Exhibit 10.12


    Exhibit
      10.12

    


    THIRD
      AMENDMENT TO

    MASTER
      LEASE AND SECURITY AGREEMENT

    (Pool
      2)

     

    THIS
      THIRD
      AMENDMENT TO MASTER LEASE AND SECURITY AGREEMENT (Pool 2)
      (the
“Amendment”)
      is
      entered into as of June 30, 2005 by and among the entities listed under the
      title “Landlord” on the signature page of this Amendment (collectively,
“Landlord”),
      the
      entities listed under the title “Tenant” on the signature page of this Amendment
      (collectively, “Tenant”),
      and
AMERICAN
      RETIREMENT CORPORATION,
      a
      Tennessee corporation (“Guarantor”).

     

    R
      E C I T A L S

     

    A. Landlord
      and Tenant have entered into that certain Master Lease and Security Agreement
      (Pool 2) dated as of July 9, 2002, as amended by (i) that certain First
      Amendment to Master Lease and Security Agreement (Pool 2) dated to be effective
      as of July 9, 2002, and (ii) that certain Second Amendment to Master Lease
      and
      Security Agreement (Pool 2) dated as of July 1, 2003 (the “Original
      Lease”).
      Initially capitalized terms used but not otherwise defined in this Amendment
      shall have the meanings given to them in the Original Lease. The Original Lease,
      as amended, modified and revised by this Amendment, may be hereinafter referred
      to as the “Master
      Lease”
      herein.

     

    B. Landlord
      or certain Affiliates of Landlord, as landlord (collectively, “Pool
      1 Landlord”),
      and
      Tenant or certain Affiliates of Tenant, as tenant (collectively “Pool
      1 Tenant”),
      have
      entered into that certain Master Lease and Security Agreement (Pool 1) dated
      as
      of July 9, 2002, as amended by (i) that certain First Amendment to Master Lease
      and Security Agreement (Pool 1) dated to be effective as of July 9, 2002, (ii)
      that certain Second Amendment to Master Lease and Security Agreement (Pool
      1)
      dated as of July 1, 2003, (iii) that certain Third Amendment to Master
      Lease and Security Agreement (Pool 1) dated as of July 7, 2004, and (iv) that
      certain Fourth Amendment to Master Lease and Security Agreement (Pool 1) of
      even
      date herewith (the “Pool
      1 Fourth Amendment”)
      (the
“Pool
      1 Lease”).

     

    C. Pursuant
      to that certain Letter of Credit Agreement dated as of July 9, 2002, executed
      by
      Landlord, Pool 1 Landlord, Tenant and Pool 1 Tenant (the “LC
      Agreement”),
      Tenant and Pool 1 Tenant posted with Landlord and Pool 1 Landlord one or more
      letters of credit as partial collateral for the performance of Tenant’s and Pool
      1 Tenant’s obligations under the Original Lease and the Pool 1
      Lease.

     

    D. Pursuant
      to that certain Guaranty of Master Lease and Security Agreement and Letter
      of
      Credit Agreement dated as of July 9, 2002, executed by Guarantor (the
“Guaranty”),
      Guarantor guaranteed to Landlord and to Pool 1 Landlord, respectively, Tenant’s
      obligations under the Original Lease and Pool 1 Tenant’s obligations under the
      Pool 1 Lease.

     

    E. Landlord
      and Tenant desire to amend and modify the Original Lease, as more particularly
      described herein, to address certain matters related to the Pool 1 Fourth
      Amendment.

     

    
      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

    

     

    A
      G R E E M E N T

     

    NOW,
      THEREFORE,
      in
      consideration of the foregoing Recitals, which by this reference are
      incorporated herein, and of other good and valuable consideration, the receipt
      and adequacy of which are hereby acknowledged, Landlord and Tenant agree as
      follows:

     

    1. Amendment
      to Original Lease.
      The
      Original Lease is amended, modified and revised as follows:

     

    (a) Section
      4.10
      of the
      Original Lease is hereby deleted in its entirety and the following substituted
      therefor:

     

    “4.10 Reimbursement
      of Landlord’s Insurance Costs.
      During
      any Lease Year or portion thereof in which Tenant is not in compliance with
      the
      other provisions of this Section 4, Tenant shall reimburse Landlord, within
      ten
      (10) days of Landlord’s demand therefor, for the costs of the premiums of the
      general liability and environmental insurance policies maintained by Landlord,
      or contributions to self-insurance in lieu thereof, in connection with the
      Premises, which amount shall not exceed in any Lease Year the amount of One
      Hundred Thousand Dollars ($100,000) when aggregated with such amounts as may
      be
      due under the Pool 1 Lease and that certain Lease and Security (Heritage Club)
      dated as of July 1, 2003, as amended by that First Amendment to Master Lease
      and
      Security Agreement dated as of July 1, 2005 (the “Heritage Club Lease”), as
      adjusted at the end of each Lease Year for increases in the CPI since July
      1,
      2005. Tenant shall have no right to receive any proceeds or other benefits
      from
      any such insurance. The foregoing shall not in any way imply that Landlord
      shall, or impose any duty on Landlord to: (a) waive any Event of Default that
      may arise as a result of Tenant’s failure to comply with the other provisions of
      this Section 4, or (b) obtain or maintain any such general liability or
      environmental insurance with respect to the Premises.”

     

    (b) The
      following is hereby added to and incorporated into the Original Lease as Section
      5.9 thereof:

     

    
      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

    

    “5.9 Capital
      Improvements.
      Commencing upon the first release of any Security Deposit and Collateral
      pursuant to Section 11.3 (the “CapEx
      Reserve Commencement Date”),
      Tenant, Pool 1 Tenant and “Tenant” (as defined in Heritage Club Lease) shall
      make, in the aggregate, annual expenditures for capital improvements to the
      Facilities, the “Facilities” (as defined in the Pool 1 Lease) and the “Facility”
      (as defined in the Heritage Club Lease) equal to one and three-fourths
      percent (1.75%) of the “Gross Revenues”, as calculated in the aggregate
      under this Lease, the Pool 1 Lease and the Heritage Club Lease (the
“Aggregate
      Gross Revenues”),
      for
      the applicable “Lease Year” under this Lease, the Pool 1 Lease and/or the
      Heritage Club Lease, as applicable, or the applicable portion thereof in the
      case of the first “Lease Year” hereunder or thereunder in which this obligation
      commences (the “Required Tenant
      Capital Expenditures”).
      Concurrently with each quarterly payment of Additional Rent after the CapEx
      Reserve Commencement Date, Tenant shall deliver to Landlord in a form mutually
      agreed upon by Landlord and Tenant, a certificate, certified by an officer
      or
      general partner of Tenant, as applicable, setting forth the actual year-to-date
      expenditures for capital improvements to the Facilities, the “Facilities” (as
      defined in the Pool 1 Lease) and the “Facility” (as defined in the Heritage Club
      Lease) made by Tenant, Pool 1 Tenant and “Tenant” (as defined in Heritage Club
      Lease) as of the end of the applicable quarter. If such actual year-to-date
      expenditures for capital improvements are less than one and three-fourths
      percent (1.75%) of year-to-date Aggregate Gross Revenues for such “Lease
      Year” under this Lease, the Pool 1 Lease and/or the Heritage Club Lease, as
      applicable, or such applicable portion thereof in the case of the first “Lease
      Year” hereunder or thereunder in which this obligation commences, Tenant, Pool 1
      Tenant and “Tenant” (as defined in the Heritage Club Lease) shall, in the
      aggregate, deposit with Landlord, Pool 1 Landlord and the “Landlord” (as defined
      in the Heritage Club Lease) an amount equal to such deficiency, and such funds
      (the “CapEx
      Funds”)
      shall
      be impounded with Landlord, Pool 1 Landlord and the “Landlord” (as defined in
      the Heritage Club Lease), in the aggregate, in accordance with Section 5.10
      of this Lease, the Pool 1 Lease and the Heritage Club Lease. Each and every
      capital improvement funded by Tenant, Pool 1 Tenant and “Tenant” (as defined in
      the Heritage Club Lease) in accordance with this Section 5.9 or with use of
      CapEx Funds, as provided under Section 5.10 of this Lease, the Pool 1 Lease
      and
      the Heritage Club Lease, shall immediately become a part of the Premises, the
      “Premises” (as defined in the Pool 1 Lease) or the “Premises” (as defined in the
      Heritage Club Lease), as the case may be, and shall belong to Landlord, Pool
      1
      Landlord or “Landlord” (as defined in the Heritage Club Lease), as the case may
      be, subject to the terms and conditions of this Lease, the Pool 1 Lease or
      the
      Heritage Club Lease, as applicable. Notwithstanding the foregoing, if, at any
      time after the CapEx Reserve Commencement Date, the Security Deposit and
      Collateral is restored to one hundred percent (100%) of its original requirement
      under this Lease, the Pool 1 Lease and the Heritage Club Lease in accordance
      with the provisions of Section 11.3 under this Lease, the Pool 1 Lease and
      the
      Heritage Club Lease, the obligations under Section 5.9 of this Lease, the Pool
      1
      Lease and the Heritage Club Lease shall be suspended until any Security Deposit
      and Collateral is thereafter released under this Lease, the Pool 1 Lease and/or
      the Heritage Club Lease in accordance with such Section 11.3.”

     

    (c) The
      following is hereby added to and incorporated into the Original Lease as Section
      5.10 thereof:

     

    
      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

    

    “5.10
      CapEx Funds. Any
      CapEx
      Funds shall be held by Landlord, Pool 1 Landlord and “Landlord” (as defined in
      the Heritage Club Lease), and shall be applied for the purposes of making
      capital improvements to the Facilities, the “Facilities” (as defined in the Pool
      1 Lease) and/or the “Facility” (as defined in the Heritage Club Lease) (the
“CapEx
      Reserve”).
      From
      time to time, but not more often than twice in any calendar month and provided
      that no Event of Default is then continuing, Landlord, Pool 1 Landlord and/or
      “Landlord” (as defined in the Heritage Club Lease), as the case may be, will
      disburse to Tenant, Pool 1 Tenant and/or “Tenant” (as defined in the Heritage
      Club Lease) amounts from the CapEx Reserve, subject to the following conditions:
      (A)
      the
      costs incurred by Tenant, the Pool 1 Tenant and/or “Tenant” (as defined in the
      Heritage Club Lease), as the case may be, shall be for the purposes of making
      capital improvements to the Facilities, the “Facilities” (as defined in the Pool
      1 Lease) and/or the “Facility” (as defined in the Heritage Club Lease); and
(B)
      the
      request for disbursement shall be accompanied with such invoices or purchase
      orders evidencing the expenditure by Tenant, Pool 1 Tenant and/or “Tenant” (as
      defined in the Heritage Club Lease), as the case may be, as Landlord, Pool
      1
      Landlord or “Landlord” (as defined in the Heritage Club Lease), as applicable,
      may reasonably require. Landlord, Pool 1 Landlord and/or “Landlord” (as defined
      in the Heritage Club Lease), as the case may be, shall make the reimbursements
      to Tenant, Pool 1 Tenant and “Tenant” (as defined in the Heritage Club Lease),
      as applicable, required hereunder within fourteen (14) days after satisfaction
      of all conditions to such disbursement. Upon reasonable advance request,
      Landlord, Pool 1 Landlord and/or “Landlord” (as defined in the Heritage Club
      Lease), as the case may be, may require Tenant, Pool 1 Tenant and/or “Tenant”
      (as defined in the Heritage Club Lease), as applicable, to procure mechanic’s
      lien waivers, in form and substance reasonably satisfactory to Landlord, Pool
      1
      Landlord and/or “Landlord” (as defined in the Heritage Club Lease), as the case
      may be, (if such waivers are then available in the applicable State in which
      the
      subject “Facility” is located), in connection with any capital improvements in
      excess of One Hundred Thousand Dollars ($100,000). Any amount remaining in
      the
      CapEx Reserve at the expiration of the “Term” (as such term is defined
      hereunder, under the Pool 1 Lease and under the Heritage Club Lease) under
      all
      of this Lease, the Pool 1 Lease and the Heritage Club Lease, and/or the earlier
      termination hereof or thereof shall be retained by Landlord, Pool 1 Landlord
      or
“Landlord” (as defined in the Heritage Club Lease), as the case may be, as
      additional or supplemental “Total Rent” (as such term is defined hereunder,
      under the Pool 1 Lease and under the Heritage Club Lease) hereunder or
      thereunder.”

     

    (d) The
      following is hereby added to and incorporated into the Original Lease as Section
      9.7 thereof:

     

    “9.7 Financial
      Covenants Calculations.
      Within
      forty-five (45) days of the end of each of the first three quarters of the
      fiscal year of Guarantor and Tenant, and within ninety (90) days of the end
      of
      the fiscal year of Guarantor and Tenant, Tenant shall deliver to Landlord the
      calculations of the “Rent Coverage Ratio”, the “Fixed Charge Coverage Ratio” and
“Book Net Worth” (all as defined in Section 11.3), together with all necessary
      support documentation with respect to such calculations as reasonably required
      by Landlord, and accompanied by an Officer’s Certificate (collectively, the
“Financial
      Covenants Calculations”).”

     

    (e) The
      following is hereby added to and incorporated into the Original Lease as
      Section 11.3 thereof:

     

    
      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

    

    “11.3 Security
      Deposit and Collateral Release.
      Provided the threshold Financial Covenants (as hereinafter defined) set forth
      below with respect to a particular Level (i.e., Level 1, Level 2, Level 3 or
      Level 4) have been met, the amount of the original Security Deposit and
      Collateral required hereunder shall be released in twenty-five
      percent (25%) increments, as set forth below, for any fiscal quarter
      in
      which the threshold Financial Covenants pertaining to a particular Level have
      been satisfied; provided however,
      that
      if, at any time after the release of any Security Deposit and Collateral at
      a
      particular Level, the requisite threshold of Financial Covenants pertaining
      to
      such Level is not maintained, as evidenced by the most recent Financial
      Covenants Calculations, then the Security Deposit and Collateral shall be
      restored by Tenant, Pool 1 Tenant and “Tenant” (as defined in the Heritage Club
      Lease), within thirty (30) days of the delivery of the Financial Covenants
      Calculations to Landlord, to the amount that was held by Landlord, Pool 1
      Landlord and “Landlord” (as defined in the Heritage Club Lease) prior to any
      release of the Security Deposit and Collateral in accordance with such Level
      until such future time, if any, that the applicable threshold Financial
      Covenants pertaining to such Level are once again satisfied. The “Financial
      Covenants”
      shall
      mean the satisfaction of all of the following with respect to any particular
      Level release threshold:

     

    
      	
              Level

            	 	
              Threshold
                Rent Coverage Ratio

            	 	
              Threshold
                

              Fixed
                Charge 

              Coverage

              Ratio

            	 	
              Threshold
                

              Book
                Net 

              Worth

            	 	
              %
                of Original 

              Security
                

              Deposit
                and 

              Collateral
                

              required
                

              hereunder
                to 

              be
                released

            
	
              1

              2

              3

              4

            	 	
              1.25x

              1.35x

              1.40x

              1.45x

            	 	
              1.35x

              1.35x

              1.40x

              1.40x

            	 	
              $100
                Million

              $100
                Million

              $100
                Million

              $100
                Million

            	 	
              25%

              50%

              75%

              100%

            


    

    


     

    Upon
      the
      exercise by Tenant of any Renewal Term in accordance with Section 1.2 of this
      Lease, Tenant shall increase the amount of the Security Deposit and Collateral
      to the amount required by Section 1.2.3 of this Lease and such amount shall
      thereafter be deemed to be the “original Security Deposit and Collateral”
      required under the Lease; provided,
      however,
      that
      Landlord shall immediately release to Tenant (or excuse Tenant from depositing
      with Landlord) that portion of the new amount that would have theretofore been
      released if the increased “original Security Deposit and Collateral” amount had
      initially been the “original Security Deposit and Collateral” amount required
      under such Section 1.2.3.

     

    
      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

    

    As
      used
      herein, (i) “Rent
      Coverage Ratio”
      shall
      mean, as of the end of any fiscal quarter of Tenant, Pool 1 Tenant and “Tenant”
      (as defined under the Heritage Club Lease), the ratio of (A) “Portfolio
      EBITDAR-X”
      to (B)
“Portfolio
      Rent Expense”
      with
      use of the following defined terms:

     

    “Portfolio
      EBITDAR-X”
      shall
      be calculated as (a) the trailing six (6)-month Portfolio EBITDARM
minus
      (b) an
      amount equal to six percent (6%) of the trailing six (6)-month
      Portfolio Gross Revenues; 

     

    “Portfolio
      EBITDARM”
      shall
      mean, as of the end of any fiscal quarter, the aggregate net income of Tenant,
      Pool 1 Tenant and “Tenant” (as defined under the Heritage Club Lease) for such
      trailing six (6)-month period to the extent derived from the collective
      operation of the Premises as defined herein, the “Premises” as defined under the
      Pool 1 Lease (the “Pool
      1 Premises”)
      and
      the “Premises” as defined under the Heritage Club Lease (the “Heritage
      Club Premises”),
      adjusted to add thereto, to the extent allocable to the Premises, the Pool
      1
      Premises or the Heritage Club Premises, as applicable, without duplication,
      (a)
      interest expense, (b) income tax expense, (c) depreciation and
      amortization expense, (d) rental expense, and (e) management
      fee
      expenses, in each case determined in accordance with GAAP; 

     

    “Portfolio
      Gross Revenues”
      shall
      mean, as of the end of any fiscal quarter, the aggregate amount of “Gross
      Revenues” as defined herein with respect to the Premises, the “Gross Revenues”
      as defined in the Pool 1 Lease with respect to the Pool 1 Premises and the
      “Gross Revenues”, as such term is defined herein, and calculated with respect to
      the Heritage Club Premises, in each case, for the trailing six (6)-month period;
      

     

    “Portfolio
      Rent Expense”
      shall
      mean, as of the end of any fiscal quarter, the aggregate amount of “Total Rent”
      (as defined herein or therein) payable by Tenant under this Lease, by Pool
      1
      Tenant under the Pool 1 Lease and by “Tenant” (as defined in the Heritage Club
      Lease) under the Heritage Club Lease, in each case, during the trailing six
      (6)-month period. 

     

    (ii)“Fixed
      Charge Coverage Ratio”
      shall
      mean, as of the end of any fiscal quarter of Guarantor, the ratio of (A)
“Portfolio
      EBITDAR”
      to (B)
“Portfolio
      Fixed Charges”
      with
      use of the following defined terms:

     

    “Portfolio
      EBITDAR”
      shall
      mean, as of the end of any fiscal quarter of Guarantor, the aggregate net income
      of Guarantor and its subsidiaries, as determined in accordance with GAAP on
      a
      consolidated basis, during the trailing six (6)-month period, adjusted to add
      thereto, without duplication, (a) interest expense, (b) income tax expense,
      (c)
      depreciation and amortization expense, and (d) rental expense, as determined
      in
      accordance with GAAP on a consolidated basis, during such trailing six (6)-month
      period, and
      as
      further adjusted to add thereto or subtract therefrom (I) any gains or losses
      arising from the sale of assets or (II) any items of income or expense which
      are
      deemed to be “extraordinary” in accordance with GAAP, and any other non-cash,
      non-recurring charges and expenses. As used herein, “non-recurring charges and
      expenses” means expenditures or charges that (i) have not been incurred within
      the prior two years, and (ii) are not reasonably likely to recur within the
      subsequent two year period.

     

    
      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

    

    “Portfolio
      Fixed Charges”
      shall
      mean, as of the end of any fiscal quarter of Guarantor, the sum of (a) all
      net
      lease expenses, (b) all interest expenses (including the interest component
      of
      rentals under capitalized leases), exclusive of prepayment fees or one-time
      loan
      fees or similar expenses, (c) all scheduled principal amortization payments
      under indebtedness or capitalized leases, exclusive of balloon payments due
      on
      maturity or expiration, as applicable, (d) all dividends paid on preferred
      stock, and (e) all mandatory distributions of earnings to shareholders, for
      Guarantor and its subsidiaries, as determined on a consolidated basis in
      accordance with GAAP, during the trailing six (6)-month period.

     

    (iii)
      “Book Net
      Worth”
      shall
      mean, as of the end of any fiscal quarter of Guarantor, as determined on a
      consolidated basis in accordance with GAAP with respect to Guarantor and its
      subsidiaries, (a) the total assets of such parties, minus
      (b) the
      total liabilities of such parties.

     

    2. Reaffirmation
      of Obligations.

     

    (a) Notwithstanding
      the modifications to the Original Lease contained herein, Tenant and Landlord
      each hereby acknowledges and reaffirms its obligations under the Master Lease
      and all other documents executed by such party in connection
      therewith.

     

    (b) Notwithstanding
      the modifications to the Original Lease contained herein, Guarantor hereby
      acknowledges and reaffirms its obligations under the Guaranty and all documents
      executed by Guarantor in connection therewith, and further agrees that any
      reference made in the Guaranty to the Original Lease or any terms or conditions
      contained therein, shall mean such Original Lease or such terms or conditions
      as
      modified by this Amendment.

     

    3. Interpretation;
      Governing Law.
      This
      Amendment shall be construed as a whole and in accordance with its fair meaning.
      Headings are for convenience only and shall not be used in construing meaning.
      This Amendment shall be governed by and construed in accordance with the
      internal laws of the State of California without regard to rules concerning
      the
      choice of law. 

     

    4. Further
      Instruments.
      Each
      party will, whenever and as often as it shall be reasonably requested so to
      do
      by another party, cause to be executed, acknowledged or delivered, any and
      all
      such further instruments and documents as may be necessary or proper, in the
      reasonable opinion of the requesting party, in order to carry out the intent
      and
      purpose of this Amendment.

     

    
      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

    

    5. Incorporation
      of Recitals.
      The
      Recitals to this Amendment are incorporated hereby by reference.

     

    


    6. Counterparts.
      This
      Amendment may be executed in counterparts, all of which executed counterparts
      shall together constitute a single document. Signature pages may be detached
      from the counterparts and attached to a single copy of this document to
      physically form one document.

     

    


    7. Attorneys'
      Fees.
      In
      the
      event of any dispute or litigation concerning the enforcement, validity or
      interpretation of this Amendment, or any part thereof, the losing party shall
      pay all costs, charges, fees and expenses (including reasonable attorneys'
      fees)
      paid or incurred by the prevailing party, regardless of whether any action
      or
      proceeding is initiated relative to such dispute and regardless of whether
      any
      such litigation is prosecuted to judgment.

     

    


    8. Effect
      of Amendment.
      Except
      as
      specifically amended pursuant to the terms of this Amendment, the terms and
      conditions of the Original Lease shall remain unmodified and in full force
      and
      effect. In the event of any inconsistencies between the terms of this Amendment
      and any terms of the Original Lease, the terms of this Amendment shall govern
      and prevail.

     

    9.Costs;
      Expenses.
      All
      costs and expenses incurred by Tenant or Landlord with respect to the
      preparation, negotiation and execution of this Amendment and all other
      documentation related to this Amendment shall be paid by Tenant. To the extent
      Landlord pays any such costs or expenses, Tenant shall reimburse Landlord for
      such costs and expenses immediately upon Landlord’s demand
      therefor.

     

    10.Entire
      Agreement.
      This
      Amendment contains the entire agreement between the parties relating to the
      subject matters contained herein. Any oral representations or statements
      concerning the subject matters herein shall be of no force or
      effect.

     

    [signatures
      on the following pages]

     

     

     

     

     

    


    
      
        
          
             

          

          
          

        

        
          8

          
            

          

        

        
          
          

          
            


          

        

      

    

    



    IN
      WITNESS WHEREOF,
      this
      Amendment has been executed as of the date first above written.

     

     

    
      	 	 

              TENANT:

               

              AMERICAN
                RETIREMENT CORPORATION,

              a
                Tennessee corporation

               

              By:
                ___________________________

              Name:
                _________________________

              Title:
                __________________________

               

              
                ARC
                  NAPLES, LLC,

                a
                  Tennessee limited liability company

                 

              

              
                By:
                  ___________________________

                Name:
                  _________________________

                Title:
                  __________________________

                 

                
                  ARC
                    AURORA, LLC,

                  
                    a
                      Tennessee limited liability company

                  

                   

                

                
                  By:
                    ___________________________

                  Name:
                    _________________________

                  Title:
                    __________________________

                   

                  
                    ARC
                      LAKEWOOD, LLC,

                    a
                      Tennessee limited liability company

                     

                  

                  
                    By:
                      ___________________________

                    Name:
                      _________________________

                    Title:
                      __________________________

                     

                    
                      ARC
                        COUNTRYSIDE, LLC,

                      a
                        Tennessee limited liability company

                       

                    

                    
                      By:
                        ___________________________

                      Name:
                        _________________________

                      Title:
                        __________________________

                    

                  

                

              

            


    

     

     

     

     

    
      
        
        

      

      
        S-1

        
          

        

      

      
        
        

      

    

     

     

    
      	 	 

              ARC
                CLEVELAND PARK, LLC,

              a
                Tennessee limited liability company

               

              By:
                ___________________________

              Name:
                _________________________

              Title:
                __________________________

               

              
                LANDLORD:

                 

                NATIONWIDE
                  HEALTH PROPERTIES, INC.,

                a
                  Maryland corporation

                 

              

              
                By:
                  ___________________________

                      
                  Donald D. Bradley

                      
                  Senior Vice President and Chief Investment Officer

                 

                
                  MLD
                    DELAWARE TRUST,

                  
                    a
                      Delaware business trust

                     

                    
                      By:
                        ___________________________

                            
                        Donald D. Bradley

                            
                        Senior Vice President and Chief Investment Officer

                    

                     

                  

                

                
                  GUARANTOR:

                   

                  AMERICAN
                    RETIREMENT
                    CORPORATION,

                  
                    a
                      Tennessee corporation

                     

                  

                  
                    By:
                      ___________________________

                    Name:
                      _________________________

                    Title:
                      __________________________

                     

                  

                

              

            


    

     

     

    
      
        
        

      

      
        S-2