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 ”).

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:

“ 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

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

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.

“ 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:

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,

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

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;

(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

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

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.

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

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 .

(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.

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

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,

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

(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).

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;

(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.

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.

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

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

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.

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