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EX 10.7

    
      
        
          
            
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        EXHIBIT
          10.7

        

        

        
          

          

        

        ASSET
          PURCHASE AGREEMENT

        

        by
          and
          among

        

        WESTPORT
          HOLDINGS BRADENTON, LIMITED PARTNERSHIP,

        a
          Delaware limited partnership,

        

        WESTPORT
          NURSING BRADENTON, L.L.C.,

        a
          Florida
          limited liability company,

        

        ARC
          BRADENTON MANAGEMENT, INC.,

        a
          Tennessee corporation,

        

        ARC
          BRADENTON LLC,

        a
          Tennessee limited liability company,

        

        and

        

        SENIOR
          HOUSING PARTNERS III, L.P.,

        a
          Delaware limited partnership

        

        Dated
          as
          of March 17, 2006

         

        
           

          
            
            

            
              

              

            

          

          
            
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        TABLE
          OF CONTENTS

         

        
          
            	 	
                    Page

                  
	
                    ARTICLE
                      I
                      DEFINITIONS

                  	
                    1

                  
	
                    Section
                      1.1 Certain
                      Defined Terms

                  	
                    2

                  
	
                    Section
                      1.2 Other
                      Defined Terms

                  	
                    5

                  
	 	 
	
                    ARTICLE
                      II PURCHASE AND
                      SALE OF ASSETS

                  	
                    8

                  
	
                    Section
                      2.1 Purchased
                      and Excluded Assets

                  	
                    8

                  
	
                    Section
                      2.2 Assumption
                      of Liabilities

                  	
                    11

                  
	
                    Section
                      2.3 Excluded
                      Liabilities

                  	
                    12

                  
	
                    Section
                      2.4 Purchase
                      Price

                  	
                    13

                  
	
                    Section
                      2.5
                      Investigation Period

                  	
                    14

                  
	
                    Section
                      2.6 Closing
                      Adjustments

                  	
                    16

                  
	
                    Section
                      2.7 Security,
                      Waiting List and Sale Deposits

                  	
                    18

                  
	
                    Section
                      2.8 Transfer
                      Taxes

                  	
                    18

                  
	
                    Section
                      2.9 Transferred
                      Contracts

                  	
                    18

                  
	
                    Section
                      2.10 Third
                      Party Consents for Transferred Contracts

                  	
                    18

                  
	 	 
	
                    ARTICLE
                      III
                      CLOSING

                  	
                    19

                  
	
                    Section
                      3.1
                      Closing

                  	
                    19

                  
	
                    Section
                      3.2 Deliveries
                      at Closing

                  	
                    19

                  
	 	 
	
                    ARTICLE
                      IV
                      REPRESENTATIONS AND WARRANTIES OF THE SELLERS

                  	
                    20

                  
	
                    Section
                      4.1
                      Organization

                  	
                    21

                  
	
                    Section
                      4.2 Authority;
                      Execution and Delivery; Enforceability

                  	
                    21

                  
	
                    Section
                      4.3 No Conflicts
                      or Violations; No Consents or Approvals Required

                  	
                    21

                  
	
                    Section
                      4.4 No
                      Conflicts

                  	
                    21

                  
	
                    Section
                      4.5 Compliance
                      with Laws

                  	
                    21

                  
	
                    Section
                      4.6
                      Litigation

                  	
                    22

                  
	
                    Section
                      4.7 Real
                      Property

                  	
                    22

                  
	
                    Section
                      4.8 Facility
                      Residents and Patients

                  	
                    22

                  
	
                    Section
                      4.9
                      Environmental

                  	
                    23

                  
	
                    Section
                      4.10
                      Contracts

                  	
                    24

                  
	
                    Section
                      4.11 Title to
                      Assets

                  	
                    24

                  
	
                    Section
                      4.12
                      Permits

                  	
                    24

                  
	
                    Section
                      4.13
                      Taxes

                  	
                    24

                  
	
                    Section
                      4.14
                      Employees

                  	
                    25

                  
	
                    Section
                      4.15 Financial
                      Statements

                  	
                    25

                  
	
                    Section
                      4.16 No
                      Brokers

                  	
                    25

                  
	
                    Section
                      4.17 Employee
                      Benefit Plans

                  	
                    25

                  
	
                    Section
                      4.18
                      Insurance

                  	
                    26

                  
	
                    Section
                      4.19 Affiliated
                      Transactions

                  	
                    26

                  

          

           

           

          
            
               

            

            
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                    Section
                      4.20
                      Insolvency

                  	
                    26

                  
	
                    Section
                      4.21 Absence of
                      Changes

                  	
                    26

                  
	
                    Section
                      4.22
                      Trademarks, Etc

                  	
                    26

                  
	
                    Section
                      4.23 Health
                      Center Financial Statements

                  	
                    27

                  
	
                    Section
                      4.24 Condition
                      of the Facility

                  	
                    27

                  
	 	 
	
                    ARTICLE
                      V REPRESENTATIONS
                      AND WARRANTIES OF BUYER

                  	
                    28

                  
	
                    Section
                      5.1 Organization
                      of the Buyer

                  	
                    28

                  
	
                    Section
                      5.2 Authority;
                      Execution and Delivery; Enforceability

                  	
                    28

                  
	
                    Section
                      5.3 No Conflict
                      or Violations, No Consents or Approvals Required

                  	
                    28

                  
	
                    Section
                      5.4
                      Proceedings

                  	
                    28

                  
	
                    Section
                      5.5 No
                      Brokers

                  	
                    29

                  
	
                    Section
                      5.6
                      Solvency

                  	
                    29

                  
	
                    Section
                      5.7
                      Disclosure

                  	
                    29

                  
	
                    Section
                      5.8 No Knowledge
                      of Misrepresentations or Omissions

                  	
                    30

                  
	 	 
	
                    ARTICLE
                      VI COVENANTS OF
                      THE SELLERS AND THE BUYER

                  	
                    30

                  
	
                    Section
                      6.1 Covenants
                      Relating to Conduct of the Facility

                  	
                    31

                  
	
                    Section
                      6.2 Access to
                      Information

                  	
                    33

                  
	
                    Section
                      6.3
                      Confidentiality

                  	
                    34

                  
	
                    Section
                      6.4 Best
                      Efforts

                  	
                    34

                  
	
                    Section
                      6.5 Employment
                      Matters

                  	
                    35

                  
	
                    Section
                      6.6 Notice of
                      Breach

                  	
                    35

                  
	
                    Section
                      6.7 Updating
                      Schedules

                  	
                    36

                  
	
                    Section
                      6.8 HIPAA
                      Cooperation

                  	
                    36

                  
	
                    Section
                      6.9
                      Non-Solicitation Agreement

                  	
                    36

                  
	
                    Section
                      6.10 ERISA
                      Certifications

                  	
                    37

                  
	
                    Section
                      6.11 Office of
                      Insurance Regulation Approval

                  	
                    37

                  
	
                    Section
                      6.12 Health
                      Center Notification

                  	
                    37

                  
	 	 
	
                    ARTICLE
                      VII CONDITIONS TO
                      CLOSING

                  	
                    38

                  
	
                    Section
                      7.1 Conditions
                      to Each Party’s Obligation

                  	
                    38

                  
	
                    Section
                      7.2 Conditions
                      to Obligation of the Buyer

                  	
                    39

                  
	
                    Section
                      7.3 Conditions
                      to Obligation of the Sellers

                  	
                    41

                  
	
                    Section
                      7.4 Frustration
                      of Closing Conditions

                  	
                    42

                  
	
                    Section
                      7.5 Effect of
                      Certain Waivers of Closing Conditions

                  	
                    42

                  
	 	 
	
                    ARTICLE
                      VIII TERMINATION;
                      EFFECT OF TERMINATION

                  	
                    42

                  
	
                    Section
                      8.1
                      Termination

                  	
                    42

                  
	
                    Section
                      8.2 The Sellers’
                      Remedies Exclusive

                  	
                    44

                  
	
                    Section
                      8.3 Obligations
                      upon Termination

                  	
                    44

                  
	
                    Section
                      8.4 Effect of
                      Termination

                  	
                    44

                  
	
                    Section
                      8.5 Time of the
                      Essence

                  	
                    44

                  

          

           

           

          
            
               

            

            
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                    ARTICLE
                      IX RISK OF
                      LOSS

                  	
                    44

                  
	
                    Section
                      9.1 Risk of
                      Loss

                  	
                    45

                  
	
                    Section
                      9.2
                      Condemnation

                  	
                    45

                  
	
                    Section
                      9.3 Fire or
                      Other Casualty

                  	
                    45

                  
	 	 
	
                    ARTICLE
                      X ACTIONS BY THE
                      SELLER AND THE BUYER

                  	
                    46

                  
	
                    Section
                      10.1 Accounts
                      Receivable

                  	
                    46

                  
	
                    Section
                      10.2 Books and
                      Records; Tax Matters

                  	
                    46

                  
	
                    Section
                      10.3 Further
                      Assurances

                  	
                    48

                  
	 	 
	
                    ARTICLE
                      XI
                      INDEMNIFICATION

                  	
                    48

                  
	
                    Section
                      11.1
                      Survival

                  	
                    48

                  
	
                    Section
                      11.2
                      Indemnification by the Sellers

                  	
                    48

                  
	
                    Section
                      11.3
                      Indemnification by the Buyer

                  	
                    49

                  
	
                    Section
                      11.4
                      Indemnification Procedures

                  	
                    50

                  
	
                    Section
                      11.5
                      Limitations on Indemnification

                  	
                    51

                  
	
                    Section
                      11.6
                      Calculation of Indemnity Payments

                  	
                    52

                  
	
                    Section
                      11.7 Time
                      Limits for Indemnification

                  	
                    52

                  
	
                    Section
                      11.8 Tax
                      Treatment of Indemnification

                  	
                    52

                  
	 	 
	
                    ARTICLE
                      XII
                      MISCELLANEOUS

                  	
                    53

                  
	
                    Section
                      12.1
                      Publicity

                  	
                    53

                  
	
                    Section
                      12.2
                      Post-Closing Information

                  	
                    53

                  
	
                    Section
                      12.3 Refunds
                      and Remittances

                  	
                    53

                  
	
                    Section
                      12.4
                      Assignment

                  	
                    54

                  
	
                    Section
                      12.5 No
                      Third-Party Beneficiaries

                  	
                    54

                  
	
                    Section
                      12.6
                      Expenses

                  	
                    54

                  
	
                    Section
                      12.7
                      Notices

                  	
                    54

                  
	
                    Section
                      12.8
                      Headings

                  	
                    56

                  
	
                    Section
                      12.9
                      Counterparts

                  	
                    56

                  
	
                    Section
                      12.10
                      Integrated Contract; Exhibits and Schedules

                  	
                    57

                  
	
                    Section
                      12.11
                      Governing Law

                  	
                    57

                  
	
                    Section
                      12.12
                      Jurisdiction

                  	
                    57

                  
	
                    Section
                      12.13 Waiver
                      of Jury Trial

                  	
                    57

                  
	
                    Section
                      12.14
                      Amendments and Waivers

                  	
                    57

                  
	
                    Section
                      12.15
                      Pre-Closing Negligent or Tortious Acts

                  	
                    58

                  

          

        
          
             

          

          
            -iii-

            
              

            

          

          
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        ASSET
          PURCHASE AGREEMENT

        

        Asset
          Purchase Agreement dated as of March 17, 2005 (this “Agreement”)
          by and
          between Westport Holdings Bradenton, Limited Partnership, a Delaware limited
          partnership (“Westport
          Holdings”),
          Westport Nursing Bradenton, L.L.C., a Florida limited liability company
          (“Westport
          Nursing,”
and
          together with Westport Holdings, each, a “Seller”
and
          collectively, the “Sellers”),
          ARC
          Bradenton Management, Inc., a Tennessee corporation (the “Buyer’s
          Manager”),
          ARC
          Bradenton LLC, a Tennessee limited liability company (“ARC
          Bradenton”),
          and
          Senior Housing Partners III, L.P., a Delaware limited partnership (“SHP,”
and
          together with ARC Bradenton and their permitted assigns, the “Buyer”).

        

        RECITALS

        

        WHEREAS,
          Westport Holdings is the owner of a retirement campus consisting of 501
          units
          (including 6 guest suites) located in Manatee County, Florida (the “Retirement
          Center”);

        

        WHEREAS,
          Westport Nursing is the owner of a skilled nursing facility licensed for
          120
          beds and an assisted living facility licensed for a minimum of 140 beds
          located
          adjacent to the Retirement Center (the “Health
          Center,”
and
          together with the Retirement Center, the “Facility”);

        

        WHEREAS,
          pursuant to a Lease, dated as of May 1, 2003, and subsequently amended
          by letter
          agreement dated May 20, 2005 (the “Health
          Center Lease”),
          among
          Westport Nursing, BR & SNF, Inc. and BALF, Inc. (together with BR & SNF,
          Inc., the “Health
          Center Operator”),
          and
          other agreements entered into concurrently with the Health Center Lease,
          the
          Health Center is leased and operated by the Health Center Operator;

        

        WHEREAS,
          the Sellers desire to sell to the Buyer, and the Buyer wishes to purchase
          from
          the Sellers, certain assets relating to the Facility, upon the terms and
          conditions set forth herein;

        

        WHEREAS,
          the Sellers desire to transfer to the Buyer, and the Buyer is willing to
          assume
          from the Sellers, certain liabilities, upon the terms and conditions set
          forth
          herein; and

        

        WHEREAS,
          the Buyer has entered, or will enter, into a management agreement with
          the
          Buyer’s Manager to operate the Facility;

        

        NOW,
          THEREFORE, in consideration of the foregoing premises, the respective covenants,
          representations and warranties and agreements hereinafter contained, and
          other
          good and valuable consideration, the receipt and sufficiency of which are
          hereby
          acknowledged, the parties hereto, intending to be legally bound hereby,
          hereby
          agree as follows:

        

        ARTICLE
          I

         

        DEFINITIONS

         

        
          
             

          

          
            1

            
              

            

          

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

         

        “Affiliate”
of
          any
          party means any person or entity controlling, controlled by or under common
          control with such party.

         

        “AHCA
          Assurances”
means
          Buyer’s receipt of commercially reasonable assurances that the Florida Agency
          for Health Care Administration will issue the Skilled Nursing Facility
          License
          (Standard) and the Assisted Living Facility License (Standard) in the name
          of
          Buyer (or any lessee, manager or other operator, as deemed appropriate
          by Buyer)
          in due course following the Closing, which licenses will be effective as
          of the
          Closing Date.

         

        “Business
          Day”
shall
          refer to a day, other than a Saturday or a Sunday, on which commercial
          banks are
          not required or authorized to close in New York City.

         

        “Buyer
          Regulatory Approvals”
means,
          to the extent deemed reasonably necessary by Buyer for the acquisition
          of the
          Purchased Assets by the Buyer or its designees (which may be any lessee,
          manager
          or other operator, as deemed appropriate by Buyer) and the operation of
          the
          Retirement Center or the Health Center by the Buyer (or any such designees)
          in
          substantially the same manner as currently operated, approval for participation
          in Medicaid, V.A. and Medicare and any approvals required by the Florida
          Agency
          for Health Care Administration and the Florida Office of Insurance Regulation,
          including the AHCA Assurances.

         

        “Contracts”
means
          all agreements, contracts, leases, subleases, purchase orders, commitments,
          contractual licenses and instruments to which either of the Sellers or
          the
          Health Center Operator is a party or by which any of them is bound and
          which
          relate to the Facility or the Purchased Assets (other than Life Care Contracts),
          including other contracts with residents (other than Life Care Contracts);
          all
          utilities, maintenance and other service agreements; all leases or other
          occupancy agreements with respect to the Real Property; all leases of personal
          property; and the Collective Bargaining Agreements.

         

        “Collective
          Bargaining Agreements”
means
          collectively the Westport Senior Living SEIU Collective Bargaining Contract,
          dated as of June 1, 2004 and The Inn & Nursing Center at Freedom Village
          SEIU Collective Bargaining Contract, dated as of June 1, 2004.

         

        “Entrance
          Fee Deferred Revenue”
means
          the aggregate amount of deferred revenue outstanding as of the date immediately
          preceding the Closing Date and attributable to the Life Care Contracts
          (other
          than Life Care Contracts with grantors under the Freedom Village Master
          Trusts),
          all as determined by generally accepted accounting principles, which aggregate
          deferred revenue was $17,853,482 at June 30, 2005, as set forth on the
          Interim
          Balance Sheet.

         

        “Entrance
          Fee Receivables”
means
          any entrance fees that are unpaid or due to the Sellers and outstanding
          as of
          the Closing Date.

         

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

         

        “Excess
          Liabilities”
means,
          the amount by which (A) the aggregate amount of Master Trust Debt, Refundable
          Entrance Fee Liabilities and Entrance Fee Deferred Revenue, in each

         

        
          
             

          

          
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        case
          determined in accordance with generally accepted accounting principles,
          exceeds
          (B) the Excess Liabilities Cap. For purposes of the calculation in clause
          (A)
          above, Master Trust Debt shall be included only to the extent, if any,
          that it
          is not otherwise included in Refundable Entrance Fee Liabilities.

         

        “Excess
          Liabilities Cap”
means
          the greater of (i) $50,000,000 or (ii) if the Closing has not occurred
          before
          May 1, 2006, other than solely as a result of a material breach by the
          Sellers’
of their obligations under this Agreement, $50,500,000. For purposes of
          this
          definition of “Excess Liabilities Cap,” the Sellers’ failure to complete the
          Remediation shall not constitute a material breach of their obligations
          under
          this Agreement, provided that the Sellers’ were otherwise in compliance with
          their obligations under Section 6.13. Notwithstanding the foregoing, the
          Excess
          Liabilities Cap shall be increased to $51,000,000 upon the later of (i)
          July 1,
          2006 and (ii) the tenth day following the Remediation Completion Date (the
          “Second
          Increase Date”).
          

         

        The
          Excess Liabilities Cap shall be further increased by another $500,000 for
          each
          30-day period following the Second Increase Date that occurs prior to the
          Closing. 

         

        “Excluded
          Contracts”
means
          all contracts and agreements of Seller(s) and the Health Center Operator,
          and
          all contracts and agreements that affect, encumber or bind the Facility
          in any
          manner, that are not Transferred Contracts.

         

        “Freedom
          Village Master Trusts”
means
          the Freedom Village Master Trusts described on Schedule
          4.10.

         

        A.)  “Health
          Center Assets”
means
          collectively the Related Assets as defined and described in Section 7 of
          the
          Health Center Lease; all replacement equipment and furniture as described
          in
          Section 7 of the Health Center Lease; any other equipment or furniture
          in use at
          the Health Center that does not constitute replacement equipment or furniture
          as
          described in Section 7 of the Health Center Lease; and any other assets
          used in
          the operation of the Health Center that are included within the definition
          of
          Purchased Assets (excluding, however, any accounts receivable of the Health
          Center Operator existing on the Closing Date). The Health Center Assets
          comprise
          a portion of the Purchased Assets.

         

        A.)  “HIPAA”
means
          the Health Insurance Portability and Accountability Act of 1996.

         

        “Life
          Care Contracts”
means
          all executory life-care residency and care contracts, all residency and
          care
          agreements, and any addendums thereto related to the Facility. 

         

        “Master
          Trust Debt”
means
          (i) the aggregate amount of debt of the Sellers secured by liens granted
          in
          connection with the Freedom Village Master Trusts, which aggregate amount
          of
          debt was $3,525,726 at June 30, 2005, as set forth on the Interim Balance
          Sheet,
          less (ii) the deferred entrance fees attributable to the Freedom Village
          Master
          Trusts, the amount of which was $512,695 at June 30, 2005, as set forth
          on the
          Interim Balance Sheet.

         

        “Material
          Adverse Effect”
means
          a
          material adverse effect on the assets, physical condition, financial condition
          or operations of the Facility, taken as a whole; provided however, a Material
          Adverse Effect shall not include an adverse effect, directly or indirectly,
          arising out of or resulting from an event or series of events or circumstances
          generally affecting (i) the senior

         

        
          
             

          

          
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        living
          industry generally, (ii) the United States economy or the Florida economy
          in
          general; (iii) national or international political or social conditions,
          including, without limitation, the engagement by the United States in
          hostilities, whether or not pursuant to the declaration of a national emergency
          or war, or the occurrence of any military or terrorist attack upon the
          United
          States or any of its territories, possessions, diplomatic or consular offices,
          or upon any military installation, equipments or personnel of the United
          States;
          or (iv) changes in generally accepted accounting principles.

         

        “Person”
means
          any individual, firm, corporation, partnership, limited liability company,
          trust, joint venture, Governmental Entity or other entity.

         

        “Pre-Closing
          Tax Period”
means
          all taxable periods ending on or before the Closing Date and the portion
          ending
          on the Closing Date of any taxable period that includes, but does not end
          on the
          Closing Date.

         

        “Real
          Property”
means
          the Land, Buildings, Improvements and other rights, interests and assets
          described in paragraphs (i) through (iv) of Section
          2.1(a).

         

        “Refundable
          Entrance Fee Liabilities”
means
          the aggregate amount of refundable entrance fees outstanding as of the
          date
          immediately preceding the Closing Date under the Life Care Contracts (other
          than
          Life Care Contracts related to the Freedom Village Master Trusts), as determined
          in accordance with generally accepted accounting principles, which aggregate
          refundable entrance fees were $25,657,669 at June 30, 2005, as set forth
          on the
          Interim Balance Sheet. 

         

        “Remediation
          Completion Date”
the
          date that is the later of (i) the date of the Sellers’ delivery of the CIH
          Certificate; or (ii) in the event that PSI delivers a Remediation Deficiency
          Notice pursuant to Section 6.13 within four (4) Business Days following
          the
          delivery of the CIH Certificate, the date when the deficiencies contained
          in the
          Remediation Deficiency Notice have been cured. 

         

        “Straddle
          Entrance Fee Refunds”
means
          the aggregate amount of unpaid entrance fee refunds as of the date immediately
          preceding the Closing Date owing to prior residents of the Facility whose
          Life
          Care Contracts have been terminated, but are not then due to such prior
          residents as a result of any applicable grace period set forth in such
          terminated Life Care Contracts. Straddle Entrance Fee Refunds shall not
          include
          any entrance fee refunds that are overdue beyond the expiration of any
          applicable payment grace period.

         

        “Subsidiary”
of
          any
          person means another person, an amount of the voting securities, other
          voting
          ownership or voting partnership interests of which is sufficient to elect
          at
          least a majority of its Board of Directors or other governing body (or,
          if there
          are no such voting interests, 50% or more of the equity interests of which)
          is
          owned directly or indirectly by such first person or by another subsidiary
          of
          such first person.

         

        “Tax
          Return”
means
          any report, return, document, declaration or other information or filing
          required to be supplied to any Taxing Authority with respect to Taxes,
          including
          any amendment made with respect thereto.

         

        
          
             

          

          
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        “Tax”
or
          “Taxes”
means
          all forms of taxation imposed by any Federal, state, local or other Taxing
          Authority, including income, franchise, property, sales, use, excise,
          employment, unemployment, payroll, social security, estimated, value added,
          ad
          valorem, transfer, recapture, withholding, health and other taxes of any
          kind,
          including any interest, penalties and additions thereto.

         

        “Taxing
          Authority”
means
          any Federal, state or local government, any subdivision, agency, commission
          or
          authority thereof or any domestic quasi-governmental body exercising tax
          regulatory authority.

         

        “Transfer
          Taxes”
means
          all sales, use, transfer, registration, recording, ad valorem, privilege,
          documentary, gross receipts, registration, conveyance, excise, license,
          stamp or
          similar Taxes and fees arising out of, in connection with or attributable
          to the
          transactions effected pursuant to this Agreement, and any deficiency, interest
          or penalty asserted with respect thereto.

         

        “Transferred
          Contracts”
means
          (i) the Life Care Contracts that are specifically identified on Schedule
          4.8
          (as
          updated through the Closing Date to include Life Care Contracts entered
          into by
          Sellers after August 17, 2005 in accordance with the terms of this Agreement);
          (ii) all Contracts set forth on Schedule
          4.10
          (as
          updated through the Closing Date to include Contracts entered into by the
          Sellers after August 17, 2005 in accordance with the terms of this Agreement)
          to
          the extent that such Contracts may be (a) assigned to the Buyer without
          consent
          (or for which the consent to such assignment is obtained prior to Closing),
          and
          (b) terminated by the Sellers or the Health Center Operator, and by Buyer
          after
          the Closing Date, without cause upon not more than 30 days’ notice and without
          the payment of any penalty, fee or other payment resulting from the termination
          thereof (but not any other Contracts on Schedule
          4.10);
          and
          (iii) any other Contracts specifically identified on Schedule
          2.9.
          Notwithstanding anything herein to the contrary, the Transferred Contracts
          shall
          not include the Collective Bargaining Agreements, the Multiemployer Pension
          Plans or the Medical Director Agreement between Freedom Village Nursing
          Center
          and Werther R. Marciales.

         

        Section
          1.2 Other
          Defined Terms.
          The
          following terms have the meanings defined for such terms in the Sections
          set
          forth below:

         

        
          	
                  Term

                	 	
                  Section

                
	
                  Accounts
                    Receivable

                	 	
                  Section
                    2.1(a)(xiv)

                
	
                  Acquisition

                	 	
                  Section
                    3.1

                
	
                  Additional
                    Earnest Money Deposit

                	 	
                  Section
                    2.4(a)

                
	
                  Agreement

                	 	
                  Preamble

                
	
                  Ancillary
                    Agreements

                	 	
                  Section
                    4.2

                
	
                  Application
                    Completion Notice

                	 	
                  Section
                    6.4(b)

                
	
                  Application
                    Date

                	 	
                  Section
                    6.4(b)

                
	
                  Approval
                    Date

                	 	
                  Section
                    6.4(b)

                
	
                  Approved
                    CIH

                	 	
                  Section
                    6.13

                
	
                  ARC

                	 	
                  Section
                    6.5(d)

                
	
                  Assignment
                    and Assumption Agreement

                	 	
                  Section
                    3.2(b)(ii)

                
	
                  Assumed
                    Liabilities

                	 	
                  Section
                    2.2

                

        

         

         

        
          
             

          

          
            5

            
              

            

          

          
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              to Table of
              Contents

          

        

         

        
           

          
            	
                    Term

                  	 	
                    Section

                  

          

        

        
          	
                  Audited
                    Financial Statements

                	 	
                  Section
                    4.15(a)

                
	
                  breaching
                    party

                	 	
                  Section
                    7.5

                
	
                  Buildings

                	 	
                  Section
                    2.1(a)(ii)

                
	
                  Buyer

                	 	
                  Preamble

                
	
                  Buyer
                    Indemnitees

                	 	
                  Section
                    11.2

                
	
                  Buyer
                    Material Adverse Effect

                	 	
                  Section
                    5.3

                
	
                  Buyer’s
                    Manager

                	 	
                  Preamble

                
	
                  CBA
                    Employees

                	 	
                  Section
                    6.5(a)

                
	
                  Chapter
                    651 Application Completion Date

                	 	
                  Section
                    6.4(b)

                
	
                  CIH
                    Certificate

                	 	
                  Section
                    6.13

                
	
                  Closing

                	 	
                  Section
                    3.1

                
	
                  Closing
                    Date

                	 	
                  Section
                    3.1

                
	
                  Closing
                    Escrow Agreement

                	 	
                  Section
                    2.4(a)

                
	
                  COBRA

                	 	
                  Section
                    2.3(j)

                
	
                  Code

                	 	
                  Section
                    2.4(c)

                
	
                  Confidentiality
                    Agreement

                	 	
                  Section
                    6.3

                
	
                  Consent

                	 	
                  Section
                    4.3

                
	
                  Covenant
                    Claim

                	 	
                  Section
                    11.7

                
	
                  Deed

                	 	
                  Section
                    3.2(a)(i)

                
	
                  Earnest
                    Money Deposit

                	 	
                  Section
                    2.4(a)

                
	
                  Earnest
                    Money Deposit Escrow Agreement

                	 	
                  Section
                    2.4(a)

                
	
                  Effective
                    Time

                	 	
                  Section
                    3.1

                
	
                  Eligible
                    Employees

                	 	
                  Section
                    6.5(a)

                
	
                  Employees

                	 	
                  Section
                    4.14

                
	
                  Escrow
                    Agent

                	 	
                  Section
                    2.4(a)

                
	
                  Excluded
                    Assets

                	 	
                  Section
                    2.1(b)

                
	
                  Excluded
                    Liability

                	 	
                  Section
                    2.3

                
	
                  Facility

                	 	
                  Recitals

                
	
                  Financial
                    Statements

                	 	
                  Section
                    4.15(a)

                
	
                  Financing

                	 	
                  Section
                    5.6(a)

                
	
                  Fund

                	 	
                  Section
                    11.3

                
	
                  Governmental
                    Entity

                	 	
                  Section
                    4.3

                
	
                  Hazardous
                    Substances

                	 	
                  Section
                    4.9

                
	
                  HC
                    Occupancy Agreements

                	 	
                  Section
                    4.8(a)

                
	
                  Health
                    Center

                	 	
                  Recitals

                
	
                  Health
                    Center Agreement Indemnities

                	 	
                  Section
                    2.1(a)(xvii)

                
	
                  Health
                    Center Agreements

                	 	
                  Section
                    2.1(b)(iv)

                
	
                  Health
                    Center Assignee

                	 	
                  Section
                    12.4

                
	
                  Health
                    Center Audited Financial Statements

                	 	
                  Section
                    4.23(a)

                
	
                  Health
                    Center Interim Balance Sheet

                	 	
                  Section
                    4.23(a)

                
	
                  Health
                    Center Interim Financial Statements

                	 	
                  Section
                    4.23(a)

                
	
                  Health
                    Center Lease

                	 	
                  Recitals

                
	
                  Health
                    Center Operator

                	 	
                  Recitals

                
	
                  Holdback
                    Amount

                	 	
                  Section
                    2.4(a)

                

        

         

         

        
          
             

          

          
            6

            
              

            

          

          
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              to Table of
              Contents

          

        

         

        
           

          
            	
                    Term

                  	 	
                    Section

                  

          

        

        
          	
                  ID
                    Number

                	 	
                  Section
                    4.8(a)

                
	
                  Improvements

                	 	
                  Section
                    2.1(a)(iii)

                
	
                  Indemnified
                    Party

                	 	
                  Section
                    11.4(a)

                
	
                  Indemnifying
                    Party

                	 	
                  Section
                    11.4(a)

                
	
                  Initial
                    Earnest Money Deposit

                	 	
                  Section
                    2.4(a)

                
	
                  Interim
                    Balance Sheet

                	 	
                  Section
                    4.15(a)

                
	
                  Interim
                    Financial Statements

                	 	
                  Section
                    4.15(a)

                
	
                  Investigation
                    Period

                	 	
                  Section
                    2.5(a)

                
	
                  Key

                	 	
                  Section
                    4.8(g)

                
	
                  Land

                	 	
                  Section
                    2.1(a)(i)

                
	
                  Leases

                	 	
                  Section
                    4.7(c)

                
	
                  Liens

                	 	
                  Section
                    4.7(b)

                
	
                  Losses

                	 	
                  Section
                    11.2

                
	
                  Monetary
                    Liens

                	 	
                  Section
                    7.2(d)

                
	
                  Multiemployer
                    Pension Plan

                	 	
                  Section
                    6.5(c)

                
	
                  New
                    CBA

                	 	
                  Section
                    6.5(a)

                
	
                  Non-CBA
                    Employees

                	 	
                  Section
                    6.5(a)

                
	
                  Notice
                    of Material Breach

                	 	
                  Section
                    7.5

                
	
                  Objection
                    Notice

                	 	
                  Section
                    7.2(d)

                
	
                  Permitted
                    Exceptions

                	 	
                  Section
                    7.2(d)

                
	
                  Permitted
                    Liens

                	 	
                  Section
                    4.7(b)

                
	
                  PHI

                	 	
                  Section
                    6.8

                
	
                  PIM

                	 	
                  Section
                    12.1

                
	
                  PIPP

                	 	
                  Section
                    2.2(ii)

                
	
                  Plans

                	 	
                  Section
                    4.17(b)

                
	
                  Prudential

                	 	
                  Section
                    4.25

                
	
                  PSI

                	 	
                  Section
                    6.13

                
	
                  PTE
                    84-14

                	 	
                  Section
                    4.25

                
	
                  Purchase
                    Price

                	 	
                  Section
                    2.4(a)

                
	
                  Purchased
                    Assets

                	 	
                  Section
                    2.1(a)

                
	
                  QPAM

                	 	
                  Section
                    5.9(b)

                
	
                  Receiving
                    Party

                	 	
                  Section
                    7.5

                
	
                  Release

                	 	
                  Section
                    4.9

                
	
                  Remaining
                    Payment

                	 	
                  Section
                    2.4(a)

                
	
                  Remediation

                	 	
                  Section
                    6.13

                
	
                  Remediation
                    Deficiency Notice

                	 	
                  Section
                    6.13

                
	
                  Remediation
                    Plan

                	 	
                  Section
                    6.13

                
	
                  Report

                	 	
                  Section
                    6.13

                
	
                  Representation
                    Claim

                	 	
                  Section
                    11.7

                
	
                  Required
                    Consent

                	 	
                  Section
                    2.10(c)

                
	
                  Resident
                    List

                	 	
                  Section
                    4.8(a)

                
	
                  Response
                    Notice

                	 	
                  Section
                    7.2(d)

                
	
                  Retirement
                    Center

                	 	
                  Recitals

                
	
                  Security,
                    Waiting List and Sale Deposits

                	 	
                  Section
                    2.1(a)(x)

                

        

         

         

        
          
             

          

          
            7

            
              

            

          

          
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              to Table of
              Contents

          

        

         

        
           

          
            	
                    Term

                  	 	
                    Section

                  

          

        

        
          	
                  SEIU

                	 	
                  Section
                    6.5(a)

                
	
                  Seller

                	 	
                  Preamble

                
	
                  Sellers

                	 	
                  Preamble

                
	
                  Sellers
                    Indemnitees

                	 	
                  Section
                    11.3

                
	
                  Sellers
                    Insurance Policies

                	 	
                  Section
                    4.18

                
	
                  Surety
                    Period

                	 	
                  Section
                    6.5(c)

                
	
                  Survey

                	 	
                  Section
                    7.2(d)

                
	
                  Taking

                	 	
                  Section
                    9.2(c)

                
	
                  Third
                    Party Claim

                	 	
                  Section
                    11.4(a)

                
	
                  Title
                    Commitment

                	 	
                  Section
                    7.2(d)

                
	
                  Title
                    Company

                	 	
                  Section
                    7.2(d)

                
	
                  Transferred
                    Employee

                	 	
                  Section
                    6.5(a)

                
	
                  Transferred
                    Permits

                	 	
                  Section
                    2.1(a)(xiii)

                
	
                  Westport
                    Holdings

                	 	
                  Preamble

                
	
                  Westport
                    Nursing

                	 	
                  Preamble

                

        

        

        ARTICLE
          II

         

        PURCHASE
          AND SALE OF ASSETS

         

        Section
          2.1 Purchased
          and Excluded Assets. 

         

        (a)    Transfer
          of Purchased Assets.
          At the
          Closing the Sellers shall sell, transfer, assign and deliver to the Buyer,
          and
          the Buyer shall purchase, acquire and accept from the Sellers, all of the
          right,
          title and interest of the Sellers in, to and under the
          following assets related to the Facility (collectively, the “Purchased
          Assets”):
          

         

        (i)    subject
          to the Permitted Exceptions, fee simple title to all of those certain parcels
          of
          land located in Bradenton, Florida and more particularly described in
Schedule
          2.1(a)(i)
          (the
“Land”);

         

        (ii)    subject
          to the Permitted Exceptions, fee title to all improvements presently erected
          on
          the Land (the “Buildings”);

         

        (iii)    subject
          to the Permitted Exceptions, fee title to all fixtures attached to the
          Buildings
          which are owned by the Sellers, including, but not limited to, the heating,
          plumbing, electrical, lighting, air conditioning and pool systems (the
          “Improvements”);
          

         

        (iv)    all
          estates, rights, privileges, easements, agreements, appurtenances, development
          rights, sewer and utility rights, and any other governmental entitlements
          belonging or in anywise appertaining to the Land and Buildings;

         

        (v)    all
          furniture, fixtures, machinery, equipment and other chattels which are
          used in
          the day to day operations of the Facility, including, but not limited to:
          beds,

         

        
          
             

          

          
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        furniture
          and furnishings, medical equipment, linens, window furnishings, carpets
          and
          floor coverings, appliances, televisions, wheelchairs, canes, walkers,
          kitchen
          equipment, dining room furniture, pool equipment, beauty parlor equipment,
          exercise equipment, etc., including the fixed assets set forth on Schedule
          2.1(a)(v);

         

        (vi)    all
          supplies and inventory at the Facility including all foodstuffs,
          pharmaceuticals, cleaning and maintenance supplies and spare parts;

         

        (vii)    all
          cars,
          trucks, buses, vans and other motor vehicles owned by the Sellers and used
          in
          connection with the operation of the Facility as set forth on Schedule
          2.1(a)(vii);

         

        (viii)    all
          trademarks, trade names, including “Freedom Village,” trademark registrations,
          signs, logos or other intangible property rights used in the operation
          of the
          Facility, if any, including all goodwill connected with or symbolized by
          the use
          thereof and all licenses, to the extent transferable;

         

        (ix)    all
          Transferred Contracts; 

         

        (x)    all
          security deposits paid to the Sellers by residents, tenants and patients
          and all
          waiting list or sale deposits of any type, kind or nature (including any
          deposit
          that will be credited against the entrance fee) (the “Security,
          Waiting List and Sale Deposits”);

         

        (xi)    all
          rights that accrue to the Facility due to prepaid expenses (excluding prepaid
          insurance premiums); 

         

        (xii)    subject
          to such confidentiality restrictions as may be imposed by applicable law
          or to
          which the Sellers are contractually bound, all books of account, and general,
          financial, accounting and personnel records, and, to the extent transferable
          by
          the Sellers, medical records of residents or patients at the Facility (past
          or
          present);

         

        (xiii)    only
          to
          the extent assignable, all permits, consents, approvals, franchises or
          authorizations from any Governmental Entity (collectively, the “Transferred
          Permits”);

         

        (xiv)    all
          accounts receivable of the Sellers for services rendered or products supplied
          prior to the Closing Date (excluding Entrance Fee Receivables and any and
          all
          receivables relating to the operations of the Health Center as of the Closing
          Date) (“Accounts
          Receivable “);

         

        (xv)    to
          the
          extent transferable, all warranties and guarantees associated with the
          Buildings, Improvements, furniture, fixtures, equipment and other personal
          property;

         

        (xvi)    all
          property and casualty insurance benefits (whether self-insured or insured
          by a
          third party), including rights and proceeds, arising from or relating to
          the
          Facility prior to the Closing Date, except to the extent expended in accordance
          with this Agreement or necessary to reimburse Sellers for costs actually
          paid by
          Sellers, to the extent applicable in accordance with this Agreement, prior
          to
          Closing to repair or restore, to the extent applicable in

         

        
          
             

          

          
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        accordance
          with this Agreement, any of the Purchased Assets damaged as a result of
          a
          casualty event;

         

        (xvii)    all
          indemnities granted to Sellers by the Health Center Operator pursuant to
          the
          Health Center Agreements, except to the extent they relate to Excluded
          Liabilities (the “Health
          Center Agreement Indemnities”);

         

        (xviii)    all
          Entrance Fee Receivables;

         

        (xix)    all
          computer hardware, software, programs and operating systems used for the
          keeping
          of records and the operation of the Facility except any proprietary software
          developed and owned exclusively by Seller; and

         

        (xx)    any
          other
          tangible or intangible asset of any kind or nature primarily used in connection
          with the ownership or operation of the Facility that is not specifically
          identified as an Excluded Asset.

         

        (b)    Excluded
          Assets.
          Notwithstanding anything to the contrary contained in this Agreement, the
          Purchased Assets shall expressly exclude the following, and only the following,
          assets and rights of the Sellers (collectively, the “Excluded
          Assets”),
          which
          shall not be sold, transferred, assigned or delivered to the Buyer:

         

        (i)    all
          cash,
          cash equivalents, certificates of deposit, bank deposits and marketable
          securities whether on hand or in accounts (other than the Security, Waiting
          List
          and Sale Deposits);

         

        (ii)    the
          “Minimum Liquid Reserve” accounts owned or created by the Sellers pursuant to
          Chapter 651, Florida Statutes;

         

        (iii)    insurance
          policies and any prepaid insurance premiums, self-funded insurance programs
          and
          the assets or proceeds thereof (except to the extent described in Section
          2.1(a)(xvi));

        

        (iv)    the
          Health Center Lease, the Credit Agreement with the Health Center Operator,
          including the right to receive repayment of borrowings thereunder, and
          the
          service agreements with the Health Center Operator (other than the Health
          Center
          Agreement Indemnities described in Section
          2.1(a)(xvii))
          (collectively, the “Health
          Center Agreements”);

         

        (v)    all
          Excluded Contracts, including, without limitation, the Collective Bargaining
          Agreements, the Multiemployer Pension Plan and the Medical Director Agreement
          between Freedom Village Nursing Center and Werther R. Marciales and all
          assets,
          properties and rights derived therefrom;

         

        (vi)    any
          security deposits, claims for security deposits or rights to receive security
          deposits paid by the Sellers with respect to the operation of the
          Facility;

         

        (vii)    any
          deposits, escrows, or reserves for real estate taxes, insurance, furniture,
          fixtures and equipment or otherwise made to any lender of the
          Sellers;

         

        
          
             

          

          
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        (viii)    any
          licenses, certificates of need, and other similar items, the transfer of
          which
          to the Buyer is prohibited by an applicable governmental rule or
          regulation;

         

        (ix)    letters
          of credit or deposits provided to utility companies or those provided for
          any
          other purpose;

         

        (x)    any
          refunds or credits, claims for refunds or credits, or rights to receive
          refunds
          or credits with respect to the Facility paid or to be paid to the Sellers
          or any
          of their respective Affiliates (other than those arising under the Transferred
          Contracts); 

         

        (xi)    any
          records (including accounting records) related to Taxes paid or payable
          by the
          Sellers or any of their Affiliates and all financial and Tax records that
          form
          part of the Sellers’ or any of their Affiliate’s general ledger;

         

        (xii)    all
          documents, drafts and records received or prepared in connection with the
          planning and sale of the Purchased Assets, including bids received from
          third
          parties and analyses relating to the Facility;

         

        (xiii)    all
          employee benefit plans; 

         

        (xiv)    the
          organizational documents and other company and partnership records and
          documents
          having to do with the organization or operation of each of the Sellers;
          

         

        (xv)    all
          claims, causes of action, choses in action, rights of recovery and rights
          of
          set-off of any kind, pertaining to, arising out of, and inuring to the
          benefit
          of the Sellers relating to matters arising prior to the Closing
          Date;

         

        (xvi)    all
          indemnities granted to Sellers by the Health Center Operator pursuant to
          the
          Health Center Agreements to the extent they relate to Excluded Liabilities;
          and

         

        (xvii)    the
          rights that accrue or will accrue to the Sellers under this Agreement and
          any
          other agreements, certificates and instruments relating to the sale of
          the
          Purchased Assets or otherwise delivered in connection with this
          Agreement.

         

        Section
          2.2 Assumption
          of Liabilities.
          In
          partial payment of the Purchase Price, the Buyer shall assume, and hereby
          covenants and agrees to timely perform, pay or discharge, only the following
          obligations, liabilities and commitments, and no other obligations, liabilities
          or commitments whatsoever (collectively, the “Assumed
          Liabilities”):

         

        (i)    all
          of
          the obligations, liabilities and commitments of the Sellers and the Health
          Center Operator under the Transferred Contracts, but only to the extent
          that
          such obligations, liabilities and commitments relate to the period from
          and
          after the Closing Date or to the extent that Buyer receives a credit therefor
          against the Purchase Price pursuant to Section
          2.6,
          and
          specifically excluding any liability arising thereunder for a breach thereof
          that occurred prior to the Closing Date;

         

        (ii)    all
          of
          the obligations, liabilities and commitments of the Sellers arising under
          the
          Sellers’ Personal Income Protection Plan (“PIPP”),
          but
          in the case of PIPP

         

        
          
             

          

          
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        deposit
          liabilities, only to the extent set forth on Schedule
          4.8(d)
          (as
          updated through the Closing Date); 

         

        (iii)    all
          of
          the obligations, liabilities and commitments of the Sellers related to
          or
          otherwise in respect of the Freedom Village Master Trusts, but in the case
          of
          refund liabilities secured by the Freedom Village Master Trusts, only to
          the
          extent set forth on Schedules
          4.8(a)
          (as
          updated through the Closing Date);

         

        (iv)    all
          of
          the obligations, liabilities and commitments of the Sellers to refund the
          entrance fees or deposits under the Life Care Contracts that are listed
          on
Schedule
          4.8
          (as
          updated through the Closing Date) that are terminated on or after the Closing
          Date; 

         

        (v)    all
          Straddle Entrance Fee Refunds; 

         

        (vi)    all
          liability for the amount of all accrued (vested or unvested) vacation,
          personal
          time, time off, holiday or sick leave as of the Closing Date for Transferred
          Employees (which shall be assumed by Buyer’s manager or lessee), but only to the
          extent that Buyer receives a credit therefor against the Purchase Price
          pursuant
          to Section
          2.6(b);
          and

         

        (vii)    to
          the
          extent not otherwise described in clauses (i) through (vi) of this Section
          2.2,
          any
          specifically identified payment obligation(s) of the Sellers or the Health
          Center Operator for which the Buyer receives a corresponding credit(s)
          against
          the Purchase Price pursuant to Section
          2.6.

         

        Section
          2.3 Excluded
          Liabilities.
          Notwithstanding anything to the contrary contained in this Agreement, except
          for
          the Assumed Liabilities, Buyer shall not assume, or become responsible
          in any
          way for, any other liabilities or obligations of either of the Sellers
          or the
          Health Center Operator, or any other liabilities or obligations that relate
          in
          any way to the Purchased Assets or the ownership or operation of all or
          any
          portion of the Facility prior to the Closing Date (each, an “Excluded
          Liability”)
          which
          shall include, without limitation, the following:

         

        (a)    all
          Taxes
          arising out of, relating to or in respect of the Facility imposed upon
          the
          Sellers for all taxable periods before the Closing, and all Taxes arising
          from
          the transactions contemplated hereby (except for Transfer Taxes as set
          forth in
Section
          2.8);
          

         

        (b)    all
          obligations, liabilities and commitments of the Sellers to the extent arising
          out of, relating to or in respect of the Excluded Assets; 

         

        (c)    any
          liability or obligation that arises or relates to the breach of, or default
          under, any contract, agreement or obligation prior to the Closing
          Date;

         

        (d)    any
          liability arising out of any lawsuit, legal or regulatory proceeding, of
          any
          type, kind or nature pending as of the Closing Date or relating to the
          operation
          of the Facility prior to the Closing Date;

         

        (e)    any
          liability arising or resulting from the non-compliance of the Facility
          or its
          operations with laws, rules or regulations, or any order of any Governmental
          Entity prior to

         

        
          
             

          

          
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        the
          Closing Date, other than any noncompliance, if any, that relates solely
          to the
          physical condition of the Real Property as of the Closing Date (subject
          to the
          representations and warranties specifically set forth in Article
          IV);

         

        (f)    any
          obligations, liabilities or commitments to pay any entrance fee or deposit
          refunds under Life Care Contracts that are not specifically set forth on
          Schedule
          4.8
          (as
          updated through the Closing Date to include Life Care Contracts entered
          into by
          the Sellers after the August 17, 2005 in accordance with the terms of this
          Agreement); 

         

        (g)    any
          PIPP
          deposit refund liability that is not specifically identified on Schedule
          4.8(d)
          (as
          updated through the Closing Date); 

         

        (h)    any
          Master Trust Debt not specifically identified on Schedule
          4.8(a)
          (as
          updated through the Closing Date); 

         

        (i)    any
          liability or obligation relating to the termination of the Health Center
          Agreements; 

         

        (j)    other
          than accrued vacation, personal time, time off, holiday, and sick leave
          time
          described in Section
          2.2(vi)
          above,
          any liability, obligation or covenant owed to any employee (past or current)
          to
          the extent arising prior to, or accruing before, the Closing Date, including,
          without limitation, any liabilities or obligations under Section 4980B
          of the
          Code and Sections 601 through 608, inclusive, of ERISA (collectively,
“COBRA”),
          whether arising before or after the Closing Date;

         

        (k)    any
          liability or obligation in respect of periods prior to the Closing Date
          arising
          under the terms of the Medicare, Medicaid, Veterans Administration, or
          any other
          third-party payor program, including without limitation any retroactive
          denial
          of claims or monetary penalties.

         

        The
          Sellers shall remain solely responsible for the Excluded Liabilities, and
          shall
          pay, discharge, or satisfy the Excluded Liabilities as the same come
          due.

        

        Section
          2.4 Purchase
          Price. 

         

        (a)    In
          addition to the Buyer’s assumption of the Assumed Liabilities, the aggregate
          purchase price (the “Purchase
          Price”)
          for
          the Purchased Assets shall be the payment of $95,000,000 in cash as follows:
          (w)
          $2,000,000 (the “Initial
          Earnest Money Deposit”)
          has
          been paid by the Buyer ($1,000,000 on August 17, 2005 and $1,000,000 on
          October
          3, 2005) by wire transfer of immediately available funds to an account
          designated by the Title Company, as escrow agent (the “Escrow
          Agent”)
          and is
          being held by the Escrow Agent pursuant to the terms of the escrow agreement
          (the “Earnest
          Money Deposit Escrow Agreement”)
          attached hereto as Exhibit A; (x) $1,000,000 (the “Additional Earnest Money
          Deposit,” and together with the Initial Earnest Money Deposit, the “Earnest
          Money Deposit”)
          shall
          be paid by the Buyer to Sellers by wire transfer of immediately available
          funds
          to the Escrow Agent to be held pursuant to the terms of the Earnest Money
          Deposit Escrow Agreement upon the expiration of the Investigation Period
          if
          Buyer has not elected to terminate the Agreement in accordance with Section
          2.5,
          (y) $5,000,000 (the “Holdback
          Amount”)
          shall
          be paid to the Escrow Agent at Closing pursuant to

         

        
          
             

          

          
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        the
          terms
          of the escrow agreement attached hereto as Exhibit B (the “Closing
          Escrow Agreement”)
          as
          security for Sellers’ obligations and liabilities under this Agreement and the
          Ancillary Agreements; and (z) $87,000,000, subject to adjustment pursuant
          to
Sections
          2.4(b)
          and
2.6
          (the
“Remaining
          Payment”),
          shall
          be paid by the Buyer to the Sellers at the Closing by wire transfer of
          immediately available funds to an account or accounts designated by the
          Sellers.
          All funds deposited with the Escrow Agent shall be held and disbursed in
          accordance with the terms of the Earnest Money Deposit Escrow Agreement
          or the
          Closing Escrow Agreement, as the case may be.

         

        (b)    The
          Remaining Payment to be paid by the Buyer to the Sellers at Closing shall
          be
          reduced by the following: 

         

        (i)    an
          amount, if any, equal to the amount by which the total amount of PIPP deposit
          liabilities as of the date immediately preceding the Closing Date exceeds
          $7,500,000; 

         

        (ii)    an
          amount
          equal to the Excess Liabilities;

         

        (iii)    an
          amount
          equal to the Straddle Entrance Fee Refunds owed to prior residents of the
          Facility that have terminated their Life Care Contracts and whose dwelling
          units
          have been resold prior to the Closing Date (which resale has actually closed
          and
          for which there is no corresponding Entrance Fee Deposit Receivable);
          and

         

        (iv)    an
          amount
          equal to amounts remaining in the reserve accounts established under the
          Health
          Center Agreements, if any, to the extent that such accounts have been
          transferred by the Health Center Operator to the Sellers.

         

        (c)    In
          the
          event that (i) the Remediation Completion Date occurs on or before May
          15, 2006
          and (ii) the Closing occurs on or after June 1, 2006, in addition to the
          adjustments set forth in Section 2.4(b), the Remaining Payment to be paid
          by the
          Buyer to the Sellers at Closing shall be increased by $200,000, provided
          that
          the failure to close prior to June 1, 2006 is not caused by the Sellers’ failure
          to act in good faith or use their reasonable efforts to cause the Closing
          to
          occur, as required by Section 6.4. 

         

        (d)    The
          Buyer
          and the Sellers shall agree upon an allocation of the Purchase Price (and
          all
          other capitalized costs) and the amount of the Assumed Liabilities among
          the
          Purchased Assets consistent with Section 1060 of the Internal Revenue Code
          of
          1986, as amended (the “Code”),
          and
          the Treasury Regulations promulgated thereunder prior to Closing, which
          allocation shall be attached hereto as Schedule
          2.4(d).
          Each of
          the Buyer and the Sellers agree to file Internal Revenue Service Form 8594,
          and
          all federal, state and local Tax Returns (as hereinafter defined), in accordance
          with any such agreed allocation as adjusted as provided herein. Each of
          the
          Buyer and the Sellers shall report the transactions contemplated by this
          Agreement for Tax purposes in a manner consistent with the allocation determined
          pursuant to this Section
          2.4(d).
          Except
          as required by applicable law, the Buyer and the Sellers shall not take
          any
          position in any Tax Return, Tax proceeding or audit that is inconsistent
          with
          such allocation.

         

        Section
          2.5 Investigation
          Period.

         

        
          
             

          

          
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        (a)    The
          Sellers shall give the Buyer full access to the Facility, upon reasonable
          prior
          notice during normal business hours, in order for the Buyer to timely conduct
          its due diligence investigation of the Facility, the Purchased Assets and
          the
          operations and financial affairs of the Facility, including, but not limited
          to,
          detailed site visits to be conducted by the Buyer or its representatives,
          and
          the right of the Buyer or its representatives to conduct building and physical
          plant inspections, Real Property surveys, environmental and engineering
          tests,
          investigations of the books and records and financial information of the
          Sellers, employee interviews, inspections of all licensing reports and
          information, inspections of medical records to the extent allowed under
          applicable law, and other due diligence inspections and investigations.
          The
          Sellers shall have the right to have a representative present during any
          employee interviews conducted by the Buyer. The Sellers shall deliver to
          Buyer
          copies of all Life Care Contracts as of the date hereof and all of the
          agreements, licenses or other documents listed on the disclosure schedules
          attached hereto within five (5) business days after the execution of this
          Agreement. The Buyer shall have until the later of (i) March 30, 2006 and
          (ii)
          the date that is four Business Days following the Sellers’ delivery to the Buyer
          of the disclosure schedules called for by this Agreement updated as of
          December
          31, 2005 or a subsequent date (the “Investigation
          Period”)
          to
          conduct its investigation. On or before expiration of the Investigation
          Period,
          the Buyer, in its sole and absolute discretion, for any reason whatsoever,
          by
          notice to the Sellers on or before expiration of the Investigation Period,
          shall
          have the right, at its option, to terminate this Agreement on or before
          such
          date in which event the Earnest Money Deposit will be refunded to the Buyer
          upon
          delivery of the documents referred to below and neither party shall have
          further
          liability to the other on account of this Agreement, provided however,
          that the
          Buyer shall within ten (10) days of such termination, return to the Sellers,
          or
          certify to Sellers Buyer’s destruction of, all documents and materials delivered
          to the Buyer by the Sellers pursuant to this Agreement. The provisions
          of this
Section
          2.5(a)
          shall
          survive the termination of this Agreement.

         

        (b)    The
          Buyer
          shall indemnify, hold harmless and defend the Sellers from and against
          any loss,
          damage, liability or claim for personal injury or property damage and any
          other
          loss, damage, liability, claim or lien to the extent arising from the acts
          at or
          upon the Real Property by the Buyer or any of its agents, contractors,
          auditors,
          engineers, attorneys, employees, consultants and other representatives.
          The
          Buyer understands and agrees that any on-site inspections of the Real Property
          shall occur at reasonable times agreed upon by the Sellers and the Buyer
          after
          not less than two (2) Business Days prior notice to the Sellers and shall
          be
          conducted so as not to interfere unreasonably with the operation of the
          Facility. The Sellers shall have the right to have a representative present
          during any such inspections. If the Buyer desires to do any invasive testing
          of
          the Real Property, the Buyer shall do so only after notifying the Sellers
          and
          obtaining the Sellers’ prior written consent thereto, which may be subject to
          reasonable terms and conditions as may be proposed by the Sellers. The
          Buyer
          shall not permit any liens to attach to any portion of the Real Property
          prior
          to the Closing Date. The Buyer shall (i) restore the Real Property, at
          its own
          expense, to the same condition which existed prior to any inspections or
          other
          activities of the Buyer thereon; and (ii) be responsible for and pay any
          and all
          liens by contractors, subcontractors, materialmen, or laborers performing
          the
          inspections or any other work pursuant to the Buyer’s investigation of the
          Facility. All contractors and others performing any tests and studies on
          the
          Real Property shall first present to the Sellers reasonably satisfactory
          evidence that such party is adequately insured in order to reasonably protect
          the Sellers from any loss, liability, or damage arising out of the performance
          of such tests or studies.

         

        
          
             

          

          
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        The
          provisions of this Section
          2.5(b)
          shall
          survive any termination of this Agreement and a closing of the transaction
          contemplated hereby.

         

        Section
          2.6 Closing
          Adjustments.

         

        (a)    Except
          as
          otherwise set forth in this Section
          2.6,
          all
          revenues and expenses of the Facility applicable to the period of time
          before
          and after the Closing shall be allocated between the Sellers and the Buyer
          as
          provided herein. Pursuant to such allocation, the Sellers shall be entitled
          to
          all revenue (other than Accounts Receivable, Entrance Fee Receivables and
          receivables of the Health Center Operator) and shall be responsible for
          all
          expenses for the period of time up to but not including the Closing Date,
          and
          the Buyer shall be entitled to all revenue and shall be responsible for
          all
          expenses for the period of time from, after and including the Closing Date.
          Such
          allocations and adjustments shall be shown on the closing statement to
          be
          executed by the parties on the Closing Date (with such supporting documentation
          as the parties hereto may reasonably require being attached as exhibits
          to the
          closing statement) and shall increase or decrease (as the case may be)
          the cash
          amount payable by the Buyer to the Sellers at Closing. All prorations shall
          be
          made on the basis of the actual number of days in the year and month in
          which
          the Closing occurs or in the period of computation. No prorations or allocations
          shall be made with respect to Entrance Fee Receivables, Accounts Receivable
          or
          receivables of the Health Center Operator, except to the extent specifically
          set
          forth in Section
          2.6(c)
          of this
          Agreement.

         

        (i)    Without
          limiting the generality of the foregoing, the following items of revenue
          and
          expense shall be allocated and prorated at Closing: utility charges; water
          and
          sewer charges; real estate taxes and all other public and governmental
          taxes,
          charges and assessments; charges for oil and heating services; charges
          under the
          Transferred Contracts; and assessments against the Real Property or the
          Facility
          or its operations. Notwithstanding the foregoing, the Buyer shall be responsible
          for establishing new utility accounts with its vendors to be effective
          on the
          Closing Date.

         

        (ii)    The
          Sellers shall be responsible for payments owing on deliveries made prior
          to the
          Closing Date. The Buyer shall be responsible for payments owing on deliveries
          made on or after the Closing Date.

         

        (iii)    The
          Sellers shall receive a credit for any prepaid expenses in connection with
          any
          Assumed Liabilities on or after the Closing Date. The Buyer shall receive
          a
          credit for that portion of any monthly fees paid to the Sellers or the
          Health
          Center Operator prior to the Closing Date under the Life Care Contracts,
          the HC
          Occupancy Agreements, or other contracts with residents that relate to
          periods
          from and after the Closing Date.

         

        (b)    The
          Buyer
          shall receive a credit against the Purchase Price for the amount of all
          accrued
          (vested or unvested) vacation, personal time, time off, holiday or sick
          leave
          for the Transferred Employees on the Closing Date. To the extent that any
          Transferred Employee is terminated by the Buyer (or its manager or lessee)
          as a
          result of the Buyer (or its manager or lessee) not receiving a satisfactory
          post-closing background check, drug test or license verification for such
          Transferred Employee, then the Buyer (or Buyer’s manager, lessee or other
          designee) shall promptly following such termination pay to the Sellers
          an amount
          equal to the

         

        
          
             

          

          
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        closing
          credit for accrued (vested or unvested) vacation, personal time, time off,
          holiday or sick leave attributable to such terminated Transferred Employee
          to
          the extent Sellers have the legal obligation to pay such terminated Transferred
          Employee such amount.

         

        (c)    The
          Purchase Price due to Sellers shall be increased by an amount equal to
          the
          product obtained by multiplying the amount of Accounts Receivable transferred
          to
          Buyer at Closing that is less than 90 days outstanding by .95. Notwithstanding
          anything herein to the contrary, for purposes of this Section
          2.6(c),
          Accounts Receivable shall not include any deferred entrance fees deducted
          from
          Master Trust Debt pursuant to clause (ii) of the definition
          thereof.

         

        (d)    If
          the
          parties ascertain any error in any adjustment following Closing or if certain
          adjustments are approximated to facilitate Closing, the parties covenant
          and
          agree to promptly readjust such items when the correct information becomes
          available.

         

        (e)    Buyer
          shall receive a credit against the Purchase Price for the amount, if any,
          required to complete the items designated on Schedule
          6.1(b)(viii)
          as
“Ongoing” or “Planned” (i.e., all items not designated on such Schedule as being
“Completed”) that are not actually completed as of the Closing Date, provided,
          however, that the credit, if any, for the final three items set forth on
          such
          schedule (Kitchen A/C Repairs, Veranda Dining Room Remodeling and Paint
          Ext. of
          Landings) shall be equal to the lesser of the cost to complete such items
          or the
          bid price for such items set forth on such Schedule.

         

        (f)    If
          Buyer,
          in its sole discretion, elects to proceed with the Closing even though
          the
          Remediation has not been completed, Buyer shall receive a credit against
          the
          Purchase Price, in an amount reasonably agreed upon by the Sellers and
          Buyer at
          that time, in the amount required to complete the Remediation that is not
          actually completed as of the Closing Date.

         

        (g)    If
          accurate allocations cannot be made at Closing because current bills are
          not
          obtainable (as, for example, in the case of utility bills and/or real estate
          or
          personal property taxes), the parties shall allocate such revenue or expenses
          at
          Closing on the best available information, subject to adjustment upon receipt
          of
          the final bill or other evidence of the applicable revenue or expense.
          The
          obligation to make the adjustment shall survive the Closing of the transaction
          contemplated by this Agreement. Any revenue received or expense incurred
          by the
          Sellers, the Buyer or Health Center Operator with respect to the Facility
          after
          the date of Closing shall be promptly allocated in the manner described
          herein
          and the parties shall promptly pay or reimburse any amount due. If the
          Buyer and
          the Sellers are unable to agree on the closing statement allocations on
          the
          Closing Date, the Closing shall occur and a preliminary closing statement
          shall
          be signed with respect to such amounts and issues that are agreed upon
          by the
          Buyer and the Sellers. With respect to any closing statement amounts or
          issues
          that are not agreed upon at Closing, the Sellers and the Buyer shall thereafter
          work in good faith to resolve, allocate or prorate such amounts or issues;
          provided that if such amounts or issues are not fully agreed upon and paid
          within ninety (90) days after the Closing, then, in such event, such amounts
          or
          issues shall be submitted to an independent certified public accountant
          reasonably acceptable to the Buyer and the Sellers for final resolution
          and the
          Buyer and the Sellers agree to be bound by the determination of such accountant.
          The costs and expenses incurred in connection with the services of such
          accountant shall be borne and paid equally by the Sellers,

         

        
          
             

          

          
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        on
          the
          one hand and the Buyer, on the other hand. The provisions of all of Section
          2.6
          shall
          survive the Closing.

         

        Section
          2.7 Security,
          Waiting List and Sale Deposits.
          From
          and after the Closing, the Sellers shall be relieved of any and all
          responsibility in connection with Security, Waiting List and Sale Deposits
          held
          by the Sellers on behalf of residents, tenants or patients and any other
          funds
          of the residents, to the extent that such Security, Waiting List and Sale
          Deposits and funds are actually delivered to the Buyer or Buyer receives
          a
          credit therefor against the Purchase Price and are included in the Assumed
          Liabilities, and, to that extent, the Buyer shall indemnify the Sellers
          and
          their Affiliates and hold them harmless from and against any claim, liability,
          cost or expense (including reasonable attorneys’ fees) incurred by them with
          respect thereto. The provisions of this Section
          2.7
          shall
          survive the Closing.

         

        Section
          2.8 Transfer
          Taxes.
          The
          Buyer shall pay all Transfer Taxes; provided,
          however,
          that
          the Sellers shall use reasonable efforts to avail themselves of any available
          exemptions from any such Transfer Taxes and shall reasonably cooperate
          with
          Buyer to reduce such Transfer Taxes to the extent legally permissible.
          Each of
          the Sellers, the Buyer and their respective Affiliates shall execute and
          deliver
          all instruments and certificates as are necessary to enable such other
          parties
          to comply with any filing requirements relating to any such Transfer
          Taxes. 

         

        Section
          2.9 Transferred
          Contracts.
          On or
          before the expiration of the Investigation Period, the Buyer shall determine,
          in
          its sole and absolute discretion, which Contracts that are not already
          included
          in clauses (i) through (iii) of the definition of Transferred Contracts
          will be
          assumed by Buyer, and will provide Sellers with a Schedule
          2.9
          specifically identifying such additional Contracts to be included as Transferred
          Contracts. 

         

        Section
          2.10 Third
          Party Consents for Transferred Contracts. 

         

        (a)    Sellers
          shall use commercially reasonable efforts to obtain all Consents reasonably
          requested by the Buyer and required for the transfer of the Transferred
          Contracts to Buyer. Notwithstanding anything to the contrary in this Agreement,
          this Agreement shall not constitute an agreement to assign any Transferred
          Contract or any claim, right or any benefit arising under or resulting
          from such
          Transferred Contract if an attempted assignment thereof, without the Consent
          of
          a third party, would constitute a breach, default or violation of such
          Transferred Contract. If any transfer or assignment by the Sellers or any
          of
          their Affiliates to, or any assumption by the Buyer of, any interest in,
          or
          obligation, liability or commitment under, any Transferred Contract requires
          the
          Consent of a third party, then such transfer, assignment or assumption
          shall be
          made subject to such Consent being obtained. 

         

        (b)    If
          any
          such Consent is not obtained prior to the Closing Date, the Closing shall
          nonetheless take place on the terms set forth herein. In which event, the
          Buyer
          may, with respect to each Transferred Contract for which a Consent has
          not been
          so obtained, cause the Sellers to provide or cause to be provided all
          commercially reasonable assistance to the Buyer (not including the payment
          of
          any consideration) reasonably requested by the Buyer to secure such Consent
          after the Closing and cooperate with the Buyer (at the Buyer’s expense) in any
          lawful and commercially reasonable arrangement reasonably proposed by the
          Buyer
          under which

         

        
          
             

          

          
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        (x)    the
          Buyer
          shall obtain (without infringing upon the legal rights of such third party
          or
          violating any applicable law) the economic claims, rights and benefits
          under the
          subject Transferred Contract(s), and (y) the Buyer shall assume any related
          economic burden (including the amount of any related Tax costs imposed
          on the
          Sellers or any of their Affiliates) with respect to the subject Transferred
          Contract and the claims, rights or benefits arising under or resulting
          from the
          subject Transferred Contract(s) agreement.

         

        (c)    Notwithstanding
          Section
          2.10(b)
          to the
          contrary, with respect to any Consent that is identified by Buyer on or
          before
          the end of the Investigation Period as a required Consent (“Required
          Consent”),
          Buyer
          may elect with respect to each Transferred Contract for which the Required
          Consent has not been obtained, to either cause Sellers to comply with
Section
          2.10(b)
          or elect
          to have the Sellers retain the subject Transferred Contract(s) and all
          liabilities and obligations associated therewith (in which event, such
          Transferred Contract(s) shall be considered to be an Excluded Contract(s)
          and
          all such liabilities and obligations shall be included in Excluded
          Liabilities).

         

        ARTICLE
          III

         

        CLOSING

         

        Section
          3.1 Closing.
          Unless
          the Sellers and Buyer otherwise agree, the closing (“Closing”)
          of the
          sale and purchase of the Purchased Assets and the assumption of the Assumed
          Liabilities contemplated hereby (collectively, the “Acquisition”)
          shall
          take place at the offices of Herrick, Feinstein LLP, 2 Park Avenue, New
          York,
          New York, on the later of (a) April 15, 2006, (b) within fifteen (15) days
          following the receipt of the Buyer Regulatory Approvals (subject to Buyer’s
          right in its sole and absolute discretion to waive the Buyer Regulatory
          Approvals that do not constitute AHCA Assurances) and (c) the satisfaction
          of
          the condition to closing set forth in Section 7.2(j). The date on which
          the
          Closing occurs is hereinafter referred to in this Agreement as the “Closing
          Date.”
The
          Closing shall be deemed to be effective as of 12:01 a.m., Eastern time,
          on the
          Closing Date (the “Effective
          Time”).

         

        Section
          3.2 Deliveries
          at Closing.

         

        (a)    Deliveries
          by the Sellers.
          At the
          Closing, the Sellers shall cause to be delivered to the Buyer the
          following:

         

        (i)    a
          special
          warranty deed in the name of the Buyer, which deed shall convey fee simple
          title
          to the Real Property in accordance with Section
          7.2(d)
          (the
“Deed”);

         

        (ii)    all
          such
          bills of sale and assignments and other instruments and documents reasonably
          requested by the Buyer, and in form and substance reasonably satisfactory
          to the
          Sellers, as may be necessary to evidence the sale of the Purchased Assets
          to the
          Buyer; it being understood that such bills of sale and other instruments
          and
          documents shall not require the Sellers to make any additional representations,
          warranties or covenants, express or implied, not expressly contained in
          this
          Agreement;

         

        (iii)    the
          Closing Escrow Agreement, duly executed by Sellers;

         

        
          
             

          

          
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        (iv)    a
          non-foreign certification (in form and substance reasonably satisfactory
          to the
          Buyer) that satisfies the requirements of Treasury Regulation Section
          1.1445-2(b)(2);

         

        (v)    a
          certificate of recent date as to the good standing of Sellers in their
          respective jurisdictions of organization and in the State of
          Florida;

         

        (vi)    a
          certified copy of the minutes of a meeting of the general partner or member
          of
          the Sellers, as the case may be, approving the transactions contemplated
          herein
          and authorizing the Sellers to enter into this Agreement and the Ancillary
          Agreements and to perform their obligations hereunder and thereunder, in
          a form
          satisfactory to Buyer and the Title Company; 

         

        (vii)    a
          certificate reconfirming that Sellers’ representations under Section
          4.25
          are true
          and correct in all material respects; and

         

        (viii)    such
          other documents as Buyer may reasonably request for the purpose of facilitating
          the consummation of the Acquisition.

         

        (b)    Deliveries
          by the Buyer.
          At the
          Closing, the Buyer shall cause to be delivered to the Sellers the
          following:

         

        (i)    immediately
          available funds in an amount equal to the Remaining Payment, subject to
          the
          prorations, adjustments and credits set forth in this Agreement, in the
          manner
          set forth in Section
          2.4(a);
          

         

        (ii)    the
          Assignment and Assumption Agreement in the form of Exhibit
          C
          annexed
          hereto (the “Assignment
          and Assumption Agreement”),
          dated
          the Closing Date, and all other instruments of assumption and other documents
          reasonably requested by the Sellers to confirm the Buyer’s obligation to duly
          assume and timely pay, perform and discharge the Assumed
          Liabilities;

         

        (iii)    the
          Closing Escrow Agreement, duly executed by Buyer; 

         

        (iv)    a
          certified copy of the minutes of a meeting of the board of directors of
          the
          Buyer approving the transactions contemplated herein and resolving to enter
          into
          this Agreement and the Ancillary Agreements; and

         

        (v)    such
          other documents as Sellers may reasonably request for the purpose of
          facilitating the consummation of the Acquisition.

         

        ARTICLE
          IV

         

        REPRESENTATIONS
          AND WARRANTIES OF THE SELLERS

         

        The
          Sellers make the following representations and warranties to the Buyer
          as of
          August 17, 2005 subject to and qualified by any fact or facts disclosed
          in the
          Schedules hereto that are provided to the Buyer as required in this
          Agreement.

         

        
          
             

          

          
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        Section
          4.1 Organization.
          Each of
          the Sellers has been duly organized, is validly existing and in good standing
          under the laws of the state of its formation. Westport Holdings is duly
          qualified to do business as a foreign limited partnership and is in good
          standing under the laws of the State of Florida.

         

        Section
          4.2 Authority;
          Execution and Delivery; Enforceability.
          Each of
          the Sellers has full limited partnership power or limited liability company
          power, as the case may be, and authority to execute this Agreement and
          the other
          agreements and instruments to be executed and delivered in connection with
          this
          Agreement (the “Ancillary
          Agreements”)
          to
          which it is a party and to consummate the transactions contemplated to
          be
          consummated by it by this Agreement and such Ancillary Agreements. Each
          of the
          Sellers has taken all limited partnership or limited liability company
          action,
          as the case may be, required by its relevant organizational documents to
          authorize the execution and delivery of this Agreement and the Ancillary
          Agreements to which it is a party and to authorize the consummation of
          the
          Acquisition and the other transactions contemplated hereby and thereby.
          Each of
          the Sellers has duly executed and delivered this Agreement and prior to
          the
          Closing will have duly executed and delivered each Ancillary Agreement
          to which
          it is a party, and this Agreement constitutes, and each Ancillary Agreement
          to
          which either of them is a party will after the Closing constitute, its
          legal,
          valid and binding obligation, enforceable against it in accordance with
          its
          terms subject, as to enforcement, to applicable bankruptcy, insolvency,
          moratorium, reorganization or similar laws affecting creditors’ rights generally
          and to general equitable principles (whether considered in an action at
          law or
          in equity).

         

        Section
          4.3 No
          Conflicts or Violations; No Consents or Approvals Required.
          No
          consent, approval, authorization or similar type of action (“Consent”)
          of, or
          registration, declaration or filing with, any Federal, state or local court
          of
          competent jurisdiction, governmental agency, authority, instrumentality
          or
          regulatory body (“Governmental
          Entity”),
          is
          required to be obtained or made by or with respect to the Sellers in connection
          with the execution, delivery and performance of this Agreement, the Ancillary
          Agreements to which one or more of them is a party or the consummation
          of the
          Acquisition, other than the Buyer Regulatory Approvals.

         

        Section
          4.4 No
          Conflicts.
          The
          execution and delivery by each of the Sellers of this Agreement does not,
          and
          each Ancillary Agreement to which it is a party will not, and the consummation
          of the transactions contemplated to be consummated by the Sellers in this
          Agreement and such Ancillary Agreements will not, conflict with, or result
          in
          any breach of or constitute a default under, or result in the creation
          of any
          Lien (as hereinafter defined) (other than Permitted Liens (as hereinafter
          defined) or Liens caused by the Buyer) upon any of the Purchased Assets
          under,
          any provision of (x) such Sellers’ organizational documents; (y) any Contract to
          which a Seller is a party or by which any of the Purchased Assets are bound;
          or
          (z) any judgment, order or decree, or statute, law, ordinance, rule or
          regulation applicable to the Sellers or any of the Purchased Assets. 

         

        Section
          4.5 Compliance
          with Laws.
          Except
          as set forth on Schedule
          4.5,
          the
          Retirement Center and, to the knowledge of the Sellers after reasonable
          inquiry
          to the Health Center Operator, the Health Center, has been operated in
          compliance with all laws, rules and regulations applicable to the conduct
          of its
          business as currently conducted by the Sellers and the

         

        
          
             

          

          
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        Health
          Center Operator, respectively. Except as set forth on Schedule
          4.5,
          the
          Facility is fully licensed by the State of Florida and the Health Center
          is in
          good standing as a health care provider under the Medicare and Medicaid
          program
          as administered by the federal government and the State of Florida. No
          notice or
          communication has been received by any of the Sellers or, to the knowledge
          of
          Sellers after reasonable inquiry to the Health Center Operator, by the
          Health
          Center Operator from any Governmental Entity that there exists with respect
          to
          the Facility any condition which violates any law, rule or regulation which
          condition has not been rectified. 

         

        Section
          4.6 Litigation.
          There
          is no litigation or proceeding pending, or, to the Sellers’ knowledge,
          threatened against any of the Sellers with respect to the Facility or,
          to the
          Sellers’ knowledge, otherwise relating to the Facility, except as set forth in
Schedule
          4.6.

         

        Section
          4.7 Real
          Property. 

         

        (a)    The
          Sellers have not received any notice of a taking, condemnation, assessment
          or
          eminent domain proceeding, actual or proposed, with respect to the Real
          Property.

         

        (b)    The
          Sellers own the Real Property in fee simple, free and clear of all mortgages,
          liens, security interests, charges, claims, pledges or other encumbrances
          of any
          kind (collectively, “Liens”),
          except (i) such Liens as are set forth on Schedule
          4.7;
          (ii)
          mechanics’, carriers’, workmen’s repairmen’s or other like Liens arising or
          incurred in the ordinary course of business; (iii) Liens for ad valorem
          Taxes
          and other governmental charges that are not due and payable or that may
          thereafter be paid without penalty; and (iv) other title or survey matters
          which
          become Permitted Exceptions pursuant to Section
          7.2(d)
          (subject
          to the provisions of Section
          7.2(d)
          regarding the payment of Monetary Liens at Closing, the Liens described
          in
          clauses (i), (ii), (iii) and (iv) above are referred to collectively as
          “Permitted
          Liens”).
          

         

        (c)    Set
          forth
          on Schedule
          4.7
          is a
          list of all leases in effect with respect to the Facility under which any
          Persons (other than residents under Life Care Contracts) lease space at
          the
          Facility from the Sellers (the “Leases”),
          and
          other than the Leases and Life Care Contracts, Sellers have not entered
          into nor
          do they have any knowledge of any other agreement giving any party the
          right to
          use or occupy any part of the Facility.

         

        Section
          4.8 Facility
          Residents and Patients. 

         

        (a)    Set
          forth
          on Schedule
          4.8(a)
          are
          lists (the “Resident
          List”)
          setting forth for each of the residents of the Retirement Center and for
          each
          resident/patient of the Health Center as of June 30, 2005; (i) a unique
          number
          (“ID
          Number”)
          assigned by Sellers for each resident(s) or patient(s); (ii) the type of
          apartment or unit occupied by such resident(s) or patient(s); (iii) the
          type of
          Life Care Contract or the residency or admission agreement (“HC
          Occupancy Agreement”)
          executed by such resident(s) or patient(s); (iv) the amount of the entrance
          fee
          paid by such resident(s) that is refundable; (v) the move in date for each
          Life
          Care Contract resident; (vi) the monthly service fees payable by such
          resident(s); (vii) the sex of the resident(s) or patient(s) with regard
          to each
          Life Care Contract resident or patient; (viii) the amount of Master Trust
          Debt,
          if any, attributable to such resident(s) as of June 30, 2005; and (ix)
          the
          amount of deferred revenue recorded by the Sellers for the applicable Life
          Care
          Contract as of June 30, 2005 and the amount of annual amortization of earned
          income applicable to such Life Care

         

        
          
             

          

          
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        Contract.
          Each such Life Care Contract and HC Occupancy Agreement is assignable to
          Buyer
          without the consent of the subject resident(s). 

         

        (b)    Intentionally
          left blank 

         

        (c)    Set
          forth
          on Schedule
          4.8(c),
          delineated by ID Number, is a list of all Security, Waiting List and Sale
          Deposits paid by a resident or potential resident to the Sellers or the
          Health
          Center Operator.

         

        (d)    Set
          forth
          on Schedule
          4.8(d),
          delineated by ID Number, is a list of PIPP deposit liabilities as of the
          date of
          the Interim Balance Sheet. 

         

        (e)    Except
          as
          set forth on Schedule
          4.8(e),
          utilizing the ID Number, the
          Sellers have not received any notice of, and are not aware of, any material
          default or breach of their obligations under any of the Life Care Contracts
          which default or breach has not been cured. 

         

        (f)    Except
          as
          set forth on Schedule
          4.8(f),
          utilizing the ID Number, none of the patients, tenants or residents of
          the
          Facility have been given any concessions or considerations for the rental
          or use
          of any patient rooms or apartments by the Sellers.

         

        (g)    A
          true,
          correct and complete list (the “Key”)
          setting forth the ID Number of each resident, tenant or patient and each
          resident’s, tenant’s and patient’s name and date of birth, formatted to permit
          Buyer to use the Key to identify each individual resident, patient and
          tenant to
          which the information on Schedule
          4.8(a),
          Schedule
          4.8(c),
          Schedule
          4.8(d),
          Schedule
          4.8(e)
          and
Schedule
          4.8(f)
          relates,
          has been provided to Buyer. As used in this Section
          4.8,
          the ID
          Number shall not be the resident(s)’ or patient(s)’ social security number or
          any other number or identifier set forth at 45 CFR § 164.514(b).

         

        Section
          4.9 Environmental.
          The
          Sellers have not caused or permitted the Facility to be used to generate,
          manufacture or refine, transport, treat, store, 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, and have not caused
          or
          permitted the Release (as hereinafter defined) of any Hazardous Substances
          affecting the Facility, and to Seller’s knowledge, there are no Hazardous
          Substances at the Facility in any amount that would violate applicable
          laws. Any
          above ground storage tank that is located, or has been located, on the
          Land has
          been maintained and operated in accordance with all applicable laws. As
          used
          herein, (a) “Hazardous
          Substances”
          includes 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 and pouring, admitting, emptying,
          discharging, injecting, escaping, leaching, disposing or dumping.

         

        
          
             

          

          
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        Section
          4.10 Contracts. 

         

        (a)    Schedule
          4.10
          sets
          forth a complete list of all Contracts, which constitute all of the contracts
          that are material to the business and operations of the Facility or that
          have
          terms that will continue following the Closing. At or prior to Closing,
          Sellers
          will deliver to the Buyer a true, correct and complete copy of each Contract,
          including any modifications thereto.

         

        (b)    Except
          as
          set forth in Schedule
          4.10(b),
          the
          Sellers are not in material breach of, or default under, any Contract and,
          to
          the knowledge of the Sellers, no event has occurred that, with notice or
          lapse
          of time would constitute such a breach or default or permit termination
          under
          such Contract. 

         

        (c)    Except
          as
          set forth in Schedule
          4.10(c),
          to the
          knowledge of the Sellers, no other party to any Contract is in material
          breach
          thereof or default thereunder and, to the knowledge of the Sellers, no
          event has
          occurred that, with notice or lapse of time would constitute such a breach
          or
          default or permit termination, modification or acceleration under such
          Contract.

         

        Section
          4.11 Title
          to Assets.
          Except
          as set forth on Schedule
          4.11,
          the
          Sellers have good and valid title to the Purchased Assets (other than the
          Health
          Center Assets). The Purchased Assets, including the Health Center Assets,
          are
          free and clear of all Liens, other than Permitted Liens.

         

        Section
          4.12 Permits.
          All
          permits, consents, licenses, certificates of need, approvals and authorizations
          from any Governmental Entity relating to the operation of the Facility
          are
          described in Schedule
          4.12,
          and to
          Seller’s knowledge, such permits, consents, licenses, certificates of need,
          approvals and authorizations are sufficient to allow the Facility to be
          operated
          in its current fashion. Except as set forth on Schedule
          4.12,
          (i) the
          Sellers are in compliance with the terms and conditions of any permit,
          consent,
          license, certificate of need, approval or authorization relating to the
          operation of the Retirement Center; (ii) to the knowledge of the Sellers
          after
          reasonable inquiry to the Health Center Operator, the Health Center Operator
          is
          in compliance with the terms and conditions of any permit, consent, license,
          certificate of need, approval or authorization relating to the operation
          of the
          Health Center; and (iii) during the past twelve (12) months, the Sellers
          have
          not (and, to the knowledge of Sellers after reasonable inquiry to the Health
          Center Operator, the Health Center Operator has not) received written notice
          of
          any violation of any permit, consent, license, certificate of need, approval
          or
          authorization relating to the operation of the Facility that remains
          uncured.

         

        Section
          4.13 Taxes. 

         

        (a)    Except
          as
          set forth on Schedule
          4.13,
          (i) all
          Tax Returns required to be filed by the Code or by applicable state or
          local Tax
          laws with respect to the Purchased Assets for Pre-Closing Tax Periods have
          been
          timely filed or will be timely filed; and (ii) all Taxes due with respect
          to
          such Tax Returns have been paid in full or will be paid in full by the
          due date
          thereof.

         

        (b)    The
          Sellers are not “foreign persons” within the meaning of Section 1445 of the
          Code.

         

        
          
             

          

          
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        Section
          4.14 Employees.
          Schedule
          4.14
          sets
          forth the name, title and total compensation of each person employed at
          or
          leased to the Facility (the “Employees”),
          including all accrued (whether vested or unvested) vacation, personal time,
          time
          off, holiday or sick leave for such Employees; date of hire; wage rate;
          and
          benefits received by such Employees or pension or benefit plans in which
          such
          Employees participate. Except as set forth on Schedule
          4.14,
          none of
          the Sellers is a party to any employment contract with any of the
          Employees.

         

        Section
          4.15 Financial
          Statements. 

         

        (a)    The
          Sellers have made available to the Buyer (i) the audited consolidated balance
          sheets of the Sellers at December 31, 2003 and December 31, 2004 and the
          related
          audited consolidated statements of income and cash flows for the fiscal
          years
          then ended (the “Audited
          Financial Statements”),
          and
          (ii) the Sellers’ unaudited consolidated balance sheet at June 30, 2005 (the
“Interim
          Balance Sheet”)
          and
          the related unaudited statement of income for the six-month period then
          ended
          (the “Interim
          Financial Statements,”
and
          together with the Audited Financial Statements, the “Financial
          Statements”).
          The
          Financial Statements, (i) present fairly the financial condition and results
          of
          operations of the Sellers as of the dates thereof or for the periods covered
          thereby, and (ii) have been prepared in accordance with generally accepted
          accounting principles consistently applied, except (x) as set forth on
          Schedule
          4.15
          and (y)
          that the Interim Financial Statements are subject to normal recurring year-end
          adjustments (which will not be material in the aggregate) and do not contain
          all
          footnotes required under generally accepted accounting principles.

         

        (b)    To
          the
          knowledge of Sellers, except as set forth on Schedule
          4.15,
          there
          are no liabilities relating to the Retirement Center or the Purchased Assets,
          (other than the Health Center Assets) of a type required to be set forth
          on a
          balance sheet prepared in accordance with generally accepted accounting
          principles, except for liabilities accurately reflected or reserved against
          in
          the Interim Balance Sheet or the Health Center Interim Balance Sheet and
          liabilities incurred in the ordinary course of business of Sellers and
          the
          Health Center Operator since the date of the Interim Balance Sheet.

         

        Section
          4.16 No
          Brokers.
          Except
          for Rockwood Realty Associates, L.L.C. (whose fees and expenses will be
          the sole
          responsibility of the Sellers), no broker, finder, agent or similar intermediary
          has acted for or on behalf of the Sellers or any of their Affiliates in
          connection with this Agreement or the transactions contemplated by this
          Agreement, and no broker, finder, agent or similar intermediary is entitled
          to
          any broker’s, finder’s or similar fee or other commission in connection
          therewith based on any agreement, arrangement or understanding with the
          Sellers
          or any of their Affiliates, or any action taken by the Sellers or any of
          their
          Affiliates.

         

        Section
          4.17 Employee
          Benefit Plans. 

         

        (a)    Except
          as
          set forth on Schedule
          4.17,
          on or
          prior to the date hereof, Sellers and the Health Center Operator (including
          any
          entity required to be aggregated with Sellers or the Health Center Operator
          under Section 414 of the Code) have not sponsored, or participated in,
          a defined
          benefit pension plan (as defined in Section 3(35) of ERISA), nor have Sellers
          or
          the Health Center Operator (including any entity required to be aggregated
          with
          Sellers under

         

        
          
             

          

          
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        Section
          414 of the Code) ever contributed to, or participated in, a multiemployer
          plan
          (as defined in Section 4001(a)(3) of ERISA).

         

        (b)    Except
          as
          set forth on Schedule
          4.17,
          with
          respect to the Facility’s Employees, neither Sellers or the Health Center
          Operator maintain, contribute to, or participate in, any benefit agreement,
          plan, arrangement or practice including any employee benefit plan as defined
          in
          Section 3(3) of ERISA (the “Plans”).
          

         

        (c)    Except
          as
          set forth on Schedule
          4.17,
          all of
          the Plans are in material compliance with all applicable laws, including
          the
          Code and ERISA.

         

        Section
          4.18 Insurance.
          Schedule
          4.18
          contains
          a true and complete list of all policies of property, fire, casualty, liability
          (general and professional), life, workers’ compensation, libel and slander, and
          other forms of insurance of any kind (except title insurance policies)
          relating
          to the Purchased Assets (other than the Excluded Assets) or the business
          and
          operations of the Facility and owned or held by Sellers as of August 17,
          2005
          (the “Sellers
          Insurance Policies”).
          All
          such policies are: (a) in full force and effect; and (b) valid, outstanding,
          and
          enforceable policies, and the policy holder is not in default in any material
          respect thereunder.

         

        Section
          4.19 Affiliated
          Transactions.
          Except
          as set forth on Schedule
          4.19,
          (a)
          none of the Transferred Contracts has as a party thereto an Affiliate of
          Sellers, and (b) there are no and, during the immediately preceding two
          (2)
          years, there have been no other transactions or arrangements between Sellers
          and
          their Affiliates that were not entered into on arm’s length terms.

         

        Section
          4.20 Insolvency.
          Neither
          Seller is insolvent and each Seller has the ability to pay all of its debts
          as
          they come due, and further is not involved in, and is not contemplating,
          any
          bankruptcy, reorganization or insolvency proceeding of any kind.

         

        Section
          4.21 Absence
          of Changes. 

         

        (a)    Except
          as
          described on Schedule
          4.21,
          since
          the date of the Interim Balance Sheet and the Health Center Interim Balance
          Sheet, as applicable, Sellers have, and, to Sellers’ knowledge after reasonable
          inquiry of the Health Center Operator, the Health Center Operator has,
          conducted
          the business and operations of the Facility in the ordinary course of
          business.

         

        (b)    Since
          the
          date of the Interim Balance Sheet and the Health Center Interim Balance
          Sheet,
          as applicable, no event has occurred that could reasonably be deemed a
          Material
          Adverse Effect.

         

        (c)    Except
          as
          described on Schedule
          4.21,
          since
          August 17, 2005, the Sellers have not (i) taken any of the actions enumerated
          in
          Section 6.1(b) or (ii) failed to take any of the actions set forth in Section
          6.1(c), other than the actions described in Sections 6.1(c)(vi) and
          (c)(vii).

         

        Section
          4.22 Trademarks,
          Etc.
          To
          Sellers’ knowledge, with respect to the conduct of the business of Sellers
          conducted at the Facility, except for the Masterpiece Living
          trademark

         

        
          
             

          

          
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        and
          as
          set forth on Schedule
          4.22,
          Sellers
          do not own or use any trademarks, trade names, copyrights or service marks,
          and
          with respect thereto, Sellers have not received any notice or claim of
          conflict
          with the asserted rights of others. To Sellers’ knowledge, except for payments
          required to be made pursuant to the Confidentiality and License Agreement,
          dated
          as of April 2, 2005, between Masterpiece Alliance Foundation, Inc. and
          Westport
          Holdings, Sellers are not required to pay any royalty, license fee or similar
          type of compensation in connection with the conduct of the business at
          the
          Facility.

         

        Section
          4.23 Health
          Center Financial Statements. 

         

        (a)    The
          Sellers have provided to the Buyer (i) the audited consolidated balance
          sheets
          of the Health Center Operator at December 31, 2003 and December 31, 2004
          and the
          related audited consolidated statements of income and cash flows for the
          fiscal
          years then ended (the “Health
          Center Audited Financial Statements”),
          and
          (ii) the Health Center Operators’ unaudited consolidated balance sheet at
          December 31, 2005 (the “Health
          Center Interim Balance Sheet”)
          and
          the related unaudited statement of income for the twelve-month period then
          ended
          (the “Health
          Center Interim Financial Statements,”
and
          together with the Audited Financial Statements, the “Health
          Center Financial Statements”).
          To
          the Sellers’ knowledge, the Health Center Financial Statements do not contain a
          misstatement or omission of financial information required to be set forth
          on a
          balance sheet or income statement prepared in accordance with generally
          accepted
          accounting principles consistently applied, except (x) as set forth on
          Schedule
          4.23
          and (y)
          that the Health Center Interim Financial Statements are subject to normal
          recurring year-end adjustments (which will not be material in the aggregate)
          and
          do not contain all footnotes required under generally accepted accounting
          principles.
          To the
          Sellers’ Knowledge, the Health Center Financial Statements have been prepared in
          accordance with the applicable provisions of the Health Center
          Agreements.

         

        (b)    To
          the
          knowledge of Sellers after reasonable inquiry to the Health Center Operator,
          except as set forth on Schedule
          4.23,
          there
          are no liabilities relating to the Health Center or the Purchased Assets
          relating to the Health Center of a type required to be set forth on a balance
          sheet prepared in accordance with generally accepted accounting principles,
          except for (i) liabilities accurately reflected or reserved against in
          the
          Health Center Interim Balance Sheet; and (ii) liabilities incurred in the
          ordinary course of business of the Health Center Operator since the date
          of the
          Health Center Interim Balance Sheet.

         

        Section
          4.24 Condition
          of the Facility.
          Sellers
          do not have any actual knowledge of any material defects to the physical
          structure of the Facility, ordinary wear and tear excepted.

         

        
          
             

          

          
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        ARTICLE
          V

         

        REPRESENTATIONS
          AND WARRANTIES OF BUYER

         

        The
          Buyer
          hereby represents and warrants to the Sellers as follows:

         

        Section
          5.1 Organization
          of the Buyer.
          The
          Buyer is a limited liability company duly organized, validly existing and
          in
          good standing under the laws of the State of Delaware.

         

        Section
          5.2 Authority;
          Execution and Delivery; Enforceability.
          The
          Buyer has full limited liability company power and authority to execute
          this
          Agreement and the Ancillary Agreements to which it is a party and to consummate
          the transactions contemplated by this Agreement and the other transactions
          contemplated hereby and thereby. The Buyer has taken all limited liability
          company action required by its organizational documents to authorize the
          execution and delivery of this Agreement and the Ancillary Agreements to
          which
          it is a party and to authorize the consummation of the transactions contemplated
          by this Agreement and the other transactions contemplated hereby and thereby.
          The Buyer has duly executed and delivered this Agreement and prior to the
          Closing will have duly executed and delivered each Ancillary Agreement
          to which
          it is a party, and this Agreement constitutes, and each Ancillary Agreement
          to
          which it is a party will after the Closing constitute, its legal, valid
          and
          binding obligation, enforceable against it in accordance with its terms
          subject,
          as to enforcement, to applicable bankruptcy, insolvency, moratorium,
          reorganization or similar laws affecting creditors’ rights generally and to
          general equitable principles (whether considered in an action at law or
          in
          equity).

         

        Section
          5.3 No
          Conflict or Violations, No Consents or Approvals Required.
          No
          Consent of, or registration, declaration or filing with any Governmental
          Entity
          is required to be obtained or made by or with respect to the Buyer in connection
          with the execution, delivery and performance of this Agreement, the Ancillary
          Agreements to which it is a party or the consummation of the transactions
          contemplated by this Agreement, other than the Buyer Regulatory Approvals.
          The
          execution and delivery by the Buyer of this Agreement do not, and each
          Ancillary
          Agreement to which it is a party will not, and the consummation of the
          transactions contemplated by this Agreement and such Ancillary Agreements
          will
          not, conflict with, or result in any breach of or constitute a default
          under, or
          result in the creation of any Lien upon any of the properties or assets
          of the
          Buyer under, or require Consent under any provision of (x) the Buyer’s
          organizational documents, as amended to date; (y) any contract to which
          the
          Buyer is a party or by which any of its properties or assets is bound;
          or (z)
          any judgment, order or decree, or statute, law, ordinance, rule or regulation
          applicable to the Buyer or any of its properties or assets, other than,
          in the
          case of clauses (y) and (z) above, any such items that would not reasonably
          be
          expected to have a material adverse effect on the ability of the Buyer
          to
          consummate the transactions contemplated by this Agreement (a “Buyer
          Material Adverse Effect”).

         

        Section
          5.4 Proceedings.
          There
          is not any (i) outstanding judgment, order or decree against the Buyer
          or any of
          its subsidiaries; (ii) suit, action or proceeding pending, or to the knowledge
          of the Buyer, threatened against the Buyer or any of its subsidiaries;
          or (iii)
          investigations by any Governmental Entity that are pending or threatened
          against
          the Buyer or

         

        
          
             

          

          
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        any
          of
          its subsidiaries that, in any such case, would reasonably be expected to
          have a
          Buyer Material Adverse Effect.

         

        Section
          5.5 No
          Brokers.
          No
          broker, finder, agent or similar intermediary has acted for or on behalf
          of the
          Buyer in connection with this Agreement or the transactions contemplated
          by this
          Agreement, and no broker, finder, agent or similar intermediary is entitled
          to
          any broker’s, finder’s or similar fee or commission in connection therewith
          based on any agreement, arrangement or understanding with the Buyer or
          any
          action taken by the Buyer.

         

        Section
          5.6 Solvency. 

         

        (a)    The
          Buyer
          has preliminary non-binding financing arrangements that it believes will
          be
          sufficient to enable it to consummate the transactions contemplated by
          this
          Agreement. The financing required to consummate the transactions contemplated
          by
          this Agreement is referred to in this Agreement collectively as the
“Financing.”
The
          Buyer does not have any reason to believe that the Financing will not be
          available to the Buyer on a timely basis to consummate the transactions
          contemplated by this Agreement. 

         

        (b)    As
          of the
          Closing and immediately after consummating the transactions contemplated
          by this
          Agreement, the Buyer will not (i) be insolvent (either because its financial
          condition is such that the sum of its debts is greater than the fair value
          of
          its assets or because the present fair salable value of its assets will
          be less
          than the amount required to pay its probable liability on its debts as
          they
          become absolute and matured); (ii) have unreasonably small capital with
          which to
          engage in its business, including the operation of the Facility; or (iii)
          have
          incurred, or plan to incur, debts beyond its ability to repay such debts
          as they
          become absolute and matured.

         

        Section
          5.7 Disclosure. 

         

        (a)    The
          Buyer
          is an “accredited investor” as defined in Regulation D promulgated by the
          Securities and Exchange Commission under the Securities Act of 1933, as
          amended.
          The Buyer has such knowledge and experience in business and financial matters,
          and in particular retirement communities similar to the Facility, that
          it is
          able to evaluate the merits and risks of investment in the Facility and
          has
          sufficient income and net worth so that it is able to bear the economic
          risk of
          loss of its entire investment. The Buyer further acknowledges that it has
          had
          the opportunity to ask questions of the Sellers and their management and
          to
          examine such supplemental documentation as it deemed necessary to make
          an
          informed decision concerning its investment in the Facility. The Buyer
          has
          relied solely upon its own independent investigation and the Sellers’
representations in making its decision to acquire the Purchased Assets
          and the
          Assumed Liabilities. 

         

        (b)    Except
          for the representations and warranties specifically set forth in Article
          IV and
          except as otherwise provided herein, the Buyer acknowledges and agrees
          that any
          purchase of the Purchased Assets hereunder shall be “AS IS”, “WHERE IS”, and
“WITH ALL FAULTS”. The Buyer further acknowledges that except for
          representations and warranties made by the Sellers in this Agreement, no
          representations or warranties have or will be made by the Sellers, their
          employees, agents or representatives, or relied upon by the Buyer as to
          the
          physical

         

        
          
             

          

          
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        condition
          of the Real Property. The Buyer, at its sole cost and expense, will, prior
          to
          the expiration of the Investigation Period, make all such tests, investigations
          and studies as are necessary or desirable to determine the suitability
          of the
          Facility for the Buyer’s intended purpose. Following the expiration of the
          Investigation Period, the Buyer will be deemed to have satisfied itself
          with
          respect to the Real Property and accepted the Real Property in its “AS IS”,
“WHERE IS”, condition, and “WITH ALL FAULTS” except for the representations and
          warranties specifically set forth in Article IV. For the purposes of this
          Agreement the “physical condition of the Real Property” shall mean the quality,
          nature and adequacy of the physical condition of the Real Property, including,
          without limitation, the quality of the design, labor and materials used
          to
          construct the Improvements included in the Real Property; the condition
          of
          structural elements, foundations, roofs, glass, mechanical, plumbing,
          electrical, HVAC, sewage, boilers, and utilities; the geology, flora fauna,
          soils, subsurface conditions, groundwater, landscaping, drainage and irrigation
          of or with respect to the Real Property; the location of the Real Property
          in or
          near any special taxing district, flood hazard zone, wetlands areas, protected
          habitat, geological fault or subsidence zone, hazardous waste disposal
          or
          clean-up site, or other special area; the existence, location or condition
          of
          ingress, egress, access, and parking; the condition of the personal property
          and
          any fixtures; and the presence of any asbestos or other Hazardous Substances,
          dangerous or toxic substance, material or waste in, on, or under or about
          the
          Real Property and the Improvements located thereon; or as to whether the
          physical condition of the Real Property complies with applicable zoning,
          building, health, safety, structural, mechanical and environmental and
          all other
          laws, codes and regulations.

         

        (c)    The
          Buyer
          further acknowledges and agrees that, (i) other than the representations
          and
          warranties of the Sellers specifically contained in Article IV of this
          Agreement
          or in the Deed or the Ancillary Agreements, none of the Sellers, any of
          their
          Affiliates or any other person has made any representation or warranty
          (including, without limitation, as to merchantability, suitability or fitness
          for a particular purpose, or quality as to the Purchased Assets or as to
          the
          condition or workmanship thereof, or the absence of any defects therein,
          whether
          latent or patent) either expressed or implied (A) with respect to the Facility,
          Purchased Assets, Assumed Liabilities or transactions contemplated hereby,
          or
          (B) as to the accuracy or completeness of any information regarding the
          Facility, Purchased Assets, Assumed Liabilities or transactions contemplated
          hereby furnished or made available to the Buyer and its representatives.
          Without
          limiting the generality of the foregoing, the Buyer acknowledges and agrees
          that
          the Sellers do not make any representations or warranties relating to the
          maintenance, repair, condition, design, performance or marketability of
          any
          Purchased Asset, including merchantability or fitness for a particular
          purpose.

         

        Section
          5.8 No
          Knowledge of Misrepresentations or Omissions.
          The
          Buyer does not have any knowledge that any of the representations and warranties
          of the Sellers made in this Agreement are not true and correct in all material
          respects. The Buyer does not have any knowledge of any material errors
          in, or
          material omissions from, any Schedule to this Agreement.

         

        ARTICLE
          VI

         

        COVENANTS
          OF THE SELLERS AND THE BUYER

         

        
          
             

          

          
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        Section
          6.1 Covenants
          Relating to Conduct of the Facility. 

         

        (a)    Ordinary
          Course of Business.
          Except
          for matters (i) expressly consented to by the Buyer after the date hereof
          in
          writing with specific reference to this Section
          6.1
          (which
          consent will not be unreasonably withheld or delayed), or (ii) otherwise
          specifically contemplated by the terms of this Agreement, from the date
          of this
          Agreement to the Closing Date, the Sellers shall (x) operate the Retirement
          Center in the ordinary course in a manner consistent with past practice
          and (y)
          exercise their respective rights under the Health Center Agreements in
          the
          ordinary course in a manner consistent with past practice.

         

        (b)    Negative
          Covenants of Sellers.
          From
          the date hereof to the Closing Date, Sellers shall not, without the prior
          written consent of the Buyer with specific reference to this Section
          6.1
          (which
          consent shall be given or refused in Buyer’s sole and absolute discretion,
          provided that the Buyer’s failure to grant or withhold consent within five
          Business Days following the Sellers’ written request for consent shall be deemed
          a grant of consent by the Buyer):

         

        (i)    sell,
          assign, lease or transfer any of the Purchased Assets, or remove any item
          of
          personal property from the Facility, except, in each case, for the purpose
          of
          repair or replacement or as otherwise in the ordinary course of business;
          

         

        (ii)    enter
          into any new Lease or Contract (other than Life Care Contracts) or amend
          any
          existing Contract, except in the ordinary course of business, and if such
          new
          Lease or Contract or amendment shall have an individual value in excess
          of
          $25,000, it shall be terminable upon less than 90 days’ prior notice without
          cause and without payment of any fee or penalty;

         

        (iii)    enter
          into any Life Care Contracts, except in the forms of Life Care Contracts
          approved by Buyer (as set forth on Schedule
          6.1(b)(iii)
          and in
          accordance with the range of selling prices, entrance fee refunds and service
          fees set forth on Schedule
          6.1(b)(iii)
          attached
          hereto);

         

        (iv)    create,
          assume or permit to exist any Lien upon any of the Purchased Assets, except
          for
          Permitted Liens and Liens existing as of the date of this Agreement that
          will be
          discharged prior to or on the Closing Date;

         

        (v)    waive
          any
          material right relating to the Facility or the Purchased Assets, except
          in the
          ordinary course of business;

         

        (vi)    allow
          the
          levels of inventories, supplies and materials to vary materially from those
          customarily maintained, or defer delivery of any inventories, supplies
          or
          materials outside the ordinary course of business; 

         

        (vii)    intentionally
          omitted;

         

        (viii)    defer
          any
          regularly scheduled maintenance or capital replacement items, including
          without
          limitation failing to use reasonable efforts to complete prior to
          the

         

        
          
             

          

          
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        Closing
          Date all of those items set forth on Schedule
          6.1(b)(viii),
          or fail
          to repair or replace any emergency repair item; or 

         

        (ix)    waive
          or
          amend, or consent to the Health Center Operator’s failure to perform, any of the
          Health Center Operator’s obligations under the Health Center
          Agreements.

         

        (c)    Affirmative
          Covenants of Sellers.
          From
          and after the date of this Agreement until the Closing Date, the Sellers
          shall:

         

        (i)    use
          their
          respective commercially reasonable efforts to keep, or to cause to be kept,
          all
          Sellers Insurance Policies, or suitable replacements therefor, in full
          force and
          effect;

         

        (ii)    preserve
          their existence and keep their business organization intact; maintain existing
          franchises and licenses relating to the Retirement Center and the operation
          thereof in accordance with this Agreement; pay when due all obligations
          and
          liabilities arising under the Transferred Contracts to which they are a
          party;
          and use commercially reasonable efforts to preserve for Buyer the relationships
          of the Retirement Center with suppliers, employees, residents and others
          with
          whom the Retirement Center has business relationships;

         

        (iii)    maintain
          the Purchased Assets in a manner that is in compliance with all legal
          requirements and that is consistent with the Facility’s ordinary course of
          business; 

         

        (iv)    pay
          all
          of their liabilities as they come due;

         

        (v)    pay
          and
          perform, in the ordinary course of business, obligations under the Transferred
          Contracts to which either of the Sellers is a party in accordance with
          the
          respective terms and conditions of such Transferred Contracts;

         

        (vi)    within
          thirty (30) days following the end of each calendar month prior to the
          Closing
          Date, deliver to Buyer true and complete copies of the unaudited balance
          sheets
          and related unaudited statements of income of, or relating to, the Facility
          for
          the month then ended, together with the notes, if any, related thereto,
          which
          shall have been prepared from and in accordance with the books and records
          of
          the Facility in a manner consistent with the Interim Financial Statements
          and
          the Interim Health Center Financial Statements, and which shall fairly
          present
          the financial position and results of operations of the Facility as of
          the date
          and for the period indicated. All liabilities of the Sellers, the Health
          Center
          Operator or the Facility will be accurately reflected or reserved against
          in
          such monthly balance sheets, except for liabilities incurred in the ordinary
          course of business of the Facility and in accordance with the provisions
          of this
          Agreement since the date of such financial statements. In connection with
          the
          delivery of such financial statements, Seller also shall deliver true and
          complete copies of the adjusted trial balances used to prepare such financial
          statements;

         

        (vii)    within
          thirty (30) days following the end of each calendar month prior to the
          Closing
          Date, and as of the Closing Date, deliver to Buyer updated Schedules
          2.1(a)(v),
          4.8(a),
          4.8(c)
          and
4.8(d);

         

        
          
             

          

          
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        (viii)    promptly
          notify the Buyer of any fact or condition that (i) causes or constitutes
          a
          breach of Sellers’ representations, warranties or covenants under this
          Agreement; or (ii) would reasonably be likely to cause such a breach;
          and

         

        (ix)    cause
          to
          be removed, at or prior to the Closing Date, those Liens on the Purchased
          Assets
          that do not constitute Permitted Exceptions. 

         

        (x)    UST
          Closure Documentation.
          The
          Sellers shall use their reasonable best efforts to provide to the Buyer
          prior to
          the Closing documentation satisfactory to Buyer confirming the appropriate
          closure in accordance with applicable law relating to the removal of two
          underground storage tanks from the Land in 1993.

         

        (d)    Notwithstanding
          anything to the contrary contained in this Article VI, the obligations
          of the
          Sellers with respect to the operations of the Health Center and the Purchased
          Assets that relate to the Health Center shall be limited to the enforcement
          of
          its rights under the Health Center Agreements. Any action or omission by
          the
          Health Center Operator that is inconsistent with the provisions of this
          Article
          VI shall promptly be disclosed to Buyer, but shall not constitute a breach
          or
          default of the Sellers’ obligations under this Article VI unless the Sellers
          allowed, permitted, approved or consented to such action or omission.

         

        (e)    Notwithstanding
          anything to the contrary contained in this Article VI, the Sellers may
          terminate
          or fail to renew, in accordance with its terms, any contract identified
          by Buyer
          as requiring a Required Consent if Sellers have used commercially reasonably
          efforts to obtain the Required Consent and have not received the Required
          Consent within thirty (30) days following the Sellers’ request.

         

        Section
          6.2 Access
          to Information.
          The
          Sellers shall, and shall cause their Affiliates to, afford to the Buyer
          and its
          accountants, counsel and other representatives full access, upon reasonable
          prior notice during normal business hours during the period prior to the
          Closing, to the personnel, properties, books, Contracts, commitments and
          records
          relating to the Facility (other than the Excluded Assets); provided,
          however,
          that
          such access does not unreasonably disrupt the normal operations of the
          Sellers
          or any of their Affiliates relating to the Facility. Sellers shall notify
          the
          Buyer in writing of any material adverse change in the financial position
          or
          earnings of the Facility after the date hereof and prior to the Closing
          Date and
          any unexpected emergency or other unanticipated material adverse change
          in the
          business of the Facility and of any governmental complaints, investigations,
          inspections or adjudicatory proceedings (or communications indicating that
          the
          same may be contemplated) (including providing copies of such complaints
          or
          reports of investigations, inspections or proceedings), and shall keep
          Buyer
          fully informed of such events and permit Buyer’s representatives to participate
          in all discussions relating thereto.

         

        In
          addition, within five (5) days prior to Closing, Sellers shall complete
          an
          inventory of all items of furniture, fixtures, equipment and other assets
          described in Section
          2.1(a)(v)
          (excluding those that are insignificant), which shall be in form and scope
          reasonably satisfactory to Buyer.

         

        
          
             

          

          
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        In
          addition, Sellers shall use their commercially reasonable best efforts
          to cause
          the Health Center Operator to reasonably cooperate with Buyer during the
          period
          prior to the Closing and to provide Buyer with copies of all documents
          that the
          Health Center Operator is required to provide to Sellers (or any of Sellers’
lenders) pursuant to the terms of the Health Center Agreements and any
          other
          information reasonably requested by the Buyer with respect to the operation
          of
          the Health Center or the Health Center Assets. Nothing contained in this
          Section
          6.2
          shall
          obligate the Sellers to breach any duty of confidentiality owed to any
          person
          whether such duty arises contractually, statutorily or otherwise.

         

        Section
          6.3 Confidentiality.
          The
          Buyer acknowledges and confirms that the information being provided to
          it in
          connection with the transactions contemplated by this Agreement is subject
          to
          the terms of a confidentiality agreement between the Buyer and Rockwood
          Realty
          Associates, L.L.C. (the “Confidentiality
          Agreement”),
          the
          terms of which are incorporated herein by reference. Effective upon, and
          only
          upon, the Closing, the Confidentiality Agreement shall terminate with respect
          to
          information relating solely to the Facility; provided,
          however,
          that
          Buyer further acknowledges and confirms that any and all other information
          provided to it by the Sellers or their representatives concerning the Sellers
          and their Affiliates shall remain subject to the terms and conditions of
          the
          Confidentiality Agreement after the Closing Date.

         

        Section
          6.4 Best
          Efforts. 

         

        (a)    On
          the
          terms and subject to the conditions of this Agreement, each of the Sellers
          and
          the Buyer shall use its reasonable best efforts to cause the Closing to occur,
          including taking all reasonable actions necessary to comply promptly with
          all
          legal requirements that may be imposed on it or any of their Affiliates
          with
          respect to the Closing. 

         

        (b)    Without
          limiting the generality of the foregoing, the Buyer agrees: (i) to prepare
          and
          submit applications required to obtain the Buyer Regulatory Approvals to
          the
          applicable Governmental Entities within ten (10) days after the date of
          this
          Agreement (the “Application
          Date”),
          (ii)
          to use its good faith efforts (not including the payment of any money other
          than
          routine application fees and the like) to receive confirmation from the
          Florida
          Office of Insurance Regulation that the Buyer’s application (or the application
          of Buyer’s manager, lessee or other designee) pursuant to Chapter 651, Florida
          Statutes is complete (the “Application
          Completion Notice”)
          no
          later than April 30, 2006 (the “Chapter
          651 Application Completion Date”),
          and
          (iii) to use its good faith efforts (not including the payment of any money
          other than routine application fees and the like) to obtain the Buyer Regulatory
          Approvals by July 1, 2006 (the “Approval
          Date”).
          To
          the extent there is any existing violation at the Facility that must be
          corrected in order for Buyer to obtain the Buyer Regulatory Approvals,
          Sellers
          must make any such corrections at their sole cost and expense, provided
          that the
          Sellers shall have the right to terminate the Agreement in the event that
          the
          estimated costs and expenses to correct any such violations exceed more
          than
          $250,000 and the Buyer does not agree to pay the amount in excess of $250,000.
          The Buyer has no knowledge of any pending or threatened governmental actions
          which would prohibit or delay it from obtaining such approvals. The Buyer
          shall
          promptly notify the Sellers upon the receipt or delay in receipt of any
          Buyer
          Regulatory Approvals.

         

        
          
             

          

          
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        Section
          6.5 Employment
          Matters. 

         

        (a)    Offers
          of Employment.
          The
          Buyer’s Manager shall extend offers of employment to all of the employees of
          the
          Sellers, the Health Center Operator or any of their Affiliates that are
          working
          at the Facility and that are subject to the Collective Bargaining Agreements
          (“CBA
          Employees”)
          pursuant to the terms and provisions of the new collective bargaining agreement
          attached hereto as Exhibit
          D
          (the
“New
          CBA”).
          The
          Buyer’s Manager shall extend offers of employment to substantially all of the
          employees of the Sellers, the Health Center Operator or any of their Affiliates
          that are working at or leased to the Facility and that are not subject
          to the
          Collective Bargaining Agreements (the “Non-CBA
          Employees”,
          and
          together with the CBA Employees, the “Eligible
          Employees”)
          which
          offers shall be subject to post-closing background checks, pre-closing
          drug
          testing, license verifications and, in the case of Non-CBA Employees, customary
          and reasonable employment policies. Buyer’s Manager shall extend offers of
          employment to and retain at least that number of employees as shall be
          necessary
          for Sellers to avoid liability under the WARN Act. All such offers made
          to
          Non-CBA Employees will be on an “at will” basis, and at substantially the same
          salary or wage level, bonus opportunity, benefits and conditions of employment.
          The Sellers shall terminate the employment of all Eligible Employees who
          accept
          the Buyer’s Manager offer of employment (each Eligible Employee accepting the
          Buyer’s manager and/or lessee’s offer of employment being hereinafter referred
          to as a “Transferred
          Employee”)
          immediately prior to the Closing Date, and Sellers shall pay all compensation
          due to the Transferred Employees prior to the Closing Date, including all
          salaries, wages, unemployment taxes, FICA taxes and withholding taxes,
          but
          excluding all accrued (vested or unvested) vacation, personal time, time-off,
          holiday or sick leave for the Transferred Employees to the extent that
          Buyer has
          received a credit therefor against the Purchase Price pursuant to Section
          2.6(b).
          Sellers
          shall be responsible for all severance liability, if any, for those employees
          that are not Transferred Employees and those Transferred Employees that
          fail, or
          do not receive satisfactory, post-closing background checks, drug tests
          or
          license verifications.

         

        (b)    Multiemployer
          Pension Plans.
          Intentionally omitted.

         

        (c)    Buyer’s
          Manager or Lessee.
          All of
          the parties hereto hereby acknowledge that Buyer shall not assume any
          responsibility for, or any obligations or liabilities relating to, the
          Transferred Employees, or under any employment agreements or arrangements,
          and,
          except as specifically provided in Section 2.2(vi), such obligations and
          liabilities shall not be deemed to be part of the Assumed Liabilities.
          All
          obligations to the Transferred Employees after the Closing Date, including
          any
          obligations included as part of the Assumed Liabilities under Section 2.2(vi)
          and any obligations under Section 6.5(a), shall be assigned to, and assumed
          and
          subject to indemnification by Buyer’s Manager. American Retirement Corporation
          (“ARC”)
          has
          guaranteed the obligations of ARC Bradenton Management, Inc., ARC’s wholly-owned
          subsidiary, under this Agreement, pursuant to a Guaranty attached hereto
          as
Exhibit
          E.
          To the
          extent that the obligations under Section 6.5(a) and the Assumed Liabilities
          under 2.2(vi) have been so assumed by Buyer’s Manager and guaranteed by ARC, the
          Buyer shall have no responsibility, liability or obligation
          therefor.

         

        Section
          6.6 Notice
          of Breach.
          From
          the date hereof through the Closing Date, if any party obtains knowledge
          of any
          material fact that causes such party to reasonably believe that

         

        
          
             

          

          
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        any
          of
          the representations, warranties or covenants of the other party(ies) set
          forth
          in this Agreement are untrue or inaccurate in any respect, then such party
          shall
          inform the other party(ies) of such fact promptly after obtaining knowledge
          thereof. Notwithstanding the foregoing, the failure by any party to provide
          any
          such notice shall not relieve the other party(ies) from, or serve as the
          basis
          of a defense in respect of, the breach of the representation, warranty
          or
          covenant at issue.

         

        Section
          6.7 Updating
          Schedules.
          Sellers
          will promptly supplement or amend the various Schedules to this Agreement
          to
          reflect any fact or condition that causes or constitutes a breach of any
          of
          Sellers’ representations, warranties and covenants in this Agreement. In
          addition, within ten (10) days (or the applicable time period set forth
          in
Section
          6.1)
          following the end of each calendar month prior to the Closing Date and
          as of the
          Closing Date, Sellers will deliver to Buyer supplements or amendments to
          the
          Schedules to this Agreement to reflect events and circumstances that occur
          between the date of this Agreement and Closing in compliance with the terms
          and
          provisions of this Agreement, which, if existing, occurring or known on
          the date
          of this Agreement, would have been required to be set forth or described
          in such
          Schedules or which are necessary to correct any information in such Schedules
          which has been rendered inaccurate by such events and circumstances. Any
          such
          supplement or amendment to the Schedules to this Agreement shall not affect
          any
          rights of Buyer under Articles VII, VIII or XI (except to the extent
          specifically set forth in Section
          7.5). 

         

        Section
          6.8 HIPAA
          Cooperation.
          Each
          party agrees to cooperate with the other so as to allow compliance with
          the
          applicable sections of HIPAA in responding to individuals regarding their
          rights
          under HIPAA, including, but not limited to, responding to individuals’ requests
          for (i) access to protected health information (“PHI”)
          under
          45 C.F.R. § 164.524; (ii) amendments to PHI under 45 C.F.R. § 164.526; and (iii)
          accountings of disclosures of PHI under 45 C.F.R. § 164.528.

         

        Section
          6.9 Non-Solicitation
          Agreement.
          From
          and after the date of execution and delivery of this Agreement by Sellers
          until
          the earlier of the termination of this Agreement or July 1, 2006, Sellers
          will
          not (and will not permit any Affiliate or any other person acting for or
          on
          behalf of Sellers or of any Affiliate thereof), without the prior written
          consent of Buyer: (i) offer for sale the Facility or the Purchased Assets
          (or
          any portion thereof) or any ownership interest of any entity owning any
          of the
          Facility or the Purchased Assets; (ii) solicit offers to buy all or any
          portion
          of the Facility or the Purchased Assets or any ownership interest of any
          entity
          owning any of the Facility or the Purchased Assets; (iii) hold discussions
          with
          any party (other than Buyer) looking toward such an offer or solicitation
          or
          looking toward a merger, business combination or consolidation of any entity
          owning any of the Facility or the Purchased Assets; (iv) enter into any
          agreement with any party (other than Buyer) with respect to the sale or
          other
          disposition of the Facility or the Purchased Assets (or any portion thereof)
          or
          any ownership interest in any entity owning any of the Facility or the
          Purchased
          Assets or with respect to any merger, consolidation, business combination
          or
          similar transaction involving any entity owning any of the Facility or
          the
          Purchased Assets; or (v) furnish or cause to be furnished any information
          with
          respect to Sellers, the Facility or the Purchased Assets to any Person
          that
          Sellers or such Affiliate or any such Person acting for or on their behalf
          knows
          or has reason to believe is in the process of considering any such acquisition,
          merger, consolidation, combination, reorganization or similar transaction.
          If
          Sellers or any such Affiliate or any such Person acting on

         

        
          
             

          

          
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        their
          behalf receives from any Person (other than Buyer or a representative thereof)
          any offer, inquiry or information request referred to above, it will promptly
          advise such Person, in writing, of the terms of this Section
          6.9.

         

        Section
          6.10 ERISA
          Certifications.
          Sellers
          will execute certifications or add other provisions to the documents necessary
          for Prudential and the Buyer to determine that Prudential and the Buyer’s
          ownership will not cause a violation of ERISA requirements, to the extent
          provided below. On or before the date which is ten (10) Business Days prior
          to
          Closing, Buyer will provide to Sellers the form (or forms) of ERISA
          certifications and/or provisions which Buyer and Prudential will require
          Sellers
          to execute and deliver, at Closing, as a condition to Closing. On or before
          seven (7) Business Days prior to Closing, Sellers will notify Buyer, in
          writing,
          of any objections Sellers may have to the form(s) of the certifications
          and/or
          provisions submitted; provided, however, that Sellers will not object to
          any
          such form(s) to the extent they merely require Sellers to make truthful
          factual
          representations. To the extent Sellers do not make valid objections to
          the
          submitted form(s) by the required date, Sellers will be obligated, as a
          condition to Closing, to execute and deliver, at Closing, any or all of
          the
          submitted ERISA certifications or provisions required by Buyer. If Sellers
          make
          valid objections to the submitted form(s), Sellers will be obligated, as
          a
          condition to Closing, to execute and deliver the submitted certifications
          or
          provisions, modified appropriately to meet Sellers valid objections. The
          parties
          hereto hereby acknowledge that the Sellers shall have no liability whatsoever
          to
          Prudential or the Buyer in the event of any violation of ERISA by Prudential
          or
          the Buyer, except to the extent that the violation arises out of the facts
          contained in any false statement made by Sellers in such ERISA
          certifications.

         

        Section
          6.11 Office
          of Insurance Regulation Approval.
          In the
          event that Buyer and Sellers mutually agree to proceed with the Closing
          (or
          Buyer elects in its sole discretion to proceed with Closing as set forth
          in the
          second sentence of this Section
          6.11)
          prior
          to Buyer obtaining a certificate of authority from the Florida Office of
          Insurance Regulation to operate the Facility as a life care facility, Sellers
          and Buyer both hereby acknowledge and agree that the Acquisition will not
          become
“final” until such time as Buyer is actually issued such a certificate of
          authority.
          If the
          Florida Office of Insurance Regulation ultimately refuses to issue the
          certificate of authority to Buyer, the Health Center Assignee shall continue
          to
          operate the Health Center pursuant to agreements mutually satisfactory
          to
          Sellers and the Health Center Assignee for such interim period of time
          beginning
          as of the date of such refusal and continuing for so long as may be reasonably
          necessary for Sellers to find a replacement operator for the Health Center.
          The
          Health Center Assignee shall receive no compensation for such interim services,
          but shall not be required to pay or incur any cost or expense relating
          to the
          operation of the Health Center for such interim period. The Health Center
          Assignee shall remit to Sellers all revenues (net of expenses of operation)
          relating to the operation of the Health Center during such interim
          period.

         

        Section
          6.12 Health
          Center Notification.
          Within
          five (5) days of signing this Agreement, Sellers shall give notice to the
          Health
          Center Operator that Sellers are terminating the Health Center Lease to
          be
          effective as of the Closing Date. Prior to the end of the Investigation
          Period,
          the Sellers shall provide the Buyer with a copy of a proposed agreement
          to be
          entered into between the Sellers and the Health Center Operator providing
          for
          the termination of the Health Center Agreements. The Sellers shall permit
          the
          Buyer a reasonable opportunity to

         

        
          
             

          

          
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        review
          and comment on such materials prior to the Sellers’ circulation of the same to
          the Health Center Operator. The Sellers will act reasonably in considering
          any
          comments that may be timely provided by the Buyer and its counsel with
          respect
          to such agreement prior to the Sellers’ circulation of the same to the Health
          Center Operator. Prior to the Closing, the Sellers shall use their reasonable
          best efforts to obtain estoppel certifications from (i) the trustee(s)
          of the
          Freedom Village Master Trusts and (ii) the Health Center Operator, both
          in form,
          scope and substance reasonably acceptable to the Buyer.

         

        Section
          6.13 CIH
          Remediation.
          The
          Sellers have retained Environmental Safety Consultants, Inc., as a Certified
          Industrial Hygienist (the “Approved
          CIH”)
          to
          develop a comprehensive mold remediation protocol for the Facility. Such
          mold
          remediation protocol, as amended by an addendum delivered to the Buyer
          prior to
          the date hereof, is referred to herein as the “Remediation
          Plan.”
The
          Sellers shall use their reasonable best efforts, at their sole cost and
          expense,
          to continue to (i) remediate any mold contamination in accordance with
          the
          Remediation Plan; (ii) repair or replace any ceiling tile, sheetrock, wallboard
          or similar building material as may be necessary to restore a remediated
          area of
          the Facility to its condition prior to such remediation; and (iii) clean
          certain
          components of the HVAC system in accordance with the Remediation Plan
          (collectively, the “Remediation”),
          all
          prior to the date that is sixty (60) days after the date hereof. In addition,
          the Sellers shall use their reasonable commercial efforts to continue to
          remediate any reasonably obvious or known source of water intrusion at
          the
          Facility which caused, or may have caused, any mold colonization requiring
          the
          aforementioned remediation. Notwithstanding the foregoing, the Sellers
          shall not
          be required to repair, replace or upgrade any HVAC systems. At least five
          (5)
          business days prior to Closing, Sellers shall provide a written certification
          (the “CIH
          Certificate”)
          from
          the Approved CIH that the Mold Remediation work has been completed in accordance
          with the Remediation Plan. Sellers agree to permit Professional Service
          Industries (“PSI”)
          and
          Buyer to monitor the course of the Remediation and periodically perform
          additional testing procedures. Within four (4) Business Days following
          delivery
          of the CIH Certificate, PSI shall reasonably and in good faith either (i)
          confirm in writing its agreement with the CIH Certificate or (ii) provide
          a
          written report setting forth in reasonable detail the ways in which the
          Remediation has not been completed in accordance with the Remediation Plan
          (such
          report, a “Remediation
          Deficiency Notice”).
          In
          the event that the Sellers timely receive a Remediation Deficiency Notice,
          the
          Sellers shall use their reasonable best efforts to cure such deficiency
          in a
          timely manner.

         

        ARTICLE
          VII

         

        CONDITIONS
          TO CLOSING

         

        Section
          7.1 Conditions
          to Each Party’s Obligation.
          The
          obligation of the Buyer to purchase and pay for the Purchased Assets and
          the
          obligation of the Sellers to sell, transfer, assign and deliver the Purchased
          Assets to the Buyer is subject to the satisfaction (or waiver by the Buyer
          and
          the Sellers) on or prior to the Closing Date of the following
          conditions:

         

        (a)    Master
          Trust Consent.
          The
          Sellers and the Buyer shall have such consents as are required pursuant
          to or
          under the Freedom Village Master Trust Agreement, as amended to date, for
          the
          transactions contemplated by this Agreement, including, but not limited
          to,
          an

         

        
          
             

          

          
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        estoppel
          certificate executed by the trustee(s) of the Freedom Village Master Trusts,
          in
          form and substance reasonably acceptable to Buyer.

         

        (b)    Certain
          Buyer Regulatory Approvals.
          The
          Buyer shall have received the AHCA Assurances. 

         

        (c)    No
          Injunctions or Restraints.
          No
          applicable law, ordinance, rule, regulation or injunction enacted, entered,
          promulgated, enforced or issued by any Governmental Entity or other legal
          restraint or prohibition preventing the consummation of the transactions
          contemplated by this Agreement shall be in effect.

         

        Section
          7.2 Conditions
          to Obligation of the Buyer.
          The
          obligation of the Buyer to purchase and pay for the Purchased Assets is
          subject
          to the satisfaction (or waiver by the Buyer) on or prior to the Closing
          Date of
          the following additional conditions: 

         

        (a)    Representations
          and Warranties (No Materiality Qualification).
          The
          representations and warranties of the Sellers in this Agreement that do
          not
          contain a materiality qualification of any kind shall be true and correct
          in all
          material respects as of August 17, 2005 and as of the Closing Date as though
          made on the Closing Date, except to the extent such representations and
          warranties expressly relate to an earlier date (in which case such
          representations and warranties shall be true and correct in all material
          respects, on and as of such earlier date, and as of the Closing Date),
          subject
          to any matters that are permitted to occur pursuant to the provisions of
          this
          Agreement.

         

        (b)    Representations
          and Warranties (Materiality).
          The
          representations and warranties of the Sellers in this Agreement that contain
          a
          materiality qualification of any kind shall be true and correct in all
          respects
          as of August 17, 2005 and as of the Closing Date as though made on the
          Closing
          Date, except to the extent such representations and warranties expressly
          relate
          to an earlier date (in which case such representations and warranties shall
          be
          true and correct in all respects, on and as of such earlier date, and as
          of the
          Closing Date), subject to any matters that are permitted to occur pursuant
          to
          the provisions of this Agreement.

         

        (c)    Performance
          of Obligations of the Sellers.
          The
          Sellers shall have performed or complied in all material respects with
          all
          obligations and covenants required by this Agreement to be performed or
          complied
          with by the Sellers by the time of the Closing.

         

        (d)    Title
          Insurance.
          The
          Buyer shall have received a title insurance commitment (the “Title
          Commitment”)
          from
          the title company (the “Title
          Company”)
          chosen
          by Sellers and reasonably acceptable to Buyer committing to issue to the
          Buyer,
          at Closing, an Owner’s Title Policy (on the latest standard ALTA Form B) in an
          amount equal to the amount allocated to the Real Property pursuant to
Section
          2.4(d),
          at
          promulgated rates and without additional premium, insuring that the Buyer
          has
          good and marketable title to the Real Property in fee simple, free and
          clear of
          Liens, except for Permitted Exceptions (as described below). Sellers shall
          cause
          the Title Commitment, together with legible copies of all documents referred
          to
          therein, to be provided to Buyer on or before ten (10) days after the date
          of
          this Agreement. Buyer shall obtain, at Buyer’s expense, a current and accurate
          survey (“Survey”)
          of the
          Real Property (Sellers will deliver to Buyer, as part of the due diligence
          materials, Sellers’ most recent

         

        
          
             

          

          
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        survey
          of
          the Real Property). If the Title Commitment notes, or the Survey shows,
          any Lien
          or encumbrance which the Buyer in its sole discretion is not willing to
          waive,
          the Buyer shall give notice of such fact in writing to the Sellers not
          later
          than five (5) Business Days prior to the end of the Investigation Period
          (“Objection
          Notice”).
          Upon
          receipt of the Objection Notice, Sellers shall notify Buyer, in writing
          (“Response
          Notice”),
          which
          of the matters set forth in Buyer’s Objection Notice will be cured by Sellers at
          or prior to Closing. Sellers shall be obligated to cure any Lien which
          is a
          mortgage, security interest or other lien which can be satisfied with the
          payment of money and which was created by the act or omission of Sellers
          (“Monetary
          Liens”),
          other
          than mortgages, security interests or other liens relating to the Freedom
          Village Master Trusts that are of public record or previously provided
          to Buyer.
          Otherwise, Sellers shall not be obligated to cure any matters set forth
          in
          Buyer’s Objection Notice. However, if Sellers’ Response Notice informs Buyer
          that Sellers will cure and remove certain matters described in Buyer’s Objection
          Notice then, as a condition to Closing, Sellers shall be obligated to cure
          the
          matters described in Sellers’ Response Notice, as well as any Monetary Liens.
          All matters shown in the Title Commitment and on the Survey to which Buyer
          does
          not object in Buyer’s Objection Notice or to which Buyer does object in its
          Objection Notice but which Sellers are not obligated to and elect not to
          cure
          are referred to collectively herein as the “Permitted
          Exceptions”.
          At
          Closing, if Sellers are not able to cure all Monetary Liens and any matters
          which Sellers, in the Response Notice, agree to cure, Buyer may elect either
          (i)
          to terminate this Agreement and receive a full refund of the Earnest Money
          Deposit, or (ii) to proceed with the Closing and receive a credit against
          the
          Purchase Price in the amount necessary to cure and remove all Monetary
          Liens and
          all matters which, in the Response Notice, Sellers agree to cure.
          Notwithstanding anything to the contrary contained in this Agreement, nothing
          herein shall be deemed to be a waiver by the Buyer of any title objections
          which
          appear subsequent to the effective date of Buyer’s Title Commitment, so long as
          the Sellers are given notice of such subsequent objections within ten (10)
          days
          after the Buyer is made aware of them, and the Buyer shall have the same
          obligations with respect to any such new objections as provided above in
          this
Section
          7.2(d).
          Upon
          receipt of notice from Buyer of any such new title objections, Sellers
          must
          again provide a Response Notice within two (2) business days thereafter
          and
          Sellers shall be obligated, as a condition to Closing, to cure any Monetary
          Liens and any such new objections which Sellers commit to cure in the new
          Response Notice. If there are any such new matters which Sellers, in their
          new
          Response Notice, do not commit to cure, Buyer may elect to terminate this
          Agreement within two (2) Business Days of the new Response Notice and receive
          a
          full refund of the Earnest Money Deposit. If Buyer does not elect to terminate,
          the newly discovered title objections which Sellers are not obligated cure,
          and
          do not elect to cure, shall become Permitted Exceptions. It shall be a
          condition
          to Buyer’s obligation to proceed with the Closing that Sellers’ shall have cured
          all Monetary Liens and all other matters which Sellers’ have committed to cure
          in any Response Notice.

         

        (e)    Buyer
          Regulatory Approvals.
          The
          Buyer shall have received the Buyer Regulatory Approvals.

         

        (f)    No
          Material Adverse Effect.
          No
          Material Adverse Effect (other than a condemnation, fire or other casualty
          event
          described in Article IX) shall have occurred following the date hereof
          and no
          event that would reasonably be expected to result in a Material Adverse
          Effect
          shall have occurred following the date hereof.

         

        
          
             

          

          
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        (g)    Termination
          of Health Center Agreements; Acquisition of Health Center Assets.
          

         

        (i)    The
          Health Center Agreements shall have been terminated in their entirety pursuant
          to a written instrument executed by the Health Center Operator effective
          as of
          the Closing Date, except for the Health Center Agreement Indemnities which
          shall
          survive in accordance with their terms.

         

        (ii)    The
          Buyer
          (or, if applicable, the Health Center Assignee) shall have acquired the
          Health
          Center Assets pursuant to the provisions of Section 8.5 of the Health Center
          Lease, and the Sellers shall have assigned to the Buyer (or, if applicable,
          the
          Health Center Assignee), directly or indirectly, all of the Sellers’ rights (but
          not their obligations) under said Section 8.5 of the Health Center Lease,
          all
          without the payment of any consideration of any type, kind or nature payable
          by
          the Buyer (including without limitation any consideration payable to the
          Health
          Center Operator under said Section 8.5 or Section 33.2 of the Health Center
          Lease).

         

        (h)    ERISA.
          Prudential and the Buyer shall be satisfied that their ownership interests
          in
          the Property, in the agreed form, will not cause a violation of ERISA
          requirements and Sellers shall have executed and delivered certifications
          and
          documents, in the forms submitted by Buyer in accordance with the provisions
          of
Section
          6.10
          above.

         

        (i)    Management
          Agreements.
          All
          management agreements of the Sellers or the Health Center Operator in effect
          at
          the Facility shall be terminated as of the Closing Date.

         

        (j)    Mold
          Remediation.
          The
          Remediation Completion Date shall have occurred.

         

        Section
          7.3 Conditions
          to Obligation of the Sellers.
          The
          obligation of the Sellers to sell, transfer, assign and deliver the Purchased
          Assets is subject to the satisfaction (or waiver by the Sellers) on or
          prior to
          the Closing Date of the following additional conditions:

         

        (a)    Representations
          and Warranties.
          The
          representations and warranties of the Buyer made in this Agreement shall
          be true
          and correct in all material respects, as of the date hereof and as of the
          Closing Date as though made on the Closing Date, except to the extent such
          representations and warranties expressly relate to an earlier date (in
          which
          case such representations and warranties shall be true and correct in all
          material respects, on and as of such earlier date).

         

        (b)    Performance
          of Obligations of the Buyer.
          The
          Buyer shall have performed or complied in all material respects with all
          obligations and covenants required by this Agreement to be performed or
          complied
          with by the Buyer by the time of the Closing.

         

        (c)    ARC
          Guaranty.
          ARC
          shall have executed and delivered to the Sellers the ARC Guaranty.

         

        (d)    Buyer’s
          Manager Assumption Agreement.
          The
          Buyer’s Manager shall have executed and delivered to the Sellers an assumption
          agreement reasonably satisfactory to

         

        
          
             

          

          
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        the
          Sellers with respect to the employee matters being assumed by the Buyer’s
          Manager pursuant to Section 6.5.

         

        Section
          7.4 Frustration
          of Closing Conditions.
          Neither
          the Buyer nor the Sellers may rely on the failure of any condition set
          forth in
          this Article VII to be satisfied if such failure was caused by such party’s
          failure to act in good faith or to use reasonable efforts to cause the
          Closing
          to occur, as required by Section
          6.4. 

         

        Section
          7.5 Effect
          of Certain Waivers of Closing Conditions.
          If
          prior to the Closing any party (the “receiving
          party”)
          receives a Notice of Material Breach (as hereinafter defined), then such
          receiving party may either (i) waive in writing any condition in Article
          VII
          applicable to the breach specified in such Notice of Material Breach and
          elect
          in its discretion to proceed with the Closing, or (ii) exercise its rights
          under the applicable provisions of Article VIII of this Agreement. In the
          event
          that the receiving party elects in its discretion to waive the applicable
          condition and proceed with the Closing as specified in clause (i) above,
          and if
          the breach so specified in the Notice of Material Breach was not, directly
          or
          indirectly, the result of any violation of any covenant in this Agreement
          by the
          breaching party, then the receiving party and its Affiliates shall not
          be
          entitled following the Closing to be indemnified pursuant to Article XI,
          to sue
          for damages or to assert any other right or remedy for any losses arising
          from
          the breach specifically identified in such Notice of Material Breach. As
          used
          herein, “Notice
          of Material Breach”
shall
          mean a written notice from any party (the “breaching
          party”)
          to the
          other party(ies) hereto that the breaching party has breached a representation
          or warranty in this Agreement as a result of matters, facts, or circumstances
          first arising after the date of this Agreement, which notice shall specify
          in
          detail the nature, scope, extent, circumstances and facts underlying such
          material breach, and shall expressly acknowledge that such material breach
          has
          caused one or more of the conditions set forth in Article VII not to be
          satisfied.

         

        ARTICLE
          VIII

         

        TERMINATION;
          EFFECT OF TERMINATION

         

        Section
          8.1 Termination. 

         

        (a)    Notwithstanding
          anything to the contrary in this Agreement, this Agreement may be terminated
          and
          the transactions contemplated by this Agreement and the other transactions
          contemplated by this Agreement abandoned at any time prior to the
          Closing:

         

        (i)    by
          mutual
          written consent of the Sellers and the Buyer;

         

        (ii)    by
          the
          Sellers, upon written notice to the Buyer, upon a material breach of this
          Agreement by the Buyer (subject to the right of the Buyer to cure the breach
          of
          any of its covenants, as opposed to its representations or warranties,
          as
          provided in Section
          8.1(b)
          hereof);

         

        (iii)    by
          the
          Buyer, upon written notice to the Sellers, upon a material breach of this
          Agreement by the Sellers (subject to the right of the Sellers to cure the
          breach
          of any of their covenants, as opposed to their representations or warranties,
          as
          provided in Section
          8.1(b)
          hereof);

         

        
          
             

          

          
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        (iv)    by
          the
          Sellers or the Buyer, if any suit, action or proceeding is commenced or
          threatened by any Governmental Entity or other person directed against
          the
          consummation of the Closing or any other material transaction contemplated
          under
          this Agreement and either the Sellers or the Buyer, as the case may be,
          reasonably and in good faith deems it impractical or inadvisable to proceed
          in
          view of such suit, action, proceeding or threat thereof;

         

        (v)    by
          the
          Sellers, if the Buyer has not submitted applications required to obtain
          the
          Buyer Regulatory Approvals to the applicable Governmental Entities on or
          before
          the Application Date;

         

        (vi)    by
          the
          Buyers or the Sellers, if the Buyer has not obtained the Buyer Regulatory
          Approvals by the Approval Date (provided that Buyer may, in its sole and
          absolute discretion, on or before the Approval Date, waive the condition
          set
          forth in Section
          7.2(e),
          except
          to the extent that it applies to the AHCA Assurances, in which event Sellers
          shall have no right of termination pursuant to this Section
          8.1(vi));
          

         

        (vii)    by
          the
          Buyer or the Sellers, if the Closing Date has not occurred by August 1,
          2006;
          or

         

        (viii)    pursuant
          to the terms of Sections
          2.5
          (Investigation Period), 6.4(b)
          (Best
          Efforts), 7.2(d)
          (Title
          Insurance) or Article IX (Risk of Loss);

         

        provided,
          however,
          that
          the party seeking termination pursuant to clauses (ii), (iii), (iv) or
          (vii) is
          not then in material breach of any of its representations, warranties,
          covenants
          or agreements contained in this Agreement. 

         

        (b)    If
          either
          party believes the other to be in default of any of its covenants hereunder,
          the
          non-defaulting party shall provide the defaulting party with notice specifying
          in reasonable detail the nature of such default. Subject to the provisions
          of
          this Agreement, if such default has not been cured by the earlier of: (a)
          the
          Closing Date, or (b) thirty (30) days after delivery of such notice, then
          the
          party giving such notice may (x) terminate this Agreement or (y) extend
          the
          Closing Date for a period not to exceed 90 days.

         

        (c)    If
          this
          Agreement is terminated in accordance with this Section
          8.1,
          other
          than pursuant to Section
          8.1(a)(ii),
          the
          Buyer and the Sellers shall instruct the Escrow Agent to disburse all amounts
          held by the Escrow Agent, subject to and in accordance with, the terms
          of the
          Earnest Money Deposit Escrow Agreement, including any interest or other
          proceeds
          from the investment of funds held by the Escrow Agent, to the Buyer.
          Notwithstanding anything in this Section
          8.1
          to the
          contrary, if Buyer has performed or is in a position to and is willing
          to tender
          performance of all of its obligations under this Agreement and Sellers
          have
          breached any of the covenants or agreements to be performed by them under
          this
          Agreement, Buyer may elect (i) if such covenants and agreements are capable
          of
          being performed by Sellers, instead of terminating this Agreement pursuant
          to
          this Section
          8.1,
          to sue
          Sellers for specific performance and cause this Agreement to remain in
          effect,
          or (ii) if Buyer has the right to terminate this Agreement pursuant to
          this
Section
          8.1
          as a
          consequence of Sellers’ breach, to terminate this Agreement, receive a refund of
          the Earnest Money Deposit and all interest or other proceeds from
          the

         

        
          
             

          

          
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        investment
          of funds held by the Escrow Agent and to sue the Sellers for damages arising
          from the Sellers’ breach.

         

        (d)    If
          this
          Agreement is terminated by the Sellers pursuant to Section 8.1(a)(ii),
          then
          the Sellers and the Buyer shall instruct the Escrow Agent to disburse all
          amounts held by the Escrow Agent, subject to and in accordance with, the
          terms
          of the Earnest Money Deposit Escrow Agreement, including any interest or
          other
          proceeds from the investment of funds held by the Escrow Agent, to the
          Sellers.

         

        Section
          8.2 The
          Sellers’ Remedies Exclusive.
          If this
          Agreement is terminated by the Sellers and Section
          8.1(d)
          applies,
          then the payment to the Sellers pursuant to Section
          8.1(d)
          shall
          constitute liquidated damages and shall constitute full payment and the
          exclusive remedy for any damages suffered by the Sellers. The Sellers and
          the
          Buyer agree in advance that actual damages would be difficult to ascertain
          and
          that the amount of the payment to be made to the Sellers pursuant to
Section
          8.1(d)
          is a
          fair and equitable amount to reimburse the Sellers for damages sustained
          due to
          the Buyer’s breach of this Agreement.

         

        Section
          8.3 Obligations
          upon Termination. 

         

        (a)    If
          the
          transactions contemplated by this Agreement are terminated as provided
          herein:

         

        (i)    the
          Buyer
          shall, and shall cause each of its directors, officers, employees, agents,
          representatives and advisors to, return to the Sellers, or certify the
          destruction of, all documents and other material received from the Sellers
          or
          any of their Affiliates relating to the transactions contemplated hereby,
          whether so obtained before or after the execution hereof; and 

         

        (ii)    all
          confidential information received by the Buyer, its directors, officers,
          employees, agents, representatives or advisors with respect to the Facility
          shall be treated in accordance with the terms of the Confidentiality Agreement,
          which shall remain in full force and effect notwithstanding the termination
          of
          this Agreement.

         

        Section
          8.4 Effect
          of Termination.
          If this
          Agreement is terminated and the transactions contemplated hereby are abandoned
          as described in Section
          8.1,
          this
          Agreement shall become null and void and of no further force and effect,
          except
          for the provisions of (a) Section
          6.3
          relating
          to the obligation of the Buyer to keep confidential certain information
          and data
          obtained by it from the Sellers or the Sellers’ representatives; (b) Article
          VIII; and (c) Article XII.

         

        Section
          8.5 Time
          of the Essence.
          Time
          shall be of the essence in this Agreement.

         

        ARTICLE
          IX

         

        RISK
          OF LOSS

         

        
          
             

          

          
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        Section
          9.1 Risk
          of Loss.
          Subject to the provisions of this Article IX, the Sellers shall bear the
          risk of
          loss with respect to the Purchased Assets until the Closing. Risk of Loss
          shall
          pass to the Buyer as of 12:01 a.m. on the Closing Date.

         

        Section
          9.2 Condemnation. 

         

        (a)    If
          all or
          any portion of the Facility shall be subject to a “Taking” (as that phrase is
          defined below) between the date of this Agreement and the Closing Date,
          the
          rights of the parties shall be as follows:

         

        (i)    If
          such
          Taking will in Buyer’s reasonable judgment be expected to have a Material
          Adverse Effect, the Buyer may terminate its obligations under this Agreement
          to
          purchase the Purchased Assets by written notice to the Sellers within ten
          (10)
          days after the Sellers have given the Buyer notice of such Taking, or on
          the
          Closing Date, whichever is earlier. If the Buyer exercises its option to
          terminate its obligations to purchase the Purchased Assets pursuant to
          this
Section
          9.2(a)(i),
          the
          Earnest Money Deposit shall be promptly returned to the Buyer and the parties
          hereto shall be released from all further obligations hereunder, except
          those
          which expressly survive a termination of this Agreement.

         

        (ii)    If
          such
          Taking will not in Buyer’s reasonable judgment be expected to have a Material
          Adverse Effect or the Buyer does not elect to terminate its obligations
          to
          purchase the Facility, the Buyer shall take an assignment of the Sellers’
interest in any condemnation award which may be payable to the Sellers
          on
          account of such Taking and shall close without reduction in the Purchase
          Price
          or change in any other term of this Agreement.

         

        (b)    The
          Sellers agree to promptly furnish the Buyer with written notice of any
          Taking or
          proposed Taking.

         

        (c)    “Taking”
is
          hereby defined to mean a taking or acquisition by a Governmental Entity
          for any
          public or quasi-public use, reason or purpose under any power of eminent
          domain
          or condemnation.

         

        Section
          9.3 Fire
          or Other Casualty. 

         

        (a)    In
          the
          event of damage to the Facility by fire or other casualty between the date
          of
          this Agreement and the date of Closing reasonably expected to cost more
          than
          $1,000,000 to repair, the rights of the parties shall be as
          follows:

         

        (i)    The
          Buyer
          may terminate its obligations under this Agreement to purchase the Facility
          by
          written notice to the Sellers within ten (10) days after the Sellers have
          given
          the Buyer notice of such fire or casualty event, or on the Closing Date,
          whichever is earlier. If the Buyer exercises its option to terminate its
          obligations to purchase the Facility pursuant to this Section
          9.3(a)(i),
          the
          Earnest Money Deposit shall be promptly returned to the Buyer and the parties
          hereto shall be released from all further obligations hereunder, except
          those
          which expressly survive a termination of this Agreement.

         

        
          
             

          

          
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        (ii)    In
          the
          event that the Buyer does not elect to terminate its obligation to purchase
          the
          Facility, the Closing shall take place without abatement of the Purchase
          Price,
          but the Sellers shall assign to the Buyer at the Closing all of their respective
          interest in any insurance proceeds (except use and occupancy insurance,
          rent
          loss and business interruption insurance, and any similar insurance for
          the
          period preceding the Closing Date) that may be payable to the Sellers on
          account
          of any such fire or other casualty and provide Buyer a credit against the
          Purchase Price in the amount of Sellers’ deductible.

         

        (b)    In
          the
          event that the damage caused by such fire or other casualty would reasonably
          be
          expected to cost less than $1,000,000 to repair, failure by the Sellers
          to
          repair such damage shall not constitute a breach or default under this
          Agreement
          and such damage shall have no effect on the obligations of the parties
          to close
          the transactions contemplated by this Agreement. The Sellers shall assign
          to the
          Buyer at the Closing all of their respective interest in any insurance
          proceeds
          (except use and occupancy insurance, rent loss and business interruption
          insurance, and any similar insurance for the period preceding the Closing
          Date)
          that may be payable to the Sellers on account of any such fire or other
          casualty
          and provide Buyer a credit against the Purchase Price in the amount of
          Sellers’
deductible.

         

        (c)    The
          Sellers agree to promptly furnish the Buyer with written notice of any
          fire or
          casualty event at the Facility. 

         

        ARTICLE
          X

        ACTIONS
          BY THE SELLER AND THE BUYER

        AFTER
          THE CLOSING

         

        Section
          10.1 Accounts
          Receivable.
          

         

        (a)    If
          Sellers receive payment of any Accounts Receivable or Entrance Fee Receivables
          assigned to Buyer, Sellers shall remit such payment to Buyer within five
          Business Days of Sellers’ receipt. If the Buyer (or any of its assignees)
          receives payment of any receivables relating to the Facility, other than
          Accounts Receivable or Entrance Fee Receivables assigned to Buyer, the
          Buyer
          shall remit such payment to the Sellers within five Business Days of the
          Buyer’s
          receipt. The Buyer shall reasonably cooperate with the Sellers in the Sellers’
efforts to collect on any receivables not assigned to the Buyer hereunder,
          including the Retained Receivables (as defined below). 

         

        (b)    For
          a
          period of 180 days following the Closing Date (the “Collection
          Period”)
          the
          Buyer, on behalf of the Sellers, will collect any receivables arising out
          of the
          operation of the Health Center prior to Closing, including that portion
          of any
          receivables generated after the Closing Date that relate to services provided
          at
          the Health Center prior to Closing (the “Retained
          Receivables”),
          in
          the same manner and with the same diligence the Buyer uses to collect its
          own
          accounts receivable. In its collection efforts, the Buyer shall not be
          liable to
          the Sellers except for willful misconduct or gross negligence. During the
          Collection Period, the Buyer shall provide the Sellers, or its designee
          with any
          information requested by the Seller or such designee regarding the status
          of any
          of the Retained Receivables or related collection efforts. For purposes
          of this
          Agreement, the term “Retained Receivables” shall not include fees

         

        
          
             

          

          
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        payable
          to the Health Center Operator under (i) the Assisted Living Facility Service
          Agreement, dated May 1, 2003, between Westport Holdings and the Health
          Center
          Operator or (ii) the Skilled Nursing Facility Service Agreement dated as
          of May
          1, 2003, between Westport Holdings and the Health Center Operator.

         

        (c)    The
          Buyer
          shall promptly deposit (but in no event more than five (5) business days
          after
          receipt), without offset or deduction, all collections received by the
          Buyer on
          account of the Retained Receivables into a bank account designated by the
          Sellers, and the Buyer shall deliver a monthly accounting of such collections
          and deposits to the Sellers. All amounts received by the Buyer from account
          debtors included among the Retained Receivables that fail to designate
          the
          period to which they relate will first be applied first to such Retained
          Receivables. The Buyer shall not settle or adjust the amount of any Retained
          Receivables without the prior written authorization of the Sellers.

         

        (d)    Upon
          the
          written request of the Sellers, the Buyer shall permit the Sellers to have
          reasonable access to the records of the Buyer and its Affiliates as may
          be
          reasonably necessary to audit the accountings required to be delivered
          by the
          Buyer hereunder in connection with its collection of the Retained Receivables.
          The costs and expenses of such audit shall be paid by the Sellers. 

         

        (e)    The
          Buyer’s obligation to collect the Retained Receivables shall cease (i) with
          respect to all Retained Receivables, at the conclusion of the Collection
          Period;
          and (ii) with respect to an individual Retained Receivable, when such receivable
          becomes aged by more than 180 days; provided however, that, in each case,
          the
          Buyer shall continue to reasonably cooperate with the Sellers in the Sellers’
efforts to collect on any receivables not assigned to the Buyer hereunder,
          including the Retained Receivables.

         

        (f)    The
          Buyer
          may delegate its responsibilities under this Section to the Buyer’s lessee of
          the Health Center; provided that no such delegation by the Buyer shall
          release
          the Buyer from liability for a breach of this Section 10.1 by the Buyer
          or the
          Buyer’s lessee.

         

        Section
          10.2 Books
          and Records; Tax Matters. 

         

        (a)    Each
          party agrees that it will cooperate with and make available to the other
          party,
          during normal business hours, all books and records, information and employees
          (without substantial disruption of employment) retained and remaining in
          existence after the Closing which are necessary or useful in connection
          with any
          Tax inquiry, audit, investigation or dispute, any litigation or investigation
          or
          any other matter requiring any such books and records, information or employees
          for any reasonable business purpose. The party requesting any such books
          and
          records, information or employees shall bear all of the out-of-pocket costs
          and
          expenses (including, without limitation, attorneys’ fees, but excluding
          reimbursement for salaries and employee benefits) reasonably incurred in
          connection with providing such books and records, information or
          employees.

         

        (b)    The
          Buyer
          agrees to retain all records relating to the finances and Taxes of the
          Purchased
          Assets for all pre-Closing Tax periods until the expiration of the statutes
          of
          limitation (including any extensions thereof) for the taxable period or
          periods
          to which such

         

        
          
             

          

          
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        records
          relate. The Buyer and the Sellers agree to provide each other with such
          information and assistance as is reasonably necessary, including access
          to
          records and personnel, for the preparation of any Tax Returns or for the
          defense
          of any Tax claim or assessment, whether in connection with an audit or
          otherwise.

         

        Section
          10.3 Further
          Assurances.
          On the
          terms and subject to the conditions contained herein, the Buyer and the
          Sellers
          shall after the Closing, (a) use commercially reasonable efforts to take,
          or
          cause to be taken, all actions and to do, or cause to be done, all things
          necessary, proper or advisable to consummate and make effective the transactions
          contemplated by this Agreement and the Ancillary Agreements; (b) execute
          any
          documents, instruments or conveyances of any kind which may be reasonably
          necessary or advisable to carry out any of the transactions contemplated
          hereunder or thereunder; and (c) cooperate with each other in connection
          with
          the foregoing. 

         

        ARTICLE
          XI

         

        INDEMNIFICATION

         

        Section
          11.1 Survival.
          The
          representations and warranties of the Sellers and the Buyer contained in
          this
          Agreement shall survive the Closing until the second anniversary of the
          Closing
          Date; provided, however, that insofar as any claim is made by the Buyer
          for the
          breach of any representation or warranty of the Sellers contained in Sections
          4.13 (Taxes) or 4.17 (Employee Benefits Plans) herein, such representations
          and
          warranties shall, for purposes of such claim by the Buyer survive the Closing
          until the expiration of the applicable statute of limitations governing
          such
          claims. To the extent that any covenant in this Agreement is to be performed
          after the Closing, such covenant and a party’s right to recover damages
          resulting from a breach of such covenant shall survive the Closing.

         

        Section
          11.2 Indemnification
          by the Sellers.
          Subject
          to the limitations set forth in Section
          11.6,
          from
          and after the Closing, the Sellers shall, jointly and severally, indemnify,
          defend and hold harmless the Buyer, its Affiliates, the Health Center Assignee
          and Buyer’s manager, and each of their respective officers, directors,
          employees, stockholders, members, agents and representatives (collectively,
          the
“Buyer
          Indemnitees”)
          from
          and against any and all claims, losses, damages, liabilities, obligations
          or
          expenses, including reasonable legal fees and expenses (collectively,
“Losses”),
          to
          the extent relating, arising or resulting, directly or indirectly, from
          any of
          the following:

         

        (i)    any
          breach of any representation or warranty of the Sellers contained in this
          Agreement, the Schedules hereto, any certificate delivered by Sellers,
          or the
          Ancillary Agreements, without giving effect to any supplements to the schedules
          hereto after the date hereof (but subject to the provisions of Section
          7.5);

         

        (ii)    any
          breach of any covenant of the Sellers contained in this Agreement or the
          Ancillary Agreements;

         

        (iii)    any
          Excluded Asset or Excluded Liability; 

         

        
          
             

          

          
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        (iv)    any
          fees,
          expenses or other payments incurred or owed by the Sellers to any agent,
          broker,
          investment banker or other firm or person retained or employed by them
          in
          connection with the transactions contemplated by this Agreement;
          and

         

        (v)    all
          liabilities relating to the ownership of the Purchased Assets or conduct
          or
          operation of the Facility, including both the Retirement Center and the
          Health
          Center, prior to the Closing Date, other than the Assumed
          Liabilities.

         

        Section
          11.3 Fund
          Indemnification.
          In the
          event that with respect to any period commencing on the Closing Date and
          ending
          the day preceding the fifth anniversary of the Closing Date, any Buyer
          Indemnitee is assessed any withdrawal liability under Section 4201 of ERISA
          from
          the SEIU National Industry Pension Fund (the “Fund”) on account of all, or any
          portion of, the Facility, or the Fund makes any claim or demand against
          any
          Buyer Indemnitee asserting any such withdrawal liability, then the Sellers
          shall, jointly and severally, indemnify, defend and hold harmless the Buyer
          Indemnitees from and against such withdrawal liability and any claims or
          demands
          with respect thereto, including reasonable legal fees and expenses.
          Notwithstanding the foregoing, the Sellers shall have no indemnification
          obligation under this Section 11.3 to the extent that the Buyer Indemnitees
          are
          not entitled to the benefit of the Fund’s five-year free look period on account
          of: (i) contributions to the Fund by the Buyer’s manager (including any entity
          required to be aggregated with the Buyer’s manager under Section 414 of the
          Code) that equal or exceed two percent (2%) of the sum of all employer
          contributions made to the Fund; (ii) an intentional waiver by the Buyer
          Indemnitees of the benefits of the Fund’s five-year free look period; or (iii) a
          statutory change in Section 4210 of ERISA that results in an elimination
          or
          reduction in the Fund’s five-year free look period as it applies to the Buyer
          Indemnitees.

         

        Section
          11.4 Indemnification
          by the Buyer.
          From
          and after the Closing, the Buyer shall indemnify, defend and hold harmless
          the
          Sellers and each of their Affiliates and each of their respective officers,
          directors, employees, stockholders, agents and representatives (the
“Sellers
          Indemnitees”)
          from
          and against any and all Losses, to the extent relating, arising or resulting,
          directly or indirectly, from any of the following:

         

        (i)    any
          breach of any representation or warranty of the Buyer contained in this
          Agreement, the Ancillary Agreements, or any certificate of Buyer (but subject
          to
Section
          7.5);

         

        (ii)    any
          breach of any covenant of the Buyer contained in this Agreement;

         

        (iii)    any
          Assumed Liability;

         

        (iv)    any
          fees,
          expenses or other payments incurred or owed by the Buyer or its Affiliates
          to
          any agent, broker, investment banker or other firm or person retained or
          employed by it in connection with the transactions contemplated by this
          Agreement; or

         

        (v)    the
          ownership of the Purchased Assets or conduct or operation of the Facility
          from
          and after the Closing Date.

         

        
          
             

          

          
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        Section
          11.5 Indemnification
          Procedures. 

         

        (a)    Procedures
          Relating to Indemnification of Third Party Claims.
          If any
          party (the “Indemnified
          Party”)
          receives written notice of the commencement of any action or proceeding
          or the
          assertion of any claim by a third party or the imposition of any penalty
          or
          assessment for which indemnity may be sought under Sections
          11.2,
          11.3
          or
11.4
          (a
          “Third
          Party Claim”),
          and
          such Indemnified Party intends to seek indemnity pursuant to this Article
          XI,
          the Indemnified Party shall promptly provide the other party (the “Indemnifying
          Party”)
          with
          written notice of such Third Party Claim, stating the nature, basis and
          the
          amount thereof, to the extent known, along with copies of the relevant
          documents
          evidencing such Third Party Claim and the basis for indemnification sought.
          Failure of the Indemnified Party to give such notice will not relieve the
          Indemnifying Party from liability on account of this indemnification, except
          if
          and to the extent that the Indemnifying Party is actually prejudiced thereby.
          The Indemnifying Party will have thirty (30) days from receipt of any such
          notice of a Third Party Claim to give notice to assume the defense thereof.
          If
          notice to the effect set forth in the immediately preceding sentence is
          given by
          the Indemnifying Party, the Indemnifying Party will have the right to assume
          the
          defense of the Indemnified Party against the Third Party Claim with counsel
          of
          its choice that is reasonably acceptable to the Indemnified Party. So long
          as
          the Indemnifying Party has assumed the defense of the Third Party Claim
          in
          accordance herewith, (i) the Indemnified Party may retain separate co-counsel
          at
          its sole cost and expense and participate in the defense of the Third Party
          Claim, and (ii) the Indemnified Party will not file any papers or consent
          to the
          entry of any judgment or enter into any settlement with respect to the
          Third
          Party Claim without the prior written consent of the Indemnifying Party.
          The
          parties will use commercially reasonable efforts to minimize Losses from
          Third
          Party Claims and will act in good faith in responding to, defending against,
          settling or otherwise dealing with such claims. The parties will also cooperate
          in any such defense and give each other reasonable access to all information
          relevant thereto. Whether or not the Indemnifying Party has assumed the
          defense,
          such Indemnifying Party will not be obligated to indemnify the Indemnified
          Party
          hereunder for any settlement entered into or any judgment that was consented
          to
          without the Indemnifying Party’s prior written consent. In addition, the
          Indemnifying Party shall not, without the approval of the Indemnified Party
          (which approval shall not be unreasonably withheld or delayed), compromise
          a
          Third Party Claim defended by the Indemnifying Party which would require
          the
          Indemnified Party to perform or take any action, or to refrain from performing
          or taking any action, or to pay any additional Persons in the
          future.

         

        (b)    Procedures
          for Non-Third Party Claims.
          The
          Indemnified Party will notify the Indemnifying Party in writing promptly
          of its
          discovery of any matter that does not involve a Third Party Claim being
          asserted
          against or sought to be collected from the Indemnified Party, giving rise
          to the
          claim of indemnity pursuant hereto. The Indemnifying Party will have thirty
          (30)
          days from receipt of any such notice to give notice of dispute of the claim
          to
          the Indemnified Party. The Indemnified Party will reasonably cooperate
          and
          assist the Indemnifying Party in determining the validity of any claim
          for
          indemnity by the Indemnified Party and in otherwise resolving such matters.
          Such
          assistance and cooperation will include providing reasonable access to
          and
          copies of information, records and documents relating to such matters,
          furnishing employees to assist in the investigation, defense and resolution
          of
          such matters and providing legal and business assistance with respect to
          such
          matters.

         

        
          
             

          

          
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        (c)    In
          connection with any notice from any Buyer Indemnitee pursuant to Sections
          11.5(a)
          or
(b)
          above,
          such Buyer Indemnitee may give notice of a claim under the Closing Escrow
          Agreement. Neither the giving of, or the failure to give, a notice of a
          claim
          under the Closing Escrow Agreement will constitute an election of remedies
          or
          limit Buyer in any manner in enforcement of any other remedies that may
          be
          available to Buyer under this Agreement.

         

        Section
          11.6 Limitations
          on Indemnification. 

         

        (a)    Notwithstanding
          the foregoing provisions of Section
          11.2,
          except
          in the event of fraud, intentional misrepresentation or intentional wrongdoing
          by either of the Sellers, (i) the Sellers shall not be liable, pursuant
          to
Section
          11.2(i)
          or
(ii)
          for any
          Losses suffered by any Buyer Indemnitee until the aggregate of all Losses
          claimed by the Buyer Indemnitees thereunder exceeds, on a cumulative basis,
          an
          amount equal to $500,000, and then only to the extent of any such excess;
          (ii)
          the Sellers shall not be liable pursuant to Section
          11.2(i)
          for
          individual items relating to a breach of a representation or warranty in
          Sections
          4.5
          or
4.12
          where
          the Loss relating thereto is less than $5,000, and the aggregate of all
          such
          Losses is less than $20,000; (iii) the aggregate liability of the Sellers
          pursuant to Section
          11.2
          (but not
          pursuant to Section
          11.3)
          for
          Losses suffered by the Buyer Indemnitees shall in no event exceed $5,000,000;
          and (iv) without limiting the limitation set forth in the preceding clause
          (iii), the aggregate liability of the Sellers pursuant to Section
          11.2
          (but not
          pursuant to Section
          11.3)
          for
          Losses suffered by the Buyer Indemnitees with respect to matters or claims
          of
          which Sellers first receive notice pursuant to Section
          11.5
          after
          the eighteen (18) month anniversary of the Closing Date shall in no event
          exceed
          $3,000,000 in the aggregate. The limitation set forth in the preceding
          clause
          (iv) shall not apply to any matter or claim that, directly or indirectly,
          relates to or arises out of or in connection with, or results from, any
          matter(s) or claim(s) of which Sellers have been notified pursuant to
Section
          11.5
          before
          the eighteen (18) month anniversary of the Closing Date.

         

        (b)    Neither
          party hereto shall be liable to any indemnitee for punitive damages or
          such
          other party’s lost profits claimed by such other party resulting from such first
          party’s breach of its representations, warranties or covenants
          hereunder.

         

        (c)    The
          Buyer
          acknowledges and agrees that, should the Closing occur, its sole and exclusive
          remedy with respect to any and all claims relating to this Agreement, the
          Facility, the Purchased Assets, the Excluded Assets, the Assumed Liabilities
          or
          the transactions contemplated hereby (other than claims of, or causes of
          action
          arising from, fraud, intentional misrepresentation or intentional wrongdoing
          by
          either Seller) shall be pursuant to the indemnification provisions set
          forth in
          this Article XI, and that amounts held by the Escrow Agent pursuant to
          the
          Closing Escrow Agreement shall constitute (i) the sole and exclusive source
          of
          recourse for the Buyer Indemnitees in connection with any claims made pursuant
          to Section
          11.2
          (other
          than claims of, or causes of action arising from, fraud, intentional
          misrepresentation or intentional wrongdoing by either Seller) and (ii)
          a
          non-exclusive source of recourse for the Buyer Indemnitees in connection
          with
          any claims made pursuant to Section
          11.3.
          In
          furtherance of the foregoing, the Buyer hereby waives, from and after the
          Closing, any and all rights, claims and causes of action (other than claims
          of,
          or causes of action arising from, fraud, intentional misrepresentation
          or
          intentional wrongdoing by either Seller) the Buyer or any other Buyer Indemnitee
          may have against the Sellers or any of their Affiliates or any of
          their

         

        
          
             

          

          
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        respective
          directors, officers and employees arising under or based upon any Federal,
          state
          or local statute, law, ordinance, rule or regulation or otherwise (except
          pursuant to the indemnification provisions set forth in this Article
          XI).

         

        Section
          11.7 Calculation
          of Indemnity Payments.
          The
          amount of any Loss for which indemnification is provided under this Article
          XI
          shall be net of any amounts recovered by the Indemnified Party under insurance
          policies with respect to such Loss. Such amount shall be (y) increased
          to take
          account of any net Tax cost actually incurred by the Indemnified Party
          arising
          from the receipt of indemnity payments hereunder (grossed up for such increase)
          and (z) reduced to take account of any net Tax benefit actually realized
          by the
          Indemnified Party arising from the incurrence or payment of any such indemnified
          amount. In computing the amount of any such Tax cost or Tax benefit, the
          Indemnified Party shall be deemed to recognize all other items of income,
          gain,
          loss, deduction or credit before recognizing any item arising from the
          receipt
          of any indemnity payment hereunder or the incurrence or payment of any
          indemnified amount.

         

        Section
          11.8 Time
          Limits for Indemnification.
          Any
          indemnification claim (a “Representation
          Claim”)
          made
          pursuant to Section
          11.2(i)
          or
Section
          11.4(i)
          shall be
          forever barred unless the applicable Buyer Indemnitee or Sellers Indemnitee,
          respectively, delivers a written notice of the Representation Claim to
          the
          Sellers or Buyer, respectively, in accordance with the procedures set forth
          in
Section
          11.5
          prior to
          expiration of the survival period with respect to the applicable representation
          and warranty set forth in Section
          11.1.
          Any
          indemnification claim (a “Covenant
          Claim”)
          made
          pursuant to Section
          11.2(ii)
          or
Section
          11.4(ii)
          shall be
          forever barred unless the applicable Buyer Indemnitee or Sellers Indemnitee,
          respectively, delivers a written notice of the Covenant Claim to the Sellers
          or
          Buyer, respectively, in accordance with the procedures set forth in Section
          11.5
          prior to
          the second anniversary of the Closing Date. The time limits set forth in
          this
Section
          11.8
          shall
          not apply to any claims under Section 11.3 or any claims based on fraud,
          intentional misrepresentation or intentional wrongdoing, which claims may
          be
          made any time prior to the expiration of the applicable statute of limitations
          governing those claims.

         

        Section
          11.9 Tax
          Treatment of Indemnification.
          For all
          Tax purposes, the Buyer and the Sellers agree to treat (and shall cause
          each of
          their respective Affiliates to treat) any indemnity payment under this
          Agreement
          as an adjustment to the Purchase Price unless a final determination (which
          shall
          include the execution of an IRS Form 870-AD or successor form) provides
          otherwise.

         

        
          
             

          

          
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        ARTICLE
          XII

         

        MISCELLANEOUS

         

        Section
          12.1 Prior
          Diligence.
          The
          Buyer acknowledges that any concerns raised in connection with the diligence
          investigation of the Facility conducted by PIM Bradenton LLC (“PIM”)
          that
          have been expressed in writing to the Sellers prior the date of this Agreement
          have been accepted or resolved to the Buyer’s satisfaction or are otherwise
          addressed by the terms of this Agreement. Notwithstanding anything contained
          in
          this Agreement to the contrary, the Buyer agrees that the existence of
          any facts
          or circumstances specifically noted in PIM’s October 14, 2005 letter to the
          Seller regarding such diligence investigation shall not give rise to (i)
          any
          claims by the Buyer or any Buyer Indemnitee pursuant to the Agreement or
          (ii) a
          failure by the Sellers to satisfy any conditions to the closing of the
          transactions contemplated by this Agreement. Notwithstanding the foregoing,
          nothing contained in this Section 12.1 shall limit the rights of the Buyer
          with
          respect to a breach by the Sellers of their obligations under Section
          6.1(b)(viii) or Section 6.13.

         

        Section
          12.2 Publicity.
          From
          the date hereof through the Closing Date, except as otherwise required
          by law,
          no public release or announcement concerning the transactions contemplated
          hereby shall be issued by any party without the prior consent of the other
          parties (which consent shall not be unreasonably withheld or delayed);
          provided,
          however, that each of the parties may make internal announcements to their
          respective employees that are consistent with the parties’ prior public
          disclosures regarding the transactions contemplated hereby.

         

        Section
          12.3 Post-Closing
          Information.
          Following the Closing, upon reasonable written notice to the Buyer, the
          Buyer
          shall afford or cause to be afforded to the Sellers and their affiliates
          reasonable access to the personnel, properties, books, Contracts, commitments
          and records relating to the Facility for any reasonable business purpose,
          including in respect of litigation, insurance matters and financial reporting
          of
          the Sellers and their Affiliates.

         

        Section
          12.4 Refunds
          and Remittances.
          After
          the Closing, if the Sellers or any of their Affiliates receive any refund
          or
          other amount which is a Purchased Asset or is otherwise properly due and
          owing
          to the Buyer or any of its Affiliates in accordance with the terms of this
          Agreement, the Sellers promptly shall remit, or shall cause to be remitted,
          such
          amount to the Buyer at the address set forth in Section
          12.8.
          After
          the Closing, if the Buyer or any of its Affiliates or their respective
          assigns
          receive any refund or other amount which is an Excluded Asset or is otherwise
          properly due and owing to the Sellers, the Health Center Operator or any
          of
          their respective Affiliates in accordance with the terms of this Agreement,
          the
          Buyer promptly shall remit, or shall cause to be remitted, such amount
          to the
          Sellers at the address set forth in Section
          12.8,
          or to
          the Health Center Operator, as the case may be. After the Closing, if the
          Buyer,
          its assignees or any of their respective Affiliates receive any refund
          or other
          amount which is related to claims (including workers’ compensation), litigation,
          insurance or other matters for which the Sellers are responsible hereunder,
          and
          which amount is not a Purchased Asset, or is otherwise properly due and
          owing to
          the Sellers or the Health Center Operator in accordance with the terms
          of this
          Agreement, the Buyer promptly shall remit, or cause to be remitted, such
          amount
          to the Sellers at the address set forth in Section
          12.8.
          After
          the Closing, if the Sellers or any of their Affiliates receive any refund
          or
          other amount which is related to claims

         

        
          
             

          

          
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        (including
          worker’s compensation), litigation, insurance or other matters for which the
          Buyer is responsible hereunder, and which amount is not an Excluded Asset,
          or is
          otherwise properly due and owing to the Buyer in accordance with the terms
          of
          this Agreement, the Sellers promptly shall remit, or cause to be remitted,
          such
          amount to the Buyer at the address set forth in Section
          12.8.

         

        Section
          12.5 Assignment.
          Neither
          this Agreement nor any of the rights and obligations of the parties hereunder
          may be assigned by any of the parties hereto without the prior written
          consent
          of the other party hereto; provided, however, that Buyer may assign this
          Agreement to any joint venture, limited liability company or partnership
          in
          which Buyer or its Affiliates, and ARC or its Affiliates, are members or
          partners. Notwithstanding the foregoing, and subject to compliance with
          the
          provisions thereof, no such assignment by the Buyer shall release Buyer
          from
          liability for a breach of this Agreement by the Buyer or its assignee.
          Subject
          to the first sentence of this Section
          12.5,
          this
          Agreement shall be binding upon and inure to the benefit of the parties
          hereto
          and their respective successors and assigns and no other person shall have
          any
          right, obligation or benefit hereunder. Any attempted assignment or transfer
          in
          violation of this Section
          12.5
          shall be
          void.

         

        Section
          12.6 No
          Third-Party Beneficiaries.
          Except
          as provided in Article XII, this Agreement is for the sole benefit of the
          parties hereto and their permitted assigns and nothing herein expressed
          or
          implied shall give or be construed to give to any person, other than the
          parties
          hereto and such assigns, any legal or equitable rights hereunder.

         

        Section
          12.7 Expenses.
          Whether
          or not the transactions contemplated by this Agreement are consummated,
          except
          as otherwise expressly provided herein, each of the parties hereto shall
          be
          responsible for the payment of its own respective costs and expenses incurred
          in
          connection with the negotiations leading up to and the performance of its
          respective obligations pursuant to this Agreement and the Ancillary Agreements
          including the fees of any attorneys, accountants, brokers or advisors employed
          or retained by or on behalf of such party. Notwithstanding the foregoing,
          the
          Sellers shall pay the expenses of Title Commitment and title insurance
          premiums
          at promulgated rates based upon the amount stated in Section
          7.2(d).
          The
          Buyer shall obtain and pay the cost of an updated Survey of the Real Property.
          Costs of preparation of Closing documents and all other similar costs,
          fees and
          expenses of the Closing (except for Sellers’ attorney’s fees) shall be paid by
          the Buyer. 

         

        The
          substantially prevailing party in any litigation or proceeding to enforce
          this
          Agreement or any of the Ancillary Agreements shall be entitled to recover
          from
          the non-substantially prevailing party, in addition to any other amounts
          that
          the substantially prevailing party may recover under this Agreement or
          the
          Ancillary Agreements, all reasonable expenses that the substantially prevailing
          party may have incurred in connection with such litigation or proceeding,
          including accounting fees, expert fees and attorneys’ fees.

        

        Section
          12.8 Notices.
          All
          notices, requests, permissions, waivers, claims, demands and other
          communications hereunder shall be in writing and shall be deemed to have
          been
          duly given (i) five (5) business days following sending by registered or
          certified mail, postage prepaid, (ii) when sent, if sent by facsimile;
          provided
          that the
          facsimile transmission is promptly confirmed by telephone, (iii) when delivered,
          if delivered personally to the intended recipient and (iv) one

         

        
          
             

          

          
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        (1)
          business day after sending by overnight delivery via a national courier
          service
          that provides proof of delivery and, in each case, addressed to a party
          at the
          following address for such party:

         

        If
          to the
          Sellers, addressed to:

         

        Westport
          Advisors, Ltd.

        3801
          PGA
          Boulevard, Suite 805

        Palm
          Beach, FL 33410

        Attention:
          Larry Landry

        Facsimile
          Number: (561) 624-8037 

        

        With
          a
          copy to:

         

        Herrick,
          Feinstein LLP

        2
          Park
          Avenue

        New
          York,
          New York 10016

        Attention:
          Irwin A. Kishner

        Facsimile
          Number: (212) 545-3400

        

        Rockwood
          Realty Associates, LLC

        555
          Fifth
          Avenue

        5th
          Floor

        New
          York,
          NY 10017-2416

        Attention:
          Brian Dowd

        Facsimile
          Number: (212) 286-5555

        

        If
          to the
          Buyer, addressed to:

         

        Prudential
          Investment Management 

        Two
          Ravinia Drive, Suite 400 

        Atlanta,
          Georgia 30346-2110 

        Attn:
          John W. Dark

        Facsimile
          Number: (770) 395-8454

         

        With
          copies to:

         

        American
          Retirement Corporation

        111
          Westwood Place, Suite 200

        Brentwood,
          TN 37027

        Attention:
          Chief Executive Officer

        Facsimile
          Number: (615) 221-2269

        

        Bass,
          Berry & Sims PLC

        315
          Deaderick Street, Suite 2700

        Nashville,
          Tennessee 37238-3001

        Attn:
          T.
          Andrew Smith

         

        
          
             

          

          
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        Facsimile
          Number: (615) 742-2766 

        Alston
          & Bird LLP

        One
          Atlantic Center

        1201
          West
          Peachtree Street

        Atlanta,
          Georgia 30309-3424

        Attn:
          Mark C. Rusche

        Facsimile
          Number: (404) 881-7777

         

        and

         

        The
          Prudential Insurance Company of America

        PREI
          Law
          Department

        Arbor
          Circle South

        8
          Campus
          Drive, 4th
          Floor

        Parsippany,
          New Jersey 07054

        Attn:
          Joan N. Hayden, Vice President, Corporate Counsel

        Facsimile
          Number: (973) 683-1788

         

        If
          to
          Buyer’s Manager:

         

        American
          Retirement Corporation

        111
          Westwood Place, Suite 200

        Brentwood,
          TN 37027

        Attention:
          Chief Executive Officer

        Facsimile
          Number: (615) 221-2269

        

        With
          copies to:

         

        Bass,
          Berry & Sims PLC

        315
          Deaderick Street, Suite 2700

        Nashville,
          Tennessee 37238-3001

        Attn:
          T.
          Andrew Smith

        Facsimile
          Number: (615) 742-2766 

         

        or
          to
          such other address(es) as shall be furnished in writing by any such party
          to the
          other party hereto in accordance with the provisions of this Section
          12.8.

         

        Section
          12.9 Headings.
          The
          descriptive headings of the several Articles and Sections of this Agreement
          and
          the Schedules to this Agreement and the Table of Contents to this Agreement
          are
          inserted for convenience only, do not constitute a part of this Agreement
          and
          shall not affect in any way the meaning or interpretation of this Agreement.
          All
          references herein to “Articles”, “Sections”, “Exhibits” or “Schedules” shall be
          deemed to be references to Articles or Sections hereof or Exhibits or Schedules
          hereto unless otherwise indicated.

         

        Section
          12.10 Counterparts.
          This
          Agreement may be executed in one or more counterparts, all of which shall
          be
          considered one and the same agreement, and shall become effective when
          one or
          more counterparts have been signed by each of the parties hereto
          and

         

        
          
             

          

          
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        delivered,
          in person or by telecopier, receipt acknowledged, to the other party hereto.
          This Agreement may be executed and delivered by the parties hereto via
          telecopier machine or other means of electronic delivery, which shall be
          deemed
          for all purposes as an original.

         

        Section
          12.11 Integrated
          Contract; Exhibits and Schedules.
          (a)
          This Agreement, including the Schedules and Exhibits hereto, any written
          amendments to the foregoing satisfying the requirements of Section
          12.15
          hereof
          and the Ancillary Agreements, including the schedules and exhibits thereto,
          constitute the entire agreement among the parties with respect to the subject
          matter hereof and thereof and supersede any previous agreements and
          understandings between the parties with respect to such matters. All Exhibits
          and Schedules annexed hereto or referred to herein are hereby incorporated
          in
          and made a part of this Agreement as if set forth in full herein. Any
          capitalized terms used in any Schedule or Exhibit but not otherwise defined
          therein shall be defined as set forth in this Agreement.

         

        Notwithstanding
          anything herein to the contrary, any disclosures in the Schedules shall
          be
          deemed adequate to disclose an exception to a representation or warranty
          made in
          this Agreement to the extent that such representation or warranty is
          specifically identified in such Schedule.

         

        (b)    The
          Sellers,
          the Buyer’s Manager and the Buyer, on behalf of itself and PIM, agree that this
          Agreement supersedes and replaces the Asset Purchase Agreement dated as
          of
          August 17, 2005 (the “Prior
          Agreement”),
          between the Sellers and PIM Bradenton, which Prior Agreement has been terminated
          and is of no force or effect.

        

        Section
          12.12 Governing
          Law.
          This
          Agreement shall be governed by and construed in accordance with the laws
          of the
          State of Florida, without reference to its conflicts of law
          principles.

         

        Section
          12.13 Jurisdiction.
          Each
          party irrevocably agrees that any legal action, suit or proceeding against
          them
          arising out of or in connection with this Agreement or the transactions
          contemplated hereby shall be brought exclusively in the United States District
          Court in which the Real Property is located, or, if such court does not
          have
          subject matter jurisdiction, the state courts of Florida for such area,
          and
          hereby irrevocably accepts and submits to the exclusive jurisdiction and
          venue
          of the aforesaid courts in person, with respect to any such action, suit
          or
          proceeding.

         

        Section
          12.14 WAIVER
          OF JURY TRIAL.
          EACH PARTY HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
          LAW, ANY
          RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION DIRECTLY
          OR
          INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR
          THE
          TRANSACTIONS CONTEMPLATED HEREBY OR DISPUTES RELATING
          HERETO.

         

        Section
          12.15 Amendments
          and Waivers.
          This
          Agreement may be amended, modified, superseded or canceled and any of the
          terms,
          covenants, representations, warranties or conditions hereof may be waived
          only
          by an instrument in writing signed by each of the parties hereto or, in
          the case
          of a waiver, by or on behalf of the party waiving compliance. No delay
          on the
          part of

         

        
          
             

          

          
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        any
          party
          in exercising any right, power or privilege hereunder shall operate as
          a waiver
          thereof, nor shall any waiver on the part of any party of any right, power
          or
          privilege hereunder, nor any single or partial exercise of any right, power
          or
          privilege hereunder, preclude any other or further exercise thereof or
          the
          exercise of any other right, power or privilege hereunder.

         

        Section
          12.16 Pre-Closing
          Negligent or Tortious Acts.
          Nothing
          in this Agreement shall be construed or interpreted to impose any responsibility
          or liability on Buyer to any third parties, whether as a successor to Sellers
          or
          under any other legal or equitable principle, for any negligent or tortious
          acts
          or omissions of Sellers, their lessees, managers, operators or employees,
          prior
          to the Closing Date. Sellers shall retain all liability and responsibility
          under
          the terms of this Agreement to third parties for their negligent and tortious
          acts or omissions prior to the Closing Date.

         

        [Signature
          page follows]

         

        
          
             

          

          
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        IN
          WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
          executed by their respective officers thereunto duly authorized, all as
          of the
          day and year first set forth above.

         

        WESTPORT
          HOLDINGS BRADENTON, LIMITED PARTNERSHIP

        

        By: 
          Westport Holdings Freedom Village, LLC, 

        its
          General Partner

         

        By:
          _______________________________

        Name:
          Larry Landry

        Title:
          President

         

        WESTPORT
          NURSING BRADENTON, L.L.C.

         

         

        By:______________________________________

        Name:
          Larry Landry

        Title:
          President

         

        

         

        ARC
          BRADENTON LLC 

         

         

        By:______________________________________

        Name:

        Title:

         

        ARC
          BRADENTON MANANGEMENT, INC.

         

         

        By:______________________________________

        Name:

        Title:

         

        SENIOR
          HOUSING PARTNERS III, L.P.

         

         

        By:______________________________________

        Name:

        Title:

         

        

        [SIGNATURE
          PAGE TO FREEDOM VILLAGE ASSET PURCHASE AGREEMENT]

         

        
          
             

          

          
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        EXHIBIT
          A

        EARNEST
          MONEY DEPOSIT ESCROW AGREEMENT

         

         

         

        
          
             

          

          
            A-1

            
              

            

          

          
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        EXHIBIT
          B

        CLOSING
          ESCROW AGREEMENT

         

         

         

         

        
          
             

          

          
            B-1

            
              

            

          

          
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        EXHIBIT
          C

        ASSIGNMENT
          AND ASSUMPTION AGREEMENT

         

         

         

        
          
             

          

          
            C-1

            
              

            

          

          
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        EXHIBIT
          D

        NEW
          COLLECTIVE BARGAINING AGREEMENTS

         

         

        
          
             

          

          
            D-1

            
              

            

          

          
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        EXHIBIT
          E

        ARC
          GUARANTY

         

         

         

        
          
             

          

          
            E-1Exhibit 10.1

    Exhibit
      10.1

    

    NON-EXECUTIVE
      DIRECTOR COMPENSATION SUMMARY SHEET

     

    

    

    At
      a
      meeting of the Board of Directors of NDS Group plc (“the Company”) held on
      January 30, 2006 it was unanimously resolved that the remuneration payable
      to
      the independent non-executive Directors of the Company for the fiscal year
      ending June 30, 2006 shall remain fixed at the same rate as last year,
      i.e.:─

    

    
      	
              1.

            	 	 	
              Annual
                fee

            	 	
              $

            	
              75,000

            	 
	
              2.

            	 	 	
              Audit
                Committee Membership

            	 	
              $

            	
              15,000

            	 
	
              3.

            	 	 	
              Audit
                Committee Chairmanship

            	 	
              $

            	
              10,000

            	 
	
              4.

            	 	 	
              Remuneration
                Committee Membership

            	 	
              $

            	
              2,500

            	 
	
              5.

            	 	 	
              Remuneration
                Committee Chairmanship

            	 	
              $

            	
              1,000

            	 

    

    

    

    Other
      compensation

     

    The
      independent non-executive directors of the Company are eligible to participate
      in The NDS 1999 Executive Share Option Scheme.

    

    
      
        E-1

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