Unassociated Document


    
      
         

        Exhibit
          10.81

        
 

        OPERATING
          DEFICIT GUARANTY AGREEMENT

         

        THIS
          OPERATING DEFICIT GUARANTY AGREEMENT
          (this
“Guaranty”)
          is made
          as of ____________ ___, 2005, by AMERICAN RETIREMENT CORPORATION, a Tennessee
          corporation (“Guarantor”),
          for
          the benefit of GMAC COMMERCIAL MORTGAGE BANK, a Utah industrial corporation
          (including its successors, transferees and assigns, “Lender”).

         

        RECITALS:

         

        A.  DENVER
          LOWRY JV, LLC, a Delaware limited liability company (“Borrower”),
          by its
          promissory note of even date herewith given to Lender (the note together
          with
          all extensions, renewals, modifications, consolidations, substitutions,
          replacements, restatements and increases thereof shall collectively be
          referred
          to as the “Note”)
          and
          that certain Loan Agreement by and between Lender and Borrower of even
          date
          herewith (the “Loan
          Agreement”)
          is
          indebted to Lender in the maximum principal sum of Twenty-Five Million
          Four
          Hundred Eighty Thousand and No/100 Dollars ($25,480,00.00) in lawful money
          of
          the United States of America, with interest from the date thereof at the
          rates
          set forth in the Note (the indebtedness evidenced by the Note, together
          with
          such interest accrued thereon, shall collectively be referred to as the
          “Loan”),
          principal and interest to be payable in accordance with the terms and conditions
          provided in the Note.

         

        B.  The
          Loan
          is secured by, among other things, a Deed of Trust, Assignment of Rents
          and
          Security Agreement (the “Security
          Instrument”),
          dated
          as of the date hereof which grants Lender a first lien on the property
          encumbered thereby (the “Property”).
          All
          and any of the documents other than the Note, the Security Instrument and
          this
          Assignment now or hereafter executed by Borrower and/or others and by or
          in
          favor of Lender, which wholly or partially secure or guarantee payment
          of the
          Note are referred to as the “Other
          Security Documents.”

         

        C.  Lender
          is
          willing to make the Loan only if Guarantor agrees to guaranty to Lender
          the
          advancement of funds by Guarantor to Borrower in an amount sufficient to
          enable
          Borrower to fund any monthly Operating Deficit (as defined below) related
          to the
          operation of the Property upon the terms and conditions set forth in this
          Guaranty.

         

        AGREEMENT:

         

        NOW
          THEREFORE, in consideration of the above and other good and valuable
          consideration, the receipt and sufficiency of which are hereby acknowledged,
          and
          as an inducement to Lender to make the Loan, Guarantor, intending to be
          legally
          bound, hereby covenants, agrees, represents and warrants as
          follows:

         

        1.  Definitions.
          The
          following defined terms have the meaning ascribed to them:

         

        (a)  “Actual
          Gross Income”
means,
          with respect to any calendar month, the actual monthly gross rental income
          derived from leases of space in the Property plus any other items of income
          attributable to and received from the operation of the Property;

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        (b)  “Approved
          Expenses”
means,
          with respect to any calendar month, the actual expenses of operation of
          the
          Property (as approved by Lender in its sole and absolute discretion) in
          such
          calendar month, excluding any payments for (i) services rendered with respect
          to
          the Property by Borrower or any affiliate of Borrower which were not included
          by
          Lender in underwriting the Loan, and (ii) nonrecurring extraordinary expenses,
          unless Lender has consented to include any such payment as an “Approved
          Expense;”

         

        (c)  “Debt
          Service”
means,
          with respect to any calendar month, all regularly scheduled monthly payments
          of
          interest and/or principal due under the Note in such calendar month (but
          specifically excluding payment of the balance of principal and unpaid interest
          at maturity, whether by acceleration or otherwise), plus all deposits required
          to be made under the Note, the Security Instrument, or the Other Security
          Documents to be held in escrow for taxes and insurance, for replacement
          reserves
          or any other reserves required to be made under the Note, the Security
          Instrument, or the Other Security Documents in such month; and

         

        (d)  “Operating
          Deficit”
means,
          with respect to any calendar month, the dollar amount by which the sum
          of (i)
          Approved Expenses and (ii) Debt Service for the calendar month exceeds
          the
          Actual Gross Income for the same month, as set forth in the monthly statements
          required by the Security Instrument to be provided to Lender and such other
          confirmatory records as Lender may request for review, and as adjusted
          by
          Lender, in its sole discretion.

         

        2.  Guaranty.
          Guarantor hereby absolutely and unconditionally guarantees to Lender the
          prompt
          and punctual payment to Borrower, or to such other Person as may be designated
          by Lender in writing, which may include Lender or any assignee of Lender,
          an
          amount equal to the Operating Deficit for the immediately preceding month,
          such
          amount to be applied toward the payment of such items of Approved Expenses
          or
          Debt Service as may be directed by Lender in writing (the “Guaranteed
          Obligations”)
          within
          seven (7) days of Lender’s demand therefor. In addition, Guarantor guarantees
          the full payment of, and agrees to reimburse Lender for, all costs of collection
          incurred by Lender in enforcing the Guaranteed Obligations and pursuing
          any
          remedies set forth in this Guaranty, including, without limitation, court
          costs
          and actual attorneys’ fees (including, but not limited to, fees in any
          bankruptcy or appellate proceeding).

         

        3.  Payments.
          All
          payments to be made by Guarantor to Lender hereunder shall be made in lawful
          money of the United States of America, in immediately available funds,
          at 100
          South Wacker Drive, Suite 400, Chicago, Illinois 60606, or such other location
          designated by Lender in writing, and shall be accompanied by a notice from
          Guarantor stating that such payments are made under this Guaranty. All
          payments
          available to Lender for application in payment or reduction of the Guaranteed
          Obligations may be applied by Lender in such manner and in such amount,
          and at
          such time or times and in such order and priority as Lender may see fit
          and to
          the payment or reduction of such portion of the Guaranteed Obligations
          as Lender
          may elect.

         

        4.  Subsequent
          Acts by Lender.
          Lender
          may, in its sole discretion and without notice to Guarantor, take any action
          which might otherwise be deemed a legal or equitable release or discharge
          of
          Guarantor’s obligations hereunder without either impairing or affecting the
          liability of Guarantor for payment of the Guaranteed Obligations, which
          actions
          might include, by way of illustration and not limitation:

         

        
          
            2

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        (a)  at
          any
          time or from time to time, the time for Borrower’s performance of or compliance
          with any provision of the Note, the Security Instrument, or the Other Security
          Documents may be extended or such performance or compliance may be waived
          by
          Lender;

         

        (b)  the
          acceptance of partial payment of the Guaranteed Obligations;

         

        (c)  any
          of the
          acts permitted in the Note, the Security Instrument, or the Other Security
          Documents may be performed;

         

        (d)  the
          Note,
          the Security Instrument, or the Other Security Documents may from time
          to time
          be amended and/or renewed by Borrower and Lender for the purpose of adding
          any
          provisions thereto or changing in any manner the rights of Lender or of
          Borrower
          thereunder;

         

        (e)  the
          maturity date of the Note may be changed, extended or renewed in whole
          or in
          part;

         

        (f)  the
          maturity of the Note may be accelerated in accordance with the terms of
          the
          Note, the Security Instrument, or the Other Security Documents or any future
          agreement between Borrower and Lender or the holder of such Note;

         

        (g)  any
          collateral security for all or any part of the Guaranteed Obligations may
          be
          exchanged, released, compromised, consolidated, surrendered or otherwise
          dealt
          with, and Lender’s interest therein may be released and may or may not be
          perfected;

         

        (h)  the
          settlement, release, compounding, compromise, cancellation, rearrangement
          or
          consolidation of any of the Guaranteed Obligations;

         

        (i)  the
          collection of or other liquidation of any claims Lender may have in respect
          to
          the Guaranteed Obligations; 

         

        (j)  the
          granting of indulgences, forbearance, compromises, extensions or adjustments
          in
          respect to any covenant or agreement under the Note, the Security Instrument,
          or
          the Other Security Documents; and/or

         

        (k)  the
          release from liability of any Guarantor and/or any additional parties who
          may
          guarantee payment of the Guaranteed Obligations or any portion
          thereof.

         

        5.  Certain
          Rights, Subordination, Etc.

         

        (a)  Lender
          may
          pursue its rights and remedies under this Guaranty and shall be entitled
          to
          payment hereunder notwithstanding any other guaranty of all or any part
          of the
          Guaranteed Obligations, and notwithstanding any action taken by Lender
          to
          enforce any of its rights or remedies under such other guaranty, or any
          payment
          received thereunder (but in no event shall Lender collect more than the
          aggregate amount of the Guaranteed Obligations).

         

        (b)  Any
          obligation or debt of Borrower now or hereafter held by Guarantor is hereby
          subordinated to the Guaranteed Obligations. Following the occurrence of
          an Event
          of Default (as defined below), Guarantor shall not enforce or collect any
          such
          indebtedness from Borrower. Nevertheless, upon request by Lender, Guarantor
          shall collect, enforce and receive such indebtedness of Borrower to Guarantor.
          Any sums collected at Lender’s request or collected in contravention of the
          prohibition set forth herein shall be held by Guarantor as trustee for
          Lender
          and shall be paid over to Lender on account of the Guaranteed Obligations;
          provided, however, that such payments shall not impair, reduce or affect
          in any
          manner the liability of Guarantor under the other provisions of this
          Guaranty.

        
           

          
            3

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        (c)  Guarantor
          agrees that if any event of default exists under the Note, the Security
          Instrument, or the Other Security Documents (“Event
          of Default”),
          (i)
          such Guarantor shall not accept payment from any other guarantor of any
          Guaranteed Obligations by way of contribution or similar rights on account
          of
          any payment made hereunder by Guarantor to Lender, all of which rights
          are
          hereby subordinated to Guarantor’s obligations hereunder to Lender, (ii)
          Guarantor will not take any action to exercise or enforce any rights to
          such
          contribution, and (iii) if Guarantor should receive payment, satisfaction
          or
          security for any indebtedness of Borrower to Lender, the same shall be
          delivered
          to Lender in the form received, endorsed or signed as may be appropriate
          for
          application on account of or as security for the indebtedness of Borrower
          to
          Lender and, until so delivered, shall be held in trust for Lender as security
          for the indebtedness of Borrower to Lender.

         

        (d)  Upon
          the
          occurrence of an Event of Default with respect to the Guaranteed Obligations,
          Guarantor agrees to pay or perform on demand such Guaranteed Obligations
          within
          five (5) days of Lender’s demand therefor. Lender shall not be under a duty to
          protect, secure or insure or be required to liquidate any security or lien
          provided by the Security Instrument or other such collateral held by Lender
          prior to making such demand.

         

        (e)  Notwithstanding
          any payment or payments made by Guarantor under this Guaranty, Guarantor
          expressly, irrevocably and unconditionally waives and releases any and
          all
“claims” (as that term is defined in the Bankruptcy Reform Act of 1978, as
          amended, 11 U.S.C. Sections 101 et seq.,
          and the
          regulations adopted and promulgated pursuant thereto (collectively, the
          “Bankruptcy Code”)) it may now or hereafter have against Borrower, and shall not
          be entitled to, and hereby expressly waives, any and all rights of subrogation,
          reimbursement, indemnity, exoneration and contribution against Borrower,
          which
          Guarantor may now or hereafter have against Borrower without regard to
          whether
          any such right or claim arises expressly; provided, that such waiver and
          release
          shall not be effective as to any such claim or entitlement or such subrogation
          and other rights that accrue after the indefeasible payment, performance
          or
          other satisfaction in full of the Guaranteed Obligations.

         

        6.  Representations
          and Warranties.
          Guarantor represents and warrants to Lender that:

         

        (a)  Existence,
          Power and Qualification.
          Guarantor is a duly organized and validly existing corporation, has the
          power to
          own its properties and to carry on its business as is now being conducted,
          and
          is duly qualified to do business and is in good standing in every jurisdiction
          in which the character of the properties owned by it or in which the transaction
          of its business makes such qualification and
          good
          standing necessary, except where failure to so qualify or be in good standing
          would not adversely affect Guarantor’s ability to perform its obligations
          hereunder.

         

        
          
            4

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        (b)  Power
          and Authority.
          Guarantor has full power and authority to execute and deliver this Guaranty
          and
          perform its obligations hereunder, all of which have been authorized by
          all
          proper and necessary action.

         

        (c)  Financial
          Condition.
          The
          financial statements of Guarantor heretofore furnished to Lender are complete
          and correct and fairly present the financial condition of Guarantor as
          of the
          date thereof. Since the date of said financial statements there has been
          no
          material adverse change in the financial position or operations, or the
          business
          taken as a whole, of Guarantor from that set forth therein.

         

        (d)  Litigation.
          There
          are no legal or arbitral proceedings or any proceedings by or before any
          governmental or regulatory authority or agency now pending or, to the best
          of
          Guarantor’s knowledge, threatened against Guarantor, in which an adverse
          decision could materially and adversely affect the ability of Guarantor
          to
          perform its obligations hereunder.

         

        (e)  No
          Breach.
          The
          execution and delivery of this Guaranty, the consummation of the transactions
          herein contemplated and compliance with the terms and provisions hereof
          will not
          (i) conflict with or result in a breach of, or require any consent (not
          heretofore obtained at the time this representation is made) under, any
          applicable law, administrative proceeding or regulation, or any order,
          writ,
          injunction or decree of any court or governmental authority or agency,
          or any
          agreement or instrument to which Guarantor is a party or by which Guarantor
          is
          bound or to which Guarantor is subject, (ii) constitute a default under
          any such
          agreement or instrument or under Guarantor’s organizational documents, or,
          except for any conflict or default which would not materially affect Guarantor’s
          ability to perform its obligations hereunder, any other agreement or instrument
          binding upon Guarantor, or (iii) result in the creation or imposition of
          any
          lien upon any of the revenues or assets of Guarantor pursuant to the terms
          of
          any such agreement or instrument.

         

        (f)  Approvals.
          To the
          best of Guarantor’s knowledge, no authorizations, approvals, or consents of
          (other than those heretofore obtained and in full force and effect), and
          no
          filings or registrations with (other than those heretofore obtained and
          in full
          force and effect), any governmental or regulatory authority or agency are
          necessary for the execution, delivery or performance by Guarantor of this
          Guaranty or for the validity or enforceability thereof.

         

        (g)  Taxes,
          etc.
          Guarantor has filed all United States federal and state tax returns and
          all
          other tax returns that are required to be filed by Guarantor and has paid
          all
          taxes due pursuant to such returns or pursuant to any assessment received
          by
          Guarantor, except such taxes, the payment of which is not yet due, or which
          if
          due, is not yet delinquent or is being contested in good faith or which
          has not
          been finally determined.

         

        (h)  Benefit.
          The
          making of the Loan by Lender to Borrower will directly benefit
          Guarantor.

         

        7.  Guaranty
          is a Continuing Obligation.
          The
          obligations of Guarantor under this Guaranty shall be continuing, absolute,
          irrevocable and unconditional under all circumstances, and shall remain
          in full
          force and effect or be reinstated, until all of the Guaranteed

         

        
          
            5

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        Obligations
          shall have been paid and performed in full, irrespective of the bankruptcy,
          insolvency, merger, reorganization, termination, discontinuation or dissolution
          of Borrower or any assignment for the benefit of creditors by Borrower.
          Guarantor acknowledges and agrees that Guarantor’s obligations hereunder shall
          apply to and continue with respect to any of the obligations of Borrower
          under
          the Note, the Security Instrument, or the Other Security Documents which
          are
          subsequently recovered from Lender for the reasons set forth below. In
          the event
          that any payment by or on the behalf of Borrower to Lender is held to constitute
          a preference, fraudulent transfer or other voidable payment under any
          bankruptcy, insolvency or similar law, or if for any other reason Lender
          is
          required to refund such payment or pay the amount thereof to any other
          party,
          including, without limitation, as a result of the appointment of a receiver,
          intervenor, or conservator of, or trustee or similar officer for, Borrower
          or of
          any substantial part of its property or otherwise, such payment by Borrower
          or
          any other party to Lender shall not constitute a release of Guarantor from
          any
          liability hereunder, and this Guaranty shall continue to be effective or
          shall
          be reinstated (notwithstanding any prior release, surrender or discharge
          by
          Lender of this Guaranty or of Guarantor), as the case may be, with respect
          to,
          and this Guaranty shall apply to, any and all amounts so refunded by Lender
          or
          paid by Lender to another party (which amounts shall constitute part of
          the
          Guaranteed Obligations), and any interest paid by Lender and any attorneys’
fees, costs and expenses paid or incurred by Lender in connection with
          any such
          event. It is the intent of Guarantor and Lender that the obligations and
          liabilities of Guarantor hereunder are absolute and unconditional under
          any and
          all circumstances and that until the Guaranteed Obligations are fully and
          finally paid and performed, and not subject to refund or disgorgement,
          the
          obligations and liabilities of Guarantor hereunder shall not be discharged
          or
          released, in whole or in part, by any act or occurrence that might, but
          for the
          provisions of this Guaranty, be deemed a legal or equitable discharge or
          release
          of a guarantor. Lender shall be entitled to continue to hold this Guaranty
          in
          its possession for a period of one year from the later of (a) the date
          the
          Guaranteed Obligations are paid and performed in full, or (b) if not paid
          in
          accordance with the Guaranteed Obligations, the expiration or termination
          of the
          Loan, and for so long thereafter as may be necessary to enforce any obligation
          of Guarantor hereunder and/or to exercise any right or remedy of Lender
          hereunder.

         

        8.  Waiver
          and Release of Subrogation and Participation.
          Until
          the Guaranty Obligations have been satisfied, (a) Guarantor shall have
          no right
          of subrogation in or under the Guaranteed Obligations, and no rights of
          reimbursement, indemnity or contribution from Borrower or any other rights
          by
          law, equity, statute or contract that would give rise to a creditor-debtor
          relationship between Guarantor and Borrower, (b) Guarantor shall have no
          right
          to participate in any way in any of the collateral which is conveyed under
          the
          Note, the Security Instrument, or the Other Security Documents as security
          for
          the Guaranteed Obligations, and (c) Guarantor hereby explicitly waives
          and
          releases any of the above-described rights of subrogation, reimbursement,
          indemnity, contribution, participation, and any right to require the marshalling
          of Borrower’s assets under any circumstances.

         

        9.  Continuing
          Validity.
          Guarantor further agrees that the validity of this Guaranty and the obligations
          of Guarantor hereunder shall in no way be terminated, affected or impaired
          (a)
          by reason of the assertion by Lender of any rights or remedies which it
          may have
          under or with respect to either the Note, the Security Instrument, or the
          Other
          Security Documents, against any person obligated thereunder or against
          the owner
          of the premises covered by the Security Instrument, (b) by reason of any
          failure
          to file or record

         

        
          
            6

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        any
          of
          such instruments or to take or perfect any security intended to be provided
          thereby, (c) by reason of the commencement of a case under the Bankruptcy
          Code
          by or against any person obligated under the Note, the Security Instrument
          or
          the Other Security Documents, or the death of any Guarantor, or (d) by
          reason of
          any payment made on the Guaranteed Obligations or any other indebtedness
          arising
          under the Note, the Security Instrument or the Other Security Documents,
          whether
          made by Borrower or Guarantor or any other person, which is required to
          be
          refunded pursuant to any bankruptcy or insolvency law; it being understood
          that
          no payment so refunded shall be considered as a payment of any portion
          of the
          Guaranteed Obligations, nor shall it have the effect of reducing the liability
          of Guarantor hereunder. It is further understood, that if Borrower shall
          have
          taken advantage of, or be subject to the protection of, any provision in
          the
          Bankruptcy Code, the effect of which is to prevent or delay Lender from
          taking
          any remedial action against Borrower, including the exercise of any option
          Lender has to declare the Guaranteed Obligations due and payable on the
          happening of any default or event by which under the terms of the Note,
          the
          Security Instrument or the Other Security Documents, the Guaranteed Obligations
          shall become due and payable, Lender may, as against Guarantor, nevertheless,
          declare the Guaranteed Obligations due and payable and enforce any or all
          of its
          rights and remedies against Guarantor provided for herein.

         

        10.  No
          Abrogation of Borrower’s Obligations.
          The
          existence of this Guaranty will not abrogate Borrower’s agreement to fulfill all
          obligations under the Note, the Security Instrument and the Other Security
          Documents.

         

        11.  Notice.
          All
          notices given under this Guaranty shall be in writing and shall be either
          hand
          delivered or mailed, by certified U.S. mail, return receipt requested,
          first
          class postage prepaid, to the other party, at its address set forth below
          or at
          such other address as such party may designate by notice to the other
          party:

         

        (a)  If
          to
          Guarantor:

         

        American
          Retirement Corporation

        111
          Westwood Place, Suite 200

        Brentwood,
          Tennessee 37027

        Attention:
          George Hicks, Executive Vice President

        


        with
          a
          copy to:

         

        T.
          Andrew
          Smith, Esquire

        Bass,
          Berry & Sims, PLC

        315
          Deaderick Street, Suite 2700

        Nashville,
          Tennessee 37238-0002

         

        (b)  If
          to
          Lender:

         

        GMAC
          Commercial Mortgage Bank

        100
          South
          Wacker Drive 

        Suite
          400

        Chicago,
          Illinois 60606

        Attention:
          Construction Department

         

        
          
            7

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        with
          a
          copy to:

         

        GMAC
          Commercial Mortgage Corporation

        8333
          Douglas Avenue, Suite 1460

        Dallas,
          Texas 75225

        Attention:
          Monique Bimler

         

        and:

         

        Kelly
          M.
          Wrenn, Esquire

        Ballard
          Spahr Andrews & Ingersoll, LLP

        601
          13th
          Street,
          NW, Suite 1000 South

        Washington,
          DC 20005-3807

         

        12.  No
          Waiver by Lender; Remedies.
          No
          failure on the part of Lender or the holder of the Note to exercise, and
          no
          delay in exercising, any right hereunder or thereunder shall operate as
          a waiver
          thereof; nor shall any single or partial exercise of any right hereunder
          or
          thereunder preclude any other or further exercise thereof or the exercise
          of any
          other right. Guarantor hereby agrees that all rights and remedies that
          Lender is
          afforded by reason of this Guaranty are separate and cumulative and may
          be
          pursued separately, successively, or concurrently, as Lender deems advisable.
          In
          addition, all such rights and remedies are non-exclusive and shall in no
          way
          limit or prejudice Lender’s ability to pursue any other legal or equitable
          rights or remedies that may be available. Failure of Lender to insist upon
          strict performance or observance of any of the terms, provisions and covenants
          hereof or to exercise any right herein contained shall not be construed
          as a
          waiver or relinquishment of the right to demand strict performance at another
          time. Receipt by Lender of any payment or performance on the Guaranteed
          Obligations shall not be deemed a waiver of the breach of any provision
          hereof
          or of any of the Note, the Security Instrument, or the Other Security Documents.
          Without limiting the generality of the foregoing, Guarantor agrees that
          in any
          action by Lender by reason of the Guaranteed Obligations, Lender, at its
          election, may proceed (a) against Guarantor together with Borrower, (b)
          against
          Guarantor and Borrower, individually, or (c) against Guarantor only without
          having commenced any action against, or having obtained any judgment against,
          Borrower.

         

        13.  Certain
          Waivers by Guarantor.
          AS
          A FURTHER INDUCEMENT TO LENDER TO MAKE THE LOAN AND IN CONSIDERATION THEREOF,
          GUARANTOR FURTHER COVENANTS AND AGREES THAT SERVICE OF ANY SUMMONS AND
          COMPLAINT
          OR OTHER PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY BE MADE BY REGISTERED
          OR
          CERTIFIED MAIL DIRECTED TO GUARANTOR AT GUARANTOR’S ADDRESS HEREINABOVE SET
          FORTH, GUARANTOR HEREBY WAIVING PERSONAL SERVICE THEREOF. GUARANTOR HEREBY
          WAIVES THE PLEADING OF ANY STATUTE OF LIMITATIONS AS A DEFENSE TO THE
          OBLIGATIONS HEREUNDER. GUARANTOR HEREBY WAIVES NOTICE OF THE ACCEPTANCE
          HEREOF,
          PRESENTMENT, DEMAND FOR PAYMENT, PROTEST, NOTICE OF PROTEST, OR ANY AND
          ALL
          NOTICE OF NON-PAYMENT, NON-PERFORMANCE OR NON-OBSERVANCE, OR OTHER PROOF,
          OR
          NOTICE OR DEMAND.

         

        
          
            8

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        GUARANTOR
          FURTHER WAIVES AND AGREES NOT TO ASSERT: (A) ANY RIGHT TO REQUIRE LENDER
          TO
          PROCEED AGAINST BORROWER OR TO PROCEED AGAINST ANY OTHER GUARANTOR, OR
          TO
          PROCEED AGAINST OR EXHAUST ANY SECURITY FOR THE GUARANTEED OBLIGATIONS,
          OR TO
          PURSUE ANY OTHER REMEDY AVAILABLE TO LENDER, OR TO PURSUE ANY REMEDY IN
          ANY
          PARTICULAR ORDER OR MANNER, (B) THE BENEFIT OF ANY STATUTE OF LIMITATIONS
          AFFECTING GUARANTOR’S LIABILITY HEREUNDER OR THE ENFORCEMENT HEREOF, (C) NOTICE
          OF THE EXISTENCE, CREATION OR INCURRING OF NEW OR ADDITIONAL INDEBTEDNESS
          OF
          BORROWER TO LENDER, (D) THE BENEFITS OF ANY STATUTORY PROVISION LIMITING
          THE
          LIABILITY OF A SURETY, (E) ANY DEFENSE ARISING BY REASON OF ANY DISABILITY
          OR
          OTHER DEFENSE OF BORROWER OR BY REASON OF THE CESSATION FROM ANY CAUSE
          WHATSOEVER (OTHER THAN PAYMENT IN FULL) OF THE LIABILITY OF BORROWER FOR
          THE
          GUARANTEED OBLIGATIONS, (F) THE BENEFITS OF ANY STATUTORY PROVISION
          LIMITING THE RIGHT OF LENDER TO RECOVER A DEFICIENCY JUDGMENT, OR TO OTHERWISE
          PROCEED AGAINST ANY PERSON OR ENTITY OBLIGATED FOR PAYMENT OF THE GUARANTEED
          OBLIGATIONS, AFTER ANY FORECLOSURE OR TRUSTEE’S SALE OF ANY SECURITY FOR THE
          GUARANTEED OBLIGATIONS, AND (G) ANY OTHER DEFENSE OR CIRCUMSTANCE WHICH
          MIGHT
          OTHERWISE CONSTITUTE A LEGAL OR EQUITABLE DISCHARGE OF GUARANTOR’S LIABILITY
          HEREUNDER, ARISING FROM OR OUT OF THE LOAN, THE NOTE, THE SECURITY INSTRUMENT,
          OR THE OTHER SECURITY DOCUMENTS AND/OR THE PROPERTY.

         

        14.  Waiver
          of Automatic Stay.
          GUARANTOR
          HEREBY AGREES THAT, IN CONSIDERATION OF LENDER’S AGREEMENT TO MAKE THE LOAN AND
          IN RECOGNITION THAT THE FOLLOWING COVENANT IS A MATERIAL INDUCEMENT FOR
          LENDER
          TO MAKE THE LOAN, IN THE EVENT THAT GUARANTOR SHALL (A) FILE WITH ANY BANKRUPTCY
          COURT OF COMPETENT JURISDICTION OR BE THE SUBJECT OF ANY PETITION UNDER
          ANY
          SECTION OR CHAPTER OF TITLE 11 OF THE UNITED STATES CODE, AS AMENDED
          (“BANKRUPTCY CODE”), OR SIMILAR LAW OR STATUTE, (B) BE THE SUBJECT OF ANY ORDER
          FOR RELIEF ISSUED UNDER THE BANKRUPTCY CODE OR SIMILAR LAW OR STATUTE,
          (C) FILE
          OR BE THE SUBJECT OF ANY PETITION SEEKING ANY REORGANIZATION, ARRANGEMENT,
          COMPOSITION, READJUSTMENT, LIQUIDATION, DISSOLUTION, OR SIMILAR RELIEF
          UNDER ANY
          PRESENT OR FUTURE FEDERAL OR STATE ACT OR LAW RELATING TO BANKRUPTCY,
          INSOLVENCY, OR OTHER RELIEF FOR DEBTORS, (D) HAVE SOUGHT OR CONSENTED TO
          OR
          ACQUIESCED IN THE APPOINTMENT OF ANY TRUSTEE, RECEIVER, CONSERVATOR, OR
          LIQUIDATOR, OR (E) BE THE SUBJECT OF AN ORDER, JUDGMENT OR


         

        
          
            9

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        DECREE
          ENTERED BY ANY COURT OF COMPETENT JURISDICTION APPROVING A PETITION FILED
          AGAINST GUARANTOR FOR ANY REORGANIZATION, ARRANGEMENT, COMPOSITION,
          READJUSTMENT, LIQUIDATION, DISSOLUTION, OR SIMILAR RELIEF UNDER ANY PRESENT
          OR
          FUTURE FEDERAL OR STATE ACT OR LAW RELATING TO BANKRUPTCY, INSOLVENCY OR
          RELIEF
          FOR DEBTORS, THEN, SUBJECT TO APPLICABLE LAW (INCLUDING WITHOUT LIMITATION,
          COMMON LAW OR STATUTORY FIDUCIARY DUTIES), LENDER SHALL THEREUPON BE ENTITLED,
          AND GUARANTOR HEREBY IRREVOCABLY CONSENTS TO, AND WILL NOT CONTEST, AND
          AGREES
          TO STIPULATE TO RELIEF FROM, ANY AUTOMATIC STAY OR OTHER INJUNCTION IMPOSED
          BY
          SECTION 362 OF THE BANKRUPTCY CODE, OR SIMILAR LAW OR STATUTE (INCLUDING,
          WITHOUT LIMITATION, RELIEF FROM ANY EXCLUSIVE PERIOD SET FORTH IN SECTION
          1121
          OF THE BANKRUPTCY CODE) OR OTHERWISE, ON OR AGAINST THE EXERCISE OF THE
          RIGHTS
          AND REMEDIES OTHERWISE AVAILABLE TO LENDER AS PROVIDED IN THIS AGREEMENT
          AND/OR
          THE NOTE, THE SECURITY INSTRUMENT, OR THE OTHER SECURITY DOCUMENTS, AND
          AS
          OTHERWISE PROVIDED BY LAW, AND GUARANTOR HEREBY IRREVOCABLY WAIVES GUARANTOR’S
          RIGHTS TO OBJECT TO SUCH RELIEF.

         

        15.  Guaranty
          of Payment.
          This is
          a guaranty of payment and not of collection and upon any Event of Default
          of
          Borrower under the Note, the Security Instrument, the Loan Agreement or
          the
          Other Security Documents, Lender may, at its option, proceed directly and
          at
          once, without notice, against Guarantor to collect and recover the full
          amount
          of the liability hereunder or any portion thereof, without proceeding against
          Borrower or any other person, or foreclosing upon, selling, or otherwise
          disposing of or collecting or applying against any of the Property or other
          collateral for the Loan.

         

        (a)  Joint
          and Several Liability.
          The term
“Guarantor” as used in this Guaranty shall refer individually and collectively
          to all signers of this Guaranty. Each undertaking herein contained shall
          be the
          joint and several undertaking of each signer hereof if more than one, and
          it is
          specifically agreed that Lender may enforce the provisions hereof with
          respect
          to one or more of such signers without seeking to enforce the same as to
          all or
          any such signers. Guarantor hereby waives any requirement of joinder of
          all or
          any other of the parties hereto in any suit or proceeding to enforce the
          provisions hereof.

         

        (b)  Assignment.
          Lender
          may assign this Guaranty or any rights or powers hereunder, in whole or
          in part,
          in connection with the sale of the Note and assignment of the Security
          Instrument. The duties and obligations of Guarantor may not be delegated
          or
          transferred by Guarantor without the prior written consent of Lender which
          may
          be withheld in its absolute discretion. Each reference herein to Lender
          shall be
          deemed to include its successors and assigns, to whose favor the provisions
          of
          this Guaranty shall also inure. This Guaranty shall be binding upon Guarantor
          and the successors and assigns of Guarantor, all of whom shall be bound
          by the
          provisions of this Guaranty. If any party hereto shall be a partnership
          or a
          limited liability company, the agreements and obligations on 

         

        
          
            10

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        the
          part
          of Guarantor herein contained shall remain in force and application
          notwithstanding any changes in the individuals or entities composing the
          partnership or the limited liability company, and the term “Guarantor” shall
          include any altered or successive partnerships and any altered or successive
          limited liability companies but the predecessor partnerships and their
          partners,
          and the predecessor limited liability companies and their members, shall
          not
          thereby be released from any obligations or liability hereunder.

         

        16.  Waiver
          of Trial by Jury; Service of Process.
          GUARANTOR
          HEREBY WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO WHICH GUARANTOR
          AND
          LENDER MAY BE PARTIES ARISING OUT OF, IN CONNECTION WITH, OR IN ANY WAY
          PERTAINING TO, THIS AGREEMENT AND/OR ANY OF THE OTHER SECURITY DOCUMENTS.
          IT IS
          AGREED AND UNDERSTOOD THAT THIS WAIVER CONSTITUTES A WAIVER OF TRIAL BY
          JURY OF
          ALL CLAIMS AGAINST ALL PARTIES TO SUCH ACTIONS OR PROCEEDINGS, INCLUDING
          CLAIMS
          AGAINST PARTIES WHO ARE NOT PARTIES TO THIS AGREEMENT. THIS WAIVER IS KNOWINGLY,
          WILLINGLY AND VOLUNTARILY MADE BY GUARANTOR, AND GUARANTOR HEREBY REPRESENTS
          THAT NO REPRESENTATIONS OF FACT OR OPINION HAVE BEEN MADE BY ANY INDIVIDUAL
          TO
          INDUCE THIS WAIVER OF TRIAL BY JURY OR TO IN ANY WAY MODIFY OR NULLIFY
          ITS
          EFFECT. GUARANTOR FURTHER REPRESENTS AND WARRANTS THAT GUARANTOR HAS BEEN
          REPRESENTED IN THE SIGNING OF THIS AGREEMENT AND IN THE MAKING OF THIS
          WAIVER BY
          INDEPENDENT LEGAL COUNSEL, OR HAS HAD THE OPPORTUNITY TO BE REPRESENTED
          BY
          INDEPENDENT LEGAL COUNSEL SELECTED BY GUARANTOR OF GUARANTOR’S OWN FREE WILL,
          AND THAT GUARANTOR HAS HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH
          COUNSEL.
          GUARANTOR HEREBY IRREVOCABLY DESIGNATES CORPORATION SERVICE COMPANY AT
          ,
          AND ITS SUCCESSORS IN OFFICE, AS THE TRUE AND LAWFUL ATTORNEY OF GUARANTOR
          FOR
          THE PURPOSE OF RECEIVING SERVICE OF ALL LEGAL NOTICES AND PROCESS ISSUED
          BY ANY
          COURT IN THE STATE OF COLORADO AS WELL AS SERVICE OF ALL PLEADINGS AND
          OTHER
          DOCUMENTS RELATED TO ANY LEGAL PROCEEDING OR ACTION ARISING OUT OF THE
          NOTE.
          GUARANTOR AGREES THAT SERVICE UPON SAID CORPORATION SERVICE COMPANY SHALL
          BE
          VALID REGARDLESS OF GUARANTOR’S WHEREABOUTS AT THE TIME OF SUCH SERVICE AND
          REGARDLESS OF WHETHER GUARANTOR RECEIVES A COPY OF SUCH SERVICE. GUARANTOR
          AGREES TO PAY ALL COURT COSTS AND REASONABLE ATTORNEY’S FEES INCURRED BY LENDER
          IN CONNECTION WITH ENFORCING ANY PROVISION OF THIS
          AGREEMENT.

         

        17.  Power
          and Authority.
          Guarantor (and its representative, executing below, if any) has full power,
          authority and legal right to execute this Guaranty and to perform all its
          obligations under this Guaranty.

         

        18.  Complete
          Agreement; Modification; Waiver.
          All
          understandings, representations and agreements heretofore had with respect
          to
          this Guaranty are merged into this Guaranty which are incorporated herein
          which
          alone fully and completely expresses the agreement of Guarantor and Lender.
          In
          no event shall any modification or waiver of the provisions of this Guaranty
          be
          effective unless in writing executed by Lender. Any waiver granted by Lender
          shall be applicable only in the specific instance for which it is
          given.

         

        
          
            11

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        19.  Governing
          Law.
          THIS
          GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
          OF THE
          STATE IN WHICH THE PROPERTY IS LOCATED AND APPLICABLE FEDERAL LAW.

         

        20.  Counterparts;
          Construction.
          This
          Guaranty may be executed in any number of counterparts, all of which when
          taken
          together shall constitute one and the same instrument. Words of any gender
          used
          in this Guaranty shall be held and construed to include the other gender,
          and
          words in the singular shall be held and construed to include the plural,
          and
          words in the plural shall be held and construed to include the singular,
          unless
          this Guaranty or the context otherwise requires.

         

        21.  Review
          by Guarantor.
          GUARANTOR HAS RECEIVED COPIES OF, AND HAS HAD THE OPPORTUNITY TO REVIEW,
          THE
          NOTE, THE SECURITY INSTRUMENT, AND THE OTHER SECURITY DOCUMENTS REFERRED
          TO IN
          THIS GUARANTY. GUARANTOR HAS DISCUSSED THIS GUARANTY WITH GUARANTOR’S LEGAL
          COUNSEL, AND GUARANTOR UNDERSTANDS THE NATURE AND EXTENT AND THE LEGAL
          AND
          PRACTICAL CONSEQUENCES OF GUARANTOR’S LIABILITY UNDER THIS
          GUARANTY.

         

        22.  No
          Oral
          Agreement.
          To the
          extent allowed by law, Guarantor agrees to be bound by the terms of the
          following notice:

        
          

            
              	
                      NOTICE:

                       

                    	
                      THIS
                        GUARANTY, THE NOTE, THE SECURITY INSTRUMENT AND THE OTHER
                        SECURITY
                        DOCUMENTS CONSTITUTE A WRITTEN AGREEMENT WHICH REPRESENTS
                        THE FINAL
                        AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED
                        BY EVIDENCE OF
                        PRIOR, CONTEMPORANEOUS OR ORAL AGREEMENTS OF THE
                        PARTIES.

                    
	 	 
	 	
                      THERE
                        ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES RELATING
                        TO THE
                        LOAN.

                       

                    


            

          

        

         

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        IN
          WITNESS
          WHEREOF, this Guaranty has been duly executed by the undersigned as of
          the day
          and year first written above.

         

        
          	 	 	 
	 	GUARANTOR:
	 	 
	 	AMERICAN
                  RETIREMENT CORPORATION, a 
                  Tennessee
                    corporation

                
	 
 	 
 	 
 
	 	By:  	 
	 	
                  
                    

                  

                
	 	
                  Name:
                    

                  

                
	 	Title: