Document:

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.

       

      
        
          -2-

        

        
          
          

          
            

          

        

        
          
          

        

      

      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.

       

      

       

      [SIGNATURES
        ON FOLLOWING PAGE]

       

      
         

        
          
            -3-

          

          
            
            

            
              

            

          

          
            
            

          

        

      

      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:
                  ___________________________

                 

              

      

      

       

      
        
          -4-Exhibit 10.9

    Exhibit
      10.9

    

    [Tucson,
      Arizona]

    [Sun
      City, Florida - Sun City Facility]

    [Sun
      City, Florida - Homewood Facility]

    [Lexington,
      Kentucky]

    [Holland,
      Michigan]

    [Austin,
      Texas]

    [Ft.
      Worth, Texas]

     

    

      SECOND
        AMENDMENT TO MASTER LEASE

      (Phase
        III)

      

      THIS
        SECOND AMENDMENT TO MASTER LEASE (this “Amendment”)
        is
        made and entered into as of this 30th day of June, 2005 (the “Effective
        Date”),
        by
        and between HEALTH CARE PROPERTY INVESTORS, INC., a Maryland corporation
        (“HCP”),
        TEXAS
        HCP HOLDING, L.P., a Delaware limited partnership, for itself and as
        successor-by-merger to Texas HCP REVX, L.P., a Delaware limited
        partnership
        (“Texas
        HCP”),
        ARC
        RICHMOND PLACE REAL ESTATE HOLDINGS, LLC, a Delaware limited liability company
        (“Richmond
        RealCo”),
        ARC
        HOLLAND REAL ESTATE HOLDINGS, LLC, a Delaware limited liability company
        (“Holland
        RealCo”),
        ARC
        SUN CITY CENTER REAL ESTATE HOLDINGS, LLC, a Delaware limited liability company
        (“Sun
        City RealCo”)
        and
        ARC LABARC REAL ESTATE HOLDINGS, LLC, a Delaware limited liability company
        (“Homewood
        RealCo”)
        (collectively, as their interests may appear, “Lessor”),
        on
        the one hand, and FORT AUSTIN LIMITED PARTNERSHIP, a Texas limited partnership
        (“Fort
        Austin Lessee”),
        ARC
        SANTA CATALINA, INC., a Tennessee corporation (“Santa
        Catalina Lessee”),
        ARC
        RICHMOND PLACE, INC., a Delaware corporation (“Richmond
        Lessee”),
        FREEDOM VILLAGE OF HOLLAND, MICHIGAN, a Michigan general partnership
        (“Holland
        Lessee”),
        FREEDOM VILLAGE OF SUN CITY CENTER, LTD., a Florida limited partnership
        (“Sun
        City Lessee”),
        and
        LaBARC, L.P., a Tennessee limited partnership (“Homewood
        Lessee”)
        (collectively, and jointly and severally, “Lessee”),
        on
        the other hand. 

       

      RECITALS

       

      A. Lessor
        is
        the current “Lessor,” and Lessee is the current “Lessee,” pursuant to that
        certain Master Lease dated September 23, 2003 (the “Original
        Lease”)
        between ARC Santa Catalina Real Estate Holdings, LLC, a Delaware limited
        liability company (“Santa
        Catalina RealCo”)
        and
        Fort Austin Real Estate Holdings, LLC, a Delaware limited liability company
        (“Fort
        Austin RealCo”),
        collectively as the original “Lessor,” and Fort Austin Lessee and Santa Catalina
        Lessee, as the original “Lessee,” as amended by that certain First Amendment to
        Master Lease and Guaranty and Option to Purchase Certain Facilities dated
        as of
        July 15, 2004 (the “First
        Amendment,”
        and
        together with the Original Lease, the “Lease”).
        The
        Lease covers the “Leased Property” of seven (7) separate congregate care
        retirement facilities, located in Tucson, Arizona, Austin, Texas, Ft. Worth,
        Texas, Sun City, Florida (Homewood), Sun City Florida (Sun City), Lexington,
        Kentucky and Holland, Michigan, all as more particularly described in the
        Lease.

       

      B. The
        Lessee’s obligations under the Lease are guaranteed by (i) ARCPI Holdings, Inc.,
        a Delaware corporation (“ARCPI”)
        pursuant to a written Guaranty of Obligations dated as of September 23, 2003,
        as
        amended by the First Amendment (as defined above) and that certain Second
        Amendment to Guaranty of Obligations (Phase III) of even date herewith (the
        “Second
        Amendment to Guaranty”)
        (and
        as the same may be further amended and/or reaffirmed from time to time in
        accordance with the terms thereof, the “ARCPI
        Guaranty”),
        and
        (ii) by American Retirement Corporation, a Tennessee corporation (“ARC”),
        pursuant to that certain Guaranty of Obligations (Phase III Master Lease)
        dated
        of even date herewith (as the same may be amended and/or reaffirmed from
        time to
        time in accordance with the terms thereof, the “ARC
        Guaranty”).
        ARCPI
        and ARC shall sometimes be referred to herein and in the Lease, collectively,
        as
“Guarantors,”
        and
        individually as “Guarantor”
        and the
        ARCPI Guaranty and the ARC Guaranty shall sometimes be referred to herein
        and in
        the Lease, collectively, as “Guarantors,” and individually as a
“Guaranty.”

       

      
        
          
          

        

        
          -1-

          
            

          

        

        
          
          

        

      

      C. The
        Lessor and Lessee desire to amend the Lease, but only upon the terms and
        conditions set forth herein.

       

      D. Capitalized
        terms used herein and not defined herein shall have the meanings given such
        terms in the Lease.

       

      AMENDMENT

       

      IN
        CONSIDERATION OF the foregoing recitals, the mutual promises contained herein,
        and other good and valuable consideration, the receipt and adequacy of which
        are
        hereby acknowledged, Lessor and Lessee hereby agree as follows:

       

      1. Modifications
        to Certain Definitions of the Lease. 
        The following definitions appearing in Article II of the Original Lease shall
        be
        amended and restated, in their entireties, as indicated:

       

      “Guarantor”:
        ARCPI
        and ARC, and any further guarantors of Lessee’s obligations pursuant to this
        Lease.

       

      “Guaranty”:
        (i)
        The Guaranty of Obligations (Phase III) of even date herewith executed by
        ARCPI
        (as the same may be amended, modified or reaffirmed from time to time in
        accordance with the terms thereof); (ii) that certain Guaranty of Obligations
        (Phase III) dated as of June 30, 2005, executed by ARC (as the same may be
        amended, modified or reaffirmed from time to time in accordance with the
        terms
        thereof); and (iii) any further written guaranty of Lessee’s obligations
        hereunder executed by another Person.

       

      2. Reaffirmation
        of Master Lease.
        Lessor
        and Lessee hereby acknowledge, agree and reaffirm that the Lease, as hereby
        amended, is and the parties intend the same for all purposes to be treated
        as a
        single, integrated and indivisible agreement. Lessee acknowledges that in
        order
        to induce Lessor to lease the Leased Property of each Facility to Lessee
        and as
        a condition thereto, Lessor insisted that the parties execute the Lease,
        as
        hereby amended, covering all of the Facilities in a single, integrated and
        indivisible agreement.

       

      3. Governing
        Law.
        THIS
        AMENDMENT WAS NEGOTIATED IN THE STATE OF CALIFORNIA, WHICH STATE THE PARTIES
        AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING
        TRANSACTION EMBODIED HEREBY. ACCORDINGLY, IN ALL RESPECTS THIS
        AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE
        WITH,
        THE INTERNAL LAWS OF THE STATE OF CALIFORNIA (WITHOUT REGARD OF PRINCIPLES
        OR
        CONFLICTS OF LAW) AND ANY APPLICABLE LAWS OF THE UNITED STATES OF
        AMERICA.

       

      
        
          
          

        

        
          -2-

          
            

          

        

        
          
          

        

      

      4. Full
        Force and Effect; Counterparts; Facsimile Signatures.
        Except
        as hereby amended, the Lease shall remain in full force and effect. This
        Amendment may be executed in any number of counterparts, all of which shall
        constitute one and the same instrument. Telecopied signatures may be used
        in
        place of original signatures on this Amendment, and Lessor and Lessee both
        intend to be bound by the signatures of the telecopied document.

       

      [SIGNATURE
        PAGE FOLLOWS]

       

       

       

       

       

       

       

       

      
        
          
          

        

        
          -3-

          
            

          

        

        
          
          

        

      

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

       

      “Lessor”

       

      
        	
                WITNESSED:

                _________________________

                Witness

                 

                _________________________

                Witness

              	
                HEALTH
                  CARE PROPERTY INVESTORS, INC., a Maryland corporation

                By:               
                  

                Title:   
                  

              
	
                 

                WITNESSED:

                _________________________

                Witness

                 

                _________________________

                Witness

              	
                 

                TEXAS
                  HCP HOLDING, L.P., a Delaware limited partnership, for itself and
                  as
                  successor-by-merger to 

                Texas
                  HCP REVX, L.P., a Delaware limited
                  partnership

                 

                By: TEXAS
                  HCP G.P., INC., a Delaware corporation, its sole general
                  partner

                By:                                                 
                  

                Title:                              

                 

              

      

      

      [Signature
        pages continue]

       

       

       

       

      
        
          
          

        

        
          -4-

          
            

          

        

        
          
          

        

      

      

      
        	 	
                ARC
                  RICHMOND PLACE REAL ESTATE HOLDINGS, LLC, a Delaware limited liability
                  company

              
	
                WITNESSED:

                 

                _________________________

                Witness

                 

                _________________________

                Witness

              	
                By: Health
                  Care Property Investors, Inc., a Maryland corporation, its sole
                  member

                 

                By:                           
                  

                Title:                        

              
	 	
                ARC
                  HOLLAND REAL ESTATE 

                HOLDINGS,
                  LLC

                ARC
                  SUN CITY CENTER REAL ESTATE 

                HOLDINGS,
                  LLC

                ARC
                  LABARC REAL ESTATE HOLDINGS, LLC

                each,
                  a Delaware limited liability company

              
	
                 

                WITNESSED:

                 

                _________________________

                Witness

                 

                _________________________

                Witness

              	
                 

                By: Health
                  Care Property Investors, Inc., a Maryland corporation, its managing
                  member

                 

                By:                           
                  

                Title:                        

              

      

      

      [Signature
        pages continue]

       

       

       

      
        
          
          

        

        
          -5-

          
            

          

        

        
          
          

        

      

      

      
        
          	 	
                  “Lessee”

                
	
                  WITNESSED:

                   

                  _________________________

                  Witness

                   

                  _________________________

                  Witness

                	
                  FORT
                    AUSTIN LIMITED PARTNERSHIP, a Texas limited partnership

                   

                  By:
                    ARC Fort Austin Properties, LLC, its general partner

                   

                   

                  By:                               
                    

                  Title:                            

                
	
                   

                   

                  WITNESSED:

                   

                  _________________________

                  Witness

                   

                  _________________________

                  Witness

                	
                   

                  ARC
                    RICHMOND PLACE, INC., a Delaware 

                  corporation

                  ARC
                    SANTA CATALINA, INC., a Tennessee 

                  corporation

                   

                  By:                            
                    

                  Title:                             

                
	
                  WITNESSED:

                  _________________________

                  Witness

                   

                  _________________________

                  Witness

                	
                   

                  FREEDOM
                    VILLAGE OF HOLLAND,

                  MICHIGAN,
                    a Michigan general partnership

                  FREEDOM
                    VILLAGE OF SUN CITY CENTER,

                  LTD.,
                    a Florida limited partnership

                   

                  By: ARC
                    Freedom, LLC, managing partner

                  By:                       
                    

                  Title:                    

                   

                
	 	 
	 	 
	 	 
	 	 
	
                    [Signature
                    pages continue]

                
	 	 

        

         

         

        
          
            
            

          

          
            -6-

            
              

            

          

          
            
            

          

        

         

         

        
          	
                   

                   

                  WITNESSED:

                  _________________________

                  Witness

                   

                  _________________________

                  Witness

                	
                  LABARC,
                    L.P., a Tennessee limited partnership

                   

                  By: ARC
                    Sun City Center, Inc., general partner

                  By:                            
                    

                  Title:                         

                

        

      

      

    

    
      
        
        

      

      
        -7-

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