FIRST AMENDMENT TO LEASE AND WORKING CAPITAL AGREEMENT

     THIS AGREEMENT     is made and entered into as of the 2nd day of July, 2002
by  and  between  Sacramento  County  Assisted,  LLC  ("Landlord")  and Emeritus
Corporation  ("Tenant").

                                    RECITALS

A.     By  Lease  Agreement dated February 21, 2002 Landlord leased to RAL, Inc.
("RAL")  the residential care facility for the elderly located at 780 Harrington
Way,  Folsom,  California  and  commonly known as Willow Creek (the "Facility").

     B.     By  Working Capital Agreement dated February 21, 2002, 2002 Landlord
agreed  , subject to certain terms and conditions, to provide to RAL any working
capital needed in connection with the operation of the Facility in the event the
cash receipts of the Facility are not, at any time, sufficient to pay all of the
expenses  incurred  by  RAL  in  the  operation  of  the  Facility.

     C.  By  Assignment  and  Assumption  Agreement  and  Release  of  even date
herewith,  RAL  assigned  to  Tenant and Tenant took and assumed from RAL all of
RAL's  right,  title  and interest in and to and obligations under the Lease and
the  Working  Capital  Agreement  and  Landlord  released RAL from any liability
thereunder  from  and  after  the  Effective  Date  (as  defined  below).

     D.  Landlord  and Tenant are now interested in amending in certain respects
the  Lease  and  the  Working  Capital  Agreement  as  of  the  Effective  Date.

     E. Each of the Lease and the Working Capital Agreement provides that it may
be  amended  by  written  instrument  signed  by  the  parties  thereto.

     NOW,  THEREFORE,  in consideration of the foregoing premises and the mutual
covenants  of  the  parties  set  forth  herein, IT IS HEREBY AGREED AS FOLLOWS:

1.     LEASE  AMENDMENTS.  The  Lease shall be and hereby is amended as follows:

(a)     Section 3.1 is hereby deleted in its entirety and the following inserted
     in  lieu  thereof:

The  term of this Lease  (the "Term") shall commence on the date on which Tenant
is  licensed  to operate the Facility (the "Commencement Date").  This Agreement
may  be  terminated  by either Landlord or Tenant, with or without cause, at any
time  upon  giving  (i)  at  least ninety (90) days' written notice to the other
party  if  the  notice  to  terminate  ("Termination Notice") is being delivered
within  the  first twelve month period following the Commencement Date; (ii); at
least  sixty  (60)  days'  written  notice to the other party if the Termination
Notice  is  being  delivered within the second twelve month period following the
Commencement  Date  and  (iii)  at least thirty (30) days' written notice to the
other  party  if the Termination Notice is being delivered more than twenty-four
months  following the Commencement Date.  This Agreement shall also terminate in
the  event  that the Facility is sold by Landlord during the term of this Lease;
or  upon  the destruction of or substantial damage to the Facility by any cause,
or the taking of all or a substantial portion of the Facility by eminent domain,
in  either case making it impossible or impractical to continue operation of the
Facility.


(b)     Section  3.2  of  the  Lease  is  hereby  deleted  in  its  entirety.

(c)     Section  4.1  is  hereby  amended by inserting the following at the end:

PROVIDED,  HOWEVER,  NOTHING  HEREIN  SHALL  BE CONSTRUED AS LIMITING LANDLORD'S
OBLIGATIONS  UNDER  THE  WORKING  CAPITAL  AGREEMENT.

     (d)     Section  5.1  is  hereby  deleted in its entirety and the following
inserted  in  lieu  thereof:

Tenant  shall  pay Landlord a monthly rent (the "Base Monthly Rent") during each
month  (or  portion  thereof) of the Lease Year included within the term of this
Lease,  without  deduction,  set off, prior notice or demand.  Base Monthly Rent
for  the  term  of  the  Lease shall be equal to the net profits of the Facility
after  the  payment  to  Tenant  of  an operating fee in an amount equal to five
percent  (5%)  of the gross revenues of the Facility (the "Operating Fee").  For
purposes  of this Agreement, "gross revenues" mean all revenues generated by the
operation  of  the  Facility,  but  shall  not include proceeds from the sale of
Facility  equipment  or  the Facility, any insurance or condemnation proceeds or
any other proceeds from a capital event.  If the Term of this Lease commences or
terminates,  other  than  on the first day of the month, the revenues upon which
the  Tenant's Operating Fee is calculated shall be prorated in proportion to the
number  of  days  in  the  month in which the Term commences or terminates.  The
Operating  Fee provided for herein shall be disbursed by Tenant to itself out of
the  Facility  Checking  Account  (as  defined  below).

(e)     Section 5.2 is hereby deleted in its entirety and the following inserted
in  lieu  thereof:

Base  Monthly  Rent shall be paid in arrears by the twentieth (20th) day of each
month  commencing with the first month after the month in which the Commencement
Date  occurs.

(f)     Section  5.3  is  hereby  amended  by  deleting the phrase "in advance."

(g)     Section 8.3 is hereby deleted in its entirety and the following inserted
in  lieu  thereof:

In connection with the operation of the Facility and notwithstanding anything to
the  contrary set forth herein, Tenant's use and operation of the Facility shall
at  all  times  be  subject  to the following terms and conditions (all of which
shall  control in the event of a conflict between this Section 8.3 and any other
provision  of  this  Lease):

A.     Operational  Policies and Forms.  Tenant shall develop and implement such
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operational  policies  and  procedures  as  may be appropriate for the effective
operation  of  the  Facility,  including  but  not  limited  to all policies and
procedures  necessary  to  ensure  the  ongoing  licensure  of  the Facility and
compliance  with  the  terms  of  residency  agreements.

B.     Charges.  Tenant  shall  establish  schedules  of  recommended  charges,
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including  all  special  charges  for  services rendered to the residents at the
Facility.

C.     Information.  Tenant shall develop any informational material, mass media
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     releases,  and  other  related  publicity materials, which are necessary or
appropriate  for  the operation of the Facility.  The cost of all such materials
shall  be commercially reasonable and be deemed to be an expense of the Facility
and  shall  be  payable  from  the Facility Checking Account (as defined below).

D.     Regulatory  Compliance.  Tenant shall use commercially reasonable efforts
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to  obtain and maintain all licenses, permits, qualifications and approvals from
any  applicable  governmental or regulatory authority that are necessary for the
operation  of  the  Facility  and shall manage the operations of the Facility in
compliance  with  all applicable laws and regulations and in accordance with all
licenses, permits, qualifications and approvals; provided, however, Tenant shall
     not be deemed to be in default of its obligations under this Section 8.3(D)
in  the event (i) of the citation of any deficiency or deficiencies which do not
result  in  the threatened revocation of the licensure or Medicaid certification
of,  or the imposition of a ban on admissions at, the Facility (which deficiency
or  deficiencies  Tenant shall cause to be timely corrected in accordance with a
plan of correction approved by the applicable regulatory authority), (ii) Tenant
is  duly  contesting the application of any law to the operation of the Facility
and  compliance  with  such law is stayed during the period that such contest is
pending  or  (iii)  compliance  with law requires the expenditure of funds which
require  the  approval  of  Landlord  and for which Landlord refuses or fails to
provide such approval.  Within 48 hours of receipt thereof, Tenant shall provide
Landlord  with copies by fax, overnight mail, email or other comparable means of
expedited  transmission of any written notice regarding the licensure, occupancy
or  operation  of the Facility which it receives from any governmental authority
having  jurisdiction  over  the  Facility.  In addition, Landlord shall have the
right to approve, which approval shall not be unreasonably withheld, any plan of
correction  developed  by  Tenant  with  respect  to  any survey which threatens
revocation of the licensure or Medicaid certification of, or a ban on admissions
at or the imposition of civil or criminal penalties against, the Facility and to
approve  the  election  by  Tenant  to contest the application of any law to the
operation  of  the  Facility.

E.     Capital  Repairs,  Replacements  and Improvements:  Tenant shall make all
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capital  repairs,  replacements and improvements necessary for the efficient and
effective  operation of the Facility and its compliance with law unless doing so
involves  an  expenditure  requiring  Landlord's approval in accordance with the
terms  of  this Agreement and Landlord fails to provide such approval.  The cost
of  such  capital  repairs,  replacements  and  improvements shall be within the
line-by-line  budgetary  limit  for  each item as set forth in the then approved
annual  capital  budget  prepared by Tenant and approved by Landlord pursuant to
Section  8.3(L);  provided, however, Tenant shall not be deemed to be in default
of  its  obligations  under  this  Section  8.3(E) in the event the cost of such
repairs, replacements and/or improvements exceeds the applicable budgetary limit
     allocated  on  a  line  item  basis  for  such repairs, replacements and/or
improvements  in  the  applicable  capital  budget  provided  such  repairs,
replacements  and/or  improvements  are  (a)  of  such  an emergency nature that
Landlord's  prior  notice  and  approval  is not feasible in order to adequately
protect  the Facility and the health and safety of the occupants or (b) the cost
of  such  repairs, replacements and/or improvements are less than $10,000 in any
one instance but do not exceed in the aggregate $25,000 for any fiscal year. Any
other capital expenditures for repairs, replacements or improvements that exceed
such  budgetary  limits  shall be subject to the prior approval of the Landlord,
which  approval  shall not be unreasonably withheld; provided, however, Landlord
shall  not  be deemed to have unreasonably withheld its approval if (i) Landlord
lacks  the  financial  resources  to  cover  the  cost  of  such capital repair,
replacement  or improvement or (ii) the cost of such capital repair, replacement
or  improvement  will exceed $25,000 individually or in the aggregate with other
unbudgeted capital repairs, replacements or improvements undertaken by Tenant in
the  same  fiscal  year.  In  performing the foregoing repairs, replacements and
improvements  Tenant  shall  use the Facility's on site maintenance personnel as
and  where possible and shall otherwise contract with qualified third parties to
provide the necessary services and shall undertake the same or cause the same to
be  undertaken  in  a  workman  like  and  lien  free  manner.

F.     Accounting.
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i.     Tenant shall, at its expense, provide accounting support to the Facility.
     Landlord  acknowledges  and  agrees  that such accounting support shall not
include  the  preparation  of  Landlord's  financial  statements  or  securities
filings.  In  addition,  Tenant shall reflect in the financial statement for the
Facility  any  accounting  adjustments  provided to Tenant by Landlord, provided
that  Tenant  shall  have  no  liability  or  responsibility with respect to the
appropriateness  of  accounting  adjustments  provided  to  Tenant  by Landlord.
Tenant  shall  not  be  required  to reflect in the financial statements for the
Facility  any  corporate  accounting  adjustments provided to Tenant by Landlord
until  such  time as Tenant fully understands the rationale for such adjustment.

ii.     All accounting procedures and systems utilized in providing said support
     shall  be  in  accordance  with  the  operating  capital  and cash programs
developed  by  Tenant,  which  programs  shall  conform  to  generally  accepted
accounting  principles ("GAAP") and shall not materially distort income or loss.

iii.     In  addition,  Tenant  shall  prepare  timely  and  file or cause to be
prepared  and  filed  timely all payroll tax returns, sales and use tax returns,
real  and personal property tax returns and local or state gross receipts and/or
business and occupation tax returns at Tenant's sole cost and expense and Tenant
     shall cause to be paid timely all of the taxes reflected on such returns as
being  due,  which taxes shall be Facility Expenses and shall be paid out of the
Facility  Checking  Account.  In  the  event  that  Tenant  fails to timely file
required  returns  or  reports  or  to  timely pay taxes, Tenant shall be solely
responsible  for  payment  of  any  resulting penalties and/or interest and such
penalties  and  interest  shall  not  be considered Facility Expenses, provided,
however, that Tenant shall not be responsible for paying any resulting penalties
or  interest  if  (i)  Landlord receives the tax reports for such taxes from the
taxing  authority and Landlord fails to furnish the tax reports to Tenant within
a  reasonable period of time prior to the date on which the tax reports are due,
or  (ii) there are insufficient funds available in the Facility Checking Account
to  pay the taxes when due and Landlord fails to comply with a timely request by
Tenant  to provide the necessary funds to pay the taxes when due.  All other tax
returns,  including  Landlord's  local, state or federal income or informational
tax  returns  and  state  corporate  franchise  tax returns shall be prepared by
Landlord  or  its designee and the taxes and other payments due thereunder shall
be  the  sole  responsibility  of  Landlord.

iv.     Nothing  herein shall preclude Tenant from delegating to a third party a
portion  of  the  accounting duties provided for in this Section; provided, that
such  delegation shall not relieve Tenant from ultimate liability for the timely
and  complete  performance  of  the  obligations  provided for herein or for the
expense  thereof, it being understood that Tenant shall bear the expense of such
third  party  to  whom  Tenant delegates any such accounting duties that are the
obligation  of  Tenant under this Section. Landlord acknowledges and agrees that
in  the  event  Tenant retains one or more qualified third parties to review the
real  and/or  personal  property tax returns or utility bills of the Facility or
other  third party charges in an effort to effect cost savings for the Facility,
the fees and expenses of such third parties shall be Facility Expenses and shall
     be  paid  out  of  the  Facility  Checking  Account.

G.     Reports.  Tenant  shall  prepare  and  provide to Landlord any reasonable
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operational information with respect to the Facility which may from time to time
     be  specifically requested by Landlord, including any information needed to
assist  Landlord in completing the tax returns for which it is responsible under
Section  8.3(F)  and  in  complying with the reporting requirements described in
Exhibit  E.  In addition, within thirty (30) days after the end of each calendar
month,  Tenant  shall  provide  Landlord  with an unaudited balance sheet of the
Facility, dated the last day of such month, and an unaudited statement of income
and  expenses  for  such  month  and for the fiscal year to date relating to the
operation  of  the  Facility showing trends, the variance between the actual and
budgeted  operating  results of the Facility for said month and with a rent roll
and  census report for the month indicating the number of units occupied and the
number  of  units  vacant.  Such  monthly  reports  shall  also show summary and
itemization  of  accounts  receivable  for the Facility and report of collection
action(s)  taken  and  status  of any collection action(s).  Furthermore, Tenant
shall  prepare  and  provide  to  Landlord such other reports and information as
Landlord  shall  reasonably  request.  Upon request, Tenant shall cooperate with
Landlord or Landlord's certified public accountant in the event Landlord elects,
or  is  required,  to  have  audited  annual  financial statements prepared. The
financial  statements  prepared  by  Tenant shall be prepared in accordance with
generally  accepted  accounting  principles  ("GAAP), consistently applied, this
Agreement,  and  the  procedures  and  practices provided for in this Agreement.

H.     Bank  Accounts.  Tenant  acknowledges  and agrees that a checking account
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has  been  opened  in the name of Landlord (the "Facility Checking Account") and
that during the term of this Lease Tenant shall deposit in the Facility Checking
     Account  all  money received during the term of this Lease in the course of
the  operation  of the Facility; provided, however, that during the term hereof,
withdrawals  and  payments from the Facility Checking Account shall be made only
on  checks  signed  by  a  person or persons authorized by Tenant.  The Facility
Checking  Account  will  be  an  interest-bearing account if an interest-bearing
account is available.  Landlord shall be given notice as to the identity of said
authorized signatories.  Withdrawals from the Facility Checking Account shall be
made  first to pay the Tenant's Operating Fee, and, thereafter, to pay all costs
and  expenses associated with the ownership or operation of the Facility (each a
"Facility  Expense"  and  any  two  or  more the "Facility Expenses") including,
without  limitation,  any principal and interest payments due in connection with
any  loan  secured  by a mortgage on the Facility, payroll, insurance, supplies,
services  and  taxes (but excluding Tenant's corporate and regional overhead and
all  federal,  state and local income taxes assessed against Owner), all in such
order  of  priority  as  Tenant deems appropriate to the commercially reasonable
operation  of  the  Facility; provided, however, if a lender providing financing
for  the  facility requires the Operating Fee to be subordinated to debt service
payments  then  Tenant will not pay the Operating Fee unless and until such debt
service  has  been paid. Facility Expenses shall also include a pro rata portion
of  any  expenses incurred by Tenant for the benefit of the Facility, as well as
any  other  facilities  operated  by  Tenant  (the  "Other Benefited Facility"),
provided  the  method  used  to calculate the portion of such expenses which are
allocated  to  the  Facility  is  consistent  with  the method used by Tenant to
allocate  such  costs  to  the  other  Benefited  Facilities.

I.     Personnel.  All  of  the on-site personnel of the Facility, including the
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community  director, business Tenant and the "wellness director", if applicable,
shall  be  the employees of Tenant but the salaries, bonuses, commissions, state
and  federal payroll and social security tax obligations and benefits paid to or
on  behalf  of  such  on-site  employees  shall  be deemed to be included in the
Facility Expenses and thus shall be paid from the Facility Checking Account. All
     matters  pertaining to the employment, supervision, compensation, promotion
and  discharge  of  such employees are the responsibility of Tenant, which is in
all respects the employer of such employees.  Tenant shall fully comply with all
federal,  state,  county,  municipal  and  other  governmental laws, ordinances,
regulations  and  orders  having  to  do  with  anti-discrimination,  workmen's
compensation,  employer's  liability  insurance,  social  security, unemployment
insurance,  hours of labor, wages, working conditions, immigration and all other
employer-employee  related  subjects  (including  without  limitation,  tax
withholding  and  information  reporting requirements) and shall not do any act,
nor knowingly permit any act to be done that would constitute a violation of any
or  all of such laws, ordinances, regulations or orders.  Tenant shall indemnify
and  hold  Landlord  harmless  from  and  against any and all claims, penalties,
liabilities  and expenses of whatsoever kind and nature which may be asserted by
any governmental body or by any person claiming to be aggrieved by reason of any
act  or  failure to act by Tenant in accordance with or in violation of any said
laws,  ordinances,  regulations or orders, so long as such act or failure to act
is  not caused or directed by Landlord.  All personnel responsible for providing
services  pursuant  to  the terms of this Agreement shall be direct employees of
Tenant and Tenant shall, for purposes of such employment relationship, be acting
as  an  independent  contractor  and  not  as  an agent or employee of Landlord.
Unbudgeted  costs  and expenses of employees or consultants that are not on-site
Facility  personnel  shall  be  treated as Facility Expenses only if approved in
writing  in  advance  by  the Landlord, which approval shall not be unreasonably
withheld.  If  Landlord terminates this Agreement, Landlord shall have the right
(but  not  the  obligation)  to  offer  to  hire  any one or more of the on-site
employees  of  Tenant.

J.     Supplies  and  Equipment:  Tenant shall purchase supplies and non-capital
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equipment  needed  to operate the Facility within the budgetary limits set forth
in  the  annual operating budget.  In purchasing said supplies and equipment, if
possible  without  Tenant  incurring  personal  liability  for  the cost of such
supplies  and  equipment,  Tenant  shall take advantage of any national or group
purchasing  agreements  to  which  Tenant  may  be  a  party.

K.     Legal  Proceedings.  Unless  otherwise  directed  by the Landlord, Tenant
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shall,  through  its legal counsel (whose identity and rates shall be subject to
Landlord's  approval),  coordinate  all  legal  matters  and  proceedings  with
Landlord's  counsel  and,  subject to the direction and/or approval of Landlord,
shall  take  any and all appropriate steps to protect and/or litigate to a final
decision  in  an  appropriate  court  or  forum  any  violation,  order, rule or
regulation  affecting  the  Facility  and  its  operations  or  any claim, loss,
violation  or  cause of action relating to the Facility. Tenant shall not settle
any  litigation  without  the prior approval of Landlord.  Tenant shall promptly
notify  Landlord  in  writing  of  any written demand letters received by Tenant
which threaten litigation related to the Facility or any legal or administrative
     proceedings  that  are  filed  involving  the  Facility.  All  of the costs
reasonably  incurred  in  such  litigation shall be deemed Facility Expenses and
shall  be reimbursed to Landlord from the funds in the Facility Checking Account
if  previously paid by Landlord  or shall be paid from the funds in the Facility
Checking  Account  if  not previously paid by Landlord.  Nothing herein shall be
construed  as  precluding  Landlord from seeking to recover from Tenant the fees
and  expenses described in this Section 8.3(K) to the extent Tenant is otherwise
liable  therefore  under  the  default  or  indemnification  provisions  of this
Agreement;  however,  it  is  understood that no expenses shall be paid from the
Facility Checking Account for any litigation commenced by the Tenant against the
Landlord.

L.     Budgets:  The  Facility  shall  be operated on a fiscal year of January 1
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through  December  31. Landlord and Tenant have agreed prior to the Commencement
Date  on  an  operating  budget  and  capital  budget  for  the  period from the
Commencement  Date  through  December 31, 2002. On or before December 31 of each
calendar  year,  Tenant  shall prepare and submit to Landlord for its review and
approval, which approval shall not be unreasonably withheld, an annual operating
     budget,  an  annual  capital  expenditure  budget,  and an annual cash flow
projection  for  the  Facility.  The  annual  operating  budget  and  capital
expenditure  budget  shall  be prepared using the format set forth in Exhibit F.
In  the  event  a budget has not been agreed upon by the beginning of the fiscal
year,  the  operating results of the prior fiscal year shall serve as the budget
for  the  following  fiscal year unless and until the new budget is agreed upon.

M.     Collection  of  Accounts:  Tenant  shall issue bills and collect accounts
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and monies owed for goods and services furnished by the Facility during the term
     of  this  Agreement, including, but not limited to, enforcing the rights of
Landlord  and  the Facility as creditor under any contract or in connection with
the  rendering  of any services; provided, however, that any expenses reasonably
incurred by Tenant in so doing shall be Facility Expenses and payable out of the
Facility  Checking Account.  In addition, upon request by Landlord, Tenant shall
issue  bills  and  collect  accounts  and  monies  owed  for  goods and services
furnished  by  the  Facility  prior to the Commencement Date; provided, however,
regardless  of any standard of performance set forth in this Agreement, Landlord
acknowledges and agrees that there can be no assurances that Tenant will be able
to  collect  any  or  all  of  such  accounts  receivable.

N.     Contracts.  Tenant  shall  negotiate and enter into any and all contracts
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necessary  from  time to time in connection with the day to day operation of the
Facility  including,  but  not  limited  to,  contracts  for water, electricity,
natural  gas,  telephone,  sewer,  cleaning,  trash  removal,  pest  control and
extermination,  cable,  elevator  and  boiler  maintenance,  pharmacy  services,
therapy  services and other appropriate ancillary services and contracts for the
provision  of  various  services  which  are designed to identify potential cost
savings  to the Facility, such as utility and tax bill review services; provided
that  such  contracts can be terminated by the Landlord on no more than 90 days'
notice.  Any contract which cannot be terminated on no more than 90 days' notice
     shall  require  the approval of Landlord before the same may be executed by
Tenant,  which  approval  shall not be unreasonably withheld.  Tenant shall have
the right to contract with entities which are owned by or under common ownership
with  Tenant provided the terms of any such contracts are no less favorable than
the  terms then offered by unrelated third parties for the same or similar goods
or  services.

O.     Tenant's  and  Landlord's  Representative.  Tenant  hereby appoints Frank
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Ruffo (the "Tenant's Representative") as the person employed by Tenant with whom
     Landlord  shall  interact  and  upon  whose  decisions  Landlord  shall  be
authorized  to  rely, and Landlord hereby appoints Ruth Verhoff (the "Landlord's
Representative")  as  the  person  employed  by  Landlord with whom Tenant shall
interact  and  upon  whose  decisions  Tenant  shall be authorized to rely, with
respect to the performance by Tenant of its duties hereunder.  Tenant shall have
the  right  from  time  to time during the term of this Agreement to replace the
Tenant's  Representative  upon  written  notice  to  Landlord  designating  the
replacement  Tenant's Representative and Landlord shall have the right from time
to  time  during  the  term  of  this  Agreement  to  replace  the  Landlord's
Representative  upon  written  notice  to  Tenant  designating  the  replacement
Landlord's  Representative.  Nothing  herein  shall be construed as imposing any
personal  liability  on the Tenant's Representative or Landlord's Representative
with respect to the acts or omissions of Tenant or Landlord, respectively, under
this  Agreement.

P.     Standard of Performance:  In performing its obligations under this Lease,
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     Tenant  shall  manage  the Facility as a licensed residential care facility
for  the  elderly  (i)  to  the  standard  and  in the same manner as management
services  are  provided by other qualified and licensed third party professional
health  care facility Tenants of facilities comparable to the Facility, and (ii)
in  accordance  with the terms of this Agreement, including, but not limited to,
the  limitations set forth herein on operating and capital expenditures, and the
policies  adopted  by,  and  resources  available  to,  the  Facility.

Q.     Force  Majeure:  Tenant  will  not  be  deemed to be in violation of this
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Lease or the Working Capital Agreement if it is prevented from performing any of
     its  obligations  hereunder  for  any reason beyond its control, including,
without  limitation,  strikes,  shortages,  acts of terrorism, war, acts of God,
lack  of  Landlord's  financial resources, unreasonable interference by Landlord
with Tenant's performance of its duties hereunder, or any statute, regulation or
rule  of  federal,  state  or  local  government  or  agency  thereof.

R.     Proprietary Materials. Landlord acknowledges and agrees that the systems,
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     methods,  procedures  and  controls  employed  by  Tenant  and  any written
materials,  computer  software  or  policies developed by Tenant to document the
same  are  to  remain  the property of Tenant and are not, at any time during or
after  the  term  of  this  Agreement,  to  be  utilized, distributed, copied or
otherwise  employed  or  acquired  by  Landlord, except as authorized by Tenant,
provided,  however, that upon request of Landlord Tenant shall negotiate in good
faith the terms and conditions upon which Landlord may be permitted by Tenant to
use,  without  payment,  such systems, methods, procedures, controls, materials,
software  or  brochures  for  a  limited  transitional  period  following  the
termination  of this Agreement, which terms and conditions shall be satisfactory
to  both  Tenant  and  Landlord  in their respective discretion. However, in the
event  of  a  termination  of this Lease, for a period of thirty (30) days after
such  termination  Landlord shall be permitted to use systems, methods, software
as may be reasonably necessary for Landlord to generate records and reports with
data  from  the  term  of  this  Lease.

(h)     The  following  is  hereby  inserted  as  Article  13  of  the  Lease:

     Tenant  shall  indemnify, defend and hold harmless Landlord and its owners,
directors,  officers and employees from any and all third party claims, demands,
causes  of  action,  losses,  damages,  fines, penalties, liabilities, costs and
expenses,  including  reasonable  attorneys'  fees  and court costs sustained or
incurred  by or asserted against any one or more of them by reason of or arising
out  of Uncovered Tenant Actions. As used in this Section XII, "Uncovered Tenant
Actions"  means (a) Tenant's breach of the duties and obligations required to be
performed  by  Tenant pursuant to this Agreement, (b) acts by Tenant outside the
scope  of  Tenant's authority under this Lease, or (c) the negligence or willful
misconduct  of  Tenant or its agents or employees. Landlord agrees to indemnify,
defend  and  hold  harmless Tenant and its shareholders, directors, officers and
employees  from  any  and  all  third  party  claims, demands, causes of action,
losses,  damages,  fines,  penalties, liabilities, costs and expenses, including
attorneys'  fees  and  court  costs  (except  to the extent covered by insurance
carried  by  Tenant  or required to be carried by Tenant pursuant to this Lease)
sustained or incurred by or asserted against any one or more of them relating to
the  Facility that results from the negligence or willful misconduct of Landlord
in performing its obligations under this Lease or from a breach of this Lease by
the  Landlord.  THE  INDEMNITIES  BY  LANDLORD  AND  TENANT  IN  THIS ARTICLE 13
SPECIFICALLY  APPLY TO NEGLIGENCE AND EVENTS FOR WHICH THERE IS STRICT LIABILITY
BY  THE  INDEMNIFIED PERSONS, TO THE EXTENT THE RESULTING CLAIM, DEMAND CAUSE OF
ACTION,  LOSS,  DAMAGE,  FINE  PENALTY, LIABILITY, COST OR EXPENSE IS WITHIN THE
SCOPE OF THE INDEMNITY. Notwithstanding any other provision of this Lease to the
contrary,  each  party's  obligation  to indemnify, defend and hold harmless the
other  party  shall  survive  the  termination  of  this  Lease.

(i)     Article  14 is hereby deleted in its entirety and the following inserted
in  lieu  thereof:

     Tenant,  as  agent  for  the  Landlord  and at the sole cost and expense of
Landlord,  shall  obtain and keep in force adequate insurance as outlined below:

          A.  All  Risk,  or  other  broad  form  coverage  property  insurance,
insuring  full  replacement value. Such insurance shall also include, but not be
limited  to,  business  interruption and extra expense coverage, for a period of
not  less  than  six  months.    Tenant shall also maintain earthquake and flood
hazard  coverage  at  an  amount equal to full replacement cost of the Facility.

          B.  Commercial  general  liability  insurance, against any third party
claims  for bodily injury or property damage.  Such insurance shall also include
coverage  for  contractual liability as respects this Agreement.  Limits of such
coverage  should  not  be less than $1,000,000 per occurrence, with a minimum of
$2,000,000  per  location  aggregate.

          C.    Professional  Liability  Insurance  with limits of such coverage
that  are  not less than $1,000,000 per occurrence, with a minimum of $2,000,000
per  location  aggregate.

          D.    Business  Auto  Liability  for  third  party  bodily  injury  or
property  damage for facility vehicles including owned, hired and non-owned auto
liability  for  $1,000,000 combined single limit.  Coverage shall be extended to
cover  physical  damage  to  facility  vehicles.

     E.  Umbrella/Excess  Commercial General Liability and Professional Services
Liability  in  the  amount  of  $10,000,000  per  occurrence.

          F.  Workers'  Compensation  coverage  with  statutory  limits  and
Employers'  Liability  insurance  coverage with minimum limits of $1,000,000 per
occurrence.

          G.    Crime insurance to cover employee dishonesty, theft of money and
security  loss  in  limits  of  not  less  than  $1,000,000

For  all  such  insurance as deemed necessary above, it is agreed and understood
that Tenant shall continuously maintain the same at the sole cost and expense of
Landlord,  and  that all premiums, deductibles and uninsured losses with respect
to  such  policies shall be deemed to be Facility Expenses. Tenant shall provide
Landlord  with  evidence  of  all  insurance,  naming  Landlord as an additional
insured  on  policies B, C, D, and E above, and subject to the requirements of a
lender, loss payee as respect the property policies.  Such evidence of insurance
shall  give  the Landlord at least thirty (30) days prior notice of cancellation
or  any  material  change  to  policies.

     Tenant shall also assist Landlord to procure such other insurance coverages
as  may be required by a lender for the Facility. Tenant shall, at its sole cost
and expense, maintain commercial general liability insurance for its operations.
Tenant  agrees  to  furnish  Landlord  with  evidence  of such insurance or with
duplicate  copies  of  such  policies.

(j)     Section  17.11  is  hereby  deleted in its entirety and the following is
inserted  in  lieu  thereof:

Tenant  shall  have  the  right  to assign to Landlord's lender, as security for
Landlord's  obligations to such Lender, all payments of rent from any subletting
of  all  or  part  of  the  Premises  as  permitted  by  this  Lease.

     (k)     Section  18.1  is  hereby amended by inserting the following at the
end  of  the  lead  in  paragraph:

; provided, however, Tenant shall not be in default of its obligations hereunder
in  the  event  such  default is due to a default by Landlord in its obligations
under  the  Working Capital Agreement of even date herewith between Landlord and
Tenant  or  as  a result of the failure of Landlord to provide any consent which
Tenant  is  required to secure hereunder or under the Working Capital Agreement.

(l)     Section  18.2.5  is hereby amended by inserting the following at the end
thereof:  "provided  such  Tenant is provided with such indemnities with respect
thereto  as  it  deems  to  be  reasonably  necessary."

(m)     Article  24  is  hereby  deleted  in  its entirety and replaced with the
reporting  requirements  set  forth  in  Section  8.3  hereof.

(n)     Section  26.2  is  hereby  amended  by  inserting  the  phrase  "without
Landlord's  consent"  after  the  word  "fails"  in  the  first  line.

(o)     Section  26.3  is  hereby  amended  by  inserting  the  phrase  "without
Landlord's  consent"  after  the  word  "fails"  in  the  first  line.

(p)     For purposes of the agreement, Tenant's address for notice purposes from
and  after  the Effective Date shall be 3131 Elliott Avenue, Suite 500, Seattle,
WA  98121,  Attn:  Raymond R. Brandstrom, with copy to The Nathanson Group PLLC,
1520  Fourth Avenue, 6th Floor, Seattle, WA 98101, Attention Randi S. Nathanson.

(q)     The  first  sentence  of  Section  29.16  is  hereby  revised to read as
follows:

     "The Persons executing this Lease on behalf of Tenant represent and warrant
to  Landlord  that  such  persons  have  been  duly  authorized  by the Board of
Directors of Tenant to enter into the transaction provided for in this Lease and
the  Working  Capital  Agreement  and  to  carry  out  the  terms  thereof.

     (r)     Any  and  all  references  in  the  Lease  to  the  Working Capital
Agreement  shall mean the Working Capital Agreement as assigned to Tenant and as
amended by this Amendment to Lease and Working Capital Agreement and any and all
references  in the Lease to Tenant shall mean RAL or Emeritus as the context may
required  and  any  and  all references to the Facility being an assisted living
facility  shall mean the facility licensed under California law as a residential
care  facility  for  the  elderly.

2.     WORKING  CAPITAL  AGREEMENT  AMENDMENTS.  The  Working  Capital Agreement
shall  be  amended  as  follows:

     (a)     Section  1(a)  is  hereby  amended  by  (I)  inserting  the  phrase
"including  the  Operating  Fee due and payable to Tenant under the terms of the
Lease"  at the end of the second sentence, (II) replacing "$25,000" in the third
sentence  with  "$25,000"  and  (III)  deleting  the last two sentences in their
entirety.

(b)     Section  1(c)  is  hereby  deleted  in  its  entirety.

(c)     Section  1(d)  is  hereby  deleted  in  its  entirety.

(d)     Section  1(g) is hereby amended as follows: (I) to insert the phrase "or
the  failure  of  Landlord  to  provide  any consent which Tenant is required to
secure  hereunder  or  under  the Lease and (II) delete clause (ii) and renumber
clause  (iii)  as clause (ii) and (III) revise renumbered to clause (ii) to read
as follows: "and which do not otherwise arise from or relate to the operation of
the  Facility  by  Tenant  prior to the expiration or earlier termination of the
Lease  and  (IV)  by  inserting the following as a new sentence. Nothing in this
Agreement shall preclude Landlord from invoking its indemnity rights pursuant to
Section 4 with respect to any amounts advanced by Landlord to meet the operating
needs  of  the  Facility  as  required  by  the  terms  of  this  Agreement.

(e)     Section  2  is  hereby  amended  by deleting the phrase "notwithstanding
anything  contained  in  the  Services  Agreement  to  the  contrary."

     (f)     Any  and  all  references  in  the Working Capital Agreement to the
Lease  shall  mean  the  Lease  as  assigned  to  Tenant  and as amended by this
Amendment  to  Lease and Working Capital Agreement and any and all references in
the  Working  Capital  Agreement to the Tenant shall mean RAL or Emeritus as the
context may require and any and all references to the Facility being an assisted
living  facility  shall  mean  the  facility  licensed under California law as a
residential  care  facility  for  the  elderly.

3.     NO  OTHER AMENDMENTS.  Except as specifically set forth herein, the Lease
and  the  working  Capital  agreement  shall  remain in full force and effect as
originally  executed  by  Landlord  and  Tenant.

4.     EFFECTIVE  DATE.  This  Agreement  shall be effective as of July 2, 2002.

5.     COUNTERPARTS.  This  Agreement  may  be executed in counterparts, each of
which  shall  be deemed to be an original, but all of which taken together shall
constitute  but  one  and  the  same  instrument.

6.     ENTIRETY.  This  Agreement  represents  the entire and final agreement of
the  parties hereto with respect to the subject matter hereof and supersedes all
prior  negotiations,  discussions  or  writings  with  respect  thereto.  This
Agreement  may not be amended or modified nor may any provision hereof be waived
except  by  written  instrument  signed  by  the  parties  hereto.

7.     ATTORNEYS  FEES.  In the event of a dispute among the parties hereto with
respect to the interpretation or enforcement of the terms hereof, the prevailing
     party  shall be entitled to collect from the other its reasonable costs and
attorneys  fees,  including  its  costs  and  fees  on  appeal.

8.     CONSTRUCTION.  Both  parties  acknowledge  that they have participated in
the  drafting and negotiation of this Agreement.  Accordingly, in the event of a
dispute  among  the  parties  hereto  with  respect  to  the  interpretation  or
enforcement  of  the terms hereof no provision shall be construed so as to favor
or  disfavor  either  party  hereto.

9.     GOVERNING  LAW.  This  Agreement  shall  be  governed by and construed in
accordance  with  the  laws  of  the  State  of  California.

<PAGE>

     IN WITNESS WHEREOF, the parties hereby execute this Agreement as of the day
and  year  first  set  forth  above.

                    EMERITUS  CORPORATION



                    By:     /s/    Raymond  R.  Brandstrom
                         Raymond  R.  Brandstrom
                    Its:     _________________________________

                    SACRAMENTO  COUNTY  ASSISTED,  LLC


                    By:     /s/    Daniel  R.  Baty
                         Daniel  R.  Baty
                    Its:     ______________________________