SALE CONTRACT
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     THIS SALE CONTRACT (this "CONTRACT") is made and entered into as of the 4th
day  of  April,  2002,  by  and  between  (i)  INTEGRATED  LIVING COMMUNITIES OF
ALEXANDRIA,  L.L.C.,  INTEGRATED  LIVING  COMMUNITIES  OF  LAKE CHARLES, L.L.C.,
INTEGRATED  LIVING  COMMUNITIES  OF  LAFAYETTE,  L.L.C.,  INTEGRATED  LIVING
COMMUNITIES  OF HENDERSON, L.P., INTEGRATED LIVING COMMUNITIES OF OAKWELL, L.P.,
INTEGRATED  LIVING  COMMUNITIES  OF  SAN  ANTONIO,  L.P.,  AND INTEGRATED LIVING
COMMUNITIES OF MCKINNEY, L.P. (each a "SELLER" and collectively, the "SELLERS"),
and  (ii)  EMERITUS  CORPORATION  ("BUYER").
     RECITALS:
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     A.     Each of the Sellers is a tenant under a lease described on Exhibit A
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attached  hereto  and  made  a part hereof (collectively, the "FACILITY LEASES")
pursuant to which each Seller leases an assisted living facility and appurtenant
improvements,  fixtures,  and  personal  property  (collectively,  the  "REAL
PROPERTY") and each of the Sellers owns the Personal Property (as defined in the
Exhibit  Recitals  attached  hereto and made a part hereof) at the Real Property
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(the  Real  Property, together with the Personal Property, is referred to herein
individually  as  a  "FACILITY"  and  collectively  as  the  "FACILITIES").
B.     Sellers  desire to sell, convey, assign and transfer and Buyer desires to
purchase,  assume  and  acquire Sellers' interest in the Facility Leases and the
Facilities  pursuant  and  subject to the terms and conditions set forth herein.
     NOW,  THEREFORE,  in  consideration  of the mutual promises hereinafter set
forth, and of other good and valuable consideration, the receipt and sufficiency
of  which  are  hereby  acknowledged,  the  parties  hereto  agree  as  follows:
1.     PURCHASE  AND  SALE.  Subject to the provisions of this Contract, Sellers
agree  to sell, convey, assign and transfer and Buyer agrees to purchase, assume
and  acquire  Sellers'  interest in the Facility Leases and the Facilities.  The
term  "BUYER"  as  used  herein  shall  include  any  designee  of  Buyer.
2.     PURCHASE  PRICE AND EARNEST MONEY.  The purchase price ("PURCHASE PRICE")
shall be Ten Dollars ($10.00).  The Purchase Price takes into account that Buyer
will (i) assume Sellers' interests in the Facility Leases and (ii) arrange for a
credit  entity  satisfactory  to  each  of the respective Landlords (hereinafter
defined)  to  replace  Integrated  Living  Communities,  L.L.C.  ("ILC")  as the
guarantor  under  each  of the Facility Leases.  Notwithstanding the immediately
preceding  sentence,  there  shall  be no reduction to the Purchase Price in the
event  that fewer than all of the Facilities are transferred to Buyer at closing
hereunder  provided,  however,  that  in  the  event that certain Facilities are
closed  on at an initial Closing Date and the remainder are closed on at a later
Closing Date, if at all, in accordance with the provisions of Section 12(c), the
Purchase Price shall be prorated and such prorated portion of the Purchase Price
shall  be  paid by Buyer at each closing.  Simultaneously with, or prior to, its
execution  of  this Contract, Buyer shall pay to the Escrow Agent (as defined in
Section 6(a)) the sum of Eighty-seven Thousand Five Hundred Dollars ($87,500) as
the  earnest  money  deposit  (the "EARNEST MONEY").  The Earnest Money shall be
held  in  escrow pending closing.  Buyer may, at its option, direct Escrow Agent
to  invest  the  Earnest  Money  in a federally-insured interest-bearing account
designated  by  Buyer and approved by Seller.  All interest which has accrued on
the  Earnest  Money  shall  be  paid  to  Buyer,  except  that if closing is not
consummated,  interest  on the Earnest Money shall be paid to the party entitled
to  the  Earnest Money pursuant to the terms hereof.  The Earnest Money shall be
applied to the Purchase Price (with the balance of the Earnest Money returned to
Buyer)  or  otherwise  paid  to  Sellers  and/or  Buyer  as provided for herein.
3.     FACILITY  LEASES  ASSUMPTION.
(a)     Buyer  acknowledges  that  it may not assume the Facility Leases without
the  consent  of  Healthcare  Realty Trust ("HRT"), with respect to the Facility
Leases described on Exhibit A under which HRT is identified as the landlord, and
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     Health Care Property Investors, Inc. ("HCPI"), with respect to the Facility
Leases  described  on  Exhibit  A under which HCPI is identified as the landlord
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(HRT  and  HCPI, collectively, the "LANDLORDS").  It is the parties' expectation
that  prior to closing, the parties will obtain the consent of the Landlords for
(i)  Buyer's assumption of the Facility Leases by means of substituting Buyer as
the  tenant  under  the  Facility  Leases  (ii)  to  the  extent  that  Emeritus
Corporation  is  not  the  assignee, the substitution of Buyer or another credit
entity  acceptable  to  Landlords as the guarantor under each Facility Lease and
(iii)  the  release  of  each  Seller  and  ILC from any liability or obligation
arising under the Facility Leases and their respective guarantees from and after
the  Closing  Date (the "REQUIRED CONSENTS").  During the Feasibility Period (as
defined  below) and thereafter, if necessary, the parties will cooperate in good
faith  to  obtain  the  Required  Consents and an estoppel certificate from each
Landlord,  providing  that, to each Landlord's knowledge, neither the applicable
Landlord  nor  the  applicable  Sellers, as tenants, thereunder are currently in
default  under the applicable Facility Leases or, to the extent that a Seller is
in  default  thereunder,  specifying  the  default and whether the Landlord will
recognize  such  default  as  being  cured  by  closing hereunder (the "ESTOPPEL
CERTIFICATES").  The  Estoppel  Certificates may be included within the Required
Consents.  Notwithstanding  any  language  to  the  contrary herein, Buyer shall
satisfy  itself  prior  to  April  15,  2002  that the Landlords will permit any
modifications  to  the  Facility Leases, e.g., waiver of radius restrictions, as
well  as  any  other  Facility Leases modifications which are required by Buyer.
Buyer  will  promptly (and in any event, within three (3) Business Days from the
receipt  of  a  request)  provide  Sellers  and  Landlords  with all information
reasonably  requested  by  Landlords to make a decision as to whether to approve
the  aforementioned  assumption,  substitution and release.  Buyer shall use its
commercially  reasonable  efforts  to  assist Sellers and ILC in obtaining their
release  from  liability  under  the  Facility  Leases  and  their  respective
guarantees.  Except  as  provided  in the following sentence, Buyer shall comply
with  all  commercially  reasonable conditions precedent to the effectiveness of
the  Required  Consents,  including, without limitation, assuming ILC's guaranty
obligations  under the Facility Leases.  Provided that the Required Consents are
obtained,  Sellers  shall pay at closing to Landlords an assumption fee, if any,
acceptable  to  each Landlord and Sellers, together with all of Landlords' other
out-of-pocket costs and expenses in connection with the assumption, substitution
and  release.
(b)     Notwithstanding  anything herein to the contrary, if a Landlord does not
grant  the  Required  Consent  with  respect  to any of the Real Property by the
Closing  Date,  then Sellers, in lieu of the transaction terminating for failure
to  satisfy  a condition precedent to closing pursuant to Section 12, shall have
the  right  to  withdraw  each  Facility  for  which  a Required Consent was not
obtained from the transaction, whereupon the definition of the term "FACILITIES"
shall  be amended to delete the withdrawn Facility, and, subject to satisfaction
of  the  other  conditions  precedent  to  closing, the parties shall proceed to
closing  on  the  Facilities  for  which  the  Required  Consents were obtained.
4.     SELLERS'  FUNDING  OF  OPERATING  LOSSES.
(a)     Buyer acknowledges that the Facilities are currently operating at a loss
     in  the  aggregate  and  may continue to do so.  To induce Buyer to acquire
Sellers'  interests  in the Facilities, each Seller has agreed to fund operating
losses  (calculated  in accordance with generally accepted accounting principals
("GAAP") and including, as facility expenses, rent under the Facility Leases and
a  management  fee  in  the  amount  of  five  percent  (5%)  of  Gross Revenues
(hereinafter  defined)(the  "OPERATING LOSSES"), up to the amounts and under the
terms,  conditions  and  limitations specified on Exhibit B (the "OPERATING LOSS
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CAPS").  The  term  "GROSS  REVENUES"  means, with respect to each Facility, all
revenues  generated  by  the  operation  of  the Facility, but shall not include
proceeds  from the sale of the Facility or the Facility's equipment.  Subject to
the  provisions  of  Section  4(d), the Operating Loss Caps are calculated on an
aggregate basis across all Facilities closed on by Buyer and there is, as stated
on  Exhibit  B, (i) an Operating Loss Cap applicable to the first 365-day period
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following  the Closing Date ("FIRST 365-DAY PERIOD"), (ii) an Operating Loss Cap
applicable  to  the  366-day period (2004 being a leap year) following the first
anniversary  of the Closing Date ("SECOND 365-DAY PERIOD," and together with the
First  365-Day  Period, the "365-DAY PERIODS"), and (iii) an aggregate Operating
Loss  Cap  comprising  the  maximum aggregate Operating Losses which Sellers are
liable  for  hereunder.  All  Operating  Losses  shall  be calculated monthly as
described  below  and  shall  be  calculated  on  an  aggregate basis across all
Facilities  closed on by Buyer notwithstanding that Sellers' funding obligations
have  been  calculated  for  internal  accounting  purposes  on a several basis.
Notwithstanding  any language to the contrary herein, Sellers' liability for the
Operating  Losses,  subject  to  the  Operating  Loss  Caps,  shall be joint and
several.  No Operating Losses shall be funded in respect of any period after the
end  of  the  Second  365-Day  Period.
(b)     To  calculate  the  amount  of Operating Losses required to be funded by
Sellers  under  this Contract, Buyer shall provide Sellers with a monthly report
("MONTHLY  REPORT")  in  the  form  set forth on Schedule 4(b) setting forth the
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income  and expenses separately for each Facility, together with (i) the current
month's  profit  or  loss  for  each  Facility  and  for  the  aggregate  of all
Facilities,  (ii)  the year to date profit or loss for each Facility and for the
aggregate  of  all  Facilities,  (iii)  the aggregate funding that has been made
under  this  Section  4,  and  (iv)  the amount remaining in each Operating Loss
Account (as hereinafter defined).  The information contained in the report shall
be  determined  in  accordance with GAAP.  Sellers shall have the right to audit
Buyer's Monthly Reports at Sellers' sole cost and expense upon reasonable notice
and  during normal business hours.  In the event that a Monthly Reimbursement is
not  paid  to Buyer when due under this Section 4, Sellers shall pay interest at
the  rate  of  twelve  percent (12%) per annum on any amounts not paid when due.
Within  thirty  (30)  days  after Sellers receive the Monthly Report for a month
ending  during  a  365-Day  Period, Sellers shall fund to Buyer in the form of a
reimbursement  check  paid  to  the  order  of  Buyer  an  amount  determined by
subsections (c) and (d) below (each, a "MONTHLY REIMBURSEMENT").  In determining
the  aggregate  Operating  Losses  for  all Facilities for any period below, the
aggregate  Operating  Losses  of all Facilities with Operating Losses during the
period  shall be netted against the aggregate operating profit of all Facilities
with  an  operating  profit  during  the  period.
(c)     The  terms of this subsection (c) shall apply in the event that there is
only  one  closing under this Contract.  To determine the amount of each Monthly
Reimbursement,  Buyer  and Sellers shall establish two ledger accounts (each, an
"OPERATING  LOSS  ACCOUNT"),  one  for  the  First  365-Day  Period  (the "FIRST
OPERATING  LOSS  ACCOUNT")  and  one  for the Second 365-Day Period (the "SECOND
OPERATING LOSS ACCOUNT").  The First Operating Loss Account shall be credited at
the  closing  with  the aggregate of First Year Operating Loss Caps set forth in
Exhibit  B in respect of each of the Facilities acquired by Buyer at the closing
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(the  term  "FACILITIES", as used in this Section 4, shall mean those Facilities
acquired  by  Buyer  at  closing).  The  First  Operating  Loss Account shall be
debited  with  each amount funded under this subsection by Sellers in respect of
each  period during the First 365-Day Period.  The Second Operating Loss Account
shall  be  credited  at  the closing with the aggregate of Second Year Operating
Loss  Caps  set  forth  in  Exhibit B in respect of each of the Facilities.  The
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Second  Operating  Loss  Account  shall be debited with each amount funded under
this  subsection  by Sellers in respect of each period during the Second 365-Day
Period.  The  amount  of  each  Operating  Loss Account shall never be less than
zero.  The  amount of each Monthly Reimbursement in respect of each month during
the  First  365-Day  Period shall equal the least of the following amounts:  (i)
the  aggregate  Operating  Losses  for all Facilities for the month to which the
Monthly  Report  relates, (ii) the aggregate Operating Losses for all Facilities
from  the  commencement  of  the First 365-Day Period to the end of the month to
which  the  Monthly  Report relates, less any amount previously debited from the
First  Operating  Loss  Account or (iii) the balance in the First Operating Loss
Account.  The  amount  of  each  Monthly  Reimbursement in respect of each month
during the Second 365-Day Period shall equal the least of the following amounts:
(i) the aggregate Operating Losses for all Facilities for the month to which the
Monthly  Report  relates, (ii) the aggregate Operating Losses for all Facilities
from  the  commencement  of the Second 365-Day Period to the end of the month to
which  the  Monthly  Report relates, less any amount previously debited from the
Second  Operating Loss Account or (iii) the balance in the Second Operating Loss
Account.
(d)     The  terms of this subsection (d) shall apply in the event there are two
closings  under this Contract, in accordance with Section 12(c).  The Facilities
acquired  at the first closing shall be referred to as the "INITIAL FACILITIES."
The  Facilities  acquired  at  the  second  closing  shall be referred to as the
"SUBSEQUENT  FACILITIES."  The  term  "FIRST  365-DAY  PERIOD"  shall mean, with
respect  to  the  Initial  Facilities,  the  365-day  period following the first
Closing  Date and, with respect to the Subsequent Facilities, the 365-day period
following the second Closing Date.  The term "SECOND 365-DAY PERIOD" shall mean,
with  respect  to the Initial Facilities, the 366-day period following the first
anniversary  of  the  first  Closing  Date  and,  with respect to the Subsequent
Facilities,  the  366-day  period  following the first anniversary of the second
Closing  Date.  To determine the amount of each Monthly Reimbursement, Buyer and
Sellers shall establish two ledger accounts (each, an "OPERATING LOSS ACCOUNT"),
one  for  the  First-365-Day Period (the "FIRST OPERATING LOSS ACCOUNT") and one
for  the Second 365-Day Period (the "SECOND OPERATING LOSS ACCOUNT").  The First
Operating Loss Account shall be credited at the first closing with the aggregate
of  First  Year Operating Loss Caps set forth in Exhibit B in respect of each of
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Initial  Facilities,  and  shall  be  credited  at  the  second closing with the
aggregate of First Year Operating Loss Caps set forth in Exhibit B in respect of
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each  of  the  Subsequent Facilities.  The First Operating Loss Account shall be
debited  with  each  amount  funded  under  this  subsection  by  Sellers  under
subsections  (1),  (2)  and  (3)(i).  The Second Operating Loss Account shall be
credited  at  the first closing with the aggregate of Second Year Operating Loss
Caps  set forth in Exhibit B in respect of each of Initial Facilities, and shall
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be  credited  at  the second closing with the aggregate of Second Year Operating
Loss  Caps  set  forth  in  Exhibit  B  in  respect  of  each  of the Subsequent
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Facilities.  The Second Operating Loss Account shall be debited with each amount
funded  under  subsections  (3)(ii),  (4)  and  (5)  below.  The  amount of each
Operating  Loss  Account  shall  never  be  less  than zero.  The amount of each
Monthly  Reimbursement  shall  equal:
               (1)     During  the period in respect of any month ending between
the  dates  of  the  first closing and the second closing, the least of: (i) the
aggregate Operating Losses for the Initial Facilities for the month to which the
Monthly  Report  relates,  (ii)  the  aggregate Operating Losses for the Initial
Facilities  from  the commencement of the First 365-Day Period to the end of the
month  to  which  the Monthly Report relates, less any amount previously debited
from  the  First  Operating  Loss  Account  or  (iii)  the  balance in the First
Operating  Loss  Account.

               (2)     During  the period in respect of any month ending between
the  date  of the second closing and the end of the First 365-Day Period for the
Initial  Facilities,  the  least  of  (i) the aggregate Operating Losses for the
Initial  Facilities  and  the  Subsequent  Facilities for the month to which the
Monthly  Report  relates,  (ii)  the  aggregate Operating Losses for the Initial
Facilities  from  the commencement of its First 365-Day Period to the end of the
month to which the Monthly Report relates and for the Subsequent Facilities from
the  commencement  of  its First 365-Day Period to the end of the month to which
the  Monthly  Report  relates, less any amount previously debited from the First
Operating Loss Account or (iii) the balance in the First Operating Loss Account.

               (3)     During  the period in respect of any month ending between
the  commencement  of  the  Second 365-Day Period for the Initial Facilities but
before  the  commencement  of  the  Second  365-Day  Period  for  the Subsequent
Facilities,  the  sum  of  (i)  the  least of (x) the aggregate Operating Losses
allocable to the Subsequent Facilities for the month to which the Monthly Report
relates,  (y) the aggregate Operating Losses for the Initial Facilities from the
commencement  of its First 365-Day Period to the end of its First 365-Day Period
and  for  the  Subsequent  Facilities from the commencement of its First 365-Day
Period  to  the  end  of the month to which the Monthly Report relates, less any
amount  previously  debited  from  the  First  Operating Loss Account or (z) the
balance  in  the  First  Operating  Loss  Account  and (ii) the least of (x) the
aggregate  Operating Losses allocable to the Initial Facilities for the month to
which  the  Monthly  Report  relates, (y) the aggregate Operating Losses for the
Initial Facilities from the commencement of its Second 365-Day Period to the end
of  the  month  to  which the Monthly Report relates, less any amount previously
debited  from the Second Operating Loss Account or (z) the balance in the Second
Operating  Loss  Account.

               (4)     During  the period in respect of any month ending between
the  date  of  the  commencement of the Second 365-Day Period for the Subsequent
Facilities  and the end of the Second 365-Day Period for the Initial Facilities,
the  least  of (i) the aggregate Operating Losses for the Initial Facilities and
the  Subsequent  Facilities  for  the month to which the Monthly Report relates,
(ii)  the  aggregate  Operating  Losses  for  the  Initial  Facilities  from the
commencement  of  its Second 365-Day Period to the end of the month to which the
Monthly  Report  relates and for the Subsequent Facilities from the commencement
of its Second 365-Day Period to the end of the month to which the Monthly Report
relates,  less  any  amount  previously  debited  from the Second Operating Loss
Account  or  (iii)  the  balance  in  the  Second  Operating  Loss  Account.

               (5)     For  any month ending after the second anniversary of the
first  closing,  the  least  of:  (i)  the  aggregate  Operating  Losses for the
Subsequent  Facilities  for  the month to which the Monthly Report relates, (ii)
the  aggregate Operating Losses for the Initial Facilities from the commencement
of its Second 365-Day Period to the end of its Second 365-Day Period and for the
Subsequent  Facilities from the commencement of its Second 365-Day Period to the
end  of  the  month to which the Monthly Report relates, less amounts previously
debited  from  the  Second  Operating  Loss  Account or (iii) the balance in the
Second  Operating  Loss  Account.

(e)     Schedule 4(e) contains an illustration of the operation of this Section.
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(f)     Horizon  Bay  Management,  L.L.C.  ("HBM")  shall  execute  at closing a
guaranty  substantially  in  the  form  of  Exhibit  I,  guaranteeing payment of
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Sellers'  obligation  to  fund Operating Losses, provided that in no event shall
HBM  and  Sellers,  collectively,  be obligated to fund Operating Losses of more
than  the  aggregate  Operating  Loss  Cap.
(g)     Notwithstanding  anything to the contrary in this Section 4, the maximum
aggregate  liability  of Sellers under this Section 4 and HBM under the guaranty
described  in  subsection  (f)  shall  not  exceed  $3,058,000.
5.     EFFECTIVE  DATE.  The  effective date of this Contract ("EFFECTIVE DATE")
shall  be  the  later  of  the  date that this Contract is executed by Seller or
Buyer,  which  is  the  date  set  forth  in  the  preamble  to  this  Contract.
6.     CLOSING:
(a)     Closing  Date  and  Escrow.  Subject  to the provisions of Section 12(c)
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hereof,  on May 1, 2002 (the "CLOSING DATE"), Sellers and Buyer are required and
agree  to  make  full  settlement  in  accordance  with  the  provisions of this
Contract.  The  Assignments  and  Assumptions  of  Facility  Leases  and Release
Agreements  (as  described  in  Section 6(b)(i)) and all other closing documents
shall  be  executed  and  delivered  in escrow to the Escrow Agent by each party
required to execute such documents.  On the morning of the Closing Date, Sellers
     shall  effect a wire transfer of federal funds to the Escrow Agent's escrow
account  in  an  amount  equal  to the sum of (i) the assumption fees, costs and
expenses  (if  any)  to  be  paid by Sellers pursuant to Section 3; and (ii) the
amount  (if any) of the other costs, expenses and adjustments payable by Sellers
under  this  Contract.  After the Escrow Agent's receipt of the wire transfer of
funds  and  immediately  following  the satisfaction (or waiver under Section 12
hereof)  of  the  conditions precedent to closing set forth in Section 12 hereof
the Escrow Agent shall (i) disburse to Sellers the Purchase Price, (ii) disburse
to  Buyer  an  amount  equal  to  the Earnest Money and interest accrued thereon
reduced by the Purchase Price and any costs, expenses and adjustments payable by
Buyer  under  this  Contract,  (iii)  deliver  to  Buyer all other documents and
instruments  received by it which, in accordance with the terms of this Contract
or  any  separate  escrow instructions prepared by Buyer, are to be delivered by
Sellers  to  Buyer  on  the  Closing Date, and (iv) deliver to Sellers all other
documents  and instruments received by it which, in accordance with the terms of
this Contract or any separate escrow instructions prepared by Sellers, are to be
delivered  by  Buyer  to  Sellers  on  the  Closing  Date.  For purposes of this
Contract,  the  term "ESCROW AGENT" shall mean Title Network, Ltd., 4975 Preston
Park  South, Suite 740, Plano, Texas 75093 (Attention:  Mr. Tim Crisp (telephone
number:  (469)241-5020),  fax  number:  (469)241-7011)).
(b)     Seller's  Deliveries:  On  the  Closing  Date,  Sellers shall deliver to
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Buyer  (through  the  Escrow  Agent)  the  following:
(i)     an  Assignment  and  Assumption of Facility Lease and Release Agreement,
one  for  each Facility Lease, in the form of Exhibit C or such other form(s) as
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may  be  required  by  Landlords  which satisfies the conditions of the Required
Consents  and  is  reasonably  acceptable to Sellers and Buyer, duly executed by
each  respective  Seller,  conveying  the  Real  Property  to  Buyer;
(ii)     an  Assignment  and  Assumption  of  Occupancy Agreements, one for each
Facility,  in  the  form  of Exhibit D, duly executed by each respective Seller,
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conveying  the  Occupancy  Agreements  to  Buyer;
(iii)     an  Assignment  of  Licenses,  Intangibles  (including Trade Name) and
Warranties,  one  for  each Facility, in the form of Exhibit E, duly executed by
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each  respective  Seller, conveying the Assignable Licenses, the Trade Names and
other  intangibles  and  warranties  to  Buyer;
(iv)     an  Assignment  and  Assumption  of  Operating  Contracts, one for each
Facility,  in  the  form  of Exhibit F, duly executed by each respective Seller,
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conveying  the  Assumed  Operating  Contracts  (as  defined  below)  to  Buyer;
(v)     a  Bill  of  Sale, one for each Facility, in the form of Exhibit G, duly
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executed  by each respective Seller, conveying the Tangible Personal Property to
Buyer;
(vi)     letters  duly  executed by each respective Seller, advising each of the
residents  and tenants under the Occupancy Agreements of the change in operation
of  the  Facilities;
(vii)     a  schedule  of all security deposits which have been deposited by the
residents and tenants under the Occupancy Agreements, in accordance with Section
6(d)(iv);
(viii)     a  copy  of  each  Assumed  Operating  Contract,  all warranties, and
Assignable  Licenses, each to the extent to be assumed by Buyer hereunder and in
Sellers'  possession;
(ix)     a  certification,  one  from  each Seller, as to its non-foreign status
which complies with the provisions of Section 1445(b)(2) of the Internal Revenue
Code  of  1986,  as  amended,  duly  executed  by  each  respective  Seller;
(x)     to  the extent permitted by law, all resident, tenant and employee (only
for  employees  who  will  be  hired  by  Buyer)  files  which  are  in Sellers'
possession;
(xi)     a  closing  statement  between  Sellers  and  Buyer,  duly  executed by
Sellers,  setting  forth  the  prorations  and adjustments to the Purchase Price
respecting  the  Facilities  to  be  made  pursuant  to  Section  6(d);
(xii)     evidence of the termination, effective as of the Closing Date, of each
Facility's  Management  Agreement  with  HBM;
(xiii)     a  Guaranty  of  Operating  Losses,  in  the  form of Exhibit I, duly
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executed  by  HBM;  and
(xiv)     a  Guaranty  of Representations and Warranties, in the form of Exhibit
                                                                         -------
J,  duly  executed  by  HBM.
(c)     Buyer's  Deliveries.  On  the Closing Date, Buyer shall pay the Purchase
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Price  and  shall  deliver  to  Sellers  the  following:
(i)     a  closing  statement between Sellers and Buyer, duly executed by Buyer,
setting  forth  the  prorations and adjustments to the Purchase Price respecting
the  Facilities  to  be  made  pursuant  to  Section  6(d);
(ii)     an  Assignment  and Assumption of Facility Lease and Release Agreement,
one  for  each Facility Lease, in the form of Exhibit C or such other form(s) as
                                              ---------
may  be  required  by  Landlords  which satisfies the conditions of the Required
Consents  and  is  reasonably  acceptable to Sellers and Buyer, duly executed by
Buyer,  assuming  the  Real  Property;
(iii)     an  Assignment  and  Assumption  of  Occupancy Agreement, one for each
Facility,  in  the  form  of  Exhibit  D,  duly  executed by Buyer, assuming the
                              ----------
Occupancy  Agreements;
(iv)     to  the  extent  required  by either or both Landlords, with respect to
each  applicable  Facility,  a  guaranty  duly executed by Buyer or other credit
entity  acceptable  to  Landlords  of  each  applicable  Facility  Lease,  in
substantially  the  form  of  guaranty  originally  executed  by  ILC;  and
(v)     an  Assignment  and  Assumption  of  Operating  Contracts,  one for each
Facility, in the form of Exhibit F, duly executed by Buyer, assuming the Assumed
                         ---------
Operating  Contracts.
(d)     Adjustments.  The  following  items  of  expense shall be adjusted as of
        -----------
11:59  p.m.  on  the  day  immediately  preceding  the  Closing  Date:
(i)     Real  estate  and  other municipal and local assessments with respect to
the  Real  Property.  If  the  Closing  Date  shall occur before the tax rate or
assessment  is  fixed  for  the  tax  year in which the Closing Date occurs, the
apportionment of taxes shall be upon the basis of the tax rate or assessment for
     the preceding year applied to the latest assessed valuation and Sellers and
Buyer  shall readjust real estate taxes promptly upon the fixing of the tax rate
or  assessment  for  the  tax  year  in  which  the  Closing  Date  occurs;
(ii)     Fuel, water and sewer service charges, and charges for gas, electricity
and  all  other  public  utilities  servicing  the  Facilities;
(iii)     The  rent  payable  by  residents  and  tenants  under  the  Occupancy
Agreements  shall  be  adjusted, and any such rent prepaid to Sellers (including
all  or  a  pro  rata  portion, as applicable, of the rent paid for the month in
which  the closing occurs) shall be paid to Buyer at closing.  Rent which is due
but  uncollected  as of the Closing Date shall not be adjusted and Sellers shall
retain  their right, title and interest in and to all unpaid accounts receivable
with  respect  to the Facilities which relate to the period prior to the Closing
Date.  Any  rents collected from a resident or tenant after the Closing Date who
owes  delinquent rent as of the Closing Date shall be applied (x) first, to then
current  rents  accruing after the Closing Date, (y) second, to delinquent rents
payable  after  the  Closing  Date  and (z) finally, to delinquent rents payable
prior  to the Closing Date.  Notwithstanding the immediately preceding sentence,
Buyer  shall  honor  any  request  from  a resident or tenant to apply rent to a
particular  delinquency.  Buyer  shall  promptly  remit delinquent rent to which
Sellers  are  entitled  hereunder  to Sellers, but in any event, within five (5)
Business Days after receipt (provided that if a resident or tenant includes in a
single  payment  rent  to which both Sellers and Buyer are entitled, Buyer shall
have up to forty-five (45) days to remit the required rent).  After the closing,
Buyer  shall  cooperate  with  Sellers'  efforts  to  collect  Sellers' accounts
receivable  by providing Sellers access, upon reasonable prior notice and during
normal  business  hours, to documents and other information reasonably requested
by  Seller.  Nothing  herein shall be deemed to limit in any way Sellers' rights
and  remedies  to recover accounts receivable due and owing to Sellers under the
terms  of  this Contract, including, without limitation, instigating litigation,
provided  that  such litigation shall not result in the eviction of any Facility
residents  or  tenants;
(iv)     Sellers  shall  deliver  to Buyer on the Closing Date a schedule of all
security  deposits which have been deposited by residents and tenants under, and
not  previously  applied  in  accordance  with,  the  Occupancy Agreements.  All
security  deposits required to be held by Sellers under the Occupancy Agreements
and  not  applied  by  Sellers prior to closing in accordance with the Occupancy
Agreements,  shall  be  transferred  and delivered to Buyer on the Closing Date;
(v)     All  charges  payable with respect to the Assumed Operating Contracts to
be  assumed  by  Buyer  hereunder.  In  addition, if Buyer shall have requested,
Sellers shall exercise any right they may have to purchase any equipment located
at  the  Facilities that is subject to an equipment Operating Contract, in which
case  Buyer  shall  credit the applicable Seller(s) with such purchase price and
such  equipment  shall  be  included  as part of the Tangible Personal Property;
(vi)     Sellers  shall  be  entitled  to  keep any petty cash maintained at the
Facilities  and  Buyer  shall replace such petty cash with such petty cash as it
deems  reasonably  necessary  or  useful  for  the  continued  operation  of the
Facilities;
(vii)     The rent payable under the Facility Leases shall be adjusted such that
Sellers  shall  be  responsible  for  all  such rent for the period prior to the
Closing  Date  and  Buyer  shall be responsible for all such rent for the period
from  and  after  the  Closing  Date;
(viii)     Buyer  shall use its commercially reasonable efforts to cause HCPI to
delete  its  requirement  under  the  HCPI  Facility  Leases  that  the  tenants
thereunder  post  letters  of credit as security deposits (there are no security
deposits  under  the  HRT Facility Leases).  If and to the extent HCPI shall not
agree  to delete its letters of credit requirement, Sellers shall maintain their
existing  letters  of  credit under the HCPI Facility Leases for a period not to
exceed  two  (2)  years  from  the  Closing  Date  on  which Buyer closed on the
Facilities  leased  from  HCPI.  During  such  two  (2) year period, Buyer shall
arrange,  to the extent required by HCPI, to post acceptable replacement letters
of  credit;  and
(ix)     If  any  of  the  items  described  in  this  Section  6(d)  cannot  be
apportioned  at  the  closing  because of the unavailability of information with
respect  to  the  amounts  which  are  to  be  apportioned  or otherwise, or are
incorrectly  apportioned  at  closing or subsequent thereto, such items shall be
apportioned  or  reapportioned, as the case may be, as soon as practicable after
the  Closing  Date  or  the  date such error is discovered, as applicable.  This
Section  6(d)  shall  survive  the  Closing  Date  for  twelve  (12)  months.
(e)     Employees.
        ---------
(i)     Not  later than ten (10) Business Days after the Effective Date, Sellers
shall  deliver  to  Buyer a schedule including the following information as of a
date which is not more than fifteen (15) days prior to the delivery date of such
     schedule:  (i)  the  name of all Facilities-based employees, and (ii) their
positions,  rates  of  pay  and  original  hire dates.  Sellers shall update the
schedule  described  in the immediately preceding sentence on or about three (3)
Business  Days  prior to the Closing Date and promptly shall notify Buyer of any
material  changes  in  such  schedule.  Sellers will terminate the employment of
each  of  the  Facility  Employees  (as  defined  below) as of the Closing Date.
(ii)     Buyer  agrees  its acquisition of the Facilities shall be structured in
such  a  manner  that Sellers shall not be required to give any Facilities-based
employees  notification  under the Worker Adjustment and Retraining Notification
Act,  29  U.S.C.   2101,  et  seq.  To  this end, on or before the Closing Date,
Buyer  shall offer to hire, on a probationary basis, at least seventy-five (75%)
percent  of  Sellers'  employees  who  are  employed  at each Facility as of the
Closing  Date  (the  "FACILITY  EMPLOYEES").  Any  such offer of employment to a
Facility  Employee  by  Buyer  shall  be to perform comparable services, in such
position  as  is comparable to the position such Facility Employee held with any
Seller  as  of  the  closing, provided that Buyer may offer compensation to such
Facility Employees at levels commensurate with compensation levels paid to other
     employees  of Buyer holding comparable positions, and provided further that
any  change in compensation levels does not result in any constructive discharge
of  any  such  Facility  Employee.  Sellers  shall  have  the right (but not the
obligation)  to  employ  or  offer  to employ any Facility Employee who declines
Buyer's  offer  of  employment.
(iii)     Buyer  shall  hire  at  the  closing,  on  a  probationary basis, each
Facility  Employee who elects to accept employment with Buyer in accordance with
the  terms  of  Section  6(e)(ii),  above  (all  of  such  employees  who accept
employment  with  Buyer  being  herein  called  the  "HIRED  EMPLOYEES").
(iv)     Sellers  shall  pay  to each Facility Employee, on that date which, but
for  the  closing, would have been the next regularly scheduled payroll date for
such  employee  following  the  closing  or sooner if required by law, an amount
equal  to any and all salary or benefits earned and accrued by such employee, as
of  the  Closing  Date  in  accordance  with  Sellers'  policies.
(v)     Nothing  in  this  Section  6(e) shall create any rights in favor of any
person  not  a  party hereto, including the Facility Employees, or constitute an
employment  agreement  or condition of employment for any employee of Sellers or
any  affiliate  of  Seller.
(f)     Insurance.  As  of  the  Closing  Date,  Buyer is solely responsible for
        ---------
obtaining, and the cost and expense of, all insurance related to the Facilities,
     including,  without  limitation,  such  insurance  as  may  be  required by
Landlords.
7.     REPRESENTATIONS  AND  WARRANTIES.
(a)     Representations of Seller.  Each Seller, only with respect to itself and
        -------------------------
     the  Facility which it leases and the Personal Property it owns, represents
and  warrants  to  Buyer  that:
(i)     Organization and Authorization.  Each Seller is an entity duly organized
        ------------------------------
     and in good standing in the state of its organization and is duly qualified
to do business and in good standing in the state in which the Facility it leases
is  situated.  The individual(s) executing this Contract on behalf of Sellers is
duly  authorized  to  execute this Contract on behalf of Sellers.  The execution
and  delivery of this Contract and the performance of all obligations of Sellers
hereunder  have  been  duly  authorized  by  all  entity  action  of  Sellers.
(ii)     No Conflicting Agreements.  The transfer and delivery by Sellers of the
         -------------------------
Facilities  to  Buyer  as  provided  hereunder and the performance by Sellers of
their  obligations  under  this Contract will not conflict with or result in the
breach of any of the terms of any agreement or instrument to which Sellers are a
party.
(iii)     FIRPTA.  Sellers  are not a "foreign person" within the meaning of the
          ------
United  States  tax laws and to which reference is made in Internal Revenue Code
Section  1445(b)(2).
(iv)     No  Consents.  With the exception of the Required Consents, Sellers are
         ------------
not  aware  of any consents required for the performance of Sellers' obligations
hereunder.
(v)     Condemnation.  As  of  the Effective Date, Sellers have not received any
        ------------
written  notice  of any pending or threatened condemnation of all or any portion
of  the  Facilities.
(vi)     Litigation.  Sellers have not received written notice of any litigation
         ----------
that  is  pending  or  threatened  with  respect  to  the Facilities, except (A)
litigation  fully  covered  by  insurance  policies  (subject  to  customary
deductibles);  or  (B)  litigation  set  forth  in  Schedule  7(a)(vi).
                                                    ------------------
(vii)     Bankruptcy.  Sellers  have  neither  filed nor been the subject of any
          ----------
filing  of  a  petition under the federal bankruptcy law or any federal or state
insolvency  laws  or  laws  for  consumption  of  indebtedness  or  for  the
reorganization  of  debtors.
(viii)     Operating  Statements.  The  Operating  Statements, as defined below,
           ---------------------
are  the  operating statements used in Sellers' ordinary course of business and,
to  Sellers'  knowledge, are in accordance with the books and records of Seller.
The  Operating  Statements do not materially misstate the Facilities' income and
expenses  for  the  applicable  periods  set  forth  therein.
(ix)     Structural.  To  Sellers' knowledge, Sellers do not have any structural
         ----------
reports  respecting  the  Facilities  in  their  possession  or  control.
(x)     Compliance  with  Laws; Environmental.  To Sellers' knowledge, as of the
        -------------------------------------
Effective  Date,  Sellers have not received any notice (whether written or oral)
from  any  governmental  authority that all or any portion of any Facility is in
material  violation  of  any  applicable  building  codes  or  any  applicable
environmental  law  (relating  to clean-up or abatement), zoning law or land use
law  relating  to  any  Facility, which material violation has not been cured or
remedied  in  accordance  with  applicable  law  prior  to  the  Effective Date.
(xi)     Operating  Contracts.  Attached  hereto  as  Schedule  7(a)(xi)  is  a
         --------------------                         ------------------
schedule  of all of the current service, maintenance and equipment contracts and
leases related to the operation of the Facilities, excluding Sellers' management
agreements with HBM (which shall be terminated as of the Closing Date), of which
Sellers  have  knowledge.  Except  for equipment leased from Landlords under the
Facility  Leases  and  any  Operating  Contracts  on Schedule 7(a)(xi) described
                                                     -----------------
specifically  as  an equipment lease, there is, to Sellers' knowledge, no leased
equipment  at  the  Facilities.
(xii)     Occupancy  Agreements.  All  of  the  tenants  or  residents  at  the
          ---------------------
Facilities occupy their respective premises under Occupancy Agreements which are
substantially  in  the  form  provided  to Buyer under the provisions of Section
8(d)(ii)  hereof.  The  security  deposit  schedule  to  be provided to Buyer by
Sellers  under  Section  6(b)(vii)  hereof is materially accurate.  There are no
"life  care" provisions in any Occupancy Agreement.  No Facility participates in
any  "third  party  payor"  program.
(xiii)     Unions.  No  Seller  is a party to any contract or agreement with any
           ------
labor  union nor do Sellers have any knowledge of union organizing activities at
the  Facilities.
(xiv)     Facility  Leases.  Sellers  are  the  respective  tenants  under  the
          ----------------
Facility  Leases.  To  Sellers' knowledge, neither Landlord is in default of its
obligations under the Facility Leases.  No Seller is in monetary default under a
Facility  Lease  and  no  Seller has received a written notice of default from a
Landlord  under  its  Facility Lease (except that HRT has notified Sellers which
are  the  tenants under the HRT Facility Leases that the Facilities fail to meet
certain  financial  coverage  ratios  set  forth  in  the  HRT Facility Leases).
     Except as expressly set forth in this Contract, it is understood and agreed
that  Sellers  are  not  making  and have not at any time made any warranties or
representations of any kind or character, express or implied with respect to the
Facilities,  including  any  warranties  or  representations as to habitability,
merchantability,  or  fitness  for  a  particular purpose or any other matter or
thing regarding the Facilities.  Except as expressly set forth in this Contract,
Buyer  acknowledges  and  agrees that upon closing, Seller shall sell, convey to
assign  and  transfer  to Buyer, and Buyer shall accept Sellers' interest in the
Facility  Leases  and the Facilities "as is, where is, with all faults."  Except
as  expressly  set  forth  in  this Contract, Buyer shall rely solely on its own
investigation  with  respect  to  the  Facilities,  including  the  Facilities'
physical,  environmental  or economic condition, compliance or lack thereof with
any  law.  Except  as  expressly set forth in this Contract, in addition to, and
not  by  way  of limitation of, the sale of the Facilities on an AS IS CONDITION
WITH  ALL FAULTS basis under this Contract, Buyer acknowledges that Sellers make
no representations or warranties whatsoever to Buyer regarding the: (i) physical
condition  of  the Facilities; or (ii) presence or absence of hazardous or toxic
materials  or  chemicals  in,  at,  or  under  the  Facilities.
References  in  this  Contract to the "KNOWLEDGE" of Sellers shall refer only to
the  actual  knowledge (as opposed to constructive, deemed or imputed knowledge)
of  the  Designated  Employees (as hereinafter defined) after reasonable inquiry
has  been  made of the appropriate regional and/or Facility personnel, and shall
not  be  construed,  by  imputation  or  otherwise, to refer to the knowledge of
Sellers,  or  any affiliate of Sellers, to any property manager, or to any other
trustee,  officer,  agent, manager, representative or employee of Sellers or any
affiliate  thereof  or  to  impose  upon  such  Designated Employees any duty to
investigate  the  matter to which such actual knowledge, or the absence thereof,
pertains  other  than the duty of inquiry described herein.  As used herein, the
term "DESIGNATED EMPLOYEES" shall refer to Thilo D. Best (President and C.E.O.),
Jon  A.  DeLuca (Senior V.P. and C.F.O.), Judy Dabertin (Senior V.P. of Assisted
Living),  and  Jim  Triplett  (Regional  V.P.  of  Operations  -  South).
(b)     Buyer's Independent Investigations.  Buyer acknowledges that it is being
        ----------------------------------
     given the full opportunity to inspect and investigate each and every aspect
of the Facilities during the Feasibility Period, either independently or through
agents,  representatives  or  experts  of  Buyer's  choosing, as Buyer considers
necessary  or  appropriate,  and,  if  applicable,  its  failure  to  give  the
Termination  Notice  (as  defined  in  Section  8(c)) will conclusively evidence
Buyer's complete satisfaction with such independent investigation subject to the
specific  sections  of  this  Contract  described  below.  Buyer  has sufficient
knowledge  and  experience  in  financial  and  business matters to enable it to
evaluate  the merits and risks of acquiring Sellers' interest in the Facilities.
Such  independent  investigation  by  Buyer  includes,  without  limitation:
(i)     the  physical  condition  of  the  Real  Property,  including,  without
limitation,  the interior, the exterior, the square footage of each tenant space
therein,  the  structure,  the  roof,  the  paving, the utilities, and all other
physical  and functional aspects of the Real Property, including the presence or
absence  of  Hazardous  Materials.  "HAZARDOUS  MATERIALS" shall mean materials,
wastes  or  substances that are (A) included within the definition of any one or
more  of  the  terms  "hazardous  substances,"  "hazardous  materials,"  "toxic
substances,"  "toxic  pollutants,"  and  "hazardous  waste" in the Comprehensive
Environmental  Response,  Compensation and Liability Act of 1980, as amended (42
U.S.C.   9601,  et seq.), the Resource Conservation and Recovery Act of 1976 (42
U.S.C.   6901,  et  seq.),  the Clean Water Act (33 U.S.C.   1251, et seq.), the
Safe  Drinking  Water  Act  (14 U.S.C.   1401, et seq.), the Hazardous Materials
Transportation  Act (49 U.S.C.   1801, et seq.), and the regulations promulgated
pursuant  to such laws; (B) regulated or classified as hazardous or toxic, under
federal,  state  or  local environmental laws or regulations; (C) petroleum; (D)
asbestos  or  asbestos-containing  materials; (E) polychlorinated biphenyls; (F)
flammable  explosives;  or  (G)  radioactive  materials;
(ii)     contracts,  operating  leases, and any other documents or agreements of
significance  affecting  the  Facilities;
(iii)     Occupancy Agreements with respect to the Facilities and all matters in
connection  therewith,  including,  without  limitation,  the  ability  of  the
residents  and  tenants  thereto  to  pay  the  rent;
(iv)     all matters relating to the income and operating or capital expenses of
the  Facilities  and  all  other  financial  matters;
(v)     the  Facility  Leases;  and
(vi)     all  other  matters  of  significance  affecting,  or  otherwise deemed
relevant  by  Buyer  with  respect  to,  the  Facilities.
(c)     Release.  Without  limiting  the  provisions  of  this  Section 7, Buyer
        -------
waives  its  right  to  recover  from,  and forever releases and discharges, and
covenants  not to sue, Sellers, Sellers' affiliates, Sellers' asset manager, the
partners,  trustees,  shareholders,  controlling  persons,  directors, officers,
attorneys,  employees  and  agents  of each of them, and their respective heirs,
successors,  personal  representatives  and  assigns (each a "SELLER PARTY", and
collectively,  the "SELLER PARTIES") with respect to any and all claims, whether
direct  or indirect, known or unknown, foreseen or unforeseen, that may arise on
account  of  or  in  any way be connected with the Facilities including, without
limitation,  the physical, environmental and structural condition of the related
Real  Property  or  any law or regulation applicable thereto, including, without
limitation,  any  claim  or  matter  relating to the use, presence, discharge or
release  of Hazardous Materials on, under, in, above or about the Real Property;
provided,  however,  that  the  foregoing  shall  not  restrict  Buyer  from
interpleading  Sellers  in  any  action  filed  by  a  third party against Buyer
relating  to Sellers' ownership and operation of the Facilities prior to closing
and  Buyer  does  not  waive  its  rights, if any, to recover from, and does not
release  or  discharge  or  covenant  not to sue Sellers for (i) any act that is
found  by a court of competent jurisdiction to constitute fraud, (ii) any breach
of  Sellers' representations or warranties set forth in Section 7(a), subject to
the  limitations  and  conditions provided in this Contract, (iii) any breach of
Sellers'  obligations set forth in this Contract that expressly survive closing,
(iv)  any matter which is the subject of an indemnity from a Seller in a Closing
Document  (hereinafter  defined),  subject  to  the  limitations  and conditions
provided  in  this  Contract  and  such  Closing  Document, or (v) any breach by
Sellers  of  Section  4  hereof.
(d)     Waiver  by  Buyer.  If  Buyer, with knowledge of (i) a default in any of
        -----------------
the  covenants,  agreements or obligations to be performed by Sellers under this
Contract  and/or  (ii)  any  breach  of  or  inaccuracy in any representation or
warranty  of  Sellers  made  in  this  Contract nonetheless elects to proceed to
closing,  then,  upon  the consummation of the closing, Buyer shall be deemed to
have waived any such default and/or breach or inaccuracy and shall have no claim
against  Sellers  with  respect  thereto.
(e)     Buyer's  Representations.  Buyer  represents  to  Sellers  that:
        ------------------------
(i)     Organization  and  Authorization.  Buyer is an entity duly organized and
        --------------------------------
in  good  standing  in  the state of its organization and is or prior to closing
will  be  duly  qualified  to  do business and in good standing in the states in
which  the  Facilities  are situated.  The individual executing this Contract on
behalf  of Buyer is duly authorized to execute this Contract on behalf of Buyer.
     The  execution  and  delivery  of  this Contract and the performance of all
obligations of Buyer hereunder have been duly authorized by all entity action of
Buyer.
(ii)     No  Conflicting Agreements.  The acquisition of the Facilities by Buyer
         --------------------------
as provided hereunder and the performance by Buyer of its obligations under this
Contract  will  not conflict with or result in the breach of any of the terms of
any  agreement  or  instrument  to  which  Buyer  is  a  party.
(f)     Waiver  by  Sellers.  If Sellers, with knowledge of (i) a default in any
        -------------------
of  the covenants, agreements or obligations to be performed by Buyer under this
Contract  and/or  (ii)  any  breach  of  or  inaccuracy in any representation or
warranty  of  Buyer  made  in  this  Contract  nonetheless  elects to proceed to
closing,  then, upon the consummation of the closing, Sellers shall be deemed to
have waived any such default and/or breach or inaccuracy and shall have no claim
     against  Buyer  with  respect  thereto.
(g)     No  Unintended  Assumption of Liabilities.  Except as expressly provided
        -----------------------------------------
in  this  Contract  or in any Closing Document, Buyer is not assuming any of the
liabilities  or  obligations  of,  or  claims  against,  Sellers  of any kind or
character.  The only transactions contemplated by this Contract are the sale and
purchase  of  Sellers'  interests  in the Facilities.  Sellers are not selling a
business.  The  parties  intend that Buyer shall not be deemed to be a successor
of  Sellers  with respect to any of Sellers' liabilities or obligations to third
parties  arising  before  the  Closing  Date.
8.     BUYER'S  INSPECTIONS  AND  FEASIBILITY  PERIOD.
(a)     Buyer's  Access.  During  the  Feasibility  Period  and prior to the TSZ
        ---------------
Objection  Date  (hereinafter  defined),  Sellers  shall  give  to Buyer and its
officers,  directors,  employees,  agents,  advisors,  or  representatives
("REPRESENTATIVES"),  complete  access  to the Facilities during normal business
hours  and  after  reasonable  prior  notice,  for the purpose of performing any
reasonable  tests  and  investigations,  including,  without  limitation,
non-intrusive  environmental and property condition tests and studies (intrusive
environmental  testing  shall require Sellers' consent).  Sellers shall have the
right  to  accompany  Buyer  and/or  its  Representatives  during  any  Buyer
investigation  or  testing.  Buyer  shall  repair  any  damage to the Facilities
caused  by  any  entry  upon  the  Facilities  by  Buyer or its Representatives.
Notwithstanding  any  other  provision  of this Contract, the preceding sentence
shall  survive  the  termination of this Contract for any reason and Buyer shall
not be relieved of its obligations under the preceding sentence by reason of any
     termination  of  this  Contract.
(b)     Buyer's  Indemnity.  Buyer  agrees  to:  (i) indemnify, defend, and hold
        ------------------
Sellers,  and  any  partner,  officer,  director, employee, agent or attorney of
Sellers,  and  any  other party related in any way to any of the foregoing, free
and  harmless from and against any and all costs, loss, damages and expenses, of
any  kind or nature whatsoever (including attorneys' fees and costs) arising out
of  or  resulting  from  the  entry  and/or  the  conduct of activities upon the
Facilities  by  Buyer  or  its  Representatives  and  their  employees,  agents,
representatives,  contractors,  subcontractors or attorneys at the Facilities or
any  breach  of  this Section 8, whether arising prior to or after the Effective
Date;  and  (ii)  deliver  promptly to Sellers copies of all third party reports
commissioned  by  or  on  behalf  of Buyer which set forth the results of tests,
studies  and  inspections  of the Facilities.  Notwithstanding any provisions of
this  Contract,  the  preceding  sentence  shall  survive  the  expiration  or
termination  of  this  Contract.
(c)     Feasibility Period.  If, during the period between February 4, 2002, and
        ------------------
11:59  p.m.  Eastern  Standard  Time  on  the  Effective  Date  (such  period is
hereinafter  referred  to  as  the  "FEASIBILITY  PERIOD"),  Buyer gives Sellers
written  notification  (the  "TERMINATION  NOTICE")  that  Buyer  elects  not to
consummate the purchase of the Sellers' interests in the Facility Leases and the
Facilities,  this  Contract  shall terminate, the Earnest Money and the interest
thereon  shall  be  returned  to Buyer, and, except as otherwise provided in the
last  sentence  of  Section  8(a)  or 8(b), neither party shall have any further
liability  to  the  other  under  this  Contract.  Buyer shall have the absolute
right,  in  its  sole  discretion,  to determine whether to give the Termination
Notice.  If  Buyer  elects  not  to  give  the  Termination  Notice prior to the
expiration  of  the Feasibility Period, this Contract shall remain in full force
and  effect  in  accordance  with, and subject to, its terms.  In the event that
Buyer  does  not give the Termination Notice, Forty-three Thousand Seven Hundred
Fifty Dollars ($43,750) of the Earnest Money shall become non-refundable, except
under  the  circumstances  described  in  Sections  13  (Risk  of  Loss),  17
(Condemnation),  and  31  (License Review Period), and shall be credited against
the  Purchase Price (as it may be adjusted and prorated herein (with any balance
returned  to  Buyer))  on  the Closing Date or shall be paid to Sellers upon any
subsequent termination of this Contract in accordance with its terms (subject to
any  express  provisions  of  this  Contract  to  the  contrary).
(d)     Due  Diligence  Deliveries.  Buyer  acknowledges  receipt  prior  to the
        --------------------------
Effective  Date  of  the following Delivered Materials, each of which Buyer will
have,  prior to the end of the Feasibility Period, reviewed and approved (if and
to  the  extent  it  does  not  give  the  Termination  Notice):
(i)     a  true  and  correct  copy  of  each  Facility  Lease;
(ii)     Facilities'  form  of  Occupancy  Agreement;
(iii)     Facilities'  most  recent  real  property  tax  statements;
(iv)     Facilities'  governmental  licenses  and  permits;
(v)     Facilities'  historical  occupancy  data  for  calendar years 1999-2001;
(vi)     Facilities'  marketing  materials,  including  brochures;
(vii)     Facilities'  operations  organizational  structure;  and
(viii)     Facilities'  statements  of income and expenses of the Facilities for
calendar  years  1999  through  2001  (the  "OPERATING  STATEMENTS").
(e)     Pursuit  of Licenses.  It shall be a condition precedent to Sellers' and
        --------------------
Buyer's  obligation  to  close  that  Buyer shall have received all licenses and
governmental approvals necessary to operate the Facilities.  Buyer shall use its
     commercially  reasonable efforts to obtain all such licenses and permits as
of the earliest possible date but in any event, not later than immediately prior
to  closing.  To  this  end, Buyer shall submit complete license applications by
not  later  than  one  (1)  Business  Day after receiving letter(s) from Sellers
authorizing  such license applications.  Buyer shall provide Sellers with a copy
of the license applications and all correspondence with governmental authorities
regarding  the  license  applications.  Sellers  shall  cooperate, at no cost to
Sellers,  with  Buyer's  efforts  to  obtain  the required licenses and permits.
(f)     "All or Nothing" Transaction.  The purchase of the Sellers' interests in
        ----------------------------
the  Facility  Leases and the Facilities by Buyer is intended by both parties to
be  an  "all or nothing" transaction.  Subject to Sections 3(b) (Facility Leases
Assumption),  12(c)  (Failure of Conditions Precedent), 13 (Risk of Loss) and 17
(Condemnation),  Buyer  shall  either  acquire  Sellers'  interest in all of the
Facility  Leases  and  Facilities  or none of them even if Buyer only desires to
acquire Sellers' interest in certain of the Facility Leases and Facilities after
completing  its  due  diligence  or  if  the conditions precedent to closing are
satisfied  with  respect  to  certain  Facilities  but  not  others.
(g)     Operating  Contracts.  Sellers  agree to deliver to Buyer on or prior to
        --------------------
the  Effective  Date copies of the Operating Contracts.  Prior to closing, Buyer
shall  designate those Operating Contracts which Buyer elects to assume (each of
which  shall constitute an "ASSUMED OPERATING CONTRACT") and all other Operating
Contracts  shall  be  terminated  by Sellers as of the earliest termination date
possible,  provided  that Buyer shall be responsible for payment of all fees due
for  the  period  after  closing  through  the termination date of the Operating
Contract  if  Buyer  receives  the  benefit  of  services  under such terminated
Operating  Contract  (otherwise  Sellers shall be responsible for payment of all
such  fees).  Payment  of all termination fees associated therewith shall be the
obligation  of  Sellers.
9.     INTERIM  OPERATION  OF  THE  PROPERTIES.
(a)     General  Operation.  Except  as  otherwise  contemplated or permitted by
        ------------------
this  Contract  or  approved by Buyer in writing, from the Effective Date to the
Closing  Date,  Sellers agree that they will operate, maintain, repair, license,
and  lease  the  Facilities in the ordinary course, on an arm's length basis and
consistent  with Sellers' past practices and will not dispose of or encumber any
Facility, except for dispositions of personal property in the ordinary course of
     business  which  is  promptly  replaced  with  like-kind  property,  or  as
otherwise  permitted  by this Contract.  Without limiting the foregoing, Sellers
shall,  in  the  ordinary  course,  file  all  renewal applications for Facility
licenses  on  a  timely  basis, enforce the Occupancy Agreements in all material
respects,  perform  in  all  material  respects  all of licensors' or landlords'
obligations under the Occupancy Agreements (other than Occupancy Agreements that
are  in  the process of being terminated due to a resident's or tenant's default
thereunder),  pay  all  costs  and expenses of the Facilities which are Sellers'
responsibility  to  pay, and perform all material obligations under the Facility
Leases.  Sellers  shall  promptly  provide  Buyer  during  the  pendency of this
Contract  with  a  copy of any renewal application for Facility licenses and any
final  Facility  surveys.
(b)     Contracts.  Sellers  agree  that,  without Buyer's prior written consent
        ---------
(such  consent not to be unreasonably withheld, conditioned or delayed), Sellers
will  not  enter  into  any  Operating Contract affecting the Facilities if such
Operating  Contract  cannot  be  terminated  on thirty (30) days' notice or less
without  penalty.
(c)     Maintenance.  Between  the  Effective Date and the Closing Date, Sellers
        -----------
shall  (i)  maintain  the  Facilities  in substantially the same manner as prior
hereto  pursuant  to  Sellers'  normal course of business, subject to reasonable
wear and tear and further subject to the occurrence of any damage or destruction
to the Real Property by casualty or other causes or events beyond the control of
Sellers;  provided,  however,  that  Sellers' maintenance obligations under this
subsection  shall  not  include  any obligation to make capital expenditures not
incurred  in  Sellers'  normal  course of business or any other expenditures not
incurred  in  Sellers'  normal course of business unless required to comply with
the  terms  of  the  Facility  Leases;  (ii)  continue  to maintain its existing
insurance  coverage;  and  (iii)  not  grant any voluntary liens or encumbrances
affecting  the  Facilities.
10.     TITLE.  Sellers do not make any representations, warranties or covenants
     concerning  title  to  the  Real  Property  except that (i) Sellers are the
respective  tenants under the Facility Leases and (ii) after the Effective Date,
Sellers  shall  not  execute  any deed, easement, restriction, covenant or other
matter  affecting  title  to the Real Property (other than Occupancy Agreements)
unless  Buyer has received a copy thereof and has expressly approved the same in
writing  (such  approval  will  not  be  unreasonably  withheld,  conditioned or
delayed).  Prior  to April 29, 2002 (the "TSZ OBJECTION DATE"), Buyer shall have
the  right, but not the obligation, to, at its sole cost and expense, (i) obtain
from  any  nationally  recognized  title insurance company (the "TITLE COMPANY")
leasehold  title  insurance  commitments  for  the  Facilities  (the  "TITLE
COMMITMENTS"), (ii) land surveys for the Facilities ("SURVEYS") and (iii) zoning
letters  from the municipalities in which the Facilities are located stating the
zoning  designation  of  the  area  in  which  each Facility is located ("ZONING
LETTERS").  On  or  prior  to  the TSZ Objection Date, Buyer may provide Sellers
with  a  written  notice  stating  any  specific  matters  (each, a "DISAPPROVED
MATTER")  in the Title Commitments' exceptions, Surveys, or Zoning Letters which
are  unacceptable  to Buyer.  Sellers shall have no obligation hereunder to cure
any  Disapproved  Matter and any failure of Sellers to respond to Buyer's notice
shall  be  deemed  an election not to cure a Disapproved Matter.  Within one (1)
Business  Day  of  its  receipt of Buyer's notice, Sellers shall notify Buyer in
writing  of  any  Disapproved  Matters  which Sellers are unwilling or unable to
cause  to be removed or insured against prior to or at closing, and with respect
to  such Disapproved Matters, Buyer shall then elect within one (1) Business Day
of  its  receipt  of  Sellers'  notice (or deemed receipt) (a) to terminate this
Contract and to receive a refund of one-half of the Earnest Money (the remaining
one-half  of  the  Earnest Money to be delivered to Sellers) or (b) to waive its
disapproval  of  such  Disapproved  Matters  and,  subject  to the terms of this
Contract,  to  proceed  to  closing  hereunder.  Buyer's  failure  to respond to
Sellers'  notice  shall  be  deemed an election to terminate this Contract under
clause (a) of the immediately preceding sentence.  If Sellers shall fail to cure
any  Disapproved  Matter  prior  to  the Closing Date which it notified Buyer it
would  cure  and  Buyer  is  unwilling  to  acquire  Sellers'  interests  in the
Facilities  subject  thereto,  Buyer  shall  have  the  right  to terminate this
Contract  and  to  receive  the  return  of  one-half  of the Earnest Money (the
remaining  one-half  of  the  Earnest  Money  to  be  delivered  to  Sellers).
11.     COSTS.  Buyer  shall  pay  the  cost  of  all  premiums  and  charges in
connection  with  any title insurance issued to Buyer, the cost of preparing any
Facility land survey, one-half of all escrow charges due to the Escrow Agent and
all costs of Buyer's due diligence, including fees due its consultants.  Sellers
shall  pay  one-half  of  all  escrow  charges  due  to the Escrow Agent and any
assumption fees and costs described in Section 3.  Each party shall pay the fees
and  costs  of  its  own  counsel.
12.     CONDITIONS  PRECEDENT  TO  CLOSING.
(a)     Conditions to Buyer's Obligations.  The obligations of Buyer to purchase
        ---------------------------------
     Sellers'  interests  in the Facility Leases and the Facilities from Sellers
and  to  perform the other covenants and obligations to be performed by Buyer on
the  Closing  Date  shall  be subject to the following conditions (all or any of
which  may  be  waived  in  writing,  in  whole  or  in  part,  by  Buyer):
(i)     Representations and Warranties True.  The representations and warranties
        -----------------------------------
     made  by  Sellers  under  this  Contract  shall  be true and correct in all
material  respects  on  the  Effective Date and shall be true and correct in all
material  respects  on and as of the Closing Date with the same force and effect
as if such representations and warranties had been made on and as of the Closing
Date.
(ii)     Sellers'  Performance.  Sellers  shall  have  performed  all covenants,
         ---------------------
agreements and delivered all documents required by this Contract to be performed
or  delivered  by  them  on  or  before  the  Closing  Date.
(iii)     Required  Consents.  Subject  to  the  provisions  of Section 3, on or
          ------------------
prior to the Closing Date, the Required Consents shall have been obtained (which
may  be  evidenced  by Landlords' execution of each Assignment and Assumption of
Facility  Lease  and  Release Agreement), upon commercially reasonable terms and
conditions; provided that Landlords requiring Emeritus Corporation to assume the
same  guaranty obligations as ILC shall be deemed to be commercially reasonable,
but  Landlords  requiring  Emeritus  Corporation  to pay any lease assumption or
other  fees  or  to  undertake  greater  obligations than those reflected in the
Facility  Leases  shall  not  be  deemed  to  be  commercially  reasonable.
(iv)     Licenses.  Buyer  shall  have  received  all  licenses and governmental
         --------
approvals  necessary to operate the Facilities and all such licenses shall be on
terms  and  conditions  reasonably  acceptable  to  Buyer  (it being agreed that
Buyer's  receipt  of  the  same  licenses currently held by Sellers on terms and
conditions substantially similar to the terms and conditions under which Sellers
hold  such  licenses  (except  that  Buyer's  license  may include any customary
conditions subsequent imposed in connection with any transfer of ownership, such
as  a  post-closing  survey)  is  deemed  reasonably  acceptable  to  Buyer).
(b)     Conditions  to Sellers' Obligations.  The obligations of Sellers to sell
        -----------------------------------
their  interests  in  the  Facility  Leases  and  the Facilities to Buyer and to
perform  the  other  covenants and obligations to be performed by Sellers on the
Closing  Date  shall be subject to the following conditions (all or any of which
may  be  waived  in  writing,  in  whole  or  in  part,  by  Sellers):
(i)     Representations and Warranties True.  The representations and warranties
        -----------------------------------
     made by Buyer under this Contract shall be true and correct in all material
respects  on the Effective Date and shall be true and correct in all respects on
and  as  of  the  Closing  Date  with  the  same  force  and  effect  as if such
representations  and  warranties  had  been  made on and as of the Closing Date.
(ii)     Buyer's  Performance.  Buyer  shall  have  performed  all  covenants,
         --------------------
agreements and delivered all documents required by this Contract to be performed
or  delivered  by  it  on  or  before  the  Closing  Date.
(iii)     Licenses.  Buyer  shall  have  received  all licenses and governmental
          --------
approvals  necessary to operate the Facilities and all such licenses shall be on
terms  and  conditions  reasonably  acceptable  to  Buyer  (it being agreed that
Buyer's  receipt  of  the  same  licenses currently held by Sellers on terms and
conditions substantially similar to the terms and conditions under which Sellers
hold  such  licenses  (except  that  Buyer's  license  may include any customary
conditions subsequent imposed in connection with any transfer of ownership, such
as  a  post-closing  survey)  is  deemed  reasonably  acceptable  to  Buyer).
(iv)     Required Consents.  Subject to the provisions of Section 3, on or prior
         -----------------
to  the  Closing Date, the Required Consents shall have been obtained (which may
be  evidenced  by  Landlords'  execution  of  each  Assignment and Assumption of
Facility  Lease  and  Release  Agreement),  including,  without  limitation, the
release  of  Sellers  and ILC from liability under the Facility Leases as of the
Closing  Date.
(c)     Failure  of  Conditions  Precedent.  Subject  to  the  terms of the next
        ----------------------------------
sentence, in the event that all conditions precedent for closing as specified in
     Section  12(a)  and (b) above are not fulfilled on the Closing Date (as the
same  may  be  extended  by  written agreement of Sellers and Buyer), the Escrow
Agent  shall return all of Buyer's funds to Buyer and all documents to the party
that  has  delivered such documents to the Escrow Agent, except that the Earnest
Money shall be distributed to the party entitled to receive the Earnest Money in
accordance  with  the  provisions  of  this  Contract.  In  the  event  that the
conditions  precedent  in  Sections  12(a)(iv)  and  12  (b)(iii)  (the "LICENSE
CONDITION")  are not satisfied on the Closing Date, Seller or Buyer may elect to
extend  the  Closing  Date  for a reasonable period of time, provided that in no
event  shall the Closing Date be extended in the aggregate more than thirty (30)
days,  but, subject to the terms of the next sentence, only for those Facilities
for  which  the License Condition was not satisfied.  Closing of the transaction
provided  for herein for which the License Condition was satisfied shall proceed
on  the initially scheduled Closing Date, except that in no event shall closings
on  Facilities  leased  from the same Landlord occur on different Closing Dates.
Accordingly,  if  the  License  Condition  is  satisfied with respect to certain
Facilities leased from a single Landlord, but not others, the Closing Date shall
be  extended  (up to the maximum time period specified above) for all Facilities
leased  from  that  Landlord.  If  the  closing  of the transaction provided for
herein  occurs  on  different  dates,  then  the  term  "Closing  Date," as used
elsewhere  in  this  Contract  (including,  without  limitation,  Section  25
(Limitations  on  Claims;  Survival)), shall mean with respect to the Facilities
for  which  the  License  Condition  was  satisfied  and closing occurred on the
initially  scheduled  Closing Date, the initial Closing Date and shall mean with
respect to the balance of the Facilities, the date on which Sellers' interest in
those  remaining  Facilities  was  acquired  by  Buyer.
13.     RISK OF LOSS.  If, prior to the Closing Date, any Facility is damaged by
     fire  or  by  any other cause whatsoever, Sellers shall promptly give Buyer
written  notice  of  such  damage.
(a)     If  such  damage affects more than one of the Facilities and the cost of
repairing  such  damage  is not in excess of One Million Dollars ($1,000,000) in
the  aggregate  at  the  time  of  such  casualty  (as  determined  by  Sellers'
independent insurer), then (a) Buyer shall receive at the closing, to the extent
     such  sums  have  not  been  expended  on  repair  work with the reasonable
approval  of Buyer (except for emergency repairs, for which no approval shall be
required), the amount of the deductible, plus the amount necessary to repair any
uninsured  loss,  plus  an assignment of all insurance proceeds payable (but not
yet  paid)  as  a  result  of such loss, plus all insurance proceeds received by
Sellers  as  a result of such casualty loss; (b) this Contract shall continue in
full  force  and  effect with no reduction in the Purchase Price and (c) Sellers
shall have no obligation to repair such damage.  Notwithstanding any language to
the  contrary herein, if the cost to repair such damage is less than One Million
Dollars  ($1,000,000)  in  the  aggregate  at  the  time  of  such  casualty (as
determined  by  Sellers'  independent  insurer),  neither party has any right to
terminate  the Contract as a result of such damage except as provided in Section
13(c).
(b)     If  such  damage affects more than one of the Facilities and the cost of
repairing  damage  from  such  casualty  is equal to or greater than One Million
Dollars  ($1,000,000)  in  the  aggregate  at  the  time  of  such  casualty (as
determined  by  Sellers'  independent insurer), then Buyer shall have the right,
for  a  period  of ten (10) days from the date of notice of the amount of damage
caused  by  the casualty, to terminate this Contract by giving written notice of
termination to Sellers within such period and the Closing Date shall be extended
if  necessary to allow Buyer to have this full ten (10) day review period.  Upon
such  termination,  the  entire Earnest Money shall be returned to Buyer and the
parties  hereto  shall  be released of any further liability hereunder except as
otherwise  provided herein.  If Buyer fails to notify Sellers within such period
of  Buyer's  exercise  of its right to terminate this Contract, then Buyer shall
proceed to closing subject to the terms and conditions hereof and, to the extent
such  sums have not been expended on repair work with the reasonable approval of
Buyer  (except  for emergency repairs, for which no approval shall be required),
all  insurance  proceeds  received by Sellers as a result of such casualty loss,
plus  the  amount of the deductible, plus the amount of any uninsured loss shall
be  paid to Buyer at the closing.  To the extent such proceeds have not yet been
received  by Sellers, then Sellers' rights to such proceeds shall be assigned to
Buyer at the closing upon payment of the full Purchase Price to Sellers by Buyer
and  Sellers  shall  have  no  obligation  to  repair  such  damage.
(c)     Notwithstanding  Sections  13(a)  and  13(b),  if  the cost of repairing
damage  from  a casualty to any Facility is equal to or greater than Two Hundred
Fifty Thousand Dollars ($250,000), Buyer shall elect, within five (5) days after
the  date  of  notice of the amount of damage caused by the casualty but, in any
event,  prior  to the Closing Date, to (i) proceed to closing in accordance with
Section  13(a) or (ii) exclude Sellers' rights in such individual parcel of Real
Property  from  the Sellers' interests in the Facility Leases and the Facilities
to  be purchased at closing.  If Buyer elects to exclude Sellers' rights in such
individual  parcel of Real Property, Sellers, within five (5) days after Buyer's
election, can either terminate this Contract or agree to exclude such individual
parcel  of  Real  Property.  If  Sellers fail to make an election by providing a
written  notice  to Buyer within such five (5) day period, then Sellers shall be
deemed  to  have  agreed  to exclude Sellers' rights in such parcel.  If Sellers
elect  to  terminate this Contract, Sellers shall send a written notice to Buyer
of  such election and Buyer shall have five (5) days from receipt of such notice
to  rescind  its election to exclude Sellers' rights in such parcel.  If Sellers
elect  to  terminate and Buyer fails to rescind its election, the entire Earnest
Money  shall  be returned to Buyer and the parties hereto shall be released from
any further liability hereunder except as otherwise provided herein.  If Sellers
agree to exclude such Sellers' rights in individual parcel of Real Property, the
term  "Facilities"  shall  be  amended  so as to exclude such Sellers' rights in
individual  parcel  of  Real  Property  and  Sellers shall have all right to the
insurance  proceeds  with respect to such excluded parcel of Real Property.  The
Purchase  Price  shall  not be adjusted as a result of the exclusion of Sellers'
rights  in  the  affected  parcel  of  Real  Property.
14.     SELLERS'  FAILURE  TO  PERFORM.  If  all  of  the conditions to Sellers'
obligation  to  close  have been satisfied or waived but Sellers fail to perform
under  this  Contract  when  obligated  to  do so, Buyer may either: (a) enforce
specific  performance  hereof  or  (b)  terminate  this Contract and receive the
Earnest  Money and, in the event of such termination, Buyer and Sellers shall be
relieved  of  all  obligations  and  liabilities  under this Contract (except as
otherwise  provided  in this Contract).  If Buyer elects subsection (a) from the
previous  sentence,  the  parties  shall  continue this Contract pending Buyer's
action  for specific performance, in which latter event Buyer, as a condition to
such  action,  shall  not  accept  return  of  the  Earnest  Money.
15.     BUYER'S  FAILURE  TO  PERFORM.  If  all  of  the  conditions  to Buyer's
obligation  to  close  have  been satisfied or waived but Buyer fails to perform
this  Contract  when  obligated to do so, the entire amount of the Earnest Money
shall  be  paid  to  and  retained  by  Sellers  as fixed, agreed and liquidated
damages,  and  as  Sellers'  exclusive  remedy  for such failure to perform, and
Sellers  and  Buyer shall be relieved from all liabilities and obligations under
this  Contract  (except  as  otherwise  provided  in  this  Contract).
16.     ATTORNEYS'  FEES;  COSTS.  In connection with any litigation arising out
of  this  Contract, the prevailing party shall be entitled to recover reasonable
attorneys'  fees  and  costs  at  both  the  trial  and  appellate  levels.
17.     CONDEMNATION.  In  the event of the institution, prior to closing of any
proceedings,  judicial, administrative or otherwise, which relate to a taking or
proposed  taking  of any portion of any Real Property by eminent domain, Sellers
shall  immediately  notify  Buyer  thereof.  In  the event of any such taking or
proposed taking which relates to more than five percent (5%) of the land area of
any  Real  Property, Buyer may at its option within ten (10) days of its receipt
of the notice exclude Sellers' rights in such individual parcel of Real Property
from  the  Sellers'  interests  in  the Facility Leases and the Facilities to be
purchased  at  closing,  or Buyer shall have the right to appear and defend such
condemnation  proceedings,  and  in  the  event the closing occurs, any award in
condemnation shall, at Buyer's election, become the property of Buyer.  If Buyer
excludes  such individual parcel of Real Property from the transaction, the term
"Facilities"  shall  be  amended so as to exclude such individual parcel of Real
Property  and  Sellers  shall  have  all right to the condemnation proceeds with
respect  to such excluded parcel of Real Property.  The Purchase Price shall not
be  adjusted  as  a  result  of  the  exclusion  of  the affected parcel of Real
Property.
18.     BROKERS AND AGENTS.  Each of the parties represents to the other that it
has  not  retained  or used the services of a broker or agent in connection with
this  transaction.  Each  party  agrees to indemnify and hold the other harmless
from any claims of brokers or agents for fees or commissions arising out of this
transaction  attributable to a breach by such party of its representations under
this  Section.
19.     NOTICES.  Any  notice  required or permitted to be given hereunder shall
be in writing and delivered by a nationally recognized overnight courier service
providing a receipt (such as Federal Express), by hand or by facsimile addressed
as  follows:  (i)  if to Buyer: Emeritus Corporation, Attention: Daniel R. Baty,
Chairman  and  CEO, 3131 Elliott Avenue, Suite 500, Seattle, WA  98121, Tel. No.
206-298-2909,  Fax No. 206-301-4500, with a copy to Randi S. Nathanson, Esquire,
The  Nathanson  Group  PLLC,  1520 Fourth Avenue, Sixth Floor, Seattle WA 98101,
Tel.  No.  206-623-6239,  Fax  No.  206-623-1738;  if to Seller, c/o Horizon Bay
Management,  L.L.C., Attention:  Thilo D. Best, President and CEO, 111 E. Wacker
Drive,  Suite  2450,  Chicago,  Illinois  60601,  Tel. No. 312-297-9494, Fax No.
312-297-9502,  with  a  copy to Whitehall Street Real Estate Limited Partnership
VII, Attention:  Chief Financial Officer, 85 Broad Street, 19th Floor, New York,
New  York 10004, and with a copy to Kenneth S. Jacob, Esquire, Arent Fox Kintner
Plotkin  &  Kahn,  PLLC,  1050  Connecticut  Avenue,  N.W.,  Washington,  D.C.
20036-5339, Tel. No. 202-775-5750; Fax No. 202-857-6395, or at any other address
designated by either party by notice to the other party pursuant to this Section
19.  Notices  shall  be deemed given when received or when receipt is refused by
the  party to whom it is addressed, if delivered by overnight courier service or
by  hand or on the date the automatic acknowledgment indicates delivery was made
to  the  party  to  whom  it  is  addressed,  if  sent  by  facsimile.
20.     ENTIRE  AGREEMENT.  This  Contract shall constitute the entire agreement
between  the  parties, and no prior verbal or written agreement of understanding
shall  survive the execution of this Contract.  In the event of any amendment or
modification of this Contract, the amendment or modification shall be in writing
signed  by  all  the  parties,  or their agents, in order to be binding upon the
parties.  This  Contract,  or  a memorandum thereof, shall not be recorded among
the  land  records.
21.     FURTHER  ASSURANCES.  Sellers agree that they will, at any time and from
time  to  time  after the Closing Date, upon request of and at the sole cost and
expense  of  Buyer,  do,  execute,  acknowledge and deliver, or will cause to be
done,  executed,  acknowledged  and  delivered,  all  such  further acts, deeds,
assignments, transfers, conveyances and assurances as may reasonably be required
for  the assigning, transferring, granting, assuring and confirming to Buyer, or
for aiding and assisting in collecting and reducing to possession, any or all of
the  assets  or property being sold to Buyer pursuant to this Contract, provided
that  the  same  do  not impose any liability on Sellers beyond that provided in
this  Contract  or  any  document required to be executed by Sellers pursuant to
this  Contract  (other  than  under  this  Section).
22.     WAIVER  OF  JURY  TRIAL.  The  parties hereto waive trial by jury in any
action,  proceeding or counterclaim brought by any party against any other party
on  any  matter  arising  out  of  or  in  any way connected with this Contract.
23.     BENEFIT  AND BURDEN; LIABILITY.  This Contract shall be binding upon and
inure  to  the benefit of the parties hereto and their respective successors and
permitted  assigns.  Buyer  shall  not  assign  its  rights  under this Contract
without  Sellers'  prior written consent but Buyer shall have the right, without
Sellers'  consent  but  with  notice  to Sellers, to designate any subsidiary to
assume  the  Facility Leases and to take title to the Personal Property.  Except
as  otherwise provided in Section 4, each Seller's liability under this Contract
shall  be  several  (i.e.,  each  Seller  shall  be  liable  only  for  its  own
representations,  warranties  and  covenants  (each  of which is given only with
respect  to  the  Facility  it  operates)).
24.     APPLICABLE  LAW.  This  Contract shall be governed by and interpreted in
accordance  with  the  laws  of  the  State  of  Texas.
25.     LIMITATIONS  ON  CLAIMS;  SURVIVAL.
(a)     Limitations  on  Buyer's  Claims.  Notwithstanding  any provision to the
        --------------------------------
contrary  herein  or  in  any  document  or  instrument  executed by Sellers and
delivered  to  Buyer  or  its  designee  at  or  in  connection with the closing
(collectively,  "CLOSING DOCUMENTS"), Sellers shall have no liability whatsoever
with respect to any suits, actions, proceedings, investigations demands, claims,
     liabilities, fines, penalties, liens, judgments, losses, injuries, damages,
expenses  or  costs,  including without limitation, attorneys' and experts' fees
and costs and investigation and remediation costs (collectively, "CLAIMS") under
any  of  the  representations  and  warranties and indemnities contained in this
Contract  or  in  any  Closing Document, except to the extent that the aggregate
amount  of  all Claims for breach of Sellers' representations and warranties and
indemnities exceeds $25,000 (the "THRESHOLD AMOUNT") (but if such Claim is valid
and  is finally determined (or settled) to be in excess of the Threshold Amount,
then Sellers' liability shall extend to the "first dollar" of Buyer's Claim(s));
provided,  however,  notwithstanding  any provision to the contrary herein or in
any  Closing Document, the total liability of Sellers for any or all Claims with
respect  to  the Facilities shall not exceed Three Hundred Seventy-five Thousand
Dollars  ($375,000)  (the "CAP AMOUNT").  Further, notwithstanding any provision
to  the  contrary  herein  or  in  any  Closing  Document, Sellers shall have no
liability  with  respect  to  any  Claim  under  any  of the representations and
warranties  and  indemnities  contained  in  this  Contract  or  in  any Closing
Document,  which Claim relates to or arises in connection with (1) any Hazardous
Materials  (except  solely  to  the  extent  that  Sellers  have  breached their
representation  in  Section  7(a)),  (2)  the physical condition of any Facility
(except  solely to the extent that Sellers have breached their representation in
Section  7(a))  or  (3)  any  other  matter  not expressly set forth in Sellers'
representations and warranties set forth in Section 7(a) or their indemnities in
any  Closing  Document.  Buyer  shall  not  make  any Claim or deliver any Claim
Notice  unless  in  good faith, it believes the Claim would exceed the Threshold
Amount  as  set  forth  above.
(b)     Survival  of Buyer's Claims.  Except as otherwise specifically set forth
        ---------------------------
in  this Contract, the representations and warranties and indemnities of Sellers
contained  herein  or  in any Closing Document shall survive only until the date
which  is  twelve  (12) months after the Closing Date (the "SURVIVAL DATE"). Any
Claim  that  Buyer  may  have  any  time  against Sellers for breach of any such
representation, warranty or indemnity, whether known or unknown, with respect to
which  a  Claim  Notice  has  not  been  delivered to Sellers on or prior to the
                         --------
Survival  Date, shall not be valid or effective.  For the avoidance of doubt, on
the  Survival  Date, Sellers shall be fully discharged and released (without the
need  for  separate  releases  or  other  documentation)  from  any liability or
obligation  to  the  Buyer, Buyer's designee and/or their successors and assigns
with  respect  to  any Claims or any other matter relating to this Contract, any
Closing  Document  or  the  Facilities, except solely for those matters that are
then  the  subject  of  the  pending Claim Notice delivered by Buyer to Sellers.
(c)     Limitations  on  Sellers'  Claims.  Notwithstanding any provision to the
        ---------------------------------
contrary herein or in any document or instrument executed by Buyer and delivered
to  Sellers  at  or in connection with the closing (collectively, "BUYER CLOSING
DOCUMENTS"), Buyer shall have no liability whatsoever with respect to any Claims
under  any  of  the  representations and warranties and indemnities contained in
this  Contract  or  in any Buyer Closing Document, except to the extent that the
aggregate  amount  of  all  Claims  for  breach  of  Buyer's representations and
warranties  and  indemnities  exceeds the Threshold Amount (but if such Claim is
valid  and  is  finally determined (or settled) to be in excess of the Threshold
Amount,  then  Buyer's  liability shall extend to the "first dollar" of Sellers'
Claim(s));  provided,  however,  notwithstanding  any  provision to the contrary
herein or in any Buyer Closing Document, the total liability of Buyer for any or
all  Claims  with  respect  to  the  Facilities shall not exceed the Cap Amount.
Further,  notwithstanding  any  provision to the contrary herein or in any Buyer
Closing  Document, Buyer shall have no liability with respect to any Claim under
any  of  the  representations  and  warranties and indemnities contained in this
Contract  or  in any Buyer Closing Document, which Claim relates to or arises in
connection  with  (1) any Hazardous Materials, (2) the physical condition of any
Facility  or  (3)  any  other  matter  not  expressly  set  forth  in  Buyer's
representations  and  warranties set forth in Section 7(b) or its indemnities in
any  Buyer  Closing  Document.  Sellers  shall not make any Claim or deliver any
Claim  Notice unless in good faith, a Seller believes the Claim would exceed the
Threshold  Amount  as  set  forth  above.
(d)     Survival of Sellers' Claims.  Except as otherwise specifically set forth
        ---------------------------
in  this  Contract,  the representations and warranties and indemnities of Buyer
contained  herein  or in any Buyer Closing Document shall survive only until the
Survival Date. Any Claim that Sellers may have any time against Buyer for breach
of  any  such  representation,  warranty or indemnity, whether known or unknown,
with respect to which a Claim Notice has not been delivered to Buyer on or prior
                                     -------
to  the  Survival  Date,  shall not be valid or effective.  For the avoidance of
doubt,  on  the  Survival  Date,  Buyer  shall  be fully discharged and released
(without  the  need  for  separate  releases  or  other  documentation) from any
liability  or  obligation  to  the  Sellers,  Sellers'  designee(s) and/or their
successors  and  assigns with respect to any Claims or any other matter relating
to  this  Contract,  any Buyer Closing Document or the Facilities, except solely
for  those  matters  that  are  then  the  subject  of  the pending Claim Notice
delivered  by  Sellers  to  Buyer.
(e)     HBM  Guaranty.  HBM shall execute at closing a Guaranty substantially in
        -------------
the  form of Exhibit J, guaranteeing Sellers' obligation to pay to Buyer damages
             ---------
due  under  this  Contract arising from a breach of Sellers' representations and
warranties  set  forth  in Section 7(a) of the Contract, provided that HBM shall
only  be  liable  under such Guaranty to the extent that Sellers would be liable
under  the  provisions  of  this  Section 25 and in no event shall HBM's maximum
amount  of  liability under the Guaranty exceed the Cap Amount.  Furthermore, to
the  extent  Buyer collects from Sellers under a Claim the Cap Amount, HBM shall
have  no  further  liability  under  such  Guaranty.
(f)     Closing  Survival  and  Section  Applicability.  This  Section  25 shall
        ----------------------------------------------
survive  closing.  The limitations on Claims (including, without limitation, the
Threshold  Amount  and  the Cap Amount) and all other aspects of this Section 25
shall  be  inapplicable  to  the  provisions  of  Section 4 (Sellers' Funding of
Operating  Losses)  and  Section 6(d) (Adjustments).  Nothing in this Section 25
shall  restrict  Buyer from interpleading Sellers in any action filed by a third
party  against  Buyer  relating  to  Sellers'  ownership  and  operation  of the
Facilities  prior  to  closing.
26.     TIME  OF  THE  ESSENCE.  All  times,  wherever  specified herein for the
performance  by  Sellers or Buyer of their respective obligations hereunder, are
of the essence of this Contract.  Notwithstanding the foregoing, any time period
     provided for herein which shall end on a Saturday, Sunday, or legal holiday
shall  extend to the next Business Day.  For purposes of this Contract, the term
"BUSINESS  DAY"  shall  mean  those  days  of the week which are not a Saturday,
Sunday  or  any other federal or state holiday in which the banks in Chicago are
not  open  for  business.
27.     COUNTERPARTS.  This  Contract  may  be  executed  in  any  number  of
counterparts,  each  of  which  shall  be  deemed  an original, but all of which
together  shall  constitute  a  single  agreement binding on the parties hereto.
28.     DRAFTS  NOT  AN  OFFER  TO  ENTER  INTO A LEGALLY BINDING CONTRACT.  The
parties  hereto  agree  that  the  submission of a draft of this Contract by one
party  to another is not intended by either party to be an offer to enter into a
legally binding contract with respect to the purchase and sale of the Facilities
pursuant to the terms of this Contract.  The parties shall be legally bound with
respect to the purchase and sale of the Facilities pursuant to the terms of this
Contract  only  if  and  when the parties have been able to negotiate all of the
terms  and  provisions  of  this  Contract in a manner acceptable to each of the
parties  in their respective sole discretion, including, without limitation, all
of  the  Exhibits and Schedules hereto, and each of Sellers and Buyer have fully
executed  and delivered to each other a counterpart of this Contract, including,
without  limitation,  all  Exhibits  and  Schedules  hereto.
29.     CONFIDENTIALITY,  DISCLOSURE  AND  PRESS  RELEASES.
(a)     Confidentiality  Agreement.  As  a  condition  to  Sellers' agreement to
        --------------------------
furnish  and/or  disclose  Confidential  Information  (as  defined  in  the
confidentiality  agreement  attached  hereto  as  Exhibit  H)  to  Buyer and its
                                                  ----------
Representatives  for  review  and inspection, Buyer hereby agrees to be bound by
the  confidentiality  agreement  in  the  form  attached  hereto  as  Exhibit H.
                                                                      ---------
(b)     Disclosure.  Notwithstanding  any  language  in  this  Contract  to  the
        ----------
contrary,  in  no  event  shall  Buyer contact any Facilities-based employees or
otherwise  disclose  the  transactions  contemplated  by  this  Contract  to any
Facilities-based  employees  until  the  later of (i) the Effective Date or (ii)
Buyer's  issuance  of  the  Press  Release  (hereinafter  defined).
(c)     Press  Release.  Sellers and Buyer hereby covenant that (i) prior to the
        --------------
closing,  they  shall  not issue any press release or public statement (a "PRESS
RELEASE") with respect to the transactions contemplated by this Contract without
the prior consent of all parties to this Contract, except to the extent required
by  law  or  the regulations of the Securities and Exchange Commission, and (ii)
after the closing, any Press Release issued by Sellers or Buyer shall be subject
to  the  review  and  approval  of all such parties (which approval shall not be
unreasonably  withheld).  If  Sellers  or  Buyer  are required by law to issue a
Press  Release,  such  party  shall, at least two (2) Business Days prior to the
issuance  of the same, deliver a copy of the proposed Press Release to the other
party  for  its  review.  Notwithstanding  any  language to the contrary herein,
Buyer  covenants to issue a Press Release two (2) Business Days after expiration
of  the  Feasibility  Period  or  such  later  date as may be mutually agreed by
Sellers  and  Buyer, which Press Release shall be subject to Sellers' review and
approval  (which  approval  will  not  be  unreasonably  withheld and may not be
withheld with respect to any provision of the Press Release which is required by
law  or  the  regulations  of  the  Securities  and  Exchange  Commission).
30.     ESCROW.
(a)     Interpleader.  In  the  event of a dispute concerning the disposition of
        ------------
the  Earnest Money, the Escrow Agent shall have the right at any time to deposit
any cash funds held by it under this Contract with the clerk of the court having
     jurisdiction.  The  Escrow  Agent shall give written notice of such deposit
to Sellers and Buyer.  Upon such deposit, the Escrow Agent shall be relieved and
discharged  of  all  further  obligations  and  responsibilities  hereunder.
(b)     Escrow  Agent  as  Stakeholder.  The parties acknowledge that the Escrow
        ------------------------------
Agent  is  acting  solely  as  a  stakeholder  at  their  request  and for their
convenience.  Sellers  and Buyer  shall jointly and severally indemnify and hold
the  Escrow  Agent  harmless  from  and against all costs, claims, and expenses,
including  reasonable  attorneys'  fees,  incurred  in  connection  with  the
performance  of  the  Escrow  Agent's  duties  hereunder, except with respect to
actions  or  omissions  taken  or  suffered by the Escrow Agent in bad faith, in
willful  disregard of this Contract or involving gross negligence on the part of
the  Escrow  Agent.
31.     LICENSE  REVIEW  PERIOD.  Buyer  may at any time on or prior to the date
which  is  five  (5)  Business  Days after the Effective Date deliver to Sellers
written  notice  that  it  is  terminating  this  transaction  because  it  is
dissatisfied  with  the  Facilities'  existing  licenses or with the licenses or
license  conditions  it  expects  to  have  imposed on it in connection with its
licenses.  Upon  Buyer  delivering  a  termination  notice  under  the preceding
sentence,  this  Contract  shall  terminate,  the Earnest Money and the interest
thereon  shall  be  returned  to Buyer, and, except as otherwise provided in the
last  sentence  of  Section  8(a)  or 8(b), neither party shall have any further
liability  to  the  other  under  this  Contract.
                  [Remainder of page intentionally left blank.]



<PAGE>
                                       S-3

                                       S-1
     IN  WITNESS WHEREOF, the undersigned parties have executed this Contract as
of  the  day  and  year  first  above  stated.

SELLERS:
-------

INTEGRATED  LIVING  COMMUNITIES  OF  ALEXANDRIA,  L.L.C.


By:     /s/    Thilo  D.  Best
     Thilo  D.  Best
     President  and  Chief  Executive  Officer


INTEGRATED  LIVING  COMMUNITIES  OF  LAKE  CHARLES,  L.L.C.


By:     /s/    Thilo  D.  Best
     Thilo  D.  Best
     President  and  Chief  Executive  Officer


INTEGRATED  LIVING  COMMUNITIES  OF  LAFAYETTE,  L.L.C.


By:     /s/    Thilo  D.  Best
     Thilo  D.  Best
     President  and  Chief  Executive  Officer


INTEGRATED  LIVING  COMMUNITIES
OF  HENDERSON,  L.P.

By:     ILC  of  Henderson  Gen-Par,  L.L.C.
     General  Partner


     By:/s/    Thilo  D.  Best
     Thilo  D.  Best
     President  and  Chief  Executive  Officer



                       [signatures continue on next page]
INTEGRATED  LIVING  COMMUNITIES
OF  OAKWELL,  L.P.

By:     ILC  of  Oakwell  Gen-Par,  L.L.C.
     General  Partner


     By:          /s/    Thilo  D.  Best
               Thilo  D.  Best
               President  and  Chief  Executive
               Officer


INTEGRATED  LIVING  COMMUNITIES
OF  SAN  ANTONIO,  L.P.

By:     ILC  of  San  Antonio  Gen-Par,  L.L.C.
     General  Partner


     By:          s/    Thilo  D.  Best
               Thilo  D.  Best
               President  and  Chief  Executive
               Officer


INTEGRATED  LIVING  COMMUNITIES
OF  MCKINNEY,  L.P.

By:     ILC  of  McKinney  Gen-Par,  L.L.C.
     General  Partner


     By:          /s/    Thilo  D.  Best
               Thilo  D.  Best
               President  and  Chief  Executive
               Officer


                       [signatures continue on next page]

<PAGE>
HBM  is  executing this Contract for the sole purpose of agreeing to be bound by
the  provisions  of  Sections  4(f)  and  25(e).

HBM:
---

HORIZON  BAY  MANAGEMENT,  L.L.C.


By:     /s/    Thilo  D.  Best
     Thilo  D.  Best
     President  and  Chief  Executive  Officer



BUYER:
-----

EMERITUS  CORPORATION


By:     /s/    Daniel  R.  Baty
     Daniel  R.  Baty
     Chairman  and  Chief  Executive  Officer


The  undersigned  Escrow  Agent executes this Contract solely for the purpose of
evidencing  its  agreement  to  perform  its  obligations,  as set forth in this
Contract, it being understood and agreed that Escrow Agent shall have absolutely
no  liability for the performance by Sellers or Buyer of their obligations under
this  Contract.

TITLE  NETWORK,  LTD.


By:
     Name:
     Title:



<PAGE>
     I-4


                                LIST OF EXHIBITS
                                ----------------

Exhibit  Recitals     Definition  of  Personal  Property
-----------------
Exhibit  A          Description  of  Facility  Leases  and  Real  Property
----------
Exhibit  B          Sellers'  Operating  Loss  Funding  Obligations
----------
Exhibit  C     Form  of  Assignment and Assumption of Facility Lease and Release
----------
Agreement
--
Exhibit  D          Form  of  Assignment  and Assumption of Occupancy Agreements
----------
Exhibit E     Form of Assignment of Licenses, Intangibles (including Trade Name)
---------
and  Warranties
Exhibit  F          Form  of  Assignment  and  Assumption of Operating Contracts
----------
Exhibit  G          Form  of  Bill  of  Sale
----------
Exhibit  H          Form  of  Confidentiality  Agreement
----------
Exhibit  I          Form  of  HBM's  Guaranty  of  Operating  Losses
----------
Exhibit  J          Form  of  HBM's  Guaranty  of Representations and Warranties
----------

                                LIST OF SCHEDULES
                                -----------------

Schedule  4(b)          Form  of  Operating  Loss  Report
--------------
Schedule  4(e)          Examples  of  Operating  Loss  Calculations
--------------
Schedule  7(a)(vi)     Litigation
------------------
Schedule  7(a)(xi)     Operating  Contracts
------------------
<PAGE>
     I-4

                                EXHIBIT RECITALS
                                ----------------

"PERSONAL PROPERTY" is comprised of the following (expressly excluding operating
procedures  manuals,  corporate  systems  (such as accounting or cash management
systems),  accounts  receivable, tax refunds, goodwill, the trade name "Kingsley
Place at Lincoln Square" and all other trade names (other than the Trade Names),
trademarks  and  service  marks,  trade  secrets and proprietary information and
know-how  and  forms,  including  accounting and other proprietary software, and
equipment):

     (i)     all  resident  occupancy  agreements and commercial tenant lease or
other  occupancy  agreements  relating  to  Sellers'  respective  Real  Property
(collectively,  the  "OCCUPANCY  AGREEMENTS");

     (ii)  to  the  extent  assignable,  any  and  all licenses, authorizations,
permits  and  approvals issued by any governmental authority and relating to the
operation  of  Sellers'  respective Real Property (collectively, the "ASSIGNABLE
LICENSES");

     (iii)  all  furniture,  furnishings,  equipment,  inventory  supplies  and
vehicles owned by Sellers and relating to such Sellers' respective Real Property
(collectively,  the  "TANGIBLE  PERSONAL  PROPERTY");

     (iv)  all  service,  maintenance,  and equipment contracts and leases under
which a Seller is vendee or lessee (excluding each Seller's Management Agreement
with  Horizon Bay Management, L.L.C.) which shall be terminated at closing which
relates  to such Seller's respective Real Property (collectively, the "OPERATING
CONTRACTS");  and

     (v) all rights to the trade names "Kingsley Place at Alexandria," "Kingsley
Place  at  Lake  Charles,"  "Kingsley  Place  at  Lafayette," "Kingsley Place of
Henderson,"  "Kingsley  Place  at Oakwell Farms," "Kingsley Place at The Medical
Center,"  and  "Kingsley Place at Stonebridge" (collectively, the "TRADE NAMES")



<PAGE>
                                     ------
                                       A-2

                                       A-1

<TABLE>
<CAPTION>




<S>                                                                                                                           <C>
NAME AND ADDRESS OF FACILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  FACILITY CURRENT TENANT  LANDLORD/TENANT LEASE  LEASE EXECUTION DATE
-----------------------------------------------------------------------------------------------------------------------------------
 -----------------------  ---------------------  --------------------
Kingsley Place at Alexandria     Integrated Living Communities of Alexandria, L.L.C.     Health Care Property Investors, Inc., as L
351 Windermere Blvd.
Alexandria, LA 71303

Kingsley Place at Lake Charles     Integrated Living Communities of Lake Charles, L.L.C.     Health Care Property Investors, Inc.,
2420 Country Club Road
Lake Charles, LA 70605

Kingsley Place at Lafayette     Integrated Living Communities of Lafayette, L.L.C.     Health Care Property Investors, Inc., as Les
215 West Farrel Road
Lafayette, LA 70508

Kingsley Place of Henderson     Integrated Living Communities of Henderson, L.P.     Healthcare Realty Trust, formerly Capstone Cap
1000 Richardson Drive
Henderson, TX 75654

Kingsley Place at Oakwell     Integrated Living Communities of Oakwell, L.P.     Healthcare Realty Trust, formerly Capstone Capital
   Farms
3360 Oakwell Court
San Antonio, TX 78218

Kingsley Place at The Medical     Integrated Living Communities of San Antonio, L.P.     Healthcare Realty Trust, formerly Capstone
   Center
9000 Floyd Curl Drive
San Antonio, TX 78240

Kingsley Place at Stonebridge     Integrated Living Communities of McKinney, L.P.     Healthcare Realty Trust, formerly Capstone Ca
1650 S. Stonebridge Drive
McKinney, TX 75070

</TABLE>

Note:     All  Lessees  were  converted  from  corporations to limited liability
--------------------------------------------------------------------------------
companies  or  limited  partnerships  as  noted  in  the Facility Current Tenant
--------------------------------------------------------------------------------
column.
-------


<PAGE>
     B-4

                                       B-1
<TABLE>
<CAPTION>


                                                           EXHIBIT B
                                                           ---------

                                          SELLER'S OPERATING LOSS FUNDING OBLIGATIONS
                                          -------------------------------------------



<S>                 <C>                                    <C>                               <C>
                    ANNUAL NET LOSS
LANDLORD . . . . .  COMMUNITY                              FIRST YEAR OPERATING LOSS CAPS    SECOND YEAR OPERATING LOSS CAPS

HCPI . . . . . . .  Kingsley Place at Lafayette            $                   (   202,000)  $                     (    5,000)
HCPI . . . . . . .  Kingsley Lake Charles                                      (   239,000)                         (  85,000)
HCPI . . . . . . .  Kingsley Place at Alexandria                               (   468,000)                          (226,000)

HCPI SUBTOTAL. . .                           (   909,000)                         (316,000)                        (1,225,000)

HRT. . . . . . . .  Medical Center                                             (   323,000)                          (127,000)
HRT. . . . . . . .  Kingsley Place at Oakwell Farms                            (   267,000)                         (  60,000)
HRT. . . . . . . .  Kingsley Place of Stonebridge Ranch                        (   199,000)                        (    6,000)
HRT. . . . . . . .  Kingsley Place of Henderson                                (   540,000)                         ( 311,000)

HRT SUBTOTAL . . .                            (1,329,000)                        ( 504,000)                        (1,833,000)

OPERATING LOSS CAP  $                         (2,238,000)  $                     ( 820,000)  $                     (3,058,000)


<S>                 <C>
LANDLORD . . . . .  AGGREGATE OPERATING CAP

HCPI . . . . . . .  $               (207,000)
HCPI . . . . . . .                  (324,000)
HCPI . . . . . . .                  (694,000)

HCPI SUBTOTAL

HRT. . . . . . . .                  (450,000)
HRT. . . . . . . .                  (327,000)
HRT. . . . . . . .                  (205,000)
HRT. . . . . . . .                  (851,000)

HRT SUBTOTAL

OPERATING LOSS CAP
</TABLE>




In  no  event  shall  Buyer  be  entitled  to  receive  more than the applicable
--------------------------------------------------------------------------------
Operating  Loss  Cap  amount  with  respect  to  either the first 365-day period
--------------------------------------------------------------------------------
following  the  Closing  Date  ($2,238,000)  or the 366-day period following the
--------------------------------------------------------------------------------
first  anniversary  of  the  Closing Date ($820,000), or more than $3,058,000 in
--------------------------------------------------------------------------------
Operating  Losses in the aggregate under this Contract.  The Operating Loss Caps
--------------------------------------------------------------------------------
include,  as  facility expenses, rent under the Facility Leases and a management
--------------------------------------------------------------------------------
fee  in  the  amount  of  five  percent  (5%)  of  Gross  Revenues.
-------------------------------------------------------------------


<PAGE>
                                     ------

                                       C-4
                                       ---
                                       C-1
                                       ---
                                    EXHIBIT C
                                    ---------

                        FORM OF ASSIGNMENT AND ASSUMPTION
                        ---------------------------------
                     OF FACILITY LEASE AND RELEASE AGREEMENT
                     ---------------------------------------

     This  ASSIGNMENT  AND  ASSUMPTION  OF  FACILITY LEASE AND RELEASE AGREEMENT
(this  "AGREEMENT")  is  made  as  of  this  ___  day  of  __________, 2002 (the
"EFFECTIVE  DATE"),  by  and  between  [INTEGRATED  LIVING  COMMUNITIES  OF
____________],  a  ________________  ("ASSIGNOR"),  [EMERITUS CORPORATION OR ITS
DESIGNEE],  a  _____________________  ("ASSIGNEE"),  and  [HEALTH  CARE PROPERTY
INVESTORS,  INC.]  OR  [HEALTHCARE REALTY TRUST], a ______________ ("LANDLORD").

                                    RECITALS
                                    --------

Pursuant to that certain [LEASE OR LEASE AGREEMENT], dated as of _________ ____,
__________  (the "LEASE"), between Landlord and Integrated Living Communities of
,  Inc.  ("ORIGINAL  TENANT")  of  the  real property, improvements and personal
property  constituting [NAME OF FACILITY] (the "FACILITY"), situated at [ADDRESS
OF  FACILITY],  Landlord  leased  the  Facility  to  Original  Tenant.

Integrated  Living  Communities,  Inc.,  a  Delaware  corporation  ("ORIGINAL
GUARANTOR"),  guaranteed  certain payments and obligations of Assignor under the
Lease  (the  "GUARANTY")  pursuant to either (i) a Guaranty of Obligations of or
about even date with the Lease or (ii) pursuant to a Guaranty within the body of
the  Lease.

Assignor  is the successor to Original Tenant and Integrated Living Communities,
L.L.C.,  a  Delaware  limited  liability  company  ("ILC")  is  the successor to
Original  Guarantor.  Accordingly,  Assignor  is  the "TENANT" as defined in the
Lease  and  ILC  is  the  "GUARANTOR"  as  defined  in  the  Guaranty.

Landlord,  Assignor,  and  Assignee desire that the Assignor assign the Lease to
Assignee  under  the terms and conditions described herein and that the Assignor
and  ILC  shall  be  released from liability under the Lease under the terms and
conditions  described  herein.

     NOW,  THEREFORE,  for  good  and  valuable  consideration,  the receipt and
sufficiency  of  which  is hereby acknowledged, Landlord, Assignor, and Assignee
hereby  agree  as  follows:

1.     Recitals.  The  Recitals  set  forth  above  are  hereby  incorporated by
       --------
reference  as  if  set  forth  herein  in  their  entirety.

2.     Defined  Terms.  Any  capitalized  terms  not  otherwise  defined in this
       --------------
Agreement  will  have  the  meaning  set  forth  in  the  Lease.

3.     Assignment of Lease.  As of the Effective Date, Assignor hereby transfers
       -------------------
and  assigns  to  Assignee  all  of its right, title, and interest in and to the
Lease  and  the  Facility  demised  thereunder.

4.     Assumption  of  Lease.  As of the Effective Date, Assignee hereby accepts
       ---------------------
the  foregoing  assignment and agrees, for the benefit of Assignor and Landlord,
to  assume  and  be  responsible  for  the payment of the rent and other charges
payable by Assignor as tenant under the Lease from and after the Effective Date,
and  to  keep, perform and observe all of the other terms, covenants, provisions
and conditions to be kept, performed or observed by Assignor as tenant under the
Lease  from  and  after  the  Effective  Date.

5.     Landlord's  Consent.  Landlord  consents  to the foregoing assignment and
       -------------------
agrees  to  amend  the Lease as of the Effective Date in the manner set forth in
Exhibit  A  attached  hereto  and  made  a  part  hereof.  Assignee  agrees  and
  --------
acknowledges that the assignment made hereby shall not relieve Assignee from the
  -------
obligation  to  obtain  the  prior  written  consent  of Landlord to any further
assignment  of  the  Lease  or  to  any subletting of the Facility to the extent
Landlord's  consent  is  required  under  the terms and conditions of the Lease.

6.     No  Further  Liability.  As  of  the Effective Date, Landlord accepts the
       ----------------------
liability  of Assignee in lieu of such liability of Assignor under the Lease and
thereby  releases  Assignor  of  any  liability  or  obligations under the Lease
(including,  without limitation, payment of rent and other charges payable on or
after the Effective Date) except for any obligations that have accrued under the
Lease  prior  to  the  Effective  Date  or  which  by  their terms would survive
termination of the Lease.  As of the Effective Date, Assignee and Landlord agree
that each of them shall be bound by the terms, conditions and limitations of the
Lease  as  if  Assignee  was  named in the Lease in place of Assignor as a party
thereto.

[TO  BE  USED  WHERE LANDLORD DOES NOT REQUIRE SEPARATE GUARANTOR IN ADDITION TO
                              --------
ASSIGNEE:

7.     NO  FURTHER LIABILITY - ILC.  AS OF THE EFFECTIVE DATE, LANDLORD RELEASES
       ---------------------------
ILC  FROM  ANY LIABILITY, WHETHER DIRECT OR INDIRECT, KNOWN OR UNKNOWN, FORESEEN
OR  UNFORESEEN,  THAT  MAY  ARISE FROM OR IN ANY WAY BE CONNECTED WITH THE LEASE
(INCLUDING,  WITHOUT  LIMITATION,  THE  GUARANTY  OF  PAYMENT  OF RENT AND OTHER
CHARGES  PAYABLE ON OR AFTER THE EFFECTIVE DATE) EXCEPT FOR ANY OBLIGATIONS THAT
HAVE  ACCRUED  UNDER  THE  LEASE  OR  THE GUARANTY PRIOR TO THE EFFECTIVE DATE.]

[TO  BE  USED  WHERE  LANDLORD  DOES  REQUIRE  SEPARATE  GUARANTOR:
                                ----

     NO  FURTHER  LIABILITY  - ILC.   AS OF THE EFFECTIVE DATE, LANDLORD ACCEPTS
     -----------------------------
THE  LIABILITY OF __________________, A ______________ ("NEW GUARANTOR") IN LIEU
OF  THE  LIABILITY  OF  ILC  UNDER  THE  LEASE AND THEREBY RELEASES ILC FROM ANY
LIABILITY, WHETHER DIRECT OR INDIRECT, KNOWN OR UNKNOWN, FORESEEN OR UNFORESEEN,
THAT  MAY  ARISE  FROM  OR  IN  ANY  WAY BE CONNECTED WITH THE LEASE (INCLUDING,
WITHOUT LIMITATION, THE GUARANTY OF PAYMENT OF RENT AND OTHER CHARGES PAYABLE ON
OR  AFTER THE EFFECTIVE DATE) EXCEPT FOR ANY OBLIGATIONS THAT HAVE ACCRUED UNDER
THE  LEASE  OR  THE  GUARANTY  PRIOR TO THE EFFECTIVE DATE.  AS OF THE EFFECTIVE
DATE,  NEW  GUARANTOR AND LANDLORD AGREE THAT EACH OF THEM SHALL BE BOUND BY THE
TERMS,  CONDITIONS AND LIMITATIONS OF THE LEASE AS IF NEW GUARANTOR WAS NAMED IN
THE  GUARANTY  IN  PLACE  OF  ILC  AS  A  PARTY  THERETO.]

8.     Survival  of  Terms.  The  terms  and  provisions of this Agreement shall
       -------------------
survive  termination  of  the  Lease.

9.     Successors  and  Assigns.  This Agreement shall be binding upon and inure
       ------------------------
to  the  benefit  of  the  parties  hereto  and  their respective successors and
permitted  assigns.

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

11.     Complete  Agreement.  This  Agreement  contains  the  entire  integrated
        -------------------
agreement  between  the  parties respecting the subject matter of this Agreement
and  supersedes  all  prior  understandings  and  agreements, whether oral or in
writing,  between  the  parties respecting the subject matter of this Agreement.

12.     Applicable Law.  This Agreement shall be governed by the applicable laws
        --------------
of  the  state  of  location  of  the  Facility.

13.     Attorneys'  Fees;  Costs.  In connection with any litigation arising out
        ------------------------
of  this Agreement, the prevailing party shall be entitled to recover reasonable
attorneys'  fees  and  costs  at  both  the  trial  and  appellate  levels.

                        [SIGNATURES FOLLOW ON NEXT PAGE]


<PAGE>
     IN  WITNESS  WHEREOF,  Assignor,  Assignee  and Landlord have executed this
Agreement  under  seal  as  of  the  date  first  written  above.

                                   ASSIGNOR:
                                   --------

[INTEGRATED  LIVING  COMMUNITIES  OF  _____],
a  _______________



                                   By:                              (SEAL)
                                        Name:
                                        Title:

                                   ASSIGNEE:
                                   --------

[EMERITUS  ________________],
a  _______________



                                   By:                              (SEAL)
Name:
                                        Title:

                                   LANDLORD:
                                   --------

[HEALTH  CARE  PROPERTY  INVESTORS,  INC.]  OR
[HEALTHCARE  REALTY  TRUST],
a  _____________________



                                   By:                              (SEAL)
Name:
                                        Title:

ACKNOWLEDGED  AND  CONFIRMED  BY  ILC:
-------------------------------------

INTEGRATED  LIVING  COMMUNITIES,  L.L.C.,
a  Delaware  limited  liability  company


By:
     Name:
     Title:

<PAGE>

                                       D-3

                                       D-1

                                    EXHIBIT D
                                    ---------

                        FORM OF ASSIGNMENT AND ASSUMPTION
                        ---------------------------------
                             OF OCCUPANCY AGREEMENTS
                             -----------------------

     THIS  ASSIGNMENT AND ASSUMPTION OF OCCUPANCY AGREEMENTS (this "ASSIGNMENT")
is  entered  into  on  this  ___ day of __________ 2002, between (i) [INTEGRATED
LIVING  COMMUNITIES  OF               ],  a  _____________________ ("ASSIGNOR"),
having  an  office  at  c/o Horizon Bay Management, L.L.C., 111 E. Wacker Drive,
Suite  2450,  Chicago,  Illinois  60601  and  (ii)  [EMERITUS CORPORATION OR ITS
DESIGNEE],  a ___________________ ("ASSIGNEE"), having an office at 3131 Elliott
Avenue,  Suite  500,  Seattle,  WA  98121.

     1.     Reference  to  Sale  Contract.  Reference is made to a Sale Contract
            -----------------------------
dated _______________, 2002 between Assignor, as seller, and Assignee, as buyer,
pursuant  to  which  Assignor  has  agreed to sell to Assignee, and Assignee has
agreed  to  purchase  from  Assignor,  the Assignor's interest in its respective
Facility (the "SALE CONTRACT").  Capitalized terms used herein and not otherwise
defined  herein  shall  have  the  meanings  set  forth  in  the  Sale Contract.

     2.     Assignment.  For  good  and  valuable  consideration  received  by
            ----------
Assignor, the receipt and sufficiency of which are hereby acknowledged, Assignor
hereby  grants,  transfers and assigns to Assignee all right, title and interest
of  Assignor  as  landlord  in  and  to each of the Occupancy Agreements and the
security  deposits  thereunder.  Assignor  is not assigning any right to receive
delinquent  rent,  and  any  delinquent  rent  as  of  the  date hereof shall be
collected  and  paid  to  Seller  in  the  manner provided by the Sale Contract.

     3.     Assumption.  Assignee hereby assumes, and agrees to be bound by, all
            ----------
of  the covenants, agreements and obliga-tions of Assignor as landlord under the
Occupancy  Agreements which shall arise or be incurred, or which are required to
be  performed,  on  and  after the date of this Assignment, and Assignee further
assumes  all  liability  of  Assignor  for  the  proper  refund or return of the
security  deposits  if,  when  and  as  required  by the Occupancy Agreements or
otherwise by law.  Assignee is not assuming any obligation to collect and/or pay
to  Seller  any  delinquent  rent  as  of  the  date hereof, except as expressly
provided  in  the  Sale  Contract.

     4.     Binding  Effect.  This Assignment shall inure to the benefit of, and
            ---------------
be  binding upon, each of the parties hereto and their respective successors and
assigns.

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

     6.     Indemnification.
            ---------------

          (a)     Assignor  agrees  to  indemnify,  defend  and  hold  Assignee
harmless  from  and against all claims and demands of a resident or tenant under
any  Occupancy  Agreement  arising  as a result of Assignor's performance of, or
failure  to  perform,  the  covenants,  agreements  and  obligations  of  the
licensor/landlord  under  the  Occupancy  Agreements to be kept and performed by
Assignor  as  such  licensor/landlord  before  the  date  of this Assignment and
Assignor shall pay all costs and expenses (including reasonable attorneys' fees)
incurred  by  Assignee  in  enforcing  this  indemnity.

          (b)     Assignee  agrees  to  indemnify,  defend  and  hold  Assignor
harmless  from  and against all claims and demands of a resident or tenant under
any  Occupancy  Agreements  arising as a result of Assignee's performance of, or
failure  to  perform,  the  covenants,  agreements  and  obligations  of  the
licensor/landlord  under  the  Occupancy  Agreements to be kept and performed by
Assignee as such licensor/landlord, as the case may be, on and after the date of
this  Assignment  and  Assignee  shall  pay  all  costs  and expenses (including
reasonable  attorneys'  fees)  incurred by Assignor in enforcing this indemnity.


           [SIGNATURES OF THE PARTIES ARE SET FORTH ON THE NEXT PAGE]



<PAGE>
     IN  WITNESS WHEREOF, Assignor and Assignee have executed this Assignment on
the  day  and  year  first  above  written.

ASSIGNOR:

[INTEGRATED  LIVING  COMMUNITIES  OF                                   ],
a  ____________
By:     ____________________________________
     Name:
     Title:

ASSIGNEE:
[EMERITUS  CORPORATION  OR  ITS  DESIGNEE],  a

By:
     Name:
     Title:



<PAGE>
------
     E-4

                                       E-1
                                    EXHIBIT E
                                    ---------

                   FORM OF ASSIGNMENT OF LICENSES, INTANGIBLES
                   -------------------------------------------
                      (INCLUDING TRADE NAME) AND WARRANTIES
                      -------------------------------------

     THIS  ASSIGNMENT  OF  LICENSES,  INTANGIBLES  (INCLUDING  TRADE  NAME)  AND
WARRANTIES  (this  "ASSIGNMENT")  is  entered into on this ___ day of __________
2002,  between  (i)  [INTEGRATED  LIVING  COMMUNITIES  OF               ],  a
_____________________  ("ASSIGNOR"),  having  an  office  at  c/o  Horizon  Bay
Management, L.L.C., 111 E. Wacker Drive, Suite 2450, Chicago, Illinois 60601 and
(ii) [EMERITUS CORPORATION OR ITS DESIGNEE], a ___________________ ("ASSIGNEE"),
having  an  office  at  3131  Elliott  Avenue,  Suite  500,  Seattle,  WA 98121.

1.     Reference  to  Sale Contract.  Reference is made to a Sale Contract dated
       ----------------------------
_______________,  2002, between Assignor, as seller, and Assignee, as buyer (the
"SALE  CONTRACT"),  pursuant  to  which Assignor agreed to sell to Assignee, and
Assignee  agreed  to  purchase  from  Assignor,  the  Assignor's interest in its
respective  Facility and other assets described therein.  Capitalized terms used
herein and not otherwise defined herein shall have the meanings set forth in the
Sale  Contract.

     2.     Assignment.  For  good  and  valuable  consideration  received  by
            ----------
Assignor,  the  receipt  and  suffi-ciency  of  which  are  hereby acknowledged,
Assignor  hereby  grants, transfers and assigns to Assignee all right, title and
interest of Assignor in and to: the Assignable Licenses, the Trade Names and any
other intangibles or warranty to the extent not excluded from transfer under the
terms  of  the  Sale Contract.  This Assignment shall not be effective as to any
Assignable  License,  Trade  Name  or other intangible or warranty which, by its
terms  or  as  a  matter  of  law,  cannot  be  assigned.

     3.     Binding  Effect.  This Assignment shall inure to the benefit of, and
            ---------------
be  binding upon, each of the parties hereto and their respective successors and
assigns.

     IN  WITNESS  WHEREOF,  Assignor has executed this Assignment on the day and
year  first  above  written.


By:     [INTEGRATED  LIVING  COMMUNITIES  OF                         ],
     a  ________________

     By:     ________________________
     Name:
          Title:


<PAGE>

                                       F-2

                                       F-1
                                    EXHIBIT F
                                    ---------

                        FORM OF ASSIGNMENT AND ASSUMPTION
                        ---------------------------------
                             OF OPERATING CONTRACTS
                             ----------------------
     THIS  ASSIGNMENT  AND ASSUMPTION OF OPERATING CONTRACTS (this "ASSIGNMENT")
                                                                    ----------
is  entered  into  on  this  ___ day of __________ 2002, between (i) [INTEGRATED
LIVING  COMMUNITIES  OF               ],  a  _____________________ ("ASSIGNOR"),
having  an  office  at  c/o Horizon Bay Management, L.L.C., 111 E. Wacker Drive,
Suite  2450,  Chicago,  Illinois  60601  and  (ii)  [EMERITUS CORPORATION OR ITS
DESIGNEE],  a ___________________ ("ASSIGNEE"), having an office at 3131 Elliott
Avenue,  Suite  500,  Seattle,  WA  98121.  ("ASSIGNEE").
                                              --------

1.     Property.  The  "PROPERTY"  shall  mean  the  real  property  located  in
       --------         --------
__________  legally  described  in  EXHIBIT  A  to  this  Assignment.

2.     Service  Contracts.  The  "OPERATING  CONTRACTS" shall mean all contracts
       ------------------         --------------------
relating  to  the  Property  listed  in  EXHIBIT  B  to  this  Assignment.

3.     Assignment.  For  good  and  valuable consideration received by Assignor,
       ----------
the  receipt  and  sufficiency of which are hereby acknowledged, Assignor hereby
grants,  transfers  and  assigns  to  Assignee  all right, title and interest of
Assignor  in  and  to  each  of  the  Operating  Contracts.

4.     Assumption.  Assignee  hereby  assumes, and agrees to be bound by, all of
       ----------
the  covenants,  agreements  and  obligations  of  Assignor  under the Operating
Contracts  which  shall  arise  or  be  incurred,  or  which  are required to be
performed,  on  and  after  the  date  of  this  Assignment.

5.     Indemnification.
       ---------------

(a)     Assignor agrees to indemnify, defend and hold Assignee harmless from and
     against  all  claims  and  demands of a vendor under any Operating Contract
arising  as  a  result  of Assignor's performance of, or failure to perform, the
covenants,  agreements  and  obligations  of  the  vendee  under  the  Operating
Contracts  to  be kept and performed by Assignor as such vendee, before the date
of  this  Assignment  (provided, however, that Assignor shall be responsible for
all  payment  obligations  accrued  by  the vendee under the Operating Contracts
before the date of this Assignment even if such sums are not due until after the
date  of  this  Assignment)  and  Assignor  shall  pay  all  costs  and expenses
(including  reasonable  attorneys'  fees) incurred by Assignee in enforcing this
indemnity.

(b)     Assignee agrees to indemnify, defend and hold Assignor harmless from and
against  all claims and demands of a vendor under any Operating Contract arising
as  a result of Assignee's performance of, or failure to perform, the covenants,
agreements  and  obligations  of  the vendee under the Operating Contracts to be
kept  and performed by Assignee as such vendee, as the case may be, on and after
the  date  of  this  Assignment  and  Assignee  shall pay all costs and expenses
(including  reasonable  attorneys'  fees) incurred by Assignor in enforcing this
indemnity.

     6.     Binding  Effect.  This Assignment shall inure to the benefit of, and
            ---------------
be  binding upon, each of the parties hereto and their respective successors and
assigns.

7.     Exhibits.  The Exhibits referred to in this Agreement and attached hereto
       --------
are  incorporated  herein  by  this  reference  and  made  a  part  hereof.

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

IN  WITNESS  WHEREOF,  Assignor  and  Assignee  have  executed  this  Assignment
effective  as  of  the  day  and  year  first  above  written.


ASSIGNOR:

[INTEGRATED  LIVING  COMMUNITIES  OF                              ],
                                                                  -
a  ____________

By:     ____________________________________
     Name:
     Title:

ASSIGNEE:

[EMERITUS  CORPORATION  OR  ITS  DESIGNEE],  a  ______________

By:     ____________________________________
     Name:
     Title:

<PAGE>

     G-4

                                       G-1
                                    EXHIBIT G
                                    ---------

     FORM  OF  BILL  OF  SALE
     ------------------------

     THIS  BILL  OF  SALE  (this "BILL OF SALE") is executed on this ____ day of
____________,  2002,  by  [INTEGRATED  LIVING  COMMUNITIES  OF               ]
("SELLER"),  a ______________________________, having an office at 111 E. Wacker
Drive, Suite 2450, Chicago, Illinois 60601, in favor of [EMERITUS CORPORATION OR
ITS DESIGNEE] ("BUYER"), a ___________________, having an office at 3131 Elliott
Avenue,  Suite  500,  Seattle,  WA  98121.

     1.     Reference  to  Sale  Contract.  Reference is made to a Sale Contract
            -----------------------------
dated  _______________,  2002 between Seller and Buyer, pursuant to which Seller
has  agreed  to sell to Buyer, and Buyer has agreed to purchase from Seller, the
Seller's  interest  in  its  respective Real Property and other assets described
therein  (the "SALE CONTRACT").  Capitalized terms used herein and not otherwise
defined  herein  shall  have  the  meanings  set  forth  in  the Sale Contract .

     2.     Sale.  For  good  and valuable consideration received by Seller, the
            ----
receipt  and  sufficiency  of which is hereby acknowledged, Seller hereby sells,
assigns  and transfers its Tangible Personal Property to Buyer free and clear of
all liens, charges and encumbrances.  Seller covenants and agrees to warrant and
forever  defend  title  to  its respective Tangible Personal Property unto Buyer
against all and every person or persons.  Except as set forth in the immediately
preceding  sentence,  Seller  makes  no  warranties or representations as to its
Tangible  Personal  Proper-ty.

     IN  WITNESS WHEREOF, Seller has executed this Bill of Sale the day and year
first  above  written.

     SELLER:

[INTEGRATED  LIVING  COMMUNITIES  OF
],
a  ____________
By:     ____________________________________
     Name:
               Title:


<PAGE>
------
                                       H-3

                                       H-1
                                    EXHIBIT H
                                    ---------

                        FORM OF CONFIDENTIALITY AGREEMENT
                        ---------------------------------


PERSONAL  AND  CONFIDENTIAL
---------------------------


______________  ___,  2002

c/o  Horizon  Bay  Management,  L.L.C.
111  E.  Wacker  Drive
Suite  2450
Chicago,  Illinois  60601
Attention:  Thilo  D.  Best

RE:  CONFIDENTIALITY  AGREEMENT
     --------------------------
Dear  Thilo:
In  connection  with the consideration by Emeritus Corporation or its affiliates
("BUYER")  of  the  potential  purchase  (the "PURCHASE") from Integrated Living
Communities  of  Alexandria,  L.L.C.,  Integrated  Living  Communities  of  Lake
Charles,  L.L.C., Integrated Living Communities of Lafayette, L.L.C., Integrated
Living Communities of Henderson, L.P., Integrated Living Communities of Oakwell,
L.P.,  Integrated Living Communities of San Antonio, L.P., and Integrated Living
Communities  of  McKinney,  L.P.  (collectively, the "SELLERS"), of the Sellers'
interest  in its respective Facilities, as defined in the Sale Contract dated as
of  _________,  2002 between Sellers and Buyer, Buyer has requested that Sellers
supply certain Confidential Information (as defined in paragraph 1 below).  As a
condition  to  Sellers'  agreement  to furnish and/or disclose such Confidential
Information  to Buyer for its review and inspection, Buyer agrees to be bound by
the  terms  set  forth  herein.
1.     "CONFIDENTIAL  INFORMATION"  shall  include  all information furnished to
Buyer  by  Sellers  relating  to  Sellers  or assets held by Sellers, as well as
written  memoranda,  notes, analysis, reports, compilations, or studies prepared
by  Buyer  which  contain,  or  are  derived from, such information furnished by
Sellers,  whether  in  writing,  computer  diskette,  other  medium  or  oral
communication.  Notwithstanding  the  foregoing, information provided by Sellers
shall  not  constitute  Confidential  Information  if such information (i) is or
becomes generally available to the public other than as a result of a disclosure
by  or  through  Buyer  or  its  directors, officers, employees or affiliates in
contravention  of  this  agreement,  (ii)  was  already  available to, or in the
possession of, Buyer prior to its disclosure by, or at the direction of, Sellers
in  connection with Buyer's evaluation of the potential Purchase, or (iii) is or
becomes  available to Buyer from a source (other than Sellers) not bound, to the
knowledge  of Buyer, by any legal or other obligation prohibiting the disclosure
of  Confidential  Information  by  such  source  to  Buyer.
2.     Buyer  agrees  that  it will use Confidential Information exclusively for
the  purpose of evaluating the potential Purchase.  Buyer further agrees that it
will  not  disclose  Confidential  Information  to  any  third  party; provided,
however,  that Buyer may without liability disclose Confidential Information (i)
to  any  director, officer, employee of Buyer, or attorney, accountant, or other
technical  expert  retained  by  Buyer  who  needs  to  know  such  Confidential
Information  for  the  purpose  of  evaluating  the  potential Purchase or later
administering  such  Purchase and to Buyer's auditors, accountants and attorneys
(it  being  understood  and  agreed  that Buyer shall advise such persons of the
confidential  nature  of  such  Confidential  Information and such persons shall
agree  to  maintain  the  confidentiality  of  such  Confidential Information in
accordance  with  the  terms  hereof),  and  (ii)  to  the  extent required by a
subpoena,  judicial,  or  administrative  process.
3.     In  the  event  that  Buyer  desires to disclose Confidential Information
under  the circumstances contemplated by clause (ii) of the preceding paragraph,
Buyer  will  (a)  provide  Sellers  with prompt notice thereof, (b) consult with
Sellers on the advisability of taking steps to resist or narrow such disclosure,
and  (c)  reasonably cooperate with Sellers in any attempt that Sellers may make
to  obtain an order or other reliable assurance that confidential treatment will
be  accorded  to  designated portions of the Confidential Information.  However,
Buyer  shall  not  be obligated to suffer civil or criminal liability to prevent
disclosure  of  Confidential  Information  required  by  a  subpoena,  judicial,
regulatory  or  administrative  process.
4.     Buyer  agrees  that in the event the Purchase fails to occur, all written
Confidential  Information  and  all  copies  thereof will be returned to Sellers
promptly  upon  Sellers'  request.
5.     In  addition  to  any  other  remedies  available  to  Sellers,  Buyer
acknowledges  and  agrees that Sellers shall be entitled to seek the remedies of
injunction  and  specific  performance  for any breach of the provisions of this
agreement  by  Buyer.
6.     Buyer  agrees to indemnify and hold harmless Sellers from and against all
loss,  liability, claim, damage and expenses (including attorneys' fees) arising
out  of  any  breach  of  this  agreement  by  Buyer  or  its  representatives.
7.     This  agreement shall be governed by and construed in accordance with the
laws  of  the  State  of  Texas.
Very  truly  yours,
Emeritus  Corporation,

By:
Name:
          Title:


AGREED  TO  AND  ACCEPTED:
Horizon  Bay  Management,  L.L.C.,  on  behalf  of  Sellers

By:
     Thilo  D.  Best
President  and  Chief  Executive  Officer



<PAGE>
                                       I-3
                                       I-1
                                    EXHIBIT I
                                    ---------

                          GUARANTY OF OPERATING LOSSES
                          ----------------------------

     THIS  GUARANTY  (the  "GUARANTY") is made and entered into this ____ day of
,  2002,  by  HORIZON  BAY  MANAGEMENT, L.L.C. ("GUARANTOR"), for the benefit of
EMERITUS  CORPORATION  ("BUYER").

                                    RECITALS
                                    --------

     A.     Integrated  Living  Communities  of  Alexandria,  L.L.C., Integrated
Living  Communities  of  Lake  Charles, L.L.C., Integrated Living Communities of
Lafayette,  L.L.C., Integrated Living Communities of Henderson, L.P., Integrated
Living  Communities  of  Oakwell,  L.P.,  Integrated  Living  Communities of San
Antonio,  L.P.,  and  Integrated  Living  Communities  of McKinney, L.P. (each a
"SELLER"  and  collectively,  the  "SELLERS"),  and  Buyer  entered  into a Sale
Contract  dated  as  of               ,  2002  (the "SALE CONTRACT") pursuant to
which  Buyer agreed to acquire Sellers' interests in the Facility Leases and the
Facilities,  each  as  defined  in  the  Sale Contract, subject to the terms and
conditions  of  the  Sale  Contract.

     B.     Guarantor  benefited  by  Buyer  and  Sellers entering into the Sale
Contract,  and,  therefore, Guarantor executed the Sale Contract for the purpose
of  guaranteeing  the  performance  of  the  Guaranteed  Obligations (as defined
herein).

     NOW,  THEREFORE,  as an inducement for Buyer to consummate the transactions
contemplated  by  the  Sale  Contract,  and  for  other  good  and  valuable
consideration,  the  receipt  and  legal  sufficiency  of  which  are  hereby
acknowledged,  the  parties  do  hereby  agree  as  follows:

     1.     Definitions.  Capitalized  terms  used  in  this  Guaranty which are
            -----------
defined  in the Sale Contract as now in effect or as it may hereafter be amended
from  time  to  time  have  the  meanings  specified in the Sale Contract unless
expressly  otherwise  defined  herein.

     2.     Guaranty  of  Payment and Performance.  As set forth in Section 4(e)
            -------------------------------------
of  the  Sale  Contract,  Guarantor  hereby  irrevocably  and  unconditionally
guarantees to Buyer the payment of Sellers' obligation to fund Operating Losses,
provided  that  Guarantor's maximum amount of liability under the Guaranty shall
not  exceed  the  applicable  Operating  Loss  Caps.  This  Guaranty  is  an
unconditional  guaranty  of  payment and not of collection, and Guarantor agrees
that Buyer  shall not be required to assert any claim or cause of action against
Sellers  before  asserting  any claim or cause of action against Guarantor under
this  Guaranty.  This  Guaranty  is  a continuing guaranty which shall remain in
full  force  and effect until all of the obligations set forth herein shall have
been  completely  performed or otherwise discharged.  The obligations under this
Section  which  Guarantor  is  guaranteeing  under this Guaranty are hereinafter
referred  to  as  the  "GUARANTEED  OBLIGATIONS".

     3.     Waiver  of  Notice.  Guarantor  hereby  waives  notice of acceptance
            ------------------
hereof,  and of nonperformance or nonpayment by Sellers of any of the Guaranteed
Obligations.

     4.     Further  Assurances.  Guarantor  will  at  any time and from time to
            -------------------
time  upon request by Buyer take or cause to be taken any action and execute and
deliver  such,  if  any,  further  documents as, in the opinion of Buyer, may be
necessary  in  order  to  assure  to  Buyer  the full benefits of this Guaranty.

     5.     Waiver.  Neither  this  Guaranty nor any term hereof may be changed,
            ------
waived,  discharged  or  terminated except by an instrument in writing signed by
Buyer  and  Guarantor expressly referring to this Guaranty and to the provisions
so  changed or limited.  No such waiver shall extend to or affect any obligation
not  expressly  waived  or  impair  any  right consequent thereon.  No course of
dealing  or delay or omission on the part of Buyer in exercising any right under
this  Guaranty  shall  operate  as  a waiver thereof or otherwise be prejudicial
thereto.

     6.     Insolvency  of  Sellers  or  Guarantor.  This  Guaranty shall not be
            --------------------------------------
affected,  modified,  or  impaired  by the voluntary or involuntary liquidation,
dissolution,  sale  or  other  disposition  of  all  or substantially all of the
assets,  marshalling  of  assets  and  liabilities,  receivership,  insolvency,
bankruptcy,  assignment  for  the  benefit  of  creditors,  reorganization,
arrangements,  composition  with  creditors or readjustment of, or other similar
proceedings  affecting  Sellers  or Guarantor, or any of the assets belonging to
any  of  them.

     7.     Notices.  Any  demand or notice required or permitted to be given by
            -------
Buyer  to Guarantor under this Guaranty shall be given pursuant to the terms and
conditions  set  forth  in  Section  19  of  the Sale Contract, and addressed to
Guarantor  at  Horizon  Bay  Management,  L.L.C.,  Attention:  Thilo  D.  Best,
President  and  CEO,  111  E. Wacker Drive, Suite 2450, Chicago, Illinois 60601,
Tel.  No.  312-297-9494,  Fax  No. 312-297-9502, with a copy to Whitehall Street
Real  Estate  Limited  Partnership  VII, Attention:  Chief Financial Officer, 85
Broad  Street,  19th Floor, New York, New York 10004, and with a copy to Kenneth
S.  Jacob,  Esquire,  Arent  Fox  Kintner Plotkin & Kahn, PLLC, 1050 Connecticut
Avenue,  N.W.,  Washington,  D.C.  20036-5339,  Tel.  No.  202-775-5750; Fax No.
202-857-6395,  or  at  any  other  address  designated  by  Guarantor  to Buyer.

     8.     Waiver  of Notice and Consent.  Without notice to Guarantor, without
            -----------------------------
the  consent  of  Guarantor,  and  without  affecting  or  limiting  Guarantor's
liability  hereunder,  Buyer  may:

          (a)     grant Sellers extensions of time for payment of the Guaranteed
Obligations  or  any  part  thereof;

          (b)     grant Sellers extensions of time for performance of agreements
or  other  indulgences;

          (c)     compromise,  settle,  release,  or terminate any or all of the
obligations,
               covenants,  or agreements of Sellers under the Sale Contract; and

(d)     with  Sellers'  written  consent,  modify  or  amend  any  obligations,
covenant,  or  agreement  of Sellers as set forth in the Sale Contract (and such
amendments  shall  nevertheless  be  binding  upon  Guarantor).

     9.     Continued  Effectiveness  and  Reinstatement.  This  Guaranty  shall
            --------------------------------------------
continue  to  be effective, or be reinstated, as the case may be, if at any time
any whole or partial payment or performance of any of the Guaranteed Obligations
or  any  other  obligation  hereunder  is  or  is sought to be rescinded or must
otherwise  be  restored  or  returned  by Buyer upon the insolvency, bankruptcy,
dissolution,  liquidation or reorganization of Sellers or Guarantor upon or as a
result  of  the  appointment  of  a  receiver, intervener, or conservator of, or
trustee  or  similar officer for, Sellers or Guarantor of or for any substantial
part  of its property, or otherwise, all as though such payments and performance
had  not  been  made.

     10.     General  Provisions.  This  Guaranty  shall  be  binding  upon  the
             -------------------
respective  successors  and assigns of Guarantor, and shall inure to the benefit
of  Buyer  and its successors and assigns; provided, however, Guarantor will not
assign  or otherwise transfer this Guaranty without the prior written consent of
Buyer, which consent may be granted or refused in Buyer's sole discretion.  This
Guaranty  shall  be governed by and construed in accordance with the laws of the
State  of  Delaware.  The  descriptive headings of the Sections of this Guaranty
have been inserted herein for convenience of reference only and shall not define
or  limit  the  provisions  hereof.  If  any provision of this Guaranty shall be
invalid,  illegal or unenforceable, the validity of all other terms hereof shall
be  in  no  way  affected  thereby,  and  this  Guaranty  shall  operate  and be
enforceable as if such invalid, illegal or unenforceable provisions had not been
included  herein.

     IN WITNESS WHEREOF, Guarantor has signed this Guaranty under seal as of the
day  and  year  first  above  written.

GUARANTOR:
---------

HORIZON  BAY  MANAGEMENT,  L.L.C.


By:
     Thilo  D.  Best
     President  and  Chief  Executive  Officer



<PAGE>
                                     ------
                                       J-3
                                       J-1
                                    EXHIBIT J
                                    ---------

                   GUARANTY OF REPRESENTATIONS AND WARRANTIES
                   ------------------------------------------

     THIS  GUARANTY  (the  "GUARANTY") is made and entered into this ____ day of
,  2002,  by  HORIZON  BAY  MANAGEMENT, L.L.C. ("GUARANTOR"), for the benefit of
EMERITUS  CORPORATION  ("BUYER").

                                       RECITALS
                                       --------

     A.     Integrated  Living  Communities  of  Alexandria,  L.L.C., Integrated
Living  Communities  of  Lake  Charles, L.L.C., Integrated Living Communities of
Lafayette,  L.L.C., Integrated Living Communities of Henderson, L.P., Integrated
Living  Communities  of  Oakwell,  L.P.,  Integrated  Living  Communities of San
Antonio,  L.P.,  and  Integrated  Living  Communities  of McKinney, L.P. (each a
"SELLER"  and  collectively,  the  "SELLERS"),  and  Buyer  entered  into a Sale
Contract  dated  as  of               ,  2002  (the "SALE CONTRACT") pursuant to
which  Buyer agreed to acquire Sellers' interests in the Facility Leases and the
Facilities,  each  as  defined  in  the  Sale Contract, subject to the terms and
conditions  of  the  Sale  Contract.

     B.     Guarantor  benefited  by  Buyer  and  Sellers entering into the Sale
Contract,  and,  therefore, Guarantor executed the Sale Contract for the purpose
of  guaranteeing  the  collection  of  the  Guaranteed  Obligations  (as defined
herein).

     NOW,  THEREFORE,  as an inducement for Buyer to consummate the transactions
contemplated  by  the  Sale  Contract,  and  for  other  good  and  valuable
consideration,  the  receipt  and  legal  sufficiency  of  which  are  hereby
acknowledged,  the  parties  do  hereby  agree  as  follows:

     1.     Definitions.  Capitalized  terms  used  in  this  Guaranty which are
            -----------
defined  in the Sale Contract as now in effect or as it may hereafter be amended
from  time  to  time  have  the  meanings  specified in the Sale Contract unless
expressly  otherwise  defined  herein.

     2.     Guaranty of  Payment and Performance.  As set forth in Section 25(c)
            ------------------------------------
of  the  Sale  Contract,  Guarantor  hereby  irrevocably  and  unconditionally
guarantees  to  Buyer  Sellers' obligation to pay to Buyer damages due under the
Sale  Contract  arising from a breach of a representation and warranty set forth
in  Section  7(a)  of  the  Sale Contract, provided that Guarantor shall only be
liable  under this Guaranty to the extent that Sellers would be liable under the
provisions  of Section 25 of the Sale Contract and Guarantor's maximum amount of
liability  under  this Guaranty shall not exceed the Cap Amount.   This Guaranty
is  an  unconditional guaranty  of  payment and not of collection, and is no way
conditioned upon any attempt by Buyer to collect from Sellers.  This Guaranty is
a  continuing  guaranty which shall remain in full force and effect until all of
the  obligations  set  forth  herein  shall  have  been  completely performed or
otherwise discharged.  The obligations under this Section which the Guarantor is
guaranteeing  under this Guaranty are hereinafter referred to as the "GUARANTEED
OBLIGATIONS".

     3.     Waiver  of  Notice.  Guarantor  hereby  waives  notice of acceptance
            ------------------
hereof,  and of nonperformance or nonpayment by Sellers of any of the Guaranteed
Obligations.

     4.     Further  Assurances.  Guarantor  will  at  any time and from time to
            -------------------
time  upon request by Buyer take or cause to be taken any action and execute and
deliver  such,  if  any,  further  documents as, in the opinion of Buyer, may be
necessary  in  order  to  assure  to  Buyer  the full benefits of this Guaranty.

     5.     Waiver.  Neither  this  Guaranty nor any term hereof may be changed,
            ------
waived,  discharged  or  terminated except by an instrument in writing signed by
Buyer  and  Guarantor expressly referring to this Guaranty and to the provisions
so  changed or limited.  No such waiver shall extend to or affect any obligation
not  expressly  waived  or  impair  any  right consequent thereon.  No course of
dealing  or delay or omission on the part of Buyer in exercising any right under
this  Guaranty  shall  operate  as  a waiver thereof or otherwise be prejudicial
thereto.

     6.     Insolvency  of  Sellers  or  Guarantor.  This  Guaranty shall not be
            --------------------------------------
affected,  modified,  or  impaired  by the voluntary or involuntary liquidation,
dissolution,  sale  or  other  disposition  of  all  or substantially all of the
assets,  marshalling  of  assets  and  liabilities,  receivership,  insolvency,
bankruptcy,  assignment  for  the  benefit  of  creditors,  reorganization,
arrangements,  composition  with  creditors or readjustment of, or other similar
proceedings  affecting  Sellers  or Guarantor, or any of the assets belonging to
any  of  them.

     7.     Notices.  Any  demand or notice required or permitted to be given by
            -------
Buyer  to Guarantor under this Guaranty shall be given pursuant to the terms and
conditions  set  forth  in  Section  19  of  the Sale Contract, and addressed to
Guarantor  at  Horizon  Bay  Management,  L.L.C.,  Attention:  Thilo  D.  Best,
President  and  CEO,  111  E. Wacker Drive, Suite 2450, Chicago, Illinois 60601,
Tel.  No.  312-297-9494,  Fax  No. 312-297-9502, with a copy to Whitehall Street
Real  Estate  Limited  Partnership  VII, Attention:  Chief Financial Officer, 85
Broad  Street,  19th Floor, New York, New York 10004, and with a copy to Kenneth
S.  Jacob,  Esquire,  Arent  Fox  Kintner Plotkin & Kahn, PLLC, 1050 Connecticut
Avenue,  N.W.,  Washington,  D.C.  20036-5339,  Tel.  No.  202-775-5750; Fax No.
202-857-6395,  or  at  any  other  address  designated  by  Guarantor  to Buyer.

     8.     Waiver  of Notice and Consent.  Without notice to Guarantor, without
            -----------------------------
the  consent  of  Guarantor,  and  without  affecting  or  limiting  Guarantor's
liability  hereunder,  Buyer  may:

          (a)     grant Sellers extensions of time for payment of the Guaranteed
Obligations  or  any  part  thereof;

          (b)     grant Sellers extensions of time for performance of agreements
or  other  indulgences;

          (c)     compromise,  settle,  release,  or terminate any or all of the
obligations,
               covenants,  or agreements of Sellers under the Sale Contract; and

(d)     with  Sellers'  written  consent,  modify  or  amend  any  obligations,
covenant,  or  agreement  of Sellers as set forth in the Sale Contract (and such
amendments  shall  nevertheless  be  binding  upon  Guarantor).

     9.     Continued  Effectiveness  and  Reinstatement.  This  Guaranty  shall
            --------------------------------------------
continue  to  be effective, or be reinstated, as the case may be, if at any time
any whole or partial payment or performance of any of the Guaranteed Obligations
or  any  other  obligation  hereunder  is  or  is sought to be rescinded or must
otherwise  be  restored  or  returned  by Buyer upon the insolvency, bankruptcy,
dissolution,  liquidation or reorganization of Sellers or Guarantor upon or as a
result  of  the  appointment  of  a  receiver, intervener, or conservator of, or
trustee  or  similar officer for, Sellers or Guarantor of or for any substantial
part  of its property, or otherwise, all as though such payments and performance
had  not  been  made.

     10.     General  Provisions  .  This  Guaranty  shall  be  binding upon the
             -------------------
respective  successors  and assigns of Guarantor, and shall inure to the benefit
of  Buyer  and its successors and assigns; provided, however, Guarantor will not
assign  or otherwise transfer this Guaranty without the prior written consent of
Buyer, which consent may be granted or refused in Buyer's sole discretion.  This
Guaranty  shall  be governed by and construed in accordance with the laws of the
State  of  Delaware.  The  descriptive headings of the Sections of this Guaranty
have been inserted herein for convenience of reference only and shall not define
or  limit  the  provisions  hereof.  If  any provision of this Guaranty shall be
invalid,  illegal or unenforceable, the validity of all other terms hereof shall
be  in  no  way  affected  thereby,  and  this  Guaranty  shall  operate  and be
enforceable as if such invalid, illegal or unenforceable provisions had not been
included  herein.

     IN WITNESS WHEREOF, the Guarantor has signed this Guaranty under seal as of
the  day  and  year  first  above  written.

GUARANTOR:
---------

HORIZON  BAY  MANAGEMENT,  L.L.C.


By:
     Thilo  D.  Best
     President  and  Chief  Executive  Officer



<PAGE>

                                  SCHEDULE 4(B)
                                  -------------

                          FORM OF OPERATING LOSS REPORT
                          -----------------------------


                                  See attached.













<PAGE>

<TABLE>
<CAPTION>


Operating  Loss  Funding
Year  1  Examples
(in  000's)
Operating  Loss  Funding
Year  1  Examples
(in  000's)
SCHEDULE  4(E)
--------------

EXAMPLES  OF  OPERATING  LOSS  CALCULATIONS
-------------------------------------------


<S>                                                                                                     <C>
                                                                                                        Group A.
                                                                                                        --------------
Month. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  Income <Loss>
                                                                                                        --------------
                                                                                                        Loss
                                                                                                        --------------

  (1) Month 1:  Group A Closes
1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           <150>




  (2) Month 2:  Both Groups Are Closed
2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           <140>




  (3) Month 10:  Losses of $2.2 Million at End of Month 9 and Company Makes Money
9. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  End of Month 9
10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              25




  (4) Month 11:  Company Loses Money Funding to Extent of Aggregate Losses
11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            <30>




  (5) Month 12:  Company Loses Money in Aggregate
12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              50




  (6) Month 13:  Group A Moves to Year 2 Funding Group B Still Draws From Year 1 Funds Subject to Cap.
13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               0


<S>                                                                                                                    <C>
Group B.       Total
                                                                                                        -------------  ---------
Month. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  Income <Loss>  Aggregate
                                                                                                        -------------  ---------
                                                                                                        Funding


  (1) Month 1:  Group A Closes
1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              0      <150>
150




  (2) Month 2:  Both Groups Are Closed
2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          <130>      <420>
420




  (3) Month 10:  Losses of $2.2 Million at End of Month 9 and Company Makes Money
9. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        <2,200>      2,200
10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             50    <2,125>
2,200




  (4) Month 11:  Company Loses Money Funding to Extent of Aggregate Losses
11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           <55>    <2,210>
2,210




  (5) Month 12:  Company Loses Money in Aggregate
12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           <70>    <2,230>
2,230




  (6) Month 13:  Group A Moves to Year 2 Funding Group B Still Draws From Year 1 Funds Subject to Cap.
13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           <50>    <2,280>
2,238
</TABLE>











<PAGE>
------
     4
------

                                SCHEDULE 7(A)(VI)
                                -----------------
                                   LITIGATION
                                   ----------
Lexington  Insurance  Company  and  ILC  of  McKinney,  Inc.  vs.
-----------------------------------------------------------------
Highland  Fire  Protection  Co.,  et  al.
-----------------------------------------
KP at Stonebridge Ranch is a nominal plaintiff in this subrogated action brought
by  plaintiff  Lexington  Insurance  Company ("Lexington") in the name of ILC of
McKinney,  Inc. (predecessor to Integrated Living Communities of McKinney, L.P.)
against  the contractor, architect, et al., resulting from a property claim paid
by  Lexington  several  years  ago.  The property claim relates to the sprinkler
system  freezing,  which  caused  water  damage  (the water damage and sprinkler
system  have  been  repaired).


<PAGE>
     3
     3

<TABLE>
<CAPTION>


                                                    SCHEDULE 7(A)(XI)
                                                    -----------------
                                                   OPERATING CONTRACTS
                                                   -------------------


                                                   OPERATING CONTRACTS


<S>                                  <C>                            <C>

PROPERTY. . . . . . . . . . . . . .  COMPANY NAME                   CONTRACT DATE
KP @ Lafayette. . . . . . . . . . .  Excel Protection Systems, Inc                                             10/18/2001
  Choice Lawn & Landscape . . . . .                      5/31/2001
  Choice Lawn & Landscape . . . . .                      5/31/2001
  Orkin . . . . . . . . . . . . . .                       8/7/2001  Pest control
  Redd Pest Control . . . . . . . .                      2/20/1998  Pest control
  Waste Management. . . . . . . . .                      9/23/1999  Non hazardous waste
  Pitney Bowes Credit Corporation .                     12/31/1997  Lease postage meter -- Equipment lease

KP @ Lake Charles . . . . . . . . .  Sue Williams                                                               2/10/1998
  Deadria Bernard . . . . . . . . .                       9/8/2000  Barber and beauty shop
  John Astling. . . . . . . . . . .  Undated                        Aerobic instructor
  Canon Financial Services Inc. . .                       2/8/2000  Copier lease -- Equipment lease
  Louisiana Special Systems, Inc. .                       4/1/1998  Fire alarm inspection agreement
  Louisiana Special Systems, Inc. .                      3/27/1998  Fire alarm monitoring agreement
  BFI . . . . . . . . . . . . . . .                       9/5/2000  Trash removal

KP @ Medical Center . . . . . . . .  Anco Inc.                                                                   7/1/1998
  JM Electronic Engineering Inc.. .                       1/1/2000  Inspection of kitchen hood
  JM Electronic Engineering Inc.. .                       9/8/1998  Fire alarm and sprinkler inspection
  Commercial Pest Control, Inc. . .                       7/2/1998  Pest control
  Oakdell Pharmacy, Inc.. . . . . .                       1/1/2001  Pharmacy agreement
KP @ Medical Center . . . . . . . .  Oakdell Pharmacy, Inc.                                                      1/1/2001
  Karen Keysor. . . . . . . . . . .                      7/23/1999  Beauty salon lease
  Pitney Bowes. . . . . . . . . . .                     11/12/1997  Equipment Lease
  Cingular Wireless . . . . . . . .                       8/1/2001  Wireless service agreement

KP @ Oakwell. . . . . . . . . . . .  Commercial Pest Control, Inc.                                               8/3/1998
  JM Electronic Engineering Inc.. .                      12/3/2000  Inspection of kitchen hood
  JM Electronic Engineering Inc.. .                      12/3/2000  Fire alarm and sprinkler inspection
  Radiant Lady #1 . . . . . . . . .                      6/13/1998  Beauty salon lease

KP @ Stonebridge. . . . . . . . . .  Symphony Mobilex                                                            1/2/2002
  Care Alliance . . . . . . . . . .                       1/1/1998  Lease space & perform therapies
  Blue Star Storage . . . . . . . .                     11/12/2001  Storage lease
  TCN . . . . . . . . . . . . . . .                      1/11/2000  Temporary nursing staff
  BFI . . . . . . . . . . . . . . .                      10/8/1997  Medical Waste
  Betty Arrington . . . . . . . . .                       3/9/2000  Barber & Beauty Shop
  Slagle. . . . . . . . . . . . . .  Undated                        Termite & Pest Control--Cancelled effective 1/31/2002
  Martin Landscape. . . . . . . . .                       4/1/2000  Lawn maintenance
  Axtell Rite-Value Pharmacy. . . .                       4/1/2000  Pharmacy
  Grinnell Fire Protection. . . . .                      12/1/1997  Fire protection and inspections--Equipment lease
  City of McKinney. . . . . . . . .                     10/22/1997  Water and sanitation service
  Physicians Reference Laboratories                     11/30/1998  Laboratory services
  Podiatric Resource Service, Inc..                      4/21/1999  Podiatrist
  Ogburn Pest & Lawn, Inc.. . . . .                      1/16/2002  Pest control

KP @ Henderson. . . . . . . . . . .  U.S. Liquids                                                                3/5/2001
  Senior Psychology Services. . . .                      4/10/2001  Psychology services
  Emi Cully . . . . . . . . . . . .                     12/28/2000  Lease for home health services
  Assist Care . . . . . . . . . . .                     12/28/2000  Lease for home health services

KP @ Alexandria . . . . . . . . . .  Sharon Grantadams                                                          5/31/2000
  Adam Pest Control . . . . . . . .  Nov-98                         Pest control
  GE Capital. . . . . . . . . . . .                      4/23/2001  Copier lease -- Equipment lease
  Cunningham Business Systems . . .                      3/22/2002  Copier maintenance
  U.S. Postal Service . . . . . . .                     12/10/1997  Postage meter license
  TCA Management Company. . . . . .                      1/21/1998  Cable television
  M and M Lawn Service. . . . . . .                      5/30/2001  Grounds maintenance


<S>                                  <C>

PROPERTY. . . . . . . . . . . . . .  NOTES
KP @ Lafayette. . . . . . . . . . .  Fire alarm inspection
  Choice Lawn & Landscape
  Choice Lawn & Landscape
  Orkin
  Redd Pest Control
  Waste Management
  Pitney Bowes Credit Corporation

KP @ Lake Charles . . . . . . . . .  Registered Dietitian
  Deadria Bernard
  John Astling
  Canon Financial Services Inc.
  Louisiana Special Systems, Inc.
  Louisiana Special Systems, Inc.
  BFI

KP @ Medical Center . . . . . . . .  Landscape maintenance
  JM Electronic Engineering Inc.
  JM Electronic Engineering Inc.
  Commercial Pest Control, Inc.
  Oakdell Pharmacy, Inc.
KP @ Medical Center . . . . . . . .  Consultant pharmacist agreement
  Karen Keysor
  Pitney Bowes
  Cingular Wireless

KP @ Oakwell. . . . . . . . . . . .  Pest control
  JM Electronic Engineering Inc.
  JM Electronic Engineering Inc.
  Radiant Lady #1

KP @ Stonebridge. . . . . . . . . .  Mobile x-ray--Equipment lease
  Care Alliance
  Blue Star Storage
  TCN
  BFI
  Betty Arrington
  Slagle
  Martin Landscape
  Axtell Rite-Value Pharmacy
  Grinnell Fire Protection
  City of McKinney
  Physicians Reference Laboratories
  Podiatric Resource Service, Inc.
  Ogburn Pest & Lawn, Inc.

KP @ Henderson. . . . . . . . . . .  Grease trap service
  Senior Psychology Services
  Emi Cully
  Assist Care

KP @ Alexandria . . . . . . . . . .  Beauty shop services
  Adam Pest Control
  GE Capital
  Cunningham Business Systems
  U.S. Postal Service
  TCA Management Company
  M and M Lawn Service
</TABLE>