Exhibit 10.2


    Exhibit
      10.2

    


     

    

      July
        7,
        2005

      


      LOAN
        AGREEMENT

      


      This
        Loan
        Agreement (the “Agreement”) dated as of July 7, 2005, by and between Bank of
        America, N.A., a national banking association (“Bank”) and the Borrower
        described below:

      


      WHEREAS,
        Borrower desires to purchase from Maybrook Realty, Inc., all of its right,
        title
        and interest in and to a certain leasehold estate and interest in Freedom
        Plaza
        Care Center, including without limitation all improvements thereon, and Borrower
        also desires to purchase from Sun Health Properties, Inc. the fee simple
        property associated with the same site, including without limitation all
        of the
        fee simple property underlying the existing ground lease between Sun Health
        Properties, Inc., and Maybrook Realty, Inc., plus some additional
        property;

      


      WHEREAS,
        Borrower has requested term loans from Bank to fund the costs of said real
        estate acquisitions, and Bank has agreed to fund same subject to the terms,
        provisions and conditions hereof;

      


      WHERAS,
        Borrower has also requested a construction loan to provide funding for the
        construction of a 21-unit assisted living expansion and a connected 20-unit
        Alzheimer's building, and Bank has also approved of same subject to the terms,
        provisions and conditions hereof and also subject to the terms, provisions
        and
        conditions of a Construction Loan Administration Agreement of even date herewith
        between Bank and Borrower;

      


      NOW
        THEREFORE, in consideration of these premises and intending to be legally
        bound,
        Bank and ARC HDV, LLC hereby agree as follows:

      


      I. DEFINITIONS
        AND REFERENCE TERMS.
        In
        addition to any other terms defined herein, the following terms shall have
        the
        meaning set forth with respect thereto:.

      


      1. Banking
        Day.
        Banking
        Day shall mean a day for dealings by and between banks, excluding Saturday,
        Sunday and any day which shall be a legal holiday in the City of Nashville,
        Davidson County, Tennessee or a day on which banking institutions in the
        City of
        Nashville, Davidson County, Tennessee are authorized to close.

      


      2. Borrower.
        ARC
        HDV, LLC, a Tennessee limited liability company.

      


      3. Borrower’s
        Address
        shall be
        111 Westwood Place, Suite 200, Brentwood, Tennessee 37027. 

      


      4. Collateral.
        The
        Collateral shall mean and refer to all that property described in the Deed
        of
        Trust and all other properties of the Borrower in which the Bank may now
        or
        hereafter be granted a lien and/or security interest or which at any time
        are in
        the possession or control of the Bank.

      


      
        
          
          

        

        
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      5. 
        Construction Loan Administration Agreement.
        The
        Construction Loan Administration Agreement shall mean and refer to that certain
        Construction Loan Administration Agreement of even date herewith by and between
        Borrower and Bank

      


      6. Deed
        of Trust.
        Deed of
        Trust shall mean and refer to that certain Deed of Trust, Assignment of Rents,
        Security Agreement and Financing Statement which is dated of even date herewith
        from Borrower to Bank and recorded in the Records of Maricopa County, Arizona
        securing, among other Obligations, Notes A , B and C.

      


      7. Default
        Rate.
        The
        Default Rate shall have the meaning given it in the respective
        Note.

      


      8. Environmental
        Laws.
        Environmental Laws shall mean all federal, state, local and foreign laws
        relating to pollution or protection of the environment, including laws relating
        to emissions, discharges, spills, releases or threatened releases of any
        pollutant, contaminant or Hazardous Substance into the environment (including
        without limitation indoor air, ambient air, surface water, ground water or
        land), or otherwise relating to the generation, manufacture, processing,
        distribution, use, treatment, storage, disposal, transport, or handling of
        pollutants, contaminants or Hazardous Substances including, but not limited
        to,
        the Comprehensive Environmental Response Compensation and Liability Act,
        as
        amended (42 U.S.C. §§9601 et
        seq.),
        the
        Resource Conservation and Recovery Act, as amended (42 U.S.C. §§6901
et
        seq.),
        the
        Clean Water Act, as amended (33 U.S.C. §§1251 et
        seq.),
        the
        Clean Air Act, as amended (42 U.S.C. §§7401 et
        seq.),
        the
        Toxic Substance Control Act, as amended (15 U.S.C. §§2601 et
        seq.),
        and
        any and all rules, regulations, codes, standards, plans, orders, decrees,
        judgments, injunctions, notices or demand letters issued, entered, promulgated
        or approved thereunder.

      


      9. Equipment.
        Equipment shall mean all of Borrower’s then owned or existing and future
        acquired or arising machinery, apparatus, equipment, fixtures, motor vehicles,
        and other tangible personal property of every kind and description used in
        the
        Borrower’s business operations or owned by the Borrower or in which the Borrower
        has an interest, and all parts and accessories and all increases and accessions
        thereto and substitutions and replacements therefor.

      


      10. Fixed
        Charge Coverage
        Ratio.
        Fixed
        Charge Coverage Ratio shall mean, for any period of determination, that ratio
        computed by dividing the sum of Borrower’s net income plus
        depreciation/amortization plus rent/lease expense by the sum of Borrower’s
        interest expense plus scheduled principal payments plus scheduled rent/lease
        payments.

      


      11. Freedom
        Plaza Care Center. Freedom
        Plaza Care Center shall mean and refer to that certain 128 bed skilled nursing
        and 44 unit assisted living facility which Borrower has purchased from Maybrook
        Realty, Inc. and Sun Health Properties, Inc. located in Maricopa County,
        Arizona.

      


      12. Guarantor.
        Guarantor means American Retirement Corporation, a Tennessee
        Corporation.

      


      
        
          
          

        

        
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      13. Guaranty.
        Guaranty shall mean the limited guaranty of American Retirement Corporation,
        a
        Tennessee Corporation with respect to the indebtedness evidenced by Notes
        A, B
        and C in form and substance satisfactory to the Bank guaranteeing the payment
        and performance of said indebtedness and any other guaranty of the Obligations
        hereafter executed and delivered to Bank.

      


      14. Hazardous
        Materials.
        Hazardous Materials shall mean any hazardous, toxic or dangerous waste,
        substance or material, regulated or controlled pursuant to any Environmental
        Law, now or at any time hereafter in effect, including, without limiting
        the
        generality of the foregoing, asbestos, PCBs, petroleum products (including
        crude
        oil, natural gas, natural gas liquids, liquefied natural gas or synthetic
        gas)
        or any other substance defined as a “hazardous substance,”“extremely hazardous
        waste,”“restricted hazardous waste,”“hazardous material,”“hazardous
        chemical,”“hazardous waste,”“hazardous air pollutant,”“regulated substance,”“toxic chemical,”“toxic substance” or other similar term in any Environmental
        Law.

      


      15. Loan(s).
        Loan(s)
        means collectively any and all loans heretofore or hereafter made by Bank
        to the
        Borrower pursuant to and in accordance with the terms of this Agreement,
        including without limitation those evidenced by Note A, Note B,
        and
        Note C.

      


      16. Loan
        Documents.
        Loan
        Documents shall mean and refer to this Agreement, Note A, Note B,
        Note
        C, the Deed of Trust, the Assignment of Rents and Leases, the Security
        Agreement, the Guaranty Agreement, the Construction Loan Administration
        Agreement, and any and all promissory notes executed and/or assumed by Borrower
        in favor of Bank and all other documents, instruments, guarantees, certificates
        and agreements executed and/or delivered by Borrower, any guarantor or third
        party in connection with the Loan.

      


      17. Note A.
        Note A
        shall be that certain floating rate Promissory Note dated of even date herewith,
        executed by Borrower in the amount of Nine Million Three Hundred Sixty Thousand
        Seven Hundred Seventy Five and No/100 Dollars ($9,360,775.00), together with
        all
        extensions, renewals and modifications thereof.

      


      18. Note B.
        Note B
        shall be that certain fixed rate Promissory Note dated of even date herewith
        executed by Borrower in the amount of Nine Million Three Hundred Sixty Thousand
        Seven Hundred Seventy Five and 00/100 Dollars ($9,360,775.00), together with
        all
        extensions, renewals and modifications thereof. 

      


      19. Note
        C. Note
        C
        shall be that certain floating rate Construction Loan Promissory Note dated
        of
        even date herewith executed by Borrower in the amount of Four Million Four
        Hundred Fifty Eight Thousand Four Hundred Fifty Eight and No/100 Dollars
        ($4,458,458.00), together with all extensions, renewals and modifications
        thereof.

      


      20. Obligations.
        Obligations shall mean, individually and collectively, the duties, obligations
        and liabilities of the Borrower to the Bank described in this Agreement or
        in
        the other Loan Documents, obligations under all notes, contracts of suretyship,
        guaranty or accommodation made by the Borrower in favor of the Bank, letters
        of
        credit, and all other obligations of the Borrower to the Bank, however and
        whenever created, arising, or evidenced, whether direct or indirect, through
        assignment from third parties, absolute, contingent, or otherwise, primary
        or
        secondary, now or hereafter existing, or due or to become due.

      


      
        
          
          

        

        
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      21. Obligor.
        Obligor
        shall mean the Borrower, the Guarantor under a Guaranty and each other party
        at
        any time primarily or secondarily, directly or indirectly liable on any of
        the
        Obligations.

      


      22. Permitted
        Liens.
        Permitted Liens shall mean:

      


      (a) Liens
        or
        charges for current taxes, assessments or other governmental charges which
        are
        not delinquent or remain payable without any penalty, or the validity of
        which
        is contested in good faith by appropriate proceedings upon stay of execution
        of
        the enforcement thereof and for which appropriate reserves have been established
        in accordance with GAAP;

      


      (b) deposits
        or pledges to secure:

      


      
        	 	
                 
                  (i)

              	
                statutory
                  obligations;

              


      

      


      
        	 	
                 
                  (ii)

              	
                surety
                  or appeal bonds; or

              


      

      


      
        	 	
                 
                  (iii)

              	
                bonds
                  for release of attachment, stay of execution or
                  injunction;

              


      

      


      (c) statutory
        liens on property arising in the ordinary course of business which, in the
        aggregate, do not materially impair the use of such property or materially
        detract from the value of such property;

      


      (d) Liens
        existing on the date hereof and described on Exhibit
        “B”,
        attached to the Deed of Trust, and Liens created after the date hereof to
        which
        the Bank has consented in writing; 

      


      (e) Purchase
        money liens on any equipment hereafter acquired provided that the obligation
        secured by such lien does exceed the fair cost of the equipment, the lien
        attaches only to the equipment so acquired, and the debt is permitted by
        Section
        V.4 below; and

      


      (f) Liens
        in
        favor of the Bank.

      


      23. Person.
        Person
        shall mean any individual, joint venture, partnership, firm, corporation,
        limited liability company, trust, unincorporated organization or other
        organization or entity, or a governmental body or any department or agency
        thereof.

      


      24. Premises.
        Premises shall mean all real properties owned or leased by Borrower or on
        which
        any of Borrower’s assets may be located from time to time.

      


      25. Subsidiary.
        Subsidiary shall mean as to any designated corporation, any other corporation
        more than twenty percent (20%) of the shares of voting stock of which is
        owned,
        directly or indirectly, by such designated corporation, and shall include
        subsidiaries of a subsidiary.

      


      
        
          
          

        

        
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      Accounting
        Terms.
        All
        accounting terms not specifically defined or specified herein shall have
        the
        meanings generally attributed to such terms under generally accepted accounting
        principles (“GAAP”), as in effect from time to time, consistently applied, with
        respect to the financial statements referenced in Sections III.11and IV.2
        below.


      


      II.     LOANS.
        Bank
        hereby agrees to make certain loans to Borrower as follows: 

      


      1. Bank
        agrees to make term loans to Borrower in the aggregate outstanding principal
        amount of Eighteen Million Seven Hundred Twenty One Thousand Five Hundred
        Fifty
        and No/100 Dollars ($18,721,550.00). The obligation to repay the term Loans
        is
        evidenced by Note A and Note B, together with any other promissory notes
        heretofore or hereafter executed by Borrower in favor of Bank and any and
        all
        renewals, extensions or rearrangements thereof (being sometimes hereafter
        collectively referred to as the “Term Notes”) having a maturity date, repayment
        terms and interest rate as set forth in each Note. 

      


      2. 
        The Loan
        evidenced by Note C provides for a committed line (the “Line”) in the amount of
        up to Four Million Four Hundred Fifty Eight Thousand Four Hundred Fifty Eight
        and No/100 Dollars ($4,458,458.00) under which Borrower may borrow funds
        pursuant to the Construction Loan Administration Agreement. The Loan is not
        revolving. An amount repaid may not be reborrowed.

      


      III.    REPRESENTATIONS
        AND WARRANTIES.
        Borrower hereby represents and warrants to Bank as follows:

      


      1. Good
        Standing.
        Borrower is a limited liability company, duly organized, validly existing
        and in
        good standing under the laws of Tennessee and has the power and authority
        to own
        its property and to carry on its business in each jurisdiction in which Borrower
        does business.

      


      2. Authority
        and Compliance.
        Borrower has full power and authority to execute and deliver the Loan Documents
        and to incur and perform the obligations provided for therein, all of which
        have
        been duly authorized by all proper and necessary action of the appropriate
        governing body of Borrower. No consent or approval of any public authority
        or
        other third party is required as a condition to the validity of any Loan
        Document, and Borrower is in compliance with all laws and regulatory
        requirements to which it is subject.

      


      3. Foreign
        Qualification.
        The
        Borrower is duly qualified, licensed or domesticated and in good standing
        as a
        foreign limited liability company, duly authorized to do business in all
        jurisdictions in which the character of its properties owned or the nature
        of
        its activities conducted makes such qualification, licensing or domestication
        necessary.

      


      
        
          
          

        

        
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      4. Compliance
        with Articles of Organization, Operating Agreement, and Other Instruments,
        Etc.
        (a) The
        Borrower is not in violation of any term of its Articles of Organization,
        its
        Operating Agreement, and no event, status or condition has occurred or is
        existing which upon notice or lapse of time, or both, would constitute a
        violation thereof; (b) the Borrower is not in violation of any material term
        of
        any mortgage, indenture or agreement relating to outstanding borrowings to
        which
        it is a party, or of any judgment, decree or order to which it is subject,
        or of
        any other instrument, lease, contract or agreement to which it is a party,
        or of
        any statute, or governmental rule or regulation applicable to it, and no
        event,
        status or condition has occurred or is existing which upon the giving of
        notice
        or lapse of time, or both, would constitute a material violation of any such
        term; (c) the execution, delivery and performance of this Agreement and the
        other instruments and agreements provided for by this Agreement to which
        the
        Borrower is, or is to be, a party, and the carrying out of the transactions
        contemplated hereby and thereby have been duly authorized by all requisite
        action on the part of the Borrower and will not result in any violation of
        the
        organizational documents of the Borrower, or any violation of or constitute
        a
        default under any term described in (b) above, or result in the creation
        of any
        mortgage, lien, encumbrance or charge upon any of the properties or assets
        of
        the Borrower pursuant to any term described in (b) above; and (d) there is
        no
        term described in (b) above which materially and adversely affects or in
        the
        future may (so far as the Borrower can now foresee) materially and adversely
        affect the business, prospects, condition, affairs or operations of the Borrower
        or any of its properties or assets.

      


      5. Subsidiaries.
        The
        Borrower has no Subsidiary.

      


      6. Binding
        Agreement.
        This
        Agreement and the other Loan Documents executed by Borrower constitute valid
        and
        legally binding obligations of Borrower, enforceable in accordance with their
        terms.

      


      7. Litigation.
        There
        is no proceeding involving Borrower pending or, to the knowledge of Borrower,
        threatened before any court or governmental authority, agency or arbitration
        authority, except as disclosed to Bank in writing and acknowledged by Bank
        prior
        to the date of this Agreement.

      


      8. No
        Conflicting Agreements.
        There
        is no operating agreement, membership agreement or other document pertaining
        to
        the organization, power or authority of Borrower and no provision of any
        existing agreement, mortgage, indenture or contract binding on Borrower or
        affecting its property, which would conflict with or in any way prevent the
        execution, delivery or carrying out of the terms of this Agreement and the
        other
        Loan Documents.

      


      9. Ownership
        of Assets.
        Borrower has or will acquire (a) good and marketable title to its properties
        and
        assets, and its assets are free and clear of liens except for Permitted Liens,
        (b) good and marketable title to its leasehold estates, and (c) its properties,
        assets and leasehold interests are subject to no covenant, restriction,
        easement, right, lease, or Lien, other than Permitted Liens.

      


      10. Taxes.
        All
        taxes and assessments due and payable by Borrower have been paid or are being
        contested in good faith by appropriate proceedings and the Borrower has filed
        all tax returns which it is required to file.

      


      
        
          
          

        

        
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      11. Financial
        Statements.
        The
        financial statements of Borrower heretofore delivered to Bank have been prepared
        in accordance with GAAP applied on a consistent basis throughout the period
        involved and fairly present Borrower’s financial condition as of the date or
        dates thereof, and there has been no material adverse change in Borrower’s
        financial condition or operations since December 31, 2004. To the best of
        Borrower’s knowledge, all factual information furnished by Borrower to Bank in
        connection with this Agreement and the other Loan Documents is and will be
        accurate and complete on the date as of which such information is delivered
        to
        Bank and is not and will not be incomplete by the omission of any material
        fact
        necessary to make such information not misleading.

      


      12. Environmental
        Laws.
        

      


      i. The
        Borrower has obtained all permits, licenses and other authorizations, if
        any,
        which are required under Environmental Laws for the operation of the Borrower’s
        business and the Borrower is in compliance with all terms and conditions
        of
        required permits, licenses and authorizations, and is also in compliance
        with
        all other limitations, restrictions, conditions, standards, prohibitions,
        requirements, obligations, notifications, schedules and timetables contained
        in
        the Environmental Laws;

      


      ii. The
        Borrower is not aware of and has not received notice of the disposal or release
        or presence of Hazardous Materials (other than in the normal course of business)
        on any of its properties, or of any past, present or future events, conditions,
        circumstances, activities, practices, incidents, actions or plans which may
        interfere with or prevent compliance or continued compliance on the part
        of the
        Borrower with Environmental Laws, or may give rise to any common law or legal
        liability, or otherwise form the basis of any claim, action, demand, suit,
        lien,
        proceeding, hearing, study or investigation, based on or related to the
        manufacture, processing, distribution, use, treatment, storage, disposal,
        transport, or handling, or the emission, discharge, release or threatened
        release into the environment, of any Hazardous Materials;

      


      iii. All
        assets of the Borrower are free from Hazardous Materials except for Hazardous
        Materials used, maintained or handled by the Borrower in the ordinary course
        of
        business and the use and disposal of any and all such Hazardous Materials
        is
        effected by the Borrower in compliance with all applicable Environmental
        Laws;
        and

      


      iv. There
        is
        not pending or threatened against the Borrower or Guarantor and neither the
        Borrower nor Guarantor knows of any facts or circumstances that might give
        rise
        to, any civil, criminal or administrative action, suit, demand, claim, hearing,
        notice or demand letter, notice of violation, environmental lien, investigation,
        or proceeding relating in any way to Environmental Laws.

      


      13. Continuation
        of Representation and Warranties.
        All
        representations and warranties made under this Agreement shall be deemed
        to be
        made at and as of the date hereof and at and as of the date of any future
        advance under any Loan.

      


      
        
          
          

        

        
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      IV.   
AFFIRMATIVE
        COVENANTS.
        Until
        full payment and performance of all obligations of Borrower under the Loan
        Documents, Borrower will, unless Bank consents otherwise in writing (and
        without
        limiting any requirement of any other Loan Document):

      


       
        1. Financial
        Condition.
        Maintain Borrower’s financial condition, determined on a consistent basis
        throughout the period involved except to the extent modified by the following
        definitions. Borrower shall maintain at all times a positive stockholders’
        equity.

      


       
        2. Financial
        Statements and Other Information.
        Maintain a system of accounting satisfactory to Bank and applied on a consistent
        basis throughout the period involved, permit Bank’s officers or authorized
        representatives to visit and inspect Borrower’s books of account and other
        records at such reasonable times and as often as Bank may desire, and pay
        the
        reasonable fees and disbursements of any accountants or other agents of Bank
        selected by Bank for the foregoing purposes. Unless written notice of another
        location is given to Bank, Borrower’s books and records will be located at
        Borrower’s chief executive office set forth above. All financial statements
        called for below shall be prepared in form and content acceptable to Bank
        and,
        in the case of annual statements, prepared in accordance with GAAP and, with
        respect to the Guarantor, audited by independent certified public accountants
        reasonably acceptable to Bank.

      


      In
        addition, Borrower will provide or cause to be provided to Bank the
        following:

      


      i. Copies
        of
        filed federal income tax returns of Borrower for each taxable year, within
        twenty (20) days after filing but in any event not later than one hundred
        twenty
        (120) days after the close of each such taxable year;

      


      ii. Year-end
        financial Statements of Borrower, provided annually within sixty (60) days
        after
        the close of each fiscal year, said statements to include a balance sheet
        and
        profit and loss statement and to be prepared in accordance with
        GAAP;

      


      iii. Financial
        statements (including a balance sheet and profit and loss statement) of Borrower
        for each quarter of each fiscal year of Borrower, within forty-five (45)
        days
        after the close of each such period;

      


      iv. Compliance
        certificate for (and executed by an authorized representative of) Borrower
        concurrently with and dated as of the date of delivery of each of the financial
        statements as required in paragraph iii, above, containing (a) a certification
        that the financial statements of even date are true and correct and that
        the
        Borrower is not in default under the terms of this Agreement, and (b)
        computations and conclusions, in such detail as Bank may request, with respect
        to compliance with this Agreement and the other Loan Documents, including
        computations of all quantitative covenants such as the Fixed Charge Coverage
        Ratio;

      


      v. Audited
        financial statements of Guarantor, for each fiscal year of Guarantor, as
        soon as
        reasonably practicable and in any event within one hundred (100) days after
        the
        close of each fiscal year, including an unqualified opinion from an independent
        auditor;

      


      
        
          
          

        

        
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      vi. Financial
        statements (including a balance sheet and profit and loss statement) of
        Guarantor for each quarter of each fiscal year of Guarantor, within forty-five
        (45) days after the close of each such period;

      


      vii. Compliance
        certificate for (and executed by an authorized representative of) Guarantor
        for
        significant senior lenders concurrently with and dated as of the date of
        delivery of each of the financial statements as required in paragraph vi,
        above,
        containing (a) a certification that the financial statements of even date
        are
        true and correct and that the Guarantor is not in default under the terms
        of any
        agreements with said significant senior lenders, and (b) computations and
        conclusions, in such detail as Bank may request, with respect to compliance
        with
        Guarantor’s agreements with significant senior lenders, including computations
        of all quantitative covenants;

      


      viii. Promptly
        upon the filing of same with the Health Care Financing Administration (“HCFA”)
        and/or any Arizona state survey agency, copies of all reports required to
        be
        submitted to such agencies including without limitation all reports required
        to
        continue participation in the Medicare Program under Title XVIII of the Social
        Security Act; and

      


      ix. Furnish
        to Bank promptly such additional information, reports and statements respecting
        the business operations and financial condition of Borrower and Guarantors,
        respectively, from time to time, as Bank may reasonably request.

      


      All
        financial statements shall be in form and detail satisfactory to Bank and
        shall
        contain or be attached to the signed and dated written certification of the
        reporting party in form specified by Bank to certify that the financial
        statements are furnished to Bank in connection with the extension of credit
        by
        Bank and constitute a true and correct statement of the reporting party’s
        financial position. All certifications and signatures on behalf of companies,
        partnerships or other entities shall be by a representative of the entity
        satisfactory to Bank. All fiscal year-end financial statements of Guarantor
        shall be audited and certified, without any qualification or exception not
        acceptable to Bank, by independent certified public accountants acceptable
        to
        Bank, and shall contain all reports and disclosures required by generally
        accepted accounting principles for a fair presentation.

      


      3. Insurance.
        Maintain insurance with responsible insurance companies on such of its
        properties, in such amounts and against such risks as is customarily maintained
        by similar businesses operating in the same vicinity, specifically to include
        fire and extended coverage insurance covering all assets, business interruption
        insurance, workers compensation insurance and liability insurance, all to
        be
        with such companies and in such amounts as are satisfactory to Bank and with
        respect to insurance on the Collateral, to contain a mortgagee clause naming
        Bank as a loss payee or an additional insured (as applicable) as its interest
        may appear and providing for at least 30 days prior notice to Bank of any
        cancellation thereof. Satisfactory evidence of such insurance will be supplied
        to Bank prior to funding under the Loan(s) and 30 days prior to each policy
        renewal.

      


      4. Existence
        and Compliance.
        Maintain its existence, good standing and qualification to do business, where
        required and comply with all laws, regulations and governmental requirements
        including, without limitation, healthcare laws (including without limitation
        applicable Medicare and Medicaid laws and regulations) and environmental
        laws
        applicable to it or to any of its property, business operations and
        transactions.

      


      
        
          
          

        

        
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      5. Adverse
        Conditions or Events.
        Promptly advise Bank in writing of (i) any condition, event or act
        which
        comes to its attention that would or might materially adversely affect
        Borrower’s financial condition or operations, the Collateral, or Bank’s rights
        under the Loan Documents, (ii) any litigation filed by or against Borrower
        seeking in excess of $100,000 in damages if not otherwise covered by insurance;
        (iii) any event that has occurred that would constitute an event of default
        under any Loan Documents and (iv) any uninsured or partially uninsured loss
        through fire, theft, liability or property damage in excess of an aggregate
        of
        $100,000.00.

      


      6. Taxes
        and Other Obligations.
        Pay all
        of its taxes, assessments and other obligations, including, but not limited
        to
        taxes, costs or other expenses arising out of this transaction, as the same
        become due and payable (or in any event prior to delinquency), except to
        the
        extent the same are being contested in good faith by appropriate proceedings
        in
        a diligent manner.

      


      7. Fixed
        Charge Coverage Ratio.
        Borrower shall maintain as of the end of each fiscal quarter commencing with
        the
        fiscal quarter ending September 30, 2005, a Fixed Charge Coverage Ratio computed
        for the four (4) fiscal quarters just ended of not less than 1.50 to
        1.00.

      


      8. Maintenance
        and Licenses.
        Maintain, in good repair, working order and condition all properties and
        repair
        and make all necessary replacements thereof, and preserve and maintain all
        licenses, trademarks, privileges, permits, franchises, certificates and the
        like
        used or useful in its business including permission to participate as a skilled
        nursing home in the Medicare Program under Title XVIII of the Social Security
        Act as evidenced by that letter dated April, 2003 from The Arizona Department
        of
        Health Services addressed to the “Freedom Plaza Care Center”, a copy of which
        has been provided to Bank.

      


      9. Environmental
        Laws.
        (a) The
        Borrower shall comply with all Environmental Laws now or hereafter in effect
        and
        maintain all required federal, state and local permits, licenses, certification
        and approvals and other authorizations, if any, which are required in connection
        with its ownership or use of the Premises and file, when due, all notifications
        relating to air emissions, effluent discharges and the generation, storage,
        treatment or disposal of any Hazardous Materials.

      


      (b) In
        the
        event that the Borrower receives notice or otherwise discovers that it is
        not in
        compliance with any Environmental Law or that there has been a spill, release
        or
        threatened release of any Hazardous Material onto, from, at or under the
        Premises of the Borrower which spill, release or threatened release requires
        or
        may require notification, response, assessment, investigation or remedial
        action
        pursuant to any Environmental Law, the Borrower shall immediately notify
        the
        Bank and all appropriate governmental agencies thereof and proceed with due
        diligence and at the Borrower’s cost and expense to respond appropriately, in
        accordance with all requirements of the Environmental Laws, provided that
        nothing contained in this Section shall be deemed to authorize the Bank to
        exercise dominion or control over the Borrower’s operation of the facility or
        the Premises or the Borrower’s handling of Hazardous Materials.

      


      
        
          
          

        

        
          -10-

          
            

          

        

        
          
          

        

      

      V.    NEGATIVE
        COVENANTS.
        Until
        full payment and performance of all obligations of Borrower under the Loan
        Documents, Borrower will not, without the prior written consent of Bank (and
        without limiting any requirement of any other Loan Documents):

      


      1. Transfer
        of Assets or Control.
        Sell,
        lease, assign or otherwise dispose of or transfer any assets, except inventory
        and used equipment in the normal course of its business, or enter into any
        merger or consolidation, or transfer control or ownership of the Borrower
        or
        from or acquire any Subsidiary.

      


      2. Liens.
        Grant,
        suffer or permit any contractual or noncontractual lien on or security interest
        in its assets, or fail to promptly pay when due all lawful claims, whether
        for
        labor, materials or otherwise, except Permitted Liens.

      


      3. Extensions
        of Credit.
        Make
        any loan or advance to any individual, partnership, corporation or other
        entity.

      


      4. Borrowings.
        Create,
        incur, assume or become liable in any manner for any indebtedness (for borrowed
        money, deferred payment for the purchase of assets, lease payments, as surety
        or
        guarantor for the debt for another, or otherwise) other than to Bank, except
        for
        normal trade debts incurred in the ordinary course of Borrower’s business,
        existing indebtedness disclosed to Bank in writing and acknowledged by Bank
        prior to the date of this Agreement, and purchase money indebtedness used
        to
        finance equipment purchases not to exceed, in the aggregate at any one time
        outstanding, a total of $250,000.00.

      


      5. Character
        of Business.
        Change
        the general character of Borrower’s business as conducted at the date hereof, or
        engage in any type of business not reasonably related to its business as
        presently conducted.

      


      6. Single
        Purpose Entity.
        Borrower covenants, represents, warrants and agrees that it:

      


      (a) will
        not
        amend, modify or otherwise change its Articles of Organization or operating
        agreement in any material term or manner, or in a manner which adversely
        affects
        Borrower’s existence as a single purpose entity without the prior written
        consent of Bank;

      


      (b) will
        not
        permit any member of Borrower to amend, modify or otherwise change Borrower’s
        Articles of Organization or operating agreement in any material term or manner,
        or in a manner which adversely affects Borrower’s existence as a single purpose
        entity without the prior written consent of Bank;

      


      
        
          
          

        

        
          -11-

          
            

          

        

        
          
          

        

      

      (c) to
        the
        full extent permitted by law, will not liquidate or dissolve (or suffer any
        liquidation or dissolution), or enter into any transaction of merger or
        consolidation, or acquire by purchase or otherwise all or substantially all
        the
        business or assets of, or any stock or other beneficial ownership of, any
        entity
        without the prior written consent of Bank;

      


      (d) except
        for Permitted Liens, will not guarantee, pledge its assets for the benefit
        of,
        hold its credit as being available to satisfy, or otherwise become liable,
        on or
        in connection with, any obligation of any other person without the prior
        written
        consent of Bank;

      


      (e) will
        not
        own any asset other than the Premises and incidental personal property necessary
        for the operation of the Premises;

      


      (f) will
        not
        engage, either directly or indirectly, in any business other than the
        acquisition, development, ownership, operation, leasing and managing and
        maintenance of the Premises, and entering into and/or assuming the Loan and
        activities incidental thereto, without the prior written consent of
        Bank;

      


      (g) will
        maintain an arm’s length relationship with its affiliates and its members and
        any other parties furnishing services to it;

      


      (h) will
        not
        incur any debt, secured or unsecured, direct or contingent (including
        guaranteeing any obligation) without the prior written consent of Bank (other
        than accounts payable incurred in the ordinary course of business and debt
        secured by Permitted Liens);

      


      (i) will
        not
        make any loans or advances to any other person or entity, including, but
        not
        limited to, the affiliates of Borrower;

      


      (j) will
        be
        solvent and pay its own liabilities, indebtedness and obligations of any
        kind,
        including administrative expenses, from its own assets as the same shall
        become
        due;

      


      (k) will
        do
        all things necessary to preserve its existence, and will observe all formalities
        applicable to it, and will do all things necessary to maintain its identity
        as
        an entity separate and distinct from any affiliates of Borrower;

      


      (l) will
        conduct and operate its business in its own name and as presently conducted
        and
        operated;

      


      (m) will
        maintain financial statements, books and records and bank accounts separate
        from
        those of its affiliates, including, without limitation, its members; provided,
        however, that Borrower may be included in consolidated financial statements
        of
        another person, provided that such consolidated financial statements contain
        a
        note indicating that Borrower is a separate legal entity and Borrower’s assets
        and liabilities are neither available to pay the debts of the consolidated
        entity nor constitute obligations of the consolidated entity and that the
        consolidated entity is not liable for any of the liabilities of
        Borrower;

      


      
        
          
          

        

        
          -12-

          
            

          

        

        
          
          

        

      

      (n) will
        be,
        and at all times will hold itself out to the public as, a legal entity separate
        and distinct from any other entity (including, without limitation, any affiliate
        or member of Borrower, or any affiliate of any member of Borrower);

      


      (o) will
        file
        its own tax returns and pay any taxes so required to be paid under applicable
        law; provided, however, that so long as Borrower’s separate tax liability and
        its income and expenses are readily determinable based on a review of Borrower’s
        books and records, it may file consolidated tax returns;

      


      (p) will
        maintain adequate capital for the normal obligations reasonably foreseeable
        in a
        business of its size and character and in light of its contemplated business
        operations;

      


      (q) will
        not
        commingle the funds and other assets of Borrower with those of any member,
        affiliate or any other person;

      


      (r) will
        maintain its assets in such a manner that it is not costly or difficult to
        segregate, ascertain or identify its individual assets from those of any
        affiliate or any other person;

      


      (s) will
        not
        hold itself out to be responsible for the debts or obligations of any other
        person;

      


      (t) will
        pay
        any liabilities out of its own funds, including salaries of its employees,
        not
        out of the funds of any affiliate and will not permit any affiliate to guarantee
        its debt or obligations (except as may be expressly provided for in this
        Agreement);

      


      (u) will
        use
        stationery, invoices, and checks separate from its affiliates;

      


      (v) will
        not
        do any act which would make it impossible to carry on the ordinary business
        of
        Borrower

      


      (w) will
        not
        hold title to Borrower’s assets other than in Borrower’s name;

      


      (x) will
        participate in the fair and reasonable allocation of any and all overhead
        expenses and other common expenses for facilities, goods or services provided
        to
        multiple entities;

      


      (y) will
        deposit all of its funds in checking accounts, savings accounts, time deposits
        or certificates of deposit in its own name or invest such funds in its own
        name;

      


      (z) will
        correct any known misunderstanding regarding its separate identity;

      


      
        
          
          

        

        
          -13-

          
            

          

        

        
          
          

        

      

      (aa) will
        establish and maintain an office through which its business is conducted
        separate and apart from that of any other affiliate; provided, however, that
        nothing herein shall be construed so as to prevent Borrower from having office
        space at the same address as any other affiliate, so long as the costs and
        expenses associated with such office space are allocated as set forth in
        paragraph (x) above; and

      


      (bb) will
        maintain a separate telephone number from that of any other
        affiliate.

      


      
        Notwithstanding
          anything herein to the contrary, Borrower may, from time to time, (i) make
          lawful distributions in accordance with this Agreement and applicable law,
          or
          (ii) obtain lawful capital contributions in accordance with applicable
          law from
          its affiliates to the extent necessary to satisfy its obligations as they
          become
          due; provided, however, that all such transactions are accurately reflected
          in
          the books and records of Borrower and each of its applicable
          affiliates.

      

      


      VI.  
         DEFAULT.
        The
        occurrence of any one of the following shall be a default under this Agreement
        (“Default”):

      


       1. nonpayment
        within three (3) days of the date when due of any amount payable on any of
        the
        Obligations, whether the due date is the scheduled due date or arises by
        acceleration or otherwise;

      


       2. any
        covenant, agreement or condition in any Loan Document is not fully and timely
        performed, observed or kept;

      


       3. any
        statement, representation or warranty of the Borrower made in writing herein
        or
        in any other writing or statement at any time furnished or made by the Borrower
        to the Bank is untrue in any material respect as of the date furnished or
        made;

      


       4. a
        default
        under any promissory note, loan agreement, security deed or other agreement,
        document or instrument executed by the Borrower;

      


       5. suspension
        of the operation of the Borrower’s present business;

      


       6. any
        Obligor becomes insolvent or unable to pay its debts as they mature, or admits
        in writing that it is so, makes a conveyance fraudulent as to creditors under
        any state or federal law, or makes an assignment for the benefit of
        creditors;

      


       7. a
        proceeding is instituted by or against any Obligor alleging that such Obligor
        is
        insolvent or unable to pay its debts as they mature, or a petition under
        any
        provision of Title 11 of the United States Code (entitled “Bankruptcy”), as
        amended, is brought by or against any Obligor;

      


       8. entry
        of
        any uninsured judgment against Borrower in excess of $100,000;

      


       9. Dissolution,
        merger, or consolidation of Borrower;

      


       10. termination
        or withdrawal of any guaranty for any of the Obligations;

      


      
        
          
          

        

        
          -14-

          
            

          

        

        
          
          

        

      

       11. a
        proceeding is instituted seeking the appointment of a receiver, liquidator,
        custodian, trustee, or other similar official for the Collateral or for any
        property in which the Borrower has an interest;

      


       12. seizure
        of the Collateral by any third party;

      


       13. the
        validity or enforceability of this Agreement, any Note or any of the other
        Loan
        Documents shall be contested by the Borrower or the Guarantor;

      


       14. the
        failure of the Bank to have a first priority perfected security interest
        in any
        Collateral;

      


       15. the
        breach by Guarantor of any condition or covenant contained in any Loan
        Document;

      


       16. Guarantor
        defaults under any existing or future loan and/or credit agreements in excess
        of
        Five Million and No/100 Dollars ($5,000,000.00), subject to all applicable
        grace
        periods therein; however, any periods of forbearance with respect to such
        credit
        agreements, which arise and continue for more than forty-five (45) consecutive
        days, will be deemed as a default hereunder.

      


      VII.    REMEDIES
        UPON DEFAULT.
        Upon a
        Default, subject to the terms and conditions of the Deed of Trust, Bank may,
        at
        its election, but without any obligation to do so, without notice except
        to the
        extent provided in the Deed of Trust, do any one or more of the
        following:

      


      1. Acceleration
        of Obligations.
        In the
        event of the occurrence of (a) a Default set forth in Sections VI.1 or VI.2,
        above, the Obligations shall automatically and immediately become due and
        payable; and (b) any other Default, the Bank, at its option, may declare
        all of
        the Obligations to be immediately due and payable, whereupon all of the
        Obligations shall become immediately due and payable, in either case without
        presentment, demand, protest, notice of non-payment or any other notice required
        by law relative thereto, all of which are hereby expressly waived by the
        Borrower, anything contained herein to the contrary
        notwithstanding.

      


      2. Default
        Rate.
        The
        outstanding principal balance of the Loans shall bear interest at the Default
        Rate until paid in full.

      


      3. Take
        Possession of Collateral.
        The
        Borrower agrees, upon the occurrence of a Default, to assemble at the Borrower’s
        expense all Equipment, including returned, reclaimed and repossessed goods
        and
        all books and records relating to the Collateral at a convenient place
        acceptable to the Bank, and to surrender such property to the Bank.

      


      4. Sale
        of Collateral.
        The
        Bank shall have the right to sell or to otherwise dispose of all or any of
        the
        Collateral, at public or private sale or sales, with such notice as may be
        required by law, in lots or in bulk, for cash or on credit, all as Bank,
        in its
        sole discretion, may deem advisable. Such sales may be adjourned from time
        to
        time with or without notice. Bank shall have the right to conduct such sales
        on
        the premises of Borrower or elsewhere and shall have the right to use the
        premises of Borrower, without charge for such sales for such time or times
        as
        the Bank may see fit. The Bank is hereby granted a license or other right
        to
        use, without charge, the labels, patents, copyrights, rights of use of any
        name,
        trade secrets, trade names, trademarks, service marks and advertising matter,
        or
        any property of a similar nature, whether owned by Borrower or with respect
        to
        which Borrower has rights under license, sublicense or other agreements,
        as it
        pertains to the Collateral, in preparing for sale, advertising for sale and
        selling any Collateral and the rights of Borrower under all licenses and
        all
        franchise agreements shall inure to the benefit of the Bank. The Bank shall
        have
        the right to sell, lease or otherwise dispose of the Collateral, or any part
        thereof; for cash, credit or any combination thereof; and the Bank may purchase
        all or any part of the Collateral at public or, if permitted by law, private
        sale and, in lieu of actual payment of such purchase price, may set off the
        amount of such price against the Obligations. The proceeds realized from
        the
        sale of any Collateral shall be applied first to the costs, expenses and
        attorneys’ fees and expenses incurred by Bank for collection and for
        acquisition, completion, protection, removal, storage, sale and delivery
        of the
        Collateral; second to interest due upon any of the Obligations; and third
        to the
        principal of the Obligations. The Borrower agrees that the Bank may apply
        any
        proceeds from the sale of the Collateral to satisfy liens, security interests
        or
        encumbrances prior to the security interest of the Bank. Any remaining proceeds
        shall be remitted to Borrower or other Person legally entitled thereto. If
        any
        deficiency shall arise, Borrower shall remain liable to the Bank
        therefore.

      


      
        
          
          

        

        
          -15-

          
            

          

        

        
          
          

        

      

      5. Judicial
        Proceedings.
        The
        Bank shall have the right to proceed by an action or actions at law or in
        equity
        to obtain possession of the Collateral, to recover the Obligations and amounts
        secured hereunder or to foreclose under this Agreement and sell the Collateral
        or any portion thereof; pursuant to a judgment or decree of a court or courts
        of
        competent jurisdiction, all without the necessity of posting any
        bond.

      


      6. Notice.
        Any
        notice required to be given by Bank of a sale, lease, or other disposition
        of
        the Collateral or any other intended action by Bank, given to Borrower in
        the
        manner set forth in Section VIII below, at least ten (10) days prior to such
        proposed action, shall constitute commercially reasonable and fair notice
        thereof to Borrower.

      


      7. Appointment
        of Bank as Borrower’s Lawful Attorney.
        Borrower irrevocably designates, makes, constitutes and appoints the Bank
        (and
        all persons designated by the Bank) as the true and lawful attorney of Borrower
        and the Bank or the Bank’s agent, may, without notice to Borrower and at such
        time or times during the continuance of a Default as the Bank or said agent,
        in
        its sole discretion, may determine, in the name of Borrower or in the Bank’s
        name: (a) do all acts and things necessary, in the Bank’s sole discretion,
        to fulfill the obligations of Borrower under this Agreement; (b) endorse
        the name of Borrower upon any chattel paper, document, instrument, invoice,
        freight bill, bill of lading or similar document or agreement; and (c) use
        the
        information recorded on or contained in any data processing equipment and
        computer hardware and software relating to the Borrower’s business to which
        Borrower has access.

      


      
        
          
          

        

        
          -16-

          
            

          

        

        
          
          

        

      

      8. Setoff.
        The
        Bank shall be entitled to hold or set off any monies and all other property
        of
        the Borrower, at any time to the credit of the Borrower or in the possession
        of
        the Bank, whether by pledge or otherwise, or upon or in which the Bank may
        have
        a lien or security interest.

      


      VIII. NOTICES.
        All
        notices, requests or demands which any party is required or may desire to
        give
        to any other party under any provision of this Agreement must be in writing
        delivered to the other party at the following address:

      


      Borrower:

      ARC
        HDV,
        LLC

      111
        Westwood Place, Suite 200

      Brentwood,
        Tennessee 37027

      Fax.
        No.:
        615-221-2269

      


      With
        a
        copy to:

      T.
        Andrew
        Smith, Esq.

      Bass,
        Berry & Sims PLC

      2700
        AmSouth Center

      315
        Deaderick Street

      Nashville,
        Tennessee 37238-2700

      Fax.
        No.:
        (615) 742-2766

      


      Bank:

      Bank
        of
        America, N.A.

      414
        Union
        Street

      Healthcare
        Lending

      Nashville,
        Tennessee 37219

      Fax.
        No.:
        (615) 749-4951

      


      With
        a
        copy to:

      Boult,
        Cummings, Conners & Berry, PLC

      1600
        Division Street, Suite 700

      Nashville,
        Tennessee 37203

      Attn:
        William W. Earthman

      Fax.
        No.
        (615) 252-6304

      


      or
        to
        such other address as any party may designate by written notice to the other
        party. Each such notice, request and demand shall be deemed given or made
        as
        follows:

      


      1. If
        sent
        by hand delivery, upon delivery;

      


      2. If
        sent
        by mail, upon the earlier of the date of receipt or five (5) days after deposit
        in the U.S. Mail, first class postage prepaid.

      


      
        
          
          

        

        
          -17-

          
            

          

        

        
          
          

        

      

      IX. COSTS,
        EXPENSES AND ATTORNEY’S FEES.
        Borrower shall pay to Bank immediately upon demand the full amount of all
        costs
        and expenses, including reasonable attorneys’ fees (to include outside counsel
        fees and all allocated costs of Bank’s in-house counsel), incurred by Bank in
        connection with (a) negotiation and preparation of this Agreement and each
        of
        the Loan Documents, and (b) Bank’s continued administration and/or amendment
        thereof.

      


      X. MISCELLANEOUS.
        Borrower and Bank further covenant and agree as follows, without limiting
        any
        requirement of any other Loan Document:

      


      1. Cumulative
        Rights and No Waiver.
        Each
        and every right granted to Bank under any Loan Document, or allowed it by
        law or
        equity shall be cumulative of each other and may be exercised in addition
        to any
        and all other rights of Bank, and no delay in exercising any right shall
        operate
        as a waiver thereof, nor shall any single or partial exercise by Bank of
        any
        right preclude any other or future exercise thereof or the exercise of any
        other
        right. Borrower expressly waives any presentment, demand, protest or other
        notice of any kind, including but not limited to notice of intent to accelerate
        and notice of acceleration. No notice to or demand on Borrower in any case
        shall, of itself, entitle Borrower to any other or future notice or demand
        in
        similar or other circumstances.

      


      2. Applicable
        Law.
        This
        Loan Agreement and the rights and obligations of the parties hereunder shall
        be
        governed by and interpreted in accordance with the laws of Tennessee and
        applicable United States federal law.

      


      3. Amendment.
        No
        modification, consent, amendment or waiver of any provision of this Agreement,
        nor consent to any departure by Borrower therefrom, shall be effective unless
        the same shall be in writing and signed by an officer of Bank, and then shall
        be
        effective only in the specified instance and for the purpose for which given.
        This Agreement is binding upon Borrower, its successors and assigns, and
        inures
        to the benefit of Bank, its successors and assigns; however, no assignment
        or
        other transfer of Borrower’s rights or obligations hereunder shall be made or be
        effective without Bank’s prior written consent, nor shall it relieve Borrower of
        any obligations hereunder. There is no third party beneficiary of this Loan
        Agreement.

      


      4. Documents.
        All
        documents, certificates and other items required under this Agreement to
        be
        executed and/or delivered to Bank shall be in form and content satisfactory
        to
        Bank and its counsel.

      


      5. Partial
        Invalidity.
        The
        unenforceability or invalidity of any provision of this Agreement shall not
        affect the enforceability or validity of any other provision herein and the
        invalidity or unenforceability of any provision of any Loan Document to any
        person or circumstance shall not affect the enforceability or validity of
        such
        provision as it may apply to other persons or circumstances.

      


      
        
          
          

        

        
          -18-

          
            

          

        

        
          
          

        

      

      6. Indemnification.
        Borrower shall indemnify, defend and hold Bank and its successors and assigns
        harmless from and against any and all claims, demands, suits, losses, damages,
        assessments, fines, penalties, costs or other expenses (including reasonable
        attorneys’ fees and court costs) arising from or in any way related to any of
        the transactions contemplated hereby, including but not limited to actual
        or
        threatened damage to the environment, agency costs of investigation, personal
        injury or death, or property damage, due to a release or alleged release
        of
        Hazardous Materials, arising from Borrower’s business operations, any other
        property owned by Borrower or in the surface or ground water arising from
        Borrower’s business operations, or gaseous emissions arising from Borrower’s
        business operations or any other condition existing or arising from Borrower’s
        business operations resulting from the use or existence of Hazardous Materials,
        whether such claim proves to be true or false. Borrower further agrees that
        its
        indemnity obligations shall include, but are not limited to, liability for
        damages resulting from the personal injury or death of an employee of the
        Borrower, regardless of whether the Borrower has paid the employee under
        the
        workmen’ s compensation laws of any state or other similar federal or state
        legislation for the protection of employees. The term “property damage” as used
        in this paragraph includes, but is not limited to, damage to any real or
        personal property of the Borrower, the Bank, and of any third parties. The
        Borrower’s obligations under this paragraph shall survive the repayment of the
        Loan and any deed in lieu of foreclosure or foreclosure of any Deed to Secure
        Debt, Deed of Trust, Security Agreement or Mortgage securing the
        Loan.

      


      7. Survivability.
        All
        covenants, agreements, representations and warranties made herein or in the
        other Loan Documents shall survive the making of the Loan and shall continue
        in
        full force and effect so long as the Loan is outstanding or the obligation
        of
        the Bank to make any advances under the Line shall not have
        expired.

      


      8. Appraisal
        and Maintenance of Collateral Value.
        Bank
        may obtain, at Borrower’s expense, but not more often than once annually, an
        appraisal of any real property securing payment of the Loan (the “Real
        Property”) prepared in accordance with applicable bank regulatory agency
        regulations and the written instructions from Bank by a third party appraiser
        engaged directly by Bank. The costs of such appraisal shall be payable by
        Borrower to Bank on demand. If such appraisal shows that the principal amount
        outstanding under the Loan exceeds 80% of the market value of the Real Property
        as so appraised, Borrower shall promptly on demand make such payments as
        shall
        be necessary to reduce the aggregate principal balance of the Loan to an
        amount
        that is equal to or less than 80% of said appraised value of the Real
        Property.

      


      9. Successors
        and Assigns.
        All of
        the terms of this Agreement, and each of the documents and agreements executed
        and delivered pursuant hereto and in accordance herewith, shall be binding
        upon
        and inure to the benefit of and be enforceable by the respective heirs,
        representatives, transferees, successors and assignees of the parties hereto,
        whether so expressed or not. The Borrower shall not assign or transfer this
        Agreement, or any of its rights hereunder, without the prior written consent
        of
        the Bank.

      


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

      


      
        
          
          

        

        
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      11. Headings.
        The
        headings in this Agreement are intended to be for convenience of reference
        only,
        and shall not define or limit the scope, extent or intent or otherwise affect
        the meaning of any portion hereof.

      


      12. Entire
        Agreement.
        Except
        as otherwise expressly provided in this Agreement, this Agreement and the
        other
        Loan Documents embody the entire agreement and understanding between the
        parties
        hereto and thereto and supersede all prior agreements and understandings
        relating to the subject matter hereof.

      


      XI.   
 USURY
        LAWS.
        Borrower, Bank and all other parties to the Loan Documents intend to conform
        to
        and contract in strict compliance with applicable usury law from time to
        time in
        effect. All agreements between Borrower and Bank (or any other party liable
        with
        respect to any Indebtedness under the Loan Documents) are hereby limited
        by the
        provisions of this Section which shall override and control all such agreements,
        whether now existing or hereafter arising. In no way, nor in any event or
        contingency (including but not limited to prepayment, default, demand for
        payment, or acceleration of the maturity of any obligation), shall the interest
        taken, reserved, contracted for, charged, chargeable, or received under this
        Agreement, the Note, any of the other Loan Documents, or otherwise, exceed
        the
        maximum amount permitted under applicable law (“Maximum Amount”). If, from any
        possible construction of any document, interest would otherwise be payable
        in
        excess of the Maximum Amount, any such construction shall be subject to the
        provisions of this Section and such document shall ipso facto be automatically
        reformed and the interest payable shall be automatically reduced to the Maximum
        Amount, without the necessity of execution of any amendment or new document.
        If
        Bank shall ever receive anything of value which is characterized as interest
        under applicable law and which would apart from this provision be in excess
        of
        the Maximum Amount, an amount equal to the amount which would have been
        excessive interest shall, without penalty, be applied to the reduction of
        the
        principal amount owing on the Indebtedness in the inverse order of its maturity
        and not to the payment of interest, or be refunded to Borrower or the other
        payor thereof, at the election of Bank in its sole discretion or as required
        by
        applicable law. The right to accelerate maturity of the Note or any other
        Indebtedness does not include the right to accelerate any interest which
        has not
        otherwise accrued on the date of such acceleration, and does not intend to
        charge or receive any unearned interest in the event of acceleration. All
        interest paid or agreed to be paid to Bank shall, to the extent permitted
        by
        applicable law, be amortized, prorated, allocated and spread throughout the
        full
        stated term (including any renewal or extension) of such Indebtedness so
        that
        the amount of interest on account of such Indebtedness does not exceed the
        Maximum Amount. As used in this Section, the term “applicable law” shall mean
        the laws of the State of Arizona or the federal laws of the United States
        applicable to this transaction, whichever laws allow the greater interest,
        as
        such laws now exist or may be changed or amended or come into effect in the
        future.

      


      XII.     ARBITRATION.
        ANY
        CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES HERETO INCLUDING BUT NOT
        LIMITED TO THOSE ARISING OUT OF OR RELATING TO THIS INSTRUMENT, AGREEMENT
        OR
        DOCUMENT OR ANY RELATED INSTRUMENTS, AGREEMENTS OR DOCUMENTS, INCLUDING ANY
        CLAIM BASED ON OR ARISING FROM AN ALLEGED TORT, SHALL BE DETERMINED BY BINDING
        ARBITRATION IN ACCORDANCE WITH THE FEDERAL ARBITRATION ACT (OR IF NOT
        APPLICABLE, THE APPLICABLE STATE LAW), THE RULES OF PRACTICE AND PROCEDURE
        FOR
        THE ARBITRATION OF COMMERCIAL DISPUTES OF J.A.M.S./ENDISPUTE OR ANY SUCCESSOR
        THEREOF (“J.A.M.S.”), AND THE “SPECIAL RULES” SET FORTH BELOW. IN THE EVENT OF
        ANY INCONSISTENCY, THE SPECIAL RULES SHALL CONTROL. JUDGMENT UPON ANY
        ARBITRATION AWARD MAY BE ENTERED IN ANY COURT HAVING JURISDICTION. ANY PARTY
        TO
        THIS INSTRUMENT, AGREEMENT OR DOCUMENT MAY BRING AN ACTION, INCLUDING A SUMMARY
        OR EXPEDITED PROCEEDING, TO COMPEL ARBITRATION OF ANY CONTROVERSY OR CLAIM
        TO
        WHICH THIS AGREEMENT APPLIES IN ANY COURT HAVING JURISDICTION OVER SUCH
        ACTION.

      


      
        
          
          

        

        
          -20-

          
            

          

        

        
          
          

        

      

       1. SPECIAL
        RULES.
        THE
        ARBITRATION SHALL BE CONDUCTED IN THE COUNTY OF ANY BORROWER’S DOMICILE AT THE
        TIME OF THE EXECUTION OF THIS INSTRUMENT, AGREEMENT OR DOCUMENT AND ADMINISTERED
        BY J.A.M.S. WHO WILL APPOINT AN ARBITRATOR; IF J.A.M.S. IS UNABLE OR LEGALLY
        PRECLUDED FROM ADMINISTERING THE ARBITRATION, THEN THE AMERICAN ARBITRATION
        ASSOCIATION WILL SERVE. ALL ARBITRATION HEARINGS WILL BE COMMENCED WITHIN
        90
        DAYS OF THE DEMAND FOR ARBITRATION; FURTHER, THE ARBITRATOR SHALL ONLY, UPON
        A
        SHOWING OF CAUSE, BE PERMITTED TO EXTEND THE COMMENCEMENT OF SUCH HEARING
        FOR UP
        TO AN ADDITIONAL 60 DAYS.

      


       2. RESERVATION
        OF RIGHTS.
        NOTHING
        IN THIS ARBITRATION PROVISION SHALL BE DEEMED TO (I) LIMIT THE APPLICABILITY
        OF
        ANY OTHERWISE APPLICABLE STATUTES OF LIMITATION OR REPOSE AND ANY WAIVERS
        CONTAINED IN THIS INSTRUMENT, AGREEMENT OR DOCUMENT; OR (II) BE A WAIVER
        BY BANK
        OF THE PROTECTION AFFORDED TO IT BY 12 U.S.C. SEC. 91 OR ANY SUBSTANTIALLY
        EQUIVALENT STATE LAW; OR (III) LIMIT THE RIGHT OF BANK HERETO (A) TO EXERCISE
        SELF HELP REMEDIES SUCH AS (BUT NOT LIMITED TO) SETOFF, OR (B) TO FORECLOSE
        AGAINST ANY REAL OR PERSONAL PROPERTY COLLATERAL, OR (C) TO OBTAIN FROM A
        COURT
        PROVISIONAL OR ANCILLARY REMEDIES SUCH AS (BUT NOT LIMITED TO) INJUNCTIVE
        RELIEF, WRIT OF POSSESSION OR THE APPOINTMENT OF A RECEIVER. BANK MAY EXERCISE
        SUCH SELF HELP RIGHTS, FORECLOSE UPON SUCH PROPERTY, OR OBTAIN SUCH PROVISIONAL
        OR ANCILLARY REMEDIES BEFORE, DURING OR AFTER THE PENDENCY OF ANY ARBITRATION
        PROCEEDING BROUGHT PURSUANT TO THIS INSTRUMENT, AGREEMENT OR DOCUMENT. NEITHER
        THIS EXERCISE OF SELF HELP REMEDIES NOR THE INSTITUTION OR MAINTENANCE OF
        AN
        ACTION FOR FORECLOSURE OR PROVISIONAL OR ANCILLARY REMEDIES SHALL CONSTITUTE
        A
        WAIVER OF THE RIGHT OF ANY PARTY, INCLUDING THE CLAIMANT IN ANY SUCH ACTION,
        TO
        ARBITRATE THE MERITS OF THE CONTROVERSY OR CLAIM OCCASIONING RESORT TO SUCH
        REMEDIES.

      


      XIII. NO
        ORAL AGREEMENT.
        THIS
        WRITTEN LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL
        AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
        PRIOR,
        CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
        UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. 

      


      
        
          
          

        

        
          -21-

          
            

          

        

        
          
          

        

      

      IN
        WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
        executed by their duly authorized representatives as of the date first above
        written.

      
        	
                 

                BANK:

              
	 
	
                Bank
                  of America, N.A.

              
	 
	
                By:

              	 
	
                Name:

              	 
	
                Title:

              	 
	 
	 
	 
	
                BORROWER:

              
	 
	
                ARC
                  HDV, LLC

              
	 
	
                By:

              	 
	
                Name:

              	 
	
                Title:

              	 


      

      


      
        
          
          

        

        
          -22-