Unassociated Document


    
      
        
          
            Exhibit
              10.92

            LOAN
              AGREEMENT

            (TERRACE
              HOMES)

             

             

            THIS
              LOAN
              AGREEMENT (this "Agreement")
              is
              made and entered into this ________ day of December, 2005, by and between
              ARC
              BRANDYWINE, L.P., a Delaware limited partnership (hereinafter called
              “Borrower”),
              and
              GUARANTY BANK, a federal savings bank (hereinafter called “Lender”).

             

            W
              I T N E
              S S E T H:

             

            WHEREAS,
              Lender has agreed to make a Loan (as hereinafter defined) to Borrower;
              and

             

            WHEREAS,
              Borrower and Lender wish to enter into this Agreement in order to set
              forth the
              terms and conditions of the disbursement of the Loan;

             

            NOW
              THEREFORE, in consideration of the mutual promises hereinafter contained
              and of
              other valuable consideration, the receipt and sufficiency of which
              are hereby
              acknowledged, Borrower and Lender hereby agree as follows:

             

            ARTICLE
              I.

             

            DEFINITIONS

             

            1.1.       
              Defined
              Terms.
              As used
              in this Agreement, the following terms shall have the meanings
              shown:

             

            (a)         
              “Architect”.
              Richard
              L. Miller.

             

            (b)         
              “Architect's
              Consent, Agreement and Certification”.
              The
              Architect's Consent, Agreement and Certification as provided for herein
              and in
              the form approved by Lender.

             

            (c)         
              “Assignment
              of Leases and Rents”.
              The
              Assignment of Leases and Rents of even date herewith from Borrower
              to Lender
              covering certain leases described therein, providing a source of future
              payment
              of the Note.

             

            (d)         
              “Borrower's
              Equity”.
              Funds
              in the amount of $2,256,915 obtained by Borrower from equity contributions
              or
              other sources approved by Lender and which are to be applied to the
              payment of
              Project Costs.

             

            (e)         
              “Certificate
              of Non Foreign Status”.
              A
              certificate by Borrower as required by Section 1445 of the Internal
              Revenue Code
              of 1986.

             

            
              
                
                

              

              
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            (f)         
              “Collateral
              Assignment of Contracts and Plans and Other Agreements Affecting Real
              Estate”.
              The
              Collateral Assignment of Contracts and Plans and Other Agreements Affecting
              Real
              Estate as provided for herein and in the form approved by Lender.

             

            (g)         
              “Commencement
              Date”.
              Construction shall begin within seventy-five (75) days from the date
              hereof.

             

            (h)         
              “Completion
              Date”.
              March
              1, 2007. 

             

            (i)         
              “Continuing
              Care Agreement”.
              Agreement by and between a resident and any Property Related Person
              executed
              upon resident’s purchase of a residential unit on the CCRC Property which
              provides for personal care services at the CCRC Property.

             

            (j)         
              “Construction
              Contract”.
              An
              agreement providing for the furnishing of labor and/or materials to
              be used in
              the construction and/or installation of the Improvements, including
              all
              additions, changes and other amendments thereto.

             

            (k)         
              “Construction
              Schedule”.
              As
              defined in subsection 4.1(h).

             

            (l)         
              “Contractor”.
              Any
              contractor who, with the prior written approval of Lender, enter into
              a
              Construction Contract with Borrower. 

             

            (m)         
              “Contractor's
              Consent, Agreement and Certification”.
              The
              Contractor's Consent, Agreement and Certification as provided for herein
              and in
              the form approved by Lender.

             

            (n)         
              “Disbursal
              Schedule”.
              The
              schedule of estimated disbursements of the proceeds of the Loan agreed
              upon in
              writing by Lender and Borrower or as modified from time to time upon
              written
              approval from Lender.

             

            (o)         
              “Engineer”.
              One or
              more engineers engaged with respect to the Property.

             

            (p)         
              “Environmental
              Indemnity Agreement”.
              An
              Environmental Indemnity Agreement of even date herewith executed by
              Borrower in
              favor of Lender.

             

            (q)         
              “Entrance
              Fee”. The
              term
              "Entrance
              Fee"
              shall
              include any deposits made in connection with the execution by a resident
              of a
              Purchase Agreement, any increases thereof and any promissory notes
              accepted in
              lieu thereof. 

             

            (s)         
              “Forecast”.
              As
              defined in subsection 4.1(d).

             

            (t)         
              “Governmental
              Authority”.
              The
              United States, the state, the county and the city or any other political
              subdivision in which the CCRC Property is located, and any other political
              subdivision, agency or instrumentality having jurisdiction over the
              CCRC
              Property or any of the Property Related Persons.

             

            
              
                
                

              

              
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            (u)         
              “Governmental
              Requirements”.
              All
              laws, ordinances, statutes, codes, rules, regulations, orders and decrees
              of any
              Governmental Authority applicable to any of the Property Related Persons
              or the
              CCRC Property.

             

            (v)         
              “Guarantor”.
              American Retirement Corporation, a Tennessee corporation.

             

            (w)         
              “Guaranty”.
              The
              Guaranty and Suretyship Agreement of even date herewith made by Guarantor
              with
              respect to all of all obligations of the Borrower contained in the
              Loan
              Documents.

             

            (x)         
              “Improvements”.
              28
              independent living units comprised of two 3-level buildings with garages
              on the
              ground level and apartments on the 2nd
              and
              3rd
              levels
              to be constructed on the Land.

             

            (y)         
              “Initial
              Advance”.
              The
              first amount of the Loan funded by the Lender to the Borrower.

             

            (z)         
              “Inspecting
              Architect”.
              The
              representative of Lender designated to inspect the construction of
              the
              Improvements on behalf of Lender.

             

            (aa)        “Land”.
              The
              real property described in Exhibit
              A attached
              hereto and made a part hereof. 

             

            (bb)        “Loan”.
              The
              $9,419,164 loan made this date by Lender to Borrower and evidenced
              by the Note.


             

            (cc)        “Loan
              Documents”.
              This
              Agreement and all other instruments evidencing, securing or related
              to the
              Loan.

             

            (dd)        “Mortgagee
              Title Policy”.
              As
              defined in the Security Instrument.

             

            (ff)        “Note”.
              The
              $9,419,164 promissory note dated as of the date hereof from Borrower
              to
              Lender.

             

            (gg)        “Plans
              and Specifications”.
              Plans
              and specifications prepared or to be prepared by the Architect and
              the Engineer
              for the construction of the Core Improvements listed in the Collateral
              Assignment of Contracts and Plans and Other Agreements Affecting Real
              Estate,
              including all additions, changes and other amendments thereto.

             

            (hh)       “Project
              Budget”.
              As
              defined in subsection 4.1(a) and as attached hereto as Exhibit
              B.

             

            (ii)        “Project
              Costs”.
              As
              defined in subsection 4.1(a).

             

            (jj)        “Project
              Revenues”.
              As
              defined in subsection 4.1(a). 

             

            
              
                
                

              

              
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            (kk)        “Property”.
              The
              Land and the Improvements.

             

            (ll)        
              “Purchase
              Agreement”.
              Agreement entered into by any resident and any Property Related Person
              whereby
              resident agrees to purchase from the Property Related Person a life-estate
              in a
              residential unit located on the CCRC Property.

             

            (mm)        “Repurchase
              Agreement”.
              Agreement entered into by and between any resident and any Property
              Related
              Person whereby resident or resident’s authorized agent is required to convey
              resident’s life-estate interest in the unit to the Property Related Person upon
              becoming a permanent resident of the healthcare facility or when the
              Continuing-Care Agreement is terminated.

             

            (nn)        “Security
              Instrument”.
              That
              certain Open-End Mortgage, Security Agreement and Fixture Filing dated
              as of the
              date hereof made by Borrower for the benefit of Lender. 

             

            (oo)        “Site
              Plan”.
              The
              site plan for the Improvements attached as Exhibit E and made a part
              hereof.

             

            (pp)        “Title
              Company”.
              Land
              Services USA, Inc.

             

            Additional
              definitions are set forth in Exhibit
              C - Healthcare Rider
              to this
              Agreement.

             

            ARTICLE
              II.

             

            THE
              LOAN

             

            2.1.       
              The
              Loan.
              Subject
              to and upon the terms, conditions and limitations contained in this
              Agreement
              and relying on the representations and warranties contained in this
              Agreement
              and the other Loan Documents, Lender agrees to lend, and Borrower agrees
              to
              borrow and take down, the Loan, to be evidenced by the Note. All proceeds
              of the
              Loan shall be advanced against the Note as provided in Article VII
              hereof and
              shall be used by Borrower to pay for Project Costs as contained in
              the Project
              Budget. The principal amount actually owing on the Note from time to
              time shall
              be the aggregate of all advances theretofore made by the Lender against
              the Note
              less all payments theretofore made on the principal of the Note.

             

            2.2.       
              Security
              for the Loan.
              The
              Loan, as evidenced by the Note, shall be secured, inter alia,
              by the
              Security Instrument, the Assignment of Leases and Rents, the Collateral
              Assignment of Contracts and Plans and Other Agreements Affecting Real
              Estate,
              the Environmental Indemnity Agreement, the Pledge Agreement and the
              Security
              Agreement and shall be guaranteed by the Guaranty.

             

            2.3.       
              Schedule
              of Disbursements.
              Disbursement of the proceeds of the Loan is to be made by Lender to
              Borrower in
              accordance with the Disbursal Schedule and the Project Budget.

             

            
              
                
                

              

              
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            ARTICLE
              III.

             

            REPRESENTATIONS
              AND WARRANTIES OF BORROWER

             

            3.1.       
              Representations,
              Warranties and Covenants of Borrower.
              Borrower hereby represents, warrants and covenants to Lender that:

             

            (a)        
              No
              Consents Necessary.
              No
              consent of any other party, and no consent, license, approval or authorization
              of, or registration or declaration with, any Governmental Authority
              is required
              in connection with the execution, delivery, performance, validity or
              enforceability of the transactions contemplated by this Agreement or
              the Loan
              Documents.

             

            (b)        
              Availability
              of Utilities.
              All
              utility and municipal services necessary for the proper operation of
              the
              Improvements for their intended purpose are available at the Property,
              including
              water supply, storm and sanitary sewer facilities, gas or electricity
              and
              telephone facilities, or will be available at the Property when constructed
              or
              installed as part of the Improvements, and written permission has been
              or will
              be obtained from the applicable utility companies or municipalities
              to connect
              the Improvements into each of said services, and Borrower will supply
              evidence
              thereof satisfactory to Lender. All of such utility and municipal services
              will,
              to Borrower's knowledge, comply with all applicable Governmental
              Requirements.

             

            (c)        
              Roads.
              All
              roads necessary for the full utilization of the Improvements for their
              intended
              purposes have been or will be completed in connection with the completion
              of the
              Improvements and the necessary rights-of-way therefor have either been
              acquired
              by the appropriate Governmental Authority or have been dedicated to
              the public
              use and accepted by such Governmental Authority and all necessary steps
              have
              been taken by Borrower and any such Governmental Authority to assure
              the
              complete construction and installation thereof.

             

            (d)        
              Building
              Permits.
              All
              zoning, utility, building, health and operating permits (if any) required
              for
              the construction and operation of the Improvements either have been
              obtained or
              will be obtained prior to commencement of construction of the Improvements
              and
              copies of same will be delivered to Lender.

             

            (e)        
              Condition
              of Property.
              The
              Property is not now damaged or injured as a result of any fire, explosion,
              accident, flood or other casualty.

             

            (f)        
              Construction
              Contract.
              Except
              for the contracts described in Schedule II of the Collateral Assignment
              of
              Contracts and Plans and Other Agreements Affecting Real Estate, Borrower
              has not
              entered into any contracts or 

             

            
              
                
                

              

              
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            agreements
              with third parties (either written or oral) providing for the furnishing
              of
              labor or materials to be used in the construction or installation of
              the
              Improvements and will enter into no such contracts or agreements, except
              in such
              form and upon such terms as shall be approved in writing by Lender.

             

            (g)        
              No
              Prior Work.
              No work
              or construction has been commenced on the Land and no materials have
              been
              delivered to the Land which could, in either case, result in the imposition
              of a
              mechanic's or materialmen's lien on the Property prior to or on parity
              with the
              lien and security interest created by the Security Instrument.

             

            (h)        
              Sufficiency
              of Funds.
              Sufficient funds are available to Borrower in addition to proceeds
              of the Note
              and Borrower's Equity to pay all Project Costs. Upon request of Lender,
              Borrower
              will demonstrate to Lender that such funds are available.

             

            (i)        
              Executive
              Order 13224.
              Borrower and all persons or entities holding any legal or beneficial
              interest
              whatsoever in Borrower are not included in, owned by, controlled by,
              acting for
              or on behalf of, providing assistance, support, sponsorship, or services
              of any
              kind to or otherwise associated with, any of the persons or entities
              referred to
              or described in Executive Order 13224 (Blocking Property and Prohibiting
              Transactions with Persons Who Commit, Threaten to Commit or Support
              Terrorism,
              as amended).

             

            ARTICLE
              IV.

             

            COVENANTS
              OF BORROWER

             

            4.1.       
              Covenants
              of Borrower  Borrower
              hereby covenants and agrees with Lender as follows:

             

            (a)        
              Project
              Budget and Application of Loan Proceeds.
              The
              Project Budget includes all Project Costs (as hereinafter defined)
              contemplated
              to be paid from disbursements of the Loan, including categories for
              contingencies and the sources of funds, that is, proceeds of the Loan,
              Project
              Revenues (as hereinafter defined) and Borrower's Equity. The Project
              Budget
              shall be promptly supplemented to include a forecast (hereinafter called
              the
“Forecast”)
              of the
              timing of the sources and uses of funds through the maturity date of
              the Loan.
              The Project Budget specifies the interest rate projections and leasing
              assumptions used to determine the Project Costs. “Project
              Costs”
shall
              mean all costs incurred in connection with the acquisition of the Land
              and the
              construction, leasing and operation of the Improvements until maturity
              of the
              Loan, including without limitation interest expense. “Project
              Revenues”
shall
              mean all receipts and revenues generated by or in connection with the
              Property,
              including without limitation rents, interest income, insurance proceeds,
              condemnation awards and payments received from interest rate hedging
              or similar
              agreements. Borrower agrees to give Lender prompt written notice of
              any changes
              made in the Project Costs or the Forecast so that the Project Budget
              accurately
              and realistically represents the sources and uses of funds for the
              Property. In
              addition, Lender may notify Borrower that, in Lender's reasonable judgment,
              changes need to be made in the Project Budget. If, after 

             

            
              
                
                

              

              
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            consultation
              and consideration of the view of Borrower and supporting documentation,
              Borrower
              and Lender do not agree as to what modifications need to be made in
              the Project
              Budget, the reasonable determination of Lender shall govern. Lender
              shall
              confirm to Borrower the most current approved Project Budget. Borrower
              shall use
              the proceeds of the Loan solely for the purpose of paying for the Project
              Costs
              as set forth in the Project Budget and shall in no event use any of
              the Loan
              proceeds for any other purpose.

             

            (b)        
              Construction
              Documents.
              Borrower shall deliver to Lender a copy of the Construction Contract
              executed by
              Borrower and the Contractor, a copy of any contract executed by Borrower
              and the
              Architect and the Engineer and executed copies of any other contracts
              by
              Borrower with architects and engineers. Borrower shall furnish Lender
              with a
              complete list of all persons, firms or entities which the Contractor
              proposes to
              engage to furnish labor and/or materials in constructing the Improvements
              and,
              upon written request of Lender, will furnish Lender with true copies
              of all
              written agreements (including contracts, subcontracts and purchase
              orders)
              therefor and the terms of all verbal agreements therefor. All such
              contracts
              shall be in form and content satisfactory to Lender. If, in the sole
              judgment of
              Lender, such contracts and subcontracts do not cover all of the work
              necessary
              for completion of construction of the Improvements (exclusive of Tenant
              Improvements), including the installation of such fixtures and equipment
              as are
              required for the operation of the Improvements and including all work
              required
              by any leases then in effect or to make any portion of the Improvements
              rentable
              (whether to be done and paid for by Borrower or by lessees under leases),
              Borrower shall cause to be furnished firm bids from responsible parties,
              or
              estimates and other information satisfactory to Lender, for the work
              not so
              covered, to enable Lender to ascertain the total estimated cost of
              all work done
              and to be done. The Construction Contract together with all other contracts,
              subcontracts, lists, agreements and terms of verbal agreements described
              in this
              subparagraph shall herein be called the “Construction
              Documents”.

             

            (c)        
              Construction
              Contract.
              Borrower shall (i) permit no default under the terms of the Construction
              Contract, (ii) waive none of the obligations of the Contractor thereunder,
              (iii)
              do no act which would relieve Contractor from its obligations to construct
              the
              Improvements according to the Plans and Specifications, and (iv) make
              no
              amendments to, or change orders with respect to, the Construction Contract
              or
              any other Construction Document, without the prior written consent
              of Lender,
              except as permitted in Section 5.3 hereof.

             

            (d)        
              Construction
              Schedule.
              Borrower shall furnish to Lender a schedule (herein called the “Construction
              Schedule”)
              showing the timing of construction of the Improvements with a breakdown
              by
              trade.

             

            (e)        
              Commencement
              and Completion of Construction.
              Borrower shall not cause or permit the commencement of construction
              of the
              Improvements or delivery of 

             

            
              
                
                

              

              
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            materials
              to the Land until after recording of the Security Instrument with the
              county
              clerk of the county where the Land is located and after obtaining all
              permits
              and approvals from Governmental Authorities. Borrower shall commence
              construction of the Improvements no later than the Commencement Date
              and shall
              diligently pursue said construction to completion, and shall supply
              such moneys
              required in excess of the Loan and Borrower's Equity and perform such
              duties as
              may be necessary to complete the construction of the Improvements pursuant
              to
              and in conformity with the Plans and Specifications and in accordance
              with good
              building practice and in full compliance with all terms and conditions
              of the
              Loan Documents, all of which shall be accomplished on or before the
              Completion
              Date, and without liens, claims or assessments (actual or contingent)
              asserted
              against the Property for any material, labor or other items furnished
              in
              connection therewith, and all in full compliance with all Governmental
              Requirements. Borrower will provide to Lender upon request therefor
              evidence of
              satisfactory compliance with all of the foregoing. 

             

            (f)        
              Evidence
              Regarding Commencement of Construction.
              Borrower shall furnish Lender with evidence required by Lender, which
              may
              include but may not be limited to photographic evidence and/or an affidavit
              executed by the Inspecting Architect or by such other person as may
              be approved
              by Lender, that at the time and immediately after the recordation of
              the
              Security Instrument there was no commencement of construction of improvements
              (as that term is defined under laws applicable to the Property on the
              Land or
              delivery of materials to the Land, including without limitation the
              demolition
              or removal of any preexisting improvement, site work, clearing, grading,
              the
              drilling of test holes, the excavation for or the laying of the foundation
              of
              any building or structure and the delivery of any lumber or other building
              materials, equipment, tools or fuel, whether or not intended to be
              incorporated
              in the construction of improvements.

             

            (g)        
              Right
              of Lender to Inspect Property.
              During
              normal business hours and upon reasonable notice, Borrower shall permit
              Lender
              and its representatives and agents, including the Inspecting Architect,
              to enter
              upon the Property and to inspect the Improvements and all materials
              to be used
              in the construction thereof and all books, records, contracts, statements,
              invoices, bills, plans and specifications, shop drawings, appraisals,
              title and
              other insurance, reports, lien waivers and all other instruments and
              documents
              of any kind relating to the construction, leasing and operation of
              the
              Improvements; shall cooperate and cause Architect, Engineer and Contractor
              to
              cooperate with Lender and its representatives and agents during such
              inspections
              and shall maintain all of the foregoing for said inspections; shall
              permit the
              photographing of any portions of the Property or any materials thereon;
              and
              shall, if requested by Lender or its representatives or agents, move,
              remove or
              uncover such materials or portions of the Improvements as shall be
              reasonably
              necessary to fully and completely inspect the Property; provided, however,
              that
              this provision shall not be deemed to impose upon Lender any duty or
              obligation
              whatsoever to undertake such inspections, to correct any defects in
              the
              Improvements or to notify any person with respect thereto.

             

            
              
                
                

              

              
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            (h)        
              Correction
              of Defects.
              Borrower shall promptly correct any material structural defect in the
              Improvements or any material departure from the Plans and Specifications
              not
              previously approved by Lender and any violation of any requirement
              of any
              Governmental Authority. The advance of any Loan proceeds shall not
              constitute a
              waiver of Lender's right to require compliance with this covenant.

             

            (i)        
              Off-Site
              Work.
              To the
              extent required by the Plans and Specifications, Borrower shall promptly
              commence and complete any and all off-site improvements (including
              public
              streets, walks and like areas adjoining the Improvements) as and if
              required and
              provide any and all utilities and other facilities required, all in
              accordance
              with the requirements of all Governmental Authorities having jurisdiction
              thereof. Unless otherwise provided for, such off-site improvements
              shall be
              deemed part of the work of construction of the Improvements. Borrower
              expressly
              agrees to indemnify Lender and to hold it harmless against any claim
              of surety
              furnishing bond for such work to the Governmental Authorities having
              jurisdiction, whether such claims be founded upon existing or future
              liability,
              and whether such liability be expressed or implied.

             

            (j)        
              Storage
              of Materials.
              Borrower shall cause all materials supplied for or intended to be utilized
              in
              the construction of the Improvements but not affixed to or incorporated
              into the
              Property to be stored on the Property or at such other location as
              may be
              approved by Lender in writing, with adequate safeguards to prevent
              loss, theft,
              damage or commingling with other materials not intended to be utilized
              in the
              construction of the Improvements.

             

            (k)        
              Vouchers.
              Borrower shall deliver to Lender, on written demand, any contracts,
              bills of
              sale, statements, receipted vouchers or agreements under which Borrower
              claims
              title to any materials, fixtures or articles incorporated in the Improvements
              or
              otherwise subject to the lien of the Security Instrument.

             

            (l)        
              Encroachments.
              Borrower agrees that (i) the Improvements shall be constructed entirely
              on the
              Land; (ii) until the Loan is discharged, no conveyances of any portion
              of or
              interest in the Property will be made by Borrower which will cause
              any
              encroachment above, on, or under the surface of the Property; (iii)
              such
              construction will not encroach upon or overhang any easement or right-of-way
              upon the land of others; (iv) the Improvements when erected shall be
              wholly
              within applicable building restriction lines however established; and
              (v) upon
              written request Borrower will, from time to time, furnish satisfactory
              evidence
              of the foregoing.

             

            (m)        
              Liens.
              Borrower will not install nor otherwise incorporate in the Improvements
              any
              materials, equipment or fixtures under any conditional sales agreements
              or
              security agreement whereby the right is reserved or accrued to anyone
              to remove
              or repossess any such items. Borrower will not cause or permit any
              lien or claim
              for lien for any labor and/or material to be filed or to become valid
              or
              effective against the Property; provided, however, that the existence
              of any
              unperfected and unrecorded mechanic's lien shall not constitute a violation
              of
              this subsection if payment is not yet due 

             

            
              
                
                

              

              
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            for
              the
              work giving rise to the lien. Notwithstanding the foregoing, Borrower
              may in
              good faith, by appropriate proceedings, contest the validity, applicability
              or
              amount of any asserted mechanic's or materialmen's lien in accordance
              with the
              provisions set forth in the Security Instrument; provided, however,
              that in any
              event each such contest shall be concluded and the lien, interest and
              costs
              shall be paid, bonded around or otherwise removed upon completion of
              construction of the Improvements.

             

            (n)        
              Cooperation
              with Inspecting Architect.
              Borrower shall cooperate with the Inspecting Architect and will cause
              the
              Architect, the Engineer, the Contractor and the employees of each of
              them to
              cooperate with the Inspecting Architect and, upon request, will furnish
              the
              Inspecting Architect whatever he may consider necessary or useful in
              connection
              with the performance of his duties including but not limited to permits,
              subcontracts, purchase orders, lien waivers and other documents relating
              to the
              construction of the Improvements. Borrower acknowledges that the duties
              of the
              Inspecting Architect run solely to Lender and that the Inspecting Architect
              shall have no obligations or responsibilities whatsoever to Borrower,
              the
              Architect, the Engineer, the Contractor or to any of their respective
              agents or
              employees.

             

            (o)        
              Sign
              Regarding Construction Financing.
              Borrower shall include on any sign erected by Borrower at or near the
              Property
              setting forth the names of the Contractor and/or any subcontractors
              of the
              construction of the Improvements a statement in conspicuous lettering
              that
              construction financing is being provided by Lender, all to the reasonable
              satisfaction of Lender. If such sign is not erected, Borrower shall,
              upon
              request by and at the expense of Lender, erect and maintain on a suitable
              site
              on the Property a sign indicating that construction financing is being
              provided
              by Lender, all to the reasonable satisfaction of Lender.

             

            (p)        
              Appraisal.
              Borrower shall submit from time to time, within thirty (30) days following
              written request of Lender, which request may not be made earlier than
              one (1)
              year after the date of the Appraisal furnished in connection with the
              making of
              the Loan and not more often than annually thereafter (unless required
              by a
              governmental agency having jurisdiction over Lender), an MAI appraisal
              of the
              Property and the proposed Improvements by a licensed appraiser satisfactory
              to
              Lender, such appraisal to be in form satisfactory to Lender. In lieu
              of
              obtaining an appraisal from Borrower hereunder, but subject to the
              limitation
              set forth in the previous sentence, Lender may itself obtain the appraisal
              and
              Borrower shall pay the reasonable cost thereof to Lender within thirty
              (30) days
              following written request of Lender. 

             

            (q)        
              Cooperation
              Regarding Financial Condition.
              Borrower shall cooperate with Lender and its representatives to the
              end that
              Lender shall be fully apprised regarding the continuing financial condition
              of
              Borrower and, upon request of Lender or any of its representatives,
              will furnish
              Lender or such representatives such documents, instruments, financial
              statements
              or other information considered necessary or useful by Lender or its
              representatives in connection with the review and understanding of
              the


             

            
              
                
                

              

              
                10

                
                  

                

              

              
                
                

              

            

             

            financial
              condition of Borrower as it may exist from time to time. Borrower shall
              maintain
              such documents, instruments and financial statements which relate to
              its
              financial condition.

             

            (r)        
              Additional
              Expenditures by Lender.
              Borrower agrees that all sums paid or expended by Lender under the
              terms of this
              Agreement in excess of the amount of the Loan shall be considered to
              be an
              additional loan to Borrower and the repayment thereof, together with
              interest
              thereon at the Default Rate, shall be secured by the Security Instrument
              and the
              other Loan Documents and shall be immediately due and payable upon
              demand, and
              Borrower agrees to pay such sum upon demand. Nothing contained herein,
              however,
              shall obligate Lender to make such advances.

             

            (s)        
              Indemnity
              of Lender.
              Borrower shall indemnify and hold harmless Lender (for purposes of
              this
              subsection, the term “Lender”
shall
              include the directors, officers, employees and agents of Lender and
              any persons
              or entities owned or controlled by, owning or controlling, or under
              common
              control or affiliated with Lender) from and against, and reimburse
              them for, all
              claims, demands, liabilities, losses, damages, causes of action, judgments,
              penalties, costs and expenses (including, without limitation, reasonable
              attorney's fees) which may be imposed upon, asserted against or incurred
              or paid
              by them by reason of, on account of or in connection with any bodily
              injury or
              death or property damage occurring in or upon or in the vicinity of
              the Property
              through any cause whatsoever or asserted against them on account of
              any act
              performed or omitted to be performed hereunder or on account of any
              transaction
              arising out of or in any way connected with the Property or with this
              Agreement
              or any other Loan Document. WITHOUT
              LIMITATION, IT IS THE INTENTION OF BORROWER AND BORROWER AGREES THAT
              THE
              FOREGOING INDEMNITIES SHALL APPLY TO EACH INDEMNIFIED PARTY WITH RESPECT
              TO
              CLAIMS, DEMANDS, LIABILITIES, LOSSES, DAMAGES, CAUSES OF ACTION, JUDGMENTS,
              PENALTIES, COSTS AND EXPENSES (INCLUDING, WITHOUT LIMITATION, REASONABLE
              ATTORNEY'S FEES) WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT
              OF THE
              NEGLIGENCE OF SUCH (AND/OR ANY OTHER) INDEMNIFIED PARTY OR ANY STRICT
              LIABILITY.
              HOWEVER, SUCH INDEMNITIES SHALL NOT APPLY TO ANY INDEMNIFIED PARTY
              TO THE EXTENT
              THE SUBJECT OF THE INDEMNIFICATION IS CAUSED BY OR ARISES OUT OF THE
              GROSS
              NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNIFIED PARTY.
              The
              foregoing indemnities shall survive the termination of this Agreement,
              the
              foreclosure of the Security Instrument or conveyance in lieu of foreclosure
              and
              the repayment of the Loan and the discharge and release of the Loan
              Documents.
              Any amount to be paid hereunder shall be subject to and governed by
              the
              provisions of Section 4.2 hereof.

             

            (t)        
              Expenses
              and Approval of Documents.
              Borrower shall pay all costs of closing the Loan and all expenses of
              Lender with
              respect thereto, including but not 

             

            
              
                
                

              

              
                11

                
                  

                

              

              
                
                

              

            

             

            limited
              to, reasonable legal fees (including legal fees incurred by Lender
              subsequent to
              the closing of the Loan but incurred in connection with the disbursement,
              administration, collection or transfer of the Loan), title insurance
              premiums
              and other charges of the title company issuing the Mortgagee Title
              Policy,
              appraisal fees, consulting architect fees, consulting inspection fees,
              advances,
              recording expenses, surveys, intangible taxes, expenses of foreclosure
              (including reasonable attorneys' fees) and similar items, and shall
              allow all
              closing papers, Loan Documents and other legal matters to be subject
              to the
              approval of Lender's attorneys.

             

            (u)        
              Additional
              Documents.
              Borrower shall:

             

            (i)        
              Regarding
              Construction-
              furnish
              to Lender all instruments, documents, initial surveys, footing or foundation
              surveys after installation of all foundations, certificates, plans
              and
              specifications, appraisals, title and other insurance, reports and
              agreements
              and each and every other document and instrument required to be furnished
              by the
              terms of the Loan Documents, all at Borrower's expense;

             

            (ii)        
              Regarding
              Preservation of Security-
              sign
              and deliver to Lender such documents, instruments, assignments and
              other
              writings, and to do such other acts necessary or desirable, to preserve
              and
              protect the collateral at any time securing or intended to secure the
              Note, as
              Lender may require;

             

            (iii)        
              Regarding
              this Agreement-
              do and
              execute all and such further lawful and reasonable acts, conveyances
              and
              assurances for the better and more effective carrying out of the intents
              and
              purposes of this Agreement as Lender shall reasonably require from
              time to time;
              and

             

            (iv)        
              Regarding
              Permits and Approvals-
              furnish
              to Lender evidence satisfactory to Lender (x) that the Plans and Specifications
              and construction pursuant thereto and the use of the Property contemplated
              thereby comply with all applicable utility requirements, restrictive
              covenants,
              Governmental Requirements and all standards and regulations of appropriate
              supervising boards of fire underwriters and similar agencies, (y) that
              the
              engineering specifications contained in the Plans and Specifications
              are within
              applicable environmental standards, and (z) all permits and approvals
              issued by
              applicable Governmental Authorities pursuant to Governmental Requirements,
              approving the Plans and Specifications and the commencement of construction
              of
              the Improvements.

             

            (v)        
              Executive
              Order 13224.
              Neither
              Borrower, nor any person or entity holding any legal or beneficial
              interest
              whatsoever in Borrower, shall hereafter be included in, owned by, or
              controlled
              by, or act for or on behalf of, or provide assistance, support, sponsorship,
              or
              services of any kind to or otherwise associated with, any of the persons
              or
              entities referred to or described in Executive Order 13224 (Blocking
              Property


             

            
              
                
                

              

              
                12

                
                  

                

              

              
                
                

              

            

             

            and
              Prohibiting Transactions with Persons Who Commit, Threaten to Commit
              or Support
              Terrorism, as amended).

             

            (w)        
              Authorization
              to Transact Business. Within ninety (90) days from the date hereof, Borrower
              shall provide Lender satisfactory evidence that the Borrower is authorized
              to
              transact business in the commonwealth of Pennsylvania.

             

            4.2.       
              Failure
              to Perform.
              If
              Borrower fails to perform any act or to take any action or to pay any
              amount
              provided to be paid by it under the provisions of any of the covenants
              and
              agreements contained in this Agreement, Lender may but shall not be
              obligated to
              perform or cause to be performed such act or take such action or pay
              such money,
              and any expenses so incurred by Lender and any money so paid by Lender
              shall be
              an advance against the Note and shall bear interest from the date of
              making such
              payment until paid at the Default Rate and shall be secured by the
              Security
              Instrument and the other Loan Documents, and Lender upon making any
              such payment
              shall be subrogated to all rights of the person, corporation or body
              politic
              receiving such payment.

             

            ARTICLE
              V.

             

            PLANS
              AND SPECIFICATIONS

             

            5.1.       
              Plans
              and Specifications.
              Borrower has furnished (or will furnish when finalized) Lender the
              Plans and
              Specifications for construction of the Improvements, including the
              engineering
              plans, complete architectural plans, specifications and work drawings,
              projected
              costs and related information, site plans, proposed plat dedications
              and
              proposed development restrictions and conditions and all requisite
              building
              permits authorizing construction of the Improvements. Borrower has
              also
              furnished Lender with a detailed listing of the Plans and Specifications.
              The
              Plans and Specifications and the Improvements constructed pursuant
              thereto will
              comply with all applicable restrictive covenants and Governmental Requirements
              and all standards and regulations of appropriate supervising boards
              of fire
              underwriters and similar agencies (and the engineering specifications
              contained
              in the Plans and Specifications shall be within applicable environmental
              standards). The Plans and Specifications as approved will not be modified
              or
              supplemented in any respect without the prior written approval of Lender
              except
              as permitted under Section 5.3 hereof.

             

            5.2.       
              Supplemental
              Data.
              Borrower shall submit to Lender a statement of the projected cost of
              constructing the Improvements, including a description of all contracts
              let or
              to be let by Borrower for the design, engineering, construction and
              equipping of
              the Improvements, setting forth the name or names of the contractor
              or
              contractors, the date of the contracts and of any supplements or amendments
              thereto, the scope of the work covered thereby, and the aggregate amounts
              payable to the contractors thereunder, and further stating whether
              said contract
              or contracts embrace all of the work required to be done and all of
              the material
              necessary for completion of construction, and, if not, setting forth
              sufficient
              information to enable Lender to determine the estimated cost of any
              work or
              materials not so covered.

             

            
              
                
                

              

              
                13

                
                  

                

              

              
                
                

              

            

             

            5.3.       
              Changes
              in Plans.
              All
              requests for approval of changes in the Plans and Specifications or
              any other
              Construction Document must be in writing, signed by Borrower, and shall
              be
              conditioned upon acceptance by Lender, which acceptance shall be subject
              to such
              conditions and qualifications as Lender in its sole and absolute discretion
              may
              reasonably prescribe. Notwithstanding the foregoing, Lender's approval
              shall not
              be required if all of the following conditions are satisfied:

             

            (a)        
              Said
              changes do not have a material effect on the structural portions or
              the exterior
              appearance of the Improvements or the architectural design concept
              thereof;

             

            (b)        
              None
              of
              said changes increases the cost of construction by more than
              $100,000;

             

            (c)        
              The
              aggregate of all of said changes does not increase the cost of construction
              by
              more than $300,000; and

             

            (d)        
              At
              the
              end of each month Borrower submits to Lender copies of all change orders
              effecting said changes made in such month.

             

            ARTICLE
              VI.

             

            LOAN
              FUNDING

             

            6.1.       
              Loan
              Funding.
              The
              Initial Advance shall be in such amount agreed to by Borrower and Lender
              and
              shall take place in the offices of Lender or at such other place as
              Lender may
              designate.

             

            6.2.       
              Conditions
              Precedent to Loan Funding.
              Except
              as otherwise provided herein, the following shall be conditions precedent
              to
              Lender's obligations to make the Initial Advance under the Loan and
              any other
              funding or disbursal of the Loan:

             

            (a)        
              Representations
              and Warranties.
              On the
              date of disbursal of the Loan (hereinafter called the “Loan
              Funding Date”),
              all
              of Borrower's representations and warranties contained herein or in
              any other
              Loan Document shall be true and correct in all material respects.

             

            (b)        Covenants
              and Agreements.
              On the
              Loan Funding Date, Borrower shall have performed each covenant and
              agreement to
              be performed by Borrower on or before the Loan Funding Date pursuant
              to this
              Agreement, any other Loan Document within the time specified.

             

            (c)        
              Other
              Conditions.
              The
              conditions to each disbursement described in Section 7.2 hereof shall
              be
              satisfied.

             

            
              
                
                

              

              
                14

                
                  

                

              

              
                
                

              

            

             

            (d)        
              Due
              Execution and Recording of Loan Documents.
              Borrower shall have delivered to Lender evidence, in form satisfactory
              to
              Lender, that the Loan Documents have each been duly executed and constitute
              valid, binding documents, enforceable in accordance with their respective
              terms
              and have been filed or recorded, as appropriate, in all proper
              offices.

             

            (e)        
              Mortgagee
              Title Policy.
              Borrower shall have furnished Lender with the Mortgagee Title
              Policy.

             

            (f)        
              Insurance.
              Borrower shall have obtained the insurance and delivered the policies
              and
              certificates to Lender as required by subsection 2.4 of the Security
              Instrument.

             

            (g)        
              Project
              Budget.
              Lender
              shall have approved the Project Budget and all changes thereto.

             

            (h)        
              Final
              Plans and Specifications.
              Lender
              shall have approved the final Plans and Specifications.

             

            (i)        
              Construction
              Contract and Other Construction Documents.
              Except
              for the Initial Advance, Lender shall have approved the Construction
              Contract
              and all other Construction Documents and all changes to any
              thereof.

             

            (j)        
              Construction
              Schedule.
              Except
              for the Initial Advance, Lender shall have approved the Construction
              Schedule
              and all changes thereto.

             

            (k)        
              Commencement
              of Construction.
              Except
              for the Initial Advance, Lender shall have received such evidence regarding
              commencement of construction as is required by Lender.

             

            (l)        
              Contractor's
              Consent, Agreement and Certification.
              Except
              for the Initial Advance, Borrower shall have furnished Lender with
              the executed
              Contractor's Consent, Agreement and Certification.

             

            (m)        
              Architect's
              Consent, Agreement and Certification.
              Borrower shall have furnished Lender with the executed Architect's
              Consent,
              Agreement and Certification.

             

            (n)        
              Intentionally
              Omitted.

             

            (o)        
              Appraisal.
              Subject
              to Section 4.1(p) above, Borrower shall have furnished Lender or paid
              Lender's
              cost of acquiring an MAI appraisal of the Property and the proposed
              Improvements
              by a licensed appraiser satisfactory to Lender, such appraisal to be
              in the form
              and amount satisfactory to Lender.

             

            
              
                
                

              

              
                15

                
                  

                

              

              
                
                

              

            

             

            (p)        
              Survey.
              Borrower shall have furnished to Lender a certified plat of survey
              of the
              Property made by a licensed surveyor or civil engineer satisfactory
              to Lender
              meeting the requirements contained in the Pre-Closing Document List
              furnished
              Borrower by Lender.

             

            (q)        
              Zoning
              and Compliance With Laws.
              Borrower shall have delivered to Lender evidence, in form satisfactory
              to
              Lender, that the Property are zoned for the use for which the proposed
              Improvements are designed and are otherwise in compliance with all
              applicable
              Governmental Requirements, including, if applicable, all provisions
              of
              environmental statutes.

             

            (r)        
              Utilities.
              Borrower shall have furnished Lender with evidence satisfactory to
              Lender that
              all utilities services (including such utilities as are necessary to
              secure a
              certificate of occupancy or equivalent) will in a timely manner be
              supplied to
              the Property upon completion of construction, including commitment
              letters from
              the agencies or entities supplying such services.

             

            (s)        
              Permits.
              Borrower shall have furnished Lender (A) copies of the building permits
              and any
              other permits, licenses or certificates which are required in connection
              with
              construction of the Improvements in accordance with the Plans and
              Specifications, issued by the appropriate Governmental Authorities
              with
              jurisdiction over the Property, and (B) a certificate by Borrower that
              no
              proceedings of any kind are pending or threatened by any person, firm,
              corporation or public agency with respect to the revocation or suspension
              of any
              permits, licenses or certificates.

             

            (t)        
              Soils
              Report.
              Borrower shall have furnished Lender a soils report, prepared by a
              licensed soil
              engineer, showing that the condition of the soil of the land is adequate
              to
              support the Improvements which soils report shall have been approved
              by
              Lender.

             

            (u)        
              Management
              Agreement.
              Lender
              shall have received and approved the Management Agreement. All modifications
              and
              amendments to the Management Agreement or any termination of the Management
              Agreement must be approved by Lender; provided, however, so long as
              no Event of
              Default exists, Borrower may extend the term of the Management Agreement
              without
              Lender’s consent.

             

            (v)        
              Subordination
              of Management Agreement.
              Borrower shall have furnished Lender with the executed Subordination
              of
              Management Agreement.

             

            (w)        
              Tax
              Service.
              If
              required by Lender, Borrower shall have furnished Lender a real estate
              tax
              reporting service contract in form satisfactory to Lender by which
              Lender shall
              receive periodic notices of all taxes, assessments and bonds encumbering
              the
              Property.

             

            
              
                
                

              

              
                16

                
                  

                

              

              
                
                

              

            

             

            (x)        
              Other
              Documents.
              Borrower shall have delivered to Lender such other documents and certificates
              as
              Lender or Lender's counsel may reasonably request.

             

            (y)        
              Commitment
              Fee.
              Borrower shall have paid to Lender the loan commitment fee in the sum
              of
              $94,191.

             

            (z)        
              Borrower's
              Equity.
              Except
              for the Initial Advance, Borrower shall have applied Borrower's Equity
              to pay
              certain Project Costs included in the Project Budget approved by Lender,
              and
              Borrower shall have furnished Lender with a schedule showing the payment
              of such
              funds for Project Costs and evidence of such payment.

             

            ARTICLE
              VII.

             

            METHOD
              AND CONDITIONS OF DISBURSEMENTS

            OF
              LOAN PROCEEDS

             

            7.1.       
              Disbursement
              Procedure.
              Disbursement of the proceeds of the Loan shall be made by Lender to
              Borrower in
              accordance with the following procedure:

             

            (a)        
              Certificate
              for Payment.
              At such
              time as Borrower shall desire to obtain, subject to the requirements
              contained
              herein, a disbursement of any portion of the Loan proceeds, Borrower
              shall
              complete, execute and deliver to Lender a request for an advance in
              the form of
              the Certificate for Payment approved by the Lender (Lender hereby approving
              AIA
              Form G-702).

             

            (b)        
              Evidence
              of Progress of Construction.
              Each
              Certificate for Payment shall, upon the request of Lender, be accompanied
              by
              evidence in form and content satisfactory to Lender, including but
              not limited
              to certificates and affidavits of Borrower, Architect and/or Contractor
              or such
              other person as Lender may require, showing:

             

            (i)        
              The
              value
              of that portion of the Improvements completed at that time;

             

            (ii)        
              That
              all
              outstanding claims for labor, materials and fixtures have been paid
              or will be
              paid from the proceeds of such disbursement;

             

            (iii)        
              That
              there are no liens outstanding against the Property, except for Lender's
              lien
              and security interest evidenced by the Security Instrument, other than
              inchoate
              liens for property taxes not yet due;

             

            (iv)        
              That
              Borrower has complied with all of Borrower's obligations, as of the
              date
              thereof, under the Loan Documents;

             

            
              
                
                

              

              
                17

                
                  

                

              

              
                
                

              

            

             

            (v)        
              That
              all
              construction prior to the date of the request for an advance has been
              performed
              and completed in accordance with the Plans and Specifications;

             

            (vi)        That
              all
              funds previously disbursed by Lender have been applied directly to
              the payment
              of Project Costs, as set forth in the Project Budget or otherwise as
              Lender
              shall have approved in writing;

             

            (vii)        That
              all
              change orders in any amount whatsoever shall have been approved in
              writing by
              Lender, and, if required by Lender, by any surety and any Guarantor,
              except as
              provided in Section 5.3;

             

            (viii)        In
              reasonable detail but only if applicable, all tangible personal property
              installed in or appurtenant to the Improvements, but not considered
              to be
              fixtures, and the value thereof;

             

            (ix)        
              That
              the
              amount of undisbursed Loan proceeds is sufficient to pay the cost of
              completing
              the Improvements in accordance with the Plans and Specifications;

             

            (x)        
              That
              the
              location of the Improvements will not encroach upon any adjoining properties
              or
              interfere with any easement;

             

            (xi)        
              That
              all
              of Borrower's representations and warranties contained herein or in
              any other
              Loan Document remain true and correct in all material respects as of
              the date of
              such advance;

             

            (xii)        
              That
              Borrower has performed each covenant and agreement to be performed
              by Borrower
              pursuant to this Agreement or any other Loan Document within the time
              specified;

             

            (xiii)        That,
              if
              payments are to be made on account of materials or equipment not incorporated
              in
              the work but delivered and suitably stored on the Property, or at some
              other
              location agreed upon in writing, such payments shall be conditioned
              upon
              submission to Lender by Borrower of bills of sale or such other procedures
              satisfactory to Lender to establish Borrower's title to, and Lender's
              lien upon,
              such materials or equipment or otherwise protect Lender's interest;
              and

             

            (xiv)        
              That
              neither the Property nor the Improvements are the subject of any litigation
              which adversely affects or could adversely affect the title thereof
              and/or the
              validity or priority of the Security Instrument or the right of the
              Borrower to
              construct the Improvements;

             

            and
              shall
              be accompanied by copies of all bills or statements for expenses for
              which the
              advance is requested.

             

            
              
                
                

              

              
                18

                
                  

                

              

              
                
                

              

            

             

            (c)        
              Certificate
              of Inspecting Architect.
              Each
              Certificate for Payment shall be accompanied by written certification
              from
              Lender's Inspecting Architect or inspection engineer indicating the
              status of
              construction, compliance with the Plans and Specifications, and approval
              of the
              disbursement request. Borrower shall pay all reasonable fees and expenses
              of
              such architect or engineer for monthly inspections, or more frequently
              if such
              inspections result from more frequent disbursement requests from
              Borrower.

             

            (d)        
              Continuation
              of Title Insurance Coverage.
              Each
              Certificate for Payment shall, at the request of Lender, be accompanied
              by a
              satisfactory down date endorsement to the previously delivered Mortgagee
              Title
              Policy which endorsement shall (i) extend the effective date of the
              Mortgagee
              Title Policy to the date of advancement and show that since the effective
              date
              of said Policy (or the effective date of the last such endorsement,
              if any)
              there has been no change in the status of the title to the Property
              and no new
              encumbrance thereon and (ii) state the amount of coverage then existing
              under
              the Mortgagee Title Policy which shall be the total of all disbursements
              of the
              Loan including the disbursement which is made concurrently with the
              down date
              endorsement.

             

            7.2.       
              Conditions
              to Each Disbursement.
              At no
              time and in no event shall Lender be obligated to disburse funds:

             

            (a)        
              In
              excess
              of the amount recommended by the Lender's Inspecting Architect;

             

            (b)        
              If
              any
              Event of Default shall have occurred;

             

            (c)        
              If
              Lender
              in its reasonable discretion is not satisfied that the construction
              of the
              Improvements will be completed on or before the date specified
              herein;

             

            (d)        
              If
              the
              Loan is not “in balance” as provided in Section 7.3 following; or

             

            (e)        
              If
              the
              Property shall have been damaged by fire or other casualty and Lender
              shall not
              have received insurance proceeds sufficient in the sole judgment of
              Lender to
              effect the restoration of the Improvements in accordance with Plans
              and
              Specifications and to permit the completion of the Improvements on
              or before the
              Completion Date set forth herein.

             

            7.3.       
              Balancing
              of Loan and Borrower's Deposit.

             

            (a)        
              The
              Loan
              shall be deemed to be “in balance” only at such time as Borrower has paid a
              sufficient amount of Project Costs from its own funds so that the undisbursed
              portion of the Loan, together with projected Project Revenues as set
              forth in
              the Project Budget, are sufficient to pay all Project Costs until maturity
              of
              the Loan. In determining whether the Loan is in balance, Lender shall
              determine,
              among other things, whether the amounts allocated for each category
              of Project
              Costs in the Project Budget 

             

            
              
                
                

              

              
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            are
              sufficient and whether the timing of receipts and expenditures set
              forth in the
              Forecast are realistic and achievable.

             

            (b)        
              Within
              ten (10) days after written notice from Lender to Borrower that the
              Loan is not
              in balance, Borrower shall deposit with Lender sufficient funds (herein
              called
“Borrower's
              Deposit”)
              with
              Lender to bring the Loan in balance. The Borrower's Deposit will be
              held by
              Lender in a non-interest bearing account collaterally assigned to secure
              the
              Loan and will be disbursed by Lender to pay Project Costs pursuant
              to this
              Agreement, prior to the disbursement of any additional proceeds of
              the Loan.
              Upon the occurrence of an Event of Default under this Agreement, Lender
              may
              apply Borrower's Deposit against the unpaid indebtedness evidenced
              by the Note,
              principal, accrued interest or attorney's fees, in such order as Lender
              may
              determine. Upon the payment in full of the Loan and all other obligations
              of
              Borrower to Lender hereunder, Lender shall return the remaining balance
              of
              Borrower's Deposit, if any, to Borrower. 

             

            (c)        
              Borrower
              agrees to use all Project Revenues for payment of Project Costs and
              to provide
              Lender with satisfactory evidence of such payment. Project Revenues
              may not be
              distributed to partners or shareholders of Borrower, or used for anything
              other
              than Project Costs, prior to payment in full of the Loan.

             

            (d)        
              Borrower
              will provide Lender with draw request documents, satisfactory title
              endorsements
              and other information required hereunder with respect to funds used
              to pay
              Project Costs under subsections (b) and (c) above, on a monthly basis,
              as if
              such funds were disbursements of the Loan.

             

            7.4.       
              Retainage
              and Final Disbursement.
              Ten
              percent (10%) of each Loan disbursement for costs of construction of
              the
              Improvements shall be withheld by Lender, which ten percent (10%) shall
              be
              disbursed only upon compliance with the following requirements (in
              addition to
              the requirements for all other disbursements):

             

            (a)        
              Receipt
              by Lender of satisfactory evidence of the substantial completion of
              the
              Improvements in accordance with Plans and Specifications and approval
              of such
              completion by Governmental Authorities having jurisdiction and approval
              of such
              completion by the representative of Lender;

             

            (b)        
              Receipt
              by Lender of a satisfactory “as-built” blueprint or survey reflecting the
              location of the Improvements on the Land in accordance with the Plans
              and
              Specifications;

             

            (c)        
              Receipt
              by Lender of (i) lien waivers or lien subordinations or releases from
              all
              contractors, subcontractors, laborers and materialmen employed in furnishing
              labor or materials in connection with the construction of the Improvements
              and
              (ii) an endorsement to the Mortgagee Title Policy covering the Property
              previously issued to Lender removing any exception with respect to
              liens arising
              by reason of unpaid bills or 

             

            
              
                
                

              

              
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            claims
              for work performed or materials furnished in connection with the
              Improvements;
              and

             

            (d)        
              Receipt
              by Lender of such other certificates, assurances and opinions as Lender
              shall
              reasonably require.

             

            7.5.       
              Notice,
              Frequency and Place of Disbursements.
              The
              Certificate for Payment shall be submitted to Lender at least ten (10)
              business
              days prior to the date of the requested advance. Disbursements shall
              be made no
              more frequently than monthly and in amounts of not less than Twenty
              Five
              Thousand Dollars ($25,000). All disbursements shall be made at the
              principal
              office of Lender at Dallas, Texas or at such other place as Lender
              may
              designate.

             

            7.6.       
              Deposit
              of Funds Advanced.
              Borrower will immediately deposit all Loan proceeds advanced by Lender
              in a
              separate and exclusive account, to be withdrawn and used solely for
              the purposes
              permitted under the provisions of this Agreement, and will promptly
              furnish
              Lender with evidence thereof.

             

            7.7.       
              Advances
              to Contractor.
              After
              an Event of Default, Lender may make any or all advances of the Loan
              directly to
              Contractor for deposit in an appropriately designated special bank
              account and
              the execution of this Agreement by the Borrower shall, and hereby does,
              constitute an irrevocable direction and authorization to so advance
              the funds.
              No further direction or authorization from Borrower shall be necessary
              to
              warrant such direct advances to Contractor and all such advances shall
              satisfy
pro tanto
              the
              obligations of Lender hereunder and shall be secured by the Security
              Instrument
              and the other Loan Documents as fully as if made to Borrower, regardless
              of the
              disposition thereof by Contractor.

             

            7.8.       
              Advances
              Do Not Constitute a Waiver.
              No
              advance of Loan proceeds hereunder shall constitute a waiver of any
              of the
              conditions of Lender's obligation to make further advances nor, in
              the event
              Borrower is unable to satisfy any such condition, shall any such advance
              have
              the effect of precluding Lender from thereafter declaring such inability
              to be
              an Event of Default hereunder.

             

            7.9.       
              Interest
              Reserve Account.
              The
              amount of the Loan was determined on the basis of the Project Budget
              prepared by
              Borrower and submitted to Lender, setting forth, among other things,
              the accrued
              interest on the disbursed principal of the Note during the term of
              the Note,
              estimated not to exceed, after the application of Project Revenues,
              if any, as
              provided in Section 7.10 hereof the amount set forth on the Project
              Budget
              (hereinafter called the “Interest
              Reserve Account”).
              Subject to the conditions set forth in this Article VII, Lender will
              disburse on
              the first day of each month a portion of the Loan sufficient to pay
              accrued
              interest then due and payable on the Note, and the amount thereof shall
              increase
              the principal of the Note and shall reduce the balance of the Interest
              Reserve
              Account. Under no circumstances shall the undisbursed Loan be disbursed
              to pay
              accrued interest thereon after depletion of the balance of the Interest
              Reserve
              Account. In lieu of disbursing Loan proceeds to Borrower for payment
              of accrued
              interest thereon, Lender may handle such disbursement and payment by
              making


             

            
              
                
                

              

              
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            appropriate
              entries on the books and records of Lender, whereupon a statement summarizing
              such entries shall be furnished to Borrower.

             

            7.10.       
              Advances
              of Interest.
              Notwithstanding anything to the contrary contained in Section 7.9 or
              elsewhere
              in this Agreement, at such time as the Interest Reserve Account has
              been fully
              funded, Lender shall have no obligation to disburse any portion of
              the Loan to
              pay accrued interest then due and payable on the Note. At such time
              as the
              Interest Reserve Account has been fully funded Borrower hereby agrees
              to apply
              Project Revenues, to the extent available after application of the
              same to the
              normal operating expenses of the Property, to the payment of accrued
              interest
              then due and payable on the Note. Borrower hereby agrees to apply all
              such
              rents, issues and profits of the Property to payment of accrued interest
              and any
              installment of principal due and payable on the Note to the full extent
              that
              such rents, issues and profits are not exhausted by payment of normal
              operating
              expenses of the Property, regardless of the existence of any remaining
              balance
              of the Interest Reserve Account.

             

            ARTICLE
              VIII.

             

            DEFAULTS

             

            8.1.       
              Event
              of Default.
              An
“Event
              of Default”
shall
              be deemed to have occurred hereunder if:

             

            (a)        
              Default
              Under Security Instrument.
              An
              Event of Default occurs under the Security Instrument; or

             

            (b)        
              Failure
              to Obtain an Advance.
              Borrower is unable to satisfy any condition of its right to the receipt
              of any
              advance hereunder for a period in excess of fifteen (15) days; or

             

            (c)        
              Litigation.
              Any
              suit shall be filed against Borrower or Guarantor, which if adversely
              determined, would substantially impair the ability of Borrower or Guarantor
              to
              perform each and every one of its obligations under and by virtue of
              the Loan
              Documents; or

             

            (d)        
              Levy
              Upon the Property.
              A levy
              be made under any process on, or a receiver be appointed for, the Property
              or
              any other property of Borrower; or

             

            (e)        
              Noncompliance
              with Laws.
              The
              Improvements are not constructed in compliance with all Governmental
              Requirements and regulations of appropriate supervising boards of fire
              underwriters and similar agencies; or

             

            (f)        
              Deviation
              from Plans and Specifications.
              There
              is any substantial deviation in the work of construction from the Plans
              and
              Specifications without the prior written approval of Lender, or there
              is
              incorporated in the Improvements any substantially defective workmanship
              or
              materials, which said deviation or defect is not 

             

            
              
                
                

              

              
                22

                
                  

                

              

              
                
                

              

            

             

            commenced
              to be corrected within ten (10) days after written notice thereof and
              such
              correction diligently continued to its conclusion; or

             

            (g)        
              Cessation
              of Work.
              Once
              commenced, there occurs cessation of the work of construction prior
              to
              completion of the Improvements for a continuous period of ten (10)
              days or more
              for causes other than those beyond the control of Borrower or consented
              to in
              writing by Lender; or

             

            (h)        Injunction.
              Any
              person obtains an order or decree in any court of competent jurisdiction
              enjoining the construction of the Improvements or enjoining or prohibiting
              Borrower or Lender from performing this Agreement, and such proceedings
              are not
              properly contested or such decree is not vacated within sixty (60)
              days after
              the granting thereof; or

             

            (i)        
              Lapse
              of Permit.
              Borrower neglects, fails, or refuses to keep in full force and effect
              any
              required material permit or approval with respect to the construction
              of the
              Improvements.

             

            ARTICLE
              IX.

             

            REMEDIES

             

            9.1.       
              Remedies.
              Upon
              the occurrence of any one or more of the events of default set out
              in Article
              VIII hereof, Lender shall at its option be entitled to proceed to exercise
              any
              of the following remedies:

             

            (a)        
              Borrower
              agrees that the occurrence of such Event of Default shall constitute
              a default
              under each of the Loan Documents, thereby entitling Lender (i) to exercise
              any
              of the various remedies therein provided including the acceleration
              of the
              indebtedness evidenced by the Note and the foreclosure of the Security
              Instrument and (ii) cumulatively to exercise all other rights, options
              and
              privileges provided by law.

             

            (b)        
              Lender
              shall have the right:

             

            (i)        
              to
              take
              whatever action is necessary or appropriate by the use of legal proceedings
              or
              otherwise (a) to cause Borrower to vacate the Property and (b) to take
              possession of the Property;

             

            (ii)        to
              perform or cause to be performed any and all work and labor necessary
              to
              complete the Improvements in accordance with Plans and
              Specifications;

             

            (iii)       to
              employ
              security watchmen to protect the Property; and

             

            
              
                
                

              

              
                23

                
                  

                

              

              
                
                

              

            

             

            (iv)       to
              disburse that portion of the Loan proceeds not previously disbursed
              (including
              any retainage) and the Borrower's Deposit to the extent necessary to
              complete
              construction of the Improvements in accordance with the Plans and
              Specifications, and if the completion requires a larger sum than the
              remaining
              undisbursed portion of the Loan, to disburse such additional funds,
              all of which
              funds so disbursed by Lender shall be deemed to have been disbursed
              to Borrower
              and shall be secured by the Security Instrument and the other Loan
              Documents,
              and to take all actions necessary in connection therewith, including
              but not
              limited to the following: to use any funds of Borrower including the
              Borrower's
              Deposit and any balance which may be held in escrow and any Loan or
              other funds
              which may remain unadvanced hereunder for the purpose of completing
              the
              Improvements in the manner called for by the Plans and Specifications;
              to make
              such additions and changes and corrections in the Plans and Specifications
              which
              shall be necessary or desirable to complete the Improvements in substantially
              the manner contemplated by the Plans and Specifications; to employ
              such
              contractors, subcontractors, agents, architects and inspectors as shall
              be
              required for said purposes; to pay, settle or compromise all existing
              or future
              bills and claims which are or may be liens against said Property or
              as may be
              necessary or desirable for the completion of the Improvements or the
              clearance
              of title to the Property; to execute all applications and certificates
              in the
              name of Borrower which may be required by any construction contract
              and to do
              any and every act with respect to the construction of the Improvements
              which
              Borrower may do in its own behalf. In accordance therewith Borrower
              hereby
              assigns and quitclaims to Lender upon an Event of Default, all sums
              to be
              advanced hereunder including retainage and the Borrower's Deposit and
              any sums
              in escrow conditioned upon the use of said sums, if any, for the completion
              of
              the Improvements. Lender shall have no obligation to undertake any
              of the
              foregoing actions and if Lender shall do so, it shall have no liability
              to
              Borrower for the sufficiency or adequacy of any such actions taken
              by
              Lender.

             

            (c)        
              Lender
              may declare all indebtedness secured by the Security Instrument immediately
              due
              and payable, and Lender shall be relieved from all obligations to Borrower
              under
              this Agreement.

             

            (d)        
              Lender
              shall have the right at any time and from time to time, without notice
              to
              Borrower (any such notice being expressly waived), to set-off and apply
              any and
              all deposits (general or special, time or demand, provisional or final)
              at any
              time held, and any other indebtedness at any time owing by Lender to
              or for the
              credit or the account of Borrower, against any and all of the indebtedness
              of
              Borrower evidenced by the Note or this Agreement and/or secured by
              the Security
              Instrument, irrespective of whether or not Lender shall have made any
              demand
              under this Agreement or the Note and although such indebtedness may
              be
              unmatured. Lender agrees to notify Borrower promptly after any such
              set-off and
              application, provided that the failure to give such notice shall not
              affect the
              validity of such set-off and application. The rights of Lender 

             

            
              
                
                

              

              
                24

                
                  

                

              

              
                
                

              

            

             

            under
              this subsection are in addition to any other rights and remedies (including,
              without limitation, other rights of set-off) which Lender may have
              under the
              Note or the other Loan Documents or otherwise.

             

            ARTICLE
              X.

             

            GENERAL
              CONDITIONS

             

            10.1.       Rights
              of Third Parties.
              All
              conditions of the obligations of Lender hereunder, including the obligation
              to
              make advances, are imposed solely and exclusively for the benefit of
              Lender and
              its successors and assigns and no other person shall have standing
              to require
              satisfaction of such conditions in accordance with their terms or be
              entitled to
              assume that Lender will make advances or refuse to make advances in
              the absence
              of strict compliance with any or all thereof and no other person shall,
              under
              any circumstances, be deemed to be a beneficiary of such conditions,
              any and all
              of which may be freely waived in whole or in part by Lender at any
              time if in
              its sole discretion it deems it desirable to do so. In particular,
              Lender makes
              no representations and assumes no duties or obligations as to third
              parties
              concerning the quality of the construction by Borrower of the Improvements
              or
              the absence therefrom of defects. Failure to inspect the construction
              of the
              Improvements or any part thereof or inspection not followed by notice
              of default
              shall not constitute a waiver of any of Lender's rights hereunder nor
              shall it
              constitute a representation that there has been compliance with the
              Plans and
              Specifications or that the construction of the Improvements is free
              from
              defective materials or workmanship. In this connection Borrower agrees
              to and
              shall indemnify Lender from any liability, claims or losses resulting
              from the
              disbursement of the Loan proceeds or from the condition of the Property
              whether
              related to the quality of construction or otherwise and whether arising
              during
              or after the term of the Loan. This provision shall survive the repayment
              of the
              Loan and shall continue in full force and effect so long as the possibility
              of
              such liability, claims or losses exists.

             

            10.2.       Waivers.
              No
              waiver of or consent to any departure from any provision hereof shall
              be
              effective unless in writing and signed by Lender and shall be effective
              only in
              the specific instance for the purpose for which given and to the extent
              specified in such writing. No advance of Loan proceeds hereunder shall
              constitute a waiver of any of the conditions to Lender's obligation
              to make
              further advances nor, in the event Borrower fails to satisfy any such
              condition,
              shall any advance have the effect of precluding Lender from thereafter
              declaring
              such failure to be an Event of Default. No waiver of any default hereunder
              shall
              affect or constitute a waiver of any later default. No delay or omission
              of
              Lender to exercise any right or remedy upon the happening of any Event
              of
              Default shall impair any such right or remedy or be deemed to be a
              waiver of
              such Event of Default.

             

            10.3.       Evidence
              of Satisfaction of Conditions.
              Any
              condition of this Agreement which requires the submission of evidence
              of the
              existence or nonexistence of a specified fact or facts implies as a
              condition
              the existence or nonexistence, as the case may be, of such fact or


             

            
              
                
                

              

              
                25

                
                  

                

              

              
                
                

              

            

             

            facts,
              and Lender shall, at all times, be free independently to establish
              to its
              satisfaction and in its absolute discretion such existence or
              nonexistence.

             

            10.4.       Assignment
              by Borrower.
              Anything to the contrary herein notwithstanding, Borrower shall have
              no right to
              assign its rights hereunder or the proceeds of the Loan without the
              written
              consent of Lender and any such assignment or purported assignment shall,
              at
              Lender's option, relieve Lender from all further obligations hereunder
              and shall
              constitute a default under this Agreement.

             

            10.5.       Successors
              and Assigns Included in Parties.
              Whenever in this Agreement one of the parties hereto is named or referred
              to,
              the heirs, legal representatives, successors and assigns of such party
              shall be
              included and all covenants and agreements contained in this Agreement
              by or on
              behalf of the Borrower or by or on behalf of Lender shall bind and
              inure to the
              benefit of their respective heirs, legal representatives, successors
              and
              assigns, whether so expressed or not.

             

            10.6.       Exercise
              of Rights and Remedies.
              All
              rights and remedies of Lender hereunder or under the Note or under
              the Security
              Instrument or under any other Loan Document shall be separate, distinct
              and
              cumulative and no single, partial or full exercise of any right or
              remedy shall
              exhaust the same or preclude Lender from thereafter exercising in full
              or in
              part the same right or remedy or from concurrently or thereafter exercising
              any
              other right or remedy which Lender may have hereunder, under the Note
              or
              Security Instrument or any other Loan Document, or at law or in equity,
              and each
              and every such right and remedy may be exercised at any time or from
              time to
              time.

             

            10.7.       Headings.
              The
              headings of the sections and subsections of this Agreement are for
              the
              convenience of reference only, are not to be considered a part hereof
              and shall
              not limit or otherwise affect any of the terms hereof.

             

            10.8.       Applicable
              Law;
              Jurisdiction; Waiver of Jury Trial.
              Sections 5.30 - 5.32 of the Security Instrument are incorporated herein
              by
              reference.

             

            10.9.       Usury.
              Section
              8 of the Note is incorporated herein by reference.

             

            10.10.      Invalid
              Provisions to Affect No Others.
              If
              fulfillment of any provision hereof or any transaction related hereto
              at the
              time performance of such provisions shall be due, shall involve transcending
              the
              limit of validity prescribed by law, then ipso facto,
              the
              obligation to be fulfilled shall be reduced to the limit of such validity;
              and
              if any clause or provisions herein contained operates or would prospectively
              operate to invalidate this Agreement in whole or in part, then such
              clause or
              provision only shall be held for naught, as though not herein contained,
              and the
              remainder of this Agreement shall remain operative and in full force
              and
              effect.

             

            10.11.      Number
              and Gender.
              Whenever the singular or plural number, masculine or feminine or neuter
              gender
              is used herein, it shall equally include the other.

             

            
              
                
                

              

              
                26

                
                  

                

              

              
                
                

              

            

             

            10.12.      Amendments.
              Neither
              this Agreement nor any provision hereof may be changed, waived, discharged
              or
              terminated orally, but only by an instrument in writing signed by the
              party
              against whom enforcement of the change, waiver, discharge or termination
              is
              sought.

             

            10.13.      Notice.
              Any
              notice or communication required or permitted hereunder shall be given
              in
              writing in the manner set forth in the Security Instrument.

             

            10.14.      Legal
              Proceedings.
              Lender
              shall have the right to commence, appear in, or to defend any action
              or
              proceeding purporting to affect the rights or duties of the parties
              hereunder or
              the payment of any funds, and in connection therewith pay necessary
              expenses,
              employ counsel and pay its reasonable fees. Any such expenditures shall
              be
              considered additional advances hereunder and shall bear interest at
              the rate
              payable under the Note for installments of principal and/or interest
              after
              maturity shall be secured by the Loan Documents and shall be paid by
              Borrower to
              Lender upon demand.

             

            10.15.      Assignment
              by Lender.
              Lender
              shall have the right to assign any portion of this Agreement and/or
              the Loan and
              to disseminate to such assignee any information it has pertaining to
              the Loan,
              including without limitation, complete and current credit information
              on
              Borrower, any of its principals and any Guarantor. In the event of
              such an
              assignment, Borrower will agree to such modifications to this Agreement
              as will
              facilitate such assignment, provided that such modifications will not
              materially
              add to the obligations of Borrower. It is understood that any assignment
              by
              Lender will not result in additional cash expense to Borrower. Neither
              the
              shareholders, nor the trustees of a real estate investment trust assignee
              shall
              be personally liable for the obligations of such trust and Borrower
              will agree
              to look solely to the trust property for the payment of any claim
              hereunder.

             

            10.16.      Lender
              Not a Joint Venturer.
              Notwithstanding anything to the contrary herein contained, Lender,
              by entering
              into this Agreement or by any action taken pursuant hereto, will not
              be deemed a
              partner or joint venturer with Borrower, and Borrower will indemnify
              and hold
              Lender harmless from any and all damages resulting from such a construction
              of
              the parties and their relationship.

             

            10.17.      Survival
              of Covenants.
              All
              covenants of either party contained herein shall continue and survive
              until the
              Loan has been fully paid and discharged.

             

            10.18.      Time
              Is of the Essence.
              Time is
              of the essence of this Agreement.

             

            10.19.      Loan
              Participation.
              Borrower acknowledges and agrees that Lender may, from time to time,
              sell or
              offer to sell interests in the Loan and Loan Documents to one or more
              participants. Borrower authorizes Lender to disseminate to such participant
              or
              prospective participant, any information it has pertaining to the Loan,
              including without limitation, complete and current credit information
              on
              Borrower, any of its principals and Guarantor. Upon request, Borrower
              shall
              execute and deliver new or replacement promissory notes to Lender and
              the
              assignee of Lender evidencing their respective prorata share of the
              Loan.

             

            
              
                
                

              

              
                27

                
                  

                

              

              
                
                

              

            

             

            10.20.      USA
              Patriot Act.
              Lender
              hereby notifies Borrower that pursuant to the requirements of the USA
              Patriot
              Act, Lender is required to obtain, verify and record information that
              identifies
              Borrower, which information includes the name and address of Borrower
              and other
              information that will allow Lender to identify Borrower in accordance
              with the
              USA Patriot Act.

             

            10.21.      Exhibits.
              All
              Exhibits attached to this Agreement are hereby incorporated by reference
              and
              made a part of this Agreement for all purposes.

             

            10.22.      Confidential
              Information. During the term of the Loan, Lender, its agents or employees
              may encounter individually identifiable healthcare information or other
              confidential information relating to the residents at the Facility
              or the CCRC
              Property (collectively, the "Confidential
              Information").
              Unless otherwise required by law, Lender, its agents and employees
              shall not
              disclose, compile, aggregate, remove from the Facility, the Improvements
              or
              record in any manner any Confidential Information, and shall not cause
              Borrower,
              any Property Related Person, the Facility, the Improvements or the
              CCRC Property
              to violate any laws, regulations or ordinances intended to protect
              the privacy
              rights of the residents at the Property, including, without limitation,
              HIPAA or
              its implementing regulations.

             

            IN
              WITNESS WHEREOF, Borrower and Lender have hereunto caused these presents
              to be
              executed on the date first above written.

             

            REMAINDER
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              SIGNATURE
                PAGE OF BORROWER TO

              CONSTRUCTION
                LOAN AGREEMENT

               

              
                	 	 	 
	 	ARC
                        BRANDYWINE,
                        L.P., a Delaware limited partnership
	 
 	 
 	 
 
	 	By:  	
                        ARC
                          Brandywine GP, LLC, a Tennessee limited liability company,
                          its general
                          partner

                      
	 	 	 


              

               

              
                
                  	 	
                          By:

                        	
                        


                

                
                  	 	 	
                          Name:

                        	 
	 	 	
                          Title:

                        	 


                

              

              
              

               

               

              
                
                  
                  

                

                
                  
                  

                  
                    

                  

                

                
                  
                  

                

              

              
              

              SIGNATURE
                PAGE OF LENDER TO 

            

            CONSTRUCTION
              LOAN AGREEMENT

            


             

                          
              GUARANTY BANK, a federal savings bank

             

            
              
                	
                      	
                        By:

                      	
                      


              

              
                
                  	 	 	
                          Name:

                        	 
	 	 	
                          Title:

                        	 


                



              
                
                  
                  

                

                
                  
                  

                  
                    

                  

                

                
                  
                  

                

              

            

             

            EXHIBITS

            TO

            LOAN
              AGREEMENT

             
              

            
              	EXHIBIT A	-	Land
	EXHIBIT B	-	Project Budget
	EXHIBIT C	-	Healthcare Rider
	EXHIBIT D	-	CCRC Property
	EXHIBIT E	-	
                      Site Plan 

                    


            

            


            
              
                
                

              

              
                
                

                
                  

                

              

              
                
                

              

            

             

            EXHIBIT
              A

             

            LEGAL
              DESCRIPTION TERRACE HOMES AT BRANDYWINE

            


            


            Any
              residential unit built in Townhouse Buildings as defined in the Amended
              and
              Restated Declaration of Condomnium for Freedom Village II at Brandywine
              Condominium of record in Record Book 6463, page 1155, records of Chester
              County,
              Pennsylvania (also sometimes known as The Terrace Homes at Brandywine).
              The
              Townhouse Buildings,including the residential units located therein,
              are to be
              constructed upon the following described land:

            


            ALL
              THAT CERTAIN
              piece of
              ground situated in the Township of West Brandywine, County of Chester,
              Commonwealth of Pennsylvania being a portion of Freedom Village at
              Brandywine
              and shown on a "Condominium Plat of Freedom Village at Brandywine",
              prepared by
              Littlejohn Engineering Associates Nashville, Tennessee, dated March
              30, 2005 and
              being a more fully described as follows:

            


            BEGINNING
              at a
              point at or near the northwesterly edge of cartway of Freedom Boulevard
              (as
              shown on said plan) within a Twenty Feet (20") wide Philadelphia Water
              Company
              Easement, said point being the southerly most point of this herein
              described
              piece of ground and being measures the following two (2) courses and
              distances
              from a spike found in the bed of Caln Meeting House road (T-413) along
              the
              extension of the line common to the lands of the now or late Freedom
              Village at
              Brandywine to the east and the lands of the now or late William F.
              and Dianne B.
              Hammel to the west:

             

            
              	 	
                      (1)

                    	
                      along
                        said common line of said Freedom Village at Brandywine and
                        said Hammel,
                        South 05 degrees 30 minutes 14 seconds East 519.18 feet;
                        

                    


            

            
              	 	
                      (2)

                    	
                      over
                        the lands of said Freedom Village at Brandywine, North 84
                        degrees 29
                        minutes 46 seconds East 91.87 feet;

                    


            

            


            thence
              from the point of beginning over the lands of said Freedom Village
              at Brandywine
              the following eight (8) courses and distances:

            


            
              	 	
                      (1)

                    	
                      across,
                        then leaving sand Philadelphia Water Company Easement, North
                        30 degrees 59
                        minutes 19 seconds West 45.55 feet to a
                        point;

                    


            

            
              	 	
                      (2)

                    	
                      North
                        09 degrees 28 minutes 50 seconds West 112.00 feet to the
                        point;

                    


            

            
              	 	
                      (3)

                    	
                      North
                        80 degrees 31 minutes 10 seconds East 199.81 feet to a
                        point;

                    


            

            
              	 	
                      (4)

                    	
                      North
                        85 degrees 21 minutes 04 seconds East 488.51 feet to a
                        point;

                    


            

            
              	 	
                      (5)

                    	
                      South
                        04 degrees 38 minutes 56 seconds East 120.69 feet to a point
                        at or near
                        the northerly edge of cartway of aforesaid Freedom Boulevard;
                        

                    


            

            
              	 	
                      (6)

                    	
                      along
                        the same, South 85 degrees 13 minutes 29 seconds West 542.15
                        feet to a
                        point of curvature;

                    


            

            
            

             

            
              
                
                

              

              
                1

                
                  

                

              

              
                
                

              

            

             

            
              	 	
                      (7)

                    	
                      southwesterly
                        along the arc of a curve to the left having a radius of 191.00
                        feet, an
                        arc distance of 65.94 feet and a chord which bears South
                        75 degrees 20
                        minutes 02 seconds West 65.62 feet to a point of compound
                        curvature;

                    


            

            
              	 	
                      (8)

                    	
                      southwesterly
                        along the arc of a curve to the left having a radius of 119.50
                        feet, an
                        arc distance of 63.30 feet and a chord which bears South
                        50 degrees 16
                        minutes 04 seconds West 62.56 feet to the point and place
                        of beginning.
                        

                    


            

            


            CONTAINING:
              83,466
              square feet (1.916 acres) of land be the same, more or less.

            


            
              
                
                

              

              
                2

                
                  

                

              

              
                
                

              

            

             

            EXHIBIT
              B

             

            
              
                 

                
                  	
                          PROJECT
                            BUDGET

                        
	 
	
                          Freedom
                            Village at Brandywine Entry Fee Expansion

                        
	
                          
                            66,000
                              S.F.

                          

                        
	
                          28
                            Units

                        
	 	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	
                            

                        	 	 	 	 	 	
                          Equity/

                        	 	
                          Loan

                        	 	
                           

                        	 	 	 
	
                          Category

                        	 	
                           Cost

                        	 	
                          $/Unit

                        	 	
                          $/PSF

                        	 	
                          Exposure

                        	 	
                          Budget

                        	 	
                          $/Unit

                        	 	
                          $/PSF

                        	 
	 	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                          Land
                            

                        	 	
                          $

                        	
                          0

                        	 	
                          $

                        	
                          0

                        	 	
                          $

                        	
                          0.00

                        	 	
                          $

                        	
                          0

                        	 	
                          $

                        	
                          0

                        	 	
                          $

                        	
                          0

                        	 	
                          $

                        	
                          0.00

                        	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                          Construction:

                        	 	 	
                        	 	 	
                        	 	 	
                        	 	 	 	 	 	
                        	 	 	
                        	 	 	
                        	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                          Hard
                            Costs

                        	 	
                          $

                        	
                          8,617,083

                        	 	
                          $

                        	
                          307,753

                        	 	
                          $

                        	
                          130.56

                        	 	
                          $

                        	
                          2,256,915

                        	 	
                          $

                        	
                          6,360,168

                        	 	
                          $

                        	
                          227,149

                        	 	
                          $

                        	
                          96.37

                        	 
	
                          FF&E
                            

                        	 	
                          $

                        	
                          444,600

                        	 	
                          $

                        	
                          15,879

                        	 	
                          $

                        	
                          6.74

                        	 	
                          $

                        	
                          0

                        	 	
                          $

                        	
                          444,600

                        	 	
                          $

                        	
                          15,879

                        	 	
                          $

                        	
                          6.74

                        	 
	
                          Hard
                            Cost Contingency

                        	 	
                          $

                        	
                          200,000

                        	 	
                          $

                        	
                          7,143

                        	 	
                          $

                        	
                          3.03

                        	 	
                          $

                        	
                          0

                        	 	
                          $

                        	
                          200,000

                        	 	
                          $

                        	
                          7,143

                        	 	
                          $

                        	
                          3.03

                        	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                          Sub-Total
                            Construction

                        	 	
                          $

                        	
                          9,261,683

                        	 	
                          $

                        	
                          330,774

                        	 	
                          $

                        	
                          140.33

                        	 	
                          $

                        	
                          2,256,915

                        	 	
                          $

                        	
                          7,004,768

                        	 	
                          $

                        	
                          250,170

                        	 	
                          $

                        	
                          106.13

                        	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                          Soft
                            Cost:

                        	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                          Financing
                            Costs

                        	 	
                          $

                        	
                          61,096

                        	 	
                          $

                        	
                          2,182

                        	 	
                          $

                        	
                          0.93

                        	 	
                          $

                        	
                          0

                        	 	
                          $

                        	
                          61,096

                        	 	
                          $

                        	
                          2,182

                        	 	
                          $

                        	
                          0.93

                        	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                          Permits
                            & Fees

                        	 	
                          $

                        	
                          25,000

                        	 	
                          $

                        	
                          893

                        	 	
                          $

                        	
                          0.38

                        	 	
                          $

                        	
                          0

                        	 	
                          $

                        	
                          25,000

                        	 	
                          $

                        	
                          893

                        	 	
                          $

                        	
                          0.38

                        	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                          Legal

                        	 	
                          $

                        	
                          30,000

                        	 	
                          $

                        	
                          1,071

                        	 	
                          $

                        	
                          0.45

                        	 	
                          $

                        	
                          0

                        	 	
                          $

                        	
                          30,000

                        	 	
                          $

                        	
                          1,071

                        	 	
                          $

                        	
                          0.45

                        	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                          Utilities

                        	 	
                          $

                        	
                          36,000

                        	 	
                          $

                        	
                          1,286

                        	 	
                          $

                        	
                          0.55

                        	 	
                          $

                        	
                          0

                        	 	
                          $

                        	
                          36,000

                        	 	
                          $

                        	
                          1,286

                        	 	
                          $

                        	
                          0.55

                        	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                          Architecture/Engineering

                        	 	
                          $

                        	
                          696,300

                        	 	
                          $

                        	
                          24,868

                        	 	
                          $

                        	
                          10.55

                        	 	
                          $

                        	
                          0

                        	 	
                          $

                        	
                          696,300

                        	 	
                          $

                        	
                          24,868

                        	 	
                          $

                        	
                          10.55

                        	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                          Pre
                            Opening/Mrktg

                        	 	
                          $

                        	
                          795,000

                        	 	
                          $

                        	
                          28,393

                        	 	
                          $

                        	
                          12.05

                        	 	
                          $

                        	
                          0

                        	 	
                          $

                        	
                          795,000

                        	 	
                          $

                        	
                          28,393

                        	 	
                          $

                        	
                          12.05

                        	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                          Taxes
                            & Insurance

                        	 	
                          $

                        	
                          123,000

                        	 	
                          $

                        	
                          4,393

                        	 	
                          $

                        	
                          1.86

                        	 	
                          $

                        	
                          0

                        	 	
                          $

                        	
                          123,000

                        	 	
                          $

                        	
                          4,393

                        	 	
                          $

                        	
                          1.86

                        	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                          Soft
                            Cost Contingency

                        	 	
                          $

                        	
                          150,000

                        	 	
                          $

                        	
                          5,357

                        	 	
                          $

                        	
                          2.27

                        	 	
                          $

                        	
                          0

                        	 	
                          $

                        	
                          150,000

                        	 	
                          $

                        	
                          5,357

                        	 	
                          $

                        	
                          2.27

                        	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                          Construction
                            Interest

                        	 	
                          $

                        	
                          498,000

                        	 	
                          $

                        	
                          17,786

                        	 	
                          $

                        	
                          7.55

                        	 	
                          $

                        	
                          0

                        	 	
                          $

                        	
                          498,000

                        	 	
                          $

                        	
                          17,786

                        	 	
                          $

                        	
                          7.55

                        	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                          Operating
                            Deficit Reserve 

                        	 	
                          $

                        	
                          0

                        	 	
                          $

                        	
                          0

                        	 	
                          $

                        	
                          0.00

                        	 	
                          $

                        	
                          0

                        	 	
                          $

                        	
                          0

                        	 	
                          $

                        	
                          0

                        	 	
                          $

                        	
                          0.00

                        	 
	
                           

                        	 	 	
                        	 	 	 	 	 	 	 	 	
                        	 	 	
                        	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                          Total
                            Project Cost

                        	 	
                          $

                        	
                          11,676,079

                        	 	
                          $

                        	
                          417,003

                        	 	
                          $

                        	
                          176.91

                        	 	
                          $

                        	
                          2,256,915

                        	 	
                          $

                        	
                          9,419,164

                        	 	
                          $

                        	
                          336,399

                        	 	
                          $

                        	
                          142.71

                        	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                          Borrower's
                            Budget

                        	 	
                          $

                        	
                          11,676,079

                        	 	
                          $

                        	
                          417,003

                        	 	
                          $

                        	
                          176.91

                        	 	
                          $

                        	
                          2,256,915

                        	 	
                          $

                        	
                          9,419,164

                        	 	
                          $

                        	
                          336,399

                        	 	
                          $

                        	
                          142.71

                        	 
	 


                

              

            

             

            
              
                
                

              

              
                1

                
                  

                

              

              
                
                

              

            

             

            EXHIBIT
              C 

             

            HEALTHCARE
              RIDER

            


            THIS
              HEALTHCARE RIDER (this "Rider")
              is
              attached to and made a part of that certain Loan Agreement (the "Loan
              Agreement")
              between ARC BRANDYWINE, L.P., a Delaware limited partnership, and GUARANTY
              BANK.
              Terms used but not defined herein are defined in the Loan Agreement
              and shall
              have the meaning given such terms in the Loan Agreement.

             

            DEFINITIONS

             

            1.1.       
              Defined
              Terms.
              As used
              in this Healthcare Rider and the Loan Agreement, the following terms
              shall have
              the meanings shown: 

            


            “Agency”.
              The
              Health Care Financing Administration, the Drug Enforcement Administration,
              the
              Environmental Protection Agency, any other state or federal licensing
              or
              regulatory authority (including any licensing or regulatory authority
              responsible for administering or dispensing Medicaid or Medicare payments
              or any
              other third party payor billing policies, procedures, limitations or
              restrictions), or any other public or private agency or organization,
              including
              without limitation, any public or private accreditation agency or
              organization.

            


            “CCRC
              Property”.
              The
              continuing care retirement community which includes the Facility as
              well as the
              other facilities located on the property described on Exhibit D
              attached
              hereto and made a part hereof.

            


            “Deficiency
              Notices”.
              All
              notices and other written communications from any Agency or Governmental
              Authority which licenses, regulates, certifies, accredits or evaluates
              the
              Property Related Persons, the Property or the operation of the Property
              by the
              Property Related Persons alleging that the Property Related Persons,
              the
              Property or the operation of the Property by the Property Related Persons
              in
              whole or in part fails to comply or, if corrective action is not taken,
              shall
              fail to comply with, any or all of the Agency's or Governmental Authority's
              requirements for and conditions of licensing, regulation, certification
              or
              accreditation by or participation in programs of the Agency or Governmental
              Authority or otherwise relating to the continuous operation of all
              or any
              portion of the Property or the programs of the Property Related Persons
              or the
              eligibility or entitlement of the Property Related Persons to receive
              reimbursement from any Agency or Governmental Authority.

            


            “Facility”.
              The 28
              independent living units located upon the Property.

            


            “GAAP”.
              Generally accepted accounting principles, as from time-to-time in effect
              in the
              United States of America, or such alternative accounting standard as
              may be
              acceptable to the Lender, consistently applied.

            


            “General
              Partner”
ARC
              Brandywine GP, LLC, a Tennessee limited liability company.

            


            
              
                
                

              

              
                
                

                
                  

                

              

              
                
                

              

            

             

            “Healthcare
              Information Laws”.
              As
              defined in Section 3.1(i) of this Healthcare Rider.

            


            “HIPAA”.
              As
              defined in Section 3.1(i) of this Healthcare Rider.

            


            “Licenses”.
              Any
              and all licenses, operating permits, franchises, and other licenses,
              authorizations, certifications, permits, or approvals, other than construction
              permits, issued by, or on behalf of, any Governmental Authority now
              existing or
              at any time hereafter issued, with respect to the acquisition, construction,
              renovation, expansion, leasing, ownership and/or operation of the CCRC
              Property,
              accreditation of the CCRC Property, any and all operating licenses
              issued by any
              Governmental Authority, any and all pharmaceutical licenses and other
              licenses
              related to the purchase, dispensing, storage, prescription or use of
              drugs,
              medications, and other “controlled substances,” and any and all licenses
              relating to the operation of food or beverage facilities or amenities,
              if
              any.

            


            “Managed
              Care Plans”.
              Any
              health maintenance organization, preferred provider organization, individual
              practice association, competitive medical plan, referral service or
              similar
              arrangement, entity, organization, or Person.

            


            “Management
              Agreement”.
              The
              Management Agreement by and between Manager and the Borrower, applicable
              to the
              Facility, as the same may be amended from time to time.

            


            “Manager”.
              ARC
              Management, LLC, a Tennessee limited liability company, and any successor
              manager of the Facility approved by Lender in writing.

            


            “Material
              Adverse Change”.
              As to
              the specified Person, a material adverse change in the business, operations,
              property, condition (financial or otherwise) or prospects of such Person
              and, in
              addition, as to the Borrower, any material adverse change in (i) the
              ability of
              the Borrower to perform its obligations under this Agreement or any
              of the other
              Loan Documents or (ii) the validity or enforceability of this Agreement
              or any
              of the other Loan Documents or the rights or remedies of the Lender
              hereunder or
              thereunder.

            


            “Net
              Operating Income”.
              The
              gross income received by Borrower from the operation of the CCRC Property
              for
              the calendar quarter in question, less expenses incurred and/or paid
              by Borrower
              in connection with the operation and maintenance of the CCRC Property
              that are
              allocable to such period (other than management fee expenses), computed
              on an
              accrual basis without regard to depreciation or debt service, but otherwise
              in
              accordance with generally accepted accounting principles consistently
              applied.
              Included within the expenses shall be annual capital expenditures equal
              to $300
              per Unit. Documentation of Net Operating Income and expenses shall
              be certified
              by an officer of Borrower with detail satisfactory to Lender and shall
              be
              subject to the approval of Lender. 

            


            “Operating
              Agreements and Management Contracts”.
              Any
              and all contracts and agreements previously, now or at any time hereafter
              entered into by the Property Related Persons with respect to the acquisition,
              construction, renovation, expansion, ownership, operation, maintenance,
              use or
              management of the CCRC Property or otherwise concerning 

             

            
              
                
                

              

              
                
                

                
                  

                

              

              
                
                

              

            

             

            the
              operations and business of the CCRC Property, including, without limitation,
              the
              Management Agreement, any and all service and maintenance contracts,
              any
              employment contracts, any and all management and operating agreements,
              any and
              all consulting agreements, laboratory servicing agreements, pharmaceutical
              contracts, physician, other clinician or other professional services
              provider
              contracts, therapy referral, food and beverage service contracts, and
              other
              contracts for the operation and maintenance of, or provision of services
              to, the
              CCRC Property.

            


            “Participation
              Agreements”.
              Any
              and all third party payor participation or reimbursement agreements
              now or at
              any time hereafter existing for the benefit of the Property Related
              Persons
              relating to rights to payment or reimbursement from, and claims against,
              private
              insurers, Managed Care Plans, employee assistance programs, Blue Cross
              and/or
              Blue Shield, federal, state and local Governmental Authorities, including
              without limitation, Medicare, Medicaid, TRICARE, VA and other third
              party
              payors.

            


            “Person”.
              An
              individual, a general or limited partnership, a limited liability company,
              a
              limited liability partnership, a corporation, a business trust, a joint
              stock
              company, a trust, an unincorporated association, a joint venture, a
              Governmental
              Authority or other entity of whatever nature.

            


            “Pledge
              Agreement”.
              Collectively, the Pledge Agreements dated as of the date hereof made
              by
              Guarantor, ARCPI Holdings, Inc., a Delaware corporation, and General
              Partner,
              for the benefit of Lender.

            


            “Property
              Related Persons”.
              Borrower, Manager and General Partner.

            


            “Replacement
              Reserve Escrow Account”.
              As
              defined in Section 3.1(j) of this Healthcare Rider.

            


            “Resident
              Agreements”.
              Any
              and all contracts and agreements executed by, or on behalf of any resident
              or
              other Person seeking residency or occupancy in the CCRC Property and
              related
              services from the Property Related Person. The term Resident Agreements
              shall
              also include any and all contracts, authorizations, agreements and/or
              consents
              executed by, or on behalf of any patient or other Person seeking services
              from
              the Property Related Persons pursuant to which the Property Related
              Persons
              provide or furnish long-term care and related services at the CCRC
              Property,
              including the consent to treatment and assignment of the payment of
              benefits by
              a third party.

            


            “Security
              Agreement”.
              The
              Security Agreement dated as of the date hereof made by Borrower, Manager
              and
              General Partner for the benefit of Lender.

            


            “Unit”.
              A
              fully constructed unit at the CCRC Property, for which a certificate
              of
              occupancy has been issued by the applicable Governmental Authority.

            


            “Work
              Inspector”.
              As
              defined in Section 3.1(j) of this Healthcare Rider.

            


            Capitalized
              terms not otherwise defined herein have the meaning assigned such terms
              in the
              Security Instrument or the Note, as the case may be.

            


            
              
                
                

              

              
                
                

                
                  

                

              

              
                
                

              

            

             

            REPRESENTATIONS
              AND WARRANTIES

             

            2.1.       
              Representations
              and Warranties of the Borrower.
              To
              induce the Lender to make the Loan, the Borrower hereby represents
              and warrants
              to the Lender as of the date hereof as follows:

             

            (a)        
              Litigation.
              With respect to the CCRC Property, there is no threatened or pending
              revocation,
              suspension, termination, probation, restriction, limitation or non-renewal
              of
              any material License or any similar accreditation or approval by or
              from any
              organization or Governmental Authority for healthcare providers, including,
              without limitation, the issuance of any provisional License or other
              License
              with a term of less than twelve (12) months, as a consequence of any
              sanctions
              imposed by any Governmental Authority. There is no threatened or pending
              assessment of any civil or criminal penalties by any Governmental
              Authority.

             

            (b)        
              Compliance
              with Laws. No Property Related Person is in violation of any Governmental
              Requirement pertaining to the operation of the CCRC Property, patient
              rights,
              resident rights, employment practices, health standards or controls.
              Except as
              disclosed to the Lender prior to the date hereof, the Property Related
              Persons
              are in compliance with all accreditation standards and requirements
              to which
              each is subject. The Property Related Persons have obtained or applied
              for all
              Licenses necessary to the ownership of their property and to the conduct
              of
              their activities which, if not obtained, could materially adversely
              affect the
              ability of the Property Related Persons to conduct the activities of
              the CCRC
              Property, including, without limitation, as appropriate, the dispensing,
              storage, prescription, disposal, and use of drugs, medications and
              other
“controlled substances” and the maintenance of cafeteria and other food and
              beverage facilities or services. To the extent the Property Related
              Persons have
              applied for any required Licenses which have not yet been issued, the
              operation
              and conduct of the CCRC Property by the Property Related Persons is
              nonetheless
              in compliance with all Governmental Requirements. The Property Related
              Persons
              currently have obtained all Licenses materially necessary under Governmental
              Requirements for the operation of the Facility.

             

            (c)        
              Licenses
              and Certifications. With respect to each License the Property Related
              Persons possess or have applied for, (i) no material default has occurred
              or is
              continuing under the terms thereof, and no event has occurred which,
              with the
              giving of notice or the lapse of time, or both, would constitute a
              material
              breach of any condition to the issuance, maintenance, renewal and/or
              continuance
              thereof, (ii) the Property Related Persons have paid all fees, charges
              and other
              expenses to the extent due and payable with respect to, and have provided
              all
              information and otherwise complied with all material conditions precedent
              to,
              the issuance, maintenance, renewal, and continuance of such License,
              (iii) none
              of the Licenses are conditional, provisional, probationary or restricted
              in any
              material way, (iv) the Property Related Persons have not received any
              notice
              from any Governmental Authority relating to any actual or pending suspension,
              revocation, restriction, or imposition of any probationary use of such
              License,
              nor has any License been materially amended, supplemented, rescinded,
              terminated, or otherwise modified except as otherwise disclosed in
              writing to,
              and approved by, the Lender, (v) no Property Related Person has made
              any
              previous assignment of any of the Licenses to any Person, 

             

            
              
                
                

              

              
                
                

                
                  

                

              

              
                
                

              

            

             

            except
              as
              security for loans and other financial accommodations, if any, which
              are to be
              paid with the proceeds of the Loan and are to be terminated promptly
              following
              the date hereof, (vi) no financing statement covering any of the Licenses
              has
              been executed by a Property Related Person or is on file in any public
              office,
              except for those financing statements relating to loans and other financial
              accommodations, if any, which are to be paid with the proceeds of the
              Loan and
              are to be terminated promptly following the date hereof, and (vii)
              each License
              has been issued for a period of at least twelve (12) months from the
              date of
              issuance or for such lesser time to the extent the issuance for less
              than twelve
              (12) months is not the consequence of any sanctions imposed by any
              Governmental
              Authority.

             

            (d)        
              Certain
              Payments. Neither the Borrower nor any director, officer, member, partner,
              employee or agent of the Borrower acting for or on behalf of the Borrower
              has
              knowingly and willfully paid or caused to be paid, directly or indirectly,
              in
              connection with the business of the Borrower:

             

            (i)        
              any
              bribe, kickback or similar payment to any Governmental Authority or
              any agent of
              any supplier; or

             

            (ii)        any
              contribution to any political party or candidate (other than personal
              funds of
              directors, officers, members, partners, employees or agents not reimbursed
              by
              their respective employers or as otherwise permitted by applicable
              laws).

             

            To
              the
              best of Borrower's knowledge, the above representation is true and
              correct with
              respect to the other Property Related Persons.

             

            (e)        
              Operating
              Agreements and Management Contracts. The Borrower has furnished to the
              Lender photocopies of all material Operating Agreements and Management
              Contracts
              entered into with the Property Related Persons, and all amendments,
              supplements
              and modifications thereto. With respect to each such Operating Agreement
              and
              Management Contract, (i) such Operating Agreement and Management Contract
              is or
              will be at the time of execution and delivery thereof valid and binding
              on the
              parties thereto and in full force and effect, (ii) no material default
              has
              occurred or is continuing under the terms thereof, and no event has
              occurred
              which, with the giving of notice or the lapse of time, or both, would
              constitute
              a material default thereunder, and no party thereto has attempted or
              threatened
              to terminate any such Operating Agreement and Management Contracts,
              (iii) the
              Property Related Persons have not made any previous assignment of the
              Operating
              Agreements and Management Contracts to any Person, except as security
              for loans
              and other financial accommodations, if any, which are to be paid with
              the
              proceeds of the Loan and are to be terminated promptly following the
              date
              hereof, and (iv) no financing statement covering any of the Operating
              Agreements
              and Management Contracts is on file in any public office, except for
              those
              financing statements relating to loans and other financial accommodations
              which
              are to be paid with the proceeds of the Loan and are to be terminated
              promptly
              following the date hereof.

             

            
              
                
                

              

              
                
                

                
                  

                

              

              
                
                

              

            

             

            (f)        
              Participation
              Agreements. The Borrower hereby represents that the CCRC Property is a
              private pay retirement community and as such, no Property Related Person
              has
              entered into any Participation Agreement with respect to the CCRC
              Property.

             

            (g)        
              Hill-Burton
              Act. The Borrower has not, nor to the best of the Borrower's knowledge,
              has
              any prior owner of the CCRC Property during the twenty (20) year period
              immediately preceding the date hereof, received any funds to finance
              the
              construction and/or acquisition of the CCRC Property pursuant to Title
              VI of the
              Public Health Service Act (commonly referred to as the Hill-Burton
              Act) or Title
              XVI of the Public Health Service Act.

             

            (h)        
              Fraud
              and Abuse. To the Borrower's knowledge, each Property Related Person, its
              directors, officers and employees have not engaged in any activities
              which are
              in violation of Sections 1128A, 1128C or 1877 of the Social Security
              Act (42
              U.S.C. §§ 1320a-7a, 1320a-7c and 1395nn), the False Claims Act (31 U.S.C. § 3729
              et seq.), the Program Fraud Civil Remedies Act of 1986 (31 U.S.C. § 3801 et
              seq.) or other federal or state laws and regulations, including, but
              not limited
              to, the following:

             

            (i)        
              knowingly
              and willfully making or causing to be made a false statement or representation
              of a material fact in any application for any benefit or payment;

             

            (ii)        knowingly
              and willfully making or causing to be made a false statement or representation
              of a material fact for use in determining rights to any benefit or
              payment;

             

            (iii)       failing
              to disclose knowledge of the occurrence of any event affecting the
              initial or
              continued right to any benefit or payment on its own behalf or on behalf
              of
              another, with intent to fraudulently secure such benefit or
              payment;

             

            (iv)       knowingly
              and willfully offering, paying, soliciting, or receiving any remuneration
              (including any kickback, bribe or rebate), directly or indirectly,
              overtly or
              covertly, in cash or in kind (A) in return for referring an individual
              to a
              Person for the furnishing or arranging for the furnishing of any item
              or
              service, (B) in return for purchasing, leasing or ordering, or arranging
              for or
              recommending, purchasing, leasing or ordering any good, facility, service
              or
              item; or

             

            (v)        billing
              a
              patient, resident or payor for health services specified in 42 U.S.C.
§ 1395nn
              or any other similar or comparable federal or state laws, or providing
              such
              health services to a patient or resident, upon a referral from a physician
              where
              such physician has a financial relationship with the Property Related
              Person to
              which no exception applies under each of the applicable laws.

             

            (i)        Certificate
              of Need Conditions. The Borrower covenants that it has developed and
              operated the CCRC Property and is providing services in a manner consistent
              with
              the representations made in the certificate of need application filed
              in


             

            
              
                
                

              

              
                
                

                
                  

                

              

              
                
                

              

            

             

            connection
              with the CCRC Property and within the project scope and the conditions
              placed on
              the certificate of need, if any.

             

            COVENANTS
              AND WARRANTIES

             

            3.1.       
              Affirmative
              Covenants of the Borrower.
              The
              Borrower agrees as follows:

            


            (a)        
              Resident
              Agreements. The Borrower will submit to the Lender when requested by the
              Lender, all information requested by the Lender with respect to all
              Resident
              Agreements, excluding, however any medical information or other protected
              health
              information as defined in 45 CFR §160-103.

            


            (b)        
              Conduct
              of Business and Compliance with Laws. The Borrower covenants and agrees that
              it or the Property Related Persons will (i) materially comply with
              all
              Governmental Requirements, including, without limitation, the Occupational
              Safety and Health Act of 1970, regulations issued under the Omnibus
              Budget
              Reconciliation Act of 1987, any Governmental Requirement relating to
“informed
              consents” and rights of patients and residents, qualifications of staff,
              staffing requirements and delivery of services in a manner sufficient
              to protect
              the health and safety of patients and residents, (ii) maintain in full
              force and
              effect all Licenses necessary to the ownership and/or operation of
              the CCRC
              Property, including, without limitation, the license to operate the
              CCRC
              Property, Licenses and other approvals related to the storage, dispensation,
              use, prescription and disposal of drugs, medications and other “controlled
              substances” and, to the extent offered by the Borrower, the maintenance of
              cafeteria and other food and beverage facilities or services, (iii)
              maintain or
              cause to be maintained the standard of care for the patients and residents
              of
              the CCRC Property at all times at a level necessary to ensure a level
              of quality
              care and services for the patients and residents of the CCRC Property
              no less
              than prudent industry standard for a similar facility, (iv) maintain
              or cause to
              be maintained a standard of care in the storage, use, transportation
              and
              disposal of all medical equipment, medical supplies, medical products
              and
              medical waste, of any kind and in any form, that is in accordance with,
              at
              least, that of the prudent industry standard and in conformity with
              all
              Governmental Requirements, (v) operate or cause to be operated the
              CCRC Property
              in a prudent manner in material compliance with Governmental Requirements
              relating thereto and cause all Licenses, permits, certificates of need,
              and any
              other agreements materially necessary for the use and operation of
              the CCRC
              Property remain in effect, (vi) correct or cause to be corrected any
              deficiency
              set forth in any Agency statement of deficiencies, the curing of which
              is a
              condition of continued licensure or for accreditation of the CCRC Property,
              (vii) maintain or cause to be maintained sufficient inventory and equipment
              of
              types and quantities at the CCRC Property to enable the Property Related
              Persons
              to operate the CCRC Property adequately and in a manner which will
              enable the
              Borrower to comply with the provisions of the Loan Documents, and (viii)
              maintain or cause to be maintained all deposits, including, without
              limitation,
              deposits relating to residents, patients or Resident Agreements in
              accordance
              with customary and prudent business practices and all Governmental
              Requirements.

             

            (c)         
              Insurance.
              The Borrower shall ensure that all healthcare providers with whom the
              Property
              Related Persons contract to provide services at the CCRC Property 

             

            
              
                
                

              

              
                
                

                
                  

                

              

              
                
                

              

            

             

            are
              insured against claims arising from such services (including, without
              limitation, malpractice coverage) with the same limits, if any, as
              applicable to
              the Borrower pursuant to the Loan Documents or otherwise acceptable
              to the
              Lender.

             

            (d)        
              Notices.
              The Borrower shall promptly notify the Lender in writing upon obtaining
              knowledge of the occurrence of:

             

            (i)        
              the
              receipt by any Property Related Person of any notice, claim or demand
              from any
              Governmental Authority which alleges that a Property Related Person
              is in
              violation of any of the terms of, or has failed to comply with any
              material
              Governmental Requirement regulating its operation and business, including,
              but
              not limited to, the Health Care Financing Administration or any division
              thereof, the Occupational Safety and Health Act and the Environmental
              Protection
              Act;

             

            (ii)        
              the
              actual, threatened or pending (A) revocation, suspension, probation,
              restriction, limitation, forfeiture or refusal to renew of any material
              License,
              or (B) the issuance or pending issuance of any material License for
              a period of
              less than twelve (12) months, as a consequence of sanctions imposed
              by any
              Governmental Authority, or (C) the assessment or threatened or pending
              assessment, of any civil or criminal penalties by any Governmental
              Authority or
              agent, or any accreditation organization;

             

            (iii)        
              any
              action, including, but not limited to the amendment of any License,
              or the
              issuance of any new License or certification for the CCRC Property,
              under which
              a Property Related Person proposes (A) to develop a new facility or
              service, (B)
              change any existing facility or service, or (C) to eliminate any existing
              or
              proposed service, which action requires the Property Related Person
              to seek
              either a certificate of need approval or exemption from certificate
              of need
              review or which requires amendment of any License or the issuance of
              any new
              License or certificate for the CCRC Property; 

             

            (iv)        
              any
              other
              development in the business or affairs of the Property Related Persons
              which
              could have a Material Adverse Change; or

             

            (v)        
              any
              actual, threatened or pending litigation with respect to the CCRC Property
              or
              the Property Related Persons;

             

            in
              each
              case describing in detail satisfactory to the Lender in its reasonable
              discretion the nature thereof and the action the Borrower proposes
              to take with
              respect thereto.

             

            (e)        
              Deficiency
              Notices. Without implying any limitation on any other provisions of this
              Agreement or any of the other Loan Documents, the Borrower will furnish
              or cause
              to be furnished to the Lender reasonably promptly after receipt thereof
              copies
              of all (A) Deficiency Notices, (B) Agency inspection reports, audits,
              surveys,
              investigations, reviews or evaluations, (C) relevant notices and written
              communications from any state or any Agency relating to material adjustments
              in
              reimbursement amounts or to rate reviews, modifications of rates, inflation
              adjustments, rate agreements or the like, and (D) responses by, or
              on behalf of,
              the Property Related Persons with respect to 

             

            
              
                
                

              

              
                
                

                
                  

                

              

              
                
                

              

            

             

            any
              of
              the foregoing. The Borrower shall or shall cause the Property Related
              Persons to
              promptly commence and diligently pursue the correction of the subject
              of each
              Deficiency Notice, and shall correct the subject of the Deficiency
              Notice
              promptly, but in any event prior to the expiration of any period allowed
              by the
              Agency for correction. The Borrower shall, at the Lender's request,
              promptly
              provide from time to time such cost estimates, reports and other information
              as
              the Lender may require to demonstrate to the Lender's satisfaction
              that the
              Property Related Persons have the financial and other ability to effect
              the
              correction and are taking the actions required by this Section.

             

            (f)        
              Census
              Report and Surveys. To the extent permitted by all laws governing the
              privacy and confidentiality of individually identifiable information,
              the
              Borrower will furnish to the Lender promptly following the request
              of the Lender
              reports of the CCRC Property periodic patient or resident census with
              a
              breakdown with respect to the source of payment, licensure survey results,
              accreditation survey results and such other information relating to
              the
              operation of the CCRC Property as may reasonably be requested by the
              Lender from
              time to time.

             

            (g)        
              Renewal
              of Agreements. The Borrower will or will cause the Property Related Persons
              to take any and all steps necessary to renew all Resident Agreements,
              and
              Operating Agreements and Management Contracts, except to the extent
              that the
              Borrower deems such renewal to be, in the exercise of prudent business
              judgment,
              contrary to the best interests of the Borrower.

             

            (h)        
              Financial
              Statements. The Borrower shall provide Lender the following financial
              statements and information on a continuing basis during the term of
              the
              Loan:

             

            (i)        
              Within
              one hundred twenty (120) days after the end of each calendar year,
              unaudited
              financial statements of Borrower and audited financial statements of
              Guarantor,
              prepared by a nationally recognized accounting firm or independent
              certified
              public accountant acceptable to Lender, which statements shall be prepared
              in
              accordance with GAAP, and shall include a balance sheet and statement
              of income
              and expenses for the year then ended. Lender reserves the right to
              require,
              after an Event of Default, annual audited financial statements of
              Borrower.

             

            (ii)        
              Within
              thirty (30) days after the end of each calendar month, unaudited monthly
              financial statements of the operations of the CCRC Property, prepared
              in
              accordance with GAAP, which statements shall include a balance sheet
              and
              statement of income and expenses for the calendar month then ended,
              together
              with a rent roll/census of the CCRC Property as of the end of such
              month,
              certified by a representative of Borrower to be true and correct to
              the best of
              the representative's knowledge and belief. The statements shall be
              accompanied
              by a summary of all Entrance Fees.

             

            (iii)        
              Within
              forty-five (45) days of the end of each calendar quarter, a balance
              sheet and
              statement of income and expenses of Borrower and Guarantor for the
              quarter then
              ended, certified by a representative of Borrower and Guarantor, as
              applicable,
              to be true and correct.

             

            
              
                
                

              

              
                
                

                
                  

                

              

              
                
                

              

            

             

            (iv)        
              The
              Lender further reserves the right to require such other financial information
              of
              Borrower, Guarantor and/or the CCRC Property in such form and at such
              other
              times (including monthly or more frequently) as Lender shall reasonably
              deem
              necessary, and Borrower agrees promptly to provide or to cause to be
              provided,
              such information to Lender. All financial statements must be in the
              form and
              detail as Lender may from time to time reasonably request.

             

            (v)        
              Within
              forty-five (45) days after the end of each calendar quarter, a Compliance
              Certificate in the form of Schedule I attached hereto and certified
              by a
              representative of the Borrower to be true and correct to the best of
              the
              representative's knowledge and belief.

             

            (i)        
              Compliance
              with Healthcare Information Laws. Without limiting the generality of any
              other provision of this Agreement including, without limitation, any
              other
              representation or warranty made herein, each of the Property Related
              Persons and
              the CCRC Property is in material compliance with all applicable statutes,
              laws,
              ordinances, rules and regulations of any federal, state or local governmental
              authority primarily relating to the confidentiality of patient healthcare
              information, including without limitation the Health Insurance Portability
              and
              Accountability Act of 1996, as amended, and the rules and regulations
              promulgated thereunder (“HIPAA”)
              (collectively, “Healthcare
              Information Laws”).
              The
              Property Related Persons have maintained in all material respects all
              records
              required to be maintained by any governmental agency or authority or
              otherwise
              under the Healthcare Information Laws and there are presently no material
              violations of the Healthcare Information Laws. Throughout the term
              of the Loan,
              the Property Related Persons will comply in all material respects with
              the
              Healthcare Information Laws.

             

            (j)        
              Replacement
              Reserve Escrow Account. As additional security for the Loan, upon request of
              Lender, Borrower shall establish and maintain a capital repair reserve
              (the
“Replacement
              Reserve Escrow Account”)
              with
              Lender for payment of certain non-recurring types of costs and expenses
              incurred
              by Borrower for interior and exterior work to the Facility, including,
              without
              limitation, performance of work to the roofs, chimneys, gutters, downspouts,
              paving, curbs, driveways, ramps, balconies, porches, patios, exterior
              walls,
              exterior doors and doorways, floor coverings, windows, elevators and
              mechanical
              and HVAC equipment (collectively, the “Repairs”)
              provided such costs and expenses are incurred for repairs (A) not incurred
              for
              ordinary wear and tear at the Facility and (B) categorized under generally
              accepted accounting principles as a capital expense and not as an operating
              expense. Upon Lender's request that the Replacement Reserve Escrow
              Account be
              established and on each and every monthly payment date thereafter under
              the Note
              until the Note is fully paid and performed, Borrower shall deposit
              in the
              Replacement Reserve Escrow Account concurrently with and in addition
              to the
              monthly payment due under the Note a deposit to the Replacement Reserve
              Escrow
              Account in an amount equal to one twelfth (1/12th) of $300 per Unit
              at the
              Facility per annum.

             

            All
              sums
              in the Replacement Reserve Escrow Account shall be held by Lender in
              the
              Replacement Reserve Escrow Account to pay the costs and expenses of
              the Repairs
              and Lender shall, to the extent funds are available for such purpose
              in the
              Replacement Reserve Escrow Account, disburse to Borrower the amount
              incurred and
              paid by 

             

            
              
                
                

              

              
                
                

                
                  

                

              

              
                
                

              

            

             

            Borrower
              in performing such Repairs within 10 days following: (A) the receipt
              by Lender
              of a written request from Borrower for disbursement from the Replacement
              Reserve
              Escrow Account and a certification by Borrower that the applicable
              item of
              Repair has been completed; (B) the delivery to Lender of paid invoices,
              receipts
              or other evidence satisfactory to Lender, verifying the cost and payment
              of
              performing the Repairs; (C) for disbursement requests in excess of
              $10,000, the
              delivery to Lender of (1) affidavits, lien waivers or other evidence
              reasonably
              satisfactory to Lender showing that all materialmen, laborers, subcontractors
              and any other parties who might or could claim statutory or common
              law liens and
              are furnishing or have furnished material or labor to the Facility
              have been
              paid all amounts due for labor and materials furnished to the Facility;
              and (2)
              a certification from an inspecting architect, engineer or other consultant
              reasonably acceptable to Lender (the “Work
              Inspector”)
              describing the completed Repairs and verifying the completion of the
              Repairs and
              the value of the completed Repairs.

            


            Lender
              shall not be required to make advances from the Replacement Reserve
              Escrow
              Account more frequently than once in any 30 day period or in an amount
              less than
              the lesser of $5,000 or the total cost of the Repairs for which the
              disbursement
              is requested. In making any payment from the Replacement Reserve Escrow
              Account,
              Lender shall be entitled to rely on such request from Borrower without
              any
              inquiry into the accuracy, validity or contestability of any such
              amount.

            


            The
              Replacement Reserve Escrow Account shall not, unless otherwise explicitly
              required by applicable law, be or be deemed to be escrow or trust funds.
              The
              Replacement Reserve Escrow Account shall be held in a separate account.
              Interest
              on the funds contained in the Replacement Reserve Escrow Account shall
              be paid
              by Lender to Borrower upon payment in full of the Loan.

            


            Upon
              the
              occurrence of an Event of Default, Lender may, but shall not be obligated,
              to
              apply at any time the balance then remaining in the Replacement Reserve
              Escrow
              Account against the Loan in whatever order Lender shall subjectively
              determine,
              together with the Make-Whole Breakage Amount arising on account of
              such payment.
              Upon full payment of the Loan in accordance with its terms or at such
              earlier
              time as Lender may elect, the balance of the Replacement Reserve Escrow
              Account
              plus all interest thereon then in Lender's possession shall be paid
              over to
              Borrower and no other party shall have any right or claim thereto.
              Lender shall
              have a perfected security interest in the Replacement Reserve Escrow
              Account as
              additional security to secure payment of the Note and Borrower shall
              execute and
              deliver to Lender such further financing statements and take such other
              action
              as Lender may require to evidence and/or perfect its security interest
              in the
              Replacement Reserve Escrow Account, including, without limitation,
              the execution
              and delivery to Lender of a pledge and security agreement in form reasonably
              satisfactory to Lender.

            


            Funds
              held in the Replacement Reserve Escrow Account are solely for the protection
              of
              Lender and entail no responsibility on Lender's part beyond the payment
              of the
              respective items for which they are held following receipt of bills,
              invoices or
              statements therefor in accordance with the terms hereof and beyond
              the allowing
              of due credit for the sums actually received. Upon assignment of the
              Loan by
              Lender, any funds 

             

            
              
                
                

              

              
                
                

                
                  

                

              

              
                
                

              

            

             

            in
              the
              Replacement Reserve Escrow Account shall be turned over to the assignee
              and any
              responsibility of Lender, as assignor, with respect thereto shall
              terminate.

            


            (k)        
              Management
              of the CCRC Property. The management of the CCRC Property shall be by
              either: (i) Borrower or an entity affiliated with Borrower approved
              by Lender
              for so long as Borrower or said affiliated entity is managing the CCRC
              Property
              in a first class manner; or (ii) a professional property management
              company
              approved by Lender. Such management by an affiliated entity or a professional
              property management company shall be pursuant to a written agreement
              approved by
              Lender. Any management agreement shall provide for a maximum allowable
              management fee of 5% of gross revenues. In no event shall any manager
              be removed
              or replaced or the terms of any management agreement modified or amended
              without
              the prior written consent of Lender. After an Event of Default or a
              default
              under any management agreement then in effect, which default is not
              cured within
              any applicable grace or cure period, Lender shall have the right to
              terminate,
              or to direct Borrower to terminate, such management agreement upon
              30 days'
              notice and to retain, or to direct Borrower to retain, a new management
              agent
              approved by Lender. It shall be a condition of Lender's consent to
              any
              management agreement, whether with an affiliate of Borrower or otherwise,
              that
              such manager enter into an agreement with Lender whereby the manager
              acknowledges and agrees to the aforesaid rights of Lender and as to
              such other
              matters as Lender may reasonably require.

            


            (l)        
              Net
              Operating Income Test. Subject to the cure rights set forth below, it shall
              be an immediate Event of Default if the Net Operating Income is less
              than
              $1,000,000, to be tested as of the end of each calendar quarter. Borrower
              may
              cure a default under this Section 3.1(n) upon payment to the Lender,
              within 45
              days of the end of the calendar quarter upon which the default occurs,
              of (i) in
              the case of the first such default, (x) $100,000, which amount shall
              be applied
              to reduce the outstanding principal balance of the Note (as defined
              in the
              Security Instrument), in such order as Lender shall determine, and
              (y) $10,000,
              which amount shall be paid to Lender as a waiver fee and shall not
              be applied to
              payment of the Note, and (ii) in the case of the second such default,
              (x)
              $500,000, which amount shall be applied to reduce the outstanding principal
              balance of the Note (as defined in the Security Instrument), in such
              order as
              Lender shall determine, and (ii) $20,000, which amount shall be paid
              to Lender
              as a waiver fee and shall not be applied to payment of the Note. No
              cure shall
              be available in the case of the third such default. Borrower will provide
              Lender
              with satisfactory evidence confirming compliance with the provisions
              of this
              Section 3.1(n) within forty-five (45) days after the close of each
              calendar
              quarter in the form of the Compliance Certificate attached hereto as
              Schedule I.
              No Make-Whole Breakage Amount shall be due on account of the payments
              under this
              Section 3.1(l).

             

            (m)        
              State
              Mandated Reserve Account. Borrower shall maintain with Lender at all times
              while the Loan is outstanding, the State of Pennsylvania mandated reserve
              account (the “State
              Mandated Reserve Account”)
              for
              the CCRC Property.

             

            (n)        
              Entrance
              Fees.
              Until
              applied to payment of the Note, all Entrance Fees will be deposited
              with Lender.
              At such time as the laws of the State of Pennsylvania 

             

            
              
                
                

              

              
                
                

                
                  

                

              

              
                
                

              

            

             

            permit
              Borrower to "break escrow" with respect to an Entrance Fee, the Entrance
              Fee
              will be applied by Borrower to the payment of the Note, without penalty
              or
              premium. 

            


            (o)        
              Transfer
              of License.
              Borrower shall apply to the State of Pennsylvania to transfer the current
              Certificate of Licensure, issued by the Pennsylvania Department of
              Health, from
              ARC Brandywine GP, LLC, the current license holder, to Borrower and
              shall
              provide Lender a copy of the new license upon issuance, but in any
              case, no
              later than June 30, 2006. Such transfer shall not require the consent
              of Lender.


            


            3.2.       
              Negative
              Covenants of the Borrower. The Borrower agrees as follows:

             

            (a)        Licenses.
              The Borrower will not allow any breach, withdrawal, rating reduction,
              restriction, suspension, probation, failure to renew, cancellation,
              rescission,
              termination, lapse or forfeiture of any License, permit, right, franchise
              or
              privilege materially necessary for the ownership or operation of the
              CCRC
              Property for the purposes for which the CCRC Property is intended.

             

            (b)        
              Agreements.
              The Borrower will not allow any breach, withdrawal, restriction, suspension,
              probation, failure to renew, cancellation, rescission, termination,
              lapse,
              alteration, forfeiture or modification of any material Operating Agreements
              and
              Management Contracts.

             

            (c)         
              Participation
              Agreements. Neither the Borrower nor any Property Related Persons will be
              a
              party to a Participation Agreement with respect to the CCRC
              Property.

             

            (d)        
              Amendments;
              Terminations. The Borrower will not amend or terminate or agree to amend or
              terminate any material License or consent to a waiver of, or waive,
              any material
              provisions thereof or amend or terminate or agree to amend or terminate,
              any
              material Operating Agreements and Management Contracts.

             

            EVENTS
              OF DEFAULT

             

            4.1.       
              Events
              of Default. Each of the following shall be an Event of Default under the
              Loan Agreement:

             

            (a)        
              Any
              involuntary, imposed, required, actual, threatened or pending revocation,
              suspension, termination, probation, restriction, limitation, forfeiture
              or
              refusal to renew, any License necessary or material to the operation
              of the CCRC
              Property.

             

            (b)        
              If
              the
              United States Department of Health and Human Services, Office of the
              Inspector
              General, or any federal, state or local Agency brings a claim, demand
              or cause
              of action against a Property Related Person or any shareholders, partners,
              members, directors, officers, employees or agents of a Property Related
              Person
              for violation of Section 1128A, 1128C or 1877 of the Social Security
              Act (42
              U.S.C. §§ 1320a-7a, 1320a-7c and 1395nn), the False Claims Act (31 U.S.C. § 3729
              et seq.), or the Program Fraud Civil Remedies Act of 1986 (31 U.S.C.
§3801 et
              seq.).

             

            (c)         
              The
              occurrence of a default under Section 3.1(l) of this Healthcare Rider
              that is
              not cured pursuant to the terms set forth in such Section.

             

            
              
                
                

              

              
                
                

                
                  

                

              

              
                
                

              

            

             

            (e)        
              The
              occurrence of a default under the Pledge Agreement or Security Agreement
              which
              remains uncured after any applicable notice and cure periods.

             

            
              
                
                

              

              
                
                

                
                  

                

              

              
                
                

              

            

             

            SCHEDULE
              I

             

            COMPLIANCE
              CERTIFICATE

            Quarterly
              Net Operating Income Test

             

            


            Guaranty
              Bank

            8333
              Douglas Avenue, Suite 1100

            Dallas,
              TX 75225

            Attn:
              Healthcare Finance Lending Division

             

            
              	 	
                      RE:

                    	
                      Loan
                        Agreement dated December ___, 2005 (the “Agreement”),
                        by and between ARC Brandywine, L.P. (the “Borrower”),
                        and Guaranty Bank

                    


            

             

            The
              undersigned officer of Borrower does hereby certify, to the best of
              his
              knowledge and belief, that for the calendar quarter ending ____________,
              20___(the “Calendar
              Quarter”):

             

            1.       
              No
              Event
              of Default has occurred or exists except ____________________
              ___________________________________________.

             

            2.       
              The
              CCRC
              Property quarterly Net Operating Income was:

             

            
              
                	 	
                        Required:

                      	
                        $1,000,000

                      


              

              
                	 	Actual:	$__________


              

            

             

            3.       
              The
              financial statements of Borrower and the CCRC Property and the rent
              roll/census
              attached hereto are true and correct. Copies of the financial statements
              of
              Guarantor are attached.

            


            4.       
              Attached
              hereto are copies of all matters with respect to which Borrower is
              required to
              give Lender notice under Section 3.1(d) of the Healthcare Rider to
              the Loan
              Agreement.

            


            5.       
              Capitalized
              terms not defined herein shall have the meanings given to such terms
              in the
              Agreement.

             

            6.       
              The
              manner of calculation of the above is attached.

             

            
               

              
                	 	 	 
	 	ARC
                        BRANDYWINE,
                        L.P., a Delaware limited partnership
	 
 	 
 	 
 
	 	By:  	
                        ARC
                          Brandywine GP, LLC, a Tennessee limited liability company,
                          its general
                          partner

                      
	 	 	 


              

               

              
                
                  	 	
                          By:

                        	
                        


                

                
                  	 	 	
                          Name:

                        	 
	 	 	
                          Title:

                        	 


                

              

              
              

               

              
                
                  
                  

                

                
                  
                  

                  
                    

                  

                

                
                  
                  

                

              

            

             

            EXHIBIT
              D 

             

            LEGAL
              DESCRIPTION

             

            CCRC
              PROPERTY

             

            PREMISES
              A

             

            ALL
              THAT
              CERTAIN LOT OR PIECE OF GROUND SITUATE IN WEST BRANDYWINE TOWNSHIP,
              CHESTER
              COUNTY, PENNSYLVANIA, BOUNDED AND DESCRIBED ACCORDING TO ALTA/ASCM
              LAND TITLE
              SURVEY FOR FREEDOM VILLAGE AT BRANDYWINE, PREPARED BY EDWARD B. WALSH
              AND
              ASSOCIATES, INC., 125 DOWLIN FORGE ROAD, LIONVILLE PROFESSIONAL CENTER,
              EXTON,
              PA, DATED MAY 16, 2005, AS FOLLOWS: 

             

            BEGINNING
              AT A SPIKE ON THE TITLE LINE IN THE BED OF CALN MEETINGHOUSE ROAD (T-413),
              A
              CORNER OF LANDS NOW OR FORMERLY OF WILLIAM F. HAMMELL AND DIANE H.
              HAMMELL, HIS
              WIFE; THENCE EXTENDING ALONG SAID TITLE LINE IN THE BED OF SAID ROAD
              THE SIX (6)
              FOLLOWING COURSES AND DISTANCES: (1) SOUTH 83 DEGREES 00 MINUTES 14
              SECONDS EAST
              101.67 FEET TO A PK NAIL; (2) SOUTH 81 DEGREES 46 MINUTES 14 SECONDS
              EAST 160.73
              FEET TO A PK NAIL: (3) SOUTH 72 DEGREES 08 MINUTES 14 SECONDS EAST
              180.25 FEET
              TO A PK NAIL; (4) SOUTH 70 DEGREES 14 MINUTES 14 SECONDS EAST 179.80
              FEET TO A
              PK NAIL; (5) SOUTH 69 DEGREES 21 MINUTES 14 SECONDS EAST 295.20 FEET
              TO A PK
              NAIL; (6) SOUTH 71 DEGREES 03 MINUTES 57 SECONDS EAST 431.61 FEET TO
              A SPIKE ON
              THE LINE DIVIDING EAST BRANDYWINE AND WEST BRANDYWINE TOWNSHIPS; THENCE
              EXTENDING THE ALONG SAME, CROSSING THE SOUTHERLY SIDE OF CALN MEETINGHOUSE
              ROAD
              AND ALONG LANDS NOW OR FORMERLY OF KEVIN AND LYNNE M. SASKA AND JEFFREY
              S.
              CHAMBERLAIN, RESPECTIVELY, SOUTH 00 DEGREES 21 MINUTES 14 SECONDS WEST
              609.79
              FEET, TO A REBAR IN THE NORTH LINE OF LANDS NOW OR FORMERLY OF WILLIAM
              F.
              HAMMELL AND DIANE H. HAMMELL; THENCE EXTENDING ALONG SAID LANDS THE
              THREE (3)
              FOLLOWING COURSES AND DISTANCES: (1) LEAVING THE TOWNSHIP DIVIDING
              LINE, SOUTH
              85 DEGREES 10 MINUTES 24 SECONDS WEST 15.86 FEET TO A REBAR; (2) SOUTH
              04
              DEGREES 49 MINUTES 36 SECONDS EAST 174.90 FEET TO AN IRON PIN; (3)
              SOUTH 85
              DEGREES 11 MINUTES 30 SECONDS WEST 1161.31 FEET TO A CORNER OF LANDS
              NOW OR
              FORMERLY OF COATESVILLE HOSPITAL CORPORATION; THENCE EXTENDING ALONG
              SAME, ALONG
              LANDS OF PREMISES "B" - TRACT I (AS SHOWN ON SAID PLAN), AND ALONG
              LANDS NOW OR
              FORMERLY OF WILLIAM F. AND DIANE H. HAMMELL, NORTH 05 DEGREES 30 MINUTES
              14
              SECONDS WEST, CROSSING A DRAINAGE EASEMENT AND RECROSSING THE SOUTHERLY
              SIDE OF
              CALN MEETINGHOUSE ROAD, 1284.26 FEET TO THE FIRST MENTIONED POINT AND
              PLACE OF
              BEGINNING. CONTAINING: 29.368 ACRES OF LAND, BE THE SAME MORE OR LESS.
              

             

            PREMISES
              B

             

            
              
                
                

              

              
                
                

                
                  

                

              

              
                
                

              

            

             

            ALL
              THOSE
              CERTAIN LOTS OR PIECES OF GROUND SITUATE IN WEST BRANDYWINE TOWNSHIP,
              CHESTER
              COUNTY, PENNSYLVANIA, BOUNDED AND DESCRIBED ACCORDING TO AN ALTA/ASCM
              LAND TITLE
              SURVEY FOR FREEDOM VILLAGE AT BRANDYWINE, PREPARED BY EDWARD B. WALSH
              AND
              ASSOCIATES, INC.,125 DOWLIN FORGE ROAD, LIONVILLE PROFESSIONAL CENTER,
              EXTON,
              PA, DATED MAY 16, 2005, AS FOLLOWS: 

             

            TRACT
              I

             

            BEGINNING
              AT A MAG NAIL SET ON THE TITLE LINE IN THE BED OF REECEVILLE ROAD (S.R.
              4005),
              THE SOUTHWESTERLY CORNER OF LANDS NOW OR FORMERLY OF JOHN AND MARY
              J. MAX;
              THENCE EXTENDING ALONG SAID LANDS AND CROSSING THE EASTERLY SIDE OF
              SAID ROAD,
              ALONG THE SOUTHERLY SIDE OF A SIGN/GRADING EASEMENT, NORTH 84 DEGREES
              48 MINUTES
              04 SECONDS EAST CROSSING A MONUMENT AT 30.14 FEET, A TOTAL DISTANCE
              OF 240.05
              FEET TO A POINT 0.60' SOUTHWEST OF A MONUMENT FOUND, A CORNER OF LANDS
              NOW OR
              FORMERLY OF WILLIAM F. HAMMELL AND DIANE H. HAMMELL; THENCE EXTENDING
              ALONG
              SAME, CROSSING A 20 FOOT WIDE WATER EASEMENT, NORTH 84 DEGREES 46 MINUTES
              59
              SECONDS EAST 509.84 FEET TO A REBAR SET IN THE WEST LINE OF PREMISES
              A,
              HEREINABOVE DESCRIBED; THENCE EXTENDING ALONG SAID LANDS, SOUTH 05
              DEGREES 30
              MINUTES 14 SECONDS EAST 60.00 FEET TO A REBAR SET, A CORNER OF LANDS
              NOW OR LATE
              OF COATESVILLE HOSPITAL CORPORATION; THENCE EXTENDING ALONG SAID LANDS,
              THE
              FOLLOWING TWO (2) COURSES AND DISTANCES: (1) RECROSSING SAID WATER
              EASEMENT,
              SOUTH 84 DEGREES 46 MINUTES 59 SECONDS WEST 512.44 FEET TO AN IRON
              PIN; (2)
              ALONG THE NORTHERLY SIDE OF A SIGN/GRADING EASEMENT, SOUTH 84 DEGREES
              48 MINUTES
              04 SECONDS WEST, CROSSING OVER A MAG NAIL SET ON THE EASTERLY SIDE
              OF PREMISES B
              - TRACT II HEREINBELOW DESCRIBED, ALONG THE NORTHERLY LINE OF THE SAME,
              CROSSING
              OVER ANOTHER MAG NAIL SET ON THE EASTERLY SIDE OF SAID REECEVILLE ROAD,
              239.05
              FEET TO A MAG NAIL SET ON THE TITLE LINE IN THE BED OF SAID ROAD; THENCE
              EXTENDING ALONG SAME, NORTH 03 DEGREES 58 MINUTES 08 SECONDS WEST 60.01
              FEET TO
              THE FIRST MENTIONED POINT AND PLACE OF BEGINNING.

             

            CONTAINING:
              1.034 ACRES OF LAND, BE THE SAME MORE OR LESS.

             

            TRACT
              II

             

            BEGINNING
              AT A MAG NAIL SET ON THE EASTERN LEGAL RIGHT-OF-WAY LINE OF REECEVILLE
              ROAD
              (S.R. 4005), 40 FEET WIDE AND ON THE SOUTH LINE OF TRACT I, HEREINABOVE
              DESCRIBED; THENCE FROM SAID POINT OF BEGINNING, ALONG TRACT I, NORTH
              84 DEGREES
              48 MINUTES 04 SECONDS EAST 10.00 FEET TO A MAG NAIL SET; THENCE LEAVING
              SAID
              LINE OF TRACT I, ALONG LANDS NOW OR LATE OF WILLIAM D. AND MARY R.
              HUTTINGER,
              THE FOLLOWING TWO (2) COURSES AND DISTANCES: (1) IN A SOUTHERLY DIRECTION,
              SOUTH
              03 DEGREES 58 MINUTES 08 SECONDS EAST 250.00 FEET TO AN IRON PIN; (2)
              SOUTH 84
              DEGREES 48 MINUTES 04 SECONDS WEST 10.00 FEET TO A POINT ON THE EASTERN
              LEGAL
              RIGHT-OF-WAY LINE OF REECEVILLE ROAD (S.R. 4005) 40 FEET 

             

            
              
                
                

              

              
                
                

                
                  

                

              

              
                
                

              

            

             

            WIDE;
              THENCE CONTINUING ALONG SAID RIGHT-OF-WAY LINE IN A NORTHERN DIRECTION,
              NORTH 03
              DEGREES 58 MINUTES 08 SECONDS WEST250.00 FEET TO THE POINT AND PLACE
              OF
              BEGINNING. 

             

            CONTAINING:
              2,500 SQUARE FEET OF LAND, BE THE SAME MORE OR LESS.

             

            BEING:
              CHESTER COUNTY TAX PARCEL 29-7-172

             

            EXCEPTING
              THEREOUT AND THEREFROM: ALL THOSE LIFE ESTATE INTERESTS CONVEYED IN
              CONDOMINIUM
              UNITS (FREEDOM VILLAGE AT BRANDYWINE, A CONDOMINIUM) IN VARIOUS DEEDS
              OUT OF
              FREEDOM VILLAGEAT BRANDYWINE LIMITED PARTNERSHIP (DECLARANT).

             

            
              
                
                

              

              
                
                

                
                  

                

              

              
                
                

              

            

             

            EXHIBIT
              E 

             

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