Unassociated Document


    Exhibit
      10.80


    (Heritage
      Club at Lowry)

     

    PROMISSORY
      NOTE

     

    
      	$25,480,000.00	
               

            
	
               

            	
              As
                of________, 2005

            


    

     

    FOR
      VALUE
      RECEIVED, the undersigned DENVER LOWRY JV, LLC, a Delaware limited liability
      company, having an address at 111 Westwood Place, Suite 200, Brentwood,
      Tennessee 37027 (“Borrower”),
      hereby
      promises to pay to the order of GMAC COMMERCIAL MORTGAGE BANK, a Utah industrial
      bank, having an address at 100 South Wacker Drive, Suite 400, Chicago, Illinois
      60606 (“Lender”),
      its
      successors and assigns as holder of this Note or, if this Note has then been
      endorsed “to bearer,” to the bearer of this Note (Lender, its said successors
      and assigns, and any such bearer, being hereinafter sometimes referred to
      collectively as the “Holder”),
      at
      Lender’s said address or at such other place or to such other person as may be
      designated in writing to Borrower by Lender, the principal sum of TWENTY-FIVE
      MILLION FOUR HUNDRED EIGHTY THOUSAND AND 00/100 DOLLARS ($25,480,000.00) (the
      “Loan”),
      or so
      much thereof as shall be advanced pursuant to the terms of that certain Loan
      Agreement of even date herewith by and between Borrower and Lender (the
“Loan
      Agreement”),
      together with interest on the unpaid balance thereof at the rate hereinafter
      set
      forth.

     

    ON
      THE
      TERMS AND SUBJECT TO THE CONDITIONS which are hereinafter set
      forth:

     

    Section
      1.   Interest
      Rate and Payment Dates.

     

    (a)  Initial
      Rate and Initial Payment.
      Interest
      shall accrue on the outstanding balance of the principal amount outstanding
      hereunder from time to time from and after the date hereof at the rate of
      __________________________________________________ percent (_____%) per annum
      until the first Rate Adjustment Date (as defined below). On each successive
      Rate
      Adjustment Date, the rate of interest at which interest accrues shall be
      adjusted to the then applicable Note Rate (as defined below). Interest for
      the
      period beginning on the date of this Note and ending on and including the last
      day of the month in which this Note is dated shall be payable on the date
      hereof. Interest shall be paid in arrears and shall be computed on the basis
      of
      a 360-day year and actual number of days elapsed for any whole or partial month
      in which interest on the loan is being calculated and shall be charged on the
      principal balance outstanding from time to time.

     

    (b)  Rate
      Adjustment Date and Payment Adjustment Date.
      The
      interest rate shall be adjusted on the dates (each being a “Rate
      Adjustment Date”)
      described in this paragraph. The first Rate Adjustment Date shall
      be______,
      2005,
      and subsequent Rate Adjustment Dates shall fall on the first day of each
      subsequent month thereafter. The first payment adjustment date shall
      be________,
      2005,
      and subsequent payment adjustment dates shall fall on the first day of each
      calendar month thereafter during the term of the Loan.

     

    (c)  Default
      Interest Rate.
      If
      Borrower fails to make any payment of principal, interest or fees on the date
      on
      which such payment becomes due and payable (including applicable grace periods)
      whether at maturity or by acceleration or on any other date, such payment shall
      accrue interest from the date on which such payment was due (and not the date
      of
      the payment default) until paid at the fluctuating rate (“Default
      Rate”)
      which
      is the lesser of (a) five (5) percentage points above the then applicable Note
      Rate and (b) the maximum rate of interest permitted by applicable
      law.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    (d)  Note
      Rate.
      During
      the Construction Loan Phase (as defined below), the “Note Rate” shall mean the
      average of London Interbank Offered Rates for a term of one month (“LIBOR”)
      determined solely by Holder as of each Rate Adjustment Date plus two and
      three-quarters percent (2.75%) per annum, determined in the manner set forth
      below. During the Permanent Loan Phase (as defined below), the Note Rate shall
      mean LIBOR as of each Rate Adjustment Date, plus two and three-quarters percent
      (2.75%) per annum determined solely by Holder in the manner set forth below;
      provided, however, that in no event shall the Note Rate exceed the maximum
      rate
      of interest permitted by applicable law. On each Rate Adjustment Date, Holder
      will determine
      LIBOR on the basis of one month LIBOR from the appropriate Bloomberg display
      page as effective on the second (2nd)
      Business
      Day immediately preceding such Rate Adjustment Date. In the event the Bloomberg
      ceases publication or ceases to publish the one month LIBOR, Holder shall select
      a comparable publication to determine one month LIBOR and provide notice thereof
      to Borrower. LIBOR may or may not be the lowest rate based upon the market
      for
      U.S. Dollar deposits in the London Interbank Eurodollar Market at which Holder
      prices loans on the date on which the Note Rate is determined by Holder as
      set
      forth above.

     

    (e)  Note
      Rate Adjustments.
      This
      Note shall bear interest at the applicable rate set forth above or at the
      applicable Note Rate until a new Note Rate is determined on each Rate Adjustment
      Date in accordance with the provisions hereof; provided, however, that, if
      Holder at any time determines, in the sole but reasonable exercise of its
      discretion, that it has miscalculated the amount of the monthly payment of
      principal and/or interest (whether because of a miscalculation of the Note
      Rate
      or otherwise), then Holder shall give notice to Borrower of the corrected amount
      of such monthly payment (and the corrected amount of the Note Rate, if
      applicable) and (a) if the corrected amount of such monthly payment represents
      an increase thereof, then Borrower shall, within ten (10) calendar days
      thereafter, pay to Holder any sums that Borrower would have otherwise been
      obligated under this Note to pay to Holder had the amount of such monthly
      payment not been miscalculated, or (b) if the corrected amount of such monthly
      payment represents a decrease thereof and Borrower is not otherwise in breach
      or
      default under any of the terms and provisions of the Note or the Loan Agreement,
      then Borrower shall, within (10) calendar days thereafter be paid the sums
      that
      Borrower would not have otherwise been obligated to pay to Holder had the amount
      of such monthly payment not been miscalculated.

     

    (f)  LIBOR
      Unascertainable.
      If (a)
      on any date on which the Note Rate would otherwise be set, Holder shall have
      determined in good faith (which determination shall be conclusive) that (i)
      adequate and reasonable means do not exist for ascertaining the one month LIBOR,
      or (ii) a contingency has occurred which materially and adversely affects the
      London Interbank Eurodollar Market at which Holder prices loans on the date
      on
      which the Note Rate is determined by Holder as set forth above, or (b) at any
      time Holder shall have determined in good faith (which determination shall
      be
      conclusive) that the making, maintenance or funding of any part of the Loan
      has
      been made impracticable or unlawful by compliance by Holder in good faith with
      any law or guideline or interpretation or administration thereof by any
      Governmental Authority charged with the interpretation or administration thereof
      or with any request or directive of any such Governmental Authority (whether
      or
      not having the force of law) then, and in any such event, Holder may notify
      Borrower of such determination. Upon such date as shall be specified in such
      notice (which shall not be earlier than the date such notice is given) the
      obligation of Holder to charge interest to Borrower at the Note Rate shall
      be
      suspended until Holder shall have later notified Borrower of Holder’s
      determination in good faith (which determination shall be conclusive) that
      the
      circumstances giving rise to such previous determination no longer
      exist.

     

     

    
      
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    (g)  Prime
      Rate.
      If
      Holder notifies Borrower of a determination under Section 1(f)
      (LIBOR
      Unascertainable) for purposes of calculating the Note Rate, the one month LIBOR
      shall automatically be converted to the “Index” of the weekly average yield on
      United States Treasury Securities adjusted to a constant maturity of one (1)
      year, as made available by the Federal Reserve Board forty five (45) days prior
      to the Rate Adjustment Date.

     

    (h)  Reimbursement
      for Increased Costs.
      If any
      law or guideline or interpretation or application thereof by any Governmental
      Authority charged with the interpretation or administration thereof or
      compliance with any request or directive of any Governmental Authority (whether
      or not having the force of law) now existing or hereafter adopted (a) subjects
      Holder to any tax or changes the basis of taxation with respect to this Note,
      the Loan or payments by Borrower of principal, interest or other amounts due
      from Borrower hereunder or thereunder (except for taxes on the overall assets,
      overall net income or overall gross receipts of Holder imposed as a result
      of a
      present or former connection between Holder and the jurisdiction of the
      Governmental Authority imposing such tax on Holder, provided, that this
      exclusion shall not apply to a connection arising solely from Holder having
      executed, delivered, performed its obligations under or received a payment
      under, or enforced any of the Loan Documents (as defined in Section 8(a)(1)
      (Events of Default)), or (b) imposes upon Holder any other condition or expense
      with respect to this Note, the Loan or its making, maintenance or funding of
      any
      part of the Loan or any security therefor, and the result of any of the
      foregoing is to increase the cost to, reduce the income receivable by, or impose
      any expense (including, without limitation, loss of margin) upon Holder with
      respect to the Note, the Loan or its making, maintenance or funding of any
      part
      of the Loan, by an amount which Holder deems to be material, Holder may from
      time to time notify Borrower of the amount determined in good faith (using
      any
      averaging and attribution methods) by Holder (which determination shall be
      conclusive) to be necessary to compensate Holder for such increase, reduction
      or
      imposition and, if Borrower is by law prohibited from paying any such amount,
      Holder may elect to declare the unpaid principal balance hereof and all interest
      accrued thereon immediately due and payable. Such amount shall be due and
      payable by Borrower to Holder seven (7) Business Days after such notice is
      given.

     

    Section
      2.   Payments.

     

    (a)  Interest
      Payments.
      Commencing on______ ,
      and
      continuing on the first day of each calendar month thereafter through and
      including________ (the
      “Construction
      Loan Phase”),
      interest shall be due and payable by Borrower to Holder hereunder in arrears
      at
      the applicable Note Rate determined as of the immediately preceding Rate
      Adjustment Date, on the then outstanding principal balance of the
      Loan.

     

     

    
      
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    (b)  Principal
      and Interest Payments.
      If the
      Maturity Date is extended pursuant to Section 4(b) below, commencing on______
      ,
      2008 and
      continuing on the first day of each calendar month thereafter through and
      including the Maturity Date, as extended (the “Permanent
      Loan Phase”),
      monthly payments of principal and interest shall adjust monthly and be made
      in
      such amount as is necessary, taking into account the then effective Note Rate,
      to fully amortize the unpaid principal balance of the Note on the date that
      is
      twenty-five (25) years after the first Rate Adjustment Date.

     

    Section
      3.   Application
      of Payments.

     

    Payments
      made by Borrower on account hereof shall be applied first, toward any Late
      Fees
      (as hereinafter defined) or other fees and charges due hereunder, if any,
      second, toward payment of interest due at the Default Rate, if any, third,
      toward payment of any interest due at the then applicable Note Rate, and fourth,
      toward payment of principal. Notwithstanding the foregoing, if any advances
      made
      by Holder under the terms of any instruments securing this Note have not been
      repaid, any payments made may, at the option of Holder, be applied, first,
      to
      repay such advances, and interest thereon, with the balance, if any, applied
      as
      set forth in the preceding sentence.

     

    Section
      4.   Maturity.

     

    (a)  Maturity
      Date.
      Anything
      in this Note to the contrary notwithstanding, the entire unpaid balance of
      the
      principal amount hereof and all interest accrued thereon, to and including
      the
      Maturity Date (including interest accruing at the Default Rate), and all Late
      Fees (as defined below) shall, unless sooner paid, and except to the extent
      that
      payment thereof is sooner accelerated, be and become due and payable
      on________,
      2008
      (“the
      Maturity Date”),
      or on
      such date to which the Maturity Date is extended pursuant to 4(b) below.
      Notwithstanding any other provision contained herein, if repayment of the Loan
      is funded from the proceeds of any refinancing of the Loan pursuant to which
      Holder does not receive a contractually agreed upon sum for the arrangement
      thereof, then Borrower shall pay to Holder a repayment premium equal to one
      percent (1%) of the outstanding principal balance of the Loan (which balance
      shall be calculated exclusive of any voluntary partial prepayments), unless
      (a)
      Holder elects not to refinance the Loan, or does not offer a similar rate and
      terms that are available in the market at the time of the refinance; or (b)
      the
      Property is sold to a third party.

     

    (b)  Extension
      of Maturity Date.
      The
      Maturity Date of the Loan may be extended for two one-year terms (each, an
      “Extension”)
      upon
      satisfaction of the conditions set forth below (each, an “Extension
      Term”),
      provided that Holder does not accelerate the maturity of the Loan or the Loan
      does not otherwise become due. Holder shall grant each Extension, provided
      that,
      at the time of the expiration of the Term or first Extension Term, as the case
      may be, (i) no Default (as defined below) under any of the Loan Documents (as
      defined below) has occurred and is continuing, (ii) the Debt Service Coverage
      for the Facility (as defined below), after deduction of Assumed Management
      Fees
      (as defined in the Loan Agreement), is not less than 1.10 to 1.0 with respect
      to
      the first Extension and 1.25 to 1.0 with respect to the second Extension, as
      applicable (in each case based on a trailing three month net operating income
      with fully amortizing debt service assuming an interest rate equal to then
      current Note Rate), and (iii) Borrower has paid to Lender, for each such
      Extension, an extension fee equal to one-quarter percent (0.25%) of the then
      outstanding principal balance of the Loan. For purposes of this Note, “Default”
means the occurrence or existence of any event which, but for the giving of
      notice or expiration of time or both, would constitute an “Event of Default” (as
      described below).

     

     

    
      
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    As
      used
      herein, “Debt Service Coverage for the Facility”
      means a
      ratio in which the first number is the sum of pre-tax “net income” of Borrower
      from the operations of the Facility (as defined in the Loan Agreement) as set
      forth in the financial statements provided to Lender (without deduction for
      Actual Management Fees (as defined in the Loan Agreement) or expenses paid
      or
      incurred), calculated based upon the preceding three (3) months, plus interest
      expense and lease expense to the extent deducted in determining net income
      and
      non-cash expenses or allowances for depreciation and amortization of the
      Facility for said period, less
      Assumed
      Management Fees for said period, and the second number is the debt service
      on
      the Loan, based on a 25 year amortization and utilizing an interest rate
      calculated at the GREATER of the actual interest rate at the time of the
      extension OR the prevailing market rate for long term fixed rate financing,
      as
      determined by Lender in its sole discretion. In calculating “net income,”
material items of income and expense of a character significantly different
      from
      the typical or customary business activities of Borrower, which would not be
      expected to recur frequently and which would not be considered as recurring
      factors in any evaluation of the ordinary operating processes of Borrower’s
      business, and any items of income and expense which would be treated as
      extraordinary income or extraordinary expenses under GAAP (as defined in the
      Loan Agreement) shall be excluded.

     

    Section
      5.   Prepayment.

     

    Prepayment
      of the Loan in full shall be permitted at any time during the term of the Loan
      without penalty, upon not less than thirty (30) and not greater than forty
      (40)
      days prior written notice to GMAC Commercial Mortgage Corporation specifying
      the
      date on which prepayment is to be made. Partial prepayments of the Loan shall
      not be permitted at any time. Any such prepayment shall be credited first,
      toward any Late Fees due hereunder, second, toward payment of any accrued and
      unpaid interest due hereunder at the Default Rate, third, toward payment of
      any
      accrued and unpaid interest due hereunder at the Note Rate, and, fourth, toward
      payment of principal; provided, however, that if any advances made by Holder
      under the terms of any instruments securing this Note have not been repaid,
      any
      payments made may, at the option of Holder, be applied first, to repay such
      advances, and interest thereon, with the balance, if any, applied as set forth
      in the preceding sentence. Any prepayment shall be made to GMAC Commercial
      Mortgage Corporation, 200 Witmer Road, Horsham, PA 19044. Notwithstanding
      anything contained herein to the contrary, if such prepayment is funded from
      the
      proceeds of Borrower’s refinancing of the Loan pursuant to which Lender desires
      does not receive a contractually agreed upon sum for the arrangement thereof,
      then prepayment of the Loan in full shall be subject to payment by Borrower
      to
      Lender of a prepayment premium equal to one percent (1%) of the outstanding
      principal balance of the Loan (which balance shall be calculated exclusive
      of
      any voluntary partial prepayments) unless (a) Holder elects not to refinance
      the
      Loan, or does not offer a similar rate and terms that are available in the
      market at the time of the refinance; or (b) the Property is sold to a
      third-party.

     

    Section
      6.   Method
      of Payment.

     

    Each
      payment of the Loan Obligations (as defined in the Loan Agreement) shall be
      paid
      directly to Holder in lawful tender of the United States of America. Each such
      payment shall be paid by 1:00 p.m. Chicago, Illinois time on the date such
      payment is due, except if such date is not a Business Day (as defined in the
      Loan Agreement), such payment shall then be due on the first Business Day after
      such date, but interest shall continue to accrue until the date payment is
      received. Any payment received after 1:00 p.m. Chicago, Illinois time shall
      be
      deemed to have been received on the immediately following Business
      Day.

     

     

    
      
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    Section
      7.   Security.

     

    The
      debt
      evidenced by this Note is to be secured by, among other things, (a) a Deed
      of
      Trust, Security Agreement and Fixture Filing of even date herewith (the
“Security
      Instrument”)
      encumbering the real property and improvements thereon located in the City
      and
      County of Denver, Colorado (the “Property”),
      (b) a
      Completion Guaranty Agreement of even date herewith given by American Retirement
      Corporation, a Tennessee corporation (“Guarantor”)
      for the
      benefit of Holder, (c) a Exceptions to Nonrecourse Guaranty Agreement of even
      date herewith given by Guarantor for the benefit of Holder, and (d) an Operating
      Deficit Guaranty Agreement of even date herewith given by Guarantor for the
      benefit of Holder. The Completion Guaranty Agreement, the Exceptions to
      Nonrecourse Guaranty Agreement and the Operating Deficit Guaranty Agreement
      are
      hereinafter collectively, the “Guaranty Agreements”.

     

    Section
      8.   Default.

     

    (a)  Events
      of Default.
      Anything
      in this Note to the contrary notwithstanding, on the occurrence of any of the
      following events (each of which is referred to herein, together with each of
      the
      Events of Default defined and described in the Loan Agreement and the Security
      Instrument as an “Event
      of Default”),
      Holder
      may, in the exercise of its sole and absolute discretion, accelerate the debt
      evidenced by this Note, in which event the entire outstanding principal balance
      and all interest and fees accrued thereon shall immediately be and become due
      and payable without further notice:

     

    (1)  Failure
      to Pay or Perform.
      If
      (a)
      Borrower fails in making any payment to Holder of any or all sums due hereunder
      within ten (10) days after such payment becomes due or on the Maturity Date
      or
      (b) there exists an uncured default under any other document or instrument
      evidencing or securing the Loan (collectively, the “Loan
      Documents”)
      which
      has been executed by Borrower, Manager (as defined in the Loan Agreement) and/or
      Guarantor and such default is not cured within the grace or cure period, if
      any,
      provided in any of such Loan Documents.

     

    (2)  Bankruptcy.

     

    (i)  If
      Borrower, Guarantor or Manager (A) applies for or consents to the appointment
      of
      a receiver, trustee or liquidator of Borrower, Guarantor or Manager, as the
      case
      may be, or of all or a substantial part of its assets, (B) files a voluntary
      petition in bankruptcy, or admits in writing its inability to pay its debts
      as
      they come due, (C) makes an assignment for the benefit of creditors, (D) files
      a
      petition or an answer seeking a reorganization or an arrangement with creditors
      or seeking to take advantage of any insolvency law, (E) performs any other
      act
      of bankruptcy, or (F) files an answer admitting the material allegations of
      a
      petition filed against Borrower, Guarantor or Manager in any bankruptcy,
      reorganization or insolvency proceeding; or

     

     

    
      
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    (ii)  If
      (A) an
      order, judgment or decree is entered by any court of competent jurisdiction
      adjudicating Borrower, Guarantor or Manager a bankrupt or an insolvent, or
      approving a receiver, trustee or liquidator of Borrower, Guarantor or Manager
      or
      of all or a substantial part of its assets, or (B) there otherwise commences
      with respect to Borrower, Guarantor or Manager or any of their assets any
      proceeding under any bankruptcy, reorganization, arrangement, insolvency,
      readjustment, receivership or like law or statute, and if such order, judgment,
      decree or proceeding continues unstayed for any period of sixty (60) consecutive
      days after the expiration of any stay thereof.

     

     

    (3)  Judgments.
      If any
      judgment for the payment of money in excess of $25,000 hereafter awarded against
      Borrower, Guarantor or Manager by any court of competent jurisdiction remains
      unsatisfied or otherwise in force and effect for a period of thirty (30) days
      after the date of such award, unless one of the conditions of Section 9.1(m)
      of
      the Loan Agreement exists.

     

    (b)  No
      Impairment of Rights.
      Nothing
      in this Section shall be deemed in any way to alter or impair any right which
      Holder has under this Note or the Security Instrument, or any of the other
      Loan
      Documents or at law or in equity, to accelerate such debt on the occurrence
      of
      any other Event of Default provided herein or therein, whether or not relating
      to this Note.

     

    (c)  Late
      Fees.
      Without
      limiting the generality of the foregoing provisions of this Section, if any
      payment of interest or principal payable under this Note is not made within
      five
      (5) calendar days after the date on which such payment becomes due and payable,
      Borrower shall thereupon automatically become obligated immediately to pay
      to
      Holder a late payment charge, for each month during which a payment delinquency
      exists, equal to the lesser of five percent (5%) of the amount of such payment
      or the maximum permitted by applicable law (“Late
      Fees”)
      to
      defray the expenses incurred by Holder in handling and processing such
      delinquent payment and to compensate Holder for the loss of such delinquent
      payment.

     

    Section
      9.   Costs
      of Enforcement.

     

    Borrower
      shall pay to Holder on demand by Holder the amount of any and all commercially
      reasonable expenses incurred by Holder (a) in enforcing its rights hereunder
      or
      under the Security Instrument and/or the Loan Documents, (b) as the result
      of a
      default by Borrower in performing its obligations under this Note, including
      but
      not limited to the commercially reasonable expense of collecting any amount
      owed
      hereunder, and of any and all commercially reasonable attorneys’ fees incurred
      by Holder in connection with such default, whether suit be brought or not,
      or
      (c) in protecting the security for the Loan and Borrower’s obligations under the
      Loan Documents. Such expenses shall be added to the principal amount hereof,
      shall be secured by the Security Instrument and shall accrue interest at the
      Default Rate.

     

    Section
      10.   Borrower’s
      Waiver of Certain Rights.

     

    Borrower
      and any endorser, guarantor or surety hereby waives the exercise of any and
      all
      exemption rights which it holds at law or in equity with respect to the debt
      evidenced by this Note, and of any and all rights which it holds at law or
      in
      equity to require any valuation, appraisal or marshalling, or to have or receive
      any presentment, protest, demand and notice of dishonor, protest, demand and
      nonpayment as a condition to Holder’s exercise of any of its rights under this
      Note or the Loan Documents.

     

     

    
      
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    Section
      11.   Extensions.

     

    The
      Maturity Date and/or any other date by which any payment is required to be
      made
      hereunder may be extended by Holder from time to time in the exercise of its
      sole discretion, without in any way altering or impairing Borrower’s or
      Guarantor’s liability hereunder.

     

    Section
      12.   General.

     

    (a)  Applicable
      Law.
      This
      Note shall be given effect and construed by application of the laws of the
      State
      of Colorado (without regard to the principles thereof governing conflicts of
      laws), and any action or proceeding arising hereunder, and each of Holder and
      Borrower submits (and waives all rights to object) to non-exclusive personal
      jurisdiction in the State of Colorado, for the enforcement of any and all
      obligations under the Loan Documents except that if any such action or
      proceeding arises under the Constitution, laws or treaties of the United States
      of America, or if there is a diversity of citizenship between the parties
      thereto, so that it is to be brought in a United States District Court, it
      shall
      be brought in the United States District Court for the District of Colorado
      or
      any successor federal court having original jurisdiction.

     

    (b)  Headings.
      The
      headings of the Sections, subsections, paragraphs and subparagraphs hereof
      are
      provided herein for and only for convenience of reference, and shall not be
      considered in construing their contents.

     

    (c)  Construction.
      As used
      herein, (a) the term “person” means a natural person, a trustee, a corporation,
      a limited liability company, a partnership and any other form of legal entity,
      and (b) all references made (i) in the neuter, masculine or feminine gender
      shall be deemed to have been made in all such genders, (ii) in the singular
      or
      plural number shall be deemed to have been made, respectively, in the plural
      or
      singular number as well, and (iii) to any Section, subsection, paragraph or
      subparagraph shall, unless therein expressly indicated to the contrary, be
      deemed to have been made to such Section, subsection, paragraph or subparagraph
      of this Note.

     

    (d)  Severability.
      No
      determination by any court, governmental body or otherwise that any provision
      of
      this Note or any amendment hereof is invalid or unenforceable in any instance
      shall affect the validity or enforceability of (a) any other such provision
      or
      (b) such provision in any circumstance not controlled by such determination.
      Each such provision shall be valid and enforceable to the fullest extent allowed
      by, and shall be construed wherever possible as being consistent with,
      applicable law.

     

    (e)  No
      Waiver.
      Holder
      shall not be deemed to have waived the exercise of any right which it holds
      hereunder unless such waiver is made expressly and in writing. No delay or
      omission by Holder in exercising any such right (and no allowance by Holder
      to
      Borrower of an opportunity to cure a default in performing its obligations
      hereunder) shall be deemed a waiver of its future exercise. No such waiver
      made
      as to any instance involving the exercise of any such right shall be deemed
      a
      waiver as to any other such instance, or any other such right. Further,
      acceptance by Holder of all or any portion of any sum payable under, or partial
      performance of any covenant of, this Note, the Security Instrument or any of
      the
      other Loan Documents, whether before, on, or after the due date of such payment
      or performance, shall not be a waiver of Holder’s right either to require prompt
      and full payment and performance when due of all other sums payable or
      obligations due thereunder or hereunder or to exercise any of Holder’s rights
      and remedies hereunder or thereunder.

     

     

    
      
        8

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    (f)  WAIVER
      OF JURY TRIAL; SERVICE OF PROCESS; COURT COSTS.
      TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF BORROWER AND HOLDER HEREBY
      WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO WHICH BORROWER AND HOLDER
      MAY BE PARTIES ARISING OUT OF, IN CONNECTION WITH, OR IN ANY WAY PERTAINING
      TO,
      THIS NOTE AND/OR ANY OF THE OTHER LOAN DOCUMENTS. IT IS AGREED AND UNDERSTOOD
      THAT THIS WAIVER CONSTITUTES A WAIVER OF TRIAL BY JURY OF ALL CLAIMS AGAINST
      ALL
      PARTIES TO SUCH ACTIONS OR PROCEEDINGS, INCLUDING CLAIMS AGAINST PARTIES WHO
      ARE
      NOT PARTIES TO THIS NOTE. THIS WAIVER IS KNOWINGLY, WILLINGLY AND VOLUNTARILY
      MADE BY BORROWER, UPON CONSULTATION WITH COUNSEL OF BORROWER’S CHOICE, AND
      BORROWER HEREBY REPRESENTS THAT NO REPRESENTATIONS OF FACT OR OPINION HAVE
      BEEN
      MADE BY ANY INDIVIDUAL TO INDUCE THIS WAIVER OF TRIAL BY JURY OR TO IN ANY
      WAY
      MODIFY OR NULLIFY ITS EFFECT. BORROWER FURTHER REPRESENTS AND WARRANTS THAT
      IT
      HAS BEEN REPRESENTED IN THE SIGNING OF THIS NOTE AND IN THE MAKING OF THIS
      WAIVER BY INDEPENDENT LEGAL COUNSEL, OR HAS HAD THE OPPORTUNITY TO BE
      REPRESENTED BY INDEPENDENT LEGAL COUNSEL SELECTED OF ITS OWN FREE WILL, AND
      THAT
      IT HAS HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL. BORROWER HEREBY
      IRREVOCABLY DESIGNATES CORPORATION SERVICE COMPANY AT
      ______________________________________COLORADO ________, AND ITS SUCCESSORS
      IN
      OFFICE, AS TRUE AND LAWFUL ATTORNEY OF BORROWER FOR THE PURPOSE OF RECEIVING
      SERVICE OF ALL LEGAL NOTICES AND PROCESS ISSUED BY ANY COURT IN THE STATE OF
      COLORADO AS WELL AS SERVICE OF ALL PLEADINGS AND OTHER DOCUMENTS RELATED TO
      ANY
      LEGAL PROCEEDING OR ACTION ARISING OUT OF THIS NOTE. BORROWER AGREES THAT
      SERVICE UPON SAID CORPORATION SERVICE COMPANY SHALL BE VALID REGARDLESS OF
      BORROWER’S WHEREABOUTS AT THE TIME OF SUCH SERVICE AND REGARDLESS OF WHETHER
      BORROWER RECEIVES A COPY OF SUCH SERVICE, PROVIDED THAT HOLDER SHALL HAVE MAILED
      A COPY TO BORROWER IN ACCORDANCE WITH THE NOTICE PROVISIONS HEREIN. BORROWER
      AGREES TO PAY ALL COURT COSTS AND REASONABLE ATTORNEYS’ FEES INCURRED BY HOLDER
      IN CONNECTION WITH ENFORCING ANY PROVISION OF THIS NOTE. NOTWITHSTANDING THE
      FOREGOING, HOLDER AGREES TO USE REASONABLE EFFORTS TO PROVIDE BORROWER WITH
      NOTICE OF THE FILING OF ANY LAWSUIT BY HOLDER AGAINST
      BORROWER.

     

    (g)  Set-Off.
      Upon the
      occurrence of an Event of Default, Holder may set-off against any principal
      and
      interest owing hereunder, any and all credits, money, stocks, bonds or other
      security or property of any nature whatsoever on deposit with, or held by,
      or in
      the possession of, Holder, to the credit of or for the account of Borrower,
      without notice to or consent of Borrower or Guarantor.

     

     

    
      
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    (h)  Non-Exclusivity
      of Rights and Remedies.
      None of
      the rights and remedies herein conferred upon or reserved to Holder is intended
      to be exclusive of any other right or remedy contained herein or in any of
      the
      other Loan Documents and each and every such right and remedy shall be
      cumulative and concurrent, and may be enforced separately, successively or
      together, and may be exercised from time to time as often as may be deemed
      necessary or desirable by Holder.

     

    (i)  Incorporation
      by Reference.
      All of
      the agreements, conditions, covenants and provisions contained in each of the
      Loan Documents are hereby made a part of this Note to the same extent and with
      the same force and effect as if they were fully set forth herein. Borrower
      covenants and agrees to keep and perform, or cause to be kept and performed,
      all
      such agreements, conditions, covenants and provisions strictly in accordance
      with their terms.

     

    (j)  Joint
      and Several Liability.
      If
      Borrower consists of more than one person and/or entity, each such person and/or
      entity agrees that its liability hereunder is joint and several.

     

    (k)  Business
      Purpose.
      Borrower
      represents and warrants that the Loan evidenced by this Note is being obtained
      solely for the purpose of acquiring or carrying on a business, professional
      or
      commercial activity and is not for personal, agricultural, family or household
      purposes.

     

    (l)  Interest
      Limitation; Usury.
      

     

    (1)  Notwithstanding
      anything to the contrary contained herein or in the Security Instrument or
      in
      any other of the Loan Documents, the effective rate of interest on the
      obligation evidenced by this Note shall not exceed the lawful maximum rate
      of
      interest permitted to be paid. Without limiting the generality of the foregoing,
      in the event that the interest charged hereunder results in an effective rate
      of
      interest higher than that lawfully permitted to be paid, then such charges
      shall
      be reduced by the sum sufficient to result in an effective rate of interest
      permitted and any amount which would exceed the highest lawful rate already
      received and held by Holder shall be applied to a reduction of principal and
      not
      to the payment of interest. Borrower agrees that for the purpose of determining
      the highest rate permitted by law, any non-principal payment (including, without
      limitation, Late Fees and other fees) shall be deemed, to the extent permitted
      by law, to be an expense, fee or premium rather than interest.

     

    (2)  It
      is the
      intent of Borrower and Lender in the execution and performance of this Note,
      the
      Loan Agreement and the other Loan Documents to contract in strict compliance
      with applicable usury laws, including conflicts of law concepts, governing
      the
      Loan, including such applicable laws of the State of Colorado and the United
      States of America from time to time in effect. In furtherance thereof, Lender
      and Borrower stipulate and agree that none of the terms and provisions contained
      in this Note, the Loan Agreement or the other Loan Documents shall ever be
      construed to create a contract to pay, as consideration for the use, forbearance
      or detention of money, interest at a rate in excess of the maximum rate of
      interest allowed to be charged by applicable law (the “Maximum Rate”), and that
      for purposes hereof “interest” shall include the aggregate of all charges which
      constitute interest under such laws that are contracted for, charged or received
      under this Note, the Loan Agreement and the other Loan Documents and in the
      event that, notwithstanding the foregoing, under any circumstances the aggregate
      amounts taken, reserved, charged, received or paid on the Loan, including
      amounts which by applicable law are deemed interest, would exceed the Maximum
      Rate, then such excess shall be deemed to be a mistake, and Lender shall credit
      the same on the principal of this Note (or if this Note shall have been paid
      in
      full, refund said excess to Borrower). In the event that the maturity of this
      Note is accelerated by reason of any election of the holder thereof resulting
      from any Event of Default under this Note, the Loan Agreement or any of the
      other Loan Documents, or otherwise, or in the event of any required or permitted
      prepayment, then such consideration that constitutes interest may never include
      more than the Maximum Rate, and excess interest, if any, provided for in this
      Note, the Loan Agreement or otherwise shall be canceled automatically as of
      the
      date of such acceleration or prepayment and, if theretofore paid, shall be
      credited on this Note (or if this Note shall have been paid in full, refunded
      to
      Borrower). In determining whether or not the interest paid or payable under
      any
      specific contingencies exceeds the Maximum Rate, Borrower and Lender shall,
      to
      the maximum extent permitted under applicable law, amortize, prorate, allocate
      and spread in equal parts during the period of the full stated term of this
      Note
      all amounts considered to be interest under applicable law at any time
      contracted for, charged, received or reserved in connection with the Loan.
      The
      provisions of this paragraph shall control over all other provisions of this
      Note, the Loan Agreement or the other Loan Documents which may be in apparent
      conflict herewith.

     

     

    
      
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    (m)  Modification.
      This
      Note may be modified, amended, discharged or waived only by an agreement in
      writing signed by the party against whom enforcement of such modification,
      amendment, discharge or waiver is sought.

     

    (n)  Time
      of
      the Essence.
      Time is
      strictly of the essence of this Note.

     

    (o)  No
      Waiver.
      Holder
      shall not be deemed to have waived the exercise of any right which it holds
      hereunder unless such waiver is made expressly and in writing. No delay or
      omission by Holder in exercising any such right (and no allowance by Holder
      to
      Borrower of an opportunity to cure a default in performing its obligations
      hereunder) shall be deemed a waiver of its future exercise. No such waiver
      made
      as to any instance involving the exercise of any such right shall be deemed
      a
      waiver as to any other such instance, or any other such right. Further,
      acceptance by Holder of all or any portion of any sum payable under, or partial
      performance of any covenant of, this Note, the Mortgage or any of the other
      Loan
      Documents, whether before, on, or after the due date of such payment or
      performance, shall not be a waiver of Holder’s right either to require prompt
      and full payment and performance when due of all other sums payable or
      obligations due thereunder or hereunder or to exercise any of Holder’s rights
      and remedies hereunder or thereunder.

     

    (p)  Interest
      Rate After Judgment.
      If
      judgment is entered against Borrower on this Note, the amount of the judgment
      entered (which may include principal, interest, fees, Late Fees and costs)
      shall
      bear interest at the Default Rate, to be determined on the date of the entry
      of
      the judgment.

     

    (q)  Relationship.
      Borrower
      and Holder intend that the relationship between them shall be solely that of
      creditor and debtor. Nothing contained in this Note or in any of the other
      Loan
      Documents shall be deemed or construed to create a partnership,
      tenancy-in-common, joint tenancy, joint venture or co-ownership by or between
      Borrower and Holder.

     

     

    
      
        11

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    (r)  WAIVER
      OF AUTOMATIC STAY.
      TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, BORROWER HEREBY AGREES THAT,
      IN
      CONSIDERATION OF LENDER’S AGREEMENT TO MAKE THE LOAN AND IN RECOGNITION THAT THE
      FOLLOWING COVENANT IS A MATERIAL INDUCEMENT FOR LENDER TO MAKE THE LOAN, IN
      THE
      EVENT THAT BORROWER SHALL (A) FILE WITH ANY BANKRUPTCY COURT OF COMPETENT
      JURISDICTION OR BE THE SUBJECT OF ANY PETITION UNDER ANY SECTION OR CHAPTER
      OF
      TITLE 11 OF THE UNITED STATES CODE, AS AMENDED (“BANKRUPTCY
      CODE”),
      OR SIMILAR LAW OR STATUTE; (B) BE THE SUBJECT OF ANY ORDER FOR RELIEF ISSUED
      UNDER THE BANKRUPTCY CODE OR SIMILAR LAW OR STATUTE; (C) FILE OR BE THE SUBJECT
      OF ANY PETITION SEEKING ANY REORGANIZATION, ARRANGEMENT, COMPOSITION,
      READJUSTMENT, LIQUIDATION, DISSOLUTION, OR SIMILAR RELIEF UNDER ANY PRESENT
      OR
      FUTURE FEDERAL OR STATE ACT OR LAW RELATING TO BANKRUPTCY, INSOLVENCY, OR OTHER
      RELIEF FOR DEBTORS; (D) HAVE SOUGHT OR CONSENTED TO OR ACQUIESCED IN THE
      APPOINTMENT OF ANY TRUSTEE, RECEIVER, CONSERVATOR, OR LIQUIDATOR; OR (E) BE
      THE
      SUBJECT OF AN ORDER, JUDGMENT OR DECREE ENTERED BY ANY COURT OF COMPETENT
      JURISDICTION APPROVING A PETITION FILED AGAINST ANY BORROWER FOR ANY
      REORGANIZATION, ARRANGEMENT, COMPOSITION, READJUSTMENT, LIQUIDATION,
      DISSOLUTION, OR SIMILAR RELIEF UNDER ANY PRESENT OR FUTURE FEDERAL OR STATE
      ACT
      OR LAW RELATING TO BANKRUPTCY, INSOLVENCY OR RELIEF FOR DEBTORS, THEN, SUBJECT
      TO COURT APPROVAL, HOLDER SHALL THEREUPON BE ENTITLED AND BORROWER HEREBY
      IRREVOCABLY CONSENTS TO, AND WILL NOT CONTEST, AND AGREES TO STIPULATE TO RELIEF
      FROM ANY AUTOMATIC STAY OR OTHER INJUNCTION IMPOSED BY SECTION 362 OF THE
      BANKRUPTCY CODE, OR SIMILAR LAW OR STATUTE (INCLUDING, WITHOUT LIMITATION,
      RELIEF FROM ANY EXCLUSIVE PERIOD SET FORTH IN SECTION 1121 OF THE BANKRUPTCY
      CODE) OR OTHERWISE, ON OR AGAINST THE EXERCISE OF THE RIGHTS AND REMEDIES
      OTHERWISE AVAILABLE TO HOLDER AS PROVIDED IN THE LOAN DOCUMENTS, AND AS
      OTHERWISE PROVIDED BY LAW, AND BORROWER HEREBY IRREVOCABLY WAIVES ITS RIGHTS
      TO
      OBJECT TO SUCH RELIEF. 

     

    (s) Acknowledgment
      By Guarantor.
      Guarantor has acknowledged this Note below for purposes of confirming its
      obligations all as more specifically set forth in the Guaranty
      Agreements.

     

    (t) Disclosures.
      Borrower
      agrees that the obligation evidenced by this Note is an exempt transaction
      under
      the Truth-in-Lending Act, 15 U.S.C. § 1601, et.seq.

     

    (u) Additional
      Interest.
      All sums
      which may or shall become due and payable by Borrower in accordance with the
      provisions hereof shall constitute “Additional Interest” hereunder and shall be
      evidenced by this Note and secured by the Security Instrument and the other
      Loan
      Documents.

     

     

    
      
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    (v) Negotiable
      Instrument.
      To the
      extent permitted by applicable law, Borrower agrees that this Note shall be
      deemed a negotiable instrument, even though this Note may not otherwise qualify,
      under applicable law, absent this paragraph, as a negotiable
      instrument.

     

     

     

     

    
      
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    IN
      WITNESS
      WHEREOF, Borrower has executed and sealed this Note or caused it to be executed
      and sealed on its behalf by its duly authorized representatives, the day and
      year first above written, and the obligations under this Note shall be binding
      upon Borrower’s successors and assigns.

     

     

    
      	 	DENVER
              LOWRY JV, LLC,
              a
              Delaware limited  
	 	
              liability
                company 

            
	 	 	 	 
	 	By:	ARC
              Lowry, LLC, a  
	 	 	Tennessee
              limited liability company, its  
	 	 	Manager 
	 	 	 	 
	 	 	By: 	 
	 	 	 	Name: 
	 	 	 	Title: 
	 	 	 	 
	 	ACKNOWLEDGED
              BY GUARANTOR:
	 	 	 	 
	 	
              AMERICAN
                RETIREMENT CORPORATION, a

            
	 	
              Tennessee
                corporation

            
	 	 
	 	By:	 
	 	 	George
              Hicks
	 	 	Executive
              Vice President