Document:

Unassociated Document

    
      
        

          Exhibit
            10.89

          PROMISSORY
            NOTE

          (AL
            Expansion)

           

          
            	
                    $11,424,000.00

                  	
                    Dallas,
                      Texas

                  	
                    December
                      ____, 2005

                  

          

           

          FOR
            VALUE
            RECEIVED, the undersigned, ARC BRANDYWINE, L.P., a Delaware limited partnership
            (“Borrower”),
            hereby
            promises to pay to the order of GUARANTY BANK, a federal savings bank
            (“Lender”
which
            shall also include each successor or assign who becomes the holder of
            this
            Note), the principal sum of Eleven Million Four Hundred Twenty Four Thousand
            and
            No/100 Dollars ($11,424,000.00), with interest on the unpaid balance
            thereof
            from date of advancement until maturity at the rate or rates hereinafter
            provided, both principal and interest payable as hereinafter provided
            in lawful
            money of the United States of America at the offices of Guaranty Bank,
            8333
            Douglas Avenue, Dallas, Texas 75225, or at such other place within Dallas
            County, Texas as from time to time may be designated by Lender.

           

          1.  Defined
            Terms

           

          :
            As used
            in this Note, the following terms shall have the meanings indicated opposite
            them:

           

          “Additional
            Costs”
-
            Any
            costs, losses or expenses incurred by Lender which it determines are
            attributable to its making or maintaining the Loan, or its obligation
            to make
            any Loan advances, or any reduction in any amount receivable by Lender
            under the
            Loan or this Note.

           

          “Applicable
            Rate”
-
            The
            Fixed Rate or the Commercial Based Rate, as the case may be.

           

          “Bloomberg”
-
            The
            Bloomberg Professional Service (a date service), or if such service is
            not
            available, such other comparable publicly available service as may be
            selected
            from time to time by Lender and determined to be comparable to the
            Bloomberg.

           

          “Business
            Day”
-
            A day,
            other than a Saturday or Sunday, on which commercial banks are open for
            business
            with the public in Dallas, Texas.

           

          “Commercial
            Based Rate”
-
            The
            base rate announced or published from time to time by Lender, which rate
            may not
            be the lowest rate charged by Lender, plus 1.0%; it being understood
            and agreed
            that the Commercial Based Rate shall increase or decrease, as the case
            may be,
            from time to time as of the effective date of each change in the base
            rate.

           

          “Debt
            Coverage Ratio”
-
            A
            ratio, as reasonably determined by Lender, the first number of which
            is the Net
            Operating Income for the period in question and the second of which is
            Debt
            Service for such period.

           

          “Debt
            Service”
-
            The
            product of (i) the constant monthly payment amount (i.e., payment including
            both
            principal and interest) sufficient to fully amortize (using mortgage
            amortization) the Loan at the time of determination in equal installments
            over a
            25 year period using an interest rate equal to the greater of (a) the
            Commercial
            Based Rate, (b) the Fixed Rate, (c) the Treasury Note Rate plus 2.25%,
            or (d)
            7.5%, multiplied by (ii) the number of months in the period in
            question.

           

          
            
              1

            

            
              
              

              
                

              

            

            
              
              

            

          

          “Default
            Rate”
-
            The
            rate per annum which is 5% above the Commercial Based Rate, but in no
            event
            greater than the Maximum Rate.

           

          “Event
            of Default”
-
            As
            defined in the Security Instrument.

           

          “Extension
            Fee”
-
            $28,560. 

           

          “Extension
            Period”
-
            The
            First Extension Period or the Second Extension Period, as the case may
            be.

           

          “First
            Extension Period”
-
            A
            period of 12 months, commencing on the first day after the Maturity
            Date.

           

          “Fixed
            Rate”
-The
            rate per annum (expressed as a percentage) determined by Lender to be
            equal to
            the sum of (a) the quotient of the LIBOR Rate for the Fixed Rate Amount
            and
            Interest Period in question divided by (1 minus the Reserve Requirement),
            rounded up to the nearest 1/100 of 1%, and (b) the Spread. 

           

          “Fixed
            Rate Amount”
-
            Each
            portion of the Principal Amount bearing interest at an applicable Fixed
            Rate
            pursuant to a Fixed Rate Request. Notwithstanding any provision contained
            herein
            to the contrary, no Fixed Rate Request may request less than the entire
            Principal Amount bear interest at the same Fixed Rate.

           

          “Fixed
            Rate Business Day”
—
A
            day,
            other than a Saturday or Sunday, on which commercial banks are open for
            domestic
            and international business (including dealings in U.S. Dollar deposits)
            in New
            York, New York and Dallas, Texas.

           

          “Fixed
            Rate Request”
—
            Borrower’s telephonic notice (to be promptly confirmed in writing which must be
            received by Lender before such Fixed Rate Request will be put into effect
            by
            Lender), to be received by Lender by 12 o’clock Noon (Central Standard
            Time) 3 Fixed Rate Business Days prior to the Fixed Rate Business Day
            specified
            in the Fixed Rate Request for the commencement of the Interest Period,
            of the
            Fixed Rate and Interest Period desired by Borrower in respect to a Fixed
            Rate
            Request Amount.

           

          “Fixed
            Rate Request Amount”
—
The
            amount, to be specified by Borrower in each Fixed Rate Request, which
            Borrower
            desires to bear interest at the Fixed Rate and which shall in no event
            be less
            than $500,000 and which, at Lender’s option, shall be an integral multiple of
            $100,000.

           

          
            
              2

            

            
              
              

              
                

              

            

            
              
              

            

          

          “Funding
            Date”
-
            The
            date of funding of the Loan.

           

          “Interest
            Period”
-
            A
            period computed as follows: 

           

          (a) The
            period
            during which interest at the Fixed Rate shall be applicable to the Fixed
            Rate
            Amount in question, provided, however, that each such period shall be
            a one (1)
            month period commencing on the first day of each calendar month.

           

          (b) An
            Interest Period shall be measured from the date specified by Borrower
            in each
            Fixed Rate Request for the commencement of the computation of interest
            at the
            Fixed Rate, to the numerically corresponding day in the calendar month
            in which
            such period terminates (or, if there be no numerical correspondent in
            such
            month, or if the date selected by Borrower for such commencement is the
            last
            Fixed Rate Business Day of a calendar month, then the last Fixed Rate
            Business
            Day of the calendar month in which such period terminates, or if the
            numerically
            corresponding day is not a Fixed Rate Business Day then the next succeeding
            Fixed Rate Business Day, unless such next succeeding Fixed Rate Business
            Day
            enters a new calendar month, in which case such period shall end on the
            next
            preceding Fixed Rate Business Day) and in no event shall any such period
            be
            elected which extends beyond the Maturity Date.

           

          “LIBOR
            Rate”
—
The
            rate determined by Lender (rounded upward, if necessary, to the nearest
            1/100th
            of 1%)
            equal to the offered rate (and not the bid rate) for deposits in U.S.
            Dollars of
            amounts comparable to the Fixed Rate Request Amount for the same period
            of time
            as the Interest Period selected by Borrower in the Fixed Rate Request,
            as set
            forth on the LIBOR Reference Source at approximately 10:00 a.m. (Central
            Standard Time) on the first day of the applicable Interest Period.

           

          “LIBOR
            Reference Source”
—
The
            display for London inter-bank offered rates appearing on the Bloomberg,
            as the
            British Bankers Association London inter-bank offered rates for deposits
            in U.S.
            Dollars. 

           

          “Loan”
-
            The
            $11,424,000 loan to be made to Borrower by Lender evidenced by this
            Note.

           

          “Loan
            Agreement”
-
            The
            Loan Agreement of even date herewith between Borrower and Lender relating
            to the
            Loan.

           

          “Loan
            Documents”
-
            This
            Note, the Security Instrument, the Loan Agreement, the Assignment of
            Leases and
            Rents and all other documents evidencing, securing, or relating to the
            Loan.

           

          
            
              3

            

            
              
              

              
                

              

            

            
              
              

            

          

           

          “Make-Whole
            Breakage Amount”
-
            As
            defined in Section 5.

           

          “Make-Whole
            Calculation Rate”
-
            As
            defined in Section 5.

           

          “Maturity
            Date”
-
            December ____, 2008, being the date this Note becomes due and payable
            in its
            entirety, unless extended as provided herein.

           

          “Maximum
            Rate”
-
            The
            maximum interest rate permitted under applicable law.

           

          “Monthly
            Principal Installment Amount”
-
            $9,670.51 during the First Extension Period and $10,369.59 during the
            Second
            Extension Period.

           

          “Net
            Operating Income”
-
            The
            gross income received by Borrower from the operation of the Property
            for the
            period in question, less expenses incurred and/or paid by Borrower in
            connection
            with the operation and maintenance of the Property that are allocable
            to such
            period, computed on an accrual basis without regard to depreciation or
            debt
            service on the Loan, but otherwise in accordance with generally accepted
            accounting principles consistently applied. Included within the expenses
            shall
            be a management fee equal to the greater of (i) the actual management
            fee or
            (ii) an assumed management fee of 5%, and annual capital expenditures
            equal to
            $300 per unit. Documentation of Net Operating Income shall be certified
            by an
            officer of Borrower with detail satisfactory to Lender and shall be subject
            to
            the approval of Lender.

           

          “Principal
            Amount”
-
            That
            portion of the Loan evidenced hereby as is from time to time
            outstanding.

           

          “Property”
-
            The
            real property, together with all improvements, fixtures and other property
            thereon and interest therein described on Exhibit A of the Security Instrument
            as Tract 3. 

           

          “Regulation”
-
            With
            respect to the charging and collecting of interest at the Fixed Rate,
            any United
            States federal, state or foreign laws, treaties, rules or regulations
            whether
            now in effect or hereafter enacted or promulgated (including Regulation
            D) or
            any interpretations, directives or requests applying to a class of depository
            institutions including Lender under any United States federal, state
            or foreign
            laws or regulations (whether or not having the force of law) by any court
            or
            governmental or monetary authority charged with the interpretation or
            administration thereof.

           

          “Regulation
            D”
-
            Regulation D of the Board of Governors of the Federal Reserve System,
            as from
            time to time amended or supplemented.

           

          “Reserve
            Requirement”
-
            The
            average maximum rate at which reserves (including any marginal, supplemental
            or
            emergency reserves) are required to be maintained under Regulation D
            by member
            banks of the Federal Reserve System in New York City with deposits exceeding
            one
            billion U.S. Dollars against “Eurocurrency
            Liabilities”,
            as such
            quoted term is used in Regulation D. Without limiting the effect of the
            foregoing, the Reserve Requirement shall reflect any reserves required
            to be
            maintained by such member banks by reason of any Regulation against (a)
            any
            category of liabilities which includes deposits by reference to which
            the Fixed
            Rate is to be determined as provided in this Note, or (b) any category
            of
            extensions of credit or other assets which includes loans the interest
            rate on
            which is determined on the basis of rates referred to in the definition
            of
“LIBOR Rate”. 

           

          
            
              4

            

            
              
              

              
                

              

            

            
              
              

            

          

           

          “Second
            Extension Period”
-
            A
            period of 12 months, commencing on the first day after the expiration
            of the
            First Extension Period

           

          “Security
            Instrument”
-
            The
            Open-End Mortgage, Security Agreement and Fixture Filing of even date
            herewith
            more particularly described herein. 

           

          “Spread”
-
            2.75%.

           

          “Treasury
            Note Rate”
-
            The
            latest Treasury Constant Maturity Series yields reported, for the latest
            day for
            which such yields shall have been so reported as of the applicable Fixed
            Rate
            Business Day, in Federal Reserve Statistical Release H.15 (519) (or any
            comparable successor publication) for actively traded U.S. Treasury securities
            having a constant maturity equal to 10 years. Such implied yield shall
            be
            determined, if necessary, by (i) converting U.S. Treasury bill quotations
            to
            bond-equivalent yields in accordance with accepted financial practice,
            and (ii)
            interpolating linearly between reported yields. 

           

          2.  Interest

           

          (a)  Borrower
            shall have the option of paying interest on the Principal Amount at the
            Commercial Based Rate or the Fixed Rate (as elected in the manner specified
            in
            this Note). Notwithstanding the foregoing, if at any time the Applicable
            Rate
            exceeds the Maximum Rate, the rate of interest payable under this Note
            shall be
            limited to the Maximum Rate, but any subsequent reductions in the Applicable
            Rate, as the case may be, shall not reduce the Applicable Rate below
            the Maximum
            Rate until the total amount of interest accrued on this Note equals the
            total
            amount of interest which would have accrued at the Applicable Rate if
            the
            Applicable Rate had at all times been in effect. 

           

          (b)  The
            Principal Amount shall bear interest from the date hereof through the
            first day
            of the first month hereafter at the Commercial Based Rate. Thereafter,
            the
            Principal Amount shall bear interest at the Fixed Rate (subject to Lender’s
            right to convert the rate of interest payable hereunder from the Fixed
            Rate to
            the Commercial Based Rate as provided herein) until such time as Borrower
            notifies Lender that it desires application of the Commercial Based Rate
            upon
            expiration of the then current Interest Period. This subsection constitutes
            a
            Fixed Rate Request. It will not be necessary for Borrower to submit further
            Fixed Rate Requests, except after electing application of the Commercial
            Based
            Rate.

           

          
            
              5

            

            
              
              

              
                

              

            

            
              
              

            

          

          (c)  Borrower
            shall pay to Lender, promptly upon demand, such amounts as are necessary
            to
            compensate Lender for Additional Costs resulting from any Regulation
            which (i)
            subjects Lender to any tax, duty or other charge with respect to the
            Loan or
            this Note, or changes the basis of taxation of any amounts payable to
            Lender
            under the Loan or this Note (other than taxes imposed on the overall
            net income
            of Lender or of its applicable lending office by the jurisdiction in
            which
            Lender’s principal office or such applicable lending office is located), (ii)
            imposes, modifies or deems applicable any reserve, special deposit or
            similar
            requirements relating to any extensions of credit or other assets of,
            or any
            deposits with or other liabilities of, Lender, or (iii) imposes on Lender
            or on
            the interbank LIBOR market any other condition affecting the Loan or
            this Note,
            or any of such extensions of credit or liabilities. Lender will notify
            Borrower
            of any event which would entitle Lender to compensation pursuant to this
            Section
            as promptly as practicable after Lender obtains knowledge thereof and
            determines
            to request such compensation. For purposes of this Section 2 and the
            definition
            of “Additional Costs”, the term “Lender” shall, at Lender’s option, be deemed to
            include Lender’s present and future participants in the Loan.

           

          (d)  Without
            limiting the effect of the immediately preceding subsection, in the event
            that,
            by reason of any Regulation, (i) Lender incurs Additional Costs based
            on or
            measured by the amount of (1) a category of deposits or other liabilities
            of
            Lender which includes deposits by reference to which the Fixed Rate is
            determined as provided in this Note and/or (2) a category of extensions
            of
            credit or other assets of Lender which includes loans the interest on
            which is
            determined on the basis of rates referred to in the definition of “LIBOR Rate”,
            (ii) Lender becomes subject to restrictions on the amount of such a
            category of liabilities or assets which it may hold, or (iii) it shall
            be
            unlawful or impractical for Lender to make or maintain the Loan (or any
            portion
            thereof) at the Fixed Rate, then Lender’s obligation to make or maintain the
            Loan (or portions thereof) at the Fixed Rate (and Borrower’s right to request
            the same) shall be suspended and Lender shall give notice thereof to
            Borrower
            and, upon the giving of such notice, interest payable hereunder at the
            Fixed
            Rate shall be converted to the Commercial Based Rate, unless Lender may
            lawfully
            continue to maintain the Loan (or any portion thereof) then bearing interest
            at
            the Fixed Rate to the end of the current Interest Period(s), at which
            time the
            interest rate shall convert to the Commercial Based Rate. If subsequently
            Lender
            determines that such Regulation has ceased to be in effect, Lender will
            so
            advise Borrower and Borrower may convert the rate of interest payable
            hereunder
            with respect to those portions of the Principal Amount bearing interest
            at the
            Commercial Based Rate to a Fixed Rate by submitting a Fixed Rate Request
            in
            respect thereof and otherwise complying with the provisions of this Note
            with
            respect thereto.

           

          (e)  Determinations
            by Lender of the existence or effect of any Regulation on its costs of
            making or
            maintaining the Loan, or portions thereof, at the Fixed Rate, or on amounts
            receivable by it in respect thereof, and of the additional amounts required
            to
            compensate Lender in respect of Additional Costs, shall be conclusive,
            absent
            manifest error, provided that such determinations are made on a reasonable
            basis.

           

          
            
              6

            

            
              
              

              
                

              

            

            
              
              

            

          

          (f)  Anything
            herein to the contrary notwithstanding, if, at the time of or prior to
            the
            determination of the Fixed Rate in respect of any Fixed Rate Request
            as herein
            provided, Lender determines (which determination shall be conclusive,
            absent
            manifest error, provided that such determination is made on a reasonable
            basis)
            that (i) by reason of circumstances affecting the interbank LIBOR market
            generally, adequate and fair means do not or will not exist for determining
            the
            Fixed Rate applicable to an Interest Period, or (ii) the Fixed Rate,
            as
            determined by Lender, will not accurately reflect the cost to Lender
            of making
            or maintaining the Loan (or any portion thereof) at the Fixed Rate, then
            Lender
            shall give Borrower prompt notice thereof, and the Fixed Rate Amount
            in question
            shall bear interest, or continue to bear interest, as the case may be,
            at the
            Commercial Based Rate. If at any time subsequent to the giving of such
            notice,
            Lender determines that because of a change in circumstances the Fixed
            Rate is
            again available to Borrower hereunder, Lender will so advise Borrower
            and
            Borrower may convert the rate of interest payable hereunder from the
            Commercial
            Based Rate to a Fixed Rate by submitting a Fixed Rate Request to Lender
            and
            otherwise complying with the provisions of this Note with respect
            thereto.

           

          (g)  Borrower
            shall pay to Lender, immediately upon request and notwithstanding contrary
            provisions contained in the Loan Documents, such amounts as shall, in
            the
            conclusive judgment of Lender reasonably exercised, compensate Lender
            for any
            loss, cost or expense incurred by it as a result of (i) the conversion, for
            any reason whatsoever, of the rate of interest payable hereunder from
            the Fixed
            Rate to the Commercial Based Rate with respect to any portion of the
            Principal
            Amount then bearing interest at the Fixed Rate on a date other than the
            last day
            of an applicable Interest Period, (ii) the failure of all or a portion of
            an advance which was to have borne interest at the Fixed Rate pursuant
            to a
            Fixed Rate Request to be made under this Note, or (iii) the failure of
            Borrower to borrow in accordance with a Fixed Rate Request submitted
            by it to
            Lender, which amounts shall include, without limitation, lost
            profits.

           

          (h)  Any
            portion of the Principal Amount to which the Fixed Rate is not or cannot
            pursuant to the terms hereof be applicable shall bear interest at the
            Commercial
            Based Rate.

           

          3.  Default
            Rate

           

          (a)  Notwithstanding
            anything to the contrary contained in this Note, at the option of Lender,
            at any
            time after the occurrence and during the continuance of an Event of Default,
            the
            unpaid principal of this Note from time to time outstanding and all past
            due
            installments of interest shall, to the extent permitted by applicable
            law, bear
            interest at the Default Rate.

           

          (b)  If
            an
            Event of Default shall occur, interest on the Principal Amount shall,
            at the
            option of Lender, immediately and without notice to Borrower, be converted
            to
            the Commercial Based Rate during the continuance of the Event of Default.
            The
            foregoing provision shall not be construed as a waiver by Lender of its
            right to
            pursue any other remedies available to it under the Loan Documents, nor
            shall it
            be construed to limit in any way the application of the Default Rate.
            

           

          
            
              7

            

            
              
              

              
                

              

            

            
              
              

            

          

          4.  Payment
            of Principal and Interest.

           

          (a)  Interest
            on the Principal Amount shall be payable monthly in arrears as it accrues
            on the
            first day of the first month following the Funding Date and on the first
            day of
            each month thereafter until the earlier of the date this Note is repaid
            in full
            or the Maturity Date. Commencing on the first day of the first month
            of the
            First Extension Period and on the first day of each month thereafter
            until the
            earlier of the date this Note is repaid in full or the Maturity Date,
            Borrower
            shall pay the Monthly Principal Installment Amount, which Monthly Principal
            Installment Amount is in addition to accrued interest due on each such
            date. The
            Principal Amount and all unpaid interest accrued thereon shall be due
            and
            payable on the Maturity Date. 

           

          (b)  Until
            such
            time as an Event of Default has occurred and after such time as such
            Event of
            Default has been cured, all payments received under this Note shall be
            applied
            in the following order: (i) to any unpaid costs of collection; (ii) to
            any Make-Whole Breakage Amount due; (iii) to accrued but unpaid interest on
            the Principal Amount; and (iv) the Principal Amount. After the occurrence
            and during the continuance of an Event of Default, all payments shall
            be applied
            in any order determined by Lender in its sole discretion.

           

          (c)  All
            interest accruing under this Note shall be calculated on the basis of
            a 360-day
            year applied to the actual number of days in each month. Borrower shall
            make
            each payment which it owes hereunder not later than twelve o’clock, noon
            (Central Standard Time), on the date such payment becomes due and payable
            (or
            the date any voluntary prepayment is made), in immediately available
            funds. Any
            payment received by Lender after such time will be deemed to have been
            made on
            the next following Business Day.

           

          5.  Prepayment.

           

          (a)  Borrower
            shall have the right to prepay the Loan, in whole or in part (except
            as
            otherwise specifically provided herein) provided:

           

          (i)  written
            notice thereof is given to Lender by prepaid registered or certified
            mail at
            least 30 but not more than 60 days prior to the date to be fixed therein
            for
            prepayment, which notice once given shall be irrevocable; and

           

          (ii)  such
            prepayment is accompanied by the Make-Whole Breakage Amount (if the principal
            being repaid is a Fixed Rate Amount and is repaid prior to the expiration
            of the
            related Interest Period), all accrued interest on the amount prepaid,
            including
            interest which has accrued at the Default Rate, and other sums that may
            be
            payable hereunder to the date so fixed.

           

          
            
              8

            

            
              
              

              
                

              

            

            
              
              

            

          

          In
            the
            event that any Make-Whole Breakage Amount is due, Lender shall deliver
            to
            Borrower a statement setting forth the amount and determination of the
            Make-Whole Breakage Amount, and, provided that Lender shall have in good
            faith
            applied the formula described herein, Borrower shall not have the right
            to
            challenge the calculation or the method of calculation set forth in any
            such
            statement in the absence of manifest error. Borrower agrees that (i)
            Lender
            shall not be obligated to actually reinvest the amount prepaid, and (ii)
            the
            Make-Whole Breakage Amount is directly related to the damages that Lender
            will
            suffer as a result of the prepayment. In addition to the Make-Whole Breakage
            Amount and without waiving any prepayment condition, if, upon any such
            prepayment, the aforesaid prior written notice has not been timely received
            by
            Lender, and the prepayment is accepted by Lender, the Make-Whole Breakage
            Amount
            shall be increased by an amount equal to the lesser of (i) 30 days' unearned
            interest computed at the Commercial Based Rate on the amount prepaid,
            or (ii)
            unearned interest computed on the amount prepaid for the period from,
            and
            including, the date of prepayment through the applicable Interest
            Period.

           

          (b)  No
            principal amount repaid may be readvanced.

           

          (c)  In
            the
            event the Make-Whole Breakage Amount is construed to be interest under
            the laws
            of the State of Texas in any circumstance, the payment thereof shall
            not be
            required to the extent that the amount thereof, together with other interest
            payable under the Loan Documents, exceeds the Maximum Rate, and if such
            payment
            has been made at the time it is determined that such excess exists, Lender
            shall, at its option, either return such excess to Borrower or credit
            such
            excess against the principal balance of the Note then outstanding, in
            which
            event any and all penalties of any kind under applicable law as a result
            such
            excess interest shall be inapplicable.

           

          (d)  The
            Make-Whole Breakage Amount shall be due, to the extent permitted by applicable
            law, under any and all circumstances where all or any portion of the
            Loan is
            paid prior to the expiration of an Interest Period, whether such prepayment
            is
            voluntary or involuntary, even if such prepayment results from Lender's
            exercise
            of its rights upon Borrower's default and acceleration of the Maturity
            Date
            (irrespective of whether foreclosure proceedings have been commenced),
            and shall
            be in addition to any other sums due under the Loan Documents.

           

          (e)  As
            used
            herein, the term “Make-Whole
            Breakage Amount”
shall
            mean an amount calculated as follows:

           

          (i)  If
            the
            Make Whole Calculation Rate is equal to or greater than the Fixed Rate
            then in
            effect with respect to the Fixed Rate Amount and related Interest Period
            in
            question, the Make-Whole Breakage Amount shall be zero with respect to
            such
            Fixed Rate Amount.

           

          (ii)  If
            the
            Make Whole Calculation Rate is less than the Fixed Rate then in effect
            concerning the Fixed Rate Amount and related Interest Period in question,
            the
            Make-Whole Breakage Amount concerning the Fixed Rate Amount to be repaid
            shall
            be calculated based upon the present value of the remaining scheduled
            debt
            service (i.e., scheduled principal and/or interest payments allocable
            to the
            Fixed Rate Amount to be repaid) discounted at the Make Whole Calculation
            Rate
            (assuming monthly compounding) for the Interest Period in question minus
            the
            Fixed Rate Amount being repaid.

           

          
            
              9

            

            
              
              

              
                

              

            

            
              
              

            

          

          (f)  As
            used
            herein, the term “Make
            Whole Calculation Rate”
means
            the latest Treasury Constant Maturity Series yields reported, for the
            latest day
            for which such yields shall have been so reported as of the applicable
            Fixed
            Rate Business Day, in Federal Reserve Statistical Release H.15 (519)
            (or any
            comparable successor publication) for actively traded U.S. Treasury securities
            having a constant maturity which most closely matches the period from
            prepayment
            to the maturity of the applicable Interest Period of the principal being
            repaid.
            Such implied yield shall be determined, if necessary, by (i) converting
            U.S.
            Treasury bill quotations to bond-equivalent yields in accordance with
            accepted
            financial practice, and (ii) interpolating linearly between reported
            yields.

           

          6.  Extension
            of Maturity Date.
            Borrower
            shall have the right and option to extend the Maturity Date (a) to a
            date ending
            upon the expiration of the First Extension Period, and (b) upon expiration
            of
            the First Extension Period, to a date ending upon the expiration of the
            Second
            Extension Period, subject to the conditions that:

           

          (a)  Borrower
            shall have notified Lender in writing of its exercise of each such extension
            at
            least 60 days prior to the Maturity Date;

           

          (b)  on
            the
            date of such written notice and on the date of commencement of the Extension
            Period, there shall exist no event of default and no event shall have
            occurred
            which with the passage of time or the giving of notice or both would
            constitute
            an event of default;

           

          (c)  contemporaneously
            with the commencement of each Extension Period, Lender shall have received
            the
            Extension Fee;

           

          (d)  at
            or
            before the commencement of each Extension Period, Lender shall have received
            evidence satisfactory to Lender that the Property has achieved a Debt
            Coverage
            Ratio of at least 1.50:1 for the 3 calendar month period immediately
            preceding
            the commencement of the Extension Period; 

           

          (e)  the
            Principal Amount must not be greater than 50% of the appraised value
            of the
            Property as determined by Lender, for which determination Lender, at
            its option,
            may obtain an updated FIRREA appraisal at Borrower's expense; and

           

          (f)  upon
            each
            such extension, Borrower and any guarantor shall have executed such documents
            as
            Lender deems reasonably appropriate to evidence such extensions and shall
            have
            delivered to Lender an endorsement to the mortgagee policy of title insurance
            insuring the lien of the Security Instrument pursuant to the applicable
            title
            insurance regulations, stating that the coverage of such policy has not
            been
            reduced or terminated by virtue of such extension.

           

          
            
              10

            

            
              
              

              
                

              

            

            
              
              

            

          

          7.  Security.
            This
            Note is secured, inter alia, by the Security Instrument evidencing a
            lien on
            certain real property more particularly described therein, and evidencing
            a
            security interest in certain personal property described therein, to
            which
            Security Instrument reference is here made for a description of the property
            covered thereby and the nature and extent of the security and the rights
            and
            powers of Lender in respect of such security. In addition, Borrower has
            made an
            Assignment of Leases and Rents (herein so called) covering certain leases
            and
            rents described therein to provide a source of future payment of this
            Note,
            reference to which Assignment of Leases and Rents is here made for a
            description
            of the leases and rents covered thereby and the rights and powers of
            Lender with
            respect thereto. Upon the occurrence of an Event of Default, Lender shall
            have
            the option of declaring the Principal Amount hereof and the interest
            accrued
            hereon to be immediately due and payable.

           

          8.  Usury
            Savings.
            It is
            the intent of Lender and Borrower in the execution of this Note and all
            other
            instruments now or hereafter securing this Note to contract in strict
            compliance
            with applicable usury law. In furtherance thereof, Lender and Borrower
            stipulate
            and agree that none of the terms and provisions contained in this Note,
            or in
            any other instrument executed in connection herewith, shall ever be construed
            to
            create a contract to pay for the use, forbearance or detention of money,
            interest at a rate in excess of the Maximum Rate; neither Borrower nor
            any
            guarantors, endorsers or other parties now or hereafter becoming liable
            for
            payment of this Note shall ever be obligated or required to pay interest
            on this
            Note at a rate in excess of the Maximum Rate that may be lawfully charged
            under
            applicable law, and the provisions of this Section shall control over
            all other
            provisions of this Note and any other instruments now or hereafter executed
            in
            connection herewith which may be in apparent conflict herewith. Lender
            expressly
            disavows any intention to charge or collect excessive unearned interest
            or
            finance charges in the event the maturity of this Note is accelerated.
            If the
            maturity of this Note shall be accelerated for any reason or if the principal
            of
            this Note is paid prior to the end of the term of this Note, and as a
            result
            thereof the interest received for the actual period of existence of the
            Loan
            exceeds the amount of interest that would have accrued at the Maximum
            Rate,
            Lender shall, at its option, either refund to Borrower the amount of
            such excess
            or credit the amount of such excess against the Principal Amount and
            thereby
            shall render inapplicable any and all penalties of any kind provided
            by
            applicable law as a result of such excess interest. In the event that
            Lender
            shall contract for, charge or receive any amounts and/or any other thing
            of
            value which are determined to constitute interest which would increase
            the
            effective interest rate on this Note to a rate in excess of that permitted
            to be
            charged by applicable law, all such sums determined to constitute interest
            in
            excess of the amount of interest at the lawful rate shall, upon such
            determination, at the option of Lender, be either immediately returned
            to
            Borrower or credited against the Principal Amount, in which event any
            and all
            penalties of any kind under applicable law as a result of such excess
            interest
            shall be inapplicable. By execution of this Note Borrower acknowledges
            that it
            believes the Loan to be non-usurious and agrees that if, at any time,
            Borrower
            should have reason to believe that the Loan is in fact usurious, it will
            give
            Lender notice of such condition and Borrower agrees that Lender shall
            have 90
            days in which to make appropriate refund or other adjustment in order
            to correct
            such condition if in fact such exists. The term “applicable
            law”
as
            used
            in this Note shall mean the laws of the State of Texas or the laws of
            the United
            States, whichever laws allow the greater rate of interest, as such laws
            now
            exist or may be changed or amended or come into effect in the
            future.

           

          
            
              11

            

            
              
              

              
                

              

            

            
              
              

            

          

          9.  Collection
            Fees.
            Should
            the indebtedness represented by this Note or any part thereof be collected
            at
            law or in equity or through any bankruptcy, receivership, probate or
            other court
            proceedings or if this Note is placed in the hands of attorneys for collection
            after an Event of Default, Borrower and all endorsers, guarantors and
            sureties
            of this Note jointly and severally agree to pay to Lender in addition
            to the
            principal and interest due and payable hereon reasonable attorneys’ and
            collection fees.

           

          10.  Waiver
            of Certain Notices.
            Borrower
            and all endorsers, guarantors and sureties of this Note and all other
            persons
            liable or to become liable on this Note severally waive presentment for
            payment,
            demand, notice of demand and of dishonor and nonpayment of this Note,
            notice of
            intention to accelerate the maturity of this Note, protest and notice
            of
            protest, diligence in collecting, and the bringing of suit against any
            other
            party, and agree to all renewals, extensions, modifications, partial
            payments,
            releases or substitutions of security, in whole or in part, with or without
            notice, before or after maturity.

           

          11.  CHOICE
            OF LAW.
            THIS
            NOTE AND THE OTHER LOAN DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE
            PARTIES
            HEREUNDER AND THEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED
            AND
            ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS (WITHOUT
            GIVING
            EFFECT TO TEXAS' PRINCIPLES OF CONFLICTS OF LAW), EXCEPT TO THE EXTENT
            (A) OF
            PROCEDURAL AND SUBSTANTIVE MATTERS RELATING ONLY TO THE CREATION, PERFECTION,
            FORECLOSURE AND ENFORCEMENT OF RIGHTS AND REMEDIES AGAINST THE PROPERTY,
            WHICH
            MATTERS SHALL BE GOVERNED BY THE LAWS OF THE STATE WHERE THE PROPERTY
            IS
            LOCATED, AND (B) THE LAWS OF THE UNITED STATES OF AMERICA AND ANY RULES,
            REGULATIONS OR ORDERS ISSUED OR PROMULGATED THEREUNDER, APPLICABLE TO
            THE
            AFFAIRS AND TRANSACTIONS ENTERED INTO BY LENDER, OTHERWISE PREEMPT THE
            LAWS OF
            THE STATE WHERE THE PROPERTY IS LOCATED OR TEXAS LAW; IN WHICH EVENT
            FEDERAL LAW
            SHALL CONTROL.

           

          13.  FORUM
            SELECTION.
            BORROWER HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION
            OF ANY
            STATE OR FEDERAL COURT SITTING IN DALLAS, TEXAS (OR ANY COURT OF COMPETENT
            JURISDICTION WHERE ANY PORTION OF THE PROPERTY IS LOCATED) OVER ANY SUIT,
            ACTION
            OR PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE OR ANY OF THE LOAN
            DOCUMENTS, AND BORROWER HEREBY AGREES AND CONSENTS THAT, IN ADDITION
            TO ANY
            METHODS OF SERVICE OF PROCESS PROVIDED FOR UNDER APPLICABLE LAW, ALL
            SERVICE OF
            PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY STATE OR FEDERAL
            COURT
            SITTING IN DALLAS, TEXAS (OR ANY COURT OF COMPETENT JURISDICTION WHERE
            ANY
            PORTION OF THE PROPERTY IS LOCATED) MAY BE MADE BY CERTIFIED OR REGISTERED
            MAIL,
            RETURN RECEIPT REQUESTED, DIRECTED TO BORROWER AT THE ADDRESS OF BORROWER
            FOR
            THE GIVING OF NOTICES UNDER THE SECURITY INSTRUMENT, AND SERVICE SO MADE
            SHALL
            BE COMPLETE 5 DAYS AFTER THE SAME SHALL HAVE BEEN SO
            MAILED.

           

          
            
              12

            

            
              
              

              
                

              

            

            
              
              

            

          

          14.  WAIVER
            OF TRIAL BY JURY AND CERTAIN OTHER RIGHTS

           

          .
            BORROWER
            AND LENDER HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, WITH AND
            UPON THE
            ADVICE OF COMPETENT COUNSEL, EXPRESSLY AND UNCONDITIONALLY WAIVE, IN
            CONNECTION
            WITH ANY SUIT, ACTION OR PROCEEDING IN CONNECTION WITH ANY OF THE LOAN
            DOCUMENTS, ANY AND EVERY RIGHT THEY MAY HAVE TO A TRIAL BY JURY. MAKER
            ACKNOWLEDGES THAT THE FOREGOING WAIVER IS KNOWING AND
            VOLUNTARY.

           

          15.  Time
            of the Essence.

           

          Time
            is of
            the essence of each obligation of Borrower hereunder.

           

          

           

          REMAINDER
            OF PAGE INTENTIONALLY BLANK

           

          SIGNATURE
            PAGE FOLLOWS

           

          

          
            
              13

            

            
              
              

              
                

              

            

            
              
              

            

          

          SIGNATURE
            PAGE OF BORROWER TO

           

          PROMISSORY
            NOTE

           

           

          Borrower’s
            Federal Tax I.D. No.

           

          38-3659381   

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

           

          
            	 	
                    By:

                  	
                    ARC
                      Brandywine GP, LLC, a Tennessee 
limited liability company, its general
                      partner

                  

          

           

            

           

          
            	 	By:	                                                       

            	 	
                    Name:

                  	                                                       
                    

            	 	Title:Unassociated Document

    
      Exhibit
        10.90

      
 

      LOAN
        AGREEMENT

       

      (Healthcare
        Center)

       

      THIS
        LOAN
        AGREEMENT (this “Agreement”)
        is made
        and entered into this           
        day of
        December, 2005, by and between ARC BRANDYWINE, L.P., a Delaware limited
        partnership (hereinafter called “Borrower”),
        and
        GUARANTY BANK, a federal savings bank (hereinafter called “Lender”);

       

      ARTICLE
        I

        

      DEFINITIONS

       

      1.1.  Defined
        Terms.
        As used
        in this Agreement, the following terms shall have the meanings
        shown:

       

      “Agency”.
        The
        Centers for Medicare and Medicaid Services, the Drug Enforcement Administration,
        the Environmental Protection Agency, any other state or federal licensing
        or
        regulatory authority (including any licensing or regulatory authority
        responsible for administering or dispensing Medicaid or Medicare payments
        or any
        other third party payor billing policies, procedures, limitations or
        restrictions), or any other public or private agency or organization, including
        without limitation, any public or private accreditation agency or
        organization.

       

      “CCRC
        Property”.
        The
        continuing care retirement community which includes the Facility as well
        as the
        other facilities located on the property described on Exhibit A
        attached
        hereto and made a part hereof.

       

      “Continuing
        Care Agreement”.
        Agreement by and between a resident and any Property Related Person executed
        upon resident’s purchase of a residential unit on the CCRC Property which
        provides for personal care services at the CCRC Property.

       

      “Deficiency
        Notices”.
        All
        notices and other written communications from any Agency or Governmental
        Authority which licenses, regulates, certifies, accredits or evaluates the
        Property Related Persons, the Property or the operation of the Property by
        the
        Property Related Persons alleging that the Property Related Persons, the
        Property or the operation of the Property by the Property Related Persons
        in
        whole or in part fails to comply or, if corrective action is not taken, shall
        fail to comply with, any or all of the Agency's or Governmental Authority's
        requirements for and conditions of licensing, regulation, certification or
        accreditation by or participation in programs of the Agency or Governmental
        Authority or otherwise relating to the continuous operation of all or any
        portion of the Property or the programs of the Property Related Persons or
        the
        eligibility or entitlement of the Property Related Persons to receive
        reimbursement from any Agency or Governmental Authority.

       

      “Facility”.
        The
        48-unit healthcare center located upon the CCRC Property.

       

      “GAAP”.
        Generally accepted accounting principles, as from time-to-time in effect
        in the
        United States of America, or such alternative accounting standard as may
        be
        acceptable to the Lender, consistently applied.

       

      
        
          1

        

        
          
          

          
            

          

        

        
          
          

        

      

      “Governmental
        Authority”.
        The
        United States, the state, the county and the city or any other political
        subdivision in which the CCRC Property is located, and any other political
        subdivision, agency or instrumentality having jurisdiction over the CCRC
        Property or any of the Property Related Persons.

       

      “Governmental
        Requirements”.
        All
        laws, ordinances, statutes, codes, rules, regulations, orders and decrees
        of any
        Governmental Authority applicable to any of the Property Related Persons
        or the
        CCRC Property.

       

      “Guarantor”.
        American Retirement Corporation, a Tennessee corporation.

       

      “Healthcare
        Information Laws”.
        As
        defined in Section 3.1(k).

       

      “HIPAA”.
        As
        defined in Section 3.1(k).

       

      “Licenses”.
        Any and
        all licenses, operating permits, franchises, and other licenses, authorizations,
        certifications, permits, or approvals, other than construction permits, issued
        by, or on behalf of, any Governmental Authority now existing or at any time
        hereafter issued, with respect to the acquisition, construction, renovation,
        expansion, leasing, ownership and/or operation of the CCRC Property,
        accreditation of the CCRC Property, any and all operating licenses issued
        by any
        Governmental Authority, any and all pharmaceutical licenses and other licenses
        related to the purchase, dispensing, storage, prescription or use of drugs,
        medications, and other “controlled substances,” and any and all licenses
        relating to the operation of food or beverage facilities or amenities, if
        any.

       

      “Loan”.
        The
        $5,000,000 loan made this date by Lender to Borrower and evidenced by the
        Note.

       

      “Managed
        Care Plans”.
        Any
        health maintenance organization, preferred provider organization, individual
        practice association, competitive medical plan, referral service or similar
        arrangement, entity, organization, or Person.

       

      “Management
        Agreement”.
        The
        Management Agreement dated December 6, 2005 by and between Manager and the
        Borrower applicable to the Facility, as the same may be amended from time
        to
        time.

       

      “Manager”.
        ARC
        Management, LLC, a Tennessee limited liability company, and any successor
        manager of the Facility approved by Lender in writing.

       

      “Material
        Adverse Change”.
        As to
        the specified Person, a material adverse change in the business, operations,
        property, condition (financial or otherwise) or prospects of such Person
        and, in
        addition, as to the Borrower, any material adverse change in (i) the ability
        of
        the Borrower to perform its obligations under this Agreement or any of the
        other
        Loan Documents or (ii) the validity or enforceability of this Agreement or
        any
        of the other Loan Documents or the rights or remedies of the Lender hereunder
        or
        thereunder.

       

      “Net
        Operating Income”.
        The
        gross income received by Borrower from the operation of the CCRC Property
        for
        the calendar quarter in question, less expenses incurred and/or paid by Borrower
        in connection with the operation and maintenance of the CCRC Property that
        are
        allocable to such period (other than management fee expenses), computed on
        an
        accrual basis without regard to depreciation or debt service, but otherwise
        in
        accordance with generally accepted accounting principles consistently applied.
        Included within the expenses shall be annual capital expenditures equal to
        $300
        per Unit. Documentation of Net Operating Income and expenses shall be certified
        by an officer of Borrower with detail satisfactory to Lender and shall be
        subject to the approval of Lender. 

       

      
        
          2

        

        
          
          

          
            

          

        

        
          
          

        

      

      “Note”.
        The
        $5,000,000 promissory note dated as of the date hereof from Borrower to
        Lender.

       

      “Operating
        Agreements and Management Contracts”.
        Any and
        all contracts and agreements previously, now or at any time hereafter entered
        into by the Property Related Persons with respect to the acquisition,
        construction, renovation, expansion, ownership, operation, maintenance, use
        or
        management of the CCRC Property or otherwise concerning the operations and
        business of the CCRC Property, including, without limitation, the Management
        Agreement, any and all service and maintenance contracts, any employment
        contracts, any and all management and operating agreements, any and all
        consulting agreements, laboratory servicing agreements, pharmaceutical
        contracts, physician, other clinician or other professional services provider
        contracts, therapy referral, food and beverage service contracts, and other
        contracts for the operation and maintenance of, or provision of services
        to, the
        CCRC Property.

       

      “Participation
        Agreements”.
        Any and
        all third party payor participation or reimbursement agreements now or at
        any
        time hereafter existing for the benefit of the Property Related Persons relating
        to rights to payment or reimbursement from, and claims against, private
        insurers, Managed Care Plans, employee assistance programs, Blue Cross and/or
        Blue Shield, federal, state and local Governmental Authorities, including
        without limitation, Medicare, Medicaid, TRICARE, VA and other third party
        payors.

       

      “Person”.
        An
        individual, a general or limited partnership, a limited liability company,
        a
        limited liability partnership, a corporation, a business trust, a joint stock
        company, a trust, an unincorporated association, a joint venture, a Governmental
        Authority or other entity of whatever nature.

       

      “Pledge
        Agreement”.
        Collectively, the Pledge Agreements dated as of the date hereof made by
        Guarantor, ARCPI Holdings, Inc., a Delaware corporation, and ARC Brandywine
        GP,
        LLC, a Tennessee limited liability company, for the benefit of
        Lender.

       

      “Property
        Related Persons”.
        Borrower, Manager and ARC Brandywine GP, LLC.

       

      “Purchase
        Agreement”.
        Agreement entered into by any resident and any Property Related Person whereby
        resident agrees to purchase from the Property Related Person a life-estate
        in a
        residential unit located on the CCRC Property. 

       

      
        
          3

        

        
          
          

          
            

          

        

        
          
          

        

      

      “Repairs”.
        As
        defined in Section 3.1(l).

       

      “Replacement
        Reserve Escrow Account”.
        As
        defined in Section 3.1(l).

       

      “Repurchase
        Agreement”.
        Agreement entered into by and between any resident and any Property Related
        Person whereby resident or resident’s authorized agent is required to convey
        resident’s life-estate interest in the unit to the Property Related Person upon
        becoming a permanent resident of the healthcare facility or when the
        Continuing-Care Agreement is terminated.

       

      “Resident
        Agreements”.
        Any and
        all contracts and agreements executed by, or on behalf of any resident or
        other
        Person seeking residency or occupancy in the CCRC Property and related services
        from the Property Related Person. The term Resident Agreements shall also
        include any and all contracts, authorizations, agreements and/or consents
        executed by, or on behalf of any patient or other Person seeking services
        from
        the Property Related Persons pursuant to which the Property Related Persons
        provide or furnish long-term care and related services at the CCRC Property,
        including the consent to treatment and assignment of the payment of benefits
        by
        a third party.

       

      “Security
        Agreement”.
        The
        Security Agreement dated as of the date hereof made by Borrower and Manager
        for
        the benefit of Lender.

       

      “Security
        Instrument”.
        That
        certain Open-End Mortgage, Security Agreement and Fixture Filing dated as
        of the
        date hereof made by Borrower for the benefit of Lender.

       

      “Unit”.
        A fully
        constructed unit at the CCRC Property, for which a certificate of occupancy
        has
        been issued by the applicable Governmental Authority.

       

      “Work
        Inspector”.
        As
        defined in Section 3.1(l).

       

      Capitalized
        terms not otherwise defined herein have the meaning assigned such terms in
        the
        Security Instrument or the Note, as the case may be.

       

      ARTICLE
        II  

       

      REPRESENTATIONS
        AND WARRANTIES

       

      2.1.  Representations
        and Warranties of the Borrower.
        To
        induce the Lender to enter into this Agreement and to make the Loan, the
        Borrower hereby represents and warrants to the Lender as of the date hereof
        as
        follows:

       

      (a)  Litigation.
        With
        respect to the CCRC Property, there is no threatened or pending revocation,
        suspension, termination, probation, restriction, limitation or non-renewal
        of
        any material License or any similar accreditation or approval by or from
        any
        organization or Governmental Authority for healthcare providers, including,
        without limitation, the issuance of any provisional License or other License
        with a term of less than twelve (12) months, as a consequence of any sanctions
        imposed by any Governmental Authority. There is no threatened or pending
        assessment of any civil or criminal penalties by any Governmental
        Authority.

       

      (b)  Compliance
        with Laws.
        No
        Property Related Person is in violation of any Governmental Requirement
        pertaining to the operation of the CCRC Property, patient rights, resident
        rights, employment practices, health standards or controls. Except as disclosed
        to the Lender prior to the date hereof, the Property Related Persons are
        in
        compliance with all accreditation standards and requirements to which each
        is
        subject. The Property Related Persons have obtained or applied for all Licenses
        necessary to the ownership of their property and to the conduct of their
        activities which, if not obtained, could materially adversely affect the
        ability
        of the Property Related Persons to conduct the activities of the CCRC Property,
        including, without limitation, as appropriate, the dispensing, storage,
        prescription, disposal, and use of drugs, medications and other “controlled
        substances” and the maintenance of cafeteria and other food and beverage
        facilities or services. To the extent the Property Related Persons have applied
        for any required Licenses which have not yet been issued, the operation and
        conduct of the CCRC Property by the Property Related Persons is nonetheless
        in
        compliance with all Governmental Requirements. The Property Related Persons
        currently have obtained all Licenses necessary under Governmental Requirements
        for the operation of the Facility.

       

      
        
          4

        

        
          
          

          
            

          

        

        
          
          

        

      

      (c)  Licenses
        and Certifications.
        With
        respect to each License the Property Related Persons possess or have applied
        for, (i) no material default has occurred or is continuing under the terms
        thereof, and no event has occurred which, with the giving of notice or the
        lapse
        of time, or both, would constitute a material breach of any condition to
        the
        issuance, maintenance, renewal and/or continuance thereof, (ii) the Property
        Related Persons have paid all fees, charges and other expenses to the extent
        due
        and payable with respect to, and have provided all information and otherwise
        complied with all material conditions precedent to, the issuance, maintenance,
        renewal, and continuance of such License, (iii) none of the Licenses are
        conditional, provisional, probationary or restricted in any material way,
        (iv)
        the Property Related Persons have not received any notice from any Governmental
        Authority relating to any actual or pending suspension, revocation, restriction,
        or imposition of any probationary use of such License, nor has any License
        been
        materially amended, supplemented, rescinded, terminated, or otherwise modified
        except as otherwise disclosed in writing to, and approved by, the Lender,
        (v) no
        Property Related Person has made any previous assignment of any of the Licenses
        to any Person, except as security for loans and other financial accommodations,
        if any, which are to be paid with the proceeds of the Loan and are to be
        terminated promptly following the date hereof, (vi) no financing statement
        covering any of the Licenses has been executed by a Property Related Person
        or
        is on file in any public office, except for those financing statements relating
        to loans and other financial accommodations, if any, which are to be paid
        with
        the proceeds of the Loan and are to be terminated promptly following the
        date
        hereof, and (vii) each License has been issued for a period of at least twelve
        (12) months from the date of issuance or for such lesser time to the extent
        the
        issuance for less than twelve (12) months is not the consequence of any
        sanctions imposed by any Governmental Authority.

       

      (d)  Certain
        Payments.
        Neither
        the Borrower nor any director, officer, member, partner, employee or agent
        of
        the Borrower acting for or on behalf of the Borrower has knowingly and willfully
        paid or caused to be paid, directly or indirectly, in connection with the
        business of the Borrower:

       

      
        
          5

        

        
          
          

          
            

          

        

        
          
          

        

      

      (i)  any
        bribe,
        kickback or similar payment to any Governmental Authority or any agent of
        any
        supplier; or

       

      (ii)  any
        contribution to any political party or candidate (other than personal funds
        of
        directors, officers, members, partners, employees or agents not reimbursed
        by
        their respective employers or as otherwise permitted by applicable
        laws).

       

      To
        the
        best of Borrower's knowledge, the above representation is true and correct
        with
        respect to the other Property Related Persons.

       

      (e)  Operating
        Agreements and Management Contracts.
        The
        Borrower has furnished to the Lender photocopies of all material Operating
        Agreements and Management Contracts entered into with the Property Related
        Persons, and all amendments, supplements and modifications thereto. With
        respect
        to each such Operating Agreement and Management Contract, (i) such Operating
        Agreement and Management Contract is or will be at the time of execution
        and
        delivery thereof valid and binding on the parties thereto and in full force
        and
        effect, (ii) no material default has occurred or is continuing under the
        terms
        thereof, and no event has occurred which, with the giving of notice or the
        lapse
        of time, or both, would constitute a material default thereunder, and no
        party
        thereto has attempted or threatened to terminate any such Operating Agreement
        and Management Contracts, (iii) the Property Related Persons have not made
        any
        previous assignment of the Operating Agreements and Management Contracts
        to any
        Person, except as security for loans and other financial accommodations,
        if any,
        which are to be paid with the proceeds of the Loan and are to be terminated
        promptly following the date hereof, and (iv) no financing statement covering
        any
        of the Operating Agreements and Management Contracts is on file in any public
        office, except for those financing statements relating to loans and other
        financial accommodations which are to be paid with the proceeds of the Loan
        and
        are to be terminated promptly following the date hereof.

       

      (f)  Participation
        Agreements.
        The
        Borrower hereby represents that the CCRC Property is a private pay retirement
        community and as such, no Property Related Person has entered into any
        Participation Agreement with respect to the CCRC Property.

       

      (g)  Hill-Burton
        Act.
        The
        Borrower has not, nor to the best of the Borrower's knowledge, has any prior
        owner of the CCRC Property during the twenty (20) year period immediately
        preceding the date hereof, received any funds to finance the construction
        and/or
        acquisition of the CCRC Property pursuant to Title VI of the Public Health
        Service Act (commonly referred to as the Hill-Burton Act) or Title XVI of
        the
        Public Health Service Act.

       

      (h)  Fraud
        and Abuse.
        To the
        Borrower's knowledge, each Property Related Person, its directors, officers
        and
        employees have not engaged in any activities which are in violation of Sections
        1128A, 1128C or 1877 of the Social Security Act (42 U.S.C. §§ 1320a-7a, 1320a-7c
        and 1395nn), the False Claims Act (31 U.S.C. § 3729 et seq.), the Program Fraud
        Civil Remedies Act of 1986 (31 U.S.C. § 3801 et seq.) or other federal or state
        laws and regulations, including, but not limited to, the following:

       

      
        
          6

        

        
          
          

          
            

          

        

        
          
          

        

      

      (i)  knowingly
        and willfully making or causing to be made a false statement or representation
        of a material fact in any application for any benefit or payment;

       

      (ii)  knowingly
        and willfully making or causing to be made a false statement or representation
        of a material fact for use in determining rights to any benefit or
        payment;

       

      (iii)  failing
        to
        disclose knowledge of the occurrence of any event affecting the initial or
        continued right to any benefit or payment on its own behalf or on behalf
        of
        another, with intent to fraudulently secure such benefit or
        payment;

       

      (iv)  knowingly
        and willfully offering, paying, soliciting, or receiving any remuneration
        (including any kickback, bribe or rebate), directly or indirectly, overtly
        or
        covertly, in cash or in kind (A) in return for referring an individual to
        a
        Person for the furnishing or arranging for the furnishing of any item or
        service, (B) in return for purchasing, leasing or ordering, or arranging
        for or
        recommending, purchasing, leasing or ordering any good, facility, service
        or
        item; or

       

      (v)  billing
        a
        patient, resident or payor for health services specified in 42 U.S.C. § 1395nn
        or any other similar or comparable federal or state laws, or providing such
        health services to a patient or resident, upon a referral from a physician
        where
        such physician has a financial relationship with the Property Related Person
        to
        which no exception applies under each of the applicable laws.

       

      (i)  Certificate
        of Need Conditions.
        The
        Borrower covenants that it has developed and operated the CCRC Property and
        is
        providing services in a manner consistent with the representations made in
        the
        certificate of need application filed in connection with the CCRC Property
        and
        within the project scope and the conditions placed on the certificate of
        need,
        if any.

       

      ARTICLE
        III  

       

      COVENANTS
        AND WARRANTIES

       

      3.1.  Affirmative
        Covenants of the Borrower.
        The
        Borrower agrees as follows:

       

      (a)   Resident
        Agreements.
        The
        Borrower will submit to the Lender when requested by the Lender, all information
        requested by the Lender with respect to all Resident Agreements, excluding,
        however any medical information or other protected health information as
        defined
        in 45 CFR §160-103.

       

      
        
          7

        

        
          
          

          
            

          

        

        
          
          

        

      

      (b)  Conduct
        of Business and Compliance with Laws.
        The
        Borrower covenants and agrees that it or the Property Related Persons will
        (i)
        materially comply with all Governmental Requirements, including, without
        limitation, the Occupational Safety and Health Act of 1970, regulations issued
        under the Omnibus Budget Reconciliation Act of 1987, any Governmental
        Requirement relating to “informed consents” and rights of patients and
        residents, qualifications of staff, staffing requirements and delivery of
        services in a manner sufficient to protect the health and safety of patients
        and
        residents, (ii) maintain in full force and effect all Licenses necessary
        to the
        ownership and/or operation of the CCRC Property, including, without limitation,
        the license to operate the CCRC Property, Licenses and other approvals related
        to the storage, dispensation, use, prescription and disposal of drugs,
        medications and other “controlled substances” and, to the extent offered by the
        Borrower, the maintenance of cafeteria and other food and beverage facilities
        or
        services, (iii) maintain or cause to be maintained the standard of care for
        the
        patients and residents of the CCRC Property at all times at a level necessary
        to
        ensure a level of quality care and services for the patients and residents
        of
        the CCRC Property no less than prudent industry standard for a similar facility,
        (iv) maintain or cause to be maintained a standard of care in the storage,
        use,
        transportation and disposal of all medical equipment, medical supplies, medical
        products and medical waste, of any kind and in any form, that is in accordance
        with, at least, that of the prudent industry standard and in conformity with
        all
        Governmental Requirements, (v) operate or cause to be operated the CCRC Property
        in a prudent manner in material compliance with Governmental Requirements
        relating thereto and cause all Licenses, permits, certificates of need, and
        any
        other agreements materially necessary for the use and operation of the CCRC
        Property remain in effect, (vi) correct or cause to be corrected any deficiency
        set forth in any Agency statement of deficiencies, the curing of which is
        a
        condition of continued licensure or for accreditation of the CCRC Property,
        (vii) maintain or cause to be maintained sufficient inventory and equipment
        of
        types and quantities at the CCRC Property to enable the Property Related
        Persons
        to operate the CCRC Property adequately and in a manner which will enable
        the
        Borrower to comply with the provisions of the Loan Documents, and (viii)
        maintain or cause to be maintained all deposits, including, without limitation,
        deposits relating to residents, patients or Resident Agreements in accordance
        with customary and prudent business practices and all Governmental
        Requirements.

       

      (c)  Insurance.
        The
        Borrower shall ensure that all healthcare providers with whom the Property
        Related Persons contract to provide services at the CCRC Property are insured
        against claims arising from such services (including, without limitation,
        malpractice coverage) with the same limits, if any, as applicable to the
        Borrower pursuant to the Loan Documents or otherwise acceptable to the
        Lender.

       

      (d)  Notices.
        The
        Borrower shall promptly notify the Lender in writing upon obtaining knowledge
        of
        the occurrence of:

       

      (i)  the
        receipt by any Property Related Person of any notice, claim or demand from
        any
        Governmental Authority which alleges that a Property Related Person is in
        violation of any of the terms of, or has failed to comply with any material
        Governmental Requirement regulating its operation and business, including,
        but
        not limited to, the Health Care Financing Administration or any division
        thereof, the Occupational Safety and Health Act and the Environmental Protection
        Act;

       

      
        
          8

        

        
          
          

          
            

          

        

        
          
          

        

      

      (ii)  the
        actual, threatened or pending (A) revocation, suspension, probation,
        restriction, limitation, forfeiture or refusal to renew of any material License,
        or (B) the issuance or pending issuance of any material License for a period
        of
        less than twelve (12) months, as a consequence of sanctions imposed by any
        Governmental Authority, or (C) the assessment or threatened or pending
        assessment, of any civil or criminal penalties by any Governmental Authority
        or
        agent, or any accreditation organization;

       

      (iii)  any
        action, including, but not limited to the amendment of any License, or the
        issuance of any new License or certification for the CCRC Property, under
        which
        a Property Related Person proposes (A) to develop a new facility or service,
        (B)
        change any existing facility or service, or (C) to eliminate any existing
        or
        proposed service, which action requires the Property Related Person to seek
        either a certificate of need approval or exemption from certificate of need
        review or which requires amendment of any License or the issuance of any
        new
        License or certificate for the CCRC Property; 

       

      (iv)  any
        other
        development in the business or affairs of the Property Related Persons which
        could have a Material Adverse Change; or

       

      (v)  any
        actual, threatened or pending litigation with respect to the CCRC Property
        or
        the Property Related Persons;

       

      in
        each
        case describing in detail satisfactory to the Lender in its reasonable
        discretion the nature thereof and the action the Borrower proposes to take
        with
        respect thereto.

       

      (e)  Deficiency
        Notices.
        Without
        implying any limitation on any other provisions of this Agreement or any
        of the
        other Loan Documents, the Borrower will furnish or cause to be furnished
        to the
        Lender reasonably promptly after receipt thereof copies of all (A) Deficiency
        Notices, (B) Agency inspection reports, audits, surveys, investigations,
        reviews
        or evaluations, (C) relevant notices and written communications from any
        state
        or any Agency relating to material adjustments in reimbursement amounts or
        to
        rate reviews, modifications of rates, inflation adjustments, rate agreements
        or
        the like, and (D) responses by, or on behalf of, the Property Related Persons
        with respect to any of the foregoing. The Borrower shall or shall cause the
        Property Related Persons to promptly commence and diligently pursue the
        correction of the subject of each Deficiency Notice, and shall correct the
        subject of the Deficiency Notice promptly, but in any event prior to the
        expiration of any period allowed by the Agency for correction. The Borrower
        shall, at the Lender's request, promptly provide from time to time such cost
        estimates, reports and other information as the Lender may require to
        demonstrate to the Lender's satisfaction that the Property Related Persons
        have
        the financial and other ability to effect the correction and are taking the
        actions required by this Section.

       

      (f)  Intentionally
        Omitted.

       

      
        
          9

        

        
          
          

          
            

          

        

        
          
          

        

      

      (g)  Intentionally
        Omitted.

       

      (h)  Census
        Report and Surveys.
        To the
        extent permitted by all laws governing the privacy and confidentiality of
        individually identifiable health information, the Borrower will furnish to
        the
        Lender promptly following the request of the Lender reports of the CCRC Property
        periodic patient or resident census with a breakdown with respect to the
        source
        of payment, licensure survey results, accreditation survey results and such
        other information relating to the operation of the CCRC Property as may
        reasonably be requested by the Lender from time to time.

       

      (i)  Renewal
        of Agreements.
        The
        Borrower will or will cause the Property Related Persons to take any and
        all
        steps necessary to renew all Resident Agreements, and Operating Agreements
        and
        Management Contracts, except to the extent that the Borrower deems such renewal
        to be, in the exercise of prudent business judgment, contrary to the best
        interests of the Borrower.

       

      (j)  Financial
        Statements.
        The
        Borrower shall provide Lender the following financial statements and information
        on a continuing basis during the term of the Loan:

       

      (i)  Within
        one
        hundred twenty (120) days after the end of each calendar year, unaudited
        financial statements of Borrower and audited financial statements of Guarantor,
        prepared by a nationally recognized accounting firm or independent certified
        public accountant acceptable to Lender, which statements shall be prepared
        in
        accordance with GAAP, and shall include a balance sheet and statement of
        income
        and expenses for the year then ended. Lender reserves the right to require,
        after an Event of Default, annual audited financial statements of
        Borrower.

       

      (ii)  Within
        thirty (30) days after the end of each calendar month, unaudited monthly
        financial statements of the operations of the CCRC Property, prepared in
        accordance with GAAP, which statements shall include a balance sheet and
        statement of income and expenses for the calendar month then ended, together
        with a rent roll/census of the CCRC Property as of the end of such month,
        certified by a representative of Borrower to be true and correct to the best
        of
        the representative's knowledge and belief.

       

      (iii)  Within
        forty-five (45) days of the end of each calendar quarter, a balance sheet
        and
        statement of income and expenses of Borrower and Guarantor for the quarter
        then
        ended, certified by a representative of Borrower and Guarantor, as applicable,
        to be true and correct.

       

      (iv)  The
        Lender
        further reserves the right to require such other financial information of
        Borrower, Guarantor and/or the CCRC Property in such form and at such other
        times (including monthly or more frequently) as Lender shall reasonably deem
        necessary, and Borrower agrees promptly to provide or to cause to be provided,
        such information to Lender. All financial statements must be in the form
        and
        detail as Lender may from time to time reasonably request.

       

      
        
          10

        

        
          
          

          
            

          

        

        
          
          

        

      

      (v)  Within
        forty-five (45) days after the end of each calendar quarter, a Compliance
        Certificate in the form of Schedule
        I
        attached
        hereto and certified by a representative of the Borrower to be true and correct
        to the best of the representative's knowledge and belief.

       

      (k)  Compliance
        with Healthcare Information Laws.
        Without
        limiting the generality of any other provision of this Agreement including,
        without limitation, any other representation or warranty made herein, each
        of
        the Property Related Persons and the CCRC Property is in material compliance
        with all applicable statutes, laws, ordinances, rules and regulations of
        any
        federal, state or local governmental authority primarily relating to the
        confidentiality of patient healthcare information, including without limitation
        the Health Insurance Portability and Accountability Act of 1996, as amended,
        and
        the rules and regulations promulgated thereunder (“HIPAA”)
        (collectively, “Healthcare
        Information Laws”).
        The
        Property Related Persons have maintained in all material respects all records
        required to be maintained by any governmental agency or authority or otherwise
        under the Healthcare Information Laws and there are presently no material
        violations of the Healthcare Information Laws. Throughout the term of the
        Loan,
        the Property Related Persons will comply in all material respects with the
        Healthcare Information Laws.

       

      (l)  Replacement
        Reserve Escrow Account.
        As
        additional security for the Loan, upon request of Lender, Borrower shall
        establish and maintain a capital repair reserve (the “Replacement
        Reserve Escrow Account”)
        with
        Lender for payment of certain non-recurring types of costs and expenses incurred
        by Borrower for interior and exterior work to the Facility, including, without
        limitation, performance of work to the roofs, chimneys, gutters, downspouts,
        paving, curbs, driveways, ramps, balconies, porches, patios, exterior walls,
        exterior doors and doorways, floor coverings, windows, elevators and mechanical
        and HVAC equipment (collectively, the “Repairs”)
        provided such costs and expenses are incurred for repairs (A) not incurred
        for
        ordinary wear and tear at the Facility and (B) categorized under generally
        accepted accounting principles as a capital expense and not as an operating
        expense. Upon Lender's request that the Replacement Reserve Escrow Account
        be
        established and on each and every monthly payment date thereafter under the
        Note
        until the Note is fully paid and performed, Borrower shall deposit in the
        Replacement Reserve Escrow Account concurrently with and in addition to the
        monthly payment due under the Note a deposit to the Replacement Reserve Escrow
        Account in an amount equal to one twelfth (1/12th) of $300 per Unit at the
        Facility per annum.

       

      All
        sums
        in the Replacement Reserve Escrow Account shall be held by Lender in the
        Replacement Reserve Escrow Account to pay the costs and expenses of the Repairs
        and Lender shall, to the extent funds are available for such purpose in the
        Replacement Reserve Escrow Account, disburse to Borrower the amount incurred
        and
        paid by Borrower in performing such Repairs within 10 days following: (A)
        the
        receipt by Lender of a written request from Borrower for disbursement from
        the
        Replacement Reserve Escrow Account and a certification by Borrower that the
        applicable item of Repair has been completed; (B) the delivery to Lender
        of paid
        invoices, receipts or other evidence satisfactory to Lender, verifying the
        cost
        and payment of performing the Repairs; (C) for disbursement requests in excess
        of $10,000, the delivery to Lender of (1) affidavits, lien waivers or other
        evidence reasonably satisfactory to Lender showing that all materialmen,
        laborers, subcontractors and any other parties who might or could claim
        statutory or common law liens and are furnishing or have furnished material
        or
        labor to the Facility have been paid all amounts due for labor and materials
        furnished to the Facility; and (2) a certification from an inspecting architect,
        engineer or other consultant reasonably acceptable to Lender (the “Work
        Inspector”)
        describing the completed Repairs and verifying the completion of the Repairs
        and
        the value of the completed Repairs.

       

      
        
          11

        

        
          
          

          
            

          

        

        
          
          

        

      

      Lender
        shall not be required to make advances from the Replacement Reserve Escrow
        Account more frequently than once in any 30 day period or in an amount less
        than
        the lesser of $5,000 or the total cost of the Repairs for which the disbursement
        is requested. In making any payment from the Replacement Reserve Escrow Account,
        Lender shall be entitled to rely on such request from Borrower without any
        inquiry into the accuracy, validity or contestability of any such
        amount.

       

      The
        Replacement Reserve Escrow Account shall not, unless otherwise explicitly
        required by applicable law, be or be deemed to be escrow or trust funds.
        The
        Replacement Reserve Escrow Account shall be held in a separate account. Interest
        on the funds contained in the Replacement Reserve Escrow Account shall be
        paid
        by Lender to Borrower upon payment in full of the Loan.

       

      Upon
        the
        occurrence of an Event of Default, Lender may, but shall not be obligated,
        to
        apply at any time the balance then remaining in the Replacement Reserve Escrow
        Account against the Loan in whatever order Lender shall subjectively determine,
        together with the Make-Whole Breakage Amount arising on account of such payment.
        Upon full payment of the Loan in accordance with its terms or at such earlier
        time as Lender may elect, the balance of the Replacement Reserve Escrow Account
        plus all interest thereon then in Lender's possession shall be paid over
        to
        Borrower and no other party shall have any right or claim thereto. Lender
        shall
        have a perfected security interest in the Replacement Reserve Escrow Account
        as
        additional security to secure payment of the Note and Borrower shall execute
        and
        deliver to Lender such further financing statements and take such other action
        as Lender may require to evidence and/or perfect its security interest in
        the
        Replacement Reserve Escrow Account, including, without limitation, the execution
        and delivery to Lender of a pledge and security agreement in form reasonably
        satisfactory to Lender.

       

      Funds
        held
        in the Replacement Reserve Escrow Account are solely for the protection of
        Lender and entail no responsibility on Lender's part beyond the payment of
        the
        respective items for which they are held following receipt of bills, invoices
        or
        statements therefor in accordance with the terms hereof and beyond the allowing
        of due credit for the sums actually received. Upon assignment of the Loan
        by
        Lender, any funds in the Replacement Reserve Escrow Account shall be turned
        over
        to the assignee and any responsibility of Lender, as assignor, with respect
        thereto shall terminate.

       

      (m)  Management
        of the CCRC Property.
        The
        management of the CCRC Property shall be by either: (i) Borrower or an entity
        affiliated with Borrower approved by Lender for so long as Borrower or said
        affiliated entity is managing the CCRC Property in a first class manner;
        or (ii)
        a professional property management company approved by Lender. Such management
        by an affiliated entity or a professional property management company shall
        be
        pursuant to a written agreement approved by Lender. Any management agreement
        shall provide for a maximum allowable management fee of 5% of gross revenues.
        In
        no event shall any manager be removed or replaced or the terms of any management
        agreement modified or amended without the prior written consent of Lender.
        After
        an Event of Default or a default under any management agreement then in effect,
        which default is not cured within any applicable grace or cure period, Lender
        shall have the right to terminate, or to direct Borrower to terminate, such
        management agreement upon 30 days' notice and to retain, or to direct Borrower
        to retain, a new management agent approved by Lender. It shall be a condition
        of
        Lender's consent to any management agreement, whether with an affiliate of
        Borrower or otherwise, that such manager enter into an agreement with Lender
        whereby the manager acknowledges and agrees to the aforesaid rights of Lender
        and as to such other matters as Lender may reasonably require.

       

      
        
          12

        

        
          
          

          
            

          

        

        
          
          

        

      

      (n)  Net
        Operating Income Test.
        Subject
        to the cure rights set forth below, it shall be an immediate Event of Default
        if
        the Net Operating Income is less than $1,000,000, to be tested as of the
        end of
        each calendar quarter. Borrower may cure a default under this Section 3.1(n)
        upon payment to the Lender, within 45 days of the end of the calendar quarter
        upon which the default occurs, of (i) in the case of the first such default,
        (x)
        $100,000, which amount shall be applied to reduce the outstanding principal
        balance of the Note (as defined in the Security Instrument), in such order
        as
        Lender shall determine, and (y) $10,000, which amount shall be paid to Lender
        as
        a waiver fee and shall not be applied to payment of the Note, and (ii) in
        the
        case of the second such default, (x) $500,000, which amount shall be applied
        to
        reduce the outstanding principal balance of the Note (as defined in the Security
        Instrument), in such order as Lender shall determine, and (ii) $20,000, which
        amount shall be paid to Lender as a waiver fee and shall not be applied to
        payment of the Note. No cure shall be available in the case of the third
        such
        default. Borrower will provide Lender with satisfactory evidence confirming
        compliance with the provisions of this Section 3.1(n) within forty-five (45)
        days after the close of each calendar quarter in the form of the Compliance
        Certificate attached hereto as Schedule
        I.
        No
        Make-Whole Breakage Amount shall be due on account of the payments under
        Section
        3.1(n). 

       

      (o)  Intentionally
        Omitted.
        

       

      (p)  State
        Mandated Reserve Account.
        Borrower
        shall maintain with Lender at all times while the Loan is outstanding, the
        State
        of Pennsylvania mandated reserve account (the “State
        Mandated Reserve Account”)
        for the
        CCRC Property.

       

      (q)  Commitment
        Fee.
        Upon the
        execution of this Agreement, Borrower will pay Lender a loan commitment fee
        in
        the amount of $25,000.

       

      (r)  Transfer
        of License.
        Borrower
        shall apply to the State of Pennsylvania to transfer the current Certificate
        of
        Licensure, issued by the Pennsylvania Department of Health, from ARC Brandywine
        GP, LLC, the current license holder, to Borrower and shall provide Lender
        a copy
        of the new license upon issuance, but in any case, no later than June 30,
        2006.
        Such transfer shall not require the consent of Lender. 

       

      
        
          13

        

        
          
          

          
            

          

        

        
          
          

        

      

      (s)  Authorization
        to Transact Business.
        Within
        ninety (90) days from the date hereof, Borrower shall provide Lender
        satisfactory evidence that the Borrower is authorized to transact business
        in
        the commonwealth of Pennsylvania. 

       

      3.2.  Negative
        Covenants of the Borrower.
        The
        Borrower agrees as follows:

       

      (a)  Licenses.
        The
        Borrower will not allow any breach, withdrawal, rating reduction, restriction,
        suspension, probation, failure to renew, cancellation, rescission, termination,
        lapse or forfeiture of any License, permit, right, franchise or privilege
        materially necessary for the ownership or operation of the CCRC Property
        for the
        purposes for which the CCRC Property is intended.

       

      (b)  Agreements.
        The
        Borrower will not allow any breach, withdrawal, restriction, suspension,
        probation, failure to renew, cancellation, rescission, termination, lapse,
        alteration, forfeiture or modification of any material Operating Agreements
        and
        Management Contracts.

       

      (c)  Participation
        Agreements.
        Neither
        the Borrower nor any Property Related Persons will be a party to a Participation
        Agreement with respect to the CCRC Property.

       

      (d)  Amendments;
        Terminations.
        The
        Borrower will not amend or terminate or agree to amend or terminate any material
        License or consent to a waiver of, or waive, any material provisions thereof
        or
        amend or terminate or agree to amend or terminate, any material Operating
        Agreements and Management Contracts.

       

      ARTICLE
        IV  

       

      EVENTS
        OF DEFAULT

       

      4.1.  Events
        of Default.
        Each of
        the following shall be an Event of Default under this Agreement:

       

      (a)  Any
        involuntary, imposed, required, actual, threatened or pending revocation,
        suspension, termination, probation, restriction, limitation, forfeiture or
        refusal to renew, any License necessary or material to the operation of the
        CCRC
        Property.

       

      (b)  If
        the
        United States Department of Health and Human Services, Office of the Inspector
        General, or any federal, state or local Agency brings a claim, demand or
        cause
        of action against a Property Related Person or any shareholders, partners,
        members, directors, officers, employees or agents of a Property Related Person
        for violation of Section 1128A, 1128C or 1877 of the Social Security Act
        (42
        U.S.C. §§ 1320a-7a, 1320a-7c and 1395nn), the False Claims Act (31 U.S.C. § 3729
        et seq.), or the Program Fraud Civil Remedies Act of 1986 (31 U.S.C. §3801 et
        seq.).

       

      (c)  The
        failure of Borrower timely and properly to observe, keep or perform any
        covenant, agreement, warranty or condition herein required to be observed,
        kept
        or performed if such failure continues for 30 days after receipt by Borrower
        of
        written notice and demand for the performance of such covenant, agreement,
        warranty or condition (the “Grace
        Period”);
        provided, however, that the Grace Period shall be extended up to an additional
        60 days (for a total of 90 days from the date of default) if (i) Borrower
        immediately commences and diligently pursues the cure of such default and
        delivers (within the Grace Period) to Lender a written request for more time
        and
        (ii) Lender determines in good faith that (1) such default cannot be cured
        within the Grace Period but can be cured within 90 days after the default,
        (2)
        no lien or security interest created by the Loan Documents will be impaired
        prior to completion of such cure, and (3) Lender's immediate exercise of
        any
        remedies provided under the Loan Documents or by law is not necessary for
        the
        protection or preservation of the collateral subject to the Loan Documents
        or
        Lender's interest therein.

       

      
        
          14

        

        
          
          

          
            

          

        

        
          
          

        

      

      (d)  The
        occurrence of an Event of Default (as such term is defined therein) under
        the
        Security Instrument.

       

      (e)  Any
        representation contained herein is false or misleading in any material respect
        when made.

       

      (f)  The
        occurrence of a default under Section 3.1(n) that is not cured pursuant to
        the
        terms set forth in such Section.

       

      (g)  The
        occurrence of a default under the Pledge Agreement or Security Agreement
        which
        remains uncured after any applicable notice and cure periods.

       

      ARTICLE
        V  

       

      MISCELLANEOUS

       

      5.1.  Rights
        of Lender.
        Lender
        may waive any default or Event of Default without waiving any other prior
        or
        subsequent default or Event of Default. Lender may remedy any Event of Default
        without waiving the Event of Default remedied. Neither the failure by Lender
        to
        exercise, nor the delay by Lender in exercising, any right, power or remedy
        upon
        any Event of Default shall be construed as a waiver of such Event of Default
        or
        as a waiver of the right to exercise any such right, power or remedy at a
        later
        date. No single or partial exercise by Lender of any right, power or remedy
        hereunder shall exhaust the same or shall preclude any other or further exercise
        thereof, and every such right, power or remedy hereunder may be exercised
        at any
        time and from time to time. No modification or waiver of any provision hereof
        or
        consent to any departure by Borrower therefrom shall in any event be effective
        unless the same shall be in writing and signed by Lender and then such waiver
        or
        consent shall be effective only in the specific instances, for the purpose
        for
        which given and to the extent therein specified. No notice to nor demand
        on
        Borrower in any case shall of itself entitle Borrower to any other or further
        notice or demand in similar or other circumstances.

       

      5.2.  Heirs,
        Successors and Assigns.
        The
        terms, provisions, covenants and conditions hereof shall be binding upon
        Borrower, and the heirs, devisees, representatives, successors and assigns
        of
        Borrower including all successors in interest of Borrower in and to all or
        any
        part of the CCRC Property, and shall inure to the benefit of the Lender and
        its
        heirs, successors, substitutes and assigns. All references in this Agreement
        to
        Borrower or Lender shall be deemed to include all such heirs, devisees,
        representatives, successors, substitutes and assigns.

       

      
        
          15

        

        
          
          

          
            

          

        

        
          
          

        

      

      5.3.  Severability.
        A
        determination that any provision of this Agreement is unenforceable or invalid
        shall not affect the enforceability or validity of any other provision and
        any
        determination that the application of any provision of this Agreement to
        any
        person or circumstance is illegal or unenforceable shall not affect the
        enforceability or validity of such provision as it may apply to any other
        persons or circumstances.

       

      5.4.  Gender
        and Number.
        Within
        this Agreement, words of any gender shall be held and construed to include
        any
        other gender, and words in the singular number shall be held and construed
        to
        include the plural, and words in the plural number shall be held and construed
        to include the singular, unless in each instance the context otherwise
        requires.

       

      5.5.  Counterparts.
        This
        Agreement may be executed in any number of counterparts with the same effect
        as
        if all parties hereto had signed the same document. All such counterparts
        shall
        be construed together and shall constitute one instrument, but in making
        proof
        hereof it shall only be necessary to produce one such counterpart.

       

      5.6.  Joint
        and Several.
        Where
        two or more persons or entities have executed this Agreement as Borrower,
        the
        obligations of Borrower hereunder shall be joint and several.

       

      5.7.  Headings.
        The
        Section headings contained in this Agreement are for convenience only and
        shall
        in no way enlarge or limit the scope or meaning of the various and several
        Sections hereof.

       

      5.8.  Amendments.
        Neither
        this Agreement nor any provision hereof may be changed, waived, discharged
        or
        terminated orally, but only by an instrument in writing signed by the party
        against whom enforcement of the change, waiver, discharge or termination
        is
        sought.

       

      5.9.  Notice.
        Any
        notice or communication required or permitted hereunder shall be given in
        the
        manner set forth in the Security Instrument.

       

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

       

      5.11.   Assignment
        by Lender.
        Lender
        shall have the right to assign any portion of the Loan Documents and/or the
        Loan
        and to disseminate to such assignee or any proposed assignee any information
        it
        has pertaining to the Loan, including without limitation, complete and current
        credit information on Borrower, any of its principals and any guarantor.
        In the
        event of such an assignment, Borrower will agree to such modifications to
        the
        Loan Documents as will facilitate such assignment, provided that such
        modifications will not materially add to the obligations of Borrower. It
        is
        understood that any assignment by Lender will not result in additional cash
        expense to Borrower. Neither the shareholders, nor the trustees of a real
        estate
        investment trust assignee shall be personally liable for the obligations
        of such
        trust and Borrower will agree to look solely to the trust property for the
        payment of any claim hereunder.

       

      5.12.  Loan
        Participation
        .
        Borrower acknowledges and agrees that Lender may, from time to time, sell
        or
        offer to sell interests in the Loan and Loan Documents to one or more
        participants. Borrower authorizes Lender to disseminate to such participant
        or
        prospective participant, any information it has pertaining to the Loan,
        including without limitation, complete and current credit information on
        the
        Borrower, any of its principals and guarantor. Upon request, Borrower shall
        execute and deliver new or replacement promissory notes to Lender and the
        assignee of Lender evidencing their respective prorata share of the Loan,
        provided Borrower is provided with cancelled notes or other indemnities or
        assurances with respect to notes being replaced, if any.

       

      
        
          16

        

        
          
          

          
            

          

        

        
          
          

        

      

      5.13.  Confidential
        Information.
        During
        the term of the Loan, Lender, its agents or employees may encounter individually
        identifiable healthcare information or other confidential information relating
        to the residents at the Facility or the CCRC Property (collectively, the
        "Confidential
        Information").
        Unless
        otherwise required by law, Lender, its agents and employees shall not disclose,
        compile, aggregate, remove from the Facility or record in any manner any
        Confidential Information, and shall not cause Borrower, any Property Related
        Person, the Facility or the CCRC Property to violate any laws, regulations
        or
        ordinances intended to protect the privacy rights of the residents at the
        Facility, including, without limitation, HIPAA or its implementing
        regulations.

       

      IN
        WITNESS
        WHEREOF, Borrower and Lender have hereunto caused these presents to be executed
        on the date first above written.

       

      

       

      REMAINDER
        OF PAGE INTENTIONALLY BLANK

       

      SIGNATURE
        PAGES FOLLOW

       

      

      
        
          17

        

        
          
          

          
            

          

        

        
          
          

        

      

      SIGNATURE
        PAGE OF BORROWER TO

      LOAN
        AGREEMENT

       

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

       

      
        	 	
                By:

              	
                ARC
                  Brandywine GP, LLC, a Tennessee
limited liability company, its general
                  partner

              

      

       

      

       

       

      
        	 	
                By:

              	                                                                       
                

        	 	
                Name:

              	                                                                       
                

        	 	Title:	                                                                       
                

      

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

      

      SIGNATURE
        PAGE OF LENDER TO

      LOAN
        AGREEMENT

       

      
        	 	 	 
	 	GUARANTY
                BANK, a federal savings bank
	 
 	 
 	 
 
	 	By:  	/s/ Jeff
                C.
                Ringwald
	 	
                

              
	 	Name:
                Jeff C. Ringwald
Title: Senior Vice
                President 

       

      
        
          
            

          

          
          

        

        
          
          

          
            

          

        

        
          
          

          
          

        

      

      SCHEDULE
        I

       

      COMPLIANCE
        CERTIFICATE

       

      Quarterly
        Net Operating Income Test

       

      

      

      Guaranty
        Bank

      8333
        Douglas Avenue, Suite 1100

      Dallas,
        TX
        75225

      Attn:
        Healthcare Finance Lending Division

       

      
        	 	
                RE:

              	
                Loan
                  Agreement dated December ___, 2005 (the “Agreement”),
                  by and between ARC Brandywine, L.P. (the “Borrower”),
                  and Guaranty Bank

              

      

       

      The
        undersigned officer of Borrower does hereby certify, to the best of his
        knowledge and belief, that for the calendar quarter ending ____________,
        20___(the “Calendar
        Quarter”):

       

      1. No
        Event
        of Default has occurred or exists except ____________________

___________________________________________.

       

      2. The
        CCRC
        Property quarterly Net Operating Income was:

       

      
        	 	
                Required:

              	
                $1,000,000

              

      

      Actual: $__________

      

      3. The
        financial statements of Borrower and the CCRC Property and the rent roll/census
        attached hereto are true and correct. Copies of the financial statements
        of
        Guarantor are attached.

      

      4. Attached
        hereto are copies of all matters with respect to which Borrower is required
        to
        give Lender notice under Section 3.1(d) of the Loan Agreement.

      

      5. Capitalized
        terms not defined herein shall have the meanings given to such terms in the
        Agreement.

       

      6. The
        manner
        of calculation of the above is attached.

      

      ARC
        BRANDYWINE, L.P., a Delaware limited

      partnership

      

      By: ARC
        Brandywine GP, LLC, a Tennessee

      limited
        liability company, its general partner

      

      
         

        
          	 	
                  By:

                	                                                                       
                  

          	 	
                  Name:

                	                                                                       
                  

          	 	Title:	                                                                       
                  

        

         

         

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      Exhibit
        A

       

      LEGAL
        DESCRIPTION

       

      CCRC
        PROPERTY

       

       

      PREMISES
        A

       

      ALL
        THAT
        CERTAIN LOT OR PIECE OF GROUND SITUATE IN WEST BRANDYWINE TOWNSHIP, CHESTER
        COUNTY, PENNSYLVANIA, BOUNDED AND DESCRIBED ACCORDING TO ALTA/ASCM LAND TITLE
        SURVEY FOR FREEDOM VILLAGE AT BRANDYWINE, PREPARED BY EDWARD B. WALSH AND
        ASSOCIATES, INC., 125 DOWLIN FORGE ROAD, LIONVILLE PROFESSIONAL CENTER, EXTON,
        PA, DATED MAY 16, 2005, AS FOLLOWS: 

       

      BEGINNING
        AT A SPIKE ON THE TITLE LINE IN THE BED OF CALN MEETINGHOUSE ROAD (T-413),
        A
        CORNER OF LANDS NOW OR FORMERLY OF WILLIAM F. HAMMELL AND DIANE H. HAMMELL,
        HIS
        WIFE; THENCE EXTENDING ALONG SAID TITLE LINE IN THE BED OF SAID ROAD THE
        SIX (6)
        FOLLOWING COURSES AND DISTANCES: (1) SOUTH 83 DEGREES 00 MINUTES 14 SECONDS
        EAST
        101.67 FEET TO A PK NAIL; (2) SOUTH 81 DEGREES 46 MINUTES 14 SECONDS EAST
        160.73
        FEET TO A PK NAIL: (3) SOUTH 72 DEGREES 08 MINUTES 14 SECONDS EAST 180.25
        FEET
        TO A PK NAIL; (4) SOUTH 70 DEGREES 14 MINUTES 14 SECONDS EAST 179.80 FEET
        TO A
        PK NAIL; (5) SOUTH 69 DEGREES 21 MINUTES 14 SECONDS EAST 295.20 FEET TO A
        PK
        NAIL; (6) SOUTH 71 DEGREES 03 MINUTES 57 SECONDS EAST 431.61 FEET TO A SPIKE
        ON
        THE LINE DIVIDING EAST BRANDYWINE AND WEST BRANDYWINE TOWNSHIPS; THENCE
        EXTENDING THE ALONG SAME, CROSSING THE SOUTHERLY SIDE OF CALN MEETINGHOUSE
        ROAD
        AND ALONG LANDS NOW OR FORMERLY OF KEVIN AND LYNNE M. SASKA AND JEFFREY S.
        CHAMBERLAIN, RESPECTIVELY, SOUTH 00 DEGREES 21 MINUTES 14 SECONDS WEST 609.79
        FEET, TO A REBAR IN THE NORTH LINE OF LANDS NOW OR FORMERLY OF WILLIAM F.
        HAMMELL AND DIANE H. HAMMELL; THENCE EXTENDING ALONG SAID LANDS THE THREE
        (3)
        FOLLOWING COURSES AND DISTANCES: (1) LEAVING THE TOWNSHIP DIVIDING LINE,
        SOUTH
        85 DEGREES 10 MINUTES 24 SECONDS WEST 15.86 FEET TO A REBAR; (2) SOUTH 04
        DEGREES 49 MINUTES 36 SECONDS EAST 174.90 FEET TO AN IRON PIN; (3) SOUTH
        85
        DEGREES 11 MINUTES 30 SECONDS WEST 1161.31 FEET TO A CORNER OF LANDS NOW
        OR
        FORMERLY OF COATESVILLE HOSPITAL CORPORATION; THENCE EXTENDING ALONG SAME,
        ALONG
        LANDS OF PREMISES "B" - TRACT I (AS SHOWN ON SAID PLAN), AND ALONG LANDS
        NOW OR
        FORMERLY OF WILLIAM F. AND DIANE H. HAMMELL, NORTH 05 DEGREES 30 MINUTES
        14
        SECONDS WEST, CROSSING A DRAINAGE EASEMENT AND RECROSSING THE SOUTHERLY SIDE
        OF
        CALN MEETINGHOUSE ROAD, 1284.26 FEET TO THE FIRST MENTIONED POINT AND PLACE
        OF
        BEGINNING. CONTAINING: 29.368 ACRES OF LAND, BE THE SAME MORE OR LESS.

       

      
        
          1

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      PREMISES
        B

       

      ALL
        THOSE
        CERTAIN LOTS OR PIECES OF GROUND SITUATE IN WEST BRANDYWINE TOWNSHIP, CHESTER
        COUNTY, PENNSYLVANIA, BOUNDED AND DESCRIBED ACCORDING TO AN ALTA/ASCM LAND
        TITLE
        SURVEY FOR FREEDOM VILLAGE AT BRANDYWINE, PREPARED BY EDWARD B. WALSH AND
        ASSOCIATES, INC.,125 DOWLIN FORGE ROAD, LIONVILLE PROFESSIONAL CENTER, EXTON,
        PA, DATED MAY 16, 2005, AS FOLLOWS: 

       

      TRACT
        I

       

      BEGINNING
        AT A MAG NAIL SET ON THE TITLE LINE IN THE BED OF REECEVILLE ROAD (S.R. 4005),
        THE SOUTHWESTERLY CORNER OF LANDS NOW OR FORMERLY OF JOHN AND MARY J. MAX;
        THENCE EXTENDING ALONG SAID LANDS AND CROSSING THE EASTERLY SIDE OF SAID
        ROAD,
        ALONG THE SOUTHERLY SIDE OF A SIGN/GRADING EASEMENT, NORTH 84 DEGREES 48
        MINUTES
        04 SECONDS EAST CROSSING A MONUMENT AT 30.14 FEET, A TOTAL DISTANCE OF 240.05
        FEET TO A POINT 0.60' SOUTHWEST OF A MONUMENT FOUND, A CORNER OF LANDS NOW
        OR
        FORMERLY OF WILLIAM F. HAMMELL AND DIANE H. HAMMELL; THENCE EXTENDING ALONG
        SAME, CROSSING A 20 FOOT WIDE WATER EASEMENT, NORTH 84 DEGREES 46 MINUTES
        59
        SECONDS EAST 509.84 FEET TO A REBAR SET IN THE WEST LINE OF PREMISES A,
        HEREINABOVE DESCRIBED; THENCE EXTENDING ALONG SAID LANDS, SOUTH 05 DEGREES
        30
        MINUTES 14 SECONDS EAST 60.00 FEET TO A REBAR SET, A CORNER OF LANDS NOW
        OR LATE
        OF COATESVILLE HOSPITAL CORPORATION; THENCE EXTENDING ALONG SAID LANDS, THE
        FOLLOWING TWO (2) COURSES AND DISTANCES: (1) RECROSSING SAID WATER EASEMENT,
        SOUTH 84 DEGREES 46 MINUTES 59 SECONDS WEST 512.44 FEET TO AN IRON PIN; (2)
        ALONG THE NORTHERLY SIDE OF A SIGN/GRADING EASEMENT, SOUTH 84 DEGREES 48
        MINUTES
        04 SECONDS WEST, CROSSING OVER A MAG NAIL SET ON THE EASTERLY SIDE OF PREMISES
        B
        - TRACT II HEREINBELOW DESCRIBED, ALONG THE NORTHERLY LINE OF THE SAME, CROSSING
        OVER ANOTHER MAG NAIL SET ON THE EASTERLY SIDE OF SAID REECEVILLE ROAD, 239.05
        FEET TO A MAG NAIL SET ON THE TITLE LINE IN THE BED OF SAID ROAD; THENCE
        EXTENDING ALONG SAME, NORTH 03 DEGREES 58 MINUTES 08 SECONDS WEST 60.01 FEET
        TO
        THE FIRST MENTIONED POINT AND PLACE OF BEGINNING.

       

      CONTAINING:
        1.034 ACRES OF LAND, BE THE SAME MORE OR LESS.

       

      TRACT
        II

       

      BEGINNING
        AT A MAG NAIL SET ON THE EASTERN LEGAL RIGHT-OF-WAY LINE OF REECEVILLE ROAD
        (S.R. 4005), 40 FEET WIDE AND ON THE SOUTH LINE OF TRACT I, HEREINABOVE
        DESCRIBED; THENCE FROM SAID POINT OF BEGINNING, ALONG TRACT I, NORTH 84 DEGREES
        48 MINUTES 04 SECONDS EAST 10.00 FEET TO A MAG NAIL SET; THENCE LEAVING SAID
        LINE OF TRACT I, ALONG LANDS NOW OR LATE OF WILLIAM D. AND MARY R. HUTTINGER,
        THE FOLLOWING TWO (2) COURSES AND DISTANCES: (1) IN A SOUTHERLY DIRECTION,
        SOUTH
        03 DEGREES 58 MINUTES 08 SECONDS EAST 250.00 FEET TO AN IRON PIN; (2) SOUTH
        84
        DEGREES 48 MINUTES 04 SECONDS WEST 10.00 FEET TO A POINT ON THE EASTERN LEGAL
        RIGHT-OF-WAY LINE OF REECEVILLE ROAD (S.R. 4005) 40 FEET WIDE; THENCE CONTINUING
        ALONG SAID RIGHT-OF-WAY LINE IN A NORTHERN DIRECTION, NORTH 03 DEGREES 58
        MINUTES 08 SECONDS WEST250.00 FEET TO THE POINT AND PLACE OF BEGINNING.

       

      
        
          2

        

        
          
          

          
            

          

        

        
          
          

        

      

      CONTAINING:
        2,500 SQUARE FEET OF LAND, BE THE SAME MORE OR LESS.

       

       

      BEING:
        CHESTER COUNTY TAX PARCEL 29-7-172

       

      EXCEPTING
        THEREOUT AND THEREFROM: ALL THOSE LIFE ESTATE INTERESTS CONVEYED IN CONDOMINIUM
        UNITS (FREEDOM VILLAGE AT BRANDYWINE, A CONDOMINIUM) IN VARIOUS DEEDS OUT
        OF
        FREEDOM VILLAGEAT BRANDYWINE LIMITED PARTNERSHIP (DECLARANT).

      
 

      
        
          3

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