EXHIBIT 10.5

GELAAC Loan No. 3982

UNCONDITIONAL GUARANTY

THIS GUARANTY is made this 1st day of August, 2005, by A4 HEALTH SYSTEMS, INC.,
a North Carolina corporation (“Guarantor”) to and for the benefit of GE LIFE AND
ANNUITY ASSURANCE COMPANY, a Virginia corporation (“Lender”).

BACKGROUND

A. A4 REALTY, LLC, a North Carolina limited liability company (“Borrower”, has
applied to Lender to assume a loan (“Loan”) in the original principal amount of
Four Million Four Hundred Thousand and No/100 Dollars ($4,400,000.00). The Loan
is evidenced by a Promissory Note (the “Note”) in the loan amount and is secured
by a Deed of Trust, Assignment of Rents and Leases and Security Agreement (the
“Deed of Trust”) on real property located in Wake County, North Carolina,
commonly described as 5501 Dillard Road, Cary, North Carolina 27511-9234.

B. The Note, the Deed of Trust and any other documents executed in connection
with the Loan, other than the Environmental Indemnity of even date, are referred
to as the “Loan Documents.”

C. The assumption of the Loan is conditioned upon Guarantor’s execution and
delivery to Lender of this Guaranty.

NOW, THEREFORE, in consideration of benefits to Guarantor from Borrower, the
receipt and sufficiency of which are hereby acknowledged by Guarantor, and to
induce Lender to make the Loan to Borrower, Guarantor agrees as follows:

 

1. Unconditional Guaranty of Payment.

 

  a. Guarantor unconditionally, absolutely and irrevocably guarantees the due
and punctual payment of the principal and interest of the Note and any other
moneys due or which may become due under the Note, the Deed of Trust and any
other documents executed in connection with the Loan (collectively the “Loan
Documents”), or any of them, and the due and punctual performance and observance
by Borrower of all of the other terms, covenants and conditions of the Loan
Documents, whether according to the present terms of any of those Documents or
at any earlier or accelerated date or dates as provided therein, or pursuant to
any extension of time, or any change or changes in the terms, covenants and
conditions of the Loan Documents hereafter made or granted. All such principal,
interest and other moneys and the performance and observance by Borrower of all
such other terms, covenants and conditions are hereinafter collectively referred
to as the “Indebtedness.”

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2. Acknowledgements, Representations and Warranties.

 

  a. Guarantor acknowledges and agrees that:

 

  (i) Guarantor either has reviewed, or has had an opportunity to review, the
Loan Documents, and is otherwise fully familiar with the terms of the Loan;

 

  (ii) This Guaranty constitutes an obligation to Lender which is separate and
distinct from the obligation of Borrower to Lender under the Loan Documents; and

 

  (iii) Guarantor is signing this Guaranty as an inducement to Lender to make
the Loan, and further acknowledges that Lender would not make the Loan without
this Guaranty.

 

  b. Guarantor represents and warrants to Lender that Guarantor is either
financially interested in Borrower or will receive other benefits from Borrower
as a result of this Guaranty.

 

3. Waivers by Guarantor and Rights of Lender. Guarantor agrees that Lender may
deal exclusively with Borrower in all matters relating to the Loan without
notice to or the approval of Guarantor. It is intended that Guarantor shall
remain unconditionally, absolutely and irrevocably liable hereunder for payment
and performance of the Indebtedness regardless of any act or omission which
might otherwise directly or indirectly result, by operation of law or otherwise,
in the discharge or release in whole or in part of Borrower, Guarantor or any
other person, or the discharge, release or impairment of any collateral (the
“Collateral”) now or hereafter held as security for any of the obligations under
the Loan Documents or this Guaranty. Without limiting the generality of the
foregoing, Guarantor hereby waives the following and agrees that Lender may do
or fail to do any of the following one or more times, without notice to or the
approval of Guarantor, all without diminishing, altering or otherwise affecting
the unconditional, absolute and irrevocable liability of Guarantor hereunder:

 

  a. Guarantor waives notice of Lender’s acceptance of this Guaranty;

 

  b. Guarantor waives notice of Lender’s advances of Loan funds, extension of
credit to Borrower and any payment of obligations of Borrower;

 

  c. Guarantor waives notice of default under the Loan Documents;

 

  d. Lender may extend, renew, accelerate or otherwise change the time for
payment and performance of any of Borrower’s obligations under the Loan
Documents and may otherwise modify and change the terms, conditions and
covenants of the Loan Documents, including without limitation increase or
decrease of the rate of interest on the Loan, provided, however, that nothing in
this clause (d) is intended to grant Lender the right to make any such
modification of change without the approval of Borrower unless Lender has the
right to do so without Borrower’s approval under the Loan Documents or as a
matter of law;

 

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  e. Lender may release Borrower, any guarantor or any other person now or
hereafter having any liability under the Loan Documents;

 

  f. Lender may take and hold Collateral for payment and performance of the
Indebtedness, and may release, surrender, substitute, take additional, or
exchange, any such Collateral Lender now holds or may later acquire;

 

  g. Lender does not have to marshall assets and may direct the order or manner
of sale of the Collateral as Lender in its discretion may determine;

 

  h. Lender may apply any money or Collateral to the repayment of any
obligations due to Lender under the Loan Documents in any order Lender in its
discretion may determine.

 

  i. Lender may forbear from pursuing Borrower, or any other guarantor or any
other person, or forbear from foreclosing or otherwise realizing upon any
Collateral or other guaranty;

 

  j. Lender may impair or fail to perfect a security interest in any Collateral;

 

  k. Lender may sell Collateral in any manner Lender in its discretion may
determine, without notice to Guarantor and whether or not such sale is
commercially reasonable;

 

  l. Guarantor waives any defense arising out of the absence, impairment, or
loss of any or all rights of recourse, reimbursement, contribution, subrogation
or any other right or remedy of Guarantor against Borrower, or any other
guarantor, or any other person to recover amounts which Guarantor is obligated
to pay under this Guaranty;

 

  m. Guarantor waives any defense based upon election of remedies and any
anti-deficiency statute, it being intended that this Guaranty shall survive any
and all realization upon Collateral. Such waiver shall include without
limitation any defense that a foreclosure of Collateral, whether judicial or
nonjudicial, discharged Guarantor’s obligations under this Guaranty;

 

  n. Guarantor waives any defense arising by reason of any invalidity,
ineffectiveness or unenforceability of all or any portion of the Loan Documents
or on the basis of any other defense (other than full payment in cash of any
monetary obligation or full performance of any other obligation) available to
Borrower, any other guarantor or any other person;

 

  o. Guarantor waives any defense arising out of lack of diligence or out of
delay in enforcement, collection or realization under the Loan Documents;

 

  p. Guarantor waives demand for payment, demand for performance, notice of
non-payment, notice of non-performance, presentment, protest, notice of
dishonor, and indulgences and notices of every other kind; and

 

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  q. Guarantor hereby waives (i) any defense arising because of Lender’s
election, in any proceeding instituted under the Federal Bankruptcy Code, of any
application of Section 1111(b)(2) of the Federal Bankruptcy Code, and (ii) any
defense based on any borrowing or grant of a security interest under Section 364
of the Federal Bankruptcy Code.

 

4. Lender’s Right not to Proceed Against Borrower, Other Person or Collateral;
Lender’s Remedies. This Guaranty may be enforced against Guarantor without
attempting to collect (or without exhausting its efforts to collect) from
Borrower, any other guarantor or any other person who may be liable for the
Indebtedness, and without attempting to enforce (or without exhausting its
efforts to enforce) Lender’s rights in any Collateral. Lender may exercise its
remedies available under this Guaranty and the Loan Documents and available at
law and in equity in such order as Lender in its discretion may determine.
Lender may join Guarantor in any suit in connection with the Loan Documents or
may proceed against Guarantor in a separate action. If suit, sale, foreclosure
or other remedy is availed of, only the net proceeds therefrom after deducting
all charges and expenses of any kind and nature whatsoever, shall be applied to
the reduction of the Indebtedness, and Lender shall not be required to institute
or prosecute proceedings to recover any deficiency as a condition of payment
under or enforcement of this Guaranty. At any sale of Collateral, Lender may, at
its discretion, purchase all or any part of such Collateral and apply against
the amount bid therefore an equal amount of the Indebtedness.

 

5. Bankruptcy and Assignment of Rights. Guarantor’s obligation to make payment
under the terms of this Guaranty shall not be impaired, modified, changed,
released or limited in any manner by any impairment, modification, change,
release, defense or limitation of the liability of Borrower or of a receiver,
trustee, debtor in possession or estate under any bankruptcy, receivership or
insolvency proceeding. If any payment of the Indebtedness made by Borrower is
reclaimed in a bankruptcy or receivership proceeding, Guarantor shall pay to
Lender the dollar amount of the amount reclaimed. Guarantor hereby assigns to
Lender all rights Guarantor may have in any proceeding involving Borrower under
any federal bankruptcy act or state receivership proceedings, whether or not
such rights relate to this Guaranty. Such assignment shall not diminish, alter
or otherwise affect Guarantor’s liability under this Guaranty.

 

6. Guarantor’s Duty to Keep Informed of Borrower’s and Others’ Financial
Condition. Guarantor is now adequately informed of Borrower’s financial
condition. Guarantor has established adequate means of obtaining, and will
obtain from Borrower in the future, all financial and other information
regarding Borrower, any other guarantor, any other person and the Loan as is
deemed appropriate by Guarantor. Lender shall have no obligation, now or in the
future, to provide any such information to Guarantor.

 

7.

Survival of Claims. Guarantor acknowledges that, to the extent permitted by law,
certain obligations of Borrower under the Loan Documents, including with
limitation indemnity obligations relating to hazardous substances, shall survive
payment of the Indebtedness and foreclosure of Collateral. Guarantor covenants
and agrees that, to the extent permitted by law, and subject to the limitations
of paragraph 1 above, Guarantor’s

 

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guaranty of such obligations of Borrower shall also survive payment of the
Indebtedness and foreclosure of Collateral.

 

8. Waiver of Right of Subrogation. Until the Indebtedness shall have been paid
and performed in full, Guarantor shall have no right of subrogation, and
Guarantor waives any right to enforce any remedy which Lender now has or may
hereafter have against Borrower, any other guarantor or any other person, and
waive any benefit of, and any right to participate in, any of the Collateral.

 

9. Subordination of Debt. Any debt of Borrower now or hereafter held by
Guarantor is hereby subordinated to the Indebtedness, and such debt, if Lender
so requests, shall be collected, enforced and received by Guarantor as trustee
for Lender and be paid over to Lender on account of the Indebtedness, but
without reduction or affecting in any manner the liability of Guarantor under
the other provisions of this Guaranty.

 

10. Attorneys’ Fees and Collection Expenses. Guarantor agrees to reimburse
Lender on demand for all fees and other costs and expenses incurred by Lender in
collecting, enforcing or defending this Guaranty, together with interest thereon
from date of disbursement at the default rate of interest stated in the Note.
Such fees, costs and expenses shall include those incurred with or without suit
and in any trial, any appeal therefrom or review thereof, any proceedings under
any present or future federal bankruptcy or state receivership proceeding and
any post-judgment collection proceedings.

 

11. Payment of Loan; Effect of Bankruptcy. Except as otherwise provided in
paragraphs 3 and 7 above, this Guaranty shall terminate upon payment and
performance in full of the Indebtedness; provided, however, that it shall be
automatically reinstated if any payment is reclaimed in a bankruptcy or
receivership proceeding, until Guarantor pays Lender the amount reclaimed or the
amount is otherwise paid to Lender and is not subject to further reclamation.

 

12. Binding Effect. This Guaranty shall be binding upon and enforceable against
Guarantor, Guarantor’s legal representatives, heirs, successors and assigns, and
shall inure to the benefit of and may be enforced by Lender and Lender’s
successors and assigns.

 

13. Assignment. Lender may assign the Loan Documents and this Guaranty, or any
of them, in whole or in part, and may grant participations therein, without
notice to Guarantor and without affecting Guarantor’s liability under this
Guaranty.

 

14. Construction. Unless some other meaning and intent is apparent from the
context, the plural shall include the singular and vice versa, and masculine,
feminine and neuter words shall be used interchangeably.

 

15. Governing Law; Jurisdiction. This Guaranty shall be governed by and
construed according to the laws of the State of North Carolina. Guarantor
consents to the jurisdiction of the courts of the State of North Carolina.

 

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16. Joint and Several Liability; Independent Obligations. The obligations under
this Guaranty of all persons included within the term “Guarantor” are joint and
several. The obligations of each Guarantor are independent of those of Borrower,
any other guarantor and any other person, and a separate action or actions may
be brought and prosecuted against Guarantor, or any of them, whether action is
brought against any other Guarantor, Borrower or any other person.

 

17. Entire Agreement; Modifications. This agreement constitutes the entire
understanding between Lender and Guarantor and no course of prior dealing
between the parties, no usage of trade, and no parol or extrinsic evidence of
any nature shall be used to supplement or modify the terms of this Guaranty.
This Guaranty may be changed, modified or supplemented only through a writing
signed by Guarantor and Lender.

 

18. Invalid Provisions. If any provision of this Guaranty is invalid, illegal or
unenforceable, such provision shall be considered severed from the rest of this
Guaranty and the remaining provisions shall continue in full force and effect as
if the invalid provision had not been included.

 

19. Counterparts. This Guaranty may be executed in counterpart originals.

 

A4 HEALTH SYSTEMS, INC.,

a North Carolina Corporation

By:  

/s/ John P. McConnell

 

JOHN P. McCONNELL

Its:

 

Chief Executive Officer

 

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