Trace
Pointe




Clinton,
Mississippi

















PURCHASE
AND SALE AGREEMENT








between








EMERITUS
CORPORATION


as
“Buyer”








and








CLINTON
ASSISTED LIVING LLC


as
“Seller”











Dated
as of September 29, 2009































TABLE
OF CONTENTS


PageARTICLE
      1
              DEFINITIONS
              1ARTICLE
      2
              TERMS
      OF THE SALE
              42.1
              Sale
              42.2
              Closing
              52.3
              Conveyance
              52.4
              Prorations
              62.5
              Costs
              7ARTICLE
      3
              CONDITIONS
      TO THE OBLIGATION OF BUYER TO CLOSE
              83.1
              Performance
              83.2
              Representations
      and Warranties
              83.3
              Recordation
      and Costs
              83.4
              Title
      Insurance
              83.5
              Entitlements
              83.6
              Condemnation;
      Casualty
              93.7
              Transaction
      Documents
              93.8
              Due
      Diligence
              9ARTICLE
      4
              CONDITIONS
      TO THE OBLIGATION OF SELLER TO CLOSE
              94.1
              Performance
              104.2
              Representations
      and Warranties
              104.3
              Board
      Approval
              104.4
              Existing
      Financing
              10ARTICLE
      5
              REPRESENTATIONS,
      WARRANTIES AND COVENANTS
              105.1
              By
      Seller
              105.2
              By
      Buyer
              11ARTICLE
      6
              COVENANTS
      OF THE PARTIES AND OTHER MATTERS
              126.1
              Covenants
      of Seller
              126.2
              Notification
      of Changes
              136.3
              Effect
      Transaction
              136.4
              Indemnification
              13ARTICLE
      7
              MISCELLANEOUS
              137.1
              Survival
              13
  i
   Page7.2
              Brokers
              137.3
              Notices
              147.4
              Attorneys'
      Fees
              147.5
              Successors
              157.6
              Waiver
              157.7
              Invalidity
              157.8
              Governing
      Law
              157.9
              Waiver
      of Trial by Jury
              157.1
              Bulk
      Sales
              167.11
              1031
      Exchange
              167.12
              Counterparts
              167.13
              ARBITRATION
      OF DISPUTES
              167.14
              Buyer's
      Remedies
              177.15
              Seller's
      Remedies
              177.16
              Entire
      Agreement
              17


EXHIBITS





Exhibit A
– Legal Description of the Land


Exhibit B
– Form of Bill of Sale


Exhibit C
– Form of Promissory Note


ii


PURCHASE
AND SALE AGREEMENT




This
Purchase and Sale Agreement (this “Agreement”) is dated as of
September 29, 2009 (the “Effective Date”), between
EMERITUS CORPORATION, a Washington corporation, and/or its assigns (“Buyer”), and CLINTON ASSISTED
LIVING LLC, a Washington limited liability company (“Seller”).




RECITALS




A.  Seller
owns certain real property located at 501 East Northside Drive, Clinton,
Mississippi, commonly known as Trace Pointe Retirement (“Trace
Pointe”);




B.  Seller
desires to sell to Buyer, and Buyer desires to purchase from Seller, the
Property, the Personal Property and the Additional Property as defined
below




NOW,
THEREFORE, the parties hereto agree as follows:




ARTICLE
1




DEFINITIONS




For all
purposes of this Agreement, except as otherwise expressly provided herein or
unless the context otherwise requires, the terms defined in this Article have
the meanings assigned to them in this Article and include the plural as well as
the singular.




“Additional
Property”:  Collectively, (i) all Resident Agreements, (ii) all
Consumables, (iii) all trade names relating to the Property, (iv) any
certificate of need or similar certificate for the Property, (v) any third-party
provider agreements (including Medicare and Medicaid) relating to the Property,
(vi) any health care license or other operating license for the Property (to the
extent the same are transferable without the consent of any third-party), (vii)
any security deposits related to the Property, and (viii) any vehicles owned,
which will be transferred subject to any loans secured by such
vehicles.




“Bill of Sale and
Assignment”:  A bill of sale and general assignment
substantially in the form attached hereto as Exhibit B conveying
the Personal Property to Buyer.




“Closing”:  The
transactions taking place on the Closing Date.




“Closing Date”:  The
date on which Buyer receives conveyance of good and marketable fee title to the
Property, free and clear of all liens, claims and encumbrances (except Permitted
Encumbrances), which date will be on or before September 30, 2009, unless Seller
and Buyer agree to a later date in writing; and delivery of the Purchase Price
to Seller as adjusted by applicable pro-rations, in any case, subject to the
satisfaction of the conditions set forth herein; provided, however, all pro-rations
shall be effective and calculated as of 12:01 a.m. on October 1,
2009.




“Code”:  The
Internal Revenue Code of 1986, as amended.




“Commercial Occupancy
Arrangement”:  Any commercial (as opposed to resident)
Occupancy Arrangement.




1


“Condemnation”:  The
exercise of any governmental power, whether by legal proceedings or otherwise,
by a Condemnor or a voluntary sale or transfer by Seller to any Condemnor,
either under threat of condemnation or while legal proceedings for condemnation
are pending.




“Condemnor”:  Any
public or quasi-public authority, or private corporation or individual, having
the power of Condemnation.




“Consumables”:  All
consumable goods and supplies, including inventories of food, beverages,
pharmaceuticals, medical supplies, linens, clothing or similar items utilized in
connection with the operation and/or maintenance of the Facility.




“Deed”:  A Warranty
Deed in form reasonably acceptable to Buyer, conveying the Property to
Buyer.




“Deposit”.  As
defined in Section 2.1.




“Excluded
Assets”.  (a) All cash, cash equivalents and short-term
investments of Seller, as well as any utility deposits or similar security
deposits unrelated to the Property; and (b) all notes, drafts and accounts
receivable not otherwise subject to proration pursuant to the terms of this
Agreement.




“Facility”:  The
land and all related improvements, fixtures and appurtenances of that certain 97
unit independent living, assisted living and Alzheimer’s and commercial clinic
facility commonly known as Trace Pointe and located at  501 East
Northside Drive, Clinton, Mississippi, which land is more particularly described
on Exhibit A
attached hereto




“Flood Hazard
Area”:  An area designated by the Federal Emergency Management
Agency and/or the Secretary of Housing and Urban Development as having special
flood hazards.




“Governmental
Authority”:  The United States, the State or commonwealth,
county, parish, city and political subdivisions in which the Property is located
or which exercise jurisdiction over the Property or the use thereof, and any
court administrator, agency, department, commission, board, bureau or
instrumentality or any of them which exercises jurisdiction over the Property or
the construction or use of the Property.




“Governmental
Requirement”:  Any law, ordinance, order, rule, regulation,
decree or similar edict of a Governmental Authority.




“Hazardous
Substances”:  Collectively, any petroleum, petroleum product or
byproduct or any substance, material or waste regulated or listed pursuant to
any Environmental Law.




“Health Care
License”:  As defined in Section 3.5.




“Intangible
Property”:  All Permits and the following intangible property
or interest therein now or on the Closing Date owned or held by Seller in
connection with the Property: Plans and Specifications, leases, contract rights,
agreements, water rights and reservations, zoning rights, and third-party
warranties.




“Issuing
Agency”:  As defined in Section 3.5.




“Licenses”:  As
defined in Section 3.5.




2


“Management
Agreement”:  That certain Management Agreement dated April 9,
1999, as it may have been amended, between Buyer and Seller regarding the
management of the Facility.




“Net Wire”:  Any
wire transfer by Buyer to Title Insurer, Seller, or other appropriate party
designated by Seller and Buyer for purposes of funding all or a portion of the
acquisition of the Property hereunder.




“Net Wire
Date”:  The date of any Net Wire.




“Organizational
Documents”:  Collectively, as applicable, the articles or
certificate of incorporation, certificate of limited partnership or certificate
of limited liability company, by-laws, partnership agreement, operating company
agreement, trust agreement, statement of partnership, fictitious business name
filings and all other organizational documents relating to the creation,
formation and/or existence of a business entity, together with resolutions of
the board of directors, partner or member consents, trustee certificates,
incumbency certificates and all other documents or instruments approving or
authorizing the transactions contemplated hereby and the Exhibits
hereto.




“Permits”:  All
permits, licenses, approvals, entitlements and other authorizations issued by
Governmental Authorities including certificates of occupancy, those required in
connection with the ownership, planning, development, construction, use,
operation and/or maintenance of each Facility for its Primary Intended Use, and
all amendments, modifications, supplements, general conditions and addenda
thereto, other than any licenses or permits included within the definition of
Additional Property.




“Permitted
Encumbrances”:  Collectively, (i) liens for taxes, assessments
and governmental charges not yet due and payable or delinquent and (ii) such
other title exceptions as Buyer may approve, in its sole and absolute discretion
in accordance with Section 3.9 below.  In addition, any loans secured
by vehicles transferred to Buyer under this Agreement will be Permitted
Encumbrances against such vehicles.




“Person”:  Any
individual, corporation, partnership, joint venture, association, joint stock
company, trust, unincorporated organization, government or any agency or
political subdivision thereof or any other form of entity.




“Personal
Property”:  All of Seller’s right, title and interest in all
Intangible Property and all tangible personal property of every kind and nature
located at, upon or about, or affixed or attached to, or installed in each
Facility or used or to be used primarily in connection with and incorporated
into or otherwise relating to the Facility or its ownership, planning,
development, construction, operation and/or maintenance, including the
following:




All
equipment, machinery, fixtures, furniture and furnishings and other tangible
personal property, including all components thereof, now or on the Closing Date
located in, on or used in connection with the Facility, including all furnaces,
boilers, heaters, electrical equipment, heating, plumbing, lighting,
ventilating, refrigerating, incineration, air and water pollution control, waste
disposal, air cooling and air conditioning systems, apparatus, sprinkler
systems, fire and theft protection equipment, built-in oxygen and vacuum
systems, tools, repair parts, appliances and communications equipment, to the
extent any of the foregoing items are not conveyed to Buyer as part of the
Facility pursuant to the Deed; and




3


Notwithstanding
the foregoing, “Personal
Property” shall not include any of the Additional Property.




“Property”:  The
Facility together with the Personal Property and Additional Property relating to
the Facility, except for Excluded Assets.




“Plans and
Specifications”:  All drawings (including final and complete
“as-builts”), plans, specifications, blueprints, maps, studies, structural
reviews, surveys (including “as-built”) and engineering, soil, seismic,
geologic, architectural and other reports relating to the Property.




“Primary Intended
Use”:  An independent living, assisted living, Alzheimer’s and
commercial clinic facility.




“Purchase
Price”:  As defined in Section 2.1.




“Resident
Agreements”:  Any and all leases, rental and occupancy
agreements, lease commitments, admission and payment documents, reservation
agreements and concessions, all deposits made thereunder, and any and all
resident trust accounts, in each case with respect to the Property.




“State”:  The State
of Mississippi.




“Title
Insurer”:  Chicago Title Insurance Company, Seattle,
Washington, Attn: Michael Beckman.




“Title Policy”:  As
defined in Section 3.4.




“Transaction
Documents”:  Collectively, this Agreement, the Deed, the Bill
of Sale and Assignment, and any other documents and/or instructions executed in
connection with the transaction contemplated by this Agreement and the
Exhibits hereto.




ARTICLE
2




TERMS OF THE
SALE




Sale.  Buyer
shall deposit into an interest bearing escrow account with Title Insurer (i) the
sum of Three Hundred Thousand Dollars ($300,000.00) within five (5) business
days after mutual execution of this Agreement (the “Deposit”).  Any and
all interest accruing on the Deposit shall be for the benefit of
Buyer.  On the Closing Date, subject to the conditions of this
Agreement, Seller agrees to sell to Buyer, and Buyer agrees to purchase from
Seller, the Property for a purchase price in the amount of Fifteen Million Seven
Hundred Eighty Three Thousand Three Hundred Fifty Eight Dollars ($15,783,358.00)
(the “Purchase Price”),
which shall be payable as follows: (a) Thirteen Million Eight Hundred Thirty
Three Thousand Three Hundred Fifty Eight Dollars ($13,833,358.00) in immediately
available funds (subject to adjustment for prorations and closing costs), and
(b) One Million Nine Hundred Fifty Thousand Dollars ($1,950,000.00) (the “Note”) in the form of a
promissory note payable to Seller’s indirect parent entity, B.F. Limited
Partnership LP, which shall be in the form attached hereto as Exhibit
C.  Buyer intends to assign its interest in the Agreement to a
wholly owned subsidiary of Buyer (“Assignee”).  Notwithstanding any
such assignment of Buyer’s interest in the Agreement to Assignee, the aforesaid
promissory note shall be executed by Emeritus Corporation (“Emeritus”) and
Assignee shall not have any liability thereunder.  The Deposit shall
be applied against the Purchase Price




4


at
Closing.  Buyer and Seller hereby agree that the Purchase Price shall
be allocated as may be reasonably determined by Buyer upon consultation with
Seller.




2.1  Closing.  The
Closing shall be held through an escrow or sub-escrow with Title
Insurer.  The parties shall mutually execute and deliver to Title
Insurer, as escrow holder, escrow and/or recording instructions consistent with
this Agreement on or prior to the Closing Date.  In the event of any
conflict between the provisions of this Agreement or any such escrow and/or
recording instructions or any general instructions required by Title Insurer to
be executed by Buyer and Seller in connection therewith, the provisions of this
Agreement shall control.




2.2  Conveyance.  On
the Closing Date, subject to the terms and conditions of this Agreement, Seller
shall deliver, or cause to be delivered, the Deed, the Bill of Sale and
Assignment and such other instruments as shall be necessary to convey, assign or
grant to Buyer good and marketable fee title to the Property, free and clear of
all liens, claims and encumbrances (except for Permitted
Encumbrances).  Buyer will assume liability for any loans securing any
vehicles included within the Property transferred at Closing.  Seller
acknowledges and agrees that as a condition to Buyer’s obligation to close,
Title Insurer shall be irrevocably committed to issue to Buyer a policy of title
insurance showing good and indefeasible title to the real property comprising
the Facility in fee simple vested in Buyer as of the Closing, subject only to
the Permitted Encumbrances applicable to the Property (the “Title
Policy”).  Each party shall execute and deliver such
instruments and take such actions as either party may reasonably request in
order to effectuate the purposes of this Agreement.




(a)  The Deed
shall be sufficient to convey good and indefeasible fee simple title to Buyer
the portion of the Property constituting real property and shall be duly
executed, acknowledged and in recordable form.  The Deed shall be
deemed to include all appurtenances to the subject real property conveyed
thereby, including all right, title and interest, if any, of the grantor in and
to any land lying in the bed of any street adjoining the Property to the center
line thereof, and any existing improvements located on the
Property.




(b)  The Bill
of Sale and Assignment shall be sufficient to convey good and marketable fee
title to the Personal Property to Buyer and shall be duly
executed.  In addition, Seller will execute or obtain and deliver to
Buyer on the Closing Date all other proper instruments for the conveyance of
such title to the Personal Property.




(c)  Seller
shall deliver (i) a “FIRPTA” certificate in form
and substance satisfactory to Buyer and in conformance with Section 1445(b)(2)
of the Code, to the effect that  Seller is not a foreign person and
(ii) such other affidavits or certificates as may be required under applicable
law in order to confirm that Buyer is not required to withhold taxes from the
payment of sale proceeds to Seller.




(d)  Each
party shall execute and deliver any state and/or county real estate transfer tax
declaration of real estate value or other affidavit required in connection with
the recordation of the Deed.




2.3  Prorations.




(a)  The
following shall be prorated between Sellers and Buyers as of the Closing
Date:




5


(i)  Taxes.  All
ad valorem, real estate and personal property taxes and assessments on the
Property payable for the current assessment period in which the Closing Date
occurs, based on the fiscal year of the applicable taxing authority (the “Current Tax
Year”).  Such real estate taxes and assessments shall be
prorated on a per diem basis based upon the number of days in the Current Tax
Year prior to and on the Closing Date (which shall be allocated to Seller) and
the number of days in the Current Tax Year after the Closing Date (which shall
be allocated to Buyer).  Seller shall be responsible for real estate
taxes and assessments on the Property payable in respect to periods prior to the
Current Tax Year.  Upon the Closing Date and subject to the adjustment
provided for above, Buyer shall be responsible for real estate taxes and
assessments on the Property payable in respect to the Current Tax Year and all
periods after the Current Tax Year.  If the Closing shall occur before
the tax rate or the assessed valuation of the Property is fixed for the Current
Tax Year, the apportionment of taxes shall be based upon the applicable tax rate
for the preceding year applied to the latest assessed
valuation.  Subsequent to the Closing, when the tax rate and the
assessed valuation of the Property is fixed for the year in which the Closing
occurs, the parties agree to adjust the proration of taxes and, if necessary, to
refund or repay such sums as shall be necessary to effect such
adjustment.




(ii)  Rents.  All
rentals and other residency or tenant payments, charges and reimbursements
(“Rents”) received in
respect to the month in which the Closing Date occurs (the “Current
Month”).  Such Rents for the Current Month which have been
received as of the Closing Date shall be prorated on a per diem basis based upon
the number of days in the Current Month prior to and on the Closing Date (which
shall be allocated to Seller) and the number of days in the Current Month after
the Closing Date (which shall be allocated to Buyer).  All Rents
received by Buyer from a resident or a tenant after the Closing Date shall first
be applied to any unpaid Rent accrued prior to the Closing Date and Buyer shall
promptly remit to the Seller that portion of Rents received after the Closing
Date attributable to periods prior to the Current Month, and if attributable to
the Current Month, Seller’s share thereof in accordance with the proration set
forth above.  If Seller shall receive any Rents after Closing, such
Seller shall promptly deliver such Rents to Buyer to the extent the same are
payable to Buyer as provided above.  Buyer shall exercise commercially
reasonable efforts to collect Rents on behalf of Seller.   Seller
shall be solely responsible for any third-party costs or expenses incurred by
Buyer in connection with the collection of rents from private party residents,
so long as Seller has approved such costs in writing in advance.




(iii)  Operating
Expenses.  All operating expenses of the
Facility.  As to each service provider, operating expenses payable or
paid to such service provider with respect to the billing period of such service
provider in which the Closing Date occurs (the “Current Billing Period”),
shall be prorated on a per diem basis based upon the number of days in the
Current Billing Period prior to and on the Closing Date (which shall be
allocated to Seller) and the number of days in the Current Billing Period after
the Closing Date (which shall be allocated to Buyer), and assuming that all
charges are incurred uniformly during the Current Billing Period.  An
amount equal to the amount of operating expenses actually prepaid by Seller to a
service provider for services to be performed after the Closing Date shall be
reimbursed to Seller by Buyer at Closing.  If actual bills for the
Current Billing Period are unavailable as of the Closing Date, then such
proration shall be made on an estimated basis based upon the most recently
issued bills, subject to readjustment upon receipt of actual
bills.  Seller shall be entitled to a credit at Closing for deposits
Seller may have with any such service providers.  Buyer, as the
current manager of the Facility, shall continue to purchase Consumables in
quantities consistent with its regular business practice.  To the
extent the




6


inventory
of Consumables at the Facility exceeds a seven (7) day supply for the Facility
as of Closing, Seller shall be entitled to a credit for such excess
Consumables.




(iv)  Prepaid
Rents.  Prepaid rentals and other resident or tenant charges
received by Seller for periods after the Current Month, shall be credited in
favor of Buyer against the Purchase Price.




(b)  None of
the insurance policies relating to the Property that are carried by Seller will
be assigned to Buyer (and Seller shall pay any cancellation fees resulting from
the termination of such policies) and Buyer shall be responsible for arranging
for its own insurance as of the Closing Date.  Seller and Buyer
acknowledge that Buyer, as a manager of the Facility, carries certain insurance
coverages and such policies shall not be terminated pursuant to the
foregoing,




(c)  As
manager of the Facility, Buyer employs all employees performing services at the
Facility.  Seller shall (i) be solely responsible for payment of all
wages, salaries and benefits of all employees through the Closing Date, and (ii)
credit to Buyer an amount equal to holiday, vacation, sick or other paid time
off accrued through the Closing Date for all employees performing services at
the Facility.




(d)  The
prorations and payments shall be made on the basis of a written statement
submitted by Escrow Holder to Buyer and Seller prior to the Closing Date and
approved by Buyer and Seller.  In the event any prorations or
apportionments made hereunder shall prove to be incorrect for any reason or the
information related to the same is not available as of the Closing Date, then
any party shall be entitled to an adjustment to correct the same.  The
parties shall cooperate with each other in order to complete all pro-rations in
a manner consistent with past practices between the Seller and Buyer within
forty five (45) days after Closing.




2.4  Costs.  Seller
and Buyer, as applicable, shall pay the following:




(a)  Buyer
shall pay the State documentary stamps and recording costs in connection with
the delivery and recordation of the Deed




(b)  Seller
shall pay all State transfer taxes, if any, in connection with the sale of the
Property hereunder;




(c)  Seller
shall pay all costs and premiums related to the issuance of the standard form
owner’s title insurance commitment and policy and one-half (1/2) of all escrow
fees and charges;




(d)  Buyer
shall pay all expenses related to the issuances of any lender’s title insurance
policy and owner’s extended title insurance commitment and policy and the cost
of any endorsements to the Title Policy requested by Buyer and one-half (1/2) of
all escrow fees and charges;




(e)  Buyer
shall pay the charges for recording any documents related to Buyer’s financing
of the purchase of the Property;




7


(f)  Seller
shall pay Seller’s legal, accounting and other professional fees and expenses
and the cost of all instruments and documents required to be delivered, or to be
caused to be delivered, by Seller hereunder;




(g)  Buyer
shall pay Buyer’s legal, accounting and other professional fees and expenses and
the cost of all instruments and documents required to be delivered, or to be
caused to be delivered, by Seller hereunder;




(h)  Seller
shall pay any other costs customarily allocated to a seller of real property in
the State of Mississippi; and




(i)  Buyer
shall pay any other costs customarily allocated to a buyer of real property in
the State of Mississippi.




ARTICLE
3




CONDITIONS TO THE OBLIGATION
OF BUYER TO CLOSE




The
obligations of Buyer hereunder are subject to the satisfaction or waiver by
Buyer of the following conditions.  Should any condition set forth in
this Article 3 not be fulfilled or waived on the Closing Date to the
satisfaction of Buyer, Buyer shall, at its option, without waiving any rights
provided in this Agreement, be relieved of all obligations
hereunder.




3.1  Performance.  Seller
shall have performed in all material respects each and all of the covenants and
obligations required to be performed by it on or prior to the
Closing.




3.2  Representations and
Warranties.  Each and all of the representations and warranties
of Seller hereunder shall be in all material respects true and correct on and as
of the Closing Date, as though given as of the Closing Date, and Seller shall
have delivered to Buyer officers’ certificates to that effect.




3.3  Recordation and
Costs.  Seller shall (a) have made arrangements for the
Deed to be recorded or filed in the manner required by the laws of the State,
and (b) pay, or arrange to be paid, all costs and fees to be paid by Seller
pursuant to Section 2.5.




3.4  Entitlements.  Buyer
shall have received evidence satisfactory to it that (i) the Facility holds all
licenses, permits, accreditations, authorizations and certifications from all
applicable Governmental Authorities required for the operation thereof for its
Primary Intended Use (collectively, the “Licenses”), including a
license to operate an assisted living facility on the Property in conformance
with Governmental Requirements (the “Health Care License”) from the
applicable Government Authority(ies) (the “Issuing Agency”); Buyer must
make all reasonable efforts to diligently pursue the acquisition of the Health
Care License from the Issuing Agency.




3.5  Condemnation;
Casualty.  No Condemnation shall be pending or threatened with
respect to the Property and no casualty shall have occurred with respect to the
Property or any portion thereof that has resulted in damage to such Property
that would materially affect the operation of the subject Facility.




3.6  Transaction
Documents.  Seller shall have executed and delivered to Title
Insurer to hold in escrow the Bill of Sale and Assignment.




8


3.7  Due
Diligence.  Until the Closing Date or the earlier termination
of this Agreement, Seller shall provide Buyer and its agents and representatives
with access to the Property.  Seller will provide access to all other
relevant information regarding the Property to the extent such information is in
the possession or control of Seller.  Commencing on the Effective Date
and continuing until 5:00 p.m. (Pacific Time) on September 29, 2009 (the “Due Diligence Period”), Buyer
shall have the opportunity to perform and complete, at its sole expense, its due
diligence review, examination and inspection of all matters pertaining to the
Property, including the Resident Agreements, the commercial leases, service
contracts, and all financial, licensing, employment, physical, environmental and
compliance matters, entitlements and other conditions relating to the
Property.  Buyer shall at all times conduct such due diligence at
reasonable times and upon reasonable notice, in compliance with applicable law,
and in a manner so as to not unreasonably interfere with or disturb the
operation of the Facility, and Buyers shall promptly restore the Property to
their condition immediately preceding such inspections and examinations and
shall keep the Property free and clear of any mechanic’s liens or materialmen’s
liens in connection with such inspections and investigations.  Any
intrusive physical testing (environmental, structural or otherwise) at the
Property such as soil borings or the like) shall be conducted by Buyer only
after obtaining Seller’s prior written consent to such testing, which consent
shall not be unreasonably withheld.  Buyers shall be liable for all
property damage or personal injury solely resulting from, relating to or arising
out of any inspection or examinations of the Property by the acts of Buyer or
any of its employees, agents, representatives or contractors, and Buyer shall
indemnify, protect, defend and hold harmless Seller and their respective agents,
employees, officers, directors, affiliates, and tenants from and against any
damages, claims, liabilities, costs and expenses, including reasonable
attorneys’ fees, arising therefrom.  This indemnification by Buyer
shall survive the Closing or the termination of this Agreement, as
applicable.  If, on or before the expiration of the Due Diligence
Period, Buyer determines that it shall proceed with the acquisition of the
Property, then Buyer shall promptly notify Seller and Title Insurer of such
determination in writing (the “Approval
Notice”).  If, however, on or before the expiration of the Due
Diligence Period, (i) Buyer shall notify Seller in writing that it has
determined, in its sole and absolute discretion that Buyer will not acquire the
Property, or (ii) Buyer shall fail to deliver the Approval Notice to Seller
on or before the expiration of the Due Diligence Period, this Agreement, and the
obligations of the parties (excluding any obligations which expressly survive
termination), shall terminate and the Deposit shall be returned to
Buyer.  Upon expiration of the Due Diligence Period, the Deposit shall
be non-refundable to Buyer; provided, however, if the failure to close arises
from a breach of Seller’s obligations hereunder, the Deposit shall be delivered
to Buyer in accordance with Section 7.14 below.




3.8  Seller
shall provide Buyer,: (i) a preliminary commitment for ALTA standard coverage
title insurance (the “Commitment”) showing marketable title to the Facility in
Seller issued by Chicago Title Insurance Company (the “Title Company”), together
with correct, complete and legible copies of all recorded instruments referenced
in the Commitment as conditions or exceptions to title to the Real Property,
including liens; and (ii) any and all existing surveys of the Property in
Seller's possession.  By written notice to Seller no later than
September 29, 2009, if Buyer is not satisfied with the condition of title in its
sole discretion, Buyer shall be entitled (i) to terminate this Agreement, or
(ii) to object to any of the exceptions to title or any other condition
appearing in the Commitment, and to condition its acquisition of the Property
upon the release, discharge or removal of said objected matters from the Title
Policy.  If Buyer fails to give written notice waiving objections
regarding the Commitment prior to September 29, 2009, Buyer shall be deemed to
have elected to have waived its right to object to any title
matter.  If Buyer makes any such objections regarding the Commitment,
Seller shall notify Buyer in writing, prior to the Closing Date, whether or not
Seller shall cure such objected




9


matters
prior to closing.  If Seller does not deliver a response to Buyer’s
objection notice by the Closing Date, Seller shall be deemed to have elected not
to cure the objected matters.  In the event Seller elects not to cure
all of the objected matters at or prior to Closing, Buyer may elect to waive
such objected matters which Seller declines to cure or to terminate this
Agreement by written notice to Seller.  Buyer’s failure to make such
an election shall be deemed to be Buyer’s election to terminate this
Agreement.  In the event Buyer elects to terminate this Agreement, the
Deposit shall be returned to Buyer and any and all rights or obligations of
Seller and Buyer under this Agreement (except those which expressly survive the
termination hereof) shall terminate and be of no further force or
effect.




ARTICLE
4




CONDITIONS TO THE OBLIGATION
OF SELLER TO CLOSE




The
obligations of Seller hereunder are subject to the satisfaction by Buyer or
waiver by Seller of the following conditions:




4.1  Performance.  Buyer
shall have performed in all material respects each and all of the covenants and
obligations required to be performed by it on or prior to the
Closing.




4.2  Representations and
Warranties.  Each and all of the representations and warranties
of Buyer hereunder shall be in all material respects true and correct on and as
of the Closing Date, as though given as of the Closing Date.




ARTICLE
5




REPRESENTATIONS, WARRANTIES
AND COVENANTS




5.1  By
Seller.  Seller represents and warrants to Buyer as
follows:




5.1.1  Seller is
duly organized, validly existing and in good standing under the laws of its
state of organization/formation, and has full power, authority and legal right
to execute and deliver this Agreement and to perform its obligations under this
Agreement.  In addition, Seller is qualified to do business and is in
good standing in the State.




5.1.2  This
Agreement has been, and on the Closing Date, the applicable Transaction
Documents and all other documents to be executed by Seller hereunder will have
been, duly authorized, executed and delivered by Seller, as applicable, and
constitute and will constitute the valid and binding obligations of Seller
enforceable against it in accordance with their respective terms.




5.1.3  Seller is
solvent, has timely and accurately filed all tax returns required to be filed by
it, and to Seller’s knowledge, Seller is not in default in the payment of any
taxes levied or assessed against it or any of its assets, or subject to any
judgment, order, decree, rule or regulation of any Governmental Authority which
would, in each case or in the aggregate, materially and adversely affect its
condition, financial or otherwise, or its prospects, the Property or the
transactions contemplated hereunder.




5.1.4  To
Seller’s knowledge, no consent, approval or other authorization of, or
registration, declaration or filing with, any Governmental Authority is required
for the due execution and delivery of this Agreement, or for the performance of
Seller’s obligations under this Agreement.




10


5.1.5  To
Seller’s knowledge, there are no actions or proceedings, including Condemnation
proceedings or tax audits, pending or threatened, against or affecting Seller,
or the Property, seeking to enjoin, challenge or collect damages in connection
with the transactions contemplated hereunder or which could reasonably be
expected to materially and adversely affect the financial condition or
operations of Seller, or any Facility or the ability of Seller to carry out the
transactions contemplated hereunder.




5.1.6  To
Seller’s knowledge, the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereunder, will not result in (a)
a breach or violation of (i) any Governmental Requirement applicable to Seller,;
(ii) the Organizational Documents of Seller; (iii) any judgment, order or decree
of any Governmental Authority binding upon Seller; or (iv) any agreement or
instrument to which Seller is a party or by which it is bound; or (b) the
acceleration of any obligation of Seller.




5.1.7  To
Seller’s knowledge and except as otherwise disclosed to Buyer in connection with
Buyer’s review of the Property, (a) there are no underground tanks or Hazardous
Substances currently located on any of the Property; (b) no enforcement,
cleanup, removal or other governmental or regulatory actions are currently
pending or threatened with respect to any of the Property; (c) there is no
outstanding violation of any environmental law relating to Hazardous Substances
with respect to any of the Property; and (d) no claims have been made or
threatened by any third party with respect to any of the Property relating to
damage, contribution, cost recovery, compensation, loss or injury resulting from
or related to any release of any Hazardous Substance.




5.1.8  INTENTIONALLY
OMITTED.




5.1.9  Seller is
not a foreign person for purposes of Section 1445 of the Code.




5.2  By
Buyer.  Buyer represents and warrants as follows:




5.2.1  Buyer is
duly organized, validly existing and, to the extent applicable, in good standing
under the laws of the state of its organization/formation; is, or will be on the
Closing Date, duly qualified and authorized to do business in the State, to the
extent such qualification is required to perform its obligations hereunder or
under any Transaction Document; and has or will have on the Closing Date, full
power, authority and legal right to execute and deliver and to perform and
observe the provisions of this Agreement, and all other instruments provided for
herein to which it is a party, and otherwise carry out the transactions
contemplated hereunder and the Exhibits hereto.




5.2.2  This
Agreement has been, and on the Closing Date all other documents to be delivered
by Buyer pursuant to this Agreement will have been, duly authorized, executed
and delivered by Buyer and constitute, and will constitute, the valid and
binding obligations of Buyer, enforceable against Buyer in accordance with their
respective terms.




11


ARTICLE
6




COVENANTS OF THE PARTIES AND
OTHER MATTERS




6.1  Covenants of
Seller.  To the extent the following matters are or can be
controlled or directed by Seller, prior to the Closing Date, Seller
shall:




(a)  not amend
or permit to be amended any material agreement related to the Property without
Buyer’s consent, which shall not be unreasonably withheld;




(b)  timely
pay all property, sales and withholding taxes and all ad valorem and other
taxes, liens and charges upon the Property and business operated thereon as they
become due through the Closing Date;




(c)  not
dispose of or encumber or permit the disposition or encumbrance of the Property
or any portion thereof, except for Property which is consumed or replaced in the
ordinary course of business;




(d)  not enter
into or assume or permit to be entered into or assumed any material contract
related to the Property except as contemplated hereunder;




(e)  not do
any act or omit any act which would cause a breach of any contract, commitment
or obligation which would have a material and adverse effect on the Property or
the business conducted thereon;




(f)  permit
the officers, attorneys, accountants, and other authorized representatives of
Buyer access during normal business hours to the Property and to the books and
records related to the Property and the business conducted thereon in order to
afford Buyer such opportunity of review, examination and investigation as Buyer
shall desire with respect to the same and permit Buyer to make extracts from,
and take copies of, such books and records as may be reasonably necessary for
such purposes;




(g)  shall
cooperate with Buyer in notifying all Governmental Authorities required by law
regarding the transfer of the Property;




(h)  take all
action as may be necessary to comply promptly with any and all Governmental
Requirements affecting the Property and all orders of any board of fire
underwriters or other similar bodies in connection with the making of repairs
and alterations, and promptly, and in no event later than forty eight (48) hours
from the time of its receipt, notify Buyer of any failure of Seller to comply
with the same; and




(i)  INTENTIONALLY
OMITTED.




(j)           Buyer
acknowledges that as manager of the facility, Buyer will also comply with terms
set forth in section 6.1, to the extent such matters are or can be controlled
by  Buyer.




6.2  Notification of
Changes.  At any time at or prior to the Closing Date, Seller
shall promptly notify Buyer of any event or circumstance of which Seller becomes
aware which makes any representation or warranty of Seller contained herein
untrue or misleading in any material respect; provided, however, Seller shall
not have any obligation to provide notice to




12


Buyer
with respect to matters within Buyer’s actual knowledge in connection with
Buyer’s management of the Facility.




6.3  Effect
Transaction.  Seller shall take all actions necessary or
desirable to effect the transactions contemplated herein.




6.4  Indemnification.




(a)  Seller
hereby agrees to indemnify, protect, defend and hold harmless Buyer from and
against any and all loss, cost or expense, including reasonable attorneys’ fees,
arising from (i) the breach of any representation or warranty of Seller
contained herein; and (ii) the failure of Seller to perform any covenant
contained herein.




(b)  Subject
to the limitations set forth in Section 7.15 below, Buyer hereby agrees to
indemnify, protect, defend and hold harmless Seller from and against any and all
loss, cost or expense, including reasonable attorneys’ fees, arising from (i)
the breach of any representation or warranty of Buyer contained herein; and (ii)
the failure of Buyer to perform any covenant contained
herein.  Payment shall not be a condition precedent to recovery under
the foregoing indemnification provision.




ARTICLE
7




MISCELLANEOUS




7.1  Survival.  All
covenants, representations and warranties made by Seller and Buyer hereunder or
in any certificates or other instruments delivered pursuant to this Agreement
shall survive the execution and delivery of this Agreement and recordation of
the Deed; provided, however, that Seller's representations and warranties under
this Agreement will expire on the first anniversary of the Closing Date, and
will have no effect thereafter.




7.2  Brokers.  Seller
and Buyer each represents to the other that to the best of its knowledge, no
brokerage commission, finder’s fee or other compensation of any kind is due or
owing to any person or entity in connection with the transactions contemplated
hereunder.  Each party hereby agrees that if any person or entity
makes a claim for brokerage commissions or finder’s fees related to the sale of
the Property by Seller to Buyer, and such claim is made by, through or on
account of any acts or alleged acts of said party or its representatives, then
said party will protect, indemnify, defend and hold the other party free and
harmless from and against any and all loss, liability, cost, damage and expense
(including reasonable attorneys’ fees) in connection therewith.  The
provisions of this paragraph shall survive Closing or any termination of this
Agreement.




7.3  Notices.  Any
notice, consent, approval, demand or other communication required or permitted
to be given hereunder (a “notice”) must be in writing
and may be served personally or by U.S. Mail.  If served by U.S. Mail,
it shall be addressed as follows:




If
      to Buyer:
            c/o
      Emeritus Corporation


Attn:  Eric
      Mendelsohn, Senior Vice President, Corporate
  Development


3131
      Elliott Avenue, Suite 500


Seattle,
      Washington 98121-1031


Fax:  (206)
      301-4493





13


with
      a copy to:
            Riddell
      Williams, P.S.


Attn:
David D. Buck


1001
Fourth Avenue Plaza


Suite
4500


Seattle,
Washington 98154


Fax:  (206)
389-1708








If
      to Seller:
            CLINTON
      ASSISTED LIVING LLC


Attn:
      Kathy Mackey


1910
      Fairview Avenue E., Suite 500


Seattle,
      WA 98102





with
      a copy to:
            Columbia
      Pacific


Attn:
      Meredith Baty


1910
      Fairview Avenue E., Suite 500


Seattle,
      WA 98102








Any
notice which is personally served shall be effective upon the date of service;
any notice given by U.S. Mail shall be deemed effectively given, if deposited in
the United States Mail, registered or certified with return receipt requested,
postage prepaid and addressed as provided above, on the date of receipt, refusal
or non-delivery indicated on the return receipt.  In addition, either
party may send notices by facsimile or by a nationally recognized overnight
courier service which provides written proof of delivery (such as U.P.S. or
Federal Express).  Any notice sent by facsimile shall be effective
upon confirmation of receipt in legible form, and any notice sent by a
nationally recognized overnight courier shall be effective on the date of
delivery to the party at its address specified above as set forth in the
courier’s delivery receipt.  Either party may, by notice to the other
from time to time in the manner herein provided, specify a different address for
notice purposes.




7.4  Attorneys’
Fees.  If Buyer or Seller brings an action at law or other
proceeding against the others to enforce any of the terms, covenants or
conditions hereof or any instrument executed pursuant to this Agreement, or by
reason of any breach or default hereunder or thereunder, the party prevailing in
any such action or proceeding and any appeal thereupon shall be paid all of its
costs and attorneys’ fees.




7.5  Successors.  This
Agreement shall be binding upon Buyer, Seller and their respective successors
and assigns.  Buyer shall have the right to assign its interest in
this Agreement to Emeritrace LLC, a Delaware limited liability company, a
subsidiary of Buyer, without the prior consent of Seller provided that the Note
shall be made by Emeritus Corporation.




7.6  Waiver.  No
delay in exercising any right or remedy shall constitute a waiver thereof, and
no waiver by Buyer or Seller of a breach of any covenant of this Agreement shall
be construed as a waiver of any preceding or succeeding breach of the same or
any other covenant or condition of this Agreement.




7.7  Invalidity.  In
the event any one or more of the provisions contained in this Agreement shall,
for any reason, be held to be invalid, illegal or unenforceable in any
respect,




14


such
invalidity, illegality or unenforceability shall not affect any other provision
of this Agreement.




7.8  Governing
Law.  If any provision of this Agreement shall require judicial
interpretation, it is agreed that the court interpreting or construing the same
shall not construe this Agreement against one party more strictly by reason of
any rule of interpretation which relates to the source of preparation of a
document, it being agreed that the agents of all parties have participated in
the preparation of this Agreement and that legal counsel was consulted by each
party prior to its execution hereof.  This Agreement shall be governed
by and construed in accordance with the laws of the State of Mississippi,
without regard to its laws regarding conflicts of laws.




7.9  Waiver of Trial by
Jury.  TO THE EXTENT PERMITTED BY LAW, EACH OF BUYER AND SELLER
ACKNOWLEDGES THAT IT HAS HAD THE ADVICE OF COUNSEL OF ITS CHOICE WITH RESPECT TO
ITS RIGHTS TO TRIAL BY JURY UNDER THE CONSTITUTION OF THE UNITED STATES, THE
STATE OF MISSISSIPPI.  EACH OF BUYER AND SELLER HEREBY EXPRESSLY
WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION (i) ARISING UNDER THIS AGREEMENT (OR ANY AGREEMENT FORMED PURSUANT TO THE
TERMS HEREOF) OR (ii) IN ANY MANNER CONNECTED WITH OR RELATED OR INCIDENTAL TO
THE DEALINGS OF BUYER AND SELLER WITH RESPECT TO THIS AGREEMENT (OR ANY
AGREEMENT FORMED PURSUANT TO THE TERMS HEREOF) OR ANY OTHER INSTRUMENT, DOCUMENT
OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS
RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREINAFTER
ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; EACH OF BUYER
AND SELLER HEREBY AGREES AND CONSENTS THAT, SUBJECT TO SECTION 7.13, ANY SUCH
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY A COURT TRIAL
WITHOUT A JURY, AND THAT EITHER PARTY MAY FILE A COPY OF THIS SECTION WITH ANY
COURT AS CONCLUSIVE EVIDENCE OF THE CONSENT OF EACH SUCH PARTY TO THE WAIVER OF
ITS RIGHT TO TRIAL BY JURY.




BUYER’S
INITIALS: /s/
EM_                             SELLER’S
INITIALS:_______




7.10  Bulk
Sales.  Buyer and Seller hereby waive compliance with the
notice provisions of any bulk sales statute in effect in the
State.  Seller shall indemnify, defend and hold harmless Buyer from
and against any and all claims, losses, damages, liabilities, costs and expenses
(including reasonable legal fees and expenses) paid or incurred by Buyer and
arising directly or indirectly out of noncompliance with bulk sales
statutes.




7.11  INTENTIONALLY
OMITTED.




7.12  Counterparts.  This
Agreement may be executed in any number of counterparts, each of which shall be
a valid and binding original, but all of which together shall constitute one and
the same instrument.




7.13  ARBITRATION OF
DISPUTES




(a)  EXCEPT AS
PROVIDED IN SECTION 7.13(B) BELOW, ANY CONTROVERSY, DISPUTE OR CLAIM OF
WHATSOEVER NATURE ARISING OUT OF, IN CONNECTION WITH, OR IN RELATION TO THE
INTERPRETATION, PERFORMANCE OR




15


BREACH OF
THIS AGREEMENT, INCLUDING ANY CLAIM BASED ON CONTRACT, TORT OR STATUTE, SHALL BE
DETERMINED BY FINAL AND BINDING, CONFIDENTIAL ARBITRATION ADMINISTERED BY THE
AMERICAN ARBITRATION ASSOCIATION (“AAA”) IN SEATTLE, WASHINGTON,
IN ACCORDANCE WITH ITS THEN-EXISTING COMMERCIAL ARBITRATION RULES, AND THE SOLE
ARBITRATOR SHALL BE SELECTED IN ACCORDANCE WITH SUCH AAA RULES.  ANY
ARBITRATION HEREUNDER SHALL BE GOVERNED BY THE UNITED STATES ARBITRATION ACT, 9
U.S.C. 1-16 (OR ANY SUCCESSOR LEGISLATION THERETO), AND JUDGMENT UPON THE AWARD
RENDERED BY THE ARBITRATOR MAY BE ENTERED BY ANY STATE OR FEDERAL COURT HAVING
JURISDICTION THEREOF.  NEITHER BUYER, SELLER NOR THE ARBITRATOR SHALL
DISCLOSE THE EXISTENCE, CONTENT OR RESULTS OF ANY ARBITRATION HEREUNDER WITHOUT
THE PRIOR WRITTEN CONSENT OF ALL PARTIES; PROVIDED, HOWEVER, THAT EITHER
PARTY MAY DISCLOSE THE EXISTENCE, CONTENT OR RESULTS OF ANY SUCH ARBITRATION TO
ITS PARTNERS, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, ATTORNEYS AND ACCOUNTANTS
AND TO ANY OTHER PERSON TO WHOM DISCLOSURE IS REQUIRED BY APPLICABLE
GOVERNMENTAL REQUIREMENTS, INCLUDING PURSUANT TO AN ORDER OF A COURT OF
COMPETENT JURISDICTION.  UNLESS OTHERWISE AGREED BY THE PARTIES, ANY
ARBITRATION HEREUNDER SHALL BE HELD AT A NEUTRAL LOCATION SELECTED BY THE
ARBITRATOR IN SEATTLE, WASHINGTON.  THE COST OF THE ARBITRATOR AND THE
EXPENSES RELATING TO THE ARBITRATION (EXCLUSIVE OF LEGAL FEES) SHALL BE BORNE
EQUALLY BY BUYER AND SELLER UNLESS OTHERWISE SPECIFIED IN THE AWARD OF THE
ARBITRATOR.  SUCH FEES AND COSTS PAID OR PAYABLE TO THE ARBITRATOR
SHALL BE INCLUDED IN “COSTS AND ATTORNEYS’ FEES” FOR PURPOSES OF SECTION 7.4 AND
THE ARBITRATOR SHALL SPECIFICALLY HAVE THE POWER TO AWARD TO THE PREVAILING
PARTY PURSUANT TO SUCH SECTION 7.4 SUCH PARTY’S COSTS AND EXPENSES INCURRED
IN SUCH ARBITRATION, INCLUDING FEES AND COSTS PAID TO THE
ARBITRATOR.




(b)  THE
PROVISIONS OF THIS SECTION 7.13 SHALL NOT APPLY TO ANY REQUEST OR APPLICATION
FOR AN ORDER OR DECREE GRANTING ANY PROVISIONAL OR ANCILLARY REMEDY (SUCH AS A
TEMPORARY RESTRAINING ORDER OR INJUNCTION) WITH RESPECT TO ANY RIGHT OR
OBLIGATION OF EITHER PARTY TO THIS AGREEMENT, AND ANY PRELIMINARY DETERMINATION
OF THE UNDERLYING CONTROVERSY, DISPUTE, QUESTION OR ISSUE AS IS REQUIRED TO
DETERMINE WHETHER OR NOT TO GRANT SUCH RELIEF.  A FINAL AND BINDING
DETERMINATION OF SUCH UNDERLYING CONTROVERSY, DISPUTE, QUESTION OR ISSUE SHALL
BE MADE BY AN ARBITRATION CONDUCTED PURSUANT TO THIS SECTION 7.13 AFTER AN
APPROPRIATE TRANSFER OR REFERENCE TO THE ARBITRATOR SELECTED PURSUANT TO THIS
SECTION 7.13 UPON MOTION OR APPLICATION OF EITHER PARTY HERETO.  ANY
ANCILLARY OR PROVISIONAL RELIEF WHICH IS GRANTED PURSUANT TO THIS SECTION
7.13(B) SHALL CONTINUE IN EFFECT PENDING AN ARBITRATION DETERMINATION AND ENTRY
OF JUDGMENT THEREON PURSUANT TO THIS SECTION 7.13.




7.14  Buyer’s
Remedies.  In the event that Seller shall fail to comply with
any material provision of this Agreement or to consummate the Closing, for any
reason other than Buyer’s default or failure to satisfy a condition to Closing
for which Buyer is responsible, Buyer, as its sole and exclusive remedies, may
either (i) terminate this Agreement, whereupon this Agreement shall be
terminated and neither party shall have any further obligations hereunder other
than such obligations that expressly survive termination of this Agreement, in
which case




16


Buyer
shall be entitled to receive a refund of the Deposit plus an amount sufficient
to recover all of Buyer’s out-of-pocket costs incurred in connection with the
transaction contemplated herein up to an aggregate amount of Fifty Thousand
Dollars ($50,000.00); or (ii) initiate and prosecute an action for the specific
performance by Seller of its obligations under this Agreement, provided that any
such suit for specific performance must be brought within two years after
Seller’s default.




7.15  Seller’s
Remedies.  If the Closing does not occur solely as a result of
Buyer’s default under this Agreement (all conditions to Buyer’s obligations
having been satisfied or waived), Seller, as its sole and exclusive remedy, may
elect to terminate this Agreement and receive the Deposit as liquidated damages
(and not as a penalty) whereupon Title Insurer shall promptly pay the Deposit to
Seller upon written notice given by Seller, this Agreement shall terminate and
neither Seller nor Buyer shall have any further obligations hereunder to the
other except for such obligations that expressly survive termination of this
Agreement.  Such liquidated damages are not intended as a forfeiture
or penalty within the meaning of applicable laws.  Seller and Buyer
have made this provision for liquidated damages because it would be difficult to
calculate, on the date hereof, the amount of actual damages for such default,
and Seller and Buyer agree that the Deposit represents reasonable compensation
to Seller for any such default.




7.16  Entire
Agreement.  This Agreement constitutes the entire agreement of
the parties in respect of the subject matter hereof, and may not be changed or
modified except by an agreement in writing signed by the parties.




[Signature
Page Follows]




17


IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
effective as of the day and year first above written.




“Seller”
              CLINTON ASSISTED LIVING,
      LLC, a
              Washington
      limited liability company
              By           C.P.
      '99 POOL GENERAL PARTNERSHIP, its sole member
              By           COLUMBIA
      PACIFIC GROWTH FUND '99 L.P., its general partner
              
              By                      B.F.,
      LIMITED PARTNERSHIP, its
              general
      partner
              
              By
      COLUMBIA PACIFIC GROUP, INC., its general partner
              
              
              By
      /s/ Brandon D.
      Baty
              Brandon
      D. Baty, President
              Brandon
      D. Baty, President
            “Buyer”
              EMERITUS
      CORPORATION,
              a
      Washington corporation
              By:/s/ Eric Mendelsohn
              Eric
      Mendelsohn
              Its:SVP Corporate Development





18


EXHIBIT
A




LEGAL
DESCRIPTION




Begin at
the Northeast Corner of Lot 9, Kentwood Sub., Part 1, Clinton, Hinds County,
Mississippi; thence North 0 degrees 47 minutes 18 seconds West 184.80 feet to
point on the South R/W Line of Northside Drive; thence North 89 degrees 11
minutes 40 seconds East 809.28 feet along said South R/W Line; thence leaving
said R/W South 1 degree 38 minutes 08 seconds East 1,041.38 feet; thence North
82 degrees 43 minutes 20 seconds West 237.50 feet; thence North 52 degrees 43
minutes 42 seconds West 300.93 feet; thence North 63 degrees 01 minutes 02
seconds West 242.67 feet; thence South 11 degrees 52 minutes 20 seconds West
186.72 feet; thence South 89 degrees 58 minutes 07 seconds West 96.95 feet;
thence North 00 degrees 47 minutes 18 seconds West 705.21 feet to the Point of
Beginning and being part of the NW 1/4 of the SE 114 of Section 20, T-6-N,
R-1-W, Clinton, Hinds County, Mississippi.














A
- 1


EXHIBIT
B









FORM
OF BILL OF SALE















Exhibit
A




LEGAL DESCRIPTION OF THE
LAND





Begin at
the Northeast Corner of Lot 9, Kentwood Sub., Part 1, Clinton, Hinds County,
Mississippi; thence North 0 degrees 47 minutes 18 seconds West 184.80 feet to
point on the South R/W Line of Northside Drive; thence North 89 degrees 11
minutes 40 seconds East 809.28 feet along said South R/W Line; thence leaving
said R/W South 1 degree 38 minutes 08 seconds East 1,041.38 feet; thence North
82 degrees 43 minutes 20 seconds West 237.50 feet; thence North 52 degrees 43
minutes 42 seconds West 300.93 feet; thence North 63 degrees 01 minutes 02
seconds West 242.67 feet; thence South 11 degrees 52 minutes 20 seconds West
186.72 feet; thence South 89 degrees 58 minutes 07 seconds West 96.95 feet;
thence North 00 degrees 47 minutes 18 seconds West 705.21 feet to the Point of
Beginning and being part of the NW 1/4 of the SE 114 of Section 20, T-6-N,
R-1-W, Clinton, Hinds County, Mississippi.


C
- 1


Exhibit
B





LIST OF EQUIPMENT
LEASES











NONE












D


EXHIBIT
C




FORM
OF PROMISSORY NOTE














PROMISSORY
NOTE







E