**PURCHASE
      AND SALE AGREEMENT**








THIS
      PURCHASE AND SALE AGREEMENT (“this Agreement”) is made and entered into as of
      the 5th day of August, 2005 (the “Execution Date”), by and between CAMLU
      REAL ESTATE DEVELOPMENT LIMITED PARTNERSHIP, a Nevada limited
      partnership  (“Seller”)
      and EMERITUS CORPORATION, a Washington corporation, and/or its assigns
      (“Buyer”).





**R
      E C I T A L S:**




**A.**  Seller
      owns the real property described in **Exhibit 1.1(a)** ,
      the
      improvements constructed thereon, which include an ninety-three (93) unit
      retirement and residential care facility operated as the “Willow Brook
      Retirement Community,” with a street address of 5501 Duncan Road, Fort
      Smith, Arkansas and certain personal property used in conjunction with the
      operation thereof.





**B.**  Buyer
      and
      Cheridan, Inc., a Washington corporation (“Cheridan”), an affiliate of Seller,
      have concurrently entered into a separate agreement dated the 5 th day of
      August, 2005 for the purchase and sale of the real property described in **Exhibit A** owned by
      Cheridan (the “Wildflower Purchase Agreement”).





**C.**  Buyer
      and
      Cheridan have concurrently entered into a separate agreement dated the
      5 th day of
      August, 2005 for the purchase and sale of the real property described in **Exhibit B** (the
“Trillium Park Purchase Agreement”).





**D.**  Seller
      has agreed to sell to Buyer all of Seller’s right, title and interest in the
      real property and improvements constructed or situated thereon, and certain
      of
      Seller’s personal property used in the operation of the real property and
      improvements thereon located at 5501 Duncan Road, Fort Smith, Arkansas and
      Buyer has agreed to purchase same from Seller subject to the terms and
      conditions hereinafter set forth.





In
      consideration of the agreements herein contained and for other good and valuable
      consideration, the receipt and sufficiency of which are hereby acknowledged,
      Seller and Buyer agree as follows:




**1.**  **The
      Property**




**1.1**  **Assets** .
      Subject
      to the terms of this Agreement, Seller agrees to sell to Buyer and Buyer agrees
      to purchase from Seller, all of Seller’s right, title and interest in and to the
      following described property (it being understood
      and agreed that such property shall specifically exclude the Excluded Assets
      (as
      defined below ) in
      accordance with the terms hereof:




(a)  the
      real
      property situated in Fort Smith, Arkansas which is more particularly described
      in **Exhibit 1.1(a)** attached
      hereto together with the ninety-three (93) unit retirement and residential
      care
      facility located thereon and commonly known as the “Willow Brook Retirement
      Community” (the “Facility”) and all other improvements and fixtures thereon
      (hereinafter collectively referred to as the “Real Property”);




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(b)  all
      equipment, computer hardware and computer software (but only to the extent
      such
      software is not proprietary to Seller and the licenses with respect to any
      non
      proprietary software are, at Buyer’s election and cost, assigned to Buyer at
      Closing), vehicles, furniture, and fixtures, inventory, linens, dietary
      supplies, housekeeping supplies, food and other consumable inventories owned
      by
      Seller and located at the Facility or used in connection with the operation
      of
      the Facility, all of which is more particularly described on **Exhibit 1.1(b)** (hereinafter collectively referred to as “Personal Property”);




(c)  all
      intangibles of Seller used in the operation of the Facility including, without
      limitation, telephone numbers, all of Seller’s interest in the name “Willow
      Brook” or “Willow Brook Retirement Community”, as well as any licenses,
      governmental approvals or permits to the extent assignable or transferable
      without cost to Seller and any other rights or privileges appurtenant to the
      Real Property or related to the business operated thereon or thereat
      (hereinafter collectively referred to as “Intangibles”);




(d)  all
      leases, rental or occupancy agreements with the residents of the Facility and
      any amendment or modification thereto (the “Resident Leases”) and any other
      agreements granting any person or entity the right to use or occupy any space
      situated in the Facility or any portion thereof (the “Commercial Leases” and
      together with the Resident Leases, the “Leases”), if and to the extent Buyer
      agrees to assume the same in accordance with the terms of this Agreement (the
      “Assumed Leases”);




(e)  all
      resident records and files and marketing databases used in conjunction with
      the
      operation of the business conducted upon the Real Property by Seller
      (hereinafter collectively referred to as “Records”);




(f)  all
      contracts, oral or written, to which the Seller is a party for the Seller’s
      operation of the Facility, including but not limited to contract rights,
      equipment leases, maintenance contracts, service contracts and other contracts,
      and operating or service manuals, warranties or guarantees relating to all
      or
      any portion of the Real Property or any item of the Personal Property subject
      to
      this Agreement (the “Contracts”), if and to the extent Buyer agrees to assume
      the same in accordance with the terms of this Agreement (hereinafter
      collectively referred to as “Assumed Contracts”);




(g)  the
      Prepaid Rents (as defined below).




The
      assets and property interests of Seller described in Sections 1.1(a)
      through 1.1(g) above being sold pursuant hereto shall hereinafter collectively
      be referred to as the “Assets”.





**1.2**  **Excluded
      Assets** . **** Seller
      shall not sell, convey, transfer or assign to Buyer, and Buyer shall not
      purchase or acquire from Seller, any of the following assets (the “Excluded
      Assets”), which shall remain the sole and exclusive property of
      Seller:




(a)  all
      insurance policies relating to Seller’s business, Facility or the Assets and the
      rights thereunder;


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(b)  all
      cash,
      cash equivalents and accounts receivables earned for the period prior to the
      Closing Date and all deposits (other than the Resident Deposits and any
      refundable deposits held by Seller with respect to any commercial spaces in
      the
      Facility which are leased to third parties), bank accounts, checking accounts,
      petty cash, computer software programs (unless such software is proprietary
      to
      Seller or unless the licenses with respect to any non-proprietary software
      are
      not assigned, at Buyer’s election, to Buyer at Closing), utility deposits or
      interest thereon, and Wenatchee, Washington central office equipment and
      personal property located in Seller’s Wenatchee, Washington central office or in
      the corporate office of Seller’s Manager (as defined below), a list of which is
      attached hereto as **Exhibit
      1.2(b)** (the
“Corporate Assets”), or insurance or tax reserves relating to the Assets being
      sold pursuant hereto, and the other assets disclosed on **Exhibit
      1.2(b)** ;
      and




(c)  refunds
      of real estate taxes allocated to the period prior to the Closing if, and to
      the
      extent, the Purchase Price was not prorated therefor.




**1.3**  **No
      Assumption of Liabilities** .
      Notwithstanding anything in this Agreement to the contrary, Seller shall retain,
      and Buyer shall not assume, or in any way be liable or responsible for, any
      obligations or liabilities of Seller or the Facility whatsoever, whether fixed,
      contingent or otherwise,
      and whether known or unknown, including, without limitation:




(a)  all
      liabilities and obligations arising from events occurring or conditions existing
      on or prior to the Closing Date, with respect to the ownership or operation
      of
      the Facility, the other Assets or otherwise, including, without limitation,
      rent, accounts payable and notes payable;




(b)  except
      as
      otherwise specifically provided in Section 19, all liabilities and
      obligations with respect to Seller’s employees, including accrued salaries,
      wages, vacation, payroll taxes, retirement plan payables and any obligations
      with respect to any other employee benefit or retirement plan or policy that
      arise from services performed by such employees prior to Closing;
      and




(c)  all
      liabilities and obligations for the payment of taxes which relate to tax periods
      ending on or prior to the Closing Date;




*provided* , *however* ,
      nothing
      herein shall be construed as imposing any obligation on Seller to perform any
      obligations related to the ownership or operation of the Facility where such
      obligation to perform first arises after the Closing Date.





**2.**  **Seller’s
      Purchase Price**




**2.1**  **Purchase
      Price** . **** The
      purchase price for the Assets is Five Million Three Hundred Thousand and 00/100
      Dollars ($5,300,000.00) (“Purchase Price”). At the Closing, the Buyer shall
      deliver to Escrow Agent in immediately available United States funds, the amount
      of the Purchase Price (a) less the Deposit (defined below); (b) plus all Closing
      costs and prorations required to be paid by Buyer pursuant to Sections 15
      and 16 hereof.


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**2.2**  **Allocation
      of Purchase Price** .
      The
      Purchase Price shall be allocated among the Assets as provided on **Exhibit
      2.2** Buyer
      and Seller agree that each will report the transaction subject to this Agreement
      in accordance with such allocation and each will not take a position
      inconsistent with such allocation without the prior written consent of the
      other
      party to this Agreement **,** which
      consent shall not be unreasonably withheld.




**2.3**  **Contingent
      Payment** . **Contingent
      Payment** .
      At the
      end of the twelve (12) month period (Period 1) or the twelve (12) month
      period following Period 1 (Period 2) selected by Seller, following the
      Closing Date, Buyer shall calculate the amount of the NOI Improvement (as
      defined below) within thirty (30) days thereafter and Buyer shall pay to Seller
      an amount determined in accordance with this Section. The “NOI Improvement”
shall be the amount that the NOI for the period selected by Seller, following
      the Closing Date exceeds the Baseline NOI. The Parties agree for purposes of
      this Section, the “Baseline NOI” equals Five Hundred Fifty-Eight Thousand Five
      Hundred Seventy Dollars ($558,570.00). “NOI” shall mean the pre-tax net income
      of the Facility for the twelve (12) month period selected by Seller, plus
      (a) the amount of the provision for depreciation and amortization; plus
      (b) the amount of the provision for interest and loan payments, if any;
      plus (c) the amount of the provision for rent payments, if any; minus
      (d) five percent (5%) of gross revenues as a provision for management fees;
      and minus (e) Three Hundred Fifty Dollars ($350.00) per unit for capital
      expenditure reserve. The difference between the NOI for the twelve (12) month
      period selected by Seller and the Baseline NOI shall be divided by a
      capitalization rate of .1053 and fifty percent (50%) of such amount shall be
      paid to Seller  within
      seven (7) days of the determination of the amount due Seller, if any.




**3.**  **Escrow** .  Within
      three (3) business days after the Execution Date (“Opening of Escrow”), Buyer
      shall deliver to Chicago Title Insurance Company whose address is
      32001 32 nd Avenue
      South, Suite 400, Federal Way, WA 98001, Attn: Brenda Sporcic, telephone
      number: (253) 945-9140 (“Escrow Agent”), Fifty Thousand Dollars
      ($50,000.00) earnest money deposit (the “Deposit”) to be held subject to the
      terms of this Agreement. If Buyer at the end of the Feasibility Period (defined
      below), has not elected to terminate this Agreement, then, subject to the terms
      of this Agreement, the Deposit shall become nonrefundable. If the purchase
      and
      sale contemplated by this Agreement is completed, then at Closing, the Escrow
      Agent will credit the Deposit against the Purchase Price, and the Deposit shall
      be remitted to Seller along with the balance of the Purchase Price. If the
      purchase and sale contemplated by this Agreement fails to close, the Deposit
      shall be remitted to Buyer or Seller, as appropriate, in accordance with the
      terms of this Agreement. All interest or other earnings on the Deposit, if
      any,
      shall become part of the Deposit and shall be disbursed to the party who becomes
      entitled to the Deposit pursuant to the terms of this Agreement.




**4.**  **Title** .
      At
      Closing, Seller
      shall deliver to Buyer by limited warranty deed title to the Real Property
      subject only to the Permitted Exceptions (as defined in Section 5(b)
      below).




**5.**  **Title
      Commitment/Survey/Litigation and Lien Searches**




(a)  Within
      ten (10) days after the Execution Date (the “Title Delivery Period”), Seller
      shall direct Escrow Agent to provide Buyer with a preliminary commitment (“Title
      Commitment”) for an extended coverage owner’s title insurance policy to be
      issued by




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Chicago
      Title Insurance Company (“Title Company”) describing the Real Property, with
      coverage in the amount of the Purchase Price, together with a legible and
      complete copy (to the extent available to the Title Company) of each of the
      documents forming the basis for each exception therein (the “Exception
      Documents” and together with the Title Commitment, the “Title Documents”). Buyer
      shall pay the difference in the additional premium cost between the cost of
      a
      standard owner’s policy of title insurance (including any endorsements required
      to remove or cure objections in the Title Objection Notice that Seller elects
      to
      remove or cure pursuant to Section 5(b)) and the cost of the title policy
      actually issued, inclusive of endorsements. Seller will provide the Title
      Company with any indemnity agreement in form acceptable to Seller to enable
      the
      Title Company to remove policy exceptions, which would not be removed if the
      Title Policy was an owner’s standard title insurance policy. Buyer agrees, at
      its sole cost and expense, to pay any and all costs associated with obtaining
      any additional items including, without limitation, any ALTA survey, which
      are
      required by the Title Company as a condition of its issuance of an owner’s
      extended coverage title insurance policy. If Buyer fails to satisfy the Title
      Company's requirements of Buyer for the issuance of an owner's extended coverage
      title insurance policy, then Buyer shall accept a standard owner's policy of
      title insurance.




(b)  Buyer
      shall have a period of twenty (20) days from receipt of the Title Documents
      to
      approve or disapprove the Title Documents (the “Title Review Period”) by written
      notice to Seller setting forth in reasonable detail the nature of Buyer’s Title
      objections (the “Title Objection Notice”). Any exceptions or other items set
      forth in the Title Commitment to which Buyer does not object within the Title
      Review Period, it being understood and agreed that Buyer shall not have the
      right to object to exceptions for liens for local real estate taxes and
      assessments not yet due or payable, shall hereinafter be deemed to be “Permitted
      Exceptions”. With regard to items to which Buyer does object within the Title
      Review Period, Seller shall notify Buyer in writing within ten (10) days after
      Seller’s receipt of the Title Objection Notice of any exceptions to title which
      Seller is unwilling to remove or otherwise resolve (the “Title Response Notice”)
      and Buyer may, at Buyer’s option, to be exercised on or before 5:00 p.m.
      Pacific Time on the fifth (5 th ) day
      after receipt of the Title Response Notice from Seller, either (i) waive
      the objections set forth in the Title Objection Notice which Seller is unwilling
      to remove or otherwise resolve in accordance with the terms of the Title
      Response Notice, in which case such items shall be deemed to be included in
      within the Permitted Exceptions or (ii) terminate this Agreement by written
      notice to Seller. If Buyer timely elects to terminate this Agreement, Escrow
      Agent shall immediately return the Deposit to Buyer and this Agreement will
      terminate except for those provisions of this Agreement which specifically
      survive termination. In the event Seller elects to cure or remove the items
      identified in the Title Objection Notice but fails by Closing to take such
      action as may be necessary to cure or remove the items identified in the Title
      Objection Notice, then Buyer shall have the option of either waiving the
      applicable items set forth in the Title Objection Notice, in which event such
      items shall be deemed to be included within the Permitted Exceptions, or
      terminating this Agreement by delivery of written notice of termination to
      Seller within five (5) days after Seller’s act or omission giving rise to such
      termination right, and the Deposit shall be returned to Buyer and thereafter
      neither Buyer nor Seller shall have any further rights or obligations hereunder,
      except under those provisions of this Agreement which specifically survive
      termination. In the event any supplement to the Title Commitment shows an
      additional exception, Buyer shall accept or disapprove the same and




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Seller
      shall respond to Buyer’s objection in the same manner as above with the
      exception that each of the time periods involved shall be shortened to five
      (5)
      days.




(c)  Within
      ten (10) days after the Execution Date, Buyer shall order an ALTA survey of
      the
      Real Property (the “Survey”), prepared by a duly licensed land surveyor
      reasonably acceptable to the Title Company and Buyer and Buyer shall cause
      the
      same to be delivered to Buyer and Seller within thirty (30) days after the
      Execution Date (the “Survey Delivery Period”). The Survey shall be dated and
      certified not earlier than the Execution Date, shall show the location of the
      Real Property, the improvements located thereon, building and set-back lines,
      fences, ponds, creeks, streams, rivers, officially designated 100-year flood
      plains, easements, roads, rights-of-way, encroachments and such other exceptions
      located on the Real Property as may be described in the Title Commitment, and
      shall contain a legal description of the boundaries of the Real Property metes
      and bounds which shall also include a reference to the recorded plat, if any.
      The Survey and certificate shall be completed in accordance with the Minimum
      Standard Detail Requirements for any ALTA/ACSM land title survey as adopted
      by
      the American Congress of Surveying and Mapping and the American Land Title
      Association, pursuant to the accuracy requirements of a Class A Urban Survey.
      Buyer shall have a period of ten (10) days from receipt of the Survey to approve
      or disapprove the Survey (the “Survey Review Period”) by written notice to
      Seller setting forth in reasonable detail the nature of Buyer’s Survey
      objections (the “Survey Objection Notice”). In the event that Buyer disapproves
      any or all items referred to in the Survey (including, without limitation,
      any
      encroachments, discrepancies in property lines, gaps, gores, or other matters
      which constitute a defect in the Real Property as determined by Buyer), Seller
      shall have a period of ten (10) days after receipt of the Survey Objection
      Notice (the “Survey Response Period”) within which to notify Buyer in writing
      whether Seller is willing or able to take such action as may be necessary by
      Closing to cure or remove, or to cause the surveyor to revise the Survey in
      a
      manner which is responsive to, the items identified in the Survey Objection
      Notice (the “Survey Response Notice”). In the event Seller notifies Buyer within
      the Survey Response Period that it is unable or unwilling to take such action
      as
      may be necessary to cure or remove, or to cause the surveyor to revise the
      Survey as to the items in the Survey Objection Letter, Buyer may, at Buyer’s
      option, to be exercised on or before 5:00 p.m. Pacific Time on the fifth
      (5 th )
      day
      after receipt of the Survey Response Notice, either waive the objections set
      forth in the Survey Objection Notice which will not be resolved as provided
      in
      the Survey Response Notice, in which event such items shall be deemed to be
      included within the Permitted Exceptions or (ii) terminate this Agreement by
      written notice to Seller. If Buyer timely elects to terminate this Agreement,
      Escrow Agent shall immediately return the Deposit to Buyer and this Agreement
      will terminate except for those provisions of this Agreement which specifically
      survive termination. In the event Seller elects to cure or remove the items
      objected to by Buyer in the Survey Objection Notice but fails by Closing to
      take
      such action as may be necessary to cure or remove, or to cause the surveyor
      to
      revise the Survey in a manner which is responsive to, the items identified
      in
      the Survey Objection Notice, then Buyer shall have the option of either waiving
      the applicable items set forth in the Survey Objection Notice, in which event
      such items shall be deemed to be included within the Permitted Exceptions,
      or
      terminating this Agreement by delivery of written notice of termination to
      Seller within five (5) days after Seller’s act or omission giving rise to such
      termination right, and the Deposit shall be returned to Buyer and thereafter
      neither Buyer nor Seller shall have any further rights or obligations hereunder,
      except under those provisions of this Agreement which specifically survive
      termination.


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(d)  Within
      the Title Delivery Period Seller shall also cause to be prepared and furnished
      to Buyer a litigation, bankruptcy, judgment and security interest search in
      the
      names of Seller and the Facility conducted in the state and county in which
      the
      Facility is located, the State of Washington and the County in which the Seller
      maintains its principal place of business (the “Litigation and Lien Search”). In
      the event that Buyer disapproves any or all items referred to in the Litigation
      and Lien Search, Buyer shall so advise Seller in writing prior to the end of
      the
      Title Review Period (the “Litigation and Lien Objection Notice”). Seller shall
      have a period of ten (10) days after receipt of the Litigation and Lien
      Objection Notice (the “Lien Response Period”) within which to notify Buyer in
      writing whether Seller is willing or able to take such action as may be
      necessary by Closing to cure or remove the items identified in the Litigation
      and Lien Objection Notice (the “Lien Response Notice”). In the event Seller
      notifies Buyer within the Lien Response Period that it is unable or unwilling
      to
      take such action as may be necessary to cure or remove by Closing the items
      identified in the Litigation and Lien Objection Notice, Buyer may, at Buyer’s
      option, to be exercised on or before 5:00 p.m. Pacific Time on the fifth
      (5 th )
      day
      after receipt of the Lien Response Notice, either (i) waive the objections
      set forth in the Litigation and Lien Objection Notice which will not be resolved
      as provided in the Lien Response Notice or (ii) terminate this Agreement by
      written notice to Seller. If Buyer timely elects to terminate this Agreement,
      Escrow Agent shall immediately return the Deposit to Buyer and this Agreement
      will terminate except for those provisions of this Agreement which specifically
      survive termination. In the event Seller elects to cure or remove the items
      objected to by Buyer in the Litigation and Lien Objection Notice but fails
      by
      Closing to take such action as may be necessary to cure or remove the items
      identified in the Litigation and Lien Objection Notice, then Buyer shall have
      the option of either waiving the applicable items set forth in the Survey
      Objection Notice, in which event such items shall be deemed to be included
      within the Permitted Exceptions, or terminating this Agreement by delivery
      of
      written notice of termination to Seller within five (5) days after Seller’s act
      or omission giving rise to such termination right, and the Deposit shall be
      returned to Buyer and thereafter neither Buyer nor Seller shall have any further
      rights or obligations hereunder, except under those provisions of this Agreement
      which specifically survive termination. Any liens reflected on the Litigation
      and Lien Search which are not objected to by Buyer or as to which any objection
      is later waived by Buyer shall be included within the Permitted
      Exceptions.




(e)  The
      costs
      of the Title Commitment, Survey and Litigation and Lien Search shall be borne
      by
      Seller and Buyer in the manner set forth in Section 15(c).




(f)  For
      purposes of this Section 5, the obligations of the parties set forth in
      Section 7(b) and in Section 18 of this Agreement shall be deemed to be
      obligations which specifically survive termination of this
      Agreement.




**6.**  **Information**




(a)  Within
      ten (10) days after the Execution Date Seller shall deliver to Buyer the
      information described in **Exhibit
      6** hereto
      (the “Due Diligence Materials”) if to the extent the same is in the possession
      of Seller or Frontier Management, LLC (“Seller’s Manager”). In the event that
      any of the Due Diligence Materials that are in the possession of Seller or
      Seller’s Manager shall not be delivered within the aforesaid ten (10) day
      period, the Feasibility Period (as defined below) shall automatically be
      extended, day for day, until all of the Due Diligence




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Materials
      are delivered. Buyer shall acknowledge in writing the receipt of all of the
      Due
      Diligence Materials within one (1) day of receipt of same. Further, Seller
      shall
      provide such other information that is in the possession of Seller or Seller’s
      Manager that Buyer may reasonably request from time to time that pertain to
      the
      Assets; *provided* , *however* ,
      that to
      the extent any such request is made after the expiration of the ten (10) day
      period described in the first sentence hereof, the Seller’s delivery of the
      requested information shall not serve in any manner to extend the Feasibility
      Period.




(b)  In
      addition to what was delivered pursuant to Section 6(a) above, Seller has
      offered to make available to Buyer for review Seller’s records which are in the
      possession of Seller or Seller’s Manager which relate to the ownership,
      condition or operation of the Real Property (the “Books and Records”). The Books
      and Records will be made available to Buyer at (i) Seller’s business office
      located at 625 Okanogan Avenue, Wenatchee, Washington 98801, or
      (ii) Seller’s Manager’s office located at The
      Woodlands, Suite 230, 17400 SW Upper Boones Ferry Road, Durham, Oregon or (iii)
      at the Facility, as designated by Seller .




(c)  Notwithstanding
      Sections 6(a) or 6(b) above, Seller shall not be obligated to disclose (i)
      any information that is subject to attorney-client privilege, or that if
      disclosed to Buyer would cause the same or other information to not be protected
      by attorney-client privilege, (ii) any information the disclosure of which
      is conditioned upon Seller’s receipt of consent from the issuer thereof who has
      restricted the redelivery thereof to any person other than Seller without its
      consent; *provided* , *however* ,
      upon
      Buyer’s request Seller shall use reasonable efforts to secure such consent,
      (iii) any tax returns of Seller, or (iv) any purchase offers or purchase and
      sale agreements delivered to or received by Seller relating to a potential
      sale
      of the Assets to any third party.




(d)  The
      financial, other information and records provided by Seller to Buyer in
      connection with Buyer’s inspection and examination of the Assets and the
      business conducted therewith, including those provided pursuant to this
      Section 6, shall be subject to the terms of Section 18
      hereof.




**7.**  **Feasibility
      Period**




(a)  Buyer
      shall have until 5 p.m. Pacific Time, on the forty fifth (45 th )
      day after
      all
      of the Schedules have been completed and all of the Exhibits have been agreed
      to
      by the parties, as confirmed in writing by both Buyer and Seller (the
      “Feasibility Period”), within which to conduct Buyer’s due diligence review of
      the Assets and the business conducted therewith. Such due diligence review
      may
      include, but not be limited to, a review of the Due Diligence Materials, matters
      related to the construction and the operation of the Real Property and its
      compliance with law, zoning investigations, soil studies, environmental
      assessments, surveys, structural inspections, pest inspections, seismic
      assessments, wetlands reports, assessment of the needs and the propriety of
      residency by current residents, the Financial Statements (as defined below)
      and
      Census Reports (as defined below), policies and procedures, advertising, the
      Books and Records, the Leases, the Contracts, accounts payable records, rent
      rolls, operating statements, and labor costs .
      If
      within fourteen (14) days after the Effective Date Buyer and Seller have not
      agreed to the Schedules and Exhibits, either party may terminate this Agreement.




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Such
      termination shall be treated as if Buyer elected to terminate the Agreement
      as
      provided in Section 7(c) hereof.




(b)  During
      the Feasibility Period, Buyer shall be permitted reasonable access to the Real
      Property during normal business hours to complete inspections and tests subject
      to the rights of residents in possession. Seller shall have the right to
      designate a representative for purposes of coordinating and overseeing Buyer’s
      on-site due diligence investigation. Buyer shall give Seller’s designated
      representative, if any, advance notice of its investigation of the Real
      Property, describing the nature of the review work to be undertaken and the
      estimated duration of the review. A representative of Seller shall have the
      right to accompany Buyer and its agents, representatives and contractors that
      are performing tests on or about the Real Property in connection with such
      testing and to limit the duration, frequency and means of such testing to the
      extent necessary to avoid disruption of residents of the Real Property providing
      that no such limitation shall unreasonably interfere with Buyer’s ability to
      conduct such tests or to have the same conducted on Buyer’s behalf. Buyer
      covenants that it will conduct its tests and other due diligence activities
      in a
      professional manner and in a manner which minimizes interference with residents
      of the Real Property. Buyer shall indemnify, defend and hold Seller harmless
      from and against all losses, damages, liabilities, claims, fines, penalties,
      causes of action and expenses arising from or out of the presence or activities
      of Buyer or its agents, employees, representatives, consultants, or contractors
      on the Real Property, both before and after Closing and, if Buyer does not
      purchase the Assets, Buyer shall repair any damage to the Real Property caused
      by such presence or activities. The terms of this Section 7(b) shall
      survive Closing or termination of this Agreement.




(c)  In
      the
      event that at or prior to the end of the Feasibility Period Buyer concludes,
      in
      its sole and absolute discretion, that it is not satisfied with its due
      diligence review Buyer may terminate this Agreement upon Buyer’s delivery of a
      written notice of termination to Seller on or before the expiration of the
      Feasibility Period, after which neither party shall have any further obligation
      to the other hereunder with the exception of Buyer’s obligations under this
      Section 7 and Section 18 and Buyer’s right to secure the immediate
      return of the Deposit. If Buyer fails to notify Seller in writing of Buyer’s
      election to terminate this Agreement at or prior to the expiration of the
      Feasibility Period, Buyer shall be deemed to have elected to have waived its
      right to terminate this Agreement pursuant to this Section 7 and
      Section 7 of the Related Agreements (as defined below).




**8.**  **Contracts
      and Leases** .  Attached
      hereto as **Exhibit
      8** is a
      copy of the Contracts and Leases. Prior to the expiration of the Feasibility
      Period Buyer shall notify Seller in writing as to which of the Contracts and
      Leases Buyer will agree to assume and those which Buyer wants terminated by
      Seller at Closing.




**9.**  **Representations
      and Warranties of Seller** . Seller
      represents and warrants to Buyer as follows: ****




(a)  Seller
      is
      a limited partnership duly organized, validly existing and in good standing
      under the laws of the State of Nevada, has received all necessary approval
      and
      authority to own its property and to carry on its business as now owned and
      operated by Seller and is duly qualified to do business in the State of
      Arkansas.


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          purchase sale agreemnt fort smith
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(b)  S eller
      is
      not a foreign person (as that term is defined in the Internal Revenue Code
      and
      Income Tax Regulations) and Seller agrees to execute a certification of
      nonforeign status pursuant to Section 1445 of the Internal Revenue Code
      prior to Closing.




(c)  The
      person executing this Agreement on behalf of Seller has the requisite power
      and
      authority to execute and deliver this Agreement in the name of
      Seller.




(d)  The
      execution, delivery and performance of this Agreement by the person executing
      the same on behalf of Seller, have been duly and validly authorized, and this
      Agreement and the other agreements and instruments contemplated hereby to be
      executed or delivered by Seller constitute legal, valid and binding obligations
      of Seller, enforceable in accordance with their respective terms except as
      such
      enforceability may be limited by creditors rights laws and general principles
      of
      equity. Seller does not require the consent of any third party to consummate
      the
      transaction provided for herein.




(e)  Except
      as
      set forth in **Exhibit
      9(e)** ,
      neither
      the execution of this Agreement nor the consummation of the transactions
      contemplated hereby shall result in a breach of or constitute a default under
      any agreement, document, instrument, or other obligation to which Seller is
      a
      party or by which Seller may be bound, or to Seller's knowledge, under any
      law,
      statute, ordinance, rule, governmental regulation or any writ, injunction,
      order
      or decree of any court or governmental body, applicable to Seller or to the
      Property where such breach or default would prevent or invalidate Seller’s
      execution of this Agreement or would prevent Seller from consummating the
      transactions contemplated hereby.




(f)  Except
      as
      set forth in **Exhibit
      9(f)** ,
      Seller
      has not received any written notice, and has no knowledge, of any
      investigations, suits, actions, administrative or arbitration proceedings
      pending, whether involving a governmental authority or a private party, to
      which
      Seller is a party or in connection with the Assets.




(g)  Except
      as
      set forth in **Exhibit
      9(g)** ,
      Seller
      has not received any written notice from any governmental authority, and has
      no
      knowledge of, any alleged violation of any fire, zoning, health, safety,
      sanitation, environmental or any federal, state or local law with respect to
      the
      Property.




(h)  Except
      as
      set forth in **Exhibit
      9(h)** ,
      Seller
      has not received any written notice, and has no knowledge, that the Real
      Property is subject to any existing, pending or threatened investigation or
      lien
      by any governmental authority under, any federal, state or local law, statute,
      ordinance, regulation or order pertaining to hazardous substances including,
      but
      not limited to: The Resource Conservation and Recovery Act of 1976, 42 U.S.C.
      ‘6901 et . seq .,
      and
      the rules, regulations and orders promulgated thereunder (“RCRA”); the Clean Air
      Act (42 U.S.C. ‘7401 et . seq .);
      the
      Comprehensive Environmental Response, Compensation and Liability Act of 1980
      (42
      U.S.C. ‘9601 et . seq .)
      (“CERCLA”); the Federal Hazardous Substances Act (15 U.S.C. ‘1261 et . seq .);
      the
      Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. ‘136 et . seq .);
      the
      Federal Water Pollution Control Act (33 U.S.C. ‘1251 et . seq .);
      and
      the Toxic Substances Control Act (15 U.S.C. ‘2601 et . seq .).
      Except as set forth in **Exhibit 9(h)** ,
      Seller
      has not, and Seller has no knowledge that any predecessor in interest of Seller
      or any other person or entity has, generated, manufactured, stored, transported,
      treated, recycled, disposed of




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          purchase sale agreemnt fort smith
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or
      otherwise handled in any way any Hazardous Substances on, beneath or about
      any
      of the Real Property (other than medical and infectious wastes and other
      Hazardous Substances disposed of in accordance with applicable laws). Except
      as
      set forth in **Exhibit
      9(h)** ,
      Seller
      has not, and Seller has no knowledge that any predecessor in interest of Seller
      or any other person or entity has, released or discharged, as such terms are
      defined in applicable environmental, health and safety laws, rules and
      regulations, in violation of applicable law, any Hazardous Substance into the
      soil, surface waters, groundwater, drinking water supplies, navigable waters,
      land, surface or subsurface strata, ambient air or other environmental medium
      related to the Real Property. Except as set forth in **Exhibit
      9(h)** ,
      there
      are no other locations where any Hazardous Substances generated from the
      operation of the Facility or the ownership of the Real Property or any of the
      other Assets have been stored, treated, recycled or disposed of, whether by
      Seller or, to the knowledge of Seller, any other person or entity on behalf
      of
      Seller, other than locations where medical and infectious wastes have been
      disposed of in accordance with applicable law. “Hazardous Substances” is any
      substance, material and/or waste which is regulated under applicable local,
      state or federal law, or which is classified as hazardous, toxic, or otherwise
      harmful under federal, state or local laws or regulations.




(i)  No
      underground storage tank (as defined in RCRA,) or any above-ground storage
      tank
      for storing or dispending any hydrocarbon on or at the Real Property have been
      installed on, or removed from, the Real Property by Seller.




(j)  The
      Real
      Property is all of the real property that is currently used in connection with
      the ownership and operation of the Facility. Seller has not received any written
      notice of any pending condemnation proceedings and Seller has no knowledge
      of
      any threatened condemnation proceedings against the Real Property or any part
      thereof. Seller has received no written notice, and has no knowledge, of the
      intent of any public authority or public or quasi-public utility to take or
      use
      the Real Property or any part thereof.




(k)  To
      Seller’s knowledge, neither Seller nor any other party to any of the Contracts
      or the Leases, is in default of any terms or obligations under the Contracts
      or
      the Leases nor to Seller’s knowledge has any event occurred which, with the
      passage of time or the giving of notice or both would constitute such a
      default.




(l)  Except
      as
      set forth in **Exhibit
      9(l)** and
      except with respect to the Permitted Exceptions, Seller has good and marketable
      title to the Assets and, subject to the rights of the residents of the Facility
      and any possessory rights granted to parties to the Contracts and Leases and
      to
      Seller’s Manager, has sole possession of and control over the Assets. Seller
      acknowledges and agrees that nothing in this Section 9(l) shall affect
      Seller’s obligation to deliver title to the Assets in accordance with the
      provisions of Section 5.




(m)  The
      Facility is currently licensed by the Arkansas Department of Human Services
      (the
      "Department") for sixty four (64) licensed residential care beds and the
      Facility currently operates thirty four (34) units as residential care and
      fifty
      nine (59) units as unlicensed independent living units . Seller
      has no written notice or knowledge that any licenses, permits and certificates
      necessary to operate the Facility in compliance with applicable law have not
      been obtained by Seller or are not in full force and effect. **Exhibit
      9(m)** provides
      a correct and complete list of all licenses, permits, approvals, qualifications,
      registrations, certifications and




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          purchase sale agreemnt fort smith
 11


other
      authorizations of any governmental authority held by Seller with respect to
      the
      Facility and its operation as of the Execution Date (the “Operating Licenses and Certifications”)
      and copies of all such Operating Licenses and Certifications have been provided
      to Buyer or will be provided to Buyer as part of the Due Diligence Materials. Except
      as
      set forth in**Exhibit
      9(m)**,
      Seller
      has no written notice or knowledge of any pending action by any governmental
      authority or other party to suspend, revoke,
      terminate or challenge any of the Operating Licenses and Certifications
      or claiming that Seller is not in compliance in all material respects with
      all
      such Operating Licenses and Certifications and Seller has no knowledge of the
      threat of the commencement of any such action.




(n)  Except
      as
      set forth in **Exhibit
      9(n)** ,
      to
      Seller’s knowledge the Assets and the Corporate Assets constitute all material
      assets and properties currently used to operate the Facility consistent with
      past practices, except for assets and properties disposed of in the ordinary
      course of business that have in the aggregate been replaced by items of
      comparable use and function in all material respects. Except as set forth in **Exhibit
      9(n)** ,
      to
      Seller’s knowledge each item of Personal Property is in working condition and
      usable for its intended purpose in the operation of the Facility. Seller
      represents to Buyer that at Closing, the Facility will have inventory levels
      which comply with applicable law and are sufficient to carry on the continued
      operations of the Facility following the Closing in substantially the same
      manner as conducted prior to the Closing.




(o)  Attached
      hereto as **Exhibit
      9(o)** are (i)
      Seller’s unaudited internally prepared annual income statements for the Facility
      for the year 2004, and the balance sheet of Seller as of December
      31, 2004, and (ii) Seller’s unaudited internally prepared income statement for
      the Facility for the five-month period ended May 31, 2005, together with the
      balance sheets of Seller as of the end of such five-month period (the “Financial
      Statements”). To Seller’s knowledge, the Financial Statements have been prepared
      in accordance with generally accepted accounting principles consistently
      applied, except that the depreciation amounts are recorded using the Federal
      Method instead of Book Method and to Seller’s knowledge accurately reflect in
      all material respects and fairly present the financial condition and results
      of
      operations of Seller and the Facility as of the dates and for the periods
      indicated thereon.




(p)  To
      Seller’s knowledge attached hereto as **Exhibit
      9(p)** are
      correct and complete copies of the annual census statements for the Facility
      for
      calendar years 2003 and 2004 and for the five-month period ended May 31, 2005
      (the “Census Reports”). To Seller’s knowledge, each of the Census Reports
      provides a correct and complete census of residents at the Facility for the
      dates reflected thereon.




(q)  Except
      as
      disclosed on **Exhibit
      9(q)** ,
      Seller
      has no written notice or knowledge of any claim or liability against the
      Facility or Seller with respect to its ownership or operation of the Facility
      of
      any nature whatsoever, whether absolute, accrued, contingent or otherwise,
      that alone or combined with all claims or liabilities would reasonably be
      expected to have a material adverse effect upon the Facility or any of the
      other
      Assets.




(r)  All
      federal, state and other tax returns and reports required to be filed in
      connection with the Facility or any of the other Assets have been filed by
      Seller or will be timely filed in accordance with the requirements of applicable
      law, and all taxes and other assessments




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          purchase sale agreemnt fort smith
 12


and
      levies (including all interest and penalties), including, without limitation,
      income, franchise, real estate, sales, gross receipts, use, excise and service
      taxes and employee withholding taxes, accrued by Seller in connection with
      the
      ownership of the Assets or the operation of the Facility have been paid by
      Seller or will be timely paid by Seller in accordance with the requirements
      of
      applicable law. Seller has not waived any statute of limitation with respect
      to
      any tax or other assessment or levy applicable to Seller, the Facility or the
      other Assets and all such taxes and other assessments and levies that Seller
      is
      required by law to withhold or to collect have been duly withheld and collected
      and have been paid over to the proper governmental authorities or segregated
      and
      set aside for such payment and, if so segregated and set aside, shall be so
      paid
      by Seller as required by applicable Law. Except as may be reflected in the
      Title
      Documents or in the Litigation and Lien Search, neither the Internal Revenue
      Service nor any other taxing authority is now asserting or, to Seller’s
      knowledge, has threatened to asset against Seller any deficiency or claim for
      additional taxes or interest thereon or penalties in connection therewith.
      Except as may be reflected in the Title Documents or in the Litigation and
      Lien
      Search, Seller has no knowledge that any of the Assets is subject to any lien
      for payment of any tax or assessment, other than taxes and assessments not
      yet
      due and payable.




(s)  There
      is
      no action, suit, claim, proceeding or investigation pending against Seller
      or,
      to Seller’s knowledge, against Seller’s Manager (and Seller has no written
      notice or knowledge
      of any threat thereof) affecting (i) Seller’s ability to perform its obligations
      under this Agreement, (ii) the Facility, or (iii) any of the other Assets
      arising out of or relating to Seller’s
      care for any of the residents located at any time at the Facility. Seller has
      no
      life care or fixed or limited fee agreements with any of its
      residents.




(t)  **Exhibit
      9(t)** contains
      a correct and complete list of all persons currently employed at the Facility,
      together with the present compensation rate (including commissions and bonuses),
      accrued vacation days and accrued sick days for each such person. With respect
      to the employees of Seller or Seller’s Manager employed at the Facility, neither
      Seller nor to Seller’s knowledge, Seller’s Manager, has recognized any labor
      organization, nor has any such organization been certified as the exclusive
      bargaining agent of any such employees. There has been no demand on behalf of any labor organization to
      represent any such employees and Seller has no knowledge of any present efforts
      of any labor organization for authorization to represent any employees of Seller
      or, to Seller’s knowledge, Seller’s Manager employed at the Facility. Seller is
      not now, and has never been, a party to any collective bargaining or other
      agreement with any labor organization with respect to its operations at the
      Facility. Neither Seller nor, to Seller’s knowledge, Seller’s Manager has
      experienced any strikes, work stoppages, grievance proceedings, claims of unfair
      labor practices filed or other employment law difficulties of any nature with
      respect to its operations at the Facility which remain unresolved as of the
      date
      hereof, nor does Seller have knowledge of any grounds for any employment law
      difficulties of any nature. Neither Seller nor, to Seller’s knowledge, Seller’s
      Manager is currently a party to any litigation, claim or other proceeding
      asserting that Seller or Seller’s Manager has not complied in all material
      respects with all laws relating to the employment of the employees of the
      Facility. Except as set forth in **Exhibit
      9(t)** ,
      neither
      Seller nor, to Seller’s knowledge, Seller’s Manager is a party to any contract
      of employment or severance pay agreement or arrangement with any of the
      employees of the Facility. Each Employee Compensation Agreement (as hereinafter
      defined) offered or sponsored by Seller or Seller’s Manager with respect to the
      Facility has been maintained, operated and administered in compliance with
      its
      terms and any related documents




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          purchase sale agreemnt fort smith
 13


or
      agreements and in compliance with all applicable laws. Neither Seller nor
      Seller’s Manager has provided any notice of “plant closure” with respect to the
      Facility that may be required by the provisions of the Worker Adjustment and
      Retraining Notification Act, 29 U.S.C. §§ 2101 2109 (the “WARN Act”)
      in connection with the transactions contemplated by this Agreement. For purposes hereof an “Employee
      Compensation Agreement” shall be defined as any (i) “employee benefit
      plan,” as defined in Section 3(3) of the Employee Retirement Income
      Security Act of 1974, as amended, (ii) Seller deferred compensation, excess
      benefit, stock, stock option and incentive plans, contracts, programs, funds
      or
      arrangements of any kind, if any, and (iii) any other plans, contracts,
      programs, funds or arrangements sponsored or offered by Seller or Seller’s
      Manager providing benefits, if any, to present or former employees, directors,
      officers, managers, members, consultants or independent contractors of Seller
      or
      Seller’s Manager, or with respect to which Seller or Seller’s Manager has made
      or is required to make, payments, transfers or contributions.




(u)  Attached
      hereto as **Exhibit
      9(u)** is a
      correct and complete list of any resident trust funds and an inventory of all
      property of residents at the Facility held by the Seller or Seller’s Manager as
      of the Execution Date (the “Resident Trust Funds”). Seller and Seller’s Manager
      have complied, in all material respects, with all laws applicable to the
      Resident Trust Funds.




(v)  Except
      as
      set forth in **Exhibit
      9(v)** ,
      to
      Seller’s knowledge the Facility has completed and maintained all resident
      medical records in material compliance with applicable laws. To Seller’s
      knowledge the Facility has complied in all material respects with applicable
      laws governing confidentiality of medical records.




(w)  Except
      as
      set forth in **Exhibit
      9(w)** ,
      the
      Facility does
      not
      participate in the Medicare or the Arkansas Medicaid programs.




(x)  None
      of
      the documents, certificates, instruments or information furnished or to be
      furnished by Seller to Buyer or any of Buyer’s representatives is to the
      Seller’s knowledge false or misleading as to any material fact or knowingly
      omits or will knowingly omit to state a material fact necessary to make any
      of
      the statements contained therein not misleading. Each of the representations
      and
      warranties set forth in this Section 9 shall be deemed to be material and
      relied upon by Buyer; provided, however, in the event Seller is able to
      demonstrate that Buyer was aware at Closing that any such representation or
      warranty was untrue or inaccurate at Closing and that Buyer nonetheless elected
      to close, Buyer shall have no rights or remedies against Seller after Closing
      as
      a result of such untruth or inaccuracy.




Except
      for the warranties set forth in this Section 9, Seller is not making and
      has not made any warranty or representation to Buyer. The representations and
      warranties of Seller provided in this Section 9 shall survive the Closing
      for a period of nine (9) months from the Closing Date after which they shall
      terminate and be of no further force or effect except to the extent any
      litigation has been commenced with respect thereto prior to the expiration
      of
      such nine (9) month period, in which case they shall survive until the final,
      non appealable resolution of such litigation.





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          purchase sale agreemnt fort smith
 14


For
      purpose of this Section 9 and Section 11, “knowledge” means the actual
      knowledge of (i) Danny L. Campbell, a General Partner of Seller, or (ii) Gregory
      Roderick, the chief executive officer of Seller’s Manager and “notice” means
      either written notice or verbal notice which has been received, directly or
      indirectly, by, Danny L. Campbell, a general partner of Seller, or by Gregory
      Roderick, the chief executive officer of Seller’s Manager, in each instance
      after reasonable inquiries directed to the on site manager of the
      Facility.





**10.**  **Representations
      and Warranties of Buyer** . Buyer
      represents and warrants to Seller as follows:




(a)  Buyer
      is
      a corporation duly organized, validly existing and in good standing under the
      laws of the State of Washington and has received all necessary approval and
      authority to own its property and to carry on its business as is now owned
      and
      operated by it.




(b)  Subject
      to the satisfaction of the conditions to Closing, the execution, delivery and
      performance of this Agreement has been, or in the event Buyer elects to proceed
      with the transaction provided for herein as of the end of the Feasibility Period
      will prior to the end of the Feasibility Period have been, duly authorized
      by
      all necessary corporate action of Buyer.




(c)  The
      person executing this Agreement on behalf of Buyer has the requisite power
      and
      authority to execute and deliver this Agreement in the name of
      Buyer.




(d)  The
      execution, delivery and performance of this Agreement by the person executing
      the same on behalf of the Buyer have been duly and validly authorized, and
      this
      Agreement and the other agreements and instruments contemplated hereby to be
      executed and delivered by Buyer constitute legal, valid and binding obligations
      of Buyer enforceable in accordance with their respective terms, except as such
      enforceability may be limited by creditors rights laws and general principles
      of
      equity.




(e)  Neither
      the execution of this Agreement nor the consummation of the transactions
      contemplated hereby shall result in a breach of or constitute a default under
      any agreement, document, instrument, or other obligation to which Buyer is
      a
      party or by which Buyer may be bound or, to Seller’s knowledge, under any law,
      statute, ordinance, rule, governmental regulation or any writ, injunction,
      order
      or decree of any court or governmental body, applicable to Buyer or to the
      Property.




(f)  Buyer
      is
      knowledgeable in the acquisition and operation of facilities of the type and
      nature being conveyed by Seller under this Agreement.




Except
      for the warranties set forth in this Section 10, Buyer is not making and
      has not made any warranty or representation to Seller. The representations
      and
      warranties of Buyer provided in this Section 10 shall survive the Closing
      for a period of nine (9) months from the Closing Date after which they shall
      terminate and be of no further force or effect except to the extent any
      litigation has been commenced with respect thereto prior to the expiration
      of
      such nine (9) month period, in which case they shall survive until the final,
      non appealable resolution of such litigation.


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          purchase sale agreemnt fort smith
 15





**11.**  **Covenants
      of Seller** .
      Seller
      covenants that from and after the date of this Agreement ,
      except
      as contemplated by this Agreement or with the consent of Buyer and provided
      this
      Agreement has not been terminated, Seller will:




(a)  timely
      pay or cause to be paid in the ordinary course of its business all obligations
      which are due and payable with respect to the Assets;




(b)  operate,
      and cause Seller’s Manager to operate, the Facility in the ordinary course of
      Seller’s business;




(c)  take,
      and
      cause Seller’s Manager to take, all reasonable action to preserve the occupancy
      of the residents and the goodwill of the suppliers of the Facility;




(d)  use,
      and
      cause Seller’s Manager to use, reasonable efforts to retain the services of the
      employees at the Facility;




(e)  not
      increase, or permit Seller’s Manager to increase, the compensation or other
      benefits or bonuses payable or to become payable to any of the employees at
      the
      Facility except for wage increases to non salaried employees which would
      normally occur in accordance with currently existing employment practices of
      Seller disclosed to Buyer;




(f)  not
      hire,
      or permit Seller’s Manager to hire, any new employees at the Facility except to
      replace existing employees in the ordinary course of business, as necessary,
      and
      not compensate any replacement employees at a rate that is more than five
      percent (5%) above the rate of compensation of the person being
      replaced;




(g)  not
      enter
      into, or permit Seller’s Manager to enter into, any contract or commitment
      affecting the Assets except which can be canceled without penalty upon thirty
      (30) days notice, or sell, dispose of, or encumber any portion of the Assets,
      other than in the ordinary course of operating the Facility;




(h)  at
      Buyer’s sole expense, reasonably cooperate, whether prior to or after Closing,
      with Buyer in any efforts which it may undertake to audit the operating
      financial statements with respect to the operation of the Facility for periods
      prior to the Closing;




(i)  maintain,
      and cause Seller’s Manager to maintain, the Real Property, the Facility and the
      other tangible Assets in the ordinary course of business, ordinary wear and
      tear
      excepted, from the end of the Feasibility Period through the Closing
      Date.




(j)  maintain,
      or cause Seller’s Manager to maintain, in force the existing hazard and
      liability insurance policies, or comparable coverage, for the Real Property,
      the
      Facility and the other tangible Assets;




(k)  promptly
      notify Buyer of any changes which affect materially the validity or accuracy
      of
      its representations and warranties of which it has knowledge or with respect
      to
      which it receives written notice prior to the Closing;


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          purchase sale agreemnt fort smith
 16




(l)  prepare
      or cause to be prepared all income, franchise, sales and other tax returns
      or
      reports required by law and promptly make all tax payments that are required
      through the Closing Date, cooperate with Buyer in the submission to any state
      taxing authorities to which Seller is subject of any requests for tax clearances
      that Buyer deems to be necessary or appropriate and cooperate with such
      authorities to facilitate the issuance of all such tax clearances;




(m)  give
      Buyer access to Seller’s
      employees at such times as may be agreed upon by Seller and Buyer, and in any
      event not less than five business days prior to Closing, for purposes of
      allowing Buyer to discuss potential employment of any or all of such employees
      with Buyer;




(n)  use
      its
      commercially reasonable efforts to (i) as soon as reasonably practicable after
      the end of the Feasibility Period (assuming Buyer has not elected to terminate
      this Agreement at or prior to the end of the Feasibility Period) to cooperate
      with Buyer’s efforts to obtain all consents of governmental authorities and
      third parties listed on **Exhibit 11(n)** attached
      hereto which Seller is required to obtain in order to consummate the transaction
      provided for herein, (ii) cause to be fulfilled and satisfied all of the other
      conditions to the Closing to be fulfilled and satisfied by Seller and (iii)
      cause to be performed all of the matters required of Seller at or prior to
      the
      Closing;




(o)  not
      take,
      or permit Seller’s Manager to take, any action, or suffer any omission,
      inconsistent with its obligations under this Agreement or which could hinder
      or
      delay the consummation of the transactions contemplated by this Agreement,
      or
      intentionally take any action or suffer any omission that would reasonably
      be
      expected to result in any inaccuracy or breach of any of the representations
      or
      warranties of the Seller contained in this Agreement as of the Closing Date;
      and




(p)  cooperate,
      at no cost or expense to Seller, in any audit which may be conducted by or
      at
      the direction of Buyer of the Financial Statements of the Facility in order
      to
      enable Buyer to comply with any securities law requirements applicable to
      Buyer.




**12.**  **Disclaimer,
      Release and “AS IS” Sale** .
      As a
      material inducement to the execution and delivery of this Agreement by Seller,
      and the performance by Seller of its duties and obligations hereunder, the
      following provisions shall apply in the event Buyer does not elect to terminate
      this Agreement at the end of the Feasibility Period:




(a)  Buyer
      acknowledges and warrants that Buyer will have had as of the end of the
      Feasibility Period adequate opportunity to become fully acquainted with the
      nature and condition, in all respects, of the Assets and Seller’s independent
      and assisted living business conducted at the Real Property, the existence
      or
      availability of all licenses, permits and approvals from governmental
      authorities necessary to operate Seller’s business, the manner of construction
      and the condition and state of repair of the tangible Assets.




(b)  Buyer
      will be expressly purchasing the Assets in their existing condition, “AS IS,
      WITHOUT RECOURSE, AND WITH ALL FAULTS, AND DEFECTS, KNOWN OR UNKNOWN, AND
      WITHOUT ANY REPRESENTATIONS OR WARRANTIES, EXPRESS




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          purchase sale agreemnt fort smith
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OR
      IMPLIED, OF ANY KIND, FROM SELLER OTHER THAN THOSE SPECIFICALLY SET FORTH
      HEREIN” and Seller shall have no obligation to repair or correct any facts,
      circumstances or conditions or defects or to compensate Buyer for same unless
      the same is a breach by Seller of its representations, warranties or covenants
      of this Agreement or any term thereof.




(c)  Absent
      fraud or a breach by Seller of its obligations under this Agreement, including
      its indemnity obligations set forth in Section 17, Buyer specifically
      agrees that Seller shall have no liability to Buyer and Buyer hereby waives
      any
      right of recourse against Seller, whether arising at law or in equity, under
      contract, tort law or statute (specifically including any Environmental Laws)
      with respect to the condition of the tangible Assets, any past uses of any
      of
      the foregoing, the economic feasibility of the Assets or Seller’s business
      operation therewith or the compliance or non-compliance of the Assets or
      Seller’s business operation with all laws, rules of regulations affecting or
      applicable to same.




(d)  Buyer
      expressly understands and acknowledges that it is possible that unknown
      problems, conditions or claims may exist with respect to the Assets or the
      business operated therewith and that Buyer explicitly will have taken such
      into
      account in electing to proceed with the transaction on the terms set forth
      in
      this Agreement, including the purchase price for the Assets, and that a portion
      of such consideration, having been bargained for between the parties with the
      knowledge of the possibility of such unknown problems, conditions or claims,
      was
      given in exchange for a full accord, satisfaction and discharge of all such
      problems, conditions, losses and claims. Accordingly, absent fraud or a breach
      by Seller of its obligations under this Agreement, including its indemnity
      obligations set forth in Section 17, Buyer acknowledges that, except as
      otherwise specifically set forth in this Agreement, following Closing Seller
      shall have no liability or duty of any kind to Buyer with respect to the Assets,
      regardless of the basis for the claim. Seller and Buyer acknowledge that this
      disclaimer and full and complete release has been specifically
      negotiated.




Initial
      Buyer  Initial
      Seller










**13.**  **Buyer’s
      Conditions Precedent** .
      The
      obligation of Buyer to purchase the Assets is subject to the satisfaction,
      at or
      before the Closing, of each of the following conditions:




(a)  The
      representations and warranties of Seller contained in Section 9 shall be
      true and correct in all material respects, except as to those representations
      and warranties which contain a materiality exception in which case such
      representations and warranties of Seller shall be true and correct in all
      respects, at Closing as if the same were made on and as of that
      date.




(b)  Seller
      shall have performed and complied with all agreements, covenants and conditions
      required by this Agreement to be performed or complied with by Seller prior
      to
      or at Closing.


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          purchase sale agreemnt fort smith
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(c)  The
      simultaneous closing of each of the transactions subject to the Wildflower
      Purchase Agreement and Trillium Park Purchase Agreement (the “Related
      Agreements”) with this transaction on the terms provided for in each respective
      Related Agreement, it being specifically understood and agreed between Buyer
      and
      Seller that this Agreement represents one part of a multi-part transaction
      related to three (3) properties and that it is the agreement of Buyer and Seller
      that, unless this condition is waived in writing by Buyer and Seller, this
      transaction shall not close unless the transactions subject to the Related
      Agreements close simultaneously with this transaction; provided, however, if
      the
      transaction subject to the either or both of the Related Agreements is
      terminated on account of material damage to the real property subject thereto,
      the closing of such transaction shall not be a condition precedent to this
      Closing.




(d)  Seller
      shall not be in default, where said default cannot be cured by Closing, under
      any mortgage, contract, lease or other agreement affecting or relating to the
      Facility or any of the other Assets.




(e)  No
      suit,
      action or proceeding shall be pending or threatened by any third party before
      any governmental authority in which it is sought to restrain or prohibit or
      to
      obtain damages or other relief in connection with this Agreement or the
      transactions contemplated thereby nor shall there have been filed by or against
      Seller at any time prior to the Closing Date any bankruptcy, reorganization
      or
      arrangement petition.




(f)  Buyer
      shall have secured all necessary consents and/or approvals of governmental
      authorities or third parties listed on **Exhibit
      11(n)** ,
      including without limitation all licenses and permits necessary for the lawful
      operation by Buyer of the Facility as an assisted/independent living facility
      with no less than thirty-four (34) licensed residential care units and
      fifty-nine (59) independent living units.




(g)  Except
      for any damage, destruction or condemnation subject to Section 22 hereof,
      there shall have been no Material Reduction (as hereinafter defined) in the
      census of the Facility since the Execution Date nor any Substantial Change
      (as
      hereinafter defined) in the condition of the Real Property, the Facility or
      the
      other Tangible Assets. For purposes hereof, a Material Reduction in census
      shall
      mean a loss of more than 10 residents from the number of persons residing at
      the
      Facility at the end of the Feasibility Period and a Substantial Change in the
      condition of the Real Property, the Facility or the other Tangible Assets shall
      mean that the cost to Buyer to repair or replace the same will exceed,
      individually or in the aggregate, Fifty Thousand and no/100 Dollars ($50,000).
      The provisions of this Section 13(g) shall not limit or restrict Seller’s
      covenant to maintain the Assets as provided in Section 11(i).




(h)  Buyer
      shall have secured the approval of its Board of Directors to the transaction
      provided for herein and in the Related Agreements; provided, however, this
      condition shall be deemed to have been satisfied or waived unless Buyer has
      advised Seller at or prior to the end of the Feasibility Period that it is
      unable to secure such approval.




(i)  The
      Title
      Insurance Policy shall have been issued by the Title Company, insuring Buyer’s
      title to all of the Real Property, subject to no exceptions other than Permitted
      Exceptions.




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          purchase sale agreemnt fort smith
 19


If
      any
      one or more of the conditions set forth above are not satisfied prior to Closing
      and are not waived in writing by Buyer prior to the Closing then, Buyer may
      terminate this Agreement by notice, in writing, with sufficient detail to inform
      Seller of the reasons for the termination, delivered to Seller and the Escrow
      Agent that Buyer elects to terminate this Agreement, and upon receipt of which
      the Escrow Agent shall cancel the Escrow and return all documents to the
      depositing party, and Buyer’s rights and remedies shall be as provided in
      Section 23 hereof. Provided, if Buyer elects to close the transaction with
      written notice or knowledge that any such condition has not been satisfied
      or
      waived, Buyer shall be deemed to have waived any such condition.





**14.**  **Seller’s
      Conditions Precedent** .
      The
      obligation of Seller to sell the Property hereunder is subject to the
      satisfaction or waiver of each of the following conditions
      precedent:




(a)  T he
      representations and warranties of Buyer contained in Section 10 shall be
      true and correct at Closing as if the same were made on and as of that
      date.




(b)  Buyer
      shall have performed and complied with all agreements, covenants and conditions
      required by this Agreement to be performed or complied with by Buyer prior
      to or
      at Closing
      including, but not limited to, the delivery to Escrow Agent of the balance
      of
      the Purchase Price which is due at Closing.




(c)  There
      shall not have been filed by or against Buyer at any time prior to the Closing
      Date any bankruptcy, reorganization or arrangement petition.




(d)  The
      simultaneous closing of each of the transactions subject to the Related
      Agreements with this transaction on the terms provided for in each respective
      Related Agreement, it being specifically understood and agreed between Buyer
      and
      Seller that this Agreement represents one part of a multi-part transaction
      related to three (3) properties and that it is the agreement of Buyer and Seller
      that, unless this condition is waived in writing by Buyer and Seller, this
      transaction shall not close unless the transactions subject to the Related
      Agreements close simultaneously with this transaction; provided, however, if
      the
      transaction subject to the either or both of the Related Agreements is
      terminated on account of material damage to the real property subject thereto,
      the closing of such transaction shall not be a condition precedent to this
      Closing.




If
      one or
      more of the conditions set forth above are not satisfied prior to the Closing
      and are not waived in writing by Seller prior to the Closing then, Seller may
      terminate this Agreement by notice, in writing, delivered to Buyer and Escrow
      Agent that Seller elects to terminate this Agreement, upon receipt of which
      the
      Escrow Agent shall cancel the Escrow and promptly return all documents to the
      depositing party, and Seller’s rights and remedies shall be as provided in
      Section 23 of this Agreement. Provided if Seller elects to close the
      transaction, with written notice of knowledge that any such condition has not
      been satisfied or waived, Seller shall be deemed to have waived any such
      condition.


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          purchase sale agreemnt fort smith
 20




**15.**  **Closing**




(a)  Provided
      the conditions to closing set forth in Sections 13 and 14 have been
      satisfied or waived and provided neither Seller or Buyer has given notice to
      the
      other of its election to terminate this Agreement as otherwise permitted under
      this Agreement, the closing (“Closing”) will occur in the office of the Escrow
      Agent (“Closing Agent”) no later than 10:00 a.m. Pacific Time on the first
      day of the first month occurring after the thirtieth (30th) day following the
      expiration of the Feasibility Period (“Closing Date”), or such earlier or later
      date as is mutually agreed to by the parties.




(b)  At
      the
      Closing:




(i)  Seller
      shall deliver to the Escrow Agent the following:




(1)  an
      executed Limited Warranty Deed in the form of **Exhibit 15(b)(i)(1)** ,
      conveying to Buyer the Real Property free and clear of any lien, encumbrance
      or
      exception other than the Permitted Exceptions;




(2)  an
      executed Bill of Sale in the form of **Exhibit
      15(b)(i)(2)** ,
      if
      applicable;




(3)  two
      (2)
      executed Assignment and Assumption of Assumed Leases and Assumed Contracts
      in
      the form of **Exhibit
      15(b)(i)(3)** ;




(4)  an
      executed certificate required by § 1445 of the Internal Revenue Code of 1986, as
      amended, in the form of **Exhibit
      15(b)(i)(4)** ;




(5)  such
      title affidavits and indemnities in form acceptable to Seller as may be
      reasonably necessary to cause the Title Company to issue the Title Policy in
      accordance with the terms of this Agreement;




(6)  Evidence
      of the termination of any Management Agreement which may be in effect between
      Seller and Seller’s Manager.




(ii)  Buyer
      shall deliver to the Escrow Agent the following:




(1)  the
      balance of the Purchase Price in immediately available funds less the Deposit,
      plus an amount equal to Buyer’s share of the expenses set forth in
      Section 15(c) below, in cash or immediately available funds;
      and,




(2)  two
      (2)
      executed Assignment and Assumption of Assumed Leases and Assumed Contracts
      in
      the form of **Exhibit
      15(b)(i)(3)** to be
      executed in duplicate.




(iii)  Seller
      shall deliver to Buyer possession of the Assets free and clear of all liens,
      charges and encumbrances other than the Permitted Exceptions.


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          purchase sale agreemnt fort smith
 21




(c)  Seller
      shall pay the cost of one-half (1/2) of the escrow fee charged by the Escrow
      Agent (except as otherwise provided in Section 23), the premium for a
      standard coverage title insurance policy, all transfer taxes applicable to
      the
      Real Property, all recording fees and title insurance cost and fees (including
      the costs of any title endorsements required to deliver title to the Real
      Property subject to no liens other than the Permitted Exceptions but
      specifically excluding the cost of the access, comprehensive and survey
      endorsements required for the delivery to Buyer of the Title Policy (the
“Extended Coverage Endorsements”)) required to be paid in order to remove any
      title exceptions other than the Permitted Exceptions, the cost of recording
      the
      Limited Warranty Deed, all prepayment penalties or premiums which may be due
      with respect to any debt secured by the Assets and its own attorneys’ fees.
      Buyer shall pay all and all sales and use taxes applicable to sale to Buyer
      of
      the Personal Property, **** the
      cost
      of the Survey, the cost of the Extended Coverage Endorsements, one-half (1/2)
      of
      the escrow fee charged by the Escrow Agent (except as otherwise provided in
      Section 23), any other title costs and its own attorneys’ fees.




(d)  Seller
      and Buyer shall deliver to each resident of the Facility immediately after
      the
      Closing, a notice regarding the sale directing that all future rents and notices
      be directed to Buyer at the address of Buyer herein indicated, or at such other
      address as Buyer shall provide to Seller at or prior to the Closing. The notice
      shall be prepared by Seller and shall be in the form attached hereto as **Exhibit
      15(d)** .




(e)  Seller
      shall deliver to Buyer outside of Escrow at Closing, the originals of all of
      the
      Assumed Leases and Assumed Contracts, keys to the Property, the Books and
      Records and make available for copying by Buyer, at Buyer’s expense, any other
      non-privileged records relating to the Property (but not Seller) which have
      not
      been previously copied by Buyer. From and after the Closing, Buyer will make
      available to Seller, upon request, the Books and Records of the Facility if
      Seller needs such in connection with claims for litigation and the filing of
      reports or returns related to periods prior to Closing (including originals
      if
      required by Seller to comply with law or the order of a court of competent
      jurisdiction), subject to Seller’s agreement to return any original Books and
      Records which may be removed from the Facility and to pay for the cost of
      copying such documents prior to the removal of such copies or of the originals
      thereof.




(f)  Each
      party shall execute such additional documents, including written escrow
      instructions consistent with this Agreement, as may be necessary to complete
      the
      transaction subject to this Agreement.




**16.**  **Prorations**




(a)  Rents,
      assessments and real and personal property taxes, operating income and expenses
      (including without limitation, utilities) and, to the extent provided in
      Section 16(c)(iii) license fees, associated with the operation of the
      Assets, and current installments of any LID assessments which are included
      in
      the Permitted Exceptions shall be prorated as of the Closing Date based upon
      actual days involved. Real and personal property taxes and operating expenses
      shall be prorated on the basis of the best information available as of Closing.
      If after Closing real or personal property taxes or other operating expenses
      or
      income are determined to be different from those apportioned at Closing, then
      the parties shall, within




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          purchase sale agreemnt fort smith
 22


thirty
      (30) days of such determination, promptly adjust the prorated amount to actual
      by payment from the party who paid too little or received too much of a credit
      at Closing. If the Real Property is revalued as a result of the sale
      transaction, there shall be no additional proration of real and personal taxes
      as a result of the sale transaction;




(b)  all
      expenses, other than the payroll and employee benefits covered in
      Section 19 of this Agreement, related to the ownership or operation of the
      Assets (including but not limited to the obligations under the Contracts assumed
      by Buyer), shall be prorated as of the Closing Date with Seller responsible
      therefor for the period prior to the Closing Date and with Buyer responsible
      therefor for the period from and after the Closing Date;




(c)  if
      applicable, Buyer shall pay any filing fees and other costs associated with
      Seller’s or Buyer’s compliance with the Antitrust Improvements Act of 1976 (the
“HSR Act”) as the same relates to the transaction provided for herein or in the
      Related Agreements; and




(d)  All
      prorations shall be made on the basis of the actual number of days of the year
      and month which have elapsed as of the Closing Date. The amount of proration
      shall be adjusted in cash after the Closing, as and when complete and accurate
      information becomes available. Seller and Buyer shall cooperate in making
      post-Closing adjustments to prorations other than those described in
      Section 16(b) above, within thirty (30) days following Closing and, if and
      to the extent possible, it shall make adjustments with respect to the prorations
      described in Section 16(b) within ninety (90) days following Closing;
      and




(e)  Buyer
      and
      Seller agree that the following shall not be subject to proration at
      Closing:




(i)  no
      provision is made for the proration of water charges, sewer, electricity, fuel
      charges, utility charges, refuse, solid waste disposal charges, telephone,
      gas
      or other utility charges as Seller shall terminate its account with the
      providers of all such services as of the Closing Date and Buyer shall, prior
      to
      the Closing Date, make application to the providers of such services for the
      continuation of such services in the name of Buyer. It is anticipated that
      in
      connection with all such services the meters will be read on or about the
      Closing Date and the Seller shall be responsible for paying the bills for such
      services accruing on and prior to the Closing Date and Buyer shall be
      responsible for the payment of all such charges accruing after the Closing
      Date;




(ii)  no
      provision has been made for the proration of premiums for any insurance policies
      relating to the Property whether for liability, fire, theft, damage or other
      casualty, and Seller shall terminate such policies as of the date of Closing.
      Buyer shall be responsible for obtaining as of the date of Closing all insurance
      necessary to insure Buyer for liability, theft, fire, and casualty; and




(iii)  no
      provision has been made for the proration of any license fees paid by Seller
      for
      the year in which the Closing occurs unless Buyer obtains the benefit of any
      such license fees as part of its licensure application process, in which case
      the same shall be prorated at closing based on the benefit derived by each
      party
      from the fees so paid by Seller.


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          purchase sale agreemnt fort smith
 23




**17.**  **Indemnification**




(a)  Except
      as
      otherwise provided in this Agreement, from and after the Closing Date, Seller
      shall indemnify, defend and hold Buyer harmless from and against:




(i)  Any
      and
      all obligations relating to the ownership and operation by Seller of the Assets
      prior to the Closing Date and any obligations under any of the Contracts and
      Leases which are not included within the Assumed Contracts and Assumed Leases
      whether the same relate to the period prior to or after the Closing Date;




(ii)  Any
      and
      all liability for nonpayment by Seller relating to any services ordered and
      performed at, or materials or goods ordered and delivered to, the Facility
      prior
      to the Closing Date;




(iii)  Any
      and
      all liability or loss relating to the operation of Seller’s business at the
      Facility prior to Closing, including, without limitation, any and all claims,
      losses and liabilities involving Seller’s employees;




(iv)  Any
      breach of any representation, warranty, agreement or covenant on the part of
      Seller under this Agreement, but only to the extent such breach has not been
      waived prior to Closing in accordance with the terms thereof;




(v)  Any
      litigation, investigations or other proceedings pending or threatened against
      Seller in connection with its ownership of the Assets or the business being
      conducted at the Facility prior to Closing; and




(vi)  Any
      and
      all actions, suits, proceedings, demands, assessments, judgments, reasonable
      costs, and other reasonable expenses, including, but not limited to, reasonable
      attorneys’ fees, incident to any of the foregoing.




For
      purposes hereof, the term “claim” shall mean with respect to the amount of the
      indemnity the actual costs and expenses incurred by Buyer directly related
      to
      any rights of the Buyer hereunder. Buyer shall act in good faith to mitigate
      any
      damages claimed against Seller.





(b)  From
      and
      after the Closing Date, Buyer shall indemnify, defend and hold Seller harmless
      from and against:




(i)  Any
      and
      all obligations arising from or related to Buyer’s ownership of the Assets and
      the operation of the Assets and the Facility from and after the Closing Date,
      including, but not limited to any obligations under any of the Assumed Leases
      or
      Assumed Contracts and any obligations with respect to the Prepaid Rents and
      Resident Deposits;




(ii)  Any
      breach of a representation, warranty, agreement or covenant on the part of
      Buyer
      under this Agreement, including, but not limited to, those set forth in
      Sections 19(d) and 20(b), but only to the extent such breach has not been
      waived prior to Closing in accordance with the terms thereof;


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          purchase sale agreemnt fort smith
 24




(iii)  Any
      claims, liens, causes of action, or obligations by persons or entities not
      a
      party to this Agreement which arise out of Buyer’s due diligence review before
      Closing, including, without limitation, Seller’s costs, reasonable expenses and
      reasonable attorney’s fees incurred in connection with defending against or
      clearing Seller’s title to the Real Property of such claims, liens, causes of
      actions or obligations;




(iv)  Any
      claim
      for any service, inventory or supplies ordered in the ordinary course of
      business prior to Closing and performed or delivered after Closing;




(v)  Any
      and
      all actions, suits, proceedings, demands, assessments, judgments, reasonable
      costs and other reasonable expenses, including, but not limited to, reasonable
      attorneys’ fees, incident to any of the foregoing.




For
      purposes hereof, the term “claim” shall mean with respect to the amount of the
      indemnity the actual costs and expenses incurred by Seller directly related
      to
      any rights of the Seller hereunder. Seller shall act in good faith to mitigate
      any damages claimed against Buyer





(c)  If
      either
      party (the “Indemnitee”) receives notice of any claim or commencement of any
      action or proceeding with respect to which the other party (the “Indemnifying
      Party”) is obligated to provide indemnification pursuant to Section 17(a)
      or Section 17(b), the Indemnitee shall promptly give the Indemnifying Party
      written notice thereof. Such notice shall be a condition precedent to any
      liability of the Indemnifying Party under the provisions for indemnification
      contained in this Agreement. The Indemnifying Party may conduct the defense,
      at
      such Indemnifying Party’s own expense and by such Indemnifying Party’s own
      counsel, against any such matter involving the asserted liability of the
      Indemnitee, and the Indemnitee shall cooperate in the defense against any such
      asserted liability. Neither the Indemnitee nor the Indemnifying Party may settle
      or compromise any claim over the reasonable objection of the other. If the
      Indemnifying Party chooses to defend any claim, the Indemnitee shall make
      available to the Indemnifying Party any books, records or other documents within
      its control that are necessary or relevant for such defense.




(d)  Neither
      Seller nor Buyer shall have any right to seek indemnity against the other party
      other than with respect to actual damages suffered by such party, it being
      understood and agreed that neither Seller nor Buyer shall be entitled to recover
      consequential or punitive damages from the other. With respect to claims made
      solely under Sections 17(a)(iv) and 17(b)((ii), neither Seller nor Buyer
      shall have any right to seek indemnity against the other party unless the amount
      of the indemnity claim individually or when taken together with all other claims
      brought thereunder is at least equal to Twenty Five Thousand and no/100 Dollars
      ($25,000.00) (“Indemnity Floor”). The maximum aggregate exposure for Seller for
      indemnity claims made by Buyer solely under Section 17(a)(iv) shall be
      Fifty Thousand Dollars ($50,000.00) in the aggregate (amounts which are in
      excess of the Indemnity Floor but do not exceed $75,000) (the “Seller’s
      Indemnity Cap”). The maximum aggregate exposure for Buyer for indemnity claims
      made by Seller solely under Section  17(b)(ii) shall be Fifty Thousand
      Dollars ($50,000.00) in the aggregate (amounts which are in excess of the
      Indemnity Floor but do not exceed $75,000) (“Buyer’s Indemnity Cap”). (Seller’s
      Indemnity Cap and Buyer’s Indemnity Cap shall collectively be referred to as the
“Indemnity Caps”.) Notwithstanding the




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 25


foregoing,
      the Indemnity Floor and Indemnity Caps shall not apply to indemnified matters
      which are the result of fraudulent acts of Seller or Buyer.




(e)  From
      and
      after Closing, the rights and remedies provided for in this Section 17
      shall be Seller’s and Buyer’s sole and exclusive remedy for any breach or
      default by the other party.




**18.**  **Confidentiality
      and Nondisclosure** .
      All
      documents and information provided by Seller to Buyer pursuant to the terms
      of
      this Agreement shall be deemed confidential. If the Closing under this Agreement
      does not occur, Buyer, in addition to returning any physical or electronic
      embodiment, reproduction or copy of such information, shall not use, exploit
      or
      disclose such information to third parties without Seller’s express written
      consent, which consent may be withheld at Seller’s sole election. Buyer shall
      indemnify Seller from and against any and all claims, liabilities, costs and
      expenses incurred by Seller as a result of such disclosure. The covenants and
      warranties contained herein shall be continuing for a period of three (3) years
      after the Closing Date if the transfer of Assets contemplated hereby does not
      occur for any reason. Buyer agrees that Seller shall be entitled to specific
      performance with respect to the enforceability of Buyer’s agreement of
      confidentiality herein, and grants to Seller the right to specifically enjoin
      or
      restrain such action without the requirement of bond, should Buyer breach this
      provision. In such event, Buyer shall be responsible for Seller’s reasonable
      attorneys’ fees and costs of obtaining any injunction or restraining order with
      regard to this Agreement. Seller shall additionally be entitled to any actual
      damages which it may suffer as a result of any breach or threatened breach
      of
      the terms of this Section 18 by Buyer or permitted assigns.




**19.**  **Employee
      Termination/Benefits**




(a)  All
      personnel employed by Seller at the Facility shall be terminated effective
      as of
      the Closing Date.




(b)  Seller
      shall make available continuation of group health coverage pursuant to
      Section 4980B of the Code and Sections 601 through 608 of ERISA to all
      current or former employees of Seller engaged in or formerly engaged in the
      operation of the Facility (or their qualified beneficiaries), without regard
      to
      whether they receive an offer of employment from Buyer pursuant to
      Section 19(e) below, who become entitled to such coverage as a result of a
      qualifying event that occurs on or prior to the Closing Date.




(c)  Seller
      shall be responsible for all such employees’ earned and accrued unpaid wages
      accrued to the Closing Date and for earned and accrued vacation and sick pay,
      if
      applicable, relating to their employment prior to the Closing Date or their
      termination as of the Closing Date. Buyer shall assume the liability for all
      earned vacation and sick pay and for all accrued vacation pay to the extent
      earned after the Closing Date and paid or utilized by personnel previously
      employed by Seller and employed after the Closing by Buyer. Seller shall deliver
      to Buyer a schedule at Closing which reflects by employee earned and accrued
      vacation and sick pay, if applicable, (“Benefits Schedule”) as of the Closing
      Date and shall pay to Buyer at Closing the amount reflected on the Benefit
      Schedule (“Benefits Payment”). Buyer shall acknowledge in writing, in a form
      acceptable to Seller, the receipt of the Benefits Payment.




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          purchase sale agreemnt fort smith
 26


(d)  In
      consideration of the payment to Buyer of the Benefits Payment, Buyer shall
      assume the liability for the benefits reflected on the Benefits Schedule and
      shall pay the same to employees of the Facility as and when due the respective
      employees listed on the Benefits Schedule.




(e)  Buyer
      may
      offer employment, as employees at will, effective as of the Closing Date to
      such
      a number of the employees of Seller as Buyer may select in its sole discretion
      but in no event less than the number of employees required to avoid the
      application of the WARN Act to the transaction provided for herein.




**20.**  **Accounting
      for Resident Security Deposits and Prepaid Rents**




(a)  At
      Closing, Seller shall provide Buyer with an accounting of the rents then being
      held by Seller from the residents or prospective residents of the Facility
      which
      relate to periods on and after the Closing Date (the “Prepaid Rents”) and
      refundable security and other refundable deposits being held by Seller (the
      “Resident Deposits”). Such accounting shall set forth the names of the residents
      or prospective residents for whom such funds are held, the amounts held on
      behalf of each resident or prospective resident and Seller’s representation that
      the accounting is true, correct and complete.




(b)  On
      the
      Closing Date, **** in
      accordance with all applicable federal and state laws and regulations known
      to
      Seller, Seller shall transfer or cause to be transferred the Prepaid Rents
      and
      Resident Deposits to Buyer and Buyer shall in writing acknowledge to Seller
      receipt of and expressly assume all Seller’s financial and custodial obligations
      with respect thereto, it being the intent and purpose of this provision that,
      at
      Closing, Seller will be relieved of all fiduciary and custodial obligations,
      and
      that Buyer will assume all such obligations and be directly accountable to
      the
      residents and prospective residents of the Facility, with respect thereto.




(c)  Notwithstanding
      the foregoing, Seller will indemnify and hold Buyer harmless from all
      liabilities, claims and demands in the event the amount of the Prepaid Rents
      and
      Resident Deposits transferred to the Buyer as provided in Section 20 did
      not represent the full amount of the Prepaid Rents and Resident Deposits then
      or
      thereafter shown to have been delivered to Seller by the current residents
      or
      prospective residents of the Facility.




**21.**  **Accounts
      Receivable**




(a)  At
      Closing, Seller shall provide Buyer with a detailed listing by resident of
      accounts receivable which are outstanding on the Closing Date (the “Accounts
      Receivable Schedule”). From and after the Closing Date, Buyer shall assume
      responsibility for the billing for and collection of payments on account of
      rent, services rendered or goods sold by it, or others under arrangement with
      it, after the Closing Date, and shall include in any invoices sent to residents
      of the Facility for one billing cycle after Closing any amounts shown on the
      Accounts Receivable Schedule as being not more than thirty (30) days past due
      at
      Closing. Seller shall retain all right, title and interest in and to its
      accounts receivable for rent, services rendered or goods sold on or prior to
      the
      Closing Date. Any payments received by Buyer after the Closing Date from
      residents with outstanding balances as of the Closing Date and which designate
      the




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          purchase sale agreemnt fort smith
 27


period
      to
      which they relate shall be applied in accordance with such designation. Any
      payments received by Buyer after the Closing Date from residents with
      outstanding balances as of the Closing Date which fail to designate the period
      to which they relate shall be retained by Buyer to reduce any balances due
      to
      Buyer from services rendered after the Closing Date, provided that, for a period
      of thirty (30) days after the Closing Date, if there are no balances then due
      to
      Buyer from any such resident for services rendered after the Closing Date,
      such
      resident payments shall be remitted to Seller to reduce any balances due to
      Seller.




(b)  Seller
      shall not prosecute any claim against any resident of the Facility without
      first
      giving Buyer ten (10) days’ prior written notice of any such
      action.




**22.**  **Damage,
      Destruction and Condemnation** .
      If
      prior to the Closing Date, all or any portion of the Assets are damaged,
      destroyed, taken by governmental authority or otherwise rendered inoperative
      (collectively the “Damage”) by fire, natural elements, or other causes beyond
      Seller’s control, then the following procedures shall apply:




(a)  If
      the
      Damage is not Material (hereinafter defined), Buyer shall proceed to close
      and
      purchase the Assets as diminished by such Damage, subject to a reduction in
      the
      Purchase Price equal to the lesser of the full estimated cost of repairing
      and/or replacing the Damage or the applicable insurance proceeds or condemnation
      award.




(b)  If
      the
      Damage is Material, then either Buyer or Seller may terminate and cancel the
      purchase of the Assets, neither party hereto shall have any further rights
      against or obligations to the other under this Agreement other than Buyer’s
      right to secure a return of the Deposit and any accrued interest
      thereon.




(c)  For
      the
      purposes of this paragraph, Damage shall be deemed to be “Material” if the cost
      of repairing such Damage equals or exceeds Two Hundred Fifty Thousand Dollars
      ($250,000.00).




**23.**  **Termination**




(a)  This
      Agreement may be terminated and the transaction contemplated herein abandoned
      at
      any time prior to Closing:




(i)  By
      mutual
      written agreement of the parties;




(ii)  By
      Seller, if any of the conditions set forth in Section 14 shall have become
      incapable of fulfillment prior to the Closing Date or such earlier date as
      may
      be specifi-cally provided for the performance thereof (as the same may be
      extended) through no fault of Seller and the same shall not have been waived
      by
      Seller;




(iii)  By
      Buyer,
      if any of the conditions set forth in Section 13 shall have become
      incapable of fulfillment prior to the Closing Date or such earlier date as
      may
      be specifically provided for the performance thereof (as the same may be
      extended) through no fault of Buyer and the same shall not have been waived
      by
      Buyer;


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          purchase sale agreemnt fort smith
 28




(iv)  By
      either
      Seller or Buyer in the event of a material breach by the other party of any
      of
      its representations and warranties contained in this Agreement or failure to
      comply in any material respect with any of the other covenants or agreements
      contained in this Agreement to be complied with or performed by such party
      at or
      prior to the Closing;




(v)  By
      Buyer,
      in the exercise of its sole discretion, within the Feasibility Period.




Neither
      Seller nor Buyer may claim termination of this Agreement or pursue any other
      remedy referred to in this Agreement on account of a breach of a representation,
      covenant or warranty by the other or failure of a condition, without first
      giving such other party written notice of such breach and not less than ten
      (10)
      days within which to cure such breach. The Closing shall be postponed during
      such cure period, if necessary, to afford such opportunity to cure; provided,
      however, unless the parties agree otherwise, in no event shall the Closing
      occur
      other than on the last day of a month effective as of midnight on such day.
      In
      any event, unless the parties hereto agree otherwise, postponement of closing
      to
      cure a breach shall be granted only once.





(b)  In
      the
      event Seller has the right to terminate this Agreement under
      Sections 23(a)(ii) or (iv) as a result of a default by Buyer in its
      representations, warranties, covenants or agreements hereunder, Buyer and Seller
      acknowledge and agree as follows:




SELLER
      SHALL BE ENTITLED TO TERMINATE THIS AGREEMENT AND TO RETAIN THE DEPOSIT AS
      SELLER’S SOLE AND EXCLUSIVE REMEDY AND ALL ACCRUED INTEREST THEREON AS
      LIQUIDATED DAMAGES, THE PARTIES ACKNOWLEDGING AND AGREEING THAT THE AMOUNT
      OF
      DAMAGES WHICH SELLER MAY INCUR AS A RESULT OF SUCH TERMINATION MAY BE DIFFICULT
      TO ASCERTAIN AND THAT THE DEPOSIT IS A REASONABLE AND FAIR ESTIMATE THEREOF,
      AFTER WHICH THE PARTIES SHALL HAVE NO FURTHER RIGHTS OR OBLIGATIONS
      HEREUNDER.









Seller’s
      Initials     Buyer’s
      Initials






(c)  In
      the
      event Buyer has the right to terminate this Agreement, under
      Sections 23(a)(iii) or (iv) as a result of a default by Seller in its
      representations, warranties, covenants or agreements hereunder, Buyer shall
      have
      the right either to (i) waive the condition or covenant or breach at issue
      and proceed with the transaction on the terms contemplated herein or (ii) seek
      specific performance of Seller’s obligations hereunder or (iii) to terminate
      this Agreement and secure the return of the Deposit and any accrued interest
      thereon, after which neither party shall have any further rights or obligations
      hereunder.




(d)  In
      the
      event this Agreement is terminated pursuant to Sections 23(a)(i) or
      (vi) or pursuant to Section 23(a)(v), then the entire Deposit and any
      accrued interest thereon shall immediately be refunded and returned to Buyer,
      after which neither party shall have any further rights or obligations
      hereunder.




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          purchase sale agreemnt fort smith
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(e)  In
      the
      event the transaction contemplated hereby is not closed for any reason other
      than a breach by Buyer or Seller, each party shall pay one half of all escrow
      cancellation fees and title charges. In the event the transaction contemplated
      hereby is not closed as a result of a breach by Seller or Buyer, then the
      breaching party shall pay all escrow cancellation fees and title charges. In
      no
      event shall either party be liable to the other for consequential damages or
      incidental damages.




**24.**  **Attorneys’
      Fees** .  In
      the
      event any suit or action is instituted to enforce or interpret any of the terms
      of this Agreement, including any action or participation in or in connection
      with a case or proceeding under any Chapter of the Bankruptcy Code or any
      successor statute, the prevailing party shall be entitled to such sum as the
      court may adjudge reasonable as attorneys’ fees in such suit, action or
      proceeding or upon any appeal from any judgment, order or decree entered
      therein. ****




**25.**  **Notices** . Any
      notice required or permitted herein or by applicable law shall be deemed
      properly given (a) when personally delivered (to the person designated below),
      (b) three (3) days following the date sent by United States Mail,
      certified or registered, postage prepaid, return receipt requested, (c) one
      (1)
      business day following the date sent by Federal Express or overnight United
      States Mail or other national overnight carrier, and addressed in each such
      case
      as set forth below, or (d) on the date sent by facsimile to the facsimile number
      set forth below during normal business hours (being 9:00 a.m. to 5:00 p.m.,
      local time of the party to which notice is sent) on any business day provided
      a
      copy is thereafter promptly sent by one other method set forth
      above:




TO
      SELLER:  CAMLU
      REAL ESTATE DEVELOPMENT


LIMITED
      PARTNERSHIP .


P.O.
      Box
      3285


Wenatchee,
      WA 98807-3285


Attn:
      Danny L. Campbell, General Partner


Fax:
      (509) 663-0461





With
      Copy
      to:  Powers
      & Therrien, P.S.


3502
      Tieton Drive


Yakima,
      WA 98902


Attn:
      Keith R. Therrien


Fax:
      (509) 453-0745





TO
      BUYER:  Emeritus
      Corporation


3131
      Elliott Avenue, #500


Seattle,
      WA 98121


Attn:
      Director of Real Estate Finance


Fax:
      206-301-4500





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          purchase sale agreemnt fort smith
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With
      copy
      to:  The
      Nathanson Group PLLC


1520
      Fourth Avenue, Sixth Floor


Seattle,
      WA 98101


Attn :
      Randi S. Nathanson


Fax:
      206-623-1738





Any
      party
      may change its address for notices under this Agreement by giving formal written
      notice to the other parties specifying that the purpose of the notice is to
      change the party’s address.




**26.**  **General
      Provisions**




**26.1**  **Unenforceability** . If any
      provision of this Agreement is held to be invalid, illegal or unenforceable
      in
      any respect, such invalidity, illegality or unenforceability shall not affect
      the remainder of such provision or any other provisions hereof.




**26.2**  **Amendment,
      Modification** . This
      Agreement may not be altered, amended, changed, waived, terminated or modified
      in any respect or particular unless the same shall be in writing and signed
      by
      or on behalf of the party to be charged therewith.




**26.3**  **Waiver** . Any
      party may, at any time or times, at its election, waive any of the conditions
      to
      its obligations hereunder, but any such waiver shall be effective only if
      contained in a writing signed by such party. No waiver shall reduce the rights
      and remedies of such party by reason of any breach of any other party. No waiver
      by any party of any breach hereunder shall be deemed a waiver of any other
      or
      subsequent breach.




**26.4**  **Facsimile
      Signatures** . Each
      party (a) has agreed to permit the use, from time to time and where appropriate,
      of telecopied signatures in order to expedite the transaction contemplated
      by
      this Agreement, (b) intends to be bound by its respective telecopied signature,
      (c) is aware that the other will rely on the telecopied signature, and (d)
      acknowledges such reliance and waives any defenses to the enforcement of the
      documents contemplated by this Agreement that are based on the fact that a
      signature was sent by telecopy.




**26.5**  **Delivery
      of Possession** . Possession of the Property shall be delivered to Buyer on the Closing Date
      subject to the rights of third parties under the Assumed Leases and Assumed
      Contracts and the Permitted Exceptions.




**26.6**  **Entire
      Agreement** . This
      Agreement constitutes the entire agreement among the parties with respect to
      the
      subject matter hereof and supersedes any prior agreements, written or oral,
      express or implied, and all negotiations or discussions of the parties, whether
      oral or written, and there are no warranties, representations or agreements
      among the parties in connection with the subject mater hereof except as set
      forth herein.




**26.7**  **Governing
      Law** . **** This
      Agreement shall, in all respects, be governed, construed, applied and enforced
      in accordance with the laws of the State of Arkansas.




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          purchase sale agreemnt fort smith
 31


**26.8**  **Headings** . The
      article, Section or paragraph headings in this Agreement are intended
      solely for convenience of reference and shall be given no effect in the
      construction or interpretation of this Agreement.




**26.9**  **Counterparts** . This
      Agreement may be executed in two (2) or more counterparts, and by facsimile
      transmission, each of which shall be deemed an original, but all of which
      together shall be considered one and the same agreement. If this Agreement
      is
      executed via facsimile transmission, the party so executing this Agreement
      shall
      forward an original executed document to the other party within five (5) days
      of
      such execution.




**26.10**  **Interpretation,
      No Presumption** . **** It
      is
      acknowledged by the parties that this Agreement has undergone several drafts
      with the negotiated suggestions of both and therefore no presumptions shall
      arise favoring either party by virtue of the authorship of any of its
      provisions.




**26.11**  **Incorporation
      of Recitals** . **** The
      recitals are incorporated in the body of this Agreement as if set forth at
      length.




**26.12**  **Time
      of the Essence** . All of
      the terms and conditions of this Agreement and the time for performance of
      the
      parties hereunder are of the essence of this Agreement.




**26.13**  **Exhibits** . **** The
      exhibits referred to herein and attached hereto are hereby incorporated into
      this Agreement wherever reference is made to them to the same extent as if
      the
      same were set out in full at the point at which such reference is
      made.




**26.14**  **Business
      Days** .
      All
      references to days herein shall be deemed to refer to calendar days unless
      otherwise specified. In the event that the final date for performance of any
      act
      required by this Agreement falls on a Saturday, Sunday, or legal holiday, such
      act may be performed on the next day which is not a Saturday, Sunday, or legal
      holiday.




**26.15**  **Successors** .
      The
      terms of this Agreement shall be binding upon and inure to the benefit of and
      be
      enforceable by and against the heirs, successors and assigns of the parties
      hereto. Neither party shall be entitled to assign its rights or delegate its
      obligations hereunder without the other party’s prior written consent, provided,
      however, that Buyer shall have the right in connection with Buyer’s financing of
      the transaction provided for herein to assign this Agreement on written notice
      to, but without the prior written consent of, Seller to an entity owned or
      controlled by Buyer or to a real estate investment trust (“REIT”) or to an
      entity owned or controlled by a REIT; provided, however, no such assignment
      shall relieve Buyer of its obligations hereunder until Closing; provided,
      further, that the representations and warranties of Seller shall not be
      assignable to any such REIT or other person or entity but the right to enforce
      the same shall remain with Buyer.




**26.16**  **Attorneys’
      Fees** In
      the
      event of litigation or other proceedings involving the parties to this Agreement
      to enforce any provision of this Agreement, to enforce any remedy available
      upon
      default under this Agreement, or seeking a declaration of the rights of either
      party under this Agreement, the prevailing party shall be entitled to recover
      from the other such reasonable attorneys’ fees and costs as may be actually
      incurred, including its costs and fees on appeal.




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          purchase sale agreemnt fort smith
 32


**26.17**  **Waiver
      of Jury Trial** .
      EACH OF
      THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES, TO THE
      FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY IN ANY LEGAL ACTION
      BROUGHT ON OR WITH RESPECT TO THIS AGREEMENT, INCLUDING TO ENFORCE OR DEFEND
      ANY
      RIGHTS HEREUNDER AND AGREES THAT ANY SUCH ACTION SHALL BE TRIED BEFORE A COURT
      AND NOT BEFORE A JURY. DRAFTING NOTE: WE HAVE NOT DELETED THIS PROVISION AS
      REQUESTED BY SELLER AS WE BELIEVE IT IS APPROPRIATE AND COMMERCIALLY
      REASONABLE.




**26.18**  **Third
      Party Beneficiary** .
      Nothing
      in this Agreement express or implied is intended to and shall not be construed
      to confer upon or create in any person (other than the parties hereto and,
      subject to the limitations set forth in Section 26.16, their permitted
      successors and assigns) any rights or remedies under or by reason of this
      Agreement, including without limitation, any right to enforce this
      Agreement.




**27.**  **Joint
      Escrow Instructions** . This
      Agreement shall constitute joint escrow instructions to Escrow Agent. In
      addition, the parties shall execute and be bound by such reasonable and
      customary escrow instructions as may be necessary or reasonably required by
      Escrow Agent or by either party in order to consummate the purchase and sale,
      provided that such escrow instructions are consistent with the terms hereof.
      The
      parties designate Escrow Agent as the “Reporting Person” for this transaction
      pursuant to Section 6045(e) of the Internal Revenue Code of 1986, as
      amended, and the regulations hereunder.




**28.**  **1031
      Exchange Provisions** .
      Either
      party hereto may desire to structure the acquisition or disposition of the
      Property as an exchange transaction within the meaning of Section 1031 of
      the Internal Revenue Code of 1986. Each party will cooperate with the other
      to
      enable Buyer or Seller, as the case may be, to accomplish an exchange, provided
      that neither Buyer nor Seller shall be obligated to incur any additional cost
      or
      liability as party of such exchange, nor shall the Closing be delayed. Neither
      Seller’s or Buyer’s obligations to close shall not in any event be contingent
      upon Seller or Buyer’s ability to sell or acquire the Property as part of an
      exchange transaction.




**29.**  **Brokers** . Seller
      and Buyer each represent, covenant, and warrant to the other that each has
      employed no other broker or finder in connection with the transaction
      contemplated herein. Seller agrees to indemnify and hold Buyer harmless from
      and
      against all liability, claims, demands, damages or costs of any kind, including
      attorneys’ fees, arising from or connected with any broker’s commission or
      finder’s fee or commission or charge claimed to be due any person arising from
      Seller’s conduct with respect to this transaction. Buyer agrees to indemnify and
      hold Seller harmless from and against all liability, claims, demands, damages
      or
      costs of any kind, including attorneys’ fees, arising from or connected with any
      broker’s commission or finder’s fee or commission or charge claimed to be due
      any person arising from Buyer’s conduct with respect to this
      transaction.







Remainder
      of Page Intentionally Left Blank


***Signatures
      on Following Page***








Ex-10.86.1
          purchase sale agreemnt fort smith
 33


Executed
      the day and year first above written.





**SELLER:** **BUYER:**





CAMLU
      REAL
      ESTATE DEVELOPMENT EMERITUS
      CORPORATION,


LIMITED
      PARTNERSHIP, a Nevada


limited
      partnership,








By:  /s/
        Danny
        L. Campbell  By: /s/
        William M. Shorten
 Danny
        L.
        Campbell  Its: William
        M. Shorten
 A
        General
        Partner  Director
        of Real Estate Finance





Ex-10.86.1
          purchase sale agreemnt fort smith


**REVISED
      7-22-05**


**EXHIBIT
      LIST**









A   Wildflower
      Real Property Description




B   Trillium
      Park Real Property Description




1.1(a)   Legal
      Description (Willow Brook)




1.1(b)   Personal
      Property List




1.2(b)   Corporate
      Assets and Other Excluded Assets




2.2   Allocation
      of Purchase Price




6   Due
      Diligence Materials




8   List
      of
      All Contracts and Leases




9(e)   Exceptions
      to No Conflict Representation




9(f)   Exceptions
      to Litigation Representation




9(g)   Exceptions
      to Violation of Law Representation




9(h)   Exceptions
      to Environmental Representation




9(l)   Exceptions
      to Title Representation




9(m)   Operating
      Licenses and Certificates




9(n)   Exceptions
      to Condition and Adequacy of Assets Representation




9(o)   Financial
      Statements




9(p)   Census
      Reports




9(q)   Exceptions
      to Absence of Material Change Representation




9(t)   Employee
      Information




9(u)   Resident
      Trust Fund Information




9(v)   Exceptions
      to Records Representation




9(w)   Exceptions
      to Medicare and Medicaid Representation




Ex-10.86.1
          purchase sale agreemnt fort smith


11(n)   Third
      Party Consents




15(b)(i)(1)  Form
      of
      Limited Warranty Deed




15(b)(i)(2)  Form
      of
      Bill of Sale




15(b)(i)(3)  Form
      of
      Assignment/Assumption of Assumed Leases & Assumed Contracts




15(b)(i)(4)  Nonforeign
      Status Affidavit




15(d)   Notice
      Letter to Residents




Ex-10.86.1
          purchase sale agreemnt fort smith







**Exhibit
      A**




**Wildflower
      Real Property Description**




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          purchase sale agreemnt fort smith


**Exhibit
      B**




**Trillium
      Park Real Property Description**




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**Exhibit
      1.1(a)**




**Legal
      (Willow Brook)**




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          purchase sale agreemnt fort smith


**Exhibit
      1.1(b)**




**Personal
      Property List**




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**Exhibit
      1.2(b)**




**Corporate
      Assets and Other Excluded Assets**




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          purchase sale agreemnt fort smith


**Exhibit
      2.2**




**Allocation
      of Purchase Price**




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          purchase sale agreemnt fort smith


**Exhibit
      6**




**Due
      Diligence Materials**




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**Exhibit
      8**




**List
      of All Contracts and Leases**




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**Exhibit
      9(e)**




**Exceptions
      to No Conflict Representation**




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          purchase sale agreemnt fort smith


**Exhibit
      9(f)**




**Exceptions
      to Litigation Representation**




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          purchase sale agreemnt fort smith


**Exhibit
      9(g)**




**Exceptions
      to Violation of Law Representation**




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          purchase sale agreemnt fort smith


**Exhibit
      9(h)**




**Exceptions
      to Environmental Representation**




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          purchase sale agreemnt fort smith


**Exhibit
      9(l)**




**Exceptions
      to Title Representation**




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**Exhibit
      9(m)**




**Operating
      Licenses and Certificates**




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          purchase sale agreemnt fort smith


**Exhibit
      9(n)**




**Exceptions
      to Condition and Adequacy of Assets Representation**




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          purchase sale agreemnt fort smith


**Exhibit
      9(o)**




**Financial
      Statements**




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**Exhibit
      9(p)**




**Census
      Reports**




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**Exhibit
      9(q)**




**Exceptions
      to Absence of Material Change Representation**




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          purchase sale agreemnt fort smith


**Exhibit
      9(t)**




**Employee
      Information**




Ex-10.86.1
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**Exhibit
      9(u)**




**Resident
      Trust Fund Information**




Ex-10.86.1
          purchase sale agreemnt fort smith


**Exhibit
      9(v)**




**Exceptions
      to Records Representation**




Ex-10.86.1
          purchase sale agreemnt fort smith


**Exhibit
      9(w)**




**Exceptions
      to Medicare and Medicaid Representation**




Ex-10.86.1
          purchase sale agreemnt fort smith


**Exhibit
      11(n)**




**Third
      Party Consents**




Ex-10.86.1
          purchase sale agreemnt fort smith


**Exhibit
      15(b)(i)(1)**




**Form
      of Limited Warranty Deed**




Ex-10.86.1
          purchase sale agreemnt fort smith


**Exhibit
      15(b)(i)(2)**




**Form
      of Bill of Sale**




Ex-10.86.1
          purchase sale agreemnt fort smith


**Exhibit
      15(b)(i)(3)**




**Form
      of Assignment/Assumption of Assumed Leases & Assumed
      Contracts**




Ex-10.86.1
          purchase sale agreemnt fort smith


**Exhibit
      15(b)(i)(4)**




**Nonforeign
      Status Affidavit**




Ex-10.86.1
          purchase sale agreemnt fort smith


**Exhibit
      15(d)**




**Notice
      Letter to Residents**










Ex-10.86.1
          purchase sale agreemnt fort smith