Unassociated Document


    
      
        
          
            Exhibit
              10.75

            
 

            CREDIT
              AND SECURITY AGREEMENT

             

            


            dated
              as of November 2, 2005

             

            


            among

             

            


            ARC
              SUN CITY WEST, LLC, ARC ROSWELL, LLC, ARC VEGAS, LLC, 
ARC TUCSON, LLC, ARC
              OVERLAND PARK, LLC, 
ARC MINNETONKA, LLC, ARC DENVER MONACO, LLC and ARC
              TANGLEWOOD, L.P.

             

            collectively,
              as Borrowers

             

            


            and

             

            


            MERRILL
              LYNCH CAPITAL,

             

            a
              Division of Merrill Lynch Business Financial Services
              Inc.,

             

            as
              Administrative Agent and as a Lender 

             

            


            and

             

            


            THE
              ADDITIONAL LENDERS

             

            FROM
              TIME TO TIME PARTY HERETO

             

            


             

            
              	
                       

                    


            

             

             

            


            


            
              
                
                

              

              
                
                

                
                  

                

              

              
                
                

              

            




            TABLE
              OF CONTENTS

             

            
              
                	 	Page
	
                        ARTICLE
                          1 DEFINITIONS 

                      	1
	 	
                        Section
                          1.1

                      	
                        Certain
                          Defined Terms

                      	
                        1

                      
	 	
                        Section
                          1.2

                      	
                        Accounting
                          Terms and Determinations

                      	
                        18

                      
	 	
                        Section
                          1.3

                      	
                        Other
                          Definitional Provisions 

                      	
                        18

                      
	 	
                        Section
                          1.4

                      	
                        Funding
                          and Settlement Currency 

                      	
                        19

                      
	 	
                        Section
                          1.5

                      	
                        Borrowers
                          as Licensed Operators 

                      	
                        19

                      
	
                        ARTICLE
                          2 LOANS 

                      	
                        19

                      
	 	
                        Section
                          2.1

                      	
                        Term
                          Loan 

                      	
                        19

                      
	 	
                        Section
                          2.2

                      	
                        [Reserved.]
                          

                      	
                        20

                      
	 	
                        Section
                          2.3

                      	
                        Interest;
                          Interest Calculations and Certain Fees 

                      	
                        20

                      
	 	
                        Section
                          2.4

                      	
                        Notes
                          

                      	
                        22

                      
	 	
                        Section
                          2.5

                      	
                        Reserves
                          and Escrows 

                      	
                        22

                      
	 	
                        Section
                          2.6

                      	
                        General
                          Provisions Regarding Payment; Loan Account

                      	
                        24

                      
	 	
                        Section
                          2.7

                      	
                        Maximum
                          Interest 

                      	
                        25

                      
	 	
                        Section
                          2.8

                      	
                        Taxes
                          

                      	
                        26

                      
	 	
                        Section
                          2.9

                      	
                        Capital
                          Adequacy 

                      	
                        27

                      
	 	
                        Section
                          2.10

                      	
                        Mitigation
                          Obligations 

                      	
                        27

                      
	 	
                        Section
                          2.11

                      	
                        Appointment
                          of Borrower Representative 

                      	
                        28

                      
	 	
                        Section
                          2.12

                      	
                        Release
                          of Liens as to Certain Projects 

                      	
                        28

                      
	
                        ARTICLE
                          3 REPRESENTATIONS AND WARRANTIES 

                      	30
	 	
                        Section
                          3.1

                      	
                        Existence
                          and Power 

                      	
                        30

                      
	 	
                        Section
                          3.2

                      	
                        Organization
                          and Governmental Authorization; No Contravention 

                      	
                        30

                      
	 	
                        Section
                          3.3

                      	
                        Binding
                          Effect 

                      	
                        30

                      
	 	
                        Section
                          3.4

                      	
                        Capitalization
                          

                      	
                        31

                      
	 	
                        Section
                          3.5

                      	
                        Financial
                          Information

                      	
                        31

                      
	 	
                        Section
                          3.6

                      	
                        Litigation
                          

                      	
                        32

                      
	 	
                        Section
                          3.7

                      	
                        Ownership
                          of Property Generally

                      	
                        32

                      
	 	
                        Section
                          3.8

                      	
                        No
                          Default 

                      	
                        32

                      
	 	
                        Section
                          3.9

                      	
                        Labor
                          Matters 

                      	
                        33

                      
	 	
                        Section
                          3.10

                      	
                        Regulated
                          Entities 

                      	33
	 	
                        Section
                          3.11

                      	
                        Margin
                          Regulations 

                      	
                        33

                      
	 	
                        Section
                          3.12 

                      	
                        Compliance
                          With Laws; Anti-Terrorism Laws 

                      	
                        33

                      
	 	
                        Section
                          3.13 

                      	
                        Taxes
                          

                      	
                        34

                      
	 	
                        Section
                          3.14 

                      	
                        Compliance
                          with ERISA 

                      	
                        34

                      
	 	
                        Section
                          3.15 

                      	
                        Consummation
                          of Financing Documents; Brokers

                      	
                        35

                      
	 	
                        Section
                          3.16 

                      	
                        Related
                          Transactions 

                      	
                        35

                      
	 	
                        Section
                          3.17 

                      	
                        Material
                          Contracts 

                      	
                        35

                      
	 	
                        Section
                          3.18 

                      	
                        Compliance
                          with Environmental Requirements; No Hazardous Materials


                      	
                        36

                      
	 	
                        Section
                          3.19 

                      	
                        Intellectual
                          Property 

                      	
                        37

                      
	 	
                        Section
                          3.20 

                      	
                        Solvency
                          

                      	
                        37

                      
	 	
                        Section
                          3.21 

                      	
                        Full
                          Disclosure 

                      	
                        38

                      
	 	
                        Section
                          3.22 

                      	
                        Interest
                          Rate 

                      	
                        38

                      
	 	
                        Section
                          3.23 

                      	
                        Representations
                          and Warranties Incorporated from Financing Documents 

                      	
                        38

                      
	 	
                        Section
                          3.24 

                      	
                        Subsidiaries.
                          There are no Subsidiaries of Borrowers 

                      	
                        38

                      


              

               

              
                
                  -i-

                

                
                  
                  

                  
                    

                  

                

                
                  
                  

                

              

              
                	
                        ARTICLE
                          4 AFFIRMATIVE COVENANTS 

                      	
                        38

                      
	 	
                        Section
                          4.1 

                      	
                        Financial
                          Statements and Other Reports 

                      	
                        38

                      
	 	
                        Section
                          4.2 

                      	
                        Payment
                          and Performance of Obligations 

                      	
                        41

                      
	 	
                        Section
                          4.3 

                      	
                        Maintenance
                          of Existence; Single Purpose Entity Requirements 

                      	
                        41

                      
	 	
                        Section
                          4.4 

                      	
                        Maintenance
                          of Property; Payment of Taxes; Insurance 

                      	
                        41

                      
	 	
                        Section
                          4.5 

                      	
                        Compliance
                          with Laws 

                      	
                        44

                      
	 	
                        Section
                          4.6 

                      	
                        Inspection
                          of Property, Books and Records 

                      	
                        44

                      
	 	
                        Section
                          4.7 

                      	
                        Use
                          of Proceeds 

                      	
                        44

                      
	 	
                        Section
                          4.8 

                      	
                        [Reserved]
                          

                      	
                        44

                      
	 	
                        Section
                          4.9 

                      	
                        [Reserved]
                          

                      	
                        44

                      
	 	
                        Section
                          4.10 

                      	
                        Environmental
                          Covenants 

                      	
                        44

                      
	 	
                        Section
                          4.11

                      	
                        Deferred
                          Maintenance 

                      	
                        46

                      
	 	
                        Section
                          4.12 

                      	
                        Further
                          Assurances

                      	
                        46

                      
	 	
                        Section
                          4.13 

                      	
                        Litigation

                      	
                        47

                      
	 	
                        Section
                          4.14 

                      	
                        Intentionally
                          deleted

                      	
                        47

                      
	 	
                        Section
                          4.15 

                      	
                        Power
                          of Attorney

                      	
                        47

                      
	 	
                        Section
                          4.16 

                      	
                        Estoppel
                          Certificates 

                      	
                        47

                      
	
                        ARTICLE
                          5 NEGATIVE COVENANTS 

                      	48
	 	
                        Section
                          5.1 

                      	
                        Debt

                      	48
	 	
                        Section
                          5.2 

                      	
                        Liens

                      	48
	 	
                        Section
                          5.3 

                      	
                        Contingent
                          Obligations 

                      	
                        48

                      
	 	
                        Section
                          5.4 

                      	
                        Restricted
                          Distributions 

                      	
                        48

                      
	 	
                        Section
                          5.5 

                      	
                        Restrictive
                          Agreements 

                      	
                        49

                      
	 	
                        Section
                          5.6 

                      	
                        Payments
                          and Modifications of Subordinated Debt 

                      	
                        49

                      
	 	
                        Section
                          5.7 

                      	
                        Consolidations,
                          Mergers and Sales of Assets 

                      	
                        49

                      
	 	
                        Section
                          5.8 

                      	
                        Purchase
                          of Assets 

                      	
                        49

                      
	 	
                        Section
                          5.9 

                      	
                        Transactions
                          with Affiliates 

                      	
                        49

                      
	 	
                        Section
                          5.10 

                      	
                        Modification
                          of Organizational Documents 

                      	
                        50

                      
	 	
                        Section
                          5.11 

                      	
                        Modification
                          of Certain Agreements

                      	
                        50

                      
	 	
                        Section
                          5.12 

                      	
                        Fiscal
                          Year 

                      	
                        50

                      
	 	
                        Section
                          5.13 

                      	
                        Conduct
                          of Business 

                      	
                        50

                      
	 	
                        Section
                          5.14 

                      	
                        Operating
                          Leases 

                      	
                        51

                      
	 	
                        Section
                          5.15 

                      	
                        Lease
                          Payments 

                      	
                        51

                      
	 	
                        Section
                          5.16 

                      	
                        Limitation
                          on Sale and Leaseback Transactions 

                      	
                        51

                      
	 	
                        Section
                          5.17 

                      	
                        Compliance
                          with Anti-Terrorism Laws 

                      	
                        51

                      
	
                        ARTICLE
                          6 FINANCIAL COVENANTS 

                      	51
	 	
                        Section
                          6.1 

                      	
                        Definitions

                      	
                        51

                      
	 	
                        Section
                          6.2 

                      	
                        [Reserved]
                          

                      	
                        53

                      
	 	
                        Section
                          6.3 

                      	
                        [Reserved]
                          

                      	
                        53

                      
	 	
                        Section
                          6.4 

                      	
                        [Reserved]
                          

                      	
                        53

                      
	 	
                        Section
                          6.5 

                      	
                        Debt
                          Yield Covenant 

                      	
                        53

                      
	 	
                        Section
                          6.6 

                      	
                        Evidence
                          of Compliance 

                      	
                        54

                      
	 	
                        Section
                          6.7 

                      	
                        Financial
                          Covenant Default 

                      	
                        54

                      


              

               

              
                
                  -ii-

                

                
                  
                  

                  
                    

                  

                

                
                  
                  

                

              

              
                	
                        ARTICLE
                          7 CONDITIONS 

                      	55
	 	
                        Section
                          7.1 

                      	
                        Conditions
                          to Closing 

                      	55
	 	
                        Section
                          7.2 

                      	
                        Searches.
                          

                      	
                        55

                      
	 	
                        Section
                          7.3 

                      	
                        Certain
                          Post-Closing Obligations. 

                      	
                        56

                      
	
                        ARTICLE
                          8 REGULATORY MATTERS 

                      	56
	 	
                        Section
                          8.1 

                      	
                        Representations
                          and Warranties Pertaining to Licensed Locations 

                      	
                        56

                      
	 	
                        Section
                          8.2 

                      	
                        Representations
                          and Warranties Pertaining to Licensed Operators 

                      	
                        57

                      
	 	
                        Section
                          8.3 

                      	
                        Covenants
                          Pertaining to Licensed Locations 

                      	
                        61

                      
	 	
                        Section
                          8.4 

                      	
                        
                          Covenants
                            Pertaining to Licensed Operators

                        

                      	61
	 	
                        Section
                          8.5 

                      	
                        Special
                          Notices to Administrative Agent

                      	
                        64

                      
	 	
                        Section
                          8.6 

                      	
                        Cure
                          of Healthcare Laws Violations

                      	
                        66

                      
	 	
                        Section
                          8.7 

                      	
                        Licensed
                          Operator; Manager 

                      	
                        67

                      
	 	
                        Section
                          8.8 

                      	
                        Transfer
                          of Healthcare Permits and Operations

                      	
                        68

                      
	
                        ARTICLE
                          9 REAL PROPERTY MATTERS 

                      	68
	 	
                        Section
                          9.1 

                      	
                        Leases;
                          Resident Agreements 

                      	
                        68

                      
	 	
                        Section
                          9.2 

                      	
                        Project
                          Use and Operation

                      	
                        70

                      
	 	
                        Section
                          9.3 

                      	
                        Casualty
                          Proceeds 

                      	
                        71

                      
	 	
                        Section
                          9.4 

                      	
                        Borrowers'
                          Obligation to Rebuild and Use of Casualty Proceeds
                          Therefor

                      	
                        72

                      
	 	
                        Section
                          9.5 

                      	
                        Tax
                          Reduction Proceedings

                      	
                        73

                      
	 	
                        Section
                          9.6 

                      	
                        Commingling;
                          FIRPTA

                      	
                        73

                      
	 	
                        Section
                          9.7 

                      	
                        Representations
                          and Warranties

                      	
                        74

                      
	
                        ARTICLE
                          10 SECURITY AGREEMENT

                      	76
	 	
                        Section
                          10.1 

                      	
                        Generally

                      	
                        76

                      
	 	
                        Section
                          10.2 

                      	
                        Covenants
                          Relating to Collateral

                      	
                        77

                      
	 	
                        Section
                          10.3 

                      	
                        UCC
                          Remedies

                      	
                        78

                      
	
                        ARTICLE
                          11 EVENTS OF DEFAULT 

                      	79
	 	
                        Section
                          11.1 

                      	
                        Events
                          of Default

                      	
                        79

                      
	 	
                        Section
                          11.2 

                      	
                        Acceleration

                      	
                        82

                      
	 	
                        Section
                          11.3 

                      	
                        [Reserved]
                          

                      	
                        82

                      
	 	
                        Section
                          11.4 

                      	
                        Default
                          Rate of Interest

                      	
                        82

                      
	 	
                        Section
                          11.5 

                      	
                        Setoff
                          Rights

                      	
                        82

                      
	 	
                        Section
                          11.6 

                      	
                        Application
                          of Proceeds

                      	
                        82

                      
	 	
                        Section
                          11.7 

                      	
                        Waivers

                      	
                        83

                      
	 	
                        Section
                          11.8 

                      	
                        Injunctive
                          Relief

                      	
                        85

                      
	 	
                        Section
                          11.9 

                      	
                        Marshalling

                      	
                        86

                      
	
                        ARTICLE
                          12 EXPENSES AND INDEMNITY

                      	86
	 	
                        Section
                          12.1 

                      	
                        Expenses
                          

                      	
                        86

                      
	 	
                        Section
                          12.2 

                      	
                        Indemnity
                          

                      	
                        86

                      


              

               

              
                
                  -iii-

                

                
                  
                  

                  
                    

                  

                

                
                  
                  

                

              

              
                	
                        ARTICLE
                          13 ADMINISTRATIVE AGENT 

                      	87
	 	
                        Section
                          13.1 

                      	
                        Appointment
                          and Authorization

                      	
                        87

                      
	 	
                        Section
                          13.2 

                      	
                        Administrative
                          Agent and Affiliates

                      	
                        88

                      
	 	
                        Section
                          13.3 

                      	
                        Action
                          by Administrative Agent 

                      	
                        88

                      
	 	
                        Section
                          13.4 

                      	
                        Consultation
                          with Experts

                      	
                        88

                      
	 	
                        Section
                          13.5 

                      	
                        Liability
                          of Administrative Agent 

                      	
                        88

                      
	 	
                        Section
                          13.6 

                      	
                        Indemnification
                          

                      	
                        89

                      
	 	
                        Section
                          13.7 

                      	
                        Right
                          to Request and Act on Instructions

                      	
                        89

                      
	 	
                        Section
                          13.8 

                      	
                        Credit
                          Decision 

                      	
                        90

                      
	 	
                        Section
                          13.9 

                      	
                        Collateral
                          Matters 

                      	
                        90

                      
	 	
                        Section
                          13.10 

                      	
                        Agency
                          for Perfection

                      	
                        90

                      
	 	
                        Section
                          13.11 

                      	
                        Notice
                          of Default

                      	
                        91

                      
	 	
                        Section
                          13.12 

                      	
                        Successor
                          Administrative Agent

                      	
                        91

                      
	 	
                        Section
                          13.13 

                      	
                        Payment
                          and Sharing of Payment

                      	
                        92

                      
	 	
                        Section
                          13.14 

                      	
                        Right
                          to Perform, Preserve and Protect

                      	
                        93

                      
	 	
                        Section
                          13.15 

                      	
                        Additional
                          Titled Agents

                      	
                        93

                      
	 	
                        Section
                          13.16 

                      	
                        Amendments
                          and Waivers

                      	
                        94

                      
	 	
                        Section
                          13.17 

                      	
                        Assignments
                          and Participations

                      	
                        94

                      
	 	
                        Section
                          13.18 

                      	
                        Definitions

                      	
                        97

                      
	
                        ARTICLE
                          14 MISCELLANEOUS 

                      	98
	 	
                        Section
                          14.1 

                      	
                        Survival

                      	
                        98

                      
	 	
                        Section
                          14.2 

                      	
                        No
                          Waivers 

                      	
                        98

                      
	 	
                        Section
                          14.3 

                      	
                        Notices
                          

                      	
                        98

                      
	 	
                        Section
                          14.4 

                      	
                        Severability
                          

                      	
                        99

                      
	 	
                        Section
                          14.5 

                      	
                        Amendments
                          and Waivers

                      	
                        100

                      
	 	
                        Section
                          14.6 

                      	
                        Credit
                          Party Assignments 

                      	
                        100

                      
	 	
                        Section
                          14.7 

                      	
                        Headings
                          

                      	
                        100

                      
	 	
                        Section
                          14.8 

                      	
                        Confidentiality
                          

                      	
                        100

                      
	 	
                        Section
                          14.9 

                      	
                        Waiver
                          of Consequential and Other Damages

                      	
                        101

                      
	 	
                        Section
                          14.10 

                      	
                        GOVERNING
                          LAW; SUBMISSION TO JURISDICTION

                      	101
	 	
                        Section
                          14.11 

                      	
                        WAIVER
                          OF JURY TRIAL

                      	
                        101

                      
	 	
                        Section
                          14.12 

                      	
                        Publication;
                          Advertisement 

                      	
                        102

                      
	 	
                        Section
                          14.13 

                      	
                        Counterparts;
                          Integration

                      	
                        102

                      
	 	
                        Section
                          14.14 

                      	
                        No
                          Strict Construction 

                      	
                        103

                      
	 	
                        Section
                          14.15 

                      	
                        Time
                          

                      	
                        103

                      
	 	
                        Section
                          14.16 

                      	
                        Lender
                          Approvals

                      	
                        103

                      
	 	
                        Section
                          14.17 

                      	
                        [Reserved.]
                          

                      	
                        103

                      
	 	
                        Section
                          14.18 

                      	
                        Waivers
                          

                      	
                        103

                      
	 	
                        Section
                          14.19 

                      	
                        Release
                          of Administrative Agent and Lenders 

                      	
                        103

                      
	
                        ARTICLE
                          15 JOINT AND SEVERAL LIABILITY; GUARANTOR PROVISIONS

                      	104
	 	
                        Section
                          15.1 

                      	
                        Joint
                          and Several Obligations. 

                      	
                        104

                      
	 	
                        Section
                          15.2 

                      	
                        Guarantor
                          Provisions. 

                      	
                        108

                      


              

            

             

            
              
                -iv-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            
 

            CREDIT
              AND SECURITY AGREEMENT

             

            THIS
              CREDIT AND SECURITY AGREEMENT
              is dated
              as of November 2, 2005 by and among ARC
              SUN CITY WEST, LLC, a
              Delaware
              limited liability company, ARC
              ROSWELL, LLC, a
              Delaware
              limited liability company, ARC
              VEGAS, LLC, a
              Delaware
              limited liability company, ARC
              TUCSON, LLC, a
              Delaware
              limited liability company, ARC
              OVERLAND PARK, LLC, a
              Delaware
limited
              liability company, ARC
              MINNETONKA, LLC, a
              Delaware
              limited liability company, ARC
              DENVER MONACO, LLC,
              a
              Delaware limited liability company, and
              ARC TANGLEWOOD, L.P., a
              Delaware
              limited partnership (each, individually as a Borrower, and collectively,
              as
              Borrowers), the financial institutions or other entities from time
              to time
              parties hereto, each as a Lender, and MERRILL
              LYNCH CAPITAL, a division of Merrill Lynch Business Financial Services
              Inc.,
              individually as a Lender and as Administrative Agent. 

             

            RECITALS:

             

            R-1. Borrowers
              have requested that Lenders make available to Borrowers term financing
              facilities as described herein.

             

            R-2. Lenders
              are willing to extend such credit to Borrowers under the terms and
              conditions
              herein set forth.

             

            NOW,
              THEREFORE,
              in
              consideration of the premises and the agreements, provisions and covenants
              herein contained, Borrowers, Lenders and Administrative Agent agree
              as
              follows:

             

            ARTICLE
              1 

            DEFINITIONS

             

            Section
              1.1  Certain
              Defined Terms. 

             

            The
              following terms have the following meanings:

             

            "Account"
              means
              "account", as defined in Article 9 of the UCC.

             

            "Administrative
              Agent" means
              Merrill Lynch, in its capacity as administrative agent for the Lenders
              hereunder, as such capacity is established in, and subject to the provisions
              of,
              Article 10, and the successors of Merrill Lynch in such capacity.

             

            "Affiliate" means
              with
              respect to any Person (a) any Person that directly or indirectly controls
              such Person, (b) any Person which is controlled by or is under common
              control with such controlling Person, and (c) each of such Person's (other
              than, with respect to any Lender, any Lender's) officers or directors (or
              Persons functioning in substantially similar roles) and the spouses,
              parents, descendants and siblings of such officers, directors or other
              Persons.
              As used in this definition, the term "control" of
              a
              Person means the possession, directly or indirectly, of the power to
              vote five
              percent (5%) or more of any class of voting securities of such Person or to
              direct or cause the direction of the management or policies of a Person,
              whether
              through the ownership of voting securities, by contract or
              otherwise.

             

            "Affiliated
              Financing Documents"
              means
              any credit, loan, letter of credit or related documents which are,
              by their
              terms and by the terms of this Agreement, cross-defaulted with the
              Financing
              Documents, and for which a Credit Party hereunder is liable or contingently
              liable for payment or as security for which a Credit Party hereunder
              has
              pledged, assigned or subjected any assets.

             

            
              
                
                

              

              
                
                

                
                  

                

              

              
                
                

              

            

             

            "Agreement" means
              this
              Credit and Security Agreement, as the same may be amended, supplemented,
              restated or otherwise modified from time to time.

             

            "Allocable
              Amount"
              shall
              have the meaning given in Section
              15.1(g).

             

            "Allocated
              Loan Amount"
              means
              the amount opposite each Project set forth below:

             

            
              	
                       

                      Project
                        Location

                    	
                       

                      State

                    	
                      Allocated

                      Loan
                        Amount

                    
	
                      Denver

                    	
                       

                      CO

                    	
                      $11,247,289

                    
	
                      Las
                        Vegas

                    	
                       

                      NV

                    	
                       

                      $7,252,350

                    
	
                       

                      Minnetonka

                    	
                       

                      MN

                    	
                       

                      $18,315,257

                    
	
                       

                      Overland
                        Park

                    	
                       

                      KS

                    	
                       

                      $9,772,234

                    
	
                       

                      Roswell

                    	
                       

                      GA

                    	
                       

                      $8,112,798

                    
	
                       

                      Sun
                        City West

                    	
                       

                      AZ

                    	
                       

                      $8,727,404

                    
	
                       

                      Tanglewood

                    	
                       

                      TX

                    	
                       

                      $13,951,555

                    
	
                      Ventana
                        Canyon

                    	
                       

                      AZ

                    	
                       

                      $7,621,114

                    
	
                      Total

                    	 	
                       

                      $85,000,000

                    


            

             

            "Anti-Terrorism
              Laws" means
              any
              Laws relating to terrorism or money laundering, including Executive
              Order
              No. 13224 (effective September 24, 2001), the USA PATRIOT Act, the
              Laws comprising or implementing the Bank Secrecy Act, and the Laws
              administered
              by OFAC.

             

            "Asset
              Disposition" means
              any
              sale, lease, license, transfer, assignment or other consensual disposition
              by
              any Borrower of any asset, but excluding dispositions of Inventory
              in the
              Ordinary Course of Business.

             

            "Assignment
              Agreement"
              means an
              agreement substantially in the form of Exhibit A
              hereto. 

             

            "ARC"
              means
              American Retirement Corporation, a Tennessee corporation.

             

            
              
                -2-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            "Bankruptcy
              Code" means
              Title 11 of the United States Code entitled "Bankruptcy", as the same
              may be
              amended, modified or supplemented from time to time, and any successor
              statute
              thereto.

             

            "Base
              Rate" means
              a
              rate per annum (rounded upwards, if necessary, to the nearest 1/100
              of
              1%) equal to (a) the rate of interest which is identified and normally
              published by Bloomberg Professional Service Page BBAM 1 as the offered rate
              for loans in United States dollars for the period of one (1) month under
              the caption British Bankers Association LIBOR Rates as of 11:00 a.m.
              (London time) as adjusted on a daily basis and effective on the second full
              Business Day after each such day (unless such date is not a Business
              Day, in
              which event the next succeeding Business Day will be used); divided
              by
              (b) the sum of one minus
              the daily
              average during the preceding month of the aggregate maximum reserve
              requirement
              (expressed as a decimal) then imposed under Regulation D of the Board of
              Governors of the Federal Reserve System (or any successor thereto) for
              "Eurocurrency Liabilities" (as defined therein). If Bloomberg Professional
              Service (or another nationally-recognized rate reporting source acceptable
              to
              Administrative Agent) no longer reports the LIBOR or Administrative Agent
              determines in good faith that the rate so reported no longer accurately
              reflects
              the rate available to Administrative Agent in the London Interbank
              Market or if
              such index no longer exists or if Page BBAM 1 no longer exists or
              accurately reflects the rate available to Administrative Agent in the
              London
              Interbank Market, Administrative Agent may select a replacement index
              or
              replacement page, as the case may be.

             

            "Base
              Rate Margin" means
              two
              percent (2.00%).

             

            "Blocked
              Person"
              means
              any Person: (a) listed in the annex to, or is otherwise subject to the
              provisions of, Executive Order No. 13224, (b) a Person owned or
              controlled by, or acting for or on behalf of, any Person that is listed
              in the
              annex to, or is otherwise subject to the provisions of, Executive Order
              No. 13224, (c) a Person with which any Lender is prohibited from
              dealing or otherwise engaging in any transaction by any Anti-Terrorism
              Law,
              (d) a Person that commits, threatens or conspires to commit or supports
              "terrorism" as defined in Executive Order No. 13224, or (e) a Person
              that is named a "specially designated national" or "blocked person"
              on the most
              current list published by OFAC or other similar list.

             

            "Borrower"
              and
              "Borrowers"
              mean the
              entities described in the first paragraph of this Agreement and each
              of their
              respective successors and permitted assigns. 

             

            "Borrower
              Representative"
              means
              ARC, in its capacity as Borrower Representative pursuant to the provisions
              of
Section 2.11,
              or any
              successor Borrower Representative selected by Borrowers and approved
              by
              Agent.

             

            "Business
              Day"
              means
              any day except a Saturday, Sunday or other day on which either the
              New York
              Stock Exchange is closed, or on which commercial banks in Chicago and
              New York
              City are authorized by law to close.

             

            
              
                -3-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            "Capital
              Lease"
              of any
              Person means any lease of any property by such Person as lessee which
              would, in
              accordance with GAAP, be required to be accounted for as a capital
              lease on the
              balance sheet of such Person.

             

            "Capital
              Replacement Reserve"
              shall
              have the meaning given in Section
              2.5(d).

             

            "Casualty
              Proceeds"
              shall
              have the meaning given in Section
              9.3(b).

             

            "CCP"
              shall
              have the meaning given in Section
              8.4b(xi).

             

            "CERCLA"
              means
              the Comprehensive Environmental Response, Compensation and Liability
              Act of
              1980, 42 U.S.C.A. § 9601 et. seq., as the same may be amended from time to
              time.

             

            "Closed
              Period" means
              the
              period from the Closing Date through the twelfth (12th) full
              calendar month following the Closing Date.

             

            "Closing
              Date"
              means
              the date of this Agreement.

             

            "CMS"
              means
              the federal Centers for Medicare and Medicaid Services (formerly the
              federal
              Health Care Financing Administration), or any successor Governmental
              Authority.

             

            "Code"
              means
              the Internal Revenue Code of 1986.

             

            "Collateral"
              means
              all property, now existing or hereafter acquired, mortgaged or pledged
              to, or
              purported to be subjected to a Lien in favor of, Administrative Agent,
              for the
              benefit of Administrative Agent and Lenders, pursuant to this Agreement
              and the
              Security Documents.

             

            "Commitment
              Annex"
              means
Annex
              A
              to this
              Agreement.

             

            "Commitment
              Expiry Date"
              means
              October 31, 2010.

             

            "Compliance
              Certificate"
              means a
              certificate, duly executed by a Responsible Officer of Borrower Representative,
              appropriately completed and substantially in the form of Exhibit
              C
              hereto.

             

            "CON" means
              any
              certificate of need or similar license which determines that there
              is a need for
              a healthcare facility at a particular location or within a certain
              geographic
              region and entitles the holder to use a Licensed Location for a purpose
              permitted under Healthcare Laws. 

             

            "Contingent
              Obligation"
              means,
              with respect to any Person, any direct or indirect liability of such
              Person:
              (a) with respect to any debt, lease, dividend or other obligation of
              another Person (a "Third
              Party Obligation") if
              the purpose or intent of such Person incurring such liability, or the
              effect
              thereof, is to provide assurance to the obligee of such Third Party
              Obligation
              that such Third Party Obligation will be paid or discharged, or that
              any
              agreement relating thereto will be complied with, or that any holder
              of such
              Third Party Obligation will be protected, in whole or in part, against
              loss with
              respect thereto; (b) with respect to any undrawn portion of any letter of
              credit issued for the account of such Person or as to which such Person
              is
              otherwise liable for the reimbursement of any drawing; (c) under any swap
              contract or other derivative obligation; (d) to make take-or-pay or similar
              payments if required regardless of nonperformance by any other party
              or parties
              to an agreement; or (e) for any obligations of another Person pursuant to
              any Guarantee or pursuant to any agreement to purchase, repurchase
              or otherwise
              acquire any obligation or any property constituting security therefor,
              to
              provide funds for the payment or discharge of such obligation or to
              preserve the
              solvency, financial condition or level of income of another Person.
              The amount
              of any Contingent Obligation shall be equal to the amount of the obligation
              so
              Guaranteed or otherwise supported or, if not a fixed and determinable
              amount,
              the maximum amount so Guaranteed or otherwise supported.

             

            
              
                -4-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            "Controlled
              Group"
              means
              all members of a group of corporations and all members of a group of
              trades or
              businesses (whether or not incorporated) under common control which,
              together with any Borrower, are treated as a single employer under
              Section 414(b), (c), (m) or (o) of the Code or Section
              4001(b) of ERISA.

             

            "Covenant
              Prepayment"
              shall
              have the meaning given in Section
              6.7.

             

            "Credit
              Exposure"
              means
              any period of time during which any Loan or other Obligation remains
              unpaid or
              outstanding; provided,
              however,
              that no
              Credit Exposure shall be deemed to exist solely due to the existence
              of
              contingent indemnification liability (other than liability in respect
              of the
              Affiliated Financing Documents), absent the assertion of a claim with
              respect
              thereto.

             

            "Credit
              Party"
              means
              any Guarantor under a Financing Document Guarantee, any Borrower and
              any
              Subsidiary of any Borrower, whether now existing or hereafter acquired
              or
              formed; and "Credit
              Parties"
              means
              all such Persons, collectively.

             

            "Debt"
              of a
              Person means at any date, without duplication, (a) all obligations of such
              Person for borrowed money, (b) all obligations of such Person evidenced by
              bonds, debentures, notes or other similar instruments, (c) all obligations
              of such Person to pay the deferred purchase price of property or services,
              except trade accounts payable arising and paid on a timely basis and
              in the
              Ordinary Course of Business, (d) all Capital Leases of such Person,
              (e) all non-contingent obligations of such Person to reimburse any bank
              or
              other Person in respect of amounts paid under a letter of credit, banker's
              acceptance or similar instrument, (f) all equity securities of such Person
              subject to repurchase or redemption otherwise than at the sole option
              of such
              Person, (g) all obligations secured by a Lien on any asset of such Person,
              whether or not such obligation is otherwise an obligation of such Person,
              (h) "earnouts", purchase price adjustments, profit sharing arrangements,
              deferred purchase money amounts and similar payment obligations or
              continuing
              obligations of any nature of such Person arising out of purchase and
              sale
              contracts; (i) all Debt of others Guaranteed by such Person;
              (j) off-balance sheet liabilities and/or pension plan liabilities;
              (k) obligations arising under non-compete agreements; and
              (l) obligations arising under bonus, deferred compensation, incentive
              compensation or similar arrangements, other than those arising in the
              Ordinary
              Course of Business. 

             

            
              
                -5-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            "Debt
              Service"
              shall
              have the meaning given in Section
              6.1(a).

             

            "Debt
              Yield Covenant"
              has the
              meaning set forth in Section
              6.5.

             

            "Debt
              Yield Ratio"
              shall
              have the meaning given in Section
              6.1(a).

             

            "Default"
              means
              any condition or event which with the giving of notice or lapse of
              time or both
              would, unless cured or waived, become an Event of Default.

             

            "Environmental
              Laws"
              means
              any present and future federal, state and local laws, statutes, ordinances,
              rules, regulations, standards, policies and other governmental directives
              or
              requirements, as well as common law, pertaining to the environment,
              natural
              resources, pollution, health (including any environmental clean up
              statutes and
              all regulations adopted by any local, state, federal or other Governmental
              Authority, and any statute, ordinance, code, order, decree, law rule
              or
              regulation all of which pertain to or impose liability or standards
              of conduct
              concerning medical waste or medical products, equipment or supplies),
              safety or
              clean-up that apply to any Borrower or the Project and relate to Hazardous
              Materials, including, without limitation, the Comprehensive Environmental
              Response, Compensation and Liability Act of 1980 (42 U.S.C. § 9601 et seq.), the
              Resource Conservation and Recovery Act of 1976 (42 U.S.C. § 6901 et seq.), the
              Federal Water Pollution Control Act (33 U.S.C. § 1251 et seq.), the Hazardous
              Materials Transportation Act (49 U.S.C. § 5101 et seq.), the Clean Air Act (42
              U.S.C. § 7401 et seq.), the Federal Insecticide, Fungicide and Rodenticide Act
              (7 U.S.C. § 136 et seq.), the Emergency Planning and Community
              Right-to-Know Act (42 U.S.C. § 11001 et seq.), the Occupational Safety and
              Health Act (29 U.S.C. § 651 et seq.), the Residential Lead-Based Paint Hazard
              Reduction Act (42 U.S.C. § 4851 et seq.), any analogous state or local laws, any
              amendments thereto, and the regulations promulgated pursuant to said
              laws,
              together with all amendments from time to time to any of the foregoing
              and
              judicial interpretations thereof.

             

            "Environmental
              Liens"
              means
              all Liens and other encumbrances imposed pursuant to any Environmental
              Law,
              whether due to any act or omission of Borrower or any other Person.

             

            "ERISA"
              means
              the Employee Retirement Income Security Act of 1974, as the same may
              be amended,
              modified or supplemented from time to time, and any successor statute
              thereto,
              and any and all rules or regulations promulgated from time to time
              thereunder.

             

            "ERISA
              Plan"
              means
              any "employee benefit plan", as such term is defined in
              Section 3(3) of ERISA (other than a Multiemployer Plan), which any
              Borrower maintains, sponsors or contributes to, or, in the case of
              an employee
              benefit plan which is subject to Section 412 of the Code or Title IV
              of ERISA,
              to which any Borrower or any member of the Controlled Group may have
              any
              liability, including any liability by reason of having been a substantial
              employer within the meaning of Section 4063 of ERISA at any time during
              the
              preceding five (5) years, or by reason of being deemed to be a contributing
              sponsor under Section 4069 of ERISA.

             

            
              
                -6-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            "Event
              of Default"
              has the
              meaning set forth in Section
              11.1.

             

            "Exit
              Fee"
              shall
              have the meaning given in Section
              2.3(d).

             

            "Excess
              Cash Flow"
              means
              Net Operating Income minus
              all
              payments of principal and interest required under the Financing Documents,
              minus
              capitalized expenditures and reserves approved in advance by Administrative
              Agent or as required by GAAP.

             

            "FF&E"
              shall
              have the meaning given in Section
              9.2(d).

             

            "Financing
              Documents"
              means
              this Agreement, any Notes, the Security Documents, any fee letter among
              Merrill
              Lynch and any of the Borrowers relating to the transactions contemplated
              hereby,
              any subordination or intercreditor agreement pursuant to which any
              Debt (other
              than any Subordinated Debt) and/or any Liens securing such Debt is
              subordinated to all or any portion of the Obligations and all other
              documents,
              instruments and agreements contemplated herein or thereby and heretofore
              executed, executed concurrently herewith or executed at any time and
              from time
              to time hereafter, as any or all of the same may be amended, supplemented,
              restated or otherwise modified from time to time. 

             

            "Financing
              Document Guarantee"
              means
              that certain Guaranty of Non-Recourse Carveouts Agreement executed
              by ARC of
              even date herewith, as well as any agreement that may exist from time
              to time
              pursuant to which any third party other than a Borrower shall Guarantee
              the
              Obligations of the Borrowers under this Agreement and/or the other
              Financing
              Documents.

             

            "Fiscal
              Year"
              means
              the fiscal year of Borrowers ending on December 31 of each calendar
              year.

             

            "GAAP"
              means
              generally accepted accounting principles set forth from time to time
              in the
              opinions and pronouncements of the Accounting Principles Board and
              the American
              Institute of Certified Public Accountants and statements and pronouncements
              of
              the Financial Accounting Standards Board (or agencies with similar
              functions of
              comparable stature and authority within the United States accounting
              profession), which are applicable to the circumstances as of the date
              of
              determination.

             

            "Governmental
              Authority"
              means
              any nation or government, any state or other political subdivision
              thereof, and
              any agency, department or Person exercising executive, legislative,
              judicial,
              regulatory or administrative functions of or pertaining to government
              and any
              corporation or other Person owned or controlled (through stock or capital
              ownership or otherwise) by any of the foregoing, whether domestic or
              foreign. 

             

            
              
                -7-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            "Governmental
              Payor"
              means
              Medicare, Medicaid, TRICARE, and other state or federal health care
              programs,
              but specifically excluding Third Party Payors.

             

            "Guarantee"
              by any
              Person means any obligation, contingent or otherwise, of such Person
              directly or
              indirectly guaranteeing any Debt or other obligation of any other Person
              and,
              without limiting the generality of the foregoing, any obligation, direct
              or
              indirect, contingent or otherwise, of such Person (a) to purchase or pay
              (or advance or supply funds for the purchase or payment of) such Debt or
              other obligation (whether arising by virtue of partnership arrangements,
              by
              agreement to keep-well, to purchase assets, goods, securities or services,
              to
              take-or-pay, or to maintain financial statement conditions or otherwise),
              or
              (b) entered into for the purpose of assuring in any other manner the
              obligee of such Debt or other obligation of the payment thereof or
              to protect
              such obligee against loss in respect thereof (in whole or in part),
provided,
              however, that
              the
              term Guarantee shall not include endorsements for collection or deposit
              in the
              Ordinary Course of Business. The term "Guarantee"
              used as
              a verb has a corresponding meaning.

             

            "Guarantor"
              means
              any Person that has executed or delivered, or shall in the future execute
              or
              deliver, any Financing Document Guarantee of any portion of the Obligations,
              including, without limitation, ARC.

             

            "Hazardous
              Materials"
              shall
              mean petroleum and petroleum products and compounds containing them,
              including
              gasoline, diesel fuel and oil; explosives, flammable materials; radioactive
              materials; polychlorinated biphenyls and compounds containing them;
              lead and
              lead-based paint; asbestos or asbestos-containing materials; underground
              or
              above-ground storage tanks, whether empty or containing any substance;
              any
              substance the presence of which on the Project is prohibited by any
              Environmental Laws; toxic mold, or any similar substance that requires
              special
              handling due to environmental concerns; and any other material or substance
              now
              defined as a "hazardous substance," "hazardous material," "hazardous
              waste,"
              "toxic substance," "toxic pollutant," "contaminant," "pollutant" or
              other words
              of similar import within the meaning of any Environmental Law, including:
              (a) any "hazardous substance" defined as such in (or for purposes
              of) CERCLA, or any so-called "superfund" or "superlien" Law; (b) any
              "pollutant or contaminant" as defined in 42 U.S.C.A. § 9601(33); (c) any
              material now defined as "hazardous waste" pursuant to 40 C.F.R. Part
              260;
              (d) any petroleum or petroleum by-products, including crude oil or any
              fraction thereof; (e) natural gas, natural gas liquids, liquefied natural
              gas, or synthetic gas usable for fuel; (f) any "hazardous chemical" as
              defined pursuant to 29 C.F.R. Part 1910; (g) any toxic substances, wastes,
              materials, pollutants or contaminants (including, without limitation,
              asbestos,
              polychlorinated biphenyls ("PCB's"), flammable explosives, radioactive
              materials, infectious substances, materials containing lead-based paint
              or raw
              materials which include hazardous constituents); and (h) any other toxic
              substance or contaminant that is subject to any Environmental Laws
              or other past
              or present requirement of any Governmental Authority. 

             

            "Hazardous
              Materials Contamination"
              means
              contamination (whether now existing or hereafter occurring) of the
              improvements, buildings, facilities, personalty, soil, groundwater,
              air or other
              elements on or of the relevant property by Hazardous Materials, or
              any
              derivatives thereof, or on or of any other property as a result of
              Hazardous
              Materials, or any derivatives thereof, generated on, emanating from
              or disposed
              of in connection with the relevant property.

             

            
              
                -8-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            "Healthcare
              Laws"
              means
              all applicable Laws relating to the possession, control, warehousing,
              marketing,
              sale and distribution of pharmaceuticals, the operation of medical
              or senior
              housing facilities (such as, but not limited to, nursing homes, skilled
              nursing
              facilities, rehabilitation hospitals, intermediate care facilities
              and adult
              care facilities), patient healthcare, patient healthcare information,
              patient
              abuse, the quality and adequacy of medical care, rate setting, equipment,
              personnel, operating policies, fee splitting, including without limitation,
              (a) all federal and state fraud and abuse laws, including, without
              limitation, the federal Anti-Kickback Statute (42 U.S.C. §1320a-7b(6)), the
              Stark Law (42 U.S.C. §1395n) , the civil False Claims Act (31 U.S.C. §3729
              et seq.), (b) TRICARE; (c) HIPAA, (d) Medicare;
              (e) Medicaid; (f) quality, safety and accreditation standards and
              requirements of all applicable state laws or regulatory bodies; (g) all
              laws, policies, procedures, requirements and regulations pursuant to
              which
              Healthcare Permits are issued; and (h) any and all other applicable health
              care laws, regulations, manual provisions, policies and administrative
              guidance,
              each of (a) through (h) as may be amended from time to time.


             

            "Healthcare
              Permit"
              means a
              Permit (a) issued or required under Healthcare Laws applicable to the
              business of any Borrower or any of its Subsidiaries or necessary in
              the
              possession, ownership, warehousing, marketing, promoting, sale, labeling,
              furnishing, distribution or delivery of goods or services under Healthcare
              Laws
              applicable to the business of any Borrower or any of its Subsidiaries,
              and/or
              (b) issued or required under Healthcare Laws applicable to the ownership
              of
              a Licensed Location.

             

            "HIPAA"
              means
              the Health Insurance Portability and Accountability Act of 1996, as
              the same may
              be amended, modified or supplemented from time to time, and any successor
              statute thereto, and any and all rules or regulations promulgated from
              time to
              time thereunder.

             

            "HIPAA
              Compliant"
              shall
              mean that the applicable Person is in compliance in all material respects
              with
              each of the applicable requirements of the so-called "Administrative
              Simplification" provisions of HIPAA, and is not and could not reasonably
              be
              expected to become the subject of any civil or criminal penalty, process,
              claim,
              action or proceeding, or any administrative or other regulatory review,
              survey,
              process or proceeding (other than routine surveys or reviews conducted
              by any
              government health plan or other accreditation entity) that could result in
              any of the foregoing or that could reasonably be expected to adversely
              affect
              such Person's business, operations, assets, properties or condition
              (financial
              or otherwise), in connection with any actual or potential violation
              by such
              Person of the provisions of HIPAA.

             

            "Indemnitees"
              has the
              meaning set forth in Section
              12.2.

             

            "Insurance
              Premiums"
              shall
              have the meaning given in Section
              2.5(c).

             

            "Intercompany
              Loans"
              has the
              meaning set forth in Section
              2.11.

             

            
              
                -9-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            "Inventory"
              means
              "inventory", as defined in Article 9 of the UCC.

             

            "JCAHO"
              means
              the Joint Commission on Accreditation of Healthcare Organizations.

             

            "Joint
              Liability Payment"
              shall
              have the meaning given in Section
              15.1(g).

             

            "Laws"
              means
              any and all federal, state, local and foreign statutes, laws, judicial
              decisions, regulations, ordinances, rules, judgments, orders, decrees,
              codes,
              plans, injunctions, permits and governmental
              restrictions (whether now or hereafter in effect), which are applicable
              to any
              Credit Party in any particular circumstance. "Laws"
              includes, without limitation, Healthcare Laws.

             

            "Leases"
              means
              the singular or collective reference to leases, subleases or other
              arrangements
              for occupancy of space within any Project or any part thereof now existing
              or
              hereafter executed; provided,
              however,
              that the
              term "Leases"
              as used
              herein shall not
              include
              Resident Agreements; and provided,
              further,
              that use
              of the term "Leases"
              in any
              Security Document shall
              include
              Resident Agreements even if Resident Agreements are, under applicable
              Laws, not
              governed as creating a landlord-tenant relationship (the intent being
              that
              Administrative Agent shall have, as part of the Security Documents,
              a lien upon
              and collateral assignment of all Leases and Resident Agreements).

             

            "Lender"
              means
              each of (a) Merrill Lynch, (b) each other Person party hereto in its
              capacity as a lender, (c) each other Person that becomes a party hereto as
              Lender pursuant to Section
              14.6,
              and
              (d) the respective successors of all of the foregoing, and "Lenders"
              means
              all of the foregoing. 

             

            "Licensed
              Location"
              means
              any facility (a) from which a Borrower or any Subsidiary provides or
              furnishes goods or services governed by Healthcare Laws, and (b) owned by a
              Borrower or any Subsidiary from which any Person furnishes goods or
              services
              governed by Healthcare Laws, and includes, without limitation, any
              business
              location of a Borrower which is subject to any Healthcare Permit.

             

            "Licensed
              Operator"
              means
              the singular or collective (as the context requires) reference to the
              following Persons: (a) any Borrower or any Subsidiary that is licensed
              under Healthcare Laws to operate a Licensed Location, or is otherwise
              providing
              or furnishing goods or services governed by Healthcare Laws, or is
              otherwise
              providing or furnishing goods or services (other than the mere leasing
              of a
              Licensed Location as a lessor and the collection of rentals in connection
              therewith) from a Licensed Location, (b) any Person with whom a
              Borrower or any Subsidiary has contracted for management or other services
              for a
              Licensed Location, and/or (c) any Person to whom a Borrower has leased a
              Licensed Location. 

             

            "Lien"
              means,
              with respect to any asset, any mortgage, lien, pledge, charge, security
              interest
              or encumbrance of any kind, or any other type of preferential arrangement
              that
              has the practical effect of creating a security interest, in respect
              of such
              asset. For the purposes of this Agreement and the other Financing Documents,
              any
              Borrower or any Subsidiary shall be deemed to own subject to a Lien
              any asset
              which it has acquired or holds subject to the interest of a vendor
              or lessor
              under any conditional sale agreement, Capital Lease or other title
              retention
              agreement relating to such asset.

             

            
              
                -10-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            "Litigation"
              means
              any action, suit or proceeding before any court, mediator, arbitrator
              or
              Governmental Authority.

             

            "Loan
              Account"
              has the
              meaning set forth in Section
              2.6(b).

             

            "Loan"
              or
              "Loans"
              means
              the Term Loan or Term Loans provided for herein.

             

            "Management
              Agreement"
              has the
              meaning set forth in Section
              8.7(b).

             

            "Manager"
              has the
              meaning set forth in Section 8.7(b).

             

            "Material
              Adverse Effect"
              means,
              with respect to any event, act, condition or occurrence of whatever
              nature
              (including any adverse determination in any litigation, arbitration,
              or
              governmental investigation or proceeding), whether singly or in conjunction
              with
              any other event or events, act or acts, condition or conditions, occurrence
              or
              occurrences, whether or not related (a) a material adverse change in, or a
              material adverse effect upon, any of (i) the condition (financial or
              otherwise), operations, business or properties of the Credit Parties
              taken as a
              whole, (ii) the rights and remedies of Administrative Agent or Lenders
              under any Financing Document, or the ability of any Credit Party to
              perform any
              of its obligations under any Financing Document to which it is a party,
              (iii) the legality, validity or enforceability of any Financing Document,
              (iv) the existence, perfection or priority of any security interest granted
              in any Financing Document; or (v) any Credit Party's or Licensed Operator's
              ability to accept, admit and/or retain patients or residents or to
              own or
              operate any Licensed Location, (b) an impairment to the likelihood that
              revenues in general will be collected and paid in the normal course
              of a
              Licensed Operator's or Borrowers' business and upon the same schedule
              and with
              the same frequency as such Licensed Operator's or Borrowers' recent
              collections
              history; (c) the imposition of a fine against or the creation of any
              liability of any Credit Party or Licensed Operator to any Governmental
              Authority
              under any Healthcare Law in excess of $50,000.00; (d) a termination,
              suspension or material limitation of any Healthcare Permits, (e) the
              failure to satisfy any demand by any Governmental Authority to comply
              with Law
              or remediate any condition, or (f) termination by any third party of any
              third party agreement required for the operation of any Project in
              the manner
              contemplated by this Agreement which agreement is not promptly replaced
              by
              Borrower on terms which are at least as favorable to the applicable
              Borrower or
              Borrowers in all material respects.

             

            "Material
              Contracts"
              has the
              meaning set forth in Section
              3.17.

             

            "Material
              Lease"
              means
              any Lease other than a Permitted Lease.

             

            "Maximum
              Lawful Rate"
              has the
              meaning set forth in Section 2.7(b).

             

            
              
                -11-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            "Medicaid"
              means
              the medical assistance programs administered by state agencies and
              approved by
              CMS pursuant to the terms of Title XIX of the Social Security Act,
              codified at
              42 U.S.C. 1396 et
              seq.

             

            "Medicare"
              means
              the program of health benefits for the aged and disabled administered
              by CMS
              pursuant to the terms of Title XVIII of the Social Security Act, codified
              at 42
              U.S.C. 1395 et
              seq.

             

            "Merrill
              Lynch"
              means
              Merrill Lynch Capital, a division of Merrill Lynch Business Financial
              Services
              Inc., and its successors.

             

            "Multiemployer
              Plan"
              means a
              multiemployer plan, that is intended to meet the definition set forth
              in Section
              4001(a)(3) of ERISA, to which any Borrower or any member of the Controlled
              Group may have any liability.

             

            "Net
              Cash Proceeds"
              means,
              with respect to any transaction or event, an amount equal to the cash
              proceeds
              received by any Credit Party from or in respect of such transaction
              or event
              (including proceeds of any non-cash proceeds of such transaction),
minus
              (a) any out-of-pocket expenses paid to a Person that are reasonably
              incurred by such Credit Party in connection therewith, and (b) in the case
              of an Asset Disposition, the amount of any Debt secured by a Lien on
              the related
              asset and discharged from the proceeds of such Asset Disposition and
              any taxes
              paid or reasonably estimated by the applicable Credit Party to be payable
              by
              such Person in respect of such Asset Disposition, provided,
              however,
              that if
              the actual amount of taxes paid is less than the estimated amount,
              the
              difference shall immediately constitute Net Cash Proceeds.

             

            "Net
              Operating Income"
              shall
              have the meaning given in Section
              6.1.

             

            "Notes"
              means
              the Term Note or Term Notes provided for herein.

             

            "Obligations"
              means
              all obligations, liabilities and indebtedness (monetary (including
              post-petition
              interest, whether or not allowed) or otherwise) of each Credit Party
              under this Agreement or any other Financing Document, in each case
              howsoever
              created, arising or evidenced, whether direct or indirect, absolute
              or
              contingent, now or hereafter existing, or due or to become due.

             

            "OFAC"
              means
              the U.S. Department of Treasury Office of Foreign Assets Control.

             

            "OFAC
              Lists"
              means,
              collectively, the Specially Designated Nationals and Blocked Persons
              List
              maintained by OFAC pursuant to Executive Order No. 13224, 66 Fed. Reg.
              49079
              (Sept. 25, 2001) and/or any other list of terrorists or other restricted
              Persons maintained pursuant to any of the rules and regulations of
              OFAC or
              pursuant to any other applicable Executive Orders.

             

            "Operating
              Expenses"
              shall
              have the meaning given in Section
              6.1a(vi).

             

            
              
                -12-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            "Operating
              Lease"
              means
              any lease of any Licensed Location to an Operating Lessee, and all
              amendments
              thereto and extensions thereof.

             

            "Operating
              Lessee"
              means
              any Person to whom any Borrower or any Subsidiary has leased a Licensed
              Location.

             

            "Operating
              Revenue"
              shall
              have the meaning given in Section
              6.1(a).

             

            "Ordinary
              Course of Business"
              means,
              in respect of any transaction involving any Credit Party, the ordinary
              course of
              such Credit Party's business, as conducted by such Credit Party in
              accordance
              with past practices.

             

            "Organizational
              Documents"
              means,
              with respect to any Person other than a natural person, the documents
              by which
              such Person was organized (such as a certificate of incorporation,
              certificate
              of limited partnership or articles of organization, and including,
              without
              limitation, any certificates of designation for preferred stock or
              other forms
              of preferred equity) and which relate to the internal governance of such
              Person (such as by-laws, a partnership agreement or an operating, limited
              liability or members agreement).

             

            "Participation
              Agreements"
              shall
              have the meaning given in Section
              8.4(b)(x).

             

            "Payment
              Account"
              means
              the account specified on the signature pages hereof into which all
              payments by
              or on behalf of each Borrower to Administrative Agent under the Financing
              Documents shall be made, or such other account as Administrative Agent
              shall
              from time to time specify by notice to Borrower Representative.

             

            "Payment
              Notification"
              means a
              written notification substantially in the form of Exhibit D
              hereto.

             

            "PBGC"
              means
              the Pension Benefit Guaranty Corporation and any Person succeeding
              to any or all
              of its functions under ERISA.

             

            "Pension
              Plan"
              means
              any ERISA Plan that is subject to Section 412 of the Code or Title
              IV of
              ERISA.

             

            "Permits"
              means
              all governmental licenses, authorizations, provider numbers, supplier
              numbers,
              registrations, permits, certificates, franchises, qualifications,
              accreditations, consents and approvals required under all applicable
              Laws and
              required in order to carry on its business as now conducted, including,
              without
              limitation, Healthcare Permits.

             

            "Permitted
              Contest"
              means,
              with respect to any tax obligation or other obligation allegedly or
              potentially
              owing from any Borrower to any governmental tax authority or other
              third party,
              a contest maintained in good faith by appropriate proceedings promptly
              instituted and diligently conducted and with respect to which such
              reserve or
              other appropriate provision, if any, as shall be required in conformity
              with
              GAAP shall have been made on the books and records and financial statements
              of
              the applicable Borrower(s); provided,
              however,
              that
              (a) compliance with the obligation that is the subject of such contest
              is
              effectively stayed during such challenge; (b) Borrowers' title to, and its
              right to use, the Collateral is not adversely affected thereby and
              Administrative Agent's Lien and priority on the Collateral are not
              adversely
              affected, altered or impaired thereby; (c) Borrowers have given prior
              written notice to Administrative Agent of Borrowers' intent to so contest
              the
              obligation; (d) in the case of real estate taxes or assessments or
              mechanic's, workmen's, materialmen's or other like Liens, Borrowers
              have
              obtained an endorsement, in form and substance satisfactory to Administrative
              Agent, to the loan policy of title insurance issued to Administrative
              Agent
              insuring over any Lien created by such obligation, or Borrowers have
              deposited
              with Administrative Agent a bond or other security satisfactory to
              Administrative Agent, in its reasonable discretion, against loss or
              injury by
              reason of such contest or the non-payment of such obligation or charge
              (and if
              such security is cash, Administrative Agent may, but shall not be obligated
              to,
              deposit the same in an interest-bearing account and interest accrued
              thereon, if
              any, shall be deemed to constitute a part of such security for purposes
              of this
              Agreement, but Administrative Agent (i) makes no representation or warranty
              as to the rate or amount of interest, if any, which may accrue thereon
              and shall
              have no liability in connection therewith and (ii) shall not be deemed to
              be a trustee or fiduciary with respect to its receipt of any such security
              and
              any such security may be commingled with other monies of Administrative
              Agent);
              (e) the Collateral or any part thereof or any interest therein shall not
              be
              in any danger of being sold, forfeited or lost by reason of such contest
              by
              Borrowers; (f) Borrowers have given Administrative Agent notice of the
              commencement of such contest and upon request by Administrative Agent,
              from time
              to time, notice of the status of such contest by Borrowers and/or confirmation
              of the continuing satisfaction of this definition; and (g) upon a final
              determination of such contest, Borrowers shall promptly comply with
              the
              requirements thereof. 

             

            
              
                -13-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            "Permitted
              Leases"
              means
              each Lease listed on Schedule 1 and any Lease (other than any Resident
              Agreement) for any portion of any Project that (a) is for demised
              space of no more than 600 square feet, (b) is for a beauty parlor, barber
              shop, rehabilitation center or other lawful use that is necessary or
              consistent
              with, and ancillary to, the operation of a senior housing facility,
              and
              (c) is terminable by Borrower upon not more than sixty (60) days'
              notice.

             

            "Permitted
              Liens"
              means:
              (a) deposits or pledges of cash to secure obligations under workmen's
              compensation, social security or similar laws, or under unemployment
              insurance
              (but excluding Liens arising under ERISA); (b) deposits or pledges of cash
              to secure bids, tenders, contracts (other than contracts for the payment
              of
              money or the deferred purchase price of property or services), leases,
              statutory
              obligations, surety and appeal bonds and other obligations of like
              nature
              arising in the Ordinary Course of Business; (c) mechanic's, workmen's,
              materialmen's or other like Liens arising in the Ordinary Course of
              Business
              with respect to obligations which are not due, or which are being contested
              pursuant to a Permitted Contest; (d) Liens on Collateral, for taxes or
              other governmental charges not at the time delinquent or thereafter
              payable
              without penalty or the subject of a Permitted Contest; (e) attachments,
              appeal bonds, judgments and other similar Liens on Collateral other
              than
              Accounts, for sums not exceeding $25,000 in the aggregate arising in
              connection
              with court proceedings; provided,
              however,
              that the
              execution or other enforcement of such Liens is effectively stayed
              and the
              claims secured thereby are the subject of a Permitted Contest; (f) those
              matters which are set forth as exceptions to or subordinate matters
              in the loan
              title insurance policy accepted by Administrative Agent insuring the
              lien of the
              Security Documents; (g) Liens and encumbrances in favor of Administrative
              Agent under the Financing Documents; and (h) Liens and encumbrances in
              favor of the holders of the Affiliated Financing Documents.

             

            "Person"
              means
              any natural person, corporation, limited liability company, professional
              association, limited partnership, general partnership, joint stock
              company,
              joint venture, association, company, trust, bank, trust company, land
              trust,
              business trust or other organization, whether or not a legal entity,
              and any
              Governmental Authority.

             

            "Project"
              means
              the singular reference to each respective portion of the Collateral
              consisting
              of the land, improvements and all other real and personal property
              encumbered by
              the lien of each respective mortgage, deed of trust, deed to secure
              debt or
              similar Security Document constituting a part of the Financing Documents.
              "Projects"
              means
              all such Projects collectively.

             

            "Pro
              Rata Share"
              means
              (a) with respect to a Lender's right to receive payments of principal and
              interest with respect to the Term Loans, the Term Loan Commitment
              Percentage of such Lender, and (b) for all other purposes (including
              without limitation the indemnification obligations arising under Section
              13.6) with
              respect to any Lender, the percentage obtained by dividing
              (i) such Lender's then outstanding principal amount of the Term Loans,
              by
              (ii) the then outstanding principal amount of the Term Loans of all
              Lenders.

             

            
              
                -14-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            "Release"
              shall
              have the meaning given in 42 U.S.C § 9601 (22).

             

            "Released
              Parties"
              shall
              have the meaning given in Section
              14.19.

             

            "Releasing
              Parties"
              shall
              have the meaning given in Section
              14.19.

             

            "Required
              Lenders"
              means,
              subject to the provisions of Section
              13.13(d),
              at any
              time Lenders holding sixty-six and two thirds percent (66 2/3%) or more of
              the outstanding principal balance of the Term Loans (taken as a
              whole).

             

            "Resident
              Agreements"
              means
              the singular or collective reference to all patient and resident care
              agreements, admission agreements and service agreements which include
              an
              occupancy agreement and all amendments, modifications or supplements
              thereto.

             

            "Responsible
              Officer"
              means
              any of the Chief Executive Officer, Chief Financial Officer or Managing
              Member
              of the applicable Borrower. 

             

            "Restricted
              Distribution"
              means as
              to any Person (a) any dividend or other distribution (whether in cash,
              securities or other property) on any equity interest in such Person (except
              those payable solely in such Person's equity interests of the same
              class),
              (b) any payment on account of (i) the purchase, redemption,
              retirement, defeasance, surrender, cancellation, termination or acquisition
              of
              any equity interests in such Person or any claim respecting the purchase
              or sale
              of any equity interest in such Person, or (ii) any option, warrant or other
              right to acquire any equity interests in such Person, (c) any management
              fees, salaries or other fees or compensation to an Affiliate of Borrower,
              (d) any lease or rental payments to an Affiliate or Subsidiary of Borrower,
              or (e) repayments of or debt service on loans or other indebtedness held by
              an Affiliate of Borrower.

             

            
              
                -15-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            "Sale"
              has the
              meaning set forth in Section
              2.12.

             

            "Securitization"
              has the
              meaning set forth in Section
              14.8.

             

            "Security
              Documents"
              means
              any agreement, document or instrument executed concurrently herewith
              or at any
              time hereafter pursuant to which one or more Credit Parties or any
              other Person
              either (a) Guarantees payment or performance of all or any portion of the
              Obligations (including, without limitation, any Financing Documents
              Guarantee),
              and/or (b) provides, as security for all or any portion of the Obligations,
              a Lien on any of its assets in favor of Administrative Agent for its
              own benefit
              and the benefit of the Lenders, as any or all of the same may be amended,
              supplemented, restated or otherwise modified from time to time.

             

            "Solvent"
              means,
              with respect to any Person, that such Person (a) owns and will own assets
              the fair saleable value of which are (i) greater than the total amount of
              its liabilities (including Contingent Obligations), and (ii) greater than
              the amount that will be required to pay the probable liabilities of
              its then
              existing debts as they become absolute and matured considering all
              financing
              alternatives and potential asset sales reasonably available to it;
              (b) has
              capital that is not unreasonably small in relation to its business
              as presently
              conducted or after giving effect to any contemplated transaction; and
              (c) does not intend to incur and does not believe that it will incur debts
              beyond its ability to pay such debts as they become due.

             

            "Stated
              Rate"
              has the
              meaning set forth in Section 2.7(b).

             

            "Subordinated
              Debt"
              means
              any Debt of Borrowers incurred pursuant to the terms of Subordinated
              Debt
              Documents.

             

            "Subordinated
              Debt Documents"
              means
              any documents evidencing and/or securing Debt governed by a Subordination
              Agreement.

             

            "Subordination
              Agreement"
              means
              any agreement between Administrative Agent and another creditor of
              Borrowers, as
              the same may be amended, supplemented, restated or otherwise modified
              from time
              to time in accordance with the terms thereof, pursuant to which the
              Debt owing
              from any Borrower(s) and/or the Liens securing such Debt granted by any
              Borrower(s) to such creditor are subordinated in any way to the Obligations
              and the Liens created under the Security Documents, the terms and provisions
              of
              which such Subordination Agreements have been agreed to by and are
              acceptable to
              Administrative Agent in the exercise of its sole discretion.

             

            
              
                -16-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            "Subsidiary"
              means,
              with respect to any Person, (a) any corporation of which an aggregate of
              more than 50% of the outstanding capital stock having ordinary voting
              power to
              elect a majority of the board of directors of such corporation (irrespective
              of
              whether, at the time, capital stock of any other class or classes of
              such
              corporation shall have or might have voting power by reason of the
              happening of
              any contingency) is at the time, directly or indirectly, owned legally or
              beneficially by such Person or one or more Subsidiaries of such Person,
              or with
              respect to which any such Person has the right to vote or designate
              the vote of
              more than 50% of such capital stock whether by proxy, agreement, operation
              of
              law or otherwise, and (b) any partnership or limited liability company in
              which such Person and/or one or more Subsidiaries of such Person shall
              have an
              interest (whether in the form of voting or participation in profits
              or capital
              contribution) of more than 50% or of which any such Person is a general
              partner or may exercise the powers of a general partner. Unless the
              context
              otherwise requires, each reference to a Subsidiary shall be a reference
              to a
              Subsidiary of a Borrower.

             

            "Substitute
              Property"
              has the
              meaning set forth in Section
              2.12.

             

            "Taking"
              shall
              mean a condemnation or taking pursuant to the lawful exercise of the
              power of
              eminent domain.

             

            "Taxes"
              has the
              meaning set forth in Section
              2.5(b) and
              2.8.

             

            "Term
              Loan"
              has the
              meaning set forth in Section
              2.1.

             

            "Term
              Loan Commitment"
              has the
              meaning set forth in Section
              2.1.

             

            "Term
              Loan Commitment Percentage"
              means,
              as to any Lender, (a) on the Closing Date, the percentage set forth
              opposite such Lender's name on the Commitment Annex under the column
              "Term
              Loan Commitment Percentage"
              (if such
              Lender's name is not so set forth thereon, then, on the Closing Date,
              such
              percentage for such Lender shall be deemed to be zero), and (b) on any date
              following the Closing Date, the percentage equal to the principal amount
              of the
              Term Loan held by such Lender on such date divided
              by
              the
              aggregate principal amount of the Term Loan on such date.

             

            "Term
              Loan Note"
              shall
              have the meaning given in Section
              2.4.

             

            "Termination
              Date"
              means
              the earlier to occur of (a) the Commitment Expiry Date, or (b) any
              date on which Administrative Agent accelerates the maturity of the
              Loans
              pursuant to Section 11.2.

             

            
              "Third
                Party Payor" means Blue Cross and/or Blue Shield, private
                insurers, managed care plans and any other Person or entity which
                presently or
                in the future maintains Third Party Payor Programs, but specifically
                excluding
                Governmental Payors.

               

              "Third
                Party Payor Programs" means all payment and reimbursement programs,
                sponsored by a Third Party Payor, in which a Licensed Operator
                participates.

            

             

            
              
                -17-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            "Transfer
              Date"
              has the
              meaning set forth in Section
              3.4(b).

             

            "TRICARE"
              means
              the program administered pursuant to 10 U.S.C. Section 1071 e.
              seq.),
              Sections 1320a-7 and 1320a-7a of Title 42 of the United States Code
              and the
              regulations promulgated pursuant to such statutes.

             

            "UCC"
              means
              the Uniform Commercial Code of the State of Illinois or of any other
              state the
              laws of which are required to be applied in connection with the perfection
              of
              security interests in any Collateral.

             

            "United
              States"
              means
              the United States of America.

             

            Section
              1.2  Accounting
              Terms and Determinations. 

             

            Unless
              otherwise specified herein, all accounting terms used herein shall
              be
              interpreted, all accounting determinations hereunder (including without
              limitation determinations made pursuant to the exhibits hereto) shall be
              made, and all financial statements required to be delivered hereunder
              shall be
              prepared on a consolidated basis in accordance with GAAP applied on
              a basis
              consistent with the most recent audited consolidated financial statements
              of
              each Borrower delivered to Administrative Agent and each of the Lenders
              on or
              prior to the Closing Date. If
              at any
              time any change in GAAP would affect the computation of any financial
              ratio or
              financial requirement set forth in any Financing Document, and Administrative
              Agent or Borrowers shall so request, the Administrative Agent, in its
              sole
              discretion on behalf of Lenders, and Borrowers shall negotiate in good
              faith to
              amend such ratio or requirement to preserve the original intent thereof
              in light
              of such change in GAAP; provided,
              however, that,
              until so amended, (a) such ratio or requirement shall continue to be
              computed in accordance with GAAP prior to such change therein, and
              (b) Borrowers shall provide to the Administrative Agent and the Lenders
              financial statements and other documents required under this Agreement
              which
              include a reconciliation between calculations of such ratio or requirement
              made
              before and after giving effect to such change in GAAP.
              All
              amounts used for purposes of financial calculations required to be
              made herein
              shall be without duplication.

             

            Section
              1.3  Other
              Definitional Provisions.

             

            References
              in this Agreement to "Articles", "Sections", "Annexes", "Exhibits"
              or
              "Schedules" shall be to Articles, Sections, Annexes, Exhibits or Schedules
              of or
              to this Agreement unless otherwise specifically provided. Any term
              defined
              herein may be used in the singular or plural. "Include", "includes"
              and
              "including" shall be deemed to be followed by "without limitation".
              Except as
              otherwise specified or limited herein, references to any Person include
              the
              successors and assigns of such Person. References "from" or "through"
              any date
              mean, unless otherwise specified, "from and including" or "through
              and
              including", respectively. References to any statute or act shall include
              all
              related current regulations and all amendments and any successor statutes,
              acts
              and regulations. References to any statute or act, without additional
              reference,
              shall be deemed to refer to federal statutes and acts of the United
              States.
              References to any agreement, instrument or document shall include all
              schedules,
              exhibits, annexes and other attachments thereto. As used in this Agreement,
              the
              meaning of the term "material" or the phrase "in all material respects"
              is
              intended to refer to an act, omission, violation or condition which
              reflects or
              could reasonably be expected to result in a Material Adverse
              Effect.

             

            
              
                -18-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            Section
              1.4  Funding
              and Settlement Currency.

             

            Unless
              otherwise specified herein, the settlement of all payments and fundings
              hereunder between or among the parties hereto shall be made in lawful
              money of
              the United States and in immediately available funds.

             

            Section
              1.5  Borrowers
              as Licensed Operators.

             

            As
              of the
              Closing Date it is contemplated and intended that each Borrower shall
              be the
              Licensed Operator of the Project (which shall be a Licensed Location) owned
              by such Borrower. Therefore, all references to "Licensed Operators"
              shall be
              deemed to refer to the applicable Borrower, and all covenants, representations
              and warranties applicable to a Licensed Operator shall nonetheless
              be deemed to
              be direct covenants, representations and warranties of the applicable
              Borrower,
              even if such covenants, representations and warranties are, under the
              terms of
              this Agreement, contemplated to be undertaken or made indirectly through
              an
              Operating Lease.

             

            ARTICLE
              2

            LOANS

             

            Section
              2.1  Term
              Loan.

             

            (a)  Term
              Loan Amounts.
              On the
              terms and subject to the conditions set forth herein, the Lenders hereby
              agree
              to make to Borrowers on the Closing Date a term loan ("Term
              Loan") in
              an original principal amount equal to Eighty-Five Million Dollars ($85,000,000).
              Each Lender's obligation to fund the Term Loan shall be limited to
              such Lender's
              Term Loan Commitment Percentage, and no Lender shall have any obligation
              to fund
              any portion of any Term Loan required to be funded by any other Lender,
              but not
              so funded. No Borrower shall have any right to reborrow any portion
              of the Term
              Loan that is repaid or prepaid from time to time.

             

            (b)  Scheduled
              Repayments.
              Payments
              of interest only shall be paid on the Loan throughout the term of the
              Loan;
provided,
              however,
              that if,
              as of the six (6) month period ending on the last day of any month
              beginning with the twenty-fourth (24th) full
              calendar month following the Closing Date, the Debt Yield Ratio is
              less than
              eleven percent (11.00%), Borrowers shall commence paying principal
              payments on
              the Loan based on a twenty-five (25)-year mortgage-style amortization
              schedule
              at an assumed rate of 7.0%, beginning the following calendar month
              and
              continuing throughout the remainder of the term of the Loan. Notwithstanding
              such required payments as set forth herein, the outstanding principal
              amount of
              the Term Loan shall become immediately due and payable in full on the
              Termination Date.

             

            
              
                -19-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            (c)  Mandatory
              Prepayments.
              There
              shall become due and payable and Borrowers shall prepay the Term Loan
              in an
              amount equal to the following on the following dates:

             

            (i)  An
              amount
              equal to any Casualty Proceeds that Administrative Agent elects to
              apply to the
              Obligations in accordance with Section
              9.3,
              plus any
              Casualty Proceeds that Administrative Agent elects to not apply to
              the
              Obligations in accordance with Section
              9.3,
              but only
              if Borrowers fail to reinvest such Casualty Proceeds in replacement
              assets
              comparable to the assets giving rise to such Casualty Proceeds if such
              reinvestment is permitted pursuant to the terms of Section 9.3;
              and

             

            (ii)  An
              amount
              equal to any Covenant Prepayment required under Section
              6.7,
              on the
              date provided for in Section
              6.7.

             

            (d)  Optional
              Prepayments.
              Other
              than mandatory prepayments under Sections
              2.1(c)(i),
              2.1(c)(ii) and
              any
              prepayment from the Sale of the Project located in Las Vegas, Nevada,
              the Term
              Loan may not be prepaid during the Closed Period. The Term Loan may
              be prepaid
              in full, but not in part, at any time after the expiration of the Closed
              Period,
provided,
              however,
              that
              Borrowers shall have given Administrative Agent at least thirty (30) days
              prior written notice of the date of such prepayment together with an
              appropriately completed Payment Notification.

             

            (e)  All
              Prepayments.
              Except as
              this Agreement may specifically provide otherwise, all prepayments
              of the Term
              Loan shall be applied by Administrative Agent to the Obligations in
              such order
              and manner as Administrative Agent may elect. 

             

            Section
              2.2  [Reserved.]

             

            Section
              2.3  Interest;
              Interest Calculations and Certain Fees.

             

            (a)  Interest.
              From and
              following the Closing Date, the Loans and the other Obligations shall
              bear
              interest at the sum of the Base Rate plus the applicable Base Rate
              Margin.

             

            (b)  Commitment
              Fee.
              Prior to
              or contemporaneous with Borrowers' execution of this Agreement, Borrowers
              have
              or shall pay Administrative Agent, for its own account and not for
              the benefit
              of any other Lenders, a fee in an amount equal to One Million One Hundred
              Thousand Dollars ($1,100,000).

             

            (c)  Arrangement
              Fee.
              Contemporaneous with Borrowers execution of this Agreement, Borrowers
              shall pay
              Administrative Agent, for its own account and not for the benefit of
              any other
              Lenders, a fee in an amount equal to Two Hundred Seventy-Five Thousand
              Dollars
              ($275,000).

             

            
              
                -20-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            (d)  Exit
              Fee.
              On the
              Termination Date or upon any voluntary prepayment of the Term Loan
              as permitted
              hereunder or upon any mandatory prepayment of the Term Loan. Borrowers
              shall pay
              to Administrative Agent for the benefit of Lenders a fee (the "Exit
              Fee") equal
              to the Term Loan Commitment multiplied
              by
              the
              Applicable Exit Fee Percentage. If any such prepayments are made, then
              upon such
              prepayment, Borrower shall pay to Administrative Agent the proportionate
              amount
              of the Exit Fee attributable to such prepayment; provided,
              however,
              that in
              the event of a casualty or Taking and the application of any Casualty
              Proceeds
              therefrom to a prepayment of a portion of the Obligations, Borrower
              shall not be
              required to pay the Exit Fee allocable to such prepayment. The term
              "Applicable
              Exit Fee Percentage"
              means:
              two percent (2.0%) if the payment is made on or before the twenty-fourth
              (24th) full
              calendar month following the Closing Date; one percent (1.0%) if the
              payment is made during or after the twenty-fifth (25th) full
              calendar month following the Closing Date and before or during the
              thirty-sixth
              (36th) full
              calendar month following the Closing Date; and one half of one percent
              (.50%) if the payment is made during or after the thirty-seventh
              (37th) full
              calendar month following the Closing Date; provided,
              however,
              that if
              the Termination Date occurs during the Closed Period, the Exit Fee
              shall be an
              amount equal to the sum of two percent (2.0%) multiplied
              by
              the Term
              Loan Commitment plus
              the
              amount of interest which would have been due and payable from the Termination
              Date through the end of the Closed Period, assuming a Base Rate equal
              to the
              Base Rate as of the Termination Date. Notwithstanding the foregoing,
              if
              (i) the Term Loan is repaid with the proceeds of a mortgage loan facility
              provided by Merrill Lynch with respect to all of the Projects not previously
              released from the Lien of the Financing Documents pursuant to Section
              2.12
              or
              (ii) Merrill Lynch fails to deliver a term sheet with respect to providing
              such mortgage loan facility within thirty (30) days after receipt from
              Borrowers of a written request for a term sheet, the Applicable Exit
              Fee
              Percentage shall be reduced by one-half of one percent (.50%) with respect
              to payments made from such refinancing proceeds.

             

            e)  Audit
              Fees.
              Borrowers shall pay to Administrative Agent, for its own account and
              not for the
              benefit of any other Lenders, all reasonable fees and expenses in connection
              with audits of Borrowers' books and records, audits, valuations or
              appraisals of
              the Collateral, audits of Borrowers' compliance with applicable Laws
              and such
              other matters as Administrative Agent shall deem appropriate, which
              shall be due
              and payable on the first Business Day of the month following the date
              of
              issuance by Administrative Agent of a written request for payment thereof
              to
              Borrowers. Notwithstanding the foregoing, provided that no Event of
              Default has
              occurred and remains outstanding, Administrative Agent shall not charge
              audit
              fees in respect of any inspections or related actions unless such audit
              shows
              discrepancies exceeding 10%. Unless an Event of Default has occurred
              and is then
              continuing audits by Lender shall not be undertaken more frequently
              than
              annually.

             

            (f)  Wire
              Fees.
              Borrowers shall pay to Administrative Agent, for its own account and
              not for the
              account of any other Lenders, on written demand, any and all reasonable
              fees,
              costs or expenses which Administrative Agent pays to a bank or other
              similar
              institution (including, without limitation, any fees paid by Administrative
              Agent to any other Lender) arising out of or in connection with
              (i) the forwarding to Borrowers or any other Person on behalf of Borrowers,
              by Administrative Agent, of proceeds of the Loans made by any Lender
              to
              Borrowers pursuant to this Agreement, and (ii) the depositing for
              collection, by Administrative Agent, of any check or item of payment
              received or
              delivered to Administrative Agent on account of Obligations. 

             

            
              
                -21-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            (g)  Real
              Property Inspection Fee.
              Borrowers shall pay to Administrative Agent, for its own account and
              not for the
              benefit of any other Lenders, on the Closing Date, and on each anniversary
              of
              the Closing Date thereafter, a real property inspection fee of Two
              Thousand
              Dollars ($2,000) per Project per year.

             

            (h)  Late
              Charges.
              If
              payments of principal (other than a final installment of principal
              upon the
              Termination Date), interest due on the Obligations, or any other amounts
              due
              hereunder or under the other Financing Documents are not timely made
              and remain
              overdue for a period of five (5) days, Borrowers, without notice or demand
              by Administrative Agent, promptly shall pay to Administrative Agent,
              for its own
              account and not for the benefit of any other Lenders, as additional
              compensation
              to Administrative Agent in administering the Obligations, an amount
              equal to
              five percent (5%) of each delinquent payment.

             

            (i)  Computation
              of Interest and Related Fees.
              All
              interest and fees under each Financing Document shall be calculated
              on the basis
              of a three hundred sixty (360)-day year for the actual number of days
              elapsed.
              The date of funding of Loan shall be included in the calculation of
              interest.
              The date of payment of a Loan shall be excluded from the calculation
              of
              interest. If a Loan is repaid on the same day that it is made, one
              (1) day's interest shall be charged. Interest on all Loans is payable in
              arrears on the first (1st) day of each month and on the maturity of such
              Loans, whether by acceleration or otherwise. 

             

            (j)  Automated
              Clearing House Payments.
              If an
              Event of Default has occurred and Administrative Agent so elects, monthly
              payments of interest and amortization shall be paid to Administrative
              Agent by
              Automated Clearing House debit of immediately available funds from
              the financial
              institution account designated by Borrower Representative in the Automated
              Clearing House debit authorization executed by Borrowers or Borrower
              Representative in connection with this Agreement, and shall be effective
              upon
              receipt. Borrowers shall execute any and all forms and documentation
              necessary
              from time to time to effectuate such automatic debiting. In no event
              shall any
              such payments be refunded to Borrowers.

             

            Section
              2.4  Notes.

             

            The
              portion of the Term Loan made by each Lender shall be evidenced, if
              so requested
              by such Lender, by a promissory note executed by Borrowers on a joint
              and
              several basis (a "Term
              Loan Note") in
              an original principal amount equal to such Lender's Pro Rata Share
              of the Term
              Loan Commitment.

             

            Section
              2.5  Reserves
              and Escrows.

             

            (a)  Requirements.
              Borrowers agree to establish and maintain all of the reserves and escrows
              required in this Section
              2.5.
              All sums
              so reserved or escrowed may be commingled with the general funds of
              Administrative Agent and no such sums shall be deemed to be held in
              trust for
              the benefit of Borrowers. Interest at the rates available to Lender
              for escrow
              depository accounts shall accrue and be added to the funds held by
              Lender
              pursuant to Sections
              2.5(b) and
              2.5(c) hereunder.
              No interest shall be payable on any other funds reserved or escrowed
              hereunder.
              All sums so reserved or escrowed shall be part of the Collateral and
              shall stand
              as additional security for all of the Obligations. If Administrative
              Agent at
              any time reasonably determines that the amount on deposit in any reserve
              or
              escrow is insufficient for its intended purposes, Borrowers shall,
              within ten
              (10) days following notice from Administrative Agent, deposit such
              additional sums as may reasonably be required by Administrative Agent.
              In the
              event of any default by Borrowers under the terms of this Agreement
              or any other
              Financing Document, Administrative Agent may, at its discretion, apply
              amounts
              on hand in the reserves or escrows to cure such default. Upon demand
              of
              Administrative Agent, Borrowers shall replenish the applicable reserve
              or escrow
              to restore any sums so applied by Administrative Agent. Upon the occurrence
              of
              an Event of Default and/or the maturity of any portion of the Obligations,
              the
              moneys then remaining on deposit with Administrative Agent shall, at
              Administrative Agent's option, be applied against the Obligations in
              such order
              and manner as Administrative Agent may elect or as may otherwise be
              required
              under this Agreement.

             

            
              
                -22-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            (b)  Real
              Property Taxes.
              At the
              time of and in addition to the monthly installments of principal and/or
              interest
              due under the Notes, Borrowers shall pay to Administrative Agent a
              sum equal to
              one-twelfth (1/12) of the amount estimated by Administrative Agent to be
              sufficient (when aggregated with an initial deposit to be designated
              by
              Administrative Agent and paid by Borrowers to Administrative Agent
              on the
              Closing Date or otherwise upon demand of Administrative Agent) to pay at
              least thirty (30) days before they become due and payable, all taxes,
              assessments and other similar charges levied against any portion of
              the
              Collateral constituting real property (collectively, the "Taxes").
              In the
              event such real property or any portion thereof is part of a larger
              tract for
              purposes of taxation and assessments, Administrative Agent may require
              the
              Borrowers to have the real property taxed and assessed as a separate
              parcel or
              separate parcels, or, in the alternative, to make the deposits required
              under
              this section based upon the taxation and assessment of the larger tract.
              So long
              as no Event of Default exists hereunder, Administrative Agent shall
              apply the
              escrows sums to pay the Taxes. Except as provided in the preceding
              sentence, the
              obligation of Borrowers to pay the Taxes is not affected or modified
              by the
              provisions of this paragraph.

             

            (c)  Insurance
              Premiums.
              If an
              Event of Default or failure to timely pay insurance premiums occurs,
              then
              Borrowers shall pay to Administrative Agent an initial deposit amount
              which is
              sufficient when aggregated with the monthly payment described below
              to pay the
              Insurance Premiums next becoming due and on the first (1st) day of each
              calendar month thereafter a sum equal to one-twelfth (1/12) of the amount
              estimated by Administrative Agent to be sufficient to pay at least
              thirty
              (30) days before they become due and payable all insurance premiums
              and other similar charges in connection with the insurance required
              to be
              carried by Borrowers pursuant to this Agreement or the other Financing
              Documents
              (collectively, the "Insurance
              Premiums").
              So
              long as no Event of Default exists hereunder, Administrative Agent
              shall apply
              the sums to pay the Insurance Premiums. Except as provided in the preceding
              sentence, the obligation of Borrowers to pay the Insurance Premiums
              is not
              affected or modified by the provisions of this section. Notwithstanding
              the
              foregoing, if the insurance premiums are paid via a premium financing
              arrangement to which Administrative Agent has given its written consent,
              which
              consent shall not be unreasonably withheld, then (i) the amount to be
              escrowed with Administrative Agent at any given time in respect of
              such
              Insurance Premiums shall be three (3) months of payments under the premium
              finance arrangement, (ii) Borrowers shall tender to Administrative Agent
              each month (on such schedule as Administrative Agent shall reasonably
              request) evidence that Borrowers (or the owner of the policy if the
              Borrowers share in a blanket policy) has paid the applicable premium
              finance amount due for the preceding month, and (iii) Administrative Agent
              shall have no obligation to remit such escrowed sums in payment of
              the premium
              finance amounts.

             

            
              
                -23-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            (d)  Capital
              Replacement Reserve.
              At the
              time of and in addition to the monthly installments of principal and/or
              interest
              due under any of the Notes, Borrowers shall pay to Administrative Agent
              monthly
              deposits in the amount of $25 per bed at each Licensed Location (the
              "Replacement
              Minimum") to
              be held by Administrative Agent in a capital replacement reserve ("Capital
              Replacement Reserve").
              So
              long as no Event of Default has occurred and is then continuing, the
              funds
              contained in the Capital Replacement Reserve shall be utilized to pay
              directly
              or to reimburse Borrowers solely for capital improvements approved
              in advance by
              Administrative Agent in writing Subject to the foregoing, Administrative
              Agent
              shall release funds from the Capital Replacement Reserve for the actual
              cost of
              such approved capital improvements upon Borrowers' providing Administrative
              Agent with paid receipts, lien waivers and other documentation deemed
              reasonably
              necessary by Administrative Agent with minimum draws of $25,000.00
              which shall
              occur no more frequently than once per month. Notwithstanding the foregoing,
              Borrowers' obligation to make deposits shall be suspended so long as
              no Event of
              Default has occurred and is then continuing and Borrowers provide Administrative
              Agent with satisfactory evidence, on an annual basis beginning
              January 1, 2007, that Borrowers have expended during the preceding
              calendar year for approved capital improvements at each Licensed Location
              an
              amount equal or greater than $300 per bed at each Licensed Location;
              provided
              that if
              Borrowers do not satisfy said $300 per bed at each Licensed Location
              requirement, then, no later than January 31 of the applicable year,
              Borrowers shall pay to Administrative Agent an amount equal to the
              amount by
              which $300 per bed at each applicable Licensed Location exceeds the
              amount
              actually spent during such year at such Licensed Location which amount
              shall be
              held by Administrative Agent in the Capital Replacement Reserve.

             

            Section
              2.6  General
              Provisions Regarding Payment; Loan Account.

             

            (a)  All
              payments to be made by each Borrower under any Financing Document,
              including
              payments of principal and interest made hereunder and pursuant to any
              other
              Financing Document, and all fees, expenses, indemnities and reimbursements,
              shall be made without set-off, recoupment or counterclaim, in lawful
              money of
              the United States and in immediately available funds. If any payment
              hereunder
              becomes due and payable on a day other than a Business Day, such payment
              shall
              be extended to the next succeeding Business Day and, with respect to
              payments of
              principal, interest thereon shall be payable at the then applicable
              rate during
              such extension (it being understood and agreed that, solely for purposes
              of
              calculating financial covenants and computations contained herein and
              determining compliance therewith, if payment is made, in full, on any
              such
              extended due date, such payment shall be deemed to have been paid on
              the
              original due date without giving effect to any extension thereto).
              Any payments
              received in the Payment Account before noon (Chicago time) on any date
              shall be deemed received by Administrative Agent on such date, and
              any payments
              received in the Payment Account after noon (Chicago time) on any date shall
              be deemed received by Administrative Agent on the next succeeding Business
              Day.
              Any optional or mandatory prepayment of a Term Loan shall be accompanied
              by
              timely delivery to Administrative Agent of an appropriately completed
              Payment
              Notification, as provided in Section
              2.1.

             

            
              
                -24-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            (b)  Administrative
              Agent shall maintain a loan account (the "Loan
              Account") on
              its books to record Loans and other extensions of credit made by the
              Lenders
              hereunder or under any other Financing Document, and all payments thereon
              made
              by each Borrower. All entries in the Loan Account shall be made in
              accordance
              with Administrative Agent's customary accounting practices as in effect
              from
              time to time. The balance in the Loan Account, as recorded in Administrative
              Agent's books and records at any time shall be conclusive and binding
              evidence
              of the amounts due and owing to Administrative Agent by each Borrower
              absent
              clear and convincing evidence to the contrary; provided,
              however,
              that any
              failure to so record or any error in so recording shall not limit or
              otherwise
              affect any Borrower's duty to pay all amounts owing hereunder or under
              any other
              Financing Document. Administrative Agent shall endeavor to provide
              Borrowers
              with a monthly statement regarding the Loan Account (but neither Administrative
              Agent nor any Lender shall have any liability if Administrative Agent
              shall fail
              to provide any such statement). Unless any Borrower notifies Administrative
              Agent of any objection to any such statement (specifically describing
              the basis
              for such objection) within thirty (30) days after the date of receipt
              thereof, it shall be deemed final, binding and conclusive upon Borrowers
              in all
              respects as to all matters reflected therein.

             

            Section
              2.7  Maximum
              Interest.

             

            (a)  In
              no
              event shall the interest charged with respect to the Notes (if any) or any
              other obligations of any Borrower under any Financing Document exceed
              the
              maximum amount permitted under the laws of the State of Illinois or
              of any other
              applicable jurisdiction.

             

            (b)  Notwithstanding
              anything to the contrary herein or elsewhere, if at any time the rate
              of
              interest payable hereunder or under any Note or other Financing Document
              (the
              "Stated
              Rate") would
              exceed the highest rate of interest permitted under any applicable
              law to be
              charged (the "Maximum
              Lawful Rate"),
              then
              for so long as the Maximum Lawful Rate would be so exceeded, the rate
              of
              interest payable shall be equal to the Maximum Lawful Rate; provided,
              however,
              that if
              at any time thereafter the Stated Rate is less than the Maximum Lawful
              Rate,
              each Borrower shall, to the extent permitted by law, continue to pay
              interest at
              the Maximum Lawful Rate until such time as the total interest received
              is equal
              to the total interest which would have been received had the Stated
              Rate been
              (but for the operation of this provision) the interest rate payable.
              Thereafter, the interest rate payable shall be the Stated Rate unless
              and until
              the Stated Rate again would exceed the Maximum Lawful Rate, in which
              event this
              provision shall again apply.

             

            
              
                -25-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            (c)  In
              no
              event shall the total interest received by any Lender exceed the amount
              which it
              could lawfully have received had the interest been calculated for the
              full term
              hereof at the Maximum Lawful Rate. If, notwithstanding the prior sentence,
              any
              Lender has received interest hereunder in excess of the Maximum Lawful
              Rate,
              such excess amount shall be applied to the reduction of the principal
              balance of
              the Loans or to other amounts (other than interest) payable hereunder, and
              if no such principal or other amounts are then outstanding, such excess
              or part
              thereof remaining shall be paid to Borrowers.

             

            (d)  In
              computing interest payable with reference to the Maximum Lawful Rate
              applicable
              to any Lender, such interest shall be calculated at a daily rate equal
              to the
              Maximum Lawful Rate divided by the number of days in the year in which
              such
              calculation is made. 

             

            Section
              2.8  Taxes.

             

            (a)  All
              payments of principal and interest on the Loans and all other amounts
              payable
              hereunder shall be made free and clear of and without deduction for
              any present
              or future income, excise, stamp, documentary, payroll, employment,
              property or
              franchise taxes and other taxes, fees, duties, levies, assessments,
              withholdings
              or other charges of any nature whatsoever (including interest and penalties
              thereon) imposed by any taxing authority, excluding taxes imposed
              on
              or measured by Administrative Agent's or any Lender's net income by
              the
              jurisdiction under which Administrative Agent or such Lender is organized
              or
              conducts business (other than solely as the result of entering into
              any of the
              Financing Documents or taking any action thereunder) (all non-excluded
              items being called "Taxes").
              If any
              withholding or deduction from any payment to be made by any Borrower
              hereunder
              is required in respect of any Taxes pursuant to any applicable Law,
              then
              Borrowers will: (i) pay directly to the relevant authority the full amount
              required to be so withheld or deducted; (ii) promptly forward to
              Administrative Agent an official receipt or other documentation satisfactory
              to
              Administrative Agent evidencing such payment to such authority; and
              (iii) pay to Administrative Agent for the account of Administrative Agent
              and Lenders such additional amount or amounts as is necessary to ensure
              that the
              net amount actually received by Administrative Agent and each Lender
              will equal
              the full amount Administrative Agent and such Lender would have received
              had no
              such withholding or deduction been required. If any Taxes are directly
              asserted
              against Administrative Agent or any Lender with respect to any payment
              received
              by Administrative Agent or such Lender hereunder, Administrative Agent
              or such
              Lender may pay such Taxes and Borrowers will promptly pay such additional
              amounts (including any penalty, interest or expense) as is necessary in
              order that the net amount received by such Person after the payment
              of such
              Taxes (including any Taxes on such additional amount) shall equal the
              amount such Person would have received had such Taxes not been asserted
              so long
              as such amounts have accrued on or after the day which is two hundred
              seventy
              (270) days prior to the date on which Administrative Agent or such Lender
              first made written demand therefor.

             

            (b)  If
              any
              Borrower fails to pay any Taxes when due to the appropriate taxing
              authority or
              fails to remit to Administrative Agent, for the account of Administrative
              Agent
              and the respective Lenders, the required receipts or other required
              documentary
              evidence, Borrowers shall indemnify Administrative Agent and Lenders
              for any
              incremental Taxes, interest or penalties that may become payable by
              Administrative Agent or any Lender as a result of any such failure.

             

            
              
                -26-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            Section
              2.9  Capital
              Adequacy.

             

            If
              any
              Lender shall reasonably determine that the adoption or taking effect
              of, or any
              change in, any applicable Law regarding capital adequacy, in each instance,
              after the Closing Date, or any change after the Closing Date in the
              interpretation, administration or application thereof by any Governmental
              Authority, central bank or comparable agency charged with the interpretation,
              administration or application thereof, or the compliance by any Lender
              or any
              Person controlling such Lender with any request, guideline or directive
              regarding capital adequacy (whether or not having the force of law) of any
              such Governmental Authority, central bank or comparable agency adopted
              or
              otherwise taking effect after the Closing Date, has or would have the
              effect of
              reducing the rate of return on such Lender's or such controlling Person's
              capital as a consequence of such Lender's obligations hereunder to
              a level below
              that which such Lender or such controlling Person could have achieved
              but for
              such adoption, taking effect, change, interpretation, administration,
              application or compliance (taking into consideration such Lender's
              or such
              controlling Person's policies with respect to capital adequacy) then from
              time to time, upon written demand by such Lender (which demand shall
              be
              accompanied by a statement setting forth the basis for such demand
              and a
              calculation of the amount thereof in reasonable detail, a copy of which
              shall be
              furnished to Administrative Agent), Borrowers shall promptly pay to
              such Lender
              such additional amount as will compensate such Lender or such controlling
              Person
              for such reduction, so long as such amounts have accrued on or after
              the day
              which is two hundred seventy (270) days prior to the date on which such
              Lender first made demand therefor. 

             

            Section
              2.10  Mitigation
              Obligations.

             

            If
              any
              Lender requires compensation under Section 2.9,
              or
              requires any Borrower to pay any additional amount to any Lender or
              any
              Governmental Authority for the account of any Lender pursuant to Section
              2.8,
              then,
              upon the written request of Borrower Representative,
              such
              Lender shall use reasonable efforts to designate a different lending
              office for
              funding or booking its Loans hereunder or to assign its rights and
              obligations
              hereunder (subject to the terms of this Agreement) to another of its
              offices, branches or affiliates, if, in the judgment of such Lender,
              such
              designation or assignment (a) would eliminate or materially reduce amounts
              payable pursuant to any such Section, as the case may be, in the future,
              and
              (b) would not subject such Lender to any unreimbursed cost or expense and
              would not otherwise be disadvantageous to such Lender (as determined
              in its sole
              discretion). Without limitation of the provisions of Section
              12.1,
              Borrowers hereby agree to pay all reasonable costs and expenses incurred
              by any
              Lender in connection with any such designation or assignment. 

             

            
              
                -27-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            Section
              2.11  Appointment
              of Borrower Representative.

             

            Each
              Borrower hereby designates Borrower Representative as its representative
              and
              agent on its behalf for the purposes of giving instructions with respect
              to the
              disbursement of the proceeds of the Loans, giving and receiving all
              other
              notices and consents hereunder or under any of the other Financing
              Documents and
              taking all other actions (including in respect of compliance with
              covenants) on behalf of any Borrower or Borrowers under the Financing
              Documents. Borrower Representative hereby accepts such appointment.
              Notwithstanding anything to the contrary contained in this Agreement,
              no
              Borrower other than Borrower Representative shall be entitled to take
              any of the
              foregoing actions. The proceeds of each Loan made hereunder shall be
              advanced to
              or at the direction of Borrower Representative and if not used by Borrower
              Representative in its business (for the purposes provided in this
              Agreement) shall be deemed to be immediately advanced by Borrower
              Representative to the appropriate other Borrower hereunder as an intercompany
              loan (collectively, "Intercompany
              Loans").
              Administrative Agent and each Lender may regard any notice or other
              communication pursuant to any Financing Document from Borrower Representative
              as
              a notice or communication from all Borrowers, and may give any notice
              or
              communication required or permitted to be given to any Borrower or
              all Borrowers
              hereunder to Borrower Representative on behalf of such Borrower or
              all
              Borrowers. Each Borrower agrees that each notice, election, representation
              and
              warranty, covenant, agreement and undertaking made on its behalf by
              Borrower
              Representative shall be deemed for all purposes to have been made by
              such
              Borrower and shall be binding upon and enforceable against such Borrower
              to the
              same extent as if the same had been made directly by such Borrower.

             

            Section
              2.12  Release
              of Liens as to Certain Projects. 

             

            In
              the
              event a Project is the subject of a sale for cash to a bona fide third
              party
              purchaser (a "Sale") (excluding
              any Guarantor or any Affiliate of any Guarantor or any investment fund
              managed
              by any Guarantor or any Affiliate of any Guarantor), at any time after
              the
              Closed Period (except with respect to the Project located in Las Vegas,
              Nevada,
              which Project may be sold pursuant hereto during the Closed Period),
              Administrative Agent will cause the Liens of the Financing Documents
              to be
              released as to such Project; provided,
              however,
              that each
              of the following conditions is satisfied, and provided,
              further
              that no
              more than three (3) Projects will be so released under the terms of this
Section
              2.12:

             

            (a)  Borrowers
              shall have given Administrative Agent no less than thirty (30) days' prior
              written notice of the proposed closing date of such Sale;

             

            (b)  unless
              Administrative Agent consents to the closing of such Sale in its sole
              and
              absolute discretion, no Default or Event of Default shall have occurred
              and be
              continuing as of the date of the notice set forth in clause (a) or as of
              the closing date of such Sale, and Administrative Agent shall have
              received a
              Compliance Certificate to that effect;

             

            (c)  after
              giving effect to (i) such Sale and the release of such Project and either
              (x) the prepayment which would result therefrom or (y) the addition of
              the Substitute Property to the Collateral, in each case on a proforma
              basis as
              determined by Administrative Agent, and any additional prepayment together
              with
              the proportionate Exit Fee, the Projects and Borrowers will be in compliance
              with all covenants and the proforma Debt Yield Ratio (as determined
              by
              Administrative Agent) is equal to or greater than the Debt Yield Ratio
              before giving effect to such Sale (as determined by Administrative
              Agent;

             

            
              
                -28-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            (d)  Borrowers
              shall have paid all costs and expenses incurred by Administrative Agent
              in
              connection with any request for a release pursuant to this Section
              2.12;

             

            (e)  no
              material adverse change (as determined by Administrative Agent) shall have
              occurred with respect to any of the remaining Projects, Borrowers,
              or any
              Guarantor; and

             

            (f)  unless
              otherwise approved by Administrative Agent in its sole and absolute
              discretion,
              either: 

             

            (i)  Borrowers
              shall make a payment to Administrative Agent in an amount equal to
              one hundred
              percent (100%) of the Allocated Loan Amount for the Project located in Las
              Vegas, Nevada or one hundred ten percent (110%) of the Allocated Loan
              Amount for all other Projects, which amount shall be applied as a prepayment
              of
              the outstanding principal balance of the Term Loan and to a pro rata
              portion of
              the Exit Fee allocable to such prepayment; or

             

            (ii)  Administrative
              Agent approves the substitution of another assisted living facility
              for the
              Project subject to the Sale ("Substitute
              Project"),
              which
              Substitute Project would upon satisfaction of the conditions below
              would become
              a Project. Administrative Agent's approval will not be unreasonably
              withheld but
              shall be conditioned upon satisfaction of each of the following
              conditions:

             

            (A)  Administrative
              Agent having received and being satisfied with (based upon Administrative
              Agent's standards and procedures used in evaluating the Projects) its due
              diligence review of the proposed Substitute Property, including without
              limitation, receipt and approval of a property condition report, an
              environmental site assessment, title and survey, an appraisal, financial
              information and healthcare regulatory information; and

             

            (B)  the
              completion of Administrative Agent's closing requirements with respect
              to
              accepting the proposed Substitute Project as Collateral, including,
              without
              limitation, the grant of a mortgage lien against the Substitute Project
              in favor
              of Administrative Agent, the issuance of loan title insurance covering
              such
              mortgage lien with such Schedule B exceptions as Administrative Agent
              reasonably
              approves and with such endorsements as Administrative Agent may reasonably
              require, Loan Document amendments and reaffirmations, and legal opinions.
              Administrative Agent will be deemed to have acted reasonably if Administrative
              Agent disapproves any exception and requires any endorsement in a manner
              consistent with its treatment of the other Projects.

             

            
              
                -29-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            ARTICLE
              3

            REPRESENTATIONS
              AND WARRANTIES

             

            To
              induce
              Administrative Agent and Lenders to enter into this Agreement and to
              make the
              Loans and other credit accommodations contemplated hereby, each Borrower
              hereby
              represents and warrants to Administrative Agent and each Lender
              that:

             

            Section
              3.1  Existence
              and Power.

             

            Each
              Credit Party is an entity as specified on Schedule 3.1,
              is duly
              organized, validly existing and in good standing under the laws of
              the
              jurisdiction specified on Schedule 3.1,
              has the
              same legal name as it appears in such Credit Party's Organizational
              Documents
              and an organizational identification number (if any), in each case
              as specified
              on Schedule 3.1,
              and has
              all powers and all Permits necessary or desirable in the operation
              of its
              business as presently conducted or as proposed to be conducted, except
              where the
              failure to have such Permits could not reasonably be expected to have
              a Material
              Adverse Effect. Each Credit Party is qualified to do business as a
              foreign
              entity in each jurisdiction in which it is required to be so qualified,
              which
              jurisdictions, in the case of the Borrowers, as of the Closing Date
              are
              specified on Schedule 3.1,
              except
              where the failure to be so qualified could not reasonably be expected
              to have a
              Material Adverse Effect. No Borrower (a) has had, over the five
              (5) year period preceding the Closing Date, any name other than its current
              name, or (b) was incorporated or organized under the laws of any
              jurisdiction other than its current jurisdiction of incorporation or
              organization.

             

            Section
              3.2  Organization
              and Governmental Authorization; No Contravention.

             

            The
              execution, delivery and performance by each Credit Party of the Financing
              Documents to which it is a party are within its powers, have been duly
              authorized by all necessary action pursuant to its Organizational Documents,
              require no further action by or in respect of, or filing with, any
              Governmental
              Authority and do not violate, conflict with or cause a breach or a
              default under
              (a) any Law applicable to any Credit Party or any of the Organizational
              Documents of any Credit Party, or (b) any agreement or instrument binding
              upon it, except for such violations, conflicts, breaches or defaults
              as could
              not, with respect to this clause (b), reasonably be expected to have
              a Material
              Adverse Effect.

             

            Section
              3.3  Binding
              Effect.

             

            Each
              of
              the Financing Documents to which any Credit Party is a party constitutes
              a valid
              and binding agreement or instrument of such Credit Party, enforceable
              against
              such Credit Party in accordance with its respective terms, except as
              the
              enforceability thereof may be limited by bankruptcy, insolvency or
              other similar
              laws relating to the enforcement of creditors' rights generally and
              by general
              equitable principles.

             

            
              
                -30-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            Section
              3.4  Capitalization.

             

            (a)  The
              authorized equity securities of each of the Borrowers as of the Closing
              Date is
              as set forth on Schedule 3.4(a) and
              as of
              the Transfer Date as set forth on Schedule 3.4(b).
              All
              issued and outstanding equity securities of each of the Borrowers are
              duly
              authorized and validly issued, fully paid, nonassessable, free and
              clear of all
              Liens other than those in favor of Administrative Agent for the benefit
              of
              Administrative Agent and Lenders, and such equity securities were issued
              in
              compliance with all applicable Laws. The identity of the holders of
              the equity
              securities of each of the Borrowers and the percentage of their fully-diluted
              ownership of the equity securities of each of the Borrowers as of the
              Closing
              Date is set forth on Schedule 3.4(a) and
              as of
              the Transfer Date as set forth on Schedule 3.4(b).
              No
              shares of the capital stock or other equity securities of any Borrower,
              other
              than those described above, are issued and outstanding as of the Closing
              Date.
              Except as set forth on Schedule 3.4(a) and
              as of
              the Transfer Date as set forth on Schedule 3.4(b),
              as of
              the Closing Date there are no preemptive or other outstanding rights,
              options,
              warrants, conversion rights or similar agreements or understandings
              for the
              purchase or acquisition from any Borrower of any equity securities
              of any such
              entity nor will there be any after the Transfer Date.

             

            (b)  Lenders
              acknowledge and agree that without further consent from Administrative
              Agent the
              one hundred percent (100%) ownership interest of PIM Warehouse, Inc., a
              Delaware corporation, in PIM Senior Portfolio, LLC, a Delaware limited
              liability
              company (which LLC is the indirect eighty percent (80%) owner of the
              Borrowers) may be transferred to senior Housing Partners III, L.P., a
              Delaware limited partnership ("SHP
              III") (the
              "Permitted
              SHP III Transfer"),
              within
              thirty (30) days of the date hereof (the date of such transfer being
              referred to as the "Transfer
              Date"),
              provided the sole general partner of SHP III is an Affiliate of The
              Prudential
              Insurance Company of America, provided that following such transfer
              the
              organizational structure of Borrowers and said entities shall be as
              shown on
Schedule
              3.4(b).
              

             

            Section
              3.5  Financial
              Information. 

             

            (a)  The
              consolidated and consolidating balance sheet of the Borrowers as of
              September
              30, 2005 and the related consolidated and consolidating statements
              of
              operations, stockholders' equity (or comparable calculation, if such
              Person is
              not a corporation) and cash flows for the fiscal year then ended, reported
              on by Epoch Senior Living, copies of which have been delivered to Administrative
              Agent, fairly present, in conformity with GAAP, the consolidated and
              consolidating financial position of Borrowers as of such date and their
              consolidated and consolidating results of operations, changes in stockholders'
              equity (or comparable calculation) and cash flows for such
              period.

             

            (b)  The
              unaudited consolidated and consolidating balance sheet of the Borrowers
              as of
              September 30, 2005 and the related unaudited consolidated and
              consolidating statements of operations and cash flows for the nine
              (9) months then ended, copies of which have been delivered to
              Administrative Agent, fairly present, in conformity with GAAP applied
              on a basis
              consistent with the financial statements referred to in Section 3.5(a),
              the
              consolidated and consolidating financial position of the Borrowers
              as of such
              date and their consolidated and consolidating results of operations
              and cash
              flows for the nine (9) months then ended (subject to normal year-end
              adjustments and the absence of footnote disclosures). 

             

            
              
                -31-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            (c)  The
              pro
              forma balance sheet of Borrowers as of September 30, 2005, copies of
              which have been delivered to Administrative Agent, fairly presents,
              in
              conformity with GAAP applied on a basis consistent with the financial
              statements
              referred to in Section 3.5(a),
              the
              consolidated and consolidating financial position of Borrowers as of
              such date,
              adjusted to give effect (as if such events had occurred on such date) to
              (i) the transactions contemplated by the Financing Documents, (ii) the
              making of the initial Loans, (iii) the application of the proceeds
              therefrom as contemplated by the Financing Documents, and (iv) the payment
              of all legal, accounting and other fees related thereto to the extent
              known at
              the time of the preparation of such balance sheet. As of the date of
              such
              balance sheet and the date hereof, no Credit Party had or has any material
              liabilities, contingent or otherwise, including liabilities for taxes,
              long-term
              leases or forward or long-term commitments, which are not properly
              reflected on
              such balance sheet. 

             

            (d)  Since
              September 1, 2005, there has been no material adverse change in the
              business,
              operations, properties or condition (financial or otherwise) of Borrowers,
              taken as a whole. Since September 1, 2005, there has been no material
              adverse
              change in the business, operations, properties or condition (financial
              or
              otherwise) of any business, assets or entities being purchased by Borrowers
              pursuant to the Financing Documents.

             

            Section
              3.6  Litigation.

             

            Except
              as
              set forth on Schedule 3.6
              as of the
              Closing Date, and except as hereafter disclosed to Administrative Agent
              in
              writing, (a) there is no Litigation pending against, or to such Borrower's
              knowledge threatened against or affecting, any Borrower or any Project
              and
              (b) there is no material Litigation pending, or, to such Borrower's
              knowledge, threatened against Guarantor. There is no Litigation pending
              in which
              an adverse decision could reasonably be expected to have a Material
              Adverse
              Effect or which in any manner draws into question the validity of any
              of the
              Financing Documents.

             

            Section
              3.7  Ownership
              of Property Generally.

             

            Each
              Borrower is the lawful owner of, has good and marketable title to and
              is in
              lawful possession of, or has valid leasehold interests in, all properties
              and
              other assets (real or personal, tangible, intangible or mixed) purported or
              reported to be owned or leased (as the case may be) by such Person, subject
              to Permitted Liens.

             

            Section
              3.8  No
              Default.

             

            No
              Default
              or Event of Default has occurred and is continuing. No Credit Party
              is in breach
              or default under or with respect to any contract, agreement, lease
              or other
              instrument to which it is a party or by which its property is bound
              or affected,
              which breach or default could reasonably be expected to have a Material
              Adverse
              Effect.

             

            
              
                -32-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            Section
              3.9  Labor
              Matters.

             

            As
              of the
              Closing Date, there are no strikes or other labor disputes pending
              or, to such
              Borrower's knowledge, threatened against any Borrower. Hours worked
              and payments
              made to the employees of the Borrowers have not been in violation of
              the Fair
              Labor Standards Act or any other applicable Law dealing with such matters.
              All
              payments due from the Borrower, or for which any claim may be made
              against any
              of them, on account of wages and employee and retiree health and welfare
              insurance and other benefits have been paid or accrued as a liability
              on their
              books, as the case may be. The consummation of the transactions contemplated
              by
              the Financing Documents will not give rise to a right of termination
              or right of
              renegotiation on the part of any union under any collective bargaining
              agreement
              to which it is a party or by which it is bound. 

             

            Section
              3.10  Regulated
              Entities.

             

            No
              Credit
              Party is an "investment company"
              or a
              company "controlled"
              by an
              "investment company"
              or a
              "subsidiary"
              of an
              "investment company,"
              all
              within the meaning of the Investment Company Act of 1940. No Credit
              Party
is
              a
              "holding company", or a "subsidiary company" of a "holding company",
              or an
              "affiliate" of a "holding company" or of a "subsidiary company" of
              a "holding
              company", within the meaning of the Public Utility Holding Company
              Act of
              1935.

             

            Section
              3.11  Margin
              Regulations.

             

            None
              of
              the proceeds from the Loans have been or will be used, directly or
              indirectly,
              for the purpose of purchasing or carrying any "margin stock" (as defined
              in
              Regulation U of the Federal Reserve Board), for the purpose of reducing
              or
              retiring any indebtedness which was originally incurred to purchase
              or carry any
              "margin stock" or for any other purpose which might cause any of the
              Loans to be
              considered a "purpose credit" within the meaning of Regulation T, U
              or X of the
              Federal Reserve Board.

             

            Section
              3.12  Compliance
              With Laws; Anti-Terrorism Laws.

             

            (a)  Each
              Credit Party is in compliance with the requirements of all applicable
              Laws,
              except for such Laws the noncompliance with which could not reasonably
              be
              expected to have a Material Adverse Effect.

             

            
              
                -33-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            (b)  None
              of
              the Credit Parties, or any of the entities shown in Schedule 3.4(a) or
              Schedule 3.4(b),
              as
              applicable, or any of their respective agents acting or benefiting
              in any
              capacity in connection with the transactions contemplated by this Agreement
              is
              (i) in violation of any Anti-Terrorism Law, (ii) engages in or
              conspires to engage in any transaction that evades or avoids, or has
              the purpose
              of evading or avoiding, or attempts to violate, any of the prohibitions
              set
              forth in any Anti-Terrorism Law, or (iii) is a Blocked Person. No Credit
              Party nor, to the knowledge of any Credit Party, any of its Affiliates
              or agents
              acting or benefiting in any capacity in connection with the transactions
              contemplated by this Agreement, (x) conducts any business or engages in
              making or receiving any contribution of funds, goods or services to
              or for the
              benefit of any Blocked Person, or (y) deals in, or otherwise engages in any
              transaction relating to, any property or interest in property blocked
              pursuant
              to Executive Order No. 13224, any similar executive order or other
              Anti-Terrorism Law.

             

            Section
              3.13  Taxes.

             

            All
              Federal, state and local tax returns, reports and statements required
              to be
              filed by or on behalf of each Borrower have been filed with the appropriate
              Governmental Authorities in all jurisdictions in which such returns,
              reports and
              statements are required to be filed and, except to the extent subject
              to a
              Permitted Contest, all Taxes (including real property Taxes) and other
              charges shown to be due and payable in respect thereof have been timely
              paid
              prior to the date on which any fine, penalty, interest, late charge
              or loss may
              be added thereto for nonpayment thereof. Except to the extent subject
              to a
              Permitted Contest, all state and local sales and use Taxes required
              to be paid
              by each Borrower have been paid. All Federal and state returns have
              been filed
              by each Borrower for all periods for which returns were due with respect
              to
              employee income tax withholding, social security and unemployment taxes,
              and,
              except to the extent subject to a Permitted Contest, the amounts shown
              thereon
              to be due and payable have been paid in full or adequate provisions
              therefor
              have been made.

             

            Section
              3.14  Compliance
              with ERISA.

             

            (a)  Each
              ERISA
              Plan (and the related trusts and funding agreements) complies in form and
              in operation with, has been administered in compliance with, and the
              terms of
              each ERISA Plan satisfy, the applicable requirements of ERISA and the
              Code in
              all material respects. Each ERISA Plan which is intended to be qualified
              under
              Section 401(a) of the Code is so qualified, and the United States Internal
              Revenue Service has issued a favorable determination letter with respect
              to each
              such ERISA Plan which may be relied on currently. No Borrower has incurred
              liability for any material excise tax under any of Sections 4971 through
              5000 of
              the Code.

             

            (b)  During
              the
              thirty-six (36) month period prior to the Closing Date or the making of any
              Loan, (i) no steps have been taken to terminate any Pension Plan, and
              (ii) no contribution failure has occurred with respect to any Pension Plan
              sufficient to give rise to a Lien under Section 302(f) of ERISA. No
              condition exists or event or transaction has occurred with respect
              to any
              Pension Plan which could result in the incurrence by any Borrower of
              any
              material liability, fine or penalty. No Borrower has incurred liability
              to the
              PBGC (other than for current premiums) with respect to any employee Pension
              Plan. All contributions (if any) have been made on a timely basis to any
              Multiemployer Plan that are required to be made by any Borrower or
              any other
              member of the Controlled Group under the terms of the plan or of any
              collective
              bargaining agreement or by applicable Law; no Borrower nor any member
              of the
              Controlled Group has withdrawn or partially withdrawn from any Multiemployer
              Plan, incurred any withdrawal liability with respect to any such plan
              or
              received notice of any claim or demand for withdrawal liability or
              partial
              withdrawal liability from any such plan, and no condition has occurred
              which, if
              continued, could result in a withdrawal or partial withdrawal from
              any such
              plan, and no Borrower nor any member of the Controlled Group has received
              any
              notice that any Multiemployer Plan is in reorganization, that increased
              contributions may be required to avoid a reduction in plan benefits
              or the
              imposition of any excise tax, that any such plan is or has been funded
              at a rate
              less than that required under Section 412 of the Code, that any such plan
              is or may be terminated, or that any such plan is or may become
              insolvent

             

            
              
                -34-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            Section
              3.15  Consummation
              of Financing Documents; Brokers.

             

            Except
              for
              fees payable to Administrative Agent and/or Lenders, no broker, finder
              or other
              intermediary has brought about the obtaining, making or closing of
              the
              transactions contemplated by the Financing Documents, and no Borrower
              has or
              will have any obligation to any Person in respect of any finder's or
              brokerage
              fees, commissions or other expenses in connection herewith or therewith.
              All
              brokerage and finder's fees, commissions and other expenses payable
              in
              connection with the transactions contemplated by the Financing Documents
              have
              been paid in full by Borrowers contemporaneously with the execution
              of the
              Financing Documents and the initial funding of the Loans. No broker,
              finder or
              other intermediary has brought about the obtaining, making or closing
              of the
              transactions contemplated by the Financing Documents, and no Borrower
              has or
              will have any obligation to any Person in respect of any finder's or
              brokerage
              fee in connection herewith or therewith.

             

            Section
              3.16  Related
              Transactions.

             

            All
              transactions contemplated by the Financing Documents to be consummated
              on or
              prior to the date hereof have been so consummated (including without
              limitation
              the disbursement and transfer of all funds in connection therewith) in all
              material respects pursuant to the provisions of the applicable Financing
              Documents, true and complete copies of which have been delivered to
              Administrative Agent, and in compliance with all applicable Law, except
              for such
              Laws the noncompliance with which would not reasonably be expected
              to have a
              Material Adverse Effect.

             

            Section
              3.17  Material
              Contracts.

             

            Except
              for
              the Financing Documents and the other agreements set forth on Schedule
              3.17
              (collectively with the Financing Documents, the "Material
              Contracts"),
              as of
              the Closing Date there are no (a) employment agreements covering the
              management of any Borrower, (b) collective bargaining agreements or other
              labor agreements covering any employees of any Borrower, (c) agreements for
              managerial, consulting or similar services to which any Borrower is
              a party or
              by which it is bound, (d) agreements regarding any Borrower, its assets or
              operations or any investment therein to which any of its equityholders
              is a
              party or by which it is bound, (e) real estate leases, intellectual
              property licenses or other lease or license agreements to which any
              Borrower is
              a party, either as lessor or lessee, or as licensor or licensee, or
              (f) customer, distribution, marketing or supply agreements to which any
              Borrower is a party, in each case with respect to the preceding clauses
              (a),
              (c), (d), (e), and (f) requiring payment of more than $100,000 in any year,
              (g) partnership agreements to which any Borrower is a general partner or
              joint venture agreements to which any Borrower is a party, (h) third party
              billing arrangements to which any Borrower is a party, or (i) any other
              agreements or instruments to which any Borrower is a party, and the
              breach,
              nonperformance or cancellation of which, or the failure of which to
              renew, could
              reasonably be expected to have a Material Adverse Effect. Schedule
              3.17
              sets
              forth, with respect to each real estate lease agreement to which any
              Borrower is
              a party (as a lessee) and which is a Material Contract as of the Closing
              Date, the address of the subject property and the annual rental (or,
              where
              applicable, a general description of the method of computing the annual
              rental).
              The consummation of the transactions contemplated by the Financing
              Documents and
              the other Financing Documents will not give rise to a right of termination
              in
              favor of any party to any Material Contract (other than any Borrower),
              except
              for such Material Contracts the noncompliance with which would not
              reasonably be
              expected to have a Material Adverse Effect. 

             

             

            
              
                -35-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            Section
              3.18  Compliance
              with Environmental Requirements; No Hazardous Materials. 

             

            Except
              in
              each case as set forth on Schedule
              3.18:

             

            (a)  no
              Hazardous Materials are located on any of the Projects except those
              that are
              both (i) in compliance with Environmental Laws and with permits issued
              pursuant thereto (if such permits are required), if any, and (ii) either
              (A) in amounts not in excess of that necessary to operate the applicable
              Project for the purposes set forth herein or in amounts used in the
              ordinary
              course of business, or (B) fully disclosed to and approved by
              Administrative Agent; to Borrower's knowledge, Hazardous Materials
              have not been
              Released or threatened to be Released into the environment, at, on,
              under or
              near any of the Projects in a manner that would require the taking
              of any action
              under any Environmental Law and that have given rise to, or could reasonably
              be
              expected to give rise to, remediation costs and expenses on the part
              of any
              Borrower in excess of $250,000; and no portion of any Project is being
              used, or
              has been used at any previous time, for the disposal, storage, treatment,
              processing or other handling of Hazardous Materials in violation of
              any
              Environmental Law in any material respect nor, to Borrower's knowledge,
              is any
              such property affected by any Hazardous Materials Contamination;

             

            (b)  no
              Borrower knows of, nor has received, any written notice from any Person
              relating
              to Hazardous Materials in, on, under or from any Project and no notice,
              notification, demand, request for information, citation, summons, complaint
              or
              order has been issued, no complaint has been filed, no penalty has
              been assessed
              and no investigation or review is pending, or to each Borrower's knowledge,
              threatened by any Governmental Authority or other Person with respect
              to any
              (i) alleged violation by any Borrower of any Environmental Law,
              (ii) alleged failure by any Borrower to have any Permits required in
              connection with the conduct of its business or to comply with the terms
              and
              conditions thereof, (iii) any generation, treatment, storage, recycling,
              transportation or disposal of any Hazardous Materials, or (iv) Release of
              Hazardous Materials;

             

            (c)  to
              the
              best knowledge of each Borrower, all oral or written notifications
              of a Release
              of Hazardous Materials required to be filed by or on behalf of any
              Borrower
              under any applicable Environmental Law have been filed or are in the
              process of
              being timely filed by or on behalf of the applicable Borrower;

             

            
              
                -36-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            (d)  to
              each
              Credit Party's best knowledge, no property now owned by any Borrower
              and no such
              property previously owned by any Borrower, to which any Borrower has,
              directly
              or indirectly, transported or arranged for the transportation of any
              Hazardous
              Materials, is listed or proposed for listing, on the National Priorities
              List
              promulgated pursuant to CERCLA, or CERCLIS (as defined in CERCLA) or any
              similar state list or is the subject of Federal, state or local enforcement
              actions or, to the knowledge of such Borrower, other investigations
              which may
              lead to claims against any Credit Party for clean-up costs, remedial
              work,
              damage to natural resources or personal injury claims, including, without
              limitation, claims under CERCLA;

             

            (e)  to
              each
              Credit Party's best knowledge, after reasonable investigation, there
              are no
              underground storage tanks located on any property owned or to be owned
              or leased
              by any Borrower that are not properly registered or permitted under
              applicable
              Environmental Laws or that are leaking or disposing of Hazardous
              Materials;

             

            (f)  to
              each
              Credit Party's best knowledge, after reasonable investigation, there
              are no
              Liens under or pursuant to any applicable Environmental Laws on any
              real
              property or other assets owned or leased by any Borrower, and no actions
              by any
              Governmental Authority have been taken or, to the knowledge of such
              Borrower,
              are in process which could subject any of such properties or assets
              to such
              Liens;
              and

             

            (g)  to
              each
              Borrower's best knowledge, after reasonable investigation, each Borrower
              has
              truthfully and fully provided to Administrative Agent, in writing,
              any and all
              information relating to environmental conditions in, on, under or from
              the
              Projects, known to each Borrower or contained in each Borrower's files
              and
              records, including but not limited to any reports relating to Hazardous
              Materials in, on, under or migrating to or from the Projects and/or
              to the
              environmental condition of the Projects.

             

            Section
              3.19  Intellectual
              Property.

             

            Each
              Borrower owns, is licensed to use or otherwise has the right to use,
              all
              intellectual property that is material to the condition (financial
              or other),
              business or operations of such Borrower. To such Borrower's knowledge,
              each
              Borrower conducts its business without infringement or claim of infringement
              of
              any intellectual property rights of others and there is no infringement
              or claim
              of infringement by others of any intellectual property rights of any
              Borrower,
              which infringement or claim of infringement could reasonably be expected
              to have
              a Material Adverse Effect.

             

            Section
              3.20  Solvency.

             

            Each
              Borrower and Guarantor are each Solvent.

             

            
              
                -37-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            Section
              3.21  Full
              Disclosure.

             

            None
              of
              the information (financial or otherwise) furnished by or on behalf of any
              Credit Party to Administrative Agent or any Lender in connection with
              the
              consummation of the transactions contemplated by the Financing Documents,
              contains (with respect to information provided by third parties on
              behalf of any
              Credit Party, to the best knowledge of the Credit Parties) any untrue
              statement of a material fact or omits to state a material fact necessary
              to make
              the statements contained herein or therein not misleading in light
              of the
              circumstances under which such statements were made. All financial
              projections
              delivered to Administrative Agent and the Lenders have been prepared
              on the
              basis of the assumptions stated therein. Such projections represent
              each
              Borrower's best estimate of such Borrower's future financial performance
              and
              such assumptions are believed by such Borrower to be fair and reasonable
              in
              light of current business conditions; provided,
              however, that
              Borrowers can give no assurance that such projections will be
              attained.

             

            Section
              3.22  Interest
              Rate.

             

            The
              rate
              of interest paid under the Notes and the method and manner of the calculation
              thereof do not violate any usury or other law or applicable Laws, any
              of the
              Organizational Documents or any of the Financing Documents.

             

            Section
              3.23  Representations
              and Warranties Incorporated from Financing Documents.

             

            As
              of the
              Closing Date, each of the representations and warranties made in the
              Financing
              Documents by each of the parties thereto is true and correct in all
              material
              respects, and such representations and warranties are hereby incorporated
              herein
              by reference with the same effect as though set forth in their entirety
              herein,
              as qualified therein, except to the extent that such representation
              or warranty
              relates to a specific date, in which case such representation and warranty
              shall
              be true as of such earlier date.

             

            Section
              3.24  Subsidiaries.
              There
              are no Subsidiaries of Borrowers.

             

            ARTICLE
              4  

            AFFIRMATIVE
              COVENANTS

             

            Each
              Borrower agrees that, so long as any Credit Exposure exists:

             

            Section
              4.1  Financial
              Statements and Other Reports.

             

            (a)  Each
              Borrower will maintain a system of accounting established and administered
              in
              accordance with sound business practices to permit preparation of financial
              statements in accordance with GAAP and to provide the information required
              to be
              delivered to Administrative Agent and the Lenders hereunder. 

             

            (b)  Each
              Borrower will furnish to Administrative Agent (or cause to be furnished
              to
              Administrative Agent) the following financial information and reports with
              respect to each Borrower and each Licensed Operator, in each case in
              form and
              format and providing information satisfactory to Administrative Agent
              in its
              discretion:

             

            
              
                -38-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            (i)  for
              the
              Licensed Operator only, a sales and collections report and accounts
              receivable
              and payable aging schedule on a form reasonably acceptable to Lender
              within
              twenty-five (25) days after the end of each calendar month, which shall
              include, without limitation, a report of sales, credits issued, and
              collections
              received; 

             

            (ii)  within
              twenty-five (25) days of the end of each calendar month, internally
              prepared monthly financial statements prepared for Borrowers on a consolidated
              and consolidating basis in accordance with GAAP (including income statements
              and
              balance sheets for each Licensed Location and a consolidated operating
              cash flow
              statement, accompanied by management analysis and actual vs. budget
              variance
              reports for
              each
              Licensed Location;

             

            (iii)  within
              twenty-five (25) days of the end of each calendar quarter, each of the
              statements and information described in the preceding section;

             

            (iv)  within
              twenty-five (25) days of the end of each calendar month, (A) a current
              rent roll/census report (including, with respect to the census report
              for a
              Licensed Location, a monthly schedule of delinquency receipts and payments
              and a
              schedule showing payor mix in respect of Third Party Payor Programs),
              and
              (B) a summary of all leasing/admissions activity then taking place with
              respect to each Licensed Location; 

             

            (v)  within
              twenty-five (25) days after the end of each measurement period applicable
              to any financial covenant hereunder, such financial reports and information
              as
              Administrative Agent shall require evidencing compliance with the applicable
              financial covenants, which reports and information shall include, at
              a minimum,
              delivery to Administrative Agent of a Compliance Certificate, and,
              if requested
              by Administrative Agent, back-up documentation (including, without
              limitation,
              invoices, receipts and other evidence of costs incurred during such
              quarter as
              Administrative Agent shall reasonably require) evidencing the propriety of
              the deductions from revenues in determining such compliance;

             

            (vi)  annual
              projected profit and loss statements (prepared on a monthly basis) for the
              succeeding fiscal year within forty-five (45) days before the end of each
              fiscal year;

             

            (vii)  internally
              prepared annual financial statements prepared for Borrowers on a consolidated
              and consolidating basis in accordance with GAAP within sixty (60) days
              after the end of each fiscal year; 

             

            (viii)  annual
              consolidated and consolidating audited financial statements prepared
              for
              Borrowers in accordance with GAAP and prepared by a firm of independent
              public
              accountants reasonably satisfactory to Administrative Agent, within
              one hundred
              twenty (120) days after the end of each fiscal year; 

             

            
              
                -39-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            (ix)  promptly
              upon receipt thereof, copies of any reports by the independent accountants
              in
              connection with any interim audit and copies of each management control
              letter
              provided by independent accountants; 

             

            (x)  for
              each
              Borrower, as requested by Administrative Agent, evidence satisfactory
              to
              Administrative Agent that all federal and state taxes, including, without
              limitation payroll taxes, that are due have been paid in full; 

             

            (xi)  for
              Licensed Operator only, as requested, copies of all cost reports filed
              with
              Medicare or Medicaid or any other Third Party Payor; 

             

            (xii)  within
              ten
              (10) days after Administrative Agent request, a written statement, duly
              acknowledged by Borrowers, setting forth any right of set-off, claims,
              counterclaims, withholdings or other defenses to which any of the Collateral
              or
              Administrative Agent's rights with respect to the Collateral are subject
              or that
              exist against such sums and Borrowers' obligations under the Financing
              Documents; 

             

            (xiii)  within
              ten
              (10) days after Administrative Agent request, a written statement, duly
              acknowledged by Licensed Operator, setting forth any right of set-off,
              counterclaim or other defense that exists against such sums and Licensed
              Operator's obligations under any Leases; and

             

            (xiv)  such
              additional information, reports or statements regarding the Borrowers,
              the
              Licensed Locations or Licensed Operator as Administrative Agent may
              from time to
              time reasonably request. 

             

            All
              financial statements shall include a balance sheet and statement of
              earnings and
              shall be prepared in accordance with GAAP. 

             

            (c)  From
              time
              to time, if Administrative Agent determines that obtaining appraisals
              is
              necessary in order for a Lender to comply with applicable Laws, each
              Borrower
              shall furnish to Administrative Agent appraisal reports in form and
              substance
              and from appraisers reasonably satisfactory to Administrative Agent
              stating the
              then current fair market values of all or any portion of the real estate
              owned
              by each Borrower. In addition to the foregoing, from time to time,
              but in the
              absence of a Default or Event of Default not more than once during
              each calendar
              year, Administrative Agent may require Borrowers to obtain and deliver
              to
              Administrative Agent appraisal reports in form and substance and from
              appraisers
              reasonably satisfactory to Administrative Agent stating the then current
              fair
              market values of all or any portion of the real estate and personal
              property
              owned by each Borrower.

             

            (d)  Promptly
              upon receipt or filing thereof, each Borrower shall deliver to Administrative
              Agent copies of any reports or notices related to any material taxes
              and any
              other material reports or notices received by any Credit Party from,
              or filed by
              any Credit Party with, any Governmental Authority.

             

            
              
                -40-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            Section
              4.2  Payment
              and Performance of Obligations.

             

            Each
              Borrower (a) will pay and discharge, at or before maturity, all of their
              respective obligations and liabilities, including tax liabilities,
              except for
              such obligations and/or liabilities (i) that may be the subject of a
              Permitted Contest, or (ii) the nonpayment or nondischarge of which could
              not reasonably be expected to have a Material Adverse Effect or result
              in a Lien
              against any Collateral, except for Permitted Liens, (b) will maintain, in
              accordance with GAAP, appropriate reserves for the accrual of all of
              their
              respective obligations and liabilities, (c) will not breach, or permit to
              exist any default under, the terms of any commitment, contract, instrument
              or
              obligation (other than Leases) to which it is a party, or by which its
              properties or assets are bound, except for such breaches or defaults
              which could
              not reasonably be expected to have a Material Adverse Effect, and (d) will
              not breach, or permit to exist any default under, the terms of any
              Material
              Lease to which it is a party as a lessor.

             

            Section
              4.3  Maintenance
              of Existence; Single Purpose Entity Requirements.

             

            (a)  Each
              Borrower will preserve, renew and keep in full force and effect their
              respective
              existence and their respective rights, privileges and franchises necessary
              or
              desirable in the normal conduct of business.

             

            (b)  Each
              Borrower will preserve, renew and keep in full force and effect their
              respective
              existence and their respective rights, privileges and franchises necessary
              or
              desirable to, at all times, comply with all single purpose entity requirements
              set forth on Exhibit
              B.
              If any
              of the Term Loans are placed in a securitization, then Borrowers shall
              promptly
              upon notice from Administrative Agent, amend their respective Organizational
              Documents to incorporate the single purpose entity requirements set
              forth on
Exhibit
              B,
              at
              Borrowers' sole cost and expense.

             

            (c)  Each
              Borrower shall at all times be a wholly-owned direct or indirect subsidiary
              of
              either ARC or a Prudential Entity or a joint venture between ARC or
              a
              wholly-owned subsidiary of ARC and a Prudential Entity or a wholly-owned
              subsidiary of a Prudential Entity, and ARC or a Prudential Entity or
              such joint
              venture shall control selection of the officers and manager(s), if
              any, or
              general partners, as applicable, of Borrowers. "Prudential Entity"
              means either
              PIM Warehouse, Inc., a Delaware corporation, an Affiliate of The Prudential
              Insurance Company of America ("Prudential"), or Senior Housing Partners
              III,
              L.P., a Delaware limited partnership, whose sole general partner is
              an Affiliate
              of Prudential.

             

            Section
              4.4  Maintenance
              of Property; Payment of Taxes; Insurance.

             

            (a)  Each
              Borrower will keep all property useful and necessary in its business
              in good
              working order and condition, ordinary wear and tear excepted. If all
              or any part
              of the Collateral becomes damaged or destroyed, each Borrower will
              promptly and
              completely repair and/or restore the affected Collateral in a good
              and
              workmanlike manner, provided that such Borrower shall only be obligated
              to
              repair or restore the affected Collateral if Administrative Agent agrees
              to
              disburse insurance proceeds or other sums to pay costs of the work
              of repair or
              reconstruction. Borrowers will not commit or allow waste or permit
              impairment or
              deterioration of the Collateral or abandon all or any part of the Collateral.
              Borrowers will perform such acts to preserve the value of Collateral.
              Each
              Borrower will (i) preserve its or their interest in and title to the
              Collateral and will forever warrant and defend the same to Administrative
              Agent
              and Lenders against any and all claims made by, through or under Borrowers,
              and
              (ii) except in respect of Permitted Liens, forever warrant and defend the
              validity and priority of the lien and security interest created in
              the Security
              Documents against the claims of all Persons whomsoever claiming by,
              through or
              under Borrowers. The foregoing warranty of title shall survive the
              foreclosure
              of the Security Documents and shall inure to the benefit of and be
              enforceable
              by Administrative Agent in the event Administrative Agent acquires
              title to any
              Collateral pursuant to any foreclosure. 

             

            
              
                -41-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            (b)  Borrowers
              will pay or cause to be paid all Taxes prior to the date upon which
              any fine,
              penalty, interest or cost for nonpayment is imposed, and furnish to
              Administrative Agent, upon request, receipted bills of the appropriate
              taxing
              authority or other documentation reasonably satisfactory to Administrative
              Agent
              evidencing the payment thereof. If Borrowers shall fail to pay any
              Taxes in
              accordance with this Section and is not contesting or causing a contesting
              of
              such Taxes pursuant to a Permitted Contest, or if there are insufficient
              funds
              in the applicable reserves or escrows under Article 2 to pay any such
              Taxes,
              Administrative Agent shall have the right, but shall not be obligated,
              to (for
              the account of all Lenders) pay such Taxes, and Borrowers shall repay to
              Administrative Agent, on written demand, any amount paid by Administrative
              Agent, with interest thereon from the date of the advance thereof to
              the date of
              repayment, at the rate applicable during periods of Default hereunder,
              and such
              amount shall constitute a portion of the Obligations. Borrowers shall
              not pay
              any Taxes or other obligations in installments unless permitted by
              applicable
              Laws, and shall, upon the request of Administrative Agent, deliver
              copies of all
              notices and bills relating to any Taxes or other charge covered by
              this Section
              to Administrative Agent.

             

            (c)  Upon
              completion of any Permitted Contest, Borrowers shall promptly pay the
              amount
              due, if any, and deliver to Administrative Agent proof of the completion
              of the
              contest and payment of the amount due, if any, following which Administrative
              Agent Lender shall return the security, if any, deposited with Lender
              pursuant
              to the definition of Permitted Contest. 

             

            (d)  Each
              Borrower will maintain (i) casualty insurance on all real and personal
              property on an all risks basis (including the perils of flood and quake),
              covering the repair and replacement cost of all such property and coverage
              for
              business interruption and rent loss and professional liability and
              public
              liability insurance (including products/completed operations liability
              coverage) in the amounts and on such terms as attached hereto as
Schedule
              4.4,
              and
              (ii) such other insurance coverage in such amounts and with respect to such
              risks as Administrative Agent may reasonably request. All such insurance
              shall
              be provided by insurers having an A.M. Best policyholders rating reasonably
              acceptable to Administrative Agent. Borrowers will not bring or keep
              any article
              on any business location of any Credit Party, or cause or allow any
              condition to
              exist, if the presence of such article or the occurrence of such condition
              could
              reasonably cause the invalidation of any insurance required by this
Section
              4.4(d),
              or would
              otherwise be prohibited by the terms thereof.

             

            
              
                -42-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            (e)  On
              or
              prior to the Closing Date, and at all times thereafter, each Borrower
              will cause
              Administrative Agent to be named as an additional insured, assignee
              and loss
              payee (which shall include, as applicable, identification as mortgagee),
              as
              applicable, on each insurance policy required to be maintained pursuant
              to this
Section
              4.4
              pursuant
              to endorsements in form and content acceptable to Administrative
              Agent.
              Borrowers will deliver to Administrative Agent and the Lenders (i) on the
              Closing Date, a certificate from Borrowers' insurance broker dated
              such date
              showing the amount of coverage as of such date, and that such policies
              will
              include effective waivers (whether under the terms of any such policy
              or
              otherwise) by the insurer of all claims for insurance premiums against all
              loss payees and additional insureds and all rights of subrogation against
              all
              loss payees and additional insureds, and that if all or any part of
              such policy
              is canceled, terminated or expires, the insurer will forthwith give
              notice
              thereof to each additional insured, assignee and loss payee and that
              no
              cancellation, reduction in amount or material change in coverage thereof
              shall
              be effective until at least thirty (30) days after receipt by each
              additional insured, assignee and loss payee of written notice thereof,
              (ii) upon the request of any Lender through Administrative Agent from time
              to time full information as to the insurance carried, (iii) within five
              (5) days of receipt of notice from any insurer, a copy of any notice of
              cancellation, nonrenewal or material change in coverage from that existing
              on
              the date of this Agreement, and (iv) forthwith, notice of any cancellation
              or nonrenewal of coverage by any Borrower.

             

            (f)  In
              the
              event any Borrower fails to provide Administrative Agent with evidence
              of the
              insurance coverage required by this Agreement, Administrative Agent
              may purchase
              insurance at Borrowers' expense to protect Administrative Agent's interests
              in
              the Collateral. This insurance may, but need not, protect any Borrower's
              interests. The coverage purchased by Administrative Agent may not pay
              any claim
              made by any Borrower or any claim that is made against any Borrower
              in
              connection with the Collateral. The applicable Borrower may later cancel
              any
              insurance purchased by Administrative Agent, but only after providing
              Administrative Agent with evidence that such Borrower has obtained
              insurance as
              required by this Agreement. If Administrative Agent purchases insurance
              for the
              Collateral, to the fullest extent provided by law Borrowers will be
              responsible
              for the costs of that insurance, including interest and other charges
              imposed by
              Administrative Agent in connection with the placement of the insurance,
              until
              the effective date of the cancellation or expiration of the insurance.
              The costs
              of the insurance may be added to the Obligations. The costs of the
              insurance may
              be more than the cost of insurance each Borrower is able to obtain
              on its
              own.

             

            (g)  Borrowers
              shall not carry separate insurance concurrent in form or contributing
              in the
              event of loss with that required to be maintained under this
              Section.

             

            
              
                -43-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            Section
              4.5  Compliance
              with Laws.

             

            Each
              Borrower will comply with the requirements of all applicable Laws,
              except to the
              extent that failure to so comply could not reasonably be expected to
              (a) have a Material Adverse Effect, or (b) result in any Lien upon
              either (i) a material portion of the assets of any such Person in favor of
              any Governmental Authority, or (ii) any portion of the
              Collateral.

             

            Section
              4.6  Inspection
              of Property, Books and Records.

             

            Each
              Borrower will keep proper books of record and account in accordance
              with GAAP in
              which full, true and correct entries shall be made of all dealings
              and
              transactions in relation to its business and activities; and will permit
              at the
              sole cost of the applicable Borrower, representatives of Administrative
              Agent
              and of any Lender (but at such Lender's expense unless such visit or
              inspection
              is made concurrently with Administrative Agent) to visit and inspect any of
              their respective properties, to examine and make abstracts or copies
              from any of
              their respective books and records, to conduct a collateral audit and
              analysis
              of their respective operations and the Collateral and to discuss their
              respective affairs, finances and accounts with their respective officers,
              employees and independent public accountants as often as may reasonably
              be
              desired. In the absence of an Event of Default, Administrative Agent
              or any
              Lender exercising any rights pursuant to this Section
              4.6
              shall
              give the applicable Borrower commercially reasonable prior notice of
              such
              exercise, and shall not require Borrower to reimburse the costs and
              expenses
              incurred in connection with such visit or inspection for more than
              one
              (1) visit per year. No notice shall be required during the existence and
              continuance of any Event of Default.

             

            Section
              4.7  Use
              of
              Proceeds.

             

            Borrowers
              will use the proceeds of the Term Loans solely for payment of amounts
              due in
              respect of an acquisition of equity interests or assets contemplated
              by the
              Financing Documents, transaction fees incurred in connection with the
              Financing
              Documents and the refinancing on the Closing Date of Debt. No portion
              of the
              proceeds of the Loans will be used for family, personal, agricultural
              or
              household use.

             

            Section
              4.8  [Reserved]

             

            Section
              4.9  [Reserved]

             

            Section
              4.10  Environmental
              Covenants.

             

            (a)  Each
              Borrower covenants and agrees that so long as such Borrower owns, manages,
              is in
              possession of, or otherwise controls the operation of the Projects:
              (i) all
              uses and operations on or of the Projects, whether by such Borrower
              or any other
              Person, shall be in compliance with all Environmental Laws and permits
              issued
              pursuant thereto in all material respects; (ii) there shall be no material
              Releases of Hazardous Materials in, on, under or from the Projects;
              (iii) there shall be no Hazardous Materials in, on, or under the Projects,
              except those that are both (A) in compliance with all Environmental Laws in
              all material respects and with permits issued pursuant thereto, if
              and to the
              extent required, and (B) (I) in amounts not in excess of that
              necessary to operate the Projects for the purposes set forth herein
              or
              (II) fully disclosed to and approved by Administrative Agent in writing;
              (iv) each Borrower shall keep the Projects free and clear of all
              Environmental Liens; (v) each Borrower shall, at its sole cost and expense,
              fully and expeditiously cooperate in all activities pursuant to Subsection
              4.10(c) below,
              including but not limited to providing all relevant information and
              making
              knowledgeable persons available for interviews; (vi) each Borrower shall,
              at its sole cost and expense, perform any environmental site assessment
              or other
              investigation of environmental conditions in connection with the Projects,
              pursuant to any reasonable written request of Administrative Agent,
              upon
              Administrative Agent's reasonable belief that any Project is not in
              compliance
              with all Environmental Laws in all material respects, and share with
              Administrative Agent the reports and other results thereof, and Administrative
              Agent and Lenders shall be entitled to rely on such reports and other
              results
              thereof; (vii) each Borrower shall, at its sole cost and expense, comply
              with all reasonable written requests of Administrative Agent to
              (A) reasonably effectuate remediation of any Hazardous Materials in, on,
              under or from the Projects as required by Environmental Laws; and
              (B) comply in all material respects with any Environmental Law;
              (viii) Borrower shall not allow any Operating Lessee or other user of the
              Projects to violate any Environmental Law; and (ix) each Borrower shall
              immediately notify Administrative Agent in writing after it has become
              aware of
              (A) any material Release or threatened Release of Hazardous Materials in,
              on, under, from or migrating towards the Projects; (B) any non-compliance
              with any Environmental Laws related in any way to the Projects in any
              material
              respects; (C) any actual or potential Environmental Lien against the
              Projects; (D) any required or proposed remediation of environmental
              conditions relating to the Projects; and (E) any written or other
              communication of which any Borrower becomes aware from any source whatsoever
              (including but not limited to a Governmental Authority) effecting or
              relating in any way to Hazardous Materials and the Borrowers or any
              Project.

             

            
              
                -44-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            (b)  Administrative
              Agent and any other Person designated by Administrative Agent, including
              but not
              limited to any representative of a Governmental Authority, and any
              environmental
              consultant, and any receiver appointed by any court of competent jurisdiction,
              shall have the right, but not the obligation, to enter upon the Projects
              at all
              reasonable times to assess any and all aspects of the environmental
              condition of
              the Projects and its use, including but not limited to conducting any
              environmental assessment or audit (the scope of which shall be determined
              in
              Administrative Agent's sole discretion) and taking samples of soil,
              groundwater or other water, air, or building materials, and conducting
              other
              invasive testing, provided, however, that so long as no Default has
              occurred and
              is continuing, Borrower shall have the right to approve any sampling
              or other
              invasive testing, such approval not to be unreasonably withheld. Each
              Borrower
              shall cooperate with and provide access to Administrative Agent and
              any such
              person or entity designated by Administrative Agent.

             

            (c)  Each
              Borrower shall establish and comply with that any operations and maintenance
              program if recommended by Administrative Agent's environmental consultant
              with
              respect to the Projects, in form and substance reasonably acceptable
              to
              Administrative Agent, and prepared by an environmental consultant reasonably
              acceptable to Administrative Agent, which program may address any
              asbestos-containing material or lead based paint that may now or in
              the future
              be detected at or on the Projects. Without limiting the generality
              of the
              preceding sentence, Administrative Agent may require to the extent
              reasonable
              under the circumstances (i) periodic notices or reports to Administrative
              Agent in form, substance and at such intervals as Administrative Agent
              may
              specify, (ii) an amendment to such operations and maintenance program to
              address changing circumstances, laws or other matters, (iii) at each
              Borrower's sole expense, supplemental examination of the Projects by
              consultants
              specified by Administrative Agent, (iv) access to the Projects by
              Administrative Agent, its agents or servicer, to review and assess
              the
              environmental condition of the Projects and each Borrower's compliance
              with any
              operations and maintenance program, and (v) variation of the operations and
              maintenance program in response to the reports provided by any such
              consultants.

             

            
              
                -45-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            (d)  If
              any
              Release or disposal of Hazardous Materials shall occur or shall have
              occurred on
              any real property or any other assets of any Borrower, such Borrower
              will cause
              the prompt containment and removal of such Hazardous Materials and
              the
              remediation of such real property or other assets as is necessary to
              comply in
              all material respects with all Environmental Laws and to preserve the
              value of
              such real property or other assets. Without limiting the generality
              of the
              foregoing, each Borrower shall comply with each Environmental Law requiring
              the
              performance at any Project by any Borrower or any other Credit Party
              of
              activities in response to the Release or threatened Release of a Hazardous
              Material.

             

            (e)  If
              requested by Administrative Agent, Borrowers
              will provide Administrative Agent within thirty (30) days after written
              demand therefor with a bond, letter of credit or similar financial
              assurance
              evidencing to the reasonable satisfaction of Administrative Agent that
              sufficient funds are available to pay the cost of removing, treating
              and
              disposing of any Hazardous Materials or Hazardous Materials Contamination
              and
              discharging any assessment which may be established on any property
              as a result
              thereof, such demand to be made, if at all, upon Administrative Agent's
              reasonable business determination that the failure to remove, treat
              or dispose
              of any Hazardous Materials or Hazardous Materials Contamination, or
              the failure
              to discharge any such assessment, could reasonably be expected to have
              a
              Material Adverse Effect.

             

            Section
              4.11  Deferred
              Maintenance. 

             

            Borrowers
              shall complete all deferred maintenance items reflected on Schedule
              4.11
              within
              twelve (12) months after the Closing Date.

             

            Section
              4.12  Further
              Assurances.

             

            (a)  Each
              Borrower will at its own cost and expense, cause to be promptly and
              duly taken,
              executed, acknowledged and delivered all such further acts, documents
              and
              assurances as may from time to time be necessary or as Administrative
              Agent or
              the Required Lenders may from time to time reasonably request in order
              to carry
              out the intent and purposes of the Financing Documents and the transactions
              contemplated thereby, including all such actions to establish, create,
              preserve,
              protect and perfect a first priority Lien (subject only to Permitted
              Liens) in favor of Administrative Agent for the benefit of the Lenders on
              the Collateral (including Collateral acquired after the date hereof),
              including
              on any and all assets of each Credit Party, whether now owned or hereafter
              acquired.

             

            
              
                -46-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            (b)  Upon
              receipt of an affidavit of an officer of Administrative Agent or a
              Lender as to
              the loss, theft, destruction or mutilation of any Note or any other
              Financing
              Document which is not of public record, and, in the case of any such
              mutilation,
              upon surrender and cancellation of such Note or other applicable Financing
              Document, Borrowers will issue, in lieu thereof, a replacement Note
              or other
              applicable Financing Document, dated the date of such lost, stolen,
              destroyed or
              mutilated Note or other Financing Document in the same principal amount
              thereof
              and otherwise of like tenor.

             

            Section
              4.13  Litigation. 

             

            Borrowers
              will give prompt written notice to Administrative Agent of any litigation
              or
              governmental proceedings pending or threatened (in writing) against
              Borrowers or ARC which might have a Material Adverse Effect with respect
              to
              Borrowers, any other Credit Party or any Project.

             

            Section
              4.14  Intentionally
              deleted. 

             

            Section
              4.15  Power
              of Attorney.

             

            Each
              of
              the officers of Administrative Agent is hereby irrevocably made, constituted
              and
              appointed the true and lawful attorney for Borrowers (without requiring
              any of
              them to act as such) with full power of substitution to do the following,
              all during the existence of an Event of Default: (a) endorse the name of
              Borrowers upon any and all checks, drafts, money orders, and other
              instruments
              for the payment of money that are payable to Borrowers and constitute
              collections on Borrowers' Accounts; (b) execute in the name of Borrowers
              any financing statements, schedules, assignments, instruments, documents,
              and
              statements that Borrowers are obligated to give Administrative Agent
              under this
              Agreement; (c) after the occurrence of a Default take any action Borrowers
              are required to take under this Agreement; and (d) do such other and
              further acts and deeds in the name of Borrowers that Administrative
              Agent
              reasonably may deem necessary or desirable to enforce any Account or
              other
              Collateral or perfect Administrative Agent's security interest or Lien
              in any
              Collateral. This
              power
              of attorney shall be irrevocable and coupled with an interest.

             

            Section
              4.16  Estoppel
              Certificates. 

             

            After
              written request by Administrative Agent, Borrowers, within fifteen
              (15) days and at their expense, will furnish Administrative Agent with a
              statement, duly acknowledged and certified, setting forth (a) the amount of
              the original principal amount of the Notes, and the unpaid principal
              amount of
              the Notes, (b) the rate of interest of the Notes, (c) the date
              payments of interest and/or principal were last paid, (d) any offsets or
              defenses to the payment of the Obligations, and if any are alleged,
              the nature
              thereof, (e) that the Notes and this Agreement have not been modified or if
              modified, giving particulars of such modification, and (f) that there has
              occurred and is then continuing no Default or if such Default exists,
              the nature
              thereof, the period of time it has existed, and the action being taken
              to remedy
              such Default.

             

            
              
                -47-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            ARTICLE
              5  

            NEGATIVE
              COVENANTS

             

            Each
              Borrower agrees that, so long as any Credit Exposure exists:

             

            Section
              5.1  Debt. 

             

            No
              Borrower will, directly or indirectly, create, incur, assume, guarantee
              or
              otherwise become or remain directly or indirectly liable with respect
              to, any
              Debt, except for: (a) Debt under the Financing Documents;
              (b) unsecured Debt in the form of trade payables aged in a manner
              consistent with ARC's past business practices; but in no event more
              than ninety
              (90) days; (c) Debt incurred or assumed for the purpose of financing
              all or any part of the cost of acquiring any equipment used by a Borrower
              in the
              operation of a Project in the Ordinary Course of Business (including
              through
              Capital Leases), in an aggregate principal amount at any time outstanding
              not
              greater than $100,000; and (d) other Debt approved by Administrative Agent
              from time to time in its sole discretion.

             

            Section
              5.2  Liens.

             

            No
              Borrower will, directly or indirectly, create, assume or suffer to
              exist any
              Lien on any asset now owned or hereafter acquired by it, except for
              Permitted
              Liens.

             

            Section
              5.3  Contingent
              Obligations.

             

            No
              Borrower will, directly or indirectly, create, assume, incur or suffer
              to exist
              any Contingent Obligations, except for:

             

            (a)  Contingent
              Obligations arising in respect of the Debt under the Financing
              Documents;

             

            (b)  Contingent
              Obligations resulting from endorsements for collection or deposit in
              the
              Ordinary Course of Business;

             

            (c)  Contingent
              Obligations arising under indemnity agreements with title insurers
              to cause such
              title insurers to issue to Administrative Agent mortgagee title insurance
              policies;
              and

             

            (d)  Contingent
              Obligations arising with respect to customary indemnification obligations
              in
              favor of purchasers in connection with dispositions permitted under
Section
              2.12.

             

            Section
              5.4  Restricted
              Distributions. 

             

            No
              Borrower will, directly or indirectly, declare, order, pay, make or
              set apart
              any sum for any Restricted Distribution at any time during which any
              monetary
              Default or Event of Default has occurred and is then continuing, or
              if such
              Restricted Distribution is reasonably likely to result in a Default
              or Event of
              Default (including, without limitation, any violation of any financial
              covenant
              on a pro forma basis).

             

            
              
                -48-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            Section
              5.5  Restrictive
              Agreements.

             

            No
              Borrower will, directly or indirectly enter into or assume any agreement
              (other
              than the Financing Documents) prohibiting the creation or assumption of any
              Lien upon its properties or assets, whether now owned or hereafter
              acquired.

             

            Section
              5.6  Payments
              and Modifications of Subordinated Debt.

             

            No
              Borrower will, directly or indirectly declare, pay, make or set aside
              any amount
              for payment in respect of any Subordinated Debt except as may be permitted
              by
              the applicable Subordination Agreement.

             

            Section
              5.7  Consolidations,
              Mergers and Sales of Assets.

             

            Except
              for
              a Sale of a Project permitted by Section
              2.12,
              no
              Borrower will, directly or indirectly (a) consolidate or merge with or into
              any other Person, or (b) consummate any Asset Dispositions other than
              dispositions of personal property assets for cash and fair value that
              the
              applicable Borrower determines in good faith is no longer used or useful
              in the
              business of such Borrower if
              all of
              the following conditions are met: (i) after giving effect to any such
              disposition, Borrowers are in compliance on a pro forma basis with
              the covenants
              set forth in Article 6 recomputed for the most recently ended month and
              quarter for which information is available as though such disposition
              and
              repayment had occurred during such month and quarter and is in compliance
              with
              all other terms and conditions of this Agreement; and (ii) no Default or
              Event of Default then exists or would result from any such
              disposition.
              

             

            Section
              5.8  Purchase
              of Assets.

             

            (a)  No
              Borrower will, directly or indirectly (a) acquire or enter into any
              agreement to acquire any assets other than in the Ordinary Course of
              Business;
              (b) create, acquire or enter into any agreement to create or acquire any
              Subsidiary; (c) engage or enter into any agreement to engage in any joint
              venture or partnership with any other Person; or (d) except as permitted by
Section
              2.12,
              acquire
              or own or enter into any agreement to acquire or own any investment
              in any
              Person.

             

            Section
              5.9  Transactions
              with Affiliates.

             

            Except
              as
              otherwise disclosed on Schedule
              5.9,
              and
              except for transactions that are disclosed to Administrative Agent
              in advance of
              being entered into and which contain terms that are no less favorable
              to the
              applicable Borrower than those which might be obtained from a third
              party not an
              Affiliate of any Credit Party, no Borrower will, directly or indirectly,
              enter
              into or permit to exist any transaction (including the purchase, sale,
              lease or
              exchange of any property or the rendering of any service) with any
              Affiliate of any Borrower. 

             

            
              
                -49-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            Section
              5.10  Modification
              of Organizational Documents.

             

            No
              Borrower will, directly
              or indirectly, amend
              or
              otherwise modify any Organizational Documents of such Person, except
              for such
              amendments or other modifications required under this Agreement, or
              by
              applicable Law and fully disclosed to Administrative Agent, or amendments
              which
              are not material, provided that such amendments are submitted to Lender
              no later
              than five (5) Business Days before becoming effective.

             

            Section
              5.11  Modification
              of Certain Agreements.

             

            Without
              Administrative Agent's prior written consent, not to be unreasonably
              withheld,
              no Borrower will, directly or indirectly, amend or otherwise modify
              any
              Management Agreement or any other Material Contract, which amendment
              or
              modification in any case:

             

            (a)  is
              contrary to the terms of this Agreement or any other Financing
              Document;

             

            (b)  could
              reasonably be expected to be adverse to the rights, interests or privileges
              of
              the Administrative Agent or the Lenders or their ability to enforce
              the
              same;

             

            (c)  results
              in
              the imposition or expansion in any material respect of any restriction
              or burden
              on any Borrower; or

             

            (d)  reduces
              in
              any material respect any rights or benefits of any Borrower (it being
              understood
              and agreed that any such determination shall be in the reasonable discretion
              of
              the Administrative Agent).

             

            Each
              Borrower shall, prior to entering into any amendment or other modification
              of
              any of the foregoing documents, deliver to Administrative Agent reasonably
              in
              advance of the execution thereof, any final or execution form copy
              of amendments
              or other modifications to such documents.

             

            Section
              5.12  Fiscal
              Year.

             

            No
              Borrower will change its Fiscal Year without the prior written consent
              of
              Administrative Agent.

             

            Section
              5.13  Conduct
              of Business.

             

            No
              Borrower will, directly or indirectly, engage in any line of business
              other than
              those businesses engaged in on the Closing Date and businesses reasonably
              related thereto.

             

            
              
                -50-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            Section
              5.14  Operating
              Leases.

             

            No
              Borrower will lease any Licensed Location under any Operating Lease
              without
              Administrative Agent's consent.

             

            Section
              5.15  Lease
              Payments.

             

            No
              Borrower will, directly
              or indirectly, incur
              or
              assume (whether pursuant to a Guarantee or otherwise) any liability for
              rental payments under a lease if, after giving effect thereto, the
              aggregate
              amount of minimum lease payments that Borrowers have so incurred or
              assumed will
              exceed, $50,000 per Project for any calendar year under all such leases
              (excluding Capital Leases).

             

            Section
              5.16  Limitation
              on Sale and Leaseback Transactions.

             

            No
              Borrower will, directly or indirectly, enter into any arrangement with
              any
              Person whereby in a substantially contemporaneous transaction any Borrower
              sells
              or transfers all or substantially all of its right, title and interest
              in an
              asset and, in connection therewith, acquires or leases back the right
              to use
              such asset.

             

            Section
              5.17  Compliance
              with Anti-Terrorism Laws.

             

            Administrative
              Agent hereby notifies Borrowers that pursuant to the requirements of
              Anti-Terrorism Laws, and Administrative Agent's policies and practices,
              Administrative Agent is required to obtain, verify and record certain
              information and documentation that identifies Borrowers and its principals,
              which information includes the name and address of each Borrower and
              its
              principals and such other information that will allow Administrative
              Agent to
              identify such party in accordance with Anti-Terrorism Laws. No Borrower
              will,
              directly or indirectly, knowingly enter into any Financing Documents
              or Material
              Contracts with any Person listed on the OFAC Lists. Each Borrower shall
              immediately notify Administrative Agent if such Borrower has knowledge
              that any
              Borrower or any additional Credit Party is listed on the OFAC Lists
              or
              (a) is convicted on, (b) pleads nolo contendere to, (c) is
              indicted on, or (d) is arraigned and held over on charges involving money
              laundering or predicate crimes to money laundering. No Borrower will,
              directly
              or indirectly, (i) conduct any business or engage in any transaction or
              dealing with any Blocked Person, including, without limitation, the
              making or
              receiving of any contribution of funds, goods or services to or for
              the benefit
              of any Blocked Person, (ii) deal in, or otherwise engage in any transaction
              relating to, any property or interests in property blocked pursuant
              to Executive
              Order No. 13224, any similar executive order or other Anti-Terrorism Law,
              or (iii) engage in or conspire to engage in any transaction that evades or
              avoids, or has the purpose of evading or avoiding, or attempts to violate,
              any
              of the prohibitions set forth in Executive Order No. 13224 or other
              Anti-Terrorism Law. 

             

            
              
                -51-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            ARTICLE
              6

            FINANCIAL
              COVENANTS

             

            Borrowers
              agree that, so long as any Credit Exposure exists:

             

            Section
              6.1  Definitions.

             

            (a)  As
              used in
              this Article 6, the following terms have the following meanings:

             

            (i)  "Debt
              Yield Ratio"
              means
              the ratio (expressed as a percentage) of Net Operating Income (measured for
              the trailing six (6) months and on an annualized basis) to the average
              outstanding balance of the Loans at the time of determination.

             

            (ii)  "Net
              Operating Income"
              means
              "Operating
              Revenue"
              for the
              applicable period annualized minus
              "Operating
              Expenses"
              for the
              immediately prior twelve (12) month period.

             

            (iii)  "Operating
              Revenue"
              means
              the sum of the following, based on customary industry accounting practices
              and
              reasonable adjustments made by Administrative Agent, and adjusted,
              however, to
              reflect a vacancy factor equal to the greater of actual vacancy or
              five percent
              (5%):

             

            (A)  for
              Licensed Locations with private pay patients, all amounts collected
              by or on
              behalf of Licensed Operator from residents or patients of the Licensed
              Locations
              (including, without limitation, rent, patient day charges, assisted
              living
              services, rehabilitation service charges, non-refundable deposits,
              entrance fees
              and property fees), as recognized revenue under GAAP, excluding:
              (1) nonrecurring income, extraordinary items, revenues items of the type
              described in subpart (C) below and other non-property related income (each
              as reasonably determined by Administrative Agent); and (2) income from
              residents (i) that are thirty (30) or more days delinquent,
              (ii) that have been thirty (30) or more days delinquent two
              (2) or more times during the immediately prior twelve (12) month
              period, plus

             

            (B)  without
              duplication, all revenues of Licensed Operator in the form of reimbursements
              under Third Party Payor Programs for services rendered during the preceding
              three (3) months (and specifically excluding any cost report settlements or
              other payments received in respect of services rendered prior to the
              preceding
              three (3) months), plus

             

            (C)  without
              duplication, other operating revenues of Licensed Operator not to exceed
              $1,000.00 per month for vending, catering and special events, food
              and beverage,
              parking, subleases and other occupancy payments (other than late fees
              and
              interest income) based upon collections and that are a normal, recurring
              operating revenue, minus

             

            
              
                -52-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            (D)  rebates,
              free rent and other concessions made by Licensed Operator (or Manager) to
              induce residents to enter into Resident Agreements.

             

            (iv)  "Operating
              Expenses"
              means
              the sum of the following for any period: the expenses incurred by Licensed
              Operators and Manager in connection with operating the Projects (including
              any
              amounts of corporate overhead expense of ARC actually allocated by
              ARC to
              Borrowers and/or the Projects, if any), determined on a stabilized
              accrual basis
              for such period (as determined in accordance with GAAP, and as reasonably
              adjusted by Administrative Agent), including, without limitation:
              (1) recurring expenses (e.g., real estate tax and insurance expenses or
              deposits, tenant improvements, leasing commissions, carpeting replacement,
              appliance and drapery replacement and such others as determined by
              Lender) which are not paid out of the replacement reserve,
              (2) management fees (whether paid or not) in an amount equal to the
              greater of actual fees accrued or five percent (5%) of effective gross
              income for the Projects, (3) a replacement reserve (whether reserved or
              not) of not less than $300 per bed per annum, and (4) all interest and
              fee obligations accruing under any Debt (other than scheduled payments
              due and
              owing under the Loan). Insurance expenses shall be calculated at the
              greater of
              (1) actual annual insurance premiums plus claims paid or accrued (without
              duplication) for which no insurance coverage is available, or (2) $500
              per bed, per year. "Operating
              Expenses"
              shall
              specifically exclude income taxes, depreciation, and amortization.

             

            Section
              6.2  [Reserved]

             

            Section
              6.3  [Reserved]

             

            Section
              6.4  [Reserved]

             

            Section
              6.5  Debt
              Yield Covenant.

             

            Borrowers
              covenant and agree to maintain the following Debt Yield Ratio for the
              applicable
              period shown below throughout the term of the Loan: 

             

            
              	
                      Testing
                        Period

                    	
                      Minimum
                        Debt Yield Ratio

                    
	
                      Each
                        six (6) month period ending June 30, 2006 and 
September 30,
                        2006

                    	
                      8.00%

                    
	
                      Each
                        six (6) month period ending December 31, 2006, March 31, 2007,
                        
June 30, 2007 and September 30, 2007

                    	
                      10.50%

                    
	
                      Each
                        six (6) month period thereafter

                    	
                      12.00%

                    


            

             

            Determinations
              of compliance with the covenant in this Section
              6.5
              (the
              "Debt
              Yield Covenant") shall
              be calculated as of the first (1st) day
              of each calendar quarter (commencing with a calculation as of July 1,
              2006).

             

            
              
                -53-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            Section
              6.6  Evidence
              of Compliance.

             

            Borrowers
              shall furnish to Lender, concurrently with the financial reports and
              documentation required by Section
              4.1(b)(v),
              evidence
              (in form and content satisfactory to Lender) of Borrowers' compliance with
              the covenants in this Article and evidence that no Event of Default
              specified in
              this Article has occurred. Such evidence shall include, without limitation,
              (a) a statement and report, on a form approved by Administrative Agent,
              detailing Borrowers' calculations, and (b) if requested by Administrative
              Agent, back-up documentation (including, without limitation, invoices,
              receipts
              and other evidence of costs incurred during such quarter as Administrative
              Agent
              shall reasonably require) evidencing the propriety of the calculations.


             

            Section
              6.7  Financial
              Covenant Default.

             

            (a)  In
              the
              event that Borrowers fail to satisfy the Debt Yield Covenant as of
              any
              calculation date (i.e., the date as of which covenant compliance is
              calculated;
              not the date on which the determination of compliance or non-compliance
              is
              made), Borrowers shall, within ten (10) calendar days after the date the
              financial reports and compliance certificates required by Sections
              4.1(b)(v) and
              6.6
              are due,
              pay to Administrative Agent, as a mandatory prepayment, an amount (a
              "Covenant
              Prepayment") which,
              if such amount were applied against the outstanding principal balance
              of the
              Loans, would be sufficient to satisfy the Debt Yield Covenant as of
              such
              calculation date, calculating the outstanding principal balance of
              the Loans
              after giving proforma effect to such Covenant Prepayment. Failure to
              satisfy the
              Debt Yield Covenant shall be deemed an Event of Default under Section
              11.1
              only if
              Borrowers fail to make the Covenant Prepayment, together with the proportionate
              amount of the Exit Fee owing with respect thereto within said ten (10) day
              period.

             

            (b)  Notwithstanding
              the provisions of Section 6.7(a), if Borrowers fail to satisfy the
              Debt Yield
              Covenant for the first or second time during the term of the Loans
              and no
              monetary Default or Event of Default has occurred and is continuing,
              then,
              instead of applying the required Covenant Prepayment to the Loans,
              Administrative Agent shall hold such Covenant Prepayment as a cash
              collateral
              deposit ("Covenant
              Deposit") without
              interest, and the proportionate amount of the Exit Fee otherwise payable
              with
              respect thereto will not be payable except as and until provided below.
              If at
              any time after Administrative Agent receives a Covenant Deposit, Borrowers
              satisfy the Debt Yield Covenant (without having to make a Covenant
              Prepayment
              and without taking into account the Covenant Deposit) for two
              (2) consecutive calendar quarters and provided that the Covenant Deposit
              has not theretofore been applied to the Indebtedness as a result of
              the
              occurrence of an Event of Default or the occurrence of a third failure
              to
              satisfy the Debt Yield Covenant, the Covenant Deposit shall be returned
              to
              Borrowers. The Covenant Deposit, if any, shall be given proforma application
              to
              principal balance of the Loans solely for purposes of determining whether
              an
              additional amount should be paid to Administrative Agent and added
              to the
              Covenant Deposit if the Debt Yield Covenant is not satisfied for a
              second time.
              If the Debt Yield Covenant is not satisfied (whether or not a Covenant
              Prepayment is made) for a third time, then (i) Administrative Agent
              shall no longer be required to hold any Covenant Prepayments as a Covenant
              Deposit and all subsequent Covenant Prepayments shall be applied to
              the
              principal balance of the Loans and (ii) the Covenant Deposit, if any, shall
              be applied to the principal balance of the Loans and the proportionate
              amount of
              the Exit Fee with respect thereto shall be due and payable within ten
              (10) calendar days after the date of determination of non-compliance. The
              Covenant Deposit shall be Collateral. If an Event of Default occurs
              at any time,
              the Covenant Deposit may be immediately applied to the Indebtedness
              in such
              order as Administrative Agent determines and the Exit Fee shall be
              due with
              respect thereto.

             

            
              
                -54-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            ARTICLE
              7 

            CONDITIONS

             

            Section
              7.1  Conditions
              to Closing. 

             

            The
              obligation of each Lender to make the initial Loans shall be subject
              to the
              receipt or waiver by Administrative Agent of each agreement, document
              and
              instrument set forth on the closing checklist prepared by Administrative
              Agent
              or its counsel and provided to Borrower in anticipation of Closing,
              each in form
              and substance satisfactory to Administrative Agent, and to the satisfaction
              of
              the following conditions precedent, each to the satisfaction of Administrative
              Agent in its sole discretion:

             

            (a)  evidence
              of the consummation of the transactions (other than the funding of
              the Loans and
              the closing of any acquisition for which the proceeds of the Loans
              are purchase
              money) contemplated by the Financing Documents; 

             

            (b)  the
              payment of all fees, expenses and other amounts due and payable under
              each
              Financing Document;

             

            (c)  the
              absence, since September 1, 2005, of any material adverse change in
              any aspect
              of the business, operations, properties, prospects or condition (financial
              or
              otherwise) of any Credit Party, or any event or condition which could
              reasonably be expected to result in such a material adverse change;
              and

             

            (d)  evidence
              that ARC and a Prudential Entity have invested a minimum of $31,775,000
              of cash
              equity into the Borrowers, and such equity infusion has been used by
              Borrowers
              to fund the transactions under the Financing Documents and otherwise
              for working
              capital purposes, and all portions of such cash equity infusion which
              are not
              used on the Closing Date to fund the transactions under the Financing
              Documents
              shall remain available to Borrowers for working capital purposes and
              shall be
              unencumbered (other than by any Lien of Administrative Agent).

             

            Section
              7.2  Searches.

             

            Before
              Closing, and thereafter (as and when determined by Administrative Agent
              in its
              discretion), Administrative Agent shall have the right to perform,
              all at
              Borrowers' expense, the searches described in clauses (a), (b) and
              (c) below against Borrowers and any other Credit Party, the results of
              which are to be consistent with Borrowers' representations and warranties
              and
              covenants under this Agreement:

             

            
              
                -55-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            (a)  UCC
              searches with the Secretary of State and local filing offices of each
              jurisdiction where the applicable Person maintains its executive offices,
              a
              place of business, or assets and the jurisdiction in which the applicable
              Person
              is organized;

             

            (b)  Judgment,
              pending litigation, federal tax lien, personal property tax lien, and
              corporate
              and partnership tax lien searches, in each jurisdiction searched under
              clause
              (a) above; 

             

            (c)  Real
              property title and lien searches in each jurisdiction in which any
              real property
              Collateral is located; and

             

            (d)  Searches
              of applicable corporate, limited liability company, partnership and
              related
              records to confirm the continued existence, organization and good standing
              of
              the applicable Person and the exact legal name under which such Person
              is
              organized.

             

            Section
              7.3  Certain
              Post-Closing Obligations.

             

            Borrowers
              shall complete and/or satisfy the obligations described on Schedule
              7.3
              within
              the time periods set forth therein. 

             

            ARTICLE
              8 

            REGULATORY
              MATTERS

             

            Each
              Borrower agrees that, so long as any Credit Exposure exists (for the
              avoidance
              of doubt, any provisions relating to any CON with respect to any Licensed
              Location shall be applicable only to the extent CON is required or
              may hereafter
              be required under applicable Law with respect to such Licensed
              Location):

             

            Section
              8.1  Representations
              and Warranties Pertaining to Licensed Locations.

             

            To
              induce
              Administrative Agent and Lenders to enter into this Agreement and to
              make the
              Loans and other credit accommodations contemplated hereby, each Borrower
              hereby
              represents and warrants to Administrative Agent and each Lender that:
              

             

            (a)  None
              of
              the Licensed Locations are in violation of any Health Care Laws, except
              where
              any such violation would not have a Material Adverse Effect. 

             

            (b)  Each
              Borrower that is the owner of a Licensed Location has (i) or is in the
              process of obtaining each Healthcare Permit and other rights from,
              and has made
              all declarations and filings with, all applicable Governmental Authorities,
              all
              self regulatory authorities and all courts and other tribunals necessary
              to
              engage in the ownership (but not operation) of the Licensed Location, and
              (ii) no knowledge that any Governmental Authority is considering limiting,
              suspending or revoking any such Healthcare Permit. All Healthcare Permits
              which
              have been issued, if any, are valid and in full force and effect. Each
              Borrower
              who is the owner of a Licensed Location is or, when the applicable
              Healthcare
              Permit is issued, will be in material compliance with the terms and
              conditions
              of all such Healthcare Permits except where failure to be in such compliance
              or
              for a Healthcare Permit to be valid and in full force and effect would
              not have
              a Material Adverse Effect.

             

            
              
                -56-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            (c)  If
              applicable, each Licensed Location has received and maintains accreditation
              in
              good standing and without impairment by all applicable accrediting
              organizations, to the extent required by law (including any equivalent
              regulation) or the terms of any Lease pertaining to the Licensed
              Location.

             

            (d)  No
              Borrower is a participant in any federal program whereby any federal,
              state or
              local government or quasi-governmental body, agency, board or other
              authority
              may have the right to recover funds by reason of the advance of federal
              funds,
              including, without limitation, those authorized under the Hill-Burton
              Act (42
              U.S.C. 291, et seq.). No Borrower has received notice, and no Borrower
              is aware
              of any violation of applicable anti-trust laws of any federal, state
              or local
              government or quasi-governmental body, agency, board or other authority
              pertaining to the Licensed Locations.

             

            (e)  Each
              Borrower that is the owner of a Licensed Location is the owner of record
              of any
              CON pertaining to such Licensed Location. If under applicable Healthcare
              Laws,
              the CON for a Licensed Location operated by a Borrower merges into
              a
              state-issued license to operate the Licensed Location, then each such
              Borrower
              is the owner of record of any CON pertaining to such Licensed
              Location.

             

            (f)  Each
              Licensed Location located in a state where licensing as an assisted
              living
              facility is required is duly licensed as an assisted living facility
              under the
              applicable laws of the state where the Licensed Location is located.
              The
              licensed bed or unit capacity of the Licensed Locations is shown on
Schedule 8.1.
              None of
              the Borrowers has granted to any third party the right to reduce the
              number of
              licensed beds or units in the Licensed Location or the right to apply
              for
              approval to move any and all of the licensed beds or units in the Licensed
              Location to any other location and there are no proceedings or contemplated
              to
              reduce the number of licensed beds in the Licensed Location. 

             

            (g)  The
              Licensed Locations and Licensed Operators do not have any uncorrected
              licensure
              deficiencies.

             

            (h)  Each
              of
              the representations and warranties of the Licensed Operators set forth
              in
Section
              8.2
              below are
              true, complete and correct.

             

            (i)  If
              (i) any Borrower or is or becomes a "covered entity"
              within
              the meaning of HIPAA, or (ii) any Borrower is or becomes subject to the
              "Administrative Simplification"
              provisions of HIPAA, such Borrower is HIPAA Compliant. 

             

            Section
              8.2  Representations
              and Warranties Pertaining to Licensed Operators.

             

            To
              induce
              Administrative Agent and Lenders to enter into this Agreement and to
              make the
              Loans and other credit accommodations contemplated hereby, Borrowers
              hereby
              represent and warrant the following to Administrative Agent: 

             

            
              
                -57-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            (a)  Each
              of
              the representations and warranties of Borrowers set forth in Sections
              8.1(a) through
              8.1(f) above
              are
              true, complete and correct.

             

            (b)  No
              Licensed Operator is in violation of any of the Health Care Laws, except
              where
              any such violation would not have a Material Adverse Effect. 

             

            (c)  Each
              Licensed Operator has (i) or is in the process of obtaining each Healthcare
              Permit and other rights from, and has made all declarations and filings
              with,
              all applicable Governmental Authorities, all self regulatory authorities
              and all
              courts and other tribunals necessary to engage in the business conducted
              by it
              except for such Healthcare Permits with respect to which the failure
              to obtain
              would not have a Material Adverse Effect and (ii) no knowledge that any
              Governmental Authority is considering limiting, suspending or revoking
              any such
              Healthcare Permit. All Healthcare Permits which have been issued, if
              any, are
              valid and in full force and effect. Each Licensed Operator is or upon
              issuance
              of the applicable Healthcare Permits, will be in material compliance
              with the
              terms and conditions of all such Healthcare Permits except where failure
              to be
              in such compliance or for a Healthcare Permit to be valid and in full
              force and
              effect would not have a Material Adverse Effect.

             

            (d)  To
              the
              extent a Licensed Operator submits claims to Governmental Payors, the
              Licensed
              Operator has the requisite provider number and, if required, Healthcare
              Permits,
              to bill Governmental Payors, except where the failure to have such
              provider
              number or Healthcare Permits would not have a Material Adverse Effect.
              To the
              extent a Licensed Operator submits claims to Third Party Payors, the
              Licensed
              Operator has any Healthcare Permit necessary to bill Third Party Payors
              except
              where the failure to have such Healthcare Permit would not have a Material
              Adverse Effect. There is no investigation, audit, claim review, or
              other action
              pending or, to the knowledge of any Licensed Operator, threatened which
              could
              result in a revocation, suspension, termination, probation, restriction,
              limitation, or non-renewal of any provider number or other Healthcare
              Permit or
              result in a Licensed Operator's or Licensed Location's exclusion from
              any
              Governmental Payor program or Third Party Payor Program, nor has any
              Third Party
              Payor Program made any decision not to renew any provider agreement
              related to
              the Licensed Locations, nor have the Licensed Locations or Licensed
              Operators
              made any decision not to renew any provider agreement, nor is there
              any action
              pending or threatened to impose material intermediate or alternative
              sanctions
              with respect to the Licensed Locations.

             

            (e)  All
              Medicare, Medicaid, and private insurance cost reports and financial
              reports
              submitted by the Licensed Operator will be when submitted materially
              accurate
              and complete and will not be misleading in any material respects. No
              cost
              reports for the Licensed Locations remain "open" or unsettled, except
              as
              otherwise disclosed to Administrative Agent.

             

            (f)  If
              applicable, each Licensed Operator has received and maintains accreditation
              in
              good standing and without impairment by all applicable accrediting
              organizations, to the extent required by law (including any equivalent
              regulation) or the terms of any Lease pertaining to the Licensed
              Location.

             

            
              
                -58-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            (g)  No
              Licensed Operator has been, or to its knowledge has been threatened
              to be,
              (i) excluded from U.S. health care programs pursuant to 42 U.S.C. §1320a7
              and related regulations, (ii) "suspended" or "debarred" from selling
              products to the U.S. government or its agencies pursuant to the Federal
              Acquisition Regulation, relating to debarment and suspension applicable
              to
              federal government agencies generally (48 C.F.R. Subpart 9.4), or other
              applicable laws or regulations, or (iii) made a party to any other action
              by any governmental authority that may prohibit it from selling products
              to any
              governmental or other purchaser pursuant to any Law.

             

            (h)  No
              statement of charges or deficiencies has been made or penalty enforcement
              action
              has been undertaken against the Licensed Locations or any Licensed
              Operator (or
              any officer, director or stockholder of any of the foregoing) during the
              last three (3) calendar years, and there have been no violations over the
              past three (3) calendar years which have threatened any certification of
              the Licensed Locations or any Licensed Operator for participation in
              Medicare,
              Medicaid or other Third Party Payor Programs. There are no current,
              pending or
              outstanding Medicare, Medicaid or Third Party Payor Program reimbursement
              audits
              or appeals pending at the Licensed Locations.

             

            (i)  Neither
              Licensed Operators nor the Licensed Locations are subject to any proceeding,
              suit or investigation by any federal, state or local government or
              quasi-governmental body, agency, board or authority or any other administrative
              or investigative body which may result in the imposition of a fine,
              alternative,
              interim or final sanction, a lower reimbursement rate for services
              rendered to
              eligible patients which has not been provided for on their respective
              financial
              statements, or which would have a material adverse effect on any Licensed
              Operator or the operation of the Licensed Locations, or which would
              result in
              the revocation, transfer, surrender, suspension or other impairment
              of the
              operating certificate or provider agreement of the Licensed Locations,
              nor any
              Healthcare Permit.

             

            (j)  There
              are
              no Resident Agreements with patients or residents of the Licensed Locations
              or
              with any other persons or organizations which deviate in any material
              adverse
              respect from the standard form customarily used at an assisted-living
              facility
              or which conflict with any statutory or regulatory requirements. All
              resident
              records at the Licensed Locations and in the possession of or created
              by the
              Licensed Operators, including resident trust fund accounts, are true
              and correct
              in all material respects.

             

            (k)  Neither
              the execution nor performance by Licensed Operator of any Financing
              Documents
              nor the exercise of any remedies by any party thereunder, will adversely
              affect
              Licensed Operator's right to receive payments and reimbursements from
              Governmental Payors with respect to the Licensed Locations, nor materially
              reduce the payments and reimbursements from Governmental Payors which
              Licensed
              Operator is receiving as of the date hereof. 

             

            (l)  Licensed
              Operator is not a participant in any federal program whereby any federal,
              state
              or local government or quasi-governmental body, agency, board or other
              authority
              may have the right to recover funds by reason of the advance of federal
              funds,
              including, without limitation, those authorized under the Hill-Burton
              Act (42
              U.S.C. 291, et seq.).

             

            
              
                -59-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            (m)  Licensed
              Operator has received no notice, and is not aware of any violation
              in any
              material respect of applicable antitrust laws, employment or landlord-tenant
              Laws of any federal, state or local government or quasi-governmental
              body,
              agency, board or other authority with respect to the Licensed Locations
              or
              Licensed Operator.

             

            (n)  No
              Licensed Operator, or any of its respective officers, directors, shareholders
              or
              members has ever been charged with or investigated for committing any
              violation
              of any state or federal statute or regulation involving fraudulent
              and abusive
              practices relating to its or his participation in state or federally
              sponsored
              reimbursement programs, including, without limitation, fraudulent billing
              practices. The Licensed Locations and, to the knowledge of the Licensed
              Operator, their contractors, have properly and legally billed all intermediaries
              and Third Party Payors for services rendered with respect to the Licensed
              Locations and have maintained their records to reflect such billing
              practices.
              No funds relating to the Licensed Operators are now, or, to the knowledge
              of the
              Licensed Operators will be, withheld by any Medicare intermediary or
              other Third
              Party Payor. Neither the Licensed Locations nor any other healthcare
              facilities
              managed by the Licensed Operator, nor any officer, director, shareholder
              or
              member of the Licensed Operator has engaged in any of 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 under any Healthcare Laws; (ii) knowingly and willfully making or
              causing to be made any false statement or representation of a material
              fact for
              use in determining rights to any benefit or payment under any Healthcare
              Laws;
              (iii) failing to disclose knowledge by a claimant of the occurrence of any
              event affecting the initial or continued right to any benefit or payment
              under
              any Healthcare Laws on its own behalf or on behalf of another, with
              intent to
              secure such benefit or payment fraudulently; (iv) knowingly and willfully
              soliciting or receiving any remuneration (including any kickback, bribe
              or
              rebate), directly or indirectly, overtly or covertly, in cash or in
              kind or
              offering to pay such remuneration (A) in return for referring an individual
              to a Person for the furnishing or arranging for the furnishing of any
              item or
              service for which payment may be made in whole or in part by any Healthcare
              Laws, or (B) in return for purchasing, leasing or ordering or arranging for
              or recommending the purchasing, leasing or ordering of any good, facility,
              service, or item for which payment may be made in whole or in part
              by any
              Healthcare Laws; (v) presenting or causing to be presented a claim for
              reimbursement for services that is for an item or services that was
              known or
              should have been known to be (A) not provided as claimed, or (B) false
              or fraudulent; or (vi) knowingly and willfully making or causing to be made
              or inducing or seeking to induce the making of any false statement
              or
              representation (or omitting to state a fact required to be stated therein
              or
              necessary to make the statements contained therein not misleading) of a
              material fact with respect to (A) a facility in order that the facility may
              qualify for Governmental Authority certification, or (B) information
              required to be provided under 42 U.S.C. § 1320a-3.

             

            (o)  Licensed
              Operator is HIPAA Compliant.

             

            
              
                -60-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            Section
              8.3  Covenants
              Pertaining to Licensed Locations.

             

            To
              induce
              Administrative Agent and Lenders to enter into this Agreement and to
              make the
              Loans and other credit accommodations contemplated hereby, each Borrower
              hereby
              covenants and agrees with Administrative Agent and each Lender that:
              

             

            (a)  If
              required under applicable Healthcare Laws, each Borrower has and shall
              maintain
              in full force and effect a valid CON for no less than the number of
              beds and
              units in the Licensed Locations as of the date of this Agreement. 

             

            
              
                -61-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            (b)  Each
              Borrower shall maintain any applicable CON free from restrictions or
              known
              conflicts which would materially impair the use or operation of each
              Licensed
              Location for its current use, and shall not permit any CON to become
              provisional, probationary or restricted in any way.

             

            (c)  No
              Borrower shall do (or suffer to be done by a Borrower or any Affiliate
              of a
              Borrower) any of the following without Administrative Agent's prior written
              consent, which consent shall not be unreasonably withheld, conditioned
              or
              delayed:

             

            (i)  Replace
              or
              transfer all or any part of any Licensed Location's units or beds to
              another
              site or location;

             

            (ii)  Transfer
              or demise (other than a demised under an Operating Lease approved by
              Administrative Agent in writing) any CON or other Healthcare Permit or
              rights thereunder to any Person (other than Administrative Agent) or to any
              location other than the Licensed Location to which such CON or Governmental
              Approval pertains; or

             

            (iii)  Pledge
              or
              hypothecate any CON or other Healthcare Permit as collateral security
              for any
              indebtedness other than indebtedness to Lender.

             

            (d)  If
              any
              Licensed Location is currently accredited by JCAHO, Borrowers shall
              use diligent
              efforts to do the following except to the extent that a Licensed Operator
              is
              otherwise obligated to do the following pursuant to any Lease: (i) maintain
              such accreditation in good standing and without limitation or impairment,
              (ii) promptly submit to JCAHO a plan of correction for any deficiencies
              listed on any JCAHO accreditation survey report, and (iii) cure all such
              deficiencies within such time frame as is necessary to preserve and
              maintain in
              good standing and without limitation or impairment such JCAHO
              accreditation.

             

            Section
              8.4  Covenants
              Pertaining to Licensed Operators.

             

            To
              induce
              Administrative Agent and Lenders to enter into this Agreement and to
              make the
              Loans and other credit accommodations contemplated hereby, Borrowers
              hereby
              covenant and agree to the following:

             

            (a)  Licensed
              Operators shall do nothing to cause Borrower to breach any of the provisions
              of
Section
              8.3.

             

            (b)  Licensed
              Operators will:

             

            (i)  timely
              file or caused to be timely filed (after giving effect to any extension
              duly
              obtained), all notifications, reports, submissions, Permit renewals,
              cost
              reports and other reports of every kind whatsoever required by Healthcare
              Laws
              (which reports will be materially accurate and complete in all respects
              and not
              misleading in any material respect and shall not remain open or
              unsettled);

             

            (ii)  if
              not
              issued as of the Closing Date, use diligent efforts to obtain all Healthcare
              Permits necessary under Healthcare Laws to carry on the business at
              the Licensed
              Locations as it is conducted on the Closing Date; and once any Healthcare
              Permit
              is issued, maintain in full force and effect, and free from restrictions,
              probations, conditions or known conflicts which would materially impair
              the use
              or operation of any Licensed Location for its current use, all such
              Healthcare
              Permits necessary under Healthcare Laws (A) to carry on the business of
              Licensed Operator as it is conducted on the Closing Date, and (B) if
              Licensed Operator receives or has applied for Medicaid or Medicare
              reimbursements as part of its business, to continue to receive reimbursement
              under Medicare and Medicaid in full compliance with all requirements
              for
              participation in, and for the licensure required to provide the services
              that
              are reimbursable under, Medicare and Medicaid, including, without limitation,
              the Medicare and Medicaid Patient Protection Act of 1987, as the same
              may be
              amended, and such other Third Party Payor Programs as to which any
              Licensed
              Operator receives or has applied for reimbursement as part of its business;
              

             

            (iii)  not
              suffer
              or permit to occur any of the following:

             

            (A)  any
              transfer of a Healthcare Permit or rights thereunder to any Person
              (other than a
              Borrower or Administrative Agent) or to any location other than a Licensed
              Location approved by Administrative Agent in advance in writing;

             

            (B)  any
              pledge
              or hypothecation of any Healthcare Permit as collateral security for
              any
              indebtedness other than indebtedness to Administrative Agent;

             

            (C)  any
              rescission, withdrawal, revocation, amendment or modification of or
              other
              alteration to the nature, tenor or scope of any Healthcare Permit without
              Administrative Agent's prior written consent, including, without limitation,
              (I) any change to the authorized units/beds capacity of any Licensed
              Location and/or the number of units/beds approved by the applicable
              Governmental
              Authority, and (II) any transfer all or any part of any Licensed Location's
              authorized units or beds to another site or location; 

             

            
              
                -62-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            (D)  any
              voluntary transfer of any resident of any Licensed Location to any
              other
              facility, unless such transfer is at the request of the resident (without
              economic incentives being given to the resident by an Affiliate of
              Licensed
              Operator) or its payor or is for reasons relating to non-payment or the
              health, required level of medical care or safety of the resident to
              be
              transferred; 

             

            (E)  without
              Administrative Agent's prior written consent, the provision by Licensed
              Operator
              of additional regulated services at any Licensed Location, including,
              without
              limitation, medical services; or

             

            (F)  any
              fact,
              event or circumstance for which notice to Administrative Agent is required
              under
Section
              8.5;

             

            (iv)  operate
              or
              cause the Licensed Locations to be operated in a manner such that the
              Healthcare
              Permits remain in full force and effect;

             

            (v)  maintain
              or cause to be maintained the standard of care for the patients of
              the Licensed
              Locations at all times at a level necessary to insure a level of quality
              care
              for the patients of the Licensed Locations comparable to that existing
              on the
              date of this Agreement;

             

            (vi)  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 at
              least, that
              of the highest prudent industry standard and in conformity with all
              applicable
              regulations and laws;

             

            (vii)  operate
              or
              cause to be operated the Licensed Location in a prudent manner in compliance
              in
              all material respects with applicable Healthcare Laws and cause all
              Healthcare
              Permits and any other agreements necessary for the use and operation
              of the
              Licensed Location or as may be necessary for participation in Third
              Party Payor
              Programs to remain in effect without reduction in the number of licensed
              beds or
              beds authorized for use in applicable Third Party Payor Programs;

             

            (viii)  maintain
              or cause to be maintained sufficient inventory and equipment of types
              and
              quantities at the Licensed Location to enable Licensed Operator to
              adequately to
              perform operation of the Licensed Location; 

             

            (ix)  to
              the
              extent required by applicable law, maintain or cause to be maintained
              all
              deposits, including, without limitation, deposits relating to patients
              or
              Resident Agreements if such deposits are in cash such deposits are
              to be
              deposited and held by Licensed Operator (or the Manager under the Management
              Agreement), as the case may be, at such commercial or savings bank
              or banks as
              may be reasonably satisfactory to Administrative Agent, if such deposits
              are in
              any other form, such deposits are to be maintained as Administrative
              Agent may
              expressly permit. Any bond or other instrument which Licensed Operator
              (or the
              Manager under the Management Agreement), as the case may be, is permitted
              to
              hold in lieu of cash deposits under any applicable legal requirements
              shall be
              maintained in full force and effect unless replaced by cash deposits
              as
              hereinabove described, shall be issued by an institution reasonably
              satisfactory
              to Administrative Agent, shall, if permitted pursuant to any legal
              requirements,
              name Administrative Agent as payee or mortgagee thereunder (or at Administrative
              Agent's option, be fully assignable to Administrative Agent) and shall, in
              all respects, comply with any applicable in legal requirements and
              otherwise be
              reasonably satisfactory to Administrative Agent. Licensed Operator
              shall, upon
              request, provide Administrative Agent with evidence reasonably satisfactory
              to
              Administrative Agent of Licensed Operator's compliance with the foregoing.
              Following the occurrence and during the continuance of any Event of
              Default,
              Licensed Operator shall, upon Administrative Agent's request, if permitted
              by
              any applicable legal requirements, turn over to Administrative Agent
              the
              deposits (and any interest theretofore earned thereon) with respect to the
              Licensed Locations, to be held by Administrative Agent subject to the
              terms of
              their related agreements;

             

            
              
                -63-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            (x)  provide
              to
              Administrative Agent no later than two (2) Business Days after request, to
              the extent applicable, an accurate, complete and current list of all
              participation agreements with Third Party Payors with respect to the
              business of
              Licensed Operators (collectively, "Participation
              Agreements").
              Licensed Operators shall at all times comply in all material respects
              with all
              requirements, contracts, conditions and stipulations applicable to
              Licensed
              Operators in order to maintain in good standing and without default
              or
              limitation all such Participation Agreements; and

             

            (xi)  maintain
              a
              corporate health care regulatory compliance program ("CCP") which
              includes at a minimum, the elements of an effective compliance program,
              as
              published in the Federal Register from time to time, by the Department
              of Health
              and Human Services, Office of Inspector General (or any successor Governmental
              Authority), without regard to whether such program is specifically
              applicable to
              the operations at the Licensed Locations.

             

            (c)  No
              Licensed Operator, shall, other than in the normal course of business,
              change
              the terms of any of the Medicaid, Medicare or other Third Party Payor
              Programs
              or its normal billing payment and reimbursement policies and procedures
              with
              respect thereto (including without limitation the amount and timing
              of finance
              charges, fees and write-offs).

             

            (d)  No
              Licensed Operator or any manager of the Licensed Locations shall rescind,
              withdraw, revoke, amend, modify, supplement, or otherwise alter the
              nature,
              tenor or scope of the Healthcare Permits for the Licensed Locations.
              

             

            (e)  If
              any
              Licensed Location is currently accredited by JCAHO, Licensed Operators
              shall
              (i) maintain such accreditation in good standing and without limitation
              or
              impairment, (ii) promptly submit to JCAHO a plan of correction for any
              deficiencies listed on any JCAHO accreditation survey report, and
              (iii) cure all such deficiencies within such time frame as is necessary to
              preserve and maintain in good standing and without limitation or impairment
              such
              JCAHO accreditation.

             

            Section
              8.5  Special
              Notices to Administrative Agent.

             

            Borrowers
              shall notify Administrative Agent within three (3) Business Days of
              Borrower's becoming aware of (but in any event prior to Borrowers submitting
              any
              requests for advances of reserves or escrows), and shall contractually
              obligate
              (via written agreement acceptable to Administrative Agent) the Licensed
              Operators to notify Administrative Agent of the occurrence of, any
              of the
              following facts, events or circumstances, whether existing or pending,
              together
              with such supporting data and information as shall be necessary to
              fully explain
              to Administrative Agent the scope and nature of the fact, event or
              circumstance,
              and shall provide to Administrative Agent within two (2) Business Days of
              Administrative Agent's request, such additional information as Administrative
              Agent shall request regarding such disclosure: 

             

            
              
                -64-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            (a)  a
              Licensed
              Operator or any Credit Party, has become subject to any federal, state,
              local
              governmental or private payor civil or criminal investigations, inquiries,
              validation review, program integrity review or reimbursement audits
              or statement
              of deficiencies involving and/or related to its compliance with Healthcare
              Laws
              (including, without limitation, an inquiry or investigation of any
              Person having
              "ownership, financial or control interest" in any Borrowers (as that
              phrase is
              defined in 42 C.F.R. §420.201 et seq.)) which, if adversely determined,
              could reasonably be expected to have a Material Adverse Effect, but
              excluding
              where such certification is not existent as of the Closing Date issues
              related
              to initial Medicare or Medicaid certification ;

             

            (b)  that
              an
              owner, officer, manager, employee or Person with a "direct or indirect
              ownership
              interest" (as that phrase is defined in 42 C.F.R. §420.201) in a Licensed
              Operator or a Credit Party: (A) has had a civil monetary penalty assessed
              against him or her pursuant to 42 U.S.C. §1320a-7a or is the subject of a
              proceeding seeking to assess such penalty; (B) has been excluded from
              participation in a Federal Health Care Program (as that term is defined
              in 42
              U.S.C. §1320a-7b) or is the subject of a proceeding seeking to assess such
              penalty; (C) has been convicted (as that term is defined in 42 C.F.R.
§1001.2) of any of those offenses described in 42 U.S.C. §1320a-7b or 18
              U.S.C. §§669, 1035, 1347, 1518 or is the subject of a proceeding seeking to
              assess such penalty; or (D) has been involved or named in a U.S. Attorney
              complaint made or any other action taken pursuant to the False Claims
              Act under
              31 U.S.C. §§3729-3731 or qui tam action brought pursuant to 31 U.S.C. §3729 et
              seq.;

             

            (c)  any
              claims, actions or appeals before any commission, board or agency charged
              with
              administering Healthcare Laws or programs operated under Healthcare
              Laws
              (including without limitation any intermediary or carrier, the Provider
              Reimbursement Review Board or the Administrator of the Center for Medicare
              Services) with respect to any state or federal Medicare or Medicaid cost
              reports or claims filed by any Licensed Operator, or any disallowance
              by any
              commission, board or agency in connection with any audit of such cost
              reports,
              to the extent such audits are not routine;

             

            (d)  [reserved];

             

            (e)  [reserved];

             

            (f)  any
              liability in respect of amounts received by Borrowers or any Licensed
              Operator
              for the purchase or improvement of any real property under restricted
              or
              conditioned grants or donations, including, without limitation, monies
              received
              under the Public Health Service Act, 42 U.S.C. Section 291 et
              seq.;

             

            
              
                -65-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            (g)  the
              voluntary disclosure by any Credit Party or Licensed Operator to the
              Office of
              the Inspector General of the United States Department of Health and
              Human
              Services, a Medicare fiscal intermediary or any state's Medicaid program
              of a
              potential material overpayment matter involving the submission of claims
              to such
              payor by any Licensed Operator;

             

            (h)  receipt
              by
              any Credit Party or Licensed Operator of any notice or communication
              from the
              Joint Commission on Accreditation of Healthcare Organizations that
              a Licensed
              Location is (A) subject to or is required to file a plan of correction with
              respect to any accreditation survey, or (B) in danger of losing its
              accreditation due to a failure to comply with a plan of correction;

             

            (i)  any
              charges of resident abuse which are made in any legal or regulatory
              proceedings
              or material licensing violations involving the Licensed Operator at
              the Licensed
              Locations;

             

            (j)  if
              applicable, any health care survey report related to licensure or certification
              (including, without limitation, an annual or biannual Medicare or Medicaid
              certification survey report) which includes any statement of material
              deficiencies pertaining to any Licensed Operator or any of the Licensed
              Locations (whether via CMS 2567 form or otherwise);

             

            (k)  without
              duplication, any failure of any Credit Party or Licensed Operator to
              comply with
              any covenants or conditions in this Article 8;

             

            (l)  any
              revocation, suspension, termination, probation, restriction, limitation,
              denial,
              or nonrenewal affecting any Licensed Operator with respect to any Medicare
              and/or Medicaid participation or provider agreement, certification,
              billing
              number, assignment (via CMS 855 forms or otherwise), billing agent
              or electronic
              funds transfer instruction, including, without limitation, any denial
              of payment
              for new admissions; and/or

             

            (m)  any
              revocation, suspension, termination, probation, restriction, limitation,
              denial
              or nonrenewal affecting any Licensed Operator with respect to any participation
              or provider agreement with any Third Party Payor.

             

            Section
              8.6  Cure
              of
              Healthcare Laws Violations.

             

            If
              there
              shall occur any fact, event or circumstance for which Borrowers or
              Licensed
              Operators are required to give Administrative Agent notice under Section
              8.5
              above, or
              if there shall occur any breach of this Article 8 (or the corresponding
              provisions of any Financing Document), Borrowers shall take, and shall
              cause the
              Licensed Operators to take (subject to the terms of any Financing Documents
              and
              the terms of any Lease to the Licensed Operator), such action as is
              necessary to
              validly challenge or otherwise appropriately respond to such fact,
              event or
              circumstance within any timeframe required by applicable Healthcare
              Laws, and
              shall thereafter diligently pursue the same to a favorable conclusion,
              all to
              the effect that the fact, event or circumstance giving rise to Borrowers'
              or
              Licensed Operators' notice obligation under Section
              8.5
              or the
              breach of this Article 8 (or the corresponding provisions of any Financing
              Documents), shall be dismissed, rescinded, eliminated and otherwise
              cease to
              exist on that date which is the earlier to occur of (a) sixty
              (60) days after the date any Borrower became aware of such fact, event or
              circumstance, or (b) the expiration of any cure period given under
              applicable Healthcare Laws to cure any such breach. Provided that Borrowers
              are
              at all times in compliance with the foregoing covenants and diligently
              pursue
              and obtain the cure described above within the timeframe described
              above, the
              existence of any fact, event or circumstance for which Borrowers or
              Licensed
              Operators are required to give Administrative Agent notice under Section
              8.5,
              or the
              existence of a breach of this Article 8 (or the corresponding provisions
              of any
              Financing Documents), shall not, in and of itself, constitute a breach
              of
              Borrowers' or Licensed Operators obligations hereunder or thereunder
              unless the
              same shall (y) have a Material Adverse Effect, or (z) have occurred as
              a result of any Credit Parties' or any Licensed Operators' negligence,
              willful
              misconduct, willful breach of this Agreement or Healthcare Laws or
              failure to
              adhere to commercial reasonable standards of operations.

             

            
              
                -66-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            Section
              8.7  Licensed
              Operator; Manager.

             

            (a)  Without
              in
              any way limiting the other provisions of this Agreement, Borrowers
              shall not
              change the Licensed Operator of any Licensed Location. Borrowers shall
              cause the
              Licensed Locations at all times to be operated by the Licensed Operators
              identified on Schedule
              8.7.
              If the
              Licensed Operator for a Licensed Location is a Person separate and
              distinct from
              Borrowers as of the date of this Agreement, then, without Administrative
              Agent's
              prior written consent, no Borrower shall become the Licensed Operator
              for such
              Licensed Location, nor shall Borrowers or any Affiliate of any Borrower
              render
              any regulated healthcare service at any Licensed Location in connection
              with or
              in the furtherance of the operation of the Licensed Location.

             

            (b)  Borrowers
              shall not change or permit any Licensed Operator to change the manager
              of any
              Licensed Location or make any modification, amendment, termination
              or
              cancellation of any management contract for any Licensed Location or
              agreements
              with brokers, without the prior written consent of Administrative Agent
              in its
              sole and absolute discretion. Any substitute property manager shall
              be required
              to enter into an assignment and subordination of management or operating
              agreement in form and substance reasonably satisfactory to Administrative
              Agent.
              Borrowers shall, and shall cause each Licensed Operator to, cause the
              Licensed
              Locations initially and at all times until a substitute property manager
              is
              approved by Administrative Agent to be managed by ARC or an Affiliate
              or
              Affiliates of ARC approved by Administrative Agent (collectively in
              the
              singular, the "Manager") pursuant
              to management/operating agreements approved by Administrative Agent
              in writing
              (the "Management
              Agreements").
              Such
              restrictions and approval rights are solely for the purposes of assuring
              that
              the Licensed Locations are managed and operated in a first-class manner
              consistent with Healthcare Laws and the preservation and protection
              of the
              Licensed Locations as security for the Obligations and shall not place
              responsibility for the control, care, management or repair of the Licensed
              Locations upon Administrative Agent, or make Administrative Agent responsible
              or
              liable for any negligence in the management, operation, upkeep, repair
              or
              control
              of
              the Licensed Locations.

             

            Section
              8.8  Transfer
              of Healthcare Permits and Operations.

             

            Upon
              written notice from Administrative Agent to Borrowers following the
              occurrence
              of an Event of Default that is continuing hereunder, or immediately
              if, at any
              time during the term hereof, a Licensed Operator vacates any Licensed
              Location,
              the following provisions shall be effective:

             

            (a)  Borrowers
              shall, or shall cause Licensed Operator to, cooperate with the Administrative
              Agent to effectuate a change of ownership of the Healthcare Permits
              for any
              Licensed Location to a replacement operator designated by Administrative
              Agent
              ("Replacement
              Operator"),
              subject to required approval of any Governmental Authority, and in
              connection
              therewith, cooperate to effectuate, if requested, the assignment of
              any Third
              Party Payor or Governmental Payor contracts (to the extent assignable).
              Borrowers further shall provide to Administrative Agent all information
              and
              records requested by Administrative Agent in connection with the change
              of
              ownership of the Healthcare Permits; and

             

            (b)  In
              order
              to facilitate an efficient transfer of the operations of any Licensed
              Location,
              Borrowers shall, if and to the extent requested by Administrative Agent,
              (i) deliver to Administrative Agent copies of all Healthcare Permits and
              the most recent reports and notices pertaining to such Licensed Location
              required to be delivered under Section
              8.5;
              (ii) continue and maintain, and cause Licensed Operator to continue and
              maintain, the operation of such Licensed Location in the ordinary course
              of
              business, including, without limitation, the retention of all residents
              at the
              Licensed Location to the fullest extent possible until the transfer
              of the
              operations of such Licensed Location to the Replacement Operator is
              completed;
              (iii) enter into such operation transfer agreements, management agreements,
              and other agreements as may be requested by Administrative Agent until
              the
              transfer of the operations of such Licensed Location to the Replacement
              Operator
              is completed; and (iv) provide continued access to Administrative Agent and
              its agents to show such Licensed Location to potential replacement
              operators.
              Subject to all laws governing the privacy and confidentiality of individually
              identifiable health information, Borrowers hereby consents to the disclosure
              by
              Administrative Agent to potential replacement operators of Borrowers'
              financial
              statements, licensure reports and surveys, financial and property due
              diligence
              materials and other documents, materials and information relating to
              the
              Licensed Locations.

             

            
              
                -70-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            ARTICLE
              9  

            REAL
              PROPERTY MATTERS

             

            Each
              Borrower agrees that, so long as any Credit Exposure exists:

             

            Section
              9.1  Leases;
              Resident Agreements.

             

            (a)  Without
              the prior written consent of Administrative Agent, Borrowers shall
              not:
              (i) enter into any Leases, other than Permitted Leases; (ii) modify,
              amend, renew, surrender, terminate, consent to a sublease of, consent
              to a
              transfer of, abate rent or other payments due under or otherwise grant
              any
              financial or other concession under any Material Lease or any Permitted
              Lease if
              the effect thereof would cause the Permitted Lease to become a Material
              Lease;
              (iii) accept any rental payment under any Leases more than one
              (1) month in advance of its due date or in violation of the cash management
              or lockbox provisions of this Agreement; or (iv) enter into any ground
              lease of any Project.

             

            (b)  Without
              the prior written consent of Administrative Agent, Borrowers shall
              not, and
              shall not permit the Licensed Operator to: (i) modify in any material
              respect the form of Resident Agreement previously approved by Administrative
              Agent; provided
              that
              Borrowers will submit all proposed form modifications to Administrative
              Agent
              prior to the use thereof, (ii) accept any payment under any Resident
              Agreement more than one (1) month in advance of its due date or in
              violation of the cash management or lockbox provisions of this Agreement;
              (iii) enter into any subleases with respect to any Project except for
              Permitted Leases; (iv) modify, amend, renew, surrender, terminate, consent
              to a sublease of, consent to a transfer of, abate rent or other payments
              due
              under or otherwise grant any financial or other concession under any
              sublease
              (except for Permitted Leases) with respect to any Project; or
              (v) enter into any Resident Agreement for a term of more than one
              (1) year, or upon rates other than market rates or upon a form that fails
              to comply in all material respects with applicable Laws.

             

            (c)  Borrowers
              shall, and shall cause Licensed Operator to, provide Administrative
              Agent with a
              copy of all Material Leases no less than ten (10) days prior to execution
              of such Leases and such Leases shall be on the form of lease previously
              approved
              by Administrative Agent (which form shall include an automatic attornment
              provision whereby, in the event of a foreclosure, the tenant automatically
              shall
              recognize the successor owner as landlord and such tenant shall have
              no right to
              terminate its lease in the event of such foreclosure). If Administrative
              Agent
              consents to any new Material Lease or the modification or renewal of
              any
              existing Material Lease, at Administrative Agent's request, Borrowers
              or
              Licensed Operator, as applicable, shall cause the tenant thereunder
              to execute a
              subordination and attornment agreement in form and substance satisfactory
              to
              Administrative Agent. 

             

            (d)  Any
              Operating Lease (or, at Administrative Agent's option, any subordination
              agreement between Administrative Agent and the Operating Lessee pertaining
              to
              such Operating Lease) shall at all times be in form and substance
              satisfactory to Administrative Agent.

             

            (e)  Borrowers
              shall not suffer or permit any breach or default to occur in any of
              Borrowers'
              obligations under any of the Material Leases nor suffer or permit the
              same to
              terminate by reason of any failure of Borrowers to meet any requirement
              of any
              Material Lease. 

             

            (f)  Borrowers
              shall not suffer or permit any breach or default by a Licensed Operator
              to occur
              in any of the Licensed Operator's obligations under any Resident Agreement
              nor
              suffer or permit the same to terminate by reason of any failure of
              the Licensed
              Operator to meet any requirement of any Resident Agreement.

             

            
              
                -71-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            (g)  If
              any
              Borrower has authorized or permitted an Operating Lessee to apply for
              or
              maintain the CON, or if the CON for a Licensed Location operated by
              an Operating
              Lessee merges into a state-issued license to operate the Licensed Location,
              Borrower shall not, at any time, pledge, transfer, hypothecate or otherwise
              alienate the CON.

             

            Section
              9.2  Project
              Use and Operation.

             

            (a)  Without
              the prior written consent of Administrative Agent in each instance,
              which
              consent shall not be unreasonably withheld or delayed, Borrowers shall
              not
              demolish, remove, construct, or, except as otherwise expressly provided
              herein,
              restore, or alter the Projects or any portion thereof in any material
              respect;
              nor consent to or permit any such demolition, removal, construction,
              restoration, addition or alteration which would diminish in any material
              respect
              the value of the Projects. No excavation, construction, earth work,
              site work or
              any other mechanic's lienable work shall be done to or for the benefit
              of a
              Project, without Administrative Agent's approval, except for normal
              repair and
              maintenance in the ordinary course of business. Borrowers shall, at
              their
              expense, (i) take good care of the Projects including grounds generally,
              and utility systems and sidewalks, roads, alleys, and curbs therein,
              and shall
              keep the same in good, safe and insurable condition and in compliance
              with all
              applicable Laws in all material respects, (ii) promptly make all repairs to
              the Projects, above grade and below grade, interior and exterior, structural
              and
              nonstructural, ordinary and extraordinary, unforeseen and foreseen,
              which are
              necessary in order to maintain the Projects in a manner consistent
              with their
              quality and use as required hereby, and (iii) not commit or suffer to be
              committed any waste of the Projects or do or suffer to be done anything
              which
              will increase the risk of fire or other hazard to the Projects or impair
              the
              value thereof. Borrowers shall keep the sidewalks, vaults, gutters
              and curbs
              comprising, or adjacent to, the Projects, clean and free from dirt,
              snow, ice,
              rubbish and obstructions.

             

            (b)  Unless
              required by applicable Law, Borrowers shall not permit or engage in
              changes in
              the use of any Project (including any change from residential to non-residential
              use, or from non-residential use to residential use) from the use at the
              time this Agreement was executed without Administrative Agent's prior
              written
              consent. Borrowers shall not request and shall not initiate or acquiesce
              in a
              change in the plat of subdivision, or zoning classification or use
              of any
              Project, or grant any encumbrances or easements burdening any Project,
              without
              in each case obtaining Administrative Agent's prior written consent,
              not to be
              unreasonably withheld. Borrowers shall not desert or abandon the Projects
              or
              cause or permit the use or occupancy of any part of the Projects to
              be
              discontinued if such discontinuance or use change would violate in
              any material
              respect any zoning or other law, ordinance or regulation.

             

            (c)  Borrowers
              shall not, and neither shall permit, the Projects or any portion thereof
              to be
              converted or take any preliminary actions which could lead to a conversion
              to
              condominium or cooperative form or ownership.

             

            (d)  All
              of
              Borrowers' personal property delivered upon, attached to, used or required
              to be
              used in connection with the operation of any Project (collectively,
              the
              "FF&E") shall
              always be located at such Project and except as otherwise permitted
              herein shall
              be kept free and clear of all Liens other than the Permitted Liens.
              Borrowers
              shall not, without the prior written consent of Administrative Agent,
              remove or
              permit to be removed from any Project any of the FF&E except to repair or
              replace the same except as otherwise permitted herein.

             

            
              
                -70-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            (e)  Borrowers
              shall not consent to or initiate the joint assessment of any Project
              (i) with any other real property constituting a separate tax lot and
              Borrowers represent and covenant that each Project is are and shall
              remain a
              separate tax lot, or (ii) with any portion of the Projects which may be
              deemed to constitute personal property, or any other procedure whereby
              the lien
              of any taxes which may be levied against such personal property shall
              be
              assessed or levied or charged to the Project as a single lien.

             

            Section
              9.3  Casualty
              Proceeds.

             

            (a)  Borrowers
              shall notify Administrative Agent promptly of the commencement or threat
              of any
              Taking of the Projects or any portion thereof or of the occurrence
              of any
              casualty with respect to any Project.

             

            (b)  Subject
              to
              the provisions of Section
              9.4
              below,
              Administrative Agent may elect to collect, retain and apply against
              the
              Obligations of Borrowers under this Agreement or any of the other Financing
              Documents all proceeds of insurance resulting from any loss at any
              Project or of
              any Taking of all or any portion of a Project (individually and collectively
              referred to as "Casualty
              Proceeds") after
              deduction of all expenses of collection and settlement, including attorneys'
              and
              adjusters' fees and charges. If any insurance proceeds are paid by
              check, draft
              or other instrument payable to any Borrower and Administrative Agent
              jointly,
              such Borrower authorizes Administrative Agent to endorse such Borrower's
              name
              thereon and do such other things as Administrative Agent may deem advisable
              to
              reduce the same to cash. Administrative Agent is authorized and empowered,
              and
              each Borrower hereby irrevocably appoints Administrative Agent as its
              (or
              their) attorney-in-fact (such appointment is coupled with an interest), at
              Administrative Agent's option, to make or file proofs of loss or damage
              and to
              settle and adjust any claim under insurance policies which insure against
              such
              risks, or to direct Borrowers, in writing, to agree with the insurance
              carrier(s) on the amount to be paid in regard to such loss. Any Casualty
              Proceeds remaining after repayment of the Obligations shall be paid
              by
              Administrative Agent to Borrowers.

             

            (c)  Notwithstanding
              anything in Section
              9.3(b) to
              the
              contrary, in the event of any casualty to any Project or any Taking
              of part of
              any Project, Administrative Agent agrees to make available the Casualty
              Proceeds
              to restoration of the Project if (i) no Event of Default exists,
              (ii) all Casualty Proceeds are deposited with Administrative Agent,
              (iii) in Administrative Agent's reasonable judgment, the amount of Casualty
              Proceeds, together with additional amounts, if any, deposited by Borrower
              with
              Administrative Agent, available for restoration of the Project is sufficient
              to
              pay the full and complete costs of such restoration, (iv) the casualty or
              Taking will not require more than twenty percent (20%) of the occupancy
              space at the Project to become vacant during the restoration, (v) the
              income to Borrowers from such affected Project (excluding the effect
              of business
              interruption or rent loss insurance) will not decrease more than twenty
              percent (20%) as a result of such casualty or Taking, (vi) the income
              (excluding the effect of business interruption or rent loss insurance) to
              the Licensed Operator of the Licensed Locations, if different from
              Borrowers,
              will not decrease more than twenty percent (20%) as a result of such
              casualty or Taking, (vii) in Administrative Agent's sole determination, the
              Allocated Loan Amount for such Project will not exceed seventy-five
              percent
              (75%) of the fair market value of the Project after completion of
              restoration but prior to any re-tenanting, (viii) in Administrative Agent's
              reasonable determination, the affected Project can be restored to an
              architecturally and economically viable project in compliance with
              applicable
              Laws, and (ix) in Administrative Agent's reasonable determination, such
              restoration is likely to be completed not later than six (6) months prior
              to the Termination Date.

             

            
              
                -71-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            (d)  Notwithstanding
              the foregoing, if the damage to the Project does not exceed twelve
              percent
              (12%) of the Allocated Loan Amount for such Project, and so long as no
              Default has occurred and is continuing, Borrowers shall be entitled
              to receive
              the Casualty Proceeds attributable thereto, provided, however, that
              Borrowers
              shall use the Casualty Proceeds to restore or rebuild the Project in
              all
              material respects to its condition prior to such casualty or
              Taking.

             

            Section
              9.4  Borrowers'
              Obligation to Rebuild and Use of Casualty Proceeds Therefor.

             

            (a)  In
              case
              Administrative Agent does not elect to apply or does not have the right
              to apply
              the Casualty Proceeds to the Obligations, as provided in Section
              9.3
              above,
              Borrowers shall:

             

            (i)  Proceed
              with diligence to make settlement with insurers or the appropriate
              governmental
              authorities and except as provided in Section
              9.3(d) above,
              cause the Casualty Proceeds to be deposited with Administrative
              Agent;

             

            (ii)  In
              the
              event of any delay in making settlement with insurers or the appropriate
              governmental authorities or effecting collection of the Casualty Proceeds,
              deposit with Administrative Agent the full amount required to complete
              construction as aforesaid;

             

            (iii)  If
              the
              damage exceeds twelve percent (12%) of the Allocated Loan Amount, in the
              event the Casualty Proceeds are insufficient to assure Administrative
              Agent that
              the all contemplated repairs or construction will be completed, promptly
              deposit
              with Administrative Agent any amount necessary to assure that such
              contemplated
              repairs or construction will be completed; and

             

            (iv)  Promptly
              proceed with the assumption of construction of the applicable Project,
              including
              the repair of all damage resulting from such fire, Taking or other
              cause and
              restoration to its former or reasonably equivalent condition in all
              material
              respects.

             

            
              
                -72-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            (b)  Any
              request by Borrowers for a disbursement by Administrative Agent of
              Casualty
              Proceeds and funds deposited by Borrowers shall be subject to reasonable
              construction loan type draw requirements as determined by Administrative
              Agent.

             

            (c)  Notwithstanding
              anything to the contrary, if the damage to the applicable Project does
              not
              exceed twelve percent (12%) of the Allocated Loan Amount and so long as no
              Default has occurred and is continuing, Borrowers may settle and adjust
              any
              claim without the consent of Administrative Agent and agree with the
              insurance
              company or companies (or Governmental Authority, in the case of a
              Taking) on the amount to be paid upon the loss, provided, however, that
              such adjustment is carried out in a competent and timely manner. Any
              monies
              collected under this subsection (c) shall be applied in accordance with
Section
              9.3(d) below.

             

            (d)  If
              the
              damage to the applicable Project exceeds twelve percent (12%) of the
              Allocated Loan Amount, then Administrative Agent may elect to file
              the
              respective proof of loss, settle and adjust any claim without the consent
              of
              Borrowers and agree with the insurance company on the amount of the
              Casualty
              Proceeds in the place and stead of Borrowers and without the consent
              of
              Borrowers; provided, however,
              that so long as no Event of Default exists, Administrative Agent agrees
              to work
              with Borrowers and to keep Borrowers fully apprised of any and all
              action
              Administrative Agent takes to settle or adjust any claim. Borrowers
              hereby release Administrative Agent from any and all liability with
              respect to
              the settlement and adjustment by Administrative Agent of any claims
              in respect
              of any casualty. 

             

            Section
              9.5  Tax
              Reduction Proceedings. 

             

            After
              and
              during the continuance of an Event of Default, Borrowers shall be deemed
              to have
              appointed Administrative Agent as their attorney-in-fact to seek a
              reduction or
              reductions in the assessed valuation of the Projects for real property
              tax
              purposes or for any other purpose and to prosecute any action or proceeding
              in
              connection therewith. This power, being coupled with an interest, shall
              be
              irrevocable for so long as any part of the Obligations remains unpaid
              and any
              Event of Default shall be continuing. 

             

            Section
              9.6  Commingling;
              FIRPTA. 

             

            No
              Borrower has commingled the funds related to the Projects with funds
              from any
              other property. Neither Borrowers nor any partner, stockholder, member
              or other
              principal in Borrowers is or will be, and no legal or beneficial interest
              of a
              partner, stockholder, member or other principal in Borrowers is or
              will be held,
              directly or indirectly, by a "foreign corporation", "foreign partnership",
              "foreign trust", "foreign estate", "foreign person", "affiliate" of
              a "foreign
              person" or a "United States intermediary" of a "foreign person" within
              the
              meaning of the Internal Revenue Code Sections 897, 1445 or 7701, the
              Foreign Investments in Real Property Tax Act of 1980, the International
              Foreign
              Investment Survey Act of 1976, the Agricultural Foreign Investment
              Disclosure
              Act of 1978, or the regulations promulgated pursuant to such Acts or
              any
              amendments to such Acts.

             

            
              
                -73-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            Section
              9.7  Representations
              and Warranties.

             

            To
              induce
              Administrative Agent and Lenders to enter into this Agreement and to
              make the
              Loans and other credit accommodations contemplated hereby, each Borrower
              hereby
              represents and warrants to Administrative Agent and each Lender the
              following
              with respect to each individual Project, standing alone and without
              reliance
              upon any other Project:

             

            (a)  Except
              as
              disclosed to Administrative Agent in writing, (i) no condemnation of any
              portion of any Project, has commenced or, to any Borrower's knowledge,
              is
              contemplated by any Governmental Authority, (ii) except as disclosed to
              Administrative Agent in writing, no condemnation or relocation of any
              roadways
              abutting any Project has commenced or, to any Borrower's knowledge,
              is
              contemplated by any Governmental Authority, and (iii) no proceeding to deny
              access to any Project from any point or planned point of access to
              any Project,
              has commenced or, to any Borrower's knowledge, is contemplated by any
              Governmental Authority.

             

            (b)  Except
              as
              disclosed to Administrative Agent in writing the contemplated use of
              any Project
              as an assisted living facility and the contemplated accessory uses
              do not
              violate, in any material respects, (i) any Laws (including subdivision,
              zoning and building Laws and Environmental Laws), or (ii) any building
              permits, covenants, conditions and restrictions of record, or agreements
              affecting any Project or any part thereof. Neither the zoning authorizations,
              subdivision approvals or variances nor any other right to construct
              or to use
              any Project is to any extent dependent upon or related to any real
              estate other
              than the real property constituting the Collateral. Except as disclosed
              to
              Administrative Agent on the land title surveys delivered to Administrative
              Agent
              prior to the Closing Date, no building or other improvement encroaches
              upon any
              property line, building line, set back line, side yard line or any
              recorded or
              visible easement (or other easement of which Borrowers are aware or
              has reason
              to believe may exist) with respect to any Project. Except as disclosed on
              such surveys, no Project is situated in an area designated as having
              special
              flood hazards as defined by the Flood Disaster Protection Act of 1973,
              as
              amended, or designated as a wetland by any governmental entity having
              jurisdiction over the Project. All Permits required for the use and
              occupancy of
              the Project have been obtained. All Laws relating to the construction
              of and
              operation of the Improvements have been complied with in all material
              respects
              and all permits and licenses required for the construction of and operation
              of
              the Project have been obtained. The Project is accessible through fully
              improved
              and dedicated roads, accepted for maintenance and public use by public
              authority
              having jurisdiction. The Project has adequate water, gas and electrical
              supply,
              storm and sanitary sewerage facilities, telephone facilities, other
              required
              public utilities, fire and police protection, and means of access between
              the
              Project and public highways; none of the foregoing will be foreseeably
              delayed
              or impeded by virtue of any requirements under any applicable Laws.
              The Project
              includes all property and rights that may be reasonably necessary or
              desirable
              to promote the present uses and enjoyment thereof. To the best of each
              Borrower's knowledge, there are no, nor are there any alleged or asserted,
              violations of law, regulations, ordinances, codes, permits, licenses,
              declarations, covenants, conditions or restrictions of record, or other
              agreements relating to any Project, or the improvements thereto, or
              any part
              thereof. Final certificates of occupancy or non-residential use permits
              have
              been obtained for all improvements on the Project. The parcels of land
              comprising the Project are contiguous, subdivided parcels and are in
              full
              compliance with applicable subdivision ordinances. No subdivision or
              resubdivision of such parcels is required to: (y) convey, transfer, assign
              or lease such parcels, either individually or as a whole; or (z) rebuild
              after a casualty all or any portion of the improvements on the Project
              to
              current size and configuration.

             

            
              
                -74-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            (c)  The
              Project is taxed separately without regard to any other property and
              for all
              purposes the Project may be mortgaged, conveyed and otherwise dealt
              with as an
              independent parcel. There are no unpaid or outstanding real estate
              or other
              taxes or assessments on or against any Project or any part thereof,
              except
              general real estate taxes for fiscal year 2006 not yet due or payable.
              To each
              Credit Party's knowledge, there is no pending or contemplated action
              pursuant to
              which any special assessment may be levied against any portion of any
              Project.

             

            (d)  There
              has
              been no damage or destruction of any part of any Project by fire or
              other
              casualty that has not been repaired. Except for the deferred maintenance
              items,
              if any, reflected on Schedule
              4.11
              or as
              part of routine maintenance or capital improvements required to be
              made by
              Borrowers under this Agreement, there are presently no material existing
              defects
              in any Project and no material repairs or alterations thereof are reasonably
              necessary or appropriate.

             

            (e)  Neither
              Borrower nor any Licensed Operator has entered into any Material Leases
              that are
              currently in effect other than as set forth on the rent roll delivered
              by
              Borrower to Administrative Agent prior to the closing of the Loans,
              which
              Borrower certifies is true and correct in all material respects. True,
              correct
              and complete copies of the form of Lease, Resident Agreement and other
              lease or
              care documents and all non-residential Leases, as amended, as in effect
              with
              respect to Borrower's or Operator's operation of the Project, have
              been
              delivered to Administrative Agent. All Material Leases are in full
              force and
              effect. Neither Borrower nor any tenant is in material default under
              any
              Material Lease. Borrower has disclosed to Administrative Agent in writing
              any
              material default by any tenant under any Material Lease and no notice
              of
              termination has been issued under any Lease. All rents or other payments
              required of the tenant under the Material Lease due to date have been
              collected
              and have been collected no more than one (1) month in advance, and no
              tenant has been granted any rent concession or inducement whatsoever
              except as
              reflected on the rent roll previously delivered to Administrative
              Agent.

             

            (f)  The
              Resident Agreements comply with all applicable Laws in all material
              respects,
              including Healthcare Laws.

             

            
              
                -75-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            ARTICLE
              10

            SECURITY
              AGREEMENT

             

            Section
              10.1  Generally.

             

            (a)  As
              security for the payment and performance of the Obligations, and the
              payment and
              performance of all obligations, and without limiting any other grant
              of a Lien
              and security interest in any Security Document, Borrowers hereby assign
              and
              grant to Administrative Agent a continuing first priority Lien on and
              security
              interest in, upon, and to all right, title and interest in and to any
              and all
              property and interests in property of Borrowers whether now owned or
              hereafter
              created, acquired or arising including all of the following properties
              and
              interests in properties (the "Personal
              Property";
              unless
              otherwise defined in this Agreement, all terms used in this Article 10
              shall have the meanings given them in Article 9 of the Uniform Commercial
              Code):

             

            (i)  All
              of
              Borrowers' Accounts, and all of Borrowers' money, contract rights,
              chattel
              paper, documents, deposit accounts, securities, investment property
              and
              instruments with respect thereto, and all of Borrowers' rights, remedies,
              security, Liens and supporting obligations, in, to and in respect of
              the
              foregoing;

             

            (ii)  To
              the
              extent not listed above, all of Borrowers' money, securities, investment
              property, deposit accounts, instruments, general intangibles, healthcare
              insurance receivables, inventory and other property and the proceeds
              thereof;

             

            (iii)  All
              of
              Borrowers' letter-of-credit rights and commercial tort claims;

             

            (iv)  All
              of
              Borrowers' now owned or hereafter acquired machinery, equipment, computer
              equipment, tools, tooling, furniture, fixtures, goods, supplies, materials,
              work
              in process, whether now owned or hereafter acquired, together with
              all
              additions, parts, fittings, accessories, special tools, attachments,
              and
              accessions now and hereafter affixed thereto and/or used in connection
              therewith, all replacements thereof and substitutions therefor, and
              all cash and
              non-cash proceeds and products thereof and all present and future warranties,
              manuals and other written materials relating thereto;

             

            (v)  All
              of
              Borrowers' now owned or hereafter acquired goods of any kind and any
              and all
              tangible and intangible books and records of Borrowers relating to
              Borrowers,
              their businesses, their financial condition, records and statements,
              the
              Licensed Locations and/or the Collateral; and

             

            (vi)  To
              the
              extent not listed above as original collateral, the proceeds (including,
              without
              limitation, insurance proceeds) and products of any or all of the
              foregoing, and all accessions to, substitutions for or replacements
              of and rents
              and profits from any or all of the foregoing.

             

            (b)  Pursuant
              to the Liens created pursuant to Section 10.1
              and
              pursuant to all of the other Security Documents (if any) (including,
              without limitation, any and all UCC financing statements being filed
              by
              Administrative Agent against any Borrower), and assuming that any such
              Security
              Document that is intended to be filed with any governmental public
              recording
              office has been so filed, Administrative Agent has been granted and
              has a valid
              and perfected first priority security interest and Lien in the Collateral,
              including the Personal Property (subject only to any Permitted Liens
              permitted
              under the terms of this Agreement and the other Financing
              Documents) securing the payment of the Obligations, and such security
              interests and Liens are entitled to all of the rights, priorities and
              benefits
              afforded by the UCC or other applicable Laws as enacted in any relevant
              jurisdiction which relate to perfected security interests. No authorization,
              approval or other action by, and no notice to or filing with, any Governmental
              Authority or consent of any other Person is required for (i) the grant by
              each Borrower to Administrative Agent of the security interests and
              Liens in the
              Collateral, including the Personal Property, provided for under this
              Agreement
              and the other Security Documents (if any), or (ii) the exercise by
              Administrative Agent of its rights and remedies with respect to the
              Collateral,
              including the Personal Property, provided for under this Agreement
              and the other
              Security Documents or under any applicable Law, including the UCC.

             

            
              
                -76-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            Section
              10.2   Covenants
              Relating to Collateral.

             

            (a)  Borrowers
              shall not take any of the following actions or make any of the following
              changes
              unless Borrowers have given at least thirty (30) days prior written notice
              to Administrative Agent of Borrowers' intention to take any such action
              and have
              executed any and all documents, instruments and agreements and taken
              any other
              actions with Administrative Agent may request after receiving such
              written
              notice in order to protect and preserve the Liens, rights and remedies
              of
              Administrative Agent with respect to the Collateral: (i) change the legal
              name or organizational identification number of any Borrower, or
              (ii) change the jurisdiction of incorporation or formation of any Borrower
              or allow any Borrower to designate any jurisdiction as an additional
              jurisdiction of incorporation for such Borrower.

             

            (b)  Borrowers
              shall cause all equipment and other tangible personal property other
              than
              inventory to be maintained and preserved in the same condition, repair
              and in
              working order as when new, ordinary wear and tear excepted, and shall
              promptly
              make or cause to be made all repairs, replacements and other improvements
              in
              connection therewith that are necessary or desirable to such end, provided
              Borrowers may make such Asset Dispositions as are permitted herein.

             

            (c)  Each
              Borrower hereby authorizes Administrative Agent to file without the
              signature of
              such Borrower one or more UCC financing statements relating to all
              or any part
              of the Collateral, which financing statements may list Administrative
              Agent as
              the "secured party" and such Borrower as the "debtor" and which describe
              and
              indicate the collateral covered thereby as all or any part of the Collateral
              under the Financing Documents (including an indication of the collateral
              covered
              by any such financing statement as "all assets" of such Borrower now
              owned or
              hereafter acquired), in such jurisdictions as Administrative Agent
              from time to
              time determine are appropriate, and to file without the signature of
              such
              Borrower any continuations of or amendments to any such financing statements,
              in
              any such case in order for Administrative Agent to perfect, preserve
              or protect
              the Liens, rights and remedies of Administrative Agent with respect
              to the
              Collateral.

             

            
              
                -77-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            (d)  Without
              limiting or contradicting any of the provisions of Sections 4.1,
              10.3(b) 10.3(c) or any other provisions of the Financing Documents
              requiring the delivery by Borrowers to Administrative Agent and/or
              the Lenders
              of any reports, certificates, information or schedules, Borrowers shall
              furnish
              to Administrative Agent from time to time any statements and schedules
              further
              identifying or describing the Collateral and any other information,
              reports or
              evidence concerning the Collateral as Lender may reasonably request
              from time to
              time.

             

            Section
              10.3  UCC
              Remedies.

             

            (a)  Upon
              the
              occurrence of and during the continuance of an Event of Default under
              this
              Agreement or the other Financing Documents, Administrative Agent, in
              addition to
              all other rights, options, and remedies granted to Administrative Agent
              under
              this Agreement or at law or in equity, may exercise, either directly
              or through
              one or more assignees or designees, all rights and remedies granted
              to it under
              all Financing Documents and under the UCC in effect in the applicable
              jurisdiction(s) and under any other applicable law; including, without
              limitation:

             

            (i)  The
              right
              to take possession of, send notices regarding, and collect directly
              the
              Collateral, with or without judicial process;

             

            (ii)  The
              right
              to (by its own means or with judicial assistance) enter any of Borrowers'
              premises and take possession of the Collateral, or render it unusable,
              or to
              render it usable or saleable, or dispose of the Collateral on such
              premises in
              compliance with subsection (iii) below and to take possession of Borrowers'
              original books and records, to obtain access to Borrowers' data processing
              equipment, computer hardware and software relating to the Collateral
              and to use
              all of the foregoing and the information contained therein in any manner
              Administrative Agent deems appropriate, without any liability for rent,
              storage,
              utilities, or other sums, and Borrowers shall not resist or interfere
              with such
              action (if Borrowers' books and records are prepared or maintained
              by an
              accounting service, contractor or other third party agent, Borrowers
              hereby
              irrevocably authorize such service, contractor or other agent, upon
              notice by
              Administrative Agent to such Person that an Event of Default has occurred
              and is
              continuing, to deliver to Administrative Agent or its designees such
              books and
              records, and to follow Administrative Agent's instructions with respect
              to
              further services to be rendered);

             

            (iii)  The
              right
              to require Borrowers at Borrowers' expense to assemble all or any part
              of the
              Collateral and make it available to Administrative Agent at any place
              designated
              by Lender;

             

            (iv)  The
              right
              to notify postal authorities to change the address for delivery of
              Borrowers'
              mail to an address designated by Administrative Agent and to receive,
              open and
              dispose of all mail addressed to any Borrower; and

             

            
              
                -78-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            (v)  The
              right
              to enforce Borrowers' rights against Account Debtors and other obligors,
              including, without limitation, the right to collect Accounts directly
              in
              Administrative Agent's own name (as agent for Lenders) and to charge the
              collection costs and expenses, including attorneys' fees, to
              Borrowers.

             

            (b)  Without
              restricting the generality of the foregoing and for the purposes aforesaid,
              each
              Borrower hereby appoints and constitutes Administrative Agent its lawful
              attorney-in-fact with full power of substitution in the Collateral
              to use
              unadvanced funds remaining under this Agreement or which may be reserved,
              escrowed or set aside for any purposes hereunder at any time, or to
              advance
              funds in excess of the face amount of the Notes, to pay, settle or
              compromise
              all existing bills and claims, which may be liens or security interests,
              or to
              avoid such bills and claims becoming liens against the Collateral;
              to execute
              all applications and certificates in the name of such Borrower and
              to prosecute
              and defend all actions or proceedings in connection with the Collateral;
              and to
              do any and every act which such Borrower might do in its own behalf;
              it being
              understood and agreed that this power of attorney shall be a power
              coupled with
              an interest and cannot be revoked.

             

            ARTICLE
              11

            EVENTS
              OF DEFAULT

             

            Section
              11.1  Events
              of Default.

             

            For
              purposes of the Financing Documents, the occurrence of any of the following
              conditions and/or events, whether voluntary or involuntary, by operation
              of law
              or otherwise, shall constitute an "Event
              of Default":

             

            (a)  Borrowers
              shall fail to pay all amounts due under the Financing Documents on
              the
              Termination Date or any Borrower shall fail to pay within five (5) days of
              when due any principal, interest, premium or fee under any Financing
              Document or
              any other amount payable under any Financing Document;

             

            (b)  any
              Borrower shall fail to observe or perform any covenant contained in
Section
              2.12,
              Section 4.4(b),
              Section
              4.4(d),
              Section 4.7,
              Section 4.10,
              Article 5,
              Article 6
              (subject
              to the provisions of Section
              6.7),
              Section
              8.3(c),
              clauses
              (iii), (iv) or (x) of Section
              8.4(b),
              Section
              8.4(c),
              Section
              8.4(e) or
              Section
              8.5
              or
              Borrowers shall fail to deliver any financial reports or statements
              when due
              under Section
              4.1
              and such
              default is not remedied or waived within five (5) Business Days after
              receipt by Borrower Representative of notice from Administrative Agent
              of such
              default, or Borrowers shall fail to permit any visit or inspection
              required by
Section
              4.6
              within
              two (2) Business Days after notice;

             

            (c)  any
              Credit
              Party defaults in the performance of or compliance with any term contained
              in
              this Agreement or in any other Financing Document (other than occurrences
              described in other provisions of this Section
              11.1
              for which
              a different grace or cure period is specified or for which no grace
              or cure
              period is specified and thereby constitute immediate Events of Default) and
              such default is not remedied or waived within thirty (30) days after the
              earlier of (i) receipt by Borrower Representative of notice from
              Administrative Agent or Required Lenders of such default or (ii) actual
              knowledge of any Borrower or any other Credit Party of such default,
              provided,
              however, if such default cannot by its nature be cured within thirty
              (30) days, but such Credit Party commences cure within said thirty
              (30) day period and diligently pursues such cure thereafter, such Credit
              Party shall have an additional reasonable time to complete such cure
              up to a
              maximum of ninety (90) days; 

             

            
              
                -79-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            (d)  any
              representation, warranty, certification or statement made by any Credit
              Party or
              to Borrowers' knowledge any other Person in any Financing Document
              or in any
              certificate, financial statement or other document delivered pursuant
              to any
              Financing Document is incorrect in any respect (or in any material
              respect if
              such representation, warranty, certification or statement is not by
              its terms
              already qualified as to materiality) when made;

             

            (e)  (i) failure
              of any Borrower to pay when due or within any applicable grace period
              any
              principal, interest or other amount on Debt (other than the Loans),
              or the
              occurrence of any breach, default, condition or event with respect
              to any Debt
              (other than the Loans), if the effect of such failure or occurrence
              is to cause,
              or to permit the holder or holders of any such Debt to cause, Debt
              or other
              liabilities having an individual principal amount in excess of $100,000
              or
              having an aggregate principal amount in excess of $100,000 to become
              or be
              declared due prior to its stated maturity; or (ii) the occurrence of any
              breach or default under any terms or provisions of any Subordinated
              Debt
              Document or under any agreement subordinating the Subordinated Debt
              to all or
              any portion of the Obligations or the occurrence of any event requiring
              the
              prepayment of any Subordinated Debt;

             

            (f)  any
              Credit
              Party shall commence a voluntary case or other proceeding seeking liquidation,
              reorganization or other relief with respect to itself or its debts
              under any
              bankruptcy, insolvency or other similar law now or hereafter in effect
              or
              seeking the appointment of a trustee, receiver, liquidator, custodian
              or other
              similar official of it or any substantial part of its property, or
              shall consent
              to any such relief or to the appointment of or taking possession by
              any such
              official in an involuntary case or other proceeding commenced against
              it, or
              shall make a general assignment for the benefit of creditors, or shall
              fail
              generally to pay its debts as they become due, or shall take any corporate
              action to authorize any of the foregoing;

             

            (g)  an
              involuntary case or other proceeding shall be commenced against any
              Credit Party
              seeking liquidation, reorganization or other relief with respect to
              it or its
              debts under any bankruptcy, insolvency or other similar law now or
              hereafter in
              effect or seeking the appointment of a trustee, receiver, liquidator,
              custodian
              or other similar official of it or any substantial part of its property,
              and
              such involuntary case or other proceeding shall remain undismissed
              and unstayed
              for a period of sixty (60) days; or an order for relief shall be entered
              against any Credit Party under the federal bankruptcy laws as now or
              hereafter
              in effect;

             

            (h)  (i) institution
              of any steps by any Person to terminate a Pension Plan if as a result
              of such
              termination any Borrower or any member of the Controlled Group could
              be required
              to make a contribution to such Pension Plan, or could incur a liability
              or
              obligation to such Pension Plan, in excess of $100,000, (ii) a contribution
              failure occurs with respect to any Pension Plan sufficient to give
              rise to a
              Lien under Section 302(f) of ERISA, or (iii) there shall occur any
              withdrawal or partial withdrawal from a Multiemployer
              Plan and the withdrawal liability (without unaccrued interest) to
              Multiemployer Plans as a result of such withdrawal (including any outstanding
              withdrawal liability that any Borrower or any member of the Controlled
              Group
              have incurred on the date of such withdrawal) exceeds $100,000;
              

             

            
              
                -80-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            (i)  one
              or
              more judgments or orders for the payment of money (not paid or fully
              covered by
              insurance maintained in accordance with the requirements of this Agreement
              and
              as to which the relevant insurance company has acknowledged
              coverage) aggregating in excess of $1,000,000 shall be rendered against any
              or all Borrowers and either (i) enforcement proceedings shall have been
              commenced by any creditor upon any such judgments or orders or (ii) there
              shall be any period of twenty (20) consecutive days during which a stay of
              enforcement of any such judgments or orders, by reason of a pending
              appeal, bond
              or otherwise, shall not be in effect;

             

            (j)  ARC,
              a
              Prudential Entity or a joint venture between ARC and a Prudential Entity
              shall
              cease to, directly or indirectly, own and control at least (i) 100% of the
              outstanding equity interests of Borrowers, or (ii) that percentage of the
              outstanding voting equity interests of Borrowers necessary at all times
              to elect
              a majority of the board of directors (or similar governing body) of each
              Borrower and to direct the management policies and decisions of Borrowers,
              or
              any other violation of Section
              4.3(c) occurs;

             

            (k)  any
              Lien
              created by any of the Security Documents shall at any time fail to
              constitute a
              valid and perfected Lien on all of the Collateral purported to be secured
              thereby, subject to no prior or equal Lien except Permitted Liens,
              or any
              Borrower shall so assert;

             

            (l)  any
              Borrower shall be prohibited or otherwise materially restrained from
              conducting
              the business theretofore conducted by it by virtue of any casualty,
              any labor
              strike, any determination, ruling, decision, decree or order of any
              court or
              regulatory authority of competent jurisdiction or any other event and
              such
              casualty, labor strike, determination, ruling, decision, decree, order
              or other
              event remains unstayed and in effect for any period of ten
              (10) days;

             

            (m)  the
              institution by any Governmental Authority of criminal proceedings against
              any
              Credit Party; or

             

            (n)  Borrowers
              shall fail to perform any of the post-closing obligations as required
              by
Section
              7.3
              and
Schedule
              7.3.

             

            All
              cure
              periods provided for in this Section shall run concurrently with any
              cure period
              provided for in any applicable Financing Documents under which the
              default
              occurred.

             

            
              
                -81-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            Section
              11.2  Acceleration.

             

            Upon
              the
              occurrence and during the continuance of an Event of Default, Administrative
              Agent may, and shall if requested by Required Lenders, by notice to
              Borrower
              Representative declare the Obligations to be, and the Obligations shall
              thereupon become, immediately due and payable without presentment,
              demand,
              protest or other notice of any kind, all of which are hereby waived
              by each
              Borrower and Borrowers will pay the same; provided, however, that in
              the case of
              any of the Events of Default specified in Section
              11.1(f) or
              11.1(g) above,
              without any notice to any Borrower or any other act by Administrative
              Agent or
              the Lenders, all of the Obligations shall become immediately due and
              payable
              without presentment, demand, protest or other notice of any kind, all
              of which
              are hereby waived by each Borrower and Borrowers will pay the same.

             

            Section
              11.3  [Reserved]

             

            Section
              11.4  Default
              Rate of Interest.

             

            At
              the
              election of Administrative Agent or Required Lenders, after the occurrence
              of an
              Event of Default and for so long as it continues, the Loans and other
              Obligations shall bear interest at rates that are two percent (2.0%) per
              annum in excess of the rates otherwise payable under this Agreement.
              

             

            Section
              11.5  Setoff
              Rights.

             

            During
              the
              continuance of any Event of Default, each Lender is hereby authorized
              by each
              Borrower at any time or from time to time, with reasonably prompt subsequent
              notice to such Borrower (any prior or contemporaneous notice being
              hereby
              expressly waived) to set off and to appropriate and to apply any and all
              (a) balances held by such Lender or any of such Lender's Affiliates at
              any
              of its offices for the account of such Borrower (regardless of whether
              such
              balances are then due to such Borrower), and (b) other property at any time
              held or owing by such Lender to or for the credit or for the account
              of such
              Borrower, against and on account of any of the Obligations; except
              that no
              Lender shall exercise any such right without the prior written consent
              of
              Administrative Agent. Any Lender exercising a right to set off shall
              purchase
              for cash (and the other Lenders shall sell) interests in each of such other
              Lender's Pro Rata Share of the Obligations as would be necessary to
              cause all
              Lenders to share the amount so set off with each other Lender in accordance
              with
              their respective Pro Rata Share of the Obligations. Each Borrower agrees,
              to the
              fullest extent permitted by law, that any Lender and any of such Lender's
              Affiliates may exercise its right to set off with respect to the Obligations
              as
              provided in this Section
              11.5.

             

            Section
              11.6  Application
              of Proceeds.

             

            Notwithstanding
              anything to the contrary contained in this Agreement, upon the occurrence
              and
              during the continuance of an Event of Default, (a) each Borrower
              irrevocably waives the right to direct the application of any and all
              payments
              at any time or times thereafter received by Administrative Agent from
              or on
              behalf of such Borrower or any Guarantor of all or any part of the
              Obligations,
              and, as between Borrowers on the one hand and Administrative Agent
              and Lenders
              on the other, Administrative Agent shall have the continuing and exclusive
              right
              to apply and to reapply any and all payments received against the Obligations
              in
              such manner as Administrative Agent may deem advisable notwithstanding
              any
              previous application by Administrative Agent and (b) the proceeds of any
              sale of, or other realization upon, all or any part of the Collateral
              shall be
              applied: first,
              to all
              reasonable fees, costs, indemnities, liabilities, obligations and expenses
              incurred by or owing to Administrative Agent with respect to this Agreement,
              the
              other Financing Documents or the Collateral; second,
              to all
              reasonable fees, costs, indemnities, liabilities, obligations and expenses
              incurred by or owing to any Lender with respect to this Agreement,
              the other
              Financing Documents or the Collateral; third,
              to
              accrued and unpaid interest on the Obligations (including any interest
              which,
              but for the provisions of the Bankruptcy Code, would have accrued on
              such
              amounts); fourth,
              to the
              principal amount of the Obligations outstanding; and fifth
              to any
              other indebtedness or obligations of Borrowers owing to Administrative
              Agent or
              any Lender under the Financing Documents. Any balance remaining shall
              be
              delivered to Borrowers or to whoever may be lawfully entitled to receive
              such
              balance (including any holder of the indebtedness evidenced by the
              Affiliated
              Financing Documents) or as a court of competent jurisdiction may direct. In
              carrying out the foregoing, (y) amounts received shall be applied in the
              numerical order provided until exhausted prior to the application to
              the next
              succeeding category, and (z) each of the Persons entitled to receive a
              payment in any particular category shall receive an amount equal to
              its pro rata
              share of amounts available to be applied pursuant thereto for such
              category.


             

            
              
                -82-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            Section
              11.7  Waivers. 

             

            (a)  Except
              as
              otherwise provided for in this Agreement and to the fullest extent
              permitted by
              applicable law, each Borrower waives: (i) presentment, demand and protest,
              and notice of presentment, dishonor, intent to accelerate, acceleration,
              protest, default, nonpayment, maturity, release, compromise, settlement,
              extension or renewal of any or all Financing Documents, the Notes or
              any other
              notes, commercial paper, accounts, contracts, documents, instruments,
              chattel
              paper and Guarantees at any time held by Lenders on which any Borrower
              may in
              any way be liable, and hereby ratifies and confirms whatever Lenders
              may do in
              this regard; (ii) all rights to notice and a hearing prior to
              Administrative Agent's or any Lender's taking possession or control
              of, or to
              Administrative Agent's or any Lender's replevy, attachment or levy
              upon, any
              Collateral or any bond or security which might be required by any court
              prior to
              allowing Administrative Agent or any Lender to exercise any of its
              remedies; and
              (iii) the benefit of all valuation, appraisal and exemption Laws. Each
              Borrower acknowledges that it has been advised by counsel of its choices
              and
              decisions with respect to this Agreement, the other Financing Documents
              and the
              transactions evidenced hereby and thereby.

             

            (b)  Each
              Borrower for itself and all endorsers, guarantors and sureties and
              their heirs,
              legal representatives, successors and assigns, (i) agrees that its
              liability shall not be in any manner affected by any indulgence, extension
              of
              time, renewal, waiver, or modification granted or consented to by Lender;
              (ii) consents to any indulgences and all extensions of time, renewals,
              waivers, or modifications that may be granted by Administrative Agent
              or any
              Lender with respect to the payment or other provisions of the Financing
              Documents, and to any substitution, exchange or release of the Collateral,
              or
              any part thereof, with or without substitution, and agrees to the addition
              or
              release of any Borrower, endorsers, guarantors, or sureties, or whether
              primarily or secondarily liable, without notice to any other Borrower
              and
              without affecting its liability hereunder; (iii) agrees that its liability
              shall be unconditional and without regard to the liability of any other
              Borrower, Administrative Agent or any Lender for any tax on the indebtedness;
              and (iv) to
              the
              fullest extent permitted by law,
              expressly
              waives the benefit of any statute or rule of law or equity now provided,
              or
              which may hereafter be provided, which would produce a result contrary
              to or in
              conflict with the foregoing.

             

            
              
                -83-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            (c)  To
              the
              extent that Administrative Agent or any Lender may have acquiesced
              in any
              noncompliance with any requirements or conditions precedent to the
              closing of
              the Loans or to any subsequent disbursement of Loan proceeds, such
              acquiescence
              shall not be deemed to constitute a waiver by Administrative Agent
              or any Lender
              of such requirements with respect to any future disbursements of Loan
              proceeds
              and Administrative Agent may at any time after such acquiescence require
              Borrowers to comply with all such requirements. Any forbearance by
              Administrative Agent or Lender in exercising any right or remedy under
              any of
              the Financing Documents, or otherwise afforded by applicable law, including
              any
              failure to accelerate the maturity date of the Loans, shall not be
              a waiver of
              or preclude the exercise of any right or remedy nor shall it serve
              as a novation
              of the Notes or as a reinstatement of the Loans or a waiver of such
              right of
              acceleration or the right to insist upon strict compliance of the terms
              of the
              Financing Documents. Administrative Agent's or any Lender's acceptance
              of
              payment of any sum secured by any of the Financing Documents after
              the due date
              of such payment shall not be a waiver of Administrative Agent's and
              such
              Lender's right to either require prompt payment when due of all other
              sums so
              secured or to declare a default for failure to make prompt payment.
              The
              procurement of insurance or the payment of taxes or other liens or
              charges by
              Administrative Agent as the result of an Event of Default shall not
              be a waiver
              of Administrative Agent's right to accelerate the maturity of the Loans,
              nor
              shall Administrative Agent's receipt of any condemnation awards, insurance
              proceeds, or damages under this Agreement operate to cure or waive
              any Credit
              Party's default in payment of sums secured by any of the Financing
              Documents.

             

            (d)  Without
              limiting the generality of anything contained in this Agreement or
              the other
              Financing Documents, each Borrower agrees that if an Event of Default
              is
              continuing (i) Administrative Agent and Lenders are not subject to any "one
              action" or "election of remedies" law or rule, and (ii) all Liens and other
              rights, remedies or privileges provided to Administrative Agent or
              Lenders shall
              remain in full force and effect until Administrative Agent or Lenders
              have
              exhausted all remedies against the Collateral and any other properties
              owned by
              Borrowers and the Financing Documents and other security instruments
              or
              agreements securing the Loans have been foreclosed, sold and/or otherwise
              realized upon in satisfaction of Borrowers' obligations under the Financing
              Documents.

             

            (e)  Nothing
              contained herein or in any other Financing Document shall be construed
              as
              requiring Administrative Agent or any Lender to resort to any part
              of the
              Collateral for the satisfaction of any of Borrowers' obligations under
              the
              Financing Documents in preference or priority to any other Collateral,
              and
              Administrative Agent may seek satisfaction out of all of the Collateral
              or any
              part thereof, in its absolute discretion in respect of Borrowers' obligations
              under the Financing Documents. In addition, Administrative Agent shall
              have the
              right from time to time to partially foreclose upon any Collateral
              in any manner
              and for any amounts secured by the Financing Documents then due and
              payable as
              determined by Administrative Agent in its sole discretion, including,
              without
              limitation, the following circumstances: (i) in the event any Borrower
              defaults beyond any applicable grace period in the payment of one or
              more
              scheduled payments of principal and/or interest, Administrative Agent
              may
              foreclose upon all or any part of the Collateral to recover such delinquent
              payments, or (ii) in the event Administrative Agent elects to accelerate
              less than the entire outstanding principal balance of the Loans, Administrative
              Agent may foreclose all or any part of the Collateral to recover so
              much of the
              principal balance of the Loans as Lender may accelerate and such other
              sums
              secured by one or more of the Financing Documents as Administrative
              Agent may
              elect. Notwithstanding one or more partial foreclosures, any unforeclosed
              Collateral shall remain subject to the Financing Documents to secure
              payment of
              sums secured by the Financing Documents and not previously
              recovered.

             

            
              
                -84-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            (f)  To
              the
              fullest extent permitted by law, each Borrower, for itself and its
              successors
              and assigns, waives in the event of foreclosure of any or all of the
              Collateral
              any equitable right otherwise available to any Credit Party which would
              require
              the separate sale of the any of the Collateral or require Administrative
              Agent
              or Lenders to exhaust their remedies against any part of the Collateral
              before
              proceeding against any other part of the Collateral; and further in
              the event of
              such foreclosure each Borrower does hereby expressly consent to and
              authorize,
              at the option of Lender, the foreclosure and sale either separately
              or together
              of each part of the Collateral.

             

            Section
              11.8  Injunctive
              Relief.

             

            The
              parties acknowledge and agree that, for certain Events of Default,
              Administrative Agent and Lenders may have no adequate remedy in money
              damages
              and, accordingly, shall be entitled to an injunction (including without
              limitation, a temporary restraining order, preliminary injunction,
              writ of
              attachment, or order compelling an audit) against such Events of Default.
              However, no specification in this Agreement of a specific legal or
              equitable
              remedy shall be construed as a waiver or prohibition against any other
              legal or
              equitable remedies in the event of a breach or threatened breach of
              any
              provision of this Agreement.
              Each
              Credit Party waives, to
              the
              fullest extent permitted by law,
              the
              requirement of the posting of any bond in connection with such injunctive
              relief. By joining in the Financing Documents as a Credit Party, each
              Credit
              Party specifically joins in this Section as if this Section were a
              part of each
              Financing Documents executed by the Credit Party. 

             

            Section
              11.9  Marshalling.

             

            Administrative
              Agent and Lenders shall have no obligation to marshal any assets in
              favor of any
              Credit Party, or against or in payment of any of the other Obligations
              or any
              other obligation owed to Administrative Agent or Lenders by any Credit
              Party.

             

            
              
                -85-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            ARTICLE
              12

            EXPENSES
              AND INDEMNITY

             

            Section
              12.1  Expenses.

             

            Each
              Borrower hereby agrees to promptly pay (a) all reasonable costs and
              expenses of Administrative Agent (including without limitation the
              reasonable
              fees, costs and expenses of counsel to, and independent appraisers
              and
              consultants retained by Administrative Agent) in connection with the
              examination, review, due diligence investigation, documentation, negotiation
              and
              closing of the transactions contemplated by the Financing Documents,
              in
              connection with the performance by Administrative Agent of its rights
              and
              remedies under the Financing Documents and in connection with the continued
              administration of the Financing Documents, including (i) any amendments,
              modifications, consents and waivers to and/or under any and all Financing
              Documents and (ii) any periodic public record searches conducted by or at
              the request of Administrative Agent (including, without limitation,
              title
              investigations, UCC searches, fixture filing searches, judgment, pending
              litigation and tax lien searches and searches of applicable corporate,
              limited
              liability, partnership and related records concerning the continued
              existence,
              organization and good standing of certain Persons), (b) without limitation
              of the preceding clause (a), all costs and expenses of Administrative
              Agent
              (including recordation and transfer taxes) in connection with the creation,
              perfection and maintenance of Liens pursuant to the Financing Documents,
              (c) without limitation of the preceding clause (a), all costs and expenses
              of Administrative Agent in connection with (i) protecting, storing,
              insuring, handling, maintaining or selling any Collateral; (ii) any
              litigation, dispute, suit or proceeding relating to any Financing Document;
              and
              (iii) any workout, collection, bankruptcy, insolvency and other enforcement
              proceedings under any and all of the Financing Documents, and (d) all costs
              and expenses incurred by Lenders in connection with any litigation,
              dispute,
              suit or proceeding relating to any Financing Document and in connection
              with any
              workout, collection, bankruptcy, insolvency and other enforcement proceedings
              under any and all Financing Documents, provided, however, that to the
              extent
              that the costs and expenses referred to in this clause (d) consist of fees,
              costs and expenses of counsel, Borrowers shall be obligated to pay
              such fees,
              costs and expenses for counsel to Administrative Agent and for only
              one counsel
              acting for all Lenders (other than Administrative Agent). 

             

            Section
              12.2  Indemnity.

             

            Each
              Borrower hereby agrees to indemnify, pay and hold harmless Administrative
              Agent
              and Lenders and the officers, directors, employees, trustees, agents,
              investment
              advisors, collateral managers, servicers, and counsel of Administrative
              Agent
              and Lenders (collectively called the "Indemnitees") from
              and against any and all liabilities, obligations, losses, damages,
              penalties,
              actions, judgments, suits, claims, costs, expenses and disbursements
              of any kind
              or nature whatsoever (including the fees and disbursements of counsel
              for such
              Indemnitee) in connection with any investigative, response, remedial,
              administrative or judicial matter or proceeding, whether or not such
              Indemnitee
              shall be designated a party thereto and including any such proceeding
              initiated
              by or on behalf of a Credit Party, and the reasonable expenses of investigation
              by engineers, environmental consultants and similar technical personnel
              and any
              commission, fee or compensation claimed by any broker (other than any
              broker
              retained by Administrative Agent or Lenders) asserting any right to payment
              for the transactions contemplated hereby, which may be imposed on,
              incurred by
              or asserted against such Indemnitee as a result of or in connection
              with the
              transactions contemplated hereby or by the other Financing Documents
              (including
              (a)(i) as a direct or indirect result of the presence on or under, or
              escape, seepage, leakage, spillage, discharge, emission or release
              from, any
              property now or previously owned, leased or operated by any Borrower,
              or any
              other Person of any Hazardous Materials or any Hazardous Materials
              Contamination, (ii) arising out of or relating to the offsite disposal of
              any materials generated or present on any such property or (iii) arising
              out of or resulting from the environmental condition of any such property
              or the
              applicability of any governmental requirements relating to Hazardous
              Materials,
              whether or not occasioned wholly or in part by any condition, accident
              or event
              caused by any act or omission of any Borrower, (b) proposed and actual
              extensions of credit under this Agreement) and the use or intended use of
              the proceeds of the Loans and (c) any brokerage claims in connection with
              the sale or any leasing of any Project, except that no Borrower shall
              have any
              obligation hereunder to an Indemnitee with respect to any liability
              resulting
              from the gross negligence or willful misconduct of such Indemnitee,
              as
              determined by a final non-appealable judgment of a court of competent
              jurisdiction or for any liability with respect to clauses (a) or
              (c) first occurring after transfer of title of a Project following a
              foreclosure or pursuant to a conveyance in lieu of foreclosure provided
              that the
              applicable Borrower is no longer in possession of the applicable Project.
              To the
              extent that the undertaking set forth in the immediately preceding
              sentence may
              be unenforceable, each Borrower shall contribute the maximum portion
              which it is
              permitted to pay and satisfy under applicable law to the payment and
              satisfaction of all such indemnified liabilities incurred by the Indemnitees
              or
              any of them.

             

            
              
                -86-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            ARTICLE
              13

            ADMINISTRATIVE
              AGENT

             

            Section
              13.1  Appointment
              and Authorization.

             

            Each
              Lender hereby irrevocably appoints and authorizes Administrative Agent
              to enter
              into each of the Financing Documents to which it is a party (other
              than this
              Agreement) on its behalf and to take such actions as Administrative Agent
              on its behalf and to exercise such powers under the Financing Documents
              as are
              delegated to Administrative Agent by the terms thereof, together with
              all such
              powers as are reasonably incidental thereto. Subject to the terms of
              Section
              13.16
              and to
              the terms of the other Financing Documents, Administrative Agent is
              authorized
              and empowered to amend, modify, or waive any provisions of this Agreement
              or the
              other Financing Documents on behalf of Lenders. The provisions of this
              Article
              13 are solely for the benefit of Administrative Agent and Lenders and
              neither
              any Borrower nor any other Credit Party shall have any rights as a
              third party
              beneficiary of any of the provisions hereof. In performing its functions
              and
              duties under this Agreement, Administrative Agent shall act solely
              as agent of
              Lenders and does not assume and shall not be deemed to have assumed
              any
              obligation toward or relationship of agency or trust with or for any
              Borrower or
              any other Credit Party. Administrative Agent may perform any of its
              duties
              hereunder, or under the Financing Documents, by or through its agents
              or
              employees.

             

            Section
              13.2  Administrative
              Agent and Affiliates.

             

            Administrative
              Agent
              shall
              have the same rights and powers under the Financing Documents as any
              other
              Lender and may exercise or refrain from exercising the same as though
              it were
              not Administrative Agent, and Administrative Agent and its Affiliates
              may lend
              money to, invest in and generally engage in any kind of business with
              each
              Credit Party or Affiliate of any Credit Party as if it were not Administrative
              Agent hereunder.

             

            Section
              13.3  Action
              by Administrative Agent.

             

            The
              duties
              of Administrative Agent shall be mechanical and administrative in nature.
              Administrative Agent shall not have by reason of this Agreement a fiduciary
              relationship in respect of any Lender. Nothing in this Agreement or
              any of the
              Financing Documents is intended to or shall be construed to impose
              upon
              Administrative Agent any obligations in respect of this Agreement or
              any of the
              Financing Documents except as expressly set forth herein or
              therein.

             

            Section
              13.4  Consultation
              with Experts.

             

            Administrative
              Agent may consult with legal counsel, independent public accountants
              and other
              experts selected by it and shall not be liable for any action taken
              or omitted
              to be taken by it in good faith in accordance with the advice of such
              counsel,
              accountants or experts.

             

            Section
              13.5  Liability
              of Administrative Agent.

             

            Neither
              Administrative Agent nor any of its directors, officers, agents or
              employees
              shall be liable to any Lender for any action taken or not taken by
              it in
              connection with the Financing Documents, except that Administrative
              Agent shall
              be liable with respect to its specific duties set forth hereunder but
              only to
              the extent of its own gross negligence or willful misconduct in the
              discharge
              thereof as determined by a final non-appealable judgment of a court
              of competent
              jurisdiction. Neither Administrative Agent nor any of its directors,
              officers,
              agents or employees shall be responsible for or have any duty to ascertain,
              inquire into or verify (a) any statement, warranty or representation made
              in connection with any Financing Document or any borrowing hereunder;
              (b) the performance or observance of any of the covenants or agreements
              specified in any Financing Document; (c) the satisfaction of any condition
              specified in any Financing Document; (d) the validity, effectiveness,
              sufficiency or genuineness of any Financing Document, any Lien purported
              to be
              created or perfected thereby or any other instrument or writing furnished
              in
              connection therewith; (e) the existence or non-existence of any Default or
              Event of Default; or (f) the financial condition of any Credit Party.
              Administrative Agent shall not incur any liability by acting in reliance
              upon
              any notice, consent, certificate, statement, or other writing (which
              may be a
              bank wire, telex, facsimile or electronic transmission or similar
              writing) believed by it to be genuine or to be signed by the proper party
              or parties. Administrative Agent shall not be liable for any apportionment
              or
              distribution of payments made by it in good faith and if any such apportionment
              or distribution is subsequently determined to have been made in error
              the sole
              recourse of any Lender to whom payment was due but not made, shall
              be to recover
              from other Lenders any payment in excess of the amount to which they
              are
              determined to be entitled (and such other Lenders hereby agree to return
              to such
              Lender any such erroneous payments received by them).

             

            
              
                -88-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            Section
              13.6  Indemnification.

             

            Each
              Lender shall, in accordance with its Pro Rata Share, indemnify Administrative
              Agent (to the extent not reimbursed by Borrowers) upon demand against any
              cost, expense (including counsel fees and disbursements), claim, demand,
              action,
              loss or liability (except such as result from Administrative Agent's
              gross
              negligence or willful misconduct as determined by a final non-appealable
              judgment of a court of competent jurisdiction) that Administrative Agent
              may suffer or incur in connection with the Financing Documents or any
              action
              taken or omitted by Administrative Agent hereunder or thereunder. If
              any
              indemnity furnished to Administrative Agent for any purpose shall,
              in the
              opinion of Administrative Agent, be insufficient or become impaired,
              Administrative Agent may call for additional indemnity and cease, or
              not
              commence, to do the acts indemnified against even if so directed by
              Required
              Lenders until such additional indemnity is furnished.

             

            Section
              13.7  Right
              to Request and Act on Instructions.

             

            Administrative
              Agent may at any time request instructions from Lenders with respect
              to any
              actions or approvals which by the terms of this Agreement or of any
              of the
              Financing Documents Administrative Agent is permitted or desires to
              take or to
              grant, and if such instructions are promptly requested, Administrative
              Agent
              shall be absolutely entitled to refrain from taking any action or to
              withhold
              any approval and shall not be under any liability whatsoever to any
              Person for
              refraining from any action or withholding any approval under any of
              the
              Financing Documents until it shall have received such instructions
              from Required
              Lenders or all or such other portion of the Lenders as shall be prescribed
              by
              this Agreement. Without limiting the foregoing, no Lender shall have
              any right
              of action whatsoever against Administrative Agent as a result of Administrative
              Agent acting or refraining from acting under this Agreement or any
              of the other
              Financing Documents in accordance with the instructions of Required
              Lenders (or
              all or such other portion of the Lenders as shall be prescribed by
              this
              Agreement) and, notwithstanding the instructions of Required Lenders (or
              such other applicable portion of the Lenders), Administrative Agent
              shall have
              no obligation to take any action if it believes, in good faith, that
              such action
              would violate applicable Law or exposes Administrative Agent to any
              liability
              for which it has not received satisfactory indemnification in accordance
              with
              the provisions of Section
              13.6.

             

            
              
                -89-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            Section
              13.8  Credit
              Decision.

             

            Each
              Lender acknowledges that it has, independently and without reliance
              upon
              Administrative Agent or any other Lender, and based on such documents
              and
              information as it has deemed appropriate, made its own credit analysis
              and
              decision to enter into this Agreement. Each Lender also acknowledges
              that it
              will, independently and without reliance upon Administrative Agent
              or any other
              Lender, and based on such documents and information as it shall deem
              appropriate
              at the time, continue to make its own credit decisions in taking or
              not taking
              any action under the Financing Documents.

             

            Section
              13.9  Collateral
              Matters. 

             

            Lenders
              irrevocably authorize Administrative Agent, at its option and in its
              discretion,
              to (a) release any Lien granted to or held by Administrative Agent under
              any Security Document (i) upon payment
              in
              full of all Obligations; (ii) constituting property sold or disposed of as
              part of or in connection with any disposition permitted under any Financing
              Document (it being understood and agreed that Administrative Agent
              may
              conclusively rely without further inquiry on a certificate of a Responsible
              Officer as to the sale or other disposition of property being made
              in full
              compliance with the provisions of the Financing Documents); or (iii) as
              required by Section
              2.12,
              and
              (b) release or subordinate any Lien granted to or held by Administrative
              Agent under any Security Document constituting property described in
              Section
              5.7(b) (it
              being
              understood and agreed that Administrative Agent may conclusively rely
              without
              further inquiry on a certificate of a Responsible Officer as to the
              identification of any property described in Section 5.7(b)).
              Upon
              request by Administrative Agent at any time, Lenders will confirm Administrative
              Agent's authority
              to release and/or subordinate particular types or items of Collateral
              pursuant
              to this Section
              13.9.

             

            Section
              13.10  Agency
              for Perfection.

             

            Administrative
              Agent and each Lender hereby appoint each other Lender as agent for
              the purpose
              of perfecting Administrative Agent's security interest in assets which,
              in
              accordance with the Uniform Commercial Code in any applicable jurisdiction,
              can
              be perfected by possession or control. Should any Lender (other than
              Administrative Agent) obtain possession or control of any such assets, such
              Lender shall notify Administrative Agent thereof, and, promptly upon
              Administrative Agent's request therefor, shall deliver such assets
              to
              Administrative Agent or in accordance with Administrative Agent's instructions
              or transfer control to Administrative Agent in accordance with Administrative
              Agent's instructions. Each Lender agrees that it will not have any
              right
              individually to enforce or seek to enforce any Security Document or
              to realize
              upon any Collateral for the Loans unless instructed to do so by Administrative
              Agent (or consented to by Administrative Agent, as provided in Section
              11.5),
              it
              being understood and agreed that such rights and remedies may be exercised
              only
              by Administrative Agent.

             

            
              
                -90-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            Section
              13.11  Notice
              of Default.

             

            Administrative
              Agent shall not be deemed to have knowledge or notice of the occurrence
              of any
              Default or Event of Default except with respect to defaults in the
              payment of
              principal, interest and fees required to be paid to Administrative
              Agent for the
              account of Lenders, unless Administrative Agent shall have received
              written
              notice from a Lender or a Borrower referring to this Agreement, describing
              such
              Default or Event of Default and stating that such notice is a "notice
              of
              default". Administrative Agent will notify each Lender of its receipt
              of any
              such notice. Administrative Agent shall take such action with respect
              to such
              Default or Event of Default as may be requested by Required Lenders
              (or all or
              such other portion of the Lenders as shall be prescribed by this
              Agreement) in accordance with the terms hereof. Unless and until
              Administrative Agent has received any such request, Administrative
              Agent may
              (but shall not be obligated to) take such action, or refrain from taking
              such action, with respect to such Default or Event of Default as it
              shall deem
              advisable or in the best interests of Lenders.

             

            Section
              13.12  Successor
              Administrative Agent.

             

            Administrative
              Agent may at any time give notice of its resignation to the Lenders
              and
              Borrowers. Upon receipt of any such notice of resignation, Required
              Lenders
              shall have the right, in consultation with Borrowers, to appoint a
              successor
              Administrative Agent, and provided that, if no Default or Event of
              Default has
              occurred and is outstanding, Borrower shall have the right to consent
              to any
              such successor Administrative Agent, which consent shall not be unreasonably
              withheld, conditioned or delayed. Upon the acceptance of a successor's
              appointment as Administrative Agent hereunder and notice of such acceptance
              to
              the retiring Administrative Agent, such successor shall succeed to
              and become
              vested with all of the rights, powers, privileges and duties of the
              retiring (or
              retired) Administrative Agent, the retiring Administrative Agent's
              resignation shall become immediately effective and the retiring Administrative
              Agent shall be discharged from all of its duties and obligations hereunder
              and
              under the other Financing Documents (if such resignation was not already
              effective and such duties and obligations not already discharged, as
              provided
              below in this paragraph). The fees payable by Borrowers to a successor
              Administrative Agent under this Agreement shall be the same as those
              payable to
              its predecessor unless otherwise agreed among Borrowers and such successor.
              If
              no such successor shall have been so appointed by Required Lenders
              and shall
              have accepted such appointment within thirty (30) days after the retiring
              Administrative Agent gives notice of its resignation, then the retiring
              Administrative Agent may on behalf of the Lenders (but without any
              obligation) appoint a successor Administrative Agent, and provided that, if
              no Default or Event of Default has occurred and is outstanding, Borrower
              shall
              have the right to consent to any such successor Administrative Agent,
              which
              consent shall not be unreasonably, withheld, conditioned or delayed.
              From and
              following the expiration of such thirty (30) day period, Administrative
              Agent shall have the exclusive right, upon one (1) Business Days' notice to
              Borrower Representative and the Lenders, to make its resignation effective
              immediately. From and following the effectiveness of such notice, (a) the
              retiring Administrative Agent shall be discharged from its duties and
              obligations hereunder and under the other Financing Documents, and
              (b) all
              payments, communications and determinations provided to be made by,
              to or
              through Administrative Agent shall instead be made by or to each Lender
              directly, until such time as Required Lenders appoint a successor Administrative
              Agent as provided for above in this paragraph. The provisions of this
              Agreement
              shall continue in effect for the benefit of any retiring Administrative
              Agent
              and its sub-agents after the effectiveness of its resignation hereunder
              and
              under the other Financing Documents in respect of any actions taken
              or omitted
              to be taken by any of them while the retiring Administrative Agent
              was acting or
              was continuing to act as Administrative Agent.

             

            
              
                -91-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            Section
              13.13  Payment
              and Sharing of Payment.

             

            (a)  Term
              Loan Payments.
              Payments
              of principal, interest and fees in respect of the Term Loans will be
              settled on
              the date of receipt if received by Administrative Agent on the last
              Business Day
              of a month or on the Business Day immediately following the date of
              receipt if
              received on any day other than the last Business Day of a month.

             

            (b)  Return
              of Payments.

             

            (i)  If
              Administrative Agent pays an amount to a Lender under this Agreement
              in the
              belief or expectation that a related payment has been or will be received
              by
              Administrative Agent from a Borrower and such related payment is not
              received by
              Administrative Agent, then Administrative Agent will be entitled to
              recover such
              amount from such Lender on demand without setoff, counterclaim or deduction
              of
              any kind, together with interest accruing on a daily basis at the Federal
              Funds
              Rate.

             

            (ii)  If
              Administrative Agent determines at any time that any amount received
              by
              Administrative Agent under this Agreement must be returned to any Borrower
              or
              paid to any other Person pursuant to any insolvency law or otherwise,
              then,
              notwithstanding any other term or condition of this Agreement or any
              other
              Financing Document, Administrative Agent will not be required to distribute
              any
              portion thereof to any Lender. In addition, each Lender will repay
              to
              Administrative Agent on demand any portion of such amount that Administrative
              Agent has distributed to such Lender, together with interest at such
              rate, if
              any, as Administrative Agent is required to pay to any Borrower or
              such other
              Person, without setoff, counterclaim or deduction of any kind.

             

            (c)  Defaulted
              Lenders.
              The
              failure of any Defaulted Lender to make any payment required by it
              hereunder
              shall not relieve any other Lender of its obligations to make payment,
              but
              neither any other Lender nor Administrative Agent shall be responsible
              for the
              failure of any Defaulted Lender to make any payment required hereunder.
              Notwithstanding anything set forth herein to the contrary, a Defaulted
              Lender
              shall not have any voting or consent rights under or with respect to
              any
              Financing Document or constitute a "Lender" (or be included in the
              calculation
              of "Required Lenders" hereunder) for any voting or consent rights under or
              with respect to any Financing Document. 

             

            (d)  Sharing
              of Payments.
              If any
              Lender shall obtain any payment or other recovery (whether voluntary,
              involuntary, by application of setoff or otherwise) on account of any Loan
              (other than pursuant to the terms of Section
              2.9) in
              excess of its pro rata share of payments entitled pursuant to the other
              provisions of this Section
              13.13,
              such
              Lender shall purchase from the other Lenders such participations in
              extensions
              of credit made by such other Lenders (without recourse, representation
              or
              warranty) as shall be necessary to cause such purchasing Lender to share
              the excess payment or other recovery ratably with each of them; provided,
              however, that if all or any portion of the excess payment or other
              recovery is
              thereafter recovered from such purchasing Lender, the purchase shall
              be
              rescinded and each Lender which has sold a participation to the purchasing
              Lender shall repay to the purchasing Lender the purchase price to the
              ratable
              extent of such recovery, without interest. Each Borrower agrees that
              any Lender
              so purchasing a participation from another Lender pursuant to this
              clause
              (d) may, to the fullest extent permitted by law, exercise all its rights
              of
              payment (including pursuant to Section
              11.5) with
              respect to such participation as fully as if such Lender were the direct
              creditor of Borrowers in the amount of such participation. If under
              any
              applicable bankruptcy, insolvency or other similar law, any Lender
              receives a
              secured claim in lieu of a setoff to which this clause (d) applies, such
              Lender shall, to the extent practicable, exercise its rights in respect
              of such
              secured claim in a manner consistent with the rights of the Lenders
              entitled
              under this clause (d) to share in the benefits of any recovery on such
              secured claim.

             

            
              
                -92-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            Section
              13.14  Right
              to Perform, Preserve and Protect.

             

            Upon
              and
              during the continuance of any Default or Event of Default, Administrative
              Agent
              itself may, but shall not be obligated to, cause any obligation of
              any Credit
              Party hereunder or under any other Financing Document to be performed
              at
              Borrowers' expense. Upon and during the continuance of any Default
              or Event of
              Default, Administrative Agent is further authorized by Borrowers and
              the Lenders
              to make expenditures from time to time which Administrative Agent,
              in its
              reasonable business judgment, deems necessary or desirable to (a) preserve
              or protect the business conducted by Borrowers, the Collateral, or
              any portion
              thereof, and/or (b) enhance the likelihood of, or maximize the amount of,
              repayment of the Loans and other Obligations. Each Borrower hereby
              agrees to
              reimburse Administrative Agent on demand for any and all costs (which
              costs
              shall be reasonable), liabilities and obligations incurred by Administrative
              Agent pursuant to this  Section
              13.14.
              Each
              Lender hereby agrees to indemnify Administrative Agent upon demand
              for any and
              all costs, liabilities and obligations incurred by Administrative Agent
              pursuant
              to this Section
              13.14,
              in
              accordance with the provisions of Section
              13.6.
              

             

            Section
              13.15  Additional
              Titled Agents.

             

            Except
              for
              rights and powers, if any, expressly reserved under this Agreement
              to any
              bookrunner, arranger or to any titled agent named on the cover page
              of this
              Agreement, other than Administrative Agent (collectively, the "Additional
              Titled Agents"),
              and
              except for obligations, liabilities, duties and responsibilities, if
              any,
              expressly assumed under this Agreement by any Additional Titled Agent,
              no
              Additional Titled Agent, in such capacity, has any rights, powers,
              liabilities,
              duties or responsibilities hereunder or under any of the other Financing
              Documents. Without limiting the foregoing, no Additional Titled Agent
              shall have
              nor be deemed to have a fiduciary relationship with any Lender. At
              any time that
              any Lender serving as an Additional Titled Agent shall have transferred
              to any
              other Person (other than any Affiliates) all of its interests in the Loans,
              such Lender shall be deemed to have concurrently resigned as such Additional
              Titled Agent. 

             

            
              
                -93-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            Section
              13.16  Amendments
              and Waivers.

             

            In
              addition to the required signatures under Section
              14.5,
              no
              provision of this Agreement or any other Financing Document may be
              amended,
              waived or otherwise modified unless such amendment, waiver or other
              modification
              is in writing and is signed or otherwise approved by the following
              Persons:

             

            (a)  if
              any
              amendment, waiver or other modification would increase a Lender's funding
              obligations in respect of any Term Loan, by such Lender; and/or

             

            (b)  if
              the
              rights or duties of Administrative Agent are affected thereby, by Administrative
              Agent;

             

            Provided
              that,
              in
              each of (a) and (b) above, no such amendment, waiver or other
              modification shall, unless signed by all the Lenders directly affected
              thereby,
              (i) reduce the principal of, rate of interest on or any fees with respect
              to any Loan or forgive any principal, interest (other than default
              interest) or fees (other than late charges) with respect to any Loan;
              (ii) postpone the date fixed for, or waive, any payment (other than a
              payment pursuant to Section 2.1(c) or
              Section
              6.7) of
              principal of any Loan, or of interest on any Loan (other than default
              interest) or any fees provided for hereunder (other than late
              charges) or for any termination of any commitment; (iii) change the
              definition of the term Required Lenders or the percentage of Lenders
              which shall
              be required for Lenders to take any action hereunder; (iv) release all or
              substantially all of the Collateral, authorize any Borrower to sell
              or otherwise
              dispose of all or substantially all of the Collateral or release any
              Guarantor
              of all or any portion of the Obligations of its Guarantee obligations
              with
              respect thereto, except, in each case with respect to this clause (iv), as
              otherwise may be provided in this Agreement or the other Financing
              Documents
              (including in connection with any disposition permitted hereunder);
              (v) amend, waive or otherwise modify this Section
              13.16
              or the
              definitions of the terms used in this Section
              13.16
              insofar
              as the definitions affect the substance of this Section
              13.16;
              or
(vi) consent
              to
              the assignment, delegation or other transfer by any Credit Party of
              any of its
              rights and obligations under any Financing Document or release any
              Borrower of
              its payment obligations under any Financing Document, except, in each
              case with
              respect to this clause (vi), pursuant to a merger or consolidation
              permitted pursuant to this Agreement. It is hereby understood and agreed
              that
              all Lenders shall be deemed directly affected by an amendment, waiver
              or other
              modification of the type described in the preceding clauses (iii),
              (iv),
              (v) and (vi) of the preceding sentence.

             

            Section
              13.17  Assignments
              and Participations.

             

            (a)  Any
              Lender
              may at any time assign to one or more Eligible Assignees all or any
              portion of
              such Lender's Loans together with all related obligations of such Lender
              hereunder. Except as Administrative Agent may otherwise agree, the
              amount of any
              such assignment (determined as of the date of the applicable Assignment
              Agreement or, if a "Trade
              Date"
              is
              specified in such Assignment Agreement, as of such Trade Date) shall be in
              a minimum
              aggregate amount equal to $1,000,000 or, if less, the assignor's entire
              interests in the outstanding Loans; provided, however, that, in connection
              with
              simultaneous assignments to two or more related Approved Funds, such
              Approved
              Funds shall be treated as one assignee for purposes of determining
              compliance
              with the minimum assignment size referred to above. Borrowers and Administrative
              Agent shall be entitled to continue to deal solely and directly with
              such Lender
              in connection with the interests so assigned to an Eligible Assignee
              until
              Administrative Agent shall have received and accepted an effective
              Assignment
              Agreement executed,
              delivered and fully completed by the applicable
              parties thereto
              and
              a
              processing fee of $3,500;
              provided,
              however,
              that
              only one processing fee shall be payable in connection with simultaneous
              assignments to two or more related Approved Funds. 

             

            
              
                -94-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            (b)  From
              and
              after the date on which the conditions described above have been met,
              (i) such Eligible Assignee shall be deemed automatically to have become
              a
              party hereto and, to the extent of the interests assigned to such Eligible
              Assignee pursuant to such Assignment Agreement, shall have the rights
              and
              obligations of a Lender hereunder and (ii) the assigning Lender, to the
              extent that rights and obligations hereunder have been assigned by
              it pursuant
              to such Assignment Agreement, shall be released from its rights and
              obligations
              hereunder (other than those that survive termination pursuant to Section
              14.1).
              Upon
              the request of the Eligible Assignee (and, as applicable, the assigning
              Lender) pursuant to an effective Assignment Agreement, each Borrower shall
              execute and deliver to Administrative Agent for delivery to the Eligible
              Assignee (and, as applicable, the assigning Lender) Notes in the aggregate
              principal amount of the Eligible Assignee's Term Loans (and, as applicable,
              Notes in the principal amount of that portion of the principal amount
              of the
              Term Loans retained by the assigning Lender). Upon receipt by the assigning
              Lender of such Note, the assigning Lender shall return to Borrower
              Representative any prior Note held by it.

             

            (c)  Notwithstanding
              the foregoing provisions of this Section
              13.17
              or any
              other provision of this Agreement, any Lender may at any time pledge
              or assign a
              security interest in all or any portion of its rights under this Agreement
              to
              secure obligations of such Lender, including any pledge or assignment
              to secure
              obligations to a Federal Reserve Bank; provided, however, that no such
              pledge or
              assignment shall release such Lender from any of its obligations hereunder
              or
              substitute any such pledgee or assignee for such Lender as a party
              hereto.

             

            (d)  Notwithstanding
              the foregoing provisions of this Section
              13.17
              or any
              other provision of this Agreement, Administrative Agent has the right,
              but not
              the obligation, to effectuate assignments of Loans via an electronic
              settlement
              system acceptable to Administrative Agent as designated in writing
              from time to
              time to the Lenders by Administrative Agent (the "Settlement
              Service").
              At any
              time when the Administrative Agent elects, in its sole discretion,
              to implement
              such Settlement Service, each such assignment shall be effected by
              the assigning
              Lender and proposed assignee pursuant to the procedures then in effect
              under the
              Settlement Service, which procedures shall be consistent with the other
              provisions of this Section
              13.17.
              Each
              assigning Lender and proposed Eligible Assignee shall comply with the
              requirements of the Settlement Service in connection with effecting
              any
              assignment of Loans pursuant to the Settlement Service. If so elected
              by each of
              Administrative Agent and the Borrowers, Administrative Agent's and
              the
              Borrowers' approval of such Eligible Assignee shall be deemed to have
              been
              automatically granted with respect to any transfer effected through
              the
              Settlement Service. Assignments and assumptions of the Loans shall
              be effected
              by the provisions otherwise set forth herein until Administrative Agent
              notifies
              Lenders of the Settlement Service as set forth herein.

             

            
              
                -95-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            (e)  Any
              Lender
              may at any time, without the consent of, or notice to, any Borrower
              or
              Administrative Agent, sell to one or more Persons participating interests
              in its
              Loans, commitments or other interests hereunder (any such Person, a
              "Participant").
              In the
              event of a sale by a Lender of a participating interest to a Participant,
              (i) such Lender's obligations hereunder
              shall remain unchanged for all purposes, (ii) Borrowers and Administrative
              Agent shall continue to deal solely
              and
              directly with such Lender in connection with such Lender's rights and
              obligations hereunder, and (iii) all amounts payable by each Borrower shall
              be determined as if such Lender had not sold such participation and
              shall
              be paid directly to such Lender. No Participant shall have any direct
              or
              indirect voting rights hereunder except with respect to (x) any event
              described in Section
              13.16
              expressly
              requiring the unanimous vote of all Lenders or, as applicable, all
              affected
              Lenders, and (y) the institution or commencement of enforcement remedies.
              Each Lender agrees to incorporate the requirements of the preceding
              sentence
              into each participation agreement which such Lender enters into with
              any
              Participant. Each Borrower agrees that if amounts outstanding under
              this
              Agreement are due and payable (as a result of acceleration or otherwise),
              each
              Participant shall be deemed to have the right of set-off in respect
              of its
              participating interest in amounts owing under this Agreement to the
              same extent
              as if the amount of its participating interest were owing directly
              to it as a
              Lender under this Agreement; provided, however, that such right of
              set-off shall
              be subject to the obligation of
              each
              Participant to share with Lenders, and Lenders agree to share with
              each
              Participant, as provided in Section
              11.5.

             

            (f)  Within
              thirty (30) days after: (i) receipt by Administrative Agent of notice
              and demand from any Lender for payment of additional costs as provided
              in
Section
              2.9,
              which
              demand shall not have been revoked, (ii) any Borrower is required to pay
              any additional amount to any Lender or any Governmental Authority for
              the
              account of any Lender pursuant to Section
              2.8,
              (iii) any Lender is a Defaulted Lender, and the circumstances causing such
              status shall not have been cured or waived; or (iv) any failure by any
              Lender to consent to a requested amendment, waiver or modification
              to any
              Financing Document in which Required Lenders have already consented
              to such
              amendment, waiver or modification but the consent of each Lender, or
              each Lender
              affected thereby, is required with respect thereto, (each relevant
              Lender in the
              foregoing clauses (i) through (iv) being an "Affected Lender") each
              of Borrower Representative and Administrative Agent may, at its option,
              notify
              such Affected Lender and, in the case of Borrowers' election, the Administrative
              Agent, of such Person's intention to obtain, at Borrowers' expense,
              a
              replacement Lender ("Replacement
              Lender") for
              such Lender, which Replacement Lender shall be an Eligible Assignee
              and, in the
              event the Replacement Lender is to replace an Affected Lender described
              in the
              preceding clause (iv), such Replacement Lender consents to the requested
              amendment, waiver or modification making the replaced Lender an Affected
              Lender.
              In the event Borrowers or Administrative Agent, as applicable, obtains
              a
              Replacement Lender within ninety (90) days following notice of its
              intention to do so, the Affected Lender shall sell, at par, and assign
              all of
              its Loans and funding commitments hereunder to such Replacement Lender
              in
              accordance with the procedures set forth in Section
              14.6(a);
              provided, however, that (i) Borrowers shall have reimbursed such Lender for
              its increased costs and additional payments for which it is entitled
              to
              reimbursement under Section
              2.8
              or
Section
              2.9,
              as
              applicable, of this Agreement through the date of such sale and assignment
              and
              (ii) Borrowers shall pay to Administrative Agent the $3,500 processing fee
              in respect of such assignment. In the event that a replaced Lender
              does not
              execute an Assignment Agreement pursuant to Section
              13.17(a) within
              five (5) Business Days after receipt by such replaced Lender of notice of
              replacement pursuant to this Section
              13.17(f) and
              presentation to such replaced Lender of an Assignment Agreement evidencing
              an
              assignment pursuant to this Section
              13.17(f),
              such
              replaced Lender shall be deemed to have consented to the terms of such
              Assignment Agreement, and any such Assignment Agreement executed by
              Administrative Agent, the Replacement Lender and, to the extent required
              pursuant to Section
              13.17(a),
              Borrowers, shall be effective for purposes of this Section
              13.17(f) and
              Section
              13.17(a).
              Upon any
              such assignment and payment, such replaced Lender shall no longer constitute
              a
              "Lender" for purposes hereof, other than with respect to such rights
              and
              obligations that survive termination as set forth in Section
              14.1.

             

            
              
                -96-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            Section
              13.18  Definitions.

             

            As
              used in
              this Article 13, the following terms have the following meanings:

             

            "Additional
              Titled Agents"
              has the
              meaning set forth in Section
              13.15.

             

            "Affected
              Lender"
              has the
              meaning set forth in Section
              13.17(f).

             

            "Approved
              Fund"
              means
              any (a) investment company, fund, trust, securitization vehicle or conduit
              that is (or will be) engaged in making, purchasing, holding or otherwise
              investing in commercial loans and similar extensions of credit in the
              ordinary
              course of its business or (b) any Person (other than a natural
              person) which temporarily warehouses loans for any Lender or any entity
              described in the preceding clause (a) and that, with respect to each of the
              preceding clauses (a) and (b), is administered or managed by (i) a
              Lender, (ii) an Affiliate of a Lender or (iii) a Person (other than a
              natural person) or an Affiliate of a Person (other than a natural
              person) that administers or manages a Lender.

             

            "Assignment
              Agreement"
              means an
              agreement substantially in the form of Exhibit
              A
              hereto.

             

            "Defaulted
              Lender"
              means,
              so long as such failure shall remain in existence and uncured, any
              Lender which
              shall have failed to make any Loan or other credit accommodation, disbursement
              or reimbursement required pursuant to the terms of any Financing
              Document.

             

            "Eligible
              Assignee"
              means
              (a) a Lender, (b) an Affiliate of a Lender, (c) an Approved Fund,
              and (d) any other Person (other than a natural person) approved by
              (i) Administrative Agent, and (ii) unless an Event of Default has
              occurred and is continuing, Borrower Representative (such approval
              of Borrower
              Representative not to be unreasonably withheld or delayed, and shall
              be deemed
              provided unless expressly withheld by Borrower Representative within
              three
              (3) Business Days of request therefor); provided, however, that
              notwithstanding the foregoing, "Eligible
              Assignee"
              shall
              not include any Borrower or any of a Borrower's Affiliates.

             

            
              
                -97-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            "Federal
              Funds Rate"
              means,
              for any day, the rate of interest per annum (rounded upwards, if necessary,
              to
              the nearest whole multiple of 1/100 of 1%) equal to the weighted average of
              the rates on overnight Federal funds transactions with members of the
              Federal
              Reserve System arranged by Federal funds brokers on such day, as published
              by
              the Federal Reserve Bank of New York on the Business Day next succeeding
              such
              day, provided, however, that (a) if such day is not a Business Day, the
              Federal Funds Rate for such day shall be such rate on such transactions
              on the
              next preceding Business Day, and (b) if no such rate is so published on
              such next preceding Business Day, the Federal Funds Rate for such day
              shall be
              the average rate quoted to Administrative Agent on such day on such
              transactions
              as determined by Administrative Agent.

             

            ARTICLE
              14 

            MISCELLANEOUS

             

            Section
              14.1  Survival.

             

            All
              agreements, representations and warranties made herein and in every
              other
              Financing Document shall survive the execution and delivery of this
              Agreement
              and the other Financing Documents. The provisions of Sections 2.8
              and
2.9
              and
              Article 12 and 13 shall survive the payment of the Obligations (both with
              respect to any Lender and all Lenders collectively) and any termination of
              this Agreement.

             

            Section
              14.2  No
              Waivers.

             

            No
              failure
              or delay by Administrative Agent or any Lender in exercising any right,
              power or
              privilege under any Financing Document shall operate as a waiver thereof
              nor
              shall any single or partial exercise thereof preclude any other or
              further
              exercise thereof or the exercise of any other right, power or privilege.
              The
              rights and remedies herein and therein provided shall be cumulative
              and not
              exclusive of any rights or remedies provided by law. Any reference
              in any
              Financing Document to the "continuing" nature of any Event of Default
              shall not
              be construed as establishing or otherwise indicating that any Borrower
              or any
              other Credit Party has the independent right to cure any such Event
              of Default,
              but is rather presented merely for convenience should such Event of
              Default be
              waived in accordance with the terms of the applicable Financing
              Documents.

             

            Section
              14.3  Notices.

             

            (a)  All
              notices, requests and other communications to any party hereunder shall
              be in
              writing (including prepaid overnight courier, facsimile transmission
              or similar
              writing) and shall be given to such party at its address, facsimile number
              or e-mail address set forth on the signature pages hereof (or, in the
              case of
              any such Lender who becomes a Lender after the date hereof, in an Assignment
              Agreement or in a notice delivered to Borrower Representative and Administrative
              Agent by the assignee Lender forthwith upon such assignment) or at such
              other address, facsimile number or e-mail address as such party may
              hereafter
              specify for the purpose by notice to Administrative Agent and Borrower
              Representative; provided, however, that notices, requests or other
              communications shall be permitted by electronic means only in accordance
              with
              the provisions of Section
              14.3(b).
              Each
              such notice, request or other communication shall be effective (i) if given
              by facsimile, when such notice is transmitted to the facsimile number
              specified
              by this Section and the sender receives a confirmation of transmission
              from the
              sending facsimile machine, or (ii) if given by mail, prepaid overnight
              courier or any other means, when received or
              when
              receipt is refused at
              the
              applicable address specified by this Section.

             

            
              
                -98-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            (b)  Notices
              and other communications to the parties hereto may be delivered or
              furnished by
              electronic communication (including facsimile transmission, e-mail
              and Internet
              or intranet websites) pursuant to procedures approved from time to time by
              Administrative Agent, provided, however, that the foregoing shall not
              apply to
              default notices or any notice of the exercise of remedies to any Credit
              Party
              unless such electronic communication is confirmed within one (1) Business
              Day by overnight courier or notices sent directly to any Lender if
              such Lender
              has notified the Administrative Agent that it is incapable of receiving
              notices
              by electronic communication. The Administrative Agent or Borrower Representative
              may, in its discretion, agree to accept notices and other communications
              to it
              hereunder by electronic communications pursuant to procedures approved
              by it,
              provided, however, that approval of such procedures may be limited
              to particular
              notices or communications.

             

            (c)  Unless
              the
              parties otherwise agree, (i) notices and other communications sent to an
              e-mail address shall be deemed received upon the sender's receipt of
              an
              acknowledgment from the intended recipient (such as by the "return
              receipt
              requested" function, as available, return e-mail or other written
              acknowledgment), and (ii) notices or communications posted to an Internet
              or intranet website shall be deemed received upon the deemed receipt
              by the
              intended recipient at its e-mail address as described in the foregoing
              clause
              (i) of notification that such notice or communication is available and
              identifying the website address therefor, provided, however, that if
              any such
              notice or other communication is not sent or posted during normal business
              hours, such notice or communication shall be deemed to have been sent
              at the
              opening of business on the next Business Day.

             

            Section
              14.4  Severability.

             

            In
              case
              any provision of or obligation under this Agreement or any other Financing
              Document shall be invalid, illegal or unenforceable in any jurisdiction,
              the
              validity, legality and enforceability of the remaining provisions or
              obligations, or of such provision or obligation in any other jurisdiction,
              shall
              not in any way be affected or impaired thereby. 

             

            
              
                -99-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            Section
              14.5  Amendments
              and Waivers.

             

            No
              provision of this Agreement or any other Financing Document may be
              materially
              amended, waived or otherwise modified unless such amendment, waiver
              or other
              modification is in writing and is signed or otherwise approved by Borrowers,
              the
              Required Lenders and any other Lender to the extent required under
Section
              13.16;
              provided,
              however,
              that
              Administrative Agent shall be entitled, in its sole but commercially
              reasonable
              discretion and without the consent of any other Lender, to waive any
              financial
              covenant of any Credit Party. 

             

            Section
              14.6  Credit
              Party Assignments.

             

            No
              Credit
              Party may assign, delegate or otherwise transfer any of its rights
              or other
              obligations hereunder or under any other Financing Document without
              the prior
              written consent of Administrative Agent and each Lender.

             

            Section
              14.7  Headings.

             

            Headings
              and captions used in the Financing Documents (including the Exhibits,
              Schedules
              and Annexes hereto and thereto) are included for convenience of reference
              only and shall not be given any substantive effect.

             

            Section
              14.8  Confidentiality.

             

            Administrative
              Agent and each Lender shall hold all non-public information regarding
              the Credit
              Parties, their Affiliates and their respective businesses identified
              as such by
              Borrowers and obtained by Administrative Agent or any Lender pursuant
              to the
              requirements hereof in accordance with such Person's customary procedures
              for
              handling information of such nature, except that disclosure of such
              information
              may be made (a) to their respective agents, employees, Subsidiaries,
              Affiliates, attorneys, auditors, professional consultants, rating agencies,
              insurance industry associations and portfolio management services,
              (b) to
              prospective transferees or purchasers of any interest in the Loans,
              provided,
              however, that any such Persons shall have agreed to be bound by the
              provisions
              of this Section
              14.8,
              (c) as required by Law, subpoena, judicial order or similar order and in
              connection with any litigation, (d) as may be required in connection with
              the examination, audit or similar investigation of such Person and
(e) to
              a Person that is a trustee, investment advisor, collateral manager,
              servicer,
              noteholder or secured party in a Securitization (as hereinafter defined) in
              connection with the administration, servicing and reporting on the
              assets
              serving as collateral for such Securitization. For the purposes of
              this Section,
              "Securitization"
              shall
              mean a public or private offering by a Lender or any of its Affiliates
              or their
              respective successors and assigns, of securities which represent an
              interest in,
              or which are collateralized, in whole or in party, by the Loans.
              Confidential information shall include only such information identified
              as such
              at the time provided to Administrative Agent and shall not include
              information
              that either: (i) is in the public domain, or becomes part of the public
              domain after disclosure to such Person through no fault of such Person,
              or
              (ii) is disclosed to such Person by a Person other than a Credit Party,
              provided, however, Administrative Agent does not have actual knowledge
              that such
              Person is prohibited from disclosing such information. The obligations
              of
              Administrative Agent and Lenders under this Section
              14.8
              shall
              supersede and replace the obligations of Administrative Agent and Lenders
              under
              any confidentiality agreement in respect of this financing executed
              and
              delivered by Administrative Agent or any Lender prior to the date
              hereof.

             

            
              
                -100-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            Section
              14.9  Waiver
              of Consequential and Other Damages.

             

            To
              the
              fullest extent permitted by applicable law, no Borrower shall assert,
              and each
              Borrower hereby waives, any claim against any Indemnitee, on any theory
              of
              liability, for special, indirect, consequential or punitive damages
              (as opposed
              to direct or actual damages) arising out of, in connection with, or as a
              result of this Agreement, any other Financing Document or any agreement
              or
              instrument contemplated hereby or thereby, the transactions contemplated
              hereby
              or thereby, any Loan or the use of the proceeds thereof. No Indemnitee
              shall be
              liable for any damages arising from the use by unintended recipients
              of any
              information or other materials distributed by it through telecommunications,
              electronic or other information transmission systems in connection
              with this
              Agreement or the other Financing Documents or the transactions contemplated
              hereby or thereby.

             

            Section
              14.10  GOVERNING
              LAW; SUBMISSION TO JURISDICTION.

             

            THIS
              AGREEMENT, EACH NOTE AND EACH OTHER FINANCING DOCUMENT, AND ALL MATTERS
              RELATING
              HERETO OR THERETO OR ARISING THEREFROM (WHETHER SOUNDING IN CONTRACT
              LAW, TORT
              LAW OR OTHERWISE), SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
              ENFORCED IN
              ACCORDANCE WITH, THE LAWS OF THE STATE OF ILLINOIS, WITHOUT REGARD
              TO CONFLICTS
              OF LAWS PRINCIPLES. EACH BORROWER HEREBY CONSENTS TO THE JURISDICTION
              OF ANY
              STATE OR FEDERAL COURT LOCATED WITHIN CHICAGO, STATE OF ILLINOIS AND
              IRREVOCABLY
              AGREES THAT, SUBJECT TO ADMINISTRATIVE AGENT'S ELECTION, ALL ACTIONS
              OR
              PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER
              FINANCING
              DOCUMENTS SHALL BE LITIGATED IN SUCH COURTS. EACH BORROWER EXPRESSLY
              SUBMITS AND
              CONSENTS TO THE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY
              DEFENSE OF
              FORUM NON CONVENIENS. EACH BORROWER HEREBY WAIVES PERSONAL SERVICE
              OF ANY AND
              ALL PROCESS AND AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE
              UPON SUCH
              BORROWER BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED,
              ADDRESSED TO
              SUCH BORROWER AT THE ADDRESS SET FORTH IN THIS AGREEMENT AND SERVICE
              SO MADE
              SHALL BE COMPLETE TEN (10) DAYS AFTER THE SAME HAS BEEN POSTED.


             

            Section
              14.11  WAIVER
              OF JURY TRIAL.

             

            EACH
              OF EACH BORROWER, ADMINISTRATIVE AGENT AND THE LENDERS HEREBY IRREVOCABLY
              WAIVES
              ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING
              ARISING OUT
              OF OR RELATING TO THE FINANCING DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED
              THEREBY AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED
              BEFORE A
              COURT AND NOT BEFORE A JURY. EACH OF EACH BORROWER, ADMINISTRATIVE
              AGENT AND
              EACH LENDER ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT
              TO ENTER INTO
              A BUSINESS RELATIONSHIP, THAT EACH HAS RELIED ON THE WAIVER IN ENTERING
              INTO
              THIS AGREEMENT AND THE OTHER FINANCING DOCUMENTS, AND THAT EACH WILL
              CONTINUE TO
              RELY ON THIS WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH OF EACH
              BORROWER,
              ADMINISTRATIVE AGENT AND EACH LENDER WARRANTS AND REPRESENTS THAT EACH
              HAS HAD
              THE OPPORTUNITY OF REVIEWING THIS JURY WAIVER WITH LEGAL COUNSEL, AND
              THAT EACH
              KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS.

             

            
              
                -101-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            Section
              14.12  Publication;
              Advertisement.

             

            (a)  Publication.
              No
              Credit Party will directly or indirectly publish, disclose or otherwise
              use in
              any public disclosure, advertising material, promotional material,
              press release
              or interview, any reference to the name, logo or any trademark of Merrill
              Lynch
              or any of its Affiliates or any reference to this Agreement or the
              financing
              evidenced hereby, in any case except (i) as required by Law, subpoena or
              judicial or similar order, in which case the applicable Credit Party
              shall give
              Administrative Agent prior written notice of such publication or other
              disclosure, or (ii) with Merrill Lynch's prior written
              consent.

             

            (b)  Advertisement.
              Each
              Lender and each Credit Party hereby authorizes Merrill Lynch to publish
              the name
              of such Lender and Credit Party, the existence of the financing arrangements
              referenced under this Agreement, the primary purpose and/or structure
              of those
              arrangements, the amount of credit extended under each facility, the
              title and
              role of each party to this Agreement, and the total amount of the financing
              evidenced hereby in any "tombstone", comparable advertisement or press
              release
              which Merrill Lynch elects to submit for publication. In addition,
              each Lender
              and each Credit Party agrees that Merrill Lynch may provide lending
              industry
              trade organizations with information necessary and customary for inclusion
              in
              league table measurements after the Closing Date. With respect to any
              of the
              foregoing, Merrill Lynch shall provide Borrowers with an opportunity
              to review
              and confer with Merrill Lynch regarding the contents of any such tombstone,
              advertisement or information, as applicable, prior to its submission
              for
              publication and, following such review period, Merrill Lynch may, from
              time to
              time, publish such information in any media form desired by Merrill
              Lynch, until
              such time that Borrowers shall have requested Merrill Lynch cease any
              such
              further publication.

             

            Section
              14.13  Counterparts;
              Integration.

             

            This
              Agreement and the other Financing Documents may be signed in any number
              of
              counterparts, each of which shall be an original, with the same effect
              as if the
              signatures thereto and hereto were upon the same instrument. Signatures
              by
              facsimile shall bind the parties hereto. This Agreement and the other
              Financing
              Documents constitute the entire agreement and understanding among the
              parties
              hereto and supersede any and all prior agreements and understandings,
              oral or
              written, relating to the subject matter hereof.

             

            
              
                -102-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            Section
              14.14  No
              Strict Construction.

             

            The
              parties hereto have participated jointly in the negotiation and drafting
              of this
              Agreement. In the event an ambiguity or question of intent or interpretation
              arises, this Agreement shall be construed as if drafted jointly by
              the parties
              hereto and no presumption or burden of proof shall arise favoring or
              disfavoring
              any party by virtue of the authorship of any provisions of this
              Agreement.

             

            Section
              14.15  Time.

             

            Time
              is of
              the essence in each Borrower's and each other Credit Party's performance
              under
              this Agreement and all other Financing Documents.

             

            Section
              14.16  Lender
              Approvals.

             

            Unless
              expressly provided herein to the contrary, any approval, consent, waiver
              or
              satisfaction of Administrative Agent or Lenders with respect to any
              matter that
              is the subject of this Agreement, the other Financing Documents may
              be granted
              or withheld by Administrative Agent and Lenders in their sole and absolute
              discretion and credit judgment. 

             

            Section
              14.17  [Reserved.]

             

            SECTION
              14.18  WAIVERS.

             

            EACH
              BORROWER WAIVES THE BENEFIT OF ANY AND EVERY STATUTE, ORDINANCE, OR
              RULE OF
              COURT WHICH MAY BE LAWFULLY WAIVED CONFERRING UPON SUCH BORROWER ANY RIGHT
              OR PRIVILEGE OF EXEMPTION, HOMESTEAD RIGHTS, STAY OF EXECUTION, OR
              SUPPLEMENTARY
              PROCEEDINGS, OR OTHER RELIEF FROM THE ENFORCEMENT OR IMMEDIATE ENFORCEMENT
              OF A
              JUDGMENT OR RELATED PROCEEDINGS ON A JUDGMENT. 

             

            Section
              14.19  Release
              of Administrative Agent and Lenders. 

             

            Each
              Borrower, voluntarily, knowingly, unconditionally, and irrevocably,
              with
              specific and express intent, for and on behalf of itself and its agents,
              attorneys, heirs, successors, and assigns (collectively the "Releasing
              Parties") does
              hereby fully and completely release, acquit and forever discharge each
              Indemnitee, and any other person, firm, business, corporation, insurer,
              or
              association which may be responsible or liable for the acts or omissions
              of any
              Indemnitee, or who may be liable for the injury or damage resulting
              therefrom
              (collectively the "Released
              Parties"),
              of and
              from any and all actions, causes of action, suits, debts, disputes,
              damages,
              claims, obligations, liabilities, costs, expenses and demands of any
              kind
              whatsoever, at law or in equity, whether matured or unmatured, liquidated
              or
              unliquidated, vested or contingent, choate or inchoate, known or unknown
              that
              the Releasing Parties (or any of them) has against the Released Parties or
              any of them (whether directly or indirectly). The foregoing release
              shall be
              deemed renewed and reaffirmed as of the date of each advance of proceeds
              under
              any Loans and each other accommodation made or granted to any Borrower
              by any
              Released Party under any Financing Document. Each Borrower acknowledges
              that the
              foregoing release is a material inducement to Administrative Agent's
              and each
              Lender's decision to extend to Borrower the financial accommodations
              hereunder
              and has been relied upon by Administrative Agent and each Lender in
              agreeing to
              extend the credit herein contemplated and in making each advance or
              other
              accommodation hereunder. 

             

            
              
                -103-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            ARTICLE
              15

            JOINT
              AND SEVERAL LIABILITY; GUARANTOR PROVISIONS

             

            Section
              15.1  Joint
              and Several Obligations.

             

            (a)  Borrowers
              is defined collectively to include all Persons constituting the Borrowers;
              provided, however, that any references herein to "any Borrower", "each
              Borrower"
              or similar references, shall be construed as a reference to each individual
              Person comprising the Borrowers. Each Person comprising Borrowers shall
              be
              jointly and severally liable for all of the obligations of Borrowers
              under this
              Agreement and the Borrowers under the Affiliated Financing Documents
              (the
              "Affiliated
              Borrowers"),
              regardless of which of the Borrowers or the Affiliated Borrowers actually
              receives the proceeds of the indebtedness governed hereby or the benefit
              of any
              other extensions of credit hereunder or the benefit of any other extension
              of
              credit under the Affiliated Financing Documents, or the manner in which
              the
              Borrowers, the Affiliated Borrowers, the Administrative Agent or the
              Lenders
              account therefor in their respective books and records. In addition,
              each entity
              comprising Borrowers hereby acknowledges and agrees that all of the
              representations, warranties, covenants, obligations, conditions, agreements
              and
              other terms contained in this Agreement shall be applicable to and
              shall be
              binding upon and measured and enforceable individually against each
              Person
              comprising Borrowers as well as all such Persons when taken together.
              By way of
              illustration, but without limiting the generality of the foregoing,
              the terms of
Section 11.1
              of this
              Agreement are to be applied to each individual Person comprising the
              Borrowers
              (as well as to all such Persons taken as a whole), such that the occurrence
              of
              any of the events described in Section 11.1
              of this
              Agreement as to any Person comprising the Borrowers shall constitute
              an Event of
              Default even if such event has not occurred as to any other Persons
              comprising
              the Borrowers or as to all such Persons taken as a whole (except as
              otherwise
              expressly provided therein).

             

            (b)  Each
              Borrower acknowledges that it will enjoy significant benefits from
              the business
              conducted by the other Borrowers and the Affiliated Borrowers because
              of, inter
              alia, their combined ability to bargain with other Persons including
              without
              limitation their ability to receive the credit extensions under this
              Agreement
              and the other Financing Documents and the Affiliated Financing Documents
              on
              favorable terms granted by this Agreement and other Financing Documents
              and the
              Affiliated Financing Documents which would not have been available
              to an
              individual Borrower acting alone. Each Borrower has determined that
              it is in its
              best interest to procure the credit facilities contemplated hereunder,
              with the
              credit support of the other Borrowers as contemplated by this Agreement
              and the
              other Financing Documents and the credit support of the Affiliated
              Borrowers as
              contemplated by the Affiliated Financing Documents.

             

            
              
                -104-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            (c)  Administrative
              Agent and Lenders have advised the Borrowers that each of them is unwilling
              to
              enter into this Agreement, the other Financing Documents and the Affiliated
              Financing Documents and make available the credit facilities extended
              hereby or
              thereby to any Borrower or Affiliated Borrower unless each Borrower
              agrees,
              among other things, to be jointly and severally liable for the due
              and proper
              payment of the Obligations of each other Borrower under this Agreement
              and other
              Financing Documents and of each Affiliated Borrower under the Affiliated
              Financing Documents. Each Borrower has determined that it is in its
              best
              interest and in pursuit of its purposes that it so induce the Administrative
              Agent and Lender to extend credit pursuant to this Agreement and the
              other
              documents executed in connection herewith (i) because of the desirability
              to each Borrower of the credit facilities hereunder and to each Affiliated
              Borrower of the credit facilities under the Affiliated Financing Documents
              and
              the interest rates and the modes of borrowing available hereunder and
              thereunder, (ii) because each Borrower may engage in transactions jointly
              with other Borrowers or Affiliated Borrowers, and (iii) because each
              Borrower may require, from time to time, access to funds under this
              Agreement
              for the purposes herein set forth. Each Borrower, individually, expressly
              understands, agrees and acknowledges, that the credit facilities contemplated
              hereunder would not be made available on the terms herein in the absence
              of the
              collective credit of all of the Persons constituting the Borrowers
              and the
              Affiliated Borrowers, the joint and several liability of all such Persons,
              and
              the cross-collateralization of the collateral of all such Persons hereunder
              and
              under the Affiliated Financing Documents. Accordingly, each Borrower,
              individually acknowledges that the benefit to each of the Persons comprising
              the
              Borrowers as a whole constitutes reasonably equivalent value, regardless
              of the
              amount of the indebtedness actually borrowed by, advanced to, or the
              amount of
              credit provided to, or the amount of collateral provided by, any individual
              Borrower.

             

            (d)  Each
              Borrower has determined that it is and, after giving effect to the
              transactions
              contemplated by this Agreement, the other Financing Documents and the
              Affiliated
              Financing Documents (including, without limitation, the inter-Borrower
              arrangement set forth in this Section) will be Solvent and has and will
              have the ability to pay its debts from time to time incurred in connection
              with
              the conduct of its business as such debts mature and that the value
              of the
              benefits to be derived by such Borrower from the access to funds under
              this
              Agreement (including, without limitation, the inter-Borrower arrangement
              set
              forth in this Section) is reasonably equivalent to the obligations
              undertaken pursuant hereto.

             

            (e)  The
              Borrower Representative (on behalf of each Borrower) shall maintain records
              specifying (i)  all Obligations incurred by each Borrower, (ii)  the
              date of such incurrence, (iii) the date and amount of any payments made in
              respect of such Obligations, and (iv) all inter-Borrower obligations
              pursuant to this Section. The Borrower Representative shall make copies
              of such
              records available to the Administrative Agent, upon request.

             

            
              
                -105-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            (f)  To
              the
              extent that applicable law otherwise would render the full amount of
              the joint
              and several obligations of any Borrower hereunder, under the other
              Financing
              Documents and under the Affiliated Financing Documents invalid or unenforceable,
              such Borrower's obligations hereunder and under the other Financing
              Documents
              and Affiliated Financing Documents shall be limited to the maximum
              amount which
              does not result in such invalidity or unenforceability; provided, however,
              that
              each Borrower's obligations hereunder and under the other Financing
              Documents
              and Affiliated Financing Documents shall be presumptively valid and
              enforceable
              to their fullest extent in accordance with the terms hereof or thereof,
              as if
              this Section were not a part of this Agreement.

             

            (g)  To
              the
              extent that any Borrower shall make a payment under this Section of all or
              any of the Obligations (other than credit facilities made to that Borrower
              for
              which it is primarily liable) (a "Joint
              Liability Payment") which,
              taking into account all other Joint Liability Payments then previously
              or
              concurrently made by any other Borrower, exceeds the amount which such
              Borrower
              would otherwise have paid if each Borrower had paid the aggregate Obligations
              satisfied by such Joint Liability Payments in the same proportion that
              such
              Borrower's Allocable Amount (as defined below) (as determined immediately
              prior to such Joint Liability Payments) bore to the aggregate Allocable
              Amounts of each of the Borrowers as determined immediately prior to
              the making
              of such Joint Liability Payments, then, following indefeasible payment
              in full
              in cash of the Obligations and termination of the Commitments, such
              Borrower
              shall be entitled to receive contribution and indemnification payments
              from, and
              be reimbursed by, each other Borrower for the amount of such excess,
              pro rata
              based upon their respective Allocable Amounts in effect immediately
              prior to
              such Joint Liability Payments. As of any date of determination, the
              "Allocable
              Amount"
              of any
              Borrower shall be equal to the maximum amount of the claim which could
              then be
              recovered from such Borrower under this Section without rendering such
              claim voidable or avoidable under Section 548 of Chapter 11 of the
              Bankruptcy Code or under any applicable state Uniform Fraudulent Transfer
              Act,
              Uniform Fraudulent Conveyance Act or similar statute or common law.

             

            (h)  Except
              as
              specifically provided in this Agreement or any of the other Financing
              Documents,
              Administrative Agent shall have the exclusive right to determine the
              time and
              manner of application of any payments or credits, whether received
              from any
              Borrower or any other source, and such determination shall be binding
              on all
              Borrowers. All such payments and credits may be applied, reversed and
              reapplied,
              in whole or in part, to any of the Obligations as Administrative Agent
              shall
              determine in its sole discretion without affecting the validity or
              enforceability of the Obligations of any other Borrower or Affiliated
              Borrower.

             

            (i)  Each
              Borrower hereby agrees that, except as hereinafter provided, its obligations
              hereunder shall be unconditional, irrespective of (i) the absence of any
              attempt to collect the Obligations from any obligor or other action
              to enforce
              the same; (ii) the waiver or consent by Administrative Agent and/or any
              applicable Lender(s) with respect to any provision of any instrument
              evidencing the Obligations, or any part thereof, or any other agreement
              heretofore, now or hereafter executed by a Borrower or Affiliated Borrower
              and
              delivered to Administrative Agent and/or any Lender; (iii) failure by
              Administrative Agent to take any steps to perfect and maintain its
              security
              interest in, or to preserve its rights to, any security or collateral
              for the
              Obligations; (iv) the institution of any proceeding under the United States
              Bankruptcy Code, or any similar proceeding, by or against a Borrower
              or
              Affiliated Borrower or Administrative Agent's or any Lender's election
              in any
              such proceeding of the application of Section 1111(b)(2) of the United
              States Bankruptcy Code; (v) any borrowing or grant of a security interest
              by a Borrower or Affiliated Borrower as debtor-in-possession, under
              Section 364 of the United States Bankruptcy Code; (vi) the
              disallowance, under Section 502 of the United States Bankruptcy Code, of
              all or any portion of Administrative Agent's or any Lender's claim(s) for
              repayment of any of the Obligations; or (vii) any other circumstance other
              than payment in full of the Obligations which might otherwise constitute
              a legal
              or equitable discharge or defense of a guarantor or surety.

             

            
              
                -106-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            (j)  Until
              all
              Obligations have been paid and satisfied in full, no payment made by
              or for the
              account of a Borrower or Affiliated Borrower including, without limitation,
              (i) a payment made by such Borrower or Affiliated Borrower on behalf of
              the
              liabilities of any other Borrower or Affiliated Borrower, or (ii) a payment
              made by any other person under any Guarantee, shall entitle such Borrower
              or
              Affiliated Borrower, by subrogation or otherwise, to any payment from
              any other
              Borrower or Affiliated Borrower or from or out of any other Borrower's
              or
              Affiliated Borrower's property and such Borrower or Affiliated Borrower
              shall
              not exercise any right or remedy against any other Borrower or Affiliated
              Borrower or any property of any other Borrower or Affiliated Borrower
              by reason
              of any performance of such Borrower or Affiliated Borrower of its joint
              and
              several obligations hereunder.

             

            (k)  Any
              notice
              given by one Borrower hereunder shall constitute and be deemed to be
              notice
              given by all Borrowers and Affiliated Borrowers, jointly and severally.
              Notice
              given by Administrative Agent or any Lender to any one Borrower or
              Affiliated
              Borrower hereunder or pursuant to any Financing Documents or Affiliated
              Financing Documents in accordance with the terms hereof or thereof
              shall
              constitute notice to each and every Borrower and Affiliated Borrower.
              The
              knowledge of one Borrower or Affiliated Borrower shall be imputed to
              all
              Borrowers and Affiliated Borrowers and any consent by one Borrower
              or Affiliated
              Borrower shall constitute the consent of and shall bind all Borrowers
              and
              Affiliated Borrower.

             

            (l)  This
              Section is intended only to define the relative rights of Borrowers and
              Affiliated Borrowers and nothing set forth in this Section is intended to
              or shall impair the obligations of Borrowers, jointly and severally,
              to pay any
              amounts as and when the same shall become due and payable in accordance
              with the
              terms of this Agreement or any other Financing Documents. Nothing contained
              in
              this Section shall limit the liability of any Borrower to pay the credit
              facilities made directly or indirectly to that Borrower and accrued
              interest,
              Fees and expenses with respect thereto for which such Borrower shall
              be
              primarily liable.

             

            (m)  The
              parties hereto acknowledge that the rights of contribution and indemnification
              hereunder shall constitute assets of each Borrower to which such contribution
              and indemnification is owing. The rights of any indemnifying Borrower
              against
              the other Borrowers or Affiliated Borrowers under this Section shall be
              exercisable upon the full and indefeasible payment of the Obligations
              and the
              termination of the credit facilities hereunder and under the Affiliated
              Financing Documents.

             

            
              
                -107-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            Section
              15.2  Guarantor
              Provisions.

             

            (a)  Each
              Borrower, as joint and several primary obligor of the Obligations directly
              incurred by any other Borrower or by any Affiliated Borrower, authorizes
              Administrative Agent and Lenders, without giving notice to such Borrower
              or to
              any other Borrower or any Affiliated Borrower (to the extent permitted
              hereunder
              or under any Affiliated Financing Document) or obtaining such Borrower's
              consent or any other Borrower's or Affiliated Borrower's consent (to
              the extent
              permitted hereunder or under any Affiliated Financing Document) and without
              affecting the liability of such Borrower for the Obligations directly
              incurred
              by the other Borrower or Affiliated Borrower, from time to time to:

             

            (i)  compromise,
              settle, renew, extend the time for payment, change the manner or terms
              of
              payment, liquidate, discharge the performance of, decline to enforce,
              or release
              all or any of the Obligations; grant other indulgences to any Borrower
              in
              respect thereof; or modify in any manner any documents relating to
              the
              Obligations;

             

            (ii)  declare
              all Obligations due and payable upon the occurrence and during the
              continuance
              of an Event of Default;

             

            (iii)  take
              and
              hold security for the performance of the Obligations of any Borrower
              and
              exchange, enforce, waive and release any such security;

             

            (iv)  release,
              surrender or exchange any deposits or other property securing the Obligations
              or
              on which Administrative Agent and/or any applicable Lender(s) at any time
              may have a Lien; release, substitute or add any one or more endorsers
              or
              guarantors of the Obligations of any other Borrower or Affiliated Borrower
              or
              such Borrower; or compromise, settle, renew, extend the time for payment,
              discharge the performance of, decline to enforce, or release all or
              any
              obligations of any such endorser or guarantor or other Person who is
              now or may
              hereafter be liable on any Obligations or release, surrender or exchange
              any
              deposits or other property of any such Person;

             

            (v)  accept
              partial payments, apply Payments received by Administrative Agent and/or
              any
              applicable Lender(s) from any Borrower or any Affiliated Borrower to any
              Obligations, in such order as Administrative Agent shall determine,
              in its sole
              discretion; and

             

            (vi)  subject
              to
              the provisions hereof, assign this Agreement in whole or in part.

             

            (b)  Each
              Borrower, as a primary, joint and several obligor with respect to the
              Obligations directly incurred by any other Borrower or any Affiliated
              Borrower,
              waives:

             

            (i)  any
              defense based upon any legal disability or other defense of any other
              Borrower
              or any Affiliated Borrower, or by reason of the cessation or limitation
              of the
              liability of any other Borrower or any Affiliated Borrower from any
              cause (other
              than full payment of all Obligations), including, without limitation,
              failure of
              consideration, breach of warranty, statute of frauds, statute of limitations,
              accord and satisfaction, and usury;

             

            (ii)  any
              defense based upon any legal disability or other defense of any other
              guarantor
              or other Person;

             

            (iii)  any
              defense based upon any lack of authority of the officers, directors,
              partners or
              agents acting or purporting to act on behalf of any other Borrower
              or Affiliated
              Borrower or any principal of any other Borrower or Affiliated Borrower
              or any
              defect in the formation of any other Borrower or Affiliated Borrower
              or any
              principal of any other Borrower or Affiliated Borrower;

             

            (iv)  any
              defense based upon the application by any other Borrower or Affiliated
              Borrower
              of the proceeds of the credit facilities or the loans under the Affiliated
              Financing Documents for purposes other than the purposes represented
              by such
              other Borrower or Affiliated Borrower to Administrative Agent and Lenders
              or
              intended or understood by Administrative Agent and Lenders or such
              Borrower;

             

            (v)  any
              defense based on such Borrower's rights, under statute or otherwise,
              to require
              Administrative Agent and/or any applicable Lender(s) to sue any other
              Borrower or Affiliated Borrower or otherwise to exhaust its rights
              and remedies
              against any other Borrower or Affiliated Borrower or any other Person
              or against
              any collateral before seeking to enforce its right to require such
              Borrower to
              satisfy the Obligations of any other Borrower or Affiliated
              Borrower;

             

            (vi)  any
              defense based on Administrative Agent's or any Lender's failure at
              any time to
              require strict performance by any Borrower of any provision of the
              Financing
              Documents or by any Affiliated Borrower of any provisions of the Affiliated
              Financing Documents. Such Borrower agrees that no such failure shall
              waive,
              alter or diminish any right of Administrative Agent and/or any applicable
              Lender(s) thereafter to demand strict compliance and performance therewith.
              Nothing contained herein shall prevent Administrative Agent and/or
              any
              applicable Lender(s) from foreclosing on any Lien, or exercising any rights
              available to Administrative Agent and/or any applicable
              Lender(s) thereunder, and the exercise of any such rights shall not
              constitute a legal or equitable discharge of such Borrower;

             

            (vii)  any
              defense arising from any act or omission of Administrative Agent and/or
              any
              applicable Lender(s) which changes the scope of such Borrower's risks
              hereunder, but the foregoing shall not limit any Credit Party from
              asserting
              claims based on breaches of this Agreement or willful misconduct by
              Administrative Agent and/or any applicable Lender;

             

            
              
                -108-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            (viii)  any
              defense based upon Administrative Agent's or any Lender's election
              of any remedy
              against such Borrower or any other Borrower or Affiliated Borrower
              or any of
              them; any defense based on the order in which Administrative Agent
              and/or any
              Lender(s) enforces its remedies;

             

            (ix)  any
              defense based on (A) Administrative Agent's or any applicable Lender's
              surrender, release, exchange, substitution, dealing with or taking
              any
              additional collateral, (B) Administrative Agent's or any applicable
              Lender's abstaining from taking advantage of or realizing upon any
              Lien or other
              Guarantee, and (C) any impairment of collateral securing the Obligations,
              including, without limitation, Administrative Agent's or any applicable
              Lender's
              failure to perfect or maintain a Lien in such collateral;

             

            (x)  any
              defense based upon Administrative Agent's or any Lender's failure to
              disclose to
              such Borrower any information concerning any other Borrower's or Affiliated
              Borrower's financial condition or any other circumstances bearing on
              any other
              Borrower's or Affiliated Borrower's ability to pay the Obligations;

             

            (xi)  any
              defense based upon any statute or rule of law which provides that the
              obligation
              of a surety must be neither larger in amount nor in any other respects
              more
              burdensome than that of a principal;

             

            (xii)  any
              defense based upon Administrative Agent's and/or any Lender's election,
              in any
              proceeding instituted under the Bankruptcy Code, of the application
              of
              Bankruptcy Code §1111(b)(2) or any successor statute;

             

            (xiii)  any
              defense based upon any borrowing or any grant of a security interest
              under
              Bankruptcy Code §364;

             

            (xiv)  any
              defense based on Administrative Agent's and/or any Lender's failure
              to be
              diligent or to satisfy any other standard imposed on a secured party,
              in
              exercising rights with respect to collateral securing the
              Obligations;

             

            (xv)  except
              as
              otherwise expressly set forth herein: notice of acceptance hereof;
              notice of the
              existence, creation or acquisition of any Obligation; notice of any
              Event of
              Default; notice of the amount of the Obligations outstanding from time
              to time;
              notice of any other fact which might increase such Borrower's risk;
              diligence;
              presentment; demand of payment; protest; filing of claims with a court
              in the
              event of any other Borrower's receivership or bankruptcy and all other
              notices
              and demands to which such Borrower might otherwise be entitled (and
              agrees the
              same shall not have to be made on the other Borrower as a condition
              precedent to
              such Borrower's obligations hereunder);

             

            (xvi)  any
              defense based on errors and omissions by Administrative Agent and/or
              any Lender
              in connection with its administration of the credit facilities or the
              loans made
              under the Affiliated Financing Documents, but the foregoing shall not
              limit any
              Credit Party from asserting claims based on breaches of this Agreement
              or
              willful misconduct by Administrative Agent and/or any applicable
              Lender;

             

            (xvii)  any
              defense based on application of fraudulent conveyance or transfer law
              or
              shareholder distribution law to any of the Obligations or the security
              therefor;

             

            
              
                -110-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            (xviii)  any
              defense based on Administrative Agent's and/or any Lender's failure
              to seek
              relief from stay or adequate protection in any other Borrower's or
              Affiliated
              Borrower's bankruptcy proceeding or any other act or omission by Administrative
              Agent and/or any Lender which impairs such Borrower's prospective subrogation
              rights;

             

            (xix)  any
              defense based on legal prohibition of Administrative Agent's and/or
              any Lender's
              acceleration of the maturity of the Obligations during the occurrence
              of an
              Event of Default or any other legal prohibition on enforcement of any
              other
              right or remedy of Administrative Agent and/or any Lender with respect
              to the
              Obligations and the security therefor;

             

            (xx)  any
              defense available to a surety under applicable law; and

             

            (xxi)  the
              benefit of any statute of limitations affecting the liability of such
              Borrower
              hereunder or the enforcement hereof.

             

            (c)  Each
              Borrower further agrees that its obligations hereunder shall not be
              impaired in
              any manner whatsoever by any bankruptcy, extensions, moratoria or other
              relief
              granted to any other Borrower or Affiliated Borrower pursuant to any
              statute
              presently in force or hereafter enacted.

             

            (d)  Each
              Borrower authorizes Administrative Agent and each Lender to exercise,
              in its
              sole discretion, any right, remedy or combination thereof which may
              then be
              available to Administrative Agent or such Lender, since it is such
              Borrower's
              intent that the Obligations be absolute, independent and unconditional
              obligations of such Borrower under all circumstances. Notwithstanding
              any
              foreclosure of any Lien with respect to any or all of any property
              securing the
              Obligations, whether by the exercise of the power of sale contained
              therein, by
              an action for judicial foreclosure or by an acceptance of a deed in
              lieu of
              foreclosure, each Borrower shall remain bound under such Borrower's
              Guarantee of
              the Obligations directly incurred by any other Borrower or Affiliated
              Borrower.

             

            (e)  This
              Agreement is a primary and original obligation of each of the Borrowers
              and each
              of the Borrowers shall be liable for all existing and future Obligations
              of any
              other Borrower or Affiliated Borrower as fully as if such Obligations
              were
              directly incurred by such Borrower.

             

            [SIGNATURES
              APPEAR ON FOLLOWING PAGES]

             

            


            
              
                -111-

              

              
                
                

                
                  

                

              

              
                
                

              

               

            

            IN
              WITNESS WHEREOF,
              the
              parties hereto have caused this Agreement to be duly executed by their
              respective authorized officers as of the day and year first above
              written.



            
              	 	
                      BORROWERS:  

                    
	 	 
	 	
                      ARC
                        SUN CITY WEST, LLC, ARC ROSWELL, 
LLC, ARC VEGAS, LLC, ARC TUCSON, LLC,
                        
ARC OVERLAND PARK, LLC, ARC 
MINNETONKA, LLC, AND ARC DENVER
                        
MONACO, LLC, each, a Delaware limited 
liability
                        company

                    
	 	 By:
	 	 Name:
	 	 Its:
	 	 
	 	 
	 	 Address:
	 	 Facsimile
                      number:
	 	 E-mail
                      Address:
	 	 Taxpayer
                      Identification Number: 
	 	 SEE
                      EXHIBIT E ATTACHED HERETO
	 	 
	 	
                      ARC
                        TANGLEWOOD, L.P., a Delaware limited partnership

                    
	 	
                       By:
                        

                    	
                      ARC
                        Tanglewood GP, LLC, a Delaware
limited liability company, its general
                        partner

                    
	 	 By:
	 	 Name:
	 	 Its:
	 	 
	 	 Address:
	 	 Facsimile
                      number:
	 	 E-mail
                      Address:
	 	 Taxpayer
                      Identification Number:


            


             

            
              
                
                

              

              
                
                

                
                  

                

              

              
                
                

              

            

             

            


            

              
                	 	
                        ADMINISTRATIVE
                          AGENT AND LENDERS:

                      
	 	 
	 	
                        MERRILL
                          LYNCH CAPITAL, a division of Merrill Lynch
                          Business

                      
	 	
                        Financial
                          Services Inc., as Administrative Agent and a
                          Lender

                      
	 	 	 
	 	
                        By:

                      
	 	
                        Name:

                      
	 	
                        Title:

                      
	 	
                        Address:

                      	
                        222
                          N. LaSalle Street, 16th Floor

                      
	 	 	
                        Chicago,
                          Illinois 60601

                      
	 	 	
                        Attn:
                          Account Manager for MLC-HCF

                      
	 	 	
                        ARC
                          transaction

                      
	 	
                        Facsimile
                          number: (866) 264-3051

                      	 
	 	
                        E-Mail
                          Address: MLC_HCF_RE1@ml.com

                      	 
	 	 	 
	 	 	 
	 	
                        With
                          copies to:

                      	 
	 	 	 
	 	
                        Merrill
                          Lynch Capital

                      	 
	 	
                        222
                          N. LaSalle Street, 16th Floor

                      	 
	 	
                        Chicago,
                          Illinois 60601

                      	 
	 	
                        Attn:
                          Group Senior Transaction Attorney,
                          Healthcare
Finance

                      
	 	
                        Facsimile
                          Number: (312) 499-3245

                      	 
	 	 	 
	 	
                        Merrill
                          Lynch Capital

                      	 
	 	
                        7700
                          Wisconsin Ave., Suite 400

                      	 
	 	
                        Bethesda,
                          Maryland 20814

                      	 
	 	
                        Attn:
                          Group Senior Transaction Attorney, Healthcare 

                      
	 	
                        Finance

                      	 
	 	
                        Facsimile
                          Number: (866) 341-9053

                      	 
	 	 	 
	 	
                        And
                          with an additional copy to:

                      	 
	 	 	 
	 	
                        Goldberg,
                          Kohn, Bell, Black,

                      	 
	 	
                        Rosenbloom
                          & Moritz, Ltd.

                      	 
	 	
                        55
                          East Monroe Street, Suite 3700

                      	 
	 	
                        Chicago,
                          Illinois 60603

                      	 
	 	
                        Attn:
                          James B. Rosenbloom

                      	 
	 	
                        Facsimile
                          number: (312) 863-7425

                      	 
	 	
                        E-mail
                          Address: james.rosenbloom@goldbergkohn.com

                      	 


              

            

            


             

            
              
                
                

              

              
                
                

                
                  

                

              

              
                
                

              

            

            


            

              
                	 	
                        Payment
                          Account Designation:

                      
	
                         

                      	 
	 	
                        ABA
                          No.:

                      
	
                         

                      	 
	 	
                        Account
                          No.:

                      
	
                         

                      	 
	 	
                        Account
                          Name:

                      
	
                         

                      	 
	 	
                        Reference:

                      
	
                         

                      	 


              
 

             

            
              
                
                  


                

                
                

              

              
                
                

                
                  

                

              

              
                
                

                
                

              

            



            ANNEXES,
              EXHIBITS AND SCHEDULES

             

            


            ANNEXES

            


            Annex
              A - Commitment
              Annex

            


            


            EXHIBITS

            


            Exhibit
              A - Assignment
              Agreement

            Exhibit
              B - Single
              Purpose Entity Requirements

            Exhibit
              C - Compliance
              Certificate

            Exhibit
              D - Payment
              Notification

            Exhibit
              E - Borrowers'
              Taxpayer Identification Numbers

            


            


            SCHEDULES

            


            Schedule
              3.1 - Existence,
              Organizational Identification Numbers, Foreign

            Qualification,
              Prior Names

            Schedule
              3.4 - Capitalization

            Schedule
              3.6 - Litigation

            Schedule
              3.17 - Material
              Contracts

            Schedule
              3.18 - Environmental
              Compliance

            Schedule
              4.4 - Insurance
              Requirements

            Schedule
              4.11 - Deferred
              Maintenance Items

            Schedule
              5.9 - Affiliate
              Transactions

            Schedule
              7.3 - Post-Closing
              Deliveries and Covenants

            Schedule
              8.1 - Licensed
              Units and Beds

            Schedule
              8.7 - Operating
              Lessees

            


            


            
              
                
                

              

              
                
                

                
                  

                

              

              
                
                

              

            




            


            
              	 	 Annex
                      A to Credit Agreement (Commitment
                      Annex)


            

            
 

            
              	
                      Lender

                    	
                      Term
                        Loan Commitment Amount

                    	
                      Term
                        Loan Commitment Percentage

                    
	
                      Merrill
                        Lynch Capital

                    	
                      $85,000,000

                    	
                      100%

                    
	
                      TOTALS

                    	
                      $85,000,000

                    	
                      100%

                    


            

            


            


            
              
                
                

              

              
                
                

                
                  

                

              

              
                
                

              

            



            


            
              	 	 
                      Exhibit A to Credit Agreement (Assignment
                      Agreement)


            

            
 

            This
              Assignment Agreement (this "Assignment
              Agreement") is
              entered into as of __________ by and between the Assignor named on
              the signature
              page hereto ("Assignor") and
              the Assignee named on the signature page hereto ("Assignee").
              Reference is made to the Credit Agreement dated as of November __,
              2005 (as
              amended or otherwise modified from time to time, the "Credit
              Agreement") among
              MERRILL LYNCH CAPITAL, as Administrative Agent and Lender and the other
              Lenders
              party thereto from time to time and ARC SUN CITY WEST, LLC, ARC ROSWELL,
              LLC,
              ARC VEGAS, LLC, ARC TUCSON, LLC, ARC OVERLAND PARK, LLC, ARC MINNETONKA,
              LLC,
              ARC DENVER MONACO, LLC, each a Delaware limited liability company,
              and ARC
              TANGLEWOOD, L.P., a Delaware limited partnership ("Borrowers"),
              the
              financial institutions party thereto from time to time, as Lenders,
              and Merrill
              Lynch Capital, a division of Merrill Lynch Business Financial Services
              Inc., as
              Administrative Agent. Capitalized terms used herein and not otherwise
              defined
              shall have the meanings assigned to them in the Credit Agreement.

             

            Assignor
              and Assignee hereby agree as follows:

             

            1. Assignor
              hereby sells and assigns to Assignee, and Assignee hereby purchases
              and assumes
              from Assignor the interests set forth on the schedule attached hereto
              (the
              "Schedule"),
              in and
              to Assignor's rights and obligations under the Credit Agreement as
              of the
              effective date set forth on the Schedule (the "Effective Date").
              Such
              purchase and sale is made without recourse, representation or warranty
              except as
              expressly set forth herein. On the Effective Date, Assignee shall pay
              to
              Assignor an amount equal to the aggregate amounts assigned pursuant
              to the
              Schedule and Assignor shall pay to Assignee a closing fee in respect
              of the
              transactions contemplated hereby in the amount specified on the
              Schedule.

             

            2. Assignor
              (a) represents that as of the Effective Date, that it is the legal and
              beneficial owner of the interests assigned hereunder free and clear
              of any
              adverse claim, (b) makes no other representation or warranty and assumes no
              responsibility with respect to any statement, warranties or representations
              made
              in or in connection with the Credit Agreement or the execution, legality,
              validity, enforceability, genuineness, sufficiency or value of the
              Credit
              Agreement, any other Financing Documents or any other instrument or
              document
              furnished pursuant thereto; and (c) makes no representation or warranty and
              assumes no responsibility with respect to the financial condition of
              any other
              Credit Party or any other Person or the performance or observance by
              any Credit
              Party of its Obligations under the Credit Agreement or any other Financing
              Documents or any other instrument or document furnished pursuant
              thereto.

             

            3. Assignee
              (a) confirms that it has received a copy of the Credit Agreement and the
              other Financing Documents, together with copies of the most recent
              financial
              statements delivered pursuant thereto and such other documents and
              information
              as it has deemed appropriate to make its own credit analysis and decision
              to
              enter into this Assignment Agreement; (b) agrees that it will,
              independently and without reliance upon Administrative Agent, Assignor
              or any
              other Lender and based on such documents and information as it shall
              deem
              appropriate at the time, continue to make its own credit decisions
              in taking or
              not taking action under the Credit Agreement; (c) appoints and authorizes
              Administrative Agent to take such action as Administrative Agent on
              its behalf
              and to exercise such powers under the Credit Agreement and the other
              Financing
              Documents as are delegated to Administrative Agent by the terms thereof,
              together with such powers as are reasonably incidental thereto; (d) agrees
              that it will perform in accordance with their terms all obligations
              which by the
              terms of the Credit Agreement are required to be performed by it as
              a Lender;
              (e) represents that on the date of this Assignment Agreement it is not
              presently aware of any facts that would cause it to make a claim under
              the
              Credit Agreement; (f) represents and warrants that Assignee is not a
              Foreign Lender or, if it is a Foreign Lender, (i) that it has delivered to
              Administrative Agent the documentation required to be delivered to
              Administrative Agent by
              Section
              13
              below
              and
              (i) that if it is claiming exemption from U.S. federal withholding tax
              under Section 871(h) or 881(c) of the Code with respect to payments of
              "portfolio interest", (w) it is not a "bank" within the meaning of Section
              881(c)(3)(A) of the Code, (x) it is not a 10-percent shareholder of
              any Credit Party within the meaning of Section 881(c)(3)(B) or Section
              871(h)(3)(B) of the Code, (y) it is not a controlled foreign
              corporation related to any Credit Party within the meaning of
              Section 881(c)(3)(C) of the Code, and (z) it is not a conduit
              entity participating in a conduit financing arrangement (as defined
              in Section
              1.881-3 of the Code Treasury Regulations); (g) represents and warrants that
              Assignee is (or, upon receipt of the required consents hereto by Administrative
              Agent and Borrowers will become) an Eligible Assignee, and
              (h) represents and warrants that it has experience and expertise in the
              making or the purchasing of loans such as the Loans, and that it has
              acquired
              the interests described herein for its own account and without any
              present
              intention of selling all or any portion of such interests.

             

            
              
                -1-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            4. Each
              of
              Assignor and Assignee represents and warrants to the other party hereto
              that it
              has full power and authority to enter into this Assignment Agreement
              and to
              perform its obligations hereunder in accordance with the provisions
              hereof, that
              this Assignment Agreement has been duly authorized, executed and delivered
              by
              such party and that this Assignment Agreement constitutes a legal,
              valid and
              binding obligation of such party, enforceable against such party in
              accordance
              with its terms, except as enforceability may be limited by applicable
              bankruptcy, insolvency, reorganization, moratorium or other similar
              laws
              affecting creditors' rights generally and by general principles of
              equity.

             

            5. Upon
              the
              effectiveness of this Assignment Agreement pursuant to Section
              13
              below,
              (a) Administrative Agent shall register Assignee as a Lender, pursuant
              to
              the terms of the Credit Agreement, (b) Assignee shall be a party to the
              Credit Agreement and, to the extent provided in this Assignment Agreement,
              have
              the rights and obligations of a Lender thereunder, (c) Assignor shall, to
              the extent provided in this Assignment Agreement, relinquish its rights
              and be
              released from its obligations under the Credit Agreement and
              (d) Administrative Agent shall thereafter make all payments in respect
              of
              the interest assigned hereby (including payments of principal, interest,
              fees
              and other amounts) to Assignee. Assignor and Assignee shall make all
              appropriate adjustments in payments for periods prior to the Effective
              Date by
              Administrative Agent or with respect to the making of this assignment
              directly
              between themselves.

             

            
              
                -2-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            6. Each
              of
              Assignor and Assignee hereby agrees from time to time, upon request
              of the other
              such party hereto, to take such additional actions and to execute and
              deliver
              such additional documents and instruments as such other party may reasonably
              request to effect the transactions contemplated by, and to carry out
              the intent
              of, this Assignment Agreement. 

             

            7. Neither
              this Assignment Agreement nor any term hereof may be changed, waived,
              discharged
              or terminated, except by an instrument in writing signed by the party
              (including, if applicable, any party required to evidence its consent
              to or
              acceptance of this Assignment Agreement) against whom enforcement of such
              change, waiver, discharge or termination is sought. 

             

            8. For
              the
              purposes hereof and for purposes of the Credit Agreement, the notice
              address of
              Assignee shall be as set forth on the Schedule. Any notice or other
              communication herein required or permitted to be given shall be in
              writing and
              delivered in accordance with the notice provisions of the Credit Agreement.
              

             

            9. In
              case
              any provision in or obligation under this Assignment Agreement shall
              be invalid,
              illegal or unenforceable in any jurisdiction, the validity, legality
              and
              enforceability of the remaining provisions or obligations, or of such
              provision
              or obligation in any other jurisdiction, shall not in any way be affected
              or
              impaired thereby. 

             

            10. THIS
              ASSIGNMENT AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
              ENFORCED
              IN ACCORDANCE WITH, THE LAWS OF THE STATE OF ILLINOIS, WITHOUT REGARD
              TO
              CONFLICTS OF LAWS PRINCIPLES. 

             

            11. This
              Assignment Agreement shall be binding upon, and shall inure to the
              benefit of,
              the parties hereto and their respective successors and assigns. 

             

            12. This
              Assignment Agreement may be signed in any number of counterparts, each
              of which
              shall be an original, with the same effect as if the signatures hereto
              were upon
              the same agreement.

             

            
              
                -3-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            13. This
              Assignment Agreement shall become effective as of the Effective Date
              upon the
              satisfaction of each of the following conditions: (a) the execution of a
              counterpart hereof by each of Assignor and Assignee, (b) the execution of a
              counterpart hereof by Administrative Agent and each Borrower as evidence
              of its
              consent hereto to the extent required pursuant to Section
              14.6(a) of
              the
              Credit Agreement, (c) the receipt by Administrative Agent of the
              administrative fee referred to in Section
              13.17(a) of
              the
              Credit Agreement, (d) in the event Assignee is a Foreign Lender, the
              receipt by Administrative Agent of United States Internal Revenue Service
              Forms
              W-8ECI, W-8BEN or W-8IMY (as applicable), and such other forms, certificates
              or
              documents, including those prescribed by the United States Internal
              Revenue
              Service, properly completed and executed by Assignee, certifying as
              to
              Assignee's entitlement to exemption from withholding or deduction of
              Taxes, and
              (e) the receipt by Administrative Agent of originals or facsimiles of the
              counterparts described above. 

             

            
              
                -4-

              

              
                
                

                
                  

                

              

              
                
                

              

            



            The
              parties hereto have caused this Assignment Agreement to be executed
              and
              delivered as of the date first written above.

             

            
              
                	 	
                        ASSIGNOR:

                      
	 	
                        By:

                      
	 	
                        Title:

                      
	 	 
	 	 
	 	
                        ASSIGNEE:

                      
	 	 
	 	 
	 	 
	 	
                        By:

                      
	 	
                        Title:

                      
	 	 
	 	 
	 	 
	 	
                        Consented
                          to:

                      
	 	 
	 	
                        Merrill
                          Lynch Capital, a division of Merrill Lynch
Business Financial Services
                          Inc., as 
Administrative Agent

                      
	 	 
	 	 
	 	
                        By:

                      
	 	
                        Title

                      
	 	 
	 	
                        ARC
                          SUN CITY WEST, LLC, ARC ROSWELL, 
LLC, ARC VEGAS, LLC, ARC TUCSON, LLC,
                          
ARC OVERLAND PARK, LLC, ARC MINNETONKA, LLC, 
ARC DENVER MONACO,
                          LLC

                      
	 	 
	 	
                        By:

                      
	 	
                        Name:

                      
	 	
                        Its:

                      
	 	 
	 	
                        Address:

                      
	 	 
	 	
                        Facsimile
                          number:

                      
	 	
                        E-mail
                          Address:

                      


              

               

               

              
                
                  -5-

                

                
                  
                  

                  
                    

                  

                

                
                  
                  

                

              

               

               

              
                	 	 
	 	
                        Taxpayer
                          Identification Number:

                      
	 	
                        SEE
                          EXHIBIT E ATTACHED HERETO

                      
	 	 
	 	
                        ARC
                          TANGLEWOOD, L.P., a Delaware limited
                          partnership

                      
	 	
                        By:

                      
	 	
                        ARC
                          Tanglewood GP, LLC, a Delaware limited liability company,
                          its general
                          partner 

                      
	 	
                        By:

                      
	 	
                        Name:

                      
	 	
                        Its:

                      
	 	
                        Address:

                      
	 	
                        Facsimile
                          number:

                      
	 	
                        E-mail
                          Address:

                      
	 	
                        Taxpayer
                          Identification Number:

                      


              



            
              
                -6-

              

              
                
                

                
                  

                

              

              
                
                

              

            



            Schedule
              to Assignment Agreement

             

            Assignor: ___________________

            Assignee: ___________________

            Effective
              Date: ______________

             

            Credit
              Agreement dated as of November __, 2005 among ARC Sun City West, LLC,
              ARC
              Roswell, LLC, ARC Vegas, LLC, ARC Tucson, LLC, ARC Overland Park, LLC,
              ARC
              Minnetonka, LLC, ARC Denver Monaco, LLC and ARC Tanglewood, L.P., as
              Borrowers,
              the financial institutions party thereto from time to time, as Lenders,
              and
              Merrill Lynch Capital, a division of Merrill Lynch Business Financial
              Services
              Inc., as Administrative Agent

             

            Interests
              Assigned:

             

            
              	
                      Commitment/Loan

                    	
                      Term
                        Loan

                    
	
                      Assignor
                        Amounts

                    	
                      $                         
                          

                    
	
                      Amounts
                        Assigned

                    	
                      $                                                                   

                    
	
                      Assignor
                        Amounts (post-assignment)

                    	
                      $                                    
                          

                    


            

            


            
              	
                      Closing
                        Fee:

                    	
                      $                                    
                          

                    


            

            


            


            Assignee
              Information:

             

            

              
                	
                        Address
                          for Notices:

                      	 	
                        Address
                          for Payments:

                      
	 	 	 
	 	 	 
	 	 	Bank:
	
                         

                      	 	 
	
                        Attention:

                      	 	
                        ABA
                          #:

                      
	
                        Telephone:

                      	 	
                        Account
                          #:

                      
	
                        Facsimile:
                          

                      	 	
                        Reference:

                      


              
 

            


            


            
              
                -7-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            



            


            
              	 	 Exhibit
                      B to Credit Agreement (SPE
                      Requirements)


            

             

            
              1. The
                Borrowers' business and purposes are and will continue to be limited
                to the
                following:

               

            

            (a) to
              enter
              into and perform its obligations under this Agreement and the other
              Financing
              Documents;

             

            (b) to
              acquire, own, hold, lease, maintain, develop and improve the
              Projects;

             

            (c) to
              sell,
              transfer, service, convey, dispose of, pledge, assign, borrow money
              against,
              finance or otherwise deal with the Projects to the extent permitted
              under the
              Financing Documents;

             

            (d) to
              refinance the Projects in connection with a permitted repayment of
              the Loans;
              and

             

            (e) to
              engage
              in any lawful act or activity and to exercise any powers permitted
              to entities
              of the type (e.g., limited partnerships, limited liability companies,
              corporations, as applicable to each Borrower) formed under the laws of the
              state of organization of such Person as of the date of this Agreement
              that are
              related or incidental to and necessary, convenient or advisable for
              the
              accomplishment of the above mentioned purposes.

             

            2. Borrowers
              shall do (or cause to be done) all things necessary in order to preserve
              their existence to the fullest extent permitted by law. Except as expressly
              permitted by the Financing Documents (if at all), Borrowers shall do
              (or cause
              to be done) all of the following:

             

            (a) not
              own
              any asset or property other than (i) a fee interest in the Projects, and
              (ii) incidental personal property necessary for the ownership or operation
              of the Projects;

             

            (b) not
              enter
              into any contract or agreement with any Affiliate of the Borrowers,
              any
              constituent party of the Borrowers, any guarantor or indemnitor under
              any of the
              Financing Documents or any Affiliate of any such constituent party
              or guarantor
              or indemnitor, except upon terms and conditions that are intrinsically
              fair and
              substantially similar to those that would be available on an arm's-length
              basis
              with third parties other than any such party;

             

            (c) maintain
              their intention to remain solvent and pay their debts and liabilities
              (including, as applicable, shared personnel and overhead expenses) from
              their assets, to the extent of their assets, as the same shall become
              due;

             

            
              
                -1-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            (d) do
              or
              cause to be done all things necessary to observe organizational formalities
              of
              the Borrowers and preserve their existence, and not terminate or fail
              to comply
              with any of the provisions in this Section.

             

            (e) maintain
              all of their books, records, financial statements and bank accounts
              separate
              from those of their Affiliates and any other person or entity; provided,
              however, that the Borrowers' financial position, assets, results of
              operations
              and cash flows may be included in a consolidated financial statement
              of an
              Affiliate of the Borrowers in accordance with GAAP so long as any such
              consolidated financial statement contains a note indicating that the
              Borrowers
              and their Affiliates comprising the consolidated group are separate
              legal
              entities;

             

            (f) hold
              themselves out to the public as a legal entities separate and distinct
              from each
              other and from any other entity (including any Affiliate of the Borrowers,
              any
              guarantor or any constituent party of the Borrowers), correct any known
              misunderstanding regarding their status as a separate entities, conduct
              business
              in their own name, and not identify themselves or any of their Affiliates
              as a
              division or part of the other; provided, however, that all Borrowers
              shall be
              permitted to, and shall at all times, hold themselves out to the public
              as
              entities that operate as a common enterprise;

             

            (g) to
              the
              extent of cash flow available from ownership of the Projects and other
              business
              of the Borrowers, intend to maintain adequate capital for the normal
              obligations
              reasonably foreseeable in a business of their size and character and
              in light of
              their contemplated business operations;

             

            (h) not
              commingle the funds and other assets of the Borrowers with those of
              any
              Affiliate or constituent party, any guarantor or any other person,
              except for
              funds deposited into any lockbox accounts or other cash management
              arrangements
              required under this Agreement;

             

            (i) maintain
              their assets in such a manner that it will not be costly or difficult
              to
              segregate, ascertain or identify its individual assets from those of
              any
              Affiliate or constituent party, any guarantor or any other person or
              entity;

             

            (j) not
              permit
              any Affiliate or constituent party independent access to the Borrowers'
              bank
              accounts, except Borrower Representative in connection with any lockbox
              account
              or other cash management arrangements required hereunder, any property
              management agreements entered into by Borrowers and approved by Administrative
              Agent, and otherwise in connection with property or cash management
              activities
              consistent with the terms of the Financing Documents;

             

            (k) pay
              the
              salaries of their own employees, if any;

             

            (l) compensate
              each of their consultants and agents, if any;

             

            (m) maintain
              an arm's-length relationship with their Affiliates;

             

            
              
                -2-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            (n) allocate
              fairly and reasonably shared expenses, if any, including shared office
              space;

             

            (o) not
              pledge
              any of their assets for the benefit of any person or entity other than
              Administrative Agent, except as expressly permitted by the Financing
              Documents
              (if at all);

             

            
              (p) have
                no obligation to indemnify their equity owners or members (but not
                including
                their respective individual officers, as the case may be, except
                to the extent
                that payment of such obligation is fully subordinated to the payment
                of the
Obligations;
                provided, however, the foregoing shall not apply where the indemnity
                is paid
                from third party funds, such as insurance proceeds;

               

            

            (q) maintain
              records, books of account and bank accounts separate and apart from
              any other
              person or entity (other than any lockbox account or other cash management
              arrangement required hereunder); and file their own tax returns, if
              any, as may
              be required under applicable law, provided, however, that the Borrowers
              may file
              their federal tax return on a consolidated basis); and maintain their
              books,
              records, resolutions and agreements as official records; and

             

            (r) not
              make
              any loans or advances to any third party, and not acquire obligations
              or
              securities of their Affiliates, except, in each case, as permitted
              under the
              Financing Documents.

             

            3. So
              long as
              the Loans remain outstanding, the Borrowers shall not do (or cause
              to be
              done) any of the following except to the extent otherwise permitted under
              the Financing Documents (if at all):

             

            (a) assume,
              guarantee, become obligated for, or hold themselves out to be responsible
              for
              the debts or obligations of any other person or entity or the decisions
              or
              actions respecting the daily business or affairs of any other
              person;

             

            (b) engage,
              directly or indirectly, in any business other than the actions required
              or
              permitted to be performed under the Borrower's Organizational Documents
              (as the
              same may be amended or supplemented from time to time with Administrative
              Agent's consent);

             

            (c) incur,
              create or assume any indebtedness other than the Loans except as otherwise
              permitted by the Financing Documents;

             

            (d) make
              or
              permit to remain outstanding any loan or advance to, or own or acquire
              any stock
              or securities of, any person or entity;

             

            
              
                -3-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            (e) form,
              acquire or hold any subsidiary (whether corporate, partnership, limited
              liability company or other); or

             

            (f) to
              the
              fullest extent permitted by law, engage in any dissolution, liquidation,
              consolidation, merger or sale of all or substantially all of their
              assets.

             

            


            
              
                -4-

              

              
                
                

                
                  

                

              

              
                
                

              

            


            
              
                	 	 Exhibit
                        C to Credit Agreement (Compliance
                        Certificate)


              



            COMPLIANCE
              CERTIFICATE

             

            [BORROWER
              REPRESENTATIVE]

             

            Date:
              __________, _____

             

            This
              certificate is given by _____________________, a Responsible Officer
              of
              _____________ ("Borrower
              Representative"),
              pursuant to that certain Credit Agreement dated as of November __,
              2005 among
              ARC SUN CITY WEST, LLC, ARC ROSWELL, LLC, ARC VEGAS, LLC, ARC TUCSON,
              LLC, ARC
              OVERLAND PARK, LLC, ARC MINNETONKA, LLC, ARC DENVER MONACO, LLC, each
              a Delaware
              limited liability company, and ARC TANGLEWOOD, L.P., a Delaware limited
              partnership (collectively, "Borrower"),
              the
              Lenders from time to time party thereto and Merrill Lynch Capital,
              a division of
              Merrill Lynch Business Financial Services Inc., as Administrative Agent
              for
              Lenders (as such agreement may have been amended, restated, supplemented
              or
              otherwise modified from time to time, the "Credit
              Agreement").
              Capitalized terms used herein without definition shall have the meanings
              set
              forth in the Credit Agreement.

             

            The
              undersigned Responsible Officer hereby certifies to Administrative
              Agent and
              Lenders that:

             

            (a) the
              financial statements delivered with this certificate in accordance
              with
Section 4.1
              of the
              Credit Agreement fairly present in all material respects the results
              of
              operations and financial condition of Borrower and its Subsidiaries
              as of the
              dates and the accounting period covered by such financial
              statements;

             

            (b) I
              have
              reviewed the terms of the Credit Agreement and have made, or caused
              to be made
              under my supervision, a review in reasonable detail of the transactions
              and
              conditions of Borrower and its Subsidiaries during the accounting period
              covered
              by such financial statements;

             

            (c) such
              review has not disclosed the existence during or at the end of such
              accounting
              period, and I have no knowledge of the existence as of the date hereof,
              of any
              condition or event that constitutes a material Default or an Event
              of Default,
              except as set forth in Schedule
              1
              hereto,
              which includes a description of the nature and period of existence
              of such
              Default or an Event of Default and what action Borrower has taken,
              is
              undertaking and proposes to take with respect thereto; and

             

            (d) Borrower
              is in compliance with the covenants contained in Article 6 of the Credit
              Agreement, and Guarantor is in compliance with the covenants contained
              in the
              Guarantee constituting a part of the Financing Documents, as demonstrated
              by the
              calculation of such covenants below, except as set forth below.

             

            
              
                -1-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            (e) Except
              as
              noted on Schedule
              2
              attached
              hereto, the Credit Agreement contains a complete and accurate list
              of all
              business locations of Borrowers and all names under which each Borrower
              currently conducts business; Schedule
              2
              specifically notes any changes in the names under which Borrower conducts
              business.

             

            (f) Except
              as
              noted on Schedule
              3
              attached
              hereto, the undersigned has no knowledge of any federal or state tax
              liens
              having been filed against the Borrower or any Collateral or the Guarantor,
              to
              the extent that tax liens against Guarantor would result in a Material
              Adverse
              Effect or would adversely affect the Collateral.

             

            (g) Except
              as
              noted on Schedule
              3
              attached
              hereto, the undersigned has no knowledge of any failure of the Borrower
              or the
              Guarantor, to the extent that tax liens against Guarantor would result
              in a
              Material Adverse Effect or would adversely affect the Collateral to
              make
              required payments of withholding or other tax obligations of the Borrower
              or the
              Guarantor, to the extent that tax liens against Guarantor would result
              in a
              Material Adverse Effect or would adversely affect the Collateral during
              the
              accounting period to which the attached statements pertain or any subsequent
              period.

             

            
              (h) [Reserved.]

            

             

            (i) [Reserved.]

             

            (j) Schedule
              4
              attached
              hereto contains a complete and accurate statement of all deposit or
              investment
              accounts maintained by Borrower.

             

            (k) Except
              as
              described on Schedule
              5
              attached
              hereto:

             

            (i) there
              are
              no current, pending or threatened proceedings relating to a condemnation
              or
              other public taking of any Project;

             

            (ii) no
              Project
              has suffered no casualty or other damage or loss of the type typically
              covered
              by hazard insurance;

             

            (iii) all
              insurance required to be maintained by Borrowers or ARC for the benefit
              of
              Borrower is in force and premiums therefor have been paid as and when
              due and no
              Borrower has made any claims thereunder;

             

            (iv) the
              undersigned has no knowledge of any current, pending or threatened
              changes to
              the zoning classification or permitted uses of any Project; and

             

            (l) Except
              as
              described in the Credit Agreement or in Schedule
              6
              attached
              hereto, the undersigned has no knowledge of any current, pending or
              threatened:

             

            (i) material
              litigation against any Borrower;

             

            (ii) inquiries,
              investigations or proceedings concerning the business affairs, practices,
              licensing or reimbursement entitlements of any Borrower;

             

            
              
                -2-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            (iii) default
              by
              Borrower under any material contract to which either of them is a party,
              including, without limitation, any Material Leases.

             

            In
              determining compliance with the provisions identified in (d) above, the
              following calculations have been made:

             

            REFER
              TO ATTACHED WORKSHEETS FOR ALL CALCULATIONS

             

            
              
                -3-

              

              
                
                

                
                  

                

              

              
                
                

              

            



            Such
              calculations and the certifications contained therein are true, correct
              and
              complete;

             

            The
              foregoing certifications and computations are made as of ___________________,
              _____ (end of month) and delivered this ____ day of _____________,
              20___.

             

            


            
              	
                      Sincerely,

                       

                       

                      By:_______________________________________________

                       

                      Name:_____________________________________________

                       

                      Title
                        of
                        _________________________Borrower
                        Representative

                    


            

            


             

            


            


            List
              of Schedules:

            


            Schedule
              1
              - Non-Compliance with Covenants

            Schedule
              2
              - Business Locations and Names of Borrower

            Schedule
              3
              - Unpaid Tax or Withholding Obligations

            Schedule
              4
              - List of all Deposit and Investment Accounts of Borrower

            Schedule
              5
              - Events Affecting Real Property (condemnation, insurance, zoning,
              taxes)

            Schedule
              6
              - Pending Litigation, Inquiries or Investigations; Defaults under Material
              Contracts

            Worksheet(s) for
              Financial or Other Covenant Calculations

            


            
              
                -5-

              

              
                
                

                
                  

                

              

              
                
                

              

            

             

            

              
                
                  	 Schedules
                          to Compliance Certificate	 


                



            

            Schedule
              1
              - Non-Compliance with Covenants

             

            


            


            Schedule
              2
              - Business Locations and Names of Borrower

             

            


            


            Schedule
              3
              - Unpaid Tax or Withholding Obligations

            
 

            


            Schedule
              4
              - List of all Deposit and Investment Accounts of Borrower

             

            


            


            Schedule
              5
              - Events Affecting Real Property (condemnation, insurance, zoning,
              taxes)

             

            


            


            Schedule
              6
              - Pending Litigation, Inquiries or Investigations; Defaults under Material
              Contracts

            


            


            


            Worksheets
              for covenant calculations

            


             

            
              
                -5-

              

              
                
                

                
                  

                

              

              
                
                

              

            



            

              
                
                  	 	 Exhibit
                          D to Credit Agreement (Payment
                          Notification)


                




            

             

            [BORROWER
              REPRESENTATIVE]

             

            Date:
              ___________, ______

             

            


            Reference
              is hereby made to the Credit Agreement dated November __, 2005 among
              the
              undersigned, Merrill Lynch Capital, a division of Merrill Lynch Business
              Financial Services Inc., as Administrative Agent and the financial
              institutions
              party thereto. Capitalized terms used here have the meanings ascribed
              thereto in
              the Credit Agreement.

             

            Please
              be
              advised that funds in the amount of $_____________ will be wire transferred
              to
              Administrative Agent on _________, 200_. Such funds shall constitute
              [an
              optional]
              [a
              mandatory]
              prepayment of the Term Loans, with such prepayments to be applied in
              the manner
              specified in Section
              2.1(e).
              Such
              mandatory prepayment is being made pursuant to Section __________ of
              the Credit
              Agreement.

             

            Fax
              to MLC Operations 312-499-3336 no later than noon Chicago
              time

             

            
              	
                      Note:

                    	
                      Funds
                        must be received no later than noon Chicago time for same
                        day
                        application

                    


            

             

            Wire
              Instructions:

            Bank
              Name: 
        LaSalle
              Bank National
              Association
        135
              S. LaSalle
              Street
        Chicago,
              IL
              60603

             

            ABA#:     0710-0050-5

            Account
              Name: ______________________

             

            Account
              #:__________________________

             

            Reference:     (Client
              Name)

            


            Address:     

                    Merrill
              Lynch Capital
        222
              N. LaSalle Street, 16th
              Floor

                    Chicago,
              IL 60601

            


            IN
              WITNESS
              WHEREOF, the undersigned officer has executed and delivered this certificate
              this ____ day of ___________, ____.

             

            
              
                	
                         

                        By:_______________________________________________

                         

                        Name:_____________________________________________

                         

                        Title
                          of
                          _________________________Borrower
                          Representative

                      


              

              


              

 

              
                
                  
                  

                

                
                  
                  

                  
                    

                  

                

                
                  
                  

                

              

            

            

              

                
                  
                    	 	 Exhibit
                            E to Credit Agreement (Borrowers' Taxpayer Identification
                            Numbers)


                  




              

               

            

             

            See
              Schedule 3.1

            


            


            
              
                -1-

              

              
                
                

                
                  

                

              

              
                
                

              

            



            

              
                
                  	 	 Schedule
                          1 – Permitted Leases


                

              

            

            


            


            


            
              	
                      Lessee

                    	
                      Location

                    	
                      Annual
                        Rent

                    
	
                      HBP
                        Corporation 

                      (Hairstyles
                        by Patricia)

                    	
                      Sun
                        City, Arizona

                    	
                      10%
                        of services rendered by Lessee

                    
	
                      Sierra
                        Corporation

                    	
                      Roswell,
                        Georgia

                    	
                      $6,000

                    
	
                      Alla
                        Shayevich

                    	
                      Tucson,
                        Arizona

                    	
                      $1,440

                    
	
                      Tina
                        Johns

                    	
                      Overland
                        Park, Kansas

                    	
                      N/A

                    
	
                      Micheline
                        Fulkerson

                    	
                      Denver,
                        Colorado

                    	
                      $2,400

                    
	
                      Kenn
                        Tyler

                    	
                      Houston,
                        Texas

                    	
                      $2,400

                    


            

            


            


            
              
                -1-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            


            

              

                
                  
                    	 	 Schedule
                            3.1 – Existence, Organizational Identification Numbers, Foreign
                            Qualifications, Prior
                            Names


                  



              

            

            


            ARC
              Sun City West, LLC

            d/b/a:
              Freedom Inn Sun City West

            Organizational
              ID No.: 4032632

            EIN:   04-3828491

            State
              of
              Formation: Delaware

            Foreign
              Qualifications: Arizona

            


            


            ARC
              Roswell, LLC

            d/b/a:
              Freedom Inn Roswell

            Organizational
              ID No.: 4032633

            EIN:   04-3828493

            State
              of
              Formation: Delaware

            Foreign
              Qualifications: Georgia

            


            


            ARC
              Vegas, LLC

            d/b/a:
              Heritage Club Las Vegas

            Organizational
              ID No.: 4032634

            EIN:   04-3828494

            State
              of
              Formation: Delaware

            Foreign
              Qualifications: Nevada

            


            


            ARC
              Tucson, LLC

            d/b/a:
              Freedom Inn Ventana Canyon

            Organizational
              ID No.: 4032635

            EIN:   04-3828495

            State
              of
              Formation: Delaware

            Foreign
              Qualifications: Arizona

            


            


            ARC
              Overland Park, LLC

            d/b/a:
              Freedom Inn at Overland Park

            Organizational
              ID No.: 4032637

            EIN:   04-3828496

            State
              of
              Formation: Delaware

            Foreign
              Qualifications: Kansas

            


            ARC
              Minnetonka, LLC

            d/b/a:
              Freedom Inn Minnetonka

            Organizational
              ID No.: 4032685

            EIN:   04-3828497

            State
              of
              Formation: Delaware

            Foreign
              Qualifications: Minnesota

            


            
              
                -1-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            


            ARC
              Denver Monaco, LLC

            d/b/a:
              Heritage Club at Denver Tech Center

            Organizational
              ID No.: 4032690

            EIN:   04-3828498

            State
              of
              Formation: Delaware

            Foreign
              Qualifications: Colorado

            


            


            ARC
              Tanglewood, L.P.

            d/b/a:
              Hampton Assisted Living at Tanglewood

            Organizational
              ID No.: 4032856

            EIN:   04-3828488

            State
              of
              Formation: Delaware

            Foreign
              Qualifications: Texas

            


            


            American
              Retirement Corporation

            Organizational
              ID No.: 0325434

            EIN:   62-1674303

            State
              of
              Formation: Tennessee

            


             

            
              
                -2-

              

              
                
                

                
                  

                

              

              
                
                

              

            


            

              

                
                  
                    	 	Schedule
                            3.4(a). –
Capitalization


                  




                
                  	 


                

                
                   

                   

                  

                    

                      
                        
                          	 


                        




                    

                    

                      

                        

                          
                            
                              	 	Schedule
                                      3.4(b). –
Capitalization


                            




                          
                            	 


                          

                          
                             

                             

                            

                              

                                
                                  
                                    	 


                                  




                              

                              

                                

                                  

                                    
                                      
                                        	 	Schedule
                                                3.6(a). –
Litigation


                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

             

            The
              estate
              of Emily Karon Oxman vs. Creekside Hospice, Inc., Dean Lewis Mondell,
              M.D. and
              Epoch SL VI, Inc. filed November 11, 2004 with the Clark County Nevada
              District
              Court, Case 04-A-495353-C claiming wrongful death and vicarious liability
              with
              respect to Epoch SL VI, Inc. Epoch SL VI, Inc. has insurance coverage
              for this
              matter in the amount of $1,000,000 and the insurance company has retained
              legal
              counsel on behalf of Epoch SL VI, Inc.

            


            


            
              
                
                

              

              
                
                

                
                  

                

              

              
                
                

              

            



            

              

                
                  
                    	 	Schedule
                            3.17 – Capitalization


                  

Management
                  Agreements listed on Schedule
                  5.9.

              

            

            


            Assisted
              Living Plus and Respite Care Services Agreement for the period January
              1, 2003
              through December 31, 2006 between Epoch SL VI, Inc., d.b.a. Epoch Assisted
              Living of Minnetonka and the County of Hennepin, a political subdivision
              of the
              State of Minnesota, as assigned to ARC Minnetonka, LLC, d.b.a. Freedom
              Pointe
              Minnetonka.

            


            


            
              
                
                

              

              
                
                

                
                  

                

              

              
                
                

              

            

             

            

              

                

                  
                    
                      	 	Schedule
                              3.18 –
Capitalization


                    

                  

                

                 

              

            

            Those
              matters referenced in the following reports prepared by JJ Blake Technical
              Services, LLC:

            


            
              	
                      (1)

                    	
                      Environmental
                        Site Assessment dated July 28, 2005 and Property Condition
                        Report dated
                        July 28, 2005 for the Epoch Assisted Living of Sun City West
                        in Sun City
                        West, Arizona

                    


            

            


            
              	
                      (2)

                    	
                      Environmental
                        Site Assessment dated July 27, 2005 and Property Condition
                        Report dated
                        July 28, 2005 for Epoch Assisted Living Facility of Roswell
                        in Roswell,
                        Georgia

                    


            

            


            
              	
                      (3)

                    	
                      Environmental
                        Site Assessment dated July 28, 2005 and Property Condition
                        Report dated
                        July 28, 2005 for Epoch of Las Vegas in Las Vegas,
                        Nevada

                    


            

            


            
              	
                      (4)

                    	
                      Environmental
                        Site Assessment dated July 28, 2005 and Property Condition
                        Report dated
                        July 28, 2005 for the Epoch of Ventana Canyon in Tucson,
                        Arizona

                    


            

            


            
              	
                      (5)

                    	
                      Environmental
                        Site Assessment dated July 28, 2005 and Property Condition
                        Report dated
                        July 28, 2005 for the Epoch Assisted Living of Overland Park
                        in Overland
                        Park, Kansas

                    


            

            


            
              	
                      (6)

                    	
                      Environmental
                        Site Assessment dated July 27, 2005 and Property Condition
                        Report dated
                        July 28, 2005 for Epoch Assisted Living of Minnetonka in
                        Minnetonka,
                        Minnesota

                    


            

            


            
              	
                      (7)

                    	
                      Environmental
                        Site Assessment dated July 28, 2005 and Property Condition
                        Report dated
                        July 28, 2005 for the Epoch Assisted Living Facility of Denver
                        in Denver
                        Colorado

                    


            

            


            
              	
                      (8)

                    	
                      Environmental
                        Site Assessment dated July 27, 2005 and Property Condition
                        Report dated
                        July 28, 2005 for the Epoch Assisted Living of Tanglewood
                        in Houston,
                        Texas

                    


            

             

            
              
                
                  
                    
                      

                        
                          
                            	 


                          



                      

                    

                  

                

              

              
                
                  
                    
                      	 	Schedule
                              4.4 – Insurance
                              Requirements


                    




                

              

            

            The
              following requirements for insurance are effective as of the Closing
              Date.
              Lender reserves the absolute right to modify, amend or supplement these
              requirements at any time and from time to time during the term of the
              Loan and
              Borrower will be required to satisfy any such modified, amended or
              supplemented
              requirements after commercially reasonable notice to Borrower from
              Lender of
              such modification, amendment or supplement.

             

            Property
              Insurance for Borrower:  

             

            1. Issued
              on
ACORD
              27
              form
              (Evidence of Insurance), signed by authorized agent.

             

            2. Insurance
              carrier(s) must be rated A- VII or better (by A.M. Best).

             

            3. ACORD
              27
              should
              disclose: (a) annual premium for the coverages should be shown on the
ACORD
              27;
              (b) premiums that remain unpaid for the term of the policy, if any.
Lender
              has accepted the schedule of estimated 2006 insurance expense provided
              by Bette
              McNamara from the Borrower.

             

            4. Policy
              should be an all risk/special perils coverage form.

             

            5. Policy
              must provide replacement cost coverage with waiver of coinsurance or
              agreed
              amount endorsement.

             

            6. Policy
              must provide waiver of terrorism exclusion (or indicate "no terrorism
              exclusion").

             

            7. Deductible
              shall be no greater than $10,000. Lender
              has approved the
              property deductible of $50,000. 

             

            
              	Ø  	
                      If
                        the deductible is subject to an
                        overall aggregate deductible, this must be disclosed with
                        a copy of the
                        specific aggregate deductible agreement
                        provided.

                    


            

             

            8. Building
              coverage must be greater than or equal to replacement cost valued by
              Merrill
              Lynch Capital or its representatives (if the policy is a blanket policy
              insuring
              other properties, and there is any sublimit on the amount of coverage
              for any
              particular property, such limit should be shown on the evidence of
              insurance).
              Renewal amount and annual agreed amount endorsement shall be adjusted
              by
              Borrower, subject to Lender's approval, to maintain proper insurable
              values.
Lender
              has approved the following actual coverage: Building, Business Personal
              Property, and Business Income coverages are written on a blanket basis
              with
              total limits of $500,000,000 applicable to each
              location.

             

            9. Loss
              of
              Rents coverage must be greater than or equal to twelve (12) months rental
              income (if the policy is a blanket policy insuring other properties,
              and there
              is any sublimit on the amount of coverage for any particular property,
              such
              limit should be shown on the evidence of insurance). Lender
              has approved the following actual coverage: Building, Business Personal
              Property, and Business Income coverages are written on a blanket basis
              with
              total limits of $500,000,000 applicable to each
              location.

             

            
              
                -1-

              

              
                
                

                
                  

                

              

              
                
                

              

            

             

            10. Policy
              must provide for Boiler & Machinery coverage.

             

            11. Policy
              must provide for Building Law and Ordinance coverage.

             

            12. Policy
              must provide for windstorm coverage, if applicable (For Florida/Coastal
              properties).

             

            13. Policy
              must provide for flood coverage, if applicable (For properties in FEMA
              flood
              zones A, B, V, and X-Shaded). Lender
              has approved the following actual coverage: Flood coverage is written
              at a
              blanket limit of $50,000,000
              with a deductible of $100,000 each occurrence. Lender has confirmed
              that no
              flood coverage is required for any Property in this
              transaction.

             

            14. Policy
              must provide for earthquake coverage, if applicable (For properties
              located in
              Seismic Zones 3 and 4). Lender
              has approved the following actual coverage: Earthquake coverage is
              written at a
              blanket limit of $50,000,000 with a deductible of $100,000 each occurrence.
              Lender has confirmed that no earthquake coverage is required for any
              Property in
              this transaction.

             

            15. Merrill
              Lynch Capital shall be named on the ACORD 27 as Mortgagee and Loss
              Payee (as
              applicable) and Certificate Holder.

             

            16. ACORD
              27
              must provide for thirty (30) days' notice of cancellation or any material
              change in the policy to Merrill Lynch Capital, and if possible, deleting
              "endeavor to" and "but failure to mail such notice shall impose no
              obligation or
              liability of any kind upon the company, its agents or representatives"
              language.

             

            17. Policy
              must contain waiver of subrogation by insurer with respect to contractual
              releases made by insured prior to loss.

             

            18. Higher
              limits and special coverages in addition to those indicated above may
              be
              required depending upon the property size and nature of operations
              (if a joint
              venture).

             

            
              
                -2-

              

              
                
                

                
                  

                

              

              
                
                

              

            


            Property
              Insurance for Operator:  

             

            1. Operator
              must carry business interruption insurance with a coverage of twelve
              (12) months. Lender
              has approved the following actual coverage: Building, Business Personal
              Property, and Business Income coverages are written on a blanket basis
              with
              total limits of $500,000,000 applicable to each
              location.

             

            2. Issued
              on
ACORD
              27
              form
              (Evidence of Insurance), signed by authorized agent.

             

            3. Insurance
              carrier(s) must be rated A- VII or better (by A.M. Best).

             

            4. ACORD
              27
              should
              disclose: (a) annual premium for the coverages should be shown on the Acord
              27; (b) premiums that remain unpaid for the term of the policy, if any.
Lender
              has accepted the schedule of estimated 2006 insurance expense provided
              by Bette
              McNamara from the Borrower.

             

            5. Policy
              should be an all risk/special perils coverage form.

             

            6. Policy
              must provide replacement cost coverage with waiver of coinsurance or
              agreed
              amount endorsement. Lender
              has approved the following actual coverage: Building, Business Personal
              Property, and Business Income coverages are written on a blanket basis
              with
              total limits of $500,000,000 applicable to each
              location.

             

            7. Policy
              must provide waiver of terrorism exclusion (or indicate "no terrorism
              exclusion").

             

            8. Deductible
              shall be no greater than $10,000. Lender
              has approved the
              property deductible of $50,000.

             

            9. ACORD
              27
              must provide for thirty (30) days' notice of cancellation or any material
              change in the policy to Merrill Lynch Capital.

             

            10. Policy
              must contain waiver of subrogation by insurer with respect to contractual
              releases made by insured prior to loss. 

             

            
              11.
                Merrill Lynch Capital shall be named on the ACORD
                27
                as
                Mortgagee and Loss Payee (as applicable) and Certificate
                Holder.

            

             

             

            
              
                -3-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            


            General
              and Professional Liability Insurance:

             

            1. Certificate
              must be issued on ACORD
              25
              form
              (Certificate of Ins.), signed by authorized agent.

             

            2. Insurance
              carrier(s) must be rated A- VII or better (by A.M. Best).

             

            3. ACORD
              25
              should
              disclose: (a) annual premium for the coverages should be shown on the
ACORD
              25;
              (b) premiums that remain unpaid for the term of the policy, if any.
Lender
              has accepted the schedule of estimated 2006 insurance expense provided
              by Bette
              McNamara from the Borrower.

             

            4. Policy
              should include coverage for Contractual Liability.

             

            5. Policy
              should include waiver of terrorism exclusion (or indicate "no terrorism
              exclusion"). Lender
              has approved the following: The
              certificates on insurance do not reflect that terrorism is included
              in the
              combined general and professional liability policy insurance program;
              however,
              the Borrower and Borrower's insurance broker confirmed that terrorism
              coverage
              is included in the primary and excess insurance programs discussed
              herein.

             

            6. Policy
              must have a deductible not greater than $25,000. Lender
              has approved deductibles discussed below in item 7 of this
              section.

             

            
              	Ø  	
                      If
                        the deductible is subject to an overall aggregate deductible,
                        this must be
                        disclosed with a copy of the specific aggregate deductible
                        agreement
                        provided.

                    


            

             

            7. Coverage
              is required in a minimum $1,000,000 per claim and $3,000,000 in the
              aggregate
              (aggregate may apply to other insureds beyond the other named insureds
              listed
              below only with Lender's prior written consent): [enter names of named
              insurance
              - i.e., the policy owner - and the other named insureds; this should
              consist
              only of borrowers unless MLC otherwise approves]. 

             

            Lender
              has approved the following coverage: The combined general liability
              and
              professional liability insurance program is written with two insurance
              carriers.

             

            
              	à  	
                      The
                        primary general liability coverage is written with a limit
                        of $4,000,000
                        each occurrence, with a $4,000,000 policy aggregate including
                        a
                        self-insured retention of $1,000,000 plus an excess-umbrella
                        liability
                        policy at a limit of $5,000,000 with no retention. The total
                        combined
                        primary insurance program for general liability is $5,000,000
                        with a
                        $1,000,000 self-insured
                        retention.

                    


            

            


            
              	à  	
                      In
                        addition to the primary general liability insurance program,
                        there are two
                        excess programs written separately. The first policy combines
                        the general
                        liability and professional liability, each written at a limit
                        of
                        $15,000,000 in excess of the primary general liability insurance
                        program
                        with $5,000,000 self-insured retention applicable only to
                        the professional
                        liability coverage. The second excess coverage policy is
                        for general
                        liability written at a $10,000,000 limit.
                        

                    


            

            


            
              	à  	
                      Total
                        combined primary and excess general liability coverage is
                        $25,000,000 with
                        a $1,000,000 self-insured retention. Total combined coverage
                        for
                        professional liability is $15,000,000 with a $5,000,000 self-insured
                        retention.

                    


            

            


            
              
                -4-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            8. ACORD
              25
              should provide for thirty (30) days' notice of cancellation or any material
              change in the policy to Merrill Lynch Capital, and if possible, deleting
              "endeavor to" and "but failure to mail such notice shall impose no
              obligation or
              liability of any kind upon the company, its agents or representatives"
              language.
Lender
              has approved the certificates without the requested changes to the
              notice of
              cancellation.

             

            9. Policy
              must name Merrill
              Lynch Capital as additional insured and must name the
              following as other named insureds: The entities identified on Schedule
              5.9.

             

            10. Policy
              must include Separation of Insureds/Cross Liability. 

             

            11. Policy
              will be written on a claims-made basis. Lender
              has approved the following: The primary general liability insurance
              program is
              written on an Occurrence basis. The two combined Excess General Liability
              and
              Professional Liability insurance programs are written on a Claims-Made
              basis
              with the retroactive date of coverage being the inception date of coverage
              on
              October 31, 2005.

             

            12. Insurance
              shall be noted as being primary without right of contribution of any
              other
              insurance carried by or on behalf of Lessor.

             

            13. Higher
              limits and special coverages in addition to those indicated above may
              be
              required depending upon the property size and nature of operations
              (if a joint
              venture).

             

             

            
              
                -5-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            Automobile
              Liability Insurance (must show the following):

             

            
              	1.  	
                      Issued
                        on Acord 25 form (Certificate of Insurance), signed by authorized
                        agent.

                    


            

            


            
              	2.  	
                      Insurance
                        carrier (s) rated A- VII or better (by A.M.
                        Best).

                    


            

            


            
              	3.  	
                      Current
                        policy term.

                    


            

            


            
              	4.  	
                      Coverage
                        for Owned, Non-Owned, and Hired
                        autos.

                    


            

            


            
              	5.  	
                      Annual
                        premium for the coverages shown. Lender
                        has accepted the schedule of estimated 2006 insurance expense
                        provided by
                        Bette McNamara from the
                        Borrower.

                    


            

            


            
              	6.  	
                      Premiums
                        that remain unpaid for the policy term, if any.


                    


            

            


            
              	7.  	
                      Waiver
                        of terrorism exclusion (or indicate "no terrorism
                        exclusion").

                    


            

            


            
              	1.  	
                      Liability
                        deductible not greater than $5,000. Lender
                        has approved the
                        automobile liability deductible of
                        $100,000.

                    


            

            


            
              	2.  	
                      If
                        the deductible is subject to an overall aggregate deductible,
                        this must be
                        disclosed with a copy of the specific aggregate deductible
                        agreement
                        provided.

                    


            

            


            
              	3.  	
                      Minimum
                        $1,000,000 per occurrence limit (primary and umbrella/excess
                        can be
                        combined to achieve minimum limit.

                    


            

            


            
              	4.  	
                      Thirty
                        (30) days (ten (10) days for non-payment) notice of
                        cancellation or any material change in the policy to Merrill
                        Lynch Capital
                        deleting "endeavor to" and "but failure to mail such notice
                        shall impose
                        no obligation or liability of any kind upon the company,
                        its agents or
                        representatives" language. Lender
                        has approved the certificates without the requested changes
                        to the notice
                        of cancellation.

                    


            

            


            
              	5.  	
                      Merrill
                        Lynch Capital included as Additional Insured (see
                        below).

                    


            

            


            
              	6.  	
                      Waiver
                        of Subrogation endorsement in favor of Merrill Lynch Capital
                        (see below).
                        Lender
                        has accepted the following: The current insurance carrier
                        would not
                        provide Waiver of Subrogation in favor of Lender. However,
                        the policy does
                        name Lender as Additional Insured which insures Lender to
                        the extent of
                        Lender's insurable interest in the automobiles for this
                        transaction.

                    


            

             

             

            
              
                -6-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            
 

            
              	7.  	
                      Separation
                        of Insureds/Cross Liability included. Lender
                        has accepted the following: The current insurance carrier
                        would not
                        provide the Separation of Insureds/Cross Liability wording
                        to the policy.
                        However, Lender is named as Additional Insured and all owner
                        and facility
                        entities are included as named insureds on the policy. Therefore,
                        Lender
                        and all owner facility entities are provided named insured
                        status on the
                        policy thereby mitigating the need for this wording on the
                        policy.

                    


            

            


            
              	8.  	
                      Insurance
                        shall be noted as being primary without right of contribution
                        of any other
                        insurance carried by or on behalf of Lessor. Lender
                        has accepted the following: The current insurance carrier
                        would not
                        provide primary without right of contribution wording to
                        the policy.
                        However, Lender is named as Additional Insured and all owner
                        and facility
                        entities are included as named insureds on the policy. Therefore,
                        Lender
                        and all owner facility entities are provided named insured
                        status on the
                        policy thereby mitigating the need for this wording on the
                        policy.

                    


            

            


            
              	9.  	
                      Higher
                        limits and special coverages in addition to those indicated
                        above may be
                        required depending upon the property size and nature of operations
                        (if a
                        joint venture).

                    


            

             

            
              
                -7-

              

              
                
                

                
                  

                

              

              
                
                

              

            

            


            Certificate
              Holder and Entity to be Shown on Required
              Endorsements:

             

            Merrill
              Lynch Capital, a Division of 

            Merrill
              Lynch Business Financial Services Inc.,

            and
              its
              successors and assigns

            222
              N. La
              Salle Street - 16th
              Floor

            Chicago,
              IL 60601

            Attn:
              Portfolio Management

            


            


            Insurance
              Consultant for Merrill Lynch Capital:

             

            Lockton
              Companies, Inc.

            5847
              San
              Felipe, Suite 320

            Houston,
              TX 77057

            


            


            

              
                	
                        Primary
                          Contact:

                         

                      	
                        Secondary
                          Contact:

                         

                      
	
                        Eileen
                          M. Stulak, CPCU

                      	
                        Debra
                          Golafshan

                      
	
                        Vice
                          President, Risk Management Services

                      	
                        Assistant
                          Vice President, Account Manager

                      
	
                         

                      	 
	
                        713.458.5200
                          (Main)

                      	
                        713.458.5200
                          (Main)

                      
	
                        713.458.5281
                          (Direct)

                      	
                        713.458.5454
                          (Direct)

                      
	
                        713.458.5299
                          (Fax)

                      	
                        713.458.5299
                          (Fax)

                      
	
                         

                      	 
	
                        estulak@lockton.com(E-mail)

                      	
                        dgolafshan@lockton.com(E-mail)

                      
	 	 


              

            

            


             

            
              
                -8-

              

              
                
                

                
                  

                

              

              
                
                

              

            


            
              
                
                  	 	Schedule
                          4.11 – Deferred Maintenance
                          Schedule


                

              

               



            


            Location:     

                    Tanglewood
                505
              Bering
              Drive

            Houston,
              TX 77057

            


              
                	
                        Estimated
                          Cost of Remediation

                      	 	 	 
	 	 	 	 
	
                        Repair
                          EIFS system finish

                      	 	
                        $

                      	
                        30,000

                      	 
	
                        Repair
                          exterior EIFS

                      	 	 	
                        20,000

                      	 
	
                        Elastomeric
                          coating

                      	 	 	
                        200,000

                      	 
	
                        Remove
                          organic matter

                      	 	 	
                        40,000

                      	 
	
                        Replace
                          urethane sealants

                      	 	 	
                        40,000

                      	 
	
                        Install
                          sealant to control joints

                      	 	 	
                        20,000

                      	 
	
                        Install/seal
                          expansion joints

                      	 	 	
                        40,000

                      	 
	
                        Repair/seal
                          control splice joints

                      	 	 	
                        15,000

                      	 
	
                        Total

                      	 	 	
                        405,000

                      	 


              



            


            (based
              upon report dated September 27, 2005 from Stone and Glazing
              Consultant)

            


            


            
              
                
                

              

              
                
                

                
                  

                

              

              
                
                

              

            

            


            

              
                
                  
                    	 	Schedule
                            5.9 – Affiliate
                            Transactions


                  

                

                 

              

            

            Senior
              Independent Living Facility Management Agreement dated November ___,
              2005 by and
              between ARC Sun City West, LLC and ARC Management LLC.

             

             

            Senior
              Independent Living Facility Management Agreement dated November ___,
              2005 by and
              between ARC Roswell, LLC and ARC Management LLC.

             

             

            Senior
              Independent Living Facility Management Agreement dated November ___,
              2005 by and
              between ARC Vegas, LLC and ARC Management LLC.

             

             

            Senior
              Independent Living Facility Management Agreement dated November ___,
              2005 by and
              between ARC Tucson, LLC and ARC Management LLC.

             

             

            Senior
              Independent Living Facility Management Agreement dated November ___,
              2005 by and
              between ARC Overland Park, LLC and ARC Management LLC.

             

             

            Senior
              Independent Living Facility Management Agreement dated November ___,
              2005 by and
              between ARC Minnetonka, LLC and ARC Management LLC.

             

             

            Senior
              Independent Living Facility Management Agreement dated November ___,
              2005 by and
              between ARC Denver Monaco, LLC and ARC Management LLC.

             

             

            Senior
              Independent Living Facility Management Agreement dated November ___,
              2005 by and
              between ARC Tanglewood, L.P. and ARC Management LLC.

             

             

            
              
                
                

              

              
                
                

                
                  

                

              

              
                
                

              

            

             

            

              
                
                  
                    	 	Schedule
                            7.3 – Post Closing Deliveries and
                            Covenants


                  

                

                 

              

            

            


            


            
              	1.  	
                      Borrowers
                        shall cause completion of the repairs referenced on Schedule 4.11
                        with respect to the Houston, Texas, Project, which repairs
                        shall be
                        completed in a good and workmanlike manner and in compliance
                        with all
                        applicable Laws within the time period set forth in Section
                        4.11.

                    


            

            


            
              	2.  	
                      Borrowers
                        shall deliver to Administrative Agent a copy of the Healthcare
                        Permit for
                        each Project issued in the name of the respective Licensed
                        Operator within
                        90 days after the Closing Date, provided that Borrowers shall
                        deliver to
                        Administrative Agent a status update every 30 days with respect
                        to each
                        pending application for a Healthcare Permit which has not
                        been issued
                        within 30 days after the Closing Date and such updates shall
                        demonstrate
                        that no delay in the issuance of any Healthcare Permit is
                        the result of
                        material approval issues with respect to the applicant or
                        ARC.

                    


            

            


            
              	3.  	
                      Borrowers
                        shall, in accordance with applicable Law, within 12 months
                        after the
                        Closing Date, pave and/or stripe the parking spaces so as
                        to create 18
                        additional legal parking spaces at the Project located in
                        Minnetonka,
                        Minnesota and Borrowers shall submit evidence thereof to
                        Administrative
                        Agent.

                    


            

            


            
              	4.  	
                      Within
                        90 days of the Closing Date, ARC Minnetonka, LLC, Manager
                        and/or Licensed
                        Operator, as applicable, shall be fully qualified to participate
                        in the
                        Medicaid Waiver Program with respect to the Minnetonka, Minnesota
                        Project
                        and be submitting bills to Governmental Payors with respect
                        to said
                        program, and Borrowers shall submit written evidence of same
                        to
                        Administrative Agent.

                    


            

            


            


            
              
                
                

              

              
                
                

                
                  

                

              

              
                
                

              

            

            

              
                
                  
                    	 	Schedule
                            8.1 –
                            Licensed Units and Beds


                  

                

                 



            

            


            
              	
                      Owner

                    	
                      Location

                    	
                      Beds

                    
	
                      ARC
                        Sun City West, LLC

                    	
                      Sun
                        City, Arizona

                    	
                      97
                        Beds

                    
	
                      ARC
                        Roswell, LLC

                    	
                      Roswell,
                        Georgia

                    	
                      96
                        Beds

                    
	
                      ARC
                        Vegas, LLC

                    	
                      Las
                        Vegas, Nevada

                    	
                      108
                        Beds

                    
	
                      ARC
                        Tucson, LLC

                    	
                      Tucson,
                        Arizona

                    	
                      99
                        Beds

                    
	
                      ARC
                        Overland Park, LLC

                    	
                      Overland
                        Park, Kansas

                    	
                      124
                        Beds

                    
	
                      ARC
                        Minnetonka, LLC

                    	
                      Minnetonka,
                        Minnesota

                    	
                      128
                        Beds

                    
	
                      ARC
                        Denver Monaco, LLC

                    	
                      Denver,
                        Colorado

                    	
                      96
                        Beds

                    
	
                      ARC
                        Tanglewood, L.P.

                    	
                      Houston,
                        Texas

                    	
                      140
                        Beds

                    


            

            


            


            
              
                
                

              

              
                
                

                
                  

                

              

              
                
                

              

            

            



            
              
                
                  	 	Schedule
                          8.7 – Operating Less
                          ees


                

              

               



            
 

            ARC
              Management, LLC

            ARC
              Sun
              City West, LLC

            ARC
              Roswell, LLC

            ARC
              Vegas,
              LLC

            ARC
              Tucson, LLC

            ARC
              Overland Park, LLC

            ARC
              Minnetonka, LLC

            ARC
              Denver
              Monaco, LLC

            ARC
              Tanglewood, L.P.