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þ   Preliminary Proxy Statement
o   Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
o   Definitive Proxy Statement
o   Definitive Additional Materials
o   Soliciting Material Pursuant to §240.14a-12

o	No fee required.
þ	Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1)	Title of each class of securities to which transaction applies:
	Common stock, par value $0.01 per share of American Retirement Corporation and Series A Preferred Stock Purchase Rights (“ARC Common Stock”)

(2)	Aggregate number of securities to which transaction applies:
	35,323,289 shares of ARC Common Stock; 1,899,577 options to purchase ARC Common Stock

(3)	Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
	$33.00 per share of ARC Common Stock; $33.00 minus weighted average exercise price of $7.21 per share of outstanding options to purchase ARC Common Stock

(4)	Proposed maximum aggregate value of transaction:
	$1,214,658,628

(5)	Total fee paid:
	$242,932

o	Fee paid previously with preliminary materials:

o	Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

(1)	Amount Previously Paid:

(2)	Form, Schedule or Registration Statement No.:

(3)	Filing Party:

(4)	Date Filed:

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	Sincerely,
	W. E. Sheriff
	Chairman, Chief Executive Officer and President

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	To vote on a proposal to adopt the Agreement and Plan of Merger, dated as of May 12, 2006, by and among Brookdale Senior Living Inc., a Delaware corporation, Beta Merger Sub Corporation, a Delaware corporation and a wholly owned subsidiary of Brookdale Senior Living Inc., and American Retirement Corporation, a Tennessee corporation, as the merger agreement may be amended from time to time.

	By Order of the Board of Directors,
	George T. Hicks
	Secretary

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SUMMARY TERM SHEET			1
	The Proposed Transaction (see page 33)		1
	The Companies (see page 8)		1
	What You Will Be Entitled to Receive upon Completion of the Merger (see page 34)		2
	The Special Meeting (see page 9)		2
	Recommendation of Our Board of Directors (see page 18)		3
	Opinion of Financial Advisor (see page 20)		3
	Interest of Directors and Executive Officers in the Merger (see page 28)		4
	Material U.S. Federal Income Tax Consequences (see page 27)		4
	Regulatory Approvals (see page 26)		4
	Stock Options		5
	The Merger Agreement (see page 33)		5
	Rights of Shareholders Who Object to the Merger (see page 11)		6
QUESTIONS AND ANSWERS ABOUT THE MERGER			7
THE COMPANIES			8
	ARC		8
	Brookdale		9
	Merger Sub		9
THE SPECIAL MEETING			9
	Date, Time and Place of the Special Meeting		9
	Proposal to be Considered at the Special Meeting		10
	Record Date		10
	Voting Rights; Quorum; Vote Required for Approval		10
	Voting and Revocation of Proxies		10
	Rights of Shareholders Who Object to the Merger		11
	Solicitation of Proxies		11
	Questions and Additional Information		11
THE MERGER			12
	Background of the Merger		12
	Recommendation of Our Board of Directors		18
	Reasons for the Merger		18
	Opinion of ARC’s Financial Advisor		20
	Antitrust Approvals		26
	Licensing Approvals		27
	Financing of the Merger		27
	Material U.S. Federal Income Tax Consequences of the Merger to Our Shareholders		27
	Interests of Directors and Executive Officers in the Merger		28
	Effects of the Merger		33
	Delisting and Deregistration of Our Common Stock		33
	Rights of Shareholders Who Object to the Merger		33
	Certain Relationships Between Brookdale and ARC		33

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THE MERGER AGREEMENT			33
	The Merger		33
	Merger Consideration		34
	Payment for the Shares		34
	Representations and Warranties		34
	Conduct of Business Pending the Merger		35
	Efforts to Complete the Merger		37
	Conditions to the Merger		38
	No Solicitations of Other Offers		39
	Termination of the Merger Agreement		40
	Termination Fees		41
	Employee Benefits		42
	Hedging Arrangements		42
	Amendment, Extension and Waiver		42
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT			43
OTHER MATTERS			44
	Other Matters for Action at the Special Meeting		44
	Shareholder Proposals		44
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS			44
WHERE YOU CAN FIND MORE INFORMATION			45

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	•	In the merger, a wholly owned subsidiary of Brookdale will merge with and into ARC with ARC continuing as the surviving corporation.
	•	Upon completion of the merger, each issued and outstanding share of our common stock will automatically be canceled and cease to exist and will be converted into the right to receive $33.00 in cash, without interest, per share.
	•	As a result of the merger, ARC will cease to be an independent, publicly traded company and will become a wholly owned subsidiary of Brookdale.

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	Date:                     , 2006
	Time:            a.m., CDT
	Place: 111 Westwood Place, Suite 200
	Brentwood, Tennessee 37027

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	•	by delivering written notification to ARC at our principal executive offices at 111 Westwood Place, Suite 200, Brentwood, Tennessee 37027, Attention: George T. Hicks, Secretary;
	•	by delivering a proxy of a later date by mail in the manner described in this proxy statement;
	•	by attending the special meeting and voting in person (your attendance at the meeting will not, by itself, revoke your proxy; you must vote in person at the meeting); or
	•	if you have instructed a broker or bank to vote your shares, by following the directions received from your broker or bank to change those instructions.

	•	determined that the merger is advisable and that the terms of the merger are fair to, and in the best interests of, ARC and its shareholders;
	•	approved the merger agreement and the transactions contemplated thereby, including the merger; and
	•	recommended that our shareholders vote to approve and adopt the merger agreement and the transactions contemplated thereby, including the merger.

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	•	our directors and executive officers hold restricted stock and options to purchase shares of our common stock that will be treated in the same manner as restricted stock and options held by other persons;
	•	under our existing severance plan, and provided that they do not reinvest a portion of their after-tax proceeds in Brookdale common stock, receive a grant of restricted stock from Brookdale and waive their rights to any severance payments under the severance plan, certain of our executive officers who were not required to enter into employment agreements with Brookdale may receive severance payments in the event that their employment is terminated within 18 months after the completion of the merger by the Company without “Good Cause” or by the officer with “Good Reason,” as such terms are defined in our existing severance plan;
	•	existing indemnification arrangements and insurance for our directors and officers will be continued if the merger is completed;
	•	upon completion of the merger, our current executive officers will be the officers of the surviving corporation and certain of our executive officers will have new employment agreements with Brookdale;
	•	upon completion of the merger and their required investments in Brookdale common stock, certain of our current executive officers will receive shares of Brookdale restricted stock; and
	•	one of our current directors may be elected to serve on the board of directors of Brookdale.

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	•	The merger agreement must have been adopted by the affirmative vote of the holders of a majority of all outstanding shares of ARC common stock;
	•	No legal prohibition to the merger may be in effect;
	•	The waiting period (and any extension thereof) under the HSR Act or other similar laws must have terminated or expired;
	•	Our and Brookdale’s respective representations and warranties in the merger agreement must be true and correct as of the date of the merger agreement and as of the closing date (without regard to materiality qualifiers), except for those representations and warranties that relate to an earlier date, and except where the failure of the representations and warranties to be true and correct would not reasonably be expected to have a material adverse effect on us or on Brookdale’s ability to consummate the transactions contemplated by the merger agreement;
	•	ARC and Brookdale must have performed in all material respects all obligations that each is required to perform under the merger agreement;
	•	There can be no pending or overtly threatened litigation by any governmental authority seeking to restrain or prohibit the merger, seeking to prohibit or limit the operation or ownership by ARC or Brookdale of any portion of its business or assets or seeking to compel ARC or Brookdale to divest or hold separate any portion of its business or assets as a result of the merger or seeking to impose any obligations on Brookdale or ARC to maintain facilities, operations, places of business, employment levels, products or businesses;
	•	Brookdale must have obtained customary assurances as are customarily obtained under local custom and practice to allow a reasonable person acting in good faith to conclude that all material permits necessary for the lawful conduct of our business will be issued in the ordinary course and effective as of the closing of the merger; and
	•	Scheduled consents, authorizations, orders, permits and approvals shall have been obtained and be in full force and effect.

	•	By mutual written consent of ARC and Brookdale;
	•	By either ARC or Brookdale, if:

	•	Any judgment, order or decree having the effect of permanently restraining, enjoining or otherwise prohibiting the merger shall be in effect and have become final and non-appealable; or

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	•	The merger is not completed on or before the outside date of February 12, 2007, subject to certain exceptions; or
	•	Our shareholders fail to adopt the merger agreement at the special meeting or any adjournment or postponement thereof, in which case the merger agreement requires us to reimburse Brookdale for all reasonable out of pocket expenses related to the merger incurred prior to the date of termination up to $5,000,000;

	•	By Brookdale, if:

	•	Our board of directors or a committee of our board of directors withdraws or modifies, or proposes to withdraw or modify, in a manner adverse to Brookdale, its approval, recommendation or declaration of advisability of the merger agreement, or recommends, adopts or approves, or proposes publicly to recommend, adopt or approve any takeover proposal by a third party or within ten (10) business days of the date any takeover proposal is made to ARC, our board of directors or any committee of our board of directors fails to publicly confirm its recommendation and declaration of advisability of the merger agreement and merger; or
	•	We have breached or failed to perform any of our representations, warranties, covenants or agreements under the merger agreement which would give rise to the failure of certain conditions to closing and where that breach or failure to perform cannot be cured, or is not cured, within thirty (30) calendar days after we receive written notice from Brookdale of the breach or failure to perform; or

	•	By ARC, if:

	•	We terminate the merger agreement in order to concurrently enter into a definitive agreement with respect to a superior proposal, provided that we have complied with our obligations under the merger agreement described under “The Merger Agreement — No Solicitation of Other Offers,” and provided that we have paid to Brookdale the $45 million termination fee as described under “The Merger Agreement — Termination Fees”; or
	•	Brookdale or Merger Sub has breached or failed to perform any of its representations, warranties, covenants or agreements under the merger agreement which would give rise to the failure of certain conditions to closing and where that breach or failure to perform cannot be cured, or is not cured, within 30 calendar days after Brookdale receives written notice from us of the breach or failure to perform.

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Q.		What is the proposed transaction?
A.		Brookdale has agreed to acquire 100% of ARC’s outstanding shares for $33.00 per share in cash. The transaction will be effected by Beta Merger Sub Corporation, a wholly owned subsidiary of Brookdale, which will merge with and into ARC with ARC being the surviving corporation and becoming a wholly owned subsidiary of Brookdale.
Q.		Why is the Board of Directors recommending the approval of the merger agreement?
A.		Our board of directors believes that the merger is advisable and that the terms of the merger are fair to, and in the best interests of, ARC and its shareholders. To review our board of directors’ reasons for recommending adoption of the merger agreement, see pages 18 through 20.
Q.		If the merger is completed, what will I receive for my shares of common stock?
A.		You will receive $33.00 in cash, without interest, for each share of ARC common stock you own, upon surrender of your stock certificates after completion of the merger. We refer to this amount per share of ARC common stock in this proxy statement as the merger consideration.
Q.		When is the merger expected to be completed?
A.		ARC and Brookdale are working toward completing the merger as quickly as possible. We hope the merger will be completed by                     , 2006. The merger cannot be effected until a number of conditions are satisfied. The most important conditions are the adoption of the merger agreement by ARC’s shareholders at the special meeting and the termination or expiration of the waiting period under the HSR Act.
Q.		Who is entitled to vote at the special meeting?
A.		Holders of record of ARC common stock as of the close of business on                     , 2006, are entitled to vote at the special meeting. Each ARC shareholder is entitled to one vote for each share of ARC common stock owned.
Q.		What vote is required for ARC’s shareholders to adopt the merger agreement?
A.		An affirmative vote of the holders of a majority of all outstanding shares of ARC common stock is required to adopt the merger agreement.
Q.		What do I need to do now?
A.		After carefully reading and considering the information contained in this proxy statement, please vote your shares of ARC common stock as soon as possible. Please return the enclosed proxy card, even if you plan to attend the special meeting, to ensure that your shares are voted. Your proxy materials include detailed information on how to vote.
Q.		If my shares are held for me by my broker, will my broker vote those shares for me?
A.		Your broker will vote your shares only if you provide instructions to your broker on how to vote. You should instruct your broker on how to vote your shares, using the instructions provided by your broker.
Q.		Can I change my vote after I have mailed my proxy card?
A.		Yes. You can change your vote at any time before your proxy is voted at the special meeting. You may revoke your proxy by notifying us in writing at American Retirement Corporation, 111 Westwood Place, Suite 200, Brentwood, Tennessee 37027, Attention: George T. Hicks, Secretary, or by submitting a new proxy, in each case, dated after the date of the proxy being revoked. In addition, your

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		proxy may be revoked by attending the special meeting and voting in person. However, simply attending the special meeting without voting will not revoke your proxy. If you have instructed a broker to vote your shares, you must follow the instructions received from your broker to change your vote.
Q.		Do I need to attend the special meeting in person?
A.		No. It is not necessary for you to attend the special meeting in order to vote your shares.
Q.		May I exercise appraisal rights in the merger?
A.		No. Under Tennessee law, ARC shareholders are not entitled to any appraisal rights in connection with the merger. In addition, shareholders of ARC are not entitled to any other rights under Tennessee law or otherwise in connection with objecting to the merger, other than the right to vote against the merger at the special meeting or to institute a lawsuit if they believe ARC or its directors violated any of their obligations in connection with the merger.
Q.		Should I send in my stock certificates now?
A.		No. After the merger is completed, you will be sent detailed written instructions for exchanging your ARC stock certificates for the merger consideration.
Q.		What other matters will be voted on at the special meeting?
A.		Only matters contained in this proxy statement will be voted upon.
Q.		Where can I find more information about ARC and Brookdale?
A.		ARC and Brookdale file periodic reports and other information with the Securities and Exchange Commission. You may read and copy this information at the Securities and Exchange Commission’s public reference facilities. Please call the Securities and Exchange Commission at 1-800-SEC-0330 for information about these facilities. This information is also available on the internet site maintained by the Securities and Exchange Commission at http://www.sec.gov. You also may obtain free copies of the documents ARC files with the Securities and Exchange Commission by going to the “Investors Welcome” Section of our website at www.arclp.com which is provided as a textual reference only. You may obtain free copies of the documents Brookdale files with the Securities and Exchange Commission by going to the “Investor Relations” subsection within the “About Brookdale” section of Brookdale’s website at www.brookdaleliving.com which is provided as a textual reference only. For a more detailed description of the information available, please refer to “Where You Can Find More Information” on page 45 of this proxy statement.
Q.		Who can help answer my questions?
A.		If you have questions about the merger after reading this proxy statement, please call our proxy solicitor, Mellon Investor Services LLC, toll-free at (          )                     .

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	Date:                     , 2006
	Time:            a.m., CDT
	Place: 111 Westwood Place, Suite 200
	Brentwood, Tennessee 37027

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	•	by delivering written notification to ARC at our principal executive offices at 111 Westwood Place, Suite 200, Brentwood, Tennessee 37027, Attention: George T. Hicks, Secretary;
	•	by delivering a proxy of a later date in the manner described herein;
	•	by attending the special meeting and voting in person (your attendance at the meeting will not, by itself, revoke your proxy; you must vote in person at the meeting); or
	•	if you have instructed a broker or bank to vote your shares, by following the directions received from your broker or bank to change those instructions.

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	•	determined that the merger is advisable and that the terms of the merger are fair to, and in the best interests of, ARC and its shareholders;
	•	approved the merger agreement and the transactions contemplated thereby, including the merger; and
	•	recommended that our shareholders vote to approve and adopt the merger agreement and the transactions contemplated thereby, including the merger.

	1. the fact that the historical trading prices of ARC common stock have never exceeded the $33.00 per share merger consideration, that the merger consideration represented an approximate 33% premium over the closing price of our common stock on the last trading day before the public announcement of the merger, and an approximate 329% and 62% premium, respectively, over the average closing price of our common stock of $7.69 for the last five years and $20.34 for the most recent year;
	2. the fact that the merger consideration is all cash, which provides certainty of value to holders of our common stock compared to a transaction in which shareholders would receive stock or other securities and the fact that for a transaction to be tax-free to our shareholders, our shareholders would have had to accept at least 40% of the merger consideration in stock;
	3. the fact that, as a result of Fortress’ commitment, Brookdale has the financial capability to consummate the merger expeditiously;
	4. the potential shareholder value that could be expected to be generated from the other strategic options available to us, including (a) remaining independent and continuing to implement our operating and growth strategy and (b) pursuing other strategic alternatives, as well as the risks and uncertainties associated with those alternatives;
	5. the fact that valuation multiples in the publicly-traded senior housing industry are at historical highs;

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	6. the financial presentation provided by Cohen & Steers on May 12, 2006, and the written opinion of Cohen & Steers delivered on May 12, 2006, to our board of directors to the effect that, as of such date and based on and subject to the matters set forth in that opinion, the $33.00 per share in cash to be received by holders of our common stock under the merger agreement is fair from a financial point of view to those holders;
	7. discussions by our management that competition for potential acquisitions has become much greater and that the prices required to be paid for acquisitions has increased substantially;
	8. discussions by our management regarding the business strategy, strategic options and prospects of ARC (as well as the risks involved in achieving these prospects), the nature of the industry in which we compete, and current industry, economic and market conditions, both on an historical and on a prospective basis, including a slowdown in the U.S. housing market, increasing interest rates, the possibility of outbreaks of epidemics or pandemics and increasing energy prices; and
	9. the terms of the merger agreement, as reviewed by our board of directors with our outside counsel, including:

	•	the absence of a financing condition or other unusual conditions to the merger; and
	•	our ability to terminate the merger agreement and enter into an agreement relating to a superior proposal under certain circumstances as more fully described under “The Merger Agreement — No Solicitations of Other Offers” and the board’s belief that provisions of the merger agreement requiring the payment by ARC of a termination fee of $45 million in the event of such termination would not unreasonably discourage third parties from making a superior proposal.

	1. the fact that the merger agreement prohibited us from soliciting other proposals and obligated us to pay to Brookdale a $45 million termination fee if we terminate the merger agreement to accept a superior proposal, which may deter others from proposing an alternative transaction that may be more advantageous to our shareholders;
	2. the fact that ARC will no longer exist as an independent company and our shareholders will no longer participate in the growth of ARC or the pursuit of our stand-alone business plan;
	3. the fact that ARC did not contact a substantial number of other potential bidders or conduct an auction process; and
	4. the fact that gains from an all-cash transaction would be taxable to our U.S. shareholders for U.S. federal income tax purposes.

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	•	mergers, acquisitions, and leveraged buyouts;
	•	public offerings and private placements of securities;
	•	recapitalizations and restructurings; and
	•	valuations for corporate and other purposes.

	(i) Reviewed certain publicly-available financial statements and other publicly available business and financial information relating to the Company;
	(ii) Reviewed certain due diligence information, including historical and projected financial information relating to the business, earnings, cash flow, assets, liabilities, capitalization and prospects of the Company, as prepared by management of the Company;
	(iii) Reviewed certain historical unaudited property level operating statements of the Company, as prepared by the Company;
	(iv) Reviewed a draft of the merger agreement distributed on May 11, 2006, provided to Cohen & Steers by management of the Company;

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	(v) Conducted discussions with the management of the Company concerning the matters described in its opinion, as well as the business and prospects of the Company;
	(vi) Reviewed terms of certain joint ventures, management contracts and other agreements of the Company that Cohen & Steers deemed relevant to its analysis;
	(vii) Reviewed the financial terms, to the extent available, of certain unrelated acquisition transactions that Cohen & Steers deemed relevant to its analysis;
	(viii) Reviewed financial and stock market data for publicly-traded companies that Cohen & Steers deemed relevant to its analysis;
	(ix) Performed various financial analyses as Cohen & Steers deemed appropriate, using generally accepted analytical valuation methodologies; and
	(x) Performed such other analyses and considered such other factors as Cohen & Steers deemed appropriate.

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	•	Brookdale Senior Living, Inc.
	•	Capital Senior Living Corporation
	•	Emeritus Corporation
	•	Five Star Quality Care, Inc.
	•	Sunrise Senior Living, Inc.

	(i) the ratio of adjusted enterprise value to owned and leased bed capacity as of March 31, 2006,
	(ii) the ratio of adjusted enterprise value to revenues, and earnings before interest, taxes, depreciation, amortization and rent expense (“EBITDAR”), the ratio of enterprise value to earnings before interest, taxes, depreciation and amortization (“EBITDA”), and the ratio of market value of equity to cash earnings and net income, each such ratio based on actual reported results for the latest quarter ended March 31, 2006 annualized, and
	(iii) net income for each of the projected calendar years 2006 and 2007 based on analyst estimates and Company financial projections.

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		Implied
		Valuation
		per Share
High		$	44.27
Mean			27.70
Median			26.70
Low			18.82
Merger Consideration		$	33.00

	•	Fortress Investment Group/ Alterra Healthcare Corp. — December 2003
	•	Senior Housing Properties Trust/ Crestline Capital Corp. — January 2002
	•	CNL Retirement Properties, Inc./ Horizon Bay Senior Communities — February 2004
	•	Sunrise Senior Living, Inc./ The Fountains — July 2005
	•	Lazard Freres/ ARV Assisted Living — April 2003
	•	Extendicare Health Services, Inc./ Assisted Living Concepts, Inc. — January 2005
	•	Fortress Investment Group/ Renaissance Senior Living — June 2005
	•	Health Care Property Investors, Inc./ Aegis Assisted Living — July 2005
	•	Five Star Quality Care, Inc./ LTA Holdings, Inc. — November 2004

		Implied
		Valuation
		per Share
High		$	49.26
Mean			21.80
Median			15.07
Low			9.58
Merger Consideration		$	33.00

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		1 Day				1 Week				1 Month				2 Months
High		$	47.04			$	46.13			$	45.53			$	54.42
Mean			31.07				31.55				32.42				33.23
Median			30.87				31.34				31.13				32.31
Low			25.59				25.60				24.90				23.69
Merger Consideration						$	33.00

		Discount Rates				Terminal Multiples
Existing Portfolio			11 – 15	%			9.0x – 14.0x
Development and Acquisition Pipeline			12 – 16	%			9.0x – 14.0x
Ancillary Services			15 – 19	%			4.0x –  6.0x

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		Implied Valuation per
		Share
		Base Case				Growth Case
High		$	34.79			$	45.75
Mean			26.85				31.41
Median			26.79				31.32
Low			19.88				18.92
Merger Consideration		$33.00

		Implied Valuation per
		Share
		Base Case				Growth Case
High		$	31.95			$	40.09
Mean			23.55				25.43
Median			23.00				24.73
Low			17.66				15.56
Merger Consideration		$33.00

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Executive		Base Salary				2007 Target Bonus
W.E. Sheriff		$	200,000			$	200,000
Gregory B. Richard		$	200,000			$	150,000
George T. Hicks		$	175,000			$	150,000
Bryan D. Richardson		$	175,000			$	150,000
H. Todd Kaestner		$	175,000			$	150,000
James T. Money		$	175,000			$	125,000

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						Number of
						Shares of
		Amount Required				Restricted Stock				Performance				Time Vesting
Executive		to Invest				to be Granted				Vesting Percentage				Percentage
W.E. Sheriff		$	9,508,073				249,752				80	%			20	%
Gregory B. Richard		$	1,116,878				29,337				70	%			30	%
George T. Hicks		$	1,982,460				52,074				70	%			30	%
Bryan D. Richardson		$	1,751,898				46,017				70	%			30	%
H. Todd Kaestner		$	2,000,000				52,534				70	%			30	%
James T. Money		$	1,750,000				45,967				70	%			30	%

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		Value of				Value of Restricted
Director or Executive Officer		Outstanding Options				Common Stock
W.E. Sheriff		$	7,512,375			$	2,530,000
Gregory B. Richard		$	1,282,555			$	946,000
H. Todd Kaestner		$	3,017,538			$	880,000
George T. Hicks		$	2,455,538			$	880,000
Bryan D. Richardson		$	3,851,300			$	946,000
James T. Money		$	2,455,538			$	880,000
Ross C. Roadman		$	2,242,500			$	814,000
Terry L. Frisby		$	872,860			$	814,000
Jack Leebron		$	186,000			$	814,000
E. Carl Johnson		$	0			$	198,000
Frank M. Bumstead		$	660,450			$	0
Donald D. Davis		$	140,700			$	0
John C. McCauley		$	140,700			$	0
John A. Morris, Jr., M.D.(1)		$	660,450			$	0
Daniel K. O’Connell		$	660,450			$	0
J. Edward Pearson		$	140,700			$	0
James R. Seward		$	0			$	0
Nadine C. Smith		$	660,450			$	0
Lawrence J. Stuesser		$	660,720			$	0

(1)	Effective as of our 2006 annual meeting of shareholders held on May 17, 2006, Dr. Morris resigned as a member of our board of directors.

	•	if, immediately prior to the merger, the eligible officer held the title of Senior Vice President, he or she would be entitled to an amount equal to the sum of (x) the eligible officer’s annual base salary (as in effect for the calendar year during which the Change in Control occurs) and (y) seventy-five percent (75%) of the maximum bonus which the compensation committee determined such officer could have earned (regardless of the amount actually earned) for the year in which the merger occurred (such amount, a “Bonus Amount”); or

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	•	if, immediately prior to the merger, the eligible officer held the title of Vice President, he or she would be entitled to an amount equal to one-half the sum of (x) the eligible officer’s annual base salary (as in effect for the calendar year during which the Change in Control occurs) and (y) the officer’s Bonus Amount.

Executive		Amount
Ross C. Roadman		$	344,000
Terry L. Frisby		$	344,000
Jack Leebron		$	243,000
E. Carl Johnson		$	280,000

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	•	corporate organization and existence;
	•	corporate power and authority to enter into and perform its obligations under, and enforceability of, the merger agreement;
	•	required regulatory filings and consents and approvals of governmental entities;

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	•	the absence of conflicts with or defaults under organizational documents, debt instruments, other contracts and applicable laws and judgments;
	•	broker’s fees; and
	•	information supplied for inclusion in this proxy statement.

	•	subsidiaries;
	•	capital structure;
	•	documents filed with the Securities and Exchange Commission;
	•	undisclosed liabilities;
	•	absence of certain changes or events since March 31, 2006;
	•	litigation;
	•	contracts, including our residence agreements;
	•	compliance with applicable laws, including laws relating to resident records and third party payor reimbursement;
	•	compliance with the Employee Retirement Income Securities Act of 1974, as amended, and other employee benefit matters;
	•	environmental matters;
	•	real property matters;
	•	tax matters;
	•	intellectual property and software matters;
	•	contracts with affiliates;
	•	insurance matters;
	•	labor matters;
	•	compliance with licensing requirements;
	•	state takeover statutes and our rights plan;
	•	board of directors approval of the merger agreement and the transactions contemplated thereby, including the merger, and board recommendation to our shareholders to approve and adopt the merger agreement and the transactions contemplated thereby, including the merger; and
	•	receipt of Cohen & Steers’ fairness opinion to our board of directors.

	•	conduct our business in the ordinary course consistent with past practice and comply with all applicable laws in all material respects; and

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	•	use all reasonable efforts to preserve intact our business organizations, keep available the services of our current officers, employees and consultants and preserve our relationships with customers, suppliers, licensors, licensees, distributors and others having business dealings with us.

	•	declare, set aside or pay any dividends on, or make any other distributions in respect of our capital stock, except by any of our subsidiaries to its parent, split, combine or reclassify any of our capital stock or issue or authorize the issuance of any other securities in respect of shares of our capital stock or purchase, redeem or otherwise acquire any shares of our capital stock or any rights, warrants or options to acquire any such shares;
	•	issue, deliver, sell, grant, pledge or otherwise encumber or subject to lien any shares of capital stock or any securities or rights convertible into, any rights, warrants or options to acquire any such shares, voting securities or convertible securities or any phantom stock, phantom stock rights, stock appreciation rights or stock based performance units, other than pursuant to the exercise of any stock options for our capital stock outstanding as of the date of the merger agreement;
	•	sell, lease, license, mortgage, sell and leaseback or otherwise encumber or subject to lien (other than permitted liens) or dispose of any properties or assets with a fair market value in excess of $1,000,000 individually or $2,000,000 in the aggregate to a third party, except for residence agreements, leases or subleases in the ordinary course of business consistent with past practice;
	•	make any acquisition of a business by purchase of securities of, or by merger or consolidation with, any individual or other entity having a purchase price in excess of $20,000,000 in the aggregate;
	•	(A) repurchase or prepay any indebtedness for borrowed money except as required by the terms of such indebtedness, (B) incur any indebtedness for borrowed money or guarantee any such indebtedness of another person or issue or sell any debt securities or options, warrants, calls or other rights to acquire any debt securities of us or our subsidiaries, guarantee any debt securities of another person, enter into any “keep well” or other agreement to maintain any financial statement condition of another person or enter into any arrangement having the economic effect of any of the foregoing or (C) make any loans, advances or capital contributions to, or investments in, any other person in excess of $750,000 in the aggregate, other than in us or a wholly owned subsidiary of ours;
	•	(A) pay, discharge, settle or satisfy any claims (including claims of shareholders), liabilities or obligations (1) in excess of $1,000,000 individually and $2,000,000 in the aggregate, other than in the ordinary course of business consistent with past practice or (2) involving any material limitation on the conduct of our or any subsidiary’s business or (B) waive or release any right of ours or any subsidiary with a value in excess of $250,000;
	•	except in the ordinary course of business consistent with past practice, modify, amend or terminate any scheduled contract or enter into any material contract; provided that we may not, without the prior written consent of Brookdale, enter into any contract which contains non-compete or exclusivity provisions binding on us or which would require consent of or notice to a third party in the event of or with respect to the merger;
	•	terminate, amend or otherwise modify any agreement entered into by ARC, at the request of Brookdale after the date of the merger agreement, with any individual party to a new employment agreement;
	•	except in the ordinary course of business consistent with past practice, and except as required to comply with applicable law or any scheduled contract, (A) increase in any manner the compensation or fringe benefits of, or pay any bonus (other than permitted bonus payments) to, any current or former director, officer, employee or consultant, (B) pay to any current or former

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		director, officer, employee or consultant any benefit not provided for under any scheduled contract or plan other than the payment of cash compensation in the ordinary course of business consistent with past practice, (C) grant any awards under any Company plan (including the grant of stock options, stock appreciation rights, stock based or stock related awards, performance units, or restricted stock or the removal of existing restrictions in any scheduled contract or Company plan or awards made thereunder), (D) take any action to fund or in any other way secure the payment of compensation or benefits under any scheduled contract or Company plan, (E) exercise any discretion to accelerate the vesting or payment of any compensation or benefit under any scheduled contract or Company plan, (F) materially change any actuarial or other assumption used to calculate funding obligations with respect to any Company plan or change the manner in which contributions to any Company plan are made or the basis on which such contributions are determined or (G) adopt any new employee benefit plan or arrangement or amend, modify or terminate any existing Company plan, in each case for the benefit of any current or former director, officer, employee or consultant, other than required by applicable law or tax qualification; provided, however, that with the prior consent of Brookdale, we may offer and make payments to current employees for retention purposes;
	•	make any capital expenditure which (1) involves the purchase of real property or (2) is not in accordance with our capital expenditure budget for the balance of fiscal year 2006;
	•	amend the organizational documents of ARC or any of our subsidiaries or adopt another poison pill;
	•	adopt or enter into any collective bargaining agreement or other labor union contract;
	•	fail to use reasonable efforts to maintain existing insurance polices or comparable replacement policies to the extent available for a reasonable cost;
	•	change our fiscal year, revalue any material asset or make any changes in any financial, actuarial, reserving, statutory or tax accounting methods, principles or practices except as required by generally accepted accounting principles or applicable law;
	•	make any material tax election or settle or compromise any material tax liability, or agree to an extension of a statute of limitations with respect to material taxes; or
	•	make any commitment to take any of the above actions.

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	•	the merger agreement must have been adopted by the affirmative vote of the holders of a majority of all outstanding shares of ARC common stock;
	•	the waiting period (and any extension thereof) applicable to the merger under the HSR Act or any other applicable competition, merger control, antitrust or similar law shall have expired or been terminated; and
	•	no temporary restraining order, preliminary or permanent injunction or other judgment, order or decree issued by any court of competent jurisdiction or other statute, law, rule, legal restraint or prohibition shall be in effect preventing the merger.

	•	our representations and warranties must be true and correct as of the date of the merger agreement and the closing date (without regard to materiality qualifiers), except to the extent that the representations and warranties expressly relate to an earlier date, and except where the failure of the representations and warranties to be true and correct, individually or in the aggregate, has not had and would not reasonably be expected to have a material adverse effect on us;
	•	we must have performed in all material respects all obligations we are required to perform under the merger agreement at or prior to the closing date;
	•	there must not be pending or overtly threatened in writing any suit, action or proceeding by any governmental authority (i) challenging the acquisition by Brookdale or Merger Sub of any shares of our common stock, seeking to restrain or prohibit the consummation of the merger, seeking to place limitations on the ownership of shares of our common stock (or shares of capital stock of the surviving corporation) by Brookdale or Merger Sub, or (ii) seeking to (A) prohibit or limit the ownership or operation by us or by Brookdale of any portion of any business or of any assets of ours or Brookdale, (B) compel us or Brookdale to divest or hold separate any portion of any business or of any assets of ours or Brookdale, as a result of the merger or (C) impose any obligations on Brookdale or us to maintain facilities, operations, places of business, employment levels, products or businesses, nor shall there be any legal restraint which could result in the foregoing;
	•	Brookdale shall have obtained such customary assurances as are customarily obtained under local custom and practice to allow a reasonable person acting in good faith to conclude that all material permits necessary for the lawful conduct of our business will be issued in the ordinary course and effective as of the closing of the merger; and
	•	scheduled consents, authorizations, orders, permits and approvals shall have been obtained and be in full force and effect.

	•	the representations and warranties of Brookdale and Merger Sub must be true and correct, as of the date of the merger agreement and the closing date (without regard to materiality qualifiers), except to the extent that the representations and warranties expressly relate to of an earlier date, and except where the failure of the representations and warranties to be true and correct, individually or in the aggregate, has not had and would not reasonably be expected to have a material adverse affect on Brookdale’s ability to consummate the transactions contemplated by the merger agreement; and

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	•	Brookdale and Merger Sub must have performed in all material respects all obligations required to be performed by them under the merger agreement at or prior to the closing date.

	•	solicit, initiate, cause or knowingly encourage, or knowingly facilitate, any inquiries or the making of any proposal that constitutes or is reasonably likely to lead to a takeover proposal as described below; or
	•	participate in any discussions or negotiations concerning a takeover proposal or furnish to any person any information in connection with or in furtherance of a takeover proposal.

	•	furnish information regarding ARC to the person making that takeover proposal pursuant to a confidentiality agreement which is no less restrictive than our confidentiality agreement with Brookdale and provided that all such information we deliver to the third party making the takeover proposal is provided or made available to Brookdale, prior to or substantially concurrent with the time it is provided or made available to the third party; and
	•	participate in discussions or negotiations with the party making that takeover proposal regarding that takeover proposal.

	•	withdraw or modify, or propose to withdraw or modify, in a manner adverse to Brookdale, the approval, recommendation or declaration of advisability, of the merger agreement or the merger;
	•	recommend, adopt, approve or propose publicly to recommend, adopt or approve any takeover proposal; or
	•	allow ARC to execute or enter into any letter of intent, memorandum of understanding, agreement in principle, merger agreement, acquisition agreement, option agreement, joint venture agreement, partnership agreement or other similar agreement constituting or related to any takeover proposal.

	•	advise Brookdale that our board of directors has determined that the takeover proposal is a superior proposal and that our board of directors has determined to withdraw or modify, or proposes to withdraw or modify, in a manner adverse to Brookdale, the approval, recommendation or

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		declaration of advisability of the merger agreement or the merger or recommend, adopt or approve, or propose publicly to recommend, adopt or approve, a takeover proposal; or
	•	terminate the merger agreement in order to concurrently enter into an agreement with respect to a superior proposal.

	•	a merger, consolidation, dissolution, recapitalization or other business combination involving ARC;
	•	the issuance of 20% or more of the equity securities of ARC as consideration for the assets or securities of another person; or
	•	the acquisition of 20% or more of our equity securities or assets of ARC that represent 20% or more of the total consolidated assets of ARC,

	•	by mutual written consent of ARC and Brookdale;
	•	by either ARC or Brookdale, if:

	•	the merger is not completed on or before February 12, 2007, except that this right to terminate will not be available to any party whose action or failure to act has been a principal cause of or results in the failure of the merger to be completed by that date;
	•	if any judgment, order or decree having the effect of permanently restraining, enjoining or otherwise prohibiting the merger and the transactions contemplated by the merger agreement shall be in effect and have become final and nonappealable; or
	•	our shareholders, at the special meeting or at any adjournment or postponement thereof, fail to adopt the merger agreement; or

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	•	by Brookdale if:

	•	our board of directors or any committee of our board of directors withdraws or modifies, or proposes to withdraw or modify, in a manner adverse to Brookdale, its approval, recommendation or declaration of advisability of the merger agreement and transactions contemplated by the merger agreement, including the merger, or recommends, adopts or approves, or proposes publicly to recommend, adopt or approve any takeover proposal, or fails to reconfirm its recommendation and declaration of advisability of the merger agreement and the merger within ten (10) business days of the date any takeover proposal shall have been made or communicated to ARC; or
	•	we have breached or failed to perform any of our representations, warranties, covenants or agreements under the merger agreement which would give rise to the failure of certain conditions to closing and where that breach or failure to perform cannot be cured, or is not cured, within 30 calendar days after we receive written notice of the breach or failure to perform; or

	•	by ARC if:

	•	we terminate the merger agreement in order to concurrently enter into an agreement with respect to a superior proposal and provided that we have paid, or simultaneously with doing so pay, to Brookdale the termination fee as described below; or
	•	Brookdale has breached or failed to perform any of its representations, warranties, covenants or agreements under the merger agreement which would give rise to the failure of certain conditions to closing and where that breach or failure to perform cannot be cured, or is not cured, within thirty (30) calendar days after Brookdale receives written notice from us of the breach or failure to perform.

	•	the merger has not been completed by February 12, 2007 and a takeover proposal shall have been made to ARC or our shareholders and within 12 months of such termination we shall have reached a definitive agreement to consummate, or shall have consummated, a takeover proposal (for purposes of paying termination fees, all references to 20% in the definition of takeover proposal shall be 50%);
	•	we terminate the merger agreement in order to concurrently enter into an agreement with respect to a superior proposal;
	•	the ARC board withdraws or modifies, or proposes to withdraw or modify, in a manner adverse to Brookdale, its approval or recommendation of the merger agreement and transactions contemplated by the merger agreement, including the merger, or recommends, adopts or approves, or proposes publicly to recommend, adopt or approve any takeover proposal, or fails to reconfirm its recommendation of the merger agreement and the merger within ten (10) business days of the date any takeover proposal shall have been made or communicated to ARC; or
	•	we breach or fail to comply with our representations, warranties, covenants or agreements under the merger agreement and a takeover proposal shall have been made to ARC or our shareholders and within 12 months of such termination we shall have reached a definitive agreement to consummate, or shall have consummated, a takeover proposal.

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	•	extend the time for the performance of any of the obligations or other acts of the other parties;
	•	waive any inaccuracies in the representations and warranties of the other parties contained in the merger agreement or in any document delivered pursuant to the merger agreement; or
	•	waive compliance with any of the agreements or conditions contained in the merger agreement.

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		Amount and Nature of
Name of Beneficial Owner		Beneficial Ownership(1)(2)				Percent of Class %
W. E. Sheriff			1,059,245	(3)			3.0	%
Gregory B. Richard			84,440				*
H. Todd Kaestner			236,493				*
George T. Hicks			179,372				*
Bryan D. Richardson			160,047				*
Frank M. Bumstead			69,100				*
Donald D. Davis			7,000				*
John C. McCauley			7,200				*
John A. Morris, Jr., M.D.			285,490	(4)			*
Daniel K. O’Connell			107,000				*
J. Edward Pearson			9,000				*
James R. Seward			100,000				*
Nadine C. Smith			58,956				*
Lawrence J. Stuesser			85,000				*
The Southern Fiduciary Group Inc.			1,829,812	(5)			5.2	%
FMR Corp.			4,686,502	(6)			13.3	%
All directors and executive officers as a group (19 persons)			2,948,618				8.1	%

	*	Less than one percent.

(1)	Includes the following shares of common stock issuable upon the exercise of options granted pursuant to the Company’s 1997 Stock Incentive Plan that the following persons are entitled to exercise within 60 days of May 17, 2006: Mr. Sheriff, 251,250; Mr. Kaestner, 95,459; Mr. Hicks, 82,125; Mr. Richardson, 108,334; Ms. Smith, and Messrs. Bumstead, Morris, O’Connell, and Stuesser, 27,000; Mr. Richard, 23,188; Messrs. Davis, McCauley, and Pearson, 6,000; and directors and executive officers as a group (19 persons), 897,481.
(2)	Includes the following shares of restricted stock, issued July 19, 2004 and September 22, 2005, that are held by the following persons: Mr. Sheriff, 111,473; Mr. Richard, 39,208; Mr. Kaestner, 38,677; Mr. Hicks, 36,472; Mr. Richardson, 41,413; and directors and executive officers as group (19 persons), 416,101. The 2004 grants vest ratably over a three-year period and the 2005 grants vest in equal amounts on March 31, 2006, 2007 and 2008.
(3)	Includes 444,421 shares owned directly by Mr. Sheriff, 359,574 shares beneficially owned by a family partnership in which Mr. Sheriff is a general partner and 4,000 shares beneficially owned by Mr. Sheriff’s wife.

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(4)	All shares are beneficially owned by partnerships owned and controlled by Dr. Morris, his brother and other members of Dr. Morris’s family. Effective as of our 2006 annual meeting of shareholders held on May 17, 2006, Dr. Morris resigned as a member of our board of directors.
(5)	Address: 2325 Crestmoor Road, Suite 202, Nashville, TN 37215. The Southern Fiduciary Group, an investment advisor, reported that it has sole voting power with respect to 908,400 shares and sole dispositive power with respect to 1,829,812 shares.
(6)	Address: 82 Devonshire Street, Boston, MA 02109. FMR, a parent holding company, reported that it has sole voting power with respect to 439,553 shares and sole dispositive power with respect to 4,686,502 shares

	•	the satisfaction of the conditions to consummate the merger, including the adoption of the merger agreement by our shareholders;
	•	receipt of necessary approvals under applicable antitrust laws and other relevant regulatory authorities;

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	•	the occurrence of any event, change or other circumstance that could give risk to the termination of the merger agreement;
	•	the outcome of any legal proceeding that may be instituted against us and other following the announcement of the merger agreement;
	•	the effect of the announcement of the merger on our customer relationships, operating results and business generally, including the ability to retain key employees;

ARC Filings:		Periods
Annual Report on Form 10-K		Year ended December 31, 2005
Quarterly Report on Form 10-Q		Quarter ended March 31, 2006
Current Reports on Form 8-K		Filed January 13, 2006, January 20, 2006, February 7, 2006, February 24, 2006, March 6, 2006, March 20, 2006, as amended on March 24, 2006, March 21, 2006, March 28, 2006, April 5, 2006, April 17, 2006, May 4, 2006, May 15, 2006 and May 23, 2006

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	American Retirement Corporation
	111 Westwood Place, Suite 200
	Brentwood, Tennessee 37027
	Telephone: (615) 221-2250
	Attention: George T. Hicks

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ARTICLE I. THE MERGER						A-1
	Section 1.01		The Merger			A-1
	Section 1.02		Closing			A-1
	Section 1.03		Effective Time			A-1
	Section 1.04		Effects of the Merger			A-2
	Section 1.05		Charter; Bylaws			A-2
	Section 1.06		Directors			A-2
	Section 1.07		Officers			A-2
ARTICLE II. EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT ENTITIES; EXCHANGE OF CERTIFICATES; COMPANY STOCK OPTIONS						A-2
	Section 2.01		Effect on Capital Stock			A-2
	Section 2.02		Surrender and Payment			A-2
	Section 2.03		Company Stock Options			A-5
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY						A-5
	Section 3.01		Organization, Standing and Corporate Power			A-5
	Section 3.02		Subsidiaries			A-6
	Section 3.03		Capital Structure			A-6
	Section 3.04		Authority; Noncontravention			A-7
	Section 3.05		Governmental Approvals			A-8
	Section 3.06		Company SEC Documents; No Undisclosed Liabilities			A-8
	Section 3.07		Information Supplied			A-9
	Section 3.08		Absence of Certain Changes or Events			A-9
	Section 3.09		Litigation			A-9
	Section 3.10		Contracts			A-10
	Section 3.11		Compliance with Laws			A-11
	Section 3.12		Employee Benefit Plans			A-12
	Section 3.13		Taxes			A-14
	Section 3.14		Intellectual Property; Software			A-16
	Section 3.15		Real Property			A-17
	Section 3.16		Environmental Matters			A-20
	Section 3.17		Transactions with Related Parties			A-21
	Section 3.18		Brokers and Other Advisors			A-21
	Section 3.19		Opinion of Financial Advisor			A-21
	Section 3.20		Residence Agreements			A-21
	Section 3.21		Insurance			A-21
	Section 3.22		Labor Matters			A-21
	Section 3.23		Licensing Surveys			A-22
	Section 3.24		Resident Records			A-22
	Section 3.25		Third Party Payor Reimbursement			A-22
	Section 3.26		State Takeover Statutes; Company Rights Plan			A-23

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ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB						A-23
	Section 4.01		Organization, Standing and Corporate Power			A-23
	Section 4.02		Capital Structure of Merger Sub			A-23
	Section 4.03		Authority; Noncontravention			A-23
	Section 4.04		Governmental Approvals			A-24
	Section 4.05		Information Supplied			A-24
	Section 4.06		Litigation			A-24
	Section 4.07		No Business Activities			A-24
	Section 4.08		Brokers and Other Advisors			A-24
	Section 4.09		Financing			A-25
ARTICLE V. COVENANTS RELATING TO CONDUCT OF BUSINESS						A-25
	Section 5.01		Conduct of Business			A-25
	Section 5.02		No Solicitation by the Company			A-27
ARTICLE VI. ADDITIONAL AGREEMENTS						A-29
	Section 6.01		Preparation of the Proxy Statement; Shareholder Meetings			A-29
	Section 6.02		Access to Information; Confidentiality			A-30
	Section 6.03		Reasonable Best Efforts			A-30
	Section 6.04		Indemnification, Exculpation and Insurance			A-31
	Section 6.05		Fees and Expenses			A-31
	Section 6.06		Public Announcements			A-31
	Section 6.07		Shareholder Litigation			A-32
	Section 6.08		Employee Matters			A-32
	Section 6.09		Employment Agreements			A-32
	Section 6.10		Standstill Agreements, Confidentiality Agreements, Anti-takeover Provisions			A-33
	Section 6.11		Cooperation			A-33
	Section 6.12		Financing			A-33
	Section 6.13		Hedging Agreements			A-33
ARTICLE VII. CONDITIONS PRECEDENT						A-33
	Section 7.01		Conditions to Each Party’s Obligation to Effect the Merger			A-33
	Section 7.02		Conditions to Obligations of Parent and Merger Sub			A-34
	Section 7.03		Conditions to Obligation of the Company			A-35
	Section 7.04		Frustration of Closing Conditions			A-35
ARTICLE VIII. TERMINATION, AMENDMENT AND WAIVER						A-35
	Section 8.01		Termination			A-35
	Section 8.02		Termination Fee and Shareholder Termination Fee			A-36
	Section 8.03		Effect of Termination			A-37
	Section 8.04		Amendment			A-37
	Section 8.05		Extension; Waiver			A-37
	Section 8.06		Procedure for Termination or Amendment			A-37

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ARTICLE IX. GENERAL PROVISIONS						A-38
	Section 9.01		Nonsurvival of Representations and Warranties			A-38
	Section 9.02		Notices			A-38
	Section 9.03		Definitions			A-38
	Section 9.04		Interpretation			A-39
	Section 9.05		Counterparts			A-39
	Section 9.06		Entire Agreement; No Third-Party Beneficiaries			A-39
	Section 9.07		Governing Law			A-39
	Section 9.08		Assignment			A-39
	Section 9.09		Specific Enforcement; Consent to Jurisdiction			A-40
	Section 9.10		Severability			A-40

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Adverse Notice			A-29
Affected Employees			A-32
Affiliate			A-38
Agreement			A-1
Articles of Merger			A-1
Certificate of Merger			A-1
Certificates			A-3
Closing			A-1
Closing Date			A-1
COBRA			A-13
Code			A-4
Company			A-1
Company Adverse Recommendation Change			A-28
Company Board			A-6
Company Bylaws			A-6
Company Charter			A-6
Company Common Stock			A-2
Company Disclosure Letter			A-5
Company Facilities			A-17
Company Intellectual Property			A-16
Company Material Adverse Effect			A-7
Company Plans			A-12
Company Preferred Stock			A-6
Company Rights			A-2
Company Rights Plan			A-2
Company SEC Documents			A-8
Company Shareholder Approval			A-7
Company Shareholders Meeting			A-30
Company Stock Options			A-5
Company Stock Plans			A-5
Confidentiality Agreement			A-30
Contract			A-7
Copyrights			A-16
Covered Employees			A-1
Delaware Secretary of State			A-2
DGCL			A-1
Dissenting Shares			A-4
Effective Time			A-2
Employees			A-12
Environmental Laws			A-20
Environmental Liabilities			A-20
Equity Financing			A-25
ERISA			A-12

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Exchange Act			A-8
Filed Company SEC Documents			A-9
Financing			A-25
Financing Commitment			A-33
GAAP			A-9
Government Programs			A-22
Governmental Authority			A-8
Hazardous Material			A-20
HSR Act			A-8
Indemnified Parties			A-31
Intellectual Property			A-16
IP Licenses			A-16
IRS			A-14
Knowledge			A-38
Laws			A-11
Lease			A-17
Licensing Surveys			A-22
Liens			A-6
Medicaid			A-22
Medicare			A-22
Merger			A-1
Merger Consideration			A-2
Merger Sub			A-1
Merger Sub Interests			A-23
Necessary Consents			A-8
New Employment Agreements			A-1
New Optionee Agreements			A-5
NYSE			A-12
Owned Real Property			A-19
Parent			A-1
Parent Articles			A-23
Parent Board			A-24
Parent Bylaws			A-23
Patents			A-16
Paying Agent			A-2
Payment Fund			A-2
Permits			A-11
Permitted Liens			A-38
person			A-38
Policies			A-21
Proxy Statement			A-9
Release			A-20
Representatives			A-27
Residence Agreement			A-21
Resident			A-21

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Restraints			A-33
RIC			A-25
Sarbanes-Oxley			A-12
SEC			A-8
Securities Act			A-8
Security Interest			A-18
SERP			A-32
Shareholder Termination Fee			A-36
Software			A-16
Subsidiary			A-39
Superior Proposal			A-28
Surviving Corporation			A-1
Takeover Proposal			A-28
tax returns			A-16
taxes			A-15
TBCA			A-1
Tennessee Secretary of State			A-1
Termination Date			A-35
Termination Fee			A-36
Trade Secrets			A-16
Trademarks			A-16
WARN Act			A-22

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	(a) Common Stock of Merger Sub. The issued and outstanding common stock, par value $.01 per share, of Merger Sub shall remain outstanding and shall constitute the only issued and outstanding capital stock of the Surviving Corporation.
	(b) Conversion of Company Common Stock. Subject to Section 2.02(e), each issued and outstanding share of Company Common Stock (other than as provided in Section 2.02(j) with respect to shares as to which appraisal rights have been perfected), together with the rights (the “Company Rights”) issued pursuant to the Rights Agreement, dated as of November 18, 1998, between the Company and American Stock Transfer and Trust Company, as rights agent (the “Company Rights Plan”), shall be converted into the right to receive $33.00 in cash (the “Merger Consideration”) without interest.

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	(i) all Contracts of the Company or any of its Subsidiaries (A) involving payments by or to the Company or any of its Subsidiaries of more than $750,000 on an annual basis or (B) involving payments by or to the Company or any of its Subsidiaries of more than $100,000 on an annual basis and which may not be terminated by the Company without cause within one year without penalty;
	(ii) all Contracts to which the Company or any of its Subsidiaries is a party, or by which the Company, any of its Subsidiaries or any of its Affiliates is bound, that contain a covenant restricting the ability of the Company or any of its Subsidiaries (or which, following the consummation of the Merger, would restrict the ability of Parent or any of its Subsidiaries, including the Surviving Corporation and its Subsidiaries) to compete in any business or with any person or in any geographic area or which prohibits the Company or any of its Subsidiaries from soliciting suppliers anywhere in the world;
	(iii) all Contracts of the Company or any of its Subsidiaries with any Affiliate of the Company (other than any of its Subsidiaries) in which the amount involved exceeds $60,000 on an annual basis;
	(iv) any (A) Contract to which the Company or any of its Subsidiaries is a party granting any license to Intellectual Property, and (B) other license (other than real estate) involving payments by the Company or any of its Subsidiaries of more than $750,000 on an annual basis;
	(v) all confidentiality agreements (other than in the ordinary course of business), agreements by the Company not to acquire assets or securities of a third party or agreements by a third party not to acquire assets or securities of the Company;
	(vi) any Contract involving payments by or to the Company or any of its Subsidiaries, of more than $750,000 on an annual basis that requires consent of or notice to a third party in the event of or with respect to the Merger, including in order to avoid a breach or termination of or loss of benefit under any such Contract;
	(vii) all joint venture, partnership or other similar agreements involving co-investment with a third party to which the Company or any of its Subsidiaries is a party;
	(viii) any Contract with a Governmental Authority;
	(ix) all material outsourcing Contracts;
	(x) all Contracts with investment bankers, financial advisors, attorneys, accountants or other advisors retained by the Company or any of its Subsidiaries involving payments by or to the Company or any of its Subsidiaries of more than $750,000 on an annual basis;
	(xi) all Contracts providing for the indemnification by the Company or any of its Subsidiaries of any person, except for any such Contract that (i) is not material to the Company or any of its Subsidiaries and (ii) was entered into in the ordinary course of business;

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	(xii) all Contracts pursuant to which any indebtedness of the Company or any of its Subsidiaries is outstanding or may be incurred and all guarantees of or by the Company or any of its Subsidiaries of any indebtedness of any other person (other than the Company or any of its Subsidiaries) (except for such indebtedness or guarantees the aggregate principal amount of which does not exceed $750,000 on an annual basis and excluding trade payables arising in the ordinary course of business); and
	(xiii) all Contracts listed on Section 3.21 of the Company Disclosure Letter.

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(i) to the Knowledge of the Company, no unresolved claims or threat of claims within the three (3) years prior to the date of this Agreement, have been asserted in writing by any third party against the Company or any of its Subsidiaries related to the use in the conduct of the businesses of the Company and its Subsidiaries that the Company Intellectual Property or the conduct of the business of the Company infringes, misappropriates or dilutes any Intellectual Property rights of any third party;

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	(ii) to the Knowledge of the Company, the conduct of the businesses of the Company and its Subsidiaries does not infringe, misappropriate or dilute any Intellectual Property rights of any third party, except as would not reasonably be expected to result in, in the aggregate, material direct or indirect costs or liabilities to, or other material direct or indirect negative impact on, the Company and its Subsidiaries, taken as a whole;
	(iii) to the Knowledge of the Company, no third party is infringing, misappropriating or diluting any Company Intellectual Property, except as would not reasonably be expected to result in, in the aggregate, material direct or indirect costs or liabilities to, or other material direct or indirect negative impact on, the Company and its Subsidiaries, taken as a whole;
	(iv) no settlement agreements, consents, judgments, orders, forbearances to sue or similar obligations limit or restrict the Company’s or any Subsidiary’s rights in and to any Company Intellectual Property, except as would not reasonably be expected to result in, in the aggregate, material direct or indirect costs or liabilities to, or other material direct or indirect negative impact on, the Company and its Subsidiaries, taken as a whole;
	(v) the Company and its Subsidiaries have not licensed or sublicensed their rights in any Company Intellectual Property, or received or been granted any such rights (except pursuant to “click wrap” or “shrink wrap” agreements or agreements contained in “off the shelf” Software or the terms of use or service for any Web site) other than pursuant to the IP Licenses;
	(vi) to the Knowledge of the Company, there is no default under any of the IP Licenses by the Company or any of its Subsidiaries or, by the other party thereto, except as would not reasonably be expected to result in, in the aggregate, material direct or indirect costs or liabilities to, or other material direct or indirect negative impact on, the Company and its Subsidiaries, taken as a whole;
	(vii) the Company and its Subsidiaries have taken reasonable measures to protect the confidentiality of their Trade Secrets; and
	(viii) the consummation of the transactions contemplated hereby will not result in the loss or impairment of the Company’s and its Subsidiaries’ rights to own or use any of the Company Intellectual Property or obligate them to pay any royalties or other amounts to any third party in excess of the amounts payable by them prior to the Closing, nor will such consummation require the consent of any third party in respect of any Company Intellectual Property, except as would not reasonably be expected to result in, in the aggregate, material direct or indirect costs or liabilities to, or other material direct or indirect negative impact on, the Company and its Subsidiaries, taken as a whole.

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	(a) such Lease is legal, valid, binding, enforceable and in full force and effect, subject to bankruptcy, insolvency, reorganization, moratoriums or similar laws now or hereafter in effect relating to creditor’s rights generally or to general principles of equity;
	(b) neither the Company nor any Subsidiary nor, to the Knowledge of the Company, any other party, is in material breach or violation of, or material default under, any such Lease, and no event has occurred, is pending or, to the Knowledge of the Company, is threatened, which, after the giving of notice, with lapse of time, or otherwise, would constitute a material breach or default by the Company or any Subsidiary or, to the Knowledge of the Company, any other party under such Lease;
	(c) all Company Facilities are supplied with utilities and other services adequate for the operation of said Company Facilities and are in good repair and working order sufficient for normal operation of the Company’s business, subject to normal wear and tear, and adequate and suitable for the purposes for which they are presently being used; and
	(d) to the Knowledge of the Company, each of the Company Facilities has unlimited access to and from publicly dedicated streets, the responsibility for maintenance of which has been accepted by the appropriate Governmental Authority;
	(e) to the Knowledge of the Company, no mortgage, pledge, security interest, encumbrance, charge or other lien (whether arising by contract or by operation of law) (collectively, “Security Interest”), easement, covenant or other restriction or title matter applicable to the real property subject to any such lease, other than Permitted Liens, would reasonably be expected to materially impair the current uses or the occupancy by the Company or a Subsidiary of the property subject thereto;
	(f) there are no material disputes, oral agreements or forbearance programs in effect as to such Lease;
	(g) there are no outstanding options or rights of any party to terminate such Lease prior to the expiration of the term thereof (except for termination rights following a casualty, condemnation, default or similar event);
	(h) to the Knowledge of the Company, all material components of all improvements located on or included with any real property subject to such Lease, including, without limitation, the roofs and structural elements thereof and the heating, ventilation, air conditioning, plumbing, electrical, mechanical, sewer, waste water, storm water, paving and parking equipment, systems and facilities included therein, are, in all material respects, in good working condition and order (ordinary wear and tear excepted) and free from material structural or other material defects, adequate for the operation of such buildings and improvements for the purposes for which they are presently being used and the Company has maintained or cause to be maintained the same substantially in accordance with the terms of the Lease;
	(i) no portion of any real property or improvements located thereon that is the subject of such Lease has suffered any damage by fire or other casualty loss which has not heretofore been completely repaired and restored in accordance with the terms of such Lease except as would not, individually or in the aggregate, reasonably be expected to materially interfere with the use of such leased Company Facility as a senior living facility; and
	(j) there are no (i) pending or, to the Knowledge of the Company, threatened condemnation proceedings relating to the real property that is the subject of such Lease, or (ii) pending or, to the Knowledge of the Company, threatened litigation, claims, actions, suits, proceedings, investigations or administrative actions relating to such Lease or the real property and/or improvements that are the subject thereof.

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	(a) the Company or the Subsidiary that is the record owner thereof has good and clear record and marketable title to such Owned Real Property, free and clear of any Security Interest, easement, covenant or other restriction or title matter applicable to such Owned Real Property, other than Permitted Liens, which would reasonably be expected to materially impair the current uses or the occupancy by the Company or a Subsidiary of the property subject thereto;
	(b) all Company Facilities are supplied with utilities and other services adequate for the operation of said Company Facilities and are in good repair and working order sufficient for normal operation of the Company’s business, subject to normal wear and tear, and adequate and suitable for the purposes for which they are presently being used;
	(c) to the Knowledge of the Company, each of the Company Facilities has unlimited access to and from publicly dedicated streets, the responsibility for maintenance of which has been accepted by the appropriate Governmental Authority;
	(d) there are no (i) pending or, to the Knowledge of the Company, threatened condemnation proceedings relating to such Owned Real Property or (ii) pending or, to the Knowledge of the Company, threatened litigation, claims, actions, suits, proceedings, investigations or administrative actions relating to such Owned Real Property;
	(e) except as would not reasonably be expected to, individually or in the aggregate, materially and adversely affect the use or operation of the Owned Real Property or the business conducted or proposed to be conducted at the Owned Real Property, the existing buildings and improvements located on such Owned Real Property are located entirely within the boundary lines of such Owned Real Property or on permanent easements on adjoining land benefiting such Owned Real Property and may lawfully be used under applicable zoning and land use laws (either as of right, by special permit or variance, or as a grandfathered use) for the purposes for which they are presently being used, and such Owned Real Property is not located within any flood plain or subject to any similar type restriction for which any permits or licenses, if any, necessary to the use thereof have not been obtained;
	(f) there are no outstanding options or rights of first refusal to purchase such Owned Real Property, or any portion thereof or interest therein;
	(g) neither the Company nor any Subsidiary has received written notice of any, and to the Knowledge of the Company there is no, proposed or pending proceeding to change or redefine the zoning classification of all or any portion of such Owned Real Property;
	(h) to the Knowledge of the Company, the material improvements and mechanical and utility systems, including, without limitation, the roofs and structural elements of any buildings or structures and the heating, ventilation, air conditioning, plumbing, electrical, mechanical, sewer, waste water, storm water and parking systems and facilities serving the buildings and other improvements located on such Owned Real Property, are, in all material respects, in good working condition and order (ordinary wear and tear excepted) and free from material structural or other material defects adequate for the operation of such buildings and improvements for the purposes for which they are presently being used;
	(i) such Owned Real Property is assessed by local property assessors as a tax parcel or parcels separate from all other tax parcels;
	(j) no portion of such Owned Real Property has suffered any damage by fire or other casualty loss which has not heretofore been completely repaired and restored to its original condition (ordinary

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	wear and tear excepted), except as would not, individually or in the aggregate, reasonably be expected to materially interfere with the use of such Owned Real Property as a senior living facility;
	(k) such Owned Real Property is in material compliance with the terms and provisions of any restrictive covenants, easements, or agreements affecting such Owned Real Property; and
	(l) the Company has made available to Parent complete and accurate copies of all of the following materials relating to such Owned Real Property, to the extent in the Company’s possession or control: title insurance policies; deeds; surveys; environmental assessment and similar reports, and leases, subleases, licenses or agreements (including any amendments or modifications thereto) granting to any other party the right of use or occupancy of any portion of such Owned Real Property and providing for payments in excess of $250,000 on an annual basis.

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	(i) (A) declare, set aside or pay any dividends on, or make any other distributions (whether in cash, stock or property) in respect of, any of its capital stock, other than dividends or distributions by a direct or indirect wholly owned Subsidiary of the Company to its parent, (B) split, combine or reclassify any of its capital stock or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock or (C) purchase, redeem or otherwise acquire any shares of its capital stock or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities;
	(ii) issue, deliver, sell, grant, pledge or otherwise encumber or subject to any Lien any shares of its capital stock, any other voting securities or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities, or any “phantom” stock, “phantom” stock rights, stock appreciation rights or stock based performance units (other than the issuance of shares of Company Common Stock upon the exercise of Company Stock Options outstanding on the date hereof in accordance with their terms on the date hereof);
	(iii) amend the Company Charter or the Company Bylaws or the comparable charter or organizational documents of any of its Subsidiaries or adopt another shareholders’ rights plan (i.e., “poison pill”);
	(iv) except in the ordinary course of business consistent with past practice, directly or indirectly acquire (A) by merging or consolidating with, or by purchasing all of or a substantial equity interest in, or by any other manner, any division, business or equity interest of any person or (B) any assets forming part of such a division or business; provided, however, that in no event shall the Company

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	and its Subsidiaries be permitted to acquire any such assets that have a purchase price in excess of $20,000,000 in the aggregate;
	(v) sell, lease, license, mortgage, sell and leaseback or otherwise encumber or subject to any Lien (other than Permitted Liens) or otherwise dispose of any of its properties or other assets with a fair market value in excess of $1,000,000 individually or $2,000,000 in the aggregate to a third party, except for Residence Agreements, leases or subleases entered into in the ordinary course of business consistent with past practices;
	(vi) make any capital expenditure or expenditures which (1) involves the purchase of any real property or (2) are not in accordance with the Company’s capital expenditure budget for the balance of fiscal year 2006 provided to Parent prior to the date hereof;
	(vii) (A) repurchase or prepay any indebtedness for borrowed money except as required by the terms of such indebtedness, (B) incur any indebtedness for borrowed money or guarantee any such indebtedness of another person or issue or sell any debt securities or options, warrants, calls or other rights to acquire any debt securities of the Company or any of its Subsidiaries, guarantee any debt securities of another person, enter into any “keep well” or other agreement to maintain any financial statement condition of another person or enter into any arrangement having the economic effect of any of the foregoing or (C) make any loans, advances or capital contributions to, or investments in, any other person in excess of $750,000 in the aggregate, other than in the Company or in or to any direct or indirect wholly-owned Subsidiary of the Company;
	(viii) (A) pay, discharge, settle or satisfy any claims (including claims of shareholders), liabilities or obligations (whether absolute, accrued, asserted or unasserted, contingent or otherwise) (1) in excess of $1,000,000 individually and $2,000,000 in the aggregate, other than in the ordinary course of business consistent with past practice or (2) involving any material limitation on the conduct of the business of the Company or its Subsidiaries or (B) waive or release any right of the Company or any of its Subsidiaries with a value in excess of $250,000;
	(ix) except in the ordinary course of business consistent with past practice, modify, amend or terminate any Contract (i) that by its terms is required to be disclosed on Section 3.10(b) of the Company Disclosure Letter, or (ii) that would be required, as so amended or modified, to be disclosed on Section 3.10(b) of the Company Disclosure Letter, or enter into any Contract which if in effect on the date hereof would be required to be disclosed on Section 3.10(b) of the Company Disclosure Letter; provided that the Company shall not, without the prior written consent of Parent, enter into any Contract which if in effect on the date hereof would be required to be disclosed on Section 3.10(b) of the Company Disclosure Letter pursuant to Section 3.10(b)(ii) or which would require consent of or notice to a third party in the event of or with respect to the Merger;
	(x) terminate, amend or otherwise modify any agreement entered into by the Company, at the request of Parent after the date hereof, with any individual party to a New Employment Agreement;
	(xi) except in the ordinary course of business consistent with past practice, and except as required to comply with applicable Law or any Contract disclosed in Section 3.12 of the Company Disclosure Letter, (A) increase in any manner the compensation or fringe benefits of, or pay any bonus (other than the bonus payments described in Section 6.11(a) of the Company Disclosure Letter) to, any current or former director, officer, employee or consultant of the Company or any of its Subsidiaries, (B) pay to any current or former director, officer, employee or consultant of the Company or any of its Subsidiaries any benefit not provided for under any Contract or Company Plan other than the payment of cash compensation in the ordinary course of business consistent with past practice, (C) grant any awards under any Company Plan (including the grant of stock options, stock appreciation rights, stock based or stock related awards, performance units, or restricted stock or the removal of existing restrictions in any Contract or Company Plan or awards made thereunder), (D) take any action to fund or in any other way secure the payment of compensation or benefits under any Contract or Company Plan, (E) exercise any discretion to accelerate the vesting or

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	payment of any compensation or benefit under any Contract or Company Plan, (F) materially change any actuarial or other assumption used to calculate funding obligations with respect to any Company Plan or change the manner in which contributions to any Company Plan are made or the basis on which such contributions are determined or (G) adopt any new employee benefit plan or arrangement or amend, modify or terminate any existing Company Plan, in each case for the benefit of any current or former director, officer, employee or consultant of the Company or any of its Subsidiaries, other than required by applicable Law or tax qualification requirement; provided, however, that with the prior consent of Parent, such consent not to be unreasonably withheld, the Company may offer and make payments to current employees for retention purposes;
	(xii) adopt or enter into any collective bargaining agreement or other labor union contract applicable to the employees of the Company or any of its Subsidiaries;
	(xiii) fail to use reasonable efforts to maintain existing insurance policies or comparable replacement policies to the extent available for a reasonable cost;
	(xiv) change its fiscal year, revalue any of its material assets, or make any changes in financial, actuarial, reserving, statutory or tax accounting methods, principles or practices, except in each case as required by GAAP or applicable Law;
	(xv) make any material tax election or settle or compromise any material tax liability, or agree to an extension of a statute of limitations with respect to material taxes; or
	(xvi) authorize any of, or commit, propose or agree to take any of, the foregoing actions.

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	(a) Company Shareholder Approval. The Company Shareholder Approval shall have been obtained.
	(b) Antitrust. The waiting period (and any extension thereof) applicable to the Merger under the HSR Act or any other applicable competition, merger control, antitrust or similar Law shall have been terminated or shall have expired.
	(c) No Injunctions or Restraints. No temporary restraining order, preliminary or permanent injunction or other judgment, order or decree issued by any court of competent jurisdiction or other statute, law, rule, legal restraint or prohibition (collectively, “Restraints”) shall be in effect preventing the consummation of the Merger.

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	(a) Representations and Warranties. The representations and warranties of the Company contained in this Agreement (other than the representations and warranties of the Company set forth in Section 3.03) shall be true and correct as of the date of this Agreement and as of the Closing Date as though made on the Closing Date (without regard to materiality or Company Material Adverse Effect qualifiers contained therein), except to the extent such representations and warranties expressly relate to an earlier date, in which case as of such earlier date, except where the failure of the representations and warranties to be true and correct individually or in the aggregate, has not had and would not reasonably be expected to have a Company Material Adverse Effect. The representations and warranties of the Company set forth in Section 3.03 shall be true and correct in all respects (subject to de minimis exceptions for breaches involving discrepancies of no more than 30,000 shares of Company Common Stock or stock options in the aggregate covering no more than 30,000 shares of Company Common Stock) as of the date of this Agreement and as of the Closing Date as though made on the Closing Date. Parent shall have received a certificate signed on behalf of the Company by the chief executive officer and the chief financial officer of the Company to the effect of the foregoing two sentences.
	(b) Performance of Obligations of the Company. The Company shall have performed in all material respects all obligations required to be performed by it under this Agreement at or prior to the Closing Date, and Parent shall have received a certificate signed on behalf of the Company by the chief executive officer and the chief financial officer of the Company to such effect.
	(c) No Litigation. There shall not be pending or overtly threatened in writing any suit, action or proceeding by any Governmental Authority (i) challenging the acquisition by Parent or Merger Sub of any shares of Company Common Stock, seeking to restrain or prohibit the consummation of the Merger, seeking to place limitations on the ownership of shares of Company Common Stock (or shares of capital stock of the Surviving Corporation) by Parent or Merger Sub, or (ii) seeking to (A) prohibit or limit the ownership or operation by the Company or any of its Subsidiaries or by Parent or any of its Subsidiaries of any portion of any business or of any assets of the Company and its Subsidiaries or Parent and its Subsidiaries, (B) compel the Company or any of its Subsidiaries or Parent or any of its Subsidiaries to divest or hold separate any portion of any business or of any assets of the Company and its Subsidiaries or Parent and its Subsidiaries, as a result of the Merger or (C) impose any obligations on Parent or any of its Subsidiaries or the Company or any of its Subsidiaries to maintain facilities, operations, places of business, employment levels, products or businesses.
	(d) Restraint. No Restraint that would reasonably be expected to result, directly or indirectly, in any of the effects referred to in Section 7.02(c) shall be in effect.
	(e) Permits. Parent shall have obtained such customary assurances as are customarily obtained under local custom and practice (if any) to allow a reasonable person, acting in good faith, to conclude that all material Permits necessary for the lawful conduct of the business of the Company and its Subsidiaries following consummation of the Merger will be issued in the ordinary course and effective as of Closing. Notwithstanding the foregoing, the forgoing provision shall be inapplicable to the extent that (i) such customary assurances are unavailable solely as a result of the negative operating history or qualifications of the Parent, or solely as a result of the negative background of any director(s) or officer(s) of the Parent, or (ii) the failure to obtain any such Permits would not, individually or in the aggregate result, or be reasonably likely to result, in a material adverse effect of Parent.
	(f) Closing Consents. The consents, authorizations, orders, permits and approvals listed on Exhibit B hereto shall have been obtained and shall be in full force and effect.

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	(a) Representations and Warranties. The representations and warranties of Parent and Merger Sub contained in this Agreement shall be true and correct as of the date of this Agreement and as of the Closing Date as though made on the Closing Date (without regard to materiality qualifiers contained therein), except to the extent such representations and warranties expressly relate to an earlier date, in which case as of such earlier date, except where the failure of the representations and warranties to be true and correct individually or in the aggregate, has not had and would not reasonably be expected to have a material adverse effect on Parent’s ability to consummate the transactions contemplated hereby. The Company shall have received a certificate signed on behalf of Parent by an executive officer of Parent to such effect.
	(b) Performance of Obligations of Parent and Merger Sub. Parent and Merger Sub shall have performed in all material respects all obligations required to be performed by them under this Agreement at or prior to the Closing Date, and the Company shall have received a certificate signed on behalf of Parent by an executive officer of Parent to such effect.

	(a) by mutual written consent of Parent and the Company;
	(b) by either Parent or the Company:

	(i) if the Merger shall not have been consummated on or before the nine month anniversary of the date of this Agreement (the “Termination Date”); provided, however, that the right to terminate this Agreement under this Section 8.01(b)(i) shall not be available to any party whose action or failure to act has been a principal cause of or resulted in the failure of the Merger to be consummated on or before such date;
	(ii) if any Restraint having the effect of permanently restraining, enjoining, or otherwise prohibiting the Merger and the transactions contemplated by this Agreement shall be in effect and shall have become final and nonappealable;
	(iii) if the Company Shareholder Approval shall not have been obtained at the Company Shareholders Meeting duly convened therefor or at any adjournment or postponement thereof;

	(c) by Parent, if the Company shall have breached or failed to perform any of its representations, warranties, covenants or agreements set forth in this Agreement, which breach or failure to perform (A) would give rise to the failure of a condition set forth in Section 7.02(a) or (b) and (B) is incapable of being cured, or is not cured, by the Company within 30 calendar days following receipt of written notice from Parent of such breach or failure to perform;
	(d) by the Company, if Parent or Merger Sub shall have breached or failed to perform any of its representations, warranties, covenants or agreements set forth in this Agreement, which breach or failure to perform (i) would give rise to the failure of a condition set forth in Section 7.03(a) or

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	(b) and (ii) is incapable of being cured, or is not cured, by Parent or Merger Sub, as the case may be, within 30 calendar days following receipt of written notice from the Company of such breach or failure to perform;
	(e) by Parent, if (i) a Company Adverse Recommendation Change shall have occurred or (ii) within ten (10) business days of the date any Takeover Proposal shall have been made or communicated to the Company, the Company Board or any committee thereof shall have failed to publicly confirm its recommendation and declaration of advisability of this Agreement and the Merger; or
	(f) by the Company, if the Company Board shall have exercised its termination rights set forth in Section 5.02(b); provided that in order for the termination of this Agreement pursuant to this Section 8.01(f) to be deemed effective, the Company shall have complied with all provisions of Section 5.02, including the notice provisions therein and paid the amounts required by Section 8.02.

	(i) this Agreement is terminated by either Parent or the Company pursuant to Section 8.01(b)(i), and after the date of this Agreement a Takeover Proposal shall have been made or communicated to the Company or shall have been made directly to the shareholders of the Company generally and (B) within twelve (12) months after such termination the Company shall have reached a definitive agreement to consummate, or shall have consummated a Takeover Proposal; provided that for purposes of this Clause (B) all references in the definition of Takeover Proposal to 20% shall instead refer to 50%;
	(ii) this Agreement is terminated by the Company pursuant to Section 8.01(f);
	(iii) this Agreement is terminated by Parent pursuant to Section 8.01(c) and (A) after the date of this Agreement a Takeover Proposal shall have been made or communicated to the Company or shall have been made directly to the shareholders of the Company generally and (B) within twelve (12) months after such termination the Company shall have reached a definitive agreement to consummate, or shall have consummated a Takeover Proposal; provided that for purposes of this Clause (B) all references in the definition of Takeover Proposal to 20% shall instead refer to 50%; or
	(iv) this Agreement is terminated by Parent pursuant to Section 8.01(e),

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	Brookdale Senior Living Incorporated
	330 North Wabash, Suite 1400
	Chicago, Illinois 60611
	Attention: General Counsel

	Skadden, Arps, Slate, Meagher & Flom LLP
	Four Times Square
	New York, New York 10036
	Facsimile No.: (212) 735-2000
	Attention: Joseph A. Coco

	American Retirement Corporation
	111 Westwood Place, Suite 200
	Brentwood, Tennessee 37027
	Attention: Chief Executive Officer

	Bass, Berry & Sims PLC
	315 Deaderick Street, Suite 2700
	Nashville, Tennessee 37238
	Facsimile No.: (615) 742-6293
	Attention: T. Andrew Smith

	(a) an “Affiliate” of any person means another person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such first person;
	(b) “Knowledge” of any person that is not an individual means, with respect to the Company regarding any matter in question, the actual knowledge of the individuals listed in Section 9.03(b) of the Company Disclosure Letter;
	(c) “person” means an individual, corporation, partnership, limited liability company, joint venture, association, trust, unincorporated organization or other entity;
	(d) “Permitted Liens” means (i) any liens for taxes not yet delinquent or which are being contested in good faith by appropriate proceedings, (ii) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other similar liens, (iii) pledges or deposits in connection with workers’ compensation, unemployment insurance and other social security legislation, (iv) easements, rights-of-

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	way, restrictions and other similar encumbrances incurred in the ordinary course of business that, in the aggregate, are not material in amount and that do not, in any case, materially detract from the use or value of the property subject thereto, and (v) any liens described in, set forth in, or securing the Leases or the Contracts described in Section 3.10(b) of the Company Disclosure Letter;
	(e) a “Subsidiary” of any person means another person, an amount of the voting securities, other voting rights 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.

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	BROOKDALE SENIOR LIVING INCORPORATED

	By:

	Name:

	Title:

	BETA MERGER SUB CORPORATION

	By:

	Name:

	Title:

	AMERICAN RETIREMENT CORPORATION

	By:

	Name:

	Title:

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	(i) Reviewed certain publicly-available financial statements and other publicly available business and financial information relating to the Company;
	(ii) Reviewed certain due diligence information, including historical and projected financial information relating to the business, earnings, cash flow, assets, liabilities, capitalization and prospects of the Company, as prepared by management of the Company;
	(iii) Reviewed certain historical unaudited property level operating statements of the Company, as prepared by the Company;
	(iv) Reviewed a draft of the Merger Agreement distributed on May 11, 2006, provided to us by management of the Company;
	(v) Conducted discussions with the management of the Company concerning the matters described herein, as well as the business and prospects of the Company;
	(vi) Reviewed terms of certain joint ventures, management contracts and other agreements of the Company that Cohen & Steers deemed relevant to its analysis;
	(vii) Reviewed the financial terms, to the extent available, of certain unrelated acquisition transactions that Cohen & Steers deemed relevant to its analysis;
	(viii) Reviewed financial and stock market data for publicly-traded companies that Cohen & Steers deemed relevant to its analysis;

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	(ix) Performed various financial analyses as Cohen & Steers deemed appropriate, using generally accepted analytical valuation methodologies; and
	(x) Performed such other analyses and considered such other factors as Cohen & Steers deemed appropriate.

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	Very truly yours,
	COHEN & STEERS CAPITAL ADVISORS, LLC

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þ	Please mark your vote as in this example.
1.	Proposal to adopt the Agreement and Plan of Merger, dated as of May 12, 2006, by and among Brookdale Senior Living Inc., Beta Merger Sub Corporation and American Retirement Corporation, as the merger agreement may be amended from time to time.

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		Please date and sign below. If a joint account, each owner should sign. When signing in a representative capacity, please give title. Please sign here exactly as name is printed hereon.
		Dated:				, 2006
		Signature
		Counter-Signature