SETTLEMENT AGREEMENT

This Settlement Agreement ("Agreement") is made and entered into by and between the Patterson Avenue Neighborhood Association ("PANA") and Senior Resource Group, LLC, a Limited Liability Company ("SRG"). This Agreement is entered into by and between the aforesaid parties for the purpose of settling all claims, disputes and administrative appeals now relating to SRG's Maravilla Senior Community Project (97-DP-012 AM01, 97-CP-045 AM01 and 97-CP-046 AM01) (the "Project"). The parties agree as follows:

RECITALS:

A. WHEREAS, SRG obtained approval of a Final Development Plan (97-DPF-012 ), a Conditional Use Permit (97-CP-045) and a Conditional Use Permit (97-CP-046) in 1998 for construction of an integrated residential community with optional living opportunities for seniors 62 years of age and older and a Senior Day Center, known as the Maravilla Senior Community Project; and

B. WHEREAS, on May 16, 2001, SRG obtained a Director's Amendment to said Project (97-DP-012 AM01, 97-CP-045 AM01, and 97-CP-046 AM01) from the Director of the County of Santa Barbara's Planning & Development Department; and

C. WHEREAS, PANA appealed said Director's Amendment to the County of Santa Barbara's Planning Commission; and

D. WHEREAS, the parties have reached a mutually satisfactory agreement for the purpose of settling the appeal of the Director's Amendment, as well as any further appeals, claims, disputes or litigation regarding the Project; and

E. WHEREAS, this Agreement is expressly made contingent upon PANA's withdrawal of the pending appeal of the Director's Amendment.

NOW, THEREFORE, in consideration of the mutual covenants contained herein, the parties hereby agree as follows:

1. SRG's Land Use Guarantees. In consideration of PANA's withdrawal of its appeal of the Director's Amendment regarding the Project, SRG agrees to incorporate the following Project benefits, together with the additional guarantees set forth below as contractual provisions of this Agreement.

1.1 Local resident preferences. Residents of zip codes 93117, 93111 and 93110 for at least 180 days will receive a 5% discount on rent, plus a 5% cap on annual rate increase. Said 5% discount shall be in addition to, and not in lieu of, any other offered discount. Any and all fees charged to local residents, as defined above, shall be no higher than those charged to non-locals. In addition to the above, residents having lived within 13 miles of the project for 5 years shall always be at the top of any and every waiting list.

1.2 Resident on-site population. Resident on-site population shall not exceed 515 at any one time.

1.3 Employee on-site population. Employees of SRG shall not exceed 69 at any one time.

1.4 On-site parking. There shall be a minimum of 387 parking spaces.

1.5 Prohibition against growth. In addition to the foregoing, SRG agrees in perpetuity that it shall not seek further expansion of the number of residents or employees within the Project nor an expansion of the Project's footprint or number of square feet, except for one 1,000 square foot addition of non-habitable space during the lifetime of the Project. This addition will be allowed only in the event that underground parking is previously completed and there is no reduction in on-site parking.

1.6 Remedies for Neighborhood Parking Complaints. Complaints to any local authority and/or PANA fostered by SRG employees', residents, guests' and/or employees' of residents parking in the neighborhoods adjacent to this Project will cause SRG to perform one or more of the following remedies: a.) the building of 22 additional on-site parking sites as provided for within current plans, b.) purchase or lease of additional off-site parking spaces for employees, c.) van-pooling of employees from home or offsite parking areas, and d.) 16 additional visitor parking spaces to be located at the cottages. SRG agrees to implement all four such remedies if required to eliminate parking complaints.

2. Occupancy; Truck Routes. SRG shall not permit occupancy of any of the units of the Project prior to completion of all Project grading on site and all construction truck routes shall be limited to Calle Real and southerly thereof.

3. Withdrawal of Appeal; Duty of Non-Opposition. Immediately upon execution of this Agreement, PANA shall withdraw its appeal of the Director's Amendment of the Project. Further, PANA covenants and agrees not to appeal nor induce others to appeal any Grading Permit, Land Use Permit, Building Permit, Occupancy Permit, or any other permits or extensions thereof issued by the County of Santa Barbara or any other governmental agency for the Project. Should SRG propose underground parking and/or should the County of Santa Barbara approve underground parking as a component of the Project, PANA agrees not to oppose said component. PANA's agreements of non-opposition as set forth herein shall expire upon issuance of the final Occupancy Permit for the Project.

5. Publicity. SRG shall cause Davies Communications to prepare a joint press release between SRG and PANA and to coordinate a joint press conference between the parties announcing the fact of the settlement and the dismissal of the appeal of the Director's Amendment. The language of both the press release and the press conference shall be mutually agreed upon by SRG and PANA.

6. Binding on Successors. All rights and obligations of the parties under this Agreement shall be binding upon and shall inure to the benefit of the respective successors and assigns of the parties. PANA may, at its sole discretion, assign this agreement to the County of Santa Barbara or a City of Goleta for enforcement.

7. Authority of Signatory. Each person executing this Agreement on behalf of a corporate entity, unincorporated association, or limited liability company represents that he or she has the right, power and authority to execute this Agreement on behalf of such entity and to bind said party or parties on behalf of whom this Agreement is executed.

8. Additional Acts. Each of the parties agrees to do all of the things and execute all other documents reasonably necessary to carry out the terms and intent of this Agreement.

9. Entire Agreement. This Agreement constitutes the entire terms and conditions of the Agreement described herein and the undersigned acknowledge that they have not relied upon any warranties or representations or promises except as expressly set forth in this Agreement. This Agreement shall superseded any and all other agreements, writings or understandings between the parties hereto related to the subject matter hereof. Any modification, alteration or amendment of this Agreement shall be void and have no force or effect until it is in writing and signed by all parties hereto.

10. Counterparts. This Agreement may be executed in separate counterparts, including execution of a tele-copied reproduction of this Agreement, and such execution by the parties shall have the same force and effect as though all of the parties had executed the same original agreement.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the dates hereinafter appearing.