent in the sum of $ 441,040.00 per year
        ($36,753.33/month) during the Lease Term, payable monthly in advance by wire
        transfer in equal monthly installments on the first business day of each
        month;
        provided, that Base Rent shall be modified as follows.


      
        
          
          

        

        
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      A.            Base
        Rent shall be increased or decreased for each Lease Year after the initial
        Lease
        Year by the percentage increase or decrease in the national Consumer Price
        Index
        for Urban Wage Earners for the most recent month's data published in the
        most
        recent publication by the U.S. Department of Labor, as of the third month
        prior
        to the beginning of such Lease Year, as compared to the same month of the
        prior
        year, provided that no such increase shall exceed four percent (4%) for any
        Lease Year.

       

      B.            Base
        Rent shall be reduced in the event of casualty loss as described in Section
        18,
        or pursuant to government action as described in Section 19.

       

      The
        first
        installment of Base Rent shall be payable on the Commencement Date.

       

      6.2            In
        addition to Base Rent, Tenant shall pay Landlord, during the sixth and
subsequent
        Lease Years of the Lease Term, Variable Rent equal to one-half percent (0.5%)
        of
        the annual Revenue of the Facility, payable in accordance with Section 6.3
        below.

       

      6.3            Revenues
        of the Facility will be reported to Landlord annually, within ninety
        (90) days after the end of the fiscal year of the Tenant (which shall be
        the
        same as the fiscal year for the Affiliated Tenants), in the consolidated
        financial statement of the Tenant and the Affiliated Tenants as described
        in
        Section 8(b) of the Agreement To Lease. The Variable Rent shall be paid,
        for the
        portion of each Lease Year after the sixth Lease Year which falls within
        any
        Tenant fiscal year, within ninety (90) days after the end of the Tenant's
        fiscal
        year.

       

      6.4            Concurrently
        with payments of Base Rent, Tenant shall pay to Landlord, monthly,
        one-twelfth (1/12) of the annual amount necessary to discharge Tenant's
        responsibility for Taxes pursuant to Section 9 below (such amount, the "Tax
        Escrow") and the annual amount necessary to discharge Tenant's responsibility
        for property insurance pursuant to Section 10.1 below (such amount, the
        "Insurance Escrow"). Landlord shall provide Tenant, within fifteen (15) days
        after the due date for payment of Taxes or insurance premiums which are the
        basis for Landlord's receipt of a Tax Escrow or Insurance Escrow payment
        from
        Tenant, with documentation confirming that such Taxes or insurance premium
        has
        been paid; similarly, and without waiving the requirement for payment of
        Tax
        Escrow and Insurance Escrow payments to Landlord, in the event that any Taxes
        or
        insurance premiums are paid directly by Tenant to a taxing agency or an insurer,
        Tenant shall provide Landlord with documentation confirming payment of such
        Taxes or insurance premiums within fifteen (15) days after the due date for
        payment thereof

       

      6.5            If
        the amount of the Tenant's obligations for Taxes or property insurance
is
        not
        ascertainable at the time any payment required hereunder ("Escrow Deposit")
        is
        to be made, the payment shall be made on the basis of the last previously
        ascertainable amount of such expense plus five percent (5%). At such time
        as it
        may be determined that Tenant's Escrow Deposits were higher or lower than
        one
        twelfth of the actual expense for the year, then if the Escrow Deposit was
        too
        low, Tenant shall, on the next date that Base Rent is due, pay Landlord such
        additional Escrow Deposit as is necessary to bring the total amount of Escrow
        Deposits into balance for the year-to-date; or, if the Escrow Deposit was
        too
        high, Tenant may reduce further Escrow Deposits until the correct balance
        is
        reached.


      
        
          
          

        

        
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      6.6           If
        Tenant fails to pay any installment of Base Rent, Variable Rent, or Escrow
        Deposit on or before the fifth Business Day after such payment is due, then
        in
        addition to the amount of Base Rent, Variable Rent or Escrow Deposit due
        and
        owing, Tenant shall pay Landlord, in addition to the amount otherwise due,
        interest on such amount, at the Default Rate, from the due date until the
        date
        of payment, plus a late charge equal to five percent (5%) of the installment
        so
        overdue.

       

      6.7           All
        payments of Base Rent, Variable Rent, Escrow Deposits or other Additional
        Rent (i.e., any other amounts payable by Tenant to Landlord pursuant to this
        Lease) shall be paid to Landlord by wire transfer according to instructions
        provided by Landlord to Tenant.

       

      6.8           After
        the Lease Term, the parties shall settle as to Tax Escrow payments as
        provided in Section 9.8 below and settle as to Insurance Escrow payments
        as
        provided in Section 10.9 below.

       

      
        	
                7.

              	
                REPLACEMENT
                  RESERVE

              


      

       

      7.1           Tenant
        shall pay to Landlord, each month during the Term, the sum of $2,475.00/month
        ($29,700/year) (the "Replacement Reserve Installment"), which is the amount
        to
        be deposited by Landlord in a fund (the "Replacement Reserve Fund") to be
        utilized for capital improvements and repairs to the Facility, under the
        same
        terms as the "Reserve Fund For Replacement" requirements of the U.S. Department
        of Housing and Urban Development ("HUD") for properties subject to mortgages
        which are HUD-insured under Section 232 of the National Housing Act (the
        Facility is not now, but is expected in the future to be, subject to such
        a
        Mortgage). If a new Mortgage (or Mortgages) should be granted by Landlord,
        in
        accordance with Section 21 below, and the terms of such new Mortgage(s) require
        Landlord to make greater payments to a Replacement Reserve Fund or similar
        fund
        than the amount of the Replacement Reserve Installment described above, the
        Replacement Reserve Installments due from Tenant shall be increased to conform
        to the requirements of such new Mortgage(s).

       

      7.2           At
        such time as the Facility becomes subject to a HUD-insured Mortgage, Landlord
        shall deposit the Replacement Reserve Installments received from Tenant into
        a
        Replacement Reserve Fund in accordance with the requirements of HUD and
        Landlord's Mortgage. Landlord shall make the Replacement Reserve Fund (both
        the
        balance of such fund as of the Commencement Date and additions thereto from
        the
        Replacement Reserve Installments paid by Tenant) available to Tenant for
        reimbursement of amounts spent by Tenant for capital improvements and repairs,
        in accordance with the standards utilized by HUD for release of funds from
        a
        Reserve Fund For Replacement as set out in Chapter 4 of HUD Handbook 4350.01
        Rev-1 ("Multifamily Asset Management And Project Servicing", September,
        1992)(hereafter referred to as the "HUD Standards"). Promptly upon Landlord's
        receipt of a request from Tenant for reimbursement from the Replacement Reserve
        Fund ("Draw Request"), Landlord shall submit a request to Landlord's Mortgagee
        for the release of such funds, and shall use its best efforts to cause the
        mortgagee and HUD to approve the Draw Request. Upon HUD's approval of the
        Draw
        Request, Landlord shall make funds available to Tenant within five Business
        Days
        of Landlord's receipt of the funds.


      
        
          
          

        

        
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      7.3            If
        the Facility is subject to a Mortgage which is not HUD-insured, but the
terms
        of
        the Mortgage require that a fund similar to a Replacement Reserve Fund
        ("Mortgagee Reserve Fund") be held under the control of the Mortgagee, Tenant
        shall submit Draw Requests, and Landlord shall make funds available to Tenant,
        in accordance with the standards of the Mortgagee, which shall be commercially
        reasonable. Upon approval of a Tenant Draw Request by the Mortgagee, Landlord
        shall make funds available to Tenant within five Business Days of Landlord's
        receipt of the funds from the Mortgagee.

       

      7.4            If
        the Facility is not subject to a Mortgage which requires that a Replacement
        Reserve Fund or Mortgagee Reserve Fund, the Replacement Reserve Installments
        shall be held in a segregated federally-insured bank account to be controlled
        by
        Landlord to be used solely for holding Replacement Reserve Installments under
        this Lease (with, at Landlord's discretion, similar payments from one or
        more of
        the Affiliated Tenants pursuant to the Other Leases) (such account, the "Reserve
        Account"). Funds in the Reserve Account shall be the property of Tenant,
        subject
        to the condition that such funds may not be used for any purpose other than
        reimbursement of Tenant for improvements to the Leased Property pursuant
        to this
        Lease and the HUD Standards. Tenant shall submit Draw Requests to Landlord
        for
        reimbursement from the Reserve Account in accordance with the HUD Standards,
        and
        Landlord shall make funds from the Reserve Account available to Tenant within
        ten (10) Business Days of Landlord's receipt of Tenant's Draw Request (including
        supporting documentation) in accordance with the HUD Standards.

       

      7.5            All
        interest earned on the funds paid by Tenant under this Section 7 shall be
        added
        to the Replacement Reserve Fund, Mortgagee Reserve Fund, or Reserve Fund,
        as
        applicable, and shall be reported for tax purposes as income of Tenant. At
        the
        end of the Lease Term, any funds remaining in the Replacement Reserve Fund,
        Mortgagee Reserve Fund or Reserve Account shall become the property of Landlord.
        Tenant's obligations to maintain the Leased Premises as provided in Section
        11
        below, to make capital improvements as provided in Section 24 below, and
        to
        replace Equipment and Supplies as provided in Section 29 below shall not
        be
        conditioned upon the availability of funds in the Replacement Reserve Fund,
        Mortgagee Reserve Fund, or Reserve Account for such purposes.


      
        
          
          

        

        
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                8.

              	
                SECURITY
                  DEPOSIT

              


      

       

      8.1            Tenant
        shall pay Landlord, upon execution of this Lease, a Security Deposit
        of $300,000.00. Tenant
        shall be entitled to interest ("Security Deposit Interest") on the balance
        of
        the Security Deposit held by Landlord (the "Security Deposit Balance") for
        each
        month at the T-Bill Rate as published in the Wall Street Journal on the last
        business day of the month. Tenant shall deduct the Security Deposit Interest
        due
        for each month from the next installment of Base Rent otherwise
        payable.

       

      8.2            The
        Security Deposit shall be held by Landlord during the Term and utilized
        as to compensate Landlord for any default by Tenant under this Lease or to
        compensate any of the Affiliated Lessors for a breach of any of the Other
        Leases. The Security Deposit shall be returned to Tenant as hereinafter
        provided, at the termination of this Lease, provided Tenant is not then in
        default hereunder and there are no amounts owed to any of the Affiliated
        Lessors
        under the Other Leases.

       

      8.3            From
        the Security Deposit, Landlord shall, to the extent otherwise permitted
        hereunder, and subject to applicable notice and cure periods benefiting Tenant,
        be entitled to deduct any amount of money reasonably required as a result
        of
        Tenant's default to restore the Leased Property to Good Condition or to
        compensate Landlord for any other breach of this Lease, or to compensate
        any of
        the Affiliated Lessors for the breach of the Other Leases.

       

      8.4            In
        the event that any deduction is taken from the Security Deposit as authorized
        hereunder, the Tenant shall pay Landlord, with the next installment of Base
        Rent, the amount necessary to restore the Security Deposit to the original
        amount.

       

      8.5            Landlord's
        obligation to pay Security Deposit Interest for any day shall be limited
        to the Security Deposit Balance as of such day.

       

      8.6            Subject
        to Section 8.7 below, the Security Deposit will not be held in a segregated
        account, and may be used by Landlord or Landlord's Affiliates (including
        without
        limitation the Affiliated Lessors) for purposes unrelated to the Leased
        Property.

       

      8.7            During
        the last eight months prior to the end of the Scheduled Lease Term, Landlord
        shall hold the Security Deposit in a segregated account and shall not use
        the
        Security Deposit, during the remaining Lease Term, for any purpose other
        than to
        offset losses suffered by Landlord as a result of breach of this Lease or
        the
        Other Leases by Tenant or the Affiliated Tenants. If Landlord does not, prior
        to
        the beginning of the eighth month prior to the end of the Scheduled Lease
        Term,
        provide documentation to Tenant confirming to Tenant's reasonable satisfaction
        that the Security Deposit is held in such a segregated account and will continue
        to be held in such a segregated account during remainder of the Lease Term,
        the
        Tenant shall be entitled to recover the Security Deposit by offsetting, against
        monthly Base Rent payments otherwise due during the last eight (8) months
        of the
        Lease Term, an amount each month equal to a fraction of the Security Deposit
        balance, said fraction having a numerator of one and a denominator which
        is the
        number of months (including the month for which the offset is taken) for
        which
        Base Rent remains to be paid (e.g., in the last month, the entire remaining
        balance of the Security Deposit may be recovered.


      
        
          
          

        

        
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      8.8            In
        the event of an Event of Default by Landlord, if Landlord does not, within
        thirty (30) days of such Event of Default, provide documentation confirming
        to
        Tenant's reasonable satisfaction that the Security Deposit is held in a
        segregated account as described in Section 8.7 and will continue to be held
        in
        such a segregated account until such time as Landlord's default has been
        cured
        (or, if such default is not cured, during remainder of the Lease Term), the
        Tenant shall be entitled to recover the Security Deposit by offsetting, against
        the next monthly Base Rent payments otherwise due, the balance of the Security
        Deposit.

       

      8.9            Within
        fifteen (15) Business Days after the end of the Lease Term, Landlord
        shall give Tenant written notice describing in detail any conditions of the
        Leased Property or other breaches of this Lease or the Other Leases for which
        Landlord intends to withhold any portion of the Security Deposit (provided
        that
        Landlord may only withhold such amounts in accordance with this Lease), and
        shall, along with such notice, deliver to Tenant any amount of the Security
        Deposit not claimed by Landlord pursuant to such notice.

       

      
        	
                9.

              	
                TAXES
                  AND OTHER CHARGES

              


      

       

      9.1            Tenant
        shall be responsible, during the Possession Period, for payment of all
        real
        and personal property taxes; governmental charges and assessments; water
        and
        sewer rents, rates and charges; charges for public utilities; excises and
        levies
        arising from the execution hereof; license and permit fees; and other
        governmental charges, special or general, foreseen or unforeseen (hereinafter
        referred to collectively as "Tax" or "Taxes") which shall be assessed, levied
        or
        imposed upon the Leased Property or this transaction or any part thereof
        by any
        federal, state, municipal, or other governmental authority; provided, that
        any
        periodic tax having accrued as of the Commencement Date shall be Landlord's
        responsibility.

       

      9.2            Notwithstanding
        anything to the contrary set forth in this Lease, Tenant shall
        not
        be required to pay any franchise, estate, inheritance, succession, excise,
        corporate capital levy, capital gains or transfer tax of Landlord, or any
        income
        or excess profits tax of Landlord, or any tax which is in fact personal to
        Landlord, or any sales, use or other tax levied upon the rent payable by
        Tenant
        hereunder.

       

      9.3            As
        provided in Section 6.4 hereof, Tenant shall satisfy its obligations
under
        this Section 9 by payment of a monthly Tax Escrow to Landlord. So long as
        there
        is no Event of Default by Tenant under this Lease, all funds held by Landlord
        as
        a result of Escrow Deposits (both Tax Escrow and Insurance Escrow payments,
        including interest earned on Escrow Deposits) shall be held by Landlord in
        a
        separate, interest-bearing account ("Escrow Account") used only for Landlord's
        receipt of Escrow Payments and payment by Landlord of Taxes and insurance
        obligations of Tenant pursuant to this Lease. Upon the occurrence of an Event
        of
        Default by Tenant under this Lease all Escrow Deposit funds (including
        accumulated interest) may be applied by Landlord to any obligation owed by
        Tenant to Landlord; provided, that such right shall not be conclusive as
        to the
        actual liability of Tenant under any provision of this Lease.


      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

      

       

      9.4             Any
        Tax relating to a fiscal period of the taxing authority, a part of which
        falls
        after the Commencement Date and prior to the end of the Lease Term, and a
        part
        of which is either prior or subsequent thereto, whether or not such Tax shall
        be
        assessed, levied, imposed or become a lien upon the Leased Property, or shall
        become payable during the term of this Lease, shall be apportioned and adjusted
        between Landlord and Tenant on a pro rata basis. If Landlord fails to pay
        any
        Tax for which it is responsible, Tenant may pay such amount and apply such
        amount as a credit against Net Rent otherwise due.

       

      9.5             Tenant
        shall have the right to contest or review the amount or validity of any
        Tax
        by appropriate administrative or legal proceedings, but the provision of
        this
        right is not to be deemed or construed in any way as relieving, modifying
        or
        extending Tenant's covenant to pay any the Tax Escrow as provided in Section
        6.4
        based on the amount stipulated by the taxing authority to be due; provided,
        however, that to the extent that any such contested Tax shall subsequently
        be
        determined not to be due, Tenant shall be entitled to recover any such
        overpayment pursuant to Section 6.4 above, i.e., by reducing future Escrow
        Deposits in the amount of such overpayment.

       

      9.6             Any
        contest as to the validity or amount of any Tax, or as to the assessed
valuation
        upon which such Tax was computed or based, whether before or after payment,
        may
        be made by Tenant in the name of Landlord or of Tenant, or both, as Tenant
        shall
        determine. Landlord agrees that it will, at Tenant's expense, cooperate with
        Tenant in any such contest as to such extent as Tenant may reasonably request;
        it being understood, however, that Landlord shall not be subject to any
        liability for the payment of any costs or expenses in connection with any
        proceeding brought by Tenant, and Tenant covenants to indemnify and save
        harmless Landlord from any such costs or expenses.

       

      9.7             If
        any new Mortgage, as described in Section 21 below, establishes requirements
        for Tax payments to be made in escrow other than as described above, Tenant
        shall pay Landlord the escrow amount as required by such new Mortgagee on
        the
        date required by the terms of the Mortgage; provided, that Tenant's obligation
        to pay any increased Escrow Deposit shall be limited to commercially reasonable
        amounts (for such purpose, requirements of HUD or FNMA shall be considered
        reasonable).

       

      9.8             At
        the end of the Lease Term, any surplus of Tax Escrow payments (and accumulated
        interest thereon) held by Landlord in excess of the unpaid Taxes accrued
        as to
        the Leased Property shall be repaid by Landlord to Tenant. If the amount
        of
        unpaid Taxes accrued during the Lease Term has not been conclusively determined,
        as of the end of the Lease Term, Landlord may retain Tax Escrow payments
        (and
        interest thereon) for the estimated accrued and unpaid Taxes. For this purpose,
        in the absence of evidence to the contrary, the estimated Taxes for the final
        year or tax period of the Lease Term shall be assumed to be 105% of the prior
        year's or other tax period's Taxes. At such time as accrued but unpaid Taxes
        have been conclusively determined, Landlord shall pay Tenant any remaining
        excess of Tax Escrow payments (and interest thereon) held by Landlord in
        excess
        of such accrued but unpaid Taxes within five Business Days after determination
        of such deficiency; alternatively, if the accrued but unpaid Taxes are in
        excess
        of the available Escrow Deposits, Tenant shall pay the amount of such excess
        to
        Landlord within five Business Days after determination of such
        deficiency.


      
        
          
          

        

        
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                10.

              	
                INSURANCE

              


      

       

      10.1            At
        all times from the Commencement Date until the end of the Lease Term, at
        its own
        cost and expense, Tenant shall be responsible for the cost of keeping all
        buildings and improvements now existing or hereafter erected as a part of
        the
        Leased Premises, and all Equipment leased hereunder, including all alterations,
        rebuildings, replacements and additions thereto, insured against loss or
        damage
        by fire, windstorm, hail, explosion, damages from aircraft or vehicles and
        such
        other hazards, casualties, risks and contingencies as are from time to time
        included within the "all risks" form of fire insurance policy with extended
        coverage endorsement, in an amount at least equal to the full replacement
        value
        thereof, subject to deductibles in commercially reasonable amounts, as
        reasonably approved in writing by Landlord and any Mortgagee, providing coverage
        for any loss occurring during Tenant's occupancy of the Leased Premises.
        The
        term "full replacement value" shall mean actual replacement cost, without
        regard
        to depreciation, as reasonably approved in writing by Landlord and any
        Mortgagee. Tenant shall satisfy its obligation hereunder by monthly Insurance
        Escrow payments to Landlord as described in Section 6.4 above; Landlord shall
        apply the funds from such Insurance Escrow payments to payment of premiums
        consistent with the second and third sentences of Section 9.3
        above.

       

      10.2            At
        all times from the Commencement Date until the end of the Lease Term, at
        its
        sole cost and expense (but for the mutual benefit of the Landlord and Tenant),
        and as additional rental, Tenant shall provide and keep in force single limit
        comprehensive general liability insurance policies reasonably satisfactory
        to
        the Mortgagee of the Leased Premises (including any prospective Mortgagee,
        i.e.,
        a lending institution having agreed to loan funds to Landlord and/or the
        Affiliated Lessors, conditioned upon receipt of a mortgage on the Leased
        Premises), subject to commercially reasonable deductibles, naming Landlord
        and
        any Mortgagee of the Leased Premises as additional insureds.

       

      A.            If  Tenant
        does not secure such insurance on an "occurrence" basis, i.e.,
        providing coverage for events occurring during the period for which premiums
        are
        paid, even if claims are asserted after such period, Tenant shall provide,
        prior
        to the end of the Lease Term, "tail" coverage, i.e., liability insurance
        coverage for claims which may be asserted during the two-year period after
        the
        Lease Term for events occurring during the Lease Term, and shall pre-pay
        in full
        the premium required for such tail coverage prior to the end of the Lease
        Term.


      
        
          
          

        

        
          18

          
            

          

        

        
          
          

        

      

       

      B.            Notwithstanding
        the above, Tenant shall not be in default under this
        Lease for failure to provide liability insurance if Tenant complies with
        commercially reasonable self-insurance practices consistent with prevailing
        practices in the assisted living and senior housing industry in the State;
        provided, that for this purpose, reliance on self-insurance shall not be
        considered to be a "commercially reasonable self-insurance practice"
        if

       

      (1)           such
        practice is materially inconsistent with the requirements of HUD for Section
        232
        projects, FNMA for senior living projects, or the requirements of ALF Licensing
        Laws applicable to the Facility; or

       

      (2)           as
        of the beginning of each month of the self-insurance arrangement, either
        of the
        following conditions is in effect:

       

      (a)           the
        self-insurance arrangement does not involve a pooling agreement wherein entities
        other than Tenant and its Affiliates are committed to a system of risk-sharing
        pursuant to which resources other than Tenant's are available for satisfaction
        of claims against Tenant (a "Pooling Arrangement"), Tenant lacks sufficient
        liquid net worth, as reflected by the financial statements of Tenant reported
        to
        Landlord pursuant to Section 8 of the Agreement To Lease, to cover claims
        on a
        commercially reasonable basis;

       

      (b)           the
        self-insurance arrangement involves a Pooling Arrangement, the liquid net
        worth
        of the participants in such arrangement are not sufficient to cover, on a
        commercially reasonable basis, claims against such participants.

       

      C.            Tenant
        shall at all times carry workers compensation insurance consistent
        with the requirements of State law.

       

      10.3             At
        all times from the Commencement Date until the end of the Lease Term, at
        its
        sole cost and expense (but for the mutual benefit of the Landlord and Tenant)
        and as additional rent, Tenant shall provide and keep in force such business
        interruption insurance as may be required by HUD or FNMA or as may be reasonably
        required by other Mortgagees.

       

      10.4             All
        such insurance to be provided by Tenant under this section shall name as
        insureds the Landlord, Tenant and the Mortgagee(s) of Landlord, as their
        respective interests may appear. All policies of insurance required under
        Section 10.1 hereof shall also be payable, under a standard mortgagee clause,
        to
        the holder of the existing or any new Mortgage, as their interests may appear.
        No such insurance shall allow for the reduction of any payment by reason
        of any
        other insurance policy unless such other policy is specifically named, a
        copy
        thereof is provided to Landlord, and Landlord and the Mortgagee are named
        therein as insureds as their interests may appear.

       

      10.5             All
        of the policies of insurance which Tenant is to provide pursuant to this
        Lease
        shall be in form and substance as is then standard in the State for policies
        of
        like coverage and shall be distributed in such amounts, and with such
        responsible companies as Tenant shall determine, subject to the written approval
        of Landlord, not to be unreasonably withheld. Certificates of insurance policies
        or other evidence reasonably satisfactory to Landlord and the Mortgagee(s),
        shall be delivered to Landlord and shall bear endorsements showing the receipt
        by the respective insurance companies of the premiums thereon, or shall be
        accompanied by other evidence of payment of such premiums to the insurance
        companies. All insurance policies shall be renewed by Tenant, and proof of
        such
        renewals delivered to Landlord, at least ten (10) days prior to their expiration
        dates. All such policies shall provide that they may not be cancelled by
        the
        insurer for nonpayment of premiums or otherwise until at least thirty (30)
        days
        after service upon Tenant, Landlord and Mortgagee(s) of notice of the proposed
        cancellation, and in any event that such policies shall not be invalidated,
        without thirty (30) days prior written notice to Landlord and the Mortgagee(s),
        by any act or omission of Tenant or any occupant of the Leased Premises,
        or by
        any other act which might otherwise result in a forfeiture of such
        insurance.


      
        
          
          

        

        
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      10.6           In
        the event that Tenant fails to obtain and maintain insurance as required
        in this
        Section 10, after ten (10) days prior written notice by Landlord to Tenant,
        the
        Landlord or the Mortgagee may effect any such insurance coverage and pay
        premiums therefore, and the commercially reasonable amount of all premiums
        so
        paid shall constitute Additional Rent hereunder, payable by Tenant to Landlord
        or Mortgagee upon the next due date of Base Rent hereunder and in accordance
        with the provisions of this Lease.

       

      10.7           The
        foregoing insurance provisions shall not limit or modify any of the obligations
        of Tenant under any of the provisions of this Lease, except as provided in
        Section 18, to restore the Leased Premises or to replace any
        Equipment.

       

      10.8           To
        the extent of the amount of insurance proceeds actually received in regard
        to
        any insured event, Landlord and Tenant and all parties claiming under them
        hereby mutually release and discharge each other from all claims and liabilities
        arising from or caused by any hazard actually covered by insurance on the
        Leased
        Premises, or actually covered by insurance in connection with property on,
        or
        activities conducted on, the Leased Premises, regardless of the cause of
        damage
        or loss. This provision shall only be effective so long as the applicable
        insurance policies contain a clause to the effect that this release shall
        not
        affect the right of the insured to recover thereunder. Such clauses shall
        be
        obtained by Tenant or Landlord, whenever possible, in all policies of insurance
        obtained pursuant to this Section 10.

       

      10.9           At
        the end of the Lease Term, any surplus of Insurance Escrow payments (and
        interest thereon) held by Landlord over the premiums payable for insurance
        required under this Section 10 shall be refunded by Landlord to Tenant within
        five (5) Business Days after such excess is determined; conversely, Tenant
        shall
        pay Landlord the amount of any deficiency of Escrow Deposits within five
        (5)
        Business Days after such deficiency is determined.


      
        
          
          

        

        
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                11.

              	
                REPAIRS
                  AND MAINTENANCE

              


      

       

      11.1           Commencing
        as of the Commencement Date and until the end of the Lease Term, Tenant,
        at its
        expense, shall take good care of and keep in good order and repair (damage
        or
        destruction by fire, other casualty and ordinary wear and tear excluded),
        the
        Leased Premises. Tenant shall:

       

      A.            make
        all repairs inside and outside, ordinary and extraordinary, structural and
        nonstructural, as necessary to preserve the Leased Premises in Good Condition,
        which repairs shall be performed in a first class workmanlike manner. If
        any
        element of the Leased Premises cannot be so repaired, Tenant shall replace
        that
        element so that the Leased Premises will be restored to Good
        Condition.

       

      B.            promptly
        pay the expense of all such repairs;

       

      C.            suffer
        no waste on or injury to the Leased Premises;

       

      D.            keep
        all sidewalks, curbs and parking areas within the Leased Premises in good
        repair
        and free from dirt and rubbish;

       

      E.            give
        prompt notice to Landlord of any fire or other casualty that may occur;
        and

       

      F.            repair
        promptly all injury done by the installation or removal of furniture, fixtures,
        equipment, machinery and personal property of Tenant.

       

      11.2           Landlord,
        its agents or representatives, shall have the right to enter upon the Leased
        Premises at all reasonable times, as provided in Section 17 below. If Landlord
        reasonably deems any repairs are necessary for which Tenant is responsible
        under
        Section 11.1, Landlord may demand in writing that Tenant make such repairs;
        and
        if Tenant either refuses or neglects to commence such repairs within thirty
        (30)
        days of Tenant's receipt of such written demand or fails to complete the
        same in
        a commercially timely manner, Landlord may make or cause such repairs to
        be made
        in a reasonable manner designed to avoid interference with the business of
        Tenant and Landlord shall not be responsible to Tenant for any loss or damage
        that may accrue to Tenant's business by reason thereof (except to the extent
        of
        the negligence or willful misconduct of Landlord or its agents), and if Landlord
        makes or causes such repairs to be made, the reasonable cost thereof paid
        by
        Landlord shall constitute Additional Rent payable on the first day of the
        next
        succeeding month; provided, that Landlord shall provide written notice to
        Tenant, not less than five (5) business days before the due date for such
        Additional Rent, advising Tenant of the cost incurred by Landlord for any
        such
        repair. Nothing contained herein shall be construed as imposing any obligation
        on Landlord to make any such repairs.


      
        
          
          

        

        
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                12.

              	
                NET
                  LEASE

              


      

       

      Except
        for payments required under any Mortgage(s) granted by Landlord as to the
        Leased
        Property, it is the purpose and intent of the Landlord and Tenant that the
        Net
        Rent payable hereunder shall be absolutely net to Landlord, so that this
        Lease
        shall yield to Landlord the Net Rent specified herein in each year during
        the
        entire term of this Lease, free of any charges, assessments, or taxes of
        any
        kind, assessed or imposed against the Leased Property, and without further
        abatement, deduction or set-off by Tenant except as authorized in Section
        6.5 to
        recover excess Escrow Deposits, 8.1 as to set-off of Security Deposit Interest,
        Sections 8.7 and 8.8 as to recovery of the Security Deposit, Section 9.5
        as to
        offset of Escrow Deposits to offset reductions in Taxes, Sections 19.4­19.5
        as to condemnation, Section 21.2 and Section 23A.2 if Tenant cures a default
        of
        Landlord under a Mortgage, and Section 23.5(F)(2) as to certain rent received
        by
        Landlord from a third party after Tenant's default. Landlord shall not be
        expected or required under this Lease to pay any such charge, assessment
        or tax,
        or be under any obligation or liability hereunder except as herein expressly
        set
        forth. All costs, expenses and obligations of any kind and nature whatsoever
        relating to the Leased Property or this Lease arising from or relating to
        the
        operation of or use of the Leased Premises after the Commencement Date and
        prior
        to the end of the Lease Term shall be paid and performed by Tenant.

       

      
        	
                13.

              	
                PUBLIC
                  UTILITIES AND VENDOR SERVICES

              


      

       

      Tenant
        agrees to pay or cause to be paid all charges for gas, water, sewer,
        electricity, light, heat, power, steam, air conditioning, telephone or other
        communication service or other utility or service used, rendered or supplied
        to,
        upon or in connection with the Leased Property throughout the term of this
        Lease, and to indemnify Landlord and save it harmless against any liability
        or
        damages on such account. Tenant expressly agrees that Landlord is not, nor
        shall
        it be, required to furnish to the Tenant or any other occupant of the Leased
        Premises, during the term of this Lease, any water, sewer, gas, heat,
        electricity, light, power, steam, air conditioning or any other facilities,
        equipment, labor, materials or services of any kind whatsoever, but, without
        limiting the foregoing, Landlord represents and warrants that, as of the
        date of
        its delivery of the Leased Premises to Tenant, the same are available to
        the
        Leased Premises. Landlord shall not be responsible for any breakdown,
        diminution, interruption, or cessation of any such utilities or utility
        services, nor shall the Net Rent abate in such event. Provided the same shall
        be
        at the Tenant's sole expense and liability, Landlord, at the request of Tenant,
        will join with Tenant in any application required for obtaining or continuing
        any of the foregoing services. Tenant shall not enter into any contract for
        goods or services to be provided for the Facility for a period beyond the
        Scheduled Lease Term.

       

      
        	
                14.

              	
                ALTERATIONS
                  AND ADDITIONS

              


      

       

      14.1            Except
        to the extent provided in Sections 18, 19, and 20 and 24 hereof, Tenant
        may at any time and from time to time during the term of this Lease, and
        any
        extension hereof, at Tenant's own cost and expense, make or permit to be
        made
        any alteration, addition, change or improvements of in or to the Leased Premises
        or any building located thereon or any part thereof; provided that:

       

      
        
          
          

        

        
          22

          
            

          

        

        
          
          

        

      

       

      A.            For
        any alterations, additions, changes or improvements involving the
        structure of the Facility (including interior walls, whether or not
        load-bearing) involving cost in excess of Fifteen Thousand Dollars ($15,000),
        the following shall be fully observed and performed by Tenant before the
        commencement of any work:

       

      (1)            There
        is no existing and unremedied default (subject to applicable notice
        and cure periods) on the part of Tenant under any of the terms, covenants
        and
        conditions herein;

       

      (2)            Tenant
        shall have delivered to Landlord plans and specifications, in
        sufficient detail to reasonably allow Landlord to make a decision with respect
        thereto, and shall have obtained Landlord's written approval thereof (which
        Landlord shall not unreasonably withhold, condition or delay), and any approval
        required by any and all governmental authorities and departments having
        jurisdiction. If Landlord shall not have signified its disapproval within
        thirty
        (30) calendar days after their delivery, the plans and specifications shall
        be
        deemed to have been approved by Landlord;

       

      (3)            Neither
        Landlord nor the Leased Premises shall be subject to any charge, liability,
        claim or lien of whatsoever kind or nature by reason thereof, except for
        any
        increase in property tax as to the Leased Premises resulting from such
        improvement;

       

      (4)            Tenant
        shall tender to Landlord such security and assurance of completion for said
        alterations or changes as shall be commercially reasonable within the industry
        and reasonably necessary for the particular alterations or changes in
        question.

       

      B.            The
        following shall be fully observed and performed by the Tenant during
        the work:

       

      (1)            The
        work involved in any such alteration, change or modification shall be performed
        with diligence and in a first-class workmanlike manner;

       

      (2)            All
        such work, alterations, changes or modifications shall be done subject to,
        and
        in accordance with all applicable federal, state and local laws and regulations
        governing the same; and

       

      (3)            Tenant
        shall procure all necessary permits for the construction of said changes,
        alterations, or modifications and shall deliver to Landlord a final certificate
        of occupancy or its equivalent as a condition precedent to the use of the
        improvements for their designated purpose.

       

      (4)            If
        any modification requiring Landlord's consent as described above
        is
        made without Landlord's consent (pursuant to the procedure described above),
        Tenant shall, before the beginning of the eighth month prior to the end of
        the
        Scheduled Lease Term, unless excused in writing by Landlord, restore the
        condition of the Facility to the condition that existed prior to such
        change.


      
        
          
          

        

        
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      14.2           All
        alterations, changes, additions and modifications to the Leased Premises,
        when
        made, erected, constructed, installed or placed upon the Leased Premises,
        and
        all machinery, apparatus, equipment, floor coverings and fixtures originally
        installed or as replaced, including without limitation all heating, lighting,
        and power equipment, pipes, pumps, tanks, conduits, plumbing, air-cooling
        and
        air-conditioning apparatus, attached cabinets, ducts and compressors are
        now and
        shall immediately be and become part of the realty when installed and the
        sole
        and absolute property of Landlord without cost or charge to Landlord and
        shall
        remain upon and be surrendered with the Leased Premises at the expiration
        or
        sooner termination of this Lease.

       

      14.3           Tenant
        shall not make any modification causing a reduction of the Resident Capacity
        of
        the Facility without prior written approval of Landlord and, upon the Facility
        becoming subject to a HUD-insured Mortgage, HUD..

       

      
        	
                15.

              	
                LIENS
                  OF THIRD PARTIES BY ACTION OF
                  TENANT

              


      

       

      15.1           Tenant
        shall not suffer or permit any liens to stand against the Leased Property
        or any
        part thereof by reason of any work, labor, services or materials done for,
        or
        supplied to, or claimed to have been done for, or supplied to, Tenant or
        anyone
        holding the Leased Property or any part thereof through or under Tenant
        subsequent to the Commencement Date. If any such lien shall at any time be
        filed
        against the Leased Property, Tenant shall cause the same to be discharged
        of
        record, within sixty (60) days after the date that Tenant receives written
        notice of such filing, by either payment, deposit or bond, unless a bond
        therefor is already in effect, or within such period shall have commenced
        proceedings necessary to discharge same and shall proceed diligently thereunder
        in order to discharge such lien within a reasonable time. If Tenant shall
        fail
        to discharge or commence necessary proceedings to discharge any such lien
        within
        such period, Landlord may, but shall not be obligated to, procure the discharge
        of such lien either by paying the amount claimed to be due by deposit in
        court,
        or if Landlord so elects, to compel the prosecution of an action for the
        foreclosure of such lien by the lienor and to pay the amount of the judgment,
        if
        any, in favor of the lienor with interest, costs and allowances. Any reasonable
        amount paid or deposited by Landlord for any of the aforesaid purposes, and
        all
        reasonable legal and other expenses of Landlord, at the option of Landlord,
        shall be payable by Tenant to Landlord as Additional Rent for the next
        month.

       

      15.2           Nothing
        in this Lease shall be deemed to be, or construed in any way as constituting,
        the consent or request of any person, firm or corporation for the performance
        of
        any labor or the furnishing of any materials for any construction, rebuilding,
        alteration or repair of or to the Leased Property or any part thereof, nor
        as
        giving Tenant any right, power or authority to contract for or permit the
        rendering of any services or the furnishing of any materials which might
        in any
        way give rise to the right to file any lien against the Landlord's interest
        in
        the Leased Property. Landlord shall have the right to post and keep posted,
        at
        all reasonable times and locations on the Leased Premises, any notices which
        Landlord shall be required so to post for the protection of Landlord and
        the
        Leased Property from any such lien.


      
        
          
          

        

        
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                16.

              	
                ATTORNEYS'
                  FEES

              


      

       

      Subject
        to the terms of Section 43 below regarding the right of either party to cause
        any dispute under this Lease (other than a request by a party for injunctive
        relief or other relief which cannot be granted by an arbitrator) to be resolved
        by binding arbitration, in the event either party brings a legal proceeding
        against the other for breach of this Lease or the Agreement To Lease, the
        prevailing party in such action shall be entitled to recover the court costs
        and
        reasonable attorneys' fees incurred by such party in such
        proceeding.

       

      
        	
                17.

              	
                ACCESS
                  TO PREMISES

              


      

       

      Tenant
        shall permit Landlord or its agents, upon at least one (1) business day prior
        written notice (i.e., no less than 24 hours), to enter the Leased premises
        at
        all reasonable hours, including without limitation the hours of 8 am through
        5
        pm, local time, Monday through Friday, for the purpose of inspection of the
        Leased Premises, and for the purpose of showing the Leased Premises to persons
        wishing to purchase the Leased Premises or make a mortgage loan upon them;
        and
        at any time within nine (9) months prior to the expiration of the Scheduled
        Leased Term, or after default (subject to applicable notice and cure periods)
        by
        Tenant in any obligation under this Lease, or the Agreement To Lease, to
        persons
        wishing to rent the whole or any portion of the Leased Premises, provided
        that
        such entry, inspection and/or showing does not materially interfere with
        the
        operation of the Facility.

       

      
        	
                18.

              	
                DAMAGE
                  OR DESTRUCTION

              


      

       

      18.1            Except
        as expressly set forth in this Section 18, and subject to the terms and
        conditions of the existing Mortgage or any subsequent Mortgage as authorized
        by
        Section 21, if after the Commencement Date and prior to the end of the Lease
        Term, the Leased Property, or any improvements or additions to the Facility
        shall be destroyed or damaged in whole or in part by fire or other hazard,
        risk,
        contingency or casualty, whether or not covered by insurance, or after partial
        condemnation not resulting in termination of this Lease, the Tenant shall
        give
        to the Landlord immediate notice thereof, and the Tenant shall, to the extent
        that funds for such purpose are available from insurance proceeds, and funds
        provided by Landlord, promptly repair, replace and rebuild the same, at least
        to
        the extent of the value, quality, condition and class equal to the buildings
        and
        improvements thereon existing immediately prior to such occurrence (as nearly
        as
        reasonably possible under the circumstances) (hereinafter referred to as
        "restoration"), all in accordance with Section 20 hereof. If Tenant shall
        not
        commence such work within thirty (30) days after the occurrence of such damage,
        or shall not complete said work within a commercially reasonable time after
        commencement of such work, Landlord may, upon written notice to Tenant, take
        responsibility for restoration. Except as hereafter expressly set forth,
        a
        partial or total destruction shall not annul or void this Lease except by
        the
        mutual written agreement of the parties, and there shall be no abatement
        or
        reduction of rent. The Tenant warrants to the Landlord that the Leased Property
        will be repaired or replaced in accordance with the then existing laws and
        regulations affecting the Leased Property, including, without limitation,
        any
        requirements of any federal, state or local licensing
        authorities.


      
        
          
          

        

        
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      18.2           In
        the event of any damage or destruction as hereinabove referred to, any insurance
        money received by or paid to the Landlord or the Tenant or the Mortgagee
        under
        the Mortgage (to the extent allowable under the Mortgage) upon the Leased
        Premises by reason thereof shall be applied to such costs of repairing,
        restoration or rebuilding as herein provided for and required pursuant to
        Section 20.1 hereof. In the event the Tenant's insurance applicable thereto
        has
        a deductible provision, the Tenant be responsible for payment of the deductible
        as may be required for such repair, restoration or rebuilding.

       

      18.3           The
        parties acknowledge that the Mortgagee(s) under the Mortgage(s) may have
        the
        right pursuant to the Mortgage(s) to apply any insurance proceeds to the
        reduction of the indebtedness under the note(s) secured by the Mortgage(s).
        In
        the event of any damage or destruction to the Facility, and if the Mortgagee(s)
        or holder(s) of said note (s) uses the proceeds of insurance resulting therefrom
        to reduce the indebtedness of the note(s) or otherwise withholds such proceeds
        from Tenant, and if Landlord does not, within thirty (30) days after receipt
        of
        notice of such destruction and such withholding, offer to provide funds
        sufficient to effect necessary repairs, restoration or rebuilding, and provide
        such funds within a commercially reasonable time thereafter, then Tenant
        shall
        have the option, if less than twenty-five percent (25%) of the Resident Capacity
        of the Facility has been rendered unusable, to continue to occupy the Leased
        Premises based on payment of rent reduced proportionately to the Resident
        Capacity still usable or, if insufficient funds are available to Tenant for
        repair, to terminate this Lease; or if more than twenty-five percent (25%)
        of
        the Resident Capacity of the Facility has been rendered unusable, either
        to
        continue to occupy the Leased Premises based on payment of rent reduced
        proportionately to the Resident Capacity still usable or to terminate this
        Lease. In the event that insurance proceeds are paid to the Mortgagee, Tenant
        shall not be required to commence repairs prior to receiving notice from
        Landlord that funds will be made available for repairs either from such proceeds
        or from Landlord.

       

      
        	
                19.

              	
                CONDEMNATION

              


      

       

      19.1           The
        Landlord and the Tenant acknowledge that the terms of the Mortgage(s) may
        contain restrictions concerning condemnation proceedings, the use of the
        proceeds from the condemnation award, and which parties can participate in
        a
        condemnation proceeding and receive part or all of the proceeds from a
        condemnation award. Notwithstanding anything set forth in this Lease Agreement
        to the contrary, the terms of said Mortgage(s) shall solely govern the use
        of
        the proceeds from a condemnation award, which parties may be a participant
        to a
        condemnation proceeding and which parties may receive all or a portion of
        the
        proceeds from a condemnation award. However, to the extent that the terms
        of
        said Mortgage(s) do not conflict with the provisions set forth hereafter
        in this
        Section 19, then, and only then, shall the terms set forth hereafter in this
        Section 19 govern the use of proceeds from a condemnation award, participants
        to
        a condemnation proceeding and the recipients of all or part of the proceeds
        from
        a condemnation award.


      
        
          
          

        

        
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      19.2           If
        title to the fee of the whole of the Leased Premises shall be taken or condemned
        by any competent authority for any public or quasi-public use, this Lease
        shall
        cease and terminate as of the Commencement Date by said authority. If title
        to
        the fee of less than the whole of the Leased Premises but more than twenty-five
        percent (25%) of the Resident Capacity of the improvements then upon the
        Leased
        Premises shall be so taken or condemned, the Tenant and the Landlord shall
        each
        have the option by written notice to the other, at any time prior to the
        taking
        of possession by, or the date of vesting of title in, such authority, whichever
        first occurs, to terminate this Lease as of the date of such vesting or
        possession. In either of such events, all Base Rent, as adjusted, and other
        charges paid or payable by the Tenant hereunder shall be apportioned as of
        the
        date the Lease shall have been so terminated as aforesaid.

       

      19.3           The
        total condemnation award made with respect to all or any portion of the Leased
        Premises or for the loss of rent, or for the loss of business beyond the
        term of
        this Lease Agreement, shall be solely the property of and payable to the
        Landlord. Any award made for the taking of Tenant's leasehold interest in
        the
        Leased Premises, for loss of business during the remaining term of this Lease
        Agreement, if any, or for removal and relocation expenses of the Tenant in
        any
        such proceedings, shall be the sole property of and payable to the Tenant.
        Any
        lump sum condemnation award shall be apportioned between the parties in a
        manner
        consistent with the above. In any condemnation proceedings, the Landlord
        and the
        Tenant shall each seek its own award in conformity herewith, at its own
        expense.

       

      19.4           If
        title to the fee of less than twenty-five percent (25%) of the Resident Capacity
        of the improvements then upon the Leased Premises shall be so taken or
        condemned, or if the Landlord or Tenant shall have the right to terminate
        this
        Lease under Section 19.2 but shall not elect to do so, the Landlord may,
        at its
        own cost and expense, restore the untaken portion of any building or
        improvements on the Leased Premises so that such building shall constitute
        a
        complete architectural unit of the same general value, quality, class, character
        and condition (as nearly as may be possible under the circumstances) as the
        buildings and improvements existing immediately prior to such condemnation
        or
        taking. Pending such restoration, the Base Rent payable hereunder shall be
        reduced in proportion to the reduced Resident Capacity of the Facility as
        so
        taken or condemned. In the event the Landlord shall not commence such work
        within thirty (30) days after such taking, or shall not complete said work
        within a commercially reasonable time after commencement of such work, then
        this
        Lease, at the option of the Tenant, upon thirty (30) days written notice
        to the
        Landlord and Landlord's failure to cure within such thirty (30) days, shall
        cease and terminate. For this purpose, a "commercially reasonable time" shall
        be
        extended to compensate for any delay to the extent directly and reasonably
        caused by labor strikes, governmental regulations, inability to obtain labor
        or
        materials or any other cause beyond the Landlord's control, and in such event
        the standard for completion shall be extended by the period of interruption.
        Alternatively, the Tenant may complete such work and offset the cost thereof;
        subject to the provisions of this Section 19, against the installments of
        Net
        Rent next coming due hereunder. During any such work, the Tenant shall be
        required to pay a portion of the Base Rent in proportion to that part of
        the
        Leased Premises remaining in tenantable condition, and the balance of the
        Net
        Rent herein provided shall abate.


      
        
          
          

        

        
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      19.5            The
        Tenant agrees that if, at any time after the Commencement Date, the whole
        or any
        part of the Leased Premises or of the Tenant's interest under this Lease
        shall
        be taken or condemned by any competent authority for its temporary use or
        occupancy of less than sixty (60) days, this Lease shall not terminate by
        reason
        thereof, subject to Landlord's payment to Tenant of any compensation received
        by
        Landlord for such temporary taking, and Tenant shall continue to pay, in
        the
        manner and at the times herein specified, the full amount of rent and charges
        payable under this Lease. During the period of such temporary taking, the
        Base
        Rent payable hereunder shall be reduced in proportion to the reduced Resident
        Capacity of the Facility as so taken or condemned. Except as Tenant may be
        prevented from so doing pursuant to the terms of the order of the condemning
        authority, Tenant shall continue to perform and observe all of the other
        terms,
        covenants, conditions and obligations hereof, on the part of the Tenant to
        be
        performed and observed, as though such taking had not occurred.

       

      19.6            Tenant
        covenants that upon the termination of any such period of temporary use or
        occupancy as set forth in Section 19.5 hereof, it will, to the extent that
        condemnation proceeds are available or Landlord has agreed to provide funds,
        restore the Leased Premises to the condition in which the same were immediately
        prior to such taking, and subject to the same conditions as set forth in
        Section
        20, unless such period of temporary use or occupancy shall extend beyond
        the
        expiration date of the term of this Lease Agreement, and any extension thereof,
        in which case the Tenant shall not be required to make such restoration.
        In such
        case, the Tenant shall contribute to the cost of such restoration that portion
        of its entire award described in Section 19.5 hereof which is specifically
        allocated to such restoration in the judgment or order of the court, if
        any.

       

      19.7            For
        the purposes of this Section 19, the Leased Premises or a part thereof, as
        the
        case may be, shall be deemed to have been taken or condemned on the date
        on
        which actual possession of the Leased Premises or a part thereof, as the
        case
        may be, is acquired by any lawful power or authority, or the date on which
        title
        vests therein, whichever is earlier.

       

      19.8            If
        the terms of any Mortgage on the Leased Premises operate to prevent the Tenant
        from participating in any condemnation proceeding, or to prevent the Tenant
        from
        receiving any of the proceeds of a condemnation award to which it would
        otherwise be entitled, or to require the said condemnation award proceeds
        to be
        applied against the promissory note secured by the said Mortgage, then the
        Landlord shall promptly pay to the Tenant a sum of money equal to the total
        award to which the Tenant would have otherwise been entitled. Any portion
        of any
        condemnation award received by the Landlord or applied pursuant to any such
        Mortgage which results from or relates to a capitalization of the income
        stream
        of Tenant's business as conducted in the Facility which is in excess of the
        capitalization of the payments of Base Rent from the Tenant to the Landlord,
        shall be promptly paid to the Tenant by the Landlord.


      
        
          
          

        

        
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                20.

              	
                RESTORATION

              


      

       

      20.1            Notwithstanding
        anything set forth in this Lease Agreement to the contrary, the terms of
        any
        Mortgage encumbering or concerning the Facility that constitutes the Leased
        Premises shall, to the extent that such terms are commercially reasonable,
        govern the terms and conditions upon which the net proceeds of all insurance
        and
        condemnation awards described in this Lease Agreement shall be applied to
        the
        cost of restoring the Facility. However, to the extent that the terms of
        such
        Mortgage do not conflict with the provisions set forth hereafter in this
        Section
        20, then and only then, shall the terms set forth hereafter in this paragraph
        govern the application of insurance proceeds and condemnation awards to the
        cost
        of restoring the Premises. Nothing in this Lease shall require Tenant to
        expend
        funds for purposes of restoration in addition to funds for such purpose are
        available from insurance proceeds or Landlord under Section 18 or from
        condemnation proceeds under Section 19.

       

      20.2            The
        party responsible for such restoration (herein referred to as the "Restoring
        Party") shall submit to the other party (herein referred to as the
        "Non-restoring Party") complete plans and specifications which shall be designed
        as follows: if the restoration is occasioned by fire or other casualty (except
        partial condemnation), to restore the Facility at least to its condition
        immediately prior to such damage or destruction and as nearly as similar
        in
        character and value as is commercially practicable and reasonable; or, if
        the
        restoration is occasioned by partial condemnation, to construct the remainder
        of
        the Facility so that the same shall constitute a complete architectural unit
        of
        the same general character and condition (as nearly as may be possible under
        the
        circumstances) as the Facility existing immediately prior to such condemnation
        or taking.

       

      20.3            The
        plans and specifications shall be subject to the written approval of the
        Non-restoring Party. Within fifteen (15) calendar days after submission thereof,
        the Non-restoring Party shall either approve the same or serve written notice
        upon the Restoring Party of its disapproval thereof and its objections thereto,
        in default of which such plans and specifications or such portion thereof
        not
        objected to shall be deemed to be approved by the Non-restoring Party, anything
        herein contained to the contrary notwithstanding.

       

      20.4            The
        Restoring Party shall thereafter furnish the Non-restoring Party and the
        recipient of the proceeds of insurance or the award in condemnation, as the
        case
        may be, with a copy of any contract or contracts which the Restoring Party
        shall
        enter into for the making of such restoration; or, if the restoration is
        to be
        done by the Restoring Party, a copy of all sub-contracts made by the Restoring
        Party in connection with such restoration and a sworn statement estimating
        the
        cost thereof


      
        
          
          

        

        
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      20.5            During
        the progress of the restoration, the holder of the insurance proceeds or
        award
        in condemnation, as the case may be, shall make payments to the Restoring
        Party
        or to the contractors and materialmen of the Restoring Party, for the account
        of
        the Restoring Party, out of such proceeds of insurance or award in condemnation
        to the extent available, at the end of each month, or from time to time as
        may
        be agreed upon, against the Restoring Party's certificates, as follows: an
        amount which shall be that proportion of the insurance proceeds or award
        held
        which ninety percent (90%) of the payments to be made to the contractors
        or
        materialmen of the Restoring Party for work done, materials supplied and
        services rendered, during such month or other period, bears to the total
        contract price; if the restoration is done by the Restoring Party, then that
        portion of the insurance proceeds or award so held which ninety percent (90%)
        of
        the estimated cost of work done, materials supplied and services rendered
        during
        that month bears to the total estimated cost; and on completion of the
        restoration, the balance of such insurance proceeds or condemnation award
        monies
        required to complete the payment of the restoration costs shall be paid to
        the
        Restoring Party; or, if the Restoring Party is the holder of the insurance
        proceeds or award in condemnation, the Restoring Party shall be responsible
        for
        and shall pay such amounts as shall be necessary to make full payment (less
        retention) for all work done, material supplied and services rendered during
        each and every month, without regard to the sufficiency of the proceeds or
        award
        otherwise available.

       

      20.6            At
        the time of each such request for advance by the Restoring Party and as a
        condition precedent thereto, the Restoring Party shall also submit a certificate
        signed by the Restoring Party and the architect or engineer responsible for
        supervising said work not more than fifteen (15) days prior to such request
        setting forth the following: that the sum then requested either has been
        paid by
        the Restoring Party or is justly due to contractors, subcontractors,
        materialmen, engineers, architects or other persons who have rendered services
        or furnished materials for the restoration therein specified; the names and
        addresses of such persons; a complete description of such services and
        materials; the several amounts so paid or due to each of said persons in
        respect
        thereof; that no part of such expenditures has been or is being made the
        basis,
        in any previous or other pending request, for the withdrawal of insurance
        money
        or condemnation award money, and that the sum then requested does not exceed
        the
        value of the services and materials described in the certificate; that, except
        for the sum then requested in such certificate stated to be due for services
        of
        materials and the 10% retainage, there is no outstanding indebtedness known
        to
        the person signing such certificate, after due inquiry, which is then due
        for
        labor, wages, materials, supplies or services in connection with such
        restoration which, if unpaid, might become the basis of a vendor's, mechanic's,
        laborer's or materialmen's statutory or similar lien upon such restoration
        or
        upon the Leased Premises or any part thereof or upon the leasehold interest
        therein; that the total cost, as estimated by the persons signing such
        certificate, of the restoration required to be done subsequent to the date
        of
        such certificate in order to complete the same, does not (except as previously
        disclosed by the Restoring Party to the Non-restoring Party in writing, which
        writing, if any, shall be identified in such certificate) exceed the balance
        of
        the proceeds of insurance or award in condemnation in the possession of the
        holder thereof; and that all of the work of restoration so far completed
        is
        proper and of the quality and class equal to the original work and in accordance
        with the plans and specifications approved by the Non-restoring
        Party.


      
        
          
          

        

        
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      20.7            At
        the completion of the restoration, and following disbursement of the final
        advance to the Restoring Party required to complete the payment of restoration
        costs, any such insurance proceeds or condemnation award proceeds remaining
        shall be paid by the recipient thereof to the Landlord and one hundred percent
        (100%) thereof shall be credited to the Base Rent required to be paid by
        Tenant
        pursuant to Section 6 hereof during the period immediately following the
        date on
        which payment is made.

       

      20.8            During
        such restoration, the Non-restoring Party and any architect, engineer, or
        other
        representative designated by the Non-restoring Party, may inspect the Leased
        Premises. During the course of such restoration and its completion, the
        Restoring Party shall keep copies of all plans, shop drawings and specifications
        relating to such restoration on the building site and permit the Non-restoring
        Party or its architect, engineer or other representative to examine them
        at all
        reasonable times, or, in the alternative, shall furnish the Non-restoring
        Party
        with copies of such plans, drawings and specifications. In the event that
        during
        the restoration of the Leased Premises, the Non-restoring Party or its
        architect, engineer or other representative shall determine that the materials
        do not substantially conform to the approved specifications or that the Leased
        Premises are not being restored in accordance with the approved plans, prompt
        notice in writing shall be given to the Restoring Party, specifying in detail
        the particular deficiency, omission or other respect in which it is claimed
        that
        the restoration does not conform with the plans and specifications as so
        approved. Upon the receipt of any such notice, the Restoring Party shall
        take
        such steps as it deems necessary to cause corrections to be made as to any
        deficiencies, omissions or otherwise, and if necessary for the purpose of
        effectuating such corrections, shall immediately remove such materials and
        replace such construction and furnish materials in accordance with the approved
        plans and specifications or equally as good as those provided for in such
        plans
        and specifications.

       

      20.9            All
        of such restoration and the performance thereof shall be subject to and shall
        be
        performed in accordance with the conditions and requirements imposed upon
        Tenant
        in Section 14 hereof

       

      20.10         If
        the Restoring Party shall fail to commence such restoration within a
        commercially reasonable time following such damage or destruction or within
        a
        commercially reasonable time following the date insurance or condemnation
        proceeds, if any, are first made available to it, whichever first occurs,
        or,
        having commenced such restoration, shall fail to complete it in accordance
        with
        the provisions of this Lease within a commercially reasonable time, the
        Non-restoring Party may, at its option and upon serving written notice upon
        the
        Restoring Party that it elects so to do, make and have the right, as the
        restoration progresses, to use and apply the insurance proceeds or condemnation
        award money to the cost of such restoration to the extent that it shall not
        theretofore have been applied to the payment or reimbursement of costs and
        expenses of the Restoring Party as aforesaid.


      
        
          
          

        

        
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      20.11          If
        prior to the completion of such restoration whether by the Landlord or the
        Tenant, this Lease shall terminate or expire for any reason, Landlord shall
        have
        the right to receive and retain such insurance proceeds or condemnation award,
        to the extent that it shall not theretofore have been applied to the payment
        or
        reimbursement of the costs and expenses of the Tenant and the Landlord, as
        aforesaid, and the Tenant shall thereupon be discharged from any and all
        obligations under this Lease to restore the Leased Premises pursuant to this
        Section 20.

       

      20.12          If
        it is apparent before the commencement of restoration that the restoration
        will
        not be completed prior to the end of the Scheduled Lease Term, then Landlord,
        at
        its discretion, may, so long as it does not materially adversely affect Tenant's
        rights hereunder, act as the Restoring Party notwithstanding any other provision
        of this Lease pursuant to which the Tenant would act as the Restoring
        Party.

       

      
        	
                21.

              	
                MORTGAGE(S)
                  AND SUBORDINATION

              


      

       

      21.1            Landlord
        and Tenant acknowledge that the Leased Premises are encumbered by one or
        more
        Mortgages. This Lease shall be subject and subordinate to the lien of the
        existing Mortgage(s) as of the date hereof, and to no other, except as provided
        herein. The Tenant agrees, at any time hereafter, on demand, to execute and
        deliver any commercially reasonable instruments, releases or other documents
        that may be reasonably required for the purpose of evidencing the subordination
        of this Lease to the lien of such Mortgage(s) or a new Mortgage(s) which
        Landlord shall have the right to place on the Leased Property as provided
        herein. The Landlord shall have the right to place a new Mortgage or Mortgages
        ("New Mortgage") on the Leased Property at any time after the Commencement
        Date;
        provided, that the Landlord shall provide to Tenant, at least twenty (20)
        days
        prior to placing any such Mortgage(s) upon the Premises, complete copies
        of all
        documents relating to the transaction in which any Mortgage is to be executed;
        and further provided, that the prospective holder of the New Mortgage ("New
        Mortgagee") shall agree, in writing and in an enforceable and recordable
        commitment, reasonably acceptable to Tenant, that Tenant's possession of
        the
        Leased Property shall not be disturbed by said New Mortgagee so long as Tenant
        (a) is not in default under this Lease beyond applicable notice and cure
        periods
        and (b) agrees to accept the New Mortgagee or any purchaser of the Leased
        Property at a foreclosure sale as Landlord hereunder. Landlord shall use
        its
        best efforts to cause the existing Mortgagee(s) to enter such a non-disturbance
        agreement with Tenant and deliver the same to Tenant upon execution
        hereof

       

      21.2            During
        the term of this Lease, and any extension thereof, Landlord shall make all
        Mortgage payments directly to the Mortgagee for every Mortgage. Landlord
        shall
        pay directly to the Mortgagee that part of the Mortgage payment that represents
        a payment of principal or interest on the promissory note secured by said
        Mortgage, as well as any amounts required by Mortgagee to be escrowed for
        payment of insurance and taxes, but the responsibility for escrow amounts
        shall
        be Tenant's. Tenant shall pay directly to Landlord that part of the Mortgage
        payment that constitutes the amount required to be paid under any Mortgage
        to be
        held in escrow for the purpose of paying property taxes and insurance; provided,
        however, that any amount paid by Tenant which exceeds the amount actually
        applied to the payment of taxes or insurance shall be held in escrow by Landlord
        for the benefit of Tenant, and promptly refunded to Tenant at such time as
        Landlord receives any refund of funds held by the Mortgagee, or, if sooner,
        within thirty (30) days after the end of the Lease Term. Landlord agrees
        to act
        in a punctual manner with respect to its obligations under the Mortgage(s).
        Tenant and Landlord each shall have the right, after ten (10) days prior
        written
        notice to the other party and such other part's failure to properly cure
        any
        default within said period (including any default by Landlord in Mortgage
        payments) to cure any such default, and the defaulting party shall immediately
        reimburse the curing party for any reasonable costs or expenses incurred
        in this
        regard, plus interest thereon at the Default Rate, from the date of payment
        by
        the curing party until the date of payment by the defaulting party. Any amounts
        advanced by Landlord to cure a default of Tenant shall constitute Additional
        Rent due to Landlord from Tenant, payable in the same manner as specified
        for
        payment of Base Rent. If the curing party is the Tenant, Tenant may, at its
        option, offset the said costs and expenses against the payments of Base Rent
        next coming due. The parties will use their best efforts to cause all Mortgagees
        to execute non-disturbance and attornment agreements protecting Tenant's
        right
        to occupy the Leased Premises provided that Tenant is not in default beyond
        applicable notice and cure periods under this Lease.


      
        
          
          

        

        
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                22.

              	
                ASSIGNMENT
                  AND SUBLETTING

              


      

       

      22.1            Except
        as hereinafter provided, the Tenant and the Tenant's legal representatives
        or
        successors in interest, by operation of law or otherwise, may not transfer
        or
        assign the Tenant's interest in and to the Leased Property, without first
        procuring the written consent of the Landlord, which Landlord may withhold
        in
        its discretion.

       

      22.2            This
        Lease may be assigned, without Landlord's consent, to an Affiliate of Tenant
        or
        Apollo, provided that such Affiliate enters into a Management Agreement with
        Summerville or an Authorized Assignee as provided in Section 2.3 above and
        such
        Management Agreement remains in effect during the Lease Term.

       

      22.3            This
        Lease may be assigned, with Landlord's consent, not to be unreasonably withheld,
        to a proposed assignee other than an Affiliate of Tenant or Apollo, provided
        that such proposed assignee (other than a party taking possession as the
        result
        of a leasehold mortgage as described in Section 22.4) enters into a Management
        Agreement with Summerville or an Authorized Assignee (as provided in Section
        2.3
        above) and such Management Agreement remains in effect during the Lease Term.
        For such purpose, Landlord's withholding of consent to assignment shall not
        be
        deemed unreasonable if the following conditions are not met:

       

      A.           The
        proposed assignee has a net worth at least equal to the greater of
        (i)
        the net worth of Tenant as of the Commencement Date or (ii) the net worth
        of the
        Tenant as of the last financial statement of Tenant furnished to Landlord,
        pursuant to the Agreement To Lease, prior to Tenant's written request to
        Landlord for consent to the proposed assignment.


      
        
          
          

        

        
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      B           Except
        as otherwise permitted under Section 22.5 below, the roposed
        assignee will also operate the Other Facilities and assume the Other
        Leases.

       

      C.           The
        proposed assignee agrees in writing to honor Tenant's contractual
        obligations as set forth in this Lease.

       

      22.4            Tenant
        may encumber its leasehold interest with a mortgage or other lien, without
        obtaining Landlord's consent; provided, that the right of any mortgagee of
        Tenant's interest, or any nominee of such mortgagee, to take possession of
        the
        Leased Property, if Tenant has defaulted under its mortgage of its leasehold
        interest or otherwise, shall be subject to Landlord's written consent, not
        to be
        unreasonably withheld.

       

      A.            If
        the Facility is to be managed for such new tenant by the Management Company
        or
        an Authorized Assignee, Landlord's withholding of consent shall not be deemed
        unreasonable if the new tenant fails to meet the standards stated in Section
        22.3(A)-(C).

       

      B.            If
        the Facility is to be managed by such new tenant, or by a management agent
        other
        than the Management Company or an Authorized Assignee (such alternate management
        agent, a "Successor Manager"), Landlord's withholding of consent shall not
        be
        deemed unreasonable if the new tenant fails to meet the standards stated
        in
        Section 22.3(A)-(C) or the following additional standards are not met by
        either
        the proposed new tenant or the Successor Manager, if any:

       

      (1)            The
        proposed new tenant or the Successor Manager (or the individual with supervisory
        control over the proposed new tenant or Successor Manager) must have a record,
        for at least five (5) years, of maintenance and operation of assisted living
        facilities and retirement housing facilities in a manner which will preserve
        the
        value of the Facility.

       

      (2)            The
        proposed new tenant or the Successor Manager (or the individual with supervisory
        control over the proposed new tenant or Successor Manager) must have a proven
        record, for at least five (5) years, of marketing and managing its facilities
        successfully from the standpoint of both quality of care and profitability,
        and
        treatment of its employees so as to avoid labor conflicts.

       

      (3)            The
        proposed new tenant (or the Successor Manager) must have sufficient management
        quality and depth to take on the operation of the Facility and the Other
        Facilities.

       

      (4)            The
        proposed new tenant or the Successor Manager) is an established firm of good
        reputation (or the individual with supervisory control over the proposed
        new
        tenant or Successor Manager has an established good reputation for operating
        such facilities).


      
        
          
          

        

        
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      22.5            For
        purposes of Section 22.3(B), pursuant to which Landlord's withholding of
        consent
        shall be considered reasonable unless the proposed assignee is to operate
        the
        Other Facilities as well as the Facility, the terms of Section 22.3(B) shall
        be
        considered as satisfied if the Other Leases are to be assumed by or one or
        more
        Affiliates of the proposed assignee, and the following conditions are
        met:

       

      A.            Any
        Affiliate(s) of the proposed assignee which is to assume any of the Other
        Leases
        shall meet the standards stated in Section 22.3 of the Other Leases (identical
        to Section 22.3 of this Lease).

       

      B.            For
        purposes of a transfer resulting from a leasehold mortgage under Section
        22.4,
        the Affiliates (or the Successor Manager retained by such Affiliates) shall
        meet
        the standards stated in Section 22.4 of the Other Leases (identical to Section
        22.4 of this Lease).

       

      C.            The
        proposed assignee and its Affiliate(s) which shall operate the Other Facilities
        shall remain under common control for the period that the proposed assignee
        operates the Facility and its Affiliates operate the Other
        Facilities.

       

      D.            For
        purposes of a transfer resulting from a leasehold mortgage under Section
        22.4,
        if a Successor Manager is retained to manage the Facility or any of the Other
        Facilities, the Successor Manager shall continue to manage the Facility and
        the
        Other Facilities for the period that the proposed assignee operates the Facility
        and its Affiliates operate the Other Facilities.

       

      22.6            The
        obligation under Section 2.3 to maintain a Management Agreement with the
        Management Company or an Authorized Assignee shall no longer be in effect
        in the
        event of a transfer of this Lease as the result of a leasehold mortgage as
        described in Section 22.4, but if satisfaction of the standards of Section
        22.4(B)(1)-(4) is based on the qualification of a Successor Manager,
        continuation of the Lease shall be conditioned on such Successor Manager's
        continuing management of the Facility (and any Other Facilities for which
        satisfaction of the conditions of Section 22.4(B)(1)-(4) of the Other Lease
        is
        based on the qualification of such Successor Manager) for the duration of
        the
        period that the proposed assignee operates the Facility and its Affiliates
        operate the Other Facilities.

       

      22.7            The
        Tenant and Tenant's legal representatives or successors in interest, by
        operation of law or otherwise, shall not sublet the Leased Premises, or any
        part
        thereof, to any person whatsoever; provided, however, that the Tenant may,
        if
        permitted under the terms of any Mortgage applicable to the Facility, sublet
        up
        to 2,000 square feet of the Facility to another service provider in furtherance
        of the operation of the Facility, or in furtherance of another activity
        undertaken by Tenant with the consent of Landlord, so long as the Resident
        Capacity of the Facility is not reduced and so long as the term of any such
        sublease does not extend beyond the Scheduled Lease Term.


      
        
          
          

        

        
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      22.8            Any
        consent by the Landlord to any act of transfer, assignment or mortgaging
        shall
        be held to apply only to the specific transaction thereby authorized. Such
        consent shall not be construed as a waiver of the duty of the Tenant, or
        the
        legal representatives or assigns of the Tenant, to obtain from the Landlord
        consent to any other or subsequent transfer, assignment or mortgage, or as
        modifying or limiting the rights of the Landlord under the foregoing covenant
        of
        the Tenant not to transfer or assign without such consent.

       

      22.9            Any
        violation of any provision of this Lease Agreement, whether by act or omission,
        by any transferee, assignee or mortgagee shall be deemed a violation of such
        provision by the Tenant, it being the intention and meaning of the parties
        hereto that the Tenant shall assume and be liable to the Landlord for any
        and
        all acts and omissions of any and all transferees, assignees or
        mortgages.

       

      22.10          If
        Tenant's rights under this Lease Agreement shall be transferred, assigned
        or
        mortgaged, the Landlord may and is hereby empowered to collect rent from
        any
        transferee, assignee or (if such mortgagee takes possession of the Premises)
        mortgagee, and the Landlord may apply the net amount received by it to the
        Net
        Rent herein reserved, and no such collection shall be deemed a waiver of
        the
        covenant herein against transfer, assignment or mortgaging, or the acceptance
        of
        the transferee, assignee or mortgagee as a tenant, or release of the Tenant
        from
        further performance of the covenants herein contained on the part of the
        Tenant
        to be performed.

       

      22.11          Each
        transfer, assignment or mortgage of this Lease Agreement or of the Leased
        Premises to which the Landlord may consent shall be by an instrument in writing
        and shall be executed by the transferor, assignor or mortgagor and the
        transferee, assignee or mortgagee, in each instance, as the case may be.
        Each
        such transferee, assignee or mortgagee shall agree in writing for the benefit
        of
        the Landlord herein to assume, to be bound by, and to perform the terms,
        covenants and conditions of this Lease to be done, kept and performed by
        the
        Tenant relating to the period beginning as of the date of the transfer to
        such
        new tenant.

       

      22.12          If
        Tenant grants a mortgage of its leasehold and gives Landlord notice identifying
        the leasehold mortgagee, Landlord shall provide to such leasehold mortgagee(s)
        a
        copy of any notice sent by Landlord of a default by Tenant pursuant to this
        Lease, and Landlord shall not have the right to terminate this Lease until
        such
        leasehold mortgagee(s) has/have received such notice and has/have had an
        opportunity, for a period which is the greater of thirty (30) days or the
        otherwise applicable cure period granted to Tenant under this Lease, to cure
        the
        alleged default by Tenant.

       

      22.13          Upon
        the Facility becoming subject to a HUD-insured Mortgage, this Lease may not
        be
        assigned without the prior written consent of HUD.


      
        
          
          

        

        
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                23.

              	
                DEFAULTS
                  AND DAMAGES

              


      

       

      23.1           Any
        one or more of the following events shall constitute an event of default
        hereunder ("Event of Default" or "Default"):

       

      A.            Financial
        Default. If
        default shall be made in the due and punctual payment of Base Rent, Variable
        Rent, Escrow Deposits, or any payment of Additional Rent required to be made
        by
        Tenant under the terms of this Lease Agreement, and such default shall continue
        for a period of five (5) business days after Tenant's receipt of written
        notice
        from Landlord specifying such default.

       

      B.            Non-Financial
        Default:
        Generally. If default shall be made by Tenant in substantial performance
        or compliance with any of the agreements, terms, covenants or conditions
        in this
        Lease Agreement other than those referred to in the foregoing Section 23.1A,
        for
        a period of thirty (30) days after written notice from the Landlord to the
        Tenant specifying the items in default, or in the case of default which cannot
        with due diligence be cured within said thirty (30) day period, Tenant fails
        to
        commence within said thirty (30) day period to cure the same and thereafter
        to
        prosecute the curing of such default with due diligence, it being intended
        that
        for a default not susceptible of being cured with due diligence within said
        thirty (30) day period, the time provided to the Tenant within which to cure
        the
        same shall be extended for such period as may be necessary to complete the
        same
        with all due diligence.

       

      C.            Occurrence
        Of Performance
        Trigger Event. Tenant's failure to submit a timely Plan of Correction
        after the occurrence of a Performance Trigger Event, or Tenant's failure
        to
        complete a Cure within ninety (90) days after submission of a Plan of
        Correction.

       

      D.            Loss
        Of License. The
        Facility's License is placed on suspension or probation, and such suspension
        or
        probation remains in effect for more than thirty (30) days after Tenant has
        received written notice thereof; or the Facility's license is
        revoked.

       

      E.             Financial
        Failure

       

      (1)            Event
        of Insolvency:
        Voluntary. If Tenant or the Management
        Company shall file a voluntary petition in bankruptcy or shall be adjudicated
        a
        bankrupt or insolvent, or shall file any petition or answer seeking any
        reorganization, arrangement, composition, readjustment, liquidation, dissolution
        or similar relief under the present or any future federal bankruptcy law
        or any
        other present or future federal, state or other bankruptcy or insolvency
        statute
        or law, or shall seek or consent to or acquiesce in the appointment of any
        bankruptcy or insolvency trustee, receiver or liquidator of Tenant or the
        Management Company for all or any substantial part of their property or of
        the
        Leased Premises, and if such condition shall continue for a period of ninety
        (90) days.


      
        
          
          

        

        
          37

          
            

          

        

        
          
          

        

      

       

      (2)           Event
        of Insolvency:
        Involuntary. If any proceeding against Tenant or the Management Company
        seeking any reorganization, arrangement, composition, readjustment, liquidation,
        dissolution or similar remedy under the present or any future federal bankruptcy
        law or any other present or future federal, state or other bankruptcy or
        insolvency statute or law is commenced, and if such proceedings shall not
        have
        been dismissed within ninety (90) days, or if, within ninety (90) days after
        the
        appointment, without the consent or acquiescence of the Tenant or the Management
        Company, of any trustee, receiver or liquidator of the Tenant or the Management
        Company, or of all or substantially all of its properties or of the Leased
        Premises, such appointment shall not have been vacated.

       

      (3)           Abandonment.
If
        the
        Tenant shall cease operating the Facility or the Facility shall become vacant,
        and such condition continues without correction for two (2) days after written
        notice to Tenant from Landlord (provided that a reasonable period during
        which
        any renovations are performed by Tenant or during which such condition continues
        as a reasonable result of any casualty or condemnation shall not count toward
        such two (2) period).

       

      (4)           Insolvency
        Of Guarantor.
If Landlord's consent to an assignment
        of this Lease is conditioned upon the agreement of a guarantor to guaranty
        the
        performance of the obligations under this Lease by the Tenant, any insolvency
        of
        such guarantor, whether voluntary or involuntary, shall for purposes of Section
        23.1(E)(1)-(2) have the same effect as insolvency of the Tenant.

       

      F.           Effect
        of Default.
Upon the occurrence of an Event of Default as described
        in Section 23.1A, B, C, D, or E (or an Event of Default as to any of the
        Other
        Leases as provided in Section 33 below), Landlord at any time thereafter
        during
        which such event remains outstanding may give written notice to the Tenant
        specifying such Event of Default or Events of Default and demanding that
        Tenant
        cure the same, or, at the option of the Landlord, the said written notice
        shall
        either declare Landlord's intention to repossess the Leased Property without
        terminating this Lease Agreement, in which case Section 23.5B hereof shall
        apply, or, the said written notice may state that this Lease Agreement and
        the
        term hereby demised shall expire and terminate on the date specified in such
        notice. For an Event of Default described in Section 23.1C, the termination
        date
        shall be not sooner than ninety (90) days after the date of the notice of
        termination. For an Event of Default involving nonpayment of Net Rent as
        set
        forth in Section 23.1A, the termination date may be at any time on or after
        the
        date of the notice of termination. For any other Event of Default, the
        termination date shall be at least ten (10) days after the giving of such
        notice. Upon the date specified in such notice, this Lease Agreement and
        the
        term hereby demised and all rights of the parties under this Lease Agreement
        shall expire and terminate, and the Tenant shall remain liable as provided
        in
        this Section 23, and the provisions of Section 23.5C hereof shall
        apply.

       

      23.2            Any
        such proceeding or action involving bankruptcy, insolvency, reorganization,
        arrangement, composition, readjustment, liquidation, dissolution or similar
        relief under the present or any future federal bankruptcy law or any other
        present or future applicable federal, state or other statute or law, above
        set
        forth in Section 23.1 C and 23.1 D hereof, shall be grounds for the termination
        of this Lease Agreement pursuant to the terms of this Section 23, if such
        proceeding, act or remedy shall be taken or brought by or against Tenant,
        the
        then holder of the leasehold estate (including any assignee or sublessee
        of
        Tenant) under this Lease Agreement, or the Management Company.


      
        
          
          

        

        
          38

          
            

          

        

        
          
          

        

      

       

      23.3            Upon
        the date specified by Landlord in a notice of repossession of the Facility
        as
        described above (with or without termination of this Lease Agreement), the
        Tenant shall quit and peaceably surrender the Leased Property to the Landlord,
        and the employees of the Facility shall become employees of the Landlord
        or
        Landlord's nominee in accordance with the terms of the Agreement To Lease.
        Landlord or Landlord's nominee, upon such date, may without further notice
        enter
        upon and re-enter the Facility and the Leased Premises and possess and repossess
        the Leased Property, by force, summary proceedings, ejectment or otherwise,
        and
        may dispossess the Tenant and remove the Tenant and all other persons and
        property from the Facility and may have, hold and enjoy the Leased Property
        and
        the right to receive all rental income of and from the same. Landlord shall
        save, indemnify and hold Tenant harmless of and from any and all liability,
        loss, cost or expense arising from the acts of persons other than Tenant
        or its
        agents from and after the date Tenant loses possession of the Facility pursuant
        to this Section 23 (the "Repossession Date"), for all duties relating to
        Resident care provided after such date, loss occurring after such date of
        the
        Facility's license under the ALF Licensing Law or required approvals under
        any
        federal, state or local licensure, permits or consents for the Facility,
        and the
        maintenance and obtaining of all other governmental approvals then or thereafter
        required. Upon the date specified by Landlord in a notice of repossession
        of the
        Facility, any contracts entered into by Tenant with respect to the operation
        of
        the Facility shall, at the option of Landlord, be assigned to and become
        the
        property of Landlord or Landlord's nominee.

       

      23.4            If
        this Lease Agreement shall be terminated pursuant to this Section 23, or
        if
        Landlord reenters the Leased Premises without terminating this Lease Agreement
        as provided in Section 23.1 G hereof, by summary proceedings or otherwise,
        the
        Landlord may in its own name, but as agent for the Tenant if this Lease
        Agreement not be terminated, or if this Lease Agreement be terminated in
        Landlord's own behalf, relet the Facility and Facility Equipment, or any
        part
        thereof, for such term or terms, which may be greater or less than the period
        which would have otherwise constituted the balance of the term of this Lease
        Agreement, and on conditions which may include concessions or free rent and
        alterations of the Leased Premises, as Landlord in its uncontrolled discretion
        may determine, and may collect and may receive the rents therefore.

       

      (1)            Tenant
        shall cooperate with Landlord or Landlord's nominee, in the
        event
        of such termination or re-entry, to enable Landlord or Landlord's nominee
        to
        assume operation of the Facility. Specifically, and without limitation, Tenant
        shall (a) allow such party to hire employees who are employed by Tenant at
        the
        Facility; (b) allow such party to use Tenant's billing system (including
        hardware and software) for at least six months, subject to such party using
        good
        faith diligence to assist Tenant in collection of Tenant's receivables. Tenant
        shall cooperate in transfer of control of the Facility to Landlord or Landlord's
        nominee in the same manner as Landlord's transfer of control of the Facility
        to
        Tenant at the commencement of this Lease.


      
        
          
          

        

        
          39

          
            

          

        

        
          
          

        

      

       

      (2)            Subject
        to Sections 23.5B, 23.5C, and 23.5F hereof, the Landlord shall
        not
        be responsible or liable for any failure to relet the Leased Premises or
        Facility Equipment, or any part thereof, or for any failure to collect any
        rent
        due upon such reletting; provided, however, that Landlord shall have the
        duty to
        mitigate its damages.

       

      23.5           Damages
        payable by Tenant in the event of expiration, termination, or re­entry and
        repossession of the Leased Premises pursuant to Section 23.1 G shall include
        the
        cost of restoration as described in Section 23.5A, plus the Rent Differential
        as
        described in Section 23.5B if Landlord elects not to terminate the Lease,
        or the
        Termination Deficiency as described in Section 23.5C if Landlord elects to
        terminate the Lease, plus, in either event, interest and expenses as provided
        in
        Sections 23.5D and 23.5E.

       

      A.            Restoration
        Cost. If
        this Lease shall expire, terminate or if the Landlord
        shall re-enter and repossess the Facilities and Facility Equipment with or
        without terminating this Lease, all as in Section 23.1G provided, then and
        in
        any of such events, the Tenant covenants and agrees in accordance with the
        terms
        otherwise set forth in this Lease Agreement:

       

      (1)            That
        the Leased Premises and Facility Equipment shall be in the same condition
        as
        that in which the Tenant has agreed in this Lease to surrender them to the
        Landlord at the expiration of the term hereof.,

       

      (2)            That
        Tenant, on or before the occurrence of any such event, shall perform any
        covenant contained in this Lease Agreement that specifically requires the
        making
        of any improvement or alteration to the Leased Premises or Facility Equipment
        or
        for restoring or rebuilding any part thereof; and

       

      (3)            That,
        for the default of any covenant above stated in this Section 23.5A,
        Landlord shall be entitled to recover and Tenant shall immediately pay, without
        notice or other action by Landlord, the then reasonable and actual cost of
        performing such covenant, plus interest thereon (at the prime rate as published
        in the Wall Street Journal in effect at the time of payment, but not to exceed
        the maximum legal rate under applicable law) for the period between the date
        of
        payment received by Landlord from Tenant and the date when such work or act
        should have been performed under the other provisions of this Lease
        Agreement.

       

      B.            Rent
        Deficiency Payable
        Monthly Before Termination. In the event
        of
        such re-entry and repossession of the Facility and Facility Equipment without
        termination of this Lease, the Tenant shall pay the Landlord the Base Rent
        and
        Additional Rent accruing up to the time of such event, and, in the event
        of the
        re-entry or repossession of the Facility and Facility Equipment without the
        termination of this Lease, the Tenant, until the end of the term of this
        Lease
        Agreement, shall be liable to the Landlord for damages for Tenant's default,
        for
        an amount which is determined to be the equivalent of the amount of the Base
        Rent, Additional Rent, and all charges payable under this Lease Agreement
        by
        Tenant on a monthly basis during the remaining Lease Term, less the then
        fair
        and reasonable rental value of the Leased Premises and Facility Equipment
        for
        the same period, after deducting Landlord's reasonable expenses in connection
        with such re-entry or repossession, which shall include, without limitation,
        all
        reasonable repossession costs, brokerage and management commissions, operating
        expenses attributable to effecting such re-entry or repossession, legal
        expenses, attorneys' fees, alteration costs, and expenses of preparing for
        such
        reletting. The Tenant shall pay such damages as in this Section 23.5B provided
        (herein called the "Rent Differential") to Landlord monthly on the days on
        which
        the Base Rent would have been payable under this Lease Agreement if Tenant
        were
        still in possession, and Landlord shall be entitled to recover from Tenant
        each
        monthly deficiency as the same shall arise. Nothing herein contained shall
        prevent Landlord from terminating this Lease Agreement thereafter for any
        such
        Event of Default.


      
        
          
          

        

        
          40

          
            

          

        

        
          
          

        

      

       

      C.           Termination
        Deficiency:Present Value of Rent Differential. In case of any termination
        of this Lease Agreement by Landlord as provided in Sections 23.1 G, the Landlord
        shall, as of the date of such termination, become entitled to recover from
        the
        Tenant, as damages for such default, an amount equal to the present value,
        as of
        the date of such termination, of the difference between the Base Rent and
        Additional Rent due from the date of such Default until the end of the Scheduled
        Lease Term and the then fair and reasonable rental value of the Leased Premises
        and Facility Equipment for the same period. Said damages (hereinafter called
        the
        "Termination Deficiency") shall become due and payable to Landlord, provided
        that an Event of Default of this Lease Agreement has occurred, immediately
        upon
        Landlord's declaration of termination of this Lease. Any rent deficiency
        paid by
        Tenant after Default but prior to termination, pursuant to Section 23.5B,
        shall
        be credited against the Termination Deficiency. In the computation of such
        Termination Deficiency, the present value of the difference between any
        installment of Base Rent and Additional Rent reserved herein, during what
        would
        have been the remaining term of this Lease Agreement, and the fair and
        reasonable rental value of the Leased Premises and Facility Equipment for
        the
        said term, shall be calculated based on a discount rate equal to the discount
        rate of the Federal Reserve Bank of Chicago in effect at the time of
        payment.

       

      D.           Interest.
In
        addition
        to liability for interest and late charges on late payment
        of rent as provided in Section 6.6 above, Tenant shall be liable for interest
        on
        the Termination Deficiency or any other amount for which Tenant is liable
        hereunder at the Default Rate.

       

      E.           Expenses
        Resulting from
        Breach. If this Lease Agreement shall terminate
        as a result of breach by Tenant or if the Landlord shall re-enter and repossess
        the Facilities and Facility Equipment without terminating the Lease, all
        as in
        Section 23.1 G provided, and whether or not the Leased Premises and Facility
        Equipment shall be relet, Landlord shall be entitled to recover from Tenant
        and
        Tenant shall pay to Landlord, in addition to any damages becoming due under
        this
        Section 23, if said amount is not already included in the computation of
        said
        damages, the following: an amount equal to all reasonable expenses, if any,
        incurred by Landlord as a prudent businessman and not reimbursed to Landlord
        or
        its successor, assignee or the then tenant or occupant of the Leased Premises,
        by third party payors, including reasonable attorneys' fees or other expenses,
        incurred by the Landlord in recovering possession of the Leased
        Premises.


      
        
          
          

        

        
          41

          
            

          

        

        
          
          

        

      

       

      F.           Determination
        of Fair Rental
        Value. Fair rental value, for purposes
        of this Section 23, shall be the highest amount which could be obtained by
        renting the Facilities to another party for a period at least as long as
        the
        remainder of the Scheduled Lease Term under the same terms (other than with
        respect to Base Rent) as specified in this Lease Agreement; provided, however,
        that the following procedures shall be used.

       

      (I)             If
        Landlord leases the Facility to another party for the remainder of the Scheduled
        Lease Term (or longer), the rent agreed to by such party shall conclusively
        establish the fair rental value of the Facility in the absence of an actual
        offer to lease for a higher amount for the same term tendered by a party
        unrelated to Tenant (whether by shared ownership of any financial or contractual
        affiliation; hereafter, "Unrelated Party") having a net worth equal to or
        greater than the net worth of the party having leased from the
        Landlord.

       

      (2)           If
        the Facility is leased by Landlord to another party for only part of
        the
        remaining Scheduled Lease Term, the rent payable under such agreement shall
        conclusively establish the fair rental value for the entire remaining Scheduled
        Lease Term, subject to Tenant's right to offset against the Termination
        Deficiency as calculated on that basis (or, if the Termination Deficiency
        has
        been paid and is not subject to recovery as a preference in the event of
        Tenant's insolvency, Tenant's right to recover from Landlord) an adjustment
        reflecting any greater rent actually received by Landlord for any portion
        of the
        remaining Scheduled Lease Term.

       

      (3)           If
        the Facility is not leased by Landlord to any other party, the fair rental
        value, for purposes of calculating the rent differential and the Termination
        Deficiency, shall be the highest rent offered by any Unrelated Party having
        a
        net worth equal to or greater than the greater of the net worth of Tenant
        (as
        stated based on generally accepted accounting principles in its most recent
        audited financial statement), for a lease term at least as long as the remainder
        of the Scheduled Lease Term (or longer).

       

      23.6            Except
        as in this Section 23 provided, the Tenant hereby expressly waives, so far
        as
        permitted by law, the service of any notice of intention to re-enter provided
        for in any statute, and except as is herein and otherwise provided, the Tenant
        for and on behalf of itself and all persons claiming through and under Tenant,
        including any leasehold mortgagee or other creditor, also waives any and
        all
        right of redemption or re­entry or repossession in case Tenant shall be
        dispossessed by a judgment in favor of Landlord or in case of any expiration,
        termination, re-entry or repossession without expiration or termination of
        this
        Lease following an Event of Default hereunder. The terms "enter", "re-enter",
        "entry" or "re-entry" as used in this Lease are not restricted to their
        technical legal meanings.


      
        
          
          

        

        
          42

          
            

          

        

        
          
          

        

      

       

      23.7           No
        failure by Landlord to insist on the strict performance of any agreement,
        term,
        covenant, or condition hereof or to exercise any right or remedy consequent
        upon
        a Default thereof, and no acceptance of full or partial rent during the
        continuance of any such Default, shall constitute a waiver of any such Default
        or of such agreement, term, covenant, or condition. No agreement, term,
        covenant, or condition hereof to be performed or complied with by Tenant
        and no
        Default thereof shall be waived, altered or modified except by written
        instrument executed by Landlord. No waiver of any Default shall affect or
        alter
        this Lease, but each and every agreement, term, covenant and condition hereof
        shall continue in full force and effect with respect to any other then existing
        or subsequent Default thereof

       

      23.8           Each
        right and remedy provided for in this Lease shall be cumulative and shall
        be in
        addition to every other right and remedy existing at law or in equity or
        by
        statute or otherwise. The exercise of any such right shall not preclude the
        simultaneous or later exercise of any other right provided under this Lease
        or
        existing at law or in equity.

       

      
        	
                23A

              	
                LANDLORD
                  DEFAULT

              


      

       

      23A.1        Tenant
        shall have the right to terminate this Lease in the event of default by Landlord
        as follows.

       

      A.            Landlord
        Default Not Cured
        Within Cure Period. If default shall be made by Landlord in substantial
        performance or compliance with any of the agreements, terms, covenants or
        conditions in this Lease Agreement for a period of thirty (30) days after
        written notice from the Tenant to the Landlord specifying the items in default,
        or in the case of default which cannot with due diligence be cured within
        said
        thirty (30) day period, Landlord fails to commence within said thirty (30)
        day
        period to cure the same and thereafter to prosecute the curing of such default
        with due diligence, it being intended that for a default not susceptible
        of
        being cured with due diligence within said thirty (30) day period, the time
        provided to the Landlord within which to cure the same shall be extended
        for
        such period as may be necessary to complete the same with all due
        diligence.

       

      B.            Notice
        To Mortgagee And
        Opportunity For Cure. Tenant shall provide to the Mortgagee(s) any notice
        sent by Tenant pursuant to Section 23A.1. Tenant shall not have the right
        to
        terminate this Lease until the Mortgagee has received such notice and has
        had an
        opportunity, for a period which is the greater of thirty (30) days or such
        commercially reasonable time (not to exceed sixty days) as may be specified
        in
        the Mortgage for such purpose, to cure the alleged default by
        Landlord.

       

      23A.2        In
        the event of default by Landlord, Tenant shall be entitled to recover, in
        addition to any amounts otherwise owed by Landlord pursuant to this Lease,
        interest on any amount for which Landlord is liable hereunder at the Default
        Rate. If Tenant pays any amount to a Mortgagee which Landlord has wrongfully
        failed to pay, in order to cure a default by Landlord under a Mortgage, Tenant
        shall be entitled to offset the amount of such payment by Tenant against
        the
        next installment of Base Rent otherwise due.


      
        
          
          

        

        
          43

          
            

          

        

        
          
          

        

      


      23A.3    
            No failure by Tenant to insist on the strict performance
        of any agreement, term, covenant, or condition hereof or to exercise any
        right
        or remedy consequent upon a default by Landlord shall constitute a waiver
        of any
        such default or of such agreement, term, covenant, or condition. No agreement,
        term, covenant, or condition hereof to be performed or complied with by Landlord
        and no default thereof shall be waived, altered or modified except by written
        instrument executed by Tenant. No waiver of any default shall affect or alter
        this Lease, but each and every agreement, term, covenant and condition hereof
        shall continue in full force and effect with respect to any other then existing
        or subsequent default by Landlord.

       

      
        	
                24.

              	
                CAPITAL
                  IMPROVEMENTS

              


      

       

      24.1            As
        used in this Lease, the term "capital improvement" shall mean any single
        improvement, alteration, replacement or repair to the Leased Premises having
        a
        useful life in excess of the longer of twelve (12) months or the remaining
        period within the then current lease term, but shall not include capital
        improvements necessitated by a destruction of the Leased Property described
        in
        Section 18 and condemnation described in Section 19.

       

      24.2            As
        part of and in addition to its obligation to bear the cost of maintenance
        and
        repair as stated in Section 11, beginning on the Commencement Date and during
        the term of this Lease, the Tenant will, at its expense, make whatever capital
        improvements are required to meet the following standards: (a) to comply
        with
        the HUD Standards for refurbishment of properties subject to mortgages insured
        under Section 232 of the National Housing Act; (b) to comply with the standards
        for licensure as an ALF by the State; (c) to preserve the desirability and
        attractiveness of the Facility so that it remains competitive with competing
        facilities in its market area. All capital improvements by Tenant shall be
        performed in a first class workmanlike manner.

       

      24.3            As
        provided in Section 11 hereof, all non-capital improvements, routine maintenance
        and minor repairs to the Leased Property shall be the sole responsibility
        of
        Tenant throughout the term of this Lease.

       

      24.4            Tenant
        shall be entitled to use of the Replacement Reserve Fund, as described in
        Section 7 above, for purposes of Qualifying Repairs and Replacements (as
        defined
        in Section 7) for purposes of meeting the obligations of this Section
        24.

       

      
        	
                25.

              	
                NOTICES

              


      

       

      25.1            Any
        notice, consent, approval or other communication (a "Notice") required to
        be
        given under this Agreement or pursuant to law shall be in writing and, unless
        otherwise required by law, shall be either personally delivered (against
        a
        receipt), or sent by reputable overnight courier service, given by registered
        or
        certified mail, return receipt requested, postage prepaid, or by facsimile
        if
        accompanied by electronic acknowledgement of receipt, addressed to the
        respective parties at the following addresses:


      
        
          
          

        

        
          44

          
            

          

        

        
          
          

        

      


      If
        to
        Landlord:

      
        	 	 	
                Niles
                  Retirement L.L.C

              
	
                Niles
                  Retirement L.L.C. 25920  North Shore Drive

              	 	
                315
                  West Jefferson Blvd

              
	
                Elkhart,
                  IN 46514

              	 	
                South
                  Bend, IN 46601

              
	
                Attn:
                  Steven L. Garatoni

              	 	
                Attention:
                  Charles Loeser

              
	
                Fax:
                  574-206-9039

              	 	
                Fax:
                  (574) 232-5123

              


      

       

      with
        copies to:

       

      And:        Niles
        Retirement L.L.C.

      2043
        South Bend Avenue, PMB 288

      South
        Bend, IN 46637

      Attn:
        Anne Economou

      Fax:
        574-243-2354

      


      If
        to
        Tenant:

      


      Summerville
        2 LLC

      c/o
        Summerville Senior Living, Inc.

      3000
        Executive Parkway, Suite 530

      San
        Ramon, CA 94583

      Attention:
        Granger Cobb, President

      Fax:
        (925) 866-8506

       

      with
        copies to:

       

      Apollo
        Real Estate Advisors, L.P. 10250

      Constellation
        Blvd., Suite 2900 Los Angeles, CA 90067

      Attention:
        Richard Ackerman

      Fax:
        (310) 843-1989

       

      (a)            Either
        party may from time to time specify in writing a new address to which any
        such
        Notice intended for such party shall thereafter and until further Notice
        be
        addressed.

       

      (b)            Any
        Notice given pursuant hereto shall be deemed to have been received on delivery,
        if personally delivered or delivered by reputable overnight courier service,
        or
        three (3) business days after the mailing thereof if mailed in accordance
        with
        the terms hereof, such mailing to be effected by depositing the Notice in
        any
        post office, branch post office or official depository regularly maintained
        by
        the United States Postal Service.


      
        
          
          

        

        
          45

          
            

          

        

        
          
          

        

      

       

      (c)           Each
        party will at all times maintain and keep the other party informed of one
        or
        more email addresses which may be used for communications to such party for
        purposes other than formal notices.

       

      
        	
                26.

              	
                QUIET
                  ENJOYMENT

              


      

       

      Landlord
        covenants and agrees that, so long as Tenant is not in default hereunder
        beyond
        applicable notice and cure provisions, Tenant shall have possession of the
        Leased Property during the term hereof Landlord warrants and defends Tenant
        in
        such possession against the claims of all persons.

       

      
        	
                27.

              	
                COVENANT
                  TO YIELD POSSESSION

              


      

       

      27.1           Tenant
        shall on the last day of the term hereof or any extension thereof, or upon
        the
        sooner termination of said term, surrender and deliver to Landlord or Landlord's
        nominee the Leased Property, including all buildings, alterations, replacements,
        changes, additions and improvements constructed, placed or added by Tenant,
        including the equivalent of the Facility Equipment and the equivalent of
        the
        Supplies as delivered to Tenant on the Commencement Date. The Leased Property
        as
        delivered by Tenant to Landlord at the end of the Term shall be in Good
        Condition, as described in Section 4.4 above. Tenant shall use reasonable
        efforts, but without incurring any material expense, to cooperate with Landlord
        in the transfer of employees (both licensed and unlicensed) in the Facility,
        the
        transfer of all resident trust funds held by Tenant, and the transfer of
        all
        resident records to the Landlord or Landlord's nominee at the time of transfer
        of the Leased Property. The Equipment and Supplies as yielded by Tenant shall
        be
        reasonably sufficient for Continuing Operations.

       

      27.2           If
        the Tenant retains possession of the Leased Property after termination of
        this
        Lease by lapse of time or otherwise without the written consent of Landlord,
        Tenant shall pay Landlord, in order to compensate Landlord for such wrongful
        withholding of possession, an amount calculated at 150% of the Base Rent
        in
        effect immediately prior to such termination for the period of such wrongful
        possession, plus all damages sustained by Landlord by reason of such wrongful
        possession. Notwithstanding the above, in the event that the Lease has been
        terminated and neither Landlord nor a successor operator designated by Landlord
        has received the required license pursuant to the ALF Licensing Law to operate
        the Facility, Tenant may remain in possession, until such time as a successor
        operator having received the required authorization under the ALF Licensing
        Law
        is prepared to operate the Facility, subject to the same Base Rent and
        Additional Rent as are otherwise applicable under this Lease; provided, that
        nothing herein relieves Tenant from obligations under other provisions of
        this
        Lease.

       

      
        	
                28.

              	
                ESTOPPEL
                  CERTIFICATES

              


      

       

      28.1           Tenant
        agrees at any time, upon not less than ten (10) days prior written notice
        from
        Landlord, to execute and deliver to Landlord a statement in writing certifying:
        (a) that this Lease is unmodified and in full force and effect [or if there
        have
        been modifications, that the Lease is in full force and effect as modified,
        stating the modifications]; (b) the dates to which rent under this Lease
        have
        been paid; (c) whether or not, to the best knowledge of Tenant, Landlord
        is in
        default in keeping, observing or performing any term, covenant, or provision
        contained in the Lease, and if in default, specifying such default; (d) stating
        whether or not, within the knowledge of Tenant, there are then any setoffs
        or
        defenses in favor of Tenant against the enforcement of any of the terms of
        this
        Lease by Landlord, and if so, specifying the same. It is intended that such
        statement delivered by Tenant may be relied upon by Landlord, any Mortgagee,
        or
        any prospective mortgagee holding or anticipating the acquisition of a Mortgage
        on the Leased Property or any portion thereof, or any transferee or anticipated
        transferee of Landlord's interest in the Lease or the Leased
        Property.


      
        
          
          

        

        
          46

          
            

          

        

        
          
          

        

      


      28.2            Landlord
        agrees at any time, upon not less than ten (10) days prior written notice
        from
        Tenant, to execute and deliver to Tenant a statement in writing certifying:
        (a)
        that this Lease is unmodified and in full force and effect [or if there have
        been modifications, that the Lease is in full force and effect as modified,
        stating the modifications]; (b) the dates to which rent under this Lease
        have
        been paid; (c) whether or not, to the best knowledge of Landlord, Tenant
        is in
        default in keeping, observing or performing any term, covenant, or provision
        contained in the Lease, and if in default, specifying such default. It is
        intended that such statement delivered by Landlord may be relied upon by
        Tenant
        or Tenant's creditors, proposed mortgagee or assignee or
        transferee.

       

      
        	
                29.

              	
                PERSONAL
                  PROPERTY

              


      

       

      29.1            Landlord
        has delivered the Premises to Tenant in "turn-key" condition, i.e., fully
        operable condition, including reasonably necessary Equipment and Supplies.
        Tenant shall maintain, repair and keep in good working order and, if necessary,
        replace the items of Equipment and Supplies during the term of this Lease
        and
        any extensions hereof. Except as otherwise agreed in writing signed by Landlord,
        all property placed by Tenant upon the Leased Premises shall become and remain
        the property of Landlord and shall not be removed from the Leased Premises
        by
        Tenant upon the termination of this Lease. Upon the termination of this Lease,
        the Equipment and any replacements shall be returned to Landlord in as good
        condition as on the Commencement Date, subject to ordinary wear and tear
        which
        is consistent with a program of maintenance as described in Section 11 above
        and
        replacements as described in Section 24 above.

       

      29.2            Landlord
        and Tenant shall jointly cause the Facility staff to prepare an Equipment
        List
        and Inventory of Supplies as of the day prior to the Commencement Date, which
        shall be signed by both Landlord and Tenant, and shall be attached as Exhibit
        B
        to this Lease.

       

      29.3            So
        long as Tenant is not in default under this Lease, Tenant may sell or otherwise
        dispose of any item of Equipment so long as Tenant promptly replaces the
        same
        with other property of the same character and actual value as the item disposed
        of, and provided such items shall not be acquired through any leasing or
        financing arrangements calling for payments over time, so that Landlord shall
        receive, upon the termination of this Lease, unencumbered title to such
        replacement items.


      
        
          
          

        

        
          47

          
            

          

        

        
          
          

        

      

       

      29.4           On
        such Repossession Date as Landlord receives possession of the Premises from
        Tenant, Tenant shall convey to Landlord Supplies of a quantity and quality
        substantially equal to the quantity and quality of the Supplies delivered
        to
        Tenant by Landlord on the Commencement Date, as evidenced by Exhibit B. If
        the
        quantity and quality of the Supplies delivered by Tenant to Landlord on the
        Repossession Date is substantially less than the quantity and quality of
        the
        Supplies delivered to Tenant on the Commencement Date, Tenant shall pay Landlord
        the amount of the difference in value on the Repossession Date. If the quantity
        and quality of the Supplies delivered to Landlord on the Repossession Date
        is
        substantially greater than the quantity and quality of the Supplies delivered
        to
        Tenant on the Commencement Date, Landlord shall pay Tenant the amount of
        the
        difference in value on the Repossession Date. Supplies shall be valued at
        the
        transferor's acquisition cost.

       

      
        	
                30.

              	
                LANDLORD'S
                  REPRESENTATIONS AND WARRANTIES

              


      

       

      30.1           Landlord
        has fully approved the Lease in accordance with law and the execution and
        delivery hereof has been duly authorized.

       

      30.2           Landlord
        is the sole owner of the Leased Property, except for such articles of Equipment
        as are identified, in the equipment list referred to in Section 29.4 above,
        as
        owned by a party other than Landlord; additionally, Landlord by this Lease
        is
        conveying such Leased Property to Tenant free of any lien, condition or
        restriction which would impair or restrict Tenant's use and possession thereof
        for the purposes permitted under this Lease.

       

      
        	
                31.

              	
                TENANT'S
                  REPRESENTATIONS AND WARRANTIES

              


      

       

      31.1           Tenant
        has duly approved this Lease and has authorized the execution and delivery
        hereof.

       

      31.2           Tenant
        agrees to assume all accounts payable for Supplies and other goods or equipment
        that are both ordered and received on the Leased Premises subsequent to the
        Commencement Date, and for services ordered, rendered and performed subsequent
        to the Commencement Date.

       

      
        	
                32.

              	
                INDEMNIFICATION

              


      

       

      32.1           Landlord
        agrees to indemnify, defend and hold harmless Tenant from and against any
        and
        all losses (including reasonable attorney fees) incurred by, imposed upon
        or
        asserted against Tenant as a result of relating to or arising out of (a)
        a
        breach by Landlord of its representations or warranties under this Lease
        or the
        Agreement To Lease; (b) any debts, liabilities or other obligations arising
        from
        the operation of the Facility prior to the Commencement Date.


      
        
          
          

        

        
          48

          
            

          

        

        
          
          

        

      

       

      32.2            Tenant
        agrees to indemnify, defend and hold harmless Landlord from and against any
        and
        all losses (including reasonable attorney fees) incurred by, imposed upon
        or
        asserted against Landlord as a result of, relating to or arising out of (a)
        a
        breach by Tenant of its representations or warranties under this Lease or
        the
        representations of Summerville under the Agreement To Lease; (b) any debts,
        liabilities or other obligations arising from the operation of the Facility
        on
        or subsequent to the Commencement Date.

       

      
        	
                33.

              	
                RIGHT
                  OF CROSS DEFAULT

              


      

       

      An
        Event
        of Default by Tenant or Landlord, or any Affiliated Lessors or Affiliated
        Tenants, under any of the Other Leases or the Agreement To Lease, shall
        constitute an Event of Default under this Lease.

       

      
        	
                34.

              	
                BROKERS

              


      

       

      34.1            Landlord
        agrees to hold Tenant and Summerville harmless from and against any claims,
        liabilities or obligations for brokerage or finder's fees or commissions
        in
        connection with this Lease or the transactions contemplated hereby which
        may be
        asserted by any person on the basis of any statement or act alleged to have
        been
        made or taken by Landlord, including, without limitation, the fee payable
        to
        Ziegler Capital Markets Group.

       

      34.2            Tenant
        agrees to hold Landlord harmless from and against any claims, liabilities
        or
        obligations for brokerage or finder's fees or commissions in connection with
        this Lease or the transactions contemplated hereby which may be asserted
        by any
        person on the basis of any statement or act alleged to have been made or
        taken
        by Tenant or Summerville.

       

      
        	
                35.

              	
                MODIFICATION
                  OR ALTERATION OF LEASE

              


      

       

      No
        modification of this Lease shall be effective unless such modifications are
        specified by written agreement signed by both Landlord and Tenant.

       

      
        	
                36.

              	
                PARTIAL
                  INVALIDITY

              


      

       

      To
        the
        extent allowed by law, if any non-material term of this Lease (including
        the
        Agreement To Lease) or the application thereof to any person or circumstance
        shall to any extent be invalid or unenforceable, so long as the omission
        of such
        term or provision does not materially alter the intention of the parties
        as set
        forth herein, the remainder of this Lease (including the Agreement To Lease)
        or
        the application of such term to other persons or circumstances, shall not
        be
        affected thereby.

       

      
        	
                37.

              	
                GOVERNING
                  LAW

              


      

       

      Subject
        to the applicable federal law, this Lease shall be construed in accordance
        with
        and its performance shall be governed by the laws of the State (excluding,
        for
        such purpose, legal principles relating to "conflict of laws" which might
        result
        in the applicability of the substantive law of a state other than the
        State).


      
        
          
          

        

        
          49

          
            

          

        

        
          
          

        

      

       

      
        	
                38.

              	
                SHORT
                  FORM LEASE AND COUNTERPARTS

              


      

       

      38.1           The
        parties may execute and deliver a short form memorandum of lease for the
        purpose
        of recording, but agree that the terms of this Lease shall govern and that
        any
        such short form memorandum shall not constitute an amendment or modification
        of
        this Lease.

       

      38.2           The
        parties have simultaneously executed and delivered four copies of this Lease.
        Each such counterpart is in all respects identical and is deemed complete
        in
        itself, accordingly, each such counterpart may be used for any purpose without
        the introduction of any other counterparts.

       

      
        	
                39.

              	
                SUCCESSORS
                  AND ASSIGNS

              


      

       

      All
        of
        the terms, covenants and conditions herein shall inure to the benefit of
        and be
        binding upon the successors and assigns of the parties and those who at any
        time
        shall be the owners or possessors of the Leased Property; provided, however,
        that no transfer by or through the Tenant of any interest under this Lease,
        whether by its own act, operation of law or otherwise in violation of any
        of the
        provisions of this Lease, shall confer any rights upon such
        transferee.

       

      
        	
                40.

              	
                TENANT
                  RIGHT OF FIRST OFFER AND FIRST
                  REFUSAL.

              


      

       

      Landlord
        gives to Tenant, from the Commencement Date until termination of this Lease
        or
        any extensions thereof, the right of first offer to purchase the Premises,
        as
        described below.

       

      A.            During
        such period, Landlord shall not offer to any other party the opportunity
        to buy the Leased Property without first notifying Tenant in writing that
        Landlord is considering selling the Leased Property and allowing Tenant thirty
        (30) days following such written notice (the "Offer Period") to negotiate
        with
        Landlord concerning possible terms of sale, during which the parties shall
        negotiate in good faith. Tenant shall have the rights as described in
        sub-section D of this Section 40 if Tenant shall, within the Offer Period,
        submit to Landlord a written offer to purchase the Leased Property ("Firm
        Offer") meeting the following conditions:

       

      (1)            such
        offer shall specify that Landlord may accept the offer at any time within
        thirty
        (30) days after the Offer Period, notwithstanding any counteroffer Landlord
        may
        have made;

       

      (2)            such
        offer shall not be subject to any contingency or condition relating to (a)
        financing; (b) any matter under the control of Summerville, Apollo, Tenant
        or
        any Affiliate thereof-, (c) a "due diligence" examination, including without
        limitation any examination of the condition of the Leased Property or matters
        relating to Facility occupancy or employees; provided, that the obligation
        to
        purchase may be conditioned on Landlord's provision of marketable title
        (including, without limitation, title that is free and clear of all liens
        and
        encumbrances, excepting matters other than Mortgages disclosed in Exhibit
        Ito
        the Agreement To Lease) and compliance with other typical conditions and
        seller
        duties consistent with normal practice in the State for the purchase of
        commercial real estate.


      
        
          
          

        

        
          50

          
            

          

        

        
          
          

        

      

       

      B.           If
        Landlord accepts such an offer from Tenant, the parties shall take all necessary
        actions to close on the purchase and sale of the Leased Property within sixty
        (60) days following receipt of notice from Landlord that Landlord has accepted.
        If Tenant does not take all action necessary on its part to close within
        such
        sixty (60) days, Tenant's rights under this Section 40 shall be waived for
        the
        12-month period following the expiration of such sixty (60) days.

       

      C.           If
        Tenant does not submit a Firm Offer within the Offer Period, Tenant shall
        have
        no further rights under this Section 40 for the 12-month period following
        the
        Offer Period, i.e., Landlord may sell the Premises, free of any claims thereto
        on the part of Tenant, to any party with whom Landlord enters a binding
        agreement (which may be subject to "due diligence" or conditions precedent)
        within the twelve (12) month period following the expiration of the Offer
        Period, provided that closing pursuant to such sale occurs within nine (9)
        months after the entry into such agreement.

       

      D.           If
        no agreement is reached between Landlord and Tenant during the
        Offer
        Period, Landlord may, within the twelve (12) month period following the
        expiration of the Offer Period, solicit offers from other parties; provided,
        however, that Landlord's right to accept (and sell the Leased Property pursuant
        to) any offer from another offeror which does not exceed the highest price
        of
        any Firm Offer submitted by Tenant during the Offer Period by more than 5%,
        or
        is not an all cash offer if Tenant has an all cash Firm Offer, shall be subject
        to Tenant's right to purchase the Leased Property as set forth in subsection
        (2)
        below.

       

      (1)            Landlord
        may, within the twelve (12) month period following the expiration of the
        Offer
        Period, without further notice to Tenant, accept (and sell the Leased Property
        pursuant to) an offer from a third party which exceeds the highest price
        of any
        Firm Offer submitted during the Offer Period by more than 5% (provided, if
        Tenant has submitted an all-cash Firm Offer, that the offer from such other
        party is an all-cash offer).

       

      (2)            If
        Tenant has submitted a Firm Offer within the Offer Period, then for the twelve
        (12) month period following the expiration of the Offer Period, prior to
        accepting any offer from another offeror which does not exceed the highest
        price
        of any Firm Offer submitted by Tenant during the Offer Period by more than
        5%
        (or, if Tenant has submitted an all-cash offer and the offer which Landlord
        intends to accept is not an all-cash offer), Landlord shall give Tenant written
        notice of the terms and conditions of such offer, and Tenant shall have the
        right to purchase the Leased Property pursuant to the terms of such offer,
        subject to the following additional conditions below.


      
        
          
          

        

        
          51

          
            

          

        

        
          
          

        

      

       

      (i)           Tenant
        shall have ten (10) business days after receipt of notice from Landlord of
        the
        offer from another offeror within which Tenant may, by written notice to
        Landlord, if the conditions of Tenant's right as stated above are satisfied,
        elect to purchase the Premises on the terms proposed by such other offeror.
        If
        Tenant does not provide Landlord, within such time, with written notice of
        its
        intent to purchase on such terms, Tenant's right to purchase under the terms
        proposed by such other offeror shall be waived, and Landlord may sell the
        Leased
        Property to such other offeror or to any other party at a price equal to
        or
        greater than (and other terms as favorable to Landlord as) the terms of the
        third-party offer as stated in Landlord's notice to Tenant.

       

      (ii)           Landlord's
        notification to Tenant of the terms of an offer
        from another offeror shall state the price and other conditions of the offer,
        and whether Landlord considers Tenant to have made a Firm Offer sufficiently
        similar to the offer from such other offeror to give Tenant the right to
        purchase the Leased Property on the terms proposed by the other
        offeror.

       

      (iii)           If
        the other offeror has proposed to buy the Leased Property together with any
        of
        the Other Facilities, then Tenant's right to buy the Leased Property on the
        terms proposed by the other offeror shall be conditioned on Tenant or Tenant's
        Affiliates also offering to buy such Other Facilities on the terms proposed
        by
        the other offeror.

       

      (iv)           If
        the terms proposed by another offeror include provision for the offeror to
        decline to purchase after conducting a due diligence investigation of the
        Leased
        Property and/or any other property to be purchased, Tenant's right to purchase
        the Leased Property upon the terms proposed by such other offeror shall be
        conditioned upon Tenant's waiver of any such due diligence investigation
        with
        respect to the Leased Property (and any Other Facility to be purchased pursuant
        to such offer if such Other Facility is at the time of such other offer is
        leased or managed by Tenant or an Affiliate of Tenant) relating to the
        Facility's operating history, physical condition, or other matters which
        Tenant,
        as the occupier of the Facility, has knowledge.

       

      E.            If
        Landlord has not, as of the end of the 12-month period following the
        Offer
        Period, entered into a binding agreement to sell the Leased Property, and
        Landlord at any time thereafter wishes to sell the Leased Property, then
        Landlord shall notify Tenant in writing that Landlord has a continuing interest
        in selling the Leased Property, and the same procedure shall apply as described
        above, i.e., Tenant shall waive the right of first refusal as described herein
        if it fails to submit a Firm Offer within thirty (30) days of receipt of
        such
        notice from Landlord, but if Tenant submits a Firm Offer within such period,
        Tenant shall have the rights described above.


      
        
          
          

        

        
          52

          
            

          

        

        
          
          

        

      

       

      
        	
                41.

              	
                RELATIONSHIP
                  OF PARTIES

              


      

       

      Landlord
        is not for any purpose a partner or joint venturer with Tenant in the operation
        of the Facilities or any business conducted on the Leased Premises. Except
        as
        expressly provided herein, Landlord shall not under any circumstances be
        responsible or obligated for any losses or liabilities of Tenant.

       

      
        	
                42.

              	
                EFFECT
                  ON MORTGAGES

              


      

       

      The
        parties hereto do not intend to impair the security of any Mortgagee under
        any
        Mortgage on the Leased Property or any part thereof

       

      
        	
                43.

              	
                ARBITRATION

              


      

       

      All
        disputes relating to or arising out of this Lease, including the arbitrability
        of a dispute, shall be solely and finally settled by arbitration in accordance
        with the rules of the American Arbitration Association. The prevailing party
        in
        such arbitration shall be entitled to receive from the other party its costs
        of
        arbitration, including reasonable attorney fees. The venue for such arbitration
        shall be in Indianapolis, Indiana.

       

      
        	
                44.

              	
                ENTIRE
                  AGREEMENT

              


      

       

      This
        Lease and any exhibits, attachments, addenda, schedules and/or supplements
        expressly referred to herein (if initialed by the representatives of each
        party
        having executed this Agreement as authorized agent for such party), contains
        the
        full under­standing between the parties and supercedes all prior
        representations or agreements, whether oral or written.

       

      IN
        WITNESS WHEREOF, the parties have caused this Lease to be executed by their
        duly
        authorized representatives as indicated below.

       

      
        	
                Summerville
                  2 LLC,

              	 	
                Hobart
                  Retirement L. L. C.

              
	
                a
                  Delaware limited liability company

              	 	 
	 	 	 
	
                By:

              	
                /s/
                  Granger Cobb

              	 	
                By:

              	
                /s/
                  Steven L. Garatoni

              
	
                Name:

              	
                Granger
                  Cobb

              	 	
                Name:
                  Steven L. Garatoni

              
	
                Title:

              	
                President

              	 	
                Title:
                  Manager/Sole Member

              
	
                Date:

              	
                October
                  29, 2004

              	 	
                Date:
                  October 29, 2004

              


      

       

       

    

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