**Real
      Property Purchase and Sale Agreement**


**Green
      Valley, Arizona**








This
      Real
      Property Purchase and Sale Agreement (this “ **Agreement** ”)
      is
      made and entered into as of May 20, 2005 (the “ **Effective
      Date** ”),
      by
      and between PIONEER HEALTH MANAGEMENT CORPORATION, an Arizona corporation (or
      its assigns as permitted herein) (“ **Buyer** ”),
      and
      EMERITUS CORPORATION, a Washington corporation (“ **Seller** ”).





Seller
      is
      the owner of certain property in Pima County, Arizona. Buyer desires to purchase
      from Seller and Seller desires to sell to Buyer the Property (as hereinafter
      defined) on the terms and conditions set forth below.





In
      consideration of the mutual covenants and promises contained herein, and for
      other good and valuable consideration, the receipt and sufficiency of which
      are
      hereby acknowledged, Seller and Buyer agree as follows:








**ARTICLE
      I.**  **PROPERTY**





Seller
      hereby agrees to sell and convey to Buyer, and Buyer hereby agrees to purchase
      from Seller, the obligations of each of them subject to the terms and conditions
      set forth herein, the following:





1.1  Land .
      That
      certain parcel of unimproved real property more particularly described on Exhibit A hereto
      (the “ **Land** ”).





1.2  Appurtenances .
      All
      rights, privileges and easements, including without limitation all minerals,
      oil, gas and other hydrocarbon substances on and under the Land, all development
      rights, air rights, water rights and all easements, rights-of-way, preliminary
      plat approvals, permits, licenses and other rights appurtenant to or used in
      connection with the Land (collectively, the “ **Appurtenances** ”).





The
      items
      described in Sections 1.1 and 1.2 are herein collectively referred to
      as
      the “ **Property** .”








**ARTICLE
      II.**  **PURCHASE
      PRICE**





2.1  Purchase
      Price .
      The
      purchase price for the Property (the “ **Purchase
      Price** ”)
      shall
      be Five Hundred Twenty-Four Thousand Dollars ($524,000), subject to adjustments,
      if any, as provided for under this Agreement. The Purchase Price shall be paid
      by Buyer in good and immediately available United States funds on the Closing
      Date (as defined below).





2.2  Escrow
      Holder .
      Chicago
      Title Insurance Company, 3400 Bank of America Tower, 701 Fifth Avenue, Suite
      3400, Seattle, WA 98104, Attn: Scott Smouse, Phone No.:


1


206.628.5693,
      Fax No.: 206.628.9737 (“ **Escrow
      Holder** ”
      in its
      capacity as escrow holder and “ **Title
      Company** ”
      in its
      capacity as title insurer) has been designated as Escrow Holder hereunder by
      mutual agreement of Seller and Buyer. Promptly upon receipt of a fully executed
      copy of this Agreement, Escrow Holder shall open a closing escrow in accordance
      with the terms of this Agreement.





2.3  Earnest
      Money .
      Not
      later than two business days following the Effective Date, Buyer shall deposit
      with Escrow Holder a cash earnest money deposit in the amount of $5,000 (the
      “ **Earnest
      Money** ”).
      At
      the Closing, the Earnest Money shall be credited against the Purchase Price.
      In
      the event this transaction fails to close as a result of Seller’s default, the
      failure of any condition precedent to Buyer’s obligations, or any reason other
      than Buyer’s default, the Earnest Money shall be returned to Buyer. In the event
      this transaction fails to close as a result of Buyer’s default, Escrow Holder
      shall deliver the Earnest Money to Seller and retention of the Earnest Money
      by
      Seller shall be Seller’s sole and exclusive remedy for Buyer’s failure to close.
      Escrow Agent shall deposit the Earnest Money in an interest-bearing account
      at a
      financial institution approved by Buyer and Seller, with all interest accruing
      thereon becoming a part of the Earnest Money.








**ARTICLE
      III.**  **TITLE**





3.1  Review
      of Title .
      Within
      ten business days after the Effective Date, Seller shall provide Buyer with
      a
      preliminary commitment for title insurance for the Property issued by the Title
      Company, together with complete and legible copies of all exceptions and
      encumbrances noted thereon (the “ **Preliminary
      Commitment** ”)
      and a
      copy of the most recent survey of the Property in Seller’s possession (the
“ **Survey** ”).
      Buyer
      shall have thirty days after the receipt of the Preliminary Commitment to advise
      Seller in writing of any encumbrances, restrictions, easements or other matters
      in the Preliminary Commitment or Survey (collectively, “ **Exceptions** ”)
      to
      which Buyer objects. All Exceptions to which Buyer does not object in writing
      within the thirty-day period shall be deemed accepted by Buyer.





If
      Buyer
      objects to any Exceptions within the thirty-day period, Seller shall advise
      Buyer in writing within five business days after receipt of Buyer’s written
      objections: (a) which Exceptions Seller will remove at Closing,
      (b) which Exceptions the Title Company has agreed to insure around in
      the
      title policy to be issued at Closing (together with the proposed form of
      endorsement), and (c) which Exceptions will not be removed by Seller
      or
      insured around by Title Company.





Buyer’s
      failure to terminate this Agreement prior to the expiration of the Inspection
      Period shall be deemed an acceptance of the condition of title, subject to
      Seller’s removal of those exceptions that Seller agrees to remove pursuant to
      this Section.





The
      term
“ **Permitted**  **Exceptions** ”
      as used
      hereafter means: (a) the Exceptions accepted or deemed accepted by Buyer
      as
      provided above; and (b) the lien of real estate taxes for the current
      calendar year, which shall be prorated to the Closing Date as provided in
      Section 7.5.





3.2  Title
      Insurance .
      Seller
      shall cause Title Company to deliver to Buyer at Closing an ALTA Standard (or,
      at Buyer’s request, Extended) Coverage Owner’s Policy of title insurance issued
      by Title Company in the amount of the Purchase Price, dated the date of Closing,
      insuring Buyer’s title subject to no exceptions other than the standard printed
      exceptions and the Permitted Exceptions (the “ **Title
      Policy** ”).
      Buyer
      shall be responsible for payment of the additional premium if it requests an
      extended coverage policy). The Title Policy shall contain, at Buyer’s sole
      expense, such endorsements as Buyer may specify.





3.3  Conveyance
      of the Property .
      At
      Closing Seller shall convey to Buyer fee simple title to the Property by
      execution and delivery of a special warranty deed to the Property in the form
      of Exhibit B hereto
      (the “ **Deed** ”),
      with
      such modifications to its form as may be required to comply with Arizona law,
      subject only to the Permitted Exceptions.








**ARTICLE
      IV.**  **INSPECTION
      OF DOCUMENTS AND**


**EVALUATION
      OF THE PROPERTY**





Seller
      shall provide to Buyer for inspection and copying within five business days
      following Effective Date, or such other time as provided herein, the originals
      or copies of the following (the “ **Due
      Diligence Materials** ”):





4.1  Preliminary
      Commitment .
      The
      Preliminary Commitment for title insurance referenced in
      Section 3.1.





4.2  Survey .
      Any
      prior surveys in Seller’s possession.





4.3  Approvals .
      All
      preliminary plat plans, surveys, reports, traffic studies, consultant studies,
      utility studies or correspondence, and all applications for governmental
      approvals, permits or licenses, including any zoning variances or special use
      permits, if any, and applications related thereto.





4.4  Environmental
      Reports .
      All
      studies and reports in Seller’s possession relating to the environmental
      condition of the Property and all correspondence or claims from any person
      or
      entity related thereto.





4.5  Other
      Matters .
      Any
      other document or matter in Seller’s possession reasonably requested by Buyer
      that relates to the Property.





The
      term
“ **Seller’s
      possession** ”
      as used
      above means in Seller’s physical possession, in the possession of Seller’s
      property manager, or otherwise readily available to Seller without cost other
      than copying and delivery charges.





Buyer
      shall have until 5:00 p.m. Seattle, Washington, time on the date that
      is
      sixty days after the Effective Date to inspect the Property and to review and
      approve the Due Diligence Materials (the “ **Inspection
      Period** ”),
      except the procedure and time period set forth in Section 3.1 shall
      apply
      to approval of the Preliminary Commitment and the Exceptions thereto.


2


During
      the Inspection Period, Buyer at its sole expense may, subject to the terms
      of
      this Agreement, inspect the Property’s physical condition, verify to its
      satisfaction the financial information provided to it and conduct any
      environmental or other inspections as it deems appropriate, including (but
      not
      limited to) geotechnical or soil borings. Buyer shall have the right to enter
      upon the Property only in accordance with the following terms and
      conditions:





(a)  This
      Agreement has not been terminated;





(b)  Any
      entry
      upon the Property shall be only for the purpose of inspections, studies and
      surveys upon prior written notice to Seller;





(c)  Following
      any testing or inspections, Buyer shall, at its own expense, restore the
      Property to its condition immediately prior to such testing or inspections;
      and





(d)  Buyer
      shall indemnify, defend and hold Seller harmless from any claims, liens, causes
      of action, or obligations by persons or entities not a party to this Agreement
      that arise out of or are in any way related to Buyer’s activities on the
      Property prior to Closing, including without limitation Seller’s costs, expenses
      and attorney’s fees, except: (i) to the extent such claims arise out of
      Seller’s negligence or (ii) the discovery and reporting as required by law
      of any hazardous or environmental condition on the Property. Notwithstanding
      anything to the contrary herein, this indemnity shall survive termination of
      this Agreement.





If
      Buyer
      is not satisfied in its sole discretion with the results of its inspection
      of
      all of the foregoing, Buyer may terminate this Agreement by delivering written
      notice of such termination to Seller at any time prior to expiration of the
      Inspection Period (the “ **Termination
      Notice** ”).
      If
      Buyer fails to deliver the Termination Notice prior to expiration of the
      Inspection Period, then the Inspection Period contingency will be deemed waived
      and this Agreement shall continue in full force and effect in accordance with
      its terms. If Buyer timely delivers the Termination Notice, then this Agreement
      will terminate, Buyer shall promptly return to Seller the Due Diligence
      Materials and copies of any third-party reports concerning the Property prepared
      on Buyer’s behalf (the “ **Reports** ”),
      the
      Earnest Money shall be returned to Buyer promptly after Buyer’s return of the
      Due Diligence Materials, and the parties shall have no further obligations
      hereunder except for those obligations that expressly survive the termination
      of
      this Agreement.








**ARTICLE
      V.**  **CONDITIONS
      PRECEDENT TO CLOSING**





Buyer’s
      obligations under this Agreement are expressly conditioned on, and subject
      to
      satisfaction of, the following conditions precedent:





5.1  Performance
      by Seller .
      Seller
      shall have timely performed all material obligations required by this Agreement
      to be performed by it.





5.2  Title
      Policy .
      Title
      Company shall be ready, willing, and able to issue the Title
      Policy.





5.3  Representations
      and Warranties True .
      Seller’s representations and warranties contained herein shall be true and
      correct in all material respects.





The
      conditions set forth in Sections 5.1 through 5.3 above are intended
      solely
      for Buyer’s benefit. If any of the foregoing conditions are not satisfied as of
      the Closing Date, Buyer shall have the right at its sole election either to
      waive the condition in question and proceed with the purchase or, in the
      alternative, to terminate this Agreement, whereupon this Agreement shall
      terminate, Buyer shall return to Seller the Due Diligence Materials and copies
      of the Reports, the Earnest Money shall be returned to Buyer promptly after
      Buyer’s delivery to Seller of such materials, and the parties shall have no
      further obligations hereunder except for those obligations that expressly
      survive termination of this Agreement.





Seller’s
      obligations under this Agreement are expressly conditioned on, and subject
      to
      satisfaction of, the following conditions precedent:





5.4  Performance
      by Buyer .
      Buyer
      shall have timely performed all obligations required by this Agreement to be
      performed by it.





5.5  Representations
      and Warranties True .
      Buyer’s
      representations and warranties contained herein shall be true and correct in
      all
      material respects.





5.6  Board
      Approval .
      Seller
      shall have secured the approval of its Board of Directors of the transaction
      provided for herein; provided, however, in the event Seller has not advised
      Buyer prior to the end of the Inspection Period that this condition has not
      been
      satisfied, it shall be deemed to have been satisfied and waived by
      Seller.





The
      conditions set forth in Sections 5.4 through 5.6 above are intended
      solely
      for Seller’s benefit. If any of the foregoing conditions are not satisfied as of
      the Closing Date, Seller shall have the right at its sole election either to
      waive the condition in question and proceed with the sale or, in the
      alternative, to terminate this Agreement. No such termination, however, shall
      waive Seller’s right to retain the Earnest Money if Buyer is then in default
      under this Agreement.








**ARTICLE
      VI.**  **OPERATIONS
      PENDING CLOSING**





6.1  Operations
      Pending Closing .
      At all
      times prior to the Closing or the sooner termination of this Agreement, Seller
      agrees to maintain the Property free from waste and neglect, in accordance
      with
      applicable law and consistent with its past management practices.





6.2  Condition
      of Title .
      At all
      times prior to the Closing or sooner termination of this Agreement, Seller
      agrees with respect to all or any portion of the Property: (a) not to
      further mortgage, encumber, or otherwise change the Permitted Exceptions;
      (b) not to enter into any written or oral contracts or agreements that
      would be binding on Buyer after Closing without the prior written consent of
      Buyer; and (c) not to enter into any contracts or agreements to sell
      or
      otherwise transfer the Property.





3





**ARTICLE
      VII.**  **CLOSING
      AND ESCROW**





7.1  Closing .
      The
      Closing hereunder (the “ **Closing** ”)
      shall
      be held and delivery of all items to be made at the Closing under the terms
      of
      this Agreement shall be made at the Title Company’s offices on the date (the
“ **Closing
      Date** ”)
      that
      is fifteen days after the earlier of (a) the expiration of the Inspection
      Period or (b) Buyer’s delivery to Seller of a written notice waiving the
      Inspection Period contingency.





7.2  Delivery
      by Seller .
      On or
      before the Closing Date, Seller shall deposit with Escrow Holder the
      following:





(a)  The
      duly
      executed and acknowledged Deed ready for recordation on the Closing
      Date;





(b)  Affidavit
      executed by Seller in the form of Exhibit C hereto
      (the “ **FIRPTA
      Affidavit** ”);
      and





(c)  Any
      reconveyance documents required to eliminate of record any existing deeds of
      trust and other security documents that are a lien on the Property and any
      customary affidavits or certifications required by Title Company to issue the
      Title Policy.





7.3  Delivery
      by Buyer .
      On or
      before the Closing Date Buyer shall deposit with Escrow Holder the Purchase
      Price (as adjusted pursuant to Sections 7.5 and 7.6).





7.4  Title
      Policy; Other Instruments .
      Seller
      shall cause the Title Company to issue the Title Policy at Closing or as soon
      thereafter as practicable. Seller and Buyer shall each deposit such other
      instruments as are reasonably required by Escrow Holder or otherwise required
      to
      close the escrow and consummate the purchase of the Property in accordance
      with
      the terms hereof.





7.5  Prorations .
      All
      revenues and all expenses of the Property, including but not limited to, real
      property taxes, drainage district service charges, water, sewer and utility
      charges, and other expenses normal to the operation and maintenance of the
      Property, but excluding insurance premiums, shall be prorated as of
      11:59 p.m. on the Closing Date. Real property tax prorations will be
      on the
      basis of taxes paid or payable in the year of Closing. Utility deposits shall
      be
      credited to Seller.





7.6  Closing
      Costs and Expenses .
      Buyer
      and Seller shall each pay their own attorneys’ fees and expenses to perform
      their obligations hereunder in addition to the following:





(a)  Seller
      shall pay:





(i)  The
      owner’s standard coverage portion of the premium for the Title
      Policy;





(ii)  All
      real
      estate excise taxes, and other transfer taxes applicable to the transfer of
      the
      Property, if any; and





(iii)  One-half
      of the fees for the Escrow Holder.





(b)  Buyer
      shall pay:





(i)  One-half
      of the fees for the Escrow Holder;





(ii)  All
      costs
      and expenses of Buyer’s consultants and investigations during the Inspection
      Period;





(iii)  The
      premium differential between owner’s standard coverage and owner’s extended
      coverage for the Title Policy plus the cost of all endorsements requested by
      Buyer;





(iv)  All
      costs
      of the new survey (or updates to the existing Survey) of the Property and all
      costs, if any, of any required replatting or subdivision of the Property;
      and





(v)  All
      recording costs for the Deed.





7.7  Closing
      Statements .
      The
      prorations shall be made on the basis of a written closing statement submitted
      by Escrow Holder to Buyer and Seller prior to the Closing Date and approved
      by
      Buyer and Seller, which approval shall not unreasonably be withheld. In the
      event any prorations or apportionments made hereunder shall prove to be
      incorrect for any reason, then any party shall be entitled to an adjustment
      to
      correct the same. Any item that cannot be prorated because of the unavailability
      of information shall be tentatively prorated on the basis of the best data
      then
      available and re-prorated between Buyer and Seller when the information is
      available. Notwithstanding the foregoing, any adjustments or re-prorations
      shall
      be made, if at all, within one hundred eighty days after the Closing
      Date.





7.8  Delivery
      Outside of Escrow .
      Seller
      shall deliver to Buyer at Closing outside of the Closing escrow the originals
      of
      the Due Diligence Materials, copies of all books and records of Seller used
      in
      the operation and permitting of the Property, and such other records and items
      related to the Property as reasonably requested by Buyer.








**ARTICLE
      VIII.**  **REPRESENTATIONS
      AND WARRANTIES**





Seller
      and Buyer make the following representations and warranties:





8.1  Seller’s
      Representations .
      Seller
      represents and warrants to Buyer as of the Effective Date:





(a)  Litigation .
      There
      is no claim, litigation, or proceeding pending against Seller, or to Seller’s
      current actual knowledge threatened against Seller, relating to the Property
      or
      the transactions contemplated by this Agreement.





(b)  No
      Prior Options, Sales or Assignments .
      Seller
      has not granted any options nor obligated itself in any manner whatsoever to
      sell the Property or any portion thereof to any party other than
      Buyer.





(c)  Special
      Assessments .
      Seller
      has not been notified during Seller’s ownership of the Property of contemplated
      improvements to the Property or the area surrounding the Property that would
      result in the assessment of a special improvement or similar lien against the
      Property.





(d)  Existing
      Agreements .
      Seller
      has entered into no contracts, agreements or understandings (whether written
      or
      oral) relating to the Property that will be binding on Buyer after Closing,
      except for the Permitted Exceptions.





(e)  Environmental
      Compliance .
      During
      its ownership of the Property, Seller has not caused or permitted the Property
      to be used to generate, manufacture, refine, transport, treat, store, handle,
      dispose, transfer, produce or process Hazardous Substances. Seller has no
      current actual knowledge of any Hazardous Substances on or adjacent to the
      Property. For the purposes hereof, “ **Hazardous**  **Substances** ”
      shall
      mean petroleum and petroleum derivatives and products, and any substance,
      chemical, waste or other material that is listed, defined or otherwise
      identified as “hazardous” or “toxic” under any federal, state or local ordinance
      or law or any administrative agency rule or determination.





(f)  Authority .
      Seller
      is a Washington corporation duly organized and validly existing under the laws
      of the State of Washington. This Agreement and all documents to be executed
      by
      Seller at Closing have been or will be duly authorized, executed, and delivered
      by Seller and are binding on and enforceable against Seller in accordance with
      their terms, subject to the terms of Section 5.6 above.





The
      representations and warranties herein that are based upon the current actual
      knowledge of Seller are based upon the current actual knowledge of William
      M.
      Shorten, who is Seller’s Director of Real Estate Finance, without any imputation
      of knowledge as a result of agency or constructive knowledge principles, and
      without any obligation on Seller’s part to undertake any investigation or take
      any affirmative action to acquire any knowledge.





Seller’s
      representations and warranties, except those set forth in (g) above, shall
      survive Closing for a period of six months and shall terminate as of the end
      of
      such period except to the extent that Buyer advises Seller in writing of an
      alleged breach thereof prior to such termination date. Subject to the foregoing,
      Seller hereby agrees to defend, protect, indemnify and hold Buyer harmless
      from
      and against any and all loss, damage, liability or expense, including attorneys’
      fees and costs, Buyer may suffer as a result of (y) any breach of or
      inaccuracy in the foregoing representations and warranties and (z) any
      claim by any person or party for personal injury


4


(including
      death) or damage to property arising out of facts and circumstances occurring
      (or alleged to have occurred) prior to the Closing.





BUYER
      IS
      PURCHASING THE PROPERTY “AS IS WHERE IS” IN ITS PRESENT CONDITION. BUYER HAS THE
      OPPORTUNITY TO INSPECT THE PROPERTY AND DOCUMENTATION IN SELLER’S POSSESSION AS
      PROVIDED IN THIS AGREEMENT. EXCEPT AS EXPRESSLY SET FORTH ABOVE AND THE SPECIAL
      WARRANTY OF TITLE TO BE SET FORTH IN THE DEED, SELLER MAKES NO REPRESENTATIONS
      OR WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO, AND SHALL HAVE NO LIABILITY
      FOR: (a) THE PROPERTY’S CONDITION OR ITS SUITABILITY FOR HABITATION OR FOR
      BUYER’S INTENDED USE; (b) ANY APPLICABLE BUILDING, ZONING, OR FIRE LAWS OR
      REGULATIONS OR WITH RESPECT TO COMPLIANCE THEREWITH OR WITH RESPECT TO THE
      EXISTENCE OF OR COMPLIANCE WITH ANY REQUIRED PERMITS, IF ANY, OF ANY
      GOVERNMENTAL AGENCY; (c) THE AVAILABILITY OR EXISTENCE OF ANY WATER,
      SEWER,
      OR UTILITIES, ANY RIGHTS THERETO, OR ANY WATER, SEWER OR UTILITY DISTRICTS;
      (d) ACCESS TO ANY PUBLIC OR PRIVATE SANITARY SEWER OR DRAINAGE SYSTEM;
      OR
      (e) THE PRESENCE OF ANY HAZARDOUS SUBSTANCES AT THE PROPERTY, INCLUDING
      WITHOUT LIMITATION ASBESTOS OR UREA-FORMALDEHYDE, OR THE PRESENCE OF ANY
      ENVIRONMENTALLY HAZARDOUS WASTES OR MATERIALS ON OR UNDER THE PROPERTY. WITHOUT
      LIMITING THE GENERALITY OF THE FOREGOING, SELLER SHALL HAVE NO LIABILITY WITH
      RESPECT TO THE CONDITION OF THE PROPERTY UNDER COMMON LAW, OR ANY FEDERAL,
      STATE, OR LOCAL LAW OR REGULATION, INCLUDING BUT NOT LIMITED TO THE
      COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION AND LIABILITY ACT OF 1980
      AS
      AMENDED, 42 U.S.C.A. SECTIONS 9601 ET SEQ., OR ANY SIMILAR APPLICABLE STATE
      STATUTE, AND BUYER HEREBY RELEASES AND WAIVES ANY AND ALL CLAIMS THAT BUYER
      HAS
      OR MAY HAVE AGAINST SELLER WITH RESPECT TO THE PROPERTY’S CONDITION. BUYER
      ACKNOWLEDGES THAT IT IS GIVEN THE OPPORTUNITY UNDER THIS AGREEMENT TO FULLY
      INSPECT THE PROPERTY AND BUYER ASSUMES THE RESPONSIBILITY AND RISKS OF ALL
      DEFECTS AND CONDITIONS, INCLUDING, WITHOUT LIMITATION, SUCH DEFECTS AND
      CONDITIONS, IF ANY, THAT CANNOT BE OBSERVED BY CASUAL INSPECTION. THIS PARAGRAPH
      SHALL SURVIVE CLOSING.





8.2  Buyer’s
      Representations .
      Buyer
      represents and warrants to Seller as of the Closing Date as
      follows:





(a)  Status .
      Buyer
      is a corporation duly organized, validly existing and in good standing under
      the
      laws of the State of Arizona.





(b)  Authority .
      This
      Agreement and all documents to be executed by Buyer at Closing have been duly
      authorized, executed and delivered by Buyer and are binding on and enforceable
      against Buyer in accordance with their terms.





5


Buyer
      hereby agrees to defend, protect, indemnify and hold Seller harmless from and
      against any and all loss, damage, liability or expense, including attorneys’
      fees and costs, Seller may suffer as a result of (y) any breach of or
      any
      inaccuracy in the foregoing representations and warranties and (z) any
      claim by any person or party for personal injury (including death) or damage
      to
      property arising out of facts and circumstances occurring (or alleged to have
      occurred) on or after the Closing.








**ARTICLE
      IX.**  **LOSS
      BY FIRE OR OTHER CASUALTY: CONDEMNATION**





In
      the
      event that all or any portion of the Property is damaged or destroyed by any
      casualty or is the subject of a taking or condemnation under the provisions
      of
      eminent domain law after the Effective Date but prior to the Closing Date,
      Buyer
      may terminate this Agreement and the Earnest Money shall be returned to Buyer
      promptly after Buyer’s delivery to Seller of the Due Diligence Materials and
      copies of any Reports. If Buyer does not elect to terminate this Agreement,
      then
      Seller shall have no obligation to repair or replace any damage or destruction
      caused by the foregoing and the Closing shall occur (subject to the terms of
      this Agreement) and no adjustment shall be made to the Purchase Price, but
      in
      the event of a taking, Seller shall assign to Buyer its rights to any
      condemnation proceeds attributable to such taking of a portion of the Property
      and shall not make any settlements without Buyer’s prior written
      approval.








**ARTICLE
      X.**  **POSSESSION**





Possession
      of the Property shall be delivered to Buyer on the Closing Date.








**ARTICLE
      XI.**  **DEFAULT;
      REMEDIES**





11.1  Default
      by Buyer .
      If
      Buyer fails, without legal excuse, to complete the purchase of the Property
      in
      accordance with the terms of this Agreement (all conditions to Buyer’s
      obligations having been satisfied or waived) or otherwise defaults hereunder,
      Seller’s sole and exclusive remedy shall be to retain the Earnest Money as
      liquidated damages. Buyer expressly agrees that the delivery to and the
      retention of the Earnest Money by Seller represents a reasonable estimation
      of
      the damages in the event of Buyer’s default, that actual damages may be
      difficult to ascertain and that this provision does not constitute a penalty.
      The foregoing limitation on Buyer’s liability shall not apply to Buyer’s
      indemnity obligations under this Agreement or to its obligations to be performed
      or enforced after Closing.





11.2  Default
      by Seller .
      If
      Seller fails, without legal excuse, to complete the purchase of the Property
      in
      accordance with the terms of this Agreement (all conditions to Seller’s
      obligations having been satisfied or waived) or otherwise defaults hereunder,
      Buyer may elect, as its sole and exclusive remedy, to either (i) seek
      specific performance of Seller’s obligations hereunder or (iii) terminate
      this Agreement and secure the return (promptly after Buyer’s return to Seller of
      the Due Diligence Materials) of the Earnest Money and any accrued interest
      thereon,


6


after
      which neither party shall have any further rights or obligations hereunder
      except those obligations that expressly survive the termination of this
      Agreement.





11.3  Attorneys’
      Fees .
      In the
      event either party brings an action or any other proceeding against the other
      party to enforce or interpret any of the terms, covenants or conditions hereof,
      the party substantially prevailing in any such action or proceeding shall be
      paid all costs and reasonable attorneys’ fees by the other party in such amounts
      as shall be set by the court, at trial and on appeal.








**ARTICLE
      XII.**  **MISCELLANEOUS**





12.1  Brokers
      and Finders .
      Each
      party represents to the other that no broker or finder has been involved in
      this
      transaction except Robert L. Baker of Sonoran Ventures (the “ **Broker** ”)
      whose
      commission shall be paid in full by Seller pursuant to a separate written
      agreement, provided, however, this provision shall not create any rights in
      the
      Broker or any other third parties. In the event of a claim for broker’s fee,
      finder’s fee, commission or other similar compensation in connection with this
      Agreement other than the Broker, Buyer, if such claim is based upon any
      agreement alleged to have been made by Buyer, hereby agrees to indemnify Seller
      against any and all damages, liabilities, costs and expenses (including, without
      limitation, reasonable attorneys’ fees and costs) that Seller may sustain or
      incur by reason of such claim. Seller, if such claim is based upon any agreement
      alleged to have been made by Seller, hereby agrees to indemnify Buyer against
      any and all damages, liabilities, costs and expenses (including, without
      limitation, reasonable attorneys’ fees and costs) that Buyer may sustain or
      incur by reason of such claim. Notwithstanding anything to the contrary herein,
      the provisions of this Section 12.1 shall survive the termination of
      this
      Agreement or the Closing. Buyer hereby discloses to Seller that C.E. Patterson,
      beneficial owner of Buyer, is a licensed real estate broker.





12.2  Notices .
      All
      notices, demands, requests, consents and approvals that may, or are required
      to,
      be given by any party to any other party hereunder shall be in writing and
      shall
      be deemed to have been duly given if delivered personally, sent by a nationally
      recognized overnight delivery service, electronically transmitted (with a
      duplicate sent by another method approved under this paragraph), or if mailed
      or
      deposited in the United States mail and sent by registered or certified mail,
      return receipt requested, postage prepaid to:





To
      Buyer
      at:  Pioneer
      Health Management Corporation


1640
      School Street


Moraga,
      CA 94556


Attn:
      Chip Patterson


Telephone
      No: 925.631.9100 ext. 206


Facsimile
      No: 925.871.4046





7


To
      Seller
      at:   Emeritus
      Corporation


3131
      Elliott Avenue, Suite 500


Seattle,
      WA 98121


Attn:
      Bill Shorten


Phone
      Number: 206.301.4511


Fax
      Number: 206.301.4500





with
      a
      copy to:   Foster
      Pepper & Shefelman PLLC


1111
      Third Avenue, Suite 3400


Seattle,
      WA 98101


Attn:
      Laura L. McClellan


Phone
      Number: 206.447.2871


Fax
      Number: 206.749.1917





or
      to
      such other addresses as either party hereto may from time to time designate
      in
      writing and deliver in a like manner. All notices shall be deemed complete
      upon
      actual receipt or refusal to accept delivery.





12.3  Amendment,
      Waiver .
      No
      modification, termination or amendment of this Agreement may be made except
      by
      written agreement. No failure by Seller or Buyer to insist upon the strict
      performance of any covenant, agreement, or condition of this Agreement or to
      exercise any right or remedy shall constitute a wavier of any such breach or
      any
      other covenant, agreement, term or condition. No waiver shall affect or alter
      this Agreement, and each and every covenant, agreement, term and condition
      of
      this Agreement shall continue in full force and effect with respect to any
      other
      then existing or subsequent breach thereof. All the terms, provisions, and
      conditions of this Agreement shall inure to the benefit of and be enforceable
      by
      Seller’s or Buyer’s permitted successors and assigns.





12.4  Survival .
      All
      provisions of this Agreement that involve obligations, duties, or rights to
      be
      performed after the Closing Date or the recording of the Deed, and all
      representations, warranties, and indemnifications made in or to be made pursuant
      to this Agreement shall survive the Closing Date and/or the recording of the
      Deed to the extent provided herein.





12.5  Captions .
      The
      captions of this Agreement are for convenience and reference only and in no
      way
      define, limit or describe the scope or intent of this Agreement.





12.6  Merger
      of Prior Agreements .
      This
      Agreement and the exhibits hereto constitute the final and complete agreement
      between the parties with respect to the purchase and sale of the Property and
      supersede all prior and contemporaneous agreements, letters of intent and
      understandings between the parties hereto relating to the subject matter of
      this
      Agreement.





12.7  No
      Joint Venture .
      It is
      not intended by this Agreement to, and nothing contained in this Agreement
      shall, create any partnership, joint venture or other arrangement between Buyer
      and Seller. No term or provision of this Agreement is intended to be, or shall
      be, for the benefit of any person, firm, organization or corporation not a
      party
      hereto, and no such other person, firm, organization, or corporation shall
      have
      any right or cause of action hereunder.


8





12.8  Governing
      Law; Time .
      This
      Agreement and the rights of the parties hereto shall be governed by and
      construed in accordance with the internal laws of the State of Washington.
      “ **Day** ”
      as used
      herein means a calendar day and “ **business
      day** ”
      means
      any day on which commercial banks are generally open for business. Any period
      of
      time that would otherwise end on a non-business day shall be extended to the
      next following business day. Time is of the essence of this
      Agreement.





12.9  Exhibits .
      The
      following exhibits are attached hereto or referenced herein and are incorporated
      in this Agreement.





EXHIBIT
      A  -  Description
      of the Land


EXHIBIT
      B  -  Form
      of
      Deed


EXHIBIT
      C  -  Form
      of
      FIRPTA





12.10  Severability .
      In case
      any one or more of the provisions contained in this Agreement shall for any
      reason be held to be invalid, illegal or unenforceable in any respect, such
      invalidity, illegality or unenforceability shall not affect any other provision
      hereof, and this Agreement shall be construed as if such provisions had not
      been
      contained herein.





12.11  Counterparts .
      This
      Agreement may be executed in counterparts, each of which shall be deemed an
      original, and all of such counterparts together shall constitute one and the
      same instrument. In addition, the parties hereto agree that this Agreement
      may
      be delivered either by a party or its counsel by fax machine to the other party
      or its counsel and that signatures so transmitted constitute original signatures
      and are binding on the party so signing. Upon request, the parties shall further
      deliver between themselves actual originally signed copies or counterparts,
      but
      such further delivery, or failure thereof, shall not affect the validity or
      timing of this Agreement. Original signatures may be removed from any
      counterpart and attached to an identical counterpart for purposes of assembling
      fully executed originals.





12.12  Assignment .
      Buyer’s
      rights under this Agreement are not assignable without Seller’s prior written
      consent, which shall not unreasonably be withheld, except that Buyer may assign
      this Agreement without Seller’s consent to any business entity of which Buyer,
      its principal shareholders, or any entity or entities controlled by Buyer or
      its
      principal shareholders is a general partner or managing member. No assignment
      shall relieve Buyer of its obligations under this Agreement.





IN
      WITNESS WHEREOF, the parties have executed this Agreement as of the day and
      year
      first above written.





[ *Remainder
      of page intentionally left blank; signatures follow* ]





9


***Signature
      Page for Real Estate Purchase and Sale Agreement***


***Green
      Valley, Arizona***








SELLER:
            EMERITUS
                CORPORATION, a Washington
                corporation











By:


William
      M. Shorten, Director of Real Estate Finance








BUYER:
            PIONEER
                HEALTH MANAGEMENT CORPORATION, an Arizona
                corporation











By:


C.E.
      Patterson, President








50517147.03
 10


EXHIBIT
      A





Description
      of the Land








A
      portion
      of the San Ignacio de la Canoa Land Grant, Pima County, Arizona, described
      as
      follows:





Commencing
      at the point of intersection of the easterly right of way line of La Canada
      Drive and the northerly line of Tucson Green Valley Unit No. 1 according to
      the
      plat recorded in Book 16 of Maps and Plats at Page 76, records of Pima County,
      Arizona;





Thence
      North 84 degrees 13 minutes 03 seconds East, along said Northerly line, a
      distance of 553.00 feet to the Point of Beginning of the herein described
      parcel;





Thence
      continue North 84 degrees 13 minutes 03 seconds East along said Northerly line,
      a distance of 300.00 feet to the Westerly line of Green Valley Townhouses No.
      7
      according to the plat recorded in Book 29 of Maps and Plats at Page 7, records
      of Pima County, Arizona;





Thence
      North 00 degrees 03 minutes 02 seconds East, along said Westerly line, a
      distance of 585.00 feet;





Thence
      South 84 degrees 13 minutes 03 seconds West, 300.00 feet;





Thence
      South 00 degrees 03 minutes 02 seconds West, 585.00 feet to the Point of
      Beginning.








EXHIBIT
            A
 11


EXHIBIT
      B





Form
      of Deed





Filed
      at
      the request of,


and
      when
      recorded return to:





_____________________


_____________________


_____________________


_____________________














SPECIAL
      WARRANTY DEED








For
      and
      in consideration of TEN DOLLARS ($10.00) in hand paid and other good and
      valuable consideration, the receipt, sufficiency, and adequacy of which are
      hereby acknowledged, EMERITUS CORPORATION, a Washington corporation (“Grantor”)
      whose address is 3131 Elliott Avenue, Suite 500, Seattle, WA 98121, does hereby
      convey and warrant to _____________________________, a ____________________
      (“Grantee”), the real property situate in Pima County, Arizona, and described on Exhibit
      A attached
      hereto and incorporated herein by this reference, SUBJECT TO the matters set
      forth on Exhibit
      B attached
      hereto and incorporated herein by this reference (the “Permitted
      Exceptions”).





GRANTOR
      does hereby bind itself and its successors to warrant and defend the title
      as
      against the claims of all persons whomsoever claiming by, through, or under
      Grantor, but not otherwise, subject to the Permitted Exceptions.





[ *Remainder
      of page intentionally left blank; signature page follows* ]





****[** ***insert
      signature and acknowledgment blocks and exhibits*** **]****








EXHIBIT
            B
 12


EXHIBIT
      C





Form
      of
      FIRPTA





**FIRPTA
      CERTIFICATE**


**(FOREIGN
      INVESTMENT IN REAL PROPERTY TAX ACT)**








ENTITY
      TRANSFEROR





Section 1445
      of the Internal Revenue Code provides that a transferee of a U.S. real property
      interest must withhold tax if the transferor is a foreign person. To inform
      the
      transferee that withholding of tax is not required upon the disposition of
      a
      U.S. real property interest by ___________________________, a [TYPE
      OF
      ENTITY ],
      (the
“Transferor”), the undersigned Transferor hereby certifies that:





1.  Transferor
      is not a foreign corporation, foreign partnership, foreign trust, or foreign
      estate (as those items are defined in the Internal Revenue Code and Income
      Tax
      Regulations);





2.  Transferor’s
      U.S. Employer Identification Number is ________________; and





3.  Transferor’s
      office address is:








Transferor
      understands that this certificate may be disclosed to the Internal Revenue
      Service by transferee and that any false statement contained herein could be
      punished by fine, imprisonment, or both.











Title:





Date:









13