**(Arbor
      Place)**








This
      PURCHASE AND SALE AGREEMENT (this “ **Agreement** ”)
      is
      made and entered into as of the 16 PP th PP day of
      June, 2006 (the “ **Effective
      Date** ”),
      by
      and among **SILVER
      LAKE ASSISTED LIVING, LLC** ,
      a
      Washington limited liability company (the “ **Seller** ”)
      and **ESC-ARBOR
      PLACE, LLC** ,
      a
      Washington limited liability company (the “ **Purchaser** ”
and
      together with the Seller, the “ **Parties** ”).




**RECITALS**





A.  Seller
      is
      the owner of the Real Property and the Facility (as defined below) and the
      Members are the sole members of Seller.




B.  The
      Facility is currently managed by Purchaser pursuant to a Management Agreement
      dated September 1, 1998 (the “ **Management
      Agreement** ”).




C.  Seller
      is
      interested in selling the Real Property and the Facility to Purchaser and
      Purchaser is interested in purchasing the same from Seller and leasing the
      same
      back to Seller concurrently with the acquisition thereof (the “ **Transaction** ”).




D.  The
      Parties are interested in documenting the terms and conditions of the
      Transaction.




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




**AGREEMENT**





**1.**  **Purchase
      And Sale**




(a)  On
      the
      terms and conditions set forth herein, on the Closing Date (as defined below)
      Seller shall sell to Purchaser and Purchaser shall purchase from Seller the
      following:




(i)  The
      real
      property situated in the State of Washington (the “ **State** ”),
      which
      is more particularly described in **Exhibit
      A** attached
      hereto (the “ **Real
      Property** ”)
      and
      the improvements thereon that constitute that certain one hundred (100) unit
      assisted living facility described on **Exhibit
      B** attached
      hereto (the “ **Facility** ”)
      together with all tenements, hereditaments, rights, privileges, interests,
      easements and appurtenances now or hereafter belonging or in any way pertaining
      to the Real Property and/or the Facility.




(ii)  All
      fixtures (the “ **Fixtures** ”)
      attached or appurtenant to the Real Property;




(iii)  All
      furnishings, equipment, tools, machinery, fixtures, appliances and all other
      tangible personal property located on or about the Real Property or the Facility
      which is owned by Seller (collectively, the “ **Personal
      Property** ”);




**1**


(iv)  All
      of
      the permits, licenses, approvals, entitlements and other governmental and
      quasi-governmental authorizations including, without limitation, certificates
      of
      occupancy and other similar permits relating to all or any part of the Real
      Property or the Facility and all amendments, modifications, supplements, general
      conditions and addenda thereto, required in connection with the ownership of
      the
      Facility (the “ **Permits
      and Approvals** ”)
      it
      being understood and agreed that the Permits and Approvals shall specifically
      exclude the boarding home license issued by DSHS to and held by Seller and
      any
      other permits, licenses, approvals, entitlements and other authorizations
      required in connection with the operation of the Facility, all of which shall
      be
      and remain the property of Seller. As used herein, “quasi-governmental” shall
      include the providers of all utility services to the Real Property;




(v)  All
      original reports, drawings, plans, blueprints, studies, specifications,
      certificates of occupancy, building permits and grading permits relating to
      all
      or any part of the Real Property or the Facility and all amendments,
      modifications, supplements, general conditions and addenda thereto (the
“ **Reports
      and Studies** ”);




(vi)  All
      warranties, representations and guaranties with respect to the ownership of
      the
      Real Property and the Facility, whether express or implied, which Seller now
      holds or under which Seller is the beneficiary (the “ **Warranties** ”);




(vii)  All
      of
      Seller’s legal and equitable claims, causes of action, and rights against the
      architects, engineers, designers, contractors, subcontractors, suppliers and
      materialmen and any other party who has supplied labor, services, materials
      or
      equipment, directly or indirectly, in connection with the design, planning,
      construction or ownership of all or any part of the Real Property and the
      Facility (the “ **Claims** ”);
      and




(viii)  All
      rights to lien waivers, surety agreements, bonds, warranties, guaranties,
      utility use agreements, covenants, commitments, permits, certificates,
      approvals, and other intangible personal property of every kind and nature
      whatsoever owned by Seller as of the date of this Agreement or hereafter
      acquired, which can be legally transferred and which relate directly to the
      ownership of the Facility (the “ **Intangible
      Property** ”).




Hereinafter
      the assets described in Section 1(a)(i) through (viii) shall sometimes be
      collectively referred to as “ **Seller’s
      Assets** .”




(b)  Except
      as
      specifically provided in this Agreement, Purchaser does not hereby or in
      connection herewith assume any liability of Seller or any other party whatsoever
      in relation to Seller’s Assets.




**2.**  **Purchase
      Price** .
      The
      purchase price (the “ **Purchase
      Price** ”)
      payable by Purchaser for Seller’s Assets shall be:




(a)  Five
      Million One Hundred Thousand and no/100 Dollars ($5,100,000) (the “ **Cash
      Purchase Price** ”).
      Purchaser shall pay the Cash Purchase Price at the Closing by wire transfer
      of
      immediately available funds (plus or minus any costs and prorations for which
      Seller and/or Purchaser are responsible under the terms hereof);
      and






**2**


(b)  An
      amount
      sufficient to payoff the obligations of Seller to Bank of America National
      Trust
      and Savings Association (formerly doing business as Seafirst Bank)
      (“ **Bank
      of America** ”),
      under
      the promissory note dated September 24, 1998, in the original principal amount
      of $5,985,000.00 (the “ **Bank
      of America Note** ”),
      which
      Purchaser shall pay to Bank of America at the Closing by wire transfer of
      immediately available funds.




**3.**  **Closing**




(a)  **The
      Closing Date** .
      Provided all of the conditions to closing set forth in Section 13 of this
      Agreement have been satisfied or waived, the closing (the “ **Closing** ”)
      of the
      Real Estate Transaction shall take place on June 30, 2006 (the “ **Closing
      Date** ”)
      and
      shall be effective as of 12:01 AM on July 1, 2006.




(b)  **The
      Closing Process** .
      The
      Closing shall occur through escrow and accordingly, at or prior to the Closing
      Date, the Parties shall deposit in escrow with Chicago Title Insurance Company
      (the “ **Title
      Company** ”)
      all
      documents and monies necessary to close this transaction as herein provided.
      Time is of the essence of this Agreement. Closing shall occur in accordance
      with
      the procedures and instructions given by the Parties to the Title Company prior
      to Closing.




**4.**  **Conveyances/Deliveries
      at Closing**




(a)  **Seller’s
      Closing Deliveries** .
      Seller
      shall deliver the following documents to the Title Company for recording and/or
      delivery to Purchaser:




(i)  A
      Warranty Deed with respect to the Real Property and Facility (the “ **Deed** ”),
      in
      the form attached hereto as **Exhibit
      C** ;




(ii)  A
      Bill of
      Sale with respect to the balance of the Seller’s Assets, in the form attached
      hereto as **Exhibit
      D** ;




(iii)  An
      affidavit executed by Seller under penalty of perjury, stating Seller’s United
      States taxpayer identification numbers and that Seller is not a foreign person,
      in accordance with the Internal Revenue Code, Section 1445(b)(2), in the
      form attached hereto as **Exhibit E** (the
“ **FIRPTA
      Affidavit** ”);




(iv)  A
      Lease
      between Purchaser, as Landlord, and Seller, as Tenant, in the form attached
      hereto as **Exhibit
      F** (the
“ **Lease** ”);




(v)  An
      Owner’s Affidavit duly executed by Seller in such form and content as may be
      reasonably required by the Title Company;




(vi)  A
      Gap
      Indemnity duly executed by Seller in such form and content as may be reasonably
      required by the Title Company;




(vii)  Such
      other affidavits and indemnities and other documents as may be customarily
      and
      reasonably required for the issuance of the Title Policy in accordance with
      the
      terms of this Agreement;






**3**


(viii)  A
      closing
      statement, executed on behalf of B.F., Limited Partnership, a Washington limited
      partnership (“ **BFLP** ”)
      as
      Manager of Seller, which shall provide that Seller is directing Title Company
      to
      pay one-half of the Cash Purchase Price by wire transfer to Providence Health
      System-Washington, a Washington nonprofit corporation formerly known as Sisters
      of Providence (“ **Providence** ”)
      pursuant to wire transfer instructions to be provided by Providence, and to
      pay
      one-half of the Cash Purchase Price by wire transfer to BFLP pursuant to wire
      transfer instructions to be provided by BFLP;




(ix)  An
      excise
      tax affidavit in the form proscribed by the Washington Department of Revenue
      (the “ **Excise
      Tax Affidavit** ”);
      and




(x)  Any
      documents to which the applicable Seller may be a party in connection with
      Purchaser’s loan from General Electric Capital Corporation (“ **GECC** ”),
      the
      proceeds of which loan shall be used by Purchaser to pay the Purchase Price
      (the
“ **Loan** ”),
      it
      being understood and agreed that GECC has advised Purchaser that it will require
      Seller to sign certain collateral documents related to the Facility as security
      for Purchaser’s obligations under the Loan.




(b)  **Purchaser’s
      Deliveries** .
      Purchaser shall deliver or cause to be delivered to the Title Company for
      recording and/or delivery to Seller the following:




(i)  The
      Purchase Price;




(ii)  The
      Lease;




(iii)  The
      Bill
      of Sale;




(iv)  An
      Indemnification Agreement in the form attached hereto as **Exhibit
      G** (the
“ **Indemnification
      Agreement** ”),
      pursuant to which Emeritus Corporation indemnifies Seller for certain matters
      identified therein;




(v)  Such
      supporting affidavits signed by Purchaser, in its capacity as the manager of
      the
      Facility, as Seller may reasonably request with respect to the matters covered
      by the Owner’s Affidavit being delivered by Seller pursuant to
      Section 4(a)(v); and




(vi)  A
      closing
      statement; and




(vii)  Documentation,
      reasonably acceptable to Seller and the Title Company, confirming the authority
      of Purchaser to execute and deliver this Agreement and all of the documents
      described in this Section 4 and to consummate the Transaction.




**5.**  **Closing
      Costs and Prorations**




(a)  **Costs
      and Expenses** .
      All
      costs and expenses associated with the sale of Seller’s Assets to Purchaser,
      including, without limitation, all title insurance premiums, real estate excise
      taxes, transfer taxes and escrow fees, shall be borne by Purchaser, other than
      any legal fees and expenses of Seller which shall be the responsibility of
      the
      Seller.






**4**


(b)  **Prorations
      and Adjustments** .
      In
      light of the concurrent leasing of the Facility back to Seller by Purchaser,
      there shall be no proration of revenues and expenses related to the ownership
      of
      the Seller’s Assets as of the Closing.




**6.**  **Possession** .
      On the
      Closing Date, Seller shall deliver to Purchaser possession of the Seller’s
      Assets, subject only to rights of residents of the Facility, the rights of
      Seller under the Lease and of Purchaser under the Management Agreement, and
      to
      such other rights, restrictions, easements and agreements which are of record
      as
      of May 4, 2006, but specifically excluding the Deed of Trust securing the
      obligations under the Bank of America Note, which shall be released following
      payoff of the Bank of America Note by Purchaser at the Closing.




**7.**  **Representations
      and Warranties of Seller**




(a)  Seller
      does hereby warrant and represent to Purchaser that:




(i)  UU Authority UU .
      Seller
      has full power and authority to execute and to deliver this Agreement and all
      related documents, and to carry out the transactions contemplated herein and
      therein at the times provided for herein.




(ii)  UU Enforceability/No
      Conflict UU .
      This
      Agreement is valid, binding and enforceable against Seller in accordance with
      its terms except as such enforceability may be limited by creditors’ rights laws
      or general principles of equity. The execution of this Agreement and the
      consummation of the transactions contemplated herein in accordance with the
      terms hereof do not and will not result in a breach of the terms and conditions
      of nor constitute a default under any law, regulation, court order, mortgage,
      note, bond, indenture, agreement, license or other instrument or obligation
      to
      which Seller is now a party or by which Seller’s assets are bound or
      affected.




(iii)  UU Necessary
      Action UU .
      Seller
      will make all reasonable efforts, with all due diligence, to take all action
      and
      obtain all consents prior to the Closing Date necessary for it to lawfully
      enter
      into and carry out the terms of this Agreement, including, but not limited
      to,
      providing any notice of the sale of the Facility, or any modifications to any
      notices previously delivered, to the residents of the Facility or any
      governmental agency or authority, required to be provided by such Seller in
      its
      capacity as the licensed operator of the Facility to the extent such notice
      from
      Seller may be required by law.




(iv)  UU Litigation UU .
      The
      right or ability of Seller to consummate the Real Estate Transaction has not
      been challenged by any governmental agency or any other person and Seller has
      no
      knowledge of the occurrence of any event which would provide a reasonable basis
      for any such litigation, investigation or other proceeding.




(v)  UU No
      Third Party Rights UU .
      Seller
      has not granted any other party any right to purchase the Seller’s Assets and
      the Seller’s Assets shall, at the time of the conveyance thereof to Purchaser,
      be free and clear of all liens, charges and encumbrances other than the
      Permitted Exceptions.




(vi)  UU Purchase
      Price UU .
      Seller
      and Purchaser negotiated the Purchase Price in an independent arms length
      transaction.






**5**


**8.**  **Representations
      and Warranties of Purchaser** .
      Purchaser does hereby represent and warrant to Seller that:




(a)  **Authority** .
      Purchaser has full power and authority to execute and to deliver this Agreement
      and all related documents, and to carry out the transactions contemplated herein
      and therein at the times provided for herein.




(b)  **Enforceability/No
      Conflict** .
      This
      Agreement is valid, binding and enforceable against Purchaser in accordance
      with
      its terms except as such enforceability may be limited by creditors rights
      laws
      and general principles of equity. The execution of this Agreement and the
      consummation of the transactions contemplated herein in accordance with the
      terms hereof do not and will not result in a breach of the terms and conditions
      of nor constitute a default under any law, regulation, court order, mortgage,
      note, bond, indenture, agreement, license or other instrument or obligation
      to
      which Purchaser is now a party or by which any of the assets of Purchaser is
      bound or affected.




(c)  **Litigation** .
      The
      right or ability of Purchaser to consummate the Transaction contemplated herein
      has not been challenged by any governmental agency or any other person and
      Purchaser has no knowledge of the occurrence of any event which would provide
      a
      reasonable basis for any such litigation, investigation or other
      proceeding.




(d)  **The
      Purchase Price** .
      Purchaser negotiated the Purchase Price in an independent arms length
      transaction.




**9.**  **Brokers** .
      Each of
      the Parties each represent, covenant, and warrant to the other that each has
      employed no broker or finder in connection with the transaction contemplated
      herein and each Party agrees to indemnify and hold harmless the other Parties
      from and against all liability, claims, demands, damages or costs of any kind,
      including attorneys’ fees, arising from or connected with any broker’s
      commission or finder’s fee or commission or charge claimed to be due any person
      arising from such Party’s conduct with respect to the Transaction.




**10.**  **Seller’s
      Covenants**




(a)  **Pre-Closing** .
      Between
      the date hereof and the Closing Date, except as contemplated by this Agreement
      or with the consent of Purchaser, Seller does hereby covenant as
      follows:




(i)  Seller
      will not enter into any contract, commitment or agreement affecting the Seller’s
      Assets except in the ordinary course of business and Seller will advise
      Purchaser of any contracts or commitments which it enters, whether in the
      ordinary course of business or otherwise;




(ii)  Seller
      will not take any action inconsistent with its obligations under this Agreement
      or which could hinder or delay the consummation of the transactions contemplated
      by this Agreement;






**6**


(iii)  Seller
      will promptly notify Purchaser of any changes affecting the validity or accuracy
      of its representations and warranties of which it becomes aware prior to the
      Closing Date.




(b)  **Closing** .
      At the
      Closing, Seller agrees that it will:




(i)  Execute
      and deliver such instruments of transfer and conveyance as shall be reasonable
      or necessary to transfer and assign the Seller’s Assets to Purchaser as herein
      provided;




(ii)  Deliver
      the documents described in Section 4(a) to which Seller is a
      party.




(c)  **Post-Closing** .
      After
      the Closing, Seller agrees that it will take such actions and properly execute
      and deliver to Purchaser such further instruments of assignment, conveyance
      and
      transfer as may be necessary to assure, complete and evidence the full and
      effective transfer and conveyance of Seller’s Assets and the continued licensing
      of the Facility.




**11.**  **Purchaser’s
      Covenants**




(a)  **Pre-Closing** .
      Between
      the date hereof and the Closing Date, except as contemplated by this Agreement
      or with the consent of Seller, Purchaser agrees that:




(i)  Purchaser
      will not take any action inconsistent with its obligations under this Agreement
      or which could hinder or delay the consummation of the Transaction contemplated
      by this Agreement;




(ii)  Purchaser
      will make all reasonable efforts, with all due diligence, to obtain all
      consents, approvals and licenses necessary to permit the consummation of the
      Transactions contemplated by this Agreement; and




(iii)  Purchaser
      will cause its affiliate, Emeritus Corporation, to continue to manage the
      Facility in accordance with the terms of the Management Agreement.




(b)  **Closing** .
      At the
      Closing, Purchaser agrees that it will:




(i)  Pay
      the
      cash due from it under Section 2;




(ii)  Pay
      for
      any of the costs and expenses specified in Section 5(a) for which it is
      responsible;




(iii)  Deliver
      or caused to be delivered the documents described in Section 4(c) to which
      it is a party.




(c)  **Post-Closing** .
      After
      the Closing Date, Purchaser agrees that it will take such actions and properly
      execute and deliver such further instruments as Seller may reasonably request
      to
      assure, complete and evidence the Transaction provided for in this Agreement.




**7**


**12.**  **Mutual
      Covenants** .
      Following the execution of this Agreement, the Parties agree:




(a)  If
      any
      event should occur, either within or without the knowledge or control of any
      of
      the Parties which would prevent fulfillment of the conditions to the obligations
      of any party hereto to consummate the transactions contemplated by this
      Agreement, such Party shall use its or their reasonable efforts to cure the
      same
      as expeditiously as possible.




(b)  To
      cooperate fully with each other in preparing, filing, prosecuting, and taking
      any other actions which are or may be reasonable and necessary to obtain the
      consent of any governmental instrumentality or any third party or to accomplish
      the Transactions contemplated by this Agreement.




**13.**  **Conditions
      Precedent to Closing**




(a)  **Purchaser’s
      Conditions** .
      Purchaser’s obligation to purchase Seller’s Assets hereunder is subject to the
      following conditions, any one or all of which may be waived by Purchaser:




(i)  UU Title
      and Survey UU .
      The
      Title Company shall be prepared to issue to Purchaser on the Closing Date,
      at
      Purchaser’s sole cost, an extended coverage title insurance policy subject to no
      exceptions other than as described in Section 6 in an amount equal to the
      Purchase Price (the “ **Owner’s
      Title Policy** ”).




(ii)  UU Damage
      and Condemnation UU .
      Prior
      to the Closing Date, the risk of physical loss to the Seller’s Assets shall be
      borne by Seller. Accordingly, it shall be a condition to Purchaser’s obligation
      hereunder that prior to the Closing Date, no material portion of the Facility
      nor any material portion of any of the Seller’s Assets shall have been damaged
      or destroyed by fire or other casualty, or shall have been taken or condemned
      by
      any public or quasi-public authority under the power of eminent domain, in
      any
      such case to an extent which causes the Facility to lose use of any of its
      licensed beds/units or to become impracticable to operate as of the Closing
      Date
      or the postponement thereof, if applicable. If the Sellers’ Assets shall have
      been so damaged or destroyed and Purchaser waives this condition, Seller shall
      assign to Purchaser all of its rights to any insurance proceeds in connection
      therewith and the Purchase Price shall be reduced by any deductible which
      Purchaser shall be required to pay in connection with such damage or destruction
      or by any uninsured costs of repair or reconstruction. If the Seller’s Assets
      shall be so taken or condemned prior to Closing, and if Purchaser waive this
      condition, Seller shall pay or assign to Purchaser all Sellers’ right to the
      proceeds of any condemnation award in connection thereof and the Purchase Price
      shall be reduced by such amount as may be agreed upon by Seller and Purchaser
      as
      a reasonable estimate of the amount by which the cost to repair the portion
      of
      the Seller’s Assets affected by such taking exceeds such condemnation award; *provided* , *however* ,
      if
      Seller and Purchaser are unable to so agree by the Closing, then Purchaser
      terminate this Agreement on written notice to Seller.




(iii)  UU No
      Defaults UU .
      Seller
      shall not be in default under any mortgage, contract, lease or other agreement
      affecting or relating to the Seller’s Assets including, but not limited to, the
      documents evidencing or securing the financing currently secured by the Seller’s
      Assets;




**8**


*provided* , *however* ,
      this
      condition to closing shall not apply with respect to any such default caused
      by
      Purchaser as a result of its acts or omissions under the Management
      Agreement.




(iv)  UU Seller’s
      Performance UU .
      Seller
      shall have performed all of its obligations under this Agreement that are to
      be
      performed prior to or at Closing to the extent the same have not been waived
      by
      Purchaser in accordance with the terms hereof.




(v)  UU Seller’s
      Representations and Warranties UU .
      Seller’s representations and warranties contained in this Agreement or in any
      certificate or document delivered in connection with this Agreement or the
      Transaction contemplated herein shall be true in all material respects at and
      as
      of the Closing Date as though such representations and warranties were then
      again made.




(vi)  UU The
      Loan UU .
      GECC
      shall be ready, willing and able to consummate the Loan and all of the documents
      and funds related thereto to which GECC or Seller shall be a party shall have
      been deposited in escrow by GECC and Seller.




(b)  **Seller’s
      Conditions** .
      Seller’s obligation to sell Seller’s Assets hereunder is subject to the
      fulfillment of each of the following conditions, any one or all of which may
      be
      waived by Seller in writing:




(i)  UU Purchaser’s
      Representations and Warranties UU .
      Purchaser’s representations and warranties contained in this Agreement or in any
      certificate or document delivered in connection with this Agreement or the
      Transaction contemplated herein shall be true in all material respects at and
      as
      of the Closing as though such representations and warranties were then again
      made.




(ii)  UU Purchaser’s
      Performance UU .
      Purchaser shall have performed its obligations under this Agreement that are
      to
      be performed prior to or at Closing to the extent the same have not been waived
      by Seller in accordance with the terms hereof.




**14.**  **Indemnification**




(a)  **By
      Seller** .
      Seller
      shall indemnify, defend and hold harmless Purchaser from and against any and
      all
      costs, losses, damages, liabilities and obligations arising from or related
      to:




(i)  the
      ownership of the Sellers’ Assets which exist as of the Closing Date, except to
      the extent Emeritus is responsible for such costs, losses, damages, liabilities
      and obligations under the terms of the Management Agreement, in which case
      Seller shall have no indemnity obligation to Purchaser by virtue of the terms
      of
      this Section 14(a); and




(ii)  any
      misrepresentation, breach of warranty or non-fulfillment of any agreement or
      covenant on the part of Seller under this Agreement or from any
      misrepresentation in or omission from any certificate furnished or to be
      furnished by Seller to Purchaser hereunder..




**9**


(b)  **By
      Purchaser to Seller** .
      Purchaser shall indemnify, defend and hold Seller harmless from and against
      any
      and all costs, losses, damages, liabilities and obligations arising from or
      related to:




(i)  Except
      as
      otherwise provided in this Agreement, the ownership of the Seller’s Assets from
      and after the Closing Date;




(ii)  Any
      misrepresentation, breach of warranty or non-fulfillment of any agreement on
      the
      part of Purchaser under this Agreement or from any misrepresentation in or
      omission from any certificate furnished or to be furnished by Purchaser to
      Seller hereunder; and




(iii)  For
      purposes of this Section 14, an obligation shall be deemed to “exist” as of
      the Closing Date if it relates to events which occurred prior to the Closing
      Date even if it is not asserted until after the Closing Date.




**15.**  **Termination**




(a)  **Grounds
      for Termination** .
      This
      Agreement may be terminated and the transaction contemplated herein abandoned
      at
      any time prior to Closing:




(i)  By
      mutual
      written agreement of the parties;




(ii)  By
      Seller, if any of the conditions set forth in Section 13(b) shall have
      become incapable of fulfillment prior to the Closing Date or such earlier date
      as may be specifically provided for the performance thereof (as the same may
      be
      extended) through no fault of Seller and the same shall not have been waived
      by
      Seller;




(iii)  By
      Purchaser, if any of the conditions set forth in Section 13(a) shall have
      become incapable of fulfillment prior to the Closing Date or such earlier date
      as may be specifically provided for the performance thereof (as the same may
      be
      extended) through no fault of Purchaser hereunder or of Emeritus under the
      Management Agreement and the same shall not have been waived by
      Purchaser;




(iv)  By
      any
      Party in the event of a material breach by another Party of its obligations
      hereunder;




(v)  By
      either
      Seller or Purchaser if the Closing has not occurred by the Closing Date
      specified in Section 3 as the same may be extended in accordance with the
      terms thereof;




(vi)  By
      Purchaser upon Purchaser’s receipt of written notification of any fact which
      would materially change any of the representations or warranties of Seller
      herein;




(vii)  By
      Seller
      upon Seller’s receipt of written notification of any fact which would materially
      change any of the representations or warranties of Purchaser
      herein.




(b)  **Remedies
      Upon Termination** .
      In the
      event any Party has the right to terminate this Agreement as a result of a
      default by another Party in its obligations hereunder, the non




**10**


defaulting
      Party shall have the right either to (i) waive the condition or covenant or
      breach at issue and proceed with the transaction on the terms contemplated
      herein or (ii) seek specific performance of the defaulting Party’s obligations
      hereunder or (iii) terminate this Agreement and seek to recover from the
      defaulting Party the actual damages suffered by the non defaulting Party as
      a
      result of such breach. In no event will a defaulting Party be liable to a non
      defaulting Party for consequential or incidental damages including, without
      limitation, lost profits. In the event of any other termination of this
      Agreement, neither the terminating Party nor the other Parties shall have any
      further rights or obligations hereunder.




(c)  **Expenses** .
      In the
      event the Transactions contemplated hereby are not closed for any reason other
      than a breach by a Party of its obligations hereunder, Purchaser shall be solely
      responsible for all escrow cancellation fees and title charges. In the event
      the
      Transactions contemplated hereby is not closed as a result of a breach by Seller
      in its obligations hereunder, Seller shall pay all escrow cancellation fees
      and
      title charges.




(d)  **Management
      Agreement** .
      In the
      event the Transaction do not close for any reason, the rights and obligations
      of
      the Seller and Emeritus under the Management Agreement shall remain
      unaffected.




**16.**  **Miscellaneous**




(a)  **Notice** .
      Any
      notice, request or other communication to be given by any party hereunder shall
      be in writing and shall be TT personally
      d TT elivered
      or sent by registered or certified mail, postage prepaid, by overnight courier
      guaranteeing overnight delivery or by facsimile transmission (if confirmed
      verbally or in writing by mail as aforesaid), to the following
      address:




To
      Seller:  c/o
      Columbia Pacific Management, Inc.


600
      University Street, Suite 2500


Seattle,
      WA 98101


Telephone:  (206)
      728-9063


Facsimile:  (206)
      728-9327





with
      a
      copy to:  Thomas
      A.
      Barkewitz


Alston,
      Courtnage & Bassetti LLP


1000
      Second Avenue, Suite 3900


Telephone:  (206)
      623-7600


Facsimile:  (206)
      623-1752





and
      with
      a copy to:  Providence
      Health System-Washington


2201
      Lind
      Avenue, Suite 200


Renton,
      WA 98138 9672


Attn:
      Robert Hellrigel


Telephone:  (425)
      687
      3700


Facsimile:  (425)
      687
      3615





**11**


To
      Purchaser:  Eric
      Mendelsohn


Director
      of Real Estate and Legal Affairs


Emeritus
      Corporation


3131
      Elliott Avenue, Suite 500


Seattle,
      WA 98121


Telephone:  (206)
      298-2909


Facsimile:  (206)
      301-4500





with
      a
      copy to:  The
      Nathanson Group PLLC


One
      Union
      Square


600
      University Street, Suite 2000


Seattle,
      WA 98101-1195


Attn:
      Randi S. Nathanson


Telephone:  (206)
      623-6239


Facsimile:  (206)
      623-1738





Notice
      shall be deemed upon the actual receipt or refusal of receipt thereof regardless
      of the method of delivery used.





(b)  **Sole
      Agreement** .
      This
      Agreement may not be amended or modified in any respect whatsoever except by
      instrument in writing signed by the parties hereto. This Agreement constitutes
      the entire agreement between the parties hereto with respect to the Transaction
      and supersedes all prior negotiations, discussions, writings and agreements
      between them.




(c)  **Assignment** .
      The
      terms of this Agreement shall be binding upon and inure to the benefit of and
      be
      enforceable by and against the heirs and successors of the parties hereto,
      it
      being specifically understood and agreed that at or prior to Closing Purchaser
      may assign certain of it rights hereunder to GECC as security for the
      obligations of Purchaser under the Loan and that such assignment shall be
      permitted without the further consent of Seller. Any other assignment shall
      require the consent of Seller, which consent shall not be unreasonably
      withheld.




(d)  **Captions** .
      The
      captions of this agreement are for convenience of reference only and shall
      not
      define or limit any of the terms or provisions hereof.




(e)  **Survival** .
      All
      covenants, indemnities, warranties and representations of Purchaser and Seller
      herein shall survive the Closing and shall continue in effect for a period
      one
      (1) year after the Closing Date, after which they shall terminate and be of
      no
      further force or effect except with respect to claims made within such one
      year
      period, in which case the applicable covenant, indemnity, warranty and/or
      representation shall survive until the full and final resolution thereof.




(f)  **Governing
      Law** .
      This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      State.




(g)  **Severability** .
      Should
      any one or more of the provisions of this Agreement be determined to be invalid,
      unlawful or unenforceable in any respect, the validity, legality or
      enforceability of the remaining provisions hereof shall not in any way be
      affected or impaired thereby.




**12**


(h)  **Counterparts** .
      This
      Agreement may be executed in any number of counterparts, each of which shall
      be
      an original; but such counterparts shall together constitute but one and the
      same instrument.




(i)  **Confidentiality** .
      In the
      event the Transaction fails to close for any reason, the Parties agree to keep
      confidential any proprietary information disclosed to them by the other Parties
      during the course of the Transaction.




(j)  **Construction** .
      Each
      Party acknowledges and agrees that it has participated in the drafting and
      the
      negotiation of this Agreement and has been represented by counsel during the
      course thereof. Accordingly, in the event of a dispute with respect to the
      interpretation or enforcement of the terms hereof, no provision shall be
      construed so as to favor or disfavor any Party hereto.




(k)  **Attorneys’
      Fees** .
      In the
      event of litigation or other proceedings involving the parties to this Agreement
      to enforce any provision of this Agreement, to enforce any remedy available
      upon
      default under this Agreement, or seeking a declaration of the rights of either
      party under this Agreement, the prevailing Party shall be entitled to recover
      from the other such reasonable attorneys’ fees and costs as may be actually
      incurred, including its costs and fees on appeal.




(l)  **Waiver
      of Jury Trial** .
      EACH OF
      THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES, TO THE
      FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY IN ANY LEGAL ACTION
      BROUGHT ON OR WITH RESPECT TO THIS AGREEMENT, INCLUDING TO ENFORCE OR DEFEND
      ANY
      RIGHTS HEREUNDER AND AGREES THAT ANY SUCH ACTION SHALL BE TRIED BEFORE A COURT
      AND NOT BEFORE A JURY.




(m)  **Calculation
      of Time Periods** .
      Unless
      otherwise specified, in computing any period of time described herein, the
      day
      of the act or event on which the designated period of time begins to run shall
      not be included and the last day of the period so computed shall be included,
      unless such last day is a Saturday, Sunday or legal holiday, in which event
      the
      period shall run until the next day which is not a Saturday, Sunday or a legal
      holiday.




(n)  **Expenses** .
      Except
      as otherwise specifically provided herein, each party shall bear its own costs
      and expenses (including legal fees and expenses) incurred in connection with
      this Agreement and the Transaction.




(o)  **Third
      Party Beneficiary** .
      Nothing
      in this Agreement express or implied is intended to and shall not be construed
      to confer upon or create in any person (other than the parties hereto and their
      permitted assigns) any rights or remedies under or by reason of this Agreement,
      including without limitation, any right to enforce this Agreement.










[ Signature
      Page Follows ]





**13**


IN
      WITNESS WHEREOF, the Parties hereby execute this Purchase and Sale Agreement
      as
      of the Effective Date.




**SELLER:**





**SILVER
      LAKE ASSISTED LIVING LLC**


By:  B.F.,
      Limited Partnership


Its:  Manager





By:  Columbia
      Pacific Group, Inc.


Its:  General
      Partner











By:  /s/
      Brandon Baty


Its:  Vice
      President








**PURCHASER:**





**ESC-ARBOR
      PLACE, LLC**


By:  Emeritus
      Corporation


Its:  Sole
      Member











By:  /s/
      Martin Roffe


Martin
      Roffe


Its:  V.P.
      Financial Planning














**Exhibit
      A**





**LEGAL
      DESCRIPTION**








PARCEL
      A:





LOT
      2,
      PROVIDENCE MEDICAL CENTER BINDING SITE PLAN FILE NO. 01-107895 BG RECORDED
      UNDER
      AUDITOR’S FILE NUMBER 200208155006, BEING A PORTION OF THE SOUTHEAST QUARTER OF
      THE SOUTHEAST QUARTER OF SECTION 30, TOWNSHIP 28 NORTH, RANGE 5 EAST, W.M.,
      RECORDS OF SNOHOMISH COUNTY, WASHINGTON.





PARCEL
      B:





A
      NON-EXCLUSIVE EASEMENT FOR INGRESS AND EGRESS AS DESCRIBED IN AND CREATED BY
      PROVIDENCE MEDICAL CENTER BINDING SITE PLAN FILE NO. 01-107895 BG RECORDED
      UNDER
      FILE NO. 200208155006, UPON AND SUBJECT TO THE PROVISIONS THEREIN CONTAINED,
      BEING A PORTION OF LOT 1 OF SAID BINDING SITE PLAN, AND NON EXCLUSIVE EASEMENTS
      FOR INGRESS AND EGRESS AS DESCRIBED IN AND CREATED BY INSTRUMENTS RECORDED
      UNDER
      AUDITOR’S FILE NO.’S 200005040193 AND 200005040194, UPON AND SUBJECT TO THE
      PROVISIONS THEREIN CONTAINED, ALL LOCATED IN THE SOUTHEAST QUARTER OF THE
      SOUTHEAST QUARTER OF SECTION 30, TOWNSHIP 28 NORTH, RANGE 5 EAST, W.M., RECORDS
      OF SNOHOMISH COUNTY, WASHINGTON





SITUATE
      IN THE COUNTY OF SNOHOMISH, STATE OF WASHINGTON








Exhibit
            A
            - Legal Description


**Exhibit** **B**





**THE
      FACILITY**








UU Facility UU  UU Address UU


Arbor
      Place  12806
      Bothell Everett Highway


Everett,
      Washington 98208








Exhibit
            B
            - The Facility


**Exhibit** **C**





**FORM
      OF WARRANTY DEED**








Recording
                requested by and
              When
                recorded, return to:
              
              Randi
                S. Nathanson, Esq.
              The
                Nathanson Group PLLC
              One
                Union Square
              600
                University Street, Suite 2000
              Seattle,
                Washington 98101





**STATUTORY
      WARRANTY DEED**


**(Arbor
      Place, Everett, WA)**








RECORDING
      NOS. OF


DOCUMENTS:  ___one_______





GRANTOR(s):  Silver
      Lake Assisted Living, LLC, a Washington limited liability company





GRANTEE(s):  ESC-Arbor
      Place, LLC, a Washington limited liability company





ABBREVIATED
      LEGAL


DESCRIPTION(s):  Lot
      2,
      Binding Site Plan File No. 01-107895 BG, Recorded Under Recording No.
      20028155006, Snohomish County, Washington





ASSESSOR’S
      TAX ACCOUNT


PARCEL
      NUMBER(s):  Parcel
      #
      280530-004-073-00





Exhibit
          C
          - Form of Warranty Deed
 **1**





Recording
                requested by and
              When
                recorded, return to:
              
              Randi
                S. Nathanson, Esq.
              The
                Nathanson Group PLLC
              One
                Union Square
              600
                University Street, Suite 2000
              Seattle,
                Washington 98101


(Space
      Above This Line for Recorder’s Use Only)








**STATUTORY
      WARRANTY DEED**


**(Arbor
      Place, Everett, WA)**








The
      undersigned Grantor, **SILVER
      LAKE ASSISTED LIVING, LLC** ,
      a
      Washington limited liability company, for and in consideration of One and 00/100
      Dollars ($1.00) and other valuable consideration in hand paid, conveys and
      warrants to **ESC-ARBOR
      PLACE, LLC** ,
      a
      Washington limited liability company, effective as of the date hereof, the
      real
      property in Snohomish County, State of Washington, described in **Exhibit
      A** attached
      hereto and incorporated herein by this reference, subject to those liens,
      charges and encumbrances described in **Exhibit
      B** attached
      hereto and incorporated herein by this reference.




DATED
      as
      of this 30 day of _June_, 2006.




SILVER
      LAKE ASSISTED LIVING, LLC,


a
      Washington limited liability company





By:  B.F.,
      Limited Partnership


Its:  Manager





By:  Columbia
      Pacific Group, Inc.


Its:  General
      Partner








By:  /s/ Ruth
      Verhoff


Its:  Secretary





Exhibit
          C
          - Form of Warranty Deed
 **2**


STATE
      OF
      WASHINGTON  )


)
      ss.


COUNTY
      OF
      KING   )








On
      this
      28_ day of _June_, 2006, before me the undersigned, a Notary Public in and
      for
      the State of Washington duly commissioned and sworn, personally appeared to
      me
      _Ruth Verhoff__, to me known to be the _Secretary_ of Columbia Pacific Group,
      Inc., a Washington corporation, the General Partner of B. F., Limited
      Partnership, a Washington limited partnership, the Managing Member of Silver
      Lake Assisted Living, LLC, the limited liability company that executed the
      foregoing instrument, and acknowledged the said instrument to be the free and
      voluntary act and deed of said limited partnership for the uses and purposes
      therein mentioned, and on oath stated that it was authorized to execute the
      said
      instrument.




WITNESS
      my hand the day and year first above written.







/s/
      Rebecca L Ozanich


Notary
      Public in and for the State of Washington, residing at Lynwood, WA


My
      Commission Expires: June 30, 2006


Place
      Notary Seal Here


Exhibit
          C
          - Form of Warranty Deed
 **3**





**Exhibit** **A**





**LEGAL
      DESCRIPTION**








PARCEL
      A:





LOT
      2,
      PROVIDENCE MEDICAL CENTER BINDING SITE PLAN FILE NO. 01-107895 BG RECORDED
      UNDER
      AUDITOR’S FILE NUMBER 200208155006, BEING A PORTION OF THE SOUTHEAST QUARTER OF
      THE SOUTHEAST QUARTER OF SECTION 30, TOWNSHIP 28 NORTH, RANGE 5 EAST, W.M.,
      RECORDS OF SNOHOMISH COUNTY, WASHINGTON.





PARCEL
      B:





A
      NON-EXCLUSIVE EASEMENT FOR INGRESS AND EGRESS AS DESCRIBED IN AND CREATED BY
      PROVIDENCE MEDICAL CENTER BINDING SITE PLAN FILE NO. 01-107895 BG RECORDED
      UNDER
      FILE NO. 200208155006, UPON AND SUBJECT TO THE PROVISIONS THEREIN CONTAINED,
      BEING A PORTION OF LOT 1 OF SAID BINDING SITE PLAN, AND NON EXCLUSIVE EASEMENTS
      FOR INGRESS AND EGRESS AS DESCRIBED IN AND CREATED BY INSTRUMENTS RECORDED
      UNDER
      AUDITOR’S FILE NO.’S 200005040193 AND 200005040194, UPON AND SUBJECT TO THE
      PROVISIONS THEREIN CONTAINED, ALL LOCATED IN THE SOUTHEAST QUARTER OF THE
      SOUTHEAST QUARTER OF SECTION 30, TOWNSHIP 28 NORTH, RANGE 5 EAST, W.M., RECORDS
      OF SNOHOMISH COUNTY, WASHINGTON





SITUATE
      IN THE COUNTY OF SNOHOMISH, STATE OF WASHINGTON





Exhibit
          C
          - Form of Warranty Deed
 **4**





**Exhibit** **B**





**PERMITTED
      EXCEPTIONS**














Exhibit
            C
            - Form of Warranty Deed
 **5**


**Exhibit** **D**





**FORM
      OF BILL OF SALE**








**BILL
      OF SALE AND ASSIGNMENT AND ASSUMPTION AGREEMENT**





In
      consideration of One Dollar ($1.00) and other good and valuable consideration,
      the receipt and sufficiency of which are hereby acknowledged, effective as
      of
      ______________, 2006 (the “ **Effective
      Date** ”) **SILVER
      LAKE ASSISTED LIVING, LLC** ,
      a
      Washington limited liability company (“ **Seller** ”)
      does
      hereby grant, bargain, sell, convey, transfer and assign to **ESC-ARBOR
      PLACE, LLC** ,
      a
      Washington limited liability company (“ **Purchaser** ”)
      pursuant to the terms of that Purchase Agreement dated as of
      _______________, 2006 between Seller and Purchaser (the “ **Purchase
      Agreement** ”)
      all of
      its right, title and interest in and to, all and singular the
      following:




1.  All
      fixtures (the “ **Fixtures** ”)
      attached or appurtenant to the Real Property;




2.  All
      furnishings, equipment, tools, machinery, fixtures, appliances and all other
      tangible personal property located on or about the Real Property or the Facility
      which is owned by Seller (collectively, the “ **Personal
      Property** ”);




3.  All
      of
      the permits, licenses, approvals, entitlements and other governmental and
      quasi-governmental authorizations including, without limitation, certificates
      of
      occupancy and other similar permits relating to all or any part of the Real
      Property or the Facility and all amendments, modifications, supplements, general
      conditions and addenda thereto, required in connection with the ownership of
      the
      Facility (the “ **Permits
      and Approvals** ”)
      it
      being understood and agreed that the Permits and Approvals shall specifically
      exclude the boarding home license issued by DSHS to and held by Seller and
      any
      other permits, licenses, approvals, entitlements and other authorizations
      required in connection with the operation of the Facility, all of which shall
      be
      and remain the property of Seller. As used herein, “quasi-governmental” shall
      include the providers of all utility services to the Real Property;




4.  All
      original reports, drawings, plans, blueprints, studies, specifications,
      certificates of occupancy, building permits and grading permits relating to
      all
      or any part of the Real Property or the Facility and all amendments,
      modifications, supplements, general conditions and addenda thereto (the
“ **Reports
      and Studies** ”);




5.  All
      warranties, representations and guaranties with respect to the ownership of
      the
      Real Property and the Facility, whether express or implied, which Seller now
      holds or under which Seller is the beneficiary (the “ **Warranties** ”);




6.  All
      of
      Seller’s legal and equitable claims, causes of action, and rights against the
      architects, engineers, designers, contractors, subcontractors, suppliers and
      materialmen and any other party who has supplied labor, services, materials
      or
      equipment, directly or indirectly, in connection with the design, planning,
      construction or ownership of all or any part of the Real Property and the
      Facility (the “ **Claims** ”);
      and




Exhibit
          D
          - Form of Bill of Sale
 **1**


7.  All
      rights to lien waivers, surety agreements, bonds, warranties, guaranties,
      utility use agreements, covenants, commitments, permits, certificates,
      approvals, and other intangible personal property of every kind and nature
      whatsoever owned by Seller as of the date of this Agreement or hereafter
      acquired, which can be legally transferred and which relate directly to the
      ownership of the Facility (the “ **Intangible
      Property** ”).




TO
      HAVE
      AND TO HOLD, all and singular, the foregoing hereby sold, assigned, transferred
      and conveyed to Purchaser, its successors and assigns, to and for its own use
      and benefit.




Capitalized
      terms used herein and not otherwise defined shall have the meaning ascribed
      to
      them in the Purchase Agreement.




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













[Signature
      Page Follows]


Exhibit
          D
          - Form of Bill of Sale
 **2**


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




SILVER
      LAKE ASSISTED LIVING, LLC,


a
      Washington limited liability company





By:  B.F.,
      Limited Partnership


Its:  Manager





By:  Columbia
      Pacific Group, Inc.


Its:  General
      Partner











By:  /s/ Ruth
      Verhoff


Its:  Secretary








ESC-ARBOR
      PLACE, LLC,


a
      Washington limited liability company











By:  /s/
      Raymond R. Brandstrom


Its:  Vice
      President of Finance




Exhibit
            D
            - Form of Bill of Sale
 **3**


**Exhibit** **E**





**FIRPTA
      AFFIDAVIT**








**AFFIDAVIT
      REGARDING NONFOREIGN STATUS**


**(Arbor
      Place, Everett, Washington)**








Section 1445
      of the Internal Revenue Code of 1986, as revised (the “ **Code** ”),
      provides that a transferee of a U.S. real property interest must withhold tax
      if
      the transferor is a foreign person. The undersigned hereby makes this affidavit
      on behalf of **SILVER
      LAKE ASSISTED LIVING, LLC** ,
      a
      Washington limited liability company (the “ **Transferor** ”),
      in
      connection with the transfer to **ESC-ARBOR
      PLACE, LLC** ,
      a
      Washington limited liability company (the “ **Transferee** ”),
      of
      certain real property located in Everett, Washington, as more particularly
      described in **Exhibit
      A** attached
      hereto (the “ **Property** ”).




1.  Transferor
      is not a foreign corporation, foreign partnership, foreign trust, or foreign
      estate, as those terms are defined in the Code and the Income Tax Regulations
      promulgated thereunder;




2.  Transferor’s
      U.S. employer identification number is [____________].




3.  Transferor’s
      address is c/o Columbia Pacific Group, Inc., 600 University Street, Suite 2500,
      Seattle, Washington 98101.




4.  Transferor
      understands that this affidavit 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; and




5.  Transferor
      understands that Transferee is relying on this affidavit in determining whether
      withholding is or will be required in connection with its purchase of the
      Property and may face liabilities if any statement in this affidavit is
      false.




Under
      penalty of perjury, the undersigned declares that he/she has examined this
      affidavit and to the best of his/her knowledge and belief, it is true, correct,
      and complete, and the undersigned further declares that he/she has authority
      to
      sign this document on behalf of Transferor.







[Signature
      Page Follows ]


Exhibit
          E
          - FIRPTA Affidavit
 **1**


Executed
      as of this date, _June 28, 2006.




TRANSFEROR:





SILVER
      LAKE ASSISTED LIVING, LLC,


a
      Washington limited liability company








By:  B.F.,
      Limited Partnership


Its:  Manager





By:  Columbia
      Pacific Group, Inc.


Its:  General
      Partner








By:  /s/ Ruth
      Verhoff


Its:  Secretary








Exhibit
          E
          - FIRPTA Affidavit
 **2**


STATE
      OF
      WASHINGTON  )


)
      ss.


COUNTY
      OF
      KING   )








On
      this
      28 day of _June, 2006, before me the undersigned, a Notary Public in and for
      the
      State of Washington duly commissioned and sworn, personally appeared to me
      _Ruth
      Verhoff__, to me known to be the _Secretary_ of Columbia Pacific Group, Inc.,
      a
      Washington corporation, the General Partner of B. F., Limited Partnership,
      a
      Washington limited partnership, the Managing Member of Silver Lake Assisted
      Living, LLC, the limited liability company that executed the foregoing
      instrument, and acknowledged the said instrument to be the free and voluntary
      act and deed of said limited liability company for the uses and purposes therein
      mentioned, and on oath stated that it was authorized to execute the said
      instrument.




WITNESS
      my hand the day and year first above written.







/s/
      Rebecca L Ozanich


Notary
      Public in and for the State of Washington, residing at Lynnwood, WA


My
      Commission Expires: June 30, 2008


Place
      Notary Seal Here


Exhibit
          E
          - FIRPTA Affidavit
 **3**


**Exhibit** **A**





**DESCRIPTION
      OF THE PROPERTY**








PARCEL
      A:





LOT
      2,
      PROVIDENCE MEDICAL CENTER BINDING SITE PLAN FILE NO. 01-107895 BG RECORDED
      UNDER
      AUDITOR’S FILE NUMBER 200208155006, BEING A PORTION OF THE SOUTHEAST QUARTER OF
      THE SOUTHEAST QUARTER OF SECTION 30, TOWNSHIP 28 NORTH, RANGE 5 EAST, W.M.,
      RECORDS OF SNOHOMISH COUNTY, WASHINGTON.





PARCEL
      B:





A
      NON-EXCLUSIVE EASEMENT FOR INGRESS AND EGRESS AS DESCRIBED IN AND CREATED BY
      PROVIDENCE MEDICAL CENTER BINDING SITE PLAN FILE NO. 01-107895 BG RECORDED
      UNDER
      FILE NO. 200208155006, UPON AND SUBJECT TO THE PROVISIONS THEREIN CONTAINED,
      BEING A PORTION OF LOT 1 OF SAID BINDING SITE PLAN, AND NON EXCLUSIVE EASEMENTS
      FOR INGRESS AND EGRESS AS DESCRIBED IN AND CREATED BY INSTRUMENTS RECORDED
      UNDER
      AUDITOR’S FILE NO.’S 200005040193 AND 200005040194, UPON AND SUBJECT TO THE
      PROVISIONS THEREIN CONTAINED, ALL LOCATED IN THE SOUTHEAST QUARTER OF THE
      SOUTHEAST QUARTER OF SECTION 30, TOWNSHIP 28 NORTH, RANGE 5 EAST, W.M., RECORDS
      OF SNOHOMISH COUNTY, WASHINGTON





SITUATE
      IN THE COUNTY OF SNOHOMISH, STATE OF WASHINGTON











Exhibit
            E
            - FIRPTA Affidavit
 **4**


**Exhibit** **F**





**FORM
      OF LEASE**








**LEASE
      AGREEMENT**








This
      LEASE AGREEMENT (this “ **Lease** ”)
      is
      made and entered into as of this _____ day of ___________, 2006 (the
“ **Commencement
      Date** ”),
      by
      and between **ESC-ARBOR
      PLACE, LLC** ,
      a
      Washington limited liability company (the “ **Landlord** ”)
      and **SILVER
      LAKE ASSISTED LIVING, LLC** ,
      a
      Washington limited liability company (the “ **Tenant** ”).




**RECITALS**





In
      consideration of the mutual undertakings and covenants hereinafter contained
      and
      the acts to be performed hereunder, Landlord hereby agrees to lease to Tenant:
      the one hundred unit (100) unit assisted living facility commonly known as
      Arbor
      Place and located at 12806 Bothell Everett Highway, Everett, Washington 98208
      (the “ **Facility** ”),
      which
      is located on the real property described on **Exhibit
      A** attached
      hereto and incorporated herein by this reference (the “ **Real
      Property** ”),
      on
      the terms and conditions set forth below:




**1.**  **The
      Premises**




**1.1**  **Real
      Property; Facility** .
      Landlord hereby demises and leases to Tenant and Tenant hereby leases and takes
      from Landlord, the Real Property and the Facility.




**1.2**  **Personal
      Property** .
      Landlord hereby demises and leases to Tenant, and Tenant hereby leases and
      takes
      from Landlord, the equipment, furniture, furnishings, and fixtures owned or
      leased by Landlord and located at or used in connection with the operation
      of
      the Facility and any additional items added thereto from time to time by written
      agreement between Landlord and Tenant (such equipment, furniture, furnishings
      and fixtures, together with all additions thereto or replacements thereof will
      hereinafter be referred to as the “ **Personal
      Property** ”).
      If
      any equipment (other than for replacement of the Personal Property) is necessary
      or convenient to operate the Facility, all such additional equipment shall
      be
      acquired by and at the cost of Tenant (the “ **Tenant’s
      Equipment** ”),
      and
      except as otherwise provided in this Lease, the same shall be and remain the
      property of Tenant.




1.2.1  Tenant
      shall keep all of the Personal Property in good working order and condition
      at
      Tenant’s sole cost and expense, and at the expiration or termination of the
      Lease Term, Tenant shall return and deliver all of such property to Landlord
      in
      as good order and condition as when received hereunder, reasonable wear and
      tear
      excepted. If necessary for the proper operation of the Facility, Tenant shall
      during the Lease Term replace part or all of the items of Personal Property
      which have been damaged or destroyed or become worn out or obsolete, and such
      replacement shall be at the sole cost of Tenant, but any such replaced Personal
      Property shall be and remain the property of Landlord.




Exhibit
          F - Form of Lease
 **1**


1.2.2  Landlord
      agrees upon request of Tenant to subordinate any statutory or Landlord’s lien
      that Landlord may have to any security interest granted by Tenant to secure
      a
      purchase money obligation or an acquisition lease of any of Tenant’s Equipment
      acquired by Tenant pursuant to Section 1.2.




**1.3**  **Premises** .
      Throughout this Lease, the Real Property, the Facility, the Personal Property
      and any other improvements located on the Real Property, will collectively
      be
      referred to as the “ **Premises** ”.
      Except
      as otherwise provided in this Lease, the Premises shall in no event include
      Tenant’s Equipment as defined in Section 1.2.




**2.**  **Term**




**2.1**  **Initial
      Term** .
      The
      term of this Lease shall commence on the Commencement Date and shall extend
      for
      a period of ten (10) years thereafter, unless earlier terminated as provided
      herein (the “ **Initial
      Lease Term** ”).
      The
      Initial Lease Term, together with any of the exercised Renewal Terms (as defined
      below), may hereinafter be referred to as the “ **Lease** Term.”




**2.2**  **Renewal
      Terms** .
      Tenant
      shall have the right to renew this Lease beyond the Initial Lease Term for
      two
      successive ten (10) year renewal terms (the “ **Renewal
      Terms** ”)
      by
      giving notice of the exercise of its renewal option at least one hundred twenty
      (120) days prior to the expiration of the Initial Lease Term or the applicable
      Renewal Term. In the event Tenant is in default on the date of the giving of
      notice of its intent to renew the Lease, the notice shall be ineffective; in
      the
      event Tenant is in default on the date the applicable Renewal Term is to
      commence, then the Renewal Term shall not commence and this Lease shall expire
      as of the end of the Initial Lease Term or any applicable Renewal Term. Tenant
      shall have no right to renew this Lease beyond the expiration of the final
      Renewal Term.




**2.3**  **Surrender** .
      Upon
      the termination of this Lease, whether by forfeiture, lapse of time or
      otherwise, or upon termination of Tenant’s right to possession of the Premises,
      Tenant will at once surrender and deliver the Premises, together with all
      improvements thereof, to Landlord, in good condition and repair, reasonable
      wear
      and tear excepted. Provided Tenant is not in default of its obligations under
      this Lease, at the time of surrender, at its sole cost, Tenant shall remove
      Tenant’s Equipment, repair any injury or damage done to the Premises which may
      result from such removal and restore the Premises to the same condition as
      existed prior to the installation thereof.




**3.**  **Rent**




**3.1**  **Basic
      Rent**




3.1.1  The
      annual rent due hereunder (the “ **Basic
      Rent** ”)
      shall
      be in an amount equal to the net profit of the Facility as determined in
      accordance with generally accepted accounting principles.




3.1.2  For
      purposes of this Lease, a Lease Year shall be the twelve (12) month period
      commencing on the Commencement Date (or such shorter period if this Lease is
      earlier terminated in accordance with its terms). Basic Rent shall be paid
      in
      advance in monthly




Exhibit
          F
          - Form of Lease
 **2**


installments
      in the amounts specified and shall be paid on the first day of each calendar
      month; *provided* , *however* ,
      that
      the first monthly payment shall be due on the first day after the Commencement
      Date.




**3.2**  **Proration** .
      Except
      as otherwise provided, Basic Rent shall be payable in monthly installments
      to
      Landlord, at the address set forth in Section 17, or to such other person,
      firm or corporation at such other address as Landlord may designate by notice
      in
      writing to Tenant. If the Commencement Date or the expiration or termination
      date of this Lease shall be on a day other than the first day or the last day
      of
      a month, respectively, then Basic Rent shall be prorated based on the actual
      number of days elapsed.




**3.3**  **Taxes
      and Assessments** .
      In
      addition to Basic Rent, Tenant shall pay all real estate taxes, general and
      special assessments, personal property taxes, and other public charges which
      are
      assessed, levied, confirmed, or imposed upon the Premises during the Lease
      Term,
      and all sales taxes and other taxes that are now or hereafter may be payable
      in
      connection with the Basic Rent payable hereunder during the Initial Lease Term
      and any Renewal Term (other than income taxes owing by Landlord as a result
      of
      Tenant’s payment of Basic Rent hereunder).




3.3.1  Any
      taxes
      and assessments relating to a fiscal period of any authority, a part of which
      is
      already included within the Initial Lease Term or any Renewal Term and a part
      of
      which is included in a period of time before or after the Initial Lease Term
      or
      any Renewal Term, shall be adjusted pro rata between Landlord and Tenant and
      each party shall be responsible for its pro rata share of any such taxes and
      assessments.




3.3.2  Nothing
      herein shall require Tenant to pay income taxes assessed against Landlord,
      or
      estate, succession or inheritance taxes of Landlord.




3.3.3  Tenant
      may contest, in its own name or in the name of Landlord, with Landlord’s
      cooperation, which Landlord agrees to give, the legality or validity of any
      such
      tax or assessment or of any law under which the same shall be imposed. This
      must
      be done in good faith, with due diligence, and at Tenant’s own expense. If
      Tenant does so contest such tax or assessment beyond the time limit for payment
      thereof by Tenant, Tenant shall do one of the following: Tenant may pay such
      amount under protest; procure and maintain a stay of all proceedings with
      adequate bond to enforce collection of such tax or assessment; or deposit with
      Landlord reasonable security for the payment of all contested sums. Once such
      action is taken by Tenant, Tenant shall not be considered to be in default
      hereunder with respect thereto. Notwithstanding anything to the contrary, Tenant
      shall not exercise its contest rights in contravention of any of the terms
      and
      conditions of the Loan Agreement (the “ **Loan
      Agreement** ”)
      with
      General Electric Capital Corporation and the other financial institutions who
      are or hereafter become parties to the Loan Agreement (the “ **Lender** ”),
      under
      which Lender agreed to make a loan to Landlord in the original principal amount
      of [Eight Million and no/100 Dollars ($8,000,000)] (the “ **Facility
      Loan** ”)
      or any
      Mortgage (as defined in Section 3.4 below).




3.3.4  Tenant
      shall have, and Landlord hereby irrevocably grants to Tenant, the power and
      authority, at Tenant’s cost to make and file and prosecute any statement or
      report or claim for refund which may be required or permitted by law, as the
      basis of or in connection




Exhibit
          F
          - Form of Lease
 **3**


with
      the
      assessment, determination, equalization, reduction or payment of any and every
      tax or assessment or license or charge which Tenant is required to pay or
      discharge hereunder.




3.3.5  Upon
      the
      termination of any such proceeding, Tenant shall pay the amount of such taxes
      and assessments or part thereof as finally determined in such proceedings,
      the
      payment of which may have been deferred during the prosecution of such
      proceedings, together with any costs, fees, interest, penalties or other
      liabilities in connection therewith.




3.3.6  If
      any
      income, profits or revenue tax shall be levied, assessed or imposed upon the
      income, profits or revenue arising from rents payable hereunder, partially
      or
      totally in lieu of or as a substitute for real estate or personal property
      taxes
      imposed upon the Premises during the Lease Term, then Tenant shall be
      responsible for the payment of such tax.




3.3.7  Any
      tax
      or insurance reserve required by Lender under the Facility Loan or by any
      Mortgagee (as defined in Section 3.4 below) under a Mortgage with respect
      to the Premises during the Lease Term shall be paid by Tenant to Landlord,
      marked payable to such holder.




3.3.8  Except
      to
      the extent impounded pursuant to Section 3.3.7, Tenant shall pay before
      delinquency any and all real and personal property taxes and assessments,
      payable hereunder by Tenant. In the event of a late payment, Tenant shall pay
      all interest and penalties plus the amount due. Tenant shall further provide
      Landlord with evidence of payment as soon as practicable after Landlord’s
      written request therefor.




**3.4**  **Triple
      Net Lease; Additional Charges; Additional Rent** .
      This
      Lease is intended to be triple net to Landlord, and Tenant shall pay to
      Landlord, net throughout the Initial Lease Term and any Renewal Term, the Basic
      Rent prescribed by Section 3.1, free of any offset, abatement, or other
      deduction, except as may be expressly set forth herein. Tenant is hereby
      obligated to make all rental payments set forth herein to Landlord. Landlord
      shall not be required to make any payment of any kind with respect to the
      Premises, except as may otherwise be expressly set forth herein. Accordingly,
      Tenant agrees to pay all additional charges and costs described in
      Section 3.3, Section 7, Section 8.2, Section 10,
      Section 14.2 or elsewhere in this Lease as they become due and payable and
      the same shall be deemed to be “ **Additional
      Rent** ”
under
      this Lease. To the extent Tenant pays the additional charges or costs to
      Landlord pursuant to any requirement of this Lease, Tenant shall be relieved
      of
      its obligation to pay the same to any other person to which they would otherwise
      be due. If non payment of any additional charge or cost shall occur, Landlord
      shall have, in addition to all other rights and remedies, all rights and
      remedies provided for herein and by law in the case of non payment of rent.
      Notwithstanding the foregoing, Landlord shall be responsible for making all
      payments to Lender under the Facility Loan and to any other mortgage lender
      (each, a “ **Mortgagee** ”)
      under
      any other mortgage granted by Landlord with respect to the Premises (each,
      a
“ **Mortgage** ”).




**3.5**  **Late
      Charge** .
      If any
      payment of any sums required to be paid or deposited by Tenant to or for the
      benefit of Landlord under this Lease and payments made by Landlord under any
      provision hereof for which Landlord is entitled to reimbursement by Tenant
      shall
      become overdue for a period of ten (10) days beyond the date on which they
      are
      due and payable as provided for in this Lease, a late charge equal to the
      greater of (a) any late charges assessed




Exhibit
          F
          - Form of Lease
 **4**


against
      Landlord under the terms of the Facility Loan or any Mortgage or (b) five
      percent (5%) of the overdue amount, shall become immediately due and payable
      to
      Landlord, and said late charge shall be payable on the first day of the month
      next succeeding the month during which such late charge becomes payable. Such
      late charge shall compensate Landlord only for loss of interest on the payments
      due Landlord and shall be in addition to any and all other amounts, including
      damages, to which Landlord may be entitled pursuant to this Lease or at law
      or
      in equity. The acceptance by Landlord of a late charge shall not limit or
      preclude Landlord from exercising its rights pursuant to Section 13. If non
      payment of any late charge shall occur, Landlord shall have, in addition to
      all
      other rights and remedies, all rights and remedies provided for herein and
      by
      law in the case of non payment of rent. No failure by Landlord to insist upon
      the strict performance by Tenant of Tenant’s obligations to pay late charges
      shall constitute a waiver by Landlord of its rights to enforce the provisions
      of
      this Section in any instance thereafter occurring.




**4.**  **Representations
      and Warranties**




**4.1**  **By
      Landlord** .
      Landlord hereby makes the following representations and warranties to
      Tenant:




4.1.1  Landlord
      has full power and authority to execute and to deliver this Lease and all
      related documents, and to carry out the transaction contemplated herein. This
      Lease is valid, binding and enforceable against Landlord in accordance with
      its
      terms. Upon obtaining the consent of Lender, the execution of this Lease and
      the
      consummation of the transaction contemplated herein will not result in a breach
      of the terms and conditions of nor constitute a default under or violation
      of
      any law, regulation, court order, mortgage, note, bond, indenture, certificate
      of formation, operating agreement, license or other agreement, instrument or
      obligation to which Landlord is now a party or by which Landlord or any of
      the
      assets of Landlord may be bound or affected.




4.1.2  Landlord
      has fee simple title to the Facility and the Real Property and marketable title
      to the Personal Property subject only to the encumbrances, set forth in **Exhibit B** .




**4.2**  **By
      Tenant** .
      Tenant
      hereby makes the following representations and warranties to
      Landlord:




4.2.1  Tenant
      has full power and authority to execute and to deliver this Lease and all
      related documents, and to carry out the transaction contemplated herein. This
      Lease is valid, binding and enforceable against Tenant in accordance with its
      terms. The execution of this Lease and the consummation of the transaction
      contemplated herein, will not result in a breach of the terms and conditions
      of
      nor constitute a default under or violation of any law, regulation, court order,
      mortgage, note, bond, indenture, articles of incorporation, agreement, license
      or other instrument or obligation to which Tenant is now a party or by which
      Tenant or any of the assets of Tenant may be bound or affected.




4.2.2  Tenant
      agrees to take the Facility and the Personal Property in their “AS IS, WHERE IS”
condition.




Exhibit
          F - Form of Lease
 **5**


4.2.3  The
      Facility is currently licensed to operate one hundred (100) units. The Facility
      [does / does not] participate in the Washington Medicaid Program and does not
      participate in the Medicare Program.




**5.**  **Use
      of the Premises/Compliance with Laws**




**5.1**  **Approvals** .
      Tenant
      covenants upon execution of this Lease to obtain and maintain all approvals
      needed to operate the Facility under applicable state and federal law,
      including, but not limited to, any certificate of need, licenses and
      certifications, and, during the Initial Lease Term and any Renewal Terms, to
      operate the Facility as a provider of health care services and to maintain
      its
      certification for reimbursement under Medicare and Medicaid, if applicable,
      and
      its licensure. Landlord agrees to assist Tenant as reasonably necessary to
      obtain and maintain such approvals. Tenant shall not amend or alter the license
      for the Facility or, if applicable, certification without the prior written
      approval of Landlord, which shall not be unreasonably withheld.




**5.2**  **Operations** .
      Tenant
      covenants and agrees that it will return the Facility to Landlord at the end
      of
      the Initial Lease Term and/or any applicable Renewal Terms licensed and
      certified in the same manner as it is on the Commencement Date. Tenant shall
      provide at all times sufficient personnel, equipment and supervision to operate
      the Facility safely and effectively and shall take such measures as are
      necessary (including disciplinary actions against, and termination of employment
      of, personnel where appropriate) to ensure the delivery of a high standard
      of
      care for the patients of the Facility. Tenant shall at all times operate the
      Facility in a manner which allows Landlord to comply with the financial
      covenants set forth in Section 7.26 of the Loan Agreement, a true and
      correct copy of which are attached hereto as **Exhibit
      C** .




**5.3**  **Use** .
      After
      the Commencement Date, Tenant shall neither use nor permit to be used the
      Premises, or any part thereof for any purpose or purposes other than as set
      forth in Section 4.2.3 hereof, without the prior written consent of
      Landlord, which shall not be unreasonably withheld. No use shall be made or
      permitted to be made of the Premises, and no acts shall be done, which will
      cause the cancellation of any insurance policy covering the Premises or any
      part
      thereof, nor shall Tenant sell or permit to be kept, used or sold in or about
      the Premises any article which may be prohibited by the standard form of fire
      insurance policies. Tenant shall, at its sole cost, comply with all of the
      requirements pertaining to the Premises of any insurance organization or company
      necessary for the maintenance of insurance, as herein provided, covering the
      Premises.




**5.4**  **No
      Unlawful Purpose or Waste** .
      Tenant
      covenants and agrees that the Premises shall not be used for any unlawful
      purpose. Tenant shall not commit or suffer to be committed any waste on the
      Premises, nor shall Tenant cause or permit any nuisance thereon. Tenant further
      covenants and agrees that Tenant’s use of the Premises and maintenance,
      alteration, and operation thereof shall at all times conform to all applicable
      and lawful local, state, and federal ordinances, rules and regulations;
      including but not limited to any certificate of need, license and/or Medicare
      and Medicaid certification, if applicable. Tenant may, *however* ,
      contest
      the legality or applicability of any such ordinance, rule or regulation, or
      any
      licensure or, if applicable, certification decision. This must be done in good
      faith, with due diligence, without prejudice to Landlord’s rights hereunder, and
      at Tenant’s own expense. If Tenant does so




Exhibit
          F
          - Form of Lease
 **6**


contest
      any such ordinance, rule, regulation or decision, Landlord may require Tenant
      to
      deposit with Landlord reasonable security for the payment of all liability,
      costs, and expenses which may arise from the litigation. Once such a deposit
      has
      been made or while such a contest is pending, even if no such deposit is
      required by Landlord, Tenant shall not be considered in default under this
      Section 5.4 of this Lease. Notwithstanding anything to the contrary, Tenant
      shall not exercise its rights to contest under this Section in
      contravention of the terms and conditions of the Facility Loan or any
      Mortgage.




**5.5**  **No
      Impairment** .
      Tenant
      shall neither suffer nor permit the Premises or any portion thereof to be used
      in such a manner as (a) might reasonably tend to impair Landlord’s interest in
      the Premises or any portion thereof, or (b) may reasonably make possible a
      claim
      or claims of adverse usage or adverse possession by the public, as such, or
      of
      implied dedication of the Premises or any portion thereof.




**5.6**  **Inspection
      Results** .
      Within
      ten (10) days after receipt, without request, Tenant shall deliver to Landlord
      a
      copy of the results of all surveys, investigations and inspections of the
      Facilities and their operation performed by state or federal authorities,
      including, but not limited to, notifications of actual or possible violations
      of
      state or federal law and regulations pertaining to the Facility.




**5.7**  **Facility
      Payroll** .
      Tenant
      shall timely pay all payroll relating to the Facility and any related payroll
      taxes and impositions.




**6.**  **Facility
      Loan**




**6.1**  **Facility
      Loan; Attornment** .
      On or
      prior to the Commencement Date, Tenant shall execute at Landlord’s expense, a
      Subordination, Attornment and Non-Disturbance Agreement in favor of Lender
      in
      connection with the Facility Loan in the form attached hereto as **Exhibit D** (the
“ **Subordination
      Agreement** ”).
      From
      and after the Commencement Date, Tenant shall operate the Facility in compliance
      with the provisions of the Subordination Agreement and the other documents
      executed in connection with the Facility Loan, which are described more fully
      in **Exhibit
      E** (the
“ **Loan
      Documents** ”).
      Tenant covenants and agrees that, if by reason of a default upon the part of
      the
      Landlord herein in the performance of any of the terms and conditions of the
      Loan Documents, the estate of Landlord thereunder is terminated by summary
      disposition proceedings or otherwise, Tenant will attorn to Lender in accordance
      with the provisions of the Subordination Agreement.




**6.2**  **Mortgage;
      Attornment** .
      Notwithstanding the provisions of Section 6.1, Tenant covenants and agrees
      that, if by reason of a default upon the part of Landlord herein in the
      performance of any of the terms and conditions of any Mortgage (other than
      the
      Loan Documents), and the estate of Landlord thereunder is terminated by summary
      disposition proceedings or otherwise, Tenant will attorn to the then holder
      of
      such Mortgage or the purchaser in such foreclosure proceedings, as the case
      may
      be, and will recognize such holder of such Mortgage or such purchaser as the
      landlord under this Lease; *provided* , *however* ,
      that
      the holder of such Mortgage or the purchaser in foreclosure proceedings agrees
      in writing not to disturb Tenant’s quiet enjoyment of the Premises so long as
      Tenant is not in default hereunder. Tenant covenants and agrees to execute
      and
      deliver, at any time and from time to time, upon reasonable




Exhibit
          F
          - Form of Lease
 **7**


request
      of Landlord or the holder of such Mortgage or the purchaser in foreclosure,
      any
      instrument which may be necessary to evidence such attornment.




**6.3**  **Tenant’s
      Right to Cure** .
      Tenant
      shall have the right to cure any default by Landlord in the payment of any
      amounts due under any of the Loan Documents or any Mortgage and to offset any
      such sums against its rent next coming due under the terms of this Lease.




**7.**  **Maintenance,
      Repair, Alterations and Utilities**




**7.1**  **Maintenance** .
      Tenant
      shall, at its own cost, and without expense to the Landlord, keep and maintain
      the Premises, including all sidewalks, buildings, surface parking lots and
      improvements of any kind which may be a part thereof in good, sanitary and
      ne TT a TT t
      order,
      condition and repair, ordinary wear and tear and obsolescence in spite of repair
      and acts of God excepted, and, except as specifically provided in
      Section 11, below, restore and rehabilitate any of the Premises which may
      be destroyed or damaged by fire, casualty or cause whatsoever and in such a
      manner as may be necessary to operate the Facility in accordance with applicable
      state and/or federal laws or regulations. Tenant shall perform all interior
      and
      exterior painting, and maintain the grounds of the Facility in a good and
      sightly appearance. Tenant shall be obligated during the Lease Term to make
      any
      repairs, replacements or renewals of any kind, nature or description whatsoever
      to the Premises.




**7.2**  **Alterations** .
      For
      changes, alterations or additions to the Premises undertaken after the
      Commencement Date, Tenant shall obtain the prior written consent of Landlord
      if
      such work requires the consent of the Lender under any of the Loan Documents
      otherwise Tenant shall not be permitted to undertake the same on notice to
      Landlord but without the need for Landlord’s consent.




**7.3**  **Utilities** .
      Tenant
      shall pay all charges for water, electricity, gas, sewage, waste, trash and
      garbage disposal, telephone, cable television, and other services furnished
      to
      the Premises from and after the Commencement Date.




**8.**  **Liens
      Against the Premises**




**8.1**  **Liens** .
      Tenant
      will not permit the Premises to become subject to any lien, charge, or
      encumbrance. Tenant shall maintain the Premises free from all orders, notices,
      and violations filed or entered by any public or quasi public authorities.
      Notwithstanding the foregoing, in the event any such lien, charge, or
      encumbrance is imposed, Tenant may contest any such lien, charge, encumbrance,
      order, notice or violation. This must be done in good faith, with due diligence
      and at Tenant’s own expense and Tenant shall not be considered in default of the
      provisions of this Section 8.1 as a result of such contest, provided Tenant
      posts adequate bond with the court or, upon Landlord’s request, deposits with
      the Landlord reasonable security for the payment of all contested sums and
      otherwise complies with the requirements of the Loan Documents.




**8.2**  **Discharge
      of Liens** .
      Should
      a judgment on any lien, charge, encumbrance, order, notice or violation be
      rendered against the Premises and should Tenant fail to discharge such judgment
      or take action to protest such judgment, Landlord shall have the right but
      not
      the obligation to discharge said judgment. If Landlord exercises that option,
      any amounts paid by




Exhibit
          F
          - Form of Lease
 **8**


Landlord
      shall be due from Tenant as Additional Rent. Such Additional Rent shall be
      due
      and payable on the next date after the expense is incurred that Basic Rent
      is
      otherwise due.




**8.3**  **Mechanic’s
      Liens** .
      Tenant
      shall take all reasonable steps necessary to ensure that no lien arising under
      Washington’s Mechanic’s or Materialman’s Law as a result of construction done at
      the Premises at Tenant’s request, shall extend to the interest of Landlord,
      Lender or any Mortgagee in the Premises. Tenant shall pay all costs incurred
      by
      Tenant in connection with the construction, alteration, demolition, maintenance
      and repair of any and all improvements on the Premises. Should a lien or claim
      of lien be filed against the Landlord’s or Lender’s or any Mortgage’s interest
      in the Premises by any contractor, subcontractor, mechanic, laborer, materialman
      or any other person whomsoever retained by Tenant, Tenant shall, within sixty
      (60) days after the filing thereof or within such shorter period as may be
      required by the terms of the Loan Documents, cause the same to be discharged
      of
      record.




**9.**  **Non
      Liability and Indemnification** .
      During
      the Lease Term, Tenant agrees to protect, indemnify and save harmless Landlord,
      Lender and any Mortgagee (the “ **Indemnified
      Parties** ”)
      from
      and against all claims arising out of or connected with the use, occupancy
      and
      condition of the Premises and shall pay all costs and expenses incurred by
      any
      of the Indemnified Parties in connection with such claims, including without
      limitation, court costs and reasonable attorney’s fees for trial and appellate
      proceedings. The Indemnified Parties shall be protected hereby from all claims
      arising during the Lease Term from loss of or damage to property, or death
      or
      injury to persons unless such loss, damage, death or injury is caused solely
      by
      the gross negligence or willful misconduct of any of the Indemnified
      Parties.




**10.**  **Insurance**




**10.1**  **General
      Requirements** .
      During
      the Lease Term, Tenant shall at all times keep the Premises insured with the
      kinds and amounts of insurance described in **Exhibit F** through
      an insurance carrier qualified to do business in the State of Washington. The
      policies must name Landlord as a named insured or loss payee. Losses shall
      be
      payable to Landlord and Tenant in the manner set forth in Section 11.1
      herein. In addition, the policies shall name as an additional named insured
      and
      loss payee the Lender or Mortgagee by way of a standard form of mortgagee’s loss
      payable endorsement if required by the terms of the Loan Documents or any
      Mortgage. Any loss adjustment shall require the written consent of Landlord
      and
      Tenant and shall be in accordance with the terms of the Loan Documents or any
      Mortgage. Evidence of insurance shall be deposited with Landlord and, if
      requested, with Lender or any Mortgagee.




**10.2**  **Additional
      Insurance** .
      In
      addition to the insurance described above, Tenant shall maintain such additional
      insurance as may be reasonably required from time to time by Lender or by any
      Mortgagee.




**10.3**  **Waiver
      of Subrogation** .
      All
      insurance policies carried by either party covering the Premises including
      without limitation contents, fire and casualty insurance, shall expressly waive
      any right of subrogation on the part of the insurer against the other party.
      The
      parties hereto agree that their policies will include such waiver clause or
      endorsement so long as the same are obtainable without extra cost, and in the
      event of such an extra charge the other party, at its election, may pay the
      same, but shall not be obligated to do so.




Exhibit
          F - Form of Lease
 **9**


**10.4**  **Limitation
      on Claims** .
      To the
      extent that either Landlord or Tenant may have claims against the other for
      fire
      or casualty damage to the Premises or any portion thereof (including business
      interruption caused thereby), which claims are covered by insurance payable
      to
      and protecting the claiming party, the claiming party hereby agrees to exhaust
      all claims under such insurance before asserting any claims against the other
      party. The foregoing shall apply to claims for damage whether such damage is
      caused, wholly or partially, by the negligence or other fault of the other
      party
      or its agent, employees, subtenants, licensees, or assignees.




**10.5**  **Premiums;
      Certificates** .
      Tenant
      shall pay all of the insurance premiums, and deliver such policies or
      certificates thereof to Landlord prior to their effective date (and, with
      respect to any renewal policy, at least five (5) days prior to the expiration
      of
      the existing policy), and in the event of the failure of Tenant either to effect
      such insurance in the names herein called for or to pay the premiums therefor,
      or to deliver such policies or certificates thereof to Landlord at the times
      required, Landlord shall be entitled, but shall have no obligation, to effect
      such insurance and pay the premiums therefor, which premiums shall be repayable
      to Landlord upon written demand therefor, and the failure to repay the same
      shall carry with it the same consequence as the failure to pay any installment
      of Basic Rent.




**10.6**  **Limits** .
      In the
      event that either party shall at any time deem the limits of the personal injury
      or property damage public liability insurance then carried to be either
      excessive or insufficient, the parties shall endeavor to agree on the proper
      and
      reasonable limits for such insurance to be carried; and such insurance shall
      thereafter be carried with the limits thus agreed on until further change
      pursuant to the provisions of this Section. If the parties shall be unable
      to
      agree thereon, the proper and reasonable limits for such insurance to be carried
      shall be determined by a mediator jointly selected by Tenant and
      Landlord.




**10.7**  **Blanket
      Policy** .
      Notwithstanding anything to the contrary contained in this Section, Tenant’s
      obligations to carry the insurance provided for herein may be brought within
      the
      coverage of a so called blanket policy or policies of insurance carried and
      maintained by Tenant; *provided* , *however* ,
      that
      the coverage afforded Landlord will not be reduced or diminished or otherwise
      be
      different from that which would exist under a separate policy meeting all other
      requirements of this Lease by reason of the use of such blanket policy of
      insurance, and provided further that the requirements of this Section 10
      are otherwise satisfied.




**10.8**  **Additional
      Rent** .
      The
      cost of insurance requested to be carried by Tenant in this Section shall
      be deemed to be Additional Rent.




**11.**  **Damage
      and Destruction**




**11.1**  **Proceeds** .
      Subject
      to Section 11.2 and to the extent made available by Lender or any
      Mortgagee, all proceeds payable by reason of any physical loss of any of the
      improvements comprising the Premises and insured under any policies of insurance
      required by this Lease shall be held in trust by Landlord and shall be available
      for the reconstruction or repair, as the case may be, of any damage to or
      destruction of the Premises and shall be paid out by Landlord from time to
      time
      for the reasonable cost of such work. Any excess of money received from
      insurance remaining with the Landlord after the restoration or reconstruction
      of
      the Premises shall be paid to Tenant free and clear upon completion or
      restoration or reconstruction. Any shortfall shall be




Exhibit
          F
          - Form of Lease
 **10**


the
      Tenant’s responsibility. All salvage resulting from any such loss covered by
      insurance shall belong to Landlord.




**11.2**  **Restoration** .
      In the
      event any improvements comprising of the Facility, the Premises or the Personal
      Property are damaged by peril covered by insurance or required to be covered
      by
      insurance in accordance with the terms hereof, to the extent proceeds are made
      available by Lender or any Mortgagee, Tenant shall commence to rebuild or
      restore the same within sixty (60) days after the proceeds of any insurance
      become available and pursuant to plans and specifications prepared by Tenant
      and
      approved by Landlord within said sixty (60) day period, and Tenant shall proceed
      with all due diligence to complete said repair or restoration within a
      commercially reasonable period of time. Any repair or restoration shall be
      undertaken by Tenant in such a manner as to ensure that upon its completion
      the
      Facility is of the same standard and quality as prior to the damage or
      destruction and shall comply with any requirements set forth in the Loan
      Documents or any Mortgage. In the event Lender or any Mortgagee elects not
      to
      make insurance proceeds available, Tenant shall have no obligation to repair
      or
      restore the Facility except as otherwise provided in the Loan Documents or
      the
      Mortgage.




**11.3**  **Effect
      on Lease** .
      This
      Lease shall remain in full force and effect and Tenant’s obligation to make
      rental payments and to pay all other charges required by this Lease shall remain
      unabated during the period of repair or reconstruction.




**12.**  **Condemnation**




**12.1**  **Effect
      on Lease** .
      If,
      during the Lease Term, the Premises and/or the Facility are taken or condemned
      in fee for a public or quasi public use Landlord shall have the right to
      terminate this Lease in the event of the acceleration of the balance due under
      the Facility Loan or in connection with any loan secured by a Mortgage. If,
      during the Lease Term, less than all of the Premises and/or the Facility are
      taken or condemned and, as a result thereof the access to, use or operation
      thereof is not adversely affected in the opinion of Landlord, this Lease shall
      not terminate but Tenant shall be required to rebuild or restore the Premises
      and the Facility to the same condition in which they were in or to as close
      thereto as possible prior to the date of, and in light of the nature of, such
      taking.




**12.2**  **Damages** .
      All
      damages awarded in connection with the taking of the Premises shall vest in
      Landlord. All damages awarded in connection with the taking of the leasehold
      estate and Tenant’s Equipment shall vest in Tenant but only to the extent such
      damages do not diminish the award otherwise payable to Landlord.




**13.**  **Default
      and Remedies**




**13.1**  **Default
      by Tenant** .
      The
      occurrence of any of the events, acts or circumstances described in
      Sections 13.1.1 through 13.1.7 shall constitute an “ **Event
      of Default** ”
under
      this Lease.




13.1.1  Failure
      by Tenant to pay in full any Basic Rent, Additional Rent, Net Profits or any
      other monetary obligation under this Lease when due, and the continuance of
      such




Exhibit
          F
          - Form of Lease
 **11**


failure
      for ten (10) days after Landlord has given Tenant written notice of such failure
      or, in the case of the Basic Rent, for such shorter period as may be set forth
      in the Loan Documents.




13.1.2  Failure
      by Tenant to observe, perform or comply with any of the terms, covenants,
      agreements or conditions contained in this Lease (other than as specified in
      Section 13.1.1 or Section 13.1.6), and the continuance of such failure
      for thirty (30) days after Landlord has given Tenant notice of such failure
      or
      for such shorter period as may be provided for the curing of such default under
      the terms of the Loan Documents. If Tenant has promptly commenced and diligently
      pursued remedial action within said thirty (30) day period but has been unable
      to cure its default (except for any default that can be reasonably cured by
      the
      payment of money) prior to the expiration thereof and if the Loan Documents
      provide for an extension of the cure period, said thirty (30) day period shall
      be extended for the minimum time reasonably required for the completion of
      Tenant’s remedial action but in no event for a period longer than authorized by
      the terms of the Loan Documents. Notwithstanding the foregoing, in the event
      any
      such failure of performance by Tenant is deemed to pose a substantial risk
      of
      harm to the patients of the Facility or to the licensure or, if applicable,
      certification status of the Facility, Tenant shall be required to cure such
      failure within a period of time as may be established by the state or federal
      authority having jurisdiction over the Facility or, if no such time frame is
      established, as soon as is reasonably practicable, but in no event within more
      than one (1) week from the determination of the existence of such condition; *provided* , *however* ,
      that in
      the event Landlord is not satisfied that the Tenant is undertaking such cure
      within one half (1/2) of the time allocated by such authority or by the terms
      hereof, then Landlord shall have the right to enter into the Facility and to
      undertake the completion of such cure, in which case Landlord shall have no
      liability to Tenant with respect thereto except for liability which Tenant
      incurs as a result of the Landlord’s gross negligence or wrongful misconduct in
      undertaking such cure.




13.1.3  The
      making by Tenant or any guarantor of this Lease of an assignment for the benefit
      of its creditors or the commencement of proceedings in a court of competent
      jurisdiction for the reorganization, liquidation or involuntary dissolution
      of
      Tenant of any guarantor of this Lease or for the adjudication of either such
      party as a bankrupt or insolvent or for the appointment of a receiver of the
      property of either such party, which proceeding are not dismissed and any
      receiver, trustee or liquidator appointed therein is not discharged, within
      thirty (30) days after the institution thereof.




13.1.4  The
      abandonment of the whole of the Premises by Tenant other than as a result of
      any
      repair or reconstruction following damage or destruction to, or any condemnation
      or taking of, the Premises.




13.1.5  The
      levying of a writ of execution or attachment on or against the property of
      Tenant or any guarantor of this Lease which is not discharged or stayed by
      action of said party contesting the same within thirty (30) days after such
      levy
      or attachment and/or the sale of the interest of Tenant in the Premises under
      such a writ of execution or attachment.




13.1.6  If
      (a)
      any government agency having jurisdiction over the Facility revokes or
      terminates any license required for the operation of the Facility for the use
      set forth in Section 4.2.3 above; (b) there is any involuntary
      decertification of the Facility from participation




Exhibit
          F
          - Form of Lease
 **12**


in
      any
      state or federal reimbursement program, if applicable; or (c) there is any
      action taken by a state or federal agency which results in the removal of
      patients from the Facility as a result of deficiencies cited by said agency
      in
      the care rendered by Tenant at the Facility.




13.1.7  If
      there
      is any generation, disposal, release or use of any hazardous substance upon
      or
      from the Premises in violation of the terms of this Lease or applicable local,
      state or federal law.




**13.2**  **Default
      by Landlord** .
      The
      failure by Landlord to pay in full any Refund under this Lease when due, and
      the
      continuance of such failure for ten (10) days after Tenant has given Landlord
      written notice of such failure shall constitute a “ **Landlord
      Event of Default** ”
under
      this Lease.




**13.3**  **Landlord’s
      Remedies** .
      Upon
      the occurrence of any Event of Default, Landlord, in addition to the other
      rights or remedies it may have, shall have the immediate right of re entry
      without any additional notice to Tenant. Should Landlord elect to re enter,
      as
      herein provided, or should it take possession pursuant to legal proceedings
      or
      pursuant to any notice provided for by law, Landlord may either terminate this
      Lease or it may from time to time, without terminating this Lease, relet the
      Premises or any part thereof for the account of Tenant for such term or terms,
      which may be for a term shorter than or for a term extending beyond the Lease
      Term, and at such rental or rentals and on such other terms and conditions
      as
      Landlord, in its reasonable discretion, may deem advisable. Should Landlord
      at
      any time terminate this Lease as a result of any Event of Default, in addition
      to any other remedy it may have, Landlord may recover from Tenant all damages
      incurred by reason of such Event of Default, including the cost of recovering
      the Premises. In addition, should Landlord terminate this Lease, Landlord shall
      have the right to take possession of the Tenant’s Equipment located at the
      Premises, and to recover as damages all costs incurred by Lender in connection
      with (a) removing and storing the Tenant’s Equipment, and (b) restoring the
      Premises following removal of the Tenant’s Equipment. Whether or not Landlord
      elects to terminate this Lease, Landlord may terminate Tenant’s right to
      possession of the Premises by any lawful means, in which case all of Tenant’s
      rights in this Lease shall terminate and Tenant shall immediately surrender
      possession of the Premises to Landlord. Possession of the Premises includes
      possession of all Personal Property, patients, patient records, Facility
      business records, general intangibles and proceeds. Any termination of this
      Lease by Landlord shall not in any event terminate Tenant’s obligation to pay
      rent and other amounts owed by Tenant pursuant to this Lease for the full Lease
      Term. Landlord shall have the right to recover from Tenant (i) the worth, at
      the
      time of the award, of the unpaid rent that had been earned at the termination
      of
      this Lease, and (ii) the worth, at the time of the award, of the amount by
      which
      the unpaid rent that would have been earned after the date of termination of
      this Lease until the time of the award exceeds the amount of the loss of rent
      that Tenant proves could have been reasonably or has actually been avoided
      by
      Landlord, and (iii) the worth, at the time of the award, of the amount by which
      the unpaid rents for the balance of the Lease Term after the time of the award
      exceeds the amount of the loss of rent that Tenant proves could have been
      reasonably or actually has been avoided by Landlord, and (iv) any other amount,
      and court costs and reasonable attorneys’ fees, necessary to compensate Landlord
      for all detriment and damage proximately caused by Tenant’s default. The worth
      at the time of the award as used in (i) and (ii) of the preceding sentence
      is to
      be computed by allowing interest at the maximum rate permitted by law (or twelve
      percent (12%) per annum if there is no maximum rate). The worth at the time




Exhibit
          F
          - Form of Lease
 **13**


of
      the
      award as referred to in (iii) above is to be computed by discounting the amount
      at the annual discount rate of the Federal Reserve Bank of San Francisco at
      the
      time of the award, plus one percent (1%).




**13.4**  **Injunctive
      Relief; Receiver** .
      Upon
      the occurrence of any Event of Default, Landlord may apply to any appropriate
      court for an injunction, the appointment of a receiver, or both. Any injunction
      or temporary restraining order issued prior to a final hearing may enjoin
      Tenant, its officers, agents and employees and those in active concert or
      participation with them, from removing from the Premises any patients, patient
      records, equipment, furniture, fixtures, Facility business records, monies
      and
      other things related in any way to Tenant’s business at the Facility; *provided* , *however* ,
      that
      the receiver may only apply such monies in accordance with the order of the
      court. The receiver shall have all powers and duties necessary and reasonable
      to
      conduct Tenant’s business until this Lease is terminated. Responsibility for the
      costs associated with the appointment of a receiver shall be determined by
      the
      court.




**13.5**  **Refunds** .
      Upon
      the occurrence of any Event of Default, Landlord may, in the exercise of its
      sole discretion, elect not to pay any Refund due any payable by Landlord (as
      defined in Section 24.2), in which case Landlord shall have no further
      obligation or liability in connection therewith.




**13.6**  **Replacement
      Operator** .
      Nothing
      in this Section 13 shall be construed as permitting Landlord to terminate
      Tenant’s right to possession of the Facility, with or without termination of the
      Lease, without making the necessary arrangements to assume, or to transfer
      to a
      qualified licensed operator, operational responsibility for the Facility. Tenant
      agrees to cooperate in any such transfer of operational responsibility for
      the
      Facility upon a termination of its right to possession of the
      Facility.




**13.7**  **Tenant’s
      Sole Remedy** .
      Upon
      the occurrence of a Landlord Event of Default, Tenant’s sole and exclusive
      remedy shall be to offset the amount of Net Profits due and payable by Tenant
      to
      Landlord against the amount of any unpaid Refund due any payable by Landlord.




**13.8**  **Remedies
      Cumulative** .
      Except
      as otherwise provided, no remedy herein conferred upon or reserved to Landlord
      or Tenant is intended to be exclusive of any other available remedy or remedies,
      but each and every such remedy shall be cumulative and shall be in addition
      to
      every other remedy given under this Lease or now or hereafter existing at law
      or
      in equity or by statute. No delay or omission to exercise any right, remedy,
      or
      power accruing upon any Event of Default or Landlord Event of Default shall
      impair any such right, remedy or power or shall be construed to be a waiver
      thereof unless and until such Event of Default or Landlord Event of Default
      has
      been cured.




**14.**  **Landlord’s
      Right to Perform Tenant’s Covenants**




**14.1**  **Right
      to Make Payments; Notice** .
      If
      Tenant defaults in the making of any of the payments, or the performance of
      any
      of the obligations provided for in this Lease, Landlord may, at its option
      and
      on behalf of Tenant, make any such payments or perform any such obligations.
      Before exercising that option, *however* ,
      Landlord must give Tenant written notice of Tenant’s default and of Landlord’s
      intention to correct that default. If thirty (30) days after such notice, or




Exhibit
          F
          - Form of Lease
 **14**


such
      shorter time period as Landlord may specify in the notice if further delay
      would
      impair materially any substantial right, property, or benefit of Landlord,
      Tenant has not corrected such default, Landlord may exercise its rights under
      this Section 14.




**14.2**  **Funds
      Expended Deemed Additional Rent** .
      In the
      event Landlord performs any obligation on Tenant’s behalf, Tenant shall
      reimburse Landlord for any amounts reasonably paid or expended, and the same
      shall constitute Additional Rent hereunder. This reimbursement shall be due
      and
      payable on the next Basic Rent payment date after the expense is incurred.
      Landlord shall not be held liable or in any way responsible for any loss,
      inconvenience, annoyance or damage resulting to Tenant on account of such
      performance by Landlord, unless Landlord is found to have been grossly negligent
      or engaged in willful misconduct in its performance. All amounts payable by
      Tenant to Landlord under any of the provisions of this Lease, if not paid when
      the same become due as in this Lease provided, shall bear interest from the
      date
      they become due until paid, at the prime rate of interest published in the
      Wall
      Street Journal, but in no event at a rate which would be deemed to be usurious
      under Washington law. In the event that the Wall Street Journal ceases or fails
      to publish or announce a prime rate, the amounts due hereunder shall bear
      interest at the prime rate announced by the bank designated by Landlord,
      provided such a bank is among the top twenty five (25) banks in the United
      States in terms of deposits.




**15.**  **Quiet
      Enjoyment** .
      Landlord covenants and agrees that, so long as Tenant observes and performs
      all
      of the covenants, conditions, and stipulations of this Lease, Tenant may
      lawfully and quietly hold, occupy and enjoy the Premises during the Lease
      Term.




**16.**  **Assignment
      and Subletting**




**16.1**  **Affiliates** .
      Tenant
      may sublease the Premises, or any portion thereof, or assign its rights and
      obligations under this Lease to entity which is owned or controlled by or under
      common control with Tenant (an “ **Affiliate** ”),
      without the prior written consent of Landlord unless Landlord is required to
      secure the consent of Lender under the terms of the Loan Documents, in which
      case Tenant shall be required to secure the consent of Landlord to such
      subletting or assignment. Before any such assignment shall be valid, whether
      or
      not the consent of Landlord is required, the assignee shall assume in writing
      and agree to be bound by all of the terms and conditions of this Lease as if
      named the Tenant herein and Tenant shall provide Landlord with a copy of such
      assignment.




**16.2**  **Non
      Affiliates** .
      Subject
      to any limitations which may be set forth in the Loan Documents, Tenant may
      sublease the Premises, or any part thereof, or assign its rights and obligations
      under this Lease to a person or entity that is not an Affiliate with the prior
      written consent of Landlord, which consent shall not be unreasonably withheld
      if
      Landlord is satisfied as to the ability of the proposed transferee to make
      the
      rent payments due and owing hereunder and to comply with Tenant’s other
      obligations under this Lease and if Landlord has secured such consent as it
      may
      be required to obtain in connection therewith under the terms of the Loan
      Documents or any Mortgage. No such assignment will, *however* ,
      release
      Tenant from its obligations under this Lease, and before any such assignment
      shall be valid, the assignee shall assume in writing and agree to be bound
      by
      all of the terms and conditions of this Lease as if named the Tenant herein.
      A
      sale or other conveyance by Tenant of the stock or beneficial




Exhibit
          F
          - Form of Lease
 **15**


ownership
      (direct or indirect) of said Affiliate, other than to itself or another
      Affiliate, shall be deemed to be an assignment for which Landlord’s consent is
      required in accordance with the terms hereof except to the extent such sale
      or
      other conveyance is specifically permitted by the terms of the Loan Documents
      to
      occur without the need to secure Lender approval, in which case Landlord
      approval shall also not be required.




**16.3**  **By
      Landlord** .
      Subject
      to such limitations as may be set forth in the Loan Documents or any Mortgage,
      Landlord may at any time assign its rights and obligations under this Lease, *provided* , *however* ,
      that
      Landlord shall furnish to Tenant a written statement from Landlord’s assignee
      that such assignee recognizes all of Tenant’s rights under this Lease; *provided* , *further* ,
      that
      the requirements of this Section 16.3 shall not apply to the Lender, any
      Mortgagee or a purchaser at a foreclosure sale which acquires Landlord’s rights
      hereunder upon the foreclosure of any interest granted as security for the
      obligations of Landlord under the Loan Documents or any Mortgage or the
      acceptance by such lender or purchaser of a deed in lieu of foreclosure.
      Notwithstanding the failure of Landlord to obtain said recognition from
      Landlord’s assignee, any assignment of Landlord’s rights and obligations shall
      be subject to Tenant’s rights under this Lease.




**16.4**  **Waiver** .
      No
      assignment or subletting that is approved pursuant to this Section 16 shall
      be deemed to remove any subsequent assignment or subletting from the provisions
      of this Section 16, it being the intent hereof that every assignment and
      subletting, whenever occurring, shall require the same approval as is set forth
      herein for an original assignment or subletting.




**17.**  **Notices** .
      All
      notices provided for in this Lease or related to this Lease shall be in writing
      and shall be delivered to the parties at the addresses set forth below. All
      such
      notices or other papers or instruments related to this Lease shall be deemed
      sufficiently served or delivered on the date of mailing, provided that they
      are
      sent by United States Registered or Certified Mail, postage prepaid, in an
      envelope properly sealed or on the date of receipt if hand delivered or sent
      by
      overnight courier:




To
      Landlord:  ESC-Arbor
      Place, LLC


3131
      Elliott Avenue, Suite 500


Seattle,
      WA 98121


Telephone:  (206)
      298-2909


Facsimile:  (206)
      301
      4500





With
      a
      copy to:  The
      Nathanson Group PLLC


One
      Union
      Square


600
      University Street, Suite 2000


Seattle,
      WA 98101-1195


Attention:  Randi
      S.
      Nathanson, Esq.


Telephone:  (206)
      623-6239


Facsimile:  (206)
      623
      1738





Exhibit
          F
          - Form of Lease
 **16**


To
      Tenant:  Silver
      Lake Assisted Living, LLC


c/o
      Columbia Pacific Group, Inc.


600
      University Street, Suite 2500


Seattle,
      WA 98101


Telephone:  (206)
      728-9063


Facsimile:  (206)
      728-9327





With
      a
      copy to:  Thomas
      A.
      Barkewitz


Alston,
      Courtnage & Bassetti LLP


1000
      Second Avenue, Suite 3900


Telephone:  (206)
      623-7600


Facsimile:  (206)
      623-1752





Both
      Landlord and Tenant may change the address or the name of the addressee
      applicable to subsequent notices by giving notice as provided above. *However* ,
      notice
      of such a change shall not be effective until the fifth day after
      mailing.





**18.**  **Miscellaneous**




**18.1**  **Captions** .
      The
      captions in this Lease are for convenience of reference only. In no way do
      those
      captions define, limit or describe the scope or intent of this
      Lease.




**18.2**  **Gender** .
      Words
      showing number shall be taken to include both the singular and the plural forms.
      Words showing gender shall be taken to include masculine, feminine and
      neuter.




**18.3**  **Successors
      and Assigns** .
      Subject
      to the restrictions on transfers set forth herein, this Lease shall inure to
      the
      benefit of and be binding upon Landlord and Tenant and their respective
      successors and permitted assigns. The definition of “ **Landlord** ”
and
      “ **Tenant** ”
herein
      refer to the Landlord and Tenant at the time in question.




**18.4**  **Governing
      Law** .
      This
      Lease shall be governed, construed, and enforced in accordance with the laws
      of
      the State of Washington.




**18.5**  **Entire
      Agreement** .
      This
      Lease represents the entirety of the agreement among the parties hereto with
      respect to the subject matter hereof and shall be deemed to supersede any prior
      discussions or agreements among the parties hereto. This Lease may not be
      amended or modified except by written instrument signed by the parties
      hereto.




**18.6**  **Waiver** .
      The
      failure of either party to insist upon strict performance of any of the
      covenants, agreements, terms and conditions of this Lease in any one or more
      instances shall not be construed as a waiver or relinquishment of any such
      covenant, agreement, term, or condition and the same shall remain in full force
      and effect.




**18.7**  **Attorneys’
      Fees** .
      In the
      event either party brings an action to enforce any of the terms hereof or in
      connection herewith, the prevailing party in such action shall be entitled
      to
      and




Exhibit
          F
          - Form of Lease
 **17**


the
      losing party agrees to pay the reasonable attorneys’ fees and expenses,
      including attorneys’ fees and expenses of appellate proceedings, of the
      prevailing party.




**18.8**  **Memorandum
      of Lease** .
      Landlord and Tenant shall execute and record a Memorandum of this Lease and
      concurrently therewith shall execute and record the Subordination Agreement.




**18.9**  **Invalidity** .
      Each
      term and provision of this Lease shall be enforced to the fullest extent
      permitted by law. Should any term or provision of this Lease, or the application
      thereof, prove illegal or unenforceable, the remainder of this Lease shall
      still
      be valid and enforced.




**18.10**  **Broker** .
      Landlord and Tenant each represent to the other that there are no claims for
      brokerage or other commissions or finder’s or other similar fees in connection
      with the transactions contemplated by this Lease insofar as such claims shall
      be
      based on arrangements or agreements made by or on behalf of the party so
      representing.




**18.11**  **Amendment** .
      Neither
      this Lease nor any provision hereof may be changed, waived, discharged or
      terminated orally, but only by an instrument in writing signed by the parties
      hereto and approved in writing by the Lender or any Mortgagee if and to the
      extent required by the terms of the Loan Documents or any Mortgage.




**18.12**  **Counterparts** .
      This
      Lease may be executed in any number of counterparts, each of which shall be
      deemed to be an original and all of which together shall comprise but a single
      instrument.




**18.13**  **Construction** .
      No
      provision of this Lease shall be construed against or interpreted to the
      disadvantage of either Landlord or Tenant by any court or other governmental
      or
      judicial authority by reason of such party’s having or being deemed to have
      structured, written, drafted or dictated such provisions.




**18.14**  **Time
      of the Essence** .
      Time is
      of the essence of this Lease.




**18.15**  **No
      Joint Venture** .
      Nothing
      in this Lease shall be construed to render or constitute Landlord in any way
      or
      for any purpose a partner, joint venturer or associate in any relationship
      with
      Tenant other than that as Landlord and Tenant, nor shall this Lease be construed
      to authorize either party to act as agent for the other party except as
      expressly provided to the contrary in this Lease.




**18.16**  **Financial
      Statement** .
      Throughout the Lease Term, Tenant shall deliver to Landlord the financial
      statements described in **Exhibit
      G**  attached
      or such other financial statements as may from time to time be required under
      the terms of the Loan Documents or any Mortgage.




**18.17**  **Landlord’s
      Consent** .
      In the
      event the consent of Landlord is required in order to permit Tenant to take
      or
      refrain from taking any action under this Agreement, and Landlord’s consent is
      conditioned upon obtaining the consent of the Lender under the Loan Documents
      or
      a Mortgagee under any Mortgage, if the Lender denies its consent, Landlord
      shall
      be deemed to have acted reasonably in denying its consent to Tenant.




Exhibit
          F - Form of Lease
 **18**


**19.**  **Landlord
      Inspection** .
      Without
      limiting any other rights reserved or available to Landlord under this Lease,
      at
      law or in equity, Landlord on behalf of itself and its agents reserves the
      following rights to be exercised at Landlord’s election:




**19.1**  **Right
      to Inspect and Repair** .
      Landlord may inspect the Premises after reasonable notice and may make repairs,
      additions or alterations to the Premises, or any part thereof, as permitted
      or
      required under this Lease, whether such repairs are the responsibility of
      Landlord or Tenant.




**19.2**  **Right
      to Enter; Notice** .
      Landlord may enter upon the Premises for any and all of said purposes and may
      exercise any and all of the foregoing rights hereby reserved during normal
      business hours unless an emergency exists, in which case Landlord shall have
      the
      right of entry upon 24 hours advance notice.




**20.**  **Estoppel
      Statements** .
      The
      parties hereto shall, at any time and from time to time upon not less than
      ten
      (10) days prior written notice from the other party, execute, acknowledge and
      deliver to such other party, in form reasonably satisfactory to such other
      party
      or such other party’s mortgagee, a written statement certifying (if true) that
      this Lease is unmodified and in full force and effect (or if there have been
      modifications stating the nature thereof), that such other party is not in
      default hereunder (or specifying the nature of any default), the date to which
      rental and other charges have been paid and such other information as may be
      reasonably required by such other party. It is intended that any such statement
      delivered pursuant to this Section may be relied upon by any prospective
      purchaser or mortgagee of the Premises and their respective successors and
      assigns.




**21.**  **Hazardous
      Substances** .
      Tenant
      shall not generate, dispose of, release, use, handle, possess or store any
      hazardous substances upon the Premises except in accordance with applicable
      laws, rules and regulations. Tenant shall, at its sole cost and expense,
      promptly remove or clean up any hazardous substances introduced onto the
      Premises by Tenant or with its permission or at its sufferance. Such removal
      or
      cleanup shall be in compliance with all applicable law and regulations. Tenant
      hereby agrees to indemnify and hold Landlord harmless and agrees to defend
      Landlord from all losses, damages, claims and liabilities and fines, including
      costs and reasonable attorneys’ fees, of any nature whatsoever in connection
      with the actual or alleged presence upon the Premises of any hazardous substance
      introduced by Tenant or with its permission or at its sufferance.




**22.**  **Limitation
      on Tenant’s Recourse** .
      In no
      event shall Landlord ever be liable to Tenant for any indirect or consequential
      damages incurred by Tenant resulting from any cause whatsoever. Tenant hereby
      acknowledges and agrees that Tenant’s sole recourse against Landlord, and any
      successor to the interest of Landlord in the Premises, is to the interest of
      Landlord, and any such successor, in the Premises.




**23.**  **Conflict** .
      In the
      event of a conflict between the obligations imposed on Tenant hereunder and
      the
      obligations imposed on Landlord under the Loan Documents or any Mortgage with
      respect to the operation, maintenance, repair or reconstruction of the Facility,
      the provisions of the Loan Documents or the Mortgage, as applicable, shall
      control.




Exhibit
          F
          - Form of Lease
 **19**











[Signature
      Page Follows ]





Exhibit
          F
          - Form of Lease
 **20**


IN
      WITNESS WHEREOF, the parties hereby execute this Lease Agreement on the day
      and
      year first written above.




LANDLORD:





ESC-ARBOR
      PLACE, LLC,


a
      Washington limited liability company











By:  /s/
      Raymond R. Brandstrom


Its:  Vice
      President of Finance








TENANT:





SILVER
      LAKE ASSISTED LIVING, LLC,


a
      Washington limited liability company





By:  B.F.,
      Limited Partnership


Its:  Manager





By:  Columbia
      Pacific Group, Inc.


Its:  General
      Partner








By:  /s/
      Ruth
      Verhoff


Its:  Secretary




Exhibit
          F
          - Form of Lease
 **21**


**Exhibit** **A to Lease**





**LEGAL
      DESCRIPTION**








PARCEL
      A:





LOT
      2,
      PROVIDENCE MEDICAL CENTER BINDING SITE PLAN FILE NO. 01-107895 BG RECORDED
      UNDER
      AUDITOR’S FILE NUMBER 200208155006, BEING A PORTION OF THE SOUTHEAST QUARTER OF
      THE SOUTHEAST QUARTER OF SECTION 30, TOWNSHIP 28 NORTH, RANGE 5 EAST, W.M.,
      RECORDS OF SNOHOMISH COUNTY, WASHINGTON.





PARCEL
      B:





A
      NON-EXCLUSIVE EASEMENT FOR INGRESS AND EGRESS AS DESCRIBED IN AND CREATED BY
      PROVIDENCE MEDICAL CENTER BINDING SITE PLAN FILE NO. 01-107895 BG RECORDED
      UNDER
      FILE NO. 200208155006, UPON AND SUBJECT TO THE PROVISIONS THEREIN CONTAINED,
      BEING A PORTION OF LOT 1 OF SAID BINDING SITE PLAN, AND NON EXCLUSIVE EASEMENTS
      FOR INGRESS AND EGRESS AS DESCRIBED IN AND CREATED BY INSTRUMENTS RECORDED
      UNDER
      AUDITOR’S FILE NO.’S 200005040193 AND 200005040194, UPON AND SUBJECT TO THE
      PROVISIONS THEREIN CONTAINED, ALL LOCATED IN THE SOUTHEAST QUARTER OF THE
      SOUTHEAST QUARTER OF SECTION 30, TOWNSHIP 28 NORTH, RANGE 5 EAST, W.M., RECORDS
      OF SNOHOMISH COUNTY, WASHINGTON





SITUATE
      IN THE COUNTY OF SNOHOMISH, STATE OF WASHINGTON







Exhibit
          F
          - Form of Lease
 **22**


**Exhibit** **B
      to Lease**





**PERMITTED
      ENCUMBRANCES**








See
      attached








Exhibit
          F
          - Form of Lease
 **23**


**Exhibit** **C
      to Lease**





**FINANCIAL
      COVENANTS**











Exhibit
          F
          - Form of Lease
 **24**


**Exhibit** **D
      to Lease**





**SUBORDINATION
      AGREEMENT**








See
      Attached








Exhibit
          F
          - Form of Lease
 **25**


**Exhibit** **E
      to Lease**





**LIST
      OF LOAN DOCUMENTS**








A.  The
      Loan
      Agreement;


B.  The
      Note;


C.  The
      Guaranty;


D.  The
      Environmental Indemnity Agreement;


E.  Deed
      of
      Trust, Assignment of Rents and Security Agreements;


F.  Two
      (2)
      UCC-1 Financing Statements;


G.  Subordination,
      Attornment and Security Agreement;


H.  Assignment
      of Membership Interests;


I.  Collateral
      Assignment of Undertakings Under Purchase and Sale Agreement.





Exhibit
          F
          - Form of Lease
 **26**


**Exhibit** **F
      to Lease**





**INSURANCE
      REQUIREMENTS**








The
      insurance requirements are as set forth in the Loan Documents, including,
      without limitation, the Loan Agreement or as may otherwise be specified in
      any
      Mortgage or other loan documents required by any Mortgagee in connection with
      financing for the Facility.







Exhibit
          F
          - Form of Lease
 **27**


**Exhibit** **G
      to Lease**








**FINANCIAL
      STATEMENT REQUIREMENTS**








The
      financial statement requirements are as set forth in the Loan Documents,
      including, without limitation, the Loan Agreement or as may otherwise be
      specified in any Mortgage or other loan documents required by any Mortgagee
      in
      connection with financing for the Facility.










Exhibit
            F
            - Form of Lease
 **28**


**Exhibit** **G**





**INDEMNIFICATION
      AGREEMENT**




This
      INDEMNIFICATION AGREEMENT (this “Agreement”) is made as of the ___ day of June,
      2006, by and between **EMERITUS
      CORPORATION** ,
      a
      Washington corporation (the “Emeritus”).and **SILVER
      LAKE ASSISTED LIVING, LLC** ,
      a
      Washington limited liability company (the “Silver Lake”).




**RECITALS**





A.  ESC-ARBOR
      PLACE, LLC, a Washington limited liability company (“ESC-Arbor Place”) has
      entered into a Purchase and Sale Agreement dated as of June 16, 2006,
      pursuant to which it will be acquiring from Silver Lake the 100 unit assisted
      living facility commonly known as “Arbor Place” and which is located at 12806
      Bothell Everett Highway, in Everett, Washington (the “Facility”); and




B.  ESC-Arbor
      Place desires Silver Lake to enter into a Lease of even date herewith (the
      “Lease”), pursuant to which ESC-Arbor Place will lease the Facility back to
      Silver Lake for a term of ten (10) years or until the Lease is earlier
      terminated as specified therein; and




C.  Emeritus
      and Silver Lake are parties to a Management Agreement, dated September 1, 1998,
      and amended by Amendment of even date herewith (as amended, the “Management
      Agreement”), pursuant to which Emeritus provides certain services to Silver Lake
      in connection with the Facility; and




D.  Silver
      Lake is only willing to enter into the Lease if Emeritus enters into this
      Agreement, and Emeritus is willing to enter into this Agreement to induce Silver
      Lake to enter in the Lease;




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




1. Indemnification.
        Emeritus shall indemnify, defend and hold harmless Silver Lake, and its owners,
        directors, officers and employees (each an “Indemnified Party”), from any and
        all party claims, demands, causes of action, losses, damages, fines, penalties,
        liabilities, costs and expenses, including reasonable attorneys’ fees and court
        costs sustained or incurred by or asserted against any one or more of them
        by
        reason of or arising out of (a) ESC-Arbor Place’s ownership of the Property from
        and after July 1, 2006, (b) any tax liability related solely to the ownership
        of
        membership interests in Silver Lake between July 1, 2006 and the date that
        such
        membership interests are conveyed and assigned to Emeritus, unless the tax
        liability is caused by actions of the members that violate the provisions
        of the
        Membership Purchase Agreements pursuant to which such interests are to be
        conveyed and assigned; and (c) any Uncovered Manager Actions, whether occurring
        before or after the effective date of this Agreement. As used in this Agreement,
        “Uncovered Manager Actions” means (a) breach of the duties and obligations
        required to be performed by Emeritus pursuant to the Management Agreement,
        (b) acts by Emeritus that relate to the Facility but are outside the scope
        of Emeritus’ authority




Exhibit
          G
          -Form of Indemnification Agreement
 **1**


under
      the
      Management Agreement, or (c) the negligence or willful misconduct of
      Emeritus or its agents or employees in connection with the performance of their
      duties under the Management Agreement. Recovery pursuant to the terms and
      conditions of this Agreement shall be reduced dollar-for-dollar by proceeds
      of
      any applicable insurance collected by either Emeritus or Silver
      Lake.




2.  Procedure .
      Silver
      Lake shall promptly notify Emeritus if Silver Lake becomes aware of any
      potential claim for indemnification under this Agreement. Emeritus shall have
      sole authority to compromise, settle or defend any such claim.




3.  Notices .
      Any
      notices required to be sent hereunder shall be sent to the Notice Addresses
      in
      the Lease and in the Management Agreement, as such addresses may be changed
      from
      time to time as provided therein. Notices shall be sent by certified mail,
      return receipt requested, facsimile or overnight delivery, and shall be
      effective when received or when delivery is refused.




4.  Severability .
      In the
      event one or more of the provisions contained in this Agreement is deemed to
      be
      invalid, illegal or unenforceable in any respect under applicable law, the
      validity, legality and enforceability of the remaining provisions hereof shall
      not in any way be impaired thereby.




5.  Counterparts
      and Facsimile Signatures .
      This
      Agreement may be executed in any number of counterparts and by different parties
      hereto in separate counterparts, each of which when so executed shall be deemed
      to be an original and all of which when taken together shall constitute one
      and
      the same agreement. Delivery of any executed counterpart by facsimile shall
      be
      as effective as delivery of an executed original counterpart of this
      Agreement.




6.  Successors
      and Assigns .
      The
      rights and obligations hereunder are personal and may not be assigned by either
      party without the prior written consent of the other party.




7.  Modification
      and Amendment .
      This
      Agreement may not be amended or modified except by a writing signed by Emeritus
      and Silver Lake.




8.  Applicable
      Law .
      This
      Agreement shall be governed by and construed under the laws of the State of
      Washington.




9.  Entire
      Agreement .
      This
      Agreement and any indemnification obligations of the parties in the Management
      Agreement, constitute the entire agreement between the parties with respect
      to
      the subject matter hereof.







SIGNATURES
      ON FOLLOWING PAGE


Exhibit
          G
          -Form of Indemnification Agreement
 **2**


IN
      WITNESS WHEREOF, Emeritus and Silver Lake have caused this Indemnification
      Agreement to be duly executed as of the date first above written.




**EMERITUS
      CORPORATION** ,


a
      Washington corporation:











By:  /s/
      Martin Roffe


Its:  Vice
      President, Financial Planning








**SILVER
      LAKE ASSISTED LIVING LLC**


By:  B.F.,
      Limited Partnership


Its:  Manager





By:  Columbia
      Pacific Group, Inc.


Its:  General
      Partner











By:  /s/ Ruth
      Verhoff


Its:  Secretary


Exhibit
          G
          -Form of Indemnification Agreement
 **3**