<PAGE>

                                                                   EXHIBIT 10.16

                           PURCHASE OPTION AGREEMENT

     THIS AGREEMENT is made as of the 1st day of December, 1999, by and between
CENTENNIAL HEALTHCARE MANAGEMENT CORPORATION ("CHMC") and CYPRESS INVESTORS LLC
("Cypress Investors"), DOLPHINS VIEW INVESTORS LLC ("Dolphins View Investors"),
HILLTOP MANOR INVESTORS LLC ("Hilltop Investors"), KANNAPOLIS INVESTORS LLC
("Kannapolis Investors"), and MATHER INVESTORS LLC ("Mather Investors"; Cypress
Investors, Dolphins View Investors, Hilltop Investors, Kannapolis Investors and
Mather Investors are sometimes hereinafter collectively referred to as "Owner").

                             W I T N E S S E T H:



     WHEREAS, CHMC manages on behalf of Cypress Investors that certain 63 bed
nursing center known as Cypress Manor Health and Rehabilitation Center ("Cypress
Manor") pursuant to a Long Term Care Facility Management Agreement dated as of
December 1, 1999; and

      WHEREAS, CHMC manages on behalf of Dolphins View Investors that certain 58
bed nursing center known as The Health and Rehabilitation Centre at Dolphins
View ("Dolphins View") pursuant to a Long Term Care Facility Management
Agreement dated as of December 1, 1999; and

     WHEREAS, CHMC manages on behalf of Hilltop Investors that certain 118 bed
nursing center known as Hilltop Manor Health Care Center ("Hilltop Manor")
pursuant to a Long Term Care Facility Management Agreement dated as of December
1, 1999; and

     WHEREAS, CHMC manages on behalf of Kannapolis Investors that certain 117
bed nursing center knows as THS of Kannapolis ("Kannapolis") pursuant to a Long
Term Care Facility Management Agreement dated as of December 1, 1999; and

     WHEREAS, CHMC manages on behalf of Mather Investors that certain 122 bed
nursing center known as Mather Nursing Center ("Mather") pursuant to a Long Term
Care Facility Management Agreement dated as of December 1, 1999; and

     WHEREAS, Owner has agreed to grant to CHMC or its affiliates a right to
purchase Cypress Manor, Dolphins View, Hilltop Manor, Kannapolis and Mather
(Cypress Manor, Dolphins View, Hilltop Manor, Kannapolis and Mather collectively
referred to as the "Properties") pursuant to the terms of this Agreement;

     NOW, THEREFORE, in consideration of the covenants, conditions and promises
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties do hereby agree as
follows:

      1. Option to Purchase.  Owner hereby grants and conveys to CHMC for the
term hereof an exclusive and irrevocable option (the "Option") to purchase all
of the Properties upon the terms and conditions contained in this Agreement.

      2. Term and Exercise of the Option. The term of the Option shall commence
on December 1, 2000 and shall terminate at midnight, Eastern Standard Time on
December 1, 2005. CHMC may exercise the Option only during its term and only by
delivery of written notice to Owner at the address set forth below. In the event
that the Option is exercised, the closing shall take place at such time as set
out in the notice of exercise of the Option at the offices of CHMC or such other
place as agreed by the parties. Upon exercise of the Option, Owner and CHMC
shall enter into a Purchase and Sale Agreement substantially in the form
<PAGE>

attached hereto as Exhibit "A".

      3. Purchase Price. The total purchase price (hereinafter referred to as
the "Purchase Price") of the Properties shall be that amount equal to Owner's
basis in the Properties, being Owner's total acquisition costs of the
Properties, capital improvements, loan fees, closing costs and expenses and any
other costs related to Owner's acquisition of the Properties. The Purchase Price
shall increase by an amount equal to four percent (4%) per annum from December
1, 1999 until the date of closing; provided, however, that if CHMC exercises the
Option prior to December 1, 2001, the Purchase Price shall be increased by eight
percent (8%). The Purchase Price shall be paid in cash at closing, subject to
adjustments contained herein. CHMC shall pay all cost of closing of its
acquisition of the Properties, the intention being that Owner will receive an
annual return of four percent (4%) on its investment in the Properties.

      4. Notices. All notices, demands or requests required or permitted to be
given pursuant to this Agreement shall be in writing and should be deemed to
have been properly given or served and shall be effective upon being deposited
in the United States mail, postpaid and registered or certified with return
receipt requested, provided, however, the time period in which a response to any
notice, demand or request must be given shall commence on the date of receipt by
the addressee thereof. Rejection or other refusal to accept or inability to
deliver because of changed address of which no notice has been given shall
constitute receipt of the notice, demand or request sent. Any such notice,
demand or request shall be sent to the following addresses:

       To Owner:   c/o Five Star Healthcare Properties, LLC
                   400 Perimeter Center Terrace, Suite 650
                   Atlanta, Georgia  30346
                   Attention:  Alan Dahl

       To CHMC:    Centennial HealthCare Management Corporation
                   400 Perimeter Center Terrace, Suite 650
                   Atlanta, Georgia  30346
                   Attention:  Daryl R. Griswold

      5.  Miscellaneous.

         (a) Time is of the essence of this Agreement.

         (b) This Agreement should be governed by and construed in accordance
with the laws of the State of Georgia.

         (c) This Agreement may be executed in several counterparts, each of
which shall be deemed an original and all of which counterparts together shall
constitute one and the same instrument.

         (d) Should any provision of this Agreement require judicial
interpretation, it is agreed that the court interpreting or construing the same
shall not apply a presumption that the terms hereof shall be more strictly
construed against one party by reason of the rule of construction that a
document is to be construed more strictly against the party who itself or
through its agent prepared the same, it being agreed that the agents of all
parties have participated in the preparation hereof.

         (e) This Agreement supersedes all prior discussions and agreements
between Seller and Purchaser with respect to the conveyance of the Property and
all other matters contained herein and constitutes the sole and entire agreement
between Seller and Purchaser with respect thereto. This Agreement may not be
modified or amended unless such amendment is set forth in writing and signed by
<PAGE>

both Seller and Purchaser.

         (f) This Agreement shall apply to, inure to the benefit of and be
binding upon and enforceable against Seller and Purchaser and their respective
heirs, legal representatives, successors and assigns, as the case may be. CHMC
may assigns its rights under this Agreement to any affiliated entity without the
consent of Owner.

     IN WITNESS WHEREOF, the parties have executed this Agreement under seal as
to the date first above written.

                             OWNER:

                             Cypress Investors, LLC

                               By:  Five Star Healthcare Properties, LLC
                               Its:   Sole Member

                               By:  Southeast Capital, LLC


                                 By:  /s/ Alan C. Dahl
                                      ---------------------
                                      Alan C. Dahl, Member



                             Dolphins View Investors, LLC
                               By:  Five Star Healthcare Properties, LLC
                               Its:   Sole Member

                               By:  Southeast Capital, LLC


                                 By:  /s/ Alan C. Dahl
                                      ---------------------
                                      Alan C. Dahl, Member


                             Hilltop Manor Investors, LLC
                               By:  Five Star Healthcare Properties, LLC
                               Its:   Sole Member

                               By:  Southeast Capital, LLC


                                 By:  /s/ Alan C. Dahl
                                      ---------------------
                                      Alan C. Dahl, Member



                             Kannapolis Investors, LLC
                               By:  Five Star Healthcare Properties, LLC
                               Its:   Sole Member

                               By:  Southeast Capital, LLC


                                 By:  /s/ Alan C. Dahl
                                      ---------------------
                                      Alan C. Dahl, Member
<PAGE>

                             Mather Investors, LLC
                               By:  Five Star Healthcare Properties, LLC
                               Its:   Sole Member

                               By:  Southeast Capital, LLC


                                 By:  /s/ Alan C. Dahl
                                      ---------------------
                                      Alan C. Dahl, Member



                             Centennial HealthCare Management Corporation

                                 By:  /s/ Kent C. Fosha, Sr.
                                      ------------------------------
                                      Kent C. Fosha, Sr., President
<PAGE>

                                  EXHIBIT "A"

                          PURCHASE AND SALE AGREEMENT

     THIS PURCHASE AND SALE AGREEMENT (the "Agreement"), made and entered into
as of this ___ day of ___________, 200___, by and between [_____________], LLC,
a Georgia limited liability company ("Seller"), and Centennial HealthCare
Management Corporation, a Georgia corporation ("Purchaser").

                        W I T N E S S E T H:
                        - - - - - - - - - -

     WHEREAS, Seller has right, title and interest in and to real and personal
property comprising a ____-bed facility known as ______________________________
located at ___________________________ (such real property and personal property
and the business conducted thereon are hereinafter referred to as the
"Facility"); and

     WHEREAS, Seller wishes to sell all of its right, title and interest in and
to the Facility, including the business thereof, to Purchaser and Purchaser
wishes to buy all of Seller's right, title and interest in and to the Facility,
subject to and upon the terms and conditions herein set forth.

     NOW, THEREFORE, in consideration of the premises, the mutual covenants
herein contained, and other good and valuable consideration, the receipt,
adequacy, and sufficiency of which are hereby acknowledged, Seller and Purchaser
hereby agree as follows:

SECTION 1.  PURCHASE AND SALE; ASSIGNMENT.

     Upon the terms and conditions set forth herein, Seller shall sell to
Purchaser and Purchaser shall purchase from Seller all of Seller's right, title
and interest in and to the following:
<PAGE>

         (a) All of those certain tracts or parcels of real property situated at
     ____________ _____________________________, TOGETHER WITH all and singular
     appurtenances now or hereafter belonging thereto, being more particularly
     described in Exhibit "A" attached hereto and by reference made a part
     hereof, and being hereinafter referred to as the "Land"; TOGETHER WITH all
     the improvements and appurtenances thereon situated, and all fixtures and
     furniture attached thereto or appurtenant thereto and used in connection
     therewith, consisting, without limitation, of the Facility, all of which
     conforms with the licenses granted, all plumbing, heating, lighting and
     cooking fixtures, air conditioning fixtures and units, ranges,
     refrigerators, dishwashers, disposals, trash mashers, hot water heaters and
     equipment, boilers, bathroom and kitchen cabinets, antennae, and to the
     extent located on the Land, mantels, door mirrors, venetian blinds, shades,
     drapes, screens, awnings, window boxes, storm doors, ice makers, mail
     boxes, weather vanes, flagpoles, pumps, shrubbery, outdoor statuary,
     carpeting, and licenses and permits (said Land, improvements,
     appurtenances, fixtures and property at the Facility being hereinafter
     collectively referred to as the "Real Property"), TOGETHER WITH all right,
     title and interest, if any, of Seller in and to any land lying in the bed
     of any street, road or avenue, open or proposed, in front of or adjoining
     said Land to the center line thereof, and together with all right, title
     and interest of Seller in and to any award made or to be made in lieu
     thereof, and in and to any unpaid award for damage to said Land by reason
     of change of grade of any street; together with all right, title and
     interest of Seller in and to any award made or to be made in lieu thereof,
     together with all right, title and interest of Seller to the use of strips
     and rights-of-way abutting or adjoining said Land, if any; and

         (b) All licenses and permits (to the extent transferable), equipment,
     furniture, furnishings, fixtures, inventory, supplies and all other
     personal property located on the Real Property or used in connection with
     the business of the Facility as going concerns and with the operation of
     the Facility located thereon, including without limitation all of those
     items of personal property set forth and described in Exhibit "B" attached
     hereto (such personal property is hereinafter referred to as the "Personal
     Property") but excluding personal property set forth and described in
     Exhibit "C" attached hereto (the "Excluded Property").

SECTION 2.  PURCHASE PRICE AND FINANCING.

     2.01. Purchase Price. The purchase price payable by Purchaser to Seller
shall be ___________________ DOLLARS ($________________), plus the net balance
of the accounts outstanding receivable for the Facility. The purchase price
shall be payable all cash at Closing.

     2.02. Compliance with Section 1060 of the Internal Revenue Code. Seller and
Purchaser agree that Exhibit "D", in which the parties have allocated the
Purchase Price among the assets purchased, has been jointly prepared by the
parties hereto. The parties agree that they shall fully comply with the
requirements of Section 1060 of the Internal Revenue Code of 1986, as amended,
and the regulations promulgated thereunder, relating to allocation rules for
certain applicable asset acquisitions, and the parties further agree to use
Exhibit "D" as the basis for completing Form 8594 entitled "Asset Acquisition
Statement Under Section 1060," which they shall both file on a timely basis with
the Internal Revenue Service.
<PAGE>

SECTION 3.  SELLER'S REPRESENTATIONS, WARRANTIES AND COVENANTS.

     As used in this Section and elsewhere in this Agreement the following terms
shall have the following meanings:

         "Knowledge of Seller" or "Seller's Knowledge" shall mean the actual
     knowledge of Seller and the actual knowledge of any general partner of
     Seller.

         "Knowledge of Purchaser" or "Purchaser's Knowledge" shall mean the
     actual knowledge of any member or manager of the Purchaser.

         "Material" or "Materially," when used with reference to any claim,
     obligation, event, omission or other development, shall mean a claim,
     obligation, event, omission or other development having a value or
     potential financial impact in excess of $25,000.00, provided, however, that
     the total value of all claims, obligations, events, omissions or other
     developments deemed not to be Material pursuant to this definition shall
     not exceed $100,000.00.

     Seller hereby makes the following representations, warranties and covenants
to Purchaser, each of which shall be deemed to be Material to the transactions
contemplated by this Agreement:

     3.01. Condition of Facility. To Seller's Knowledge, upon Closing, the
Facility will be in good condition, comparable, in all Material respects, to the
condition existing on the date of this Agreement, ordinary wear and tear
excepted. Except as may be disclosed in Exhibit "E", to Seller's Knowledge the
heating, air conditioning, sewer, plumbing, antennae, and electrical systems in
or relating to the Facility are in good working order in all Material respects,
the painted walls, window treatments, interior and exterior doors, plumbing,
roofs and carpeting of all of the buildings of the Facility are in good repair
in all Material respects and each building of the Facility is free from damage
by termite and insect infestations and the structural supports and members of
all buildings are sound and in good repair in all Material respects. There are
no latent defects in or to the Facility or any portion thereof of which Seller
has been notified. Upon the request of Purchaser, Seller will provide
information in its possession concerning the age of items described above.
Seller shall not remove any item of Personal Property from the Facility prior to
the Closing, except for the purpose of repair or replacement or in the ordinary
course of business, and any such item or its replacement, as the case may be,
shall be included in this transaction.

     3.02. List of Patients. Seller will provide to Purchaser at the Facility a
schedule setting forth the name of each patient of the Facility, the status of
payment or level of care of each patient, and an accounting of security deposits
and patient funds, which accounting is true, complete and correct in all
Material respects. To Seller's Knowledge, the Facility's accounting of patient
funds, which accounting is maintained as a ledger book in the offices of the
Facility, is true, correct and complete in all Material respects, subject to
routine periods for posting of transactions and is available for inspection by
Purchaser in accordance with Section 8 hereof.

     3.03. Financial Statements and Costs Reports. Seller has provided to
Purchaser copies of the following financial statements of the Facility: (i)
unaudited balance sheets as of the end of the Facility last two (2) fiscal years
which, in all Material respects, are true, complete and correct and accurately
reflect the financial condition of the Facility at the respective dates on such
balance sheets; and (ii) unaudited statements of operations for the Facility's
last two (2) fiscal years which, in all Material respects, are true, complete
and correct and accurately reflect its operations during such periods. Seller
will also provide to Purchaser copies of all cost reports and any audits of cost
reports under either Medicare or Medicaid for the two (2) years prior to the
<PAGE>

date hereof for the Facility, the Medicaid rate sheets for the last two (2)
years, and trial balances for the Facility for the year ended December 31, 1998.
Seller shall make available to Purchaser upon Purchaser's request any and all
unaudited balance sheets and statements of operations provided to them from a
comptroller's office and or Medicare intermediary and any internal accounting
working papers of the Seller used in preparing the above-referenced balance
sheets and statements of operations for the Facility. Except as set forth on
Exhibit "F", there have been no Material adverse changes in the financial
condition, business or properties of the Facility since their most recent fiscal
year end. Seller shall make available to Purchaser upon Purchaser's request all
internal accounting working papers prepared during the annual financial reviews
of the Facility for the last two (2) fiscal years and the current fiscal year.

     3.04. Agreements, Contracts and Commitments. Seller has provided to
Purchaser at the Facility a list of all contracts and agreements with respect to
laundry Facility, food services, equipment, furniture, medical equipment,
management, grounds maintenance and other services of the Facility which require
more than 31 days notice for cancellation without penalty. Seller shall not
renew or extend any such contracts without Purchaser's consent, which shall not
be unreasonably withheld; provided, however, that Seller may in the ordinary
course of business renew without Purchaser's consent any contract involving an
amount which, when combined with amounts payable under all other contracts which
are renewed without Purchaser's consent, is not in excess of $5,000. Purchaser
shall assume the listed contracts and agreements or shall cause Seller to
terminate such contracts and agreements before Closing in accordance with
Purchaser's instructions to Seller on or before Closing. Seller shall use its
reasonable efforts to keep all insurance policies or renewals thereof
("Policies") affecting or covering the Facility and their operations in force
and effect up to and including the date of the Closing unless the reason for
such Policies ceases or such Policies are replaced in the ordinary course of
business. Seller shall deliver to Purchaser true and correct copies of all such
Policies in Seller's possession.

     3.05. Discharge of Obligations. Except as may be disclosed in Exhibit "F",
to Seller's Knowledge, Seller has carried out, performed and complied with all
obligations imposed on Seller under any admission agreements, agreements with
patients or agreements with others.

     3.06. Occupancy. To Seller's Knowledge, at the time of this Agreement, the
Facility has existing valid agreements with the patients occupying the Facility.

     3.07. No Rebates or Allowances. Except as may be disclosed in Exhibit "G",
to Seller's Knowledge, none of the patients of the Facility have been given any
concession or consideration for the rental of any patient room, and none of the
patients of the Facility are entitled hereafter to any concessions, rebates,
and/or allowances of free occupancy for any period after the Closing.

     3.08. Repair Requirements. To Seller's Knowledge, there are no outstanding
requirements or recommendations by any mortgagee or any insurance company,
requiring or recommending any repairs or work to be done on the Facility.

    3.09. Litigation. Except as may be disclosed in Exhibit "G", to Seller's
Knowledge, there is no litigation or proceeding pending or threatened, other
than as normal or customary in the health care industry, which would Materially
adversely affect all or any part of the Facility, their assets, property or
business, and Seller has no reasonable grounds to know of any basis for any such
action.

    3.10. No Condemnation Proceedings. To Seller's Knowledge, there are no
<PAGE>

pending or threatened condemnation or eminent domain proceedings which would
Materially adversely affect all or any part of the Facility.

     3.11. Access Public Improvements. Except as may be disclosed in Exhibit
"G", to Seller's Knowledge, all curb cut and street opening permits or licenses
required for vehicular access to and from the Facility over presently existing
roads and driveways have been obtained and paid for and shall be in full force
and effect at the time of Closing. To Seller's Knowledge, no assessments for
public improvements have been made against the Facility which remain unpaid,
including, without limitation, those for construction of sewer and water lines
and mains, streets, sidewalks and curbs. To Seller's Knowledge, there are no
public improvements which have been ordered to be made and/or which have not
hereto been completed, assessed and paid.

     3.12. No Liens Against Personal Property. Except as may be disclosed in
Exhibit "G", all fixtures and articles of Personal Property included in this
sale at Closing will be owned by Seller, free and clear of any conditional bills
of sale, chattel mortgages, security agreements, financing statements, other
security interests, liens or encumbrances of any kind, except for any personal
property taxes (ad valorem), which are liens not yet due and payable.

     3.13. Compliance with Facility Laws. Except as may be disclosed in Exhibit
"G", to Seller's Knowledge the Facility, including without limitation, the
buildings and improvements included thereon, shall be, at the Closing Date, in
compliance in all Material respects with all laws, ordinances, codes,
regulations and requirements of the State of Florida and any political
subdivision or agency thereof, and the federal government and any political
subdivision or agency thereof, concerning and applicable to licensing of nursing
care facilities, together with such other laws, ordinances, codes, regulations
and requirements concerning and applicable to buildings and the Facility
generally, as shown by the licenses previously issued to the Seller, or its
predecessor, by the State of Florida or any other state or federal government or
political subdivision or agency thereof. The Facility is fully licensed by the
State of Florida and in good standing as healthcare providers under the Medicaid
and Medicare programs, as both programs are administered by the federal
government and the State of Florida. The Medicare and Medicaid cost reports for
the last two (2) fiscal years and the current portion of this fiscal year are
true and correct in all Material respects except as may be disclosed in
Exhibit "G".

     3.14. Leased Property. Seller does not lease any personal property,
equipment or fixtures used in the business conducted at the Facility, except as
may be disclosed in Exhibit "G", or as may have been leased by Seller pursuant
to that certain power of attorney granted by Seller to Centennial HealthCare
Management Corporation.

     3.15. Status of Land; Environmental Standards. To Seller's Knowledge, the
Land is legally occupied by the Facility and has been approved by all
governmental authorities having jurisdiction, and all approvals, permits and
certificates required to occupy and operate the Facility have been obtained. To
the Knowledge of Seller, the present use of the Land is in compliance in all
Material respects with all applicable zoning ordinances, building codes, fire
codes, life safety codes, or health department ordinances pertaining thereto,
except as may be disclosed in Exhibit "G". Seller has not received notice that
the Facility is not in compliance with all federal, state and local laws and
ordinances relating to clean air, water, waste disposal, toxic substances and
other environmental regulations. Seller has not received notice that the
Facility is not in compliance with all laws and ordinances relating to
occupational health and safety. To Seller's Knowledge, during the period of
Seller's ownership of the Facility, Seller has not caused or permitted the
Facility to be used to generate, manufacture, refine, transport, treat, store,
<PAGE>

handle, dispose, transfer, produce or process Hazardous Substances (as
hereinafter defined), or other dangerous or toxic substances, or solid waste,
except in compliance with all applicable federal, state, and local laws or
regulations or except for Hazardous Substances in non-reportable quantities. To
Seller's Knowledge, during the period of Seller's ownership of the Facility
there has been no Release (as hereafter defined) of any Hazardous Substances on
or off-site of the Facility. As used herein, (a) "Hazardous Substances" include
any pollutants, dangerous substances, toxic substances, hazardous wastes,
hazardous materials, or hazardous substances as defined in or pursuant to the
Resource Conservation and Recovery Act (42 U.S.C. Section 6901, et seq.) as
amended, the Comprehensive Environmental Response, Compensation and Liability
Act (42 U.S.C. Section 9601, et seq.) as amended, the Clean Water Act (33 U.S.C.
Section 1251, et seq.) as amended, or any other federal, state or local
environmental law, ordinance, rule or regulation, and (b) "Release" means
releasing, spilling, leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, disposing or dumping. Except as may be disclosed
by an environmental audit of the Facility, to Seller's Knowledge, there has not
been incorporated into the Facility and the Facility does not contain any
asbestos products, urea-formaldehyde, and other known building products which
may be harmful or injurious to human health or constitute Hazardous Substances.

     3.16. Compliance with Setback Requirements. Except as indicated on a survey
of the Real Property, to Seller's Knowledge, all of the improvements of the
Facility are located within the boundaries of the Land and comply with any
applicable zoning setback requirements unique to the Facility.

     3.17. No Management Agreements. Except for the management agreements
between Seller and Centennial HealthCare Management Corporation, which will be
canceled at or after Closing, there is now and will be no management contract
for the Facility at the time of Closing, except as Seller and Purchaser may
agree in writing.

     3.18. Union Agreements and Employee Relations. Except as may be disclosed
on Exhibit G, Seller is not a party to any union or collective bargaining
agreements, nor to the Knowledge of Seller, is there any pending or potential
attempt to unionize any of the employees of the Facility. To Seller's Knowledge,
during the period commencing two (2) years prior to the date hereof and ending
on the Closing Date, the employees of the Facility have not been the subject of
a union election. Seller will provide Purchaser copies of any grievances
received by Seller during the twelve month period immediately preceding the date
hereof.

     To Seller's Knowledge, prior to the period of Seller's ownership of the
Facility, there have been no strikes, lockouts, or other work stoppages,
picketing or labor disputes (other than the negotiation of existing union
contracts, if any, which shall not be deemed to be a labor dispute for purposes
of this Agreement) in which the Facility are or were involved, and, to Seller's
Knowledge, no event has transpired which has or will have a Material adverse
effect on the relationship between Seller and its employees at the Facility.
Seller will provide to Purchaser at the Facility the name and current annual
salary and other compensation or the rate of compensation payable by Seller to
each employee at the Facility and the profit-sharing, bonus or other form of
extra compensation paid or payable by Seller to or for the benefit of each such
person for the Facility's current fiscal year. There are no oral or written
contracts, agreements or arrangements obligating Seller to increase the
compensation or benefits paid or payable to any of its employees now or at any
future time.

     3.19. Real Property Taxes. The real estate and personal property tax
assessment on the Facility are as reflected on the real estate and personal
property tax bills for the Facility (the "Tax Bills") for 1998 and Seller will
<PAGE>

provide to Purchaser at the Facility evidence of the amount of taxes paid and
unpaid in connection with the Tax Bills.

     3.20. Utilities. Seller will provide to Purchaser at the Facility
information concerning the total amounts for the Facility of: (i) water and
sewer bills; (ii) gas bills; (iii) electric bills; (iv) garbage and trash
removal; and (v) repairs and maintenance.

     3.21. No Violations of Law. Seller has not received notice from any
governmental authority of any violation by or Materially adversely affecting the
Facility of any federal or state law or any municipal ordinance or order or
requirement of any governmental authority having jurisdiction over the Facility.
To Seller's Knowledge, there are no notices, suits or judgments relating to any
such violation, including without limitation, fire, zoning, life safety, air or
water pollution or health, food or drug code violations with respect to the
Facility.

     3.22. Maintenance of Business Operations, Employees and Goodwill. Seller
will cooperate with Purchaser to preserve and maintain the Facility's business
operations intact, use its reasonable efforts to keep available to Purchaser the
services of its present employees, with consideration for turnover in the
ordinary course of business, and preserve to the extent reasonably possible the
goodwill of the Facility's business.

     3.23. Inventories and Trade Payables. Seller currently maintains and shall
maintain as of the Closing Date, inventories and supplies reasonably sufficient
and adequate to satisfy state licensing requirements for the operation of the
Facility. All such inventories and supplies shall conform to trade standards for
marketable goods, subject to such spoilage, waste and obsolescence as is normal
in the Facility's ordinary course of business. At Closing, Seller shall certify
that there are no trade payables or other accounts payable incurred in
connection with the Facility, including payables for inventory, supplies and
other consumer goods in the ordinary course of the Facility's business, except
those incurred on Seller's behalf by Centennial HealthCare Management
Corporation as manager in the ordinary course of operations of the Facility (a
list of such payables shall be attached to a certificate furnished by Centennial
HealthCare Management Corporation at Closing). Any payables incurred by Seller
and not by Centennial HealthCare Management Corporation as manager of the
Facility, and any payables incurred by or on behalf of Seller which are not the
ordinary course of business shall be paid by Seller or from funds payable to
Seller at Closing.

     3.24. Organization of Seller. Seller is a limited partnership formed and in
existence under the laws of the State of Georgia and Seller has the power and
authority to own its properties and to carry on its business as and where such
business is now conducted.

     3.25. Due Authorization; No Default. The delivery and execution,
performance of this Agreement by Seller and all other agreements and instruments
to be executed by Seller in connection herewith or pursuant hereto and the
consummation of the sale contemplated hereby have been duly authorized by all
requisite action on the part of the general partner of Seller. When this
Agreement is executed and delivered by the general partners of Seller on behalf
of Seller, it shall constitute the legal, valid and binding obligation of
Seller. The transfer of Seller's right, title and interest in and to the
Facility to Purchaser will not violate in any Material respect any provision of
Seller's Amended and Restated Agreement of Limited Partnership ("Seller's
Partnership Agreement") or any laws governing Seller. Except as may be disclosed
in Exhibit "G", the execution, delivery or performance of this Agreement, or the
consummation of the transactions contemplated hereby, or compliance with any of
the terms or conditions hereof, will not result in the breach in any Material
<PAGE>

respect by Seller of any of the terms, conditions or provisions of any
agreements or instruments to which Seller is a party, or to which it or its
property is bound, or constitute a default in any Material respect under such
agreements or instruments.

     3.26. Consents. Except as set forth in Exhibit "G" and for the agencies and
departments of the State of Florida necessary to issue licenses to operate the
Facility and authorize Medicare and Medicaid reimbursements, there are no
persons whose consent is necessary in order for Seller to consummate the
transactions contemplated by this Agreement, including, without limitation, any
such persons who are:

         (a) the parties to any agreements to which the Seller is a party of or
     by which it is bound; and

         (b) any federal, state or local authorities or governmental regulatory
     agencies having jurisdiction over the Seller (except to the extent any
     licensing and Medicare/Medicaid reimbursement approval for the Facility is
     necessary).

     3.27. Notice as to Material Changes. Seller will promptly advise Purchaser
in writing of the occurrence of any Material events which come to the Knowledge
of Seller after the date of this Agreement and prior to Closing relating to any
of those matters which are the subject of the covenants, representations and
warranties of the Seller contained herein.

     3.28. Accuracy of Information. No representations, warranties or covenants
by Seller or its general partners, nor any statement, list or certificate
furnished or to be furnished to Purchaser pursuant hereto, or in connection with
the transactions contemplated hereby, contains or will contain any Materially
untrue statement of fact or omits or will omit to state a Material fact
necessary to make the statements contained therein not Materially misleading in
light of the circumstances under which they were made.

     3.29. Survival of Warranties and The Representations, Covenants.
warranties, representations and covenants of the Seller contained in this
Agreement shall be true and correct as of the Closing Date in all Material
respects with the same force and effect as if given and made on and as of the
date and time of Closing, and such representations, warranties and covenants
shall survive the Closing and the consummation of the transactions
contemplated this Agreement for the period set forth in Section 13.

SECTION 4. PURCHASER'S REPRESENTATIONS, WARRANTIES AND COVENANTS.

     Purchaser makes the following representations, warranties and covenants to
Seller, each of which shall be deemed to be Material to the transactions
contemplated by this Agreement.

     4.01. Organization of Purchaser. Purchaser is a limited liability company
formed and existing under the laws of the State of Georgia and is qualified to
do business in the State of Florida.

     4.02. Due Authorization and Authority. This Agreement and its execution,
delivery and performance, have been authorized by all requisite action on the
part of Purchaser. The performance of this Agreement by Purchaser will not
result in violation of Purchaser's Operating Agreement, or any Material contract
or commitment to which Purchaser is a party or by which it is bound or any law,
statute, ordinance, regulation or decree of any governmental, regulatory or
judicial body or entity. The members of Purchaser have full power and authority
to make, execute, deliver and perform this Agreement and the transactions
contemplated hereby on behalf of Purchaser, and the execution, delivery and
<PAGE>

performance of this Agreement and the transactions contemplated herein by the
Purchaser have been duly authorized by all necessary corporate action of
Purchaser. When this Agreement is executed and delivered by the members of
Purchaser on behalf of Purchaser, it shall constitute the legal, valid and
binding obligation of Purchaser.

     4.03. Litigation. To Purchaser's Knowledge, there is no litigation
proceeding pending, or threatened, against Purchaser in any court or before any
arbitration or governmental agency, domestic or foreign, which would Materially
adversely affect Purchaser's ability to perform its obligations under this
Agreement.

     4.04. No Default. Neither the execution or delivery of this Agreement or
any agreement required hereby to be executed by Purchaser nor the performance of
Purchaser in compliance with their terms shall:

         (a) Materially conflict with or result in a Material breach or
     constitute or result in a Material default under:

             (i) any judgment, order, injunction, statute, decree, regulation or
         ruling of any court or governmental authority, domestic or foreign,
         to which Purchaser is subject; and

             (ii) any Material agreement, contract, or legally binding
         commitment to which Purchaser is a party.

         (b) give to any person any rights of termination, cancellation or
     acceleration, in or with respect to any Material agreements, contracts,
     indentures or legally binding commitments by which Purchaser is bound; or

         (c) result in the creation or imposition of (or the obligation to
     create or impose) any Material lien, charge or encumbrance upon any of the
     property or assets of Purchaser pursuant to the terms of any indenture,
     mortgage, deed of trust, lease, agreement or other instrument to which
     Purchaser is a party or by which it may be bound.

     4.05. Accuracy of Information. To Purchaser's Knowledge, no representation,
warranty or covenant by Purchaser or its officers or directors, nor any
statement, list or certificate furnished or to be furnished to Seller pursuant
hereto, or in connection with the transactions contemplated hereby, contains or
will contain any Materially untrue statement of fact or omits or will omit to
state a Material fact necessary to make the statements contained therein not
Materially misleading in the light of the circumstances under which they were
made.

     4.06. Consents. Except for the agencies and departments of the State of
Florida necessary to issue licenses to operate the Facility and authorize
Medicare and Medicaid reimbursements, there are no persons whose consent is
necessary in order for Purchaser to consummate the transactions contemplated by
this Agreement, including, without limitation, any such persons who are:

         (a) the parties to any material agreements to which the Purchaser is a
     party of or by which it is bound; and

         (b) any federal, state or local governmental authorities or regulatory
     agencies having jurisdiction over the Purchaser (except to the extent any
     licensing and Medicare/Medicaid reimbursement approval for the Facility is
     necessary).

     4.07. Survival of Representations, Warranties and Covenants. The
warranties, representations and covenants of the Purchaser contained in this
<PAGE>

Agreement shall be true and correct in all Material respects as of the Closing
with the same force and effect as if given and made on and as of the date and
time of Closing, and such representations, warranties and covenants shall
survive the Closing and the consummation of the transactions contemplated by
this Agreement for the period set forth in Section 13.

SECTION 5.  CONVEYANCES AND TITLE.

     5.01. Assignment and Bill of Sale. At Closing, conveyance of all of
Seller's right, title and interest in and to the Real Property and the Personal
Property shall be by special warranty deed and assignment and bill of sale,
respectively. Good, marketable and insurable title to the Real Property and good
and marketable title to the Personal Property shall be conveyed from Seller to
Purchaser free and clear of all liens, claims, charges and encumbrances of any
kind, subject only to taxes for the current year, and those other liens, claims,
charges, encumbrances or objections, if any, set forth in Exhibit "H" attached
hereto and by reference made a part hereof (such other liens, claims, charges,
encumbrances or objections are hereinafter referred to as "Permitted Title
Exceptions").

     5.02. Title Defects. If examination of title reveals any legal defect to
title other than the Permitted Title Exceptions, Purchaser shall furnish Seller
with a written statement thereof on or before Closing and Seller shall have the
option to correct any legal defects, as set forth in Section 8.04.

     5.03. Non-Waiver of Title Objections. Notwithstanding anything stated to
the contrary in this Agreement, nothing herein shall be deemed to be a waiver by
Purchaser of any title objections which appear at or after Purchaser's title
examination, and Purchaser shall have the right to raise any such objections and
require that Seller cure the same prior to Closing as a condition of Purchaser's
obligation to proceed with the Closing.

     5.04. Prorations. The following items shall be adjusted on a pro rata basis
between Seller and Purchaser on the Closing Date:

         (a) General real estate taxes and other taxes and assessments related
     to the Facility;

         (b) Charges for electricity, gas, water, sewer and other utilities to
     be based on projections from most recent invoices or on recent meter
     readings, if actual invoices are not available;

         (c) All amounts due under the service contracts and other agreements
     accepted by Purchaser pursuant to the provisions of this Agreement;

         (d) Prepaid patient charges; and

         (e) Accrued and/or earned fringe benefits of all employees of the
     Facility, including without limitation vacation, sick pay or leave,
     retirement benefits, disability benefits and other employee benefits.

     5.05 Accounts Receivable. Seller shall transfer, convey and assign to
Purchaser at Closing all of Seller's right, title and interest in the accounts
receivable existing as of the Closing Date. Purchaser shall pay Seller the
outstanding balance of such accounts receivable, net of outstanding debt on such
accounts receivable and management fees due thereon. All payments received by
Seller from government agencies or other payors shall be remitted to Purchaser.

     5.06 Inventory. Seller shall transfer and convey to Purchaser at Closing
all of Seller's right, title and interest in the inventory at the Facility.
Purchaser shall pay Seller the value of such inventory at Closing.

<PAGE>

SECTION 6.  CLOSING.

     6.01. Place, Time and Date of Closing. The payments and deliveries
contemplated by this Agreement (other than the post-closing payments
contemplated by this Agreement) shall be made at the offices of Purchaser at
10:00 a.m., local time, on _____________, 200___, or at such other place, time
and date as Purchaser and Seller shall agree. The date on which the last of such
payments and deliveries occurs is the "Closing Date," and such payments and
deliveries constitute the "Closing." The Closing shall not be deemed to have
occurred unless and until all of the conditions set forth in this Agreement have
been satisfied (or appropriately waived); and none of such actions shall be
deemed to have been taken unless and until all of them have been taken (or the
requirement that they be taken appropriately waived); provided, however, that if
all such actions are taken (or appropriately waived), then the Closing shall be
effective on the Closing Date. Failure to close the transactions contemplated by
this Agreement on the date specified in the first sentence of this Section 6.01
shall not in and of itself constitute a reason for a party to terminate this
Agreement, termination being governed by Section 9 of this Agreement, and so
long as this Agreement is not so terminated, the parties shall continue in good
faith to undertake to consummate the transactions contemplated in this Agreement
as soon as practicable.

     6.02. Conveyance of Property Free and Clear of Liens. At Closing hereunder,
all of Seller's right, title and interest in and to the Real Property and
Personal Property and the Facility shall be conveyed free and clear of all
liens, encumbrances, restrictions, assessments (including, without limitation,
any assessments payable in installments, all of which installments have not been
paid), encroachments, and easements, except those set out in the Permitted Title
Exceptions and to which Purchaser has consented. Subject to the Permitted Title
Exceptions, Seller shall have satisfied and canceled of record all such
aforesaid assessments, liens and other encumbrances against said Real Property
and Personal Property, including, without limitation, any mortgage, indenture,
security agreement, or deed to secure debt outstanding on any portion of such
Real Property and Personal Property, unless assumed by Purchaser.

     6.03. Deliveries by Seller. Seller hereby agrees to, and shall, deliver or
cause to be delivered to the Purchaser (unless Purchaser waives delivery of any
one or all) at the Closing the following, each of which shall be in form and
substance reasonably satisfactory to the Purchaser:

         (a) Possession. Possession and occupancy of the Facility subject only
     to any Permitted Title Exceptions;

         (b) Deed. Special warranty deed conveying title to the Real Property to
     Purchaser, duly witnessed and attested for recording in the State of
     Georgia, free and clear of all liens, restrictions and encumbrances other
     than the Permitted Title Exceptions;

         (c) Title Binder; Survey. A title insurance policy (marked title policy
     commitment) issued by a reputable title insurance company in an amount not
     less than the portion of the Purchase Price allocated to the Real Property
     with the costs of such title insurance to be borne by Purchaser, and a
     survey of the Land on which the Facility is located with the cost of such
     survey to be borne by Purchaser;

         (d) Environmental Report; Engineering Report. An environmental report
     for the Facility and an engineering report for the Facility with the costs
     of such reports borne fully by Purchaser.

<PAGE>

         (e) Assignment of Patient Contracts. An assignment of all patient
     contracts, the originals of such contracts, all advance payments held by
     Seller, and all patient property or patients' funds held by Seller and
     complete accounting of same;

         (f) Assignment of Warranties, Guarantees and Indemnities. An assignment
     of any unexpired warranties, guarantees and indemnities now in effect with
     respect to any part of the Real Property or Personal Property and/or any of
     the mechanical systems in same;

         (g) Assignment of Service Contracts. An assignment of all service
     contracts not terminated prior to Closing;

         (h) Assignment and Bill of Sale. A Limited Warranty Assignment and Bill
     of Sale for all of Seller's right, title and interest in and to the
     Personal Property and fixtures located in the Facility, including those
     items described in Exhibit "B" attached hereto and by this reference made a
     part hereof;

         (i) Other Instruments. Such other endorsements, assignments and
     instruments of transfer and conveyance as may be necessary to vest in the
     Purchaser good and marketable title to the assets and business to be sold
     hereunder and as shall be reasonably requested by Purchaser;

         (j) Paid Tax Bill. A copy of the most recently paid real estate tax
     bills;

         (k) Certificates Regarding Mechanics' Liens and Other Matters.
     Certificates or affidavits of Seller in form and substance reasonably
     satisfactory to Purchaser regarding the status of mechanic's liens,
     Seller's right to possession of the Facility, the authority and power of
     the Seller to complete the transactions provided for herein, and the
     accuracy, in all material of Seller's representations, and warranties and
     covenants contained herein;

         (l) Certificate Regarding Absence of Changes. Certificate or affidavit
     of Seller in form and substance reasonably satisfactory to Purchaser that
     there have been no Material changes made to the Facility since the date of
     this Agreement;

         (m) Title Insurance Company Documents. Such documents and instruments
     as may be reasonably required by Purchaser or its title insurer to carry
     out the intent of the parties to this Agreement;

         (n) Admission Agreements; Employee Benefits. The lists and payments
     required by Sections 14 and 15 hereof;

         (o) Patient Records. The patient records and property described in
     Section 16 hereof;

         (p) Repair Records. All painting, repair and maintenance records
     available to Seller;

         (q) Plans and Specifications. The plans and specifications pursuant to
     which the Facility were constructed, if same are available to Seller;

         (r) As-Built Surveys. The most current "as-built" surveys of the
     Facility, if available;
<PAGE>

         (s) Trade Name Assignments. An assignment of the trade name "The Health
     and Rehabilitation Centre at Dolphins View"; and

         (t) Compliance at Closing with Facility Laws. The representation made
     by Seller in Section 3.13 hereof shall be true and correct in all Material
     respects as of the Closing Date.

     6.04. Escrow Closing for Regulatory Delay and Other Conditions. If, on or
before the Closing Date, Purchaser has not received all approvals required by
any federal, state or local regulatory agency or authority with respect to the
transactions contemplated by this Agreement, or if other conditions of Closing
have not been satisfied or waived in writing, Purchaser and Seller shall have
the option to close the purchase in escrow with a mutually acceptable escrow
agent and pursuant to an escrow agreement reasonably acceptable to Purchaser and
Seller; provided, however, that Purchaser may waive its right to close in escrow
based upon applications filed and any formal or informal indications from
regulatory agencies or authorities that approval shall be forthcoming in
ordinary course.

     6.05. Security Deposits, Patient Property and Patient Funds. All security
deposits, patient property and patient funds held by Seller shall be turned over
to the Purchaser at the Closing, together with evidence in form reasonably
satisfactory to Purchaser of Seller's compliance with all applicable laws with
respect to the collection and maintenance of such security deposits, property
and funds. Purchaser shall execute a receipt therefor. Before Closing, Seller
shall provide to Purchaser at the Facility a list of all such security deposits
and patient property and make available the ledger of patient funds as provided
in Section 3.02 hereof. Seller agrees to assist in any audit of such deposits,
property and funds. Seller and Purchaser hereby agree to reimburse and indemnify
and hold free and harmless the other party from any and all liability in
connection with any loss of deposits, patient property and patient funds
incurred by the other party's failure to comply with applicable laws or properly
to handle and account for same.

     6.06. Conditions Precedent to Obligations of Purchaser. All of Purchaser's
obligations to make the deliveries and payments contemplated by Section 6 of
this Agreement are subject to the fulfillment prior to or at the Closing of each
of the following conditions, any one or more of which Purchaser may waive in
whole or in part (and at or prior to the Closing, Purchaser may request a
certificate of the general partner of Seller or such other evidence as Purchaser
reasonably requests concerning the fulfillment of the following conditions):

         (a) Accuracy of Representations, Warranties and Covenants. The
     representations and warranties of Seller contained in this Agreement shall
     be true and correct in all Material respects as of the date when made and
     shall be updated and true and correct in all Material respects as of the
     Closing as though such representations and warranties were made again on
     that date and Seller shall have performed and complied with all Material
     obligations, covenants and agreements with which Seller is required by this
     Agreement to perform or comply on or before the Closing.

         (b) Deliveries. The delivery to Purchaser of those items listed in
     Section 6.03 in form and substance reasonably satisfactory to Purchaser.

         (c) Governmental Consents Obtained or Requirements Satisfied. All
     authorizations, consents and approvals of any governmental or public unit,
     agency, body, authority or governmental or public official or entity
     necessary for the valid consummation of the transactions contemplated by
     (and compliance with or performance under) this Agreement shall have been
     obtained and shall be in full force and effect, including any required
     consents. Without limiting the foregoing, the Purchaser and the Seller
<PAGE>

     shall have filed, or will file, with the appropriate agencies of the State
     of _______________ or subdivisions thereof, as applicable, for all
     approvals necessary to permit the transfer of Seller's right, title and
     interest in and to the Facility and the continued operation of the Facility
     as nursing care facility under applicable _______________ laws. Purchaser
     shall send Seller copies of all correspondence related to such applications
     and notices and Purchaser shall use reasonable dispatch and make all
     reasonable efforts to gain such approvals. Seller shall have responsibility
     for providing to Purchaser any information reasonably required by Purchaser
     and to otherwise cooperate with Purchaser, as reasonably requested, to gain
     such approvals. If Purchaser has not received all approvals required by any
     federal, state or local regulatory agency or authority with respect to the
     transactions contemplated by this Agreement, Purchaser shall have the
     option to require that the purchase be closed in escrow as provided in
     Section 6.04 hereof.

         (d) No Challenge to Transaction. No injunction (temporary or permanent)
     shall have been issued against Seller or Purchaser enjoining the
     consummation of the transactions contemplated by this Agreement, and no
     action, proceeding, investigation, regulation or legislation shall have
     been instituted, threatened or proposed by any governmental or public unit,
     agency, body, authority or other governmental or public officer or entity
     before any court, governmental or public unit, agency, body or authority or
     legislative body that has not been withdrawn, dismissed, rescinded,
     dissolved or otherwise eliminated on or before the Closing Date, to enjoin,
     restrain, delay, prohibit or obtain Material damages (i) with respect to,
     or which is related to, or arises out of, this Agreement or the
     consummation of the transactions contemplated by this Agreement or (ii)
     which, in the reasonable judgment of the Purchaser, would have a Materially
     adverse effect on the business or financial condition of the Facility.

         (e) Consents and Releases Received. Except as provided in (c) above,
     all consents reasonably necessary to complete this transaction shall have
     been obtained by Seller and Seller shall provide evidence thereof in form
     and substance reasonably satisfactory to Purchaser. Except for the
     Permitted Title Exceptions, all liens on the Real Property and Personal
     Property shall have been released in full and UCC termination statements
     shall have been filed or delivered for filing as appropriate. Purchaser
     shall have received consents or agreements from all parties other than
     Seller that all Material contractual arrangements with Seller shall
     continue unaltered in all Material respects; provided, however, that such
     consents shall be required only if the failure to obtain such consent
     would, in the reasonable determination of Purchaser, have a Material
     adverse effect on the business, financial condition or results of
     operations of the Facility; provided, further, however, that none of such
     consents or other assurances shall be given on terms that Materially
     adversely affects the rights of Seller thereunder.

         (f) Title Binder. Purchaser shall have obtained with respect to Real
     Property (including, but not limited to, the Land) a commitment for an
     owner's title insurance policy issued in the name of Purchaser and its
     successors and assigns by such title insurer as Purchaser shall reasonably
     select (i) insuring the title to such Real Property (in a total aggregate
     amount equal to the Purchase Price allocated to the Real Property at
     regular rates, including examination costs) as good, valid and marketable
     title free and clear of all liens, encumbrances and exceptions other than
     those that (A) involve imperfections of title that do not, individually or
     in the aggregate, impair the marketability of the affected property, (B)
     involve easements, covenants, restrictions or other encumbrances that do
     not, individually or in the aggregate, detract from the value of such
<PAGE>

     property, in its current use or interfere with such use of such property,
     or (C) the Permitted Title Exceptions; and (ii) containing no survey
     exceptions or exclusions from coverage that indicate that Purchaser will
     not be able to operate the Facility after the Closing in the manner in
     which it is currently being operated.

         (g) Casualty Losses. On or prior to the time of Closing, the Facility
     shall not have sustained any loss, whether or not insured, by reason of
     physical damage to the Facility caused by fire, flood, accident, explosions
     or other calamity which would Materially adversely affect the carrying on
     of its business in the normal and regular course.

         (h) Union Contract. Any union contract entered into regarding the
     Facility prior to the Closing Date shall be in form and substance
     reasonably satisfactory to Purchaser.

         (i) Insurance. Policies of insurance relating to the Facility, in form
     and substance reasonably satisfactory to Purchaser, shall have been
     obtained by Purchaser. Purchaser agrees to use its reasonable efforts to
     obtain appropriate insurance prior to the Closing Date.

         (j) No Material Adverse Change. During the period prior to the Closing
     Date, no information shall have come to the attention of Purchaser
     reasonably indicating or suggesting that the financial information
     regarding the Facility and Seller is in any Material respect incorrect or
     incomplete. Without limiting the foregoing, any investigation of, or
     information obtained with respect to, Seller or the Facility by Purchaser,
     or any exhibit or schedule or any supplement hereto or any other document
     delivered to Purchaser in connection with this Agreement, shall not have
     revealed any facts or circumstances which, in the reasonable judgment of
     Purchaser, reflect in a Materially adverse way on the financial condition,
     assets, liabilities (absolute, accrued or contingent), reserves, business
     or operations of the Facility.

         (k) Financing. Purchaser shall have received financing on such terms as
     are acceptable to Purchaser.

         (l) Acquisition of Other Facilities. Purchaser shall have entered into
     Purchase and Sale Agreements for the acquisition of those facilities
     described on Exhibit "I" attached hereto on such terms as acceptable to
     Purchaser and closing of such acquisition shall have occurred
     simultaneously with the acquisition of the Facility.

     6.07. Closing Costs. Purchaser shall pay all costs of Closing, including
the cost of recording any deed and any documentary stamps, transfer tax, or
other similar tax and fees and expenses of any attorneys.

     6.08. Deliveries by Purchaser. Purchaser hereby agrees to, and shall,
deliver and pay or to cause to be delivered and paid to Seller the following,
each of which shall be in form or substance reasonably satisfactory to Seller:

         (a) Purchase Price. The Purchase Price as set forth in Section 2.01
     hereof.

         (b) Other Documents. Such other documents, certificates and opinions as
     the Seller may reasonably and timely request in order to document more
     effectively the transactions contemplated by this Agreement or to evidence
     the compliance by Purchaser with any condition of this Agreement.

     6.09. Conditions Precedent to Obligations of Seller. All of the obligations
of Seller to make the deliveries contemplated by this Section 6 are
<PAGE>

subject to the fulfillment prior to or at the Closing of each of the following
conditions, any one or more of which Seller may waive in whole or in part (and
at or prior to the Closing, Seller may request a certificate of Purchaser or
such other evidence as it reasonably requests concerning the fulfillment of the
following conditions):

         (a) Accuracy of Representations, Warranties and Covenants. The
     representations and warranties of Purchaser in this Agreement shall be true
     and correct in all Material respects as of the date when made, and shall be
     updated and true and correct in all Material respects as of the Closing as
     though such representations and warranties were made again on that date and
     Purchaser shall have performed or complied with all Material obligations,
     covenants and agreements with which Purchaser is required by this Agreement
     to perform or comply on or before the Closing.

         (b) Consents Obtained or Requirements Satisfied. All authorizations,
     consents and approvals of any third party, including without limitation any
     governmental or public unit, agency, body, authority or other governmental
     or public official or entity necessary for the valid consummation of the
     transactions contemplated by (and compliance with or performance under)
     this Agreement shall have been obtained and shall be in full force and
     effect. Notwithstanding the foregoing, Purchaser and Seller shall have
     obtained or be in the process of obtaining from the appropriate agencies of
     the State of _______________ or subdivisions thereof, as applicable, all
     approvals necessary to permit a transfer of the Facility under applicable
     _______________ laws.

         (c) Purchase Price. Purchaser shall have delivered to Seller the
     Purchase Price in the manner described in Section 6.09 hereof.

         (d) Deliveries. The Purchaser shall have delivered to Seller those
     other items listed in Section 6.08 hereof, in form and substance reasonably
     satisfactory to Seller.

         (e) No Challenge to Transaction. No injunction (temporary or permanent)
     shall have been issued against Seller or Purchaser enjoining the
     consummation of the transactions contemplated by this Agreement, and no
     action, proceeding, investigation, regulation or legislation shall have
     been instituted, threatened or proposed by any governmental or public unit,
     agency, body, authority or other governmental or public officer or entity
     before any court, governmental or public unit, agency, body or authority or
     legislative body that has not been withdrawn, dismissed, rescinded,
     dissolved or otherwise eliminated on or before the Closing Date, to enjoin,
     restrain, delay, prohibit or obtain Material damages with respect to, which
     is related to, or arises out of, this Agreement or the consummation of the
     transactions contemplated by this Agreement.

         (f) No Material Adverse Change. During the period prior to the Closing
     Date, no information shall have come to the attention of Seller indicating
     or suggesting that the ownership or operation of the Facility, in the
     reasonable judgment of Seller, would be illegal or would make the Facility,
     in the reasonable judgment of Seller, ineligible for Medicare or Medicaid
     reimbursement if owned by Purchaser.
<PAGE>

SECTION 7.  CONDEMNATION, RISK OF LOSS.

     7.01. Condemnation. In the event of the imminent threat or institution of
any proceedings, judicial, administrative or otherwise, which shall relate to
the proposed taking of any substantial portion of the Facility by eminent domain
prior to Closing, Purchaser shall have the right and option to terminate this
Agreement at any time prior to Closing by giving the Seller written notice to
such effect. Seller hereby agrees to furnish Purchaser written notification with
respect to such events of taking within three (3) days from Seller's receipt of
any notification of such events. If Purchaser should decide to terminate this
Agreement, the parties hereto shall be released from respective their
obligations and liabilities hereunder. As used herein, a "substantial portion"
of the Facility shall be deemed to include without limitation, a taking which
would (i) close five (5%) percent or greater of the number of patient rooms or
licensed beds at either of the Facility, (ii) close any one entrance or exit of
either of the Facility, or (iii) cause a loss of future gross revenues in an
amount greater than ten (10%) percent of either of the Facility's most recent
annual gross revenues or a closing of the operations of either of the Facility.

     In the event Purchaser does not elect to terminate this Agreement because
of such taking, at the Closing hereof, Seller shall assign to Purchaser all its
right, title and interest in and to any proceeds arising out of such taking.

     7.02. Risk of Loss. Risk of loss with respect to the Facility is assumed by
Seller until Closing. In the event that either of the Facility is substantially
damaged by fire or other casualty prior to the Closing of this transaction,
Purchaser, at its option, may:

         (a) Elect to terminate this Agreement upon giving written notice of
     such termination to Seller, whereupon the parties hereto shall be released
     from their respective obligations hereunder, or

         (b) Elect to close the sale, whereupon Purchaser shall be entitled to
     and shall receive an assignment of the proceeds of any insurance due to
     Seller with respect to such fire or other casualty.

Aggregate damage of $50,000 or more shall be deemed substantial, without
excluding other damage that may be substantial.

     In the event that the Closing occurs, unless the damages are repaired in
full by Seller prior to Closing, Purchaser shall be entitled to receive an
assignment of the proceeds of any insurance due to Seller (but only to the
extent of proceeds in excess of the amounts expended by Seller on any repairs
related to damage for which such proceeds are due to Seller) with respect to
fire or other casualty losses occurring between the date of this Agreement and
the Closing Date, notwithstanding the fact that such losses are not deemed
substantial.
<PAGE>

SECTION 8.  INSPECTION.

     8.01. Right to Inspect. The Purchaser, or its agents, shall have the right
to inspect the physical condition, environmental condition, structural
competency and good working order of the Facility (including, without
limitation, the heating, air conditioning, sewer, plumbing, antenna and
electrical systems contained therein) prior to Closing. Such right of inspection
and the exercise of such right shall not constitute a waiver by Purchaser of the
breach of any representation or warranty of Seller that might have been
disclosed by such inspection, unless such waiver is made in writing by
Purchaser.

     8.02. Environmental Audits; Surveys. Commencing upon the date of this
Agreement and extending through Closing hereunder, Purchaser shall have the
right to enter the Facility personally or through agents, employees and
contractors for the purpose of making boundary line and topographical surveys of
same, making soil tests thereof and in general making tests, analyses and
investigations of the Facility.

     8.03. Inspection of Records. Prior to Closing, all leases, books or records
of Seller pertaining to the Facility may be inspected by Purchaser at the
Facility, and Purchaser shall be supplied with copies thereof by Seller upon
request.

     8.04. Seller's Options. Purchaser has heretofore inspected and approved the
physical condition of the Facility. Pursuant to Purchaser's right to inspect the
Facility as provided in Section 8.01, hereof, Purchaser shall endeavor to
furnish Seller, prior to the Closing Date, with a written list of all defects in
physical condition, structural competency or good working order which Purchaser
discovers (to the extent such defects are incurred or arise after the date of
this Agreement). Prior to Closing, Seller shall notify Purchaser in writing that
(i) Seller shall and does thereby agree to correct or cause to be corrected all
such defects prior to the Closing, (ii) instead of correcting or causing to be
corrected all such defects, Seller shall and does thereby agree to reduce the
Purchase Price by a specified amount, itemizing how much of that amount is
applicable to each defect, (iii) Seller shall and does thereby agree to correct
or cause to be corrected only certain specified defects prior to Closing, or
shall reduce the Purchase Price by a specified amount with respect to only
certain itemized defects, or both, or (iv) Seller shall not correct or cause to
be corrected any of the defects or agree to any reduction in the Purchase Price
on account thereof. Seller's failure timely to give Purchaser such written
notice prior to the Closing Date shall be deemed to be and shall constitute
Seller's notice as provided in (iv) above. In the event Seller notifies
Purchaser that Seller shall not correct or cause to be corrected all of such
defects prior to the Closing under the provisions of (ii), (iii) or (iv) above,
Purchaser may, at its option, after receiving such notice, terminate this
Agreement, whereupon this Agreement shall be of no further force or effect and
neither of the parties hereto shall have any liability or obligations each to
the other. If Seller agrees to cure such defects prior to Closing or if Seller
informs Purchaser that Seller shall not correct or cause to be corrected such
defects prior to Closing under the provisions of (ii), (iii) or (iv) above, and
Purchaser does not terminate this Agreement prior to Closing, then prior to
Closing, Seller must correct or cause to be corrected such defects or reduce the
Purchase Price, or both, and Seller's notification with respect to such list of
defects shall become part of this Agreement without any further action by the
parties hereto. Seller's obligations hereunder to correct or cause to be
corrected any defects shall survive the Closing.

     8.05. Terms and Conditions of Inspections. Any inspections conducted
pursuant to this Section 8 shall be at any time subject to the following terms
and conditions:

         (a) Seller shall have received reasonable advance notice thereof;

         (b) No such inspection shall interfere with the normal day-to-day
     operation of the Facility; and

         (c) No due diligence objection to Closing shall be raised by Purchaser
     after the Closing Date.
<PAGE>

SECTION 9.  TERMINATION.

     9.01. Circumstances of Termination. This Agreement may be terminated in
either of the following circumstances:

         (a) The conditions to the Agreement in Section 5 and Section 8 are not
     satisfied or the termination circumstances as set forth in Sections 7.01,
     7.02 and 13 occur; or

         (b) The Closing begins or would otherwise occur and Purchaser is not
     obligated to close pursuant to Section 6.06 or Seller is not obligated to
     close pursuant to Section 6.09.

     9.02. Effect of Termination. If this Agreement is terminated pursuant to
Section 9.01, this Agreement shall be deemed thenceforth null and void and no
party hereto shall have any obligation or liability by reason of this Agreement
except as specifically provided herein.

     9.03. Damages Upon Termination. If Purchaser fails to tender the Purchase
Price to Seller at the Closing or fails to perform as required herein or Seller
fails to perform as required herein, then either party shall have all rights or
remedies available to it under law or at equity, including, without limitation,
specific performance and such rights or remedies may be exercised by either
party concurrently or in such order as such party may elect.
<PAGE>

SECTION 10.  BROKER'S COMMISSION.

     Each of Purchaser and Seller warrants to the other that there are no
brokers, finders or other consultants acting on behalf of, or at the request of,
Purchaser or Seller in this transaction. Seller shall indemnify and hold
Purchaser harmless from and against the claims of all persons or entities who
claim commissions through Seller for real estate brokerage fees or commissions
or any other fees arising out of the sale and purchase of all of Seller's right,
title and interest in or to the Facility or the transactions contemplated
hereby. Purchaser shall indemnify and hold Seller harmless from and against the
claims of all persons or entities who claim commissions through Purchaser for
real estate brokerage fees or commissions or any other fees arising out of the
purchase or sale of all of Seller's right, title and interest in or to the
Facility or the transactions contemplated hereby.

SECTION 11.  ASSIGNMENT AND APPROVAL.

     Seller shall not assign its rights and obligations hereunder or any part
thereof to any person, firm, limited partnership or corporation, including a
corporation to be formed hereafter, or other entity, without the prior written
consent of Purchaser. Purchaser may assign its rights and obligations hereunder
without Seller's prior written consent.

SECTION 12.  NOTICES.

     All notices, demands or requests provided for or permitted to be given
pursuant to this Agreement must be in writing. If not otherwise provided
hereunder, all notices, demands or requests to be sent to any party hereto, or
any assignee or any party, shall be deemed to have been properly given or served
by delivering same personally to each party or by sending same by telecopy
(receipt confirmed) or overnight delivery addressed to such party at the
following addresses or telecopy number:

  To Purchaser:      Centennial HealthCare Management Corporation
                     400 Perimeter Center Terrace
                     Suite 650
                     Atlanta, Georgia 30346
                     Attention: Kent Fosha

                     Telecopy Number: (770) 730-1375
<PAGE>

  With a copy to:    Centennial HealthCare Corporation
                     400 Perimeter Center Terrace
                     Suite 650
                     Atlanta, Georgia 30346
                     Attention: Daryl Griswold

                     Telecopy Number: (770)730-1350

  To Seller:         c/o Five Star Healthcare Properties, LLC
                     400 Perimeter Center Terrace
                     Suite 650
                     Atlanta, Georgia 30346
                     Attention: Alan Dahl

                     Telecopy Number: (770) 730-1377

SECTION 13.  MISCELLANEOUS.

     This Agreement shall bind and inure to the benefit of the parties hereto
and their respective executors, administrators, legal representatives, and
permitted successors and assigns. All the terms and conditions of this Agreement
not performed at Closing shall survive the Closing for a period of one (1) year
hereunder and shall not be merged into any general assignment from Seller to
Purchaser. If all or any portion of any of the provisions of this Agreement
shall be declared invalid by laws applicable thereto, then the performance of
such offending provision shall be excused by the parties hereto; provided,
however, that, if the performance of such excused provision Materially affects
any aspect of this transaction, then the party for whose benefit such excused
provision was inserted in this Agreement shall have the right, exercisable by
written notice given to the other party within ten (10) days after such
provision is so declared invalid, to terminate this Agreement; whereupon this
Agreement shall be null and void. The titles or captions of the provisions of
this Agreement are merely descriptive and are not representations of matters
included in or excluded from such provisions. This Agreement and the agreements
contemplated herein constitute the sole and entire agreement between the parties
hereto with respect to the subject matter hereof, and no modification hereof
shall be binding unless set forth in writing, signed by all parties and attached
hereto. This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of Georgia (without regard to its rules of
conflicts of laws). Where the context so requires or permits, the use of the
singular form includes the plural, and the use of the plural form includes the
singular, and the use of any gender includes any and all genders.

SECTION 14. ASSUMPTION OF SELLER'S OBLIGATIONS TO THIRD PARTIES.

     Purchaser shall assume the obligations of Seller to provide future care to
all current patients under any admission agreements or other contracts relating
to patients.

SECTION 15. SELLER'S OBLIGATION WITH RESPECT TO EMPLOYEES.

     As of the Closing Date, Seller shall deliver to Purchaser a list of any and
all amounts for current wages due employees as of the Closing Date and taxes
with respect thereto, and all accrued and/or earned fringe benefits including,
without limitation, vacation, pay or sick leave, retirement benefits and
<PAGE>

disability benefits to which employees may be entitled as of the Closing Date,
certified by the general partner of Seller. Such benefits will be prorated in
accordance with the provisions of Section 5.04 of this Agreement.

SECTION 16. PATIENT RECORDS AND PATIENT FUNDS.

     As of the Closing Date, Seller shall deliver to Purchaser all patient
records with respect to the business conducted in connection with the Facility,
which records Purchaser shall maintain and make reasonably available to Seller
for three (3) years after the Closing Date, and Seller shall provide Purchaser
with an updated accounting of all patient funds and other property of patients
held by Seller and shall deliver such funds and other property to Purchaser at
Closing.

SECTION 17.  LIABILITIES.

     Except as specifically provided in this Agreement, Purchaser shall assume
no liabilities of any kind or nature of Seller or any liabilities of any kind or
nature arising out of the business conducted with respect to the Facility prior
to the Closing Date. Purchaser shall assume all liabilities arising out of the
business conducted with respect to the Facility on or after the Closing Date and
Seller shall assume no liabilities of any kind or nature arising out of the
business conducted with respect to the Facility for the period after the Closing
Date.

     Seller shall be responsible for satisfying the Facility's creditors and
trade suppliers in accordance with Section 3.23 hereof. Seller shall indemnify
and hold Purchaser harmless from and against any and all cost, loss, damage or
liability which Purchaser may incur as a result of any "employment loss" as used
in the Worker Adjustment and Retraining Notification Act of 1988 at the Facility
occurring on or after the Closing Date as a result of the transactions
contemplated hereby.

SECTION 18. TRANSFER OF THE TRADE NAME "THE HEALTH AND REHABILITATION CENTRE
AT DOLPHINS VIEW"

     At Closing, Seller shall assign any and all of its right, title and
interest in and to the trade name "_________________________________".

SECTION 19. CASH AND CASH EQUIVALENTS INCLUDED.

     Seller shall convey to Purchaser Seller's right, title and interest in and
to any cash or cash equivalents with respect to the Facility, except as
otherwise specifically provided herein.

SECTION 20.  DELIVERY.

     To the extent Seller is obligated to deliver records or other items to
Purchaser as of the Assignment and such items would be cumbersome or
unreasonable to remove from the Facility, such delivery may be made at the
Facility, regardless of the location of the remainder of the Closing.

SECTION 21. INDEMNIFICATION BY SELLER AFTER CLOSING.

     21.01. Indemnification. If the transactions contemplated in this Agreement
are completed and closed and this Agreement is not terminated, Seller and
Purchaser shall indemnify and hold harmless each other against any loss, damage,
liability or expense (including without limitation legal and other fees)
incurred or sustained by that party as a result of or attributable to any
Material misrepresentation or Material breach of any covenant, warranty or
representation given or made by the other party and against any loss, damage,
<PAGE>

liability or expense (including without limitation legal and other fees) which
would not have been incurred or sustained by that party if such covenants,
representations and warranties had been true and correct in all Material
respects. Seller shall indemnify and hold harmless Purchaser against any claim
by any governmental entity for Medicare or Medicaid overpayment made by such
governmental entity prior to the Closing Date or for Medicare or Medicaid
recapture of depreciation resulting from the sale of the Real Property or
Personal Property or any other change giving rise to such recapture.

     21.02. Tax Indemnification. Without limiting the requirements of the
foregoing Section 21.01, Seller will promptly indemnify and hold harmless
Purchaser against any and all liability for or with respect to taxes for any
taxable period ending on or before the Closing Date that is asserted or assessed
against the Facility. Notwithstanding anything in this Section 21 to the
contrary, any indemnity payable by Seller to Purchaser pursuant to the foregoing
sentence shall be paid within (i) ten days after Purchaser's request therefor or
(ii) ten days prior to the date on which the liability upon which the indemnity
is based is required to be satisfied by Purchaser or the Facility.

     21.03. Limitations. The foregoing is subject to the following limitations:

         (a) Each party shall promptly notify the other parties of any action,
     claim, loss or potential action, claim or loss, in regard to which action,
     claim or loss that party shall seek or may seek indemnification pursuant to
     this Section 21, and in any event within thirty (30) days or such shorter
     period as may be necessary to avoid a default thereof after that party has
     actual knowledge of such action, claim or loss or potential action, claim
     or loss, and, at such time, that party shall tender and permit the other
     party to defend, at such other party's expense, any such action, claim or
     loss.

         (b) Claims under this Section 21, must be asserted within the following
     time periods after the Closing Date:

               Material misrepresentation or Material breach of any covenant,
         warranty or representations - 1 year;

               Any claim by any governmental entity for Medicare or Medicaid
         overpayment made by such governmental entity prior to Closing - 5
         years;

               Recapture of depreciation resulting from the sale of the Real
         Property or Personal Property or other change giving rise to such
         recapture - 5 years.

               Tax indemnification - later of 5 years or running of applicable
         statute of limitations.

     It is understood and agreed that any such claim may be validly asserted by
     Purchaser or Seller during the applicable period if a claim has been
     asserted or threatened during such period which could result in a loss,
     liability, damage, cost or expense for which the Seller or Purchaser would
     be liable pursuant to this Section 21; and

         (c) Neither Seller nor Purchaser shall have rights as to any claim
     pursuant to this Section 21 in the event this Agreement is terminated prior
     to the consummation of the purchase and sale contemplated herein.
<PAGE>

SECTION 22.  EXHIBITS.

     The parties shall have until Closing to agree upon all information to be
filed as a part of the Exhibits to this Agreement.

SECTION 23. REMEDIES NOT LIMITED TO REAL AND PERSONAL PROPERTY.

     The parties shall have all legal and equitable remedies available to the
for breach of this Agreement and shall not be limited to the collateral of the
Real Property and Personal Property.

     IN WITNESS WHEREOF, the parties hereto have executed this Purchase and Sale
Agreement the day and year first hereinabove written.

"SELLER"

_______________________ INVESTORS, LLC

By: Five Star Healthcare Properties, LLC
Its:  Sole Member

 By: Southeast Capital, LLC

   By:
       ---------------------------------
       Alan C. Dahl, Member

 By: Highland Healthcare Capital, LLC

   By:
       ---------------------------------
       J. Stephen Eaton, Member
<PAGE>

"PURCHASER"

CENTENNIAL HEALTHCARE MANAGEMENT CORPORATION


   By:
       ---------------------------------
<PAGE>

                                 EXHIBIT INDEX

Exhibit "A"     REAL PROPERTY DESCRIPTION
-----------
Exhibit "B"     PERSONAL PROPERTY
-----------
Exhibit "C"     EXCLUDED PROPERTY
-----------
Exhibit "D"     PURCHASE PRICE ALLOCATION
-----------
Exhibit "E"     SCHEDULE OF DEFICIENCIES IN THE CONDITION OF THE FACILITY
-----------
Exhibit "F"     CHANGES IN FINANCIAL CONDITION OF THE FACILITY
-----------
Exhibit "G"     LIST OF EXCEPTIONS
-----------
Exhibit "H"     PERMITTED TITLE EXCEPTIONS
-----------
Exhibit "I"     LIST OF ADDITIONAL FACILITIES
-----------