Document:

Unassociated Document

    
       

      Exhibit
        10.83

       

      

       

      

 

       

      CONSTRUCTION
        LOAN AGREEMENT

       

      by
        and
        between

       

      American
        Retirement Corporation,

       

      a
        Tennessee corporation,

       

      as
        Borrower,

       

      and

       

      Bank
        of
        America, N.A.,

       

      a
        national
        banking association,

       

      as
        Lender,

       

      with
        respect to The Cumberland at Green Hills

       

      Burton
        Hills, Nashville, Tennessee

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        TABLE
          OF CONTENTS

      

       

      

        
          	 	 	
                  Page

                
	
                  Article
                    I

                	
                  General
                    Information

                	
                  1

                
	
                  Section
                    1.1

                	
                  Conditions
                    to Closing

                	
                  1

                
	
                  Section
                    1.2

                	
                  Schedules

                	
                  1

                
	
                  Section
                    1.3

                	
                  Defined
                    Terms

                	
                  1

                
	
                  Article
                    II

                	
                  Advances
                    of the Loan

                	
                  1

                
	
                  Section
                    2.1

                	
                  The
                    Loan

                	
                  1

                
	
                  Section
                    2.2

                	
                  Purpose;
                    Reallocation; Revenues from Property

                	
                  2

                
	
                  Section
                    2.3

                	
                  Draw
                    Requests

                	
                  2

                
	
                  Section
                    2.4

                	
                  Additional
                    Terms Regarding Advances

                	
                  2

                
	
                  Section
                    2.5

                	
                  Liability
                    of Lender

                	
                  2

                
	
                  Article
                    III

                	
                  Representations
                    and Warranties

                	
                  2

                
	
                  Section
                    3.1

                	
                  Organization,
                    Power and Authority of Borrower; Loan Documents

                	
                  3

                
	
                  Section
                    3.2

                	
                  Other
                    Documents; Laws

                	
                  3

                
	
                  Section
                    3.3

                	
                  Taxes

                	
                  3

                
	
                  Section
                    3.4

                	
                  Legal
                    Actions

                	
                  3

                
	
                  Section
                    3.5

                	
                  Nature
                    of Loan

                	
                  3

                
	
                  Section
                    3.6

                	
                  Trade
                    Names

                	
                  4

                
	
                  Section
                    3.7

                	
                  Financial
                    Statements

                	
                  4

                
	
                  Section
                    3.8

                	
                  ERISA
                    and Prohibited Transactions

                	
                  4

                
	
                  Section
                    3.9

                	
                  Compliance
                    with Zoning and Other Requirements

                	
                  4

                
	
                  Section
                    3.10

                	
                  Plans
                    and Specifications

                	
                  4

                
	
                  Section
                    3.11

                	
                  Building
                    Permits; Other Permits

                	
                  4

                
	
                  Section
                    3.12

                	
                  Utilities

                	
                  5

                
	
                  Section
                    3.13

                	
                  Access;
                    Roads

                	
                  5

                
	
                  Section
                    3.14

                	
                  Other
                    Liens

                	
                  5

                
	
                  Section
                    3.15

                	
                  No
                    Work Commenced

                	
                  5

                
	
                  Section
                    3.16

                	
                  No
                    Material Adverse Change

                	
                  5

                
	
                  Section
                    3.17

                	
                  Defaults

                	
                  5

                
	
                  Section
                    3.18

                	
                  Affirmation
                    of Representations and Warranties

                	
                  5

                
	
                  Article
                    IV

                	
                  Affirmative
                    Covenants and Agreements

                	
                  6

                
	
                  Section
                    4.1

                	
                  Commencement
                    and Completion of Construction

                	
                  6

                
	
                  Section
                    4.2

                	
                  Approval
                    of Construction

                	
                  6

                

        

      

       

      
        
          -i-

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        TABLE
          OF CONTENTS

        (continued)

      

      

        
          	 	 	
                  Page

                
	
                  Section
                    4.3

                	
                  Deposits
                    to Balance Loan

                	
                  6

                
	
                  Section
                    4.4

                	
                  Compliance
                    with Laws; Encroachments

                	
                  7

                
	
                  Section
                    4.5

                	
                  Inspections;
                    Cooperation

                	
                  7

                
	
                  Section
                    4.6

                	
                  Contracts,
                    Vouchers and Receipts

                	
                  7

                
	
                  Section
                    4.7

                	
                  Payment
                    and Performance of Contractual Obligations

                	
                  7

                
	
                  Section
                    4.8

                	
                  Correction
                    of Construction Defects

                	
                  7

                
	
                  Section
                    4.9

                	
                  Insurance

                	
                  8

                
	
                  Section
                    4.10

                	
                  Adjustment
                    of Condemnation and Insurance Claim

                	
                  9

                
	
                  Section
                    4.11

                	
                  Utilization
                    of Net Proceeds

                	
                  9

                
	
                  Section
                    4.12

                	
                  Management

                	
                  10

                
	
                  Section
                    4.13

                	
                  Books
                    and Records; Financial Statements

                	
                  10

                
	
                  Section
                    4.14

                	
                  Estoppel
                    Certificates

                	
                  11

                
	
                  Section
                    4.15

                	
                  Taxes

                	
                  11

                
	
                  Section
                    4.16

                	
                  Lender’s
                    Rights to Pay and Perform

                	
                  11

                
	
                  Section
                    4.17

                	
                  Reimbursement;
                    Interest

                	
                  11

                
	
                  Section
                    4.18

                	
                  Notification
                    by Borrower

                	
                  12

                
	
                  Section
                    4.19

                	
                  Indemnification
                    by Borrower

                	
                  12

                
	
                  Section
                    4.20

                	
                  Fees
                    and Expenses

                	
                  12

                
	
                  Section
                    4.21

                	
                  Appraisals

                	
                  12

                
	
                  Section
                    4.22

                	
                  Leasing
                    and Tenant Matters

                	
                  12

                
	
                  Section
                    4.23

                	
                  Principal
                    Depository

                	
                  13

                
	
                  Section
                    4.24

                	
                  Swap
                    Contracts

                	
                  13

                
	
                  Article
                    V

                	
                  Negative
                    Covenants

                	
                  13

                
	
                  Section
                    5.1

                	
                  Conditional
                    Sales

                	
                  13

                
	
                  Section
                    5.2

                	
                  Changes
                    to Plans and Specifications

                	
                  13

                
	
                  Section
                    5.3

                	
                  Changes
                    to ASF Loan Documents or the Subordinated Loan Documents

                	
                  13

                
	
                  Section
                    5.4

                	
                  Insurance
                    Policies and Bonds

                	
                  13

                
	
                  Section
                    5.5

                	
                  Consolidated
                    Fixed Charge Coverage Ratio

                	
                  13

                
	
                  Article
                    VI

                	
                  Events
                    of Default

                	
                  14

                
	
                  Section
                    6.1

                	
                  Payment
                    Default

                	
                  14

                
	
                  Section
                    6.2

                	
                  Default
                    Under Other Loan Documents

                	
                  14

                
	
                  Section
                    6.3

                	
                  Accuracy
                    of Information; Representations and Warranties

                	
                  14

                

      

      
        
          -ii-

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      TABLE
        OF CONTENTS

      
        (continued)

      

       

       

      

        
          	 	 	
                  Page

                
	
                  Section
                    6.4

                	
                  Covenants

                	
                  14

                
	
                  Section
                    6.5

                	
                  Deposits

                	
                  14

                
	
                  Section
                    6.6

                	
                  Insurance
                    Obligations

                	
                  14

                
	
                  Section
                    6.7

                	
                  Other
                    Obligations

                	
                  14

                
	
                  Section
                    6.8

                	
                  Progress
                    of Construction

                	
                  15

                
	
                  Section
                    6.9

                	
                  Damage
                    to Improvements

                	
                  15

                
	
                  Section
                    6.10

                	
                  Lapse
                    of Permits or Approvals

                	
                  15

                
	
                  Section
                    6.11

                	
                  Completion
                    of Construction

                	
                  15

                
	
                  Section
                    6.12

                	
                  Mechanic’s
                    Lien

                	
                  15

                
	
                  Section
                    6.13

                	
                  Survey
                    Matters

                	
                  15

                
	
                  Section
                    6.14

                	
                  General
                    Contractor Default

                	
                  15

                
	
                  Section
                    6.15

                	
                  Performance
                    Enjoined or Prohibited

                	
                  16

                
	
                  Section
                    6.16

                	
                  Bankruptcy

                	
                  16

                
	
                  Section
                    6.17

                	
                  Appointment
                    of Receiver, Trustee, Liquidator

                	
                  16

                
	
                  Section
                    6.18

                	
                  Judgment

                	
                  16

                
	
                  Section
                    6.19

                	
                  Dissolution;
                    Change in Business Status

                	
                  16

                
	
                  Section
                    6.20

                	
                  Default
                    Under Other Indebtedness

                	
                  16

                
	
                  Section
                    6.21

                	
                  Change
                    in Controlling Interest

                	
                  16

                
	
                  Section
                    6.22

                	
                  Material
                    Adverse Change

                	
                  16

                
	
                  Article
                    VII

                	
                  Remedies
                    on Default

                	
                  17

                
	
                  Section
                    7.1

                	
                  Remedies
                    on Default

                	
                  17

                
	
                  Section
                    7.2

                	
                  No
                    Release or Waiver; Remedies Cumulative and Concurrent

                	
                  18

                
	
                  Article
                    VIII

                	
                  Miscellaneous

                	
                  18

                
	
                  Section
                    8.1

                	
                  Further
                    Assurances; Authorization to File Documents

                	
                  18

                
	
                  Section
                    8.2

                	
                  No
                    Warranty by Lender

                	
                  19

                
	
                  Section
                    8.3

                	
                  Standard
                    of Conduct of Lender

                	
                  19

                
	
                  Section
                    8.4

                	
                  No
                    Partnership

                	
                  19

                
	
                  Section
                    8.5

                	
                  Severability

                	
                  19

                
	
                  Section
                    8.6

                	
                  Notices

                	
                  19

                
	
                  Section
                    8.7

                	
                  Permitted
                    Successors and Assigns; Disclosure of Information

                	
                  21

                
	
                  Section
                    8.8

                	
                  Modification;
                    Waiver

                	
                  21

                
	
                  Section
                    8.9

                	
                  Third
                    Parties; Benefit

                	
                  21

                

        

      

       

      
        
          -iii-

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        TABLE
          OF CONTENTS

        (continued)

      

       

      

        
          	 	 	
                  Page

                
	
                  Section
                    8.10

                	
                  Rules
                    of Construction

                	
                  22

                
	
                  Section
                    8.11

                	
                  Counterparts

                	
                  22

                
	
                  Section
                    8.12

                	
                  Signs;
                    Publicity

                	
                  22

                
	
                  Section
                    8.13

                	
                  Governing
                    Law

                	
                  22

                
	
                  Section
                    8.14

                	
                  Time
                    of Essence

                	
                  22

                
	
                  Section
                    8.15

                	
                  Electronic
                    Transmission of Data

                	
                  22

                
	
                  Section
                    8.16

                	
                  Dispute
                    Resolution

                	
                  23

                
	
                  Section
                    8.17

                	
                  Forum

                	
                  24

                
	
                  Section
                    8.18

                	
                  WAIVER
                    OF JURY TRIAL

                	
                  24

                
	
                  Section
                    8.19

                	
                  USA
                    Patriot Act Notice

                	
                  25

                
	
                  Section
                    8.20

                	
                  Entire
                    Agreement

                	
                  25

                
	
                  Section
                    8.21

                	
                  HIPPA
                    Disclosure

                	
                  25

                

        

      

       

      
        
          -iv-

        

        
          
          

          
            

          

        

        
          
          

        

      

      
 

      
        	 	
                 Schedules
                  to Construction Loan Agreement

              	 
	 	 	 
	
                Schedule
                  1

              	
                Definitions

              	
              
	
                Schedule
                  2

              	
                Form
                  of Draw Request

              	 
	
                Schedule
                  3

              	
                Budget

              	 
	
                Schedule
                  4

              	
                Project
                  Schedule

              	 
	
                Schedule
                  5

              	
                Additional
                  Terms Regarding Advances

              	 
	
                Schedule
                  6

              	
                Leasing
                  and Tenant Matters

              	 
	
                Schedule
                  7

              	
                Swap
                  Contracts

              	 

      

       

      
        
          i

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      Construction
        Loan Agreement

       

      This
        Construction Loan Agreement (this “Agreement”)
        is made
        as of the 12th
        day of
        December, 2005, by and between American Retirement Corporation, a Tennessee
        corporation (“Borrower”),
        and
        Bank of America, N.A., a national banking association (“Lender”).

       

      Recitals

       

      Borrower
        has applied to Lender for a loan to assist in financing certain costs related
        to
        the construction and development of improvements on real property in Burton
        Hills, Nashville, Tennessee. The Borrower has simultaneously herewith sold
        its
        interest in the real property to ASF of Green Hills, LLC, a Tennessee non-profit
        limited liability company ("ASF") owned solely by American Seniors Foundation,
        an Ohio non-profit corporation ("American Seniors"). Borrower intends to
        re-lend
        the entire proceeds of its loan from Lender to ASF pursuant to separate
        construction loan documentation between Borrower and ASF, and to act as the
        developer of the property and the improvements on ASF's behalf. Lender has
        agreed to make the loan to Borrower for the sole purpose of the Borrower
        re-lending same to ASF on the terms and conditions set forth in this Agreement
        and in the other documents, including without limitation those documents
        between
        Borrower and ASF evidencing and securing the second loan (the "ASF
        Loan").

       

      Now,
        therefore, in consideration of the premises, and in further consideration
        of the
        mutual covenants and agreements herein set forth and of the sum of Ten Dollars
        ($10.00) paid by each party to the other, receipt of which is hereby
        acknowledged, the parties covenant and agree as follows:

       

       

      Agreements

       

      Article
        I  

      General
        Information.

       

      Section
        1.1  Conditions
        to Closing.

       

      The
        conditions precedent to closing the Loan and recording the Mortgage are set
        forth in the Closing Checklist.

       

      Section
        1.2  Schedules.

       

      The
        Schedules attached to this Agreement are incorporated herein and made a part
        hereof.

       

      Section
        1.3  Defined
        Terms.

       

      Capitalized
        terms in this Agreement shall have the meanings ascribed to such terms in
        the
        Preamble hereto and in Schedule 1.

       

      Article
        II  

      Advances
        of the Loan.

       

      Section
        2.1  The
        Loan.

       

      Borrower
        agrees to borrow the Loan from Lender, and Lender agrees to lend the Loan
        to
        Borrower, subject to the terms and conditions herein set forth, in incremental
        advances which will not exceed, in the aggregate, the Loan Amount. Interest
        shall accrue and be payable in arrears only on sums advanced hereunder for
        the
        period of time outstanding. The Loan is not a revolving loan; amounts repaid
        may
        not be re-borrowed.

       

      
        
          PAGE
            1

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      Section
        2.2  Purpose;
        Reallocation; Revenues from Property.

       

      The
        Loan
        shall be advanced by Lender in accordance with the terms of this Agreement
        to
        pay those expenses related to the Loan and the Property that are described
        in
        the Budget, but not, in the aggregate with respect to any line item set forth
        in
        the Budget, in excess of the amount of the Loan to be disbursed for such
        line
        item, as set forth in the Budget. Borrower will receive each advance in trust
        for the purpose of paying only those costs for which the advance is made
        and
        will utilize the funds advanced for no other purpose. With the prior approval
        of
        Lender, any cost savings, actual or estimated, affecting any approved line
        item
        within the Budget, other than the interest reserve, may be reallocated by
        Borrower to any other line item within the Budget. Upon completion of the
        Improvements and the payment of all costs in connection therewith, any
        undisbursed proceeds of the Loan shall be allocated to the interest reserve
        or
        to such other line item as Lender shall approve. Each disbursement from a
        contingency reserve shall be subject to approval by Lender as to the amount
        and
        purpose for which such disbursement will be used. If and when revenues are
        derived from the Property in amounts sufficient to pay all or any portion
        of the
        operating expenses of the Property or all or any portion of the interest
        on the
        Loan, revenues will be used to pay such expenses and/or interest, and Lender,
        at
        its sole option, may restrict or prohibit future disbursements of the Loan
        for
        such purposes to the extent that revenues are sufficient to pay such
        amounts.

       

      Section
        2.3  Draw
        Requests.

       

      Advances
        shall be made not more frequently than monthly based on draw requests signed
        by
        an Authorized Signers in the form attached hereto as Schedule 2.
        Each
        draw request, whether for hard or soft costs, shall be set forth on AIA Forms
        G702 and G703, and shall be reviewed by the Construction Consultant, signed
        by
        the General Contractor and, if requested by Lender, approved by the Architect.
        Draw requests for hard costs shall show the percentage of completion of
        construction and shall set forth in trade breakdown form and in such detail
        as
        may be required by Lender the amounts expended and/or costs incurred for
        work
        done and materials incorporated in the Improvements. Retainage will be withheld
        and released in accordance with the terms of Schedule 5.
        Each
        draw request, whether for hard and/or soft costs, shall be supported by such
        information and documentation (such as paid receipts, invoices, statements
        of
        accounts, lien releases, etc.) as Lender may require to assure that amounts
        requested are to be used to reimburse Borrower for costs previously paid
        by
        Borrower and/or ASF or to pay costs incurred by Borrower and/or ASF that
        are to
        be paid from proceeds of the Loan, as set forth in the Budget. Unless reasonably
        requested by Lender in any instance, Borrower will not be required to provide
        any individual invoice for an amount less than or equal to $5,000.00 in support
        of a draw request; provided, Borrower shall provide or cause to be provided
        with
        each draw request a complete listing of all payees and the amounts requested
        for
        payment by each.

       

      Section
        2.4  Additional
        Terms Regarding Advances.

       

      Advances
        of the Loan shall also be subject to the terms and conditions set forth in
        Schedule 5.

       

      Section
        2.5  Liability
        of Lender.

       

      Lender
        shall in no event be responsible or liable to any Person other than Borrower
        for
        the disbursement of or failure to disburse the Loan proceeds or any part
        thereof
        and neither ASF, the General Contractor, Construction Consultant nor any
        subcontractor, laborer or material supplier shall have any right or claim
        against Lender under this Agreement or the other Loan Documents.

       

      Article
        III  

      Representations
        and Warranties.

       

      Borrower
        represents and warrants to Lender that:

       

      
        
          PAGE
            2

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      Section
        3.1  Organization,
        Power and Authority of Borrower; Loan Documents.

       

      Borrower
        (a) is a corporation duly organized, existing and in good standing under
        the
        laws of the state in which it is organized and is duly qualified to do business
        and in good standing in the state in which the Land is located (if different
        from the state of its formation) and in any other state where the nature
        of
        Borrower’s business or property requires it to be qualified to do business, and
        (b) has the power, authority and legal right to own its property and carry
        on
        the business now being conducted by it and to engage in the transactions
        contemplated by the Loan Documents. The Loan Documents to which Borrower
        is a
        party have in each case been duly executed and delivered by Borrower, and
        the
        execution and delivery of, and the carrying out of the transactions contemplated
        by, such Loan Documents, and the performance and observance of the terms
        and
        conditions thereof, have been duly authorized by all necessary organizational
        action by and on behalf of Borrower. The Loan Documents to which Borrower
        is a
        party constitute the valid and legally binding obligations of Borrower and
        are
        fully enforceable against each of them in accordance with their respective
        terms, except to the extent that such enforceability may be limited by laws
        generally affecting the enforcement of creditors’ rights.

       

      Section
        3.2  Other
        Documents; Laws.

       

      The
        execution and performance of the Loan Documents to which the Borrower is
        a party
        and the consummation of the transactions contemplated thereby will not conflict
        with, result in any breach of, or constitute a default under, the organizational
        documents of Borrower or any contract, agreement, document or other instrument
        to which Borrower is a party or by which Borrower or any of its respective
        properties may be bound or affected, and such actions do not and will not
        violate or contravene any Law to which Borrower is subject.

       

      Section
        3.3  Taxes.

       

      Borrower
        has filed all federal, state, county and municipal Tax returns required to
        have
        been filed by Borrower and has paid all Taxes which have become due pursuant
        to
        such returns or pursuant to any Tax assessments received by
        Borrower.

       

      Section
        3.4  Legal
        Actions.

       

      There
        are
        no Claims or investigations by or before any court or Governmental Authority,
        pending, or to the best of Borrower’s knowledge and belief, threatened against
        or affecting Borrower, Borrower’s business, or the Property. Borrower is not in
        default with respect to any order, writ, injunction, decree or demand of
        any
        court or any Governmental Authority affecting Borrower or the
        Property.

       

      Section
        3.5  Nature
        of Loan.

       

      Borrower
        is a business or commercial organization. The Loan is being obtained solely
        for
        business or investment purposes, and solely to be re-loaned to ASF for
        Construction of the Improvements, and will not be used for personal, family,
        household or agricultural purposes.

       

      Section
        3.6  Trade
        Names.

       

      Borrower
        conducts its business solely under the name set forth in the Preamble to
        this
        Agreement and makes use of no trade names in connection therewith, unless
        such
        trade names have been previously disclosed to Lender in writing.

       

      Section
        3.7  Financial
        Statements.

       

      The
        financial statements heretofore delivered by Borrower to Lender are true
        and
        correct in all respects, have been prepared in accordance with sound accounting
        principles consistently applied, and fairly present the respective financial
        conditions of the subjects thereof as of the respective dates
        thereof.

       

      
        
          PAGE
            3

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      Section
        3.8  ERISA
        and Prohibited Transactions.

       

      As
        of the
        date hereof and throughout the term of the Loan: (a) Borrower is not and
        will not be (i) an “employee benefit plan,” as defined in Section 3(3) of
        ERISA, (ii) a “governmental plan” within the meaning of Section 3(32) of
        ERISA, or (iii) a “plan” within the meaning of Section 4975(e) of the Code;
        (b) the assets of Borrower do not and will not constitute “plan assets”
within the meaning of the United States Department of Labor Regulations set
        forth in Section 2510.3-101 of Title 29 of the Code of Federal Regulations;
        (c) transactions by or with Borrower are not and will not be subject to
        state statutes applicable to Borrower regulating investments of fiduciaries
        with
        respect to governmental plans; and (d) Borrower will not engage in any
        transaction that would cause any Obligation or any action taken or to be
        taken
        hereunder (or the exercise by Lender of any of its rights under the Mortgage
        or
        any of the other Loan Documents) to be a non-exempt (under a statutory or
        administrative class exemption) prohibited transaction under ERISA or Section
        4975 of the Code. Borrower agrees to deliver to Lender such certifications
        or
        other evidence of compliance with the provisions of this Section as Lender
        may
        from time to time request.

       

      Section
        3.9  Compliance
        with Zoning and Other Requirements.

       

      The
        anticipated use of the Property complies with applicable zoning ordinances,
        regulations and restrictive covenants affecting the Land. All use and other
        requirements of any Governmental Authority having jurisdiction over the Property
        have been satisfied. No violation of any Law exists with respect to the
        Property.

       

      Section
        3.10  Plans
        and Specifications.

       

      The
        Plans
        and Specifications are complete and adequate for the Construction of the
        Improvements. The Plans and Specifications have been approved by all
        Governmental Authorities having or claiming jurisdiction over the Property
        and
        by the beneficiary of each restrictive covenant affecting the Property whose
        approval is required. The Plans and Specifications have also been approved
        by
        any tenant and by any prospective purchaser of the Property or provider of
        permanent financing for the Property whose approval is required. To the best
        of
        Borrower’s knowledge, the Improvements, if constructed substantially in
        accordance with the Plans and Specifications, will fully comply with all
        applicable Laws, including those Laws relating to access and facilities for
        disabled persons.

       

      Section
        3.11  Building
        Permits; Other Permits.

       

      All
        building, construction and other permits necessary or required in connection
        with the Construction of the Improvements have been validly issued or will
        be
        issued in a timely manner by a date sufficient to ensure commencement of
        construction and Completion of Construction in accordance with the Project
        Schedule. All required fees have been paid and bonds and/or other security
        have
        been posted in connection with all permits that have been issued, and adequate
        amounts are included in the Budget to pay all fees and the cost of all bonds
        and
        other security in connection with permits to be issued in the future. Following
        the issuance thereof, all permits will remain in full force and
        effect.

       

      Section
        3.12  Utilities.

       

      All
        utility services necessary for the Construction of the Improvements and the
        operation thereof for their intended purposes are available at the boundaries
        of
        the Land (or will be available upon the completion of work shown in the Plans
        and Specifications), including telephone service, cable television, water
        supply, storm and sanitary sewer facilities, natural gas and electric
        facilities, including cabling for telephonic and data communication, and
        the
        capacity to send and receive wireless communication.

       

      Section
        3.13  Access;
        Roads.

       

      All
        roads
        and other accesses necessary for the Construction of the Improvements and
        full
        utilization thereof for their intended purposes have either been completed
        or
        the necessary rights of way therefor have either been acquired by the
        appropriate Governmental Authority, or have been dedicated to public use
        and
        accepted by such Governmental Authority and all necessary steps have been
        taken
        by Borrower, ASF or such Governmental Authority to assure the complete
        construction and installation thereof by a date sufficient to ensure the
        Completion of Construction of the Improvements in accordance with the Project
        Schedule.

       

      
        
          PAGE
            4

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      Section
        3.14  Other
        Liens.

       

      Except
        for
        contracts for labor, materials and services furnished or to be furnished
        in
        connection with the Construction of the Improvements, Borrower has made no
        contract or arrangement of any kind the performance of which by the other
        party
        thereto would give rise to a lien on the Property.

       

      Section
        3.15  No
        Work
        Commenced.

       

      Prior
        to
        the recordation of the Mortgage, except as disclosed to Lender in writing,
        no
        work of any kind (including destruction or removal of any existing improvements,
        site work, clearing, grading, grubbing, draining or fencing of the Land)
        has
        been or will be commenced or performed on the Land, no equipment or material
        has
        been or will be delivered to or placed upon the Land for any purpose whatsoever,
        and no contract (or memorandum or affidavit thereof) for the supplying of
        labor,
        materials, or services for the design or construction of the Improvements,
        or
        the surveying of the Land or Improvements, has been entered into which could
        cause a mechanic’s or materialman’s lien or similar lien to achieve priority
        over the Mortgage or the rights of Lender thereunder.

       

      Section
        3.16  No
        Material Adverse Change.

       

      No
        material adverse change has occurred in the financial conditions reflected
        in
        the financial statements of Borrower since the respective dates of such
        statements, and no material additional liabilities have been incurred by
        Borrower since the dates of such statements other than the borrowings
        contemplated herein or as approved in writing by Lender.

       

      Section
        3.17  Defaults.

       

      There
        is
        no Default or Event of Default under any of the Loan Documents, and there
        is no
        default or event of default under any material contract, agreement or other
        document related to the Construction of the Improvements or the operation
        thereof.

       

      Section
        3.18  Affirmation
        of Representations and Warranties.

       

      Each
        draw
        request and each receipt of the funds requested thereby shall constitute
        an
        affirmation that (a) the foregoing representations and warranties of Borrower
        are true and correct as of the date of the draw request and, unless Lender
        is
        notified to the contrary prior to the disbursement of the advance requested,
        will be so on the date of the disbursement, (b) the work completed to the
        date
        of the draw request is of quality and in all other respects consistent with
        the
        Plans and Specifications, and (c) if applicable, Construction of the
        Improvements is proceeding in accordance with the Project Schedule.

       

      Article
        IV  

      Affirmative
        Covenants and Agreements.

       

      Section
        4.1  Commencement
        and Completion of Construction.

       

      Borrower
        shall cause the Construction of the Improvements to be commenced by ASF and
        prosecuted in a good and workmanlike manner and shall cause the same to be
        completed by ASF in accordance with the Project Schedule and substantially
        in
        accordance with the Plans and Specifications.

       

      
        
          PAGE
            5

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      Section
        4.2  Approval
        of Construction.

       

      No
        work
        associated with the Construction of the Improvements shall be commenced by
        Borrower or ASF unless and until the Plans and Specifications have been approved
        by Lender, by all Governmental Authorities having or claiming jurisdiction
        over
        the Land and Improvements, by the beneficiary of any applicable restrictive
        covenant whose approval is required, and by any other party whose approval
        is
        required under applicable agreements, and unless and until all building,
        construction and other permits necessary or required in connection with the
        Construction of the Improvements have been validly issued and all fees, bonds
        and any other security required in connection therewith have been paid or
        posted.

       

      Section
        4.3  Deposits
        to Balance Loan.

       

      If
        at any
        time Lender shall determine that (a) the proceeds of the Loan remaining to
        be
        advanced for any line item within the Budget, together with any anticipated
        Deferred Equity that Lender determines to its satisfaction is or will be
        available for such item, are not or will not be sufficient to pay, in a timely
        manner, the amount of such line item remaining to be paid, and (b) the
        deficiency cannot be remedied by a reallocation of budgeted amounts pursuant
        to
Section
        2.2,
        then
        Borrower shall deposit with Lender, within ten (10) days from the effective
        date
        of a Notice from Lender requesting such deposit, funds in an amount equal
        to the
        deficiency. Such funds shall be held by Lender in a Borrower’s Deposit Account,
        which shall be an interest-bearing account, with all accrued interest to
        become
        part of Borrower’s deposit. Borrower agrees that it shall include all interest
        and earnings on any such deposit as its income, and shall be the owner of
        all
        funds on deposit in the Borrower’s Deposit Account for federal and applicable
        state and local tax purposes. Lender shall have the exclusive right to manage
        and control all funds in the Borrower’s Deposit Account, but Lender shall have
        no fiduciary duty with respect to such funds. Advances of the deposited funds
        will be made from time to time for the payment of deficient line item amounts,
        prior to the advance of proceeds of the Loan for such amounts. Advances of
        the
        deposited funds will be subject to the terms of this Agreement regarding
        advances of the Loan. Any account fees and charges may be deducted from the
        balance, if any, in the Borrower’s Deposit Account. Borrower grants to Lender a
        security interest in the Borrower’s Deposit Account and all such deposited funds
        hereafter deposited to such deposit account, and any proceeds thereof, as
        security for the Obligations. Such security interest shall be governed by
        the
        Uniform Commercial Code of the State, and Lender shall have available to
        it all
        of the rights and remedies available to a secured party thereunder. The
        Borrower’s Deposit Account may be established and held in such name or names as
        Lender shall deem appropriate, including in the name of Lender. Borrower
        hereby
        constitutes and appoints Lender and any officer or agent of Lender its true
        and
        lawful attorneys-in-fact with full power of substitution to open the Borrower’s
        Deposit Account and to do any and every act that Borrower might do on its
        own
        behalf to fulfill the terms of this Section
        4.3.
        To the
        extent permitted by Law, Borrower hereby ratifies all that said attorneys
        shall
        lawfully do or cause to be done by virtue hereof. It is understood and agreed
        that this power of attorney, which shall be deemed to be a power coupled
        with an
        interest, cannot be revoked.

       

      Section
        4.4  Compliance
        with Laws; Encroachments.

       

      The
        Improvements shall be constructed in accordance with all applicable (whether
        present or future) Laws. The Improvements shall be constructed entirely on
        the
        Land and shall not encroach upon any easement or right-of-way, or upon the
        land
        of others. Construction of the Improvements shall occur wholly within all
        applicable building restriction lines and set-backs, however established,
        and
        shall be in strict compliance with all applicable use or other restrictions
        and
        the provisions of any prior agreements, declarations, covenants and all
        applicable zoning and subdivision ordinances and regulations.

       

      Section
        4.5  Inspections;
        Cooperation.

       

      Borrower
        shall permit or cause ASF to permit representatives of Lender and the
        Construction Consultant to enter upon the Land, to inspect the Improvements
        and
        any and all materials to be used in connection with the Construction of the
        Improvements, to examine all detailed plans and shop drawings and similar
        materials as well as all records and books of account maintained by or on
        behalf
        of Borrower or ASF relating thereto and to discuss the affairs, finances
        and
        accounts pertaining to the Loan and the Improvements with representatives
        of
        Borrower and ASF. Borrower shall at all times cooperate and cause ASF, the
        General Contractor and each and every one of its subcontractors and material
        suppliers to cooperate with the representatives of Lender and the Construction
        Consultant in connection with or in aid of the performance of Lender’s functions
        under this Agreement. Except in the event of an emergency, Lender shall give
        Borrower at least twenty-four hours’ notice by telephone in each instance before
        entering upon the Land and/or exercising any other rights granted in this
        Section.

       

      
        
          PAGE
            6

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      Section
        4.6  Contracts,
        Vouchers and Receipts.

       

      Borrower
        shall furnish to Lender, or cause to be furnished to Lender, promptly on
        demand,
        any contracts, subcontracts, bills of sale, statements, receipted vouchers
        or
        other agreements relating to the Construction of the Improvements, including
        any
        such items pursuant to which Borrower or ASF has any claim of title to any
        materials, fixtures or other articles delivered or to be delivered to the
        Land
        or incorporated or to be incorporated into the Improvements. Borrower shall
        furnish to Lender, or cause to be furnished to Lender, promptly on demand,
        a
        verified written statement, in such form and detail as Lender may require,
        setting forth the names and addresses of all contractors, subcontractors
        and
        suppliers furnishing labor or materials in the Construction of the Improvements
        and showing all amounts paid for labor and materials and all items of labor
        and
        materials furnished or to be furnished for which payment has not been made
        and
        the amounts to be paid therefor.

       

      Section
        4.7  Payment
        and Performance of Contractual Obligations.

       

      Borrower
        shall cause to be performed in a timely manner all of ASF's obligations under
        the Architect’s Contract, the Construction Contract and any and all other
        contracts and agreements related to the Construction of the Improvements
        or the
        operation thereof, and Borrower will pay or cause to be paid when due all
        bills
        for services or labor performed and materials supplied in connection with
        the
        Construction of the Improvements. Within thirty (30) days after the filing
        of
        any mechanic’s lien or other lien or encumbrance against the Property, Borrower
        will promptly discharge or cause to be discharged the same by payment or
        filing
        a bond or otherwise as permitted by Law. So long as Lender’s security has been
        protected by the filing of a bond or otherwise in a manner satisfactory to
        Lender in its sole and absolute discretion, Borrower and/or ASF shall have
        the
        right to contest in good faith any claim, lien or encumbrance, provided that
        Borrower and/or ASF does so diligently and without prejudice to Lender or
        delay
        in completing Construction of the Improvements.

       

      Section
        4.8  Correction
        of Construction Defects.

       

      Promptly
        following any demand by Lender, Borrower shall correct or cause the correction
        of any structural defects in the Improvements, any work that fails to comply
        with the requirements of Section
        4.4
        and any
        material departures or deviations from the Plans and Specifications not approved
        in writing by Lender.

       

      Section
        4.9  Insurance.

       

      Borrower
        shall maintain or cause to be maintained the following insurance:

       

      (a)  Insurance
        against Casualty to the Property under a policy or policies covering such
        risks
        as are presently included in “special form” (also known as “all risk”) coverage,
        including such risks as are ordinarily insured against by similar businesses,
        but in any event including fire, lightning, windstorm, hail, explosion, riot,
        riot attending a strike, civil commotion, damage from aircraft, smoke,
        vandalism, malicious mischief and acts of terrorism. Such insurance shall
        name
        Borrower and Lender as joint mortgagee and loss payees. Unless otherwise
        agreed
        in writing by Lender, such insurance shall be for the full insurable value
        of
        the Property, with a deductible amount, if any, satisfactory to Lender. No
        policy of insurance shall be written such that the proceeds thereof will
        produce
        less than the minimum coverage required by this Section by reason of
        co-insurance provisions or otherwise. The term “full insurable value” means one
        hundred percent (100%) of the actual replacement cost of the Property (excluding
        foundation and excavation costs and costs of underground flues, pipes, drains
        and other uninsurable items).

       

      
        
          PAGE
            7

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (b)  Comprehensive
        (also known as commercial) general liability insurance on an “occurrence” basis
        against claims for “personal injury” liability and liability for death, bodily
        injury and damage to property, products and completed operations, in limits
        satisfactory to Lender with respect to any one occurrence and the aggregate
        of
        all occurrences during any given annual policy period. Such insurance shall
        name
        Lender as an additional insured.

       

      (c)  Workers’
        compensation insurance for all employees in such amount as is required by
        Law
        and including employer’s liability insurance, if required by
        Lender.

       

      (d)  During
        any
        period of construction upon the Property, Borrower shall maintain, or cause
        others to maintain, builder’s risk insurance (non-reporting form) of the type
        customarily carried in the case of similar construction for one hundred percent
        (100%) of the full replacement cost of work in place and materials stored
        at or
        upon the Property.

       

      (e)  If
        at any
        time any portion of any structure on the Property is insurable against Casualty
        by flood and is located in a Special Flood Hazard Area under the Flood Disaster
        Protection Act of 1973, as amended, a flood insurance policy in form and
        amount
        acceptable to Lender but in no amount less than the amount sufficient to
        meet
        the requirements of applicable Law as such requirements may from time to
        time be
        in effect.

       

      (f)  Loss
        of
        rental value insurance or business interruption insurance in an amount
        acceptable to Lender.

       

      (g)  Such
        other
        and further insurance as may be required from time to time by Lender in order
        to
        comply with regular requirements and practices of Lender in similar transactions
        including, if required by Lender, wind insurance and earthquake insurance,
        so
        long as any such insurance is generally available at commercially reasonable
        premiums as determined by Lender from time to time.

       

      In
        addition to the foregoing, Borrower shall cause the General Contractor to
        provide and maintain comprehensive (commercial) general liability insurance
        and
        workers’ compensation insurance for all employees of the General Contractor
        meeting, respectively, the requirements of Subsections
        (b) and (c),
        above.

       

      Each
        policy of insurance (i) shall be issued by one or more insurance companies
        each
        of which must have an A.M. Best Company financial and performance rating
        of A-IX
        or better and are qualified or authorized by the Laws of the State to assume
        the
        risks covered by such policy, (ii) with respect to the insurance described
        under
        the preceding Subsections
        (a), (d), (e) and (f),
        shall
        have attached thereto standard non-contributing, non-reporting mortgagee
        clauses
        in favor of and entitling Lender without contribution to collect any and
        all
        proceeds payable under such insurance, either as sole payee or as joint payee
        with Borrower, (iii) shall provide that such policy shall not be canceled
        or
        modified without at least thirty (30) days prior written notice to Lender,
        and
        (iv) shall provide that any loss otherwise payable thereunder shall be payable
        notwithstanding any act or negligence of Borrower which might, absent such
        agreement, result in a forfeiture of all or a part of such insurance payment.
        Borrower shall promptly pay all premiums when due on such insurance and,
        not
        less than thirty (30)
        days
        prior to
        the expiration dates of each such policy, Borrower will deliver to Lender
        acceptable evidence of insurance, such as a renewal policy or policies marked
        “premium paid” or other evidence satisfactory to Lender reflecting that all
        required insurance is current and in force. Borrower will immediately give
        Notice to Lender of any cancellation of, or change in, any insurance policy.
        Lender shall not, because of accepting, rejecting, approving or obtaining
        insurance, incur any liability for (A) the existence, nonexistence, form
        or
        legal sufficiency thereof, (B) the solvency of any insurer, or (C) the payment
        of losses. Borrower may satisfy any insurance requirement hereunder by providing
        one or more “blanket” insurance policies, subject to Lender’s approval in each
        instance as to limits, coverages, forms, deductibles, inception and expiration
        dates, and cancellation provisions.

       

      
        
          PAGE
            8

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      Section
        4.10  Adjustment
        of Condemnation and Insurance Claims.

       

      Borrower
        shall give prompt Notice to Lender of any Casualty or any Condemnation or
        threatened Condemnation. Lender is authorized, at its sole and absolute option,
        to commence, appear in and prosecute, in its own or in Borrower’s and/or ASF's
        name or names, any action or proceeding relating to any Condemnation or
        Casualty, and to make proof of loss for and to settle or compromise any Claim
        in
        connection therewith. In such case, Lender shall have the right to receive
        all
        Condemnation Awards and Insurance Proceeds, and may deduct therefrom any
        or all
        of its Expenses. However, so long as no Event of Default has occurred and
        Borrower and/or ASF is diligently pursuing its rights and remedies with respect
        to a Claim, Lender will obtain Borrower’s written consent (which consent shall
        not be unreasonably withheld or delayed, with Borrower obtaining ASF's consent
        if deemed necessary) before making proof of loss for or settling or compromising
        such Claim. Borrower agrees to diligently assert or cause to be asserted
        its
        and/or ASF's rights and remedies with respect to each Claim and to promptly
        pursue the settlement and compromise of each Claim subject to Lender’s approval,
        which approval shall not be unreasonably withheld or delayed. If, prior to
        the
        receipt by Lender of any Condemnation Award or Insurance Proceeds, the Property
        shall have been sold pursuant to the provisions of the Mortgage, Lender shall
        have the right to receive such funds (a) to the extent of any deficiency
        found
        to be due upon such sale with interest thereon (whether or not a deficiency
        judgment on the Mortgage shall have been sought or recovered or denied),
        and (b)
        to the extent necessary to reimburse Lender for its Expenses. If any
        Condemnation Awards or Insurance Proceeds are paid to ASF or Borrower, Borrower
        shall in each case receive the same or cause the same to be received in trust
        for Lender. Within ten (10) days after receipt of any Condemnation Awards
        or
        Insurance Proceeds, Borrower shall deliver such awards or proceeds to Lender
        in
        the form in which they were received, together with any endorsements or
        documents that may be necessary to effectively negotiate or transfer the
        same to
        Lender. Borrower agrees to execute and deliver from time to time, upon the
        request of Lender, such further instruments or documents as may be requested
        by
        Lender to confirm the grant and assignment to Lender of any Condemnation
        Awards
        or Insurance Proceeds, including obtaining any such documents requested by
        Lender from ASF.

       

      Section
        4.11  Utilization
        of Net Proceeds.

       

      (a)  Net
        Proceeds must be utilized either for payment of the Obligations or for the
        restoration of the Property. Net Proceeds may be utilized for the restoration
        of
        the Property only if no Default shall exist and only if in the reasonable
        judgment of Lender (i) there has been no material adverse change in the
        financial viability of the construction or operation of the Improvements,
        (ii)
        the Net Proceeds, together with other funds deposited with Lender for that
        purpose, are sufficient to pay the cost of the restoration pursuant to a
        budget
        and plans and specifications approved by Lender, and (iii) the restoration
        can be completed prior to maturity of the Loan. Otherwise, Net Proceeds shall
        be
        utilized for payment of the Obligations.

       

      (b)  If
        Net
        Proceeds are to be utilized for the restoration of the Property, the Net
        Proceeds, together with any other funds deposited with Lender for that purpose,
        must be deposited in an interest-bearing account with Lender, which account
        will
        be assigned to Lender as additional security for the Loan. The account will
        be
        opened, managed and controlled in a manner consistent with, and subject to,
        the
        provisions of Section
        4.3
        governing
        a Borrower’s Deposit Account, including those provisions permitting Lender to
        require Borrower to deposit funds in the event of a deficiency in the funds
        available to complete restoration as herein contemplated. Disbursements of
        funds
        from the account will be made in a manner consistent with, and subject to,
        the
        requirements for the closing and funding of the Loan and the terms of this
        Agreement regarding the disbursement of Loan proceeds.

       

      Section
        4.12  Management.

       

      Borrower
        at all times shall provide for the competent and responsible management and
        operation of the Property. Any management contract or contracts affecting
        the
        Property must be approved in writing by Lender prior to the execution of
        the
        same, provided Lender's approval will not be unreasonably withheld or
        delayed.

       

      
        
          PAGE
            9

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      Section
        4.13  Books
        and Records; Financial Statements.

       

      (a) Borrower
        will keep and maintain or cause to be kept and maintained full and accurate
        books and records administered in accordance with sound accounting principles,
        consistently applied, showing in detail the earnings and expenses of the
        Property and the operation thereof. Borrower will keep and maintain its books
        and records, including recorded data of any kind and regardless of the medium
        of
        recording, at the address of Borrower set forth in Section
        8.6.
        Borrower
        shall permit Lender, or any Person authorized by Lender, to inspect and examine
        such books and records (regardless of where maintained) and all supporting
        vouchers and data and to make copies and extracts therefrom at all reasonable
        times and as often as may be requested by Lender. Borrower will furnish or
        cause
        to be furnished to Lender annual financial statements, including balance
        sheets
        and income statements, for the Borrower, ASF, any Guarantor and the Property,
        within ninety (90) days after each fiscal year end for the Borrower and one
        hundred twenty (120) days after each fiscal year end for ASF and any Guarantor.
        Borrower will also furnish or cause to be furnished to Lender quarter-annual
        financial statements within forty-five (45) days after each fiscal quarter-end
        for the respective reporting party, including the December 31 fiscal quarter
        end, and such financial statements shall include (i) consolidated balance
        sheets
        and income statements for the Borrower, ASF, each Guarantor and the Property,
        and (ii) cash flow statements for the Borrower. In addition, Borrower will
        furnish or cause to be furnished to Lender, with reasonable promptness, such
        interim financial statements of Borrower, ASF, each Guarantor and the Property,
        together with such additional information, reports or statements in connection
        therewith, as Lender may from time to time request. All financial statements
        must be in form and detail acceptable to Lender and must be certified as
        to
        accuracy by Borrower, ASF or the respective Guarantor, as the case may be.
        The
        year-end financial statements of the Borrower and American Seniors must also
        be
        audited, with an unqualified opinion given by the respective independent
        certified public accountant reasonably satisfactory to Lender. Borrower shall
        provide, upon Lender’s request, convenient facilities for the audit and
        verification of any such
        statement of the Borrower. All certifications and signatures on behalf of
        corporations, partnerships, limited liability companies and other entities
        shall
        be by a representative of the reporting party satisfactory to Lender.

       

      (b) Contemporaneously
        with each quarter annual and fiscal year-end financial report required by
        the
        foregoing paragraph (a), a certificate of the president or chief financial
        officer of the Borrower stating that: (i) such officer has individually reviewed
        the provisions of this Agreement; (ii) a review of the activities of the
        Borrower and its Subsidiaries during such year or quarter-annual period,
        as the
        case may be, has been made by such officer or under such officer’s supervision,
        with a view to determining whether the Borrower has fulfilled all its
        obligations under this Agreement; and (iii) to the best of such officer’s
        knowledge, the Borrower has observed and performed each undertaking contained
        in
        this Agreement and is not in default in the observance or performance of
        any of
        the provisions hereof or, if the Borrower shall be so in default, specifying
        all
        such defaults and events of which such officer may have knowledge. Such
        certificate shall further set forth the calculations of the financial ratios
        and
        covenants set forth in Section 5.5, including without limitation any antecedent
        calculations and the source of any information that was used in such
        calculations.

       

      Section
        4.14  Estoppel
        Certificates.

       

      Within
        ten
        (10) days after any request by Lender or a proposed assignee or purchaser
        of the
        Loan or any interest therein, Borrower shall certify in writing to Lender,
        or to
        such proposed assignee or purchaser, the then unpaid balance of the Loan
        and
        whether Borrower claims any right of defense or setoff to the payment or
        performance of any of the Obligations, and if Borrower claims any such right
        of
        defense or setoff, Borrower shall give a detailed written description of
        such
        claimed right.

       

      
        
          PAGE
            10

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      Section
        4.15  Taxes.

       

      Borrower
        shall pay and discharge or cause to be paid and discharged all Taxes prior
        to
        the date on which penalties are attached thereto unless and to the extent
        only
        that such Taxes are contested in accordance with the terms of the
        Mortgage.

       

      Section
        4.16  Lender’s
        Rights to Pay and Perform.

       

      If,
        after
        any required notice, Borrower fails to promptly pay or perform any of the
        Obligations within any applicable grace or cure periods or an Event of Default
        otherwise occurs hereunder, Lender, without Notice to or demand upon Borrower,
        and without waiving or releasing any Obligation or Default, may (but shall
        be
        under no obligation to) at any time thereafter make such payment or perform
        such
        act for the account and at the expense of Borrower. Lender may enter upon
        the
        Property for that purpose and take all action thereon as Lender considers
        necessary or appropriate. At the option of Lender, following the occurrence
        of
        an Event of Default, Lender may apply any undisbursed Loan proceeds to the
        satisfaction of the conditions of the Loan Documents, irrespective of the
        allocation of such Loan proceeds in the Budget. Without limiting the generality
        of the foregoing, Lender may pay directly from the proceeds of the Loan all
        interest bills rendered by Lender in connection with the Loan, and following
        the
        occurrence of an Event of Default may make advances directly to the General
        Contractor, the title insurance company, any subcontractor or material supplier,
        or to any of them jointly. The execution hereof by Borrower shall, and hereby
        does, constitute an irrevocable authorization so to advance the proceeds
        of the
        Loan. No further direction or authorization from Borrower shall be necessary
        to
        warrant such direct advances. Each advance shall be secured by the Loan
        Documents and shall satisfy the obligations of Lender hereunder to the extent
        of
        the amount of the advance.

       

      Section
        4.17  Reimbursement;
        Interest.

       

      If
        Lender
        shall incur any Expenses or pay any Claims by reason of the Loan or the rights
        and remedies provided under the Loan Documents (regardless of whether or
        not any
        of the Loan Documents expressly provide for an indemnification by Borrower
        against such Claims), Lender’s payment of such Expenses and Claims shall
        constitute advances to Borrower which shall be paid by Borrower to Lender
        on
        demand, together with interest thereon from the date incurred until paid
        in full
        at the rate of interest then applicable to the Loan under the terms of the
        Note.
        Each advance shall be secured by the Loan Documents as fully as if made to
        Borrower and ASF, regardless of the disposition thereof by the party or parties
        to whom such advance is made. Notwithstanding the foregoing, however, in
        any
        action or proceeding to foreclose the Mortgage or to recover or collect the
        Obligations, the provisions of Law governing the recovery of costs,
        disbursements and allowances shall prevail unaffected by this
        Section.

       

      Section
        4.18  Notification
        by Borrower.

       

      Borrower
        will promptly give Notice to Lender of the occurrence of any Default or Event
        of
        Default hereunder or under any of the other Loan Documents, including without
        limitation under any loan documents entered into between Borrower and ASF
        with
        respect to the property and the construction of the improvements thereon.
        Borrower will also promptly give Notice to Lender of any claim of a default
        by
        ASF, or any claim by ASF of a default by any other party, under the Architect’s
        Contract, the Construction Contract or any Lease.

       

      Section
        4.19  Indemnification
        by Borrower.

       

      Borrower
        agrees to indemnify Lender and to hold Lender harmless from and against,
        and to
        defend Lender by counsel approved by Lender against, any and all Claims directly
        or indirectly arising out of or resulting from any transaction, act, omission,
        event or circumstance in any way connected with the Property or the Loan,
        including any Claim arising out of or resulting from (a) Construction of
        the
        Improvements, including any defective workmanship or materials; (b) any failure
        by Borrower to comply with the requirements of any Laws or to comply with
        any
        agreement that applies or pertains to the Property, including any agreement
        with
        a broker or “finder” in connection with the Loan or other financing of the
        Property; (c) any failure by Borrower to observe and perform any of the
        obligations imposed upon the landlord under the Leases; (d) any other Default
        or
        Event of Default hereunder or under any of the other Loan Documents; or (e)
        any
        assertion or allegation that Lender is liable for any act or omission of
        Borrower or any other Person in connection with the ownership, development,
        financing, leasing, operation or sale of the Property; provided, however,
        that
        Borrower shall not be obligated to indemnify Lender with respect to any Claim
        arising solely from the gross negligence or willful misconduct of Lender.
        The
        agreements and indemnifications contained in this Section shall apply to
        Claims
        arising both before and after the repayment of the Loan and shall survive
        the
        repayment of the Loan, any foreclosure or deed, assignment or conveyance
        in lieu
        thereof and any other action by Lender to enforce the rights and remedies
        of
        Lender hereunder or under the other Loan Documents.

       

      
        
          PAGE
            11

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      Section
        4.20  Fees
        and Expenses.

       

      Borrower
        shall pay all fees, charges, costs and expenses required to satisfy the
        conditions of the Loan Documents. Without limitation of the foregoing, Borrower
        will pay, when due, and if paid by Lender will reimburse Lender on demand
        for,
        all fees and expenses of the Construction Consultant, the title insurer,
        environmental engineers, appraisers, surveyors and Lender’s counsel in
        connection with the closing, administration, modification or any “workout” of
        the Loan, or the enforcement of Lender’s rights and remedies under any of the
        Loan Documents.

       

      Section
        4.21  Appraisals.

       

      Lender
        may
        obtain from time to time an appraisal of all or any part of the Property,
        prepared in accordance with written instructions from Lender, from a third-party
        appraiser satisfactory to, and engaged directly by, Lender. The cost of one
        such
        appraisal obtained by Lender in each calendar year and the cost of each such
        appraisal obtained by Lender following the occurrence of an Event of Default
        shall by borne by Borrower and shall be paid by Borrower on demand.

       

      Section
        4.22  Leasing
        and Tenant Matters.

       

      Borrower
        shall comply with the terms and conditions of Schedule 6
        in
        connection with the leasing of space within the Improvements.

       

      Section
        4.23  Principal
        Depository.

       

      Borrower
        shall maintain Bank of America, N.A. as its principal depository bank, including
        for the maintenance of business, cash management, operating and administrative
        deposit accounts. If Lender determines that Bank of America, N.A. is not
        Borrower's principal depository bank, it shall not be deemed an Event of
        Default, but the interest rate charged on the Loan shall be increased by
        forty-two and one half (42.5) basis points per annum upon five (5) days'
        prior
        written notice to Borrower.

       

      Section
        4.24  Swap
        Contracts.

       

      Borrower
        shall comply with the terms and conditions of Schedule 7
        with
        respect to all Swap Contracts.

       

      
        
          PAGE
            12

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      Article
        V  

      Negative
        Covenants.

       

      Section
        5.1  Conditional
        Sales.

       

      Borrower
        shall not incorporate in the Improvements any property acquired under a
        conditional sales contract or lease or as to which the vendor retains title
        or a
        security interest, without the prior written consent of Lender.

       

      Section
        5.2  Changes
        to Plans and Specifications.

       

      Borrower
        shall not allow or permit any changes, whether made by ASF, Borrower or
        otherwise, in the Plans and Specifications, including any such changes that
        alter, diminish or add to the work to be performed or change the design of
        the
        Improvements, without the prior written consent of Lender and under such
        reasonable conditions as Lender may establish. Lender’s prior written consent
        shall not be required, however, as to any change order which (a) individually
        does not cause the fixed or guaranteed maximum price of the Construction
        Contract to be increased or decreased by more than Fifty Thousand Dollars
        ($50,000.00) and, when added to all previous change orders, does not cause
        such
        price to be increased or decreased by more than Five Hundred Thousand Dollars
        ($500,000.00) in the aggregate, (b) does not result in a material change to
        the design of the Improvements, and (c) has been approved in writing by the
        Architect and any Governmental Authority, tenant or other party whose approval
        is required.

       

      Section
        5.3  Changes
        to ASF Loan Documents or the Subordinated Loan Documents.

       

      Borrower
        shall not allow or permit any changes or modifications to be made to the
        ASF
        Loan Documents or the Subordinated Loan Documents without first obtaining
        in
        each instance the prior written consent of the Lender, nor shall Borrower
        enter
        into any additional or supplemental documents relating to or affecting in
        any
        manner the ASF Loan or the Subordinated Loan without first obtaining Lender's
        prior written consent. Borrower shall not release any collateral or cancel
        any
        guaranty securing the ASF Loan or the Subordinated Loan.

       

      Section
        5.4  Insurance
        Policies and Bonds.

       

      Borrower
        shall not do or permit to be done anything that would affect the coverage
        or
        indemnities provided for pursuant to the provisions of any insurance policy,
        performance bond, labor and material payment bond or any other bond given
        in
        connection with the Construction of the Improvements.

       

      Section
        5.5  Consolidated
        Fixed Charge Coverage Ratio.

       

      Borrower
        shall not allow or permit its Consolidated Fixed Charge Coverage Ratio to
        be
        less than 1.20 to 1.00. 

       

      Article
        VI  

      Events
        of Default.

       

      The
        occurrence or happening, from time to time, of any one or more of the following
        shall constitute an Event of Default under this Agreement:

       

      Section
        6.1  Payment
        Default.

       

      Borrower
        fails to pay any Obligation under this Agreement within three (3) days after
        the
        date such Obligation is due or upon acceleration, maturity or
        otherwise.

      

      
        
          PAGE
            13

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      Section
        6.2  Default
        Under
        Other Loan Documents.

       

      An
        Event
        of Default (as defined therein) occurs under the Note, or the Borrower, ASF
        or
        any Guarantor fails to promptly pay, perform, observe or comply with any
        term,
        obligation or agreement contained in the Mortgage or any of the other Loan
        Documents (within any applicable grace or cure period).

       

      Section
        6.3  Accuracy
        of Information; Representations and Warranties.

       

      Any
        information contained in any financial statement, schedule, report or any
        other
        document delivered by Borrower, ASF, Guarantor or any other Person to Lender
        in
        connection with the Loan proves at any time not to be in all material respects
        true and accurate, or Borrower, ASF, Guarantor or any other Person shall
        have
        failed to state any material fact or any fact necessary to make such information
        not misleading, or any representation or warranty contained in this Agreement
        or
        in any other Loan Document or other document, certificate or opinion delivered
        to Lender in connection with the Loan, proves at any time to be incorrect
        or
        misleading in any material respect either on the date when made or on the
        date
        when reaffirmed pursuant to the terms of this Agreement.

       

      Section
        6.4  Deposits.

       

      Borrower
        fails to deposit funds with Lender, in the amount requested by Lender, pursuant
        to the provisions of Section
        4.3
        or
Section
        4.11,
        within
        ten (10) days from the effective date of a Notice from Lender requesting
        such
        deposit, or Borrower fails to deliver to Lender or cause to be delivered
        to
        Lender any Condemnation Awards or Insurance Proceeds within ten (10) days
        after
        Borrower’s or ASF's receipt thereof.

       

      Section
        6.5  Insurance
        Obligations.

       

      Borrower
        fails to promptly perform or comply with any of the covenants contained in
        the
        Loan Documents with respect to maintaining insurance, including the covenants
        contained in Section
        4.9.

       

      Section
        6.6  Other
        Obligations.

       

      Borrower
        fails to promptly perform or comply with any covenants or other Obligations
        set
        forth in this Agreement and such failure continues uncured for a period of
        thirty (30) days after Notice from Lender to Borrower, other than those
        expressly described in other Sections of this Article
        VI
        and those
        covenants set forth in Sections 4.13, 5.3 and 5.5, for which no notice or
        cure
        rights shall be applicable and the occurrence of any of which shall constitute
        an immediate Event of Default. Notwithstanding the foregoing, if Lender
        determines, in Lender's sole discretion, that such failure, by its nature,
        is
        not capable of being cured within the thirty (30) day period after the initial
        Notice from Lender to Borrower (other than a failure to comply with any of
        the
        Obligations expressly described in other Sections of this Article VI
        and/or
        the covenants set forth in Sections 4.13, 5.3 and 5.5), it shall not be an
        Event
        of Default hereunder if (a) Borrower commences to cure such failure and
        thereafter diligently prosecutes the cure thereof, and (b) Borrower causes
        such
        failure to be cured no later than ninety (90) days after the date of such
        initial Notice from Lender.

       

      Section
        6.7  Progress
        of Construction.

       

      Construction
        of the Improvements is abandoned or is discontinued for a period of more
        than
        twenty (20) consecutive days.

       

      
        
          PAGE
            14

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      Section
        6.8  Damage
        to Improvements.

       

      The
        Improvements are substantially damaged or destroyed by fire or other casualty
        and Lender determines that the Improvements cannot be restored and completed
        in
        accordance with the terms and provisions of this Agreement and the
        Mortgage.

       

      Section
        6.9  Lapse
        of Permits or Approvals.

       

      Any
        permit, license, certificate or approval that Borrower is required to obtain
        with respect to the construction, operation, development, leasing or maintenance
        of the Improvements or the Property lapses or ceases to be in full force
        and
        effect.

       

      Section
        6.10  Completion
        of Construction.

       

      Completion
        of Construction does not occur in accordance with the Project Schedule, or
        Lender determines that Completion of Construction will not occur in accordance
        with the Project Schedule.

       

      Section
        6.11  Mechanic’s
        Lien.

       

      A
        lien for
        the performance of work or the supply of materials filed against the Property,
        or any stop notice served on Borrower, ASF, the General Contractor or Lender,
        remains unsatisfied or unbonded for a period of thirty (30) days after the
        date
        of filing or service.

       

      Section
        6.12  Survey
        Matters.

       

      Any
        Survey
        required by Lender during the period of construction shows any matter which
        in
        Lender’s reasonable judgment would interfere with the Construction of the
        Improvements or the operation or use of the Property, and such matter is
        not
        removed within a period of thirty (30) days after Notice thereof by Lender
        to
        Borrower.

       

      Section
        6.13  General
        Contractor Default.

       

      The
        General Contractor defaults under the Construction Contract in a manner which
        Lender deems in Lender's reasonable judgment to be material, and, unless
        otherwise agreed in writing by Lender, ASF fails promptly to exercise its
        rights
        and remedies under the Construction Contract with respect to such
        default.

       

      Section
        6.14  Performance
        Enjoined or Prohibited.

       

      Borrower
        or ASF is enjoined or prohibited from performing any of its respective
        obligations under any of the Loan Documents for a period of more than fifteen
        (15) consecutive days.

       

      Section
        6.15  Bankruptcy.

       

      Borrower,
        ASF or any Guarantor files a bankruptcy petition or makes a general assignment
        for the benefit of creditors, or a bankruptcy petition is filed against
        Borrower, ASF or any Guarantor and such involuntary bankruptcy petition
        continues undismissed for a period of sixty (60) days after the filing
        thereof.

       

      
        
          PAGE
            15

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      Section
        6.16  Appointment
        of Receiver, Trustee, Liquidator.

       

      Borrower,
        ASF, or any Guarantor applies for or consents in writing to the appointment
        of a
        receiver, trustee or liquidator of Borrower, ASF, any Guarantor, the Property,
        or all or substantially all of the other assets of Borrower, ASF, or any
        Guarantor, or an order, judgment or decree is entered by any court of competent
        jurisdiction on the application of a creditor appointing a receiver, trustee
        or
        liquidator of Borrower, ASF, any Guarantor, the Property, or all or
        substantially all of the other assets of Borrower, ASF, or any
        Guarantor.

       

      Section
        6.17  Judgment.

       

      A
        final
        nonappealable judgment for the payment of money involving more than $100,000
        is
        entered against Borrower or a final nonappealable judgment for the payment
        of
        money involving more than $50,000 is entered against ASF or any
        Guarantor, and
        Borrower, ASF or such Guarantor
        fails to discharge the same, or causes it to be discharged or bonded off
        to
        Lender’s satisfaction, within thirty (30) days from the date of the entry of
        such judgment.

       

      Section
        6.18  Dissolution;
        Change in Business Status.

       

      Unless
        the
        written consent of Lender is previously obtained, all or substantially all
        of
        the business assets of Borrower, ASF or any Guarantor are sold, Borrower,
        ASF or
        any Guarantor is dissolved, or there occurs any change in the form of business
        entity through which Borrower, ASF or any Guarantor presently conducts its
        business or any merger or consolidation involving Borrower, ASF or any
        Guarantor.

       

      Section
        6.19  Default
        Under Other Indebtedness.

       

      Borrower
        defaults under any existing or future loan and/or credit agreements (other
        than
        this Agreement) in excess of Ten Million and No/100 Dollars ($10,000,000.00),
        subject to all applicable grace periods therein; however, any periods of
        forbearance with respect to such credit agreements, which arise and continue
        for
        more than forty-five (45) consecutive days, will be deemed as a default
        hereunder.

       

      Section
        6.20  Change
        in Controlling Interest.

       

      A
        Change
        of Control occurs without the prior written consent of the Lender.

       

      Section
        6.21  Material
        Adverse Change.

       

      In
        the
        reasonable opinion of Lender, the prospect of payment or performance of all
        or
        any part of the Obligations has been impaired because of a material adverse
        change in the financial condition, results of operations, business or properties
        of Borrower.

       

      Article
        VII  

      Remedies
        on Default.

       

      Section
        7.1  Remedies
        on Default.

       

      Upon
        the
        happening of any Event of Default, Lender shall have the right, in addition
        to
        any other rights or remedies available to Lender under the Mortgage or any
        of
        the other Loan Documents or under applicable Law, to exercise any one or
        more of
        the following rights and remedies:

       

      
        
          PAGE
            16

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (a)  Lender
        may
        terminate its obligation to advance any further principal of the Loan pursuant
        to this Agreement by Notice to Borrower.

       

      (b)  Lender
        may
        accelerate all of Borrower’s Obligations under the Loan Documents whereupon such
        Obligations shall become immediately due and payable, without notice of default,
        acceleration or intention to accelerate, presentment or demand for payment,
        protest or notice of nonpayment or dishonor, or notices or demands of any
        kind
        or character (all of which are hereby waived by Borrower).

       

      (c)  Lender
        may
        apply to any court of competent jurisdiction for, and obtain appointment
        of, a
        receiver for the Property.

       

      (d)  Lender
        may
        set off the amounts due Lender under the Loan Documents against any and all
        accounts, credits, money, securities or other property of Borrower now or
        hereafter on deposit with, held by or in the possession of Lender to the
        credit
        or for the account of Borrower, without notice to or the consent of
        Borrower.

       

      (e)  Lender
        may
        enter into possession of the Property and perform any and all work and labor
        necessary to complete the Construction of the Improvements (whether or not
        in
        accordance with the Plans and Specifications) and to employ watchmen to protect
        the Property and the Improvements. All sums expended by Lender for such purposes
        shall be deemed to have been advanced to Borrower under the Note and shall
        be
        secured by the Loan Documents and the Mortgage. For this purpose, Borrower
        hereby constitutes and appoints Lender its true and lawful attorney-in-fact
        with
        full power of substitution, which power is coupled with an interest, to complete
        the work either in the name of Borrower and/or ASF, and hereby empowers said
        attorney or attorneys, in the name of Borrower, ASF or Lender:

       

      
        
          	
                  (i)

                	
                  To
                    use any funds of Borrower including any balance which may be
                    held by
                    Lender and any funds which may remain unadvanced hereunder for
                    the purpose
                    of completing 

                
	the
                  Construction of the Improvements, whether or not in the manner
                  called for
                  in the Plans and Specifications;
	 
	
                  (ii)

                	
                  To
                    make such additions and changes and corrections to the Plans
                    and
                    Specifications as shall be necessary or desirable in the judgment
                    of
                    Lender to complete the 

                
	Construction
                  of the Improvements;
	 
	
                  (iii)

                	
                  To
                    employ such contractors, subcontractors, agents, architects and
                    inspectors
                    as shall be necessary or desirable for said purpose;

                
	 	 
	
                  (iv)

                	
                  To
                    pay, settle or compromise all existing bills and claims which
                    are or may
                    be liens against the Property, or may be necessary or desirable
                    for the
                    completion of the work 

                
	or
                  the clearance of title to the Property;
	 
	
                  (v)

                	
                  To
                    execute all applications and certificates which may be required
                    in the
                    name of ASF and/or the Borrower;

                
	 	 
	
                  (vi)

                	
                  To
                    enter into, enforce, modify or cancel Leases and to fix or modify
                    Rents on
                    such terms as Lender may consider proper;

                
	 	 
	
                  (vii)

                	
                  To
                    file for record, at Borrower’s cost and expense and in the name of ASF
                    and/or Borrower, any notices of completion, notices of cessation
                    of labor,
                    or any other notices 

                
	that
                  Lender in its sole and absolute discretion may consider necessary
                  or
                  desirable to protect its security; and
	 
	
                  (viii)

                	
                  To
                    do any and every act with respect to the Construction of the
                    Improvements
                    which either the Borrower or ASF could do in its own
                    behalf.

                

        

      

       

      
        
          PAGE
            17

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      It
        is
        understood and agreed that this power of attorney shall be deemed to be a
        power
        coupled with an interest which cannot be revoked, and includes within it
        any
        power of attorney or other similar rights granted by ASF to Borrower to act
        on
        ASF's behalf. Said attorney-in-fact shall also have the power to prosecute
        and
        defend all actions or proceedings in connection with the Construction of
        the
        Improvements and to take such actions and to require such performance as
        Lender
        may deem necessary.

       

      Section
        7.2  No
        Release or Waiver; Remedies Cumulative and Concurrent.

       

       

      Borrower
        shall not be relieved of any Obligation by reason of the failure of Lender
        to
        comply with any request of Borrower or of any other Person to take action
        to
        foreclose on the Property under the Mortgage or otherwise to enforce any
        provision of the Loan Documents, or by reason of the release, regardless
        of
        consideration, of all or any part of the Property. No delay or omission of
        Lender to exercise any right, power or remedy accruing upon the happening
        of an
        Event of Default shall impair any such right, power or remedy or shall be
        construed to be a waiver of any such Event of Default or any acquiescence
        therein. No delay or omission on the part of Lender to exercise any option
        for
        acceleration of the maturity of the Obligations, or for foreclosure of the
        Mortgage following any Event of Default as aforesaid, or any other option
        granted to Lender hereunder in any one or more instances, or the acceptance
        by
        Lender of any partial payment on account of the Obligations shall constitute
        a
        waiver of any such Event of Default and each such option shall remain
        continuously in full force and effect. No remedy herein conferred upon or
        reserved to Lender is intended to be exclusive of any other remedies provided
        for in the Loan Documents, and each and every such remedy shall be cumulative,
        and shall be in addition to every other remedy given hereunder, or under
        the
        Loan Documents, or now or hereafter existing at Law or in equity or by statute.
        Every right, power and remedy given by the Loan Documents to Lender shall
        be
        concurrent and may be pursued separately, successively or together against
        Borrower, ASF or the Property or any part thereof, and every right, power
        and
        remedy given by the Loan Documents may be exercised from time to time as
        often
        as may be deemed expedient by Lender.

       

      Article
        VIII

      Miscellaneous.

       

      Section
        8.1  Further
        Assurances; Authorization to File Documents.

       

      At
        any
        time, and from time to time, upon request by Lender, Borrower will, at
        Borrower’s expense, (a) correct any defect, error or omission which may be
        discovered in the form or content of any of the Loan Documents, and
        (b) make, execute, deliver and record, or cause to be made, executed,
        delivered and recorded, any and all further instruments, certificates and
        other
        documents as may, in the opinion of Lender, be necessary or desirable in
        order
        to complete, perfect or continue and preserve the lien of the Mortgage. Upon
        any
        failure by Borrower to do so, Lender may make, execute and record any and
        all
        such instruments, certificates and other documents for and in the name of
        Borrower and/or ASF, all at the sole expense of Borrower, and Borrower hereby
        appoints Lender the agent and attorney-in-fact of Borrower to do so, this
        appointment being coupled with an interest and being irrevocable. Without
        limitation of the foregoing, Borrower irrevocably authorizes Lender at any
        time
        and from time to time to file any initial financing statements, amendments
        thereto and continuation statements deemed necessary or desirable by Lender
        to
        establish or maintain the validity, perfection and priority of the security
        interests granted in the Mortgage, and Borrower ratifies any such filings
        made
        by Lender prior to the date hereof.

       

      Section
        8.2  No
        Warranty by Lender.

       

      By
        accepting or approving anything required to be observed, performed or fulfilled
        by Borrower or to be given to Lender pursuant to this Agreement, including
        any
        certificate, Survey, receipt, appraisal or insurance policy, Lender shall
        not be
        deemed to have warranted or represented the sufficiency, legality, effectiveness
        or legal effect of the same, or of any term, provision or condition thereof
        and
        any such acceptance or approval thereof shall not be or constitute any warranty
        or representation with respect thereto by Lender.

       

      
        
          PAGE
            18

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      Section
        8.3  Standard
        of Conduct of Lender.

       

      Nothing
        contained in this Agreement or any other Loan Document shall limit the right
        of
        Lender to exercise its business judgment or to act, in the context of the
        granting or withholding of any advance or consent under this Agreement or
        any
        other Loan Document, in a subjective manner, whether or not objectively
        reasonable under the circumstances, so long as Lender’s exercise of its business
        judgment or action is made or undertaken in good faith. Borrower and Lender
        intend by the foregoing to set forth and affirm their entire understanding
        with
        respect to the standard pursuant to which Lender’s duties and obligations are to
        be judged and the parameters within which Lender’s discretion may be exercised
        hereunder and under the other Loan Documents. As used herein, “good faith” means
        honesty in fact in the conduct and transaction concerned.

       

      Section
        8.4  No
        Partnership.

       

      Nothing
        contained in this Agreement shall be construed in a manner to create any
        relationship between Borrower and Lender other than the relationship of borrower
        and lender and Borrower and Lender shall not be considered partners or
        co-venturers for any purpose on account of this Agreement.

       

      Section
        8.5  Severability.

       

      In
        the
        event any one or more of the provisions of this Agreement or any of the other
        Loan Documents shall for any reason be held to be invalid, illegal or
        unenforceable, in whole or in part or in any other respect, or in the event
        any
        one or more of the provisions of any of the Loan Documents operates or would
        prospectively operate to invalidate this Agreement or any of the other Loan
        Documents, then and in either of those events, at the option of Lender, such
        provision or provisions only shall be deemed null and void and shall not
        affect
        the validity of the remaining Obligations, and the remaining provisions of
        the
        Loan Documents shall remain operative and in full force and effect and shall
        in
        no way be affected, prejudiced or disturbed thereby.

       

      Section
        8.6  Notices.

       

      All
        Notices required or which any party desires to give hereunder or under any
        other
        Loan Document shall be in writing and, unless otherwise specifically provided
        in
        such other Loan Document, shall be deemed sufficiently given or furnished
        if
        delivered by personal delivery, by nationally recognized overnight courier
        service or by certified United States mail, postage prepaid, addressed to
        the
        party to whom directed at the applicable address set forth below (unless
        changed
        by similar notice in writing given by the particular party whose address
        is to
        be changed) or by facsimile. Any Notice shall be deemed to have been given
        either at the time of personal delivery or, in the case of courier or mail,
        as
        of the date of first attempted delivery at the address and in the manner
        provided herein, or, in the case of facsimile, upon receipt; provided that
        service of a Notice required by any applicable statute shall be considered
        complete when the requirements of that statute are met. Notwithstanding the
        foregoing, no notice of change of address shall be effective except upon
        actual
        receipt. This Section shall not be construed in any way to affect or impair
        any
        waiver of notice or demand provided in this Agreement or in any other Loan
        Document or to require giving of notice or demand to or upon any Person in
        any
        situation or for any reason.

       

      
        
          PAGE
            19

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      The
        address and fax number of Borrower are:

       

      American
        Retirement Corporation

      Address:
        111 Westwood Place, Suite 200

      City/State/Zip:
        Brentwood, TN 37027

      Contact
        Person: George Hicks

      Telephone:
        615-221-2260

      Fax:
        615-221-2269

      E-mail
        Address (if applicable): ghicks@arclp.com

      

      
        
          PAGE
            20

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      With
        a
        copy to:

      

      Andrew
        Smith

      Bass,
        Berry & Sims

      315
        Deaderick Street, Suite 2700

      Nashville,
        Tennessee 37238

      Telephone:
        615-742-6266

      Fax:
        615-742-6293

       

      The
        address and fax number of Lender are:

       

      Bank
        of
        America, N.A. Bank of America, N.A.

      414
        Union
        Street

      Nashville,
        TN 37219-1697

      Senior
        Underwriter: Ms. Hope Walker

      Phone:
        (615) 749-3023

      Fax:
        (615)
        749-4951

      E-mail
        Address: hope.walker@bankofamerica.com

      

      Construction
        Administration: Kathryn V. Traylor

      1111
        E.
        Main Street, 6th
        Floor

      Richmond,
        VA. 23219

      E-mail
        address: Kathryn.v.traylor@bankofamerica.com

      Phone
        (804) 788-3873

      Fax:
        (804)
        788-2248

      

      With
        a
        copy to:

      

      William
        W.
        Earthman, III

      Boult,
        Cummings, Conners & Berry, PLC

      1600
        Division Street, Suite 700

      Nashville,
        Tennessee 37203

      Telephone:
        615-252-2304

      Fax:
        615-252-6304

      

      Section
        8.7  Permitted
        Successors and Assigns; Disclosure of Information.

       

      (a) Each
        and
        every one of the covenants, terms, provisions and conditions of this Agreement
        and the Loan Documents shall apply to, bind and inure to the benefit of
        Borrower, its successors and those assigns of Borrower consented to in writing
        by Lender, and shall apply to, bind and inure to the benefit of Lender and
        the
        endorsees, transferees, successors and assigns of Lender, and all Persons
        claiming under or through any of them.

       

      (b) Borrower
        agrees not to transfer, assign, pledge or hypothecate any right or interest
        in
        any payment or advance due pursuant to this Agreement, or any of the other
        benefits of this Agreement, without the prior written consent of Lender,
        which
        consent may be withheld by Lender in its sole and absolute discretion. Any
        such
        transfer, assignment, pledge or hypothecation made or attempted by Borrower
        without the prior written consent of Lender shall be void and of no effect.
        No
        consent by Lender to an assignment shall be deemed to be a waiver of the
        requirement of prior written consent by Lender with respect to each and every
        further assignment and as a condition precedent to the effectiveness of such
        assignment.

       

      
        
          PAGE
            21

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (c) Lender
        may
        sell or offer to sell the Loan or interests therein to one or more assignees
        or
        participants. Borrower shall execute, acknowledge and deliver any and all
        instruments reasonably requested by Lender in connection therewith, and to
        the
        extent, if any, specified in any such assignment or participation, such
        assignee(s) or participant(s) shall have the same rights and benefits with
        respect to the Loan Documents as such Person(s) would have if such Person(s)
        were Lender hereunder. Lender may disseminate any information it now has
        or
        hereafter obtains pertaining to the Loan, including any security for the
        Loan,
        any credit or other information on the Property (including environmental
        reports
        and assessments), Borrower, any of Borrower’s principals or any Guarantor, to
        any actual or prospective assignee or participant, to Lender’s affiliates,
        including Banc of America Securities LLC, to any regulatory body having
        jurisdiction over Lender, to any actual or prospective counterparty (or its
        advisors) to any swap or derivative transaction relating to Borrower and
        the
        Loan, or to any other party as necessary or appropriate in Lender’s reasonable
        judgment.

       

      Section
        8.8  Modification;
        Waiver.

       

      None
        of
        the terms or provisions of this Agreement may be changed, waived, modified,
        discharged or terminated except by instrument in writing executed by the
        party
        or parties against whom enforcement of the change, waiver, modification,
        discharge or termination is asserted. None of the terms or provisions of
        this
        Agreement shall be deemed to have been abrogated or waived by reason of any
        failure or failures to enforce the same.

       

      Section
        8.9  Third
        Parties; Benefit.

       

      All
        conditions to the obligation of Lender to make advances hereunder are imposed
        solely and exclusively for the benefit of Lender and its assigns and no other
        Persons shall have standing to require satisfaction of such conditions in
        accordance with their terms or be entitled to assume that Lender will refuse
        to
        make advances in the absence of strict compliance with any or all thereof
        and no
        other Person shall, under any circumstances, be deemed to be the beneficiary
        of
        such conditions, any or all of which may be freely waived in whole or in
        part by
        Lender at any time in the sole and absolute exercise of its discretion. The
        terms and provisions of this Agreement are for the benefit of the parties
        hereto
        and, except as herein specifically provided, no other Person shall have any
        right or cause of action on account thereof.

       

      Section
        8.10  Rules
        of Construction.

       

      The
        words
“hereof,” “herein,” “hereunder,” “hereto,” and other words of similar import
        refer to this Agreement in its entirety. The terms “agree” and “agreements” mean
        and include “covenant” and “covenants.” The words “include” and “including”
shall be interpreted as if followed by the words “without limitation.” The
        captions and headings contained in this Agreement are included herein for
        convenience of reference only and shall not be considered a part hereof and
        are
        not in any way intended to define, limit or enlarge the terms hereof. All
        references (a) made in the neuter, masculine or feminine gender shall be
        deemed
        to have been made in all such genders, (b) made in the singular or plural
        number
        shall be deemed to have been made, respectively, in the plural or singular
        number as well, (c) to the Loan Documents are to the same as extended, amended,
        restated, supplemented or otherwise modified from time to time unless expressly
        indicated otherwise, (d) to the Land, the Improvements or the Property shall
        mean all or any portion of each of the foregoing, respectively, and (e) to
        Articles, Sections and Schedules are to the respective Articles, Sections
        and
        Schedules contained in this Agreement unless expressly indicated
        otherwise.

       

      Section
        8.11  Counterparts.

       

      This
        Agreement may be executed in any number of counterparts, each of which shall
        be
        considered an original for all purposes; provided, however, that all such
        counterparts shall together constitute one and the same instrument.

       

      
        
          PAGE
            22

        

        
          
          

          
            

          

        

        
          
          

        

      

      Section
        8.12  Signs;
        Publicity.

       

      At
        Lender’s request, Borrower shall place a sign at a location on the Property
        satisfactory to Lender, which sign shall recite, among other things, that
        Lender
        is financing the Construction of the Improvements. Borrower expressly authorizes
        Lender to prepare and to furnish to the news media for publication from time
        to
        time news releases with respect to the Property, specifically to include
        releases detailing Lender’s involvement with the financing of the
        Property.

       

      Section
        8.13  Governing
        Law.

       

      This
        Agreement shall be governed by and construed, interpreted and enforced in
        accordance with the laws of the State.

       

      Section
        8.14  Time
        of
        Essence.

       

      Time
        shall
        be of the essence for each and every provision of this Agreement of which
        time
        is an element.

       

      Section
        8.15  Electronic
        Transmission of Data.

       

      Lender
        and
        Borrower agree that certain data related to the Loan (including confidential
        information, documents, applications and reports) may be transmitted
        electronically, including transmission over the Internet. This data may be
        transmitted to, received from or circulated among agents and representatives
        of
        Borrower and/or Lender and their affiliates and other Persons involved with
        the
        subject matter of this Agreement. Borrower acknowledges and agrees that (a)
        there are risks associated with the use of electronic transmission and that
        Lender does not control the method of transmittal or service providers, (b)
        Lender has no obligation or responsibility whatsoever and assumes no duty
        or
        obligation for the security, receipt or third party interception of any such
        transmission, and (c) Borrower will release, hold harmless and indemnify
        Lender
        from any claim, damage or loss, including that arising in whole or part from
        Lender’s strict liability or sole, comparative or contributory negligence, which
        is related to the electronic transmission of data.

       

      Section
        8.16  Dispute
        Resolution.

       

      (a)  Arbitration.
        Except
        to the extent expressly provided below, any Dispute shall, upon the request
        of
        either party, be determined by binding arbitration in accordance with the
        Federal Arbitration Act, Title 9, United States Code (or if not applicable,
        the
        applicable state law), the then-current rules for arbitration of financial
        services disputes of AAA and the “Special Rules” set forth below. In the event
        of any inconsistency, the Special Rules shall control. The filing of a court
        action is not intended to constitute a waiver of the right of Borrower or
        Lender, including the suing party, thereafter to require submittal of the
        Dispute to arbitration. Any party to this Agreement may bring an action,
        including a summary or expedited proceeding, to compel arbitration of any
        Dispute in any court having jurisdiction over such action. For the purposes
        of
        this Dispute Resolution Section only, the terms “party” and “parties” shall
        include any
        parent
        corporation, subsidiary or affiliate of Lender involved in the servicing,
        management or administration of any obligation described in or evidenced
        by this
        Agreement, together with the officers, employees, successors and assigns
        of each
        of the foregoing.

       

      (b)  Special
        Rules.

       

      (i) The
        arbitration shall be conducted in any U.S. state where real or tangible personal
        property collateral is located, or if there is no such collateral, in the
        City
        and County where Lender is located pursuant to its address for notice purposes
        in this Agreement.

       

      (ii) The
        arbitration shall be administered by AAA, who will appoint an arbitrator.
        If AAA
        is unwilling or unable to administer or legally precluded from administering
        the
        arbitration, or if AAA is unwilling or unable to enforce or legally precluded
        from enforcing any and all provisions of this Dispute Resolution Section,
        then
        any party to this Agreement may substitute another arbitration organization
        that
        has similar procedures to AAA and that will observe and enforce any and all
        provisions of this Dispute Resolution Section. All
        Disputes shall be determined by one arbitrator; however, if the amount in
        controversy in a Dispute exceeds Five Million Dollars ($5,000,000), upon
        the
        request of any party, the Dispute shall be decided by three arbitrators (for
        purposes of this Agreement, referred to collectively as the
“arbitrator”).

       

      
        
          PAGE
            23

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (iii) All
        arbitration hearings will be commenced within ninety (90) days of the demand
        for
        arbitration and completed within ninety (90) days from the date of commencement;
        provided, however, that upon a showing of good cause, the arbitrator shall
        be
        permitted to extend the commencement of such hearing for up to an additional
        sixty (60) days.

       

      (iv) The
        judgment and the award, if any, of the arbitrator shall be issued within
        thirty
        (30) days of the close of the hearing. The arbitrator shall provide a concise
        written statement setting forth the reasons for the judgment and for the
        award,
        if any. The
        arbitration award, if any, may be submitted to any court having jurisdiction
        to
        be confirmed and enforced, and such confirmation and enforcement shall not
        be
        subject to arbitration.

       

      (v) The
        arbitrator will give effect to statutes of limitations and any waivers thereof
        in determining the disposition of any Dispute and may dismiss one or more
        claims
        in the arbitration on the basis that such claim or claims is or are barred.
        For
        purposes of the application of the statute of limitations, the service on
        AAA
        under
        applicable AAA
        rules of
        a notice of Dispute is the equivalent of the filing of a lawsuit.

       

      (vi) Any
        dispute concerning this arbitration provision, including any such dispute
        as to
        the validity or enforceability of this provision, or whether a Dispute is
        arbitrable, shall be determined by the arbitrator; provided, however, that
        the
        arbitrator shall not be permitted to vary the express provisions of these
        Special Rules or the Reservations of Rights in subsection (c)
        below.

       

      (vii) The
        arbitrator shall have the power to award legal fees and costs pursuant to
        the
        terms of this Agreement.

       

      (viii) The
        arbitration will take place on an individual basis without reference to,
        resort
        to, or consideration of any form of class or class action.

       

      (c)  Reservations
        of Rights.
        Nothing
        in this Agreement shall be deemed to (i) limit the applicability of any
        otherwise applicable statutes of limitation and any waivers contained in
        this
        Agreement, or (ii) apply to or limit the right of Lender (A) to exercise
        self help remedies such as (but not limited to) setoff, or (B) to foreclose
        judicially or nonjudicially against any real or personal property collateral,
        or
        to exercise judicial or nonjudicial power of sale rights, (C) to obtain
        from a court provisional or ancillary remedies such as (but not limited to)
        injunctive relief, writ of possession, prejudgment attachment, or the
        appointment of a receiver, or (D) to pursue rights against a party to this
        Agreement in a third-party proceeding in any action brought against Lender
        in a
        state, federal or international court, tribunal or hearing body (including
        actions in specialty courts, such as bankruptcy and patent courts). Lender
        may
        exercise the rights set forth in clauses (A) through (D), inclusive, before,
        during or after the pendency of any arbitration proceeding brought pursuant
        to
        this Agreement. Neither the exercise of self help remedies nor the institution
        or maintenance of an action for foreclosure or provisional or ancillary remedies
        shall constitute a waiver of the right of any party, including the claimant
        in
        any such action, to arbitrate the merits of the Dispute occasioning resort
        to
        such remedies. No provision in the Loan Documents regarding submission to
        jurisdiction and/or venue in any court is intended or shall be construed
        to be
        in derogation of the provisions in any Loan Document for arbitration of any
        Dispute.

       

      (d)  Conflicting
        Provisions for Dispute Resolution.
        If there
        is any conflict between the terms, conditions and provisions of this Section
        and
        those of any other provision or agreement for arbitration or dispute resolution,
        the terms, conditions and provisions of this Section shall prevail as to
        any
        Dispute arising out of or relating to (i) this Agreement, (ii) any
        other Loan Document, (iii) any related agreements or instruments, or
        (iv) the transaction contemplated herein or therein (including any claim
        based on or arising from an alleged personal injury or business tort). In
        any
        other situation, if the resolution of a given Dispute is specifically governed
        by another provision or agreement for arbitration or dispute resolution,
        the
        other provision or agreement shall prevail with respect to said
        Dispute.

       

      
        
          PAGE
            24

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (e)  Jury
        Trial Waiver in Arbitration.
        By
        agreeing to this Section, the parties irrevocably and voluntarily waive any
        right they may have to a trial by jury in respect of any Dispute.

       

      Section
        8.17  Forum.

       

      Borrower
        hereby irrevocably submits generally and unconditionally for itself and in
        respect of its property to the jurisdiction of any state court or any United
        States federal court sitting in the State specified in the governing law
        section
        of this Agreement and to the jurisdiction of any state court or any United
        States federal court sitting in the state in which any of the Property is
        located, over any Dispute. Borrower hereby irrevocably waives, to the fullest
        extent permitted by Law, any objection that Borrower may now or hereafter
        have
        to the laying of venue in any such court and any claim that any such court
        is an
        inconvenient forum. 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 court or any
        United
        States federal court sitting in the state specified in the governing law
        section
        of this Agreement may be made by certified or registered mail, return receipt
        requested, directed to Borrower at its address for notice set forth in this
        Agreement, or at a subsequent address of which Lender received actual notice
        from Borrower in accordance with the notice section of this Agreement, and
        service so made shall be complete five (5) days after the same shall have
        been
        so mailed. Nothing herein shall affect the right of Lender to serve process
        in
        any manner permitted by Law or limit the right of Lender to bring proceedings
        against Borrower in any other court or jurisdiction.

      

      Section
        8.18  WAIVER
        OF JURY TRIAL.

       

      WITHOUT
        INTENDING IN ANY WAY TO LIMIT THE PARTIES’ AGREEMENT TO ARBITRATE ANY “DISPUTE”
(FOR PURPOSES OF THIS SECTION, AS DEFINED IN SCHEDULE
        1)
        AS SET FORTH IN THIS AGREEMENT, TO THE EXTENT ANY “DISPUTE” IS NOT SUBMITTED TO
        ARBITRATION OR IS DEEMED BY THE ARBITRATOR OR BY ANY COURT WITH JURISDICTION
        TO
        BE NOT ARBITRABLE OR NOT REQUIRED TO BE ARBITRATED, BORROWER AND LENDER WAIVE
        TRIAL BY JURY IN RESPECT OF ANY SUCH “DISPUTE” AND ANY ACTION ON SUCH “DISPUTE.”
THIS WAIVER IS KNOWINGLY, WILLINGLY AND VOLUNTARILY MADE BY BORROWER AND
        LENDER,
        AND BORROWER AND LENDER HEREBY REPRESENT THAT NO REPRESENTATIONS OF FACT
        OR
        OPINION HAVE BEEN MADE BY ANY PERSON OR ENTITY TO INDUCE THIS WAIVER OF TRIAL
        BY
        JURY OR TO IN ANY WAY MODIFY OR NULLIFY ITS EFFECT. THIS PROVISION IS A MATERIAL
        INDUCEMENT FOR THE PARTIES ENTERING INTO THE LOAN DOCUMENTS. BORROWER AND
        LENDER
        ARE EACH HEREBY AUTHORIZED TO FILE A COPY OF THIS SECTION IN ANY PROCEEDING
        AS
        CONCLUSIVE EVIDENCE OF THIS WAIVER OF JURY TRIAL. BORROWER FURTHER REPRESENTS
        AND WARRANTS THAT IT HAS BEEN REPRESENTED IN THE SIGNING OF THIS AGREEMENT
        AND
        IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL, OR HAS HAD THE
        OPPORTUNITY TO BE REPRESENTED BY INDEPENDENT LEGAL COUNSEL SELECTED OF ITS
        OWN
        FREE WILL, AND THAT IT HAS HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH
        COUNSEL.

       

      Section
        8.19  USA
        Patriot Act Notice.

       

      Lender
        hereby notifies Borrower that pursuant to the requirements of the USA Patriot
        Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the
        “Act”), Lender is required to obtain, verify and record information that
        identifies Borrower, which information includes the name and address of Borrower
        and other information that will allow Lender to identify Borrower in accordance
        with the Act.

       

      
        
          PAGE
            25

        

        
          
          

          
            

          

        

        
          
          

        

      

      Section
        8.20  Entire
        Agreement.

       

      The
        Loan
        Documents constitute the entire understanding and agreement between Borrower
        and
        Lender with respect to the transactions arising in connection with the Loan,
        and
        supersede all prior written or oral understandings and agreements between
        Borrower and Lender with respect to the matters addressed in the Loan Documents.
        In particular, and without limitation, the terms of any commitment by Lender
        to
        make the Loan are merged into the Loan Documents. Except as incorporated
        in
        writing into the Loan Documents, there are no representations, understandings,
        stipulations, agreements or promises, oral or written, with respect to the
        matters addressed in the Loan Documents. If there is any conflict between
        the
        terms, conditions and provisions of this Agreement and those of any other
        instrument or agreement, including any other Loan Document, the terms,
        conditions and provisions of this Agreement shall prevail.

       

      Section
        8.21  HIPPA
        Disclosure.

       

      During
        the
        course of Lender's, its agents' or employees' inspection of the Property
        pursuant to the terms of this Agreement, Lender, its agents or employees
        may
        encounter individually identifiable healthcare information or other confidential
        information relating to the residents at the Property (collectively, the
        "Confidential
        Information").
        Unless
        otherwise required by law, Lender, its agents and employees shall use
        commercially reasonable efforts not to disclose, compile, aggregate, remove
        from
        the Property or record in any manner any Confidential Information, and shall
        not
        willfully cause Borrower or the Property to violate any laws, regulations
        or
        ordinances intended to protect the privacy rights of the residents at the
        Property, including, without limitation, the Health Insurance Portability
        and
        Accountability Act of 1996 or its implementing regulations.

      

      
        
          PAGE
            26

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       

      IN
        WITNESS
        WHEREOF, Borrower and Lender have caused this Agreement to be executed
under
        seal
        as of the
        date first above written.

       

      
        	 	 	BORROWER:
	 	 	 
	 	 	
                American
                  Retirement Corporation,

                a
                  Tennessee corporation

              
	 	 
	 
 	 
 	 
 
	 	 	 
	 	
                By:
                  

                
                  

                

                Name:

                
                  

                

                Title:
                  

                

              
	 	
              
	 	LENDER:
	 	 
	 	
                Bank
                  of America, N.A.,

                a
                  national banking association

              
	 	 
	 	
              
	 	
                By:
                  

                
                  

                

                Name:

                
                  

                

                Title:
                  

                

              

      

       

      
        
          PAGE
            27

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      Schedule
        1

       

      Definitions

       

      Unless
        the
        context otherwise specifies or requires, the following terms shall have the
        meanings herein specified, such definitions to be applicable equally to the
        singular and the plural forms of such terms and to all genders:

       

      “AAA”
means
        the American Arbitration Association, or any successor thereof.

       

      “Act”
means
        the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October
        26,
        2001)).

       

      “Architect”
means
        Earl Swensson Associates, its successors and permitted assigns.

       

      “Architect’s
        Contract”
means
        the agreement dated September 1, 2005, by and between ASF, as owner, and
        the
        Architect, as architect, and any other contract for architectural services
        relating to the Construction of the Improvements between ASF and an architect,
        and approved in writing by Lender, as the same may be amended from time to
        time
        with the prior written approval of Lender.

       

      "ASF
        Loan"
        means
        the loan in the Loan Amount from Borrower to ASF, the repayment obligations
        in
        connection with which are evidenced by the ASF Note.

       

      "ASF
        Loan Agreement"
        means
        that Construction Loan Agreement of even date herewith between the Borrower
        as
        the lender therein and ASF as the borrower therein pertaining to the ASF
        Loan.

       

      "ASF
        Loan Documents"
        means
        the ASF Note, the Mortgage, the ASF Loan Agreement, and all other documents
        now
        or hereafter evidencing or securing the ASF Loan from Borrower to
        ASF.

       

      "ASF
        Note"
        means
        the Promissory Note of even date herewith, in an amount equal to the Loan
        Amount, made by ASF to the order of Borrower and collaterally assigned and
        negotiated by Borrower to the order of Lender, as the same may from time
        to time
        be extended, amended, restated, supplemented or otherwise modified.

       

      “Authorized
        Signers”
means
        either George T. Hicks or H. Todd Kaestner of the Borrower, and either
        Christopher Coates or R. Murray Hatcher of ASF, or such substitute officers
        of
        Borrower and/or ASF as shall be duly designated and authorized in writing
        by
        Borrower and/or ASF, as the case may be, to sign draw requests in a writing
        addressed to Lender, which writing may include a draw request in the form
        attached hereto as Schedule 2.

       

      “Banking
        Day”
means
        any day that is not a Saturday, Sunday or banking holiday in the
        State.

       

      “Borrower’s
        Deposit Account”
means
        an
        account established with Lender pursuant to the terms of Section
        4.3.

       

      “Budget”
means
        the breakdown of hard costs and soft costs attached hereto as Schedule
        3,
        as the
        same may be revised from time to time with the written approval of
        Lender.

       

      “Casualty”
means
        any act or occurrence of any kind or nature that results in damage, loss
        or
        destruction to the Property.

       

      "Change
        of Control"
        means an
        event or series of events by which:

       

      (a) any
        "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of
        the
        Securities Exchange Act of 1934, but excluding any employee benefit plan
        of such
        person or its subsidiaries, and any person or entity acting in its capacity
        as
        trustee, agent or other fiduciary or administrator of any such plan) becomes
        the
        "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Securities
        Exchange Act of 1934, except that a person or group shall be deemed to have
        "beneficial ownership" of all Capital Stock that such person or group has
        the
        right to acquire (such right, an "option right"), whether such right is
        exercisable immediately or only after the passage of time), directly or
        indirectly, of thirty percent (30%) of the Capital Stock of the Borrower
        entitled to vote for members of the board of directors or equivalent governing
        body of the Borrower on a fully diluted basis (and taking into account all
        such
        securities that such person or group has the right to acquire pursuant to
        any
        option right); or

       

      
        
          SCHEDULE
            1 - PAGE 1

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (b) during
        any
        period of 24 consecutive months, a majority of the members of the board of
        directors or other equivalent governing body of the Borrower cease to be
        composed of individuals (i) who were members of that board or equivalent
        governing body on the first day of such period, (ii) whose election or
        nomination to that board or equivalent governing body was approved by
        individuals referred to in clause (i) above constituting at the time of such
        election or nomination at least a majority of that board or equivalent governing
        body or (iii) whose election or nomination to that board or other equivalent
        governing body was approved by individuals referred to in clauses (i) and
        (ii)
        above constituting at the time of such election or nomination at least a
        majority of that board or equivalent governing body (excluding, in the case
        of
        both clause (ii) and clause (iii), any individual whose initial nomination
        for,
        or assumption of office as, a member of that board or equivalent governing
        body
        occurs as a result of an actual or threatened solicitation of proxies or
        consents for the election or removal of one or more directors by any person
        or
        group other than a solicitation for the election of one or more directors
        by or
        on behalf of the board of directors); or

       

      (c) any
        Person
        or two or more Persons acting in concert shall have acquired by contract
        or
        otherwise, or shall have entered into a contract or arrangement that, upon
        consummation thereof, will result in its or their acquisition of the power
        to
        exercise, directly or indirectly, a controlling influence over the management
        or
        policies of the Borrower, or control over the Voting Stock of the Borrower
        on a
        fully-diluted basis (and taking into account all such Voting Stock that such
        Person or group has the right to acquire pursuant to any option right)
        representing thirty percent (30%) or more of the combined voting power of
        such
        Voting Stock.

       

      “Checking
        Account”
means
        account no. 3253194544 of the Borrower maintained at Lender. 

       

      “Claim”
means
        any liability, suit, action, claim, demand, loss, expense, penalty, fine,
        judgment or other cost of any kind or nature whatsoever, including fees,
        costs
        and expenses of attorneys, consultants, contractors and experts.

       

      “Closing
        Checklist”
means
        that certain Closing Requirements and Checklist setting forth the conditions
        for
        closing the Loan and recording the Mortgage.

       

      “Code”
means
        the Internal Revenue Code of 1986, as amended.

       

      "Collateral
        Assignment of Loan Documents"
        means
        that Collateral of Assignment of Loan Documents of even date herewith from
        Borrower to Lender assigning to Lender the ASF Note, the ASF Loan Agreement,
        the
        Mortgage, the Guaranty and the other loan documents entered into by and between
        ASF and Borrower, or from ASF and/or American Seniors to Borrower, with respect
        to the ASF Loan, as the same may be modified and amended from time to time
        with
        the consent of the Lender.

       

      "Collateral
        Assignment of Subordinated Loan Documents"
        means
        that Collateral Assignment of Subordinated Loan Documents of even date herewith
        from Borrower to Lender assigning to Lender the Subordinated Note, the
        Subordinated Mortgage, and other documents between ASF and Borrower pertaining
        to the Subordinated Loan.

       

      "Collateral
        Assignments of Loan Documents"
        means,
        collectively, the Collateral Assignment of Loan Documents and the Collateral
        Assignment of Subordinated Loan Documents.

       

      “Completion
        of Construction”
means,
        with respect to the Construction of the Improvements or any component thereof,
        the satisfaction of all of the conditions of Section
        5
        of
Schedule
        5.

       

      
        
          SCHEDULE
            1 - PAGE 2

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      “Condemnation”
means
        any taking of title to, use of, or any other interest in the Property under
        the
        exercise of the power of condemnation or eminent domain, whether temporarily
        or
        permanently, by any Governmental Authority or by any other Person acting
        under
        or for the benefit of a Governmental Authority.

       

      “Condemnation
        Awards”
means
        any and all judgments, awards of damages (including severance and consequential
        damages), payments, proceeds, settlements, amounts paid for a taking in lieu
        of
        Condemnation, or other compensation heretofore or hereafter made, including
        interest thereon, and the right to receive the same, as a result of, or in
        connection with, any Condemnation or threatened Condemnation.

       

      "Consolidated
        Fixed Charge Coverage Ratio"
        means
        the ratio of Borrower's EBITDAR to its Fixed Charges, computed in each instance
        for the immediately preceding two (2) fiscal quarters. "EBITDAR" shall mean,
        as
        of any time of determination, Borrower's consolidated net income plus
        (without
        duplication) the following items: consolidated interest expense, consolidated
        income tax expense, consolidated depreciation and amortization, and consolidated
        rental expense; in addition, any gains or losses arising from the sale of
        assets, or any non-cash, stock-based employee compensation expense arising
        from
        the application of APB 25 (Accounting for Stock Issued to Employees), SFAS
        123R
        (Accounting for Shared Based Payment) or SFAS No. 148 (Stock Based Compensation
        - Transition and Disclosure), or from any other items of income or expense
        which
        are deemed to be extraordinary or nonrecurring in nature shall be subtracted
        or
        added back, as the case may be. Items shall be deemed to be extraordinary
        only
        if deemed to be so in accordance with GAAP, and items shall be deemed to
        be
        non-recurring only if they are expenditures or charges that have not been
        incurred in the last eight (8) fiscal quarters and are not likely to recur
        in
        the subsequent two year period. "Fixed Charges" shall mean, as of any time
        of
        determination, the sum of Borrower's consolidated rent expense, consolidated
        interest expense (including the interest component of rentals under capitalized
        leases, but exclusive of prepayment fees or one-time loan fees), scheduled
        principal payments due on any indebtedness or capitalized leases (but exclusive
        of balloon payments due on maturity or expiration), dividends due or paid
        on
        preferred stock, and any mandatory distributions of earnings to shareholders.
        All calculations shall be done on a consolidated basis in accordance with
        generally accepted accounting principles consistently applied ("GAAP") computed
        over the trailing two fiscal quarter period.

       

      “Construction
        Consultant”
means
        a
        person or firm appointed or designated by Lender from time to time to inspect
        the progress of the Construction of the Improvements and the conformity of
        construction with the Plans and Specifications, the Budget and the Project
        Schedule, and to perform such other acts and duties for such other purposes
        as
        Lender may from time to time deem appropriate or as may be required by the
        terms
        of this Agreement.

       

      “Construction
        Contract”
means
        the agreement dated October 20, 2005, by and between ASF, as owner, and the
        General Contractor, as general contractor, and any other contract for the
        Construction of the Improvements between ASF and a contractor, and approved
        in
        writing by Lender, as the same may be amended from time to time with the
        prior
        written approval of Lender.

       

      “Construction
        of the Improvements”
means
        the development of the Land and/or the construction of the
        Improvements.

       

      “Default”
means
        an
        event or circumstance that, with the giving of Notice or lapse of time, or
        both,
        would constitute an Event of Default under the provisions of this
        Agreement.

       

      “Deferred
        Equity”
has
        the
        meaning ascribed to such term in Schedule
        5.

       

      “Dispute”
means
        any controversy, claim or dispute between or among the parties to this
        Agreement, including any such controversy, claim or dispute arising out of
        or
        relating to (a) this Agreement, (b) any other Loan Document,
        (c) any related agreements or instruments, or (d) the transaction
        contemplated herein or therein (including any claim based on or arising from
        an
        alleged personal injury or business tort).

       

      
        
          SCHEDULE
            1 - PAGE 3

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      “Environmental
        Agreement”
means
        the Environmental Indemnification and Release Agreement of even date herewith
        by
        and between Borrower and Lender pertaining to the Property, as the same may
        from
        time to time be extended, amended, restated or otherwise modified. 

       

      “ERISA”
means
        the Employee Retirement Income Security Act of 1974, as amended.

       

      “Event
        of Default”
means
        any event or circumstance specified in Article
        VI
        and the
        continuance of such event or circumstance beyond the applicable grace and/or
        cure periods therefor, if any, set forth in Article
        VI.

       

      “Expenses”
means
        all fees, interest, charges, costs and expenses of any nature whatsoever
        incurred at any time and from time to time (whether before or after an Event
        of
        Default) by Lender in making, funding, administering or modifying the Loan
        and/or the ASF Loan, in negotiating or entering into any “workout” of the Loan
        and/or the ASF Loan, or in exercising or enforcing any rights, powers and
        remedies provided in the Collateral Assignment of Loan Documents, the Mortgage,
        or any of the other Loan Documents, including attorneys’ fees, court costs,
        receiver’s fees, management fees and costs incurred in the repair, maintenance
        and operation of, or taking possession of, or selling, the
        Property.

       

      “Force
        Majeure”
means
        strikes, lock-outs, war, civil disturbance, natural disaster, acts of terrorism
        or acts of God which cause a delay in Borrower’s performance of an Obligation
        related to the work of construction; provided, however, that (a) Borrower
        must
        give Notice to Lender within ten (10) days after the occurrence of an event
        which it believes to constitute Force Majeure, (b) in no event shall Force
        Majeure extend the time for the performance of an Obligation by more than
        sixty
        (60) days, and (c) circumstances that can be remedied or mitigated through
        the
        payment of money shall not constitute Force Majeure hereunder to the extent
        such
        remedy or mitigation is deemed reasonable by Lender in its sole
        discretion.

       

      “General
        Contractor”
means
        American Constructors, Inc., its successors and permitted assigns.

       

      “Governmental
        Authority”
means
        any governmental or quasi-governmental entity, including any court, department,
        commission, board, bureau, agency, administration, service, district or other
        instrumentality of any governmental entity.

       

      “Guarantor” means
        American Seniors Foundation, an Ohio non-profit corporation, as the guarantor
        of
        the loan from Borrower to ASF, and its successors and assigns.

       

      “Guaranty”
means
        the Guaranty Agreement of even date herewith executed by Guarantor for the
        benefit of Borrower as well as the Lender as assignee of the Borrower, as
        the
        same may from time to time be extended, amended, restated, supplemented or
        otherwise modified.

       

      “Improvements”
means
        all on-site and off-site improvements to the Land for a 93 unit assisted
        living
        center together with an 18 unit Alzheimers' facility to be constructed on
        the
        Land, together with all fixtures, tenant improvements and appurtenances now
        or
        later to be located on the Land and/or in such improvements.

       

      “Insurance
        Proceeds”
means
        the insurance claims under and the proceeds of any and all policies of insurance
        covering the Property or any part thereof, including all returned and unearned
        premiums with respect to any insurance relating to such Property, in each
        case
        whether now or hereafter existing or arising.

       

      “Land”
means
        the approximately 4.674 acre tract of land described in and encumbered by
        the
        Mortgage.

       

      “Laws”
means
        all federal, state and local laws, statutes, rules, ordinances, regulations,
        codes, licenses, authorizations, decisions, injunctions, interpretations,
        orders
        or decrees of any court or other Governmental Authority having jurisdiction
        as
        may be in effect from time to time.

       

      
        
          SCHEDULE
            1 - PAGE 4

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      “Leases”
means
        all leases, license agreements and other occupancy or use agreements (whether
        oral or written), now or hereafter existing, which cover or relate to the
        Property or any part thereof, together with all options therefor, amendments
        thereto and renewals, modifications and guaranties thereof, including any
        cash
        or security deposited under the Leases to secure performance by the tenants
        of
        their obligations under the Leases, whether such cash or security is to be
        held
        until the expiration of the terms of the Leases or applied to one or more
        of the
        installments of rent coming due thereunder.

       

      “Letter
        of Credit”
means
        any letter of credit issued by Lender for the account of Borrower or its
        nominee
        in connection with the Construction of the Improvements, together with any
        and
        all extensions, renewals or modifications thereof, substitutions therefor
        or
        replacements thereof.

       

      “Loan”
means
        the loan from Lender to Borrower, the repayment obligations in connection
        with
        which are evidenced by the Note.

       

      “Loan
        Amount”
means
        Twenty-Six Million Two Hundred Fifty Thousand and No/100 Dollars
        ($26,250,000.00).

       

      “Loan
        Documents”
means:
        (a) this Agreement, the Note, the Environmental Agreement, the Collateral
        Assignments of Loan Documents and related instruments, (b) all documents
        now or
        hereafter evidencing or securing the ASF Loan, including without limitation
        the
        ASF Note, the Mortgage,
        and
        the
        other ASF Loan Documents, and (c) any and all other documents which Borrower,
        ASF, Guarantor or any other party or parties have executed and delivered,
        or may
        hereafter execute and deliver, to evidence, secure or guarantee the Obligations,
        or any part thereof, as the same may from time to time be extended, amended,
        restated, supplemented or otherwise modified. 

       

      “Mortgage”
means
        the Deed of Trust, Assignment, Security Agreement and Fixture Filing of even
        date herewith given by ASF to John S. Seehorn, trustee for the benefit of
        Borrower, and collaterally assigned by Borrower to Lender to secure the
        Obligations, as the same may from time to time be extended, amended, restated,
        supplemented or otherwise modified.

       

      “Net
        Proceeds,”
when
        used with respect to any Condemnation Awards or Insurance Proceeds, means
        the
        gross proceeds from any Condemnation or Casualty remaining after payment
        of all
        expenses, including attorneys’ fees, incurred in the collection of such gross
        proceeds.

       

      “Note”
means
        the Promissory Note of even date herewith, in an amount equal to the Loan
        Amount, made by Borrower to the order of Lender, as the same may from time
        to
        time be extended, amended, restated, supplemented or otherwise
        modified.

       

      “Notice”
means
        a
        notice, request, consent, demand or other communication given in accordance
        with
        the provisions of Section
        8.6
        of this
        Agreement.

       

      “Obligations”
means
        all present and future debts, obligations and liabilities of Borrower to
        Lender
        arising pursuant to, or on account of, the provisions of this Agreement,
        the
        Note or any of the other Loan Documents, including the obligations: (a) to
        pay
        all principal, interest, late charges, prepayment premiums (if any) and other
        amounts due at any time under the Note; (b) to pay all Expenses, indemnification
        payments, fees and other amounts due at any time under the Mortgage or any
        of
        the other Loan Documents, together with interest thereon as provided in the
        Mortgage or such Loan Document; (c) to pay and perform all obligations of
        Borrower (or its affiliate) under any Swap Contract; and (d) to perform,
        observe
        and comply with all of the terms, covenants and conditions, expressed or
        implied, which Borrower is required to perform, observe or comply with pursuant
        to the terms of the Mortgage or any of the other Loan Documents. 

       

      
        
          SCHEDULE
            1 - PAGE 5

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      “Person”
means
        an
        individual, a corporation, a partnership, a joint venture, a limited liability
        company, a trust, an unincorporated association, any Governmental Authority
        or
        any other entity.

       

      “Plans
        and Specifications”
means
        any and all plans and specifications prepared in connection with the
        Construction of the Improvements and approved in writing by Lender, as the
        same
        may from time to time be amended with the prior written approval of
        Lender.

       

      “Project
        Schedule”
means
        the schedule for commencement and completion of the Construction of the
        Improvements attached hereto as Schedule 4,
        as the
        same may be revised from time to time with the written approval of
        Lender.

       

      “Property”
means
        the real and personal property conveyed and encumbered by the
        Mortgage.

       

      “Rents”
means
        all of the rents, royalties, issues, profits, revenues, earnings, income
        and
        other benefits of the Property or any part thereof, or arising from the use
        or
        enjoyment of the Property or any part thereof, including all such amounts
        paid
        under or arising from any of the Leases and all fees, charges, accounts or
        other
        payments for the use or occupancy of rooms or other public facilities within
        the
        Property or any part thereof.

       

      “State”
means
        the State of Tennessee.

       

      “Stored
        Materials”
means
        building materials or furnishings that have not yet been incorporated into
        the
        Improvements.

       

      "Subordinated
        Loan"
        means
        that loan in the amount of up to $6,050,000.00 to be made by Borrower to
        ASF to
        finance the purchase of the Property by ASF as well as ASF's working capital
        operating deficits upon Completion of Construction.

       

      "Subordinated
        Loan Documents"
        means
        the Subordinated Note from ASF to Borrower, the Subordinated Mortgage and
        related loan agreement and other documents.

       

      "Subordinated
        Note"
        means
        that Note in the maximum principal amount of $6,050,000.00 from ASF payable
        to
        the order of Borrower.

       

      "Subordinated
        Mortgage"
        means
        the Deed of Trust, Assignment, Security Agreement and Fixture Filing from
        ASF to
        John S. Seehorn, trustee, to secure the Subordinated Loan.

       

      “Survey”
means
        a
        map or plat of survey of the Land which conforms with Lender’s survey
        requirements set forth in the Closing Checklist and with the “Minimum Standard
        Detail Requirements for ALTA/ACSM Land Title Surveys” jointly established and
        adopted by ALTA, ACSM and NSPS in 1999, and pursuant to Accuracy Standards
        as
        adopted by ALTA, ACSM and NSPS and in effect on the date when the Survey
        is
        certified to Lender in the form specified in the Closing Checklist.

       

      “Swap
        Contract”
means
        any agreement, whether or not in writing, relating to any Swap Transaction,
        including, unless the context otherwise clearly requires, any form of master
        agreement (the “Master Agreement”) published by the International Swaps and
        Derivatives Association, Inc., or any other master agreement, entered into
        between Swap Counterparty and Borrower (or its affiliate) in connection with
        the
        Loan, together with any related schedule and confirmation, as amended,
        supplemented, superseded or replaced from time to time, relating to or governing
        any Swap Transaction.

       

      “Swap
        Counterparty”
means
        Lender or an affiliate of Lender, in its capacity as counterparty under any
        Swap
        Contract.

       

      “Swap
        Transaction”
means
        any transaction that is a rate swap, basis swap, forward rate transaction,
        commodity swap, commodity option, equity or equity index swap or option,
        bond,
        note or bill option, interest rate option, forward foreign exchange transaction,
        cap, collar or floor transaction, currency swap, cross-currency rate swap,
        swap
        option, currency option or any other similar transaction (including any option
        to enter into the foregoing) or any combination of the foregoing, entered
        into
        between Swap Counterparty and Borrower (or its affiliate) in connection with
        the
        Loan.

       

      
        
          SCHEDULE
            1 - PAGE 6

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      “Taxes”
means
        all taxes and assessments whether general or special, ordinary or extraordinary,
        or foreseen or unforeseen, which at any time may be assessed, levied, confirmed
        or imposed by any Governmental Authority or any communities facilities or
        other
        private district on Borrower or on any of its properties or assets or any
        part
        thereof or in respect of any of its franchises, businesses, income or
        profits.

       

      
        
          SCHEDULE
            1 - PAGE 7

        

        
          
          

          
            

          

        

        
          
          

        

      

      

 

      Schedule
        2

       

      Form
        of
        Draw Request

       

      [BORROWER’S
        LETTERHEAD]

       

      DRAW
        REQUEST NO. _________

       

      

      

        
          	
                  TO: 
                    BANK OF AMERICA, N.A. (“Lender”)

                   

                	 
	
                  LOAN
                    NO.

                	 
	
                  PROJECT

                	
                  The
                    Cumberland at Green Hills

                
	
                  LOCATION
                    

                	
                  Burton
                    Hills, Nashville, Tennessee

                
	
                  BORROWERS

                	
                  American
                    Retirement Corporation

                
	 	
                  ASF
                    of Green Hills, LLC

                
	 	 
	
                  FOR
                    PERIOD ENDING 

                	 

        

      

      

       

      In
        accordance with those two (2) certain Construction Loan Agreements in the
        amount
        of $26,250,000.00 dated December 12, 2005, with one being between ASF of
        Green
        Hills, LLC and American Retirement Corporation and the other between American
        Retirement Corporation and Bank of America, N.A., the undersigned jointly
        request that $______________________ be advanced from Loan proceeds. The
        proceeds should be credited to American Retirement Corporation's Account
        No.
        3253194544, at Bank of America, N.A.

       

      
        
          
            	 	
                    1.  CURRENT
                      DRAW REQUEST FOR HARD COSTS

                  	
                    $

                  
	 	
                    2.  CURRENT
                      DRAW REQUEST FOR SOFT COSTS

                  	
                    $

                  
	 	
                    3.  TOTAL
                      DRAW REQUEST

                  	
                    $

                  

          

        

      

       

      

        
          	 	
                  AUTHORIZED
                    SIGNERS:

                	 	 
	 	 	 	 
	 	
                  ASF
                    of Green Hills, LLC

                	 	
                  Dated:
                    

                
	 	
                   

                	 	
                   

                
	 	
                  Approved:

                   

                	 	 
	 	
                  American
                    Retirement Corporation 

                	 	
                  Dated:

                
	 	
                   

                   

                	 	
                   

                   

                

        

      

       

      
        
          SCHEDULE
            2

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      Schedule
        3

       

      Budget

       

      
         

         

         

         

         

         

         

         

        
          SCHEDULE
            3

        

        
          
          

          
            

          

        

        
          
          

        

      

      
Schedule
        4

       

      Project
        Schedule

       

      

       

      1.  Commencement.

       

      Subject
        to
        Force Majeure, Borrower shall cause development of the Land to commence no
        later
        than December 31, 2005, and shall cause Construction of the Improvements
        to
        commence no later than February 7, 2006. In connection with the foregoing,
        Borrower shall obtain from the appropriate government officials (i) a grading
        permit on or before February 7, 2006 and (ii) a building permit on or before
        February 7, 2006.

       

      2.  Completion
        of Construction of All Improvements.

       

      Subject
        to
        Force Majeure, Borrower shall cause Completion of Construction of all of
        the
        Improvements to occur no later than August 27, 2007.

       

      3.  Outside
        Date for Completion of Construction.

       

      Regardless
        of the existence or non-existence or occurrence or non-occurrence of Force
        Majeure, in no event shall Completion of Construction of the Improvements
        occur
        later than November 27, 2007.

       

      
        
          SCHEDULE
            4

        

        
          
          

          
            

          

        

        
          
          

        

      

      
Schedule
        5

       

      Additional
        Terms Regarding Advances

       

      The
        conditions precedent to closing the Loan, recording the Mortgage and making
        the
        first advance are set forth in the Closing Checklist. Subsequent advances
        of the
        Loan shall be subject to the following additional terms and
        conditions:

       

      1.  Advances
        Under the Budget.

       

      As
        listed
        in the Budget: (a) the “Total
        Costs”
are
        the
        maximum costs anticipated by Borrower for each item specified; (b) the
“Total
        Budget”
is
        the
        maximum cost anticipated by Borrower for the Construction of the Improvements
        and Borrower’s satisfaction of the other requirements of the Loan; (c) the
“Loan
        Proceeds”
are
        the
        maximum amount to be advanced under the Loan; (d) “Upfront
        Equity”
is
        the
        amount that Borrower is required to pay toward the Total Costs; and (e)
“Deferred
        Equity”
is
        an
        additional amount that Borrower is required to pay toward the Total Costs
        as of
        the date indicated. Whenever Borrower is required to pay any items from Upfront
        Equity or Deferred Equity, Lender, at its option, may restrict or prohibit
        advances of the Loan for such items to the extent that Upfront Equity or
        Deferred Equity is sufficient to pay such amounts. Whenever Borrower’s Upfront
        Equity or Deferred Equity is on deposit with Lender, Lender shall make all
        advances first from such equity based on the allocations thereof set forth
        in
        the Budget. After the exhaustion of Upfront Equity or Deferred Equity allocated
        to a given line item, Lender will advance Loan proceeds for that line item
        pursuant to the Budget.

       

      2.  Special
        Conditions to Second Advance [First
        Advance for Hard Costs].

       

      Prior
        to
        the second advance of the Loan [first
        advance for hard costs],
        Borrower
        shall furnish the following items to Lender, all of which must be satisfactory
        to Lender:

       

      (a)  The
        original title insurance policy insuring Lender’s interest under the Mortgage,
        issued pursuant to the commitment for title insurance approved by Lender
        prior
        to the closing of the Loan;

       

      (b)  Evidence
        of Borrower’s Upfront Equity investment in the Property of not less than Three
        Million Six Hundred Thousand and No/100 Dollars ($3,600,000.00) from sources
        other than the Loan, in accordance with the Budget.

       

      3.  Additional
        Items Required for Each Advance.

       

      Lender
        shall not be obligated to make an advance of Loan proceeds until and unless
        the
        following additional items shall have been received and approved by Lender,
        as
        and to the extent required by Lender, prior to the date of the
        advance:

       

      (a)  A
        notice
        of title continuation or an endorsement to the title insurance policy with
        respect to the Land theretofore delivered to Lender, showing that since the
        last
        preceding advance, there has been no change in the status of title and no
        other
        exception not theretofore approved by Lender, which endorsement shall have
        the
        effect of advancing the effective date of the policy to the date of the advance
        then being made and increasing the coverage of the policy by an amount equal
        to
        the advance then being made, if the policy does not by its terms provide
        automatically for such an increase.

       

      (b)  Interim
        acknowledgments of payment and releases of liens from all Persons who have
        furnished labor, materials and/or services in the Construction of the
        Improvements, covering work performed, materials supplied and services rendered
        through the date of the last preceding advance.

       

      
        
          SCHEDULE
            5 - PAGE 1

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (c)  Soil
        compaction test reports, bearing capacity test reports and concrete test
        reports.

       

      (d)  A
        foundation Survey and such other current Surveys as Lender may reasonably
        request, in each instance disclosing no violation, encroachment or other
        variance from applicable set-backs or other restrictions unless approved
        in
        writing by Lender.

       

      (e)  Evidence
        that the Improvements have not been materially damaged by fire or other Casualty
        unless Lender shall have received Insurance Proceeds, or satisfactory assurance
        that it will receive such proceeds in a timely manner pursuant to Section
        4.10,
        sufficient in the judgment of Lender to effect a satisfactory restoration
        and
        completion of the Improvements in accordance with the terms of the Mortgage
        and
        this Agreement.

       

      (f)  Evidence
        that all work requiring inspection by any Governmental Authority having or
        claiming jurisdiction has been duly inspected and approved by such authority
        and
        by any rating or inspection organization, bureau, association or office having
        or claiming jurisdiction.

       

      (g)  Evidence,
        including a report from the Construction Consultant, that all work completed
        at
        the time of the application for an advance has been performed in a good and
        workmanlike manner, that all materials and fixtures usually furnished and
        installed at that stage of construction have been so furnished and installed,
        that the Improvements can be completed in accordance with the Project Schedule,
        and that the balance of the Loan proceeds then held by Lender and available
        for
        advance pursuant to the terms of this Agreement, together with other funds
        which
        Lender determines to be available to Borrower for such purpose, are and will
        be
        sufficient to pay the cost of such completion.

       

      4.  Conditions
        Precedent to All Advances.

       

      Lender
        shall not be obligated to make an advance of Loan proceeds unless the following
        additional conditions shall have been satisfied or waived in writing by Lender
        as of the date of each advance:

       

      (a)  No
        lien
        for the performance of work or supplying of labor, materials or services
        shall
        have been filed against the Land and remain unsatisfied or
        unbonded.

       

      (b)  No
        condition or situation shall exist at the Land which, in the reasonable
        determination of Lender, constitutes a danger to or impairment of the Property
        or presents a danger or hazard to the public.

       

      (c)  The
        representations and warranties made in Article III
        shall be
        true and correct on and as of the date of the advance with the same effect
        as if
        made on such date.

       

      (d)  All
        terms
        and conditions of the Loan Documents required to be met as of the date of
        the
        applicable advance shall have been met to the satisfaction of
        Lender.

       

      (e)  No
        Default
        or Event of Default shall have occurred and be continuing.

       

      5.  Advances
        for Hard and Soft Costs.

       

      Lender
        shall make periodic advances for hard and soft costs as construction progresses.
        Each advance shall be equal to 91.2646% of Borrower’s total costs as reflected
        in the applicable draw request, net of retainage in the amount of 10% for
        hard
        costs, until Lender has disbursed an amount equal to 50% of all hard cost
        line
        items in the Budget. Thereafter, each advance shall be equal to 91.2646%
        of
        Borrower’s total costs as reflected in the applicable draw request, net of
        retainage in the amount of 5% for hard costs. The balance of Borrower's total
        costs, being 8.7354% of each draw request, shall be made up by the Borrower
        in
        cash as Deferred Equity simultaneously with each advance by the Lender. Lender
        shall not be obligated to make the final advance of the Loan for hard costs
        unless the following additional conditions shall have been satisfied, to
        the
        extent required by Lender:

       

      
        
          SCHEDULE
            5 - PAGE 2

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (a)  The
        Construction Consultant and the Architect shall have certified to Lender
        that
        construction has been completed in a good and workmanlike manner, in accordance
        with applicable requirements of all Governmental Authorities and substantially
        in accordance with the Plans and Specifications;

       

      (b)  To
        the
        extent required by applicable Governmental Authorities for the use and occupancy
        of the Improvements, certificates of occupancy and other applicable permits
        and
        releases shall have been issued with respect to the Improvements and copies
        thereof have been furnished to Lender;

       

      (c)  Lender
        shall have received a satisfactory as-built Survey showing the location of
        the
        Improvements;

       

      (d)  Lender
        shall have received a satisfactory final affidavit from the General Contractor
        and full and complete releases of lien from the General Contractor and each
        subcontractor of and supplier to the General Contractor with respect to work
        performed and/on materials supplied in the Construction of the
        Improvements;

       

      (e)  Lender
        shall have received a satisfactory set of as-built plans and specifications
        for
        the Improvements;

       

      (f)  A
        valid
        notice of completion shall have been recorded;

       

      (g)  Lender
        shall have received a satisfactory endorsement to its title insurance policy;
        and

       

      (h)  All
        other
        terms and conditions of this Agreement and the other Loan Documents required
        to
        be met as of the date of the final advance of the Loan for hard costs shall
        have
        been met to the satisfaction of Lender.

       

      6.       
        Advances for Stored Materials.

       

      No
        advances will be made for Stored Materials unless (a) Borrower has good title
        to
        the Stored Materials and has furnished satisfactory evidence of such title
        to
        Lender, to the extent required by Lender, (b) the Stored Materials are
        components in a form ready for incorporation into the Improvements and will
        be
        so incorporated within a period of forty-five (45) days from the date of
        the
        advance for the Stored Materials, (c) the Stored Materials are in Borrower’s
        possession and are satisfactorily stored on the Land or at such other location
        as Lender may approve, in each case with adequate safeguards to prevent
        commingling with materials for other projects, (d) the Stored Materials are
        protected and insured against loss, theft and damage in a manner and amount
        satisfactory to Lender, (e) the Stored Materials have been paid for in full
        or
        will be paid for in full from the funds to be advanced, (f) Lender has or
        will
        have upon the payment for the Stored Materials from the advanced funds a
        perfected, first priority security interest in the Stored Materials, (g)
        all
        lien rights and claims of the supplier have been released or will be released
        upon payment with the advanced funds, and (h) following the advance for the
        Stored Materials, the aggregate amount of advances for Stored Materials that
        have not yet been incorporated into the Improvements will not exceed Two
        Hundred
        Thousand Dollars ($200,000.00).

       

      7.       
        Advances
        for Soft Costs.

       

      Lender
        shall make periodic advances for soft costs, each in the amount requested
        in the
        applicable draw request, without retainage.

       

      8.       
        Advances for Interest.

       

      Lender
        shall make periodic advances to pay interest as and when it becomes due.
        Borrower hereby irrevocably authorizes Lender to make any interest payment
        on
        Borrower’s behalf by debiting the interest reserve in the amount of the payment
        and applying the debited amount to accrued and unpaid interest on the Loan.
        Lender will disburse the amount of any interest payment into the account
        designated below for funding of advances, and will invoice Borrower for such
        interest payment.

       

      
        
          SCHEDULE
            5 - PAGE 3

        

        
          
          

          
            

          

        

        
          
          

        

      

        

       
          9.           
        Account
        for Funding Advances.

       

      Subject
        to
        Lender’s right to advance Loan proceeds as provided in this Agreement, Lender
        may make advances into Borrower’s checking account No. 3253194544 maintained
        with Lender. Borrower hereby irrevocably authorizes Lender to deposit any
        advance to the credit of Borrower in that account, by wire transfer or other
        deposit. Borrower further irrevocably authorizes Lender to pay and reimburse
        itself for any Expenses incurred by Lender by debit to such account.

       

      
        
          SCHEDULE
            5 - PAGE 4

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      Schedule
        6

       

      Leasing
        and Tenant Matters

       

      1. 
Representations
        and Warranties of Borrower Regarding Leases.

       

      Borrower
        represents and warrants that Borrower has delivered to Lender Borrower’s
        standard form of tenant lease, and no Lease or lease guaranty contains any
        option or right of first refusal to purchase all or any portion of the Property
        or any present or future interest therein.

       

      2. 
Covenants
        of Borrower Regarding Leases and Rents.

       

      Borrower
        covenants that Borrower (a) will observe and perform all of the obligations
        imposed upon the landlord in the Leases and will not do or permit to be done
        anything to impair the security thereof; (b) will use its best efforts to
        enforce or secure, or cause to be enforced or secured, the performance of
        each
        and every obligation and undertaking of the respective tenants under the
        Leases
        and will appear in and defend, at Borrower’s sole cost and expense, any action
        or proceeding arising under, or in any manner connected with, the Leases;
        (c) will not collect any of the Rents in advance of the time when the same
        become due under the terms of the Leases; (d) will not discount any future
        accruing Rents; (e) without the prior written consent of Lender, will not
        execute any assignment of the Leases or the Rents;  (f) other
        than in the ordinary course of business, will not alter, modify or change
        the
        terms of the Leases, or surrender, cancel or terminate the same without the
        prior written consent of Lender; and (g) will execute and deliver, at the
        request of Lender, all such assignments of the Leases and Rents in favor
        of
        Lender as Lender may from time to time require.

       

      3. 
Leasing
        Guidelines.

       

      Borrower
        shall not enter into or allow ASF to enter into any Lease of space in the
        Improvements unless approved or deemed approved by Lender prior to execution.
        The standard form of tenant lease, and any revisions thereto, must have the
        prior written approval of Lender. Lender shall be “deemed” to have approved any
        Lease that: (a) is on the standard form lease approved by Lender with no
        deviations except as approved by Lender; (b) is entered into in the ordinary
        course of business with a bona fide unrelated third party tenant, and ASF,
        acting in good faith and exercising due diligence, has determined that the
        tenant is financially capable of performing its obligations under the Lease;
        (c)
        reflects an arm’s length transaction at then-current market rate for comparable
        space; and (d) contains no right or option to purchase the Property or any
        present or future interest therein. If requested by Lender, Borrower shall
        provide to Lender a correct and complete copy of each existing and future
        Lease,
        including any exhibits, and any guaranty(ies) thereof, within seven (7) days
        after Lender’s request (for existing Leases) or seven (7) days after execution
        (for future Leases).

       

      4. 
Delivery
        of Leasing Information and Documents.

       

      From
        time
        to time upon Lender’s request, Borrower shall promptly deliver to Lender (a)
        complete executed originals of each Lease, including any exhibits thereto
        and
        any guaranty(ies) thereof, (b) a complete fee schedule relating to the Property
        in such detail as Lender may legally require, together with such operating
        statements and leasing schedules and reports as Lender may require in compliance
        with applicable law, and (c) such other information regarding tenants and
        prospective tenants and other leasing information as Lender may reasonably
        request.

       

      
        
          SCHEDULE
            6 - PAGE 1

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      Schedule
        7

       

      Swap
        Contracts

       

      

      1. 
Swap
        Documentation.
        Within
        the timeframes required by Lender and Swap Counterparty, Borrower shall deliver
        to Swap Counterparty the following documents and other items, executed and
        acknowledged as appropriate, all in form and substance satisfactory to Lender
        and Swap Counterparty: (a) Master Agreement in the form published by the
        International Swaps and Derivatives Association, Inc. and related schedule
        in
        the form agreed upon between Borrower (or its affiliate) and Swap Counterparty;
        (b) a confirmation under the foregoing; (c) the Guaranty; (d) if Borrower
        (or
        its affiliate) is anything other than a natural person, evidence of due
        authorization to enter into transactions under the foregoing Swap Contract
        with
        Swap Counterparty, together with evidence of due authorization and execution
        of
        any Swap Contract; and such other title endorsements, documents, instruments
        and
        agreements as Lender and Swap Counterparty may require to evidence satisfaction
        of the conditions set forth in this Section
        1
        of
Schedule
        7.

       

      2. 
Conveyance
        and Security Interest.
        To
        secure Borrower’s Obligations, Borrower hereby transfers, assigns and transfers
        to Lender, and grants to Lender a security interest in, all of Borrower’s right,
        title and interest, but not its obligations, duties or liabilities for any
        breach, in, under and to the Swap Contract, any and all amounts received
        by
        Borrower in connection therewith or to which Borrower is entitled thereunder,
        and all proceeds of the foregoing. All amounts payable to Borrower under
        the
        Swap Contract shall be paid to Lender and shall be applied to pay interest
        or
        other amounts under the Loan.

      

      3. 
Interest
        Reserve.
        Borrower
        and Lender acknowledge that the amount of the interest reserve line item
        in the
        Budget was calculated based on the assumptions that Borrower (or its affiliate)
        would obtain the Swap Contract and would timely pay and perform its Obligations
        under the Swap Contract in the future. On the terms and subject to the
        provisions of this Agreement governing advances of Loan proceeds, Lender
        will
        make advances from interest reserve for periodic payments under the Swap
        Contract as and when they become due. Borrower hereby irrevocably authorizes
        Lender to make any payment under the Swap Contract by debiting the interest
        reserve in the amount of the payment and applying the debited amount to the
        Swap
        Contract. [Lender
        will disburse the amount of any payment under a Swap Contract into the Checking
        Account defined and designated below.] Notwithstanding
        the foregoing, Lender shall have no obligation to make any advance for any
        payment which becomes due under a Swap Contract following an Event of
        Default.

      

      4.            
         Cross-Default.
        It shall
        be an Event of Default under this Agreement if any Event of Default occurs
        as
        defined under any Swap Contract as to which Borrower (or its affiliate) is
        the
        Defaulting Party, or if any Termination Event occurs under any Swap Contract
        as
        to which Borrower (or its affiliate) is an Affected Party. As used in this
        Section, the terms “Defaulting
        Party,”
        “Termination
        Event”
and
        “Affected
        Party”
have
        the
        meanings ascribed to them in the Swap Contract.

      

      5. 
Remedies;
        Cure Rights.
        In
        addition to any and all other remedies to which Lender and Swap Counterparty
        are
        entitled at law or in equity, Swap Counterparty shall have the right, to
        the
        extent so provided in any Swap Contract or any Master Agreement relating
        thereto, (a) to declare an event of default, termination event or other similar
        event thereunder and to designate an Early Termination Date as defined under
        the
        Master Agreement, and (b) to determine net termination amounts in accordance
        with the Swap Contract and to setoff amounts between Swap Contracts. Lender
        shall have the right at any time (but shall have no obligation) to take in
        its
        name or in the name of Borrower (or its affiliate) such action as Lender
        may at
        any time determine to be necessary or advisable to cure any default under
        any
        Swap Contract or to protect the rights of Borrower (or its affiliate) or
        Swap
        Counterparty thereunder; provided, however, that before the occurrence of
        an
        Event of Default under this Agreement, Lender shall give prior written notice
        to
        Borrower before taking any such action. For this purpose, Borrower hereby
        constitutes Lender its true and lawful attorney-in-fact with full power of
        substitution, which power of attorney is coupled with an interest and
        irrevocable, to exercise, at the election of Lender, any and all rights and
        remedies of Borrower (or its affiliate) under the Swap Contract, including
        making any payments thereunder and consummating any transactions contemplated
        thereby, and to take any action that Lender may deem proper in order to collect,
        assert or enforce any claim, right or title, in and to the Swap Contract
        hereby
        assigned and conveyed, and generally to take any and all such action in relation
        thereto as Lender shall deem advisable. Lender shall not incur any liability
        if
        any action so taken by Lender or on its behalf shall prove to be inadequate
        or
        invalid. Borrower expressly understands and agrees that Lender is not hereby
        assuming any duties or obligations of Borrower (or its affiliate) to make
        payments to Swap Counterparty under any Swap Contract or under any other
        Loan
        Document. Such payment duties and obligations remain the responsibility of
        Borrower (or its affiliate) notwithstanding any language in this
        Agreement.

      

      
        
          SCHEDULE
            7 - PAGE 1

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      [Optional
        provision requiring the borrower to choose one-month LIBOR fixings under
        the
        note to coincide with swap payments. Swaps use British Bankers Association
        LIBOR, which is expressed to 5 decimal places without rounding. If you want
        the
        loan and swap to match exactly, you will need to delete the LIBOR rounding
        in
        the note.]

      

      6. 
Timing
        of Interest Rate Periods.
        At all
        times when any Swap Contract is in effect, Borrower shall elect Interest
        Periods
        of one month in duration for all LIBOR Rate Principal. As used herein, the
        terms
“Interest
        Period”
and
        “LIBOR
        Rate Principal”
have
        the
        meanings ascribed to them in the Note. Borrower shall time its rate elections
        under the Note so that each Interest Period for LIBOR Rate Principal ends
        on a
        day when a payment is due from either counterparty under any Swap
        Contract.

      

      [Optional
        provision authorizing the lender to debit and credit a specified checking
        account for loan and swap payments.]

      

      7.           
        Automatic
        Deduction and Credit.

       

      
        
          	 	
                  (a)

                	
                  At
                    all times when any Swap Contract is in effect, Borrower shall
                    maintain the
                    Checking Account in good standing with Lender. Borrower hereby
                    grants to
                    Lender and 

                
	 	Swap
                  Counterparty a security interest in the Checking Account, and any
                  other
                  accounts and deposit accounts from which Borrower may from time
                  to time
                  authorize Lender to debit payments due on the Loana nd the Swap
                  Contracts.
                  Borrower is granting this security interest to Lender and Swap
                  Counterparty for the purpose of securing the Obligations.
	 	 
	 	
                  (b)

                	
                  At
                    all times when any Swap Contract is in effect, all monthly payments
                    owed
                    by Borrower under the Note will be automatically deducted on
                    their due
                    dates from the 

                
	 	Checking
                  Account. Lender is hereby authorized to apply the amounts so debited
                  to
                  Borrower’s obligations under the Loan. Notwithstanding the foregoing,
                  Lender will not automatically deduct the principal payment at maturity
                  from the Checking Account.
	 	 
	 	
                  (c)

                	
                  At
                    all times when any Swap Contract is in effect, all payments owed
                    by
                    Borrower (or its affiliate) under any Swap Contract will be automatically
                    deducted on their due 

                
	 	dates
                  from the Checking Account. The preceding sentence includes Borrower’s
                  authorization for Lender to debit from the Checking Account any
                  monetary
                  obligation owed by Borrower (or its affiliate) to Swap Counterparty
                  following any Early Termination Date, as defined under the Master
                  Agreement. Swap Counterparty is hereby authorized to apply the
                  amounts so
                  debited to the obligations of Borrower (or its affiliate) under
                  the
                  applicable Swap Contract.
	 	 
	 	
                  (d)

                	
                  Lender
                    will debit the Checking Account on the dates the foregoing payments
                    become
                    due; provided, however, that if a due date does not fall on a
                    Banking Day,
                    Lender 

                
	 	will
                  debit the Checking Account on the first Banking Day following such
                  due
                  date.
	 	 
	 	
                  (e)

                	
                  Borrower
                    shall maintain sufficient funds on the dates when Lender enters
                    debits
                    authorized by this Agreement. If there are insufficient funds
                    in the
                    Checking Account on 

                
	 	any
                  date when Lender enters any debit authorized by this Agreement,
                  without
                  limiting Lender’s other remedies in such an event, the debit will be
                  reversed in whole or in part, in Lender’s sole and absolute discretion,
                  and such amount not debited shall be deemed to be unpaid and shall
                  be
                  immediately due and payable in accordance with the terms of the
                  Note
                  and/or the Swap Contract, as applicable.
	 	 
	 	
                  (f)

                	
                  So
                    long as there is no Event of Default existing under this Agreement
                    or any
                    Swap Contract, Lender will automatically credit the Checking
                    Account for
                    payments owed 

                
	 	by
                  Swap Counterparty under the Swap Contract. Lender will credit the
                  Checking
                  Account on the dates the foregoing payments become due; provided,
                  however,
                  that if a due date does not fall on a Banking Day, Lender will
                  credit the
                  Checking Account on the first Banking Day following such due
                  date.

        

      

      

      
        
          SCHEDULE
            7 - PAGE 2Unassociated Document

    

      Exhibit
        10.84

       

      Promissory
        Note

       

      
        
          	$26,250,000.00	
                  December
                    12, 2005

                

        

      

       

       

      FOR
        VALUE
        RECEIVED, American Retirement Corporation, a Tennessee corporation
        (“Borrower”), hereby promises to pay to the order of Bank of America,
        N.A., a national banking association (together with any and all of its
        successors and assigns and/or any other holder of this Note, “Lender”),
        without offset, in immediately available funds in lawful money of the United
        States of America, at 414 Union Street, Nashville, Tennessee, the principal
        sum
        of Twenty-Six Million Two Hundred Fifty Thousand and No/100 Dollars
        ($26,250,000.00) (or the unpaid balance of all principal advanced against
        this
        Note, if that amount is less), together with interest on the unpaid principal
        balance of this Note from day to day outstanding as hereinafter
        provided.

       

      Section
        1     Payment Schedule and Maturity Date. Prior to
        maturity, accrued and unpaid interest shall be due and payable in arrears
        on the
        first (1st) day of each month commencing on January 1, 2006. The entire
        principal balance of this Note then unpaid, together with all accrued and
        unpaid
        interest and all other amounts payable hereunder and under the other Loan
        Documents (as hereinafter defined), shall be due and payable in full on December
        12, 2010 (the “Maturity Date”), the final maturity of this Note. 

       

      Section
        2     Security; Loan Documents. The security for this
        Note includes a Collateral Assignment of Note, Deed of Trust and Other Loan
        Documents (as the same may from time to time be amended, restated, modified
        or
        supplemented, the “Assignment”) of even date herewith from Borrower to
        Lender, conveying and encumbering certain personal property more particularly
        described therein (the “Collateral”). This Note, the Assignment, the
        Construction Loan Agreement between Borrower and Lender of even date herewith
        (as the same may from time to time be amended, restated, modified or
        supplemented, the “Loan Agreement”) and all other documents now or
        hereafter securing, guaranteeing or executed in connection with the loan
        evidenced by this Note (the “Loan”), as the same may from time to time be
        amended, restated, modified or supplemented, are herein sometimes called
        individually a “Loan Document” and together the “Loan
        Documents.”

       

      Section
        3     Interest Rate. 

       

      (a)    
        BBA LIBOR Daily Floating Rate. The unpaid principal balance of this Note
        from day to day outstanding which is not past due, shall bear interest at
        a
        fluctuating rate of interest per annum equal to the BBA LIBOR Daily Floating
        Rate plus two hundred twenty-five (225) basis points per annum. The “BBA
        LIBOR Daily Floating Rate” shall mean a fluctuating rate of interest per
        annum equal to the British Bankers Association LIBOR Rate (“BBA LIBOR”), as
        published by Reuters (or other commercially available source providing
        quotations of BBA LIBOR as selected by Lender from time to time) as determined
        for each Business Day at approximately 11:00 a.m. London time two (2) London
        Banking Days prior to the date in question, for U.S. Dollar deposits (for
        delivery on the first day of such interest period) with a one month term,
        as
        adjusted from time to time in Lender’s sole discretion for reserve requirements,
        deposit insurance assessment rates and other regulatory costs. If such rate
        is
        not available at such time for any reason, then the rate will be determined
        by
        such alternate method as reasonably selected by Lender. A “London Banking Day”
is a day on which banks in London are open for business and dealing in offshore
        dollars. Interest shall be computed for the actual number of days which have
        elapsed, on the basis of a 360-day year.

       

      (b)    
        Alternative Rates. If Lender determines that no adequate basis exists for
        determining the BBA LIBOR Daily Floating Rate or that the BBA LIBOR Daily
        Floating Rate will not adequately and fairly reflect the cost to Lender of
        funding the Loan, or that any applicable Law or regulation or compliance
        therewith by Lender prohibits or restricts or makes impossible the charging
        of
        interest based on the BBA LIBOR Daily Floating Rate and Lender so notifies
        Borrower, then until Lender notifies Borrower that the circumstances giving
        rise
        to such suspension no longer exist, interest shall accrue and be payable
        on the
        unpaid principal balance of this Note from the date Lender so notifies Borrower
        until the Maturity Date of this Note (whether by acceleration, declaration,
        extension or otherwise) at a fluctuating rate of interest equal to the Prime
        Rate of Lender. The term “Prime Rate” means, on any day, the rate of
        interest per annum then most recently established by Lender as its “prime rate.”
Any such rate is a general reference rate of interest, may not be related
        to any
        other rate, and may not be the lowest or best rate  actually 

       

      
        
          
          

        

        
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      charged
        by
        Lender to any customer or a favored rate and may not correspond with future
        increases or decreases in interest rates charged by other lenders or market
        rates in general, and that Lender may make various business or other loans
        at
        rates of interest having no relationship to such rate. Each time the Prime
        Rate
        changes, the per annum rate of interest on this Note shall change immediately
        and contemporaneously with such change in the Prime Rate. If Lender (including
        any subsequent holder of this Note) ceases to exist or to establish or publish
        a
        prime rate from which the Prime Rate is then determined, the applicable variable
        rate from which the Prime Rate is determined thereafter shall be instead
        the
        prime rate reported in The Wall Street Journal (or the average prime rate
        if a high and a low prime rate are therein reported), and the Prime Rate
        shall
        change without notice with each change in such prime rate as of the date
        such
        change is reported.

       

      (c)    
        Past Due Rate. If any amount payable by Borrower under any Loan Document
        is not paid when due (without regard to any applicable grace periods), such
        amount shall thereafter bear interest at the Past Due Rate (as defined below)
        to
        the fullest extent permitted by applicable Law. Accrued and unpaid interest
        on
        past due amounts (including interest on past due interest) shall be due and
        payable on demand, at a fluctuating rate per annum (the “Past Due Rate”)
        equal to the Prime Rate plus two hundred (200) basis points. 

       

      Section
        4     Prepayment. Borrower may prepay the principal
        balance of this Note, in full at any time or in part from time to time, without
        fee, premium or penalty, provided that: (a) no prepayment may be made which
        in Lender’s judgment would contravene or prejudice funding under any applicable
        permanent loan commitment or tri-party agreement or the like; (b) Lender
        shall have actually received from Borrower prior written notice of
        (i) Borrower’s intent to prepay, (ii) the amount of principal which
        will be prepaid (the “Prepaid Principal”), and (iii) the date on
        which the prepayment will be made; (c) each prepayment shall be in the
        amount of $1,000 or a larger integral multiple of $1,000 (unless the prepayment
        retires the outstanding balance of this Note in full); and (d) each
        prepayment shall be in the amount of 100% of the Prepaid Principal, plus
        accrued
        unpaid interest thereon to the date of prepayment, plus any other sums which
        have become due to Lender under the Loan Documents on or before the date
        of
        prepayment but have not been paid. If this Note is prepaid in full, any
        commitment of Lender for further advances shall automatically
        terminate.

       

      Section
        5     Late Charges. If Borrower shall fail to make
        any payment under the terms of this Note (other than the payment due at
        maturity) within fifteen (15) days after the date such payment is due, Borrower
        shall pay to Lender on demand a late charge equal to four percent (4%) of
        the
        amount of such payment. Such fifteen (15) day period shall not be construed
        as
        in any way extending the due date of any payment. The late charge is imposed
        for
        the purpose of defraying the expenses of Lender incident to handling such
        delinquent payment. This charge shall be in addition to, and not in lieu
        of, any
        other amount that Lender may be entitled to receive or action that Lender
        may be
        authorized to take as a result of such late payment.

       

      Section
        6     Certain Provisions Regarding Payments. All
        payments made under this Note shall be applied, to the extent thereof, to
        late
        charges, to accrued but unpaid interest, to unpaid principal, and to any
        other
        sums due and unpaid to Lender under the Loan Documents, in such manner and
        order
        as Lender may elect in its sole discretion, any instructions from Borrower
        or
        anyone else to the contrary notwithstanding. Remittances shall be made without
        offset, demand, counterclaim, deduction, or recoupment (each of which is
        hereby
        waived) and shall be accepted subject to the condition that any check or
        draft
        may be handled for collection in accordance with the practice of the collecting
        bank or banks. Acceptance by Lender of any payment in an amount less than
        the
        amount then due on any indebtedness shall be deemed an acceptance on account
        only, notwithstanding any notation on or accompanying such partial payment
        to
        the contrary, and shall not in any way (a) waive or excuse the existence of
        an Event of Default (as hereinafter defined), (b) waive, impair or
        extinguish any right or remedy available to Lender hereunder or under the
        other
        Loan Documents, or (c) waive the requirement of punctual payment and
        performance or constitute a novation in any respect. Payments received after
        2:00 p.m. shall be deemed to be received on, and shall be posted as of, the
        following Business Day. Whenever any payment under this Note or any other
        Loan
        Document falls due on a day which is not a Business Day, such payment may
        be
        made on the next succeeding Business Day. Borrower has elected to authorize
        Lender to effect payment of sums due under this Note by means of debiting
        Borrower's Account Number 3253194544. This authorization shall not affect
        the
        obligation of Borrower to pay such sums when due, without notice, if there
        are
        insufficient funds in such account to make such payment in full on the due
        date
        thereof, or if Lender fails to debit the account.

       

      
        
          
          

        

        
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      Section
        7     Events of Default. The occurrence of any one or
        more of the following shall constitute an “Event of Default” under this
        Note:

       

      (a)    
        Borrower fails to pay to Lender any payment within three (3) days after the
        date
        such payment is due or upon acceleration, maturity or otherwise.

       

      (b)    
        Any covenant, agreement or condition in this Note is not fully and timely
        performed, observed or kept, subject to any applicable grace or cure
        period.

       

      (c)    
        An Event of Default (as therein defined) occurs under any of the Loan Documents
        other than this Note (subject to any applicable grace or cure
        period).

       

      Section
        8     Remedies. Upon the occurrence of an Event of
        Default, Lender may at any time thereafter exercise any one or more of the
        following rights, powers and remedies:

       

      (a)    
        Lender may accelerate the Maturity Date and declare the unpaid principal
        balance
        and accrued but unpaid interest on this Note, and all other amounts payable
        hereunder and under the other Loan Documents, at once due and payable, and
        upon
        such declaration the same shall at once be due and payable.

       

      (b)    
        Lender may set off the amount due against any and all accounts, credits,
        money,
        securities or other property now or hereafter on deposit with, held by or
        in the
        possession of Lender to the credit or for the account of Borrower, without
        notice to or the consent of Borrower.

       

      (c)    
        Lender may exercise any of its other rights, powers and remedies under the
        Loan
        Documents or at law or in equity.

       

      Section
        9      Remedies Cumulative. All of the rights
        and remedies of Lender under this Note and the other Loan Documents are
        cumulative of each other and of any and all other rights at law or in equity,
        and the exercise by Lender of any one or more of such rights and remedies
        shall
        not preclude the simultaneous or later exercise by Lender of any or all such
        other rights and remedies. No single or partial exercise of any right or
        remedy
        shall exhaust it or preclude any other or further exercise thereof, and every
        right and remedy may be exercised at any time and from time to time. No failure
        by Lender to exercise, nor delay in exercising, any right or remedy shall
        operate as a waiver of such right or remedy or as a waiver of any Event of
        Default.

       

      Section
        10     Costs and Expenses of Enforcement. Borrower
        agrees to pay to Lender on demand all costs and expenses incurred by Lender
        in
        seeking to collect this Note or to enforce any of Lender’s rights and remedies
        under the Loan Documents, including court costs and reasonable attorneys’ fees
        and expenses, whether or not suit is filed hereon, or whether in connection
        with
        bankruptcy, insolvency or appeal.

       

      Section
        11     Service of Process. Borrower hereby consents
        to process being served in any suit, action, or proceeding instituted in
        connection with this Note by the mailing of a copy thereof by certified mail,
        postage prepaid, return receipt requested, to Borrower. Borrower irrevocably
        agrees that such service shall be deemed to be service of process upon Borrower
        in any such suit, action, or proceeding. Nothing in this Note shall affect
        the
        right of Lender to serve process in any manner otherwise permitted by law
        and
        nothing in this Note will limit the right of Lender otherwise to bring
        proceedings against Borrower in the courts of any jurisdiction or jurisdictions,
        subject to any provision or agreement for arbitration or dispute resolution
        set
        forth in the Loan Agreement.

       

      
        
          
          

        

        
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      Section
        12     Heirs, Successors and Assigns. The terms of
        this Note and of the other Loan Documents shall bind and inure to the benefit
        of
        the heirs, devisees, representatives, successors and assigns of the parties.
        The
        foregoing sentence shall not be construed to permit Borrower to assign the
        Loan
        except as otherwise permitted under the Loan Documents.

       

      Section
        13     General Provisions. Time is of the essence
        with respect to Borrower’s obligations under this Note. If more than one person
        or entity executes this Note as Borrower, all of said parties shall be jointly
        and severally liable for payment of the indebtedness evidenced hereby. Borrower
        and each party executing this Note as Borrower hereby severally (a) waive
        demand, presentment for payment, notice of dishonor and of nonpayment, protest,
        notice of protest, notice of intent to accelerate, notice of acceleration
        and
        all other notices (except any notices which are specifically required by
        this
        Note or any other Loan Document), filing of suit and diligence in collecting
        this Note or enforcing any of the security herefor; (b) agree to any
        substitution, subordination, exchange or release of any such security or
        the
        release of any party primarily or secondarily liable hereon; (c) agree that
        Lender shall not be required first to institute suit or exhaust its remedies
        hereon against Borrower or others liable or to become liable hereon or to
        perfect or enforce its rights against them or any security herefor;
        (d) consent to any extensions or postponements of time of payment of this
        Note for any period or periods of time and to any partial payments, before
        or
        after maturity, and to any other indulgences with respect hereto, without
        notice
        thereof to any of them; and (e) submit (and waive all rights to object) to
        non-exclusive personal jurisdiction of any state or federal court sitting
        in the
        state and county in which any of the Property (as defined in the Loan Agreement)
        is located for the enforcement of any and all obligations under this Note
        and
        the other Loan Documents; (f) waive the benefit of all homestead and
        similar exemptions as to this Note; (g) agree that their liability under
        this Note shall not be affected or impaired by any determination that any
        title,
        security interest or lien taken by Lender to secure this Note is invalid
        or
        unperfected; and (h) hereby subordinate to the Loan and the Loan Documents
        any and all rights against Borrower and any security for the payment of this
        Note, whether by subrogation, agreement or otherwise, until this Note is
        paid in
        full. A determination that any provision of this Note is unenforceable or
        invalid shall not affect the enforceability or validity of any other provision
        and the determination that the application of any provision of this Note
        to any
        person or circumstance is illegal or unenforceable shall not affect the
        enforceability or validity of such provision as it may apply to other persons
        or
        circumstances. This Note may not be amended except in a writing specifically
        intended for such purpose and executed by the party against whom enforcement
        of
        the amendment is sought. Captions and headings in this Note are for convenience
        only and shall be disregarded in construing it. This Note and its validity,
        enforcement and interpretation shall be governed by the laws of the state
        of
        Tennessee (without regard to any principles of conflicts of laws) and applicable
        United States federal law. Whenever a time of day is referred to herein,
        unless
        otherwise specified such time shall be the local time of the place where
        payment
        of this Note is to be made. The term “Business Day” shall mean a day on which
        Lender is open for the conduct of substantially all of its banking business
        at
        its office in the city in which this Note is payable (excluding Saturdays
        and
        Sundays). Capitalized terms used herein without definition shall have the
        meanings ascribed to such terms in the Loan Agreement. The words “include” and
“including” shall be interpreted as if followed by the words “without
        limitation.”

       

      Section
        14     Notices. Any notice, request, or demand to or
        upon Borrower or Lender shall be deemed to have been properly given or made
        when
        delivered in accordance with the terms of the Loan Agreement regarding notices.
        

       

      Section
        15     No Usury. It is expressly stipulated and
        agreed to be the intent of Borrower and Lender at all times to comply with
        applicable state law or applicable United States federal law (to the extent
        that
        it permits Lender to contract for, charge, take, reserve, or receive a greater
        amount of interest than under state law) and that this Section shall control
        every other covenant and agreement in this Note and the other Loan Documents.
        If
        applicable state or Federal law should at any time be judicially interpreted
        so
        as to render usurious any amount called for under this Note or under any
        of the
        other Loan Documents, or contracted for, charged, taken, reserved, or received
        with respect to the Loan, or if Lender’s exercise of the option to accelerate
        the Maturity Date, or if any prepayment by Borrower results in Borrower having
        paid any interest in excess of that permitted by applicable law, then it
        is
        Lender’s express intent that all excess amounts theretofore collected by Lender
        shall be credited on the principal balance of this Note and all other
        indebtedness secured by the Assignment, and the provisions of this Note and
        the
        other Loan Documents shall immediately be deemed reformed and the amounts
        thereafter collectible hereunder and thereunder reduced, without the necessity
        of the execution of any new documents, so as to comply with the applicable
        law,
        but so as to permit the recovery of the fullest amount otherwise called for
        hereunder or thereunder. All sums paid or agreed to be paid to Lender for
        the
        use or forbearance of the Loan shall, to the extent permitted by applicable
        law,
        be amortized, prorated, allocated, and spread throughout the full stated
        term of
        the Loan.

       

      
        
          
          

        

        
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        IN
          WITNESS
          WHEREOF, Borrower has duly executed this Note as of the date first above
          written.

         

         

        
          
            	Borrower:
	
                     

                    American
                      Retirement Corporation,  a Tennessee corporation

                  
	 	 
	By: 	
                  
	Title: 	
                  

          

           

           

          
            
              
              

            

            
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