Unassociated Document


    
      Exhibit
        10.78

       

      


       

      AMENDED
        AND RESTATED

       

      LIMITED
        LIABILITY COMPANY AGREEMENT

       

      OF

       

      DENVER
        LOWRY JV, LLC

       

      A
        Delaware Limited Liability Company

       

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
 

      AMENDED
        AND RESTATED

      LIMITED
        LIABILITY COMPANY AGREEMENT

      OF

      DENVER
        LOWRY JV, LLC

       

      This
        Amended and Restated Limited Liability Company Agreement (the “Agreement”) of
DENVER
        LOWRY JV, LLC,
        a
        Delaware limited liability company (the “Company”), is entered into as of the
        14th day of October, 2005, by DENVER
        LOWRY SENIOR HOUSING, LLC,
        a
        Delaware limited liability company (“CNL”), and ARC
        LOWRY, LLC,
        a
        Tennessee limited liability company (“ARC”), as members (CNL and ARC are
        sometimes referred to herein as the “Members” or individually as a
“Member”).

       

      Preamble:

       

      WHEREAS,
        pursuant
        to the Certificate of Formation of the Company filed in the office of the
        Delaware Secretary of State on October 11, 2005, the Company was formed as
        a
        limited liability company under the Delaware Limited Liability Company Act;
        

       

      WHEREAS,
        the
        parties entered into that certain Limited Liability Company Agreement of
        the
        Company on October 14, 2005 (the “Original LLC Agreement”) for the purpose of
        setting forth and agreeing upon their respective rights, duties and
        responsibilities with respect to the management and affairs of the Company
        and
        memorializing certain other agreements between them with respect to the Company
        and their interests therein; and

       

      WHEREAS,
        the
        parties desire to amend and restate the Original LLC Agreement in its
        entirety.

       

      NOW,
        THEREFORE,
        for and
        in consideration of the foregoing premises, the mutual covenants and agreements
        set forth herein, the contributions to the capital of the Company made and
        to be
        made hereunder, and for other good and valuable considerations, the receipt
        and
        sufficiency of which are hereby acknowledged, the parties hereby agree as
        follows:

       

      ARTICLE
        1

      DEFINITIONS

       

      The
        following terms used in this Agreement, unless the context otherwise requires,
        shall have the following meanings:

       

      “Act”
means
        the Delaware Limited Liability Company Act, as the same may be amended from
        time
        to time.

       

      “Actual
        TCCO”
means
        the actual costs incurred by or on behalf of the Company until such time
        as the
        development and construction of the Senior Living Facility is completed and
        a
        certificate of occupancy is granted.

       

      “Adjusted
        Capital Account Deficit”
means,
        with respect to any Member, the deficit balance, if any, in a Member’s Capital
        Account, after giving effect to the following adjustments:

       

       

      
        
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      (i) Credit
        to
        such Capital Account any amounts such Member is deemed to be obligated to
        restore pursuant to the penultimate sentences of Regulations Sections
        1.704-(g)(1) and 1.704-2(i)(5); and

       

      (ii) Debit
        to
        such Capital Account, the items described in Regulations Sections
        1.704-1(b)(2)(ii)(d)(4), (5) and (6).

       

      The
        foregoing definition of Adjusted Capital Account Deficit is intended to comply
        with the provisions of Regulations Section 1.704-1(b)(2)(ii)(d), and shall
        be
        interpreted consistently therewith.

       

      “Advisor”
means
        CNL Capital Corp., a Florida corporation, its successors and/or
        assigns.

       

      “Affiliate”
means,
        when used with reference to any Person, (i) any Person that, directly or
        indirectly, through one or more intermediaries controls, is controlled by,
        or is
        under common control with, or owns a greater than fifty percent (50%) interest
        in the specified Person (the term “control” for this purpose, shall mean the
        ability, whether by the ownership of shares or other equity interest, by
        contract or otherwise, to elect a majority of the directors of a corporation,
        independently to select the managing partner of a partnership or the manager
        or
        managers of a limited liability company, or otherwise to have the power
        independently to remove and then select a majority of those Persons exercising
        governing authority over an entity, and control shall be conclusively presumed
        in the case of the direct or indirect ownership of fifty percent (50%) or
        more
        of the equity interests in the specified Person); and (ii) a spouse, parent,
        sibling, or issue of such Person.

       

      “Agreement”
or
        “this
        Agreement”
means
        this Amended and Restated Limited Liability Company Agreement of Denver Lowry
        JV, LLC, as originally executed and as it may be amended from time to
        time.

       

      “Approval
        of the Members”
and
        “Approved
        by the Members”
means
        the unanimous written approval of all of the Members.

       

      “ARC
        TCCO Capital”
means
        the funds advanced to the Company by ARC or caused to be advanced to the
        Company
        by ARC (irrespective of whether such funds are advanced directly from ARC,
        indirectly from its ultimate parent American Retirement Corporation, a Tennessee
        corporation, or indirectly from any affiliate thereof) pursuant to Section
        3.2(b) to fund the amount by which Actual TCCO exceeds Budgeted TCCO.


       

       

      
        
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      “Bankrupt
        Member”
means
        any Member (a) that (i) makes a general assignment for the benefit of creditors;
        (ii) files a voluntary bankruptcy petition; (iii) becomes the subject of
        an
        order for relief or is declared insolvent in any federal or state bankruptcy
        or
        insolvency proceedings; (iv) files a petition or answer seeking for the Member
        a
        reorganization, arrangement, composition, readjustment, liquidation,
        dissolution, or similar relief under any law; (v) files an answer or other
        pleading admitting or failing to contest the material allegations of a petition
        filed against the Member in a proceeding of the type described in subclauses
        (i)
        through (iv) of this clause (a); or (vi) seeks, consents to, or acquiesces
        in
        the appointment of a trustee, receiver, or liquidator of the Member’s properties
        or of all or any substantial part thereof; or (b) against which, a proceeding
        seeking reorganization, arrangement, composition, readjustment, liquidation,
        dissolution, or similar relief under any law has been commenced and sixty
        (60)
        days have expired without dismissal thereof or with respect to which, without
        the Member’s consent or acquiescence, a trustee, receiver, or liquidator of the
        Member or of all or any substantial part of the Member’s properties has been
        appointed and sixty (60) days have expired without the appointments having
        been
        vacated or stayed, or sixty (60) days have expired after the date of expiration
        of a stay, if the appointment has not previously been vacated.

       

      “Budgeted
        TCCO”
means
        the costs budgeted by the Company (as more fully set forth on Exhibit E attached
        hereto) for the development and construction of the Senior Living Facility
        until
        such Senior Living Facility is complete and a certificate of occupancy is
        granted.

       

      “Business
        Day”
means
        any day other than a Saturday, Sunday, or other day on which commercial banks
        are authorized to close under the laws of, or are in fact closed in, the
        State
        of Colorado.

       

      “Capital
        Account”
means,
        with respect to any Member, the capital account maintained for such Member
        in
        accordance with the following provisions:

       

      (i) To
        each
        Member’s Capital Account there shall be credited (a) such Member’s Capital
        Contributions, (b) such Member’s distributive share of Profits and any items in
        the nature of income or gain that are specially allocated pursuant to
Section
        4.3
        or
Section
        4.4
        hereof,
        and (c) the amount of any Company liabilities assumed by such Member or that
        are
        secured by any Property distributed to such Member. The principal amount
        of a
        promissory note that is not readily traded on an established securities market
        and that is contributed to the Company by the maker of the note (or a Member
        related to the maker of the note within the meaning of Regulations Section
        1.704-1(b)(2)(ii)(c)) shall not be included in the Capital Account of any
        Member
        until the Company makes a taxable disposition of the note or until (and to
        the
        extent) principal payments are made on the note, all in accordance with
        Regulations Section 1.704-1(b)(2)(iv)(d)(2);

       

      (ii) To
        each
        Member’s Capital Account there shall be debited (a) the amount of money and the
        Gross Asset Value of Property distributed to such Member pursuant to any
        provision of this Agreement, (b) such Member’s distributive share of Losses and
        any items in the nature of expenses or losses that are specially allocated
        pursuant to Section 4.3 or Section 4.4 hereof, and (c) the amount of any
        liabilities of such Member assumed by the Company or that are secured by
        any
        Property contributed by such Member to the Company;

       

       

      
        
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      (iii) In
        the
        event an Interest is transferred in accordance with the terms of this Agreement,
        the transferee shall succeed to the Capital Account of the transferor to
        the
        extent it relates to the transferred Interest; and

       

      (iv) In
        determining the amount of any liability for purposes of subparagraphs (i)
        and
        (ii) above there shall be taken into account Code Section 752(c) and any
        other
        applicable provisions of the Code and Regulations.

       

      The
        foregoing provisions and the other provisions of this Agreement relating
        to the
        maintenance of Capital Accounts are intended to comply with Regulations Section
        1.704-1(b), and shall be interpreted and applied in a manner consistent with
        such Regulations. In the event the Manager determines that it is prudent
        to
        modify the manner in which the Capital Accounts, or any debits or credits
        thereto (including, without limitation, debits or credits relating to
        liabilities that are secured by contributed or distributed property or that
        are
        assumed by the Company or any Members), are computed in order to comply with
        such Regulations, the Manager may make such modification, provided that it
        is
        not likely to have a material effect on the amounts distributed to any Person
        pursuant to Article
        11
        hereof
        upon the dissolution of the Company. The Manager also shall (i) make any
        adjustments that are necessary or appropriate to maintain equality between
        the
        Capital Accounts of the Members and the amount of capital reflected on the
        Company’s balance sheet, as computed for book purposes, in accordance with
        Regulations Section 1.704-1(b)(2)(iv)(q) and (ii) make any appropriate
        modifications in the event unanticipated events might otherwise cause this
        Agreement not to comply with Regulations Section 1.704-1(b).

       

      “Capital
        Contributions”
means,
        with respect to any Member, the amount of money and the initial Gross Asset
        Value of any property (other than money) contributed to the Company with
        respect
        to the Interest in the Company held or purchased by such Member.

       

      “Capital
        Proceeds”
shall
        mean the cash proceeds (net of costs, expenses, any amounts required to be
        paid
        into escrow and any debts required to be paid pursuant to the transaction
        generating such proceeds or pursuant to any Company financing)
        from:

       

      (a) the
        sale,
        exchange or other disposition of any portion of the Property or the Senior
        Living Facility, other than those resulting in, or in the course of, the
        liquidation and dissolution of the Company, which shall be governed by Article
        XI hereof;

       

      (b) any
        mortgage financing or refinancing of any mortgage loans on the Property or
        the
        Senior Living Facility (including any permanent loan), but not including
        any
        advances borrowed by the Company under the terms of the Construction Loan
        or any
        Member Loan; or 

       

      (c) any
        condemnation, casualty insurance or any other nonrecurring proceeds not used
        for
        the restoration of the Property or the Senior Living Facility.

       

      “Capital
        Transactions”
means
        any transaction that produces Capital Proceeds.

       

       

      
        
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      “Certificate”
means
        the Certificate of Formation of the Company that was filed with the Delaware
        Secretary of State, as the same may be amended from time to time.

       

      “Code”
means
        the Internal Revenue Code of 1986, as amended (or any corresponding provision
        or
        provisions of succeeding law).

       

      “Company”
means
        the limited liability company created by the filing of the Certificate, as
        the
        Company may from time to time be constituted.

       

      “Company
        Minimum Gain”
has
        the
        meaning given to the term “partnership minimum gain” in Regulations Sections
        1.704-2(b)(2) and 1.704-2(d).

       

      “Construction
        Lender”
means
        GMAC Commercial Mortgage Corporation.

       

      “Construction
        Loan”
means
        the first mortgage construction/mini-perm loan provided by the Construction
        Lender to the Company in an amount up to Twenty-five Million Four Hundred
        Eighty
        Thousand and No/100s Dollars ($25,480,000.00) for the development of the
        Property and the construction of the Senior Living Facility.

       

      “Depreciation”
means,
        for each Fiscal Year or other period, an amount equal to the depreciation,
        amortization or any other cost recovery deduction allowable with respect
        to an
        asset for such year or other period, except that if the Gross Asset Value
        of an
        asset differs from its adjusted basis for federal income tax purposes at
        the
        beginning of such Fiscal Year or other period, Depreciation shall be an amount
        that bears the same ratio to such beginning Gross Asset Value as the federal
        income tax depreciation, amortization or other cost recovery deduction for
        such
        Fiscal Year or other period bears to such beginning adjusted tax basis;
        provided, however, that if the adjusted basis for federal income tax purposes
        of
        an asset at the beginning of such Fiscal Year or other period is zero,
        Depreciation shall be determined with reference to such beginning Gross Asset
        Value using any reasonable method selected by the Manager.

       

      “Development
        Fee”
shall
        have the meaning set forth in Section 8.1 hereof.

       

      “Effective
        Date”
means
        October 14, 2005.

       

      “Event
        of Bankruptcy”
shall
        mean any event that causes a Member to be deemed a Bankrupt Member.

       

      “Fiscal
        Year”
means
        the Fiscal Year of the Company, which shall be the calendar year.

       

      “Force
        Majeure”
shall
        have the meaning set forth in Section 14.4 hereof.

       

      “Governmental
        Authority”
shall
        mean any board, bureau, commission, department or body of any municipal,
        county,
        state or federal governmental or quasi-governmental unit, or any subdivision
        thereof, having or acquiring jurisdiction over the Property or any portion
        thereof or the management, operation, use or improvement thereof.

       

      “Gross
        Asset Value”
means,
        with respect to any asset, the asset’s adjusted basis for federal income tax
        purposes, except as follows:

       

       

      
        
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      (i) The
        initial Gross Asset Value of any asset contributed by a Member to the Company
        shall be the gross fair market value of such asset, as determined by the
        Majority in Interest of the Members;

       

      (ii) The
        Gross
        Asset Value of each Company asset shall be adjusted to equal its respective
        gross fair market value (taking into account Code Section 7701(g)), as
        determined by the Manager, as of the following times: (a) the acquisition
        of an
        additional Interest in the Company by any new or existing Member in exchange
        for
        more than a de minimis Capital Contribution; (b) the distribution by the
        Company
        to a Member of more than a de minimis amount of Company property as
        consideration for an Interest in the Company; and (c) the liquidation of
        the
        Company within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g);
        provided, however, that an adjustment described in clauses (a) and (b) of
        this
        subparagraph (ii) shall be made only if the Manager reasonably determines
        that
        such adjustment is necessary to reflect the relative economic interests of
        the
        Members in the Company;

       

      (iii) The
        Gross
        Asset Value of any Company asset distributed to any Member shall be adjusted
        to
        equal the gross fair market value (taking into account Code Section 7701(g))
        of
        such asset on the date of distribution as determined by the Manager;
        and

       

      (iv) The
        Gross
        Asset Values of Company assets shall be increased (or decreased) to reflect
        any
        adjustments to the adjusted basis of such assets pursuant to Code Sections
        734(b) or 743(b), but only to the extent that such adjustments are taken
        into
        account in determining Capital Accounts pursuant to Regulations Section
        1.704-1(b)(2)(iv)(m) and subparagraph (vi) of the definition of “Net Profits”
and “Net Loss” or Section 4.3(g); provided, however, that Gross Asset Values
        shall not be adjusted under this subparagraph (iv) to the extent that an
        adjustment pursuant to subparagraph (ii) is required in connection with a
        transaction that would otherwise result in an adjustment pursuant to this
        subparagraph (iv). If the Gross Asset Value of an asset has been determined
        or
        adjusted pursuant to subparagraph (i), (ii), or (iv), such Gross Asset Value
        shall thereafter be adjusted by the Depreciation taken into account with
        respect
        to such asset, for purposes of computing Net Profits and Net Loss.

       

      “Initial
        Capital Contributions”
means,
        with respect to each Member, the amount of money and the initial Gross Asset
        Value of any property (other than money) contributed to the Company by CNL
        and
        ARC as reflected on Exhibit
        B
        attached
        hereto.

       

      “Interest”
means,
        as to any Member, all of the limited liability company interest of that Member
        in the Company, including, but not limited to, such Member’s (i) Capital
        Account, (ii) right to allocations of items of income, gain, loss, deduction
        and
        credit of the Company in accordance with the terms of this Agreement, and
        (iii)
        right to a distributive share of the Company’s assets.

       

      “Investment
        Return”
means,
        as and only to CNL, a one-time non-annualized non-compounded return equal
        to the
        product obtained by multiplying (i) CNL’s Initial Capital Contribution as set
        forth on Exhibit
        B
        by (ii)
        eleven and twelve one hundredths percent (11.12%).

       

       

      
        
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      “Loan
        Documents”
shall
        have the meaning given to such term in Section
        2.3(b)(iii)
        hereof.

       

      “Major
        Condemnation”
means
        an
        event in which all or substantially all of the Senior Living Facility shall
        be
        taken in an eminent domain, condemnation, compulsory acquisition or similar
        proceeding by any competent authority for any public or quasi-public use
        or
        purpose, or an event in which a portion of the Senior Living Facility shall
        be
        so taken, but the result is that it is unreasonable to continue to operate
        the
        Senior Living Facility in accordance with the standards required under the
        Management Agreement.

       

      “Majority
        in Interest of the Members”
means
        Members who collectively own more than fifty percent (50%) of the Percentage
        Interests. Where such term is prefaced by a modifying fraction or percentage,
        which is greater than fifty percent (50%), e.g. “two-thirds,” then the modified
        term means Members who collectively own at least the stated fraction or
        percentage of the Percentage Interests.

       

      “Management
        Agreement”
means
        that certain Management Agreement by and between the Property Manager and
        the
        Company regarding the management of the Property.

       

      “Manager”
means
        ARC Lowry, LLC, a Tennessee limited liability company, in its capacity as
        the
        Manager of the Company pursuant to the terms and provisions of this Agreement,
        and any other Person that becomes a Manager of the Company pursuant to Section
        6.5 hereof.

       

      “Member”
means
        any one of the Members.

       

      “Members”
        means all Persons admitted to the Company as a Member, initially CNL and
        ARC.

       

      “Member
        Nonrecourse Debt”
has
        the
        meaning given to the term “partner nonrecourse debt” in Regulations Section
        1.704-2(b)(4).

       

      “Member
        Nonrecourse Debt Minimum Gain”
means
        an
        amount with respect to each Member Nonrecourse Debt equal to the Company
        Minimum
        Gain that would result if such Member Nonrecourse Debt were treated as a
        Nonrecourse Liability, determined in accordance with Regulations Section
        1.704-2(i)(3).

       

      “Member
        Nonrecourse Deductions”
has
        the
        meaning given to the term “partner nonrecourse deductions” in Regulations
        Sections 1.704-2(i)(1) and 1.704-2(i)(2).

       

      “Net
        Cash Flow”
means
        the gross cash proceeds of the Company less the portion thereof used to pay
        or
        establish reserves for all Company expenses (including any Development Fees,
        Management Fees, Financing Fees and corporate maintenance expenses), debt
        payments, capital improvements, replacements, and contingencies, all as
        determined by the Manager. “Net Cash Flow” shall not be reduced by depreciation,
        amortization, cost recovery deductions, or similar allowances, but shall
        be
        increased by any reductions of reserves previously established pursuant to
        the
        first sentence of this definition.

       

       

      
        
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      “Net
        Profit”
and
        “Net
        Loss”
means,
        for each Fiscal Year or other period, an amount equal to the Company’s taxable
        income or taxable loss for such Fiscal Year or other period, determined in
        accordance with Code Section 703(a) (for this purpose, all items of income,
        gain, loss or deduction required to be stated separately pursuant to Code
        Section 703(a)(1) shall be included in taxable income or loss), with the
        following adjustments:

       

      (i) Any
        income
        of the Company that is exempt from federal income tax and not otherwise taken
        into account in computing Profits or Losses pursuant to this definition shall
        be
        added to such taxable income or loss;

       

      (ii) Any
        expenditures of the Company described in Code Section 705(a)(2)(B), or treated
        as Code Section 705(a)(2)(B) expenditures pursuant to Regulations Section
        1.704-1(b)(2)(iv)(i), and not otherwise taken into account in computing Net
        Profits or Net Loss pursuant to this definition, shall be subtracted from
        such
        taxable income or loss;

       

      (iii) In
        the
        event the Gross Asset Value of any Company asset is adjusted pursuant to
        subparagraphs (ii) or (iii) of the definition of “Gross Asset Value,” the amount
        of such adjustment shall be treated as an item of gain (if the adjustment
        increases the Gross Asset Value of the asset) or an item of loss (if the
        adjustment decreases the Gross Asset Value of the asset) from the disposition
        of
        such asset and shall be taken into account for purposes of computing Profits
        or
        Losses;

       

      (iv) Gain
        or
        loss resulting from any disposition of Company property with respect to which
        gain or loss is recognized for federal income tax purposes shall be computed
        by
        reference to the Gross Asset Value of the property disposed of, notwithstanding
        that the adjusted tax basis of such property differs from its Gross Asset
        Value;

       

      (v) In
        lieu of
        the depreciation, amortization, and other cost recovery deductions taken
        into
        account in computing such taxable income or loss, there shall be taken into
        account Depreciation for such Fiscal Year or other period, computed in
        accordance with the definition of “Depreciation” hereinabove; and

       

      (vi) To
        the
        extent an adjustment to the adjusted tax basis of any Company asset pursuant
        to
        Code Section 734(b) is required, pursuant to Regulations Section
        1.704-(b)(2)(iv)(m)(4), to be taken into account in determining Capital Accounts
        as a result of a distribution other than in liquidation of a Member’s interest
        in the Company, the amount of such adjustment shall be treated as an item
        of
        gain (if the adjustment increases the basis of the asset) or loss (if the
        adjustment decreases such basis) from the disposition of such asset and shall
        be
        taken into account for purposes of computing Net Profits and Net
        Loss;

       

      (vii) Notwithstanding
        any other provision of this definition, any items that are specially allocated
        pursuant to Section
        4.3
        or
Section
        4.4
        below
        shall not be taken into account in computing Net Profits or Net Loss;
        and

       

       

      
        
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      (viii) The
        amounts of the items of Company income, gain, loss, or deduction available
        to be
        specially allocated pursuant to Sections
        4.3
        and
4.4
        hereof
        shall be determined by applying rules analogous to those set forth in
        subparagraphs (i) through (vi) above.

       

      “Nonrecourse
        Deductions”
has
        the
        meaning given to such term in Regulations Section 1.704-2(b)(1) and
        1.704-2(c).

       

      “Nonrecourse
        Liability”
has
        the
        meaning given to such term in Regulations Section 1.704-2(b)(3).

       

      “ODA
        Advances”
means
        the advances made by ARC or an affiliate thereof to the Company as required
        by
        the Operating Deficits Guaranty.

       

      “ODA
        Advances Account”
means
        an
        account maintained by the Company for ARC. The ODA Advances Account shall
        be
        credited (increased) with the ODA Advances as and when made by ARC to the
        Company, credited (increased) by the ODA Advances Return and debited (decreased)
        by amounts distributed to ARC pursuant to Sections
        5.1(a),
        5.2(a)
        and
5.2(j).

       

      “ODA
        Advances Return”
means
        an
        amount computed as if ARC were earning a rate of interest equal to five percent
        (5%) per annum, calculated monthly and non-compounded, on the outstanding
        balance of ARC’s ODA Advances. The ODA Advances Return shall be calculated from
        and after the date on which ODA Advances are made until the date of distribution
        to ARC.

       

      “Operating
        Deficits Guaranty”
means
        that certain Operating Deficits Guaranty entered into by and between American
        Retirement Corporation, a Tennessee corporation, and the Construction Lender
        entered into in connection with the Construction Loan. 

       

      “Percentage
        Interest”
means,
        with respect to any Member, the Interest of the Member in the Company expressed
        as a percentage for the purposes of allocating items of income, gain, loss,
        deduction and credit of the Company and making distributions of cash pursuant
        to
        the terms of this Agreement and determining the respective voting rights
        of the
        Members hereunder. The Percentage Interest of the Members are set forth on
        Exhibit
        B
        attached
        hereto.

       

      “Person”
means
        any individual, partnership, corporation, limited liability company, trust,
        estate, or other entity.

       

      “Preamble”
means
        the preamble to this Agreement appearing prior to this Article 1.

       

      “Prime
        Rate”
means
        the prime rate of interest as published in the “Money Rates” section of the
        Eastern Edition of the Wall Street Journal.

       

      “Property”
means
        the real property described on Exhibit A attached hereto.

       

      “Property
        Manager”
means
        ARC
        MANAGEMENT, LLC,
        a
        Tennessee limited liability company, in its capacity as the manager of the
        Property pursuant to the terms and conditions of the Management Agreement,
        and
        any successor Person employed by the Company as manager of the Property pursuant
        to the terms and conditions of a property management agreement. 

       

       

      
        
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      “Regulations”
means
        the permanent and temporary Income Tax Regulations, and all amendments,
        modifications, and supplements thereof, from time to time promulgated by
        the
        Department of the Treasury under the Code.

       

      “Senior
        Living Facility”
means
        the senior residential facility to be developed and constructed on the Property
        consisting of approximately one hundred and thirty-two (132) independent
        living
        units, thirty-one (31) assisted living units and sixty (60) skilled nursing
        beds.

       

      “Subsidiary”
will
        mean any Person at least fifty-one percent (51%) owned, directly or indirectly,
        by another Person.

       

      “Substituted
        Member”
has
        the
        meaning given to such term in Section
        9.2.

       

      “Total
        Casualty”
will
        mean any fire or other casualty which results in damage to the Senior Living
        Facility and its contents to the extent that it would be commercially
        impractical to undertake to repair and/or replace the Senior Living Facility
        to
        substantially the same condition as previously existed.

       

      “Unreturned
        Capital Contributions”
means,
        with respect to each Member, as of any date, an amount equal to the aggregate
        Capital Contributions made by such Member, less, as to such Member, the total
        cash distributions made to such Member in return of such Capital Contributions
        pursuant to Sections
        5.1(c),
        5.2(b),
        5.2(d),
        5.2(k)
        and
5.2(n).

       

      Terms
        defined in the Preamble have the meaning therein specified. To the extent
        that
        terms bearing initial upper case letters appear in this Agreement but are
        not
        defined in the Preamble or in this Article, such terms shall have the meaning
        set forth elsewhere in this Agreement.

       

      ARTICLE
        2

      FORMATION
        OF COMPANY, NAME, ETC.

       

      2.1 Formation.
        The
        Company was formed by the filing of the Certificate with the Secretary of
        State
        of the State of Delaware (the “Secretary of State”) pursuant to the applicable
        provisions of the Act. Chris Haley, as an “authorized person” within the meaning
        of the Act, executed, delivered and filed the Certificate with the Secretary
        of
        State. Upon the filing of the Certificate, his powers ceased and the Manager
        thereupon became the designated “authorized person.”

       

      2.2 Name.
        The name
        of the Company shall be Denver Lowry JV, LLC and the business and affairs
        of the
        Company shall be conducted under that name or such other name as may be Approved
        by the Members from time to time.

       

      2.3 Limited
        Purpose of Company.
        

       

      (a) The
        Company is organized for the limited purpose of acquiring, owning, and managing
        certain real property located in Denver, Colorado, more particularly described
        on Exhibit
        A
        attached
        hereto (the “Property”), and developing and constructing the Senior Living
        Facility. 

       

       

      
        
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      (b) Subject
        to
Section
        6.2,
        the
        Company is empowered to do any and all acts and things necessary, appropriate,
        proper, advisable, incidental to or convenient for the furtherance and
        accomplishment of the purposes and business described herein and for the
        protection and benefit of the Company, including, but not limited to, full
        power
        and authority to:

       

      (i) enter
        into, perform and carry out contracts of any kind;

       

      (ii) acquire,
        own, manage, improve and develop the Property and the Senior Living Facility,
        and lease, exchange, sell, transfer and dispose of the Property and the Senior
        Living Facility;

       

      (iii) finance
        the acquisition of the Property and the development of the Senior Living
        Facility by executing the necessary Loan documentation (the “Loan Documents”),
        and effecting the transactions contemplated therein and, in connection with
        any
        such financing arrangement, to pledge as security all or substantially all
        of
        its assets including, without limitation, all of its right, title and interest
        in and to the Property and the Senior Living Facility;

       

      (iv) to
        repay
        such financing through any lawful means, including, without limitation, the
        sale
        or transfer of the Property and the Senior Living Facility in connection
        with a
        tax-free like kind exchange under Section 1031 of the Code; and

       

      (v) to
        engage
        in any lawful act or activity, to enter into any agreement or other undertaking
        and to exercise any powers permitted to limited liability companies organized
        under the Act that, in any such case, are incidental to and necessary or
        convenient for the accomplishment of the above mentioned purposes.

       

      2.4 Term.
        The
        Effective Date of this Agreement is October __, 2005, and the term of the
        Company shall be perpetual, unless earlier dissolved and terminated (and
        not
        reconstituted by at least a Majority in Interest of the remaining Members,
        as
        provided for in this Agreement) pursuant to the Act or any provision of this
        Agreement.

       

      2.5 Principal
        Office.
        The
        Company’s principal office shall initially be located at 111 Westwood Place,
        Suite 200, Brentwood, Tennessee 37027. The Manager may change the location
        of
        the Company’s principal office from time to time or establish and maintain
        additional places of business for the Company, and shall make any filing
        and
        take any other action required by applicable law in connection with the
        change.

       

      2.6 Separateness
        from Affiliates.
        The
        Company shall, and the Members and the Manager also shall cause the Company
        to:

       

      (a) be
        legally
        and in fact separate from any other Person;

       

      (b) conduct
        its business in its own name and to use its own name for the purposes of
        obtaining required registrations, licenses and permits (whether governmental,
        administrative or otherwise) necessary to the conduct of its
        business;

       

       

      
        
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      (c) correct
        any known misunderstandings regarding its separate identity;

       

      (d) maintain
        its books and records separate from those of any other Person and, if required
        by law to file tax returns, file its tax returns separate from those of any
        other Person;

       

      (e) maintain
        its funds and accounts separate from those of any other Person;

       

      (f) not
        commingle its assets with those of the Members or any other Person (except
        as
        contemplated by the Loan Documents);

       

      (g) maintain
        its financial statements separate from the financial statements of any other
        Person; provided, however, that nothing contained herein shall prohibit the
        inclusion of the Company in consolidated financial statements with other
        entities as long as the Company’s separate existence is noted in any such
        statements;

       

      (h) use
        stationery, invoices and checks separate from those of any other
        Person;

       

      (i) pay
        its
        liabilities out of its own funds, provided, however, the foregoing shall
        not
        require the Members to make any additional Capital Contributions to the Company,
        except as otherwise required by this Agreement;

       

      (j) not
        acquire obligations or securities of the Members or its Affiliates;

       

      (k) pay
        the
        salaries of its employees, if any, and maintain a sufficient number of employees
        in light of its contemplated business operations, provided, however, the
        foregoing shall not require the Members to make any additional Capital
        Contributions to the Company, except as otherwise required by this
        Agreement;

       

      (l) allocate
        fairly and reasonably any overhead for shared office space;

       

      (m) maintain
        adequate capital in light of its contemplated business operations and purpose,
        provided, however, the foregoing shall not require the Members to make any
        additional Capital Contributions to the Company, except as otherwise required
        by
        this Agreement;

       

      (n) limit
        the
        debt of the Company to the debt incurred in the ordinary course of business
        and
        debt incurred as described in Section
        2.3
        hereof;

       

      (o) not
        guarantee or become obligated for the debts of any other Person or hold out
        its
        credit as being available to satisfy the obligations of others or, except
        as
        provided in Section 2.3 hereof, allow others to guarantee or become liable
        on
        the debts of the Company;

       

      (p) except
        as
        described in Section
        2.3
        hereof,
        not pledge its assets for the benefit of any other Person or make any loans
        or
        advances to any Person;

       

       

      
        
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      (q) not
        make
        loans to any other Person or buy or hold evidence of indebtedness issued
        by any
        other Person (except for cash and investment-grade securities); 

       

      (r) observe
        all Delaware limited liability company formalities;

       

      (s) maintain
        an arm’s-length relationship with its Affiliates; and

       

      (t) not
        take
        any action if, as a result of such action, the Company would be required
        to
        register as an investment company under the Investment Company Act of 1940,
        as
        amended.

       

      ARTICLE
        3

      CAPITAL
        CONTRIBUTIONS;CAPITAL ACCOUNTS

       

      3.1 Initial
        Capital Contributions.
        The
        Members shall contribute the amount of capital opposite their names as set
        forth
        on Exhibit
        B
        attached
        hereto (the contributions set forth on Exhibit
        B
        shall be
        referred to herein as the “Initial Capital Contributions”). The Members
        acknowledge and agree that such Initial Capital Contributions may be made
        at any
        time, but in any event, shall be made at such times and in such amounts as
        are
        needed to fund costs and expenses for the development and construction of
        the
        Property and the Senior Living Facility and that the full funding of such
        Initial Capital Contributions is required by the Construction Lender as a
        condition precedent to any draws being made by the Company under the
        Construction Loan. Within five (5) business days following the date upon
        which
        the Members receive a notice to fund from the Manager, the Members shall
        contribute to the Company, an amount determined by multiplying that Member’s
        Percentage Interest by the funding required in the Manager’s notice. In the
        event that either Member, for whatever reason (other than a payment timing
        delay
        due to an event of Force Majeure; provided, however, that in no event shall
        a
        payment be delayed for more than thirty (30) days), fails to fully contribute
        the aggregate amount of its Initial Capital Contribution as set forth on
        Exhibit
        B
        pursuant
        to this Section
        3.1,
        (i) such
        Member’s Interest in the Company shall be forfeited and any and all rights with
        respect to such Interest, including without limitation, such Member’s right to
        vote and receive distributions, shall immediately terminate and (ii) any
        amounts
        previously contributed to the Company by such Member shall be retained by
        the
        Company and its members as liquidated damages for such Member’s breach its
        funding obligation. The Members hereby agree and acknowledge that, in the
        event
        of a failure of a Member to fully fund its Initial Capital Contribution as
        set
        forth on Exhibit B, actual damages will be difficult to ascertain and, as
        such,
        the forfeiture of such Member’s Interests as liquidated damages is an
        appropriate remedy.

       

       

      
        
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      3.2 Member
        Loans.

       

      (a) In
        General. In order to satisfy its financial needs, the Company may borrow
        funds
        from ARC or CNL or one of their Affiliates (each a “Member Loan”). Unless
        otherwise designated in the loan agreements or accompanying documents, repayment
        of principal and interest on such loans will be solely the obligation of
        the
        Company and not of the Members. Any loans to the Company from ARC, CNL or
        one of
        their respective Affiliates shall be Approved by the Members and, except
        as
        provided in Sections
        3.2(b)
        and
(c)
        below,
        shall bear interest at the Prime Rate.

       

      (b) ARC
        TCCO Advances.
        In the
        event that Actual TCCO exceeds the Budgeted TCCO prior to such time as the
        Senior Living Facility obtains a certificate of occupancy and such excess
        is a
        result of events not constituting Force Majeure, ARC shall advance the cost
        of
        such overruns by (i) first, providing up to Seven Hundred Fifty Thousand
        Dollars
        ($750,000) of its own funds (which advances shall not be repaid and shall
        not be
        deemed a Member Loan or any other type of loan) and (ii) second, advancing
        ARC
        TCCO Capital. Any ARC TCCO Capital advanced by ARC pursuant to this Section
        3.2(b)
        shall not
        be treated as a Capital Contribution, but instead, shall be treated as a
        Member
        Loan that shall be repaid by the Company pursuant to Sections
        5.2(f)
        and
5.2(p)
        hereof,
        which Sections establish only the priority of repayment of such Member Loan
        and
        shall not cause the repayments to be treated as “distributions” for purposes of
        maintaining Capital Accounts.

       

      (c) ARC
        ODA
        Advances.
        Following receipt of a certificate of occupancy for the Senior Living Facility,
        ARC shall make ODA Advances as and when required pursuant to the Operating
        Deficit Guaranty. Any ODA Advances advanced by ARC pursuant to this Section
        3.2(c)
        shall not
        be treated as a Capital Contribution, but instead, shall be treated as a
        Member
        Loan that shall be repaid by the Company pursuant to Sections
        5.1(a),
        5.2(a)
        and
5.2(j)
        hereof,
        which Sections establish only the priority of repayment of such Member Loan
        and
        shall not cause the repayments to be treated as “distributions” for purposes of
        maintaining Capital Accounts. The Manager shall provide monthly reconciliation
        statements to the Members regarding the ODA Advances Account pursuant to
        Section
        3.5
        hereof.

       

      (d) No
        Default.
        If ARC
        has met its obligations to advance ARC TCCO Capital and/or ARC ODA Advances
        pursuant to this Section
        3.2
        and, in
        spite of these advances, the Company is still without sufficient funds to
        meet
        its needs, ARC will not be in default of this Agreement. Further, it shall
        not
        be a default under this Agreement if ARC does not make an ODA Advance as
        a
        result of an ongoing material breach or violation of this Agreement by CNL,
        CNL’s unreasonable and/or bad faith refusal to grant a requested consent or
        approval under the Management Agreement which results in an increased ODA
        Advance, or the Manager’s unreasonable and/or bad faith refusal to grant a
        requested consent or approval under the Management Agreement which results
        in an
        increased operating cost, if the Manager is not an Affiliate of
        ARC.

       

       

      
        
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      3.3 Return
        of Capital.
        No
        Member shall have any liability for the return of any Member’s Capital
        Contributions. A Member shall not receive out of the Company’s property all or
        any part of such Member’s Capital Contributions except as provided in
Sections
        5.1
        and
5.2
        hereof.

       

      3.4 Capital
        Accounts.
        The
        Company shall maintain for each Member an account designated as such Member’s
        Capital Account. The Capital Accounts shall be maintained in accordance with
        Section 1.704-1(b)(2)(iv) of the Regulations, and the items of income, profit,
        gain, expenditures, deductions and losses which increase or decrease such
        capital accounts shall be those items which, pursuant to such Regulations,
        affect the balance of capital accounts.

       

      3.5 ODA
        Advance Account.
        The
        Company shall maintain an account designated as ARC’s ODA Advance Account, which
        account shall be credited (increased) by each ODA Advance as and when made
        by
        ARC to the Company, credited (increased) by each ODA Advances Return and
        debited
        (decreased) by amounts distributed to ARC pursuant to Sections
        5.1(a),
        5.2(a)
        and
5.2(j).
        The
        Manager shall provide monthly reconciliation statements to the Members regarding
        such ODA Advance Account. 

       

      ARTICLE
        4

      ALLOCATIONS
        OF PROFITS AND LOSSES

       

      As
        of the
        end of each Fiscal Year, the Company’s Net Profit or Net Loss and each item of
        income, gain, loss and deduction related thereto, as well as other items
        of
        income, gain, loss or deduction which are subject to special allocation
        provisions, shall be allocated to the Capital Accounts of the Members and
        for
        federal income tax purposes pursuant to the following Sections of this Article
        4.

       

      4.1 Allocation
        of Net Loss.
        After
        giving effect to the special allocations set forth in Section
        4.3
        and
Section
        4.4
        hereof,
        if there is a Net Loss for any Fiscal Year, such Net Loss shall be allocated
        as
        set forth in Section
        4.1(a)
        below,
        subject to the limitations in Section
        4.1(b)
        below:

       

      (a) Net
        Loss
        for any Fiscal Year shall be allocated in the following order and
        priority:

       

      (i) First,
        to
        the Members, proportionately in accordance with their respective Percentage
        Interests, in an amount equal to the excess, if any, of (A) the cumulative
        Net
        Profits allocated pursuant to Section
        4.2(c)
        hereof
        for all prior Fiscal Years, over (B) the cumulative Net Losses allocated
        pursuant to this Section
        4.1(a)(i)
        for all
        prior Fiscal Years;

       

      (ii) Second,
        one hundred percent (100%) to CNL, in an amount equal to the excess, if any,
        of
        (A) the cumulative Net Profits allocated pursuant to Section
        4.2(b)
        hereof
        for all prior Fiscal Years, over (B) the cumulative Net Losses allocated
        pursuant to this Section
        4.1(a)(ii)
        for all
        prior Fiscal Years;

       

      (iii) The
        balance, if any, to the Members in proportion to their respective Percentage
        Interests.

       

       

      
        
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      (b) Notwithstanding
        the allocations set forth in Section 4.1(a), no amount of Net Loss shall
        be
        allocated to any Member if such allocation would cause such Member to have
        an
        Adjusted Capital Account Deficit. The amount of the allocation of Net Loss
        which
        would otherwise have caused a Member to have an Adjusted Capital Account
        Deficit
        shall instead be allocated to those Members who would not have an Adjusted
        Capital Account Deficit as a result of the allocation in proportion to their
        Percentage Interests. If no Member may be allocated a Net Loss without creating
        or increasing an Adjusted Capital Account Deficit, then all further Net Loss
        shall be allocated among the Members in accordance with their Percentage
        Interests.

       

      4.2 Allocation
        of Net Profits.
        After
        giving effect to the special and curative allocations set forth in Section
        4.3
        and
Section
        4.4,
        Net
        Profit for each Fiscal Year or part thereof shall be allocated to the Members
        in
        the following manner and order of priority:

       

      (a) First,
        to
        the Members, in proportion to their respective Percentage Interests, in an
        amount equal to the excess, if any, of (i) the cumulative Net Losses allocated
        pursuant to Section
        4.1(a)(iii)
        hereof
        for all prior Fiscal Years, over (ii) the cumulative Net Profits allocated
        pursuant to this Section
        4.2(a)
        for all
        prior Fiscal Years;

       

      (b) Second,
        to
        CNL in an amount equal to the excess, if any, of (i) the sum of (A) CNL’s
        Investment Return and (B) the cumulative Net Losses allocated pursuant to
        Section
        4.1(a)(ii)
        for all
        prior Fiscal Years, over (ii) the cumulative Net Profits allocated pursuant
        to
        this Section
        4.2(b)
        for all
        prior Fiscal Years; and

       

      (c) The
        balance, if any, to the Members in accordance with their respective Percentage
        Interests.

       

      4.3 Special
        Allocations.
        Prior to
        the allocations pursuant to Section
        4.1
        and
Section
        4.2
        hereof,
        items of income, gain, loss and deduction for the Year shall be allocated
        in
        accordance with the following provisions of this Section
        4.3
        to the
        extent such provisions are applicable in determining Net Profit or Net
        Loss.

       

      (a) Minimum
        Gain Chargeback.
        Except
        as otherwise provided in Regulations Section 1.704.2(f), notwithstanding
        any
        other provision of this Article
        4,
        if there
        is a net decrease in Company Minimum Gain during any taxable year, each Member
        shall be specially allocated items of Company income and gain for such taxable
        year (and, if necessary, subsequent taxable years) in an amount equal to
        such
        Member’s share of the net decrease in Company Minimum Gain, determined in
        accordance with Regulations Section 1.704-2(g). Allocations pursuant to the
        previous sentence shall be made in proportion to the respective amounts required
        to be allocated to each Member pursuant thereto. The items to be so allocated
        shall be determined in accordance with Regulations Sections 1.704-2(f)(6)
        and
        1.704-2(j)(2). This Section
        4.3(a)
        is
        intended to comply with the minimum gain chargeback requirement set forth
        in
        Regulations Section 1.704-2(f) and shall be interpreted consistently
        therewith.

       

      
        
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      (b) Member
        Minimum Gain Chargeback.
        Except
        as otherwise provided in Regulations Section 1.704-2(i)(4), notwithstanding
        any
        other provision of this Article
        5,
        if there
        is a net decrease in Member Nonrecourse Debt Minimum Gain attributable to
        a
        Member Nonrecourse Debt during any taxable year, each Member who has a share
        of
        the Member Nonrecourse Debt Minimum Gain attributable to such Member Nonrecourse
        Debt, determined in accordance with Regulations Section 1.704-2(i)(5), shall
        be
        specially allocated items of Company income and gain for such taxable year
        (and,
        if necessary, subsequent taxable years) in an amount equal to such Member’s
        share of the net decrease in Member Nonrecourse Debt, determined in accordance
        with Regulations Section 1.704-2(i)(4). Allocations pursuant to the previous
        sentence shall be made in proportion to the respective amounts required to
        be
        allocated to each Member pursuant thereto. The items to be so allocated shall
        be
        determined in accordance with Regulations Sections 1.704-2(i)(4) and
        1.704-2(j)(2). This Section
        4.3(b)
        is
        intended to comply with the minimum gain chargeback requirement set forth
        in
        Regulations Section 1.704-2(i)(4) and shall be interpreted consistently
        therewith.

       

      (c) Qualified
        Income Offset.
        In the
        event any Member unexpectedly receives any adjustments, allocations or
        distributions described in Regulations Sections 1.704-1(b)(2)(ii)(d)(4),
        (5) or
        (6), items of Company income and gain shall be specially allocated to each
        such
        Member in an amount sufficient to eliminate, to the extent required by the
        Treasury Regulations, the Adjusted Capital Account Deficit of such Member
        as
        quickly as possible; provided, however, that an allocation pursuant to this
        Section
        4.3(c)
        shall be
        made only if and to the extent that such Member would have an Adjusted Capital
        Account Deficit after all other allocations provided for in this Article
        4
        have been
        tentatively made as if this Section
        4.3(c)
        were not
        in the Agreement.

       

      (d) Gross
        Income Allocation.
        In the
        event any Member has a deficit Capital Account at the end of any taxable
        year
        which is in excess of the sum of (i) the amount such Member is obligated
        to
        restore pursuant to the penultimate sentences of Regulations Sections
        1.704-2(g)(1) and 1.704-2(i)(5), each such Member shall be specially allocated
        items of Company income and gain in the amount of such excess as quickly
        as
        possible; provided that an allocation pursuant to this Section
        4.3(d)
        shall be
        made only if and to the extent that such Member would have a deficit Capital
        Account in excess of such sum after all other allocations provided for in
        this
Article
        4
        have been
        made as if Section
        4.3(c)
        and this
Section
        4.3(d)
        were not
        in this Agreement.

       

      (e) Nonrecourse
        Deductions.
        Nonrecourse Deductions for any taxable year or other period shall be allocated
        to the Members in proportion to their respective Percentage
        Interests.

       

      (f) Member
        Nonrecourse Deductions.
        Any
        Member Nonrecourse Deductions for any taxable year shall be allocated to
        the
        Member who bears the economic risk of loss with respect to the Member
        Nonrecourse Debt to which such Member Nonrecourse Deductions are attributable
        in
        accordance with Regulations Section 1.704-2(i)(1).

       

       

      
        
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      (g) Section
        754 Adjustment.
        To the
        extent an adjustment to the adjusted tax basis of any Company asset pursuant
        to
        Code Sections 734(b) or 743(b) is required, pursuant to Regulations Section
        1.704-1(b)(2)(iv)(m)(2) or Section 1.704-1(b)(2)(iv) (m)(4), to be taken
        into
        account in determining Capital Accounts as the result of a distribution to
        a
        Member in complete liquidation of such Member’s Interest in the Company, the
        amount of such adjustment to the Capital Accounts shall be treated as an
        item of
        gain (if the adjustment increases the basis of the asset) or loss (if the
        adjustment decreases such basis), and such gain or loss shall be specially
        allocated to the Members in accordance with their interests in the Company
        in
        the event Regulations Section 1.704-1(b)(2)(iv)(m)(2) applies, or to the
        Member
        to whom such distribution was made in the event Regulations Section
        1.704-1(b)(2)(iv)(m)(4) applies.

       

      (h) Capital
        Items.
        All or a
        portion of the remaining items of Company income or gain for the Fiscal Year,
        if
        any, shall be specially allocated to the Members in proportion to and to
        the
        extent of the excess, if any, of (i) the aggregate distributions each Member
        has
        received pursuant to Sections
        5.2(c),
        5.2(e),
        5.2(g),
        5.2(h),
        5.2(i),
        5.2(l),
        5.2(m),
        5.2(o),
        5.2(q),
        5.2(r),
        and
5.2(s)
        over (ii)
        the cumulative items of income and gain allocated to such Member pursuant
        to
        this Section 4.3(h) for all prior Fiscal Years. 

       

      4.4 Curative
        Allocations.
        The
        allocations set forth in Sections
        4.1(b),
        4.3(a),
        4.3(b),
        4.3(c),
        4.3(d),
        4.3(e),
        4.3(f)
        and
4.3(g),
        (the
“Regulatory Allocations”) are intended to comply with certain requirements of
        the Regulations. It is the intent of the Members that, to the extent possible,
        all Regulatory Allocations shall be offset either with other Regulatory
        Allocations or with special allocations of other items of Company income,
        gain,
        loss, or deduction pursuant to this Section 4.4. Therefore, notwithstanding
        any
        other provision of this Article
        4
        (other
        than the Regulatory Allocations), the Manager shall make such offsetting
        special
        allocations of Company income, gain, loss or deduction in whatever manner
        they
        determine appropriate so that, after such offsetting allocations are made,
        each
        Member’s Capital Account balance is, to the extent possible, equal to the
        Capital Account balance such Member would have had if the Regulatory Allocations
        were not part of the Agreement and all Company items were allocated pursuant
        to
Sections
        4.1
        and
4.2.

       

      4.5 Tax
        Allocations: Code Section 704(c).
        In
        accordance with Code Section 704(c), and the Regulations promulgated thereunder,
        income, gain, loss and deduction with respect to any property contributed
        to the
        capital of the Company shall, solely for tax purposes, be allocated among
        the
        Members so as to take account of any variation between the adjusted basis
        of
        such property to the Company for federal income tax purposes and its initial
        Gross Asset Value (computed in accordance with the definition of Gross Asset
        Value) using the traditional method as set forth in Regulations Section
        1.704-3(b), unless some other method is agreed upon by the Members.


       

      In
        the
        event the Gross Asset Value of any Company asset is adjusted pursuant to
        subparagraph (ii) of the definition of Gross Asset Value, subsequent allocations
        of income, gain, loss, and deduction with respect to such asset shall take
        account of any variation between the adjusted basis of such asset for federal
        income tax purposes and its Gross Asset Value in the same manner as under
        Code
        Section 704(c) and the Regulations thereunder. 

       

       

      
        
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      Any
        elections or other decisions relating to such allocations shall be made by
        the
        Manager in any manner that reasonably reflects the purpose and intention
        of this
        Agreement. Allocations pursuant to this Section
        4.5
        are
        solely for purposes of federal, state, and local taxes and shall not affect,
        or
        in any way be taken into account in computing, any Member’s Capital Account or
        share of Net Profit, Net Loss, other items, or distributions pursuant to
        any
        provision of this Agreement.

       

      4.6 Allocations
        for Year of Liquidation.
        After
        giving effect to the special allocations set forth in Sections
        4.3
        and
4.4
        hereof,
        the amount of Net Profit or Net Loss for the Fiscal Year in which the Company
        is
        dissolved, and each item of income, gain, loss and deduction related thereto,
        shall be allocated to the Members in an manner so that the distributions
        to each
        Member pursuant to Article
        11
        shall, to
        the greatest extent possible, be equal to that amount that each such Member
        would receive under Section 5.2 if the amounts to be distributed by the Company
        in connection with such dissolution were instead distribute under such
Section
        5.2.

       

      ARTICLE
        5

      DISTRIBUTIONS

       

      5.1 Distribution
        of Net Cash Flow.
        Except
        as otherwise provided in Section
        5.4
        hereof,
        distributions of Net Cash Flow, if any, shall, unless otherwise Approved
        by the
        Members, be distributed to the Members within fifteen (15) days after the
        end of
        each Fiscal Year quarter and shall be apportioned among the Members as
        follows:

       

      (a) First,
        to
        ARC until the balance of its ODA Advances Account has been reduced to
        zero;

       

      (b) Next,
        to
        CNL to the extent of its unpaid Investment Return until its Investment Return
        has been paid in full;

       

      (c) Next,
        to
        the Members, to the extent of and in proportion to the Unreturned Capital
        Contributions of each, until such Unreturned Capital Contributions have been
        returned in full; and

       

      (d) The
        balance, if any, to the Members in accordance with their respective Percentage
        Interests.

       

      Notwithstanding
        the foregoing, during any period in which ARC or one of its Affiliates is
        not
        serving as the Property Manager, all Net Cash Flow remaining after the repayment
        of ARC’s ODA Advances Account in accordance with Section 5.1(a) shall be
        distributed to CNL.

       

      5.2 Distribution
        of Capital Proceeds.
        Except
        as provided in Section
        5.4
        hereof,
        distributions of all or any portion of Capital Proceeds shall be made within
        thirty (30) days of the event giving rise to the Capital Proceeds, and shall
        be
        apportioned among the Members as follows:

       

      (a) First,
        to
        ARC until the balance of its ODA Advances Account has been reduced to
        zero;

       

      
        
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      (b) Next,
        to
        CNL until its Unreturned Capital Contribution has been returned in full;
        

       

      (c) Next,
        to
        CNL to the extent of its unpaid Investment Return until its Investment Return
        has been paid in full;

       

      (d) Next,
        to
        ARC until its Unreturned Capital Contribution has been returned in
        full;

       

      (e) Next,
        to
        CNL until it has received a thirteen and one-half percent (13.5%) return
        on its
        Initial Capital Contribution, calculated per annum, compounded quarterly,
        to be
        calculated from the date on which such Initial Capital Contributions, or
        portions thereof, are made;

       

      (f) Next,
        to
        ARC until its ARC TCCO Capital has been repaid in full;

       

      (g) Next,
        to
        ARC until it has received a thirteen and one-half percent (13.5%) return
        on its
        Initial Capital Contribution, calculated per annum, compounded quarterly,
        to be
        calculated from the date on which such Initial Capital Contributions, or
        portions thereof, are made;

       

      (h) Next,
        eighty percent (80%) to CNL and twenty percent (20%) to ARC until such time
        as
        CNL has received a total return of twenty percent (20%) on its Initial Capital
        Contribution, calculated with per annum, compounded quarterly, to be calculated
        from the date on which such Initial Capital Contributions, or portions thereof,
        are made; and

       

      (i) The
        balance, if any, seventy percent (70%) to ARC and thirty percent (30%) to
        CNL.

       

      Notwithstanding
        the foregoing, if ARC or one of its Affiliates is not serving as the Property
        Manager, distributions of all or any portion of Capital Proceeds shall be
        made
        within sixty (60) days of the event giving rise to the Capital Proceeds,
        and
        shall be apportioned among the Members as follows:

       

      (j) First,
        to
        ARC until the balance of its ODA Advances Account has been reduced to
        zero;

       

      (k) Next,
        to
        CNL until its Unreturned Capital Contribution has been returned in full;
        

       

      (l) Next,
        to
        CNL to the extent of its unpaid Investment Return until its Investment Return
        has been paid in full;

       

      (m) Next,
        to
        CNL until it has received an eight percent (8%) return on its Initial Capital
        Contribution, calculated per annum, compounded quarterly, to be calculated
        from
        the date on which such Initial Capital Contributions, or portions thereof,
        are
        made;

       

       

      
        
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      (n) Next,
        to
        ARC until its Unreturned Capital Contribution has been returned in full;
        

       

      (o) Next,
        to
        CNL until it has received a thirteen and one-half percent (13.5%) return
        on its
        Initial Capital Contribution, calculated per annum, compounded quarterly,
        to be
        calculated from the date on which such Initial Capital Contributions, or
        portions thereof, are made;

       

      (p) Next,
        to
        ARC until its ARC TCCO Capital has been repaid in full;

       

      (q) Next,
        to
        ARC until it has received a thirteen and one-half percent (13.5%) return
        on its
        Initial Capital Contribution, calculated per annum, compounded quarterly,
        to be
        calculated from the date on which such Initial Capital Contributions, or
        portions thereof, are made;

       

      (r) Next,
        eighty percent (80%) to CNL and twenty percent (20%) to ARC until such time
        as
        CNL has received a total return of twenty percent (20%) on its Initial Capital
        Contribution, calculated per annum, compounded quarterly, to be calculated
        from
        the date on which such Initial Capital Contributions, or portions thereof,
        are
        made; and

       

      (s) The
        balance, if any, seventy percent (70%) to ARC and thirty percent (30%) to
        CNL.

       

      5.3 Distributions
        in Kind.
        If any
        of the Company’s assets are to be distributed in kind rather than sold, such
        assets shall be distributed on the basis of the fair market value thereof
        and
        any Member entitled to any interest in such assets pursuant to this Section
        5.3
        shall
        receive such interest therein as a tenant-in-common with all other Members
        so
        entitled. Unless otherwise agreed by all of the Members, the fair market
        value
        of such assets shall be equal to an appraisal or appraisals prepared by one
        or
        more appraisers selected by the Manager and paid for by the Company. Such
        appraiser(s) must have a “MAI” designation or its equivalent and substantial
        experience appraising commercial real estate in the counties and states in
        which
        the assets to be appraised are located.

       

      5.4 Limitation
        on Distributions.
        Notwithstanding any provision to the contrary contained in this Agreement,
        the
        Company shall not be required to make a distribution to any Member on account
        of
        its interest in the Company if such distribution would violate Section 18-607
        of
        the Act or any other applicable law.

       

      ARTICLE
        6

      MANAGEMENT
        OF THE COMPANY

       

      6.1 Management
        by Manager.
        The
        Members hereby appoint ARC Lowry, LLC as the initial Manager of the Company.
        The
        overall management and control of the business and affairs of the Company
        shall
        be vested in the Manager, who shall have all powers permitted under the Act
        as
        well as all other powers necessary or desirable for the performance by it
        of all
        of its duties and obligations as the Manager of the Company. The Manager
        shall
        devote such time to the Company as shall be reasonably required for its welfare
        and success. By way of illustration, but not in limitation, the powers and
        duties of the Manager shall include the following:

       

       

      
        
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      (a) Protect
        and preserve the titles and interests of the Company in the Company’s
        assets;

       

      (b) Subject
        to
Sections
        6.2 and 6.3,
        purchase
        real property and any other assets necessary or appropriate for the conduct
        of
        the Company’s business;

       

      (c) Subject
        to
Sections
        6.2 and 6.3,
        borrow
        money on behalf of the Company for Company purposes and encumber the Company’s
        assets to secure the Loan;

       

      (d) To
        the
        extent Company funds are available, pay all taxes, assessments, and other
        impositions applicable to the Company and the Company’s assets;

       

      (e) Subject
        to
Sections
        6.2 and 6.3,
        sell,
        lease, exchange, mortgage, or otherwise dispose of the Company’s assets or any
        interest therein in the ordinary course of the Company’s business;

       

      (f) Retain,
        discharge and replace the Company’s accountants and attorneys, and hire and fire
        employees of the Company and other persons necessary or appropriate to carry
        out
        the business of the Company;

       

      (g) To
        the
        extent that funds of the Company are available from time to time, pay all
        current debts and other obligations of the Company, and invest funds that
        are
        temporarily not required for Company purposes in any short-term, highly liquid
        investments with appropriate safety of principal;

       

      (h) Maintain
        all funds of the Company in one or more bank accounts in such bank or banks
        as
        the Manager may from time to time select; provided, however that any such
        account will bear interest at market rates;

       

      (i) Procure
        and maintain, at the expense of the Company, insurance policies covering
        the
        assets and operations of the Company; and 

       

      (j) Perform
        other normal business functions and otherwise operate and manage the business
        and affairs of the Company.

       

      6.2 Unanimous
        Major Decisions.
        Notwithstanding any other provision hereof and in addition to those matters
        which pursuant to any other provisions of this Agreement require the approval
        of
        one or more of the Members, the Company may not take any action or incur
        any
        obligation binding on the Company within the scope of any of the actions
        or
        decisions listed below (each a “Unanimous Major Decision” and together, the
“Unanimous Major Decisions”) unless and until the Unanimous Major Decision has
        been Approved by the Members, provided that in the event that ARC Management,
        LLC is no longer the Property Manager pursuant to the Management Agreement,
        Unanimous Major Decisions shall be approved by a Majority in Interest of
        the
        Members:

       

      (a) entering
        into any single contract, agreement or transaction in excess of two hundred
        fifty thousand dollars ($250,000.00), provided that such contract, agreement
        or
        transaction is terminable without penalty upon thirty (30) days
        notice;

       

       

      
        
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      (b) except
        for
        the Management Agreement attached hereto as Exhibit C and the Development
        Agreement attached hereto as Exhibit D, entering into any contract, agreement
        or
        transaction with any Member or any Affiliate of any Member;

       

      (c) engaging
        in any activity that is substantially unrelated to the objects and purposes
        of
        the Company as set forth in Section 2.3 above;

       

      (d) amending
        the Certificate or any of the terms of this Agreement; 

       

      (e) doing
        any
        act that would make it impossible to carry on the ordinary business of the
        Company;

       

      (f) borrowing
        money or incurring or refinancing indebtedness in the name of the Company,
        or
        guaranteeing the obligations of any other Person, other than equipment and
        vehicle financing entered into in the ordinary course of business;

       

      (g) except
        for
        accounts receivable or pursuant to the terms of any residency agreement,
        lending
        money or extending credit to anyone;

       

      (h) establish
        any reserves deemed necessary or advisable by the Manager other than any
        reserves that are contemplated by Budgeted TCCO;

       

      (i) using
        the
        proceeds of an insurance claim or condemnation proceedings or other governmental
        taking for casualties which are less than a Total Casualty or Major
        Condemnation;

       

      (j) issuing
        or
        assigning any Interests or permitting the transfer of any Interests in the
        Company except in accordance with the terms of this Agreement;

       

      (k) except
        as
        provided in Section
        2.3
        hereof,
        reorganizing the Company, causing the Company to merge or consolidate with
        or
        into another Person or sell all or substantially all of its assets to another
        Person, or acquiring another Person or substantially all the assets of another
        Person;

       

      (l) to
        the
        fullest extent permitted by law, dissolving or liquidating the Company, in
        whole
        or in part, or instituting proceedings to be adjudicated bankrupt or insolvent
        or taking any action that might cause the Company to become insolvent;


       

      (m) consenting
        to the institution of bankruptcy or insolvency proceedings against
        it;

       

      (n) filing
        a
        petition seeking or consenting to reorganization or relief under any applicable
        federal or state law relating to bankruptcy or insolvency;

       

      (o) consenting
        to the appointment of a receiver, liquidator, assignee, trustee, sequestrator
        (or other similar official) of the Company or a substantial part of its
        property;

       

       

      
        
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      (p) making
        a
        general assignment for the benefit of creditors; and

       

      (q) making
        any
        admission in writing to creditors that it is unable to pay its debts generally
        as they become due; 

       

      (r) except
        as
        set forth in Section
        6.3(e),
        making
        any decisions on behalf of the Company with respect to the Company’s rights
        under the Management Agreement or Development Agreement;

       

      (s) removing
        the Manager of the Company, provided the Manager of the Company has performed
        its duties under this Agreement, has acted in good faith, and has otherwise
        dealt fairly with the Company and its Members; and

       

      (t) appointing
        a new Manager of the Company, provided the immediate prior Manager of the
        Company was removed pursuant to Section
        6.2(s).

       

      6.3 Majority
        Major Decisions.
        Notwithstanding any other provision hereof and in addition to those matters
        which pursuant to any other provisions of this Agreement require the approval
        of
        one or more of the Members, the Company may not take any action or incur
        any
        obligation binding on the Company within the scope of any of the actions
        or
        decisions listed below (each a “Majority Major Decision” and together, the
“Majority Major Decisions”) unless and until the Majority Major Decision has
        been approved by a Majority in Interest of the Members:

       

      (a) entering
        into any contract or agreement to purchase or sell or encumber the Property
        or
        any other real property; 

       

      (b) using
        the
        proceeds of an insurance claim or condemnation proceedings or other governmental
        taking resulting from a Total Casualty or Major Condemnation;

       

      (c) removing
        the Manager of the Company, provided the Manager of the Company has failed
        to
        perform its duties under this Agreement, has failed to act in good faith,
        or has
        otherwise failed to deal fairly with the Company or any Member; 

       

      (d) appointing
        a new Manager of the Company, provided the immediate prior Manager of the
        Company was removed pursuant to Section 6.3(c);

       

      (e) electing
        whether or not to terminate the Property Manager for failing to meet the
        performance requirements set forth in Section 2.03 of the Management Agreement;
        provided, however, that the Property Manager shall not be removed under the
        Management Agreement unless and until American Retirement Corporation, a
        Tennessee corporation, has been fully released from any and all obligations
        under that certain Exceptions to Nonrecourse Guaranty delivered by American
        Retirement Corporation for the benefit of Construction Lender, except to
        the
        extent that Construction Lender has then made a claim against American
        Retirement Corporation for any of the obligations guaranteed
        thereunder.

       

       

      
        
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      6.4 Resignation
        of a Manager.
        The
        Manager of the Company may resign by providing written notice to all Members.
        Unless otherwise Approved by the Members, any such resignation shall take
        effect
        thirty (30) days after the date such Manager gives notice to all Members,
        or at
        a later date stated in the notice of resignation. Notwithstanding the foregoing,
        the Manager shall not be permitted to resign pursuant to this Section
        6.4
        unless
        and until another Manager has been designated and approved by the affirmative
        vote of a seventy-five percent (75%) Majority in Interest of the Members,
        as
        provided in Section
        6.5.

       

      6.5 (Intentionally
        omitted).

       

      6.6 Officers.
        The
        Manager may, from time to time, appoint one or more officers of the Company
        (each an “Officer” and, collectively, the “Officers”), and delegate to such
        Officer or Officers any of the Manager’s rights and powers to manage and control
        the business and affairs of the Company. The Manager may remove and replace
        any
        such Officer or Officers, with or without cause, in its sole and absolute
        discretion. An Officer shall serve until his successor is chosen by the Manager
        or until his earlier removal, resignation or death. Any two or more offices
        may
        be held by the same person. No Officer shall receive any compensation for
        his or
        her service as an officer of the Company. An Officer may resign at any time
        by
        giving written notice to the Manager, and no such resignation need be accepted
        to be effective. Any Officer appointed will have the same fiduciary duties
        with
        respect to the Company as a Manager has under the Act.

       

      6.7 Authority
        of the Members.
        No
        Member may act for, obligate, or in any manner legally bind, the Company
        or any
        other Member, unless such Member has been authorized to do so, in writing,
        by
        the Manager. Any Member acting in contravention of the prohibition of the
        immediately preceding sentence shall indemnify, insure and hold harmless
        the
        Company, the Manager and each other Member from and against, and reimburse
        each
        such Person for, any and all liability, loss, cost, expense or damage incurred
        or sustained by reason thereof, including, but not limited to, court costs
        and
        reasonable attorney and paralegal fees through any and all negotiations,
        trials
        and appeals and through all settlement and collection proceedings.

       

      6.8 Other
        Activities.
        The fact
        that a Manager or any Affiliate of a Manager is employed by, or is directly
        or
        indirectly interested in or connected with, any Person employed or engaged
        by
        the Company to render or perform a service, or from which the Company may
        purchase any property, shall not prohibit the Company from employing or engaging
        that Person, or from otherwise dealing with him or it, and neither the Company
        nor any of the Members shall have any rights in or to any income or profits
        derived therefrom as a consequence of the relationships created in this
        Agreement. The Manager, each Member and each of their respective Affiliates
        may
        engage in or possess an interest in other business ventures of every nature
        and
        description, including the purchase, development or sale of real estate,
        independently or with others, and neither the Company nor any of the Members
        shall have any rights, by virtue of this Agreement, in and to the independent
        ventures or the income or profits derived from them.

       

       

      
        
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      6.9  Conveyances.
        Any
        deed, mortgage, lease, contract of sale, or other commitment purporting to
        convey or encumber the interest of the Company in all or any portion of any
        real
        or personal property at any time owned or leased by the Company shall be
        signed
        by the Manager, or, upon the written authorization of the Manager, by an
        Officer
        or by a nominee of the Company then holding record title to the property
        for the
        Company, and no other signatures shall be required. No person shall be required
        to inquire into the authority of any individual to sign any documents pursuant
        to the provisions of this Section
        6.9.

       

      6.10  Construction
        Loan.
        Notwithstanding anything to the contrary in this Agreement, each Member’s rights
        under the Agreement shall at all times be subject to the terms and conditions
        of
        the Construction Loan, and neither Member (a) shall take, or fail to take,
        any
        action that would conflict with any material term or condition of the
        Construction Loan or cause a default or event of default under the Construction
        Loan, or (b) shall cause the Company to take, or fail to take, any action
        that
        would conflict with any material term or condition of the Construction Loan
        or
        cause of default or event of default under the Construction Loan.

       

      ARTICLE
        7

      MEETINGS
        OF MEMBERS

       

      7.1 Member
        Meetings.
        In the
        event that any matter requires the approval of the Members under the terms
        of
        this Agreement or the Act, then the Manager shall call a meeting of the Members
        by providing the Members with written notice of such meeting at least two
        (2)
        days and not more than ten (10) days prior to the date of the meeting. Such
        notice shall state the date, time, place and purpose or purposes of the meeting.
        The business transacted at a meeting of the Members shall be limited to the
        purpose(s) stated in the notice of the meeting.

       

      7.2 Location,
        Conduct and Adjournments.
        Each
        meeting of the Members will be held at the Company’s principal place of business
        unless otherwise Approved by the Members. Unless otherwise Approved by the
        Members, the Manager shall act as chairman of such meeting. Any meeting of
        the
        Members may be adjourned from time to time to another date and time and,
        subject
        to the first sentence of this Section
        7.2,
        to
        another place. If at the time of adjournment the person chairing the meeting
        announces the date, time, and place at which the meeting will be reconvened,
        it
        is not necessary to give any further notice of the reconvening. Any Member
        or
        Manager may participate in any meeting of the Members by means of telephone
        conference or similar communications equipment that allows all persons
        participating in the meeting to hear each other, and such participation in
        a
        meeting will constitute presence in person at the meeting. If all the
        participants are participating by telephone conference or similar communications
        equipment, the meeting will be deemed to be held at the principal place of
        business of the Company.

       

      7.3 Waiver
        of Notice.
        A Member
        may waive notice of the date, time, place and purpose or purposes of a meeting
        of the Members. A waiver may be made before, at, or after the meeting, in
        writing, orally, or by attendance. Attendance by a Member at a meeting is
        a
        waiver of notice of that meeting, unless the Member objects at the beginning
        of
        the meeting to the transaction of business because the meeting is not properly
        called or convened, or objects before a vote on an item of business because
        the
        item may not properly be considered at that meeting and does not participate
        in
        the consideration of the item at that meeting.

       

       

      
        
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      7.4 Member
        Quorum and Voting.
        A
        Majority in Interest of the Members shall constitute a quorum at a meeting
        of
        the Members. If a quorum is present, the affirmative vote of a Majority in
        Interest of the Members shall be the act of the Members unless a greater
        affirmative vote is expressly required by the Certificate, this Agreement
        or by
        applicable law. Voting by proxy is not permitted. Members may participate
        in a
        meeting by means of a conference telephone or similar communication equipment
        by
        means of which all persons participating in the meeting can hear each other
        at
        the same time. Participation by such means shall constitute presence in person
        at a meeting.

       

      7.5 Action
        by Members Without a Meeting.
        The
        Members may take any action without a meeting that could be taken at a meeting,
        without prior notice and without a vote, if a consent in writing, setting
        forth
        the action so taken, is signed by Members that are necessary to authorize
        or
        take such action. Within ten (10) days after obtaining such authorization
        by
        written consent, written notice of the action taken shall be given to those
        Members who have not consented in writing. The notice shall fairly summarize
        the
        material features of the authorized action. Failure to provide the notice
        shall
        not invalidate the written consent.

       

      ARTICLE
        8

      OPERATIONAL
        ISSUES; RELATED PARTY TRANSACTIONS;

      COMPENSATION
        OF MEMBERS

       

      8.1 Development
        Services.
        ARC
        Lowry, LLC, a Tennessee limited liability company (the “Developer”) shall
        supervise the development of the Property pursuant to the terms of a separate
        development agreement between the Company and the Developer attached hereto
        as
        Exhibit D. The Developer shall receive a development fee of One Million Five
        Hundred Thousand Dollars ($1,500,000) for its contribution to the development
        of
        the Property, and the Advisor shall receive a development fee of One Hundred
        Fifty Thousand Dollars ($150,000) for its contribution to the development
        of the
        Property (each respectively a “Development Fee”).

       

      8.2 Management
        Services.
        The
        Property Manager shall supervise the management of the Property concurrently
        with the development of the Property and thereafter pursuant to the terms
        of the
        Management Agreement attached hereto as Exhibit C. The Property Manager shall
        receive a management fee based on five percent (5%) of accounting gross revenues
        from the Senior Living Facility for its contribution to the management of
        the
        Property, and the Advisor or an affiliate thereof shall receive a management
        fee
        of one-half of one percent (0.5%) of accounting gross revenues from the Senior
        Living Facility for its contribution to the management of the Senior Living
        Facility, each as more specifically determined in the Management Agreement.
        

       

      8.3 Financing
        Fee.
        The
        Company shall pay Advisor a financing fee of one-half of one percent (0.5%)
        of
        the principal authorized amount of (i) the Construction Loan funded in
        connection with the development of the Property and the construction of the
        Senior Living Facility, which fee shall be paid at the closing of the
        Construction Loan, and (ii) the permanent financing involving the Property
        or
        the Senior Living Facility, which fee shall be paid at the closing of such
        loan,
        provided that Advisor shall be limited to one (1) financing fee from permanent
        financing.

       

       

      
        
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      8.4 Disposition
        Fee.
        Upon the
        sale of the Property, the Company shall pay Advisor a disposition fee equal
        to
        three percent (3%) of gross sales price of the Property, which fee shall
        be paid
        at the closing of such sale.

       

      8.5 Accounting
        and Administrative Services.
        The
        Manager shall handle and be responsible for the obligations of the Company
        under
Article
        12
        below,
        including the maintaining of the Company’s books of account, preparation of
        financial statements for the Company and preparation and filing of tax returns
        for the Company. The Manager shall not be compensated for its role as manager
        of
        the Company.

       

      8.6 Guaranteed
        Payments.
        The
        Company may, from time to time, engage one or more Members to provide services
        to the Company as provided above and on such other terms and in such other
        instances as may be Approved by the Members. The Members intend the payments
        of
        such compensation to be guaranteed payments without regard to the income
        of the
        Company as contemplated by Code Section 707(c). The payment of any compensation
        to a Member pursuant to this Section
        8.6
        will not
        affect the right of such Member to allocations of income, gain, loss, deduction
        or credit or distributions of cash pursuant to the terms of this
        Agreement.

       

      8.7 CNL
        Representative.
        The
        parties acknowledge that CNL is an investment entity created by the Advisor,
        for
        the purpose of investing in the Company. The parties further acknowledge
        that
        CNL Senior Housing, Inc. is the managing member of CNL with the authority
        to
        represent CNL in all matters related to this Agreement, the Management
        Agreement, the Development Agreement and any other matter relating to the
        organization and operation of the Company. CNL and Advisor represent and
        warrant
        to ARC that the Advisor shall be the sole and exclusive agent and
        attorney-in-fact to act on behalf of CNL, in connection with and to facilitate
        any and all matters relating to this Agreement, the Management Agreement,
        the
        Development Agreement and any other matter relating to the organization and
        operation of the Company.

       

       

      
        
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      ARTICLE
        9

      TRANSFER
        OF A MEMBER’S INTEREST

       

      9.1 Restrictions
        on Transfer.
        Except
        as otherwise specifically set forth in this Agreement and to the fullest
        extent
        permitted by law, no Member may transfer all or any part of its Interest
        to any
        Person, other than an Affiliate of such Member, whether voluntarily,
        involuntarily or by operation of law, without the prior written consent of
        the
        other Member(s) and the Manager, which consent may be withheld in the sole
        and
        absolute discretion of any other Member(s) or the Manager. For purposes of
        this
Section
        9.1,
        “transfer” includes the sale, exchange, pledge, encumbrance or other transfer or
        disposition by a Member of any part of its Interest, whether for a valuable
        consideration or as a gift, and whether voluntarily or involuntarily. In
        addition to the required consents to any transfer, as a condition to any
        such
        consent, a Member or the Manager may require that the Member desiring to
        make
        the transfer provide to the Company a reasonably acceptable opinion of counsel,
        in form and substance reasonably acceptable, that the proposed transfer does
        not
        result in a violation of the Securities Act of 1933, as amended, or any
        applicable state securities laws. The attorney fees and costs for such opinion
        and the attorney fees and costs incurred by the Company in connection with
        any
        such transfer shall be paid by the Member who is transferring all or part
        of its
        Interest.

       

      9.2 Substituted
        Members.
        Any
        Person, not then a Member, to whom an Interest is transferred in accordance
        with
        the provisions of Section
        9.1
        shall
        agree in writing to be subject to the terms of this Agreement and shall,
        thereupon, become a substituted Member (“Substituted Member”) hereunder. Such
        admission as a Substitute Member shall be deemed effective immediately prior
        to
        such Transfer. A Substituted Member has, to the extent assigned, the rights
        and
        powers and is subject to the restrictions and liabilities, of a Member under
        this Agreement and the Act. A Substituted Member also is liable for the
        obligations of its assignor to make and return contributions as provided
        in the
        Act, and for certain other liabilities of the assignor as provided in the
        Act.
        If an assignee of an Interest becomes a Substituted Member, the assignor
        is not
        released from its liability to the Company to the extent provided in the
        Act.
        The Substituted Member shall pay all reasonable expenses in connection with
        its
        admission to the Company, including, but not limited to, legal fees and other
        costs of preparing any amendment to this Agreement deemed necessary or desirable
        by the Manager. If any Interest is transferred other than in accordance with
        the
        provisions of Section
        9.1
        and the
        transferee is not admitted as a Substituted Member, then such transferee
        will
        have the sole right to share in such profits and losses, to receive such
        distribution or distributions, and to receive such allocation of income,
        gain,
        loss, deduction or credit or similar item to which the assignor was entitled,
        to
        the extent assigned, and will not have any of the rights, power or authority
        of
        a Member hereunder or under the Act; and the transferor of such Interest
        shall
        thereafter be considered to have no further rights or interest in the Company
        with respect to the transferred Interest, but shall remain subject to any
        obligations under this Agreement and the Act with respect to such
        Interest.

       

       

      
        
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      9.3 Admission
        of Additional Members.
        With the
        Approval of the Members, any Person may be admitted to the Company as an
        additional Member upon making such contributions to the capital of the Company
        in exchange for such Percentage Interests as may be Approved by the Members.
        In
        the event that the Members admit any additional Member to the Company, this
        Agreement shall be amended or amended and restated as appropriate. The dilution
        resulting from the admission of any new Member shall be borne by the other
        Members in proportion to their respective Percentage Interests immediately
        prior
        to the admission of the new Member.

       

      9.4 ARC
        Purchase Right During Construction.
        In the
        event that, prior to the completion of construction of the Senior Living
        Facility, a Majority in Interest of the Members exercises its right pursuant
        to
Section
        6.3(b)
        to use
        the proceeds of an insurance claim resulting from a Total Casualty or
        condemnation proceeds from a Major Condemnation in any manner other than
        the
        rebuilding of the Senior Living Facility, ARC shall have the right to acquire
        the other Members’ interest in the Company at an amount equal to the sum of
        their Capital Contributions.

       

      ARTICLE
        10

      PURCHASE
        OPTION UPON BANKRUPTCY/BUY-SELL PROVISIONS

       

      10.1 Option
        Rights.
        If a
        Member becomes a Bankrupt Member, then the other Member(s) shall thereupon
        have
        the right and option to purchase the entire Interest of the Bankrupt Member
        pursuant to the terms of Sections
        10.1, 10.2, 10.3,
        and
10.4
        of this
        Agreement. The Bankrupt Member shall send notice of the applicable Event
        of
        Bankruptcy to the other Member(s) within ten (10) days after the occurrence
        thereof. To exercise its option, a Member must provide written notice thereof
        to
        the other Member(s) within ninety (90) days after the first to occur of the
        following: (i) the effective date of the Bankrupt Member’s notice, and (ii) the
        date upon which such Member otherwise becomes aware of the applicable Event
        of
        Bankruptcy. Such notice must indicate the portion of the Bankrupt Member’s
        Interest that such Member desires to purchase; provided, however, that if
        there
        is more than one Member with such purchase right, then such Members will
        have
        the right to purchase the Bankrupt Member’s Interest pro rata in accordance with
        their respective Percentage Interests.

       

       

      
        
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      10.2 Obligations
        of Bankrupt Member.
        To the
        fullest extent permitted by law, the Bankrupt Member or its personal
        representative, as the case may be, shall, within ten (10) days after the
        last
        notice given pursuant to the terms of Section
        10.1,
        execute
        and deliver such assignments and other instruments as shall reasonably be
        requested by the purchaser(s) to effect the conveyance and transfer of the
        Bankrupt Member’s Interest to the purchaser(s) free and clear of any and all
        liens, claims and encumbrances of any kind or nature whatsoever, and shall,
        to
        the extent requested by the purchaser(s), cooperate to effect a smooth and
        efficient continuation of the Company’s business and affairs. If the Bankrupt
        Member disputes the right of the purchaser(s) to purchase and succeed to
        the
        Bankrupt Member’s entire Interest, then the Bankrupt Member shall nevertheless
        execute instruments and cooperate with the purchaser(s) pursuant to the
        immediately preceding sentence, without, however, being deemed to have waived
        its rights to damages if the purchaser(s) shall have purchased and succeeded
        to
        the Bankrupt Member’s Interest under this Article
        10
        without
        having the right to do so. To the fullest extent permitted by law, the Bankrupt
        Member shall indemnify, insure and hold each of the purchaser(s) harmless
        from
        and against all loss, liability, cost or expense (including reasonable attorney
        fees) suffered or incurred by the purchaser(s) if the Bankrupt Member fails
        to
        properly execute instruments and cooperate with the purchaser(s) pursuant
        to, or
        shall otherwise fail to perform, its obligations under this Article
        10.

       

      10.3 Payment
        of Fair Value.
        Upon
        compliance by the Bankrupt Member with the provisions of Section
        10.2,
        the
        purchaser(s) shall pay to the Bankrupt Member the “Fair Value” of the Bankrupt
        Member’s Interest (such value to be determined as of the date of the applicable
        Event of Bankruptcy) within thirty (30) days thereafter by delivering to
        the
        Bankrupt Member an amount equal to twenty percent (20%) of such Fair Value
        by
        official bank check, wire transfer or other immediately available funds,
        and a
        promissory note in an original principal amount equal to eighty percent (80%)
        of
        such Fair Value. Such promissory note will provide for a per annum interest
        rate
        equal to the Prime Rate as of the date of the applicable Event of Bankruptcy,
        will provide for four (4) equal annual payments commencing one (1) year after
        the date of the purchase, and shall otherwise have terms that are reasonable
        and
        customary. The “Fair Value” of the Bankrupt Member’s Interest shall be
        determined pursuant to the terms of Section
        10.4
        below.

       

       

      
        
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      10.4 Determination
        of Fair Value.
        For
        purposes of Section
        10.3,
        the
“Fair Value” of the Bankrupt Member’s Interest shall be the amount such Member
        would receive if the assets of the Company were sold for their fair market
        value, the Company’s liabilities were paid in full, gain or loss from the sale
        was allocated in accordance with the applicable terms of this Agreement,
        and the
        sales proceeds were distributed in accordance with the applicable terms of
        this
        Agreement. For purposes of this Section
        10.4,
        the
“Fair Value” of the Company shall be determined, as of the effective date of the
        applicable Event of Bankruptcy, by the average of two independent appraisals
        conducted by state certified appraisers, with the first appraiser chosen
        by the
        purchasing Member(s), and the other to be chosen by the Bankrupt Member or
        its
        personal representative, as the case may be, within fifteen (15) days after
        the
        effective date of notice of the appointment of the first appraiser, provided
        that if the Bankrupt Member or its personal representative, as the case may
        be,
        fails to timely appoint the second appraiser, then the determination of the
        first appraiser of the Fair Value of the Company shall be binding on all
        interested Persons. In the event the Non-Bankrupt Member should exercise
        the
        Option provided in Section 10.1 hereof, the Non-Bankrupt Member shall receive
        a
        credit towards the Fair Value of the Bankrupt Member’s Interest in the amount of
        the cost of such appraisal(s).

       

      ARTICLE
        11

      DISSOLUTION,
        REFORMATION,

      LIQUIDATION,
        ETC.

       

      11.1 Termination
        of Membership.
        Except
        for withdrawals expressly permitted by provisions contained in Article
        10
        or
11,
        no
        Member shall have the right to withdraw from the Company and all Members
        hereby
        agree not to withdraw from the Company, and any attempt to do so, whether
        voluntary or involuntary, shall be null and void. Each of the Members agrees
        not
        to voluntarily resign from the Company or to default with respect to any
        obligation or undertaking contained in this Agreement or the Act.

       

      11.2 Dissolution.
        The
        Company shall be dissolved and its affairs wound up and terminated upon the
        first to occur of the following events (each, a “Dissolution
        Event”):

       

      (a) The
        determination in writing to dissolve the Company by all Members;

       

      (b) At
        any
        time when there are no Members;

       

      (c) The
        sale
        or other disposition of all or substantially all of the assets of the Company
        in
        one transaction or a series of related transactions and the distribution
        of such
        proceeds pursuant to Section
        5.4
        hereof;

       

      (d) The
        occurrence of a Continuation Event followed within ninety (90) days by a
        determination of the requisite Percentage Interests to dissolve the Company
        as
        described in Section
        11.3
        hereof;
        or

       

      (e) The
        entry
        of a decree of judicial dissolution under Section 18-802 of the
        Act.

       

      Upon
        the
        occurrence of a Dissolution Event, the Company shall be wound up and liquidated
        pursuant to Section
        11.4
        hereof.

       

       

      
        
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      11.3 Continuation
        Event.
        Neither
        the resignation, expulsion, bankruptcy or dissolution of any Member, nor
        the
        occurrence of any other event that terminates the continued membership of
        any
        Member (each, a “Continuation Event”), shall cause the Company to be dissolved
        or its affairs to be wound up, and upon the occurrence of any such Continuation
        Event, the Company shall be continued without dissolution, unless within
        ninety
        (90) days following such Continuation Event, a Majority in Interest of the
        Members (excluding the Member which has been the subject of the Continuation
        Event) agrees in writing to dissolve the Company.

       

      11.4 Winding
        Up of the Company.
        Upon
        dissolution of the Company pursuant to Section 11.2 hereof, the Manager or
        if
        the Manager is a Member and the Continuation Event occurred with respect
        to such
        Member, such person as is designated by a Majority in Interest of the Members
        not subject to the Continuation Event (such person being herein referred
        to as
        the “Liquidator”), shall proceed to wind up the business and affairs of the
        Company upon such terms, price and conditions as are determined by the
        Liquidator in accordance with this Agreement and the requirements of the
        Act.
        This Agreement shall remain in full force and effect and continue to govern
        the
        rights and obligations of the Members and the conduct of the Company during
        the
        period of winding up the Company’s affairs. The Liquidator shall have and may
        exercise, without further authorization or consent of the Members, all of
        the
        powers conferred upon the Members under the terms of this Agreement to the
        extent necessary or desirable in the good faith judgment of the Liquidator
        to
        carry out the duties and functions of the Liquidator hereunder for and during
        such period of time as shall be reasonably required in the good faith judgment
        of the Liquidator to complete the winding up and liquidation of the Company.
        The
        Liquidator shall liquidate the assets of the Company, collect the debts and
        obligations due to the Company, and pay or provide for payment of all
        liabilities and obligations of the Company, including payment of every Member
        Loan with interest thereon and payment of any real estate commission due
        and
        payable to the Advisor pursuant to Section
        8.4
        hereof,
        after which the Liquidator shall distribute the remaining assets of the Company
        to the Members in accordance with their respective Capital Accounts, after
        giving effect to all contributions, distributions and allocations for all
        periods, by the end of the Fiscal Year in which such liquidation occurs or,
        if
        later, within sixty (60) days after the date of the dissolution. The Liquidator
        may distribute assets in kind; provided, however, that the Liquidator shall
        determine the fair market value by appraisal or other reasonable means of
        all
        assets so distributed in kind.

       

       

      
        
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      ARTICLE
        12

      ACCOUNTING
        AND ADMINISTRATIVE MATTERS

       

      12.1 Books
        and Records.
        The
        Company shall maintain true, complete and correct books of account of the
        Company, all in accordance with generally accepted accounting principles,
        or
        such other accounting method as may be selected by the Manager, applied on
        a
        consistent basis. The books of account shall contain particulars of all monies,
        goods or effects belonging to or owing to or by the Company, or paid, received,
        sold or purchased in the course of the business, and all of such other
        transactions, matters and things relating to the business as are usually
        entered
        in books of accounts kept by persons engaged in a business of a like kind
        and
        character. In addition, the Company shall keep all records required to be
        kept
        pursuant to the Act. A Member shall, upon prior written notice and during
        normal
        business hours, have access to the books and records of the Company, for
        the
        purpose of inspecting or, at the expense of such Member, copying such books
        and
        records. Any Member reviewing the books and records of the Company pursuant
        to
        the preceding sentence shall do so in a manner which does not unduly interfere
        with the conduct of the Company’s business.

       

      12.2 Financial
        Statements.
        The
        Company shall, within twenty (20) days following the end of each Fiscal Year
        month, furnish to each Member monthly financial statements for the Company,
        prepared in accordance with generally accepted accounting principles.
        Additionally, the Company shall furnish to each Person who was a Member during
        the immediately prior Fiscal Year (i) audited financial statements for the
        preceding Fiscal Year prepared in accordance with generally accepted accounting
        principles within ninety (90) days after the close of each Fiscal Year, and
        (ii)
        a Schedule K-1 or such other form as is necessary to provide the Members
        with
        the information that is needed by them in order to file their respective
        federal, state or local income tax returns within forty-five (45) days after
        the
        close of each Fiscal Year.

       

      12.3 Tax
        Matters Partner.
        The
        initial Manager shall be the Company’s “tax matters partner,” as such term is
        defined in Code Section 6231(a)(7) (the “Tax Matters Partner”). In connection
        therewith and in addition to all other powers given thereunto, the Tax Matters
        Partner shall have all other powers necessary or appropriate to fully perform
        such role, including, but not limited to, the power to retain all attorneys
        and
        accountants of its choice. Notwithstanding the foregoing, the Tax Matters
        Partner shall not settle any audits for or on behalf of the Company or its
        Members without the written approval of a Majority in Interest of the
        Members.

       

       

      
        
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      ARTICLE
        13

      INDEMNIFICATION

       

      13.1 Indemnification.
        Each
        Member hereby agrees to defend, indemnify and hold harmless the other member,
        the Manager and any Officer of the Company, and each of their respective
        officers, directors, partners, members, shareholders, employees and agents,
        from
        and against any and all liability, loss, cost, expense or damage, including,
        but
        not limited to, court costs, expenses and reasonable attorney and paralegal
        fees
        through any and all negotiations, trials and appeals and through all settlement
        and collection proceedings, incurred or sustained by such member, Manager,
        or
        Officer by reason of the indemnifying Member’s fraud, bad faith, willful
        misconduct, gross negligence, unauthorized acts or breach of this Agreement.
        The
        Company, to the fullest extent permitted by law, hereby agrees to defend,
        indemnify and hold harmless each Member, Manager and Officer of the Company,
        and
        each of their respective officers, directors, partners, members, shareholders,
        employees and agents, from and against any and all liability, loss, cost,
        expense or damage incurred or sustained by reason of any act or omission
        in the
        conduct of the business of the Company, including, but not limited to, court
        costs, expenses and reasonable attorney and paralegal fees through any and
        all
        negotiations, trials and appeals and through all settlement and collection
        proceedings; provided, however, that the Company will not indemnify any Member,
        Manager or Officer of the Company or any officer, director, partner, member,
        shareholder, employee or agent of any Member or hold any of them harmless
        with
        respect to any of the foregoing that is incurred by them as the result of
        conduct which constitutes fraud, willful misconduct, gross negligence or
        breach
        of fiduciary duty of the party who would otherwise be entitled to be indemnified
        and held harmless under this Section
        13.1.
        The
        provisions of this Section
        13.1
        shall
        survive the termination of this Agreement.

       

      13.2 Advancement
        of Legal Costs and Expenses.
        The
        Company shall advance Company funds to any Person who is entitled to
        indemnification pursuant to the terms of Section
        13.1
        for legal
        expenses and other costs incurred as a result of any legal action if the
        following conditions are satisfied: (a) the legal action relates to acts
        or
        omissions with respect to the performance of duties or services on behalf
        of the
        Company; (b) the legal action is initiated by a third party who is not a
        Member,
        or the legal action is initiated by a Member and a court of competent
        jurisdiction specifically approves such advancement; and (c) such Person
        undertakes to repay the advanced funds to the Company in cases in which such
        Person is not entitled to indemnification pursuant to the terms of Section
        13.1.

       

      13.3 Provisions
        Not Exclusive.
        The
        indemnification provided by this Article shall not be deemed exclusive of
        any
        other rights to which those seeking indemnification may be entitled under
        any
        statute, agreement, vote of the Members or otherwise.

       

      13.4 Insurance.
        The
        Company may purchase insurance to insure against the liabilities contemplated
        by
        this Article
        13.

       

       

      
        
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      ARTICLE
        14

      MISCELLANEOUS
        MATTERS

       

      14.1 Governing
        Laws.
        This
        Agreement and the rights, powers, duties and obligations of the Members
        hereunder shall be interpreted, construed and enforced in accordance with
        the
        laws of the State of Delaware.

       

      14.2 Acknowledgment.
        The
        parties acknowledge that each party to this Agreement has had equal input
        as to
        the drafting and construction of this Agreement and, accordingly, the parties
        intend that a court construing this Agreement shall not construe it more
        strictly against any of the parties hereto. Each of the Members has had this
        Agreement reviewed on its behalf by independent legal counsel of its choosing,
        or has waived its right to do so.

       

      14.3 Notices.
        All
        notices, demands, consents, approvals, requests, offers or other communications
        which are to be given pursuant to the terms of this Agreement shall be in
        writing and shall be given (a) by registered or certified mail, return receipt
        requested, (b) by personal delivery, or (c) by delivery via nationally
        recognized overnight delivery service, and the cost and expense of any such
        delivery shall be borne by the sending party. Any notice sent in compliance
        with
        the above provisions shall be deemed delivered and received on the third
        Business Day after the day on which it was sent, or, if sooner, on the actual
        date received. All notices sent pursuant to this Section 14.3 shall be addressed
        as herein provided:

       

      
        	 	To
                CNL:	Denver
                Lowry Senior Housing, LLC
	 	 	CNL
                Center at City Commons
	 	 	450
                South Orange Avenue
	 	 	Orlando,
                Florida 32801
	 	 	Attn: Mike
                Garbers
	 	 	 
	 	With
                copies to: 	Lowndes,
                Drosdick, Doster, Kantor & Reed, P.A.
	 	 	450
                S. Orange Avenue, Suite 800
	 	 	Orlando,
                Florida 32801
	 	 	Attn: Daniel
                F. McIntosh, Esquire
	 	 	 
	 	To
                ARC:	ARC
                Lowry, LLC
	 	 	111
                Westwood Place, Suite 200
	 	 	Brentwood,
                Tennessee 37027
	 	 	Attn: Chief
                Financial Officer
	 	 	 
	 	With
                copies to:	Bass,
                Berry & Sims PLC
	 	 	315
                Deaderick Street, Suite 2700
	 	 	Nashville,
                Tennessee 37238
	 	 	Attn: T.
                Andrew Smith, Esquire


      

       

      Or
        at such
        other address as is from time to time designated by the party receiving the
        notice. A notice shall be deemed to have been given upon delivery, evidenced
        by
        appropriate signature, pursuant to the methods described above.

       

       

      
        
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      14.4 Force
        Majeure.
        Notwithstanding anything herein to the contrary, no party shall be liable
        or
        responsible for, or shall be subject to any right or remedy as a result of,
        any
        loss, cost, damage, delay or circumstance, and shall be relieved of any adverse
        consequence, that arises, directly or indirectly, from any event or circumstance
        of Force Majeure. As used herein, “Force
        Majeure”
means
        any event, fact, circumstance, delay, failure, loss or damage that, directly
        or
        indirectly, arises from, or as a result of, or that fails to occur because
        of,
        occurrences that are beyond, or outside of, the reasonable control of any
        Person
        or entity, including but not limited to: Acts of God; the taking, confiscation
        or expropriation of any property or asset; the occurrence of any casualty
        event;
        compliance with any order or directive of any governmental authority; acts
        of
        declared or undeclared war; the occurrence of any military or terrorist attack;
        public disorders; rebellion; sabotage; revolution; earthquakes; floods; riots;
        strikes; significant disruptions of the labor or employment markets; and
        changes
        in laws, rules, regulations, orders or directives of any Governmental Authority.
        

       

      14.5 Entire
        Agreement.
        This
        Agreement contains the entire agreement between the parties hereto with respect
        to the Company and supercedes and replaces any prior agreements between the
        parties with respect to the Company. No variations from, modifications of,
        amendments to or changes in this Agreement shall be binding upon any party
        hereto unless set forth in a document duly executed by or on behalf of such
        party.

       

      14.6 Severability.
        If any
        provision of this Agreement or the application thereof to any Person or
        circumstance shall be invalid or unenforceable to any extent, the remainder
        of
        this Agreement and the application of such provisions to other Persons or
        circumstances shall not be affected thereby and shall be enforced to the
        greatest extent permitted by law.

       

      14.7 Construction
        Rules.
        All
        personal pronouns used in this Agreement, whether used in the masculine,
        feminine, or neuter gender, shall include all other genders, the singular
        shall
        include the plural, and vice versa, as the context may require. Titles of
        Sections and Articles are for convenience of reference only, and shall neither
        limit nor amplify the provisions of this Agreement itself. References in
        this
        Agreement to particular Sections or Articles are references to Sections or
        Articles of this Agreement unless otherwise specifically provided. The words
        “hereof,” “herein,” “hereto” and “hereunder” shall refer to this Agreement as a
        whole and not to any particular provision of this Agreement unless otherwise
        specifically provided.

       

      14.8 Binding
        Effect.
        Subject
        to the restrictions on transfers and encumbrances set forth herein, this
        Agreement shall inure to the benefit of and be binding upon the undersigned
        Members and their respective heirs, executors, personal and legal
        representatives, successors and permitted assigns. Whenever, in this instrument,
        a reference to any Member is made, such reference shall be deemed to include
        a
        reference to the heirs, executors, personal and legal representatives,
        successors and permitted assigns of such Member.

       

      14.9 Jurisdiction
        and Venue.
        If any
        Member or the Company institutes any lawsuit or other action or proceeding
        pertaining to the Company, any right or obligation of any Member hereunder,
        or
        any breach of this Agreement, then the nonexclusive venue and jurisdiction
        for
        filing and maintaining any such lawsuit or other action or proceeding shall
        be
        in the County Court for Denver County, Colorado. To the fullest extent permitted
        by law, each Member, by executing this Agreement, consents and submits itself
        to
        the personal jurisdiction of such court.

       

       

      
        
          38

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       

      14.10 Attorney
        Fees.
        In any
        action or proceeding between the parties concerning this Agreement or its
        enforcement, the prevailing party or parties in such action or proceeding
        shall
        be entitled to collect in such action or proceeding from the non-prevailing
        party or parties all costs of such litigation incurred by such prevailing
        party
        or parties, including, but not limited to, reasonable attorney fees and costs,
        through all levels of proceedings.

       

      14.11 Counterparts.
        This
        Agreement may be executed in counterparts and any of such counterparts may
        be
        transmitted by facsimile transmission, and each of such counterparts, whether
        an
        original or a facsimile of an original, will be deemed to be an original
        and all
        of such counterparts together will constitute a single agreement.

       

      IN
        WITNESS WHEREOF,
        the
        undersigned Members have executed this Agreement as of the date stated
        above.

       

      Witnesses:

      
        	 	 	DENVER
                LOWRY SENIOR HOUSING, 
	 	 	LLC,
                a Delaware limited liability company	 
	 	 	 	 	 	 
	 	 	By:
                	CNL
                Senior Housing, Inc., a Florida	 
	 	 	 	corporation	 
	 	 	 	 	 	 
	 	 	 	By: 	 	 
	Name: 	 	 	Name:	 	 
	 	 	 	Title:	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	
                Name:

              	
                 

              	
                Address:

              	
                 

              	
                                 450
                  S. Orange Ave.

              	 
	
                 

              	
                 

              	
                 

              	
                 

              	
                Orlando,
                  Florida 32801

              	 


      

       

       

      
        
          39

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       

       

      
        	 	 	 	 	 

                ARC
                  Lowry, LLC,
                  a
                  Tennessee limited 

              	 
	 	 	 	 	liability
                company	 
	 	 	 	 	 	 
	 	Name:	 	 	By:	 	 
	 	 	 	 	Name:	 	 
	 	 	 	 	Title:	 	 
	 	 	 	 	 	 
	 	Name:	 	 	Address: 	111
                Westwood Place, Suite 200	 
	 	 	 	 	 	Brentwood,
                Tennessee 37027	 


      

       

       

      
        
          40

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       


      Exhibit
        “A”

       

      (Property)

       

      A
        parcel
        of land in the Southeast quarter of Section 16, Township 4 South, Range 67
        West
        of the Sixth Principal Meridian, City and County of Denver, State of Colorado/
        being more particularly described as follows:

      For
        the
        purpose of this description the bearings are based on the Southerly line
        of the
        Southeast quarter of said Section 16, as marked by a 3-1/4" aluminum cap,
        PSL
        29036 in Range Box at the South quarter corner and by a 3-1/4" aluminum cap
        in
        Range Box at the Southeast corner bearing South 89 degrees 31 minutes 31
        seconds
        East.

      Commencing
        at the South quarter corner of said Section 16;

      Thence
        North 00 degrees 07 minutes 58 seconds East along the Westerly line of the
        Southeast quarter of said Section 16 a distance of 60.00 feet to a point
        on the
        Northerly right of way line of Mississippi Avenue as recorded under Reception
        No. 00029954 on October 2, 1986 in the City and County of Denver Clerk and
        Recorders Office and the Point of Beginning/¬Thence North 00 degrees 07 minutes
        58 seconds East continuing along said Westerly line a distance of 561.14
        feet to
        a point on the Southerly line of a private road as shown on the Breaker's
        Single
        Family Subdivision Plat as recorded in said Clerk and Recorders Office under
        Reception No. 9400092452 dated June 6, 1994:

       

      
        	Thence
                along said Southerly line the following four (4) courses;
	 	 
	1.	South
                89 degrees 56 minutes 18 seconds East along said Southerly line a
                distance
                of 555.38 feet to a point of non-tangent curvature;
	 	 
	2.	Thence
                along the arc of a curve to the right having a central angle of 90
                degrees
                00 minutes 16 seconds, radius of 60.00 feet, arc length of 94.25
                feet
                (chord bears South 44 degrees 31 minutes 39 seconds East, 84.86 feet)
                to a
                point;
	 	 
	3.	Thence
                South 00 degrees 28 minutes 29 seconds West a distance of 10.00 feet
                to a
                point
	 	 
	4.	Thence
                South 89 degrees 31 minutes 31 seconds East a distance of 18.00 feet
                to a
                point on the Westerly line of S. Valentina St. Subdivision as recorded
                in
                said Clerk and Recorders Office Reception
                No. 16388
                dated February 2, 1992;


      

       

      
        	
                Thence
                  along said Westerly line the following four (4)
                  courses: 

              
	 	 
	1.	South
                00 degrees 28 minutes 29 seconds West a distance of 185.44 feet to
                a
                point; 
	 	 
	2.	Thence
                South 01 degrees 37 minutes 14 seconds West a distance of 150.03
                feet to a
                point;
	 	 
	3.	
                Thence
                  South 00 degrees 28 minutes 29 seconds West a distance of 120.00
                  feet to a
                  point of curvature;

              
	 	 
	4.	Thence
                along the arc of a curve to the right having a central angle of 90
                degrees
                00 minutes 00 seconds, radius of 30.00 feet, arc length o 47.13 feet
                (chord bears South 45 degrees 28 minutes 29 seconds West, 42.43 feet;
                to a
                point on said Northerly right of way line of Mississippi
                Avenue;


      

       

       

      
        
          41

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       

       

      
        	 	Thence
                North 89 degrees 31 minutes 31 seconds West along said Northerly
                right of
                way line a distance of 597.01 feet to the Point of Beginning.
                City
                  and County of Denver, State of
                  Colorado.

              


      

       

       

       

       

       

       

       

      
        
          42

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       


      Exhibit
        B

       

       

      
        	
                Member’s
                  Name and Address

                 

              	
                Initial
                  Capital Contributions

                 

              	
                Percentage
                  Interests

                 

              
	
                Denver
                  Lowry Senior Housing,

                LLC

                CNL
                  Center at City Commons

                450
                  South Orange Avenue

                Orlando,
                  Florida 32801

              	
                $10,000,000

                 

              	
                80%

                 

              
	
                ARC
                  Lowery, LLC

                111
                  Westwood Place, Suite 200

                Brentwood,
                  Tennessee 37027

              	
                $2,500,000

                 

              	
                20%

                 

              
	 	 	 
	
                Total

              	
                $12,500,000

                 

              	
                100%

                 

              


      

       

       

      
        
          43

        

        
          
          

          
            

          

        

        
          
          

        

      

      
 


      Exhibit
        C

       

      Management
        Agreement

       

      (See
        attached)

       

       

       

       

       

      
        
          44

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       

       

      Exhibit
        D

       

      Development
        Agreement

       

      (See
        attached)

       

       

       

       

       

      
        
          45

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       

       

      Exhibit
        E

       

      Budgeted
        TCCO

       

      (See
        attached)

       

       

       

       

      46