VI.       DEFAULT AND POSSIBLE SUBSIDIZATION

A. Termination for Failure to Make Payments You will be required to make all payments due to Front Porch in a timely manner and otherwise to take care of your personal financial obligations. If you fail to pay your Monthly Fees or any other charges in a timely fashion, Front Porch may, in its discretion, terminate this Agreement under Section IX below upon ninety (90) days written notice to you. In the event of such termination, all unpaid fees and charges (including any late payment charges and interest) plus any and all charges owed to any entity or company owned by Front Porch Communities and Services shall be deducted from any refund owed to you by Front Porch.

B. Alternative Payment Arrangements

1. Possibility of Alternative Arrangements. If you are unable to pay your Monthly Fees or other charges promptly, Front Porch may, in its sole discretion, agree to grant you an extension of time to make any payments that are due or to work out another mutually acceptable alternative arrangement for payment. In order to qualify for and maintain such alternative payment arrangement, you must comply with all the other provisions of this Section .

2 Application for Public Benefits. Before you may qualify for any alternative payment arrangement, you must, at Front Porch's request, apply for and seek the benefits of any public assistance program for which you might qualify, including but not limited to Social Security, SSI/SSP, Aid to the Blind, Veterans' pensions, and MediCal. You will not qualify for an alternative payment arrangement if you transfer your assets for less than their fair market value (e.g., by gift, loan, liquidation or bargain sale) or if you have purchased unnecessary services in order to qualify for financial assistance.

3.Substitution of Your Residence. If you seek public assistance or any other alternative payment arrangement under this Section, Front Porch reserves the right to transfer you to an alternate Residence, if appropriate.

4.Increase in Assets; Preservation of Assets; Repayment Instruments. To maintain any alternative payment arrangement with Front Porch, you must do all of the following:

(1) report promptly to Front Porch any material increase in your assets or their value, whether the increase occurs by way of gift, inheritance, appreciation in value, or otherwise;

(2) refrain from transferring any assets for less than their fair market value;

(3) make arrangements, at Front Porch request, for the preservation and management of your property by others, including conservators and trustees; and

(4) execute any instruments (such as promissory notes, assignments, security agreements, and deeds of trust) that Front Porch deems necessary to evidence or secure its claim for repayments of any sums due under this Section.

5.Repayment of Front Porch. You agree that any deferral or subsidization of your Monthly Fees or other charges under this Section VI.B shall be deemed a loan to you by Front Porch, shall be a first lien against your estate, and shall be deducted from any refund that Front Porch may owe you or from any repayment of your Entrance Fee to which you would otherwise be entitled under Section IX below. If your financial situation improves while you are at Carlsbad By The Sea, Front Porch's subsidy to you will be decreased or eliminated, as determined by Front Porch in its sole discretion. If your financial situation improves to the extent that you are able to repay all or part of Front Porch's subsidy to you, you will be required to make such repayment at a rate and on terms established by Front Porch in its sole discretion.