ex10_285.htm


    
      

    

    Exhibit
      10.28.5

     

    
      AMENDED
        AND RESTATED LEASE
        AGREEMENT

       

      THIS
        AMENDED AND RESTATED LEASE AGRELMENT (the "Lease") is made and entered into
        as
        of the 1st day of November, 1994, by and between CLAIREMONT ROYALE, a California
        limited partnership (hereinafter referred to as "Landlord") and JERRY AGAM,
        an
        individual, and PACIFICA MANOR, INC., a California corporation (hereinafter
        collectively referred to as "Tenant"), and is made with reference to the
        following facts and objectives:

       

      A.                Landlord
        and Tenant have heretofore entered into a Lease Agreement, dated March 31,
        1987,
        for the Premises; which prior Lease Agreement was amended by that certain
        Amendment of Lease Agreement, dated October 16, 1989 (the prior Lease Agreement,
        as thus amended, is hereinafter collectively referred to as the "Prior Lease").
        The parties desire to fully amend and restate the Prior Lease with this Lease;
        and, upon execution of this Lease, the Prior Lease shall be terminated
        and
        of no further force and effect.

       

      B.          Landlord
        owns the "Premises" hereinafter described, together with the fixtures and
        equipment therein.

       

      C.          Tenant
        is experienced in the management and operation of residential care facilities
        for the elderly (as defined in California Health and Safety Code, Division
        22,
        Chapter 23.2, S1569.21.

       

      D.          Tenant
        desires to lease the Premises and personal property from Landlord pursuant
        to
        the provisions of this Lease, for the purpose of operating a residential
        care
        facility for the elderly.

       

      E.            Landlord
        is entering into this Lease in reliance upon the particular skills, knowledge
        and experience of Tenant in the operation of residential care facilities
        for the
        elderly.

       

      NOW,
        THEREFORE, for and in consideration of the forego­ing Recitals and the
        terms, covenants and conditions of this Lease, and for good and valuable
        consideration, the sufficiency of which is acknowledged by all parties, the
        parties agree as follows:

       

      
        	
                 

              	
                1.

              	
                PREMISES

              


      

       

      Subject
        to the terms and conditions of this Lease, Landlord hereby leases to Tenant,
        and
        Tenant hereby leases from Landlord, that certain real property described
        in
        Exhibit "A" attached hereto, which is improved with and currently licensed
        and
        operating as a two hundred fourteen (214) bed residential care facility for
        the
        elderly, and certain personal property located thereon, or hereafter located
        thereon (collectively, the "Premises").  The Premises is located at
        5219 Clairemont Mesa Boulevard, San Diego, California, and is commonly known
        as
Clairemont
        Gardens.

       

      
        	
                 

              	
                2.

              	
                TERM

              


      

       

      The
        term
        of this Lease (the "Term") shall be for seventeen (17) years and five (5)
        months, commencing on November 1, 1994, and terminating on March 31,
        2012.


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        	
                 

              	
                3.

              	
                RENT

              


      

       

      3.1
        Tenant shall pay to Landlord a monthly rent during each month of the Term,
        without deduction, setoff, prior notice or demand, as follows:


       

      3.1.1
        Subject to Section 3.2 below, the monthly rent for the initial two (2) years
        and
        five (5) months of the Term, through March 31, 1997, shall be Thirty-six
        Thousand Three Hundred Eighty Dollars ($36,380.00).

       

      3.1.2
        Commencing on April 1, 1997, and thereafter on the yearly anniversary date
        of
        such date throughout the remainder of the Term, the monthly rental shall
        increase, but never decrease, as calculated on the basis of the Consumer
        Price
        Index, All Urban Wage Earners and Clerical Workers, All Items, published
        by the
        U. S. Department of Labor, Bureau of Statistics for the Los Angeles/Long
        Beach/Anaheim Metropolitan Area (the "Index"), as follows:

       

      (a)           The
        Index published as of March 1, 1996, shall be considered the "Base
        Index";

       

      (b)           The
        monthly rental shall be adjusted upward, but not downward, by an amount equal
        to
        sixty percent (60%) of the increase, if any, in the Index as of the last
        month
        prior to such adjustment over the Base Index (for instance, for the adjustment
        to occur on April 1, 1997, the Base Index would be compared to the Index
        for
        March 1, 1997); provided, however, the monthly rent shall not increase in
        any
        lease year by more than four percent (4%) nor less than two and one-half
        percent
        (2-1/2%).

       

      If
        at the
        time of any such adjustment of the monthly rental, the Index shall not exist
        in
        the same format described above, the Landlord shall reasonably substitute
        any
        official index published by the Bureau of Labor Statistics, or successor
        agency,
        as may then be in existence and most nearly equivalent thereto.

       

      3.2
        The
        parties agree that the monthly rent for the initial one (1) month of the
        Term,
        due November 1, 1994, shall be deferred; that is, not payable on its usual
        due
        date, but rather paid
        to Landlord in sixty (60) monthly payments of Six Hundred Seven Dollars
        ($607.00) each, commencing on January 1, 1995, and ending with the payment
        on
        December 1, 1999. Each such payment shall be deemed additional rent, in addition
        to monthly rent and all other sums due under this Lease. Tenant covenants
        that
        it shall expend such deferred rent amount for capital improvements to the
        Premises; which expenditures shall be approved in advance by Landlord in
        its reasonable
        discretion and shall be accounted for in writing by Tenant to Landlord. This
        one
        time deferral shall include only the deferral of the monthly rent, not the
        deferral of additional rent, impound payments or other sums due under this
        Lease
        for November 1, 1994 or any other date.

       

      3.3
        The
        monthly rent is due and payable on the first (1st) day of each month, commencing
        on the first (1st) day of the month
        in
        which the Term commences. If the Term commences on a day other than the first
        (1st) day of a month, monthly rent for such partial month shall be prorated
        at
        the rate of 1/30th of the monthly rent per day.

       

      3.4
        All
        rent shall be paid to Landlord at 5150 Overland Avenue, Culver City, California
        90230, or at such other address as may be designated by
        Landlord from time to time in writing to Tenant.


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      3.5
        Tenant acknowledges that late payment by Tenant to Landlord of rent will
        cause
        Landlord to incur costs not contemplated by this Lease, the exact
        amount
        of such costs being extremely difficult and impracticable to fix. Such costs
        include, without limitation, processing and accounting charges, and late
        charges
        that may be imposed on Landlord by the terms of any encumbrance(s) affecting
        the
        Premises. Therefore, if any installment of rent is not received by Landlord
        within ten (10) days after its due date, Tenant shall pay to Landlord an
        additional sum equal to five percent (5%) of the overdue rent as a late charge.
        The parties agree that this late charge represents a fair and reasonable
        estimate of the costs that Landlord will incur by reason of late payment
        by
        Tenant. Acceptance of any late charge shall not constitute a waiver of Tenant's
        default with respect to the overdue amount, nor prevent Landlord from exercising
        any of the other rights and remedies available to Landlord hereunder, at
        law or
        in equity.

       

      3.6
        The
        monthly rent provided in this Lease shall be in addition to all other payments
        to be made by Tenant as provided herein. It is the purpose and intent of
        Landlord and Tenant that the monthly rent provided herein shall be absolutely
        net to Landlord, so that this Lease shall yield net to Landlord the monthly
        rent
        specified in this Lease in each month during the Term. Except as otherwise
        expressly provided herein, Landlord shall have no obligation or liability
        to pay
        any amounts in connection with the ownership, operation and/or management
        of the
        Premises, or any part thereof, whether for real or personal property taxes,
        or
        insurance premiums of any kind, or maintenance or costs of repair of any
        kind,
        including structural or exterior maintenance, or license fees. Excluding
        encumbrances for which Landlord is liable, if any, all costs and expenses
        including, without limitation, taxes, assessments, insurance premiums,
        utilities, maintenance and repair (capital and ordinary), restore, license
        fees
        and obligations of every kind and nature whatsoever relating to the use and/or
        management of the Premises by Tenant which may accrue become due during or
        out
        of the Term shall be paid by Tenant Landlord shall be indemnified and saved
        harmless by Tenant from against the same.

       

      4.
REAL
        ESTATE AND PERSONAL
        PROPERTY TAXES

       

      In
        addition to all rentals herein reserved, the Tenant shall pay the real estate
        taxes, levies and assessments imposed, levied upon or assessed against the
        Premises for each year of .the Term. Said taxes shall be payable in full
        within
        thirty (30) days after receipt by Tenant of a statement in writing from Landlord
        setting forth the amount of taxes and assessments due under this Section.
        The
        term "real estate taxes" as used herein shall be deemed to mean all taxes
        imposed upon the real property and permanent improvements, and all assessments
        levied against the Premises, but shall not include personal income taxes,
        inheritance taxes or franchise taxes levied against the Landlord.

       

      During
        the Term, Tenant shall pay, prior to delinquency, all taxes assessed against
        and
        levied upon fixtures, furnishings, equipment and all other personal property
        contained in the Premises.

       

      Upon
        the
        commencement of the Term, an impound account for the payment of real estate
        taxes shall be established and maintained by Landlord, as set forth below.
        Concurrent with each payment of monthly rental and in addition thereto, Tenant
        shall pay to Landlord's a sum (the "Funds") equal to one-twelfth (1/12) of
        the
        yearly real estate taxes and assessments, as may be adjusted from time to
        time.
        Any funds received by Landlord shall be held in an institution chosen by
        Landlord, in its sole discretion, provided the deposits of which are insured
        by
        a federal or state agency. Landlord shall be permitted to commingle the Funds
        with its own funds or the funds of other tenants of Landlord, as Landlord
        shall
        determine in its sole discretion. Landlord shall apply the Funds to pay the
        real
        estate taxes for the Premises; provided Landlord shall only be obligated
        to make
        such payment of Funds to the extent that Tenant pays the Funds to Landlord.
        Landlord shall not charge for the holding or handling of Funds. Landlord
        shall
        pay interest on the Funds actually held by Landlord based upon a rate equal
        to
        the then-existing average interest rate for thirty (30) day certificates
        of
        deposit as published by the Wall Street Journal. The prompt payment of the
        Funds
        shall be a material covenant of Tenant under this Lease, and shall constitute
        additional rent hereunder. Landlord shall provide to Tenant an annual accounting
        of the Funds showing credits and debits to the Funds and the purpose for
        which
        each debit to the Funds was made. If the amount of the Funds held by Landlord,
        together with the future monthly installments of Funds payable prior to the
        due
        dates of real estate taxes, shall exceed the amount required to pay said
        real
        estate taxes as they fall due, at Landlord's option, such excess shall either
        be
        repaid to Tenant or credited to Tenant on monthly installments of Funds.
        If the
        amount of the Funds held by Landlord shall be insufficient to pay real estate
        taxes, as they fall due, Tenant shall immediately pay to Landlord any amount
        necessary to make up the deficiency in one or more payments, as Landlord
        may
        require. In the event that the Premises is transferred by Landlord to another
        party, which transfer results in an increase in the real estate taxes, Tenant
        shall not be responsible for the payment of such additional real estate taxes.
        Notwithstanding the foregoing, the initial impound payments by Tenant,
        commencing November 1, 1994, shall be utilized for the second (2nd) installment
        payment of real estate taxes for 1994-95, and, in addition thereto, Tenant
        shall
        be responsible for the timely payment of the first (1st) installment payment
        of
        real estate taxes for 1994-95 directly to the applicable taxing
        agency.


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      
        	
                 

              	
                5.

              	
                USE

              


      

       

      5.1
        Tenant shall use the facility for a residential care facility for the elderly,
        and for no other use without Landlord's prior written consent, which may
        be
        withheld in Landlord's sole discretion.

       

      5.2
        Tenant's use of the Premises as provided in this Lease shall be in accordance
        with the following:

       

      5.2.1
        Tenant shall not do, bring or keep anything in, or about the Premises that
        will
        cause a cancellation of .any insurance covering the Premises, and Tenant
        shall
        comply with all requirements imposed by any such insurance company.

       

      5.2.2
        Tenant shall cause the Premises to be and remain licensed and certified by
        the
        applicable state and/or local governmental agencies as a licensed residential
        care facility for the elderly, and shall maintain such license(s) and
        certifications during the Term. At Tenant's sole expense, Tenant shall cause
        the
        Premises to conform to the requirements and provisions as the licensed facility
        including, without limitation, the obligation at Tenant's sole cost to alter,
        maintain, replace or restore the Premises or any part thereof in compliance
        and
        conformity with all laws relating to the condition, use or occupancy of the
        Premises as the licensed facility during the Term.

       

      5.2.3
        Tenant shall not use the Premises in any manner that will constitute waste,
        nuisance to the Premises, or cause unreasonable annoyance to owners or occupants
        of adjacent properties.

       

      5.2.4
        Tenant shall not do anything on the Premises that will cause damage to the
        Premises or any part thereof. No machinery, apparatus or other appliance
        shall
        be used or operated in, on or about the Premises that will in any manner
        injure
        the Premises or any part thereof.

       

      5.2.5
        Tenant shall pay all payrolls promptly when due respecting all personnel
        at the
        Premises and shall file all governmental reports required pursuant thereto
        (including, without limitation, payroll tax returns), and shall pay such
        taxes
        promptly and before delinquency.


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      5.2.6
        Tenant shall not release, use, generate, manufacture, store or dispose of
        on,
        under or about the Premises or transfer to or from the Premises any flammable
        explosives, radioactive materials, hazardous wastes, toxic substances or related
        materials (collectively "hazardous substances"). There is excluded from this
        prohibition hazardous substances of the type commonly used in residential
        care
        facilities for the elderly in California, subject to the condition that they
        are
        used, stored, and disposed of in accordance with applicable laws. As used
        in
        this Lease, hazardous substances
        shall include, but not be limited to, substances defined as "hazardous
        substances," "hazardous materials," or "toxic substances" in the Comprehensive
        Environmental Response, Compensation and Liability Act of 1980, as amended,
        42
        U.S.C. Section 9601, et seq.; the Hazardous Materials Transportation Act,
        49
        U.S.C. Section 1801, et seq.; the Resource Conservation and Recovery Act,
        42
        U.S.C. Section 6901, et seq.; the Clean Water Act, 33 U.S.C. Section 466,
        et
        seq.; the Safe Drinking Water Act, 14 U.S.C. Section 1401, et seq.; the
        Superfund Amendment and Reauthorization Act of 1986, Public Law 99-499, 100
        Stat. 1613; the Toxic Substances Control Act, 15 U.S.C.•
        Section 2601, et
        seq., as amended;
        the Clean Air Act, 42 U.S.C. Section 7401, et seq.; the Occupational Safety
        and
        Health Act ("OSHA," 29 U.S.C. Section 651, et seq.; California Environmental
        Quality Act, Pub. Res. Code Section 21000, et seq.; Carpenter-Presley-Tanner
        Hazardous Substance Account Act, Health and Safety Code Section 25300, et
        seq.;
        Hazardous Waste Control Law, Health and Safety Code Section 25100, et seq.; Porter-Cologne Water
        Quality Control Act, Water Code Section 13000, et seq.; Hazardous Waste Disposal
        Land Use Law, Health and Safety Code Section 25220, et seq.; Safe Drinking
        Water
        and Toxic Enforcement Act of 1986 ("Prop 65"), Health and Safety Code Section
        25249.5, et seq.; Hazardous Substances Underground Storage Tank Law, Health
        and
        Safety Code Section 25280, et seq.; Air Resources Law, Health and Safety
        Code
        Section 39000, et seq., Hazardous Materials Release Response Plans and
        Inventory, Health and Safety Code Sections 25500-25541; Toxic Pits Cleanup
        Act,
        Health and Safety Code Section 25208, et seq.; and those materials and
        substances of a similar nature regulated or restricted under any other laws
        of
        the United States, the State of California or any other governmental agency
        having jurisdiction over the Premises now existing or hereafter adopted,
        and in
        regulations adopted and publications promulgated pursuant to said
        laws.

       

      5.2.7
        Tenant shall comply with, and the leasehold created by this Lease is subject
        to,
        all covenants, conditions, restrictions, easements and rights of way affecting
        the Premises.

       

      5.2.8
        Tenant shall furnish any bond which may be required by law in connection
        with
        residents' trust funds and the accounting therefor. Tenant shall be fully
        responsible for such trust funds, and agrees to indemnify and hold harmless
        Landlord from any loss regarding same.

       

      
        	
                 

              	
                6.

              	
                ALTERATIONS

              


      

      


      Tenant
        shall not make, or suffer to be made, any alterations of the Premises, or
        any
        part thereof, without the prior written consent of Landlord, and any additions
        to, or alterations of the Premises, except movable furniture and trade fixtures,
        shall become at once a part of the realty and belong to
        Landlord.


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      


      
        	
                 

              	
                7.

              	
                MAINTENANCE
                  AND
                  REPAIRS

              


      

       

      7.1
        Except as provided in Section 7.2 below, Tenant shall, during the Term, at
        its
        sole cost and expense, keep in good repair and maintain the entire Premises
        in
        good, clean working order, condition and repair including, without limitation,
        the structural portions of the building and improvements thereon, the interior
        and exterior thereof, plate glass, wiring, plumbing, heat and air conditioning
        units, the parking and service areas, the landscaping, the approaches thereto
        and appurtenances thereof, including all adjacent sidewalks and alleys. Except
        as provided in Section 7.2 below, Tenant's obligation to maintain the Premises
        shall specifically include, without limitation, the obligation to make any
        and
        all repairs and to repaint and/or re-stain all painted areas as required.
        Landlord shall not have any responsibility to maintain the Premises or any
        part
        thereof including, without limitation, any structural maintenance, repair,
        replacement or restoration. Tenant waives all rights under any laws which
        may
        provide for Tenant's right to make repairs and to then deduct from rents
        the
        expenses of such repairs.

       

       7.2
        Except as provided in Section 7.3 below, Landlord shall, during the Term,
        at its
        sole cost and expense, keep in good repair and maintain the roof and exterior
        surface of the Premises in good condition and repair. Landlord's obligations
        for
        maintenance and repair shall be limited to the particular obligations of
        this
        Section 7.2; all other maintenance and repair obligations relating to the
        Premises shall belong to Tenant under Section 7.1 above. Landlord's obligation
        to maintain the exterior surface of the Premises shall include, without
        limitation, the obligation to make any and all repairs and to repaint and/or
        restain, as applicable, the painted portions of the exterior surface. Upon
        the
        occurrence of the events described in Section 7.3 below, all obligations
        of
        Landlord hereunder shall shift to Tenant. In the event that Tenant becomes
        aware
        of the need to repair the roof and/or exterior surface of the Premises (prior
        to
        the assumption by Tenant of the responsibility for maintenance of the roof
        pursuant to Section 7.3 below), Tenant shall notify Landlord in writing of
        the
        specific details of such need(s). In the event that Landlord fails to repair,
        or
        commence to repair (and prosecutes diligently to completion), such needs
        within
        ten (10) days after receipt of the written notice, and damages are

      thereafter
        suffered to the Premises and/or Tenant's personal property as the direct and
        consequential result of such failure to repair, then Landlord shall be liable
        to
        Tenant for the amount of such damages which exceed Tenant's recovery of
        insurance proceeds for such damage. Such damage shall be subject to reasonable
        proof and verification being provided to Landlord. The foregoing shall represent
        Landlord's only potential area of liability for maintenance and repair of
        the
        Premises under this Lease.

       

       7.3
        Landlord shall have the option, in its sole discretion and at its sole cost
        and
        expense, to re-roof the Premises and/or to repaint the exterior of the Premises.
        In the event that Landlord causes such work to be performed during the Term,
        then immediately thereafter and throughout the remainder of the Term, Tenant
        shall assume, at its sole cost and expense, the obligation to keep in good
        repair and maintain the roof and/or the exterior surface of the Premises,
        respectively, along with and in comparable condition with other portions
        of the
        Premises as required of Tenant in Section 7.1 above. Upon such assumption:
        (a)
        Landlord's obligation to repair and maintain the roof and/or exterior surface
        of
        the Premises under Section 7.2 above shall cease and terminate and (b) Landlord
        shall cause to be assigned to Tenant any applicable warranty for the new roof.

       

      7.4
        Tenant shall, at its sole cost and expense, during the Term, keep and maintain
        all the personal property including furniture, fixtures and equipment, in
        good
        working order, condition and repair. Tenant shall have the right to install
        on
        the Premises any and all equipment and fixtures which Tenant desires to install
        thereon and which are necessary or convenient to Tenant's use of the Premises
        as
        permitted herein, without the consent of Landlord. All such property so
        installed by Tenant shall remain Tenant's property (other than replacements
        for
        personal property as provided below) and, provided Tenant is not in default
        hereunder, may be removed by Tenant as provided in this Lease. Tenant shall
        not
        remove any personal property owned by Landlord which was leased to Tenant
        as
        part of the Premises and/or replacements thereof or any part thereof from
        the
        Premises, without the prior written consent of Landlord. Tenant shall purchase
        and replace with substitutes of equal or higher quality any worn out or broken
        items of personal property required to be on the Premises for continued
        licensing and/or certification as the same may occur from time to time
        throughout the Term at Tenant's sole cost and expense. Such items being
        replaced by
        Tenant shall become the property of Landlord. Tenant agrees, upon written
        request from Landlord, to execute any and all documents necessary to assist
        Landlord to fully evidence Landlord's ownership of the personal
        property.


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      7.5
        Tenant shall, throughout the Term of this Lease, make all repairs, alterations,
        replacements and additions to the Premises required by law and/or as necessary
        to obtain and maintain licensing and certification as a licensed residential
        care facility for the elderly.

       

      7.6
        By
        entering upon the Premises, Tenant shall be deemed to have accepted the Premises
        as being in good and sanitary order; condition and repair.

       

      
        	
                 

              	
                8.

              	
                COMPLIANCE
                  WITH
                  LAWS

              


      

       

      Tenant
        shall, at his sole cost and expense, comply with all of the requirements
        of all
        municipal, state and federal authorities now in force or which may hereafter
        be
        in force pertaining to the use of the Premises, and shall faithfully observe
        in
        said use all municipal ordinances and State and Federal statutes now in force
        or
        which shall hereinafter be in force. The judgment of any court of competent
        jurisdiction, the ruling of any administrative proceeding, or the admission
        of
        Tenant, in any action, or proceeding against Tenant, whether Landlord be
        a party
        thereto or not, that Tenant has violated any such regulation, order or statute
        in said use, shall be conclusive of that fact as between the Landlord and
        Tenant. It is agreed and understood by and between Landlord and Tenant that,
        in
        order to conduct the business proposed for the Premises, the State of California
        shall issue and be responsible for renewing a license to allow Tenant to
        conduct
        a residential care facility for the elderly. In the event of the cancellation
        or
        rescinding of said license, Tenant agrees that this action shall constitute
        a
        material default under this Lease.

      
 

      
        	
                 

              	
                9.

              	
                INDEMNIFICATION
                  OF
                  LANDLORD

              


      

       

      Tenant,
        as a material part of the consideration to be rendered to Landlord under
        this
        Lease, hereby waives and releases all claims against Landlord for damage
        to
        personal property in, upon or about the Premises and for injuries to any
        and all
        persons in or about the Premises, from any cause arising at any
        time.

       

      Tenant
        hereby agrees to indemnify and hold harmless Landlord and its partners, agents,
        successors, heirs and assigns from and against any and all damage or injury
        to
        any person; or personal property of any person, arising from the use of the
        Premises by Tenant, or from the failure of Tenant to keep the Premises in
        good
        condition and repair as herein provided.

       

      Except
        as
        provided in Sections 10.3 and 10.4 below, Tenant furthermore agrees to indemnify
        and hold harmless Landlord and its partners, agents, successors, heirs and
        assigns from and against any and all from and against any and all loss, damages,
        claims, causes of action and/or awards incurred, directly or indirectly,
        by
        reason of any damage to the Premises, any personal property thereon or any
        person during the Term for any reason, other than the intentionally tortious
        conduct of Landlord.


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      
        	
                 

              	
                10.

              	
                INSURANCE

              


      

       

      10.1
        During the entire Term, the Tenant shall, at its sole cost and expense, but
        for
        the mutual benefit of Landlord and Tenant, maintain general public liability
        insurance against claims for personal injury, death or property damage occurring
        in, upon or about
        the Premises and on any sidewalks directly adjacent to the Premises. The
        limitation of liability of such insurance shall be not less than One Million
        Dollars
        ($1,000,000) in respect to injury or death of one person and to the limit
        of not
        less than Two Million Dollars ($2,000,000.00) in respect to any one accident
        and
        to the limit of not less than Five Hundred Thousand Dollars ($500,000.00)
        in
        respect to property damage. All such policies of insurance shall be issued
        in
        the name of Tenant and Landlord and for the mutual and joint benefit and
        protection of the parties, and such policies of insurance or copies thereof
        shall be delivered to the Landlord. Each insurance policy shall provide that
        such policy cannot be canceled, modified or reduced in scope without thirty
        (30)
        days' prior written notice to Landlord and to any superior lessor, mortgagee
        or
        trust deed holder of whom the insurer has been notified in writing.

       

      10.2
        During the entire term, Tenant shall, at its cost and expense, maintain fire
        and
        extended coverage insurance throughout the Term of this Lease in an amount
        equal
        to the replacement value of the Premises (exclusive of foundation and excavation
        costs) of the building and improvements hereby demised, as determined by
        Landlord in its sole discretion. The proceeds of said policy shall be payable
        to
        Landlord and Tenant as their respective interests may appear. Tenant agrees
        that
        upon Landlord's request, it will procure a mortgagee's loss payable endorsement
        to said policy, provided that any policy proceeds paid to such mortgagee
        shall
        be available for reconstruction in accordance with the terms of this Lease.
        It
        is further understood and agreed that Tenant hereby waives any right of recovery
        from Landlord, its officers or employees for any loss or damage (including
        consequential loss) resulting from any of the perils insured against in the
        standard form fire insurance policy with extended coverage
        endorsement.

       

      10.3
        In
        the event that the Premises are damaged or destroyed by fire or other casualty,
        but the Premises not thereby rendered untenantable in whole or in part, Landlord
        shall cause such damage or destruction to be repaired at its own cost and
        expense (in excess of any insurance proceeds paid pursuant to such damage
        or
        destruction), and the monthly rent provided herein shall not be abated during
        the repair period as to any portion of the Premises. The cost of any repairs
        required as the result of the negligence of Tenant shall be paid by
        Tenant.

       

      10.4
        In
        the event that the Premises are damaged or destroyed by fire or other casualty,
        and the Premises shall be rendered untenantable either in whole or in part,
        Landlord shall have the option to repair the damage and destruction at its
        cost
        and expense (in excess of any insurance proceeds thereof), in which case
        the
        monthly rent provided hereunder shall not be abated during the repair period
        as
        to any portion of the Premises, including, without limitation, the portion
        rendered untenantable. Landlord may, however, in the event of any damage
        or
        destruction, and at Landlord's election, terminate this Lease by giving Tenant
        written notice of Landlord's election within sixty (60) days following the
        date
        of such damage or destruction, and in such event this
        Lease
        shall terminate on the date of such notice and rent shall be prorated as
        of the
        date of expiration of coverage under the business interruption insurance
        in
        place. The cost of any repairs required as result of the negligence of Tenant
        shall be paid by Tenant. To the extent applicable, Tenant hereby waives any
        provisions of the California Civil Code with respect to any damage to, or
        destruction of, the Premises or the building in which the Premises are located,
        the rights of Tenant in the case of any such case of any such damage or
        destruction being governed by the provisions of this Lease.


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      10.5
        During the entire Term, Tenant, at its sole cost and expense, shall maintain
        business interruption insurance or loss of income insurance for a coverage
        period satisfactory to Landlord, but not less than six (6) months. Landlord
        shall be named in such policy as the irrevocable
        assignee of all proceeds of such policy.

       

      


      
        	
                 

              	
                11.

              	
                ASSIGNMENT
                  AND
                  SUBLETTING

              


      

       

      Tenant
        shall not assign this Lease, or any interest therein, and shall not sublet
        the
        Premises, or any part thereof, or any right or privilege appurtenant thereto,
        or
        permit any other person (the agents and servants of Tenant excepted) to occupy
        or use the Premises, or any portion thereof, without first obtaining the
        written
        consent of Landlord, which consent may be withheld in the sole discretion
        of
        Landlord. Consent by Landlord to one assignment, subletting, occupation or
        use
        by another person shall not be deemed to be a consent to any subsequent
        assignment, subletting, occupation or use by another person. Consent to an
        assignment, subletting, occupation or use by another person
        shall
        not release the original named Tenant from liability for the continued
        performance of the terms and provisions on the part of Tenant to be kept
        and
        performed, unless Landlord specifically and in writing releases the original
        named Tenant from said liability. Any assignment or subletting without the
        prior
        written consent of Landlord shall be void and shall, at option of Landlord,
        terminate this Lease.
Tenant may not assign
        this Lease, or any interest therein, by operation
        of law, without the prior written consent of Landlord, which consent shall
        not
        be unreasonably withheld.

       

      
        	
                 

              	
                12.

              	
                DEFAULT

              


      

       

      In
        the
        event of any breach of this Lease by Tenant, the Landlord shall notify the
        Tenant in writing of such breach, and Tenant shall have ten (10) days in
        which
        to cure any such breach as to payments of rent or other sums due hereunder,
        and
        thirty (30) days to cure any other breach and, if Tenant shall fail to cure
        such
        breach or default within such time limit, then Landlord, besides other rights
        or
        remedies Landlord may have, shall have the immediate right of reentry and
        may
        remove all persons and property from the Premises, and such property may
        be
        removed and stored in a public warehouse or elsewhere at the cost of and
        for the
        account of Tenant. Should Landlord elect to reenter, as herein provided,
        or
        should Landlord take possession pursuant to legal proceedings or pursuant
        to any
        notice provided for by law, Landlord may either terminate this Lease or may
        from
        time to time, without terminating this Lease, relet the Premises, or any
        part
        thereof, for such term or terms and at such rental or rentals and upon such
        other terms and conditions as Landlord in his sole discretion may deem
        advisable, with the right to make alterations and repairs to said premises.
        Upon
        such reletting: (a) Tenant shall be immediately liable to pay to Landlord,
        in
        addition to any indebtedness other than rent due hereunder, the cost and
        expenses of such reletting and of such alteration and repair, incurred by
        Landlord, and-the
        amount, if any,
        by which the rent reserved in this Lease for the period of such reletting
        up to
        but not beyond the Term, exceeds the amount agreed to be paid as rent for
        the
        demised premises for such period of such reletting or (b) At the option of
        Landlord, rents received by such Landlord from such reletting shall be applied
        as follows: First, to the payment of any indebtedness, other than rent, due
        hereunder from Tenant to Landlord; Second, to the payment of any costs and
        expenses of such reletting and of such alterations and repairs; Third, to
        the
        payment of rent due and unpaid hereunder; and the residue, if any, shall
        be held
        by Landlord and applied in payment of future rent as the same may become
        due and
        payable hereunder. If Tenant has been credited with any rent to be received
        by
        such reletting under option (a), and such rent shall not be promptly paid
        to
        Landlord by the new Tenant, or if such
        rentals received from reletting under option (b) during any month be less
        than
        that to be paid during that month by Tenant hereunder, Tenant shall pay any
        such
        deficiency to Landlord. Such deficiency shall be calculated and paid monthly.
        No
        such reentry or taking possession of the Premises by Landlord shall be construed
        as an election on Landlord's part to terminate this Lease unless a written
        notice of such intention be given to Tenant or unless the termination thereof
        be
        decreed by a court of competent jurisdiction. Notwithstanding any re-letting
        without termination, Landlord may at any time thereafter elect to terminate
        this
        Lease for such previous breach.. Should Landlord at any time elect to terminate
        this Lease for any breach, in addition to any other remedies he may have,
        Landlord may recover from Tenant all damages incurred by Landlord by reason
        of
        such breach, including the cost of recovering the premises, and including
        the
        worth at the time of such termination of the excess, if any, of the amount
        of
        rent and charges equivalent to rent reserved in this Lease for the remainder
        of
        the stated term of this Lease over the then reasonable rental value of the
        premises for the remainder of the stated term, all of which amounts shall
        be
        immediately due and payable from Tenant to Landlord.


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      In
        addition to all other rights created herein upon any default under this Lease
        by
        Tenant, it is expressly agreed that:(a) a default under this Lease shall
        also
        constitute a default under all of the Other Leases (as defined below) entered
        into between Landlord and its related affiliates, on one hand, and Tenant,
        on
        the other hand, shall constitute a default in each and all of the Other Leases
        and allow Landlord to exercise all remedies provided in each of the Other
        Leases, and (b) a default under any or all of the Other Leases shall constitute
        a default under this Lease and shall allow Landlord to exercise all remedies
        provided for Tenant's default under this Lease. The "Other Leases" shall
        mean
        and refer to the following: (i) the Amended and Restated • Lease Agreement,
        dated November 1, 1994, between Northridge Royale and Tenant for the premises
        at
        17300 Roscoe Boulevard, Northridge, California; (ii) the Amended and Restated
        Lease Agreement, dated November 1, 1994, between Channel Islands Royale and
        Tenant for the premises at 1020 Bismark Way, Oxnard, California; (iii) the
        Amended and Restated Lease Agreement, dated November 1, 1994, between Alhambra
        Royale and Tenant for the premises at 1 East Commonwealth, Alhambra, California;
        and (iv) the Amended and Restated Lease Agreement dated November 1, 1994,
        between Chatsworth Royale and Tenant for the premises at 20801 Devonshire
        Street, Chatsworth, California.

       

      
        	
                 

              	
                13.

              	
                FREE
                  FROM
                  LIENS

              


      

       

      Tenant
        shall keep the Premises free from any liens arising out of any work performed,
        material furnished, or obligation incurred by Tenant.

       

      
        	
                 

              	
                14.

              	
                ABANDONMENT

              


      

       

      Tenant
        shall not vacate or abandon the Premises at any time during the Term; and
        if
        Tenant shall abandon, vacate or surrender the Premises or be dispossessed
        by
        process of law, or otherwise, any personal property belonging to Tenant and
        left
        on the Premises shall be deemed to be abandoned, at the option of Landlord,
        except such property as may be mortgaged to Landlord.


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      
        	
                 

              	
                15.

              	
                SIGNS;
                  AUCTIONS

              


      

       

      The
        Tenant may affix and maintain upon the exterior (including those parts of
        the
        interior visible from the exterior) of the building only such signs,
        advertising, placards, names, insignia, trademarks and descriptive material
        as
        shall have first received the written approval of the Landlord as to size,
        type,
        color, location, copy, nature and display qualities and which are in conformity
        with municipal ordinances. Anything to the contrary, in this Lease
        notwithstanding, Tenant shall not affix any sign to the roof of the
        building.

       

      Tenant
        shall not conduct or permit to be conducted in, from or upon the Premises
        any
        sale by auction, whether such auction be voluntary, involuntary, pursuant
        to any
        assignment for the payment of creditors or pursuant to any bankruptcy or
        other
        insolvency proceeding.

       

      
        	
                 

              	
                16.

              	
                UTILITIES

              


      

       

      Tenant
        shall pay before delinquency all charges for water, gas, heat, electricity,
        power, telephone service, trash collection and all other services and utilities
        used in, upon or about the Premises by Tenant during the Term. Landlord shall
        not be liable for any interruption in the provision of any such utility services
        to the Premises.

       

      


      
        	
                 

              	
                17.

              	
                ENTRY
                  AND
                  INSPECTION

              


      

       

      Tenant
        shall permit Landlord and his agents to enter into and upon the Premises
        at all
        reasonable times for the purpose of inspecting the same or for the purpose
        of
        performing any right of Landlord hereunder, or for the purpose of posting
        notices of non-liability for alterations, additions or repairs, or for the
        purpose of placing upon the Premises any usual or ordinary "For Sale" signs.
        Landlord shall be permitted to do any of the above without any rebate of
        rent
        and without any liability to Tenant for any loss of occupation or quiet
        enjoyment of the Premises thereby occasioned. Tenant shall permit Landlord,
        at
        any time within six (6) months prior to the expiration of this Lease, to
        place
        upon the Premises any usual or ordinary "For Lease" signs and during such
        six
        (6) month period, Landlord or his agents may, during normal .business hours,
        enter upon the Premises and exhibit same to prospective tenants.

       

      
        	
                 

              	
                18.

              	
                INSOLVENCY
                  OF
                  TENANT

              


      

       

      Tenant
        agrees that, in the event all or substantially all of its assets be placed
        in
        the hands of a receiver or trustee, and in the event such receivership or
        trusteeship continues for a period of ten (10) days, or should Tenant make
        an
        assignment for the benefit of creditors, or be adjudicated as bankrupt, or
        should Tenant institute any proceedings under any state or federal bankruptcy
        act wherein Tenant seeks to be adjudicated as bankrupt, or seeks to be
        discharged of its debts, or should any involuntary proceedings be filed against
        such Tenant under such bankrupt laws and Tenant consents thereto or acquiesces
        therein by pleading or default, then this Lease or any interest in and to
        the
        Premises shall not become an asset in any of such proceedings and in any
        of such
        events, and in addition to any and all rights or remedies of Landlord hereunder
        or as provided by law, it shall be lawful for Landlord at his option to declare
        the Term ended and to reenter the Premises and take possession thereof and
        remove all persons therefrom and Tenant shall have no further claim therein
        or
        hereunder.


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      
        	
                 

              	
                19.

              	
                SURRENDER
                  OF
                  LEASE

              


      

       

      The
        voluntary or other surrender of this Lease by Tenant, or a mutual cancellation
        thereof, shall not work a merger, and shall, at the option of Landlord,
        terminate all or any existing sub-leases or sub-tenancies or may, at the
        option
        of Landlord, operate as an assignment to him of any or all of such sub-leases
        or
        sub-tenancies.

      


      
        	
                 

              	
                20.

              	
                HOLDING
                  OVER

              


      

       

      This
        Lease shall terminate at the end of the Term, provided it has not either
        been
        earlier terminated as contemplated in this. Upon termination
        of
        this Lease, whether by lapse of time, cancellation, forfeiture, or otherwise,
        Tenant shall immediately surrender possession of the Premises and all buildings
        and improvements within which the same are located to Landlord in good and
        tenantable repair, reasonable wear and tear excepted. Tenant shall fully
        cooperate with Landlord in turning the Premises over to Landlord so as to
        assure
        to uninterrupted care to all residents of the Premises.

       

      
        	
                 

              	
                21.

              	
                PRESERVATION
                  OF
                  RESIDENTS' RECORDS

              


      

       

      Tenant
        shall preserve all resident records as required by applicable law and deliver
        them to Landlord on expiration, or sooner termination, of this
        Lease.

      


      
        	
                 

              	
                22.

              	
                RESIDENT
                  CARE;
                  CENSUS

              


      

       

      Tenant
        shall take all steps appropriate to maintain a high level of quality resident
        care, and to promote and maintain a high resident census at the Premises
        consistent with law and ethical standards governing the operation of residential
        care facilities for the elderly.

       

      
        	
                 

              	
                23.

              	
                FINANCIAL
                  STATEMENT

              


      

       

      Landlord
        and Tenant agree that, upon request by Landlord, Tenant will provide to
        Landlord, within ten (10) days of Landlord's request, a copy of the current
        financial statement for the Premises (which shall include a current profit
        and
        loss statement and balance sheet).

       

      
        	
                 

              	
                24.

              	
                ATTORNEYS'
                  FEES

              


      

       

      In
        the
        event the Landlord finds it necessary to retain an attorney in connection
        with
        the default by the Tenant in any of the agreements or covenants contained
        in
        this Lease, Tenant shall pay reasonable attorneys' fees and costs incurred
        by
        said attorney.

       

      In
        the
        event of any litigation regarding this Lease, the prevailing party shall
        be
        entitled to recovery of expenses of litigation, including, without limitation,
        attorneys' fees, travel expenses, trial and appellate court costs and deposition
        and trial transcript expenses.


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      
        	
                 

              	
                25.

              	
                NOTICES

              


      

       

      Wherever
        in this Lease it shall be required or permitted that notice and demand be
        given
        or served by either party to this Lease to or on the other, such notice or
        demand shall be given or served and shall not be deemed to have been duly
        given
        or served unless in writing and forwarded by registered or express mail,
        return
        receipt requested, addressed as follows:

       

      


      
        	
                TO
                  LANDLORD

              	
                TO
                  TENANT

              
	 	 
	
                Clairemont
                  Royale

              	
                Pacifica
                  Manor, Inc.

              
	
                5150
                  Overland Avenue

              	
                11141
                  West Washington Boulevard

              
	
                Culver
                  City, California 90230

              	
                Culver
                  City, California 90232

              
	
                Attention:
                  Warren Breslow

              	
                Attention:

              	
                Jerry
                  Agam

              
	 	 	
                President

              


      

       

       

      Either
        party may change such address by written notice by registered mail to the
        other.

      


      
        	
                 

              	
                26.

              	
                SUCCESSORS
                  IN
                  INTEREST

              


      

       

      The
        covenants herein contained shall, subject to the provisions as to assignment,
        apply to and bind the heirs, successors, executors, administrators and assigns
        of all the parties hereto.

       

      
        	
                 

              	
                27.

              	
                FORCE
                  MAJEURE

              


      

       

      If
        either
        party hereto shall be delayed or prevented from the performance of any act
        required hereunder by reason of acts of God, strikes, lockouts, labor troubles,
        inability to procure materials, restrictive governmental laws or regulations
        or
        other cause without fault and beyond the control of the party obligated
        (financial inability excepted), performance of such act shall be excused
        for the
        period of the delay and the period of such delay; provided, however, nothing
        in
        this Section contained shall excuse Tenant from the prompt payment of any
        rental
        or other charge required of Tenant hereunder except as may be expressly provided
        elsewhere in this Lease.

       

      
        	
                 

              	
                28.

              	
                PARTIAL
                  INVALIDITY

              


      

       

      If
        any
        term, covenant, condition or provision of this Lease is held by a court
        of
        competent jurisdiction to be invalid, void or unenforceable, the remainder
        of
        the provisions hereof shall remain in full force and effect and shall in
        no way
        be affected, impaired or invalidated thereof.

       

      
        	
                 

              	
                29.

              	
                MARGINAL
                  CAPTIONS

              


      

       

      The
        various headings and numbers herein and the grouping of the provisions of
        this
        Lease into separate Sections and Paragraphs are for the purpose of convenience
        only shall not be considered a part hereof.


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      
        	
                 

              	
                30.

              	
                TIME

              


      

       

      Time
        is of the essence
        in the performance and interpretation of this Lease.

      


      
        	
                 

              	
                31.

              	
                SUBORDINATION,
                  ATTORNMENT

              


      

       

      This
        Lease and all rights of Tenant herein shall be subordinate to the lien of
        any
        mortgage, or deed of trust, to any bank, insurance company or other lending
        institution, now or hereafter in force against the land and building of which
        the Premises are a part, and upon any buildings hereafter placed upon the
        land
        of which the Premises are a part, and to all advances made or hereafter to
        be
        made upon the security thereof. Tenant agrees to execute any writing required
        by
        Landlord or its lender(s) to evidence such subordination.

       

       In
        the event any proceedings are brought for foreclosure, or in the event of
        .the
        exercise of the power of sale under any mortgage or deed of trust made by
        the
        Landlord covering the Premises, Tenant shall attorn to the purchaser upon
        any
        such foreclosure or sale and recognize such purchaser as the Landlord under
        this
        Lease. The provisions of this Section to the contrary notwithstanding and
        so
        long as Tenant is not in default hereunder, this Lease shall remain in full
        force and effect for the full Term.

       

       Within
        ten (10) days after request therefor by Landlord, or in the event that upon
        any
        sale, assignment or hypothecation of the Premises or the land thereunder
        by the
        Landlord, an offset statement shall be required from Tenant, Tenant agrees
        to
        deliver in recordable form a certificate addressed to any such proposed
        mortgagee or purchaser or to the Landlord certifying that this Lease is in
        full
        force and effect (if such be the case) and that there are no differences
        or
        offsets thereto or stating those claimed by Tenant.

      


      
        	
                 

              	
                32.

              	
                BROKERAGE

              


      

       

      Tenant
        shall be responsible for all brokerage fees, if any, resulting from this
        Lease,
        and Tenant agrees to indemnify and hold harmless Landlord from and against
        all
        such fees and costs.

      


      
        	
                 

              	
                33.

              	
                WARRANTIES

              


      

       

      LANDLORD
        HAS MADE NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, NOR DOES LANDLORD
        MAKE ANY HEREIN REGARDING THE CONDITION OF THE PREMISES OR ANY PART THEREOF,
        INCLUDING, WITHOUT LIMITATION, THE PREMISES' FITNESS FOR ANY PARTICULAR USE
        OR
        OCCUPANCY. LANDLORD FURTHER HEREBY SPECIFICALLY DISCLAIMS ANY REPRESENTATIONS
        AND/OR WARRANTIES, BOTH EXPRESS AND IMPLIED IN LAW, WITH RESPECT TO THE
        CONDITION, HABITABILITY, OR SUITABILITY OF THE PREMISES, OR ANY PART THEREOF,
        FOR THE USE AND PURPOSES PERMITTED HEREUNDER OR ANY OTHER PURPOSE, AND LANDLORD
        DOES NOT REPRESENT OR WARRANT THAT THE PREMISES OR ANY PART THEREOF COMPLIES
        WITH ANY LAWS RELATING TO THE USES AND OCCUPANCY THEREOF. TENANT FULLY
        UNDERSTANDS THAT THERE MAY BE CERTAIN REPAIRS AND ALTERATIONS REQUIRED FOR
        THE
        CONTINUED LICENSING AND/OR CERTIFICATION OF THE PREMISES, AND TENANT SHALL
        BE
        FULLY RESPONSIBLE FOR THE COST OF AND FOR EFFECTUATING ANY AND ALL ALTERATIONS,
        REPAIRS AND REPLACEMENTS REQUIRED TO BE MADE FOR THE CONTINUED LICENSING
        AND
        CERTIFICATION OF THE PREMISES, AS WELL AS ALL ALTERATIONS AND REPLACEMENTS
        REQUIRED TO MAINTAIN AND PRESERVE THE PREMISES IN THE CONDITION CALLED FOR
        HEREIN. THE PARTIES HEREBY ACKNOWLEDGE THAT LANDLORD IS NOT RESPONSIBLE FOR,
        AND
        TENANT SHALL HOLD LANDLORD HARMLESS IN CONNECTION WITH, ANY SUCH REPAIRS,
        REPLACEMENTS, AND ALTERATIONS TO THE PREMISES FOR ANY REASON
        WHATSOEVER.

       

      Initials
        of Tenant /s/ JA


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      
        	
                 

              	
                34.

              	
                RIGHT
                  OF FIRST
                  REFUSAL,

              


      

       

      In
        consideration of this Lease, Paragraph 2 of the Amendment to the Prior Lease,
        entitled "Option to Purchase," is hereby expressly deleted and terminated
        upon
        the execution of this Lease; and, as a part thereof, Tenant waives and
        relinquishes all rights and/or interest in the Premises created thereby.
        In
        place thereof, Landlord hereby grants to Tenant a right of first refusal
        as set
        forth in Subsection 34.1 immediately below.

       

      34.1
        During the Term of this Lease, in the event that Landlord shall decide to
        sell
        the Premises, Tenant shall have a right of first refusal to match the terms
        of
        any offer of a third party to purchase the Premises from Landlord, on the
        following terms and conditions:

       

      
        	
                 

              	
                (a)

              	
                Landlord
                  shall deliver to Tenant a copy of a legitimate -written offer of
                  a third
                  party (the"Offer") to whom the Landlord proposes to sell the Demised
                  Premises; which Offer shall contain all basic deal points of such
                  Offer;

              


      

       

      
        	
                 

              	
                (b)

              	
                Tenant
                  shall have fifteen (15) calendar days after its receipt of the
                  Offer
                  within which to exercise
                  its right of first refusal; and shall exercise such right
                  by
                  delivery to the Landlord of a written notice of intent to exercise
                  such
                  right.

              


      

       

      
        	
                 

              	
                (c)

              	
                If
                  Tenant exercises its right to purchase the Premises, it shall be
                  upon the
                  same terms, conditions and timing as set forth in the Offer;
                  and

              


      

       

      
        	
                 

              	
                (d)

              	
                If
                  Tenant fails to exercise its right of first refusal within the
                  time limit
                  imposed above, Tenant's right of first refusal shall be forever
                  waived and
                  terminated.

              


      

       

      34.2
        The
        parties acknowledge that, as part of the Prior Lease (as provided in Sections
        21
        and 29 of the Prior Lease),
Tenant paid to Landlord
        a refundable "Option Payment" equal to Two
        Hundred Fourteen Thousand Dollars ($214,000.00). In light of the termination
        of
        the "Option to Purchase," as provided in Section 34 of this Lease, the parties
        hereby agree to reallocate the Option Payment, as follows:


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (a)                 A
        portion of the Option Payment equal to One Hundred Seven Thousand Dollars
        ($107,000.00) shall be deemed the Option Payment for the "Option to Purchase,"
        for the term from the date of execution of the Prior Lease through October
        31,
        1994. This portion shall be deemed fully earned by Landlord, and shall not
        be
        subject to any refund, credit or offset.

       

      (b)                 The
        remaining portion of the Option Payment, in the amount of One Hundred Seven
        Thousand Dollars ($107,000.00), effective upon the commencement of the Term
        of
        this Lease, shall be deemed to be a refundable security deposit (the "Security
        Deposit") under this Lease, and not prepaid rent. Landlord shall not be required
        to keep the Security Deposit separate from Landlord's other accounts and
        no
        trust relationship is created with respect to the Security Deposit. In no
        event
        shall the Security Deposit be in lieu of, constitute, or excuse Tenant from
        paying any portion of the monthly rent, additional rent, or of any other
        sums
        payable by Tenant under this Lease, at any time during the Term of this Lease.
        The application of the Security Deposit by Landlord shall in no way be a
        bar or
        defense to any action in unlawful detainer
        for
        the recovery of the Premises or any other action which Landlord may at any
        time
        institute for the breach of this Lease. No interest shall accrue or be payable
        by Landlord on the Security Deposit. Landlord may, at Landlord's option,
        apply
        all or any part of the Security Deposit to any unpaid monthly rent, additional
        rent, or any other sums due from Tenant under this Lease, or to cure any
        other
        defaults of Tenant hereunder. Upon expiration of the Term of this Lease,
        and
        provided Tenant is not then in default under this Lease, or no event has
        occurred which Could give rise to a default with the giving of notice and/or
        the
        passage of time, Landlord shall return that portion of the Security Deposit
        to
        Tenant which has not been so applied by Landlord. Should all or any portion
        of
        the Security Deposit be applied by Landlord, pursuant to this Section 34.2,
        Tenant shall, upon 'the written demand of Landlord promptly remit to Landlord
        a
        sufficient amount of cash to replenish the Security Deposit to the amount
        of the
        Security Deposit immediately prior to such application, and Tenant's failure
        to
        do so within five (5) days after receipt of such demand shall constitute
        a
        further material default and breach under this Lease.

       

      (c)                 As
        a further part here of Tenant acknowledges, that security deposits have been
        delivered by Tenant pursuant to each of the Other Leases (as defined in Section
        12 of this Lease), in addition of the Security Deposit herein. In the event
        that
        the Security Deposit herein has been depleted, then Landlord shall be expressly
        permitted and authorized, but not obligated, to apply funds from the security
        deposits of any or all of the Other Leases to replenish the Security Deposit
        under this Lease. Such application of security deposits from any of the Other
        Leases shall in no manner limit or waive Tenant's obligation under this Lease
        to
        replenish the Security Deposit herein, and likewise shall further require
        Tenant
        to immediately replenish the security deposit(s) applied from any of the
        Other
        Leases. Upon the expiration of this Lease, if any of the security deposit(s)
        provided for in the Other Leases are subject to the replenishment as provided
        in
        this Section 34 or said Other Lease, and further provided that Tenant would
        otherwise be entitled to the return of all or a portion of the Security Deposit,
        the Security Deposit herein shall be transferred to the Other Leases in the
        amount(s) necessary to replenish said security deposit(s), and only the balance
        of the Security Deposit after such transfer, if any, shall be returned to
        Tenant. Likewise, if one or more of the Other Leases shall expire, and the
        Security Deposit herein shall be subject to replenishment as provided above,
        any
        portion of the security deposit(s) for such Other Leases shall be transferred
        to
        the Security Deposit herein to replenish same, and only the balance thereof,
        if
        any, shall be returned to Tenant. Tenant expressly agrees and acknowledges
        that
        any transfer of funds between the Security Deposit and the security deposit(s)
        of any or all of the Other Leases pursuant to the provisions of this Section
        34.2 (c) shall be deemed a good faith retention of such funds by Landlord.
        Tenant further acknowledges and agrees to waive any and all of the provisions
        of
        California Civil Code Section 1950.7, or successor provision, which shall
        in any
        manner conflict with this Section 34.2(c).


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      
        	
                 

              	
                35.

              	
                NOVATION

              


      

       

      It
        is the
        intent of the parties hereto that a novation of the Prior Lease occur upon
        execution of this Lease, and that the Prior Lease shall be extinguished hereby,
        effective November 1, 1994.


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      
        IN
          WITNESS WHEREOF, the parties have duly executed this Lease as of the day
          and
          year first above written.

      

      
        


      

      
        


      

      
        	
                “LANDLORD”

              	 	
                “TENANT”

              
	 	 	 	 	 
	
                CLAIREMONT
                  ROYALE, a California limited partnership

              	 	 	 
	 	 	 	
                /s/
                  Jerry Agam

              
	 	 	 	
                 Jerry
                  Agam, an individual

              
	 	 	 	 	 
	
                By:

              	
                /s/  Warren
                  Breslow

              	 	
                PACIFICA
                  MANOR, INC., A California corporation

              
	 	
                Warren
                  Breslow, as Trustee

              	 	 	 
	 	
                of
                  The Warren L. Breslow

              	 	 	 
	 	
                Trust,
                  a General Partner

              	 	 	 
	 	 	 	 	 
	 	 	 	
                By:

              	
                /s/
                  Jerry Agam

              
	 	 	 	 	
                Jerry
                  Agam, President