**AGREEMENT
      OF SALE AND PURCHASE**




**THIS
      AGREEMENT OF SALE AND PURCHASE** (the
“Agreement”) is dated as of March 7, 2007, to be effective as of the Effective
      Date, and is made and entered into by and between the entities that have
      executed this Agreement on the signature pages hereto as sellers (individually,
      a “Seller” and collectively, the “Sellers”), and **EMERITUS
      CORPORATION** , **** a
      Washington corporation, as purchaser (the “Purchaser”). Each Seller and
      Purchaser are sometimes individually referred to as a “Party” and collectively
      referred to as the “Parties”.




**WHEREAS** ,
      Sellers
      are the owners of the Facilities, the Emeritus Mortgage Loan and the Term
      Mortgage Loan as provided herein; and




**WHEREAS** ,
      Sellers
      desire to sell and Purchaser desires to purchase the Facilities and to terminate
      the Tenant Leases; and




**WHEREAS** ,
      in
      connection with the sale and purchase of the Facilities and the termination
      of
      the Tenant Leases, Purchaser has agreed either to pay the unpaid amounts owed
      under the Emeritus Mortgage Loan required to pay the Emeritus Mortgage Loan
      in
      full or to cause the purchase of the Emeritus Mortgage Loan at the Closing
      as
      provided herein; and




**WHEREAS** ,
      in
      connection with the sale and purchase of the Facilities and the termination
      of
      the Tenant Leases, Purchaser has agreed to pay the unpaid amounts owed under
      the
      Term Mortgage Loan required to pay the Term Mortgage Loan in full at the
      Closing;




**NOW,
      THEREFORE** ,
      in
      consideration of the sum of Ten Dollars ($10.00), the mutual covenants and
      agreements contained herein and other good and valuable consideration, the
      receipt and sufficiency of which are hereby acknowledged, the Parties agree
      as
      follows:




**ARTICLE
      I**




**DEFINITIONS
      AND INTERPRETATION**




1.1  **Definitions.**  As
      used
      herein, the following defined terms shall have the meanings set forth
      below:




*“Affiliate”* shall
      mean any Person that directly or indirectly controls, is under common control
      with, or is controlled by any other Person. For purposes of this definition,
      “controls”, “under common control with” and “controlled by” shall mean the
      possession, directly or indirectly, of the power to direct or cause the
      direction of the management and policies of such Person, whether through
      ownership of voting securities or otherwise.




*“Appurtenant
      Rights”* shall
      mean all rights, privileges and easements appurtenant to the Land that
      permissibly pass by operation of law with the conveyance by the applicable
      Seller of the fee simple estate in the Land.




*“Assumed
      Business Agreements”* shall
      mean all Business Agreements that (i) Purchaser agrees to assume as provided
      in Section
      4.3 hereof,
      and (ii) are assigned to Purchaser pursuant to the General Assignment for a
      Facility.







*“Assumed
      Liabilities”* shall
      mean the following:




(a)  all
      obligations of Sellers that arise or accrue under the Assumed Business
      Agreements relating to a particular Facility on and after the effective date
      of
      the General Assignment for such Facility;




(b)  all
      obligations under any Permit and Warranty assigned to Purchaser that arise
      or
      accrue on or after the effective date of the General Assignment for the Facility
      to which such Permit and Warranty relates;




(c)  all
      Property Taxes and all other obligations with respect to a Facility that accrued
      prior to the Closing Date for such Facility but which are not due for payment
      until after the Closing Date;




(d)  all
      Property Taxes and all other obligations with respect to a Facility that accrue
      on and after the Closing Date; and




(e)  all
      obligations, liabilities, damages, losses, claims, expenses and costs relating
      to the Facilities arising or accruing on or prior to the Closing Date that
      the
      Tenant under each of the Tenant Leases was obligated, liable or responsible
      to
      pay or perform under the terms of such Tenant Lease.




*“Bankruptcy/Dissolution
      Event”* shall
      mean the occurrence of any of the following: (a) the commencement of a case
      under Title 11 of the U.S. Code, as now constituted or hereafter amended, or
      under any other applicable federal or state bankruptcy law or other similar
      law;
      (b) the appointment of a trustee or receiver of any property interest; (c)
      an
      assignment for the benefit of creditors; (d) an attachment, execution or other
      judicial seizure of a substantial property interest; (e) the taking of, failure
      to take, or submission to any action indicating an inability to meet financial
      obligations as they accrue; or (f) a dissolution or liquidation.




*“Bill
      of Sale”* shall
      mean a bill of sale substantially in the form of **Exhibit
      A** hereto
      by which the applicable Seller for a Facility conveys to Purchaser such Seller’s
      right, title and interest, if any, in and to the Personal Property located
      at
      such Facility.




*“Business
      Agreement”* shall
      mean any management agreement, service contract, contractor agreement,
      construction contract or other agreement or instrument affecting all or a
      portion of the Facilities or the operation thereof to which a Seller is party
      and that is assignable by such Seller without the consent or approval of any
      other Person.




*“Business
      Day”* shall
      mean any calendar day other than a Saturday, a Sunday or a day on which national
      banks are not required or authorized by law to remain closed.




*“Closing”* shall
      mean the closing of the purchase and sale of the Facilities contemplated by
      this
      Agreement.




*“Closing
      Date”* shall
      mean March 16, 2007.




**2**


*“Code”* shall
      mean the United States Internal Revenue Code of 1986, as amended, and all
      regulations promulgated thereunder.




*“Deeds”* shall
      mean special warranty deeds substantially in the form of **Exhibit
      B** hereto,
      modified to reflect a special warranty deed (or the equivalent) for the
      applicable states where each of the Facilities is located, by which the
      applicable Seller conveys the Land, the Improvements and Appurtenant Rights
      comprising or relating to a Facility to Purchaser.




*“Earnest
      Money”* shall
      have the meaning set forth in Section
      2.1 hereof.




*“Effective
      Date”* shall
      mean the latest of the dates of the execution of this Agreement by a Seller
      and
      Purchaser as evidenced by the dates appearing under their respective signatures
      hereto.




*“Emeritus
      Mortgage Loan”* shall
      mean the mortgage loan identified on **Exhibit
      G-1** hereto
      that encumbers one or more of the Tenant Leases.




*“Escrow
      Agreement”* shall
      mean an escrow agreement substantially in the form of **Exhibit
      C** hereto
      by and among Sellers, Purchaser and Title Company with respect to the terms
      of
      the escrow of the Earnest Money.




*“Facilities”* shall
      mean the Land, the Improvements and the Appurtenant Interests associated
      therewith comprising the senior living facilities identified on **Exhibit
      D** hereto.




*“Forum”* shall
      mean any federal, state, local or municipal court, governmental agency,
      administrative body or agency, tribunal, private alternative dispute resolution
      system or arbitration panel.




*“General
      Assignment”* shall
      mean one of the assignments between Purchaser and the applicable Seller,
      substantially in the form of **Exhibit
      E** hereto,
      pursuant to which the right, title and interest of such Seller in and to the
      Assumed Business Agreements and the Permits and Warranties relating to a
      Facility are assigned to, and obligations thereunder are assumed by,
      Purchaser.




*“Government”* shall
      mean any federal, state, local or municipal government or any department,
      commission, board, bureau, agency, instrumentality, unit or taxing authority
      thereof.




*“Governmental
      Requirements”* shall
      mean any notices, filings or pre-approvals required by a Government in
      connection with the transfer of ownership of any of the Facilities.




*“HR”* shall
      mean Healthcare Realty Trust Incorporated, a Maryland corporation and an
      Affiliate of Sellers.




*“Improvements”* shall
      mean all buildings, improvements, structures and fixtures to the extent now,
      and
      on the Closing Date, owned by Sellers and comprising the Facilities, including
      landscaping, parking lot improvements and structures, drainage facilities and
      all above ground and underground utility structures and other so-called
      infrastructure improvements comprising a part thereof to the extent any of
      the
      same may be owned by Sellers.




**3**


*“Land”* means
      the real property owned in fee simple by Sellers upon which the Facilities
      are
      located.




*“Laws”* means
      all federal, state and local laws, moratoria, initiatives, referenda,
      ordinances, rules, regulations, standards, orders and other governmental
      requirements, including those relating to the environment, health and safety,
      disabled or handicapped persons, and as applicable, to the licensing of a
      Facility.




*“Lease
      Termination”* shall
      mean a lease termination agreement, substantially in the form of **Exhibit
      F** hereto,
      pursuant to which the applicable Seller and the Tenant under a Tenant Lease
      agree to terminate such Tenant Lease effective as of the Closing
      Date.




*“Mortgage
      Loan Assignee”* shall
      mean an Affiliate of Purchaser designated by Purchaser in accordance with Section
      2.3(a) hereto
      to purchase the Emeritus Mortgage Loan as provided herein.




*“Mortgage
      Assignment”* shall
      mean an assignment and assumption agreement, substantially in the form of **Exhibit
      J** hereto,
      pursuant to which HR’s right, title and interest in and to the Emeritus Mortgage
      Loan and the Mortgage Loan Documents relating thereto are assigned to, and
      HR’s
      obligations thereunder are assumed by, the Mortgage Loan Assignee.




*“Mortgage
      Loan Documents”* shall
      mean all promissory notes, mortgages, deeds of trust, loan agreements,
      participation agreements and other documents evidencing or securing the Emeritus
      Mortgage Loan.




*“Orders”* shall
      mean all applicable orders, writs, judgments, decrees, rulings, consent
      agreements and awards of or by any Forum or entered by consent of the party
      to
      be bound.




*“Permits
      and Warranties”* shall
      mean the following, to the extent that they relate exclusively to the Facilities
      and are assignable by the applicable Seller without the consent or approval
      of
      any other Person: (i) certificates of occupancy and permits or approvals of
      any
      nature from any Government; and ( ii)
      guarantees, warranties and indemnities, if any, pertaining to the ownership
      of
      the Land or the Improvements.




*“Permitted
      Exceptions”* shall mean
      (a)
      all liens for Property Taxes that are not yet due and payable; (b) easements,
      restrictions, covenants and other encumbrances of record as of the Effective
      Date; (c) any state of facts that would be disclosed by an accurate survey
      or
      independent inspection of the Facilities; (d) all applicable building and zoning
      ordinances, Laws, regulations and restrictions of any Government; (e) such
      easements, restrictions, covenants and other encumbrances that become matters
      of
      public record after the Effective Date and before the Closing to the extent
      that
      such matters are waived or accepted, or deemed to be waived or accepted, by
      Purchaser; and (f) the rights of residents of the Facilities.




*“Person”* shall
      mean an individual, a partnership, a joint venture, a corporation, a limited
      liability company, a trust, an unincorporated organization, a Government and
      any
      other legal entity.




**4**


*“Personal
      Property”* shall
      mean all tangible personal property of any kind located on or in the Facilities
      and owned by Sellers, including, without limitation, equipment, appliances,
      machinery, furniture, furnishings, signage and fixtures.




*“Property
      Taxes”* shall
      mean all ad valorem, real property and personal property taxes, all general
      and
      special private and public assessments, all other property taxes, and all
      similar obligations relating to the Land and the Improvements.




*“Purchase
      Price”* shall
      mean the amount of Ninety-Eight Million Nine Hundred Ninety-Eight Thousand
      Eight
      Hundred Fourteen and No/100 Dollars ($98,998,814.00).




*“Rent”* shall
      mean all rental payments due under the Tenant Leases prior to the Closing
      Date.




*“Tenant”* shall
      mean each party named as the tenant or lessee under any Tenant
      Lease.




*“Tenant
      Lease”* shall
      mean each of the leases, license agreements and other occupancy agreements
      for
      the rental of a Facility identified on **Exhibit
      H** hereto,
      as amended, modified or extended through the Effective Date, together with
      all
      renewals, modifications, addenda, guarantees and other security documents
      relating to any and all such leases, license agreements or other occupancy
      agreements.




*“Term
      Mortgage Loan”* shall
      mean the mortgage loan identified on **Exhibit
      G-2** hereto
      that encumbers one or more of the Tenant Leases.




*“Title
      Company”* shall
      mean Fidelity
      National Title Insurance Company .




1.2  **Interpretation** .
      In this
      Agreement, the singular includes the plural and the plural the singular; words
      importing any gender include the other gender; references to statutes,
      regulations or ordinances are to be construed as including all provisions
      consolidating, amending or replacing the referenced statute, regulation or
      ordinance; references to agreements and other contractual instruments shall
      be
      deemed to include all subsequent amendments to or changes in such agreements
      or
      instruments entered into in accordance with their respective terms; references
      to Persons include their permitted successors and assigns; use of the term
      “include” or “including” shall mean to include or including without limitation;
      and references to a “Section” or “Article” shall mean a section or article of
      this Agreement unless otherwise expressly stated.




**ARTICLE
      II**




**PURCHASE
      AND SALE**




2.1  **Purchase
      and Sale** .
      Upon
      the terms and subject to the conditions set forth in this Agreement, Sellers
      at
      the Closing shall sell, transfer and assign to Purchaser all right, title and
      interest of Sellers in and to the Facilities free and clear of any mortgage,
      security interest, lien, charge, claim or other encumbrance except the Permitted
      Exceptions, and Purchaser shall purchase such Facilities for the Purchase Price.
      Prior to the Effective Date, Purchaser has deposited with Title Company the
      amount of One Million Three Hundred Fourteen Thousand Two Hundred Seventy-Two
      and No/100 Dollars ($1,314,272.00) as an earnest money deposit




**5**


(the
      “Earnest Money”), which Title Company shall continue to hold pursuant to the
      Escrow Agreement. Purchaser shall be entitled to apply the Earnest Money to
      the
      payment of the portion of the Purchase Price due from Purchaser at the Closing.
      The Earnest Money is refundable only in the event that this Agreement is
      terminated pursuant to Sections
      9.1(a)(i), 9.1(a)(ii), 9.1(a)(iii) or 9.1(a)(iv) hereof.
      Except as set forth in the immediately preceding sentence, the Earnest Money
      is
      not refundable to Purchaser under any circumstances and shall be deemed to
      be
      consideration earned by Sellers for the execution and delivery of this
      Agreement, and the forfeiture of any Earnest Money pursuant to this Agreement
      shall not be deemed to be liquidated damages or otherwise to limit Seller’s
      remedies for a breach or default by Purchaser under this Agreement.




2.2  **Assumption
      of Liabilities** .
      Upon
      the terms and subject to the conditions set forth in this Agreement, Purchaser,
      as of the Closing Date, shall assume all of the Assumed
      Liabilities.




2.3  **Purchase
      Price** .




(a)  The
      Purchase Price shall be subject to adjustment only as set forth in this Section
      2.3 .
      Property Taxes, water/sewer charges, gas, electric, telephone and other
      utilities, and other operating expenses relating to the Facilities are the
      responsibility of the Tenants under the Tenant Leases and shall not be prorated.
      All unpaid Rent and any other amounts due and payable under the Tenant Leases
      as
      of the Closing Date shall be charged to Purchaser and paid at the Closing,
      and
      Rent for the month in which Closing occurs shall be prorated through the Closing
      Date. Sellers shall retain all security deposits and other similar deposits
      relating to the Tenant Leases, and Purchaser shall receive a credit for such
      deposits at the Closing. In addition to the payment of the Purchase Price,
      Purchaser shall, at and as a condition to the Closing, be obligated (i) to
      pay
      all unpaid amounts that are owed under the Term Mortgage Loan which are required
      to pay the Term Mortgage Loan in full, and (ii) either (A) to pay all unpaid
      amounts that are owed under the Emeritus Mortgage Loan which are required to
      pay
      the Emeritus Mortgage Loan in full or (B) to cause the Mortgage Loan Assignee
      to
      purchase the Emeritus Mortgage Loan from HR for a purchase price equal to all
      unpaid amounts that are owed under the Emeritus Mortgage Loan in consideration
      of HR’s execution and delivery of the Mortgage Assignment to the Mortgage Loan
      Assignee at the Closing. If Purchaser elects to pay the Emeritus Mortgage Loan
      in full at the Closing, Purchaser must provide, not less than two (2) Business
      Days prior to the Closing Date, written notice to Sellers of any such election,
      and, in the absence of such written notice of Purchaser’s election, Purchaser
      shall cause the Mortgage Loan Assignee to purchase the Emeritus Mortgage Loan
      from HR at the Closing for a purchase price equal to all unpaid amounts that
      are
      owed under the Emeritus Mortgage Loan. Purchaser shall identify the Mortgage
      Loan Assignee in a written notice to Sellers not less than three (3) Business
      Days prior to the Closing Date. Sellers shall cause HR to accept, or cause
      the
      acceptance of, prepayment of the Term Mortgage Loan and, as applicable, accept
      the prepayment, or complete the sale as contemplated herein, of the Emeritus
      Mortgage Loan irrespective of the failure of Purchaser to satisfy any applicable
      prepayment notice requirements, and to deliver a payoff letter to Purchaser
      at
      least three (3) Business Days prior to the Closing Date.




(b)  In
      addition to any adjustments to the Purchase Price pursuant to Section
      2.3(a) hereof,
      the Purchase Price shall be subject to further adjustment as set forth
      below:




**6**


(i)  the
      Purchase Price shall be adjusted to reflect any expense paid by one Party that
      the other Party has agreed to pay or share pursuant to Section
      11.1 hereof
      or otherwise pursuant to this Agreement; and




(ii)  for
      any
      Facility that is not purchased by Purchaser pursuant to Section
      10.2 hereof,
      the Purchase Price shall be decreased by an amount determined in accordance
      with Section
      10.2 hereof.




(c)  After
      taking into account any adjustments to the Purchase Price as set forth above,
      the Purchase Price (plus the unpaid amounts owed under the Term Mortgage Loan
      required to pay the Term Mortgage Loan in full and either the unpaid amounts
      owed under the Emeritus Mortgage Loan required to pay the Emeritus Mortgage
      Loan
      in full or the purchase price of the Emeritus Mortgage Loan if it is to be
      purchased as provided herein) shall be paid by Purchaser (and the Mortgage
      Loan
      Assignee as provided herein) by wire transfer of immediately available funds
      to
      an escrow account maintained by Title Company for delivery to Sellers (and
      HR,
      as applicable) upon the consummation of the Closing. As soon as possible after
      the Closing (but not later than thirty (30) days after the Closing Date), the
      Parties shall reconcile the actual amount of any prorations that were estimated
      as of the Closing. To the extent that a Party subsequently verifies that the
      actual amounts differ from the amounts estimated and so prorated, the Parties
      agree to remit the correct amount of such items to the appropriate Party as
      and
      when they are determined. The terms of this Section
      2.3 shall
      survive the Closing.




2.4  **Deliveries
      at Closing** .




(a)  At
      the
      Closing, Sellers shall deliver to Purchaser, or cause the delivery to Purchaser
      of, the following:




(i)  A
      certificate of an authorized representative of each Seller, dated the Closing
      Date, certifying that attached thereto is a true and complete copy of
      resolutions or limited partnership documentation, as applicable, adopted by
      such
      Seller authorizing the execution, delivery and performance of this Agreement
      and
      the documents and instruments to be executed and delivered by such Seller
      pursuant hereto, and that all such resolutions or limited partnership
      documentation, as applicable, are still in full force and effect and have not
      been amended or modified;




(ii)  A
      General
      Assignment, duly executed by the applicable Seller, assigning to Purchaser
      the
      Permits and Warranties and Assumed Business Agreements relating to the
      Facilities that are sold and transferred on the Closing Date;




(iii)  A
      separate Lease Termination, duly executed by the applicable Seller, for each
      Tenant Lease by which such Seller agrees to the termination of such Tenant
      Lease
      as of the Closing Date;




(iv)  A
      separate Bill of Sale, duly executed by the applicable Seller, for each Facility
      conveyed by such Seller to Purchaser;




**7**


(v)  The
      Deeds, duly executed by the applicable Sellers, relating to the Facilities
      that
      are sold and transferred on the Closing Date;




(vi)  Releases
      of the leasehold mortgages or deeds of trust and other instruments that secure
      the repayment of the Term Mortgage Loan and the Emeritus Mortgage
      Loan;




(vii)  A
      statement executed by each Seller in form and substance acceptable under Section
      1445 of the Internal Revenue Code, as amended, setting forth such Seller’s
      United States taxpayer identification number and certifying that Seller is
      not a
“foreign person” as that term is used under Section 1445(b)(2) of the Internal
      Revenue Code, as amended;




(viii)  Copies
      of
      any engineering plans, drawings, specifications and blueprints in the possession
      of Sellers and relating to the Improvements;




(ix)  A
      closing
      statement executed by the applicable Sellers itemizing the Purchase Price and
      all adjustments thereto as provided herein;




(x)  An
      owner’s title affidavit substantially in the form of **Exhibit
      I** hereto
      duly executed by each applicable Seller relating to the Land and Improvements
      that are sold and transferred on the Closing Date and owned by such Seller;
      and




(xi)  In
      the
      event that the Emeritus Mortgage Loan is to be purchased by the Mortgage Loan
      Assignee as permitted by this Agreement, the Mortgage Assignment duly executed
      by HR.




(b)  At
      the
      Closing, Purchaser shall deliver to Sellers or HR, as applicable, or cause
      the
      delivery to Sellers or HR, as applicable of, the following:




(i)  A
      certificate of the Secretary or an Assistant Secretary of Purchaser, dated
      the
      Closing Date, certifying that attached thereto is a true and complete copy
      of
      resolutions adopted by the board of directors of Purchaser authorizing the
      execution, delivery and performance of this Agreement and the documents and
      instruments to be executed and delivered by Purchaser pursuant hereto, and
      that
      all such resolutions are still in full force and effect and have not been
      amended or modified;




(ii)  The
      funds
      constituting the portion of the Purchase Price allocable to the Facilities
      that
      are sold and transferred on the Closing Date, as required under Section
      2.3 hereof;




(iii)  All
      unpaid amounts that are owed under the Term Mortgage Loan which are required
      to
      pay the Term Mortgage Loan in full as of the Closing Date;




(iv)  All
      unpaid amounts that are owed under the Emeritus Mortgage Loan which are required
      to pay the Emeritus Mortgage Loan in full as of the Closing Date, or, if the
      Emeritus Mortgage Loan is to be purchased and sold as provided herein, the
      purchase price of the Emeritus Mortgage Loan equal to all unpaid amounts under
      the Emeritus Mortgage Loan that would be required to pay the Emeritus Mortgage
      Loan in full;




**8**


(v)  A
      General
      Assignment, duly executed by Purchaser, by which Purchaser assumes the payment
      and performance of the obligations of the applicable Seller under the Permits
      and Warranties and Assumed Business Agreements assigned to Purchaser thereby
      and
      relating to a Facility that is sold and transferred by such Seller on the
      Closing Date;




(vi)  A
      separate Lease Termination, duly executed by Purchaser, for each Tenant Lease
      by
      which the Tenant thereunder agrees to the termination of such Tenant
      Lease;




(vii)  Executed
      waivers of the rights of first refusal under the Tenant Leases held by any
      Tenants (other than Purchaser) in a form acceptable to Sellers;




(viii)  A
      closing
      statement executed by Purchaser itemizing the Purchase Price and all adjustments
      thereto as provided herein;




(ix)  In
      the
      event that the Emeritus Mortgage Loan is to be purchased by the Mortgage Loan
      Assignee as permitted by this Agreement, the Mortgage Assignment duly executed
      by the Mortgage Loan Assignee.




2.5  **Further
      Assurances** .
      From
      time to time after the Closing, Sellers shall, upon Purchaser’s reasonable
      request and at Purchaser’s sole expense, execute, acknowledge and deliver to
      Purchaser such other instruments of transfer and conveyance and shall take
      such
      other actions and execute and deliver such other documents, certifications
      and
      further assurances as Purchaser may reasonably require to vest more effectively
      in Purchaser, or to put Purchaser more fully in possession of, any of the
      Facilities, or to better enable Purchaser to complete, perform and discharge
      the
      Assumed Liabilities. Each Party shall cooperate with the other and shall execute
      and deliver to another Party such other instruments and documents and take
      such
      other actions as may be reasonably requested from time to time by another Party
      hereto as necessary to carry out, evidence and confirm the intended purposes
      of
      this Agreement.




2.6  **Delivery
      of Possession** .
      Possession of the Facilities sold, transferred and assigned at the Closing
      shall
      be delivered to Purchaser effective as of the Closing Date.




**ARTICLE
      III**




**REPRESENTATIONS
      AND WARRANTIES OF SELLERS**




Sellers
      hereby represent and warrant to Purchaser as of the Effective Date as
      follows:




3.1  **Organization,
      Qualifications and Corporate Power.** Each
      Seller is duly formed or incorporated, as the case may be, and validly existing
      and in good standing under the laws of its state of formation or incorporation,
      as the case may be, and is qualified or authorized to conduct business in each
      state where the failure to be so qualified or authorized could reasonably be
      expected to have a material adverse effect upon the business of Sellers taken
      as
      a whole. Sellers have the power and authority to execute, deliver and perform
      the Escrow Agreement, this Agreement and the other agreements, documents and
      certificates contemplated to be delivered by them pursuant to this
      Agreement.




**9**


3.2  **Authorization** .
      The
      execution, delivery and performance by Sellers of this Agreement and the
      instruments contemplated to be delivered by Sellers pursuant to this Agreement
      at the Closing have been duly authorized by necessary corporate or partnership
      action, as applicable.




3.3  **Validity.** This
      Agreement has been duly executed and delivered by Sellers and constitutes the
      legal, valid and binding obligation of Sellers, enforceable in accordance with
      its terms, subject to general equity principles and to applicable bankruptcy,
      insolvency, reorganization, moratorium and similar laws from time to time in
      effect affecting the enforcement of creditors’ rights. The Escrow Agreement and
      each Deed, General Assignment, Bill of Sale, Lease Termination and other
      agreement, document and certificate to be executed and delivered by Sellers
      hereunder shall, when so executed and delivered in accordance with this
      Agreement by the applicable Sellers, constitute the legal, valid and binding
      obligation of the applicable Sellers enforceable in accordance with its terms,
      subject to general equity principles and to applicable bankruptcy, insolvency,
      reorganization, moratorium and similar laws from time to time in effect
      affecting the enforcement of creditors’ rights.




3.4  **Non-Contravention.** The
      execution and delivery of this Agreement and the other agreements, documents
      and
      certificates contemplated to be executed and delivered by Sellers pursuant
      to
      this Agreement do not, and the consummation by Sellers of the transactions
      contemplated hereby and thereby shall not, violate any provision of their
      respective articles of incorporation or bylaws or partnership agreement, as
      the
      case may be.




3.5  **Litigation.** No
      Seller is a party to or subject to any judgment, decree or order entered in
      any
      lawsuit or proceeding brought by any Government or other party seeking to
      prevent the execution of this Agreement or the consummation of the transactions
      contemplated hereby.




3.6  **Assets.** The
      applicable Seller has good and marketable title to each Facility to be conveyed
      by such Seller. At the Closing, each Facility shall be free and clear of any
      and
      all mortgages, pledges, security interests, liens, charges and conditional
      sales
      agreements granted by Sellers, except for the Permitted Exceptions and subject
      to execution and delivery by the Tenants of the Lease Terminations. To
      Sellers’ Knowledge, the zoning classification for each of the Facilities located
      in the Commonwealth of Pennsylvania is set forth in **Schedule
      3.6** hereto.




3.7  **No
      Bankruptcy or Dissolution** .
      No
      Bankruptcy/Dissolution Event has occurred with respect to any
      Seller.




**ARTICLE
      IV**




**COVENANTS
      OF SELLERS**




4.1  **Transfer
      of Permits.** Sellers
      shall use commercially reasonable efforts to assist Purchaser with the
      assumption, transfer or reissuance of any licenses, permits or approvals
      required for the operation of the Facilities that do not constitute Permits
      and
      Warranties; provided, however, that Sellers shall not incur any material cost,
      expense or liability in connection with such efforts or in connection with
      the
      assumption, transfer or reissuance of any such licenses, permits or approvals
      that do not constitute Permits and Warranties.




**10**


4.2  **Cooperation.** Insofar
      as such conditions are within their reasonable control or influence, Sellers
      shall use commercially reasonable efforts to cause the conditions set forth
      in Section
      7.2 hereof
      to be satisfied and to facilitate and cause the consummation of the transactions
      contemplated hereby; provided, however, that no Seller shall be required to
      make
      any payment to any party (other than reimbursement of expenses), guarantee
      any
      Business Agreement or remain liable for the payment thereof following the
      Closing Date with respect to any matters arising on or after the Closing Date,
      or agree to any concessions or amendments to other contracts, leases or
      arrangements with such party in order to obtain any such consent or
      approval.




4.3  **Delivery
      of Documents.** No later
      than five (5) Business Days after the Effective Date, Sellers shall provide,
      or
      otherwise make available, to Purchaser the following, to the extent such
      information and materials are in Sellers’ possession and available without
      immediate disclosure of the confidential nature of this Agreement:




(a)  True
      copies of all Business Agreements;




(b)  True
      copies of any existing surveys of any of the Facilities to the extent in the
      possession of Sellers; and




(c)  True
      copies of title commitments with respect to the Facilities, each of which has
      an
      effective date that is not earlier than seventy-five (75) days prior to the
      date
      of this Agreement.




Purchaser
      shall have the right to assume any such Business Agreements relating to a
      Facility pursuant to the General Assignment therefor so long as Purchaser
      provides written notice to Sellers no later than three (3) Business Days prior
      to the Closing Date that identifies those Business Agreements which Purchaser
      has elected to assume as of the Closing Date, and any Business Agreements not
      so
      assumed by Purchaser shall be terminated by Seller at its sole cost and
      expense.




4.4  **No
      New Business Agreements.** During
      the period commencing on the Effective Date and continuing through the earlier
      of the Closing Date or the prior termination of this Agreement, no Seller shall,
      without the prior written consent of Purchaser, which may be given or withheld
      in Purchaser’s sole and absolute discretion, enter into or modify any Business
      Agreements, or any agreements for the use and occupancy of any of the
      Facilities, that will survive the Closing.




**ARTICLE
      V**




**REPRESENTATIONS
      AND WARRANTIES OF PURCHASER**




Purchaser
      represents and warrants to Sellers as follows:




5.1  **Organization,
      Corporate Power and Authorization.** Purchaser is a corporation duly organized, validly existing and in good standing
      under the laws of the State of Washington and in each other jurisdiction in
      which it is lawfully required to qualify to conduct business. Purchaser has
      the
      corporate power and authority to execute, deliver and perform this Agreement
      and
      the other agreements, documents and certificates contemplated to be executed
      and
      delivered




**11**


by
      Purchaser pursuant to this Agreement. If the
      Emeritus Mortgage Loan is to be purchased as provided in Section
      2.3(a) hereof,
      the Mortgage Loan Assignee shall have the legal power and authority to execute,
      deliver and perform the Mortgage Loan Assignment.




5.2  **Authorization.** The
      execution, delivery and performance by Purchaser of this Agreement and the
      other
      agreements, documents and certificates contemplated to be executed and delivered
      by Purchaser pursuant to this Agreement have been duly authorized by all
      corporate action required by law. If the
      Emeritus Mortgage Loan is to be purchased as provided in Section
      2.3(a) hereof,
      the execution, delivery and performance by the Mortgage Loan Assignee of the
      Mortgage Assignment shall have been duly authorized by all action required
      by
      law.




5.3  **Non-Contravention.** The
      execution and delivery of this Agreement and the other agreements, documents
      and
      certificates contemplated to be executed and delivered by Purchaser pursuant
      to
      this Agreement do not, and the consummation by Purchaser of the transactions
      contemplated hereby and thereby shall not, violate any provision of its articles
      of incorporation or bylaws. If the
      Emeritus Mortgage Loan is to be purchased as provided in Section
      2.3(a) hereof,
      the execution and delivery of the Mortgage Assignment by the Mortgage Loan
      Assignee shall not, and the consummation by the Mortgage Loan Assignee of the
      transaction contemplated thereby shall not, violate any provision of the
      Mortgage Loan Assignee’s articles of incorporation, bylaws, partnership
      agreement, operating agreement or other instrument governing the organization
      or
      operation thereof.




5.4  **Validity.** This
      Agreement has been duly executed and delivered by Purchaser and constitutes
      the
      legal, valid and binding obligation of Purchaser, enforceable in accordance
      with
      its terms, subject to general equity principles and to applicable bankruptcy,
      insolvency, reorganization, moratorium and similar laws from time to time in
      effect affecting the enforcement of creditors’ rights. The Escrow Agreement and
      each General Assignment, Lease Termination and other agreement, document and
      certificate to be executed and delivered by Purchaser hereunder, shall, when
      so
      executed and delivered, constitute the legal, valid and binding obligation
      of
      Purchaser, enforceable in accordance with its terms, subject to general equity
      principles and to applicable bankruptcy, insolvency, reorganization, moratorium
      and similar laws from time to time in effect affecting the enforcement of
      creditors’ rights. If the
      Emeritus Mortgage Loan is to be purchased as provided in Section
      2.3(a) hereof,
      the Mortgage Assignment to be executed and delivered by the Mortgage Loan
      Assignee shall, when so executed and delivered, constitute the legal, valid
      and
      binding obligation of the Mortgage Loan Assignee, enforceable in accordance
      with
      its terms, subject to general equity principles and to applicable bankruptcy,
      insolvency, reorganization, moratorium and similar laws from time to time in
      effect affecting the enforcement of creditors’ rights.




5.5  **Litigation.** Purchaser is not a party to or subject to any judgment, decree or order entered
      in any lawsuit or proceeding brought by any Government or other party seeking
      to
      prevent the execution of this Agreement or the consummation of the transactions
      contemplated hereby.




**12**


5.6  **Tenant
      Leases.** Purchaser and ESC
      IV,
      L.P. (d/b/a Texas-ESC IV, L.P.), a Washington limited partnership, are the sole
      Tenants under the Tenant Leases. ESC
      IV,
      L.P. (d/b/a Texas-ESC IV, L.P.), a Washington limited partnership, is a
      wholly-owned subsidiary of Purchaser.




5.7  **AS
      IS, WHERE IS.** Purchaser acknowledges, represents and warrants that any information supplied
      or
      made available by Sellers, whether written or oral or in the form of maps,
      surveys, plats, environmental reports, engineering studies, inspection reports,
      plans, specifications or any other information whatsoever, without exception,
      pertaining to the Facilities, any and all records, rent rolls and other
      documents pertaining to the use or occupancy of the Facilities or any portion
      thereof, the income thereof, the costs and expenses of the maintenance thereof,
      and any and all other matters concerning the condition, suitability, integrity,
      marketability, compliance with Laws or other attributes of the Facilities or
      any
      part thereof, has been furnished to Purchaser solely to assist in Purchaser’s
      review and investigation of the Facilities. Further, Purchaser acknowledges
      that, as of the Effective Date, Purchaser is in possession of the Facilities
      and
      is familiar with the Facilities and has made all such independent investigations
      as Purchaser deems necessary or appropriate concerning the Facilities. AS SUCH,
      THE FACILITIES ARE SOLD BY SELLERS, AND ARE HEREBY ACCEPTED BY PURCHASER, AS
      IS,
      WHERE IS AND WITH ALL FAULTS, AND WITHOUT ANY REPRESENTATIONS OR WARRANTIES
      WHATSOEVER, EXPRESSED OR IMPLIED, WRITTEN OR ORAL. PURCHASER HEREBY
      UNCONDITIONALLY WAIVES AND EXCLUDES, AND SELLERS DISCLAIM, ALL REPRESENTATIONS
      AND WARRANTIES, INCLUDING ANY AND ALL EXPRESS OR IMPLIED REPRESENTATIONS AND
      WARRANTIES AS TO: (i) THE CONDITION OF THE FACILITIES OR ANY ASPECT THEREOF,
      INCLUDING ANY AND ALL EXPRESS OR IMPLIED REPRESENTATIONS AND WARRANTIES RELATED
      TO SUITABILITY FOR HABITATION, MERCHANTABILITY OR FITNESS FOR A PARTICULAR
      USE
      OR PURPOSE; (ii) THE NATURE OR QUALITY OF CONSTRUCTION, STRUCTURAL DESIGN OR
      ENGINEERING OF THE IMPROVEMENTS; (iii) THE QUALITY OF THE LABOR OR MATERIALS
      INCLUDED IN THE IMPROVEMENTS; (iv) THE SOIL CONDITIONS, DRAINAGE, TOPOGRAPHICAL
      FEATURES OR OTHER CONDITIONS OF THE FACILITIES OR WHICH AFFECT ANY THEREOF;
      (v)
      ANY FEATURES OR CONDITIONS AT OR WHICH AFFECT THE FACILITIES WITH RESPECT TO
      ANY
      PARTICULAR PURPOSE, USE, DEVELOPMENTAL POTENTIAL, CASH FLOW OR OTHERWISE; (vi)
      ALL EXPRESS OR IMPLIED REPRESENTATIONS OR WARRANTIES CREATED BY ANY AFFIRMATION
      OF FACT OR PROMISE OR BY ANY DESCRIPTION OF ANY OF THE FACILITIES; (vii) ANY
      ENVIRONMENTAL, GEOLOGICAL, METEOROLOGICAL, STRUCTURAL OR OTHER CONDITION OR
      HAZARD OR THE ABSENCE THEREOF HERETOFORE, NOW OR HEREAFTER AFFECTING IN ANY
      MANNER ANY OF THE FACILITIES; (viii) CLAIMS REGARDING DEFECTS WHICH WERE NOT
      OR
      ARE NOT DISCOVERABLE; (ix) PRODUCT LIABILITY CLAIMS IN ANY MANNER RELATED TO
      ANY
      OF THE FACILITIES; AND (x) ALL OTHER EXPRESS OR IMPLIED WARRANTIES AND
      REPRESENTATIONS BY SELLERS WHATSOEVER.




**13**


**ARTICLE
      VI**




**COVENANTS
      OF PURCHASER**




6.1  **Purchaser
      Performance.** After
      the Closing, Purchaser shall promptly pay as they become due and otherwise
      perform all obligations of Sellers under the Assumed Liabilities relating to
      the
      Facilities and otherwise perform and fulfill all other obligations with respect
      to the Facilities to the extent relating to the period on and after the
      Closing.




6.2  **Confidentiality.** Purchaser hereby agrees that any information, documents, financial records,
      architectural and construction plans or other materials provided to Purchaser
      pursuant to this Agreement shall be deemed to be confidential information and
      shall
      not be disclosed to others except (i) to Purchaser’s attorneys, accountants,
      investors, lenders and agents who have agreed to treat such information,
      documents, financial records, architectural and construction plans and other
      materials as confidential information and not to disclose any thereof to others and
      (ii)
      insofar as any such information,
      documents, financial records, architectural and construction plans or other
      materials are published or are a matter of public knowledge (other than as a result of the
      disclosure thereof by Purchaser or any of its attorneys, accountants, investors,
      lenders or agents) or is required to be disclosed by applicable
      Laws.




6.3  **Filings
      and Notices** . Within
      seven (7) Business Days after the Effective Date, Purchaser agrees to complete
      and submit such notices, filings and requests necessary to satisfy all
      Governmental Requirements imposed upon Purchaser as transferee of the
      Facilities.




**ARTICLE
      VII**




**CONDITIONS
      PRECEDENT**




7.1  **Purchaser’s
      Conditions.** Purchaser’s obligations under this Agreement are subject to the satisfaction of
      the following conditions:




(a)  All
      representations and warranties of Sellers in this Agreement shall be true in
      all
      material respects at and as of the Closing, and Sellers shall have delivered
      to
      Purchaser a certificate to such effect dated as of the Closing
      Date;




(b)  Sellers
      shall have performed and complied in all material respects with all of their
      obligations under this Agreement that are to be performed or complied with
      by
      Sellers prior to or on the Closing Date;




(c)  No
      Order
      shall then exist that enjoins or prevents the consummation any of the
      transactions contemplated hereby; and




(d)  Sellers
      shall have delivered or caused the delivery of the items required by Section
      2.4(a) hereof.




In
      the
      event that any of the conditions set forth in this Section
      7.1 are not
      satisfied, in the reasonable judgment of Purchaser, prior to the Closing,
      Purchaser shall have the option either (x) to waive such unsatisfied condition
      and proceed in accordance with the terms of this Agreement, or (y) to terminate
      this Agreement.




**14**


7.2  **Sellers’
      Conditions.** The
      obligations of Sellers hereunder are subject to satisfaction of each of the
      following conditions:




(a)  All
      representations and warranties of Purchaser in this Agreement shall be true
      in
      all material respects at and as of the Closing Date, and Purchaser shall have
      delivered to Sellers a certificate to such effect dated as of the Closing
      Date;




(b)  Purchaser
      shall have performed and complied in all material respects with its obligations
      under this Agreement to close the transactions contemplated hereby on the
      Closing Date;




(c)  Sellers
      shall have obtained all consents and approvals required for Seller to sell,
      transfer and assign the Facilities at the Closing;




(d)  All
      Governmental Requirements shall have been satisfied or obtained;




(e)  No
      Order
      shall then exist that enjoins or prevents the consummation any of the
      transactions contemplated hereby; and




(f)  Purchaser
      shall have delivered or caused the delivery of the items required by and
      performed its obligations under Section
      2.4(b) hereof.




In
      the
      event that any of the conditions set forth above are not satisfied, in the
      reasonable judgment of Sellers prior to the Closing, Sellers shall have the
      option either (x) to waive such unsatisfied condition and proceed in accordance
      with the terms of this Agreement, or (y) to terminate this
      Agreement.




**ARTICLE
      VIII**




**INDEMNIFICATION**




8.1  **Purchaser’s
      Claims** . Sellers
      shall indemnify, defend and hold Purchaser harmless from and against any costs
      (including reasonable attorneys’ fees and court costs and costs of
      investigation), losses, damages, liabilities or expenses incurred by Purchaser
      as a result of any claim for brokerage, finder’s fees or other commissions
      relating to this Agreement or any of the other agreements contemplated by this
      Agreement asserted by or on behalf of any broker or finder claiming to have
      been
      retained by Sellers or to have rendered services on Sellers’
behalf.




8.2  **Sellers’
      Claims** . Purchaser shall indemnify, defend and hold Sellers harmless from and against
      all
      costs (including reasonable attorneys’ fees and court costs and costs of
      investigation), losses, damages, liabilities or expenses incurred by Sellers
      as
      a result of:




(a)  The
      non-fulfillment of any covenant, agreement or obligation to be performed by
      Purchaser under or pursuant to this Agreement or any of the other agreements
      contemplated by this Agreement;




**15**


(b)  Any
      claim
      for brokerage, finder’s fees or other commissions relative to this Agreement or
      any of the other agreements contemplated by this Agreement asserted by or on
      behalf of any broker or finder claiming to have been retained by Purchaser
      or to
      have rendered services on Purchaser’s behalf;




(c)  Any
      litigation, proceedings, controversies or claims relating to a Facility and
      arising from, in connection with or incident to any occurrence on or subsequent
      to the Closing Date;




(d)  Any
      litigation, proceedings, controversies or claims arising or resulting from
      the
      occupancy, possession or operation of the Facilities by the Tenants under the
      Tenant Leases; and




(e)  All
      obligations, liabilities, damages, losses, claims, expenses and costs relating
      to the Facilities arising or accruing on or prior to the Closing Date that
      the
      Tenant under each of the Tenant Leases is or was obligated, liable or
      responsible to pay or perform under the terms of such Tenant Lease.




8.3  **Defense
      of Third Party Claims** .




(a)  In
      the
      event of any claim by a Person not a Party to this Agreement with respect to
      any
      matter to which Sections
      8.1 or 8.2 hereof
      relates, the indemnified party, after not less than thirty (30) days’ written
      notice to the indemnifying party containing the terms of the proposed
      settlement, may make settlement of such claim, and such settlement shall be
      binding on the Parties hereto for the purposes of this Section
      8.3 ;
      provided, however, that, if within such thirty (30) day period, the indemnifying
      party shall have requested the indemnified party to contest any such claim
      at
      the expense of the indemnifying party, the indemnified party shall promptly
      comply, and the indemnifying party shall have the right to direct the defense
      of
      such claim or any litigation based thereon at its own expense through counsel
      of
      its own choosing. The indemnified party also shall have the right to participate
      in the settlement of any such claim or in any such litigation so long as its
      participation is at its own expense and with the understanding that the
      indemnifying party may settle in its own discretion at its sole expense so
      long
      as any such settlement provides for a complete release and discharge of the
      indemnified party and does not impose any liabilities or obligations on the
      indemnified party. Any payment or settlement made by the indemnifying party
      in
      such contest, together with the total expense thereof, shall be binding on
      the
      indemnified party and the indemnifying party for the purposes of this Section
      8.3 .




(b)  In
      the
      event that any litigation, proceeding, controversy, claim or other matter is
      initiated by a third party against Purchaser or a Seller, and Purchaser or
      Sellers, as the case may be, are obligated or potentially obligated to
      indemnify, defend and hold the other harmless under this Article
      VIII ,
      the
      indemnified or potentially indemnified party will reasonably cooperate with
      the
      indemnifying or potentially indemnifying party with respect to the investigation
      and defense of such litigation, proceeding, controversy or claim or other
      matter.




**16**


8.4  **Survival
      of Representations and Warranties** .




(a)  The
      representations and warranties of Sellers contained in this Agreement or any
      certificate delivered by or on behalf of Sellers pursuant to this Agreement
      or
      in connection with the transactions contemplated herein shall survive for a
      period of twelve (12) months after the Closing Date.




(b)  The
      representations and warranties of Purchaser contained in this Agreement or
      any
      certificate delivered by or on behalf of Purchaser pursuant to this Agreement
      or
      in connection with the transactions contemplated herein shall survive the
      consummation of the transactions contemplated herein and shall continue in
      full
      force and effect for a period of twelve (12) months after the earlier of the
      (i)
      the Closing Date or (ii) the prior termination of this Agreement.




(c)  Purchaser
      may not assert any claim against Sellers for breach of any covenant contained
      in Article
      IV hereof
      and all such claims shall be deemed to be waived as of the Closing
      Date.




**ARTICLE
      IX**




**TERMINATION**




9.1  **Termination** .




(a)  This
      Agreement may be terminated as follows:




(i)  At
      any
      time by the mutual consent of Sellers and Purchaser;




(ii)  By
      Purchaser because of the failure of any condition set forth in Section
      7.1 hereof;




(iii)  By
      Purchaser if Sellers fails to comply with their obligations under this Agreement
      to close the transactions contemplated hereby;




(iv)  By
      Sellers because of the failure of any condition set forth in Sections
      7.2(c), (d) or (e) hereof;




(v)  By
      Sellers because of the failure of any condition set forth in Sections
      7.2(a), (b) or (f) hereof;
      and




(vi)  By
      Sellers if Purchaser fails to comply with its obligations under this Agreement
      to close the transactions contemplated hereby.




(b)  In
      the
      event of the termination of this Agreement pursuant to Section
      9.1(a) hereof
      because Sellers or Purchaser, as the case may be, shall have willingly failed
      to
      fulfill its obligations hereunder, the other Party shall be **** entitled
      to pursue, exercise and enforce any and all remedies, rights, powers and
      privileges available to it at law or in equity.




**17**


(c)  Section
      2.3 , Section
      6.2 , Article
      VIII and Sections
      11.1, 11.12 and 11.15 hereof
      shall survive the Closing or the prior termination of this
      Agreement.




**ARTICLE
      X**




**CASUALTY
      AND CONDEMNATION**




10.1  **Casualty
      Before Closing.** In
      the
      event of damage to or destruction of all or any portion of a Facility by fire
      or
      other casualty prior to the Closing, Sellers shall assign to Purchaser at the
      Closing all available casualty insurance proceeds to which Sellers are entitled
      under existing insurance coverages, and this Agreement shall remain in full
      force and effect as to such damaged Facility with no adjustment to the Purchase
      Price.




10.2  **Condemnation
      Before Closing.** In the
      event of a condemnation or other exercise of the power of eminent domain with
      respect to all or any portion of a Facility prior to the Closing that permits
      the Tenant of such affected Facility to terminate the Tenant Lease for such
      affected Facility, Purchaser shall have, as its sole and exclusive remedy,
      the
      option to exclude and eliminate such affected Facility from the terms of this
      Agreement and the Purchase Price shall be decreased by the value of such
      affected Facility, as reasonably determined by the applicable Seller and
      Purchaser, to reflect the exclusion of such affected Facility from the terms
      of
      this Agreement; provided, however, that this Agreement otherwise shall remain
      in
      full force and effect. As to any Facility affected by a condemnation or other
      exercise of the power of eminent domain prior to the Closing that is sold and
      transferred to Purchaser, the applicable Seller shall assign to Purchaser at
      the
      Closing its right to any award resulting from such condemnation or other
      exercise of the power of eminent domain and the Purchase Price shall not be
      adjusted. Except
      as described in the first sentence of this Section
      10.2 ,
      no
      condemnation or other exercise of the power of eminent domain with respect
      to
      all or any portion of a Facility prior to the Closing shall affect the
      obligations of Purchaser hereunder with respect to any Facility affected
      thereby.




**ARTICLE
      XI**




**MISCELLANEOUS**




11.1  **Expenses** . Each
      Party shall pay its own legal, accounting and similar expenses incidental to
      the
      preparation of this Agreement, the implementation of the provisions of this
      Agreement, and the consummation of the transactions contemplated hereby. If
      Purchaser elects to obtain owner’s title insurance policies for the Facilities,
      Sellers shall pay the premiums for obtaining such owner’s title insurance
      policies in an aggregate amount not exceeding the Purchase Price (without
      endorsements thereto or affirmative coverages thereunder). Purchaser shall
      pay,
      or reimburse Sellers for, all costs of obtaining title policy endorsements
      and
      affirmative coverages, all transfer, intangible, recording taxes and other
      fees
      with respect to the transfer of the Facilities, the costs of obtaining any
      surveys (and updates thereof), environmental investigations, studies, reports
      and all other costs of any investigation of the Facilities by Purchaser,
      one-half of any escrow fee charged by the Title Company, any costs associated
      with the transfer of any Permits and Warranties, the cost of obtaining other
      licenses, permits or approvals that do not constitute Permits and Warranties
      and
      the costs and expenses incurred in




**18**


connection
      with the satisfaction of and compliance with the Governmental Requirements.
      Sellers shall pay one-half of any escrow fee charged by the Title
      Company.




11.2  **Contents
      of Agreement; Parties in Interest;** ***etc*** **.** This
      Agreement sets forth the entire understanding of the Parties with respect to
      the
      transactions contemplated hereby and constitutes a complete statement of the
      terms of such transactions. This Agreement shall not be amended or modified
      except by written instrument duly executed by all of the Parties. Any previous
      agreements and understandings between or among the Parties regarding the subject
      matter hereof, whether written or oral, are superseded by this Agreement. No
      Party has been induced to enter into this Agreement by any statement,
      representation or warranty of the other Party not set forth in this Agreement,
      and no Party has relied upon any statement, representation or warranty of the
      other Party not set forth in this Agreement




11.3  **Assignment
      and Binding Effect.**  Purchaser
      shall not have the right to assign its rights hereunder unless Purchaser
      receives the prior written consent of Sellers to any such assignment, which
      consent Sellers may grant or without in their sole discretion; provided,
      however, that Purchaser shall have the right to assign this Agreement to one
      or
      more wholly owned subsidiaries of Purchaser; provided, further, however, that,
      regardless of any assignment by Purchaser of any of its rights hereunder,
      Purchaser shall remain responsible and liable for the payment and performance
      of
      all of its liabilities and obligations as set forth herein. Subject to the
      foregoing, all of the terms and provisions of this Agreement shall be binding
      upon and inure to the benefit of and be enforceable by the successors and
      permitted assigns of Sellers and Purchaser.




11.4  **Notices** .
      A ll
      notices, requests and other communications under this Agreement shall be in
      writing and shall be either (a) delivered in person, (b) delivered by a
      recognized delivery service taking a receipt upon delivery or (c) sent by
      facsimile transmission and addressed as follows:




If
      intended for Sellers:   c/o
      Healthcare Realty Trust Incorporated




3310
      West
      End Avenue, Suite 700




Nashville,
      Tennessee 37203




Attn:
      General Counsel




Phone:
      (615) 269-8175




Facsimile:
      (615) 463-7739




With
      a
      copy to:    Baker,
      Donelson, Bearman, Caldwell & Berkowitz, P.C.




211
      Commerce Street, Suite 1000




Nashville,
      Tennessee 37201




Attn:
      David J. White.




Phone:
      (615) 726-5776




Facsimile:
      (615) 744-5776




**19**


If
      intended for Purchaser:   Emeritus
      Corporation


3131
      Elliott Avenue, Suite 500


Seattle,
      Washington 98121


Attn:
      Eric Mendelsohn


Phone:
      (206) 301-4493


Facsimile:
      (206) 357-7388





With
      a
      copy to:    Pircher,
      Nichols & Meeks


900
      North
      Michigan Avenue, Suite 1050


Chicago,
      Illinois 6011


Attn:
      Real Estate Notices (JDL/EF)


Phone:
      (312) 915-3112


Facsimile:
      (3120 915-3348




or
      at
      such other address, and to the attention of such other person, as a Party shall
      give notice as herein provided. A notice, request and other communication shall
      be deemed to be duly received if delivered in person or by a recognized delivery
      service, when left at the address of the recipient, and, if sent by facsimile
      transmission, upon receipt by the sender of an acknowledgment or transmission
      report generated by the machine from which the facsimile transmission was sent
      indicating that the facsimile was sent in its entirety to the recipient’s
      facsimile number; provided, however, that if a notice, request or other
      communication is delivered or served on a day which is not a Business Day,
      or
      after 5:00 p.m. on any Business Day at the recipient’s location, such notice or
      communication shall be deemed to be duly received by the recipient at 9:00
      a.m.
      on the first Business Day thereafter.




11.5  **Applicable
      Laws** .
      This
      Agreement and the transactions contemplated hereby shall be governed by and
      construed in accordance with the Laws of the State of Tennessee.




11.6  **Exhibits.** All
      Exhibits referred to herein are intended to be and hereby are specifically
      made
      a part of this Agreement.




11.7  **Severability.** Any
      provision of this Agreement that is invalid or unenforceable in any jurisdiction
      shall be ineffective to the extent of such invalidity or unenforceability
      without invalidating or rendering unenforceable the remaining provisions hereof,
      and any such invalidity or unenforceability in any jurisdiction shall not
      invalidate or render unenforceable such provision in any other
      jurisdiction.




11.8  **Public
      Announcements.**  No
      Party
      to this Agreement shall make, or cause to be made, any press release or public
      announcement with respect to this Agreement or the transactions contemplated
      hereby or otherwise communicate with any news media without the prior written
      consent of the other Parties, and the Parties shall cooperate as to the timing
      and contents of any such press release or public announcement; provided,
      however, that, to the extent any Party is advised by legal counsel that it
      is
      required by Laws or the rules and regulations of any applicable securities
      exchange to make such a press release or public announcement, such Party may
      issue such a release or make such an announcement, the contents of which shall
      be reasonably satisfactory to the other Parties.




**20**


11.9  **Construction.** The
      Parties hereto have participated jointly in the negotiation and drafting of
      this
      Agreement. In the event that any ambiguity or question of intent or
      interpretation arises, this Agreement shall be construed as if drafted jointly
      by the Parties hereto and no presumption or burden of proof shall arise by
      virtue of the authorship of any of the provisions of this
      Agreement.




11.10  **Time.** Time is
      and shall be of the essence of this Agreement.




11.11  **Days
      for Performance.** If the
      date for the performance of any obligation or notification hereunder falls
      upon
      a day that is not a Business Day, then such date shall be read and construed
      for
      all purposes herein to mean the next day which is a Business Day.




11.12  **Delivery
      of Due Diligence Materials.** In the
      event that Purchaser shall terminate this Agreement as permitted herein,
      Purchaser shall provide, or cause to be provided, to Sellers, within five (5)
      Business Days after such termination and to the extent such items are in the
      possession of Purchaser or its attorneys, original copies of all surveys,
      original copies of all environmental reports, appraisals, studies and
      investigations prepared by or at the request of Purchaser with respect to the
      Facilities, and copies of all other reports, searches, investigations, studies
      and materials prepared by or at the request of Purchaser with respect to the
      Facilities, excluding any internal memoranda and attorney work product. Upon
      the
      request of Sellers, Purchaser shall consent to and reasonably cooperate with
      Sellers in any request from Sellers to any preparer of any such surveys,
      reports, appraisals, searches, studies, investigations or materials to provide
      to Sellers written confirmation from such preparer that is addressed to Sellers
      in form and substance reasonably satisfactory to Sellers and stating that its
      surveys, reports, appraisals, searches, studies, investigations or materials
      are
      certified to Sellers and Sellers are entitled to rely thereon.




11.13  **Counterparts** .
      This
      Agreement may be executed in multiple counterparts, each of which shall be
      deemed an original and all of which, together upon full execution, shall
      constitute one and the same instrument.




11.14  **No
      Recording** .
      Purchaser shall not record this Agreement or any short form, memorandum or
      notice thereof in any public or governmental office.




11.15  **Attorneys’
      Fees** .
      In the
      event of any litigation between the Parties under this Agreement, including
      with
      respect to the enforcement of any right or provision herein, the prevailing
      Party, in addition to those damages and other awards given such Party therein,
      shall be entitled to reasonable attorneys’ fees and court costs at all trial and
      appellate levels.




11.16  **Waiver
      of Jury Trial** .
      TO THE
      EXTENT NOT PROHIBITED BY APPLICABLE LAWS WHICH CANNOT BE WAIVED, EACH OF THE
      PARTIES HERETO (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE) HEREBY WAIVES
      ANY
      RIGHT TO TRIAL BY JURY IN ANY FORUM WITH RESPECT TO ANY ISSUE OR ACTION, CLAIM,
      CAUSE OF ACTION OR SUIT (IN CONTRACT, TORT OR OTHERWISE), INQUIRY, PROCEEDING
      OR
      INVESTIGATION ARISING OUT OF OR BASED UPON THIS AGREEMENT OR THE SUBJECT MATTER
      HEREOF OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE TRANSACTIONS




**21**


CONTEMPLATED
      HEREBY, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING. PURCHASER
      ACKNOWLEDGES THAT IT HAS BEEN INFORMED BY SELLERS THAT THIS SECTION
      11.16 CONSTITUTES A MATERIAL INDUCEMENT UPON WHICH SELLERS ARE RELYING AND WILL RELY
      IN ENTERING INTO THIS AGREEMENT AND ANY OTHER AGREEMENTS RELATING HERETO OR
      CONTEMPLATED HEREBY. ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A
      COPY
      OF THIS SECTION
      11.16 WITH ANY
      COURT AS WRITTEN EVIDENCE OF THE CONSENT OF EACH SUCH PARTY TO THE WAIVER OF
      ITS
      RIGHT TO TRIAL BY JURY.




**22**


**IN
      WITNESS WHEREOF,** the
      Parties hereto have executed this Agreement to be effective as of the Effective
      Date.




**PURCHASER:**




**EMERITUS
      CORPORATION** ,
      a


Washington
      corporation








By:   
       /s/
      Eric Mendelsohn


Title:     
      Director
      of Real Estate and Legal Affairs


Date:
      March
      8 ,
      2007









**SELLERS** :




**HR
      ACQUISITION I CORPORATION** ,


a
      Maryland corporation








By:  /s/
      James C. Douglas


Title:
      Vice
      President


Date:
      March
      7 ,
      2007









**HR
      ACQUISITION OF**


**PENNSYLVANIA,
      INC.** ,
      a
      Pennsylvania


corporation








By:
/s/
      James C. Douglas


Title:
      Vice
      President


Date:
      March
      7 ,
      2007









**23**


**HR
      ACQUISITION OF SAN ANTONIO,**


**LTD.** ,
      an
      Alabama limited partnership





By:  **HEALTHCARE
      ACQUISITION**


**OF
      TEXAS, INC.** ,
      an
      Alabama


corporation,
      General Partner








By:
/s/
      James C. Douglas


Title: 
      Vice
      President


Date:
      March
      7 ,
      2007









**HRT
      HOLDINGS, INC.** ,
      a
      Delaware


corporation








By:
/s/
      James C. Douglas


Title:
      Vice
      President


Date:
      March
      7 ,
      2007




The
      undersigned hereby executes this Agreement solely for the purpose of
      acknowledging its waiver of any notice of prepayment requirements set forth
      in
      the Emeritus Mortgage Loan and the Term Mortgage Loan.





**HEALTHCARE
      REALTY TRUST INCORPORATED** ,
      a
      Maryland


corporation








By:
/s/
      James C. Douglas


Title:
      Vice
      President


Date:
      March
      7 ,
      2007







**24**


**EXHIBITS**






**Exhibits**
              
              **Title**A
              
              Form
                  of Bill of SaleB
              
              Form
                  of Special Warranty DeedC
              
              Form
                  of Escrow AgreementD
              
              List
                  of FacilitiesE
              
              Form
                  of General AssignmentF
              
              Form
                  of Lease TerminationG-1
              
              Emeritus
                  Mortgage LoanG-2
              
              Term
                  Mortgage LoanH
              
              List
                  of Tenant LeasesI
              
              Form
                  of Title AffidavitJ
              
              Form
                  of Mortgage Assignment









**A-1**


**Exhibit
      A**


**to
      Agreement of Sale and Purchase**





Form
      of
      Bill of Sale





**BILL
      OF SALE**





**KNOW
      ALL MEN BY THESE PRESENTS** that the
      undersigned, **______________________________** ,
      a
      ____________________________ (the “Seller”), for and in consideration of the sum
      of One and No/100 Dollars ($1.00) and other good and valuable consideration,
      the
      receipt and sufficiency of which are hereby acknowledged, does hereby agree
      as
      follows:





Seller
      hereby grants, bargains, sells, transfers, sets over and delivers to **_______________________________** ,
      a
      __________________________ (the
“Buyer”), all of Seller’s right, title and interest, if any, in and to the
      property described in **Exhibit
      A** hereto
      (the “Personal Property”) .





**SELLER
      MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO
      THE
      PERSONAL PROPERTY, INCLUDING, WITHOUT LIMITATION, THE HABITABILITY, CONDITION
      OR
      FITNESS THEREOF FOR ANY PARTICULAR USE OR PURPOSE.**  **BUYER
      AGREES THAT THE PERSONAL PROPERTY IS CONVEYED BY SELLER AND ACCEPTED BY BUYER
      IN
      AN “AS IS, WHERE IS” CONDITION, AND SELLER SPECIFICALLY DISCLAIMS ALL WARRANTIES
      OF MERCHANTABILITY OR OF FITNESS FOR A PARTICULAR PURPOSE.**





Executed
      as of the _____ day of ____________, 2007.





**_________________________** ,
      a


_________________________








By:


Name:


Title:


**A-1**


Exhibit
      A


to
      Bill
      of Sale





Personal
      Property





T he
      following described property to the extent such property is located on the
      real property
      described in Exhibit
      B hereto
      and owned by Seller: all tangible personal property, including, without
      limitation, equipment, appliances, machinery, furniture, furnishings, signage
      and fixtures.


**A-2**


Exhibit
      B


to
      Bill
      of Sale





Real
      Property





Description
      of Real Property from Special


[or
      Limited] Warranty Deed from Seller to Buyer





**A-3**


**Exhibit
      B**


**to
      Agreement of Sale and Purchase**





Form
      of
      Special Warranty Deed





This
      instrument was prepared by:











**SPECIAL
      [OR LIMITED] WARRANTY DEED**





**THIS
      SPECIAL [OR LIMITED] WARRANTY DEED** is made
      as of the ____ day of _____________, 2007, from _______________________________,
      a ________________________________ (the “Grantor”), to
      _________________________________, a ________________________ (the “Grantee”),
      with an address of ______________________________________________.





**W
      I T N E S S E T H:**





That
      Grantor, for and in consideration of the sum of Ten and No/100 Dollars ($10.00)
      and other good and valuable consideration, the receipt and sufficiency of which
      are hereby acknowledged by Grantor, has granted, bargained, sold, aliened,
      conveyed and confirmed, and does hereby grant, bargain, sell, alien, convey
      and
      confirm, to Grantee, and Grantee’s successors and assigns forever, the real
      property located in _________________________ and more particularly described
      in Exhibit
      A hereto
      (the “Property “), subject to the following (the “Permitted Encumbrances”): (a) all
      liens
      for ad valorem, real property and personal property taxes, all general and
      special private and public assessments, all other property taxes, and all
      similar obligations relating to the Property, not yet due and payable; (b)
      easements, restrictions, covenants and other such encumbrances of record as
      of
      the date hereof; (c) any state of facts that would be disclosed by an accurate
      survey or independent inspection of the property conveyed hereby; (d) all
      applicable building and zoning ordinances, moratoria,
      initiatives, referenda, ordinances, rules, regulations, standards, orders and
      other governmental requirements, including those relating to the environment,
      health and safety, disabled or handicapped persons, and as applicable, to the
      licensing of the use of the improvements on the Property ,
      regulations and restrictions of any federal, state, local or municipal
      government or any department, commission, board, bureau, agency,
      instrumentality, unit or taxing authority thereof; and (e) the rights of
      residents and licensed occupants of the improvements located on the
      Property;




Together
      with all of Grantor’s right, title and interest, if any, in and to rights,
      privileges, easements, servitudes, rights-of-way and appurtenances belonging
      or
      appurtenant to the Property and all improvements on the Property.




Notwithstanding
      any reference to acreage or square footage contained in the description of
      the
      property conveyed hereby, Grantor makes no representation or warranty, express
      or




**B-1**


implied,
      as to the exact amount of acreage or square footage in the property conveyed
      hereby. Grantor further makes no representation or warranty, express or implied,
      with respect to the ownership of oil, gas or other minerals located on, under
      or
      within the property conveyed hereby.




This
      is
      improved property known as ___________________________________.




**TO
      HAVE AND TO HOLD** the
      Property, together with all and singular the rights, privileges, easements,
      servitudes, rights-of-way and appurtenances belonging or appurtenant to the
      Property, and the rents, issues and profits thereof, and all the estate, right,
      title, interest, property, claim and demand whatsoever of Grantor, in law,
      equity or otherwise, and all improvements on the Property, to Grantee, and
      Grantee’s successors and assigns forever, subject to the Permitted
      Encumbrances.




Grantor
      does hereby bind itself, and its successors and assigns, to warrant and forever
      defend all and singular the Property, subject to the terms of this Special
      [or
      Limited] Warranty Deed, unto Grantee and unto Grantee’s successors and assigns,
      against every person whomsoever lawfully claiming or to claim the Property
      or
      any part thereof by, through or under Grantor, but not otherwise, subject to
      the
      Permitted Encumbrances.




**EXCEPT
      FOR THE SPECIAL [OR LIMITED] WARRANTY OF TITLE CONTAINED HEREIN, GRANTOR MAKES
      NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE
      PROPERTY, INCLUDING, WITHOUT LIMITATION, THE CONDITION OF THE PROPERTY
      (INCLUDING, WITHOUT LIMITATION, IMPROVEMENTS) CONVEYED HEREBY, INCLUDING,
      WITHOUT LIMITATION, THE HABITABILITY, CONDITION OR FITNESS THEREOF FOR ANY
      PARTICULAR USE OR PURPOSE OR THE ENVIRONMENTAL CONDITION OF THE PROPERTY
      (INCLUDING, WITHOUT LIMITATION, IMPROVEMENTS) CONVEYED HEREBY. GRANTEE AGREES
      THAT THE PROPERTY (INCLUDING, WITHOUT LIMITATION, IMPROVEMENTS) CONVEYED HEREBY
      IS CONVEYED BY GRANTOR AND ACCEPTED BY GRANTEE IN AN “AS-IS, WHERE-IS”
CONDITION.**







**B-2**


[PENNSYLVANIA
      NOTICES TO BE PROVIDED AS REQUIRED:




NOTICE—THIS
      DOCUMENT DOES NOT SELL, CONVEY, TRANSFER, INCLUDE OR INSURE THE TITLE TO THE
      COAL AND RIGHT OF SUPPORT UNDERNEATH THE SURFACE LAND DESCRIBED OR REFERRED
      TO
      HEREIN, AND THE OWNER OR OWNERS OF SUCH COAL HAVE THE COMPLETE LEGAL RIGHT
      TO
      REMOVE ALL OF SUCH COAL AND, IN THAT CONNECTION, DAMAGE MAY RESULT TO THE
      SURFACE OF THE LAND AND ANY HOUSE, BUILDING OR OTHER STRUCTURE ON OR IN SUCH
      LAND. THE INCLUSION OF THIS NOTICE DOES NOT ENLARGE, RESTRICT OR MODIFY ANY
      LEGAL RIGHTS OR ESTATES OTHERWISE CREATED, TRANSFERRED, EXCEPTED OR RESERVED
      BY
      THIS INSTRUMENT.




[This
      notice is set forth in the manner provided in 52 P.S. §1551 and is not intended
      as notice of unrecorded instruments, if any.]




Notice THE
      UNDERSIGNED, AS EVIDENCED BY THE SIGNATURE TO THIS NOTICE AND THE ACCEPTANCE
      AND
      RECORDING OF THIS DEED, IS FULLY COGNIZANT OF THE FACT THAT THE UNDERSIGNED
      MAY
      NOT BE OBTAINING THE RIGHT OF PROTECTION AGAINST SUBSIDENCE AS TO THE PROPERTY
      HEREIN CONVEYED RESULTING FROM COAL MINING OPERATIONS AND THAT THE PURCHASED
      PROPERTY, HEREIN CONVEYED, MAY BE PROTECTED FROM DAMAGE DUE TO MINE SUBSIDENCE
      BY A PRIVATE CONTRACT WITH THE OWNERS OF THE ECONOMIC INTEREST IN THE
      COAL.




[This
      notice is provided to comply with 52 P.S. §1406.14.]




**_________________________** ,
      a


_____________________________








By:


Name:


Title:







[INSERT
      APPROPRIATE ACKNOWLEDGEMENT FORM]]





**B-3**


**IN
      WITNESS WHEREOF** ,
      Grantor
      has caused this Special [or Limited] Warranty Deed to be duly executed and
      delivered as of the day and year first above written.





**_________________________** ,
      a


_____________________________








By:


Name:


Title:





[INSERT
      APPROPRIATE ACKNOWLEDGEMENT


FORM
      AND
      RECORDING REQUIREMENTS]


**B-4**


Exhibit
      A


to
      Special [or Limited] Warranty Deed





Description
      of Property from Recorded Vesting Deed(s) of Grantor





**B-5**


**Exhibit
      C**


**to
      Agreement of Sale and Purchase**





Form
      of
      Escrow Agreement





**ESCROW
      AGREEMENT**





**THIS
      ESCROW AGREEMENT** (the
“Agreement”) is made as of the ____ day of _______________, 2007, by and among the
      entities that have executed this Agreement on the signature pages hereto as
      sellers (individually, a “Seller” and collectively, the “Sellers”) ,
      and **EMERITUS
      CORPORATION,** a
      Washington corporation, as purchaser (the
      “Purchaser”), and **FIDELITY
      NATIONAL TITLE INSURANCE COMPANY** , a
      California corporation (the “Escrow Agent”).





**W
      I T N E S S E T H** **:**





**WHEREAS** ,
      pursuant to the Agreement of Sale and Purchase, dated as of ___________, 2007,
      as hereafter amended or modified by the parties thereto (the “Purchase
      Agreement”), by and among Sellers and Purchaser, Sellers have agreed to sell and
      Purchaser has agreed to purchase certain assets of Sellers as set forth therein;
      and





**WHEREAS** ,
      pursuant to the Purchase Agreement, Purchaser must deposit the Earnest Money
      (as
      herein defined) with Escrow Agent to be held and paid in accordance with the
      Purchase Agreement and this Agreement;





**NOW,
      THEREFORE** ,
      for and
      in consideration of the above and foregoing premises and the mutual covenants
      and agreements set forth hereinbelow, together with other good and valuable
      consideration, the receipt and sufficiency of which are hereby acknowledged
      by
      the parties hereto, Sellers, Purchaser and Escrow Agent hereby agree as
      follows:





1.  Escrow .
      Purchaser hereby delivers to Escrow Agent the sum of One
      Million Three Hundred Fourteen Thousand Two Hundred Seventy-Two and No/100
      Dollars ($1,314,272.00) (the
      “Earnest Money”) to be held by Escrow Agent in accordance with the terms of the
      Purchase Agreement and this Agreement. Escrow Agent shall deposit the Earnest
      Money in an interest-bearing account that is maintained at depository
      institution reasonably acceptable to Sellers and Purchaser.





2.  Purpose
      of Escrow .
      Purchaser has deposited the Earnest Money with Escrow Agent to comply with
      Purchaser’s obligations pursuant to Section
      2.1 of the
      Purchase Agreement.





3.  Disbursement
      of Earnest Money .
      Subject
      to the terms of the Purchase Agreement and this Agreement, Escrow Agent shall
      disburse the Earnest Money pursuant to the terms of the Purchase Agreement,
      including, but not limited to, Section
      2.1 of the
      Purchase Agreement. Within two (2) Business Days (the term “Business Day” having
      the same meaning herein as in the Purchase Agreement) after receipt of written
      notification from Sellers (the “Sellers’ Default Notice”) that


**C-1**


Purchaser
      has breached or defaulted under the Purchase Agreement and Sellers are entitled,
      pursuant to the Purchase Agreement, to disbursement of the Earnest Money (or
      so
      much thereof not previously disbursed pursuant to the terms of the Purchase
      Agreement), Escrow Agent shall send to Purchaser a written notification (the
      “Purchaser’s Notice”) advising Purchaser that Escrow Agent intends to disburse
      the Earnest Money (or so much thereof not previously disbursed pursuant to
      the
      terms of the Purchase Agreement) to Sellers no earlier than two (2) Business
      Days after Purchaser’s receipt of such written notice from Escrow Agent. Sellers
      also shall provide a copy of Sellers’ Default Notice to Purchaser. Escrow Agent
      shall be entitled to rely, for purposes of this Agreement, upon any statement
      delivered by Sellers or Purchaser pursuant to this Section
      3 .
      Escrow
      Agent shall disburse the Earnest Money (or so much thereof not previously
      disbursed pursuant to the terms of the Purchase Agreement) no earlier than
      two
      (2) Business Days after Purchaser’s receipt of Purchaser’s Notice, provided,
      however, that Purchaser has not notified Escrow Agent that it disputes Sellers’
Default Notice. In the event of any disputes among the parties hereto in
      connection with the Earnest Money or this Agreement, Escrow Agent shall refuse
      to comply with the claims and demands by Sellers or Purchaser so long as the
      dispute shall then continue. In so refusing, Escrow Agent shall make no delivery
      or other disposition of the Earnest Money, except as permitted under Section
      6(a) below,
      and, in so doing, Escrow Agent shall not be or become liable in any way to
      any
      person for its failure or refusal to comply with conflicting or adverse demands
      and it shall continue to refrain from acting and refuse to act until it receives
      authorization as follows:





(a)
            Written
                authorization to act that is executed by Sellers and Purchaser;
                or





(b)
            A
                certified and file-stamped copy of a court order resolving the
                disagreement or directing specific
                action.





Upon
      the
      receipt of either such document, Escrow Agent shall promptly act according
      to
      its terms.





4.  Termination
      of Escrow .
      This
      Agreement shall terminate upon the disbursement of all of the Earnest Money
      pursuant to the terms of the Purchase Agreement or this Agreement. Interest
      that
      accrues on the Earnest Money shall be combined with and treated as a part of
      the
      Earnest Money. In the event all or a portion of the Earnest Money is paid to
      Sellers pursuant to this Agreement, any interest on the Earnest Money in the
      possession of Escrow Agent at the time such Earnest Money is paid to Sellers
      shall be paid to Sellers. Interest on any portion of the Earnest Money that
      is
      to be refunded to Purchaser pursuant to the Purchase Agreement shall be paid
      to
      Purchaser.





5.  No
      Representations by Escrow Agent .
      Escrow
      Agent shall not be liable for the performance or non-performance or delay in
      performance of any obligation of Sellers, Purchaser or any other person or
      entity.





6.  Escrow
      Agent .
      The
      escrow of the Earnest Money shall be subject to the following
      provisions:





(a)  Duties
      and Authorization .
      The
      payment of the Earnest Money to Escrow Agent is for the accommodation of Sellers
      and Purchaser. The duties of Escrow Agent shall


**C-2**


be
                determined solely by the express provisions of this Agreement. Sellers
                and
                Purchaser authorize Escrow Agent, without creating any obligation
                on the
                part of Escrow Agent, in the event this Agreement or the Earnest
                Money
                become involved in litigation, to deposit the Earnest Money with
                the clerk
                of the court in which the litigation is pending and thereupon Escrow
                Agent
                shall be fully relieved and discharged of any further responsibility
                under
                this Agreement. Sellers and Purchaser also authorize Escrow Agent,
                if it
                is threatened with litigation, to interplead all interested parties
                in any
                court of competent jurisdiction and to deposit the Earnest Money
                with the
                clerk of the court and thereupon Escrow Agent shall be fully relieved
                and
                discharged of any further responsibility
                hereunder.





(b)  Liability .
      Escrow
      Agent shall not be liable for any mistake of fact or error of judgment or any
      acts or omissions of any kind unless caused by its willful misconduct or
      negligence. Escrow Agent shall be entitled to rely on any instrument or
      signature reasonably believed by it to be genuine and may assume that any person
      purporting to give any written notice or instruction in connection with this
      Agreement is duly authorized to do so by the party on whose behalf such writing,
      notice or instruction is given.





(c)  Indemnification
      of Escrow Agent .
      Sellers
      and Purchaser will jointly and severally indemnify Escrow Agent from and hold
      it
      harmless against any loss, liability or expense incurred without negligence
      or
      willful misconduct on the part of Escrow Agent arising out of or in connection
      with the acceptance of, or the performance of its duties under, this Agreement,
      as well as the costs and expenses of defending against any claim or liability
      arising under this Agreement. This Section
      6(c) shall
      survive the termination of this Agreement.





7.  Counterparts .
      This
      Agreement may be executed in several counterparts, each of which, when executed,
      shall be deemed to be an original, and all such counterparts shall together
      constitute one and the same instrument.





8.  Notices .
      All
      notices required or permitted to be given hereunder shall be in writing and shall
      be
      either (a) delivered in person, (b) delivered by a recognized delivery service
      taking a receipt upon delivery or (c) sent by facsimile transmission and
      addressed as follows:





To
      Sellers:     Healthcare
      Realty Trust Incorporated




3310
      West
      End Avenue, Suite 700




Nashville,
      Tennessee 37203




Attn:
      General Counsel




Facsimile:
      (615) 463-7739




with
      a
      copy to:    Baker,
      Donelson, Bearman, Caldwell & Berkowitz, P.C.




211
      Commerce Street, Suite 1000




Nashville,
      Tennessee 37201




Attn:
      David J. White




Facsimile:
      (615) 744-5776






**C-3**


To
      Purchaser:    Emeritus
      Corporation


3131
      Elliott Avenue, Suite 500


Seattle,
      Washington 98121


Attn:
      Eric Mendelsohn


Facsimile:
      (206) 357-7388





with
      a
      copy to:    Pircher,
      Nichols & Meeks


900
      North
      Michigan Avenue, Suite 1050


Chicago,
      Illinois 6011


Attn:
      Real Estate Notices (JDL/EF)


Facsimile:
      (312) 915-3348





To
      Escrow
      Agent:   Fidelity
      National Title Insurance Company


7130
      Glen
      Forest Drive, Suite 403


Richmond,
      Virginia 23226


Attn:
      Melodie T. Rochelle


Facsimile:
      (804) 673-3308





or
      at
      such other address, and to the attention of such other person, as the parties
      hereto shall give notice as herein provided. A notice, request and other
      communication shall be deemed to be duly received if delivered in person or
      by a
      recognized delivery service, when left at the address of the recipient and
      if
      sent by facsimile transmission, upon receipt by the sender of an acknowledgment
      or transmission report generated by the machine from which the facsimile
      transmission was sent indicating that the facsimile was sent in its entirety
      to
      the recipient’s facsimile number; provided, however, that if a notice, request
      or other communication is delivered or served on a day which is not a Business
      Day, or after 5:00 p.m. on any Business Day at the recipient’s location, such
      notice or communication shall be deemed to be duly received by the recipient
      at
      9:00 a.m. on the first Business Day thereafter.





**C-4**


**IN
      WITNESS WHEREOF** ,
      this
      Agreement has been executed as of the date and year first set forth
      above.





**SELLERS:**





**HR
      ACQUISITION I CORPORATION** ,


a
      Maryland corporation








By:


Title:




**HR
      ACQUISITION OF**


**PENNSYLVANIA,
      INC.** ,
      a
      Pennsylvania


corporation








By:


Title:




**HR
      ACQUISITION OF SAN ANTONIO,**


**LTD.** ,
      an
      Alabama limited partnership





By:  **HEALTHCARE
      ACQUISITION**


**OF
      TEXAS, INC.** ,
      an
      Alabama


corporation,
      General Partner








By:


Title:




**HRT
      HOLDINGS, INC.** ,
      a
      Delaware


corporation








By:


Title:




**C-5**


**PURCHASER:**





**EMERITUS
      CORPORATION** ,
      a


Washington
      corporation








By:


Title:




**ESCROW
      AGENT:**





**FIDELITY
      NATIONAL TITLE INSURANCE COMPANY**








By:


Title:







**C-6**


**Exhibit
      D**


**to
      Agreement of Sale and Purchase**





List
      of
      Facilities





1.  Loyalton
      at Bloomsburg


420
      Shaffer Road


Bloomsburg,
      PA





2.  Loyalton
      at Danville


432
      Hermitage Drive


Danville,
      VA





3.  Loyalton
      at Harrisburg


3560
      N.
      Progress Ave.


Harrisburg,
      PA





4.  Loyalton
      at Harrisonburg


2101
      Deryerle Ave.


Harrisonburg,
      VA





5.  Loyalton
      at Creekview


1100
      Grandon Way


Mechanicsburg,
      PA





6.  Loyalton
      at Greensboro


3823
      Lawndale Drive


Greensboro,
      NC





7.  Loyalton
      at Ravenna


141
      Chestnut Hill Drive


Ravenna,
      OH





8.  Loyalton
      at Roanoke


3585
      Brambleton Ave.


Roanoke,
      VA





9.  Kingsley
      Place of Henderson


100
      Richardson Drive,


Henderson,
      TX





10.  Kingsley
      Place of McKinney


1650
      S.
      Stonebridge


McKinney,
      TX


**D-1**





11.  Kingsley
      Place Medical Oakwell


9000
      Floyd Curl Road


San
      Antonio, TX





12.  Kingsley
      Place of Oakwell


1970
      Oakwell Farms Parkway


San
      Antonio, TX








**D-2**


**Exhibit
      E**


**to
      Agreement of Sale and Purchase**





Form
      of
      General Assignment





**GENERAL
      ASSIGNMENT**





**THIS
      GENERAL ASSIGNMENT** (this
“Assignment”) is made and entered into as of the ____ day of __________________,
      2007, by and between ________________________, a ___________________ (the
“Assignor”), and ___________________________, a ________________________ (the
“Assignee”).





**W
      I T N E S S E T H:**





**WHEREAS** ,
      Assignor and Assignee are parties to that certain Agreement of Sale and
      Purchase, dated as of ____________, 2007, [as amended] (the “Agreement”),
      pertaining to the sale of the [senior living or skilled nursing facility] (the
      “Facility”) described on Exhibit
      A hereto
      and incorporated herein by reference; and





**WHEREAS** ,
      the
      Agreement provides that Assignor shall assign to Assignee, and Assignee shall
      assume, Assignor’s rights, title and interest in certain [permits, guarantees,
      warranties, licenses and agreements] relating to the ownership of the
      Facility;





**NOW,
      THEREFORE** ,
      in
      consideration of the foregoing and the covenants and agreements contained herein
      and in the Agreement, Assignor and Assignee agree as follows:





1.  Assignment
      and Assumption .
      Assignor hereby assigns to Assignee all of Assignor’s right, title and interest
      in and to and all of Assignor’s obligations under any of the following that are
      listed in Exhibit
      B hereto
      (collectively, the “Assigned Rights”), to the extent that they relate
      exclusively to the Facility and are assignable by Seller under the terms and
      conditions thereof without the consent or approval of any other individual,
      partnership, joint venture, corporation, limited liability company, trust,
      unincorporated organization, Government (as herein defined) or other legal
      entity: [(i) certificates of occupancy and permits or approvals of any nature
      from any federal, state, local or municipal government or any department,
      commission, board, bureau, agency, instrumentality, unit or taxing authority
      thereof ( a “Government”); ( ii)
      guarantees, warranties and indemnities pertaining to the ownership of the
      Facility; and (iii) management agreements, service contracts, contractor
      agreements, construction contracts or other agreements or instruments affecting
      all or a portion of the Facility.] Assignee
      hereby accepts all of such right, title and interest to, in and under the
      Assigned Rights and assumes all of the obligations of Assignor under the
      Assigned rights and arising or accruing on or after _____________, 2007 (the
      “Effective Date”).





2.  Indemnification .
      Assignee agrees to indemnify, defend and hold Assignor harmless from and against
      any liability, loss, damage, cost, claim or expense directly or indirectly
      related to or in any way associated with the Assigned Rights arising from the
      obligations of Assignee to be


**E-1**


performed
      on or after the Effective Date. Assignor agrees to indemnify, defend and hold
      Assignee harmless from and against any liability, loss, damage, cost, claim
      or
      expense directly or indirectly related to or in any way associated with the
      Assigned Rights arising from the obligations of Assignor under the Assigned
      Rights and incurred prior to the Effective Date. Any claim made by Assignee
      or
      Assignor against the other under this Section
      2 shall be
      made in accordance with the provisions of Section
      8.3 of the
      Agreement.





**IN
      WITNESS WHEREOF** ,
      the
      parties hereto have caused this Assignment to be duly executed and delivered
      on
      the day and year first above written.





**ASSIGNOR:**





___________________________,
      a ___________








By:


Title:





**ASSIGNEE:**





___________________________,
      a ___________








By:


Title:


**E-2**


Exhibit
      A


to
      General Assignment


**E-3**


Exhibit
      B


to
      General Assignment





**E-4**


**Exhibit
      F**


**to
      Agreement of Sale and Purchase**





Form
      of
      Lease Termination





This
      instrument was prepared by:















**LEASE
      TERMINATION AGREEMENT**




**THIS
      LEASE TERMINATION AGREEMENT** (the
“Termination”) is dated as of ______________, 2007, and effective at the
      Effective Time (as defined in **Section
      1** hereof),
      and is by and among **_______________________________** ,
      _____________________________________ (the “Landlord”), with an address of
      __________________________________, and **_________________________________** ,
      a
      __________________________________ (the “Tenant”), with an address of
      __________________________________.





**PRELIMINARY
      STATEMENTS**




A.  Pursuant
      to that certain [Lease Agreement identified on **Exhibit
      A** attached
      hereto] (the “Lease”), Tenant leased from Landlord the premises more
      particularly described as the “____________” in the Lease (the
“Premises”).




B.  I n
      conjunction with the conveyance of the Premises by Landlord to Tenant, Landlord
      and Tenant wish to agree and consent to the termination of the Lease .




**TERMS**




**NOW,
      THEREFORE** ,
      in
      consideration of the sum of Ten and No/100 Dollars ($10.00) and other good
      and
      valuable consideration, the receipt and sufficiency of which are hereby
      acknowledged, and the mutual promises contained in this Termination, the
      parties, intending to be legally bound, agree as follows:




1.  Landlord
      and Tenant hereby agree and consent to the termination of the Lease, effective
      as of ______ __.m. (Central Time) on the date hereof (the “Effective Time”);
      provided, however, that Tenant is not released from any liabilities, duties
      or
      obligations under the Lease that arose or accrued prior to the Effective Time,
      including, without limitation, the obligation, responsibility or liability
      for
      the payment to Landlord or any other person or entity for any losses,
      liabilities, damages, injuries, penalties, fines, costs, expenses, claims and
      other amounts of any and every kind whatsoever (including, without limitation,
      reasonable attorneys’ fees and expenses) that
      relate to (a) the Lease; (b) Tenant’s occupancy of the Premises or the
      improvements thereon; (c) the


**F-1**


use
      or
      enjoyment of any appurtenances, easements, rights and privileges belonging
      to
      the Premises by Tenant or its invitees, officers,
      contractors, subcontractors, agents, representatives or employees ;
      or (d) causes
      of
      action, claims, suits, actions or other proceedings (i) pending at the Effective
      Time or (ii) filed or made at or after the Effective Time and relating to events
      occurring or liabilities or obligations arising or accruing prior to the
      Effective Time.





2.  Tenant
      hereby releases and forever discharges Landlord from all known or unknown causes
      of action, claims, suits, actions, demands or other proceedings of any kind
      that
      Tenant has as of the Effective Time or may have after the Effective Time on
      account of or in any way arising out of or related to the Lease or the
      Premises.





3.  This
      Termination shall be construed and interpreted in accordance with the laws
      of
      the State in which the Premises are located.





4.  This
      Termination shall inure to the benefit of the successors and assigns of the
      parties hereto.





5.  This
      Termination may be executed in any number of counterparts, each of which shall
      be deemed an original hereof and all of which together shall constitute but
      one
      Termination. In the event of any conflict between the terms of this Termination
      and the terms of the Lease, the terms of this Termination shall govern and
      shall
      be controlling.




**IN
      WITNESS WHEREOF** ,
      the
      parties hereto have executed this instrument effective on the date set forth
      above.




**LANDLORD:**





___________________________,
      a


____________________________








By:


Name:


Title:





**TENANT:**





___________________________,
      a


____________________________








By:


Name:


Title:





**F-2**


[INSERT
      APPROPRIATE ACKNOWLEDGEMENT


FORM
      AND
      RECORDING REQUIREMENTS]


**F-3**


Exhibit
      A


to
      Lease
      Termination





Description
      of Lease








**F-4**





**Exhibit
      G-1**


**to
      Agreement of Sale and Purchase**





Emeritus
      Mortgage Loan





Promissory
      Note, dated June 30, 2005, executed by Emeritus Corporation in the principal
      amount of $10.8 million and payable to Healthcare Realty Trust Incorporated,
      as
      amended, renewed, modified or extended. As of the February 28, 2007, the
      outstanding principal balance thereunder was $10.8 million and non-default
      rate
      of interest thereunder was 10% per annum.








**F-1**





**Exhibit
      G-2**


**to
      Agreement of Sale and Purchase**





Term
      Mortgage Loan





Term
      Loan
      Note, dated May 1, 2003, executed by Emeritus Corporation in the principal
      amount of $600,000 and payable to HR Acquisition I Corporation, as amended,
      renewed, modified or extended. As of February 28, 2007, the outstanding
      principal balance thereunder was $600,000 and the non-default rate of interest
      thereunder was 10% per annum.





**G-1**





**Exhibit
      H**


**to
      Agreement of Sale and Purchase**





List
      of
      Tenant Leases





1.  Lease
      Agreement, dated May 1, 2003, by and between HR Acquisition I Corporation,
      Capstone Capital of Pennsylvania, Inc., and HRT Holdings, Inc., as lessor,
      and
      Emeritus Corporation, as lessee, as amended, modified, extended or assigned,
      and
      including any recorded lease memoranda or short form leases thereof, as amended,
      modified, extended or assigned.





2.  Lease
      Agreement, dated as of December 31, 1996, by and between Capstone Capital of
      San
      Antonio, Ltd. (d/b/a Cahaba of San Antonio, Ltd.), as lessor, and Integrated
      Living Communities of McKinney, Inc., as lessee, as amended, modified, extended
      or assigned, and including any recorded lease memoranda or short form leases
      thereof, as amended, modified, extended or assigned.





3.  Lease
      Agreement, dated as of December 31, 1996, by and between Capstone Capital of
      San
      Antonio, Ltd. (d/b/a Cahaba of San Antonio, Ltd.), as lessor, and Integrated
      Living Communities of Henderson, Inc., as lessee, as amended, modified, extended
      or assigned, and including any recorded lease memoranda or short form leases
      thereof, as amended, modified, extended or assigned.





4.  Lease
      Agreement, dated as of December 31, 1996, by and among Capstone Capital of
      San
      Antonio, Ltd. (d/b/a Cahaba of San Antonio, Ltd.), as lessor, and Integrated
      Living Communities of Oakwell, Inc., as lessee, and Integrated Living
      Communities, Inc., as amended, modified, extended or assigned, and including
      any
      recorded lease memoranda or short form leases thereof, as amended, modified,
      extended or assigned.





5.  Lease
      Agreement, dated as of December 31, 1996, by and among Capstone Capital of
      San
      Antonio, Ltd. (d/b/a Cahaba of San Antonio, Ltd.), as lessor, and Integrated
      Living Communities of San Antonio, Inc., as lessee, and Integrated Living
      Communities, Inc., as amended, modified, extended or assigned, and including
      any
      recorded lease memoranda or short form leases thereof, as amended, modified,
      extended or assigned.





**H-1**





**Exhibit
      I**


**to
      Agreement of Sale and Purchase**





Form
      of
      Title Affidavit





**TITLE
      AFFIDAVIT**





BEFORE
      ME, the undersigned authority, on this day personally appeared
      _________________________ (the “Affiant”), personally known to be the person
      whose name is subscribed hereto, and upon his oath deposes and says as
      follows:





1.
            Affiant
                is the _________________ of __________________________, a
                _____________________ (the “Owner”). Deponent has knowledge of the
                statements made herein and is qualified and authorized to make and
                deliver
                this Title Affidavit on behalf of
                Owner.





2.
            Owner
                is the present owner of the property described inExhibit
                Aattached hereto (the “Property”).





3.
            To
                the best of Affiant’s knowledge, there are no pending disputesconcerning
                the location of the boundary lines, fences, driveways, walks,
                encroachments or improvements, either onto or from the
                Property.





4.
            To
                the best of Affiant’s knowledge, there are no currently pending suits,
                proceedings or judgments that adversely affect the title to the
                Property.





5.
            There
                are no tenancies, leases, subleases, occupancies or parties in possession
                of the Property except for
                _______________________________________________.





6.
            No
                bankruptcy proceedings in any federal court, federal tax liens, state
                tax
                liens and/or judgments have been or are being filed against or by
                Owner.





7.
            There
                are no liens for past due taxes of any nature or any unpaid assessments
                of
                any kind against the Property, other than shown on Commitment No.
                _____________ (the “Commitment”) issued by Fidelity National Title
                Insurance Company (“Fidelity”).





8.  As
      of the
      closing of the sale of the Property, there will be no financing statements
      under
      which Owner is the debtor encumbering the Property and no outstanding
      indebtedness of Owner for equipment, appliances or other fixtures attached
      to
      the Property.





9.
            This
                Title Affidavit is being delivered to Fidelity in connection with
                the
                conveyance of the Property to __________________________, a
                _____________________.





**E-1**


10.
            There
                are no unpaid debts or liens for work, improvements or repairs that
                have
                been undertaken by or at the request of Owner on the Property preceding
                the date of the making of this Title
                Affidavit.


**E-2**





EXECUTED
      this _____ day of _______________, 2007.





**________________________________**








By:


Title:








SUBSCRIBED
      AND SWORN TO BEFORE ME this ___ day of ______________, 2007.










Notary
                Public, State of ___________







My
      commission expires:    Printed
      Name





______________________      [SEAL]


**E-3**


Exhibit
      A


to
      Title
      Affidavit





Description
      of Property





**E-4**





**Exhibit
      J**


**to
      Agreement of Sale and Purchase**





Form
      of
      Mortgage Assignment





**ASSIGNMENT
      AND ASSUMPTION**


**OF
      LOAN AND LOAN DOCUMENTS**





**THIS
      ASSIGNMENT AND ASSUMPTION OF LOAN AND LOAN DOCUMENTS** (the
      “Assignment”) is made as of ________________, by and between
      ______________________, a ___________________________ (the “Assignor”), and
      _____________________________, a ___________________________ (the
“Assignee”).





**FOR
      A VALUABLE CONSIDERATION AND THE MUTUAL COVENANTS HEREIN
      CONTAINED** ,
      the
      receipt and sufficiency of which are hereby acknowledged, the parties, intending
      to be legally bound, agree as follows:





1.  Assignor
      hereby bargains,
      sells, assigns, transfers and conveys unto Assignee, without recourse or
      warranty, all of Assignor’s right, title and interest in and to those loan
      documents (collectively, the “Loan Documents”) listed and identified in Exhibit
      A hereto,
      the loan indebtedness (the “Loan”) evidenced and secured, respectively, by the
      Note and the [____________________] identified in Exhibit
      A hereto
      and all rights, options, benefits and privileges granted to Assignor in the
      Loan
      Documents. Assignee
      hereby accepts such assignment and assumes, effective as of _____________,
      2007
      (the “Effective Date”), all liabilities, duties and obligations of Assignor
      under the Loan Documents and hereby agrees to be bound by and upon all of the
      covenants, agreements, terms, provisions and conditions of the Loan
      Documents.




2.  ASSIGNOR
      MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO
      THE
      LOAN, THE LOAN DOCUMENTS, THE COLLATERAL SECURITY FOR THE LOAN, IF ANY, OR
      THE
      ABILITY OF THE OBLIGORS UNDER ANY OF THE LOAN DOCUMENTS TO SATISFY THEIR
      RESPECTIVE OBLIGATIONS THEREUNDER. ASSIGNEE AGREES THAT THE LOAN AND THE LOAN
      DOCUMENTS ARE ACCEPTED BY ASSIGNEE IN “AS-IS, WHERE-IS” CONDITION, AND ASSIGNOR
      SPECIFICALLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR OF FITNESS FOR
      A
      PARTICULAR PURPOSE.





3.  Assignee
      hereby releases and forever discharges Assignor from all known or unknown causes
      of action, claims, suits, actions, demands or other proceedings of any kind
      relating to the Loan, the Loan Documents or the ability of the obligors under
      any of the Loan Documents to satisfy their respective obligations thereunder.
      REGARDLESS OF ANY STATEMENTS OR REPRESENTATIONS IN THE LOAN DOCUMENTS TO THE
      CONTRARY, ASSIGNEE ACKNOWLEDGES AND AGREES THAT REPAYMENT
      OF THE LOAN IS UNSECURED AND ANY
      PRIOR COLLATERAL SECURITY FOR THE LOAN WAS RELEASED OR EXTINGUISHED PRIOR TO
      THIS ASSIGNMENT.







**E-1**


4.  This
      Assignment shall be construed and interpreted in accordance with the laws of
      the
      State of _________________.





5.  This
      Assignment shall inure to the benefit of the successors and assigns of the
      parties hereto.





6.  This
      Assignment may be executed in any number of counterparts, each of which shall
      be
      deemed an original hereof and all of which together shall constitute but one
      Assignment. In the event of any conflict between the terms of this Assignment
      and the terms of the Lease, the terms of this Assignment shall govern and shall
      be controlling.





**IN
      WITNESS WHEREOF** ,
      the
      parties hereto have executed this Assignment to be effective as of the Effective
      Date.





**ASSIGNOR:**





___________________________,
      a ___________








By:


Title:





**ASSIGNEE:**





___________________________,
      a ___________








By:


Title:








[INSERT
      APPROPRIATE ACKNOWLEDGEMENT


FORM
      AND
      RECORDING REQUIREMENTS]





**E-2**


Exhibit
      A


to
      Assignment and Assumption of Loan and Loan Documents







**E-3**


**Schedule
        3.6**
 **to
        Agreement of Sale and Purchase**
 
  Facility    Zoning
        Classification
  Loyalton
        at Bloomsburg    C
        (General Commercial District)
 420
        Shaffer Road
 Bloomsburg,
        Pennsylvania
 
 Loyalton
        at Harrisburg    B.O.R.
        (Business, Office, Residential)
 3560
        N.
        Progress Ave.
 Harrisburg,
        Pennsylvania
 
 Loyalton
        at Creekview    R-T
        (Residential Towne)
 1100
        Grandon Way
 Hampden,
        Pennsylvania







**E-1**