Exhibit 10.8


     

    
      	
              Exhibit
                10.8 

            


    

    
      FIRST
        AMENDMENT
        TO LEASE AGREEMENT

       

      THIS
        FIRST AMENDMENT TO LEASE AGREEMENT
        (“Amendment”)
        is
        entered into as of June 29, 2005 (“Effective
        Date”),
        by
        and between CNL
        RETIREMENT DSL1 ALABAMA, LP,
        a
        Delaware limited partnership (“Landlord”)
        and
ALABAMA
        SOMERBY, LLC,
        a
        Delaware limited liability company (“Tenant”).

       

      W
        I T N E S S E T H
        :

       

      WHEREAS,
        Landlord, as landlord, and Tenant, as tenant, entered in to that certain
        Lease
        Agreement dated August 25, 2003 (the “Lease”),
        whereby Landlord leased to Tenant certain real property and improvements
        commonly known as “University Park” and located in Jefferson County, Alabama, as
        more particularly described in Exhibit “A” of the Lease (the “Property”);
        and


       

      WHEREAS,
        Landlord, Tenant and certain of their affiliates also entered into an Earn
        Out
        Agreement dated as of August 25, 2003 (the “Earn
        Out Agreement”);
        and

       

      WHEREAS,
        the Earn
        Out Agreement entitles Daniel Senior Living, L.L.C. (“Daniel”)
        and
        American Retirement Corporation (“ARC”
        and,
        together with Daniel, the “Beneficiaries”)
        to
        receive additional funds from Landlord upon the meeting of certain conditions,
        which have been met; and

       

      WHEREAS,
        simultaneously with the execution hereof, Landlord is making a payment to
        the
        Beneficiaries as required under the Earn Out Agreement; and

       

      WHEREAS,
        pursuant to paragraph 4(b) of the Earn Out Agreement, upon such payment to
        the
        Beneficiaries, Landlord and Tenant are to amend the Lease to provide for
        an
        additional rental payment reimbursing Landlord for amounts advanced under
        the
        Earn Out Agreement.

       

      NOW,
        THEREFORE,
        in
        consideration of the mutual covenants herein contained and other good and
        valuable consideration, the mutual receipt and legal sufficiency of which
        are
        hereby acknowledged, Landlord and Tenant hereby agree as follows:

       

      1.  Recitals.
        The
        above recitals are true and correct and their terms and provisions are
        incorporated herein for all purposes.

       

      2.  The
        following definitions are hereby added to the Lease:

       

      “First
        Earn Out Payment Rent”
        shall
        mean an amount equal to Two Hundred Sixty-Two Thousand One Hundred Eighty-Nine
        and 08/100 Dollars ($262,198.08) per year, payable in monthly installments
        pursuant to Section 3.13.

       

      3.  Landlord’s
        Adjusted Investment Amount.
        For
        purposes of determining the amount of Landlord’s Adjusted Investment Amount, as
        defined in the Lease, Three Million Five Hundred Thousand and No/100 Dollars
        ($3,500,000.00) of the amount funded as of the Effective Date pursuant to
        the
        Earn Out Agreement is hereby allocated to the Property.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      4.  The
        following provision shall be added to the Lease as Section 3.13:

       

      First
        Earn Out Rent After First Earn Out Payment.
        Upon
        the funding of the First Earn Out Payment (as defined in the Earn Out Agreement)
        and continuing through the end of the ninth Accounting Year of the Initial
        Term
        (but not thereafter), First Earn Out Payment Rent shall be due at the same
        time
        and under the same terms as Minimum Rent is due under the Lease (except as
        otherwise expressly provided herein).

       

      5.  The
        following provision shall be added to the Lease as Section 3.14:

       

      Escalation
        of First Earn Out Payment Rent.
        Commencing on the first day of the Fourth Accounting Year and on the first
        day
        of each Accounting Year thereafter (through and including the first day of
        the
        ninth Accounting Year, but not thereafter), First Earn Out Payment Rent shall
        escalate at a rate of two and one half percent (2.5%) per annum.

       

      6.  The
        following provision shall be added to the Lease as Section 3.15: 

       

      Imputed
        Interest.
        In the
        event that any payments of First Earn Out Payment Rent hereunder include
        or are
        deemed to include any unstated or imputed interest, the rate for determining
        the
        amount of such payments that will constitute such unstated or imputed interest
        will be the "short-term federal rate" (as such term is defined in Section
        1274(d) of the Code and the regulations, rulings and pronouncements promulgated
        thereunder) as of the date hereof which the parties hereto acknowledge is
        (1.21%), and the parties hereto shall prepare and file all tax returns to
        be
        filed with any taxing authority in a manner consistent with the foregoing
        and
        shall take no position inconsistent therewith in any tax return, in any
        discussion with or proceeding before any taxing authority, or
        otherwise.

       

      7.  Second
        CMC Mortgage Loan.
        The
        definition of “Mortgage” set forth in Section 19.4 of the Lease shall be deemed
        to refer to both the first mortgage loan advanced as of the date of the Lease
        and the second mortgage loan being used to fund the payment being made pursuant
        to the Earn Out Agreement as of the Effective Date and all of the provisions
        of
        Section 19.4 applying to the first mortgage shall also apply to the second
        mortgage.

       

      8.  Property
        Expenses.
        The
        following paragraph is hereby added at the end of Exhibit “H”:

       

      Notwithstanding
        anything contained in the foregoing, in no event shall costs and expenses
        relating to the hiring or termination of any corporate-level personnel of
        the
        Tenant or Manager who are not direct employees of the Facility, including
        but
        not limited to the executive director of the Facility, be paid as a Property
        Expense payable from Total Facility Revenue, but rather shall be a cost borne
        by
        Tenant or Manager independently.

       

      9.  Assignment
        of Daniel interests in
        Tenant to ARC.
        Landlord consents to the assignment by Daniel to ARC of all of its membership
        interests in and to the Tenant.

       

      10.  Full
        Force and Effect.
        Except
        as herein provided, all other terms, conditions and provisions of the Lease
        shall remain in full force and effect and cannot be modified unless said
        modification is reduced to writing and signed by all parties.

       

      
        
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      11.  Successors
        and Assigns.
        This
        Amendment is binding upon and shall inure to the benefit of the parties hereto
        and their respective successors and assigns as may be permitted under the
        Lease.

       

      12.  Counterparts.
        This
        Amendment may be executed in one or more counterparts, any one of which need
        not
        contain the signature of more than one party and all of which taken together
        shall constitute one and the same agreement.

       

      


       

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        ON FOLLOWING PAGE]

       

      
         

        
          
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      IN
        WITNESS WHEREOF,
        the
        parties have executed this Amendment as of the date above first
        written.

       

      


       

      
        	 	
                LANDLORD:

                 

                CNL
                  RETIREMENT DSL1 ALABAMA, LP,
                  

                a
                  Delaware limited
                  partnership

                 

                By:
                  CNL
                  Retirement DSL1 GP, LLC,
                  a

                Delaware
                  limited liability company, 

                its
                  sole general partner

                 

                 

                By:
                  ____________________________

                Name:
                  __________________________

                Title:
                  ___________________________

                 

              


      

      


      
        	 	
                TENANT:

                 

                ALABAMA
                  SOMERBY, LLC, a
                  Delaware limited liability company

                 

                By:
                  ARC Somerby Holdings, Inc., a Tennessee corporation, Managing
                  Member

                 

                By:
                  ____________________________

                Name:
                  __________________________

                Title:
                  ___________________________

                 

              


      

      


       

      
        
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